# 12 Lessons Learned Moving from Bootstrapped to Venture Backed – Rob Walling – MicroConf Growth 2018

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=2244yg-Ju2E
Duration: 49 min
Language: English
Words: 10765
Transcript page: https://viewrankai.com/tools/youtube-transcript/2244yg-Ju2E

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[0:03] finish the day out on a on a high note here. Um, I want to share some lessons that I've learned over the past really over the past two years. It's been almost two years since Drip was acquired um, in in July of 2016. And um, you know, this I had 16 years of bootstrapping and then two years essentially inside a well-funded company. And there there's obviously um, both good and bad that you notice on both sides of it once you've done both. Um, and so this is just one man's experience, but um, you know, it's I hope it that it's valuable to y'all

[0:37] today. So, uh, in true MicroConf fashion, we often have um, photos of our families because this after all is why I do all of this, right? Like I started businesses so that I could have more time and a better lifestyle to spend uh, with with my family. And this is us um, less than a month ago on the lake by our house, Minneapolis in the background. We moved there two years ago after that acquisition. And for those of you who've been at previous MicroConfs keeping count of my kids, yes, there's an extra child and episode 146 of Zen Founder explains what that is, but we are legal

[1:14] guardians of a little girl as well now. And this is us seeing Hamilton in Chicago. Highly recommend Hamilton, really really good musical. So, all right, with the family stuff aside, I want to dive into um, very quickly recapping. I talked a lot about this in in my last year talk, but kind of the

[1:31] story so far and how I how I got here. Um, so I started Drip in 2012 and with my co-founder Derrick Reimer, who's here in the audience, uh, we built it up over the next three years and we came to a uh, uh, kind of a crossroads where it was like, all right, we need to raise a little bit of of money cuz we're pretty cash strapped, growing so quickly that we were ahead of of cash flow. So, we should raise some money or, you know, we should potentially one day respond to some of these acquisition offers we're getting. And we had several people trying or wanting to acquire us. And so

[2:06] ultimately we settled on what turned out to be a really good deal for for both parties, and we were acquired by Lead Pages, agreed to be acquired July of 2016. And so that meant that we moved to Minneapolis, which from California is obviously a big shift. Winters are long, the winters are cold. And my kids look like this when they go to school in the

[2:27] winter. Um but man, it's a such a cool city. And so we've we've really enjoyed that. And um you know, my tenure with Drip actually just recently ended. So I left That's why the get a job song and the unemployed on my badge. I did leave. I have no job right now. And I left about

[2:44] a week ago. But one of the things as um you know, as we were moving to Minneapolis and I was going to enter this world of of a venture-funded company and and the one a product, you know, I became VP of product, basically running Drip under that umbrella. Um the good news is I had I knew that there would be a lot of learning from it, right? And I always look at my my seasons. I typically have 18-24 month seasons of things as just a big learning

[3:09] experience to to learn a new experience. So before Drip, I was doing HitTail, which was, you know, about 10 times smaller. And before HitTail, I was doing things that were about 10 times smaller than that. And so I always think, what can I learn? And so a good friend of mine, Ruben Gomez with Bittersweet, also here, he asked me, "What are you planning to learn from this experience?" I knew I was going to learn stuff, but I really wanted to

[3:28] think deliberately, you know, about it. And so I had this whole thing in my mind of like, well, like Lead Pages is really good at top of funnel marketing. They're good at raising funding. Like there's stuff they're good at. And I hopefully I'll, you know, kind of learn from that. And none of that stuff is is actually what I came away with. What I came away with were the differences between the bootstrapping world and and the funded world and how we operate differently. And I today I'm going to share those with you and five of them are negative things are things that I saw from the inside where I thought I

[4:00] think funding kind of [ __ ] some things up here and then seven of them are things that if I were to ever you know start another one that I would do differently because of what I learned working at Leadpages. So I went on Crunchbase. They have in fact raised $38 million. So it's it's a better funded than most even most VC funded startups. This is this is a lot. It's it's over three rounds

[4:23] according to Crunchbase. And so you know I did go to my wife who you just heard from and I I told her you know I I think there's a lot I can learn over this next you know next couple years year or two and I didn't know how long it would be at at the start and I said but obviously I'm going to learn it just to share it with others because I'm not going to do I'm really

[4:40] not going to do another one of these. And so you know she looked me in the eye and and Dr. Rowling said you know what Rob? I think that that is [ __ ] that you are going to do another one. And so that remains to be seen but um Yeah so the interesting thing about the funded world cuz I'm going to talk a little bit about VC funding and then I'm going to talk about some some

[5:01] alternatives to that. I'm not I've never been anti-funding. I have always been kind of anti-funding is the only way to start a business right? And that's why I started blogging in 2005 and then we started the conference is because there was no one talking about this stuff. So even you go back to my book which I wrote I think it was 2010 or 2011 that it came out and this is a section from the intro. I hadn't read my book in years and then we got a question on the podcast and I went back and and looked through it and I was like I don't even remember saying this but

[5:29] this is still how I feel right? 8 years later. So I am not anti-venture capital but I'm anti-everyone thinking venture capital is the only way to start a tech company. And I point out the differences. If you're self-funded or bootstrapped with one or two founders you can support your entire business from a tiny niche that provides 20k a month in revenue and that's that's pretty sweet right? That's that's why we're here and that's why we bootstrap this cuz it's just so damn much easier. But with venture capital or angel funding, you're forced to go after much larger markets. And a market that's 10 times the size is 100 times harder to

[5:59] get right. There's so much more competition, complexity, ad rates, and stuff. So, um so I come before you as someone who has always tried to keep an open mind and not use always and never about anything. You know, I never say I never really like that. I never say, you know, I would never raise funding or um I would always do this. But to to look to feel like there's a learning experience inside every endeavor, you know? And it's the same reason that at Starter uh on on Wednesday Thursday, I will be sitting over in that seat taking copious notes because I believe that we all have

[6:30] stuff to learn from each other. So, I'm going to start off with the bad. And I really debated whether start with the good and end with the bad, but I'm going to do the bad. And um a big Clint Eastwood fan, so uh uh going to kick it off with the bad. We're not going to do the ugly today. That will be an outtake that uh I publish on my YouTube channel later. No, I'm just kidding. I'm not going to do that. Um so, the the bad is the stuff that even at So, you don't have to We're going to get this company for 2 years. Like the

[6:58] the company's well well structured. The um the the people are nice. You know, it's like it's it's not I don't think it's atypical of a lot of venture companies, right? Venture funded companies. It's not like it's some cluster in there. But I did see that um these things were very noticeable as we went from We know we're a 10-person company in essence when we got acquired and we were then at a 150-person um venture funded company. So, these are the five things that I noticed right off the bat. The first one is that communication was brutal. Um So, what used to happen when we were going to build a new feature is

[7:33] I would turn to Derek who's sat next to me. And all right, should we build this feature? And then we would stand up at the whiteboard. We'd go into our office, which is stand over here, and then we'd sketch it out, and we take a picture of it, and then we throw it in essentially GitHub. And then Anna, who is working customer success for us, we'd say, "Hey, we're going to build this feature, it'll be live in a week." Okay, well, when it's, you know, almost ready to go, I'm going to try it and learn how to do it. And then we'd email our our support guy, he was

[7:57] remote, and we'd say, "Here's a screenshot, that's how it's going to work." And we had one support guy, so there was no training, he would just, "All right, I figured out how to use it." And then we would um we'd tell Zach and be like, "All right, let's let's try to market this." And that was it. And so it was like there were four or five people, it was really easy. And then we'd blog and tell our customers and, you know,

[8:16] dot dot dot profit. Once we were inside a larger org, and especially an org that's moving fast, cuz if you're let's say you're in a 150-person org, but it's like really slow and you're not doing a lot and it's just plateaued and it's not venture funded, communication can be slow and that's okay, right? Because you're not moving at a pace where you need to communicate quick. But when you're launching multiple features a week and you're 150 people, it was like, "Okay, we need to tell our customers and we're going to build this feature and it's going to go live in a

[8:42] month." So, I can't wait until 2 days before to go tell the marketing department, because it's not just Zach anymore, it's 10 people, and they have a bunch of [ __ ] going on, right? That they they're trying to get stuff out. So, now I'm like, "All right, so I'm going to schedule a meeting with marketing 2 or 3 weeks in advance, even though we don't estimate exactly when features are going to go live, so it's like I don't really know if this is 2 or 3 weeks and it could get, you know, if if GDPR or like spammers start attacking us, it's actually going to be 2 or 3 months, but

[9:07] I already scheduled the meeting." And we have to teach support how to use it, which is now 14 people, cuz we went from 10 to, you know, 150, and customer success, and sales, which we didn't have before, and I had to keep the CEO and the CMO in um uh you know, up to speed on what we were

[9:24] building. And it all has to get done. In bigger orgs, you just have to do this, and everybody knows communication is hard, but I found myself saying, sometimes to myself and sometimes out loud, at times I feel like I spend more time talking about building product than actually building product. So, I built way more slide decks than I wanted to. And again, there was not a lot of red tape at Leadpages, or there isn't a lot I should say, and yet just communicating to that many people is really hard. And so, that was

[9:53] something I I certainly didn't enjoy. The second thing is that um just like I thought, board meetings are a pain in the ass. They really are. And the thing is is I didn't even take the brunt of the board meetings. You know, the Jason Heath is a the CFO of Drip and Leadpages. He's here in the audience. He was working with the CEO for weeks on decks and and um pulling numbers together. And I basically got to saunter in and do about 30 minutes on on the product and say this is the road map and and talk off top of my head. But, I did have to kind of rehearse it and I had to

[10:24] get slides in and so, I'd spend about a week thinking about it and putting it in and then it chain it change at the last minute and I'd find that things were different. So, I found that I spent just for this I think it was a said a quarterly or every 6 weeks, there were dozens, if not 50 plus man

[10:40] hours or person hours between all of us. And again, I probably spent 5 hours. Everybody else spent more time. But, it was like, "Huh, that kind of sucks." Like that to me that's or it is, it's just overhead, right? It's not moving the product forward. Now, it's moving the company forward, but um it wasn't something that I enjoy and it was one reason you know, kind of one thing in my mind that was like, "It's another reason why I wouldn't go personally go VC funded, right? It's a

[11:03] it's supported that." So, the number three thing is that culture really is hard. And this is something um I don't know if this happens at I know what happens at bigger companies, but when you are hiring quickly and you are bringing people into the fold and you're trying to get, you know, 50 people in a year in your door or 100 people in a year, it's really hard. And thinking about culture for me is just

[11:36] almost overhead. And what I've realized is that at any pace, um even bootstrappers in our community, when they hit about 15 employees or 20, if you're not very deliberate about your culture, it can take a turn on you. So, you have to be in control of it. So, um you know, when we got there, again, we were 10 people and we were tight-knit and I we Derek and I had hired really

[12:00] um carefully. And there were about 150 people at at Leadpages, and there were just a handful. It was just a few people that were that came in from a different background or a different um you know, corporate environment. And they weren't bad people, but they were just political enough or just not toxic is is too strong a word, but just a little bit different that it like gummed up the works. And so, even having five people out of 150 who are kind of gumming things up, it it can really

[12:28] wreak havoc. And you know, so the the answer to this, of course, is to, you know, have mission statements and vision vision statements and um and and goals and you know, all the objectives and all the stuff. And you can go generate your own just by clicking the button on a mission statement generator. I just Googled mission statement generator. There were

[12:47] some funny ones that came out of this. Or you can you can be more deliberate if, you know, if you want to do this, cuz I believe when you hit 15 or 20, all of all of my friends who run businesses, this happens. Um you can do something Netflix has a really good one. Uh I think co-authored by Patty McCord, who has a book out. And it's uh one of the one of the better examples I've seen of this. Or you can even do uh you know, you don't have to go this far if you're going to try to solve this, and you can go to um

[13:12] Balsamiq. And Peldi, who's a friend of MicroConf, a friend of mine, he just has the Balsamiq mantras. And you know, they're pretty they're pretty cool. Help our customers uh com- genuinely care about, be good servant leaders. I think Balsamiq's over 30 people now, and he just said, "Man, if I didn't have this." cuz I said, but but you're a bootstrapper, man. He was he wanted to be a micro ISV. He wanted to be a

[13:31] solopreneur and they're over 30 people. And I said, do you want to do you know, the mantras and the you know, the the mission statements? And he said, well, not particularly, but but I have to, right? Because culture is hard. And so, that's that's another thing. All right. Uh last couple. The fourth thing that I realized is that you have to hire for skill both skill

[13:55] and personality. Cuz if you hire just for skill, then you do get folks in who are not a good fit for the company. They can be toxic or they can just have uh you know, personalities that aren't going to fit. And if you hire just for personality and you have to train everybody up, then you

[14:10] can't move fast enough. And um yeah, there were uh well, I'm going to since we are over time, I'm going to I had a little anecdote, but I'm going to skip it here to to go a little a little short. Um but this is something that I think yeah, I hadn't I hadn't realized and I think it it you know, you can impact

[14:28] your culture pretty easily. Um and the fifth one is a bunch of stuff. It's there's a bunch of other things I wasn't even around with that were I think kind of a pain in the butt. Um the actual initial raising of the funding was kind of like an act, you know, being acquired. It was a lot of due diligence. It was a lot of work and I wasn't there for that. So, that'd be that'd be another tough thing to put up with if if your [ __ ] meter is as low as mine is. Um and when I say [ __ ] I just mean I don't like dealing with crap that

[14:53] I don't want to do. Um which is why I start my own companies, you know. Um the monthly reporting again, ask Jason Heath about what that's like. I'm sure it's he never complains about it, but I can just tell that's not fun. Their annual audits. Um I don't know why they have to be audited. It's not IRS. It's like an external auditor. I think it's cuz if you're venture funded, you have to you

[15:11] can tell it really dug into this stuff. I just know it happens and I see auditors for weeks uh hanging out. Legal complexities uh and a lot of other things. So, those Those five things that when I was inside, you know, the this type of company, um, I realized those are real. You know, cuz we all have if you've never been inside one, we have the myth of what it must be like to raise funding or they're going to take control and they take the board and then they kick you out and then they end It's like, yeah, maybe, but these were the ones that I

[15:38] found that were, you know, were actually real about that. And so, I feel a little bad about leav- leading with all the negative cuz it's like, all right, pandering to the audience. I'm going to come to MicroConf and talk about the negatives of raising funding, but I am going to talk about the good things here. We're going to finish up today. Um, I have seven things that are the good the good side of it. Things that I learned,

[15:59] um, yeah, from a from a funded company. And I I think it's probably best summarized as like seven luxuries that funding affords you that I think a lot of us could, um, potentially implement in in our own businesses. A few of them you kind of need at least a little bit of free cash flow to do, but others you can just do from today. So, the first thing that I was shocked by and pleasantly surprised by when we arrived at Leadpages is that they hire specialists. And at one point, um, I had a job description when we were three or four people and I said, you

[16:27] know, we need marketing help and customer success and we don't have a salesperson. So, I'm going to put out a job description that includes all of those. And it was insane and I was naive enough to think that I could find someone and I actually did, of course. Uh, we found Anna, but that was a an

[16:43] exception. Um, hiring specialists is so much easier because people tend to be good at one thing. And when you spread them across three disciplines like I tried to, um, it leads to frustration and it leads to you kind of being okay and trying to juggle too many things. So, examples when we, you know, arrived, um, at Leadpages is they had someone, this was like the best day ever because we were struggling with who should handle all these partnerships, right? It's called business dev- biz dev or biz dev business development. But Anna and I kept passing it back and forth and we were trying to figure out who handles

[17:17] this cuz it's like project management, takes a long time, it's dependent on external resources, and we built 35 between 35 and 40 integrations over the course of about 18 months. And we wanted to do just like Justin talked about this morning with the integration marketing is is is what I call that where you're just integrating and marketing on it. So there's a lot of work to it. And sure enough, we got to to Leadpages and I think there were two people like full-time working on this and I was able to just hand it all off and it was like it was really a good day. So

[17:44] specialization and partnerships is something that if I were to do this again, early on, I know I couldn't afford someone full-time, but I would look for a part-timer or a contractor, somebody who knows how to do this that could just run that show for us cuz it was a big distraction for me as a CEO of a small company and and you know, for Anna who was again running three departments on

[18:06] her own or whatever. Um HR, like I knew that there were supposed to be HR departments, but when we arrived, there were five like five people in the HR department and I was thinking to myself, that seems like a lot for this for this company, but as it turns out, it wasn't because they had two full-time recruiters in house. Cuz when you're hiring 50 to 100 people in a year, you need folks who are specialized in this. And that was a godsend for me because so much of my time was spent recruiting people even though again, we only hired to 10 people over a couple years. But it's incredible how

[18:38] time-consuming that is. So the HR department had recruiters and they had a compliance person and they had the person in charge of you know, of of experience and all that stuff. And again, when I first got there, I was like, "What are all these people doing?" And over time, I realized, "Oh, the CEO doesn't have 10 jobs like I did, you know, the the marketing person isn't doing six different things." Like they actually are way more productive and and frankly, a little more happy, I think. Even got down to um

[19:03] we everybody was a generalist developer. There were three of us, you know, on when we got acquired. And today, um there are like 18 developers working on Drip. And so we're broken down into, you know, we have front-end folks, we have front-end people just doing JavaScript, then we have the UX design, then we have the back-end, and it it is easier to

[19:21] find and easier to retain people. And even like GDPR stuff, back in the day I would have been struggling for months, and and it was one of the reasons that I didn't enjoy large parts of of running, well, not large parts, but parts of running the company really sucked is because I didn't have someone who could help me out with stuff like this. And today,

[19:38] uh it's done by somebody. The second thing that I wished I could have done, and this is one that, you know, sometimes maybe you need a little more money to do it, but when we got acquired, I learned how I I didn't really know what market salaries were. It was always kind of like, well, let's like figure out a a number. I didn't realize there were things called salary surveys, which are very experienced and specialized HR recruiters did know once we got acquired. And so they were like, "Do you realize all of you are way below market?" And I was like, "No, I didn't know that. How I Why did everyone sign

[20:05] up?" And they're like, "Well, cuz they love the company and they wanted, you know, to work with you and stuff." But Derek and I, like the founders, we were all under market. And what that meant is we lost multiple two or three, might have been four, really solid candidates that I think could have moved Drip forward faster than we did. There was a really good UX guy up in Washington state that we were bummed to lose, but um

[20:26] just didn't feel like I could afford it. And in retrospect, if I recall, it was like a $10,000 a year difference. And I think to myself now, how the hell did I let that happen? Uh and then there were a couple developers where we we got in discussions as well. So, the ability to pay market salaries is um I think it's game-changing. And again, this is was a naive bootstrapper of like, "Hey, if I can We're bootstrapped, so if we can just pay less, you know, we'll be fine." But I think over over the years our people would have got

[20:51] would have got poached. Um the third thing that I learned, and that I think that that, you know, Leadpages did well, um is to hire senior talent. So, almost everyone we hired at Drip was very junior, and there was one was a cost issue, whether that was real or imagined by me, it was definitely a very real thing. And so, most folks were junior. And what that meant is, you know, we'd hire we hired a couple developers who were like, I don't know, 3 months in, 4 months into being Rails developers. And so, Derek had to train them up, took a lot of his time. By the

[21:19] time they're productive, 3 4 5 months down the line, now they're junior to mid and they're trying to produce, but it meant we built features slower. Um, and so, once you have a little bit of money, um, hiring the senior talent makes you move so much faster. And the fourth thing, I referenced it a little bit earlier, I would never have considered this, um, is to use a recruiter. And an internal recruiter, not a contingency external recruiter, but I don't know if I could go back to hiring without someone who is handling that. And after working with a couple folks, uh, inside the org who are

[21:59] like really you know, when you think of recruiter, you're like, oh, kind of a pain in the ass, they're LinkedIn-ing me every 2 weeks asking if I want to switch jobs or whatever. But, I worked with like these nice competent people. And and our goal was to like just let's find the right people for the right fit. And let's hire on skill and personality. And they took away when we first got acquired, I was spending I didn't realize how much time in a week I was spending, um, just trying to hire. And Derek and I had really honed this process where we let

[22:25] high quality talent through. And we, you know, it took a lot of time, but it, um, it was it was a good process. And so, I couldn't imagine anyone else like participating in that. And again, it was the naive kind of I have to do everything founder mentality. And the moment that I let that go, it was about 6 or 8 months after the acquisition, half of my week freed up, maybe 10 hours, 10 to 15 hours of my week. And we did not have false positives. I think of all that we probably interviewed, um, probably 60 7 maybe 70 engineers, Derek and I, and that was after a filter over

[22:57] the course of those 2 years. And, um, we only had one person who came through who I felt like was a waste of time out of like 60 and I don't think we lost anybody that wouldn't have been a fit, you know? So, this is one that I just I went on um Upwork because I was thinking, you know, I wouldn't have had budget to hire a recruiter, right? When you're eight people and you're not hiring enough. But I I would just checked out like literally just typed in talent recruiter or something like that and I would this is what I would do um you know, if I

[23:24] were to to to start another one even though of course I'm not going to do that. So, number five um Yeah, I was guilty. Uh so, I didn't grow I talked about this before like I grew up without a lot of money. I used to put batteries in the freezer to try to get more life out of them and rewind my cassette tapes with the Anybody do that with the pen because I didn't have the batteries? Just me? All right. So, thinking everyone's the odds are like cassette tape? What are you What are you

[23:49] talking about, old guy? Um So, uh yeah, I've I'm really cost-conscious with stuff and I think having had a few years where you know, I was on the precipice of um of of maybe not being able to make payroll and that kind of stuff made me really really jittery and I remember combing through our This is not our AWS bill, but combing through the AWS bill every month and doing reserved instances to do the stuff and I was juggling and then like the boomerang I would boomerang an email back so that I would remember to do it and I know that I was saving a solid

[24:24] couple thousand dollars a year, maybe five grand. It like it just was not worth that time, frankly. And um I thought as soon as I I started thinking about this point of how much time I spent trying to save little dollar amounts, I realized that that that amount took away focus from the rest of you know, the rest of what we were trying to do and as a company with eight or 10

[24:43] people, it needed that focus from me. And so, reminded me of a quote from Jason Cohen of WP Engine and a Smart Bear and he said uh he actually got a like a listener question or or a a question from a a reader and they said, "Sh- you know, we're at 10K MRR and should we look at like optimizing for profit or should we grow grow our top line?" And he said, "Spending your time, which is your most valuable asset, on saving an extra thousand dollars a month cannot today significantly improve your business. You should be spending that time on getting more revenue, both short-term bursts and building

[25:16] systematic ways of growing revenue month over month." And so obviously you can swing too far in one way or another, right? If you're a bootstrapper and cash is tight, you have to think about this stuff. But there's an order of magnitude at which it doesn't matter. Um and then there's a point at which it

[25:28] does. So in retrospect I look back and I wonder, wasted time question mark. You know, are these things wasted time? I listened to a podcast the other day and someone was was kind of debating like, should I go with Kayako because they're cheaper? Should I go with Intercom even though they're probably, you know, perhaps a better tool. I don't know what the difference is but in price between these, but it's I don't know if it's even worth the time using Zoho, which is really rough and I've tried it, versus uh you know, like Gmail apps for um Google apps for the for the stuff, which is expensive. It's like five I think

[25:56] it's five bucks a month per user. Expensive. Definitely. But this you see my whole thing, I can't control it. Uh Wistia versus Sprout Video. I wanted to sign up for Wistia and I remember it was 100 bucks a month and we were probably doing 30 40K MRR and I was like, well, Sprout Video is only 25 bucks a month. And so we signed up for for Sprout Video and then we had to migrate all that stuff like two years later, right? And it was

[26:16] like, come on, man. GoDaddy hosting versus WP Engine. There's there's a a laundry list. So it was a reminder to me of like, yeah, there's certain things that that I think you shouldn't pay too much attention to. Um second to last one is totally come out of nowhere, but it's to use standard job titles. So I used to just make up job titles. And and when we realized, man, we need an architect or like somebody to like scale our infrastructure cuz we have to we send a hundred something million emails in a month like, we need a senior scaling architect and it was just off the top of

[26:47] our heads. Hey, this makes sense. So we're working with the recruiter, internal recruiter, and she says, "So I ran a salary survey for that and there's just not enough data." And I was like, "Yeah, it's cuz we made up the name." And she's like, "So, how am I supposed to do this?" And so, we're like, "Well, maybe it's a senior architect or something." And she's like, "Well, why don't we just call it that then?" Because then the people who have their saved searches for senior architect, it will pop up for them. So, not only can you not get good data when you make these things up, I'm guilty of

[27:14] this, obviously, um but you're not going to, you know, people aren't going to know what it actually means. Like, what does this mean? Like, there's no senior scaling architects at at GitHub or Google or Facebook. Um and and it makes it harder for the recruiter to explain it when people apply for it. They're like, "What exactly is this job? This isn't doesn't

[27:32] fit in my hierarchy." So, titles matter. And again, as a bootstrapper, I hate that titles matter because I don't want to It's to me this falls in the line of like, "Just this is [ __ ] I don't want to worry about cuz I'm trying to build a product." But it really does matter. And there was another uh person who we were debating who was like, "Should we um should this person get the title of senior architect?" There was a whole long story around it. I won't go into, but uh a chief architect, yeah. And we realized we got had good advice from an advisor who said, cuz to me I was like,

[28:00] "Yep, like he's super senior, more senior than everybody else." And the advisor said, "You know what? If you you give him chief architect, there is no other chief architect. What if you want to hire someone of his caliber? You know, what if you 10x in the next couple years, Drift 10x's, which is the goal,

[28:16] right? You can't hire another chief architect. So, what do you do then?" And so, it's thinking about how and we found a uh um kind of a compromise with a different a different title that worked out. So, it really made me realize like, "Man, you can't early on hire your first developer and they're working and be like, well, this is my CTO." Because if you get big, like you may not want that developer to be your CTO. So, like be mindful of um

[28:43] of titles. And then, Yeah, that that was actually my example there. It was I there was actually a startup that I knew who named their first customer success person, who's not a manager, they named him head of customer success, and then when they went and hired other customer success people, they actually didn't want him managing them because he he didn't know it. And so they were now stuck of like, do we demote this guy and potentially have him leave? And so it's the mistake of like elevating titles too early to kind of make yourself

[29:15] feel better. Seventh and last one, um, is I feel like funding has the the possibility of maybe, you know, making you less stressed. I do know that once we got into that world and I had the the funding to back us up and I had help, uh, in on terms of recruiters and people helping us market and people running the finances and people handling legal and people, you know, specializing in all these things, I was a hell of a lot less stressed. And so I somewhere in my in my dream world, I feel like, you know, having a small No, you don't need to raise venture, but having a small amount

[29:48] of funding I think could be interesting. Um, and so I asked a couple people just to It's three three founders that I know that I've actually invested in. And so none of these founders have raised venture funding. It's all just been an angel round. In fact, in fact, most of them are thinking about just sticking with their angel and getting to profitability with that. And so I said, you know, Jordan Gall, we'll hear from him tomorrow, he's actually

[30:09] closing us out. Um, he runs CartHook. And I said, do you think the fact that you raised, you know, this this angel round made you more is has you more or less stressed at this point? And he says, I don't think about it in terms of more or less stress. I think about it as having made this version of the journey possible cuz they're they're growing very quickly, way faster than they could without funding. Overall, I'm personally very happy with the decision. When someone asked me if they should take investment, my answer is always to make sure they understand the tradeoffs and to make sure that aligns with what they

[30:38] actually want. And he he He a very well-written long email that I can't include here, but he had a lot of kind of pros and cons and he's like, but if you accept that the cons are there, like he's happy with it. Matt Goldman um with Turn Buster and radio rocketship.fm. He says, I feel more stressed by raising the funding, but in a good way. It's nice to have outside pressure. We've been careful to raise from folks who are on the same page with our plans, our growth plans. So, the pressure we feel is towards reaching a realistic goal. So, there's something about accountability there and and all

[31:09] of these guys guys send me a monthly email and we talk about stuff and I'm not busting their chops like a board. They don't have board. They none of them have lost lost control of their company. None of them have people breathing down their neck, but they are getting you know, unlimited free advice from from everyone who's invested in them in

[31:23] including me. And then Justin Miguel who couldn't make it this year, but he's been at many MicroConfs. He's with Lead Fuze. He He's the reason there's a big question mark on this one. He says, it's been more stressful and that's with awesome hands-off investors like you. It's a mental thing for me as I feel an

[31:38] obligation to you guys. When things inevitably don't go as planned, it's crazy stressful thinking about how to share the news and that's knowing no one has any problem or is upset. So, if you feel you know, it's interesting to see the three different takes on not even venture funding, right? Very different what these guys

[31:53] have done. Um So, I think there's a possibility. I feel like perhaps I would I would feel less stressed. So, uh what can you do? You know, I'm kind of in my wrap up wrap up mode here. Um I'm not saying you should raise funding in any way, shape or form. I'm saying these are things I think we can learn

[32:10] from it. So, you could what you could do is you can continue bootstrapping and that's what MicroConf's about. That's what I did for, you know, 16 years and just take as many of the of the seven that I said um that you can implement and and hopefully learn from that and implement them in your business. You could consider VC funding, which I just don't think is the fit for probably almost anyone in here um or there's this third option which

[32:32] is called fund strapping. And it's that in between of raising a round and never raising again. And it's interesting because it's this I'm starting to see this um kind of theme. This is how these these kind of themes emerge in the startup space. You know, in in 2009 uh Business of Software I I did a talk

[32:51] about split testing. And I got a bunch of reviews and emails that said, "We don't do split testing. That's for shifty internet marketers and we don't do that in the startup space." It literally was not being done. And then you saw the trend towards it. Now we do it and we like it. And if you're not being shifty, it's cool. 2010 I did a talk about email marketing. And I said

[33:09] email marketing is this great thing. It's not dead. Everyone was saying email was dead. And I got same comments and uh the tweets and stuff that said, "Boy, email is for spammers and blah blah blah." And then you know, lo and behold, it's like I think what we do cuz I was seeing it in our community and what I was doing and what we were doing is like a leading indicator. And I think this is another There's a few other trends, but um I feel like funstrapping is potentially a fit for some people. Maybe it's one in 20 in this room. You know, and maybe it's one in 10, but I do

[33:35] believe that this is going to be um become more of a thing. This is how like non-software businesses have to do it. If you start a restaurant or a car wash, you can't just start it up without a couple hundred grand, right? And so you you know, you need to have a little bit of money and you're never going to raise venture funding. So, the term was coined by Colin from customer.io. He says funstrappers, "We raised an initial money, but going forward we'll grow on the revenue of the

[34:01] business." And there's an entire um fund in India, uh VC. And I like the way he describes it, Bryce. He says, "There's no implied series A." So, it's it's an interesting thing. Um the typical VC-funded path obviously is your seed round, and then your series A, B, C, et cetera. And once you've reached that reached that series A, man, that's where all the bad that I just talked about happens, right? That's where you're pushed for growth. That's where you have a board. That's where you could potentially um you really need that B and the C in every 18 months you're you're raising funding. But the funstrapping path, if it's something

[34:32] that is at all interesting, and I'm guessing it's it's not for the majority of you and maybe not even a fit, but if it is, you want to bootstrap that sucker just like all of us, right? You get up to 20 or 30k so that you have a nice valuation, and you raise that single

[34:43] round. And then there's a ton of hard work, and then profit for everybody. So, that's it for me today. Look forward to your questions.

[34:58] So, I have a copy of the Entrepreneur's Guide to Keeping Your [ __ ] Together that was co-authored by Rob and Sherry Walling together. So, for each question, you get a copy of the book, and I'm open for questions. Uh you talked about a little bit about about your hiring process that you had pre- merger acquisition Yeah, can you speak a little bit on how you did that? Um yeah, it's probably longer than I could do verbally here. Um basically, we wrote a very opinionated and and real, you know how Patrick

[35:34] Collison said, "Speak like a human." Like when you if you go back and read our job description, it's it's like a well it's like a non-obnoxious sales letter. It starts off and it says, "You're a You're a fantastic developer, and the world is your oyster. You can work for anyone. So, why would you You

[35:50] know, it's like you you you you you." That's like the first four paragraphs, and then it's like, "Here's why you should come work for us." Because if you work for an agency, you're doing other people You know what I'm saying? So, it starts with that, and that instantly either filters out or gets people super stoked. Um and then once we got past that, then we would obviously filter resumes, and then I would do a phone interview, and we'd do some other stuff. But we were It It started with having a kind of an interesting filter at the front, and then being very picky on the back end,

[36:15] and turning down a lot of candidates. Thanks for the question. Yeah. With fun-strapping with venture-backed funding, every VC wants an exit. That's a big part of what they're doing is they want to get their money out. With your approach on the investor side or what you've seen on the fund strapping side, is there a model where the exit is less of an issue and you're just, you know, they're just

[36:41] taking the monthly or yearly dividend? Yeah. Yeah, it's both. Um I think that the interesting thing about the fund strap businesses um that I'm in is a couple of them I think may have real potential to be acquired, which would be the exit. And the a couple of the other ones I mentioned were LLCs when I was talking to Patrick and they do plan, the reason they set up as LLC is they want to be able to withdraw distributions and they want to reach profitability like a real business, you know, like a my what I consider a MicroConf business. They want to throw out 20, 30, 40k a month just in

[37:17] pure profit after salaries are paid. And um if you own a few percent of that, you know, you you make back your money and and get it back. So, yeah, again, this is a model that, you know, is used in in restaurants and and car washes and that kind of stuff and so um

[37:32] those are the two paths, I think. Obviously, they're not going to IPO, you know, if you're if you don't raise a round. Uh hey there. Uh the one thing I was interested in is I think a lot of people here they like having control over their own destiny. And obviously, you went into a company and you were now

[37:48] reporting to a CEO and things like that. Um and I I'll see it wasn't on your list of negatives. So, I guess where did you land on that in terms of, you know, going from where you were calling the shots on everything to where you were yeah, answering to a board and all of

[38:02] that stuff? Sure. No, that was a that's a good question, actually. So, the good news is I didn't answer directly to the board because they don't they're not really going to hold a VP, you know, account I mean, they would, but really it's the CEO who would hold me accountable. And I had the luxury/ Derek and I I enough inbound interest to acquire us that we got to handpick kind

[38:24] of who acquired us in a way. Um and so Clay Collins, I've known him for a few years. He was the CEO for the really kind of the first year and then the COO took over for the next year and I got along really well with both of them. And so it could have been a [ __ ] show and I have talked to founders where it was a [ __ ] catastrophe and one guy told me, I was on the phone with him and uh if it the if I said the company name you would know it and they got acquired and he said just he said, "If you're going to

[38:52] you're going to you know work for him for whatever a year or or 2 years or whatever." He said, "Consider it jail time." Just like could you go to jail for that amount of money? And I was like, uh I'm not sure I can do that. And luckily it was not I mean it wasn't like that. I kind of I'm missing the office already. So yeah, I didn't have I didn't struggle with it. Um but I also wasn't or they weren't saying like build this and you know, you're

[39:15] behind on see you know, no one did that. So that that would have been really hard if it had turned into that. Hi. So when looking at your list of bad things about being VC-backed, it sounds like some of them are really just challenges that occur at scale. So things like communication is hard, culture is hard. Those are things that are going to hit you inevitably at a certain size business, but you're kind

[39:37] of calling them out as problems of VC. Thoughts on that? Yeah, I think that they're exacerbated substantially with VC-backed because you have to get there so fast. So if I were able to grow, you know, let's talk Basecamp, right? 60, 70 employees, like it's a it's a company, right? Substantial. Um but they've grown over 10, 12 years. So culture, I would say is not actually that hard to build over 10 years if you hire four people a year, you know, or or six people a year or something. I think it's much easier. But if you need to go from 50 to 150 in 12 months, culture and

[40:11] communication, they become very hard because you're moving so much faster. So that's that's kind of what I was saying is yes, you're right, they do exist at any company of any size, but I think it's it's exacerbated by the fact that there's this push for fast growth and fast hiring. Uh you mentioned that culture can change very quickly. Uh do you have any other advice on how to prevent culture for

[40:31] changing and ways to protect it? Uh things like that? Yeah, the I mean the two ways that I know about and have experienced, number one is um have writing something down, you know, like the Peldi's mantras or you can look at Patty McCord's stuff that I linked or obviously there's there's some good docs

[40:47] out there on it. And having something written down and handing it to everybody and saying like no, this is what we do. You know, this is what we do here. If you don't do that, you can totally have a 15-person company or you can have a 30-person company, it's just the culture will be kind of it'll define itself and you will lose control of it. So, that's the number one. And the number two thing is all about hiring and it's about hiring people who are uh either on board with that or who you think you can get on board with that

[41:10] vision. Um because different people do, you know, have different goals and it's it's not that they're That's what I was trying to say. It's not that they were bad people uh you know, who who flame out. It's that they're just they're people at the wrong company cuz there's another company that would be a fit for them.

[41:22] That's how I like to think about it. Did you uh as far as on the acquisition side, did you did you learn anything on on that front where they were trying different tactics that you hadn't tried or that they could afford that you just weren't able to afford? Oh, customer acquisition? Oh, yeah. Yeah, there was a lot. Um because I mean LeadPages is a is a marketing machine, right? It was started by a a really

[41:44] really solid internet marketer. So, yeah, they have I mean they they almost I don't know if they invented, but they really perfected the affiliate uh webinar model. Um they uh gosh, just cross-sells were amazing cuz LeadPages itself had 45,000 customers and they were able to send us a lot of trials per month. Um their paid acquisition, again, they had multiple people and that's all they did was paid acquisition instead of me checking the Facebook ads once a week at 7:00 at night and trying to optimize them. Um so it's stand and there was a lot of of uh blogging, there was content marketing, there was SEO. It's all the the standard

[42:20] blocking and tackling that we would know about. But it was um doing two things. One, the marketing department was 35 people, you know, out of that 150. So it was a lot of people who were very specialized. And they were tracking they had they had a one or two uh guys who were just all they did was like try to track results of all the stuff, you know? It wasn't an afterthought of like we're going to do this and see if revenue goes up. It's like they could tell from the it's initial Facebook ad, they could see the retargeting, they could see boom boom boom boom sign up, then they could

[42:51] see how many months they stuck around. And that was a lot of work, right? But they had two full-time people just doing that. So I learned that You know what I learned is that I've always thought, "Man, I'm a deve You know, I was developer previously, so I'm a developer who's like I'm pretty good at marketing." to like I'm a developer who's like kind of good at You know what I'm saying? Like I'm not a professional marketer, period. So that's that It was a humbling

[43:12] humbling experience for me. Any others? Uh hi Rob. First of all, uh congratulations on your retirement. I don't know of anyone who deserves it more. Thank you. Secondly, you made a transition from being a maker to a manager. Yeah. Uh did you try to hang on to be a a maker for too long at any stage? And on what stage do you need to

[43:35] sort of go full-time into a manager? I think that I maybe should have done it even before the acquisition. And I think the fact that I was still so involved in the product caused me a lot of stress and pushed me towards a burnout that I only realized in retrospect. Um and if I hadn't made that choice, which I didn't, right? Cuz I just love building the product and just hang you know, hanging out with Derek and the team and and doing stuff. I eventually transitioned away from it when I mean when I left there were 18 people you know directly or indirectly reporting to me it's the entire product

[44:13] org. And I did have to leave um product about probably a year in. And it wasn't as bad as I thought it was going to be in all honesty. Um it was nice to take a break from it because it was you know, it was stressful trying to do all the things and you have to at some point make a choice to let let things

[44:31] go. It's stressful out. So excited to be asking Rob a question. Hey as a micropreneur what what would be the benefit to fund strapping over getting a loan at the bank? Yeah, well I mean I think you know again if you really are if you want to be a solopreneur like start the company and get it to 10k a month and and live you know or 20k and live a great life. Like I wouldn't consider fund strapping if you're not going to build something that is going to grow. It does have to grow fast and it has to grow you know big. And so there are the reason I even bring this

[45:06] up is that at MicroConf there are people who just want to an awesome lifestyle business and have a business that's doing 2 3 400k a year and and that's great. I've been there and it's awesome. I did that for several years and then eventually I wanted something more. And so there are there are also some folks here who are who are doing those larger

[45:24] things. Um and that's where I think huh fund strapping would have made my life uh uh quite a bit easier. Um I didn't answer your question. Sorry what what what was the question again? I was just talking. Compared to a loan at the bank. Um well so the fund strapping is is an investment in the business and if the business tanks you don't owe the money back. Right? They're buying equity or we are buying equity right? When someone

[45:50] writes you a check. So uh loan at the bank comes with you know it hangs on your personal credit and you know, you have to pay it back or declare bankruptcy or something. Um now there are other options. There's a sponsor of MicroConf called Aslo? Yeah, no, Capital Starts with C or not um

[46:09] Mike. Mike's in charge of sponsorships. Yes, I am. Yeah. Bigfoot Capital, thank you. Which is which I've talked about them. specializes in in SaaS apps and and funds based on, you know, MRR and stuff. So, um that would still be a loan, but it is an option where you don't have to give up any uh you know, any equity. So, and they specialize like also trying to get a loan from a bank when you're a SaaS company, they don't It's It's like, "Well, what's your profit?" And it's like, "Well, we're not profitable cuz

[46:33] we're growing." And so, they won't give you a loan, whereas Bigfoot's like, "Well, you're at You're not profitable, but you're at 100K MRR going 10% month-over-month. We know that you you could be profitable if you turn the spigot, you know?" So, there's uh a couple companies in the space, but we thank Bigfoot for being here. Uh if I fund strap, uh how much of my

[46:51] business am I going to have to give up? Yeah, so it depends on the evaluation, and that's where I was saying um you know, if you were to even consider it, which again, you don't certainly don't have to. I'm not saying you should, but um I would bootstrap it to that 20-30K mark because then you can start talking about, "Well, I'm going to I'm going to ask for a three or four million-dollar valuation, you know?" Or if I'm going to bootstrap this thing to 40K MRR, like in that range, you can get four four to six million. So, then I'm going to sell

[47:19] 10% of my company for 500 grand. Right? I mean, that's that's a not an uncommon That's the range that I'm seeing. There's some where it's low as two depending on or you know, someone's really low. And the top end Actually, the top end I've seen I think is maybe around five um million. And so, you know, if you think about you get that chunk of money and you could put it in the bank and help be less stressed, you

[47:38] know? That's That's right. for one more question? I don't know. Just on the same lines, like what is the liquidity of that or typically you know, if you're doing the fund strap, like it's when you pay that back? Yeah. Yep, Patrick Patrick asked that question uh or similar question and it would either be getting acquired and if you're growing quickly, that's always, you know, an option or to the point once you growing companies are not typically that profitable, but once you get to the point where you're not growing anymore, so let's say you get to several million in ARR, um, SaaS businesses are amazing. I mean,

[48:18] they have top line, you know, gross profit margins of 70, 80% if you're not hiring and they have they can have net profit margins of 50, 60% you know, I mean, really high I um amounts of money amount amounts of EBITDA coming in and that allows you to just pay dividends in essence. So, those are kind of the two paths that would be an exit or paying dividends like a normal

[48:41] normal company that you buy stock in. Thank you very much, Rob. Thanks.

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