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Jean-Sebastien Laverge, the Chief Growth Officer at Tilting Point, joins us in the next episode of How I Grew This podcast. As a CGO, JS oversees more than forty game titles. Before Tilting Point, he worked for twelve years at Gameloft, where he helped generate significant annual revenues by developing retention and monetization strategies. Tilting Point is a leading award-winning free-to-play games publisher that empowers independent developers to accelerate their growth. It started as a premium game publisher then shifted to the freemium model. The team has now built a new model called progressive publishing. Some of the company's most successful games include Star Trek Timelines, Warhammer: Chaos & Conquest, and SpongeBob: Krusty Cook-Off. Tilting Point approaches growth in three directions. Firstly, paid growth, which is about user acquisition. Secondly, organic growth includes ASO, distribution platform optimization, IP integration, and marketing buzz. And lastly, monetization growth improves the user's LTV. Some of the most impactful paid channels remain Facebook and Google. When you synchronize the three axes you can unlock maximum growth for your game. According to JS, to engage and bring people back into the game, you can advertise specific offers or push notifications and emails. If you want to start in the gaming industry, you need to be passionate about it, be analytical, and understand data and statistics. If you are a leader in the gaming industry, be transparent and find good talent to help and support you.

There's only one question you need to have the answer to in order to create a roadmap to make 2022 your best year yet in your business: 'What's the number?'Understand that number also represent everything you want your business to do for you. And when you have clarity about the cost that comes with the success you want, you then can reverse engineer it into actionable tasks you must achieve daily to get it.Beyond The Episode Gems:Free tool to give your website a professional audit and improve your organic traffic courtesy of Ahrefs: ahrefs.com/awtWatch the video of me talking with Phil Gerbyshak on  Sales & Marketing Processes Debunk'd on YouTubeListen to Ep 42 on how to negotiate and position your business when it comes to sales.Listen To Ep 26 to learn the two-word sales manifesto that will help you accelerate your sales strategy.#####• Rate & Review iDigress: RateThisPodcast.com/iDigress• Get Strategy Solutions & Services: FindTroy.com• Follow Troy on Twitter, LinkedIn, YouTube, Instagram, & Clubhouse @FindTroy 

Andrew Gazdecki is the founder and CEO of MicroAcquire, the world's most founder-friendly startup acquisition marketplace. MicroAcquire helps entrepreneurs buy and sell startups.After founding and later selling two successful startups, Andrew decided there needed to be a better way to connect buyers and sellers in the startup marketplace. He founded MicroAcquire to fill this void in the startup acquisition arena.In this episode, Andrew shares how he grew his Twitter audience from 30,000 to 70,000 followers in a few short months. He uses his connections with others, his partnerships, his brand, and savvy marketing techniques to boost engagement and attract followers. It's a fun and entertaining episode, and I think you're going to enjoy it.In this episode, you'll learn: The one thing you should spend at least half of your startup's budget on Proven strategies and tactics to grow your Twitter account How to bootstrap your business and retain your autonomy Links & Resources TechCrunch Cameo Effie Empire Flippers Flippa Bizness Apps Sam Parr Stripe Baremetrics ChartMogul Bumble Brandarrow Bootstrappers.com Y Combinator Salesforce Nick Huber David Cancel Josh Pigford Clearco AngelList Avaloq Naval Ravikant Dharmesh Shah The Ladders of Wealth Creation blog post Andrew Gazdecki's Links Follow Andrew on Twitter Follow MicroAcquire on Twitter Episode Transcript00:00:00 Andrew:I'm a big fan of stair-stepping and entrepreneurship. One of my favorite tweets that I've ever written is, “Start with an agency, get to cashflow positive, and then bootstrap an asset—whether that's a SaaS company or your e-commerce business—sell that asset, become financially secure, and then do whatever you want.”Along the way, you prepare yourself for the next stage of business. 00:00:35 Nathan:In this episode, I talked to Andrew Gazdecki, from MicroAcquire. Andrew started a couple other businesses and sold two of them. In that process, he decided there needed to be a better way to buy and sell businesses. So, that's where MicroAcquire came from. Their marketplace originally focused specifically on SaaS businesses, but they broadened to all of software.The reason I want to talk to him—he doesn't write a traditional newsletter or something like that—but he uses audience really well to grow MicroAcquire. He uses his personal brand connections with others, partnerships, a bunch of fun things.We get into how he grew his Twitter audience from 30,000 followers just a couple months ago, to over 70,000. His approach to Twitter, some of the arguments or beefs that he started with TechCrunch and others, and where he thinks those lines are.We also get into how he uses Cameo; he has these great ads announcing partnerships and others from Russ Hanneman on Silicon valley talking about this, and they're really entertaining.So, there's a lot of fun things in this episode, and I think you're going to like it.I'll get out of the way, and we'll dive in.Andrew, welcome to the show.00:01:41 Andrew:Thanks for having me, Nathan. Always a pleasure to be chatting with you. 00:01:44 Nathan:There are a lot of companies in the brokerage/help-me-sell-my-business space. I think of Effie International, Empire Flippers, Flippa, all of these. So, one, you're going into a really crowded market with MicroAcquire, and then, two, you're coming at it like you're a force of nature.Sam Parr and I we're actually talking about this, of how some people start a project and it's like, “Oh, I'm going to do this thing.” And then other people do effectively the same thing. I mean, it's different in a lot of ways, right? But the same category, and come in and just completely dominate, and grow so fast, and it feels like a fundamentally different thing.What's your take on that, of coming into a crowded space, and then the amount of momentum that you've come in with?00:02:34 Andrew:Yeah. I have a lot of respect for all those companies that you mentioned, and appreciate the compliment.The market that is specifically acquisitions hasn't seen a lot of innovation in a decade. Two of the businesses you mentioned are service businesses, Flippa being a marketplace. I looked at that, and I just thought, there's an angle here where sellers could benefit more than the buyers, and I felt buyers were benefiting. So, I took a left while everyone was going right.Then coming in from an entrepreneur's view instead of a buyer's view, or an investment bankers view, or an MNA advisor view, this was me saying, okay, I'm gone through two acquisitions, I think I have a few unique insights into what it would take to make me comfortable putting my business, generating millions of dollars, on a new marketplace. Then, what information and educational pieces would I need to feel comfortable to facilitate an acquisition.So, I just built what I felt acquisition should be. We still have a long way to go. We've done a really good job of connecting buyers and sellers, and all the acquisitions are facilitated off platform. We've been working on a lot of tooling to really add value to the acquisition, if that makes sense.So we're looking to innovate on things like due diligence or even simple items like writing a letter of intent or streamlining escrow, because everyone complains about escrow.com. so yeah, I mean, sometimes it just happens in markets. Like a new entrant comes in with a different angle towards the problem And different viewpoint. and I think my unique, insight there was just, I had been on. The side of the table that maybe the other, companies had not. but it's also, a giant market. So I, think, arising boat lifts all tides. So, you know, we're here to my require. I just made my group or to help entrepreneurs get acquired and, and, succeed.And so, I think also as, you know, Mike require pick steam and helps everyone else in the market as well. So, but, yeah, I don't have a good answer to that. I don't know. I think if I, if I, this, this will sound cheesy, but you know, I, I I'd like to say I built my group hire would love, like I launched it in the middle of the pandemic. I didn't have a business model. I had no idea how I was going to make money. I just knew I wanted to work with entrepreneurs and startups. And the rest is kind of history, you know, along the way, talking to customers, getting feedback from them, pretty much everything we do is basically feedback from customers.I'm not Steve jobs or anything like that. So I can't read people's minds. So I ask what, what ideas do you have? but yeah, it's been, it's been a fun journey so far. my group is about to turn two, which is pretty wild. 00:05:56 Nathan:That first version, that you launched, what did that look like? What, what was the very early stages of it? 00:06:02 Andrew:The first version was, it was just a simple marketplace with a couple of. Changes that I haven't seen in the market. One was privacy and anonymousy and then no fees or commissions for founders. So it was the first marketplace where you could meet buyers and sell your business without paying a 15% commission like you typically would with a broker or something like that.So I think that was kind of a change. And our business model today is we charge buyers for access to the platform to connect with sellers and, you know, having negotiations that lead towards negotiations. But yeah, the first version, required a lot of vetting of the buyers. Every buyer needed like a LinkedIn profile.Some people have complained about that, but I personally would never sell my business as someone, without a LinkedIn profile. I need to know where you worked, like you know, do you have anyone that's bad for you? not just like John 9, 9, 2, 4 5. You know, I need to know, who you are. and we're going to add other ways of verification, but I think that was a big one. and then also real-time metrics integration. So when we launched, you could connect like Stripe and chart, mobile and probable and bare metrics to get like a real, like a nice, pretty graph, like the revenue to help with due diligence. and then also founders and everything was private. So you didn't know what the business was.And as a founder, you had complete control over the process. So when you were with a broker, sometimes it could be kind of showing your business to a lot of peopleAnd you may not know who those people are. they could even be competitive to your business. And so I think what Mike required did that kind of, and I'm just guessing here because I haven't really liked. Taking a step back and then like, what did we do? Right. you know, I'm usually thinking about what can we be doing better? we really put the founder in control. You know, they were the ones able to choose which buyers to speak to. they were the ones able to share which information they wanted to and which information they did not want to share. And again, it was completely free. So it was very low friction to get onto the platform. And then I think just the, the high, the caliber of buyers and the caliber of listing. So we vet every listing. We vet every buyer. Now that registers as a micro require premium buyer, that's where you can contact sellers. so I think it was just kind of like, you know, going from let's just call it like a car dealership to like a Ferrari shop that makes sense where all the cars are, That it, and if you want to know who the owner is, you have to pay for that access, but it was a very specific towards startups, specifically SaaS.So I think that's another thing that I'm thinking of now is we, we went very narrow at the beginning, very narrow. So we were very specific on, specifically, bootstraps, SaaS companies.00:08:59 Nathan:Yeah. I think the approach in different marketplaces is always interesting when, you know, a marketplace is how businesses has like is a generic category, but then the twist on it, of, the seller not paying anything. And it being the buyer who pays, you know, a subscription for access. Why I think that that makes for an interesting twist, because then you're going to have this much higher pipeline of, you know, high quality businesses to look at.And so if a seller is paying for that, that makes sense. It reminds me of like, Bumble as a dating app being like, yep. So within the category of dating apps, but, women have to send the first message, you know, and, and like, that little bit of a twist makes it the marketplace feel, very different and changes the dynamics of. 00:09:40 Andrew:Yeah. I was going to say something, someone called micro fire shark tank, like if shark tank and dinner had a kid, I thought that was kind of an interesting analogy. but yeah, I'd say the, the key. The unique insights I had was again, like, from my perspective, if I'm going to list a business, I need to know who's seeing my information. I want to be in control of, you know, what information is being disclosed or being displayed publicly. and I don't want to commit until I really know, the quality of the buyers. And so that I think was very appealing to just being an entrepreneur. I think I. You know, understood the needs of other entrepreneurs and just kind of got it.Right. But I'm not gonna lie. When I, when I first launched it, I have this, I keep a journal that I update every month. It's not like a weird, you know, Hey dear diary thing. It's I do like, what's going really well. What are some things I'm worried about? and then things I'm grateful for, just to, you know, kind of keep it story log of my life. And before I launched my group wire, I actually, cause this idea had been attempted before, like a real startup acquisition marketplace. I think some of the other market places are more, geared towards, you know, content sites and domains and 00:11:07 Nathan:Yeah, 00:11:08 Andrew:Affiliate websites, but not real. Startups like SaaS companies, e-commerce companies, crypto companies, we've moved into a number of different categories.But, I wrote in my journal, I was like, I don't know if this is going to work, but at least it looks good. cause I, I just thought it needed to exist so bad for entrepreneurs that, we put a lot of thought into user experience and design. So it felt modern. You know, when you're working with startup founders, you kinda, you know, you want to really build trust, like yeah, if you're going to sell your business with us, your startup, you know, we also, we know how to build startups as well, and design them well and make them feel like something like this, this feels legitimate.And I think that's a, what I would call, you know, closing the credibility gap, you know, really, that first impression is so important. So we really kinda overdid the initial MVP. 00:12:06 Nathan:Yeah. I think that design is one of those things where you can go a long ways. And it's probably the first thing that people cut when it comes to the MPP. And that's just, I'm like, Nope, that's not an MVP. You have to cut features. You can't cut like the quality of, of the design. And if I have a limited budget, I'm for sure.Spending half of it, if not more on design. So I think you made the right move there.00:12:29 Andrew:Yeah, I think, I think today, I don't know if we're going to go off topic here, but I think a lot of startups today can legitimately have user experience in design as their competitive advantage. Just saving people, a Couple of clicks, making things easier to use, having a product where you don't have 50 tutorial videos, you've got to watch, or course you have to take. that's a huge advantage. and there's a lot of products that are very clunky and kind of feel like a car with, you know, like a jet ski engine added in. And I just kind of like a Jenga thing, you know, there's just so much technical debt to the product. I think though there's some products out there that I think could be rethought in terms of like the experience and the design they're delivering to the customers.But that's, that's probably a whole nother topic.00:13:22 Nathan:Yeah. Yeah. But we agree. And anyone who's listening to this show knows that I care deeply about design. one thing that I want to ask about and spend a lot of time on is content strategy. if I go to your website and go to the about page, it just lists your title or like your, your job description and your role as marketing. and so I'm imagining that's where you spent the majority of your time in, from the outside. It looks like content marketing is, either a very large or the largest portion of where you spend your time and how you're looking to grow MicroAcquire. Can you talk about how you think about content marketing and the growth of the business? 00:13:59 Andrew:Yeah, I think that was twofold. So number one, the first thing that happened to me when business apps was acquired, I had like five founder friends reach out and they said, how did you sell your business side is, is, were what, you know, so as entrepreneurs, we're not trained to sell businesses, we're not educated on what is due diligence, what are the legal steps of an acquisition?So I felt it was a twofold, the problem with the benefit. And when I say two folded, not right. Prom, but well point number one. Yeah. It's a phenomenal growth channel for us. we think heavily in terms of, you know, what is the content that, entrepreneurs will need when they're going through an acquisition, because the more we can educate them on acquisitions, the more we'll be able to facilitate.And I think that's been crucial, but then two there's just no content in the market that like there's books on fundraising, there's books on marketing there's books, on design there's books on there's a couple of books on, exits, but there just is such a disproportional amount of content available for everything, but a startup being acquired, that we felt, you know, there's an opportunity here to kind of be almost a, I don't want to say thought leader.00:15:20 Nathan:Yeah.00:15:21 Andrew:Kind of write the book, if you will, on, you know, this is, but also important to note is we write content for the seller, not for the buyer. we kinda think, you know, the buyers are set, you know, the buyers that we work with are, you know, private equity firms, corporate dev teams, other startups, people that, generally are sophisticated with, and also a lot of first-time buyers, but so the condoms still applies, but it gets you in the head of the entrepreneur, but we wanted to really empower the founder.So you'll notice every piece of content is angled towards the seller, not the buyer, if that makes sense. And I felt that was critical and just something cool to do for other founders, not like, Hey, this is an article on how to get like the cheapest SaaS acquisition possible. so we read articles on how to maximize your startups exit as.00:16:14 Nathan:Yeah. I mean, that, that perspective is in your, like your founding story for the company, But then it's interesting, like, all right, it makes sense that it carries through all of your content marketing as well, because in the same way that you have know who your customer is, which in the marketplace, you have a lot of different customers or you're, you know, you have both sides of it, but, 00:16:32 Andrew:That's that's something. Yeah, you're onto something. So that's something that, we determined, very, very early. So when we raised our, our seed round, I hired my former VP of product, VP of engineering. My former CFO, and my former head of marketing who's now gone. Cause he went, he was, he was, he was like one foot in he's started this, agency called brand arrow. so if anyone needs help with, Facebook ads or just any sort of SaaS marketing shadow, Tim brown now I told him like, Hey, you got to, I'm a big fan. I need like a micro mafia at one point. So I, I told him to dive in on that, but, we did an offsite and we, defined our culture, you know, our values, but really specifically, like you said, who was our customer?Cause it could be so many people, it could be okay, buyers, but there's so many different types of buyers. You know, which ones are we going to cater towards? And then there's sellers, you know, there's so many different types of sellers. There's people looking to sell comments. Again, domains, Amazon FBA businesses, SaaS founders.And so we really narrowed in, got super specific with our buyer And that really guides a lot of the decisions that we make all the way from the content to the product. I think that's really crucial in the early days, because you can always expand outwards. There's a theory. I don't know if you've heard of this, but the bowling ball theory, you've probably gone through this with your business where, you know, you start with one sorta audience and then I one customer segment, and there's just like these natural sort of like, you know, other segments that target for us, it was like e-commerce.And then we've been seeing a lot of just miscellaneous. You know, profitable software companies. So now we're a little bit more broad. So when I described my required of people, I say, it's a marketplace. So profitable software businesses, not just SaaS anymore, but yeah, we started really specific with SaaS founders being, our initial customer,00:18:37 Nathan:Yeah. Like narrowing it on. That is always a good thing. Okay. So content strategy, I'm seeing you do a lot of different things. one at let's just take Twitter, as a starting point. So I was looking back in August, you had 30,000 followers on Twitter. You have 73,000 followers today. You're tweeting five to 10 times a day.Often. Like you got a lot of, a lot of posts going out. It seems like they're resonating, obviously from the growth and all of that. you have a lot of these single posts are like single sentence. You know, here's an idea latch onto it, like positioning type things. So like one, one example is, instead of thinking of a hundred plus startup ideas, pick a customer you'd love to serve and solve their problems.That gets a thousand likes, 150 retweets or more. I want to know, two things, one, tell me about your Twitter strategy of how it fits into the broader business and what you're trying to do there. And then two, we'll just get into what's working. What's not working. 00:19:33 Andrew:Yeah, definitely. So Twitter strategy, there is absolutely none, aside from having fun. And I'm a firm believer of this, I think when people try to have a social media strategy where their goal is to grow followers. And so you start doing stuff like looking at other people's tweets, and then you take a tweet and this how I see this all the time with some content I put out like, oh, that looks very familiar, but I don't, I don't, you know, I don't care. but they're trying to grow their audience and they're not being authentic to who they are. And they're trying to be, you know, they're trying to, I guess what I'm trying to say is, Find a way to utilize, you know, social platforms in a way that you enjoy. So, one thing notice if you look at all my tweets, they're all from my iPhone.Like they're not from my web app. They're not from a scheduled Twitter thing. I just like that tweet. I remember writing that tweet. I was like, in my kitchen, I was just like, did it, you'll also see a tweet right before this podcast. That's just me. I was waiting for you to come on this podcast. I was like, so I think my point being, and I think this goes even broader is just, you know, if you want to be great at anything, and I'm not saying in any way, shape or form, I've created Twitter, but you just have to enjoy it.And then if you enjoy it, you're consistent at it. And then, I do have a few rules though. I don't usually comment on people's cause like you know, once you start getting to a certain point on Twitter, people, you can just post like Entrepreneurship is awesome. And then people have like a hundred questions and I just don't have the bandwidth to answer all those questions.So I usually will, I'm watching those questions and I'll usually, if some, if something's interesting, I'll, use that as a new tweet. and then you get tweeted out a lot, like, Hey, follow me. Like, Hey, we'd be on my podcast. So I kind of have a rule of like stay in my lane, if that makes sense. I've done a little bit of like beef marketing and stuff like that, you know, I'm sure you saw me like call out like tech, Raj, or maybe like throw a couple of shots at like, just joking, like VC sort of like, you know, shit posting type stuff. And that works. It definitely works. And there's some strategy behind that. That's probably one part of my social media strategy that was, strategic, it's effective, but it's not for the faint of heart. cause you do you make people pick sides, so you're going to upset some people and you're going to make some people really cheer you on.And so, I'm kind of done with that phase. that was fun. 00:22:20 Nathan:So if someone is in that phase or they're thinking about it, right. They, have a specific audience for their business or like a specific focus. They've chosen a niche and they have some strong opinions and they're not that kind of person who's like, you know, like let's not cause any conflict.They're like, no, I'm actually, I'd be, I'd be willing to get into a little bit of conflict. what would you say what's, what's your advice on going down that path of like, if you're thinking of oh, there's a TechCrunch in your space or someone else that you might want to pick a fight with? 00:22:49 Andrew:Did you just gotta really believe it? like, and I think it has to be factual, like what I said about, TechCrunch, as an example, just go on their website right now and see it. And tell me if you can find an article about a bootstrap startup. like, that's all I said is like, you guys are a publication that writes about just venture backed businesses. and you know, what kind of really struck a chord with me with that was my prior company business apps. You know, we were in TechCrunch, all the time. Like they loved writing about, you know, real business building storage partnerships, you know, version 2.0 launches, you know, international exp like, you know, stories that inspire entrepreneurs.And they moved towards, you know, this really venture backed sorta, you know, you're, you're either in it, or you're not in it. And I just blindly called them out on time and then some people. were like, yeah. And then I was like, huh, maybe there's something here. And then I just, and this is how I always think of or how I validate ideas as well as, so I have a publication now called, bootstrappers.com, which is just kind of like my.Like what I wanted, like just, you know, I want inspiring stories, like back in like 2010, you would read articles on TechCrunch about like, two people. They just launched a product, no funding. I remember some of the writers I used to work with, are they all left? They're all gone. It's like a new, it's a new company.It's, it's been acquired by four different companies. And you know, some of the older writers you're out, but, the older crew, would kind of joke and say, Hey, BC's like, I hope you banked me one day for writing about all the companies that I discovered. and then you find it later. now the opposite is entirely true. And so I, I wanted to bring that style. You know, journalism back where it's stories about companies making like 200,000 a year or 500,000 or 2 million. because you know what, I read an article about a company raising 200 million and then 500 million, like the next week. it doesn't really inspire me too much.And I think that celebrated so much today and, you know, the startup community that I think it's a little dangerous, I think, as a young entrepreneur, like if you think the path to being a successful founder is. Get into Y Combinator, raise a bunch of funding, get featured in, you know, these magazines, because that's what happens when you get fun.That's like the only way to get covered sometimes, is funding announcements. and even then it's hard cause there's so many. so I think that creates an environment where a lot of entrepreneurs are focused on raising capital rather than raising or generating revenue from customers.And that was just something that I lived through.I had a really good mentor. We're told, are we going off topic too far?00:26:04 Nathan:Well, I do want to take you back to, like the idea of like picking a fight. But finish the thought with a mentor. Who's everyone, everyone listening knows that ConvertKit is bootstrapped. I'm a huge fan of that and the same things, the same reason that you're picking a fight with TechCrunch or that you did, I would do the same because we experienced that, you know, we could have more revenue, more customers, all of that than, anyone else, but they're only going to write about the VC funded version.So, 00:26:28 Andrew:Yeah. So so long story, short business apps, my company prior, boot shove that business, and I just had a really good mentor Christian free Freeland. And he was always challenging me to think against the difficult soak on early pap. And we were based in San Francisco for five years, eventually moved to San Diego and that's where we exited the business. but, yeah, now that like I'm on my third, I took a little hiatus and went into crypto land for a little bit. So it got away from like SaaS and stuff like that, but now I'm back home. and yeah, just saw that and said, okay, and then actually TechCrunch did write a little bit about bootstrapping and then I've also seen a lot of other people start saying the same thing, like agreeing, which I think has been cool.It, which isn't like it's not a bad thing that TechCrunch or any publication, I don't want to just hone in on, on TechCrunch. because th they're, they've done so much for so many founders. but yeah, other people, I feel like the first shot was fired. Like, Hey, You know, we miss the old version of, you know, maybe mix it up a little bit.And they've taken some of that feedback and I've actually written about some bootstrap companies and then other people have kind of said the same thing. Like, you know, the startup ecosystem is really turning into this, you know, fundraise craze news cycle. And, you know, there's 99% of other startups that aren't going down that path.So that creates kind of like a movement. So that was like the benefit of, of beef marketing sometimes is you, again, make people pick sides. Some people agree with it, some people don't. yeah. So advice for anyone in terms of beef marketing, I, I, again, I, going back to my original point, it how you have to believe it, you have to believe what you're saying.It can't just be like, you know, one foot in, from my perspective, Most of the major tech publication should write about, you know, businesses that are profitable and sustainable and ones that are raising a bunch of capital and going public like a good mix would be amazing because then that gives you a true picture of, you know, all the different styles of entrepreneurship, you know, the ones that are at the top of the top and the ones that are taking a more sustainable practical approach, just giving a more realistic view into the world of entrepreneurship instead of just kind of, you know, putting this one style on a pedestal.Yeah, I mean, just get ready for, I mean, nothing bad happened. so I would just say also with beef marketing, it doesn't have to be just, an individual Oregon or, or an organization. Like good examples. So I've always had a, like, kind of an, a branding, an enemy, and all my businesses for business apps.It was a large businesses. Like our main sales pitch was, you know, Starbucks down the street, paid 2 million for their, mobile app, blah, blah, blah. You know, would you like to create that same customer experience for your customers and, you know, like David versus Goliath type story, you know, Mike group, we're kind of fighting for the founders.Then all the other stuff that I just talked about, but Salesforce had, their, their enemy was on-premise software. They essentially invented SaaS, you know, the company. Say a little chat thing. Yeah. They had a big campaign of just no forums. Like no one wants to download an ebook anymore, like forms go away, please. and I thought that was very clever, box.com had some beef with Microsoft, which was definitely fun to watch. I've I've been around long enough where I remember seeing in San Francisco, like, the billboard of like box, just basically saying Microsoft sucks. you know, Uber and Lyft were throne, had a food fight for awhile.That one probably went over over the line maybe. but yeah, my point is, is there's other examples it could be, for your business, it could be expensive. To like, I don't know, like it could be, it doesn't have to necessarily be like a organization or it definitely shouldn't be a person either.Like don't ever like just straight up call. That's just, that's not cool. Like if you have a problem with a person, call them and tell them your problems, like, that's it now. Like that's not, I don't, I don't support that at all. I think that's ticky-tacky and just a sign of just weak character, if you're just literally, you know, trying to tear someone down for your business's benefit,00:31:28 Nathan:One thing that's interesting, I think is you probably watch some, maybe beefs between individuals is just how many of them, maybe are planned or facilitated in some way. that is interesting. Like someone, messaged me today because, sort of like Nick Huber who's, has a popular Twitter profile under sway startup.Hopefully we'll have him on the show soon. He was, he posted something like controversial, which I know is one of his top of funnel tweets, right. To try to get as much attention. And so I purposely like aggressively disagreed with it, you know And then we're just separately texting, like, Oh, thanks for the engagement, you know Right. Because we know that by deceit, like if he strongly takes one stance and I strongly take the other stance, then like one, no one will think we're actually mad at each other, but then too, like, it'll get a lot more attention engagement. So a lot of people are doing. Some version of that. or if you see a happening usually between two individuals often, they're probably on really good terms behind the scenes. 00:32:26 Andrew:Yeah, I did not know that that's, that's me staying in my lane. I, I, I missed it. but yeah. I, mean that's business entertainment, you know, there's, there's nothing wrong with that, but I, think there's a line to be drawn, you know, like, If you do engage and stuff like that. number one, I think it's always great when, like, if it's real and then they like, like, Hey, we're cool now.Like, you know, we did this in pub and now like, okay, we're on 00:32:59 Nathan:Close that loop. 00:33:00 Andrew:Yeah. I think, I think that's really cool to see. but yeah, public food fights, not my thing. don't have appetite for that or any advice, but I will say, I will say Nick is coming hard on some, some of the stuff I've said, like, 00:33:16 Nathan:Whole angle. 00:33:17 Andrew:Yeah.The, the one thing I'll say about that though, that style like shit posting, you know, I was like some view of like VC funds just based on like shit posting and stuff like that. what I've noticed, ‘cause this, this actually, this is probably a good tidbit for, you know, if you're considering, beef marketing and what happens is you draw in a type of crowd that likes that negativity and it, and that can drain on you.And so if you should ship posts all the time, like a large amount of your followers are just going to be shipped posters, and they're going to be, then all your comments are like, use a blah, blah, blah. I mean, if you go on Nick's feed, you can just kind of look, just look at his comments. He has like a million people.Unfortunately insult, I kind of feel bad for him sometimes because I've also seen him comment how it affects him personally. I, I don't know him, so maybe it doesn't give a shit, but, that's why, again, I say, stay in my lane. Just keep it positive. Aye. Aye. Microfibers entire marketing strategy is literally just inspire or support encourage entrepreneurs.It did. not, I mean, not getting beefs with people and stuff like that.00:34:33 Nathan:Have you. like, there's the side that you're, you're taking of, using your personal brand for marketing, you know, growing a Twitter audience, all of that. You're very off the cuff of like, you know, just firing off, tweets or things that you, you think about. But at the same time, like you're a professional marketer and you tend to, from my new at you and other places, like you're very methodical, you tend to attract things really well.Do you track efforts that go into Twitter and Like how that translates into, you know, deals on MicroAcquire or new buyers or sellers, you know, like listing listing companies or any of that. 00:35:10 Andrew:So I'm a big believer in, so David can sell from drift said this really well where, I think I might've mentioned this to you the last time we talked, but, he, he broke it down into like three phases where, we've gone through three phases of SaaS. Like the first phase was invention murder. The first person to kind of build a tool one, the market.And then the second phase was the first company to really figure out the best, go to market strategy, like LTV to CAC, you know, AEs STR ratio who could, who could land grab the market fast enough. And then right now he says, he calls what we're in today, the Procter and gamble phase, which is your brand. So it's most defensible part about, your business is your brand. Your technology can be copied. it's easier than ever to raise capital to build a team to do that. There's also other things like your culture and your team's talent and just, you know, again, your unique insights into the market. People can copy chapter one, but not chapters two and three and four that you have planned. so I think a lot about that, a lot in terms of just brand and market reputation. But So, no, we don't, I don't measure it. when a tweet goes viral, like the one you just mentioned, I don't look at the comments because when a tweak gets like a thousand likes00:36:33 Nathan:Yeah,00:36:34 Andrew:Is gosh, like the questions and the people like disagree with you and just, you know, you start to enter, it's like, you're in a stadium of, you know, 200,000 people are reading this and then like 200 people have comments, not everyone's going to be like, yeah.Like half of them are going to be like negative stuff. So, yeah. So I, I push, I push away all negative energy. So if, if it's not positive, I'm over it. 00:37:05 Nathan:W what you're describing is interesting of the city of idea of, if you think about it, like maybe your immediate group of friends, you post something, the people who reply right away, you interacted with them a bunch, like that's who's on the field or whatever. And then the next group is like the coaches, the diehard fans, like the re the support staff, everyone else, like those are your Followers. And then you can tell every time that this tweet goes beyond that, because you start to get, like, I had one on company culture that, was like a thousand retweets and went really far. and you could just immediately tell when it had gone to like two levels beyond the people who follow me, cause it just, it went totally off the rails. And you're right. That the only thing you can do is like mute your own thread and move on. 00:37:50 Andrew:Yeah, I just, and you could tell, cause I usually will like everyone's tweets just cause I respect everyone's opinions, like bringing, Nick back up. He, I remember I had a tweet, just something about how entrepreneurs that have maybe struggled in their childhood, have an advantage. He came in with like a strong disagreement and kinda, but I respected it.But then I, we, we kind of close the loop with like, Hey Mike, I think you're taking this out of context. so I'll respect everyone's opinion, but once it goes, you know, I'll like all of, them. And then once it goes viral, that's when it's like all, everything is just nuts. Like, you know, I can't, I would never want, I can't keep up with it.And then too, I've probably already moved on to like three or four other tweets that, you know, I'm thinking of or something like that, but I think, I think that's another important side of, just social media in general is just understanding like everyone has a right to their opinions. So even if people do strongly like disagree, that's awesome.You know, everyone is entitled to their opinion. Everyone has, You know, unique view of life And how things work. and I respect all those opinions, but I think one. thing about social media that can get kind of crazy is when you're taken out of context, I've had that happen a couple of times. Like the one time with Nick, maybe, he took it as I think like, people with really great families, you know, like divorced dads make less than married men. and I, was like Nick, no, this isn't about diverse families. It's just about like entrepreneurs struggling with when they grew up. Like I were Joe, and then I had another one. This one was, this is a crazy one. I had one, I tweeted out. Hire people you'd be friends with. And that was, literally someone literally took that as far as saying, nice job describing why tech is sexist and racist in five words.And I, and I was like, what? And I was hanging out with my sons. I didn't have like enough, I didn't catch it in time. And so I come back, to my phone and I had to delete the tweet. And then I actually, you know, put more con like, Hey, I meant that as like, you know, hire people, you'd be friends with and you'd care for them personally and professionally, not just hire a bunch of white people or something like that.Like what? So sometimes you gotta be careful, when that kind of stuff goes down. And it's also just fascinating how people can, again, their, their perspectives, like their perspectives and their viewpoints. you know, you can say one thing and it means one thing to you and something completely different to someone 00:40:47 Nathan:Right.Yeah. I remember a time that Josh Pigford, for bare metrics, had a tweet about concerns in your, in a resume when someone, you know, has had 10 roles in 10 years or kind of thing, or like jumped between roles every 12 months. And that, I I'm not even fully sure why, but, but that one, like he got jumped on in a very similar way of people taking out of context and saying like, this is what's wrong with technology and 00:41:14 Andrew:Let's talk about that for a second. So when you're, when you're taken out of context, Just admit it, just say, Hey, that, that this is not what I meant. And then I recommend is deleted tweet, and just clarifying, just like, Hey, I wrote a tweet, this, this is what I actually did. I deleted the tweet. And then I said, Hey, I had a tweet taken out of context and it's obviously a little embarrassing, you know, but it's the right thing to do is like, Hey, like that's not what I meant.So also admitting, you know, that's not what you meant, but clarifying when people like, that's not that that was not my intention of those five words in any way, shape or form, even like, that, that, that experience was so far off. I still kind of scratch my head on it. But my point being is, you know, it, you know, take one back, like, Hey, listen, I, I said something, it was taken out of context.I apologize. this is what I really meant for further clarification. And it'll just make your life a lot easier instead of trying, to defend, because I know the thing is if Mrs. Also I don't really comment too much on social media. Number one, it's just exhausting because you can have so many, then you're like a, full-time like customers support person on Twitter. again, you know, once You kind of engage with someone who vehemently disagrees with what you're saying, or has taken you out of context, it's really hard to change their opinion, if not impossible. So even trying, once you, if you just try you lose. You just start throwing food and stuff like that.So that's just kinda some of the crazy stuff I've seen happen on, on Twitter as, you know, gone a little bit more active. cause I, I wasn't active on Twitter, so all this is like new to me too. I'm still learning like, oh shit posers. I didn't, I didn't know those existed or like, oh wow. You can get really taken out of context and it can go viral and people can say some mean things.So yeah, my, again, going back to just saying I stay in my lane and just talk about stuff that I liked it. Talk about.00:43:35 Nathan:I like it. something else that you've done that I hadn't seen other people to do before, but I get it as a strategy. so separate from like just sort of specific, but it's using cameo and using spokespeople on cameo. for your business specifically, you got Chris, demon topless from Silicon valley and all of that to do announcement videos for partnerships and one they're amazing. but like w where did that come from? And, how'd that turn into something that like, And, now if someone says like tres commas, like in relation to micro choir, everyone's like, oh yeah, that makes sense. 00:44:15 Andrew:So for the longest time, it was just me running Mike requir. I was a solo founder. and on the team page, we just like, as I was working on the design with, I initially use an agency to help with, the development. And, there was a team page and I was like, ah, just put Richard Hendrix, Gavin Belson, and Jen yang from Silicon valley.And it just kinda was, I just thought it was cool. And some people like, you know, called it out and was like, are these really your team members? And I'm like, yeah, they were super harder recruit. So I'm, I'm a huge fan of the show because it is shockingly accurate and just hilarious. and then, yeah, so I actually, you know, before, like right when I launched my crew choir, I.When on cameo saw Russ Hanneman Chris. I can't pronounce his last name off the top of my head, but, you know, he was available and he was like my favorite character. And I was like, yeah. W do you want to talk about my group choir? And since then we built, you know, a pretty good relationship in terms of, you know, just working with them.And he's a really great guy. Like he's a really, really, really nice person. but my point here is I'm always thinking about what's, I'm always learning and I'm always trying to think of what is changing in marketing today? For example, the marketing playbooks that worked five years ago don't work as effectively today because everyone adopts them and starts using them.And then it starts to, feel like marketing and the best marketing doesn't feel like marketing it's entertaining, or it, captures your attention in a way where you go, whoa, I haven't seen that before. So I'm always trying to think of unique ways to, capture or actually I should say, earn audience attention rather than buy it, or, you know, writes an ebook and engaged it and get your email and then send you 30 trip emails, which worked fantastically a decade ago, which killed a decade ago.But So that's kind of where the thought process and then candidly. I would say, I might laugh the hardest out of those videos. So it's like my like guilty, like pleasure. cause you know, they're not free. So like, you know, I, I probably am lapping the hardest, like when those go out.00:46:46 Nathan:I've I've laughed pretty hard at a lot of them, especially as like, they end up in a series where they like build on each other. The, he uses jokes that he first coined and, you know, first video. And,00:46:58 Andrew:Yeah. a little background on that too is, I didn't tell him to make up anything like he's made of like gas Decky style, micro Gaz, micro, and like, I don't tell, I just basically, cause you're only able to write in like two sentences and he he's just a hilarious person. So any startup looking to, you know, announce something, I highly recommend checking it. 00:47:21 Nathan:I guess how has the business side of it work? Right? Cause if you go on, on his page in particular, it says $349 for personal use or 909 plus for business use, which makes sense that there would be a split there because you've obviously gotten a lot of earned, earned, attention from those. how does it work actually on the payment side? 00:47:41 Andrew:In terms of like using Kamya.00:47:44 Nathan:Yeah. Using cameo, maybe using Russ specifically. Well, Chris, not Russ. But using him specifically or, you know what you've done, you've done with, other people on cameo. 00:47:56 Andrew:Yeah. So he's kind of the only we did a partnership with Clearco and I had like the game, the rapper, duke came here just because I kind of went on like a cameo binge, like I've been a fan of you forever.00:48:12 Nathan:Cards on file. You know, you're just like00:48:15 Andrew:Yeah. I was like, I'd love for you to just say micro choir. Like this is awesome. who else did we get?I can't remember off the top of my head, but, what's been interesting to see what Chris is. when I first booked him, he was $200. Now he's 5,000. So he, has definitely, you know, made some waves in the startup community. And So it's, it's cool to see him like, you know, making people laugh and helping startups get exposure and then raising his prices too, which is, I think something that, you know, most startups should do.So he's done a very good job of that. It, it went from like one K to two K to three K. Now it's at like, 5k, so he's expensive. 00:49:00 Nathan:So that's like when we see something like that, right. If the nine and nine plus, in the buying process, then later, does it tell you like, oh, here's like once you fill out, the initial form, it'll tell you what, what the price is or how's that work?00:49:13 Andrew:So there's, there's a personal use. So you can use his personal, I don't know his like personal cost, but let's say it's like 500 bucks and that would be for like a birthday wish or something like that, which can be a great way to motivate like your team, like, Hey team, great. You know, Q1 or Q4 that's ending, here's our goals for next year, you know, made, they want to me to give you all shout out, that'd be 500 bucks, but then a business use where you posted, externally, so on Twitter or social media, or, within some sort of piece of marketing content.The price for that is usually 10 X, you know, internal use. 00:49:55 Nathan:Did any of the other ones that you tried? Did you feel like they got attention or that kind of thing make you want to do it again? Or was it more just the ones with Chris that really resonated. 00:50:04 Andrew:I think probably you'll see less cameos, out of me, I think, you know? there, there, there gets to a point and we could, we could probably have another podcast about this, about like things with diminishing returns. And I think I've kind of, you know, used them so many times that, I mean, for the really big like, announcements that we have coming up, like maybe twice next year or something like, that but I think there's sort of a diminishing return, especially with the cost, you know? I think building in public kind of falls into that category a little bit. audience exhaustion in terms of like paid ad campaigns. you know, so I'm always thinking of that stuff too.I like, are we overdoing it? cause then it just kinda starts to get corny is when you're doing it over and over and over and over. and it's not really like, whoa, he's here. Like I didn't expect this. And when it starts to become expected, I think if there was just kind of a little bit of luster. 00:51:05 Nathan:Yeah. That makes a lot of sense. something else that you do a ton of is partnerships, whether it's with PYP or angel list or whoever, it feels like micro choirs coming out with a partnership. Every, I don't know what the actual cadences, I feel like it's every two weeks to a month. what's the, what's the strategy there. And is that like a very deliberate, marketing strategy or is it just like, look, this is a natural fit. And so we're just going to do a better job. It made sense to do the partnership and we're just going to do a better job promoting it than most people do. And when they come out with a partnership, 00:51:35 Andrew:Yeah. I mean, so the pipe Clearco Angeles partnerships all made total sense. They help startups get acquired, which is, you know, the purpose of our business. And, you know, our, our main metric of success is helping startups get acquired. So helping them get financed, increases the buyer pool, which then can lead to more acquisitions.So there's, those made a ton of sense. and then we also want to expand internationally. So we partnered with, essentially like the angel list of, Africa that serves 40 countries in Africa. And so I thought that was a really fun partnership in terms of, you know, helping, really underserved. areas of the world, or support underserved areas of the world with my group who are in terms of, you know, just our message and just our encouragement and we're going to continue those.So we're looking, actively speaking with, individuals that are, you know, accelerators or like, start a boot camps and like Turkey or Europe or the UK or Australia. I have a number of conversations, but we'll probably go a little lighter on those because I also feel like the partnership thing is it's like, okay, another part is another partnership might require really. but that's, I think partnerships are, what I would call a non-linear growth strategy. So it's basically, you know, what you're doing is you're leveraging, you know, number one, Another company's brand So you're, you're borrowing some of their brand equity saying like, Hey, we're partnering. So their capabilities are now part of our capabilities and vice versa. so there's benefits on both sides. And then you know, with products that, you know, pipe clear co and Angeles offers specifically, it adds value to our product. So it's like a win, win, win. It's a, it's a good marketing play, good brand play. And then it's good. Just, you know, product play without, a lot of, you know, engineering needed. 00:53:41 Nathan:Is there, like, do you have engineers internally just devoted to, you know, these integrations or, or did they tend to be more on the marketing? you know, our business ops side rather than on the product side, because then they can be expensive on the product side.00:53:55 Andrew:Yeah, they definitely can. I would say they're more. On the marketing side then on, like for example, the angel is partnership is just a landing page that so Avaloq, the CEO of Angeles is an investor in might require and then evolve in an investor in my rewire. And so I just asked, I pointed out this other company that was making an SPV product for private equity firms.And I just said, can you make me a landing page? I'll promote it. And so inside my group where there's like a drop down that says raise bonds, and then it takes you to a landing page. So minimal product integration there, but it's just kind of like us saying, Hey, if you, if you're looking to raise funds, this is where we recommend you doing it.We've done that with mercury bank as well, which is just, again, you know, you acquire a company, you probably want to transfer those assets and do a new entity. That new entity is going to need a bank account. So we're just kind of getting all the re they're almost like perks. If you will.00:54:54 Nathan:Yeah. That makes sense. And then it's not this big integration that you're having to maintain for years to come or.00:55:01 Andrew:Yeah, no, it's not like a, like a Facebook, like a, you know, SSO log-in or something like that. you know, it's a, it's a lot simpler. It's usually just like a lane kicking over to a landing page, you know, driving traffic to them and then we get some sort of kickback for whatever business we drive to them.00:55:20 Nathan:Is there anything in particular that's worked well on, like the partnerships that have been a, a, huge boost, right? Where either you've gotten a bunch more attention for Mike require built the brand. Like, are there things that you see in common on those ones where you're like, yes, that was a home run versus the ones where you're like, I think that was worth the time to put together.Maybe 00:55:40 Andrew:Yeah. I mean, I'd say, I'd say all of them, I'd say my favorite are definitely the Clearco and pipe partnerships. like. Hers is he, oh, he bought me this to kick off our partnership. It's assigned Mike Tyson glove and we've done a number of acquisitions together. I think their company's fantastic. I love working with our team.Clearco same thing. So pipe, I was finance all of our SaaS deals exclusively, and then Clearco all of our e-commerce deals exclusively and they're just great teams and it's a clear need. You know, some people want to finance these with, these companies and we make it extremely seamless to connect to those companies.And we even do like pre-financing. So if you're a founder looking to sell on Mike required and you want to give a line of, you know, potential financing in advance to a buyer, we can, pre-approve a seller. So it just makes kind of the, you know, when you're going to buy a home, it's like it's pre finance or something.I don't know if that's a good analogy, but, those are, those are partnerships that really add, like they were on the product roadmap and they just, you know, we just went to the best ones in the market with the most credibility, with the largest capital pools. but also with the engineering resources.So, you know, anytime a company is, you know, financed through pipe, we get a notification within slack. It says like, Hey, add preapproval number to this company. So we just, we, instead of working with like a ton of different financing partners, we just pick the best ones and then then integrated deeply with them.00:57:23 Nathan:That makes sense. One of the things that I wanted to ask about before we wrap up is, on the sort of the investor influencer side, you have a lot of people, like know, you mentioned Deval and, and others who, have invested in MicroAcquire. And is that, helping of like helping you you know, amplify some of these things on Twitter amplify, these partnerships, open doors in some way.Do you think you get something similar with like a influencer program or has the investor side really been a good, good angle for that? 00:57:54 Andrew:Yeah, that's a good question. So yes, there's definitely the group of investors that my career has is like all my, like idols, like, you know, founders of companies that, you know, I like, you know, Dharmesh from HubSpot, Neval like, From Angeles, like those are some of my favorite companies and I get to, interact with them on a, on a very limited basis. I don't reach out to them for advice, very often. So I think that also adds to just, you know, brand equity of just, being a marketplace, you know, and us wanting to build this with the startup community. That was kind of more of the thought process behind it. But now, I mean, you could even look at my likes.I, I ha I, was, has evolved over, liked something of, mine now has Dharmesh maybe once, like, so now I don't rely on them for like social media support or anything like that. but it, it is, a good way in terms of, you know, when you raise your entreprenuers, you get kind of, again, unique insights because most of them have been through MNA. so, so typical VCs, but, I, I really liked that, style of, of fundraising is when, obviously I'm a bigger advocate of bootstrapping because that's kind of, you know, where I've spent, or had the most success. But if you're gonna raise capital, I, I recommend entrepreneurs for us because they have experienced building a business.And then typically with, you know, acquisitions specifically in my case, which is you know, extremely helpful. 00:59:33 Nathan:Yeah, you and I are both known for bootstrapping. And we're also, I think, pretty well known for not being that dogmatic about it, of being like, here's what we did. Here's why it works well. Here's why the other path can be fine too. you know, rather than being super dogmatic in one camp or the00:59:49 Andrew:Yeah. That's one thing I've noticed since being vocal about bootstrapping that I think is a little toxic; if you're funded, it's like, I hate you. Then, if your bootstrapped, venture capital's just a tool. If you know how to use the tool correctly, it can be a great accelerant to your business. Everything comes with a cost. So, when you bootstrap, you have to kind of eat glass for much longer. I've lived that life, but at the end, the rewards can be epic.So, if your goal is to make money, you should probably bootstrap, because you can sell the business whenever You want. You have no approvals. You own the whole thing. Nathan, if you wanted to sell your business, you don't have any investment or approvals, or anyone saying, “No, you need to hit that billion dollar mark.” If you want to really disrupt the market, or change a market or, go a little bit bigger, faster, venture capital is just a tool to accelerate that. It all comes with a cost.The cost of bootstrapping is, sometimes you have to do customer support for longer. You have to do some of these roles where you can't bring in talent earlier. The cost of venture capital is, you give it back equity and control within your business. There's usually controls. You need approval to raise capital. You need approval to sell your business.So, everything comes with a cost, and it has pros and cons. I think bootstrapping makes sense for 99% of entrepreneurs, because the bar today is building a billion dollar business, and that's not easy to do. So, for many first-time founders, I'm a big fan of stair-stepping and entrepreneurship. One of my favorite tweets that I've ever written is, “Start with an agency, get to cashflow positive, and then bootstrap an asset—whether that's a SaaS company or your e-commerce business—sell that asset, become financially secure, and then do whatever you want.” Swing for the fences, go on a beach, whatever. Along the way, you prepare yourself for the next stage of business.01:02:24 Nathan:Yeah, I completely agree with that. I have an article titled “The Ladders of Wealth Creation” that touches on the similar idea of using the skills from one ladder to move up to the next, and go from there.Well this has been fun. I always enjoy watching the partnerships, what you're doing on Twitter, and everywhere else.I think that MicroAcquire is a great example of what you can build with an audience. Thanks for coming on and hanging out with me and, and we'll have to talk soon.01:02:52 Andrew:Yeah, Nathan, thanks for having me, man. I enjoyed the chat.01:02:55 Nathan:Alright. Catch you later.01:02:56 Andrew:See you, man.

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9:56 - From bio major to builderDaniel's journey into entrepreneurship started as the desire to make money for weekend college fun, despite the fact that he didn't have time to work a traditional job.“I was a biology major. I was actually going to school to be a dentist and. I always knew that I wanted to be an entrepreneur. And that's what drove me. That was interesting. And doing new projects, stuff like that. Obviously, as a 19-year-old kid, I just had no idea what I wanted to do. And the online landscape was nothing like it was today. There's so much information you can find out there, and it's so accessible, there's communities and all that stuff going on. When I was in sophomore year of college, I had no idea you could even make money online. I had no idea that was even a thing. So it's a lot different than it is today. But what inspired me at the time was just a conversation. My friend was telling me he was making $45 a week on his phone. And I couldn't get a job, because I was focused on my studies. At first that's just what inspired me. I was like oh, I can get some money to go to the bar on the weekends. But what allowed me to really gain motivation was really I became passionate about it. Passionate about being able to grow a following, being able to engage with other people in this community, being able to learn all this new information that was solely reliant on me building something.”15:19 - The decision to ditch dental schoolDaniel's first ventures were doing well enough that he decided they sounded more exciting than dental school.“I started that platform May going into my senior year of college. I was going to the library every day to study for my DATs. I started the platform, it started getting traction and all this stuff. So you could say I was getting distracted very often. And I would say one month of studying and I knew that, number one, I was absolutely miserable. I hated the stuff I was studying. I never really wanted to be a dentist anyways, but it was just literally torture. I was already committed and whatnot. So I knew essentially by the time I was going to take the test, which was I think in August, that I didn't want to be a dentist for sure. And I didn't get a good enough score to get me into the right dental school anyways. So that made my decision very easy. With the platform getting so much success, I decided I'll take a year after college, see what happens. And if things keep going, I can still go to dental school. I can do whatever. But there's too much of an opportunity right now.”26:31 - Hitting the ground running with GOATcaseThe phone case company GOATcase was an immediate success. The major challenge was on the fulfillment side.“We went from literally zero to a hundred in one week. How do you fulfill that? That was the biggest thing. Within one week I remember we ordered 15,000 phone cases. Where do you put them? We should've gotten a 3PL. We thought about doing that, which was definitely the biggest mistake. And many people told me I should do it, but it seemed so expensive at the time versus what we could potentially do it for. And decided not to do it, which was an awful mistake. But like you said, in the first six months, we moved four times. Imagine how much time that takes, and stress, and all this other stuff. So logistics and fulfillment or a complete shit show.”29:30 - Getting a 3PLOnce GOATcase and Daniel's next brand, Perfect Sculpt, gained even more momentum, they were able to get a 3PL and ditch their nightmare of a warehouse.“It took us a year and a half to outsource our fulfillment. And that was when we launched our second brand Perfect Sculpt, which was substantially bigger than GOATcase even. And ended up taking more space because we went from phone cases to bras and waist trainers and shapewear, which just take a lot more space. So now we moved into a legitimate warehouse, 8,000 square feet, and had a legitimate kind of fulfillment operation going. And we just dealt with so much bullshit. Employees stealing, weird stuff going on from the security cameras, and all the stuff from managing warehouse workers that you might imagine. Just crazy stuff. And number one we weren't doing a great job from an accuracy standpoint on fulfillment. And because we had leverage because of just the volume of the business, we were able to find a 3PL that would pay. Because I got to the point where now we had substantial costs. We had our warehouse, we had a team, we had all this, we had some equipment and stuff like that. So because we had the leverage of our volume, we were able to get the 3PL to pay for the entire move, and to pay for our lease, to buy us out of our lease.”32:24 - The early days of ShopifyAt the time Daniel started his businesses, the online ecosystem we know today was in its elementary form.“We were on Shopify day one. But all of stuff that we take for granted today with Shopify was nowhere near it is what it is today. And all up and all the partners on it that you mentioned weren't anywhere near as capable and mature as they are today. Klaviyo at that time was a startup. $10 billion company today. So it was a bunch of startups just getting started, and obviously their tools just weren't as mature as they are today. But it also provided a lot more opportunity, because there weren't as many players in space in terms of competition yet, so costs for everything were cheaper.”34:04 - The decision to ignore AmazonAt the time, Daniel and his team didn't have the bandwidth to explore Amazon. It worked out fine in their case, but today Amazon is much more attractive.“We always dabbled a tiny bit into Amazon. I never gave it a ton of mental bandwidth for myself to figure it out, so to speak. And I would say that looking back, that maybe I regret that. Just because we always had so much success with what we had in front of us. And there was always moving and change and all the stuff you need to do to operate a business day to day. Amazon is a completely separate beast itself. So it's like, to stop what I'm doing to learn it myself seemed like an arduous task. Versus where we were at and the scale we were at, you may as just hire someone to figure it out. So we never put a ton of focus into that. I think looking back it might've been a mistake. But it also just wasn't our business model. We were trying to build brands, not just sell forks or dishes or whatever. But the M&A activity in the Amazon space is a lot more active now.”36:49 - Founders shouldn't do it allDaniel made the mistake of trying to hold all the cards in his business early on, when he should have been hiring and delegating sooner.“To build a great company, at least at the time, I felt like I had my fingerprints, so to speak, on everything. I had to manage everyone, I had to tell everyone to do anything, they were extensions of me. That's not right. Today I realize that's not the right way to do things. To build something that's scaling fast and efficiently, you need to find great people and get them to do that stuff. And if that trust isn't there, then you can't build a real company. Now that's how I approach things, and trust in my leaders and managers and stuff like that, who are able to bring the company tons of value that's not reliant on me.”39:34 - Why you need to be on marketplacesMarketplaces are where your customers are, pure and simple. With very few exceptions, such as subscription-based brands, Daniel thinks everyone should be on them.“The overwhelming majority of brands should be on Amazon. And you should be on every marketplace you can get on. Why? Traffic is so expensive today that unless you are wherever your customer is, it's now harder more than ever to generate profit. So customers simply go from Facebook ads to Amazon to buy products today. That's what happens. That's not questionable at this point. And if you're not there, then your competitors are there. And if your competitors are there, they're winning off your traffic and getting revenue and getting your customers. So for that reason alone, it's my opinion that you should be on every marketplace that you can get on.”43:27 - Subscriptions are the winning modelLong-term, Daniel thinks subscription-focused brands will win out due to the element of streamlined and sustained customer acquisition.“In my opinion today, if I'm launching a brand or I'm thinking about launching a brand, if it doesn't have a focus on subscription, I'm not even considering launching it. Because just like I touched upon before, it is now harder than ever to acquire customers profitably. And unless you have a really good metric for LTV and retention of your customers, it's just so hard to build a brand today. Pre iOS 14, it was extremely easy. You could for almost any type of stuff, if you had a good idea of what you're doing from an ad standpoint and creative and influencer, you could make it work. You could typically scale it pretty quickly. But with how tricky it has become since iOS 14, it's the brands that are able to focus on subscription that are thriving more than ever. Because typically the LTV is higher, they're compounding every month, and they don't need to focus on day-to-day.”50:11 - Know your marginsIf you don't have a high enough margin on a product, you can't be successful.“I tell brands it would be ideal to have at least 75% margins on a product. If you're under that, it just becomes really tough. Just from a marketing standpoint let's say advertising is 50% of your expenses. Which today a lot of brands are in that docket. And let's say, like I said, you only have 50% margin on the product. Now you're zero for everything else. You can't hire employees. You can't pay for software. You can't you can't invest in anything like influencer content. So unless you have a good enough margin, it's tough to really invest in a lot of things you need day to day. So roughly that's what I'd say, because then a lot of the numbers start backing out.”51:05 - You need a killer content strategyFrom working with influencers to ads, a good content strategy (or lack thereof) can make or break your business.“Having a good content strategy is the most important thing. And I think influencer marketing, leveraging that kind of goes hand in hand with that. Especially when it comes to building a brand, because a lot of time brands that have brand equity from the influencers you are working with, from the celebrities you are working with. Because that's how people remember a brand. It's like Nike, do you remember it was Michael Jordan. A lot of times you don't say, ‘oh, I love this brand because their ads I see on Facebook.' It might acquire the customer, but unless you are getting the likeness from a lot of people along the way, I think it's tough to have that brand equity that a lot of people aspire to have.”Full video interview: https://www.youtube.com/watch?v=5mDY_VLkWS0Daniel Snow: CEO of Snow AgencyRamon Berrios: CEO of Trend.ioBlaine Bolus: COO of Omnipanel 

Barry has been involved in the financial and investment industry since 2001 and helped build a multi-million dollar real estate empire. The mix of real estate and financial planning experience has enabled him to see opportunities and business with more clarity and has enabled him to assist clients to increase their wealth and benefits while lowering their overall risk.He is the Founder & CEO of Focus Wealth Group, specializing in wealth & protection strategies, tax-free money planning, and guaranteed retirement income planning. He is the co-author of the book, Tax-Free Money for Long-Term Care!, and is known as a financial coach and mentor to clients nationwide. Barry speaks on topics such as real estate investing, tax-free retirement, guaranteed income planning, Infinite Banking, and how to take your business online and go virtual.In‌ ‌our‌ ‌conversation,‌ ‌we‌ ‌discussed:‌Infinite banking structure strategyFoundational background on infinite bankingGrow money for tax-freeCan I get the full million out on the borrow against it, or is there an LTV limit on the life insurance policy?Connect with Barry Brooksby:https://capitalgainstaxsolutions.com/tax-strategies-using-infinite-banking-with-barry-brooksby/Love the show? Subscribe, rate, review, and share!Here's How »Join the Capital Gains Tax Solutions Community today:capitalgainstaxsolutions.comCapital Gains Tax Solutions FacebookCapital Gains Tax Solutions Twitter

In today's episode, my guest is Yasmin Nozari the Co-Founder and COO from Peel Insights. They are an automated business analysis system built for Shopify brands that are committed to growth.Peel is designed for DTC Shopify brands to quickly understand trends in their business and react to the most promising cohort signals, without the need for any technical skills. They share all the intel Shopify businesses need to sell to more customers and to earn more revenue from existing ones.They provide the daily analysis needed to make growth decisions.WHAT YOU WILL LEARN TODAYWhy business intelligence is a necessary superpower to succeed in e-commerce.What is cohort analysis and why is it important for a Shopify brand.The importance of focusing on improving LTV from your ad-driven leads.LINKS AND RESOURCES MENTIONEDPeel InsightsPeel Insights Shopify AppPeel Insights Case StudiesPeel Insight - 30-Day Free Trial - Thanks Yasmin!EPISODE SPONSORToday's episode is brought to you by the Rewind App. This should be the first thing you install on your Shopify store to protect against human error, misbehaving apps, or collaborators gone bad. It's the trusted backup solution for over 100,000 businesses. See acast.com/privacy for privacy and opt-out information.

Metrics by Stage of Startup Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Startups move through stages from pre-seed to seed to growth to scale. The metrics you apply should adjust to the stage of the company. Here's a list of metrics by stage: Pre-seed - when you have an idea, use qualitative metrics and focus on basic activity. Key metrics include qualitative feedback, website traffic, and conversions. Seed - when you have a first product, focus on initial revenue. Key metrics include MRR (monthly recurring revenue), ARR (annual recurring revenue), as well as CAC (customer acquisition cost), and LTV (lifetime value ratio). Cash flow and burn rate are also useful. Growth - when you have product-market fit and start to grow, then focus on growth revenue. Key metrics include gross margin, segment analysis, forecast sales vs. quota, and month-over-month revenue growth.  Scale - when you start scaling the business, focus on the core drivers of the business. Key metrics include customer activation by channel or segment, increasing retention, and reducing churn.  The metrics start qualitative and shift to quantitative to focus the company on what drives growth. As the company matures, so the metrics become more specific and refined. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let's go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at:   Check out our other podcasts here:   For Investors check out:   For Startups check out:   For eGuides check out:   For upcoming Events, check out   For Feedback please contact info@tencapital.group   Please , share, and leave a review. Music courtesy of .

Selling on Amazon is a great way to earn money for your business, but in order to scale long term, you need to build your brand across multiple channels and platforms.In this episode, Garret Akerson, Chairman Of The Board at Kindred Bravely, talks about how they started as an Amazon brand then built their own presence on Shopify. He shares his experience of taking outside investments and having equity partners.Listen up and learn a ton from this episode!KEY TAKEAWAYS FROM THIS EPISODEHire team members that love your brand and are experts in their own right.You have to have great marketing to scale.Designing for yourself helps if you really know what you want.You can have a phenomenal product, but without great marketing, you are not going anywhere.If your brand is not built on repeat purchases, focus more on AOV (average order value) than LTV (lifetime value) for scaling.Be careful when choosing a partner or private equity firm.You can discount without discounting by bundling.Recommended Podcast: The Peter Attia Drive Podcasthttps://peterattiamd.com/podcast/Today's Guest:Garret Akerson is a Chairman Of The Board at Kindred Bravely. As an entrepreneur for 12+ years, he has been a part of three founding teams, one merger, and one successful exit. I've led branding campaigns, $1M/mo. Digital media campaigns, operations, hiring, UI/UX, and product development.Kindred Bravely is an online clothing retailer for pregnant and breastfeeding moms. We are a fast-growing team based all over the world, with offices located in Oceanside, CA. Connect and learn more about Garret and Kindred Bravely here:Website: https://www.kindredbravely.comLinkedin: https://www.linkedin.com/in/garretakersonTwitter: https://www.twitter.com/geakersonThis month's sponsor is Oribi. The conversion-driven analytics platform that gives you valuable insights on your funnels, events, drop-offs, and channel attribution metrics with no coding required. Try Oribi for Free!We love our podcast community and listeners so much that we have decided to offer a free eCommerce Growth Plan for your brand! To learn more and how we can help, click here:https://mindfulmarketing.co/growthplan-applyIf you've been paying attention and your brand is ready to GROW, apply now to be the one new brand we take on this month!https://mindfulmarketing.co/apply

You'll learn from an entrepreneur how their ambassador program became a 7-figure channel for their company. For more on BIOHM Health and show notes: https://www.shopify.com/blog/biohm-health-ambassador-program?utm_campaign=shopifymasters&utm_medium=description&utm_source=podcast Tune in to learn Why are supplement businesses cost-efficient to get into How to build significant demand for your product through PR before launching What is RFM analysis and how it increased their LTV almost 40% over the last year 

5 Reasons You Lose Customers with Paula Courtney Paula Courtney and Joe Lynch discuss 5 reasons you lose customers. Paula is the CEO of The Verde Group, a Customer Experience (CX) research consultancy specializing in measuring, tracking and improving the specific customer experiences statistically linked to growing revenue, market share, and customer life-time value (LTV). About Paula Courtney  A passionate change agent and entrepreneur, she believes that organizations remain competitive and profitable when they are brilliant at the basics of service delivery. As President of The Verde Group, a global market research consultancy specializing in helping companies improve customer retention, Paula leads the development of new research methods for helping companies quantify the financial impact of their customer experience. The Verde Group's Canadian and US retail studies have been published globally in over 35 publications including Business Week, Forbes, the Wall Street Journal and Fortune. A frequent conference presenter, Paula has delivered keynote presentations for various industry and professional associations and is also a regular guest lecturer at the Wharton School of Business. Paula also sits on the board of Covenant House, Canada's largest agency serving youth who are homeless, trafficked or at risk. Paula holds a BSc in Psychology and a post graduate certification in Personnel & Industrial Relations (CPIR) from the University of Toronto. Paula is also fluent in French, Spanish and Portuguese. About The Verde Group The Verde Group is a Customer Experience (CX) research consultancy specializing in measuring, tracking and improving the specific customer experiences statistically linked to growing revenue, market share, and customer life-time value (LTV). Our proprietary experience analysis methodology is known as Revenue@Risk Analysis. Based on decades of social science academic research and practical in-market business application, Revenue@Risk uses dissatisfaction analysis of problem experiences to understand why customers behave in a certain way and what actions to take to alter those behaviours. Verde Group has applied Revenue@Risk successfully for nearly 20 years with Fortune 500 clients in technology, manufacturing, pharmaceutical, retail, and financial services categories. Their practice is roughly 65% B2B and 35% B2C. Key Takeaways: 5 Reasons You Lose Customers Paula Courtney is the President of The Verde Group, a Customer Experience (CX) research consultancy specializing in measuring, tracking and improving the specific customer experiences statistically linked to growing revenue, market share, and customer life-time value (LTV). In the podcast interview, Paula explains the 5 reasons you lose customers. Reason 1 – Lack of customer support. When customers don't receive the customer support that they expect, they may begin looking for alternatives. Poor follow-up, getting the run-around, and being transferred by phone repeatedly without resolution is frustrating and damaging to customer relationships. Reason 2 – Ineffective problem resolution. There are more channels for customers to connect than ever before, however, if the customer is not able to get quick and effective resolution to their problems, they will move on. Reason 3 – Digital tools that are overly complicated or don't meet customer expectations. Technology that is supposed to improve the customer experience can sometimes be overly difficult to use and actually negatively impact the experience. Reason 4 – Lack of consistency across channels. Technology has enabled companies to engage with their customers in multiple channels (website, social media, phone, email, app, etc..) and the policies, procedures, experience, and outcomes must be consistent. When customers have different experiences across different channels, they lose faith in the company. Reason 5 – Lack of proactivity. Customer expectations are always rising and successful companies will always look for ways to deliver more for their customers. Get closer to your customer and find new ways to add value. Key areas associated with revenue growth: Frictionless experience Effective recovery from problems Engagement with customers The Verde Group helps their clients prioritize and tackle the customer experience problems that negatively impact their business. The Verde Group utilizes a unique non-traditional customer dissatisfaction research and social science-based Attitude-Behavior Consistency Model, which enables them to to isolate the most business-critical pain points across the customer journey, financially quantify revenue at risk, and reverse your customers' most damaging experiences. Learn More About 5 Reasons You Lose Customers Paula Courtney LinkedIn The Verde Group Logistics case study HBR Article The Logistics of Logistics Podcast If you enjoy the podcast, please leave a positive review, subscribe, and share it with your friends and colleagues. The Logistics of Logistics Podcast: Google, Apple, Castbox, Spotify, Stitcher, PlayerFM, Tunein, Podbean, Owltail, Libsyn, Overcast Check out The Logistics of Logistics on Youtube

Paul and Ed  are breaking down some recent pitch decks for potential investments.  Bad pitch decks can crush your chances at an investment. Lead with the strongest details, such as revenue, CAC and LTV.   Traction is key, cut out the fluff.  In the end, if you need to explain your entire business to an investor through a lengthy pitch deck, they're probably not the right investor.

W tym odcinku dowiesz się, jakie działania warto podjąć po dokonaniu sprzedaży w swoim biznesie, by zwiększyć LTV oraz pozyskiwać kolejnych klientów do Twojego biznesu. Dołącz także do promocyjnej oferty Growthlettera PRO na http://mateuszwycislik.pl/pro/Wszystkie linki i notatki znajdziesz na: https://mateuszwycislik.pl/

Today people don't want fake they want personable and using video is one of the ways to do it. What we're gonna talk about today is how to get personal with video one on one. We brought on one of the founders of BombBomb, Darin Dawson. BombBomb is a video email platform, probably the leading one in the industry if and it's a great product. What these guys did really good is they personalize the relationship process through email and put a face with a name and that's why they're succeeding. Darin believes that human beings have intrinsic value. Each person deserves to be seen, heard and understood. That's why he co-founded BombBomb. They enable everyone in your organization to easily record, send, and track personal videos so that they can break through the digital noise, build human connection, and get a "yes" faster and more often. Stop relying on plain black text on a plain white page to communicate your most important and valuable messages. Start enjoying the benefits of face to face communication through simple, personal videos.Three Things You'll Learn in This EpisodeThe best easy investments to make for your businessHow to use video to your advantageWhat BombBomb is and why you need itResourcesLearn More About Darin Dawson & BombBombReal Estate Marketing DudeThe Listing Advocate (Earn more listings!)REMD on YouTubeREMD on InstagramTranscript:So how do you attract new business? You constantly don't have to chase it. Hi, I'm Mike Cuevas to real estate marketing. And this podcast is all about building a strong personal brand people have come to know, like trust and most importantly, refer. But remember, it is not their job to remember what you do for a living. It's your job to remind them. Let's get started What's up ladies and gentlemen, welcome another episode of the real estate market interview podcast today we have a great episode for you guys. If you've been following the show last few weeks where we've been focusing on his personal branding. What the hell are you going to be doing in 2022? So many guys who subscribe and listen to the show constantly doing the exact same thing? Hey, Mike, I'm gonna get on video Mike, I'm gonna do video I'm going to get on video but then you kick the can down the road. Because the market is good right now and you forget the whole video thing to begin with. And then we end up back at square one. So what I've been preaching for the last two months, probably for the last five years actually is you have to build your personal brand through video. No one cares about what fucking brokerage you work for. Everyone cares about one thing, do I trust this person? Since COVID, it's O or COVID COVID COVID. It's okay to be personable. I'm in my garage. Right now, the guest is usually probably prior to COVID you're probably in a nice fancy office. But today people don't want fake they want personable and using video is one of the ways to do it. So how we're gonna talk about today is how to get personal with video one on one. And we brought on one of the founders of bom bom, which all of you guys are very familiar with Bom Bom is a video email platform, probably the leading one in the industry if that. And it's a great product. But what these guys did really good is they personalize the relationship process through email and put a face with a name. And that's why they're succeeding. So without further ado, let's go ahead and introduce our guest today. Mr. Deron Dawson. How you doing, buddy?Good, man. What's up, Mike, thanks for having me. I love everything you're just talking about. Yeah, I think every year I've been I've been doing this since 2006. And every year, it's been the year of video, right? Like, every year, every real estate conference, I go to a mall and let's like this year's the year a video and I think, you know, every year it gets better. But yeah, I mean, people want to adopt it, but then they then they just don't for whatever reason they get busy. I mean, that's the it's hard I get I've been in real estate, it's hard, you got a lot going on. You're dealing lots of transactions on moving parts. But I think if you make some easy investments in these relationships that you've had, because, you know, let's face it, you know this that real estate is a personal relationship business. Referrals are important to you. Repeat business is important to you. And you are in a business where you are involved in the transaction, right? A human is involved in the transaction, that means trust is needed. And so that's where human beings, that's how we communicate as humans comes into play in a different way. And you're right, that video is a great way to build trust, and to build a human feeling of trust and gratitude to one another. I think that's where most people need to be focusing right now.Absolutely. Why don't you tell everyone who you are and how you know about this stuff a little bit and then we'll get into all kinds of questions for you. Is it the NCI bom bomI started bom bom it's a video messaging platform allows you to send videos from anywhere to anybody. So you know, if you're in Gmail, because videos in Outlook, you can send videos if you're in LinkedIn, if you're in the CRM that you're using. If you're in mortgage or title, you're in real estate, we integrate with the CRM you're using, I can almost guarantee it. We've been we probably have about 100,000 realtors and loan officers and a bunch of other folks everything in between kind of on our platform and so we've been doing this long time and and I get that I'm just in San Diego now a couple weeks ago and they are national association Realtors Conference, I missed you a little talking about this. And you know I've been doing this for a long time. My only investor that we have as a business is the National Association of Realtors. I'm actually on there and you know part of their second century ventures portfolio so they invested in us and saw this is a big need in the real estate industry in general so yep, yeah. Solet's get into it I got all kinds of stuff so are you guys you know you got most of you're listening to the show are familiar with what we do if you're not we script that distribute video content for people but what we do is more on a production type level and we focus on building your personal brand. I want to go through how I've used bom bom how we coach our clients use bom bom because everyone always asked me how to use video and you're going to use video in different ways based upon the purposes that you're using video for. So let's break down all the different applications of bom bom because by the end of this podcast you guys should all get a subscription to Bom Bom if you haven't already. You're losing money and I'm gonna share with you why throughout the next 30 minutes. First and foremost is what I want to focus on is the transaction on the experience that we provide. I'm gonna tee you up first, when we are in a transaction No one remembers what the hell we did for them. They remember how we make them feel. They remember the conversation points we've had. And I'm giving you guys a very tangible example. I used to buy people for closing gifts. Darrin, there, I used to pick up their attorneys fees and their home inspection, which amounts in the city Chicago back that up to $700 a transaction. Not one time, did they ever remember the monetary costs I gave you $700. That sounds like a nice gift. But it went in one ear out the other, you want to know what made a bigger impact during the course of the transaction was how I use video to inform them along the way of every step of the process. What that ended up doing guys was allowing me to remove having to spend $700 on the client, I focused on the experience because customer service is lead generation, the goal is not to sell your house, the goal of average three to five transactions off of the sale the house, please decline then sell the house in that order. Sonow I have a this is how I think about this, Mike, that if you have two companies, company A and company B and I don't care what they do, okay, let's just whatever service you're you, you know, if you're listening to this watching this, put yourself and you're choosing a service, company A and company B, they are both basically cost you the same. They basically deliver in your as far as you can tell the same service, they cost the same same service, everything seems the same. If that's the case, how do you make a decision on who you're going to go with? Right? It's typically who you kind of like the most right? Or how you feel about them as a person are they going to have you feel like they're going to take you through and deliver the services you want. And same thing in real estate, like you're competing against all these other people. No matter what we think we think we're different. We think that we provide this better, we can say have more experience, but the consumer doesn't know or just not as informed about that. And so how you make me feel about how you how you deliver this process differently than your competition is how I decide I'm going to go with you right, like, so if you show up before, send a video, introduce yourself. Tell him tell him where you're from Holleyman doing it all the great things about you before you show up to the presentation. After you leave. recap everything you talked about the show them you listen to them, send them a video, this is the way you know, you said it create a different customer experience than other people competing for that business.But Darrin, I have a real estate license and 35 years in the business. These people need me. What's your answer to that?I think the other one is that, you know, I've been doing this forever. And I want to do this. I'm doing the same way. Yep. And it's worked for you. I would challenge Look, I know. I've worked with all the coaches, Brian Buffini, Tom Ferry, Jared, James, everybody. We all think about this the same way that you you got to reinvent yourself a bit. Okay? Even if you've been doing it forever, everything's always worked for you. There is always a way we get comfortable there too. Like you make the same income. You're not challenging yourself anymore. Think about it's 2022. What are you going to do differently this year? Just what's the new goal? You're raising the bar? How are you going to incrementally push yourself to get that higher number than you've ever gotten before? I would challenge that simply using video could be one of the ways to do that. Like I had a customer Michael Thorne he's a great customer out of Vancouver. been a customer for like 10 years, right? He just called me and said how can I just I want to up the ante. Because I know what using Bom Bom has done for my business. I know if I do more. I'm gonna make more money this year. So he's always he's already thinking about like, how am I gonna, like push this for 2022 and his goal, it's gonna send 1000 videos in 2022 I personally I own the business. I've sent like 8000 videos. Okay, that's a lot of one to one with. I'm talking one to one to people videos. We have some sales reps. I've worked for a long time over 20,000 videos, Michael thorns, probably he's earning a 10,000 category. But if he does 1000 In one year, he knows what it's gonna do for his business. And it's just these simple little things like I just said like before listing presentation, after listing presentation. Yep. During the holidays. Thank you for your business. It's gratitude. It's being that if you bumped into them at the grocery store, a past client? Yeah, would you say send that to them over a video and whatever medium you choose in watch the gratitude component back from that client he hadn't seen in the year two or three or four or whateveron a percent. Let's go through specifically and experience I'm going to share some some of the lenders we work with actually we're building out a guy's 12 Step transactional campaign right now and we're doing all like really funny, cool, entertaining videos, but what he's doing is that each step in the transaction as a lender, he's got a touch point. So for example, guys, and especially if you're a lender listening to this, you guys are being shocked everyone everywhere but sideways, let's be honest, and the only one who ever wins the deals the one that reaches them either a first or makes the biggest impact. So how a lot of lenders are using this as so many different ways you guys, they're using it a pot. Hey, nice to meet you. I just want to congratulations on getting that offer expected. My name is Mike Cuevas real estate dude, I heard I'm gonna be doing your financing. So I want to at least put a face to the name let you know there's a living breathing human being and that we're not like this Quicken Loans type company with a bunch of fucking robots. Right? I'm going to go in there and personalize it based upon my brand. Now we have other people that clear to close, congratulations, you have a clear to close. What does that mean? Well, and these little touch points, you guys, you have to remember that when people are transacting, that's the largest chance for referral. And when because it's such an emotional process, people are talking about it with everyone, which means they're walking billboard for your business, if you make an impact with it, and 100% of the people you come across this year will have a referral whereas 10 to 15% of the people will be moving themselves. So this is not we're talking about making an impact and differentiating the brand. What I found Bom Bom for very beneficial is that so many of these, like 2012 ish. Some of these agents are sending up real estate market updates, and then they send out Hey, turn back the clocks No shit, Sherlock. I've heard that like five different times today. And the entire you almost could tell when people come from conference, they all send the same email out, right? And what we started doing is like how I just ripped off hallmarks greeting card strategy, instead of Homer can make an entire business model, often holiday greetings. Well, what can I do with video holiday greetings. So we ran this for three years. And all we did was talk about the history of each holiday. And I'll tell you the number one subject line, the number one holiday to send out guys, it's Valentine's Day and the subject line is I love you, you'll get about an 80% open rate. And the content is so easy. You might be wondering why Realtors wishing I love you? Well, you might not know this, but you are responsible for 98% of my business. So therefore, yes, I love you. And then I lead into something else different. But the point is, guys, you don't have to talk about real estate, as a matter of fact, I will tell you not to the more you talk about it, the more gonna be tuned out. You need to remindpeople, people work with people they know like and trust, that's still true. And what you're doing there is building that know, like and trust. And only you can do that in your own unique way. And especially in your past clients. I think that the idea of referrals and the idea that, you know, I think often too many times real estate folks are everyone, loan officers as well. They think about the transaction, and that I always like to point out the lifetime, what is the lifetime value of a customer to you? What is it?Right, it's actually 25k, but there's not a number you can put on it.But if you say take that 25k It's really time that because of the referrals, if you build in the process for referral, and like I love what you're saying about especially in loans, because you have a lot of these points of interaction like loans been funded or you've been approved, there's all these points. And what you did there as you did that you never say anybody's name, but that's okay, because that can be an evergreen video. But again, that experience you're providing is a feeling that you're giving to the customer, okay, but back to LTV, lifetime value of your customer. It's not just the transaction is actually could be three to five times that over the lifetime of your relationship as long as you keep a relationship with them. And I think we all know that we need to do a better job at that. Okay, loan officers. You're so busy right now you're like I don't got time for one more damn thing. Okay. And a lot and some folks in real estate are feeling the same way. Some art some art, right? Some are struggling with buyers who they just can't dammit, I can't get it done. I get it. Look. All of this requires relationship building you need to be doing if you're busy right now you need to square away 10 minutes a day to nurture relationships of your past clients. Because the day that that shifts on you and I have been in this long enough that it has shifted okay, like I've done I've seen it will shift again. But you've got to hedge that. Look, you always are backing money away in this business. Because you never know when other shoes gonna fall right? I get it. So hedge it a little bit. Take 10 minutes on your day, send some simple gratitude videos like you've been describing, thanking people for their business checking in on them, how's the wife? How's the house? How's the car? How's the kid whatever it is, just send a simple video like that. Build that build that relationship over time again and nurture those things because it can be worth five times the original transaction really 10 times. How many repeat transactions can you get from them? How many referrals can you get from them in a 10 year period? That I need to think about your business both in both sides of this we're talking about loan loan officers we're talking to real estate professionals any any of theany referral based business this will work for our kids. And the more stuffy the business, the more it stands out like this businesses I love like for this type of stuff is like the attorney business or the CPA business. Imagine getting a video like I hate my CPA, we have a love hate relationship. And can you imagine like, how much human would your CPA be? If he sent you a video email? You'd be like, You know what, I actually don't hate you anymore. Okay, great. Like, because it's huge. If I sayit like this, if long term relationships are key to your success in your business video, yeah, especially now, in this post COVID thing, right? Like, we're more remote people are working from different places. The other thing I think that video helps with is, sometimes when we're calling people to check in on them, you just want to check in on a phone, I'm interrupting you, right? Like, I'm going to call you, but I'm going to interrupt you in your day with a video you can send it, they can receive it on their time, you can send it on your time. And that's called that's asynchronous video, right? That means that the two recipients in the center are removed from the time being the same so that they get the feeling of bumping into me at the grocery store. And they can be like, Oh, I like them. They're great. I remember working with them. That was fantastic. But I don't interrupt them when they're busy. And they're doing a bunch of stuff during your day. Does that make sense? Yeah,here's what I never understood was like, I don't understand why real estate agent or even any business for that matter. But especially in a referral based business like real estate, because it's so simple. Like we all live somewhere last I checked unless you're sending it to someone's box. I mean, we live somewhere renting, buying or whatever. But agents will go out there and farm a bunch of strangers before they'll start farming their own relationships. Right that very early on in my career. And here's I'll give I'm gonna give you guys a very pragmatic, easy approach. What is Bom Bom run right now? It's gonna do an ROI and everything. How much does it cost me to get a subscription on bom bom 500 bucks, that 500 bucks a year. Okay, we're going to 1000 access right now, I'm gonna give you guys a very simple format to follow, I'm sure exactly I do. It's gonna take you 10 minutes a month. If you have 10 minutes a month, you don't have a fucking business. So here's all I did, to video emails a month, nothing to do with real estate, follow the subject, follow the holiday greetings. And here's how I want you to do the math, you guys. If you send we would average a 40% open rate plus on our video emails, the national averages, what they're in 13%, give or take. Yep, so let's look at what impact is, if I'm hitting 40% in my email list is 200 People, I'm gonna give you the statistics on that. And if I average of 40%, that means roughly 80 people are seeing me each and every year, every month, twice a month, okay? Now if you do that for 24 or 12 months, it's 24 videos over the course of time of those 80 people this is what's happening with them statistically 10 to 15% of them are going to be moving themselves. So that's about eight to 12 transactions, but 100% of them all 80 of them have a referral for you. 88% of transactions come from the first person you meet. That happens to be people you know used in the past or you fucking run into on your Facebook feed. It doesn't matter. We're not fighting for anything else other than the attention of our network. And it's how you nurture not what I do better. I do better on my videos when I dress up as Alec Baldwin and I recreate a scene from frickin Glengarry Glen Ross and I'm talking about a B are always be recording that generates five sales. Me talking about video marketing generates zero, it's the same thing in my business. So you guys nurture and farm your relationships with content. Now take that and do the same thing on social and run ads to the same damn people. You won't have a lead generation problem which you're going to have as a hiring problem. This is not rocket science. And if people don't like you, it's the only time it doesn't work.I didn't Well, you're preaching to the choir. But you know, I think one of the ways that everyone on this call or is listening this understand it's like compound interest. Yeah, you make an investment. As long as you consistently drop that in your 401k or your all of your are in real estate you're buying this property because it's going to increase in value over time. The property is your database and that doesn't mean it needs to be 1000 people I love that you said 200 Thank you. Because a lot you don't need a lot you don't pick up the if I can't pick up the phone and call a person on my list and they don't know who I am. I should not be emailing them okay, like you don't have a relationship with these people you have a relationship I think that's why it's so effective. That's why you have a 40% so it's your home and it's increasing in value 6% 8% 12% Wherever you live, but it's I got to keep it up I got to paint it I got to make sure the lawn whatever you got to think about your database that way like a home right I think you could all relate to that and then the interest compounds and your investment or the investment grows and you sell it you make money.Here's another way to think of your databases your significant other the second you stop talking to him you're on your way to a divorce and she starts cheating on you with another agent or do this because it's the exact same thing. Let's get into some creative ways I want to share some creative ways I use bom bom in the past. I remember this one we're in a multiple offer otherwise sticks out but we're in a multiple offer situation And the realtor was like getting hammered in Mexico like I call them ahead of time and I said hey dude, I'm he was drunk at the pool and I needed my offer to stand out and I was in multiple offers so we use bom bom put the freakin sombrero hat on or whatever and I was like Cheers The him I said listen dude I know you're on vacation it's the thing I'm gonna make this transaction extremely easy I get it bla bla bla bla who won the deal guys because no one else did it on a video people are doing this every day and it's the differentiation factor is all that you get noticed and when you get noticed you get more eyeballs get more eyeballs that's all it's about in this business I believe.Yeah. Standing out man. I think this car thing I think the pandemic did more. Okay, I call it digital pollution. But when I get off this time with you, I'll have no less than 10 cold emails I'll have somebody call me spamming me on my phone LinkedIn are knocking you guys it's just a constant assault I think it's it's like this proliferation of like stuff coming at you now. And look I am dealing with that so if I'm You're someone's customer and I am I just rebuilding the house for we're refinancing stuff like I'm your customer okay? If you're trying to get my attention for anything. Yeah, you got to stand out a little bit because I get so much Senate me I think video helps you be uniquely yourself. Every human beings different or fingerprints or faces everything is different. Right? I have twins. I can tell them apart. No one else can but they're different. Funny. That's the point right? Humans are different. We stand out just by simply being us. So if you're afraid of video or you haven't done before, because of whatever reason, you got to be standing out you got to be unique in a way that's only it's not hard because you're uniquely you and uniquely unique and and you can do this easily with video, but you got to start he's gonna start sending simple videos. Don't overthink it, don't over produce it. Don't worry so much about what you like, here's the deal. We sound different to to ourselves. When we hear the video back. Is there a problem that people face? So right now the way I hear myself is not how you hear me? Right? Like the way I hear you is not how you think you sound? It's because we hear ourselves in our heads. Oh, yeah. Let me tell my look at myself now a lot because I'm on video a lot, but it's when I'm brushing my teeth in the morning. So a lot of times when people turn on the video camera and they record it and they play it back to get freaked out. I don't like how I sound in your brain is kind of saying that. That doesn't sound like you rightly gotta like get over that a little bit. Because what is how you sound okay, but encourage yourself, it's not it. It's not a bad thing. It's okay thing, but send the video. And that's why I was telling people when they're getting started, send gratitude videos, send thank you videos. Thanks for your business. Thanks for the lead. I appreciate you. It's easy to do. And it almost always elicits a response from the other person to say, I thank you so much for sending that. So you get to feel good. Sending gratitude. You get the feel good receiving gratitude, and they get the feel good because you did that for them. So it's a reciprocation that happens only humans have that type of exchange. By the way, it's a human thing that you can do very easily and really help your business. It's very simple. Yep.What would you say? All industries you guys were doing? What would you say the? To me? It's any any personal one on one? I mean, it works with everything. I don't know, I can't even really name something that wouldn't. But yeah, your goals, it's very simple guys stand out, like quit being like everybody else. And the only thing that ever stands out is your personal brand. Because God only made one of you as Darrin just said, That's pretty damn cool. We just have to embrace it. Note, I always tellpeople though they go like, I will say you don't have to send a video every time. So if you're trying to think like when should I? If it's better said in person, if it would be better. To say it in person, and I can't send a video, I think that that loan is funded, you know you're approved. That'd be better in person. They're gonna be pumped. You can deliver that message better in person or accepted like our we were accepted, like our offers accepted. That's a great one. If you could be in person, but often you're too busy. Send an exciting video, guys, and then like holed up aside, you're approved or, look, we're accepted offers accepted. I think that's huge. Celebratory makes it easy, by the way to share that video with other people. Oh, we got the house forward. Yeah, they get to see you their realtor. They get to see you their loan officer, what am I whatever it might be? Those are the fun things that people want to celebrate and tell other people about in their lives, which gets you more referrals, right?Yep, that's it. Well said dude. Don't overthink it, guys. Darrin any other points that you want to make anything else you think?I think the one thing that we do that we didn't touch on though was screen recording. So we actually allow you to record whatever's on your screen. So here's where this comes into play. Now, I know you don't want me sharing any financial information on this video, okay for Oregon title, but I mean, when you're walking through things that you need them to do. Again, this could be an evergreen video, a lot of times and these businesses begin to these repetitive things that are new to me as a consumer, but you've done 1000 times, right? So shoot a quick video with a walkthrough. recording the screen helped me understand the things you need me to do. Yes, you don't need to show right, like walk through the document, walk through this disclosure form, whatever it might be, of course, again, not sensitive information, but things that you're doing all the time, record a video once send that to them. And then you can use that video again and again and again. saves you a ton of time.Yep. 100% transactional, there's so many ways use a transactional guys like your, your process. People do rave about them, because they just they like you, they just turn into referral sources, but also the database nurturing was game changers for us. And we do over we create nearly 100 people's videos a month, two to four a month, and we're sending a video email to every single one of them. So I could tell you guys exactly what the statistics are and how it works. It freakin works. And we're doing edited videos, you don't need superduper edited videos you could the transaction on a one on ones are better not edited unless you're using. I agree Iowe you an edited video. There's definitely a place for both of those campaigns. Right. Like you said this the beginning. It's what is the end goal of this communication? What is it being used for? And that's how you decide, right? Yep,totally. Dare launch you go ahead and tell them. I'm sure you guys know how to get there. But go ahead and tell them where they can go. Because he has webinars maybe up on your site or something to check it out further. And here's the homework.It's easy, just get a free trial free, get it 14 day free trial, check it out. Bom bom.com. In my homework for you, you're listening. My challenge to you is to send 10 videos to past clients. If you're a loan officer, it could be to your real estate friends and beginning a lot of business in the last year. If you're in real estate, it's your folks you transact with and 2021 and just tell them thanks. Thanks for business. I appreciate you. Appreciate you always calling me and giving me the business you are. Send a gratitude send 10 Gratitude videos with a 14 day free trial. after that. I don't think you'll look back. Okay, and one more thing I got a book out. It's called human centered communication. And you can buy it on Amazon it's easy to get our chief evangelist wrote Ethan Buettner Chief Marketing Officer see personality it's great book kind of break down breaks down some of these ideas again that we've been talking about gives you some tactical ways to implement them in your business. I think you'd love it.Yep, awesome, dude, appreciate it. Great show and folks, thank you for listening to other episode real estate marketing podcast. Because I think we can help you with you want to build your personal brand to come to look celebrity your market, feel free to reach us real estate marketing do.com We script edit and distribute your videos and make you look pretty damn cool. But more importantly, we don't let anyone forget about you, which is why we generate more referrals. If you're interested in looking at a new strategy to market your listings and stand out quit being like 99% of the other people out there visit listing advocate.com listing advocate.com Appreciate you guys subscribe, and stay tuned to next week. Peace. Thank you for watching another episode of the real estate marketing dude podcast. If you need help with video or finding out what your brand is, visit our website at WWW dot real estate marketing dude.com We make branding video content creation simple and do everything for you. So if you have any additional questions, visit the site, download the training, and then schedule a time to speak with a dude and get you rolling in your local marketplace. Thanks for watching another episode of the podcast. We'll see you next time.

Komponists Marģeris Zariņš dzīvo kā trijās dimensijās reizē – pagātnē, tagadnē un nākotnē, stāstot par nesen izdoto Zariņa pirmo autoralbumu "Kremerata Baltica. Marģeris Zariņš", atzīmē diriģents Andris Veismanis. LTV raidījumā "Kultūrdeva" diriģents komentē mecosoprāna Ievas Paršas mijiedarbību ar komponista mūziku: "Sapfo dzeja, kas ir mūzikā, ko Marģeris Zariņš uzrakstījis, Ievai ļoti piestāv, tāpēc ka viņa pati tieši tā dzīvo. Viņa dzīvo kopā ar literatūru, tautas mākslu, daudz ko dara ar latviešu darbiem, rokdarbiem un arī komponē."

On the podcast we talk with Robbie about finding your super users, the real reasons for subscription fatigue, and why pricing isn't as important as you might think, especially early on.Our guest today is Robbie Kellman Baxter, consultant, keynote speaker, and author. She's advised many of the world's leading subscription-based companies, including serving on the advisory board of Strava. Her most recent book, “The Forever Transaction” is a deep dive into everything consumer subscription, and a must read for anyone in the space.In this episode, you'll learn: Identifying and attracting lifetime value customers How to get and maintain customer loyalty Three causes of subscription fatigue Why customers cancel their subscriptions Links & Resources Strava Intuit Survey Monkey Oracle The Subscription Economy Tien Tzuo: Subscribed Eric Crowley Seth Miller CrossFit Shopify Calm Matthieu Rouif PhotoRoom GoPro Elevate VSCO Robbie Kellman Baxter's Links Robbie Kellman Baxter's website Follow Robbie on Twitter Robbie's book: The Forever Transaction Robbie's book: The Membership Economy Robbie's LinkedIn Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Hello, I'm your host, David Barnard, and with me, as always, RevenueCat CEO, Jacob Eiting.Our guest today is Robbie Kellman Baxter, consultant, keynote speaker, and author. She's advised many of the world's leading subscription-based companies, including serving on the advisory board of Strava. Her most recent book, “The Forever Transaction” is a deep dive into everything consumer subscription, and a must read for anyone in the space.On the podcast we talk with Robbie about finding your super users, the real reasons for subscription fatigue, and why pricing isn't as important as you might think, especially early on.Hey Robbie, welcome to the podcast.00:00:58 Robbie:Thanks for having me. I'm excited to chat with you both. 00:01:00 David:I was introduced to your work by somebody recommending your book, The Membership Economy, and it really struck me. I was so excited that you agreed to be on the podcast, because here's a book written in 2015, and we'll talk about your other book that was written more recently, but written in 2015. I was looking through it, scanning the chapters, so I bought the book. I was like, this is everything we're talking about now, thinking it's all so novel with subscription apps, but really consumer subscriptions have been around for decades. You've been working in this space way longer than any of us.So, I thought it would be really fun to have you on the podcast to talk more broadly about these principles of consumer subscriptions that apply equally to D to C subscriptions, as well as the app space that we work in. That's where I wanted to kick things off.So, how did you get your start in consumer subscriptions?00:01:57 Robbie:A couple of threads came together. I was in product-marketing for what is now called SaaS, for five years, right before I hung out my own shingle and started consulting. So, I had that background as a product manager working with software products that were being sold as subscriptions, and then as an independent consultant.My fifth client was Netflix. I fell in love with their business model, and I was wondering why isn't everybody else falling in love with their business model, too? This is amazing. Recurring revenue, predictable cashflow, the amount of data they were collecting on their customer. The fact that they're offering was just a much better way of delivering on a promise that many of us wanted delivery for, which is a professionally created catalog of video content delivered in the most efficient way possible. It meant not having to put a raincoat over your jammies to go pick up a movie, with cost certainty and no late fees.I was consulting with Netflix. I was already a customer, and a few people started calling and saying, “Hey, we heard you worked with Netflix. We want to be the Netflix of our space.” Whether that was news, or music, or bicycles, or dental pain management products, or clothes, there was a lot of interest in what it was that Netflix was doing.So, I started trying to create frameworks, trying to say, what are they doing? Which parts are applicable to other businesses, and which parts are just unique to that group of people solving that particular problem?That's really where I got started, and it turns out to be big enough and deep enough that it's kept me really busy for, it's been 20 years, 20 years. 00:03:55 David:Fifth client to, to land as a consultant. That's a. Really great. And so you were with them before they even introduced the, video on demand on the internet, right. You started with them when it was DVDs in the mail, 00:04:09 Robbie:Yeah. 00:04:10 David:Traditional D to C subscription service. 00:04:13 Jacob:But, but even then was satisfying a lot of those, almost all of those conditions. Right. I didn't have to go outside just to my mailbox, not too bad price certainty. I didn't have late fees. and then like, you know, insanely large catalog. Right. you know, it was, it was, it wasn't. We tend to wait for the technology to get that right.And then, then we had VOD being, 00:04:33 Robbie:Yeah. And they were already thinking, I mean, it was amazing to me. So I was there, you know, the time that I worked most actively with dev 2001, 2003, even during that time, which was all DVDs, all three DVDs out at a time, they were already thinking about streaming versus, you know, should they let you download it?And then have it explode after, you know, you know, some duration. What was the best way to deliver it? Should they come through your, you know, for awhile? I remember I think it came through your PlayStation or your, your we, were thinking like, 00:05:06 Jacob:My first like set top box experience with Netflix would have been on Nintendo. Yeah.00:05:10 Robbie:Yeah. I mean, so they, they were already thinking about it and I think that's a really important part of any subscription is even if your subscription works great today and it's good enough to get people to sign up the product team has to be thinking, how are we going to continue to evolve it in particular fringy? Right. How do we continue to stay relevant to these people while also having those new and improved features that bring new people in? And I think a lot of organizations. I have been taught to over-index on acquisition benefits and not thinking as much about those, the sticky engagement benefits that often are really hard to talk about credibly. Right? If I say to you, you know, sign up for my subscription, my, my video subscription, because it's the most, it's the easiest to find the next piece of content. And you're going to love our algorithm, right? People aren't going to believe you. You don't have credibility. So, all they're going to say is, oh, you have Hamilton, I'll sign up for that.And then I'll cancel. And then it's still up to you, you know, if you're Disney plus to get them from Hamilton to princess movies, national geographic titles, ESPN, all the other great stuff that they have. Star wars.00:06:26 David:I'm 00:06:26 Robbie:Yeah. 00:06:26 David:My son right now. Yeah. That's great. And then I do want to kind of step back and you're kind of right into the weeds with some really actionable advice, but I want to, I want to step back a little bit and talk more broadly. So after working with a few, companies in the subscription space and Netflix so early eventually wrote this book, The Membership Economy, which I love.Phrase and wanted to ask actually, did you, did you coin that phrase then how did you at the time and how do you still kind of define this membership economy that you wrote about. 00:06:57 Robbie:Yeah. Well, first of all, I'd love to say that, like I just came up with it and it was so natural and obvious, but, you know, I was thinking, I was like, is it, is it about subscription pricing? Is it about premium services? Is it about recurring revenue? Should I call it the recurring revenue that I was trying to think?What is it? And where I came out was it's not about the subscription pricing, which I think is a tactic. it's a tactic that you earn the right to do by having. Relationship that is trusted with your customer. The customer trusts you so much that they're like fine. You can charge me every month or you can charge me every year and I will just keep paying you and not look for alternatives.And for me, that was based on a certain kind of human relationship. And that's where I came up with this concept of membership that you belong. That it's, you're committing upfront to a long-term relationship as a vendor, and then you earn the right to have subscriptions. So that was kind of where I came up with it.I worked with Netflix. I also worked. At that time Intuit. I worked with a survey monkey and their predecessor. Uh Zoomerang and I worked with Oracle on the B2B side, and those were some of the companies that helped me sort of connect the dots and figure out how. The framework, of, you know, here's some ways to think about what happens when you treat your customers like membership members.Here's what you need to track. Here's how you need to think about it. And here's what it, what it can do for you. Honestly, the first book, all I was trying to do is say, this is a good idea. You might want to consider it for a bunch of reasons.00:08:26 Jacob:Think of it in opposites. I think it's is it the. the Zuora founder's book subscription economy,but but you're right in the sense that subscription kind of implies like 00:08:37 Robbie:Okay. 00:08:38 Jacob:Particular tactic for monetization that does go really well with this concept. But when I think of membership, as opposed to just subscription, like membership implies also community to me, right.00:08:48 Robbie:Yeah. 00:08:49 Jacob:Like building this. This, this ecosystem, this community that, that, which was then in genders trust, which then allows you to monetize, right. And and this great business model. about it in those terms, I think is a really nice way to put it as opposed to like, let's take something.Let's take something that, that we were monetizing another way and just slop noodle on it, which is something a lot in the, in the app world, this transition from paid upfront or micro-transactions driven apps to subscriptions, some have made it and some have not. And I think the ones that have made it are the ones who look at it in that light, in the membership light, in the.Earning their business repeatedly through content or through community. so I, yeah, that, that framing I think is really accurate.00:09:36 Robbie:Your point about, you know, so many companies to slap a subscription price onto whatever they already had, you know? Okay. We have a usage based model. Let's see what happens if we do a subscription based model for the same product, or let's see what happens if we take, you know, a model where you have ownership, where I download the app and it's mine, and I can use it forever, even if it's really, really obsolete.If it solves my problem, who cares, to one where you're being forced to pay every month. Yeah, extensively to get upgrades and maybe access to your peers and some kind of community functionality. It really is a different product. You need a different product for subscription than for, you know, a purchase or usage based model.And, you know, I love teens books. Subscribed is a great book. I recommend it to people. It's very, well-read has a lot of interesting ideas. but I didn't go with that, you know, subscription economy model just because I really want. To focus more on the culture and the relationship and not jump straight to let's get some of that subscription pricing stuff so that we can get a good valuation, you know?00:10:39 Jacob:Yeah. Yeah. I, it, you made me think of this one experience I had just as an anecdote was, X-Box in for three or four years ago, released an Xbox subscription. And I thought this is a really cool one because I could defer, I buy another X-Box every three or four or five years. So it was like, oh, I'll just spread that cost out.I didn't have a lot of cash at the time. I was like, this is a great 40 bucks a month. I get a new Xbox, right. And so I went in to do this at the, at the Microsoft store. What it really was, was they were giving me like a cash advance, like they were giving me, like, basically I had to get a credit check to get a subscription.And I was like, this is 00:11:12 Robbie:That's not a subscription. 00:11:13 Jacob:In mind. Exactly. Right. Like I thought I was joining the, the X-Box club and I was going to just get an expert and they're going to place my Xbox for me. Right. example. of that case of just like slapping subscription pricing on what was essentially a loan.00:11:26 Robbie:Yeah. Yeah.00:11:27 Jacob:Now my credit score, I have loan for a 19 20 16 Ford edge and a next box, on those are my two like credit items I've ever had. So it's really weird.00:11:37 Robbie:And they've come a long way. I mean, Microsoft has come a long way with their subscription strategies, you know, not just on the gaming side, but you know, with, with office 365 and you know, they've done a lot of thinking about subscription, but it really is super complicatedto, to make it work. 00:11:54 Jacob:Right? Like with software zero marginal costs or whatever you can It makes a lot of sense. will say, I will say, I want to give Microsoft some credit, back in the gaming world there Xbox game pass product product, which I also subscribed to has been amazing.I bought a new X-Box game in forever, cause I don't really care about title individuality. I just, whatever it is, $10 a month or $15 a month. And I get access to like 50 different games that rotate. Plenty. That's plenty for me. And I will probably never unsubscribe from that. Right. But it feels like a 00:12:22 Robbie:Yeah. 00:12:22 Jacob:Cause it's, software-driven, in there. There's like there's changing and there's events stuff that comes in and out and they make it a big thing. built it up into this, into this. Yeah. This kind of, it feels like a membership, as opposed to, yeah, just slapping an affirm loan on an X-Box purchase, basically.00:12:39 David:I do want to step back to your, to your book, The Membership Economy, and, I love the subtitle. Find your super users, the forever, transaction and build recurring revenue. finding super users is something we've actually talked a lot about here on the podcast. So looking for those cohorts, one of our recent podcast, guests, Eric Crowley.Talked about locals versus tourists. Seth Miller, another recent podcast guests talked about how, you know, figuring out these cohorts was just a huge unlock for their business. so what's your process? How do you recommend clients find these super users and how do you think about these, super users?You mentioned all the way back in 2015 before any of us were thinking about these things.00:13:24 Robbie:Yeah. Well, so for me, what I think about with super you. So I think about, you know, anybody does subscriptions knows. Segmentation is like re like the most important thing. You have to know who your customer is. Not just at the moment of acquisition, what they look like. You know, when you're like, that's the person I want, but how are they going to behave once they join?The moment of transaction becomes the starting line for understanding your customer, not the finish line. What like, oh, we knew them well enough to get them to buy it. We knew them well enough to get them to buy. And then to get them to make this a habit and then to get them to go deeper and to stay for a long time and maybe even bring their friends.So, you know, the first thing I always do with my clients, I say, let's focus on who you're, who you're making the problem. What is the promise you're making, who are you making it to? and that's kind of part one. And then we map out the journey. What is it? What is the goal that they have that is ongoing or the problem that they have that is ongoing?And what are the moments on their journey where you might be able to intervene and help. Right. So in the beginning it might be just one or two places, right? I'm I'm, I'm QuickBooks. I help you at tax time, but then it might be, oh, and I'm going to help you with some other key moments in your process of adulting financially.Right. You know, one of the things is you move at your parent's house and you pay your own taxes. Another is you might take out a loan for that. Awesome. You know, for whatever car you said, you know, you're going to get an, get a car and you need a loan and you know, they can help you. And so you're layering in those different beds.On a journey cause you want them to stay. You want to keep providing value. and then once you know what that person looked like, then you go tell your marketing team to go get lookalikes, get more people like that. Super users goes one step beyond that, which is not only are they great customers, you know, high customer, lifetime value, easy to serve, whatever.They also were putting their own money and effort, their own resources into strengthening your model. So these are people that bring in. These are evangelists who bring in other members. These are people who give you feedback on your products and services, which sometimes doesn't feel like a gift, but always is a gift.And it's, people who are willing to help onboard. New members. Right? So the ones that, you know, explain in the user group, you know, that, you know, this is, this is how you use that product, or this is, this is my workaround, or this is, you know, what was hard for me and how I fixed it. So those people, you know, that make referrals, that that speak out on your behalf that gather, you know, others they're so valuable.And I got really into this idea actually with CrossFit. my sister is a, is a big CrossFitter and watching her. in addition to all the money she was spending to, to be a member of this CrossFit box, the amount of time and effort she was spending to onboard new members to invite them over. When the, when the box was closed, she and her husband would put out their equipment on their live on a cul-de-sac.They put it all out on the street and invite the whole box, come over and get their workout done there because they love the community so much, right. Their own time and money to support the community.00:16:27 David:There kind of specific, Ways, especially digitally like, with, with or customer service, what are the tools that, that you see people be successful in finding those kinds of users and understanding those patterns and who they are and what they 00:16:45 Jacob:Yeah. 00:16:45 David:Like. And those sorts of things. 00:16:47 Robbie:So the, the starting point, I think is always lifetime customer value. So. You look at the group of customers who stay the longest and spend the most right. And the ones that people would say, we wish we could make more of these, you know, and then you look, you develop hypotheses. What does this group share?And it can be as simple as writing the names of your first 10 customers on a boards. These are the 10 customers we had. These five have been awesome. These. You know, didn't stick around long canceled, complain a lot, you know, whatever the reason is. And then you try to come up with what is, what did this group share that this group doesn't share?That's the simplest way in a, in a data world where you have the data you're doing the same thing, but digitally, how did they onboard? What was the source of the lead? what time of year? Like which cohort are they in? Did they join? You know, people like, for example, with QuickBooks people that join in tax season, Might be behave very differently than people who join as a new year's resolution or who joined in August.Right. What kind of person starts thinking really hard about managing their money in August? Great. you know, so, so looking for those things, developing hypotheses, looking at the data, trying to say what's the difference between our most valuable customers and our not most valuable customers, which is not your worst customers, because your worst customers are often outliers, but just the ones where you're like, they're just not that good.They came for two months, they left, they binged, they used up, you know, they were using us really heavily for six weeks. And then they left. What's different about them than the ones who continue to use this gradual. For five months. and I think that's where the hypotheses come out and then tactically, what you do after, you know, as you look at the difference in onboarding those different groups and you optimize your onboarding experience.To build those habits and then you mark it. This is often requires a tremendous amount of discipline. You mark it to only attract the high value people and not to attract the others. So if I walk into McDonald's with a gown on with my husband and I say, it's our 20th anniversary, show us to your finest team.Give us the best you've got. And we'd like a nice bottle of champagne, right? Customer's not always right at McDonald's. Right. They're not going to say, oh man, Robbie needs champagne. Somebody scraped down to the seven 11 and you know, get a bottle of Prosecco and you know, we'll try to pass it off. They say, that's not really what we do here.Dummy. They might not say dummy, but they might be thinking it, right. That's not what we here, you know 00:19:10 Jacob:The 00:19:12 Robbie:Right. We're here, you know, we're cheap, we're fast. It tastes good. Your kids love it. You can drive through and eat it. But we don't do, we don't do special occasion stuff. And so they know who they are.Right. And they're okay with me not coming in. Right. They're even okay with me saying, by the way, don't go to McDonald's, it's a terrible place to celebrate your anniversary. Right. They're kind ofCause it. 00:19:32 Jacob:Just all 00:19:33 Robbie:Right. The leaning is terrible. It makes your skin look awful. You know, the point is that if they took care of. Right. What am I going to do? I'm going to tell you, you know what, just go there for your anniversary. Just tell them it's your anniversary. They'll run out and get all the stuff you need. Right? And then they have all these people that are expensive to serve. Right? It's the same thing digitally, right? If you bring in the wrong people who are going to binge on your content in the first month, or the people who are going to push you to create features that nobody needs, except that.Right. It's just going to throw your whole business off in the wrong direction. So having that discipline upfront to know what you do and you don't do well. And to say no to some prospects, it's really hard to say no to prospects, right? If they have money and they're like, just add this feature and I'll pay.You know, Netflix in the early days, a lot of people wanted them to have video games. Right? Video games were also on discs seems easy, right? As an outsider, as an expert, right? I'm like, ah, video games, same thing. Video games work in a totally different way. And what Netflix said is we don't really understand how people would view.Games. We don't understand how they've use them. We don't understand how many we need. We don't understand how they value that. We don't understand how to negotiate terms with gaming companies, but that's a whole different thing we're going to, we have plenty of runway here. Just focusing on video content.00:20:51 Jacob:Yeah, it's, it's really interesting that, that, that feeling as a founder, especially true in SaaS, when you have literally 10 customers and like you will do 00:20:59 Robbie:Yeah. 00:21:00 Jacob:For the, your 11th, it's a little bit true in consumer. Two in the early days, like you, you're just kind of like, how do I get the funnel bigger?How do I, how do you, I think you are a little bit myopic on, the top of the funnel and not thinking about this long-term thing, partially because we don't have a lot of data. You launched your app six months 00:21:19 Robbie:Yeah. 00:21:19 Jacob:Trying to make decisions on customer lifetime value. And you don't really have a good sense because you don't know who's sticking around.You probably don't have a ton of data, but one thing you said. That really got my gears turning was that of putting them on a board and just looking at them, looking at the 10 customers or whatever it is, a hundred, even in consumer SaaS, where you have hundreds of 00:21:37 Robbie:Yeah, 00:21:38 Jacob:So it's not that many, you can grab it.You'll be surprised at how many things I've in my old days in consumer's house of like just clicking into a customer and just watching how they use the app, like an individual, right. It doesn't, not data, but it gives you hints and you can start there. And then, and 00:21:54 Robbie:Yeah. Hypotheses, right? 00:21:55 Jacob:Yeah. Hypothesis. And then you actually talk to those people, if you can, like get them on the 00:22:00 Robbie:Yeah. 00:22:00 Jacob:Surprised what they tell you. One of our, our guests Matthew and photo room a few weeks ago talked about, they would take their app to McDonald's and just show it to people to keep the McDonald's references going, and get like in-person feedback.And that helped them learn, you know, they, they were, they were an app that thought that. For everybody and find out later that they're actually like, kind of like a pursuer app for Shopify people, people 00:22:23 Robbie:00:22:24 Jacob:And people with, with e-comm and, and that like kind of exploded their business for this exact case.You're talking about where they found out. Okay. Yeah. We're not for this entire, like long tail of low intent users where for this really core set, but that can be really scary if that sets kind of 00:22:39 Robbie:It's always scary to niche down, but it's almost always. a good strategy. And I wanted to tag onto something else that you said, Jacob, which I think is really important. People often say, how can I make any decisions about, you know, based on, you know, who has the highest customer lifetime value?When, you know, we've only been around for three months or six months, we have to wait until they leave. Hopefully not for three years or five years, but what I've found. And, you know, I wonder if you've seen the same thing. Most people who leave leave in the first two months. So what you really want to do is optimize for onboarding, you know, are they adopting habits that look like people who are steady users getting value, and you can often tell that in the first month, by how many people drop off by who stays and buy, you know, are they bingeing or are they using it in kind of a normal way? And so you don't have to wait for 18, 18 months or however many periods, a lot of it, you get your answer right away. Do they cancel at the end of the first period?00:23:43 Jacob:Yeah, it's good to think about your product in terms of not just. Like signups and getting through the end of onboarding, like that day one experience, but think about what hooks are like, what are the things that people are actually investing contingent on? I always think that that's, that's a, know, you think about this long-term relationship, giving users, in your product to invest and to give back and to connect, like putting in 00:24:05 Robbie:Yeah. 00:24:06 Jacob:Themselves.Like there's passive usage consumption. Netflix does a good job. Like you can save, listen stuff that they do a lot of this just in passively, right? Like you consume content and they learn about you and then they have a profile. but I think some of the best apps, like let put in and that's going, gonna also not only probably make them stickier users, but also it gives you early indications and some things to hook on and be like, okay.I mean, Dropbox, this was a big thing in Dropbox. This story. they, they could get people to like understand the concept, but we had massive product issues, getting people to put a file in the thing, right? Like 00:24:41 Robbie:Yeah. 00:24:42 Jacob:Not necessarily the most user friendly thing. Like is some sort of app that runs in the background whenever they would, they did, they pulled users in, they watched them do it and totally fail.And then they fixed the product. Right. and, that's, that's. core product problem, but it relates to this this story of getting somebody to membership, right? Like getting them 00:25:00 Robbie:Yeah 00:25:00 Jacob:And focusing on that.00:25:02 David:One of the things that you talked about in your most 00:25:05 Robbie:No. 00:25:05 David:That I think, is so important to understanding the activation. Is is this concept of a forever promise. And so, so your most recent book that forever transaction we'll we'll link to in the show notes and whatnot. but in order to activate, in order to even just build a business, especially a subscription business, you need to start with Promise that you're going to make to customers. and then, especially again, like you said earlier to justify recurring payments, like, so tell me how you think about a forever promise and how, how any app, any business that wants to set up recurring payments should be thinking about this forever promise.00:25:47 Robbie:Yeah, it's, it's really simple. You take a step back and you say, when my customers come to. What is the ongoing problem they're trying to solve, or what is the ongoing goal they're trying to achieve and how can I best align my product and my messaging with that goal, that ongoing goal or that ongoing problem.So what can I promise them about it? So with a Netflix, it's about, you know, entertaining. You know, I'm going to provide you with the biggest selection of professionally created video content delivered in the most efficient way, right. With cost certainty. you're never going to have to pay extra fees and you know, there's a lot of, a lot of apps that are around.You know, helping you with some part of your business process, getting a certain kind of work done or tracking your finances or creating beautiful images for, you know, personal use for your hobbies. What have you gaming apps for fun? And I think first getting really clear on what your promise is and who you're making it to, and then you design the features and benefits to support them.Forever on their journey. And you say, as long as you continue paying me regularly, I am going to continue improving the way I deliver on my promise to you. Right? If I'm a gym, I'm going to have new equipment, I'm going to have new classes. I might offer you stuff online. If I'm news source, I'm going to offer it maybe through an app.Maybe I'm getting the access to the journalists. Maybe I'm getting, get the access to conferences or webinars on top of news because. My promise is I'm going to help you understand the world around you so you can make better decisions. And I don't have, like, if you even think about that promise, There's nothing about that promise that makes you say it needs to be a newspaper, right?It could be a conference. It could be classes, it could be a community of like-minded people sharing their learnings and their observations. So why not layer all of that in over time so that you get closer and closer to guaranteeing that they're going to get the impact that they hoped for on an ongoing basis.00:27:55 Jacob:It's interesting. in some ways relates to like what a company mission can be for a different audience. Right? You say, you know, revenue has as a mission. And that's one thing that I won't change, right. That that's kind of what we do. And that's part of joining the company and whatever. But, but I do think there's value in communicating that as well.This is like the customer facing version of that. Like, what's our 00:28:15 Robbie:Exactly. 00:28:16 Jacob:Charter. Like, why are we here? And what can I 00:28:18 Robbie:Right, 00:28:19 Jacob:That's not going to change. Right. It, especially when you think in those terms of not the like person who's coming to do a very quick transactional thing as in, I'm going to binge you put it, or maybe I just some trying this out, or I have this like one limited life or limited pain, like a limited time pain. Like what's 00:28:35 Robbie:Yeah. 00:28:36 Jacob:Engagement that we're going to do, is really interesting ground when I read the, framing of just the forever transaction forever promise. It's really exciting because we have the infrastructure for the first time in human history to really make this efficient at scale that like computers can do these sort of like, patronage relationships for us.Yeah. And, rethinking how we frame and, and relationships with customers, I think. Yeah. I mean, it's some of the work are a bit ahead of us on.00:29:05 Robbie:Yeah. Well, I mean, I, you know, I've been here a lot. Like I got here first cause I was here for a long time, but you know, it kind of a dubious distinction, but you know, I think you're right. Like you step back and you say, what are the problems? What's the ongoing problem. The ongoing problem is I'm constantly running out of laundry detergent.Right? The ongoing problem is I look in my closet and I have nothing to wear for this occasion, whatever this occasion might be. Right. you know, something that I think is really interesting to think about, you know, Amazon. Talks about removing all friction from all buying decisions, right. They started with just books.Right. And you still have to wait two weeks to get the book right when you ordered it, but they had this. All the different friction in all the different buying decisions. We're just going to, you know, layer by layer. We're gonna remove all of those things. And, you know, at some point, you know, I think they want to get to the point where I think to myself, those are really cool headphones that Jacob's wearing.I wish I had those. And before I even say. They're on my ears. And then I'm like, oh, these are uncomfortable. And they make my hair look bad. They're gone. Right. That it's almost magical. That's what they're moving to. No friction. I don't even have to say a word. It just happens. you know, I think having that kind of guidance of like, that's what we're trying to do, there's so many times when I've gone shopping and I've needed something, whether it's like buying a new house or buying a white blouse for an event and thinking this shouldn't be that hard.I have enough money to pay for. I know exactly what I need it for. And I've already spent four hours or four months, or in the case of buying a house for years, trying to find, you know, the needle in the haystack. It should not be this. When, when you say it should not be this hard, that's probably00:30:46 Jacob:An 00:30:46 Robbie:Good, 00:30:47 Jacob:Opportunity. 00:30:48 Robbie:Opportunity.Yeah, 00:30:49 Jacob:No, I I'm. I mean, I'm just sitting here thinking about revenue. Cats are, you know, this is a shameless plug time to talk about my company, but, I think about our forever promise and we, our mission is like we help developers make more money. That's our goal. but I almost think that. Kind of like a short, pithy way of like phrasing. It really it's about how do we remove the way he put his barriers? Like, how do we remove all the barriers for a developer to make money? How do we remove all the for a developer to value with software for other people? and often like people see a lot of these.Yeah. Subscription, infrastructure problems, data problems, all these, all these things are not why somebody got into it. Right. When they started Netflix, it wasn't like, I just can't wait to do like cohort analysis. 00:31:35 Robbie:Okay. 00:31:35 Jacob:Like all these things, it's like, no, we want to deliver entertainment to people the easiest way possible.And so, you know, for us, like, In some ways, our particular problem that we're, we've committed and, and going to the forever thing to, you know, our product is, it's a subscriber, it's a, it's a subscription essentially. but it's a long-term commitment by the nature of it. It's very infrastructure-related so like I've always talked how to, you know, is there something the early days had to give a lot of assurances to folks like yeah.We're, we're sticking around like, yeah, this is, 00:32:06 Robbie:Yeah. 00:32:07 Jacob:The long-term goal for us. But I think, I think that comes down to consumers too. Like the best companies I've seen. In our space doing consumer software apps, subscription apps essentially have like a really deep connection to the mission. And the problem I think of calm, I think of, 00:32:24 Robbie:Yeah. 00:32:24 Jacob:Photo room, this app, we work with that the, you know, they've been in vision, computer vision, and they've worked for GoPro and they've just, this is in their DNA to 00:32:34 Robbie:00:32:35 Jacob:Of image manipulation.And then, and then on the other spectrum of that, you think of. Companies that are just stamping out, don't know anybody ever heard that company stamping out utility apps or like whatever it is, and then slapping a subscription thing on it. Yeah, it works. I'm going to get marginally more LTV than they were, you know, before, but 00:32:54 Robbie:Yeah. 00:32:54 Jacob:Not going to, that's 00:32:55 Robbie:Yeah. 00:32:56 Jacob:The level of like computer or like problem solving for consumers that we were then we were doing before.00:33:02 Robbie:I think you have to be really passionate about the customer needs and the customer's journey rather than on your product. And this is, this is always a really rough conversation because a lot of businesses, really, really, really hold their products in high regard, whether it's. Automobiles or, you know, software, I mean, software, you know, most companies around here in Silicon valley, like the software team, they run everything.Like that's, that's the talent and everything, you know, they can build what they want. And, you know, I, I used to joke that, you know, when you work with. The car world, right? Sometimes it's just about the cup holders, right? It's not about, it's not about the big engine, right. Which is what a lot of the people, a lot of people go into the world of cars, automotive because they love cool cars, but a lot of people who buy cars.Don't buy cool cars. They buy practical cars that solve certain problems for them. And you have to be passionate about the problems you're solving for the customers. That again. So I did a lot of work early on with, in my sort of subscription life in the high-end bicycle industry. I was working with the bicycle product suppliers association, really, really interesting space.But one thing about it is that most people who own bike stores and work in bike stores and sell bikes and manufactured by. Our bike researchers and off-road, you know, risk-taking bike enthusiasts that have nine bikes at home, there's a whole huge untapped market of people who just need a bike to get to school or a bike to get to work or a bike for, for Saturdays to go to the farmer's market.And they ask really annoying questions at the bike store. Like, does this come in pink or can I get a basket for this? Or, this going to get em, you know, Reese on my, on my work pants and at some point, even, you know, like there's always this tension because the people who create the products, sometimes they're like those aren't problems I want to work on.Right. Or, you know, I worked in the hospital, you know, kind of in the, in the, in the health industry. And I talked to a lot of surgeons and they're like, yeah, you guys can do whatever you want around customer, this customer that treating customers like patients, whatever. But I want to see my patient unconscious on a table and I'll cut them open and I'll fix them and make them better.And I don't want to do all that other stuff. Right. it's hard because they're the talent. you know, I think this is a big issue with subscriptions because those Mark Key elements, aren't always the thing that's going to drive engagement, retention.00:35:30 Jacob:It's falling in love with your own product, right. It's falling in love with the 00:35:33 Robbie:Yeah. 00:35:34 Jacob:And not the problem, you know? you 00:35:37 Robbie:Exactly. 00:35:38 Jacob:I mean, I've been in the, you know, in the past, when I was in the weeds, like you start to really over it. I think analytics can actually like be, this is where, yeah.Back to the discussion of like, just throw 10 users on the board and maybe don't like, get the finest. Tooth comb to like go through your data. First is like, when you have like super high fidelity data on everything, you can start to get really data oriented. But if your product is the thing, collecting the data, you sort of inherently bias the data collection you're doing based on the product you have.You miss a lot of opportunities because you're not just thinking about the problem space. I worked on this app called elevate, which was training, and I can remember so many. So many like heated discussions about, this flow, should we do this or X and Y and Z. And not as many as we should have had about like, why are people actually coming to this app like addressing those questions from like head-on, and thinking about ways that we can improve the product with that.The beginning. And I haven't seen that revenue cat too. Like we have a lot of which are really deep and rich and people use and they're in love with, and we can, you know, you can spend a lot of brain power and a lot of focus thinking about the next iteration of that thing. The re yeah, like you said, the, the, the, the bike shop owner who's really into bikes are like really into some particular technology touch with.Yeah, these bigger things, it's like forever promise this, like, what are we actually building? Like what does revenue cap mean? And in a decade when the problems we're solving now, actually, maybe aren't that relevant the case. We've talked a lot about media companies and I almost snuck in a metaverse joke.And now I will just refer to OMA 00:37:14 Robbie:Yeah. 00:37:15 Jacob:Joke your headphones, but like, Yeah, we think about this as like modes of consumption are going to be changing. that's where these, like, missions, customer mission or forever promises kind of come in. It's like making sure that regardless of a Netflix delivered on a DVD or on a streaming set top box, or into some sort of like brain 00:37:34 Robbie:Okay. 00:37:35 Jacob:Like this, the subscribers will transfer.Right. 00:37:38 Robbie:Yeah. 00:37:39 Jacob:Yeah. And this is one of my, like now I'm now I'm ranting, but think is one of the reasons I'm still really excited about all of these pieces coming together, is because it does just feel like we've reached some stage in our economy where we can align a lot more incentives this way.Then maybe we have been able to in the past, which I think is just exciting.00:38:00 David:But as we align those incentives and people get more and more subscriptions. Nice little transition there. Thank you, 00:38:07 Jacob:That's great. David, you're getting this podcasting thing, like really turning it in.00:38:11 David:There is a growing, chorus of, but subscription fatigue, People are tiring of all these subscriptions and no matter how much you can align incentives And everything else, people are just not going to want to pay subscription. So having, having seen the, the growth in subscription, consumer subscription starting way back at Netflix in the early two thousands, and now we are layering on more and more and more.What what's your perspective on this, this concept of subscription fatigue, our consumers really tiring of, paying in this way. 00:38:49 Robbie:Yeah. So the upside of, you know, this explosion and subscriptions is that consumers, and actually businesses alike are much more receptive to subscription offerings. They understand them, they understand the value they can provide if they're done. Right. and they're easier than ever before for any kind of company.You know, from the smallest mom and pop up to the, you know, the biggest multinationals to offer subscription pricing. The downside is there's this glut of subscriptions. Every company has them and not all of them are well-designed as, as we've been discussing. and that leads to subscription fatigue, and, and there's sort of three things.Contribute to that. One of them is where these, the product does not justify subscription pricing, right? This is a product I'm going to need once and you're requiring me to subscribe to it. That feels unfair. you know, or I'm never, I'm hardly ever going to use this in. You're making me subscribe, even though, you know, my use case doesn't justify that investment.Second problem is kind of the flip side of that, which I think of the subscription overwhelm or subscription guilt, which is. This great value. Actually, your product is fantastic, but I can't use all the value because of my own issues. And that makes me feel bad about myself. Like this is when you, you know, you have the new Yorker magazine piling up on your bedside table.Right. And you just cause you just want to Netflix and chill cause you're tired. But like your thought at the beginning of the day is I'm going to get so smart. I'm going to read all these great. That makes you feel bad about yourself, you can't, you know what I would suggest for example, that a new Yorker does is to educate consumers, that you only have to read one or two articles to get the full value of your subscription.It's all you care to consume, not consume all of it or you're, you're lazy. but I think that overwhelm, or, you know, same thing with blue apron where the meal kits are in your fridge and you're not using 00:40:34 Jacob:No, Don't even fatigue. it's a rough subject.00:40:39 Robbie:Yeah. Cause you feel bad, like the meals are calling to you and you're like, don't go out with your friends. 00:40:44 Jacob:Yeah. 00:40:44 Robbie:In the fridge. Don't be a waster. 00:40:47 Jacob:With my spouse about cooking because we have the giant meal kit to do. but it's great. I love the time.00:40:53 Robbie:Yeah. So then, and then, and then I think the last one, I mean, but it's, it's great. Cause it's not the fault. The meal is great. It's I don't feel like eating it today or someone invited me over for like the crazy one is when someone invites you to dinner. And so then it's not even a question of finances.You're like, well, either way, I'm not going to have to spend any more money and I'm going to get a delicious dinner. Do I want to make the blue apron dinner or go to my friend's house? Who just invited me? Well, I can't go to my friend's house because I feel bad throwing the blue apron in garbage 00:41:19 Jacob:To, the lettuce is going to be wilted by the next by tomorrow.So. 00:41:22 Robbie:Day I can cook. And then the last issue, so there's there's know, bad product-market fit. There's this subscription overwhelmed or subscription guilt. And then the last one is hiding the cancel button. And I'm really interested in what you guys think about that one. Cause a lot of subscriptions, make it really hard for you to get out of this.Cancel anytime relationship, even though. That's what they pitched. Join and cancel any time. If you can find the cancel button, which we've hidden behind 27 clicks with a call us on Tuesday, you know, extra hurdle.00:41:54 Jacob:Yeah, I think it's, well, my take is it's terrible. And anybody that does, it should really reevaluate what they're doing in software. Cause like, I think it violates that trust, right? Like, welcome. We're going to ask for this thing where you're gonna you're you're gonna let us charge. We're just going to suck money out of your bank account every month, because you've decided to like enter this relationship with us and then we're going to go ahead and betray that trust.Right. We can turn around and betray that 00:42:16 Robbie:Yeah,Advantage. 00:42:17 Jacob:But, yeah, I hadn't. Thought of fatigue in so many channels like that are so many aspects, but like the, the overwhelming aspect is interesting. And I resonate. I feel that, like, I feel that with, with dinner boxes, for sure, but even in software too, there's certain pieces of software.Like, I feel like, ah, I can't cancel it cause I have these intense and things like that. And that's not really what you want to, those, aren't the relationships you want to focus on. Right? Like so. 00:42:40 David:Side there, I think like I use this example a ton, but, Visco, I'm not a daily user. I'm not even necessarily a monthly user, but when there's a photo of my kids or just a photo, I took that I really cherish. I important into Visco and Fisco makes it better. And that to me is so valuable that I didn't even care.I mean, 20 bucks a year, I think is too cheap for their product. I would pay a lot more, even though I maybe only use it quarterly sometimes, or maybe once a month or, you know, when I'm on vacation, maybe I use it every day for a week, but it's interesting that that product. Doesn't create that sense of, oh, I'm not getting enough value out of it because I get so much value when I do. Yeah, maybe. Yeah. Maybe if it were $60 a year, it would be too much. But I mean, I just, I just would never consider canceling because I it's just, when I have a photo I care about, I take it to Bisco and it's better and it like, that's their forever promise and it just resonates so well with me that I don't, I don't get that, guilt you know, I get more than $20 a year of value out of 00:43:49 Jacob:00:43:50 Robbie:Yeah, I think, I mean, it's interesting. I think one of the things about this, you know, sort of dealing with subscription overwhelm is, you know, is it framed like whatever the customer is, anchoring their pricing to. where they say it's valuable enough. So, so for example, I worked with, one of these produce box companies, and one of their challenges was that most of their customers said that most weeks they ended up throwing something away.Right. Because it's never the exact right amount of produce. Right? So you end up at the end of the week with like soggy kale or, you know, turnips, and then you go on vacation and you come back and they put them into with these turnips. But one of the things that we did is we set expectations. That it's okay to throw out a little bit of produce that you're still getting a better price than you would at the store.And you're still supporting farmers, local farmers. So sometimes it's as simple as just reframing what the expectation is like saying for Visco. You know, if you, if you use, you know, if you use this for two or three, you know, memory pictures a year, You know, doesn't that pay for itself in 20 bucks worth, you know, three great shots of your life.You know, the three best moments of 2021. a lot of it is about, is about, I think, expectation setting and understanding your customer and what the value is. Like. I don't know how much I pay for Amazon prime. I don't care.00:45:05 Jacob:Yeah, 00:45:06 Robbie:I it almost every 00:45:07 Jacob:I 00:45:07 Robbie:Mean, I don't. 00:45:08 Jacob:A decade ago and haven't thought about really 00:45:11 Robbie:Right. But I use it every day. Like I don't care what it costs. I mean, if they start charging $3,000, I would care. But like, if it's a hundred dollars a year or $85 a year or $115, I don't care. And that's a really important point about pricing is that at least I've found with many of the subscription companies I've worked with and a lot of, you know, software products when they don't sell well, when their business isn't growing, they immediately jumped to the. Must be too expensive. We'll have to lower our price. But in so many cases, it's not about the price. It's about the value. I'm not using it. If I'm not using it, it doesn't matter if it's a dollar or a hundred dollars. and so thinking about why aren't they using it before you jump right to, well, I guess I'll take 10% off the top.00:45:56 David:Yeah, let let's let's talk pricing real quick.Cause you, you do have several strategies that you get through in the book and in what you were, what you were just explaining was one of the things I really took away from your book. is it you say in the book that it's more important to understand product-market fit and willingness to pay than finding the exact right price.And so you, you were, you kind of backed into explaining that, but let, let's elaborate a little bit. And essentially what you were just describing was that a product that doesn't have product-market fit, it doesn't matter what you price it. You know, what are, what are your, what else, what are your thoughts on that?00:46:36 Robbie:Yeah. I, I just think, I mean, in so many things in life, you're kind of on a continuum. Like, you know, I remember when many years ago I started doing weightlifting and, you know, I told people that I was doing it to be more fit and you know, stronger, and now it's very common, but at the time a woman doing weightlifting, you know, working out with weights and people would say to me, I don't want.Huge muscles. And I was like, oh honey, you are so far from that being a problem. Like we're at the other end of the continuum. Like there are certainly people, women who work out and get too muscly and that's not what they want men to wear. Like then it intervenes with my ability to do my sport. But for most people it doesn't just happen.And I think in the world of apps, I think most people. Kind of over index on pricing and think that that's going to be the key thing to figuring this out. When a lot of times there's actually a pretty big gap between, you know, kind of where you can make money and where your customer is willing to pay there's lots of room, lots of different prices. And as long as you launch somewhere in that. You're going to make some money and over time, there's lots of ways to become more sophisticated and get to a better and better price point. But a lot of people assume that if they have a highly elastic product, meaning that for every dollar you increase your pricing.Your number of customers drops by a predictable percentage. And I think in many cases for a lot of products that are inelastic, if I use it, I'll pay anywhere between five and $10 month. And if I don't use it, I will pay nothing. And so if you notice that people aren't are canceling and they're the same people who aren't using the product, it's probably not a pricing problem.It's probably a product problem.00:48:17 Jacob:Right. I mean, if you're talking about product-market fit and a forever relationship like that, I'm going to pay incident money in terms of my lifetime. Right? Like I'm going to pay 00:48:27 Robbie:Great. Right. And it's, and the thing is that people assume like, so what I would say is if. If you're trying to figure out your first price, I'd say, don't worry about it too much. if you need to do a land, grab like a Spotify priced low and you can raise your price later, although that's hard, but just do it cause you, you want people to adopt your solution.If you're worried about, you know, hurting your core business, And so, you know, then start by pricing really high and you can lower it as you have increased confidence and understanding of use case. But there's a lot of room in there and that's really, my advice is be somewhere in that range. And if people aren't buying it or aren't staying.Look for the other signs of what might be driving it besides pricing, like, is it that they, you know, failure to launch? They never onboarded. They never activated, they never used the best features. is it that they were using it for a while and then their usage trickled off. Maybe they used it up, right?Either they binged or, you know, they've watched everything they've seen, maybe their job changed. So these features are no longer relevant to their work, but really try to be a detective about where the problem is like. it's like you have a party, in a bar you're not making money from the party in the bar. Like before you lower the price at the front door, see like, are people walking by and not recognizing that you have a party, so you have nobody in there because that's an awareness problem or is it that people come in the front door and can't find their way to the food and drink and music. And so they think it's a lame party is that they leave and they never come back.You know, that's an onboarding problem. Is it that they've been eating all the food and dancing to all the music and they're like, I'm tired of these songs. I'm tired of this food, which is a different kind of product problem, product assortment problem. Or is it, I went downstairs to the food and there was no food and the music, you know, the speakers weren't working and that's an operational issue.Right. So fix the problems before you drop the price.00:50:20 David:That's such...00:50:21 Jacob:I mean I think about it, if you have product-market fit, you're going to go this way (up and to the right on the curve). All the price is going to do is maybe define that inflection on that curve. Exponential curves, the slope doesn't matter often all that much in the longterm. You can optimize it eventually, but it's really getting that product-market fit. Then it just takes care of itself.00:50:52 David:That that is a great bit of advice to wrap up on.Your book, The Forever Transaction, is fantastic. Reading it was so fun just to think about—we put our blinders on with this podcast and in the space we work in with apps—but realizing that so many of the ideas that we think about, so many of the problems we work on, are things that are across the entire industry, across all consumer subscriptions, even a lot of overlapping in B2B SaaS.So, it was just so fun reading your book, and then getting to ask you questions here. I had 30 more questions that I wanted to ask you. I could go another hour or two, but I'll, put links to your LinkedIn, to your website, to your Twitter in the show notes.Is there anything else you wanted to share with our audience as we wrap up?00:51:42 Robbie:No, I think we covered a lot. If there's one thing that I want to leave people with, it's this idea that if you start with the promise you're making to your customers, helping them with an ongoing problem, or achieving an ongoing goal that's important to them, and then you optimize your offering around that, your chances of both acquiring and retaining your customers going to go way up.00:52:06 David:Such great advice. Great place to end.You mentioned that there's some extra goodies listeners can get if they click on the link in the show notes, they can get your book and some extra goodies along with that.So, thank you so much for being on the podcast.00:52:22 Robbie:Yeah. A real pleasure.

The criteria for mortgage qualification involves fairly deep analysis of your personal income generation, your history of handling mainly unsecured consumer credit sources (like credit cards, lines of credit, car loans) and lastly, the amount of skin you have in the game - the down payment, or if refinancing, the current equity stake in your property. But the main driver and gatekeeper to all of the qualification tiers is the loan-to-value ratio (aka LTV). Generally speaking, the higher your down payment (or equity position), the less rigid the qualification guideline.Here is a brief outline summary of the key LTV thresholds:up to 95% LTV - the least skin in the game, you will rarely (if ever) get exceptions from lenders. You are an inside-the-box applicant and need to fully comply with the standard qualification criteria. Regardless of which lender you team up with, the outcome will generally be the same...the lenders will all qualify you for the same amount and approximately the same interest rate (within a negligible margin)Up to 90% LTV - a few more qualification programs become available in this qualification bin, but still rigid qualification criteria with very little exceptionsgreater than 80% LTV - substantially reduced insurer premiums and a more pragmatic approach to exceptions (i.e. proceeding with an approval despite a light credit history, or recently recovered credit mishap, or remaining probationary period with employer)80% LTV and lower - the entry level conventional, uninsured lending zone. Ironically, an increase in rates (often the highest interest rates as it falls just outside the insured safe haven zone, but only at the doorstep of big down payment territory). Today's 20% down payment is like yesterday's 10% down payment...not as powerful and influential as you might think. Still an impressive milestone, but not the money-talks arena.75% LTV and lower - even better than 80%, a few more unique and niche qualification guidelines open up to you. Rates get lower and more exceptions are granted.and finally, the mother queen of the LTV scale...65% LTV - this is the big leagues, this is where you get rewarded for all the hard work of either accumulating your prized 35% down payment or owning a property with a comforting equity ratio...just the right amount of equity to creep out of all the lenders risk-pricing parameters. Best possible interest rates and significant qualification flexibility from lenders.Contact Marko, he's a Mortgage Broker!604-800-9593 direct Vancouver403-606-3751 direct Calgarymarkogelo.comFacebook@markogelo (Twitter)MarkoMusic (SoundCloud Account)...all podcast music tracks are performed and produced by Marko See acast.com/privacy for privacy and opt-out information.

Watch and subscribe on YouTube: https://youtu.be/OeSn3WCr7rEThis episode featured Jordan Richardson. Jordan is a real estate investor, and an entrepreneur that has created a great investment portfolio for himself. He joined us to discuss his approach when investing in single and multi family properties. Jordan described how he finds undervalue properties and then makes them available to tenants for Section 8 housing.   He also detailed the BRRR method, which was created from Bigger Pockets. They are a top real estate investing and media company. The BRRR method stands for Buy, Rehab, Rent, and Refinance. We also went into why real estate is one of the oldest asset's that has been around and one of the best subscription plans around. When you think about the cash flow an investor can make monthly. Jordan analyzed a property in South Bend, IN and gave listeners a step by step guide on how it calculates his number's. He went over his rule of keeping his LTV from 65-70% and why that's important when he goes to refinance his properties. He explained the process of building a team and managing capital for hard money lenders and private investors. Jordan elaborated on how his contracting experience allows him to save more money with purchasing a property and not having to distribute costs to finding a contractor. Rather he does all of the rehab himself with the team he has builded around him. Jordan emphasized the value of becoming vertically integrated and building a successful real estate investing business. Here is the buzzsprout link mentioned to start your own podcast: https://www.buzzsprout.com/?referrer_id=1305358Jordan Outlets:Instagram: mr_junglerose Email: propertybros.sb@gmail.com I.P Outlets:Spotify:https://open.spotify.com/show/4j9Yr9WPtCpYzXiOxSlpfpApple: https://podcasts.apple.com/us/podcast/principles/id1518622247?uo=4Instagram: https://www.instagram.com/insightfulprinciples/TikTok: https://vm.tiktok.com/ZMdMdVHBa/LinkedIn: https://www.linkedin.com/in/kevinnjenkins/Clubhouse: https://www.clubhouse.com/@kevnjenkinsInvesting Mastermind Discord:https://discord.gg/JfpbEcpGLinkTree: https://linktr.ee/insightfulprinciplesSupport the show (https://www.patreon.com/insightfulprinciples)

On the podcast I talk with Eric about the value destruction of App Tracking Transparency, the limitations of SKAdNetwork, and how to thrive as an app developer in this new paradigm.My guest today is Eric Seufert. Eric has deep operating experience, having worked in growth and strategy roles at consumer tech companies such as Wooga and Rovio, but he also founded and sold a marketing business intelligence company, Agamemnon, and is an active investor in the mobile gaming and ad tech categories. Eric has a depth and breadth of experience with mobile apps and games that few can match. Over the past year Eric has written extensively about App Tracking Transparency and the future of mobile advertising on his trade blog, Mobile Dev Memo.In this episode, you'll learn: Will Apple's ATT be a net loss for Apple? Can SKAdNetwork be saved, and does Apple want to save it? Is focusing on organic traffic a flawed strategy? What does the future of app install ads look like? Links & Resources Rovio Snapchat Apple's Private Relay Tim Cook Outbrain Taboola AllTrails SubClub AllTrails podcast episode Stitcher Eric Seufert's Links Follow Eric on Twitter Mobile Dev Memo Heracles Freemium Economics: Leveraging Analytics and User Segmentation to Drive Revenue  Eric is on LinkedIn Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Hello. I'm your host, David Bernard, and for the first time ever, I'm flying solo today. RevenueCat CEO, Jacob Eiting is busy CEO'ing.My guest today, is Eric Seufert. Having worked in growth and strategy roles at consumer tech companies such as Wooga and Rovio, Eric has a depth and breadth of experience with mobile apps and games that few can match. He also founded and sold marketing business intelligence company Agamemnon, and is an active investor in the mobile gaming and ad tech categories.Over the past year, Eric has written extensively about App Tracking Transparency and the future of mobile advertising on his trade blog, Mobile Dev Memo.On the podcast, I talk with Eric about the value destruction of App Tracking Transparency, the limitations of SKAdNetwork, and how to thrive as an app developer in this new paradigm.Hey Eric, thanks for being on the podcast.00:01:09 Eric:Thank you for having me on the podcast.00:01:11 David:So, we're going to start off with a bit of a dead horse that's been beaten over and over again. Apple's motivation in enacting App Tracking Transparency, but I did want to take kind of a different perspective on it. The most interesting thing to me personally about Apple's motivation with App Tracking Transparency is what it says about what they are going to do in the future.Did they build SKAdNetwork purposely handicapped, or did they not really understand how handicapped it was? Were they really trying to kill Facebook, or was that a kind of a side benefit? I think that their motivations are important, because it forecasts what changes they may or not make moving forward as they start to see the impact.So, I think the first thing I wanted to ask you is, how do you see Apple's reaction and how they perceive ATT to be going, now that we're seeing snap drop 25% after the quarterly earnings report, and see more of the disruption that you and others were predicting, but maybe Apple didn't quite see coming? How do you think Apple sees this going currently? And what does that say about the future of privacy on iOS?00:02:42 Eric:I think Apple's primary motivation was not to capture mobile advertising market share. I don't think that was a primary motivation. I think that's happened, and I think they expected that to happen, but I don't think that was the primary driver of this decision.What I think they wanted to do was, there's kind of like a big picture idea here, and then an immediate consequence idea. I think what Apple did not like, was that they had kind of lost control over content discovery on the iPhone.When the App Store was first launched, that was how you discovered apps. It was through going to the App Store, and some small part search, but then in large part just like the editorial curation that Apple exposes there. That changed over the years, and up until the announcement, or the enactment of of ATT, the way that people discovered apps was through advertising, and primarily Facebook advertising.Apple totally lost control. The content that people interacted with on their phones was not the result of any deliberate decision on Apple's part or some deliberate consideration. It just happened to be whatever could scale ads the best. Whatever companies could scale their ads the most efficiently, that's what people interacted with. That's what became dominant on the platform, and Apple really had no say in that.Short term, narrow aperture view of this, they just wanted to regain control of that. They wanted to be the kingmakers. They wanted to be the tastemakers; the people that decided—the party that decided—what became popular on the iPhone and how the iPhone was used.And I mean, that's, it's, if you've worked in, in gaming, especially, but if you've worked in mobile apps at all and you've ever had to go and, you know, go, go through the whole process of pitching your app to Apple, and pleading for featuring You know, that that's what they want.They, they like to having that control because that allowed them to percolate their new iOS features into the app community through almost horsetrading it's like, you want featuring, We'd be happy to give you featuring, but you've got to integrate X, Y, Z thing into your app.Once you do that, we're happy to feature you. that, that was sort of the, that was the, the, the negotiating process. You know, that that process, even that process itself became less important and less prominent in the life of a developer over the last few years, In 2012 to 2015 that's what you did every time you were launching a new app, or even if you're doing a major update, you flew, you flew to San Francisco, you went to Cupertino, you went into a, conference room at Apple HQ and you pitch somebody.That just stopped being something that people did. Like just people realized that, even if we get featuring, it's not going to be that meaningful for our business, what we really need to be able to nail what we, what we have to do. Our success is dependent on our ability to scale the product with paid advertising, you know, and explicitly, you know, specifically through, through Facebook.So, I think that was the primary motivation to regain that control right now. I think there's a bigger picture idea here. There's a bigger picture motivation or, or like, projection here, which is that, you know, we're, we're moving into a paradigm where, you know, the phone you have, the, the device you have that you consume content with is totally unconstrained, in terms of what it accesses, right?Like, and, and how it accesses content. And that's what that's, that's the sort of, that's the behavioral, norm that, that people are moving into, they just expect their favorite stuff to be available from whatever device they have in their hand, at that moment, as long as it's connected to the internet, they expect to be able to connect to Disney to Hulu, to Netflix, to Facebook, to anything, they use every day.You get to a point where, you know, if you run this gatekeeping platform, like at the App Store or Google play If, if, if users have leapfrogged that paradigm into no, my favorite content is always available. It's, you know, sort of like, it's just, just persistent in the cloud and I should be able to access it however I want at any, at any given point in time.Then you've lost control of that sort of, of that gatekeeper positioning. I feel like what Apple wanted to do they, they, know that that's inevitable. we'll get there, but they wanted to prolong this dominance and the prominence of the App Store in terms of, you know, the consumer relationship, that's the first stop you've got to go through them to get to the content. because then that also, like that also provides them with some leverage over the, over the developer. And I think w w we've I think we've probably accelerated. But, but maybe not, maybe this, maybe this, you know, buys two to three more years of, okay, well, I have an iPhone that means I go through the App Store to get content, right.Or I have an Android. Maybe that means I go through Google play to get to content. And not that like, this is it. Matter what device I'm using, I'm using my Samsung TV or my iPhone and my iPad or my Facebook portal or whatever, or my, my, Amazon, echo. I want to get to the content that I have available to me in a persistent way in the cloud.Right. And so I think that was, that was also the primary motivation, or that was part of the primary motivation, but that was like, sort of like the bigger picture consequence of it.00:08:18 David:Right. I mean, where do you put, Apple's kind of stated motivation of privacy in this hierarchy of, of motivations and, and outcomes because, you know, a lot of people have said, oh, well, Apple was clearly acting anti competitively to favor their own ad business and crush these other ad businesses. It was, you know, primarily driven by the greed to expand their ad revenue.And then I think yours is really interesting as far as like the control, but then of course Apple goes and just in the quarter results recently and has stated over and over again. That it was 100% privacy motivated. do you just not buy that00:08:58 Eric:No, not at all. And I don't, I don't necessarily even think at this moment that consumer privacy, has been benefited or protected as a result of this. Right. And we can get into that in a second, but you know, I've been publishing a lot about, they're still allowing fingerprint and they said they wouldn't, that's in the policy.Right. It's explicit. Like there's no ambiguity there and they're allowing for it. Right. And they're not policing. And they could, because they've done it in the past. And so I think if you want it to be protective of privacy, That would be one of the things that you would prioritize is, preventing that from happening.00:09:33 David:And you don't think that? Not that I mean, diving into fingerprinting real quick, do you think that. It's potentially that they're just delaying the enforcement to kind of smooth some of the disruption that tra App Tracking Transparency has already caused it because them not enforcing it immediately doesn't mean they're not going to enforce it.So, but I find it baffling as well. That they're not. So do you see them enforcing it sooner do you think that this really is an indication that they don't actually care about privacy and that this is not ever going to be enforced?00:10:08 Eric:They can enforce it at some point and like they're there, there wise, like I think kind of a widespread. That in the developer community, that there was going to be a grace period. Right. They would introduce NTT, but they're going to allow for fingerprinting for some amount of time, because, you know, if, if you just, you know, made this very radical change and it was like absolute from day one, the impact would have been even more severe than, than what we saw.So I, there was a belief that there would be a grace period, but you know, we're going on like four months now. Right. And, and the thing is, you know, my, my sense was when, as soon as they, because they, you know, they talked about private relay at WWDC this year, I was like, oh, okay. That's how they do it.Right. Because, and I've talked a bunch about how it would be clunky to police fingerprinting through App Store review the store review process. Right. I talked about that in a piece. I just wrote two weeks ago or last week, and it would be clunky, but they could have introduced us in private relay.I thought that that's what they were going to do. Or at the very least they would roll private relay out. Cause it applies to, you know, safari traffic now. And they would say, look, well, we have to reach parody. Our treatment of the web and or treatment had been app traffic. And so therefore, you know, maybe for whatever technical reason we can't, we can't, obfuscate the IP address of in app traffic, it'd be too expensive or it's a technical challenge that we haven't solved yet.But like, this is the moment, you know, ad tech when you must stop fingerprinting. And I think if they said that, you know, these ad tech companies would, right, because the way that they've sort of implemented this in a lot of these solutions is it's like an option, right? Like they say, you can turn it off if you want.Right. Cause I think that these ad tech companies are surprised. They thought fingerprinting was going to be. More we're policed early on, maybe not on day one, but you'd get like two weeks a month. and so they kind of introduced this as like an optional feature. Right. And then, you know, and they, they presented it as like a, Hey, it's a feature for developers if they want it.And so, you know, it's, it's something that they could switch off and they, they they're ready to switch off. I think. So I think even if, if Apple just sort of like, you know, kind of pantomime those motions, people would stop doing it because, okay. It's, it's actually, you know, it's sort of like actually against policy now versus just before where it was like ignored, but, you know, I, I thought they were gonna introduce in iOS 15 for that reason, or at least again, like, just make the, go through the motions of saying that, that it's, it's not allowed, but, but so just, just back Betsy, it wasn't about like, where does privacy sit in the, in the sort of list of motivations?I think it's probably so my, my, the heart, the hard time that I have with like, reconciling this idea that like, and you hear this a lot, like Apple cares about policy that people say that privacy, Apple cares about product. How could it have Apples on a person Apple. Apple's a corporate structure.There's there's however many employees at Apple. They don't all agree on things. Right. Who and Tim cook is not a dictator. He can't just run the company like that. Apple shareholders, have some control. His board has some control. Right. And so, you know, at least they have influence. And so like, the Apple as a, it can't have is it doesn't have a monolithic opinion about stuff.It's not an entity in its own. Right. I I just don't buy this idea that a company can care about some abstract concept. Right? Like, here's another question for you. Apple makes the Apple watch, It's a health tracker. Does Apple care about your health Do they, are they really concerned? Are they genuinely, you know, invested in your health Or do they want to sell something. so the idea with privacy is okay. It gives us an opportunity to strike a juxtaposition juxtaposition against Android, which you know, has, is, is perceived, I believe, as less privacy-safe but even Android has gone to great lengths or Google has gone to great lengths to bring privacy to the forefront in Android.A lot of it is about informing consumers about their data being accessed, but still there. They've done some things. Right. So anyway, I just, I don't believe that a company, a corporate entity can care about an abstract concept. Right. putting that aside, what does privacy buy them It buys them that juxtaposition, and then it buys them cover, It buys them cover to do all this other stuff. Right. And then to, and then they spin up this big narrative that probably helps us sell iPhones. Because you know what I00:14:07 David:Or future AR glasses 00:14:10 Eric:Exactly 00:14:10 David:Some ways,Positioning themselves, they they care about privacy insofar as it's an incredible marketing tool for them. it, gives them cover for future devices. They become more and more and more and more private. this thing you wear on your wrist biometric sensors and tracking your sleep and everything else, customers are going to feel more comfortable wearing AR glasses that have cameras on.When it's Apple branded, than when it's Facebook branded, there's been backlash with the Ray-Ban, glasses from Facebook. So, yeah, I get, you I, you know, the Apple fanboy in me wants to believe that, you know, Apple you know, wants to do good in the world, but I've, since lost my Apple religion, but I, but I do think to a certain extent that they care about they do care about privacy whether or not any of that's motivated by Goodwill or otherwise it's incredible marketing for them.That being the case, you know, and this is where maybe our opinions diverge, or at least how we interpret some of, of what's been going on. I still am of the opinion, as naive as it may be that that privacy was a primary motivation for them, whether they're altruistic or marketing or, whatever other reasons they have to be to be positioning themselves this way.I still think that that that was primary and, and that, I don't know that they even fully understood or expected some of the. the things that have been happening, I think they thought SKAdNetwork was a better solution than it actually is. I don't know that they expected to see a company like snap that is actually fairly aligned with them, at least, in marketing and public perception as being a more privacy-focused company to see this company that has been reading and talking positively about App Tracking Transparency and see them drop 25% in a single day, because, and then say specifically it's because SKAdNetwork isn't delivering.I still think personally. This has more to do with Apple, not understanding and not listening to the industry, which we've seen for decades, Apple doesn't listen, they're not good at receiving outside feedback on roadmaps, on, on their APIs, on anything else. They think they know what to do.And they think as a product company, they can just build this product bring it to the world. And it's going to be the best thing since sliced bread SKAdNetwork is just another. Yeah. Another example of them trying that approach and then just falling flat on their face. I think this is important because if that is the case and if they really, if the primary motivation really was privacy, then maybe we do see an SKAdNetwork 3.0, that's way better than this current one.After they realized they've destroyed tens of billions of dollars of value, and also potentially handicapped their own platform because as ad efficiency goes down and as apps struggle to gain traction, they lose too. So, yeah, I mean, I guess just, I'd love to hear your kind of response to that. Cause I know we probably disagree on this a bit.00:17:37 Eric:I guess it doesn't really matter. Like it, you know, if we, I don't know, at this point it kind of seems like semantics a little bit. Cause it's like, well, all they care about privacy because privacy is good marketing messages. But my point is like, I don't think they genuinely care whether people's data is being accessed by advertising networks.Right. I don't think they cared about that to the, to the degree that, it didn't impact. It was, it was, it was happening sort of unawares, right? Like, or, you know, that these users were like sort of unawares, once it became, like a, like a sort of social rallying cry around, you know, Facebook and, you know, it's the congressional testimony and you're listening on our devices.And then once it became something that I think that they could, you know, exploit the insured, then maybe they care about it because it is a differentiator for the products and they can help them sell more products. Right. But, but I think so, first of all, so we are on a scanner 3.0, they released 3.0 3.0 is just like a minor improvement.So 3.0 added view through attribution. And I think it added one more thing. And then also with, I was 15, they allowed the post-bacc to be sent directly to the advertiser, not just the networks. I mean, those are improvements, but I don't see them continuing to do. S K I know work. I just, I just don't see that, but I think I do. I do agree. I agree with you that, that they didn't understand how consequential that this would be to the advertising. I think it's an example of like the left hand, not talking to the right hand.Apple is like a super secretive organization, not just to the outside world, right. Internally Apple teams are very secretive. Right. And, you know, I, I don't know that the App Store team was talking to the iTunes team. I, I mean, I don't even really know how that, how, how this sort of corporate structure separates those two teams.But my sense is that like the App Store team, the people that work with developers, Aware of this, like, and I I've been told that I've been told that they learned about it at WWDC two years ago. Right. And then they got up, they had to field a bunch of angry emails and phone calls. Right. you know, I think, there, there wasn't a whole lot of consensus internally around what the impact of this would be.I think the impact was underestimated. And to be honest, I don't think they would have released something if they knew that it was going to wipe out, you know, just a late, a quarter of snaps market cap in a day. Right. I don't think they would have released something if they knew it was going to annihilate a fifth of Zynga's market cap in a day last quarter, you know what I mean?I don't think they, you know, and what we saw with Facebook was that there's like this kind of slow erosion of, of, of market cap, you know, from, from like the all time high, a couple months ago. but you know, th the damage hasn't been just, just in terms of stock price, hasn't been as, as, as severe to Facebook, as it has to some of these other.You know, who weren't really doing the things that Apple wanted, you know, to sort of, to mitigate. Right. So I, I don't think that they fully, you know, first of all, they didn't, you know, workshop this with advertisers. Like I know that to be true, or, or I believe that to be true, unless some people did it in like, you know, deep secret and they've never revealed it, but I don't think they, I don't think that's true because I've talked to a lot of people.No one, no one was consulted about this that I've spoken with. you know, I don't think that they really truly grasped how sort of like fundamental performance advertising was, or is to a lot of these businesses, right. In terms of, they're just, they're, they're sort of, you know, operational success.Right. And so I think, because of that sort of differential between. I think what they thought was going to be the result of this and what the actual result was. You know, I, I feel like that does call into question, you know, not only just the wisdom of this, but you know, how well they can defend it, right.When, you know, against maybe some, some, some lines of inquiry, you know, that, that are, that are sort of like, you know, kind of a more powerful and, sort of socially instrumental than, than ours than mine are then, then app advertisers or app developers. Right.I think they've, they've invited a lot of questions about this through, through, through the severity of the impact that we've witnessed over the last couple of weeks and months.00:21:35 David:And that's where I totally agree with that. And that's been my perception as well. And I talk to folks as well, is that Apple didn't fully understand the implications. And if there were people inside Apple who had a better understanding of what might play out, they didn't have enough of a seat at the table.And that a lot of this was just ivory tower thinking was Apple building ski network thinking, oh, this is going to be a great solution with. Like you said, workshopping it with the people who would actually have to use it. And then, you know, coming up with a better solution. So then, then my question for you is, okay.You know, you were kind of chicken little for a year, the sky is gonna fall. The sky is gonna fall. The sky is gonna fall. I mean, you've been really one of the most vocal people about how big these impacts were going to be. And you had a lot of people in the industry saying, oh, it's not going to be that bad.It's not going to be that bad. Well, now the sky fell. I mean, you know, a public company having 25% of its market value wiped out in a day due to one specific policy from a platform like the sky is falling, you were right. But then so now Apple sees it. They can't, they can't avoid seeing it. What do they do from here?You said, they're not going to make SKAdNetwork better. You know, are they going to not police, fingerprinting to, continue to soften the blow? Like where does it go? That's that's, what's so interesting to me about okay, whatever their motivation, what they do in the future. In reaction to what's actually happening now that we're seeing actual results matters, you know, to, to the tune of hundreds of billions of dollars.And, and one of the things I put in the notes to talk about is a lot of this value that's being destroyed is not accruing to Apple. It's not as if you know, a hundred billion dollars of market cap wiped out of Facebook and Google and snap and other folks, it's not like Apple is actually capturing that because they don't, they don't have the ad inventory.They don't they're, they're not a big player in the space. So, yeah. W where does Apple go from here if they painted themselves in a corner,00:23:38 Eric:Maybe, I mean, I think what I would, you know, if I was an Apple, I'd be worried about, you know, they've got a lot of theirs are, they're already under a lot of scrutiny, right. Like, you know,00:23:47 David:Right.00:23:48 Eric:What did the DOJ, what just three days ago, decided to re reopen the investigation in that, in the Apple, related to, to the way they operate the App Store.I just think it's really tough to, to maintain this line on one front while, you know, you're obviously having to lose ground on, on another front. Right. because as we've seen, like there's just been this steady trickle of them, you know, seeding ground developers or, giving up a lot of, you know, Exclusivity and, and, you know, PR preferential treatment they have with, with apps or operation, right.Like, it just feels like maybe it's maybe it's they felt like, well, that will, it we'll expand one area of that, that preferential treatment while we're sort of like forced to abandon other, areas of preferential treatment. But I don't know that they were, I don't, but that would only make sense if they actually really understood how dramatic the consequences of, of ADT would be, which I don't think they did.You know, I don't know. Maybe they have painted themselves into a corner. I mean, I don't know. So that's the thing about asking, I know work is like the way it was designed. It's got a lot of features that on their own would be smart, you know, tech, progressive privacy, protective, you know, mechanisms.Right. But in combination just renders this thing, like totally. Dysfunctional. And that's the problem because now if they go back and they get rid of any of these given features, so like, or not features, but restrictions, right. So let's say they say, okay, so first of all, I mean, and I'm assuming most people listening are at least familiar with this.I don't want to, I won't, I won't go into the whole thing, you know, description of Muscat network from zero, but let's say they give up on the privacy threshold, which would be weird because there's a privacy threshold for Apple search ads to be fair, but let's say they gave that up. Right. then, then, okay.You move a little bit towards, you know, something that, that is functional and helpful. but you're, you've, you've, you've made a pretty, sort of like very kind of public facing kind of Mia culpa decision, which I don't, you know, or announcement. Right.Which I don't know, that is an Apple's DNA to do that kind of thing.00:25:49 David:And giving up the privacy threshold would actually allow tracking, which is what they're saying, they're trying to prevent. So that's the other problem with giving much ground on some of these things with SKAdNetwork.00:26:01 Eric:Well, it could, it00:26:03 David:And that that's kind of the broader question is like, can S K I network even be saved and, you know, let's say regulators did come in and say, this was completely anti-competitive what's the solution.I mean, if you roll back and give unique identifiers to every app, you're going to have all the same unintended consequences that came with the IDFA. yeah, I mean, that's like four questions rolled into a statement, but, can I ask that network actually be saved while maintaining some level of privacy?00:26:32 Eric:Maybe, but I don't know that you do give up. So I don't, I don't think you totally Naval tracking. If you'd give up the privacy threshold, what you'd enable would be the advertiser would be able to link the specific campaign to an individual user in their data environment. Now, if they chose to share that with a third party, Platform or as platform, I guess that that would be their decision, I don't think by default it would sort of instantly, you know, make that trackable. Right. Cause all you're really doing is adding a little bit more context every post-bacc versus just some, because you already get, I mean, if you get rid of the privacy rest, it, that just means those NOLs go away.Right. And so you're able to get a little, you're able to track, you're able to sort of observe the less frequent, transactions. Right. Or just tell me what it is. If you tell me what it is that I can design around that. Right. But we don't even know if it's dynamic they've, they've apparently changed it like without telling anybody.And so all of a sudden the number of Knoll conversion values exploded. Right? I mean, that's the thing, just make it public because if you do that, then I'm going to say, you know what? Okay, I'm going to design my app, such that like. The people I care about are going to trigger this or not. Right. It's not something that's in its early funnel.It's something that it'll happen. You know, I can build my, I can, I can sort of like Intuit, you know, just through like kind of statistical modeling, what, where I need to place this in order for it to trigger the number of people that satisfies the privacy threshold, such that I get the data that I really need to make decisions.Cause right now you have no idea. And you know, I have no idea where to place that. What, what is that? Unless you just experiment a bunch of times, but, but even then it's, it's the, the broader environments to variable because the, the campaign could go up and down in terms of like DAU or DNA every day, you know what I mean?And then if they change it, then there's like a totally unknown exhaustion is variable there. Right? So it's impossible to tune your app such that you, you say, okay, look, I get it. You're not going to let me have. conversion value if fewer than 25 people did it. Well, I know how much traffic I'm driving through all these campaigns every day.So, so I need to consolidate my campaign, such that each one drives 400 in new, new installs every day, because I know that, you know, an eighth of the installs will trigger that thing, but those will be the users that really care about. Right. And if you did that, then at least I know, and I can design everything around that, but I don't even know.I don't even know if that changes over time relative to the number of installs I'm driving. I don't know if you're changing it on the back end without telling me like, it's just, you can't operate in with that kind of opacity. It's just, it's just not functional. And then you've got the a hundred campaign ID limit, you know, you've got no creative, parameters in the post-bacc like, you just can't do anything with this.00:29:04 David:Yeah. I mean, that's where it does seem like this was designed as an academic exercise. How do we prevent any. Identification of any individual ever from being even remotely possible. And, and it was an academic exercise that they played out. Whereas if they had workshops with the people who actually have to use it and had, thought through the kind of business use cases and you made a valid point earlier, you don't automatically, enable tracking by, reducing the privacy threshold.But I think, you know, Apple She kind of rethink some of the priorities around this so that you get better business metrics, even if one or two people can slip through the cracks of being able to be uniquely identified. And I think the argument there is like, it doesn't matter at scale, like if one person slips through the cracks, Facebook is not going to build technology around finding that person here and there that slips through the cracks because it doesn't matter to their business to find one or two.It matters too to have more data on everyone. So the campaign ID limit the creative ID, like all of these seem very ivory tower thinking that just is not going to play out in the real world. So, a few minutes ago you were saying you don't think Apple will improve SKAdNetwork, but now we're talking about how they could.Where does the rubber meet the road what's going to happen?00:30:31 Eric:I mean, I don't. Cause I mean, the thing is like, you know, we're just kind of riffing right now. Right? I think like if we sat, we sat down with the chocolate or the whiteboard or something, you know, because we, I wrote an article a couple months back, right. It was, it was like right after this was announced and I kind of like, here's some suggestions here's, here's what you can do to make STI work.More helpful and you know, some really smart people in the Mobile Dev Memo, slack pointed out holes in my analysis. They know if you do this, I, I, if we, if we had enough, post-tax going, I could sort of encode the idea of V over enough of the post-tax like, event in a post-tax. I could put like one character from the 90 fee and every single one, I could get the users.So it's, that's why you can only have one post-bac per install, right. Because if you did 50 or so, that makes sense. So, I mean, the thing is like, if I'm just ripping, what I do believe though, is like, you can eat, you can either have the privacy threshold or the random. Right because I need so like ramp the privacy threshold up to a million.I don't care, but let me have real-time install accounting because without that, I can't do anything. Right. If you, if I, if you're off you skating, even the date of installed in that I can't, I can't do in Sauk county. I can't, I can't, I can't, assess the economics of my campaigns because I don't even know when the installs are produced and I can't make changes to campaigns.Right. Without having to shut the whole thing down and wait, and to reuse that, one precious campaign ID within the, within the sort of like constraint of a hundred. Right. So. my sense is that like, if you just solve for that allow that allow real-time install accounting and then do whatever after that you have to do to prevent me from figuring out who those people are.Okay, that's fine. But at least then I know this campaign drove this many installs today. These were the targeting parameters. This was the audience I was reaching. This is how much I spent. Right. And like, even if we just went, cause I don't think you would lose a lot if you just went back. Cause right.You know, the, the frontier that we reached was like, we're in, especially on Facebook, I'm optimizing for value. I'm not demising for ROAS. Right. And that was like the sort of the final form of, of, of mobile advertising measurement is like, I'm telling Facebook, give me 110% ROAS on day seven. If you do that, I don't care how you target, who you target.You know, w how much you see CPI is, is irrelevant. I've got unlimited. You know, from a, from a sort of like practical standpoint on any given day spend as much as you can, but just make sure we'll get a hundred times that was the final form. And I think even if we sort of like retreated from there back to just like CPI, the average LTV of this campaign is X and the average, you know, the CPI was Y and so therefore I'm making money.That would be much less efficient, but still like it's workable right now. What we have is not workable.00:33:10 David:Yeah, well, I think you and I could riff on all this wonky stuff for another couple of hours and, I hope Apple's listening and actually going to make some changes and, listen better now that they're starting to see some of this stuff, but I did, I did want to change gears and kind of start talking through.What this means for developers and specifically, you know, sub club podcasts, what it means for subscription app developers and, and what you were just talking about. I think, I think is actually a really important, topic that not a lot of people fully understand you've written about it in the past, but I think it's still somewhat abstract enough, that I wanted to, to kind of have you describe it in more concrete terms.And that's the fact that with these, you know, day seven ROAS campaigns and value optimization and event optimization campaigns, Facebook with all of its data and AI in incredible targeting efficiency has kind of, in some ways been doing the job of developers. It's been finding. Those unique profiles, user profiles of who's actually going to spend money.Who's actually going to enjoy the app. And, and it's like, in some ways they, they became this really efficient black box of user profiling and understanding users that developers had kind of in the past done. And then maybe now need to get good at again in the future. know, again, you've written about this before, but just describe that process, maybe a little better of, of how amazing Facebook really was at finding the best users for an app.00:34:51 Eric:Well, they were very, you know, as you said, very, very good at it. Right. So, you know, it was based on like an approach that is, was very, simplistic, right? I mean, I just gonna, I'm gonna, if I can observe everything, then I know everything about this user and I can just target most relevant ads to them.Cause I know everything about what they interact with. Right. And I know what they like and you know, it gets to a point where that, that that ability to observe is so pervasive. That I, I do agree like that, that had, gone too far. Like the pendulum has swung too far in that direction.Like it is not, I find it unsavory to think that like, literally everything I do on my phone is observed and instrumented and ingested as a data point by one company. Right. Like that's, I'm uncomfortable with that. So, you know, and, but, but like, I think, you know, to your point, like going, you know, if you go back to when, when UAC was introduced, right.So Google their mobile product UAC is that's they describe it. I think that they themselves describe it as a black box as like a selling point. Right. Because it's like, look. Worried about any of that, you will handle all of this difficult analysis for you. We'll find the best users for you. You don't have to iterate across audience, definitions, or even creative, you know, and do all that experimentation yourself.We'll do that on your behalf with our superior tools. And when they announced it, there was a lot of, you know, disquietude in the, in the developer community. Cause people are like, look, we built this. We want to do it. I don't trust you to do it. I trust you to do it well, but I also trust it to do it to your advantage.Right, right. To pursue your best interest. Not necessarily mine, what I think you'll do. So this is, and this is exactly what these platforms do is they sort of, they take whatever boundary you set or whatever standard you set around efficiency. And they, they reached that. Right. They'll they'll get you to exactly what you say is like the sort of quality threshold or the efficiency threshold for your campaigns to keep spending money, but they won't give you any more than that.Right. So they could blow out your campaigns and get you 400% real ass. but if you told them you only need 110 by day seven, that's what, that's what you're going to get. And if they get you to that 400, then they're going to buy you a bunch of crappy traffic that brings the sort of average down until it hits that one 10.Right. And so, you know, that's, that's the power that they had, which, you know, to be fair, it's like, they were really good at that. And they would probably be, and, and, and them being really good at it. And then, and then present and providing that as a product productizing that and making that available to everyone.Meant that anyone could spin up a Facebook campaign, you know, any, any Shopify retailer, any Shopify merchant, any small time app developer and spend money and grow their product, grow their audience, right. Versus go back to 2012 and like, you know, the best UAA teams won. And, and a lot of times these were like big teams, big companies that raised a lot of money.You know, now, you know, it is way more egalitarian to open it up to anybody. And, you know, the small shop owner, in, I don't know, the middle of Kentucky or whatever could, could have access to this world-class machine learning infrastructure to grow their business. Right. And then they only really had to compete on the quality of their product and not the quality of their user acquisition infrastructure.So in a way it was, I mean, it was a giant gift to these SMBs and, and if the proof is in the pudding, look at Facebook's advertiser mix, 10 million advertisers, vast majority SMBs, right? 10 million average. Right. Think about any company that has 10 million customers, that's just an absurd scale. Right?And these are people spending, you know, in aggregate tons of money on Facebook. So like, it made sense, but, but, you know, there was a lot of pushback when UAC announced that. Cause developers said, look, we, that was our competitive advantage. Like, well, should it be, if we go back to basics and everybody has access to the same quality of infrastructure and the same quality of like, sort of like, you know, marketing tools and then you can be on the basis of your product.00:38:49 David:So then are we kind of going back to that world? I mean, after I think transparency is going to degrade, Facebook's targeting efficiency because they're not going to have that pervasive tracking where they know everything that's going on on your smartphone. So, so where do we go from, from here as far as, you know, what developers need to be thinking about?And, and I forget exactly when you were at this post, but, but I really appreciated you. You kind of talked through some, some tactics even around. developers needing to get better at capturing intent about potentially kind of bifurcating experience in the app is that we're we're developers should be headed of, okay.Now Facebook can't bring me the perfect user for my app as it exists today. and instead developers need to get back to the basics of understanding their user base and kind of building out those user profiles and understanding who they should be going after. Is it, is that where we're headed?00:39:48 Eric:I think so. I mean, I think we talked about this last time I was on this podcast, but like, you know, so when I wrote my book, Freeman, economics, I mean, this was like 2013. Right. And so this AEO didn't exist yet. You know, VO was didn't exist yet. This was, you bought installed. Right. And the idea of freemium or my sort of thesis with freemium is that like, it gives you the ultimate power to personalize.And so you need some minimum scale because you need a minimum amount of people to experiment with in order to make, you know, some small percentage of people that do monetize meaningful to you. but in order to do that, you need like a sort of like very large surface area for experimentation, right?You need a lot of content to be able to test against people and make sure that, you expose to them the exact perfect thing that they want. And in order to do that, you eat a lot. And so what ended up happening was that idea of flip. And it, and it became less about doing that in the product and more about doing that with the creative, right.And allowing Facebook to do that with four year on your behalf with the creative, then they found the perfect user and you need to do any personalization in the app because they probably the perfect user just make the app for the perfect user, that individual profile, that one profile. Perfect. You make that app, Facebook will find those people through like mass, you know, wide-scale experimentation with creative.Well, now it's flipped again. And so, you know, when someone comes into your app, you don't know who they are. You don't know how qualified they are, because the targeting has been degraded to the, to the point where, you know, th th there's, there's not a whole lot of, of sort of like operatory, you know, relevancy that you can Intuit there.And so you've got to parse that out from their behavior, show them something, see how they react to it. If they react positively to it, show them more of that. And if they don't show them more. And, and that kind of personalization though. I mean, it was very powerful and I talked and that's, I wrote a whole book about it, but it's hard to do.You need a big team, you need data infrastructure, you need that's, that's the thing. And then you revert back to like, well, only big developers can do this. Right. And so you've kind of just edged out the small guy. you know, the developers that are just like a couple of people and they got to just whiff, or they, they got to take a flyer on some idea, and they better hope that it works right.Versus being able to kind of iterate into that and provide one app that gives like personalized experiences to sort of everybody that comes through.00:41:56 David:Yeah. So then those, I mean, what would your advice be today knowing that you can't just, you know, throw a hundred grand at Facebook and let them figure out your perfect user? How, you know, if you're, if you're building an app today from scratch, or let's say you're at 20 or $30,000 in MRR and you want to make that leap and really grow, what do you do?00:42:18 Eric:Well, I think so. I mean, in that post, I mean the one thing that is, you know, it's a worthwhile exercise, but it is trying to instrument these, these signals with the conversion values for SKAdNetwork. Now, the problem with that was, you know, going into this before NTT was launched and, you know, I worked, you know, I worked with some companies to do this and it's like a data science exercise, right?You just, you, you run these, you know, you go back and you have like, kind of look back models and you find out what the commonality was amongst people that ended up being good users. And you try to surface that in the app and you encode that as a signal for a scanner. The problem is going into that exercise.You're thinking that sci network was like a good faith solution. it made sense, but now we realize, well, we don't even know when they're going to te when they're going to, how many of these we need to trigger before they even start reporting them to us. Right. And so like, it's like, okay, well, that's not really an option.You know, I think the other thing is, you know, you approach this as more of like a product marketing, you know, project and just trying to figure out who your audience is right here. And that's like, going back to basics, that's saying, okay, like, what are the demo features of the groups that like this type of product and that's what I have to target against.Right. And then just, and then trying to get, you know, cause you can't do mass creative testing anymore, at least on an iOS. And so, you know, trying to work out some pipeline of like, we try concepts on Android where we can still do kind of mass testing and then we promote the, the conceptual winners to iOS, but then we've got, you know, fewer, various success there.So we've got to kind of adapt that for the iOS environment. Like it's just, you lose a lot of, there's very lossy that each time you, you sort of transfer some sort of component of understanding from a totally separate platform. To iOS and then from iOS to like different environments to, to other environments on iOS, you just, you lose signal there, you lose precision.So I mean, it's it's, but that's it right. And then, you know, trying to get away. So I think another thing is that, you know, you talk to some of these companies and Facebook had become like kind of a drug for them. I mean, it's just like they were addicted to it. and it was just so easy to only use Facebook, right?Because you could accomplish everything you want it to, but you know, that's a classic, you know, sort of, that, that that's a classic sort of blunder from, from just a commercial perspective. You never want to be totally dependent on another platform. You know, now Facebook didn't make this decision.Apple did, but, you know, nonetheless, you know, your sort of devastated by it, right. Because of that dependency. So I think the other piece of this is just trying to, is doing, doing the work you should've done a long time ago, which is diversify your traffic mix. Right. And that's actually kind of difficult because Facebook, again, they did all that creative exploration for you.You know, they have such a broad user base that you could find all these different groups in scale, right at to, to scale like these even niche audiences, niche, look, any, any sort of like niche for X strategy game. You find enough people to build out, a big da you base and that's not true.I don't the other platforms. Right. And you got to really nail the form factor for those like snap is totally different. Like the way to approach the app is totally different. The Facebook, the way to approach tick talks to even snap, right? The way to approach Outbrain, Taboola totally different than any of those.You know, the way to approach YouTube is even different. Like every, all these, these are very, you know, particular, unique, channels and, and, and the way that the ads are are exposed in the products is different across them. And so you've to, you've got, gotta go through the work and the investment it's, you're investing in a data and, and, and sort of institutional knowledge.And all was never went through that exercise because it's like, I can just00:45:46 David:Right.00:45:46 Eric:Spend more Facebook.00:45:47 David:Yeah. And, where do you think organics fall into this mix? I know, like we talked to all trails on the, on the episode before that I said, not only are they a unicorn app, likely evaluation, but in, in their success with organics, I mean, there are apps that just find incredible success with that, right.Kind of search optimization or finding that right niche that really drives organic installs. Where do you think the average app should be placing organic and how much focus should they be putting on trying to get some of this free attention and build, you know, user generated content and links and things like that.00:46:35 Eric:I mean, do it to the extent that you can. I mean, why not? you know, I, I don't think you've got to choose one of the other, right. I mean, you should be ideally maximizing the effect of both of these strategies, but I will say one thing it's that you always have to turn on paid UI, right. You've always got to turn on paid marketing.There's varying, you know, sort of, timelines, you know, over which you have to confront that reality, but it is reality. You've always got to turn it on and like, I've done enough, like advisory for like private equity funds and just big companies that are looking to buy other companies.And it's always, the reason they bring me on is because I'm going to say, we could triple this business. If you did paid UA, right. We could cut Drupal this, like how, how, how much, how much bigger could this get? Right. And you know what I mean? Like, there's always a point where they've capped out. They never developed this, you know, expertise.Internally, right. It never became like domain knowledge that they possessed. And for that reason, there been a lot of false starts. Cause it's like, well, we can always sort of lean back on organic and it's going to take time to spin up paid and they bring someone in. And within two months they haven't really materially improve the business and they spend a bunch of money.So they get fired or, you know, they get the budget cut and they quit. And then they do that three more times and then they realize we're stalled out in growth. and no one wants to come work to be our CMO because like, it's pretty obvious that they're not gonna be. You know, the full freedom and the only way to sort of like break out of that cycle is to have the company get acquired right by a private equity fund is going to say, yeah, we're going to bring in a CMO and you know, these management's kind of gone and, or they're gone, but, or they can stay with it to play ball with the new, you know, the new execs and, and we're just gonna spin up paid marketing and that's, and that's how we grow this asset and that's how we make our money.So I've just been on enough of those deals where you always turn on page away. If you, even, if you, even, if you think you never will, it happens, you know, outside of your, approval.00:48:28 David:Yeah. I didn't mean to phrase the question anyway, that made it a black or white that you had to choose one over the other. And actually I was, I was trying to, to, to kind of, throw a softball at you, because I think your, your thinking on this, is great in that the sooner you do spin up some level of paid marketing, the sooner you, you can understand the different audiences that are going to be coming into the app.And, and that's something that you've talked a lot about that I think is really fascinating. Yeah. If you can find a good organic channel, go for it and bring traffic in, but know that when you spin up ads, those that traffic is going to look different. They're going to convert different. They're going to be interested in different things.And if you, yeah, I'm stealing your, your kind of playbook here. So yeah. Tell me why you think. even if you do have a very successful organic channel and maybe that's the strategy, you kind of get from 10 K a month to a hundred, 300 K a month. But to get from there to the millions a month, you're going to have to spin it up.So what's the playbook for, for kind of building that expertise in house. And when do you start, when do you have to start ramping it up?00:49:43 Eric:So thank you for reminding me of my thoughts here. so, so the idea, the idea there is like, organic's never going to be the ultimate scale channel, right? Like it's gonna, it's gonna, it's, it's gonna, you're gonna reach some sort of asymptote with growth there and it's gonna flatten out and probably at, you know, if you kind of close your eyes and you pictured your app at like the sort of greatest potential, right?Th this sort of like greatest sort of like intrinsic potential paid is 80% of daily, you know, new users, right. Or 60 or whatever, but it's a majority. And so if you've only. You know, grown via, you know, just sort of like organic traction and organic like magnetism, and you've, you've gone through like many sort of cycles of app or product iteration to sort of optimize the product for that group of people that do look distinct that will look distinct from people that have responded to some kind of stimulus, right.And have some sort of intent, sort of like, you know, driving their, their adoption of your product, then you've optimized for the group. That's that at the greatest potential scale of your, of your product is in minority. Right. And what you really want to do is you want to optimize the product for the majority, the, where all the growth, where the growth can be, right.And so that, you know, if you delay layering in pay traffic and you, and you delay, then you delay understanding what they want out of your product. And the sooner you bring that in the sooner you can sort of, Optimize the product for them, the more efficient your pay traction will be, and you'll get an organic halo effect from that.Right. And so like, it's like, well, the sooner that you do that, the faster that you sort of reach that, that sort of, you reached that potential on the organic side. So it's more about like, are you thinking about like how, I mean, an exercise that I always love to do is it's just like pause and think about like, what would success look like?And for most apps, success looks like, yeah, we're spending a ton of money on paid you way. And there's a lot of organic too, because that's just a function of being a successful app that a lot of people know about, but, but we're spending a ton on UI. That's a good thing. That's not a bad thing. It's a great thing.And so, but, but the majority of our users came in through paid UA and so we've optimized the app for them. and so we've, we've, we've made the economics better over time. And then the other piece is like in a, talked about this a lot too. It's like, you've got to change it. Over the life cycle of your app.It, because you know, a lot of times what you see as, you know, you see an app that's new they've got like explosive growth, right? And you look at the, just like a kind of stacked, a bar chart of the cohorts by age. And it's like, well, on any given day, the vast majority of users are new or they're less than a month old.Right. And then like you go, you fast forward two years or three years, and a really good app, that'll be flipped because you've, you've retained people. The vast majority of people that use your product every day are old. I mean, in terms of like when they adopted your product, because it's sticky because it's retentive, right.And that's a, that's a great place to be. But that, that you've got to change the way that you think about product optimization at that point. Like when you're going through the product iteration process, like, well, you're not optimizing for the newbies anymore because there's way fewer than you got to keep the old timers involved and engaged and.Right. Cause, you know, that's just where the vast majority of your revenue is coming from. Right. And, and, you know, and, and at that point you've probably reached, you know, some proportion of your Tam. And so you might not even be doing new user acquisition as such anymore. You might be doing a lot of retargeting re-engagement.And so it's just like, you gotta be very conscious of like the life cycle of the app, what the, what the user base looks like in terms of composition by age and like all that kind of stuff. And it just, it just takes a lot of consideration and it's it's, you know, and if you get to any point where like any of those, any of those distributions is skewed to an extreme, to an extreme one direction or the other, you probably got a problem.Like if you're all organic, you're not you leaving money on the table. If you're all old timers, when you're not growing anymore, if you're all 00:53:39 David:Right, 00:53:39 Eric:Retaining enough. Right. It's like all these different levers that you got to pull to make sure that you hit the optimal sort of combination.00:53:45 David:Yeah. That's great stuff. I love the way you put that too. I think there is some level of magical thinking that if I have just the right app, I never have to do marketing, marketing is a dirty word. Spending money on marketing is. It is wasteful or only companies with bad products have to do marketing and that's just not true.What's especially funny. a lot of these folks or indie developers who hold up Apple to be the end, all be-all Apple spends tens of billions of dollars on marketing, Apple measures that marketing while at the same time, you know, enacting ATT. App Tracking Transparency So it is funny that dichotomy of, and the magical thinking of I shouldn't have to pay for users.My product should be good enough it, really is just magical thinking. ultimately, spending money on marketing is a good thing. Not a bad thing. I love that perspective.00:54:39 Eric:Yeah, my, we had a Halloween party for my son and his classmates he's, he's very young and he was, he like, he did this thing where, you know, he wanted to be two things for Halloween. So they had like a, you know, a parade of their school. And then, we had, you know, we just had Halloween day country competing and stuff anyway, so he wanted to be a dinosaur.And then he decided he wanted to be a vampire for the Halloween day. so we had to get him a second costume. He was a vampire and a, and we're having this party and someone was like, oh, you look like such a scary vampire. I was like, I work in digital advertising.I'll show you what a vampire. looks like, It's this idea about digital advertising. Oh man. It's, so disgusting. it's crass gross. You have to spend money to acquire users That's that's that's that's so, vulgar, but in reality, you're leaving money on the table.If you could be doing it and you're not00:55:35 David:Right. 00:55:36 Eric:That's not good. 00:55:37 David:Yeah, totally. So, so, that, that's actually a great place to wrap up. Like where, where do we go from here? So ATT App Tracking Transparency is what it is. We don't know what Apple's going to do. We hope they make things better, but, what is the future of, of app install ads? What is the future of, of marketing your app successfully?00:55:57 Eric:It's funny because I, have been the biggest, crypto skeptic since day one. I remember people were telling me about Bitcoin in 2011 and I was like, this is a joke. Like, this is a, there's no need for this. There's no use case for this. I still feel that way, but it's gotten to a point where I feel like it's actually inculcating new behaviors where this is just.Crypto in general is probably the thing that introduces us to these ideas. it's like an imperfect way to implement them, but it makes us think about them. then there's going to be a solution that follows The structure of crypto. that is, is actually the better way to, to, to implement these ideas.But I've worked with a number of web 3.0 gaming companies. Right. And, and their challenge is that they can't be on the App Store. they're running like web properties. how do you promote that? And, the thing is if you're running it on the web, you can access it from your mobile device.I can access these games from my device It's just not on the App Store. if you get one of these that blows up, you get the halo of web 3.0 games. You get the, hit game that, creates the space for this category to thrive.Then. Maybe it just becomes, you know, acknowledged that yeah, we can go through the App Store if we want specific types of games, but if we want these other types of games, we just go straight to the browser. my big question is why did Apple do privacy really in the first place? maybe it was to actually route everything through the App Store, That would be the cynical conspiratorial take. It's that they want to prevent your access to the open web or they want to gatekeep it. so they're going to decide what you're able to access. But anyway, There are a lot of web 3.0 companies thinking about this right now.They can't go to the App Store, So there's no app install ads for them. It's all web-based. and, and also, you know, they've done a great loves Web 3.0 companies have done a great job of fostering community-driven marketing, Getting a discord server with 20,000 or 100,000 people in it.And That's where you advertise. you never have to pay for anything. now that's a first-mover thing. And I think that declines as more people enter the space. There are just, you know, there's just too many of these, these sort of games to, to sort of rely on that.But a lot of companies are thinking about that right now. How do we drive people to the web to do acquisition? Right. A lot of, you know, as, you know, a lot of, subscription companies, have been doing that for a long time, There are well-worn strategies for doing this. And they've been monetizing that way for a long time too.They haven't been screaming about it. But they've been doing it. now that, well, okay, now that's probably, that's, that's a policy that's allowed to, you're allowed to do that. Apple blesses. Well, they don't, they, anyway, they say we can't stop you. Maybe the consequence of this whole thing is that it just moves people into the browser. there's the web 3.0 piece of it, which, who knows maybe that is a dud. Maybe it's a gigantic category. I'm not convinced either way yet, but you've got people that are saying I'm going to set up web shops I made the point that like, look, I don't think that, you know, there's, there's, there are systematic reasons why that probably doesn't become a mass-scale solution.A lot of people are doing that anyway. A lot of games are doing that anyway. That's the other dirty little. secret A lot of gaming companies were sending emails saying, Hey, you know what, don't buy these IAPs in the app. Be

Does the world really need another subscription box? Do parents really need to buy more things for their kids? Well, when we're talking about Lovevery, the answer is yes and yes. In the crowded spaces of DTC subscription services and childrens products, Lovevery is making its presence known. On this episode of Up Next in Commerce, I talk to Rod Morris, the co-founder and president of Lovevery, who told me all about the development of the company's amazing products, and, more importantly, how he and his team went about making them stand out among the rest. It takes a lot of hard work — but it all starts with a complete obsession with creating a brand that you believe in and products that fill a gap in the market. Rod took me behind the scenes of getting press and testimonials for Lovevery, he told me how they create social content that sees engagement that blows the competition out of the water, and we also dug into his tips for fundraising and what the upside is to going public. Enjoy this episode!Main Takeaways:Winning with Connected TV: If you can break format and do something divergent, you will be able to find success in the world of connected TV. People are engaged by unique content, so you should constantly be looking for ways to take wha's working and flip it on its head.Understanding the International Market: When you take your company abroad, there is a steep learning curve to understand how to win customers and take a part of the marketshare. Even if your product works the same wherever you sell it, the process of marketing it and adhering to regulations varies. These are important things to consider and prepare yourself for if/when you are seeking to expand overseas.It Takes Heart, Soul and Obsession: The way to keep LTV high and keep growing you need a mix of ingredients. First, you have to truly be obsessed with your product, love it, and constantly strive to improve it. Second, invest in content and reaching the audience you care about with useful and engaging content. Finally, you have to stay connected and work with customers so that they feel invested in the product and the company rather than being on-off shoppers.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we're ready for what's next in commerce. Learn more at salesforce.com/commerce---For a full transcript of this interview, click here.

On today's episode, Kunle is joined by Garret Akerson, Co-Founder of Kindred Bravely, a maternity and breastfeeding apparel brand founded in 2016 along with his wife Deeanne. Kindred Bravely is a case study in female entrepreneurship and innovation which is a testament of achieving a three-year revenue growth of 8,544%.Running a profitable business is a challenge at the best of times. But if you don't have a handle on your numbers, this challenge can become insurmountable. It's fair to say that almost every business owner already recognises the power of data, and many spend a lot of money on analytics tools as well. But simply having your numbers on hand is very different from truly understanding them. Herein lies the difference between the truly profitable businesses and the rest of the pack.In this episode, Kunle and Garret talk about scaling a business with typically low-LTV products to over $30 million in revenue. You will get to hear about what it takes to deleverage from Amazon, knowing which metrics to track, why using spreadsheets still works and tips on running a business with your partner. This is a great episode for business owners and operators.-----------SPONSORS:This episode is brought to you by:Klaviyo This episode is brought to you by Klaviyo – a growth marketing platform that powers over 25,000 online businesses. Direct-to-Consumer brands like ColourPop, Huckberry, and Custom Ink rely on Klaviyo.Klaviyo helps you own customer experience and grow high-value customer relationships right from a shopper's first impression through to each subsequent purchase, Klaviyo understands every single customer interaction and empowers brands to create more personalized marketing moments.Find out more on klaviyo.com/2x.  RewindThis episode is brought to you by Rewind - the #1 Backup and Recovery App for Shopify and BigCommerce stores that powers over 80,000 online businesses.Direct-to-Consumer brands like Gymshark and MVMT Watches rely on Rewind.Cloud based ecommerce platforms like Shopify and BigCommerce do not have automatic backup features. Rewind protects your store against human error, misbehaving apps, or collaborators gone bad with Automatic backups!For a free 30-day trial, Go to Rewind Backups, reach out to the Rewind team via chat or email and mention '2x ecommerce'GorgiasThis episode is brought to you by Gorgias, the leading helpdesk for Shopify, Magento and BigCommerce merchants. Gorgias combines all your communication channels including email, SMS, social media, livechat, and phone, into one platform.This saves your team hours per day & makes managing customer orders a breeze. It also integrates seamlessly with your existing tech stack, so you can access customer information and even edit, return, refund or create an order, right from your helpdesk.Go to Gorgias.com and mention 2x ecommerce podcast for two months free.CloudwaysCloudways is the hosting platform of choice for thousands of ecommerce merchants, SMBs, and agencies all around the globe. They offer a high-performing custom stack, top-notch security, the choice between 5 cloud solution providers, ease of scalability, affordable pricing plans, and so much more.Cloudways also offers support for all PHP-based applications like Magento, WooCommerce, WordPress, Laravel, and others.Experience an unbeatable managed cloud hosting experience with Cloudways today. For a $20 Free Hosting Credit use the Coupon code: **BOOSTMAG**

We've aired a few special episodes recently, but now we're back to RevOps 201. Today we're talking marketing metrics to align your revenue operation. Marketing metrics are super interesting. There's a ton of them and many don't even help you align. It's kind of like sales and CS. There's stuff that's good to know, but "how many phone calls your sellers make” is not necessarily helping you align your revenue operation. Tune-in for a deep dive on the ONE marketing metric to rule them all: CAC (customer acquisition cost). Plus, a deep-dive on LTV and many other fun acronyms. Follow the Hosts on LinkedIn: Jordan Henderson (Sr. Director of Revenue Operations) Brandon Redlinger (Sr. Director of Product Marketing) Jonathan Stevens (Sr. Revenue Operations Manager) Sponsored by: Revenue.io | Powering high-performing revenue teams with real-time guidance Explore the Revenue.io Podcast Universe: Sales Enablement Podcast Selling with Purpose Podcast RevOps Podcast

Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures. AllTrails was early to the consumer subscription space, launching a $3/month premium tier way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users worldwide.On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn't always as bad as you've been led to believe.In this episode, you'll learn: How to refine and optimize your freemium strategy Two things you need to keep an eye on as a founder The pros & cons of outside funding vs. organic growth How Ron fast-tracked AllTrails' profitability Links & Resources Accenture Hotwire Yelp Liftopia Alex Honnold Spectrum Equity Ron Schneidermann's Links Ron Schneidermann's LinkedIn page AllTrails Celebrates 1 Million Paid Subscribers! (January press release) AllTrails' website AllTrails is hiring Follow AllTrails on Twitter Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures, AllTrails was early to the consumer subscription space, launching a $3 per month premium tier, way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users world.On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn't always as bad as you've been led to believe.Hey, Ron! Welcome to the podcast. 00:00:59 Ron:Thanks for having me.00:01:00 David:Yeah. Really looking forward to the chat today. I wanted to kick it off, and most people know what AllTrails is, and it's a fantastic brand. It kind of tells you what it is right there on the tin. What's your pitch? We're in 2021, post pandemic.Give us the short version of what AllTrails is. What does it mean? 00:01:21 Ron:Yeah. So AllTrails is a free app and website that helps you find trails all over the globe, so you can spend more time enjoying the outdoors, and spending time in nature.00:01:34 David:That's awesome.00:01:35 Jacob:That's a very nice mission. That's way more beautiful than helping developers make more money. Both are important, but I can smell that. It smells, “piney” and I like it.00:01:46 David:Yeah, it smells like the Colorado forest. I haven't been hiking forever, and doing all the research to chat with you today was like, oh man, I need to go hiking more.00:01:55 Ron:I heard there's a great app for that.00:01:57 David:I heard that.So, I did want to also ask about your journey to AllTrails. You got there fairly early, and then grew in, and you're now CEO. Tell me, off the bat, what led you to AllTrails way back in 2015 when it was just six people?00:02:20 Ron:Yeah. To answer that I'm going to go a little bit further back in time. My first job right after college was at Accenture, at a global management consulting firm. It was great. A good jumping off point, and I learned a ton. I didn't know anything going into that job. You know, you get the rubber stamp and it opens doors.By the end of my third year there, I kind of had a realization. Epifany is a little too strong a word, but I just kind kinda realized I can't take a job just for money again. The amount of time and energy that I was putting into it, and the lack of work-life balance, it really made me rethink who I want to be. Who does working Ron want to be?So, I was able to parlay that Accenture job into a biz dev role over at Hotwire, an online travel company. That was really where it opened my eyes. Like, I am so much happier, and I am honestly so much better when I'm working at something that I'm just personally passionate about.That guiding principle has really held through throughout my career trajectory. From Hotwire, I want to do my own startup in the ski space. I love to ski. So, I did that for nine years. It was a ton of fun. Then I was over at Yelp, doing growth for a bit. I love finding non-chain restaurants, and supporting mom and pop businesses, and stuff. I live in Yelp, so that was great.Then, when the opportunity for AllTrails presented itself, it was just kind of a no-brainer. Of course I'm going to take this.I'll say this to you, one little addendum, one of the things I learned along the way, too. I am not a zero to one guy. That is not when I am at my best. It just causes me stress and anxiety, and just, figuring out how to keep the lights on for another day.So, again, knowing kind of that sense of self knowing. Like, alright, I'm best at B to C. I'm at my best when I'm using products I personally want to use and like talking about. I like hypergrowth, and I think that's probably my sweet spot.So, it starts to all align when AllTrials showed up.00:04:34 David:Yeah. And then how did that go from? You joined the company as COO, right? And then, what was the progression inside the company to eventually taking over as CEO?00:04:45 Ron:Yeah. So if you want to demo and COO, I dunno why I really wanted to have both, like, I didn't want to just be CMO in a vacuum, but not have any ownership or agency over kind of team composition and strategy and stuff. So I thought that it was really. Really important. And when you're a six person company, it's pretty easy to grab titles.It's not like how to take it from anyone.00:05:08 Jacob:I was going to ask, like, I mean, it's, it's not like you see this a lot where it's like a six person company and they had like five C-levels and you're like, okay. Yeah, sure. Like, like my title, for example. But like, I'm kind of curious, like, you know, you like your background, you founded a company, like you were like a real CX whatever.Right? Like it's not like it was fake. So how did, how did that, how did you go as like an executive, like choosing your next thing? That'd be a hell of a pitch to get you to like join a tiny little like, team like that.00:05:36 Ron:You know, I think I, I spent a lot of time thinking through again. I don't know, I, to be perfectly honest, I was, I was a little bit bored at the end of my tenure at Yelp. I love Yelp. It's a great company, but it was just, it was too big for me. And so I spent a lot of time thinking through what's next again?That whole question, like zero to one. Do I need, do I need to start something myself or what? So the smallness didn't bother me. I actually really liked the smallness cause it was almost like, it was almost like a cheat code. Like I got to do a startup, like basically from scratch, but I didn't have to do it from scratch.And then.00:06:09 Jacob:They had, they had a kernel of something at00:06:11 Ron:They did, they did. And you know, it was actually to, to give my predecessor credit. It was, it was actually more than that. Like they had, they had solid product market fit from a monetization perspective. And then what really got me across the line with their product channel. And I feel like that's often overlooked and that's something you kind of pick up in time.Like it's not just like, is this a product people are willing to pay money for, but just straight up, how are you going to get this out to market? And can you, can you do it in a way that is, you know, viable and scalable and, and ultimately, you know, going to be, be more efficient than, you know, it's kind of like net out, right?Like the whole LTV to CAC thing and everything that00:06:49 Jacob:Yeah. It's, it's something more efficient than paying for every single install. Right.00:06:53 Ron:Exactly. And so. You know, I, it felt like there was good bones, you know, maybe it was like a fixer upper kind of house. but it had good bones, like it had, it had the foundation in place. And I could see, you know, back in 2015, the product sucked, it sucked. and, and what was shocking after I came was how bad the data was.I didn't realize that when I was kind of doing my own diligence, but it was00:07:20 Jacob:You mean like analytics on the internally, what the company knew about itself or you mean like the, the, the trail00:07:25 Ron:The trail data, like the trail data that we were showing, you know, and that's that's subs high consequence. and so that was like a hard pivot, within a couple months, like, all right, this is, you know, all hands on deck thing.We're not doing anything else until we figure this out. but again, it just, it felt like there was a diamond in the rough, in this one. You know, I've been here six years now and I can say like, unequivocally, this is the highlight of my career. Maybe I just got lucky. I don't know. But, man, like, yeah, this has been a really, really great run so far.00:07:59 Jacob:I was just going to ask about the, that channel and monetization fit. I mean, I guess this was maybe I'm jumping ahead in our agenda here, but, but yeah, they were already charging a subscription before you got there. Right. And in terms of like monetization, maybe like describe that model a little bit and, and how that has changed.00:08:20 Ron:Yeah, I had never done this subscription business before coming here. So this was my first subscription business. And I'll tell you, you guys already know this. I'm sure your listeners already know this too. subscription businesses are magical. Oh my goodness. Compared to like e-commerce or you're trying to re when, you know, the transaction every single00:08:40 Jacob:I know I was looking at Hotwire just now, when you mentioned it. And I was just thinking about like, how many of those there were at that era, right? Like, and still are like, when you had to book a hotel on Google and they're like, oh, here's 15 different sites. You can actually like book it through it's like Wolf,00:08:53 Ron:Oh, so tough. Same with Liftopia. Liftopia the ski startup. There was the same thing. Right. you know, but, but with a much smaller niche and segment, and then, and then Yelp is, you know, they're, they're kind of the media model and then trying to, you know, kind of pivot more towards like B2B and subscriptions for businesses and value added services and stuff.And coming here doing a consumer subscription business, an annual subscription, the auto renew. It's like an annuity, like it just builds up every single year. Like obviously, like you can't take retention for granted and I'm sure we'll talk about that, but you know, just, if you're able to kinda, you know, do a, do a pretty good job on the retention side and you see this thing build up And just.Raise the tide every single year that I've been here and have it just, is that much more momentum that just gets like brought into each new fiscal year for us. It's just, it's incredible. It is incredible. the leverage that it offers. So that was cool. That was definitely a, 00:09:51 Jacob:One of those good bones.00:09:54 David:Yeah. And that's what I was going to ask you say the bones were good. Yeah, AllTrails had launched their subscription in 2012. So about three years before you joined, what was the state of that? And that's really early in the kind of consumer subscription software space. Was there a lot of push back was like, how was traction, chargebacks and things like that was the bones were there, but were there some serious doubts or questions in your mind as to how this subscription app space was going to play out? 00:10:28 Ron:Yeah, I mean, so can I share a secret with you guys? I honestly didn't know that our subscription business loss in 2012, until you guys showed me the research that you did leading up to this, I had always thought that, it launched with our ass. We launched our apps in, I think early 2015, I joined in September, 2018.And I just lumped everything together just in that, you know,00:10:53 Jacob:Yeah. It's yeah,00:10:54 Ron:Yeah. So I, I, I had always thought that it, that we had launched it when our apps launched, but I guess we were on the cutting edge, the bleeding edge, the subscription space here.00:11:05 Jacob:So, so, but that, then I'm, then I'm correct to assume that, you know, if you launched a description 2012 was on the web, if you didn't have apps until 20, 20, 15. Right. Right. Which, I mean, my, my experience, I guess I've been on old trails website, but like my vast majority of experience has been on the web.Right. Because I'm like, or sorry on the, on the phone because I'm going for a hike and I'm like, I need a map and like, boom, there's AllTrails. Right. Which I guess is that channel fit. You're talking about.00:11:27 Ron:Yeah. And that's been, that's been one of the cool things when I started. So a couple, a couple, I guess, data points, just to show like, sort of that, that snapshot in time of 2015, we probably had 20,000. subscribers at that point, maybe a million cumulative registered users since 2010, when we first launched and maybe 20,000 active paying subs.And in January of this year, we put out a press release. We don't normally do that, but it was two pretty cool milestones. We had cracked 25 million registered users and a million paying subs at the start of this. So, you know, again, like the, the, the unlock has been really cool and very, very powerful. but the other thing, like you said, like this was, you know, a web driven subscription business.At first, when I, when I first started here. probably 70% of our, of our web traffic was desktop desktop to mobile 70 30. And obviously that's inverted, since then, and then Mo the, the, the mobile apps, the native apps are by far the best form factor for what we're trying to do. Like you said, Jake would like take it with you on the go, the navigation, the GPS stuff, everything baked in there.And so that's become really the workhorses of, of subscription business and, and of our overall, UDC flat.00:12:42 Jacob:Yeah. I mean, it's so helpful. you guys have good SEO when you search a trail, it comes up on AllTrails. Right. But that's, I would imagine like this stage probably mostly like demand gen for the app,00:12:53 Ron:That's exactly it. No, that's exactly it. Right. So our se our legacy SEO, this is what, again, one of the beauties of being around for 11 years and counting, we have this amazing legacy SEO and that's, that was that product channel fit that brought me here was the sales pitch was he just showed me Google analytics.And he just like, look, look at all of this for your00:13:12 Jacob:Just like a hyper-local very valuable data, right. Index. And if you're, if you're the winner, that's a great real estate to00:13:20 Ron:I know. And, and so what we've been doing obviously as, sort of consumer behavior has changed and gone mobile first is, we're able to parlay all of that mobile first SEO traffic it's, incremental organic app installs, and that's a huge driver. Of our business. We get millions and millions of incremental app installs that we don't pay a dime for every mom's.00:13:42 Jacob:Yeah. And going back to your point, like yeah. Not having to push. Up the hill completely is a bit, you know, you think about a Compounding annuity analogy as you made, right? Like the cost of that compounding really, you know, if you net out the whole asset, right? Like that's going to be a big part of it is like, how much does it cost to push that that, that, that flywheel up a little bit. 00:14:02 Ron:It's a moat for business too, you know, you're around long enough and you're doing something good. You're going to see a ton of competitors start flooding into the space, which is great as validation of what we're doing, but the product market fit product channel fit conundrum is, is real.It's real. And you know, I see really great products, you know, beautifully designed products that just crank can't crack the code on either of those. And then they kind of, you know, whether on the line, right? Like see it all the time.00:14:31 David:No, that was actually my next question is that in those early days, and you already said when you joined and when y'all launched the apps in 2015, they were crap. So take me, how did you go from this crap up and what experimentation, what pain, what suffering did 00:14:53 Jacob:There's some, there's some old, there's some like a old guard at, at all trials that are going to listen to this and be like, crap. They were great.00:15:00 David:But what did it take and what was the approach to, to find you, you had some level of product market fit, but then to actually build a great product around those early signs. 00:15:12 Ron:There, there are a couple of philosophical things that we decided immediately. One was around funding. Do we want to go take funding, and try and do this faster? Do we want to do this kind of organically? And my predecessor had done a small seed round. I think he raised 3 million bucks in 2012.And we were still kind of drafting off of that. And then there was a little bit of subscription revenue and then a whole bunch of just, you know, classic entrepreneur head on the swivel stuff. Like let's throw a bunch of shit up on the wall. Like, let's see what we can do. So there's, you know, a media play and programmatic ads.Whatever, right. Just trying to buy time more than anything. Right? Like keep the servers running for a little bit longer. But we decided we very intentionally decided not to take funding. We wanted to control our own destiny. And part of it to be clear, part of it was the handshake agreement with the original founder, was to grow it and sell it.He wanted us to, to, to sell it. And so, so then if that was kind of the. The Mandy. And I was like, well, why would we even just, you know, deal with the, the opportunity cost and the headache of going out and trying to raise funds, as a pain in the ass. So, you know, it was like, let's just, let's put our heads00:16:22 Jacob:Especially, especially for our consumer subscription company in 2015, like00:16:27 Ron:Right? Yeah.00:16:28 Jacob:Ben kind of been party to that. It's not, it wasn't easy. Let's put it that way.00:16:32 Ron:Tried doing it in 2005, by the way I was with Liftopia was insane anyways. but so we decided to put our heads down and just say super scrappy, super scrappy, super lean. And so, it just came down to like relentless prioritization and essentially what we ended up doing was triaging sort of a different funnel metric each quarter.Right. So one quarter is. We've got to tackle bounce rate. All right. Now we've got to tackle signup rate and now we've got to tackle pro conversion rate. And now we've got to talk over attention and we just kind of spent cycles, through 2016 and through 2017, just each, each quarter, just like laser focus in on that one metric and do what we can and then move.And it worked because by the end of 2017, we actually achieved profitability. Which was cool, which was really, really great. You know, like we wanted again, when you've been around the block long enough, you talked to enough entrepreneurs, you've seen, you've seen enough. there's so many examples of people going and getting too much funding too soon, and then they develop bad habits, right?Yeah. Let's get a little hot in here. Is it.00:17:36 Jacob:I never heard of that.00:17:39 Ron:So, you know, but so you see it right? Like that you, you get the, unsustainable growth channels, again, the product channel fit question, like how are you actually going to bring this to market? And how are you going to do it when that VC money dries up? Like, is this actually00:17:50 Jacob:Five X that VC money, right.00:17:52 Ron:Right? Is this sustainable?Or you're just connecting yourself to the next round of00:17:56 Jacob:You can put yourself in a, in a dead man's corner, right. Where you're not your, market's not big enough, whatever you end up killing and otherwise like really great business,00:18:05 Ron:Totally. And I, you know, I'd seen that, I'd seen that. I really didn't want to do that here. It felt like because so much of our growth was coming through SEO. It felt like obviously there's an opportunity, which we later unlocked on the ASO side of things. It felt like even beyond both of those though, it's just like word of mouth and PR and viral loops and network effects.00:18:27 Jacob:Product market fit as a broad thing, right? Like growth kind of have you have a really good product and it serves a niche, like grit just starts to start to go.00:18:36 Ron:And especially organic growth, right? Like, and that was really the big key as like, do we need to be like one of these DTC companies and just raise millions of dollars for Instagram ads? Or can we, can we do something that's more sustainable for the long haul? And that was, that was one of the bats.The other big bet that we placed was, from a brand positioning perspective. You know, when I came in the app was definitely geared towards like the through hikers and search and rescue and, and the hardcore, like, you know, back country folks. And the challenge with, with, with that segment is that there's always these, you know, really esoteric and extreme product requirements that they want because they're they're edge cases.They're by definition, all edge cases. And in this space in particular, a lot of them. Kind of living the, you know, the van life, life, you know, trying to live as frugally as possible. and so they don't want to really pay you any money either. It's like this isn't a good growth segment. We got, we gotta rethink this one.And so, I've told this story a lot, you know, this strong man to this day still is, is my wife where like she likes going outside with me. You know, she's always down to go on a high. you know, spend time outside. We have three kids, totally trying to raise them on the trail. we have a dog who loves being on the trail and, but, but if I'm not there, you know, she's, she's not going out there.Right. So it's like, okay, okay. Maybe here's the play. Like what, what if we use technology? Kind of tear down the barriers for entry, like instill confidence, whether through like product functionality or content, but really make it so that someone like my wife and the hundreds of millions of people around the globe, like her who, who know that they feel better when they time spend in nature.They're just a little scared to do it. Like, can we help augment that? Can we help supplement that? And I think that's going to be the unlock. And that was the big bet. That was the other big bet that we placed in 2015. And you know, 00:20:30 Jacob:And just to summarize that, I understand it's like to kind of not ignore these like extreme users that are on the edge on the edges, you know, serve them, but maybe not in the way that they would want, but like let's focus on, you know, this larger segment. I mean, I think that's the thing, even some good founder advice is good for founders.Sometimes doesn't always apply. Like B to C stuff sometimes where it's like, yeah, like, listen to your most vocal users often. There's something there, but like with an ounce of like moderation, because yeah. They can lead you in really strange places. And think about the network. Think about the like user.Maybe you're not talking to her, her the next year saying next a hundred million users that you have to get. and that's potentially a much bigger surface area. And that doesn't mean you're going to abandon those court users. Like they might grumble a little bit and they might not be totally served by your use case.And like, that's maybe just life. but, but you know, you've now potentially, like if you think about the, you know, the mission of just getting people outdoors, like you've achieved that much better by going for this much larger market segment. Right.00:21:31 Ron:Yeah, and they're not mutually exclusive. It's just which one are we prioritizing? Which one are we preferencing? And how are we, you know, what kind of language are we? Are we using lingo or not? Right. Are we making this accessible for everybody or not for imagery? Right. Are we doing like, you know, Alex, Honnold like dangling one handed off of a cliff,00:21:51 Jacob:Or just, or just a picture of the N the end cap at an REI, Right. Like,00:21:56 Ron:Yeah. Yeah. Or, or just like, you know, a family like smiling and having fun out in nature together, you know, like, all right. It doesn't cater to the core, but they're not necessarily going to like walk away because they see that stuff either. 00:22:07 Jacob:Right. I mean, and that comes to. Channel fit As well, right? Like not your products fit and your products oriented for, and that like B to C you kind of, you can't divorce the two, like you can't have totally independent marketing and channel channels for the product itself, which maybe you could get away with a little bit in B2B.But, but, but they, but they don't necessarily have to be like completely like linked, you know, you can kind of serve both niches on the, on the product side to your point.00:22:34 David:And speaking of getting more folks out in the mission of AllTrails. I'd love to hear about your freemium strategy, because that's a huge part of it. Like what early on, what was your approach? And then how did that evolve over time? As far as what features you do give away for free to kind of reach the broadest audience possible, and then what things you pay wall to actually get paid? 00:22:57 Jacob:And, and, and I'd like to highlight how Ron, when we asked you to describe AllTrails, you put free in the name, which I'm sure was very intentional. Right? You said it is a free app, right? It is not a premium app. I mean, it is a premium app, but the highlight the free. So00:23:09 Ron:Yeah,00:23:10 Jacob:That framing, what, what, tell us about your free app.00:23:13 Ron:There's, this is a, this is, an ongoing. Like not debate, but, it's an open question always. And we're constantly like asking our employees and our board, like let's challenge our assumptions here just because we did something a certain way last year. Doesn't mean we need to do it this way.Like let's constantly reevaluate this, for us, there's sort of three main buckets we have. Free on authenticated users and then we have free registered users. So kind of that registration wall is like the first key funnel, metric. And then there's, pro subscribers, right? So we have two, two kind of core, success metrics.One is registration rate and one is pro conversion rate. And then what goes in front and behind the paywall and the red wall, the registration wall. Constantly influx constantly. And plus we actually just did this really fun workshop a couple of weeks ago, internally here. It was like the history of AllTrailss pro and just showing kind of which features started when I, you know, again in 2015, like what was the pro feature set?How much of those? We actually ended up pulling in front of the red wall and new features that we put back behind the paywall. So I feel like we're constantly in a state of experimentation here. we've been, we've been experimenting with that since day one. We've been experimenting with pricing also on day one.And there's still, I don't feel like we've cracked the code at all at all. When I, when I first started here, I'll chose pro was 50 bucks a year and I spent the first, like two months just trying to get as, as much like, obviously all the quant data that I could get my hands on, but as much qualitative data as I could get to.So reading every app store review, every Reddit thread, every blog post. Talking to customers, all of it. And aside from everyone telling us that our data socked and, you know, we can, we got them lost. So we got them tickets from the park ranger for telling them to bring a dog when it's not that currently, whatever it was.The other piece of feedback that we got was like 50 bucks, like it's way too much. And so we immediately started testing pricing and, and, and we tested it at 30 bucks a year and we tested that 15 bucks a year to kinda all right. If we really just take that price down is, the in incremental, purchase rate, gonna offset, you know, the, the change in that revenue per transaction.They were about to wash it, which was really interesting from a net revenue perspective, 15 bucks a year versus 30 bucks a year was, was basically flat. But we went with 30 because it gave us more maneuverability. We could do more. for the folks who were like price sensitive, do do discounting, intro offers, whatever.At 15, we really couldn't go any low, lower. So it's just like, this is it for everybody all the time. but even that we're revisiting now and thinking through like, all right, maybe are there other different tiers? We've never done monthly before. So what is, what is a world in which there's a monthly price?I don't, I don't love it. I mean, again, annual is magic. Like why mess with a good thing, but there is a cohort of users, especially outside of the U S where that's a pretty high00:26:16 Jacob:Oh, I mean, I live in the Midwest. Like I would, I only need your app from, from April to November. Right. Like I really don't need to pay all year.00:26:24 Ron:For the two weeks in00:26:25 Jacob:Yeah. I, but I mean, I think there's the counter argument there of the simplicity. It's like, yeah, sure. But. Whatever your value is. So your, your, your, this is the price.I really, I I've seen that effect before on the price experimentation, you just end up with the same area under the curve. Like, no matter how you move it, and some apps are like that, some apps are not. but I do think it's really fascinating, the wisdom of crowds, right. And just how, like, they know like the, the, the, the masses have priced and valued your products.And then just like showing that like, it's very efficient, right. No matter where it goes, then you can come down to like, It's almost a good place to be. Cause then yeah, you have that like opera, you can choose where you want it to price. You can basically, you're freed from the like fiduciary duty of like maximum extraction.And you can like, like, just focus on like, okay, what's gonna what's right. For us for some of those goals on company growth and stuff like that. If it was right for the mission. And then like also give yourself some like tactical opportunities in terms of discounting and other stuff like this, and then positioning as well.Like what is it? I think that's almost as important. It's like, how do you use. How do you see all trials? Like how do you see it as like, what's the value of perception? Like a $30 skew and a 50 and a 15, those are very different. Right. And those are, you know, I think about consumer goods on those scales.That's like each one of those things has like a different, like, feel to it.00:27:43 Ron:Totally. And, and then on top of it, though, our business is driven by UGC, right? We have this classic UGC flywheel. And so obviously we know our pro users are more engaged, but a ton of engagement comes from our free users as well. And so you can't kind of, turn the squeeze on them too hard without like really fundamentally damaging the business.00:28:05 Jacob:What kind of user generated content? Is it like pictures and updated and stuff or what? What's00:28:10 Ron:Yeah, ratings, reviews, photos, recordings, you know, and then there's this also this virtuous cycle that we have, this beautiful relationship we have with our users, where they, they help us create as well as Curie our trail Content. So that's the thing with trail content, just to go down this rabbit hole for a second, Joe Content, super fluid, like it's not like streets that are, that are relatively static.You know, a trail is you get, you get flooding, you get fires, you get maintenance, you get development, down trees, whatever. Like they're constantly in a state of flux. And it's really, really hard to stay on top of it. We can't do it alone. And so we00:28:49 Jacob:And there's no, it's not like, it's not like roads where there's like a national database, right. Of like uniform data00:28:55 Ron:Yeah, no, not at all. Right. so we, we do. We have this like really beautiful symbiotic relationship with our, with our users, you know, and, and it's kind of like, we both get value from each other and we're both very transparent about like the relationship, like you guys help us and you help the community.Right. And we'll package it. We'll, we'll keep improving and investing in the product experience and everything else. and again, like, this is where it seems to be working, but this is when, when we were talking about. Th th the choke points in the funnel and that, that red wall and the broken version Weill, this is the thing that's top of mind over all of it. 00:29:30 David:Yeah, that's great. I did want to move on and talk about in 2018, AllTrails raised, 75 million led by spectrum equity. And so I'm curious about that, about that story. So, I know, you know, the plan was to sell and then you've shared on other podcasts that, part of that was the founder taking, taking some money kind of his exit event.But I'm really curious just from like a company building perspective. I think so many founders and entrepreneurs think, oh, if I can just. More money. If I can just hire more people, everything's going to be easier. but I imagine that's not the full story. So I'd love to hear about the raise, but then also kind of how that changed the company and changed the trajectory.00:30:18 Ron:Yeah. So like I said earlier, right. That the handshake agreement was to grow and sell it. So we knew going in exactly what the deal was. and once we hit profitability in 2017, it kind of felt like, all right, it's probably next year. It's probably our year. And we got an inbound from one of the big tech companies early, you know, probably end of Q1 of 2018.And so I was like, all right, game on, right? This is it. We'll go get a bank. we'll run a formal process here. And we started going through it. We started going through it. This was actually, it was fun, right? Like I got to put together sort of like, all right, here's our top 100 strategic partnerships broken out by category, broken out by vertical.Here's like the, you know, the accretive value here is, you know, the, the investment credit. It was like a really fun thought exercise. You know, we're talking to online travel companies and real estate companies, and obviously like the retailers and just so many different types of companies out there. And we ran a process and it was, it was fun.But, and as we were going through it, well, a couple things happen. One is our business really took off. Like it was a breakout trajectory year for us. So that always helps. Anytime you, you meet with someone, you share your plan and then you come back a month later and it's like, Hey, actually, Outperforming outpacing.So your price just went up. so that was, I mean, that was great. Like a great position to be in. I've never had leveraged like that. And the other, the other thing was like, we could walk away at any point. If we, if we didn't like it, I had done a lot of fundraising before and that I've never had a position of, of leverage like that.So that was cool. But as we were going through the process and talking to these different strategic acquires, the other thing that kept jumping out was like, I don't want to just go be middle management at some big company that I already like have chosen not to work out anyways, because it doesn't align with what I want to do with my time.And so, you know, we're kind of going through, it's like, is this really, is this it is this the only path? and we're talking to our bankers about it and like, you know, there's a, a huge ecosystem of financial investors that are really excited about this consumer subscription space. let's, let's do a spike there.And so we started talking to somebody. Different financial firms out there. And that's where it got really, really interesting. you know, I think, I think we all probably have preconceptions about like private equity groups, like, you know, I know, right.00:32:36 Jacob:Just, it then the light dimmed here. When you said00:32:39 Ron:I know, cause a lot of the classic ones, they're just there in your shorts about like your bottom line expenses and micromanaging and telling you to cut costs and00:32:47 Jacob:That's, that's the, that's the, the stereotype at least.00:32:50 Ron:Totally right. but there's this whole class of growth equity shops out there and, and we, we sort of plugged into it and I would squarely put spectrum equity and that one, and the first time we talked to them, it was so clear. They're like, you guys, aren't thinking big enough. It's like, what? I love that.Okay. Let's talk growth. You know, like you guys need to be thinking global. Right. And it was just like, there was so much alignment around. This, this opportunity in front of us. And instead of like pulling the rip cord and just kind of being absorbed and integrated into something else, it's like, how about, like, we really make a, make a run at this.And so the more we talk to them, the more it's was like, yes, hell yes. And it wasn't just from like, a funding perspective, you know? Cause if it was just that like again, then you just do an auction and you just see whoever's the highest. But we really wanted, like I needed a partner. I wanted a value added partner that I wanted someone who could bring in, you know, a sense of community, not have to reinvent the wheel all the time.That's always nice when you can plug into our portfolio of similar companies and just pick their brain. All right. Like how did you guys00:33:54 Jacob:Yeah. I mean, that's an under, that's an underappreciated aspect of raising versus like going at your own. It's like the network, like it's, I think feces oversell it, but maybe founders undervalue it. Right? Like00:34:05 Ron:A hundred percent. Couldn't agree more. It does. It really does. and so yeah, we kinda went, yeah. I, I feel incredibly fortunate that we were able to partner up with spectrum equity. And so David two question, I have, it's like it for us, it was this huge unlock. It was this huge online. Like we have another partner, we're going to be more formal, with our board structure and, you know, the, the sort of like metrics, which is great, like we needed to level up, and our corporate diligence and everything.And they've been, they've been a partner and we've, we've grown the board. We've added more expertise. And again, like the, the portfolio being, being sister companies with, with like Headspace and the not worldwide and survey monkey, whatever, like these cool companies that I respect and be able to, you know, hit up the CEO and be like, okay, how did you guys deal with this?Because like you said, like there are a ton of challenges that come when you're going through that, you know, that the slope of the curve at that point, right? Like the true hyper-growth curves. All right. You know, we can't fall back on, on money as an excuse, you know, like it's purely an execution play and how do we do more faster?And that's honestly like, that's my, I think one of the coolest things I can say about my board, that the single biggest piece of feedback I get from them where they're just like yelling at me all the time and a great way. It's like, you gotta do more faster. Why aren't you doing more faster? Right. Like that is the mantra here because everyone sees this opportunity.It's ours, it's ours to go take. Right. But we got to execute and do it as fast as we can.00:35:33 Jacob:Yeah. That's that's, I mean, I'll say as somebody recently constructing a board, like that was sort of my cause as a founder and as a CEO, like you're always, you're just, you're you're at, you should be at the limits if you're doing your job. Right, right. Like you should be kind of feeling at least like thinking, you know, what your limits are and what the company's limits are.And it's nice. Even if there isn't anything more you can do. It's nice to have some people who like, ostensibly are aligned with you to be like, Are you sure there's not more right? Like, is there anything like, are you doing like, could, could you change this? Like, could you go go faster potentially? And sometimes the answer's no, but it does always kinda, you leave those board meetings going like, like maybe there is like, maybe there is some way we could do this, like better or faster, right.00:36:10 Ron:Yeah. And then you build a team, right? And that leads back to like the team growth. And this, you know, this is our third year in a row of, of doubling head count. Hopefully next year will be our fourth year in a row. And all of the leverage, I'm a big believer, like two things are the lifeblood for companies like ours.One is culture and the other is momentum. And you can't, if you lose either of them, Right. Like, you cannot take your eye off of either of those as a CEO, as a founder, whatever it is. and so like building both, you know, they, they got to go hand in hand, or you can sacrifice culture as you're doing the internal hypergrowth.00:36:43 Jacob:Have an exit strategy, right?00:36:45 Ron:Exactly.00:36:46 Jacob:Going to last very long.00:36:47 Ron:Because you'll never get it back. That's exactly right. But, but generating momentum through like value added hires and raising the bar or bringing, you know, a bringing in a plus, I love being the dumbest person in the room. That's my favorite thing at all. Choose walking in there. It was like, all right, I'm going to learn something.Someone's going to teach me something cool. and building a team.00:37:06 David:So it sounds like the biggest unlock for y'all taking the money was just the ability to hire faster, hire better folks, offer better pay. but was there anything else that you feel like taking funding helped unlock for AllTrails? Did you, were you able to spend Mo did you start spending more on, on user acquisition or ramping anything else out? 00:37:27 Jacob:Can I ask a clarifying question without like you sharing your term sheet or whatever, but like D w like these, these deals can be very different than like a venture deal, right. Where like, almost always all of it hits the books and it's dilutive, meaning that the company gets the money, but this was like kind of a buyout for the founder as an alternative to a sale.It's like, did you guys structure it? So some hit the books and not, or was it all to the founders or how did it, whatever you're comfortable00:37:50 Ron:We, we hardly took any primary capital in 2018. I didn't, I didn't want it. I don't want it. Like I liked our organic trajectory. I didn't want. And obviously I've gotten to know spectrum a lot better. They're not built from the CNA, but you take money from a VC. And the expectation is like the success metric is suspended as hard and aggressive as possible because they're incentivized to keep you hooked, you know, on the next round.And I wanted to, you know, accelerate more like on the product development side of things, but I didn't want to get stuck in a, a growth model that's dependent on unsustainable paid acquisition. Right. So. almost the entire deal with secondary capital, which was great, which was00:38:33 Jacob:And for the financial illiterate IME, like 18 months ago,00:38:37 Ron:Yeah,00:38:38 Jacob:The company gets the money. Secondary would be somebody who's already a shareholder gets the00:38:41 Ron:Exactly the people on the cap table. so it was buying out the founder, buying out the original investors, like really cleaning it out. It was a new chapter, a new book altogether. At that point and, you know, start sort of starting together. I think, you know, to the question earlier, in terms of like the other value as like, I really can't stress enough, just the strategic value add that I was able to get like, again, because as a founder or as a CEO or as an example, You're kind of stuck in your own head a lot and you can talk to other founders, but you know, there's this like culture, especially in Silicon valley, like, oh bro, coaching it.Yeah. I mean just crushing it, you know? No, one's, you know.00:39:19 Jacob:I didn't, you didn't have to put air quotes around culture there, but like, I could hear the00:39:24 Ron:Yeah.00:39:24 Jacob:I'm called.00:39:25 Ron:You know, and very few people are like really open and transparent, about the challenges and what have you. And so being able to go in. and have this board that I trust that I feel like we're all aligned. I've had boards, you know, especially VC backed boards, where you get like a different, you know, venture capitalists from every round that you do.Like you have a lot of misaligned incentives. You have a lot of sharp elbows in a room.00:39:47 Jacob:I was gonna say, there's a lot of, you know, these are all competitors in a lot of cases, right? Hopefully you pick well, and you have people that are professionals, but like you can totally end up in a situation where you have frenemies,00:39:57 Ron:Yeah, you're watching your back at your own boards. That's a horrible way to live. Whereas with this one, it was so clean. It was like, we were owned by spectrum. This is great. I work at on their behalf. This is great. We've got the two of them there's me. And then, and then, but to their credit, they're like, let's bring on two more operators.And so, you know, they didn't care about like, well, we have to have 51% plus of the seats. It was just like, no, let's just surround ourselves with really awesome. And so we got, you know, we got the former CEO of ancestry, who, you know, they know a thing or two about, subscription businesses. And then we got the COO of Robin hood and obviously like they know a thing or two about hyper-growth and everything else.And again, like, so it's almost like it's this team, you know, it's like this dream team we're just collectively, like they're helping me chart stuff. Like see things. I wouldn't have been able to see on my own, whatever the pattern00:40:45 Jacob:Yeah.I mean, I think it's, it's, it's a good story in the sense that like, I think, I think we think too terminally sometimes about companies, right? Like it's like, they're born, they are grown and then they get sold and then they die usually like nine times out of 10, right? Like it's, it's not often that an intern, like I say, all goes well and the integration goes, well, some spectrum of results.Right. But this is a result where I think you, you guys have a company that's two important. To let die, right? Like if you had sold, I don't know what, you know, your fangs or whoever was like, I'm sure I could see any number of massive tech company wanting this to be a part of their data set or part of their like social, like aspect of whatever.It's just, I could see a plugging into a lot of things, but you know, to get Google's exciting acquisition today and not saying you guys. Talking to Google or not, but as an example, like their exciting acquisition today is tomorrow is like, you know, happy trails, blog posts, right. That actually a good name for the, the shutting down AllTrails, acquisition at Google blogposts.But, but the, you know, and this is a, this is a path where, you know, people who are passionate about the mission, the employees and the users, like can kind of, you know, get that exit that people are looking for. But without like jeopardizing. Thing that's important. And like, maybe this is very hippie, right?But like, I think there is some aspect of companies that's beyond like the capital value and beyond like, even like the culture, but like actually achieving the mission and, and making that change in the world or providing that service. That's, that's, that's more important than, you know, Hypergrowth or whatever.And look, I mean, we should get into talking about now, like posts around, but it sounds like you guys are in hyper-growth anyway. Right. So it didn't, it's not like it's, it's this false dichotomy of right. Like either you're like raising for venture and you're like going at it really hard or Like you're a lifestyle business or, you know, whatever.And it's just like, Maybe, whereas maybe us like lampooning, this straw man of a false narrative has like most of the talking about this to like make that is the, the, the totality of the false dichotomy is us talking about it. But I really think this is a great example of like one of those like interesting, you know, outcomes and, and stories.So it tell us about what's happening now. 00:42:52 David:I appreciate you sharing that specifically because even in researching it, I listened to a couple of your other interviews. I still assume that that the. A pretty big primary chunk that, that went into the balance sheet of the company and then it accelerated it from there. So it's an even more interesting story to me that that raise was mostly secondary.So from the $3 million seed way back in, whatever it was 20 12, 20 13, it really has been an almost bootstrapped company and becoming what it is today on. Little capital is really incredible and it really kind of speaks to consumer subscription space and, and how you can operate and go big without spending a ton of money.If you do it right. If you don't, if you don't just plug into Instagram and blow $5 million of VC money acquiring the wrong users, if you actually talk to them and build a good product and everything else. but I did00:43:55 Ron:Well, and I was just stay on top of not only that at the first board meeting that we had with. I, I walked in and I said, Hey, you know, this is great high five super-stoked, we're also, I think we should donate 1% of our revenue to environmental causes. I know you guys just shelled out a whole lot of money, but would that be okay?And to their credit, they're like Yeah, let's do it. Let's do it. And you know, one of the first things we did post-transaction was signing up for 1% for the planet, you know, like there there's totally a different path here. I didn't realize it. And I think it's cool for people.I don't know. I, I wish I heard this earlier in my career. Like there are, like you said, like there's not a dichotomy, like there's so many different ways to do this. I think we have. Fetishizing almost, or like putting on a pedestal this whole like massive VC round kind of stuff, you know, and there's a time and a place for it, for sure.But like, that's not the success metric in and of itself, like more often than not, especially for earlier companies, the death knell. And so I think that, I'm always, you know, I get, I get hit up by people, you know, for whatever I'll all the time talking about this kind of stuff. And so I was like, dude, if you can boot shop, if you can control your own destiny, like do it, you know, find right partners that are gonna unlock growth and everything else.Don't fall, don't fall victim to that. Like, just that story that you think is like the classic Silicon valley startup story, which is you go out, you raise a big round and you have an IPO. It never works. It never works that way00:45:19 Jacob:Who would do that?00:45:20 Ron:To too many man.00:45:22 Jacob:We're running out of time. I do want to know. So you're talking about like doubling and so I'm guessing like the pandemic, like we've seen across the ecosystem has been really, especially, I can imagine there's two aspects to it, right? Like one your digital service.And then secondly, like you're very good compatible with like, social distancing. So did you like think you would be having this conversation for whatever four years after the spectrum, deal like doubling every head count every year? Cause that's typically not what private equity companies growth rates look like.00:45:51 Ron:I know. No, it was, I mean, so I'll preface this by saying we were incredibly fortunate during COVID and sometimes you just get lucky. Sometimes you get like, there's a ton of great companies out there that just like how to pull sales reps out of the field, or we're an equip for like the supply chain issues or whatever it was.Right. Like, Well, like you said, we're digital first company. we, we already, we had a somewhat distributed workforce, so we already like using zoom and slack and going fully remote. Like we, we saw no, no drop in productivity. Now granted like when, when the world shut down mid-March that was a little bit scary.But we knew it would be temporary. I, you know how long no one really knew. Bye bye. Mid April, we were going to our board and saying like, look like, I know things look a little bleak right now. Like the, the machine has fully ground to a hall, but we think actually like this is going to be an insane accelerant.Once things open back up, there's nothing to do. Like you said, it lends itself perfectly to social distancing. You know, people who can't travel anymore. Like, all right, we're going to explore our local state parks now, you know, like we'll scratch that. It's that way I got three kids and you know, school is canceled and obviously, you know, summer camps forget.What are we going to do? What are we going to do with these kids? And it's like, we're going to run them ragged on the trail, you know, every weekend we're just going on the trail and we're running them ragged and00:47:10 Jacob:There's a good ad campaign in there. Just00:47:11 Ron:Totally right. And so,00:47:13 Jacob:Sleeping kids in the back of a Subaru Forester and it's like,00:47:16 Ron:Yes, exactly. So, I mean, you know, we made, we did make a big strategic decision, to get in front of it and, and start hiring like crazy, and just make, you know, make a play, make a play. And, and again, Sometimes you get lucky. you know, that works, that works all these companies around us, that we were never able to like really poach from or whatever.Something like we're able to go grab their talent. Like not just from people who are like, oh, but people were actively working there who were just like, I don't want to do this with my life anymore. I like spending time outside. I had the number of people, the number of inbound applicants that like write in their cover letter.I was looking at which apps I use the most. And I just started applying to those jobs. You know, I think that there really is. It's like really. Great. And I applaud it and I love it. And I hope it never stops people like taking more agency and control over their career and not just like reactively, you know, just doing whatever leftovers00:48:10 Jacob:Yeah. I mean, the geographic unlock of remote, I think is a big part of that. Right. Cause suddenly like you're, you can just literally go on your phone and pretty probably today, nine times out of 10, you're going to be able to work for that company depending on your like, you know, locale or like time00:48:22 Ron:Totally.00:48:23 Jacob:It wasn't that way two years ago,00:48:25 Ron:Not at all, not at all. Exactly. So, a lot changed. A lot has changed in this time. With all of that, with the big accelerant they were seeing on the usability side through 2020, there is, I think David, you had asked this like pre pre-show, you know: there's two big questions hanging over our business as we went into 2021.One is, are the registered users who we got last year during COVID are they going to convert to pro like our conversion to pro happens over time? We look at a lot of stuff through a cohorted basis, and it goes up and to the right. It will take years for some users across the line to go pro, but it's great.It just keeps going up. So, are the folks who signed up when there was nothing else to do, are they ever going to convert to pro or not? The other big question is: all the folks who converted to pro in the height of the pandemic in 2020, once the world opens up, are they going to retain? Or, are we going to have the bottom drop out from under us?These were two questions hanging over our heads. We have a seasonal business, it follows the sun pretty much. So, as we headed into May, June, July of this year, thankfully that the answer for both was a resounding “yes.” The folks who signed up last year are converting at a higher rate than normal.The folks who subscribed are retaining at higher rates than normal, too. And I think it's kind of more of a testament to how the zeitgeists has changed a little bit post pandemic. Being outside just makes people feel good. I guess it's that simple. It's not very complicated.You feel better when you spend time outside, and people are just incorporating it into their regular routines.00:50:08 Jacob:Yeah. It's interesting. For positives and negatives, I think you came up three cherries, right? It just really lined up, and then it's continued. You're talking about the hiring thing, too. Like a lot of habits changed during COVID, and I don't think anything will necessarily go back. Especially if people have found a new, happier, maximum for their lives. You guys are part of that. That's great. and that seems like, I dunno, we don't have total good analytic quantitative data on this, but it doesn't seem like the whole boosts from last year totally collapsed.It seems like it just was like an accelerate, and I think other industries would sort of back that up. 00:50:54 David:Yep. Well, we're coming up on time. Is there anything else I should've asked you? 00:50:59 Ron:No, this was fun.00:51:00 Jacob:You guys are probably hiring, right?00:51:02 Ron:We're hiring like crazy right now. Yeah, absolutely.00:51:06 Jacob:AllTrails?00:51:07 Ron:Yeah.00:51:08 Jacob:There you go.00:51:08 David:Any particular roles you want to shout out? 00:51:11 Ron:We're always starving for great engineering talent. Android, iOS, front end, back end dev ops, security, all of it. PMs, product designers, mapping designers, customer support, the full gamut. The entire company, every department is hiring right now.00:51:28 David:Well, it sounds like a really fun company to work for. We'll put links to your job page and to your personal LinkedIn, and a few other places in the show notes, but this was really fun chatting with you today, Ron. Thank you so much for taking the time. 00:51:41 Ron:My pleasure guys. Thanks for having me. This was fun.

>> Get the newest LFG episodes delivered to your inbox when you Sign Up for our Newsletter.Resource Links:Boost your case count and scale the sustainable way with the Double Your Case Files MasterclassSupercharge your law firm growth and get access to free masterclasses and more when you join our Facebook groupYou've probably never been asked this question before.It's a bit strange without context, but an important concept to grasp nonetheless.So the question is…If you were hungry, would you rather eat 100% of a grape or 75% of a watermelon?In this scenario, just about everybody would pick a watermelon since it's more food, after all.So what the heck is the point of asking this question?Well, think of the grape as referral marketing, and think of the watermelon as paid marketing.Referrals are only a small percentage of what's out there, so relying solely on referrals to scale your practice can be a bit challenging.None of the largest firms in the country scale without some form of paid marketing.Those firms understand that the more they make on their services, the more they can spend to acquire new business.In this week's podcast, Jan discusses the mindset and approach necessary to grasp the nuances of scaling, and why you can't have a customer acquisition cost that's higher than your LTV.There's much more to learn in this episode about structuring the framework of paid marketing in your firm, so tune in now!In this episode: 0:43 - A quote from one of the all-time greats2:20 - Breaking down the numbers4:43 - The “auction” algorithm behind scaling6:38 - Circling back to LTV9:12 - Referral based practicesAbout Our Host:Jan Roos is the founder and CEO of CaseFuel agency, which helps law firms generate revenue through pay-per-click advertising. He is a legal marketing expert and is the author of the bestselling book, Legal Marketing Fastlane. It talks about PPC lead generation, a technique used to generate client leads for big and small practices.If you liked this episode, please don't forget to subscribe, tune in, and share this podcast. See acast.com/privacy for privacy and opt-out information.

Toms Bricis: "Ļoti bieži konflikti rodas no tā, ka cilvēki dara to, ko nevēlas." Toms ir LTV laika ziņu redaktors un meteorologs, kurš ne tikai pasniedz laika prognozi, bet caur savu darbību ārpus TV ekrāna, arī izglīto cilvēkus par klimatu un laika apstākļiem. Šajā sērijā apspriežam: Liekulība ap vides draudzīgumu. Laikapstākļu kontrolēšana. Toma piedzīvojumi sociālo tīklu sarakstēs. Klimata krīze un komunikācija ap to. Meteoroloģija. Latvijas un pasaules klimats. Zinātnes komunikācija. Cilvēku daba. Sazvērestību teorijas. Un daudz vairāk. Ja tagad podkāstam vari veltīt tikai piecas minūtes, dodies uz 13:46, kur Toms pastāsta kādām būtu jābūt mūsu dzīvēm, lai mēs būtu videi draudzīgi. Baudi un dalies!   00:00 - Ievads. 01:20- Kā Toms sāka dziedāt. 06:00 - Kāda ir klimata samitu nozīme. 08:33 - Kādēļ ir grūti publiski skaidrot sarežģītas tēmas. 13:46 - Kādām būtu jābūt mūsu dzīvēm, lai mēs būtu videi draudzīgi. 16:30 - Ieguvumi no klimata pārmaiņām. 21:30 - Kā tiek pieņemti videi draudzīgi lēmumi turīgās valstīs. 26:59 - Kādēļ pusotrs grāds ir tik svarīgs. 35:20 - Vai cilvēki Latvijā biežāk sāk praktizēt kritisko domāšanu. 47:44 - Vai laikapstākļi paliek grūtāk prognozējami. 51:44 - Vai laikapstākļi Latvijā paliek dīvaināki. 1:01:32 - Niķi cilvēku dabā, kuri liedz objektīvi saskatīt realitāti. 1:04:53 - Laika prognožu veidošana. 1:08:51 - Ko Toms dara pirms ētera, ja viņa viedoklis par laikapstākļiem atšķirās no modeļu pronozēm. 1:12:50 - Medicīniskie laika tipi. 1:19:14- Kādas sazvērestību teorijas tauta pārmet Tomam. 1:23:35 - Laikapstākļu kontrolēšana. Patreon atbalstītājiem pieejamais saturs: 1:29:01 - Neizpratne ap Ziemas vētrām Latvijā. 1:34:21 - Kādēļ medijiem ir ērtāk iekļauties naratīvā un neskaidrot sarežģītas parādības ārpus naratīvas. 1:40:18 - Kā Toms saglabā produktīvas attiecības darbā, ja viņam ar citiem ir domstarpības. 1:49:56 - Vai Tomam ir kāds uzskats par, ko vairums cilvēku viņam nepiekrīt. 1:54:34 - Kas ir labākais padoms, ko Toms ir saņēmis. Toms twitterī: @boms_tricis Toms medijos: https://www.lsm.lv/autors/toms-bricis/ Toms Instagram: https://www.instagram.com/toms_bricis_ltv_laika_zinas/ Toms Facebook: https://www.facebook.com/TomsBricisLTVLaikaZinas   Podkāsta mājaslapa: SvarigasDetalas.lv Podkāsta Facebook lapa: facebook.com/SvarigasDetalas Podkāsts iekš Apple podcasts: https://podcasts.apple.com/lv/podcast/id1455599870 Podkāsta Patreon lapa: https://www.patreon.com/SvarigasDetalas Es twitterī: @JurisBaltacs

Today I'm talking with Matej Lancaric, who is a user acquisition specialist and he runs his own UA consultancy which you can find by going to lancaric.me. In this discussion, we talk about Matej's perspective on user acquisition for mobile games, how developers are becoming better at building games for UA in mind and what the future holds for game studios embracing user acquisition.

On today's show, Beth Yehaskel, a Customer Success Architect at Winning by Design, preps us for end-of-year CFO budgeting and headcount conversations by sharing the difference between a CS org that's run as a profit center versus a cost center. She covers how CS leaders need to connect improvements in retention to LTV, the common cost center pitfalls to avoid, and the difference between providing customer impact and customer value. Resources: Follow Beth on LinkedInRead her post on restructuring the typical org designCheck out her lessons from running CS Ops

Brian and Mike chat about getting $220 tips, and the art of getting attention. Whether it's your crush, your business or whatever, getting attention is an art. Flex that muscle and work it out and see how you can blossom into something special, and then add in LTV for an even better 1-2 punch.   https://superiorautoinstitute.com  

Our guest today is Eric Crowley, a tech investment banker with GP Bullhound. With investments in companies ranging from Spotify to Whoop, and clients such as AllTrails, Pinkbike, and Lingoda, GP Bullhound provides transaction advice and capital to many of the leaders in the Consumer Subscription Software space.On the podcast we talk with Eric about his 2021 report on Consumer Subscription Software, the truth about LTV calculations, and the new era of organic user acquisition.In this episode, you'll learn: Was 2020 just a “COVID Bump,” or a shift in consumer behavior? Are the Bumble & Duolingo IPO multiples justified? How savvy developers are adapting to Apple's App Tracking Transparency The truth about LTV The new era of customer acquisition Links & Resources Spotify Whoop AllTrails Pinkbike Lingoda Bumble Duolingo Instacart Match Group Netflix Noom Weight Watchers Tinder The Dyrt Day One Journal Automattic Tech Crunch Scribd Pandora Eric Crowley's Links Follow Eric on Twitter GP Bullhound GP Bullhound insights Eric's LinkedIn GP Bullhound 2021 CSS survey Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Hello, I'm your host. David Bernard. And with me, as always, RevenueCat CEO, Jacob Eiting. Our guest today is Eric Crowley, a tech investment banker with GP Bullhound. With investments in companies ranging from Spotify to Whoop, and clients such as AllTrails Pinkbike, and Lingoda, GP Bullhound provides transaction advice and capital to many of the leaders in consumer subscription software.On the podcast, we talk with Eric about his 2021 report on consumer subscription software, the truth about LTV calculations, and the new era of organic user acquisition.Hey, Eric, welcome to the podcast.00:00:56 Eric:Hey, David, Jacob. Thanks for having me back. It's always a pleasure. 00:00:59 David:Yeah. Every year you release this report, so we had to get you back. This is the third annual Consumer Subscription Software Report, and I wanted to kick off just asking you a little bit about the motivation, and where your headspace is in thinking about creating this. Who the target is, and what kind of questions you're asking yourself as you prepare this report.00:01:24 Eric:Yeah. The report is the GP Bullhound Consumer Subscription Software Report. I call it CSS, which is kind of a playoff SaaS. This is the third year I've been writing it, and it started back in 2018. I worked with a company called AllTrails that was starting to monetize really well by selling subscriptions.It was like a light bulb went off in my head. I was like, this is a phenomenal way to provide a consistently improving product to consumers, where the margins are pretty good. It's easy to access a ton of different people globally through the app stores or through the web, and I just got really excited about it.I started putting some notes down on my own, and then GP Bullhound really supported me in saying like, “Hey, this is actually a pretty big trend. There's gonna be some amazing companies built around this space,” and companies like RevenueCat, that are supporting CSS companies, are just as exciting.So, we've been slowly educating ourselves. The goal behind the report is really just to force me to do some thinking about the space. What it looks like. What it will be. As a banker, you can quickly focus on transaction, transaction, transaction, and not really do any long-term thinking about where the world's going.It's putting myself in your guys's shoes. You guys are building RevenueCat not for what the world looks like today, but for what the world looks like in three to five years. I try to take the same approach with CSS, and think about where's the world going to go. So I talked to a lot of smart people as I put the report together. Entrepreneurs, investors, get their opinions.You guys can see their interviews in the report, and then ultimately we publish it. The audience I like to think about is entrepreneurs, people that are thinking about starting a CSS company, or already launched one, and they're looking to improve their metrics, or think about their target audience as entrepreneur-rich.By partnering with them, investing in their businesses, it takes them to the next level. The other way I like to think about it, it's my own personal scoreboard. I love to flip back two years ago and see, was I right about this company? You're publishing in public, so people can always come back to you and say, “Man, you were way off.” So, I look forward to that.00:03:26 Jacob:I remember the F finding the first one, the 2018, I guess, reporter 2019, whenever the first one you put out,00:03:33 Eric:2019, I think that's how we met actually.00:03:36 Jacob:Did you reach out to me or? I think I found it, or I don't remember what it was, but00:03:39 Eric:We've had a mutual friend, Nico introduced us and said, Hey, you guys should talk about this. and then I think we just went off on a two hour tangent.00:03:47 Jacob:But yeah, I remember being, it's still, there's still not a ton of like really focused research or writing on this space. and I think that, that, you know, this will probably won't be true for very long, right. As long as it continues to grow, but like going back to like who it's for. I mean, I imagine it as some, you know, end of the day, if you're employing.Pushing into some kind of lead gen. Right. But it does provide a lot of value for, you know, even if you're not interested in a transaction or whatever, just. Some like holistic data on a space. Cause like, I, the same, I mean, Eric, you said we're, we're thinking three and five years in the future. It's like, I wish like a lot of times I'm thinking like three to six weeks in the future.Right. and so it's even useful, I think, you know, even if you're, you know, I, you know, we're, we're in a bit of an interesting place as a infrastructure provider to be at kind of a bird's eye view, but it. Founder on one of these CSS apps, you know, like it is useful for you to know, like what's the meta environment, how's it evolving, you know?And if nothing else to like connect you with other people who have experimented with things and stuff like that. So, yeah, I think it provides beyond, beyond the, the, the lead gen aspect of it. It provides a lot of value for people. So I'm glad, I'm glad you're, you're still doing it. 00:05:04 Eric:Yeah. And just for any of the listeners, it is free. So you just go to the GP, bullhorn.com website. It's all easy to download and then you can see all our past reports as well. So 00:05:12 David:Yeah, and we'll drop it in the show notes. but, yeah. And, and, and speaking of all that, you know, it, it's something we as RevenueCat want to get more into as well. I mean, just seeing how much value you've created in producing these reports, and we're kind of sitting on a, you know, Processing over a billion dollars a year in, subscription revenue.We've got a lot of interesting data that, that we, that I'm very personally excited to share that we haven't, kind of had the infrastructure to, to do yet, but are, are getting there. And, so hopefully we'll, we'll have our own kind of, state of subscriptions that dives into the data and some of the trends and stuff in a different way than, than your kind of, strategy and higher level look at things.But when one thing that has happened, in the actually. It was announced before your last report, but actually implemented since your last report. And that's the app tracking transparency and iOS 14, which didn't actually ship till iOS. What was it? 14.4 or five or something. So, so we're kind of just now starting to see the impacts of it.And, and, you know, you took a couple of slides in your report to start discussing it. And it really is kind of one of the biggest topics and top of mind for subscription app developers, because it really is a huge shift in the landscape. So I want it to. Start with talking about that. And one of the things you shared in the, in the presentation is that you feel like it's a short-term pain, that's ultimately going to lead to a long-term gain.So I'd love to hear your thinking around what that pain is, but then also what you see the long-term game being.00:07:01 Eric:Yeah, it's a, it's a, great point. And, you know, anytime apple or Google make changes to their, their, their app stores, right. It's a seismic shift throughout the industry because it's something that impacts everyone. And so everyone has to be aware of these changes and then ultimately have a plan for them.And so I think that the change you're talking about David is really the. The implementation of, removing tracking for a lot of, a lot of these businesses specifically, like. And so what the change did with IDFA, is it, it really deprecated the ability for, for marketers within some of these CSS businesses to really accurately target people, specifically using Facebook or some of these other social networks.And so what it's doing is it. It's impacting the conversion rates on, CSS, CSS, businesses, marketing to consumers. And so if you just can't find that person that just is in love with, for example, biking, if you're a Strava marketer, it just takes you a lot longer to find that specific subscribers you might have to market to 10 people now to find two subscribers versus before you can market to five people and find two subscribers.And so it just means marketing efficiencies going down. And that can mean. Growth rates. It can impact conversion rates and ultimately impact just financials of these businesses. And so it's a pretty important consideration for any, CEO marketing team on how they go out and get their, their business in front of consumers.If Facebook's no longer as efficient, they have to find other ways. And so. So my, my thought is like, this is a short-term problem, right? It's something that's going to take people two to three months to adapt and find a new way to reach consumers. But ultimately my hope is for the space is you see the long-term game, which is what I was referencing.People really focus on organic ways of acquiring customers. Right? So instead of just pumping ads through Facebook and trying to find someone who fits a profile, you spend a lot more time really narrowly targeting your demographic, your niche, and then finding ways for them to find your product organically either.You know? So like a company that I work with, we sold a company called Pinkbike and so what they do is they partner with, the trade associations for mountain. And those trails associations now act almost as the marketing partner of pink bike to let consumers know about the fact that all the trail details.Is on, is on the pink bike app or it's called trail forks. And so that's, that's a really powerful, organic customer acquisition tool that they don't have to pay for. And so you're seeing, seeing the same thing happen with, like Strava is doing this, pre.com recently partnered with the NFL. So if your team's got a last fourth quarter fuel goal and you need to get something kicked, you can go to pray.com and submit a prayer for your kicker. I wish I was joking. It's a pretty brilliant idea. So I think this is really good for the sector overall, but yeah. Happy to dive into it. It's it's a fascinating00:09:37 Jacob:We it's a callback to a sub club podcast content, but, Greg, this, the plant app, this is something that they were doing, which is like, we're partnering with, plant nurseries. Yeah. To like, get their app into people's hands. And, yeah, I don't know if it's an earned media or. Bought media, but this is more like this is earned, right?This is like building an audience. You've seen it in the maker community, actually a lot, like in the indie SaaS community, more it's a different game when it has to be consumer scale. Right? Like there's a little bit different. You have to build maybe a bit more than you would in like, oh, just blog about.Built this thing and that's enough to get Indies, but you can apply the same thing, right? It's like produce content, produce something like low investment for users to get engaged with your brand because you're not building an app unless you have some, I mean, maybe you are, but you're not going to build something with very high, like multiples.Like if you're, if you don't have something unique to offer in the first place, but put that into like a more like lightly consumable format, start to build that audience and then make that an on-ramp and yeah, I agree. Like that's, that's something you own, right? Like your brand is. your brand doesn't exist on the app store, right?Like your brand can exist outside of these, like shifting sands and regulations and whatnot, and ultimately is like, you know, going to get reflected in your asset value if that's something you care about. Right. So, 00:10:53 Eric:Yeah, that's a key thing we talk about, right. If any business that we look at that's potentially selling or, or thinking about raising capital, right? It's like, how are you finding your. And if you're, if you're one channel is Facebook, and then consequently, like doing Facebook ads or apple ads on the, on the app store, that becomes pretty challenging.And so you want it to be such a good product, right? So it involves more work upfront. And just as you're talking about Jacob, the product's gotta be better. It's gotta be more efficient. It's got to reach consumers where they are with the problem they have. it becomes a lot more viral and a lot more sticky.So I think, I think it's going to be good for the sector.00:11:26 David:You wouldn't want to name names of course, but I am curious if. Had any clients, or just talks about anybody in the space where they were very reliant on Facebook specifically, and then, and have really struggled as things have changed. You know, I've been seeing some tweets around the, the consumer packaged goods space where some of these CPG companies are really struggling.And so I'm just curious. You know, without naming names, if, if there's any kind of high level things you could share around, apps that have struggled in this new paradigm. 00:12:02 Eric:Yeah. I mean, I definitely can't name names, you know, obviously I keep everything confidential with my clients, but even non-clients, you've seen CACs go up 20, 30%. you see, like, if you think about like conversion rates from installs to subs, That's a big metric of actual intent. Did you find the right user, right?Did someone just click on it and download it? Great. But if they're not actually subscribing that wasn't a successful transaction for you. And so the way I think about this, David is it's the app stores made tracking a lot harder, so it's harder to find your right consumer. So imagine if you're a CPG company, you walk into a grocery.And instead of stuff, being laid out perfectly across the shelves at the right height for you, they just tossed everything in the middle of the store and said, find what you want. Just go pick it out. Right. You're going to have much lower conversion. You're going to have much lower purchase rates because people aren't being targeted with the stuff they want to see.And so I think now you have to find, you know, it becomes more of a specialty situation where you're walking into a store that has stuff for just outdoor gear or very healthy granola. Right. And you're going specifically to that store for that. That's probably better in the long term, for a lot of these companies, 00:13:01 Jacob:Yeah, but there's, there's a lot of, there's a lot of folks that have benefited from this ease relative ease, right. And any sort of market disruption is going to be painful. I was like, anecdotally, I mean, David, we've heard on this podcast and elsewhere people who have just like straight up pause acquisition, who are like all re scrambling because yeah.You get it tuned to this very fine knife edge. And I imagine for like consumer physical goods, like DDC stuff, it's even worse because their margins are thinner than software. Right. 00:13:28 Eric:And you've got inventory and everything. Yeah. It's a totally different. 00:13:31 Jacob:But, you know, as you do like you, the market reshuffles and the people, I can figure it out, the fastest are gonna are going to come out the best.So. 00:13:39 Eric:There's going to be a shift though. So people under this is like that seismic shift that just shows how much of your reliance is on maybe one or two channels. Right? Two, two major tech companies sitting here in San Francisco. If you're super, truly relying on those and you're doing great, fine.But if a bump happens, right, how exposed are you? And so like, this will be a benefit. Right. I think it's going to be a huge benefit for Tik TOK. Right? I think people are finding really good ways to acquire customers through tic-tac. And so that's a very interesting channel. I think it'd be really good for influencers, right?If you have people that are very passionate about a certain space and then they go out and, you know, have a very core customer base that loves what they do specifically. It's going to be pretty powerful for them to.00:14:18 David:Yeah, and I was just gonna say, anecdotally, you know, we haven't done a super deep dive in our data, but at a, at a high level, I was. Bracing for our numbers to take a big dip. Like I, I mean, Jacob and I had talked about it in the spring about, you know, how, what is going to look like for RevenueCat, you know, are some of these subscription apps just going to completely unwind and people are apparently figuring it out because you know, it keeps going up until the right. 00:14:49 Jacob:I mean the consumer, the consumer need hasn't disappeared. Right. So maybe if they just weren't driven, you know, it's not going to, it can't just disappear overnight. Right? Like if you never, if you, if you are a Coke fan who never saw Coke out again, and it's like, you're still gonna buy it. Right. Like there's, there's, there's a certain amount of demand.That's just going to find the supply. But, but yeah, no, I mean, it's hard for us to, to definitively say looking at our data and aggregators. Cause there's so much, but they're definitely. Like this summer was definitely slower than we've had in the past. Like on my, as I'm writing my investor updates of the year and each month and stuff looking at it.But yeah, it wasn't like this catastrophic, you know, macro thing. And they were talking about a lot of like, you know, probably outliers that we hear about people who were affected, you know, more than others, but overall. I, I don't think our, I don't think our prediction last year of, of a potential recession was necessarily false.Like it doesn't, it definitely doesn't feel like it's sped up the ecosystem. Right. But it doesn't necessarily feel like a depression, right. Maybe, maybe a slight recession or just the normalization. 00:15:49 David:Looking at our data in aggregate that, some folks use this to their advantage and actually, and, and accelerated because they knew it was coming and they did focus more on product and organic and other things. And so for whatever, you know, losses, there were. Other folks more than made up for that.And that's it kind of the interesting thing about working with so many, I mean, we're closing in on 10,000 apps on revenue cat. And so, you know, you kind of have a pretty broad basket where you, you know, there are going to be winners and losers, but in aggregate subscription apps are just continuing to tick along and do really well. 00:16:26 Eric:David it's like you read directly from bullets on my report. I, I, I completely agree with you.00:16:34 David:Another thing I wanted to dive into was the, the COVID bump. Cause that's, that's another thing that's kind of been on everybody's mind is simultaneous to this. I was 14 and, and this is something we've talked about again internally, with revenue cat, is it. This summer was the, everybody who was vaccinated and, and Delta hadn't kind of bumped yet.And so, you know, may, June and July, there was a big shift socially. kind of it felt like it, especially in the U S that we were coming out of the pandemic. and, and so simultaneous to the app, tracking transparency, going into effect, we had these like societal shift. And then now we're kind of back into it a little bit with the Delta surge, but just curious what your thoughts are on how much of the boosts we saw in 2020 really was dependent DEMEC and then how much of that will actually linger as kind of shifting consumer preferences and shifting consumer spend.00:17:36 Eric:Yeah. I mean, there's, there's absolutely a companies that benefited from us is called the removal of inf in in-person conversations. Right? So like Bumble and DuoLingo, two companies that both went public, right. They both benefited because their, their business model is designed around, not meeting in person for the first couple of conversations.Right. And so. There's no way to say that they didn't benefit. the way I think about it, though, in this, in the CSS space, it's very similar to like the overall e-commerce space, right? Is consumers looked around to find a solution for a problem they're having right. Instacart you couldn't, you couldn't go to the grocery store or maybe you felt less comfortable going to the grocery store.So you tried an Instacart for the first time. Maybe you were, you know, thinking about meeting someone, you know, long-term but you never, you never wanted to try online dating or you couldn't go to the bar. So you tried online dating for the first time and sorry. What the pandemic did was it really opened up people's eyes to other options from what they'd been doing for the last 20 years, 50 years, whatever it was.And so they had to find other solutions to, you know, their demands, their needs. And so I don't, I think it's absolutely a COVID bump, but I still look at it as really as an accelerant of people adopting new products and services that they would have tried in three to four years. but the pandemic kind of pushed them to try something, to move out of their comfort zone and try something new.So, you know, I absolutely think you'll see a little bit of a downshift in, in some of these companies that had a really big boom, right? Like language learning. People had nothing to do for four to five months, especially over some of the winter times. So people tried new hobby, tried language learning, you know, that'll probably go down a little bit, but overall, if you look at it from like a five-year trend, It's going to be up substantially from where it was in 20 17, 20 18, 20 19, and 2020, you know, made it look like a little bit of bump, but eventually I think those companies will continue to grow and surpass what anything they did in 2020. 00:19:21 David:Yeah, that's really interesting.00:19:22 Jacob:I'll back that up as well with the, the unreleased, Jacob looks at graphs and then gives a, gives a hand wavy descriptions of them. But we, yeah, we, we were, I was kind of bracing for it as well. And then I would say this summer was slow and like, David was. We're not sure why. I think it was, I think it was a number of factors things have since picked up again.But I think generally summers are slow for software a and then B. Yeah, I think we were seeing kind of like a little bit of the payback for, for COVID perhaps it's a, it's a vial. I think it's a plausible theory. We don't, it's really hard to prove. but we have not seen, you know, we, we saw our COVID experience was really drastic.And we have not seen. Similar, like back off from that, like, it has been like, it has been like we just compressed six months and I'm saying partially, this is just revenue casts, individual story because of where we were last year. But then I think also it's, it's indicative of the system in general.It's like, I think, yeah, we just compressed a whole bunch of, like consumer behavior change into like a very short period of time. And yeah, we're not gonna be able to keep that up. Right. We're not gonna be able to continue. To, to crunch that in, or we'll run out of consumers eventually. But, but it doesn't look like everybody's, you know, because, you know, I think the story for CSS in general, it's like we've delivered value for people, right?Like it's, it's a good, it's a good product, right? The whole line, not every product is good, but in general it's like a it's, it's a decent deal. And so I, I think more people discovering that. Yeah, it can only get bigger, right.00:20:55 Eric:Yeah, I think we talked about it in our first year, our first time together, right on the last podcast, which is if these businesses are truly making consumers' lives better, this is going to be a very long-term.00:21:04 Jacob:Yeah. 00:21:05 David:And speaking of that, and the two companies you just mentioned, in the, Time since we last spoke, but Bumble and DuoLingo went public and some other consumer subscription, apps went public. so tell me a little bit about your, your perspective on the, the public investor. Excitement for CSS.I mean, we're seeing pretty high multiples in the both of those IPS did, did very well. so what are you seeing in the, in the public investor space?00:21:33 Eric:Yeah, I think, I think the public market has really woken up to this business model, the power of it and understanding, you know, it's public markets. They do a lot of pattern matching, right? If they've seen something be super successful, they look for something that looks similar to that. And so I think a lot of people are waking up to, how powerful Salesforce is not waking up.They're well awake, very aware of SAS businesses. But I think they're seeing that same pattern starts to take, hold on, CSS. It just has different metrics. Right? And so, you know, Bumble's now public, the match group's been public for quite some time. Once I spun out of IAC, you've got Netflix and Spotify, which are fantastic examples of the international global reach of Content, and how consumers are very sticky for something they love.And so. These businesses who can get to scale really quickly, like you nuMe, right, is a competitor to weight Watchers. Weight Watchers has been around for decades, but Newman built a better mouse trap and they acquired customers at a really quick rate. And, you know, they're well over 400 million in revenue and ready for the public market.So I expect them to go public. Pretty soon. And so I think there's going to be a lot of businesses that follow them that are using this, this metric. So, and then that'll cascade all the way through, from public market investors as, as exit opportunities all the way down to, you know, series a series B investors, seeing this business model work and scale.00:22:47 Jacob:Yeah. I mean, I guess my, like, what's your, like, I, I, when, when we started seeing these go public in the last, like couple of years, so, well, I mean, honestly, it's like, Since we started RevenueCat, like was actually the, kind of the first unicorns, even like, I guess Bumble might've been passing unicorn when we got started, but like there weren't a ton and now it's like every, every month there's a funding announcement for a CSS company.That's a, that's a university. I mean, partially that's just like valuations going up and stuff like this, but like, how do you see. The evolution of this market. Long-term, you know, so DuoLingo pops becomes the first, you know, are they going to be like Salesforce and just be dominant in that space forever?Or do you see it being maybe more dynamic than sasses?00:23:31 Eric:I think it's a little more dynamic than SAS for, for a couple of reasons. One, new consumers like to try stuff, right. And so if it's with like a Salesforce or something, right. That integrates into your day to day operations from a business model perspective, right. So if something breaks there, right.Your business. 00:23:47 Jacob:Is very high. 00:23:48 Eric:Yeah, it's a little higher, right. And it's not just you using it. It's your entire business. Right? So you've got 10 people using this product or 20 people or 5,000, depending on the size of your company. Right. In CSS. It's it's you, maybe you and your family. Right? So it's a little bit of a different switching cost.So that's, that's one. However, these companies can scale a lot of. and they can, they don't have like the heavy, heavy cost and, you know, on the sales and marketing side. So I think they have an ability to actually get to profitability a lot faster, especially if they have an organic customer acquisition engine.And so I think that's going to be a big difference between that, between CSS and SAS. 00:24:23 Jacob:So, yeah, you mentioned the metrics are different. What are, what are the metrics that folks are, public investors are looking at for these companies that it might be different from a SAS company?00:24:33 Eric:Yeah. I mean, a lot of them are the same metrics, but the numbers that are like good are different, right? So like on a SAS business model, right. Revenue growth is just as attractive as a CSS business model revenue growth. Right. Everyone wants to see high double digits, triple digit numbers on revenue growth.But like an interesting thing is net revenue retention. Now that's very different, right? In CSS, you typically don't upcharge people or have additional seats be filled because it's just one person. Right. So, you know, maybe you get an. 00:24:59 Jacob:It's not much expansion opportunity. 00:25:00 Eric:Yeah, you can, you can do maybe some, some packages, upgrades, and people are starting to experiment that you can pack it and you can experiment with bump, bundling 00:25:07 Jacob:But it's certainly never going to be greater. It's never going to be net positive, right? 00:25:11 Eric:No, you're never going to see a net positive number where a lot of the SAS businesses, right.People are looking for net revenue, retention, numbers of north of one, 20, 120% net revenue retention 00:25:18 Jacob:I mean the opposite of churn, right. Which if you have a CSS business with opposite, Congratulations. like 00:25:25 Eric:Yeah. You're doing something well, and I haven't found it yet, but yeah, 00:25:28 Jacob:You might be the only one 00:25:29 Eric:Yes, I think that's right. 00:25:31 David:Quick, point though, to counterpoint to what y'all were both just saying, of all the apps, dating app, it's totally slipping my mind. 00:25:40 Jacob:Tinder. partnership. David, look at us. We're like on a wavelength. 00:25:46 David:They, they have in-app purchase. They have consumable in-app purchases to boost your, profile. They're one of the few that I've seen that could potentially actually have a. A a positive, net revenue retention. whereas most subscription apps are just a subscription. it's going to be interesting to see if other subscription apps can pull off that sort of model that you could actually generate a, a net net revenue retention. 00:26:19 Eric:I think you nailed it, David. So that's coming from. Right. I think people first experimented with, Hey, how do I get someone to buy my product every year or every month? Right. And now is how do you make it even better? So they're starting to listen to their core users. And we talk about this a little bit on the LTVs.And what do these people want and what makes this experience even better for them. And I think you nailed it with Tinder, right? It's the most, it's the easiest thing to convince people to, to encourage more is more, you know, more relationships, right? People love more relationships and people are willing to pay for that.And so, you know, then what else, what else could this go down the path of, right. What other options could people pay for additional services? Or what we've seen is like marketplaces or transactions spinning on. Right. So if you have a really passionate user base and they're going out there doing, camping, for example, like on, on the dirt, it's a camping site, right?What about doing a marketplace to buy and sell use tents right now is not a subscription, but now if someone's paying, like, okay, now they bought something through your marketplace and you get 10% of that purchase price. So there's going to be a lot of stuff. I think that happens there, to encourage that, to encourage that LTV numbers start rising, I just haven't seen a ton yet, make it happen above 00:27:26 Jacob:It's a scale problem. I need to do that either be at such scale for that to make sense. So I was going to say for anybody, listening to this, that hasn't reached 20 million in ARR, probably north of that do not add a marketplace to your 00:27:37 Eric:I totally agree with that. Very, very much focused focus, focus. And so I would even say like closer to 50 00:27:43 Jacob:Yeah. I mean, until you're like, how do we get this thing public? Or how do we show, like, how do we show like N plus one revenue streams, right? Like it's kinda more what it's about than it is necessarily the revenue generated. 00:27:53 Eric:I'm just a dreamer though. You're just a realist. I'm here, I'm here. And you're just telling me all that stuff that could go wrong. 00:27:58 David:One of the things you just kinda touched on that I wanted to dive deeper into was, was a truth about LTVs. And I love this slide on the, on your presentation, kind of defining these two cohorts, which I've never heard, defined this way. And I really loved the analogy and I'm going to start sort of stealing it from you and use.And crediting you of course. but in the presentation you define, tourists and locals, and then talk about kind of the importance of identifying these different cohorts. So tell me about Who the locals are and why that matters and who the tourists are and how companies can start, analyzing their data to understand this and better target marketing, better, craft the experience in the app and, and those sorts of things. 00:28:46 Eric:Yeah. So we're going to geek out here guys, and, really go deep into STSS. Right? So this is where, this is where my brain goes sometimes on a Saturday night, which is just exciting. but so the way I've been thinking about CSS a lot, and so the LTV component of CSS, which is lifetime value, Which I'm sure all your listeners are very, very well aware of is kind of like how much money can you make from this consumer over time.Right. And it's a function of your pricing and it's an, a function of your turn rate. And so, a lot of people are very focused on this metric as investors or buyers, right? Because it's effectively, how valuable is your customer? So it's an extremely important metric. The problem with this metric and lots of other metrics is it's, it's derived from an app.Right. It's looking at all your users that come into your, in your ecosystem is paying customers. And then how do they perform over time? and it's, it's driven, it's driven off an average of all your users. And so when I've gone through some of my client's data and you look at their user base, right, we, we quickly discovered there's a, there's kind of two different profiles.And I won't use any names here, but let's just, let's just say it's, a walking company, right? So you're, you've got people that go out and they, they sign up, you have a hundred people that. And 20 of them start walking every day and they're, and they, this is what they love and they're tracking, they're walking and you've got another 40 that do it for like a month or two.And then they kind of drop off and then just like, I'm going to go do biking or skateboarding or something. And I switch and you've got another people that sign up. They subscribed to it because their friend pressured him into it and they hate walking and they're never going to walk again and they turn off immediately.Right. So you kind of have those three different groups, some that are just going to do whatever. Some that do it for two to three months and then leave. And then some that do it the first month. And then say, forget this. I'm never going to use this again. And so the problem is your LTV of each one of those three groups are very, very different.And so what, we've, what we've been guiding investors and entrepreneurs, as they think about their growing their businesses, really find out who those locals are, who those people that are going to come and use your app every day, every week, every summer, whatever, whatever the metric is that you're looking.And find ways to measure that, right? Because ultimately that's who you need to bring to your community. And one, those people make the community run more robust, right? Cause they're constantly contributing feedback into the. To, they're much more likely to stay around with you guys. And so you need to find those tools that they're looking for.Right? Like seeing around the corner and saying like, okay, this person loves walking. What else can I provide them? What about a weather forecast? So now that they are about to go out and walking, you know, what does the weather look like? And, oh my God, this is now, this is my one-stop stop for, for walking.And so I think w we've been guidinGP Bullhound's like if you use the averages as a broad metric and that's great, and you should, because investors are going to want to know that, but, but really dig deep into your, your cohort and understand like who's using this every day, all day and what do they need. And so if you can really identify that and show that LTV to, to invest in.I think you can get people a lot more excited than just like that average LTV, right? Cause this shows them potential of what it can be over three to five years, which is really important if you're two or three year old company. Right. And try to convince someone to invest in you showing them that lifetime value of the tour or the locals is going to be a lot more valuable than that average.00:31:46 Jacob:I mean, if you think about just as the, you know, I think it's one of the, you highlighted one of the hard parts of assessing these businesses early on, is that yeah. Your cohort, your total subscriber base is very heavily biased on like your most recent cohort, because often you're also growing, right?Like that's often, like your most recent cohort might be the size of your first five, you know? just because, and for that reason you can really have scurry looking data. but you know, if you think five years from now, mostly. Those other two groups you mentioned there they'll have turned out from most cohorts.Right? And then the only ones remaining for four years of cohorts will be these locals and these long-term retention. And then your total subscriber base is gonna look very different than it does today. Right. And yeah, I'll admit revenue. I've tried to solve this problem in the product. And we still are trying to solve this problem in the product.It's how do we like show people? Cause you're, you're dealing with a mixed population, right? And like you, you can also also run into a problem with begging the COO or like doing very, like, look, you got to invest in and say like, look, look how great my retention is. If I just ignore them. Bad users. Right?Like, let me just look at the good ones. Right. But there is something there in that. What you're talking about, Eric, that long, that very long-term view is that if these users really do retain for a long time, eventually they will be the lion's share of. Subscriber base. And that churn that we talk about, like, you know, if you're adding 1% of your total user base, the most you can experience off of that as like 1% of churn, right.Versus when you're adding half, you know, if you have 110,000 subscribers and you add 10,000 in a month, that's going to be a huge effect to your overall subscription subscription base. Right. so yeah, I think, I think, you know, we certainly have a lot to build on the tooling side. Right. And I think it goes to what you're talking about.Air. We're very early. Like, I think we've just kind of solved infrastructure, like infrastructure. I mean, I would even say kind of, cause there's a lot for us that we need to do yet. but as far as like data science and actually yeah. Being able to outside of a spreadsheet, understand this stuff. It's it's, it's not trivial.It's not trivial. All 00:33:51 Eric:It's extremely hard. And I think like, cause there's so much more you could do once you've broken those two cohorts into tourists and locals, right? Like how do you acquire the locals versus how do you acquire the tourists? Are tourists coming through like Facebook, apple store and the locals are coming from referrals.Okay. So maybe your Facebook spend, is that even worth doing the spending on right. If they're, if they're turning off after a month or two, you know, subscribers is a vanity metric, right. If they don't. All right. You can grow. We talked about this in our 2020 report. We have like this cheetah versus thoroughbred.Right. And it's really easy to show a ton of growth. And you've got all these subscribers and everything is fantastic. Right. But if those subscribers get tired and they turn off right away, you kind of probably wasted money on them. Right. Maybe you got paid back in a month, right. So you didn't lose like on the CAC spend right in here, but you're not building your business.Right. You're just gonna you're pinching pennies. 00:34:36 Jacob:But not a lot of work. Right? Like it's not actually getting translated into business 00:34:39 Eric:Exactly. So is it better to kind of focus on the product, right? Figure out what those, those, tourists are using and spend less time on the marketing side and really nailed the products like, Hey, you'll probably grow slower, right? And That's an issue. That's a risk you have to take, but maybe you can grow more efficiently, more capital efficiency.00:34:55 Jacob:Capital's free now, so that's not a 00:34:58 Eric:That's a fair point of half my fault, I'll take full responsibility for some of that. Right. 00:35:03 Jacob:I think it's interesting how this like feeds into, you know, kind of going back to targeting and ad targeting how often. Optimized Facebook campaigns on like trial conversion. And that doesn't even that doesn't, that's all your tourists and your locals. I mean, maybe some of those that never even start a trial would be cause, but there's a lot of tourists in that group that started trial right.Or convert a trial. And a lot of people are targeting off of that. Right. And so as these methods become less. Good. it will force it'll force developers to yeah. Maybe do one of these scary things actually talk to users, right? Like actually like find those locals, like go in your analytics. And I think just the thing as you were talking about, I just want to point out that, like, I don't think you necessarily need to define this off of monetization retention either could just be retention, like pure usage retention, but it could also be engagement.Yeah. I think about the way Facebook, Oriented their growth teams very early on, which was like findinGP Bullhound that connected, like that was a really key step for them in their product, was to get people to make like three or four. I forget there's some number of friends and they oriented all of their growth efforts around that.Find the thing that people do in your. Shows that they're engaged and give them opportunities to show that. And then, you know, you can use that as an indicator. Okay. Talk to those folks and actually talk to them, right? Like find out, always put something in your app that lets you reach out to them in some way.And like, have you can get on a zoom call. I've done. It's easier now in SaaS land because like, I, I, I, people I'm an app. People like I know how to talk to them, but when we were, when I was working in consumer. Phone calls were more awkward, right? It was different. You're not going to books like outside of computer land, but still like just incredibly valuable.And, and, and, and I think like, you know, if we want to talk about the way to build the way to fully realize how CSS is going to, I'm just going to go all in on your turmeric, by the way, I said, I'm going to, 00:36:57 Eric:That.00:36:57 Jacob:I'm going to push it. We're going to standardize. But 00:36:59 Eric:It's not trademark, but knock it out. 00:37:01 Jacob:All right. So to fully like, to fully realize the potential to like help problems for people.Like, I think we need to lean into this more of this model. Right. Rather than I've always kind of like had an uncomfortable relationship with how our RevenueCat fits into the like hyper fast monetization stuff. Right. I'm like, get users, check your CAC, put more money into Facebook. Right. And so, the more the industry gets away from that. The happier I am. I don't know. Like you said, maybe it doesn't go quite as fast, but I think the overall Tam will be larger. Right? If we take that approach,00:37:33 Eric:Think that's right. And, you know, I mean, I've talked to a bunch of founders that haven't raised capital. Right. And they build something that like their users love. Right. Like, so I don't know if you guys saw the deal with day one that got bought by automatic braised almost as your outside capital.Right. He built. 00:37:46 Jacob:Big fans that they won. 00:37:47 Eric:Yeah. Yeah. I was a big,I got it's an awesome business and he did that exact same thing. Right. He just listened to his users. He didn't care about vanity metrics grew really nicely. Right. And it wasn't like, you know, he's not getting tech crunch publishing, but that's fine. Right. You know, on an amazing business.And then, you know, I've got a fantastic exit out of it. So I think, I think people are really waking up to that's a very much a possibility here in the.00:38:08 David:Yeah, one thing I wanted to highlight too, in that graph that you made, and for people that are listening to this, you can go to the show notes. We'll have links to the, Eric's presentation and you can find this chart, but to visualize it00:38:25 Jacob:Page 18. it open right here. 00:38:27 David:Following along at home, the, line for the locals drops.So, you know, even, even for locals, you're going to have some turn early on, but then it essentially flat lines. and I'm sure you did that very purposely to kind of illustrate how. How long term some of these, these, this retention can end up being, and it's something we've actually been talking on the podcast about recently is that we're so early in the space.We don't even really know what, how to measure LTV. Cause you're going to have people who ended up subscribing for decades. and years and years and years, if not decades. And so, and, and then, you know, to your point about the cheetah versus thoroughbred, another great chart in the patient number, Jacob Page number00:39:16 Jacob:I 00:39:17 David:Cheetah versus thoroughbred but in that tuna versus thoroughbred, The other aspect to locals, and we're kind of touched on it earlier is that those cohorts start to stack. So when you identify this cohort, that is going to be a very long-term cohort. That's going to stay subscribed and have very low churn. You, you acquire a hundred thousand this year, and then they're still there next year.And you put a hundred thousand on top of that. And those are still there next year. And by year three, you know, you just continue to grow this pie of people who are very, very sticky in the product. And I think that's part of what. you know, what you're talking about with delinquent and Bumble and other companies is like, we're still just starting to understand even as different as this is from SaaS.We're starting to see similar dynamics as far as. Early on the churn is so high, but then you do have this really strong stickiness over the long-term that, that, that can build a really healthy business of people who really love your, your product and really are invested in it and are going to stay for a really long time.So yeah, I just wanted to point that out that, that I, I love that aspect of the chart of how flat that line is for the locals. 00:40:35 Eric:I mean, you, you can see it in your own spending patterns, right? Like how many of you guys have subscribed to Netflix or Spotify for more than five years? I bet it's a good chunk of your listeners. Right? So, I mean, if I look at my phone, right, I'm going to subscribe to all trails for the next decade, 00:40:47 Jacob:Yeah, I've got CSS. I I've started subscribing to in 20 13, 14, like as 00:40:52 Eric:Yeah. 00:40:52 Jacob:It was a thing, 00:40:53 Eric:I've, been a script user for four years and I still download audio books or download other books from like the San Francisco library. Cause I'm probably the cheapest banker of all time. but you know, I still use script 00:41:04 Jacob:It's finding margin, Eric you're finding margin. That's what that is. 00:41:07 Eric:Exactly. I've pinched counties all day.But yeah, so I mean, I, I think those tails David to your point are still being written. And so that's the whole point, right? If you use average LTV and you say, all right, well, we have 30% churn that math means you lose every user in three years, and that's just not how it works. And if with really good businesses that are delivering value, right?And so then once you convince people of that, right, the investment case becomes a very different company.00:41:30 David:And speaking of that, you, you had a great, slide on investor benchmarks. And so I wanted to get to that real quick, tell me about how you, how you thought. These different metrics. And what, and how investors think about these metrics? Because you know, we're talking about LTV and in there you have LTV to CAC of you, you know, for a really strong app, that investor would be super excited about.You're closest to. Six X versus less than three X, you start to cool off. So, yeah. Walk us through each of these metrics and kind of how you think about it, how you think investors think about it, And even how that's kind of maturing as we understand the space better. 00:42:10 Eric:Yeah. And just to note like these metrics are all different for different types of businesses, right? If you've been around for a year, these metrics are very different versus if you've been around for 10 years, right. If you're in high growth, you know, venture back, spending a lot of money, these metrics look very different than if you're a bootstrap business, you know, just trying to inch out.You know, 10% growth a year. Right. So they can be very different. And the important thing is how does the story of your business and what you're trying to accomplish tie to these metrics? Right. So that's what we spent a lot of time talking to founders about is, is what's good based on what you're trying to do.Right. So it's just how you, how do you tell your story through the metrics? but yeah, so a couple of your points on the S on the slide, we talk about like user growth rates, gross margins, LTV to CAC, churn rates, free to paid conversion rate, and then sales efficiency. and then, you know, just to talk about something different, we, we talked about LTV a little bit earlier, but maybe talking about, churn, right.And so like how quickly do people churn off? Right. And so that's, there's a couple different ways to interpret churn, right? It's one, they didn't find your product. Too. They thought it was really expensive. or if they're not turning, they really love something you've put together. Right. And they decided to pay you multiple times for that either monthly or annual.And so what we just try to do is try to tell the story of where the business is at and where it's going by looking at these metrics. And so, you know, that's why it's so important to truly understand these metrics, because if you don't understand the metrics, it's hard to tie that to the story. so we spent a lot of time with any client or even non-clients just talking about this stuff to truly understand, you know, what investors care about.And it's, you know, if someone's buying the business, they may care a very good. They may care about very different metrics for someone who's investing your business for growth, right? So someone's going to put 40%, $40 million on your balance sheet to go grow. They may be focused less on LTV to CAC now because your LTV is not formally formed, right.They don't know how good it is, but they will focus very heavily on churn, which is a reflection of how good your product is and how good you're finding consumers that love your product. Right. So those, those are metrics that they may focus. They made me more comfortable spending a lot of money in the next two years.Right. So your CACs going to look a lot worse because they watched, you acquire a lot of users to make the platform a lot better. Right. And a lot of CSS businesses, right. UGC is a, is a, is a spinoff of user activity on the post. Beautiful uploading photos reviews. They're adding new new items on, on the platform for other users to use.And so it's worth spending more money to get those people in the first two to three years because your platform becomes that much better and that much more valuable, right? So you may be willing to burn down to a, an LTV to CAC of three X or something like that in the near term, or sometimes even two extra one X, because it's a land grab for those.Once you're on their platform right now. You want to see that LTV to CAC, start to move up a little bit, right? So you start to put it to four or five, six X, LTV to CAC. So it's all about where your business is. It's each different stage, but it's important to have a story and a message around why your numbers are, what they are.00:45:03 Jacob:Of the, I have the slides up in third slide, 37 for anybody who's following along at home. all of these as a veteran SAS CSS person, every annual user growth rate, gross margin to be cash I'll clear me, sales efficiency ratio. Can you talk about that one? Cause that one's, that one's, not as a little foreign to me. 00:45:22 Eric:Yeah. It's, it's a, it's more of a metric that's come out of SAS just to be honest. So it's thinking about like, it involves like how, how many users are you gaining? It's how much revenue you're gaining versus how much money are you putting out there? So it's a little bit of a different metric. and most CSS businesses don't get to that yet because they typically don't have heavy sales team.And so we've included it because you're starting to see some of these CSS businesses really start to grow. And so how much revenue gaining versus how much revenue you're losing and how much is it costing you to do that? And so that's when you're starting to get into like the tens to $20 million of, of, marketing spend a year, it's, it's, important to understand like how efficient is that spend being, and this is the best metric 00:46:00 Jacob:We, it says called sales, but you actually throw in marketing, spend in there as well. So it's like all go to market spend 00:46:07 Eric:Yeah. Are using head count, not just like the ad dollars. right. 00:46:10 Jacob:Right. 00:46:11 Eric:It's like a fully loaded CAC number, like 00:46:13 Jacob:Your, all of your people telling Facebook what to do, 00:46:17 Eric:Yep, exactly. Exactly. 00:46:18 Jacob:Content graders, like all that stuff, right? Yeah. 00:46:20 Eric:If you've got a hundred people running around campus, right. Promoting your app. Right. Okay. How much those people cost. Right. So it's an important way to think about how much you grow. And it's a way to think about like how well can you grow a capitally efficient capital with limited amounts of capital.So it's an important one. We look at it, it's typically a later stage, right? So you've gotta be like north of 20 million of 00:46:40 Jacob:So he's going to be super high when you're small, right? Because you're, you're your. 00:46:43 Eric:Sir. Request important. 00:46:44 Jacob:People are discreet. Right. And that you can't, you're not continuous. So, and also your, your, your revenue just grows less because of like, you know, you're smaller, you're less, well-known like, you're less is momentum is things like this. 00:46:56 David:Well, we're starting to run low on time, but there's so much more I want to talk to you about, but just to hit one last thing. I also love this chart you did, of Pandora versus Spotify. It's such a. And encapsulation, really everything that we've been talking about on this podcast is to see how well Spotify revenue has compounded over the past few years versus a Pandora, which, which look was the juggernaut.You know, when, when, when Spotify started. so, so walk us through this chart. And in how and why you think, you know, Spotify was able to, to grow the way they did while Pandora really struggled. And obviously there's a ton of, you know, other business factors and execution and other things. But, but I think overall, this does speak to the power of CSS.00:47:54 Eric:Yeah. And this is, this is something we did back in 2020 when we were just trying to decide like, Hey, what's is this CSS thing real? And, and a big question you get from, from investors. And listen, I think a lot of them have stopped asking this question because the case studies are out there is why would someone pay monthly or annually for something they can get for free?And by get for free, it means listening to, or watch. Right. And so I wanted to see like, alright, graphically or like actually numbers to will people, more companies make more money by making that really hard decision and say, pay me for what I'm giving you first. I'll give you something for free and exchange every half hour, you watch two minutes of ads, right?That's a really hard question to say, because it involves you putting a lot of value in your product. And so entrepreneurs, you know, product developers have to. Is this worth money or am I giving something out to people that, Hey, they'll kind of use it if they get it for free. Right? So it's a, it's a gut check for people to say, like, did I build something that someone will buy?That's hard. That's really challenging. Ask yourself, especially if you've started with advertising. and Spotify, you know, listen, they were a small company based in the Nordics, right. Versus Pandora US-based juggernaut and, and raised a lot of money. Right. That's a tough challenge. And so they took a really tough thing and said like, Hey, we're going to get.And make people pay for our product and we're going to make it better. But the crazy thing that happens though, right, is you make so much more on a user from subscriptions than you do from average. Right on advertising. You're trying to pick up pennies per subscription on some or pennies per user on the subscriber.You're making 10, 20 bucks a month, depending maybe maybe $60 a year for a subscriber. So the amount of users you have compounds so quickly, and then if you have that heavy retention, all of a sudden, you've got these really thick layers of cashflow that come in every year, use that cashflow. You invest it back in.He invested back in product and you do it again and again and again, and all of a sudden you've got a better product. And if you have a better product, people will come to it. And if it's something that they're using daily, right. Why would you not be comfortable like paying five bucks? Right. If I think about like how much my Netflix subscription is, right.It's $11 a month or something like that. Right. Well, I probably watch 10 hours of Netflix a month, right? So I'm paying a dollar an hour to be entertained. Pretty good deal. And so, like, I think if people, people start doing that math and you start to see like how powerful that that subscription is for user versus an ad driven, it becomes pretty interesting.And so I think you've seen this case study play out over and over and over across CSS, where if you build a good enough product, you know, a 10 X product versus the free option, people will pay for it. 00:50:24 David:And Spotify does double dip as well, which is interesting is that they have a good enough free tier and people can listen for free. But they choose to spend, even though they can. And so, so Spotify is a great example of, of double-dipping with a great freemium tier, but then a good enough product in a compelling enough reason that people will pay.00:50:47 Jacob:Yeah, another dimension. I don't know the specifics of Pandora and Spotify. It's like fundraising history, but if you have like the subscriber. Subscription revenue momentum makes capital more easy to access. And you look at some of this. I think of some of the strategic stuff that Spotify has done. Like they got the Beatles on Spotify pretty early on and lets up, they spent big on partnerships and Content and stuff.And if you have momentum, if you have hard dollars, it's a lot easier to go to an investor and be like, Hey, like I want to raise X million dollar. Revenue growth. I have, like, this is very clearly a business. I can remember raising money in the pre revenue is everything era or like trying to raise money.And it was like a lot harder. Right. Cause it was just like hand waves and we're going to grow and like, and now it's like, yeah, for better or worse, you go over the curtain and you show something. Right. But the big benefit too, I think for founders, it's not just for investor, for founders. It's like, yeah, you build a great business.You're building a safety net, right? Like if you can't fundraise, it's not the end of the world. Like you have options. And I think that's part of the reason why also, I mean, now we're getting into fundraising like macro, but that's part of the reason the funding environment is crazy because businesses are sturdier than they've ever been.Like they need capital less than they've ever needed it. Right. And so like, that's why it's gotten cheaper. or, you know, evaluation's gotten higher same thing. Right. So, Anyway. Yeah. And this is a fascinating to put this. I already was not on here, which was my horse. And I was like really pulling for them.And then it gets to a whole different story of why that's not on there. But, but yeah, it's fascinating.00:52:11 David:Well, I think that's a really fun place to end the story of Spotify, one of the biggest juggernauts in the space. We're going to include in the show notes a link to the report, a link to your LinkedIn and Twitter to follow along.Anything else you want to share as we wrap up? 00:52:27 Eric:No guys. Always a pleasure to join you. One thing for your audience users, we are trying to make the GP Bullhound CSS report a resource for founders. This year, for the first time ever, we did include a link to a survey.So, if you want to contribute your data, what we'll do is aggregate everything, anonymize it, and then we'll provide back a summary to users to say, “Hey, here's your LTV to CAC. How does this compare to other founders at this stage?” We are trying to be a resource. I'll probably give you guys that link, if you don't mind. We'd love to have as many people as possible. No pressure.Of course, all of it would be anonymized. This isn't a marketing tactic for us. It's us giving back to the community. We'd love people to take a second to do the survey, but if not, don't hesitate to email me, tweet at me, hit me on LinkedIn with questions, comments, and specifically stuff We got wrong. Absolutely love to hear where we can learn.00:53:22 Jacob:Yeah. 00:53:23 Eric:Because we're not building, we're just talking about what you guys are doing.00:53:26 Jacob:By the time you print this thing, it's like, stuff's changed, right? Like it's changing so fast.00:53:32 Eric:The whole Apple thing when we were publishing was happening everyday. And I was like, this is unbelievable.00:53:36 Jacob:And wait to...00:53:36 Eric:Since July, and I have to change every minute. Yeah. I had to change a PowerPoint. You guys had to change code. So I think one was a lot harder.00:53:44 David:Well, it was great having you on, Eric, and we'll have to make this an annual thing.00:53:49 Eric:Sounds good.You're welcome.00:53:51 Jacob:Yeah, we'll see you next year. 00:53:52 David:See you in 2022.00:53:54 Eric:All right. Thanks David. Thanks Jacob.

Are you launching a tech startup and wishing you had a step-by-step guide to help you?Our guest, Shirish Nadkarni, has exactly what you need to succeed with his book, From Startup to Exit: An Insider's Guide to Launching and Scaling Your Tech Business!A serial entrepreneur Shirish Nadkarni came to the U.S. as a teenager with $25 in his pocket. After graduating from Harvard Business School, he worked at Microsoft where he engineered the $400 million acquisition of Hotmail and launched MSN.com, the world's leading web portal.Striking out on his own in 1999 at the height of the dot-com boom, he founded TeamOn Systems, an early pioneer of mobile email that was later acquired by BlackBerry.After a family trip to Spain rife with language barrier snafus, Shirish launched the first social language learning app Livemocha and grew it to over 15 million members in 200 different countries before it was acquired by Rosetta Stone.Get your copy of Shirish's book From Startup to Exit here: https://bit.ly/ShirishNadkarniConnect with Shirish on:LinkedIn: https://www.linkedin.com/in/shirishn/Twitter: https://twitter.com/ShirishnWatch my video How to Calculate the LTV/CAC ratio here: http://bit.ly/LTVCACRatio00:00 - meet Shirish!07:00 - Shirish's origin story10:35 - Why Shirish left Microsoft in 1999 to launch his first business13:00 - what happened when Shirish left the resources-rich environment of Microsoft to launch a lean startup15:00 - how Shirish pivoted after realizing his MVP was too soon21:40 - always keep a list of companies in your space that are much bigger players and potential acquirers29:00 - what makes a great startup idea35:43 - how to split founder equity40:45 - team acquisition strategies for startups43:20 - why knowing the LTV, CAC and LTV/CAC ratio are so important for startups46:20 - how to manage and lead during a downturn48:00 - why you need to make one big reduction in force instead of small layoffs at a time53:50 - Shirish's desired outcome for his book, From Startup to ExitThank you for carving out time to improve your Founder Game - when you do better, your business will do better - cheers!Ande ♥Ande Lyonshttp://andelyons.com#videochannelforstartups #howtolaunchatechbusiness #fromstartuptoexitANDELICIOUS RESOURCES:JOIN STARTUP LIFE LIVE MEETUP GROUPGet an alert whenever I post a new show!https://bit.ly/StartupLifeLIVEAGORAPULSEMy favorite digital marketing dashboard is AGORAPULSE – it's the best platform to manage your social media posts and presence! Learn more here: http://www.agorapulse.com?via=ande17STARTUP DOX Do you need attorney reviewed legal documents for your startup? I'm a proud community partner of Startup Dox, a new service provided by Selvarajah Law PC which helps you draw out all the essential paperwork needed to kickstart your business in a super cost-effective way. All the legal you're looking for… only without confusion or frustration. EVERY filing and document comes with an attorney review. You will never do it alone. Visit https://www.thestartupdox.com/ and use my discount code ANDE10 to receive 10% off your order.SPONSORSHIPIf you resonate with the show's mission of amplifying diverse founder voices while serving first-time founders around the world, please reach out to me to learn more about making an impact through sponsoring the Startup Life LIVE Show! ande@andelyons.com.STREAMYARD OVERLAYS AND GRAPHIC DESIGNNicky Pasquierhttps://www.virtuosoassistant.co.uk/Visit Nicky's CANVA Playlist: https://www.youtube.com/playlist?list...Nicky's Canva Presentation Playlist: http://bit.ly/Canva_Present_PlaylistGET VIDEO/AUDIO TRANSCRIBED WITH OTTER.AIhttps://bit.ly/StartupLifeOtter CONNECT WITH ME ONLINE: https://andelyons.com https://twitter.com/AndeLyonshttps://www.facebook.com/StartupLifew... https://www.linkedin.com/in/andelyons/ https://www.instagram.com/ande_lyons/ https://www.pinterest.com/andelyons/ https://angel.co/andelyons TikTok: @andelyons

Subscribe to DTC Newsletter - https://dtcnews.link/signup Today we get totally pitted with Fussy deodorant co-founder and CEO Matt Kennedy. Fussy (getfussy.com) is on a mission to banish single-use plastic from your bathroom. With simple, high-quality and effective personal care products that are backed by science and offered as a subscription to really drive that LTV! Founded in 2020 and launched just this year, Fussy has seen incredible growth from a combination of PR hits and TV appearances that have fuelled both their organic and paid efforts. In this episode we cover why being fussy about personal care products is a good thing -- Why PR has been Fussy's biggest lever for lowering blended CaC -- How they leveraged a Spat with Unilever for short and long term success -- as well as Supply chain learnings Matt wished he learned a long time ago… Give yourself a quick pit sniff, and delve into deodorant. Subscribe to DTC Newsletter - https://dtcnews.link/signup Advertise on DTC - https://dtcnews.link/advertise Work with Pilothouse - https://dtcnews.link/pilothouse Follow us on Instagram & Twitter - @dtcnewsletter Watch this interview on YouTube - https://dtcnews.link/video

On today's episode I take two questions. The first is regarding a popular topic many businesses are asking about how to work with influencers - striking the balance between paying them enough to make it worth their while without paying too much that impacts your business negatively. While Cory is knowledgeable about the hair industry, and clearly has an understanding of Netflix and Spotify's business models, it's always worthwhile to re-evaluate your strategies. Is subscription really the best way to go? Or can you have a hybrid model that allows you to scale? If you are going to go the subscription route, understanding the unit economics of your business is the only way to know how much you can afford to pay them. So how many users, over what churn rate, over what length of time? And what's the LTV (lifetime value) of a customer on your platform? I've learned a lot about this stuff over the course of the last 12 years and I love to hear specific business problems, so if you are at a crossroads or want some perspective on how you can navigate your own business challenges shoot me a text at 206-309-5177. Question two is another zinger. With everyone on the internet- putting out so much incredible art and creativity, standing out from the crowd is one of the most difficult things you can do. I've said it before, personal style is everything. It is the most important thing creatives can do because that's how you get hired. The way you do that is by putting more of yourself into the work. So what have you done, experienced, learned about or worked on that you can you consistently put into your work to differentiate you from other creators? It's okay to take bits and pieces of others' creativity, filter it through your lens, and share that. That's not stealing, that's called research and application. But hang on, there is a critical first step. And it's simple, but it won't happen overnight. You need to put in the reps. Make enough stuff to get to the point where creating becomes intuitive. That's when you know you've developed your own personal style. Enjoy this episode as I dig into these topics and most importantly, get those creatives reps in early and often. Enjoy! Have a question? Text me 1-206-309-5177
 Tweet me @chasejarvis --- Today's episode is brought to you by CreativeLive. CreativeLive is the world's largest hub for online creative education in photo/video, art/design, music/audio, craft/maker and the ability to make a living in any of those disciplines. They are high quality, highly curated classes taught by the world's top experts -- Pulitzer, Oscar, Grammy Award winners, New York Times best selling authors and the best entrepreneurs of our times.

ตอบทุกคำถาม ‘ปลดล็อก LTV ช่วยปลุกเศรษฐกิจไทยได้แค่ไหน' กับ ดร.ดอน นาครทรรพ ผู้อำนวยการอาวุโส ฝ่ายเสถียรภาพระบบการเงิน ธปท. ปัจจัยหลักในการขับเคลื่อนการลงทุนที่ต้องติดตาม และโอกาสสำหรับนักลงทุนในช่วงที่เหลือ ปี 2564 คืออะไร พูดคุยกับ นิสารัตน์ ชมภูพงษ์ Director, ผู้บริหารฝ่ายการลงทุนผ่านกองทุนต่างประเทศ บลจ.ไทยพาณิชย์

ตอบทุกคำถาม ‘ปลดล็อก LTV ช่วยปลุกเศรษฐกิจไทยได้แค่ไหน' กับ ดร.ดอน นาครทรรพ ผู้อำนวยการอาวุโส ฝ่ายเสถียรภาพระบบการเงิน ธปท. ปัจจัยหลักในการขับเคลื่อนการลงทุนที่ต้องติดตาม และโอกาสสำหรับนักลงทุนในช่วงที่เหลือ ปี 2564 คืออะไร พูดคุยกับ นิสารัตน์ ชมภูพงษ์ Director, ผู้บริหารฝ่ายการลงทุนผ่านกองทุนต่างประเทศ บลจ.ไทยพาณิชย์

The Groundsmen this week discuss the challenges of sport's evolution into a B2C business. Do you know your LTV, CAC, ARPU? Unit economics porn! And a very deep dive into crypto's beachhead into the industry; from Binance to Tether. Is this the new tobacco & betting addiction? Dont miss Gilo's Sean Connery please.

LTV: a metric that is central to marketing decisioning. While it is an important metric to decide further budget allocations, it's important to understand that there is no one single objective way to define this. In this short episode, we outline the different ways in which LTV can be defined - there is no one single correct way, and why it's important to be clear about exactly what definition we're talking about. **Check out the show notes here: https://mobileuseracquisitionshow.com/episode/why-your-ltv-might-differ-from-your-analysts-ltv/ **Get more mobile user acquisition goodies here:http://RocketShipHQ.comhttp://RocketShipHQ.com/blog

In episode #1885, Neil and Eric talk about three pieces of data you need to track as a marketer. You might now be looking at all of these, which is why you should tune in to hear what they are! TIME-STAMPED SHOW NOTES: [00:25] Today's topic: 3 Pieces of Data That Are Key to Marketing [00:27] Focus on LTV; you need to look at the long-term, not the short-term. [01:05] Understand the power of retention to align with product! [01:43] See how your upsells and downsells work out.  [03:03] That's it for today! [03:03] To stay updated with events and learn more about our mastermind, go to the Marketing School site for more information or call us on 310-349-3785!   Leave Some Feedback:     What should we talk about next? Please let us know in the comments below Did you enjoy this episode? If so, please leave a short review.     Connect with Us:    Neilpatel.com Quick Sprout  Growth Everywhere Single Grain Twitter @neilpatel  Twitter @ericosiu

Leigh Marie Braswell (@LM_Braswell) of Founders Fund and Erik Bernhardsson (@bernhardsson), who built the music recommendation system at Spotify, join Erik to discuss:- How data flows through a company and the business decisions that can be made based on data.- The waves of change in the data tooling landscape over the last decade and why we're only a quarter of the way to easy-to-use tools.- Why there are so many data roles and how the commercialization of open source projects drives fragmentation and specialization in the industry.- The exciting opportunities and potential pain points to build around in data tooling, including workflow scheduling, LTV predictions, and collaboration.- Why people building in the space shouldn't index to existing roles, structures, and platforms, since those platforms may not be around in a few years.- Why AI and ML are just one tool in the data toolbox and the fact that there is more room to build around other, boring data science tasks.Thanks for listening — if you like what you hear, please review us on your favorite podcast platform. Check us out on the web at www.villageglobal.vc or get in touch with us on Twitter @villageglobal.Want to get updates from us? Subscribe to get a peek inside the Village. We'll send you reading recommendations, exclusive event invites, and commentary on the latest happenings in Silicon Valley. www.villageglobal.vc/signup

This episode's guest on the SaaS Revolution Show is Nathan Barry, Founder & CEO of ConvertKit. Nathan discusses bootstrapping to $29M ARR or $80M in LTV with Alexander Theuma, CEO of SaaStock. This episode is sponsored by Capchase: capchase.com/saastock Get your free ticket now to join the session! https://hopin.com/events/saastock-emea-online-2021?ref=816f9a5f9bfc

#1189 Time travel is one of my favorite things, and I love to incorporate it into AskPat by bringing people back to see how things have been going. Jackie Bolen of ESLSpeaking.org has actually been a guest on AskPat a couple of times before, in episodes 1003 and 1046. And she's been on an incredible journey. As you'll learn if you listen to her two previous episodes, she started out doing niche websites and helping people with ESL, and then doing some Amazon-focused stuff. She was going to partner with some people who were supposed to take a bunch of work off of her plate, but it didn't quite work out. Today we're going to dive a little bit deeper into what happened there and where things are now, and you're going to see this very nice story arc that Jackie has followed recently. Jackie is doing pretty well now, but she had to go through some messy stuff in the middle to find her way there. As her story shows, sometimes you don't realize how much you miss something or how good you had it until you don't have it anymore. Jackie's experience also shows the benefit of sticking with one niche and going deep, so you can build relationships and develop a much greater lifetime value (LTV) of each customer. Her story can be a great lesson for all of us, so check it out.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

On this episode of Hit Subscribe we're chatting with Reggie Black, CEO of Better Way Health.  We chat with Reggie about how Better Way Health excels in providing exceptional customer experiences. We specifically dive in on how their phone support results in doubling AOV and tripling LTV through education, automation and first class dedication. Reggie also shares more on their personal touch approach to combating churn and why they're making the switch to go Headless on Shopify. --- Seamless Subscription Commerce https://rechargepayments.com/ (Recharge Payments)

In this episode, Diego discusses how a rebrand can turn a dead product into billions and why the LTV or lifetime customer value is much more important than the value of a single sale today.   Comment on this episode on IG https://instagram.com/diegofooter Increase farm efficiency with the Paperpot Transplanter and Other Small Farm Equipment at https://www.paperpot.co/ Follow PaperpotCo on IG https://instagram.com/paperpot Podcasts by Diego Footer: Microgreens: https://apple.co/2m1QXmW Vegetable Farming: https://apple.co/2lCuv3m Livestock Farming: https://apple.co/2m75EVG Large Scale Farming: https://apple.co/2kxj39i Small Farm Tools https://www.paperpot.co/

In this episode, Diego discusses how a rebrand can turn a dead product into billions and why the LTV or lifetime customer value is much more important than the value of a single sale today.   Comment on this episode on IG https://instagram.com/diegofooter Increase farm efficiency with the Paperpot Transplanter and Other Small Farm Equipment at https://www.paperpot.co/ Follow PaperpotCo on IG https://instagram.com/paperpot Podcasts by Diego Footer: Microgreens: https://apple.co/2m1QXmW Vegetable Farming: https://apple.co/2lCuv3m Livestock Farming: https://apple.co/2m75EVG Large Scale Farming: https://apple.co/2kxj39i Small Farm Tools https://www.paperpot.co/

In today's episode, my guest is Jonathan Poma the Founder & CEO of Loop Returns.Loop is the returns and exchanges platform purpose-built for Shopify brands that drives customer lifetime value and reduces refunds. Merchants that use Loop make more money because they assist customers to make an exchange vs a refund. Notable Shopify brands including Allbirds, Brooklinen, and Chubbies Shorts choose Loop Returns to deliver a great returns experience to their customers. WHAT YOU WILL LEARN TODAYWhy the post-purchase experience is a crucial part of the commerce stack.How to drive up customer lifetime value through exchanges.Why exchanges continue the customer relationship and lead to higher LTV.LINKS AND RESOURCES MENTIONEDLoop ReturnsLoop Customer Success StoriesThis episode is brought to you by Attentive, the most comprehensive text message marketing solution for modern Shopify brands. See acast.com/privacy for privacy and opt-out information.

If you want to know how to succeed at real estate, understand that becoming an investor doesn't end with acquiring a license. From there, you'd have to go through a lot of learning curves. You can't just dive headfirst without planning smartly and not knowing what you can bring to the table. With the fast-paced real estate world, you won't survive without having a firm grasp of the basics and establishing professional relationships.  In this episode, Dom Santaniello from Naples Home Buyers & Naples Realty Group joins us to speak about how to succeed at real estate. He shares how being overly cautious about deals held him back in the beginning and how he got over this dilemma. Dom also discusses how they found success through the BRRRR method and explains their portfolio. Most importantly, he imparts invaluable advice to real estate beginners. Tune in to the full episode to learn how to succeed at real estate and attain tremendous growth! 3 Reasons Why You Should Listen to This Episode: Understand how to succeed at real estate and how the BRRRR model can help. Find out why being direct to the point will help you in the early stages of your real estate career. Learn the value of leveraging professional resources instead of doing the work yourself. Resources Connect with Brandon: Website | Facebook | LinkedIn | Instagram Looking for credit repair done-for-you service? Check out Credit Repair Mobile! Apply to be part of an exclusive mastermind group at Credit Counsel Elite! Action Driven by Brandon Elliott Connect with Dom: Email | LinkedIn | Instagram  Naples Home Buyers  Naples Realty Group Episode Highlights [01:38] Dom's Background Dom was a pipeline engineer for a Fortune 500 company for seven years.  He decided that being an engineer wasn't for him, so he acquired a real estate license. Dom started two companies with his business partner, Luke Giusto: Naples Realty Group and Naples Home Buyers. Naples Realty Group is a brokerage firm, while Naples Home Buyers is a fix and flip company. Dom wants to share the importance of taking action and how "less is more" allows you to scale. [04:11] Why Dom Gravitated  Towards Real Estate Dom had no intention of being a serious investor. His initial purpose in getting a real estate license was to start making money on the side.  At the time, it wasn't sustainable for him to live in a single-family house. He realized he could get into multifamilies instead for a 3.5% down and live for free. While researching, he ended up experiencing analysis paralysis. Dom only started going all-in after meeting the right people and gaining motivation. [06:08] The Pivotal Point for Dom Dom used to be very cautious when pursuing deals.  His risk tolerance improved thanks to his more decisive business partner. There wasn't a massive catalyst or event that pivoted him to move forward. It was a compounding effect from missing out on deals. [08:17] How to Succeed at Real Estate: Looking for Deals  Currently, the focus of their deals is within one hour of home because of the availability of resources. You'll find that there's a surplus of deals in an area once you figure out the market. Dom: "Before, we thought it was impossible to raise money. And then once we kind of figured that element out and met the right resources, we're able to not worry about that piece and really just focus on the deals where, as we know—that's the whole game." [09:44] Dom's First Projects Dom did his first three projects by himself. All other projects afterward have been with a partner. His partner runs the rehab side of the business, while Dom handles the back end. Part of knowing how to succeed at real estate is doing these two correctly. Dom shares that he constantly got outbid on his first projects because he was unrealistically conservative.  After realizing cautiousness isn't the way to go, he started aggressively networking with other agents. Tune in to the full episode to get a vivid look at the numbers on Dom's first projects! [13:38] Leaving Self-Management and Using the BRRRR Model Dom and his partner don't do self-management anymore. Instead, they moved their portfolio to a third party. Using the BRRRR model, they buy distressed properties, stabilize them, add value, and refinance them. Then, they roll them over to the property manager at a discounted rate so they don't have to deal with rent collection and accounting. Cutbacks and maintenance are almost zero after undergoing this process. Opting for a light value add makes it harder to hit LTV and get the money out. [16:43] On Appraisals Know that the value of the property will also depend on the appraisal of the bank.  If you want to know how to succeed at real estate, you need to build and leverage relationships. There was only one time Dom had an appraisal come in low. Still, they broke even as the other refi (refinancing) at the time came in high. You still make a solid asset even with a 5% or 10% appraisal.  [20:01] The Value of Their Tenants For Dom and his team, the value of being able to put their own tenants in is game-changing. Their average net profit per door is between 500 to 650 thousand. It's double or triple what the standard is. Their tenants are either six-figure earners or around that income level. The “less is more” mentality started with Dom bringing his all-around engineering role to examine another business. [21:20] Less is More Doubling the portfolio with higher-touch stuff is like maintaining something that can only bring you down. It's best to look at the properties in the neighborhood instead of relying on a spreadsheet.  [24:48] Advice for How to Succeed at Real Estate As you're learning how to succeed at real estate, you have to think outside the box. Dom found that cutting to the chase and showing how he can provide value is the best strategy to reach successful people. As a licensed real estate agent, you have to invest either time or money. People in the real estate business are hustlers. Following Dom's strategy will help you cultivate relationships in the early stages. Dom: “My thing is, how do I provide tremendous value to this person for as little time as possible?” [30:04] Some Learning Curves for Dom Initially, Dom spent a lot of money and time in marketing. He mistakenly thought that if you spend money, you'll automatically get leads. He later learned the power of building a brand first and foremost. So, they decided to go all-in when COVID hit.  During COVID, they've built their brand quickly, grew their agent rosters, and have had deals getting brought to them. [33:57] Getting Attached to a Project Dom made two critical mistakes when he started working in real estate: overly remodeling a property and doing the work himself. You lose so much growth by focusing on the little things and doing the work by yourself.  Another piece of advice on how to succeed at real estate: learn how to leverage professional resources. Dom: “Do you wait until you have a 100 unit, seven-figure machine and hand it off to someone you don't know? Or do you start with one duplex and lose 100 bucks a month? So right now, paradigm shift, the biggest mistake was keeping everything in the house under control.” You might lose money initially when you bid out contractors to do the job. However, you'll save money and time in the long run. You can speed through for the next flips because you already formed relationships. [39:52] Final Takeaways Dom disagrees with quitting your job and jumping into real estate — or any other venture — immediately. Remember, success will not happen overnight. You have to engineer your exit strategy and actions smartly because your credit, savings, and reputation are all on the line. All it takes is creative financing to put yourself two years ahead. It's life-changing once you get to leverage and sell a property from a zero-down situation. [46:01] What's Next for Dom and His Team Their goals for the next year: 20+ flips, 40+ wholesales, 20+ new BRRRR units, and 20+ buy-and-holds. The businesses went from being just him and his business partner to hiring remote part-time and full-time workers. They're huge on networking and aim to provide value to other businesses.  About Dom Dom Santaniello is a licensed real estate broker and the co-owner of Naples Home Buyers and Naples Realty Group. Dom is an experienced real estate landlord and investor. Specifically, he is the VP of Acquisitions & Sales at Naples Home Buyers where he focuses on business development, lead generation, and project acquisitions. Meanwhile, he specializes in representing investors as the Managing Broker of Naples Realty Group. Since 2020, Dom and his business partner have closed more than 50 deals with a diverse project portfolio. Dom brings his unique perspective to real estate from his strong analytical, financial, and sales foundation. Before being a real estate broker, he worked as a gas pipeline engineer for Kinder Morgan. If you wish to connect with Dom, you may send him an email directly at dom@naples-group.com. You can also reach out to him on LinkedIn and Instagram or visit Naples Home Buyers and Naples Realty Group. Enjoyed this Episode? If you did, don't forget to subscribe and share it with your friends! Post a review and share it! If you enjoyed tuning in on the show, we'd appreciate your review. You can also share this episode with your friends and family, so they can learn more about how to succeed at real estate. Have any questions? You can connect with me on Facebook, LinkedIn, and Instagram. Thank you for tuning in! For more updates, visit my website, YouTube channel, or tune in on Apple Podcasts. To achieving financial freedom,  Brandon   Youtube Description If you want to know how to succeed at real estate, understand that becoming an investor doesn't end with acquiring a license. From there, you'd have to go through a lot of learning curves. You can't just dive headfirst without planning smartly and not knowing what you can bring to the table. With the fast-paced real estate world, you won't survive without having a firm grasp of the basics and establishing professional relationships.  In this episode, Dom Santaniello from Naples Home Buyers & Naples Realty Group joins us to speak about how to succeed at real estate. He shares how being overly cautious about deals held him back in the beginning and how he got over this dilemma. Dom also discusses how they found success through the BRRRR method and discusses their portfolio. Most importantly, he imparts invaluable advice to real estate beginners. Tune in to the full episode to learn how to succeed at real estate and attain tremendous growth!   Connect with Brandon Facebook: https://www.facebook.com/brandonelliottinvestor LinkedIn: https://www.linkedin.com/in/brandon-elliott-6b1643148/  Instagram: https://www.instagram.com/brandonelliottinvestments/  Website: https://www.brandonelliottinvestments.com/podcast  Apple Podcasts:  ​https://podcasts.apple.com/us/podcast/ready-set-go-real-estate-investing-podcast/id1341397059?mt=2    Looking for credit repair done-for-you service? Check out Credit Repair Mobile: https://creditrepairmobile.com/    Apply to be part of an exclusive mastermind group at Credit Counsel Elite: https://www.creditcounselelite.com/    Action Driven Book: https://www.amazon.com/Action-Driven-brandon-Elliott/dp/1978280831   Connect with Dom Email: mailto:dom@naples-group.com LinkedIn: https://www.linkedin.com/in/domsantaniello/  Instagram: https://www.linkedin.com/in/domsantaniello/  Naples Home Buyers: https://www.naples-group.com/   Naples Realty Group: http://www.naplesrealtyma.com/ 

Rents are skyrocketing, up 11.4% just since the start of this year per Apartment List. Increases like this could mean a 25% increase in your cash flow. Rod Khleif has made big failures. I mean that in the best way. Ultimately, he was willing to fail often in order to become the giant success that he is today. He lost $50M in the 2008 crash, even though his properties were at 30% LTV (70% equity). Rod is a multifamily apartment building investor and syndicator. He motivates many with his successful seminars.   We discuss “The Law Of The First Deal”. Who you spend time with is who you become. He's an active RE buyer now, with 296 units under contract in San Antonio. However, he sees an economic contraction coming. To hedge against a potential RE market downturn, Rod likes to avoid C-Class property. He likes investing in “A” and “B” areas in southern states. Resources mentioned: Show Notes: www.GetRichEducation.com/361 Rod Khlief's website: RealEstateWithRod.com Rod's podcast: Lifetime CashFlow Through Real Estate  Get mortgage loans for investment property: RidgeLendingGroup.com JWB's available Florida income property: www.CashFlowAndGrowth.com eQRPs: text “EQRP” in ALL CAPS to 72000 or: eQRP.co By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: www.B2Rdirect.com Best Financial Education: GetRichEducation.com Get our free, wealth-building “Don't Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: GREturnkey.com Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold

In this Investor Stories episode, co-founder of West Irving Capital and Stessa power-user, Derrick Deese shares his investment journey. From strategy, operations, and portfolio growth, Derrick shares a wealth of information for investors. We also cover how Derrick uses Stessa for asset management, to simplify his process for procuring lenders, completing taxes and keep a finger on the pulse of his portfolio performance.  WestIrvingCapital.com --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everybody, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum. And today with us, we have a very special guest, Derrick Deese out of the Pacific Northwest. He's an investor that started small on Rootstock and is now up to 40 plus units with his partner, we're going to talk to him about how he scaled, what tips he has for newer investors and what programs he uses to manage a portfolio that size. So let's get into it.   Awesome, Derrick. Well, thanks so much for taking the time to hang out with us today. Really appreciate it, man.   Derrick: Thanks, Michael. Appreciate it. And happy to be here. And thanks for inviting me and look forward to chatting.   Michael: Yeah, absolutely. So I want to hear about your background. But before we do, I'm curious to know, what was like your worst day ever since becoming a real estate investor?   Derrick: Oh, well, I will, I will let you now. So the worst day I think was actually someone called and said that there was poop and I'll use poop versus the other word coming out of your toilet. It was about 11:30. At night, I actually had just had my second child, my daughter, Evelyn and I was holding her about 11:30 I get a call saying that there's poop come out of toilet. What do we do? And so I had to deal with that. And it was just one of those things, we sort of have to sort of say s.h.i.t happens. And it's sort of one of those forescout moments.   But right that that was pretty, that was pretty funny at the time, I'd look back, but it's sort of one of the things where like, you know, you sort of deal with the good and bad with it. But that was probably one of the worst areas. And really, you know, we had to end up cleaning a pipe inside one of the buildings and following the plumbing stack was off or something. But it comes with territory. So   Michael: It comes it comes with the business. When they said what do we do? Did you tell them like, well put the poop back in the toilet, that's belongs, it's kind of a no brainer.   Derrick: Basically, I said, you know, just get a plunger and just call the day. I can't come out there. You know, figure it out. Just put it back in there. It's probably your poop anyway. So Michael: Yea better than someone else's poop.   Derrick: Exactly. So yeah, yeah, but that was probably the worst. But then in terms of and then in terms of this background, right. I mean, I, I can give you just a quick background for myself in terms of sort of where I how I got to where I am.   So I actually started off. I've had a career in a variety of different different functional areas. I started off after college, in investment banking, and did that for several years. And I actually covered real estate investment trusts when I was doing that, that's when I first started to learn about just real estate in general different asset classes across real estate and understanding how the business works there.   And then from you know, after banking, went to grad school, came out, I did strategy for a little bit. And now I actually work in the tech industry, and really the sales and business development function. And I've been doing that for the past seven years. And I really started getting into real estate, honestly, three years ago, and it was what the birth the birth of my first child a room. And I sort of said, You know, I got to figure out a way to diversify a little bit, but also just figure out a way to own my own time and spend some more time with my kids because I realized that I wasn't spending lot of time with him because he wakes up, I want him to work, I come back from work he was sleeping.   So that's really the the impetus behind me starting to invest was was really family related. And then as I've continued, you know, it sort of has expanded into writing different things which I can get into. But that's really why I started investing in the first place really, for my son, and now my daughter as as as well, and also my wife as well just disappear. We'll have more time to own ourselves.   Michael: Yeah, absolutely. So I'm curious what I mean, if it was the birth of your first child, that would truly was the wake up call. Because you were involved, we can say in the space and you knew about it. But why didn't you feel like it was for you? or Why didn't you take the time to invest back then? wasn't just Oh, it's for somebody else? I don't need to do that. Or just curious what your where the where your mind was at back then?   Derrick: Yeah, honestly, I think that that was one of the things where it's a it seemed almost unattainable. When I first started thinking about it. And again, working in banking, I learned about investing in general. So I had invested in the public markets and sort of was very comfortable there. It was very accessible. You could just go to, you know, fidelity and just buy and sell stocks. It was easy. And I and I knew it. And the people with whom I worked on a real estate side, you know, when I when I covered them, you know, they were all they owned 1000s of units and had tons of space.   And so I just it just wasn't clear to me that you could start off buying a single family or duplex and that wasn't something that I just realized. But then as I started doing more research into sort of Ever friends and people, I sort of realized that you have to start somewhere. And taking your first step is important. And you're not going to start off buying, you know, a 1000s for, you know, 1000 units ready to start off with just one.   And so really, it was just sort of a, I guess, a mis misalignment in my mind of what was like feasible to start versus what versus what I have seen that that was the biggest barrier for me. And once I sort of overcame that barrier, it just became much more easier.   Michael: Awesome. And so what was it that allowed you to actually take that leap to go from zero to one to make that first purchase? And I'm curious to know, if you remember, any, were you just scared out of your mind? Or would you think we confident because you'd seen it? And you you'd seen but it was possible, it was possible? Talk us through that? Yeah. So it's kind of funny.   Derrick: So it's kind of serendipitous that, you know, both Stessa and Roofstock are now one of the same because my first purchase was actually the Roofstock.   Michael: Okay, yeah.   Derrick: And, and I, I was looking at, I said, I don't, I said, I, I knew how the process of buying homes, I'd done it before my primary residence, I did not know, for investment home. So it was kind of daunting to figure out how to find an agent and find a property manager and all this stuff over time. And I ended up doing it. But when I first started, it was just daunting. So I, I literally looked up, like how to buy properties online, I googled it. And, you know, Roofstock came up, and then also, another company came up, I happen to start browsing through stock, love the UI, found a property in Ohio, and wants you to process the Roofstock. And literally, I bought it and I you know, you sort of expect like, you know, some Gong in the sky to like, you know, well, yeah, I'm just like, Okay, done. Like, here's your property. And I said, Okay, that that was it. Right. And after that, it just you started to just start moving forward. But my first property was actually bought the Roofstock. So   Michael: Oh, that's awesome. That's awesome. It was funny. I was chatting with another member, who's who's from rootstock Academy. And I asked him, he closed on this property. And I said, so what did you think? And he goes, honestly, Michael, it was so anticlimactic. And I said, it's because you did all the legwork up front. It should be anticlimactic. It should be boring. Investing should be boring a lot of the time. So I love that. That's   Derrick: Exactly, Exactly.   Michael: So So you got that single family home? Was that a single family? Yes. Okay, so that was your first single family, your your first investment property single family out in Ohio. Talk to us a little bit about what your portfolio looks like today.   Derrick: Yeah, so the portfolio has grown. Over the past three years, now it's close to 40, or somebody units, I think, mostly in Ohio. And I primarily do my investing through a business partnership really is called West Irving Capital Partners, you can go to the website and check it out. It's just westirvingcapital.com. And it's really myself and two other partners who primarily do a mix of call it two to four units, and also some five plus units. So we have around 40 split up between duplexes and a couple of actual, you know, public apartment buildings in the world, but they're under 10 units. And so that's what a portfolio looks like. Now.   You know, we primarily invest in Ohio, just because, you know, we like the market, we think there's a lot of upside in that particular area. And again, our whole strategy is sort of focused on finding properties that we think are undervalued or mismanaged. We've we've seen that there is a lack of supply of housing that is, you know, high quality and also decently priced. That's where our niches, we focus on rents that are around 800 to $1200. We put in some capital expenses, some some ESM, some capex upfront. And that's what we do. And we've been doing that for the past three years.   Michael: I love that strategy. And so I want to come back to this strategy as a whole. But you mentioned targeting properties that are mismanaged. And I want to hear a little bit more about that from because I think a lot of people when they're looking for investment properties, if they see something that appears mismanage they run the other way. But what you're saying is they're running towards it. So what what do you mean by mismanagement? And what, at the risk of giving away the secret sauce? What kind of risk management things are you looking for?   Derrick: Sure, no, I try to give as much information, Michael, just because, you know, the market is so vast, everyone can win. You know, it's not like I'm, you know, I have the only manufacturer of widgets on the country, right, everybody can buy real estate, so I will give as much as I can.   It's sort of funny, as I look at listings, or even talk of talking to people on the ground, I think that I've realized that you can that when you look at the marketing of a property listing, I sort of tend to take with a grain of salt because it's like oh, like you know, some updates have been made to me that means nothing has been updated. So the bare minimum right now like you know, it says like, you know, newer water heater or something Um, like that probably means it's like 10 years old, right?   So it's like any things that I've seen over time, I sort of said look like people don't put in the capital and it is capital intensive, I get that. But people haven't put in the capital that's needed to sort of keep them up to date. And you can sort of see it through MLS listings, or even talking to people who are just around the neighborhoods and seeing houses, right. So some properties that we bought off market, for example, sort of fit the criteria, but it was talking to people and sort of seeing what the condition of the properties were in.   And, you know, most of the times, Michael, there's, I say, mismanaged, and there's mismanagement where it's like, the roofs falling in, or it's like, the, the house is just a little bit dated, and needs a couple of, you know, cosmetic updates, and some mechanicals, we sort of go towards that, you know, the ladder, like we don't want the roof caving in. But it's like, Look, if we need to replace a couple mechanicals, if we need to update some of the fixtures, and they could let you know, more more modern, we're going to do that because our time horizon is, you know, extremely long term. And we don't have any intention on selling anything. And so for us, putting the capital in upfront to start is, you know, an upfront expense, but ultimately, it will pay off down the long run for us.   And that's what we focus on. And so that's what we mean by mismanage is like deferred maintenance. People who, who don't really want to be a, you know, a property owner and want to sort of get out. You know, and obviously, there's there's things that there's other things that go into that whether it is, you know, not wanting to deal with, you know, poopy toilets not wanting to do a lot of things. That's we look for, and again, like, it's, it's worked for us. And that's what we continue to do.   Michael: Yeah. That's great. And so are you utilizing property management? Or are you self managing? So I know you got the empty toilet call? So is that talked about how you're structuring that?   Derrick: Yeah, so it's so it's so it is a mix. So so so the vast majority of the portfolio is through West Irving Capital Partners, but I do have some that I manage myself, and then I have through the partnership, so that would be that was one that I own myself. So that's, that's, that's why there, but I guess we do property management, based in Ohio, great to work with, they do all the leasing the rent collection, things of that nature. And this is sort of funny, like, this is one thing that I didn't know, as an initial, you know, investor, you hear property management, eager asset management, I thought that they were the same thing. They're not I realized, finally, I, you know, I was today years old when I realized that right?   You know, like property management, you know, rent collection, marketing, the property insurance, that it's sort of, like up to standards, great. Asset Management is sort of like, okay, what's the property look like? What are the aesthetics? What, how do I make it modern? How do I position this, you know, as within a portfolio, so that's sort of another piece of that we also do, and ensure that our properties, again, are in the highest and best quality shape, we can make them. So that way, our property manager can make their job easier, right, rent them easily, you know, get the top of the line rents, and get high quality tenants.   Michael: Yeah. Awesome. So I know. And we're kind of gonna shift gears here, since you brought up into asset management, talk to us a little bit about how you do manage your assets.   Derrick: We, we want our assets to be in the best shape that we can have them want to make sure that they're updated to the best quality that that they can be. And we tried to position ourselves as basically like the best landlords, if you will, in the market, in which we operate. And so for us, that means, you know, we could go towards, you know, basic basic fixtures, or we can go sort of like a little bit to higher up to make sure that they're sort of like, you know, nice and are going to last so that's, that's one thing that we choose to do.   Yeah, we can have many houses have sort of old, sort of like aluminum windows, like we try to get vinyl to make sure that, you know, we can maintain, you know, heat, moisture, etc. And it'll also like reduce utility bills down down down the line, we also ensure, you know, we want to focus on the actual property for the tenants, and, you know, the uses of that property is something that we're providing, but anything outside of that, whether it's utilities, water, etc, you know, we believe, you know, should be borne by the tenants are using that. So, we try to submitter all of our properties, such that, you know, the actual utility payments are coming from the tenant.   And again, when I say sort of like, mismanaged assets, right, many properly bought has not been submitted, and the prior owner was paying all the water and water bills is can can get expensive. I have, I have no bearing on water usage, but I can absolutely dictate what the property looks like. So that's sort of our strategy in terms of, from utility standpoint, from from from the asset as well.   And that's what we're really focused on, we're really focused on, on on, on ensuring that it's high quality, and then in terms of how we position our portfolio, you know, we want to make sure that that our assets are, are smartly leveraged, right. So we don't want to over leverage in the market, we try to make sure that we're around 65 to 70% LTV at purchase, we think that we can add we can then force appreciation to some updates that we talked about. So that way our LTV is Can, you know drop a little bit a little bit more such that we can then look to refinance over call a two, three year period and take a capital and then allocated somewhere else?   So that's sort of our approach to asset management. Yeah.   Michael: Oh my gosh. I love that, Derek. And for those of you listening to the episode, not checking us out on YouTube, when Derek talking about submetering, I got this ear to ear grin. And part of the reason I love being a co host on this show is that it's so self serving, and we get to ask our guests all kinds of interesting questions. A lot of them come from our own brain. So I'm very curious, because I have several buildings actually, that I've been looking to sub meter. They're they're smaller multi families, you know, in that five unit range, and I just haven't found an economical company or resource to do that with but it sounds like you have.   Derrick: Yeah, I mean, it really depends on it really depends on what like market you're in. So So may I ask you a question? Like, you know, what, what markets? Are you in Michael?   Michael: So I'm in Cincinnati, and Northern Kentucky.   Derrick: Okay, so those are my two main markets. So, okay, so it's a close, close, close ish. area, and I've been looking for something for ad Cincinnati as well. So So really, within within the area, again, like, there has been, um, spectra energy, which is one, and also, you know, Guardian, Guardian Water and Power has been our main provider, but they, I think that they've been shifting towards less, sort of, like, quote, unquote, smaller units. But I think that if you have five plus units, that actually would be a good one. I think that they're charging 20 bucks per per unit, to on an ongoing on an ongoing basis.   But then there's this the the setup fees, are the capital expense, right, and then it's the cost of the actual submeter, the cost of the installation, etc. That's where it gets a little pricey. But again, I think about it as an upfront investment, it's gonna pay off down the road, because the submetering will ultimately reduce your utility bills on the road.   Michael: Yeah, totally.   Derrick: So I would check out either Yeah, you know, either guardian and or spectrum energy. Especially since they may actually be available in either Cincinnati or Northern Kentucky. Again, I'm not sure if they serve those those markets. But since in Ohio, it's worth a shot.   Michael: Totally. And I'm just writing that down. Now. This is awesome. So for those of you that might not be familiar with, with Derek and I are talking about. So submetering is basically when you have a property that has contains multiple units, so that can make you flesh out like squat, any number of units, there's a different there are several different ways to meter, the energy usage of that property of the utility. So water meter, electricity and gas, if it has it. So if it's something is called master meter, you're going to have one single meter coming into the building that feeds all of the units. And in that instance, it's really difficult to say, Okay, well unit one use this much energy unit to use this much. So they send out bills accordingly. So that's an instance where the landlord typically pays all of the utilities, because there's no way to measure how much is being used by each individual unit, versus installing some metering like what Derrick is talking about is every unit will actually then go get its own separate utility meter installed.   So we can tell how much do you how much water or electricity or gas unit one use, and send them in appropriate bill, and so on, and so forth. So this is an instance I've got a five unit building, it's master metered. The water bill can fluctuate from like 100 bucks a month to like 1000 bucks a month. And we charge a flat bill back for the tenants. And so every month, I lose that on the months where the water bill is really big, I really lose. And that folks are incentivized to tell you if their toilets are leaking or their showers that he because they don't care. They're not paying the bill. So this is a really, really, really great strategy for folks that have multiple units in the same building that have a master meter in place. I love that man.   Derrick: That's a great summary. That's a great summary.   Michael: Awesome. So talk to us about some of the software that you use to help manage your 40 plus units. I mean, I know that you're you're a Stessa user, so I'm curious to get your thoughts on on the program.   Derrick: Yeah, Stessa has been pretty tremendous for us. I mean, honestly, we we do all of our at westerbeke. We do all of our accounting, tax preparation, analysis for the properties, all this. So it's been pretty instrumental, honestly, in managing our business. You know, we're outside investors. And so you know, we're not on the ground. So being able to look at the data, there's data to be able to understand what's happening at a portfolio level, but also at a unit level is great. That's our main source, right? I mean, so so we link all of our accounts. So we see all the rents that come in, we see all the expenses that come out, you know, we're able to track our ltds we're able to track our, you know, stress test scenarios, depending on what happens. That's great for COVID obviously, right, like there's a lot of stress in the market overall.   We use it to look at our overall balance sheet to see sort of where we stand. We use it to have a quick download to get information to lenders who need it when we're looking for additional financing. So it's it's it's, it's great. I mean, it's it is much tremendous tool. We've been using it since we first started and anybody who does not have you know, a system To manage your properties, I highly recommend it. Because it's been great for us, I probably would categorize myself as a power user. I mean, I'm probably in stessa. At least, if not once a day, once every other day, to met to manage it, but truly a tremendous tool and any and a powerful data visualization tool as well just as sort of see trends and be able to address things for the properties in the future.   Michael: Love it. And I'm sure everybody listening is gonna be very curious. Derrick, how much did we pay you for this demo? PSA?   Derrick: Negative $1? Yeah, no, I mean, it's I mean, there's Yeah, there's, it just so happens that this, you know, this podcast is on this. So but I've been using Stesa for the past three years. And it's been pretty incredible. And there's more features that come out all the time. With any product, right, there's obviously obviously things that can can be addressed and things that will come down the pipeline, but it's been great. And again, like literally anything that you need for your properties, whether it's tax preparation, understanding how your assets are performing, looking at the income statement, looking at cash flow, looking at balance sheet, looking at ledger being like anything, it's all there. So it's kind of like, why why you something.   Michael: Why go anywhere else? No, that's great. That's great. That's just me. What would you say your one fit your favorite feature is?   Derrick: I would probably say, I'll, I'll give, I'll give two. So what I what I will say is a dashboard, it's like really cool to see the visualization, that like the opening dashboard is to showcase like this snapshot, what's happened to properties where they stand, what's your cash flow estimates look like? etc, that's probably the one. The second I actually think, which I think is pretty cool. And this is probably a nerdy one is just the rent roll, because you can just download it and sort of see like, it's sort of like a, like a snapshot of your properties. And you can just send it to a lender to say, like, Look, here's our portfolio. Here's our LTV. Here's our estimated cash flow across properties. It has, you know, taxes, insurance, and they're etc. I think that was a pretty powerful one. Because like, we've used it so often, just to say like, is every lender asked same thing? What's your rent roll? Where's your income statement? What's your trailing 12 months? Give me I mean, so literally, you know, there's so many times I just feel like I'm sitting on our computer doing this on stuff like this, like downloading. Like, okay, rent roll, okay, here. So, the rent roll one, I think is a good one to take as I use it so often.   Michael: Yeah, it's such a good point, too, that all lenders, almost every single lender is gonna ask for the same stuff. So if you're using your own program, you know, have a folder of using Stessa. It's all kind of contained in one place. So I'm curious to get your thoughts too, because I know, I've heard that one of the qualms about is, oh, I gotta take time and set this all up and input all the information, all that kind of stuff. From your perspective, now that you've grown your portfolio? And I think you know the answer, but I have to ask it anyhow. Was it worth it? Was the time set up on the front end worth it?   Derrick: Absolutely. It's no different than capital expense for your property. The same thing, you just have these set up once and then after that just pays off. So like, thinking about it is like putting in a new HVAC system. It's like, Oh, my God, I have to buy a new furnace. It's like, well, you got to buy it. And once you buy it, you under bought, you don't have to pay for another one for like, 20 years. It's the same thing. You just do it once it takes so long, it takes like an hour. It's not like it takes 10 days. It's like it takes an hour to like, sign up your account and then put in your you know, your stuff. It's like an hour, so it's not totally worth it. I would do it again in a second. Take an hour. Yeah.   Michael: Awesome. Awesome. That's great stuff, man. So yeah, I want to wind back the clock a little bit. And have you talked to some of our newer investors. So when you after you bought that first property, what allowed you to go step two, and three and four, and really snowball into this massive portfolio that unit partners have been able to accumulate?   Derrick: Yeah, I mean, I really think that that part of it is just taking action. I mean, taking action is such a huge thing that I would say to anybody who's getting into it is that it's so easy to overanalyze, and to create blockers for yourself to say, well, this doesn't fit my numbers, like your first deal is never going to be the best deal. Let's be honest, it's gonna be okay.   Michael: Whhhat?   Derrick: Yeah exactly. Oh my god, it's not a homerun. Maybe you get maybe not even a single maybe you like bunt, and then like they pay you out at first. It's not gonna be the greatest, right? So set expectations, right? But taking action is the biggest thing, right? You have to take action. I think you have to make a conscious choice to say, look, I want to be I want to invest in real estate, I want to be a real estate investor. You have to start somewhere. And I think that getting something under your belt, learning from it, and then applying that to the next one, I think is what I would recommend. That's what I've done. I started off with Roofstock right, they sort of it sort of did everything for me it sort of got the property manager it got the lender, it sort of set it up.   So I said okay, like, they're, they're doing this so I can do it too. And again, it wasn't time investment for myself to do it upfront, right? For myself, my partners that West Irving, right, but now we have agents. We have property managers, we lenders, it's upfront investment. But it was the action that first started. So to me the action is really the biggest thing and being able to get comfortable with being uncomfortable, because it will never not be uncomfortable buying something that you may not necessarily see. That cost a lot of money. It's not it's not comfortable, but like you have to take action and get comfortable being uncomfortable as a as a baseline for stuff that sort of, I would say, is a very, very big baseline.   Michael: That's great. And I'm curious to know what some of your big takeaways were from that very first deal.   Derrick: Again, your first deal is not going to be on running. It's just not that's the takeaway. Yeah, the property and I still track it. And that's, that's what's still on there. So I still see it. But I'd that property had a tenant that didn't pay for seven months. I think at one point time, I had you know, then it then had to do a pretty extensive rehab, but it was cosmetic rehab, that was a decent amount of money. Yeah, now tend to now it's tenanted again.   But again, you never expect that you sort of see like, oh, if you buy property, and then everything is rosy, it's like no, it takes years to reposition an asset. And there's always lumps in terms of like, you know, using a spreadsheet to analyze properties, I've kind of I'm like, I'm a finance guy. So I understand why the like, the spreadsheets are never going to tell you the truth. You can make it say whatever you want to say, oh, cash 10% cash on cash return and like, my, that's not gonna happen. But someone may not pay rent, you have to replace a furnace, you have to replace a roof, you have to get a city ordinance. I mean, it's all kinds of stuff.   So it's, you have to just take a leap a little bit, the comfort with risk. And take a step right. So again, not gonna be a home run.   And then the second thing, I think, is to sort of like expect the unexpected, right? I think it's setting expectations. Were your first property, you just don't know what you don't know. But you should expect like, hey, at any point in time, right, I may, I may have some expense on are expecting something may break, a window may break, a tenant could leave. So having cash buffer is sort of like the metapoint because there's always something that may happen, and it usually does. So be prepared for that. Right? It's kind of no different than some of the conversations of people having expenses saved up for themselves. from a personal standpoint.   Same thing for reserves, because inevitably, something will happen. And you do not want to be caught off guard when it does, because it can spiral very quickly.   Michael: That's such a great point. And yeah, I've never heard anyone make that connection that bridge between Well, hey, you have an emergency reserve for your personal life. So why wouldn't you have one for your rental property? That just makes so much sense to me.   So, so what I'm just curious to get your personal thoughts. If when you look at a turnkey provider, and they say, Oh, the property is brand new, they have $0 for capex and $0 for repair and maintenance and their pro forma, what are your first thoughts?   Derrick: I take with a grain of salt. I say even brand new properties have issues. I mean, especially new bills today, I've had people who bought new who bought new bills for their primary. And this The stairs are thinking that things things go wrong. And again, like this is no particular homebuilder. I'm not saying this, but like, in today's environment, home go up very quickly, the materials are iffy at best. And it's kind of quick for reason is I will say so I would say I'd still save because realistically, something can happen even in new builds, especially when you know when something's new newly constructed, you know, flooring is shifting around because it's expanding, like, you know, like this thing's on your walls that could happen like the baseboards could turn yellow because they didn't paint they forgot to paint.   I mean, just all kinds of stuff. So I just say I'll add 5% for halfbacks and 10% for maintenance this to start because something's gonna happen. Yeah, even a new build. It doesn't matter. Even if a new build.   Michael: IF it is not today it'll probably be tomorrow.   Derrick: Not today, tomorrow. So I say, turn turnkey, is is is is I'll say turnkey. I'll call it like 180 degree turnkey now 360 because something will happen.   Michael: That's great. That's awesome. All right. And so I'm curious to know, Derrick, for all the new investors out there, especially folks that are part of our Roofock Academy are interested in joining the restock Academy or who are in their education phase, let's call it How would you articulate to them or what would you say to them in how do you know when you've had enough information? How do you know when you're ready to take that leap? Because, like any of us, I'm sure we've also come to analysis paralysis. I need to read one more book. I need to take it to one more seminar one more podcast before I'm ready. How do you how do you know and then how did you know?   Derrick: What I would say is I would make I would make an analogy for those who have significant others, boyfriends, girlfriends wives. It's like how do you know when you're ready? To get married, like, you don't really know, you kind of just kind of have a feeling. And you're like, there's gonna be some lumps. But you kind of have, it's kind of in your gut, right? I think intuition is a very powerful tool that we as humans have, that we sometimes go against.   Intuitively, you know, when that person is right for you, in two, I would make an analogy, like, intuitively you're like, Okay, I'm probably 80% of the way there, I've read this book, I've taken the Roofstock Academy, I've talked to people, I've got all my stuff and in process, the other 20%, the incremental value of that is pretty minimal. I would say, again, once you have 80% of the way there, you know, you want to be an investor, you've taken that step, you've gone through these things like Roofstock Academy, etc. You've gotten comfortable with understanding how the numbers work, right? You won't actually really learn to do it, but getting comfortable with understanding how things work, then taking the leap, because ultimately, otherwise, getting from 80 to 100. It's just gonna take forever, and at that point, you might as well just say, I'm just gonna stop.   That's what I would say, right? Like you, you take that leap from, you know, going from, you know, single on taxes to married filing jointly, like you don't really like, no, you're just like this person, is it? There's going to be some bumps, but this is it, I will make that analogy. It's no different than property investing because you kind of like you kind of there and you're like, wishy washy when we read that wishy washy point of like, I need this disc go. Because if you need that other thing, it's gonna keep prolonging it.   Michael: Ah, dude, I love that. I mean, your isms. Two for two on the episode, you're batting 1000 a day. That's so good. That is so good. Oh, I love it. I love it. I love it.   Derrick: Thanks, man. Thanks. I try to make I try to make try to make analogies things. Because otherwise, I mean, it's easier to comprehend those things personally for me. And people did the same thing when I was asking about these things, too. And it's, you know, people have analogies, I think resonate. And for me, at least, having those comparisons that are personal help make it a little bit easier, right? Especially in investing because it's never going to be easy. I think 80% and you have to make a call.   Michael: Totally, totally. Well, I'm gonna let you get out of here in just a minute. But before I let you go, I want to know where your portfolio's headed from here. What's next on the docket? What do you got your sights on?   Derrick: Yeah, sure. So again, check us out WestirvingCapital.com we're looking to continue to expand in your area, you know, just similar to you, Michael, right, Cincinnati, and Northern Kentucky, that sort of those sort of like, you know, markets, I think are ones that have upside. There are a lot of positive economic indicators. For those areas. It's affordable. With the work from home trend, people may look for places that are more affordable than coastal cities, that will continue to go right, we will continue to look to invest in those areas, again, looking for mismatch or mismanaged properties, both on market or off market.   And again, sticking to that niche, right to the 19 units is sort of where we want to stay like we don't need, we don't see the need to have 100 unit apartment building. For us, we think that there's going to be a great demand for high quality, multifamily housing. And that's what we'll say. I think from there, right, we, you know, our buy partners are always looking for other opportunities in terms of our business. So, you know, thinking about ways that we can also help other investors, right, whether that's through real estate services, real estate, back end services, things like that, is something that we're looking to expand into.   Yeah, nothing on the horizon yet. But again, we're thinking of ways that we can continue to help investors like us, you know, who who are smallish, want to continue to grow. So again, like trying to figure out ways that we can, you know, expand into real estate services is probably the other option, right? So we'd have an investing arm, and then the services arm is sort of where we're looking to trend probably over the next two to three years.   Michael: That's really exciting. That's what it is. And it seems like it's the next logical progression. Because you've got kind of your baseline built at the physical properties. Now going and supporting yourselves. You hear so much about property manager businesses, like I started out of necessity to manage their own stuff, and like, Oh, well, we'll help that that friend or that family member. That's really exciting. I can't wait to see where you take it from here.   Derrick: Yeah. Thanks. Thanks a lot.   Michael: And so if people want to reach out to you have additional questions is the best place check out wwestirvingcapital.com? Or do you want to share?   Derrick: WestIrvingCapital.com is our website, there's a Contact Us form there, which is really great. And again, our main email is info@westirvingcapital.com. So you can either submit a submit on the site for contact us, or submit an email to info and one of us will respond back and again, we're happy to help out any way we can. We won't have all the answers But again, we were sort of in many of the same shoes as many investors out there. Just you know, we started only recently, so we're still new to it as well. And we're still learning so happy to share, share, to share the advice.   Michael: That's great. And just so anybody out there I mean, my personal opinion, it sounds like you probably share it as well there. If anybody says they have all the answers run don't walk the other way. Because they're, they're full, they're full of that comes out of poopy toilets.   Derrick: Full of what comes out of poopy toilets. Yes, yes, exactly.   Michael: Man. Well, this. This was great. Derrick, thank you so much for coming on and sharing your story and tidbits of advice. There's a lot of golden nuggets in there. I definitely look forward to touching base with you again shortly.   Derrick: Thanks so much Michael. And thanks for the time and again those those those those who are looking to invest Rofstock Academy is going to be great for you and again, using Stessa to help manage, it's gonna be awesome too. So Best of luck to all those out there who are just getting started.   Michael: Right on. Talk to you soon, man.   Okay, everybody, that was our episode a big big, big thank you to Derek after the recording of this. He and I were chatting we definitely want to have him back on. He has a wealth of knowledge. I highly recommend you go back and listen to this episode again. As always, if you'd like the episode, feel free to give us a rating or review wherever it is using your podcasts. If you're checking us out on YouTube, hit the like and subscribe button below us we can continue bringing you content like this. We look forward to seeing on the next one and happy investing.

Jason Hartman joins us to talk about how young investors can navigate the current housing market and succeed. We cover inflation - what it is, what it does, and how you can use it to your advantage as an investor; how to think about debt; his favorite asset class; his strategy for financial perpetual motion; and how to think about mitigating risk. Jason's Site: https://www.JasonHartman.com Free Book: https://www.PandemicInvesting.com  --- Transcript   Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, and welcome to another episode of the remote real estate investor. I'm Michael Albaum, and today I'm joined by a very special guest, Jason Hartman. Jason is the founder and CEO of the Hartman media company, as well as the Jason Hartman foundation. He's a longtime real estate investor, and also host of the creating wealth podcast. And Jason's gonna be talking to us today about some real estate tips and tricks he has, as well as how to use inflation to our advantage. So let's get into it.   Hey, Jason, super excited to have you on the show today. Thank you so much for taking the time to hang out with us.   Jason: It's my pleasure, good to be here. And we're going to talk about one of my favorite topics, that is a topic most people hate, because they don't know how to use it. for their benefit. We're going to talk about how right all the listeners today and the viewers can use it for their benefit. And that is inflation.   Michael: Ooooh, dun-dun-duun! So before we jump into it, I would love if you could just share with everybody listening and watching who you are, where you come from, and kind of what your background is.   Jason: Sure, sure. Happy to do that. So I've been in real estate since I was 19 years old, I got my real estate license, my first year of college, purchase my first rental property at 20 and a half. I was about to get my license right before my 20th birthday. And I've been doing it ever since I've owned a lot of single family homes. Over the years, I've had a couple of big apartment complexes, 139 units, 125 units, 120 unit, mobile home park, and then you know, just a bunch of single families and in some other stuff like that I have not done any Self Storage, investing. But long term rentals are really my thing. And I know your company helps people with long term rentals, we had your founder on my show before. And and so does my company. So we're in the same space. It's a really big space, and a lot of people just love buying rental properties, rightfully so, you know, I like to say it's the most historically proven asset class in the entire world.   Michael: Yes, yeah. I couldn't agree more. I couldn't agree more. So that's awesome. Do you really done a lot of different things? And I'm just curious, which, which is your favorite asset class? Having seen a bunch of different ones?   Jason: Yeah, you know, that's a good question in the the answer, the real answer is it depends. And why do I say that? Well, I think the best asset is the good old fashioned humble single family home, that really is the best one, all things considered. However, you know, it is a little bit harder to scale it. So if you're a really wealthy investor, you may want to do bigger properties, bigger deals, and fewer of them.   However, in recent years coming out of the Great Recession, we've seen big institutional investors that own 10s of 1000s of single family homes, as you all know. And so that is being scaled pretty effectively by major investors. So you know, it can scale, you just need to treat it like a business have systems in place. One of our investors, you know, I'm not sure the exact number he's up to, but I think he's up to about 70 or 80 houses through our network. And he wants to go to 500 doors in single family.   Michael: Wow.   Jason: You know, I do think single family really is the best one. I think it appreciates the best, I think it's the simplest, and for most people, it's the best thing. But But again, if you've got billions of dollars to deploy, I understand that you may not want to mess around with, you know, hundreds of 1000s of single family homes.   Michael: Maybe a bit too slow, too cumbersome.   Jason: Yeah.   Michael: Love it. Awesome. Well, Jason, can you just give everyone a super simple definition, in your own words of what is inflation? Because I think this word gets tossed around by a lot from people. People love using it. People love to sound smart. But for everyone who might not be super familiar with it, just what is it at its basic form?   Jason: From an economists perspective, the real definition of inflation is just simply increase in the supply of money. Right. But what does it really mean? That's the important thing. And that's the real answer to your question. So, first of all, let's understand how it occurs, in most cases. Milton Friedman, the late great economists, who I'm a big fan of but some people don't like him. He said inflation is everywhere and always a monetary phenomenon. Meaning that there are two major influences on inflation. One is monetary policy, which means the central bank, the Federal Reserve, how they deal with money increases and decreases in the money supply. That's monetary policy.   On the other hand, fiscal policy is the policy of the government. It's the way the government taxes and spends. So when it comes to monetary policy, when the supply of currency units is increase, in our case, it's dollars, right. But it could be yen pesos, Brazilian reals euros doesn't matter, right? Whatever that currency unit when the supply of it increases, you have this effect of more, in our case, dollars, chasing a limited supply of goods and services.   And so naturally in any free market without major distortions, and we can talk about that in a moment, if you like. The price of those goods and services will naturally increase as more currency units chase them, they go into the market and they buy them. So when people feel richer, right, when there's a wealth effect, the value of their real estate goes up their stock market holdings go up. There's a wealth effect, right? They feel richer. So they spend more they spend more freely when they feel more comfortable. And if they think the future is rosy and optimistic, they'll spend more. If they think the future is going to be scary and contractionary, then they'll spend less they'll rein in their spending. And so that will tend to cause deflation versus inflation. Right. So I hope that answers your question. Sorry, for the long answer.   Michael: No, it absolutely does. It absolutely does. It's great. And so why is that something that real estate investors should concern themselves with? Or is it something that real estate investors should even concern themselves with?   Jason: Well, it's interesting that you use the word concern, because most, in most cases, concern would be a bad thing. And for most people, inflation is a bad thing. However, for real estate investors, it's a really great thing. And as much as I philosophically do not like inflation, as a real estate investor, owning income property, I love inflation. Okay. So this is where philosophy and just personal interests diverge, right? They really do.   I don't like inflation, I philosophically disagree with it. I don't think the central bank and the government should cause it, I think it hurts most people. But from a self interested perspective, I'm going to figure out and I'm going to help teach investors how to figure out how to align their interests with the two most powerful forces the human race has ever known - governments and central banks. And so most people from a sort of amateur level, say, well Real Estate's a good hedge against inflation. Why do they say that? They say it, because the price of real estate tends to go up with inflation, or a little better than inflation. So it hedges it, right.   So if inflation is, according to the official stats of the consumer price index, the most widely used metric for measuring inflation, the CPI, if the CPI is just say, for example, at any given time, 3%. And housing appreciates it 6% Well, then you beat inflation, right? You beat it by 3%. And so you're better off, right? You're exceeding inflation. And that's the hedge. That's the amateur view.   But the more advanced view is sort of explained in a phrase that I trademarked many years ago. And it's a mouthful, so I'm just gonna warn you it's a mouthful, and that is inflation induced debt destruction. Say that it's fast. Inflation induced debt destruction, or IIDD. Right. And what that really addresses is this hidden wealth crater, this beautifully hidden wealth creator. When you use leverage when you use a mortgage on your properties, then you're borrowing the money based on today's value. But you are actually not even you were tenants because we outsource our debt obligations to our tenants. Right? Which is another great thing about income property. You, we or our tenants pay it back in cheaper dollars. So that is really a beautiful thing. And that's inflation induced. That destruction, I can unpack that a lot more if you like, depending on how much time we have.   But when I started in this business about 18 years ago, hoping people invest in properties nationwide, I really wanted to come up with some new thinking, some new ideas, some things that made my philosophy of investing unique stuff I hadn't heard before, stuff that really just came out of my own head. And then I did find some examples of some of these techniques out there in the world. And the only one I really heard even alludes to the concept of inflation, which is debt destruction was Sam Zelle, who is a big billionaire real estate investor, who owns a bunch of office properties and apartment complexes and, you know, he's he's a wall street type an investor. And he alluded to this idea about, I want to say maybe 15 years ago, it's the only time I ever heard anyone really allude to it back in the time when I was talking about it, where he talked about his company equity office that owns office properties, how they borrow today's dollars, and pay them back in tomorrow's cheaper dollars. Right. So that's, essentially inflation does that destruction?   Pierre: So Jason, I think the common understanding is that inflation is a wealth distribution from the everyday person to those closest to the money because those closest to the money generation are the ones who get to spend it before the prices in the market react to it.   Jason: Yeah.   Pierre: How is there? You have a different way of thinking about this?   Jason: Yeah, no, that's what you said is you nailed it. Okay. So what you what you just address is something that an economist about 250 years ago named Richard Cantillon. postulated, and it's been called the Cantillon effect. Because the insiders, the banksters, Wall Street crooks, you know, they all have access, that the politicians, frankly, they all have access to this money before it hits the streets, if you will, and before it creates inflation.   So, you know, the folks at Goldman Sachs, for example, they basically, since they're on the inside of the game, right? They know that the money is coming, because they're consulting with Jerome Powell, and the other elites, right. They know what's coming. And they can buy up assets, before the effect of the inflation of those asset values has really happened largely in the market. Now, they'll usually continue to basically dollar cost average into a market as those prices are rising. But the little guys, the fools will be the last in. And, you know, that's, that's what, how it works, right?   And it is a wealth transfer, not just because of the Cantillon effect, which you just mentioned, but it's also a wealth transfer, just because of the way inflation works. So inflation is this insidious, hidden tax, that destroys the value of purchasing power of our savings, our stocks, or bonds, and even our equity in our real estate, because that's all priced in today's dollars, but today's dollars keep devaluing through inflation, right? If inflation is, and just to use that, well, let's do it. This one, let's say, say 10%, inflation occurs, whether that occurs in one year or three years, who cares, right? It happens, right? 10% inflation happens.   So if we own a million dollars in stocks, or a million dollars in bonds, or a million dollars in the bank, we just lost $100,000. Because the value those are denominated in dollars, and the value of those dollars is 10% less, but guess what? What if we have a million dollars in mortgages, and our mortgages have now been devalued? By 10%? Well, that's great. See, it destroys the value of everything denominated in those currency units, so in dollars, and thankfully, it destroys the value of debt too.   So beautiful thing when you're a debtor. So the lesson is, use mortgages, use leverage prudently, don't pay off your properties. You know, I had a question from one of my podcast listeners, the other day, emails me and says, Hey, Jason, should I sell one of my rental properties and use the the equity in that property to pay off another rental property? And I said, No, you should use my refi till you die plan and you should leverage them both to the highest possible value pull cash out and buy another property with that cash from the refinance.   Remember, there's no tax on borrowed money. So this is why my other technique called refi, till you die is a good technique for people, right? Because they take advantage of more inflation do set disruption. And of course, you know, you have to use this with some degree of prudence obviously. Right. But it is a it is a very powerful wealth creator.   Pierre: It's kind of a reversal of the wealth transfer kind of your you're absolutely right. It is. And you know, what's interesting, too, is you started off this conversation asking kind of what it means to young people specifically, and I'm not sure why you brought that up. But, you know, a lot of young people are interested in real estate investors, millennials, Gen Z people. And the interesting thing about inflation is that it is the most powerful method of wealth redistribution, most people think taxation is the most powerful method, but it's, that's not true.   The reason is, is because taxes are too obvious. Right? We all know, if our tax bill went up, there will be people rioting in the streets voting politicians out of office when they raise taxes, right, you know, the first George Bush Read my lips, no new taxes. Well, he lost the next election, because you know, that was the reagan is faced with that one, he gave it to the Democrats, right? And raise taxes.   And so, but inflation is something subtle, right? It's something people don't really notice, they sort of do, but they don't really understand why it's occurring. And they just kind of don't get it most people, right. And so it's a very powerful method of wealth redistribution, because it's subtle. It's sneaky, it's covert. But also, it transfers wealth and redistributes wealth, from lenders to borrowers, as we already talked about. But it also redistributes wealth from old people to young people.   Why is that? Well, I'll tell you why. In most cases, old people have hopefully savings, they own stocks, they own bonds, they have money in the bank. Hopefully they do. Hopefully they do, right. And young people typically don't have many assets, they just have a lot of debts. And so they get the advantage. It's an intergenerational wealth transfer without anybody passing away and having an inheritance, right? Because inflation just automatically transfers that wealth from people who have savings stocks, and bonds to people who have debts, because those debts are reduced through inflation induce debt destruction.   So if you're a young person, and you have a super high mortgage, and you have big student loan debt, and you financed both of your cars, so you're a young couple, right? You financed both your cars, and you've got some credit card debt, which is the worst kind of all right? I'm not recommending any of these consumer debts, obviously. But if inflation comes along, it will reduce the value of those debts and allow you to pay the lender back and cheaper dollars. But those aren't ideal debts. The reason real estate debt is ideal. Well, not real estate, rental property income property debt, is because it's self liquidating debt. We don't pay our own debt back. Right, our tenants pay it back. So we basically delegate the responsibility of the debt to people all tenants. Isn't that a great e quation.   Michael: amazing equation. Amazing equation. And I love the the refi till you die. model. That's great. We had a 1031 exchange, Ron, he said, you know, swap till you drop. So very similar methodology   Jason: Swap till you drop, I love it. That's good.  I am going 2 1031 exchanges on my own properties right now. And I agree with you that the 1031 exchange is a great tool right here.   Michael: I'm in the middle of one myself, and it's Yeah, the best thing since sliced bread. So Jason, I'm curious to get your thoughts because everyone always talks about, maybe not everyone, always, I'm over generalizing here. But a lot of people often talk about leverage and being responsible with it. And so what I'm hearing is that the more leverage you can utilize, the more advantageous it becomes in the long run because of inflation. So how should folks think about balancing that with not over leveraging themselves?   Jason: Yeah, good question. And it all depends first off on the person right and their personal situation. First off, right. But secondly, if you buy good properties, and we like we like to help our clients buy properties in linear Our markets. So we don't like these high flying trophy markets that have big fluctuations in pricing in value, right? We like slow and steady. You know, it's like the old parable, the tortoise and the hare. Okay? You know, it's slow and steady wins the race, right? The reliable properties in these reliable markets, mostly in the southeastern United States right now, that would be the example of it, and what I call linear markets, okay.   And so you have good properties with good cash flow characteristics, and, you know, appreciation is not very reliable, but cash flow is pretty reliable. It really is, even in in times of recession, cash flow is pretty reliable, you know, mostly, you collect the rent, mostly people pay in, you know, the money comes in, I mean, not always, but most of the time, it's pretty reliable.   So, good properties, good, linear markets. And using as much leverage as you can, which typically is not more than 80%, you got to put 20% of your own money into the deal. In most cases, you know, it's self liquidating debt, because the tenant pays the debt. Right? So I would never recommend consumer debt of any time. I don't recommend, you know, auto debt, although, you know, auto, that's pretty cheap. And if you finance your car and use that money that you would have done to pay for a car in cash to buy a property, I think that actually is a good idea. Okay.   Michael: Yeah.   Jason: But don't go out and get a super expensive car that you can't afford, right? That's the first lesson to that. student loan debt is terrible. I think it's a complete scam. And colleges are are just basically creating debt slaves. It's awful what they're doing. But that's a whole whole nother rabbit hole,   Michael: I can say we do a whole nother podcast on that.   Jason: We can I have opinions.   Pierre: So just going back to that younger investor, say they're just starting out, real estate has a pretty high barrier to entry for So to get started, how should younger investors be thinking about getting into real estate? Should they be saving their money for a down payment? Or should they be kind of taking bigger risks and playing in the stock market to build up that?   Jason: Yeah, well, you know, I'm never gonna be a huge fan of the stock market. You know, I, I like to say, Wall Street's the modern version of organized crime. Okay, you know, your Look, I mean, the point is, you're just putting your money, your financial future, your savings into somebody else's hands, right? When you buy properties, you're a direct investor, you control. Right, you you own it, you see if you understand it, but it does take more attention, right, you gotta pay attention to anything.   You know, if you're investing in stocks, you better be paying attention, right? I mean, the one way you are sure to lose or not get maximum return, at least, is to not pay attention, right, you can never just delegate this responsibility to somebody else. So in terms of saving for that first property, and the high barrier to entry, well, it's not really that high. I mean, you can buy a decent rental property with 25 or $30,000. Down, it's higher than it used to be for sure. But it's not impossible. And, you know, we have investors in their 20s, that are vying through our network. And, and they're doing it and, you know, you'd be amazed at it's like the old saying, most people overestimate what they can do in a year. And they massively underestimate what they can do in five years. So just living prudently and saving money for that first property. And, you know, letting that first property go to work for you paying attention to it, being a good manager of that property. And, you know, you'd be surprised in just a few years how things can really change.   You know, you buy a second property, we have an interesting calculator that we use for our clients. And it actually one of our clients kind of developed it, and then we expanded on it quite a bit. And that calculator basically shows people how to create a perpetual motion machine using real estate. And you might have heard about the old tales of how everybody, you know, in the late 1800s, I think it was was trying to invent the perpetual motion machine. And it's,   Michael: I can create it.   Jason: Yeah, it can't be done, at least not so far, right? Because energy, you know, has entropy to it, right? And it just loses its power. So you can't create a perpetual motion machine. The law of physics won't allow it, right. But with finance, you can. And basically, as you build your real estate portfolio, you use the cash flow from those properties, and use the appreciation from those properties. And then you get to a point where you do your first refinance, and use the proceeds from that refinances, tax free proceeds to buy another property. And this ultimately can create this perpetual motion machines. Absolutely beautiful.   Michael: That's incredible. That's incredible. I love that.   Jason: Yeah, we've got a calculator that actually shows people that where they can put in their own numbers, their own plan, how much they have to start with and, and create that perpetual motion machine.   Michael: That's great. As an engineer, I just love the analogy. You know, reformed engineer rather?   Jason: Yeah, yeah, yeah. What kind of engineer?   Michael: So I studied agricultural, but I used to work as a fire protection engineer for almost nine years. It was a lot of fun.   Jason: So if you if you if you got a student loan, that's a useful degree, right? People are actually hiring engineers, right. But they're not hiring for a lot of these other crazy things that there's they're selling fake, useless. putting people into you know, $100,000 worth of student loan debt.   Michael: It's, it's terrible. That's quite, it's like there's a whole generation of people that have a mortgage, they just didn't get a house included with their mortgage. You know, it's, it's ridiculous. Yeah.   Michael: It's it is crazy. It is crazy. Jason, I'm curious to get your thoughts, kind of on two separate investment vehicles. One is I don't have a big fan of the stock market, but curious to your thoughts on index funds. Because a lot of folks say, well, that's a great place to park money. So you don't have to be very active in it, kind of set it and forget it. And then alternatively, syndications, where you're involved in real estate, but not direct ownership.   Jason: Okay, so first off, you know, I have something called the 10 commandments of successful investing. And I must tell you, our 10 commandments has helped 23 commandments.   Michael: Funny how they keep growing.   Jason: You know, we got more. Yeah, so we're up to 23-10 commandments now.   Michael: Love it,   Jason: You know, we do math, government over here, okay. Funny math. Because, anyway, so commandment number three has really resonated with a lot of my podcast listeners and YouTube followers. And commandment number three is, thou shalt maintain control, you know, in other words, try as much as possible in your life to be a direct investor. Because when you are not a direct investor, you don't directly own the asset in which you're investing your money. You leave yourself susceptible to three major problems. Number one, you might be investing with a crook. And we've all heard about the scandals on wall street or Enron WorldCom   Michael: The Madoffs.   Jason: There's so many, Bernie Madoff. I mean, yeah, you know, global crossing. I mean, they're, you know, how long How much time do we have, right? There's just you know, that that Coffee Company in China, what's it called? luck in coffee? You know, there's so many stock market scams, it's unbelievable. So we know about that. And in real estate, there's certainly a lot of scams with syndicators, scamming people fund managers scamming scamming people, right? You know, most people aren't getting scammed. But, you know, there are certainly a good number of crooks out there.   When you're a direct investor, you can avoid these problems, right?   Number two problem, assuming they're honest, they might just be incompetent. And you'll lose money because they're either dishonest or stupid. Right. And that's no fun.   The third problem, assuming they're honest and competent, they take a big management fee off the top for managing the deal. And, you know, we've all seen these ridiculous salaries on Wall Street, as the shareholders are losing money, but they're still paying themselves big bonuses, right? It's just these things are not correlated, like they should.   Michael: Right.   Jason: And so so these are the problems you leave yourself susceptible to, don't directly invest in Listen, I'm not a direct investor, anything, everything I sell, okay, I mean, I have a lot of direct investments. But I have some non direct investments too. You just got to trust the person you're doing it with or the company, you're doing it with their competence. And their, their honesty. Right. So So that's, that's part of it. And then you've just got to look at the deal and see if they're charging ridiculous fees, you know, acquisition fees, disposition fees, management fees, are they using your money in the fund to go out and raise money from other people? Well, I mean, I don't know. Should that be an expensive the funder? Is that like an outside business expense, right? Yeah. So these are, these are questions you have to ask and do due diligence.   Michael: Yeah. Yeah. makes total sense.   Jason: But as far as index funds, the answer your other question. You know, it's, there are a lot of people who say and a lot of they have a lot of evidence for it. But you know, like anything, it's debatable because you can slice and dice things a million different ways that the index funds beat these highfalutin fund managers that charge big fees, right. So just by the index, there may be some wisdom to that.   Michael: Yeah. Yeah.   Pierre: Just thinking about risk taking on, you know, how to mitigate some of the risks that are inherent with taking on this debt, with an we're kind of depending On the government inflation to capitalize on that, what are some other risks that are inherent in government action? Like, there's a lot of talk about when people are deferring their mortgage payments, they're going to lose their homes when the government assistance stops, like, what are some ways to protect yourself.   Jason: Protect yourself? So, I mean, look at everything has risk, there's nothing risk free, even putting your money in the bank is very risky, because well, it's actually not risky. I know for sure what's going to happen with your money in the bank, you're going to lose it to taxes and inflation, guaranteed. Guaranteed loser money in the bank. Okay. That one is, is the guaranteed loss, right? Everything else has a risk, it could go up or down, right. And, you know, there's risk and everything, there's political risk.   So if you are investing in a blue state, the political risk is pretty significant. People are leaving a lot of these places. I live most of my life in California, and California has become a more risky environment with the political environment, they're New York, risky, right. And the other states, they're more business friendly, or a lot less risky. In fact, they're benefiting from the migration that's occurring out of these more or less left oriented places.   So there's political risk, and the political climate can change over time, right? For example, Texas, has always been very business friendly. But that's really kind of changing a little bit in Texas, even right, especially in Austin, which is a great city are really neat city. But politically, it's getting kind of risky here. So these risks are inherent.   But one thing that can really help directly when we're talking about risk in real estate is this. It took me 19 years to discover this, and I've been teaching it for a long time to it's called the Hartman Risk Evaluator. And basically, what the Hartman risk evaluator does, is it shows people by using what I call the LTI ratio, we've all heard of the LTV ratio, the loan to value ratio, right? Hey, you know, we'll give you an 80% loan, you need to put 20% down, that's the LTV ratio, right when you're getting a new loan, but the LTI ratio I invented, and that stands for land to improvement ratio.   So when people buy a property, they usually consider it to be just one thing, but it's really two major items, there is the land. And then there's the improvement for the house or the apartment building sitting on the land. So that's the LTI, the value of the land, versus the value of the improvements sitting on the land, the LTI ratio.   And the Hartman risk evaluator basically shows people that the higher land value markets are much more risky to invest in. And the higher improvement value ratios for that LTI ratio skews toward high improvement value and low land value are less risky to invest in. And I can give you an example of that, that I use personally in my own life. And this is kind of how I discovered a good way to mitigate risk on real estate. One of the first properties I bought out of state when I lived in California. It was interesting, because I was buying two properties at the same time. One was a home for myself in California.   And this was about 2004, I think, and I was buying this house in, in Orange County, California, and it was $815,000. And I was buying another house across the country for $159,000. So you know, you really see the difference there. Right? It was a rental property, that $159,000 pose. And I had this girlfriend at the time, and she was her mom was a new home sales. And she was telling me not to buy this $815,000 house because she just didn't think it was a very good deal. Right. And so we broke up. I bought the house anyway. And there you go.   But I also bought the other house across the country for 159,000. And here's what was interesting. My insurance broker Jennifer was insuring both properties. So she had an office in Irvine, California. And I remember she reached out to me and she said that the out of state property, we're going to give you insurance for $135,000. And you're your personal residence we're going to give you insurance for and I can't remember that one as well. I think about $200,000 Okay.   So basically, we all know the insurance company only insures what the improvement sitting on the land because the house burned down the land walls be there, right? So they don't insure the land value they just insure the house or the improvement. So what's the point of that, what does that tell us? Well, here's what happened. I bought both houses, moved into my personal residence, have a rental property out of state. And here's what happened, the personal residence went way up in value in the first year, even while they were building it, it went way up in value before it was finished. And before I moved in, so it was a great deal, I loved it.   And I moved into the house and about a year went by and I noticed the houses in the neighborhood really going up in price. So I called up my lender that did the original loan and I said, Hey, I think I want to refinance this property, pull some equity out and buy more rental properties. They sent over an appraiser the appraisers name is Eric, I tell you that for a reason. Because he also came back following year appraisal again. And that $815,000 property is now worth 1,300,000. And I thought, Wow, it's only been a year and my property went up. $485,000, do I ever love real estate, and I heard you, but that was in a cyclical market in Orange County, California, a risky market.   So I refinanced the property and pulled some cash out, I bought some more rental properties nationwide. And I really started thinking about that, because when I got the insurance on that property, on the out of state property, they told me, they were going to give me $135,000 worth of insurance, meaning by deduction, the land value was only $24,000. And in the California property, the land value at the time of purchase was about $615,000. So if, if the improvement value goes up, it will only go up by a small amount based on the cost of the construction materials.   And also what happened to the price of lumber went way up, came back down a little bit, etc, etc. But land value is just all over the board. It's not at all logical. land value goes up a lot, and it goes down a lot in rapid succession. And so the risk evaluator basically shows you that the risk is in the high land value markets. And it's a little bit hard to explain this without illustration. But look at it this way. If I've got $600,000 in land value and a property, and that goes down by 50%, I'm going to lose $300,000. And if I got $24,000 in land value in a property, it goes down by half and lose $12,000. The improvement cost is much more stable than the land cost. Because builders won't rebuild more properties if they can't make a profit.   So yes, there are times by during the Great Recession in 2008 or so that properties did sell below the cost of construction. But at the same time properties were selling for half to a third of their land value their prior land value. So the the price of the improvement of the building sitting on the land gives us a stop gap of where it will hold the value much better than high land value markets.   So I hope that makes sense. Again, it's hard to explain without illustrations and slides. But the moral of the story is high land value. cyclical markets are more risky than low land value linear markets. That's the moral of the story. And also, coincidentally, those low land value linear markets have much better cash flow than the high land values.   Pierre That's fantastic.   Michael: That makes a ton of sense. That makes a ton of sense. So I'm curious, Jason, what did you do with that 1.3 million place in Orange County? Did you refi to I mean, you're clearly alive. So not till you die. But did you keep it or did you get rid of it?   Jason: Yeah. So I did, unfortunately, keep it. And I kept living there. And the next year, Eric came back and appraise the house again. It was the exact same appraiser. And he said,   Michael: Good ol' Eric. Yeah, good ol Eric. I have bad news for you, Mr. Hartman. Your house is now only worth 1,215,000. So I lost $85,000 in a year. Okay. But I was still way up. And I still stupidly kept the house. And I stayed there and I kept living there. I wanted to move but frankly, I was just too busy to move. I wanted to move out of state. That's sort of a major decision. And I finally did get out of the Socialist Republic of California about 10 years ago. I'm glad I did. You know, California is beautiful. It's great place but I just don't want to pay the taxes. I just had it.   And so I moved to Scottsdale, Arizona. I lived there for six years. And now I live in Florida. And I just every time I move I lower my tax rate and so for 200 state income taxes. And so I kept the house, and I ended up selling it for only about $100,000 more than I paid. I should have sold it sooner and made $485,000. But you know, I just didn't. And I was just too busy with my business to really manage my real estate, my home as an investment really, really well.   But the moral of the story is, that's a cyclical high land value market, the cost of improvement when I sold it for $915,000, about 100,000 more that I paid, the cost of the improvement did not go down. It actually cost more to build that house seven years later than it did the day. I bought it seven years earlier. But the land value had gone down. Well, it was still up above what I paid for it. But it was still much a lot lower than the peak, which was 1.3 million.   Michael: Got it. And the reason that the property the improvements would have cost more to build seven years later when you sold it was because of inflation, right?   Jason: It just inflation. Yeah. Yeah. Well, it was actually that's a that's a good point, Michael, it was inflation. But it was also inflation caused not just by bad fiscal and monetary policy, but inflation caused by a huge economic and construction boom in China, and to a lesser degree, India, they were just sucking up these raw materials, these commodities used to build houses.   And so if you think about it, another principle I teach is called packaged commodities investing or assembled commodities investing. And what that is, is, if you think of the houses you buy, or the apartment buildings you buy as commodities, just packaged up, right, you know, what are they they're glass, steel, lumber, concrete, petroleum products, copper wire, you know, etc, etc, labor, energy, all these things go into building a house.   And so that's what you're really buying. When you buy in low land value, good linear markets, like we invested. Like, if people go to my website, if they want to see a list of linear markets, just go to jasonhartman.com, click on the Properties page, those are all linear markets, okay, that we'd recommend investing in low land values, high improvement values as an LTI ratio. And you're basically a commodities investor.   And the neat thing about these commodities guys, is they are not attached to any one currency. These commodities, whether they be lumber, concrete, petroleum products, copper wire, they don't care if you're buying them in dollars, yen, Euro, pesos, whatever, it doesn't matter to them. They're they have intrinsic value, and they're used worldwide. And every human on Earth needs them. Because they are the ingredients of the places we live, the places we work, and the places we interact with all day. It's every building is made of these things.   Michael: Interesting. That's a really interesting way to think about it.   Jason: Packaged commodities investing.   Pierre: Yep, that definitely answers my question. Thank you.   Michael: Jason, we want to be super respectful of your time here. Any additional questions for Jason?   Pierre: Just tell our listeners where to find you, link them to your channels?   Jason: Yeah, thanks. So I'm on my podcast is called The Creating Wealth Show. And you can get that just look up Jason Hartman, wherever you get your podcasts, my website, jasonhartman.com. I've also got a special gift for your listeners and viewers. And that is a book a little mini book that is free. And what we did is we took a lot of my strategies that have been teaching for many, many years, and we adapted them to the crazy times we're living in. And that is available totally for free at pandemicinvesting.com, that's pandemicinvesting.com, and it's a small book on pandemic investing that you get right away. It's just emailed to you right away. for free.   Pierre: We'll put that in the show notes as well. So   Jason: Thanks.   Michael: Yeah, can't wait to take a read that sounds awesome. Because he has you mentioned that we are in a bit of a crazy time here.   Jason: You know, it's a really weird time and a lot of things that people expected. I think, you know, it's hard to even remember, try to think back how things were, you know, what, 16 months ago? Right? I mean, just think of what you thought back then. And everybody listening to this. Think of what how you were thinking back in, you know, maybe, I don't know, March of 2020. A lot of people just thought the world was going to end. Right. The economy was going to collapse. You know, there were riots that summer. You know, cities were being destroyed, burnt down. Windows broken, you know, massive looting and all kinds of crazy stuff going on in and and look at what really happened.   That's a lot different than most people would have thought it's counterintuitive, right? Yeah. But it is a wealth transfer. And a lot of people are still suffering. And a lot of people haven't even noticed how bad it is going to get. So it's it's uneven, it's unequal, and it's unfair. And just, you know, for people listening to your show, I know that you're trying to do it, and I'm trying to do it for my audience. You know, we're just trying to help as many people as possible, understand what's happening, and understand really how, how they're being played by the system. And inflation is hurting those people. And if you don't do anything about it, if you don't follow these techniques, you will be the victim rather than the victor.   And but you can you can succeed in this environment, just by aligning your interests with these two most powerful forces the human race has ever known. What are they governments and central banks, they have standing armies, they have aircraft carriers, they have police forces, they have missiles, and you know what, it doesn't matter what we think, or what we believe or whether we philosophically disagree. I do. You know, if they don't care, okay, they're gonna do what they're gonna do. And they have all the power, so we better align our interests with theirs, and follow the same business plan they're following. And that's how we'll succeed.   Pierre: Fantastic.   Michael: Love that Jason, thank you so much for coming on this and sharing this was this was really great. Really, really great stuff.   Michael: Hey, my pleasure. Thanks, everybody.   Michael: Thank you.   Pierre: Thank you, Jason.   Michael: Thanks, take care. Talk to you soon.

In this episode, Devin Redmond from Stessa gives us a peek under the hood of the Stessa asset management software. Deven explains Stessa's functionality, reporting tools, and how to use it with a live demo. --- Transcript   Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Tom: Greetings, and welcome to the remote real estate investor. On this episode, I'm joined by   Michael: Michael album.   Tom: And today we're gonna dig into some of the Stessa features and functionality. Devin leads the customer success team at Stessa. So a lots of great things we're going to walk through note this episode, while it's valuable to listen to, and it's gonna be extra valuable if you check out our YouTube channel as well. So worth checking out both. Alright, let's get into it.   Devin, let's get a little bit about your background. So you lead the customer success team at stessa. Let's talk about let's roll back, roll back a little bit further. How did you get to stessa? Are you an investor as well? Let's hear about it.   Devin: Yeah, yeah, sounds good. Let's Well, we'll set the stage a little bit. So yeah, I started with Stessa, about three years ago. So I've been there almost since the beginning. And Stessa, from the beginning has been a financial management platform for rental property owners specifically. So at the time, you know, a few years ago, there's Mint, Personal capital, a lot of these platforms coming out that were more sort of stock market oriented or other investments, and there wasn't much for real estate investors to efficiently track their portfolio.   And so that was the original idea for Stessa. It's the word assets spelled backwards. And since then, we've, you know, introduced through a steady stream of new features over time, that have come together to be a sort of all in one platform for tracking your your tenants, your income and expenses, you can store real estate documents, and you can run all your financial reports there as well. So that's kind of the quick overview on Stessa. It's great for whether you have one property five properties growing portfolio of 10, plus single family rentals, smaller multifamily. That seems to be kind of the sweet spot where people get the most out of out of the platform.   So I run the customer success side, I spend a lot of my time talking with investors, understanding what their challenges are, and figuring out ways that stessa can can help address those. And then I'm also an investor myself, so invested in property, both in California and Hawaii. And I self manage a lot of that so that, you know i'm i'm in investor shoes, seeing what the issues are working with vendors, and building relationships with tenants every day. So that's that's part of what I'm doing what I'm bringing to my job at Stessa.   Michael: Oh, man got to go show a vacant property in Hawaii, poor you.   Devin: Yeah, it's it can be pretty tough. Sometimes I've actually been doing that remotely. So like, I'll get on FaceTime with someone. And they'll go hit the lockbox and get in, we'll sort of tour together. And it's actually worked out really well so far. I don't know if it's just that market, or it's not a cheap property, right. So I've been able to kind of like screen tenants in advance and make sure they're qualified. And then they come for a tour. And I've had really good luck with it so far.   Tom: I remember talking to you about this before, it was interesting learning the rules in Hawaii. Where is it? Right, you have to own it for a certain number of years before doing short term like you have to do long term first, or I thought that was just kind of an interesting factor on the rules. And why do you mind elaborating on that?   Devin: Yeah, yeah, no problem. I mean, it's pretty complicated. Each island has its own rules. Each island has its own County, and the rules are kind of determined by county for the most part. But yeah, getting into short term rentals, there are certain areas on each island where short term rentals are sort of de facto allowed. And you can buy one of those and start doing short term rentals, you know, day one.   On the rest of the island. And a lot of the neighborhoods, they've really cracked down there were a ton of illegal short term rentals going on like that. And those have those have been shut down. There's huge fines for doing that. So on Maui specifically, you can if you buy something in a you know more of a long term rental neighborhood, you've got a five year waiting period before you can even apply to do short term rentals. So everything I'm doing over there as long term rental, it's pretty tricky to manage short term rental from that far away without a property manager and that's kind of how I've preferred to do things so far at least.   Tom: I wonder if it's like the resort lobby. like trying to like snuff out? I don't know, being conspiracy theorists, Tom over here. Like,   Michael: They send someone in to lobby for Marriott. Hey they're killing returns?   Devin: Yeah, definitely part of that I mean, and then there's you know, understandably there's local opposition to and when long term rents are going up you know a lot of that frustration gets directed at people who are doing illegal short term rentals which you know, they shouldn't be doing. Tom:: Sure is and just kind of curious on longer term strategy. Do you see that as like retirement spot as well or I love interesting places where people invest in Maui's awesome,   Devin: Yeah, yeah, I mean, that was definitely part of the objective that it has that option, as a place may want to retire or semi retire in a while. You know, it's a little tricky to spend a lot of time over there. Now, pandemic, there were some opportunities to do that when everyone was working remote. And that was a nice sort of bonus, because one of the properties has a little in-law unit that my family was able to tuck into for a few months, and we got a feel for what it's like to, you know, to live in Hawaii, not right on the beach in a rental condo.   So yeah, and that's one of the ways I think about investing is Okay, is there some reason that apart from just getting getting a good yield, or return that I would need or want to be in this place? Right? So is there some other reason to get on a plane and go there and deal with the property meet people start building a network in Hawaii kind of fit the bill for me on that front?   You know, I have family in Cincinnati, and my family's from part of my family's from Nashville originally. So like, there's other places that also have that, that sort of angle that I think is one way investors can kind of think about things so that it's not just about yield, or just about the math and the model. I think it's nice to have some other ways for things to work out in a positive way for your life overall.   Tom: Optionality for sure. Well, I, we could probably talk about investing in the islands for a long time. But getting I guess we'll save that for another episode going deeper on that. But let's let's circle back into Stessa. So what I wanted to do within Today's episode is to walk through some of the key functionality and use cases, just to give listeners a better idea about what what is the product? What does it do? You know, how is it different than property management, all of that good stuff?   Devin: Yeah, absolutely. So I think the first thing to note is that when you think of property management, you think of really being in the weeds, vendors, maintenance requests, you know, long list of items that have to be taken care of rent collection, etc. Stessa, we've thought about this as more asset management. So this is a layer that kind of sits on top of property managers, or on top of the DIY owner who's doing a lot of property management on their own. So, you know, think of it 10,000 foot level, rolling up a lot of the data and information to help you understand how you're doing on a more macro level.   So, to that end, I'll go ahead and share my screen here. And you can see our dashboards. Can you guys see my screen? Okay,   Tom: I can and note for listeners on the podcast, we have this all the the video is on YouTube, but we're going to talk through it. So you get a good idea on what is within the the dashboards and functionality.   Devin: Yes, so when you set up a test account, it's pretty easy. It's, you just enter a property address. And we go ping a bunch of different public records and put together as much information as we can, then you key in your rent roll some other basic information. And pretty quickly, you'll see a dashboard like this. So this is for our demo account. This is overall portfolio view. And you'll see you know, kind of key metrics like value, set return, if you've set up all your acquisition information, will track your occupancy, we'll do the math on the projected income, you can put in all your mortgages. And then you get a portfolio you know, for if you've got a big complicated portfolio, you might have 10 properties, a bunch of units here, this math gets pretty hard to do on your own. So this is a nice kind of quick reference.   In terms of tracking actuals you get a net cash flow by month chart here, where this blue line is your actual results. And this dotted black line is your pro forma your budget. So you know, one of the things that we learned very early on from talking to investors is a lot of them don't necessarily have a great idea as to how they're doing month to month. You know, you may check in with your CPA, your accountant once a year when it's time to do your taxes. But that's not really enough to know how to operate better during the year, he really kind of need to track your results month to month to know what adjustments you can make along the way so that when it does come time to file taxes, you're making as much money as possible.   So this is a great a great way to automatically track things. As long as you have all your bank accounts set up and your your data is coming in smoothly.   Michael: This is so powerful. And debit, I just want to pause here for one second, if you scroll up just a hair, so we get back to the bar graph. So for anybody not watching this on YouTube, what we're showing is this bar graph, which shows the breakdown of the income and then the expenses that get paid. And then the cash flow is being being tracked. And it looks like for any other math nerds out there, like the sine wave, which basically goes up and down and up and down, and up and down. And that's what we project, that's what we anticipate our actual cash flow to look like. Versus when we're modeling, we assume that it's uniform, every single month, we'll make the same amount of money. And every single month, we'll have the same amount of expenses going out, which if anybody owns properties, you'll know that's not the case, because you might have property taxes due once a year, and you might have your insurance payment once a year. And you might have a big expense once a year, or whatever the case may be if your individual property. So I think it's so important to recognize and understand that it's not smooth, it's not uniform. And this is a really great visual for this.   Devin: Yeah, absolutely. That's a good point. Yeah, property taxes, insurance, these are lumpy things that happen throughout the year. And you want to make sure you're managing your cash flow to accommodate that, right. So this is this gives you a nice visual of what's actually going on and how things really work.   Michael: That's great.   Devin: We've also found that this is really helpful for for some investors who don't necessarily have an appreciated how much capital can be required on certain investments, right. And so when you were accurately tracking all your capital expenses, you can see that that introduces some some lumpiness as well.   And then we also do a cash on cash return down here, which, in the early, early days of an investment is a great way to understand, you know how you're doing in terms of the actual cash dollars you've, you've put into the deal. less important over time, we try to focus more on ROI and ROE over over the long run. But in the beginning cash on cash is is pretty useful.   Tom: We love some cash on cash metrics that Michael and I it's, we have big fan of that one, I think one last thing that I that I love about this is, you know, you may have some dashboards with your property manager that you're using. But if you have multiple properties across multiple property managers, I mean, this is one where you can aggregate it all together, you can, you know, look at you know, perhaps, you know, perhaps part of your portfolios in Texas, you just want to see the Texas properties great. You can run all these reporting for just that specific or all of them, or one of them. It's just really granular, cool reporting.   Devin: That's right, yeah, you can easily switch back and forth between portfolio and a specific property up top here.   Michael: Well, it's something to keep in mind too, is your property manager has a limited insight into what the property is doing. And only from their perspective. So they might be paying the management fee. And I've been the expenses of any kind of repairs that come up. But you as the owner are likely the one paying the property taxes, the insurance, you might be paying some vendors specifically if there's a big a big capital improvement that's being generated or going into the property. So it property managers so often don't have the full picture Oh, and the mortgage, like duh, that's the biggest, oftentimes the biggest expense, they might have no idea what that looks like. So this is Tom, you mentioned, it just aggravates it altogether, one place becomes so nice. You don't have to do that for yourself.   Tom: Great point, Michael.   Devin: Yeah, absolutely. So while we're talking about property managers, and data, let's maybe go under the hood a little bit here and see where all this information is coming from. So the transactions ledger, it's kind of the real engine of Stessa. And this is where all your data gets consolidated in one place. So just like mint or personal capital, you can link directly to bank accounts, you can link to your lenders, you can link to your credit cards, and you can link to various property managers depending on which software they use. So if they use Apfolio or Property Ware we can tap into those reports directly. So when everything rolls up into one place, you can pretty easily go through and categorize all of your income and expenses. Most of these categories align really well to Schedule E on your tax reporting. So, you know, we try to get you to kind of the five yard line before taxes and want to coordinate with your CPA to get over over the finish line. But you can get pretty far just with these quick tools in the in the transaction ledger.   Michael: And just just to clarify that analogy, Devin, you're talking about the five yard line, very close to scoring as opposed to your own five yard line, almost getting saftied.   Devin: Yes, yes, that would be very far. Absolutely. I would imagine a lot of people feel like, you know, especially during I don't know, I felt this, I don't know if you guys experienced this, but like CPAs were just totally overwhelmed this past year. And so I always felt like we always we had a long ways to go just to like, get the conversation started and get someone engaged and working and asking me questions. I don't know what your guys's experience was, but it's been, it's been hard lately.   Michael: I'm still holding my CPA to get my state tax returns. He just got my federal over to me. So I feel that sentiment 1,000%.   Devin: Yeah, yeah. So you know, when you can roll it up and give someone a nice report that's got all your information where you've done a lot of the categorization, which is sometimes hard for CPAs to do, because they don't know your business as well. They don't know your properties, they don't know how you like to do things. I feel like it does kind of put you in the pole position to get you know, better attention from from your CPA and get things done.   So, the transaction page here, this feeds all the reporting all the dashboards, it's very easily searchable. So if you're looking for something like let's say you wanted to say, okay, where did I? Where did that Home Depot, receipt go. Or what did I spend money on last month, you can really easily search and pull that information up. Everything's pretty responsive.   For any particular transaction, you can also attach a receipt so you can drag and drop a file here. And then we also have iOS and Android apps that do receipt scanning. So when you scan a receipt, it'll automatically create a transaction for you attach that receipt here. And then you have a great reference. And you don't have to store store papers at home.   Michael: Awesome. And Devin, if I have regularly occurring expenses, every month, I pay the property management fee every month I pay utilities, or whatever the case may be, will Stessa start to learn that type of stuff, or do I still need to go in every month and manually update what this expense was and categorize it?   Devin: Yeah, in terms of the categories, we do have algorithms that pay attention to your patterns over time. So to the extent those expenses are coming in with the same description from the same source every month, once you categorize it three or four times in the same way, our engine will pick up on that and start to do it for you going forward. So it's not perfect, but it does over time, the more you put in in the beginning, the more time you save down the road.   We also support file imports. So this button here allows you to import Standard Bank files, like OFX and QFX, you can also bring in CSV files. So if your local bank happens to not be supported for a direct connection, you can still get your data in efficiently. Of course, you can also add transactions manually, if something, you know for whatever reason slipped through the cracks, and you just need to track it.   Michael: Awesome.   Devin: So that's the transactions page. I'll show you reports. Next, maybe since this is another place where the data feeds into, we've spent a lot of time building out the report center to be very focused on what investors actually need. So you know, some general accounting programs will give you like a sort of vague p&l for a business. But that doesn't necessarily break down the way you want it to to understand how your investment properties are performing.   So we've got a net cash flow report. This is somewhat influenced by how, you know commercial real estate investors look at things, very detailed operating expenses. So you can see line by line, each category gets a breakdown by month. This is all clickable. So if some numbers seems out of whack, you can just click on it. And so we'll look at what was this $390 and February looks like it was travel, we click here and boom, there it is. Okay, it was a looks like a plane flight to somewhere. So it's a great way to cross check your data. By going through through your reports.   Michael: This is such a powerful report. Devin, I just want to kind of highlight this for a minute. This is one of the first things that I asked for when I'm looking at a deal to purchase is I want to see the T 12, which stands for trailing 12 months of numbers on that property. And also ask for Schedule E from the seller to make sure that those numbers are aligning that they're telling what they're telling me is the same thing they've told the government and as far as operating expenses and costs associated with the property.   And so if you're someone that's thinking, Oh, I'm you know, going to be selling a property, I might not have any use for Stessa because I'm going to get rid of that property. This could be an actual perfect case study to use Stessa because you'll be able to generate these numbers and provide these report to a potential buyer. I mean, this is really, really, really powerful because this aggregates everything that we were talking about previously, all of the property manager expenses, and combined with all the expenses that you're paying as an individual, as an owner, we get to see it all in one place. And so you can show somebody, hey, look, here's living proof of what this property, how it's performed over the last 12 months, or whatever timeline you're looking to, to acquire.   Devin: Yeah, absolutely. I mean, I would have way more confidence in a seller in a property that I'm looking into buying if they provided me with something like this, that looks professional, or all the numbers add up, and it's clear that they've been paying attention, right?   Michael: Hmm. I hate getting the handwritten stuff.   Devin: Right. You wonder well, what else has been kind of like, you know, Jerry rig here? nicest on the property. Right?   Tom: Canary in the coal mine.   Devin: I always one of the things I always look for is is what kind of conditions the mailbox in is it? Is the pole straight? Is the mailbox, like painted a new or is the thing like, all, you know, sideways and falling apart, and no one's bothered to notice?   Michael: That's a good one.   Devin: It's amazing. It's amazing how many slanted like you know, rundown mailboxes that are out there.   Tom: Kind of unrelated kind of related. I. So Have you guys heard that story about rockstars saying like in their writer, you know, in their dressing room, they only want like red m&ms or something like that,   Michael: Like being very particular about their wants, specifically for red m&ms.   Devin: This is this is a great story. This is that I think it's Van Halen.   Tom: Yes, exactly. And I think Devin, you may know, you may know where this is going. But they included this like really detailed thing and the writer kind of buried in there. And what was happening during that time, the electronics and a lot of these stages were sketchy and people were getting electrocuted. So as a way to kind of check that the venue in the team there locally, like was on their game. They had these really kind of obscure requests. And if it wasn't there, that was a huge red flag that, hey, this place might not be safe. Oh, well, we put in our contract that has to be you know, in there, or we're getting paid. So kind of similar to you talking about the mailboxes looking at these like kind of external things to making sure if there's issues there, there may be one of those things. If you find one bug, there's probably 10 bugs hidden in the wall. It was the same sort of reason. It wasn't about being a diva. It was like testing kind of testing the water for some other risks.   Devin: Yeah, yes. I remember a Van Halen specific rider was we need a big bowl of m&ms in the in the waiting room. And it's all the brown ones have to be removed. It was like something crazy like that, that they could immediately walk in and tell whether they had read the vendor had read the contract or not.   Tom: Yeah, in the mailbox. I love that Devin, like super similar. One of the things that you would, you know, easy to overlook if someone's not kind of paying attention and potential risks and other places. Love it.   Devin: Yeah, like they probably haven't maintained the HVC system either. Right? And yeah,   Michael: Yeah, that's really smart. That's really smart. But also kind of silly, because everybody knows that brown m&ms are the best. So Van Halen threw that away.   Devin: There was a cost to it. Kind of the full look at all the reports that we support at the moment. So beyond that cash flow, there's also a balance sheet, which pulls in your bank account balances and then also ties into your valuations for each property and gives you kind of a net portfolio value. You can track your your rent, roll and report out on that. So this one's helpful. If you're buying a new property and your lender needs to see all your underlying data, you can run a quick rent roll, tenant ledger, this tracks, you know, payment status by tenant who owes you how much when their last payment was scheduled real estate owned. This is kind of a full full summary of the portfolio from a high level lenders often like to see this to get an understanding of what your obligations are and what all your holdings are.   General Ledger allows you a full export of all your data line by line. And then you can do whatever you want with it and excel CapEx just what it sounds like. You can also track useful life and date placed in service there. So this is a good one to give your CPA it's pretty helpful. And then tax package is something that a lot of folks use in March and April. This runs a an email with links to all of your key reports that you can then share with a forward to a CPA or spouse or investing partner.   And then we also have a stress test, which is a modeling exercise we did during the pandemic where you can understand what would happen to your portfolio if suddenly your recollections fell to 70% of normal or 50% of normal, just as a kind of pressure test on on your situation. Tom: That's it. stress test is so cool. I mean that just kind of like speaks to the agility of the reporting in the in the company at Stessa where it's like hey, this isn't really you neat feature that could be really helpful right now. Really neat, neat, neat functionality in reporting.   Devin: Yeah, and this is only built as a as a built in model where you can actually change the inputs right here and see how it how it affects performance.   Michael: This is just goes to show you that this stessa was created by investors for investors. If this kind of stuff that you find so helpful and useful, as you continue your investing career.   Devin: You won't find this in any standard accounting program.   Michael: No.   Devin: But that's the fun thing about doing something that's purpose built for niche for an audience that you know, rather well as you can, you can get into all this more sort of esoteric stuff that that you just can't find anywhere else.   So in terms of setup, I'll jump over to the Properties page here, just a high level portfolio overview is a great sort of SREO schedule real estate owned, it shows you what's going on in terms of acquisition price, your market value, so your valuations are easily set through, you can click there and do a short cut on this to this property details page, where you can toggle between different valuations. So it's a little bit of a modeling tool here, you can enter a custom valuation. We connect to Zillow, and you can get updated real time values.   You can also do it based on gross rent multiplier or capitalization rate. Especially if you have a larger portfolio, this high level view calculated equity on these property is a really quick way to see you know, what your current status is, overall. These loan balances are tracked. So if you have your lenders connected through the automated, external account page, this will update automatically as you pay down principal.   Michael: Yeah, I've got a quick question for and this is more so for me as as kind of a teachable moment. In terms of gross rent multiplier grm. I see it all the time I see it used regularly. It's not a it's not a metric that I ever used. So I'm just curious what, you know, what people are using it for it and how it can be helpful to folks who who find it valuable?     Devin: Yeah, I don't actually see it used much on single family rentals. But I do see it on smaller multifamily properties, more sort of industry standard. So, you know, in a typical market, the gross rent multiplier might be 12, or 15. It certainly changes over time as investor return requirements change. But it's a real quick and easy way to say, Okay, let's take my current current rents, and let's apply a, you know, 12 grm. What's that imply for the valuation?   Let's say maybe this market is pretty hot, and the grm is more like 18. What does that mean for the valuation? Well, it's 982. It's a lot higher than what Zillow is saying. So it's an alternate way to kind of like check in a given market that may have a bunch of comps that support a particular range of grm. What does that mean for my property?   Michael: Got it. Okay. All right. Thanks for that.   Devin: So let's spend all the time on leases and tenants. This is where you key in all of your rental information and manage your tenants, which is a big part of owning property, right? That's where all the revenue comes from. So we found talking to investors, a lot of them, if you've got property manager, maybe you got two or three property managers, sometimes it's hard to appreciate what's actually happening on the ground, who's paid rent, who's behind. Sometimes property managers aren't always on top of it, especially during the pandemic.   So I've got overloaded try, just trying to keep track of everyone. And the leases and tenants page is easily sortable by portfolio or property. And we've got these flags here that give you a quick heads up as to who's current who's due, and in who's late. For any particular tenant, you can then dig in. And you can track a lot of detail here. So if you have complicated lease structures, where rents are changing over time, you can key those all in here going forward. You can also track phone numbers, basic contact information for reference, each lease you can renew or set as month to month. So we handle a lot of different scenarios there.   And then down here at the bottom, I think this is the most powerful part, at least in the tenants page, you get a ledger that automatically creates charges in this column based on the information you've set up up here for your reference And then all this payment data is coming automatically from the transactions page. So you can quickly see when someone got behind how behind are they, and what the total balance due here is, which is calculated right up here.   If you have tenants that reimburse you for utilities or any other sort of random expenses or damages, you can add charges. You can also add credits here, if you're say, crediting them for for something off of their rent. So that makes it easy to kind of rebalance the ledger and keep everything tied out.   Michael: This is great.   Devin: And then you also get a reference of all past tendencies. So this is great for you know, if you're, if you've owned a building for a while, you can really keep track of how rents have changed over time who was there, etc, which is something you know, new buyers, if you ever go to sell, probably want to see.   Let's see, let's also talk about document storage. So police's, mortgages, vendor contracts, all this paperwork that seems to accumulate when you own real estate. It's hard to keep track of and it's often difficult to find the right document when you need it. If a lender asked for it. You know, when does my insurance expire, these are all sorts of questions that come up pretty often. And by keeping everything in one place, it's very easily searchable, retrievable, you can look things up and keep going.   So we find a lot of investors have hundreds of documents uploaded to their Stessa account, because they just want to know that when they need something, that's where they can find it. In the past, I've had a bunch of different folders on two or three different laptops. And sometimes it takes half an hour to find the right thing. And organizing and consolidating it all on on stessa in one place. makes that really efficient.   Tom: Yeah, I love this feature, having recently refinanced a few properties and you're collecting tons of documents also going through tax time. This I love the document management part is super helpful.   Devin: Cool. So those are kind of the highlights. You know, we talked a little bit about bank and external account linking. That all happens on on this page here. And you can see we just have one demo bank account connected now. But you know, we have many investors with accounts that Chase and Wells Fargo and BofA. And then they've got a credit card somewhere else and to property managers. And you can have a lot of data connections set up here. And it's incredible how much time it saves to have that information coming in automatically, versus having to create transactions, or go through, you know, checking account statements, credit card statements, separate out which ones are you know, rental investment versus personal. A lot of that can happen for you automatically.   Michael: And Devin, a concern that I had when mint came about and any of these other companies and services were basically it aggregates data and pulls data from from various financial institutions. So you have to go put your your account information and username and password in. And so from a cybersecurity standpoint, maybe you can speak to that a little bit about folks who are entering their username and password. How are they protected against cyber hacks?   Devin: Absolutely. So we use a third party called Yodlee Investnet, who handles all the secure connections. So when you add a new bank on Stessa, you don't actually share your credentials with Stessa. You share them with with Yodlee, who does this for 1000s of companies and organizations around the world. And they go directly to your bank to access the data. So no one at Stessa can see or, or pull up credentials, it all happens through Yodlee. And then, in addition, there's a few of the major banks have moved to this new open banking standard, which which we actually really like, it's a little smoother in terms of getting the data in real time. And they also have you log in directly. So you'll for chase Wells Fargo BofA now, when you add one of those banks on stessa, you'll you'll get redirected to their site where you log in directly and then it actually establishes a connection without having to share your your credentials.   Michael: Awesome.   Devin: So I'm hopeful that things kind of keep moving in that direction. And it's more secure. It's more seamless. It's just a better experience for everyone.   Michael: Yeah, that makes total sense.   Tom: Awesome. Yeah. I mean, Mike was alluding to it earlier, like, going through it, you could pretty much tell that it's you They're not made by a bunch of marketers. It's definitely made for real estate investors. Love it. Love it. Love the demo.   Devin: Yeah. One other quick thing I'll mention is, we also have this alerts and insights page, which is relatively new. And this is where we bubble up interesting things that are happening across your portfolio. So, you know, might be something like we noticed an LTV guy is it this loan to value is pretty low on this particular property, right. So maybe that's an opportunity to refinance or, or cash out in some way, right to redeploy the equity elsewhere.   Things like expiring leases, that's another one where we've got a word set up 30 and 60 days out, so you can get a heads up on something before it's, you know, too late to reach out to that tenant or deal with the situation. And then we'll also surface interesting things about what's going on with expenses recently. And you know, we're spending a lot of time on this particular feature to, to develop even more specific insights around, okay, if certain expenses way out of whack if there's a water bill that's too high, sort of that sort of intelligence that, you know, can help you save money and things you might not notice on your own. So we plan to introduce more of these in the future.   Michael: And this is so great, Devin, and I think it speaks to what you mentioned at the beginning of the episode is that this is more of an asset management layer. And then that, you know, your property manager is not going to tell you, hey, things, you know, your value has probably increased. We're seeing a lot of comps sell higher in the area, you should think about refinancing that's kind of outside their purview. So adding a tool like this into the fold can be so helpful to have that macro level.   Devin: Yeah, absolutely. I mean, these are the things that you know, investors often reach out to other investors to understand, right, like, how do I think about hold sell? How do I think about growing my portfolio? What happens when my LTV gets so low because the value has gone up a lot? Right, like good situation. But how do I handle that? What do I do? And so yeah, Stessa does really try to focus on helping you answer those questions.   Tom: Awesome, Devin? Well, this is awesome. Thank you so much for going through this, you know, another pointer kind of feature within Stessa. That I think is really great. Is the the forum committee that you guys have set up where people can, you know, ask questions about products, they can upload feature requests, you want to talk just real quickly about that?   Devin: Yeah, sure. I can actually do a quick screenshot of that as well. I think it'd be helpful. Let me share a screen here.   Devin: You guys see the forum?   Tom: Yes.   Devin: Great. Yeah. So this, this forum is organized by different threads. We've got set up in support, we've got tips and tricks, these are kind of ways to optimize your Stessa count. bug reports. They do happen sometimes, and we really try to jump on them. And then you've got the wish list, which is very popular. This is for new feature requests. So, you know, we found that as this has community has grown, people have started helping each other solve their own problems with Stessa or get more out of the product. And it's developed into a place where investors can talk to each other directly, which is great, that was kind of what we hoped would happen.   You know, particularly things like the wish list. This is where we often go to understand, okay, what new features should we be looking at building next. So when you sort by popularity of views, all the wishlist items, you can see that, you know, back in 2020, people really wanted an Android app. So we built an Android app. Before that, people wanted cash on cash metrics. So we built that. Tenant ledger by unit status of rent payments. That's something that I shared a little while ago. So you know, we, we really like having our users, our investors involved in what we're doing. And they've been really great at it, about sharing ideas, and, and we'll often develop a beta version, and then post on the forum here. Hey, like, who wants to be part of the beta? We'd love for you to check out this feature. And I've been really pleasantly surprised at how involved people get and how much great feedback they give us that that makes us a better and more useful for everyone.   Michael: That's great.   Tom: Awesome. Well, thank you. Yeah. Thank you so much for coming on, Devin.   Devin: Yeah, thanks for having me. Appreciate it, guys.   Michael: Take care. Talk to you soon.

In episode #1804, we share four marketing traits to emulate from hugely successful businesses like Amazon, which has done a number of different things to help them grow. From obsessing about your customers to aggressive experimentation and creating lifetime value, we've got some key advice to help you grow your business! Tune in today to learn more! TIME-STAMPED SHOW NOTES: [00:20] Today's topic: 4 Marketing Traits to Emulate from Businesses like Amazon. [00:29] The first trait you can emulate to help you grow: obsess about your customer. [00:48] An example of how adding reviews helped Amazon build trust and increase revenue. [01:19] Trait two: prioritize learning over profit in the early phases of your business. [02:22] Trait number three: optimize for LTV or life time value. [02:59] Last but not least, trait number four: cultivate company culture. [03:40] That's it for today! [03:41] Go to marketingschool.io/live to join our virtual and live events.   Links Mentioned in Today's Episode:   Amazon   Leave Some Feedback:     What should we talk about next? Please let us know in the comments below Did you enjoy this episode? If so, please leave a short review.     Connect with Us:    Neilpatel.com Quick Sprout  Growth Everywhere Single Grain Twitter @neilpatel  Twitter @ericosiu