MBA2371 Extended Interview: How Greg Smith Grew Thinkific to a $150M Company

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Your coach, your teacher Omar Zenholm.

I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014 and today's episode is a very special extended interview episode where I sit down and extract the wisdom out of some of the best business minds out there. And today is no exception. We have Greg Smith, the founder and CEO of thinkific, the leading platform for creating, marketing and selling online courses and membership sites. I sat down with Greg to find out how he started and grew his $150 million business, Thinkific. We learn how the idea even came about, how he was his first customer and how he grew his business day after day, year after year, raised capital and even went public and now is a public traded company. There's so many nuggets that he shares in this episode. So let's get into it. Let's get down to business. I wanted to sit down with Greg Smith for a lot of reasons, but mainly because his story is filled with amazing insights and takeaways. He's also been through a lot of different stages in his business, from bootstrapping with a loan from family to raising capital to going public, but all started with a pain. A pain that he had that he wanted to solve. Let's jump into that conversation with Greg Smith right now, but I'll be back to wrap up today's episode and share a few takeaways. But for now let's jump into that conversation with Greg Smith, the founder and.

And CEO of thinkific. Greg Smith, awesome to have you on the podcast. How you doing today?

Great pleasure to be here.

Thank you. Awesome. Thinkific, your baby, your company. Well known in the space in terms of teaching, learning, the creator economy, people creating their own online courses and trainings. I've Known for you. Known about thinkific for years. I've known of you for years. It's good to kind of meet you and talk to you and pull out some of the things I want to learn from you. A lot of reasons why I do these extended areas is because of selfish reasons, so I can learn. But I want to start with the genesis of the idea thinkific. And really, what kind of problem were you trying to solve back? Was it 2012 when you started?

Yeah, I mean, genesis for us was I was really lucky because I was trying to solve my own problem, really, in that I had been teaching and tutoring in person the lsat, the law school admissions test, and then move that to an online environment in about 2006. And so for about six years there, it had always been a side project. I went on, finished law school, practiced as a lawyer, but I had this online course going in the lsat and the course went well. But what we were struggling with is we'd had to build their software on our own. We were, we had been looking for a system that allowed us to have our own content, own it, have it under our own brand, price it, build a business, have it, be kind of e commerce focused where we could actually sell our courses and other programs to people. And didn't you. We found marketplaces that didn't meet the need. We found LMS that didn't really meet the need. And so after years of that, and then the other thing that happened is a lot of other people were reaching out, saying, we want to do what you did with your LSAT course. So that kind of came full circle to starting thinkific as a way of solving our own problem that we saw now a whole bunch of other people had as well.

Awesome. So you had a problem you wanted to solve. You wanted to kind of solve it for yourself. What were kind of your first steps? Was it like, I learn to code or do I need to find somebody and hire them? What was the, like, you know, your next step after you're kind of like, I want to solve this problem?

Yeah, I mean, the, the learn to code is an interesting one. I get asked about that by so many founders because I, I did try learning to code. I did try sort of hiring a few friends and other people to help with that piece. I got lucky. Eventually my brother came along and said, I know how to code and let me, let me help you get this up and running. So fortuitous that, that he was a strong developer and I mean, he was still learning very much at the Time, but learning quickly. So he did a lot of it. I tried. I went to school for a year trying to learn to code in night classes, and eventually my brother said to me, he said, greg, you know, you could be a good developer, but it's kind of an all or nothing thing. And I dropped it instantly. I'm like, okay, fine, I'm going to go all in on business that I'm good at and not try and become a software developer.

I love that. I love the idea that, hey, I can't do it all. You know, I run a software company myself, Webinar Ninja. And I. A lot of people ask me the same question. I don't know how to code. I took a couple classes just so I can understand what my engineers are talking about. But. But in the process I learned that, okay, I gotta know my lane and I just gotta focus on what I do best, because that's how I could serve my, my company best. So you started back in 2012, which sounds like, you know, ages ago in, in the tech world. Talk us through, like, what was the landscape starting a SaaS company back then? You know, which was unheard of. You know, I started in 2014, so you started two years even before me, where like, you know, half the tools that we use every day and half the things that are out there are not available. So what were, what was the landscape like? What were the competitors? Like? What was it like starting a business in, in tech back then?

Yeah, I mean, different, obviously. I feel like, you know, I look at it as almost. There's been three stages of. Well, there was like pre SaaS then you had SaaS software as a service where you had the early starts. Like obviously Salesforce being one of the earliest. When we got started, there were. There was SaaS. It wasn't that uncommon. Like, because you had Shopify was around and others like that. Nothing that we found in our space. You know, I think there might have been others who were getting started around the same time of us, but they were so small like we were, that no one had ever heard of them. So we couldn't even find them with extensive Google searches and stuff. And so I think one of the key differences, and I saw a kind of chart of this a few years ago, was around the time we were starting. You know, three to five years after you started a SaaS company, you could expect like three to seven competitors. Whereas I think, you know, more recently it's like a year after you start, you might expect 10 to 20 competitors because it is so Much easier. I mean, the benefit is it's easier and cheaper to get started to build things. And there's just a lot more, I think, rapid copycat happening now in SaaS that if something works and then you'll see a lot more people doing something very, very similar very quickly. So in some ways it's easier and faster, and others there's more rapid competition these days.

Yeah. In preparation of this conversation, I watch a dozen YouTube videos on people reviewing Thinkific and what they like about it and, you know, versus the other competitors and things like that. And I always like to kind of learn a little bit about that because often that stuff doesn't happen overnight. It's like in the DNA from the beginning of the company. And one of the things a lot of people talk about is that they love the marketing side of thinkific, the landing pages, the checkout pages, the ability to kind of run a business with this course platform, and it's not just like a place to host your courses. Was that something intentional from the beginning, and if so, why?

Yeah, I mean, definitely intentional. And I like what you say about sort of in the DNA of the company. I mean, the core offerings we were looking to solve or the real problems we're looking to solve was how do we help people with knowledge, passion and expertise make a living from it? How do we get out there and help them sell that? And so there's two core components. You want to have an amazing product, that learning experience, be it a membership site or a course or otherwise, and you want to be able to go and make a living doing it and selling it. And the interesting thing is, I think know so many of the people in this space, they're usually more passionate about and better at the. I'm passionate about my passion, my expertise, my knowledge. Marketing is often kind of a new world to them and a little bit scary and a harder problem to solve. And so we've definitely put a considerable amount of effort into sort of solving that problem for them and, and doing that through tooling and. And other features within the platform.

I love it. I mean, Greg's being modest, those who are lif listening, but this is a big part of having a successful business is because you got to think about your customer. You got to think about how do I keep them on my platform, how do I make sure that they're successful with my product and they're not going to be successful if they're not selling courses. So they need to have great tools to sell, to market, to run a business, because if they have a course out there and it doesn't sell for three, four, five, six months, they're probably going to churn. And that's, you know, the enemy of any SaaS business. So I love the fact that, you know, a lot of people get really caught up in the idea of their business and the, the so called, so called, you know, problem they're trying to solve but really don't think about how do I make my customers successful because if they win, I win. Incredibly important in any business, but especially in SaaS. What are some of the kind of changes you made along the way to kind of fuel that business kind of running or the business thinkific itself and, and keep churn down and make customers successful?

I mean you kind of hit the nail on the head there in that we look at, I'm a big fan of Jim Collins and a lot of his literature and so think about the Flywheel, the Hedgehog concept. Sort of these are the things that your businesses, I mean the Hedgehog is what you're what passionate about, you can make money doing and be the best in the world at. And the Flywheel is sort of the steps that link together and are sort of mutually fulfilling within your business that help build your business. And at the center of all that for us is helping our customers be successful. So really everything we do kind of comes back to and focuses on how, how do we help them succeed. And that, you know, means a combination of things. They have to be able to take their knowledge and passion and extract it and putting it into some sort of product they can deliver and have that be an amazing product that we help them with. But then definitely they have to go and be able to sell it. And so we've done um, it's not just tooling. We do a lot of help and training now with AI. We've introduced some AI elements to help them both build the product and then also go out and sell it rapidly. So we look at things like higher converting landing pages, higher converting checkouts. How do we help them do things like drive traffic or convert that traffic into sales? And then really importantly, and I think sometimes people miss this, certainly early days in our space and still to this day, if you don't have a really high quality backend product, then you spend all of this money making a sale. And I mean for our, for our customers, you know, they've got a course or a membership, they make a sale, they come in if the, if the back end product, which we're kind of responsible for helping them Build isn't amazing, then their own customers will churn out. Or worse, they don't refer other people. So if it costs you a hundred dollars to acquire a customer, ideally you want that customer to go and refer three of their friends to it because that makes all of your subsequent acquisitions that much cheaper. And that comes from having an amazing learning product on the back end. And so that's a big part of where we invest as well.

I love it. What Greg just mentioned is what we talk about a lot on the show. You want a business that allows you to push the boulder down the hill, not up the hill. You want it's a everything to be in your advantage because business as it is is hard. So you got to kind of line things up to make it a little easier. So you guys, along the way raised $22 million or so. I work at a co working space. I'm at my home office right now, but I have a co working space downtown Sydney. And it's sort of like a startup hub co working place. So like half the people that around me are trying to raise money, many of them are pre, pre revenue and are think if they have the right pitch, if they get there in front of the right people, they're going to be able to raise millions of dollars and be okay. Talk me, talk me through a little bit about when did you know it's time to raise money for thinkific and how much for your first round? Like that actually matters a lot.

Sure, yeah. I mean I can, I'm happy to share all sorts of details on this being public. You know, a lot of this stuff is out there in that. Well, not all of it, but it makes it easier for me to share details around numbers and revenue and stuff like that. So first round was a loan from grandma for 25,000. A lot of our early work was also funded by just us having the LSAT course that was making money and we were pouring into Thinkific to fund it. My dad cut a small investment check. Uh, then we took in 600,000 from angels, then a million, then 2 million. Each of these being a sequen, a subsequent round with sometimes usually years in between. Then 22 million, a lot of that was secondary, which means some of it went to me and other early investors and founders and then 180 million in the IPO. So total were around 100 or 230 million raised.

Oh wow. Oh, way off.

Yeah, well you got like the 22 is the most recent round prior to the IPO. We. But you know when to Raise I, I think is, is probably one of the most important questions there. I do find often founders are looking to raise when they shouldn't or before they should. To me, the biggest questions are if you take in money from somebody else, is it going to meaningfully change the business you have? Is there things you can't do without it that will grow, it'll help you grow way faster because you have it, not just raising because it's the cool thing to do. And everybody says you should go and raise money. And it's, it's seems like a surprisingly simple question, but I find so many founders ask them like, what do you really like, never mind your pitch deck. What are you actually going to go and do with this that, that you know, multiplies your business and do you really need the money to do that? And if not, don't raise yet? Yeah. So there is a psychological element too. Like I know when we raised our first 600,000, like the first real investor round, we, we didn't need the money. We were close to profitability and when the money came in, we ended up just sticking it in the bank and adding to it with our revenue. That made it easy to raise. We didn't need it. But what it did do for us is it gave me more confidence in just kind of go and put the pedal down and go.

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There's a couple things I want to talk about here. Number one is the fact that I, I always find that especially in the, in, in the investment world, in the startup world, that when you don't need it is when you find it easier to raise. Like because your business is healthier. You know, people want to invest in a business that is going the right direction, that is close to profitability if not profitable. And it's just easier to raise when you don't need. It's almost like a law of attraction. Like I don't really care if I make, if I raise or not. But it comes easier the. The other thing. And I feel in my experience of being an entrepreneur for 20 years, it's so much easier to be creative, to make better decisions, to run a better business, to have a healthier company. When you're not worried about the roof caving in. You know, like when you have a bit in the bank and you're like, okay, I could breathe. I can make solid decisions. I can think about the next year, the year after. I actually think that's a smart idea, like what you. What you did with the 600k in the beginning. But what I really love is the fact that. And I want to ask you, did you sell your LSAT course on Thinkific?

It does now. When we first started, it was on some custom software we wrote. And once we got Thinkific up and to the point where it could support it, we moved it over.

Yeah, I thought that was brilliant that you. You basically became an example of the best client. Like, you know, this is, this is what we do. I. I drink the Kool Aid as well. I sell my own courses, and that's how I got started. A lot of people don't understand the power of that part of the story. When you're trying to sell your product. Like, you're not just some person that came up with an idea and, you know, put some lines of code together. You're somebody who's trying to really solve a problem for yourself. You understand, you empathize with the customer. Because I'm selling a course, I' to teach people something. I'm a creator myself. I know that when, with. With our software webinar Ninja, people really resonate with the fact that, like, you know, when I do my own webinars, they're like, oh, okay, great. This person knows how I feel because they've been through my path. This is huge because you know the language they use, and you could use that in your marketing. You know the pain points they have. So you can address them in your marketing, sales, but also in your product development, your roadmap. What are some of the things I want to talk about? One of the, One of the things I want to ask you is, like, along the way, you kind of had to go from creator to CEO of a public company. Like, how did that transition happen? Was it bittersweet? Was it difficult? Do you have a talk with somebody?

What happened?

I. Yeah, I mean, it's. You know, keep in mind it didn't happen overnight. It was 12 years in the Making and so a lot of reading, a lot of learning. I, I've had multiple coaches, I listen to podcasts, I watch what others are doing, I make huge mistakes and then I try and fix them the best I can and learn from them. So just, yeah, it's, it's a lot of learning along the way, but I think being conscious that it is constantly changing and growing and if your business like ours has, is growing at, at points of, you know, 50%, 70%, 100 something percent year over year, um, even if you're growing at 20% year over year, you've got to take a step and say I need to be growing at at least that rate just to keep up. And so it's just that constant learning of what's the next stage look like. And, and I think the, it's, it's helpful to be focused on the day to day sort of operational. But if you're not also thinking about the future and growth and how you're growing into it, then you, you kind of get, you can get left behind or, or fall behind in terms of where you need to be along the way.

Did you have any mentors or coaches that helped you?

Yeah, I mean, I've some authors I love that I've gone and read and followed fairly closely or even in some cases flown out to sit down with and try and understand what I didn't understand from just reading everything they'd written. Coaches, definitely. So we have a coach for our leadership team as a whole for when we get together and work together. And then I have a, have of, have a personal coach that'll work with me on a once every couple of weeks, just work through some problems together. And then within the team, you know, I operate as a bit of a coach to some people, people on the team and then just having some good members on my team that I can sit down and puzzle a problem with, even if it's not someone that reports to me or I, you know, like work directly with. But I can just sit down and I know they're a good sounding board to work ideas through with.

I love this, I love this idea of reaching out to an author that you love or, or maybe wrote a book or, or had a training and just reaching out to them and saying, you know, can I buy you a $5,000 lunch or something, you know, like, you know, have lunch but maybe pay for them for their time or something like that. Because we dropped five grand to go to, you know, south by Southwest, you know, like some conference and flying out and all that kind of stuff. And, you know, a few days go by and it's kind of over. The impact that you would get from just sitting with somebody that you can extract so much amazing wisdom from is incredible. Like, I love that idea. I also love the fact that you are conscious of training your team as well, not just yourself and thinking, okay, I'm the leader, I'm making the decisions. But there's plenty of people on my team making decisions, which is just as important. So awesome stuff. I want to talk a little bit about Thinkific, the product itself, because I find it really interesting and fascinating in the space. And I think it's. It's interesting that, you know, you live in Vancouver, you're Canadian. There's. There's a lot of Canada in Thinkific. And I mean this in a positive way because I always say that I never have never met a Canadian I don't like, because you guys are very polite, very nice, very sweet and thoughtful. And one of the things I want to talk about first is your pricing plans. You have a very generous free plan. And, you know, like. Like we talk about on the show, you know, when it comes to free plans, this is like a customer acquisition. It's not like a pricing model. It's a way to kind of. It's like one of the best, you know, lead magnets you can ever create. But I want to talk about, how did you guys decide on this free plan? How do you decide on what's included and how and why did you make it so generous?

Yeah, I mean, interesting thing is actually a little less generous than I think it was at one point. So we've done a lot of experimentation on it, of trying, you know, adding and taking away things not from the people who are actively on it usually, but from the one from new people as they come in. What you experience today is slightly different than it was a year ago or two years ago or 10 years ago. So it is with pricing. I think, especially in SaaS, it's something you should be. I think that convention. I find it hard to keep up with this, but the conventional wisdom is like, should be revisiting it twice a year. I think that's a little too quick. But we're trying to look at it every year and just understand, are we doing it the right way? And at that, don't hear pricing increases. It's not always just raise your prices 10%. I think there are companies who do that. I think they're missing opportunities there of it could even be lowering your entry point and increasing your high point. It could be opening freemium or moving just a free trial. So one thing we tried at one point was dropping the freemium and moving to free trials. We have experimented with more on the, say, transactional fee, whereas right now it's pretty much, you know, no transaction fees and you just come in and pay a monthly fee. So really it comes down to understanding where your customers get value, where you're adding value for them and what they're willing to pay for. Studying that constantly and then experimenting around what kind of pricing, pricing changes you can make.

I love it. And what I really like about your business model is that you're conscious of the fact that, you know, you have to invest in your customer. Like, I gotta give them something so they can get started. I know if they have a course and they start selling the course, even they have one student, they're gonna want to stick around because that student's gonna have access to that course. So it's a great idea. I think that a lot of companies, they kind of have short term thinking they're trying to make a quick buck and they don't really think about investing in their customers. What did you decide when you went to the free model and you went to the free plan? What were some of the things that you thought, okay, how do I get them to get started? Invest in them, make sure they have a course. And then what is the attraction to move into the next plan so they could be a paid customer?

Yeah, so, and I didn't totally answer your question on why the free plan and why, why so generous there? And I think you kind of helped me with that a bit there in the answer in that it really was about showing them value first and having them come in and saying, we're confident that we can help make people be successful. And so why let an initial price point get in the way of that? Right. Give them something for free that they can play around with, show them value from. And when they start to see that value, they get to make that option to move up. And that allows us like the why is we get to see thousands of people come in and try that out in a time period where you might otherwise see dozens, because it is free, it makes it so easy for people to try it. And then we're confident our product adds so much value they'll make that choice to upgrade as opposed to, you know, putting it all, hiding it and saying, you know, only once you've paid us do we get to show you the product you're buying, I'd rather say, you know, like in any. In so many other industries, you get to really look at the product you're buying before you purchase it. So that was kind of the concept behind freemium for us. And not that we're the first to do freemium. And definitely there's other companies that do great that you really don't get to see the product until you purchase it. On that piece of when do we. When do we introduce the customer into or try to ask them to pay us? A lot of our mentality on what goes on free versus what goes on paid is what if it's something they need to be successful initially and get started, we should make it free. Right. Like, help them be successful. That's what we want. We're with them. We're with them through the whole journey. Help them be successful. Put it on free. If it's something that it's more vanity or ego or nice to have or desire. So like a custom URL or, you know, very personalized branding, things like this, or a very specific feature that you really don't need to be successful, but you're, you know, to fulfill their vision the way they want it. Exactly. They need this more niche feature. That's the stuff that starts to pull them up into the free plans or, sorry, the pay plans.

As your business starts to evolve, it gets better. You're making some. Some cash. You're willing to reinvest in your business in those nice to haves. You know, most of the things we have in our personal life are nice to haves. You know, like, we don't really need a car, but, you know, we can probably take mass transit. We don't really need, you know, a Gucci bag, but it's nice to have, and it makes me feel nice and you want to treat yourself. And the same psychology happens in business as well, which I love. I want to talk a little bit about. You said a lot of people do freemium, which is true, but not many, especially in your space, do 0% transaction fees. I want to talk a little bit about that, because a lot of people, they use this to kind of make up for the losses of a free plan from a number sense. How do you. How do you guys kind of make sense of this and say, okay, we're willing to forego the transaction fee. It doesn't matter how much, how many sales they make, they're going to pay the same amount every single month.

Yeah. So I think it's worked for us to grow, you know, exponentially to this point. We do have some areas now where with certain feature sets, we will have variable pricing where it'll start to move up a little bit with your, with the value you're getting. It's not always a percentage. It could be something else. We're starting to introduce a little bit of this and the thinking is that. But what we want to do is we want to do it really where someone has essentially the opportunity to opt into it and we're providing enough value back that it makes sense to opt in. So as opposed to it just being a blanket, we're going to take 1%. Instead, what we're going for is I want to give you, I want to show you a whole bunch of value and we'll take some portion of that the more you use it. Um, and so we're finding that works pretty well for us. Um, I think the reason against the just flat, like you could take our whole pricing models, throw them out and just say, we're just going to charge everyone 10%. The challenge I have with that is you're actually going to scare away the most successful people and you're going to attract more of the people who, you know, don't have that much confidence in the future. And they almost use you like a parking lot. Like, I do remember at one point, a long time ago, we had a customer who said, hey, I love the fact that you have a free plan because I can like store all my videos on. And I was, I cringed. But you know, that's, that's one of the challenges of if you go with like a 10% or, you know, a flat percentage on everybody, you're gonna end up with way more people like that and less of the highly successful ones. Because when someone's like, I'm gonna make a million dollars, which plenty of our customers do and more, they don't want to give you 10%.

That's true. And you know, this is, was a hot topic on Twitter with, you know, one of the people in the space changing their pricing recently and they went with that like it's just a blanket high percentage for all their users and it makes sense for smaller people like you mentioned. But it's the, it's the big creators, it's the influencers that actually make your brand. It's actually the other people that promote you and talk about you. And the, there's a built in virality to your business because, you know, a lot of these people are teaching their students how to do something and they're seeing their teacher and they're. Oh, what software they're using? Oh, they're using Thinkific. That's pretty cool. Let me try them out. So if you're, if you're removing the, you know, the influencer part or that's not your customer base anymore, you're kind of losing out on that virality, which is not so great. And I love that, that you're conscious of that, which is great. So. And I also love this idea of giving them value first and then taking a percentage of, you know, the, the results. I find that this is incredibly a no brainer offer for as a customer. Like we use profit, well retain, which is a dunning service basically. You know, they recover your. Yeah. They cover your, you know, your failed payments and all that kind of stuff from customers that need to update their credit cards or whatever. And you know, they charge us a hefty fee every month. But because they recover so much, the value is so overwhelming. It's kind of like they're actually just making me money. So I'm happy to throw them that, that chunk of change, you know. Um, so I, I love this concept of like show them value first, see how well you're doing. And, and I love the idea of, you know, understanding like what I like about this, that the customer understands you're not trying to just rip them off. You're actually saying, I want to give you something great, you know. Yeah. And I only want money if it's great. And that's, that's fantastic.

Yeah. I mean I can give you one, two examples. One is we're looking on some things where we can actually say to them, we'll bring you a sale and then we just want a small percentage because it's a sale. You can run your business, you don't have to use this. But if you want the sale, we'll take a little percent because it costs us money to go get it for you. And the other one is we recently rolled out taxes so our customers now can have us process their taxes. We collect. We automatically determine based on the jurisdiction, the tax. We collect it and then we actually remit it for them to the tax authority. Now obviously there's a big expense for us in doing all of that and managing it. So we take half a percentage in order to do that. Yeah, but it's something where it's like they don't have to hire an accountant to go and do that. And you know, like it would cost them way more to do it themselves.

Yeah. And much more reasonable in terms of the Value they're getting. Yeah, I love it.

Yeah.

So I want you to talk to a little bit of the people that are starting out there who maybe have been running their SaaS business for a year or two, are trucking along, they're. They're maybe bootstrapped, trying to, you know, put the pieces together. Maybe they're missing a few things. In your experience, if you had to give this type of person advice, what is the most important thing they need to get right when they're starting and growing their SaaS business?

I, I believe it's really getting to know your customers and really living and breathing in their world and understanding the changes you make and how it impacts them. And the more people on your team who can do that. Like when I go to a conference and I meet a customer who, my favorite is someone who's like, switched to us or switched to a competitor or canceled or it failed or didn't work, and I'll just pull up my phone, be like, can you just tell me the whole story? And I'm going to record it, I'm going to send it to the team, and then we're going to watch it and we're going to dissect it and we're going to call you with more questions. Is just like those casual social conversations that unfortunately happen a lot better in person. You can do some of them on Zoom, but having those casual in person conversations where you just ask them and I ask questions that go, I don't tend to say, you know, what do you think of this feature? I'm more like, what are you afraid of? What are your goals? What are you trying to accomplish? What are you struggling most with? You know, to really understand what's going on in their business and behind the scenes and in their hearts and minds. And that helps me understand how they might view something new we would do. And the more of those conversations I've had, the more I find a year from now we come up with a new idea on the team and I can sort of drop into the mind of the customer as much as possible and say, I think they'd be pissed off if we like watermarked all their videos or something like that. Let's not do that.

Yeah, yeah, I love that. And understanding your customer is huge. A lot of people I know, especially those who have built a product to solve their own pain, they're like, oh, I know what they want. And they kind of feel like I'm like the ultimate customer. But I found through the years, you know, having these Chats, in person, on video. Understanding, you know, why. Why are you even doing this? Like, why are you even starting this business? Why are you even running courses? You get to understand, like, what their motives are, what's their why. Like, I'm doing this because I'm, I want to be able to stay home with my kids or I want to be able to travel or I quit my job or I got laid off. And like, you understand what their fears are. You understand what their issues are. You understand, okay, how can I help them in those areas? If I can get them a sale, they'll see value in that. And I, I feel like that's incredibly important because you might understand the product, but you don't understand everybody's certain situation. Everybody's got different situations, different reasons, different whys. And I think you nailed it on the head. Understanding your customer really well is, is going to help you not only create a great product, but know how to market to it now, how to talk to them, know how to find them. Like, where do these people exist? You know, and I can market to them, whether on ads or in conferences or whatever it might be. I love it. Greg, I got a couple more questions I want to get into while I have you. I think this has been a great conversation. I hope it's going well for you as well.

Yeah, I love it.

It's great.

Thanks, Omar.

Love it.

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So I want to talk a little bit about. I know a lot of my peers in the SaaS business right now in the SaaS world are kind of going through a tough time. It's a tough time right now for business in general, but especially SaaS. When people are trying to cut costs, businesses are trying to lower their expenses. We went through the COVID era where, you know, we had a boom in, in online businesses. And then now with, you know, the so quote unquote recession, a lot of people are Just feeling like, okay, how do I stay afloat? How do I stay alive so I can ride this wave and come out stronger in the next 18 months? Like, what are some things that you would advise those types of people?

Well, first, I think it's a great time to start. So if you're early and you're starting and you can figure something out now, oh, that's amazing, right? Because you come out of the slow times and it just goes up. Whereas if you started, you know, in, in a, you know, in a peak time and then you go into a tough line like this, that's, you know, sometimes businesses die that way. So if you're getting started, you know, it's tough, but stick with it because if you can figure out, you know, you iterate and iterate and pivot and figure something that works now, it'll work even better when things pick up again. For those who are struggling, I think, you know, back kind of to that financing question. You really don't want to be raising because you have to desperately. And so, you know, unfortunately, and there, I think there were a bunch of articles that went out about this, you know, a year or so ago of cut costs rapidly. Get yourself in a position where you are not reliant on anything or anyone else, where, you know, you kind of have like a doom and gloom spreadsheet that you still stay alive and make it through. Because one of the biggest things for going through tough times is just surviving and coming out the other side. If you're really lucky and you can, you have a balance sheet that allows you to continue to invest through the tough times, even better. But for the first 10 years of the company, I had a, what I called my bankruptcy spreadsheet. And I ran it myself and I checked it every single week. And it had sort of the worst assumptions about the future and the future of our business in it. And I was always checking, like, when could we go bankrupt? Now we're with having raised the money and, you know, being pretty much close to profitability at this point, we.

You.

Know, I don't really need that as much, but I'm still constantly watching, like, under what scenarios would that happen? So I find running something like that where you say, let's kind of assume the worst, where do I run out of cash and how do I manage and change my choices on the basis of that? The last thing you want, and I've had calls from founders in this boat is, you know, I'm running out of cash in two weeks or two months. What do I do now. Your options become less and less limited the longer you leave it. So seeing that further ahead of time means making shifts faster. And it's not always like, revenue is always the hardest thing to move. The thing you can move for certain is. Is the cost control. And I know this. Like, we went through this. We did two rounds of layoffs over the last year and a half. And, you know, we were still growing. We were still making money, but. And we were in no risk of bankruptcy. And, you know, we had well over 100 million US in the bank. But I looked at it, and I said, if we don't do something now, there's a possibility we could be in that really bad boat. And if we do a change now, we're back in the power position. We can invest, we can grow. Everything is good. And so we made those hard moves, which sucks to do, but it puts you in a much better position. So the faster you act on those kind of things, the better. So just the biggest thing is, like, make sure your eyes are open. Look at the worst possible future, and adjust accordingly.

I've been through that. I've been through. I had that spreadsheet you're talking about, and it's not a fun time. It's not a fun activity to look at that sheet every day. I looked at it every day for a period of time until we were kind of weathered the storm. But the point is, is that you gotta be comfortable being uncomfortable about it, because otherwise it's gonna cost you your business. And a lot of people don't understand that. It kind of just creeps up on you that, you know, you talked about some people that come up like, I got two weeks of Runway. It's like, yeah. And the fact that, you know, you had to make some tough decisions. It's never easy to say goodbye to employees because they're part of the journey. It's never easy to make these. These hard, you know, choices. But your ultimate as a business owner, your ultimate, you know, alliance or your. Your job is to serve the customer. And if I am out of business, I can't serve my customer. So. And it's. It's a tough one. But the thing I learned through that experience is it's great to have accounts. It's great to have bookkeeping. It's great to have financial advisors and CFOs, all that kind of stuff. But it's actually healthy for you to be a bean counter and understand where you lie in terms of your finances, understand what's costing you the most Money. What's, you know, what's bringing in the most revenue? And sometimes you're going to be like, hey, I'm. This is, I'm running a SaaS business, but maybe I need to start creating a service to bring in some cash to bring it along with it, or sell a course or sell some sort of training or do something so I can bring in more revenue that I normally wouldn't do.

Did you ever have to do that.

In that process where you're just like, okay, we need to kind of bring in some other revenue in some way.

Where, where you're like in a kind of urgent situation and you're like, okay, how do we bring in more?

And maybe, maybe even on urgent. Maybe it's just like I'm forecasting and saying, hey, we may, may need a little bit more revenue and need to kind of source it in a different way.

Yeah, I don't know that we've done it exactly that way. What we, what we look at is we kind of do these bullets, then cannonballs again, Jim Collins kind of concept. But we've got an existing revenue stream, an existing business that's working, and we're constantly firing these experiments, call them bullets, to see if we can find other things that work. We could layer on top of or add to or continue to grow faster. And when those hit, then we'll fire a few more just to really calibrate and make sure that that actually is what we want to do, that it works, that the customers value it and that we can make revenue doing it. And then we'll throw the cannonball at it and say, okay. And so we've done that in a few places where then it's added on a whole new growth lever or revenue stream for us. The challenge is I find those things take often take a year to like, it depends on the size. But they often can take a year to calibrate and then. And start to generate a real return from sometimes even more. And so it's often not something you can do in that urgent moment. That's why I talk like in the urgent moment moment. Usually the only thing you can do is control your costs.

If you.

Now certainly I've done the thing where, you know, you pick up the phone dialing for dollars, try and make a few sales. That was when we were five to 10 people. Harder for me to do that today and meaningfully move the needle, even if I have a high close rate on the phone. So today I'm more trying to look much further ahead and then the other thing I really try and do is keep my head. It's harder the larger you grow to keep yourself focused on growth as opposed to problem solving. And so I really try and force myself to think mostly about growth.

Huge. Huge. That's, that's a, you know, and that's the kind of a, it's, it's a growing pain, you know, kind of understanding that, hey, I, you know, did certain things that got me to a certain point. I can't do those same things to get to the next point, the next part of the mountain. I love it. One thing I want to touch on before is before we say goodbye is being a public company. You know, you guys are a public company and from my understanding, running a public company is very different from running a private one, especially, you know, self funded one or even one that, you know, has investment but is, is not obliged to, you know, disclose a lot of information publicly. What are some of the advantages and some of the disadvantages, some of the challenges you've had transitioning into a public company?

Yeah, so I mean I, I'm lucky in that. You know, former life before all this, I was a securities lawyer, so I practiced law, helping public companies go public, raise money, be public. So I had a pretty good understanding of what I was getting into. But even so, it's been a huge learning curve of understanding what we can and can't do and, and how it changes some of how the business operates. So lots of things learning, you know, one I think is take some liquidity when you can. Right. So as a founder, you know, even before going public, looking at opportunities when financings rounds are available to, to take liquidity is a good one in terms of being public. Yeah, it certainly changes things. I mean, you get a much more serious board, which can be extremely helpful. But it does, it changes the dynamic a little bit. You do have to share a lot for more information publicly. That's part of being, you know, the whole public concept is you're sharing a lot of data and information and being conscious that that's going to both take time, but also put competitive intelligence out there. Like I know our competitors listening to, listen to my earnings call every quarter where we talk about our revenue and our strategic priorities and things like this. So you got to get comfortable that that kind of thing is going to be happening. I'd suggest, you know, we probably went public a little too early, but the opportunity was there. We were, you know, the markets were so hot, the window was open and it closed shortly thereafter. So in a Sense like we did it at the perfect time to raised a crazy amount of cash that now we're sitting on a fortress balance sheet in a very difficult time. So we're in the perfect position this way. But from a size wise, it's pretty early for a company to kind of go out there and go public. So, you know, most people wouldn't be looking at it till a little further down the road probably. I don't know. Is there other stuff you were looking for in that?

No, that's exactly what I was looking for. No, no, I mean, I, I have some friends that sold their companies to public companies and they're like, oh man, everything is so different. And you got to disclose information. Something as simple as like, oh, announcing the sale has to happen during market hours. And it's like, it's like, oh, okay, I gotta be up that time, okay. You know, that kind of thing. So I think it's an interesting move and I think that obviously it's right for certain businesses to do this and obviously you have a lot of experience of understanding when it's. When is the right time. So I think that it's good for people to understand what their options are, questions are. And I like the fact that you're being transparent about, you know, the challenges along the way.

Yeah, it's definitely something if you were, if anyone was considering it, like, call me or call someone who's been through it and get the real, you know, inside scoop and ask your questions because, yeah, just get some, get some guidance, mentorship from someone who's been through it.

I love it. One last question I like to ask many of our guests is we all have our reasons why we became entrepreneurs. You know, from the beginning, you know, when you started to think about, hey, maybe I could be my own boss, I can create my own thing, I can, you know, maybe have some financial freedom in some way. What was your why? Why did you become an entrepreneur? And where are you at in the journey of fulfilling that why?

I probably have like 10 different ways to answer this, so I'll do rapid fire a bunch of them. Like the. If you ask the why. But wait, why, why? You know, the five whys to get the root of it. I love helping other people fulfill their dreams. So whether that's someone on my team, you know, advancing their career or even getting the next position that they want outside of our company, you know, I'm always happy to give references and help people take that next position or coaching them within their position here at Thinkific or more Important, you know, even more so to the vision of our company, helping our customers achieve their dreams of taking their knowledge, passion, expertise, sharing it with others, making a positive impact on the world and making a making a living, making money doing that, and then even helping their customers, the students on our platform learn a new skill, you know, a new hobby, and change their lives fundamentally. It all boils down to how I can help other people achieve their dreams. And I'm loving what we're doing. We've had a huge impact on that idea of helping others achieve their dreams, but there's so much more for us to do. So I'm pretty excited about it.

Love it. Greg Smith, thank you so thank you so much for being part of the community here at the 100 RMBA, sharing your wisdom, sharing your experience, being so open and honest and really making an impact on our community.

Thanks, Omar. I really appreciate it.

Such a great conversation with Greg Smith. I want to thank Greg for his honesty, his openness, and his willingness to share and help everybody listening today. I learned a ton just through this conversation and doing a bit of research about his life and his journey as an entrepreneur. We look at Greg and we say.

Wow, what a success.

But this is almost 14 years in the making. He started in 2012. Takes a long time to get to this level. It takes perseverance, it takes consistency. It takes belief in yourself, your product, your team that you can actually do it. But one of my biggest takeaways is that he balances two important factors to have a successful business. One, understanding your customers and building something they want. And two, knowing how to sell it, package it, offer to them in a way that it's a win, win, win for them, the company and the customer. When you balance these two, it's hard to lose in business because you're doing the right thing. You're actually delivering on your promise. If you want to learn more about Greg and his team and what they built over at thinkific, go to thinkific.com they got an amazing blog, but they also have this really cool tool over I thinkific.com if you go to the Resources tab, then go to AI Tools. They have a business name generator, they have a course name generator and more. Check it out. It's a lot of fun that wraps up today's episode. If you love what you hear, hit subscribe, hit follow on your favorite podcast app, whether it's Spotify or Apple Podcast or Overcast or whatever you like to use to listen to podcasts. By hitting subscribe or follow, you get our next episode automatically and you get access to over 2,300 episodes in our back catalog. Go ahead and do that right now. Before I go, I want to leave you with this. One of the things I noticed in my conversation with Greg Smith is this is not his first rodeo. He has spoken about his company and his story many times before. He knows exactly how to deliver his answers with confidence, with coherence, and he's pretty succinct. He also allows time for me to ask some follow up questions to dig in a little bit more. It's better for you to allow people to ask you questions about your story rather than being long winded. So you can learn from the things that people say, but you can also learn from how they say it. Thanks so much for listening and I'll.

Check you in Wednesday's episode.

I'll see you then.

Take care of.

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