140: From $300k in Product Sales to $9m in Software Sales with Nathan Barry

In this episode, I talk about a simple goal that every blogger needs to have. And we connect with Nathan Barry from ConvertKit and chat about email marketing. Hey everybody, this is Bjork Ostrom and you are listening to the Food Blogger Pro podcast. We have been doing this for a.

Couple years now, and it is one.

Of the great joys of my job.

Is producing this podcast each and every.

Week and sending it out to you across the world. We have people that listen all around the world and I think that's so incredible. The WP Tasty sponsorship, or the Tasty Tip, is something that we're doing every single week. And WP Tasty is not an English poet, as my friend gives me a hard time about. He actually calls it MT Biscuit, but it is not empty biscuit. It is WP Tasty. And Wptasty is a site for WordPress bloggers. We launched WP Tasty about a year ago now and we have been going strong. We are now in the thousands of users and it's been slowly but surely picking up speed. And we're really, really excited about it. And it is the official sponsor for this podcast with a Tasty Tip. And what is a Tasty Tip? Well, a Tasty Tip is a really short, concise, but actionable piece of advice that you're able to implement on your blog. Sometimes it has to do with the plugins that we publish at WP Tasty. So it might be publishing a recipe post and how you can optimize that for SEO, because that's what our plugin Tasty Recipes is for. Or it might have to do with Pinterest or optimizing your images alt text, which is what TastyPins is all about. And those are the two plugins and products we have at WPTasty right now. But sometimes it doesn't have to do with either of those things. And that's the case for today's Tasty Tip. Today's Tasty Tip is about goals for bloggers. And these aren't the kind of goals where you set a goal and you want to, you know, achieve a certain amount of page views in a month. This is a goal that you would set in Google Analytics, and lots of bloggers have Google Analytics set up. And if you don't, that's definitely something you should set up. But not as many bloggers have a goal set up. And I would really encourage you to set up a simple goal if you haven't yet done that before. In the previous episode, we talked about the Tasty Tip of Optimizing your conversion pages. So if you have a page where somebody signs up to be on your email list, which is perfect for today, and they hit this confirmation page, maybe it's not going to be the ideal page. It's probably not going to be branded or look the way that you want it to. So it's important to think about intentionally crafting those pages on your blog. Along with that, you should set up a goal in Google Analytics for those important pages. So what are some pages that you could set up goals for? Well, the one that I just mentioned is a good example. Any email confirmation page. You could also set up a goal page if you have any type of conversion for a product. So if you are selling something on your blog, make sure that you are tracking the conversions of those pages by setting up a goal in Google Analytics. And to do so is really easy. We're not going to walk through the exact steps of how to go about doing that, but you can find the goals area in Google Analytics by going to the conversions area. And then you can click on goals and that will show you the entire goals section for Google Analytics. And all that you need to do when you're setting up a goal in Google Analytics is there's multiple different ways you can do it. But one of my favorite ways is to pick a goal URL. So what is the URL on your blog or your website that you want people to go to? And when they get there, you consider that a successful conversion or a successful visit. And for a lot of people, if you have an email list, which we're going to be talking about today, that goal page can be the page that people see after they sign up for your email list. So that would be the Tasty tip for today. If you haven't set up a goal before, jump in. Set up a goal for your blog or your website so you can track along and see within Google Analytics how many people are signing up and hitting that page each and every day. And I think once you do that, you'll start to be really encouraged to try and get that number to increase. Because we improve what we track. And if you are tracking important things and you'll be able to improve them a little bit better. That is the Tasty Tip for today brought to you by WP Tasty, who sponsors this podcast. And it is also one of our.

Sister sites for Food Blogger Pro.

Email and conversion is actually a really.

Good topic for the Tasty Tip today.

Because we are talking with Nathan Barry from ConvertKit and Nathan is going to be sharing his story of building ConvertKit up from a tiny startup that was kind of struggling along and they were really trying to make ends meet and the expenses every month were as much as the income. And he's going to talk about how he strategically made some decisions and started to become a profitable company. And it's a really inspiring story for any of you that are interested in building a business, which is a lot of people that listen to this podcast. He's also going to talk about some tips and advice for bloggers when it comes to email marketing in general, and some things that you can be doing as a blogger and a content creator to help encourage people to sign up for your email list.

So it's going to be a great.

Story and there's also gonna be some great actionable advice from Nathan. So let's go ahead and jump in. Nathan, welcome to the podcast.

Hey, thanks for having me on.

Yeah, it'll be fun to chat here.

Because I really view this interview as a two part interview. First, I would love to talk about your story as an entrepreneur and I've been able to observe you as you've created publicly, you know, and talked about your journey as an entrepreneur. And I followed along with that. And then after that we're gonna talk.

A little bit about the some specifics with email because convertkit is obviously all around email.

So a two part podcast interview. We won't officially break it up, but let's jump into the first part and hear a little bit about your story. So take us back to pre ConvertKit. Before you started ConvertKit, what were you doing?

Yeah, I was designing software and then writing blog posts about how to design software. So my background is first in web design, then in I guess what's known as user experience design and software design. And so I was working at a software company leading their design team and then I really got into designing iPhone and iPad applications. We had the fun experience of building an iPad app before the iPad was released. So we got to design an app even before we had the device. And it was a really cool experience to go to the Apple Store and buy it and then load our software on and be like, this works, right? We'd never tested it, but it was out in the App Store, so it was really fun.

Yeah. So you're working as a software designer at. Was it an agency?

No, it was a software startup.

Okay, got it.

We were probably half software and then half video production because it was a video delivery startup where used more in corporate training and used by a Lot of hospitals.

And so what happened, I would assume, is that the iPad is coming out. And so it says, as a company, you have this conversation of like, hey, we should probably have an iPad app here in the app Store. So you create that. While creating that, you realize, hey, this is something that I really enjoy the. The process of developing for the iPad and for the iPhone. So did you take that and then kind of as your side hustle, start to design apps for fun? Did you do it consulting for other people that had maybe their own little side business that they were starting as an app? What. What did the next step look like?

Yeah, it was kind of all of the above. So I started with the very first app that we did. I just designed it in Photoshop and didn't write any code for it. And then the next app, I was like, oh, I'm going to do some implementation of it. And then after that, it was like, well, we don't need to build any more apps for work. We had made two big ones. And I was like, but this is fun. I'm not, you know, you may be done the apps and not need anymore, but I'm not done. And so then I started, along with a couple coworkers, we all kind of had our own little side project apps and just started building stuff. And that was really fun. And so each time I'd get deeper and deeper into the code side of things. And one of my co workers, who's a good friend, his name's Chris, he was a developer, and so he had his apps, he'd make, like, fun little math apps for kids and other educational apps, and then I would help him design those out. And then I was making some apps, like a habit tracking app, a language app, and some other things, and I would design them and code them, and then I'd get stuck somewhere and he'd be like, oh, yeah, let me help you with that. So Computer Science 101, he'd, like, teach me through some of these areas. And it was a really fun time. Cool.

So that then led you to a point where you said, okay, I'm interested in apps. I'm starting to design them, even starting to develop them a little bit.

And. But then as you're doing that, you.

Start to teach other people about the things that you're learning. And as I understand your story, that was kind of your first step into selling product at scale. And can you talk about the first product that you put together, how you knew that it would be a product that you should put together and Then what? The process was like selling that, like pressing that button to publish that and then to offer that to the world.

Yeah. So I wanted to be a blogger. I looked at people like Chris Gillebeau and Tim Ferriss and some of these other people putting out great content on the web and I wanted to be like them. I wanted to have my own audience. So as I was building apps, I was always looking to that world. Somewhere in there I learned that, hey, you could write a book and you could actually make money from that. So that got me on the idea of, okay, I'm going to write a book called the App Design Handbook. It's going to be teaching people, developers or people who want to get into design how to design iPhone applications. I learned a lot, probably from Chris Gillebo in particular. He's been a big influence on me and just kind of wrote out that book. And my hope was to make $10,000 over the lifetime of sales from the book. Because my idea was, I'm gonna build this audience and I want this product out there, but I didn't know how successful it could be. And my idea was that I was going to use this as a calling card for, hey, hire me to consult on your app design. I mean, be a reputation booster.

What did you learn from Chris that was helpful?

So, a couple things. He had two manifestos that he put out early on and they're still available and I highly recommend reading them. One is called the Complete Guide to World Domination and it's just a short PDF but it's super inspiring. And then the other one is called 279 days to overnight Success. And I love this one because everything. And it's super interesting to look back on now. I just pulled it up a few days ago, actually, after having not read it because it was written in, I don't know, 2009 or something, 2010. What's interesting is the numbers that he's talking about in there. He's talking about getting to $60,000 a year in revenue from his blog and numbers that like, you and I have spent tons of time around the blogging world and people are like, you know, everyone's saying, oh, I'm a six figure blogger. Oh, you're only a six figure blogger. I'm a seven figure blogger. And I'm just like. Part of me is like, shut up, guys. But the other part, it's interesting. The way he sets the bar for achieving success with your blog made it seem really achievable. And it wasn't some crazy Outlier. It was like, no, no, no. All these things pull together so that I can be a full time blogger. And here's how. It took me 279 days to get to the point where I could make a full time living from my blog. And it's just great storytelling and so it felt very approachable. So that was one thing. Do you want to add to that?

Yeah, well, I was going to say.

I think that's a really important takeaway and I think maybe we're spending some time on, you know, as people that listen to this podcast would be interested in either doing what they're doing better from a business perspective with their blog, or getting started from the business perspective. And one of the things that you said was that he pulling it all together. And can you talk a little bit about what you meant by pulling it all together and how he did that and then how that impacted your mindset?

Yeah, I think what was interesting for me is that he had a bunch of different revenue sources and I can't remember now. I would need to read the whole thing again. But it was like the writing that he did for this publication and then it was his own products that he sold here. And it was definitely a few different sources. And as much as the title of the ebook kind of points to this of the 279 days to overnight success in that it didn't happen immediately and he had to pull from a bunch of different places. It wasn't like he was like, yeah, I came out with a course and it sold $50,000 the first week. And it was all easy from there. Why don't you do the same thing? I don't understand. It was very much like he worked at this. He built it up over time. There was some affiliate revenue in there, There was some advertising, There was. You know, I don't know if he had, remember if he had sponsored posts. I don't think he did. But then, you know, the bulk of it was his ebooks and courses and it just felt scrappy and relatable.

Yeah.

In a way that nothing else had.

Yeah, we.

So this is an older episode for.

People that are just picking this up in episode 97. One of the things that I talk about is this idea of the egg carton method. And it sounds really similar to what you're describing where you view your blog not as or your business, whatever it would be your online business not as. Hey, how can I from this one source ads or affiliate income, how can I get to the place where I replace my full time income, but instead viewing it as an egg carton and saying, okay, If I need $50,000 as a salary, uh, how do I break that up down or break that down to a point where from 12 different sources, I can pull in enough. And when you do that, you start to realize like, oh, okay, it doesn't have. I don't have to make $3,000 a month from advertising. I can start with 300 or $400 a month. And from affiliate marketing, it can be the same thing. And it becomes more approachable and in.

Some ways more encouraging because the numbers.

Don'T seem as daunting. Uh, and it, it sounds like maybe that kind of overlaps a little bit. We'll link to both of those things in the show notes, the 279 days to overnight success and, and the podcast I'm talking about. But it sounds like maybe there's some overlap there with the idea that, hey, you don't have to be super incredible and get to, you know, 9,000 visitors overnight, but you can put these little pieces together along the way.

Yeah, I 100% agree with that. And I think what I particularly like about that is that just the way it builds on itself. The other thing that I would say is if you're in that position, your goal, I don't know, maybe your 2018 goal is to quit that job. Let's say it's making $50,000 a year and you need to replace that income. One thing that I really encourage you to do is if that's we're going to be at by the end of 2018 and that's what we're working super hard, it's not going to happen immediately. It's not going to be like you made zero dollars and then now you're making whatever that is just 47. I can't do the math in my head, but some number of thousands of dollars a month.

4,000 to make it easy.

Yeah, yeah, that's not going to happen instantly. And so at that point, let's say it's February and you're making 1200amonth. Go put that money in savings. Take that income that's coming in. This is what I did with my iPhone apps in the early days was as they were in the app store, they were making some money. First they're making 500 bucks a month. And then by the time I quit my job, they were making 3,000amonth or so, which was not enough for me to live on, but I'd been saving it all the way along and so then when it came down time to quit, I had, you know, 25,000 saved up entirely for, like the purpose of funding me quitting my job.

Yep. Yeah.

And might be able to quit a little sooner. Yeah.

And I think the other thing that helps you do is it doesn't let you have lifestyle inflation where suddenly that 3,000amonth gets folded into the coffee budget and it's like you upgrade from the coffees to caramel macchiat and suddenly it's like, you know, you're spending increases to the income and if you put that away, it allows you to maintain that number that then you can transfer over to. So you, you're starting to have some success with this and starting to get some, some traction. You're inspired by Chris Gillibro and you launch this, your first product. And your first product is around the thing that you've been passionate about, which is iOS development. It wasn't called iOS at the time, but iPad and iPhone design. What happened when you did that and was it what you expected?

It exceeded expectations in pretty much every way. So I launched it to a little email list of 800 people and my goal was that 10,000 over the course of the lifetime of the project, maybe five years or three years or something, and it made $12,000 in the first day. And I went, whoa, okay. I heard crazy stories of other people doing epic launches, but that was them and they were Internet famous. And this was me on my pre launch list of 800 people. And so I was definitely blown away by that. And I actually didn't take on a single consultant. The point of the book was to help me get that reputation so that I could charge more in my consulting and get more people. I didn't take on a single consulting project after that. I just said, nope, I'm a full time blogger now. Yeah, that's, you know, that's amazing.

Yeah. And it's a huge proof of concept that what you're doing was needed, but also what you're doing was valuable. Right. So the solution you came up with solved the problem that you thought it would. I know for some people, they go through that process, they launch and it falls flat.

So what do you think was the.

Difference between what you did versus a launch that just falls flat?

Yeah, that's a good question. Because a lot of people are going to have that frustrating experience of like, I couldn't build the pre launch list or, you know, I did and no one went to purchase. Yeah, I think there's a couple things, you know, the size of that pre launch list matters, you know, so if that launches to 50 people, then you got to do some work to get it at least up into the 2, 3, 400 people if we're going to have a successful launch. The next thing is if you have those people. One trap that's easy to fall into is think, Okay, I have 5,000 people on this list. So the conversion rate will be X and a bunch of them will buy, but often they're not. They didn't intend to be on that list for that product. They signed up for your blog or they signed up for something unrelated from two years ago and they're still on your list now that you've pivoted your blog four times. And so then you're like, why aren't they buying? And it's because, well, they don't actually even care about this thing that you're doing now. It's not a list for that product, it's a list for whatever you've had as your interests have changed over the years. Yeah, I think that's a big risk.

In your case, it was a super targeted list. It was all people that were interested in iPad and iPhone design.

Yeah, exactly. So it's about as targeted as you can get.

Got it. Were there some more things, takeaways that you're going to say in terms of success versus not success?

I think in the mistake side, the next thing that you can do is you can really mess up the pricing. One thing that I learned from Chris Guillebo was doing tiered packages. And I've written a bunch of articles on this. If you just search Nathan Barry tiered pricing. I've written like probably 30,000 words all across the Internet about this one thing. But basically the idea is instead of charging the same price, say $29 for your book or your course, you should have some tiered prices. So $29 is the entry point and then maybe $99 is the higher end package. What you'll find is that only a smaller subset, maybe 20, 30% will go for that higher package, but they'll represent over half the revenue. And so just doing that every time I've done it, every time I've helped other bloggers implement tiered pricing, they've always at least doubled their revenue by doing that.

Yeah, and idea being that just because you have a certain product price point doesn't mean that that's serving the needs of everybody that's there. There might be people that would have a bigger budget, they'd be willing to Pay more in order to have additional value or product or services, whatever it would be.

Yep, for sure. And everyone has a different price tolerance.

Sure.

So you might be willing to spend 50 bucks and not think of much of it. I might be like, ooh, $20 is the max I can do. So if you had two price points at $2050, you and I will both be happy consumers and the author will have made 30 bucks more off of that sale.

And how do you know how to price your product? It's a huge tough question, but in your case, how did you go about picking that number?

Yeah, you know, I don't think that I had much of a formula to it. I originally went with, I think$29.79. I did three packages, 29.79 and 129 or something like that, or 180, I can't remember. And they were just examples off of what other people had done. I heard this tiered package idea, so I put together a top tier package that I didn't think people would buy. Turns out like a third of everyone bought that and accounted for well over half the revenue. I was like, oh, okay. So I think the thing to do is to just pick those, figure out what the ratio is. You're like, okay, I would like 50% of people to buy the smallest package, 25% to buy the medium one, and 25% to buy the most expensive. And. And then throughout launches and other changes, keep tweaking those prices so that you end up close to that ratio.

Got it? Yeah. Tweak, adjust, change, monitor.

Yeah. And I would say set the prices at something. If you're super worried, you can set them lower than maybe what people are recommending. Do a launch at that. And then for your next launch, go, okay, we're going to raise them by 50% or 30% or something like that and see where the price tolerances, especially when you have tiered pricing, then you get to cover this range and that ends up being really good. So you're less likely to run into the problem of, oh, I priced a course at $500 and nobody bought it and I really should have been at 200 or 300.

So you are starting to make this transition.

You're experimenting with apps and those are having some success. Now you do an information product around designing apps that has successful, you double down on that and get even more traction. And it got to the point where, you know, you're reporting publicly on this and talking about it on your blog and you get to the point where in 2015 you make almost $300,000 from products on your blog. And around the same time you're also starting to experiment with starting this software company called ConvertKit.

So can you talk to me about.

That pivotal point in your life and.

Why not just continue with the success.

That you had with the products you were selling on your blog?

Yeah, so I wanted to get back into software. I felt like I was teaching people how to make software and I was kind of getting a little bit disconnected from actually designing and creating software myself. So I wanted to get back to that. The other thing is that I'd gotten really good at a launch driven model for my business where I would do a product launch, it would make 20 to 40 thousand dollars in one go and then maybe even in a day and then would taper off from there. So in a launch I might have a $60,000 a month, but then my average would be, or not the average maybe then the low months where I wasn't doing a launch would be 10k or something like that. I really wanted the stability and I was really drawn to the recurring revenue that a software as a service platform has. So hey, instead of buying a $29 eBook, you're paying $29 a month for as long as you use our product. So I wanted that. I liked the stability of it. My idea was then I can have the launches be these big peaks and valleys and then with the recurring revenue smoothing that out, it'll be perfect. The other thing is I was getting a little bit bored. I'd figured out a system for, you know, drawn from a lot of other people and my own ideas for self publishing, for building this audience. I'd written a book on it called Authority. And I was like, I can make this gradually increasing 300,000 a year, you know, maybe get up to 350 and then 400 or something like that without ever really challenging myself. Right. I can just execute the same playbook a little bit better every year. And that's where we're at. And it wasn't challenging. So I was like, okay, a software company sounds hard and like a lot of new challenges, so let's go do that.

Yeah. And I would guess that you were right. It is a hard thing, isn't it?

It's very hard.

Turns out you were way harder than I thought. Turns out you were right. So ConvertKit, you decide to create an email software product for bloggers. Before we jump into the story of ConvertKit and cover that, can you talk about at a high level what ConvertKit and what it does.

Yeah. So ConvertKit is an email marketing platform. You think of it as a competitor to Mailchimp or AWeber or Infusionsoft. And it is designed from the ground up specifically for bloggers.

So.

I designed it based around the needs that I had and then said, okay, we're not building a generic tool, we're building exactly what bloggers need to. And so it's designed for people who, whether they're just starting out or they have a million subscribers to their blog, has the deliverability, the automation they need, all of that, all the integrations, while still staying really simple and easy to set up.

Got it.

So it's used by everyone from Pat Flynn and Chris Gillebo to Gretchen Rubin and Tim Ferriss.

Cool. Yep. And idea being that it is really focused on the people that are maybe solopreneurs or bloggers that have a small team, but it's not necessarily this massive tool that's super hard to use, like an infusionsoft would be, where you almost have to be full time email marketer just to use the tool.

Correct.

Yep. And with ConvertKit, you're at this point where you started it, you launched it, it was kind of going alongside the products that you're creating, but you were doing both at the same time. And there came a point where that wasn't sustainable.

Or did ConvertKit take off? At what point did you say, I'm gonna start to focus less on the.

Product side of things, the information products side of things, and do more on the software product side of things. And was that a hard decision to make?

Yeah, it was a hard decision because I think most people are expecting that, you know, once I'll gradually, I'll gradually shut down the current business once the new business is doing amazingly well. And what I realized is I'm really bad at doing multiple things at once. And so if you give me one thing to do, I'll do it well. You give me two things, I'll do both of them poorly. And so that's what I was doing. I was basically starting to run an info product business worse and worse because of the focus on software. But I also wasn't able to do the software side on the level that I needed to. And that was definitely frustrating. So a friend of mine called me out on that and he was like, look, either shut down ConvertKit and just keep building your audience, keep building this info product business, or shut down the other business and go all in on ConvertKit. But whatever you're doing, it's not working. So pick one and move on from the other.

Yeah. And it's interesting to see that decision being the right decision. When you do your year end review on your blog, we'll link to that where you show the graph of the books and course revenue. And it's, you know, in 2012 it's 75,000 and then it goes to, you know, 160 or 170,000, 300,000. And then in 2014 it pretty quickly drops off and goes the other way back down.

But then underneath that you look and.

See at convertkits growth and it's like not on the graph, not on the graph, not on the graph. And then it's like 2015, it's on the graph. 2016 it's like multiple millions. And then 2017 it's $10 million, almost $10 million.

So that is a massive change in.

A short amount of time in terms of the success of a product. And for those that are interested, you're part of Barometrics open startups, which reveals the revenue from different SaaS apps, so software as a service, kind of those monthly apps. And when you look at that, you can see the recurring revenue, which is really interesting to see.

But one of the interesting things for me was to see right around August.

Or September of 2015, it looks like there is not necessarily a hockey stick movement, but it kind of feels like.

That where there's this jump, this pivot.

Point, and when you look back at that, can you pinpoint what happened at that point that helped lead to the success and kind of launching of ConvertKit into pretty consistent growth?

Yeah. So everyone always talks about how you need word of mouth to grow. It's like, how'd you grow your company? Oh, word of mouth. And then as a founder, that's super frustrating to hear because you're like, oh, word of mouth. Right. Why didn't I just try to.

Why didn't I think of that?

Why didn't I just pull that word of mouth lever? That's the one. Here I was trying to do sales and build a business and all I had to do was use the magical word of mouth. So it's super frustrating to hear, but when everyone talks about that, there's a certain amount of momentum that has to happen. Right. You want super happy customers saying good things about you and that momentum builds. It allows you to get a little bit of a reputation and land bigger and bigger people. So we'd spent the nine months before that or eight months before that. I was all in doing Direct sales, calling people up, cold emails, just trying to talk to any blogger who would work with us. And then we would do all the manual switches for them. So if we get them to switch off of Aweber, then we would do all the work for them to set them up and all that. And so we did that to grow the company from about 1,500amonth in revenue to just about 10,000amonth in whatever that was seven or eight months. And right about that time is when we started to feel that things were getting easier, that I'd have a conversation with someone, they'd be like, oh yeah, my friend uses ConvertKit. Or someone would respond to an email and say, I've heard good things about you. And that's when it's like, okay, this is that word of mouth thing that they're talking about. So we were able to land a couple clients right around then who were really, really influential in different spaces. The first one, actually they both signed up on the same day, which was super funny. One was Katie and seth spears from wellnessmama.com Just a massive, amazingly successful blog. And the other was pat flynn from smartpassiveincome.com and both of them signed up on the same day, Both through the course of a lot of conversations and in person meetings and all that gave us a nice, I think that was like a $4,000 bump in revenue or $3,000 in a single day. Our revenue went up by 30% when those two blogs signed up because they had such large lists. But then in that August, September, October, we launched our affiliate program. Really kicked off by those two sites and especially Pat Flynn in a big way. And so then that was where we started paying to incentivize the word of mouth. And that really started to take off.

Interesting. Yeah. And makes a lot of sense that people that would use the affiliate program would then recommend it if it's successful and they like it, but even more so if there is an incentive behind it where they can take advantage of some of that recurring income that comes along with it, which is really cool.

So you're at the point now where.

ConvertKit is an extremely successful bootstrapped business and bootstrap, for those that aren't familiar, means that you haven't taken any outside funding, is that correct?

That's correct.

Okay, so which is a really incredible thing, and the last thing I want to talk about on the ConvertKit side of things was to hear you talk about the story of building ConvertKit and.

The revenue and the expenses going hand.

In Hand and how you made the decision and how you went about making sure that ConvertKit started to turn a profit. Because I think sometimes when people see that number, they see, you know, $100,000 in recurring revenue or, you know, a million dollars in recurring revenue, they think, wow, must be so nice to get a million dollars every month. But a lot of that, especially with a software company like this, goes into the expense side of things. So can you tell that story about how you turned that around and started to turn a profit with Convertkit?

Yeah, absolutely. So if we go to. I guess that was July 2015, we ended the month at 15,000amonth in revenue. That was the first month that we actually made a profit as a company. It was a tiny little profit, but it was a good time to make a profit because we were completely out of money, both personally and in the business. And so from there I think we got down to maybe $5,000 in the bank account. And from there we ran a profit of about one to three thousand dollars a month. I think one or two of those months might have been as much as five or six thousand as we grew. Because what happened over the from July to the end of the year is we just grew crazy fast. Like 15k to 20, to 30, to 50, to. At the end of the year, we were doing 98,000amonth in revenue. So over those six months, it was just insane. And all the way along, we were just working as hard as we could to keep up on everything. There's this idea in the startup world that you need to reinvest everything in growth and supporting that growth. So we ran right at breakeven the entire time. There were always more tickets to answer. There was always more stress on our servers and everything else. Hiring more engineers, upgrading servers and everything. So every dollar that came in got spent on something. This guy Matt, who has been on our team for a long time, he joined the customer success team really early on. I think he has the third longest tenure of anyone at the company, after myself and one of our engineers. When he joined, we hired him part time to help answer customer support tickets and help customers get set up. And we hired him at 20 hours a week. And then the next week we were like, hey, could you do 25 hours? And he was like, sure. And then like a week or so after that, we were like, could you do 30? Then two weeks later, could you do 40?

Could you do 55?

Yeah, exactly. And he was like, that was the. We had a conversation maybe a year later. He was like, that was the weirdest thing. Like, why not just hire me part time and then move me to full time? And I was like, because that was the exact amount of money that we had coming in.

Oh, wow.

Like, that was our. As our revenue went up, I was like, whoa, we just added 500 bucks into recurring revenue. Like, Matt, can you work X number of hours more? And he was like, oh, that makes a lot of sense. So that's how we were running the whole company, where every dollar, as it came in, you know, we gave it a job and we put it to work. And that continued until, you know, mid January, when we were at that a little over 100,000amonth in revenue. But our bank balance was all the way up at, like, 25,000amonth. Or not 25,000amonth, just 25,000, which is way better than the 5,000 that we had six months ago. But as a function of the number of days worth of expenses in the bank, it was a pretty bad situation because as we continued like that, our cash balance would go up, but the day's worth of expenses would get shorter and shorter. So it'd be like, oh, we have three weeks worth of expenses. And then, oh, shoot, now it's only 14 days and 10 days. And it was getting shorter and shorter because we were spending so much money. That's when we really thought about raising capital and taking on investment. I did the whole Silicon Valley thing. I was down there for a conference, talked to a bunch of venture capitalists. Luckily, they didn't understand our business model and thought it wouldn't be a very big business. We got turned down by pretty much all of them. But I talked to another founder. His name is Mike McDermott. He's the CEO of FreshBooks, and just this amazing, massive company that I think most of your listeners have probably heard of. And he just said, look, you're growing at a rate of like, 20 to $30,000 of new revenue every single month. If you stop spending and lock it and say, like, you're just going to stay at this level for expenses, then you'll get super profitable really quickly and you'll be able to build up your cash balance without raising funding. And it was almost like I needed him to give us permission to do that.

Sure.

Because everyone else was saying, oh, you.

Got to spend everything.

Yeah, yeah. And so when he said that, I was like, okay, we can do this. And we set a goal to get three months of expenses in the bank and, you know, to go from, you know, eight days of expenses in the bank to three months worth as quickly as possible. And we started that in February, and our expenses barely grew. Our revenue grew a ton. And by July 1, we had more than three months of expenses in the bank and we'd gone from operating at maybe a 3% profit margin to operating at a 50% profit margin. It was pretty incredible. There was definitely things that we should have spent money on that we didn't. And so we might, you know, like immediately after that we were like, yes, hit the goal and hire three people.

Right, right.

You know, but. But still, it was really good and it built a lot of discipline in the company and it established a culture that we even have today of everyone being frugal and. And very, very deliberate with how they spend their. The company's money.

Sure. Yeah, that's great. And I think it's helpful for people to hear that because I think sometimes when you are in that startup stage, whether it's, you know, spending 500, making 500 and spending 500, or, you know, 100,000 and spending a hundred thousand, it's interesting to hear people's journey to profitability from a business standpoint and knowing that part of it just comes from that intentional decision to say, I'm just not going to spend anymore. I'm going to press pause on spending to this point. Not forever, right? You don't want to get to the point where you're never spending money on your business, but to intentionally build up those reserves, which I think is such a cool story.

So we'd love to pivot here a.

Little bit for the end of our interview. And one of the things that I love about interviewing people like you, Nathan, is that with ConvertKit, you have thousands of touch points with other bloggers and you are able to see some common traits with bloggers that experience success as business owners and as bloggers. So one of the questions that I would love to hear you talk about.

Is some of the common themes that.

You see with bloggers that are having success online.

That's a good question. Yeah. So we've got 17,000 bloggers using ConvertKit, so we definitely get to see the full range of what works and what doesn't. Let's see. I think that the bloggers who are growing a list really quickly are putting more time, let's see, they're putting more time than you would think into every blog post. So these would be the people like the Tim Ferriss who are writing epic blog posts. Or another example would be Tim Urban from Wait, but why he writes these blog Posts that are just insane and they're so good and they're so well researched and you're just like, whoa, you did not just sit down and write this in an hour and hit publish. You were very intentional about this and it deserves to be shared. So that side of it where it's like, hey, whatever you're putting into time to write a blog post, a lot of these best bloggers are putting in two or three times as much as you are because they're really crafting that great content.

Yep. And that's one of the things we talk about on the food side of things with a recipe. By the time you go from recipe development to photography to editing photos to publishing the post, it's so much time that goes into it. And so you're saying these people are crafting these blog posts really intentionally. But then you had also mentioned intentional list building alongside that. So how do those two things partner?

Yeah, because really the great blog post is only half of it or maybe a third of it. There's the list building side of having a really great opt in incentive or a reason for people to join the list, because I know plenty of people who have tons of traffic and they're really converting it quite poorly because there's not a great ebook or a case study or whatever it is. There's not a great reason to download the free offer and join the list. The other side of it that I think people really mess up is like, okay, I've got to put tons of time into this blog post, so I'm going to do that. And then I hit publish and okay, time to take a nap. And you just got to realize that your work is half over at that point. You have done exactly half of the work required and it was way more work than you expected. And you're only halfway done because all these people put way more time, you know, the other 50% into actually promoting the blog post after it's out and finding new communities and reaching out to people and doing projects together and appearing on podcasts and everything else. And so there's just a ton of work of who do you admire, who do you want to be friends with, who do you want to partner with and working with them, going to the conferences that they're attending, networking, getting on calls, all this stuff, let alone the basics of promoting the blog post, building backlinks and everything else. I think people just don't put in enough time and enough high quality time.

Yeah. And I think that's such good advice and such a good Reminder, Because I think oftentimes what people want is myself included, like the quick tip or the trick that's working really well on Facebook. But so often it's not a quick tip, it's not a trick. It's just the time and energy that goes into crafting content that people engage with and share and want to consume, which is a lot easier said than done.

Yeah. The other thing I would say is, like, what work are you putting in to level up your skills? One thing that made me, you know, want to move on to the software side was I felt like I wasn't learning things very quickly anymore. And so I think if you're really deliberate about, okay, I run a food blog, or, you know, okay, what. When was the last time you took a course or really learned from someone on how to write great recipes? Or how much time have you spent practicing on taking great photos? These other things that are really going to feed into it. And then you're like, great, I'm a food blogger. Oh, shoot. That means I've got to go learn SEO and I've got to. All these other things I always tell bloggers, I hate to break it to you, but you pick the industry where you have to learn basically everything and continually learn, and then you should go learn some HTML and CSS as well. At the same time, it's like, there's such a range of stuff to learn, so I just break it out like, okay, these are the four things that I want to get better at this year so you don't get overwhelmed. And every week you're like, okay, can I carve out an hour each week to get better at each of these things? And then it's more deliberate practice rather than a year later. I wish I knew how to take better photos, but I just haven't been able to find the time to do it right.

Yeah, absolutely. And I think what people would find is if they do chuck out that time to do that, that it would be enjoyable, especially if it's something that you like doing. The hard part is just scheduling that and making it and making sure to do it every. I'm going through the. This would maybe be an encouragement to people that are interested in doing it. Uh, I'm going through the process of going watching the Linda.com course on Mac OS, so just like the Mac software and some of it is so, so basic. Uh, but I just spend 15 minutes a day going through these. It's like eight hours of content. Uh, but what I find is like, oh, man, there's things that I pick up and that I learned and that I understand that when I'm sitting at the computer for eight hours a day, over time I'm able to do that and understand that better. So I think even if it's a short amount of time, it makes a really big difference if you're able to continually learn.

Yeah, for sure.

So last question that I would love to hear you talk about is for those that are just getting started. So let's say somebody signs up for ConvertKit or you know, they've never done email marketing before. They have a food blog or maybe they have just a blog where they publish lifestyle content. They don't have any experience with email marketing or setting up automations or even the word automation is a little bit intimidating. What would your recommendation be for the people that are just getting started to set up a successful email marketing campaign or account?

Yeah, so the first thing to do is I'd probably break it up into a few steps. It's really easy to think, oh man, we've got to do all this stuff. We've got to create this funnel, like so much stuff. And it's like, okay, yes, you will do all that, but let's do it over the course of months or weeks depending on how much energy you have. And so start with like, just get an opt in form on your website. There's so many bloggers. Like we referenced Pat Flynn a few times. He often talks about how he really wishes he'd started building his email list a year earlier and he didn't because he was intimidated. He had to learn all this stuff and it's like, look, just put an email list, an opt in form on your website and at least you'll be capturing some number of people who come in. Tim Ferriss actually talks about that where he didn't use email for the longest time.

Yeah, I remember him writing a blog post about that and saying, I'm finally going to start doing email. It's like, oh, I feel like it makes me feel a little bit better. Like, okay, Tim's still working stuff out too, right?

100%. But he did the right thing and he had an opt in form sitting on his site the entire time.

Got it.

He was like, I don't know what to do with email. Here's this thing. Someone told me to put it there and I did.

So he had it, but he wasn't using it right.

And then years later he was like, oh, I have 300,000 people on this list. You know, because you had all this traffic and it was crazy successful. But your version of that might be okay. You know, I ignored this for three or four months or six months and I have 200 people and you're not starting from zero because you did that work. I would say the next step after that is to create an opt in incentive of some kind. You know, a lead magnet. Everyone has a different term for it, but it's basically, maybe it's the free ebook of recipes, maybe it's the cooking tips, whatever else for me, maybe it's the app design, the ebook on the 10 must have app design techniques, something like that, and to incentivize people to download because then it really gives you something to promote and it gives your friends something to promote on your behalf as you've networked with other bloggers, other people in the industry. Then you're like, hey, would you mind sharing this on Twitter? Would you mind linking to this in your email that's going out or some of those other details? And it makes it a lot easier to grow the list rather than like, I started this blog, can you promote it? It's like you want me to just link to the homepage of your blog? Like, no, I'm not going to. You know, that doesn't work. But if it's like, hey, I made this guide or I made this free email course or a really good opt in incentive, then like, yeah, I like your stuff, I'd love to promote it. You know, that happens a lot more naturally. Then the third step from there would be creating some kind of follow up sequence. It's not about going out and creating something crazy advanced or designing the perfect funnel. It's really about taking your three or four favorite pieces of content that you've ever put out and putting those into an email sequence so that someone who signs up today is going to get that article sent to them that you love, that you wrote, you know, two years ago or something like that.

Cool.

And that's the start.

Cool.

So Nathan, we are coming to the end of the podcast interview. But for people that are interested in jumping in, taking that first step if they don't have email set up or maybe converting over to ConvertKit, what would be the best way to do that.

And also what would be the best.

Way to follow along with you online at your blog?

Yeah, so I write about a bunch of stuff just@nathanberry.com Barry's B A R R Y so there's a lot of ConvertKit story there. All our numbers are public, so you'll probably see a lot of details that you wouldn't expect to find published openly on the web about a software company.

Sure.

And then I also recommend checking out from ConvertKit we have a publication called Tradecraft and it's a monthly publication. Goes into a lot of detail on a different topic every month. So email deliverability, how to grow your list, how to do automation and set all that up. Bunch of different stuff there. And then when it comes time to actually sign up for ConvertKit, there's a free 14 day trial on the website. Then if you have more subscribers. So if you have over 5,000 subscribers, then we have a concierge migration service where we'll switch everything over for you for free.

Cool.

Great. And they can find that@convertkit.com and then we'll link to that in the show notes as well. So Nathan, thanks so much for coming on the podcast today, sharing the story and some advice as well.

Yeah, thanks for having me.

Hello, hello, hello. Alexa here bringing you the reviewer of the week and this one comes from Tanya from whynotmom.com and it says as a non food blogger I have gotten more tips and helpful advice than I ever anticipated with this podcast. Not only is Bjork excellent at interviewing, but he has guests that provide very useful information for running any small to mid sized business and blog. I love it when Lindsay is on as she really shown what it takes to be successful. I would like to hear more tips on working from home and raising kids and juggling it all from guests who are making it work. I really love that suggestion Tanya. Thank you so much. And if any of you have any suggestions for guests or topics that you'd like to hear on the podcast, we are all ears. Just shoot an email to podcastoodbloggerpro.com and we'd love to hear it. Thanks so much for listening this week. Friends from all of us here at fpphq make it a great Sam.