Episode #013

How to Overcome the Biggest Challenges to Your Online Business with Patrick McKenzie

Patrick McKenzie divulges his wisdom around how to develop promising business ideas, find your first customers, convince smart people to work with you, generate more revenue, and stay happy while doing it.

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Transcript

Courtland Allen 0h 0m 8s

What's up, everyone? This is Courtland from IndieHackers.com, and today I'm doing something a little bit different, and actually sitting across the room from my guest. I'm talking to Patrick McKenzie, better known in some circles as @patio11. How's it going, Patrick?

Patrick McKenzie 0h 0m 19s

Doing well, thank you. Hi-de-ho, everybody. My name is Patrick McKenzie, better known as patio11 on the internets. And yes, I have totally memorized that introduction so that I'm not too nervous when I start talking about things.

Courtland Allen 0h 0m 30s

So Patrick and I both work at Stripe. We're both sitting on the fifth floor of the Stripe office, and we've got a lot of stuff to talk about. You're actually one of the founding influences for how I got into starting businesses online and one of the most inspirational people that I've met. You're one of the first people to start writing transparently about yourself on the Internet, and for the people who are listening who don't know who you are, can you give kind of a brief intro of your background and where you started and how you get to where you are now?

Patrick McKenzie 0h 0m 55s

Sure thing. I kinda feel like occasionally that I am totally pretending with regards to actually knowing any of this stuff, but a brief background on when I genuinely did not know anything.

I have lived in Japan for approximately the last 12 years, got there shortly after university. And when I was 24, I was working a Japanese day job that was not really challenging or giving me opportunities for professional growth, and so I decided to do a side business, mostly as a project to learn about running businesses and to have a little more freedom to actually make engineering decisions that mattered. An engineer by training and trade, but was in the bowels of a megacorp doing nothing really fun.

And so I made a Java Swing app called Bingo Card Creator which made bingo cards for elementary school teachers. And it's been described by some of my friends as hello world attached to a random number generator, which it pretty much is. And I did this in about a week and then started taking payments via the credit option there was for taking payments back then, eSellerate, and then eventually PayPal, in a little website that I had built for this Java Swing app program in literally Notepad. And I made $24.95 about three weeks after launching, and then about $2,000 in the first year of running the business, and then it went, it took a while, but eventually four or five years later it was eclipsing the amount of money that I was making at the day job.

I quit to run my business full-time, started a second product called Appointment Reminder, ran a consulting company where I was doing marketing and sales for other software companies because I turned out to be kind of good at that, probably have a comparative advantage on it versus actually writing software, and then that went pretty well for a while. I started a different business with two friends of mine called Starfighter to do recruiting for engineering teams. That business ended up failing in August of last year, and then I sold Appointment Reminder and joined Stripe.

Courtland Allen 0h 2m 47s

So your history is, as I remember it, you were one of the first to start writing transparently online about having a business and about charging customer's money, generating revenue, and talking about the behind-the-scenes of Bingo Card Creator. What got you into that? Why did you start sharing all the details?

Patrick McKenzie 0h 3m 4s

So I think a number of these trends kind of go in waves, where there's sort of a generation of people who are coming up at the same time that I was coming up, and I might be one of the first people in that generation to write transparently about the mechanics of running the business and revenue numbers, etc. There's like a mini-trend in that generation, the one that follows us, but shockingly, there were folks running businesses over the internet even a few years before I and my buddies came up. There was a guy named, I think, Brian Rameson (Brian Plexico), who ran this business making skeet shooting scoring software. That was really transformative for me, and he wrote two pages or so about running the business of skeet shooting scoring software. And I'd also been reading Joel Spolsky's blog and loved everything he was writing, but I bucketed myself into, he's not exactly a role model or a person I could see myself eventually being, and that is the genius shining on the hill over there next to the New York Stock Exchange that has a business that employs 30 people, something that I would never, ever be able to do. But skeet shooting scoring software. Yeah, I could write that if I had ever shot skeet before. But something on that level of complexity, selling $2,000 of software over eBay, I could do that. And so one of the reasons I started my blog was that, well, I was living in Japan and not getting much practice on writing English and didn't want to lose that ability, but another reason was in the crazy odd chance that this actually turns into something and I make $2,000 selling bingo card software over the internet, I would love to drop some breadcrumbs for the next person and to see if that is possible. And so one of the things that makes me happiest about this whole business career over the last... Goodness, it's been almost 11, 12-ish years now, is that folks routinely write me and say that the last three million words I wrote on the blog and Hacker News comments and tweets and et cetera actually did move them to make a business, in many cases, much more successful than any of mine were.

Courtland Allen 0h 4m 58s

Yeah, I think more and more founders are considering writing transparently, and just like you were inspired by Joel Spolsky and the skeet shooting guy, people have been inspired by your writings and nowadays it's pretty common for people to write transparently. There's also resistance to it. What do you think are some of the advantages and disadvantages that come out of sharing things like your revenue metrics, sharing what goes on behind the scenes at a business?

Patrick McKenzie 0h 5m 21s

I think this a situation that depends on who your businesses are, who your target customers are. Folks often thought that I was doing the writing about revenue metrics or writing about the operations of running a bingo card business for the purpose of getting directly in front of customers for the bingo card business, which is not true. My customers were mostly middle American teachers. They don't care about writing software. That's why they would pay me money for it. It was always kind of like a side project/hobby for me which became very, very valuable when I was actually selling stuff into the market of people who would reasonably try to read about SEO advice or how to do e-mails for SaaS companies from someone who had something to sell in that market. In terms of whether it's a good idea tactically or not, number one, one of the inspirations for me starting to write about my revenue numbers was A, my revenue numbers were minimal, so if someone knew, knowing them didn't, no skin off my nose. And with B, since no one was doing it at the time, or rounds to zero people were doing it at the time, there was kind of what Seth Godin would call a purple cow phenomenon, where since every other cow you've ever seen is not purple, if you ever see a purple cow, you will totally remark about the fact that, holy cow, that's a purple cow! I've never seen a purple cow before. But if you just see a spotted black-and-white cow, that's just a cow, and cows aren't remarkable. You don't talk about cows to your friends. I kind of feel that, given that you can go to a graph on Buffer, or a series of graph on baremetrics.com and see the revenues of 25-ish SaaS businesses all displayed in a single place where they all kinda look samey, the graphs are different. If you genuinely care about any one of those businesses, it's interesting. But merely the fact of exposing numbers is no longer in itself interesting. It's just like, oh, that's a cow. You can probably either kill it or milk it, one of the two things. So I would encourage people to look for something other than mere transparency to cause their business to be remarkable if being remarkable is a core driver for their business. That said, in addition to the marketing benefits of it, I've often found that forcing the discipline of writing on myself, to write down plans and to check in a few months later on whether those plans actually worked, made me much better about both planning and executing. And it kind of created a self-documenting record for my professional growth over the years, which turned out to be really useful when I was doing conversations about doing consulting engagements later, or conversations about theoretically getting a day job later. It's like, well, I happen to have this thing that was published in middle of 2010 about what I knew back then. Here's a results post from 2011, and then a steady drumbeat of these over the next five years. And you can see that I'm somebody who routinely makes plans, does experiments, and gets results with them. It is a useful attribute to have people associate with you.

Courtland Allen 0h 8m 2s

Yeah, it reminds me of a Dwight Eisenhower quote, which is, I think Dwight Eisenhower said it, "Plans are worthless, but planning is essential." Just like the process of planning in and of itself helps you clarify your thoughts, and maybe you got the first part wrong, 'cause the plans can later on help you build your resume or sell yourself to other people.

Patrick McKenzie 0h 8m 19s

And it's odd. I thought that when I was young and stupid, young and naive I'll call it instead, I thought that having evidence of failure associated with yourself would be a very not-survivable thing. And you know, when you're in school, F is literally a failing grade, you can't get more than one or two of them in a year or you get knocked off the golden track. When you're in a large company, nobody ever got fired for IBM thing, it's definitely a factor in being closely associated with failure's a really bad thing. But I've been associated with any number of failed experiments over the years, and wrote about them just like the successes on the blog. But no one remembers those. It's crazy. They only remember the parts of the distribution where the outcome was like, oh, and I tripled the revenue of a software business. And even when I tell people in the same conversation, yeah, I've done a variety of experiments as a consultant, in one case I tripled the revenue of a software business, and in another case it was a no-op. They paid me a lot of money and nothing happened as a result of it. The only thing people remember from the sentence is, wait, so you can triple the revenue of a software business? And I would tell them, no, no, wait. Probability distribution, you're paying for the totality of a probability distribution, but yeah, they hear the successes and remember the successes.

Courtland Allen 0h 9m 32s

I think entrepreneurs were optimists, so if you come in and talk about how you're gonna help their businesses grow, then it would light something up. One of the, I think, perennial problems or divides or conflicts, I should say, in people learning how to get into entrepreneurship and to get into Internet businesses is whether they should dive in or whether they should take the time to read and learn. And on one side you've got this situation where, okay, if you just dive in head-first without reading what people who have come before you have learned, then you end up repeating a lot of their mistakes and you end up just making mistakes that would have been avoidable and you get behind. But on the other end, there's a humongous number of entrepreneurs or would-be entrepreneurs who simply haven't started yet, and they're spending tons of time reading books, reading blog posts, but have yet to write that first line of code or to put an idea into action. When you started Bingo Card Creator, where were you in this process? Had you already acquired a bunch of knowledge from business, or were you just pretty green?

Patrick McKenzie 0h 10m 29s

So I had been passively reading about things like online marketing, SEO, Adwords for a number of years, partly because it was theoretically connected to the day job, and since I was very under-challenged at the day job, I felt carte blanche to read about that during work hours. But I had no experience running a business, didn't have an MBA, had no education about accounting, bookkeeping, et cetera, and would have considered myself very, very green. And the thing that I've noticed in dealing with a lot of entrepreneurs over the last 12-ish years is that there are some folks who for like a multi-year period, two, three, five years, will continue just passive content consumption without ever attempting to actualize it or put it into practice. And that's definitely a failure road. Getting something out there, I certainly agree with make your own mistakes rather than repeating the mistakes of other people. So if you can spend a few weeks learning about things like how to validate a product before coding it, that will probably decrease the amount of time you spend going down blind alleys, but get something into the market. Your pace of learning goes way, way up after you have something into the market. I don't know what the right ratio is. I sometimes quote to people like 98% trying your own stuff and 2% reading about other people's things, which I think is probably approximately correct, but maybe in the early days it's 90/10 or 80/20. But it certainly isn't 2/98.

Courtland Allen 0h 11m 50s

What are some of the things that you learned at Bingo Card Creator when you were starting out?

Patrick McKenzie 0h 11m 54s

This has become almost my catchphrase, a bit of advice that someone gave me in literally the first week. I wrote a post on a forum and said that I was considering the price points $14.95, $19.95, and $24.95 for the software, and which did I think I should go with, given that it was new to the market, I had vanishingly few features, I was worried the software was buggy, and teachers don't have a lot of money? This is the construct that I had about how pricing decisions were made. And someone who was older and wiser in the software business told me, charge $24.95 and see what happens. And the way that I've rephrased this out over the years is always, always, always charge more, particularly for folks who have the capability of actually bringing things into the world. We see, because there's no magic involved in bringing something into the world, that since there is no magic and since it is free for me to create software, it must be free for people to buy software, which is the opposite of the truth, because it is totally impossible for them to create the benefit of software without paying for it. They're willing to pay a lot of money for it because software is fundamentally magic if you can't actually make it. And as a result, a lot of companies that are started by software people or for folks who do teaching as their line of business, they undervalue teaching. For people who do writing as their business, they undervalue writing. Creators undervalue themselves constantly, and so at a lot of places some of the most impactful advice that you can give them for the least amount of work involved is just double your prices. If you are selling software to a business and you're thinking, okay, should I be charging $19 a month for the lowest tier of my SaaS business, or $29 a month? 29, go with it. Nobody who, like in a business context, mind you, but in a business context, anybody who can pay 19 can pay 29, but that's 50% extra to your bottom line immediately. Actually, more to your bottom line, because expenses might not scale linearly. Blah blah blah, MBA talk. Don't have to worry about that right now, just always charge more. And have a few ways to charge. If you think that 29 is a scary number for you right now, throw two much higher price points on the page and see who bites with it. You'll be shocked. Like my stock pricing that I tell anybody to start with if they don't know what to do for a SaaS business is to do the three-tier model for SaaS businesses. So have an entry point for small businesses at $29. Would say 49 these days, but since most of you won't agree with 49, do 29. Then have one at 99, and one at 249. You can figure out what the difference in feature sets/customer support/whatever it is to justify those prices, but whatever. Assert that you are capable of delivering something that exists at those price points, and then figure out what that something has to be and then put that on your pricing page. People will buy the $99 offering. People will buy the $249 offering. You make a lot more money at 249 a month times a small number of customers than you do at 29 a month times a small number of customers. And you get to the point where the business is self-sustaining much, much faster. And when you get to the point where the business is self-sustaining you can do things like buying inputs into the business, hiring people, even just hiring a few hours of help on the design side of things if you're not a designer, or getting a lawyer to review things or yada yada, to help you accelerate the growth of the business and start making much more interesting decisions than pricing is. Another one: pricing is not really an interesting decision. You should be revisiting it occasionally, but the amount of stress that people go for about like pricing early in the business relative to their go-to-market strategy or how do I get this in front of potential customers is like way out of whack.

Courtland Allen 0h 15m 28s

Yeah, somebody I interviewed recently on Indie Hackers said that if your price point is not too high for some people you're probably charging too little, which struck me as wise advice. You probably don't want to target the absolute bottom barrel of your customer segments, and it's hard psychologically for a lot of people for the reasons that you listed. Programmers, we don't think that the code that we write is worth very much, because we wrote it. And how could it be worth paying for if we were able to whip it up out of thin air by ourselves? And similarly, from a psychological perspective, it's hard to have customers e-mailing you, telling you that what you're selling them is too expensive. Which is inevitably going to happen unless you sell to the cheapest possible customers who are probably not the best segment. And a data point to support that is on Indie Hackers, if you just go through all the businesses on the website and look at who's doing the most revenue, the B to B companies selling to other businesses are doing twice as much in revenue, the median and the average, for literally no other reason than they're selling just a higher price point.

Patrick McKenzie 0h 16m 27s

I think a good thing to remember is that someone who writes you an e-mail and says, I do not buy it because of your price, is not a customer. That's axiomatically true, but there are many, many businesses which charge more money than some parts of the theoretical market for them will pay. I will never buy a Tesla. Way outside of my price range. Tesla's a great business. There are plenty of people who are willing to pay whatever that absurd amount of money that they charge is. And they don't have to sell to me for it to be a great business for them. Similarly, given that there are companies, and pretty small companies, mind you, which pay 800 plus dollars a month just for somebody to come into their office and take out their garbage so that they don't have to worry their employees about bringing garbage cans to the curb themselves, like any 14-year-old can organize themselves to do, $800 a month just for trash take-out, your software is certainly worth $50 a month to somebody. You just have to figure out who that somebody is and how you can reach them at scale.

Courtland Allen 0h 17m 24s

I thought a really good way you that you put it at MicroConf a couple weeks ago was you asked everybody in the room basically to raise their hands if they've ever sold some sort of services or product to a customer for six figures, and it was essentially a reference to every programmer ever who works at a job getting a six-figure salary, right? You're effectively selling your services and your time to this business, who's really your customer. So can you speak to other lessons that might motivate beginner entrepreneurs that might... 'Cause I know that a lot of people for example are intimidated. They think, okay, I don't have the sales skills to be able to start a business, or I don't have the marketing skills to start a business, or I don't know how to come up with an idea. Is there anything that you've found particularly inspiring to get people who have doubts to take the leap?

Patrick McKenzie 0h 18m 9s

I think understanding that almost all us come from a point of not knowing what we're doing until we actually do the thing is pretty important for most of you. I don't have much leadership or sales or management experience prior to jumping into the business world. My leadership experience prior to becoming CEO of my last company was I ran a Wild Guild, and I had that in my bio for why I should be CEO of the company, because what else was I gonna put there? But yeah, you just make it work over time, you don't have to be an expert at day one. You will quickly find that there's actually many more business owners in the world than most people who read the tech press assume, because most businesses don't look like what you see in the tech press. But there's many less business owners in your social circles than there are, say, programmers in your social circles or designers in your social circles or probably even people who can sing well in your social circles. So even after a few weeks of doing it, you'll know a lot more than most of your friends do. And you have to stop taking advice from your friends on it. That's a weird decision point for a lot of people. That's one of the reasons I love Indie Hackers as a community, I love Hacker News' community, I love other watering holes on the internet, is that our naturally occurring social circles are just terrible at this kind of stuff. I love my family deeply. When I told my father I was starting a business, my father had started a business himself and was actually reasonably experienced at it. You heard the outlines of, oh, I'm going to sell software over the internet for $30, and I think I can eventually sell a couple hundred copies a month. Actually, no I didn't tell him that. I told him I could eventually sell eight copies a month, and he was skeptical of being able to sell eight copies a month, since I had no brand name behind me, and told me that I should just go get a job at Google instead. And we both look back at that conversation and years down the road he apologizes to me for it occasionally, and I'm like, no apology required. But it is a fact that most people are in our lives don't have the context necessary to give meaningful advice on this kind of stuff. So find the people who do have that context, and get the advice from them.

Courtland Allen 0h 20m 8s

Yeah, that rings very true with me as well. It's difficult to find a community of people who actually understand what it is that you're trying to do, and who will give you advice that's worthwhile. And that's also why I like the forum on Indie Hackers and Hacker News, as well, and MicroConf was amazing. I had never been to a place where I could just talk to people about SaaS metrics and hundreds of people could have an hour-long conversation with me about that topic without falling asleep.

Patrick McKenzie 0h 20m 32s

I think that a thing when you're looking for people to model off of or people to engage with directly in looking for advice, is that if you can imagine a success spectrum, or a ladder, you don't want to go at people who are the top of the ladder, even though that's... Like you would feel, okay, I want to eventually be like Elon Musk. I will ask Elon Musk what I should do today. I don't necessarily know that he's a great example, but a lot of people look up to him, so whatever. But the advice that Elon Musk would give you is likely not something that you're able to operationalize right now. What are his big concerns? How to run multiple companies at once, how to manage a team of 60 plus direct reports. You neither have that circumstance nor the background to even be able to appreciate or operationalize the advice. Instead you should go to the people who are like one or two rungs up on the ladder from you. So if you haven't launched yet, talk to the folks who have launched and have $2,000 revenue a month or $5,000 of revenue a month. And what does the path look like between have not launched and $2,000? And then after you get up to $2,000, go to the people who have $10,000 or $20,000 and say okay, what struggles do you get between $2,000 and $10,000? Spoiler alert: marketing and sales. And then after you get to $10,000, what are your struggles then? Spoiler alert: hiring. But if you ask people those kind of questions, you're much more likely to get advice, which they actually remember what the hard parts were, they can appreciate the fact that you have the limitations you had because they recently got to them yourself. Like if you ask Mark Zuckerberg for advice, it's like, well, if you start from the position where you have $1 billion in the bank, here's how you spend that $1 billion most effectively. Without perhaps consciously remembering, oh yeah, there was that time once that I was also in a dorm room and $600 was a lot of money to me, and I shouldn't tell you to buy a server for $5,000 as if that was nothing. So yeah, I'd definitely advise sending e-mails to people who are approachable from where your position is. Also send e-mails to people. This is something that I've never been very confident with myself, but I've seen other people do it, and it is a thing that serves them well in the world. Very few people will get a cold e-mail from someone who says, hey, I'm an entrepreneur. I have some specific questions which I think could benefit from your experience. Here are the specific questions. If you have any time, that would be awesome. Few people will say, dammit, I hated getting this e-mail. Get off the internet, kid. BTW I'm gonna talk about you to all my CEO friends so that we blacklist you from the world for life. The worst thing that happens is they're busy and you get no reply. But most people who run businesses really, really like running businesses. That's not just the job, it's also a bit of a hobby. And they love people telling them that their advice would be meaningful, and that really important bit here, that it would actually be acted upon. This is why sending someone an e-mail, hey, I wanna pick your brain about something, generally sends a terrible signal, because pick your brain is like, well, I'm just going to spend an hour of your time and then totally file all the comments that you made but not actually do anything. But if you say, I have a specific challenge, I've put a reasonable amount of thought into it, but I think that you could give me additional feedback on that, that would be useful. And then two weeks from now, after I've implemented your advice I'm gonna tell you how it worked out, that's totally crack for most entrepreneurs, and they would be really happy to have that interaction. And that lets you kind of develop a more enduring relationship with someone, another thing that I wouldn't have given as much credit to 12 years ago, but relationships are really important in this. I've made some lifelong friends in the entrepreneurial community, also made a number of folks who, as you start up new adventures, the folks who are currently where your business is or one or two rungs down the road will also be having growth over the next couple of years, and your new adventures might be in a position to help each other out, to do things together. Your company might be a client of my new thing, or you might invest money in my new thing, et cetera, et cetera. So making friends is a useful skill to have.

Courtland Allen 0h 24m 26s

Yeah, your story about how when people reach out to you, to entrepreneurs or to people that they wanna learn from, they should actually be helpable and be in a position where, okay, the person giving them the advice feels like it's going to be acted upon. It reminds me so much of Nathan Barry, who was on the podcast a few episodes ago and he did, I think, at the beginning of his business, ConvertKit, he issued what he called the Web App Challenge, and it was just a blog post stating his goals. He wanted to make $5,000 in monthly recurring revenue after six months, and he had kind of a track record of actually building and launching things. So people knew this wasn't just an empty goal, that he wasn't just saying he was going to do it, but he's actually going to do it. And consequently, even though he was in a much less of a known quantity than he is now, a lot of very influential and experienced people were super happy to take him under their wing and just give him personal feedback and advice on his challenges. So that's also something that I've seen, and I'm sure you've seen way more of it, with all the blog posts and things that you've read over the years, with people e-mailing you and just the difference between the ones that you want to respond to, and you can give helpful feedback to and the ones that you can't. It really helps to make it clear that you're someone who's acting on the advice that you're requesting.

Patrick McKenzie 0h 25m 30s

Yep. I feel comfortable saying this because Nathan is a friend of mine, but Nathan had a really rough go of it on ConvertKit for a period of years. I think it was like three or four years before that business got to the point where it was more than a part-time income for one person. And he had a different business he was running which was doing pretty well, and eventually decided to just dive full feet in on the ConvertKit, the SaaS business, and really start actually actualizing some of the advice that he had been getting over the time. And between that time of uncertainty, should I really be doing this, it's been kind of failing in slow motion for the last couple years through today, he built a, it's a multimillion dollar business right now and has a team of very smart people working at it, very, very successful. And none of that was something that was taken for granted at any time. It was not obvious that he would be able to pivot from being good at doing one thing, which was selling online books and courses, to running an online SaaS business. SaaS businesses are harder in a lot of ways. If you had seen the internals of ConvertKit for the first month, 16 months, 18 months, two years, it did not look like a wonderful business, and he was wracked with doubt at times, like all entrepreneurs are wracked with doubt at times. Persisted through it. Not just persisted through it, but actually made meaningful changes in how they were approaching the business, and it worked out very well, so yay.

Courtland Allen 0h 26m 59s

One of the interesting things that I like to talk about and think about really is how so much of what we do in life is in response to mistakes that we've made in the past. And obviously sometimes those are over-corrections. The biggest lesson that you said you learned during Bingo Card Creator was effectively about the importance of raising prices and not selling yourself short. What lessons did you take from Bingo Card Creator into your next endeavor at Appointment Reminder?

Patrick McKenzie 0h 27m 24s

I think chronologically speaking, technically Appointment Reminder came after doing a bit of consulting, but be that as it may, Bingo Card Creator had a lifetime value per customer of exactly what I was charging for it. It was sold on a one-off purchase model, so when I raised the prices to $29.59, if you used it for five years I was only ever gonna get $29.95 from you. That was freaking brutal. I had 8,000 customers that I was supporting, and at the start of the month my revenue was zero. And I really, really wanted to have a recurring revenue model built into my next thing. I have reasons why I didn't do it for Bingo Card Creator, particularly as I knew as it was going to transition of that business, but it was like, okay, since I'm effectively running a SaaS these days anyhow because eventually it had a server side component that kind of swallowed the entire application. It was run entirely inside a browser anyhow. I'm certainly going to charge in a recurring fashion for this. And then the lifetime revenue for a $29 account for Appointment Reminder didn't have a $29 lifetime revenue. My churn rate for those accounts was on the order of 7%. BTW high, but roll with it for the moment. So their average customer lifetime is about 14 months, so 14 times 30. Lifetime revenue in excess of $500. Hope I did that math right. I used to be on the math team. You wouldn't know it. Okay, in excess of $400. And 400 and 29 are very different places. If your lifetime revenue is $29, you can't pay $50 to acquire a customer. But if your lifetime revenue is $400, you can pay $50 all day long. Enough to accelerate customer acquisition. The lifetime revenue of some of our clients and Appointment Reminder, not merely predicted lifetime value, but realized lifetime value in terms of we cash those checks, was in excess of $6,000 to $10,000 for some of our clients who never once talked to me. Never sent an e-mail, never picked up a phone, they just purchased it with their credit card from the internet and used it happily. And that was not the only thing we did for sales, but those businesses exist out there in the world. So I would bias towards creating a business like that, if you want to eventually get to the point where something can be sustaining as your primary source of income.

Courtland Allen 0h 29m 35s

And we kinda skipped over it, but you did go into consulting for a while between BCC and Appointment Reminder. Were there any mistakes or learnings you took away from consulting that you also brought with you to Appointment Reminder?

Patrick McKenzie 0h 29m 46s

It would have been great if someone had told me to charge more. You should charge more. So when I was working at a Japanese day job, I worked at a company that was, theoretically speaking, a consultancy. It's called a systems integrator in Japan, but whatever. Modeled like an engineering consultancy. And I'm just an engineer, I have no connection to the business side of the business, but I knew what my charge-out rate was. It was approximately $100 an hour. I didn't make anything close to $100 an hour, but I thought, if I start a consultancy, then I can make 100% of my charge-out rate: 100 bucks an hour. Awesome. Then I spoke to... Importance of having friends who are a few steps down the road from you. I made a buddy on Hacker News, Thomas Ptacek, and he told me, "You shouldn't charge hourly for consulting, you should charge weekly for consulting. So whatever your rate is right now, just multiply it by 40. That's your new week rate. And people can't buy hourly blocks, they have to commit to a week." And so I started doing that, started selling four-grand-a-week engagements, and after one of those, I decided that four grand was way too low relative to the value I was creating for larger software companies, and said, okay, my new rate is eight grand a week. And people still bought it. And the next engagement I was pitching to a company, and they sent me a one-sentence e-mail: "Quote me your rate for two weeks." I said, "Well, my rate for one week is 8K, so two weeks is 16K." And I had my finger over the Send button and said, wait. What's the worst thing that happens if I type in 12? They say it's too high? You'll have another of these e-mails coming from somebody else in another week or two, so backspace, backspace, backspace. 12K, 24K respectively. Hit Send. And then I had a panic attack, 'cause I thought, who could charge $12,000 for a week? I don't even know what I'm doing. How are they gonna react to that? Am I going to lose a friendship over this? Blah blah blah. I got a reply back five minutes later: "Wow, that's a healthy rate." "Okay." And that's the last time that consulting client ever even mentioned rate as a discussion. So six months later, new engagement, my stock rate is $20,000. Okay. And then a year or two after that, my stock rate is $30,000. Pricey, okay. And I did have one engagement get greenlit at 50K a week, but that didn't actually happen. My highest actual realized rate was 30K. I put, can't go into this in a lot of detail for all the obvious reasons, but I did put $125,000 a week for 10 weeks on a proposal once, and got very far away down the line on that proposal, but didn't happen.

Courtland Allen 0h 32m 17s

Wow. So that's way more money than I ever charged as a consultant, but really, I was just a contract web developer. And I saw that advice on Hacker News from time to time about how you should charge not by the hour, but by the day or by the week, and I never really internalized it. It didn't really find purchase.

Patrick McKenzie 0h 32m 34s

It's really important because you get to... To recenter the conversation from, the only thing you are buying is my time, to, you're buying a business outcome that I can describe and buying this business outcome will probabilistically take about two to three weeks. So is that business outcome worth X amount of money for you? If it is, then we get me in here for two to three weeks and I predictably deliver on it. If it's not worth it, then it doesn't matter what my rate is, we should find something that I could do for your company that would be worth my rate. Or if there's nothing, and if your company doesn't operate at a level of sophistication or a level of scale that my rate works at, no worries. I have a blog, feel free to read it. I'm gonna go talk to someone who does have a sophisticated enough company to make use of my services. It's a really, really hard thing to say, particularly if you're coming from a place of scarcity and I need to sell X number of hours this month or I will fail to make my rent. But one of the nice things about this model is that if you get one or two higher rate engagements, you get a little bit of runway, and you can start being really choosy about what the next thing is. So hypothetically, many of you might be young or in parts of the world where a small amount of money is enough to live on, and you might think, okay, if I only really need three grand a month, then charging four grand a month is, that's pure gravy for me. But you should charge much more than four grand a month because if you successfully do it once, then that gives you a few months of runway to line up the next client, and you can walk your rate up a lot because you can be choosy about that next client. And then virtuous cycle there of whatever goal you want to ultimately optimize for in your business or life, you have a lot more ways to optimize for it if you get more money. That is a mindset shift that is difficult for a lot of entrepreneurs because man, the middle class does a great job of indoctrinating kids on a hey, you're a good student, you're a good kid, you shouldn't talk about money. Money is an evil thing that we associate with venture capitalists and yada yada. But fundamentally when you are in a business for yourself or negotiating for another business, you're in a value-creating transaction for both sides, and there's just a matter of, okay, what is the way that we divide this new pie that we're creating together? And you have no less of a right to that pie than the other business does. So BTW, the other business has a competent professional in the room who is already negotiating in behalf of their interests, so you need to, too. And since there is nobody in the room on your side except you if you are a solo entrepreneur, you need to be the person who is kind of aggressively going after your own interests. Because if you are a wallflower, people will happily walk all over you and not even realize they're doing it, because that's the kind of the nature of business-to-business interactions.

Courtland Allen 0h 35m 16s

I think what strikes me the most in what you said about charging the rates that you did and charging by an elongated time period, like by the week so you can redirect the conversation in terms of the value you're providing to the business, is that it's directly parallel to selling a product or a service as an entrepreneur. Ultimately one of the pitfalls I think a lot of people fall into, and if you're an early-stage entrepreneur, you're just getting started, it's worth watching out for, is not really understanding why people are paying for what you're paying for, paying for what you're building and what you're selling, or why anyone would use it. But what Patrick just said is effectively, you need to think in terms of the value that it provides to them. Ultimately what you're building should be solving some sort of crucial or valuable problem for them, and I see this problem all the time in the Indie Hackers forum when people come online and share a landing page they've thrown up, and it doesn't talk at all about why customers might want to use it, it just lists, okay, here are the features of what my thing does, and forces customers and visitors to make the mental leap of how this product will actually increase their revenue that they're making for their business, et cetera.

Patrick McKenzie 0h 36m 17s

Yep, businesses don't buy features, they buy benefits, is the way that we phrase this for a lot of folks, and yet almost every SaaS company will ship in version one of their website features.html, which is kind of unfortunate. Like ultimately, what's in it for me? What am I gonna get out of adopting this, both for my business and useful thing to know when selling to businesses: you're selling to a person in the business, and that person has their own set of incentives which might or might not be the business' global incentives, and you have to sell to their incentives. But you figure out what will motivate someone to purchase your thing within a business. Tell them that if they buy your thing that that motivation does get achieved, that gets exercised, and then figure out what the set of features you need to be able to credibly make that story are, and then build those features rather than building features you think are cool to build, cool to implement, or should be bought by a rational business.

Courtland Allen 0h 37m 8s

It's great advice. And I wanna talk a little bit about things that tend to block early-stage entrepreneurs. I think there's a very long list of things that cause people to fail, and I wanna get your rapid-fire advice for how to get around these things. So first thing: coming up with an idea. Coming up with an initial idea is difficult for most people. Even more difficult often is settling on a particular idea once they have a list of four or five. What are your tips for people who might be at the idea phase and struggling to decide what to work on?

Patrick McKenzie 0h 37m 37s

Broadly speaking in terms of figuring out an idea for things that someone will buy, I'm gonna give one potentially controversial piece of advice, but feel free to run with this until you understand why you are a person who does need to run with this: sell to businesses rather than selling to consumers. Businesses have much, much, much deeper pockets, they are easier to sell to. If you're selling to consumers, you're locked in at price points that are low because consumers don't have much money, and so you have to get good at marketing and sales and sell tens of thousands of units to make whatever your magic number is. Whereas if you're selling to businesses, you only have to sell in single digit to hundreds of units to make whatever your number is. So sell to businesses first. In terms of what will businesses buy, look at the things they already buy, whether that's a person's time or other solutions or very manual processes, and figure out which of these would be transformatively better if I applied my unique skillset to it. For example, this is not the way to think about it, but a way that I came up with the Appointment Reminder thing was I saw Twilio made it possible for regular developers like me to send out phone calls and SMS messages. And I made a list of every phone call and SMS message that I could think of a business doing in a predictable fashion, and I eventually picked one to build a business around. Now building from like, okay, here's my capability, here's what I can do with the capability, pick which of the best things to exercise that capability in from a business perspective, probably not optimal because you if were to look at needs first and then figure out, okay, what capabilities do I have, what do I lack which I could gain easily, that's probably a bit more optimal. But look at things people are buying. How do you know that businesses care about backups? Well, you can reason from first principles that losing all your data as a business will suck, but reasoning from first principles can be hard and difficult. An easy way to know that people care about backups is that there's many backup companies out there that pay a lot of money for it, or rather, are paid a lot of money for backups. And so you figure out, okay, what is the better take on backups that doesn't hit the pitfall that these companies hit, both from a product perspective and a sales marketing perspective? One that one could come up with for backups is that everyone knows they have to do backups, but they don't really operationalize it because it's time that they have to spend thinking about backups, and they don't spend time actually testing the backups to make sure they work. And therefore they feel insecure about their backup strategy. And so you think, okay, my take on this will not be merely encrypted backups. People already do that. It won't be merely backups living in the cloud. People already do that. But it will be, how do I sell peace of mind as a backup thing? How do I sell the surety that we're backing up the right things as a part of a backup offering? And maybe that involves a lot of your time. As the entrepreneur, going to companies and saying, okay, I will do consultative approach with you, where I figure out where are the databases, where are the documents that you actually need to back up. And will set it all together myself and then operate the service for you. You never have to think about this again, and I will send you a report every month. And that, you can charge a lot money for that than simply saying, well, five gigabytes of backup storage is five bucks a month. Price of hard disks is going to zero. Price of people who can make decisions about whether MySQL database should be backed up or not is going to several hundred thousand dollars. You can kind of have a happy little arbitrage in the middle there.

Courtland Allen 0h 40m 57s

It's funny, some of the most common advice that people encounter online is that you need to do something completely different, and they take this to mean that they can't solve a problem that's being solved by some other solution, they need to find something that's never been solved before, when in reality, looking at things that people are already paying for is one of the best indicators that there's an actual valuable problem that you can contribute to.

Patrick McKenzie 0h 41m 18s

Yep, the vast majority of companies who are out there sell something that some other company has sold before. Like think of your dentist. Have you happily paid your dentist money? Yes. Did he invent dentistry? No. There's thousands and thousands of dentists out there. Your dentist makes quite a good living doing what every other dentist does. At the scale that most people in Indie Hackers are operating on, where $2,000 a month or $20,000 a month is life-changing to you, you do not have to be the only person executing on your business in the world to pull $20,000 out of the economy. The economy is massive. If you're selling to businesses, you're selling to the economic engine of that economy. They have more money than you can even conceive of. It is easily possible for 100 people to occupy different parts of the backup ecosystem and all make great, great businesses out of that. Even for bingo cards to elementary school teachers, which is a terrible market in a lot of ways. Oh, I could go for an hour on that question. There were probably six firms that were bigger than mine. People only know about Bingo Card Creator because I have a big mouth about it, but yep, there's somebody in Texas who is just happily grinding it out every day and making mid six figures from that. And good on them, right?

Courtland Allen 0h 42m 27s

Okay, problem number two. Let's say someone's come up with an idea. They have zero customers. How do people find their first customers?

Patrick McKenzie 0h 42m 35s

If you're still in the idea-making stage, the how I find the customers question should be really tied into the idea-making stage. A great idea without a plan to get it in front of people is not a great idea anymore. So, given that you've been able to sell your services to at least one company over the years, presumably because you've had a job at some point, thinking back, okay, one question is, will the job buy this thing? If not, why? If you're building something that is completely orthogonal to every corporate experience that you've had or every career-oriented experience you had, I question whether that is a very useful decision. But it might work for some folks. If you can find someone that you could convince to use it via e-mail people who should be using it and saying, "Hey, I'm trying this thing. Will you beta test it for me for free for a month, and then if it works out, would you pay $50 a month?" If you can just start cold e-mailing people, that's really useful. If you don't know who to cold e-mail because you don't know who the market is for the thing you are building, don't build that thing. Don't run a backup company without knowing who buys backups. That's just going to be a terrible, terrible use of your time. Throwing up a page on the internet about your thing and then waiting for folks to discover it can work, but it takes a very long time. That's why I would suggest that you press the flesh in the beginning stages when you have nothing but time rather than just waiting for folks to find you. Go to the folks who sell something that is complementary to yours or similar to yours, but not quite duplicative, and ask them who they don't sell to, or who they don't sell your thing to. And ask for referrals. For example, this is a great way to get started if you are a consultant, for example. If you are a Ruby on Rails consultant and you wanna do e-commerce sites and there exist other design firms in town, go to all of them and say, hey, I'm a Ruby on Rails consultant specializing in e-commerce sites. Do you ever get someone asking you to build an e-commerce site where that is not something that your shop does? If they say yes, say, great. Please send them my information. And they will be happy to do that, because it costs them nothing to tell a lead, actually, talk to Bob over here. He does exactly that thing you wanna buy. And it's better experience for their leads than saying, actually, we don't do that, best of luck. Nobody wants to hurt their reputation that way.

Courtland Allen 0h 44m 54s

So overview: know who you're actually selling to and be willing to reach out manually in the early days.

Patrick McKenzie 0h 45m 0s

Yep. Some of the most successful entrepreneurs that I know have the most tolerance for just consistently turning the crank on cold outreach. Patrick Collison sent hundreds of cold e-mails in the early days of Stripe, and probably sends hundreds of cold e-mails even these days. I guarantee you he gets replies saying, you're not really Patrick.

Courtland Allen 0h 45m 23s

Okay, so problem number three: finding a co-founder, especially if you're not a technical co-founder, you're not a programmer. How can people do that effectively?

Patrick McKenzie 0h 45m 34s

My first question here is why do you think you need a co-founder? Because if you think you need a co-founder because Paul Graham wrote an essay that you need a co-founder, then A, that advice is contextualized to applying to Y Combinator, which if that is in your near future then maybe you should prioritize up having a co-founder, but if not, it might not be as required as you think it is. If you need a technical person to develop a thing that you want to sell, the question is, why are you... Well, is it possible for you to sell something that you could actually deliver by yourself? If it is not possible to sell something that you could actually deliver by yourself, do you have enough skill to be attractive to someone who is capable of building the thing if you are not capable of building it yourself? So for example, could you demonstrate superior sales skill to be able to actually be comfortable with getting on the phone with folks and convincing them to do things that you want them to do, like for example, sign a letter of intent to buy software that does X in a number of months after it's developed and commit to paying $10,000 for the software if it is developed to those specifications? If you go to a developer and say, I have six letters of intent locked up, companies are willing to pay me $10,000 apiece for this software, we just need to build it together, then that's pretty attractive to a developer. There is a pot of gold at the end of that rainbow, and the business goes up and to the right from there. If you just say, I have an idea, it's on a napkin, then you've only produced evidence that you're capable of producing napkins. Napkins are cheap. You can go get one from McDonald's and smear ketchup stains on it. That is exactly as worthwhile as a napkin with a business model idea on it. Also I would encourage founders to be realistic with themselves about what their true skill levels are. Like don't have the impostor syndrome that many of us have. But if you describe yourself as yeah, I'm a business founder, I get deals done, that is my core competence, okay, if you can't convince any engineer to get into business with you, then you're not getting that deal done, and maybe your competence level at getting deals done is not as high as your self-rating on it. So be realistic about that. There are ways to get things built for amounts of money which are lower than people sometimes think is necessary. For example, if you are capable of doing good project management and really tightly scoping projects and paying for a few failures, it's possible to go to the Elances of the world and get offshore teams to build out products for you. And that might or might not work out for you. I'm not bullish about it. As a technical person, I think that most projects there fail, but I know folks who have successfully project-managed their way to having a saleable product and not spent a huge amount of money on that. But if you don't have that project management skill, or you don't have even the small amount of money required to hire a development team to build something for you, then you should know that the market rate for a technologist to join you as technical co-founder is 50% of the company, given that there's two of you. This is often a surprising thing to folks with a business background, because they expect from their corporate career, wait, the suits make all the money and the engineers make nothing. Guess what, that is not the market. You're in 2017. The market rate for founding companies is that someone with the business sales, et cetera, background who spends all their time dealing with the investors, who raises the funding for the company, who puts the deals in place, deals with lawyers, yada yada, gets half the company. And the person who builds the thing gets half the company. And if you're not willing to give away half the company for something that's valuable, you gotta find some other approach.

Courtland Allen 0h 49m 3s

The primary takeaway there is 50/50 split, bring actually valuable and demonstrable business skills to the table, and having an idea, especially writing that idea on a napkin, does not count as a valuable business skill. Point number four that trips up a lot of entrepreneurs is staying motivated. So I personally think this kills more businesses than anything: just founders quitting when the going gets tough, quitting when they can't find their first customers, quitting when they can't come up with an idea. How can people stay motivated to push through all the hard parts?

Patrick McKenzie 0h 49m 33s

I generally agree that motivation is one of the very few unlimited resources in running a business that actually matter. There's basically only two: motivation and money. 'Cause running out of either will generally kill your company. And there's ways to stretch through a short-term lack of one or the other by trading off on other various parts about your life, but that's not sustainable on a long-term thing. So running a business is hard. Between now and some period in the future where you look back and say, oh yeah, I think I'm at some level of success, there's going to be a lot of sucky things that happen, and you should probably be honest with yourself on whether you are capable of tolerating sucky things, and whether you are capable of continuing to work on the business in a directed fashion even when the business is not generating strong signals of success. And by the way, businesses can sometimes be very hard to work on, even when they're generating strong signals of success. Everything can be going right, and then you have an argument with your co-founders or a client's relationship go disastrously wrong, or you get a tax bill for 80 grand that you don't have in the bank, and suddenly everything's on fire again. A lot of founders would tell you that the experience of running their business is just going from one fire to another for a period of years, even the ones that look pretty successful as seen from the outside. But in terms of tactical things you can do to maintain motivation, I like establishing a cadence where you expose yourself to the things that you like about the business that motivate you, whatever that is for you. For me, I loved seeing analytics data. I loved seeing how many hits I got today. And so I would start my days out with that. Like man, 123 hits today, that's five more than I got yesterday! It's a great day already. And then start working on things that you are not as intrinsically motivated to do. And for me, that might be writing e-mails to customers or what have you. Some other folks have different motivations in life. I know some folks who are intrinsically motivated by sending e-mails to people and yet really it does not provide a boost of energy for them to have to go off to the writing cave or go off to the code cave for the rest of the day. But then, if that's you, start the day with writing e-mails and start every day by writing e-mails. Write e-mails even if no e-mails need to be written, and then work on the other things. You kind of need to have a north star for what you're optimizing for at any given point in the business. I often describe myself as having business ADD, always getting pulled in a bunch of different directions. And that was kind of fun for me, but probably not optimal for every business. You should think, okay, right now, for the rest of this month, the thing that I'm primarily working on is getting new customers. And specifically I'm shooting for 20 new accounts that sign up for this plan. I should be directing almost all of my efforts to getting those 20 new accounts, rather than spending 20% of your cycles on getting new accounts and 20% of your cycles on product improvements not linked to getting new accounts and 20% of your cycles on going to that conference and 20% of your cycles on this thing. You kind of have to move with purposeness and intensity, as some folks around here would say. And take care of yourself. It is outrageous how more successful my businesses are when I'm doing things like going to the gym regularly or eating vegetables, not subsisting entirely on a diet of sugar and coffee. I discounted that advice from all the gym rats in my life for many, many years. I thought, oh, the meatheads don't know anything, but they are fundamentally running on the same hardware that I am, and so I've adjusted in my old age about that and yet have not been to a gym in a year and a half because I'm stupid and don't even take my own advice some of the time. But hopefully gonna fix that next week.

Courtland Allen 0h 53m 4s

It's tough, it's tough to get into habits that are healthy like that, but I can attest to how much better they make your life. If you feel healthy and the other parts of your life are taken care of and your relationships are healthy as well it's easier to focus on the hard task of running a business.

Patrick McKenzie 0h 53m 18s

I think that is something, that relationship, that by the way is something we systematically undercover in particularly the startup community. Some unhappy people have built companies, but people with wildly out of balance, out of control lives generally do not build very successful companies. And the exceptions are exceptions for a reason. I think that there's far too much valorization of put off having good friends or a romantic relationship for several years, and let your friendships wither, put your family in the backseat for a bunch of years and then you can always get that back eight years from now after the business is successful. I think that's just a sucky way to live out your life for the eight years, and totally not guaranteed, even in the case where your business is successful. And if you come the end of that eight-year period and all of your relationships are in shambles, then what do you have to show for it? I've had ups and I've had downs over the last 12 years, but I have a loving wife and two healthy kids. And even when the business was failing, I'm like, well, I'm sucking right now, granted, but still married, still have a child. What's the worst ultimate downside here? Get a job that I'll probably like, and indeed, I got a job that I probably liked. But I think we systematically undervalue relationships in the community.

Courtland Allen 0h 54m 32s

And speaking of something that we undervalue, I wanna talk about writing. You are a very effective communicator. You're a methodical thinker and a prolific writer. And in my opinion writing is obviously fundamental. It's a fundamental skill for running a business. It's something that you're going to find yourself doing a lot of, and it's extremely helpful in lots of areas. What are your tips for people who are entrepreneurs and might not be the best writers, what even they should learn, and how do you think about writing and communicating?

Patrick McKenzie 0h 55m 0s

I don't know if I'm necessarily the most methodical thinker. I think I can fake it very well on the internet. And there's a bunch of things that I feel I've been faking on the internet for 12 years which eventually might have transitioned to being true. I don't know if fake it 'til you make it is actually useful operational advice, but definitely it's a nagging doubt monster in my head. Has said for a number of years that I am not as good at X as people attribute me as being at X.

Courtland Allen 0h 55m 27s

Well, if I can interrupt for a second, I think there's certain ways that you see the world that... You uncover problems that other people I've found don't talk about that often. For example, you look at how engineering works and how engineering hiring works, and you'll realize that hey, engineers are simply not negotiating their salaries. And you'll go off and you'll rate a foundational piece or pillar piece, if you will, on how to negotiate and why it's worth negotiating that will measurably change people's lives. And I think that ability to recognize problems that have solutions that can be written about or productized is valuable. So how do you go about thinking what to cover and what to focus on?

Patrick McKenzie 0h 56m 6s

Thanks, I'm flattered for that. It might be this is the case where I don't see that as valuable because I'm capable of doing it and other people see it as valuable because not hardware that everybody gets. I think being generally well-read is a useful skill. The only reason I know anything about negotiation is I read a few books on it, talked to people who are good at it, and started to apply that in various contexts. And then as I realized, wait, now that I'm actually doing negotiation on a regular basis and consulting, looking back to that one time I did a salary negotiation, oh my God, what was I thinking? And then when I saw other Hacker News on... Other engineers on Hacker News giving people advice about salary negotiation, like name a number first so that everyone knows what you're thinking, it's like, oh my God! What are you people telling each other? I have to write something here, because the world is broken! People are wrong on the internets, to quote the xkcd cartoon. So I wrote 10,000 words on salary negotiation for engineers. You can probably Google up by Googling that. And 500,000 people or so read that a year, and I know it's generated millions of dollars in extra salaries, so awesome for engineers, sorry for my buddies in Silicon Valley, but you have the money, you should be paying me. Deal with it. Anyhow, getting better at writing. Write a shedload. I think that people think that homeopathic amounts of writing for their business will be enough. Like okay, I've gotta write 800 words or so of copy for my landing page, and then got to write an e-mail, that's another 200 words. 1,000 words. Man, that's a lot. That's like an assignment from grade school. I've written three million words over the last 10 years. To the extent that I am much better than people who wrote 10,000 words over the same interval? Well, yeah. I have a lot more experience and have been able to try out a lot of things and make a lot of more interesting mistakes and then find more things that work for me and double down on them. Write more. Way to become a better engineer. If you're doing rounds to zero coding, coding more. Coding more, coding more is probably one way to do it. Surrounding yourself with people you wanna be like is another way to do it. Some of my best friends in business are kind of birds of a feather flock together. We all have our own takes on what a good written voice is or what our form factors look like. I write long, long articles when I write. 10,000 words is middle of the road to me, whereas I have friends where they might phrase it as ain't nobody got time for that. Yeah, nobody except the people who read it and then buy from it, but whatever. When they write, they write 800-word articles, and that works for them. But we can bounce ideas off each other and okay, does this turn of the phrase work? Are all my semicolons in the right place? And the more important questions on like strategically, why am I writing this thing that I'm writing? When I started, this is the benefit of three million words, when I started I had no clue what I was writing about. I would just write about, literally it was a blog. What do you do on a blog? You write about what you did today, and so I would write about what I did today. And I did that for about two years, and I realized that's the things that were really landing with people, and stuff that I could look back a year later and say, hey, that thing that I wrote was actually useful. Folks clicked on it, folks linked to it, folks cited it to me as changing their decisions. They were consistently around a few topics. And like my updates on how I had done Rails programming and I was dealing with the session with cookies were not consistently among my highest and best work. And the topics that were really landing with people were the intersection of marketing and engineering. And so it's like, hmm. If I know that 20% of my writing gets the best results and it's consistently on those topics, and I consistently have a skeptical-ish engineer's take on marketing as the general frame that I wrote them in, what if I did that for substantially 100% of my writing? Would that work out? And actually, it was nowhere near substantially 100%, but like 80 plus instead of 20 minus. And that decision worked out pretty well for me. Finding out what your beat is or what you want to cover will take a while, but start writing more. You'll get closer to it as you have more experience and have tried more things. Also, figuring out where among the panoply of different things that you have to do for your business your comparative advantage is. Let's see, if I started my business in 2006, and I was a part-timer and it took me a long time to figure out anything, but about 2009, 2010, it was pretty obvious to me that A, I was better at writing than most people, and B, that that was like producing outsized returns for the business. So I kinda doubled down on that for a while. And ironically, in the last couple years, I've spent a lot less time writing publicly and I'm still known as a good writer and some of the things that I wrote back in the 2010-2012 time span are continuing to do dividends for the business. That's kind of one of the benefits of putting work out there publicly that you can benefit from for years. Micro-tip about writing: write things that people will want to read many years later, because then you don't have to get on the content creation cycle where it's like Instagraming. You Instagram something and then folks see that in the moment, but a week from now it might as well never have happened, unless you get a reputation for real for having the best posed Instagram shots of food or whatever people actually do on Instagram. I have no idea, it's not even installed on my phone. Sorry, that's not me being an anti-Instagram hipster, that's just a reflection of my priorities in life. If you do content creation like that, where you're setting yourself up for a treadmill, and the only reward for being on the treadmill is congratulations, you get to continue pedaling on the treadmill, but faster, with more people watching you, that seems a battle to me. Rather than getting on the treadmill, I would rather produce artifacts that contribute some amount of business capital or career capital over the course of the next several years that people will consistently cite and that will allow you to build a platform for doing later adventures off of.

Courtland Allen 1h 2m 7s

So read more, write more, double down on what's working, and write for the long term. Okay, well, I think that's a pretty good place to end the interview. Next time you're in SF, we'll have to do this again and talk about a whole different set of topics.

Patrick McKenzie 1h 2m 21s

We definitely should. Thanks much, everybody, for listening, and my e-mail address if you want to e-mail for anything personal is patrick at kalzumeus.com. And if you have anything Stripe-related it's patio11 at stripe.com. Please feel free to e-mail me. I love getting e-mails from the internets. It's one of the things that I most enjoyed over the last 10 years. Specific questions are awesome. Operationalize that advice we gave earlier. And yeah, but write me anytime.

Courtland Allen 1h 2m 54s

Thanks, Patrick.

Patrick McKenzie 1h 2m 55s

Thanks much.

Courtland Allen 1h 2m 57s

If you enjoyed listening to this conversation, you should join me and a whole bunch of other Indie Hackers and entrepreneurs on the IndieHackers.com forum, where we talk about things like how to come up with a good idea and how to find your first paying customers. Also if you're working on a business or a product of your own it's a great place to come and get feedback from the community on what you're working on. Again, that's www.indiehackers.com/forum. Thanks, and I'll see you guys next time.

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