Andrew: Hey, there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. I usually record just one interview, but today’s guest, Nathan Latka came out with a book that I’m really fascinated by. It has lots of different topics. I felt like each one of them could’ve been its own podcast episode. And I said to him, “Listen, Nathan, let’s do two.” And so that’s what we’re doing.
Nathan Latka is a man who is known for starting Heyo, the Facebook software company that then he sold. And we talked about in the first interview what he sold it for and how that did for him.
He then followed it up with a podcast where he interviews entrepreneurs, kind of like I do here. But he turned it into this database full of revenue direct from the CEOs of top companies. It’s called GetLatka. And that became an interesting business. It’s continuing to grow.
But he also has these plugin, actually a collection a little software companies that he bought and he grew. And I loved how in his book “How to Become a Capitalist without Capital,” he talked about how he took these things that were . . . I’m going to say, maybe failing, but had . . . I’m going to say failing for sure, but we’ll see what Nathan thinks. And turn them into assets that are producing revenue on an ongoing basis. So how did he create a SaaS business without creating a SaaS software from scratch? That’s what this interview is about.
And the software that I’d like to spend, probably the most time talking about, is called The Top Inbox. It’s a Chrome plugin that lets you see if people open your emails. And people are paying monthly to use it.
This interview is sponsored by two phenomenal companies. The first will host your website right. It’s called HostGator. And the second will help you hire really the best of the best developers. Nathan has used him. I’ve used them. It’s called Toptal. I’ll tell you about them later.
Nathan: Andrew, thanks for having me on.
Andrew: And congratulations. The book is now in bookstores. When we published this, it’ll be on the week where people can go out and buy it, right?
Nathan: That’s great. Yeah. And like we told you in the last thing, this is a book that will not work in a year for various reasons. So grab it early.
Andrew: Because there’s so many things that are actionable today related to websites and techniques that work today, who knows if two or three years from now it’s still going to work out? All the different software that you have, how much is it producing on a monthly basis?
Nathan: Excluding GetLatka, just the things I’ve bought?
Nathan: Call it $15,000, $20,000 a month.
Andrew: $15,000, $20,000. And the one that I’m most fascinated by, The Top Inbox, doing how much?
Andrew: $6,000 a month.
Andrew: And when you discovered it, how did you even come up with it?
Nathan: Well, this goes back to a basic question after I sold Heyo, which is, is it smarter to buy a company or start one? And I actually think it’s way, way smarter to buy companies than it is to start them. And so I said, “Well, how can I buy cheap companies with potential?” I had to define potential. Potential to me was an audience, whether that’s an email list or a user base or whatever.
So The Top Inbox is one of those. It had a ton of users, but the developer that was working on it didn’t update it for a while. And I went in and, you know, buying this thing is actually a statement because, as you saw, I actually was paid to take it over by leveraging kind of a psychological trick and a big liability.
Andrew: I want to understand that. But first, you discovered it by going into the Chrome store looking for apps that had a lot of users, but complaints or what? How did you know that it wasn’t being updated? You saw the update?
Nathan: Not complaints. Yeah. And the buy . . . if you go in and if anyone goes in the Chrome store right now, if you want to try the strategy for yourself, you know, spend less than a grand to buy a company, go to the Chrome store, search for something you’re interested in, like productivity tool. In the bottom right, it’ll tell you the date that the developer last updated it.
But what I was looking for was a discrepancy between a really old update, like not a lot of updates going out, meaning they weren’t focused on it, but a lot of users. That would tell me, “Maybe they don’t care about it and I can get it for cheap.”
Andrew: Okay. And then you just reach out to him with what? I think you even included a picture of the email that you sent him in your book.
Nathan: I did. I did. Basically, that first email was, it said specifically just, “Acquiring The Top Inbox.” That was the only title.
Andrew: Wait, it wasn’t called The Top Inbox at the time, right? What was it called?
Nathan: Sorry, sorry. This was actually Mailed to Cloud. I’m sorry. It was, “Acquiring Mail2Cloud.”
Andrew: Mail, the number two cloud. Why was it called Mail2Cloud?
Nathan: Well, it was Mail2Cloud or MX here. There was a very touching brand. The big story was though, this was one of the tools in their portfolio at their company. And they just raised VC, and the VC said, “This tool is a distraction. Get rid of it.”
Now I didn’t know that, starting. I only saw the really old update date and a lot of users.
Andrew: Got it. And that’s why they were ignoring it. And so, in my mind, when I see a lot of users to a productivity tool I think, “They’ve got their email addresses.” That alone is an asset, that even if you say, “Look, this software is not working. I’m going to a burn down the whole company and do nothing but e-mail them products.” I could probably make my money back from that. Is that what you were thinking too?
Nathan: Yeah, but you’re like a smart business guy that understands marketing. A CTO, if you say, “Why don’t you e-mail them every day with your products?” They’re going to go, “That sounds like death. I hate e-mails. Why would I ever e-mail my people every day?” They didn’t even consider that.
Andrew: And in addition to that, you also had the ability to, since it was a Chrome plugin, show ads within the plugin. And when people were using it . . . And I’ll say this, I don’t know if you do this or not, I’m curious about it, I’ve had entrepreneurs in my office here, who say in private that a big chunk of revenue that happens with Chrome apps, Chrome plugins is data. That there are companies that pay for data. They want to know where people are going, what they’re doing, what they’re typing in. So were they selling data? Are you selling data too?
Nathan: No, no, no. So this is what the liability was. This tool had taken a $100,000 check from a larger company, which unfortunately I really can’t show that name, but because right now they’re pulling out of all these relationships because of GDPR and the Google updates. But anyways, the important thing is they had $100,000 liability on the books because they sold access to their Chrome plugin. It was a data opening.
Andrew: So there’s a data company. I think I could guess who it is.
Nathan: You probably can . . . Wait, hold on, guess and then read my face.
Andrew: Okay. SimilarWeb.
Nathan: It wasn’t SimilarWeb. Yeah, that’s your only guess. But you’re in the right kind of . . .
Andrew: So they got $100,000 for access to data. Now owe the data or the $100,000 back.
Nathan: They were under delivering the data. So they kept the liability. And listen, by the way, your audience is going, “Wait, wait, wait. How did Nathan know about all this from the outreach?” I didn’t.
Andrew: You just said, “I want to buy it.” And I think you . . . Sorry, what happened was?
Nathan: No, no, you’re right. You’re right. I reached out. I said, “I want to buy this.” By the way, that first e-mail . . . And again, we have it. This is like Page 151, it’s Chapter 9, there’s actual screenshots in here of the emails. But I basically reached out and said . . . Oh, yeah, yeah, yeah, sorry. “Potentially acquiring Mail2Cloud.” And they said, “No,” at first because they hadn’t raised that VC round yet. They were still trying to make the Chrome plugin work because they had a liability.
So what happened was we started getting into conversations after they raised. And I said, “Well, are there any liabilities I need to be aware of? That’s part of due diligence.” And they said, “Well, actually, we have this thing.” And I’m like, “Well, what’s the thing?” And they go, “Well, it’s $100,000.”
Now, this company’s pre-revenue. They have no revenue with a $100,000 liability, but they have 70,000 active users, including the email.
Andrew: Active users?
Nathan: Yeah, including email. That means daily these users were sending at least one email through, it’s called now Send Later or The Top Inbox, every day.
Andrew: Wait, wait, wait. They were sending that many emails to their audience . . . ? No, their users. But what’s the . . . ?
Nathan: Yeah, there were 70,000 individual users of the Chrome plugin that sent at least one email per day. That was tracked using this extension, which allowed users to send later, auto-follow up, track opens, things like that.
Andrew: Got it, got it. So you’re saying, they weren’t just using it and having it in the background, they were actively using one of the features of the software. And this company that you bought from wasn’t monetizing it.
So you were just putting out feelers, saying, “What could I buy? What could I buy? What could I buy?” And you were trying to see, what could I buy for like no money down? And they came up to you and they said, “Okay, here’s the thing.” You then saw the big debt, and you didn’t say, “Okay, okay, I can’t deal with this.” You went and had a conversation with the people they owed money to, and the conversation was . . . ?
Nathan: The conversation was, “Listen, you’re never going to give this money back. They can’t give it back to you anyway. I’m really smart. I have a podcast. I can grow this thing. Why don’t you let me take over the liability? But you’ve got to sign off on the deal.”
So I basically said, “You have to let me pay this liability back over like five years.” So I pushed the payment way the hell out, because my thinking was, “I’ll have revenue by then, and it’ll pay for itself. And then, I won’t tell the other side that I renegotiated the liability, and I’ll make the other side essentially pay me some section of the $100,000 liability to take it over.”
Andrew: And they did pay you some section of it. How much money did they pay?
Nathan: I wanted $18,000. They paid me $15,000.
Andrew: They paid you $15,000. They said, “Look, now you take a $100,000 other debt, you go deal with it”?
Andrew: Take $15,000 and leave us alone. Now you had $15,000 to build this out. Did you buy it as a separate entity, or was it part of your main entity?
Nathan: No, no it was a kind of, I suppose, a kind of real estate for insurance reasons. Its own kind of little bubble, its own little LLC, its own little [inaudible 00:08:48].
Andrew: So worst case, Nathan, people might be thinking, “Well, Nathan’s going to sleep every night owing $100,000.” No, it’s this LLC that owns $100,000. If you can’t pay the $100,000, the LLC goes bankrupt, not you, right?
Andrew: It’s completely separate, even from your podcast?
Nathan: Yes, totally separate.
Andrew: That means you also have to be careful about things like not milking it by sending email just for your podcast.
Nathan: I mean, you can, but it’s just where you recognize the revenue. So like one of the things, and hopefully we get into this, this tool, the value that I saw was this audience, which helps me drive lower [tax 00:09:17] to my podcast sponsors. And we can talk about them a lot more later. But the podcast’s revenues is recognized in a whole different LLC.
Andrew: Got it. Got it. But, I think that the creditors could come back to you if you hadn’t been able to pay them, they could come back to you and say, “Really, you did take money out of this company that should have been ours. We’re owed the money. You should’ve given it to us.” But it doesn’t matter, because you stretch out $100,000 worth of payments over five years or did you reduce . . .
Nathan: Because they had delivered some data. I think it might been like $89,000 or something like that.
Andrew: But you didn’t negotiate it down any further than that.
Nathan: No, I didn’t ask for a discount. I asked for more time. Time is more valuable than money.
Andrew: Got it. So then the next thing you did was, you said, “Look, I’m not a developer. I’m not going to sit down and code this thing up.” Where did you find the developer to adjust this, to fix it?
Nathan: By the way, now I have a private equity fund where I buy companies like this much bigger, and I have a process that I follow. The first step is usually the developer’s not coming with the acquisition. So what I’ll do is, I’ll get the tech stack, all that stuff and over the transition period, I will ask for the tech stack, copy that. I will go to Toptal.com, copy the tech stack into Toptal and have a guy named . . . Actually, there’s a bunch people I work with at Toptal that basically set up interviews of people they find and then that essentially becomes my hired contract work. And that person I hire via Toptal is who basically handles the tool for the first six months before I decide if I want my full kind of dev team to take over.
By the way, I learned about Toptal because I went to toptal.com/mixergy. I think that’s the link from one of your earlier interviews.
Andrew: Thanks, yeah.
Nathan: So it works great.
Andrew: So you go to them and you say, “I want to do this.” Do you have a developer that you work with who can manage a Toptal developer? I find that Toptal doesn’t . . .
Andrew: That you do, got it.
Nathan: Yeah, I have a SWAT . . . It’s a SWAT . . . His name’s Charlie Martin, in New York City. Got him on Google, actually. So it’s a SWAT team, by the way, the way I structure is, there’s a SWAT team at the top of people I pay full time. And so they help me manage the little armies I’m building on all these entities.
Andrew: So even when you had nothing, even when you were just buying what became the Chrome plugin, The Top Inbox, you had Charlie and you were working with him?
Nathan: Because he was helping me . . . GetLatka was growing at that point, so he was helping me develop and build the GetLatka team.
Andrew: And so you at least had someone to watch. And why didn’t you want him to start hiring a developer or take over this Chrome plugin?
Nathan: Well, because he was managing . . . I don’t want him running a recruiting process, he’s expensive. So I did that via Toptal. Toptal saved me that money. And so the Toptal people do the work. And if I didn’t make a decision six months in, I want to spend more money on the tool then I’ll go deeper. Because what I did . . . By the way, you see on page 164, this is all the Toptal engineer did. He put this popup right there. They put this popup. That basically said, “Hey, you’re a Top Inbox or Send Later power user,” because they get 50 uses, “Click here to start paying.” That’s the only thing I paid the Toptal engineer to do, because it’s the quickest way to revenue.
And what happened was, about five to six, seven, eight people every day started signing up for $5 a month or $50 a year plans. And before you know, I had revenue to pay down the debt.
Andrew: And did they actually lock out people who weren’t paying that or was it just being brought up as in [another 00:12:20] . . . ?
Nathan: No. We did. So in the popup, you see here where it says, I don’t know if you can read this, or your audience can read this, but it says, “Choose a plan.” And we don’t lock them out. We say, “Let me use one more time for free.”
Andrew: So this just kept going up. If they didn’t actually pay, they could just keep hitting let me pay one more time.
Nathan: Exactly. Which is annoying as hell, but if you really care about your $5 a month and I don’t want to lose you as a user, you can just keep hitting, “Let me use one more time.”
Andrew: And so you had people who just kept hitting the “One more time,” one more time, one more time.
Nathan: Andrew, I looked at this data almost a weekly. I had people that hit it thousands of times over years.
Andrew: Wow. Okay. And that’s all that you had them build? I thought that was pretty smart too. You talk about in the book, you said, “Look, one of the best ways to turn one of these new purchases around is either start charging, if they haven’t charged for anything,” and I like what you said, “Start charging only people who are the power users,” or if they’re already charging, “Increase prices on people.”
Nathan: Yeah, there’s a playbook I followed. There’s three steps. One is double prices. Two is hire an SEO person, I actually didn’t do that here with Top Inbox because all the organic traffic was coming through the ranking in the Chrome store. So I didn’t need an SEO person. And lastly, was essentially, just invest more essentially in marketing. So that’s what we did.
Andrew: What other marketing did you do?
Nathan: Well, you saw a little bit of it. But I cross-promote a tool . . . Like, when I buy a new tool I cross-promote into other tools that I already own. So the cross-pollenization means, I have the same user but instead of $5 a month, now they’re paying for two of my tools at $10 a month.
Andrew: And so at the very first, the first thing that you did was you started charging. Then, if I understand it right, on your podcast you wanted to get more money from sponsors than the podcast itself would be able to justify. So you were putting in popups for them in there. And so that’s another monetization. And then once you got them all . . .
Nathan: But it’s a reward, just to be clear, like that thing, a lot of people would mess that up royally. What I do is I say, “Wow, you hit 10 uses of Send Later today. You unlocked a free trial on Toptal.” And Toptal is paying me on my podcast for sponsorship.
Andrew: Got it. Got it. I saw that you did that. You also kind of mentioned in the book that you use Sumo for ads or something. Sumo is happy, you’re happy, the user is happy. What was this?
Nathan: Well, yeah. Noah, it’s a little bit of a crazy story though, because I drove him an unbelievable amount of traffic on one of the Black Friday deals, and then like after he kind of knew it was already live, he goes, “Uh, not paying.” I’m like, “Okay, whatever. That’s fine.”
Noah what is one of the smartest business guys I know. And he kind of disarms that and hides it in kind of his goofiness and tacos and sumo wrestling.
But I have never seen somebody that is a larger detriment to early stage SaaS CEOs [giving them 00:14:54] a lifetime AppSumo deal. I have so many CEOs who call my show that say, “I have 10,000 customers and like $2,000 a month in revenue.” I say, “Why? That’s very low.” “We did an AppSumo deal and sold lifetime plans.” How can you sell a lifetime plan? Because that’s Noah’s model, by the way, it’s genius. How can you sell a lifetime plan? You’re committing to that person to pay that you’re going to support them for life. You can’t do that because you have no idea what the costs are going to be over time and you have no recurring revenue stream to invest in developers.
Andrew: Right. I get it. And so by the way, he is such a good like hardnosed, hard-charging . . .
Nathan: He’s smart.
Andrew: [inaudible 00:15:29], “I know where I’m going with this. I got the math in my head,” type of entrepreneur and . . .
Nathan: Works for him.
Andrew: . . . you wouldn’t know it because all he does is smiles, wears his earrings, he’s just like . . . And I believe he’s genuinely both of those things. He’s genuine . . .
Nathan: It’s great. It’s a great business.
Andrew: . . . [inaudible 00:15:40] taco drinker, the taco whiskey drinker.
But wait. So the deal that you had with him was you were going to promote one of the Black Friday deals. He was going to pay you every time you got someone to download the app, one of the apps to pay for?
Nathan: No, I forget what it was. It was just a basic kind of affiliate kind of deal. I think it was like a $30,000, kind of one-time payment or something like that.
Andrew: And he wasn’t going to pay you anything.
Nathan: Yeah. I said, “What is your goal?” Like what number do I have to be? And we crushed the number because I crossed-promoted into a ton of my different tools.
By the way, The Top Inbox users are all productivity users. They’re the exact fit for AppSumo deals, like perfect. He couldn’t have paid anyone and gotten a bigger return probably than me in terms of my exposure to number of users.
Andrew: And he didn’t pay.
Nathan: He did not pay.
Andrew: See? This sucks, I would love to just find out . . . Oh, I’m going to text him right now. I’m doing it in real time. Noah Kagan.
Nathan: While you’re doing that, Andrew, I’ll tell your audience it’s hysterical because someone on his team reached out this year, “Nathan, I saw you have a great article that rings for Black Friday deals, like AppSumo’s doing a deal. Do you want to get on board?” And I just . . . I don’t hit back too much. I just, no response, no response.
Andrew: Boom. Got it. All right, let me take a moment to talk about my first sponsor then we’re going to continue on and see what you did next with this. First sponsor is a company called Toptal. T-O-P-T-A-L.com/mixergy.
You guys heard Nathan . . . Oh, look, he signed . . . he’s writing back to me right now.
Nathan: Call him in, call him in a Zoom call.
Andrew: He says, “Pay him for what?”
Nathan: Call him in a Zoom call. Just call him in.
Andrew: Wait. Go here. Oh, fuck, fuck. I can’t keep texting, sorry guys.
Nathan: Can you send it to him?
Andrew: He says, “No way.” No, it doesn’t say, “No way.” He says, “No.” Nathan.
Nathan: Read it.
Andrew: I can’t because he didn’t give me permission to read his personal messages to you.
Nathan: Oh, come on.
Andrew: But he definitely said, “No.”
Nathan: Call him in. See if he can join us.
Andrew: “We discussed sponsoring, and it didn’t make sense so we didn’t do it. No controversy.”
Nathan: Bullshit. We actually executed the sponsorship and Noah was a friend. So I was going to say, “You can pay at the end.”
Andrew: “The sponsorship and said, ‘You could pay at the end.'”
Nathan: Hold on. I’m bringing you up the traffic data right now to show you how much traffic we drove him that day.
Andrew: He is saying, “No, thank you. B ye.” And he never . . . He’s just like hanging up on me.
Nathan: Has he ever done that to you, ever?
Andrew: End like that?
Andrew: No, no, no.
Nathan: Okay, there’s a reason.
Andrew: But he doesn’t want to keep getting sucked into this with me, but yeah, let’s see actually, I just sent him a text message and let’s see what he says.
You see, I miss the days of Skype because with Skype I could actually call him up on Skype and bring him.
All right. The next sponsor is a company called Toptal. You guys look, I don’t even think I need to do a full ad for Toptal. Nathan was just talking about how he used Toptal for this. He used Toptal for GetLatka, his database company. He used Toptal. I used Toptal. If you’re out there building a company and you need phenomenal developers, even if like Nathan you already have someone and like me you already have someone who’s doing it. When you need somebody new, somebody in addition and you don’t want the headaches of having to go through the process of finding the right person and you want them to be the best, go to toptal.com/mixergy. When you go to that URL you’re going to get something they don’t offer anywhere else, 80 hours of Toptal developer when you pay for your first 80 hours.
Oh, man. He is actually sharing . . . I don’t even know if I could share a screen like this.
T-O-P-T-A-L.com/mixergy. And they also have a . . .
Wow, I’m looking at your screen. What are you show?
Nathan: I just want you to see this. This was 11/23, Black Friday 2017, two days before that, 11/15, and then a year before that when they run a test. These are the hits. This is a Pretty Link tool. So I set up these little things. This goes to . . . I don’t know if this is still live. This was a Black Friday deal, but this is where we drove all the traffic. It was all to . . . Yeah, there it is, right? There’s all to kind of these Sumo products. So no, we drove him thousands of like high quality potential customers. We executed it, no payment.
But listen, it’s okay. I get it. Some people do this.
Andrew: Okay. He’s responding back to me. I hate that I can’t get him on.
Nathan: Call him on your phone and just put it on speaker.
Andrew: You know what? Based on what he’s telling me, I . . . No, I’m not . . .
Nathan: By the way, this is what I mean by your show is less
Andrew: [inaudible 00:19:49] away from me. You’re right. In this case what I’m doing it . . .
Nathan: I would go all-in on this.
Andrew: Go all-in and call him.
Nathan: I would, but that’s my style. I would totally do this, because what you’re reading is he said something like, “Oh, my God, Nathan is going to judge that and this might hurt like Nathan. I don’t want to do it.”
Andrew: He sent me a screenshot for you. You’re right. What I’m doing is actually I’m prioritizing the relationship with him.
Andrew: And you’re saying you would not. You would just say, “Fuck it, I’m going to let that go.”
Nathan: Yeah. But look, I get it, like there’s limited time, like it’s a logistical thing, like I get it.
The point here is, though, I buy distribution channels and I funnel those channels to different people who pay me for sponsors.
Andrew: Okay. Oh, man. And you know what? This really is a moment where I’ve had to decide who I am, and I think in this moment who I am is, I do like the relationships. I am going to stick with the relationship.
Nathan: That’s good. That’s great.
Andrew: I think will just be drama and not adding any more insight.
Nathan: I won’t be suing you.
Andrew: I don’t mind being sued. I get that. I actually find that suing right now it backfires, because we all publish our lawsuits. We all talk about it. It becomes like Bird scooters suing that blogger.
But I do like having a relationship.
Nathan: Anyways, if you guys are curious about what the Sumo kind of popup was, that actually is in the book in one of the earlier chapters. You can actually see what I wrote. You can see how the click-throughs worked. But ignore the whole Noah thing.
This is really, I think, what everyone entrepreneur should be doing, which is how do you buy distribution channels and then figure out the product versus build a product first and then go and try influencers like Andrew to promote it.
Andrew: So the reason that you didn’t want to just copy this, because you could copy that software. It’s not that great. It’s not that new.
Nathan: Copy what?
Andrew: You could have copied, what? I forget what it was called. Mail2Cloud, right?
Nathan: Oh, yeah.
Andrew: You could’ve copy them and . . .
Nathan: It’s not the software.
Andrew: . . . called your new thing the top . . . it’s not the software. It’s the fact that they had some users already who were using it daily, monthly, who you had their email addresses.
Nathan: And they were never going to be moved from the number one spot on Google when you searched “Open tracking.” They had the most five star reviews for that tool. So it’s like a little bit of SEO there built in. They were automatically, no matter what I did, always going to get a couple hundred new users per day. That’s a good couple hundred new email leads. Probably email marketers are using ClickFunnels or whatever. But I’m getting that for free.
Andrew: I get that. You know what? I never understood it until like Rob Walling told me that he bought what became Drip because even though he could’ve built it himself, he said, “It’s really hard to get that product market fit.” The little details of software that will make it something that people love and use on a regular basis, it’s hard to do and it takes a long time. And he’d rather have that and then improve on it than start from scratch. He’d rather have that and then throw some marketing muscle behind it then start from scratch.
Nathan: And he just increased prices.
Andrew: I think he might have actually left the company, and yes, they did increase prices and then there’s a firestorm that . . .
Nathan: Which is great. They have to do it, by the way. You have to increase prices. Nobody like to hear . . .
Andrew: What do you think about what he said? He actually came out and said, “Look, when you’re increasing prices, the number one, grandfather-in people, if you can.” You wouldn’t do that.”
Andrew: It wasn’t like he wasn’t saying to the Drip people after he moved on, “Hey, you should have grandfathered people.” And they said, “Whenever possible grandfathered them in, and why not give them a long lead time so that they know what’s going on?”
And you’re saying, “I’m not grandfathering them in. I buy a Chrome plugin. If I want to increase prices, everybody’s getting increased.” That’s your position.
Nathan: Because what Rob is not understanding is he’s not in charge now of the tactical execution of that. Grandfathering people is very difficult. You end up with a Stripe account with 7,000 pricing plans, one’s like capital and one’s lower case, and one’s like monthly and one’s annual, and two . . . I mean, you know what I’m talking about.
Andrew: But then those older people will never leave you because they know that once they leave, they lose the old grandfather pricing.
Nathan: But what if you want them to leave? What if you are moving away to a new customer segments? See this, people start with even friends in life, you have to know like when to remove people. People are only good at adding things. They’re not good at subtraction. They hate losing things.
Andrew: I’m taking a look at when you talked about this . . . Then you end up with a bunch of different plans in Stripe. It makes me think of Baremetrics. Baremetrics shows all their numbers, including like . . . Anyone can go see it. Go to demo.baremetrics.com and you get to see what they make on a daily, monthly, annual basis. You get to see all the different levels that they charge for. And they also, you can see all the different plans that they’ve had over the years. And you can see that some people are getting one low price, others are getting higher prices and it does become really insane to keep up with. Like, “Look, he’s got to recover 25, the recover 50.” He’s got one with a dash, something with a dash, something without I think.
Andrew: And that’s what you’re talking about. You don’t want to do that.
Nathan: The reason people are scared to grandfather is because they also know those people paying very cheap prices when they look at the usage metrics, they haven’t like logged on in three months. And so they’re worried if they don’t grandfather, they’re going to churn.
Nathan: My argument is they should churn. You should not count revenue from users who are not actively getting utility value from your product. It should never be revenue in the first place. So, like grow a pair, charge the new price point, make them pay. And you know they’re going to churn. And you should actually send them an e-mail that says, every time you bill them every month, that says, “We just billed you $20 bucks for the month. Why the hell are you paying us?” That’s what the subject line should be. And the content, “You haven’t logged on in like a year. You’re wasting money on us. Why are you doing this?”
They are going to love that. They’re going to screenshot it. They’re going to tweet it. They going to say, “This is great customer service.” And you’re going to win them back.
Andrew: I get it. All right. And that’s your position on it. And I was as you were doing it, counting to see how many different plans Baremetrics has. He has 140 plans.
Nathan: Yeah. Crazy.
Andrew: Literally 140 plans.
Nathan: And it’s $1 million AR company.
Andrew: How do you know that? That’s impressive. Yes, that’s exactly what they are, $1 million.
Nathan: $1.2 million, they’re doing about $100,000 a month.
Andrew: That’s right. Look at that. And that’s down 1.5%. Wait, were you looking at it as I did it or you just happen peek on this stuff?
Nathan: No, just because I’ve interviewed on my podcast so many SaaS entrepreneurs, I have a lot of this stuff memorized.
Andrew: So then you are making money from starting to charge. You then started running ads to them. Is that included in the $6,000 a month that you’re telling me?
Nathan: No. That’s only people paying $5 a month or $50 for the year, users.
Andrew: That’s pretty low.
Nathan: Yeah, but it’s a volume play.
Andrew: Okay. And then you do start running ads, AppSumo. What else did you start running to them?
Nathan: Oh, my gosh, everything. My book will pop up, but they’re not ads, Andrew. They’re rewards.
Andrew: Rewards. And so, what’s a reward? If I use it, how do you frame your book as a reward?
Nathan: Yeah, hold on. I’ll read it.
Andrew: You got something ready.
Nathan: Yeah, I’m going to show you the exact popup that is running right now in the tool for the book, because it’s all positioned around. Okay, here it is. So for the book what it says is, “You just unlocked a reward . . . ” Oh, wait, hold on. Oh, here’s the popup. “What does this tool cost me to build? Nathan, here from The Top Inbox Send Later. I just got done writing a book that outlines the costs and revenues I get from this tool. And since you used it, thought you might like to see the numbers.” Page 165. “You’ll only see this link here. If you exit this popup, you won’t see it again. Click here to get the book.” And then it links to a page to buy the book.
Andrew: That’s it. It’s not. You’ll only see this link here? That’s it?
Andrew: Okay. I do like one of things that you’re doing with the book is, you’re constantly spouting out page numbers, which I always found was really effective with those old boardroom classics where they’d run ads, saying, “Understand how to manage someone who’s angry. Page 156.”
Nathan: And the reason I’m doing it, like look, I’ll do it right now, this is page 179, it’s a screenshot of my Stripe account, because you’re audience right now is at the gym or they’re jogging or they’re driving to work, and my goal, like the screenshots are hooks. I’m hoping one of the screenshots we talk about in the interview, hooks them, they’ll remember, “Search Latka,” “Search Nathan on Amazon right now in between sets, at the next stoplight, buy the book.” And then they will go back and listen to this. Look at your show notes, and you go to those pages or just flip through the book when they get it.
Andrew: It also feels like it’s more real. It’s right in here. If you just had this book, you can go and flip to that page. So that’s good marketing. And I see that you intentionally Post-it Notes on all these pages that you want to be able to call out on podcast, because I’m assuming podcasting what that’s for.
I like that you have the book over your shoulder. One suggestion that I have for you is, I’ve noticed that authors who are smart do put the book over their shoulders. I think for you, you need to put yourself back further closer to the book so that it’s easier to read. And then move your desk, like move your whole desk backwards to the book, and maybe even have a couple of other books. Like that stack over on the other side might need to be stacked [it 00:28:03] up.
Nathan: I like that. I like it. By the way . . .
Andrew: [inaudible 00:28:05]. Because I should be able to see it almost as big as your head.
Nathan: I don’t know about you, but this is an ironing board with a coffee stain, like this is “How to Be a Capitalist Without Any Capital.
Andrew: It did look so much more impressive before you showed that.
Nathan: Yeah, right? Now you see . . .
Andrew: Is that your apartment?
Nathan: Yeah, dude. This is one of my Airbnb rentals in Austin.
Andrew: I like the light. The light helps a lot. Well, and you’re just going to sit down here for a couple hours with me as we record.
All right. We don’t have that much more time. Let me talk about my second sponsor. It’s a company called HostGator. Anyone out there who needs a website hosted right should go to HostGator.
Nathan, one of things that I liked about the way you did an ad for HostGator was you said, “I’m going to give you $100,” and then you started talking about HostGator. I started listening going, “How’s he giving me $100? What he’s going to do?” And then you said, “If you go to my URL, on the very bottom, you’re going to see that as soon as you sign up for this HostGator offer, you’re going to get $100 AdWords offer. That will help you get traffic for your website. I’m also going to throw in $50 search credit from Bing and Yahoo.” And I thought, “That’s really good.”
All right. The way that I say it is this. I actually find when there’s a website for something, Nathan, it feels more real. Like I’m going to be running a marathon on every continent. I believe that if I were just telling you that, it would be an interesting anecdote about me that I’m doing this. The fact that I have a website for it, makes it feel more real. The fact that I now have a place where I can go and update people who are interested, makes it feel more real. The fact that later on when you’re thinking, “I think Andrew did a run.” You’re just going to go to the search Google, find my website and see what I did, and then get to connect with it in some way.
Add more credibility. If I’m telling my doctor, here’s one, “I need to go barge into my doctor’s office cause my foot hurt.” I barge in and I said, “Can you please see me? I’m doing this marathon.” They saw the website. They Googled it before, when I told my I was doing it. It feels more real. He said, “Yes, Andrew, we know this mission that you’re on. Come on in here.” And they help take care of my foot.
Anything that you have, if you attach a website to it, it gives it much more credibility than you would think, considering the fact that is just a bunch of numbers on a website, a bunch of like bits and pixels on a website on the internet.
All you have to do to get a plan that will let you have unlimited websites hosted by HostGator is go to hostgator.com/mixergy and select the Baby Plan. That Baby Plan is the one that I love because it gives you unlimited domains. You’re going to start a new plan, create a website for it. Just hit that one button, get WordPress on there, install a free theme, give it a name and now people feel that what you’re doing is more real, more substantial and they give it more credibility than it would have if you didn’t have a website.
All right, hostgator.com/mixergy, and yes, I will give you a $100 offer once you sign up.
All right. The next plugin, the next software that you bought was what?
Nathan: Send Later, sndlatr.com.
Andrew: And how did you come across that and why did you want to buy it?
Nathan: The same playbook. It showed up on the related extensions under The Top Inbox once I rebranded. And so now the reason I loved that is because they actually, both tools, no matter which extension you install, they run on the same code base, which means lower dev costs for me, more users, same playbook.
Andrew: And it was essentially the same thing because Top Inbox does that also, has a send later button.
Nathan: Yeah, Send Later, sndlatr.com, if your audience goes there. Literally, is the exact same thing. It’s just marketing. Some people will search like, “How to send later in Gmail?” And they’ll install Send Later for the use case.
Andrew: Oh, I didn’t realize that. We’re talking about the exact same software, just different names. One highlights one set of features, the other highlights another set of features. But they’re the exact same thing?
Nathan: Yes. So I get major, major cost savings because it’s one developer, same code base.
Andrew: Got it. Okay. But then you can’t sell to the same people the same software twice. The thing that you were saying earlier, which is that sell . . .
Nathan: Well, no one will install both of those. No, no, I would upsell something. It wouldn’t be the same thing that does the same thing.
Andrew: So you’re not doing that right now. You’re not selling a bundle of software.
Nathan: Well, I’m not selling Send Later users in into The Top Inbox. But I’m selling Send Later users into magazine subscriptions, or The Top Inbox users into Blinkist users who sponsors my podcasting. Things like that.
Andrew: Got it. Okay. And then, did you have a . . . You did. You have a third piece software, right?
Nathan: Yeah. So the third one is called eTools, which is probably my biggest failure. That one was doing, when I bought it, $10,000 a month in revenue. And it’s just, I hate saying this, it makes it sound so ego . . . it’s so little compared to the other revenue I’m doing. I haven’t updated it, I don’t even if the site works. Does the site load for you? etools.io.
Nathan: I competes with Hunter. It’s like an email lookup tool. And so the mistake I made here is when I bought it, they didn’t tell me that all the revenue wasn’t tied to a Stripe account. This was an overseas like Polish or Ukrainian thing and they couldn’t actually transfer the asset to me. And it wasn’t worth my time to go try and chase the money. So I don’t know if it’s working.
I don’t know. I can’t load the site, but I know people are still using it because of use [inaudible 00:32:51].
Andrew: No, I can’t load it either. That sucks actually. So, it’s all because you weren’t able to take over their current users payment. So who’s getting that money now?
Nathan: Well, it’s automatically now wiring to me through this very weird way, but it makes it very difficult to streamline our test pricing or anything because I don’t actually own the Stripe account of value.
Andrew: It’s going to them and then they send it to you somehow.
Nathan: It’s just complex and I don’t like complexity.
Andrew: If they had Stripe, would you be able to carve out that? If someone is selling you a plugin that’s part of a portfolio of software and they’re charging for all the software using Stripe, can they peel off a set of customers and just hand those to you? No.
Nathan: No. That’s why it’s best to actually get a free tool with no revenue and then you set the Stripe account from scratch, or if you’re going to buy revenue, that’s what I . . . We, you know, I don’t if you know this, I raised a very small fund, like $700,000 to buy small B2B SaaS companies. I put in $100,000, a bunch of people you know actually put another $100,000 each, and I was paying 8% interest on the money, the thesis was buy B2B SaaS companies at 0.5x to 1x annual revenues. And the problem was, that I just actually gave everyone back their money with interest because I couldn’t deploy the capital because I was competing with lawyers and doctors who wanted to buy a SaaS company, and they were paying way over market value and I don’t want to compete.
So now what I’m doing is I’m raising a much larger fund. I’ll put in more money, but it’ll be a $3 to $30 million fund, and we’ll buy these companies doing north of $1 million in AR. So I’m moving upstream a little bit.
Andrew: So it’s harder to find these free plugins now. The ones . . .
Nathan: No, no, you can be free . . . What I’m saying is, don’t go buy one that’s doing $500,000 a year. Either be totally free or get above the funny money, in terms of who you’re competing with to buy the company.
Andrew: So why weren’t you buying the ones that were just free?
Nathan: Well, because I didn’t have to. They were paying me the $15,000 to take it over.
Andrew: No, I mean, now that you’ve raised all this money. You have $700,000, I think you said that you raised. Why not use that to buy more free Chrome plugins? Is that still available?
Nathan: Well, yes, it’s a time thing. So like I would rather actually use that money to go buy $1 million revenue stream, than go buy 20 free tools, install popups and wait until they get to generating $1 million themselves.
Andrew: And even The Top Inbox plugin is only doing $6,000, which is not huge.
Nathan: Yeah, but that relative to the amount of time that took me to do, I mean, it feels like I’m cheating something. It feels like free money. It really is incredible. It’s a strategy the publisher Portfolio Random House, they didn’t want me to put it in the book. And I said, “Listen, this is a really quick way to essentially cheat and get to a side hustle much, much faster.” Other people would go spend a dollar CPC on Facebook to build an email list of 70,000 users and then try and monetize it. I’m basically short-cutting all of that, getting a liability, negotiating it and being paid to get it.
Andrew: I’m trying to see like a could-I-do-this-now, could I go into the app store . . .
Nathan: Yeah, try it.
Andrew: . . . and find some free plugin.
Nathan: Search, “Google Chrome extension.”
Andrew: I’m in there now. I’m in there right now.
Nathan: And to the left side, you’ll see like productivity tools or like email tools. And so, pick a category that you kind of like.
Andrew: Let’s go with productivity.
Nathan: Okay. And then you’re going to see a bunch of them ranked. You’ll probably see like the Chrome Extension like home page ones. Hold on, I’m going to follow you so I can actually make sure . . .
Andrew: There’s Grammarly. There’s Momentum, which is the thing that when you open up a new tab gives you an inspirational photo, and now it’s adding more tools like a To-do tab. Then there’s OneTab, consolidate tabs into a list. You’ve got Office, of course. LastPass is in there.
Nathan: Yep. So click on like OneTab or one of these things.
Andrew: Let’s go to OneTab.
Nathan: Okay, go to OneTab. And then in the bottom right you should see Updated. It’ll say additional information.
Andrew: Oh, look at this, they didn’t update in a year.
Nathan: That’s a target.
Andrew: It’s been almost exactly a year.
Nathan: That’s a great target. So the next step is you got to be able to find their email address. So is there a website they link to?
Andrew: Finding email addresses is part, I’m really good at that. And so, yes, there is a website, it’s onetab.com. I like to use whois.com as a first step to finding email addresses.
Nathan That’s perfect. And how many five star reviews do they have in the app in the store?
Andrew: A lot. Let me take a look here. So we’re looking at a total of 11,485.
Nathan: Unbelievable. How many users?
Andrew: It says how many? Yeah. Basically 2 million users, they’re just shy of 2 million users.
Nathan: Incredible. That is exactly something that you would try and go after.
Andrew: So now they’re using WhoisGuard, who is protection from NameCheap. So I’ll have to go I guess to their website, and frankly I think I could just tweet around and see who knows the owner of OneTab.
Nathan: You need to find it. You have to kind of hassle you way through this, but you can use Hunter, eTools, WhoIs, some tweets here or there, their email contact form on the website. There’s all kinds of ways to do that.
Andrew: And the idea is now I start to contact them, see if I could sell to them. They’re probably going to say, “No,” because most people say, “No,” and you’re saying over time, you might be able to get one person to say, “Yes,” or even one of these people like OneTab might turn around and say, “You know? I didn’t want to say yes to you before but now I’m ready to get out.”
Nathan: You’ve nailed it, Andrew.
Andrew: All right. That makes sense.
Nathan: And by the way, this works not only in the Chrome store. Let’s say you guys want to buy a marketing tech or a sales tech platform. Where might you look for that? Go to the Salesforce app exchange, run the exact same playbook. Go to the Intuit app store, run the same playbook. Go to G2 Crowd and look at it. I mean, there are all kinds of ways you can see a list of like software companies. And you’re just prospecting through the list.
Andrew: I kind of imagine you could even do it through Product Hunt, there are a lot of people get really big pops on Product Hunt when their thing hits. And then they just can’t manage it, because they’re getting a lot of hits but no revenue. And that might be an interesting place to find them too.
Nathan: Hugely interesting. Andrew, I don’t know. You said Share Screen won’t really work in this.
Andrew: Don’t do it, don’t. Just in case. Ah, go ahead. Yeah, let’s see. Go ahead. I don’t think people will see it, but at least I’ll get to see it.
Nathan: So this is like a media asset that I grabbed. Now, you can read this page view number here and tell me how viable that is.
Andrew: This is a site called . . . I don’t see the site name.
Nathan: I’m not going to tell you what this asset is.
Andrew: 16 million page views between . . . Where is the date that you’re looking at? Between June 1st and July 5th of last year.
Nathan: No, no, this year, 2018. Oh, yeah, sorry. You’re right, 2018. So like let’s go and just look at like January or February.
Andrew: Look at last month.
Nathan: Okay. Look at all December. This is December 2018. How many page views?
Andrew: 10 million.
Nathan: And you might go, “Those are bullshit page views from India.” What’s the site time?
Andrew: Seven minutes, 12 seconds, average site time.
Nathan: Way above average. I mean, most people it’s like 60 seconds and you’re going, “What the is this thing?” The point is here is, the point I’m trying to hit home here is, I’m buying distribution channels. The same thing I’m doing with the putting popups in like The Top Inbox, I can now put in this asset and drive an amount of clicks of high quality clicks from the U.S. that no other podcast host could ever drive.
Andrew: And this is what you bring your sponsor. I like this a lot. I like this whole idea a lot. I feel like we should be doing that this year. I don’t know if it distracts from our business or if it’s just additive, and I think you’re kind of convincing me that we should spend 10%, 20% of our time experimenting with new things like this.
Nathan: Yeah. It’s interesting. This is the stuff for the person that is thinking, “I just want like five, or six or seven grand on the side. I’m stuck in corporate. If I have that income on the side, then I can finally quit and like listen to more Mixergy interviews and like launch my business bigger.”
Andrew: How many email addresses you get of people who are really prime potential listeners of your podcast? So much cheaper than going out and buying all these Facebook ads, hoping that they’re going to convert. It may not be as targeted, but it’s still pretty effective.
Nathan: Yeah. And Andrew, I don’t want to bury the lead here. I use all these assets to promote my Facebook show, which got one 1.2 million views shoot on my phone of me walking up to a random stranger in Austin, investing in their food truck on the spot, that then got picked up by a production company and we just sold a massive deal at CNBC. So I have a show on CNBC doing this in the spring. That’s another massive distribution channel.
Andrew: All right. For anyone who wants to go check out the book, it is called, “How to be a Capitalist without Capital.” We’re going to publish this when the book is available in bookstores. People should read that. They should see what you did. I like how you turn yourself into an Instagram follower. I like how you broke down the deals for software. I like what you did with GetLatka, which we talked about in a previous interview.
You know what? Let’s spend one minute. Let me bring a question to you. Tell me how you would handle it, and then we’ll close it out
So I got fascinated by chatbots, you know this right? I started investing the companies that did chatbots. I wanted to even like create a software company around and I said, “No, screw it, Andrew, focus on what you love. We’re going to stay focused.” But we’ve got all these people who are learning how to create chatbots from us and then go get clients. And then I said, “Would be really hot if what we could do is give them . . . if they’re going after chiropractors, I just love to give them a list of chiropractors so they could go in and start contacting them.”
These two guys in Eastern Europe created this beautiful experiment, where they could do a search on Facebook for chiropractors or basically any other kind of business type, based on their rankings, based on how many people thumbs them up, based on what rating they have, etc. And then they’ll find the contact info for all those chiropractors, so you can find Facebook Messenger, link with one-click it and get them, or you can hit one link and send him an email and say, “Hey, look, I see you’re a chiropractor who is really big on Facebook. I can create a chatbot for you,” or whatever. Or if you want to target real estate professionals, you could do a search for real estate guys. And then it basically is getting all that data from Facebook and you could contact them.
I was thinking, instead of just promoting them, maybe we should be partnering up. What would you do with that situation? I feel like this would be perfect for our customers. I would even just buy it to give it to my customers. But I think maybe we should partner up with them.
Nathan: The question is like, how do you buy the right to allow your customers to reach that list?
Andrew: Do you think I should just invest in the company and own a piece of it so that we could promote it to our audience? Do you think I should just buy access to it for our users? What would what would Nathan Latka do with that, with this software that you think would be perfect for your customers?
Nathan: Oh, I don’t spend time promoting really anything, unless they’re paying me a significant amount money or giving me like equity on a cap table. That’s how you leverage up, Andrew, this distribution channel in Mixergy.
Andrew: And you’re not even going to put in . . . I would put in money. I feel like these guys are brand new, they want help to grow.
Nathan: Yeah, if you want. But see, what are they going to spend the money on? They’re going to pay an influencer like Andrew Warner for a podcast ad. Like you actually are the . . . If you think you are the thing that I’d be spending money on anyway, like it’s really just a trade.
Andrew: You know what they would spend it on? Server costs. Even server costs apparently for something like this, are a big issue for them.
Nathan: That’s interesting. So like I would call up AWS or another Rackspace and say, “Listen, I have a huge show, I want it to be three free podcast placements. And in exchange, I want $50,000 of free credit. It costs you nothing.” Then pass that free costs on to the server expenses. And you’re giving them podcast placement for free.
Andrew: This is what you’re constantly doing. How can I reduce costs? How can I get equity? Got it. And then bring the assets that I have to this, instead of the cash that I have.
Nathan: Yeah, but you have to, like the thing is I see a lot of people in our shoes who create like podcasts or things like this is, they don’t actually get in from the right ATMs. Like they don’t get on the cap tables, they don’t get the actual value of the things they’re promoting when you should protect this channel you’ve build. I protect mine really hard core because it’s very valuable. It’s a very curated audience.
Andrew: Thank you. It is. And I do protect a little too much. I should be using it more. All right. I really like your book. It’s called “How to be a Capitalist without Capital.” I think people should go get it and read it. It’s the diverse ideas that are counterintuitive, that are clearly documented that makes this book so interesting for me.
And I want to thank my two sponsors who made this interview happen. The first will host your website right. It’s called hostgator.com/mixergy.
And the second is a company that Nathan has used to get developers for these companies that he’s working with.
Nathan: Still use.
Andrew: You still use them. I freaking love Toptal. I’m so glad that I’m working with Toptal and HostGator. I feel like good sponsors for me are like I’d love for them to be lifelong relationships, but there are many, many year relationships, and it’s for a reason. So go check out toptal.com/mixergy, top as in top of your head, tal as in talent, for clarity.
All right, Nathan, thanks so much for doing now two interviews. Bye, everyone.