What Is The Most Important Factor To Keeping Your Customers Attention?

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, www.thelandgeek.com. and I'm really excited for today's guest. He's. I'm gonna have to put on my anchorman voice. He's kind of a big deal. But before we talk to our guests, I would be remiss before I properly introduce our co host, Scott Todd from Scott todd.net landmodo.com and most importantly, if you're not automating your Craigslist postings, posting domination.com TheLandgeek Scott Todd, how are you? I'm excited.

Mark, how are you?

I'm great. I'm drinking some good coffee here from Danielle Dybal, no less, from the last boot camp. She got me like these beans are Texas pecan beans. Grune Coffee House. It's so good.

Wow.

Texas pecan. Does it taste like pecans?

Yeah, it tastes like deliciousness without delicious aftertaste. Deliciousness. What are you gonna do when you.

Run out of that bag?

Buy more?

I guess you have a hookup now, huh?

Yeah. Oh, by the way, today's podcast is sponsored by loangeek IO. If you're not automating your note payments, why you can always make more money, you can't get more time. Go to loangeek IO and, and learn how you can start making your note collection actually a profit center for yourself. All right, today's guest, let's talk about him because he's kind of a big deal. He's really big deal. CEO of Highrise, which is a spinoff of Basecamp. Nate Cotney is a two time Y Combinator alum. If you guys don't know who Y Combinator is, just Google it. To be a Y Combinator alumni, once is amazing. Twice is like you're kind of like a genius. Okay. At least in the in the tech world. He also created an online writing software draft called drafting.com. nate. Cottony, how are you?

I'm great. Thanks for having me guys. And thank you. That was. Yeah, I'm blushing. Those some very nice words. Thank you very much.

I mean, Nate, Y Combinator's really hard to get into. So how does somebody get attention there when you're competing against the most ambitious, the most, you know, big thinking software startups in the country and they're vying for these guys attention to be their mentors. How do you do that? How'd you break through?

I mean, to be completely honest, I was in a very the second batch of Y Combinator So it was a very different process back then. I think we only. There was about maybe 11 startups back then. I did that, you know, at the end of 2005, and then I did it again in 2011. And I think in that group, maybe there was a hundred startups. I mean, so it's much more competitive today than it was back in 2005, you know, but we did okay and we made some decent connections in 2005. So it really wasn't even a competition. 2011, they just let us back in. You know, it's. I think that one of the biggest ones is the fact that even going into y Combinator in 2005, I remember I feeling like there's no way this is going to work out. The odds were totally not in our favor. I mean, I didn't have a lot of confidence that this was going to work. There was also something. I had a partner that I really wanted to join with, and he backed out on me and thought, like, we'll just do it another time. We'll try to get into Y Combinator in another bash. And I think there's actually, there's probably two really great lessons there. One was like, let's just do it anyway, even if we don't have confidence. And for the partner that didn't end up joining me, it was like, there's no way we can wait on this. Like, you have no idea what the environment is going to be like in a year when you finally get around to wanting to join Y Combinator, because by the next batch, it would have been so much more competitive. So it was like, no, the time was now. I'm not going to, like, look at this opportunity and just piss it away. Like, we've got to do this now. And so I did it and, you know, I surprised myself. We had a really good resume and we had a really great idea, so they let us in. So, yeah, don't just keep waiting on your opportunities. Just, you know, even if. Even if it wasn't going to work out, we were going to try it anyway and probably try, try again.

So, yeah, I mean, Y Combinator has helped fund you, Dropbox, Reddit, Airbnb, Stripe, Weebly, among many, many others. I mean, these are some massive names, billions in enterprise value. So it's really kind of a special thing when you look back on that experience. What were, let's say, the two biggest takeaways you got from it?

I think maybe the biggest takeaway is how much you can get done in such a short amount of time. I think a lot of people look at starting a business and thinking like, oh, my God, this is. We need. We need so much time. We need. I need. I need to. I can't work at this. This company I'm at because I need, you know, all I need a year to create, you know, to even start my first business. And these, these kids, you know, most. So many. I mean, I'm much older now than when I did Y Combinator now, but like, I mean, even my. In my batch, in my class when I was in. In 2005, a lot of, you know, kids right out of college, I mean, they're just doing it in three months. I mean, they're building these really amazing products and company companies and demoing them to investors in just three months. There is an enormous amount you can do in just three months. And even less than that, so many people, I think even us, we had launched in a month and a half. So it's like there's a way to really pare down some of the things that you want to accomplish and get a nugget of something kind of important out that I think really surprises people when they think of the grand vision, vision of what they want to do that it's going to take so long. It's really surprising how much you can get done in just a little bit of time. The second biggest thing on a Y Combinator, I don't know, maybe some of, maybe almost an anti kind of Y Combinator thing. I think Y Combinator is great, but there's really definitely people that kind of try to approach the VC life and try to raise a bunch of money. And if they only see the world as something that they're going to start a business, they need someone else's money. When I went and did Y Combinator, we were very much, you know, first batch of Y Combinator, we only got a little tiny bit of seed money, and we didn't raise any more money after that. I think we started with like $18,000, which is really nothing when you think of the Dropboxes and the Airbnb's that raise millions and millions. We created a company that was just. Just customer money. That's all we wanted to do. We took that little bit of money. It was more the, I think the backing of some people that believed in us, and we just started a business and just started selling the customers and built the company from there. So, I mean, we took from that, you know, just, yeah, we can do this. We don't actually need a Lot of money. I know a lot of people look at Y combiner and think it's all these big VC companies, but it isn't. A lot of them today are a lot of companies that just kind of bootstrap from there.

Scott Todd.

Why do you think people don't get started like that? Like, you know, you talked about, you know, your partner didn't want to go, but you're like, we're going to go, we're going to do this now. And you know, like, you see entrepreneurs all the time, that something goes wrong, whether it's their partner bails on them or. I mean, personally, I think it might be even just a little bit of lack of confidence. Right? Like they lose their self conf in that piece, they lose their momentum. I mean, what do you think? What do you see and why.

The entrepreneurship game? I mean, it's been challenge after challenge after challenge. I don't know, it's from partners not working out. I mean, I think a big thing with the whole partner situation is.

I.

Think your question brings up like a lot of different, like, avenues to go down. One is just the whole partner thing. Bringing partner to a business, I think is super important. There's just this need. When you find yourself working on a business by your lonesome, it can get incredibly alone. And so I have surrounded myself with really bright people and sometimes I look for partners to bring into these things and it's been awesome. Whether it's just a friend that I have or it's my wife bringing her into the business. I really rely and I really believe in the power of partners. And if you look at like some of the greatest companies like Apple and even Microsoft, and you look at that's kind of like a premise from Y Combinator is the greatest businesses are started with a couple people because you need the peer support. But it's really tough when you do that. You basically create this marriage and so things can really go bad, right? You don't really have that kind of, maybe a lot of us don't have that form of dating that can kind of lead up to marriage. A lot of people starting businesses kind of jump in with a partner right away because you want to have this opportunity. So you invite somebody into your business. You don't really have maybe the same vetting process as you might dating someone after a while before you get married. And so I think a lot of people kind of jump into a partnership a lot faster, yet the dynamics are very same. Similar to marriage, you're both depending on each other Financially, you're both depending on each other for moral support, even friendship, because sometimes you're the only friends you have because you're spending all this time in the business and not socializing that. So it's not that surprising when somebody kind of bails out, because it's just. It's just a very rough and very tough situation to have these two people in a business. And if you haven't dated very long, anything can happen.

Yeah.

I think that what I see a lot of times, whether it's with land investors or anybody doing investing, is there comes a point in time where it's that gut check. Like, holy cow. I think we all live in this fairy tale. Like, okay, this is the way it's going to be. And then we start doing something, and it's like, boom, you know, like, I mean, I don't know the exact story, but, like, you know, as you're buying. As you're buying High rise From, you know, 37 signals and splitting that off of basecamp, I mean, that is a. That's a big undertaking that at some point you're like, what. What are we doing here? Is this really a good financial decision? And then at some point, you just have to have the confidence in yourself, like, it will be okay. Let's just keep board.

And that's. I mean, I actually had the first business. I had the first partner back out before even applied. I had another partner that did. We had started this business all together. There was three of us in the first business with Y Combinator. And then he left. You know, it was kind of like this mutual separation after, like, three months, because it was. The fairy tale wasn't there for him. He had really expected, okay, we're going to raise a lot of money, and we're going to be super financially successful and on our own after three months. And that's not at all how it panned out. And we were prepared for this. I mean, we had, you know, we had saved the appropriate amount of money. We had the plans that, like, well, we could do some. Some other work on the side to make sure that we could fund the business going forward. You know, we had plan B and plan C in place, but this was just like, this guy didn't. It was only plan A, and we were going to have to be richly successful after three months or he was going to bail. And, yeah, a lot of people have that fairy tale, and it's not. And, you know, now, like, taking over High Rise, I mean, it's definitely much again, like, I Think I had one vision of what it was going to be like, taking it over. And it's very different in terms of the problems and challenges that we have. But I've seen enough of this to know, like, yes, like you just said, like, we'll figure it out. Like, things aren't always rosy, but we've been in really weird situations before. And as you just experience this in business, it's like, you know, that's just part of the game. You're gonna have problem after problem after problem. It's never just gonna be like, you know, always on autopilot. There's always gonna be some sort of situation that comes up, whether it's the market changes, there's different competitors that come out, or, you know, problems within the business, whether it's employees leaving or something else not working out. And you just. I'm used to it by now, doing this now after a while.

What's the difference between being a founder of a startup and being the CEO of a more mature business?

The one so I bring this one is experimentation. When you're a founder and you create that first business you have, it's funny how much room you have to experiment or, you know, you could start something and even if you get a little bit of traction, you can kind of throw it away if you end up feeling like, well, you know, it didn't. Didn't work out and you're gonna upset some people. Maybe that depended on your thing. But obviously there's only gonna be that small little basis of customers taking over Highrise. We took over this mature business with lots of customers. It makes it more difficult to experiment. There's a really great book, I think, on the Clayton Christensen series of books like Innovators Dilemma. It's the innovator's dilemma. You take over this mature business and you don't have the room to experiment, to innovate. At least it's harder to. And you really have of do some things to kind of isolate yourself from the maturity. Because the mature most the customers that are using, they don't want big changes and they don't really want you to innovate. They want you to kind of keep doing the same and keeping things steady. But maybe the future of your life going forward is to embrace some of the new things that don't exist yet. You really do still have to experiment. That's one of the biggest challenges. It's like you'd like the mature business, but there's some curses that come along with it.

That's really interesting. And for you, like, how are you? How are you navigating that then?

So it is tough and we have screwed up sometimes. I remember changing something maybe the first year we were here. So I've been in charge of Highrise now for a couple, two and a half years. We built a completely new team. No one from basecamp came over to Highrise. We took it over. And so in many ways, it felt like a startup. We were starting this team from scratch, you know, learning the customers ourselves from scratch. Except the customers were very acclimated to the product. The customers knew the product better than we did. So we definitely tripped a couple times, like, launching something that we thought was maybe in the best interest of our customers, that maybe modernized something, and it pissed a lot of people off. We have gotten much better about that. Some of it is just, you know, you do it and you learn from the mistake. We've also just gotten good at, I think now, like, interviewing customers, listening to what they want. We've gotten really good about kind of like testing in small doses. That thing I just mentioned where we, like, pissed a bunch of people off. We launched that thing without enough testing, without enough experimentation. Now we go to people who have expressed interest in trying some of the new things who are a little bit more, you know, comfortable, kind of on the bleeding edge. And so we will, you know, now we've gotten, like, a whole system in place where we, like, work hard to. Well, this feature will only give it to 10% of our customers. So we're a lot more careful with kind of just our experimentation. We've got, like, a better process in place not to experiment with our whole customer base and try things out in kind of smaller doses.

Yeah. You know, Scott and I were talking before the podcast, before we started recording how High Rise HQ and our land investing businesses are similar in the sense, like, we're kind of like SaaS models. Right. So, Scott, you know, you'll sell a piece of land and you'll get your money hopefully out on the down payment or within six months of the down. But now you've got this recurring, you know, passive income coming in every month as long as your customer keeps paying you. Right now, if they stop paying you, we've got a default on our hands. We've got to, you know, get that property back and resell it quickly. And, you know, it's a challenge in the sense that every month, right, we've got a sort of somehow say to that customer, that land investment was a good investment, because as soon as that money comes out of their bank account or their credit card, they think to themselves, well, do I really want that property in Texas? The same thing goes with your business, right? I mean, every month it comes out and they think, well, you know, is Highrise, you know, HQ really the right thing for our business? How do you. How do you. How do you keep that customer attention?

Sure, a lot of it. So the. When we spun off, there was a huge. When people first heard of High Rise spinning off, we lost a ton of customers. Like, a lot of people actually thought the spinoff meant we would just die or Basecamp was going to sell off Highrise. And you know, what happens to a lot of businesses that get sold to the bigger companies or whatever? They usually just kill them. You know, they just take the lead list and try to transfer them to their product. It happens, like, all the time. Something you were using gets acquired and gets shut down. And a lot of people were worried about that. So a big thing that we needed to do was just kind of show people that there was momentum behind our product and that we were here. It was more about that we were here, that we were around, we were here to help. And so a lot of it was just like a communications, like, challenge. And so we basically implemented a process. I got ahold of this. This was another. I think Clayton Christensen actually interviewed a company called Medtronic that launched. That was one of the innovators in pacemakers. And they found their business kept shrinking and shrinking and shrinking until they implemented what they called a train schedule. And the train schedule just meant, like, we were going to release products on this train. So instead of, like, you know, debating like, well, we don't have the right product to release here, you know, there's going to be a release at Medtronic. It's probably, you know, still every couple of years since they're in the medical industry. But for us, we just implemented a communication schedule that was like, we are going to let our customers know what we're working on, what we're doing. Maybe it's not even a new feature. Maybe it's something. A helpful resource for them to learn how to use the product better, or not even the product, but how to learn how to do something. And we were going to just regularly communicate with them. Every four weeks, there was going to be another newsletter. So I think there's a lot of value to this kind of momentum on communication to make sure people know you're there. I see it even today, I'm running a daily vlog, and as soon As I started doing this daily, there's some sort of like momentum. There's, there's like a connection you make with people that let them know that they can depend on you, that you're going to be there. So for me, like conquering some of our churn problems has just really been about like letting people know that there's momentum here and we are regularly going to be there for them and give them some sort of kind of expectation that we're here consistently.

Yeah, consistency is so important. And Scott and I, we talk about this all the time that you've got to show up consistently. Whether it's, you know, a once a week promotion to your email list or even a once a month to your, you know, newsletter to your current customers, they have to be able to know that you're gonna show up. Right. And I'd be curious, like, as far as getting traction in the marketplace, what are some of the things that you're currently doing that you find like the 80, 20 rule, right. 80% of this marketing is. Or 20% of this marketing is really producing 80% of the results. Have you found that magic spot yet?

I think we still look for it. I think the biggest thing that I've realized is that for me, that marketing shouldn't be a short term game. I keep finding people who are like, they create something new and then they want a bump in say, traffic. They want to connect with a journalist or a blog somebody to kind of talk about them. So then they reach the gatekeeper problem where, okay, well now how do I reach the journalists and get their attention? And of course, these journalists are assaulted with hundreds of emails a day with people with the same problem who want the same thing attention. And so it's dawned on me a long time ago that I need to own my own channels, that I need to create my own audience. And this isn't a short term thing. I mean, there's definitely short term things that I also like to be doing. Whether it's understanding how to do a Facebook ad and again, you can get better at this. But taking out a Facebook ad today gets you traffic today. Some of the stuff about building a channel is like, well, you keep getting better at it and hopefully you have a really great channel in a couple years that you can keep using and going to and this audience just keeps paying attention. And so I learned that a long time ago and that has had a big payoff for me, whether it was launching Draft, the writing software back in like 2011, 2012, and it was like I went out. I mean, my channel was. Now all these people that have been following my writing that I've been doing for a couple years. And so it's not easy. It's not a short term thing. You kind of have to keep practicing and get better, getting better at it. But it's then the thing that's the biggest win. Because the thing is, I don't think any of us who want to start a business plan on the business being gone in a few months. Like, hopefully your business is going to be here for years and years and years. So you might as well start making some of these investments, investments in channels and marketing that's also going to be here and paying off years from now. But it does, it takes a while. It doesn't always grow really fast. My vlog right now is kind of just growing incrementally. But it's good. I mean, I hope if I can just keep growing it like this, it's going to be a very powerful little new channel for me on YouTube, you know, in a year, in a couple years. But you got to start somewhere.

That's one of the things that, you know, someone like a Grant Cardone or Gary Vee has done a fantastic job is, you know, they have not necessarily relied on someone else's covering them. I mean, to even some extent. We saw that in the last presidential race and even now, as you see the president, he'll communicate with Twitter through Twitter directly to people. And it's not filtered. When it comes to. It's not filtered good or bad, it's not filtered. That's the thing is that if you, if you build that, if you build that base, and like you said, it's not something that happens over time or not something happens overnight, but happens over time then being consistent, like Mark saying, then, you know, just showing up. And the fact that you're writing, whether it's medium or whatever you're using, every single week, you'll grow that audience organically. I think it's a great.

There's a really great article by. I think it's Kevin Kelly. I think he used to be the editor in chief over at wired magazine called 1000 True Fans.

I love that. Yeah, a thousand true fans. You'll make a living, right?

And so it's like you've got to build this audience yourself, not keep relying on all these outside influences and media and gatekeepers. I mean, none of that stuff is bad to understand how to get pr. I mean, all that stuff is good. But I think you need to Take it into your own responsibility and kind of own an audience yourself.

It's great advice. All right, Nate, we're at that point in the podcast now where we're going to put you on the spot and ask you for your tip of the week. A website, a resource, a book, something actionable where the art of passive income listeners can go right now, improve their businesses, improve their lives. You've given us tons of great mentorship, but we're gonna ask you for one more.

I think a lot of people make things like innovation and creating new businesses and products a little bit too complicated. There's a book that I love called Something Really New. And it's just a really interesting take on innovation and creating new businesses. Check out Something Really New. I really like the take on it. It's a very. It's not a very popular book. It's not one of those you're gonna find in a lot of the, you know, Harvard best business books. And it's one of my favorites. All it does is really break out, you know, finding a problem people have, you know, turning it into a bunch of steps, you know, that people do in this problem and then figuring out which steps you can remove. Just a breakdown of it and getting it that into your mindset I think is a very powerful way of thinking about creating a business. And it's kind of unknown.

Is this Dennis Hopley?

Yeah. Yep. Yep.

All right. I see it. Wow. Only available from third party sellers.

Oh, really?

Yeah. It's not getting the Amazon love.

Yeah, it's kind of a. It's, you know, I don't even know. Right. I don't even know if there's any more publications of it. Yeah, you might have to buy some that have been published a long time ago. It is. It's kind of. Yeah. Maybe a harder to find book.

Well, how did you find it?

I honestly don't know. It might have been. I do look for a lot of books. I'm kind of a. I speed read and go through more books than most people probably have an appetite for. Just kind of came on my radar and it struck me how different it was than some of the other business advice.

You know, it's funny. Is it the first. The first review says this book goes on the shelf. Right. By Clayton Christensen's Innovators Dilemma and Gary Hamill's Leading the Revolution. But of the three, hopefully something really new might be the best and certainly will be the most useful. Very interesting.

Yeah.

So great tip. Great tip, Scott. Todd landmodo.com all right.

Mark, check this out. Snapper, snapper co. S n a p p r dot co snapper co. Why.

Am I checking this out? Oh, no. Great. Photography shouldn't be so hard, huh? Look at this.

Look at that. Now, this is like Uber for photographers, right? You know, book your session $59.

I mean, would they go out and take pictures of raw lands?

I don't think that they will, but, you know, I mean, you could always check them out and find out, but because they don't. I mean, they do say real estate, though. They do say that they will go.

Out for real estate.

I don't know if they'll go out.

And do you know what? This is a horrible. But you know, the only reason I say that is like, book now in San Francisco, San Jose, Sydney, Melbourne, Brisbane, Perth. They're a company. Australia.

What?

Yeah, this isn't like the Uber. This is more like before Uber started.

Book in San Francisco, San Jose. Okay, so they're in Australia.

All right, well, we're not buying land in Australia. No.

But guess what? We've got. I wasn't really thinking about it from. From a land perspective. Right.

Oh, okay. I'm sorry. What were you thinking about it then for?

Well, I'm thinking, you know, like a lot of times we talk about credibility, right? Like building credibility and whether it's putting a video on your website or just connecting with a customer. And sometimes, you know what, the best way to do that is with a real photographer, not your iPhone. So if you need some headshots done, this might be a good place to do it for $59. Especially if you're in San Francisco, San Jose, or Australia.

Have you guys talked about the Airbnb kind of story on the show before? And photographs at all? No. Photographs unlock that business. Like, they were struggling when they were a startup, and then they realized they needed a professional photographer to start traveling, and they traveled to the different cities, like New York specifically. But, you know, I mean, they realized, like, we're not. This site isn't going to just move itself if people keep taking photographs with their crappy phones. So they started sending professional photographers out and that really helped launch, like, the Airbnb website. Now it looked like this professional thing. So, yeah, professional photography really unlocked that business.

Scott, will you accept my apology for poo pooing it? Sure, why not?

You know, it's okay.

All right, I apologize. I really jumped down your throat fast on that one. All good.

All good.

All right. Good, good tip. Snapper Co. All right. My tip of the week that was the best. Sorry, guys. It is. Learn more about getting organized, okay? Because you've got to have access to your contacts and your sales, collecting your leads, your marketing messages. And check out highrise hq.com highrise hq.com. the tools you need, all in one place. Projects, companies, emails, contacts, tasks. It's pretty cool, it seems. I like, I like the simplicity of it. It has a very basecamp like simplicity. Nate, why should I use High Rise HQ over? Say you don't need a CRM or nimble or some, you know, I don't know what. Zoho. Some other CRM.

Yeah, I mean, I think it really comes down to ease of use. If you find we're doing all these customer interviews right now, jobs to be done, interviews coming right out of the Clayton Christensen, you know, philosophy. The people that really, like, resonate with Highrise are the people that have a lot of things going on. They're not. Their core isn't just doing one thing like a sale, like a sales lead. The people use Highrise. The people who are like, well, I do sales, I do development, I do, you know, business development, I do marketing. And it's like, if you've got a lot of stuff going on and you've got a lot of people involved who might not be technical, who don't have the time to just learn a specific tool, this thing is. There's no learning curve. You use High Rise if you. If you've got a real complicated situation, use a salesforce, use some of these other tools. If you need ease of use and you need people to, like, get in here quick, use High Rise.

I love it. I love it. All right, was there anything that we should have asked you? We didn't ask Nate.

No. This has been great.

All right, well, this is great. I. Are we good? Pretty good.

I think we're good, Mark.

All right, well, I would thank all the listeners. I want to remind them the only way, the only way we're gonna get the quality of guests like Anit Kantney from Highrise HQ is if you do three little things. You got to subscribe, you got a rate, you got to review the podcast. Send us a screenshot of your review to support the landgeek.com we're going to send you for free the $97 passive income launch kit. And again, today's podcast is sponsored by lonegeek IO. All right, Scott, you ready?

Ray?

Mark?

I'm ready.

Let freedom ring.

Nate's like, that was pretty good. He's like, that will not get you into y combinator.

You gotta do something to stand out these days. So maybe.

Yeah, maybe. Maybe. All right. Thanks, guys.

Thank you very much.