When Vincent Woo (@fulligin) first started CoderPad, he was certain his idea was a good one. But he still needed to put in the work to prove it. Seven years later, after growing CoderPad and selling it for tens of millions of dollars, it's clear he was right. In this episode, Vincent and I sit down to discuss why bootstrapping is easier than taking the VC path, how it feels to grow and sell such a successful SaaS business, and what exactly he's doing with all that money and free time.
CoderPad – the SaaS business that Vincent bootstrapped and sold
@fulligin – follow Vincent on Twitter
Lambda School’s Misleading Promises – Vincent's article on Lambda School
Silicon Valley Elite Discuss Journalists Having Too Much Power in Private App – Vice's piece about tech dissing the media in Clubhouse
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 like 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? And 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.
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For this episode, I sat down with my good friend, Vincent Woo. Vincent was first on the podcast a couple years back when he told us the story of how he had bootstrapped Coderpad to millions of dollars in revenue.
Since then, I've had the chance to keep up with Vincent and watch his company continue to grow until he eventually sold it for an 8-figure sum, and then he’s been living for 8 or 9 months after that sale.
So I figured it would be great to bring Vincent onto the show to talk about the entire journey of being a bootstrapper, from coming up with the idea, to running and growing your company through all the different phases of success, to selling your company and then trying to figure out what to do with your life after that.
In addition, Vincent is always entertaining to talk to. He’s smart. He’s sarcastic, and the two of us always seem to get into some sort of debate whenever we talk. So I hope you enjoy the episode as much as I enjoyed recording it.
(end of intro) So we’re going to talk about what it’s like to sell your business for - what’s the number that we’re allowed to say? Tens of millions of dollars?
I’m allowed to say, legally speaking, that I have sold my business for tens of millions of dollars.
And what are you going to do with your tens of millions of dollars now that you have it in your bank account and it’s all yours. It’s not theoretical. It’s not someday. It’s here.
Nothing. I mean, I don’t do anything with money, man. What is money? I bake bread. I fund initiatives that I think are important to a small degree. I haven’t spent anywhere close to the majority of the money yet.
The short answer is I don't know. It was a surprising thing to happen to me in my life. I started to suspect that something like this might happen eventually in the last few years, but to have it actually happen is another thing entirely. The truth is, I am dumbfounded the sense of my own luck in this matter. I don’t know. I haven’t planned for this. I don't know what I’ll do. I sort of assume I will lose all of it sooner or later.
It’s been what, nine, ten months since you’ve sold?
Yeah, that sounds about right, I think fall last year maybe. So yeah.
I think it says something about you that that much time can go by and it still for you is a weird, surprising thing that you’ve made this much money. Most people I know who’ve sold their companies or had some sort of windfall are super strategic about it.
They’re like, “I’m going to spend the next 12.9 months planning exactly what I'm going to do with my fortune and invest it here and here.” For you, it truly is like, “Wow, look at all this money.”
My only plan was to learn to become comfortable doing very little. The process of having earned that sum of money is quite a bit of work, frankly quite pointless work I would say, work with no particular meaning to it.
Being able to do nothing for a while and to learn to sit well with the notion of doing nothing sounded very rewarding to me. So that’s what I've been doing pretty much, with some exceptions which we can talk about later. Over the last year or so, I've done quite a bit less. I enjoy myself. I bake bread. I used to do ceramics before the world ended. I run. The very simple things, frankly.
Do you think your company brought you the same level of joy as the things that you’re doing now?
Different sort. I mean, level is tough. There is a peace to running alone through the streets of San Francisco at 3:00 a.m. It does bring a sense of happiness, but it’s a different sort of happiness than the joy of nurturing a small team through the growing stage of a company. They’re both rewarding. They’re rewarding in very different ways.
I've been reading The Snowball, which is a Warren Buffet biography, recently. I'm listening to the audiobook. It’s 37 hours long. It’s by far the longest thing I've ever listened to, so at this point it feels like Warren Buffet is my close personal friend.
But a lot of the book is obviously about how rich this guy is, and a lot of it as about how frugal he is. He’s famously frugal. He still lives in the same house that he bought 50, 60 years ago.
I think a big part of the reason why he’s frugal is because he is so confident in his investing skills that when he looks at a dollar in his hand, it looks like $10.00 or $20.00 to him. He can vividly imagine how much more money he could turn that into. So he doesn’t want to buy a $1 million house, because of him it costs $20 million.
That’s crazy. I don't believe that. I feel a lot of people have mythologized Warren Buffet to the extent where he’s now a figure more than he’s an actual person with real spending habits.
I was talking to a friend of mine today who is running a small investment firm, and he said, “You know, I think a lot of people think Warren Buffet has magic in him.”
People do. There are people who knock on his door and throw themselves before his feet and start bowing to him. He’s had all sorts of crazy stuff happen, and he’s really just an investing nerd.
Warren Buffet has made a lot of money, but he is also the contemporary of many other people who manage much larger funds and made much more money, who probably aren’t quite so frugal, so I would hesitate to associate too much in the way of moral causality to any particular little meaningless spending habit that he has, like whether or not he buys a house worth slightly more is meaningless in terms of Berkshire’s overall returns.
It’s interesting to me because I think, as different as he is from you, at the end of the day he didn’t spend his fortune and he reasoned to himself, he should spend his life doing what he likes doing, which is making more money. Then after he dies, his relatives can figure out how to donate it philanthropically. With you, you’ve got all this money -
His relatives can figure it out? I don't know.
Yeah, cause his kids are in charge of his charitable foundation.
Didn’t he pledge to the Giving Fund that he’s supposed to end his life -
Yes. A lot of it is giving it to Bill Gates to figure out how to give it away.
Giving to Bill Gates. I’m glad he did that, at least. I think it is normally the case that most wealthy people end their lives with the majority of their wealth still. This is exactly the sort of thing that we complain about in modern democratic society, and I think perhaps rightfully so. I personally am in favor of raising the estate tax to something like 90% or 100%, honestly, if we could get it.
A hundred after a certain point, where it’s like, does it make society better if people are born billionaires?
Yeah. Like a marginal rate that like above a billion it’s a hundred. Totally. I plan to end my life with none of my money. You can’t take it with you, so you have to figure out where it’s going to go in this lifetime.
I think it was Andrew Carnegie or someone who said that he who dies with the majority of his riches, dies embarrassed.
I think so. It was one of the mega robber barons.
It’s true that Carnegie did live in a time in which there was a weird sense of noblesse oblige among the very wealthy, even still, we have since lost in the present day. So I could imagine Carnegie saying something like that.
Let’s talk about what you’re doing with all this freedom. It sounds like the biggest thing the sale of your company has afforded you is the freedom to spend your time however you want to.
Yeah, on Twitter every hour of every day.
Okay, so you’re on Twitter, and I know you’ve done some journalism.
Yeah. Do you want to hear about the Lambda School story? Is that what you’re asking?
Yeah, tell us about the Lambda School story.
I got interested in Lambda School as a concept because the people who run it are so crazy. It was a while ago now I’d say maybe when I got started, at least eight or nine months ago, around the same time I started thinking about selling the company.
It was weird. While I was selling the company, I was contemporaneously working on an investigative journalism piece about Lambda School, which split my attention at the time, but it worked out okay. I suspected that this company was being run poorly, because of various things that people had told me with insider knowledge.
I began interviewing a lot of people, a lot of former students or current students, one prominent former employee and some other people I can’t name, and put together a story that tried to marshal as much factual evidence as possible that, at the very minimum, once you regard the leadership of Lambda School as having committed fraud - Lambda School, for people who don’t know, is an online-only coding education bootcamp that students enroll in for nine months that ostensibly teaches them to code.
When I had Austin on the podcast, way back in the day when Lambda School was about a year old and they were growing like crazy, it was honestly one of my favorite interviews.
He went on this podcast?
Yeah. He was on Indie Hackers. They have obviously a very inspirational, evocative vision where they’re changing the way that people get education, and moving people from lower income brackets into upper income brackets basically for free -
- because essentially for people who can’t afford to college, who could use Lambda School to learn how to become a software engineer in, I don't know, nine months or however long it takes, and the next year be getting paid $100,000, $120,000 and they pay Lambda School by paying a percentage of their salary, rather than having to pay up front which is a prohibitive bar for a lot of people to get education.
I'm sure that has happened.
It’s the cool, inspirational mission at least people like me want to cheer for, and then you exposed a lot of stuff that was a little bit less inspirational.
Yeah. I think I was interested precisely because I am interested in the mission. If I didn’t care about the topic, I don't think I would have investigated. I think it’s because of my early exposure to bootcamps.
I was a very early mentor at one of the earliest cohorts of Dev Bootcamp and I knew quite a few people that had gone through the different phases of the evolution of the bootcamp ecosystem. What Lambda School was doing flew in the face of what I thought would be possible or feasible.
I think a lot of my initial skepticism is that this is a company that is simultaneously innovating on two fronts, ostensibly. One, they’re doing online-only education. That alone gave me such pause, because what I witnessed personally in real life, even with dedicated instruction in real life, face to face, a struggling student can struggle for so long.
The moment the breakthrough happens for a student to understand some random-ass concept like recursion, it can be quite a long time. It takes a lot of effort and pedagogical finesse from the instructor in order to bring them through that realization. So the idea that you could do this online, willy-nilly, I was like, they must have an amazing way of conceiving of this whole problem.
And then two, they were innovating along with the financialization lives of the school, which I just thought, wow, you guys are doing a lot right now, where they don’t charge any students up front and ostensibly claim only a portion of their salary after the fact if they get a job.
I was like, “Wow, okay. It sounds really cool, but how could this work?” So there was a lot of this “how could this be working” in the beginning. Then that initial skepticism compounded with all the weird stuff that the leadership would say on Twitter that made me feel like something was going wrong somewhere.
The first thing that came onto my radar about you caring about Lambda School was when we were talking about Austin on Twitter. Austin is a unique tweeter.
In some ways.
I've never seen someone who’s been so enthusiastically positive about their own company and their own mission. He had a tweet where it said, “LAMBDA SCHOOL” in all caps with 12 exclamation marks after it.
I was like, “Wow, this is cool. This is guy has so much energy.” And you were like, “No, there’s fraud. Where there’s smoke there’s fire. There’s something going on here.” And it seemed to me that all you had to do was look at the Twitter account of the founder and that was enough for you to figure it out.
Well I had a lot of domain knowledge, too. But I think the truth is that Austin fits in very well in VC Twitter. I think what makes his Twitter presence unusual is it’s a founder saying this stuff.
It’s not uncommon for West Coast VC’s on Twitter to express themselves in this wholly self-promotional way. I think part of the reason that Austin is that way is I think he’s taken a lot of cultural cues from this milieu. I think that explains a lot of his aesthetics.
So what’s the upshot of what happened? You figured out something fishy was going on. You decided that you wanted to, while selling your company, do some investigative citizen journalism and figure out whether or not Lambda School was up to no good. You interviewed a bunch of people. What was the outcome?
The outcome is the piece got published and a lot of people got mad at different people on the internet for a week, and then life moves on.
Did people get mad at you?
Yeah, a little bit. I mean, people got made at each other. Some people got mad at Lambda School. You don’t control a story once it’s on the internet, do you know what I mean? I put it out there. I presented the facts as I’d seen them.
I provided the interview transcript with Austin, the recording we did of the interviews we did. I tried to be as transparent as possible, and now it’s out there. I've been given to understand from talking to people with knowledge that Lambda School’s corporate climate has changed a bit since the publishing of the piece, e.g., they’ve started to hire out around rules regarding, how to put it , curriculum quality.
Yeah, that little thing.
It seems like they’re trying to take it more seriously, which is good. At some level I'm obligated to say that it would be good for the world if they did well. It shouldn’t bother me if Austin, himself is successful, if the school is truly successful. I do help that they figure out how to make it.
I’m skeptical, but it would be a good thing for the world if someone figured out how to crack online-only coding education for people with no prior exposure to coding. That is the golden goose.
So you had aspirations to do some journalism. You started investigating a story. You took that story to fruition. You published it. It had effects. Are you going to do more journalism?
I don't know, man. If you’ve got any tips, anyone at home has any tips, go ahead and email me. My email address is [email protected] If you know about some crimes, I’ll take a look. I can’t promise anything.
It comes down to, I’ll happily do another news story when the opportunity presents itself. I had a couple of opportunities present themselves but I don't think any of them crossed over the boundary of newsworthiness, so I didn’t fully develop them. I kind of dropped the stories.
Anyway, Lambda School was a story where there was a clear newsworthy component that gave me the confidence to know that the work I put into it would reach people somewhere. But for most stories that you come up with, you have to pitch an editor. I don’t work for a publication so I'm pitching as a freelancer, and that makes the bar a bit higher. You have to sell why this story’s important.
You know who else had a short stint as a journalist after reaching a big financial milestone with his business? Warren Buffet.
Oh, come on, man. What is this? Did he pay for this? What’s going on?
I'm noticing that there are a lot of parallels between Vincent Woo and the life of Warren Buffet, and it might be because I've been immersed in this Warren Buffet land for the last 37 hours.
What stories did he work on? Did Buffet break any spicy news in his day?
He did. He broke a big scandal about an institution that was purporting to do good and it turned out that it was actually not doing good, and he won a Pulitzer Prize. Go figure.
I respect that. It makes perfect sense to me. If you work your life in and around an industry, you get to know its ins and outs pretty well. You can tell from the performance characteristics purportedly of a thing, whether there might be something fishy going on.
So many people knew about the Madoff scam, not because they saw Madoff take money from one customer account and put it in another, but because his performance metrics were the wrong shape. This just doesn’t seem possible. That guy either knows something -
You can tell.
Yeah, presupposing he was in possession of the knowledge that would allow him to do what he’s claiming to do, why would he be doing what he’s doing, running a small family office? He’d be doing something completely different if he was in possession of knowledge of that nature. They could tell. I bet Buffet had a similar feeling and I also, I think, had a similar feeling.
He broke the story on this charity called Boys Town, where they would take in underprivileged boys or something, and they’d give them a life and reform them and provide for them. They were sending 20 million letters every holiday season to Americans all over the country asking for donations.
He did the math in the same way that you’re talking about Madoff, where he’s like, “Based on the campaign you’re running, you should be making a lot more money than you’re reporting.” He spent a year trying to break this story, eventually got it published. I think the paper he published it with won a Pulitzer because of the story.
For this story?
Yeah, for this story.
Wait, are you telling me that Warren Buffet won a Pulitzer?
I think the paper that published the story that he worked on.
Right, but the reporter usually gets -
Yeah, look it up. It’s crazy. It could be you, Vincent.
I don't think I'm that talented, no. That’s incredible. One of my favorite movies is Spotlight.
Is that about the Catholic Church scandal?
Yeah, it was a good movie.
It’s about the Boston Globe’s Spotlight reporting unit. There are only so many movies about journalists doing a journalism thing that are enlivening to watch as a random audience member. I think Spotlight is one of them.
I tried to watch All the King’s Men. It was so boring. But Spotlight is good. The pacing, Mark Ruffalo, the magnitude of the damage that was being done to society by the Catholic Church at the time, all those come together. It’s a great story. It’s a tragic story, obviously, but also a very well-told story of journalistic courage in the face of overwhelming institutional social pressure to believe a certain story that was just not true.
Right. So as someone who’s worked both as an amateur journalist and obviously you started a successful tech business, what’s your take on the current tech versus media industry fight that’s been going on for five or ten years now, but it’s blown up recently.
Five or ten years?
From my perspective it’s been going on for about that long. I don't know if it’s been as popular, but I think it peaked around the 2016 election with the controversy around Facebook.
It’s true that Trump but a lot of this to a head. Ultimately, I agree that everything that is happening now is a result of an event that got started four years ago, nominally because of Facebook, but more about - I was talking Casey Newton the other day and I was like, “How did you come to being a beat reporter on Facebook? I've noticed that you’ve become much more critical of the company. What happened?”
He told me that he had been a less critical reporter in a heyday when tech was more purely exciting and everything that was happening regarding tech seemed to good or at least neutral, so it was fun. It was only around the Trump election he told me that he began to examine tech from the lens of power and what its effect on society is liable to be.
I think that’s when his coverage started to shift. I respected that he came to that decision. I think we’re still fighting this weird skirmish around this today. I think the whole conflict is funny at some level.
One thing that I think is ridiculous about it is that in order for Balaji and the other prominent VC’s who think that journalism is now morally bankrupt, in order to make their argument have oomph, ,they have to build up journalism as a pillar of culture. And they have to make their enemies seem all-powerful and ever-present.
This is amusing to me because journalism’s influence on culture is probably at a 20-year low. We’ve been bleeding - I say “we,” I'm included in we. Journalism has been bleeding money ever since the invention of the internet. Everyone knows it.
So if that’s the case and journalism is less relevant than ever, why are they so upset? One imagines if your model of the world truly is that a dying industry is out to get you for no particular reason, why bother caring?
I have an answer to that question, and it’s a speculative answer. The media, traditional media and I think social media represented by tech are, I think, natural enemies. They’re natural competitors. And I think for purely logical business-related reasons, it would make sense for any competitor to write disparaging things about their competitor.
I don't agree. No. If that was the case, then I think you would see more systemic action by both sides. But as far as I can tell, the extent of the conflict has been limited to individuals having shit-fests on Twitter. I think the vast majority of both tech and journalism doesn’t give a shit about the other party.
That’s true. I mean, there’s a reason why I think it started before 2016, which is there was, as you were alluding to in your conversation with Casey, a period of time where most coverage of the tech industry was very uncritical. It was very fawning.
It was like, “Look at these cool toys that are changing the world,” blah, blah, blah. And then around 2010, 2011 it became more clear that tech posed a serious threat to journalism. So you have the iPhone and the App Store and Apple basic -
Tech is too broad a term though. Tech includes Uber and Yelp.com.
Well let’s put it this way. Big tech, the companies that control the means of distribution. Apple which controls distribution on the iPhone, Google which controls distribution on search, Twitter which is now the place where stories break.
Tech media platforms?
Yeah, the media has traditionally been the distribution channel, and tech has increasingly become -
I agree. But if that’s your motive and model, you would expect conflict to arise directly between these platforms and journalism, which hasn’t been the case, with the notable exception of Facebook. The conflict as it’s currently being driven in culture presently, it’s being driven by weird venture capitalist, of all people to give a shit about this. It’s not the people running things.
I’ll give you my theory and you tell me what you think, because you’re had your foot in both doors. In fact, from the way you're talking you might identify more as a journalist now than you do as a tech founder.
So essentially if you are the media, you don’t have that many weapons with which to fight tech. You have only one weapon, which is your word. You can write stories, or you can hire journalists who have sympathetic views to what you want to write about.
You won’t have to tell anyone, write this hateful story about tech. You look at somebody who doesn’t like tech and you hire then, and now they’re a journalist, and lo and behold, you get lots of negative stories.
On the flip side, tech’s weapon in the fight is to control the distribution. If you’re Steve Jobs you tell the New York Times that you’re going to take 30% of their revenue. You're not going to give them the email addresses or credit card information from any of their subscribers anymore, and you're suddenly an existential threat to them.
Or if you’re Facebook, you tell media organizations that you’re going to limit which of their followers they can even reach, and they have to pay you if they want to reach.
Can we terminate this line of inquiry? This is not how the world works. This is far too conspiratorial. The amount of people that would need to coordinate to make this model of the world reality is (inaudible).
It’s the exact opposite. It doesn’t require any conspiracy. There doesn’t need to be any sort of –.
That Apple thinks of itself as in relation to the New York Times in particular?
It doesn't. That’s the whole point though.
It doesn’t. That’s what I'm saying.
It doesn’t need to.
None of the people in - the idea that you would hire a reporter because they’re critical of tech? There are so few reporters that can only file tech stories. They’re so overworked. The vast majority of reporters are trying to survive through any means necessary by filing their quota.
It’s so hard to make a living as a journalist, that you would be selected for this very specific almost petty attribute belies a conspiratorial mind of thinking about what journalism as a whole - there is no Mr. Journalism.
The whole idea behind a conspiracy is you need a bunch of people in a room to get together to conspire, versus what I’m talking about is -
But what you're suggesting is a mode where you sit down and decide, “We’re going to hire people who are unfriendly to tech.” Clearly you know this isn’t how it happened, because the same people who are filing anti-tech stories today were writing pro-tech stories five years ago.
Some of the same people.
They’re the same - no, the large - these positions are so hard to come by, they’re occupied by mostly the same humans.
Well I think you’re a good example, for example. You weren’t a journalist 10 years ago. Today, you are a journalist. The story that you pitch is a decidedly anti-tech story. It’s a good story. It’s a story that should be published.
I'm not going to say that you’re going to say tech should be exempt - should be the sole industry that’s exempt from criticism. I don't believe that at all. But I think that essentially any media organization that’s going to want to write about certain topics, the idea that media organizations don’t have an editorial team that decides, “What do we want to write about and what do we care about and what do we think will be popular,” is -
Certainly, they do. I guess what I’m saying is tech is a pretty minor concern of journalism. I think tech has an inflated notion of how important it is for the rest of the culture.
When I was pitching the Lambda School story, you understand, my story was delayed for a month. The story was done, basically done, a month prior to its publication. What happened was Washington, DC kept emitting news. I was pushed back week after week after week because everything in the world was more important than what some random tech company had done wrong.
This is where I think the tech side of things has jumped the shark, where essentially, most of VC’s you’re talking about who complain, their chief complaint was, “I don’t like the way that I was criticized,” which is (inaudible). No one likes being criticized by the media.
The problem is they draw attention to themselves in complaining about the criticism. If they wanted to move past the criticism, the easiest thing to do would be to ignore it because outside of their strange reactions to it, it’s not that much of a story. Wealthy people behaving badly, open any newspaper any day of the week and there will be a story like it.
I think the opposite is also true. For example, there’s this recent spat over this app, Clubhouse, where some people were talking about - they were criticizing journalists.
Then the articles appeared in I don't know publication, where it basically boiled down to, how dare tech criticize the media? It’s funny, because it’s literally the same thing happening in reverse.
No, I think you're reading - I don’t agree with the characterization. But okay. Yeah, I think if you’re a prominent famous person and you go on the record criticizing almost anyone in a public forum, that gets reported, like if they were complaining about Donald Trump.
I guess, more pointedly the Democrats, I guess, because that would be more unusual. That would be reported, too. And it is frequently reported. I don't think this is unusual. This is normal journalism.
Normal journalism is following around noteworthy people and waiting for them to say something noteworthy, and then publishing it so that you can make your quota. That’s okay. That’s the system functioning, in so much as it was a meta-story that happened to concern journalism itself this time. Whatever? Who cares?
I think that you’re right. I think that there’s also incentive-caused bias. If you look at what people's incentives are, I don't think you need any elaborate conspiracies. I don't think you need any sort people meeting in a dark room.
I think you think individuals are much more motivated by the economic incentives of their industry than they are in practice.
I think that the industry software engineer at Google doesn't care about the media. I think the industry journalist at the New York Times doesn’t care about the tech industry. I think the people who run those businesses, the people who invest in those businesses, do care a lot.
I think if you are the leadership of the New York Times, you care a lot about controlling the distribution of the New York Times. You care a lot about the existential threat of distribution platforms being owned by tech.
Sure, but I don't think that boils down into individuals. I agree that over a long time this bias may present itself in one way or another. I think for these individual spats that we are observing right now, they are so random and so untied to any economic stakes.
This whole thing got kicked off because someone - because the woman who’s in charge of that Away Luggage Company did some crazy stuff way back when. That’s the impetus for all of that. This is not even an important company. It has nothing to do -
It feels very tribal to me. It feels like one tech founder gets criticized, and then a bunch of venture capitalists and other tech founders come to their defense, or one media organization gets criticized and then a bunch of media organizations come to their defense.
I agree that the main emotive force behind this conflict is tribalism, but I do not agree that there is much of a from-on-high reason for this conflict to exist. I think the only reason this conflict is existing is because tech is ascendant and they’re going to generate more newsworthy stories than they would previously.
There are more tech companies. They are more powerful. They’re beginning to represent a larger and larger slice of the modern work economy. And of course, like we were publishing articles about people getting their hands chopped off in factories during the industry era, we’re going to start writing about the abuses of workplace culture in the tech era today. But that’s necessary. It’s desirable, in fact, from the journalistic press.
Yeah, totally agree. I think what’s fascinating about your role in all of this is that you switched careers. You’re not a fulltime journalist. It’s not like you’ve drawn a hard line in the sand.
I haven’t switched careers. I've ended my career.
You ended your career -
- and you’ve retired. And I think, in most industries, if someone is a success, as you undoubtedly were as a founder, most successful carpenters stay carpenters. Most successful software engineers stay software engineers.
Is that true?
Why aren’t you starting another tech business? Why aren’t you going for round two and applying all your previous learnings and connections to something even bigger and better?
I'm working on some little stuff, but I made my company because I felt compelled to, not because I wanted to be a founder. I think a lot of people are that way. Do carpenters stay carpenters? Maybe. Why are we so sure even that that narrative is true?
I don’t have the numbers myself. People switch jobs. Lots of people have changed job. The premise of Lambda School, fundamentally, is that you can change careers. I don't think it’s that unusual to want to do different things in life.
I think it’s unusual to have the opportunity, but I don't think the motivation is that strange. I know all sorts of software engineers or people who work at desk jobs who say all the time that they’d rather be doing almost anything else.
I sympathize with that, and I too wanted to do something else. I just made the time for it. If that’s the unusual part then so be it, but I don't think my desires are unusual.
Well you spend so many years acquiring skills set. You became an extraordinarily good software engineer. You became good at sales. You had to learn how to hire and manage people.
Even selling your company, you had to learn a whole bunch of stuff. Then if you switch careers, a lot of that goes down the tube. I'm sure some of it’s transferrable over to other places, but do you feel like there’s some sense in which.
You're describing sunk cost fallacy, man. It’s literally the example. Who cares, right?
Well it’s not a hundred percent sunk cost. It could also be the case that your future gains, rewards could be bigger if they come from a place of mastery or experience.
Right. It’s telling. It comes down to what do you think is worthwhile in life. What are you doing things for? You’re right from this perspective of my goal is to only maximize the amount of money under my control. Yeah, absolutely. But why? Why do anything?
I don't think I have the answers to that, only to say that the question of desire is fundamental to human nature. We don’t know where desire comes from. We can’t control it very easily. We do know it’s all over the place, and I think acknowledging that frees one to let go of this impulse.
It seems like the most childish impulse to me. Having made a bunch of money but desire to make even more, why? That I struggle to understand. From my perspective, that is a far more alien thing than wanting to switch what one does. Frankly, relatively early in life, I’m only 30. It’s not like I've committed 30 years of the monastery to the contemplation of the face of God or anything.
Not wanting to keep making more and more money. You finally said something that Warren Buffet wouldn’t have said.
Yeah. Warren Buffet is clearly a much more dedicated acolyte of the church of finance than myself. Money to me is a means to an end, and I think to him it is somewhat of an end in and of itself and you can tell that he takes joy in it. Good for him, I guess, but not for me.
Was there a point at which a switch flipped, and you no longer felt compelled to continue running and growing your company, and you felt like, “You know what, I've been successful enough here. I've reached some number or some level where I don’t care about this anymore”?
About a year in.
Where was Coderpad a year into it?
You know, it made enough for me to pay for my apartment.
And that was it. There was never another milestone, never another point?
Honestly, truthfully, it’s hard to sell a business. It’s a buyer’s market. They tell you this in the abstract, but the reality of it is it’s hard to get a deal that feels fair. So it took a long time. I said no to a lot of deals. The one I took is the first one that I felt was fair, I got a fair price, a price where we were evenly splitting both the risk and the upside, I felt. I was being compensated fairly for my investment.
It’s arbitrary where one draws that line. What is a fair price to sell? It’s a soft science. But nonetheless, I did it because I felt it was fair, and I didn't do it previously because all the offers that came to me were absurd, from my perspective.
I want to talk about the transition period. I don't believe that you hit a point where it paid your rent and the next day you were ready to sell. Maybe that’s true, but I think it’s fascinating to look at it under a microscope, because so many people are trying to start companies and they quite frankly would probably have a lot of trouble putting into words why they’re doing it.
Okay. It might have been a few years in, but it was early. I knew that I would be amenable to selling the business pretty early in the business.
When did you actively start trying to make that happen?
I never actively tried to make it happen. They all came to me. When the deal happened I ended up working with a broker, but I had worked with a broker before and we didn’t get there, but for the most part, I offloaded the legwork of selling.
I'm not suited for that sort of work. I imagine the work of a broker, though I don't know directly, is to know and to talk to hundreds of potential buyers. I'm not fit for that type of thing. It’s far too speculative and disconnected. I enjoy a sales conversation I think because I am delivering value to someone if the deal happens.
Cases like this become more abstract. They become about the financialization of the business and whether it’s a good investment in this abstract trend that’s divorced from real value being created by the business. It’s too nerdy. It’s way too nerdy.
Let’s dive into the nerdy nitty gritty of selling your business.
Okay. I’m allowed to say a certain amount. What are you curious about in particular?
We’re going to talk about it. We’re going to go from the top. Obviously, I sold my company, too, but it was nothing like your process. You sold to a private equity firm. Yours was more of a legit sale and mine was more of a random chance event that occurred.
I've done a lot of phone calls since I sold Indie Hackers from other founders selling their businesses, but I think you’re one of the few people smart enough not to call me cause I have no idea how to go through the process that you’re going through.
It’s true also. I experienced this. I tried to talk to people about what this process might be like, and for the most part I got incredibly unhelpful advice that I ignored. This is one of the reasons I wanted to come on the show.
There is very little in the way of discussion regarding how a bootstrapped company ought to sell a business of a certain size. Above a certain size, the type of buyers that remain in the market are not a thing that gets written about very much. There is no guide on how to sell your tech company to private equity. And often, there is a bit of a stigma attached to that notion as well, perhaps rightfully so.
I think on the high end of private equity deal size, private equity can be very dangerous for society in the way that certain companies have been effectively looted by private equity is very concerning and there’s not a lot we can do about it.
But I think it’s simultaneously true, and this is the tension that on the smaller to medium size of businesses that have been bootstrapped by their founders, private equity is probably one of the only remaining buyers in the room. So if you want a liquidity event and your company is making, let’s say, millions of dollars in revenue per year, who’s left?
You can try to get your company strategically acquired, but good luck. If you’re lucky enough for that then congratulations, but for the most part that’s not the median outcome. It’s much more likely that your company sells to private equity. What does that look like? Who are the people that you’re talking to? What are their incentives? Not a lot is said about it.
Do you think that having sold Coderpad to private equity, the company is in good hands? Should people go work there?
Oh, it’s in very good hands. Coderpad is actively hiring. One thing that’s cool about private equity, their purchase of a company is an express belief that the company is going to continue to be profitable and may grow significantly from the time of purchase.
So whatever price I sold Coderpad for, my buyers think it’s going to worth more. Their purchase is proof of that. But Coderpad is hiring. If you're interested in working for a company that’s pushing the boundaries of what you can do in the browser without doing code execution in a live important career event, like the interview for a job for other programmers, consider applying.
The company's in good hands. It’s being run by Amanda Richardson, who I respect tremendously, and I still consult from time to time to the business, for free because I find them enjoyable.
So that is what is cool about selling to private equity also is that in order to make the deal happen, they have to believe that there is a way to continue to run the company as a profitable stand-alone business, whereas you see that in VC-backed acquisitions, companies that are bought are very often shut down a year later.
Yeah. They disappear.
What’s up with that? Isn’t that so strange? Why did they buy the company to being with? What’s up with that? I find it genuinely confusing, frankly.
It’s just a mechanism to hire the people behind the company.
It’s a very expensive hire. I don't think it’s worth it. You pay a couple million dollars per employee. Insane. There’s no way those employees are that good.
My theory is what happens is people start these huge tech companies and grow fast. In the early days they’re extremely picky about hiring, and then as they see their companies balloon to thousands of employees and the quality of the average hire goes down, they start feeling emotionally distraught that they’re not bringing in as good people.
Then they become willing to spend millions of dollars to acquire whatever the latest shiny thing is, even if they’re going to shut it down, because they can tell themselves the story that, “Now we’ve hired top-quality people.”
Right, but if the motive behind that is a disconnect between the actual current employee base and the employees that would be brought in in the acquisition, there’s no model reality where those people would stay any length of time, right? Your goal is to inculcate a sense of trust in your employees and communicate.
Not everybody’s capable of long-term thinking.
I don't know. I guess what I'm saying is I don't know if I believe that theory. Maybe. I think it’s still mysterious to me. I think people are way more optimistic that these acquisitions will be strategic and will mutually benefit both companies and products, and they always forget that the reality is otherwise.
That sounds right.
I think they’re far too optimistic about acquisitions working out in that way.
Tell me about the process of selling Coderpad. You said you didn’t initiate it. You weren’t actively making it happen. Were buyers coming to you or were brokers coming to you?
Now and then, yeah. The way I ended up, I sold my company eventually through the brokers, FE International. The way it came to that is some random guy, I think he was an early Instagram employee. It was some random tech guy that had made some money off of equity at a somewhat large company, and he was trying to buy his own tech company to operate profitably.
The guy had something like a million dollars, and he wanted to go to bed. I was like, “Look, Dude. I don't think we can make a market here.” And he was like, “No, no, no. I’ll get a bank loan. I’ll get a bunch of money together. You can also sell a portion of your company.” I was like, “Dude, it’s not going to work. It’s very flattering, but I think we’re both wasting our time here.”
Then we stopped talking and then later he was like, “Hey, you should consider working with FE International. I used them to buy a company that I'm running now and I’m very pleased with it.” And I was like, “Wow. Okay.”
I had heard about FE through patio11. The guy introduced me. We got to talking. I got the sense that they were professional enough to get the job done. I told them what my price was, and they got there. We talked to a variety of buyers and so forth and ended up with the buyers that we ended up with.
How’d you come up with the price?
How? I'm going to see what I can say here. Without revealing too much, I decided on what felt like a fair multiple of revenue at the time.
I've talked to some of the aforementioned people who’ve called me to try to figure out their own acquisition. One of the things that always comes up is this process of negotiation.
How am I going to get the price I want? It usually morphs from, “How am I going to get the price I want,” to “How am I going to make as much money as I possibly can during this negotiation?” Because the upside is always uncapped. You don’t know how much someone might be willing to pay you.
I wouldn’t say uncapped.
There’s a cap for sure. No one’s going to pay a trillion dollars for your rinky dink to-do list app, but if you think you would sell it for a million dollars, and it turns out that someone agrees to a million dollars, there’s sort of a normal thing to do in that situation, for most of the people I've talked to anyway, is see if they can negotiate higher. If someone agreed to this price, why can’t I get a higher price?
Yeah. I think maybe you're getting the wrong impression. It was work to get to the price I picked. I can’t say too much more than that, but let’s put it this way. If offers abounded at the price that I had initially chosen, I would revise my choice.
You would have gone upwards?
But I chose what was a fair price, I mean fair in the sense that that was what the market eventually considered fair, which is to say it was the tip of the market making price. It’s where supply and demand just crossed. I think I correctly assessed what a fair price was because it took a while to get to that number.
That's impressive. So you didn't adjust the price during the conversations, you determined a price, and then talked to enough people until you found someone who would match that price?
Correct. You can make the argument, perhaps I did leave value on the table, but I suspect if I did, not a lot.
How many people would you estimate you had to have conversations with before you found a good buyer?
I can’t really get into this, but at least a few.
And what were those conversations like? Working with FE International, they were probably introducing you to a lot of buyers.
The nature of the relationship through FE was I would be shepherded around as the eclectic founder. They would initiate the discussions. They have a stable of people that they talk to who they know like to buy things. When they judge the relationship to be, perhaps, serious enough they would bring me in and the buyers would have individual questions for me, as well as a sense of laying on hands.
Then I’d give my opinion after the meeting and move on. For a lot of it I was clinical about it. For a lot of hours I was like, I don't know if they’re going to get there, but if they get there, I'm fine with it. That was mostly what I had to say.
I wasn’t negotiating, usually, as the principal. And that is, I think, one of the nice parts about working through the broker, is you can each point at each other and say “Look, it’s their call,” like when they need to make it my fault, they can say, “Hey, Vincent says,” or when I need to make it their fault, I'm like, “Hey, the brokers say.” So for most of the lead-up of the process, I was not negotiating, principally.
I bought a car a week and a half ago, and in every car buying process there’s a negotiation phase. Of course the salesperson who is talking to you can’t agree to your request. They have to go back to talk to someone in the back room, the one who has all the power.
Yeah, there’s no one in there. There’s a mirror.
He actually walked and talked to someone, but they weren’t talking about anything, really, just the price of the car.
Yeah, they were talking about sports or something.
Then he would come back with some counteroffer that was like, “Oh, it’s just above what you asked for.”
You know what I love is I love that this behavior is a universal in all negotiations. In sales I did this all the time as a person who sold services to companies.
I don't know that it does. It’s almost expected. It’s hard to tell a little bit. But everybody needs to go and consult with someone before agreeing. I think part of it is the desire not to let the counter party know that you can be convinced by argument. If they say something that does convince you, even then you still want to be like, “Look, I have to ask someone,” And then you come back and say yes, even if you agree.
It’s just appearances?
It’s a desire to save face, I think somewhat, and also a desire to reserve bargaining power for yourself later. Cause if you show that you are in charge, then I think the nature of the conversation can change to be more personal if they can give more personal appeals to you. Like, “Come on, don’t you think that.”
You want to agree out of politeness in order to sympathize with the customer. Like, “Don’t you think that this price is a bit steep?” I want to be able to say, “Yeah, I understand.” But if I'm also the principal making the decision regarding price, I have to follow “Yes, I understand,” with “And that’s why you need to lower your price.” But if I'm not the principal, then I can say, “Yes, I understand but I’ll see what I can do.” I think being able to divest yourself of responsibility is very powerful.
It feels easier to tell somebody no when it looks like you tried, and you had some other recourse and it wasn’t your fault.
The funny thing is anyone who’s participated in any of these negotiations now knows that this is a fiction. This is one of those societal fictions that we all agree to.
We all agree that if you get invited for dinner at someone’s place and they’ll be having dinner for you, bring a bottle of wine, even though they probably don’t want the bottle of wine that much. It’s just one of those things. We just decided that this is how it is. Maybe one day we’ll undecide, but for now.
So when you were selling to a private equity firm and you were having these conversations, is any part of it in person at their office, or is it all virtual through your broker?
When it became serious, when feasible we’d meet people in real life. A number of times, Thomas Smale, one of the co-owners of FE International would drive me down in an uber to the South Bay. It was like being taken to a family meeting by your dad. He was like my dad. He looks older than me. I think he is a bit older than me.
He’s a very dad-like figure. He’s also a previous guest on the podcast.
Totally. He does the whole paternalistic thing quite well. He would bring me to these meetings, and I’d be ushered in like his child. We’d end up in these very swank offices. Private equity and venture capital do share some DNA in common, which can be a bit problematic.
There is a definite aesthetic and racial homogeneity to this space, and many of their offices feel very similar, with very expensive glass paneling, some weird light fixtures and a receptionist who will ask whether you want coffee or tea and if coffee, what sort of coffee and how much milk and so forth. It’s like an experience I’m not very used to.
They all dress a certain way. There’s a lot of the classic finance outfit with the vest and all that. We did a few of those and they were interesting but not super memorable. They all jumble together in my memory.
I think a lot of it is them trying to assess whether you’d be the kind of person who would deceive them about the viability of the business. I think they’re trying to get a sense for whether the business will continue to grow.
Their chief concern is that they might buy a business that is not that great, and one way to asses that, and I think venture capitalists and PE people in this space maybe share this in common is by assessing the founder's temperament, whether they believe that that founder would have created a viable business. Because they can only know so much from numbers.
So I think part of that experience is appearing rightfully confident that you’ve built a good business and answering their questions plainly and truthfully, frankly. I just told the truth. There was no dissembling on my part.
It’s almost like you're the used car salesman in this scenario, and they’re trying to make sure they don’t buy a lemon.
No, no, no, no. I am the used car.
They’re evaluating you as a person as a proxy to evaluating the business.
You and the company together are the used car, and the owner, he’s also you but he’s represented by you spiritually by the broker and they’re the buyer. They’re the buyer, they’re kicking the tire, which is you, by asking you questions about how did the business get to be and how is it doing and so forth.
I don't think I've ever been inside a PE firm, but I've been inside a few venture capital firms, which doesn’t happen often because Indie Hackers is about bootstrapped companies. But every now and then, someone wants to talk, and I observe the same homogeneity, where all of the offices are lavish.
They’re strikingly lavish.
Yeah, strikingly lavish. They put a lot of thought into that. They spend a lot of money on it. They almost always have an absurdly attractive receptionist. For whatever reason it’s consistently seems to be the case.
This is consistent with my experience as well, but I didn't want to mention it.
Why do you think that is?
I don’t want to get into it. It’s gross. Let’s move on.
You don’t have to talk about it, but it’s almost like cults. I don't think these people are parts of a cult, but where a lot of cults will do things that succeed in recruiting and retaining new cult members, but then a lot of cults have no idea why any of that stuff works and they’re copying what they see the other cults doing.
Okay. If I'm being made to remark on it, I would say yeah, but what you're describing is an extreme way of describing what culture is in general. And I think it’s striking that culture and cult share a root.
One guy that I talked at FE who leveled with me, He was like, “I think we do this cause we’re expected to,” and at some level, I agree that that is part of why they do what they do. I think finance is if it’s unusual as an industry, I think it’s unusual because the nature of its competition is more zero sum than in other industries.
And I think because of that, people are a little more risk averse socially, at least, because anyone could end up at any other firm at any other time, so fitting in with everybody is a useful career attribute, whereas I think in tech there’s a bit more room to be unusual or eclectic socially speaking at least.
I think part of the reason that all these firms look this way is probably because some of the very successful instances of these firms decided to be lavish and the rest had to follow in order to be seen as competitive with them.
Do you think it had any effect on you as the seller?
What do you mean?
Do you think you were more likely to sell to any particular firm because they seemed more professional, their offices were more lavish?
No, no, no. Not at all. I mean, as I said, I had a price in mind.
Let’s talk about the alternative to negotiation. Let’s say no one meets your price. You shop around. No one gets there. No one gets close, but you're still Vincent running Coderpad.
You’re still in a position that you were apparently a year or two after you started Coderpad. You were more or less having fun running it, but you’d also be happy to sell. What would you do in that situation?
I was in this situation for quite a long time. Every time I attempted to sell the business and did not succeed, that was the situation I was in. As I saw it, I had two options.
Option one was try to sell the business. Okay, two. Option 2 is continuing to operate the business, which is what I did nominally. A third option I considered was attempt to install a new general business owner/manager in my place, give them financial incentive to run the business well and then retire and draw down an owner’s dividend effectively from the business. That was a possibility but difficult.
Option four, maybe try to promote someone from within the company to give them increasing amounts of executive authority to the point where I can do less and less. And option five, maybe, I told you about the idea about raising venture capital. I don't know, what if I try and make a really big company. That ended up being way too much work.
So what I mostly did was continue to operate the business and try and give my employees a bit more latitude. I started to offload some of the things that I found more tedious to do as the owner of the business and hired more professional services as well, more advanced accountants and lawyers and so forth. That helped quite a bit.
It’s funny that you considered, at least it was on the table, to maybe raise VC, I’ve heard?
Yeah, I talked to a couple of people. It was too much work.
I've heard a few people espouse this philosophy that you shouldn’t start a bootstrap company because it’s about as much work as trying to start a unicorn company but if you succeed the rewards aren’t as great. What are your thoughts on that?
Couldn’t be more wrong. I mean, it could be more wrong but it’s pretty wrong. It would be crazy. I would counter, what are they talking about? Why would anyone say that? Doesn’t that sound crazy to you?
It does sound crazy to me. I wonder what your take is on why it’s crazy.
I mean, just because it’s untrue. What are the ways that it’s untrue? Every way imaginable. You understand how hard it is to raise venture capital? Holy shit. It’s a months’ long process, at the end of which you have to do even more work and you’re constantly racing against the clock because your incentivized by the system to never be profitable, which means you always have a timer. You’re always racing.
You have to scale beyond what is comfortable almost by definition. Holy shit. What a race against time. I ran my company very leisurely. We did better than many venture-backed companies, but we did it by walking slower.
You can ask my employees. For the most part they had a pretty leisurely time. I think if they had to answer honestly, they would say there were times when they worked hard, but there were a lot of times where we sat around the office and talked about ants.
When I met you, I think you were in the process of making a transition from super-serious Vincent to a lot more leisurely, worked fewer hours. I think you almost ran your business in almost a tongue-in-cheek way, which I respect because it’s still a hard thing to grow a company. It’s a hard thing to do to grow a company the amount that you did from the day that I first met you, which I think was in 2016.
It’s a matter of luck more than anything. Sorry, I interrupted you. Go on.
That’s another topic we should talk about, but in general, I think it’s impressive to be able to have fun doing something and to take it easy and do it at a relaxed pace, and yet succeed at doing it.
This is the thing that a lot of talented, intelligent people don’t succeed at doing. A lot of people want to bootstrap a business and get it to millions of revenues and try for a decade to do that, and never do.
You know, I wonder if it’s because the nature of wanting to start your own company selects for highly ambitious people, and highly ambitious people tend to be less comfortable taking it easy.
I'm a weird in-between. I'm right on the edge of the kind of person who might start a business, on the more leisurely edge. I don't think you could get much more leisurely than me and still want to start a business. I think it’s a demographic issue more than anything.
I think a lot of people who do successfully run businesses could do it by taking it much more easily. I think a lot of them come to that point in old age or when they have children, for instance. I understand. I mean you’re right that in the beginning of Coderpad I was much more serious at least about getting the business planted.
What do you think specifically you weren’t worrying about and you weren’t working super hard on that other people are perhaps, due to their personalities, too obsessed with or too worried about?
Oh, man. Metrics. I think I made a very conscious early decision to not have metrics. I had seen this at Everlane and at other companies before Everlane, that the moment you start measuring something, people are going to talk about it all the time. And the talking about it causes there to be a bad thing when the numbers are a bad way and it’s a good thing when the numbers are a good way.
That’s letting numbers control how you feel on any given day. I had been through that and had not enjoyed it and decided that if I couldn’t tell whether the business was doing well or not, if it felt like a VI dashboard, I had no business running a business to begin with. I didn't think I needed to know.
I think that choice cascaded in a big way. Once you let go of metrics, how do you measure whether you’re doing a good job or not at anything? What is the proper timeframe to finish a task? I think this is where people drive themselves insane. They set aggressive timeframes to do things.
If you don’t know how much money you stand to lose or gain, you have only these rough notions in your mind, everything becomes fuzzier. You can be like, “Oh, this could take a couple of weeks or a month or two,” and once you let go of this notion of precision and measurement, I think it becomes a lot easier to float along and do things daily. We got about as much work as we were going to get out of ourselves if we had been a lot meaner to ourselves anyway.
What about the topic of luck? Obviously, you’re a talented guy but we’ve talked about this before and you’ve told me that you think the amount that you have gotten lucky exceeds the amount that you have talent, by far.
Yeah. The reason Coderpad worked is because the idea for Coderpad was correct. Everything else from there, a modestly talented programmer of sufficient motivation could have done Coderpad given the proper formulation of the idea.
The proper formulation of the idea, I don't know where ideas come from. I don't know where thoughts come from. I'm not in charge of that. People just have thoughts. I was in a place in my life where I just happened to have been interviewing a lot and I thought about the nature of interviews almost in a manner of curiosity.
I came to the idea for the business. I could have very easily not had something else distracted me. So it was the right time and place to have had the idea for the business, and then I had it. I had not control over that.
When I say luck, that’s what I mean. I have no control. The part that mattered, I was not making a choice about. And the part that mattered by far was coming up with the correct idea. The execution is whatever.
It’s fascinating to me for so many reasons, the first being it’s the polar opposite of the common trope that your idea doesn’t matter. It’s all about the execution. You’re saying your idea is what carried the bulk of your success on its back.
And the execution almost anyone could have done.
Why do you think people say the opposite? Why do you think people worship at the altar of execution so much?
Oh, man. The cynical answer is because it is more flattering. If you have done something that is good, you wish to believe that you did it because you are good. Being lucky is not thought of, at least in Western society, as being good. Hardworkingness is.
So people wish to attribute the virtuous attribute to themselves rather than the arbitrary attribute. In some instances, this is correct. There have been companies where the principle virtue was execution. But my feeling in startups, startups usually are about coming up with a novel approach, to do a thing that has either not been done or been done in a less than good way.
Because so much of these things turn on novelty, you can’t help it. I feel that you must acknowledge that the idea is principally important in this. You can start with a bad idea and get to a good one, but it’s still the idea.
I agree that in some cases an idea alone was not sufficient, but it was always necessary. Airbnb famously had the idea long before it was accepted by society. I think I'm also lucky in the sense that society accepted my idea fairly readily, I think because it was not so novel an idea. It was just novel enough. When you have a truly radical idea, I guess execution starts to matter a bit more.
I look at is at almost a multiplication-based equation where if either one of them is zero, if your execution is trash then your business isn’t going to work, but the idea itself has a much larger coefficient in front of it. You get a lot more leverage from having a great idea than you do from being an amazing operator or developer or designer or whatever it is.
I think the degree to which you get more leverage though definitely depends principally in industry, I think.
Yeah, which I consider to be part of your idea. It’s baked into your idea.
Sure. Okay. Fair enough.
It’s surprising to me because I've also noticed this interviewing lots of founders in Indie Hackers, and a lot of first-time founders will make it spectacularly well and a lot of experienced founders sometimes won’t.
The first-time founders, it seems like they’re almost inexorably carried on the wave of a few decisions that they may write in the early days, often without even thinking about those decisions very critically or doing any sort of business school analysis on whether the idea is going to work. They just happen to pick an idea. Maybe it was in line with their passion or something they heard about or something that they cared about and it worked out really well for them.
I think there’s definitely something to that. Correct idea generation is something that’s hard to do intentionally. It’s like deciding to be inspired. It’s difficult.
Some people can do it, I think if you’re very practiced at it and have done it multiple times before. I think professional musicians can engender ideas because the experience of having inspiration has become more of a routine in their mind. But I think for business it is truly for the most part, you have to have a random idea. You can't force it. It has to be something that you care about at some level.
Yeah. The thing that’s probably more under your control is recognizing some signs of an obviously bad idea and being able to eliminate certain ideas that you might have otherwise worked on for a year. But it’s hard to, out of the blue, generate a great idea.
Hard is the language of difficulty. I prefer to use the language of luck. I’d almost chose words like blessed or divinely chosen, like the language of the Greeks. They had a cognitive model that allowed for gods to step in and change human cognition. A lot of that’s probably literally not true. The model of thinking about it I think is more pleasing, or models what happens, oddly enough, more accurately.
You're divinely inspired by a muse.
We don’t have control over the origin of our thoughts to such an insane degree that it’s a wonder that people can have a consistent frame of view about the world at all. It’s a miracle that memory works. This is truly astounding.
I feel like we could have an hour-long conversation on this topic and we probably will at some point.
We have this fiction that you are your thoughts and they come from a place that reflects who you are, and at some level that’s obviously true but it’s also obviously untrue. You can’t choose what thought to have next.
This is going to turn into a discussion about free will.
Oh, yeah. Sorry. Okay, we don’t have to do this one.
We can do this over some of that bread that you’re baking someday.
I feel like we’ve gone for a long time. We’ve explored what it’s like to be a founder who sells your business and then takes on other careers and reflects on what it was like to run a business.
Well you should give some color here, too. You are also such a person.
Hey, this is not the Courtland Allen episode. It’s the Vincent Woo episode.
I know but in so much as your experience is relevant to the topic at hand. Do you not talk about yourself on the episode?
Not much. I mostly talk about you and the other people -
So, for the audience. This is the last episode of the Indie Hackers podcast. Courtland’s moving away from San Francisco, I understand. Courtland, what’s going on?
Yeah, the second part of that statement is true. I'm moving away. I hope it’s not the last episode of the podcast because that means something’s going to happen to me.
Where are you going?
I’m going on an indefinite road trip, is what I'm doing right now.
Why are you doing this?
The genesis of this is that I've been on a few long-ish, three to four week trips in the last year. During every one of those, I liked my life a lot better than I like my life in San Francisco.
Wow. What turned?
I don't think anything turned. I think that if I put on my analysis hat, obviously traveling is fun. Being exposed to new and unique situations is great and it’s enlivening. I think having a time limit whenever you travel somewhere, it’s not like you’re going to be there forever. You’re going to be there for two or three weeks and you’ve got a flight back home.
I think having that time limit forces you to get out and do more things than you would at home. In San Francisco, I've got years here. It took me four years of living here before I ever went to Alcatraz. If I was visiting San Francisco, I would have gone to Alcatraz, gone to the Redwoods, hit up some of the coolest restaurants. I would have lived a much more active life.
So I guess this trip is more of an experiment. What if I am always on a clock? What if, no matter where I am, I’m only going to be there for a few days or a few weeks?
When you use the word indefinite, I feel like you’re making it clear that you’re not on a clock.
I mean, the trip itself is not on a clock, but the time I spend on each place I'm going to go to will be. I’m not going to go anywhere and be there forever.
I know what you mean. Each place that you end up in will feel like a liminal state where you’ll feel motivated somehow to experience it. It’s a wonderful idea. I hope that this is enlivening for you.
I hope so, too. I mean, worst case scenario, I hate it and I come back, and nobody died.
This is part of the fruits of having sold your bootstrapped company, is it not? This is a thing that might only be possible having had the good fortune that you’ve had.
You know, I think it’s easy to tell yourself that you have to wait for something to happen before you do the thing you want to do.
But if I look back, I could have done this at any point in time in my life in the last ten years. There was absolutely nothing stopping me.
I definitely know people like that. You can make your own pimped-out camper van and you can live the life, man. You don’t have to sell a company to do that. That is correct.
You don’t, and I think if you’re an Indie Hacker and you’ve got a bootstrapped business and four-we internet based, which I obviously did, you don’t need to work 80 hours a week.
You don’t need to work on a perfectly set schedule and you don't need to live an expensive life. You don’t need an office. I could have done this at any point in time. I think the turning point for me was more so the fact that I had these trips. I opened my eyes to even having this idea in the first place.
Let me ask you something. As the proprietor of indiehackers.com, let’s say a founder came to you with what seemed to you to be a pretty good idea for a business that they wanted to start, and they wanted your advice on whether they should raise venture capital for this idea or not. Are you generally against this idea? Actually, in my conversations with you, you’re striking neutral on the topic. So what do you really think?
I’m a bad cult leader. I think a great cult leader would be unequivocally one-sided about things and have zero nuance. I'm not anti-VC. I think there’s a time and a place.
Let’s say this founder was, in fact, yourself.
As if it was me?
How would you approach this decision?
Essentially, you’re asking me what are the factors that you consider if you want to determine should you raise money or not?
That’s exactly what I'm asking. If anyone should know, it’s you, right?
Yeah. Well maybe it’s easier to answer in light of different personas, because people come into this with different amounts of knowledge. I think the biggest problem, and one of the reasons I started Indie Hackers in the first place was that so many people don’t understand a lot of the truths and realities about what it’s like to raise venture capital and the fact that an alternative path even exists, because the tech press has only ever publicized or glorified that path
Right. I'm asking you to evaluate the tradeoffs. What do you think?
Yeah. So the tradeoffs for me would be, number one, do you want to constantly be in a state of what a programmer would call default dead, where you are beholden to these people who have an expectation that you hit some growth target, and it’s almost always going to be a stretch and if you don't hit that, your company is basically dead?
Maybe you can take some money off the table or maybe you can get lucky and find a buyer, but I think you’re in a constant state of stress and that is caused by the differential between where you want to get and where you are, and knowing that you don't necessarily have a safety net.
There’s some benefit, too.
Let’s say the idea requires at least three people to work on it for let’s say at least six months before the idea can be minimum viable. This would be perhaps - you could maybe bootstrap it yourself, but you’d be committing to spending, I don't know, a year working.
I mean, the benefit is that you go much faster and you can get much bigger, faster.
Would you take that deal, is what I'm saying.
The situation for me though that would convince me to take VC would be, number one, I already sold a company and feel financially set, which has already happened.
Number two, I have an idea that I believe in enough that I think is important enough, not just for me but for whoever the customers would be, potentially the world, that I do think I need to pour that much money into it and want it to be big. In the absence of that idea, I would choose to bootstrap a company.
Putting VC into it is not putting your own money. It’s other people's money so it’s risk averse in that sense.
But for me, it’s not much about the risk. It’s more about, if I'm going to undergo all the negatives of raising VC, am I at least doing it to produce something that I think should exist?
Because I think I'm somewhat similar to you in that I don’t need to try to start another company just to make more money. There’s no part of me that’s like, “I need to keep making money forever and ever, no matter what.” So if I'm going to work on something in the future -
It’s more like if you felt like an idea that had to be done and it seemed like the best way to cause that idea to be done was to raise venture capital.
Then I would do it.
What’s an example of an idea for a business that already exists, that if you had come up with it you would feel like it had to be done?
I don't know. Honestly, I think Stripe is such a company. If Stripe didn't exist and I spent a lot of time talking to founders like I do today, and everyone was struggling to implement payment for their company, and it was like, you know what, there’s a way to make this simpler. I know that I can do it and I could raise money for doing it, I think so.
It’s a convenient answer given your employer. Okay. Fair enough. Fair enough.
What about you? What would you raise money for?
I’d raise money for any odd idea. This is maybe weird about me, maybe counterintuitive, but I don't understand why more people don’t screw over their VCs. Imagine if you took a safe and then you never raised a price round of equity, ever.
You’re talking about a mutual acquaintance, Lynn, who went to Y Combinator and raised from YC and then deliberately decided she never wanted to raise another round and hasn’t. I think that’s -
It’s beautiful. It’s surprisingly common. If you don’t feel happy doing that -
It’s common? If I thought that I could raise - I don't know, seed rounds are up to absurd amounts. You can raise a million-dollar seed round. If I could get a million dollars in a convertible note, that never had to be paid back nor convert to equity, why wouldn’t I?
Your basic human ethics.
Why? They know the risks.
The sense of obligation to the people to the people who you told that you would be shooting for a particular goal.
I would not tell them any such thing.
If you could raise a million dollars without ever communicating your future intentions -
Well I wouldn’t communicate it literally. I’d be like, “You know, I think this is a really good idea and that it should exist.”
I think you could do that.
“The market for it is quite large, don’t you think? Also, I have a track record.”
I think if you wanted to do this, you could do it. I think if you really wanted to, you could.
I think in reality, a safe would still convert when you eventually sold the business anyway. I think it would be difficult to get away with it entirely but I guess I mean in the lighter sense, that even if you sold the price - let’s say you sold 20% of your company for quite a lot of money. You are under no real legal obligation to run your company any particular way. They can’t outvote you.
I know a lot of founders who run VC-funded companies who are in a miserable emotional state, and a hundred percent of their concern comes from the built-in human sense of obligation to another person. This person put money into your company. They have faith in you and if you're letting them down it feels bad, especially for the conscientious types of people who become founders.
They don't feel bad that they’re letting down their employees, their families?
The feel bad all of the above.
It would be their investor? It’s true. I've seen this myself, too.
Again, it makes sense because what’s the name of it, if somebody gives you something you feel almost obligated to give something back.
I mean, you're paying your employees at least. It sucks. It does feel bad to let down your employees. But your investor gave you a bunch of money. I think it’s hard for people to let someone down who wrote you a check for a million dollars.
I agree that there seems to be something para-social there. The relationship exploits a weird aspect of human psychology. So game theoretically, stepping all the way back, there’s no reason that you ought to care much about the return for your investor once you have their money. Either they’ll get a return, or they don’t. They knew the risks.
If you're a cold, hard robot I think that’s totally true.
Not a robot, but I think a realist. Your investor has invested similar amounts of money in a hundred people who look just like you, of which they expect only one of you to return any significant amount of money.
So just knowing the calculus, I would personally feel that I was not important to them and they should not be important to me. The asymmetry of the relationship is so huge. There are a hundred of me for one of them.
Exactly. Well I think often investors are the people reminding founders of that fact, cause a lot of founders never raised before, and they tie themselves into these knots and get emotionally -
It’s true that VC’s use this language all the time, that they are there to serve the founder and that’s how the relationship should be thought of.
Well no, I mean I could get into specific instances where VC's have said, “Hey, you seem stressed out about this. You should know that if the company goes to zero, I will be okay. You need to chill out.”
It’s not even their money.
Yeah, it’s their LP’s (ph) money.
They get paid either way. They get paid even if your company goes to zero. They get two percent carry. It’s insane. That job is crazy, man.
The financials for VC's, obviously they’re incentivized to succeed, but the fact that they could do so well if they raised a huge fund it completely fails and they’ll still make millions of dollars a year if they raised enough money. That's pretty crazy.
I'm surprised that more founders don't raise a 20% A round or equivalent seed round or something, and then not spend it. I would keep it as a war chest. If I thought it was going to be a long time until I was profitable, I wouldn’t try to race the clock of probability.
I’d hire extremely slowly and work very diligently to get there. But anyone who’s tried to scale a team very quickly knows what happens when you try to throw money at this problem. It doesn't work that great.
What happens is 9 times out of 10 or 95 times out of 100 the company fails and the other five times it hopefully becomes a unicorn and the investors make their money.
I don’t even mean in the company sense. I mean in the human sense of hiring a bunch of new employees and trying to get them coordinated around the novel mission is hard.
The people best able to do this work for a long time is going to be the founders. I feel like the entirety, almost, of the round raised should go to keeping them alive, unless it’s absolutely necessary to hire outsiders, because you give yourself so many more chances that way.
There’s a new, I guess, class of investor who’s more interested in these slower growth bootstrapped businesses. There’s Rob Walling at Tiny Seed and Tyler Tringas at Earnest Capital, and they’re investors who don’t pressure you to spend all of your money as fast as possible because they have more capital that they’ll employ for you to put into your next round.
And I think that that will become increasingly common. I think people are realizing that there are companies like Coderpad that can be successes and I think they’re devising instruments that allow them to invest in a way that makes sense. It’s taken some time but 10 years from now, I don't think we’ll live in a world where the only path is VC or not.
And maybe the way that it is right now is correct. Cause even reflecting on it, I don't know that there’s a financial instrument that you could offer Coderpad that it would have made sense for me to take.
Even if it was very easy to come to venture capital, at least in the early days, I don't think I could have given a very favorable price to VC. I don’t see why the deal would be done, because I didn't need money. If you do build a profitable bootstrap business, especially if you come to it quickly, there isn’t a need for additional capital ever. You can eat your earnings.
If you make enough money early onto quit your job. But there could be something in there where you could - I think most of the proposals now depend on the investors being able to correctly predict, with a high percentage of success, which companies can return their capital, and then not needing as big of returns.
So you could theoretically imagine someone invests in Coderpad, you quit your job immediately instead of having to work for a year to be able to cover your rent. You get to probability faster. After a few years you return all the money that was invested, and -
I guess what I'm saying is, even in that situation, if I could convince an investor that return on investment in that case was highly likely, that means I have already convinced myself, which means I should be willing to eat my own savings, which I for the most part was willing to. So it doesn’t seem like there - it would have to be a huge amount of money for almost no price at that time in order to get someone like that in my position to say yes.
You would have to calculate that the cost of continuing to work at your job and eat through your savings is less painful than the cost of giving up a percentage of your business to an investor.
Yeah. It’s such a tough calculus to make on the part of the founder that I would default to no deal. The benefits are not obvious.
The cool thing is we get to see this experiment play out. We get to see lots of people making this decision right now.
In another year to two, I'll be able to have them all on the show and be like, “How did it go? Do you regret it? Would you do it again?”
Do you know anyone in the Tiny Seed cohort?
Yeah. There are a lot of companies in the Tiny Seed cohort, and some of them have been on Indie Hackers. But I don't think we’re far enough out for people to be able to say, “Okay. This was the right decision,” or at least to be honest about it.
Are they receiving the investment before they’ve reached market?
Some, but I think not the majority. I think the majority of them have already had a project, are already generating revenue.
They’re further along than you were in this hypothetical situation we’re discussing.
Wild. Okay. Cool.
Listen, Vincent, the Indie Hackers podcast tradition is, people listening are fledgling founders. Many of them have not been divinely inspired to have a great idea. What’s your advice for somebody out there who’s trying to figure out how they can follow in your footsteps?
I prefer to avoid that framing, because in the literal sense you could literally clone my idea and you could compete with the current company. I don’t recommend it though. It would be tough.
You know, try to have a good idea. That’s obviously a facetious answer. Think clearly about what value you’re providing to who, and to whether there are enough of those people and whether they’re willing enough to part with your money.
Think about whether ideas like yours have been tried and whether they have failed or not prior. Cause the truth is, all of this advice is advice I did not follow personally. The annoying part is, I was certain. I was always certain, maybe because of hubris, maybe because I was correct, but it’s hard to convey the sense of certitude I experienced.
Maybe the advice ought to be then, wait until you experience certitude, but that doesn't seem right either, because there definitely should be room in the market for people to experiment with ideas they’re not quite sure about.
So I don't know what to say, except to say there’s clearly no sure thing, that you can do everything right and still fail miserably seems obvious and I think if I were giving any advice, disconcertingly I would say accept failure earlier.
Be at peace with whatever outcome may happen before it happens, because if you are not, you will not be free to inspect reality and you will avoid learning things that would indicate an outcome that you’re not ready to accept.
I think this is one of the principle mistakes that’s being made. It’s like you said, you think maybe one of the things that people can do is learn to dismiss bad ideas sooner. I have seen quite a lot of founders pursue things that seem to me to be patently bad ideas and when I try to convince them of this, my opinion let’s say, I've found them terribly unreceptive.
At some level I understand. You don’t want to be that receptive to someone telling you that what you’re doing is wrong, but at the same level, I think you ought to be very receptive to that idea. Because the impact of that fact, if it is true, is so huge for your world that you ought to be sensitive to evidence that indicates that that’s the world that you live in. So I guess this is a long-winded way of saying you should be open minded.
Be open minded. Accept the possibility of failure and be actively looking for reasons why your idea might not work, so that you don’t have to waste years of your life figuring out the hard way what could have been done easily.
Or ask yourself ahead of time what the contrapositive would be. What evidence would there be in the world of me being wrong if I was wrong? In Coderpad for instance, I can do this exercise in hindsight.
If I was wrong that Coderpad would be a correct business to exist, what would I notice? Well I think one thing that I would notice is that it would be extremely hard to convince people that would otherwise have every economic incentive, at least in my model, to want to test programming candidates more thoroughly.
There definitely have been people who’ve brought businesses as ideas to me that are very similar to Coderpad. It’s like a Coderpad for some other industry, where my response would be, I don’t know, or you haven’t convinced me, that the market you’re targeting experiences enough of an economic incentive to want to filter its candidates more appropriately.
It’s like they’ve copied your product and they’re trying to apply it to a different problem, but there’s no evidence that the problem is one that anybody cares about.
It’s the market. People don’t get, it’s the market more than it is even the idea or the timing. I guess timing encompasses market, or the other way around. The market is so, so, so important.
Market excuses poor ideas, poor execution, total ignorance, if you happen to luck into the correct market and I guess, by extension, idea, you can flail wildly and still get there. Likewise, if the market is missing it doesn't matter.
It doesn’t matter how well you execute or how well you understand how to build the product. There have to be people who want to transact with you in this economic regime. So I try to push gently a lot of time. I'm like, “Okay. I understand the product as you proposed, but are you sure that there are buyers?”
It’s not enough to ask the question. You have to ask the other question, which is like, “What evidence would convince you one way or another that there are or are not buyers?” In Coderpad’s case, I think if my first ten conversations with engineering managers in positions to buy who are experiencing the problem that roughly my product addresses, opted in clear terms not to buy, then I think I would have been really confused and I think I would have experienced the strong desire to halt.
The reality was the first ten people I talked to, most bought. I was like, “Okay. Clearly this works.” But that would have been an early turning point for me. Cause I think it would be easy, also, to say in someone to that position, “Yeah, you should push on. Talk to more people.”
But I think if you say that to someone, I think you’re obligated to tell them how many more people, how many more experiments. What evidence would be sufficient? I think thinking about what you would require to reach a decision one way or another before you make the decision is a helpful way of framing the problem. It’s a Bayesian trick or whatever.
Couldn’t agree more. Vincent Woo. Thanks for coming back on the podcast.
Thanks for listening to the last Indie Hackers podcast. It’s cool to retire along with retiring this podcast. And this is a great season finale. I feel really good about it. I think we covered a lot.
Covered a lot. Can you tell listeners where they can go to get in touch with you if they want to or maybe follow some of the things you’re up to?
Just tweet at me. Just search for Vincent Woo on Twitter. It’s W-O-O. My handle is fulligin, F-U-L-L-I-G-I-N. I'm mostly on Twitter now. I guess you can email me also at [email protected] But just tweet at me, man.
Alright. Thanks, Vincent.
Alright. See you.
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