https://www.listennotes.com/e/1c54d168518f4ca48fcf5d00e6e3facc

You really have no idea how big the thing is you're working on until you throw it out there and see what the adoption is. If your startup is stuck at a couple million ARR, it's probably something radically different that's going to get you to a true product market fit rather than just like incremental feature building, like trying to outdo your competitor or something like that. I think you need very strong word of mouth to make anything else work. 'cause I was trying everything and the conclusion they came to is like, the people who can afford to buy these Facebook ads are people who already have word of mouth and people are hearing about it everywhere. And then the ad shows up and somebody clicks through. The only thing you should be doing until you are getting referrals that you are not asking for many every week is talking to prospects or customers or writing code. If anyone is doing anything else, you are wasting your fucking time and money. You heard it here first. so that is a public service announcement. Yeah, we're gonna do 14 million of profit this year. And if we plateau, I don't care. That's product market fit. Product market fit. Product market fit. I call that the product market fit question. Product market fit.

Product market fit. Product market fit. Product market fit.

I mean, the name of the show is product market fit.

Do you think the product market fit show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests.

Guests.

Thank you. Adam, welcome to the show, dude.

Thank you, Pablo.

Happy to be here. Dude, so, I mean, I found you on LinkedIn, as I'm sure many people do these days. And one of the posts I saw a few weeks ago, I think it's probably a perfect starting point because it just gets us into this idea, like you're one of the kind of, you're big into bootstrapping, right? And I think this post kind of does it justice. So maybe tell me that story about, you know, it's, it's about kind of, some guy who's doing like this big VC thing, trying to hire you seven years ago. I'll stop there, but you can, you can tell a story better than I can.

My first startup, I was able to bootstrap it, but it got stuck at 3 million ARR and, you know, it was cash flow positive, but it wasn't growing. And it was really a, I mean, that's, it's just like emotionally as an ambitious person, that's kind of a tough spot to be in. It was like not growing, but it was like, you know, if you're not growing in tech, you're dying, right? So like, I was in this position where I knew I needed to do something bigger for myself. And, you know, I've kind of like always been very transparent about my, everything's going on to like me and my friends. Um, and I had a buddy who, who, he started to start up around the same time as me. He raised round after round after round. you know, after a few years, I realized it was because he had never really had product market fit and he was just like selling a new kind of like seed stage dream to like a different investor and went to Stanford, super smart, he could talk to anybody. And then finally he stopped working, right? Like 12 years in, there is, I think $35 million, their families put in a million dollars each of their own dough. And like finally he couldn't do another round, right? So they just wound it down. in the middle, there was a point when I, you know, I was just lost in my entire life, not just my business life. And he was like, dude, like, you know, you're a former trader, like, we want that skill set to like run this employment marketplace we're doing or whatever. Like, you know, they just did a big round. He's like, that's what Uber did. Come do it for us. And I was like, no, like, I have my own startup. Like, and then he's, you know, there was this back and forth over email that I pulled up before I wrote that post. and the dude sitting there, like, accusing me of not being ambitious enough, you know, because, like, my. He's like, what do you want from your life? I'm like, honestly, man, my dream is like, I'd heard about this guy, and, and my co-founder used to work for him named Ross Paquette from Maripost. It's like an email marketing automation platform. And he got his business. He was a sole founder, owned all the equity, got his business to 30 million ARR and was banking 20 million bucks every. and it was stuck. But who gives a shit, right? I mean, he was miserable because he wanted to be Salesforce or something like that. But relative to my situation, I was looking at that going, I don't see anyone else doing that with software businesses. And I had a hard time envisioning at that time the unicorn thing for myself, but I could totally see getting to a few tens of millions of revenue and running it super lean in you know, having one of these, like, best lifestyle. But when you say lifestyle business, you think of something like my first business, 3 million ARR, you know, a million and a half bucks gets split between two or three founders and, like, everybody's happy, quote unquote. But, like, you know, that, that other end of the spectrum, like, you know, if you have 20 million of profit and you're splitting it between two founders, like, that's a really different thing than, than, you know, that, that's like, that's like a bigger secondary round than most founders ever get to take. that's happening to you every single year, you know? So I was kind of, I got pretty obsessed with this idea and I had like no idea how I was going to get there, but I literally wrote it down. That was like what I wanted. And this was, it was crazy to think that it was still years away from even being, like it all spawned from this retention.com, which used to be called Get Emails. And like it would, when I wrote it down, it would still be 24 months before I even like started that company, you know? So I was just in the middle of this totally stuck place. you know, this is why this guy's calling me out for like not being ambitious enough and not like, you know, wanting to like, he's like, that's not a big enough vision. By the way, I was also an angel investor in his company, right? So like, I got the disillusion papers, right? Like, I got the disillusion papers the first month that we actually made $1,000,000 of profit in a month, you know? And like, we're still friends. I saw him, I went for a run with him yesterday. Point of the story is like, he is definitely not, you know, he's got a wife and two kids. Like he's, he's, he's starting over right now. Like he is not saying that I am not ambitious enough anymore. You know what I mean? Like that is not, those are not words that are leaving his mouth, right? Like, in the long run, you know, stacking profitable businesses on tap, on top of profitable businesses versus his path, it's just night and day how much better it is for, for, for me. I mean, it just really is clear when you like look at those so.

I would say, I remember when I was a founder, like the thing I paid attention to and, you know, maybe I was just dumb, but I was young, I was like, you know, early twenties. But the thing that's hot is like, you see some company raise like $10 million, right? Like especially when you see like obviously companies raising way more, but like that's kind of where your mind is like those people that are raising, that are getting that like $10 million series A. And, you know, what I've come to realize is, you know, you're jealous of the person who raised a 10 million series A until like you're the person who like bootstrapped to 10 million in revenue. And then you're just laughing because you kind of can't lose if you get there. It's a lot more pain upfront because, you know, you raise two, three million, you pay yourself like close to a market salary, or at least you can if you choose to. Whereas when you're boost trapped, like you, you, what you kill sort of thing. But if you get there, you can't lose because you don't have this huge breath stack, you don't have this. go bigger, go home. Like you must go bigger, go home. You actually, like the big risk in venture, and by the way, like I'm a VC, so for me, like I only work with the ones that are trying to build this massive businesses, but I still recognize like the risk in venture is you plateau, you're always priced so far ahead of where you are. So plateauing is like death. Whereas if you're bootstrap and you don't want plateau, nobody wants to, but if you plateau with 10 million, you're bootstrapped, like, okay, you know, you're running at a 20, 30% net margins, like, I don't think anybody's crying about that.

I figure your next thing out, no big deal. Yeah, we're going to do like 14 million of profit this year.

Wow.

And if we plateau, I don't care.

Yeah, yeah, exactly.

You know, like, like if we plateau, I'm just trying to keep that plateau for like five more years. That's right. Yeah. And that's my billion dollar exit or whatever. It's not a billion dollars, but it's like the, you know, if you do the math or whatever, it's like the 5% of the billion dollar exit got to me that way. Yeah, and there's a whole generation of go-to-market companies that are just in this position right now. So it's like, you know, 6 cents is a perfect example. They raised it 50 times revenue in 2021 or early 2022, and then they did not grow last year. You can't not grow after you raised at 50 times your revenue. What's going to happen to them is the same thing that happened to Infusionsoft. They will eventually sell for less than their preferred because that's the only path unless they can reinvent the, you know, what are they trying to do? They're trying to build every single tool under the sun just like every single other person in their position and they're telling the narrative of we are going to be the all in one go to market suite and no one's going to buy it.

And you were talking about Clay recently, no, as well, like in kind of this light.

Yeah, look, Clay's in a different, so like Sixth Sense raised that round when they were at the, in the hundreds of millions of ARR and Clay raised at 1.25 when they were at like 30. So like, again, these guys are like the most, you know, it's like I had them on my, my show and he's like, we are trying to be synonymous with growing a company. We are trying to be, you know, like when you get your LLC, the next thing you're going to do is go get Clay. you know what I mean? That's like a massive ambition that like, I struggle to think even how I could think that big related to work.

Right.

You know what I mean? But it's just crazy how big they're thinking, you know? And they've got unbelievable traction and they've got a lot of other really good stuff, good things going for them. Yeah, I mean, I'm just not them. Like, I would do it like Mailchimp. Like Mailchimp had that level of brand heat traction. all that shit and they didn't do well. Clay was always venture. Clay had raised $12 million before they had a dollar of revenue, which is, I think, why they stay on this path, right? Because you can't get off of that if you did that. But let's say they had bootstrapped. It's really easy to write, not easy. It's easy to raise at a billion dollars. It's not easy to get sold for a billion dollars. That's right. Yeah, it's much harder. Clay could get sold for a billion dollars in a year or two, right? And that to me is just like, and probably more if they just, you know, keep leaving the chips on the table. You have, if you raise it 1.25, like that is not even close to an option. And clearly, if you talk to those guys, that's not where they're, what they're playing for anyway.

They think that this is going to be some, yeah, it's gonna be 10 billion plus.

Yeah, for sure. Like the minimum. Or it's, it's gonna be like Shopify, but for B2B, right? Like a hundred billion dollar thing or something like that. I don't even know the thing that I would tell you know, the, the zero to one guys listening to this, right? It's like, God, I hope you get product market fit. The thing that's going to happen to you when you do is you're going to have a hundred investors come to you and try to give you that $10 million, like you said. The second you take that check, you've taken paying yourself dividends like I do off of the table. There are a lot of businesses that would be great businesses like the characteristics of mine. Like we, we've, we were growing like 20 to 30%, which is not, great for by venture businesses standard. They want 50 or something like that. But it is super highly profitable. We have a great brand. People love working for us. We do stuff super lean in my life. It's incredible, right? Like, I love my team. I'm paying myself a shitload of dough. Like, the second you accept that check, that is off the table. Never gonna be your life. The way you're gonna get rich is through either a secondary transaction transaction or selling the business. Selling the business is very hard to do, especially like you'll take a check and then you'll take a second one. You'll raise 30 or 40 at, you know, two or 300. Whoever gives you that money, they need a three or four X. So my point in all this is the thing I was saying about clay is, like, when they raised at 500, I was like, oh, like they just took a billion dollar exit off the table, you know, like, and that would have just been so awesome. And then. they go on a raise at 1.25, it's like shit, man, now the number's like five.

That's right. You raise the bar a lot, a lot every time.

Yeah, and it's just like, and I think there's a lack of appreciation for.

How.

Pointy the pyramid is. Or maybe it's flat actually, and then it just goes up to a point. There's probably 2,500 people you could sell a business to. for $30 million too, you know, P E, like a solid EBITDA business, like strategic, whatever.

Right.

And then every time you add a zero to that, it's like, yeah, the.

The, the pool of bars, at some point you got to go public cuz there's nobody left. That's right.

Yeah. And so, and so, and so then it's like IPO robust, man, the number of companies that thought they were IPOing in late 2021 versus if they're being honest with themselves, the number that actually think they are now, like, and, you.

Know, the interesting thing about, like, ambition is, and this has really changed, I think, over the last decade or so, because the thing is, like, you know, if you think about the software businesses, the internet business, you know, post 2000, and now they're really big 10, 20 years later. And those are the people you hear on podcast. Those are the people that you hear talk, Ryan Chesky, Mark Zuckerberg, whoever it is. And they obviously have, like, at this point in their careers, in their lives, massive, massive goals. And a lot of times what they're talking about is like, you should have, you know, huge ambition and these sort of things. But when you go back to like when those companies started, like take most of these, like you take, you know, Zuck at Facebook, like he actually didn't have in his mind at that time, I'm going to build a trillion dollar business. He was literally just playing around. You look at, you know, Shopify and Toby, and he actually is quoted saying that his goal, like we're looking back at, you know, let's say 2005 is when he was starting his goal was to build a 20 person super profitable business, right? And now it's, you know, nearly $100 billion outcome. So like, my point is even some of the ones that turn huge don't think that way at the outset.

Yeah, I kind of fell Victor. So here's the thing. I think if you get in a position really in SaaS and software, it's all about churn, in my opinion. And like, if you get a business that actually has true net revenue retention, I will not hold it against you if you feel compelled to really go for it.

Well, sometimes you should, for sure. Yeah, that's right.

Yeah, exactly. The mistake that I think a lot of people make is that they try to go for it and they're delusional about that aspect, or they don't really understand the metrics behind it, or there's some thing that's going on to where, like, maybe they're long deals. So, like, the churn doesn't show up for, like, you know, two and a half years or something like that. Yeah, it's, dude, it's a plateau, right? Like, or, or, like, they, they have, they have a smaller TAM than they thought, and, like, they get there and, like, they haven't, you know, built adjacencies or something like that. There's just a million ways you can plateau.

And why would you say that it's all about retention? And you even mentioned true net dollar, what's true NRR versus fake NRR?

I think a 50% gross that has enough expansion to still be positive is kind of fake NRR. You know what I mean? Low logo retention, but an expansion dynamic.

I see that.

Doesn'T really, I mean, I think Mailchimp probably had that, but also their TAM was, you know, a hundred million or something like that companies, right? Like a billion people is their TAM or something. So I think if you have that, the TAM's got to be absolutely enormous. Otherwise, what I mean is like, it's like a real logo retention that has, you know, actual seat expansion, apartment expansion, something like that. Like there's just like a, very clear path to, to that growing. Email and CRM are like, generally like, like, I think SMB email is, is in crms that are exclusively SMB are like the lowest. But like, those are, it's like if the state of the software is expanding over time, you've got a pretty good shot that it's like, you know, if you're not selling to SMB, it's, it's got a pretty good shot that it's like real. There are, I don't have any of that. My state does not expand at all. It sucks.

So let's actually dive on that. Cause we kind of jumped into the middle. Tell me a bit more about the origin story. What is retention.com and where did the idea come from? How did you get that started?

Yeah, so I mentioned I was running this email newsletter app and I don't really, I'm not drawn to email in any way. I just wanted to start a startup and I tried five different things and the email thing, we figured out how to how to basically poach customers from Constant Contact. And then that got us 1% of their revenue. And then after the lead pool was dead, the product that we were left with could not compete with MailChimp. So, like, I mean, it wasn't even close. They just, if our users that we had acquired knew that MailChimp existed, we would have had zero.

But it was just like a MailChimp competitor. That's what it was, like a newsletter.

Yeah, well, Constant Contact was the pioneer. MailChimp was the disrupter, and MailChimp had this, like, incredible economic model, which then fueled They built a freemium product in a space that people did not think freemium products were possible. I see. They thought that the nature of email marketing was too complex to actually build a simple enough free tool that worked, and they were able to do it. And it was epic. And I think that if it was just constant contact that we were up against, we actually probably could have grown that business. to something well beyond what it was. But like the fact that Mailchimp just absolutely, I mean, it wasn't just us. They destroyed everyone. You know, like they destroyed everyone. So aside from a few cases, right? Like you could say Klaviyo, they didn't destroy. But like Klaviyo decided, I mean, this is an incredible thing to think about. Klaviyo decided to be the go-to tool for Shopify. When Shopify was 85 million in value, right? They were like a series B or something, or series A. It's probably series B at the time, maybe a series A company. Shopify, as Klaviyo grew to IPO, grew to $150 billion market cap.

That's right.

Shopify 1000 X'd as this tool was like, we're the best one for Shopify. Okay, they were able to compete with Mailchimp, but I think that they were like holding on to the right boat. I think we could like agree that that, But basically no one else. I mean, I think ActiveCampaign is a decent business, like, you know, ConvertKit's like out there doing the bootstrap thing for bloggers. But like, they fucking leveled all of MailChimp leveled the entire rest of the space. It was like MailChimp, Klaviyo, a couple other vendors, and then like 200 vendors.

At like 2 million ARR. Because by the way, like, why? Like they just had better product or.

Just a pure economic model? So like, They got far enough along with this freemium model that they could max out all of the channels advertising their free product. And then what are you going to do? You can't be more free than free. And they have more money to spend on their free offer than anyone else. So like, you can't be more free than free. So, and they were, they had this kind of moat with integrations and it was just, no one took them seriously until it was unstoppable. It is breathtaking execution. I mean, I just sat there and watched the whole thing happen, right? I was just, how do I get in the space? How do I get a place to do this at some point? And by the way, this is a really helpful thing for early stage founders. If you can study this story, you should. So constant contact, IPO'd with 100 million ARR when Mailchimp was at 2 million ARR. One of their co-founders talks about this on a podcast. At the time, there was constant contact at 100 million, and then there was eye contact in vertical response. And they were both trying to do the exact same thing Constant Contact was doing with just far less resources. One of the co-founders was like, how do we do the opposite of that? And they were like, we're gonna try free. So they had this, like, you know, up to 2000 contacts. They started with 800 contacts, but they got up to 2000 for free. And then just, they, they had this incredible viral loop of, there was a massive stamp in the bottom right corner of that email that said, mailchimp 100% free email marketing. And it wasn't even believable. And like, people thought it was cheap and not a good product, but like over time it just swallowed everything, you know, cuz it was just this incredible viral loop and then their brand was so cool and like, it was just in the power free is immense. It's amazing. It's huge.

It's huge, man. It's like prices are another thing that is kind of like we've talked about lifestyle business, I think has a bit of a, let's say negative stigma for whatever reason, like free, not, not free, but like, Cmmpeting on price is another thing that's just like not that cool, but like it's awesome, man. You can make something free and still have a model that works around it. You can come late to a market and absolutely turn it upside down.

Totally. And if you watch what I'm doing with RBDV, it's like, I'm trying to, it's not really, we'll see, we'll see if I still have a free product in like a year or two. For now it's working, you know, it's, yeah, I think it, and with my, with the rest of my go to market, which is like, Founder led thought leadership, I think a free offer like complements that really well. Cause like the only thing I'm trying to do is like air cover, like very, if you look at my posts, like I don't really talk about RB2B almost ever unless I'm like bitching about churn or like doing a monthly update or whatever. But like, I think I've earned the right to say my stuff is so good that like you read the take and then people click through, visit my website, cause they're like, I want to see what this guy does. and that's the entire strategy. It's just like, how can I make stuff that is like so good that these different types of users and buyers that we have, they want to consume the content irrespective of what I'm selling. And it's like building so much trust that eventually they have to click that button and figure out what I do.

So I want to talk about the LinkedIn stuff, but first let's get through the retention story. So like this is happening, MailChimp, whatever.

Where does retention go? Okay, so yeah, right. The short version of the story is we're just stuck as you could possibly be. and then, you know, I'm, I'm trying everything. It's not working. I'm going to all these trade shows to figure out how to grow SaaS companies. Nothing that anyone says works. I bump into agencies, whatever their agency is, they say, well, I can grow your, you know, SaaS with Facebook ads, and it doesn't work. And, you know, I'm sure anybody listening to this has had a similar experience. And then this very wise woman who worked at this company called litmus, I, I shook her down after she spoke at a trade show, and I was telling her my totally beat plan for, like, you know, how I thought I was going to grow this email tool. And she's like, dude, what I would do is I would try to focus on a problem in email that hasn't been solved yet. I was like, wow, what problem hasn't been solved yet? And I couldn't even, couldn't even think of one, right? Because, like, I've been living in this, like, what are my competitors doing? What features do they have? Like, what, you know, we need a, a drag and drop automation builder and all this, and, like, Eventually someone told me at lunch that it was possible to get a deliverable email address from someone who did not fill out a form, who visited the website. So someone hits the site, they leave without filling out a form, you can get an email. I was like, I've never heard of that before. I know the biggest problem in email is list shrinking. If I could do that, I could sell it to literally anybody with a website.

By the way, that still sounds amazing. What is the simple mechanics of how that works?

So the simple mechanics are you're basically like, by the way, this is legal in the U.S. it's not legal in Europe. Like, gdpr is first party opt-in for data collection on the internet. And, and the whole chain of things necessary to do this, like, when you add that part of it, you can't do it, but you can do it in the U.S. basically, like, you know, ad networks, like, so the open internet, right? The open internet survives on these persistent identifiers, so. It is an unreadable string of characters that identifies you as Pablo, and then when you go from website to website, they can show you stuff that you're presumably interested in or retargeting ads or whatever. The whole method is just using those and some other probabilistic things to get that persistent identifier back to a real person.

That's the crazy part, because the cookie piece I get, the following you through I get, but the tying it to an email, is where I'm like, wait, what? Yeah, yeah, yeah, yeah.

And then you just, you got to do a bunch to make sure the email is safe to send to also, which, you know, is another part of it. My whole plan was to try to grow the email tool with this feature. And then what happened was we added the feature and people would sign up for the email tool. They'd use the feature, download the file, put it in Clayvio and say it was awesome. That's a pretty good indicator of product market fit. It's like if someone's willing to endure a bad user experience and give it a high NPS score, you're sort of moving in the right direction. Meanwhile, it was like, okay, like our email tool is so far behind everybody else. Like, if we try to grow the email tool with this feature, it's going to be a shitty product. If we spin it out and connect it to everything, it'll be a great product. And like, just to give you, so like, I always like to say, like, I've spent years on either side of product market fit and like, So this product, we kind of like got some validation when it was a feature inside of our ESP, which by the way was making money, right? So like I didn't want to distract everyone from the mothership because I tried a bunch of stuff the last three years that didn't work. And I had no idea if this was gonna work or not, honestly. I didn't know.

And what year is this, by the way?

2019. What I did was I went to Upwork. I literally, so Drift was a popular company at the time. and it was, it's this chat bot.

It's like, yeah, yeah, okay.

Not a big brand anymore, but they.

Like made a huge splash.

I remember they were like the number one chat bot. Yeah, back then. Huge splash, huge splash. And great brand play. I mean, just epic brand play. I was obsessed with it and they got people to install a Pixel, which is what I needed to do, right? So, and it was self serve on the sign up and then they had like a PLG sales motion or whatever. I literally just took, I have this Shopify or Photoshop for Dummies app I use called Snagit. I still use it. So like, I just took screenshots of their entire onboarding process and mocked them up in this Photoshop for Dummies. And then I went to Upwork and got someone to make those into actual Photoshop docs. And then I got somebody else to make those into HTML. And I made like a basic dashboard and like, you know, sort of like download your contacts here. And then in 12 weeks, my CTO made a backend that worked with a MailChimp and a Klaviyo integration. We launched it on November 9th. I also, I went to digitalmarketer.com and watched their video sales letter class. And they have like a template for how you write a video sales letter. So I just filled it in with the information about Get Emails, which we were about to launch. I got someone else on Upwork, paid her, a girl named Romina, paid her a thousand dollars to like make this word art video. from the script that I made, recorded on my iPhone. The video is all scratchy. You can actually, the video is on retention.com's website. Video is all scratchy.

I bought a song on one of these, like, you can buy them.

Is this your classic videos, like how the product works, whatever, or like, what's, what is this video? It was just, it was, it was.

Like, what if I told you I.

Knew exactly who was on your website? Okay.

Yeah.

One of those explainers. It was animated words, right? Like with visual whatever, put it on Facebook, ran it to a Shopify audience, spent $5,000 and got 10K monthly recurring revenue in week one. Wow. If I would have spent $5,000 on ads for the email app, I wouldn't have gotten $50 in MRR. I'm serious. You know what I mean? So like, that is what you're looking for. And like, you know, a really funny story about all of this is I, to share an office with the guys who created Jasper, the first chat GPT. It was phenomenal, you know, like, but I share novels with them for two hours, for two hours, for two years before they launched that product. And we were both schmucks stuck at 2 or 3 million ARR for that entire time. And we were both trying anything desperately. Like they were, they went to YC, they were venture funded. And like, I had, so retention.com used to be called get emails. I launched get emails in November of 19. They launched Jasper in January 2021. They watched me grow, I got get emails to 3 million ARR and I had these two things with tiny teams that were like cranking out cash and they were trying stuff that was failing. And like, we had both, like we had talked ourselves into thinking that the way forward for us is to just have a port of these 3 million ARR companies with five people. And if each one cranks out a million and a half bucks and you have five of them and you have a couple co-founders, you're living in Aspen, right? Like you're doing great. And we were totally convinced this was the way forward. And like, this is so nuts. Like, so we were talking about it a lot and he's like, I'm on board. And we had this plan where like, we're good at distribution. We're just gonna find these people who can't sell. and kind of like put a UI on their tech and resell it. And there is a, I'm trying to pull up this text. I don't know how to get to it, but there's a text from Dave that says, Got my first sale, had the idea seven days ago. Hopefully this is my get emails. And mind you, get emails was a 250k ARR at the time. He was trying to just beat that. And that was Jasper. and, like, by the end of month one, they were at 500k MRR. They, like, seven months in, they were three mil. They were at, like, 40 million AR. Those guys went zero to 50 in under 12 months and didn't hire anyone. It was like a team of eight. And then they brought this guy on who's like, we should do a big round. Then they did, like, you know, 200 million, like 75 secondary, 125 primary, took some chips off the table, and then Chachi PT came out. There's a lot of lessons there, you know, like, listen, I mean, I just, the lessons are like immense. It's like, hey, you really have no idea how big the thing is you're working on until you throw it out there and see what the adoption is. Lesson number two is you're looking for something like, like I said with those Facebook ads or like if you asked Dave, I interviewed him on my weekly show. he's like, people were just dumbfounded. He's like, we would just be having a conversation, like, how do I pay you for this? Right? And like, if your startup is stuck at a couple million ARR, it's probably something radically different that's going to get you to a true product market fit, rather than just like incremental feature building, like trying to outdo your competitor or something like that.

Oh, you're such a selfish person. I actually can't believe how selfish you are because like you've been listening to the show, you listened to this episode, you loved it, You've listened to a bunch of other episodes and you haven't told anyone about it. You haven't told any of the many founder friends that you have about it. Think about how many founders have helped you out when you're building your startup. So don't be selfish. Tell your friends about this episode. Tell them about the show and help me help them. I mean, that's what I, you know, I was just thinking about this morning because I was talking to another founder, founder of Touch, and he kind of had a, you know, one of these stories, right? Where like, For two years, him and, you know, he was funded, but like him and his co-founder and team of maybe five or so people, just like throwing out a product, doesn't really work, playing around. And when he hit it, he just hit it. Like he went from zero to ten in like, you know, a couple of years. Like it was just a crazy hockey stick type chart. And what I was thinking about was like, you know, one of the things I noticed, I mean, there's some founders who just like take Zucker, you know, like they put something out, it just works great. Google, whatever, right? But there's a lot of other founders that are successful that what they really did differently than, let's say, founders where it didn't work is they just kind of didn't settle for these like okay problem solution sets. They kept trying stuff until they find something that has the pull that you just described for Get Email or for Jasper. Because like you said, once you have that 3 million or 5 million, it's just kind of slowly like you can't change that growth curve, you know, like something has to really change. Maybe the market just suddenly changed, which is kind of like, you know, good luck to you. And I've heard some of those stories. Otherwise you've got to change like that problem solution set in a pretty big way to get like true insane pull that is like true product market fit.

I agree with that. And another thing I would say about product market fit since we're on topic is I believed this even when I came to this conclusion when I didn't have product market fit. I was like, I think you need very strong word of mouth to make anything else work. Because I was trying everything and the conclusion they came to is like, the people who can afford to buy these Facebook ads are people who already have word of mouth and people are hearing about it everywhere. And then the ad shows up and somebody clicks through and it appears as though the math is working. I don't. So I can't afford to buy this ad because it's not going to convert for me. you know, it's like if you have this incredible body of word of mouth going, then you can do a bunch of stuff that's like almost like scissors, like snipping off conversions from that, from that big body of word of mouth. If you don't have that, everything you try will be pushing on a string. And I think word of mouth is analogous for early product market fit. I think like it needs to, you know, it's more than that at later stages, but like you, yeah, I just truly believe it. And like I see So it's like, what's the biggest mistake early stage founders make? Without question, in my opinion, it's doing what I did. And it's, you're like, I'm stuck. What do I do? You go to like SaaS Fest or like you listen to Nathan Walker's webinar and like, it's like, here's what Notion's doing in partnerships. And you're like, cool, I need a partnerships motion because Nathan said the notion was doing this. And it's like, no, it's not about like, you know, monday.com's SEO strategy. For you, right? Like the reason monday.com's SEO strategy works is because they have an insane product market fit somehow, right?

100%. Yeah, like what works post product market fit is two worlds. Like post product market fit, you gotta worry about culture, you gotta worry about partnerships, you gotta worry about how to sell, you gotta worry about org charts, you gotta worry so many things. Pre-product market fit, you gotta worry about.

Getting product market fit. And you can't just use those tools here and expect like great outcomes. And it's like, to me, it's like, I did a show with Clay a couple weeks ago and like, I kind of knew this, but I didn't really know this, that Varun, who's their co-founding go-to-market guy, he joined them when they had 20 customers paying $100 a month. That's crazy, right? And that was at the end of 2021. So like three, a little over three years later, they are a unicorn. What did he do his first year? I think most people would have set down as a go-to-market person, they would have been like, okay, I need my hundred shitty domains. I need to like hook it up to instantly and I need to get this pipe coming in, you know, and then I'm gonna also like work on my LinkedIn game and like do some thought leadership ads and like get that pipe coming in and then, you know, whatever. Like he man, did not do any of that. He did calls from 10 to five every single day for a year. That is it. Before they added on any other growth channels and he went and manually found those people to bring to those calls, like he went into these like community groups of It was basically, they identified that lead gen agencies had problems they could solve. So he would just sit there and scroll through these, communities all day, find somebody bitching about something about the existing data providing ecosystem that Clay could solve. And he was like, dude, can I.

Show you to solve that? Like come to this thing. Oh, and he's doing, is he doing.

Sales calls or more like customer discovery and like understanding the ICP calls? He was, he was doing this reverse demo. So it ended up being a sales call, but it was more discovery than a sales call. He would basically be like, bring a problem to this call and I will coach you on how to solve it in clay. And then either pay us or don't pay us, but he was taking all that feedback and giving it back to their engineer who was improving this product in this iterative loop. Point is, really the only two important things that were going on at that time were his conversations and then the product that was evolving from it. And they still do that today in many respects. They have this team of go-to-market engineers that's very closely intertwined. with their actual engineers who are improving the product. And that's why I think they are where they are. The only thing you should be doing until you are getting referrals that you are not asking for many every week is talking to prospects or customers or writing code. If anyone is doing anything else, you are wasting your fucking time and money. You heard it here first. So that is a public service announcement. And it's hard because that's what startup content is telling you to do. Like, they'll bring me on and have me talk about how I grew my SaaS from zero to 4 million ARR in nine months using LinkedIn. And I'll talk about what I do in LinkedIn. But, like, the only reason that LinkedIn worked is because my product was dope, right? Like, it was, it was like, you know, great marketing with a product gets you nowhere.

Yeah. And beyond, and beyond product, it's also that, like, you know, we say product market fit, but, like, Before product-market fit, there's this value delivery piece of it, right? Are you actually solving an important, take your example, right? Take retention. What sticks out to me listening to that story, the moment that woman talked to you, is then you finding a way to solve a problem that isn't being solved, but it's not just a problem that isn't being solved. Probably one of the most important problems that people that are doing email newsletter stuff needs solved. Like, who wouldn't want to know who's on their website so they can retarget them via email? Like, everybody basically would want that. So that, like, bringing that zero to one is like the other example that comes to me. I had, I had one of the, like, early employees of, of Rappy, which is like kind of the, the food delivery app in, in Latam, right? They're worth many billions of dollars. And he said, you know, when they launched, they, they just faked, they just put, like, the 25 best restaurants in Bogota on the app. without getting their permission and they just send couriers. And he said to me, like this is him talking about Primark. To me, Primark fit is something that wasn't possible now is possible. Before you couldn't get any delivery from these 25 restaurants. You couldn't do it. It wasn't like you could do it, but it was hard. You couldn't do it. Now you can do it. And everybody wants delivery from these 25 best restaurants because it's the best restaurants in Boa Vista. So like you go from zero to one on something that everybody wants. you're going to have crazy pull. And then it becomes about how do you retain them better? How do you, you know, market to more? How do you cast a wider net? All these accelerants. But a lot of times it's so hard to do that that people jump to the, the, the next piece and they try to do all the other things right. And like you said, like, it doesn't matter if your LinkedIn game is great, if you're not delivering enough value and.

Targeting a meaningful problem, like it's going to lead to nothing. And, and that's the hardest thing because you're like, how do I grow this? you know, and like growth, it's almost like this, this, this term growth hacker has like given early stage founders the wrong idea. It's like the reason those growth hackers have jobs is because the companies they work for have product market fit. A great growth hacker without product market fit is someone who's producing nothing. Literally. Right. And none of those tactics work at all unless, you know, in like these, these, these guys who are renowned growth hackers, it's like you look at the companies they work for it. It's like Guillaume Cabane, right? He's like this LinkedIn marketing guru, but like he's known to be like a great growth hacker. You look at where he's worked, it's like segment, drift, clearbit, ramp. You know what I mean? It's these- 100% epic product market fit stories, right?

If you go back to the history of it, like, you know, they always talk about like the early growth hackers were from like Facebook, right? Like Chamath and these guys. and when you hear them talk about, like they're obviously super smart, talented people, but you hear about some of the things they did. Like one of the examples I remember talking about is language, like globalization of Facebook, right? So Facebook's English only. They're like, we need to penetrate other markets. Okay, what a growth hacking technique is like using the community to translate posts live real time and then basically being able to offer Facebook to the entire world instead of just English speaking. And you're like, okay, that's clever. smart, like it's clearly the right thing to do, but you don't get any of that unless you have such insane product market fit that you have a community and you have all these things, you know? And basically, when you look at everything they did, it was lubricating something that was already spinning on its own. And you're just like, oh, this is friction. Oh, this is friction. Take it out, take it out, take it out. And then it just goes faster and faster. But if things are moving, like it's gonna go like this, you're not gonna just get it to accelerate by removing friction because there's just no momentum yet.

Agreed.

So tell me a bit more like retention, like retention.com, like we talked about kind of, it starts off, right? What kind of happens, like, you have that kind of initial week, you run those ads, you have great results. What's the next like year like?

Yeah, so the next year was pretty good. I mean, well, not really, actually. It was November 9, 2019, and we kind of like went straight up and then COVID hit America and March of 2020, like everybody was very freaked out. And this was a month to month service. Like we had like an 80% revenue hit, but then very quickly e-commerce recovered. We got to like 3 million ARR in 13 months. And then nine months later, we still weren't much higher than 3 million ARR. And this is like around the time that I'm talking to Dave thinking that like we're just a bunch of 3 million ARR guys. We started focusing more on outbound to e-commerce stores and then kind of without us knowing it over the next 18 months, they became this, like, killer ICP for us, and they were much lower churn. So our business was growing because of it. And then we kind of shut everybody.

Else off and, like, only focused on them. So you flatlined because you didn't. You weren't really, like, you had some.

Early traction, but then you flatlined. Why exactly? Just super high churn, dude. We were letting anybody sign up for it, like Legion Publishers, B2B, you know, whatever. And, like, really, the bigger the company is, the better this is going to work, you know, like that's just the better the tech will work and like, it kind of like amplifies throughput of an e-commerce store. So like the more that's going through, like you, you, you grow at 50%, you grow an abandoned cart flow 50%, rather there's $5 or $500,000 a month going through that, right? So like obviously the bigger store, you know, is going to benefit a lot more from it. And it's the benefit is linear and the pricing of the service is not linear. So so it's in, in the bigger the company is, the lower churn buyer persona they naturally are. Like we closed American Eagle in December. It was our first real enterprise deal. And they spent like nine months vetting it and like three months installing it. Like that, that piece of technology is not coming out. Like it's just not like it is now part of what they do.

And what did you change? Like between that time, did you change like the product itself? Did you mainly change just the messaging? Did you change the go to market just to Kind of get that growth back.

Yeah. In 2022, we were in the middle of 2022, we were around 10 and it was still just that one product. We added another product for e-commerce stores, which in addition to just adding to your email list, it expanded the audiences of abandonment flows. So it was like an email trigger, like in addition to just list growth. And then that's when I bought the domain retention.com because it was beyond, it was called get emails before. that. And then shortly thereafter, we decided to only go after these big Shopify stores. And there's a whole go-to-market motion that if you have incredible product market fit with the large Shopify stores that you can do. And it's like partnerships and, you know, affiliate and events and all that stuff.

But I'm interested more in that, in that three to 10, like how you went from three, because that part is still kind of early product market fit, like in that three to 10 phase. And especially since you were It's one thing if you just kind of doubled your way there, then clearly you already had it. But what did you do when you were flatlining to get that back?

You know, we kept trying to make the product better and better for our bigger customers and our bigger customers were these e-com guys. And then Diana started focusing. So like we were, we were still a team of six at 12 million ARR. We were team of six when we launched and we were team of six at 12 million ARR. So it really was just this like, Let's stop picking up the, let's stop, you know, they can still sign up, but like we're not taking any more calls with, you know, somebody who's running a Facebook ad to a lead form and like excited about the product. We're not taking any more calls with BB Publishers. We're not, you know, focusing on whoever, right? It was like, we really only want to get in front of these, these, these e-com stores. And she started prospecting exclusively them. and it was the combination of making the core product a bit better. And like, you know what it also was? It was like what she would say if you asked her. She would say, we went from letting the market use the product however it wanted to, to telling these e-com stores exactly what to do to be successful. That was the biggest change. So it's like we'd only do demos with e-com stores, and then when at the end of the demo, It was five slides that sort of answered their basic questions. It's like, you know, here's your price, try it for a couple months. And here is exactly the flows that you set up and exactly how you use this and exactly how you measure the ROI. So that was 3 to 10. And then we added another product and we had another product to 10 and then, you know, 20 we added the B2B thing.

And let's stop it there. Maybe just in terms of like in terms of the story, but just in terms of advice, you know, I often ask like, what's your biggest piece of advice? I know you wrote some stuff. to take you however you want, but like you also wrote some stuff on what's happening in B2B sales and obviously you're doing a lot in terms of top of funnel on LinkedIn. So I don't know if you have any big pieces of advice around that combination of like lead gen and B2B sales and like what's happening in that world and how founders should be like, you know, basically generating and closing leads these days.

It's just getting harder to do what was easy. So like it was never really easy to manage a bunch of beach bubble. It was pretty easy to just like get you know, contact records from Zoom Info and like get sequences set up in outreach and just scale that up, right? Like that, I think we're all feeling that like a BDR who is doing just that is very, unless you have this insane product market fit paradigm and they're just like collecting hand raisers, it's very difficult to scale that out. So like early stage startups, it's incredibly hard to think this way, but like the reason my the only reason RB2B, which is selling B2B, the only thing that has grown, we're almost to 5 million ARR with five people in like 12 months. The only reason it's doing what it is is because I'm doing only brand marketing. You can't measure it on a day to day basis, but literally I cut everything else. I'm not sending out cold emails, I'm not running any ads, not doing any SEO, stopped engaging with all these UGC guys that we were engaging with because we ended up thinking that they're instructing people to use the product in the wrong way. All I'm doing is this very untargeted thought leadership, which is marketing to the people who are actually not in market to buy. My dream customer, who's reading this stuff, is an enterprise deal that when they decide to add this to their tech stack, they're either coming to us and only us, or we're in the deal when they're checking out- what's RB2B?

Just to get some context.

RB2B is the same technology. We just sell to B2B companies.

You sell the companies who sell B2B.

Yeah, it's for sales teams. It's like a signal for sales teams or results to a LinkedIn profile instead of a personal email. And so it's not e-commerce or closes. And that was a question, right? It's like hard, it's hard to do B2B sales now. Everything's always hard, you know? So, but like, I think my You know, I found myself in this position where, you know, I have this incredible brand play for the B2B product that's just this LinkedIn thought leadership. And every week out of nowhere, we get 350 people signing up for a free product and 10% of them convert and the churn still sucks. And we got to like change a lot of stuff about the product. But like as sure as I am that more cold emails will get sent next year than they did this year, and like people will continue creating spam cannons of various forms. I also believe that like the, this sort of antithesis of the spam cannon is like you keep saying pull with product. It's like these thought leader, these, these personal social media profiles, they have pull with attention. And if you pull attention over the course of a year, like you have created a massive amount of trust. If you're super lucky, you can link yourself with the product category, right? So like when someone sees my LinkedIn avatar, It's like, oh, that's like the website identity guy. I am very bullish about the future of doing that. I think like if you can manage to do it for your target audience, it's like the most efficient way to go zero to one that you could ever imagine. I mean, the problem becomes if you've like made software for elementary schools, you're probably not going to have the same results on LinkedIn that I do. I don't know if elementary school principals or whoever buys it are sitting there doing their sales and marketing people are doing their jobs on LinkedIn all day.

Well, how targeted just on that LinkedIn advice, because more and more founders I know that have some product market fit are trying to use LinkedIn and thought leadership stuff to generate top of funnel. But a lot of it I find is the biggest mistake that I see on LinkedIn, and the question is, how do you do it? the right way is it's almost hyper targeted. Like it becomes so, so some of the obvious mistake is like you almost just like pitching your product constantly. So like that's obviously complete waste of time. But then there's also the ones that, okay, at least they're not thinking about their product or thinking about the problems, but it's so targeted to like their niche that it just never gets any reach. Like LinkedIn just doesn't end up pushing it and, you know, a hundred people see it or like a thousand people see it, it just doesn't drive real results. Like, How do you think about the content and you create a lot of content? Like what is your kind of thinking about the sort of content you create that's still relevant but still like big can still get a lot of reach?

Yeah. So like it doesn't need to be big to be effective. I mean, LinkedIn, the magic of it is, and it's not just in B2B sales and marketing, like you can do a targeted outbound connection campaign, get connected to 3000 people that you care about. And if they accept your connection and you write good content, they'll see it. and like that will build trust over time. Cool.

Adam, thanks for jumping on the show, man. It's been great. 85% of people who listen to the show just started listening to it this year. You're probably one of those people. In fact, the odds are 85%. Guess what? You need to go back because there are over a hundred other episodes that you need to check out that are just as good, if not better, than this one. Don't miss out.