Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. Joining me is a repeat guest and to call him a repeat entrepreneur is understating it. This dude might have a problem. Like he had a bunch of companies that I knew about, and then he put out this spreadsheet of all the companies that he’s had before leading up to this company. And as I’ve been preparing to do this interview with him, I’ve watched him create another . . . what are you doing? Is one of my first questions for Josh Pigford.
First of all, I should introduce him as the founder of Baremetrics. The official description is . . . oh, man, I just read it. Oh, there it is, “Metrics, forecasting and engagement tools for teams.” Here’s what I like about him. As soon as you start selling anything online, especially on subscription, you want to know like who’s buying and what’s the repeat business and the whole cohort analysis stuff that everyone tells you to do, but it’s a pain in the neck. And what Baremetrics decided to do is say, “Look, just connect your payment processor,” for me it’s Stripe, “and we’ll do the rest. We’ll tell you how long people stay with you. We’ll tell you what a customer is worth. We’ll tell you when somebody signs up. We’ll tell you when somebody leaves.”
And then they decided to finally take my advice from my last interview with Josh and say, “Look, we’re not just going to tell you, we’re going to help you keep them longer.” I don’t have a lot of advice for entrepreneurs. I basically I’m a good listener. But that’s one thing I felt very strong about with Baremetrics. I invited him here to talk about how he built his business, find out what about the past companies that he’s had, why he constantly keeps launching businesses. Is this really distracting or is it adding to his company? And we can do the whole thing thanks to two phenomenal sponsors. The first will help you hire developers, it’s called Toptal. And the second will help you do email marketing right, it’s called ActiveCampaign. I’ll tell you about those later. Josh, what are you drinking? You’re drinking a whole lot.
Josh: Man, I’m well hydrated. I’ve got coffee and water.
Andrew: I noticed.
Josh: Actually I have two empty cans of LaCroix over here too. I just drank my last one, and I’m very sad.
Andrew: Feel free to go pee in the middle of the interview if you need. Let me know. Your revenue is public, so I’m not like extracting any secret information. Anyone can see it at demo.baremetrics.com. If they went there today, what would they see as far as revenue?
Josh: Hundred-something thousand. I haven’t checked it recently.
Andrew: A month?
Josh: A month, yes.
Andrew: In recurring revenue?
Josh: That’s correct.
Andrew: Congratulations. You’ve passed a million dollars in recurring revenue. You guys celebrated when you did that?
Josh: We did, but it was one of the things like it was . . . that last amount like I felt like we just teetered right on it for, I mean, like a month or something. It was just maddening where every day it’s like, “We’re like $1 short,” and then it would go down a little bit more and then be like $100 short . . . yeah, whatever but we celebrated but then, you know, kept making stuff.
Andrew: Are you allowed to make a profit considering that you’ve got a little bit of outside funding?
Josh: Sure. Yeah, yeah. The funding that we have is really super basic angel investing stuff like we’ve very few . . . almost no strings attached.
Andrew: So are you profitable?
Josh: Yes.
Andrew: You are? I didn’t know. Congratulations. How much?
Josh: It’s like we purposely operate like at breakeven. So like any profit we’ve got, we just throw it right back into the business at this point.
Andrew: Into projects. Like that introduction project that we’re going to talk about. You know, before I get into this, you’re doing well. Why are you selling coasters on Twitter? What the F, man?
Josh: Oh, right. So earlier you mentioned that, you know, I think you said like problematic or something like that, or like that I might have a problem which is feels very accurate. Some days it’s like, “What on earth am I do like doing?” Like doing 1,000 different things. But part of it is that I have . . . since I was a kid, I’ve felt this like strong urge to constantly like try new things. So I love learning. I hate school, but I love learning. And so for me like my brain has to constantly be like trying to figure out new things. That’s the only way I can kind of stay sane. And so with Baremetrics, you know, I’m in this sort of CEO role and there’s less sort of room for me to like try weird things that pop into my head. So doing these other kind of random things like buying a laser cutter and like making stuff is like the way that my brain gets to think about other things where I . . . so I don’t get stuck in this like echo chamber of startup stuff.
Andrew: So I feel like I need to do stuff like that. But I’m . . .
Josh: Yeah.
Andrew: You think that too about me. My head is very focused on one thing. We got to get it right. If I have any bit of attention, it has to do something else that supports back to this. What am I missing? What are you getting out of . . . and, by the way, these coasters look beautiful. My favorite one is the one that Ryan Hoover took his first tweet announcing Product Hunt, turned it into a coaster that now he’s got around the house . . . it looks beautiful. I get it. But as someone who doesn’t want to get distracted, someone who doesn’t have shiny, whatever, syndrome, what am I missing? What’s a benefit that you’ve gotten from trying different projects? Be specific, if you can.
Josh: Sure. Well, so high level, it’s my sanity. Now more specific, so there’s a few things few benefits. So first, I think it’s what I was saying earlier about like getting out of echo chamber where I’m not . . . like my brain cycles aren’t constantly spinning on the next article we’re going publish on the blog or the next product or whatever and you’d like you can get caught up in . . . current example I gave is like programmers when they’re looking at this programming problem, it’s like they’ll stick and stare at it all day and then they like go grab lunch or something and then come back 15 minutes later and the solution to it is completely obvious.
Like, “Of course that’s the solution,” but they wouldn’t have found it had they not stepped away. And that’s me stepping away from the business problems. It’s like I get to go think about something that has nothing to do with like business analytics and I can come back with some fresh thought on things. So it’s that but then also I feel like it also makes me empathetic to business owners because these other things that I’m making I’m also selling a lot of that stuff and so this is like this new aspect or this new angle that I’m able to view business through or new lens that I can see it through that otherwise I would not have been able to.
Andrew: I thought about doing something like that and one of my concerns is that I’m then going to get sucked into a lot of projects or a lot within that project, building a website, creating the product, making sure that I ship it out. My own personal obsession with what if not enough people like it. Like we’re doing this session live here today and I’m constantly watching how many participants do we have? Am I doing well or not because some participants left? Someone just left right now as I said left and I thought, “Oh, man, what happens there? Am I not doing a good job?” Do you feel any of that distraction with time as you’re creating coasters, distraction with attention?
Josh: No, I mean so, you mentioned all the little things like creating a website. I mean, you also mention that spreadsheet of stuff. Like the spreadsheet is a prime example of how I figured out how to make certain things very quickly. So I can spin up a new website or whatever in like an afternoon. So that’s sort of like logistical stuff doesn’t take me much time. And then pass that again it’s like a lot of times I think this kind of go in cycles. So like, you know, I might spend a good chunk of a week on one of these projects that’s not really the Baremetrics and then I don’t touch it for like a month. So it kind of comes and goes and I control like the volume of time that I’m spending on it. So none of these things like require my attention, but, you know, I get to choose when to spend my time on it really.
Andrew: Sorry, I had it on mute. 2014, you guys raised a little bit of money. You were at 20% growth rate. Was that good? Was that bad?
Josh: I think the growth rate at the time early on set maybe some false expectations. So I, you know, sort of from the perspective of like building a company that is focused on growing, I was new to some of that. Like had some real sort of monetary success. So I think I kind of went into that thinking that 20% month-over-month growth was normal and it’s not at all.
Andrew: You mean at some point it stopped?
Josh: It just starts by plateauing. You know, you’re not going to keep 20% month-over-month growth like forever. Most don’t stay anywhere near that. So, you know, the bad thing there was that a kind of like made me think like whenever we would hit like, get down to about 10% month-over-month growth, it was like, “Okay, man, something is wrong.” It’s like, “No, 10% is still fantastic.” So there’s a skewed view on things.
Andrew: And 2014 is when we did an interview. At the time you were at $250,000 a year in revenue. And again, it was all public. And so were you starting to spend money expecting a 20% growth rate? Expecting that to continue?
Josh: Right. So, yes. The only thing we’ve ever really sort of spent money on is people. So we rarely have not spent any real tangible amount on things like advertising or marketing. It’s always been on hiring and that’s also the hardest sort of knob to adjust. So yeah, so we hired based on the like, of course, we’re hiring the head of revenue, but we’ll catch up to that pretty quickly. And that’s like part also the eternal optimist that most entrepreneurs are. It’s like, “Of course, well, yeah, it’ll be great. It’ll be fine. Six months we’ll catch up and it’ll be good,” and just didn’t.
Andrew: And it didn’t. And now you had a team of five people?
Josh: Yes, at that time somewhere around there. Yeah.
Andrew: And what do you do then? How do you deal with it when you don’t have enough money to pay?
Josh: Yes. So at first, so we raised the initial $500,000 seed round. Then by the end of 2015, I started realizing, “Okay, we are going to run out of money here.” So I started trying to raise some more money. I was able to get an extra $300,000. And had I been smart, I would have just said, “Okay, here’s our $300,000. Like let’s buckle down and get profitable then,” but instead I kept hiring. You know, it’s the classic. Like we just need role x to be filled and like that’ll help us grow.
Andrew: Got it.
Josh: It’s not true. I mean, at least it wasn’t for us.
Andrew: By the way, I do research in real time as we talk. I’m trying to see who your investors are. And it’s not coming up in Crunchbase.
Josh: There’s two.
Andrew: Who are they?
Josh: Yeah, so General Catalyst and Bessemer.
Andrew: Oh, got it. And but those aren’t angel investors.
Josh: Not at all.
Andrew: They’re significant VCs, yeah.
Josh: Which is why they don’t care about the investment in me. I mean, they’re great people. But it’s like on a small [percentage 00:11:05].
Andrew: Oh, right. It’s such a small amount of money.
Josh: Right. So General Catalyst has 700 and Bessemer has 100. And those came about, especially the General Catalyst side from Stripe. Stripe created this thing called like the Stripe Platform Fund or something like that for Baremetrics back in 2014? And General Catalyst is like the vehicle that sort of put all that money in. But yeah.
Andrew: So you know what? I talked to Courtland Allen, the founder of Indie Hackers. He sold to Stripe and I said, “Well, I love Baremetrics and I kind of feel . . . Oh, Courtland is there. Hey, Courtland. I’d love for you to jump in here after this conversation and just kind of talk about your site a little bit, and I’d love to have Courtland as an interviewee. One of the things that I said to him was, “Stripe is going to like incorporate all this Baremetric stuff.” And he said, “No.” And I saw in his eyes, “Andrew was thinking too small.” Stripe’s ambitions were way bigger. Nevertheless, Stripe is building a lot of your software into . . . a lot of what you guys do. The metrics are being built in. They went from being the crappiest metrics out there to now being useful kind of. What happens there?
Josh: Yeah. So that’s interesting. And not a whole lot of fun for us. I think the way we see it is like I guess if anything it makes . . . the positive is that like we’re sort of forced to innovate, not that we wouldn’t have anyways, but like, you know, now Stripe has this like high level set of metrics. Like it’s still not great. We would still say like it’s not even accurate and a lot of it though is like now Stripe has the data that Stripe has but Baremetrics has the data that Stripe has plus we bring in a bunch of external data and let you bring in external data as well.
Andrew: Like what? What do you guys have that they don’t have?
Josh: So stuff around like company like demographic stuff. So you can say like, “Let me see MRR of companies that have more than 25 employees or have raised more than a million dollars in funding.”
Andrew: But I wouldn’t need that as a user, right? What I want to know is how many people . . .
Josh: No, [you would want 00:13:10] . . . for your customer base.
Andrew: Oh, got it. Like tell me what who my customer base is. Stripe isn’t doing that. That’s out of their focus but I could with Baremetrics. So it’s not only how much am I getting paid day to day which Stripe was not very good at to also then you moved on to . . . or you also included how long is somebody with me. Now you’re giving me data about who that someone is and who the group of people are. Got it. And then you add more to it.
Okay. All right. So we’re going to get into like how you compete with them when they’re competing with you and what kind of innovation you bring in. But going back to 2015, you raise more money. You said, “I’m going to put more people on tasks so that we can grow even further.” And then you hired an outsourced CFO. How did you find that outsourced CFO?
Josh: So I have like a private Slack group with other founders and I’ve just asked there. Like, hey, what somebody else is using? And this particular guy was suggested to me and . . .
Andrew: I’ve heard good things about your Slack group. All right. And so you got with this outsourced CFO. I got someone like that. I got him from Toptal. What are you doing with the outsourced CFO that’s helping you?
Josh: Right. So through mid-2015, so for almost two years, I had this sort of pretty rudimentary spreadsheet, just sort of like trying to project future revenue stuff based on the expenses I was inputting, those kind of things. And the problem is, like, I’m not like a finance kind of guy. Like I’m not interested in the spreadsheet stuff. I mean, I built Baremetrics because I hate looking at spreadsheets. So that thing kind of got away from me and ultimately became like very inaccurate. And I was starting to like feel the cracks in it when I decided to reach out. So the outsourced CFO and that’s when he sort of like he surfaced a ton of stuff. Mainly that we were about to run out of money.
Andrew: He looked at it and said you guys are about to run out of money when?
Josh: So we had had an initial sort of consultation thing and he’s like, “Okay, let’s swing back in a few weeks,” and I’ll kind of go generate his little internal spreadsheet of stuff and it’s very cool. But then like later I think like within 24 hours he sent me a note like, “Hey, we need to get on the phone now.” And so we hopped on the call. He’s he said, “You’ve got about six to eight weeks of cash left and then you’re at zero. You have nothing left.” So that’s a problem. You know, especially when you like all of those expenses are really tied up in people.
Andrew: And so what do you do?
Josh: So at that point I had to have a tough conversation with the team. So I think that . . . he and I had a chat on like a Thursday and we have . . . the whole team is remote but we have like a weekly standup video chat on Mondays. So I spent the next like four days or whatever that would be over the weekend just trying to think through, crunch every number possible and think through like what are our scenarios here that could make this work? And so, you know, looked obvious like having to lay off people. I mean, like doing pay cuts, like what expenses can we cut, we ran through all sorts of scenarios. And ultimately figured out that if the whole team took a 15% pay cut and I took a 30% pay cut and then we cut, you know, like really dug in and cut down on sort of extraneous expenses like software that we use and whatnot that we could make it work. So we did that.
Andrew: If you think back, I’m kind of a chicken when it comes to letting people go, kind of meaning very much. Do you feel like maybe you should have let somebody go, that this was an opportunity that if you are the type of person who can make those types of decisions, you would have let people go, not just cut back how much you’re paying people?
Josh: So, I mean, maybe, but the thing is that like at that stage, it’s not like, we had multiples of any role really. Like it’s not like we’ve got like designers and we can let go of a few. You know, it’s like pretty much every person had a pretty crucial role in making it function. So, you know, if people had said, “No, I’m not going to take the 15% pay cut,” then, yeah, we would have had to let some people go, like there’s another option. But, I mean, the team was pretty amazing about it and agreed to take a 15% cut.
Andrew: And were they still working as hard, as passionately as they were before?
Josh: Yeah. I mean, so in the middle of this like so Monday was when I told the team about this and like we’ve been working on a six-month project to basically expand outside of Stripe as a payment processor. And like that Wednesday we were launching it. Like we were all hands on deck anyways to make all this work. And so, yeah, it was everybody just kind of like dug in and did their work.
Andrew: I’ll find out how that went in a moment. But first Jack was listening to us live has a question. By the way, anyone who’s listening to us live, I’d love to hear your questions or just say hi in the chat. I want to make sure that chat is working for you guys. Jack was asking personally, “How many months of emergency money did you have?”
Josh: Yeah, so I’ve been self-employed for the better part . . . at this point, 15 years. When I started Baremetrics is like 10. So like months of like personal emergency fund stuff, maybe a few months. At the same time, like I’ve always me and my wife like are used to the ups and downs of being self-employed to the point where it’s like we were pretty flexible.
Andrew: Your wife can deal with this? I know she’s dealt with this for a long time.
Josh: Sure. Yeah. It’s that she doesn’t really know any different. Like our relationship started in college when I was like doing all of these like random projects. Like the one like real job that I ever had was a couple weeks after we got married I went and got a job for an interactive design firm and seven weeks later I quit.
Andrew: But wait, she’s never had a situation where she said, “Look, Josh, you’re working hard. I need us to save some money. We’ve got . . . ” you have five kids. “I need you to make sure that . . . ” You never had that?
Josh: No, not really. I think it’s just because, again, we started off our entire relationship on this like this is sort of . . . on the idea that my sort of employment is atypical.
Andrew: So what’s in it for her for that? Like why is she okay with this? I saw the cake that she made for you years ago that even had josh.com on it, like celebration of how you have to keep creating these companies. What do you think is in it for her?
Josh: I mean, so she even like worked. So we’ve worked together for a number of years. Like I think she . . . in the same way that like I make a lot of like web technology kind of stuff, she’s also got like this sort of maker bone in her body like she enjoys creating things too and I think like . . . I don’t know. We haven’t known different. That’s like our whole relationship exists around like from a money standpoint is like always been sort of up and down and it’s just been normal.
Andrew: Impressive. All right. I’ll talk about my first sponsor then we’re going to come back and find out what happened when you guys launched that new feature. My first sponsor is Toptal. I usually talk about how Toptal is a great place to find developers. And guys, if you’re listening to me, it’s the best place to find developers and frankly they’re best at that. But I had a similar situation as Josh. I wasn’t sure if we were like maximizing our profit. I wasn’t sure why some months we just weren’t making any freaking money even though I was working like a dog. And so I went to Toptal and said, “You guys have a part time CFO?” And they always get on the phone with you.
And one of the first things they asked me was, “Tell me what you’re looking from a part time CFO.” And I’m glad that they did because it turns out I didn’t really need a part time CFO, I had bookkeepers. I had enough like internal CFO type components. What I was looking for was, as they named it, a profitability advisor. Somebody to say, “Hey, dude,” once a month, get on a call with me and say, “Dude, here’s what you’re not thinking about profits. Here’s where you’re screwing up by spending money where you’re not supposed to. Here’s where you’re not maximizing. Here’s what you’re not talking to Sachit who sells ads here and pushing him a little bit more because this is what’s expected. And here’s what you’re . . . ” all that stuff. What your sponsors are doing with other people.
He started doing all this research into like . . . he even went to like John Lee Dumas. Here’s how John Lee Dumas is doing this thing. Why aren’t you thinking more like that? Like all that stuff. I want him to think outside of my box. He started pushing me and it was incredibly helpful. Immediately he more than paid for himself and then we’ve been on monthly calls where we’re thinking way bigger now, thinking more about long-term where I had a budget last year. We have a budget this year where I know where I’m screwing up and where I know where I’m jumping on opportunities.
And one of the things that we did was I have this site where I promote chatbots because I invest in a couple of chatbot companies. I believe chatbots are a future for business communication with customers. And Jack said, “Well, you’ve got no monthly thing on that. This is a problem.” And we talked it through. And Megan who helped put this thing together, she’s been an advocate of that for a long time too. And using Megan’s creative ability and our team and our audiences’ needs. And Jack is thinking about finances, we were able to put this up in no time flat because it was so important to us.
So if you’re out there and you’re not thinking about your profits and you don’t have somebody from the outside to look at them and give you a different perspective, do what Josh did, get an outside CFO. Do what I did, get an outside . . . I call them profitability advisor. And the way to do it just to go to Toptal. Toptal.com/mixergy. Yes, they have a lot of developers, but they also will help you find a good finance person. MBAs is one of their big categories. And if you go there you can get a bunch of credits and no-risk trial period and all that stuff you can read. If you go to top as in top of your head, tal as in talent. That’s toptal.com/mixergy. Josh, is Mixergy too hard for people to spell? A little bit.
Josh: No. I mean, I don’t know. The R-G part is confusing sometimes.
Andrew: I should have just called it Mix Energy.
Josh: There you go.
Andrew: All right. What happened? What happened when you guys launched this? What was the new feature and then what happened when you launched it?
Josh: Yeah. So what we were doing, again, like the first year and a half, almost two years, we were exclusive to Stripe. So it’s revenue analytics for Stripe but we needed to expand outside of Stripe to have other things. So we expanded to Braintree, Recurly. We were working on like PayPal and all this other stuff. And so that was the feature with us expanding outside of Stripe.
Andrew: Oh, that’s why you went outside of Stripe. And when you did, did that help? Well, how did that impact revenue?
Josh: Yeah. As with most things, it didn’t have as big of an impact as we had hoped but it did help. I mean, certainly. But like if you look at our revenue growth, it’s annoyingly consistent.
Andrew: I noticed that.
Josh: Yeah, it drives me crazy.
Andrew: There’s no big jumps. Anyone can go to demo.baremetrics.com right now and see your revenue. And there aren’t these big jumps.
Josh: No, it drives me insane. But that is what it is. I mean, I should be thankful. It’s like at least it’s not like down a bunch or anything.
Andrew: And so why do you think that didn’t jump up? You now went from just being Stripe to now having all these platforms. I expected it to maybe not be as big a jump for each one because I think Stripe has these passionate people who are on it. Stripe is kind of easier to integrate. Well, why do you think that didn’t work?
Josh: I think it’s one of the things that people have to be searching for it. Like we can’t just all the sudden have every Braintree customer know that we support their platform. And I think a lot of it’s just like Stripe has got so many sort of early adopter types, especially a couple of years ago that they’re always sort of like looking for new things and whereas like people in Braintree might have been on Braintree 10 years prior.
Andrew: They don’t go to Product Hunt? You’re saying, “Oh, they’ve just been on Braintree forever. They just . . . ” Got it.
Josh: They’re not like looking for Braintree analytics or whatever. So we slowly add new customers every month to those platforms but it’s a different type of customer.
Andrew: Michael [Cooney 00:25:43] who’s listening to us live is saying, “Hey, it’s not just Buffer’s data that you can get. If you want Buffer’s revenue, just go to buffer.baremetrics.com. If you want ConvertKit’s revenue, go to convertkit.baremetrics.com and you’ll see it.” How much has that helped you guys grow, companies like ConvertKit promoting their revenue?
Josh: I think it’s one of our major sort of referrals for new customers because it’s a thing that’s referenced a lot, you know, like Buffer’s constantly sharing that dashboard. ConvertKit is constantly sharing it, right? So like it’s just this very consistent since we started doing this little partnerships.
Andrew: But it’s not huge. It’s almost like branding, am I right?
Josh: Yeah, totally. I mean, like, you know, people will say like go look at ConvertKit’s Baremetrics dashboard. You know, like it’s just sort of a thing that people reference a lot and for me, I like that that happens.
Andrew: But it’s not a huge funnel. I’m wondering where you get the majority of your customers. What’s your thing?
Josh: Content is probably the biggest thing for us, which is a slow thing. Like we don’t have anything that we just pump in, you know, 100 bucks and we get 1,000 bucks back, right? Like it’s all just this everything piles up and adds up and this is sort of cumulative effect over time.
Andrew: Where’s that? Baremetrics.com/blog? That’s where the majority of people come in?
Josh: Mm-hmm.
Andrew: “The importance of founder-generated content.” That’s one of the blog posts. “How Dollar Flight Club achieved 76.5% trial-to-paid conversion rate.” “How to use customer feedback to fuel your business growth.” That’s what we talked about last time. That’s it. You’re just writing for writers like you, for entrepreneurs like you.
Josh: Right.
Andrew: What then allowed you to improve your sales? It was you reduce your expenses. You just kept growing a little bit at a time. How were you able to finally pay for your people?
Josh: It took about six to eight months later. We had really, again, like you mentioned from the graph. But there was no just big inflection where all of a sudden we’re like, “Hey, we’re making massive amounts of money that we were not before.” It was just that like incremental. We kept the same growth and we were already . . . Like we were burning money but like not . . . we were able to basically become profitable by just cutting salaries. And so we didn’t have that far to go to get profitable with everybody getting everybody back up to their full salary as well. So within eight months later we were [not 00:28:23] strong enough.
Andrew: Eight months?
Josh: Yeah. And everybody is back up to full salaries and we’re profitable.
Andrew: Did people act like the they were doing you a favor? Which they were. Was there this awkward situation?
Josh: No. So like the day that I had that conversation with the team, you know, everybody was certain within their right to be angry. And you know, like, let me have it for having dropped the ball on managing all that. But nobody did. I had a few people like sort of take the rest of the day off just to kind of figure out how this . . .
Andrew: How it means for them. Yeah.
Josh: Right. It was like after that it was back to business as usual and with me doing I think . . . I did either weekly or biweekly updates on where we were with finances. Like I kept everybody in the loop. I had already tried to keep people in the loop for the most part. But now at that point I became very intentional about like here’s exactly where we are and here’s how close we are to you getting back to full salary. So we got there.
Andrew: I wonder what Courtland would have asked. I love Courtland’s interviews. I feel like some people give him a hard time online by comparing them to me but I find that he finds that nugget that’s really important for his audience. He’s so laser connected with these developer, entrepreneur people. I’ll bring them up in a little bit once we’re done here.
Josh: Courtland [inaudible 00:29:44].
Andrew: People are saying I’m much more confrontational. There’s nothing to confront Josh about. The fact is that he’s just good with everything. You are right, I am more confrontational. I feel like I do lose a little bit of friends over it, because people feel like I’m a nice guy. We’re friends. “But, Andrew, can you just edit that one thing out?”
But if I do, it tears a heart out of all this. So last time you were on. The one thing that I said to you was getting data from Baremetrics gives me anxiety. It gives me anxiety to see how much money I’m like churning month after month, solve that. And you at the time said, “No, we don’t want to do that.” And I felt like maybe you were pulling a Steve Jobs who when Steve Jobs was asked, “Can you finally do video on the iPad?” He said, “No, nobody would want to see video on small screen.” Meanwhile, he was thinking about and working on it. Were you at the time in fact thinking about doing that, helping people recover some of that lost churn?
Josh: Yes.
Andrew: You were?
Josh: We were privately building it at the time.
Andrew: You were?
Josh: Yeah. So we’ve had a couple of iterations on that. So like the very first thing we ever did was just called dunning which is like the industry term for sending emails to collect on [failing 00:30:51] revenue. And we released that. It was like concluded, I think it’s probably sometime in late maybe sometime in 2015.
Andrew: This is for people who their credit card doesn’t work. Here’s a feature that I didn’t know, Stripe doesn’t talk about this. But if you contact Stripe and say, “If somebody switches their credit card, can you just auto switch their payment with me to the new credit card?” Stripe will do that for pennies. I just didn’t know that.
Josh: They do it automatically.
Andrew: They do it automatically, but there’s more to it. There’s some people whose card just will continue to fail because they’ve switched to a different card processor, from credit card, for example, right? And so that’s what you decided you wanted to do. I was glad about that because that’s an awkward thing for a seller to do. Someone comes in, they buy from you and you say, “Hey, you should update your credit card. You’ve had an issue here. You’ve got to pay me what you owe.” How did you know that that was going to be an issue? What was your process for understanding it?
Josh: Well, for subscription revenue, it’s always an issue, right? Like, if you have an e-commerce store, their credit card either works or it doesn’t and they either buy the thing or they don’t. Where with subscription revenue, you’re sort of like there’s a certain level of trust that they put in their credit card permission. You hope you can bill it. And a lot of times, you can’t. Not for like nefarious reasons. But, I mean, they’ve lost their card or the person at the company left the company and so their card doesn’t work anymore and all that kind of stuff. And it doesn’t make sense. You can’t scale you manually reaching out to somebody and you also won’t do it as efficiently if you do it manually. So we . . .
Andrew: But just from your phone calls, I remember when I signed up to Baremetrics for the first time, there was, “Hey, Andrew, let’s get on the call. I’ll help you with your profitability?” Was that where you got it by talking to customers like that?
Josh: It was probably more from us needing it. That’s where a lot of stuff comes from.
Andrew: For yourself?
Josh: Yes.
Andrew: Okay, because you’re also on a subscription payment.
Josh: Right. And we have for us, a lot of our customers are paying many hundreds, if not thousands of dollars a month. And like that stuff adds-up really quick for how much money could be lost to failing cards. So yeah, we built that and we built like a second iteration where it’s not just emails, it’s also in-app stuff. So, you know, this in-app thing that will block access to your app if the cards fail after a certain amount of time, or let’s say . . .
Andrew: Instead of building all that.
Josh: Letting them update their card right inside your product, like all that kind of stuff.
Andrew: And what are you charging for that? I interrupted.
Josh: Well, so initially that very first version was just part of like our $250 a month plus plan and then when we released the second version, we made it an add-on that goes anywhere from like I think 25 bucks a month up to I think a couple thousand depending on how much MRR you’ve got.
Andrew: Got it. So it’s not how much you recover, it’s how much you earn.
Josh: Right. So and the reason to not do it based on the amount that we recover for you is that like it’s a little . . . I find that area to be very gray. We have a competitor that does it that way. And I’ve had way too many people feel like they were getting like something didn’t add up, which like in those cases, it works out better for the company to like fudge your numbers a little bit to recover more or to claim responsibility for recovering something.
Andrew: Oh, really?
Josh: Because they make more money. Whereas like whatever recover is sort of irrelevant. It’s just based on the size of your business. So we want to recover as much as possible, right, because you make more money, but we’re not going to like charge you a percentage of them.
Andrew: Kelly, I see. I’m about to talk about ActiveCampaign. Can I unmute you? “Yes.” She says yes. Okay. Second sponsor is a company called ActiveCampaign. Let me unmute Kelly since she uses them. Kelly feel free . . . actually, you can only unmute yourself. I can’t unmute you. I was talking about ActiveCampaign as a great email marketing platform because it does all kinds of things that will help you target people better. Kelly, what’s an example of one feature that . . . since you’re an ActiveCampaign user, what’s an example of one feature that we should be aware of?
Kelly: I actually have it open right now because I’m working on a client’s project in it. And that automation is by far the most helpful thing.
Andrew: What do you mean?
Kelly: So you can tag people. So ActiveCampaign is a tag-based program and you can tag people according to different things that they do, and then send them through automations to go down different paths, kind of, choose your own adventure type thing.
Andrew: What’s an example of how you use that with one of your clients?
Kelly: So what I’m working on right now actually is I created a membership platform for this client. And we are . . . when someone purchases from them, they get a tag saying that they get access to the course and then they get different tags for different modules that they get access to. And then it sends out an email that includes their login information and then they can go and log into the course that they purchased.
Andrew: Yep. And you can go even further with it and say, “Look, if somebody hasn’t watched one of the modules, you . . . ” if they watch a module, you tag them. If they don’t have that tag, then you can send an email saying, “Hey, you didn’t watch this module. You should click here and go take a look and do a follow up sequences.” Great example. And that’s something you could do on ActiveCampaign. Kelly Garrett, what’s the website where people can find out about you?
Kelly: Ekcetera.com. Ekcetera.com.
Andrew: Cool, thanks. And for anyone else who wants to go check them out. Go check out ActiveCampaign. They have this special URL where they’re going to let you try their software for free. If you decide to sign up, they’ll give you a second month free. If you want help one on one, you decide that you can’t afford Kelly Garrett and you just want some help from the company itself. They’ll give you two free consultations with their experts and they’ll even migrate you if you’re with a different email provider.
All you have to do is go to activecampaign.com/mixergy. You’ll get all that good stuff. And I love that they’ve got actual professionals that they’ve trained that they help get up to speed with this. So you can hire Kelly to help build this out even further. Activecampaign.com/mixergy to get all that good stuff. Josh, I wonder if you’re really good with email automation and any of that stuff or do you just keep it simple?
Josh: I now try to not think about it. We’ve had very complex sort of email marketing stuff in the past to the point that it got really out of hand. And now we hired a head of growth back in December who’s now like we’ve like stripped it down to the basics and are sort of like slowly building back up on that.
Andrew: I chatted with him. What’s his name?
Josh: His name is Corey.
Andrew: Corey. Let’s see if Cory know. We spoke . . . oh, Corey Haines?
Josh: That’s it.
Andrew: Yeah, Corey. Corey, I’m going to bring you up later on. I’m just going to like give you the talking power. I’d love you to come on after and just give me some insight into what it’s like to work with Josh. When nothing like this is working, what do you do like to channel your energy within the company?
Josh: So at my core, I’m a product guy which can sometimes, it’s like to a fault in that in my head building something fixes things, when in reality a lot of time that’s not what the business needs. So like hiring . . . you know, we mentioned Corey here. Hiring Corey to do our growth stuff was a major necessity because my brain just doesn’t work, doesn’t think in those terms. And so I think like that’s to the businesses detriment because that’s not how I would approach that.
Andrew: You don’t think about marketing to the degree that he does?
Josh: Correct. And so not that I don’t value it. It’s just I don’t get enjoyment out of digging into the sort of technical like, you know, the testing of all these different ideas and stuff. Like it doesn’t make me want to show up for work every day. So that was like me needing to hand that off to somebody else.
Andrew: So where you do like spending your time is creating stuff. Let’s talk about this thing that you created for investors and the problem that you had with it. I feel like you analyze investors, right? And when I talked to Nathan Latka, and he said, “I’m going to create all this data and I’m going to sell it to investors. And I’m making money because I’m selling it to investors.” Something didn’t ring true for me. And I think your experience feels more like what I expected. Let’s talk about where the idea came from first and then what you built and then talk about what happened.
Josh: Yep. So since I started Baremetrics years ago, there’s always been like me sort of playing middleman between people of the companies and then people who are interested in those companies. So whether that’s investors or buyers or, you know, they want access to companies. And so a company would say like, “Hey, do you know anybody that’s interested in investing in a company like us or do you know of somebody I could sell my company to?” So that’s always been the thing that’s existed for us. So we decided to . . . like what if we created this sort of marketplace to have this like centralized location for that stuff to happen and then potentially monetize it? And that was the sort of impetus for what we launched called Intros. So we started working on that middle of last year.
Andrew: And you said in your blog posts that you kind of faked your launch. You went to Product Hunt, which is where a lot of the people I’m interviewing today seem to have gotten their first customers. And then on Product Hunt, you announced it. And then what did you have at the time when you launch it on Product Hunt?
Josh: We had the ability for companies to opt in. So which was essentially a little toggle switch within their Baremetrics account and they could add a little bit extra info and that was it. So there was nothing for anybody to really see as far as dashboards or lists of companies or anything like that. But we needed more companies to come on board. And then we also needed to start getting some investors interested in the idea so that I could start chatting with them before launch.
Andrew: And then how did you get investors to raise their hands and say they were interested?
Josh: I mean, the Product Hunt thing kicked started a lot of that. And then, you know, our own email list happens to have a lot of investors on it. And so we just word of mouth really.
Andrew: So you reached out to them and when you had conversations with investors what happened?
Josh: So, initially, it’s all good. So, you know, show, doing demos, videos, like screen sharing our mockups of things. Showing here’s what you would have access to. It’s like they’re interactive mockups. You click through them and see what it feels like and all that. And the feedback there was like universally positive. Everybody was, “Yes, it would be great. I would love to use something like this. You know, here’s a few extra things that would be great to have.” But, you know, and then I would mention the price point. So we’re planning on 500 bucks a month. And it was like, “Yeah, that’s fine. That’d be great.” And nobody flinched at that.
Andrew: Great. And then when you started charging, what happened?
Josh: I didn’t start charging because nobody would pay for it.
Andrew: Oh, when you said nobody flinched, they would just say, “It’s great,” but they wouldn’t pay for it.
Josh: Right.
Andrew: Really?
Josh: Yeah.
Andrew: Not a single person?
Josh: Not a $1 was made.
Andrew: Whoa, yeah.
Josh: So that’s not fun but . . .
Andrew: Let’s analyze why.
Josh: Sure.
Andrew: Why do you think?
Josh: The biggest thing I think is . . . okay. So there’s this disconnect between the feedback of like, “This is great. Yes, we would love this. Like this would help us make more investments, make better investments.” And then when you ask them to pay, they won’t. So like why? So I think one, you’ve got the VC sort of standard operating model is for them to take a look at something. You think people are like from the prospective of somebody pitching an investor. The investor wants to make everything sound great. They want the person on the other end to feel like they’re into the thing and then the investor doesn’t . . . They have no reason to . . . They don’t have to follow up with that. They don’t have any skin in the game yet. So they can say everything’s great. They can add all the feedback in the world and they’re used to doing that. But when it came down to it, them parting ways with money is actually really difficult. And they don’t actually have that much money to spend.
Andrew: Yeah, why not?
Josh: Because the money that they’ve got . . . so, say, they make a $10 million investment. That wasn’t $10 million that they had sitting in a bank account that they could spend on a tool.
Andrew: There’s only the management fees that they can use on tools. But they don’t even take back the money from their like winnings and use that to invest in stuff.
Josh: Right. Like from a business model perspective, there aren’t that many VCs that are making boatloads of money from like being . . . as far as like freely expendable money. Anything like some like a junior associate or something, they might have, say, a $500 max on their credit card a month that they can use. And that includes like, they got to go take people out to dinner and all that stuff. So like at the end of the day, they don’t have that much money to spend on this kind of stuff.
Andrew: I found that too. When I started doing Mixergy as events, I remember people would tell me, “Andrew, you should get investors to sponsor the events because then they get access to all these people.” And a good friend of mine actually happened to work for a VC firm as their PR person. She said, “These guys don’t spend money on anything. That’s just not how it works. They don’t even spend money on me really. What they do is they kind of partner up with me and the other companies I invest to pay for me so that they’re all sharing my research.” And I realized, “Whoa, these guys really don’t.” And you don’t see a lot of investors buying stuff online . . .
Josh: That’s right.
Andrew: . . . and nothing like that, right?
Josh: Yep.
Andrew: What would you do differently? Because I know you’re going to launch more products. What’s the new approach?
Josh: I don’t know that we will change our approach any. I think we’ve used this sort of approach in the past where it’s, let’s design a mockup of it. And then like get in front of potential customers or even current customers of it it’s like an add-on or something like that. And that generally works really well for us. In this particular case, it was here is this entirely new market that we’ve not worked with before and at the end of the day like there was like . . . I think, anytime you’re building a product, like there’s an inherit risk where something may sound good in theory but like when credit comes into the picture, it’s kind of a gamble. And it will be until you have a point where you will charge for it.
And, I mean, I think one thing I was really proud of is like we stripped it down a lot to get to the very first version to launch where we could accept a credit card because we didn’t want to just keep building stuff. You know, like us adding a couple extra features was not going to like tip somebody over from not being able to pay to wanting to pay.
Andrew: And from what I saw what you did really well was you kept it simple in the launch, like you said people can just flip a switch and say, “Share my data anonymously with investors and then let me decide if I want to talk to them.” And then what you created for investors was, “Here’s an agriculture company,” or I don’t know what, a B2B project management software company that’s earning this much money. If you want an intro hit this button and then if they accept it, you get it right. So that’s all you built. That’s not that intense.
Josh: No. No, from a coding perspective we did not spend a whole lot of time on it. So I was happy with the amount of time we put in. Anytime we were like creating something new in some sort of new category, there’s going to be some risk and like some of that stuff going to work, some of it it’s not and that’s part it.
Andrew: Okay. So why don’t we close out with this question then I’m going to bring up Corey once we’re done with the interview. I’m on a site where I’ve got a list of all the projects that you created over the years. Anyone can see it at joshpigford.com/projects. I see here 57 lines of different products including the new wood laser etch thing that you just launched. I want to know like what did you learn from all those that allowed you to create Baremetrics? That allowed you to be a better entrepreneur, one who can generate profits more because of this experience?
Josh: So I think all this stuff leading up to Baremetrics . . . Baremetrics would not have happened had the prior, whatever, 50 or something items not existed. So every one of those is sort of this like stepping stone to the next thing. And some of them are like directly . . . You can follow the line directly from one thing to another to Baremetrics. I think from what I learned it was just all of the things that come with like building products, like trial and error. It’s, you know, 10 plus years of trying things and then having that as knowledge when the [doors open 00:48:00].
Andrew: Here’s one thing that always stood out for me with you, PopSurvey. You wished when you created your survey site, which looked beautiful, you wished from what I remember that you talked to people first. Talked to more customers, more users as fast as possible, right? And you’re nodding. And that’s why at Baremetrics you got on a call with people so fast. I’m looking to see what’s another one that was especially painful that would have forced you to learn something else.
Josh: So like preceding Baremetrics you mean?
Andrew: Yeah.
Josh: Yeah. So I think sometimes I like sift through that list and, “What could I have done different that would have made that thing work?” And like one of those, I think, like, so there’s just one called TechUniversity that’s on there, which is like . . . we were producing like lots of how-to videos. And to me that’s like one of those things that could have if I had, like, the foresight, you know, like online education has like blown up, right? And we were sort of . . .
I felt like we had the talent and the people to make something like that. I mean, you think of like Khan Academy or even our Code Academy or like . . . there’s hundreds of them at this point, but back in the, like, late 2008, 2009, and 2010 there were a lot fewer of those. And that’s one of the things I felt like we had the knowledge and we certainly. I had built the platform to be able to do that really well. And so it’s one of those, like, I felt like a lot of times I don’t have enough foresight into a certain, you know, industry or something like that where it’s like, “Oh, man, if I had just, like, stuck with it then who knows?” But I tried. I don’t think a whole lot about that stuff.
Andrew: I see that it was part of Gigaom network. How was that?
Josh: Yeah. So I had sort of a thing called the Apple Blog. It’s just like a blog about Apple stuff. And then it got acquired by Gigaom. And part of that was, like, I spun off a bit there just saying like, “Hey, let me build this thing”
Andrew: Got it. So it was owned by Gigaom but it was your own thing to run on the side?
Josh: Yeah. It was a sort of siloed business.
Andrew: Okay. All right for anyone who wants to go check out your website, I highly recommend they don’t go to baremetrics.com but instead go to demo.baremetrics.com because I find it just interacting with the product really lets you understand why it’s so useful. I’m telling you before Baremetrics for years VCs would come on here and entrepreneurs would come on here at Mixergy and say, “You need to know where you’re . . . what your lifetime value of a customer is, you need to do cohort analysis.” When I emailed them and ask them, like, “How do I do it?” Or invite them to do a course on Mixergy about how to do it. Their process was so freaking convoluted that nobody was going to do it.
It involved a bunch of spreadsheets. I remember even giving somebody access in my audience who said, “I could do it in a spreadsheet for you.” I give them access to all my data. He tried to put it in a spreadsheet and just made no sense with the result. And there’s no way to just go through and adjust and see it. And so if you look at Baremetrics in that one screenshot, I can’t help but scroll through it, you’re going to exactly understand how this works and why this makes sense.
If you’re out there and you’re listening, go check them out at demo.baremetrics.com. I want to thank my sponsors who make this interview happen. By the way, Josh, stick around we’re doing this live here today. So I’m going to bring on Corey who you work with after we’re closed, after we’re done with this interview. But if you forgot my two sponsors are if you’re hiring developers, check out toptal.com/mixergy. If you’re doing email marketing automation right, do what Kelly did and go sign up for ActiveCampaign. Check them out at activecampaign.com/mixergy.
And finally, I want to always close this out by saying I’m running marathons all over the world this year and interviewing entrepreneurs all over the planet as I do it. Follow along at runwithandrew.com. Cool, thanks. Bye, everyone, except for Josh.
