Startup to Last

It's impossible to cover the entirety of this topic in one episode, but there were some key takeaways that should apply to pretty much any startup:A financial model is something that takes inputs (e.g. historic data and assumptions about the future) and gives outputs (e.g. how much money might you make this year). It can be as simple as some notes on a piece of paper, or it can be much more complicated.There's no standard model that everyone should follow. The key is to figure out what questions you have, and build a model that will answer them.In some cases you'll want more than one model. For example, you might make a specific model to help predict what your customer acquisition could look like in the future, and then use the output of that as an input of a higher-level model predicting what your overall profit might be.The complexity of your model probably depends on the complexity of your business. Don't compare yourself with other companies.Having said that, you might find the process of building a model helpful as a way to force you to think through your business.If you're trying to raise money, your model needs to communicate information to them which you might not otherwise be interested in. Things can get more complicated at that point.Understanding all of the above, building a model is just a matter of opening up Excel, entering the inputs, and doing your best to generate reasonable estimates for the outputs. Each model is different, so it's hard to be more specific than that.

We considered having this conversation privately, but since almost every business should have a conversation like this, we decided to record it in the hopes that the discussion is helpful for others. As expected, this ended up being a bigger topic than we could cover in a single episode, but we did start narrowing down on some ideas and constraints around the idea of starting up to last:Traditional entrepreneurship is already set up well if your goal is to become as rich as possible. Startup to last companies should probably have some other motivation such as enjoying the work, feeling fulfilled by the impact the company has, etc.Despite needing to be motivated by something other than money, sustainability is key to survival, and that means that every business needs to at least make enough money to make it worthwhile for the founders. That's the first priority, and then once that "enough" number has been reached, it's time to start focusing on non-monetary goals.It's only possible to run a company this way if all shareholders are on board. It's not hard to get founders, employees, and customers aligned. It's harder, but maybe not impossible, to get investors on the same page (venture capitalists specifically are unlikely to want this approach). This is why bootstrapping is common among these types of companies.Because the goals of startup to last companies are different so are the rules. We didn't get too deep into how this might impact how you operate the business, but there's a lot to discuss there.It's helpful to think about the company as a place you'll work for the rest of your professional life (even if that's not true). That will help you prioritize sustainability, enjoyment and fulfillment. Companies that expect to exit soon can justify burnout-level work environments because they know it doesn't have to last.

Takeaways from our conversation:Starting a new job is stressful, and one of the main goals should be to make the new employee feel safe. One way to do this is to set expectations are that (a) small enough to be achieved over a short time period and (b) not related to actual job performance at first.In the case of LACRM, expectations will be set around trust. The goal of the first month is for the new hire to feel safe and trust the rest of the team and the company. This way they know they don't need to worry about their job performance during training.It's valuable to give new hires a lot of context about the business (e.g. the history, who you serve, why, etc.) but this can be hard for employees to retain because they're learning so much at once. One way to help with this is to build everything into the same narrative.In the case of LACRM, because "trust" is the theme of onboarding, it might make sense to center all the other company lessons around that same concept. Instead of teaching new hires about 20 random concepts, explain how each of those concepts leads to trust.Most importantly: explain to the new hire why you're doing things the way you are. Just giving them info won't be helpful (and might actually be hurtful) if you don't contextualize it. This should be a topic for the first day, or maybe even before the first day.In the case of LACRM, focusing on trust might actually give new hires a reason to distrust the company if it's not explained why trust is so important (they might wonder what happened in the past to cause trust to be such an emphasis).

This week, we wanted to take some time to reflect on what happened in 2019 and set goals for 2020. We created a series of questions that Rick and Tyler both had to answer. Here are the answers...What happened in 2019?In our personal livesRick: Took 7-8 months of to figure out who he is and what his goals are, especially with his new marriage.Tyler: Figured out a sustainable dietIn our professional livesRickFigured out what he wants to do after leaving his previous job of 11+ yearsStarted LegUp Ventures which is a holding company for his various ventures:GroupCurrent - Outsourced member managementStartup to Last - This podcastRickLinquist.com - Rick's personal writingLegUp Health - Reducing healthcare-related anxiety for people without job-based insuranceTylerStarted the year working on a new project called Sparse which was abandoned in FebruaryThe rest of the year was spent on a major redesign of Less Annoying CRM which included two major new features: Custom fields and Outlook Calendar SyncThis was the best year for the LACRM product teamBiggest accomplishmentTyler: Finally built a real product team at LACRMRick: GroupCurrent turned around the business model of their first client and got it to sustainabilityBiggest disappointmentTyler: Sales in the second half of the year were below expectationsRick: Wasn't thoughtful enough about getting his wife's buy-in when starting his new venturesLooking forward to 2020Personal goalsRick: Get to a point where he and his wife feel comfortable having kidsTyler: Get a dogHigh-level professional goals / the theme of 2020Tyler: Continue the product teams momentum and establish a rhythm of regularly shipping updates to LACRMRick: Calm growth. His life is calm right now, and as his ventures pick up, he doesn't want that to change.Biggest worries / what's keeping you up at night?Rick: Making enough personal income to be able to sustain his venturesTyler: Growth at LACRM needs to pick up eventuallyThree specific goals for 2020TylerExercise moderately three times per weekWrite code once per weekBy the end of the year, average 50 paying users per month joining LACRM through the referral channelRickPlay more sports. He has an exercise routine, but it's boring and doesn't involve games or playBe ready to start trying to having kidsGet distribution revenue from LegUp Ventures to $10k/monthShared goal: Get this podcast to 250 subscribersMake a prediction for 2020Tyler: Starting a software business without venture capital will become much more mainstream over the next yearRick: An all-in-one leader will emerge in the no-code industryWhat do you want to read in 2020?Rick: Too many to name, but wants to read a lot about emotions.Tyler: The unicorn project and Obviously Awesome

Takeaways from our conversation:In the early days, a founder can easily offer great customer service just because they're an expert on the topic and are empowered to solve every problem. Rick doesn't need to worry about this at first.For a low ARPU (average revenue per user) product, it's best to think of support reps as "coaches" so they can be more proactive and replace other functions such as sales and customer success. It's not viable to have separate teams for each function at a low price point, nor is it desirable.Rick's first move should be to do all the coaching himself until he has it systematized. Some of it can be automated with things like tutorial videos, but some of it will need to be manual.Once he knows exactly how to manually provide the best coaching and he has enough customers that he can't handle any more, it will be time to start building a team.Offering great customer service for a low ARPU product will hurt margins. This might mean that certain investors aren't interested in the business, but it's still possible to be profitable enough to bootstrap.

In this episode, Tyler gets Rick’s advice on how to think about redesigning the Less Annoying CRM marketing website. Here are some of the takeaways:There are different types of website redesigns, including:AB testing (iterating pages on the site based on performance).Style update (updating the CSS, or look and feel based on a new brand style guide).Restructuring the site (changing the site navigation and pages to better accomplish objectives).Rebranding the site (changing the brand name and/or positioning of the site).You want to do the minimum necessary when you're redesigning a website. Figure out the smallest thing that you know you need and just go do it.If you can get away with basic iterative AB testing, that's awesome. It means you're in a really good place. If you need a whole rebrand, figure out how to do it as quickly as possible because when you're going through wholesale changes, it's messing with reporting.When doing a redesign consider the following questions:Is my brand name or positioning changing?If your brand name is changing, you may need to consider transitioning a new domain. (Note: This comes with significant search engine optimization challenges.)  If your positioning is changing, you may need to review copy on all of your pages. (Note: This might impact SEO if the copy changes are significant.)What are the main functions of the site and are they changing?Is it for users to login?Is it to generate leads?Is it to convert free trials?If the functions are changing, you may need to restructure the site (Note: This can impact SEO in a big way if you are onsite links or removing pages).  How complex is the site?How many unique pages and designs are there on the site?Can you get away with designing a few templates and applying them across multiple pages?Or, is every page unique?More complex sites taking longer to redesign.Does look and feel (style) need to change?Do colors need to change?Do fonts need to change?Do page layouts need to change?Do UI components need to change?It’s OK to prioritize a redesign based on a standards without data proof.At the end of the day, if brand is important to you, it's important to you. If you're failing on your brand promise or standard, that's going to keep you up at night and that's not healthy. Just go fix it and don’t waste time trying to justify your brand standards.What else would you add to this list?ContextTyler: So what we're going to talk about is ... I'm actually interested, I'm not entirely sure where this is going to go, but Less Annoying CRM, my company, just did this big redesign that I keep talking about, but that was just the app. So when a customer logs in, the experience they have in the logged in part of it has been redesigned. The other stuff, what I'll call the marketing site here, still looks like it did four or five years ago. And so there's this big mismatch between the, first, impression a customer gets when going to our marketing site versus the actual polished and good design that they get once they log in. So we're basically trying to think about some kind of a redesign of the marketing site. This could be really, really small. It could literally just be like go in and make some CSS tweaks, but leave everything else the same. It could be completely, from the ground up, rethink what this website should even be, think about SEO, switch to a content management system like WordPress or something. It could be as big as we want it to be. So that's basically what we're talking about here. I have a little more context, but maybe what I should say is just what I'm hoping is we can talk through, A, how big of a project should this be and then, B, we're not going to plan the whole thing out in this next 40 minutes or whatever, but where should I start? What should some actions be that I can take to really get moving on this project?Rick: Yeah. So I'm interested in what problems you need to solve by doing this. It sounds like you're mostly concerned about more of a brand consistency or user experience consistency more so than anything else. I'm not hearing, "Hey, we need to get more leads," or, "Man, people are complaining about the website." It seems like it's more of a personal, "Hey, this website is no longer up to my standard," type thing.Tyler: Mm-hmm (affirmative). There's definitely part of that. And, yeah. I'll say, I'm really skeptical about a lot of marketing. I think 20% of marketing is super valuable and critical to a company and I think a lot of it is just a bunch of overpaid people in suits being like, "Oh, your font doesn't communicate the trust that you're ..." Nobody cares about the font. Shut up. So, yeah. I don't want it to be what a marketing agency would turn this project into. The way I look at it is, it's kind of like if you're single and you're dating and you go to a bar to meet somebody, you know that the things that matter are personality and trust and all this, but all you can see is their physical appearance when you walk into the bar. And so people naturally tend to overemphasize that when it comes to first impressions. The same thing is true with a company. Just the other day, actually, for my wedding, I had to get insurance for the wedding and our wedding planner sent us two websites. I went to both of them. One of them had not been redesigned in a decade and one of them looked nice and I was just like, "I have no information here. I can't tell which insurance is better, so I'm just going to go with the one that looks like a more professional company." So that's really what I'm going for is, once someone uses our product, they like it, we treat them well, everything goes well, the personality stuff in the dating analogy is good, but we need to put on a little makeup and actually try at the bar if we're going to get these customers in the first place.Rick: So it sounds like your main concern is what's the first impression people have of Less Annoying CRM when they come to your website.Tyler: Absolutely.Why is this a priority right now?Rick: Okay. So flying up a little higher, just for context, why are we talking about this right now over some other priority? Why do you feel like now is the right time to worry about the first impression?Tyler: That's a fair question. It's possible that it's not. I would say that, probably two years ago was the right time, but the reality was that the app would've let down that first impression either way. So I think it's just, now that the app looks good, I don't think ... Redesigning the app was a nine-month project. I think redesigning the website could be as little as a one-week project. And so I just feel like it's kind of low-hanging fruit because we've done the hard part already.Rick: Interesting.Tyler: But, yeah. If it didn't happen for the next six months, I don't think there would be any real consequences.Rick: Have you talked to any new users who've gone through the existing marketing site experience with the new interface?...

In this episode as part of some research for his next book, Rick interviews Tyler about his experience with emotions in the Less Annoying CRM workplace. Here are some of the takeaways:There are frameworks out there for emotional intelligence, self-regulation, but there isn’t much stuff out there about how emotions impact company culture, team performance, and leadership.There aren’t a ton of CEOs talking about their own experiences.Most of the stories out there are from therapists about their anonymous clients.There isn't agreement on the definition of emotion.One model is Robert Plutchik’s wheel of emotions (see image below) that defines 8 primary emotions: joy and sadnessanger and feartrust and disgustsurprise and anticipationA leader who priorities trust may be more likely to create a safer culture where people are free to express their emotions.This makes it so that the emotions that you and other people experience happen in a way that is healthy, and has a mostly positive impact on other people (and  team performance / culture).It also makes it safe for everyone to inquire about clarifying the meaning of each others’ emotions (instead of making assumptions).When you're in a distrusting situation, emotions are probably more violent in a negative way.Trust relies on character and authenticity.You might experience trust when you see someone do something that's not in their own best interest, but they do it because they think it's right or some set of values.Competence may also play a part.Distrust leads to distrustIf you hire and keep people who you don’t trust, it can lead to a negative cycle of distrust.One source of potentially negative emotion for leaders is the time between becoming aware of a problem and figuring out what to do about itIf you have don’t have a high-trust environment, this can be a risky time period when emotions might be misinterpretedAnother source of potentially negative emotion is when an employee leavesWhat else would you add to this list?Source: WikipediaContextRick: It's my week for the topic. I don't really have a critical problem per se to bring you that I want to brainstorm with you, at least not more important than what I'm bringing to you today. So taking a slightly different approach with the topic I'm bringing, and it could be a total bust, so I'm prepared for bad feedback from this from the audience. But maybe this works. I guess listeners out there, if you listen to this and you don't get value, please tell us so that we don't repeat this. But if you do like it, please tell us because we'll have more confidence covering topics like this in the future. Now that I've got my writing cadence going at RickLindquist.com, I spend two to three hours every morning before 9:00 AM researching and writing about a topic of my choice. My goal is not to just throw out content, it's primarily learning through the process of writing. And so I want to write a book about emotions, leadership, and teams, and I'm starting to outline that book in terms of what would the table of contents be so it can drive my research. Because I'm going to be learning a lot as I go because I'm not an expert on emotions by any means, I know that the specific angle I'm going to take and the specific outline is going to change over time, but I hope that by constantly revising the outline based on what I'm learning, it can drive my short-term and short-form writing on a weekly so that I'm killing two birds with one stone. I'm writing and fulfilling what I want to do at RickLindquist.com in terms of outputting content, but I'm also learning the things necessary as part of research for this larger book. It may take me a whole year to write this thing. It's just a question of putting a couple of hours in a day most days. I started this week researching emotions and building the outline. I'm stunned at how little agreement there is on how emotions work and how they impact people. Most of what I'm reading is research and academic papers. I have not been able to find a ton of CEOs talking publicly about the role of emotions in leadership and in teams. Kind of coming back to listeners out there, I personally think that this is a topic that we all need to talk about more because I hypothesize that we can become better leaders if we're more in touch with our own emotions and others' emotions because it's the basis for how we form trust with our strong relationships. And trust is the ultimate success factor for a highly functioning team. But I'm trying to do research. I'm having trouble finding like layman's explanations of the stuff with consensus. I was hoping today that I could, I don't want to say interrogate, but I kind of have a feeling that I need to ask you some tough questions. I want to ask you some tough questions about your experience with emotions, both from how they happen in your head and within your body, as a leader and CEO. Then also, how you react and observe and handle emotions of team members in the day-to-day stuff. We've talked offline I know you've, we've talked offline and made sure that was okay, but is there anything that's off limits in terms of asking you questions?Tyler: No, I mean there might be ... I'm happy to share my own experiences and I might be a little more secretive if I feel like I'm exposing something about someone else who hasn't necessarily given permission. But for myself, now I think I'm an open book. We'll see.Rick: Yeah. Cool. Listeners, I think that the other thing that we want to do here is I want to model talking about this openly, so I'll also jump in with my own insights on emotions. I'm a pretty, in terms of like emotional spectrum, I wear my emotions on my sleeve much more than Tyler does. Not to say that we're both not emotional people, it's just we may have very different experiences with emotions because of our personalities. I'll jump in when I can add a personal take. Would you add any anything?Tyler: I'm curious here, so I don't hear people maybe using the word emotions a lot, but I hear people talking about m...

In this episode, Tyler seeks Rick’s advice on how to plan the Less Annoying CRM product roadmap for the upcoming year. Here are some of the takeaways:Product roadmap planning is easier when you are able to align to clear company goals and constraints. In this context:Goals = what you really want to accomplish during a time frame. E.g.:“Increase signups from word of mouth”Constraints = the things you aren’t willing to ignore / don’t want to drop while you’re pursuing your goals. E.g.:“Spend 10% of development hours paying down technical debt”Take time to make sure employees are bought in to the company goals and constraints prior to planning the product roadmap. One way to do this is to include employees in the prioritization and trade-off process.Company leaders often go through a number of change cycles and trade-off decisions when setting company goals. If you can allow employees to have a voice in these trade off decisions, they are much more likely to buy in to your prioritization decisionsWhen you get to product roadmap planning, allocate resources based on your company goals and constraints. Once you’ve addressed your constraints, ideally you can put all of your remaining resources toward the company goal(s). Common (non-outcome-based) allocation buckets include:New feature developmentImprovement to existing featuresBug fixesPaying down technical debt(Note: if you can logically bucket roadmap items into specific business outcomes tied to your company goals and constraints, do it)It's nice to think, "What's our top priority? We're only going to work on that." But, even at a one-person company, this is likely unrealistic. You lose momentum if you ignore parts of the business and this could get you in trouble.Setting constraints on goals is one way to address this problem.What else would you add to this list?ContextTyler: What we're going to talk about is basically the... Like any company, there's a lot of different things I want to work on next. We're finally at the point where we have multiple developers so we can do multiple things at once, which is not really something I've been faced with much in the past, and I'm trying to figure out how to prioritize different categories of things. One category is building totally new features. That's the sexy, fun-to-announce type of thing, like, "Here's something the software can do that it couldn't do before," versus improving existing features in a way that customers care about versus improving features in a way that customers won't even notice, but the idea of paying off technical debt or something like that, so, a bit of context here, we're finishing up this redesign, and, in a couple months, we're going to have all four developers plus myself moving on to other things, and basically, while we've been doing this redesign, which took almost all year, we've cut a lot of corners. The goal is to get it done as quickly as possible. There's a lot of stuff we want to go back and fix. This is normally referred to as technical debt. We have a lot of ideas for just minor tweaks to our current products that our customers would love, little one-week, two-week things, but we could do it for a year and not run out of ideas there, and they're just slam dunks, makes the product better, and then there's the go-out-and-really-do-something-new that our product doesn't currently do and maybe have a bigger splash, but it's a little more risky, so, yeah, I'm interested in basically just, A, figuring out what should I be doing, but, B, coming up with a framework for how I should think about this in the future.Rick: Yeah. What timeframe are you thinking about? Is it over the full course of 2020 starting in January? Is it next month for a couple of months? What are you thinking?Tyler: Probably, I think, the next six months. January through June, July would probably be a good... planning the most immediate next things, and then I'd like that the framework I was talking about can inform once... In April or May, when we start planning the next six months, I'd like to be able to apply that framework again.Rick: Makes sense. How have you gone about this in the past?Tyler: I just haven't. Partially, I've been very undisciplined about it. It's gone fine. It hasn't been a problem exactly, but, normally, there's just an obvious next thing. Having said that, it's not clear that the obvious next thing is actually the right next thing, but, in the moment, it's like what piece of software, what piece of our product is clearly the worst thing, that's normally what's going to get the most attention.Rick: It sounds like you want to add some discipline to your planning process and then you also, it sounds like, have some capacity to do more than one thing and in terms of you have more developers that are fully up to speed and capable that you can put on different things and get more done.Tyler: Yeah, absolutely, and so one of the reasons I say I've never had a system for this, we haven't launched a totally new, little features, but like a new major thing in maybe since 2014 or something like that. The last several big projects we've done, we're just redoing things we already had, so we redid the calendar, we redid custom fields, we did a redesign, so, yeah, it's weird having the resources and say, "Should we actually start adding to the functionality?"What are the company goals?Rick: This was a big challenge for me. I went through a similar transition from Zane Benefits to PeopleKeep. At Zane Benefits, it was very much a... I was the dictator of what got done on a monthly to quarterly basis, and there wasn't this engaged planning process that we thought about things over a long period of time. When I got money to fund PeopleKeep and hired a new CTO for that, he brought a whole nother mentality around roadmap planning and thinking through, and the... one thing that was really hard for him to do a good roadmap on... the situation that made it very hard for him to do a roadmap on was a situation in which I hadn't clarified the company goals for the year, so, I guess, what the... where I would start with this is what are the... If we look at the timeframe for a year from a company perspective, at the end of 2020, when you're looking back, what are the things you want to have accomplished and how will you have measured that? That should drive the first six months of the product roadmap.Tyler: Yeah, so, if I only get to answer one goal, I want 2020 to be the year of the referral. I want it to be word of mouth. We talked about this in a podcast, I don't know, a month ago about how I was thinking, and I had some questions around referrals and word of mouth. From a business standpoint, I want to make that better, but I also think products can have a big role in there. Now, having said that, I've been making a fair number of implicit or explicit promises to the dev team about it's okay to cut this corner, we'll come back and clean that up later, so I have other concerns beyond just this one big goal, but that's the biggest thing.Rick: Yeah, and are...

In this episode, Rick seeks Tyler’s advice on how to approach consulting on the side to fund LegUp Ventures. Here are some of the takeaways:If you need the money, you’ve got to consult or get a jobAin’t no way around itConsulting can be preferable as you have way more flexibilityIt's way easier to bootstrap with consulting as your source of money versus a full time jobYou hourly rate as a consultant might be higher alsoBe proactive about consulting.(Don’t want until you need the money)View consulting as protection for your business —> it will help you sustain your startup while you’re searching for a repeatable business modelConsulting helps avoid putting negative pressure on your startup to generate cash when you should be focused on learningFigure out how much you need to make consulting for the year so you can focus on a specific numberThis number is totally dependent on your personal goals and constraintsThen, decide how to approach projects There are two core approaches: 1) big project chunks, and 2) smaller, consistent retainer workConsider getting a job or consulting project in an area that will help you learn or hone stuff related to your startup(e.g. skills, know-how, etc.) I.e. Get paid to learnNote that there's probably an inverse correlation between how much you get paid and how much you're learningIf you're learning, it means you're not already an expert at it and they're probably not going to be willing to pay you as muchWhat else would you add to this list?ContextRick: Yeah. So, I think this is a question that a lot of people probably face when they're trying to bootstrap. Obviously, if you're ... maybe not obviously, but if you're trying to build a venture backed business, this may not be an issue because you're going to go raise money so that you have runway to deal with things, but when you set a constraint on, hey, I'm not going to raise money or I'm not going to raise ... I'm not going to raise money ever or I'm not going to raise money until a certain milestone is hit, like I've set, which is, I don't want to raise money until after product-market fit is reached, which I consider to be a pretty high revenue base, hundreds of thousands of recurring dollars per month.Tyler: Per month?Rick: Per month, yeah. It's a very high bar for me.Tyler: So, you're saying like where Less Annoying CRM is right now, you want to bootstrap to that point?Rick: Yeah. I think you have product market fit.Tyler: We've had product market fit for like nine years.Rick: Not by my definition.Tyler: Okay, I got you.Rick: Yeah. But, maybe like you've had it for a couple of years, maybe not nine years, somewhere in between there. There was some level where you hit it probably and you've been slowly increasing on top of that. You and I are different, I would probably say, somewhere in the last four or five years I probably would've said, hey, let's go raise some money.Tyler: What's the reason to wait that long? Well, sorry, why don't you intro it and then I'll get to my questions.Rick: Yeah. This is a whole mentality. So, this is my weirdness. I'll hold off on why that's the case. So, one constraint is, I'm not going to let myself raise money until I reach a pretty high proof of real business threshold. So, that means that in order to fund things, I've got to have cash available. I also have a constraint on my own personal life where I'm not going cash flow negative on this. So, that's a big thing where it's like, I have a pretty nice life style, I'm not going to let that life ... I'm not going to downgrade the lifestyle and I'm not going to allow that lifestyle to be a negative cash flow, personally. Okay? So, this means a couple of things. One, it means LegUp has to pay me money, right? From the get go. Two, it means that leg up has to make money in order for me to pay that. So, it's not like I can go raise money and then start paying myself money. LegUp's actually got to produce revenue. The quickest way for me to produce money is to sell my time. I have some expertise that allows me to sell time at a pretty high ... the metric I talk about in this case is return on time. I have a pretty good return on time invested, but it comes at a cost to me working on some of the early stage ventures I have going on in terms of focus and energy that I have to go after them. So, when I do take on a consulting project, it's generally a larger project and it takes a good bit of my focus and energy which means a lot of my other initiatives slow down. But, they're very lucrative and they give me a lot of runway when they happen. So, context, when I started Leg Up this year in June, May or June, I actually started it for a couple of consulting clients I had and then added a third and basically those consulting clients have been enough to pay my salary that I've been paying myself from Leg Up for this year and I haven't consulted in a few months and it's allowed me to have pure focus on the ventures that I've created. Now, I've gotten spoiled. Okay? So, I've really enjoyed having basically being able to set my week every week on what I want to focus on, but as I plan ahead, I'm realizing every time I put pressure on a venture to make money faster than it will just naturally happening by just continuous improvement processes, it gets less fun and it also leads to, I think, bad long term decision making. So, while I want to focus on these things and maybe move faster, if I do my constraints, it's going to put pressure on these ventures producing cash faster than maybe that is good for them and could lead to worse longer term outcomes and then on the other side, if I go consult, it takes all the pressure off of cash, but slows down progress and if I had to make a decision today just to give you an idea of where I am, I know I should go probably plan on consulting and then it becomes a question of like, okay, I'm going to go consult, how much do I need to consult? Do I front load it for the year and just work my, pardon me, ass off for like three or four months?Tyler: How offensive.Rick: Well, I just wrote a pretty sensitive article on the Church of Jesus Christ of Latter-day Saints, ie Mormons.Tyler: You're trying not to use naughty words? Okay.Should I consult?Rick: Yeah. Bad words. So, anyway, summarizing, should I consult? If not, tell me why. I would love to hear your perspective. If so, how much. I'd love to brainstorm I guess. If we decide yes, I should consult, I'd like to just go into how best to structure that, is it small projects that kind of continue throughout the year? Is it a couple big projects front loaded at the beginning? Like I did this year. I'm interested in your thoughts.Tyler: Yeah. Okay. So, I'll start...

In this episode, we discuss how to think about positioning, packaging, and pricing a second product when you have an existing customer base. Here are some of the takeaways:Be clear about the primary reason you want to add a second product.This will impact how you package and price the product. Is this the right thing for the business and for your customers?Or is this about you and what makes you happy? Is your goal to expand customer acquisition?It might make sense to package the product on a stand-alone basis.If you take a stand-alone product approach, recognize that it may be more work.Positioning will be harder.You may have to build additional infrastructure.It also might make sense to give it away for free.Is your goal is to retain more customers?It might make sense to include the second product with current pricing.Is you goal is to increase revenue per customer?It might make sense to offer the second product as an add-on.If you decide to take an add-on approach, recognize that it may be harder to maximize the price. An add-on probably shouldn’t be 100%+ of the base price.You’re probably looking more like a 50% up-sell opportunity.Or it might make sense to package the second product as part of a second, higher tier of pricing.Are you just bored and wanting to build something to satisfy a personal craving?It might make more sense to do the product as a side thing.What else would you add to this list?ContextTyler: To the deep dive topic here. So this is an issue I'm thinking about right now and it's basically pricing a second product. I have a first product... Let me get a little context on what we've got right now. So like I said, we're 10 years old about. Our product has always been $10 per user per month. I know a lot of people would say that's too low or whatever, but we're pretty entrenched in the lower tier of the market at this point. And we've grown to 22 thousand paying users. So we've got a pretty big customer base, at least relative to what we used to. The plan from day one was build a suite of products. Our name is actually Less Annoying Software, not Less Annoying CRM. That's just the first thing. But we expected probably a year or two in launch that second thing and a year turns into 10.Ben: Turns out every 10 years you get a new something.Tyler: Yeah, exactly.Ben: Something less annoying.Tyler: By the time I retire we'll have four products.Ben: Okay.Tyler: But yeah, I think we're finally at a point where our dev team's big enough. We can peel a few people, maybe two people off and launch something new. When I say a new product, I think the idea is it would be within the same app. So one login, one billing system. But it's like, do you want the CRM or do you want both of these things? Or maybe the other thing standalone, depending. Most likely, we surveyed our customers, did a little customer research. I think the thing that's low hanging fruit to get our current customers to buy something else is an appointment scheduler. So a Calendly type of thing. And then we could grow... We have a lot of ideas beyond just appointment scheduling, but kind of starting there and building it out. So what I'm interested in talking about is A, general structures for, it's one thing to price one product, but when you have this idea that I want to sell two things to the same group of people, the right structure for that. I'm less interested in the number but more the, is it a bundle thing, is it a la carte? What if we had a third product? Kind of general structure stuff to this. And then a few things that have kind of been on my mind to consider here is should we be prioritizing getting our current customer base to upgrade versus treating this as a channel for getting new customers? Should people be able to buy this new product on its own? Obviously all else being equal, it'd be nice, but is it worth the effort versus just upselling our current people? And then should we be thinking about a third product or should we basically just say, it took us 10 years to get to our second one, it would be stupid to base any decisions we make right now around the idea of a third one coming out. So, that's a lot. But those are some different things to chew on here.Ben: Is this product done, like you're already committed to this decision? This is a thing that's happening?Tyler: No it's not. We've done a fair amount of validating it with customers. We have not built anything yet. I should say, one thing, that not all CRMs have this, we have a fully functional calendar with all of the functionality you get from Google or Outlook or something. So we're in a good position to build calendar related tools, but we haven't actually started this second product, no.Ben: What's the motivation behind adding another product?Why are you building a second product?Tyler: A couple. One is the unit economics of the business could get better. You could say just raise the price on the existing product. That would certainly work from a... If a private equity firm bought us, that's what they would do and it would work. We have certain other interests and I take a lot of pride in serving the low tier of the market that a lot of other SaaS companies don't care about. So I want to be able to improve our margins without raising prices and that's one way to do it I think. Another thing is I do think that our customers... I don't know, I feel like software goes in cycles between everything being bundled together and then everything unbundling and being a bunch of different tools that integrate together. And we're in a very unbundled phase right now and I think a lot of value could be provided by going back to bundling here for our customers who are not tech savvy and really just want one clean experience. But that's a fair question. Do you think that maybe we should back up even more?Ben: Oh, I mean, I don't know. Maybe. You did say you don't want to raise the prices, but if you roll out a new feature and say this new feature costs extra money, you haven't exactly raised the price, but you kind of have. You're... Yeah.Tyler: Yeah. The standard I was hoping to hold myself to here is basically, if there are standalone products that sell just this thing, I can call it a different product, but if it's like this is clearly dependent on the CRM, that would be included in what we already offer. So for example, if we add our... Yeah, go ahead. Sorry.Rick: Oh sorry. I interrupted you.Tyler: I was just going to say if we add a little more reporting to how our pipeline reports work, I wouldn't charge more for that. But if we say, "Well, now there's an email client built in," I think it's pretty justifiable to say that's a different thing.Rick: Do you have a way you're leaning right now in terms of, without us talking about today. If you had to make a decision today, what would you roll ou...