Andrew: Hey everyone. My name is Andrew Warner. I’m so excited to do this. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses for an audience of entrepreneurs. Joining me as someone who’s been along fan. And also who’s, I’ve been a customer of his for years.
apparently a few of you who’ve listened to me after hearing him here in the past, became customers of his enough with the introduction. Let me, let me explain who this is. This is Patrick Campbell. He is the founder of ProfitWell. What they did for me initially was just tell me how much money am I making from each subscriber.
So you get someone to sign up for a monthly membership. Are they worth a lot or a little where they stay for one month or several years? I had no idea. And ProfitWell told us that and gave us charts and did it all of it for free, where competitors were charging. And then they took it to the next level, which is what was so Cigna.
If somebody canceled, they would go back to them and say, do you want to just update your credit card? If somebody’s credit card failed, they’d say, do you want to add your new card? And dude, Patrick, first of all, I should say you sold your company and it’s a bootstrap company. We’ll talk about how much and why I should say that as you and I were emailing underneath your message to me was an email from supposedly you, but mostly your robot at ProfitWell saying we’ve recovered money for you.
So you’re still saving me money. As we’re talking about doing this interview, we’re going to find out how and why ProfitWell sold, how it built up and we could do it all. Thanks to two phenomenal sponsors. The first, if you’re looking for developers, go to lemmon.io/mixergy. The second. If you’ve got some money, the way that Patrick does, you should invest it.
And I’m going to tell you later why masterworks is a good place for you to consider Patrick? How much would you sell for let’s announce it it’s public, but let’s just do it.
Patrick: Yeah. Yeah. So we’re, we, we sold for over 200 million. Um, and, uh, yeah. Went from bootstrap to over 200 million and it’s kind of, it’s, I’ve been sitting with the news for a long time. Obviously we announced yesterday, but it’s still pretty surreal. Cause I’m just cranking already. I’m not even, not even stopping I’m going on with the existing business, but thanks for having me, man.
You were one of the first people. Uh,
Andrew: wait, wait. You were about to compliment me. What? Tell me the one
Patrick: I was going to compliment you. I was going to say you’re the one of the first people I contacted because I enjoy the pod. I enjoy the content. And so I was like, if I want to tell this story, and literally we’re telling this is the first, the first time I’m telling the story after this is going public.
But, uh, yeah. Long story short, it was cash and equity. It was a considerable amount of cash. Uh, I don’t want to necessarily publicly share all those details, but, uh, yeah, it was cashing equity. Um, there’s enough equity that I am very incentivized to stick around, which I think is, is the right move and what we wanted.
And then the cash means that if you know, God forbid, anything happens to myself or the business, uh, many generations are taken care of I’ll I’ll, I’ll describe it that way.
Andrew: Many general let’s do some rapid fire. You were the sole owner of the company
Patrick: Uh, I know, so we were very generous with equity. Um, we were very, um, it was kind of an approach. There was definitely a debate there, like early on, like, do we want to kind of hoard equity, you know, as us in a couple of the initial execs, um, or is it something where we want to kind of everyone to win? Um, I held a considerable amount of the company, so I’m
Andrew: more than 50%.
Uh, I, in a sense I won’t go too deep into it. Uh, but yeah,
Andrew: does in a sense mean? Like
Patrick: good, significant the way to deal with structured. Um, uh, it basically, um, I did get a considerable amount of the value there, so it’s a good question. Um, but I’ll, I’ll leave it at
Andrew: You mean, it wasn’t shares that.
you were offering or options. It was a different structure.
Patrick: Yeah, we had a couple of different structures within the company, um, and especially going into the deal. Um, but it was one of those things that, uh, um, we wanted to make sure that everyone got paid. We wanted to make sure that everyone got paid a good chunk. Um, and, uh, you know, obviously more, some people got more than others just based on their tenure time, impact those types of things.
Andrew: And you made the decisions afterwards or before after the sale.
Patrick: uh, no, like most of the, well, we couldn’t really make those after the sale. Right. But, um, well, you know, there’s stuff, that’s, that’s the one thing a lot of people don’t realize about like acquisitions is like, this is why you gotta really trust. I would argue like your exec team or your founders, if you’re going through, especially a venture-backed acquisition, because if you’re not like going public and even if you’re going public, like a lot of that stuff could shift.
Um, so stuff that was kind of promised earlier on can shift, thankfully we were, you know, not trying to, to, to, um, do something that wasn’t in the spirit of, of, of the equity and stuff like that. But what I was referring to more as like, we took a philosophy that was trying to get to you really early on, where, um, you know, we wanted people to have considerable upside and considerable impact in the business.
And so even our vesting schedule, like really incentivized, um, sticking around, um, being within the business. And then we even chose to like accelerate everyone who was in the businesses, vesting those types of things. So yeah, that’s, that’s kinda what I meant
Andrew: you mean?
Patrick: Uh, well, it was part of the sale meeting.
Like we signed, we sign an LOI, then you kind of go through and you have to make some of these decisions. Right. And so anyone who was in the business who was, um, at ProfitWell for more than a certain amount of time, we accelerated all of their shares essentially, um, to make sure that they, you know, kinda got out.
And this is something that we had promised ourselves like really early on, like that was kind of the expectation, um, kind of going into things if that makes sense.
Andrew: I promise I won’t spend all this time on how much money, because the truth is that that doesn’t really help us do anything. It just helps us gawk. And I want to get to know how you did it, but let’s just spend a couple more minutes on, on money. You have tens of millions of dollars now in a bank account.
Patrick: Yeah. It’s kind of weird.
Andrew: And so I asked you, how does life change with that? And you didn’t even feel happy with the answer. Do you get to sleep better at night? Do you get to dream about what you’re going to do? What happens now with all that?
Patrick: It’s kind of weird because it’s very, um, I think it would be different if I wasn’t coming on board. If that makes sense. Like, if it was just kind of like a sale and like, we’ll see you later, because then it’s like, you know, and then you have the, but, but maybe it wouldn’t have been different. And what I mean by that is I, like, I’ve seen a lot of my founder friends go through exits before and I counseled a lot or counseled her, got counsel from them through this process.
And like, honestly, like it’s, it’s kind of a weird phenomenon because, um, half of the ones I asked, I asked about 30 founder friends who had sizeable exits, like, you know, Hey, you have this size of an egg. Do you take it? Do you do it again or do you not? And like half of them said, no, that they would have kept going.
And half of them said, you know, yes, of course. Right. And all of them took the exit. Right. And so like, it’s a little bit different. It’s a little bit hard, but the main reason was because people had this like void, then all of a sudden they didn’t know how to fill, which I know is kind of like a champagne problem and kind of crazy.
Like for me, it was kind of funny. I had a conversation with someone, um, you know, who’s still in the business a couple of weeks ago and I was like, yeah, you know, millions of dollars in the bank, but like just still writing emails, you know, still, still putting together content, still doing these types of things.
And I think that it, it was, it definitely am a little lighter. I think. I definitely, like, I think I’m, I, I worry a little bit less about certain things, but those have been replaced by like other worries. Like I, I never really feared death or loss of version before, which is kind of weird. And now all of a sudden I’m like, Oh crap.
Like, you know, now I want to kind of, you know, I got here now. I kind of want to enjoy it. Like, oh, that’s really scary. Right. Which is kind of a weird feeling that I haven’t had so long story short, like I, it’s definitely changing and it’s a very privileged thing to, you know, to be able to talk about. But, but long and short of it, it is, uh, it is a really fascinating,
Andrew: So you didn’t have this like insane worry all the time that it was all going to go away and you needed to just lock something in so that you wouldn’t, I don’t know, be replaced by a competitor that was offering everything for free. It seems like you were doing okay. My sense was you finally hit your groove a few years ago.
Am I right?
Patrick: yeah, I think that’s a good way to put it. It, it, there, there were definitely some major problems, um, which I’m happy to get into, like even, even as soon as like two years ago. But I think that. We were settling in, we were the dominant player in multiple markets. Those markets weren’t enormous. And that was part of the problem.
Um, but it was one of those things where like, from an operation standpoint, brand standpoint, product standpoint, we’re really starting to hit a groove, like tons of shit shows like to every company still to fix. Um, but yeah, I, I wasn’t feeling like, oh my God, if we don’t do this now we’re screwed. Like, there were definitely some of those conversations of like, well, like where’s the market going to go?
Like, and obviously the market’s not doing really well, but that like, we weren’t timing the market. I don’t think anyone can truly time the market. But yeah, I think it was one of those things we’re hitting the groove and what really helped
Andrew: mean, you
Patrick: kind of making this decision.
Andrew: I mean, you personally, for a long time, you were almost overshadowed by Josh who ran bare metrics, who was like the cool kid in the space. He had great design. I have to be honest, his design was better than ProfitWell and he was more plugged in and connected. And I feel like you were just not in a lot of conversations.
And at some point, a few years ago, things changed. You were getting more public and talking and like doing interviews and being interviewed, you create, you know, what did it for me? You created the baseball cards of entrepreneurs. That’s like a fun project that is not ROI based that you have got your groove and can do the childhood fantasy thing.
Am I right about that? Or am I misreading things from the outside? All of that.
Patrick: Yeah. It’s a good question. I think for us, for me personally, I. Yeah, it’s a really good question. I think that you’re, you’re not necessarily correct in the sense of like, like all this stuff, like you see the end of it. Right. So we were always like trying to build brand. We were trying to build content.
Right. And then like you start seeing as you called it the groove, because I think that all of a sudden we started getting enough of a base under us. Like we were invited to talk on podcasts there for like, we started doing it. We didn’t like, we tried to push it a little bit. I do think personally, like for me, like, I, I had a really tough time in this market because of just how insecure of a human I am.
I think that, like, we definitely had some issues like early days from a competitive standpoint where it was like trying to like get out there, like, you know, kind of, I don’t want to say getting made fun of, but that’s kinda what it was like in the
Andrew: do you mean who would make fun of it? Who would
Patrick: uh, it just like it’s, I think the indie hacker community, which like I’m a part of theoretically is very, uh, You have some of the most helpful supportive human beings in all of tech, and then you have this like very small percentage of very self-righteous like folks.
And so like the design comment, like you had, like, there were people that I had gotten on the phone for multiple hours to help them with their pricing, just out of like the kindness of my heart. Um, and also like, yeah, it comes back eventually, right? Like it wasn’t a purely like selfless act who like would like then talk crap about us on Twitter.
Maybe justifiably like, oh, this is a crappy product or whatever it is. But like, in a way that was like, just kind of, you know, it really kind of hurt and kind of like hits you at the core because you’re sitting there and you’re like, you’re trying, you’re trying to be really, really helpful. And anyone who’s met me or talked to me, knows that I at least try to be really helpful.
And so it was one of those things where it was like in the early days, like it was hard. It had a lot of anxiety on top of the anxiety of trying to build a business. And I don’t know, like it’s, it’s not, uh, like it’s, it’s, it’s not friend club, right? Like it’s business, you know? So it’s not something that I’m like complaining about, but it’s more of like, yeah, that was hard, but that was the motivation.
I’m very like, you know, unfortunately negatively motivated, um, or insecurely
Andrew: does that mean? That you’re negatively motivated. or insecure? You’ve you mentioned that I wrote it down. What do you mean by
Patrick: yeah, I’m very, I’m very, um, It’s it’s very like, it’s, it’s actually pretty simple. It’s like very tell me, I can’t like, you know, kind of like, um, pushed me, like my coaches back in the day I did, you know, I went to college on a debate scholarship. They would like, like they knew going into a tournament that they would like stop giving me attention because it would like drive me nuts.
Like it was definitely not the great thing as a human, but from a competition standpoint, I was like, all right, I’m going to go, like, when I’m going to go win. Right. Um, and so like that insecurity really drives a lot of like, alright, I’m going to get better. I’m going to go after this. I’m going to study more.
I’m going to learn more. I’m going to like be more helpful. I’m going to get more stuff out there. And so, yeah, I don’t really know where I was going with this, but I think long story short. It was definitely one of those things where like, I did hit a stride because I think we started winning. Right. Like we started winning, we had so many more people on, um, ProfitWell versus the rest of the competition.
Like we started getting recognition in the market. Like people started finally looking at like a lot of the content and that’s what I was saying. It was like, yeah, you started seeing like, when we were really getting pops. Right. But we had to earn those pops by like fighting for every inch, every blog, post those types of things before that.
So, yeah. Yeah. Good, good reflection. I it’s been a while since I’ve had the, uh, the aggressive interviewing and so yeah, I appreciate it. It’s giving me, give me good depth here to explore.
Andrew: it is very friend club, because I think that things are going pretty well for people in this space. And I do feel like you are on the outside of the friend club. Like the friend club is where I was sitting with dinner with Noah Kagan and talking to him about, um, our numbers and saying I was using bare metrics.
And he goes, yeah, but the big secret is profit while is free. That like, that’s him helping out me going and staying at his house when I, when I’m in Austin and didn’t have a place to stay for the night. You know, I feel like for a while you were on the outs of that. And then at some point you got in and I, and I feel what you’re saying is Andrew things were going so well that even my own insecurity couldn’t tell me I wasn’t doing well.
And I could actually finally step into the role that I had found myself in that I had earned.
Patrick: Yeah, I don’t know. I think that’s an interesting, interesting thought. I actually think if it, to use your framing, like we got in by light. Being helpful, right? Like this is, this is the thing that I think a lot of people don’t realize, like I got advice early on that was like, don’t go to events, like focus on product, focused on product.
Right. Which is definitely true. But what I kind of took was like, oh, when I go to events or I go hang out with, you know, even know at an event, that’s a good, good example, actually, all of a sudden, like, he’s going to give me a piece of advice. He’s going to introduce me to someone new. And like, if you give more, like, you’re helpful as much as possible, you get a lot back.
Right. Um, and so I think it’s just like, that was, that was also a hard thing too, because I think that I would tell you in the last two years, I can, I have dozens of examples, not dozens, probably like one dozen examples of people I’ve gotten on the phone with who were kind of part of the friend club, let’s say, uh, and, uh, I ended up like talking to and they were like, oh, I, I, it was like one guy like actually was like, oh, I’m so sorry.
Like, I was like, well, it’s all good. And he’s like, no, For years, I thought you were an asshole. And I was like, what? Okay. He’s like, yeah, like I just thought you were an asshole because I was told you an asshole. Right. And the end of why I was told I was, I was an asshole was because like, oh, like I stole someone’s idea.
Like, oh, we like, you know, basically like we’re trying to sell stuff, you know, like that type of a thing, we weren’t doing the, like, you know, that, that 20% of the indie hacker ethos, if that makes sense. And so, yeah, it’s interesting. It’s really interesting. These, these markets as they grow.
Andrew: I liked Josh a lot too. And I, I think a lot of us do Josh from bare metrics. He did this analysis on Twitter, where he said that one of the reasons why he didn’t get nearly the size, uh, exit that you did is he said from the beginning, he thought of his company as a side hustle, a side project. And he took some money from Stripe, I think.
And then he was connected to Stripe. So he was only doing Stripe analysis. And then the way that he created his product was more directly in line with Stripe and less about a bigger business. Do you feel that analysis was right on his part and then I’d love to see why you think you, you did do well. Why you won.
Patrick: Yeah. Yeah. So first, like I think Josh and I would, I mean, kind of doesn’t matter, like he’s out of this space at this point. So if
Andrew: He sold a while ago.
Patrick: definitely say it. Yeah. I think Josh has extremely talented and. The thing that like, and we have a lot of similarities, like, you know, it was kind of funny.
He would like talk about his Glowforge, which is like a little laser printer. And I’d be like, oh, I bought my glow for like very like similar interests. And that was always interesting, you know, kind of following them on Twitter and following the journey. And so like, I’ve always appreciated him and like the way he looks at things.
But I do think as is, you’re saying like, like I’m very opposite in the sense of like, he starts a lot of stuff. Um, and he has like, you know, he started bare metrics as he said, kind of as this like side hustle in his mind. And I, I can’t do that. Like, it’s really hard for me to do that. Like, I get people who want me to like, do side consulting on pricing or they want me to.
Um, you know, do you like you almost like a speaker’s bureau and do talks on marketing and stuff and it’s, I can’t like I have to focus on like one thing and I genuinely asked him in response to that thread, you know, like, Hey, like I almost wanted to be like, like, how do you do this? Like, I don’t know how to do it.
Right. So I do think like the side hustle mentality, like it, I think it’s really, really good for exploring, but like, when you want to go deep and you raise money and those types of things, I, you can’t, I don’t think you can treat it like that. And I think that’s what Josh has learned and I’m actually an investor in maybe, um, at this point, his new venture.
And so, yeah, I think it’s like one of those things where like, he taught me a lot, not only in like some of the stuff he was doing, but also he taught me a lot in the sense of like, oh, this was going on. And like how I learned from that insecurity as I was talking about. But I think in terms of like the outside success, here’s a couple of things about this market that I think we really realized early on that no one else did.
Um, Selling analytics and metrics is a terrible business. It is a terrible business. It does not matter what analytics suite you’re doing terrible. Like it’s hard. Um, and we did, we did
Andrew: I’m going to write this down and we’ll come back into more detail. Selling analytics is a horrible business. What else were you going to say?
Patrick: I was going to say so also, um, one of the reasons it’s horrible, we can come back to it is because accuracy is so important. So. Our gut was punched. When all of a sudden we were working on this, uh, Nick from ChartMogul was working on this and then Josh bear metrics, all of a sudden, we’re all working on it.
And Josh gets out there and gets the hacker news crowd, like excited goes and speaks at MicroComp, you know, that kind of a world. And all of a sudden it was one of these things where it was just like this gut punch when he like wants it, because we were like, oh crap, he’s got, the crowd is beautiful. It’s really, really well-designed.
And like, we’re so behind, we don’t have a designer, we barely have engineering resources. And so, but what we discovered in that jolt of like, oh, this market’s becoming competitive is, oh, if the numbers aren’t right. It doesn’t matter because the people who are willing to pay enough, meaning the larger companies, they’re the ones who only care about the number being right.
And unlike like a marketing piece of software or something like that, it’s financial metrics. So it has to be. So, yeah, I do think that, like, that was something we discovered and, you know, it wasn’t as pretty, but when we got accuracy, that was the biggest thing that like really drove our growth free, also drove her growth.
But I think the other thing that Josh kind of mentioned, I do think that the Stripe exclusivity partnership was, was really bad for the business. Um, and it, it hurt, like when I found out about it, I was like, oh my gosh, I could have made that mistake because also I wouldn’t have known it was a mistake at the time, because I think that the world was like, and I don’t, like, I don’t think strike did anything nefarious.
Right. I think it was just like, oh yeah, let’s build together and we’ll be on this ecosystem and it’ll be awesome. And then Stripe gets distracted and grows, but there’s still this like two year exclusivity. Um, and that’s hard because the market just wasn’t big enough. There weren’t enough companies on Stripe to support a venture back company I would argue.
Um, and so you needed to build like, and just acquiring these customers is so difficult because you don’t know, even if you’re using a built with data, what subs, what billing system they’re using always. And so all of a sudden it’s. You know, if you send out to a hundred subscription companies, even if you’re targeted, like there’s only a portion of us are using Stripe.
And so all of a sudden you’re like wasting so many calories and different leads and stuff like that. And so, yeah, I do think his analysis was right. I think that, um, I do think that was a little bit more complicated because I just don’t think that this is, I think the free model was the right way. We were going to shut it down or go free.
That was our only option. We weren’t going to sell it. Um, you know, for the metrics product, to, to customers just because analytics is such a terrible business,
Andrew: My problem with analytics is it’s stinks because unless you tell me what to do about it, all you’re doing is making me feel bad and leaving me
Andrew: That’s it. Right. But so if you tell me Andrew lost the customer, I feel terrible. Either. Tell me here’s how to call them and win them back, which is minor or do what you eventually did, which you say we will get them back for you.
But to just leave me with the data is hopeless, sad, and useless.
Patrick: It’s not it’s it’s, it’s not that it’s useless. I hundred
Andrew: know what I’m exaggerating.
Patrick: No, I know. Of course, of course. Uh you’re you’re a media guy, Andrew, of course you are, right? Yeah.
Andrew: but No, but I shouldn’t be exaggerating. Th the reality is that it was helpful to know here’s how much a customer is worth to know. For example, a monthly subscriber is worth a hundred dollars. And if you sell an annual subscription for 200, you might as well just sell annual or bump people to annual.
That little bit of information was useful.
Patrick: Yeah. Here’s what, here’s what I would say.
Patrick: You have a spectrum of trying to solve a problem as a business owner, right? You want some sort of outcome you want lower churn, higher ARPU, better LTV, whatever. Right? In order to get that outcome, you need insights. Insights are really difficult because it’s not just a number goes up.
Number goes down. It’s why, why is the number going up? Why is the number going down in order to get insights? You need analytics. So because of that spectrum, and because you’re so far from the outcome, part of that spectrum as an analytics product, it’s incredibly difficult to get. Uh, business person, owner operator, product person, whoever it is for whatever analytics to appreciate how much effort, how much time goes into making an analytics product.
Right? And we discovered this really early on a startup and a enterprise company, the distance between their willingness to pay was not that high, meaning like, yeah, the startup would pay a hundred bucks, but like, it’s not like, uh, you know, the, the enterprise company was going to pay a hundred thousand dollars for the same type of a product.
And this is why all analytics companies, they, they all start out by saying, they’re going to democratize, you know, whatever analytics across the space. And then they all go, Nope, we’re actually going to go fortune 2000. We’re going to go at market mix panel, Domo grow has done this. Like, they all kind of do that.
Um, because that’s where the dollars are. And when you get to outcomes, which is what we did with retain, and some of the other products we’re gonna end up building, like that’s, that’s where the real juice is.
Andrew: Okay, let me take a moment. First sponsor. My first sponsor is a company called lemon.io. I told you, before we got started, they, they help people. They help companies find developers and they were based out of Ukraine. They still have a lot of people in Ukraine. You had a story about Ukraine, what happened there, and then we’ll come back into this sponsorship.
Patrick: Yeah, totally. So I, um, the, you know, I’m not Ukrainian, but I was helping some companies out of, um, an incubator in Estonia. Uh, I think this was in 20 14, 20 15, right after the, the Crimea incident. And I asked, you know, just kind of making conversation, one of the Ukrainian teams that had come and I said, Hey, like how’s everything going?
And you know, what’s, you know, obviously this is not great or wasn’t great what happened. And they said, we thought you would help us. And that’s how they phrased it. And it was really dramatic. And I was like, Yeah. Like, what do you mean? He’s like, well, the U S like you guys said you were going to help us.
Right. And I felt this like, weird, personal, um, you know, and obviously like, you know, it’s, it’s, it’s one story, but when this started popping off, you know, this year, you know, I sent out a tweet storm and I sent out a, um, a LinkedIn post just saying, Hey, if you’re in Ukraine or even, I was like, even Russia, like wherever.
And you want, like, you fear that a conflict is going to start. Cause this is before the conflict started. You know, let’s, let’s get you out. Like, let’s raise some money, like, we’ll get flights. We got people in Poland who can take you in this was before everything kind of started. And yeah, we got, we got some folks out, which was great.
Um, you know, but obviously, uh, it was one of those things where we got a lot of responses that were like, oh, it’s going to be fine. You know, all that kind of stuff. And it was just kind of heartbreaking, you know, it’s been a whole heartbreaking situation, but, um, yeah, so that’s, that’s, you know, a little, a little personal and I don’t know the lemon that IO guys that well, but it’s, it’s, it’s one of those things where you have, you know, a group of people who, you know, didn’t ask for this, um, you know, even the Russian population didn’t ask for this.
And so it’s just one of those things that’s just heartbreaking all around.
Andrew: It’s shocking how much they didn’t expect it. I mean, Alex from lemon said that he was in Germany on vacation. He came home just days before this whole thing started, which is a reminder to me. Number one, the U S is not coming to help anybody. Let’s see, let’s cut that out. We’re not helping anybody. Number two.
No one’s helping us either. We’ve got to just be prepared to leave. I really admire. There’s a friend of the podcast, friend of my family’s, who was on the podcast couple of times who, as soon as, um, COVID happened, he just went and went to Singapore. He said, I’m looking and seeing, where can I go now? I’m not advocating, going to a different country.
Whenever something goes bad, but I’m advocating doing something, taking action instead of waiting for something to happen. All right. All this is kind of distracting from this ad. Then I’m getting paid
Patrick: It’s a good color though. It’s good color
Andrew: it is good color Actually. Here’s the deal. The dude, Alex ended up leaving Ukraine. He is going to become an American citizen.
So I shouldn’t say America is not helping anyone. He is going to get to be an American citizen because America is welcoming people from Ukrainian and number two. He says his company is doing well. He is committed to paying the salaries of the people who work for him. He’s committed to helping them out, even if they can’t work.
And so I assumed that he wasn’t going to be doing well. He says he is doing better this year than before. One of the things that he’s admitting that this has done for him is it’s allowed him and pushed him to go and get developers outside Ukraine. He realized there were other places like Ukraine, where they’re smart developers who are being underpaid.
And he said, you know, I’m going to bring them to companies that need great developers and don’t want to pay, you know, Silicon valley or even us prices. And so that’s what lemon.io is. They will match you. If you’re listening to me, they will match you with a phenomenal developer. They will work with you and switch them out.
If it’s not a great developer. And frankly, if you don’t like them, you don’t even have to get started. So I think you should give them a shot by going to lemmon.io/mixergy. When you do, they will match you with someone. And because you’re using my URL, they will get you a lower price than other people pay.
It’s lemon.io/mixergy. I am sitting out here in Austin. I think my neighbor’s doing some work, but the neighbor’s like all the way down there, dude. I’m from New York, San Francisco, Argentina, like bonus hours. I’ve never lived in the country like this. Austin still has like five acres land like this with deer coming in last night, there was a Fox coming in.
This is great.
Patrick: That’s awesome, man.
Andrew: You’re living in Puerto Rico now.
Patrick: I am living in Puerto Rico. I, uh, it’s funny you say that with acreage. I actually, I grew up in Wisconsin, so I grew up with a large swaths of land everywhere, almost, almost to a point, but yeah, I moved to Puerto Rico. Um, I think, uh, you know, it would be, it would be disingenuous for me to say that, uh, the, the tax benefits was not a reason to move.
Um, it’s one of these things it’s called act 60. Um, that is really advantageous. And so as the deal started coming together, um, was one of those things where at this point in my life, Jenny, my better half and I like, we don’t have kids yet. Um, we’re going to start down that track. Um, we’d always kind of wanted to live in like a little bit more of a beach environment.
We’ve lived in Boston as well as Utah. And so we kind of looked at it and, you know, we went and visited a couple of times, you know, fell in love with it a little bit and you know, we’re looking at it for the next part of the journey. And so, yeah, it’s exciting. Um, it’s been
Andrew: and you don’t have to pay any taxes on the sale on
Patrick: Uh, it’s, it’s a little more complicated.
Yeah. There’s no, there’s no capital gains. Um, it’s, it’s a little bit more complicated than that. It’s, there’s, there’s some tax I’m going to, I’m going to pay a good portion of taxes. I’ll put it that way. Um, but it’s, it’s, it’s, it’s one of those things where like, it, it’s kind of funny and this is where, like, when you’re going into a sale, like the way you structure a sale, um, what the equity is, how the equity is dispersed these types of things, especially if there’s equity, part of the deal is super, super important.
Um, and it also like for a lot of bootstrap companies, like this is, this is a mistake we made, like making sure that you are, um, doing that hygiene earlier, like, well, before you want to get into a sales situation, um, we just didn’t keep up that hygiene because like, we didn’t need to, we weren’t raising money.
We always said, oh, well, when we go raise money, we’ll, we’ll do that. Cause that was kind of the initial intention. Um, but yeah, just making sure you kind of make sure your ops and stuff is in place. It’ll save you a
Andrew: What do you mean? What kind of high
Patrick: fees. Um, just like, like basics, like there’s some basic stuff, which is kind of embarrassing to admit, but like just making sure, like all the docs are in one place.
Like we had some, we had some of that done, but like all of a sudden, like chasing stuff down, like, oh yeah, the cap table is like 99% accurate. It’s not a hundred percent accurate. Like we got to input those things into Shareworks those types of things. That’s what we use for our cap table management. Um, and then just like your operating agreement, like how that’s structured, if you’re, even if you’re an LLC or your Corp, like what elections you filed that type of stuff.
There’s just a lot of stuff we learned that we’re like, oh, that we weren’t focused on it, but it’s all the stuff in the beginning. You’re like, yeah, we’ll figure this out when it matters. Right. You know? And it’s like, oh, it all of a sudden you’re in it. And it matters. And it’s like, oh, there’s that thing that we should have done three years ago or something like that.
That’s really important. So just whatever your type of business you are, just, you know, spend the money, like spend the money on a decent lawyer. It doesn’t have to be the most expensive lawyer, but just to make sure you’re, you’ve prepped your company for sale. That’s, that’s the code word that I, I think, uh, we’ve talked about for, for a while now.
Andrew: From what I see here from this Google search, you have to live in Puerto Rico for 183 days before act 60 tax benefits kick in. Right.
Patrick: And it qualifies. Go ahead.
Andrew: no, sorry. You did qualifies.
Patrick: Yeah. So you’re the year of the move residency. Um, Basically as retroactive to January 1st, as long as you meet a number of requirements. Um, and so this was fun to figure out because talking to many lawyers about it and texts, texts, folks, I’m just trying to figure it out.
But, um, yeah, the way that it’s structured, it also like the value. This is why I’m paying some taxes is because the valuation of your security before, um, moving to Puerto Rico that is still taxed. Right. And so basically the taxes up to my move, and then basically when the sale goes through the valuation increases.
And so that’s what will be fair for tax or free from capital gains tax? Yeah, it’s, it’s complicated. Don’t just go to someone who does this all day, every day, because like the first guy I talked to, he w I just asked all these questions and he, everything was, yes, everything was, yeah, of course. I was like, well, what if I don’t do this?
What if I do this? Oh, yeah, it’s fine. Well, what if we’re structured this way? Oh yeah, it’s fine. And it just was to the point where I was like, I know he’s just trying to get my like couple of thousand dollars to file this thing. Um, so we found some good folks through our, um, through our accountants and stuff like that, but, uh, yeah.
And also like, I. I’ve I haven’t lived there that long. Um, but I, I think that what we learned towards the end of the process is like, make sure you’re willing to be there regardless of the tax benefits. It’s, it’s great that the tax benefit is like a big incentive. And like, I don’t think we would have looked at Puerto Rico without it, but just make sure, like, you’re, you’re not just doing it for that because everyone we talked to who did that, um, in different places, um, they regretted it.
Um, and we also were like very clear on what our expectation was if like, okay, we’re going to have kids, we gotta make sure there’s good schools. Like we checked all that stuff out, even though, you know, we’re a few years from that, if that makes sense. So yeah, just, it should be a part of the calculus, but it shouldn’t be the only part is what I’m trying to say.
Andrew: well, the reason I brought up the 183 days is because I was wondering if that’s how long you were working on this deal and kind of pausing it. How long has it been?
Patrick: Uh, we signed the term sheet. Around, I think it was like January 15th, January 10th. Um, that was like the LOI. Um, I think we closed, I don’t remember the exact date, but we closed in beginning of April, um, where we signed to beginning of April, we did a split close, um, that was basically, um, um, you know, sign and then there’s a bunch of things to get done.
Like we told the team like two days after we signed, just because new employment contracts, all that kind of stuff needed to get done before technically closed.
Andrew: Okay. Wow. You’ve been sitting on this for quite a while. We’re now May
Patrick: I’m excited. I’m excited to get it out. That’s why I was so excited about yesterday. Less about like the impact, but it’s more about like, Hey, this is, you know, I don’t have to like, you know, hide this or be under wraps, if that makes sense. So yeah.
Andrew: It does. Um, let’s speaking of. You. And I talked before we got started about how you had a culture conversation with your team that resembles where base camp and Coinbase, uh, did, which is what they did was say, we don’t want politics at work. Go be political as much as you want, but keep it outside of the office.
What was it like for you before you said that?
Patrick: Yeah. So we didn’t, we didn’t quite go as far as what they did to, to be clear. I think that. Here’s here’s the thing. I think I kind of talked about this in the beginning about making sure everyone got paid, making sure it wasn’t just like, you know, I get a bag and, you know, everyone else’s, you know, even if they were paid and that’s what they signed up for.
Like, I thought the MailChimp thing, you know, I don’t know, I don’t want to judge like Ben Chestnut or anything like that, but like, that’s a tough thing. Like I think it was $11 billion and like the rest of the team, you know, wasn’t, wasn’t getting, you know, a ton like that’s that’s um,
Andrew: I don’t even know if they got anything
Patrick: for, I think they got a bonus.
Andrew: you more. Okay. But their whole deal was, they were going to pay people more without having the risk of a stock, uh, or option package. And that’s that didn’t turn out so well, but, you know, that’s what they signed up for. That’s what they were looking for.
And I see. And so you didn’t have that. Okay.
Patrick: So, but the reason I bring that up is because I think like at the end of the day, Your company is your people. And I don’t mean that like everyone’s hears that and goes, oh, fluffy feelings, these types of things. And the way, I mean, it is very practical. It’s like, you want to make sure incentives are aligned and incentives are not just money in stock, but incentives are like opportunities and growth and, you know, management and stuff like that.
And we we’ve set up a really good structure. That I think, you know, paddle like really enjoys and really appreciates, which is like, you know, we have people who are, you know, nine to fivers, but they work hard, they do their job and it’s great. Um, and they, you know, they’re, we, they know the boundaries and then we have people who like, they want to speed up their career 10 years, um, in, in a two three-year period, right.
They just want to go balls to the wall as they say. And so I think for us, like we always thought, okay, we want to be really accommodating, um, to what the lifestyles people want, as long as they’re going to put in the time and the work and the effort and get the performance, whatever that might be. And I think we made a really big mistake in that mindset because we confuse the accommodation with basically.
Not having like very clear, like these are the values that we have, and these are the values that are important and we will hold dear. And that means that not everyone’s going to appreciate those values. Right. And some of these values are things like we really like feedback is non-negotiable like, we talk about that.
That’s the phrase we use now, the way you receive feedback is super negotiable. But feedback in general is non-negotiable we talk about things like, Hey, like transparency is super important. Obviously there’s HR things that are not transparent, but like transparency. It’s like, we’re not going to like say, you know, something, um, you know, one place and we’re, we’re not gonna, you know, we’re not gonna have bad integrity and then say something else.
Um, we talk about the most charitable interpretation principle. It’s a big thing for us. So like, you know, if you said something that offended me, Andrew, instead of being like, you know, screw, you are going to be a manager or whatever it is, I’d go to your Hey man. Like, I didn’t really like how you said that.
I’d give you the most charitable interpretation that like, you didn’t know that and then you’d go, oh my God, I’m so sorry. It’s like 99% of the time that what happens. We like always talked about these things and there’s others, but we didn’t like defend them. And one of the things that kind of came to a head was, um, we had a situation where like about two years ago, we just, I had two hours of every week and I didn’t realize it for months, two hours of every week was being spent on like, either talking about like what ProfitWell could do.
Like this thing that was out of our control, um, or, um, like talking about like, oh, well this person said this or this person said that and kind of handling like gossipy, like political, like bologna, I would say. And so what we did is like right around, it was, it was actually before like the base camp Coinbase stuff, but we, we basically started saying like, as a culture, like, no, no, no.
We care about these things. If you can’t give MCI, um, barring, it’s an egregious thing that obviously HR should get involved with, which thankfully we haven’t ever had. But if you can’t give MCI like, or you have a problem with MCI, most charitable interpretation, like this, isn’t the place for you. And that’s okay.
That doesn’t mean you’re bad and we’re good. It doesn’t mean you’re good and we’re bad. It just means that like, you’re just not going to like this culture. Like there’s going to be resentment that builds up all that kind of stuff. So like, like let’s just find you another home, right? Around the base camp thing.
We thought about this because we were like, oh no, like a year ago or whatever, like this was like this kind of stuff. This would be a hotbed issue, like at ProfitWell. And we wrote a memo, we do a lot of memos and basically said, listen, you can talk about whatever you want, but you’re not entitled to anyone having your opinion.
You’re not, you’re not entitled to get super offended by someone else’s opinion, but also like we’re not, we’re here for one thing. We’re here to serve our customers. We’re here to build a great company. We’re here to build a company that we’re all proud of and that’s our focus. Right. And it was, you know, basically like, you know, do what you want, but like here’s, here’s kind of where we stand and what was kind of beautiful about it is, you know, we published it, we sent it to the team.
We had an all hands about it and, or we had an all, we talked about it in all hands. The feedback was like, why are we even talking about this? Right. Because we had started basically curating that culture already. Um, and so it was one of those things that I think that was really, really powerful for us was just like controlling for, you know, those things that didn’t fit with our culture, which is really hard because as they always say, like, you know, they’re skills that people have, or the people are really high performers, but they don’t fit with the culture.
And then your whole team suffers because even though they’re high performer, like they’re just not fitting, you know, the things that you hold dear. And that’s really, really tough. So that’s kind of our story with, with people and stuff and it was
Andrew: what do you mean? Can you give me an example? What’s a topic that someone would have a hard time giving a charitable interpretation to
Patrick: Um, so, um, let’s say, I said, um, what’s a good example. Um, Let’s say you didn’t like, you know, I called you a bud. Oh, it’s a bud. You know, some people like, you know, it could be as innocuous of that. Right. Well, what would happen is, is like you would go like a person who doesn’t fit. MCI would first assume that me saying bud was.
Offense offensive or like, I was trying to bother you, even though I didn’t know you didn’t like being called bud. Right. And then what would end up happening is, is like you would go to the manager and you would go to the manager and say, Hey, you need to tell Patrick that he shouldn’t be calling me, bud.
And then the manager would be like, what? Like the expectation would be to go to me. Then they would go to me and be like, Hey, so-and-so, doesn’t really like bud, when you call them that. And you’re like, well, why didn’t they tell me? I don’t know, like, it’s they think it’s offensive, right? Like that’s, that’s a problem.
And like when you go to that person and say, Hey. Like, honestly, like as an adult, you should tell them that you don’t like that. And nine out of 10 times they’re going to go, I’m sorry. I didn’t even know, like they have a problem with that, right? Like, well, what if like, you know, someone does this and it’s a lot of what ifs and it’s like, well, we’ll, we’ll handle that judgment and we’ll handle that situation when it comes up.
But like, it’s, it’s just one of those things that like, it’s, it’s hard or like I gave you feedback, but I didn’t give it exactly how you want it. Right. Oh, Patrick like hates me, Patrick doesn’t like me, Patrick is just being mean, you know, that type of stuff like that stuff happens a lot. Um, and it’s one of those things where I think a lot of companies just kind of accept it and try to work around it rather than being like, Hey, this is not how we handle conflict.
This is not how we handle, like working together. Um, and you know, this is how we want to handle it. And I think that that’s, it’s hard. It’s really, it’s, it’s surprisingly hard. It seems so obvious. I’m sure in how I describe it, but like, it just takes one or two people that like sucks up a lot of time with this type of.
Andrew: I imagine that the word is not bud, but guys, I live in fear of accidentally calling the wrong people guys. And I’m practicing y’all, especially since I’m here in Austin, which feels so wrong out of my mouth. You all folks. Definitely. Doesn’t it sound like I’m Obama.
Patrick: less about words. Yeah. Yeah. It’s less about words normally. Like it, it happens with words like that type of a thing. Um, but it’s, it’s more, it’s it’s more often like, and I are working together like I’m and I’m a very direct person, or at least try to be. And like you and I are working together and I go, Hey, Andrew, like you wrote this email, this line doesn’t work.
This is kind of shit. This line like needs to be better. And here’s how to like, fix these three things like you. And I might have, like, that just might be how you work to like, and you might be like, well, no, I don’t agree with this. And we have a conversation. It’s great. There’s this, there’s a certain archetype of people that that’s really difficult.
And, and I don’t want to say that, like, I’m better in, in like I have superiority over how I handle these conflicts than them, but I just know that like, our culture is very much like. Hey, let’s get feedback. And if you don’t like how I gave feedback, like maybe you wanted to give an, a differently, you’re going to let me know, and then I’m going to adjust.
So I’m not always going to be perfect at it, but like, we’re going to work together like that. That’s, that’s kind of what we focused on. So if someone has like a really big problem with like that type of feedback and they need a compliment sandwich and those types of things, like either can’t be their manager.
Um, or, um, if it’s, if it’s agregious maybe, maybe they shouldn’t work here. Right. And I think that’s a big thing, um, at ProfitWell that
Andrew: If people leave
Patrick: Um, it wasn’t like, yeah, it wasn’t like, there was a like, oh my God, we had this moment in time. And then a bunch of people left or anything, but we, we definitely lost, we let someone go because it was w it was very bad, like, think of what I’m talking about times 10.
And it wasn’t
Andrew: easily offended instead of giving people a charitable interpretation.
Patrick: I don’t want to say offended because it’s like, like, it’s not, like we were saying guys all the time or these types of things. It was more of like, and, and the problem is too, is like, a lot of this happens when you’re holding onto someone who isn’t as good at their job as they need to be.
And this is a big problem. Like, it’s like, Hey, if you’re a 25 out of a hundred on this skill, and you need to be at 50, like we were arrogant and it’s it’s well-intentioned, but we were like, arrogant enough to think like, oh, we can help them. Like, we can get them to a 50 out of 100. To get from 25 to 50 on any skill, like that’s probably baked into like your education, your life, whatever.
Right? Like I’m not gonna be able to do that in two quarters, right. With some of these things, unless, unless you are like, yup. I will take the fire hose of feedback and we will do 17 iterations of this thing and all that kind of stuff. And so it’s, it’s, it’s not like an offensive thing. Sometimes, sometimes it’s just an environment thing and yeah, so we, we did let someone go and that was the example of someone we let go is like they were in, it was going on for nine months and they hated us.
And we were like, just so frustrated. And it wasn’t again, because they were a bad person. It’s just like, we put them in a job that they, they were coming from a job. They were fantastic at, at the company. And then they were put in a job where like, it just, they didn’t have the development speed. Right. Um, and that’s hard, but then, you know, we lost a couple of other people, um, You know, mainly because I think that like, they, they wanted less of a feedback culture.
Um, and I actually heard from one of them recently, um, and they were like, you know, th they actually were like, I thought I wanted this other culture. I went to it. I was fired without knowing why, like, everything was fine. And then all of a sudden I was fired and it turns out when I was fired, they were like, oh, you sucked at all these things.
And you’re in this person was like, no one told me. Right. And so it’s, you gotta pick your strokes. And I think as a company you gotta like, kind of commit. Um, and again, I’m not saying we’re right at this. I think it’s just one of those things. Like what kind of culture you brewing? What kind of culture are you building?
Andrew: Let me tell you about my second sponsor. Then I want to come back and find out and talk to you about why paddle, like, what is, I have a few ideas of what paddle is. Tell me if I’m right at and understanding, and then we’ll talk about your health masterworks. When I told you that I was going to read an ad for masterworks, you said, then you’re going to tell me about all the art I’m not going to invest in.
Do you know what you’re going to invest your money in?
Patrick: Uh, I am not touching the money for at least a year. Like I might buy a couple things here and there that, you know, just kinda to spend a little, like Jenny told me I had to buy something gratuitous and I didn’t want to do anything, but, uh, no, I’m not gonna touch it for a
Andrew: What’s your gratuitous. Yeah,
Patrick: do well, I do like art.
I just don’t. I think all the art I would want, I would need to be a billionaire to afford that’s that’s the problem. But I could invest with masterworks
Andrew: That’s the thing, what they do is they have professionals who can pick the art, and then if you want, you can invest in it and not own the whole thing. You own a piece of it. And the reason you might want to do this now is because contemporary art prices outpaced the S and P 500 total return from 1995 to 2020 by 165%.
Let me give you a little stat about inflation. Contemporary art has, uh, has a price appreciation of 23% on average. When inflation is above 3% and these people, they sold their first three paintings that they sold each realize a net annualized gain above 30% per work net of these. This is what masterworks does.
And if you’re thinking at some point, you might want to actually own the whole thing yourself. You might as Well,
buy a small piece of it. So you understand it. So you get to see how the process works profit from it, hopefully, and watch the whole thing from sale to, from purchase to a holding to sale. If anyone out there, including you, Patrick, wants to get in on this.
What you need to do is go to masterworks.art/mixergy. They’ll get you right in. You do the first thing I did when I got in with them, what you do is you just get on a call with them and you say, well, how does this work? And you throw all your questions at them and they walk you through an understanding of how, how it works, how little you could invest in it and what you could expect as you continue masterworks.art/mixergy.
And I should say that because of what this is, you should see important regulation Ady disclosed. Important regulation, a email@example.com slash CD. And of course, if you want to sign up, go to masterworks.art/mixergy. All right. Here’s what I know about paddle, the company that you sold to that you’re now an investor of that a major portion of your, your assets are in there.
Kind of like striping that I could use them for payment processor, but they also have this feature where with Stripe, I have to make sure that I’m paying sales tax, that I’m doing all the paperwork. Right. And what I think paddle does is say, tell you what Andrew, you’re not technically selling to your customer.
You’re selling to us. We’re selling to your customer. We’ll deal with the sales tax. We’ll figure out what needs to happen with them. Am I right?
Patrick: Yeah. It’s um, the way I’ve been describing it is we do all this for you. Um, and when you, you bring up tax for instance, right. What people don’t realize, and we’re going to definitely get into some content. Cause I think it’s an amazing hook one because it’s, it sounds crazy. But two, because it’s true. We go to jail.
If we mess up your taxes, like that’s what people don’t realize. Like, because we handle like all the tax for you. Like literally you plug paddle in, um, handles your billing subscription management, localization 29 currencies, all the payment methods, all these other things. But because it handles like tax in a turnkey way, wherever you sell.
And it also allows you to sell everywhere. Um, we take on the risk and we take on that burden and um, that’s kind of the big difference with, you know, kind of other payment providers. And it’s just kind of interesting. I think this, this whole do it for you. Ethos is exactly how we think about things. Um, and that’s how they thought about, um, building their product.
And that’s, that’s kind of the nexus of like why we even started and honestly why we’re here probably.
Andrew: The do it for you, ethos, meaning at ProfitWell it was, we’re not just going to tell Andrew that a customer’s credit card stopped working and let him do it. We’re not even going to do an API to make it easy for him. We’re just going to do it and come back and report when we’ve got the money back and paddle is not going to give me information and make it easier for me to pay sales tax.
They’re just going to take on sales tax.
Patrick: A hundred
Patrick: Yeah. And it’s it’s yeah, it’s more of the sales tax. It’s, you know, we got invoicing, like the currency and payment methods. It’s really interesting because, um, you know, and, and what a lot of people don’t realize, like a lot of the stuff was like, oh, are you competitive with Stripe now?
And it’s like, it’s not really. Um, and the reason for it is it’s, it’s, it’s where like Stripe for first of all, we’re a huge customer of Stripe as paddle. Um, we’re probably in their top a hundred, 200 customers. Well, we use a bunch of different payment folks. And so what, and the re the point I was trying to make was, is like Stripe.
Isn’t great in France. I think they’re fantastic in France, but like, let’s say Stripe, isn’t great in France.
Patrick: Paddle has the ability to basically swap out. Um, and they do this obviously in real time at, for you, right. Um, Stripe isn’t in a location. So we basically have the right payment backend, um, for it to be taken care of in that particular location.
Um, and that’s the biggest thing is it’s like, it’s, it’s not quite an apples and apples comparison. Like there is part of the Venn diagram. It does definitely cross over. Um, but it’s very much like just a different approach to handling, honestly, bill may billing and your payments infrastructure. Um, but yeah, the do it for you is really where, where this kind of came into play, where they do it for you on that end, we do it for you for retention.
And then we were going to start doing it for you for pricing and a couple of other things. Um, and that’s kind of where, you know, the cultures were overlapped so much that. In the end, like there were probably more lucrative deals. Like I say, probably because the stock value, um, you know, might, you know, it was maybe a little bit more obvious at the time.
Um, but it was one of those things that like, that was really like the powerful piece was like, we’re kind of continuing our journey or accelerating our journey a couple of years versus like becoming director level. And everyone becomes ICS that, you know, a different type of company.
Andrew: What I guess what I’m, what I’m wondering is what else did they do for us? What else? Cause I think what you do is you will bring back the, the charge for me. So if someone’s credit card is not working and we lose that charge, you get it back. I think you also offer a service, which we haven’t used to help us do pricing where you will experiment profit.
Well, we’ll experiment for us. Am I right with our landing page and find the right price? Okay. What else now does paddle do you do for us?
Patrick: Yeah. So as a combined paddle, um, retention pricing, Billing payments, localization tax. Um, I’m going to miss a whole host of things and I’m going to get yelled at now that I I’m part of a larger entity. I have to make sure I stay on brand here, Andrew. But I think the other thing is, is like, what’s, what’s more, I know, I know that.
Not for you, never for you. It was a couple of others, but I won’t name them as your media competitors that I won’t, I won’t say, but, um, I think for the most part, yeah, What’s what’s most interesting is like, it’s just a fundamentally different way of like helping a customer, like our customers. What I mean by that is like, instead of giving you Wiziwig editors, instead of giving you like workflows to figure out, like, you’re never going to become an expert in tax credit cards, like mechanical retention and churn your pricing, your localization, all these other things.
And so like, we do a lot of stuff right now. The other stuff that’s coming out, we have products that, you know, are roadmaps. Um, and some that are being worked on in the pricing space, like to make it even easier for you to kind of automate parts of your pricing. Um, we have stuff that we’re thinking about for like automating parts of your acquisition, but like, I want to take everything off your plate to run and grow your subscription business.
That’s our goal. Um, and what’s kind of cool about it is like, We’ve sourced all this data and that’s really where retained power comes in, but it’s also a product mindset. And I think this is where a lot of products are going to end up going, which is like the first 10 years of the SAS wave was very like Salesforce.
Like, let me show my boss. I’m doing work. Like the actual person doing the work, like hates the product, but the VP really likes it. I think the second half is like, let’s not like, you know, show all this work, let’s just do the work. Um, and that’s, what’s really exciting in the world of billing, which I know is not the most exciting part, but it’s so important because like, if I can do all this for you and you plug it in and operational headaches are taken care of and you’re growing automatically, then ultimately like you can focus more on your customer, focus more on your product, which is ultimately we should be doing.
Andrew: Globalization meaning change prices based on where the customer is not. The currency, but also, I didn’t know that that was possible. So we have a lot of people in India who reach out and say, Andrew, I can’t afford what you’re charging. It’s us. It’s too expensive. You will adjust based on where they are.
Patrick: Yep. That’s and that’s, uh, for folks listening who are want a direct, like thing to go take action on is I would look at your traffic. And if you have, like, let’s say 30% of your traffic outside of your home region, most people listening, probably the U S um, you should be doing some sort of localization, um, you know, not only the currency as you’re describing, but, um, basically adjusting the, the relative price.
Um, I can tell you right now, and we’ve seen this in the data over the past 10 years, like places like the Nordics, um, they’re willing to pay about 30% more. Typically Brazil’s about 20% less Southeast Asia. You’re typically 40 to 60% less, um, depends on your region and your product and those types of things, but like willingness to pay purchasing power parity is just so different, um, that you want more volume at a certain regions and you want obviously higher prices out of other regions.
Andrew: Wow. Okay. All right. So I see how you do that at ProfitWell. And now at paddle, where do you see that in the future? Like if you imagine software like pipe drive, which does, which is a CRM for sales people at small medium sized businesses, right now they create great software. You’re saying they should be making the sales for people instead of selling software to enable their salespeople or, or I guess what I’m trying to understand is how does this worldview extend beyond paddle and ProfitWell,
Patrick: Interesting. So I think in, yeah, that’s a good question. I think in there’s going to be some places that it doesn’t work. Right. And what I mean by that is like, think of the very essence of your product. Like whatever it is, like talking about like a consumer product, like a meditation app, right? Like they can’t meditate for you.
Right. So obviously you have to do the meditation. Right. But they can make everything around that meditation as easy as humanly possible. And that’s what, like Headspace and calm have done. Right? Like, you know, you don’t have to have a Yogi or anything like that, or, uh, you know, someone guide you through it because they have it guided through it.
They have the lesson plans, whatever it needs and you just click a button and you kind of go, right. I think in the world of software, Yeah. Like, think of all the things when it comes to sales and marketing, that could be done better by algorithms than humans, right? Like there’s a world where ads, there’s a world where like, you know, kind of how you figure out your ad networks or how you figure out where your ads go, how to figure out your ad.
Copy. It gets really interesting right now, a long enough timeline this’ll be difficult, but from a sales example, imagine if pipe drive had a way to like, basically do prospecting for you and put you in front of the right person and get them actually on the phone. Right. And you might be thinking like, oh, that’s impossible.
Right? We need BDRs. It’s like PDR is in a lot of ways. Our. Almost like the judgment they’re actually doing. And really well-run BDR teams is not as much as one would think. Like they might be cleaning the data, but then the data that gets cleaned by a rev ops team, and then it’s like, well, they’re handling responses.
It’s like, well, the AI might be able to handle those responses. Right? Like, it’s one of those things where like, if you just kind of take it out, like there’s a lot of things that it can do, but then actually selling the essence of your product and talking about the value. That’s probably where you’re not going to get, you know, you know, some sort of efficiency that’s done for you.
And that’s probably where like the water’s edge goes, but that’s so much more than allowing me to have a tool to track relationships and, you know, put data in and getting some reporting out so on and so forth.
Andrew: So you know what, then you and I are talking, using Riverside great software because it lets me edit your side of the conversation separate from mine. And then our editor, Ari DeSorbo. She will be leveling it. I’ve been happy with it, but you’re making me realize they could be doing so much more. Why does Ari have to figure out that your mic is lower than mine, or I shout more than you and then adjust the volume.
And maybe there are times when you get too loud and the software should be picking that up. It should just let me record, figure everything else out and then publish automatically to whatever platforms I want to be on. And that’s what you’re saying. We are not having software do enough because what we’re thinking about is software that gives people, I don’t know A product instead of the full result.
Patrick: I think Ari should be making creative decisions about an episode, not spending their time doing the mechanics of cleaning data and cleaning audio. Right now. It’s hard. Like it’s easy for us to, and I do think we should expect more out of our software, right? Like I do think like HubSpot should tell me, like, these are the six workflows you should do for your base.
Not like, oh, you gave me a bunch of Wiziwig editors to figure out how to set up this. And I have to like think through it, but I, it is a hard problem, right? Because you want this type of podcast. So-and-so Jay Acunzo wants like a very well he’s gonna edit the hell out of it and all this other stuff.
Right. So it doesn’t get hard, but there’s probably things in, and I know the Riverside team, like they’re thinking on this wavelength, they already thought on this wavelength with this product that they have right now, like, this is better than zoom. It’s better than, you know, other stuff that existed before.
Right. Um, but I think that’s the biggest change. And, and frankly, like when we looked at other options for, for selling, it was like, yeah, we can just get the bag and, you know, kind of rest invest in that type of thing. But like I was telling you before we started recording, like I’m not done. Like I want to keep going.
Like I just want to keep going. And I think it was one of those things that like, it would have been really difficult finding a company that didn’t think this way. And I think it’s going to be difficult to like compete if you don’t think this way in the future, like, especially as we get into this next wave of billing, let alone the next wave of a lot of these different products as, um, honestly, as the tooling gets better and better just overall.
Andrew: Right now, I asked you what you were going to do. And he thought about it. And he said, I’ve got nothing that you’re going to love. as what I’m going to do after the sale. But you did have one thing. You’re not buying a boat. You’re not finally, I don’t know, getting a house though. I imagine at some point you will.
Patrick: house technically. Yeah. So, yeah.
Andrew: In Puerto
Patrick: No, I have a house in Utah. No, I have a house in Utah. I’m probably going to buy it in Puerto Rico as well, but,
Andrew: Why Utah?
Patrick: Puerto Rico. Uh, we needed the shortest answer cause I knew this wasn’t the track you wanted to go down. Um, we needed a west coast office.
Um, I was ready to not to live in Boston anymore. I think as you get older cities, it’s like, it’s like the benefits start to go down and the cost stayed the same in a lot of cities. And so, um, I was ready to go and then, um, yeah, we needed a sales office basically and Utah’s like, I think one of the best places to hire sales folks, I think it’s amazing place.
Uh, but yeah. That’s why you saw
Andrew: W w you have salespeople, what’s your sales process now? I thought it was all freemium. People are signing up. You do. And so how do you, if you can’t go to BuiltWith and see who’s my, actually, I guess you could go to build with and see who’s doing payment. What’s your process right now. And then we’ll get into the thing that you’re going to do.
Patrick: So we run kind of a classic inside sales model. So, so freemium, what a lot of people don’t understand with freemium is like, yes, there is a network effect that you get with a free user who then decides to upgrade to a paid plan or get on the phone or whatever it is. But, um, we ran what’s called a forever free model, which is basically like, it’s a product that provides tremendous amount of value, but we don’t have like a premium version of it to sell, like, or at least a very obvious freemium version.
Because if I’m like, great, this is free until you’re a millionaire RR. And then I force you to charge you still lose the fundamentals we were talking about in the beginning, which is like, people just don’t value in analytics product. So the reason we’re free is less because of the, um, the, the free to paid aspect, although that does exist.
And it’s more about the network effect, um, what, how you build these outcome products and how you build these products that do for you. It’s a data problem because there remember we need data for the analytics, for the insights and all of that guides the outcomes. And we just finished the idea by, you know, basically finishing, um, or finishing the solution for you with that outcome.
And the reason that’s so important is because of. I we know more about credit cards, like in a retention subscription mindset than anyone else in the world, right. Paddle understands like currencies and different countries and tax in different countries better than probably anyone else in the world.
Right. And it’s because of the data, that’s basically creates that network effect in every single additional ProfitWell user basically improves those algorithms that help the product that you guys use. Basically get more churn or reduce more churn and get more customers to stick around. And so, yeah, that’s the big thing.
Now our sales motion, um, we run a very classic inside sales motion. Um, we, I think do really well. We have an 18% account to call ratio, um, which is kind of insane if you think about
Andrew: does that mean?
Patrick: Um, So we contact a hundred companies and this is outbound. This is not even inbound, meaning they’re not even unprofitable yet.
We contact a hundred companies, outbound 18 of them get on the phone, um, which industry standards, depending on who you look at, which benchmarks you look at is typically seven, 8%. Um, and we’ve started jacking up the volume. We’ve been doing the volume every single quarter, hiring more folks. Um, but the way that we’re able to get that is we really approach highly personalized, um, you know, kind of like just really well done emails.
I would argue. Um, we bring in as much data as we can, like we’ll calculate, even if you’re not on profit. Well, like an estimate of how much you’re losing. Um, right now, just based on your website, your traffic, what we estimate your, your ARPU to be. We’ll do custom video at the lead level. Um, basically like, you know, Hey, Andrew Patrick here from ProfitWell.
Hey, Ari Patrick here from ProfitWell like we’ll do those
Andrew: You mean you’re sitting down and you’re doing that personally, or your salespeople are doing that personally every
Patrick: I’m not anymore. Uh, it’s not every day, but each, each rep, um, well we have a couple of reps that do it. Um, you know, and not everyone does it, but we have each of those reps that does it is like 200 per week that they’re recording. Um, and we have a whole system, like we have it down to about a dollar per video, plus the reps time.
Like we have a whole system that we, and this is the advantage of being bootstrap. You don’t throw money at a problem. You think you’re every little incremental step. And then you’d like basically design a system around it. So, yeah, long story short, um, we do that, then it gets onto a, um, a call with, uh, a E the AAE basically pushes for an ROI audit, which is hookup to profit.
Well, we will tell you based on all the data, here’s where you are, here’s where you could be. This is how much this would bring you. And this is how much this would cost, uh, makes it a very, no. Um, which is kind of the point. And then, um, depending on their size, like if they’re a smaller company, they’ll get up and running relatively quickly, um, if they’re a larger company, you might have to go through InfoSec and procurement and all those kinds of things and then actually get implemented, um, and kind of run from there.
Um, and a similar process for our other paid products is basically run, but, uh, yeah, and then we have a whole inbound system with all our media and content, but, uh, yeah, that’s hopefully useful to people listening
Andrew: is useful.
Patrick: you a bunch of audience here.
Andrew: I don’t think so. Let’s um, I’m curious about like the whole process. I could do a whole episode on that, but we’re close to the end here. Can you hear that airplane by the way? Since I’m sitting outside?
Patrick: No, I can’t.
Andrew: this is amazing. I love
Patrick: You have a good mic. Yay.
Andrew: I love being outside. I also, it’s a, it’s also crisp.ai, which allows me to work out here.
I check the internet connection. Austin has very good internet, so that helps, um, health. What are you doing? that’s the big treat yourself to something new post-sale thing,
Patrick: Yeah. That’s what what’s funny is you were like, you’re like, oh, is there something you’re going to be able to do? And I was like, I didn’t, I like, I didn’t even understand the question. Right. And you were like, well, I’ll interview people. And they’re like, I never, I’ve always wanted to try surfing and I’m going to go try surfing.
And I was like, I have nothing on that wavelength right now. Um, I, I’m not into cars. I like, you know, I’m not into watches or anything. Crazy. I think for me, um, health is a big thing, um, that I have sacrificed and I know I’ve sacrificed it. When I say sacrifice, it makes me sound noble. I don’t think it was noble, but like whenever, like I gained a hundred pounds with the company, like, and whenever there was a choice to like, not go to the gym or order crap food so that I can like keep emailing or keep doing something, I always chose the email.
Um, and so it was one of those things that as soon as, as soon as like this was going, I, and I did lose some weight during COVID, but like, as soon as this started happening, I was like, that’s the treat is like, now I have enough means that there shouldn’t be any excuse there really wasn’t before, but yeah, I’m gonna I’m or I’m already in, I already have a coach, I got a personal trainer.
I have like meal prepping and you know, all that outsourced basically. Um, no matter where I am
Andrew: once a week, no matter where you are, someone’s bringing you food. You’re in London right now.
Patrick: I have London, I have prepped meals. This is actually a lot cheaper and a lot less complicated than you think it is. Like I have a coach, uh, who like a nutrition coach is actually through. You might know Adam Gilbert, do you know my buddy tutor at all?
He’s an Austin and Kagan. It’s funny. Like I, I texted Adam and I didn’t tell him why, but I, I had failed out of my body tutor like eight years ago. And I was like, Hey man, I know it’s worth it. I just can’t, I’m not focused. But I started up again and I was like, Hey man, I can, now I have, I can, I now know I’m going to dedicate to it.
And also was like, I’m an idiot if this doesn’t work at this point. Um, and so my coach she’s like going to London, here’s a list of places you should order. I’m like, great. I have a VA. And I’m like, Hey VA, can you order this for me please? And that was all taken care of. It’s in my, like a, a part hotel. Um, and then back to Puerto Rico, I got another one I’m traveling for two weeks.
So I have different stuffs in different places. That’ll have prepared food and stuff. Just trying to like, take this complete, like no excuses. That’s what I’m trying to do. And, um, it’s been working, it’s been working like I’m not, you know, down a hundred pounds yet, but it’s been, it’s been working.
Andrew: It’s the person at my body tutor, who will find you, somebody in whatever city you’re in, who you can buy food from and have them prep it.
Patrick: Yeah, I it’s it’s I think, yeah, basically it’s not like a service. I don’t know if it’s an official service that they provide, but I, you know, I asked Hailey or Halley actually suggested it. She’s like, do you want me to reach out when you’re in London or wherever? I’m like, yes, this would be extremely convenient.
This would be great. Um, and so, and then she’s like, all right, let’s find another person in Puerto Rico. We’re going to find this. And so, um, yeah, I did tell, I told Adam, I was like, I need someone. And the reason I failed out of my body tutor first time, I think not just because the company, but like Adam, Adam was my coach and he was just always so supportive.
And I was like, you know, to bring it back to the beginning, I was like, Adam, I need you to yell at me if I’m letting you down, like, I need you to be disappointed in me. I need you to like, he’s like, no, man, we’re going to get through it. We’re going to like focus. We’re going to get through it. We’re going to keep these habits.
I’m like, Adam, I need you to be like, Hey Patrick, you fucking agreed to this. You agree to it. And you didn’t put stuff into the app. And so Hailey, uh, is, uh, is definitely, you know, thankfully we haven’t had to, I haven’t had to get yelled at yet, but, uh, yeah, it’s, it’s, it’s been great. And I’ve been maybe two months in and so far, but yeah, I’m pretty, pretty excited to like, not, uh, I don’t want to be a fat dad.
I know that sounds like kind of weird, but I just, I want to, I want to be a dad that’s around. Um, I don’t even have kids yet. And I’m like, nah, if I’m going to do this now, we’re, we’re in kid territory. Now. I was like, I want to be around. And I want to be able to like, you know, You know, basically, like, I don’t know, like be able to go everywhere and not like be I’m tired or this.
And I know like, I I’m, I’m very resilient and I push through things and work too long and too many hours. But like, it’s one of those things where I’m like, still, I know that like, this is going to give out at some point. Like I’m pretty young still, but it’s like going to give out and I’m not going to be able to like push through my body’s just going to be like, you can go screw yourself.
Um, and so
Andrew: As they start to copy the things that you do, the little things that you don’t want them to copy that are part of who you are. They just make it. part of them. All right. Congratulations. ProfitWell what a fricking ride.
Patrick: It’s been good, man. It’s been good. It’s not over yet. Which I’m excited about. I do think if it was over, this is going to be a dramatic ending for you. I just realized I want to give you a dramatic ending. Um, I, I told you in the beginning, I talked to a bunch of founder friends about.
Who, you know, like, should you sell, should you not? And obviously all of them it’s sold. So some of them regretted it. I think that if I just, and the fun fact, or it’s not so fun out of those 30 people, three of them had major addictions or alcoholism that came after the company, um, ended. And all three of them are good place now, which is great, but they all had just walked away and like gave the keys over to the buyer.
And, um, they, and I, and I, you know, I know them well enough where I was like, Hey, like, are you like, do you think this contributed to it? And they sat and what, what, I don’t know, maybe this is rationalization, but I was like, I think that if I just gave her the keys, I would end up like them because I just, I love what I do so much.
And it’s not that I can’t do something else, but like, there’s just more in the tank. And it’s one of those things that I think that’s another thing to kind of think about, um, when you’re kind of going through this. If it’s for the money, it’s, it’s hard. Like it’s going to be something that you have to consider, like, especially given your lifestyle, what’s important to you, et cetera.
But like, you really got to consider, are you going to be able to keep going? Are you going to start something new? Do you want to do something else? And that’s something that you got to have to have good advisors around you because I think that like some people sell and they regretted almost instantly.
And then that void is filled with like not great stuff. Um, so just something to think about.
Andrew: Well, I’m glad you’re still there. We’ll have to check up on you in a bit, but just see what you’re up to. But I guess as long as you’re you’re there daily, the big problem is that you’re going to be too addicted to your work. And if you’re not, that’s when we should all worry. All right,
Patrick: Oh, I wasn’t that, that wasn’t a call for help. Just to be clear.
Andrew: I’m putting out a call for help. I feel like my, I remember when you got COVID I was like, I didn’t know what COVID was at the time ago due to You Okay. You dying and your
Patrick: gave me a really nice text.
Andrew: I was genuinely worried. And then, you know, we realized, okay, people can come through to this. Like it’s nothing. And I felt like such a douche for
Patrick: it was pretty early. Oh no, no, no. It was, it was the nicest, like, it was the nicest thing and it was like one of those things where as like, like, I didn’t even think you remembered me cause we haven’t hung out in a while. And I was like, oh, maybe he like doesn’t doesn’t remember me or whatever.
That was like a really nice note. So thank you for that. And I’m glad, I’m glad we could like close the loop here on another episode of podcast here.
Andrew: All right. The website profit. Well, go check them out on Twitter. What’s your Twitter account? It’s like PC something right on
Patrick: No, it’s Patty kiss, PA T T I C U S. It’s a childhood nickname. So yeah, we’ll save that story for another pond.
Andrew: Yeah, I’ve been following you forever. That’s how I keep staying in touch with you. All right. Thank you.
And thank you everyone.