Are The Glory Days of SaaS Finished in a World of AI?
Are the glory days of SaaS over as AI transforms software? Explore how artificial intelligence is reshaping the SaaS landscape forever.
Rob Walling, Founder of Tinyseed, MicroConf & Podcast “The Startups For The Rest of Us.”
In this thought-provoking show, we dive into the impact of artificial intelligence on the Software as a Service (SaaS) landscape. As AI technologies evolve, traditional SaaS models face unprecedented challenges and opportunities. We explore whether the golden age of SaaS is coming to an end or if it can adapt and thrive alongside AI innovations. Tune in to gain insights and perspectives on the future of both sectors.
This Week’s Sponsors
Kinta: Kinta
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The Show’s Main Transcript
[00:00:00.000] – Jonathan Denwood
Welcome back, folks, to the WP Tonic Show. This is episode 987. We got a returning friend of the show. We got Rob rolling with us, the founder of Tiny Seed Micro Conf, and the podcast for Startups For The Rest Of Us. He’s a friend of the show. It should be a great discussion. We’re going to be talking Are the Glory Days of SASS, finishing with in the world of AI. We’re going to talk about some of the other subjects Rob has been discussing over the past few months. It should be a great show. Rob, would you like to give The Tribe a quick 10-15-second intro, and then, when we come back for the main part of the interview, you can give a longer intro?
[00:00:52.020] – Rob Walling
For sure. I’m a recovering software engineer, builder, and maker, and I’ve started a few SaaS companies I sold a few, and now I run Tiny Seed, which is an accelerator for B2B SaaS companies, and Micro Conf, which is a community for B2B SaaS founders.
[00:01:09.480] – Jonathan Denwood
That’s fantastic. I’ve got my great co-host, Kurt. Kurt, would you like to introduce yourself to the new listeners and viewers?
[00:01:17.080] – Kurt von Ahnen
Sure thing, Jonathan. My name is Kurt von Ahnen. I own an agency called Manana Nomas, and we work directly with the great team over at WP Tonic.
[00:01:25.480] – Jonathan Denwood
That’s fantastic. Before we go into the meat and potatoes of this great show, this great interview. I’ve got a message from one of our major sponsors. We will be back in a few moments, folks. Three, two, one. We’re coming back. We also got a monthly sponsor, and Kurt is going to tell you something about them. Over to you, Kurt.
[00:01:52.860] – Kurt von Ahnen
Well, Jonathan, we are still happy to have Mesterio with us, Mesterio LMS. They have It’s not just a trial version. It’s not a trial, it’s 100% free. So it’s free, and it’s unlimited, no credit card required. When we say unlimited, it means unlimited courses and unlimited students, with payment gateway support, all in the free version. If you wanted something like certificates or a content drip, they offer some pro features, but you could get more at Misteriolms. Com. That’s M-A-S-T-E-R-I-Y-O.
[00:02:31.080] – Jonathan Denwood
Com. That’s fantastic. Well, Rob, thanks for agreeing to come back on the show again. They’re always great discussions. I think you enjoy them. That’s why you agreed to come back. Maybe for the new listeners and viewers, and we’ve had quite a few new people joining the tribe. Maybe you can give us more details about how you got into software engineering, since I think your background was in electrical engineering. Am I correct about that? Yeah.
[00:03:01.960] – Rob Walling
Then I worked construction for a few years, but I had learned to code as a kid, as many of us do. You pick up a book, How to Speak Basic to My Apple, and I just typed in some basic into the old Apple IIe, and it really fit the way my mind worked. I work in construction. There was one day when I was literally sitting in a ditch being rained on with a shovel. It was a backhoe, and we were trying to lay pipe for electrical wiring, and I thought to myself, What the heck am I doing? Why am I not doing something in an office? Because I could see in the window and see the people in there. I was like, I want to get an office job. Maybe I’ll learn to code again. I went to the library, nights and weekends, and learned to code. Then that was so much fun for a few years. Then you work for one credit card company, you work for the city of Pasadena, and it’s like, this isn’t fun anymore. So I realized I should be an entrepreneur and start my own stuff. And so, really, about 20 years ago, I started launching them, and it took me about four or five years to have enough income to get my own products out.
[00:04:04.480] – Rob Walling
And since then, I’ve started a total of six companies, including Tiny Seed and Microcomf. And five of those companies were bootstrapped, and Tiny Seed is the one we raised funding for.
[00:04:15.000] – Jonathan Denwood
So, where were you born? What area was it?
[00:04:18.020] – Rob Walling
In California. In California? Yeah, I was born in the East Bay of California, which is like Silicon Valley, right? I actually worked in Sunnyvale in San Jose, the heart of it. And I knew precisely zero people in the tech industry. All I knew was my family and construction. And it was very much, I’m still an outsider. I can’t ring up venture capitalists. They don’t know who I am. I just had to do this on my own. The reason I didn’t raise funding for my previous companies is I didn’t know anyone with money. I didn’t know any investors. And so I’ve always felt… First, I felt like an outsider, and that was a bad thing. And now I feel like an outsider, and I’m okay with that. It’s like I had to build my own community and a group of folks who feel a little bit like misfits, which is how I’ve always felt compared to the broader startup ecosystem.
[00:05:05.020] – Jonathan Denwood
What did you do when you asked him, What did your dad and mom do then?
[00:05:09.160] – Rob Walling
Yeah, my dad was an electrician. Was he an electrician? Yeah, he didn’t own the business, but he was an electrician and then a project manager, 42 years in the construction industry. That’s what my older brother does still. He runs a contractor out there. He and I often talk about the path not… His path not taken is not getting into tech because he and I both learned how to code around the same age. I’m glad that I got out of it.
[00:05:30.740] – Jonathan Denwood
What led to getting as a child? Because your dad… Was your family, your dad, or anybody in your family into it, and did they influence you?
[00:05:42.040] – Rob Walling
No, but my dad had seen computers around the… This is the early ’80s. My dad had seen computers around the office and said, That’s the future. So we’re going to buy one for your kids for Christmas, just so you know how to use one. How do you learn how to type? You didn’t learn how to type that in the ’80s. And then we got one book on programming, but we couldn’t afford it. So back then, it was like a crappy game to play, low 8-bit, was like $50. So that’d be like what? $150 today? $125? It would be a lot of money with inflation. We didn’t have that money with a single working parent. And so we got this book, and you could type in your own games. Now, they were text games. It was like Zork, like InfoComm games. So that’s what it was like. We did it to We were very entertained. We lived out in the country. We didn’t have anybody who lived within miles of us. We just read a lot of books, played a lot of Dungeons & Dragons, programmed the computer, and played the games we had.
[00:06:40.380] – Rob Walling
But then we decided we got to build our own to stay entertained.
[00:06:44.180] – Jonathan Denwood
This ditch incident, and you decided you try and learn programming, what was the first language that you learned then?
[00:06:52.640] – Rob Walling
I had known basic, and this is, when was this? 1999, 2000. And I went to the library that night, and I’m like, What? I knew HTML. I had learned HTML in college, and I was like, What language do I need to know to web program? And it was a classic ASP, and Perl, CGI scripts. And then, PHP, I think, was just coming about, and I was like, Oh, PHP’s so nice compared to Perl. I don’t know if you guys ever did CGI scripts. It was brutal. You just take it in, and yeah, string processing and stuff. So that was an early thing, and I applied to a few jobs, and I went up getting a job in Sacramento with just the little knowledge that I had. And that was when I got good at programming, was doing it 40 or 50 hours a week for the first time in my life.
[00:07:40.380] – Jonathan Denwood
And what company was that?
[00:07:41.640] – Rob Walling
Do you remember me asking? It was a consulting firm called Paradox Concepts, and it was like a 20-person firm in Sacramento. And talk about outsourcing or offshoring or nearshoring. All the Bay Area companies would hire us because we were 25% cheaper than the Bay Area companies or 30 % because we’re in Sacramento, and it was cheaper to live, and so salaries were lower. And so, yeah, our boss, the CEO, would drive into the Bay Area, sell a $30,000, $50,000 project to build a web app. It was dot-com boom. We were working for dot-coms in that first wave, and then we would go build it.
[00:08:20.020] – Jonathan Denwood
All right. Over to you, Kurt.
[00:08:23.240] – Kurt von Ahnen
I am listening to you talk, Rob, and I’m having wild flashbacks. I got hired by Ducati and drugged to California to work at Ducati’s main offices, which at the time was right across the street from Apple in Cupertino. My wife has family in Elk Grove. I just don’t know that listeners and viewers really have a tactile understanding of just what a foreign planet that whole Silicon Valley space is. When I would drive to the office, people would stop in the middle of the street and share their phone screens with people as if they’re not in the street. It’s a totally bizarre place to live. And when you describe yourself as an outlier or outside of that space, I’m going to say when you said that just now, it shocked me because I always looked like I read your book. Thanks for sending me the book, by the way, the SAS Playbook. I think listeners and viewers picture you being this inside guy, but then you just described yourself as not the inside guy. Could you just expand on what that feels like there? Because I I think that’s unique. People might think that’s interesting.
[00:09:32.080] – Rob Walling
Yeah, it’s trippy to grow up in a place and to not feel like I could take advantage of… There were all these startups around me, and I was like, Well, I want to be part of this. It’s exciting. It’s interesting. There’s money flowing. There are people are building stuff. I’m a creator. I’m a maker. I want to do it. And to just be like, I don’t know anyone who does this. And I did apply to jobs in the Bay Area in that ’99, 2000 time frame, and I just couldn’t… Well, any of the jobs that I got offered, they were paying… You can’t even afford an apartment there. Two grand a month at the time didn’t even pay for a one bedroom apartment. It was crazy. And so the thing that I started wrestling with was like, I don’t know that I want to go down this venture capital. Everyone was like, If you want to do anything in software, you just raise funding. And it was like, Hey, how do you do that? How do you raise funding? I don’t know anyone. B, What if I want to do it without doing that? And that became the question.
[00:10:23.230] – Rob Walling
No one was talking about that, except for Joel Spolsky. He started in 2000, 2001. He had a consulting, like an agency. Then he spinning products off Fogg Bugs and a few others. Later, Trello came out of it and Stack Overflow, Stack Exchange. But that was my feeling of, I guess if I’m an outsider, maybe I’ll just walk my own path because I’m an outsider no matter what. You know what I mean? There was this whole path of VC, and it’s like, nobody knows me there. Maybe I’ll just invent this path of bootstrapping. I didn’t invent it, you get it, but I had never heard of anyone doing it. So I was inventing it in my head of, Can’t I just build software and just charge people for it? And that became the path And then I started blogging about that in ’05, and that was where an audience started building up. It was like, Wait, I’m also a developer who doesn’t know anyone who would give them funding. How do you have $3,000 a month in product revenue? And it’s like, Well, here’s what I did. And that became the start of all this, of the books.
[00:11:18.040] – Rob Walling
I’m five books in now in terms of publishing and the podcast and everything, spring out of that. Originally, it was just literally just sharing my journey and what I was doing.
[00:11:26.720] – Kurt von Ahnen
Yeah. Like I said, my head just exploded. I used to travel up and down Highway 9 to go to Boulder Creek because when I got the offer at Ducati, I thought, That’s a lot of money. And then I went to California. I said, We can’t afford to live. I had to drive to the top of the mountain every day.
[00:11:42.640] – Rob Walling
Yeah, it’s brutal. People don’t realize how bad the cost of living is out there. My parents are still out there, and I go see them every now and again, and I’m like, Oh, California, it’s nice, but there’s a lot of SSM issues. Now, they live in Minneapolis, which is like, It’s this higher quality of life, although it’s very cold here.
[00:11:58.340] – Kurt von Ahnen
Yeah. Well, that leads us to Our next question, and that is, in this new sea of artificial intelligence, and you’re talking about startups and all the things that you do, can a SaaS still be successful coming out of the shoot?
[00:12:13.520] – Rob Walling
For sure. Yeah, we see it every day. We do tiny seed. We do applications twice a year. We’re an accelerator, and so we do a batch of companies at a time, usually 10 to sometimes upwards of 15 at one time every six months. When we do this application process, we get hundreds and hundreds of applicants, and then we fund 2, 2. 5% of them. We are still seeing SaaS companies that started six months ago, that started two years ago, some that started more than that, but that are getting traction. The key is, how do you use AI to help augment… Ai helps you move faster. Ai is not a competitive advantage because everyone can use it, so there is no advantage. It’s only an advantage if your competitors are not using it, but it is an accelerant. It It helps you get there faster. Integrating it into your, whether it’s your product, whether it’s your internal operations, whether it’s growth and marketing, these things can help you. It is getting noisier. Marketing is getting noisier. There are more SaaS companies, and AI is not making this any easier on people, but we definitely still see a lot of winners.
[00:13:22.120] – Jonathan Denwood
Nice.
[00:13:22.760] – Kurt von Ahnen
Jonathan?
[00:13:24.920] – Jonathan Denwood
Well, you hinted that, isn’t that just a level competition, The ability to know code, lovable, I think it’s a bit overdone myself. I got a friend, and she was one of the first employers of Evernote, and she’s had a few successful launches. She hates WordPress with her passion. She said, Well, you can almost knock anything up in and it’s only going to get easier. Isn’t it just the amount of competition in the SaaS space? The only thing I was thinking I was going to ask you, isn’t it just become really possible just to have a custom solution through AI? Just have something custom for your individual needs and not have to use as a SaaS, really?
[00:14:32.240] – Rob Walling
Yes and no. The answer is, at least the way I view it, is when no code started really coming up, when you had Bubble and Airtable and Zapier has been around forever. But as you could start building things with drag and drop builders, people said, This is it. It’s the end of code. You’re just going to build everything in no code. And then some people said, No code isn’t going to be for anything. You’re not going to use it for anything. And it’s like, neither of those is true. What happened is no code probably took 10% of the SaaS market, maybe 15, 20. There are fewer people paying for SaaS because they can build it. Internally, with Tiny Seed and Microcomp, we have at least three full-blown line of business internal apps that we have built in Airtable. I might say four. Our entire Tiny Seed application process, you apply, we filter, we do all this. All that’s in Airtable. The entire production system for my podcast and YouTube is all custom. We probably would have paid for something or used Google Sheets previously. That’s what NoCo did. I think AI will do something similar.
[00:15:33.280] – Rob Walling
Ai coding, lovable and that stuff. I think it can take 10, 15, 20% of the SaaS market. The thing is, the more complicated you get, the harder it is to build, harder it is to maintain in the long term. That’s what’s going to kill people. Ai is getting better, I know. But the ability to build a little utility, if you were to say, I need a Chrome extension that I want to give me an alert when any website in whatever blah happens, I can build that with AI in half an hour now. Those types of things, they’re low-hanging fruit, these little utilities. If you want to convert a PDF to a JPEG, a JPEG to an MP3, whatever. Ai. Because it’s a little structure. It’s 20, 50, 100 lines of code. Yeah, AI going to do that. But let’s talk about building Salesforce HubSpot, building an email service provider, building DocuSign, building, I don’t know. Let’s think of a full-blown SaaS app that does millions, tens of millions, hundreds of millions. You can’t build that with AI. I mean, you could try. It’s going to be buggy as hell. The interface is going to suck.
[00:16:31.060] – Rob Walling
Even as AI gets better and better, I just don’t. I think there’ll always be makers who can make their stuff maintainable, better user experience, on and on.
[00:16:42.640] – Jonathan Denwood
Yeah, I totally agree with you, actually, about what I know. You’ve been a lot more successful than I’ve been. Back over to you, Kurt.
[00:16:53.180] – Kurt von Ahnen
Again, you did it to me. I’m running into a ton of vibe coders or story stories of vibe coding where they’re saying, Oh, I use this to build this. It was so easy. It was so great. And they’re selling these products. They’re creating businesses and selling these products. And in my mind, and maybe I’m polluted from the WordPress space where there’s always an update. There’s always something that’s got to be updated or a possible conflict with your latest page builder. And you got to fix that. So I see these people building these things, and they have no idea how the code works. They built it with and then they sell these products. I’m assuming you get a lot of exposure to these types of workflows. How are people dealing with that? Are they just taking the money and running and changing the company name or It depends on the person.
[00:17:45.980] – Rob Walling
Yeah, it’s opportunistic in the sense that these are not five-year businesses. These might not even be two-year businesses. It’s I’m going to build this utility. They are likely have big security flaws because it isn’t so great at that. They’re unmanaged. They’re It’s maintainable if you get past thousands, tens, thousands of lines of code. They often have bugs in them. And so the good developer is I know senior developers using AI as an augmentation and engine to get there faster and to help write, well, to write the unit tests. When they go through, but they spend time, they spend 30, 60 minutes doing something that if the first pass, it’s like, oh, AI did this in five minutes, that pass is not great. That pass is like someone who’s coded for a few months. We see applicants certainly have seen an increase to tiny seed of AI-generated and no code, code bases. And we specifically ask that now as a question, who wrote the code for this? It’s okay if you use AI if a senior, mid-level to senior developer is using AI. But if you tell me you vibe code, and we ask in interviews, did you vibe code this?
[00:18:48.920] – Rob Walling
It’s not a hard no, but it is a red flag for us. And in fact, in this batch alone, there was a company that we decided not to fund because we think the code base is going to have to be completely rewritten in the next 6-12 months. Most no code, we’ve backed a few no code apps. All of them have needed to be completely rewritten from scratch. And you just got to know, it’s not a hard no, but it definitely is a ding against you if you’re- Because that would completely flip the profit proposition completely upside down, because now you have the implied expense of the easy way of building it.
[00:19:25.300] – Kurt von Ahnen
Then when you bring in just a little bit of revenue because they price themselves competitively, so They don’t have a great margin to begin with, and then they have to rewrite the whole thing manually anyway. They’re completely upside down, I would think.
[00:19:37.800] – Rob Walling
They stand still is what we say. If they’re charging MRR and they have three grand of MRR, four grand of MRR, the MRR keeps coming in, but they have to then spend however many months to rewrite it, and they stand still, meaning they’re not launching any features. And so they’re either losing ground or they’re just flailing of like, I’m now wasting all the time to do the thing I should have done upfront type thing. So it’s a challenge, and it’s frustrating for them as well. Again, we’ve had a couple of tiny seed companies that have rewritten their code base, and the founders are like, I can’t release new features. I’m losing customers because I can’t release this feature because we’re rewriting the whole thing. And I’m like, I know. And this is why we’ll probably not back many more live coded or no code. It’s not an absolute, but you get the feeling. It’s a negative signal for us.
[00:20:24.340] – Kurt von Ahnen
Well, we were going to ask, what are some of the biggest mistakes in business that you could share with the tribe, that you could share with our audience, is that one of the biggest mistakes or is that something new that hasn’t come your way yet?
[00:20:35.920] – Rob Walling
No, that’s something new that hasn’t got my way yet. It’s certainly- Can I just say one thing?
[00:20:43.500] – Jonathan Denwood
We had a great interview a couple of weeks ago with Dustin on Magi. I don’t know if you… Am I pronouncing it correct, Kurt?
[00:20:53.620] – Kurt von Ahnen
Yeah, Magi.
[00:20:55.020] – Jonathan Denwood
Have you heard of Magi?
[00:20:56.500] – Rob Walling
I have not.
[00:20:58.020] – Jonathan Denwood
It’s a place where he offers all the leading language models in one price. He’s a experienced interface designer, UX designer, and he was running out of his money and he built this using the no code and he launched it. And he’s been highly successful. You use it, don’t you, Kurt?
[00:21:26.880] – Kurt von Ahnen
Oh, yeah. I’m a subscriber. I like it because it puts all of my learning management, all my LLMs in one dashboard. So I don’t have to remember where I worked on stuff. All my chats were in one interface, but it gives me access to all of the major ones.
[00:21:44.080] – Jonathan Denwood
He launched a lifetime deal not on AppZuma, on another platform, and it gave him the money to move the product forward. But in general, I do agree with what you’ve outlined. I just thought I would just point it out because Dustin’s such a nice guy, wasn’t he, Kurt?
[00:22:07.300] – Kurt von Ahnen
Yeah, he’s a sweetheart.
[00:22:08.420] – Jonathan Denwood
He’s a bit like you. He hasn’t been on the show as many times as you, but he’s been on a few times. He’s just a great founder. Sorry, Kurt, I interrupted. Sorry.
[00:22:19.380] – Kurt von Ahnen
No, it’s all good. We’re on the what are the biggest mistakes in business question?
[00:22:24.320] – Rob Walling
Well, yeah. And it’s like, I have my own, right? I recorded a YouTube video in a podcast episode about the It’s one of the biggest mistakes I’ve made, because I get asked about this a lot, right? It’s like, all right, you’re successful. What did you do well? And what did you really mess up over the years? And so these might not be the biggest mistakes in business, but maybe the biggest mistakes in my story. And I’m going I just throw one out here. Lifetime deals, if you’re SaaS, don’t do that. I’m not going to say it’s the biggest mistake, but I am anti-lifetime for the reason because SaaS is not a lifetime. If they can download it right on their own server and that’s the point, good. You can give them one price, but not if you’re going to maintain something month after month. But things that I did personally as I was going along, and I still succeeded in spite of these things, is things like launching a bunch of ideas. I’m going to launch an idea a week and just see what sticks. I’m going to launch one thing after the other, but not actually focusing on something and taking feedback, iterating on it, trying to find product market fit.
[00:23:26.080] – Rob Walling
I know that’s a jargon, but I see so few products that out of the gate… I mean, almost none of the seven or eight-figure SaaS, bootstrap SaaS companies I know, launch something and it’s like, Oh, it took off. It’s 1% or less. Everyone else, like Drip, which was my last SaaS app, we had three different iterations of it over the course of 18 months. We launched and it worked, but it wasn’t, and we iterated, iterated. But something I did early on and something that’s popular at the end of the indie hacker scene these days is like, Well, I’m going to launch 20 things in 20 weeks and just see what sticks. And That’s like buying lottery tickets. Like actually put in the work and learn is, I think, a big mistake I’ve made.
[00:24:07.800] – Jonathan Denwood
I got thrown out of one of your groups because remember I joined one of your groups?
[00:24:15.020] – Rob Walling
One of your mastermind group?
[00:24:16.240] – Jonathan Denwood
Yeah, I got thrown out because the guy, he said he was doing that. And I said, It’s a little bit too much. It didn’t go down very well. But I should have kept my mouth shut.
[00:24:29.910] – Rob Walling
Lessons I’ve learned, for sure.
[00:24:32.780] – Jonathan Denwood
Don’t know about that. Well, it’s the middle road, isn’t it? But I think some do go a bit far on it, don’t they? They take it.
[00:24:41.380] – Rob Walling
Yeah, because it’s easy. It’s like me saying, and it’s what we all want to do. We’re makers. We’re builders. If you’re a maker or a builder, you want to just make and build, and you don’t want to do the things you don’t want to do. And so if I were to tell you, Kurt, you can get in great shape. All you have to do is eat ice cream and play video games. If I convinced you that that was true, you’d be like, This guy, Rob, he should be so popular. Even if it’s not true, that’s what I feel like some people are just selling this dream that’s like, This is not good. I tell people, eat spinach and actually lift weights or run or whatever. It may be the tough love, but it’s what I really believe that pretty adamantly. You’re going to have to do some things you don’t want to do, and that may include grinding on an idea for a while to see if it works and then moving on to the next one only if it fails.
[00:25:31.420] – Kurt von Ahnen
Well, see, I think that’s the magic question that a lot of entrepreneurs get completely wrong, Rob, is that is, I was someone that was somewhat tenacious, and I would get an idea, and I would follow, follow, follow, follow, follow. The whole world’s telling me it’s failing, and I’m going, No, I just know just a little bit more time. And then finally, I go, Okay, I give up. And then a year, two years later, my exact concept all of a sudden has widespread adoption, and everybody everybody’s railing on it. And so that happened to me three different times where I tried something and it failed. And so finally, I put together a project five years ago. And again, I feel like I was early to market and I was this close to shutting it down. And literally the month I was going to turn it off, it turned profitable. It’s so hard to encourage people because there are times where people should go, Okay, I’ve invested too much in this. I need to shut it down. But that decision is so hard. And I can only imagine if someone did 20 products in 20 weeks, trying to pick which one to shut down because you didn’t give any of them a chance to succeed.
[00:26:41.020] – Rob Walling
Yeah, that’s right. One of the most common questions I get, especially from early stage founders, is how do I know when to quit? How do I know when to bail on an idea? How do I know if it’s working or not? And usually it’s, are you out of ideas of things to try? And are you out of motivation? And realize we all have weaknesses weaknesses and strengths. If your weakness is you don’t stick with anything long enough, then you need to stick with things way longer than you think. If your weakness is you stick with stuff for too long, which I have some friends who worked on the same startup for six or seven years with almost no traction, it’s like, That’s just dumb. That’s just too long. You got to know yourself a bit, but also… I mean, sorry.
[00:27:22.780] – Jonathan Denwood
I got a product, but I still haven’t got… I’m going to try and persuade Kirk my vision for that, I don’t know. But I think just to finish off before we go for the mid-term break, I think the greatest thing… I was watching, I’ve got the guy’s name, but he’s the founder of our B2B, the I don’t know if you know about this product, Rob, but when somebody comes to your website, it shows- I’ve heard of this. He’s very popular. He did a video and he said, The thing I didn’t realize the key to everything, and I think you’ve said this a few times, is market fit. If you haven’t got product market fit, you haven’t got anything, have you?
[00:28:12.180] – Rob Walling
That’s right, because product market fit is really just have you built something that businesses want and are willing to pay for and that they don’t churn. Churn is a huge signal of product market fit and also growth, just MRR or ARR going up into the right.
[00:28:27.440] – Jonathan Denwood
I have this guy, I wish I could remember his name, but he was saying his first SaaS, he got it over to a million, but he said it was a bit like a leaky bucket. This is a hard core marketer, so he knows what he’s doing. And he said he was smart, but it was like a leaky bucket. They were losing as many clients as they were going, and it just wasn’t getting tracked. It seemed successful, but you realized the market fit wasn’t really there. He was managing to move it forward by almost personal It’s like brute force.
[00:29:01.920] – Rob Walling
Yeah. And if you’re a really good marketer, you can hide with top of funnel, new leads, you can hide your lack of retention. If you’re churning people out, but you’re just refilling them, It’s just not a great business. We actually don’t fund businesses like that. We look at the full life cycle. It’s not just growth. You can’t just say, Well, it’s growing, therefore it’s successful. That’s not true. You have to look at net revenue retention over time, and you want churn to flatten out. Yeah, it’s very important. It’s harder than people think. Everyone who gets into SaaS, who has been an infraproduct marketer, or an e-commerce founder, or any consultancy, an agency, it’s always like, I want to do SaaS because it’s recurring and because exit multiples are great and blah, blah, blah. And then they get in and inevitably it’s like, Oh, no. Building a product that people don’t churn out of is so, so, so hard, and most founders never get there.
[00:29:58.840] – Jonathan Denwood
Right. I think that’s a good place for our break. We got a couple other messages from the sponsors of the show that are very appreciated. They cover the cost of production in there. We will be back in a few moments, folks. Three, two, one. We’re coming back. We’ve had a fantastic discussion with Rob, the friend of the show. It’s always great to have Rob back. But before we go into the second half, I want to point out we got some great deals from the sponsors, plus a created list of the best WordPress plugins and services and technology for the power user, for the small agency, for the freelancer. To find all these goodies, go over to wp-tonic. Com/deals, wp-tonic. Com/deals, and you find all the goodies there. What more could you ask for, my beloved tribe? Probably a lot more, but that’s all you’re going to get on that page? I’ve made a career of disappointing. There we go, Rob. Over to you, Kirk. You can do the next question.
[00:31:12.040] – Kurt von Ahnen
Well, you guys started getting into it a little bit about this idea of product-market fit. And you had a YouTube video on the five levels of product-market fit that I watched, Rob. I want to refer people to that. Search that out. I, as a as my business, I was making some assumptions about where I was in product-market fit. But you broke it down. You broke it down by a percentage of churn, MMR. When I looked at the dollar amounts, I was like, Oh, maybe I’m not in stage three. Maybe I am in stage two. It was really quite telling the way that you described that. Could you give us just a little detail without having to redo a whole training from a YouTube video?
[00:31:57.800] – Rob Walling
Yeah, for sure. I tell you, I was listening to a podcast in the venture space, and I don’t remember who it was, maybe Lenny’s podcast or something. And First Round Capital, someone from there was on it. And I’m not super familiar with them, but I have heard of him. And he had a framework for product-market fit. And I started listening. He’s like, Level one, nascent product market fit, level two, level three. And as he’s going, I’m like, This is super interesting. None of this applies to my companies. This is such a venture-backed, right? It’s just a venture lens. And I’m like, This doesn’t fit. So I sat down and I started talking to ChatGPT, and I’m just like, Bootstrap or product market fit. Let’s think about this. And this is my… It’s my limited experience of investing in 235 companies and starting my own and being in whatever. So it’s my lens. But I really was like, Stage one is pre-product-market fit. It’s when Churn is flailing. Churn is high, 5 to 10% or more, probably a few thousand MRR. And then you can get to weak product market fit. Churn is starting to come down 3 to 6, 3 to 7% a month.
[00:32:55.860] – Rob Walling
And maybe you’re doing up to, I don’t know, 5 grand to 20 grand MRR. Then stage 3 is emerging, so it’s a little further. Stage 4 is strong. That’s when you get up to about a million ARR, and then stage 5 is mature product market fit. That’s a million and up, and your churn can be net negative at that point. It can be zero, one, two, three % net. Now, a true venture capitalist would look at my numbers and say, Those are toy businesses. Those are not even real. But you know what? I know a founder who got to 3 million ARR, mostly bootstrap, took some tiny seed money. Our check sizes, for people to know, are usually between about 150 and 220,000. They’re very small checks in the scheme of things. Got to 3 million-There are small checks unless you haven’t got 200,000. Unless you haven’t. No, I know. Would have been a big check to me years ago. But Sold for tens of millions of dollars. And so it is a toy business to a venture capitalist when they need Apple-level, Facebook-level, OpenAI-level returns. But that founder is generational wealth for him, and it returned millions of dollars to Tiny C.
[00:34:02.880] – Rob Walling
These are not toy businesses to me. So anyways, I had never seen anything like this where there’s these five stages or multiple stages, and it’s trying to get into growth, as you said, in churn, to try to bucket them and to say what it looks like and what you should be working on. I had never seen it, and I felt pretty strongly that I wasn’t making this up. This is just what I see out there. So I hope that it helps people. And I put a YouTube video out, and I think we have a PDF of it someone can download Nice.
[00:34:32.300] – Kurt von Ahnen
Over to you, Jonathan.
[00:34:34.200] – Jonathan Denwood
Yeah, like I was saying about this guy, I could remember his name, but he was talking about market fit, and you’ve talked about it, but he was saying that… We preach it on another podcast, me and Kurt, about course creators. I wouldn’t even make a course unless I had a landing page and I actually could get some people to give me some money. It’s the same. He said, Don’t sell it to your friends or people that like you because they’re just going to tell you they don’t want to hurt your feelings. You got to get some people to actually give you some money for the idea, and then that’s a good sign. You did your own video on this about product-market fit. Maybe you can give us your own thoughts about that.
[00:35:30.100] – Rob Walling
Are you talking about pre-selling, like trying to validate an idea?
[00:35:33.300] – Jonathan Denwood
Yeah. Yeah.
[00:35:34.820] – Rob Walling
Look, some people, I hear them say, Oh, validation. I validated it, like the experts say, and then it didn’t work. Therefore, validation doesn’t work. And it’s like, no. Validation is never 100%. You cannot validate any idea to 100%. But right now, if you and I came up with, the three of us came up with an idea for a course or a book, or startup or a conference, we are about zero % validated that this is going to do Maybe five or 10%, if the three of us are pretty smart. All validation is there’s really two approaches that I’ve taken, and I’ve taken these approaches with multiple books, with conference, with Tiny Seed, with SaaS apps, Trying to think of what else. Probably something else that I can’t remember. But it’s either a landing page or it is one-on-one customer prospect conversations. And usually, I do both. So before I launched Start Small, Stay Small, my first book, put up a landing page and said, This is the book for bootstrappers. If you’re a developer, you want to build a company, don’t need to raise venture capital. This is the book. And I got like four or five hundred emails from people.
[00:36:41.700] – Rob Walling
I was like, Okay, that’s some validation. I didn’t pre-sell it. I did go and write the book. And then I sold several hundred copies, and it was good. Did the same thing for Micro Conf. Micro Conf in 2011 was just a landing page with some head shots. I got Heet and Shaw, Noah Kagan, myself and my co-host. We put our head shots on the thing, picked a date, and And then we put it up and said, Are you interested? We didn’t have a venue. We didn’t have tickets. It was just email opt-in. Same thing with Tiny Seed, an entire startup accelerator was just a landing page. You can go see it in Wayback Machine. And all it was was me saying, Venture funding doesn’t help bootstrappers. I want to start something where funding can be bootstrapper friendly. I’m Rob Walling. This is why I should be doing this. Put your email in if you either want to invest or you’re a founder. And that’s all it was. It was a landing page for months. And I tweeted it, emailed the list, and then we raised Our first fund was 4. 6, 7 million. And that was raised mostly based on this landing page.
[00:37:37.200] – Rob Walling
Now landing pages aren’t everything, but they are one signal that you can drive from social. And with Drip, I used ads to drive to the Drip landing page. I didn’t do that with Tiny Seed. But then there are often one-on-one conversations to Jason Cohen. You’ve heard him about how he validated WP engine, which was he did cold outreach to people on LinkedIn and then said, Would you use a faster, high-performant WordPress, more expensive WordPress hosting platform? He got like 30 or 40 people to tell him yes, and that’s when he went and built it.
[00:38:08.860] – Jonathan Denwood
Right. I was to you, Kurt. Was it me? I’m trying not to… I was told by a very popular influencer… See, Rob, I was told by a very popular influencer in the WordPress WordPress space that I interrupt too much. So I’m trying to change my ways.
[00:38:31.760] – Rob Walling
You’re doing great today.
[00:38:33.040] – Jonathan Denwood
I am. I am. I’m trying. Like all things, he was partially correct, but he was being his normal gracious self as well. There we go.
[00:38:47.180] – Kurt von Ahnen
He’s one of those hard love, right? What do they call that? Tough love. He’s a tough love person. He’s a tough love person. So you were talking about pre-selling the book, and then you We talked about landing pages for this, that, and the other. But in reality, you’re not really selling to consumers. Almost everything you do is business to business, right? Yeah. I think about the book, even. I don’t think your book is marketed to soccer moms, right? It’s marketed to people that want to grow a business or they’re in a business space.
[00:39:20.500] – Rob Walling
Aspiring founders, at least. Yeah.
[00:39:22.620] – Kurt von Ahnen
So talk to me about why you think consumer-driven products and services are more What would you call that? They’re less successful than business to consumer. I mean, business to business.
[00:39:36.410] – Rob Walling
Business to business? Yeah. Well, especially, specifically with software, with SaaS. Because look, if you’re going to invent a widget and go on Shark Tank, a physical scrubbing something or other for your kitchen, go do that. It’s a lottery ticket, and some people do have really big successes with it. Or if you’re going to sell content for consumers like Dungeons and Dragons, live streaming or whatever, a course to be a better DM, a Dungeon Master, yeah, sure. No, go do that. That’s fine. Info products for consumers, it’s fine. It works. There’s dating, and there’s health, and there’s working out, and there’s all these how to make money online, that type of stuff. When I see folks trying to launch SaaS to consumers. All I see is it’s just brutal.
[00:40:19.880] – Jonathan Denwood
It’s going to be brutal, isn’t it?
[00:40:21.880] – Rob Walling
The churn is through the roof. I see churn 20% a month, 25% a month. It’s like you’re turning over your entire customer base every four months. This is not SaaS. It’s not It doesn’t even qualify as SaaS in my mind. Price points, everyone, what are consumers used to paying for SaaS? They complain about $12 for Netflix. I want to charge $100 or $1,000 a month. There’s no consumer that’s going to pay me that. And so as a result, all right, great. So I can charge $9 a month for consumers or maybe hobbyists. Let’s say a hobbyist has a podcast, and I’m podcast hosting. I can charge $14 a month, $20 a month. I can’t charge $100 a month for a hobbyist podcaster. So the price points are so low, you can barely afford to market. Because you can’t run ads. You can’t hire someone to do biz dev. You can’t hire a salesperson. You can’t do demos. There’s about 20 B2B SaaS marketing approaches that exist. I list them all in my book, SaaS playbook. And if you are selling to consumers, you can afford to do four of them. It’s like viral marketing and SEO and content.
[00:41:21.240] – Rob Walling
And there’s a couple, but you can’t do most of them. So you’re very limited on what you can do. Plus your churn is likely to be high. It’s more potentially, or more sexy, or you have more of a relationship with it because it’s like, Well, I’d be the user for this thing that does… I’m trying to think of even consumer SaaS. When I ask, I’ll go on xTwitter and say, There are approximately zero successful B2C SaaS companies. Name one. And people will be like, Netflix. And it’s like, that’s not SaaS. That’s a content. That’s a content play. You’re not paying for software. If Netflix could, hypothetically, just send you a huge hard drive every every month with all the videos on it, and it’s set at your house, that would work, right? You would pay 14 bucks for that. All you want is the movies. That’s not SaaS. And so everyone’s in the SaaS and Spotify, and this and that. And realistically, the only ones that I know of that are actually big and successful Oh, people will say Dropbox. Dropbox, have you looked at their revenue? They’re public. Eighty plus % of their revenue comes from businesses.
[00:42:21.620] – Rob Walling
The consumer revenue is a pittance. It’s like 15, 20 %. The only ones that I know of that actually work are fitness trackers, where you get the aura ring or whatever. And there was one other category, and I forget what it even is now, but it’s stuff like that. It’s around working out exercise and such. Maybe some sports things, like some people with golf to track their golf, blah, blah, blah. But everything else is not, there really is not B2C SaaS at scale.
[00:42:48.680] – Jonathan Denwood
What about WP engine? How would you classify? Because I’m on a much, much smaller scale with my little company WP tonic, which- You’re an SMB.
[00:43:00.000] – Rob Walling
You’re a small business.
[00:43:01.260] – Jonathan Denwood
Yeah, I’m trying to be a boutique hosting provider in the eLearning space. I’m getting some traction. It’s been really brutal, though. How How do you classify what Jason did with WP Engine?
[00:43:19.240] – Rob Walling
You mean in terms of B2B versus B2C?
[00:43:21.160] – Jonathan Denwood
Yeah, because it seems a mix, doesn’t it? Which I’m- I don’t know.
[00:43:24.690] – Rob Walling
Do you know a single consumer that has a website on WP Engine? It’s all businesses. My My wife is Sherry Walling, Dr. Sherry Walling. I think you’ve spoken with her. She is a solopreneur who hosts… I think she… Does she even have WordPress anymore? She might be on Squarespace now. But when she- Did you have to swear like that.
[00:43:41.480] – Jonathan Denwood
Sorry.
[00:43:42.520] – Rob Walling
Yeah. Sorry. Can you bleep that out for me? Yeah, I forget. Sometimes I get a little carried away. But when she had a WordPress site, she was on WP Engine, and you could say, Well, isn’t she a consumer? But no, she’s paying for her business website, Sherry Walling. Com. I’d say there’s approximately zero consumer websites on WP Engine. If you’re a consumer truly paying for, again, a hobby website for Dungeons & Dragons or some game, you’re going to go to, what are the $4 a month hosts? A GoDaddy or something? I don’t even know what the bottom end of the market is, but that’s where you’re going to go as a consumer because you’re so price sensitive.
[00:44:15.960] – Jonathan Denwood
Don’t mind that because I’ll be nasty to GoDaddy. They’re never going to sponsor me. You can say whatever you like about GoDaddy because I’ll be nasty to them. But they’re fine. But I agree with you. Sorry.
[00:44:29.110] – Kurt von Ahnen
I think this drives back to a conversation Jonathan and I had this week, Rob, and that was we were reviewing some SaaS products, and I don’t want to mention names because God forbid, they’re in your little circles. But I’m seeing these horrific ads that are like, you don’t need a website. You don’t need courses anymore. You just need a mobile app, right? And then you get all these subscribers on your mobile app, or you need a private podcast. More successful private podcasters make more money through And my position with Jonathan was like, who… Okay, so they’re selling business to business. They’re selling the podcast thing. They’re selling the mobile app thing. They’re business to business. But the people that they’re selling to, in my humble opinion, they don’t have a prayer because what average person is looking for another subscription or to pay for information that’s otherwise free just by searching YouTube? I don’t see people… But then to your point, as you were talking, I thought trade magazines. There are still aviation trade magazines, dentistry trade magazines, medical trade magazine. People still go to print and deliver them to offices and make a ton of money, then they’ll pay a premium because that’s information that’s not generally…
[00:45:50.320] – Kurt von Ahnen
But that’s business to business. If I run a dental office, if I run a hangar at an airport, I’m going to want that trade magazine. So I can Your insight there really led me to think that it really is B2B. And as soon as you go the B2C angle, you put yourself at risk because there’s no money. No one wants to pay for that at that level.
[00:46:13.000] – Rob Walling
Especially subscription. So I There are info product or info marketers or influencers that sell courses to consumers. And you have to do it like Alex Ramosey, maybe. I think there’s a lot of… Even that’s businessy stuff. But the three big information Categories for consumers are dating and relationships, health and fitness. I’m going to include sports in that because golf and fishing are part of that. I’ll lump all that in. The third one is how to make money online. I don’t mean we talk about actual business stuff. I mean the biz-ups, selling the dream thing where it’s like, Hey, I’m in a Maserati. Those do work, and people build up big audiences on YouTube or TikTok these days or on Instagram, and you learn to know, like and trust the person, and then the person says, I have this course for 50 bucks or 90 bucks or whatever, or a membership, blah, blah, blah. That can work. The churn is very high if you do any type of subscription, if you do a one-time fee, people make a living at it. So it’s not that it doesn’t exist in info. It really doesn’t exist in SaaS, though.
[00:47:24.620] – Rob Walling
Again, I just don’t see it.
[00:47:27.680] – Kurt von Ahnen
Yeah, it’s super insightful. Over to you, Jonathan.
[00:47:31.760] – Jonathan Denwood
I’m going to be because Kirk’s being tactful, but as you know, Rob, I’m not. Basically, we were talking because Kirk was quite insightful because we were doing a review of The Hive, the newsletter platform, and they’ve introduced a lot of extra improvements, as they put them. Well, it’s well moving away from a newsletter. They’re throwing in podcasting, they’re throwing in a website, they’re throwing… And Kurt pointed out, that’s not a sign of strength, that’s a sign that, in his opinion, the core element of Beehive, that they’ve got this marketplace and they’ve got mechanisms that can promote your newsletter in a crowd and you get traction. Might not be as effective as they’re making out because they’re aiming at encroaching on other people’s turf with all these extra elements. I was a little bit more charitable than Kirkwood was, but I think he’s probably right. What’s your thoughts when somebody, a company, dramatically starts not adding on core functionality to the core product, but they start adding stuff that That seems to be outside the boundary of the original core product. Is this making any sense, Rob?
[00:49:08.540] – Rob Walling
It is making sense. The answer is, I don’t know. It’s one of two things. They’re either really smart and they’re trying to get ahead of what’s called the S Curve. The S Curve is that every product, no matter how good it is, it’s going to grow, and then it’s like an S, it’s going to plateau. Hubspot, the core inbound marketing engine, did that. Salesforce, the core CRM, did that. Wp engine, the core hosting, all these big companies, that happens. Apple is the reason you launch multiple products. So what you do is you then layer on that next product. Remember when HubSpot wasn’t even a CRM, and then they added it as another product.
[00:49:44.300] – Jonathan Denwood
I didn’t know that, actually.
[00:49:46.100] – Rob Walling
Yeah, they were all inbound marketing until 2011. They bought Performable, I think. That was landing pages. I don’t know if that is CRM, but they started acquiring to use Stack the S Curve. Jason Cohen has a great article about this elephant curve, I think. Type in Jason Cohen Elephant Curve or a smart Elephant Curve. It’s the best article I’ve seen on it. See, I don’t know the Behab guys, and I don’t know what their internal revenue or growth looks like.
[00:50:10.500] – Jonathan Denwood
They got about 30 million in finance.
[00:50:15.700] – Rob Walling
So they’re either being smart and getting ahead of the S Curve, or they don’t know what they’re doing, and they’re just flailing, launching a bunch of stuff, trying to be the maker platform. Will it work? We don’t know. Maybe they’re-I don’t think they We know what they’re doing, but who knows?
[00:50:31.960] – Jonathan Denwood
I don’t, that’s for sure. It’s all conjecture, isn’t it, Rob? Really, isn’t it? Let’s round it up. By the way, can you stay on for some extra bonus stuff, or do you have to be off on the hour? Because Kurt does, because he’s got another engagement. But let’s do this one quick. So if you could go back to your 20s and you could give yourself a little bit of advice, a little bit of a tip, what would you give yourself, Rob?
[00:51:16.680] – Rob Walling
Become an influencer and make money online content. No, that’s not what I would say. I think my biggest thing was… You know the big thing? Is I I saw venture capital, and I wanted to do startups, and I didn’t see anyone doing it the way I wanted to. So I just went off on my own for years, and I blogged about it and talked about it, but I just did my own thing. I didn’t find a group, a community of like-minded people. I didn’t even look. And there were some out there. Joel’s, Joel on software, business of software forums were good. And then later, I started my own. That’s what microcomf and tiny seed spring out of that podcast. But I think the biggest thing was I thought that I could do it all on my own, and I wanted to do it all on my own, just one man on an island. I didn’t want community, I didn’t want employees, I didn’t want any of that. I would encourage myself back then, surround yourself with people who are doing it, who So it was more positive. My relatives were not entrepreneurs. I was actually discouraged from being an entrepreneur by friends, and not so much family, but friends and people around me.
[00:52:25.300] – Rob Walling
That wasn’t helpful. What about finding actual people who are doing this maybe a little ahead of you? Where are Where are they? Maybe they’re listening to this show. Maybe they’re at MicroKopf, maybe they’re at a local event. But get around them and be in the network. You will learn so much faster than if you try to do… You make every mistake on your own, which is effectively why it took me so long to get where I am.
[00:52:45.820] – Jonathan Denwood
It’s always very strange, really, because I look at myself, because I am a little bit of a loner myself. But I think it’s not my natural stance. I do like people, but I think because of my dyslexia and the way I was treated, I became a little bit of a loner, if that makes sense. And it’s a bit like I don’t like really large groups. I prefer a few friends around dinner. But on the other hand, I get pumped up about presenting to large groups. It’s all very contradictory. I can’t even make sense in my own mind about myself, but I suppose there is some pattern to it, I suppose.
[00:53:27.040] – Rob Walling
There’s a difference between those two, right? Because you and I, we I could be on this podcast and say, Oh, there’s 5, 10, 15,000 people listening. It’s like, But I’m in a.
[00:53:35.300] – Jonathan Denwood
I wish there was. Well, actually, my numbers even impressed Kurt, actually, for a little niche podcast.
[00:53:41.000] – Rob Walling
But being on a stage or being on a podcast like this, I don’t think requires extroversion. I’m not extroverted, but I obviously record a lot of content. But being in a room with a lot of people, there’s a different energy flow, and it’s like back and forth conversation, which is different than just this interview.
[00:53:58.960] – Jonathan Denwood
When you’re presenting to a large group, because I quite like it, I get pumped up. As long as I’ve practiced enough, I get pumped up.
[00:54:07.120] – Rob Walling
That’s right.
[00:54:07.500] – Jonathan Denwood
Do you get pumped up about it?
[00:54:09.000] – Rob Walling
I do. I used to get really nervous. Then at a certain point, that flipped, and the nerves actually are excitement and energy. If I practice a talk, let’s say twice before I give it, in my hotel room or whatever, the best version of the talk I give is always on stage because of the energy. It used to be the opposite. There was the worst version because I was so nervous that I was like, deer in the headlights. And I’m like, Why did I stumble? Why didn’t I say this? Now, when I’m on stage, it’s delivered with the most confidence, and it has the best points that I pull from nowhere all of a sudden because I’m on the spot. And that’s a cool place to go to, but it’s purely repetition. At least it was for me.
[00:54:46.560] – Jonathan Denwood
Right. So this is the show, but we have some bonus content. You’ll be able to watch the whole show, plus the bonus content on the WPTonic YouTube channel. But, Kirk, what’s the best way for people to find out more about you and what up to, Kurt?
[00:55:01.260] – Kurt von Ahnen
I’m on LinkedIn almost every day, and I’m the only Kurt von Ahnen on LinkedIn. So when you search me and you find me, you know you got me. And then Manana Nomas is for the company stuff. If you need something, just look us up on manianonomas. Com or on our socials.
[00:55:14.160] – Jonathan Denwood
And thanks for It’s been such a great co-host, Kurt. Your contributions to the show is much appreciated. Rob, what’s the best way for people to find out more about your thoughts and your ideas, Rob?
[00:55:28.580] – Rob Walling
If people are into podcasts, search for startups for the rest of Us, wherever podcasts are served, Apple Podcasts, Spotify, all the places. If you’re more into YouTube, head to youtube. Com/microcomf, and that’s where I put out a YouTube video every other week. I have like 400 on that. On channel now, and those are probably the easiest ways.
[00:55:48.180] – Jonathan Denwood
It’s a great podcast. You learn a lot, folks. We’re not having a show next week. We’re having a little break, but we will be back in December. We got some great guests in December, but we’re next Thursday. But we’ll be back soon. We’ll see you soon, folks. Bye. Three, two, one. So let’s do some bonus content. So let’s talk about marketing because I think marketing is SaaS. It’s never been easy. I shied away from it. I’ve become, I wouldn’t say it well. I I’m an expert in SEO. I’ve all of it. I just become insanely focused about online marketing. That’s all I listen to and do. I think it’s always been brilliant. I think I just think it’s just got even more brutal. What do you think about that statement and what do you think works for SaaS companies around marketing at the end of 2025?
[00:56:58.920] – Rob Walling
End of 2025, I think marketing SaaS is harder today, probably than it’s ever been. But I think that’s been the steady cadence of it. Here’s the thing, if you were building SaaS in 2008 or ’09, just building it and hosting it was really hard and expensive and would take months and months and months and months and months to get any type of MVP out with the tools we had. Then it was expensive to host it. These days, all of that is approaching zero, obviously not literally. But as a result, there’s just a lot more competition. But that doesn’t mean that you can’t still stand out. I see hundreds of companies at any given time, maybe thousands, that are still figuring it out and having success. There are approximately 20 B2B SaaS marketing approaches that exist in the world, give or take, about 20, 21, 22. Every once in a while, I hear, I hadn’t thought of that, and I’ll add it to my list. But I listed them all in the SaaS playbook. And what’s working for companies just depends on their space. It depends on who you’re in, where are your end customers. Where are your customers?
[00:58:07.920] – Rob Walling
Where do they live online? That’s my first question. But the five most common, call them the big five, It’s not very creative. But the big five SaaS marketing approaches are content, SEO, integrations and partnerships, pay-per-click ads, and cold outreach. Those are the five most popular. It doesn’t mean any or all will work for you, but those are usually the first five that I- Well, because I’m going to do it.
[00:58:42.520] – Jonathan Denwood
I’ve immersed myself in the technology and the methodologies. I’m going to be doing a load of cold email marketing in the new year. I’m just going to go for it. I’ve been doing some LinkedIn, but they’re hammering hard. That’s the factor. Linkedin, Google, Microsoft, they’ve been hammering away at the cold email. Everybody seems to be gunning for the small person, for the entrepreneur, don’t they? The big boys, they seem to be really gunning.
[00:59:20.060] – Rob Walling
Well, they just want to get rid of the span. I mean, there’s a lot of really crappy cold email out there is the problem. And big companies and small companies alike are sending those.
[00:59:29.540] – Jonathan Denwood
Yeah. That’s true. What do you think of AI? Because I’ve got such mixed feelings. I use a fair bit, and it’s really helped me, Rob, really. But on the other hand, I’m not an expert, but I know a couple of people who are actually AI consultants. They actually did their degrees in Artificial Intelligence. My understanding of the large learning models is their pattern recognition models to some extent. That’s rather simplistic, but they are pattern recognition. Natural language has more patterns to it than you realize. But this whole thing about general AI intelligence, I just think it… I wouldn’t quite say it’s nonsense. It might happen the next five, I don’t know how many years I’ve got left, but I might see it in my lifetime. But I don’t think we even know that because I just don’t think we know enough about how the human mind works, what is intelligence. We don’t even know the basics. I get annoyed about all the hype. How do you treat the whole thing, Rob?
[01:00:56.280] – Rob Walling
Yeah, I mean, every new technology has a big hype cycle, right? It doesn’t mean that it’s not going to be impactful. It’s just that in ’99 and 2000, there was the dot com hype cycle. It started, what, ’94, when Netflix, a net escape, went public and went through 2000. People were saying, Oh, my God, the internet is going to revolutionize everything, and everything’s going to be making all these predictions. Then people were like, No, the internet’s dead. Now that the dot com crash happened, no more internet. Well, guess what? The internet stuck around, and in fact, some great businesses were built between ’01 and ’08, which was the next big crash. Then mobile apps in ’08, ’09 was the big boom. Remember that? No more websites. This was the prediction. Websites are dead. It’s all going to be mobile.
[01:01:43.860] – Jonathan Denwood
Wax.
[01:01:44.940] – Rob Walling
That didn’t happen now, but mobile stuck around, right? So then crypto and-Yeah, the crypto.
[01:01:50.130] – Jonathan Denwood
Well, you done okay out of the crypto.
[01:01:52.900] – Rob Walling
I did fine, but I’m not a crypto proponent or whatever. I don’t even use it.
[01:01:57.960] – Jonathan Denwood
I just bought it as a investment. It’s like a religion with that Sorry, I would do it.
[01:02:00.340] – Rob Walling
Yeah, I don’t do that. But that has a big hype cycle, and now AI is having its hype cycle. My belief is that it won’t live up to the hype that everyone’s saying, but it will still have a dramatic impact. I think if you’re in technology, whether you’re a developer, an entrepreneur, a designer, a consultant, you should be paying a little bit of attention, but not too much. That’s the thing. You would think maybe that I’m doing all the new AI stuff and in all the new tools. I’m not. I ask friends of mine, like Craig Hewitt, who runs Castos, and I say, What’s the AI tool that I should be using right now? And he tells me the best one, and I go use that. And then I hang around. I’m not an early adopter, and I hang around, and I learn it, and I use it because I want to know what’s going on. But I don’t spend all my time diving into it. So I think the first thing is we should all know. You should know how to use it and how to build a GPT and how to train something, just to know, just basic skills.
[01:02:54.760] – Rob Walling
In terms of AGI, you’re talking about generalized intelligence. I’m not a futurist. I don’t know. I don’t think it’ll happen in the next 20 years, but it’s hard to make a prediction like that. I do know that the models aren’t… In our VULSA, my co founder with Tiny Seed has been saying this for a while, and he’s a PhD computer scientist. He said, with OpenAI or ChatGPT 1. 0 or whatever, they already absorbed most of the internet and trained the entire thing on the internet, and that was really ground-breaking. How different is the current word, the 5. 0, from the first version I used?
[01:03:28.940] – Jonathan Denwood
Well, it’s around the It’s limitations of scaling, isn’t it?
[01:03:32.000] – Rob Walling
It’s a little better, but it’s not 5 times better.
[01:03:35.000] – Jonathan Denwood
I’ve got the guy’s name. He’s been a critic, but he is an expert. He said there’s quite a few people. I think Meta, I I think he’s just recently left, the head of the AI Department, a French guy. He’s left, hasn’t he? He was saying he also felt there were limitations on scaling. It’s going to Yeah, I don’t know enough, but some of the more people that impressed me in the area, they said that scaling has got its limitations and they’re coming quite rapidly. You’ve got to look for other models. But what do you think about… Do you think the other factor is, do you think in the next couple of years, a load of people are going to be sacked, basically, are going to lose their jobs?
[01:04:31.080] – Rob Walling
Yeah, entry-level jobs. I wish it were not the case, to be honest, but it is tough. I have two kids, I have a 15-year-old, 19-year-old. 19 is going to graduate from college in 18 months. It’s tough for them because AI AI can… This is what AI is actually pretty good at, is doing entry-level and junior work. Ai is not good at mid-level and senior and really thoughtful work, but it’s going to be tough for kids coming up. I think if you have any type You see the stuff that AI can do now that you would have hired someone to do, like a VA or an EA, a generalist. You’d hired them to do a year or two ago. A tiny seating micro-off, like two multimillion dollar business Our entire team is 11 people, and not even everybody is full-time. The reason is because we use AI all over the place to just get stuff done quicker.
[01:05:25.960] – Jonathan Denwood
Well, for the time being, but when everybody’s using it, the competitive gain you get reduces, doesn’t it? You only get it when they… But it’s absorbed into every company and everybody’s using it. It just becomes natural. The actual gain is reduced, isn’t it? Am I right about that?
[01:05:51.860] – Rob Walling
Yeah. It’s an advantage right now in the short term until everybody starts using it, and then it’s all going to just be, I think, a water the rising tide that raises all boats. But I think the challenge is, we saw this with US manufacturing in the… Was it the ’60s and ’70s, really, as an automation and robots and all that?
[01:06:13.540] – Jonathan Denwood
’70s, ’80s.
[01:06:14.840] – Rob Walling
’80s, yeah. And lower skilled workers that were in an assembly line, you stamp a thing and you put a rivet in it and do that. Robots could do that. And so those folks had to go find new jobs. And oftentimes, they moved into trucking or they move, become trades people. Ai is going to do a similar thing, and we’ve never seen it do it for knowledge work or office jobs, but that is what it’s going to do. And it’s going to start with the lower skilled jobs because AI can do that. Chatgpt is not so bad at that.
[01:06:49.920] – Jonathan Denwood
Well, I find I use it as a writing tool, but I have to give it a very outline. I only write about things that I have some knowledge of, then I’ll give it an outline, and then I have to proofread it completely because it’s full of innacuracies. Inaccuracies, outdated innacuracies because it’s utilizing past data. But it all has to be proofread because it’s not correct in what it says. But I don’t know if that will improve.
[01:07:28.780] – Rob Walling
Yeah, they’re working on it. I I don’t… I mean, I’m sure it’s going to get better over time. It’s just will it ever get to zero hallucinations? I don’t know. They need a lot more stuff to train it on, and they’ve already done the internet, so I just don’t know.
[01:07:39.170] – Jonathan Denwood
What’s the other area? Where do you think intellectual property is going? Because if you’re in the SaaS, you build something, that’s one of the things you didn’t like about WordPress because it’s quasar open source. One of the values is subscription, is making money, but it’s also the intellectual property involved. But AI is just like a drive in a truck through intellectual property, really. They paid off a lot of organizations, haven’t they? But it’s still there. How do you think that’s going to pan out in the next 18 months?
[01:08:24.920] – Rob Walling
Well, we should differentiate between intellectual property of just scraping everyone’s online content content and images, which AI has done. I struggle with this because I don’t necessarily agree with all that, but there’s active lawsuits happening right now around that. Then intellectual property, owning a SaaS company where you have software and you’re building a brand around it. Ai can’t really just take that. It doesn’t know your code. In terms of IP, I think AI has overstepped. These AI companies have overstepped, especially, it was Anthropicic that I think just lost their suit. They lost a big suit. When you look at what they did, it’s like, That’s not cool, man. I don’t love that artists and musicians have been scraped in order to make other stuff. But to make quasi-copies of their stuff. But also, I don’t… Ai is inevitable. What is happening is inevitable. It’s this weird line that I find myself in of, I don’t I feel like it’s just what’s happening to creators, but I also don’t know what the alternative is. I don’t have a great alternative. Maybe it’s licensing. I know they’re going to pay Reddit. They being like, Is it OpenAI, licensed Reddit?
[01:09:45.030] – Rob Walling
And aren’t they doing that with Medium? And they’re doing that with some sites. And it’s like, maybe that’s enough. I don’t know.
[01:09:51.000] – Jonathan Denwood
Well, the only thing, obviously, they’ve got their chosen people or people that they know that’s got big enough resources to sue them. But the only thing I could see that might is to bring up another technology that’s got a bit of an iffy reputation with me, which is crypto, which is blockchain, is that micropayments, wasn’t it, is protecting IP through blockchain. And then if somebody uses it, they have to make micropayments, don’t they? Do you think that might be a possibility?
[01:10:31.840] – Rob Walling
You know how long micropayments have tried to be a thing? Since 1996. Remember, flues. Com? Yeah. So micropayments have never really worked. I think Patreon is a better model. I think Kickstart like crowdfunding. I know this is not the same, but I don’t know. I don’t know how they’re going to fix this. It feels messy, if I’m honest.
[01:10:57.870] – Jonathan Denwood
So, off of the AI tools and things that you have used, is there any that come on your radar that’s really impressed you, Rob?
[01:11:09.660] – Rob Walling
Yeah. Well, obviously ChatGPT, but there’s one… Crap, what is it? It’s the one Craig Hewitt keeps talking about. I can’t remember the name of it, though. Muti?
[01:11:21.660] – Jonathan Denwood
You got my disease then, Rob.
[01:11:24.100] – Rob Walling
Yeah, I just can’t remember the thing, like the best AI. This is great radio when I can’t even I can’t remember the name of the thing. It’s not Replet. The thing I liked about it is that it’s ChatGPT, but it’ll go out and search and pull transcripts. He told it, go grab all these-Oh, you’re talking about Notebook, L-M? No, because that won’t go out and grab it. Misstral? Misstral?
[01:11:54.680] – Jonathan Denwood
Well, I’m quite impressed with the Notebook LLM.
[01:12:03.180] – Rob Walling
Don’t you have to upload… Because I uploaded my books there. Will it go out and grab things, too?
[01:12:07.220] – Jonathan Denwood
Yeah, Notebook will now. They’ve brought out a new version. Well, they always bring it out. But for a Google product, I was reasonably impressed. The way it’s presented, they have a Notebook LLM Pro that you have to pay for, but the free one is reasonably impressive. But I’m always a little bit cagey about any Google products. Their Gemini 3 seems to be on top of the large learning models for certain things now. Have you refreshed your memory, Rob, or are you still struggling?
[01:12:49.440] – Rob Walling
I’m literally scrolling through a Craig Hewitt YouTube video right now because it’s not in the description. What is this app?
[01:12:58.640] – Jonathan Denwood
I think we have, but I’ve been… Yeah, there are some of them that… Do you think the large company… Because you had that, well, it’s become semi-notorious, that white paper from the Massachusetts Institute that was saying that a lot of the larger companies were really struggling to utilize large learning models to get real efficiency. And I’ve heard a few companies, like the CEO, has insisted that people use it. I’ve heard large company policies from people. Well, we are told to use it. Then you’ve had some of the large pharmaceutical companies that were using it, and they seemed to be backing off a little bit. I am a little bit concerned about that, or do you think that that’s just anti-AI propaganda?
[01:14:10.800] – Rob Walling
You mean… Some companies are looking, anti-AI? No, I don’t think it’s propaganda. I think that’s probably really happening. I think, like with any new technology, there’s this hype cycle I talked about, and people think it can do a lot more than it actually can. And then people try, people in businesses try, and then it fails. So you’ll see, it’s like the Verizon chatbot or some airline AI chatbot that was just catastrophic, and people were posting screenshots of it online, and it’s like, oh, look, AI failing. And it’s like, yeah, there are going to be cases when it does that. But also, the other thousand implementations of that chatbot are amazing or whatever. So it’s like, there are failure scenarios. I don’t know if it was anti-AI.
[01:15:01.240] – Jonathan Denwood
Well, the example I was listening to that confirmed what you just said was, I forgot the gentleman who pointed this out, about when electricity was first becoming popular in the cities. People. They first implemented it in factories, but the factories really struggled initially to utilize electricity because the actual models, the actual internal way, the factory couldn’t adapt to the technology instantaneously. It took a while before the actual internal models could utilize electricity in a manner that increased efficiency. I think that’s what you’re trying to outline there. Is that correct?
[01:15:49.260] – Rob Walling
It is because I think of a small company that’s one person or that’s 10 people. We can move faster, we’re agile, and we can tweak and make mistakes and do it. But if you’re a thousand, 10,000, 50,000 people, it’s like steering a big ship. I remembered the name. I didn’t remember. I scrolled through one of his YouTube videos. I found it. It’s called Manus. I-m-a-n-u-s. I-m. Manus. I-m. It is like a chat interface, but it will go crazy. It’s agentic in the sense that it’ll crawl the internet, and it’ll pull stuff. And he, Craig Hewitt, swears by it. I have just started using it this week. And it can do everything ChatGPT can. It can do plus, plus, plus. I like it when Craig says ChatGPT is a consumer product, and none of us, technical people, should be using it. You should be using Claude or Manus. I appreciate his opinionated take on that.
[01:16:42.500] – Jonathan Denwood
Well, thanks for that. I think we wrap it up. I do appreciate you staying on and giving us some more insights, Rob. It’s always a pleasure talking to you. I think we’ve covered, as usual, some fantastic stuff. I haven’t interrupted too much, so my critics will be happy. There we go. Like I say, we won’t be around next week, but we will be back in December. We’ll see you soon, folks. Bye. Bye.
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