Andrew: Hey, they’re 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 as a guy I’ve been really looking forward to talking with today. Hit actually for a long time. We’ve set this up a while back and I’m so glad that we made this work.
Baird, his name is Baird Hall, and the dude has started several companies, all bootstrap. Every part of it makes sense, and here’s why I’m excited about talking to you, Barrett. A lot of the people that I’ve gotten to interview lately are kind. . I don’t know. It makes me feel almost like we’re in late stage tech startup where they’ve raised a boatload of money.
They don’t really have much at stake. They’ve created companies that are so massive from day one that you can’t even get your hands around it, let alone really imagine yourself building it. And it takes all the fantasy and imagination out of it, and it makes the whole industry feel a lot like we are in.
I don’t know, private equity. The more money you have, the bigger your customers, the more likely you are to succeed. And also the more likely you are to be less interesting to me and less, I don’t know, revolutionary and more like, let’s move the ball a little bit forward, more evolutionary. And so Baird, what I like about you is you’ve started several companies.
We’re gonna talk about that one that didn’t do so well. Um, what is it called? talk.io. I think it was. No, you talk.io with the letter you, but we’re also gonna talk about the companies that kind of sprung out of it. You talk was kind of like a clubhouse for sports people you created before. A clubhouse virtually had no money in it.
I’m gonna keep saying virtually because if every time I say, What did you bootstrap? And you pause for a moment, you think we’d have to be a hundred percent accurate, we actually put in a thousand dollars each. A thousand dollars each is nothing, first of all. And second, that still is your, your money. You are and your co-founder.
So it’s bootstrapped. Anyway, so you did that and then from there, You wanted to promote your, your audio and so you created Wave, which basically takes Longform audio clips out, small pieces of it and makes it more shareable because there’s an image and those little bars, the progress bars that people like on social.
Anyway, you created that. You sold it to Com Capital. That’s where I’d like to focus today, but I should say that you’ve gone on afterwards to say, you know, churn for companies like Wave where you depend on people who pay monthly churn is a problem. I’m gonna create turnkey that basically helps reduce churn.
And as a follow up to wave, you said we need a way to actually have subtitles. Cause I don’t think Wave showed subtitles. It just allowed you to allowed creators like me to share clips of our audio with images. And you said, you know, Subtitles are a big thing cuz a lot of people like to watch without their audio on.
I’m gonna create z subtitle with a z as a way of, uh, enable them to create subtitles. We’re gonna talk about that, the revenue behind it, the business, what happened, what, what worked, what didn’t work. Anyway, all the stuff that you guys are used to expecting from me, we’re gonna do it thanks to two companies that you expect that I’m gonna be talking about because I’ve been talking about them for a long time.
The first, so if you’re hiring developers to build something like what Bear did is, uh, it’s a company called. lemon.io. And if you go to lemon.io/mixergy, you can hire developers from there who are phenomenal. And the second, when you’re ready to do email marketing and you should always be ready to do email marketing, I want you to go to send in blue.com/mixergy bef.
I’ll talk about those later. First. Baed. Good have you here.
Baird: Andrew. Thanks for having me. Long time listener. First time caller. I’ve been uh, following your podcast for years since. I mean, you were definitely around when I started getting interested in, um, in this space. So thanks for having me
Andrew: I’m shot out of a can about this. I’ve gotta calm myself down whenever I get super excited about a guest. Will you talk about what you sold way for, you put in a thousand dollars each, you and your co-founder. What did you get out of it? What’s the exit?
Baird: Um, it was seven figure multiple. Um, we, I think we can say kind of loaded to multiple seven figures. Uh, we scaled the business, we started it in 2016 and, uh, we really time.
Andrew: Wait, let me pause there. Did you each get to put at least a million dollars in your bank?
Baird: Um, The majority shareholders. Yes. Yeah.
Andrew: So yeah, it’s you and your co-founder with the majority shareholders. Even after taxes, you ended up with a million dollars so that you can go and build the next
Baird: Uh, yeah. CL around that ballpark.
Andrew: Okay. All right. So I, I wanna walk through how the whole thing happened and then get into subtitle, which. Is you have a free version on subtitle, so I think a lot of people will get to play with it immediately after this, and then of course if they want, they can expand beyond it. But let’s go back. The whole idea for Wave started when you created, You Talk back in 2 20 16.
Take me through what happened there for a moment, just as a backstory to wave this thing that became the big hit for you.
Baird: So I was working for a, a local AC actually bootstrap, um, software company that was kind of a partner company of a. Public software company here and um, I was a sales engineer and I was on calls all day. And the one break that I got was to run the launch for an hour and I’d listened to sports radio. I was a big sports radio fan and I’ve always had this.
At the time, I didn’t know why I wanted to start my own thing, but I’ve always had this kind of, I’m sure most of your listeners can resonate with just that gut feeling that. You wanna break off and do your own thing at some point. Um, and so my first idea was, um, a, an app that allowed you to record a minute to two minutes of, uh, sports talk radio responses and actually send it back to the radio station where other listeners can hear your responses.
Kind of like a virtual social call in, um, app for, uh, radio stations. And I convinced my wife’s, uh, best friend’s husband. Nick, who’s been my co-founder for all these years and convinced him to help me build it, and the next two years were a total fun disaster. We made every mistake in the, we made every mistake in the book.
We built way too much product. We didn’t validate any business models, but we had a blast. We got a lot of radio stations on board. We had a lot of podcasters that used it to interact with their audience. Um, it was kind of like, it was kinda. Imagine like setting up a clubhouse for your podcast where your listeners can join in and drop audio messages.
That was kind of the vision, but this was 2015 and investors wanted no part of this, and it was just, we were way, way, way too early.
Andrew: You were doing this for about a year. I guess you were living off savings.
Baird: Yeah, I left my company and I spent a whole year just on savings, uh, and my wife, um, and my wife’s salary. Uh, so it was like a year and a half. And then Nick, my co-founder, he, he was a, uh, he passed the bar, went to law school, and then decided not to go. He, he, he can tell you all about that sometime. Um, and yeah, so he had.
He, he’s got a really, uh, impressive story. But yeah, so we were both kind of running on fumes after a year and a half trying to get this thing off the ground, trying to get investments and, uh, we just never figured out the business side of it. But, uh, luckily while we were kind of winding that business down and we, we sold some of the tech, uh, for parts to different, different groups.
Um, so I’d say we sold it for dimes on the dollar for all the time and money we spent.
Andrew: What do you mean? Like what’s a part that a different company would
Baird: found a lot.
Andrew: they couldn’t build
Baird: Uh, we found a live streaming company that really wanted to support Ayq audio within their platform. Um, and we had a pretty. We built 80% of what they were gonna do. And so we sold it to them. Uh, we sold all the tech, we kept the brand, which is what became Wave. But we sold all of the IP from the tech standpoint and um, with the services contract to basically set up exactly what we did in their environment.
Um
Andrew: Got it. Because they can’t just take this piece of software and put it in like a Lego
Baird: We had to actually
Andrew: you’ve already built it, they’re basically paying you to rebuild it or connect it back into what they’ve got. Got it. Okay. Meanwhile, you needed to promote these, What were you trying to promote actually was, were you trying to promote the shows that were
Baird: We were,
Andrew: or were
Baird: no, we were promoting the listeners of those shows that were submitting audio content to their, the shows channel. So we had all these just really funny, awesome, exciting listeners that were, you know, telling their story or given their takes. Um, but we, we realize, Well, maybe if we take these clips from our, um, social app and put it on social media like Instagram or Facebook, we can start generating some interest and get those, um, get people to come join the conversation.
That was really the strategy, so I’m not kidding. It was a weekend. Nick locked himself in a room and he built this MVP of this tool that takes on audio clip, combines it with images and animations and wave form. . It was really, really manual the way that we did it. Um, and we started promoting all these clips from our social app, and nobody cared except for some podcasters that would see it.
And they would say like, I don’t understand your app at all, but how’d you do that? How’d you take audio and put it on social media? And like, the light, light bulb went off for like, Oh my gosh, we built something. We built a marketing tool. Some people want. And uh, that’s when we started making the shift, um, and started building kind of the first MVP version of Wave and getting our first customers on board with that.
Andrew: The thing that’s interesting about that period is that you knew to take it and make it its own brand. Instead of saying, this is just another part, we want everybody to come to this thing that we built. We have this vision. This is a small side thing. We’ll use it to bring people back to this bigger vision.
Why did you decide to make it its own, uh, separate brand and give it its own separate
Baird: Well, we were, we were spent for the most part from uh, both a money and an emotional standpoint. Um, cuz it had been really, had been two years, it’d been one year full time, like, left our jobs. Um, and we had actually created this wave brand that we obviously wasn’t gonna work for this social platform, but, We really liked the colors and the logo and the name and all these things.
So we decided, like, once we sold the tech, we said, Well, we’re gonna keep the brand. They didn’t want it anyway. Uh, and decided to just use that to kind of become the new brand of this marketing tool that we were gonna release.
Andrew: Because from the beginning you made this feature into a tool that had, its its own identity, its own website and everything. I see. Got it. So basically you talk had people submitting their questions and their comments for radio and podcasters. Wave would take some of those and then create social media out of it that was promoting or just being promoted through wave.
Got it. And so it was a natural break. Got it. And that became the winner. And in the beginning I went back to internet archive. You had like a free version of it where people can try one design and then it went up from there, 10, 18, $30. Um, with funny names like a alpha, beta
Baird: Yeah, we were playing on the radio WA radio wave, um,
Andrew: Ah, that’s what that is.
Okay. All right. And so then it seems like one way that you got early customers was by having people see what Wave was promoting and saying, I want that too. And so you started reaching out to them. Do you remember the first customer you got?
Baird: Yeah, it was actually a local podcast. It was a local business, um, that I had met at a startup net networking event that had just started a podcast. And they were really struggling to get listeners and I said, Hey, I’ve actually, we just built this weird little thing for sharing audio. Do you wanna try it?
And they were all on board and basically they, they signed up for $10 a month and I was the one that actually used it for ’em. So like, that was kind of the first way to test out our first customer. And then we. We actually just, I, I, I got our first 50 to 75 customers using cold email. Nick built this little scraping tool for me that I would go on Twitter, I would find somebody that was sharing an episode image of their podcast, and then, um, I could take, he built this tool where I could take the link, go to this scraping tool and pull their RSS feed and grab their email.
And I just sent ’em an email that says, Hey, I saw you’re promoting your podcast on social media, and you posted an image. Have you ever thought about posting an actual. And if they, if they bid it, that it was like the door was open for me and I would say, well, like, hey, we just built this thing. It was a really great lead in.
People would respond and say, I didn’t know that was an option. Um, so the first 50 to 75 customers were. Um, were cold email, kind of cold sales, which is really painful when it’s $10 a month. I think it was actually like seven or nine to start, so that was painful. And then, um, we started getting some word of mouth referrals from podcasters that would see that.
And kind of going back to the magic of wave and subtitle, really the core of it has been helping. Create something they’re proud of that other people on social media ask them how they did it. And that has been our growth engine over all the years, is building really awesome eye-catching video features for whether you’re sharing audio on social media or video.
Um, and. And giving something that users are proud of. So that became like an early focus for us, and the more that users were sharing their content, the more other podcasters would see it and be like, Oh, I need to do this so I can stand out, but I want it to look a little bit differently. Um, so that’s kind of how we, I mean, that was, I, I, I’m taking a probably a year and a half of learnings, um, and jamming it into one little sentence, but that’s kind of the origin story.
Andrew: the first version of it, it had an audio wave V image, or like this, this moving audio wave on the picture was a picture that they get to upload themselves. It was an audio wave file that was moving. I don’t think the first audio wave file though was really in sync with the audio was just like an eye catchy movement.
Baird: It was, but early on they were, they were, um, kind of. Basic animations that most people were using were so bad that they didn’t look like they were attached. And that was something that, there were some other competitors that were doing this at the time, and I think we were the first ones to make those animations look really good and perform it as the person was talking.
Um, which is something that separated us early on. Um,
Andrew: How did you do that?
Baird: We used, uh, from the technical side, it’s a lot of ffm, peg, um, a lot of node js behind the scenes. I’m not the engineer, but, um, my, my, uh, Nick really just dove in and became an absolute expert on, um,
Andrew: Nick, the lawyer is the guy who started coding this stuff for
Baird: Yep. And just taught himself video, you know, video generation on the web, which in 2015 was pretty early back, you know, there, there weren’t a lot of video creative web apps at that point.
Um, so we were definitely really early on. And then once, um, You know, from the technical standpoint, once the, uh, serverless architecture from AWS came out and we learned how to use serverless, cuz it was always bottleneck from a performance standpoint, trying to run these big ffn peg services within your web browser.
So once we found the serverless architecture, uh, again, I’m not the technical expert, but I remember like once we got that working, we could really start moving, creating new types of animations, doing captions, really perform it really. And, um, it was kind of, we were kind of, I, I think one of the first ones to kind of hit on, um, both of those front.
Andrew: Okay. I should say anyone who needs a great developer, now that you can see the power of a great developer, someone who can figure things out, solve problems, and be creative, there’s a place where you can go hire those people. lemon.io. They specialize in them. Let them match you with the right person. Let them blow your mind.
In fact, because they get them from Eastern Europe, the prices that you’re going to pay for these amazing developers is lower than what you’d pay if you went elsewhere. Great developers, great price, fantastic people who will make sure to match you up. All you have to do is. Not just lemon.io, but use my URL where they’ll give you an even bigger discount on their already low prices and they’ll know that, that you’re a friend of mine lemon.io/mixergy.
Well, not a friend, a listener, but they’ll take care cuz the founder is a friend of mine, lemon.io/mixergy. I read this, the group, this great article from com, The com cap, capital, excuse me, com capital, the company that bought your business, they said that a year later, like the, the first year, I think you hit a thousand dollars monthly recurring revenue.
A year later you were 10,000 recurring revenue. That sounds like a good growth, but 10,000 monthly recurring revenue for two people means 60,000 a person, and that doesn’t even take into account any expenses. You were still living off of your savings, or did you go into credit cards at that
Baird: No, we started consulting on the side. There was a local group, um, a, a dev product shop here locally that we knew. And, um, Nick actually did engineering work for him, and I jumped on board doing marketing, branding, project management. So we’d spend, we would spend our mornings working on our company and then we would spend afternoons contracting, um, and working with clients.
And so that paid the bills. For, I guess that was probably the next year and a half or so as we were building wave. Um, I mean when we started this thing, we were literally, our goal was to pay our, like, to have a passive income tool that could pay our mortgages. And then once we hit, I remember 12 K being an inflection point where I thought it was never gonna grow beyond that, almost quit and then almost quit at 20 k again to where we’re still not after expenses.
Not really, like, we’re not hitting market rate salaries.
Andrew: What got you to each of those milestones, and then what got you past them?
Baird: Um, let’s see. Our first big milestone was building a drag and drop interface for allowing users to design. Their waves, as we would call ’em, however they wanted. That was again, kind of going back to that learning that our customers were creatives that wanted to stand out and look like creatives on social media.
So we built this drag and drop editor. That was a huge effort and um, uh, we actually launched that. I was. Traveling and it just, it was one of those things where you launched it and it just hit, and users started coming back. We had new users signing up and then people were telling other people about it.
And that’s when I, I think that was about probably like the 1214 k Mr. Mark. And that’s what really took us to 20 and up to 30. Um, and
Andrew: And, and part of the way you got to that was anyone who used the free version was also logoed with waves so that they were basically promoting you for
Baird: Yep. Yeah, we’ve always had a free tier. Same with subtitle. There’s just a free tier where we can sign up and use it, um, to a certain degree with, um, a, a, you know, like a made by wave or made by subtitle logo on it. It kind of acts as a free trial, but then there are some users that they would rather, you know, just have the logo and share it.
And then that kind of encourages, uh, inbound growth for. It allows us to keep our prices low, um, and go for high volume with freemium inbound model and, uh, really reach a wide, wider audience and converting, you know, really the only seven to 10% of customers that you know want, want to have their custom branding set up or they want to have premium animations and kind of ha have a higher level of, of.
Andrew: One of the things that you did throughout was you were on Indie Hackers and you just kept updating the community. So there’s a post from May, May 1st, 2017, 1000 monthly recurring revenue. It took six months to hit a thousand, uh, six months. There were times that I wanted to quit, but each month showed a little bit of growth.
Then, uh, a year later, April 1st, 2018, almost a year later, we hit 10,000 monthly recurring revenue. Slow and steady wins the Bootstrap race then, and this is largely word of mouth. You still reaching out to people and making improvements that do it, and what.
Baird: Content market. And content marketing. We were really hard on blogging. Um,
Andrew: That was something you figured out. You were spending time trying to think about what we need to write about.
Baird: Yep. Yeah. We wrote a blog post every two weeks
Andrew: What type of content worked back then, and how’d you know?
Baird: You know, at that time, everything podcasters, podcasting was just starting to boom. And they wanted every little tip and information possible where they can host their content, the best ways to edit their content, how to share it on social media, how to interview people properly, was really interesting. Um, sound design, I mean, we wrote about anything and everything that podcasters were trying to learn about.
Um, cuz most podcasters, what we. At our market level was, um, very DIY focused, so they really wanted as much help as they could get and we, um, just grew a big audience on our blog
Andrew: is it considering how much you care about audio that you don’t have one of these professional mics that I see people who are well working from home.
Baird: it’s so bad. Same. Yeah, same thing with audio and video that I still haven’t bought a big microphone. The problem is I don’t have like a studio or, anyway, to put it, I
Andrew: believe that you still work at the kitchen table. That would be so distracting for me.
Baird: I. We’re building a new house and,
Andrew: Where do you live? What city?
Baird: gonna be done in the next couple months. And then I’ll have my own
Andrew: Okay. A great place. I, um, I kind of like that you don’t have a good mic. Here’s why I want you to just keep improving audio. I don’t know the software that improves everyone else’s sound. So let Apple fix earphones and then bring the rest of the, Or excuse me, let Apple fix earphones with mics in them so the rest of the industry will keep moving forward and have you.
Improve the way that that subtitle, and I want subtitle to just keep adding all kinds of tools in it for improving audio. Uh, after it’s edited, I’m looking at you. You don’t seem interested in doing that. You just wanna do transcripts and let other people worry about the sound.
Baird: Uh, No. I like, I like that. We’ve definitely got some, um, we, yeah, we like the transcription angle. Um, That’s, No, that’s an interesting thought. Yeah. Finding ways to optimize audio so it’s less about the
Andrew: All right? And then the next year, It’s Nick who comes back to Indy Hackers and his update is our old duct tape backend got us over a thousand customers before we hit scaling issues, servers started running out of memory. The job queue would get backed up and customers were waiting longer and longer for videos to finish.
This was something we put off for as long as we could. We spent two months. Rewriting our entire backend, and now we’re ready to start seeing the benefits. Our bill decreased by more than 50% video wait times dropped by several minutes, and the system is much more robust with increased logging visibility and retry logic.
So you’re basically, at this point, improving software for your users. Why? How did you know that that’s what you should spend time on instead of finding new ways to bring in new customers?
Baird: Well, that was kind of the problem, is that we were getting really good at bringing on new customers, but our inbound funnel was all set up on website visits that moved to free trial signups, and almost 90, I think it’s like 94% of users upload a video before they would buy a plan, even if they knew like, Oh, this is what I want.
They would never subscribe first because they were given a free video. But that free video, if it wasn’t snappy and moving along quickly, like, you know, these are users that are coming off of a blog post. Or a social media post. They don’t have 30 minutes to, you know, sit there and wait for something to happen.
They’re signing up their experimenting and they want feedback very quickly. So it was when we saw our conversion funnel dropping in our, uh, video wait time increasing is when we realized the correlation that, you know, these users are looking for quick wins and we need to make this thing as snappy as possible.
And it was a huge effort again, um, to Nick and we had brought on Rob at this point who’s our, um, Our third partner and they really just knocked it outta the park. And once those videos started happening in seconds, our, our inbound funnels started
Andrew: Rob went through the critical product decisions, implementing amazing animations to video, uh, to the videos. This was, and then he became a partner. I’m just kind of reading off of an article that was written about the sale. Um, All right. I could see that. Did you though have customer calls to understand that this is what was going on?
Did you talk to people who tried the software for free and never.
Baird: Yeah. Oh yeah. We talked to even still subtitle, our inbound chat support cases. , you know, over 200 a month. Um, people, you know, these customers, when they hit our website, a lot of ’em want help. They want, you know, they have feedback, they have direction creators are very passionate, which is why I’ve had so much fun, you know, building products for them.
They, they, you know, they’re have a lot of strong desires and, um, opinions. So they’d tell us all about it. And we would also get on user. You know, we would definitely have user calls where we would get on a screen share and walk through certain things, um, and do user surveys as well to try and collect some data to help make decisions.
Um, those are. Three major ways that we would
Andrew: I see. So it wasn’t like you would find people who dropped out and left. They would find you in the chat and you would start to see what’s going on with them. And would you, would you occasionally say, Let’s get on a call and I’ll see if I could work this out? I guess that’s what you were saying when you said screen sharing.
Baird: Yeah, for sure. Sometimes we would hop on a call cuz you know, to really understand what they’re trying to, you know, get to the heart of, But you know, the popup chats have always kind of caught in a bad rap over the years, but in my opinion, I mean, that is what opinionated passionate users like, that’s how they wanna talk to you.
Like they want to get on and give you quick feedback. I know the, you know, that’s probably a small percentage, but those are the percentage I care about cuz they’re the ones that are trying to pay and, you know, really have, have a big win. So we still, even at subtitle, we still use Intercom, um, as our pri
Andrew: I was trying to go into your site right now to see if I could send a message and see who it went to, but it’s a little too much to do while we’re on a call. Uh, then six months later he comes back in and he says, We doubled our revenue in six months. The new video infrastructure were part was part of this.
By video, you’re basically, he doesn’t mean video of the podcaster and her guest. He means video, which is the animation of what the text is.
Baird: Correct. It’s basically the, yeah, the video that was generated
Andrew: And then at some point I’m just, I’m not even seeing it here yet. Oh, there we go. It is here at some point. 2020, you hit a million in arr. What, what changed about the business that allowed you to get there to a million in annual recurring revenue?
Baird: Honestly, I think at that point it was just of the things that we’ve talked about coming together and finally understanding them and just putting. You know, those practices into place, you know, good onboarding features that allowed users to, to create beautiful videos that really stood out from, from the crowd.
And then having a very performant architecture. And the combination of all that with content marketing and our inbound funnel all kind of just came together and really started working. And, um, it, it, it. Was working for about a year and a half until we started hitting. Um, that was a million arr and I think we got up to 1.4 at
Andrew: see. Uh, September of 2020, which makes me wonder why sell it when the thing did it. But here’s, here’s some of what I saw that did it running a lot of growth experiments. So you were constantly testing things. Anything by the way, in growth experiments that worked before I went into the the next bullet point.
Anything that was especially. Crazy standing out.
Baird: Um, Not that I can think of, but it was so long ago. I mean, I feel like Instagram reels had just come out. TikTok was like kind of starting to become a thing. So we’re always testing these new platforms and having to make sure that we were building features as these new platforms came out. Like I remember Facebook Live had a an eight month period where it was ev all anything everybody wanted to talk about.
So we always constantly had to be staying on top of these social trends and making sure that we had features and blog posts to go along and kind of. Dovetail on those. When Instagram releases
Andrew: How’d you know what problems people had that you would need to either add features to your software to accommodate or write articles?
Baird: It was a lot, to be honest though, it was a lot of, um, the, the problem was always the same. It was, how do I take my podcast audio and get it to X so when a new
Andrew: know we need to find a way to get the Podcaster’s audio in. X Facebook Live though is not a place where you can take someone’s podcast and put it on there. Can you as wave? No.
Baird: No, that was actually, no, that was actually a bad example. That was one where people wanted to, they wanted to rip their audio from Facebook Live and then put it into wave. Probably a better example would be like when Instagram TV came out, um, where all of a sudden we have to have all of our features work for vertical videos.
That was a bit. And then be on top of like, Hey podcasters, here’s how you use vertical videos to grow. Here’s where you can share vertical videos and how you should form at ’em. And there was all these little details around, you know, this specific aspect ratio that now has to be accounted for. And making sure that we were like ready to pounce on these new trends when they came out, and then accommodate what we
Andrew: and then that brings me to number two. First one was running a big collection of growth experiments. The second is, You were writing a wave of growth, both in podcasting, which was growing and there were more and more podcasters out there and in social. That social was looking for more movement.
Where it started with text, it moved on to pictures. Once it got to video, it went almost all in on video and you needed to take people’s audio and put it in these channels and you were set to do that. Right. Okay.
Baird: Yep. Yeah, I think we were in, you know, kinda in the right place at the right time
Andrew: the next thing was you tested out different pricing. And if I go through internet archive over the years, I could see that this, what I didn’t find the $8 a month, but what was an eight or $10 a month plan started to give way to lots of different variations, lots of different tests, which I think is something that we tend not to test because there’s a sense that if we test the price and someone got a different price, they’re gonna be upset with us.
So how did you test it without losing these customers that. Spend so much time tending to,
Baird: We, uh, we have always
Andrew: you’re trying a lower price, can you really, Do you then give it to people who came in at the higher price?
Baird: We’ve actually never tested lower prices. We only test upwards, and if it doesn’t work, we just. Scrap it and go back to what we had. Um, so we’re always testing upmarket, rarely now. I, I, I will, with one caveat, we have released lower plans that are cheaper, but they have different feature sets, uh, or, or different usage models to where like somebody that would need a higher plan wouldn’t even need it.
And in that case, there are situations. Maybe somebody who’s paying more than they had to, and then they get to downgrade to this better fit, which to be honest, you know, even though we’re losing a little revenue, we might be holding the, we might be holding that customer for a longer
Andrew: I see. So the, the pricing experiments, it seems to me also, it wasn’t a lot of pricing experiments on the low end. It was more on the high end, How high can you make, what I, what used to be called what, I guess gamma, but eventually became the pro plan. And then you’re not just tweaking prices, you’re also tweaking features.
So it’s hard to make an apples to apples comparison. And if someone says, I want the lower price, but I’m willing to sacrifice feature. Good for them. Happy to, to oblige. All right. Um, is there something else here in my notes, Uh, let’s go back to this Indie Hacker’s article. Um, reducing churn, but, uh, part of it was letting customers pause their plans.
I was, I just used the software that I, I realized we hadn’t, Sorry. We had the software that we hadn’t really used in years. I went to cancel it and the the service said, Do you wanna pause? And I thought, Well, maybe we should pause it because I might need it. And if we pause it and we see that we’re suffering, then we could always come back.
I don’t know that that the pause has been over, but I think at some point it’ll end and I’ve gotta make sure to stay on top of it and come back in and decide do we want to go in or not? Regardless of which way we go, They did not lose us. They gave us another opportunity to reexamine our relationship with them.
Pausing is really big, but as the guy now who’s all in turnkey. Or one of your businesses is turnkey, which helps reduce churn. Talk about some of the things that you learned about reducing churn at Wave and we’ll save Nick. He’s gonna come on here and do an interview about Turnkey. We’ll save him to go in more detail of what’s new today, but at Wave Beyond the Pause.
What else helped you reduce churn?
Baird: Let’s see. Um, maybe to back up a little bit, kind of the, kind of let people in on the magic moment of churn for us. So both wave and subtitle, very high volume businesses, both over a million ARR lots. We’re talking 200 new users a day come in, um, and churn between seven and upwards of 11% when it was at our worst case.
So 11% on a million ARR is alarming and you’re basically turning over your customer base every like 14 months. Uh, the ma. Math probably needs to be checked on that, but it’s pretty close. Um, so churn became our number one enemy for a full year of how do we get every percentage point of churn that comes down, Our valuation goes up drastically.
So, um, we tried all kinds of things. We hired consultants, um, that rewrote all of our emails and onboarding. And, um, you know, se we tried to segment our users into different ways, which a lot of that was very valuable. We, you know, churn has a close correlation with pricing so that a lot of those pricing tests were designed to try and find better fits for, to lower churn and have customers leaving less.
But our magic moment was when we realized that when we had, you know, 80 to a hundred customers a month that were canceling, it turns out about 85% of them actually wanted to cancel. There’s this like 15 to 20% of people that they don’t actually want to cancel. There’s just something that’s not right with our arrangement that needs to be tweaked.
It could be, I just need a couple months off because my podcast is on a break. It could be my business is just, you know, we’re having a bad month and I’m out here cutting cost. And you all were first on the chopping block. Well, What if we gave you a discount for a month? Cuz we value you as a customer.
You value our product and we understand their circumstances. How about 50% for two months? Would you come back? Um, or it could be, uh, technical support was another thing that we found was some people were canceling cuz they needed this feature to do something a little bit different. And it really just needed a conversation to say, Oh, you’re pressing the wrong button.
Go over here, change the setting, and then they’re safe. So we found that there. Big portion of customers that are canceling that they really just need to reframe their arrangement in some way. And that’s when we started using the cancellation flow to run lots of experiments around how, how can we grab this person now eight outta 10 customers that are canceling for us?
there’s no chance to save them. So we just let them cancel. Not a big deal. We’re not gonna save you anyway, but we’re gonna hit you with a little survey to figure out, Hey, are you in this percent of users that don’t want to cancel? And then based on what you selected, let’s try to give an
Andrew: Ba, How did you know that it was that it was 15? Who didn’t wanna cancel?
Baird: Uh, lots of testing, figuring out that, um, you know, there’s a certain percentage of customers, you know, it wasn’t until we started providing offers like pausing and discounts and technical support. We did these all very manually. We’d hard code ’em into the cancellation flow and test them, and, uh, changed offers around as a lot of work on Nick’s part to, you know, manually try all
Andrew: But let’s say somebody says, I’m gonna pause. How did you know that the reason they wanted to pause was they’re just taking a, a pause from their podcast for a couple of. Or that they’re having a hard month.
Baird: We. The survey was always part of that. The first thing that we always presented was a survey with different options and we would change those options over time. Um, cuz we’ve, we found out for the most part, most users when they’re canceling will just say like, I don’t have any money. I’m quitting. But if you take that option away and make them actually like, get more specific about what’s happening, uh, that’s when we, that’s when we started learning like, Oh, this person.
Didn’t do a podcast this month. They don’t, They don’t dislike our product or not like us. They just don’t have a video to create. So let’s just let ’em take off a
Andrew: Okay. I should say anyone who needs to do email marketing should check out my sponsor. It’s called Send In Blue and Baird. One of the best things about Send in Blue is that they have all the features that email marketers need, and frankly, everyone should be an email marketer. As much as I hate to say it, email is still working for marketing.
It’s. Still working for bringing people back. It’s still working for teaching people about your business anyway, but it doesn’t work if you send people the same dumb messages over and over again. You need to actually have some kind of automation that takes into account what they’ve done before that takes into account where you think they’re going and what you think they need.
And that’s where Send In Blue comes in. They allow you to create a full customer journey via email based on what people have done, based on what they need. And that means that if somebody’s not interested in one aspect of your business, you’re not promoting that to them, but you can promote. In addition to that, they also do chat marketing, they do sms.
They do so many different things all in one. And the beauty of this is, yes, they have all these features, but also they have a price that starts out reasonable and stays reasonable, unlike other email marketing companies that start out almost free. And then guess what? They spike up once they get you and you can’t move out because it’s a pain to move your email list.
If you wanna check them out and I really urge you to do to do it, go to send in blue.com/mixer G send in blue.com/mi X E R G y. When you do, you’ll get a discount on their already low prices. And I know that people are getting it because I just got a message from someone saying, Hey, it looks like this offer expired and it did.
But send in blue, reactivated it. So if you want that discount, go for a limited time. It’s available still@sendinblue.com slash mixergy. All right. Why’d you decide to sell then? Everything seems to be going well. You got this thing that you wanted to create your, your monthly mortgage payment you’re in.
Baird: Yeah, it’s a good question. We spent a lot of time thinking about it and what we came down to at our core was that over the years we had found out that we’re really, really good at, at least, at least myself. I’m really good at creating these businesses and you know, getting ’em off the ground and like getting that initial wave of growth going.
Um, once the business gets to a point where the, you really need a scientific operator, um, and manager of multiple people, that’s where my skillset doesn’t really shine. And that’s really where Wave became, you know, once you realize that, you know, a quarter of a percent conversion rate is a different, makes a huge difference in the next quarter’s revenue.
That’s when I’m, you know, I start becoming less effective because it be, we, you really need somebody scientific, somebody really product oriented that can come in and, um, operate at a higher level rather than, you know, just wanting to be an artist and wants to create some new flashy feature and, um, talk about it.
So that’s kind of where we were. And, um, I had started subtitle, which was also starting to. , uh, which was just focused on the video captioning. And then this churn solution that we had talked about. We realized it worked so well that we pulled it out and started our own, Started another company with that its own product to help other staff companies, um, build better cancellation flows, which that’s.
turned into a, a, a huge awesome churn solution, which I’m sure Nick can talk to you about sometime. Uh, but anyway, we just had a lot going on and Wave was a really good win. And it was also, to be totally honest, when you look at that company’s valuation and you compare it to your personal finances and realize that it’s taking up a huge majority of your net worth, the risk all of a sudden.
you know, of like, well, what happens if we make a bad decision or, you know, we change the product around. And we were almost like that fact alone was kind of, there was like this inherent fear that we were going to screw it up. So we had a hard time like experimenting and doing new big features and new initiatives.
Um, It, you know, I don’t know if that makes sense, but I think we had just kind of got to a point where it felt like we needed to take that win and we have other things to work on. So let’s, you know, let’s get some new experienced operators on board and um, and, you know, sell it and
Andrew: so one of them is subtitle. Why didn’t you fold that into Wave? How did you know we’re gonna create this as its own business? It’s, it does, it takes people’s videos,
Baird: gosh,
Andrew: subtitles, and then it makes them look good with the progress bars, with different, uh, uh, video sizes, with logo and other stuff that people can add on it.
Baird: Yeah, so the story on that, uh, kinda interesting cuz we, I wanted to, um, and at the time, the reason we built subtitles, because we had all these wave customers asking us to do video captions, which was not a common. Thing back that, you know, this was really when they were starting to become popular and there weren’t many solutions out there for it.
And every time we specked out the project, it was gonna be 50, 70, 80 k to build this video captioning engine for for Wave, because the tech just wasn’t really there yet. And it was gonna be a big, big effort. So my thought was, well, What if we can, you know, build it as a standalone product that any video creator can use and then we’ll integrate it with Wave and it will just do the, it’ll support that for Wave and we decided that was the right way to do it, cuz it would de-risk on both sides.
Uh, it could at least exist as his own product and also not just be some expensive feature for Wave, but at the time, Had started a crypto, uh, helped. He was a founding engineer at a crypto company, so he couldn’t break off and start this new one with me. So I had to go find, uh, it was actually one of his friends was my, became my co-founder and cto and we built this separate company that supported ways video capturing.
So it’s kind of complicated how it all worked, but at the time, it made sense to have them as separate brands and separate products.
Andrew: It feels almost like you kind of knew you were going to leave into a different business, right? That you were going to sell wave, and then wanted to hold onto this. Am I right?
Baird: No, it was just that at the time, Nick didn’t have any time to build it into Wave or build it as a, And so, because I was bringing on another product, another equity owner that didn’t need to become an equity owner of Wave. So we had to start a separate entity to, to build it there and then just integrate it back to Wave.
Um, We’ve actually done this with a couple other products with, we built a, um, audio to blog post creator tool that we did the same. We would kind of spin out these side products to see if they work and, you know, if they don’t work, we can easily just kind of kill it off and it, it has no,
Andrew: What’s a project that you, You know what I’m gonna ask Nick that about a project, cuz he’s gonna come here and do an interview. I’m curious about what, what you tried that didn’t. with subtitle, one of the things that comes to mind is Facebook is already integrating it into, like, Instagram and other tools seem to be integrating, uh, captions.
I don’t like their tools because it means you can’t correct the text easily. There’s a, there’s some restrictions for it, but they seem like they keep adding it. What do you think about
Baird: Mm-hmm. . Yeah, definitely. Well, every time I see those features, I’m always, you know, typical business owner.
Andrew: Right, right.
Baird: go. The end’s coming. We’re, you know, Facebook’s gonna squash us. It happens all. And finally, I think I’m finally over that, over six years of watching headlines. Um, but um, yeah, they do keep, they keep iterating and, um, Creating new caption animation styles.
But the two things that have always saved us from that has been one, the customization aspect that we work with what we call prosumers. They’re aspiring entrepreneurs or they’re coaches, consultants, um, that are, you know, using content to, to grow their business, uh, or get their business off the ground.
And they want to differentiate from regular other, not just normal. Consumers using social media. So they want to use their brand, they want to use their logo. There’s always these little tweaks that they want to have that make it look like their video rather than using the same feature that everybody else does.
Um, so our goal is always to be a step ahead of those features and include customization so that those users that are, you know, really trying to sell something or grow their business, um, you, you know, are incentivized to, to want to go above and beyond what the basic. Instagram
Andrew: are you getting customers now?
Baird: and the interface really isn’t that great
Andrew: It’s designed to be a really quick thing to. To work. Not exactly something that, um, that lets you do customization and work on your own, your own product. Um, where’s the revenue now? With subtitle?
Baird: We are at 96 K, Mr. Um, right. . Yeah. And it, well, that it was up, it was up to one 18. Um, we tripled since the covid lockdowns happened in March, 2020. We’re at 40 K when that happened. Thought, you know, we didn’t know what the world was gonna turn into at that point. Um, but we wound up tripling the business to just under one 20.
And as you can hear, as you can tell from this interview, I bounce around and I do a lot of different things. And I’m neglected subtitle for a. Uh, while it was growing and, uh, our competitors were all raising money to go after the same space, and we fell behind. So we’re down 20% from our all time high and, uh, January of this year.
We had to, you know, have a come to Jesus moment with the team and really decided that’s, um, I had to focus on subtitle for, you know, a full calendar year. And it’s been our first remodeling of a business. I mean, we have changed everything front end back. Uh, website marketing personnel. Uh, really everything about our support person and our positioning has changed.
Um, so that’s really been this whole year is getting it back to on
Andrew: I find that one of the things that there, there are a lot of competitors, but they’re not all dependable and then a lot of them just. Of a lot of features and a lot of, a lot of everything, which kind of slows you down. I was telling you about one that does a desktop app, and the problem that I have with it is I can’t use a single other thing even on my new Mac M two, uh, computer.
I can’t run anything.
Baird: Yeah, I think it’s a. Less, again, like as a young entrepreneur, when I would see competitors, especially ones that are more funded and have more features than us, I would just be nervous. I’d be like, They’re gonna kill us. How are we ever gonna compete with them? But what I’ve found over the years is that the world and the most markets are way, way bigger than you think.
And there are people that don’t want to use heavy, big competitors, feature rich solutions. They just want things done quickly. Uh, or they may want it cheaper or they may want, you know, a different spin on the business model. Like there’s so many different ways to do it, and you don’t have to beat these big competitors.
You just have to find your corner of the room. Execute that corner really well and then defend against it. And that’s kind of what we’ve always done, as opposed to playing the, Okay, well let’s raise as much money they did as they did and try to like land grab more. Um, so there’s a lot of different ways to do it and you know, wrong or right.
You know who, who knows if you know, we’ve made the perfect decisions, obviously, I’m sure we haven’t, but that’s kind of been
Andrew: All right. And one of the things that you were telling me before you got before we got started was you’re thinking longer term. Look, this thing. is working. It’s got its customers, it’s got room for growth. Now you’re thinking maybe you wanna bring somebody in who can be the operator, who can work with you, where you don’t have to spend day in and day out on the mechanics of growing.
You can think, bigger vision, envision, and then maybe even take on a third project or a fourth.
Baird: Yeah. With, again, we’re kind of hitting that spot where we did with Wave where, you know, it’s it, it’s becoming. You know, there’s a lot of moving parts, um, not even that many, but just enough moving parts to keep you from working on new creative projects, which is where I’m just always gonna naturally gravitate towards.
Um, and it, you know, it’s that tricky question of, you know, how does, how does subtitle. Get the right people or the right resources into the business that it needs to grow. And if that’s not us, what does that look like? So, you know, everything from bringing on, um, new operators to selling it or, um, I’ve recently been learning about growth equity firms that actually kind of do this.
They’ll come in and, you know, invest in your company and bring an operating team with it, and you can stay on in certain capacities. So there’s a lot of different ways to do it, and that’s gonna be you. I think we’ve got a good six to eight month roadmap, six to 12 month roadmap that we need to execute on, and then it’ll be trying to figure out what next, what is next for the company, which is always, you know, a big topic and,
Andrew: What’s a good way for people to connect with you? I know that you sold your company to somebody who reached out to you with a cold email. Is email the best way? Is Twitter the best way? What’s a good way to.
Baird: Um, yeah, if it’s company specific, um, you know, beared@subtitle.com um, is is a good way to reach me. LinkedIn and Twitter are definitely the two platforms that I’m hanging out on most. I don’t really post a lot, but um, I am there
Andrew: Twitter is the way the two of us connected. We scheduled this whole thing, I think via Twitter direct messaging. Thanks for being on here. The website for anyone who’s been curious about it, what he’s working on right now. Subtitle. It’s like subtitle, but with a z. subtitle.com. Beautiful site.
Congratulations on all the success bear. Thanks for being here.
Baird: Thanks, Andrew. Yeah, appreciate it. Thanks for having me.
