Nathan Barry Founder of ConvertKit

Episode № 13

Nathan and I talk about the early days of ConvertKit, reaching a point where he had to make a decision to invest more significantly in it or walk away. He invested a significant portion of his income from other projects and really doubled down to make it work long before it was obvious things were going to take off. He talks about his sales process and how it simultaneously helped him better understand the needs of potential customers as well as build a relationship and find his first customers.

Garrett Dimon: All right, hello everybody, we’re here today with Nathan Barry, the author of Authority and the founder of ConvertKit. Welcome Nathan, thanks for coming.

Nathan Barry: Yeah, thanks for having me on.

Garrett: Can you give a little quick overview of ConvertKit, how it came about and where you are now?

Nathan: Yeah. ConvertKit is an email marketing platform for professional bloggers. You could think of it as the power of Infusionsoft, but easier to use than MailChimp. Kind of having that hybrid world of great automation and sophisticated features, but paired down to exactly what bloggers and content creators need. As far as where we’re at now, we’re at 25 full time employees. Been at it for almost four years now, and hopefully this week we’ll cross 500,000 in monthly recurring revenue.

Garrett: Nice.

Nathan: I’m trying to get that in right before the end of the year. Then as far as the early days, my background is in blogging and then then writing books. Even before that, my background is in user experience design. I wrote a couple of books and was surprised to learn that email marketing was the most powerful way to sell those books, and so those books were self published, sold on my site, and they did great.

I expected Twitter and Facebook and Instagram and all these hot sexy new platforms to drive the revenue, and it just wasn’t the case. Email was where the sales happened. I told that to friends who’d been in marketing for a long time and they were like “Uh-huh. We’ve known this since 2002, like good job welcome to the party, I thought you said you knew what you were doing with marketing.”

I just became obsessed with marketing and all the best practices. I was using MailChimp at the time and every time I went to implement a best practice, it was just frustrating. I felt like I was fighting against the tool, rather than someone saying, hey we know the best practices and we built a tool with those in mind. Best practices by default.

I spent all this time writing books and I wanted to get back into software because that’s where my roots are, and so I thought okay, I’m going to start a SaaS application. Let’s dive into that world, and that ended up being ConvertKit. That was started January 1st, 2013.

Garrett: Right on. Obviously you’ve had some great success lately. ConvertKit’s really taken off but it wasn’t like that all of the time. When it first launched it was more of a struggle and it took some time for it to really get traction. Can you talk a little bit about those early days and the stepping stones that got you to the point where it took off?

Nathan: Yeah I actually didn’t start with the idea of I want to start an email marketing company. I started with the idea of I want to start a SaaS company. Who cares what it is, I just want to make this switch from E-books and that category of digital products to software. Mainly for the recurring revenue. Call it 70%, because I wanted recurring revenue, and 30% because I wanted a new challenge.

I actually started something that I called the Web App Challenge, and I did it publicly on my blog, and you can still go back and read the blog posts. I just said hey, my goal is to go from today, which is actually December 31st, 2012. I gave myself a day early to start the challenge, and my goal is to go from today of not having an idea, or even knowing what I’m going to build, to six months from now having a SaaS app, making five thousand month in recurring revenue.

I knew it would be hard, but I’d just come off some really successful E-book launches, and so I seriously underestimated the difficulty of pulling that off. In a book launch I could do 25,000 dollars in a day. 50,000 dollars in a month. I thought how hard could it be to get 5,000 in recurring revenue. Turns out very hard.

I was naïve and I embarked on this challenge and part way through, in the first week or so I decided that ConvertKit, an email marketing platform was what I was going to build. One of the other requirement was that I could only put in 5,000 dollars of my own money, and the reason for that was I’d seen lots of people come off one success and have money, and then pour all of that into the next thing, and they didn’t actually have to talk to customers because they didn’t need money in the short term. I didn’t want to take 50,000 dollars or potentially more, that I just made over here, and squander it all in experimenting with software, especially because it’s so easy to do.

My rule was that other than that five grand, it had to be customer funded through pre sales, because I figured then I have to talk to people. I have to get customers and I have to … Hopefully that will help me find product market fit faster. To fast forward a little bit over those six months, we got to about 2,100 dollars in MRR. I think a reasonable goal would have been 2,500 maybe to get to over that time period with my knowledge and expertise and capabilities. I tend to set decently big goals for myself, and I usually hit them by about, hit right about the 50% mark. That was par for the course for me.

Then after that, after that initial six months, we didn’t … We basically just maintained that 2,100 a month. I would work on it, but it wasn’t really growing. It’s really hard to sell recurring versus selling a one off payment. Especially when you’re not like hey buy an E-book and someone’s like cool, I can own an unlimited number of E-books. Whereas with an email marketing product, they’re like, “Okay is yours good enough that I should close down my MailChimp account? Because I’m going to use one and I might try out another at the same time, but there’s no way I’m going to be using more than two for sure.” It’s really about you’re getting someone to switch. That was a lot harder.

Then when it didn’t grow further, I had a hard time continuing to pour a lot of time and effort into it, because the books and courses that I was selling were still doing well. I’d pull in about 250,000 a year total from those. With the same fixed amount of effort. Whatever effort it took to make a thousand dollars with books and courses, that same amount of effort applied to ConvertKit would increase MRR by 50 bucks or something you know? It was so hard to focus on the hard long term revenue, when there is easy short term revenue. We effectively just stayed flat for … After that, for the next year and a half or so, after that first six months.

I knew it would be hard, but I’d just come off some really successful E-book launches, and so I seriously underestimated the difficulty of pulling that off.

Garrett: Through all of that, did you ever consider just giving up on ConvertKit or just letting it flounder on the side and focusing on the books, or was it always, at some point I’ll figure it out, kind of optimism there?

Nathan: It was the at some point I’ll figure it out, but it was really more of a head in the sand, not make a decision, this could still work, rather than there being an actual plan or how I’m going to make it work. It’s like sitting there and waiting for your software product to take off, and to go viral or something like that. Something will happen, there will be some tipping point, and if I just hold on long enough, working on it 10 hours a week or something, while doing my other things, then at some point it’ll work out. That some point never came.

Garrett: How many different things would you say you tried, and what different things did you try during that time?

Nathan: It was probably like four or five different marketing strategies. I tried going after different audiences. I tried making, and I actually gave a talk about this one. I tried making the way I sold ConvertKit more like the way you would sell an info product. Info products are often sold with an open and closed launch, or a discount period for a certain time so that there’s urgency. They’re often sold more up front, so it’s not a small recurring amount, it’s more of a commitment. I tried that with ConvertKit where I launched something called the ConvertKit Academy, where I’d open up 10 slots a month, and it was 300 dollars. You’re paying for a year of ConvertKit up front, and then included all this training and all this help. I could do that launch, and it worked okay. I mean the 10 slots a month, I set the number that low because that’s all I thought I could sell. There were months that I didn’t even sell those 10.

Then with the churn from other accounts dropping out, and it just not being enough money put into it to make the product better. It was just in this awkward place where you couldn’t really put more time into selling it because the product was mediocre and didn’t have the features it needed, but also because there weren’t customers then you couldn’t really … There wasn’t money to build out more functionality, and so it just sat in this really awkward place.

Garrett: How hard is it to not just give up? Either not by necessarily shutting it down, but just saying okay, at what point, when you try that many different things and none of them are significantly changing the situation for you, after each one was there a point where you were a little closer to just saying all right, I picked the wrong thing, I’m chasing the wrong rabbits here. How did that play out?

Nathan: Yeah, I don’t think I had that much clarity with it. I think I was looking really short term and saying “oh bummer this isn’t working.” I didn’t really look at it holistically and say wow, I’ve worked on this for 18 months and this is where we’re at? I didn’t have that approach to it, and maybe that’s good. No it’s not good actually, because that’s how you could just coast on a project and be like yeah, I’m working on this and we’re making traction, but if you don’t step back and look like, okay this is where we’re at. Then really look at the amount of effort that you’re putting in.

For me, I didn’t get that clarity until a conversation with Hiten Shah from KISSmetrics and Crazy Egg and you know, a bunch of other great SaaS companies. He and I were at a conference walking back from dinner, and he just stopped and said, “Look Nathan, you should shutdown ConvertKit.” I was like uh excuse me? What? He said, “Yeah, you’re going to be successful at something. You’ve proved that with the books, and you can build an audience and you can sell, but you’re a year and a half in with ConvertKit, it’s not working. It’s time to call it, shut it down. Move on to the next thing because you’re crippling yourself effectively in having this project here that’s not going anywhere. You placed a bet, you put the footwork in and it’s time to call it.” Then he just started walking again. I was like okay. As I’m thinking about this I take a few quick steps to catch up with him again.

Then as we’re walking he just says, “Or you can give it the time, money and attention it deserves and build it in to something real. This in between state where you’re like yeah it’s a side project, it might work it might not. I’m trying these things … Clearly that’s not working, so you need to change something.” That was really the shut it down or double down conversation. I think a lot of people with their side projects are probably in a similar place where maybe it gets to 500 a month of recurring revenue, and you’re like, well it’s not worth focusing on yet. If it’s 500 a month quickly, then you’re like wow this is exciting, but if you get to 500 a month over the course of a year, then you’re actually in this really bad place where it’s not a failure because you’ve got customers and they’re happy, but it’s certainly not a success. I think that’s the worst thing that can happen.

Garrett: It’s a really really tough spot to be in. That’s, for me, with Sifter it was those two years where I was still working and doing other stuff and Sifter wasn’t making enough to support me and I was constantly like where can I cut costs so that I can afford to be on Sifter full time without needing to make other income. That was probably the most stressful period, but then at the same time if you quit too early and you don’t have the runway or the savings and it’s not making enough money, you could end up in a spot where you run up against a wall and you have to go get a job or do something else. There’s that, it is you’re constantly toeing the line about when do I make the leap? Am I close enough? I think that’s probably one of the most difficult decisions for anybody to make on that.

Once you did commit, how long did it take for you to realize, okay this was the right decision?

Nathan: Yeah, so first I didn’t commit right away. I always joke that I did what everyone does when they hear really good advice, and that’s to wait six months to do anything with it. I thought about and pondered it for awhile, and then ConvertKit’s revenue, as recurring revenue does, I find a lot of people don’t know this, but if left alone it does not continue to recur perfectly, it declines at a pretty steady pace which is really depressing. It declined down to 1,300 a month and at this point it wasn’t even covering basic costs to maintain it, let alone new development.

Garrett: At anything it was probably at a point where there was more reason to give up on it than to double down on it. How on Earth at that point did you make the decision to double down versus quit?

We actually did run out of money, and that was a couple months later in May 2015. We were at about 8,000 a month in revenue, 9,000 a month in revenue, and ran out of money.

Nathan: I decided that I needed a framework to make this decision, because I needed to actually make a decision. I was tired of … For the last year and a half I’ve been like, yeah maybe this will work or maybe not. I hadn’t made a decision as to whether or not I was going to make it work. Really put the effort into it. As you said, the time, money and attention basically.

The little framework that I came up with was to ask two simple questions. One, do I still want this as much today as the day that I started. A lot can change in your life in two years or more, and just because you wanted something a couple years ago doesn’t mean you still want it now. If you don’t still want it, that just makes the decision easy. Especially, anyone probably getting into building software, they have talent hopefully. Either on the development side or on the marketing side or products in some way. There’s lots of good things you can do with your time. If you don’t still want this, move on to something else.

For me, I was like yeah. I have these books of courses, that’s all going just fine. I can go down that road, but I still wanted to run a software company and I wanted that new challenge. I really wanted to take it to the next level, so the answer to that question was yes, I want it just as much as the day I started. I moved on to question two which was, have I given ConvertKit every possible chance to succeed? If the answer to that is yes, then it’s not the right product, it’s not the right market, you’re not the right person to do it. You’ve given it your all, it didn’t work, and it’s time to call it, move on. When I look back over my last couple years, I went … No. I can’t honestly say that yeah, I’ve given this my all and it didn’t work. There’s a lot of weeks where I’ve given it 20% of the possible effort.

Now there’s a big disconnect between how much I say I want something, and then my actions. Looking at that, I was like … I saw that disconnect, and there’s still opportunity there. That’s when I decided okay, it’s time to double down. What doubling down looked like for me, was I took all of our savings, which we still had more money invested in a wealth [fund 00:17:23] account for stocks and that kind of thing. All of our savings, which was 50,000 dollars, and put that into the company. Then I’d been hiring contractors just to work on things part time, and so there wasn’t … Since I’m not a developer, I can write a bunch of front end code and I can do design, but since I’m not a developer, there wasn’t that dedicated product focus and someone really working hard to carry it through who really owned that whole process.

I hired one of my favorite developers I’ve ever worked with over the years at different software companies. A guy named David Wheeler to come on as our founding engineer. Then I started selling. I’d always tried to find scalable ways to grow, so content marketing or partnerships or all these other things. This time I just said, I’m going to sell. I made lists of … We also picked the niche of, at the time it was email marketing for authors, and then we later pivoted it a little bit to be email marketing for professional bloggers, but by going after a niche, I was able to make lists of potential customers and then just email them and say, hey can I get on a Skype call and demo this for you? Just be relentless about selling.

Our expenses pretty quickly went up significantly, to about … I think they went up to about 10,000 a month right away, and then you gradually climb to 13,000 a month. On 1,300 a month in revenue. I was doing the math of 50,000 declining like this but revenue … Where does that match. I didn’t have an exact number of when I was going to call it, of like this isn’t working. I guess it was going to be when I ran out of money, I was going to make that decision. I sold 300 dollars worth of MRR from direct sales that first month, and so we went from 1,300 to 1,600. Then the month after that I sold 400, so then we went up to 2,000. That was October 2014, and by March 2015, we were at 5,000 a month in revenue, which was my original goal, it just took a year and a half longer than expected.

We actually did run out of money, and that was a couple months later in May 2015. We were at about 8,000 a month in revenue, 9,000 a month in revenue, and ran out of money. I considered a bunch of different options. I ended up laying off one person on the team who is doing customer support and a lot of the other work in there. Helping with a lot of the administrative work. We ended up being able to bring him back on three months later, but that was the thing, I had to cut the expenses from 13,000 down to 9,000 so that we could not go broke. During that time, I’d sold off all of my investments and all that kind of thing just to live on.

We got down pretty low on financially, but never went really far in the negative. It just kept climbing from there, and then later things took off. We probably relied entirely on direct sales up to 15,000 MRR. Then affiliates and referrals started to kick in after that, but even to today we still do a lot of direct sales.

We probably relied entirely on direct sales up to 15,000 MRR. Then affiliates and referrals started to kick in after that, but even to today we still do a lot of direct sales.

Garrett: On direct sales, because that’s something that so many of us just hate the idea of, but the reality is too, I’m guessing it wasn’t pure sales right? When you’re on the phone call, you’re getting feedback. You’re learning where to focus and what features. Can you talk about how those calls balance in terms of actual sales effort versus actual research effort.

Nathan: I don’t think they’re two different things. That conversation, it always starts with hey what are your frustrations? You use MailChimp, you use Campaign Monitor, whatever it is, what bothers you about them? You’re telling me, and I’m writing it all down. I’m taking notes. Then when someone says, they list off all this stuff, “Oh I’m sick of paying for duplicate subscribers with MailChimp, it’s really a pain to set up automations, there’s no tags.” In that case I’m saying, those are all the same frustrations I had with MailChimp, that’s why I built ConvertKit.

People will throw out other things, and I’m like oh I hadn’t thought about that. Oh that’s a good point. It’s product research, but then also … I don’t come in saying you should sign up for ConvertKit, here’s why. Instead, you let them talk about frustration and then you answer that. I think research and sales are the same thing.

Garrett: That’s a really good point too, because I think so many people think of sales and they think of it as, I’m going to call this person up and I’m going to tell them to buy my product, when the best sales you can possibly do is to call somebody up and say, what sucks for you right now? Listen to them, and then say, okay that’s great, I think I can help you solve those problems. It’s not, here buy my product, it’s here’s how my product can maybe help you, after you’ve listened to them. That makes all the difference in the world in sales, and obviously the research bonus is there too.

Yeah and then whenever you’re selling purely online, people are rejecting you every single day and not telling you why.

Nathan: Yeah and then whenever you’re selling purely online, people are rejecting you every single day and not telling you why. If I put up a blog post that says this is why ConvertKit is amazing, or here’s how to solve your seven greatest email marketing problems, oh and it happens to pitch ConvertKit. Someone reads through that and goes oh that’s interesting, and they click through to learn more or to buy, and then for whatever reason they click the back button. That’s the equivalent of me saying, hey will you buy ConvertKit? And you staring at me awkwardly and then slowly backing away without saying anything, and then turning and leaving. Which is entirely socially unacceptable. You’re not allowed to do that. If I say hey you should buy this thing, you have to say like, ask a couple clarifying questions, and then you have to say well here’s why I’m not going to buy it. You have to give a reason.

When you’re selling online, all you know is that 25 people visited your sales page, and zero purchased. If you have 25 individual conversations, made up or not, all 25 of those people have to give you a reason that they’re not going to buy your product. That’s powerful.

Garrett: I would say it even goes a step further, because in hindsight I think one of my biggest mistakes with Sifter was, I had plenty of feedback coming in via email, lots of suggestions and we had just enough traction that people cared enough to make feature requests and that sort of thing. It was one thing to hear those via email, but every time I got on the phone with somebody, I would get a dozen other things that were just small enough, and just annoying enough, that by themselves weren’t a big deal but in a phone call was well, this bothers me, this bothers me, this bothers me. They were all easy to fix, but they weren’t big enough for people to mention via email. That face to face conversation just solves so many problems and helps you see things that you otherwise would never know about, or never notice. Or nobody would take the time to tell you.

Nathan: Yeah, that’s absolutely true. Then the other thing is, whenever we build these products we, at least for me, I think this would be perfect for so and so, you know? You have all these people out there who think … They would be perfect for this project, if only they knew about it, or would buy it, or would come stumble across a Google ad about it or something like that. It’s like, if you know who those people are, or you have that avatar in your head, then go call them up and say hey, I built something that I think is perfect for you and here’s why.

Garrett: To be fair, I think in your case too, having a little bit of credibility from your books and your previous work made it easier to get those conversations, because I certainly … I remember getting a lot of outreach and I’m sure plenty of people read … People trying out, nobody responds to me, nobody gives me the time of day. It’s not quite that easy, and it certainly helps to build an audience and build some credibility ahead of time, and then it makes those much easier … It just makes the emails easier. You’re going to get more of a response and you’ll be able to have those conversations in the first place. It’s not super easy but it’s worth it.

Nathan: Yeah, and so I have posters behind me on the wall that are some of the … I don’t even know what to call them. They’re not necessarily ConvertKit core values, maybe they are. One of them is teach everything you know. That’s how you build that credibility. It’s one thing to say I’m going to build a software company, and you know. I set off in my own quiet world and go do that. It’s another thing to be public about all of it, to let everyone know what your goal and your mission is and your progress along the way, because when I publish that article saying, “I’m launching the web [app 00:27:05] challenge, my goal is to go from zero to 5,000 a month in revenue in six months. I’m going to blog about the entire thing.”

The number of people that came on along side and said great, if you need anything let me know. I had emails from Ryan Carson at Treehouse. That’s how I met Hiten Shah, was he, I think either emailed me or posted a comment on that article and said, “Cool. I like to help people who are in motion, so if there’s ever anything you need, let me know.” That was so much easier. I got a lot of help from Amy Hoy in the early days. She said something about … She was referring to how frustrating it is to help someone who’s not going to do anything with that. She said something like, I have all the time in the world to help people who are in motion. Then a little bit of guidance, you just change that and they’re going to execute on it. Really you have to publicly prove that you’re going to make this happen, and then other people will say, “I will happily give you 30 minutes, or this introduction, or that kind of thing in order to make it happen.”

Garrett: I never thought about it that way, but the in-motion thing is just a great way to look at it, because I, like with Sifter, I was fascinated with bug trackers and talked to people about them for years, but until I started creating mock ups and sharing them with no observable goal just beyond sharing it, that’s when people started coming out of the woodwork with suggestions and encouragement and like, you’re going to do something with this right? It makes a lot of sense, and I think that’s probably a great way to overcome. If you don’t necessarily have the credibility yet but you put forth some effort and you put something out there that shows you’re making progress and working towards a goal, then people see that, they’re like oh yeah I’ll have a call with this person, they’re clearly doing interesting things. That could be a great way to overcome that challenge.

Nathan: To do it all publicly. In the early days, I was fascinated by how I could write about … The first article I ever wrote that was popular was about how I made 19,000 dollars on the app store while learning to code, so a little click bait in there. That one took off like crazy, and I was having conversations with all these people who were running businesses doing half a million or a couple million dollars a year on the app store, and they were in some way not looking up to me, but their business was at a high level, mine was at a very small level, but because I wrote about it, I got to play on their level. The same way that, like with ConvertKit. In those early days, I mean I gave a talk at MicroCon when ConvertKit had gotten to 2,500 a month, and it’s just an attendee talk, but there were so many people there who were at 10,000, 50,000 a month in revenue, and all of a sudden, because you’re sharing.

It was like, why am I the one talking with … You’ve done so much more than I ever have. It elevates the level to get out there and be willing to talk about it publicly. I’ve always had that mindset of, whatever I’m learning, whatever I’m working on, just teach that, share it publicly. One of the posters says work in public. That’s just, hey I learned a thing, hey I built this thing, here’s how I built it. Also this is where I’m going.

Any time you read an article and someone’s saying this is where I’m going, these are the steps to make it happen, then you would just want that person to succeed. There are Kickstarter projects that I don’t care about the project at all, but when someone spells it out of, “This is what I’m trying to accomplish, this is the story behind it,” et cetera, you’re just like cool. There’s a 50 dollar contribution. It’s the ones where you’re selecting no reward, because you don’t care about whatever they’re making, but you want to help people who are in motion.

Garrett: Yeah. There was a thought on the tip of my tongue and I’ve lost it. All right well I’ll skip that one. One of the other things I want to talk about is when ConvertKit was getting started and [Drip 00:31:34], because they were born around the same time serving very similar audiences. How did that unfold in terms of … So many people were scared of, oh there’s a competitor. There’s a big player or whatever, and Drip took off faster, but you were ultimately able to catch up, and when you’re going through a trough like that and there’s a very similar product that’s very solid that’s taking off, all the more reason to give up. Like oh why not just go use their product instead of dragging myself through all this. How did that go?

Nathan: Yeah I always thought it was interesting in the early days that people compared ConvertKit and Drip so much from a competition perspective, because they would say, “Oo, you’re getting into a competitive market. Drip’s in that market.” I was like, no I’m getting into a competitive market because MailChimp is in that market, you know? And Campaign Monitor and Infusionsoft and AWeber and iContact and Constant Contact. People looked at our two little tiny bootstrap companies, doing a couple grand a month and maybe Drip at the time, six months after launch I think was doing 10 or 12 grand a month, and then there’s MailChimp doing 250 million a year. Then it’s like, there’s a ton of room for everyone, but also the two products didn’t start as competition, and so Drip was email marketing for SaaS companies when it started, and so Drip I believe started four weeks before ConvertKit. At least the first mention of it publicly.

I didn’t understand what Drip was for, because if I probably would have used it if the marketing had made sense to me. There’s actually a Twitter conversation somewhere between Rob and I where I’m asking him questions of like, hey does it do this? He’s like no it doesn’t. Because I’m trying to find a tool to switch from from MailChimp and if someone’s building it then great I’ll do that. I walked away from that conversation going oh, okay this isn’t for me and it’s not going to solve my problems, and then a month later decided to build something that was for me and would solve my problems.

ConvertKit started in the info product space, and Drip started in the SaaS product space. We went after two totally different markets, and then later Drip pivoted into marketing automation and broadened to SaaS and whoever. We just stayed in … We switched from talking about info products to professional bloggers. Stayed in the same space but went deeper and then added all that automation functionality. It probably wasn’t until a year, a year and a half in that we actually started going after the same customer base.

Yeah it was definitely frustrating I think … I think at the end of that six months when we’d hit 2,000 a month in revenue, I think at the time Drip was at 12,000 a month, but was interesting is you can go back and listen to the Startups For the Rest of Us Podcast and they hit a trough at the same time. They had this initial success, and I think it was 9 or 12 thousand a month, somewhere in there. Then found that the market … That they weren’t a good fit. That they didn’t have product market fit. Then that’s when they made the pivot into more true automation rather than just email marketing for SaaS. They had this spike and then this flat line of very slow growth, and then they started taking off again. Yeah, it’s interesting.

Then later, you know I think April 2015. That’s coming up on two years. We were at 5,000 a month in revenue, so as we’re starting to take off, and they were at I think 36,000 a month. From then on we just, our worst growth month was like 18% monthly growth, and we continued that all the way, up to a year later I think we were 50,000 MRR larger than them. Who knows what’s happened since they’ve been acquired by Leadpages, because that’s … Leadpages is a big marketing machine and they have 40,000 customers or whatever. Plenty of millions to put behind it, but it’s interesting. I think the audience segment plays a big role. We accidentally picked probably one of the best possible markets by going after bloggers because if I have a small business product and I get you to use it and you love it, you might tell three or four of your friends like hey the thing is pretty great, but if I get a high profile blogger to use it, and they love it, they’ll tell 100 thousand of their closest friends.

Our affiliate program has been able to do well, whereas in other industries it just, affiliate programs just don’t work.

Garrett: Yeah absolutely.

Nathan: It’s interesting, but I don’t worry about Drip. I worry about the bigger products like the MailChimps or an Active Campaign that has a lot of resources.

Garrett: I love that affiliate marketing as worked well for you, when, like you said so many people are like oh I’ll just throw in affiliate marketing, but some things just aren’t naturally sharable, or don’t have an audience that can or will share. It’s a great example of the fact that just because an idea worked for another company doesn’t mean it’s going to work for you. Just because an idea didn’t work for another company, doesn’t mean it’s not going to work for you. I think sometimes, I know I always struggle with that, was oh well that’s not going to work because so and so tried it and they didn’t work. It’s like, well how did they try it? Are they in the right industry, the same audience, the same … There’s so many variables that can really affect which tactics are successful.

One of the other questions, now that you’re bigger and it happened quickly, I mean basically two years. Is there anything you miss from the days that ConvertKit was smaller?

Nathan: I don’t think so.

Garrett: Really?

Nathan: Let’s see, things that I miss. Probably being more embedded in the product and working on that side of it, because my background is in design and user experience. I’ve actually spent the last two months leading our engineering team and being very heavily involved there, and so that’s been a lot of fun. There’s an in between time where I just wasn’t very involved in that process. I was very heavily on the sales and marketing and growth side of things.

Yeah, I like being able to still write some code myself and design out a new feature or spend three or four hours and ship a pull request. Make the product better than it was when I got up this morning. That doesn’t happen very often anymore.

Garrett: It’s a lot simpler in the early days I think.

Nathan: Yeah and it’s just like, I can kind of do whatever I want because there’s 50 customers and whatever, but now one little blog, there’s 10 thousand customers and so it’s a big deal now.

Garrett: Yeah.

Nathan: On other things, I don’t think there’s much else that I miss. It’s really fun to show up to a conference or something like that, and people go oh yeah, I use ConvertKit. My mom had all my family over for dinner two nights ago, and my mom was saying, “Hey I was reading a book the other day and ConvertKit was mentioned in that.” I was like what? That kind of stuff is fun, and I just don’t worry about money in the same way. The whole journey was a lot harder than I expected, but I don’t really miss the early days.

Garrett: All right, fair enough. Looking back, kind of a two part question to wrap it up. What was the most painful or the lowest point in the whole process for you?

Nathan: Let’s see. Oh man. I mean running out of money, that sucked. At the same time we had traction then, so it wasn’t so much of a money problem … I mean it was a money problem, but whenever I think of problems, I always think of them in terms of, does this get solved with time? If I’m going to stress out about something, does this get better or worse with time? In our case with the money problem we were growing. Yes our, our burner was getting lower each month, and so that problem was getting less significant with time. That’s a problem where you’re like, okay I need to worry about that because it’s a real problem, but it’s not that big of a deal, where as the problems that get worse with time, those are the ones where you’re like, okay I have to fix that.

That was pretty stressful. I think making the decision to put all of our savings into ConvertKit, at the time of doubling down, that was definitely stressful. Then I think the first time that I had to fire someone. You know, especially with a remote team, I didn’t want to hop on a Skype call or a Zoom call and say look I’m letting you go. Especially for someone who had done great work and had been a big part of everything in the early days, and so I ended up … One it was especially hard because not everyone on the leadership team agreed that letting this person go was the right move. All those internal people things is hard.

When firing this person, what I ended up deciding to do was, they live one state over and so I caught the 6 AM flight out there. I texted him the night before and say hey, I’m going to be in your city tomorrow, can you meet up for coffee, can we grab breakfast. He was like, “Sure, what time works?” 8 AM? Great. I caught the 6 AM flight over, met them there. Let them go, thanked them for everything, had some good conversations and then a couple hours later flew home.

That ended up being a really good decision because, I admit it’s one that I don’t talk about much, but I think it’s showing to that person and to the rest of the team, because we were at 10 or 11 people then. That hey, I didn’t make this decision lightly. I took it really seriously. I’m not going to say you know what, you’re not a good fit, you’re gone. To let this person go, I actually got on a plane and you know … It took me a day because I went there and back same day, but I think it showed that I valued each person on the team, and if I was going to let someone go, I was going to do it right. I stressed out about that so much. That was probably the lowest point.

Garrett: I talked to Josh about Baremetrics the other day, and for him it was the same thing. When they financially were struggling and had everybody took a pay cut, and he said that was some of the hardest … It’s always the personnel issues, the people that I think everybody gets the most stressed about as the company grows.

Nathan: Yeah for sure. That’s the thing, I was talking to Jason Cohen from WP Engine, and they’re at 450 employees now and I was in Austin and I went to their office to meet with Jason and just hang out and catch up because you know, I had met him years before at MicroConf, like right when ConvertKit was starting. He just said, “Whatever people problems you have at 10 employees, the ratio stays the same of problems per employee. Now just go up to 450 and beyond, and just know that whatever problem is the biggest edge case that you think you’d never encounter, you’re going to encounter that three times a year.” Probably one of the best moves I ever made was hiring a director of operations to handle so much of that, and all the business stuff.

Garrett: Yeah.

Nathan: Yeah it’s been quite the journey, but it’s fun to be at the stage where we’re at and to have the momentum.

Garrett: Then the one final question, which often times pivots off of that, but this may not. If you could go back and tell yourself, what is this almost three years ago total?

Nathan: Yeah almost four.

Garrett: Almost four years ago, what would you tell yourself to do differently?

Nathan: To double down sooner. To realize that I’m in this in between state of, I haven’t given up, but I’m also not serious about it and I’m not working hard to make it work and giving it my all. You can give something your all even if you only have 20 hours a week. You’re working full time on this and it’s a side project, and I just wasn’t. I was like, trying to … I had these projects for Convertkit and I was moving them forward and you know. At whatever pace.

Garrett: It’s not necessarily quit your job and take a leap of faith so much as, if you’ve got free time, give it all your free time and put yourself into it.

I wish I would have asked that question, those two questions of do I still want this as much today, as the day that I started, and have I given this every possible chance to succeed?

Nathan: Yeah and take it really seriously. I wish I would have asked that question, those two questions of do I still want this as much today, as the day that I started, and have I given this every possible chance to succeed? I think it may not be useful to ask yourself that every single day, but maybe every week, and certainly every month, and reevaluate those side projects and ask those two questions. Do I still want this? If yes, does my effort match my desire? Be willing to pull the plug sooner rather than later.

Garrett: That was more or less the thought process I had with Sifter, was after going through everything I had gone through, I was at a point where I was like, this isn’t what I want right now. I can see myself wanting to do this again some day, but right now this is just not, my heart’s not in it anymore. I was in a totally different place, and it wasn’t anything to do with Sifter, it was just I was so mentally and physically at a different place. That’s basically what I had to do was ask myself, am I really doing the right thing or am I just continuing this because I’ve been doing it for so long, I’m not going to consider anything else. It turned out that’s what I was doing.

Nathan: Yeah and it’s not about some particular I built a SaaS company badge of honor, it’s like what do I want? Because we’re all skilled, talented people. We can all pay our mortgages through a handful of different ways. You have any experience in software, you could pay your rent. It’s really about what do I want? What makes me happy? What do I want to pursue, and go for that, and don’t base it on, that someone else says that you have to run a software company or you have to have this style of business or you have to … Any of those things. Yeah, I like that approach.

Garrett: That’s a pretty good note to end on. All right thanks so much for taking the time, I really appreciate it. I’m sure lots of other people get a lot out of this as well.

Nathan: Absolutely, thanks for having me.

Garrett: Yeah.

Support Starting & Sustaining

This episode is just one piece of a much bigger puzzle. Starting & Sustaining is a complete system to help you build and launch a web application with less pain and fewer mistakes.

The Package

An illustration of the checklist, book, and spreadsheet.

The Audiobook

An illustration of Starting & Sustaining on a mobile device audio player.

The Book

An illustration of Starting & Sustaining on an iPad.
An illustration of an envelope with a wax seal.

Once-a-month emails Focused emails on SaaS topics like email, security, onboarding, pricing, and more.