Josh Pigford Founder of Baremetrics

Episode № 8

Josh and I discussed bootstrapping, accepting outside money, the drawbacks of hiring too fast and having to ask his team to take a pay cut. We also talk about how metrics simply aren't important in the early days and how nothing beats spending time to talking to your customers in person.

Garrett Dimon: We’re here today with Josh Pigford of Baremetrics, and many other previous ventures. Thanks for being here, Josh.

Josh Pigford: Thanks for having me, Garrett.

Garrett: Could you give me a quick overview of your background, and your history, and how you got to where you are now with Baremetrics?

Josh: Yes. I’ve been a self-proclaimed maker of things for probably, I mean really since I was a kid, but in the Web side of things, a solid 15 years. I started making random things, really back in high school. Everything was a stepping stone.

I built a couple of random SaaS products years ago. Ultimately, Baremetrics came out of that. It was trying to solve… scratch my own itch. That’s where we’re at now. I do that. Baremetrics.

Garrett: That’s one of my favorite things about Baremetrics — or the story about Baremetrics — you didn’t just come up with an idea and launch an app. You had a couple of apps that in a roundabout way, led you to Baremetrics.

Do you have some color for that story and how that unfolded? How you realized, and how Baremetrics came about? Were you building it for yourself? Or did you realize there’s a business opportunity here? What came first?

I built an internal tool. I did not see it as a business opportunity, initially. I started talking to other buddies who were building SaaS companies and really struggling with the same stuff. They’re like, “Yeah, man. I need that.”

Josh: This was maybe 2010, 2011, something like that. I had two SaaS products, both in a survey space. Super vanilla SaaS products like, you paid 29 bucks a month, 99 bucks a month, whatever.

I needed all these metrics, MRR, Lifetime Value Return, etc., or at least I assumed that I did. There was no real great way to get it without doing spreadsheets, and things like that.

Initially, this came about with, me trying to not have to build something myself. I’m opposed to that kind of thing. I tried a bunch of different products that were out there. More higher level analytics stuff, like Kissmetrics or Mixpanel, which have some really basic stuff in there already.

I could never get what I wanted. I was always afraid that I was doing it wrong. It all was based on you putting the data in there. It did not solve the human error side of things. I was finally just like, “Well, Stripe’s got all the data. Let me build this internal tool.”

I built an internal tool. I did not see it as a business opportunity, initially. I started talking to other buddies who were building SaaS companies and really struggling with the same stuff. They’re like, “Yeah, man. I need that.”

I built the first version, it was not about over a month from when I had the idea like, “Hey, I could make this like a little side project.” It was probably about seven or eight days of coding to get that first version out the door. That was November 2013, three years ago. That’s where it came about.

Garrett: Nice, so it was a side effect of a project. I think that the more I’ve talked to people, the more so many of the implicitly successful products didn’t start out where somebody decided, “I want to build a business.” They decided, “I want to solve a problem,” and a business was just the side effect.

Josh: Yes, that’s the double-edged sword there. The big drawback of that is it’s dangerous to think, because I have this problem somebody else does too.

…it’s dangerous to think, because I have this problem somebody else does too.

Garrett: Yeah.

Josh: So you make this artificial assumption like, “Yeah, there’s absolutely a market for it because I need it.” Well, you might be the only guy on Earth who needs that.

At the same time, I think it’s a great entry point because a lot of times people go into… I hate to say entrepreneurship, like it’s like a field of study or something. To me, it’s just most “entrepreneurs” are just born problem solvers.

They just like fixing things, whether it’s on the Internet or something literal like a physical object. It’s like, “I like to solve problems.” I think when you’ve got a history of that, the scratching your own itch thing, naturally leads to some stuff in a way that’s different than just sitting down and staring at a screen until you think of a business idea.

Garrett: Yeah, absolutely. There’s always validation that needs to happen in one form or fashion, but for that kind of spark, it helps a lot if it’s coming from something you genuinely wanted to build, create, and then accidentally a business is born out of it.

Josh: Happens.

Garrett: Yeah.

Josh: Right, and it helps reduce some of the stress when you’re not going into it from this wrong place. I’ve decided on this idea and I really want it to work. No, I’m just building the thing I need to build anyways and if I can turn it into something, cool.

Garrett: One of the things you probably have some deep opinions on, since you run a metrics app, is metrics in general. You started out because you needed these metrics.

Now as you’ve built the app and have all of these metrics, what would be your advice for people as they’re coming into this, how to leverage metrics and get value out of them or just fit them into their business?

Josh: If you’re just starting out, ignore them. Don’t sign up for Baremetrics. If you’ve got less than 10 or 20 customers, really probably even higher than that, there’s no reason to sign up for any metrics or analytics service. Not even just talking about revenue, anything, even traffic, and stuff like that. The only thing that matters at that stage really is, “Am I making money?”

It doesn’t even matter of the exact amount of money that you’re making. It’s just like, “OK, I made a hundred bucks this month. Did I make 200 bucks the next month? Did I make 500 bucks the next month?” When it comes to metrics, every metric, think of it like a knob to twist or a lever to move up and down. They’re just like little tools.

The problem early on is thinking that, one, the numbers actually are meaningful at that stage and they’re not but, two, thinking that you can have a big meaningful effect on them. Early on if you’re like, “Man, my churn’s 10 percent.” Well, then you got 10 customers. It’s a big deal if one of those leaves. That’s one-tenth of your entire customer base.

It doesn’t matter that early. You can get obsessed with numbers and affecting numbers that early on don’t matter. There’s too many other things that you should be doing to grow the business than caring about if a number has increased 30 percent or not.

Garrett: On one hand, you’re not going to have any kind of statistical significance with…

Josh: Exactly.

Garrett: …anything at that point. Then on the other hand, seeing a churn rate isn’t what’s going to improve the business. It’s talking to your customers and really building those relationships that can then help expand the business. Learn where the business is falling short so you could fix those problems.

Josh: It’s pre-optimizing. It’s like the guy who’s like, “You know, man, we need to build this thing. What do you like? 50 servers,” and we spend the next six months having just this insanely robust back-end system, and nobody signs up. It’s solving problems you don’t have yet. Yes, I think that you can absolutely care about metrics too early.

Garrett: That’s always a difficult line to walk though, too. When is too soon, and when is too late? Right?

Josh: Yup.

Garrett: That’s the ongoing challenge of growing a business, I think.

Josh: For sure. Especially when you’re the founder, it’s easy to get distracted by busy work. You end up doing these random tasks because you might be putting off the really important stuff because it’s freakin’ hard, or you’re just not sure what to do next, so you just pick the easiest path to go down.

Metrics is one of those things where you can feel you’re doing meaningful work, and it’s not by staring up at numbers. It can be a really huge distraction.

Garrett: I literally have a poster right here that says, “Not everything that can be counted counts, and not everything that counts can be counted.”

Josh: Yeah, so spot-on.

Garrett: You’ve grown a couple businesses, and you’ve bootstrapped, you’ve raised money. In your experience, what have been the pros and cons? What advice would you give to somebody else who’s trying to make that decision? Do I need to raise money? Can I start this on my own? How’s that been for you?

The terms of the deal were extremely ideal. It valued Baremetrics at like $10 million. So like, “Oh, OK.” Nobody gets a board seat, nobody can tell me what to do. It’s still, as far as on paper goes, was a no-brainer.

Josh: A little backstory. Baremetrics was bootstrapped to… oh, gosh. I can’t remember what it was. I think we were doing maybe $10, $15, $20,000 a month. It was probably close to 20,000 a month. Most of that was just me, by myself. By that point, I started hiring some freelancers, and stuff. Then I ended up having something fall on my plate.

I had turned down a lot of investment offers because I’ve been bootstrapping stuff for a decade. A really sweet deal popped up. Baremetrics was initially built just for Stripe. Stripe approached us to do… the initial thing was a $500,000 investment for what amounts to about five percent of the company.

That was a sweet deal. I don’t care about percent of ownership per se. Certainly, didn’t care about five percent. The whole equity thing is a whole…whatever.

The terms of the deal were extremely ideal. It valued Baremetrics at like $10 million. So like, “Oh, OK.” Nobody gets a board seat, nobody can tell me what to do. It’s still, as far as on paper goes, was a no-brainer.

It was free money, for all intents and purposes. The terms of it were such that it would’ve been crazy to not take it when you’d look at just the paper.

Now, the dangerous part that we’re on the tail-end of finally figuring out and fixing is that… what most businesses use fund raising for is to hire, to bring on more developers or a couple of designers, whatever.

The problem is, when you go back to twiddling with knobs, you can’t adjust those knobs that much. It’s because you’re talking about people’s lives, people’s employment with you. Where it gets super dangerous is hiring a lot of people.

As founders, we tend to be really overly optimistic, because we have to be, to make something out of nothing. We assume that we’ll grow enough to cover ourselves on the burn rate side of things.

That’s why there’s so many startups that fail, because they raise $10 million in funding, $100 million of funding, and they hired a thousand people. Then it turns out they couldn’t make enough money to cover themselves.

That’s my big thing. I’m not opposed to fundraising, to raising some money. I don’t think it’s inherently evil. It’s just money. Especially, there can be some bad terms.

If you get good terms, it’s like, “OK. Cool.” But when you start using that money to bring on people who then are now depending on the business to grow, to keep up with that, it’s so stressful. Holy crap, it’s freaking stressful.

Back in June, we realized that we were spending way too much and we were about to run out of money. I took a 30 percent pay cut. My whole team took a 15 percent pay cut. We’re just now, six months later, starting to increase everybody’s salaries, because we’ve been mostly profitable for the past couple of months, and trajectory should be fine.

Garrett: That’s also not an easy thing to go through, to ask people, “Hey, you should consider this.”

Back in June, we realized that we were spending way too much and we were about to run out of money. I took a 30 percent pay cut. My whole team took a 15 percent pay cut.

Josh: Exactly, and that was my fault. If I had properly planned that stuff, and not been overly optimistic… We didn’t really have a finance person in place then early on, especially when I took on that money, and I should’ve had somebody.

I’m not a numbers person in the accounting sense, and so just crunching a thousand rows of spreadsheet numbers and figuring… It drove me crazy and I avoided it. That’s my thing with my fund raising. It’s not inherently evil. It’s the whole Mac versus PC thing like, “Who cares?” You can use it. You can screw it up pretty bad.

Garrett: It’s a tool, just like anything else. The terms, too, are a big factor, because everybody focuses on the dollar amount naturally, because that’s the quantifiable thing. The terms on that can really, really make it difficult and put you in a tough spot and make you miserable.

Josh: When you hear about stuff like VC horror stories, a lot of that stuff is actually not even in the… What I had was technically like an angel round. The terms of those are actually usually pretty favorable, other than sometimes people get some… the terms will be bad, as far as a percent of a ownership, or something.

But other stuff, you don’t get into this really scary like, “Now I, as the founder, only have 20 percent of the company, and all of these people on the board who could kick me out of the company.” That stuff doesn’t happen until you are like, three rounds of funding in, and you’ve made some pretty bad decisions.

Bootstrapping stuff… I mean, doing some small angel round really isn’t bad if you are really great with managing finances, and keep an eye on that stuff, and if you don’t use it for hiring people, I don’t think it’s a bad deal.

Garrett: The other thing for you though, too, it fell into your lap because of a couple of factors. One, because you had bootstrapped, so you’re in a healthy spot. Two…

Josh: I could prove that we had value.

Garrett: Had you started the at that point? So that was really transparent.

Josh: Yeah, that had been around for a long time. I knew.

Garrett: This came around by virtue of you building the business to a point where it was healthy, and thus you were at least, you weren’t begging for money. It was just, “Hey, here is some money. What do you think?” You’re like, “Oh, wow. It’s kind of hard to say ‘no.’”

Josh: That’s another thing too, is that people think that I can’t… that they are not able to even get something off the ground without some money. The fundraising thing is the first thing that they do. It’s like, “No. No. Prove something first. Try to get a customer.”

Garrett: There’s way too many tools like spreadsheets, and Zapier, or something. You can cobble together something that will help somebody achieve something. There’s plenty of people that aren’t capable of thinking about all that, not recognizing all those tools.

Start out. Build it all via Web interfaces and these tools, and then once you’ve got people like, “Oh, my God. That’s so cool. You’re saving me so much time,” Then start to automate it. Invest in it. There’s a lot of ways to start cheaper.

Josh: People just want too much, too quick. It’s the whole thing like, “We want what it took our parents 30 years to get. We want it right away.” A part of that’s a byproduct of there’s so many things at our fingertips that didn’t exist a decade ago. Having some patience, we’ve…

For me, personally, over this past Thanksgiving break, I had this epiphany, at least in my head, of realizing I don’t care about the… I’ve felt this false sense of urgency with building Baremetrics like, “We got to do this,” as though there’s this imaginary finish line that we could potentially be last to.

But there’s no finish line. We’re just building stuff. It changes, whatever. There’s competition, who cares? When you think of it, whether there’s not this end goal that you may or may not win, there’s no urgency. You just want to build something great, and it makes things so much more pleasant.

Garrett: Absolutely. On the transparency note, you’ve got a lot of customers now that have jumped on-board, and they’re full on with transparency. Based on talking to them and their experience and your experience, what have been the pros and cons for transparency?

…if you’re saying, “Hey, I’ll publish how much we’re making,” is what’s the story that you’re telling with it? Transparency for transparency’s sake is irrelevant.

Josh: The huge caveat, if you’re saying, “Hey, I’ll publish how much we’re making,” is what’s the story that you’re telling with it? Transparency for transparency’s sake is irrelevant. It doesn’t necessarily matter. I don’t think you win any business brownie points by being transparent. You don’t get a badge or anything.

For Baremetrics, it makes a ton of sense, because our market is other businesses. One, it shows off the product. Great, but two, us helping other businesses by giving insight into an actual business helps them, which is great, but, two, it also helps us and we get new customers as well.

We’re able to tell this story about how businesses run and the fact that it’s not all unicorns and puppy dogs. I think when you’re able to use that to tell a story, whether that’s a business story or just like a… I know some businesses do that.

It’s like they want… Buffer’s a great example, where they don’t have a financial product of any sort, but they’ve built this entire company around the idea of like, “We have nothing to hide. You can trust us.” Being transparent almost gives a face to the company.

But if you just do it half way, if you’re like, “Hey, I’m going to make Baremetrics dashboard public,” and then you never do anything with it, then you’ll see no tangible benefit whatsoever.

Garrett: The only tangible consequence I’ve heard from folks is, if and when you ever get to a point where you want to sell the business, a lot of buyers who aren’t necessarily online buyers, who are more traditional business people, don’t like that. It makes them uncomfortable that that information was out there.

Josh: Yeah, that’s the whole thing. I remember when I was playing with the idea of making our Baremetrics dashboard public, the feedback I got from a number of people about not doing it was because it’s like, “Well, if your competitor knows what your churn rate is…” or, “The lifetime value of a customer…”

Or people who aren’t competitors but are looking to start a business, and they say, “Man, the lifetime value of that customer is like $5,000. If I could make one-tenth of that, that’d be great.” It brings about a lot of competition, and I do think that’s partially true. There’s been a dozen Baremetrics knockoffs, almost to the pixel.

It unquestionably brought about some competition, but at the same time, when you’re doing stuff legitimately and you’re not just motivated by a quick buck, you’re going to be fine. Literally, 99 percent of those Baremetrics knockoffs were gone within six months. They just don’t stick around. They’re trying to make a quick buck and they realize, “It’s hard to do this.”

Garrett: [laughs] Exactly. If you look at it, if your motivation is just to make the money and not because it’s something you’re excited about or passionate about, for whatever reason, then you’re not going to have the fortitude to stay with it. Of course, it’s why half the title of my book is “Sustaining.”

Josh: Right, because it already… that’s the…

Garrett: Because starting it, anybody could start it. [laughs]

Pricing is one where I probably went way too traditional early on. It felt like I needed a nine dollar a month plan or something. I felt I didn’t value my own business enough early on in those previous products.

Josh: That’s the fun exciting part. Right? Yeah, the sustaining part is where you just want to stab yourself in the eye ball.

Garrett: It’s like a fire, right? Anybody can squirt lighter fluid all over a pile of logs and get the fire to start, but it’s maintaining that fire all night long, that’s the hard part.

Josh: Yup, totally.

Garrett: From your early products, is there a single lesson you could say that you learned from those products that translated directly to Baremetrics beyond the whole idea for the business? Mistakes or…

Josh: Sure. I’ll probably say two things. Pricing is one where I probably went way too traditional early on. It felt like I needed a nine dollar a month plan or something. I felt I didn’t value my own business enough early on in those previous products. Thinking like, “I should charge more for this.”

With Baremetrics, I intentionally started on the higher end. I wanted it to feel a little too expensive and then to stick with it. That’s what we did. Our very first customer was a $249 a month customer on Baremetrics, which, for me, it was just like I was losing my mind. I was so excited that that happened…

Garrett: Greating starting point.

Josh: Where I was like, “Yes! I picked a really high price.” I wasted my mind, and like, “It worked!” We’ve got customers who are four or five times that now as far as what their monthly payment is, but early on like, “Man.”

I’m glad that I didn’t start off low because it’s much easier to offer some lower options if you felt like you needed to, but it’s much harder to be like, “Hey, we’re tripling pricing.” The pricing stuff, charging more upfront…because it also naturally weeds out some less than pleasant customers.

Maybe this is my personality, but I did this in other businesses, and I carried that through to Baremetrics. I think it has really paid off for us is being as high touch with customers as possible, especially early on. I hopped on the phone with every customer, every one of them, and regularly.

We still have an automated email sequence to at least offer, to hop on a video chat every… There’s a three-month one, a six-month one, a 12-month one, an 18-month one, to say, “Hey, let’s just talk shop. I’m not trying to sell you on a thing. I just want to know how your business is doing and if I can help.” A ton of my time is just spent hopping on video calls with customers.

Garrett: You invariably get feedback and a lot of serendipitous feedback that somebody wouldn’t email you about but they’ll mention in a conversation.

Josh: Happy to talk about it. Right? We were very intentional with Baremetrics, but I’ve done that before, little bits here and there and realized like, “Hey, those things were beneficial.” I do think there’s a lot of new businesses, especially people who are doing it for the first time around like, “I get really scared to talk to humans.” [laughs]

This can be awkward at first, but then you just figure it out. That’s so important.

Garrett: You didn’t have at first. Right? As IO at first?

Josh: No.

Garrett: There’s usually a story behind getting dot-com.

Josh: Yes.

Garrett: Don’t want to spend a lot of time on it, but there’s usually something fun to get into here and some experience for people who want to get that dot-com for their own business eventually.

Josh: When I came up with the name for Baremetrics everything was available as far as the Twitter handle and Facebook. The dot-com was taken. It was like a GoDaddy landing page with a huge butterfly on it, and that was it. It was like filler text, like, “This is my site. Welcome to my site.” There’s nothing there, essentially.

I have reached out a dozen times over the first year trying to get the dot-com and I never heard anything, just not heard back at all. About a year in, this is right after we had gotten $500,000 in funding which was, again, transparent, all over the web. You just search for Baremetrics, and it was the top news thing, was that we’d raised $500,000.

Then I realized that, “Hey, I can try to get this domain through GoDaddy’s domain buying service.” It’s just like you’ve made a bid. There’s no even like, “Buy this domain now for $20,000.” You just bid on something. I was like, “What do I have to lose?” I think it was 70 bucks from GoDaddy to just use the service. I do it, and I bid, I think I’ve put in 600 or something like that or 550. I can’t remember exactly.

Holy moly, a few days later, it worked. They came back and were like, “So and so accepts your bid.” I’m like, “Wait. What? Seriously?”

All said and done, it was like $616 to get this domain, where, again, if this guy had just searched for the word Baremetrics, he would have realized I’ve got half-a-million dollars sitting in my bank account.

Maybe that’s just a decent human being in the domain world. Surprise, I guess, and I had it. I had spent a year trying to personally go out and do it, just sending an email and I got no response, but the GoDaddy thing, Holy moly. I don’t like GoDaddy, but they came through.

Garrett: Nice. One of the things that — this could be a long conversation — we talked about on Twitter a little bit was cancellation processes. I’m a huge advocate of automation on many reasons, for the customer, for cutting down on support, for all sorts of stuff.

But you do bring up the very good point that it is one of the best ways to spark a conversation at a critical time where there’s a huge learning opportunity on why they’re leaving. I tend to believe that cancellations don’t happen in an instant like that.

They happen over a month or two months while they lose interest and fade. Could you talk a little bit about your experience with that?

Obviously, now you all have changed over. I assume you haven’t changed back. You have an automated cancellation process now, where you had a manual process, where they had to email you for a long time.

How did that go for you? What were some of the pros and cons? It sounds like you never had anybody upset about having to email, which is fantastic. Tell that story.

Josh: This came about maybe a year, I don’t know, or like a year-and-a-half, or something like that, where we were having serious churn problems. I think we were at double digit churn. We were just having the hardest time.

We had an automated cancellation. You just click the button. I even think we even had a textbox or something where you could put in why or maybe even require the textbox, but it was still automated. We were getting no good feedback. People would just type in random stuff into the textbox, nothing useful.

We would do follow up emails right after they cancel say, “Hey, would you mind to give us a reason,” or “Can we hop on a phone call.” No feedback from that. We just weren’t getting traction and were having a really difficult time figuring out why the heck people are cancelling. With double-digit churn, we got to do something. That’s a bad spot to be in.

We said, “Hey, we’ll take down the automated thing and just make it a click this link and it brings up a chat window.” It wasn’t even like you had to open your email inbox. It was like an intercom chat window popped up, prefilled where it just said, “Hey, I want to cancel my account.” They hit send and usually we’d respond within minutes most of the time.

We said, “Let’s just do that and see what happens.” We started getting really great feedback. I think the chat interface helped that a ton because we were really intentional about responding to these super quick. We auto put them in their own inbox, in Intercom, so we knew, “Hey, this needs high priority response as quick as possible.”

The chat interface made it so that it wasn’t like they’re sending this email off into the ether and hoping that somebody sees their cancellation request. It was like, “We’re talking to a person right there.” A lot of times two things would happen.

One, they would give us amazing feedback, and because we were having a chat, we’re able to keep a conversation going to get even better feedback, or they would say, “I really needed this feature X,” and we could say, “Hey, here’s a way. We have the feature.”

That’s great feedback for us to know we’re doing a terrible job of servicing this feature. Two, we’re solving their problem and they want to stay a customer. We’re getting great feedback and we’re even actually helping some people not have to cancel.

Really, it just stuck around. We had no intention of even keeping it around that long, but we just kept getting great feedback. I can count on one hand the number of people that were upset, even remotely. There were a couple people who were angry. It was like I had killed their dog, but you get it.

Garrett: It’s a black and white thing for some people. If you’re going to do it, your reasons and the motivation was right. The immediacy was right. I think emailing versus live chat is a big difference there, and being responsive… it makes a big difference.

Like you said, emailing is a lot more… well, maybe not totally black and white, but a little more black and white there where you shouldn’t have to email, but a live chat, you’re not even leaving the interface.

Josh: Right, they’re still at it. I think a lot of people come into the conversation from the cable companies, like the classic, “I got to call my cable company and the whole time, they’re spending like an hour trying to keep me around, and screw that,” right?

Garrett: Upsells and, “We can give you a discount!”

Josh: Yeah. “If you stay around, we’ll give you six months free.” We never tried to push people to hang around. Eventually, that being said, we’ve, over the past few months, started realizing the feedback from that has progressively gotten less useful, and I think that’s because we started solving a lot of the common problems that were happening.

In that whole Twitter conversation, which was over the course of a full day with a dozen different people, John O’Nolan from Ghost made this really great point, “If you’re able to ultimately help a thousand people better by inconveniencing a dozen people, then there’s a trade-off there. That’s business.”

You can’t make everybody happy. If we can, ultimately, in the long term make something better for a whole lot more people, and a couple of people get upset, that’s a trade-off I’m willing to make for the long term success of the business.

Like I said, a few months ago we started realizing the feedback wasn’t great, and so we just decided… I feel like we could probably get better feedback by not having the open-ended texting, well, that’s still there, but having pre-existing radio buttons to choose from, and the feedback has been more quantifiable and more actual at this point.

I’m still happy with how we did it and I think that there is a time and a place for it, especially early on when that’s so critical, to get that kind of feedback.

Garrett: I think there’s definitely some subtle tactics on how you approach it that make a very big difference and the nefariousness of it.

I would not spend the funding to hire people. Right now, still, the wound is fresh. I maybe would hire one person, but I hired five people.

Josh: Yup. I remember, there’s lots of SaaS companies that do it, and you do have to phone and/or email, and you won’t hear back for two days or something.

Garrett: It’s always the funded ones.

Josh: I know. Those guys are terrible.

Garrett: We’re getting towards the end here. I’ve got a couple more universal questions. What’s the worst day, the most difficult, stressful thing you’ve dealt with since starting Baremetrics, besides this conversation?

Josh: Mid-June, when I realized we’re going to run out of money. I had a hunch that things were getting tight, and a buddy suggested, “Hey, talk to this finance guy. He’ll put together a spreadsheet model, forecaster thing with all your expenses.” A week later, he was like, “Hey man, we need to hop on the phone.” Sure enough, man, that was a pretty terrible day.

Garrett: How were those conversations with the team?

Josh: Everybody on our team has really done amazing, given that I asked them to take a pay cut. That conversation that day, it was our weekly morning stand up, and I just jumped into it, “Hey guys, bad news.” It was obvious.

When I’m able to show the graphs of like, “Here is if we don’t do anything. Here is if only I take a pay cut. Here is if I take a 50 percent pay cut. Here is if I don’t get paid anything. Here is what happens if everybody takes a five percent…”

Garrett: So you offered multiple choices…

Josh: I showed them like, “Asking you guys to take a 15 percent pay cut is the best option we have right now to not lay anyone off.” They took it as well as they could.

Garrett: Nobody’s going to take that and celebrate.

Josh: Right, but everybody really has done amazing.

Garrett: Now you feel like it’s bouncing back well, and everybody has a future and feels good about things.

Josh: Yeah. We’ve backed off on the pay cuts and within the next 30 to 60 days everyone will be back to full 100 percent.

Garrett: That’s good to hear. This may dovetail right off of that, but if you could go back and do one thing differently, just one thing, what would it be?

Josh: It’s related to funding. I would not spend the funding to hire people. Right now, still, the wound is fresh. I maybe would hire one person, but I hired five people.

Garrett: That’s a lot.

Josh: It’s way too much. It’s like the nozzle that you can’t… it’s a water hose that you can’t just turn it off. Whereas like spending that money on marketing or customer acquisition, different.

Garrett: It’s a dial that adjusts this way, really easy, but it doesn’t come back with…

Josh: It does not go back. I would say I misused the funding that I took on.

Garrett: So you would’ve been more cautious?

Josh: Yeah. The money, again. Great terms. Nothing wrong with it, but the way in which I spent it, I should have been much more frugal.

I think a lot of people give up too quick or they go and think that, yes, raising money is somehow the solution to their problem. Yeah, stick with it and then get good at selling.

Garrett: That’s good advice. All right, so that’s the end of my questions. Is there any kind of parting words you have or anything you’d want to say to somebody else who wants to start their own app?

Josh: Yeah. I think the only thing is, “Stick with it.” It’s fun. It’s the whole premise of your book, man. The fun part is the early stuff, and when you launch it and you get two customers, and then it stays at two customers for two months, man, that is just the biggest kick in the gut, but you just have to keep trying stuff.

I think a lot of people give up too quick or they go and think that, yes, raising money is somehow the solution to their problem. Yeah, stick with it and then get good at selling. You need to understand why people buy stuff and make them give you money.

Garrett: Yeah, absolutely. All right, man, this has been awesome. Thanks so much for taking the time.

Josh: Yeah, thanks for having me.

Garrett: Of course.

Josh: Cool.

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