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. My first revenue model at Mixergy, I mean, the first sustainable one that I discovered was selling online courses. And a bit after I started doing that on my site using software that I control, using a plugin I paid for, I heard about this software called Thinkific and I even talked to the founder of Thinkific and found out a little bit about how it worked. And I said, “Hold on a second. A software that I don’t have full control over? A software that I’m not hosting? I’m not going to do it and I actually don’t know how anyone else is going to do it. Why would you want to do that?”
And we had an interesting conversation. I even gave him access to my site. We stayed in touch a little bit. And then I watched from a distance as he grew his business. And I watched a revolution happening, actually, which is that not only do people not need to have their own courses on their websites, they didn’t even need to have their own websites. People were starting to shift towards publishing more of their content on sites like Medium but also on sites like Facebook and Twitter and being okay with that and Instagram, and your own hosted domain, in many ways, became the place to point to all the other stuff that you have and to do a few things but not your main source of traffic. I missed it.
Today’s guest saw that and said, “I’m jumping in,” and his business because of that is a lot easier for his clients to use than frankly the plugins that my team and developers have had to put together and maintain over the years. In fact, we just found a bug in it yesterday that drove me freaking nuts. And I mailed it our developer and I know his task list and he can’t do it. So I understand why people made the move. I want to find out about the business behind this concept.
The founder you’re about to meet is Greg Smith. He is the founder of Thinkific. Thinkific is software that enables anyone, individuals, businesses, nonprofits, whatever to create, market, sell, and deliver online courses on their own websites, but they don’t have to host it, they don’t have to manage it, they don’t have to take care of the software behind it. I invited him here to talk about how he came up with this idea. He’s, as far as I know, not a developer, how we got this whole thing coded up and how we got clients.
This interview is sponsored by two great companies. The first will let you host your own website, even if it is just a site pointing to your Instagram, Facebook and everything else and your Thinkific course. It’s called HostGator. They’ll host your website right. And the second will help you hire your own developers. If you’re like Greg and you need to hire an army of developers, they’ll do it right for you. It’s called Toptal, but I’ll tell everyone about them later. Greg, good to have you here.
Greg: Thank you. I appreciate it. Thanks, Andrew. It’s a pleasure.
Andrew: Revenue now.
Andrew: The revenue. Where are you guys now? 2018 is about halfway. It’s not halfway. Last 12 months, how much revenue have you produced, do you think?
Greg: So we’re doing about 600,000 a month and growing that pretty quickly.
Andrew: Six hundred thousand to you?
Andrew: No, to the business as opposed to like . . .
Greg: Yeah, yeah.
Andrew: That’s an aggregate of all sales on your channel of all the courses sold?
Greg: Oh, no, no, no. Aggregate of all sales where it’s like, you know, 4 to 10 million a month, I think.
Andrew: Depending on the month.
Greg: Yeah, yeah.
Andrew: But on average $600,000 revenue to you that you use to pay for your developers and so on. Get the hell out of here. Really?
Greg: I could take home and pay my mortgage. My wife would love it if we had to.
Andrew: Right, right. But that’s your . . . Here’s the thing that who people have market places, people who have software where others build and sell stuff, they tend to go for the biggest number which is all the sales done on their platform, right, which is legitimate. It’s a number that you want to keep track of but it doesn’t give me a sense of how much you guys have to pay your own expenses with, I see. $600,000. Impressive. Do you guys take any outside funding ever?
Greg: We’ve done a little bit. So we took . . . First round we did 600,000, and then we did 2 million last year and they’re just from sort of other founders actually who have successful businesses. So . . .
Andrew: Who are some of the people who you’ve raised money from?
Greg: Ryan Holmes from Hootsuite, Jeff Booth from BuildDirect and then Dan and Fraser with VFF who did Recon Instruments which is like a virtual reality company they sold to Intel.
Andrew: Why would the founder of Hootsuite want to invest in this?
Greg: He’s here in Vancouver. I’ve run into him a bunch of times. I think he’s a big believer actually in sort of the . . . What do they call it? The Maple Syrup Mafia. It’s a play on the sort of PayPal mafia and Silicon Valley and he wants to bring that concept to Vancouver. So he’s very big on reinvesting his own funds in Vancouver into startups that he believes in here.
Andrew: Okay. Wow wee, dude. And you’re a guy who didn’t start out as an entrepreneur. You’re kind of happy, right, because I think I turned you down for an interview before. Does it feel good to like go in your face, “Andrew, I told you this was big”?
Greg: I don’t know about the in your face part, but like I mentioned before is like I’ve been following you from the internet and looking up to you in a lot of ways and watching what you’ve been doing. So it’s exciting to get a chance to be interviewed and be part of your community now, so that’s pretty awesome.
Andrew: You know, one of the things that I get excited about is to see this wrong or right. This is where I fail, like an influencer or someone who’s building up my reputation. I should not. I should always say, “This was an interesting idea. I saw it. I knew him back then.” Instead of, “Why do I have to put front and center in the intro that I was wrong?” But I think that the analysis of why I was wrong is useful and interesting. Let’s go back to how you discovered this. You’re a guy who’s a lawyer. I think I looked back at one of our early email exchanges. I think you signed your email with your like lawyer with the fact that you are a lawyer in there. That’s how long ago we go. We go back. But you still were an entrepreneur from the beginning. You told our producer, “Lemonade stands. Oh yeah, I did all that stuff.” Give me some of the stories of what you built up as a kid.
Greg: Sure. I think I’ve always been obsessed. I was telling someone the other day, I mean, every time as a kid I would walk even to a coffee shop or we go for breakfast with my parents, I’d be looking around doing the math and thinking, “How many customers? Average all their value. How can I help them on the marketing?” Right. And yeah, I always started. I had a few little lemon stands and to this day, I cannot pass a lemon stand or kids selling anything on the side of the street without stopping. It drives my wife crazy because we’ll have kid in the back of the car and we’re trying to get home and I’m like, “Wait, stop the car. We got to go to a bank machine. I got to go to that lemonade stand.”
Andrew: Because you want to support them.
Greg: Yes. Yeah. Yeah.
Andrew: You know the big disappointment that I see now is they’re not doing it for themselves, they’re doing it for charity, they’re doing it for some organization. It’s like trying to have a lemonade stand and make some money to go buy your own stuff is wrong and this is the way that they get to whitewash it and it’s a little disappointing for me, frankly. You got to keep your own money. What did you buy with it as a kid? Do you remember?
Greg: A fair amount of candy. I think at some point comic books.
Andrew: That’s it.
Greg: Baseball cards, I had a lot of collections of those.
Andrew: Because you thought baseball cards would be worth more money or because you were into baseball?
Greg: A bit of both. Largely, I think I was more both on the comics and the baseball. I enjoyed it but there was a huge investment. I mean, I just found the other day some unopened boxes, so that tells you I was more about the investment and saving it and, you know, it’s still in a plastic wrap.
Andrew: What’s the thing with the marble racing that kids in your area did?
Greg: So me and a close friend of mine when we were at about 10 or 11 put together this thing we call it snowbird mountain and there was this little hill in his backyard and the trees and we carved all these roots down, it made jumps and tunnels and all sorts of little interactive race courses for marbles, and then we’d have all the local neighbor kids come over and they would pick their marbles and they would race them down the hill. And I don’t think we got . . . There was like betting but not really financial betting, but then we made the revenue model was a candy store. So they would come for the whole day to do the entertainment of the marble racing and we’d make it on concession sales, and we pick up bulk candy at Costco and then sell it at five cents apiece and did pretty well.
Andrew: So then, what’s the thing about going to law school? Here it is. I see on my other monitor. You signed your email to me, “Cheers, Greg,” and then underneath it, it said, “Greg Smith, B.Com.” I don’t know what that is, “lawyer,” and then, “Cofounder and CEO.” What’s the B.Com thing?
Greg: Oh, Bachelor of Commerce. So I went to business school and then I went to law school.
Andrew: I see.
Greg: And I still sign it that way. Someone was teasing me about that the other day. They’re like, “You’re a CEO now. You don’t need to sign it with lawyer and B.Com.”
Andrew: Yeah, we don’t need to see your diplomas on the wall. Why do you think you still do that?
Greg: I still think the lawyer element will lend some level of credibility. I mean, there’s nothing wrong with being a founder who just came out of high school and started a company, and in many ways, I admire those people it was more challenging than what I did. I got a lot of training that helped. But there is an element for me of I think . . . I still believe there’s some trust and credibility built up by doing that, plus I spent a lot of money on those, you know. It matters there. So I still kind of like doing something with them.
Andrew: You know what? I completely agree with you. All those little credibility boosts are helpful. Like, even our first producer Jeremy Weisz, a chiropractor, who on one of his calls with me wore his white jacket, you know, the lab coat that he would wear in, just because he was rushing, and he said I couldn’t take it off. I said, “Jeremy, you’ve got to wear that.” He started wearing it. And in the beginning when people didn’t understand, “Why does Andrew even do pre-interviews or whatever?” they would see him in his white lab coat on Skype and it would communicate authority and they just kind of go along with it and then they’d see the value of it. So I’m with you on that. But why did you go to law school? Why is it that a guy who has all these businesses in his head ends up at law school?
Greg: I think for me really, it was about exposure to businesses, and not just businesses, but the most exciting point in a business is life, is when you typically bring in a lawyer of the type that I was. So I was a securities lawyer. So I got to jump in to a business that was buying something, selling the whole business, raising millions of dollars or in some cases of, you know, doing a billion dollar transaction, or they had problems within the business they needed to restructure. So I only practiced for three years, so I was still a relatively junior lawyer. I got to run my own files and have my own clients, but in that three years, I probably saw more corporate transactions and massive change within companies than a CEO would see in two lifetimes, just because every month I was in on a new file, a new business doing a new challenge for them.
Andrew: Do you remember something that you learned from that, from being that close to them?
Greg: Yeah. Well, one thing I learned is that the CEOs get to go on boat trip sometimes on the weekends while the lawyers are working drafting documents. The other, I think, well, a lot of different things in terms of . . . I mean, one encouraging thing for me is even looking at some of my clients it was that a lot of these people they’re running massive companies, but I think I could do that. I’m advising them. So there was an element of encouragement, not that they weren’t super smart people, but saying like, “Hey, if all of these different people are building and running businesses, I can dive in and do that.”
Andrew: I see that. Then . . . Again, I go back into my email inbox to just take a peek at our past conversations. At one point you mentioned something called gregstravels.com. The site is not up anymore. It’s not even in Internet Archive. All I could do is I hunt through and see something about Colombia, about Croatia. What is this?
Greg: Oh, yeah, that’s going way back. That was my first foray into just putting something on the internet, sort of almost like what you were identifying in the beginning of just having a site that says, “Here’s my Twitter. Here’s my . . . ” except a lot of that stuff, even Facebook, I think when I first set that up wasn’t around. So I was on exchange in Budapest and wanted a way to essentially started as a bit of a travel blog, sharing stories, and then just morphed into sharing all the different things that I had and any stories of where I was in the world, writing. I’ve got a big family back in Vancouver, and so just sharing with everyone an easier way.
Andrew: That’s it. Just a personal family travel log. Here’s one from January 29th, 2005. In Hungary, they call crosswalks, zebras, I guess it’s because they both have stripes, and they say “hello” for goodbye. I can’t tell you how many times I’ve done a double take walking out of a store or restaurant as the clerk or server yells out, “Hello.” That’s the kind of thing that you’re doing. All right, so this wasn’t a business. It was just a personal thing that you were doing, but you were learning about other businesses. Did you have any other companies before Thinkific or was Thinkific the first big one?
Greg: So I think there was a little bit of a business on it. So I actually ran some ads on it and that really taught me how difficult a content ad model is. So even with my own . . . But it was a personal site, to it’s tough to basically get your friends and family to read the ads. But yeah, lots of other businesses before Thinkific. I mean, everything back to the lemonade stands and the marbles and stuff, I did . . .
Andrew: Was it a t-shirt business or clothing company?
Greg: Yeah. So in university, we did . . . I was in the Greek system most part of a fraternity, and so as going through that, we saw a need for custom clothing. So every fraternity and sorority was making their own custom shirts. So we did a custom clothing company to take orders and do all that. And that grew into doing it for some sports teams and other groups. And so we do a lot of custom clothing for people that way, hoodies, and other things.
Andrew: All right. Then you started teaching and that’s partially what got us towards Thinkific. At first, it was just when you are in university, you are teaching in classrooms. What were you teaching and why were you the one teaching it?
Greg: Initially, I did some public speaking teaching and a couple mostly related to public speaking in business courses and commerce. I’d won a few public speaking competitions, and so that created opportunity to jump in and do a little bit of that and that led to more teaching of the LSAT. And so I saw an opportunity. I did well on the LSAT and applying to law school and that created an opportunity to go and actually teach people how to write the LSAT and how to get into school. And so I started out doing actual classroom courses. Nothing online, initially.
Andrew: What was it that made you so good at the LSAT? Were you the kind of person who could memorize well? Did you get lost in the study? What was it?
Greg: Well, historically, in school, I’d say pretty good on the memorization. For the LSAT, though, it’s much more of logical thinking. But the interesting thing for me is when I first wrote the LSAT I didn’t do particularly well when I did a practice exam at home, but then I studied for two, three months and got to the point where I was pretty much acing every test that I took. And so I kind of had developed my own way of studying and my own system of approaching it, and I think that’s what encouraged me to go and teach this because what I found was initially I would just have a friend, say, “Can you help me out with the LSAT? I’m struggling.” I’d say, “Hey, here’s what I did.” And we spend three, four hours together and I’d say, “Hey, go do that for two weeks and then come back and talk to me.” And two months later they’d be getting a great score on the LSAT. So that’s really what led me to push for the teaching side, is whatever the little systems I had developed were actually working for people.
Andrew: And then I guess it was Collin Stewart who introduced us, and he said that you were doing . . . that you are teaching an online LSAT course called Alpha Score.
Andrew: How did you get started with that?
Greg: Well, so I was having those one-off conversations, then I started teaching classroom courses. And initially, I was teaching for another company and I would go, I get paid $1,000 for a weekend, Friday night, all day Saturday, all day Sunday with a ton of prep work, and I’d be sitting in the classroom looking and I’d be counting, I’m like, “One, two, three. There’s 30 people in this room. They’re all paying $500 to $1,000 to be here. I’m getting $1,000 bucks for the weekend.” Doing the math and thinking, “It’s not that hard to put 30 people in a room. I can do this.”
So I went started my own business doing exactly that and learned pretty quickly how hard it is to put 30 people in a room, especially for something like the LSAT where in any given town, in any given month, there’s only so many people who are looking at it, and that’s where I started to go online is two things happen. One, I couldn’t get enough students into my personal classroom in that city on that day. And the other was, everyone I was talking to tutoring or helping in the classroom was asking for the same questions for the first four or five hours. So I thought, “I need to just scale this and put it all in one place so that I don’t have to answer the same questions over and over.” So I put my core lessons all online. And initially, I did it totally for free almost as a blog style and that kind of took off, people were excited about it, so then that led to starting to create an online course.
Andrew: The online course that you publish was using what platform?
Greg: We custom built. So what we . . . We got our own website.
Andrew: Who is “we” by the way?
Greg: My brother. So I’m lucky my brother, Matthew, he is a software developer and he’s really good one now and runs his own tech startup, but . . .
Andrew: And you guys aren’t together.
Andrew: You guys . . . He’s not together with you.
Greg: No. So he started Thinkific with me, we’ve got a few years in, had a good time doing it. We certainly butt heads a lot, which is a good and a bad thing amongst family cofounders. And then he did a weekend hackathon where they started this ability to schedule posts to Instagram and it was like a little side project for him and some friends, and within six months they had 100,000 active users and then so he went and started a whole company doing that. So he still sits on my board and advises, but he’s running his own thing now.
Andrew: Okay. All right, so he put something together for you from scratch. Did he code up the whole thing? I’m looking at your old site right now. You guys use WordPress.
Andrew: But for managing the content and selling it, did use a WordPress plugin back then?
Greg: No. So we use WordPress and then he custom-coded in, I think, PHP the whole sign-in, purchase with PayPal . . .
Greg: And take the course. Yeah.
Greg: We looked everywhere for something kind of off-the-shelf, and maybe we were picky, but I really couldn’t find anything that met my needs. I had a few particular needs in terms of, you know, I wanted multiple choice questions because that’s the way the LSAT worked, I wanted to deliver my video in a certain way, and I really wanted to own the property. There were . . . I think this was a while before things like Udemy like a marketplace for courses, but there were a few predecessors to Udemy then where you could go publish a course in kind of a marketplace, but I didn’t . . .
Then, you mentioned this move to having things on your own platform but with a hosted solution. The reason we did the kind of hosted own it ourselves was, like you, I kind of didn’t want to put it on someone else’s system. So we built it ourselves initially, and having it on our own domain. What I learned is having a hosted solution would have been ideal. We should have tried harder to find a hosted solution because building the software was a pain in the ass. It took him really years, and it was always really terrible in terms of the backend experience and building it. It was a huge time suck. But having our own domain was really key that allowed us to go the long-term sustainable business.
Andrew: Why? Why does it matter whether it’s on your domain or someone else’s domain?
Greg: It’s that control and ownership. No one can change the game on you. They can’t go and say, “Oh, we’re changing . . . ”
Andrew: I’ve got an example. For example, Udemy could potentially say, “Anyone who comes in for your course, we’re going to recommend these other LSAT courses because they came in for one and they might be interested in these others.” Or they might say, “We only will allow you to sell things for $30 or less because we’ve decided that we want to go mass as opposed to increase prices.” If you were on someone else’s domain you couldn’t adjust it. If it’s on your domain using someone else’s software, you could just say, “We’re tossing that out. It’s going to be a pain in the ass, but at least it’ll still be new software on our site.” Okay, I think I’ve got it.
Greg: And I think this is another big one too, knowing that I own customer.
Andrew: What is it?
Greg: Owning the customer list and the intellectual property like I owned . . . I’ve always owned my course, the videos and I’ve owned the customer list where, again, you put on Udemy, you don’t necessarily own that customer list and you couldn’t reach out to them to sell them your new book or invite them to a podcast or something.
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Look at what it did for Greg to have a phenomenal developer to start off with as opposed to like some dude off of some random country that he’s paying just a buck an hour. I love these guys. The most amateur business people will say . . . And I get it. When you’re starting out, you got to take shortcuts wherever you can. But they’ll say things like, “I got a developer for a buck an hour ago.” I’ll go, “Well, congratulations. I see it in your site it’s actually a buck an hour developer’s work.” Good entrepreneurs will say, “I found this phenomenal developer. Let me tell you what he just did.” All right. And unfortunately, it is a lot of, “Let me tell you what he just did.”
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All right. So you had your whole vision for what you wanted, he built it. How long did it take him to build the first version of this?
Greg: We set a goal of one month. So we both had full-time jobs and we wanted to . . . My initial vision was much bigger and he was actually the one who cracked the whip and said, “We’re launching in 30 days. Whatever you get done by then is what I’m launching.”
Greg: That forced us to really work some late nights and get this out the door. So I didn’t launch with the perfect product by any stretch, and then we had a bet going, “Would anyone buy it?” And I bet that someone would and he bet that they wouldn’t.
Andrew: How did you get your first customer?
Greg: So I did have a blog running. So I had alphascore.com and I had a little blog on it. And so we did have visitors. I mean, it was minimal . . . It was pretty small traffic but I had people coming and just finding us organically through Google initially. And so we didn’t do any real promotion, we just put the links up and said, “Do you want to sign up for an online course $29?” And so we got 10 customers in the first month for $29.
Greg: So that was just validation that, “Hey, people care.” And then the big validation was the ones who did sign up, loved it, so that really encouraged us to do more.
Andrew: Do you remember those alerts going off on your phone at the beginning from PayPal?
Greg: We had a whole system around this. So I don’t know if you ever . . . There’s a good movie, Middle Men, and it’s kind of early days in the porn industry. But one of the funny things in it is that they . . . So they created this thing where it’s like before video and they were just selling like a download of a picture where it would like load line by line on the screen, but every time they sold one, they set up an alert to go off on their computer and then they woke up in the middle of night to this alert and then they fast forward a few weeks and they’re going off every 60 seconds. So we saw that in us we need to do that for our business. So we would play . . . I had the tiger from the Rocky movie every time we sold a course and literally get up and dance around our desks and kind of do a celebration. And eventually we moved into a co-working space and after a month the other co-working people came over and said, “Guys, you got to stop.”
Andrew: At what point did you quit your job? I think at that point you had a job doing sales for Moving Media Group, right?
Greg: So that actually . . . So I had . . . I was practicing law. I left law. And usually, the cleaner story I tell is, I left law, I went straight into doing my online course because the online course stretched across . . . Well, I did the online course before I went into law practicing. And I practice law, but then I actually left to co-found Moving Media Group with two buddies from law school, so I did sales but I was also a co-founder there. And that was . . . We were essentially selling ads in TVs in the back of taxis across Canada. So I did that for about a year, a year and a half, part of it overlapping with my law career a little bit towards the end there. And then . . .
Andrew: What I mean is, at what point did selling your own course produced enough money that you can just go all in on that?
Greg: It was getting there as I left law, and then . . . I mean, it was at that point where I felt comfortable quitting my law career. And it continued to scale up throughout. So different, I think, than some people’s courses now. I’ve never had that seven-figure launch or even really six-figure launch or anything. I’ve just consistently done $10,000 a month in core sales and that’s . . .
Greg: So it started hitting that right around the time I left law.
Andrew: Why didn’t you chase that? Why didn’t you say, “You know what? LSAT is going great. We’re going to do an SAT one, we’re going to do another one and we’re going to double down on LSAT and we’re going to come back.” Why didn’t you go all in on course and teaching?
Greg: I should have because that was really my passion. My passion wasn’t selling ads, it was really in education it’s always has been in helping people. And I really . . . That’s a big lesson for me is, I should have followed that but I had so many people saying it wasn’t scalable that I was competing against Kaplan, that I couldn’t really repeat the success from LSAT into other things that it was going to be a lifestyle business and that was a dirty work. Damn, lifestyle businesses are amazing. I mean, we’re not building one right now. It’s much bigger than that now, but there’s an element of that that I would miss. I mean, I could be doing a lot more traveling and spending time with my kids, but at the time, I just got so much advice, “Don’t go for the lifestyle. That’s too small.”
Andrew: Advice from who?
Greg: Friends who are in tech companies, venture capitalists that I spoke to when I went and did . . . I did some little pitch competitions, I spoke to investors of friends of mine company, things like that, where they would sort of say, “If you want to do a lifestyle, fine, that’s great, that’s cute, but you’re not going to make this into something huge.”
Andrew: This is where being part of what Ryan’s trying to call what the Maple Syrup Mafia or being around that startup ecosystem helps because they do start to push you to think bigger for better or worse, and that’s what you’re saying happened to you. And then how did you end up with the idea that you need to create your own software for publishing courses?
Greg: That really came from a market pool in that we had the course out there and I was really still focused on the course and we started to think, “Let’s do SAT and GMAT,” but then I started getting inbound phone calls unsolicited just people calling up and saying, “How did you do it? Can we use your software? So I’ve got a GMAT course I want to put online. Can I use your software to do that? I’ve got an SAT course.” And then it got outside of test prep, it got into, “I’ve got a course for entrepreneurs or a course on business or a course on some sort of arts and crafts.” And I’d say even only 10 or 15 of those phone calls and I was convinced that there was a real need for a solution that would let people build their own course.
Andrew: Initially you guys would do the coding yourselves for them. It wasn’t just this off-the-shelf piece of software that I can sign up for and use myself, right?
Greg: Yeah. So we did it really on scale. I mean, we did build a platform that would allow lots of people to use it but initially, they couldn’t self-sign-up, they couldn’t build their own site. We would just literally call people up and say, “Hey, you look like you could have a course or you do have a course. Why don’t you Dropbox us the files? We’ll build it and send you back the website.” And in a lot of cases, we did it without any payment. We built the whole thing, we sent it back to them a week later, booked another call and said, “So what do you think? Do you want to pay us?” Most people did. A few said, “No, thanks.”
Andrew: Why did you do it that way?
Greg: It seemed like the right thing to do with the right . . . Like maybe I . . .
Andrew: Because you said, “I want to create software in this space. I want to understand these users’ problems.”
Greg: Yeah, there was a big piece of it there of wanting to do it right for them. Like I really want . . . I think partly too there was a lack of confidence that maybe I had the perfect solution, and so I would call them up and say, “Do you want to do this?” And then I would really want that validation that this is really . . . not that I convinced them to buy before they saw the product, but that I showed them everything we could do and then said, “Okay. Are you really ready to give us money now?” And I probably could have grown a bit faster if I went more aggressive on this, “Give us money,” and we’ll build something, but in those early days what that really convinced me is that if they were willing to pay after they saw what we did and we gave them a choice that we were really validating this idea. So in a way, it was proving out the model that there was product-market fit for us.
Andrew: Why didn’t you say what I would have said at the time, which is, “You know what? There’s Wish List Member. Let’s just create a plugin for WordPress.” Thirty percent of the world right now of websites are built on WordPress. So it was a thriving growing market. Why didn’t you say, “I’m going to build this plugin for WordPress”?
Greg: I think I had spent enough time using WordPress to sort of understand some of the frustrations that it’s a great and amazingly powerful platform and tool and obviously ton of websites are built on it. But there’s still an element of it becomes frustrating as you start to piece. And we had tried that, to be honest. We tried that with some clients. We tried it a little bit with other projects we’ve done.
But you end up bolting on. You’ve got WordPress running the site, then you bolt on a plugin for, say, video delivery and another plugin for quizzes and another plugin for the membership element and another plugin for payments, then you’re trying to integrate PayPal. And you have to manage all these moving parts and it really just became apparent that having one single point solution. And I think that was a big piece of feedback. We would call clients and they would say, “I’m already doing it with WordPress and 15 different plugins, but if you can handle with all those plugins and do it in one, then great. I’ll use what you guys have.”
Andrew: I’m looking at screenshots from an early version of your site. Here’s the thing that gets me. The big tagline or the big sentence that stands out for me on this sparse website is, “We use social and game mechanics to motivate and engage students,” that you guys were really big on the quizzes thing. It felt like that’s what you thought was your special sauce.
Andrew: That is it?
Andrew: That’s what worked for you before?
Greg: We took a lot of it for inspiration from Udemy. Oh sorry, not from Udemy. Sorry. We took a lot of inspiration from Duolingo, their free app that kind of lets you learn languages. And a lot of other even scientific studies about gamification within learning and encouraging people to complete. And what I saw was the two big problems I still see today in education are motivation to complete and really absorption and retention of knowledge. So getting real value out of your education. And the first step is getting people to actually take it. I mean, how many people sign up for courses and never finished them or never even take them and then really getting value?
And so right out of the gate and it’s still an obsession we have today. We don’t maybe advertise it as much anymore, but it’s an obsession with ours of encouraging motivation, completion, and getting value. So we’re constantly looking at when a student signs up for your course, say, you’re hosting it on Thinkific, they have a goal in mind, a reason, and it’s not to give you money or to take a course or to finish a course. That’s not their success condition. Their success condition is changing their life in some way.
So one of the early online courses I took was in video editing and I had a goal to edit a family, a fun friend’s video that I wanted to create. So I went in and I only completed 30% of this course on video editing, but I was stoked. I had achieved success in online learning because I got exactly what I needed. I skipped around the course, took the lessons I wanted. And so we’re really obsessed with that piece as kind of a differentiator for us in terms of really pushing on student success and making sure that if you run your course on Thinkific, we are doing our best to ensure your students achieve success because I think that drives business success for you as well. If you’re running a business around your course, if your students are successful, they’re more likely to return, repurchase, testimonials, referrals, less refunds, all that kind of stuff.
Andrew: You know, I think the other thing that you picked up on was what Paul Graham called Schlep Blindness, that when something is a lot of work we do start to become blind to it, we assume that’s just part of the process. When it was a lot of work for me to install a plugin, when it was a lot of work for me to connect it to Stripe, when it was a lot of work for me to make it do this and make it do that, I just grew blind to it because I thought this is the way things have to be. And in reality, for most people, that’s just not the life that they want for themselves. They don’t accept that because they’re not like into the technology the way that I am. I blame myself because I’m into the technology. If I can’t make my iPhone do something, it’s my fault. If I can’t screen share using Zoom on my iPhone, I think I got to look it up, there’s got to be a solution somewhere. The most people would say, “No, I need a better system and I’m open to it.”
Okay. All right. Let me take a moment to talk about my second sponsor and then we’re going to talk about how you got your customers, including this first customer who was not at all what I expected your first customer to be and how you kept building, and then maybe you’ll talk about why you and your brother not working together because I know that that came from . . . I saw your eyes do something as I said it. I know that came from stress in the company.
All right. The second sponsor is HostGator. Let me ask you this. Do you think that someone in my audience right now who is not teaching can start a site to teach and then create a Thinkific course?
Greg: Yes, yeah.
Andrew: What’s a good place to pick a topic, and then how would they get started if they wanted to do it?
Greg: Picking the topic is a tough one because I think that needs to come from you and what the areas you have expertise. I struggle with the idea of, you know, anyone who’s asking the question of, “What topic is going to make me the most money or be the most successful?” It’s really where are your areas of passion or expertise so that you can refine it for sure. And then, sorry. Once you’ve got your topic you’re . . .
Andrew: You’re saying, just pick a topic and then once you have your topic, you can start creating a course for it.
Andrew: Let’s suppose someone in my audience is really crazy about bike wheel changes. I’ve got to change a wheel on my bike, right? That’s a narrow niche within the cycling community, but frankly, people who are . . . I did a training weekend with Iron Men people, Iron Men athletes, and those guys were so about how fast they could change their tires because if they got stuck they needed to, you know, change your tire fast and not lose any seconds so they could get to the finish line. Let’s suppose I was interested in that, the different ways to move faster, the different tools involved in that, I put up a website. Does the model still work of blog about it, teach about it, and then have a course about it?
Greg: I think so, and I see people doing a lot of success. I mean, it’s . . . If you’re getting out there with . . . So you’re this Iron Man athlete who’s got the fastest tire changes in the business and you want to share that with your fellow athletes. If you’re getting out there with an honest desire to help people in that and you’re creating content around that, the free posts, YouTube videos, the tire change might be too niche. I don’t know how long you can talk about tire changes, but if it’s only an hour and you’ve kind of explained everything you need, then I would try and go a bit bigger in terms of like bicycle repair efficiency on the road or something like that.
But once if you’re doing that, then yeah, I think a great step is to actually get a site up, start creating some content around that. But the content piece will take a bit longer, so I do think you need to be looking at other ways as well to drive people, but it’s also good to have that home base, that site where you can say, “This is where my brand lives. This is where my audience can come to learn more about what I’m doing and have that base.” And then when you have your YouTube channel or Instagram, you can drive them back to that.
Andrew: I’m looking at a LiveJournal blog, believe it or not, from George R.R. Martin apparently for 10 years. Up until this year, 2018, he’s been using LiveJournal. Huge mistake, of course, but at one point, LiveJournal was top of the world, that was the place to publish online. And now he finally moved himself over to his own domain. The reason I’m bringing this up is anyone who’s listening to me who says, “Hey, Medium is great. I’m going to publish on Medium or Facebook or Instagram or whatever.” Terrific. Still get your own site. And you might want to do what George R.R. Martin did for a while there which is just published on both places, and that way when whatever new medium is deleted or killed or replaced by Russians who are then doing all kinds of weird things which is what I think happened to LiveJournal, you still have your own site and you can move on.
So if you’re going to do that, I urge you to find a hosting company that you can trust, one that’s been around, one that won’t just suddenly delete your stuff left and right, and one that won’t charge you an arm and a leg because frankly, hosting is a solved issue. And that’s why I recommend you go to hostgator.com/mixergy. When you go there, you’re going to get an extra special discount on there already low prices. They’ll host your website right. Yes, you can publish on all these other mediums, but publish on your own site too, own your own domain, and then when you’re ready for it, you can easily say, “You know, what I really want to do is start offering a course and go to thinkific.com, create a course, teach it and then start watching the $29 sales come through on your phone, you get excited, and then you keep building it up, and building it up, and building it up.
All right, hostgator.com/mixergy. I use that to create my own new business one about chatbots. That’s how I became a customer of yours of Thinkific, by the way.
Greg: Oh yeah?
Andrew: I don’t know if you know it. So I again went back and I created my own software, publish my own site, my own course, and I watch this this dude, Scott Oldford [SP] compete and he would just stick together whatever tools were out there, like he’d use ClickFunnels to create his landing pages, but he wouldn’t even cover up the fact that he was using ClickFunnels. It would be something like botsforbusiness.clickfunnels.com were all his domain pages. And then he wanted to publish this course. So he didn’t go and create all this software and put it together and get a developer to manage it. He just went to Thinkific and he just published on there.
And that dude just puts the whole thing together super-fast and we watched him. And then when we bought the business, I got to see the inside of the software and I got to see the way that he was thinking. And one of the things that I wanted to acquire from him was also the way that he thought about publishing. So through that, I became one of your customers and I also got a whole new experience and how to publish just faster. Don’t be so precious about owning your own technology.
All right. Let’s talk about your first customer. The first customer, do you remember who they were?
Greg: Do you have a mining one in there?
Greg: Yeah, yeah.
Andrew: Yeah, so it seems like maybe that’s not exactly necessarily the very first person to send you $1 for Thinkific, but that’s indicative of the first customer. Some geologist who is teaching mining.
Greg: Yup. Yes.
Andrew: How did you even get that? What’s your connection to that?
Greg: That one was . . . Like I said in the early days, we did . . . There was some initial inbound phone calls of people interested but we didn’t have the software for them, so once we actually got ready then we started doing outbound calls. And so my initial thought was, “We’re going to make this as easy as possible for everyone.” So I called him up and said, “You’ve got a great book and you teach at conferences. Why don’t we come in and help you produce a course and get it online? You need to be able to scale this globally. There’s a lot of opportunity.” I had some connections and I knew the mining industry well, so I knew this was a good opportunity. So we actually went and met with him in person, brought him into our office at the time, which was pretty small and . . .
Andrew: I heard a rented storage room is what you guys used as a studio.
Greg: Yeah, yeah. We used the rented storage room as a studio. We brought him into that and spent three or four days filming his course. It was like 18 hours, one of the biggest courses I’ve been involved in putting together. And then we would actually go and actually even promote and at one point even do cold-call phone sales to sell the course. So it was a very sort of non-scalable start to doing it and really focused on his course in the mining industry initially.
Andrew: Now, that seems like a lot of work. I would have stopped at that point and said, “Look at what we have to do for somebody to publish their course. We have to get together with them in person, we have to film over four days, we have the knowledge, we have the expertise, we have the motivation to do this, and it still takes us four days.” Imagine somebody who’s out there who was going to be a potential customer, that’s a pretty narrow market of people who know enough and are willing to commit that time to publish. Why wasn’t that an obstacle, or was it?
Greg: It certainly was and I would say bigger piece of it too even was the marketing of it and figuring that we’re not going to be able to do this for each customer because I need a marketing or sales team for every single course topic that we’re going to do because selling mining courses is going to be totally different than selling business courses. So that was one learning I took away. In terms of this is a lot of work. I’m just stupidly stubborn sometimes. And there was probably a lot of points in the first two or three years where we really should have given up where the revenue wasn’t there, the market feedback wasn’t there, but for better or for worse . . . Well, for better now but worse at times then I just couldn’t quit. I figured there was something in it and if it wasn’t exactly this model we tweak it and tweak it until we figured out exactly what people were going to look for. And then try to make it easier and easier for people to do all of this stuff.
But there’s still, even today, I’d say biggest challenges for getting out of the gate going is building your course and then going out and marketing it. We’ve kind of solved that piece in between of putting it all together and having a platform, having the software and being able to promote and sell and knowing all the technical challenges, but you still have to go and do the effort to create the learning that you’re going to deliver and then you do have to do some promotion to get out there and market it.
Andrew: All right. So you were doing a lot of that manually. You had a pricing structure that was interesting. Was this when you started out . . . At what point did you start charging people a percentage of their fees of the revenue they make?
Greg: Right out of the gate, we would do like a custom contract with people where we would say, “We’re going to shoot the course and promote it and we’re going to take a percentage.” And early days it was 50, 60, 75% I think in some cases because we were going to do everything. They were just going to show up on camera. We have since rolled over to a very different pricing model, but yeah, early days we were taking a cut. What I realized is that the people who are going to do more of it themselves, care more about the success of it, have a bigger longer-term vision, and want to build something kind of sustainable and grow, or even have a strong course offering. They’re the ones who don’t want to give us a percentage, so that’s why we wanted to move away from charging a percentage.
Andrew: And once you did, how did that impact sales?
Greg: That was a turning point. Like, I think I’ve told this once before, but there was literally a moment in the office, I think we were a team of six or seven, we rolled over pricing where we were charging monthly and added in annual plans, and someone we just . . . I didn’t almost even really look at the numbers for a few days and then someone showed me the graphs and there was a very noticeable change in slope of our revenue graph from sort of a slow flat inclined to almost a 45 degree huge spike in revenue growth and I literally fell down on the floor kind of did like some sort of snowman movements and rolled around a bit and was kind of laughing and super excited about this.
Andrew: You know what? That seems dramatically fast. Are you saying that people are going on your website, they immediately see there’s a pricing change and say, “I didn’t want to use Thinkific, now I have to because the price is right”?
Greg: So we had a lot of leads, yeah, that weren’t necessarily paying us, and because we were taking a cut, it was taking longer to get to that place where they’re making revenue so we could take a piece of it. But then there was also the fact that we also added the annual plans. So then we had a bunch of people who had been either free or paying us monthly and then they decided, “Sure, I’ll get the annual plan.” So the cash flow spiked up quite a bit too. So it all kind of came together and . . . And it’s not really a perfect magic moment, I mean, it’s not an overnight, everything suddenly work. There was lots of little paper cuts to build to that point, but that was a very distinct moment I remember and just everything turned around at that point. And the growth from that point was consistently 20, 30 even 40% month over month for a couple of years.
Andrew: Wow. You know what? I do understand the value of charging annually. It does bring in a lot of money right up front. Leadpages was especially good at that. Every time you’d log in they would say, “We’ll give you a 20% or whatever discount if you switch to annual,” and it was like one click to switch to annual, and gives them a lot of cash to use to hire people to build up their business. When you said paper . . .
Greg: They encouraged me to switch to two-year and three-year.
Andrew: You just drop your whole seat.
Greg: We kind of jerry-rigged this at the beginning because it could be something . . .
Andrew: Yeah, there’s an Amazon box to hold up your monitor.
Andrew: You’re saying it was them who encourage you to go to what?
Greg: Well, just that when I remember signing up for Leadpages and then I switched to annual and then I got on another webinar and they’re like, “Switch to two-year plan, three-year plan where you pay two, three years in advance.” They were really bringing that cash in up front, which is great. I mean, you get a little bit less because you give that discount, but from a cash flow perspective that’s keying early days in a business. And I think part of the reason why I was so excited in that moment is up until that point I was always worried how are we going to make payroll next month or pay the rent and when that turning point having that that kind of changed everything.
Andrew: You know, one of the things that I realized for myself was as a business owner, I’d rather pay you . . . If I’m going to use you long term, I’d rather pay you all upfront and then take the expense now which is great for my taxes. And I thought I was the only one who thought that way. Then, I forget his name, the founder of Baremetrics sent out an email to his own email list just before the end of a year and he said, “Hey, don’t you guys who are using cash flow or cash basis accounting want to increase your expenses this year so you don’t have to pay as much in taxes in April? Here’s how you do it. Go annual.” And I thought about it and I started emailing everyone. I don’t think Pipedrive had an annual plan before emailed him and said, “How do I pay you annually?” I lot of these companies didn’t have it and I would just pay them annually. Help Scout, I think I just had to send him money just so I can use them annually.
Greg: That’s a great email. I’m going to borrow that if you don’t mind. Well, [inaudible 00:47:53]
Andrew: I wouldn’t have thought. But it matters a lot if you’re doing things that way. All right. So then you grew your business that way. Talk to me about the stress. So far we’ve talked about like this easy business, the one from highs to highs to highs. There was a stress. You told our producer a little bit about how it led to you and your brother arguing. What would you guys argue about?
Greg: Early . . . I mean, the first really two years I think the big stress is you really don’t know if, “Is it working? Are you making the right decision?” So you make a decision, you go in a direction for a little while, you don’t see the results you were hoping for, you don’t see enough results. And so I think that constant uncertainty and, “Are we doing the right thing?” and as you pointed out some of those early things, “If this seems like a lot of work, how are you going to be able to actually scale that?”
So we tried a few different business models. We even tried more of a marketplace model for a bit. We were always moving in this direction that we went in of this self-serve platform that lots of people can use to create their own courses, but trying all of these other paths kind of along the way in terms of business models. So I think that led to a fair amount of stress there. And then there were times where in that first couple two and a half years a six-month runway, like six months to bankruptcy felt like infinity, and there were points where it was two weeks to bankruptcy and we always just kind of pulled through with one more sale or . . .
Andrew: And that stress that builds up and then little things lead to arguments because you’re feeling the stress. And did you have a family at that point? Do you have a kid?
Greg: No, no. Not yet.
Andrew: Okay. So when you guys would argue, do remember one of your stupid arguments, one that shows how stressed you must have been?
Greg: Probably the stupidest one was around our accounting system and I was setting up our accounting system, because I was setting it up, I was the admin on it and I was probably going to do most of the accounting, and he was looking over my shoulder, he’s like, “Well, you better give me all the privileges so I can go in and edit everything.” And I was like, “Oh, I don’t know. If you go editing things and I don’t know what you’ve changed, it’s going to screw up all the numbers. I’ll just give you reports every week. You can go in and you can view everything but I don’t want edit privileges.” So we had a little momentary back and forth.
Greg: So I made click like no edit privileges and that was it. Then we were like off down the street walking for blocks through downtown arguing for like two hours.
Andrew: So that people wouldn’t see you argue.
Andrew: So that your people wouldn’t see that you guys were arguing about this.
Greg: Yeah, I think at that point we really only had one employee on team. But if I think for it was more just . . .
Andrew: Who is that? Is that Ohr? Eugene Ohr [SP], was that the guy?
Greg: Yeah. Yeah, exactly. Yes.
Andrew: Okay. I’m looking it right at your brother’s site.
Greg: This is great.
Andrew: Yeah, I do my research. I’m looking at your brother’s site, by the way. He got leader.com as a domain. Beautiful looking site which fits in Instagram business. I’m looking also at your pricing and something stands out to me. It seems like you guys are going after not just course creators who sell their stuff the way that you did, but it’s businesses who are trying to teach their people. That seems like a part of what you’re doing. Am I right?
Greg: Yes. Yeah.
Andrew: How big of a business is that for you?
Greg: Well, if you . . . There’s definitely this huge piece of the coach trainer consultant individual who’s got some expertise and that’s our core base.
Andrew: More than 60% of sales.
Greg: Yeah, yeah. But then, and I’d say 20 to 30% now is bigger businesses, not enterprise level like IBM or anyone, but going up there like Hootsuite does use us and some businesses of that size. And what I’m seeing is more and more every business is realizing there’s an opportunity if you share your special expertise with your potential customers and customers, you increase their loyalty, you increase their likelihood to sign up or purchase or continue to use you or even promote you. So I walked through a store the other day and I saw a ukulele for sale, and on the box, the big promotional thing was not, “This is the best ukulele,” it was, “Get this ukulele and you get a free online course on how to play ukulele.” So really across the board, I’m seeing companies get into this education piece both in terms of lead generation and marketing, monetization, and then general loyalty and sort of churn prevention for customers.
Andrew: So you’re not saying that they’re doing this to train their people. You’re giving me the example of Hootsuite which is Hootsuite Academy is hosted on your software?
Greg: Yes. Yeah, so they do . . .
Andrew: So it’s people training their users and potential users on what they do. Got it. And I could see that Hootsuite does two different versions. They do a free course model where they’re just teaching you about online content creation and then they also have paid certification programs and those are both publish on your platform. I see. So you’re saying people who want to sell need to teach and your platform is a way to do that.
Greg: Yeah. And if you think about it even if you go to the coffee shop conversation and you’re . . . Let’s say you’re selling back to your example on Iron Man and the bike. If you’re someone who sells Iron Man bikes and you start by sitting down with an athlete and saying, “I want to sell you this bike. Here’s all the features of the bike,” you might close 5% or 10% of those deals. But if you start by sitting down and saying, “Oh, you’re doing the Iron Man. Let me teach you how to change your tire in 60 seconds. I can cut minutes off of your tire change time.” And you have that whole conversation first and then you say, “By the way, do you want to buy bike? It’s got some cool features that allow you to change your tires faster.” You’re potentially doubling, tripling that rate.
Andrew: Ah. Okay. I see it. You’re saying, this is a way to get people in the door. It doesn’t have to be the sale. It doesn’t have to be the product and frankly, it could be both. All right. For anyone who wants to go check it out, the site is thinkific.com. I was wrong. I’m amazed by how well they’re doing. And frankly, I had the notes here. I’m still blown away by how well you guys are doing. But I understand it. I’ve seen your software. It is so elegantly done, so beautifully laid out, which frankly, you told our producer your previous version, your first version was crap. I went back and what I saw, maybe it’s crap to your standards but it looked way, way better than most people’s existing sites. Today it’s come a long way still from there. It’s thinkific.com for anyone who wants to go try it out and I’d love to see your courses. If you guys do it for your pages, send me a link, let me see what you guys are up to.
And if you want to host your website right and that would be the free content, the everything, the domain, whatever it is that you want, go to hostgator.com/mixergy. And when you’re finally ready to create your own product, maybe it’s like a piece of your business that you think you could sell to other people, the way that Thinkific was a piece of someone else’s business, it became this standalone business. If you want to hire great developers do it for you, go to Toptal, in fact, go to toptal.com/mixergy. Greg, thanks so much for being here.
Greg: Thanks Andrew, I really appreciate it.
Andrew: Thanks. Congrats. Bye.