The Moneyball approach

John, the last time we had you on this network was “The acquisition of a lifetime”, and I think that might potentially set the foundation for this thesis and these moves you’re making… Because you not only were working at GitHub, you also pooled away some money as a result of this acquisition of a lifetime. Maybe that’s the best place to begin. Just give us a synopsis, a real quick summary for those who want to go back and listen to Founders Talk 79.

Yeah, sure. So basically, I was in RubyConf New Orleans, and it was - you know, hotel, and conference, and bar, and all that, all together, and just walked into the bar, and… I’d been friends with Chris Wanstrath from GitHub for a while. And I saw –

What was the year?

Oh, man… 2011. Actually, it’s easy for me to remember. Not that we’re into medical things here, but I had three hernia surgeries that year.

Gosh.

That would make it easy to remember.

It sticks out, yeah. It’s like stuff that is not normal. Which one of these is not like the other years?

Three is too many in one year. I would agree with that.

It was brutal, yeah. And the last one was so bad, they told me - they’re like “You’re gonna be back in five years.” I’m like 10 years sober from hernia surgeries.

Sweet.

Yeah. I’m living on borrowed time right now. But anyways, I went into the bar, I saw Chris, we started talking… We were just talking about like GitHub, which was maybe like 40 people at that point, and then like the stuff we were doing at Ordered List… And there was five of us, and we talked for a couple hours, and then went our separate ways. And then he ended up messaging us, and we connected in South Bend, and they’re like “What if instead of like me personally investing or something like that, what if we just acquired you guys?” And we’re like “Cool. Yeah, that sounds good.”

So we did that, and then worked there for seven years, and then perfectly had a daughter in June of 2018, and went on parental leave… And GitHub was amazing. I got five months off; full pay, do whatever I wanted…

It’s a long time.

It’s amazing. Yeah, I got four months with my son, who’s like three years older… And I thought that was just like unheard of. My dad - I was born at like 3 a.m. He was back at work at 6 a.m. on the farm. That brain can’t even compute.

And so yeah, we had my daughter, and then two days later they were like “There’s rumors about the Microsoft stuff”, and then like three days after that it was announced. And then basically I went on leave, and then my last day of leave I had a Friday… GitHub and Microsoft closed the acquisition, and that Monday was my first day back, the one after that. And I was like “Sorry, I’m out.” So it just timing-wise worked out. They asked me, I was like “I was totally planning on coming back.” I was, I had no intentions, because I’m like “You never know what’s gonna happen with deals.” I’m not gonna quit in the middle of leave, and have a deal not go through, or things like that.

[08:00] But yeah, so we were 45 through 50, early, acquired kind of like a strike team, and then we all went our separate ways and worked on different things… But I think it worked out well for both sides. And so that’s kind of like the very fast-forwarded version of it. And then done Box Out, kind of the last – Box Out Sports the last four or five years since then. So 2018 – yeah, that would have been right at the end of 2018 when I moved on to that.

Fantastic. You saved the audience - let’s see… An hour, ish, I want to say, of their life… Unless they want to go 79 minutes of having to go listen to Founders Talk. 79.

Are you a GPT? Because that was a pretty good summary.

Yeah, I did. I piped it through before. I just had a gut feeling. I was like “Add some mumbles and some uhms to make it look real.” That was in the prompts, so…

Yeah did it add any hernia did or that was accurate already; the number three, right?

[laughs] Three was correct, yeah. I was not hallucinating, unfortunately.

Right.

So to set the premise of what by foundation, you shared a post, I want to say about a week-ish ago, acquiring Fireside . But part of this post you mentioned this thesis you have of acquiring Rails applications… Because you’re a Rails developer. GitHub was an early Rails application; still is a Rails application. You’re a Rails developer, and you’re in this position… And I’m not gonna read the post for you, but essentially you’re in this position to acquire and grow some Rails apps where the original founders may be ready to leave, or looking for an injection, or just something where you can begin to build out this portfolio of primarily, to my knowledge, Rails -based companies.

And so the foundation, this acquisition of a lifetime was a financial, in my opinion, a financial foundation to set you in a groove, put you in a good position, and then I would say - and you could probably concur with this - that that has set you in a good groove or a good motion to accomplish this very good software motion that you’re working on, which is part of that post.

Yeah, that’s definitely true. Even Box Out, before that, that was kind of – let’s say that’s the first investment. I worked there, so it doesn’t really count. I don’t know if that counts as an investment, but I bought in. I didn’t join, and then – it wasn’t like work equity, it wasn’t stuff like that. I bought in for like 25% of it, and then I’ve additionally worked there as well. So from there I think I saw a little bit of like you can – I’ve got this post on my website that’s like “Cushion vs. flow”, and it’s this idea of you can have like a cushion, which is like a cash cushion, or you can have cash flow. And you can use them interchangeably to create the other. And so it’s just like at any given time you have to kind of choose between which one; do you need a little bit more cushion? Then you can take your cash flow and you can save some of that and you can build up a cushion, or vice versa.

And so and so Box Out was kind of the first one where I was like “Okay, I have a little bit of a cushion from GitHub.” I’m not gonna stop working – I have like a six-month-old and a three-and-a-half-year-old. I’m gonna be at a desk for a while. And so I was like “What am I gonna do?” And I had some friends already that were doing it, they were doing well, they could use help, and so it just kind of made sense to buy in and do that.

And then doing that, we’re getting about the size where we’re on like let’s say private equity radar… I don’t know how they know. They just like sniff it out and they can tell… And so they’re like “Oh, you must have X million in revenue. We’d like to get to know each other. Are you up for coffee in the Bay Area?” And I’m like “No. Not in the Bay Area.”

But I’ve done a lot of interactions and stuff like that, went through a lot of like due diligence, and a lot of deal structures and negotiations, and then I started getting this idea of like – and I’ve listened to a lot of “My First Million.” I hope I’m allowed to mention other podcasts on this…

Please do, yeah.

We’ll just bleep it out, no big deal.

That’s fine. You can bleep it out. Make it unnecessary censorship there.

[laughs]

But yeah, I listened to that, and listened to some other stuff, Incquiring Minds, and I was like “What if I just bought something?” So I in and out of while I’m at Box Out; like, I’ve been looking at that kind of a thing, and just nothing came along that was that was right. I just couldn’t find the app.

[12:10] And then I was I was working with Garrett Diamond, and I was paying him to work on Flipper, so that Flipper could move forward while I was kind of working on Box Out the last year, and we were in kind of like a deal with another company, kind of related to PE, and stuff like that… And I was like “I want Flipper to be there, in case something happens with that.” And nothing did, which is totally fine and great.

And Garrett knew Dan from Fireside , and Dan was looking to to get out, he had kind of stopped podcasting…

Use the full name. What’s his last name?

Dan Benjamin.

There you go.

Yup. DB. Dan Benjamin. Here we go. And so yeah, Dan was looking, I think, for a good home. He’d went around and talked to a lot of people, he’s obviously well known in the podcasting space, and stuff like that… And he was looking for someone who could take it over, who would like do the customers right, who would push the app forward, who would do new things, not just harvest it and shut it down. And so he mentioned something to Garrett, and Garrett has been a founder, Garrett Diamond has been a founder in the past… Now I’m going to get those names every time, so… I’m ready. I’m trained.

Well, once you say it once, you can just say Dan now, and Garrett. But the first time, please say the full name, just so everybody’s tracking.

You can do it backwards now. First name once, and then full name the rest of the show.

Diamond, comma, Garrett.

[laughs]

So he was like “I don’t want to do this by myself, but maybe John would be interested.” So he reached out, and then we –

Full name, please.

Well, he’s John.

Diamond, comma, Garrett. John, me.

No, Nunemaker.

John Nunemaker. Nunemaker, comma, John.

Oh, sorry. I went one level too deep.

I’m a little slow on the uptake, man. I’m not pros like you guys. So…

Sorry.

So yeah. So that’s kind of like how it kind of came about. And we’re like “Well, hey, if we can get this one, I bet there’s a lot more.” Now, I don’t know that we’re ready to just go in there and – we’re not taking on outside investors, we’re not making a fund, we’re not going to be private equity, where we have like management, and carry, or whatever, and all that kind of stuff… We’re just going to build like a nice portfolio of small things. We’re starting with Flipper and Fireside , because we already had Flipper. We were able to get Fireside, and now it’s like, there’s probably a whole lot more out there. People have been working hard for four to eight years, or longer, they’re in the 10 to, whatever, 50,000… They’re over the 10k mark a month, and so they’ve proven that there’s a decent amount of value out there for it, for whatever they’re building… But they’re not so big that we have to go out and get millions of dollars to acquire it, and stuff like that.

And they’re just looking for liquidity and to move on to something else. It’s hard. You guys have been doing it forever, so props on that front… But it’s really hard to do the same thing for a long time.

So that’s kind of my theory. And even after announcing Fireside and being at Rails World, I feel like I had three or four people come up to me who were like “I’m in that boat right now”, which is really interesting. So I think we’re going to let the dust settle on this one and see if we actually are any good at this. I feel like we will be, but yeah, that’s how it kind of came about, I guess. The thesis came from “Look, we know Rails , we know standardizing things across multiple apps”, because I’ve never done one thing. I’ve always had three things at a time. And then I get too busy and I think “Oh, I should get rid of one of them.” And so I get rid of one of them and then I fill it with another one. So I finally accepted that’s just me. I’m just going to have three things.

Speaker Deck.

Yeah, exactly. Yup. I’m kind of almost back in Speaker Deck as well, again. So that’s the in and out for the fourth time, or whatever.

So how do you get back in on Speaker Deck? Where is in?

Well, equity, sorry. Just equity.

Just ownership.

Yeah. I sold it to my friend, and so he’s been running it… And then every so often I come in and I help on it… Because it gets a lot of traffic, and a lot of scale, so not just anyone can work on it. People can work on it and build things, but eventually it’s going to struggle. I’ve got a lot of experience from GitHub, Words with Friends, things like that in the past, of large scale Rails apps… And so I’m able to come in a week or two and kind of fix things up. And I was like “Why don’t we just come up with something – you can pay me if you want, or maybe we can just hammer out some kind of equity thing.”

[16:03] And then Fireside dropped in, and we’re like “Okay, let’s figure out Fireside first.” And he is also in on Fireside, he’s one of the people that joined on that, and he’ll be doing the marketing and stuff. And so that’s where it was kind of like “Okay, let’s figure this one out first, and then we’ll figure out the other one after that.”

You built Words with Friends, is that what you said? The backend, or something?

I helped scale it. So when I started, it was maybe - I don’t remember, like 60k, 70k requests a minute, and it was going down every night… And then I had some friends who were working on it, one friend in particular, Jesse Newland, and he was like “I think, Nunes can help us”, and so I was like “Sure, I’ll try.” And it was the first and only time in my life I think I’ve had imposter syndrome, where I was like “I don’t think I can actually help you”, but I was like “Let’s try it.”

And between the two of us, we were able to help get it a ways, and I brought on some other friends who are much smarter than me… That was really my value in that.

Sure. Well, that’s valuable.

And when I left, it was millions of requests a minute, in Rails . All in Rails. And just basically wrote memcache for like two years, a year and a half or so. And so we helped him launch on Facebook, and all that kind of stuff as well. That was Ordered List days, before we got acquired by GitHub.

Before you were acquired.

Yup.

That sucker’s still kicking? I assume these games have like a long tail of people who just keep playing it forever, right?

Yup. Just like SaaS apps. And it is. My mom still - she still plays on it. I haven’t. I kind of dropped games, but yeah, there’s –

I dropped off as well, yeah.

I think there’s still a lot of activity. I don’t even know who owns it anymore, if it’s still Zynga or not… Because they bought them at some point.

Games. Simple games like that are kind of cool, honestly. And the with friends phrase is kind of cool.

It’s great, yeah.

Word with Friends…

It is cool. Yeah.

Chats with Friends… They had all kinds of stuff that were all with Friends.

Spot on.

Yeah, it was smart.

Right. I’ve actually played a couple of handheld games, to the end of their support, where you can just tell at the end, where it’s like “Okay–”, they were either… This is like pre in-app purchase, it was like one-time sale kind of thing, where it’s like you pay three bucks and you play it… And very popular, they’re making a lot of money, everything is good, six months go by, a year, people move on… But then there’s this core, there’s this group of people that just keep playing it. And I was one of them, and specifically a game called Hero Academy, which was one of the best turn-based strategy games I’ve ever played. And I loved it. It was like chess, with more complexity, because your players couldn’t just – they could move a certain place, but they also had special abilities, and there was teams… It was really well conceived. And I played it so long that eventually things just started breaking. And the community rallied, “Can we open source the backend?” And I was like part of that whole thing, of like “Can we keep this game going?” The answer was “No.” We could not keep it going.

But there’s a weird place where video games get, where it’s enough of a player base to be popular and to probably make some money, but not enough to actually support ongoing effort for developers, you know? And so like business decisions come in and ruin the fun. So…

Yeah, and I think that happens with everything. It happens with SaaS apps… Anything that has stickiness is going to have that same kind of, I guess, tail, a long tail, of where - it’s just going to go like that for quite a while. Again, just since Fireside, I think I’ve had three or four or five people come up to me, who were kind of in a similar boat… And it’s really fascinating to me, because on one hand, it’s like – I remember the first time I talked about it with anybody. They’re like “Dude, that’s a lot of money. What if it goes to zero?” And I’m like “They don’t go to zero.” They just don’t. Think about all these apps on the internet… Actually, I talked to Adam. I forgot about that. We talked and he was like “Well, what if it goes to zero?”

You said that, Adam?

He said that. Well, close to that.

I think I did say that.

Yeah, that’s something he would say. Yeah, “Go to zero.” He’d say that.

It was close to that. Maybe it wasn’t exactly verbatim, but it was something along those lines. And that was my first thought, too. And then I realized, I can’t think of anything that’s gone to zero. The stuff that goes to zero is like the stuff that you put gas on the fire and you try to grow faster than you can. That stuff goes to zero. Stuff like this long tail, been around for a while, proven business model… I mean, Fireside is 2016. So we’re talking an eight-year-old business at this point, that’s been rock-steady the last three, four years… It’s not going anywhere immediately, unless podcasting disappears, and then we all have bigger problems, right? So…

[20:19] Well, it’s mostly the saturation in the podcast space that I think I was concerned about. Because we are in that space. And there’s been a lot of consolidation, and there’s also been – like, Chartable just shut down. It’s in the process of shutting down. Like, it was acquired by Spotify, they’re keeping the necessary features inside of the core… I think it’s – is it Anchor, Jerod? Megaphone?

Well, Anchor’s also gone now. Spotify basically buys stuff and then closes it eventually.

Right. And then you’ve got to compete with free. This is a behemoth, they’re going to put things out for free, so you’ve got to compete with free. So I think my concern was really around just the saturation and the competing with free… Because that’s hard, right? And when we talked about – can I share some of the things we talked about?

Yeah.

You cool with that?

Yeah.

You were just talking about the churn, or lack of churn with customers, and how there was not churn going away, they were staying there, there was steady income over a period of time that made sense to give you at least enough foundation to say “This is a safe bet.” And zooming back out a bit to maybe eight minutes ago, you were saying “Could we do this?” And you have a lot of friends who say “Yeah, you probably could do this.” I also agree. I think you can probably do this. We’re betting hard on podcasting, obviously… We have gone the route of “Build it versus buy it” in our case, but because that’s our business model in terms of sponsors, partners… Just the way we went; infrastructure partners are core to our business model, really. And I think we’re a unique scenario in the podcasting world in the fact that we podcast around software development, software engineering, business, growth, things like that… And we also benefit from the various partners we can work with and attract, because they have awesome platforms. And I couldn’t imagine us doing what we do, and host it somewhere else. We just would not have the same clout, I would say, in those cases, where we can actually eat the dog food or drink the champagne, and share the sentiment of the taste, of the grapes.

It makes total sense.

So Fireside then - rock-solid, you describe it. Growing? Shrinking?

Yeah. I would say shrinking. But again, so there’s different categories of SaaS apps, just what I’ve seen in my, whatever, 10-20 years of doing it. One example would be – way back in the day we made Harmony. It was a CMS, did great… It had the lowest churn of anything I’ve ever worked on. I think we had two people cancel the entire like two, three years we ran it… And one person was Garrett, who was paying it because he thought it was cool, but wasn’t using it. And he was like [unintelligible 00:22:50.16] So he canceled, I think. And the other person, they went out of business.

And so I’m like, I’ve seen hosting, and hosting is very – it takes a lot to get in; once they’re in, they don’t leave. And then I’ve also seen Gauges, which is what we made to go against like Google analytics.

Yeah, Gauges.

Yeah. And that was like –

I was a customer.

I remember Gauges.

Were you really? Oh, that’s amazing.

I was a Gauges customer. Yup.

That’s awesome.

.es, right?

Yeah.

Yeah. Which was against Google Analytics. It was cooler looking. And simpler.

Yeah. It was a lot cooler, and way more simple. It was just like “Look, you care about these three things.” And it was live. We had this awesome air traffic, dropping pins, and…

Yeah, it was a cool design. What was the price on that sucker?

Oh, it started at like six bucks.

Yeah, I was gonna say, it wasn’t very much.

The biggest customer we had was maybe in the hundreds, like many hundreds… But most of it was pretty cheap.

But that one’s not sticky, because it’s so easy to switch. New JavaScript snippet and you’re out.

Yup. A hundred percent. It’s super-easy. So there’s no stickiness. Because you can run two at the same time, and see if you like it. And you can use the free trial and be like “No, I don’t like it”, and just take it off. So it’s like super-easy in, but super-easy out. And so I’ve seen like both – I would say those are the two ends of the spectrum of SaaS apps. And so I’m like “Well, if you’ve got those two ends, where does Fireside fit?” And I’m like “It’s hosting.” And yeah, sure, it’s not that hard to move from like one podcast host to another in some cases…

Yeah.

[24:12] But if you have something that’s working, most people just don’t want to touch stuff that works, especially in the hosting realm. And I saw grow – I say growing up; geez, I’m really dating myself now. Get off my lawn. But my first job out of school was like working at this company that had hosting, and email, and websites, and all that kind of stuff… And just pulling in a fortune on hosting it. People just want it to work. As long as it works, they’re not going to change stuff, you know?

So when I look at Fireside and I think rock solid, that’s why I think – it’s amazing to me; let’s say it’s basically not been marketed, or worked on actively, aggressively, maybe in a year and a half, two years, two and a half years… I don’t know the exact dates, because I – this is a different situation than like a typical acquisition, where you would do intense due diligence… I’m like, I know the person, I know the person in between that person in me, which is I know Dan, I know Garrett, and I know Garrett worked on it for like a year and a half a couple of years ago, so he knows it well… And so I’m like –

There’s confidence in the code.

A hundred percent. I’m like “This is not getting into a mess.” I don’t need to select count star, the number of podcasts…

And it’s Rails, so how hard could it be?

Right. Exactly.

You know that pretty well. Even yourself, you can take Garrett’s opinion at its face value, but you can also dig in one layer… And you’ve worked with Garrett for many years, so he’s not going to wrong you.

Exactly. So all of those things make it rock solid for me.

Dan - the jury’s out on Dan. I’m sorry, Dan, I’ve gotta say.

[laughs]

I’m just kidding. We don’t know about Dan…

Yeah, that’s funny.

So for our listeners’ sake, Dan Benjamin, founder of 5by5.tv, which is a podcast network that we were once on back in the yesteryear before we went to this platform… So Adam said “I can’t imagine running on somebody else’s platform” I’m like “Well, we have done it before.” But we’ve been free for so long it’s hard to us to imagine going back.

Well, the model wasn’t in place though. That’s why. Because we ran it – the model of the business was different then.

Right. He built Fireside probably out of the code from 5by5, which I think was also a Rails app… And so that was something that he had dogfooded, so to speak, for years, and decided to create a hosting platform… And created a successful one.

In the meantime, there has been a lot more people offering podcast hosting. I mean, a lot. Even both in the small and in the large. So you have the big players like Spotify giving it away for free, but then you have, I would say, Fireside competitors like Transistor, who are killing it in the marketplace. I think Transistor, in terms of features – we are Transistor users through our partner podcasts, which we help produce Big Tent for Grafana for instance… And we host their Big Tent podcast on Transistor. And so I’m familiar with the feature set and the offerings of that platform. And it’s just really good. Shout-out to – is it Justin Jackson?

Justin Jackson. Yeah.

Justin Jackson. Shout-out to Justin Jackson. Who’s probably been on our shows as well, I think.

It’s been a bit. We haven’t had him on in a while. I think the last show he was on was AFK.

Okay. So a very long time.

It’s too long, and that’s not okay.

He’s been out there, building Transistor… Started later than Dan, but actively building that. So when you acquire something like this - of course, I guess with this one it’s your first time, so how do you know what you’re going to do…? But what’s the strategy? Is it just “I’m going to maintain it and just continue to get maybe a little bit of growth, maybe not, but it’s making money right now”? Is it like all in, “We’re going to take it to the Moon”? What are you thinking when you buy this?

Yeah, so we’re super-conservative. A lot of people are like “Oh, being an entrepreneur is so risky. I could never do that. I could never start my own thing.” And I’m just – I’m the opposite. I’m like “It’s the easiest way for me to reduce risk.” Because you can control things. So for myself, when I look at “What are we going to do with Fireside?” I’m like, “Initially, we’re just going to let the dust settle.” So let’s update some software; it’s on older versions of Ruby Rails… Again, just boring stuff. Let’s show customers that we care, let’s be fast responding to support, let’s help people… Let’s actually actively market it. That’s I think the biggest thing that nothing has happened with in the last, let’s say two years, is that there’s just no marketing. And so I’m like, that’s one of the reasons why one of the people that I wanted to make sure was in it was my friend, Chris, because that’s what he does. He does marketing.

[28:27] So we’ll get an email list going, we’ll get things when you sign up, where it’s like “Here’s how you can better use us.” The normal things that every SaaS app basically does to kind of hopefully increase engagement and usage and stuff like that. There’s a lot of low-hanging fruit that I think we can do because it’s kind of just sat and in an awesome way chugged along.

So I feel like that’s step number one, is like the rest of this year is probably “Look, let’s stabilize it. Let’s start building some trust back up that we’re going to do things with it, and talk about it”, and get to where we can start moving more quickly. And then next year will probably be like “Okay, here’s some new features” and things like that.

So as far as what we have actually picked out to work on and stuff, we’ve definitely got some ideas. I wouldn’t say we’ve said “This is what we’re going to do first.” The goal is not all in, the goal is not – again, I always have like two or three things, so my goal is never be all in. My goal is always – which has always felt wrong, because everyone’s always like “You’ve got to focus on one thing. And if you’re doing two things, you’re stupid”, you know? And I’m like, I can work at 110% if I do 80% on this and 30% on another. But I can’t work at 110% on one thing. I just can’t do it. It’s boring. I just – you get locked up once in a while on an issue and your brain’s got to process that in the background. Sometimes there’s just no way past it. And so then I can just move on to another thing, and it’s like, my brain lets go, and then it can solve that other thing while I’m doing something else. It’s not full multitasking, but it kind of – I find it’s helpful for me. I’m able to kind of stay more engaged in things for a longer period of time, because there’s more things to keep my brain busy.

So it’s not an all-in thing. So Garrett will be a couple of weeks on Box Out, a couple of weeks on Fireside… My hours that I’ve worked with my partners, that they’re okay with me doing on Box Out every week, and then the rest will put towards Fireside, and Flipper, and stuff like that. And then the goal is definitely to grow it. I would say conservatively – I’ve never worked on a SaaS that hasn’t grown at like 20% consistently. Maybe Fireside is the first where I can’t do that, because there’s just so many people in the space… I have no idea. We’ll find out. But in my head, I think 5% is totally reasonable. And at that rate, I’ve done the math; based on the capital we started with - and we financed it a lot of it - based on those two things, I think I can have… Even at 0%, we could pay off the loan in five years. Let’s say 5% growth. At 5% growth, we can pay off the loan in like four years. At 10%, at the end of year three; whereas maybe it was the middle of year four at like 15%… It’s like three years, and it’s paid off, if we want to. Again, from free cashflow. And that’s with taking money out of the business to pay ourselves some money as well.

So if we can just grow like a little bit, and take a little bit of – so let’s say you have a hundred thousand in free cashflow, you do some amount each for some salary to work on it, and then you take out some more; it has more than that, but let’s just say it’s that. It’s easy to do some math and say “Okay, we’re going to take 50% out for the people working on it, and the other 50% will go towards dividends, and paying off the loan early.” So that’s kind of like how we look at it. We’re like “Look, we don’t have to be full-time all-in.” We don’t have to beat Transistor, Buzzsprout, any of the other – whatever, there’s a million out there that do this kind of stuff. All we’ve gotta do is like do the things we know how to do on every SaaS we’ve ever worked on, and the likelihood of us growing is good. Perhaps that’s naive, perhaps that’s just like 20 years of experience and it will be accurate, and it’s not naive… I don’t know on that. I’ll probably need to come on in a year or two years and then we’ll have a better –

Six months.

Yeah, six months. We’ll have a better idea. But that’s kind of the process for us. So I’ll be part-time on it, Chris will be part-time on it, Garrett will be part-time on it, as it grows, which I believe it will. Any good software that you keep improving, you keep listening to customers, you keep solving their problems, you keep telling them about what you’re doing - that grows. I’ve just never been on a team that does that, that the software doesn’t grow. And so assuming that’s the case, we’ll just go more and more full-time on it, and at some point it will be the only thing. And then we’ll probably bring on more apps. We’ll try and find more to actually go out and do the same thing with. Does that kind of answer the question?

Yeah.

It’s very much like a lifestyle, chill… Like, I have a Google Doc that I made at the beginning, and I was like “This is what I want to do.” I showed it to every person that was going to be involved. I’m like “This is what I want to do. Do you have any changes? Are you cool with this overall?” And the number one thing is calm. I want calm. I love calm. Box Out is calm. It does very well, it makes lots of money, it pays lots of people’s bills, and supports their families… And nobody’s stressed out, freaking out. It’s totally a possible thing. So I just want to apply the same thing over here, just because structure-wise it just made more sense than trying to like roll a whole bunch of things and something over there, on the other side. So…

Break: [33:35]

So five years to pay it off with no growth, to me, sounds like a pretty good deal. How do you value such a piece of software, a business? How do you value a business like that? How do you guys come to that price?

Yeah, so price-wise, the multiple on profit was less than that. It was probably more like two and a quarter, or less than that. And again, it’s because – this is a massive credit to Dan. I want to give him props, because he could have just waited, and just collected checks… He could have tried to get a higher multiple for somebody that’s going to harvest the customers… He could have tried like a lot of different things, and he was like “I want the customers to be taken care of. A lot of these people are my friends. A lot of these people I’ve served for a long time. I don’t want it to just go away.” And so that, I think, was a big benefit to Garrett and I, and the others, is that we could come in and say “Look, this is what we’re going to do. We’re actually going to try to grow it, we’re going to make it better, we’re going to take your baby and we’re going to hopefully help it continue to grow, instead of just to sit and slowly kind of decline.”

So multiple-wise, he gave us a much better multiple than perhaps like – if any private equity company or somebody else came in, they would definitely have given probably a better multiple. He had a better offer that he turned down before us. So I think it was truly like – he’s like “These are the right people to run it.”

So I don’t have a great example of “Here’s how you figure that out.” What I’ve always done is – it’s basically napkins. It’s like, “Look, you have this much in revenue and you have this much in profit.” And you’ve got to just look at the business and say “Is it fair to just look at the profit, or is should I look at the revenue? Because I can cut the expenses and make the profit larger…” It’s kind of a holistic thing. If it’s at X hundred thousand and the expenses are like 20 percent, the fixed expenses of no one working on it, just the servers and software to make sure it’s up and running… 10, 20 percent, whatever it is, then you can say “I’ve got the rest of that 80 percent to pay debt service”, and also to like pay people to work on it, or pay myself to work on it, or any of those kinds of options. And if I did that, I’ve got this massive spreadsheet, with all these adjustable variables… And I learned these really cool functions thanks to ChatGPT, where I was like “How do I amortize alone over 15 years in an Excel function?” And it’s like “Oh, well, you need to use PMT.” And then like “How much principle is left if I do this?” So I used all those things, and I basically got it to where I could say “Okay, if I grow 0 percent, negative 5 percent, 5 percent, 10, 15…” And I’m conservative, so I’m I’m not going to say that I’m going to grow 50 percent. I don’t feel like that’s going to happen. Realistically, we’re going to put in a good 5, 10, 15, 20 percent effort, and I think we’ll get it out of there as time goes on.

But I don’t feel like there’s any fancy formula. I don’t feel like – probably other people do, that are more experienced. For me, it’s just - I looked at it, I’m like “It seems like a good business. It’s built in the way that I would run a business.” Very low expenses, very high profit margins… It’s recurring revenue… I’m looking at all those kinds of things and I’m like “Why would I say no?” other than maybe I’m too busy. But it has money to pay people to work on it, so it doesn’t matter if I’m too busy, really. It really just matters “Can it afford to pay people to work on it?” And then it’s just a matter of “Do you have the money or the financing options or other things like that to make it happen?” And again, because of my fortunate past, I’ve got some of that stuff lined up, and so I was able to finance this… Because I never have financed anything, from a software standpoint… And I was like “Let’s figure out how to do that. That sounds fun.” And I learned a lot over the last two months, of like how to do that, little weird gotchas from the bank… At the very end we had to like change ownership percentages and things like that, or other people were going to have to personally guarantee beyond me… Which I did not want. I wanted it just to be my risk, and stuff like that.

[40:08] So yeah, that’s kind of like the longer, meandering answer, is like - in general, SaaS apps that are, let’s say, under a million in revenue, are probably worth two to four times profit. Or like seller discretionary. So it’s like, anything that the seller would pay themselves, that plus the profit - they’re probably worth two to four times that. If you get bigger, if you get to like 1 to 5 million, then you can get – I mean Box Out has had offers very comfortably in the six and a half range, that we’ve turned down. We had some stuff in the nine times range, where we’re like – of revenue, not even profit; just of revenue. And we’re like “Okay, well - yeah, we would say yes to that”, but it didn’t quite work out.

So I would say like in that 1 to 5 million range, your multiples can go up a little bit. And then if you get in the 5 to 20 million range, or the 20+, you can get into 10x really easily, and higher multiples. If you asked ChatGPT, that’s probably what it would say. It’s something like those ranges, two to four. So like two if it’s not growing, four if it is growing when it’s under a million, and then one to five - there’s some multiples in there. And probably people would argue with some of those, but that’s a general thing that I’ve seen.

I think multiples are always challenging, because it’s like - you could sit there and split hairs over multiples; one, two, three… And then especially when somebody built this thing and it’s their labor of love, and it’s been this thing they care for and they’ve got friends on the inside… It’s like “Well, now you’re, not just offending me on my multiple, now you’re offending me on my work. You’re not valuing what I’ve done.” But that’s good that you were able to come to terms fairly quickly, at least based on this text thread that you briefly shared on the acquiring Fireside blog post…

Oh, yeah.

It was a pretty quick deal.

Yeah. Well, the slowest part was the bank, and attorneys, and things like that at the end. The part of “Are we going to do it?” and “How much are we going to buy it for?” was like a week. That was really quick. I talked to Dan once, we hit it off, we enjoyed each other’s companies, and stuff like that… Just a phone call, nothing fancy, for like an hour on a Saturday night, Sunday night, I don’t remember… Props to my wife for all the extra time she did single-parenting while I was doing phone calls and stuff on this… But we talked, and I was just like – and then he sent me all the info. So I’ve looked at a lot of P&L’s over the years because of Box Out, and because of due diligence and stuff there… So I was like “I’m comfortable with that.” And I looked at it, I was like “I think this is what I would feel okay with.” The amount we ended up at, it was like – I’m like “I’m a nervous guy. I run the ball out in the fourth quarter in the football game. I’m not aggressive, by any means.” The whole reason I have multiple things is in case one of them goes bad. I just diversify everything. So yeah, from that standpoint I was like “I’m okay with this number. Are you okay with this number?” And he’s like “Yeah. Because it’s you guys, I’m okay with this number.” And so we got to that and we’re like “Okay, cool.” And then from there it was like “Okay, who’s going to be in and out of the company? How much ownership are they going to have? How much capital are they going to put in for the ownership, and how much is going to be work-based?” and all that kind of stuff. And then is it a separate company? Is it a stock sale, or an asset sale? All that kind of stuff.

And then fun things at the end with the bank, where they’re like “Oh, FYI, if someone has 20%, then they have to also personally guarantee it. And then we have to take it back to our bank board, literally the people that run the bank, and get it approved again. And that takes at least another week.” And I’m like “We’re supposed to close tomorrow.”

Yeah, can’t do that.

Yeah. So stuff like that.

You mentioned this was financed.

Yes.

[43:55] And that means that you’re not technically using your own money, you’re using future money. Now, you’ve also based the payoff on cashflow, and that – so you’ve weighed the risk. Is this one of the biggest risks financially you’ve taken in a software business? Because it seems like everything else you’ve – not homegrown, but like bootstrapped, and it’s been sort of a safe growth and safe entrance… Even if it’s been a failure, or not great, or whatever the outcome, it seems kind of like your biggest risk.

So what’s funny is I was feeling that, and then once everybody who was coming in came in and I knew all the amounts and stuff, it won’t be the biggest risk, technically. Like, technically, Box Out would have been, because I gave them straight cash at a pretty good evaluation, and that was definitely… Now that was also when I had the most cash, and so it was maybe an easier decision. This feels riskier. But amount-wise, it’s not as risky. Technically, my part was mostly the collateral and the organization, and the deal structure… And the stuff that like, if I hadn’t done that, then it wouldn’t have happened… So that was my part. And then each of the other three people that are in it, Garrett, Chris and Steve - they all are putting capital in, either this year or next year, based on the terms we’ve worked out, and stuff like that. And that will get the finance amount basically like lower than what Box Out was for me. And again, for me, what I brought to the table was the collateral. So I have a lien on my house now. I use my house because I learned that you can get 80% for your house. Like, my house is paid off, fortunately, so you can get up to 80% of the value of your house, whatever it appraises for; snap your fingers and the bank will give you a loan for that, a commercial loan. Land, like farmland - I have some of that. I was going to do that at first, they’re like “We’ll only give 50% to 60% of that.” I was like “Well, that might not work.”

So it’s kind of interesting to see what banks will do based on the assets that they’re really comfortable in dealing with… Because they will not do it for software. So if you want to do it just based on the software, and then basically you have to personally guarantee it; you don’t have to put up any collateral, but you have to personally guarantee it, which is the same thing, kind of… And then also, you have to do like an SBA loan. An SBA loan is like a ton of extra paperwork, and it’s like 11% interest rate. So it’s like super-high interest rates; prime plus two or something like that is what I was told. I just did a commercial loan with collateral. My house is collateral. And I ended up with below six and a half percent. So like half the interest rate for me.

Additionally, an SBA loan you typically have to pay off in 5 to 10 years. So your payments, they go way up. Whereas again, my collateral - they’re like “What do you want to do? Like 15 years?” I’m like “Yeah, that sounds good.” I’ll do a 15-year, I’ll lower the payment at the beginning, and then as we grow, or as we stay the same, and whatever it is that happens, I will just apply more to the payment to pay it off early. But it gives me flexibility, because basically, I can snap my fingers, I can get some cashflow to run the app, and then the only risk is a lot of things go wrong. The market goes down like 70%, so any stock that I have is worth nothing… And all my cash is at zero because of inflation… And everyone stops podcasting, or goes and uses free things… I can’t count the number of scenarios that would have to go wrong for this to be like a really bad decision. And so from that standpoint, if all that stuff goes wrong, no matter what I’m doing, I’m probably going to be in a little bit of – all of us are gonna be in a rough spot. If all these industries collapse, we’ve got bigger problems. So I was like “I’m just going to, for once in my life, take a little bit of a bet.” But I would say overall it’s not as big of a gamble as Box Out from a purely money standpoint, because technically, I haven’t gambled anything. I’ve only gambled like possibly having to pay it off early, myself personally. And that wouldn’t be fun. Or having to do that when the asset goes to zero, something like that. So it’s like “Well, I really made a pretty big mistake, and the other guys made smaller mistakes.” But I don’t think that will happen.

[48:06] So I feel pretty confident that, again, worst-case scenario is this just keeps slowly going down over the course of like six, seven, eight years, it gives us the money back and we wasted our time. Like, that’s the worst case scenario. And that’s such a negative outlook on life. I’m like, I’m not going to wake up in the morning to do that. I’m going to wake up in the morning to see what I can do, you know? Again, meandering, that’s going to be the theme of this, but…

That’s okay. I think so. I mean, it seems like a big bet, mainly because while you know Rails and you know SaaS applications, I think that hosting podcasts - there are some preeminent, worthy opponents out there. And while you don’t have a ton of churn, you mentioned to Jerod earlier that there is negative growth. So there is some churn. You now have to do something to grow this thing. I just wonder how impossible it is for you to, with your outlook on even focus, define - and maybe not in 2024, but maybe 2025, you start to define some of these feature sets that you can utilize and deploy to attract.

I’m hearing your story. We’ve talked a lot about business and financials, and semantics really of the choice, not so much what you’re actually doing or what you’ll do with it… If I zoom out, I think it’s very much the hub, or could be the hub of the many spokes you can build with very good software, this company you’re gonna form, or you formed. I think that when you have a media-esque or a media-styled business, which very much a podcast hosting business could be… The media side of it could be adjacent to it, and the core product software could be – they could live side by side in terms of brand. But in business, it could be literally two different businesses. This could be very much the beginning of a hub, a very big hub for you to establish more spokes to.

I’m thinking like if this was very big for you, Flipper could be more well-known, because you use Flipper to support and test your different feature sets with Fireside. And as that gets awareness and growth, then so does Flipper, and every other thing that you can acquire along the way, to support this hub.

Totally agree. I’ve watched you guys, I’ve watched MFM, I’ve watched several people in, let’s say media build audiences. And again, the quote that’s – I think I put it in the post; it’s like “First time founders focus on products.

Second time founders focus on distribution.’ And I’m like, I think podcasts are an amazing distribution system. I absolutely love them.

The people I feel the closest to, that I don’t even know, are podcast hosts. And that’s a weird thing. You guys have these mega fans who think they know everything about you, and they do, because it’s just - the format…

They kind of do, in a way.

They do. They know everything.

I’m like “How did you know that? Oh yeah, I said that on a podcast. Dang. I forgot I told you guys that.”

Exactly.

I told the world.

I think it’s a great medium. I think it’s a great – I love everything about it. I’ve done a lot of consuming of podcasts over the last – well, I’ll say four years. Again, like most people, around COVID it really started exploding. And because of that, I’m like, I wanted to do something. And my plan was “Well, I’ll just start a podcast”, you know? So I started going on like Founder Quest, with those guys. Love them. I was just a third wheel. I could hop in, add some accountability… Like, “Are we recording this week?”, and stuff like that. And it’s awesome. I don’t have to do any of the work. I don’t have to pay anything. I just show up and talk. This is like my ideal job. So that’s cool.

And then when Fireside dropped in, I was like “What if it’s just bigger? What if I hosted them, too?”

I’m noticing that Founder Quest is a Transistor podcast… That’s why I laughed.

[51:54] Yeah. Yup. It is. And I love Justin. He got me back into indie stuff. I was completely out of indie. I was at GitHub, and even then, I left and did Box Out, but I was still not – I was not in the indie space, I was not doing other stuff on the side. And then I started listening to Megamaker and some of the other stuff he did, and I was like “Heck yeah.

Why am I not doing this? I should do this again.” So again, I’m like “I want to now have a podcast. I want to have my own.” So I think Garrett and I – we’re going to start our own Fireside podcast, and it’s going to be like… Maybe two. Maybe one is like the building of, and one is like “Here’s how to better –” We interview other podcasters and talk to them about their setup, what they do, what’s different, all that kind of stuff of like things that teach people how to start, or how to get better, or how to improve.

But then we also, the thing I’m passionate about, which you can hear when I’m talking about it - I’m passionate about the company side. I’m super-fascinated about, like you said, the hub and spoke, of like now we have like a nice chunk size business, that can be kind of like a starter… And it’s way easier to buy that than to build that. I’m building that with Flipper. Flipper’s like five figures; mid five figures. So you’re talking, again, partial work on it and stuff like that, but it’s not big. Fireside is like more like mid six figures. Box Out - seven figures, and stuff like that. So I’ve seen the ranges in there and stuff, and it’s way easier to acquire something than to start and build that from scratch. It just takes a long time, and also a lot of right decisions, and stuff like that.

So yeah, I think it can definitely be that kind of centerpiece. And you can’t have a podcast host and not have a podcast, right? You have to.

I think it’s actually law.

It is.

Isn’t that law now? Yeah.

They passed it, at least in California. I’m not sure about other places. [laughter]

California passes all them laws, man…

[laughs]

I have to draw this corollary, because I just have to… Are you a fan of Silicon Valley?

Yeah, I’ve watched it.

Okay. When I say the name Keenan Feldspar, what do you think of?

It’s familiar, but I – it’s been like years since I watched it.

Okay, I’ll prime you then. And the audience is right there on the tip, because they’re super-fans like I am. So Keenan Feldspar was introduced, I believe, in season four. He was played by Haley Joel Osment…

Oh, yeah.

…who was from the Sixth Sense. That was his claim to fame, that very first movie. I think it was one of his first. And AI, artificial intelligence…

Yeah. Lots of stuff when he was a kid.

Yeah. And so this was later on. And so you remind me a little bit of Keenan, not so much in demeanor and look, but mostly –

Do you see dead people?

No, not this at all. But Keenan could not fail. If he wanted it, he got it. If he thought he can get more money, he can get more money.

This is a compliment.

It is.

It was almost as if he could just fall bass-ackwards into something. Great.

[laughs]

It sounds like less of a compliment now. [laughter]

That’s good. I think you have – Keenan had good instincts as well, but it was like, everything he touched turned to gold. It was a Midas touch. So he couldn’t almost go the wrong way. His VR company, just to set the stage a little bit, eventually sold to Hooli for billions.

Yes. Oh, I remember that.

It did make phones catch on fire, and lots of bad things happened… Sorry to plot kill for certain folks, but whatever.

Spoiler alert.

If you haven’t watched by now, then you’ve got problems. Catch up! So you kind of remind me of Keenan Feldspar.

I take that as the highest compliment, I do. Because I don’t – again, there’s other people that…

Oh, I didn’t call you Erlich Bachman, so…

Exactly. Yeah. Yeah.

I could have called you Erlich.

Yup. It could have been worse. I don’t know the best way to answer it, but I feel like – it’s not even really a question, but more it’s like I very much appreciate that sentiment… I don’t feel like I have golden touch, but I feel like I have very conservative and methodical – you know, my favorite quote is that consistency beats intensity. I don’t have to work on this 60 hours a week for three weeks. I can work on this X hours a week for five years, and I can just keep doing that. Because I love the process of building software. So that’s, I guess, my advantage. And that’s why I’m not really worried about it.

[56:25] I like the process of building software, I like talking to customers, I like solving their problems, I like building stuff, and I like charging them money for it. And I’m not going to build the next GitHub, I’m not going to build the next of any of those kinds of things, and I don’t even have any interest in that, but I’m very happy to build something that someday is like 5, 10, 15, 20 people max, and everybody’s really stoked, and we just try and pay everybody more every year. That sounds awesome to me. So that’s what I want to kind of do next, is that kind of thing. I don’t know how long it’ll take or if I’ll succeed, but…

I wonder if it could be bigger than this conservative dream.

It’s possible, but I’ve worked at bigger companies, and – I guess I wasn’t at the top in bigger companies, but…

I guess I don’t mean bigger company-wise, like people-wise, but trajectory and target, in terms of…

Oh, gotcha.

…ability to capture the market. And I don’t know if you have to be necessarily bigger people-wise to be bigger from a revenue target or market capture, really.

Yeah. I mean, Box Out was literally four people, well past a million. Four people, maybe five people. Some help and support and stuff, too. There’s so much leverage if you can write software. The key is finding people who can also, depending on the plans, can either market it if it’s lower price plans, or sell it if it’s higher price plans. I feel like that’s – it’s just build good software, and then have one of those arms.

You got that wrong. Build very good software.

Yes. Very good software. Yes. Buy it or not. We’re not beggars. Parks and Rec. Huge fan.

There you go. What’s the right number of businesses to own in this holding company?

Well, I think it’s just based on the number of people and the amount of work that’s necessary. Again, I don’t believe every piece of software requires full-time work. I don’t think that that’s like a thing that you have to do. So I think the right number of businesses is how many can we work on based on the people that we have and the revenue that’s inside of it. So if we have the revenue to support three people, whatever, halftime, that’s what we’ll do. As soon as we have the revenue to support more, the people who are halftime will move off of other things, a.k.a. Box Out, and they’ll move up on this, and I’ll replace them at Box Out with somebody else. So because they’re owners, I want owners in the company working on it more than randos.

So I think the answer is basically – I mean, having done it now, I’m like “Oh my gosh, I want to do it again.” But Garrett is a very good anti-force to that. He’s like “Dude, can we let the dust settle on one? Can you just like calm down?” Because it’s really cool. I think it’s really neat to find a good business, but I think it’s also very hard as well. So we got lucky, we had one drop in our lap. That’s not going to keep happening. But maybe if I talk about it, maybe it will. I don’t know. We’ll see.

So you’re open to current acquisitions. Like, if somebody had a Rails SaaS that they were thinking about selling, you would hear them out, even though you’re not actively looking right now.

I have some leverage left on my house. So yeah.

So they wouldn’t let you bet the farm. That’s the problem.

Yeah. I mean they would, just not for as much.

Yeah.

Yeah. So there’s other things. But again, if you can get something, and you can get it for the right cashflow, and then you can – again, I’m so fortunate to have worked at GitHub. I have so many friends from that era, that I know would love to work together again… And it’s not hard for me to find people to work. It’s harder to build the business to support more people to work. You know what I mean? So if I can find a business that just there, I’m like “Yeah, I could hire people that are founder energy to start running them, if we can capital-wise make it happen.” The goal is just to do it all in this roof and align incentives.

[01:00:07.07] Flipper’s currently in a separate company, but we’re going to merge it in somehow. We’ll figure it out without messing up taxes, and stuff like that… Because we want all the incentives aligned. And Chris didn’t want to merge Speaker Deck in right away, and that’s fine. I gave him all kinds of crap about it. But I was like “You keep your little thing over there, but maybe I won’t help you anymore.” I’m just teasing him. Because part of me is like “That’d be cool to have that in also”, because now you’ve got like speakers, and presentations, and stuff like that. You’ve got media with this, you’ve got software here, you’ve got lots of advertising space across all of them… You’ve got lots of distribution. And so I could see that working. But we can also work with misaligned incentives, and we can say “Hey, I’ll build your new advertising system that advertises Fireside anywhere we want, and advertises this, and if we can figure out–” Again, we’ll have all that in-depth data, and we can say “Oh, this is worth X to us. We’ll give you this instead of the ad money you’re getting right now.” So there’s still things we can do, but I really like this idea of everyone aligning incentives in one company, and we get multiple shots on goal inside that company as well. I think that’s just really cool.

So your strategy is buy and hold. You mentioned that Box Out has had multiple acquisition attempts; one that you were ready to receive or take. Have you considered buy and flip? Not to reuse flipper pun, but like - you could fix this up for five years, and 10X your equity, just make it worth way more, and find a new home for it… Have you considered that as a strategy?

I haven’t done this one, and maybe I will in four years, five years. I don’t know. But right now I have this – again, it’s just another theory, that I’ve sold too quickly in the past. And so there’s a side of me that’s like “What if I didn’t sell Harmony and Gauges?” and all those things. Because in some ways, a lot of ways, they were way ahead of their time. They’re pre Plausible, pre Fathom, pre all these things.

I was going to say, Plausible is killing it, you know?

Right? I mean, you can’t tell me if Gauges wasn’t still around and we were working on it… I mean, it’s around, but it’s some PE firm owns it, so who cares? But if we didn’t work on it for the last 15 years, you can’t tell me that it would not be killing it. I just, I would not believe it. I feel like it would be killing it. And Harmony as well. I feel like Harmony was way ahead of its time on its template system, and the control that it gave you, and the ease of use for people that are not devs to put content in, and stuff like that. There’s a side of me that always wishes genuinely that I could A/B test my life and see which path… Because I like control, and I like return on investment, and I like having an impact, and it’s really hard to do in a big company. Obviously, things went great with GitHub and stuff like that, but I’m just better in small stuff. Small pond is my – that’s my thing.

So I’m really curious. I don’t know. I don’t know. Maybe it would make sense to go bigger, or to do other things, or all that kind of stuff… But I know those other things, and so on this instance right now, I don’t want to sell. I want to – as long as I can, I want to just be like buy and hold. And also, the last three weeks I’ve been reading Warren Buffett… That’s probably part of it. But I’d formed the thesis before that. So now I’m just like “Okay, well, what does he do?” Because he’s a very notorious buy and hold kind of person.

So yeah, so that’s kind of it. I could be totally wrong. Maybe I am just like zero to one, or zero to 1.5 or 2, and sell. That’s entirely possible. But I kind of wonder what would happen if I didn’t. And I’m like, I don’t have to sell right now. So what if we just created –

Well, you just bought, so you definitely don’t have to sell right now…

Yeah, exactly. And we could, probably, but yeah.

You very much feel like you’re in buy mode right now. Like, you just bought, and you’re thinking about buying more. You’re not thinking about selling anything. But maybe five years from now you’re thinking… Because at a certain point, like Dan Benjamin, we kind of get worn out, or done. I’m not sure Dan’s motivations, but he didn’t want it anymore. He built it, he got a great business off the ground, very difficult thing to do… And eventually, he was looking for a new home for that. And a lot of us small business software people find ourselves in that situation, of like “How do I exit this?” And what you’re doing is you’re collecting other people’s exits. And then I wonder “Well, how do you then later exit that thing?” Because you’re gonna have a bunch of holdings.

[01:04:25.18] I say don’t. Don’t exit.

Yeah. It’s like Tiny…

Yeah, I like the Tiny as well. Andrew Wilkinson is very smart.

What’s the Tiny model?

So Andrew Wilkinson was one of the co-founders, I believe, of MetaLab. He and his brother, I believe, were doing this… They were very successful with being a great design company and a services company. They’re famously known for their work on Slack, which - I think Slack was so good, not just because it was a good idea, but also because of their tremendous work on that. And just like you, John, Andrew began to read and study Warren Buffett. And he took the same approach with acquiring companies, not having to think too deeply, going through all this crazy due diligence… It was more like “If I can’t in a short amount of time”, and I’m paraphrasing, because I haven’t read the essays. “If I can’t in a short amount of time understand if it’s a yes or a no, then it’s probably a no.” Like, I should be able to look at some key metrics and be like “A yes” or “A no”, pretty quickly.

And Andrew formed literally a fund, I believe, and then a holding company called Tiny. And I believe it’s at tiny.co, if I can recall correctly. And Tiny’s model was to acquire. They acquired Dribble, they acquired Designer News… They acquired so many others.

AeroPress.

AeroPress… The coffee company?

Yeah.

That’s crazy.

And they just made a glass one. Literally, it just came out.

That’s so cool. Anyways. Maybe I should buy the glass one. Coffee Dreams. Yeah, his model was “Let me just buy, just this model of tiny or smaller companies…” And created a fund, and has gotten very successful with that process of just vetting out worthy buys, and holding them. Now, at the same time, I think he’s sold a couple…

Well, we know he sold Castro, because we’ve did a show with Castro, the fellow who bought Castro.

Yeah. Castro was what he sold.

So… Okay, the model of buy makes sense, but aren’t we talking about the eventual exit?

Yeah. So my obsession I think the last, let’s say three or four years, has been cashflow. I understand multiples and exits and stuff like that, but if you can create a lot of cashflow, then you can pay people to do the work and keep the cashflow coming, and then you can do less and less on it, in theory. So I’ve definitely seen – I don’t work as much on Box Out as I used to… I mean, that’s a true thing. I feel like once you can get the cashflow, then you can pay people well to work on it, and they’re probably better than you at those specific skills anyways… And so it’s fine. Maybe they’re not, that’s entirely possible. And I’m picky, so I don’t know. But we have a couple of people in the development seat now at Box Out that are doing things… Obviously, it’s not just a press a button and receive code. It’s a lot of work to like train people the way you do it, or things like that… But I don’t think you have to – here’s the thing. My kids are like nine and six. I’m not doing anything. I’m going to be tied to a location, generally, while they’re in school and things like that. So I’ve got like at least 12 years, for sure. So again, maybe in 12 years I might come back on, and you guys will still be here, and everyone will have the fully gray beards… And at that point I’ll be like “No, I sold. I’m done.” That’s possible. But either way, I’m like –

“Let me tell you about how I sold this company, Adam and Jerod… Oh my gosh, I was a buy and hold guy for so long… And then I did what? I sold it… It was so good.” Sorry…

I’m still stuck on we’re going to be here in 12 years. Adam, are we going to be here in 12 years? I just –

Well, we said that 10 years ago, didn’t we, Jerod? Like eight years ago… Like, “Would we be here in five or eight –” I remember I said something like that. Where would we be…?

You’re right.

And we are still here.

[01:08:10.13] We are. [laughs]

You are. I think it’s amazing. That’s one of the things I talked to Adam about. I’m like “How do you keep doing it?” It’s amazing. I’m five years on –

Just keep showing up.

Yeah. I’m five, six years on Box Out and I’m like, it just kind of runs, and it does great. Because there’s a lot of people involved. We had our first Christmas party… We had never done a Christmas party. We had – I don’t know how many people; 20 people or something, and we flew people in, and all kinds of stuff… And we all got together and ate food. It was awesome. I was like “Dang, this is fun.” I don’t know about GitHub Summit size. 50, 100, 200. I saw that path up to a thousand… I’m just like “That’s crazy.” That’s a lot.

So I like this idea of small things, that can do well, the below 2 million figure. If they go up over that, that’s fine. But I think there’s a lot of – and there’s other companies that are doing this, too. I’ve seen like Third South Capital, I’m actually talking with Justin, who’s in that, the button-down guy, next week, and there’s some other people that have reached out, bigger than that… Or I don’t know what size they are. But what I’ve seen is they do some bigger deals more, and they’re like let’s say 2 to 5 million range kind of stuff… But below PE. PE is usually – they’ll sniff around in the one, two range, but they don’t get super-interested and excited to like five or ten, usually.

But I’m seeing more people kind of move down market, because they’re realizing “Hey, you can buy stuff there and then grow them, and you get multiple arbitrage.” If you are going to sell it, you can buy it for a two to four x, and sell it for a four to six x, if you can grow it. It’s just interesting. I don’t know. Again, I have no idea. This is my current thesis right now. I’m just blabbing. Even as I’m sitting here, I’m like “Do I believe all these things?” I’m not entirely sure.

It’s kind of funny, though… You’re hypothesizing from a lily pad, right? I think of this as like a frog in a pond, with various lily pads, some further away, some smaller, some bigger… Maybe there’s a crocodile in there, maybe there’s a predator that can get you, or whatever… And you’re on the lily pad and you’re hypothesizing about which lily pad or path makes the most sense to get back to the shore, or to get to wherever your goal might be. It could be this other lily pad, with a flower on it, and a fellow frog that you like. I don’t know.

You may not know this, John, but this is the second lily pad analogy that Adam has done in the last month.

I actually love it. I think it’s great. I think the only change I would do –

You’re safe. You’re on the safe ground. You kind of know where you’re at. You have some stability, some assurances. And so you can kind of gauge where you want to go next. That’s the intended pun there.

Yes. And I think like a big thing too is that – yeah, Ordered List, there was Steve and I, but we had three guys working with us… And the GitHub stuff happened, and that was all great for them. And I was like “That’s cool. That’s really cool.” I was a part of helping someone else. Obviously, they did the work and stuff like that, too. But that was a neat thing. And now I’m in Box Out, and Steve and I have been through this before, but we’ve got two other partners… And I can see that, again, all the four of us together have created something cool. It’s cool that we’ve helped enable it, because we know the software stuff, you know? And so it’s almost like “Okay, well, who are the next group?” And that’s one of the things I think that’s kind of driven me a little bit, it’s just like, who are some other people that I’m really good friends with, that I would like to also be in on the lily pad with, or whatever…

That’s right.

…to bring it home. Who do I want – I wanna help them get to a bigger lily pad, or whatever. I think it’s cool. Who do I want to spend time with? I’m going to work. I love the process. I’m not just going to like stop. I love building software. So I’m like “Who do I want to do it with, and how do I find things that can pay for them, so they can do it, and it makes it worthwhile for both of us?” And I think that’s – even the Fireside deal, that’s kind of what happened. It’s worth it for Chris, it’s worth it for Garrett, it’s worth it for me, it’s worth it for Steve, it was worth it for Dan… Everybody kind of wins.

And I think there’s more out there like that, too. It’s just a matter of like letting the dust settle on this one, and then we’ll see from there. But at least if I talk about it, then people will hear it, and then if it happens to them, they’ll think of me. And maybe it will be something that like “Okay, yeah, that’s a Rails app. It’s very stock and standard. It’s making good money. You’re tired of it.” Or maybe I like you, and you’re doing this, and why don’t you just merge our merry band of SaaS artisans, or whatever? So yeah, I just think there’s some cool stuff out there for that.

Break: [01:12:45.16]

It’s very smart, I think, because you’re so comfortable in the Rails world… I think it’s smart because - yeah, Rails is mature enough that there are several opportunities out there just sort of waiting, in a way… And you could be a friend, you can bring something to it, you can give something new life, you can have somebody get liquidity out, or some sort of exit that might make sense… You can satisfy the existing customer base, you can bring it into the fold and grow it more and bigger… If we go back to the hub and spoke idea - and I don’t know exactly how far you go in to decide which really is your hub, but if you can start to surround this hub with various things that compliment this thesis, this idea of “Enjoy what you do, enjoy the process, great enough revenue to support other people, bring them in, everybody wins”, and you just kind of rinse and repeat… I think the question Jerod’s asking is like, at one point, can you exit that? And I think if you’re enjoying it for the next 12 years, there’s an obvious exit that can come about if you’re building value… So I don’t really – I personally wouldn’t care that much or concern that much with the exit strategy.

They do say every time you enter into a business or a room, that you should Jason Bourne it; you should plan your exit, right? You should never go into something and you don’t have some sort of like failsafe, or “What if this went to zero?” or exit strategy. I think that is smart. But I think if you’re comfortable with this Rails model, and this is only Rails SaaS apps, it would be kind of – not so much easy necessarily, but like you can see a clear path in terms of the word easy being applied. You can see a clear path to even the codebases getting refactored the same way, or having similarities across them, or services that you’re buying once, or you have one relationship, then benefit the whole entire pool. That’s why I like the lily pad analogy.

Yeah, that’s definitely a thought process, is “How do we–” Whether it’s cross-sell, or like any of the other – I mean, there’s tons of different business acronyms and words and stuff you can throw out for that kind of stuff… But that’s definitely in the thought process; it’s like the rising tide lifts all boats, all lily pads. I think that’s a thing that is a real thing. Especially if you stick to Rails and you standardize really heavily. That’s the thing that Steve and I have always done with all of our previous stuff; we’re super-STDIN how we do all the stuff. It’s always bootstrap, it’s always this, it’s always that. Even if it’s like, well, we might be curious about Tailwind or other stuff, but we’re like “You know what? We’re standards.” It’s not about individual enjoyment, it’s about across the board, all the things that we’re working on - how do we make that enjoyable and fast?

So there’s definitely parts that in bits that we share, and stuff like that, and I can see that big time for this kind of a business as well… Without intertwining them so much that they would be hard to sell if there was some scenario where we wanted to.

What if you come across a SaaS app that has just an excellent business going on, at a great price, and you’re friends with the owner, and they just can’t do it anymore and it’s not a Rails app? Deal breaker?

Yeah, it’d be a deal breaker for me. Yeah, I wouldn’t do it. Because I like Ruby and I like Rails that much. Shout-out to everything else…

What if it’s a Ruby app?

Yeah, a Ruby app would be fine. Yeah.

Okay. You’d just convert it.

It’s Ruby. Yeah.

Okay. But if it’s not Ruby… So it could be like a Sinatra thing…

Yeah, that’d be fine.

I’m not sure if they’re still building Sinatra things. I don’t know.

They’re not. No.

Yeah.

Yeah. That would be fine. But if it was Python, or if it’s – again, I don’t have anything against Elixir. I like Elixir. I think it’s cool, I’ve tried a bunch of stuff, I know a ton of smart people who like it… And I’m just like, I just like what I’m doing. I don’t really have a strong desire to change it. What I’m more fascinated with – I’m less fascinated with tech and more fascinated with “How do I create more jobs to work with people that I like”, and want to not be laid off or not get fired or not have like “How do I create more of that kind of stuff?” It’s just more interesting to me than those other things.

Now, maybe I should just go into one of the other ones and hire somebody to do that, but I don’t know those kinds of people. I don’t really know that many people who do - whatever, these other frameworks. So it would be harder for me to figure that out. So right now - and maybe in the future that’s less of an issue. But right now, you’ve gotta be ICP. Ideal Customer Profile. And the ideal customer profile would be like Rails app, Stripe… Even Bootstrap. Fireside is Bootstrap 3. And it’s like “Well, I’ve done the three to four upgrade, I’ve done the four to five upgrade”, I’ve done all those things. It’s 2.7 on Ruby, I know how to get to 3, and all the [unintelligible 01:21:55.27] stuff, and then I know how to get to 3.1, 3.2 or 33, I know how to get Rails up to 8, all that kind of stuff. It’s a straightforward path to stabilization and then iteration.

[01:22:07.28] Predictability is good too, though. I mean, you’re trying to do a lot, so your footprint gets wider. I think - back to the lily pads ideas - that really it’s predictability.

Yes.

Why do we have to go back to the lily pad again?

Well, because I think when you judge where you jump, you think predictability is assurance that it doesn’t go underwater. You want assurance and predictability in these maneuvers, especially as you widen your pool. I mean, that’s how I would approach, is you want some assurances.

And you might be giving more credence to frog decision-making than they actually put into it… I think they’re more intuitive than all this thought that you’re putting into it.

Sure. Maybe.

You have me thinking now. I don’t know. I’m definitely processing live, and I’m –

In terms of other languages?

Yeah. Like, would I do another language or not?

Well, if the business was right… I was just trying to feel what’s more important to you, you know?

And I would have to have a good team probably already, or I would have to have a friend who knows the exact technologies being used, that could just step in… Because the marketing and things like that don’t matter. You can standardize that stuff at the top of the holding company, or whatever. It’s just the tech that I would like somebody – again, I was listening to a podcast on Inquiring Minds, and it’s like a guy who buys manufacturing companies. And I was just like nodding my head profusely the whole time. The first podcast ever I’m probably going to listen to a second time, and maybe a third time… Because I was just like exactly what this person is saying. He’s like “Look, I’m not going to buy a manufacturing company that I can’t step in and like run the machine if I have to.” He’s like “All the way through, I want to know that worst case I could go in there by myself and I could keep the thing going.” He’s that conservative on stuff. But yet, they’re compounding it 20% or more; they’re doing great in growth and all that kind of stuff. And so I’m like, “That’s in my head, I guess.” In my head it’s like “I should be able to step in, if push came to shove, and like run the thing”, and I just… I don’t know, maybe I’m too old, too many gray hairs to like totally switch languages and frameworks, and really feel like I could be – it would take me some time, I think, to be successful doing that.

Sure. Let me give you another hypothetical. This is in a different direction. Let’s imagine you come across a new business. All the other things I just said are true. It is a Rails app, but you’re out of money. Now, at a certain point, this is what cashflow people do, is they run out of money. They’ve got cashflow every month, but they can no longer acquire because all they’re doing is cashflow businesses. And so usually, then they open up to more people’s money. Is that something that you’ve considered?

I think I would do it. I just would have to learn more about how people do that. And even in that, again, that podcast episode about like buying five – I can share the link later, or whatever… But it’s like buying five manufacturing companies; in that scenario, that guy was like – they do kind of like a PE model, where basically they’re like “Look, we come in and we run it”, and there’s six partners in the group, and each of those partners will personally guarantee one business. And so right now they have three, guaranteed. And when they do that, they do two things. So one, they charge a management fee to the business based on EBITDA. So they buy businesses that already have good profit margins, they take a slice of that profit margin for everyone who’s in the management group, and then they’ll also do - whatever, first 8% preferred return, in the event of a sale, goes to the investor, and then after that it’s like split based on equity and all those kinds of things. And they bring in basically different people in every single deal.

So I wouldn’t say different people from the standpoint of like “Well, Adam’s in this deal, and Garrett’s in this deal”, or stuff like that. It’s more like “We’ve got five people each putting in like 100,000 or 50,000, so now we have 250k, 500k, and then we’re going to personally guarantee, do an SBA loan for the other half…”

[01:26:13.23] So their debt to whatever ratio is basically like half. Because again, if the business went all the way in half, you’d still be able to run it, which is pretty rare for a business that’s been around for – they stick to 30, 60, 80 years. 30 plus employees, so they know that all the knowledge is not with one owner in a 10-person company, or things like that. So again, a different scenario here, where we have software and leverage and stuff, and it’s less of less of a concern. But I’m like, that idea is really fascinating to me.

The group, the six, each have a share in each of the companies they acquire. One of them runs each of the companies they acquire, one of them personally guarantees… Not necessarily the one they’re running. And then they also kind of – for lack of a better word, they shard their investors across all the deals as well, so no investor is heavily invested in one of them. And I’m like “I actually really liked that model.” I think that’s sick. Because now they’re doing the SBA loans, which means they can personally guarantee, but not actually put up the collateral, so you don’t run out of collateral and run out of money… But I don’t know all that financial stuff yet. I haven’t done any of that, so I’m like, I’m just going to start simple. And I’m like “Look, I’ve got some friends, they had a little bit of cash too, I’ve got the collateral, let’s put it together, make it look a three to five-year payoff.” If it’s an eight-year payoff and we take more cash out, that’s fine. It’s just, ideally, I don’t want to have my house on the hook forever. Or maybe I pay off the loan at some point… Like, let’s say Box Out does sell, for some reason. We’re not planning on it now, we’re not talking to anybody, we don’t have any interest in that… But if somebody came along with the right price, we’d be like “Sure.” That happens, now I’ve got some cashflow, so maybe I pay off the loan, get the lien off my house, and then I loan it back to the business at a lower interest rate, or something like that, so that the lien is basically gone from my house, but there’s still some amount of leverage of using other people’s money to make money, which is kind of an interesting concept, I guess. Again, I’m all a rookie. I don’t know any of this stuff. I’m just flapping the stuff that I’ve been researching for a couple of years, and then heavily for a month or so… So I don’t know, but that’s just what I think in my head.

Makes sense.

I just like to hear the ideas and think about them in my head, so…

Oh, awesome.

I’m sitting here listening. I don’t know if that’s a good idea or not, but it’s not something that I had ever heard, so… Certainly interesting.

Yeah. I think there’s a lot of ways to get capital. And it doesn’t hurt – I mean, I’ve got the GitHub founders, other people in my phone… I mean, I could text them. But I don’t need to.

Well, I wonder if you’d ever like start a fund, or something. Become –

I don’t know. And even just for the reason that the – again, I don’t want to keep going back to the other guy, but it’s fresh in my brain because I just listened to it, and it was like “Yes, I like what you’re doing. I’m headed to the ER, because my neck hurts, because I’ve been nodding my head profusely”, but I’m like “I like this.”

Get another hernia again.

Exactly. Pop another hernia… But I like that idea of like not running it like a fund, because a fund has to receive the capital, and then deploy the capital. And so you’re kind of under constraints, because you’ve got to deploy the capital in a certain amount of time. But that means you’re going to maybe have to deploy the capital into a deal that you’re like not super-excited about, because it’s like “Well, it’s time.” Otherwise the fund’s going to run out, et cetera. Whereas this model is like, look, we get people to commit, but then they don’t have to give their capital up until the deal’s actually here.

And we know it’s a really good deal, because we have just been vetting them profusely. And so this is like – yes, their range was 500,000 to 2 million EBITDA, they’re going to do X multiple, and they’re going to, again, shard their investors, shard their individual personal guarantees. That’s just a really cool model if you can make it work. It probably takes a lot more smarts than I currently have… But I think that’s cool. I like that idea of – yeah, that process.

The fund could easily be replaced by a pool of people that are just simply angel investors, though. And it doesn’t have to literally be a fund…

Yes, agreed.

[01:30:07.19] …that has capital and it has to deploy by a certain timeframe, which is really how funds work in most cases…

It wouldn’t have to be formalized.

Yes. That I’d be super-interested in. And that’s even why the first thing I did is I reached out to Adam… Not even about investing, but just because I was like “He’s in podcasting”, and everybody knows you guys are killing it. So I was like “Hey Adam–” No, I’m just kidding.

Just killing it…

Well, thank you.

Just killing it. Crushing it. And then I was like, again, you know podcasting, you know this kind of stuff…

He told you it was going to go to zero… You called him and he’s like “This thing’s going to zero.” [laughs]

Here’s what happened, though… That was the first five minutes. And then by the end he’s like “Well, how do I get in on this?” [laughter] No, not really.

I didn’t say those words…

Actually, you could see that story in Adam, happening a lot, yeah.

Somewhat…

[laughs]

I come in as a skeptic, and then I come out as a believer, in a lot of cases. Not every case though. There’s been several cases where we plotted with people and I’m like “Nah”, at the end still yet.

Sure. It happens. Yeah.

Well, the question you have to always ask yourself when you take any bet is “What if it does go to zero?” That’s the obvious prudent question to ask.

Of course, yeah. “Do I lose my house?”

Regardless of conviction, you know?

I take a hit. That’s what happens. I definitely did that math, too. A hundred percent.

Yeah. I mean, you’ve gotta do that math. You’ve gotta do the worst case, best case, and then you also need to do that “What’s more likely?” stuff. We can’t live in worst case and best case world though. We tend to make bad decisions if we just do those two.

Yeah. Neither of those. That’s a really good thing to say, because I feel like a lot of people just go right to the worst case, and I’m like “That’s not the common case.” That’s one of the best things that I think partnering with Steve has been; he’s very much like not a worst case. He’s like “I mean, well, worst case you just get a job again. It’s fine.” And I’m like “Oh yeah, that’s a good point.” I actually do have marketable skills.

Yeah, it wouldn’t be challenging.

Yeah.

A change, though. You still have to change, which…

Of course.

…change can be hard. But you can float.

The only constant is change though.

Yeah, positive or negative.

Says the people who’ve been doing the same thing for 15 years. [laughs]

But then I follow it up with like 17, maybe, maybe 45,000 good ideas, that he wrote down immediately. At least two.

Oh. That’s the other thing that Adam gets.

And I’ve told a lot of other people. And then he was like “I can’t give you any more”, again, because he wants in. And if he gives all the ideas, then he doesn’t have a way in.

[laughs] Right. This is his leverage. His good ideas.

I tell anybody that, “I can only give you one or two for free.” The rest you’ve gotta pay me for.

Yeah.

That’s right. He gave you the lily pad metaphor. What else do you need? He called you Keenan Feldspar. I mean…

Gosh, yes.

Come on, get him in, John. Get him in.

[laughs]

We’re obviously long podcasting. I think it’s a great medium. We have – I’ve even posed this question to Jerod a couple of times… Like, why should we ever do a host? And I think, Jerod, what was your sentiment, always pushing back? It was always like “Compete with free, saturation in the marketplace”, things like that. I’m not sure that’s where I would actually begin, though.

Oh, why don’t we turn our thing into a hosting thing?

No, like spin off some of the things we’ve built as software into its own standalone business… Because we’ve got enough street cred to do it.

Sure.

Heck yeah.

I’ve always thought – I guess maybe I’m always less impressed with what we’ve built than maybe other people would be, so I discount it… That might be one part of it. The other part of it is, is that another job that we want? Because now you basically have two jobs. And maybe it is. And maybe it becomes the main thing. I’m certain that if we came across a business model that we both liked, and a software product that we could build, we could somehow use what we’ve currently built in order to promote that thing, and make that the new thing that replaces this thing… But is that what we want to do? Do we want to have a different kind of life? I don’t know. If that thing comes across, maybe I would say yes. Let’s try it. Let’s go for it. But so far, all of our ideas have kind of been like…

Meh…

“Maybe it would work…”

You guys have the distribution. You have this massive audience.

[01:34:06.20] Yes… The challenge, though – so I hear you on that. But then if we begin to leverage our distribution, then it’s like “Well, are they saying this or doing this because…?”

Yes, you have to be careful.

Are they pimping their own stuff, basically? That’s the easiest way to phrase that.

Well, it clearly would be.

Yeah.

But also, it’s our stuff, and you’re listening to our show cause you like our stuff. So it’s more of what you like.

Yeah.

So there’s a strategy about that. You want to do it right. Everything we do, we want to do right.

We try to be, as best we can, calculated. And I think the thing that’s kept us from doing other things has been keep the main thing the main thing.

Which - our main thing is saying that to each other. “Let’s keep the main thing the main thing.”

[laughs]

And every time we feel like we’re going too fast, we say what?

Slow down and check yourself before you wreck yourself.

[laughs]

And then the other thing we say is “Give them what they came for.”

Give the people what they came for.

Yeah.

That’s awesome.

So we have our little sayings. Of course, we’re podcasters. We say stuff to each other. We have sayings.

It’s so good. I love that.

It’s like kind of having like your own little utility functions that you use, you know?

Oh, yeah.

We have our little sayings. This whole Silicon Valley thing - he’s mined this thing so deep right now that… You have no idea how deep the Silicon Valley references go on this show, because…

Well, I’m on the money with Keenan Feldspar and John Nunemaker. Okay? I mean, when the audience hears this, they’re going to have to go to the hospital for their hernia in their neck.

[laughs]

Oh, yeah.

And they might even bust a gut. Gosh. They’ll get a new monitor, and everything. They spit their coffee on their monitor.

See, now we all want in on the Keenan Feldspar, the fund. That’s why we’re trying to get him to a place where he’s got to take our money and give us some cashflow back.

Hey, you guys got the distribution. So you know…

Alright. Alright. We’ll talk. We’ll talk.

We’ll talk. There is big upside to what you could do. I do believe it could be the hub of your spoke model for this company that you’re trying to build, that you are building… I think as you talk about this more, I would find a way to give people a page to go to, because you’re going to have inbound people either DMing you, or directly coming to you… Just something to say, “Okay, rather than come to me and ask me a bunch of questions, go here first. If you fit this model and you’re in this world, then I want to attract you, and I want to help you if I can. It may not be today. We should definitely become friends. I want to put you on a list, maybe an unordered list, potentially… Put you on a list, and if the stars begin to align, then they do.” And I would definitely, if you like this, and you do this, and you repeat this a few times, I would 100% begin to build that angel list investor group, especially if you can help their interests align with your interests, and everybody wins. And really, at the end of it, it’s all about having the fun, right?

Yes.

It’s enjoying the process, having the fun, enjoying the people you’re working with, and really building very good software, that you can really –

Be proud of.

…have fun with and be proud of. Yeah.

Yeah. That’s a really good way to put it. That’s better than – again, you get to sit there and analyze what I’m saying while I’m saying it on the fly, but that’s a really good summary, I think of, of it. Hopefully, it works. I mean, I think it will.

I believe in you. It’s going to work. I believe in you.

Yeah. I mean, I say hopefully, but I believe it will, too. I honestly don’t – I don’t feel imposter syndrome, I don’t feel like it’s not going to work. I’ll just figure it out, one way or the other. It might take more work than I thought, but I’ll figure it out. So…

Yeah. I think you collect the right kind of people too over your career and history as a person I’ve just known, and more recently in the last few years become more close with. You’ve been able to collect the right people and attract the right people to be friends with, and to enjoy working with, that I think you’ll do amazing with this, man. Total belief.

Well, when you work at a thousand, two thousand person company, you just run into a lot of awesome people. It’s hard not to find ten really awesome people at a company that size. That’s the one benefit of working at a really big company. If you stay at the small stuff, it’s a lot harder, but… Again, it’s conferences, too. You’ve gotta show up at the conferences. You show up at those, and then –

Meet people.

…good stuff happens. I’d stopped for 10 years, and that’s when the good stuff didn’t happen. And then now I’m back on it and I’m like “It’s awesome. It’s amazing.”

[01:38:13.25] Yeah, so speaking of conferences - let’s close with this… Give us a quick Rails World recap, because… Was this is your first conference back, or you’ve been doing a few of these?

I did RailsConf in Detroit.

Okay.

So I’m in Indiana. Detroit is like a three, four-hour drive, so I did that. This one was in Toronto, Rails world, and then RubyConf in Chicago. So I was like “I’m doing the triple crown.” I’m like going from no conferences since my kids were born, to the triple crown in one year.

So the recap of Rails World - electric energy. The Rails Foundation just did like an amazing job of putting this really cool venue, partially outside, partially inside… The only problem was the bees. There was like a lot of – not bees, but like hornets, or something.

Oh, that’s worse.

Yeah, they would not leave me alone. It was like they’re flies, but like with stingers, you know? And then the talks were great… DHH kicked it off with an amazing keynote, as usual, they got everybody kind of fired up… And then I – I would like to say the rest of the talks were amazing… I believe they were. I was in the hallway track the entire time, and I did not shut up. I was just meeting all my old friends, making new friends, and it was awesome. It was really good. A thousand people, or maybe more, I don’t know. Something like that. It was packed, great energy, very low shilling of services and things like that… It was just like lots of great people smashed together. Shopify blew it out on the last night. I cannot even express how amazing the Shopify closing party was…

Really?

Because they got this amazing three-story office, and then COVID happened and they just turned into an event space, and it was killer. I mean, they had barbecue on the roof deck… Legit just making barbecue, putting it on sticks. I ate like 10 in a row, and the lady was just like “You must really like this.” And I was like “You guys are amazing.” And we became friends, you know?

Nice.

It was a great vibe. So yeah, it was really fun. I feel like there’s a lot of excitement coming back to Rails as things kind of swing like a pendulum, like they always do.

Right, right. They’re coming back to the server side… And I do think that Rails is having a bit of a comeback of late. Renewed fervor, renewed – people talking about it who weren’t previously talking about it. Good, bad, or indifferent, they’re talking about it again. And I did see some of the Rails World vibe remotely via social networks. I got a little bit of the FOMO. I was like “Oh man, that was like actually a pretty decent conference. Maybe I should have been there.” So that’s cool.

Yeah. I mean, we even had Laravel and Tailwind; people like that, they were there, so it was good. There was a whole lot of different – it was great. It was really great.

Yeah.

It would’ve been awesome if you’d been there. We did some live podcasting.

Gosh, that’s what we do, man… Speaking of, ATO 2024, shout-out to our All Things Open coming soon, coming end of October. So we will be there.

So soon.

It’s a little bit far away from you, John. You have to drive through some floods to get there probably, unfortunately… But the part of North Carolina that we are going to is clear and dry, right Adam?

Safe.

Safe. Raleigh, North Carolina, the Durham area is dry.

Yes. I have a couple of friends there. They said it was just wet, but it didn’t get hit like everything else.

Yeah. It’s been crazy out there.

On that note, John, what are you doing October 27th through October 30th? Do you have plans?

I think I have a – we might have a camping trip that weekend, actually. I’m not sure. I’ll have to check. But you know what? I have traveled so much, if I leave again, I’m going to have to find a new wife and family.

Your wife’s gonna kill you, dude.

[01:41:47.20] Yeah. It’s not going to work out. I’m already going to be gone in November, so I’m at my max traveling. So you’re welcome to come here, we’ll put you up in a room if you want to hang out, but…

I’ve never been to Indiana. I never had a good – never had a reason to visit, actually.

Oh, man.

Never.

We should do some kind of –

Driven through, not to.

Is there a regional conference? Is there are local thing that happens regularly?

There’s nothing. But you know what I was thinking when I was at Rails world? I was like “What if I just invited a bunch of my friends, and did like a –” Well, so one of the things I’m in is like a real estate thing where we’re doing like an entrepreneurship hub in a big building, and stuff like that. We did a ground breaking like a couple of weeks ago… And I’m a very small, passive, part of it. The other people are doing all the hard stuff. But I’m like, once that’s exists and there’s a nice, awesome event space like I was a part of, I’m definitely having some kind of like JohnConf… Just bring all the smart people together, and see what happens…

JohnConf, yeah.

I don’t know, whatever. It doesn’t matter to me what we call it. But just like a bunch of different skill sets, and cool people… I think that’d be really fun. And then try and grow it every year. Not try to make any money, just try and break even.

Like LessConf. The good stuff from LessConf.

Exactly. Yes. I went on the LessCruise and it was amazing.

What is the shirts you’re wearing? Does it say Less? I was trying to figure it out.

It says Less. It’s not one of theirs, but shoutout to –

I thought for sure it was like a LessEverything shirt, or something.

No, this is “Less, but better.” Yeah. But I had a “Don’t quit your day job” shirt from them. It was my favorite shirt, and then it just got old, and so now I just wear it on my way home from basketball after I’m sweaty. That’s it. But it’s still a great shirt. Or it says “Quit your day job.” Sorry. That’s what it said.

Quit your day job.

Quit your day job. That’s the opposite of Keep Your Day Job.

Exactly. Yeah.

See, I follow some people on YouTube that RV, they say, “Keep your daydream.”

Keep your daydream.

We always say “I’m sorry for what I said while we were parking the camper.” That’s a big, popular one.

Oh, yeah. You have to, because you’re always on the phone, backing up this trailer…

“Your left or my left?!”

“Get it right! Go left!” It’s always a mess. Yeah, I think if you could - if somebody could - recreate the essence of what they did well with LessConf, it would be amazing.

It’s a great idea.

If you build it, we will come.

Okay.

For sure.

2026.

Will we still be here? We’ll still be here.

Exactly. You’ve got at least 12 years. So…

That’s right. Alright. John, thanks so much for coming on.

Thanks for talking. That was fun.

It was fun. Good seeing you.

You too.