Can introverts succeed in building and scaling a business?
In this episode of the Bean Ninjas Podcast, Anf’s interesting conversation with Convert Kit Founder and CEO, Nathan Barry, will definitely inspire and give you hope. Nathan was an author, designer and blogger before venturing into the world of business, despite being an introvert.
Convert Kit is a SAAS Software started in January 2013 that helps creators with email marketing. Since then, it has grown from a small side project to powering the audiences of thousands of creators including Tim Ferriss, Gretchen Rubin, Tim McGraw, and many more.
In this episode, we discuss:
[02:55] Announcing the Creator Fund amid COVID-19.
[07:03] Their team at Convert Kit and how they prepared for events like closing down offices and taking hits on the business.
[12:18] Working on marketing and growing Convert Kit as an introvert.
[16:37] The types of marketing and sales he used for Convert Kit.
[20:57] The effectivity of webinars in their marketing strategy.
[22:46] His top priorities as a CEO and how it has shifted over the years.
[25:00] Their rationale for launching a free product.
[30:26] Nathan tells us about their landing page products and how it came about.
[34:46] Taking care of the financial side of things in the business.
[37:33] Giving value to team members through profit-sharing.
[41:45] The meaning of financial freedom for Nathan.
Transcription
Helping Creators to make a living doing work they love with Nathan Barry of Convertkit
Announcer Welcome to the Bean Ninjas Podcast, where you get an all-access pass to see what happens behind the closed doors of a fast-growing global bookkeeping and financial reporting business.
Anfernee:
Hey. Welcome to the Bean Ninjas Podcast. This is Anfernee Chansamooth, and I have with me, Nathan Barry, founder of ConvertKit. And, Nathan, welcome, and thanks for joining us all the way from Boise, Idaho.
Nathan:
Yeah. Hey. Thanks for having me on.
Anfernee:
Now, we are using Zoom, which is a tool that’s kind of getting a lot of shared value right now.
Nathan:
Yes, they are.
Anfernee:
Yeah. In the kind of climate, we are in the midst of Covid-19, and we’re going to talk a bit about; why don’t we just start there because it’s actually top of mind and it is the hot topic right now.
But before we jump into that, I’m going to give people a bit of background because I’m going to assume not everyone in the whole world knows who you are even though a lot of us in the tech world know it.
So previously, Nathan, you are a designer, an author, a blogger. Some of those things I can see definitely manifest in what you’re doing with ConvertKit. And you’re also learning the power of email marketing. You gave up your successful blogging career to build ConvertKit, which is a SaaS or a Software-as-a-Service product that helps businesses with email marketing.
Outside of it, this is what I like, outside of work, you like to play soccer, you do some woodworking, and you chase after your three little boys. How old are they now?
Nathan:
They are 8, 5, and then 10 weeks.
Anfernee:
Oh, wow.
Nathan:
Yeah. Side note, on the very topical aspect of it, I’m so glad that Josiah, my youngest, was born; he was born the first of the year. I’m so glad he’s not like born right now. Like even just, like family wouldn’t be able to come to visit. You know, all that was easy then, and now, it would be much more difficult.
Anfernee:
Yeah. I had a buddy here. I mean, he came up for a wedding from London two weeks ago. And he’s kind of stranded here and his daughter is just about to turn two, and he’s freaking out because he’s like, “Man, I’ve got to be there for my kid.”
Nathan:
Yeah.
Anfernee:
Yeah. And he’s like, “Potentially, I might be stuck here for a month.” Like he doesn’t know. There’s no timing on that. Yeah. So first of the year; is that 1st of January?
Nathan:
Yup. First day of the decade is when he was born.
Anfernee:
That’s a special date, man.
Nathan:
It is.
Anfernee:
Yeah. I’m a New Year’s kid as well. I wasn’t 2020. So that’s amazing. Congrats.
Nathan:
Thank you.
Anfernee:
Alright. So now that we’re talking about it, Covid-19; kind of hit all of us out of nowhere. And your response as a company was to create, to announce The Creator Fund, which started off as a $50,000 fund to help cover rent, childcare, medical expenses, groceries for any creators who might need it. I’m just curious. I think that fund is growing and you’ve had partners come on board. So tell us a bit more about that.
Nathan:
Yeah. So it was really; it came out of this feeling of, “Can you feel prepared and helpless at the same time?” Because that’s what we felt of like, on the one hand, we saw this coming as many people who were paying attention did. That like, this is kind of strange is natural disasters all over the world that have happened of like earthquakes or tsunamis and these things; you never see them coming, right? There is no way. It just happens. You might get a tiny bit of a heads up, but that’s all.
And this one we saw coming for a long way away, right? It was just a matter of how bad it was going to be and that was up for debate. And in this case, working in software and technology and social networks and all of that, like we understand the exponential growth and viral numbers. And so, we realized this is going to be bad. We have to see it coming from China, and then through South Korea. And then, like we all have Italy as an example of like, okay, that’s how it plays out when it doesn’t go well.
And so, from the company side, we’ve prepared for it and we thought like we were really in a good position. We can talk about some of those things that we did. But then also, from the other side, we kind of felt helpless and powerless. Like, other than getting our decks in a row and everything squared away, we couldn’t do anything.
And that’s where we realized like, okay, in this cycle of refreshing the stats on the Johns Hopkins like dashboard where it looks like the world is going to end, and the latest news and the local news, and then a lot of people coming at on Twitter, in that cycle, it was like, “Okay, this isn’t serving anybody.”
And so we realized, “Okay, let’s actually do something. Let’s take back this feeling of helplessness. Instead, do something.” And so we launched The Creator Fund with $50,000 saying, “Hey. If you’ve had gigs cancelled, if you work as a creator, you worked events; any of this kind of things. We can’t help in a huge way, but we can give up to $500 per creator like to supply here whatever you need.”
Like, people are being told, “Okay. Stock up on groceries.” Like, what if I am a freelancer and that check didn’t come in and I don’t have the money to stock up on groceries. And the grocery stores are like, stock is dwindling on everything and all that.
So we launched that fund. The response was absolutely overwhelming. Now, the number of people who have applied are way beyond what we can help, but we also had a bunch of more partners come on. And so the funds now are over $150,000 and climbing, and the demand is pretty crazy as well. But it felt good to get out there and actually do something rather than just sit back and like refresh social media in despair.
Anfernee:
Yeah. And that’s kind of there’s two patterns that we observe like this; people who are doing that refresh, and the media is just loving all the negativity. They’ve thrown out all these stats and things. And I’ve been cognizant of that and getting trapped in that; like you go down a spiral, and you go, “Oh my God. I can’t do anything,” that helplessness you talked about.
And then, on a flip side, then you do you hear stories of humans doing human things, and supporting each other, and rallying, and coming to each other’s support, and aid, and people giving each other toilet paper, and necessities and things.
And I want to remind people of that. Like, it’s the opportunity here is for us to rally together, and that’s what you’re doing with The Creator Fund; I love that. I think Teachable will come on board and some other partners, which is brilliant.
Now, you did mention just your own contingency plan and what you did at ConvertKit. Just for context, like how many staff or what’s your team size, and what did you have to do in order to get ready for that?
Nathan:
Yeah. So a few stats about the business, we’re about $20M in revenue, 50 team members, and we’re a distributed team. So like the first thing, right? All of these companies are having to figure out how to work from home, how to close down their offices; all of that. We’ve been working remotely for seven years. There’s no change in that for us.
Kind of the second thing is as all these businesses are taking a hit, right? You’re looking at, “Okay. How many customers are we going to lose?” We’re about to enter a very significant recession, way worse than I think anyone thought it was going to be. Like everyone was talking about, “Oh, we’re overdue for a recession. When is the correction going to come?” No one expected that it would come in this way and it’s going to be very, very severe.
And so, the first thing is like our revenue’s spread out between a lot of different customers. We’ve got 28,000 paying customers; the average is people pay us 60 bucks a month. And so, we’re not worried about losing one giant customer like that. But we are going to see a contraction overall and we expect that. But that has us in a good position.
Then the other thing is that we saved aggressively and we’ve planned for this time. It was actually, we’ve built up our cash balances. So like, we don’t have any investors. We’ve just been big shot, but we have $5M in cash on hand that we’ve built up because we’ve been expecting this. And we actually had a conversation back in November as a whole company; we have a whole thread going in our company-based camp of what does it look like when the inevitable recession comes?
And like, one business model changed that we really wanted to get in is we’ve always had a paid product. It’s a free trial but no free planner or freemium or anything like that. And we talked about; this was the beginning of last year, we were talking and saying, “Okay. I don’t know when the right time is to launch a free plan, but we want to have it launched and in place before the next recession hits.”
And that was our plan. And we launched it the first of the year, so just two and a half months ago. And it was kind of funny, we were joking and we’re like, “Okay. We’ve been to launching before and we didn’t mean to get the timing that close.” So that was a little wild. So those are some of the things that we got in place.
And then, I think on the team side, kind of the other thing that we’ve been doing is just being a voice of calm to all of this. So we see all these companies like freaking out and telling people, “Okay. You’re working from home, but work twice as hard.” It’s like, “What are you doing?” Like, someone who’s stressed and overwhelmed telling them to work harder or get more done or like, “Make sure to maintain your productivity levels.” Like, that doesn’t help.
And so, instead, what we’ve been saying is like, “Hey. So many of you have kids at home now that schools are shut down; all the stuff. Like, family comes first. Take care of them. If you have time and energy to put into work, like try to create, try to get like one good or two good 30-minute blocks of focused time then where you like close all distractions and all of that. And if you get that done, count the day a success.”
And so, I’m really lowering the bar because it’s really easy as a human to get into this trap of, “I’m going to try really hard to get this done. Oh, I didn’t get it done. I’m a terrible person. I’m going to try harder the next day, but my motivation is even lower.” And you’re in this like vicious spiral. And so, we start to change the approach and say, “Okay, anything that I get done is a success,” and you like really lower that bar, then I think you can relieve a lot of stress and you can end up being more productive.
So kind of last week and this week, that was a lot of our message to the team was like, “Take care of what you need to take care. Take a step back. And then like, just try to get that one thing checked off the to-do-list and call the day a success.”
Anfernee:
I really like that. I think it’s quite powerful to remind people all of that, that yesterday, like on a personal level, I was feeling quite strange, I didn’t know why. Like I know, life’s good, life is healthy.
Nathan:
Yup.
Anfernee:
Got a roof over my head and this sort of things. And whatever reason just was in a funk. It was like, why am I not productive? And just to have that voice say, “Hey, like one or two good things is a win.” Right? Like, that’s what it’s about and acknowledge that it’s not going to be growth on revenue. Like, the way that we’ve been going, like, that’s going to shift for a little while.
And it’s actually about coming, returning to the idea of it’s about humans supporting humans, and we all have families, as you say, and we all have priorities outside of work, and work needs to be a space that supports that because that’s why they’re there. Like, as much as they love what they’re building with you, it’s not always about just that. Yeah, that’s really strong.
Alright. So let’s go rewind a bit because I think what’s really fascinating about your trajectory and where you’ve gone to; like you mentioned, your current revenue levels, but just how you started that because you did start off your blogging and you have a design background. And your stories out there and this kind of podcast that people can listen to.
But I just wanted to narrow in on the fact that you’re quite an introvert, and I don’t see you going out in the street, going, “Hey, buy ConvertKit.” Like, that’s probably not your strategy. So how did you sort of get your initial sales?
Because we have a lot of people listening to this who are at that stage who are thinking, who might want to just ask, who might want to launch some kind of service or something like that, “And how do I get those initial sales running and how do I do that, especially if I’m an introvert?” What is your approach to that and were there any sort of confidence things you need to work through to get there?
Nathan:
Yeah. So, I mean, I’m definitely an introvert. I resonate with all the memes going around right now of like people talking about stay home, don’t go out, don’t talk to people; like all of that. And the introverts are going like, “Oh, I’ve prepared for this moment my whole life.” And I’m like, “Yeah, it sounds about right.” Though I do like the soccer games were all cancelled, and that’s a bummer. Like, I would love to go out and play soccer.
So with ConvertKit, my background isn’t; it’s in design. And so, I started out like web design then into software design, and iPhone apps, and all of that. And the biggest thing that I learned from that journey is really around building an audience.
So I ended up writing a book about how to design iPhone applications, and just started teaching like writing, little tutorials like how to use Xcode, what makes a good design, design principles. And as I put that content out there, people started following it. And it was so different from the experience of like being in-person and trying to start a conversation.
Years ago, I went to this conference called A List Apart or An Event Apart who’s put on by the website, A List Apart, which is big in the web centres for event. And this is in Seattle. I didn’t know anybody. I went there. I think I talked to like three people, maybe four, the entire weekend. And it was people that like I sat near at lunch where they introduced themselves to me or that kind of thing. Like, I didn’t say hi to anyone.
And I remember this moment of walking back to the hotel where everyone was staying from the conference centre along the Seattle Waterfront. And I realized that about 30 steps ahead of me is all the speakers. Like, there’s seven of the speakers in the conference; they’re all hanging out together and they’re talking and they’re laughing and joking.
And I’m walking behind them, and I’m like just far enough back that it’s like, I don’t know if I realized, “Oh, I could catch up but I could join that conversation. But I don’t know them. They’re with friends and I just felt so out of place.”
And then, I had this experience a few years later after blogging a bunch and putting out this content and all that, where it’s at this other conference called MicroConf. And it’s a bunch of people building small businesses, and I think I was brand new with starting ConvertKit. But my blog was established and I had a bunch of other things going.
And in that, I started talking to three or four people, and somebody came up and like did like this double-take as they walked by and realized like they recognized me. They came back and they joined the conversation and said, “Oh, man. I just have to say hi. I love your content; all of that. And I know that if I went back home without; like if my friends know that I passed up on a chance to meet Nathan Barry; they never let down.”
And I remember it being such a weird moment as the contrast between like, “I don’t know anyone. I’m not going to introduce myself to people who want to come up and introduce themselves to me.” I was like, “What happened in this period of four years?”
And the difference is that I started blogging, right? Like, I just started putting out content and I was still the same introvert, but I love that at conferences now because I didn’t have to come up and introduce myself to people. Like someone else would do all the work because I’d put in the time blogging.
So that’s kind of how it started and that’s also how I grew ConvertKit was just telling the story, “This is what I’m doing. This is how to do email marketing,” and really putting out all that content and letting people follow along to the story of the journey.
Anfernee:
That’s really cool. Did you have to do any cold outreach as part of that journey?
Nathan:
Yeah.
Anfernee:
Yeah. I think that’s something that; like we’re going through a process right now. We’ve just launched an online Xero Bookkeeping Course, which basically helps entrepreneurs learn how to use Xero. And we’re finding, “Yes, you can polish a ton of content and see those working,” and those little things, but sales; the best sales have come from direct sales. Like, just basically messaging someone going, “Hey. We think you might find this useful.” What’s been your experience around that?
Nathan:
Yeah. So content marketing worked really well for me for selling books and courses and content like that. But when it came down to sell software and get this new thing off the ground and get it established, it did not work well for me at all. Like, people have followed along, but then again, “I’m not going to use it.” “Oh, it’s too much work to switch email tools.”
And so, what I started doing is exactly what you described; the direct sales of going after a specific market and saying like, “Okay. This is going to be the best email service for bloggers, but we’re going to go even way more specific than that. We’re going to go to the rest of bloggers who are women. And we’re going to make a list of all of them. And we’re going to men’s fashion bloggers in New York City and list them out.”
And then work my way down that list and cold email them and say, “Hey.” What I would always do is I’d start with frustrations. And I would say, “Hey. What is it that frustrates you about Mailchimp? Reassess and build your email product called ConvertKit specifically for bloggers. It’s used by,” and I’d name drop; I didn’t have anyone hard that I’d name drop, but I’d name drop the most relevant customer I could.
And then from there, what it would be is just hoping, like saying that really short email and then hoping they respond with some frustrations. And I got a pretty good response rate. If you’re sending cold email, the shorter the email, the higher likelihood that it will get a response. Because if you write a longer email, I’m like, “Now I just know you copied and paste it.” Like, this isn’t personal to me at all.
But in that, I guess those responses say, “Oh, I’m frustrated with the way like MailChimp doesn’t have tags, it’s hard to set up content upgrades,” and these other things. And then I’d say like, “Okay. That’s actually some of the same frustrations I had with MailChimp that’s why I started ConvertKit, which we have to get in a call so I can learn more, and then also, I could show you a little bit of what I’m building.”
And we’d get people on a call and go from there. So there was a lot of direct sales. I’d basically did a lot of content marketing for the first two years and got almost no traction. So two years in, ConvertKit was doing less than $2,000 a month in revenue. And then I pivoted to going all-in on direct sales, and that’s when we started to get traction and really grow the business.
Anfernee:
And so you went from $2,000, and you went in on the outreach process, at which point if you switch that again and go, “Okay. This is probably should have limit in terms of capacity to do that. And then, how do we really scale this?”
Nathan:
Yeah. So we still do the direct outreach today.
Anfernee:
Awesome.
Nathan:
Same exact. We’ve basically just moved up. Before, it was direct outreach to get any customer, and then it was to get any customer that would pay us over $100 a month. And now it’s to really get any like big-named customer, right?
So we have customers like Tim Ferriss, and Gretchen Rubin, and Tim McGraw, and even Arnold Schwarzenegger. And all of them came through like an outbound sales process of direct outreach. So we still do it today, but it was most important to get that initial momentum going of getting the first few customers who would then refer a few more people and go from there.
But we kept going heavily at least to probably $50,000 of MRR, which took us; basically, we started 2015 at $2,000 a month in revenue and we; let me make sure I’m picking the right year; 2015. I can’t keep track of the years anymore, but there was a year we started $2,000 a month in revenue, and by July, we’re at $15,000 a month in revenue. And then, by the end of the year, we’re just shy of $100,000 a month. Because in that process, like from $15,000 a month and beyond, that’s when those referrals really started to kick in and that flywheel really started to happen.
Anfernee:
Yeah. That’s just really cool. And I remember sort of my first exposure to the product and to what you’re doing came through the partner webinars. There was a phase where you did a lot of partner with influential bloggers and YouTubers and those sort of things. I’m curious how effective that was for you and what you learned from that experience?
Nathan:
Yeah. So somewhere in that time, probably when we were about $25,000 a month in revenue, we launched an affiliate program. And we’re starting to get these bigger customers on board. We’d gotten Pat Flynn. And then, in the totally different space, we have a website called Wellness Mama. Katie and Seth who run that are now really good friends; good friends of mine.
And they’re starting to get all this traction and talked about it, so we launched an affiliate program and they promote it a lot. And that was really an exciting time because we’ve got a ton of growth from it. And then you mentioned the webinars, and those are really important because all these affiliates would come on and they would promote us, but like on the resources page or something like that.
And the webinar created an event, basically, of like, “Okay. Let’s co-host this thing together and give them a reason to email their list and to make it this full thing.” Whereas before, it was just like, “Oh, we’re on the resources page.” Like, if you’re recommending a resource, I’m sure people will sign up.
So the webinars ended up being really good and we’ve done hundreds and hundreds of partner webinars at this point, and it’s still a key part of our strategy. I just don’t do that anymore. We’ve hired people who are more talented than me to do it because as we’ve mentioned, I’m kind of that introvert who; like, it’s hard when you’re live to just like bring this over-the-top energy for the webinar. Because it feels way over-the-top, but then when you’re listening to or watching the webinar, it doesn’t. It just feels normal. It doesn’t feel crazy over-the-top.
Anfernee:
So you’ve had to learn through all this journey how to become the CEO. And then what does that mean? So give us a little insight to like what’s your top three priorities as a person sort of at the top if you will? And has that changed over time?
Nathan:
Yeah. So, you know, initially, it was like design about the product. And then, it was market and sell the product while designing it. And for a while, like that sales and marketing was my core focus. Somewhere in there, it shifted back again to be all about building the product. And so, mix of strategy of where we’re going long term, and then, also just like prep design what features are we coming out with; all of that.
Because now, the company is bigger. We’ve got a leader in each key area. And so, I’m both CEO and Director of Product. So we kind of have a bit of a weird hybrid there in that like, my COO, Barrett, manages almost the entire business. And so, on one side, he’s the one that reports to me, and then I have three designers; soon to be three designers.
Two of them, I just hired and haven’t started yet. But, you know, a front-end developer, product manager, and then my assistant who all report to me on the product team. So it’s kind of weird filling two roles, and it might not work long-term, and I’m looking to recruit a Director of Product. But in the meantime, I really, really enjoy it.
I’m a huge believer in product over growth, and so being really involved and to being able to actually like design out a feature and thought, “Okay. This doesn’t quite feel right. What do we need to do to get it to the point where it feels right to the users?” You know, lots of customer calls; that kind of thing.
So now, I’d say I’m probably 70% like as a product leader, and then 30% on the marketing side of like, “Okay. What does it look like to get out and do podcasts and stuff like that?” But also, some of the launch of the free plan; how does that fit in the market, how we promote it, who do we partner with; all of that kind of thing.
Anfernee:
Yeah. So let’s talk about that; the free product, and how you arrived; at which point did you first have the idea or as a team come up with the idea? Perhaps we should go down that path and try that out. Due respect that for just your internal process around new product launches with the free product? And we can also talk about the landing page product.
But yeah, just maybe a bit of insight into what was the rationale, and at which point, so a few years is in now, ConvertKit is a stable product, and you might be working on features that customers are asking for. But I’m curious, at which point did you go, “Hey. Yeah. Maybe this time we’ll get a free product.” And what’s that really about?
Nathan:
Yeah. So I’ve wanted to do a free version of ConvertKit for about three years. And people would always ask for it, and I’d give some diplomatic answer. Like, “Well, focusing on paid customers,” or whatever. Being bootstrapped makes that hard. Like scaling a business without an outside funding, you need every dollar to support scaling.
And we knew that somewhere in there, if we were like, “We came out with a free plan,” and people are like, “Your existing service is not keeping up with like paying users and you’re now letting us people in for free,” we knew that wasn’t going to be okay. And so, we really had to get to a point where the feature base or feature set was rounded out well, you know, and we didn’t have people going like, “What are you doing over here? We’re paying you and you’re putting your attention on people who aren’t paying you.”
Customer support had to be in a really good place for the same reason. And then the infrastructure. Like, we’re getting to the point where we’re sending hundreds of millions of emails a month. And actually, now, we send over a billion emails each month. And that like we had to have no downtime; like emails had to be going out really quickly. It all had to be squared away before we kind of earn the right to launch a free plan.
And then the other part of it is knowing that by introducing a free plan, we’re going to have a bunch of contractions. Like a bunch of customers who are like, “I was paying you $29 a month,” which was our cheapest plan, “and free sounds better. Let me do that.”
And so, it’s like, “Okay. Do we have enough savings? Are we stable enough that even though we think long-term or free plan will turn into more exposure, lowering customer acquisition cost; all this stuff; and more growth, are we willing to take that short-term hit in order to make that happen?” How big is that short-term hit even going to be? And so, those were all the factors that went into it.
Anfernee:
Yeah. That’s really interesting. And I love that you say, “We’ve earned the right to introduce a free plan.”
Nathan:
Yeah.
Anfernee:
Where it’s really a reverse of a lot of the other SaaS out there going, “We’ll put it out free and then I’ll tell people into paid product and see how that works.” And some businesses never get paid.
Nathan:
When I think; a lot of that is because that they don’t know whether or not they have a business model. They’re saying, “Let’s figure out if we can get users. And then, if we can get users, let’s try to figure out a business model that works.”
And so, we sat there going, “Okay. We know for sure our business model works. Like people want to pay for this product.” And so, then the question is can we, in releasing a free version, can we get far more users, and then eventually convert them to pay? And I think in our industry, Mailchimp and others have proven that that’s possible.
And so, it’s like, “Okay. For our sub-niches, instead of going for all business, we’re going for online creators. Can we make that happen?” And it’s turned out well. And honestly, the contraction, like the downgrades that we’ve expected; to throw some real numbers at it, so our free plan that we came up with has – it’s free for up to 100 subscribers and it includes landing pages product and sending broadcasts and all that. But it doesn’t include our automations product.
Anfernee:
Okay.
Nathan:
And so we have 9,000 paying customers that have under 100 subscribers. So who could say like, “Okay. I don’t need the automation that much. I’m going to downgrade to free.” And that being about $250,000 in MRR. And to give you an idea, we’re at $1.7M in MRR. So it would be a really like [Crosstalk 00:29:21]. It will be a very big hit.
And so, we’re like, “Okay. Here it goes. Launch. Let’s see where it goes.” And we started, we hit slow, fairly timid launch, and then we’ve gotten more aggressive with it. And kind of what surprises us is that the downgrades were definitely there, but not to the same exact. We didn’t lose $250,000 in MRR; we may be lost $20,000/$15,000.
A lot of people want to keep paying us because they love the business and the brand, or they want to keep the automations or the premium support. And so, we’ve got under 100 subscribers that are happy to like stay at paying, and that was great to see. And so now we’re looking like, “Okay. How do we get more aggressive with pivoting it and going from there?”
Anfernee:
Yeah. It’s very fascinating because like the numbers approach to this and being that we are an online bookkeeping company, of course, and most of you, but just to have that in mind and say, “Okay, what is potential; let’s look at the worst-case scenario and the best-case scenario and let’s see how that pans out over a time period,” right? So that’s really cool. Tell us about the landing page product and how that came to be, and then why that is driven?
Nathan:
Yeah. So this really sets the stage for a lot of it because what we found; we have an email product, and we found that we had tons of new beginners coming to us, and this is even before launching our free plan. And then after a while, they’d cancel. And like, “Okay, why did they cancel?” And they say like, “Oh, it’s too expensive. We’re not ready.” Those were the two most common cancellation reasons.
And we dig into it and like, “Okay, it doesn’t quite make sense.” So then we put like a little sign-up survey when you create your account. It’s just like a quick little like answer three questions; really informal thing. And some of those questions are like are you new to email marketing or are you migrating from another tool? If you’re new, like do you have a website yet or no website? If you have a website, is it WordPress or Squarespace? You know, we can personalize the journey based on some of those things.
And we found that we’re getting tons of users who are coming in who said they were a beginner and they had no website. Like, “But what are you doing? You can’t email before; like where do you expect to put your opt-in for? Like, what are you doing?” Like, if we think about the creator journey of you need some web presence and you need a way to capture email addresses.
And then, like you go through all of this and we’re for like the middle part of the creator journey and not for the beginners, but we’re getting tons of beginners showing up. And so, we kind of thought, “Okay. What if we added a landing page as part of the product where that’s what these people need.” They don’t need a full website, they don’t need to go buy Squarespace or like self-host WordPress like that. They need a landing page for their new created venture, and then it will collect email subscribers.
And so, what if we started with that? And we always have landing pages as part of our product but they were honestly pretty lame. You know, it was like more of an afterthought. And so, all of last year, we rebuild the whole landing pages product, from the four templates that we had to now, there’s like 35 or 40 templates.
And rebuilt the whole editor and everything, and said, the basic idea was look in these products like Leadpages and Unbounce and Instapage and saying like, “Hey. One, if you’re using that tool out of ConvertKit, you can now cancel it and consolidate it on a ConvertKit to save money.” But then, with the switch to the free plan, it’s like, “Great. But that whole product is actually now free.”
And so, you can ask someone trying out a new creative idea and a new venture. Like, you can launch that totally for free. And as you get traction and that’s working, then you can upgrade to a paid plan. And basically, the idea, and we’ll see how it plays out; we’re only ten weeks into that part of the strategy; the idea is that we’ll align our product around like that natural creator journey that somebody goes to.
Anfernee:
Yeah. And I think that speaks a lot to your own journey, and also just understanding your customer better. Because if you can map your workflow to the way that people do, that their normal behaviours, and that’s where learning that quick about what we do as well and that’s really the key because you can say, “Hey. We understand you better than anybody else.”
Nathan:
Yup.
Anfernee:
Like, that’s a really strong value composition. I love it. A couple of things I want to talk about is I’ve been a user of the product for a long time. And for me, when you implemented visual workflow, like to me, that was huge.
Nathan:
Yup.
Anfernee:
Because I’m a visual; creators being visual. It’s like, I need to understand how things are flowing. And then I think, yeah, the landing page is a good one, too, because that’s been great for all of us going like, “Okay. There’s got to be a better landing page product than this.”
Nathan:
Right. So if you’re using us since before like the visual workflows, then visual automations, that had been 2015 that you’d say you’re with ConvertKit probably?
Anfernee:
Yeah. That’s right.
Nathan:
So yeah, that’s a long time.
Anfernee:
Exactly.
Nathan:
Well, thank you.
Anfernee:
There’s been moments when I was like, “Ohh, Pat’s using it and Nathan’s cool,” and this sort of things, and it’s like, “Okay.” But I’m with you, I’m with the whole, in what you’re doing with The Creator Fund. It just shows where your attention is and what you’re really about.
Now, we’re going to wrap up; I don’t want to wrap up; with the numbers, but I do have some accounting questions for you. And just because we’re curious about how business owners do finances and that’s where we can define our value as a business. So what accounting software are you using for ConvertKit?
Nathan:
Yeah. We use just QuickBooks Online. So we’ve got a pretty, I guess, relatively simple set up there. I’m not so involved in it, but yeah.
Anfernee:
Cool. Now, I mean, you strike me as someone who does have a good grasp on numbers. And from what I’m hearing, you probably have a COO or you might have a finance person who is stronger.
Nathan:
Yup.
Anfernee:
At which point did you decide to bring that person in?
Nathan:
Yeah. So if I can keep my year straight, it must have been at the end of 2014, I think. I can’t keep track of this. Best be; we had five or six people on the team, and we’re growing really quickly. It was in that time when were from $30K a month to $50K to $80K. Like just month after month, they’re growing like crazy.
And I’ve brought in Ashley who’s our Director of Operations and she has a very strong finance background. But she did a bunch of things. Like, the business was not very officially run, and she; well, one, we weren’t even an LLC. Like, we were exploding growth and it was still like a sole proprietor. So she like immediately got us into an LLC, like got healthcare set up, got like taxes caught up and taken care of, and all of that. So she came on pretty early on, and that has been running that ever since.
Anfernee:
And what’s your rhythm look like in terms of looking at the numbers with Ashley, and just going, “Okay. This is where our profit’s at. This is where,” so you know, looking at the P&L or tax coming? Like what’s your; do you have a monthly cadence or how does that work with your business?
Nathan:
Yeah. So we do that monthly, and we also run OpenBooks within our whole company. And so, like our revenue numbers are public to the world. But then, you know, all of our expenses and everything are public within the team.
And so, we update those. It’s in a big Google sheet; we update that every month. And so, this is what happens is as a leadership team, we had to jump on a call and run through the highlights that Ash takes us through, or she records like a 10-15 minute video saying, “Hey. Here’s the numbers in the business. Here’s what you should know about,” and people can catch up on that at their leisure.
So yeah. It’s a good cadence for it and I’m definitely a fan of paying attention to the numbers because I want to know where’s profit sitting out, what’s in the queue for profit sharing for the team, how much do we spend on additional marketing?
Anfernee:
At which point did you decide profit sharing would be an offer that you would give to people coming on board?
Nathan:
Yeah. Whenever, let’s see, I guess it’d be early 2016, we made this big push to be profitable, and I wanted to incentivize the team for helping to do that. And so we made this big push and we set aside; in the period of six months, we went from like 1 to 3% profit margin; it’s like basically nothing, up to 50% profit margins, basically by locking our expenses and just wear on this crazy growth trajectory and we stopped aggressive spending money and decided, “Okay. We’re just going to support the team with what we have.”
And now, it got us in good footing and it got us with three months of expenses in the bank, and we’re able to have our first team retreat of bringing everyone in, and that was really a special experience. And so in doing that, we’ve set aside $100,000 and we surprise the team with profit sharing.
It’s actually probably one of my favourite moments in the company. What we did; so there’s 20 of us, 21 of us in the company at the time, and Ashley and I set aside $100 per person and we went shopping for everybody, and we picked out personalized gifts for every person in the company. So we had a whole spreadsheet where like, “Okay. Brad. What does Brad like? Okay. He likes the outdoors. He likes whiskey.” Like just whatever cut in, and we bought gifts for each person.
Anfernee:
Wow.
Nathan:
And wrap them up. Luckily, our first retreat was in the mountains outside of Boise. And so, we’re able to like; we’re using our cars to drive people up there. Because people flew in, Ashley is in Boise as well. We have like this big wrapping parties. Like, my wife, Hillary joined us. And so, Ashley, Hillary and I would wrap dozens of gifts and put it all together and all this.
And so, people showed up for this retreat. They were blown away. Like that was our surprise. The first time that we did celebrations of like really celebrate how far we’ve come. And then, we had to open these big cardboard boxes sitting on the corner and people are like, “What? What are those?” And like pass our personalized gifts for people.
And those little things like, this one woman, Nicole, on our team, she had made a passing comment like a month earlier about how her waffle maker had broken and that was a bummer. She needed to get a new one because her and her boyfriend’s like Saturday morning tradition was to make waffles.
Anfernee:
Oh, wow.
Nathan:
You know, and so like she opens one of her gifts – it’s a waffle maker. And so, she’s like crying because of that. And it was just this amazing moment with the team. And then, like that kind of wrapped up everybody sort of showed what gifts they’ve got, and things just starting to devolve and we’re like, “If we could go gather in front up again because we actually have one more thing. “
And that was when we passed up profit-sharing checks for the first time and announced that we’re doing a profit-sharing program. And for people who had just joined the team, that was like $1,000 or $2,000; and for the people who had been there for a year or so and like gone through these crazy time with us, they were getting like 10, 11, $12,000 in checks just for the last six to eight months. And they were blown away, and that was such a cool moment. And it just became a key part of our culture ever since.
Anfernee:
Yeah. That’s really incredible and I love that you shared that because I think it gives perspective around what’s possible when you do grow your company and when you can put people, like you understand they’re a key asset. You’re like, for them, if you don’t have those team members, ConvertKit doesn’t happen the way it does. Alright?
And I think we can sometimes lose sight of that or we get too focused on the growth and the audience and all these other things; other metrics we have out there. But what happens on the outside is evidence of what’s happening on the inside. And I think I resonate with, particularly you as a human being. It’s really cool.
Let’s wrap up with this question, which is what I always ask our guests, which is what does financial freedom mean to you?
Nathan:
That’s a good question. I mean, I think it’s one of the things, if we look back to 2008, the last recession. I was two years out of college, or out of a year, a year and a half out of college; something like that. I was freelancing; everything like got hit pretty hard. And I knew, and actually like, okay, everything is on sale now. Wouldn’t it be nice to have money and stability and all of that?
I was still single then, but my wife and I got married, I guess, a year later. It has kind of all this happening; and like I watched clients go away and all these projects that I thought I was going to get not happen. I made a promise to myself that, okay, the next time this happens, like the next recession, like, I’m going to be in a totally different position.
And so, it’s one of those things I realized that, okay, now I have financial freedom. Like we live on a 5-acre farm in the middle of town that we love. And so, if we have to be quarantined somewhere, it’s not a bad place to be quarantined. We have plan to invest, we have a really stable business that takes enough risks, but we always make sure that we’re going to be just fine.
If we don’t grow aggressively, no venture capital is going to like to remove me as CEO and replace me with someone who’s going to like push for the exit. So I think financial freedom is, I mean, it’s a position that we’re in right now, which I feel very privileged for. But it’s like knowing that if I didn’t work, even if ConvertKit went to zero of its value or anything like that, like my family is taken care of and we can live on our farm and everything is good.
Anfernee:
Yeah. That’s amazing. Your girls are healthy, your wife is healthy, you’re good. Your parents are there or wherever is around you. You got your acres. I think a lot of people, this is what it comes down to.
It’s funny because we go in this pursuit to create value and to be recognized in this certain human things, but when it comes down to it, like what you said, if the company disappears, I’ve got the people I want around me, I’m in a good space, I’m fed, and you can always build a new company. Like, that’s always there, right?
Nathan:
Yup.
Anfernee:
Amazing. Thank you for sharing your time and your energy with us today, Nathan. I know you’ve got some other things to do today. I really admire what you’ve been doing and our community knows that as well.
So I would definitely link out to all your, like the free offer and the free product and other things and the notes and the fund as well. Just a final question, is there any preferred platform that you like people to connect with you on?
Nathan:
Yes. So you can check out my blog at nathanbarry.com. Have to say Twitter just to add, @nathanbarry. That’s probably where I’m the most active. And then, yeah, if you want to check out the landing pages and the free version of ConvertKit and all of that, you can actually just go to landingpage.new and it will take you right into that. We’re pretty thrilled that Google gave us that .new extension. And so, might as well play with it.
Anfernee:
Love it. Cool. Alright. Well, thanks everybody for listening in, and yeah, ConvertKit.com. Again, we’ll add all the links and all the things, and definitely check out if you can contribute to the fund, please do. And if you want to apply, you can as well. Nathan, have a wonderful year, and hopefully, will talk again real soon.
Nathan:
Awesome. Thank you.
Meryl:
Would you like some resources to help you get on top of your business finances and to prepare for what’s coming? We’re living in unprecedented times where borders are shutting down, mass gatherings are canceled and cities, even entire countries are going into lockdown in an effort to flatten the curve.
In tough and uncertain times, it’s more important than ever to rally together. And here at Bean Ninjas, we believe that now more than ever, it’s important for business owners to understand their numbers and to get on top of their finances.
To help with that, we’ve created some helpful tools and resources for you, and most of these are free. If you head over to beanninjas.com/resources, then you’ll be able to access all of them.
Contact Nathan Barry:
- Nathan Barry Blog
- Nathan Barry Twitter
- Convert Kit Website
- Convert Kit Facebook
- Convert Kit Twitter
- Convert Kit Instagram
References and Links Mentioned:
- Convert Kit Free Product Offer
- Convert Kit Landing Page Product
- The Creator Fund
- Helpful tools and resouces
