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. This is my first ever interview in my house. Joining me is an entrepreneur that I’ve known for a long time. TK Kader, he is the . . . still is, the founder of ToutApp. I say still is because you sold the company. ToutApp, what was that one sentence that you gave me?
TK: We’re a sales engagement platform.
Andrew: The way I always thought about ToutApp was that I need to send out email, I want to know if people are even freaking opening the email or are they ignoring it. If they’re opening it, are they clicking the link? Are they going back and like opening and shutting it and opening and shutting it? That’s an indication. I want to know what happens when I send out an email so that I can improve it. Right. But you guys have expanded beyond that.
TK: Yeah, that’s how we got our start. That email tracking was a big part of it. And then we had the templates, which was stopped writing the same email over and over, write better emails. And then we evolved into sales engagement, which was your lead, it takes seven touches to get you to come to a meeting. How do I get ahold of you over phone, email, and LinkedIn and everything else?
Andrew: Beyond the email, you want to make sure that salespeople can reach their targets. All right, I say still is because you did create it but the company is sold. And the reason that I invited him here to do this interview is it is very touching photo on social media of his stuff on Marketo’s desk saying goodbye. And I thought, “I don’t know why I’m so moved by this. I’m not usually moved by goodbyes. This one was. I think it’s because I’ve kind of known him. I’ve known a software I’ve used it and it’s like, wow, what this guy has done.” I want to find out about how he started the company, how he built it up, how he got customers, what he did when so many competitors came in.
Why he sold it, what happened after the sale and a little bit about this new book called “How to Punch the Sunday Jitters in the Face.” Find out what that means thanks to two phenomenal sponsors, one of which he used for hiring developers. There’s no better company than Toptal and for doing your finances, doing your bookkeeping right, I’ve been freaking loving pilot.com. I’ll talk about those later. TK, tell me about the day. Do you remember the day when you closed the sale of your business?
TK: I do. Yeah.
Andrew: What happened?
TK: I was three weeks sleep deprived. So we were going through a three-week due diligence process. It was a 360 point spreadsheet to go through it. And the reason it was only three weeks was because we wanted to announce it at Marketo or Marketing Nation Summit in front of 5,000 people. And the moment we closed the deal, we were in a conference room. It was me, Leo Choi, who’s our VP of BizOps and finance. Him and I were working the deal and you’re on this conference call and there’s like the people from Marketo, the people from Vista, the people from their law firm, the people from their accounting firm, the people . . . like I lost count.
And there’s just this one dude on the call and they’re like, “All right, TK, do you agree with all the terms of the deal?” I’m like, “I do.” And then the Chief Legal Officer on the Marketo side is like, “All right, [Margaux 00:03:00], do you agree to the all the terms of the deal?” She’s like, “I do.” And then there was like, “All right, we’re going to release the funds. We’re all done here.” And there was a brief moment of pause and I’m like, “Did we just get married?” Like that’s what it felt like. And then we put the thing on mute and we just went crazy. It was incredible.
Andrew: And the [funder 00:03:15] officially released when they say, “Do you?” You say, “Yes.”
TK: At least for our deal is sort of like it was the moment where everything signed, everything is good, everything is checked off. And it’s like literally the last piece which is when they wire they just want to get on a call and make sure everyone’s good. There’s no outstanding issues and we’re a go, and that was when everything just kind of went into motion.
Andrew: How much did you sell for?
TK: I rather not talk about that. So here’s the thing, in a venture back business you either hear about the billion dollar exits, or you don’t. And ours was undisclosed, which basically puts in a zip code where it’s like immaterial what the exact amount was.
Andrew: Did you end up doing well financially from it?
TK: In the long run, I did. By the time that we sold my ToutApp and then 18 months later we sold Marketo, it worked out really well for myself and the team.
Andrew: Because you ended up with shares in Marketo?
Andrew: And then you worked for Marketo, which gave you more. And then Marketo went from what? The share prices went up and then the company sold?
TK: Yeah. Well, Marketo was private. It’s owned by Vista. And Vista had taken Marketo public and it was only a few months later, they brought in a new CEO, the rebooting the whole executive team, and they bought ToutApp. And I joined the executive team then and so ended up being an incredible experience and just like net positive for everyone.
Andrew: So I don’t want to give away too much of this story but I want to acknowledge one of the difficult moments and I know that they’re several along the way. The hug. Who was this? Where was this?
TK: Well, ToutApp ended up being a good outcome for people involved and then Marketo even better.
Andrew: But long before the sale.
TK: There was long before that that, yeah, there was a point that ToutApp almost died. Literally almost like we were in a board meeting and at the end of the board meeting, each of the board members gave me a hug. You know, you’re like at the board meeting and they’re like, “All right, good job,” and they’re running off to the next meeting. It’s like they literally gave me a hug and I’m like, “All right, well, just cut the company down to 15 people and good luck and we’ll figure it out from there.” And they like they just laughed. And an hour later, I found out my dad was in the ER, and it was like one of those like double whammy like craziest day ever.
Andrew: And how did your dad do?
TK: It worked out fine like everything else does.
Andrew: But basically they’re giving you a hug. Goodbye. We tried to make this a venture-backed firm. It’s not scaled down. Enjoy it and . . .
TK: It was one of those, yeah, like we need to cut and just cut down to 15, become self-sustaining and we’ll figure it out from there type of thing. Yeah.
Andrew: All right.
TK: And we were at 80 people at the time, so that was going to be like insane.
Andrew: I had all these questions about did you cut or not, but you know what? Let’s go back to your childhood. I want to go a little bit before Tout and then go into where Tout came from. The things that you did to get users at Tout. What happened that set you guys on this downward spiral if it was a spiral, and then how’d you recover and why you sell? But we talked before we started about how even as a kid you were entrepreneurial. And you told me about something that you did with MFC. What’s MFC?
TK: That’s blast from the past. So MFC is Microsoft Foundation Classes. So MFC is this like framework that Microsoft came out with that helped you build Windows applications. It’s like way back. I was 14 years old. And when it came out, there weren’t a lot of resources available online. So that was one of my first entrepreneurial things. I basically built a website that was like a community. It was like, here’s all the different places you can go to but it was like a Yahoo but only for MFC. And because it was so young and so new and there weren’t too much out there, like we became one of the top resources for MFC. Search for MFC like literally we would be the third result in whatever crazy web crawler you were using at that time.
Andrew: And was it also community or just a link to all the resources?
TK: It was basically a directory and then it turned into a forum. And then it also had recommendations.
Andrew: And the money for that, the revenue came from?
TK: So Amazon Associates had just started. And just like a Hail Mary, I put basically top five MFC books, just a little banner in the bottom. And I just literally had a picture of the top five books. And if you clicked on it, it would go to Amazon. And, you know, if you sell books, you don’t make a lot of money. What would happen was people would buy an MFC book, for whatever reason, they would then buy a Super Nintendo. And then so every quarter I would start getting these like commission checks that were like substantial amounts from Amazon all because people were coming to coming to this MFC site.
Andrew: How substantial?
TK: I mean, for a 14-year-old, it was probably like $1,000, $1,500 every quarter.
Andrew: What do you think that says about you that, as an early young teenager, you started this company?
TK: I just hate inefficiencies and . . .
Andrew: You started because you hated inefficiency?
TK: Yeah. I mean, like literally, I started because I’m like, “I really want to use MFC. It’s cool. And I can’t find anything anywhere. So this is not how it should be. There should be a better way.”
Andrew: It wasn’t that you saw market. It’s not that you were entrepreneurial. It’s just, “This is too inefficient. I got to fix this.”
TK: I think like that’s always been the primary driver. And then, once I caught the bug of like, oh, like, if you solve a problem and it solves a problem for a massive number of people then it’s highly lucrative and that’s when you discover entrepreneurship. But primarily, I’ve always been driven by like this is a problem. Like even Tout it started because I had the problem and I just needed to solve it for myself.
Andrew: Let me come back to that in a moment and I’m fascinated by problems as the origination of businesses, but I want to go to one other business. HipCal. What was HipCal?
TK: And so HipCal was originally called MyPIMP.
TK: Yeah. It’s MyPIMP, P-I-M-P. Personal Information Management Portal. It was like Web 2.0. This is 2006. It was one of the first online calendars and before Google Calendar came out, and it was not just a calendar and a notes app, but it was also a group calendar. So, again, it started with this necessity. We were in a fraternity. And we had all these social events, we had all these classes, and you had to like put it in your calendar one at a time. So we built HipCal, which is your online calendar plus you could subscribe to the fraternities’ calendar and the classes’ calendar and all those events would just come in automatically.
Andrew: And then eventually Google started adding that with their Google Calendar, but this was way before it. You guys built it just as a fun project in your fraternity?
TK: It started with . . . so I had like four other co-founders in our fraternity Garret Heaton, Pete Curley, were the two that like really started it and then the rest of us joined on as and it started as a class project. And then it was like, “Oh, this is a thing.” And we always wanted to do a company, not a startup, mainly because we were in upstate New York, we didn’t really know about startups. We didn’t know about fundraising. We just wanted to build a company. And so we got together, took over a room in our fraternity and built it out and went to thousands of users. It was an awesome experience.
Andrew: You sold it to Plaxo.
Andrew: I remember Plaxo as being the thing that would trigger 1,000 emails from 1,000 different friends saying, “I need you to update your address book with me.” And it will go and add your contact information. But then they would send messages to all the people who were in your address book saying, “I need you to update your account.”
TK: It was the original social network.
Andrew: From Sean Parker the first I think President of Facebook.
TK: That’s right.
Andrew: The guy who has gone on to a lot of fame and fortune over the years. Did you get actively sell it to him? Did you get to meet him?
TK: No, Sean Parker was gone by the time Plaxo bought us. But his co-founders were there, Cam and Todd. And they were evolving the company and they were building out an online Plaxo. So originally, Plaxo started with email plugins, which is relevant for ToutApp. And they actually ended up buying us because they wanted to build out an online calendar as well.
Andrew: And did that work out?
TK: Yeah, it was great. We were graduating college and it was between getting jobs at IBM and GE which is what we would have done. And in fact like the summer we did HipCal, I was supposed to show up for my second internship with GE Water & Process Technologies. Like it does not get more exciting than that. And I literally canceled the day before and just did HipCal instead. So it was incredible. We were graduating and we got bought and we moved out to California. We got a house in Los Altos Hills and we commuted to work every day together and worked at Plaxo. It was amazing
Andrew: That does sound like a lot of fun. Did you have a personal life at that point?
TK: I had a girlfriend at the time. But between graduating and moving cross country, like it didn’t quite work out.
Andrew: Why did you end up with Bridgewater afterwards? It’s an investment firm, right? [Private 00:12:15] equity?
TK: Yeah. Yeah, Bridgewater is hedge fund. Ray Dalio, he came up with the book “Principles.” They recruited me from out of out of Plaxo. At that time, everyone . . . I didn’t understand at the time but everyone wanted to be Facebook. If you remember like 2006, 2007 period, Facebook was doing well. LinkedIn was doing well. Everyone else wanted to be a social network. And I didn’t know how to articulate it back then but now I can. Like I didn’t like B2C. I just like . . . I was like B2B.
Andrew: Why not?
TK: I didn’t understand it. Like I’m more of a business software guy. I’m more of let’s close deals kind of guy. Not a we have a whole bunch of users and some of them will monetize.
Andrew: I can’t picture you being that way because, number one, HipCal seems like a business to consumer product. Consumers we are using it, right? Number two, you were going to go work for like a water thing at GE?
TK: GE Water & Process Technologies.
Andrew: Yeah. Which just makes me think you don’t look like . . . salespeople don’t want to go and work, do they, for GE Water & Process?
TK: I mean, GE Water & Process Technologies is fantastic. But like no one I don’t think wants . . . unless you’re a mechanical engineer or electrical engineer I think maybe you want to work there. I just loved businesses. I loved revenue. I loved understanding like what solutions you were creating, what problems you’re solving. Whereas social networking and B2C was really more of a vice. It’s like how do you actually get people to not do work and go enjoy or go escape? And for me, like going back, like I like solving problems and B2B is like solving problems. Whereas B2C is a lot more of pleasure and distraction and escapism.
Andrew: Mind candy.
TK: Exactly. And that didn’t resonate with me. I don’t think it’s bad or good, just like what you were interested in and in driven by.
Andrew: But then what did Bridgewater want with that? They were looking to invest in companies that were social networks of running social networks [inaudible 00:14: 12]
TK: No. So Bridgewater was completely different. I was like, “I don’t quite understand Silicon Valley. I grew up in New York City. And I was all sudden in living in Los Altos Hills commuting to Mountain View working there. And I’m like, “I don’t like this. Like I miss the city. I miss the East Coast.” I didn’t quite understand it. Everyone wanted to be a social networking company. So maybe Silicon Valley is not for me and Bridgewater came along and they’re like, “Look, we value engineers just as much as the finance people. We’re first principles thinkers. We want you to come build software for us to help us trade better in the markets.” And I’m like . . . and I get to learn about the economy and all this. And that’s what really . . . and Bridgewater has a very unique culture. And that’s what really drew me to them.
Andrew: I read the book “The Principles.” That’s what is called? It was fascinating. Did you work in the farm that he was talking about in the book?
TK: The farm?
Andrew: Yeah. He had like a farmhouse or something where people aren’t working. Maybe that was a short period . . .
TK: There’s Nyala. Oh, no. So the farm that was like their office number one. I joined when they were at probably at about 200 people, 250 people.
Andrew: Even that is fairly small. They always wanted to have from what he described a very family-like environment. It was him living in this farmhouse with people working there and his kid would be on the potty and somebody who is like an executive walks through and sees the kid peeing . . .
TK: That’s like super early days.
Andrew: No, that’s not it. But the other thing that I remember about them was everything is like an algorithm, even the human mind should be thought about in a sense of like you would program a computer, the way you think, because then when there’s a problem, you don’t think I screwed up. You think, “What part of my logic needs to be adjusted, right?
TK: Yeah, it’s all about principles.
Andrew: Yeah. How did it play itself out when you were there day to day?
TK: The way it played it out is like, typically, when you face a problem or roadblock, the natural human reaction is, “How do I solve this problem?” The unnatural human reaction is to take a step back and ask, “What is this problem indicative of and what is what is the general class of problems that this represents? And given that general class of problems, what are the set of principles that can establish so that whenever that permutation or problems come up, we will have a solution for it.”
Andrew: So then how did you do that? What’s an example of how they did that in a more basic way?
TK: I mean, it permeated pretty much everything like from how you think about what the type of food that they should have to . . .
Andrew: Yeah, let’s talk about that. Something very basic like that.
Andrew: I’ll give you an example that I remember from the book, maybe this will trigger something. He had this problem where if somebody made a mistake, he wanted them to report it, to not shy away. How do you get people to report mistakes when it’s not in their best interest? And what he came up with was, he said, “We don’t want to reward people for saying that they made mistakes because that’s really just not creating a great culture and encouraging people to make more mistakes.” I think the answer if I remember right was, “We’re going to have people report on the mistakes they made. If you don’t report, then you could get fired, but by reporting others can learn how they made the mistake and avoid in the future.”
TK: Yeah, it’s called the issues log. So there’s a giant SharePoint list you logged into. Anytime something went wrong, you would write into the issues log on what went wrong.
Andrew: And so would you do that even if it was like lunch or dinner that was mis-ordered?
TK: Yeah, absolutely. Like if lunch was terrible, you would go into the issues login and say lunch was terrible.
Andrew: And then whose job was it to go and pick through all these different things and . . .
TK: So every issue needs to be diagnosed. Also, whenever you log an issue, it needs to be rated in terms of impact on a scale of one to five. So five is like we’re losing money and everything. Like this is terrible. One is like, this is not the biggest deal. But again, this is probably indicative of bigger problem, therefore we should look into it.
And so you have to actually like in order to file an issues log, it’s not like . . . probably not like a Slack channel today, like where you go like, “This sucks.” It’s like no, there’s probably about 8 to 10 fields you have to fill out to log that issue and classify that issue. And then the manager that’s . . . you have to always give a responsible party. So, again, one of the principles is always a responsible party. There should be a single throat to choke as he probably put in the book.
Andrew: I don’t remember that line.
TK: That might have gotten . . . So I didn’t read his book, but I had the wire bound version of “Principles” from my time there . . .
Andrew: Which is how it started.
TK: . . . with handwritten notes. That’s what they gave to every employee.
Andrew: With your handwritten notes.
TK: My handwritten notes. Yeah.
Andrew: Everybody had it? And then was it something that he would iterate on?
TK: You had to have it with you all the time. And in meetings, you could cite a principle if you were bringing up a point related to a principle that was being violated . . .
Andrew: [He didn’t 00:18:49] fix the principle though.
TK: . . . or needed to be applied.
Andrew: Or would you be . . .
TK: The time I was there he was actually solidifying all the principles. And so there would be basically draft one got published. And then there was open debate about debate me on which principle you agree with and disagree with. And it went through probably two or three iterations where he debated some and tweaked some and then it got it like, “All right, these are the principles . . .
Andrew: I can’t believe it.
TK: . . . we’re going to operate on.” And the way the principles came to be, I’m sure this is in the book as well is every single time this is like in play, every time he recognized a problem, he took a step back and he would dumb down in his BlackBerry a principle that he like came up with because of that set of issues that he just dealt with.
Andrew: So let’s bring this back to like entrepreneurship and something more concrete.
Andrew: Yesterday, I totally screwed up. You came to my house yesterday, I was out for a run. My wife was here. She was in her Birkenstocks and socks. That’s how unprepared we were for people. And she says, “Andrew, TK is here.” “Oh, no.” So what I now have learned to do is not to like beat myself up the whole run. I tried to find a way to make it work. Yesterday it didn’t make sense. But what I wanted to do was come up with a way to fix this and keep it from happening again. If we were going to go back to first principles, what would we do? Would I just like write a principle of no meeting happens without a . . . But we did have a calendar invitation. It was just that mine was not the same as yours. So how does this work?
TK: Yeah, so the way it works is you’re first asked . . . So key thing in diagnosis when you’re actually looking to understand a problem and get to the core like what the problem, it always comes down to some character flaw that the responsible party has. So in this case, there’s some character flaw that you have that caused this issue. And until you get down to a thing of, “Andrew tends to X, Y, Z . . . and that is why this happened,” you haven’t gotten to a root cause you haven’t fully understood what principle that you can provide.
Andrew: So you’re saying character flaw because in my mind I go, “I am so disciplined. I’m right up against like on it.”
TK: Absolutely. Yeah.
Andrew: But I always will put that aside to try to understand what you’re saying and see how we can apply it. And what that made me think is, “Andrew’s character flaw is he only goes by what’s in the calendar and has to live by the calendar.” Now that we’ve understood the character flaw, what do we do with that?
TK: Yeah, there’s a thing of . . . there’s two things there. One is can you actually improve on yourself in terms of that character flaw? Is there improvement there? And another thing is can you build systems to address for that and catch that next time? And that’s where this really comes in . . . like this is where principles come into play. And first, where you actually asked that, “Okay, if the calendar is the source of truth and errors still happen, then is there a double check on the calendar that needs to happen?”
Andrew: Got it. So maybe what I would do is let’s think very simply, again, entrepreneurial . . . like a simple answer for entrepreneurs might be, “I might need a zap that checks my calendar,” or maybe we code something up, “that check my calendar, and if there’s something that doesn’t have a person attached to it, then it’s an error that should be triggered.” And then the other thing I might do is I guess that might be one. And basically you’re sitting around and you’re thinking this stuff through all the time. So it’s not, “I screwed up. I got . . . ” Some things you let go but it’s not, “I screwed up.” Okay. All right.
TK: And there’s like another example that like . . . another way to think about it is this is where it gets powerful, right? Do you fix the calendar or do you do a zap? Or is there an elegant solution like, you know what? A week before, just send an email saying, “Hey, here’s what I’ve got down on my calendar, looking forward to it.” And that way it forces the other person to also look at it and he’s like, “Well, that’s not right. It’s Monday not Tuesday,” or whatever it is. So that way we have a second source of truth that’s verifying or communicating what you’ve got.
Andrew: And here’s what comes back to me from that. What I always have to come back to is what’s the principle so that I don’t just solve this problem to solve all related problems. And one of the things might be always have a like a failsafe for something like that. Okay, that’s helpful for me.
TK: There’s a principle in the book called trust but verify. And so that would be the principle that applies for you, it’s like trust the calendar but verify.
Andrew: I know what it was. It was, in that case, I can’t do a million different things, I have to reduce what I do, so that I have like an hour to digest this problem, fix it, and make sure it never happens again. So the next guest has the perfect experience. And then if I’m going to do interviews in my house, I have to either commit to them or not do them. And then if I do, I need to have a place to record errors for it. Like, for example, I know you like tea, I need to have five different teas here. If someone comes over and says, “I need decaf tea,” I need to make sure that we have decaf tea. If someone else comes in and says, “I need coffee,” we need a quick way to brew coffee. And it’s all these things go into the process but I could only do that if I care about a few processes.
TK: Yep. And the magic there I think for the entrepreneurs, it’s like, you know, you roll out a release and something goes wrong. Most entrepreneurs are like quickly fix it, solve the fire. Okay, we’re good, move on. The discipline comes and I’ve worked at Bridgewater, I’ve worked with Vista, I’ve worked with [inaudible 00:24:03]. These are three like best VC firm, best hedge fund, best PE firm. The one common thing that all three of these firms have, world class firms, best of the best is that they actually set aside time to actually vet their principles. They each have principles and they look at . . . and so the thing you said where I actually have an hour where I diagnose what happened, if entrepreneurs did that, just like once a week, that would be a game changer for their businesses.
Andrew: Yeah, we need to do that more. If I’m running marathons on other continents and I’m doing interviews, we need to have a breakdown when I come back of what happened, a post-mortem on everything. Okay, let me talk about my first sponsor and then we’ll get back into the rest of the story. My first sponsor is actually a company called . . . who do we go with first? Let’s go with like Pilot because you don’t know Pilot. I’m going to tell you about them.
Andrew: I hate having individual bookkeepers. A lot of my friends do. The reason I don’t like them as I don’t like one person to be sick or one person have another client was more important or pulls them away because they’re less important but they’re annoying. I just want to know there’s a company people who handle it. Pilot said to me, “Andrew, we have software that will suck in data from Stripe, sucking data from all these other sources that you have, credit cards, Chase,” whatever, everyone except Citibank is always a pain in the butt. “But we’ll suck it in, we’ll organize it. Then a human being will go and do it manually and make sure that it’s all right.” I said, “Leave me alone. I don’t care. I’ve got this okay.” I said, “Come on.”
And then Sachit said, “Andrew, they want to buy an ad. Don’t you want to do it?” I go, “No, I’m happy.” I finally said, “I got to get these people to just leave me alone.” These people and I mean Pilot. The people in my team would say, “Here, take money and go and do my books.” I gave them access. They did my books and I ignored them. January 1st. Andrea, my assistant says, “Andrew, like I think we should get paid as a team using Pilot’s system. They put it into QuickBooks. It all works. It just makes sense.” I go, “Okay, fine. I’m not arguing with you. Let’s go do it.” I looked at the books. Every detail was so right. I’ve never had anyone . . .
TK: All the categorization and everything.
Andrew: Yeah. A few months, two months later, I’ll give an example of something that was brilliant. I usually wear beads and they must be on the table here. We decided as a team . . . they’re in my pocket. I don’t want to screw around with. Yeah, let me show you. Someone on my team said, “We’re going to sell these for five bucks.” We got them coming in from this woman on Etsy and we’re going to sell them for five bucks as a way of like starting a conversation about focus.
I’ve totally forgot about it. I look at my books I go, “What the hell is this revenue line?” They understood because they looked at Stripe that we were selling beads, they understood that the beads said “True Mind Beads” with them. They understood that we had a True Mind program associated with it. We had 3 people, 10 people signed up for the True Mind program. So they attributed the revenue to that. They created a whole other source so they can combine the True Mind beads.
TK: That’s awesome.
Andrew: The whole freaking thing. I was in shock and that’s when I knew I did a great thing. So I said finally to them, “Okay, you’ve been wanting to sponsor us for about a year. We’re going to let you come in because you’re just that good.” And I said, “Great, but we don’t want to sell.” I got, “What the hell? What is this?” They said, “Andrew, no one is going to just sign up and start with a new bookkeeper.” I said, “Then what do you want to do?” I said, “What we want to do is anyone who has a bookkeeping company who wants some feedback on their books, we’ll give it to them. They’ll see how we work, they’ll see how we think, we’ll be useful when they’re ready to change. Maybe a year later, when they’re doing their taxes, they’re frustrated, they’ll remember Pilot is a good company.”
Anyone who’s starting out, they’re probably not ready for us. We’ll get on a call with them, we’ll talk to them about the mistakes that they should make, what works and what doesn’t. When they’re ready to hire a bookkeeper, they’ll hire us. And then if they use your special URL, we’ll give you some discount. I actually don’t have it in front of me. So I don’t remember what the discount is. Frankly, they don’t charge that much. The amount is not that significant. They’re not giving you 50% off because it’s all services with software, but a lot of services.
So here it is, if you’re out there and you’re starting a company and you want someone to help you think through how to do accounting properly or if you have accounting done right and you want somebody to go over your books and give you feedback on what you could do to adjust it and make it better, what I want you to do is go to pilot.com/mixergy.
Pilot like the guy or the woman who will . . . I hardly ever see a female pilot. Anyway. There’s a reason for that. I actually did a whole trivia thing on that. It has to do with how the Air Force recruits. Anyway, never mind. Pilot.com/mixergy. They will go over your books with you. They’ll go over your plan for your books and then when you’re ready to sign up, they’ll give you a discount. Well, is it weird that I think this lavalier keeps pulling down my shirt and showing you way more chest hair than should be shown in an interview.
TK: I think you’re good.
Andrew: All right. I’m figuring this out. When Hiten Shah and I did this, all I kept hearing was rustling, rustling, rustling. I was like, I got to solve it. We solved that. But now I got to think . . .
TK: I’m also a very still person. I meditate.
Andrew: Do you?
Andrew: Why do you meditate?
TK: It started at Bridgewater. So Bridgewater, Ray did this program where he had been doing Transcendental Meditation for decades. And it costs $1,200 to learn and he did a program where they open up meditation rooms in every building and they said, “I’ll pay for half, you pay for half and if you finish the course, I’ll reimburse you your half.”
Andrew: Wow. Okay.
TK: And that’s when I picked it up. So I’ve been practicing it for nine years and it just helps me be more still. Like naturally I’m like kind of an anxious person. Socially, I get anxious but Transcendental Meditation kind of just like eases that down.
Andrew: Anxious over what? This kind of goes back to . . . I’m guessing this is the point in your life where you titled your book “How to Punch the Sunday Jitters in the Face.”
Andrew: Is this a point in your life where you wanted to start a company?
Andrew: You were. And so your Sunday was what?
TK: So Sunday jitters kicks in right around like 3:00 p.m. You’ve had a good weekend but then that’s when you get like either you like drank too much, spend too much, went out too much. Or, you know, you feel unprepared for the week or you literally going into a situation on Monday that you’re not happy about. And that’s like the pit in your stomach. So that’s how I describe it. And I start feeling like I love being at Bridgewater, but I always knew I wanted to go back and build a company. And it was that angst and it was a little bit of like, “Where am I going? How do I do that? Where do I start?” That’s kind of when I started to . . . meditation definitely helped. In fact, the year I started meditating is the year I quit and started Tout.
Andrew: And how did meditation play into that?
TK: Meditation, the way I pitch, I’ve gotten countless people to take on Transcendental Meditation. Excuse me. Sorry. That probably kills your
Andrew: Right. It doesn’t need to have a like a cough thing. So I don’t cough much but I do have a problem with like this constant need to with my nose, you know, and I hear that from podcasters. I used to hear much more than today.
TK: Now you control it.
Andrew: When I do it remotely, I have a mute button when I do interviews. I need a mute button on this freaking thing. I haven’t found one of those yet.
TK: Is that right?
Andrew: That’s the one thing. Anyway, sorry. You can go on.
TK: Giant red means record not mute button then?
Andrew: Yeah, I was thinking what I could do is like disconnect it but I know I’m potentially not going to reconnect it.
TK: So basically . . . have you ever watched movie, “The Matrix?”
TK: Okay, so Neo, like when he first starts, he has his bullets coming out and he doesn’t even know what to do. By the end of it, he learns that he could actually stop the bullets, look at it sideways and pick the one bullet he wants. That’s what meditation does for your thoughts, and particularly Transcendental Meditation. So generally through my day, I would have so much coming my way and I’m like . . .
Andrew: Like what? Like what would you . . . I was going to say around today. But let’s take business, what are some of the issues that would have come up to you as you were starting Tout?
TK: I mean, when you’re a founder, there’s no shortage of the [air 00:31:30]. Whether it’s personnel, funding, is the product market fit right. And then the early fears and then there’s imposter syndrome. All of that is coming at you all at once. And like even when I was starting Tout, like built Tout, I’ve been working on a different project that didn’t quite like fit the market. And there’s still that feeling of like, “I just left a great job like for this. Is this like big enough? Is this going to be a thing?” Like those are all things that come at you like a billion miles per hour. And the thing that Transcendental Meditation taught me to do was just kind of stop at midair and figure out what is like the one thought that is the most important thought to focus on at any given moment. You train yourself to do that, basically.
Andrew: Okay. And so, well, let’s look at this. I’m guessing the company that the product that you didn’t think was going to be the thing was Recommend, which then became Braintrust.
TK: Yeah, that’s right.
Andrew: Let’s walk through. You did this great blog post. The reason I know this stuff is because I read it. Just thinking through here’s the way the idea from one product to the other. The original idea was what with Recommend?
TK: The original idea was, “I need to find X. I want to buy a car. And so recommend me what you think I should buy.” So normally, with Google it was like best blah, blah, blah. And you try look at reviews and figure it out and you reverse engineer the data that’s out there. And Recommend was just recommend me what I should get. And that’s what that product was.
Andrew: And you would have send it to strangers. They would have said, “You know what? You need this car based on what you said.”
TK: The core thing Recommend and Braintrust was it was all about the 5 to 10 people you really trust it. So it was your core group of friends.
Andrew: Even in the beginning, Recommend?
TK: Even with Recommend. Yeah.
Andrew: And then you said UserVoice nailed it.
TK: Yeah, I think . . . Well, they nailed it because they just went more into . . . what I was trying to do, I was still early in my discovery of what I really love working on. I was trying to do it within your personal friends. Like all I wanted was my Braintrust. I knew that like there’s like . . . I read Napoleon Hill. He has the concept of a mastermind. And I’m like, “I want my five people and I want an easy way to go ping them on stuff and have some sort of real conversation about it.” And that’s essentially what Recommend and Braintrust essentially was.
Andrew: Okay. And then you eventually said, “Do you know what? Maybe why don’t I go to existing Braintrust.” Like within a company I’m guessing. So if there’s someone within a company who says, “I need a recommendation for where I should stay when I’m in Chicago,” other people at the company know your sensibility, know the price point. You should be recommending [apartments 00:34:07].
TK: You’re right. There was a brief moment where it’s like the Recommend thing would be just completely open social and like anyone could recommend, then you just kind of put it in the ether. And then quickly I switch to like, you can’t. Like network problems are hard to solve. Back then even doubly so. And so I switched to like let’s just focus on the five to 10 people that you really trust and they understand your sensibilities. Exactly.
Andrew: And it didn’t work why? Why didn’t this work even when you’re thinking about existing groups?
TK: I think that there’s a couple of reasons. One, I was trying to build it as a bootstrapped business. And those kind of things are hard to build in a bootstrapped way because it was such a new way of . . . it was a collaboration software, it was with your close friends, and I was teetering between is this for my personal friends, or is this for business? Eventually we moved to business. We started getting paid customers. They kind of looked like an early version of Yammer. But I was also in like Greenwich, Connecticut. Like I was leaving Bridgewater. I had some consulting going on.
I was working on this solo and my second bedroom. And I’m like, “I don’t know, this should exist in the world. I would like to use it at some point.” So it was all theoretical. And I didn’t have the structure that you would have in, say, a Silicon Valley, or now you have online to really like take that to the next level and scale it. And that’s why I think if you pursued it, if I could have continued on it, I think it could have gotten bigger, but I wasn’t in an environment that that kind of idea could thrive. Some ideas take a bit of time to grow.
Andrew: I feel like even if you were in the perfect environment, that’s an idea that is not as big as Tout.
Andrew: The revenue isn’t there. The clear need for it isn’t there. People have the problem and then they disappear. Facebook could be better equipped to solve it the way that they do now, right, with the questions. Am I right about that?
TK: This is classic vitamin not a painkiller.
Andrew: Right. And so then you said, “I had my own personal problem that led to Tout.” What was the problem?
TK: The problem was I wanted to get more users for Braintrust.
TK: And I’m like, “I know, I’m going to start emailing business owners and say, “Hey, don’t you wish you had a brain trust?” So I started emailing people and that started to work. Like people were like, “Oh, yeah, I’ll totally try out the trial. Like let’s go for it.” And then, again, I’m like I hate inefficiencies and I was literally like I’m typing the same email over and over and I’m tweaking one thing or another. And so literally, I copied the billing code and the homepage and the crux of Braintrust to a new project. And I built it for myself. So I could like just type in a name and an email and click on the template that best fit that ideal customer profile. And I would personalize it and I would hit send, and then they would tell me like if they looked at it or not.
Andrew: Okay, that makes a lot of sense. And you did this I think in three days. You wrote this blog post that I don’t have access to. What was in the blog post? And then we’ll get into I don’t have access.
TK: The blog post was I did it in three days because I use Chargify. I use SendGrid. I used Ruby on Rails. And the whole idea behind the blog post is like you can build a SaaS app leveraging all the services, and you can build something that’s revenue generating within a weekend. And that’s what was like really powerful for me.
Andrew: And the original thing just did templates within what, Gmail?
TK: It did templates and tracking. You could not . . . it was text only emails. You couldn’t even bold a word if you wanted to. And it was not integrated into any email tools. So it was just a standalone web app. We had not built any plugins or anything like that.
Andrew: And an user would have to give you their email address.
TK: You would have to give your email and verify it and so I know that you’re not faking someone.
Andrew: Got it. So if I bring my Gmail, put it in, send it out. Did you get users for it?
TK: Did I get users for it?
Andrew: Yeah. Sorry. Obviously you did. But in the beginning was this when you started to say, “All right, I’m going to go after integrations. I’m going to go after individuals. What’s the first place where you got users?
TK: Honestly, I launched it two days later. Within two days, like we had gotten featured in 37signals newsletter. We were number one in Hacker News, that blog posts you were referencing, and people were signing up and it was making money. The reason I knew it was making money was I had rigged it where every single time someone swiped a credit card, it would send me a text message. And I programmed the text message . . . you remember this app called Boxcar?
TK: So what you could do is set receive notifications. But you could set up a different sound so it would make the sound of a cash register. And so literally every single test I swiped cards. So within two days, it was just generating money. And my original plan was, “Oh, like I’ll charge $9 a month.” But I was talking to some friends and they were like, “Just charge $30 because otherwise it’s like $1 a day, they’ll make more money if they use it. It’s probably salespeople that like it. So whatever.” And within two to three days I just started making money. Even though I did that . . .
Andrew: At 30 bucks?
TK: At $30 a month.
Andrew: I was looking at your early price. I don’t have a screenshot of it.
TK: And you couldn’t even bold the text. It was like product market fit was that strong. And I’m an immigrant.
Andrew: There it is.
TK: And the reason that’s relevant is like it came so quickly and so easily. I was like, “This is not worth it. Like it’s just too easy.” And so I literally ignored Tout for like four months. Like I just made sure it just worked, the core version. And people kept writing in on how much they love it. But I’m like, “This is not a thing. This is a toy.” And my prior co-founder, Pete, who I started HipCal with, he was texting. He’s like, “You know, on one hand, you’re trying to replace email with this Braintrust thing so people don’t email their friends, they’d come to your thing to collaborate. No one cares. On the other hand, you made email a little bit better, you made a better email client for a specific purpose and they’ll love it and they’d pay you $30 a month, why are you resisting it?” And I was like, I just don’t think it’s big enough. And what’s very interesting, you know, whenever you’re like . . .
Andrew: Everyone in the world could need this and they make decisions all the time.
TK: It’ll transform the world. Like you get grandiose about your vision when you’re an entrepreneur and sitting in a vacuum in Greenwich, Connecticut. And so finally six months late I said, “You know what? Like even if this is a toy, it’s got traction. So just follow what the customers want and let’s see where it takes us.” And that’s when I started to follow on Tout. And it wasn’t even called Tout at first, it was called Pitch.
Andrew: And the reason it’s not called Pitch now is?
TK: The other thing that happened within two days in addition to people paying $30 a month, was we got a cease and desist order from some random company saying, “We have the trademark on Pitch app.” So I said it’s like for two days in and this is a toy. So I went out the source.com, typed in Pitch and I had the domain register another thing and you name your company based on what domain you can get really like unless you got a million dollars in funding already. And so toutapp.com was available so I bought that and ran with it.
Andrew: And now I’ve got my screenshot from the Internet Archive. You did have a free plan that allowed people to send up to five pitches per day. Oh, now I see like the old language is still in here. Five pitches per day for free. Encourage all new users to start with this plan and feel how Tout works for them. And then for 30 bucks a month, you could send up to 100 pitches per day. And you also offered, and this was bolded on your site, website like analytics. That means open and click rates?
Andrew: And you did open rates with the pixel?
Andrew: Yeah. That’s amazing. It’s actually all the essential features in there. It’s not like you said, “It’s just going to be templates. I’ll figure out the rest later.” This is phenomenal features.
TK: I needed that so bad. Like I just backed myself into product market fit. It was all the right things in that one app that . . .
Andrew: I don’t really think that this existed at the time. I remember when we first needed it.
TK: Yeah, we were one of the first ones. Yeah.
Andrew: Was there someone else before?
TK: Not in this way. There were some like you could send an email, you could kind of track it, but not in the . . . you send a bunch of emails. They need to be consistent with the best messaging. And you need to track what happens after you send it.
Andrew: Yeah, there would be like little plugins that would tell you when somebody opened and clicked your email.
TK: That’s right.
Andrew: It’s more like, “I’m kind of needing to know if my boss opened it,” not, “I’m doing this to a lot of people. I need to know about all of them.”
TK: That’s right. The magic and it was when you picked a template, it would aggregate the stats. So as you use more of it, it started telling you what messaging was getting you more engagement. And then all of a sudden, every email, additional email you sent just got better and better.
Andrew: Highrise was not just a 37signals they were called at that time. They ran a product called Basecamp, which is project management we use down on our company. They didn’t just randomly include you in the newsletter. You did a little outreach, right? What was that?
TK: Yeah, I used Tout send them an email.
Andrew: Just to see will they care about?
TK: Yeah, I was like, “Hey, listen, every single one of your users use your CRM, and they need to email their prospects.” So we integrated . . . what we did was we integrated it where you had a little bookmark, let’s say, if you’re in a Highrise page, you looking at a lead, you hit that, it will pop-up would happen, you would pull the data from Highrise. It will prepopulate the name and email. So boom, like email with Tout, choose the template, tweak it, hit send. And I did a little demo and just attached it for them. And they’re like, “This is amazing.” And they just featured it right then and there.
Andrew: That’s fantastic. All right. Let me talk about the second sponsor, and then we’ll come back and hear about some of the other things that you did to grow the user base. How are you doing tea?
TK: That was great.
Andrew: Okay, yeah. Then that I don’t need to have like a teapot on my checklist. The second sponsor is Toptal for hiring developers. You told me before that you started to use them. What did use them for?
TK: We reached a point with Tout where we needed to test out new features, but I didn’t want to distract the core engineering team. So I had what I called my private army. And my private army was the . . . they were the ones . . . it was like three developers front and backend and a project manager. They would go test out different ideas.
Andrew: And you would go get them from Toptal. And you say, “I need these three developers front and backend?”
TK: There was a team that was on the ready and they would test out different ideas.
Andrew: Like what’s an idea that you had tested?
TK: We had one idea where we wanted to be able to create a meeting room for salespeople. So like salespeople sent over a lot of presentations. And so then you could do that with Tout. But we wanted it where they could interact with the person real time. So I send you a proposal and you’re viewing it. We wanted to do it where like a little thing would come up and say, “Hey, by the way, if you have any questions I’m here for you.”
Andrew: Oh, wow. All right.
TK: We were testing those kind of things out.
Andrew: You didn’t want your engineers to get distracted with that. You go to Toptal. They would do that. How did that feature work for you?
TK: We didn’t end up productizing it. That was one of the . . . it was an experiment where getting that to the core engineering team and then prioritizing that. Like it was cool, but not enough to get it into the core. But it was phenomenal because otherwise we would have just wasted our core engineering hours.
TK: Those guys were super talented also. I was very happy with them.
Andrew: For anyone who wants to go hire developers, I feel like that’s one of the best uses of Toptal, especially when you’re getting started. You’ve got a product you need, you don’t want to distract from the team. You go and have them do this. If you’re out there and you’re looking to hire developers, a great place to do it is not just toptal.com but toptal.com/mixergy. When you use that URL by now, you know. They’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours. In addition to a no risk trial period. By the way, I talk too fast. I grew up in New York. I should say Toptal.
TK: What part of New York?
Andrew: I grew up in Queens.
TK: Me too.
Andrew: Me too. I actually from Jamaica Estates, actually, which is pretty close.
Andrew: 179th Street F Train. That’s where I would take . . .
TK: That’s by 7th train
Andrew: By the 7th train?
TK: The Main Street.
Andrew: Main Street. Oh yeah.
TK: On Franklin Avenue.
Andrew: That’s right, that’s right. Yeah. I used to go to the Main Street a lot by Chinatown. If you keep going down far enough you end up there. I hated at the time. No, actually, I wanted to move to Manhattan. I was very happy when I finally moved in. I thought Queens was so much better than Brooklyn. And then I’ve gone back recently. Have you?
Andrew: They’ve lost so much?
TK: You think if they’ve lost? Queens is cool now.
Andrew: There are parts of Queens that are cool. The parts where they were going to get the whole Amazon thing. That part got . . .
TK: Yeah. The store at Long Island city.
Andrew: Yeah. Used to see people like poop in the street. Now, it’s that’s the place. My part, Jamaica Estates, I think and I haven’t been to Flushing but Forest Hills, they’re just not that exciting.
TK: Interesting. I haven’t been back recently. I mean, I always end up in Manhattan and don’t make it out to beyond on that.
Andrew: I do it because I want to go back sometimes and just feel in my gut, in my brain, in my skin how far I’ve come, or how not far enough I’ve come. Do you do anything like that? It’s like slapped you in the face.
TK: Yeah, having a constant is super important to me. I was like I go back to . . . I used to live in Cole Valley. So I’d go back there sometimes and drive past by.
Andrew: I love that area. I mean, what do you feel when you’re there? I mean, you’re thinking back about your past.
TK: I think that we tend to be so critical on ourselves today. But if you were to meet you for five years ago, and that was a stranger having coffee with, they’d be so proud of you. And that’s the thing that I try to remind myself of like no matter what like I feel like I want to be as happy as you are. You always want to do more. You beat yourself up over it. I think high achievers do that. That’s why you become entrepreneurs in a way. And having a constant reminds me just how far you’ve come. So you’re not as mean to yourself.
Andrew: I don’t know. I find that that’s kind of hard because didn’t you dream that Tout was going to be a billion dollar company? And when you think back on where you were when you’re building it up, you’d be proud of where you are like head-wise, head space, but wouldn’t you say, “Man, I want it to be so much bigger. Why didn’t I do this and all these other people are doing it?”
TK: Yeah. I think that . . . I don’t believe in regret. And the reason I don’t believe in it is because it’s a flawed concept. The reason it’s a flawed concept is whenever we have regret, you’re like, “I wish I hadn’t done that.” But the universe is a very complicated multivariate equation. And regret is the type of thing where you assume you can change one variable and everything else will remain the same. And so why like that? So I’m just like, “Well, I don’t even know what to regret.”
Andrew: I don’t get . . . Yeah. That’s a good way to think about regret. I don’t get lost in regret. I get lost in I want to be so much further, always. Is that the timer? Do you need to go?
TK: Like 10, 15 minutes.
Andrew: Okay. I need to do that too. One of the things I need to do when I get into meetings with people, set a timer. Because I get so lost in conversation that I forget I’ve got other stuff to do.
Andrew: What about that? Don’t you feel like, yes, you’re doing well but you had this dream you came, you got money from Andreessen Horowitz. They’re not trying to make thousandaire. They’re not trying to make a millionaire. They want to have a billion dollar business, right? And so what do you feel about that? Be open.
TK: I don’t feel any regret because . . .
Andrew: Not regret, but do you feel a sense of . . . when you compare yourself to where you want to be? How do you feel?
TK: The thing is, well, the question becomes where did I want to be?
Andrew: Yeah, where did you want to be?
TK: My goal for . . . when I started Tout, my goal was . . . I was a kid coming out of hedge fund. I’m like I want to build an amazing company. I want to have amazing customer. I want to create something of value. And I want to be really excited coming into work every day. And I want to create. I want to have impact. Like those are the kind of things I thought of. I didn’t think of . . . I wanted wealth. And I wanted to be able to get to being able to do whatever I wanted to do. Those were my parameters.
Andrew: Very similar to 37signals, wanted to be bootstrapped. You’re actually proud. You were before we started talking about Bootstrapped and Proud their series, that’s your mentality. Where did you then change from saying, “I want it to do well. I want to be wealthy, yes,” to “I’m going to take on funding and now I’m on this path where I need to be . . . ”
TK: Tout was that big of an idea?
Andrew: At what point did you get to the realization that it was going to be that?
TK: Because every customer conversation and every quarter we went through, the idea got bigger on how much more we could do for our customers.
Andrew: Like what. So I really love the product.
Andrew: I used it when I was thinking through this True Mind concept. I wanted to understand why people cared about it. I would always sign up, use it for the thing that I was using as I was like promoting something and understanding. And then once I got it, I would stop because I’m not a salesperson, right? So I get the difference there. But I always thought is just that. I didn’t spend enough time with the product to think here is the bigger vision for it. How did you find the bigger vision beyond every salesperson needs to know open click rate and have simple terms?
TK: I mean. So I would not have raised money if that’s all it was. The vision for it was people communicate through workflows. And they pull in data from all different sources, look at that data and then make decisions on what do I write to this person? How do I communicate with them? And they do it through multiple channels, particularly for salespeople, particularly for customer facing people. So the vision got bigger and bigger, not about email tracking, or templates. Like if you look at later archives, we stopped talking about those things. It got more about how do you engage with the customer? And how to use the right content at the right time? How do you actually use the right messaging at the right time?
Andrew: Beyond the sales message. Beyond the one-off. I need somebody to open this and know who works. It’s how do I follow up and know that they care about the Giants? Is that it? And the Giants won. No?
TK: There’s a part of that but there’s also like they come back to me and they asked me these five questions. Like the question became like, “Can we put a red, yellow, green on that message saying is this deal trending to close or not?”
Andrew: They would ask you about that.
TK: No, no, no. We would start to predict those kind of things. Like that’s where the vision went.
Andrew: But did the salespeople tell you I need this? Or did you understand this was a problem? How did you understand this was something anyone cared about?
TK: Well, as you start to talk to . . . we had the users down. The users got what they wanted. They’re like I could send emails and get them back and in touch with them seven times. All that.
Andrew: They don’t have enough imagination to think beyond it.
TK: That’s right. But as with any B2B company and any enterprise company, you want to start actually getting the higher levels engaged. You want to get the VP of sales, the CEO, and you start to talk to them. You start to understand like what are the things they want to know about a deal beyond what your CRM does?
Andrew: And what did they want to know?
TK: They wanted to know is the deal is going to close or not? And they wanted to know are they using . . . Is a rep using their best practices to actually do the things they’re supposed to do in a deal? And so you all of a sudden, the vision gets bigger beyond just did they open the email.
Andrew: How did you know that? How did you know that they needed all that? How do you go from understanding your core problem, and putting something in the world and recognizing other people have the problem enough that they’re willing to pay for a solution to now going into the headspace of someone that you’ve never been in their shoes?
Andrew: What would you do to know that?
TK: Part of it was when we at Tout. When I decided that we’re going to raise money like a series A, six months before that, we decided that we’re going to focus purely on salespeople and sales teams. Before that we were like email productivity for everyone. Like a lot of people, biz dev people, PR people, teachers, they all need, you know, tracking in templates. There was a moment like literally I sat down I’m like if we’re going to focus on sales teams and salespeople, that has to be a conscious decision and I have to own it and I have to go into it like loving it. And that was the moment where I had actually committed to reading like 10 sales books, start talking to sales leaders. I started to actually get in on the sales calls. I started to join sales groups. I joined this thing called Sales Hacker, which became an entire conference.
Andrew: I thought you basically helped create it. You’re one of the first 10 people to meetups for it. Max Altschuler told me, yeah, you were the first sponsor of it.
TK: I was, yeah.
Andrew: So this was you saying, “I’m going deep in that world and then . . . ”
TK: I want to own it. I want to be the best. Like I want to just like live and breathe being in sales.
Andrew: So then how did you understand their problems once you were there?
TK: I think that I will, I mean . . .
Andrew: Did you just do interviews? Did you just listen in?
TK: I was the chief salesperson for Tout. So I was already in the role. I put myself in the role. And then on top of that, I just . . . sales people just love talking. And so I just took them out for drinks and we just talked through like how to use the product but really tell me more about sales. Sales is an art. And there’s tons of books . . .
Andrew: And they would tell you, “Here’s what my boss needs”?
TK: No. They would tell me . . . You understand their workflow. Like what do they do all day? What are they responsible for? And then you find the inefficiencies and figure out how software can eliminate them.
Andrew: Do you have an example of a conversation that led you to . . . ?
TK: Yeah, our most popular feature for Tout. All time. And even the competitors today haven’t truly replicated. I don’t know why. It’s was the Live Feed. And the Live Feed was this floating window that sat in the top left corner. And in real time, it would show exactly what was going on from opens, clicks, website visits, they’re reviewing slide number five to any event that you wanted to track. And then you hit it and then it would give you the next . . . one click action on what you want to take next.
Now, no one asked for the Live Feed, even though every customer I ever visited, if you were on the on the sales floor, you would walk through. There were only three things on their screen, Salesforce, Gmail, or Outlook and the Tout Live Feed all day long.
Andrew: And the Live Feed just told him someone just open your email.
TK: It’s a real time viewing of exactly what’s going on.
Andrew: All the people that they were messaging.
Andrew: So they would know, “Oh, I can understand that. Yeah.”
TK: Even better because I sent you a proposal. The Live Feed would tell me Andrew is on slide five of the proposal. You know what was next to it? There was a call button. You hit the call button, your phone would ring, my phone would ring, and would be connected right then and there. And the salesperson would just say, “Hey, I wanted to follow up on the proposal. Did you have a chance to look at it?”
Andrew: Anytime something like that . . . any type of action that was significant, when it showed on the Live Feed, there was one click that would call both of us so we could . . . And so who invented that? Who knew that would be a thing?
TK: I did.
Andrew: And how did you know? Just because you were living and breathing . . . ?
TK: You talking to a salesperson all they ever say, “You know what our number one feature request for the Live Feed was? “Can you send me an email when someone opens my email?” So I call up all these people like why do you want an email? I want to know right away? What are you going to do with that? Well, I want to know . . . if I know that they’re looking at it, I want to call them. And so I’m like, “Well, what if we just told you they’re looking at it with a call button?” And then I’m like, “Well, that sounds great.” And I think that the key was to just map out their workflow. Like what do you do then? What happens after that?
And what I found when you actually call up a customer, they do obscene things in their day-to-day jobs. Like to actually to get their jobs done. And if you can actually listen and say, “How much of that can I automate or streamline into my workflow?” Those are the kind of things that builds moats and stickiness in product.
Andrew: Like what? What’s an obscene thing?
TK: They were, I would say, like are you going to call them? How do you call them? It’s like, well, if you send me an email, and they opened it and I’m going to my Salesforce, I would type in that name, and type in that name and go to the record. And I’m going to like, “Look at the phone number.” I’m going to type in the phone number my phone, and then I’m going to call them. And if they don’t pick up, they keep asking like, “And then what? Suppose they might not pick, like what happens then?” And I’m going to go back into Salesforce and create a task to follow up with this person or type in his name. Like, “Okay, you didn’t get the test then what happens?” So feature number two on the Live Feed was follow ups. So it will literally hit another button and say like call this person in a week and then they would just come together.
Andrew: Wowee. That is amazing. Okay, I love that. Did you keep . . . as you’re talking about it, I love it. I love sitting and talking to salespeople. I love watching it. I love the thoughts of inefficiencies. Did you get to a point where you said, “I’m kind of tired of these people? I’m tired of sales because you’re living it so much?”
TK: A little bit. Yeah.
Andrew: A little bit.
Andrew: Towards the end?
TK: I think that there was always a question in my mind of is this the thing for me forever? And I think as entrepreneurs, I don’t know about you, my dream is an entrepreneur now, like, this wasn’t at Tout. When I started at Tout, it was like I just want to build a company because I’ve never done it before. My dream right now is to be able to work on something that I can work on for the next 20, 30 years of my life. Like I think that’s like a blessing if you can get to that.
Andrew: You know what? And I’m at that and I hate that I love it so much. I feel like, “Boy there’s so much else you should be looking at. Why are you so deep in love with this?” And I have to keep reminding myself, “Enjoy the fact that you’re in love with this? The gift that you’re . . . ” But I do wrestle with that a lot. What got you to a place where you got those hugs? Why did you end up considering how things were just growing and growing?
TK: Yeah, three things happened. So we had raised our series B, we raised about 15 million. It was great. And we pushed on the gas real hard, moved into much bigger space, scaled the sales team. During that year because we had raised from a tier one firm, it was a hot space, literally, like almost overnight, three of our customers became our competitors. Literally almost like they’re like, “Oh, this is awesome. We’re going to compete with you guys.” SalesLoft, Outreach. And Yesware was always there. So those were our three big and they’re all still alive and they’re going really well. Outreach is a unicorn.
Andrew: But they were client of yours, Outreach?
TK: Outreach wasn’t but SalesLoft was. And Yesware wasn’t. There was for Max and I were talking about from Sales Hacker.
Andrew: Because he sold his company to Outreach.
TK: He sold his company to Outreach. Like those companies have people in leadership that were once customers of Tout. Like there was like an island of loss where we all know each other kind of thing. And so it got super competitive. And then when it came time for our next raise, three things happened. One, our board member was leaving the firm. Two, the markets took a dive. And three, we were dealing with like just competitive headwinds where the conversation on what our customers wanted changed. It went from, “I want to engage with customers,” to, “I want to be able to send my customers as many emails and phone calls as possible.” And that was what like the evolution of that space turned into.
Andrew: Why did they want to do more calls like that?
TK: Volume is easier to do in sales teams to show more progress. And so it’s easier to say, “I did 100 dials,” than to really personalize 10 dials and really hit it hard.
Andrew: Okay. So then that’s what it was. What did you do to turn things around when they hugged you and said, “Cut down to 15?”
TK: I refused. I was like, “There’s no way we can cut down to 15 and there’s just no way that . . . like our customers would be screwed, our product would be screwed. Like no one wins.” And so from through 2016, I re-architected the company. And I didn’t notice at the time, but looking back, I basically applied a PE playbook to it where I . . .
TK: Private equity playbook
Andrew: Oh, private equity playbook to it. Okay.
TK: To a venture capital company.
TK: And basically through the course, so I’ll tell you the end result. The end result was we had our largest quarter in company history. We nearly quadrupled our ACVs and then we sold. And we were like a few months away from cash flow breakeven. And that was the after. And the before was we’re burning a million a month to scale the company.
Andrew: And, you know, what did the PE technique allow you to do?
TK: And basically, we . . . Number one was we figured out really, really who our most ideal customer was? We were in land grab mode. When you’re VC company, your job is to put the money to work and deploy multiple bets. But when you’re a PE company, your job is to strengthen the core. And so I said, “What are our most profitable customers that don’t leave, our most valued and just make us healthy?” And that was the higher end of the market for us. We were fortunate enough to have certain enterprise customers. And I said, “Let’s just focus on those.” And therefore, I actually, ended up doing two layoffs.
The first one was just to kind of clean out the company and get rid of underperformers, turn off certain bets. And get out of certain segments. We got out of SME, we got out of the mid-market and we just said we’re just going to focus on enterprise. The second thing we did was raise prices. That was like a highlight meeting was like me, Ben Horowitz, Marc Andreessen and one other [buyer 01:02:46]. Ben was like, “You know, just raise prices. Like that works almost every time when you’re when you’re like fixing problems.” And for us, like we just set a floor like we will not sell a deal below this. And we did that. And immediately every deal was much more profitable for us.
Andrew: And you didn’t raise it on existing customers. It was just all the new people. That was it?
TK: No, no. Just new customers.
Andrew: And by the way, I went to their website today. There’s no longer a price list. It’s, “If you’re interested, hit this button and come talk to us.”
TK: Yeah. You mean for ToutApp?
Andrew: ToutApp. Yeah.
TK: Yeah. Yeah. So today, it’s called Marketo Sales Connect. And it’s generally sold alongside the engagement platform. And they tend to focus on like the deep enterprise like 5000 [CDLs 01:03:27]. They’ll attach in Sales Connect.
Andrew: How is it like to talk to talk Marc Andreessen, to Ben Horowitz, these superstars in, you know, entrepreneurship?
Andrew: Were you able to sit there and actually have a conversation and be focused like you were on the level with it?
TK: I mean, yes, you are because I was able to because I had spent by that time, five years mentally processing this whole and calculating this whole space. And so I should be able to and I was. And that’s not the impressive part. The impressive part about those kind of people was that within 30 minutes of them getting a room, they’ll spend 30 minutes asking you a whole bunch of questions. And then there’s always this moment where they go like this. And they’re like, “Okay, got it.” And then they’re at your level. The five years you spent calculating all that, they like that’s what makes them who they are. And then they’re talking to you at your level. I’m like, “Okay, but then how do you think about this?” I’m like, “Yeah, we thought about that and you approach it this way.” And when we showed them road maps . . . And it was just incredible conversations, and we did have the opportunity to it.
Andrew: How did you do that? I’ve seen a few people do that. It is amazing. It’s like . . . and they know the key things to ask and, yeah. Why did you sell?
TK: It was time. We turned around the company. So we weren’t able to raise a series C. And the board was like, “We have a board member leaving,” and the comps were all off like and I pitched probably about 40 VC firms and like literally through the court. And I pitch every single one. It was just not going to happen. So I came back and said, “We’re going to fix this.” And we did. And once we fixed it, then magically like the investor was like, “Okay, so what do you want to do now?” I was like because six months ago, before I made all those changes, I said, “Here’s the things I’m going to do.” And they’re like, “Still we’re not going to invest.”
And so literally, there are certain guys are like you did everything you said you would do. And like we brought our burn down to like 100K or 6 million AR business, 6.5. And there was that moment, and we actually had one investor that was like, “Hey, like, I think we might be interested.” And then our existing investors were like, “Hey, hang on, what do you want to do?” Because we were starting to do sale conversations. So I brought my executive team who had gone through war with me. And we talked about it. And I’m like, “Hey, listen. We were on a path where we decided we’re going to fix the company. We get it to like self-sustaining and we’re going to exit it out because we think that’s our best strategy to go in the market.”
What if we didn’t? What if we went into another direction? And I looked around my team and they’re all like, “No, like this makes sense. And we signed on for it. And it makes sense to join a larger company and seed that to a much larger customer base instead of trying to go at it alone. So let’s just go do that.” And for me, I didn’t see sales engagement for me getting to a company that would IPO. Now, others might do it, but not in the vision in the way that I started. I started a company where we wanted to be the email client for salespeople.
I didn’t want to build a company that helped spam people. And in a lot of ways, the markets shrunk into . . . we want to just have our SDR sales development reps, they send out as many emails and as many phone calls as they can to our list all day long. And I’m like, “Cool. That’s awesome. I don’t know what the value of that honestly.” And that may be a billion dollar value, a $10 billion value. That’s not why I started the company. I started the company. And if you think back to the first version of ToutApp, type in the name and email, pick the template, personalize it, make it meaningful and then hit send.
And over time, we’ve evolved on that. And that was what was appealing to me. And given that that vision wasn’t what the market was ready for, I’m like, “Let’s just go join a larger company, seated into the market, get an added advantage and then go do bigger things.” And that’s how I looked at it. And we had two offers, very similar. Both companies did, I mean, Marketo obviously did phenomenally well. The other company is doing amazingly well. And I ended up choosing Marketo because it just made a lot more sense.
Andrew: Marketo did this on a bigger scale. They were marketing automation for bigger companies. And it was like email and other stuff that they would . . . you’d get subscribers, customize it, send email out. Right?
TK: Your story is perfect. Like Marketo helps you generate a whole bunch of leads under marketing. And then once the lead got hot, Marketo would send an email to the sales rep saying, “Hey, here’s a hot lead.” And our pitch was feed it in our system and the sales rep will then engage with that lead.
Andrew: And send a personalized message, and we’ll make sure they follow up yet. Yeah, that makes sense.
TK: And they’ll also do the 10 touches that they want because we ended up building that feature because we have to stay alive. And so it was like a perfect thing. Steve Lucas joked on the . . . like when we sold the company he came over like, “Well, we really wanted TK to join our team. I had to buy his company to get him. So we’re really excited to be here.” And I think he was probably half joking but it worked out really well because that kicked off a whole second chapter like I ended up joining the executive Marketo like literally from day one. After that, I’ve worked less on Tout and work more on like helping Marketo succeed which was an incredible journey as well.
Andrew: You told me before I started you helped create Marketo Europe, you led it?
TK: No, no, no. I didn’t create it. Marketo Europe was going strong, but they needed a new leader in there. So I read, basically, I spent 18 months there. I spent three months rebooting Europe, helping bring on a new leader there. And then I spent some time in Japan. And like learned from them. I did like the product keynote in our marketing nation in Japan. And it’s like I think every Marketo in Japan was in there and it was crazy. And I’m speaking in English, talking about Marketo’s new engagement platform and two ladies in the back are translate into Japanese in real time. It’s crazy.
So I had done Europe, did Japan, and then I came back and like I’d have my one-on-one with Steve and he was like, “Look, you don’t have to . . . this has been like normally founders take a break after selling the company.” And I had moved to Europe. And then I went to NSA. He’s like, “Look, you don’t have to. If you did, it would be really good for us.” And so then I moved to Sydney after that and spent time there to help reboot that. And then I did M&A and worked on corporate strategy. And then obviously worked on the sale and partnerships as well. So it was like an incredible experience in that 18 months, and then sold the company.
Andrew: You’re looking for the next thing right now?
TK: Now I’m taking some time off. I just launched my book based on like, basically, after being a tech executive and a founder for 10 years, I learned a ton about how to get your mindset right, even when things are really bad. Like when you’re doing layoffs or when things are really great. So I wrote a book called “How to Punch the Sunday Jitters in the Face.” So like to help you get more centered and figure out how to operate better as an entrepreneur, as a CEO. So I was spending time on that. Spending time on my YouTube channel “Unstoppable.”
Andrew: Weren’t you also . . . So I like that you’ve got in here. Where was that? I just bought the book. Who sells a book for $2.95? What’s up with that? Is that a thing? Is it because you’re like testing it right now or doing an official launch?
TK: Books don’t make any money. Books are designed to . . . like every CEO should write a book is what I’d I say.
Andrew: And so why did you write this? Why do you think CEOs should write books?
TK: Because the best way to build the brand of your company and get leads is to build a movement around what you’re doing. And the best way to build a movement is to write a manifesto. And the best way to deploy a manifesto is through a book. So the book I’ll give away for free. Once you read the book, it actually teaches you certain concepts. One of the core concepts . . . there’s two core concepts in there. One is “Unstoppable Sundays.” I spent every Sunday, spent 30 minutes, when the jitters kick in, to ask myself where am I and what do I do next? And that actually is an online app that you can go sign up for and use.
TK: I also teach this thing called the “45-day beast mode challenge.” Anytime we were stuck, slightly behind, I would rally my team and we do a 45-day challenge. And we would accomplish incredible things.
Andrew: Because doing the incredible things in 45 days does what to you?
TK: Two things. Generally, when you are trying to do things that leave you neither here nor there, you only end up doing the most urgent tasks, you’re spanning across personal and business life. When you do a beast mode challenge, you’re focused on a singular goal and you create an action plan. And you just like and that’s the thing, there’s a name for it. And therefore you get to put in more into it.
Andrew: I get it. I also feel like if I could achieve that big goal, then I feel more unstoppable in other things.
TK: Exactly. Once you leave that 45-day challenge, you’ve trained your mind to constantly ask what is the most highest impact tasks that I can work on. And therefore you leave the beast wanting an elevated state. And then you can change these modes. You can do like three, or four throughout the course of the year to actually grow as well.
Andrew: What’s an example of the beast mode that you guys did?
TK: We were behind on a certain product, and we did a 45-day beast mode to actually focus on that and nothing else and get it out so that customers would be happy.
Andrew: What’s one for your personal life? You do that?
TK: Yeah. I’m down 35 pounds over the last nine months. And the way I kicked the healthy habits was, I said, “I’m just going to do this for 45 days.” And it wasn’t anything crazy like keto or anything. I just counted calories and did jump roping. But I said, “I’m going to do this for 45 days and it’s going to be a singular area of focus for me, and made the world of difference.”
Andrew: And you used the app to like keep track of calories?
TK: Yeah, the way beast mode works is you create an action plan, you commit to it. We also teach you how to have the conversation with friends and family. So if you’re a doctor, and you see I have the boards coming up or I’m on rotation, everyone’s going to be super understanding like, “Oh, God, like I know you can’t make it. Totally understand.” If you’re an entrepreneur and you’re like, “I got to work.” They’re like, “No, that’s not cool, man.” But if you say I’ve got beast mode, and I’m like I’m working on beast mode, here’s our thing.” And we give you a script on how to do it, all of a sudden, you’re like a lawyer that needs to pass the bar like a doctor that needs to pass the board. You have social capital.
Andrew: Should I just be looking in the book for beast mode?
TK: Yeah, or you can go get on unstoppable.com. You go to get unstoppable.com/beast-mode. And there’s a guide for this. There’s an Excel spreadsheet that helps you set it up. And there’s a webinar where I explain my three secrets as well.
Andrew: I had no idea you’re doing this.
Andrew: You know, my brother used to go to bars a lot because he was at a place in his life where he wanted to take some time off. And he’s still want to eat healthy and he’d asked for things like, “Give me just vegetables, some steamed vegetables.” And he’d freaking slather the thing in oil and butter and this ruined the whole thing. And then he couldn’t say I’m on a diet because that came across weird. He discovered if he just says, “I’m in training, can I have just steamed vegetables,” even the dirtiest bars would understand. Just steamed vegetables, don’t put butter and it doesn’t make you . . .
TK: That got him social capital.
Andrew: It’s unreal how . . . And so from that I learned if you could just phrase it a certain way, but it’s hard to come up with the phrasing which is why I like that you’re saying beast mode and here’s the language for what to do. I feel like it would rally other people around and help my wife understand why I’m not doing things for a bit.
TK: The last piece of beast mode is you also commit on how you’re going to celebrate, which is awesome. Because as entrepreneurs, we’re terrible at celebrating. By the time we accomplish something, we move the goalposts already. And that’s in the book as well.
Andrew: So it’s so much smaller. If I accomplish it, it is not big enough for me to care about. That’s what it feels like, right?
TK: Yeah, yeah, yeah.
Andrew: You should only be excited [inaudible 01:15:18]
TK: You’re already on the next goal. You forgot about it. Yeah, that’s right. And so we actually write down how are you going to celebrate, how are you going to reward the people that supported you and celebrate with them. And that’s part of how you have the conversation with them as well. So it’s all structured.
Andrew: You have a lot of these like in the book. You have a lot of fill in the form, the fill in the blank things. Is that the way you think?
TK: Yeah. And that and also, most personal development books yell at you for not knowing certain concepts. Like if you read my book it’s kind of like how I talk. It’s like look, man, there’s one superpower I have it. I take complex things and say, “Look, here’s all you really need to know.” I call it the “Hey, man voice.” And so the book is structured in a way where you can actually just answer certain questions that help you get to the mindset that you need to have. Instead of watching a video that says you should have a growth mindset, or you should have a five-year plan. You’re like, “Great. I don’t know what that means. And I suck.” Versus it’s like, “Answer these five questions that will actually help you get clarity into what you need to know.”
Andrew: I’m watching your levels by the way. I love that I’ve got this right here. It’s so helpful. For some reason, I associate this with you. Did you once only have calls on Thursdays?
Andrew: You did?
TK: Tuesdays work best was what it was.
Andrew: Oh, was it? So I do Thursdays because I thought you said you told me once you do it on Thursday.
TK: And it doesn’t matter what it is. It’s just it’s got to be a day and so you have it all.
Andrew: To this day, interviews is Tuesdays and Wednesday, calls, Thursday.
TK: That’s awesome.
Andrew: Anyone who wants it, just from that one little thing and I have to admit the first time you said I said, “Every freaking entrepreneur is a freaking life hack. I get it. That’s so culture we’re in. That’s what they do.” And then I went nuts with calls all over the place. It would interrupt my flow for something like even between interviews to have a conversation. It doesn’t work. I said Thursdays. I even have like a Acuity Scheduling calendar link just for Thursdays.
TK: Yep. It makes a huge . . . I could have nothing for the day but a 3:00 p.m. call that first part of the day smashed from me. It would not work. I don’t know why.
Andrew: Wait, I don’t know why.
TK: I have no idea.
Andrew: It does get me lost. All right. So is the best place for people to go is it getunstoppable.com if they want to find out what you’re up to today?
TK: Yeah, go getunstoppable.com.
Andrew: Getunstoppable.com. Tout, we cannot sign up for anymore. I feel like we’re way too small to sign up for it, but the software is so elegant. It was so well done. We didn’t even get into how like you would teach people, you would offer these templates to get people to sign up. It was just freaking amazing. But I understand why you wouldn’t. Well, you don’t want us as a customer. We weren’t spending that much money. And as soon as we understood our messaging, we would just stop. And we come back again. And it wasn’t even me as a company signing up. It was freaking person signed up for their own thing. I get it.
TK: Well, I mean for that segment of the market like Outreach and SalesLoft are great for a mid-market, lower enterprise. They’re getting an enterprise as well and if you want something that’s like self-service, PersistIQ is great and Mixmax is great. And we did deals with them to make sure that that part of the market had good places to go to as well.
Andrew: What do you mean you did deals with them? With?
TK: We offered . . . like I reached out to CEO Mixmax. I like what they’ve done with the product. And I said, “Hey, can you give a savings offer for the people that cannot be on the self-serve anymore?”
Andrew: Oh, got it. To switch them over. Yeah, I saw a Sachit who sells ads for us, again, everyone like picks their own thing, which is why you don’t want to work with companies our size. And Sachit does use Mixmax. And the only thing I don’t like about it is there a few people who still have the get Mixmax on the email. Like get rid of that. I don’t need people to know that. I get it’s great for Mixmax that they’re all promoting and every time they send an email out, it says sent with this and it encourages people to open up the email and to click because otherwise we’ll know that you didn’t. The senders will know that you didn’t. But I feel like our people should just get . . . pay whatever it costs, just get rid of that so that you’re focused on the message, not distracting with the tool.
Anyway, I’ve got a lot of thoughts about this. I’m so glad to hear how things are going with you. I’ve known you now and not like best buddies or anything, but you’re in the startup space. I’ve watched you do things. You’ve been vocal. Even did a Q&A session for Mixergy years ago. It feels good to see that you did well. It felt so sad and also pride. I don’t know why. I had nothing. I’m not your dad. We had nothing to do with this stuff. But to just see you did a good job, you were able to put your stuff on the table and walk away. It reminds me of that old Vince Lombardi quote that I’ll get wrong, which was, “Just leave it all on the field.” And you left it all in the field.
TK: Yeah. Okay. I appreciate that.
Andrew: Congratulations. Thanks so much for doing this interview and coming in here.
TK: Thanks for having me.
Andrew: I messed up the URL for Toptal because I got lost in the New York conversation. So I will say very slowly Top as in top of your head. Tal as in talent. If you need to hire developers, go toptal.com/mixergy. And Mixergy of course is M-I-X-E-R-G-Y. And if you need help with your books, meaning not writing a book, if you need somebody to help you with your accounting, go to pilot.com/mixergy. I wonder how much money they spent on Pilot? I bet he told me. We’ll find out. All right.
TK: Sounds awesome. I need to look into it.
Andrew: Doesn’t it? All right.