TMBA572: 4 Things We’ve Learned From Building a New Software Platform

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We’ve been receiving a ton of requests recently from listeners who want to hear an “old school” episode, so this week Dan and Ian are jumping on the horn to talk about the progress that they’ve made with their remote jobs business Dynamite Jobs.

Since the start of the summer, we’ve been building a new software platform designed to make the hiring process a whole lot easier for entrepreneurs.

Just a few weeks ago, we finally started onboarding users into the platform.

So far the results have been remarkable, but the challenges immense.

In today’s episode, we’re sharing four specific things that we’ve learned from creating a brand new software product.

You’ll hear updates about some key figures in our business, how running a SaaS business has differed from a lot of our other ventures, and a whole lot more.

See the full transcript below

Listen to this week’s show and learn:

  • Our vision moving forward for Dynamite Jobs. (6:44)
  • The new software product that we’ve been developing. (17:24)
  • The similarities and differences between SaaS and physical products. (25:10)
  • Why getting a CTO was essential for us to start building software. (35:50)
  • The emotional complexity of running a SaaS business. (40:01)

Mentioned in the episode:

Before the Exit – Our New Book
TMBA Masterminds
Partner With Us
The Dynamite Circle
Dynamite Jobs
Dynamite Deals
Tropical MBA on YouTube
Post a Remote Job
Upwork
Fiverr
Simon Payne
Rob Walling

Enjoyed this podcast? Check out these:

TMBA557: Ascending the Staircase
TMBA564: The Knowledge Gap vs The Efficiency Gap Revisited (Again)
TMBA566: Why Do SaaS Businesses Fail?

 

This week’s sponsor:

Today’s podcast is sponsored by Woven.

Woven is an all-in-one calendar that helps you manage and blend both your work and personal lives, enabling you to spend time on what matters the most.

With Woven you can sync all of your calendars in one place, including Google Suite and Microsoft integration, create new scheduling links from directly within your calendar, and much more.

Woven makes it easy to plan, join, and manage video events, helping you schedule with Zoom and Google Hangouts. With multiple timezone integrations, Woven is ideal for remote workers and productivity hackers.

Woven is a calendar for power users and those who are serious about their productivity, allowing you to schedule time with others and protect that precious maker time for yourself, all while giving you analytics so you can track your time and gain insights into your week.

Check them out over at Woven.com and a huge thanks to the folks at Woven for sponsoring the show.

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Have comments about the show?

Do you have ideas for things you’d like Dan and Ian to discuss on future episodes?

Our producer Jane would love to hear from you at [email protected] or leave us a voice message using the record button below.

 

 

Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.

Cheers,

Dan & Ian

 


Dan: All right, Happy Thursday morning. Thank you for joining us. I got the Bossman here, we got an old school episode on tap. What does that mean? By popular request from you the listeners. Yes, basically, we’re going to talk about what we do every day, specifically at Dynamite Jobs today, which since 2017, has been a popular remote job board. But now it is evolving into a software product or a SaaS product. And it’s a new experience for us. And we’re going to share four key observations that we’ve had, in today’s episode. Your thoughts, Bossman, before we get started,

Ian: Help, send help.

Dan: It’s part of the wonderful part about doing this, I’m very certain that we will get emails from the audience today, that will help us, and it’s always been a two-way street here at the pod. So I really enjoy doing these sorts of episodes. And I’m thankful that people still want to hear from us in this capacity.

Ian: Yes Dan we spent a lot of time on this show, if you go back to the old episodes, talking about just sitting in the thick of it. We would call each other and be like, ‘Oh, man, what is going on? I don’t know’. You’d be like, ‘I don’t know, either’. And we’d be like, okay, tomorrow, let’s just do some more of I don’t know, where we’re out right now.

Dan: Ian, can I give some context for what we’re going to talk about today? You know, it’s worth touching on, you know, all of our business units here at the podcast. Obviously, something we’re going to continue doing through 2021, we got advertisers well into the next year. That’s been really cool. You know, one of the overall lessons, meta lessons, Ian that I’ve learned time and time again and in 2021, is that as the founder of a business, you have to find ways to stay interested and stay engaged. And that’s by design, something you can design into your business. And that was really one of the big takeaways of our book ‘Before the Exit’, available at all reputable booksellers currently at a 4.9 review on Amazon, which I think means that, only fans of the podcast are buying and reviewing. So we appreciate it, guys. One of the lessons of that book, Ian, was really, you know, we kind of got bored with our old business. And I think one of the lessons for us this year is like, we refuse to do that. Because like we said, there are no finish lines, this is a lifestyle business. I think it’s on us to find ways to stay engaged and interested in our projects and our businesses.

Ian: I think that’s right. It’s sometimes an impossible task too, right? But one of the heuristics that we came up with several years ago was like the onstage tests in the question is, is this something I want to be talking about or doing in a professional capacity five to 10 years from now? Can I do it on stage? Can I discuss it on stage as if I was presenting my ideas and my business to somebody? And I think that test still holds up, Dan, in terms of, you know, if you’re going to start a project, is it something that you want to be on stage talking about five or 10 years from now,

Dan: A related conversation we’ve been having lately is one about legacy, you know, what kind of legacy do you want to have? And I kind of been digging into that, like, what does that mean? What do you want people to say about you, that doesn’t really resonate with me so so much, and then I kind of thought, well, maybe it’s more important, like, what you say about yourself? One of the things that’s remarkable about living in America is probably, for Americans, like the first question you ask them, one is like, you know, ‘What’s your name?’ And then the second question is like, ‘Well, what do you do?’ And in my mind, like, your legacy is what you say, right then. It’s partially the story that you have to tell yourself and others repeatedly on a day to day basis. And that legacy is like I’m kind of bored with this thing that I have or whatever, you know, that can weigh on you. And I think having that story for yourself every day about what problems you’re solving, why you’re interested in them, and what unique perspective you have on them as an important part of building a business,

Ian: You can just tell that we’re at different stages of our life, you know, for you that that’s the question that comes up a lot, because that’s what you know, happens on the golf course. For me, it’s, ‘Can I have a lollipop?’

Dan: All right, Ian before we get into these four observations that we have about, essentially, a lot of the new work we’ve been doing over at Dynamite Jobs and the platform behind that company. I wanted to just give some overall context for the business. Of course, ‘Before the Exit’ is still selling well, on Amazon. In fact, I have been embezzling those funds for my personal use and re spending them on DC merchandise. I’ve got a hat, a hoodie, and a golf shirt coming in the mail. So we did put up a DC merchandise website for DC members, gotta give a shout out to all the DC members. Of course, the big change there is we have no in person events recently.

Ian: Totally sucks.

Dan: Totally sucks. But still, people continue, the business is going strong. We recently brought on a new community manager who is an experienced member. That’s been amazing. We’ve been having social hangs on discord, we got merch now, conversations going in there, speculation about travel, how to run businesses in COVID, how people are adapting. And so Dynamite Circle continues to be a part of what we do on a day to day basis. Because there are not any big evolutionary shifts in what’s happening in the membership itself we’re not going to talk about that today. But a lot of the things we’re building over at DJ are built to benefit those customers. So something I just wanted to give a shout out to all DC members. But we’re going to be focused on Dynamite Jobs here today.

Music

Dan: So Ian before we get into our observations, I thought I would give you a little bit of a CEO challenge.

Ian: Uh-ho, this is unprompted everybody

Dan: This is unprompted. I want to say – what is the vision for Dynamite Jobs? Because a lot of listeners to the show say, ‘It’s a job board. There are remote jobs on it. Great. You guys have a job board’. But it’s your job as a CEO to have, I think a bigger vision about where it’s going. And so I challenge you, right now.

Ian: I’ll tell you this. Just for a little context, this isn’t our first job board. We started a little job board called ‘Tropical workforce’. Do you remember what year that was? I’m not good at that.

Dan: 2012

Ian: Okay, 2012, when, when we kind of saw this opportunity popping up, like basically what we’re doing is we’re hiring interns to work on our e-commerce physical product company. And we thought, well, there’s an opportunity for more of these people to exist. And because we’re having such good success with it, you know, basically, mostly younger Americans wanting to live abroad. So we started ‘Tropical workforce”. I don’t really remember how hard we tried. But you know, the demand wasn’t there, scattered, whatever it didn’t work out. So I just mention that because that was kind of our first jump into the job board scene.

Dan: Yeah. And I mean, and then subsequently, through the DC, we have facilitated hundreds of placements over the years, informally, essentially, that was part of the original vision of DJ, which is, ‘Hey, let’s make this process which is happening in the podcast community, informally, let’s formalize it and see if it, you know, helps people better, essentially’. And so far, we’ve done that, I mean, in terms of what we can keep track of, we’ve made 300 official placements, and that’s full-time Remote Jobs. And that doesn’t include freelance or connections, or investments, or friends or all these other connections which is stuff we can’t keep track of. But in terms of like, what we can sort of put a pin in, there’s been 300 hires so far, which is pretty cool.

Ian: So our initial vision for Dynamite Jobs was like, basically, DC-ers have these awesome companies, these great company cultures where they’re remote, flexible, working on fun projects. Let’s get people into those companies because DC-ers were coming to us saying like, hey, I need to find people and it’s really hard. I’m not gonna go post on ‘Indeed’, and find a bunch of people that used to be managers at ‘Chick-Filet-A’, you know, applying to my job. So we were really trying To facilitate that relationship, the best remote jobs, and the best people that were qualified to work for these jobs.

And so, since 2017, that’s basically what we’ve been doing. And then I think our vision is really evolving, Dan, now that we’ve started to make these connections and understand more about both sides, this is kind of a two-sided market – the applicants, the employees, and then also the jobs, basically, the companies. With that, I think our vision is kind of changing. And so I’ll just throw out what I think our vision is recently, and what’s probably going to stick with us for the next year at least, basically this idea that the next company, whatever industry, you’re in, the next company, that the incumbent, whoever comes into that industry, I believe strongly, in a couple of years from now, if not today, they’ll have half the employees and double the number of service providers, software subscriptions, etc. Meaning, I think that you can run and grow sustainable, profitable businesses with a lot fewer people than they used to be able to. And that is because of the distributor workforce.

Dan: Yeah, and if I were to put my, you know, overly complicated philosophical twist on this, I feel like the fundamental note of productivity is moving away from the individual or employee, and being replaced by specific value propositions. So essentially, you can duct tape together a business with hyper-focused units of productivity. This is a complicated way of saying like, you know, what you’re saying, which is, you know, you have a smaller team at the core of your company. And they are people who are great at integrating, they’re great at thinking on their feet, critical thinking, again, this is why we were hiring smart young interns. We needed people who weren’t just focused on the task at hand, but could manage a variety of different things going on in the business.

And then those people are going out, pulling together SaaS products, they’re buying productized services. So we don’t need an in-house counsel, we buy, you know, a service from a lawyer that does trademark, we buy a service from a lawyer that does contracts, we do buy a service from a lawyer that does TOS. As these units of productivity become more agile, more focused, there’s no longer a need to do them inefficiently in house, we can efficiently bring them in, you don’t need a social media manager, you need a social media service. You don’t need an SEO person, you need an SEO service, or you need a freelancer who focuses on 301 redirects. And the moment you do a 301 redirect, the in house person doesn’t have to learn how to do that and take a couple of weeks doing it, no, the integrator, the key person on your team goes out and essentially invests in that unit of productivity into the team. This is becoming increasingly possible – look things like SaaS products, they’re relatively new in the world, and productized services focused on internet operations and marketing, they’re relatively new too and so as these things pop up, and we start to build businesses based on them, the question comes up, you know, when you’re hiring, ‘Is what you’re looking for a person? Or is it that thing that you need in your business?’ Right? The answer is, ‘Well, could be both’.

Ian: It’s very interesting, a lot of times with these services and productized services, you can gain efficiency, and you can also drive cost down. So in the past, you know, you might have had to hire somebody to do this work for you full time and had payroll taxes and all this stuff. Now, it’s a deduction. Now you just bought a service for your business.

Dan: So you know, in the early days of, you know, our careers, there were websites like best jobs.ph, you know, and before there was somebody, you know, pulling together virtual assistants in the Philippines, this wasn’t really a strong possibility for entrepreneurs at scale to have administrative work done in the Philippines, for really good salaries there and now, because that resource became legible, all of a sudden, it just became common in our industry. And then you got freelance websites like Upwork you got Fiverr, which is very much moving into like the Business Services space now where it’s like, rather than hiring a consultant to like launch your podcast for you, maybe you just, you know, hire someone to do this specific element off Fiverr for you.

And that’s purchasing like a unit of productivity into business, essentially purchasing revenue into your business, which is something we’ve talked a lot about on this pod through Dynamite Deals, which is a project we worked on last year. This is all saying that in like hiring someone remote in a country that’s strategic, whether that’s Latin America, because of a timezone or whether that’s Eastern Europe, because of the education or Philippines because of the English language and customer service skills. This is just the tip of the iceberg in terms of how we run our businesses. It’s not the end game, remote teams aren’t the end game, we’re going to continue to evolve how we run our businesses. And so I would sum it up to say, the vision of Dynamite Jobs is that we believe, you ought to be able to run your business, or make a living off this platform if you understand this new reality of how business gets done in the 2020s.

Ian: So what we’re going to do today, Dan, is talk about four reflections that we’ve had, especially just like in the last six months, because a lot has changed. Like I said before, the first vision that we had was like, pull together the best jobs and the best candidates to hire full time remote, we’re still sticking with that. Our database, our pool of applicants is growing like wildfire. It’s amazing to watch that happen. But I’ll say this about that space, it’s very hard to make those connections, you know, you say like 300, we’ve placed 300 people in companies in the last two years. That to me is an unimpressive number in a lot of ways. You’re like, oh, only 300. Right. But the great deal of difficulty that it takes to do that is immense. to get that relationship going, because it’s so high friction, it’s not leveraged. There are a lot of moving parts, it’s just really difficult to do that on both sides of the aisle.

Dan: There’s a lot of wasted energy.

Ian: There totally is, yeah, there’s a lot of false starts. So, I don’t think that we’re necessarily shying away from that, I think we’re actually building a product that’s going to help facilitate those relationships and make them easier. But I’ll say this too, in terms of vision, and this is something that’s going to make it into our new product very shortly, I truly believe that the best way to get a full-time job is to get a part-time job, meaning start working as a freelancer or start taking a bite out of a small project for a company that might have the ability to hire you on full time.

Dan: Yeah. And again, this is back to the vision, which is you’re deconstructing full-time work. Full-time work isn’t going anywhere. The idea is, how do you make it more efficient? You know, how do you and that’s the promise of remote work. Well, one of the ways you make it more efficient is you hire the right people in the right place that aren’t constrained by geography. Now take it to the next level. Like, maybe if you want to pay someone $100,000 a year to do X kind of technical work? Well, maybe you would start your relationship, not at the hundred thousand dollar mark, which often requires literally 200 people to get involved in that, right? If you have a contest for a $100,000 prize, it is essentially a sweepstake, right? You have to keep entering these sweepstakes until your ticket comes up. And then you get that job and you hang in it for however many years. There are ways that these things get done informally, in communities, at events, through marketing, through Instagram, through websites that make these transactions go down faster. And that’s why people join communities like the Dynamite Circle, and the idea and the challenge is, well could we make this a little bit easier? I want to give some key stats here, even before we get to the observations, but I think it’s worth saying, like, you’re talking about our product. What is it?

Ian: Okay, so something happened a couple of months ago. We’ve brought it up on the show. He’s been on the show. He is our main man, Simon. And he came on to help us with the development of this new platform. And so when we talk about the product, we talk about the platform and basically, the architecture of the platform is connecting companies and candidates. And the way that we’re approaching that is through profiles. So every candidate has a profile. Now, if you go to our site, there’s an ability to sign up for your profile. And in about a week or two, a lot of these profiles are going to be public. Right now they’re sitting behind are sitting behind a wall, and we can see them all, but not everybody else.

Dan: We send them to our clients right now essentially

Ian: That’s right. And all that’s going to be flipped public pretty soon now. So the biggest thing that’s happened to us really, Dan is, from my perspective, is we’ve gone from doing like a tonne of manual work to automating a bunch of these systems and processes.

Dan: The big question mark about the product is, well, what will be the convention for connection? So right now, we know it’s a sweepstakes model for full-time employment, right? You post this great offer with this big prize, and then 200 people send you their profile, right? And say, ‘I would I want that prize, I’m willing to interview for it. I’m willing to do test work and assessments in order to get that price’. Well, there are opportunities too for people to connect in different ways. As we said, gigs is a common one, ‘Hey, I’ve got something to do over the weekend, Can someone help me out?’ Another way you could do that is by offering services, ‘Hey, I’m willing to do this for you for this amount of money’.

And so once we get this sort of profile situation going on, the question is, well, ‘How are people actually going to connect?’ Say you’re interested, for example, in getting SEO work done? might you be able to follow profiles that are relevant to SEO, or the particular kind of SEO that you do, and engage with people via their offers, their gigs, or their jobs? That’s sort of where things are heading. Now we’re definitely doing like the PowerPoint vision talk here because I feel like we’re just in the clouds because that’s not the reality of our day to day. We are still servicing clients, servicing listeners to this show. Some key stats, I think are worth bringing up. We mentioned we had a $16,000 month just a few weeks ago, our revenue through services at Dynamite Jobs has been a pretty consistent $10,000 a month on average. And so that’s good, not great. Certainly, we’re still burning money on this project. But it’s cool to have consistent services coming through and clients to serve and to learn from.

Ian: I’ll do my little pitch here, which is, we have our own little productized service, we’re talking about, like the deconstruction of the company. If you’re hiring less than 20 or 30 people a year, you probably can’t and you don’t want to afford a traditional recruiter to be in your company, we offer that service to people. So we will go out and find you the best person that is looking for a remote job to come work in your company, often saving you a tonne of time.

Dan: Another key stat I just want to bring up is, as of right now we have just over 1000 candidate profiles on our system. This number has been and we expect it to be changing rapidly. One of the most exciting things I just got to share emotionally in our business for years is watching the product go up very recently, as of a few weeks ago and just seeing as we’re on the phone right now people signing up. And that’s a kind of a new experience for me as an entrepreneur to watch something happen so fast.

Ian: Before we were collecting resumes, and cover letters, and emails, and we have far more of those in our database. And that’s the way that we’re collecting people basically is we’re like manually moving these things around in Airtable. And then recently, we flipped the switch on this new product, this new platform, where it’s a sign-up and people are signing up like wildfire. And you know, one of my concerns, before we flipped that switch. I was like, ‘Oh gosh, how are we gonna convert all these people, you know, all these resumes to like profiles. I was like, man, we’re gonna have to go to outsource to the Philippines calm or whatever it is, like, hire somebody to like, manually fill these out’. I was fretting about this. And then Monday, we flipped it on like Thursday or Friday.

Dan: It was Friday night, Friday night, we flipped it on.

Ian: I came to the meeting on Monday, and I was still cranky about it. And Simon’s like, ‘Dude, have you looked at the Air Table?’ And I was like, ‘No, why would I do that?’ You know? And there was like, there was a lot of people that had signed up, like, I don’t know, something like 30 or 40 people just in the first day without announcing it, you know, just off cold traffic. And I was like, ‘Oh, this is interesting’. And then the next day, it was like 100. And I was like, ‘Oh, this is interesting’. So we’ve literally had this flipped on for like a week and a half. It’s exciting to watch that many people sign up so quickly. And so now we’re trying to figure out like, ‘Okay, what is the actual action that we want these people to be doing?’ Because you know, it’s like, fill out a profile. It’s like, well, okay, so we designed this profile, it’s like, well, what’s the most important part of the profile? Because clearly, everybody’s not filling out everything in their profile. So we’ve kind of had to, like, you know, go back and reimagine our product in a lot of ways too Dan, because you make all these assumptions, right? You create this beautiful profile, and then nobody treats it the way that you think they’re gonna treat it, of course.

Dan: Obviously, there’s a lot going on. I want to get into these four reflections Ian before we do that, I want to give a sales pitch to the audience. Because, you know, there’s a lot going on here, we got 1000, new profiles, we’ve got 10,000 plus resumes, we’ve got a job board a lot of traffic, what do you have for me? And well, what we have for listeners of this podcast is, if you want to profile on the system if you want to message candidates directly, if you want to post unlimited jobs and unlimited gigs, provided you do own one of these cool remote companies we’re talking about, you can have access to all that for $100 a month. That is our first feeler out in the product market fit game. You know, you’d be one of our first customers to this $100 a month product. Sign up for that we’ll definitely work with you and make see if that works out for the listenership of the audience.

Alright, so without further ado, let’s get into the four reflections we having done this now for six months. Ian, I thought it would be interesting for us to reflect briefly as our first reflection on the difference between a physical product business and a SaaS business. So you know, a lot of us are currently thinking about evolving our business models, we’re no different, we have experience in all different kinds of stuff, including product business. And now into SaaS, which look, SaaS wasn’t always around, it’s a new thing, relatively speaking. And it essentially means that you are selling software on a subscription basis.

It’s typically delivered through a web interface, it typically has faster updates than old school software that you know, you got on a CD ROM or whatever, you can ship updates to your customers, there are typically community elements to it, where there’s a dynamic element when you log into the database, you see new candidates, you see people coming through. This is a SaaS, obviously different from a physical product business where you’re coming up with cat furniture, as an example. I’m curious as to how it’s felt different for you, what do you think strategically are the differences? How do you behave differently now that you’re thinking about software instead of valet podiums or cat furniture?

Ian: Well, the first thing is, that’s a weird question. Right? It’s like, it’s, I think it’s very us related, but it doesn’t necessarily need to be. So like, you know, who’s the person that’s sitting down thinking like, ‘Should I start a physical product business or a SaaS company?’

Dan: I think a lot of hands just went up in the audience.

Ian: Really?

Dan: Yeah. Because we believe we can do all different kinds of things. And the reality is we can, you know, and this stuff is just a choice.

Ian: I think that’s true. I guess the reason this question makes a lot of sense for me, though, I guess, is because I have a little bit of experience in both. And so, when we’re sitting down designing this product, this platform, it feels a lot like designing products, like physical products.

Dan: It does.

Ian: There’s this stage where you’re designing and developing in the dark, hopefully, you’re talking to your customers, but a lot of times that you’re not, maybe you got like a tidbit of information, now you’re kind of running with it, and then you have to go to the woodshed or you have to go to your factory and you have to put down some money to design or develop something. There’s this area of like feature creep, you know, where you can be working in the wrong direction, and all these bad things can happen. So hopefully, we’re trying to avoid some of that. But in terms of the product development, it feels very similar in terms of tinkering. That being said, the interesting thing for me is like at some point with your physical product that tinkering stops and you have like to ship the product out to people. And I think that’s where a lot of people can get stuck in The SaaS product, which is they can basically tinker forever. And like do these like limited releases and things like that. Because you can do that software, the physical products, you can’t really do that,

Dan: Right, so someone’s buying it, or they’re not. And it’s sitting in your warehouse, or it’s not.

Ian : Exactly. And so shipping is one thing that I think is very cool with physical products, because there has to be an end date, and like, you have to get it out there. SaaS, like, not so much. But then the other thing that I think is like very cool about software products as opposed to physical products is like, you know, in the lifespan of a physical product for us, Dan, we could have done like five or 10 versions, like every year, we update something, and it’s like, you get a phone call from like a couple of customers, and it’s like, ‘Write it down in the list’, right. And like six months later, you get the same call, it’s like., ‘Write it down on the list’. And then at the end of the year, you get to update the product. And you’re like, ‘Well, let’s look at that list again’.

Whereas with software, it can kind of be like a continuous evolution of the product. Because to deploy these updates, a lot of times are much easier. And a lot of times to deploy the updates means that you can charge people more too so you have this built-in like feedback loop with the product because you’re ultimately talking to your customer a lot more too because that communication a lot of times is built in the platform. You’re talking with your customer, you’re serving them updates, and then you’re able to charge them more for these updates. So you’re constantly working on the product. Whereas with like the physical product, you’re putting it out into the universe, and then you’re working on it every once in a while. So it feels to me, at least in this early stage that, you know, some of those benefits are there. But then also, one of the, I’d say hidden costs is that you always have to be working on your product,

Dan: And on that front, you could say something in a team meeting that’s like, ‘This product needs x feature’. And the costs of that feature could be very difficult to articulate that moment in terms of time and investment.

Ian: Oh, yeah.

Dan: Whereas with the physical products business, it was very clear, like what our unit costs were going to be. Whereas with a SaaS, it’s like, you could say, ‘Oh, well, I really think we need to have this for these clients, these group of clients over here’, and like, boom, you just spent like three months of development resource on that. And that is a big, big challenge. And I think why podcasters, like Rob Walling, for example, talks about, you know, needing to have the experience. So a lot of the reason we went into the physical products business at the beginning was because it was what we knew, and what you know, is important to this whole thing. Occasionally I’ll bring it up on the show, I put out a little SaaS tool way back in the day before we even started a business. And it costs a lot of money, all the money went down the drain, because a few sentences can cost you 10s of thousands of dollars. So that’s one thing.

Another thing I think it’s really worth bringing up Ian is today, we jumped on a team call, and our product was broken. So one of the team members got off the call and went and emergency fixed it. So the team call was a little bit shaken up, we had to fix a problem. And remember, if that was the product business, one of us would be on an airplane going to a warehouse somewhere, having to send stuff back to the factory. And so from a lifestyle perspective, you can understand that like, okay, it sucked that our product broke. But it was pretty cool that we could fix it from our laptops. And I can understand why SaaS is really held up in the internet sphere as sort of this end game of business models that really does provide an extraordinary amount of lifestyle, flexibility and possibility.

All right, so our first reflection is based around the differences between running a product business and a software business. The second is this idea of crossing the Rubicon. And I wanted to talk about our team composition. And the fact that especially I think, in a SaaS business, that team composition is critically important because a lot of the intelligence in a business won’t be immediately externalized into product. In other words, it’s an ongoing product conversation, and who’s building that product is really critical.

Ian: Yeah, for us, this has been surprisingly difficult, just like trying to figure out what we’re all supposed to be doing. You know, we have conversations still, we had one this morning about, like, ‘Who’s doing this? Who’s responsible for that? And you know, things move fast. You kind of have to be agile and adapt to that, but I’ll say this. One of the things that I’m most surprised about is, when we were just connecting candidates and jobs, with the job board, we basically had a marketing company. And the end game was to match somebody with the company. But it’s like, on the front end of that, you’re like, pretty far away from that actually happening, you have to go through a series of steps. And so we just like started to rewrite the sales page the other day, damn. And, by the way, our sales page is like, all over the place. We’re still trying to figure it out. But we try to sit down and write the sales page. And we started to change our op, and we started to change our opt-ins now that we have this platform. And the first thing that we’re doing was like trying to get people’s email. And the conversation was like, ‘Well, wait a second, like, why do we need people’s email, we just want to put them directly in the product, like when they get in the product will have their email’, and I was like, ‘Oh, we’re not a marketing company anymore. We’re a product company’.

Dan: Yeah.

Ian: It was kind of this cool moment. And the reason that moment happened …

Dan: The Rubicon, so to speak.

Ian: Yes, was because we brought on the CTO, Simon. And he’s the one that kind of like, yeah, was able to help us cross that threshold into a product company, which I think has been pretty cool.

Dan: Yeah, I mean, look, this thing doesn’t happen without a technical person who is fully competent, fully engaged. And I think that is fundamentally for a lot of listeners of this podcast, whether you’re a technical person or a marketing person, is finding ways to get both done at the same time. We talk about software as a service, right? The service part is a big part of it, which is, are you serving people? Are they paying? Do people know about it? That’s a big, big challenge. As well as the technical elements, which are ongoing as well. So you really got to have both. And like you said, we didn’t have a product, we didn’t have a company, that any kind of potential like we have now until we secured a CTO,

Ian: You asked me the other day, you said, ‘Do you think it’d be possible to, like, outsource the development of this product?’ And I think that’s a good question, especially for non-technical people like you and me to think like, ‘Hey, can I just go hire somebody to build this product? Or do I need to bring them in as a CTO and as somebody that’s part of the core structure of the company?’ And I think that’s a great question, it’s still an open one for me, I can go both ways on that. But I’ll bring it back to the physical product business. When you go to manufacture a physical product, you have a tonne of options in terms of what factory you want to use, assuming this isn’t some, you know, battery that only Elon Musk can develop. Most products are ubiquitous. And, you know, the manufacturing process is fairly well known. So you kind of have your pick. But with software, it hasn’t gotten to that point yet. And I kind of wonder if it ever will, if there’s going to be like these factories basically, that you can just say, like, ‘Hey, this is my vision, like, I want you to build this’. And when you’re wrong a little bit wrong about your vision, it only takes a couple of days or a couple of hours to change that vision. It’s certainly not there right now. But like with the physical product that it definitely is.

Dan: Yeah, and I think that’s, again, one of the biggest challenges that we’re facing with SaaS and that anybody faces, getting a CTO is absolutely critical and essential to us doing this sort of work. In my view, it couldn’t be outsourced, given the complexity of the problems we’re trying to solve and their ever ongoing nature. The hard part is figuring out a way to pay for it. And that is why more people don’t start SaaS companies. And that is why more people shouldn’t start SaaS companies because you need to be in a position to spend hundreds of thousands of dollars developing a product whereas, with a physical goods product, your costs on that spend can be controlled, right? If what you do is you say, ‘Okay, I want to go to SaaS, I’m going to have like this team builder prototype, I’m going to go spend, you know, $35,000 outsourced into a development agency?’ Well, what if it doesn’t work? Are you ready to spend the next 35,000? And I think that that’s really the question you face in SaaS. And it’s a weird thing because well, it could never work, that’s the other thing, and it often doesn’t. Whereas with physical goods is pretty clear, like, if you’ve demonstrated interest in your prototypes, your initial run, you kno, the cost of that unit, you can go by it, and you can pump them out. That is the difference.

Ian: And this is why investor money is so interested in this space because you need tonnes of it to get started and the potential upside is tremendous.

Dan: 100%. One of the things we talked about with ‘The Thousand Day Principle’, when getting to exit velocity with your business and stuff is like, really trying to get a sense for what things cost, and then what your cost structure is going to be. So you know, when we look back on like, well, how much should it really cost us to start our product company? Well, we needed 65 grand to get our first container. But we also needed you to work full time for four months before that, and then I worked full time. And then I got a freelance salary. And it’s like, you put it all together, it’s like, well, maybe it cost us like 300 grand, but we figured out to like, get around 200 of it. And when you’re talking about getting a technical person to work for you for a year, you’re not getting around a whole lot, like they got to eat, you know. So you see where I’m going with this is like, we’re talking about hundreds of thousands of dollars in startup costs here. And so I think there’s a big barrier to entry as well. And one of the things I want to add just for a little bit of context, and I know this, it’s a super Insider. But I think it’s worth mentioning that we really do have an amazing team around this product. And they are very international, I think maybe some listeners think we’re sort of America centric, me and you are very America-centric right now.

Ian: Can’t leave.

Dan: We have a team that’s based in Thailand, in Colombia, in Europe, really all around the world. Hardly any of us share a nationality. And so I guess our company, in some ways, reflects the community in that way. We’re a very, very global team. And I’m really proud of the team. We had a team call on Friday, and I took a screenshot to send to my family. It’s just so cool to see so many smart people focused on this problem that we care a great deal about, you know, it feels really great, okay, it’s only 300 people Ian right now that we’ve hooked up with jobs, but they’re all people, that’s 300 people that have jobs in listeners’ companies, that they get to spend more time with their family, they get to travel more, I think that’s really cool. That’s happening on our team, too. And so I think that that’s a cool element that we are dogfooding our own product, we are the first people that would use it.

Ian: The other thing too, that really makes a difference, Dan, especially in this stage that we’re at is like flexibility in your team, you know, have you hired the right people that can adapt to a new situation that can not get their ego so wrapped up in their daily workflow, that they can’t change directions almost an instant? Because that’s kind of the power of this platform, too, as soon as you turn a switch, as soon as you like you see a new pathway, a lot of times you can start running for it. And that means dropping what you’re doing potentially in a small team with limited resources. I’m mostly proud of our team, not for their nationality, because that wasn’t their choice, but for how adaptable they are.

Dan: All right, our third observation. The emotional complexity of running a SaaS business. You know, one of the things Rob Walling said on this podcast and someone we’re really looking for a lot of guidance on these issues, is he talked about the anxiety of running a SaaS, you’re kind of competing with everybody all the time. The extreme expense of it, and the leap of faith that you have to take in order to make product market fit. And I’ll say this if we sound a little bit garbled and confused, in terms of what we’re doing, the reality is, we’re not exactly sure. We know how to solve problems for remote companies, we do it, we make a little bit of money doing it. But the reality is, is we’re kind of camped out with a really smart team in a big space. And this is the first time in our careers that we’ve decided to be little fish in a big pond. We have over the years, done and advocated the strategy of big fish, small pond. And we have to have this new sense of anxiety and faith that camping out in a big pond, which is, hiring, this is a multi-billion dollar industry, it’s one of the biggest industries on the planet, that if we can find some set of problems to solve, that ultimately will be able to make more money for our clients than we’re making for ourselves and, and be able to harvest a percentage of it in order to keep the company alive. And it remains to be seen whether we can do that.

Ian: Here’s another feeling and emotion. And I’ll put this out there and you could respond to it and maybe put me in line. I feel like with this venture, like failure isn’t an option, meaning, there’s going to be probably more failure than there is success, at least on a small scale, like there’s gonna be many small failures that hopefully lead to great success. But like ultimate failure doesn’t feel like an option in this situation. I’ll tell you why. Because I feel like we’re failing in a way that we’re learning intelligently, and we’re able to change our product quickly. So it’s not to say that this is going to be some huge company in terms of the financials. But I do feel like the worst-case scenario is building a nice lifestyle business. So if that’s failure to somebody, then yeah, we might fail. But to me, that seems like a pretty good outcome.

Dan: Yeah. Well, you’ve changed bro. As the meme goes, because I’ll tell you what, you come into these team meetings with way too much optimism. We’ve changed roles. And this is, we could do a partnership episode, and people say, should you partner with someone with a particular skill set? And I say no, you need to partner with somebody that you have a high degree of communication with, that you have emotional flexibility, that you can learn new skills as you go. Because you will change your roles in the company. I used to be the hype man. I used to be the guy who was optimistic about our outcomes. And now you’ve taken over my role and I’m scared to death.

Ian: You know what’s changed, right?

Dan: No.

Ian: Mortgage, just one word man.

Dan: All right, we cannot afford to fail. Speaking of a grain of salt, in our fourth point, is just to talk about some of the struggles that we’re having today. And these are, you know, some of the things that I bring to the calls when you’re just this heap of ridiculous optimism about what we’re working on, I have to point out some pretty key problems. First and foremost, is we don’t have product market fit.

Ian: What’s that? Why do we care about it? Yeah, so anybody that’s like, listening to this podcast, and certainly anybody that’s like, talked to us in person, like, ‘Man, you guys are doing a lot of stuff’. And that’s not good.

Dan: No we don’t have focus. But we do have glimpses of things, for example, now that we have 1000 candidates that are, a lot of them are amazing. They’re in our database. When people see the candidates, it’s like, ‘Well, I’d love to get in contact with them’. It’s like, ‘Okay, well, there’s a, there’s something there’, you know, you know, how does that contact happen? What does it cost? What are the guidelines? How do you make it productive for everybody, we understand from having done these services, and having made all these placements, that there is value here, we’re just not exactly sure how to participate in it, and how to grow it. And that’s what we’re working on on a day to day basis.

Another challenge is the division of duties and roles on the team. that’s been a big theme of the past few weeks, you know, a wake up in the morning, ‘I think maybe this person should, you know, move their area of responsibility over here. And that could have a different impact’. And that’s been a big discussion in the company as well. One other challenge is, and you know, I’ve been the big anti plumbing guy on the team, because I have extreme anxiety about product market fit. I walk around with a T-shirt with an enormous monkey wrench on it with a big Ghostbusters x through it, ‘We are not doing plumbing around here’. I’m curious if you can describe what we mean by that Ian.

Ian: I don’t know if this is a real thing? Or did you make this up, because it makes sense once you explained it? But I’ll explain it basically, which is like, we don’t want to put plumbing in the building, because we don’t know where all the rooms are going to end up. And so let’s just put in some composting toilets. So let’s go down to Home Depot, there are 150 bucks a pop, you know, put six of those puppies in the office. And if tomorrow we decide that this is not an office, this is the bedroom, then there doesn’t need to be a toilet anymore. You know, on the development side of things, I think this is true with our CTO, and with a lot of developers, which is they like to make things neat and tidy. They like to create systems that save time so when they go back, you know, they don’t have to kind of reinvent the wheel. And so, you know, marketing and sales is kind of always fighting against that, especially pre product market fit, because you’re not sure what’s going to stick, you’re not sure where the bathroom or the room is gonna end up. And so yeah, you walk around all day with this, like ‘no plumbing’ sign on your shirt. And I think it’s a pretty good idea. Now, you know, I know that development is doing plumbing behind your back, they know that a bathroom is gonna end up, but no one is super confident about it yet.

Dan: Yeah, and this is just a classic idea of premature optimization. And also the classic dialogue between the sales function of a company and the operations. The reality is, our account managers benefit from neat plumbing every day, they build plumbing every day, they need to serve clients, they need to get things done on the website, they need to serve the hundreds of jobs that go up on our website, every day, every week. And the people that email them about that, like there’s real stuff happening here. And you need tools just to get it done. And the sort of ‘no plumbing’ thing is like, let’s be very deliberate and careful about the optimizations that we make in terms of our infrastructure because like you said, things are evolving fast. And we don’t want to spend two weeks optimizing something that might not ultimately be of value to our customers. So that is sort of my final point, which is being extremely deliberate about the problems you’re trying to solve in the software businesses, because like I said, ‘One sentence, one idea’, ‘Oh, what about if you do this integration?’ you could be doing that integration for two weeks, and that’s perhaps an integration that then you can’t turn around and create revenue out of. So at least for the time being, one of the big thrusts in the business is ensuring that the sales team, the marketing team has a strong voice in the company, and we’re building things that we can sell to our customers.

Ian: Yeah, you keep bringing up this like ‘one sentence idea’. But a lot of our meetings are based around prioritization. Like what we’re going to do first? And I think that that’s important. And maybe even more important is like, ‘What can we sell first?’ We’re starting to kind of come to that realization, too, because just for an example, last week, we had our product roadmap for the next like four or five weeks laid out. It turned out like the thing at the end of the product roadmap was a thing that we can sell like tomorrow. So it’s ‘Well, let’s reshuffle that’. Because, you know, in these young companies, a lot of times you don’t have …

Dan: And just to be clear that that thing was access to the database.

Ian: Yes.

Dan: And so essentially, like if you’re listening to this right now, and you’re saying, ‘What is he talking about?’ He’s talking about, by the time this gets up, we’ll probably have a couple of thousand candidates that, you know, focus on different technologies. They focus on different marketing tools and stuff. It’s like, ‘Well, how can you see them?’ Well, right now you got to email us to see him. So that was what was prioritized now, well, you’re gonna have access to them for 99 bucks a month, provided you play by the rules. That is something that got reprioritized based on how amazing these candidates were looking and things are changing fast. So we just moved that up the roadmap a little bit.

Ian: Yeah, and the reason that this prioritization has to happen in these small companies is because you just don’t have the resources. Trying to be deliberate about the problems you’re solving, then also prioritizing how they’re going to get solved. And when you’re going to get paid for what because, you know, if we had a team of five or six developers, like, no problem, we’ll do everything at the same time. But we don’t.

Dan: Part of me wanted to say, oh, man, we’re so different in our 30s than we were in our 20s. But the reality is, when we started our podcast, we did have product market fit. And right now we don’t, we know how to sell services in this space, but we’re really aiming to do a lot more for a lot more people and a lot better. And so it remains to be seen, you could retitle this episode, you know, ‘Four red flags that Dan and Ian are perpetrating in their new software business’. And hopefully, by sharing honestly, that, ‘Hey, look like we are just entrepreneurs, we’re just business people. We’re not exactly right about all this stuff all the time’, and opening up and sharing some of these challenges with you will hopefully do a couple of things. I hope that it inspires you to take on challenges, to continue on. And a lot of it is, I keep coming back to you know, when I was making a big effort to improve at golf Ian, it just made it simpler than business.

So I just want to say the golf thing. It’s like, I got so much worse. And I was so frustrated when I started getting lessons because I was worse, and I didn’t know when I was going to get better. And every day I would go to the range. And it wasn’t the day that I was better. And then one day, like three months later, it was the day And that’s how business works, too. Sometimes, like it is uncertain. And but you just kind of keep coming back every day. And one of these days you figure something out. And that’s kind of the idea about ‘The Thousand Day Principle’ is like if you think it’s gonna just be right there in front of you right away, that’s not how it works in our careers. That’s not how it works in the careers that we see. And so, part of us laying out this process here on the pod is to get your feedback, you know, number one, hopefully, you know, you’ll buy our product number two, of course. And then number three, hopefully, you’ll feel a sense of solidarity. That, you know, I think building a business is about taking on challenges whether it’s a product business, information business. There’s going to be like you said you’re in the woodshed with some blinders. You cannot always have constant confirmation that what you’re doing is going to be the right thing, at a certain point you got to go to that woodshed and build things of value. It takes some time.

Ian: I’m scared. Is that okay?

Dan: Yeah, I think that’s totally okay. That’s it, Bossman. Thanks for joining me on the pod. You got questions about this product. Obviously we’re engaged on day to day basis, our emails, our names Ian and Dan at this extension at tropicalmba.com. That’s it for this week. We’ll be back next Thursday morning at 8am Eastern time.

Ian: See ya.