Rob Walling is an entrepreneur, angel investor, author, international speaker, and host of the Startups for the Rest of Us podcast. Rob is the Co-founder of TinySeed, the first startup accelerator designed for SaaS bootstrappers. He has invested in 36 startups and has built multiple businesses to six- and seven-figures in revenue.
On top of this, Rob also runs MicroConf, the most well-known conference and online community for non-venture track SaaS founders.
Here’s a glimpse of what you’ll learn:
Rob Walling discusses his latest venture, TinySeed
The three Ps that Rob looks for in a founding team: people, product/market fit, and price sensitivity
Rob explains the advantages of the “dual funnel” model
How—and why—Rob and his team at TinySeed help companies grow and scale
Rob breaks down the five-part TinySeed Playbook
The dos and don’ts of gradually raising your prices
How to get in touch with Rob and learn more about bootstrapping SaaS
In this episode…
Do you want to know how to grow a SaaS business into a valuable investment opportunity for potential buyers? Do you need some tips and tricks for constructing a successful founding team, attracting investors, or promoting positive growth trends? If so, you’re in the right place.
Rob Walling is an entrepreneur, angel investor, author, international speaker, and podcaster with a plethora of valuable experience. He knows first-hand the ups and downs of starting, growing, and selling SaaS businesses. Today, Rob is on the Quiet Light Podcast to share his effective startup growth tactics so you can achieve the successful exit of your dreams.
On this episode of the Quiet Light Podcast, host Joe Valley sits down with Rob Walling of TinySeed to talk about the dos and don’ts of growing SaaS businesses into successful acquisitions. Listen in to learn the secrets behind building a valuable founding team, leveraging profitable growth opportunities, and raising prices without losing customers. If you are an entrepreneur, investor, or startup founder, this episode is for you!
This episode is brought to you by Quiet Light Brokerage, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light Brokerage wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
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What are you waiting for? Quiet Light Brokerage is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Episode Transcript
Intro 0:07
Hi, folks, it's the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Joe Valley 0:29
Alright, everybody, I'm really excited this week to have Rob Walling on the podcast. Rob, you have an amazing resume when it comes down to it, I could talk about it for hours. Because you've just done so much. You've built seven different businesses from scratch up to six or seven figures, you are behind the startup of Drip, which is sold. That was your most recent one. You're one of the Founders of MicroConf, and if anyone in the SaaS world has been around for more than, I don't know, seven days, you know, you know, MicroConf because it's the preeminent conference for SaaS startups out there. You're the host of startups for the rest of us. You have software by Rob, you are everywhere out there. And now you have TinySeed, which is a SaaS accelerator for bootstrappers. So I'm really excited to have you on the podcast. And just a quick reminder for those listening, you know, this podcast is brought to you from Quiet Light Brokerage, we work with SaaS companies to help prepare you for sale and go through that process of an exit of the SaaS companies. We're entrepreneur lead, we're all entrepreneurs, we've found we've started, we've sold our own online businesses, for six, seven and eight figures. Each of us here quite light. And so we love talking to people like Rob, because you have that same background as us you've founded you've bootstrapped, you've invested now and you've sold, let's get into some topics about what you're doing these days, with things. So welcome to the podcast.
Rob Walling 1:49
I'm fired up, man, thanks for having me on. I've also bought by the way, I don't know, that's a lesser known thing. But I bought multiple SaaS apps. It's been a while since I think my last one was 2011, but still has all the sides, you know,
Joe Valley 2:00
all the sides. And you know, you go to the different sides of the transaction, and you learn something new about perspective when you're doing it. Because when you're selling by sometimes the question is like, why is he asking that? Or are these guys ever going to get moving on this deal? I mean, what do they need to know? And then you get to the buy side? And you think, are they ever going to give us the details we actually need like why why are they being so hesitant to give us what we need? perspective right perspective on each side of the transaction?
Rob Walling 2:27
Absolutely. And then investing is even different, right? Because the due diligence is different. And you know, there's another layer there. So
Joe Valley 2:34
well, let's talk about that. This is your latest venture TinySeed, tell me about it in a word or two.
Rob Walling 2:39
Yeah, it's the first startup accelerator designed for bootstrappers, bootstrap, SaaS for that matter. And it's spring at a micro conference, in essence, another offering into your long, it's a remote accelerator, and we invest early stage SaaS, kind of at the Y Combinator model, where it's a certain amount of money for, you know, a kind of a fixed percentage we've done, we're in the middle of our second batch right now, we've invested in 23, companies, 23, companies 23, clerk, we started investing, if we wrote our first checks in March of last year, so it's only been maybe 18 months. Now we did 10 in the first batch and 13. In the second. And frankly, we would have done, there were another seven, at least we wanted to but our first fund was only four and a half million dollars. And we essentially ran out of money. So we're raising fund to now in order to fund you know, reinvest in the next two to 300, I'm a we've proven out the model and the deal flow and the results and all that stuff is the early stages are early signs are really good. Actually, if someone's listening to this, and you know, you are interested in investing in early stage SaaS, tinyseed.com/invest, that'll be the only plug that I that I have the whole time. But it's really a way to diversify across a bunch of a bunch of SaaS companies. And, you know, as you know, the multiples the growth, and the multiples on SaaS are pretty incredible as or profitability, you know, people who join TinySeed don't have to sell I mean, that's a big differentiator between us and venture capital is they can just run it and throw off, you know, throw off dividends.
Joe Valley 4:06
You know, I'm glad you mentioned because I was actually going to mention that you have on TinySeed right now, an investment page. And I know, when we talked to buyers all the time that would love to have something of a passive investment like that, where they can ride on somebody else's work and the work that you guys do, obviously, you're well known in the space, you have a good track record. So that's a great lead for for people that are looking to make that additional investment. I want to talk in this episode and in our conversation here, I want to talk a lot about your advice with your experience for those that are looking to grow SaaS companies because you're making these investments, right and people aren't taking on these investments just to take your money, right? They want to grow. Right? Right. And in addition, building up these companies to to sell some of them as well. So let's start off. Let's start off with that and what I'm kind of curious to start off with is What do you look for in a SaaS company? When you see it and you think this company has the right base ingredients for growth, as opposed to something else, imagine you get a lot of pitches. So it's those first 20, some odd investments that you made, I'm sure you had more than 20 some odd pitches to you. And so you said no more often than you said, Yes, most likely. So what's the differentiating factor? Where do you look for growth in a SaaS company for your kind of nascent untapped growth?
Rob Walling 5:30
Sure. Yeah, so we had almost 1600 applicants to pick those 23. So it was, it was a lot of work, you know, it's a good problem to have. But of course, it's still a problem to sift through that many and have the conversations, we do have this pretty extensive list. In a Google Doc of kind of the checklist, not even a checklist, it's like 42, different factors of the founding team and how they are and you know, the traction they have, and different questions about it. But really, like on a podcast like this, I kind of boil it down to three things. And they all start with P, the letter P. So it's pretty easy. It's the people, it's product market fit, whether they have it or not, and it's a price sensitivity of their market. And so the people is basically the team, right? Are the founders because, you know, obviously, we don't just acquire the technology, we actually invest in the team. And so we have to believe that the team is, is motivated and interested in in solving this problem, that they're getting shipped down that they're shipping, you know, and that they're just a competent team. And that comes in all shapes and sizes, which is kind of cool. Like, we aren't the traditional, I need a Stanford Graduate, you know, I think the Silicon Valley model is pretty kind of a little bit cookie cutter, and we are not. And so the people involved is a big thing. The way they have product market fit, of course, is really just translate that to have they built something people want and are willing to pay for. And so we try to evaluate that, you know, like revenue, traction is one, one piece of that, but some people have pretty low revenue, but they have ravenous fans, you know, where they've ravenous customers, and their, their churn is really low. And they're proud to pay conversion may not have a ton of traffic, but they're really converting well. And we're, we're like if they double that traffic, or five times that traffic, which is pretty easily done, you know, based on SEO, or ads or whatever, we think that they're going to five times their growth, that type of thing. So product market fit is because you can spend I mean, as you know, 12 1824 months just flailing around trying to find that and once you found it, it's much more of a playbook. From there, there's much more of a blueprint to growth. So the second P and the third one is price sensitivity. And you know, the examples are, we looked at a I'll say it was in the podcasting space. And that average revenue per user was like $12. And when we looked at how, you know, ask the founder, how you're going to raise that he's like, I don't really know. And I don't have any, any way to raise that. And so even with 1000 customers, you're making 12 k MRR like that's, that's tough, you know, if you really are dealing with hobbyist, but then we invested in squad cast, which is also in the podcast space. And they have a bunch of $12 a month customers, but then they also have a bunch of 50 to $100 a month customers and they have customers paying them thousands of dollars a month because it's recording it's remote recording software. And so you get a you know, whoever you think of NPR gimlet media, or you know, anyone who has a big pot I Heart Radio, like they're they're willing to pay a lot of money. So that price sensitivity question is, can you find customers who are willing to pay you hundreds or thousands of dollars a month? Because those are the companies that do tend to grow fastest.
Joe Valley 8:31
I'm fascinated that people is such a big piece of the pie for you. And this is actually something that I see as a common thread through some of the more renowned investors out there. Right? We know that Warren Buffett takes a quick look at people I know that the the people over at Motley Fool, they talk a lot about management teams and those people making sure that they are right. But I would imagine and correct me if I'm wrong. This is more of one of those differences that happens when you're simply acquiring versus investing in companies that that that people element would be important. Would you say that's fair? Do you think that that's not necessarily the case?
Rob Walling 9:08
That's interesting, like so like when I sold Drip as an example, or when we sold trip and co founder. We were a team of 10. And I think that our acquirer lead pages. They, they wanted the people but I think the people, the results of our growth, and just the quality of the product we had built was more important, but they didn't just want the technology either, right? They wanted the team that had built it because they wanted another several years of that level of innovation. So I think there's a balance. And then of course, if you're just going to acquire technology having to buy a SaaS app with no team, then obviously the team is much less relevant in that case. But when we're investing for the long term, you know, if we want to invest in someone and kind of be we're essentially business partners with them, we're super minority business partner, but we might be in business with these people for a decade or more. The team Important, you know, we're gonna work pretty closely with them. And I think there's a lot. There's a lot to that.
Joe Valley 10:04
Yeah, I've got a lot of questions. But I want to get through the three P's here first, that you put together the product market fit. Do you run into situations where you feel like the product market fit is just about there? Right? You can see it, but maybe it hasn't proven out yet in the numbers? And how do you evaluate that?
Rob Walling 10:23
It's tricky. I mean, I think the the easy way to evaluate it is to look at at rules of thumb metrics. You know, it's like, if you asked for a credit card up front, how many people try to paid, you know, how many convert to or from, you know, visitor to trial trial to paid? How many stick around? What's your turn, like? I mean, you can look at those and get an idea of, if you're turning 10% 12% a month, you have a problem somewhere, right? You probably a product market fit problem. But even if all those are locked in and you are only at two k of MRR 2500 typically, like, my rule of thumb for private market is between about five K and 10 k a month of revenue. That's when most businesses find it. Now, there are outliers. Some people find it really early, and then some people that takes it, they just grind away for years, and they can get to 15 K, you know, but I haven't I don't know that I've ever seen a business app 30 k a month that didn't product market fit. It's just it's too far outside that range. I think that's it. I mean, it really is like if you look at traffic numbers, and you just run down the line of and I think oh, I think the other thing is we have talked to like existing customers of some folks, especially like really rabid fans and said like, what were you using before this? You know, how does this solve your problem? Why is this so great? What do you love about it? Isn't there another? what's the alternative? Those are the types of things if they've truly built something that's that unique for now, until they're essentially copied, because eventually someone's gonna compete with them. You know, that's a, that's kind of a good sign.
Joe Valley 11:48
Yeah, so those are the three P's. And we talked a little bit about the price sensitivity side of it as well, which is important. I've actually never heard anyone quote that as one of the key things that they're looking at. And I think that's makes makes a lot of sense. As you said, if it's $12 per user, then it's going to take a lot.
Rob Walling 12:07
And they tend to turn more like your lower price. it's counterintuitive, right? But lower price point tends to turn more. And you just have to find so many customers, you know, you have a map to have a massive funnel. And truth be told, like I've only ever come to this realization in about the last six months is this thing called a dual funnel. That's the phrase I'm using for it is having low like a high volume, lower price funnel, if you can build a great business, right, you can build a seven figure business at, let's say, 100 computers 20 3040 a month, like that's relatively low price, but like if you get, you know, 100 new customers a month, like that's pretty decently growing business. And then there are the really slow slog enterprise sales where it's like every every contract is six months, but it's but it's you know, up 3040 $50,000 annual contract value. And those are all can also be great businesses, but the ones that I'm seeing that are just rocketing. And squad cast is like a good example, is they have both dual funnel because they have, they have the fly fisherman who's paying him 12 bucks a month. And they have the, you know, maybe the markdowns for the Rob Walling who's like a business podcaster who's paying, you know, maybe 50 bucks a month, and that's totally a reasonable amount for my podcast. But then again, you get that, that, you know, big I Heart Radio, you know, where the gimlet or whatever who to them 3000 4000 a month in recording cost is not that big of a deal. And so having both sides of that funnel, both the enterprise and the wide funnel is pretty magical.
Joe Valley 13:28
It's interesting to see so many companies kind of pick that path, but they're either enterprise they're going to play to the enterprise level or they're going to play to just the average consumer, rather than going to open a route. One what's behind that? Do you think it's just a matter of organizational focus, rather than trying to split that that attention?
Rob Walling 13:48
Yeah, well, I think the traditional venture VC model if you go to Silicon Valley is go after enterprise go after high price. The Jason Lemkin approach, right SaaS it's like high price, all enterprise sales cold outbound boom, just grinded out random, grind it out. So that's their playbook. Whereas a lot of kind of the maybe the bootstrapper, or the, you know, I wanted lifestyle businesses to go, I want low headache, I don't want to deal with the pain of enterprises. So I'm going to do the $10 a month or the $40 a month or whatever. But so I think those camps may be separate there. But realistically, the advantage is that if you have this wide funnel, you start to build a brand, right? If you get 500, or 1000 or 2000 customers at that lower price point, you won't have so much revenue, but a lot of people know who you are, and you're just at the top of mind. It's like what are the two tools in the space that do this and you're always one of those two? Well, then when the big companies come around, you know if the ESPN or the target or the Best Buy or the Verizon suddenly needs a tool like that. You're one of the two and that's where you can have massive I mean, there's a company called wufu. Alright Wu fo is it was a Y Combinator company that got acquired by Survey Monkey. And I remember when they got acquired this at least five years ago, and the press release they say we sold for into dollars 80% of our revenue or 90% of our revenue was from like, 7% of our customers, all of it was this stuff that is massive, that big free plan. And I thought wufu was really this consumer plan, you know, we're SMB play, but they and they had a ton, they had thousands of thousand customers on their SMB plan, but the amount of revenue from them was very small, but they had mindshare, you know, and they had brand and they had reputation, and that the real money came from these these enterprise ones. So I would prefer for it not to be that far out of balance, if I own the business, you know, but it there is an advantage to the kind of this dual funnel model, I think, if you can engineer that,
Joe Valley 15:35
that's fascinating. I have a good friend who did subscription based businesses for a long time. And he preferred to have that private individual SMB sort of approach. And his whole argument was, I can lose 30 clients in one month, and the impact of my revenue is negligible. Whereas if you have the enterprise is 80%, of revenue coming from that few that's, that's scary stuff, you lose a contract. In your, if your fixed costs are too high, you're you're you're screwed.
Rob Walling 16:02
Yeah, I would prefer to be less to be I'm sorry, to be more diversified than they were then my recollection of them. But it is an extreme example,
Joe Valley 16:10
as far as I know, obviously, most people had been around for a while. And what they were doing, I had no idea. I had no idea. Alright, so people are taking some of these investments from TinySeed, they aren't just taken again, with the idea of to take your money they want to go and this typically growth, right. Okay. Let's talk about some of the things that you look for for growth, as far as some of the high leverage techniques that you're using to help these companies scale up and grow. And then the follow up question to that, that I would like to just have in mind is, to what end? is a growth for the sake of growth to hang on to? Or is it growth to eventually sell?
Rob Walling 16:51
Yeah, I'll take that latter one first, actually, folks who take money from us, and one of the reasons we're we are different than traditional venture in venture capital is, if folks take money from us, they can sell if they want, they're in control, right? We don't, we don't have the ability block a sale where a minor, super minority shareholder, but they can sell if they want, they can throw off dividends if they want. And obviously, we get a pro rata share of that, as owners in the business. Or eventually, if they wanted to buy us out, you know, we can work that out. There's a kind of three paths to, you know, to working with us as investors. So lots of flexibility on there. Yeah, flexibility. Right. And, and as a result, you know, they can be a C Corp or an LLC, which is again, different normally, it's Delaware C Corp, if you're going to raise venture and with us, we have C corpse, and I don't know of the 23. Like, at least eight of them are and just random states wherever the person lived, you know, Arizona, C Corp or Arizona LLC, whatever. So that's the option optionality we want to give people because, again, I've run my own businesses, and I didn't necessarily want to sell them, although I wound up doing that that wasn't the goal from the start. terms of growth. Yeah, there's a couple things the money tends to help people you know, if they have a channel that's working, like I AdWords is working, they can pour money into it, if they need more features to move faster than they often hire a developer, you know, some of it often goes to, you know, to resources, human resources, but the bigger thing we provide is direct mentorship and advice. Pretty prescriptive, especially early on. And then we have a network of SaaS mentors, you know, if you go to tiny sea comm slash people, you'll see. I mean, you know, it's kind of the the all star cast of SaaS, right? It's like Basecamp, that Basecamp co founders, it's Rand, Fishkin, Heaton Shah, David Heinemeier Hansson,
Joe Valley 18:37
Jason Yeah, I was looking at this and just thinking, Oh, my gosh, this is like, an amazing list of mentors,
Rob Walling 18:43
right? And so that the mentorship allows people to get there very fast, right? they'll raise something in slack of like, hey, how has anyone ever dealt with this, and the odds are pretty good, no matter how esoteric someone's dealt with this, and someone either can give you advice, or they like no consultant, that it's like, this person is good, go pay him 1000 bucks. And suddenly, you've saved yourself three weeks of looking around on Upwork and blah, blah, blah, or you go to Rand Fishkin for advice about it, you know, SEO or integrations or something. And it's like, oh, wow, that like literally changed the course of someone's business. So the mentorship and the advice, both from the mentors and myself, obviously, and my co founder, aner volstead, who's putting time into like, enterprise sales and cold email, but so that that's a piece that's the just in time advice, which is obviously you know, worth quite a bit. But this other piece we focus on really early, we call it the tiny c playbook. And we have five parts to it. And we go through one every other week for the first 10 you know, 10 weeks in essence. The first thing we do is we look at funnels, and so we talk a lot, you know, we do like a 40 minute talk with slides about how I just talked about kind of low touch funnels, high touch funnels and dual funnels, like I just have a whole talk that we've never done in public that we do for them. And then we and then we do case studies, right? We just start digging in like call out what surprised points. You know, let's look at are you you can't do enterprise sales when you're charging $30 a month, right? We had a great company a batch one who is doing that. And it's like, the numbers just don't work because it because it just doesn't work, you're never gonna grow, you're not you can't even afford to, you know, pay for people to a salesperson to do that. So in the back end batch one, like this company doubled their pricing, and then doubled it again, and then double it again, like they just kept. So when they went from $30 a month, there's a little plan up to $250 a month as the whole plan because the economics didn't work. So funnels is the first pricing is the second and frankly, pricing is the biggest leverage the biggest lever in any SaaS app. And I think almost all of us are under priced most of the time, you know, until you've really sat down and looked at it. And so that was something we drill down. In the first meeting of batch two, I asked for show hands, and I think it was 70 or 80% of companies raised their hand when I said who thinks they're either underpriced or that their value metric is off, meaning just the way your charging is off. And you know, everyone raises their hand. And so then we dig in, and we more than half the batch raise their price prices in the first month. And I was actually just just took a screenshot of one of their revenue or two of their revenue graphs and put them in the internal slack with just my team and said, look at this, that was the month we told them to read, they everybody doubled their pricing. And you can just see the it's not a hockey stick, but it's an absolute noticeable thing, because they doubled the price and the same amount of customers come through. So in essence, growth is doubled with all you did was change a number on a website, you know, and it's like, that's it, no new features, no big production, you know, didn't have to sell to more people, it's just a number. So that's where pricing is like the biggest lever that we that we drill home. And we don't tell everyone Hey, you have to double your prices. We don't say that. But it's like, it's pretty. I've seen enough patterns now that we look at it. And we're like, yeah, you know, again, Best Buy comes to you and says, Oh, we need your software, and you're gonna charge him like $300 a month, no way, like it should be out it should be 3000 a month, at least, for what they're gonna use it for.
Joe Valley 21:56
I want to stop you on this pricing thing, because I can already hear the objections in people screaming in their heads, especially the business owners, this is screaming out of fright as to what happens. And I'm going to bring up Drip as the example. Right? When they raise their prices. What was that that was a year and a half ago. Now. I think there is a prices and we're not here to dump on Drip. But it didn't go well. Right? It meant a lot of public resistance. And I know people that they lost for customers, including myself, you know, quietly to sell on Drip. But the other company I have we moved off of that plan. And I also know some of the competitors. Boy, did they smell blood in the water. They were very proactive and picking up clients. So talk to me about that talk to me about that business owner says I don't want to I don't want to double prices and we lose clients and how do you how do you go about that? If you're not adding features? Because that was Drips mo right? But hey, we haven't raised prices in a long time. And we've got a lot of new exciting features coming out. Well, that's the cynic side of me. Whenever I saw them add like a new feature. I was like, that's what you raise my prices for really come on, you know, it played didn't play? Well, again, I'm not here to dump on them. Sure. Things like that. It's an example.
Rob Walling 23:07
It's an example of a company who really fumbled the ball when they raise their prices. Right. So how do you not know that's really the question, right? Yeah, well, so there's a couple things, I mean, you have to decide, like a lot of our companies are so you know, imagine a company doing 10 k of MRR with 100 customers, well, they just raised their pricing on their pricing page, and they grandfather everybody else in because doubling everybody else's price isn't you know what I mean? And you don't have to do that I it's not, it's not an always grandfather thing. But in the early days, maybe just grandfather, you know your for now, and wait till you get a few years down the line. And then they should be paying you five times and then come to them and say, hey, look we raised we like have five x pricing, which hopefully you do over time, or at least two or three X, whatever you get to, and then go back to them and say, Look, it's been three years, I do want to get you up to at least half of our current real pricing, you know that that's how you treat right? And and you can, you can do that carefully. And that's what Drip didn't do. I don't want to jump on Drip either. I wasn't there when they did that. But they just kind of made all the mistakes that you make. They didn't give much notice. They didn't think two weeks, which is no you need. I mean, if I were to do it, I'd give 90 days minimum maybe six, six months Max, within that range of like, Hey, we are raising prices, but then you say here's why you point out specific features that you've you know, increase, hey, we are going to grandfather or we're not and if you're not, you need to really justify why you're not right. If like, hey, all of our competitors are more expensive, or whatever else the reason it is so yeah, there's a there's a right and wrong way to do it. raising prices the other scary thing, even if your grandfather the other scary thing is you think you're gonna raise it and then you're just gonna basically dry up your growth that no one's gonna buy man, they've been paying 50 a month and I'm gonna go to 100 No, this tool is not worth 100 a month. And if you find that like if you raise it to 100 and and growth does stagnate, well, then you just drop it down, whether it's up or down to 50 or 75. At that point, you do. But again, we found that a lot of our companies, they raise it and they're like wait a minute, I'm getting literally the same number I have new customers and I've doubled my growth. Like, it's just, it's crazy to see it over and over.
Joe Valley 25:04
Yeah. And you know, I think that is the other element that of pricing can sometimes imply value as well, right? It's is that inverse law, right? Low Cost services turn higher. Because you don't attach as much value to it. I think there's a lot more intentionality. If I sign up for, I sign up for a service, I'm paying $500 a month for, I'm gonna take the time to go through that onboarding to make sure I am using that and using it well, but if I sign up for something that's 1010 bucks a month? Yeah, I'll sign up. I'll look at it. I'll play around with a little bit. And then maybe we'll get to in a few weeks. And three months later, when I see that recurring charge come through, like I just cancel, no commitment to it. No premium to it. Alright, so we talked about pricing, and pricing. I think that's that's fantastic advice. We dumped a little bit on Drip, they're a good company. So again, that wasn't the intent. They are a good case study.
Rob Walling 25:53
I have several, several Drip accounts, I still still a good tool.
Joe Valley 25:56
Well, actually something else. Again, I don't want to belabor the point. But something else that they did that I would just say don't do is they they grandfathered for those that were willing to switch from monthly to annual subscriptions. And one of the big complaints there is it felt extortion, airy, right. Like, oh, you're grandfathered me if I pay you 12 months in advance, like, you know that it really came off wrong. So again, that is a good case study of what not to do. I think their justification for raising prices made sense. At the end, it was just a poor rollout plan. Edwards, you mentioned that obviously, if it's if AdWords is working well, you know, we continue to feed that that funnel, what other areas would you look at for these high leverage things that you guys have looked at for high leverage growth opportunities?
Rob Walling 26:41
Yeah, so there's understanding your funnel and the economics of it and and sample conversion rates, that's all the stuff we went through. And then of course, pricing, and we look at examples and how, how to increase that if you think you're off and how to adjust your value metric, right. So if you're charging based on number of subscribers, is that the right thing you should be met, you know, charging on if you're charging a number of seats, is that the right thing you should be charging on? Part Three, the playbook is just an in depth sales conversation about what sales actually is enterprise SaaS sales, or like medium to high touch SaaS sales. Really, it's your consider yourself a high paid consultant, but you're just not paid, you're paid and people not turning. And that's truly what you're trying to do is find the best solution I remember at Drip and at you know, hittail, before that, I would come in and just say that it took somebody to say, you know what, we're actually not the best fit for you. And I would literally refer them out to a competitor who I thought, like, oftentimes, MailChimp is a really good tool. And if all you're going to do is send broadcasts actually wouldn't use Drip, we're more, we're always more expensive than MailChimp, it's like you don't need all the automations you know, and that. So being that consultant and actually being just honest and ethical about it, and, and thinking about it is a big thing. So as far as kind of a sales one on one, and then like 102 class, you know, within about 3040 minutes, because being able to sell specially when I talk about this dual funnel or the enterprise funnel, it's kind of a necessity, right? In a SaaS org, unless you're gonna be totally, you know, on the kind of the low touch funnel, and then we do good.
Joe Valley 28:06
I was gonna ask, what point should a company think about that, because that definitely seems to be a choke point for a lot of companies is building out that that sales team and the sales processes involved in it to be efficient?
Rob Walling 28:17
Yeah, I mean, until you can hire the advice that I keep hearing, and I'm pretty, it's tough, but I'm kind of on board with it is until you can hire two salespeople to have the founding team do it, because you need to hire two at once. Because you just don't know, if, if one fails, you don't know if it was you if it was your market, if it was your training, if it was all these things, but if to fail, you know, you probably screwed up. And if one succeeds, you know, that one was good, you know, and if both succeed then amazing, you know, so it's and there's competitive, you know, nature between salespeople. So the people who I know like the Steli, efti, or the Damian Thompson, who, in my opinion, no sales and have lived and breathed it for 10 1520 years. They all say that same thing. And so that's, and of course, so then that dictates Well, if I'm doing 10 k MRR, I don't have enough money to hire two salespeople. So I'm not I'm not going to do it yet. You know, so to me, it's in that I don't know what 20 to 40 k MRR range if you really if you really need it. Yeah. So beyond sales, then you know, lead generation is the next thing we talked about. And we basically just look at what are all the traction channels that you can look at ranging from there's all manner of paid acquisition, there's all manner of organic acquisition. And then there's all the create all the creative things like the trade shows, I mean, trade shows and cold email still work really well in certain niches that are not inundated, you know, with cold email and that of course, right now, there's no in person events, but certain small niches like let's say you're in HR, or you're in construction, you know, or construction commissioning. We have a company in batch two who's just a it's a very tight niche, and there's only a couple thousand companies in maybe in the country who would buy it, but they all go to this event. And so he goes to this one event every year and that's like a huge source of leads to them. And you would never do that. You know, I wouldn't go I don't know if you're an ESP It's a good event or you're going to go to maybe go to traffic and conversion or something. But they're just not, it's not the same thing when you, you know, our horizontal app. So there's a lot of creative ways to generate leads there,
Joe Valley 30:10
for those companies wanting to go into an event is more to be there and to show up and be in people's minds, as opposed to actually retaining new clients. Yeah,
Rob Walling 30:17
yeah, events for sales versus events for branding, you know, in the appearance, right. So yeah, we run through all kinds of lead gen stuff. And, and really, it's just a palette, we're trying to give them a buffet of like, when we do ask around what's working for everyone, raise your hand so that we didn't because it's a batch, right? So there's 13 companies, it's like, oh, look around who SEO is working for these people. If you're trying to get it to work, go to that, you know, go to those who was fellow but kind of batchmates. And then the last thing, the fifth part of the playbook is hiring. And we look at hiring that first support person, we look at hiring the first, you know, developer or product person or whatever, and talk about lightly about org structure. Because I think a lot of people don't know and understand that it's pretty easy to your hire your first customer success person and you make you say, oh, you're my head of customer success, because you're the only one. And it's like, well, how do you know that? So when you hire two, three more, are they automatically going to manage those other ones should they so just easy with the titles, title inflation can really come back to bite you is kind of one thing we talked about, in addition to just hiring basics of you know how to write a good job description, and that kind of stuff. Because having good people as you know, if you're going to build a team of even five people, it's like, you really need good people. Because if you have BNC players, you're just not gonna make the progress you want.
Joe Valley 31:26
Yeah, having good people and having good culture. Yeah, are two things that makes such a big difference. And I've owned multiple companies, right? I've, I've owned companies with great culture at Quiet Light, like definitely in that category. Our culture is fantastic. And everyone that works with us, everyone says the same thing. This is the best company I've ever worked for. This is so much fun, if other companies because most of my companies are virtual, right? Everyone lives in different states, people don't know each other. And it's trying to build that culture can be really difficult to do, especially if you don't have the right person mix in that. So that's fascinating. We are we blew through 30 minutes. I was gonna start to jump in other questions, but I'm not because we blew for 30 minutes, and we'll go through another 30 minutes. If we don't do that, so TinySeed, you guys do have investments open? What are you going to be making your next round of investments? Or is that just an ongoing process?
Rob Walling 32:21
We do want? Well, right now we'll do the next batch. Cool. We'll open up for applications in January of 2021. So what is it, it's September right now. And then we're gonna start doing two batches a year in the US because we found that just the volume is that the deal flow, you know, the number of deal flow is a weird way is the best way of saying it, but just the number of companies that need and or desire This is ample. And once we have fun to we'll have the money to be able to invest and then we're looking at expanding into Europe and APAC, you know, go there. So
Joe Valley 32:52
that's super exciting. I mean, there's there's a wealth of knowledge that you can offer people thank you for sharing the basic playbook that you guys go through with the companies that you invest in. I think there's just a lot of stuff to digest there so really appreciate you coming on guys check it out tinyseed.com or any of your other blogs has
Rob Walling 33:12
started rolling calm. Yeah, so the rest of us if if you listen to podcasts that that'd be the place to go startup to the rest of us every every week for more than 10 years now. 512 episodes and I talked about, you know, it's bootstrapping SaaS really is what
Joe Valley 33:25
500 episodes. That's a ton.
Rob Walling 33:27
That's awesome. Yeah, it's been a while.
Joe Valley 33:29
Hey, Rob, thanks for coming on.
Rob Walling 33:31
Absolutely, man. My pleasure.
Outro 33:34
today's podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast subject or guests, email us at podcast at quietlight.com. Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram, and subscribe to the show wherever you get your podcasts. Thanks for listening. We'll see you next week.
Rob Walling is an entrepreneur, angel investor, author, international speaker, and host of the Startups for the Rest of Us podcast. Rob is the Co-founder of TinySeed, the first startup accelerator designed for SaaS bootstrappers. He has invested in 36 startups and has built multiple businesses to six- and seven-figures in revenue.
On top of this, Rob also runs MicroConf, the most well-known conference and online community for non-venture track SaaS founders.
