Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixer G, where I interview entrepreneurs about how they built their businesses.
You know that because I’ve been doing this now for years. Um, it’s been a while though. Since I’ve recorded an interview at five o’clock with my kids here and the rhythm of the day already established, and, um, I kind of wanna acknowledge that and acknowledge that Nick Fogel, today’s guest, is not just the guy who created churn key among other businesses and churn key, by the way, automates retention for your SAS business.
What’s cool about it is that he built it for himself and then said, Hey, you know what? Other businesses probably have the same issue. I’m gonna do it, um, as a standalone business. And they could, they could sign up and it’s become a, a big success story for him. Um, but I kind of wanna acknowledge that this is where we are.
I just, before the interview, my kids came home. I went and I raked up some, I don’t know where the lawn used to be, and I put some seeds down. I told you how good that felt. It was only like two minutes to get to patch some hole. Where are you, Nick? Like your kids, you told me are barricaded behind the door.
What’s going on in your house right now?
Nick: They’re, they’re locked down. We’ve got Bluey or one of these streaming shows on they are four and one year old. If, if that gives you any context. So they could burst in here any minute if my wife loses control. I’m in Charleston, South Carolina, by the way.
Andrew: For you, a one year old can they sit in front of a tv. My one year old wasn’t able to do it.
Nick: So the four year old and the one year old, totally different personalities. Four year old, I mean, he’s talking a mile a minute. He couldn’t sit still one year old. You could plop him down in front of the tv or he’ll go upstairs and play magnet tiles for like two hours straight. It’s.
Andrew: That is phenomenal. I feel like the one thing we didn’t do with our kids over Covid was train them to be on their own. And that’s such a good skill to have. And frankly, even for me, it took me until I was maybe seven, eight years old at an aunt’s house, bored to death. That I finally at that moment realized how to entertain myself.
I wanted a bicycle in the worst way. And there were all these different cool things you could get for your bike, like one of these, uh, dynamos that you could attach to the wheel that would then spin and fire up your light. And then there’s this, uh, gear shifter that looks like the kind of thing that a car would have, um, on that horizontal bar.
And so I started imagining all the different things I wanted on my bike. And that made me realize, oh yeah, I can entertain myself. I, all I have to do is think about what I wanna do, what I want to have, and how I could do it. And then my mind will go, Did it take you a while too?
Nick: That’s a great model for entrepreneurship. I think most entrepreneurs are, are those types, you know, they get bored. It’s like, What am I gonna do next? You need some something to work toward. And for me growing up it was, uh, I think it was like, uh, Nintendo and Sega Genesises. You know, I can still smell the blockbuster, like rubbery smell, like walking in.
Mom would take me and, uh, I’d go pick up a game. I’m probably four or five at this point. Pick up a game and just run up the stairs, fall my way up the stairs to get to the console and plug it in, Blow the cartridge. Those were some good memories,
Andrew: One it took us a long time to get any kind of video operation in our, in our city, in New York. There are too many built up companies and things like Walmart wouldn’t come, Blockbuster wouldn’t. But I remember reading about Wayne, he Zenga and his whole model was, he said, I’m looking for businesses where there are rentals, because if I’m selling you something you buy from me and then I have to convince you to buy the next one or another thing to go along with it.
But if I’ve got rental, then I’ve got an ongoing relationship with you. And the first way that he built, the first business that he built was, um, waste management. Um, Industries or something. It was a very generic name, picking up garbage. They basically would put dumpsters out and then get paid every time they picked it.
And then he discovered, uh, videos and he started going cross country and just buying up all these mom and pop video stores and making them into a chain with the idea that people would just keep renting. And I remember after that he started looking for the next big thing and he thought, Well, companies have water drugs, Maybe I do water rental.
And that didn’t quite work out. There weren’t a lot of businesses with rental. SAS really is the replacement for that. I think if Wayne Heen got that billionaire, um, who owned the Dolphins and some other sports team that I’m not cool enough to know, he would be in Sass like you. Nice ongoing revenue actually.
Do you have ongoing revenue? I forgot to check how you get paid. Do you guys get paid on a monthly or per recover
Nick: we, we do monthly basis. It’s the easiest. And I was just gonna mention, this is the CEO of Blockbuster that
you’re
Andrew: video. The, the founder essentially,
Nick: Yeah. and, and and the interesting part of that, Andrew, is that didn’t they have the opportunity to buy Netflix at one point?
Andrew: They did. But, but, but you know what, By then he was gone. He had already sold his company to Viacom when Viacom was trying to buy, um, Paramount Studios, and they didn’t have enough money to make the payments on their, on their loan that they took out to buy Paramount. So they bought Blockbuster because it was just kicking off cash and all they had was this cash coming in to help them service the debt.
And then at some point they got lazy, and then Netflix got aggressive. And yes, you’re right, they missed an opportunity to buy Netflix. But frankly, so did I, I didn’t buy their stock even though I was a subscriber.
Nick: Right, me too. And, and you know, the, the beauty of, back to your question, the beauty of that SAS revenue and with turnkey, um, the business I run currently, and initially we did think that, um, let’s do a percentage of recovered revenue because we’re saving some companies. We’ve got a company, we’re saving them, um, 300 to $400,000 a month in revenue.
And man, it would be nice to, uh, to, you know, pull in 10% of that revenue or some percentage. The difficulty in doing that is it becomes very hard for CFOs and the accounting department to, you know, stomach that because it’s dynamic, it’s ever changing, and they’ve got a line item there that’s that unpredictable.
Even though they’re saving that money, it’s, you know, it’s icing on the cake at that point. It’s hard to get those deals done. So it’s, it’s much better to predict what we think they’re going to save and do a fixed amount.
Andrew: You know, Nick, your competitor, and I forgot to say this, my, my sponsors are number one, if you’re hiring developers, go to lemon.io/mixergy. And number two, if you’re interested in this whole new movement of having decentralized, autonomous organizations, Dows, I created a podcast about it, uh, where I interview entrepreneurs who’ve created dows.
And I want you to go check it out at join origami.com/podcast. But I’ll talk about those later. Um, you know, Nick, though, your competitors do offer that I know of at least one company that will charge per, like, charge a percentage of recovery. My sense is based on the way you are talking, is you’re looking for like, uh, enterprise customers and he’s going for the entrepreneur who can’t stomach paying money unless that money makes him money.
And so he said, I’m gonna connect it right.
Nick: Yeah, that’s true. And we were actually a customer of the company, I think you’re talking about, with a previous business wave that has since been acquired. And, uh, there were some deficiencies with that product. Just it hadn’t been updated in a while, and things that we knew we could improve on, things that were missing,
Andrew: Let’s talk about the name since we’re after hours here. What’s the name of the company that you think I’m talking about? I was talking about Profit. Well,
Nick: I was
too.
Andrew: so Profit Well had what? Deficiencies at the time.
Nick: You know, I, I think deficiencies may be overly critical sounding. They just weren’t offering some of the things that we needed. So let’s talk about Wave. All right. So Wave was a business that was a video creative tool for, mostly for podcasters, creators, influencers, product like that, A prosumer or B2C app.
For creators, it’s gonna have very high churn, so people are going to constantly be canceling every two or three. That was generally the lifetime of a customer. It was about three months sometimes, you
Andrew: Just to set it up, What Wade would do is they would, you would pull clips of a podcast and make ’em into these shareable little videos. And you’re right, podcaster maybe decides for a month they’re not gonna record a podcast. Or maybe for some reason they’re, they can’t keep up with it for a few months, they cancel, and then when they’re back in the promotion mode, they sign up again.
Okay. So that’s the issue that you were facing there.
Nick: right. That budget was another one where they didn’t have enough budget for tools because it’s, Hey, this is a self-funded passion project. Um, and then the seasonality that you mentioned, they’ll work in batches, three months here, stop for two months and then come back. And that created some problems. The revenue was very lumpy.
It was unpredictable Sometimes, like if somebody left wave, what if they went to a competitor? We’d prefer that not to happen. We spent a fortune on, um, we were looking to get acquired. We were doing a lot of revenue about, we were approaching a million ARR at this point, but we knew that the churn was so bad.
Our growth would eventually plateau. It would asso tote at a certain figure, and we knew to grow more, we would need to cut the churn. And we spent a fortune on consultants helping us, and that didn’t move the needle. So we had to take like a year and take and focus away from our core product offering. So we weren’t really able to improve the product.
We were just focused on spending engineering time to save these customers. And, um, throughout all that effort, we figured out a way to use a cancel flow. This is interesting. All right, so as a company, you spend all this money to acquire users and there are a lot of tools that exist to onboard customers successfully, but there hadn’t been a lot of effort around offboarding.
But why not? For a lot of companies, that’s a very unpleasant part of the customer life cycle. You’re basically dealing with a breakup and there’s this attitude that, well, if a customer’s gonna click the cancel button, they’ve already made up their mind. The hypothesis that I had was that, No, like their mind could be changed.
There’s just this intent to cancel. If we understand why they’re canceling, maybe we can give them a reason not to cancel. Now, I’ve gotta say this is not an original thought at all. We talked about Netflix earlier. Well, I’d seen this at Netflix when I went to cancel a Netflix subscription. They had this survey.
I said, Netflix is, um, I’m not using Netflix right now. I’m out of the country. And they said, Would you like to pause your subscription? And I thought, Wow, that’s really nice. And I looked around and said, Well, our billing provider doesn’t offer pause. What if I built this type of cancel flow for Wave? And I did.
And over the course of building that and testing and improving it, our churn rate went from, I think it was like 13 or 14% down to about 8%, which is massive. I mean, that unlocked the next level of growth
Andrew: How much money are
we
talking about back then? I, I interviewed your co-founder on Wave, and so I bet if I looked, I’ll find his revenue, but do you remember it? What are we
talking
Nick: Yeah. Um, so right before we sold it, we were approaching $150,000 in monthly recurring revenue. So, I mean, uh, not like crazy amounts, but it was a small team. It was just ba myself and, uh, another, um, founder we brought on later as a, um, uh, engineer, and then we had some contractors.
Yeah, Rob. Exactly.
Andrew: Okay. And so.
Nick: notes there.
Andrew: You, you’re right. There was no pause button. And I’ve noticed it. There was a thing that I had with Pipedrive, my crm, I said, I don’t know that I need them. Maybe we’re just, maybe I can keep this, keep track of it somewhere else. And I went to cancel and they said, Do you wanna pause?
And I said, Yeah, I do. And actually, now that I think about it, I hadn’t checked back to see do I really want to go back to them or not? Did did they start building me? But, um, that’s very effective and I’m surprised that no one else had built it. And so that was the first thing you built for yourself. What else did you build
Nick: The other thing was price sensitivity. So I mentioned that a lot of podcasters who were just starting out, and this was back during Covid just to kind of paint a complete picture. Um, people were very price sensitive. This was like before stimulus. Everybody was canceling everything they were paying for cuz they were, you know, freaking out.
They were getting laid off, you know. But at the same time there were a lot of creators that were starting new things cuz they had this time on their hands. And we realized that if we started experimenting with discounts, maybe, uh, you know, 20% off for a month, uh, that didn’t really move the needle. So then we tried 30% off for three months.
Hey, you know, that’s starting to work. Then we did 50% off for three months and boom, like that. It was like 40% of the people that would’ve canceled and cited, um, budgetary reasons for canceling. Well, they ended up staying. And it was at that moment that we were like, okay, we’re onto something. And we had a kind of tight knit of this like group, uh, indie hackers.com.
It was acquired by Stripe. I don’t know if you’re familiar with the, um, Community over there, but we shared some of this with people we’d met on Indie Hackers, and they said, Wow, I’d love to have something like that. And there really wasn’t anything like this at the time. So, um, we were, and Back to Profit, well, we were using Profit Well for the failed payment recovery and for just like, metric tracking, but they didn’t have anything like this.
So, um, we said, All right, well, we’re gonna sell this business, but we’re these entrepreneurs that we’re always wanting to do things. So after the Wave acquisition, what are we gonna do next? Well, hey, we love building startups. I’m kind of a finance nerd. I get just totally geeked out by this stuff. So I was like, Let’s just go all in on a churn product and make this easy for other companies.
And, you know, with Wave Weed wasted, I hate to say wasted because it, you know, added a lot to our value multiple. Um, but we had to spend a, a year away from our core product offering to focus on like billing code
Andrew: know, Nick, I’ve gotta tell you, this feels a little bit like an exaggerated, uh, startup story that I can’t believe you had spent a year on that when you’re doing a hundred thousand in revenue, wouldn’t that year have been better off spent on doubling revenue and let the, and then figure out the churn later on?
We’re not talking about tens of thousands of dollars. Even. Meanwhile, if you focused on growth, you could put in tens of thousands easily. If not, get to another hundred a year, a hundred a month.
Nick: Well, you know, in hindsight it might look like that. But, um, throughout building wave, we were constantly up against this feeling of like, okay, growth is here. We’re, you know, doing everything we can with our bootstrap budget. We never took VC funding, so it wasn’t like we were pouring money into growth, but we had solid growth figures.
And, uh, as we, you know, approached this period of time, you know, me being the CTO of that company and also like the financial mind, I took it upon myself to say, Hey, we need to focus on this because as we talked to business brokers, they said, You know, this value multiple that you’re seeking, which was like a four to five x multiple, you’re not gonna get it.
If your churn is at 13%. That means you have to, that basically means you have to replace your entire customer base every year.
Andrew: Okay.
Nick: So think about that. You’ve got 10,000 subscribers and at that churn rate, you’ve gotta go find 10,000 more the next year. It doesn’t sound like much, but it’s a big problem. And the market for podcasters is limited, right?
Like at the time I think there were like 250,000 podcasts, so you, we knew what we were up against, right? Like we knew that there was a finite amount of people that we could bring on. And that, that’s kind of the, um, background that went into it. And, you know, I should say that year it wasn’t all focused on the trend.
There were a lot of other little financial tweaks that we were able to make to help improve the business and prepare it for.
Andrew: Okay. And so you did it, You saw the results and you said, We’re gonna go and create a separate business that now is known as turnkey to sell this as a service. My guess is it’s because you saw that wave wasn’t growing fast enough. Is that it? Or was it something else too?
Nick: You know, think part of it was just, we’d been working in this space for about five years at this point. So before Wave the product that actually took off, we’d been building, uh, kind of a precursor to Clubhouse or like Twitter spaces. It was like Reddit for social audio. And, um, we’d worked with podcasters and radio shows for two years, spinning our wheels, and we never got anywhere.
So by the time we hit the idea of Wave, we were like three years into the podcaster space. And bear to myself, we weren’t podcasters like we liked listening to podcast, but it wasn’t like core to who we were. So, you know, as we got to year five and year six, we started thinking like, this is not, you know, the absolute.
Founder fit. And we also realized like we didn’t love the operational side of the business as it was at that point. You know, I, I can always look back in hindsight and say, ah, like, maybe we should have like juiced that business for more. Um, but also at the time too, like from my point of view, I had $250,000 in student loans that had negative amortized since law school.
And um, that was a crushing burden that was always kind of on my shoulder. And I knew that I had 99% of my net worth tied up in this business. And I was like, Man, you know, this is a lot. I just had my first son and I was like, How great would it be to have this nice exit? And for the first time in my entire life, I’d have this runway and be able to like, choose what I wanted to work on next.
Andrew: That makes sense. And then Com Capital acquired you, you were able to pay your, um, able to pay your student loan debt. What else did you get to do after that?
Nick: I bought a G wagon, uh, that was my wife forced me to do that pretty much because, um, I’m a, I’m a tight wa I don’t spend money and um, I used to always be a car buff I guess. And you know, when you’re grinding and you’re deep in the weeds on things, like you just suppress some of those desires cuz you’re just getting through.
And for so long I hadn’t even entertained any thoughts like that. So yeah, I paid off the student loans, which was a huge relief. And then, you know, it’s also funny, I tell people this today when they’re like, you know, you was all this money on a vehicle and, um, I also put funds into, into index funds, you know, the smart financial moves, Baird and I bought a boat.
The two things that have appreciated the most since that acquisition are the G wagon and the boat
Andrew: Wow, I can’t believe it. The G wagon, I don’t know anything about cars, so I have to look it up. The G wagon is that Mercedes-Benz That looks like a Jeep,
Nick: Yes, And you can write it off for taxes because it’s very
big. It’s 6,000 pounds I think. So it was a tax write off too. So, uh,
Andrew: And it’s the
kind of
Nick: and if you’re on TikTok, you, you see all these influencers that get in a new G wagon. They’re like, Yeah, you know, this is my smart financial decision cuz I am able to write it off.
Um, but I think they’re just looking to, to get some
views,
Andrew: my buddy Anthony who, who uh, created eye crack, the iPhone repair company, which Steve’s job’s wife apparently backed. I didn’t know that, but I’ve gotten to know him a little bit since uh, his business was acquired and he bought one of the Tesla model Xs for the same, that had the same benefit.
And as he was talking to me, I said, I’m gonna check with my accountant. And sure enough, my accountant said yes. Over a certain weight. You can write it off immediately, but he said if you ever sell it, then you have to undo some of that. And so that also explains why a lot of my friends will just keep whatever that heavy car is forever.
Nick: Yeah, I’m, I’m gonna be stuck with it for a while, and the, the gas mileage is not great. I’ll tell you that. Uh, it’s like 12 miles to the gallon of premium gas.
Andrew: dude.
Nick: bought it at a time when gas was pretty cheap, and then, you know, immediately after I bought it, of course, like things are sky rocking, but I work from home.
I don’t drive much. And when I drive, it’s fun. I, it brings a smile to my
face is
Andrew: interviewed a dude who will turn that into, uh, an electric car for you. If that’s what you’re looking for though. It’s not worth it. You’re not driving it enough. Um, alright, and so you got the exit, you got the car. Let me take a break and then come back. And the break that I’m gonna take is to talk to you about this other podcast that I’m doing.
It’s, um, It’s called, it’s, uh, it’s called How to Launch A Dow. And what I’m doing is I’m interviewing these people who created Dows. Let me tell you about one, one person who I interviewed, he didn’t give me his name. I still to this day don’t know what he looks like. And you know me. I need to see your face.
I told you we’re not publishing the audio. I’m, I’m keeping it in case we need to promote it somehow. I just wanna see your eyes light up the way they did just now and Notorious, and that’s not his real name, gets on with me. He masks his voice and we talk and I say, Dude, why are we hiding your voice? And he started explaining how he just wants anonymity.
And I don’t think there’s anything nefarious there, but who knows. But he also says what we created should just stand alone. So good that if I am even a te, he didn’t say this, but this was my implication. What he wants to do is create something that even if he’s terrible, will still stand up and do and be strong and do good work in the world.
And you should be able to see the operating of this organization that he created and see not just the operating system, but the day to day operations of it to see if it works. So what did he create? He created something with a name that, to be honest with you, Nick scared me off. It’s called Cult Dow.
Their whole iconography just looks really scary. It’s a guy who doesn’t have eyeballs with red blood coming, you know, blood tears coming down. I don’t know what that whole thing’s about, but here’s what they’re about. They want to invest in web three technology. They see an opportunity in it, and they also see that Web three is going to change the world for the better.
The way that you and I did when we first came across SAS and startups, and so they created a Dow, they talked exactly about how the Dow is going to operate all in public, the whole operating systems out there. They got a bunch of people who believe in this approach and this investment philosophy together.
They raised money with this dow from people who had similar um, uh, points of. and now they’re investing. And I said, How much did you invest? He says, 2 million in the last six months. So this group of people, many of them completely anonymous, and some of them have come out and told me who they are so I could see their faces and talk to them.
Unlike this, uh, co co-founder of Cult, but they’re all together and raising this much money, working well together, making investments. This is an incredible thing and it’s one of many stories in the Dow world that I think many of us have been passing. If you’re at all interested in it, I want you to go to join origami.com/podcast.
That’s join the company’s origami. That’s what creates all these dows. Join origami.com/podcast. What do you think of these dos? Be open with me, Nick. You can say I hate them.
Nick: Um, I lost a lot of money in the first ever Dow. The, uh, I don’t know if you remember the Ethereum Fork back in like 2016 and, uh, I was, I just only bought Bitcoin before that and I was like, I’m gonna convert some Bitcoin to Ether on shapeshift and I’m gonna throw some, buy some Dow tokens. And, you know, now looking back, I kind of remember it fondly because it’s like I was part of this event that was historic in the crypto world of like, ethere, I’m doing this hard for and being able to pull my tokens back.
Um, I think it’s, I think it’s still early. I’m probably, what, in the crypto world, I’m probably more of like the Bitcoin maximalist. I think there’s, I think the Dow and Web three are going to turn into something. I just think it’s super early to figure that out. And, you know, back in 2017, I created, I was on the founding team of a company that created the first Bitcoin multisig security application.
So this is like, you need these three keys outta the five to unlock your wealth. Very high net worth individuals is what we’re targeting. And I’m very familiar with this idea of anonymity and particularly, you know, we’ve got it really good in the US where it is unlikely that guys are gonna show up to your house and hold you hostage, but in, in other parts of the world, like that’s a real threat.
And if you’re in somewhere, you know, like Pretoria, South Africa comes to mind and you’ve come out as this very wealthy, uh, you know, uh, crypto millionaire, that’s a real risk. So it does make sense to me that it’s helpful to be anonymous. It’s also helpful if you’re worried about the s e coming after you for, uh, unregistered securities.
Um, but yeah, there are a lot of reasons why, uh, I think that’s helpful. But I also think it’s it’s novel. It’s interesting. It fascinates me
Andrew: I should say that I wish that that Dow had given itself a name. So we can say that one, Dow, the
first one
was hacked. That really started things off in a bad way for the
whole
Nick: The Dow.
Andrew: It’s almost like in the early days of the internet, everyone knew a person who lost their, I don’t know, password or something to AIE for who took control of their computer.
Here it’s, we all know this one story. Thankfully, since then, um, there have been safeguards put in. Um, and then as far as security even that’s been, uh, addressed. In fact, I don’t know if you know about Orange. Orange is a Dow created by over a thousand Y Combinator founders. They got together, they created a Dow, they raised an insane amount of money, over $80 million, and they’re investing together.
And in order to do that, they had to find a way to keep the tokens that they have in the Dow from being securities, but at the same time, still be valuable enough that these really sharp guys, if you think about Y Combinator, very smart people, they still need to care enough about the tokens to earn them and to work with them within this community.
Anyway, whole thing’s super fascinating. Um, and I had no idea that you had that much, uh, experience in it, including being in that first Dow, which, um, I, I wish you had some kind of NFT or something to show and say, Look, I am one of the OGs here and I was in it before you, you even were aware of it, Andrew.
Nick: I think I’ve got these, the old address where I redeem my Dow tokens once they Hard for, but
Andrew: So you didn’t get your full money back once They hard forked. They hard forked to
give
people there. You did? Yeah. So then
what’s the, I guess the thing I’m wondering is you shouldn’t have bad taste in your mouth. Why did it leave a bad taste in everyone’s mouth? If, if anything, it had a pretty happy ending all the way around, except that we had the hard fork Ethereum.
Nick: so, so the outcome is, is excellent for people like me and the only person that suffered in that outcome was the hacker, right? They had these funds they couldn’t spend cuz they’re on the old fort. Um, but here’s the problem, as I see it, you have a central authority figure that is able to dictate governance and policy and the whole point, in my opinion, Of a decentralized all like organization is you shouldn’t have that capability.
And that’s something that’s a little different with the Bitcoin network. You don’t have this sole founder, like, you know, Ethereum’s got Vitalic and they’ve got a num number of other very high people at the foundation that can drive decisions like that with Bitcoin. Like, you know, who knows where Satoshi is or if he’s alive, uh, you just can’t do that sort of thing.
So from my point of view, it just sets a bad precedent and it’s like, you know, if you could do that, you know what’s
Andrew: you could fork Ethereum for the good, it means you could fork it for the bad and think that
Nick: right? Or for selfish motives. Mm-hmm. , yeah, you could say this, this group, you know, I disagree with this type of speech, I disagree with this thing that they’re doing. Let’s fork away from that. And that’s the part that’s troubling. And maybe as it matures more and it does become more decentralized, that sort of thing becomes more difficult.
Andrew: I think that’s where you start to see lots of different answers to how to handle it. You have some people where there’s some doubts where they have an in an individual or a set of individual. Who can override just about anything. And so if like the original Dow, there’s a hacker who says, Give me money from this thing.
There’s a group of people who can stop it and say, This is clearly now part of our ethics. Then you have other organizations where they created, like we talked about cult Dow. Cult Dow puts together this group of, I think it’s 50 people called The Guardians, and they have a little bit more sway and different sway within the community than others.
So the, there are different approaches to how to do it. I think what it’s becoming is a little bit like an LLC where yes, if you have an LLC with me, one of us could go to the bank and take all the money out, but there are some safeguards in place. And if anything, knowing Multisig, you know, that what we could do in, uh, in a Dow is you and I could both be signatories on this wallet that we share, but we have a third person who check acts as a check.
That way, if Andrew says, I wanna take all the money out, the third person needs to either be in cahoots or I don’t know. Um, but it’s, it’s a lot
harder.
Nick: that part, the governance side fascinates me and having a legal background, my specialty was really around business transactions and business like, uh, creating LLCs, creating corporations. And I think that’s also the biggest challenge for these dowses, how do you manage governments? And then also there’s this big trade off between personal responsibility where if the money’s gone, it’s gone.
There’s nobody that can retrieve it. And having some team of people that are able to stop bad actors and, um, that has, you know, that has its own risk. So it’s gonna be trade offs. Yeah.
Andrew: How did you go from being a lawyer to being a developer? Because when I talked to Baird, it seemed like he said, I was partnered with this lawyer, Nick, who then needed to learn how to code so that we can build the first version of one of our sites, and he took up coding and boom, he became a developer.
But you had a little bit more of a background than that. I, I think it’s fine to simplify there. Let’s talk here with a little bit more clarity. What got you into development if you went to law school and took on all that debt?
Nick: Yeah, I’ve always been kind of a computer nerd. Um, you know, I, I remember my dad growing up. I talked about at the top of the, the call here, I talked about, uh, loving to play video games. And, um, my dad made this rule where, you know, you need to go do 40 pushups for every 15 minutes of games you played.
So he wanted me to, you know, kind of buck that. And, you know, I felt, I’m 35, so I grew up in an era where nobody could be a streamer. Like that’s not a career, you know, game streamer. Um, you, you’d be a doctor, you’d be a lawyer. So I finished in 2008. I graduated semester early with the economics degree. I was interviewing with Bank of America.
Guess what happened in the fall of 2008? banking crisis. Boom. I get an email hiring free. So I said, Well, I’ll go to law school. Great. Second bat. Well, I made a bad situation way worse by pursuing something I wasn’t really passionate about and racking up a ton of student debt. I went to a private law school and I failed to account for, um, what 8% government loans look like after they amortized over time.
And I also didn’t realize how little attorneys made in my area. So when I, when I finished law school, I had an offer for the, from the firm I’d been clerking with, and I’ll just say it was right under $50,000 a year. That was not enough money to pay the interest on my student loans. Um, and I
Andrew: Legitimately. Oh. Because after you pay for your living expenses, not enough. It’s not like you had $50,000 worth of interest.
Nick: interest.
No, no, no. But yeah, like af after paying for all my expenses, yeah, it was like I couldn’t cover the interest, so I was like, Oh, something’s gotta change. And I also didn’t like what I was doing. . Um, I just got married. My wife was probably like, you know, what the hell are you doing?
Like, you’re . You are, uh, going, you spent three years and you know, all this time and you’ve been working in law firms, like you’re not gonna do that. And, uh, we actually ran outta money. I got a final cash advance and I did a Craigslist housing wanted add. Luckily we weren’t ax murdered. Uh, somebody out, way out toward Keah Island.
That’s where they do the PGA tour. It’s about an hour away from where I live. Out in the middle of nowhere. I found a job as a shuttle driver at this resort, living in a guest house that I’d found on Craigslist. And during that time, I was like really trying to figure out what, what do I wanna do with my life?
And I still had all these great like startup ideas. I wanted to make law more approachable for layman. And I, this is the best way to learn to code. By the way, if anybody is wanting to learn to code, find what you’re passionate about. If it’s a startup idea or something that you wanna build and just start doing it.
Like don’t, don’t try to procrastinate. Don’t go to a code school. Don’t get a computer science degree, just start building and Google your way to figuring it out. And that’s what I did for six months. I drove this shuttle in between pickups. I’d carry my laptop with me, I’d tether it to my phone or park in like a wifi spot in between, you know, picking up guests and I’d do Code Academy or these other lessons.
And uh, I never got even close to launching this thing I was trying to build. But I learned enough over six months to get an internship and I realized that I really loved coding. What started as a means to an end was a tool that I just love. I love the idea of being able to create. In law you don’t have that creativity.
You write a contract and maybe, maybe if things go really bad, you’ll see that contract work five years down the road with code. You can see it working like 20 seconds. So it was an amazing shift and um, yeah, I just kind of like went all in and worked like crazy for a number of years to hone that skill.
I definitely put in the. 10,000 hours over the next five years working, um, 60 to eight hours a week between, you know, this, uh, large publicly traded company that I ended up working for full-time and then weekends and nights for all, uh, startup ideas and kind of honing that skill.
Andrew: You didn’t have a hard time going and being an intern after you went to law school. You didn’t have a hard time facing your wife, your friends, your schoolmates.
Nick: I did. It was, it was humiliating.
Andrew: past it? The humiliation,
I
Nick: I’ll never, I’ll never forget, I was at a, um, I was at a social event with my wife and, uh, I ran into, um, this woman, she’s mid sixties, she’d worked at an accounting practice that shared a building with the law firm I’d been with, and she said, Your parents must be so ashamed.
I’d love to meet her now. I’d love to see her again now. Um, but yeah, you know, there were things like that. People were like, you know, Nick’s gone off the deep end. Um, but I knew, I knew what I was doing and, you know, I, I, I wasn’t, there was nothing was for sure, but I knew that I could make more money as a software engineer than I could as an attorney.
And the other thing I loved about it and the area that I live law is such like, um, old boys club. Like aristocratic type of who, you know, what judge does your dad play golf with? Um, writing code is very meritocratic. What can you build? You know, that’s what it comes down to. And I love that, like, being able to say, Give me a challenge.
I’ll go build it and prove myself to you.
Andrew: And the company that you worked for that was a publicly traded company is Black bod, which is a software company, Right? Like a cloud services provider for nonprofits, things like that
Nick: Yeah. And let me throw in a, a little, um, throwback to your podcast around that time. You’ve been doing this since what, like 2011? Maybe longer? 2012. I don’t longer. Okay. You interviewed a guy named Noah Everett. Way back maybe, maybe 2010 or 2011. And around this time, I think this was like 20 13, 20 14, I was sitting down.
I found an old podcast, by the way, Noah lives in my town, uh, Charleston. Not many people have really made it out of Charleston in the tech sector. And I heard this interview of you interviewing Noah and for me it was like, Oh wow, like this local guy is on this big podcast and you know, if he can do it, I can do it too.
There was that kind of idea. So it’s kind of surreal now. That’s probably been over 10 years ago and now I’m doing a podcast with you about a business that I’ve since built and sold.
Andrew: This was, I looked it up. It was 2010 when I talked to him, and I talked to him at the time a bit because he owned Twi pick huge success story. Twitter didn’t have pictures. He found a way to add picture, uh, a picture feature in He got it according to this headline on my own site to a million and a half a year.
And then Twitter decided they wanted to get into images and they just went on the attack with him. I think they were pretty harsh with him trying to scare him off, and it was a really tough spot that they put him in. I gotta check to see where that guy is. But, um, I think that that’s the best part of what I’ve done here at Mixergy, that a story like his will resonate with someone that I don’t know until we meet randomly and I hear that story.
Nick: Yeah, he, and he’s still here. We actually met up with him eventually and like got to know him and we went to his wedding. So
Andrew: Oh, get out. Oh, that’s fantastic.
Nick: the podcast was before I’d met him or anything, it was just some like legend of a guy, you know, And then you end up sitting down and having beers and you’re like, Oh wow.
He’s. You know this, you know, there’s no big gap or anything. Noah was a, Noah’s a really cool guy and he’s doing well. He’s married and has a, a kid now.
Andrew: All right. And so I see how you got into development. I see. How, how the career developed when you decided you were gonna go off on your own, you and bared with business partners. How did the two of you decide, you know what Nick’s gonna take this idea? Even though it was, it was birthed from a company, we both.
Nick: Yeah. So, um, well, so yeah, Baird and I created Wave. Um, we had, Baird was like really into sports, like sports talk at the time. So the first thing we did was like, let’s build this Sports Talk app so everybody can talk about the sports teams and these little communities. And, um, that one never really took off.
But then we stumbled upon, as we got to know radio podcasters. By the way, a lot of the thesis I have here around building startups translates to anybody who’s building a business. The key here is proximity. If you start working and just start going, you’re gonna learn so much about a. Simply by proximity, you’ll start to get lucky.
You’ll uncover something that gives people value. So we ended up building Wave together. And through this whole story, you know, we ended up having this churn problem. I’m definitely kind of like the financial nerd, Financial guru. Um, and Baird has been like the, the growth machine. Um, so I found this problem of churn and we figured out how we could solve it.
And um, yeah, so then after that we said, let’s, let’s build turnkey. And uh, to kind of kick things off, we realized, you know, the first wave we started with just two people and it was exhausting. And now we had kind of a nice exit under our belt. So we brought on one of my, um, friends is very, very talented designer.
His, um, previous business was found was, um, acquired by Tinder. That’s Scott. He created the super, like, I’m too old to have used Tinder, but people know what that is. And the crazy part is Rob, our other co-founder at Turnkey, he met his wife using the super, like before he’d ever met Scott. So it’s, it that was hilarious.
You know, a year in working together, we realized that that had happened. So yeah, we, we assembled this team and, um, of people that we’d all worked together and had a good rapport with. And, um, meanwhile, like BA also had subtitle, which was like a video subtitling business. So his time has been a little more divided between turnkey and, um, and subtitle, two very different brands.
Um, but, and I will say that those first six months after selling wave and starting turnkey were, were kind of a rude awakening for me. We had been riding high on the mountain, as you mentioned earlier. You know, why wouldn’t you just ride on this growth rocket forever? Um, we were riding high and we were, you know, felt like we could do anything.
We could just start anything, snap our fingers and, uh, you know, be on our way to mega riches with any business we wanted to do. And we were not prepared for the differences from B to C to b2b. It’s a longer sales cycle. The customers require much higher table stakes. You can’t just build a cruddy little mvp.
You need something that people trust. So there was a lot more that went into getting something off the ground, iterating on it, getting used to a sales cycle that can last one month, two months, sometimes as long as six months.
Andrew: You know my friend. Tried to create a service like this that would not even recover. I don’t think it was just going to tell you what your churn was. Actually, maybe there was a recovery anyway, I don’t remember. But I remember I wanted to help him out. And usually if somebody says, Can you help me out? I say, yes.
I’ve had like random stuff on my computer and on my website for years because there’s an entrepreneur had an idea, but this I couldn’t do because it was so embedded into our infrastructure and because if it failed, you are taking somebody who wants to cancel and making their life miserable, which is bad for your reputation no matter how much you’re trying to do good.
And so I, I don’t know that I ever got it up and running on the site. Maybe eventually I did Kareem Mayan. That’s who did it. Anyway, so I, I get what you’re talking about. This is an especially touchy thing to do. And so all those people who told you on, uh, Indie Hackers, Go ahead. We want this. Did any of them sign up?
Nick: maybe three out of a hundred people that were like, Yeah, this sounds awesome. You know, we realize something about that persona that that particular market, they get very excited about ideas and about building things, but then they, they’re very, they don’t look at things from a logical financial point of view always.
And that’s not a jab at Indie Hackers at all. You know, I’ll think a lot of them do it as a passion project, and they’re not looking at a bottom line figure. So I was getting so frustrated. I’d talk to people and I’d say, You’re, you’re actually like, you know, you’re losing customers. And we’d done end user interviews, like, we knew that most customers are not irritated by this.
And the people that are in a bad spot, you know, that, that take a discount because finances are a little tough. They’re really grateful for. Same thing with a pause. Um, but there is this hesitation that these makers that have so much control over, you know, their app, they’re either like, Well, I’m gonna build it myself because I want it to be this exact certain way, and they waste all this time, you know, going to build it.
Or they have this like, you know, moral quandary, like, is this the right thing to do? Um, so as we, as we learned and talked to more customers, we, we realized that we really need to go after teams and particularly founders who look at the business holistically and are really in tune with the financials, um, people that might be looking to get acquired.
You know, there are a lot of different founders that, um, that really value reducing churn.
Andrew: How did you find those founders, the ones who are super into this?
Nick: A lot of work. Yeah. Um, I’ve never been a salesperson. I was, you know, always, I, I, I’m mostly an introvert, right? Like I. Don’t mind talking to people. I enjoy talking to people, but I get exhausted. I also don’t love rejection. Uh, but when you’re building something that you know it works and you can see a business and tell them like, this is gonna save you that much, it becomes easier.
So I got more comfortable with cold outreach, just Twitter. Using Twitter for outreach was amazing. Finding these other founders that I’d already interacted with that ran bigger companies, having the wave sale under our belt gave us credibility. Other founders would say, Hey, I want to get acquired one day, or, I’d like to know what that process is like.
And even being able to say like, reducing churn was critical to getting a higher valuation that we wanted. So yeah, all of that together helped. And um, you know, we since hired a head of sales to help supplement some of our outreach efforts, and it’s been a lot of learning, but mostly on transitioning from everything being inbound to a mixture of inbound and cold outbound.
Andrew: love to hear about one of these people who you reached out to who you can mention. Who said yes after connecting with you through Twitter First, I should say anyone who likes this kind of developer, a guy like Nick Fogel, well, really hard to find, but I can find somebody close, someone who loves this kind of problem, who can obsess about it and can be grateful to not talk to Andrew all day, but instead to be looking at that problem on their computer screen and figure it out.
If you need a developer like that, Well, I want you to go and check out Lemon. Lemon Is is a matchmaking service that will go and find you developers who are phenomenal because they love it. They take on these challenges and frankly, they can work remote at places where you don’t have to pay them as much, but you get phenomenal developers, um, who are, who are as good, if not better than the ones you can find locally.
Don’t take my word for it. In fact, don’t even take their word for it. Don’t trust anybody. Go and have a conversation with them. See if they can match you with someone, and before you decide, get a sense of whether I’m right when I tell you Lemon has phenomenal developers at a phenomenal price. If you want an even lower price, go to lemon.io/mixer, g lemon.io/mixer.
G. Yeah. Nick, do you remember one or were you just looking one
up?
Nick: Yeah, I was actually looking to see who I had permission to share , because it’s been a lot, and you know, with B2B it’s different than b2c, where B2C you can just throw names out, Most people don’t care, but, um, you have to be a little more careful around logo placement and things like that. But there is a, um, really great new ad tracking startup called commonly, I think they’ve only been around for like a year, but they are growing like a rocket ship.
And, um, I reached out to, uh, their founders Grant and Matt, and um, they let us also use their quotes on the website, which was great. But um, yeah, that was a great example of one where I was able to kind of like share our experience
Andrew: was you reaching out to them on Twitter and saying, Hey guys, I’m a developer like you. I’m a, I’m an entrepreneur like you. There’s a tool that I needed. I created it. Do you wanna hear about how it could work for you? Is that the thing?
Nick: Yeah. Although I think have to remember, but I think these guys were from a separate, uh, like, um, like a message board community thing that I’m in. It’s called SAS Friends, and it’s a large community of founders running businesses. And, um, I’ve reached out to a lot of the, the people in, uh, in the Sasin community and pretty sure Grant was one that I reached out to.
And he and his co-founder, Matt, were very quick to check out turnkey. And, um, they installed it right away because they could see the, the value their financial people too, so they could see the value in like, Oh yeah, if I reduce churn, that is growth. And that’s a hard message that I have to communicate. A lot of people don’t get that.
It’s not intuitive that by reducing churn, you actually unlock a lot of growth.
Andrew: saw you struggle to tell that and explain it on the early version of the site of, I should say the site is churn key.com churn. Because that’s what happens when, you know, people who are subscribed stop subscribing. It’s called churn, churn key.co, churn key.co. Um, so you did everything from saying even just 1% is important, which usually when you hear someone say, All I need is 1%, they’re, they’re kidding themselves.
It’s usually some guy who says, If only 1% of my audience will buy whatever, um, or 1% of the internet buys for me, then I’m gonna be rich. Um, but in your case, it’s significant. And so you created this, um, Uh, I don’t this like form that people can fill out with their revenue and their churn and see what a 1% impact would make on it.
And, and that was, I could see what you’re trying to do there. I get a sense that maybe that was even too complicated for people to fully get. And then you created this video that’s still live. I found it on, um, I, I can’t tell if this is like a Vimeo or something, or maybe it’s just still on your servers and you don’t realize that it’s still on there.
Um, but
Nick: Uhuh
Andrew: shows what happened. Someone goes to cancel, then you ask them about, uh, I, I don’t know that I exactly have it. It’s something like you ask them if they wanna pause, you also ask them why they’re trying to cancel and then you offer them a discount. I think your, your thing was at the time, Maybe I’m getting it out of order.
It was, if someone wants to cancel, let’s ask them a little bit. Let’s find out a little bit about them and then decide what we give them. Do we give them a, an offer of a pause? Do we give them a percent discount? Do we give them a chat session, something else? Am I right about that?
Nick: Yeah, that was like the V one basically that you found. Is it me narrating? Can you tell?
Andrew: No, there’s no
Nick: bubble of my face? Okay.
Andrew: nothing at all. It’s just showing it.
Nick: super early.
Andrew: Right. This might be even before the site was fully up on online, but the thing I’m wondering is how much intelligence was behind that? Was it just their picking from one of four options and then youth based on that can tell them that they have a pause, offer a discount?
It was, it was that simple. I’m, I’m imagining a lot more artificial intelligence, but it was that straightforward.
Nick: That that version was that straightforward, you would preset those. And that version I think you’re looking at had segmentation. So one thing that’s helpful is you can segment the cancel flow that’s delivered to the individual based on attributes. Like what is their pricing plan? Are they on like a top tier, bottom tier, middle tier?
How long have they been a customer? If they’ve only been a customer for two months, you may wanna offer something different. And uh, we were also doing a lot of managed, uh, flows back then because the artificial intelligence wasn’t artificial at all. It was our real intelligence from doing this with lots and lots of customers.
We knew by looking at a business and their metrics, what would work and be most effective and. As somebody sets it up and starts getting sessions that flow through, then we have recommendations in a dashboard that can help you to fine tune those and boost your revenue even further.
Andrew: And all that was in version one. Was it you coding V1 by yourself?
Nick: No, uh, Rob and myself, and we hired a contractor too that helped kind of push it across the finish line. I think we started coding in like, so we hadn’t sold Wave at this point. We were just like, All right, we’re gonna start doing this. And the first version like, we’ll just put it in wave prior to, you know, selling it.
But it was September or October of 2020 and uh, we didn’t start selling it until either, I think it was like January or February we started bringing on beta customers of 2021
Andrew: Okay. Wow. So you started it in the beginning of the pandemic or at like the height of it, and then you didn’t get started selling it until after the pandemic was
essentially
Nick: or six months. Yeah. So five or six months of death time.
Andrew: All right. That’s a, That’s actually a pretty decent time to launch because that’s when people are starting to see churn again.
We obviously, we know what happened with Peloton, but they weren’t the only ones. So you did hit at a good time. How involved was getting this to work with people’s software? Because you don’t just have to plug in with, with their payment processor and their multiple payment processors. You also have to plug in with whatever they’re using for membership and understand a couple of other things.
How involved is it? This is scary business for me to get into.
Nick: Very high table stakes for this type of business, and that’s something we didn’t realize going in. We build it for ourselves. Very easy to just look at your billing system and build it for you. But we, you know, with engineering, you’re always underestimating what a project is gonna take. So, uh, for turnkey, I was like, Yeah, we’ll get it done in two months.
Then month three comes, Month four comes. We’re like, All right, we’re gonna bring on an extra contractor. Now there are three of us working on it. Um, so yeah, it took longer, but, um, yeah, it’s, you’ve gotta integrate with Stripe. Really. That was the main thing we were integrating with first. And then we added like Braintree and Charge Bee and Paddle, like all the other payment providers over time
Andrew: When you started out, you were sending out offers to people, talking to them, closing sales, that kind of sales process Got you to how much in revenue?
Nick: for turnkey. Well, we don’t disclose turnkey revenue. Not right now, at
Andrew: Oh, I had it. I guess I won’t disclose it to maybe I was told in, in private. What can you tell me about the revenue? Cuz you guys are super open about wave. What can you tell me about the revenue? It’s in the millions, right?
Nick: for Trin. Yeah, I can’t, I can’t share. We’re in, we’re in discussions during a potential fundraise right now, so I can’t
Andrew: freaking, you know, BA told me and he told me you would tell me. I said, I don’t need two guys from the same thing. He goes, he’s gonna tell you and it’s your business.
Nick: Bear, Bear did not tell me that before the call yet. Sorry to, uh, to disappoint and to leave listeners hanging here, but, uh, in the future we, we may release that. You know, it’s a very different business though when you’re working with other businesses. People don’t share this, and honestly, like, it kind of hurt us with Wave.
We were so public. We had all these copycats come in and they said, and you get, you know, drug over the coals on Hacker News. Everybody, you know, badmouths you, so they’re there. There weren’t really any benefits to sharing revenue at Wave except that it boosted our egos,
Andrew: I don’t think at Wave it helped because podcasters, I don’t think were reading your posts on Indie Hackers and I’d watch your post over the years, Nick, where you went in and you broke it down. I do think it would help here because people who are into churn do monitor their revenue and monitor others.
Um, what’s that other pro not profit? Well what’s the other company? Uh, Bear Metrics. They were very big about showing their own numbers and a lot of us went to look at theirs.
Nick: Yeah. And, and you know what’s interesting about that Profit? Well Sold for Far. I mean, everybody knows Profit Well or Barometric sold for about 5 million or 4.5 million. And, uh, Profit Well, which was very mom about their stats. I don’t know that they’ve ever publicly revealed their, uh, revenue, but they had that big 200 million acquisition by
Andrew: know I did the first interview with him after Patrick sold the company. He had 200
million.
Nick: Oh, really?
Andrew: Yeah. What do you think the difference is? I don’t think the difference is that one of them was willing to share publicly and the other was not. Um, the founder of, uh, Beare said that, Josh said that, that, that his problem was that he was too married to Stripe.
That he started out as like, I guess he got a little bit of funding from Stripe. And so he was in their camp and he had to stay Stripe obsessed for a long time. I actually don’t believe that was a difference. Let’s, uh, here’s how I’m gonna analyze it and I’d like to hear your, your take on it. I think Bear Metrics built a really beautiful product, but they charged for it.
And what ProfitWell did was they said, you know, this whole bear metric product, which is gonna give you analysis of your revenue and cohort and all that stuff, we’re gonna give it to you for free. I love Patrick. It was pretty ugly. It wasn’t very easy to tell. Their people were phenomenal that they would actually get on a call with you and they would explain it to you.
But the thing is that people needed to get on a call with you. And so with Josh when I signed up, all I got was ada. All these people at counseling, I don’t know what to do. And Josh wasn’t able to help for, for years. I think he was not in the help you reduce churn business profit. Well, on the other hand was it’s free.
And by the way, we’ll also help recover some of it and we’ll only charge you if you, if we recover. That was I think, the key difference. Now, profit, well didn’t have the same slickness. What do you think of my analysis of the two of them? And then I’d like to hear what you think like churn key does. That’s different, but I, I can analyze you
two.
Nick: Yeah. Yeah. And I can give you some other, uh, flashy numbers that are not gonna, you know, impact our, our efforts here, um, for, on the turnkey side that
Andrew: Analyze those. And then let’s get into turnkey. What do
Nick: Yeah.
Andrew: the difference between the two of them?
Nick: so I think Profit Well was a data play. This is my hypothesis. Um, because after that Profit Well, or yeah, after the Profit Well Sale.
Paddle suddenly started reaching out to everybody I know that is on a Stripe plan that had connected to profit well, and I thought about it and I was like, Well, I don’t think it’s, I don’t think it’s a secret that if something’s free, you tend to be the product, right? So they had all this data from Stripe customers and here comes Paddle.
Who is coming after Stripe? How are they gonna grow? It’s very hard to get somebody to move a billing system unless you know everything about that business. And if you were to acquire a company that knew everything about all these businesses, you could feed that into pitch decks for your sales team, and then you can reach out and say, Hey, you’re getting this kind of, these kind of stats through Stripe, This number of payment failures, this number of chargebacks, this kind of tax problem.
Another thing Paddle did would send these notices out that say you have a tax bill due for unpaid sales tax. Um, so they could use all of this data and we’ve had a, we’ve actually had a lot of customers on Turnkey who were using Stripe Switch to Paddle in the last three or four months. I don’t think that’s a coincidence.
Andrew: Okay. That’s, I hadn’t thought of that. And, and I think that’s what they were trying to do. They did say Paddle is a. They do a lot of things. One of the things they do is they do process payments and then they do anything related to payment. They wanna get in. I see. You’re saying, look, there are all these free profit.
Well customers now Paddle can go to them and understanding their financials, try to switch ’em over. Okay, that makes sense. I do think that offering that free product was, was very helpful. And I could see how Church Key could use some church key. Turnkey. Turnkey could use some kind. Church key is a thing that you used to open up old cans of beer, I think, right?
Yeah, no, I could see how turnkey could, could, could benefit from having some kind of free option also. Um,
Alright then.
Nick: Yeah. So, so, so, so we do now and that’s brand
Andrew: I didn’t know that.
Nick: Yeah. Yeah. It’s not, you know, we need to do better publicizing that. Um, so, and, and I also, I have to give this caveat. Patrick Campbell and the profitable team have been like a phenomenal resource to the community, their materials and, and like a whole academy they have for SaaS founders.
That was invaluable for us as we were building Wave and the free metrics tool. Like we didn’t have any money to spend on metrics solutions. We couldn’t have afforded bear metrics. We eventually bought Bear metrics in, you know, 2018 or 2019 for Wave cuz we could afford it. Um, so I don’t mean to speculate overly speculate and say sinister motives for the
Andrew: I didn’t see what you said as sinister at all. That
seemed like
Nick: good, that’s
my, that’s my personal hunch. Yep. As a business. I think that’s probably what happened there. Anyway, What was your question?
Andrew: So considering that there are two entrants in the space, one thing that I know that they didn’t do was they could go back when someone’s card pro fail. and say, Your card failed. Come back. That’s one group of people. Or you got a new credit card or whatever, come back. What they couldn’t do is say, You wanna cancel.
We are going to handle what happens when you try to cancel and see if we can head you off before cancellation. Am I right?
Nick: Mm-hmm. .Yeah, that’s right. Um, and a second ago you did ask about the free thing and I said, Oh, we do have a
free, uh, thing. So Profit Well’s, free Metric solution. The way they made money, they have a services arm, which is different. I’m not gonna talk about that. Their core SAS offering was the, um, the retain product.
We talked about this at the top of the call, a per, you get a percentage. The retained customers for fail payments. And we used that for Wave for a little bit and it was good. And eventually they, you can talk them into doing a bundled plan where it’s a fixed rate monthly, You don’t have to do the, uh, if you complain, they’ll give it to you.
For the most part, with turnkey though, um, after we’d been working on turnkey for a year, the giant in the Space Profit well releases what they call salvage offers, which is basically, you know, it’s similar to what we built, not as personalized, you know, that you have to send them your data and then they just make it for you kind of thing.
Um, but it was still like all these people are using their, you know, retain product and we were terrified. You were like, Oh man, like here comes the giant after us. And um, you know, inevitably it hasn’t been as big a problem. You know, these competitive problems, they’re never as big as you think them to be in your mind.
But we had an idea at that moment. We said, Well, ProfitWell gave away metrics for free and then they sold Dunning. What if we give. Dunning away for free, which for a long time, Dunning the, The failed payment solution has been kind of a commodity, hadn’t been updated in a long time. We could do it better than anybody else based on what we already know about churn, and we could give it away for free to anybody who’s doing less than $25,000 in monthly recurring revenue.
So in August, after a few months of beta testing, we release this publicly. So any company that’s just starting out, that’s doing $25,000 or less in monthly recurring revenue, we give our fail payment recovery tool away totally for free. And then even after that, we’re very competitive. So whatever you’re paying for your fail payment provider, will you only have to pay us half of that.
Andrew: Dude, you gotta do a better job of that. That should have been the first thing that we talked about. I had no idea. You know what? And I looked at the different I, I can’t f find it now, but you have a list of features somewhere on the site. There it is. And under how it works. Failed payment recovery, It says Dunning.
So good. It’s free. Got it. And so now if someone’s credit card fails, if a customer credit card fails, you’ll automatically send a message trying to bring the person back and get them to upgrade, update their credit card or whatever. Actually, that’s basically what it is. They get a new
credit card. Right.
Nick: the beautiful thing that we do with that. So we’ve learned so much about, uh, price sensitivity and price sensitivity is so important right now we’re heading into a recession. I think we are. It’s safe to say we are already in a recession. People are actively canceling subscriptions and monitoring their spending right now.
Layoffs are high. Everything. So we’ve been tracking this price sensitivity and we’ve been watching failed payments and cards are failing with more frequency. And one thing we found that nobody else had offered in Dunning is this idea of you person. So we’re one of the most personalized Dun. So people can actually create like this drip campaign for when a payment fails.
You’ll get five emails or however many of the sequence it’s gonna be. At that person’s local time based on, you know, zip code and uh, other information. If you get toward the end of that sequence and they’re about to churn, they’re about to, subscription’s, about to be canceled cuz the card has failed so many times we have discount offers to entice them to go ahead and say, Hey, here’s a hundred percent off.
Just update your card. You’ll get a hundred percent off this next month. Kind of a, you know, that Hail Mary that we’ve learned works so well with voluntary churn to combat price sensitivity or if somebody’s card has just got a low balance and they want to keep using the product. Um, so our recovery rates are exceedingly high.
We’ve got companies that are recovering 68 to 80% of, uh, of fail payments with this methodology that
Andrew: Freaking, I, I feel like maybe you need to, you need to maybe redo your home, your whole homepage to emphasize that. Like for someone who’s, who’s early on in their business, that’s just a no brainer. Put it in, get, get churn recovery. Do you also give stats?
Nick: Yeah, and the, the stats are, so my, um, Rob has, has his masters in data science and data visualization from Oxford, and he’s like 5 38 or any of these other, you know, bear metrics is beautiful. It is as it is. Rob has greater talent with the visualizations he does. I mean, it’s gorgeous works of art. You can just sit there and drool over the, the stats.
So for both the cancel flows and the failed payment solution, you get some really beautiful charts that break down behavior and give you insides and recommendations.
Andrew: Oh, Yeah, I feel like you need to do a better job of explaining that. All right, so free turn busting essentially, right? Somebody comes in and says, I’m signing, I’m signing up. Great. If they cancel because their credit card fails or whatever’s happening with the card, you will go and recover that account and then for free.
And then if the customer wants you to, or if your, if your customer wants you to, you’ll also, uh, offer discounts and other things to keep ’em around. Let me see, what else is there? There’s a discount, There’s pause. There is, I can’t tell what else.
Nick: Uh, free, uh, free trial extension. So this is another great thing. Like let’s say you’re, you sign up for something that’s a free trial, great, I’m excited to use this tool, but you never get around to using it during the free trial period. Well, we have now an offer that says, Okay, you’ve got a free trial.
Why don’t we, you didn’t get around to using the product. Just extend it for another 14 days. That works exceedingly well for free trials. And another thing that I’m really excited about that we just released is this idea of hidden plans or secret plans. So let’s say for instance, you subscribe to something that you’re not using very much right now.
Um, or, you know, the cost is too much and people don’t wanna put a super low budget plan on the marketing page. It could undermine, you know, your current payments and, and your average revenue per user. But if somebody’s leav. You can do one of these hidden plans and it’s like people love the exclusivity of that.
It’s a secret plan. Don’t cancel, just downgrade to this $10 a month. Secret plan. That’s a better fit for you as a customer right now based on your usage.
Andrew: You know what? I think it was Patrick from ProfitWell who just did this whole tweet storm about how Twitter can start charging and he’s the one who said Companies have way more plans than you see when, when you’re on their site. And so you’re saying, Yes, they do. We not only make it available to your customers if you use us, but we also decide who gets to see that and who doesn’t.
And at one stage, and this is where now the new thing that Nick you’re doing is there’s artificial intelligence behind turnkey where you’re trying to figure out what offer to place in front of whom.
Nick: Yeah. And another big AI piece that we found that works incredibly well is freeform feedback. We have customers that have, you know, 2000 people a month going through the cancel flow, some even more than that, and they get so much feedback. You, it would be somebody’s full-time job to go through and read all of that.
And some of these companies do have somebody who, that poor person has to read through all these crazy comments. We surface the most applicable ones and we categorize them to like feature suggestions. Okay. Uh, people that cancel, but they have testimonial worthy feedback, you know, uh, potential chargebacks.
So somebody that’s, you know, angry that they’ve been charged and they’re at a high risk for chargeback, which, you know, that hurts you a lot. Both in terms of your, um, reputation and as well as, you know, extra fees to be, um, to receive a chargeback so you could proactively go after those users. But yeah, that’s another AI based tool.
We have to just comb through all of that stuff that a lot of it’s junk. That doesn’t mean anything. And we surface the most applicable ones for you.
Andrew: All right. The website is churn key.co. You said you had some kind of stats. Let’s close it out with one. One. Interesting. Really, let’s be open. It’s gotta be interesting stat about how you’re doing a churn key.
Nick: so we track revenue boosted. That is our North Star metric. So if you’re a company and you come on turnkey and you install our cancel flow and you install Dunning, um, you’re going to have a lot of boosted revenue. And, you know, some companies are gonna be, you know, doing $25,000 a month in revenue.
Some are higher, they’re doing a hundred thousand in revenue. And keep in mind, we’ve only been around for about 18 months public. This year alone this year. So, you know, we were around for six months and then we’ve been ramping up very quickly this year so far we have boosted revenue 3.5 million for our companies just this year.
And that’s compounding. So it’s increasing at a ever faster growing rate. And just about turnkey specifically, I know I can’t get into the MRR figures due to, you know, our internal efforts and potential fundraising, but what I can say is that we’ve been growing on average by, um, 18% a month for the last six months.
Um, and if you know anything about compounding, that’s lightning fast growth. So we’re finally at the pace that we were at at Wave when we started to hit that nice trajectory and getting kind of an escape velocity. So we are,
Andrew: tell me how many customers you have
Nick: are going. No, cuz then you can connect the dots.
Andrew: because your pricing is up
on your
Nick: you’re clever, you’re very, you’re very clever.
Andrew: I’m trying to get a sense of how big this bread box is. You know, like how big is turnkey right now is the big question. And I think what you’re saying is, look, we’re not at a point where we can talk about how big we are. The 18% is interesting. Only if I know where we’re starting.
But you know, for all I know, you could have been at a hundred
Nick: we could have been at, we could have been at $1. Yeah,
yeah, Yeah. So
Andrew: All right. But I respect that. I think it’s a good story with useful information about how you built it up. I, um, I, the. I’d like to know that, but that doesn’t disturb me nearly as much as the way you undersold the free product.
I feel like that’s a key feature that you’re making available for
free.
Nick: you know, that, that’s good feedback. We’ve been ship, you know, it’s, and it’s a challenge for me personally, you know, moving from product and engineering to sales and marketing focus and, um, as a new feature, you know, you’re launching, you, you’ve got cancel flows. That’s been your bread and butter, right? And now you’ve got this. Product, and it’s hard to think of that. I think I still think of it as like an add-on feature, you know, when really I think that’s a great one to lead with and one that we need to kind of rewrap our marking materials to read with, to lead with this, because it is easier to install. You don’t need to install any JavaScript.
You just click a button basically, and it’s ready to go for you.
Andrew: you know, I used to be
good
Nick: that allows us to sell, cancel flows later.
Andrew: I remember Alan Branch and Steve, the two co-founders of less accounting, less everything. Every, every one of their products did what someone else’s product did, but with fewer features and just more streamlined. What they used to do was they used to, to work with someone just to see if they could reduce their churn or grow their sales or whatever, and then do a big write up on it.
I feel like this free churn busting thing that you’ve got, that you can offer, um, Indie Hackers just seems to scream out for a case study for someone on, on, on Indie Hackers, and maybe a little bit more because there’s, there’s a lot going on here that you could do, but I’m excited about how far you’ve
come.
Nick: that’s good. advice that we’ve got some old, really, really old case studies and we have some that would just blow your socks off that, you know, we need permission to share and, you know, sometimes it’s the most, uh, exciting ones that people are uncomfortable to
Andrew: This is a very hard thing to share. You don’t wanna say, if you cancel, you get it. Like, I, I happen to know that if you cancel, um, Jasper, I think you guys are on Jasper’s site, they ask you a bunch of questions and then there’s an opportunity to get a lower price. Right now, if they start saying, This is what we did, and they write that up, everyone is gonna go to their site, sign up, get the free plan, then cancel, and then get the discounted plan.
And all that is just, you know, it’s, it’s a way of
playing the
Nick: so we do have
anti, we’ve got anti gamification built, so that’s another AI feature. Anti gamification. It, it has a cool down period. So you can’t do that. You can’t game it, you can’t do that. And you could randomize it with segments. So people,
Andrew: think people would be even more pissed, like if I read a case study that Jasper says, we gave people discount after they canceled and I signed up just to, just to cancel and then I didn’t get that. I feel even more jotted. So I, what I’m saying is I understand why it’s hard for you to get, get case studies.
All right. It’s churn key.co churn cuz some jerk is sitting on.com when it means nothing for them. turnkey.co. Um, that’s all right. Our, our tech-oriented audience and your tech-oriented customers don’t give a rats ass. You could even just do turnkey.xyz and they wouldn’t have a problem with it. They’d find you.
So it’s turnkey.co. And then I wanna thank the two sponsored who made this interview happen. The first, if you are all interested about these Dows. I want you to go and listen to the podcast where I do this kind of interview with someone who has created a Dow or is a part of it, and I want you to go check it out by going to join origami.com/podcast.
Join origami.com/podcast, and if you’re hiring developer, go to lemon.io/mixer G. All right, I think we got it here. We said everything, didn’t we?
Nick: I think so, yeah, we covered it all. And, and sorry again about not being able to, uh, share the details.
Very
different business this time around.
Andrew: but it worked out. I’m glad actually that your kids didn’t bust through, and I should say, maybe the audience will tell me differently, but my kids playing the piano. I forgot to tell ’em, Please don’t play the piano now I’m recording. But I said, you know, let me see if I can actually keep it off mic and I, from what I can see, I kept it off the microphone, so
we’re
Nick: who been in some nice background music. You, I, you could pay more for that
Andrew: Yeah. . Yes, Thanks. My kids. I mean, knowing my kids, they’re gonna start to charge me some kind of royalty. You know, they heard the interview or someone made money from royalty that whatever.
Nick: You raised them, right?
Little
Andrew: it up with them. All right, dude. Thanks Nick. Have a good evening.
Nick: Thanks a lot.
Andrew: Thanks. Bye everyone.
