Jesse Mecham: You Need A Budget

Welcome to the new retirement podcast. Today we're going to be talking with Jesse Mecham, who is the founder and CEO of youf Need a Budget about why budgeting can be a life altering event and what he's learned about bootstrapping his business to hundreds of thousands of users and about 70 people. Jesse lives in Lehigh, Utah, went to BYU and is a former CPA and current CrossFit aficionado. Side note, I've been watching some you Need a budget videos and I looked at some videos that were about 4 to 5 years old and then I did a kind of prep Skype with Jesse and he looked materially bigger and stronger and actually had to ask him if that was him in the videos. So on that note, Jesse, welcome to our show. It's great to have you join us.

Thanks. Yeah, glad to be here.

So yeah, mate, thanks for making the time. So first, would just love to get a little bit more on your backstory and kind of a little bit about from you how you grew up and kind of how you got to where you are today.

Yeah, absolutely. I'm one of six kids, grew up in Phoenix, Arizona and yeah, had a great life as a kid. Had two parents that just raised us well. So no complaints there at all. I was pretty mediocre at anything I tried but ended up choosing once I got to college, choosing accounting because the job placement rate was so astronomically high out of BYU it was like 99.5% job placement straight out of school. And I thought, well, okay, that gets me a job, so I'll pick accounting and the rest is history from that point on.

You're pretty scientific about it, but then you decided, so it looks like you're accountant for couple years and then at the same time you're also running a business. So you decided pretty quickly.

Yeah, I wish I could say I'd stuck with it for a couple of years that would maybe show that I wasn't as flighty. But I started YNAB the business in September of 2004 and I graduated from college in 06 with a master's degree in accounting. And I worked for a large accounting firm down in Texas for like 10 months before I realized, whoa, you know, I love the education, love what it taught me about business, thinking about business, break even, financial stuff, all that. But when it came to the actual work, it was soul sucking for me. So I got out of that and took a little gig helping a company do some marketing back in Utah just to kind of bridge me a little bit because I was still pretty afraid of running my own show and having my own business pay for this little family. I had two kids and a wife, but those fears were unfounded. And about four months after I had that little gig, that ended. And I just started working on YNAB basically full time at that point. And since about 2007 till now, that's kind of been my sole focus, at least professionally. Sole focus.

Nice. Were your parents entrepreneurs or did you just do this yourself?

My dad is an attorney or was an attorney just recently retired. So, you know, he owned his own practice. But most attorneys probably wouldn't say they're entrepreneurs if they run their own practice. You know, they're just kind of doing what attorneys do. He did definitely steer me away from being an attorney, that much is sure. But my mom, she was a stay at home mom and it was just always there for us. When I came home, she was there. So yeah, it was awesome way to, to grow up. And I've got two brothers that are pilots in the Air Force and yeah. Sisters doing various things. So I'm the only one that started and is running a business. But I'm surrounded by. I was in a family where people just thought a lot of you and everyone's very encouraging and I don't know, it's a good environment. Whatever you choose, they're just. Everyone's very supportive and kind and. Yeah, I just couldn't ask for a better family.

Nice. Well, yeah, definitely. I think having that belief in yourself and having support around you to kind of take the risk, it's a big part of it. There's a lot of data that shows that children of entrepreneurs are much more comfortable starting their own companies and tend to do it at a much higher rate. So I asked that question.

Yeah, I could believe that. Yeah. Because it's kind of. You maybe see your dad or mom doing it and it's just normal to you, you know, and, and so you naturally gravitate towards starting your own thing as well. That makes perfect sense.

Okay, awesome. So a little bit more before we dive in here on CrossFit, because I think you're, you're a big CrossFit person, right?

Yeah, I'm more of a. I like CrossFit because it keeps me entertained. You know, it changes up enough that I don't get bored with it. I'm, I'm, I do CrossFit with a heavy strength bias, I would say. So I'm a big fan of the powerlifting movements and, and I work along those lines. And then I do CrossFit to kind of keep me a little more spry, you know. So I would probably say I'm more of a strength athlete that mixes in CrossFit to, you know, stay humble, I think.

Nice, for the most part. Do you compete at all, like through the CrossFit games or anything like that?

Oh, no. I mean, I'll pay my 20 bucks to do the Open and, you know, slaughter myself for however many weeks it is. And then I'm usually pretty content not to do that again for a year. So, um, it's, it's fun to, you know, you just push yourself, push the envelope a little bit. But I'm learning. I've. And I've been doing it for six years and you kind of learn that you can't, you know, you can't every day just go all out. You know, it's partially me getting older, but I think it's just if you want to stay in it for, for the long haul, you got to kind of start picking your poison a little bit as well.

How much, how much muscle have you added in six years?

I'm up probably £25. Yeah, not all muscle, you know, but a good bit of it. So it's, yeah, I mean it's just, it's entertaining. You've got a community around you and people are all various levels. There are, you know, nothing, no one's crazy in there. You walk in, you feel comfortable, you know, regardless of your skill level and you have a little bit of accountability with the group and it's just, it's nice to get out and mix with people that are also interested in being a little bit more intense with, you know, with their fitness approach. So, uh, yeah, I have no complaints. I've been at the same box for the whole time and yeah, it's good fun. I've got a little setup at home as well, but I use that only if I can't get in to the gym, you know.

Nice. Yeah, I'm starting to think about, you know, I, I'm a mountain biker, play a little, play a little soccer on the weekends, ski and do lots of different kinds of things. But I've been thinking more about lifting weights. So I started, I broke out the 35 pound dumbbells that I had from college and now I'm, now I'm like, okay, I'm probably going to hurt myself if I start swinging these things around. I'll have to ask you later about the tips for kind of getting back into this, but I've been reading up on kind of weightlifting, weight training, Strength training is actually really important for people, especially as they get approach 50 and get up there. You gotta actually actively do this or you're going to lose joint issue. You're going to have joint issues and other kinds of issues, it looks like.

Absolutely. Yeah. It's like a anti aging regimen that's sure fire proven. Yeah, you move well and you, and you build strength. It's just so healthy for you. Women and men. And women don't lift any different than men. It's the same exact program. Their numbers may be less some, although I know some that can lift a ton. So it's just, there's no difference in how you prescribe it for men or women. Everyone does the same and just change the weight a little bit, but the intensity is the same, the set's the same number of reps, all that. It's so healthy. You just gotta make sure you get a, you get, get instruction. So you're moving well, right?

Yeah. My wife did CrossFit for a while and you know, it was clear that it was all about kind of the movement and the community. I mean, I find that I'm not, you know, we'll see, we'll see with weightlifting, but I pretty much need to go to a group or have someone yell at me to kind of like get some serious work done. You know, it's hard to kind of just sit up there.

Yeah, absolutely.

So. All right, cool. Well, look, appreciate that. So I want to dive into kind of just budgeting in general, since that's your, you know, area of expertise. And also for our audience, you know, it's a, it's a big thing. Right. So managing costs as people head into retirement, you know, it's, it's a huge lever that folks have. I think my perspective is, you know, many people think they should do this and are aware of it, but few people do do it. And I'd love to kind of get your perspective on like why you chose budgeting as your area of focus and why you've chosen to stay so focused on it. Because you kind of have this laser focus on it looks like.

Yeah, I mean, budgeting specifically, it was something that I was found to be fairly passionate about. If you can get the budgeting right, everything else seems to start to fall into place. And if you can manage the ins and outs, then your bank pound starts climbing. You start to have excess funds to be able to invest and learn all about that. It's a whole field in and of itself. Although not as Complicated as we'd like to make it. But budgeting is just kind of step one. And I found that there was. At step one, you have a very wide audience. You have a large group of potential customers. And so in our situation, whether the person's, you know, just out of college at 22 or they're just getting toward retirement at 64 is the same idea. We're saying, listen, if you can get your money lined up with your priorities and gain, really gain total control of your money, not that you're a miser, not that you're the super frugal, but. But just that you have control and your money is doing what you really want it to do, then there are wins there, and there are wins there across all demographics and at all stages of life. And so it's a good place to operate. You can get people from stressed to serene fairly quickly.

Yeah, it sounds pretty powerful. I mean, definitely having that sense of control over money is a huge thing. What percentage of the population do you think budgets today?

Oh, gosh, budgets. Well, a percent, maybe less, but has some means by which they can live within their means. It's probably 10%, something like that. Yeah, there's a lot of. The ceiling's pretty high as far as capping out on our market and wondering what we'll do next. There are just so many people that just don't have those fundamentals down. And if we can get them down, man, it's just. It's life changing for them.

Right. I've been talking with this guy, Tim Ranzetta, over at Next Generation Personal Finance. They're pushing. It's a nonprofit. They're pushing hard to get, you know, personal finance taught to every high school student in the US and he was telling me that, you know, 50% of students, high school students, now have access to the curriculum, which is great, but. But only less than 20% actually take advantage of or actually get taught this in high school. So 80% of high school students are graduating with no personal finance education. And you look at the outcomes on the end of it. I mean, we're at the retirement side of it, looking at it, and we're like, okay, yeah, almost nobody's really ready for retirement. And that's why kind of getting in the front end and educating folks and teaching about budgeting, it's so important.

Yeah. And I struggle on the high school kids side because when you're trying to teach those kids, they don't have any pain, you know, any financial pain yet. So sometimes it's hard to get them to listen because they're just like, you know, I don't pay bills, I don't have bills. You know, it's what we really got to do is be able to intervene in some meaningful way when they're about to load up on student loans without even knowing what the ramifications are. And so if they just had that one lesson where it just was just, you know, you just put this deep seated fear deep in their belly about borrowing money for school, that would be a great start because at least they'd go into a financial aid office a little more educated and maybe a little more wary of what they're hearing and what they're being told.

Yeah, well, as a father of three kids, I have a well established deep seated fear of college costs right now.

Yeah, absolutely. I've told my kids, I just said, listen, you're on your own if you, if you don't get grades. Yeah, just go to some school, you know, and, or heck, just learn a trade and show up on time and do good work. You'll have more work than you can handle. You know, there's, there, yeah, it is a whole other subject that I'm passionate about. But we're, we're, I mean, we're just, we're seeing a. I just in the New York Times. No, no, Wall Street Journal a couple weeks ago it was, they were talking about different bubbles and they were showing the difference between the mortgage burden since 2002 up till now, and you'd see it climb in.08 and then really dip low and then it's slowly climbing, but it's actually maintained a fairly relative size. But you look at the student loan debt and it's on a tear and I don't know what the ramifications for that will be, but we're sending a lot of people out into the world that are already anchored and like they won't be able to buy a house because of their student loan payments, they won't be able to buy a car because of their student loan payments. And I don't know, they'll. I think there will be some kind of reckoning that we haven't all.

Yeah.

Necessarily.

Totally. I mean, I actually, my first business was around putting college applications, college research, college applications, inquiries, financial aid on the web during the first dot com boom. And you know, I remember even back then, you know, college costs were appreciating it inflating at 7% a year, you know, twice the rate of, over twice the rate of normal inflation. And. Yeah, and I was Talking with a friend of mine and he has a daughter going to usc. And I was like, so how's that? You know, what is it, 60,000 bucks a year for private? He's like, it's actually 85,000. When you factor in like sorority and fraternity, I think it's so sorority cost plus, you know, you know, plus the cost of school. I was like, 85 grand. That just, it's kind of a mind blowing number, you know, per year. And so I've had a. We're having actually a healthy dialogue inside of our family about, you know, definitely being cognizant of like how much debt that is and do you want to do that? Is it worth it? You know, and you know, I've met people, you know, early 20 somethings that are like, oh yeah, I've got $150,000 in debt that I'm paying down. And for me it's just kind of a mind blowing to think that, yeah, I definitely wouldn't want my kids or any young person, you know, kind of if you graduate with that kind of debt, then essentially then you're going to be totally focused on, you know, if you're financially prudent, you're going to be like, okay, how do I pay down this debt? Right. And that's going to be like, okay, what can I do to make that much money? Right. And I'm only going to think about like whatever accounting or engineering or whatever the number is. Right. It kind of immediately limits you in a way that may not be good and kind of constrained your life. So.

Absolutely.

I got to imagine a lot of families are talking about this.

Yeah, I mean, it feels almost like a form of indentured servitude. You know, you just kind of get into a spot where you really can't, like sharecroppers, you know, it's like you're there and you really just don't have a way out. And it's scary. I think we'll see something start to break. I'm hoping the competition from online schools, and I don't mean the shady ones that want you to borrow and have, you know, but just online. Availability of education, democratization of those low level freshman classes where you have a thousand kids taking Econ 100, like that's a model that does not cost $10,000 a year per student, you know. And so things like that I hope happen. And then I also hope that some kids recognize that their skills don't lie, maybe in the liberal arts and they can jump to other spots where they're really fulfilled and making great money and providing, you know, providing well for their families. So we'll see. I have a lot more reading to do on the subject and, you know, more studying and thinking, but it's on my mind and doesn't seem to leave.

Yeah, for sure. I think college is going to change. There was a recent story about where Clayton Christensen, who's an economist, came out and said, hey, I think that half of these small private schools are going to be gone in the Next, I think 15 years. So there's definitely more awareness and I think there's also, I mean, just color commentary from someone facing this. There's definitely other alternatives. I'm hearing people talking a lot more about, oh yeah, send your kid to a two year school, a community college, think about the trades or think about Europe. You know, Europe offers low cost or free education. Some people are like, oh, can I send my child to Germany or to Scotland or something like that. So. And some people are doing it. So there's definitely.

That's pretty cool.

Yeah, there's some different, you know, globalization. Right.

So, yeah, absolutely.

Yeah. So, you know. Right. Actually another comment, you know, back on what you said about budgeting and why it's important and you know, one thing that came to mind is I was talking to Bill Bernstein and we were talking about retirement planning and he was like, hey, retirement planning, it's something that's simple to do. Simple. It sounds simple, but it's actually hard to accomplish. I feel like budgeting is the same thing. It's like, oh, it's a simple idea, but it's actually hard to get on track. What do you think? Any kind of big things that people need to think about or should they embrace tools like yours? I mean, obviously you're biased to kind.

Of get on track. Yeah, ours is the best tool. No, it's any tool works. But really they need to think about it from a mindset perspective. And this is tool agnostic. They need to think about how they're thinking about their money. And that's the biggest change that we try and get across. If we teach people a new way of thinking about their money, we teach them that budgeting isn't an arrival point. You don't say, okay, now I've budgeted, now I, you know, now I'm here. It's not binary. It's much more gradual and you probably swing back and forth a little bit from good to not so great. But at the end of the day, we want people regularly and intentionally deciding what they want their money to do. And that's, that's budgeting. And when their money doesn't do what they wanted, they assess change and then again decide what they want their money to do. And when they see that they have larger expenses coming down the road, you know, Christmas coming up or a big family vacation, they look at that and say, oh, okay, well we're going to save up for that. We're going to budget, you know, for a $600 vacation six months from now, we're going to budget $100 per month. And they start to just treat all these future obligations, current obligations, the wants, all of that as, as claims on their money. And then it's just a game of trade offs and essentially manufacturing scarcity in their mind where they say, if I put something here, I can't put it over here. And having that exercise of feeling scarcity, feeling money run out, having that really work for them, where they then have their priorities being fleshed out. And when that works, they aren't making more money, they haven't gotten a raise or anything, they haven't even cut costs. All they've done is just made sure their money is doing what they want. Suddenly they feel good. And it's a strange, strange phenomenon, but it happens almost without exception that way. So it's really just thinking different. You can use any tool you want, really, just thinking different and being proactive instead of reactive with your money. That's the key.

That's really interesting inside of our company we're talking about what's the aha moment when people kind of get, you know, that there's a lot of value here. And it sounds like for you it's. Is it that moment when they start kind of reorienting themselves about how they think about money? Is that it's a psychological thing?

Yeah, there are a few spots. One is when they realize that they only should budget money that they actually have on hand. They shouldn't budget their paycheck that's coming up. They should budget the one they've already been given that's been deposited into their account. So that little change makes budgeting so much easier. When you only deal with what you have on hand, even if you're going to be paid in three days, just deal with what you have on hand. When you make new money, then deal with the new money. That alone like that difference between budgeting and forecasting is huge for a lot of people. Another one is when they recognize that when they overspend, they go over budget on whatever that it's part of budgeting, that's just part of living. So they just adjust their numbers and move along and they recognize that budgeting is about. It's not about being a perfect guesser at what you will spend. It's really just about being intentional about what you want your money to do. Those two seem to be pretty big in the aha category.

That's really helpful. Yeah, it seems like something that you don't think about it, but it can be game changing. So I had this analogy. Just like, you know, people who meditate, they talk about just learning to breathe deeply and be thoughtful. And you're kind of like, oh, I'm breathing all the time. Right. But hey, if you actually take, you know, 10 seconds, you know, or whatever, 30 seconds and take six deep breaths, you know, it totally changes your approach to life. Sounds like there's some elements of that in budgeting. Cool. So, you know, a side question for you, as you need a budget has grown and gotten bigger, has your own personal budget changed a lot?

Oh, yeah, absolutely. I used to, I mean, gosh, we used to not even take a steady salary, you know, back in the day. And then finally, I think five years into it, I told Julia, I think we're able to pay ourselves regularly, you know, like a specific amount. It was nice to do that. Although that was the same year we had to raid our own emergency fund to push things through to launch a, you know, third version of the software. So it kind of, you know, it gives and sometimes it takes away, it seems. But, but yeah, I mean, definitely it's grown. Sometimes you get nostalgic about the old days, you know, you think, man, we used to live on so much less. What the heck has happened? And it's not just that we had more kids. Kids aren't that expensive. It's, you know, your lifestyle just. You get lifestyle creep. And what once was a luxury becomes a norm. And then what was a norm becomes an entitlement. And pretty soon you're this soft individual that can't manage anything on their own. So you have to kind of be careful. It's almost a stoic. You have to kind of approach it like a stoic would and say, well, I'm going to push back on this because I need to make sure I can. I'm still have a little bit of metal left in me. I can sleep on the ground and whatnot. But yeah, budget's definitely grown and I love it. I mean, it's, it's very nice to not have to be scrambling if we, you know, we have a hundred dollar expense that hits. Cause I readily remember those days still. And you know, they're stressful. So we have different stresses. The stress never goes away. It never goes away. Just different stress. So you gotta learn how to manage stress apart from learning how to manage your money. Just recognize that if you're alive, you will have, you know, you'll be experiencing stress and you gotta be able to manage that. So we still, we still have stress and all that. But. But yeah, Julie doesn't have to know exactly how much a can of corn costs. And those kinds of things are. Nice.

Nice, that's good. And do you use. You need a budget for your own, for your business as well as your personal life?

Personal, absolutely. I feel I'd be lost without it. But on the business side, I did up through last year and then we had to switch to accrual accounting. And YNAB is insufficient as it relates to accrual. You could probably shoehorn it in some way, but I didn't want to mess with it. And I miss it terribly not having it in the business because when I did move YNAB the business to YNAB the Software back in 2010, it was a real growth, growth accelerator for us. Having that kind of intention put behind our cash flow helped. It eased a lot of my burden around. Can we afford this? Should we invest here? Because, because I could see, oh look, we have the cash, it's allocated to hire. So yeah, let's hire versus being afraid of every single expense that came across. So it helps a ton. Anyone that's got a small business, they're doing cash accounting, not accrual. YNAB will be tremendously helpful. It's anything where you don't have to carry inventory, you have very simple or no accounts receivable and you deal a lot with just kind of ins and outs. Realtors, you know, solo operators. YNAB real honestly, a lot of people, if they start with their business first, it makes more sense because they're usually the only spender in that scenario. They aren't having to do it with a spouse. And I don't mean that negatively, I just mean from a complexity standpoint. So they're just running their own business. Their own. Yup. For the business. If they get used to that, a lot of times they do all the learning there and then they can transfer it back into their personal life and with a spouse where they're sharing and things and it, it works out a lot better. So if you're kind of struggling on the personal side. But you're running a business. I'd maybe implement it in the business first. It, it tends to be a little easier. There are fewer transactions, there's less collaboration, it's just a little simpler as far as a learning platform goes in there.

So what percentage. Yeah, it's interesting, interesting idea. What percentage of your audience is like solo sole operator, you know, sole proprietors, side gig people versus people just budgeting for their family or themselves Personally, you.

Know, I, I actually don't know that. We've never surveyed around that to ask. Um, it would probably pretty representative of, of a normal population, you know, so whatever the, wherever we land on a population front, we're, we're probably right around there as well is my guess. Maybe we attract a little more of the solo operators just because they're kind of used to tackling things and self learning in that way, but probably nothing out of the ordinary in the course.

Of building this business and obviously servicing tens of thousands of people now or more. Any stories that jump out from individuals that have kind of had life changing, huge changes in their life from using your software.

Man, I mean an individual like a specific story. I don't know if I could tell you, we featured some in my book that were pretty thorough, but one of my favorite things is to go into our feedback channel in Slack and that's where a lot of the customer service team, we have got support specialists in there. They'll drop notes in from people that write in and say how Ynab's helped them out. And sometimes they're writing, they've been using it for three days, sometimes they've been using it for three years. But people aren't being overly dramatic when they say it saved their marriage, that they're sleeping better, that they feel a tremendous relief, that they just feel better about things in general. And it's not that Ynab's this magical thing, but when money is so you could say invasive in our lives, I mean it touches everything. So if you're in a relationship, money is going to be a factor for sure. And if you can master money, then suddenly you don't have that one massive leverage they're being pulled on you. When other normal stresses happen, I would rather have life stress happen without having to have it compounded by money stress. And so if Ynab can be a relief for people there where they just say, hey, at least you know, I lost my job, serious stress, but at least I know that I'm covered for the next two or three months and I can take my time, find the right job. That, that's life changing. It's just a process of recognizing that you have things well in hand and being able to kind of breathe a little easier. But specific stories I'd have to go back through. And I mean, we can find them for sure, but it's really just kind of the whole, like, I feel like we do good and make the world slightly better in our little corner of it. And that's something worth getting up for.

Totally. Well, money. Money's a huge deal and we see that now as well. Like in our, in our side, we're, you know, talking to folks that are using our tool. And a lot of times they're, you know, they're, they. It's. The core problem isn't money. It's like the out. It's. It is stuff that's happening inside of their family. It could be like, okay, you know, how much are we going to allocate to pay for someone's college or, you know, support another side of the family? Things like that. You see these. I think there's a lot of this family dynamic stuff that happens and people have to make these decisions and there is scarcity. Right. And future risk. Right. If, like, oh, well, I'm going to take on paying for so, so much for college or hey, we're supporting your family over here. And that's costing us 15,000 bucks a year. You know, that's going to definitely impact us downstream. Having a way to kind of facilitate those conversations and get resolution can be game changing for people.

Yeah, absolutely. And it's stressful. It's always going to be stressful. So having the money be less of a stress in that way or less of an amplifier is a big deal.

Yeah. Okay, so I have a question for you. Since we're in the process of rolling out our own kind of paid solution here. What does your growth curve look like from kind of zero to 100,000, 10,000. Tens of thousands of people. I'd love to hear that.

Yeah. Do you mean from like the very, very beginning?

Yeah, just get me models.

Yeah.

Well, I'd love to hear more about how you switched models too, because I don't know that side of your story.

It was slow at first. Like getting the first customer took two weeks after I thought it wouldn't work. You know, I actually had to give her a refund because it still didn't work for her once she bought it. But. And I say she, because I totally remember the. I remember her Email address still to this day. But. But that first customer was a big deal because it was almost like, hey, this did work, at least for one other person. Maybe there's something here. And so, yeah, it was very, very slow. I mean, I don't even know when we had our first hundred. I remember six months into selling what was a spreadsheet at the time, we had sold 30 copies in one month. So I had hit like, this big milestone where we were selling one one a day. And that. That was a big. Has a big deal, you know, so. And then about six months later, we, you know, we were just kind of steadily growing. And then I. I started selling, kind of pitching the rules instead of the spreadsheet and really focusing people on the rules behind it and not just selling them a spreadsheet. And that really changed the resonance with. With people to where they recognize, oh, this isn't just a tool. Like, this is a way of thinking. And when I did that and really started emphasizing the rules that we still do this to this day, I saw sales basically double overnight. And when I say overnight, I literally mean overnight. I put out the new site, focusing on the rules, and suddenly we were doing twice as many per day. But it was still tiny. It was tiny enough. I wasn't thinking it was anything for the long term. I just thought, well, this is great. It's additional cash for us while we're in school. I was able to cut my hours at my internship, able to keep working on school and getting good grades there. And then I realized once, probably two and a half years in, I realized that I was making more money from Ynab than I was from my real job as an accountant. But I was working 80 hours at my real job, and I was working at ynab, like, from 4 to 5am in the morning. So, yeah, I was slow to realize the obvious, but I thought I should probably drop this accounting gig. It was just hard for me to unpack that, what I call brainwashing that happens where they're just like, you got to do this for five years. This is your career. And took me a while to realize, well, maybe that's not the case. So, yeah, it was. We just grind. I mean, I don't. I never even have thought about a growth curve. We just always have been kind of. We find we found a trench, and we just keep digging in this trench over and over again, hopefully with maybe a little nicer tools or with a little more sophistication. But at the end of the day, we've Just found a good niche and we just keep, you know, just stay right here, keep doing what we're doing.

Okay. And then partway through this, you switched from licensing kind of just one time charge to a. Is that the big change that you went through, that switching to subscription?

Yeah, that was end of 2015. So we're almost three full years into the change at this point. And it was a scary change. I knew it'd be scary. I tried to save up a ton of money to float us along as we knew that would happen and it would be a hit. But we were not in a sustainable position for that major release upgrade cycle. Our user base kept growing and, but we weren't being paid. And so you have this ever growing base and some users literally never cost you any money. They never write in, they just do their thing. And that's totally true. But as you're looking at how to make this sustainable, we thought, well, maybe you pay for support or pay. But that didn't feel good. You know, trying to throw up. Like if someone writes in, are you supposed to say, like, well, I'm sorry, I can't answer your questions because you haven't paid for support. That just felt really, you know, antithetical to what we, what we wanted to do. So when we looked at this new model, it let us not have to hold back and make big splashes. It let us put something out there and iterate on it and be wrong in a small way and then fix and refine everything about the model was, was better for us. It's allowed us to, to cash flow better, although we're rapidly hiring. So we just are kind of pushing the envelope there. But it's allowed us to support more effectively because we have far more resources to throw out support. Our response time is very competitive. It's allowed us to hire more engineers and keep building. So it put us in a spot where I felt like, okay, we're here for the long haul now. I didn't have to worry about eventually just saying, gosh, I don't need to have just a skeleton crew. We can't support anymore and we just got to kind of ride this out.

That's great. It's a cool story. I don't know if you're open to sharing, but how many subscribers do you guys have now?

We don't. Yeah, we don't share that just because there's no upside, really. And what really happens, to be honest, is you share that and then you end up getting tons and tons of cold calls from like Investors, they all want to reach out and connect and I end up just having to fill all these emails. So I end up keeping a couple of things kind of close to the vest, but pretty open. Otherwise.

Sure, totally get it. And do you think you'll ever take outside investment? Sounds like no.

You know, the only thing I would love if I were, I would probably it would be because I had some life event that dictated that, you know, I have no idea what that would be, but just something that just said, hey Jesse, like things have changed. Maybe something out of your plan changed. So you need to look at this differently. My favorite approach at the moment would be something where ynab, this sounds crazy, but ynab, the company could borrow money to buy out some meaningful amount of my ownership and then that could then belong to the employees of YNAB in some kind of an ESOP or something. And then, and then the, the employees, the team, they can, they would just work and continue to grow the business and pay off that debt and then eventually I would be a minority owner and you'd have employees as the majority owners. And that could be a pretty cool situation because it would protect it. I, well, I'd have to really know this investor well to say like, oh yeah, go ahead and jump in here. You know, even if they buy 10%, I've heard stories. It's where suddenly they're, you know, they're a 10% owner, but it feels like they run the whole show and so I'm afraid of having another boss.

Sure, totally get it. The ESOP idea I think is pretty interesting and should be, you know, something you could actually implement. I was reading up on that.

Yeah, it's not like an out of left field idea. It's funny that, I mean we've never leveraged before, so it would be funny to like a little weird to do that. But I think for that purpose it could work, you know. So anyway, it's a thought. Rolling.

Sure. Side note, I just had Kyle Taylor from the Penny Hoarder on the podcast. He's another entrepreneur, he's located in Florida. He's got the fastest growing private media company out there for a couple years in a row and he totally bootstrapped the thing as well, you know, and it's a great story, you know, $0 in funding started on, you know, started, you know, at his whatever kitchen table at his parents house and has grown this thing and now is, you know, over 100 employees and it's cranking. So anyway, yeah, it's good to hear the stories.

I'm more curious or concerned about growth at that point. You know, I want to have healthy growth. So as things start to really take off, it's almost like you just want to make sure that the trajectory is healthy. I want to be in it for the long haul. You know, I don't want to have this big, this white flash of activity and change and then realize, oh my gosh, this morphed into something we didn't intend. I want to make sure that the growth is healthy, sustainable, the team's happy, you know, and all that. So I'm sure he's doing the same. Like, growing fast is hard, but it can be done. You just got to make sure that you're devoting lots of effort to channeling that growth in the direction you intend.

Well, I think the founders have a good idea about what's healthy. And when you do take outside investors, very often, depending on who they are, they can be looking for that fast growth in a timeframe for an exit. You see here these private equity shops like, yeah, I'm put your money, I'll put money in, but we're selling this thing in five, seven years no matter what.

So exactly.

Regardless of where we're in the business cycle or whatnot.

I mean, a lot of times they'll have buyers already in mind when they buy something. They already know who's going to buy it from them. And yeah, it can be pretty dicey for founders.

Yeah, totally. So I appreciate the color on the company. I'd like to get back really quick to the community and that side of your business because it does seem like that was transformational for you. And I see that on your site. You know, I see the method, I see the courses and the fact that you're doing both kind of like live and recorded stuff, you know, just would love to learn more about, you know, how that, how that, you know, kind of is part of your business and what you've learned doing that.

Yeah, I mean, we're an education company that sells software to pay the bills, essentially. So we just teach and teach and teach through one on one support, through workshops. We're piloting a few other teaching channels that are kind of new enough, I wouldn't want to say. But that's our bread and butter. And we're really good at software, really good at the tech, really good at design. But where we've been differentiated for a long time and where we compete really well in the space is in our education. So that's been big. And then our customers they're so helpful, you know, and they teach each other. And we have a really active subreddit that's really fun for me to scroll through and read. Like, people will have rants on there. I'll read the rants because those are really educational as well. You read the raves, they make you feel good. And there's just a vibrant community of people. And they're so kind. For the most part. I've been surprised at how kind like this, this corner of the Internet seems to be fairly kind. And I. I've enjoyed seeing that happen. So I don't know why that's the case, but we, we seem to have attracted users that are helpful. And so when you do join and jump in and you ask a question in one of the, you know, many Facebook groups that are out there, or even some local, like, meetup groups, you just find that there are people that are like, oh, yeah, I've been there and here's how you can keep going. And yeah, you get a little bit of a support network. So it's a. Yeah, I love seeing that aspect of it. It's really fun.

That's awesome to hear about. So you deliver all this education and support kind of for free. Right? I mean, I could go on there and just sign up and, like, take these courses and whatnot. And then it's my option if I want to pay for the software. And do you?

Well, I was going to say, like, the courses don't sell the software in the sense that you don't have a teacher saying, and if you buy now, you're going, you know, none of that, but, like, it's a great sales pitch nonetheless, you know, to see it, see the software in action and how you're supposed to think about it and stuff. So it's an effective selling tool, even if we aren't actively selling in those workshops.

Yeah, no, I get it. How long have you been running the workshops? Has that been going on for years or did it looks like you've got a ton going on?

Yeah, years and years. We started them maybe in Goo Gosh, 2008. We started running webinars with like, hundreds of people. And then we've just kind of refined them over the years. And we like doing the workshop where people can say a question, type in a question. We like that. It's. We keep the classes small enough, your specific question can be answered versus just watching a glorified, you know, PowerPoint presentation where there's no interaction. That's pretty, pretty boring. So our teachers are really good at facilitating and connecting with the students individually, and it's a ton of fun. The teachers are so good at it. Now at this point, it amazes me. I could never pull off what they pull off as far as how on top of things they are, how smooth they are. You really can't surprise them with a question at this point. I think they've seen them all at this point.

Well, you know what's so cool about what you're doing is you're achieving behavior change in people around personal finance, which is really hard to do, and everyone's trying to do it with technology and software. And I think you've got it right, which is. It's about education. It's about the personal connection, the community, and having that educational component and the group dynamic. I totally get that. I totally get why this works. And it's growing and growing quickly. It's awesome to see.

Yeah.

Good job.

Thanks.

Um, yeah, and also you, you know, you yourself are, like, obviously invested doing, I mean, 342 podcasts, and I know you've been doing, like, these whiteboards and stuff like that, like, from the beginning when I said I watched that video. So you've embraced it. Any. Any lessons that you've taken away from kind of doing all these podcasts and videos and stuff yourself?

Yeah, the. The. The videos I stopped. We. We were in New York for the book launch, and then when I got back from New York, we were there for three months, and I got back from that and just was like, let me take a break from the videos. Just literally just to take a break. I just, like, I want to pause on these. But the podcasts are so easy to produce because they're so darn short, you know, three to five minutes that I can. I just. I come up with a topic, I talk about it, and for some reason, some people are okay listening to it. So it's usually about budgeting or somehow I tie it in in some very reaching way at times, but I enjoy it. You know, we have a lot of listeners at this point. I've been doing it for so many years. I probably. Gosh, probably almost seven years now that I think I was doing podcasts before, you know, everyone had a podcast. So it's like, mine's still the same as it was. Like, it hasn't improved at all. You know, it's still maybe my delivery is perhaps improved slightly, but, like, as far as production quality and all that, it hasn't really improved much. We have actually done more with our debt stories segment that's where we're really trying to kind of push the envelope and make it different, you know, in that way. And that's been. That's been a fun project.

Yeah, I listened to one of those. I listened to one of your podcasts, you know, your three five minute ones. And then I listened to Debt Story, and I thought the Debt Story was really good because you hear real world stories from someone and what they're going through and how they can kind of make their lives better. That's pretty cool. All right, so any big influencers on your journey here that you found really helpful as you built the business and kind of built your community?

On the software side, I'm a pretty big fan of Jason Fried. He's the Basecamp founder. He just always seems to be pretty pragmatic and thoughtful, so I've followed him for years. His original book that he wrote with his business partner, I can't remember the guy, David Heinemeier Hansen, I think it's called Getting Real. That original book was very informative on the software side of things, on the marketing side back in the day. Seth Godin with an old book at this point, but it's called Permission Marketing was really, really informative for me. I'm not much of a consumer as it relates to, like, you know, kind of ongoing content from people, but I'll read books because I know books have been through a long, long process, you know. So one of my favorite books, and it's super relevant for anyone that's. Well, it's just super relevant, is by Cal Newport called Deep Work. I require that by, you know, that every single team member of ours, when they start, they read it. A lot of us are rereading it again right now in this month, and it's just great as far as how to do really deep work, meaningful work, not just keep things shallow and kind of transient in your thinking. I like that one a lot. Another business book I really enjoyed last year was by Ben Horowitz, big VC guy, and it was called the Hard Thing About Hard Things. That one has some absolute gems, especially as your team count gets to be, you know, 40, 50 plus. You'll really start to find him saying things where you're thinking, oh my gosh, I just did that wrong, you know, or, oh, we just saw that. So that, that one, that one's been really helpful. I like Andy Grove stuff too. He's the old intel guy from way back. High output management's actually really, really solid on the management side. So traction is another Good one. Gino Wickman wrote Traction, and that was very informative for us as we were trying to just ramp up to the next level as far as kind of the life cycle of ynab, the organization. So, yeah, I'm a pretty avid reader, but not much of like a podcast blog kind of follower.

Totally. Do you do any? Thanks to the list of books. I appreciate it. I'll. I'll read some of these that I haven't read. Do you participate in any, like, Mastermind groups or anything like that?

I'm a member of Vistage. It's more. I mean, if you're a CEO or an owner of a company size. I can't remember what the minimum is for the company size. It's pretty small. But I go once a month to a group where we meet together and we just work through issues and things, and that's been very, very effective for me. It helped me kind of grow up a little bit in my role. I really like that. But no groups that are more specific to my niche or anything like that. Just that one.

Cool. Appreciate that. All right. So, you know, Jesse, I appreciate your time. Anything else you want to touch on? I mean, one side note I saw was like, you were looking at getting a dog. Did you actually end up doing that?

I did way back, yeah. It was super fun. But I think she had some kind of a, like, something from birth, you know, something that was wrong with her, some congenital thing. So we only had her for six months, and then we had to put her down. The vets couldn't figure out what was wrong with her, and it was kind of rough. I was amazed at how fast I connected with this dog. It was a Belgian because, you know, I had her for six months, and, man, I was just wrecked when we had to put her down. I can't imagine when people have, you know, have a dog for years and see kind of their kids grow up with this dog and then you, you know, you have to let the dog go. It's so, I want another dog. My wife needs to be convinced. So that's the issue. All my kids are convinced we should get a dog. It's just my wife. So one of these days, you know, one of these days we'll. I may be able to win her over somehow. I'm not sure how exactly, but that's on the list. I'm into woodworking lately, and that's been fun. Something kind of totally, totally analog, you know, away from computers and something that I'm really bad at. And so it's fun to kind of be in the novice stage and think something is fantastic when it's very, very beginner level, you know. But that's, that's been fun. So I'm always kind of changing things and diving in on stuff, just learning, you know.

Thanks Jesse for being on our show. Thanks Dotto Robison for being our sound engineer. Anyone listening? Thanks for listening. Hopefully you found this useful. Our goal at New Retirement is to help anyone plan and manage their retirement so they can make the most of their money and time. And if you've made it this far, I encourage you to check out YNAB or you need a budget. Also check out newretirement.com where you can build your own plan or take advantage of our premium advanced tools and support. Oh, and you can also find us on our Facebook group or follow us out there ewretirement on Twitter. All right, thanks everyone. Have a great day.

Sam.