Ever since I came across his blog years ago, Brian Balfour (@bbalfour) has been one of the most influential people for how I think about growing online businesses. Not only is Brian a successful blogger, but he's also served as the VP of Growth at HubSpot and founded four companies. His most recent business, Reforge, generates millions in revenue helping tech professionals boost their skills. In this episode, Brian explains why it's crucial to have a visual model for growth, shares his models for growing Reforge, and discusses why sometimes the best thing you can do is the exact opposite of what everyone else is.
What's up everybody? This is Courtland from IndieHackers.com and you're listening to the Indie Hackers podcast. On this show I talk to the founders of profitable internet businesses and I try to get a sense of what it's to be in their shoes. How did they get to where they are today?
How do they make decisions both at their companies and in their personal lives? And what exactly makes their businesses tick? The goal here, as always, is so that the rest of us can learn from their examples and go on to build our own profitable internet businesses. Today I am talking to Brian Balfour, the founder and CEO of Reforge.
Brian is a prolific blogger on the topics of growth and user acquisition. He's had a successful career along the same topic, culminating in his role as the VP of Growth at HubSpot. He has grown products to millions of daily active users and he's also a serial founder himself. I believe you started four companies, Brian, is that right?
Yes. It depends on how you count. But yes.
You've raised money from venture capitalists, you've bootstrapped, you've sold companies, you've done it all, really. Today you're joining me on the Indie Hackers podcast, so welcome to the show.
All right, thanks for having me.
Thanks for coming on. I first found you online, I think, a couple of years ago and I was reading your blog and you had a post called Why Product-Market Fit is Not Enough. I've never read anyone who said anything like this before. Product-market fit is hailed as the pinnacle of startup success.
It's what every company needs if it wants to hit a home run and basically become everything its founders dreamed it could become. Yet you were saying that's not quite enough. Can you share with us your opinions there? Why is product-market fit not enough for founders to succeed?
Yes, I think just in general in tech basically what ends up happening is somebody creates a framework or a concept to help explain a really important topic and it is very helpful at first, but then like we like to do in tech, we just take things to the extreme and start applying it and just way too many ways and in ways it's not.
I think it's a super useful concept, don't get me wrong. But I think there's two big things that I tend to talk about and think about and that I especially felt as a founder in both a positive and negative ways. One is that product-market fit isn't a moment in time.
I see a lot of founders that I advise and invest in. I even had a conversation on Twitter today about this, somebody asking, "Have I reached product-market fit or not yet?" Almost they're searching for this bell to go off. I wish we had a product-market fit bell that just rung so we all knew that when we had it, but it just doesn't work that way.
To be honest in the founder's seat, I think it very rarely ever feels that way. The closest thing I've ever gotten to a description of that feeling is from the CEO of Segment, Peter, who described this sense of the market is pulling the product out of you rather than you pushing the product on the market.
I thought that was the best description I've ever heard of. Like just the qualitative feeling of when you have it. But I often find it's almost feels this search for the pot of gold at the end of the rainbow, right? Or this lucky leprechaun and we're actually never find that confidence or that feeling that we ever got it because it's this thing that's always moving, right?
Like all of these components, our product and our market, our distribution channels, or how we monetize our users. These things just are constantly changing and evolving. So even when you find product-market fit on a single feature or product, these things move and things get out of whack and so you've got to move with it.
You're always on this constant search for continually evolving and making sure you not only maintain product-market fit, but you're searching for new product-market fit of new features and new products.
So even at HubSpot, a big part of my job is I came in as, all right, well they had this marketing product growing to $100 million in revenue, but they knew to continue to maintain growth of that business that they had to find new products, new verticals.
We restarted the whole product-market fit search all over again inside of an organization, which is really hard to do at small and large organizations, but for different reasons. I think people just get caught up in the concept as like, I just gotta find this thing and then I'm done with that and I get to move on to some other things.
And no, you're constantly working at this and evolving and molding and shaping along the way. So I think that's the first thing. Then the second thing is, just because you have, I to call it market product fit because I tend to think about things first from like, "Who am I building this thing for," first. And then, "What are their problems?"
Then I can think about the product, which is the solution to those two things. I often find when we flip it and we say product market first, we try to think, we think about the solution first and then the audience and the problem. So yes, it's, the semantics, right? But I actually think language is pretty important. It shapes how we think about things.
When I think about market product fit, that's one thing. But there's these other fits that I commonly talk about. The main ones are product channel fit. Even if we get market product fit, meaning we have clear signals that our product is solving the problems for the audience that we intend to solve them for and those signals can come from and NPS data, word of mouth signals, retention data, all that stuff.
We still need to find a way to actually grow this thing and just because we have those things does not mean it's going to grow. We are working on things that we can control, right? Like the product and we get to choose the market. But the one thing we don't get to control is what are the scalable channels available to us where our audience is living?
Like that's actually determined by somebody else, right? Not only that, but the rules of those channels are also not within our control. A lot of people can be very frustrated by that. Like we do not control what Google does. We do not control what Facebook does. We do not control what the email providers do to spam algorithms and promotions folders and all of this stuff. We do not control a damn thing of it.
At the end of the day we have to focus on the things that we can control. So what we have to do instead is mold our products to fit with one of these channels. The different channels are better for different types of products and so we have to mold to that.
The other one that I often talk about is channel model fit, which is that one of the levers we can control is how much we price our product for, how do we structure the monetization model around it? What features go in, what package, all that stuff.
All of these levers of our monetization model actually create friction for the user deciding whether or not they're going to use and purchase our product. We can either create a model that is super low friction, so low price point freemium models, all that stuff.
Then as a result we're able to use channels like virality, like paid marketing, some of these lower friction channels. Or we can create really high friction. High price point, gotta pay up front, all that stuff. As a result we need to use channels that have more influence to help people get over that friction.
Those are more things inbound marketing and sales and all that stuff. Then the last one is model-market fit. So it's based on the monetization mechanisms I've set and I look at my market and how many people are in that market. If I just do simple math, average revenue per customer times the number of people in my target market times the percentage I think I can capture, how big of a business does that build? Am I building something as big as I want it to be?
A lot of times founders that are on the VC path, who need to create $100 million plus revenue businesses, we walk through that math and the math just doesn't work out. So you have all of these fits and the thing is you're constantly searching for them over time.
A lot of times one or two come really easy to that business. Then the other ones are the ones that you've got to really work on and really innovate and put your muscle and your grease behind. But these are all components that you need to think about. You know, these things are not easy. Building companies are not easy.
These things are systems that where, if you move one lever, all of the other levers move. So it's this constant game of putting all the puzzle pieces together.
But such a perfect way to describe it. It's not you can just change one part of your business and not worry about the other parts. They're all connected. If you choose a particular market that's going to affect the prices that you're able to charge and the prices that you charge are going to affect the distribution channels that you can afford to go after.
So like you said, it's a puzzle where all the pieces have to fit together. I also love that you mentioned that as founders we tend to want to work on the things where we have the most competence, the most control, where we're the most comfortable with it.
If you're a developer or designer or something, that's probably going to be the product. You're obsess over all the features and the bells and whistles you're going to add. You're going to be imagining people using this cool product that you built and it's going to seem so real to you, while at the same time you're neglecting all other parts of your business that you actually need to care about in order to make this thing work.
I think a lot of people like to talk about a lot of reasons companies fail is because they got the product wrong. I actually don't think that's true. I think they probably got one of the other components wrong.
So they either built a product for the wrong market or for a market that didn't exist, which actually doesn't mean they got the product wrong, they just got the market wrong. They chose the market wrong. They didn't define the problem and the customer or they built a product that didn't fit with any of the distribution channels.
Or they didn't choose the right monetization model. Like have the right pricing and all these things, so it doesn't create compelling unit economics and all those components. Maybe that's a counterintuitive statement. I don't know. But I actually think most of the time I look at these things and I'm like, "You built a really interesting product, but one or more of these other things is, is off. You didn't fail at building something. You built something but you just didn't figure out these other components."
I think it is counterintuitive. If you look at the population, the demographics, really of people who are building these tech based businesses, these online companies, they're pretty smart people. They're pretty ambitious and driven and talented and motivated.
All the good stuff. Yet most companies still fail. I think that should tell you if you're a first time founder and thinking about getting into this that, "Hey, your intuition is probably not good enough. Otherwise it would have been good enough for all of these other people. There's probably some stuff that you need to learn and try to understand so you don't make the same mistakes that everybody else makes."
I think the one thing that I've become more of a believer in is, I don't know, this rule probably applies in a bunch of places. Look at what everybody else is doing and try to do the exact opposite and that tends to work out. I mean, just look at Reforge as an example.
I think when we started in the online professional education space, what everybody was focused on was the entry level market. Helping people get jobs or like pricing things low. Like on Udemy at 10 bucks a pop.
Or letting anybody buy the course. Just all of these components, we did the exact opposite. We were like, you know what? You got to apply for it and we're only going to accept X percent and we're going to slap a super high price on this thing.
Actually we're not target helping people get jobs, which is a good initiative but we're only going to target people who have jobs already. We literally did the exact opposite of what everybody else was doing in this space and it's worked out super well for us, so far.
I think the reason it just works is, if everybody is doing one thing or saying something or focused on something, I guarantee you that there is an audience on the other side of that equation that is not being served.
There's some other things that we did is a lot of online courses where you're going to get amazing results in X period of time. We said the exact opposite. We said we were like, you know what? This shit's going to be super hard. It's going to be super intense. You're probably going to hate us by the of it.
We're not guaranteeing you some crazy outcome tripling your outcome in two weeks, but we're going to teach you some really meaningful stuff and if you put the time into it, you're going to meet some really amazing people and we guarantee you that you'll be able to use these things to create value for you and your company.
We just say the opposites and I guarantee you, you'll find an audience that's just tired of the rest and will immediately attach themselves to what you're doing. So I looking for the opposites.
I think that's a great approach. I've talked to a few people on the podcast who've done something similar. Tobias van Schneider comes to mind. His episode was called "Definitely Not Trying to Fit In with Tobias van Schneider," because he always does the opposite of what everybody else is doing and it's worked out for him.
It's obviously worked out with you for Reforge. I want to talk about how you got to where you are at Reforge, actually. Your story starts a little bit earlier. You said that you were hired to become the VP of growth at HubSpot and they already had a product that was doing $100 million in revenue when they hired you. How do you get hired for that position?
Oh man. I'd still questioned why they ever hired me. The history of it is that I spent my early career, I started this company called Viximo. Some VCs wrote me some massive checks that they should have never written. I was 22 at the time.
This was pre-Facebook platform and we just saw what was going over on in Korea with virtual goods and we were like, that's really interesting. That seems a new business model. We don't know how it's going to develop, but let's start exploring there.
Facebook platform launched, social games became a thing. We ended up building this alternative social gaming platform. Ended up selling it to a company called Tapjoy. But that was where I really started to learn, growth, what people now refer to as growth. It was product driven growth, a lot of things around virality, a big mix of quantitative views with qualitative views of user psych, and all these other components.
So that's where I started this whole growth thing and many years later HubSpot initially started off, they built this amazing marketing and sales machine, but one of the things that they felt they wanted to do going forward was start to enable more product driven growth mechanisms.
That wasn't really a muscle that they had internally and they had a really interesting opportunity to explore that because they were starting these new products. So rather than experimenting on an existing product and having the initiatives be constrained, it was like, "Hey, here's this blue ocean, this Greenfield territory. You can do what you want." I had known Dharmesh and Mike Volpe and a bunch of the other early team from HubSpot for some time.
Mark Roberge, who was their early salesperson and built the whole sales machine. There was one of the leaders of this new product division. He and I just got to talking. He made me an offer twice. I said no, twice, and finally on the third time he convinced me. I went and it was one of the best decisions I made.
It was myself and maybe six others when we started in this new products group and the only things that we had as our goals were we knew we wanted to develop new products in the sales software vertical and that we wanted to create a new hundred million dollar line of business and that we wanted the primary growth motion to be a product growth motion rather than a sales first growth motion.
That's how I entered HubSpot. Then over the next couple of years we ended up developing the free HubSpot CRM and what's now known as HubSpot Sales Pro, which I don't know if they publicly announced, but pretty confident, has over a hundred million dollars as a line of a business now.
I think they did announce that. So you can keep that in there. But yes, it was just crazy growth. It was this crazy growth in a couple of years, but it was really hard. I've written a lot about this, about some of the failures that we had to navigate through to get through success.
Even with that giant machine that we had behind us, it was finding these successes and these fits that we're talking about was still a difficult road, for sure.
I think for most of us, the way that the growth machine works inside a big company HubSpot as a total black box. So could you give us a story or an example of how things worked behind the scenes?
Well, it depends what you mean by the growth machine. There's growing the company itself and the operating system of the company. There's growing the products, there's multiples. So go a little bit deeper. What do you mean about the growth machine?
Let’s talk about growing the products. Because it seems you came in and it was like you were starting almost miniature startup inside of HubSpot, working on brand new products and trying to grow those.
What was that like and how does a mature company like HubSpot approach the problem of trying to grow a product and reach more people?
I think HubSpot did a really great -- I did not make these decisions, by the way. There are smarter people, like JD Sherman and Brian Halligan, the COO and CEO, that helped set this up.
The big death of most new products inside companies is that there's a couple of different failure points. At the beginning failure points they don't give the products enough room to truly explore from first principles. They basically assume too many things of like, "Oh, well, we know this, we know this, we know this," because we have this other success over here.
But a lot of times those successes don't translate to new audiences or new verticals. As a result, they lead you down a road of failure. You really have to wipe the whiteboard clean and start from scratch and rebuild from there. So what they did was they actually treated it as venture rounds inside the company. We took multiple product bets.
There's multiple products that got "seed funding". So a year of funding at a typical seed level. I think the budget was in the hundreds of thousands of dollars. It funded a team of X and at the beginning of the year we're looking for these validation points by the end of the year. At the of the year we would go "pitch our Series A".
We would go talk about what we learned in the validation points and then we would get the next level of funding. And then the series B. They actually funded it that way, and then finally by the time you get to the Series B and you know this is a really real thing now hits the second big problem, which is, "How do you mold this thing back into the giant machine of" --
That's a whole transition point as well. That was actually led by somebody different than I did because this was about six months into this transition I ended up leaving to start Reforge, but a guy named Michael Pici was responsible for this and did an amazing job and started to figure out how to transition it back into the machine.
Then the third failure point is you got to do it all over again and make sure you don't screw up those first two things. That's how it essentially worked in terms of how we planted these bets. Now, how the product, the mechanisms behind the products actually grew, it was a different story.
One thing that I commonly talk about is if you're trying to build a super high growth type of product, which I know not everybody is, which is totally fine, but these types of products that we read about on Tech Crunch and all these other places. Behind them, if you look at how they grow, it's basically a system of what we call compounding growth loops at Reforge. So rather than looking at these things as funnels, these things are actually self-reinforced.
There is some self-reinforcing loop behind the thing that creates this compound interest effect that gives you those exponential curves. The compounding machine behind the marketing product at HubSpot was originally basically what we at Reforge would refer to as a company generated company, distributed content loop.
So we would get these leads – combined with a sales loop. So we'd get these leads, we generate revenue off of them, that revenue would fund the company generating content. We then distributed that content to the search engines, like SEO and stuff, as well as our users would distribute that content, which would close the loop and create more leads and followers, which would give us more revenue.
So through every cycle of the loop we were able to invest more and more into more content, distribute more content and it just continued to compound on itself over time. Now over time that loop got even more efficient because rather than the company generating content, we had built such an audience up that we just got what I refer to as suppliers to generate that content.
It was guest writers who wanted access to our audience. So we were able to generate a higher volume of content, every cycle of loop, which distributed more content, which attracted more leads, and continued to repeat itself.
So that was really the thing behind the HubSpot. Now the new products, they wanted to take a totally different approach. So a product led machine. They were thinking about user generated content loops and the different forms of viral loops and everything. The early HubSpot sales pro product, we took a bet on one main thing, which I referred to as a financial viral loop.
So it was a freemium product and as a result it was designed for an individual, not a group or a company. It started off super simple. It was what we called an email tracking product that sent you notifications when people opened your emails. Super interesting to salespeople sending contracts all day long.
Now this is standard in a lot of tools, but it wasn't back then. Basically you got, I think there was a hundred notifications for free. Once you hit a hundred notifications you could invite others to get more notifications or you could pay, I think it was at that time, 10 bucks a month. The key here was people would hit this notification limit 13 days into the product, which was a magical time.
They had built the habit around the product. They had gotten addicted to these notifications and so they were super incentivized to invite others. We got to a hundreds of thousands of users just off of that single loop.
Now we evolved that over time into other growth loops. But that's how I think about growing products is like, "How do you build these compounding loops and then just how do you improve them over time?"
It's great that you have so many internal frameworks for how growth works. I mean, growth is arguably the most important part of any company. How do you go from zero customers to one customer? How do you go from one customer to the point where your company can pay your salary and beyond? That's all growth.
And yet most of the people that I talk to, they don't have this level of knowledge that you have obviously, or even a small fraction of it. They have no idea how to organize these different concepts.
They hear about something like viral growth or product driven growth, or marketing, or SEO and they don't know how to really structure these things in their mind as to how they're related and when to apply one and when to apply the other.
You've been both a founder and a VP of Growth of a company. What do you think your average founder needs to know and educate themselves about with growth before they start a company?
Yes, that's a good question. I mean I think it is very important to understand these things and even more so as the company grows, you need a common language of how to talk about these things inside the company. Because growth means so many different things to so many different people.
If you don't actually establish this common language, you just end up talking apples to oranges with each other and you don't even know it. This is often really the source of most internal disagreements or misfires is that people think they're aligned and talking about the same thing but in reality they actually aren't.
If you just ask them to draw a picture of what you mean on a whiteboard, you would very quickly realize, "Oh you are thinking about this way different than I am." It's why I tend to talk in frameworks because I essentially think about as frameworks as like if I'm in a meeting trying to explain something to somebody, can I get up on the whiteboard and draw a picture of this so that we all understand it and are talking about the same thing.
So it is important. However, the reason I'm having a conflict internally is I keep going back and forth on should you really be working on filling in your weaknesses or just doubling down on your strengths? The reason I talk about it like this is because this is obviously my strength. This is what I've spent years and years on.
I used to code, but if you asked me to code today you're about to put yourself through a world of pain, if you ask me to do that. So it's hard. I do some investing on the side and advising. Whenever I do that, the bar I take people through is what we just went through. I'm like, "Hey, I think about growth like this. It's a system of compounding loops."
There's these common set of loops. I think this is how I would view your product growing. We draw a picture up on the whiteboard of how one step leads to another step. Do you think about it in the same way?" Oftentimes, no. We collaborate on this.
The minimum bar that we essentially try to get to is a common picture of how we think the product grows. Not how money comes in in the system and money comes out of the system, but it's how does one user lead to another user? Then once we have that common picture, then we can zoom into that map and say, "Well, how do we make this thing happen? How do we improve this thing?"
So if there's content involved, then we think search engines and then we can talk about all the levers and tactics of that little arrow in the picture. Or if it's like, "Hey, I'm Calm dot com the app and I'm a subscription product. It's a free trial and I'm driving it through paid ads."
Well, okay, that's fine. We can now talk about, "Well what are the key steps in these loops that are going to be really important to making that work?" That's an example where I wasn't involved in the company, but they looked at that and they were like, "Actually, you know what, to make this work, we needed to do annual subscriptions versus monthly subscriptions so that we collect the money sooner so that we can reinvest it back into ads in order to grow faster."
These are the types of conversations you can have. I think for founders it's just, they need a picture of how they think about the product grows and be able to draw that picture. Because if they're able to do that, they're then able to do a couple of things. They're able to zoom in on what might be the most important part of the picture at any given time.
Or two, they're able to engage with people me or the many other awesome growth people out there to have a very productive conversation about what the weak spots are and how to improve. But a lot of times I just get founders that come to me and they literally ask me, "Well, how do I grow?" I'm like, "Well shit."
That's the biggest, like I don't know, every Forge we have about 200 hours of recorded material on that single question. Like yes, it's just impossible for me to answer that type of question and at that broad.
Questions that, it takes an hour just to peel back the onion of like, "Well, who's your target audience? What's the problem that you're solving for? Like how big of a pain point? Is this an individual? Is this a group? What are the alternatives? Like what are their motivations?"
Okay. Then we can start to think about the loops and how all those things start to play into account. So I would say if founders, if you're listening and you just want to get to that basic bar of knowledge, I would say we have a couple blog posts on Reforge, one about growth loops and one about a growth system.
If you supplement that with some reading from Casey Winters who is the chief product officer at Eventbrite, a couple of things from Andrew Chen, he's got What Investors Look for in Growth deck out there on his blog. To be honest, you start with those four things and you really internalize those things, you'll be gold.
OK. I'll put some links to those in the show notes cause I think it's super helpful to get that background knowledge and be able to draw that diagram. You know on the whiteboard of your mind for how growth works for your company.
So like you said, you can talk to other people intelligently about it and also so that you can understand and talk to yourself intelligently about how these things work. At some point you left HubSpot, you started the company you're working on now Reforge you're doing seven figures in revenue.
You mentioned earlier that you're doing the opposite of what everybody else is doing, professional education is doing, and that's worked out for you. I'm curious of the story. Is there, how did you decide to start this type of company?
Why did you decide to start this type of company? You've always worked on product companies. Why get into the education business? Also, to make this question even longer, what did the growth loops look in your mind before you got started?
Professional education was something that I had been interested in for a while. Prior to HubSpot I co-founded a company called Boundless Learning, another VC backed company. We developed a way that what would take a college textbook publisher, two years, and a couple million dollars to produce, and we got that down to 30 days and 15 grand of capital and equal to higher quality results.
So orders of magnitude, and as a result we could offer a free alternative to students’ college textbooks, which here in the U S, costs people two to three grand a year. So huge pain point for college students. You know, that was a case where we took a bet on that company.
We had three huge hypotheses. One, that we could develop a system that created 10 X or more efficiencies, which we proved out. Two, that we can market this directly to end students because that wasn't a proven thing at the time. We proved that out, actually. We got to millions of users.
Then, three, we could build a product that they would engage with on a recurring basis and pay for. We fell short there. A number three, part of it was the textbook publishers got pretty freaked out by us and the three biggest ones here in the U S banded together and sued us, which is a podcast for another time. But that was a wild ride.
But during that I started thinking about professional education because it was something that I was doing that was really close to me. It was a different audience than what we were targeting at Boundless Learning.
But I didn't pull the trigger on it at the time, so it was just ruminating in my head for a while. I went to HubSpot. Our team grew really fast and I would just eventually sit in these one-on-ones every week.
Somebody would ask me about professional development. I'd spend hours researching what to recommend them. Nine times out of 10 I would come up empty handed and that made me feel a terrible manager. It was a terrible experience for them.
So I decided I was going to create this course on the side. Andrew Chen who was entering growth at Uber at the time was going to do something similar. So we were like, "Hey, why don't we do this together?" Twice the distribution, half the work, this was like the MVP of MVPs.
When people talk about you should be embarrassed of your first version of the product. I am incredibly embarrassed of that first version. I still see and meet people who were part of that first course and I just profusely apologize. But the thing was, we had thousands of applications.
We slapped a high price point on it. We generated some good revenue and NPS (ph) and the feedback after that was pretty good for what it was. It was at NPS was 30, and for the, for the crappiness of this thing, that to me was 90 NPS.
I was like, Holy crap. So, that combined with some other things that were going on at HubSpot at the time, it just made it the right time if I was going to leave and do something. It was either that or stay at HubSpot for another couple of years and it was a really hard decision because I learned so much at so much at HubSpot during my time there. But I ultimately just decided to pull the trigger and leave and take a bet.
Why do you think thousands of people were applying to this course that you're teaching? What got everybody so excited? Because that's a pretty unusual response to, as you said, to the smallest of the small MVPs.
Yes. It was just part of going back to what we were talking about earlier, which was so I had experienced the problem as a manager. So it was like, "Well, why can’t I find anything out there that I feel that I can recommend to my employees and have it be a good use of their time?"
We just started creating a list of those things and started creating a list of what was out there and then we just did the exact opposite. Rather than it being a short course, we did a long course. Rather than it being about tactics, we actually did it about strategy and frameworks. Rather than it coming from an author of a book, it was Andrew and I who were operators at the time.
Rather than being low price, it was high price. Rather than accepting everybody, we made everybody apply. We did all of these things and as a result, right, there was an untapped audience out there that was tired of what everybody else was chasing and it just stuck out to them.
It was differentiated and they responded to it. But I think the more that I've gotten into Reforge, I took the leap on Reforge. I had no idea whether or not it was going to be a big company. That wasn't a thing that I was confident in at the beginning. I now believe in that after working on it for a few years and proving out a bunch of hypotheses, but it's not like the need for professional education has decreased.
It's only increased. But it's just that along with that, how people want it, has totally changed. Like they don't really want it from tenured professors. They want it from operators and you don't want to take two years off and go do it. They want to do it alongside their careers. They don't want it to be general and surface level. They want it to be something that they can apply right away.
There's just all of these different factors about it. This isn't new news, but MBAs and master’s degrees, in general, are in massive trouble. A bunch of them have been shutting down because they've been in the red for many years for schools.
There's very few schools that are even coming close to keeping up with the times, not only on topics but who's teaching them and the formats that they're offering them in. It's just, that's a slow moving world and so the speed is our benefit at the moment.
Earlier when you were talking about why product-market fit is not enough, you brought up a bunch of different fits and having read your material on this, you've got four different quadrants. You've got market-product, your distribution channels, and your monetization models that all go into how your business grows.
I want to analyze Reforge on the basis of this four fits framework. So I'll do my best. You tell me where I go wrong.
The market here is this milieu, of all these people who don't want to get their education from master's degrees. They want it from operators. They feel that they can grow in their careers, make more money, become more successful.
That's the problem you're solving that this market has and the business model, as you pointed out, is that people pay directly for the courses and they're willing to pay quite a lot of money for it. The product is one of these areas where you've taken a look at your market and what their needs are and just matched it to fit directly what they want.
Which, in many cases involve doing the opposite of what other products are doing. that's what you've got all sorts of different courses that people can take while they're at their careers rather than having to take several years off, etc. Those aren't decisions you made in a black box. Those are decisions that you made because they flowed backwards you knowing who your market was and what their needs are.
Then I think the big question mark for me is the channels, the distribution channels. How do people find out about Reforge? How did you get it in their hands in the beginning and how has that changed over time?
Yes. Let me restate these real quick. The way that I think about the market is that we target mid-career professionals. These are people that are at least a few years into their career but not tenured execs yet. The problem that we solve for that market is that I need to get up to speed from the best on this topic really quickly.
So oftentimes you're a PM at Facebook and you get thrown onto a new project. You've never worked on that thing before and you need to start by standing on the shoulders of giants. The product is – we actually describe the product as, we pursue three principles and we can bring that to life in any way.
But we talk a lot about credibility so that it's coming from actual practitioners and people that our audience identifies. We talk about relevance, meaning that it it's relevant enough to you that you can take action on what you learn almost immediately. We talk about depth so that we go deeper than anybody else out there on the topics that we choose.
So those are the three principles. The model is a transactional model. We charge 3500 bucks or 3014 bucks per person for teams of three plus. And the channel. I'm glad you mentioned that because as I mentioned earlier with these four fits is, you never nail these four things out of the gate. They are always things that evolve and you work on over time.
You typically start strong in one or two areas and then add the others. I would say this is definitely our weakest area. Andrew and I, we've been blogging for 12 years now or something that. So we had these email lists that had built up over time. Those lists have just continued to grow on their own and to be honest, those email lists and a very basic content presence has gotten us to where we are today.
Which is fine because once again you have limited time, you have limited resources, so you have to prioritize. So for us, we looked at this and we're like, "OK. Well, with our limited time and availability which ones should we focus on?" Well, why would we focus on channel when we have enough there to get us to a certain point.
Let's figure out these other pieces first. But we are actually getting to a point where our growth is hitting the ceiling of what we have and what is available to us. So you will likely see some new things from us in the coming year that fundamentally change the channel and the structure of our model, actually. So both those things. Like I said, always moving.
Yes, it's really cool to see how you've been so successful despite the fact that you say, your channels are your weakest point. I think a lot of that comes down to the other parts of your model. They all fit together. the fact that, for example, with monetization, you're able to charge customers $3,000, $3500 bucks a head.
If you can charge that much for what you're selling, you don't need 10 million users to make a profit. You can have a few hundred people and you're already making enough to support a small team. I think this is something that a lot of fledgling founders don't understand.
They start right out of the gate saying, "What can I build? What can I create that I can sell for $5 a month or $10 a month?" Or something extremely low, not realizing that that automatically means that they have to hit it out of the park with their distribution channel. They have to have some massive distribution if they ever want to turn a profit with that. What made you so confident that you could charge that much coming out of the gate?
I wasn't confident at all. Andrew was the one that pushed this actually, initially. I'm glad he did because exactly what you're talking about is even if you know this principle, you will still likely underprice your product.
It's just like a natural human bias, is we have lack of confidence almost, in our own thing. So we didn't have that. We didn't know at first and I would say we actually have never revisited pricing so we haven't changed pricing in four years, which is actually a huge problem. Which I actually just wrote a blog post on.
We know we're way underpriced just based on the volume of applications and our NPS is typically above 70 in like the mid-seventies. But that's okay for us right now because we're optimizing for other things with the limited resources that we have. But you're right, I would be lying to you if I said that I had the confidence, I personally had the confidence in that.
That actually came from Andrew pushing a little bit. We even thought about prices that were double that at some point. But yes, we just wanted to validate other things. But by default I would go down the line that way. You're saying is like either start by charging way more than you're initially thinking or you just need to pursue a problem that justifies a higher price point and you can create a compelling business off of that.
But once again, these things are all systems. So really depends on all of the other components. Like if you think about our market, mid-career professionals in tech companies, of companies post product-market fit that are interested in the product growth vertical you're talking about. Like in the grand scheme of things, a pretty niche audience.
So in order to create a profitable, compelling growing business that small audience equals that you need to charge some higher dollars to do that. So it's hard to give general advice on one of these components without talking about all of the other components at the same time,
You have a niche audience, but they're very well positioned in terms of being a lucrative audience. There are people who make a lot of money and who see even more money in their future if they can leverage an educational platform to help them learn and become better at their careers. Like you said, these are people in the middle of their careers working at tech companies. They're pretty well paid.
And I think that supports you being able to charge a high price point. You also said something that I would really love to deep dive on, which is half of the equation for raising your prices as a founder is having that confidence or just taking a leap of faith.
But the other half is maybe just solving a problem that people already have proven is valuable enough for them to pay a lot for. You know, maybe if you're building a task management application, people are paying five bucks a month for it. It's going to be pretty hard for you to raise prices. But if you're building something in, for example, the education space, well you already know people pay $40,000 - $50,000 a year to go to college.
People value education to an extreme degree. Just by making the decision to be in that market, you're giving yourself a huge boost in terms of how much you can charge. This is one of the reasons why I tell a lot of Indie Hackers that one of the best businesses you can start is an education business.
I've had a ton of founders on the podcast in the past who've had some sort of business where they're teaching people, I've had Wes Bos, who teaches developers to learn how to code and he just makes his own websites and puts up courses and people pay hundreds of dollars a pop to learn how to code because it's valuable for them. They understand how it's going to make them more money in their careers.
Yes but let me push back on that a little bit. I'll play devil's advocate for a second. Like our true competition or true alternative is the huge wide web of just generally free content that, in a lot of cases, is pretty good. Like this podcast, right? And that alternative is pretty compelling.
And we do something that most that no other education domain does, which is we do not sell certificates. I'm morally opposed to certification. I think it's bullshit. It's a false destination that is not the end. I would rather have you take one thing, apply it, and create value than memorize all of the frameworks in our course in pass, some quiz for a certificate.
So most other education companies justify their price points by some signaling factor. We do not do that. The alternatives, there are alternatives out there. They are free but it pushes us to create something for a specific audience that wants a different environment, a different audience, a different outcome than that.
And that's why it's so important to get as detailed as possible, as you can, with the market and the problem that you're actually solving. I know that's super common generic advice that probably everybody on this podcast gives, but I don't actually think most people know what it looks like to really know the audience and really know the problem and have it written down in a structured way and evangelize within your company to a point that everybody can repeat it on prompt.
So I don't know. Pricing is a tricky thing. There's some good mechanisms and stuff out there as well if you want to gather some information and data around. I would just search, like there's this great company, ProfitWell, that talks about how to measure value metrics and do max differentiation surveys and stuff like that. They have some excellent content.
Patrick has been a guest on the podcast.
Yes, there you go. Yes.
A lot of good information from him about monetization and not only how it can help you make more revenue, but how it can also help you grow faster and reach more customers. Which is fascinating because most people don't associate how you charge with how fast your company is growing.
Yes, that's right.
So you said, on the topic of acquisition, that the times are actually changing and that user acquisition is actually harder today than it was in the past. It's getting more expensive. Why don't you educate us a bit on why that is and what founders can do about it?
We initially went through a wave where new, big, scalable channels were emerging at a pretty consistent pace. I'm talking about the days where Facebook emerged and Instagram and Snapchat and I'm sorry I forgot about Google and all these different channels, but that's done at least for the time being.
The reason that's an issue is because if you flip it every time a new one emerges, it creates a new opportunity, a new wave of people who are willing to try these things out early. They really get a lot of benefit from it. But getting to that type of scale on a consumer basis is so hard now just due to the network effects of all of these companies and their extreme willingness to squash it, others at any moment through acquisitions or other mechanisms.
So that just means everybody's competing in the same territory. On top of that, you've just got the macro trends of most of U.S. people are online at this point, so you don't have, like the tide is rising. So these channels that aren't growing their pool of people naturally that way either.
On top of that, I think in the past three to five years, even though we haven't had a ton of new channels emerge, there's been a lot of innovation in the use of data for different types of targeting algorithms, lookalikes, all that kind of fun stuff.
Obviously the big privacy push new regulation feels like, I don't think we've really felt it yet, but it's feels like what I call data tailwinds, which helps make acquisition more efficient and more effective, start to feel they might be turning into headwinds. So I think just all of these dynamics at once make the whole game tougher.
Well, what to do about it is a really hard question because it depends on your company. But I think the good thing for this audience is that the people that I see winning are the ones who are leveraging technology and data a lot more. So there's this awesome guy. If you haven't had him on the podcast yet, you should have him. His name is a G. Cobane. Our Guillaume Cobane.
He was a VP of Growth, at Segment and then Drift. He's one of the most creative technical marketers I have ever met in my entire life. The types of things and campaigns and things that he puts together is just brilliant and amazing.
But he does all of these things where he finds unique sources of data, pulls it in, is able to personalize, automate things off of these unique sets of data in ways that I haven't seen others. You've also seen the people who are doing the best at paid acquisition right now are not actually performance marketers.
They're typically a team of two to three engineers with a PM that has a little bit of background. So companies like Wish, that I spent, I think, tens of millions on Facebook ads. Even people at Pinterest at this point. And Airbnb is actually another good one. These teams are technical teams and that's because the way to win in these channels is not through anything manual.
It's all through the use of data, mass personalization, finding technical holes in the algorithms, all of that stuff. So where it goes from here, I don't know. The obvious thing is in the B2B space, you see all those companies move from sales and marketing channels to more product-driven viral products spreading.
But that even feels saturated at this point. It's so many invites for so many different products, right? So it's hard to predict where these things going and that's not really what I spend my personal time on. I spend my personal time on understanding the underlying principles and frameworks so that others that are working on these problems can use them to uncover new solutions.
So that's what we teach at Reforge. I'm not a fortune teller, unfortunately. But get people like G. on this podcast. Yes, he's a wealth of knowledge.
Well you've been a wealth of knowledge yourself, Brian. Thank you so much for coming on the show. I regret not being able to ask you these other 35 questions I had.
But no, can I just say one more thing?
Because I know a lot of people on this are starting companies. This shit is hard. Super hard. I don't think we talk enough about how hard it is. We can sit up here and we can talk about all the successes and all that stuff.
So if you're sitting there and if you feel the struggle, just embrace the struggle because it's hard for everybody. Everybody, believe me, I wake up half my mornings and I question why the hell I'm doing what I'm doing.
Like because there are so many other easier ways. So look, I just don't want people to feel all alone out there and feel like everybody else has it easy. It's hard for everybody. So embrace the hard stuff and that's what gets you returns.
I'll throw my hat into that ring as well. I'm right there with you. It's not easy, but you're also not alone. You've got tens of thousands of other people doing this as well. That's the entire point of this podcast.
The entire point of Indie Hackers is to show that you're not alone. There's other people you can talk to you. Brian Balfour, thank you so much for coming on the show. Thanks for sharing your story and your advice with us.
Can you tell listeners where they can go to learn more about what you're up to online, your writings about how to grow, and your company, Reforge?
Yes, the main places are, I have a blog, BrianBalfour.com and then yes, just go to Reforge.Com and sign up for the blog there as well. Those are the best place. We don't send a lot of emails. We focus more on quality over quantity, so don't be afraid we're going to spam you or anything.
Those are the main places. I'm on a social media diet. I'm also occasionally on Twitter @BBalfour. Any of those places work.
All right, thanks so much Brian.
Thanks for having me.
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