Street Fighting My Way From $0 to IPO With Greg Smith, Thinkific

It felt like gravity. When it hit you, it was like a black hole you were just getting sucked into. Oh wow, this is it. I remember those three years of talking with investors and people, product, market fit, and asking, how do you quantify it? How do you know? But when it hit, we knew pretty quickly. It was like, oh wow. And the biggest thing I'd say, if you wanted to quantify or be able to describe, is we had customers just screaming at us for like, more. More like, I need build this for me, build this for me. It was no longer a discussion of am I the right fit, I don't know if I want to use it. We stopped having to sell people and now it was them selling us on what we needed to do next. I need some traction.

You need some traction. Let's get some traction.

Hey, what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host Lloyd Lobo. We're a community of over 100,000 people just like yourself, on a mission to help you get the methods, the money, and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more, this episode is brought to you by Boast AI. Each year, the US And Canadian governments give out billions of dollars in R and D tax credits and innovation incentives to fund businesses like yours. But the application process is cumbersome, prone to frustrating audits, and receiving the money can take up to 16 months. Boast AI gets you access to research and development tax credits and innovation funding opportunities without the headache and red tape. Join thousands of North American companies leveraging Boast AI software to maximize cashback. Check out B oast AI. This episode is also brought to you by Launch Academy, an international tech hub that provides mentorship, resources, network and the environment for entrepreneurs to launch, fund and grow their startups. Since 2012, Launch Academy has incubated over 6,000 entrepreneurs, of which 300 have grown their startups past seed and Series A and have collectively raised over $1.2 billion in funding. To learn more about Launch Academy's programs, check out launchacademy.ca I think I've known.

Greg from the time he started and had a desk at Launch Academy, and it's been a terrific journey for Greg and thinkific. He's the founder and CEO of Thinkific. They've pretty much dominated an industry, the leading platform for creating, marketing and selling online courses, and Greg's been super passionate about helping entrepreneurs create or grow a business around their own passions. Prior to thinkific, Greg was a corporate lawyer, which is a very interesting combination for one of he was a corporate lawyer for one of the largest law firms in the country. And if you've not heard about Thinkific, Greg and his team at Thinkific have grown to power courses for over 51,000 people and businesses worldwide in 190 countries. And Thinkific's customers have taught millions of students and sold hundreds of millions of dollars in courses each year. Greg, welcome to Traction. How you doing?

Great, thanks. I really appreciate you having me here, Lloyd. And it's, yeah, it's been a lot of fun.

You've had a very impressive story, big struggles en route to the ipo, but you've also pioneered a whole new industry. Walk us through your journey from that co working space at Launch Academy to ipo. What made you decide to start the company? What else did you consider?

We're coming up on 10 years in April, so let's start with your last question there on deciding to start the journey. So I was actually, I was going to school, going to law school school and I was teaching and tutoring people the lsat, the law school admissions test. I was doing it in person, just part time job basically to help pay off some of my student loan debt and eventually put together a little blog as a way of all my conversations. The first few hours I spent with students was the same stuff. And so I put the basics on a blog and said, hey, go start there, it's free, call me when you need the tutoring. Beyond that and then we can get more deep into your own individual issues. And from there that got a little bit of traction. I remember those early days in the blog, logging into Google Analytics and being like, oh wow, we had a visitor today and then realizing that no, that's my IP address, but we eventually did build and launch a little online course. My brother helped me put that together. He came along and said, hey, I can help you build a course if you want to do that. So we built a course, put it out on the blog, and this is 2006, so way before even Thinkific got started. And the course did well, but there really wasn't any tools to make it easy. So I was lucky. My brother is a software developer. We mashed together a whole bunch of different tech tools to make it work, wrote a bunch of custom PHP code and made that work. And that continued to grow as a part time side gate side hustle. I went on to finish law school, practiced law, started another company and then eventually came full circle to, hey, this course is working. People are getting value out of it. It's actually building a sustainable business. It's growing quickly still. And while it's growing. And then others started reaching out to and saying, we want to create our own courses on our own websites, under our own brand and build a business around it. And we don't have a great tool to do it. Looks like you guys do. Can we use yours? But at the same time, we were struggling with what we'd built because it wasn't. There was no tool out there. And we were spending more time managing all of these different technology pieces working together. So we set out to start Thinkific in 2012 as a way to create one simple tool for anyone or any business to take their skill, knowledge, passion, create learning products around it and distribute that to their audience or to their fans, their customers, and build a business doing it where it could live on their website and under their brand with full control in their hands. And we would just be the sort of silent tech partner behind the scenes, making it super easy for them to do that.

Fantastic journey, man. And we'll unravel all of that en route to the IPO through this conversation. But how did you find your early customers? How did you validate this beyond just your early needs? What was that indicator that, man, this can be a thing?

I would say the first three years were pretty tough on this front of finding customers and validating product market fit and that there was an idea and we had a lot of false starts and false positives and failures. And so we tried the marketplace route similar to Udemy and then similar even to a masterclass. And obviously there was a great business to be built there, but we didn't find we got enough positive to waste a bunch of time on it, but not enough positive to build a business around it. We tried working with sort of not for profits and professional designations. We tried almost like a royalty model where we took control of building all the courses and then sold them even by phone call. So it wasn't like we just had this magic idea and everything worked. It was probably three years in before my brother sat me down and said, hey, I think. I think we're basically like a Shopify, but for digital products and courses. And I said, no, that's no, we can't do that. And we argued about it. And then he said, no, I've already started telling people this is what we do. And I disagreed, but he was right. And so really quickly, in a matter of a week, or two, he turned me around. He was like, yeah, this is what we set out to do in the first place. And so this is what we got to do. But, yeah, there was three years of all sorts of false positives and customers that brought revenue and needed what we were doing and were loving it, but just not enough product market fit and customer base and huge market opportunity and a fit with our skillset that it was going to build a sustainable business.

What is the metric for product market fit in your head? Was it gut feeling? Was it a number of customers? Was it high retention? Was it selling repeatedly? What was that? How did you know? Like, how do you quantify that product market fit?

It felt like gravity. Like when it hit you, it was like a black hole, like you were just getting sucked into, oh, wow, this is it. I remember those three years of talking with investors and people, product market fit and asking like, how do you quantify it? How do you know? But when it hit, we knew pretty quickly. It was like, oh, wow. And the biggest thing I'd say if you wanted to quantify or be able to describe, is we had customers just screaming at us for, like, more, I need build this for me, build this for me. It was no longer a discussion of, am I the right fit, I don't know if I want to use it. We stopped having to sell people and now it was them selling us on what we needed to do next. They're like, yeah, I love what you're doing. I need this and this next. And so then we just became about solving for customer needs and building the next step in what they needed as opposed to trying to sell people.

You ditched a few different models, right? You ditched the marketplace like Udemy. What else did you ditch when you finally landed on. We're going to enable course creators to create and market and sell these courses online themselves. Like a shopify.

A couple of things we shifted away from. One was owning the content or owning the brand or having it live on our website where we would sell it. And all the orig. A lot of the original models were more that way, like more of a licensing thing where we would build it and sell it and own it and have a lot more control. And where we really shifted back to is we're going to put all the control in the hands of our customers. We'll be the silent technology partner that makes everything easy. But let's. It's your site, your brand, your content, your revenue, your customers, your courses and products that you're selling and all the a Lot of the original ones were more our site, our brand. And we just found by putting the control back in people's hands, they were much more empowered to go build their own businesses or many of them already had some kind of a business and this was just adding onto it and scaling it from there.

Three years is a lot of grinding to get to product market fit. Were there some milestones you set in the early days? Like what were some go knows.

I don't think three years is a success metric there. Like we could have done it so much faster. I think we could have gotten there a lot faster. We in the early days we probably kept the team too small and didn't kind of move fast enough in a bunch of different ways. One of them was getting really stuck on some of these false positives. Another one was and if I could go back and do a bunch of this over again, one of the key things I would do is taking a look at what Unbounce has done or they how they got started. As they were starting to build the company and the simultaneously ollie, one of the founders went out and just built a massive audience around the topic that they were going to live in. And so I would have started a content engine and thought leadership around that area. Like almost what you do with Launch Academy and with traction and like having this. You're a thought leader in the space now and hundreds of thousands of people are looking to you and traction and learning from it and that allows you to build all sorts of things potentially to help entrepreneurs. I would probably start there because that would also fast track the trip to product market fit because every time we were trying a new idea, it was like full start from scratch. Go to the phone book almost or Google and start googling who our customers could be and calling them up and saying does this work? And if we had an audience that we had built through thought leadership and content first, it would have been so much easier to find product market fit faster.

I mean for us, right? Like we're selling to founders and CEOs, it's R& D tax credits. But we built this big audience with traction because our philosophy was fall in love with your customer and make them successful beyond your product or service. If you build a community, you won't be a commodity. And we took this commodity industry and built a big brand around it and have been doubling growth. But that community played out really well for us. But as you were going through different kind of customers, is there a truth to really nailing down that ideal customer profile in the early days, is that a thing? Was it all one type of customer that you were getting?

Once we figured it out it was pretty clear what the commonalities were and we narrowed that down quite a bit more narrow than it is now. It's broadened a bit and we keep fighting to narrow it back down. And I think there's a diff. One thing to recognize in narrowing down and defining that ideal customer archetype or personality is you can have an ideal one and then you have a broader set of people who actually use you. So for example, our ideal customer now is very much people who are have some skill, knowledge, expertise, be it a business or an individual, but they're looking to generate revenue by distributing that through learning products like courses or memberships. But we also have a lot of customers outside that ideal customer range using us for things like customer education. As a SaaS company who's just educating their customers with us because we happen to be a really good solution for that problem. Some of them even use us for educating employees, we use us for educating employees, but that's not the use case we're really focused on. We're marketing to, we're talking to or we're even building for. We just happen to be a good fit. So I think it's important to narrow down super tight as to who you're going to speak to and build for and market to but be open to that other people around that are going to use you and it's hey, we're building a, we're building a box. If you want to buy a box, that's what we're building. Great. If you want to use us as a sphere, go ahead, just that's not who we're marketing to or what we're building for, but go for it.

In the early days when you started what was the one channel? Was there like just one way you were getting customers or you tried a bunch of things? And how has that customer acquisition evolved today?

Yeah, we did try a bunch of things, I would say early days. Three of the biggest areas that worked was a lot of non scalable hands on manual outbound, like just emailing people that we thought would be a good customer, calling them up. Early days there was a fair amount of even like phone sales and then we went a long period of all inbound, no phone sales and now we've reintegrated phone sales but mostly to deal with inbound leads that are already coming in that sort of non scalable just like googling and finding the right people and Reaching out, emailing them, having a real conversation, calling them. That was awesome. Not just for customer acquisition, but really just for deeply learning and understanding our customer. Like having conversations about their hopes and dreams and fears and goals, not just buy my product or what features do you need? So that was a big one. Early days, that was super helpful. The other two was content building out that content engine and some thought leadership as we started to do that, that worked quite well and still does to this day. And another one was actually partners and partnerships through sort of affiliate marketing. So finding someone in your space who's already got an audience that meshes well with your target customer, and then working with them to find ways to help their audience and promote your product to their audience. And we often did that where we give them an affiliate. But that was one of the early channels that just blew up for us and really changed the trajectory of our growth curve.

Did you say that? Hey, you know what? I think I figured out this one channel. It's great. And maybe advice for founders is you chase all these channels, and if you don't nail one, then you're doomed. Right. At what point do you start finding other channels, in your opinion? When's the best time?

Yeah. And I think you need to be careful of this in terms of your time and attention and resources. If you have a channel that's working really well. A lot of companies are built where externally you see them using five, 10 different channels, but internally, they know that it's sort of 80, 20, where a lot of results are coming from one channel. We are now much more diversified. But early days, it was more like, hey, this channel's really working for us right now. I would say double down on, especially in the early days, the channels that work well for you and expand experimentally and as you have resources. So let's say your content engine is killing it. Keep pouring gas on that fire and blow up that channel and then run little experiments in other channels. And if you find one that takes off like we did, we ran one partner webinar with one partner, had amazing success, and then said, okay, let's go put somebody on this and actually start building that out. But it was one of many experiments, and that was the one that worked, and that's why we started investing. But I would caution, don't pull people off a channel that's working to go put them on a channel that is unproven, experimental, or even new. Because if you got something that's working to keep your foot on the gas to that, and then Add new people to when you find new channels that work.

I like that. 80, 20, spend 80% of your time scaling what you've nailed, putting gas on the fire and maybe 20, 30% of your time trying new channels and then once you've figured it out, throw more gas on it. What is your long term vision for Thinkification?

Yeah, so we are, we're helping tens of thousands of businesses and creators now that are taking their knowledge or passion or skill and getting it out there to generate revenue. We want to do a lot more of that. Some of the things that we see coming in the future is I've seen a really interesting shift away from not away from, but courses is the thing that got us here. But I think as we go into the future we see people introducing more and more learning type products how they can disseminate their knowledge. Be it a community or a conference, an event like this, or a webinar or coaching. There's all these different ways that people are spreading their knowledge and using it to build their audience and their business and their revenue. And so better supporting all of that for our creators is a big path for us in the future. Another piece of it is we really are pushing down the platform piece. So we have open API and a very customizable platform. So we provide a big chunk of the needs that our customers have, like that core set. But then by having the open APIs and the app Store and the platform and customizable look and feel, we allow partners to come in, be it agencies that can customize it or just other software companies, app developers to come and build on top of thinkific. And the cool thing is we've got a whole like economy. We've got tens of thousands of potential customers for these partners. These customers are generating hundreds of millions in revenue so they're happy to go and spend with our partners. And so we're building out that ecosystem where partners can now come and build an app on top of us and build a really successful business doing that. And that's a big part of the opportunity for both our growth, our customers growth, but especially for these developers to come in and be able to grow companies on top of thinkific.

I would say thinkific is one of the true product led companies. Is that the right statement to make?

I like to think so. We do, we still do marketing and other things, but yeah, right from the beginning we've got a freemium product so people can sign up for free. And then the experience is very much that you can get a lot of value out of the product, right out of the gate, even on a free plan. And then there are prompts and triggers all over the product to encourage you to upgrade. But it's not so much like a bunch of paywalls where you have to upgrade to do anything. It really is get give you value first. Show our customers that they can do great things. You can build, launch, sell a course and generate revenue and have hundreds of thousands of students all on the free plan. But there's lots of ways that the product is continuously pushing you to upgrade, which to me is a big part of. That's one part of product led growth. The other piece I think too is using the product, an acquisition tool to go and bring in customers. And we do that as well. And then in terms of product led, product focused. Yeah, we are at our core constantly reinvesting in R and D and just continuing to accelerate that investment as opposed to cut back on it and focus more on marketing.

Were there some key product decisions you made that allowed you to grow rapidly? Maybe a couple of things when you're looking back, you're like, I'm glad we did those.

I mean I think one is strong engineering talent. We got lucky with that, found our original engineering team that's still here today just was amazing. And that helped us build. Well, I think within that having a really healthy conversation of the business needs and realities and the return on investment with building proper code and infrastructure and. And also the customer needs and having all of those and design and having all of that have a seat at the table and talking through these things to build the right product. There's two things I think that helped us move quickly on the product side. One was not building things that someone else had already mastered. So for example, we use video players. I think originally it was like JW Player and now Wistia, but might use JW again, stuff like that for delivering the video. Because there's like we could have built our own video player, but someone else has done this. We use Stripe to process payments because Stripe had done that well. So looking for if it's not going to be your core offering, the most important thing you do and someone else does it just integrate like the sort of build versus buy or rent debate. I feel this has been settled. If someone's built it, use it. That was one, I think. And then the other was keeping technical debt in mind. Like I think having a healthy relationship with technical debt that you're not over indexing on fixing it, but not you don't want to build so fast and so quick without any thought for tech debt and testing and things that you get two years in and everything grinds to a halt.

How long did it take to your first A hundred kr. And what did you do to get there?

Yeah, So a hundred k, what's that like? Less. That's maybe 8k, 8 or 9k mrr. We got that after Launch Academy. So after the first two and a half, three years really revenue. The thing in those early three years is we had revenues but it was like we sold a course. We got a one off client where they paid us a service fee to build out their site and their course site and stuff. We didn't really have true monthly recurring revenue until about three plus years in when we even launched the ability for someone to come to our site, put their credit card down and pay a recurring fee. So it wasn't until that happened. So maybe call it three years in and then the revenue came but that was, we threw down this ability to sign up yourself, self serve and pay us like a SaaS company should at about three year mark. And we also started to figure out the product market fit and our marketing channels all at the same time. So in a matter of a few months we went kind of from 0 to 5k to 10k mrr really quickly because all of those pieces came together three years in.

They say do it in phases, right? Your first phase is validate the market, get 5, 10 people paying for you. The next phases get to a higher retention, then figure out a channel, then scale and it feels like you grinded for for a few years. And then it all came together. Your market, your product market fit, your channel and scale. What a rush. Sometimes what you don't build is more important than what you build. And you touched on this with firstly integrate tools, don't build what something someone else has mastered. Are there any other ways you recommend people prioritize what to build?

Early days it was a lot of me or my brother or a couple of other people in the room, Miranda, Matt Payne are my co founders. Just sitting right there every Friday in our Sprint planning session and very quickly going from a one bullet line idea to fleshing it out to the point where our team could go spend a week working on it and then come back a week later and midweek we would check in on the whiteboard. So it was very sort of hands on, all founder level engaged in everything we were building. Plus we were and every single person on the team was talking to customers every day, answering support tickets, having Sales calls with them. My CTO Matt would come in and every single morning he would read every single customer ticket in our email queue from the day before. So he knew all the conversations that were going on. So it was very hands on. Then I think we moved to something a little closer to like Shape up, which is a book by, I think Basecamp and that. I think that works quite well. We didn't fully build that one, but that's a great way of, I think, moving really quickly in smaller product teams. I don't know how well it scales to where we're at now, where we've got like dozens of product teams and then we've looked at stuff like Build Trap, which I think there are some good things to take away from it in terms of putting some of that power back into the hands of the teams to go and do transitioning from the founder saying, build this and build this and let me draw it on the whiteboard for you, to the team starting to do the research, talk to the customers, come up with the ideas and create the vision for what they're going to be building. Although you're still there having an influence on what big problems are we solving the Shape up one, you still have some senior people who are really clear on what the problem is you're going to solve the bet you're going to make. And so you're making a bet. And so the idea is like in a. You have, I think a six week period often where you're saying, we're going to bet six weeks on this. And so it's nicely time bound and you start the whole process with kind of a whiteboarded out or fat marker they call it, I think layout of a broad idea of what you're. What the problem is you're solving and how, even how you're going to solve it. So you're working closely with engineering and design and product leadership right out of the gate to get. So you walk in on day one to building with a really clear idea what you're going to go and build. And then the team that's building it divides the problem up into little parts and pieces and builds them one by one, making sure you're always like adding value every sprint every week. So you've got something basically to ship every week. Lots more to it in the book if you. And they've got it online like it's a PDF, you can just grab offline and skim through it.

Shape up by Basecamp has a lot of great books. I love one of the other books getting real in terms of building products and very quickly. And this build trap I haven't checked out. I wanted to ask you a bunch of questions on fundraising.

So the company didn't pay me any money for about five years, but I wasn't totally broke because I had the online course. So the online course was both a little bit helping me survive and my brother and a little bit helping the company survive. We were putting money from my own online course and reinvesting it in thinkific to help build that. But mostly I alternated between moving home with my parents and. And then getting the cheapest apartment I could find and renting out the whatever spare room and living in the closet or whatever I needed to do to basically be able to live on. I think for a good number of years there I was living on less than $15,000 a year, which in Vancouver is not a lot. So it was just getting good at not spending money.

Walk us through your funding story. What were some milestones that led to subsequent rounds, et cetera?

We started in 2012. I think we raised our first round and I think it was 2015 or 2016. I think we might have talked to Rhino and shook hands with them in 2015 and then actually closed the round in 2016. They're really quick to move, but I was slow. So I'd say early days we were doing a lot of this sort of Vancouver pitch competitions of pitching your startup for investors, and we were so not ready. We didn't have revenue, we didn't really have a product market fit or any traction whatsoever. And so I'd say it was helpful to be out pitching and getting feedback. But my mindset was I might actually raise money and there's no way that was going to happen at the stage we were at. And so then got a little further along and started taking it a bit more seriously and then actually set out to raise. And I was lucky that Jeff Booth from Build Direct came along and said, I see the traction you've got now you've got some fit. Like you've been taking my feedback, I'll cut you a check, I don't care about the valuation and I'll help you figure out a round. And so then the next people we talked to was at Rhino Venture Capital and they were just amazing to work with and so raised our first round and then every round afterwards with them.

Build the company in a very capital efficient way. Right.

By the time we went public, we had put less than 10 million in primary capital into the company. And we'd really not spent most of that. So even with our first raise of 600,000, I think a year later, it was still sitting in the bank, and we were just adding to it. So one of the really cool things that happened for us at least, and I've seen it for others when we raised, was it forced you to think bigger. And so even with our first round, we shook hands on the amount and the terms, basically. And then it wasn't for a little while before we put the money in the bank account, because I dragged my feet on negotiating the legal. In the interim, we just suddenly took off and started growing and hiring people and stuff, because our mentality was like, all right, we got to think bigger now we've raised some money. And I found that with every round, including the ipo, it's just forced us to think way bigger as to what's possible and what we could do. And I think there's ways to do that without raising. But it certainly pushed us to think bigger. But we could have bootstrapped the whole thing. We've always had revenue, and we've always been either cash flow positive or very close to it, and could have been cash flow positive. So we could have bootstrapped the whole thing. I think the raise did help us think a bit bigger.

Build a company and product that people love and want to pay a fee for, and the money will follow. But your journey to Rhino. So starting with Jeff Booth and the Angels to Rhino, did you run a process when you were going to take the money from Rhino? How did you meet them? Is there a recommended way to build relationships with investors and find the right ones before you even need to raise?

So a couple of things. So we didn't run a really broad process, and I'm glad we didn't. I think if you want to run a great broad process, Dan Martell's got a good webinar. I think it's probably on YouTube around how to do some of that stuff. That's a good one. But the general gist of it is, and it's actually similar to what we did for the ipo, which is, let's do it privately for a second, though. You make your database of a bunch of your ideal investors. You have a whole bunch of coffee dates with them to get a sense, warm them up, but you're not ready to actually. You're not raising. You're just getting them warmed up to the idea of working with you. And then you have your roadshow where you've got your close Date set and from your first real meeting with an investor, you just pack them all into a tight time period. For our roadshow, it was about 10 days for the IPO. For a private raise, you might have a bit of a longer, maybe even six week period, but you just pack that period with meetings with your investors, you pitch them all, you get some term sheets come in and then you pick the best one to work with, not necessarily based on just best valuation. And that's the key there that I'm really glad we chose. We were working with Rhino and it worked out well for us, is I've heard and seen plenty of unpleasant stories around investors. We got really lucky. They've been absolutely amazing. But I think that's honestly the most important part. I'd rather raise at a lower valuation and have the right people at the table, then go optimize for valuation and have someone that's not going to be helpful in growing the company or be kind to work with, or be fun to work with, or be ethical to work with.

You and me both had been a part of a few venture backed companies and so at Boast we bootstrapped for a long time and then when we raised, we didn't really run a big process. And our philosophy was if you treat people like a transaction on the way in, they'll treat you like a transaction on the way out.

So.

So if you optimize for the highest possible valuation, then the first time or second time a major roadblock hits, they're in their hair, they're out of there or you're out of there kind of thing. We optimized, we met our investors through traction. We didn't go and run a big process. We might at the next round, but I like that idea of if you're running a process, talk to people, get to know them informally before and when you're raising, at least you've invited the people you really like and who can be helpful, like effectively. People who love you more than you love them.

Yeah. And do your reference checks because you'd be surprised if you talk to a few entrepreneurs who've worked with an investor, you might really quickly find some great stories or some horror stories going into your ipo.

How much did your background as a securities lawyer ensure you structure the business properly for an ipo?

I downplay it sometimes. I think being a lawyer was helpful. It helped me think about risk and contracts and understand a lot of these things, similarly to the fact that I did a finance degree so I could understand our financial side of the business. I did our accounting for a long time, did our contracts for a long time. It's certainly not necessary by any stretch. Lots of founders have totally different skill sets that are amazing and add value and that I wish I had in bringing to the business. But in the IPO process it helped. But I wasn't the primary or only person working on the ipo. I think the key is having an amazing cfo. And we got lucky and found Karine, an absolutely amazing cfo. She really helped with the getting us ready to go public as well as Miranda who ran a lot of the process in building out our prospectus and marketing content that way. So I would say what's helpful in going public to think about is you need the right team, but then that's a given for anything you're going to do who first, not what, and then your story and your data. And so having a very simple, clear, compelling story that you can tell to investors because especially as you go public, a lot of the investors are actually less narrowly industry specifically sophisticated than your VCs who only invest in a specific industry. Lots of public investors are investing in a broad range of companies. So you've got to educate them on what you're doing. And that means getting the story as simple and clear as possible, having it really clear what the big market opportunity is and then having the data that backs up your story. So build your story and then test it against your data and make sure you're not telling people a story that doesn't actually play out in the data of how you're growing your business.

I can't say enough, hire either a CFO or get help and get your data in order or else it's going to be a painful process. A lot of times right now the market is super hot so a lot of VCs are just writing term sheets and then end up doing the due diligence with minimal diligence. They do the term sheet and then later all the data room follows and if your data is a mess then you know the discounting will follow. Now do you recommend, I guess you work with a banker for the IPO or.

Yeah, yeah, I know there's popularity in SPACs and trying to do direct listings and things like that. We did consider and look at it. I just think it would have added a lot more overhead and our bankers were exceptionally helpful in, in doing this and it worked out really like we, we had an exceptional result like we from making the choice to do it through to listing on the TSX at A billion dollar valuation. It was five months. So it went quickly, efficiently. We had an exceptional result. We got what we wanted out of it. A big part of the reason we were doing it was even just branding and brand recognition and the press and the media we get from being a publicly traded company as well as talent acquisition. And all of those things have played out as well as we could have imagined.

Are you open to sharing what firm you work with? Banker?

Yeah, we had BMO bank of Montreal lead left and CIBC lead and then a syndicate of bankers that were also super helpful in joining us. Many other Canadian banks as well. But it was a really smooth and amazing experience. Certainly anything big and challenging you do lots of hiccups along the way, but it was great.

Now I'm going to ask you a stupid question because I don't know this. What do you mean BMO led left and CIBC led left.

Yeah, this was all new stuff for me. So you've got. I'm not sure I still totally understand. I used to take companies public as a securities lawyer, a couple of them, not tons. But then experiencing it from the company side was a whole new world for me. And being in the meetings that I wasn't in as a lawyer, as the company with the bankers planning it out. Your banks work with you a lot. Like you're on calls with them every day through the whole process of getting ready to go public. They're helping you with the marketing materials and how you're going to language it to your investors and what questions are going to come up. The lead left and right is something that I think is more important to the banks as to who's first and second in running the show with you. And sometimes it little it goes a little bit to how they share the economics and there's probably more to it than that that I don't totally understand. But for us it was like both of them were there at the table. Equals helping us out running, helping us make this happen. And then you just have one that's the lead left that is a little more of the sort of guiding decision making on things for you.

The market is absolutely bonkers. It appears companies are raising hundreds of millions of dollars every other day at unicorn valuations. Outside of all this marketing and branding and team, why did you decide to ipo? Because it's an expensive process and it can be stressful in this market. Why do you decide to IPO versus raise more venture dollars?

Yeah, I think there's something in our DNA at Thinkific that we like to do big, difficult things quickly. And so the IPO was one of those big, difficult things to do quickly and get a great result. And look, we looked at raising from VCs. We had lots of inbound offers from amazing Tier 1 VCs all over North America and eventually just came around to we thought we could have the best possible result for the company. And it was thinking about, what do we actually want out of this? And it wasn't so much that we actually needed a bunch of money. Sure, there's things we can do with it to grow, buy other companies, scale faster. But some of the big reasons was we wanted to have a branding event and continue to have a bigger branding platform for the company. And the public platform, as we've seen with companies like Shopify, can be great for that. And it's already paying off dividends for us. We wanted to be able to better compensate our team and make it clearer to our team that they were participating in the value of the company. So everyone at thinkavik has stock options and by going public, we made those stock options worth real money. And so that was a change point too, in even being able to go and find talent that I would have normally looked at as hopefully they'll get on a call and give me advice because they're amazing, they might actually want to come and work for us. And so having that public platform as a company to do that has helped with that and talent acquisition as well. Lots of other reasons. And of course, raising the $184 million has been great in terms of opening our eyes to the kind of growth opportunities and acquisition opportunities that are available to us. So lots of reasons to do it. Those are some of the big ones for us.

Is there much to be said about timing? When is the right time to IPO or start thinking about it?

There's market timing, right? So we had originally looked at it as we've got to be at 100 million ARR to go public. And the reason to think that way was typically that was a number to reach a sufficient valuation, say a billion dollars or more, to get sufficient analyst coverage, which is like the analysts at the banks covering your stock and your company and talking about you so that you have enough interest from investors to have a successful publicly traded platform. What we saw over the last couple of years is both we started growing exceptionally well. We'd always been growing well, but we continue to grow exceptionally well. Combined with appetite in the public markets, for software companies to have strong valuations meant that there was a nice Window opening up for us where even though we weren't yet at that a hundred million ARR mark, we had that opportunity to go public and get the analyst coverage, get the valuation of a billion dollars plus that we wanted and be successful as an ipo. And so it was a matter of a quick pivot of hey, we were thinking this was a couple years off, let's do it now.

The valuations are going higher and within reason. Right. If you're growing more than 2x year over year, more than 200%, 300% year over year, you have high retention, great gross margins. Why not? So this sounds interesting. Even Asana, when they went public, they didn't go. They didn't, they weren't at a hundred million in ARR2. What are some key ingredients do you need to have in place to get that ipo? It feels like you hadn't been thinking about this timing for years probably. How long did you think about it before planning this five month process?

We thought about it for a couple of weeks, made a decision and we were public five months later. Yeah, like I said, things with huge value that are hard really quickly, we is that's not the normal path. Like when we talk to bankers, they were saying a year or two is the typical sort of timeframe. Or for a lot of, not all the bankers, but a lot of people were saying, I think the bankers were encouraging us, you can do it faster. But many people were saying a year to two years. One thing I would say we were lucky we had a strong team in place. So if you're not there with a strong team, especially on the finance side, I'd say what you need is a strong finance team. And then I think you need someone ideally who can really tell the story, whether that's you as or a founder, but someone who can really understand and tell the story well to help with things like drafting the Prospectus or the 10K and your roadshow deck, that person who can really tell that investor story is important, then the next things I'd say that were important for us is we actually spent a lot of our time on things that typically the bankers would do more of and they certainly helped a ton with it. But we invested more of our time in things like the deck that we were going to use to do the roadshow and in the prospectus itself and writing a lot of the content for it. And I think that was very helpful both in us even in terms of understanding the story we were going to tell, making sure it really linked up with the data and making sure it was the story we wanted to tell, the way we wanted to tell it. And that was clean and simple and presentable. And then the other big piece was ensuring you have the data to back that story up. And it's not about, let's create the story we want to tell and go find data to back it up. That's massive, like biases and all sorts of fraught with problems there. You need to look at your data and understand your data in combination with the story and make sure that they do align. And then we used a great story and then just inserted these graphs and charts and data points to really validate that the story we're telling is actually, actually playing out in the numbers. And that, I think is really key because for any investor, you want to see that there's proof points behind everything we're telling you.

What was your ARR when you went public?

If anyone wants, like, all the deets. And you can even see our investor roadshow video if you Google Thinkific investors, or it's just, I think investors.thinkific.com and there's a video there that is very similar to what we did on the roadshow talking to investors. It's a little more flashy and edited, but that will help. And that goes into things like ARR. Our numbers are right on the page. ARR revenue, gross merchant or GMV customers, things like that. So we closed last year, I think, at about 20 million in us. All our numbers now are us, but we closed last year at about 20 million in revenue. Not ARR was beyond that at that point, but I think we'd grown about 150% year over year. And I think as of end of last quarter, so end of Q2, we were at 38 million in annual recurring revenue, which is about 80% growth rate or 100% growth rate in revenue over the same period a year before. So that's at January, February, March, April, May, June. So June 30, we were at 38 million. ARR.

I want you to touch on roadshow, because it gets thrown out a lot. Roadshow, IPO roadshow. What does that entail? Who are you pitching to?

Yeah, so interesting. You do two roadshows. I didn't know this. You do, too. So there's a thing called testing the waters, which is basically a practice roadshow where you go out and you do the whole roadshow, and then you just see how you get some feedback and you see how it went, and then you wait a few months and you do it again for real. So what is the roadshow? It really is just 10 days, ish. 10 days, 2 weeks of back to back pitching investors. The bankers go through their database of all their investors all over the world. We were pitching people all over Europe and everywhere in North America. They set up all the meetings. So you've got them starting at depending on time zones. But for us it was like 6 o' clock in the morning through 5 o' clock in the evening and it's just back to back, 45 minute pitches. You've got your deck and you're telling your story. It's very well rehearsed. But then there's Q and A period and you go through and you tell your story, use your deck and then answer a bunch of questions. And on the basis of that 45 minutes, which usually stretches to an hour, meaning you don't get a lot of breaks in between. They're making a decision sometimes to invest 5, 10, 20 million or more. So it's not a lot of time for the investors to make that evaluation. Now they get to read your prospectus, which is a 300 page document you've prepared. They get a lot of other information, but with you it's a very short, intense period. So it's, you might do 10 or 12 of these calls in a single day and you do that for 10 days straight at the end. And then there's some of them are group calls where you do one presentation and lots of people watch it at the end of that period. Throughout that period, the investors are basically making their offers through to the bankers and that builds up what's called the book. And at the end of that period you've got this book and you go through and determine who's going to get stock and how much. And have we had a successful ipo? Because sometimes you can get to the end of that period and you don't have enough orders to actually have an ipo. But all that went quite well for us. But the testing the waters one you do a couple months earlier and you go out and you're allowed to have these conversations with a few rules legally attached to it. And then you basically just get a bunch of feedback like we love it, we hate it, we don't understand this. And then you can adjust and tweak and then a little while later you do your real roadshow.

And then what are the key factors that drive the excitement from the investors you're pitching to? Is it growth rate, gross margin, net revenue retention, market size? Like there must Be four or five factors. As much as we'd love to think that they love the vision of and the product, eventually it's numbers. What are those key drivers?

Yeah, I think it depends. Like for us I can share a bit what it was for us. But it's different for every business. If you're a biotech business, they might be excited about the potential for a new patent or a new solution. So it's going to be a bit different for every business. And I think that's key is you got to figure out what's important for you. So we went through a whole bunch of prior IPOs. We read up documents, we went through people's 10ks and pitch decks and everything and said what worked for them. And then we figured out what worked what, what would work for us. And really you just have to tell your story with your data and your information and what you're excited about. We created sort of a list of emotional cues. This was actually RHINO guiding on this of what are the things we want people to feel as they go through this deck on the premise like they. People don't remember what you say, but they'll remember how you made them feel. So what do we want them to feel? We wanted them to feel that there was like a really big market opportunity, which we believe there is. We wanted to know that we were growing rapidly, that we were had this potential to be the market leader in this space. And so then we built the story backed up by data around this kind of stuff. And I think that having just a clear understanding of what your story is and what your strengths are and also weaknesses like we weren't, we didn't go out just pretending that everything was perfect, but you do want to tell a great story. And yeah, so for us it was, I think some of the big ones is the traction we retrieved so far, the growth rates, the team that we built was a big part of it as well. The bigger market opportunity and then some of the future opportunities we had on both product to help serve our customers and what our vision was for it. And I think there's a personality. Do you get along with them? Do they get along with you? Do they believe in you and what you're sharing and that you're going to be able to execute on this is a big part of it.

And were these pitches what an hour.

Two hours, typically 45 minutes with a 15 minute break in between. And they would often extend to the one hour mark, which meant that I was constantly trying to figure out when I was Going to take a pee break.

How did you avoid burnout? Not paying yourself for five years, no revenue for three years, and having a fiance and wife around, you seem level headed.

And then kids.

And then kids. You and me have similar stories from that way. Like what motivated you to stay on course for so many years before finding success? What were some moments you wanted to just give up?

There were moments that were a struggle and it's not all easy for sure. And then there's motivation and then there's self care. So talk about a couple of those things, the motivation. I just love what we do and I think it's really hard to do this kind of stuff if you don't love the impact you're having on the world. And maybe for some people it can be about money. But now having the success that I've had, I've always said it's not about the money. Now that we've had some success, I really know it's not because I just don't care about that. What I care about is the success we deliver for our customers. Our whole team is just so passionate to the point where often in our team meetings we'll share customer stories and there's literal tears on the team of oh, I can't believe we're making this impact in someone's life. But just super passionate about our ability to create success in our customers lives and that they then go get to have an impact in what they're sharing. Combined I think with the fact that I'm deeply passionate about the team we're building and the culture and the diversity within the team and the kindness and empathy within the team is just, just so much about what makes it fun to come to work every day. And that wasn't always there in the early days cause we were figuring out the vision. We hadn't delivered a lot of success for customers yet in the early days and we didn't have a team to have this amazing culture. But as that shaped up it made it so much easier to be excited and passionate and happy to come to work. So having that motivation is key. Yeah, there's moments of struggle like you're running out of cash and those things. And I think it's having that motivation to get through it and also just being willfully blind and saying I'm just going to go headstrong, head down, persist and not stop and. And then there's the self care piece which I think is I'm naturally fairly good at it. But I would highly recommend there's a good Book your oxygen mask first. But it's the idea that you're on a plane. They always tell you put your own oxygen mask on first before you put it on loved ones or kids or anyone next to you. Because if you black out from lack of oxygen, you're not going to be able to help your kids. So start with yourself and then help your team and your company. So I've been pret good naturally at just taking a break when I need to, working out or going for a swim or a walk or a runner or you've just sometimes vegging and watching YouTube because I need a change of pace. But I think that part is key and you've got to remember that and then encourage your team to take care of themselves too.

The biggest outcomes are founder led and if you don't take care of yourself physically and mentally, personally, you'll eventually burn out and you'll destroy the company. Right. Personal health is very important and if you take care of that, that you'll do well professionally. The other thing you touched on, I've interviewed now hundreds of great founders like yourself and often there's a common theme here and that is if you hunger for power or control, you'll destroy relationships and you'll never build something big. If you hunger for money, you'll make short term decisions. It's still good, but you'll make short term decisions. If you want to build something big and lasting, you got to focus on impact. If you had to start a company today, how would you build a team? In what order across different phases. What would be some key people you.

Would bring along if you're starting out? I think you hired sometimes different kinds of people at different stages. And early on I got lucky in that I found very sort of entrepreneurial jack of many trades kind of people. They had a special skill set they were really good at, but they were also willing and able to just jump in all over the place. And so that I think was key. Like Miranda, who joined us originally as a director of marketing and eventually became our chief operating officer and co founder, probably has run every single team within the company except for engineering and I think she even wrote some code at one point. So finding these people early days who are just exceptional a players plus who can operate in all sorts of different areas, they're really flexible. I think growth mindset is a big part of this. That sort of self awareness and ability to like take feedback both from you and from the world as to hey, this isn't working, let's figure it out. And not give up. And that ability to just go over, around and through any obstacle is key in the early days as opposed to necessarily. I need to do marketing. So go find the best marketer who knows how to run paid ads. Because you might not be running paid ads two months later if it doesn't work out that well. So you need to know the people you're bringing in can move around a bit and figure things out as you go. Because you're going to be figuring it out in the early days. Days. Then you get a little further along and you get a bit more specialized in your hiring. At what point do you.

I completely agree. Finding those Swiss army knife, jack of all trades to do a little bit in the early days. At what point is there an ARR metric where you say, now I'm going to find specialists?

Yeah, it's maybe it's not an ARR point, but it's a point when you're going to be doing this thing long enough and often enough. Like you've done the experimentation and you're like, let's take the paid ads example. Like you've figured out that paid ads is going to be a big important growth channel for you. It wasn't for us, but, you know, early days, but let's say you figured that out. That's maybe when you bring in someone who's really more specialized and focused on that. And so even like from the early days, one of the earliest places where we were bringing in specialists was engineering because we knew, hey, we're a product company, like we need people who can come in and build stuff and do a great job doing that. So that was an easy place to jump to specialists as opposed to generalists there. But even within that early days, some of our early days developers were able to do DevOps, front end, back end, a little bit of design, sometimes not so good design, but they were able to operate all over the place. Like I remember Kevin, who's with us today, like he was one of our earliest developers and Judy as well, were able to come in and they operated all over the stack. And so now often we're, hey, we're hiring a front end or we're hiring a backend or we're hiring DevOps or security or IT. But then it was still even within engineering, more able to operate all over the place.

Are there any hacks you've picked up of finding talent that's worked well for you? Any hacks? How do you source candidates?

So first, like, I met my two co founders, there's three of my brother. And then we added Matt Payne and Miranda Levers and we met them both on AngelList. So that was a nice little kind of hack. But I think it's in that sense it's going to the places where the kinds of people you're trying to meet hang out. So we did a lot of just even hanging out at developer meetups, going to events. And where we're at now is I've studied Netflix and a lot of the stuff they've done on talent and talent acquisition and they essentially built their own internal recruiting agency. And so we do work with recruiting agencies, but we also have effectively our own internal recruiting agency. And so we built out the internal recruiting function that has been great at allowing us to scale talent more quickly. And then even things like employer branding like just getting out there and. And I don't know that this event for me is going to acquire me a bunch of customers. It's more likely that this is a bit of an employer branding event for us. And thinkific is hopefully some people here are hearing it and saying, I might want to apply for thinkific. This sounds awesome. So doing things like that to help build that helps with the funnel of people coming in. And then I think the biggest thing you can do though is create the gravity well of having an absolutely amazing culture and recognize that being kind of and empathetic and really caring about the interests of the people on the team is actually what's going to drive this long run.

I couldn't agree more. All these things work because we've added 70 people in the last five, six months. We went from a 30% bootstrap company. We're over a hundred people. Last year this time we were 30 less than 30 people. And now we're maybe nearing 110. In house. We brought the recruiting in house, the branding. I can't say this enough. We brought in like execs from Avalara and execs coming from four exits, one ipo. Laurie Scholes, who sold galvanized for a billion, joined our board. This whole traction branding has been so helpful to us because we see as a community focused brand. And then you recommended a book a long time ago. I don't know if you use it still Top grading. Do you still use it?

Oh yeah. Top grading or who by GH Smart, who I think is the more easily consumable one. And then I would recommend getting some coaching on it if you're going to do it. But it's. Yeah, we've really modified Top Grading. For our own way of doing things. But it is critical to our success, I would say, in being very specific about how we go about hiring and ensuring we've got a great fit with people who are joining the team.

Yeah, the culture is really important and the culture of empathy and when people really know that you care about impact, they gravitate towards it. Right. Because everyone can get paid the same amount or a little better somewhere else. So they gotta gravitate towards your impact and your purpose. You're now over 400 people. How do you train the organization to make better decisions when you're not in the room?

Yeah, I'm struggling not so much with better, but just faster and decision making, especially partly as you're going to learn now having skill or you're probably learning now, scaling that fast. So we, when the pandemic started we were 115 people and I think we're going to close this year over 500. So that's more of a two year timeframe, but still pretty quick growth. And I think one thing when you have new people is they're just less ingrained in organizational history and knowledge and it takes a while to get up to speed so it's harder to make quick decisions. So I'm working on figuring out how we can make faster decisions. The making good decisions when you're not in the room, I focus more on, hey, here's what good looks like, here's where we want to get to, here's what exceptional looks like from a metrics perspective and a broad problems to solve for our customers. This is where we're going, this is what we want to achieve this year, this quarter. And then the teams are figuring out the how. So the key though, I think is being really clearly aligned on what does success look like, what are we shooting for? How do we, sorry, not how do we want to get there, but what are the problems we're solving to get the results we want. And then the teams are figuring out the how of how they're going to solve those, those problems. And part of that just means you can't be the blocker, you can't be the decision maker for all things. Like you've got to be the decision maker for some big important things. But you've got to really empower your teams to make choices and decisions as to how they solve problems and, and even surfacing what the next problems could.

Be, provide the vision, the values, the mission, the metrics and let them bring the execution, be an input, not an approver and blocker if you're an approver. One piece of unconventional advice founders typically ignore, but shouldn't.

I think I've highlighted both of these, but I'd say one is just take care of yourself, and then the other is take care of your team. I think as you build a company, there's always going to be people in pressure saying, more money, more revenue, more customers, like, grow faster, be successful, these kind of things. There's not a lot of voices around you saying, take care of the people because they're the ones who are going to go there with you. Make it a fun journey, get you there, be the most important. Like our team is the most important, important thing, like I. More important than our customers or our revenue or anything else. It's the team. It's the team that gets us there, and it's the team that we show up to work with. And so being kind and empathetic and supportive of the team and their feelings and goals and fears and hopes and dreams is really important. And I think more and more culturally, companies are starting to realize this and execute on it. But it's just a good reminder that it's key.

Because ultimately the job of a leader is to build, inspire, and motivate a team to deliver. And deliver is a lagging indicator. If you treat your people with love and help them grow, they'll treat your business with love and your business will grow. Hey, looking back at all these years, what do you wish you did more of and what do you wish you did less of?

Yeah, dangerous question. There's always things I could do better along the way, for sure. Like that three years was. We did not need to take three years or we could have built that content engine like Unbounce did. Or so lots of things we could have done differently. I'm also cautious that like, like to take the time to celebrate and look back positively on the past and the wins that we've had. And that if I went back and told my. If I had a time machine and I told myself to do a bunch of things differently, we might not be here as a public, successful company today. I might not be married, I might not have two amazing kids. So very careful about tampering with the past, assuming that you could. But I'd say that, like, the things that I would go back and give advice if someone, if I saw someone else in my shoes is build that thought leadership content audience engine really early, because you'll probably pivot in the solution you're offering, but you probably won't leave the TAM or the market that you're in. And so having that base of audience will help you move faster and grow better and more sustainably. And then the other piece is the care about your team. Right from the early days I didn't. I was not the leader I am now in terms of caring about the team. So read and get your hands on everything you can around working with your team and being a great leader that way because it will over deliver in spades.

You talked about building the community and audience before you have it. HubSpot did it. HubSpot built a whole category marketing automation. They didn't have software when they built Inbound or Gainsight. When they built the Pulse customer success community, they didn't even have software. We try to do the same with Traction. We didn't really have product before we built this community. You recommend some great books. Your Oxygen mask first you recommended Shape up by Basecamp, Build Track App and then who and top grading any other books?

Oh yeah, I'm just known in my team for driving up Amazon sales. Here's a good one. Turning the Flywheel by Jim Collins or really anything by Jim Collins. And another one, what is Strategy by Joan Magretta. This is so both of these are like you can read them in an hour or two. So that's why I love recommending them. The strategy one just blew my mind on strategy. Everything by Jim Collins I think is amazing. But what is Strategy is like it's a pitcher book book. So like my 3 year old likes to take it to daycare because it's got pictures of bears and roller coasters. But it's such the most beautiful concise summary of strategy and how to look at strategy. I recommend it for everyone.

Thank you so much Greg. It's been a great pleasure. Where can we find you on social? Where are you active?

Pretty much anything at thinkific and then you can always find me attached to that. LinkedIn is where I put a lot of my articles. So just Greg Smith. I think it's Greg smith, lawyer on LinkedIn from the old days. But yeah, just on LinkedIn or any channel as Thinkific. I need some traction.

You need some traction.

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