028: 6 Keys to Building a $40M Business (Live Mastermind)
You guys are all amazing entrepreneurs, very successful people. But I know not everybody started that. What's the thing that I should be focused on early on? And I think it's actually working on the really hard stuff. We built a service that would do on demand parking every day. We had people calling and being like, you guys crash this car right into my office.
If I can solve this, I can solve anything. There's so many skills that you learn as you ladder up through these businesses. You know, I started a web hosting company that didn't go anywhere. I tried to make, like a local social network idea. Revenue made $0 $0, $50, and then it builds up and then finally went to five.
Yeah. I like to think of entrepreneurship as I'm a gambler. I want to look at the risk profile and odds of success. I'm playing basketball against LeBron James, against the Stanford grads, against the venture capital, where I can go over here in sweaty startup land and play basketball against a 4th grade girl. So, oh, and don't follow your passion.
There's this grand story you just, like, follow your passion. Somehow money will just fall out of the sky on you. I think you should follow your passions and you should figure out a way to make money. I think it's really important to like the industry that you're in, at least categorically, because you don't want to be fighting all the uphill battles and also hitting the people that you have to spend all this time with to do.
I don't know, I'm of the camp that making money is fun.
So we're hanging out here in Cabo for a little mastermind I did this weekend, and we thought it'd be fun just to get everybody around the table and, chat about something or take away that's going out of business. So you've got Curtis, who's built an amazing business venture, backed, in the financial services world is well over $1 million a month in revenue.
And that is our host. He's the one that brings us down to Cabo every year. Yeah. And Xavier and built enduring ventures. How many companies you guys own that 22. I think there's a lot of stuff that's pretty fantastic. and then Nick joined us from for the first half of the conversation, and then he had to jet off to the airport.
He's probably is the best example in the group of building an audience and taking it, you know, to an amazing level of building all of these companies. Yeah. And then I built ConvertKit to a little over 40 million a year in revenue. And, it's a fun conversation. So you guys are all amazing entrepreneurs, very successful people now.
but I know not everybody started that way, right? We all started somewhere, and we got to where we are today. I'd love to hear about any of stories around past businesses that you had that didn't work out, and how you transitioned and really, like, made that change to become part of that. my first business, I thought was a good idea.
I was 21. the college I went to, there was no food, for drunk people. After 10 p.m., and I was college, and I had, recently saw in Paris there was, like, late night crates, being sold. I was like, this is going to be awesome. that sounds awesome. Yeah. I had a dorm room.
I had no, like, health and safety, code violations. I was like, I'm going to be a traveling salesman to drug people. Night. at midnight at parties. And I prepped everything in my dorm room to be ready to go. And I was like, the way I'm going to. The way I'm going to do this, like, crate plates needs to be powered.
I'm going to buy a generator so the generator can be portable. Yeah. My biggest cat bags. I saved up for $500 for a generator. Make one. I have yet to turn it on. I turned the generator on at, like, 8 p.m. just to test the equipment. It was so loud. It was basically like crush any. It was unusable.
It was totally unusable. Anyway, I, I ended up buying, like, incredibly long extension cords to, like, frat houses. I made it work. But, like, ultimately the downfall there was like, very drunk girl with, turquoise tube top. She went for a scrape. She put her hand. Oh, yeah. I was like, I got to shut this thing down.
But it did prove to me you can take an idea in your head and turn it into reality in a business. And that got me hooked on entrepreneurship for the rest of my life. I'll say, I think the common theme is that as an early entrepreneur, I had a lot of ego at a lot of, set in my ways.
I was very sure of myself, and I think that was a blessing. I wouldn't have had the guts to do it, but the theme that I'm reading and one of my big takeaways from you all this weekend, and just in general, is that if you are fluid in your decision making, you're willing to change your mind. You're willing to change the way you think about things over time.
You can adjust and go after what's working. And I feel like everybody a metaphor is there's a mountain over there. If we took this cup and we poured this water out on top of that mountain, it would take the path of least resistance to get to the bottom. A lot of entrepreneurs early in their career are like, I want to go up that marathon.
I want do something really hard. I want to do something that maybe notable. All of us here are thinking, hey, what's the what's the path of least resistance? Like, how can I change my mind? How can I be fluid? I can to capitalize on momentum and keep doing easier and easier things that are more and more effective. And that takes a sense of humility that I think all of the successful entrepreneurs, especially you all have, is that sense of humility.
I'm not going to go after what I think is right. I'm going to step back. I'm going to be unemotional about this. I'm gonna change my mind, and I'm going to be like water. Find the path of least resistance down, down the hill. I just want to know if there's a magic crystal. yeah. I've got a great recipe from crabgrass.
There's so many skills that you learn as you ladder up through these businesses. I made a list of all the companies or like, attempted projects before starting ConvertKit, and there was actually ten. And just going through you know, I was in web design early on and so of course, started a web hosting company that didn't go anywhere, WordPress theme company.
Then I combined those and tried to make like a local social network and just ladder up through all of these things. It doesn't work. It doesn't work. You know, a flashcards app in the App Store and but all the way along and you're learning a little bit more about how how things work. But when I actually listed it out, like idea revenue made, idea revenue made, you know, it was just like $0, $0, $50, you know, $100.
And then it builds up and then finally went and found out the. Yeah, but it requires like actually trying things out and seeing what works. And I don't think if we would have tried that stuff, been in those hard businesses, we would have been able to get to where we are today. I think means B and C, we've talked about this a lot.
There's three really important things in building businesses. You know, the network, the capital and the skill, like the operational chops, the ability to make decisions. You don't practice that stuff and it never comes to that point. Exactly. I often get asked by, founders like, what's the thing that I should be focused on early on? And I think it's actually working on the really hard stuff because it teaches you this level of resilience that you're going to need no matter what business you do.
Like the last startup that I worked on was an on demand business. It was like in the middle of the early 20 tens era where every in of Uber for X, we basically built a service that would do on demand parking. So you go to a city, you can't find parking, you drop your pin somewhere to come pick up your car for you, and then magically, they take it away and park it.
And then whenever you wanted to back, drop your pin again, they come back. Right? Logistically brutal business genius, magical service. Like it was like a 12 out of ten on all the rigs. Everyone loved it. Obviously the business model was absolutely terrible. Like, our gross margin was like -200%. But but people loved it. And I think what inspired us was that you build something that's really, really great.
People love it and that's a first step. But just to make that service work, you had to get all of these people to show up on time to a car, pick it up, not crash it, not put the wrong fuel in, not do all of these things are just inevitably going to happen and I every day we had people calling and being like, you put diesel into my g-wagon what are you going to do about it?
Or like, you guys crash this car right into my office. What are you gonna do about it? We were like, I don't know. but I think dealing with that every single day teaches you, like, okay, if I can solve this, like, I can solve anything else that comes my way. Yeah, yeah. Because the other thing that's, I think, really worth pointing out is in the ten things that you tried, that means, there were nine times you bounced back from a not working and, there's like, under appreciated just tenacity that that's required that is really worth cultivating.
I guess I have a scrappy story similar to Xavier's. I was running pickup and delivery student storage business, where I had to be at a certain dorm at a certain time with a truck, with dollies. Having college kids drive these things in major cities and 12, 12 places at the same time. And, we couldn't spend money on AdWords.
So we took boxes of chalk and we wrote big ads on the concrete where we knew our students were walking to class, our competitors were spending money on AdWords. We were getting out at 5 a.m. and writing chalk advertisements for Storage Squad. Go to this website for student storage. And then at 8 a.m. for the 840 class at Cornell, and they would all walk across the same bridge and they would see our stickers, and we would literally start to see people showing up on the website, showing up on the website, showing up on the website at 8:10 a.m. as they were walking to class.
So like, you don't always have to think of like, how is this super scalable? If you're willing to like, take a step down status wise and get out and write sidewalk chalk or go pick up cars or this stuff, it's hard. You just learn a ton. There's a version of that we're off in the online or the offline marketing is really interesting for making compelling online marketing.
So in today's world, what what I would do is I would do the sidewalk chalk version, and then I would make Instagram Reels or online content of the sidewalk chalk. So I have a local newsletter called from that's got 25,000 subscribers. And so we're always trying little things of how are we going to grow this newsletter. And one thing that we did is made those like fliers with little tear sheets at the bottom, and we put them up a bunch of places and people would actually tear it off.
And, you know, we made it trackable so I can, you know, and now I got subscribers. But what got way more subscribers was the Instagram reel that we made about that. And people were watching. It's trying to learn. And so often you would like, should I buy a billboard for my business? Probably not. You're gonna take a picture of it, but you're gonna take a picture of it.
If you're going to be content about the billboard that absolutely. 100%. Yeah, yeah. How do you give yourself enough? It sounds like a big part of building your guys's businesses. It's. You've just been at it for a long, right? We're just seeing kind of the chapter ten. And we didn't see chapter one. We didn't see chapter two. Like, what do you tell people who were just thinking about entrepreneurship or just getting into it?
You know, I think game selection is something that I did not understand as like a college entrepreneur, like which game there's a there's infinite entrepreneurial games you can play, each with their own margin profile, level of competition, level of difficulty, level of your special skills being applicable to that. And as a young entrepreneur, you tend to like, I think half the table or more started a college oriented business, right?
Because like all you know about in life is like there's no food for drunk people after ten or like, textbooks are expensive nerds. You know, I want to buy some notes or whatever. And like, you don't, you see this, you end up choosing the game too quickly, and then you grind it the game if you're a good entrepreneur, and then you wake up and you're like, oh, I spent my 20s playing like a somewhat mediocre game.
Like, turns out, Uber for X was usually like a mediocre game. I guess you could raise like billions of dollars. And so I think that it's really hard to find like a highly attractive game to play. But I think, like I've seen everybody here actually step up the quality of the game they're playing, both in their particular ability to win it as well as, the, the scale of the game.
And in some ways, Nick, like you said, you know, doing the self storage stuff, when you compare that to all the other stuff you're doing now, it looked like a way better business than Storage Squad. And it was. But now the stuff you're doing now is way better because you've kept iterating on what's what's a game I can play that will, you know, could have my benefit.
Yeah. I like to think of entrepreneurship as I'm a gambler and I have chips in front of me, and those chips are years of my life. If I'm gonna put chips on a hand, I want to look at the risk profile and odds of success I can have A72, which means in Matt is got an ace. Ace. I'm playing basketball against LeBron James.
I'm picking. I'm choosing on purpose to gamble my time to play against the Stanford grads, against the venture capital it play a game where nobody's profitable yet. Nobody's proven a concept. It's like I'm playing basketball against LeBron James, or I can go over here in sweaty startup land and play basketball against a fourth grade girl. So I can shoot way up over here without any pressure, or I can try to hit a fadeaway three pointer over LeBron James to hopefully score two points and still get crushed.
Yeah, that's that's entrepreneurship. You get to pick what games you want to play. So many people are emotionally drawn towards something that's sexy. Something that's fun. Something that will give them status. Something where they can walk around silicon Valley and sweat pants, tell their grandma they raise money, or you can go move boxes in second year in business, make 7080 grand a year.
So it's it's oh, and don't follow your passion. I'm also a big believer in that. Say more about why. Okay so I got lots on this. Yeah. So there's this grand story that's told that you. So you just like follow your passion. Somehow money will just fall out of the sky on you. And I really think that that's one of the most harmful things.
Yeah. I think you should follow your passions, and you should figure out a way to make money and your passions may give you clues about interesting niches or interesting ways to make money. But just because you love guitar is the dumbest thing in the world. You could do is start a guitar store and sit there all day waiting for people to walk in and buy them guitar for you.
Like that's a terrible business. It turns out a lot of money lets you follow your passion. Every rich guy I know it's go around, do whatever the hell he wants. If he's passionate about golf, you can play golf, especially about guitars and collecting guitars. He's passionate about luxury real estate. You can buy this 4000 square foot, luxury condo in one of the nicest resorts in the world.
the person who goes and starts a business again. And another thing about doing that is that you compete against a lot of other emotionally driven people who don't make logical decisions. If you're if you're traveling what you love, there's a damn good chance that a lot of other people love that, too. You can get to compete against them.
They're willing to make less money. They're willing to do it longer. They're willing to make irrational decisions. So like in the restaurant business and so many others. So you want to know the worst business in the world is the wine business. Almost no one makes profit on wine because every rich person buys a vineyard, and they don't care whether they make money.
Competing against those people sucks. The other thing about the passion thing is, is what people underestimate early is if you make a good choice in game selection and you commit to it and then you get better and better and better, oftentimes a level of passion can emerge from mastery around just becoming a better like craftsperson in that field of entrepreneurship.
And so, like, passion isn't static. Yeah. And, it's why. So you got to solve the financial piece. Here's a really surprising piece of it. Yeah. If you're doing business at a high level, you are hiring, you are firing, you're managing, you're raising capital. You're not doing that individual thing anymore. Every business owner I know in any industry, whether it's the wine business or any business, they are dealing with problems.
They are dealing with workforce, they're dealing with recruiting, they're dealing. So unless you're passionate about sales, delegation, hiring, raising money, then you're going to have a hard time being a successful entrepreneur, because doing business well is not drinking wine or playing guitar. There's a really important point you made there, which is that I'm a really big believer of playing unfair games.
And so when you talk about game selection, it's really important that you understand what is the one thing that I am better at than 99.99% of people. And it's usually something like sales or engineering or something like that. And you have to put yourself in a position where you are able to do the specific thing all the time, instead of spending your time trying to get better at the stuff that you suck at because you're just not going to be able to grow fast enough and outcompete people who are already good at that.
Right? But you combine that with like there some there is some kernel of truth in that following your passion idea, which is that it helps you pick the sector and domain that you might start to pursue. And the reason why that's important is because if you're passionate about the domain you're in, you're going to go deeper than most people will about understanding why the thing is, what it is, or why things are the way they are today.
And if you have that passion about that space, you can uncover that secret or that unique insight about the space that others will not be able to actually uncover. And then you combine your superpower with that expert understanding of the space, and that's when you get outsized outcomes. I think along those lines, it's really important to like the industry that you're in, at least categorically, or like the types of people that you hang out with is that we know that in order to find success in this, it's not gonna be like, oh, you know, I've been in this business for a year and then, you know, sell it.
It's like probably ten years. And so when you're, you know, choosing the game you want to play or the industry that you're in, ask yourself, are these the kind of people that I want to hang out with for the next decade? If know like, think hard about that because you don't want to be fighting all the uphill battles or headwinds in your business and also hitting the people that you have to spend all this time with to do or know.
I'm of the camp that making money is fun, and like if I'm making money in a business, I'm having fun. And if I'm leading people, my team is having fun. If I'm not making money, nobody's having fun. And people are struggling to feed their families. But the interesting thing is, like when you've done it for ten years and you have the momentum and you have the flywheel spinning, all of us get to start playing games where we have a massive competitive advantage.
Xavier, Matt, Nathan, Kurt. Everybody's playing a game where they know they have a competitive advantage, and if they don't have the cards stacked in their favor, they're not willing to play the game. What the fun thing about business is that you can find those advantages. You can have business on easy mode because you have an audience, or because there's synergies with another business, or there's a bolt on to your business or there's there's so many different ways where, wow, this is like a no brainer.
I'm going to push my chips in because I've been in the game long enough. I've seen one. Then opportunities just start to follow. People and opportunities attract. And that's when business gets really fun. Yeah. How do you guys discover your superpowers? Like how did you lean into that? I didn't automatically know that when I was a kid. I think one of the easiest ways to start is by asking your friends who know you well what they think your superpower is, because I think it was always really hard to do honest self-assessment, but if people who've been around you for ten years plus, they'll be able to give you a lot of clarity around like, hey,
you're really good at storytelling or you're really good at breaking down complex things into really simple terms, and then that will give you, I think, a guidepost to then start to explore more deeply what it is that you can really do with that, then for me is really about trying a lot of things, you know, like, I really had to go through those first five years.
I have to try sales, I tried marketing, I was an intern for, politician, you know, like, I try a bunch of things, and I kind of didn't give up until I started to notice things got easier. And then when things got easier, I talked to my friends, talk to my peers, and I looked at what I was doing.
I was like, oh, wow. I think this is like really where I excel. And it wasn't, frankly, being CEO, it wasn't being a cloud. It was really identifying talent, raising capital, putting deals together. That's really when things started to take off of me, you know, and I'll say, I've I've never really been great at self-assessment. I think I got lucky, like, I just got lucky that I fell into a spot where I can be a leader, I can be charismatic, I can try to attract people.
so it was kind of just a blessing that it fell. I think you're so right that it might take other people some assessment, because I'm, I'm naturally pretty bad at assessing logically what I'm good at and what I'm not. And peer groups are great for that. I mean, that's one I think that's cool, right? Is like, I always like, learn something where somebody in one of these groups are like, oh yeah, that was really helpful that you did.
I'm like, oh, interesting. all right. So we, we lost our friend Nick. He had to catch a plane, but we were talking about game and game selection, and I'd love to hear from you guys. Like, what have we learned over the years about what is a good game? What is a bad game? You know, the the first business I started that went anywhere was better world Books.
from a scale perspective group from absolute zero. We we had $40 to start up capital, to about 70 million in revenue over a decade. What do we do? Fundamentally, we sold used books through Amazon Marketplace and other third party channels. And why was that a good idea at that time? It was a good idea because Amazon had just opened up to third party sellers.
So we were a and when something changes in the market like that, sometimes all the previous participants. So in our case, all the old used bookstores were not well set up for online sales because they were typically retailers. And so we had our wind at our back essentially for the first decade of operations, even though we made every mistake in the books, like I even think about, like population growth or decline in a geographic area, like it doesn't feel like a lot in a short period, but over a decade or two decades, 3% population growth versus 3% population decline means, a huge difference because if it's growing all the suppliers can grow into it.
If it's shrinking, people tend to try to stay in business. So you're fighting over fewer and fewer customers, tends to be lower prices, tends to be more competition, and just a worse game to play. I totally agree that, if they were saying here, I think one of the first things you have to be really sure about is the either velocity or size of the market you're going after.
And like, you know, people call it Tam or what have you. That's so important because what it really allows you to do as an operator is have, margin of error. If you're a small market, like you really can't mess up, you have to do everything right, because it's just not a big enough market for you to win.
Otherwise, when you look at something like payments, right, there's like a thousand companies in payments and like, all of them are successful because it's just so ludicrously big as a market. And you can find your specific niche within that market. But I see a lot of people who have a unique idea, and they get really excited about it, and they start to pursue it, only to realize a couple years in that the market just isn't big enough to support small quote unquote, like lifestyle business.
But you really want to build something meaningful that just isn't a big enough market there. And so it doesn't have to be something that exists today, like like Airbnb, like they created a market. But the dynamic and demand for an alternative to a hotel was always there, and they just found the right way to capture it. And so you have to be really clear about either it's growing past or the market itself is just so big.
Otherwise you're going to be playing a game that is always against me. When I sold my first company I started, it was 25 years older. I was 33, and I had a little dinner with like the advisors who had mentored me, and there was a 70 year old and I was like trying to review with them the mistakes I made.
So I was making sure to take the takeaways. And the advisor was like, you should read much more focused on the fact that you selected, an industry that had these growth tailwinds to it that allowed you to overcome mistakes you made that would frankly kill 90% of other companies. So, yeah, picking, picking the game, picking me industry with, a lot of growth behind you, you're going to have to have margin for error.
I think something else like gives you some of that margin for error is one of my rules is that I have to choose a business or products where I have recurring or repeat purchases, or if I have one time sales and I'm just counting on word of mouth or referrals or like, you know, the ability to reach more customers through advertising, I won't touch that market, but you get so that that's going to bring me to something like, subscription software, which I love, or getting into, you know, consumables.
Right. If someone has, you know, liquid death rate the water. If you're buying that continually, you know, you get someone to have that as part of their habit and to buy it again and again rather than seeking out a new, a new customer. So when I'm looking at particularly creative led businesses, people often want to go into something where it's like, oh, I'm going to make this perfect backpack, you know, I'm going to sell that to my audience because that's what they love.
But the one time sale and I really encourage people to stay away from that and to find a business where they have recurring or a repeat for return purchase. You know, my experience as you were sharing your book building business and bookselling business, my experience was the opposite for my first two businesses. So my first business was the student not taking business.
Basically, we went to college students and they would post their college notes on our website and sell them, which at its core is not a bad idea. But the problem is that one, it's not a pain killer. You know, they talk about vitamins versus painkillers, like class notes are a vitamin, right? They're like nice to have, but they're not the solutions to my test.
Right. So the students are kind of like iffy. There's the really really want to get a good grade to buy your notes in the first place. The second problem is you're selling to college students. College students have no money. They're frugal, they're living off of ramen, and we're trying to build a big business off of that. After working on it for like three years, I remember I went to a family friend who was a famous investor, and I was sitting with him and I was like, man, like scratching my head.
This is so freaking hard. I feel like I'm like climbing a mountain. Like, is all entrepreneurship like this? Is there like a better way? And he thought about it for a second and he basically shared what you said, you know, you can swim upstream or you can swim downstream. And he's like, you are swimming upstream. And at that point I was like, I need to stop swimming upstream.
I need to pick a different business. You know, fast forward to today. We own a couple of plumbing businesses, right? And those are pain killer businesses, right? If you own a home and your plumbing breaks, you are freaked out and the plumber shows up and they're ready to help you. They're ready to soothe your concerns. You're going to pay whatever it takes to fix it, right?
This is your home. This is your biggest investment, and you're ready to pay for it immediately. You're ready to pay a lot of money. And that's an example of what I think is a good business where you can charge a good margin. And frankly, like live a better life. Right. Play entrepreneurship on easier mode. I spent a lot of time with people who are teaching creative content and all that, and one of the rules is to teach a skill that makes money to people who have money.
So that could be, you know, I'm teaching, professional software designers how to develop in their career. Right? Or if you're the inverse, like a ridiculous example, like we're teaching knitting to college students, right? It's not going to go anywhere. Right. So skill that doesn't make money. It's people who don't have money. But you can also end up in the in-between where you're say you're teaching career skills.
Definitely a skill that makes money to college students. And so when you when you find in this thing that you're teaching or selling or if you're struggling, then what's the correlation? You know, does this help them make money? And am I choosing a market where they actually have money to spend? Because if you're focused on teaching professional skills to professionals, then they're usually they have a budget with them.
Right. when you're thinking about like, I'm teaching all this content that could be learned for free on the internet, why would someone pay me, you know, $200 for a course or $500 for coaching for this? And so when you think about that, you know, it's a huge game selection thing of like, oh, if I just choose to teach a skill that makes money to people who have money, then I'm swimming downstream.
Yeah. Instead of swimming upstream. I think another really key element of game selection is I think there are teachers of decisions that you make. Right? So let's say just for the sake of this conversation, there's three levels of decisions. Level one is like picking the market that you choose to play in. Level two would be who you bring on your team to help you tackle that market.
And level three would be like what products that we build to actually like solve the problem. Level four would then be like features for a specific product, etc. then it goes down and up from there, right? The most important decisions and you only really make like 1 to 2, maybe three of these a year as a leader are in that level one bucket.
But if you make the wrong decisions, that level one bucket, everything below it is effectively irrelevant because you made the wrong level one decisions. And so I think a big element of game selection is if you don't make sure that you nail that level one, then you're spending your time in the wrong area, right. What do you think is cool today if you guys look okay, we have an AI boom happening, right?
That is like could be the next internet revolution, could be an overhyped, thing that happens probably will be both. It'll be like I will eventually change your lives. Probably take like ten years longer than everyone thinks. I'm just curious what you guys are curious about. Forward looking. What? What lights you up? I'm currently obsessed with network effects.
I ran a business for a decade. You know, in that the email industry where everything was very siloed. Yeah, people were pulling content on social networks and connecting with other creators and all of that. And then when they came to their email list, it was entirely, you know, you're on your own island, entirely separate. And now I think the next decade of the business is all about making those connections between creators and figuring out how can they recommend each other benefit you know and learn and grow and and meet each other?
You know, sort of as we talk about like what had a huge impact, you know, for each of us, it's usually the people we met. And so how can we make that happen at scale? And it's one of those things that two years ago I was not really thinking about network effects. And then once I started to implement them, it was actually an advertising business that got me there first realized, like, wait, if I bring in a sponsor for a creator, then I can set, you know, sell that same brand across ten more creators.
And, you know, 90% of the work was landing them for the first creator, and it's just 10% to get them for the next, you know, ten creators. And once I saw that, it was like, oh, this network effect is amazing. And then we started to see it the other way as well of, wait, if we run sponsorships for all these different creators, then we have this huge amount of surface area for brands to come in and work with us, and then it just turned into like something.
Once you see it, you can't unsee it. And now I'm just obsessed with network effects in every aspect of our business. One level out what I see is the discussion is really about leverage. And as time has gone on over the centuries, frankly, our ability to create more and more leverage has gone up. There's a theme of saying that I'm going to butcher, but it's basically you can give me the biggest rock in the world and I can move it.
If you also give me the biggest stick to stand through. And that's the concept of leverage, obviously. So in the beginning and Nirvana has a quote on this too. I think, you know, three of his concepts of leverage are capital, labor and media. Right. And in the beginning, let's say 500 years ago, maybe there was just labor, right?
You could hire people to do work for you. And then eventually there was capital, right? You could get a loan from your neighbor to start a farm. And maybe 100 years ago, the concept of media started. Right. And all of that is accelerating now. And I'm curious, how are you guys applying leverage to your lives, to your businesses, and where do you see this all going for you?
I mean, one thing with an audience is, is it comes down to hiring. Actually, since I've built a following on acts, my team actually gets annoyed at me sometimes because they'll be facing a problem and trying to figure out like, how are we going to solve this? And I'm like, I don't know. I'll tweet about it and see what happens, and I'll tweet about it and we'll get like seven really competent people who respond say, hey, I would solve it this way.
They go after my team. Like, how's that sound on? That sounds great. But like they're both excited that we solved the problem so easily and really annoyed that they just feel like I didn't put any effort in because I just use extreme leverage. posting a tweet to 100,000 people and be like, oh yeah, let's go with that one.
And so it definitely makes these things so much easier. And so hiring, you know, if you think about how do I get people interested in working for my company if I'm putting out content, I have these people following, you know, they're not scrolling through a job listing and you're like, I don't know, this random. Have you ever read a job description?
They're all terrible, right? Yes. You have my company. They're probably terrible. My eyes glaze over when I read. Yeah, because it's just full of nonsense. But the if you're scrolling through and you go, oh, that's a company that I recognize or I follow that CEO on Twitter, then you immediately get, you know, hire conversion right there. And then someone is like, oh, I'd love to work for this company, over this company.
If the offer was the same, because I'm following and caring about it. And then if you think about the leverage you get when someone already knows you and your business and your industry, they come in with ideas. it's just like being able to hire from an audience or hire from a community that follows you is a massive amount of leverage.
And I think that people look really, really, underestimated. Yeah. We posted a job posting on Twitter and LinkedIn recently for an investment partner, and we had over 200 super qualified applicants that knew exactly what we do. They were attracted to our long term holding concept, and we got a great hire out of it. And we didn't spend it all right.
As we wrote a short description we posted on Twitter, it took us 20 minutes. Yeah, we, you know, I just saw this with our shareholder letter. Right. So our shareholder letter went out. I think that, you know, our it was seen maybe 120,000 times. And so, you know, I think about I could go to infinite business conferences for a whole year.
I can spend all day, every day presenting to investment managers, high net worth individuals, and after the entire year, like maybe 10,000 people, 5000 people would would know more about entering ventures or like that one act of putting out a written bit of content that is Sheridan seen, you know, people now know who we are, what we do and how we think.
And more deeply like I had personal friends in my real network, you know, I'm an investor. Yeah. Who texted me your letter. It was like, this is so cool. What they're building. and you just you just posted it. A really simple example of leverage that if you guys are doing this in recruiting, I highly recommend you start doing it.
So I've been working to hire a VP of product. This has been a three month search that we're working on. I hired a, recruiting firm as well. And so they're teeing up candidates and what I realized is, okay, I'm going to talk to, say, 20 highly qualified candidates over this time period. That's a lot of conversations where I'm setting the stage of the business, the problems that we're facing, what's interesting about the role.
And so what I did is I just mapped out, okay, what's most important for these people to know? And I recorded a 20 minute live video and it was targeted at, you know, a VP products you might be interested in in this role. Here are the problems exactly we're facing. Here's why it's hard. And I emailed that out to every candidate before I talked to them.
And it was like every single conversation started 20 minutes in and then we got on on the call and they're like, first, every person said, I love the video. I've never seen that before in recruiting. And, like, it's so fantastic, actually a recruiter, Rivera said. I feel like I've just seen a step function in my career because I'm going to do this with every single client going forward.
and I had one call with someone who had not watched the video, who inspired about zero, and it was just and, you know, maybe somebody was missing the email or and I didn't want to hold it against them because that is not a normal thing. But the quality of the conversation was completely different. And I was like, oh, you know, we had to start at square one, where I realize every other conversation I've been starting super far in.
So I saved a whole bunch of time, got candidates excited, and then ultimately landed a candidate that, you know, very, very happy with. That's a great example of why would you took a task that was going to take you nine hours to do this kind of all these introductions. You compressed them into 20 minutes. And in your organization where you have, you know, 50 plus employees, that's a lot of time.
But really up. Yeah, there's just like really simple concept. There are leverage that I feel like it's just always good to help people understand. Like the shorthand for leverage is like, is it saving you time because time is your most valuable resource, right? So we can talk about like whether it's labor, whether it's capital, whether it's media, all of those things are ways to save you time to get to the end result faster.
But when you start thinking about it that way, there's actually like a hundred different ways that you can gain leverage in your day to day hiring, a housekeeper to clean your house because you don't want to do it yourself. It's like one of the most simple, like, points of leverage that can get you back, I don't know, a couple hours of your week.
And I think for a lot of people, once they grasp that concept and then you like, there's this thing they can do around like a time audit, right where you look at your calendar and say, okay, where am I spending my time? And how much of that stuff could either be automated or in some way delegated or passed off to someone where it would actually be able to free me up to do the more important things.
And if you do that exercise regularly, both in your personal and in your work life, you will always find opportunity like, oh, like, I really shouldn't be the one doing this, or like I should actually find a service to take this thing off of my plate. And just constantly doing that exercise, I think, is a really helpful way to just always improve your quality of life.
And so I love Nathan's story about, adding more leverage to the hiring process by giving the candidate more information up front. something we do that is related to that on the hiring side. But on the team training side is I found that I was as a founder, I will always have the most, the highest bar for talent, and it will just naturally, always be that way.
But you have to scale that understanding of what we're looking for and assessment of talent across the whole org. So how do you do that? Right. And like one of the biggest fears I have, and I know a lot of other founders have this fear is you get dilution of talent the larger you get. So how do you prevent that with a system and so one of the things that we started doing is we record all of our interviews, obviously with the permission of the candidate.
And then we go through and we label, this was a like, we have a four point scale for being like the best one being the worst that we go through. And we have a library of like hundreds and hundreds of interviews where this is like before or 3 or 2 or a one, and then we talk about why this was a four candidate or a three candidate, a 2 or 1.
And when we train interviewers like it's a privilege to be an interviewer, right? Because you're the gatekeeper for the culture. have them watch hours and hours of interviews as part of a training so they can just start pattern matching with like, oh, okay. Exactly. Calibrate pattern matching. We found that to be the most effective by far because like most people, when they interview you just like, oh, I trust you go out there and like they're just even if they have a script and they have a clear rubric of what they're assessing for, they don't understand how pinwheel actually assesses for talent.
And like that, you start to have a lot of dispersion in terms of the quality. And that's how we are able to stay still, maintain high quality, even at scale. That's an amazing strategy. Yeah. And that's really good. It's also a good example of I mean, we've been talking a lot about the value of, you know, your own media or audience at scale, but these are two examples of like custom media that you're creating for a very specific use case internally that still gives you massive leverage.
You can you can think about ways of using that media form of leverage, but with a very focused audience and still can be extremely powerful. Yeah. What is one thing that you've done either in the past year or if you want to extend the timeline out, that's fine. That you feel like is giving you the most leverage in your in what you do.
I've actually blocked off more and more of my calendar and made it so like my, like my calendly, which I'll, I like various links which I send which have like more or less availability to like various people, like so random person I do want to have a conversation with. I will give them this calendly like members of my team like have broader access to my time, but still I really try to make it so there's like 2 or 3 days in the week where there's very little scheduled activity.
And I actually find this when I get any real work done. Yeah, I have a weird answer for this, but I would have to say hosting. Interesting. So like I made a conscious effort in the last year to be very intentional about hosting this event as part of that, I've been doing it much more like like in the Bay area, like like locally near my home.
And obviously it's intentional hosting is you're thoughtful about, who you're inviting, but the opportunities and the leverage from the opportunities from those relationships, I mean, we're literally also creating media, right now, that will get that will all get leverage from from hosting, I kind of like thought that was Oh, yeah. That kind of makes sense.
But I've been really surprised. the leverage it is generating, hosting is something that I want to do more of and figure out the system for. Dan Martell does something where I think it's every I think every week, in Kalona, in British Columbia, where he lives, he does a founder's hike because he's all these people who want to meet up and and all of that.
And so he just combined a bunch of things where he's like, all right, zoom meetup, I want to get a workout in. And when people come into town, I don't want to do like a whole ton of coffee meetings or whatever else someone say, like, Dan, let's get together. Like, yep, Tuesday morning, 6 a.m. we're climbing them up.
We do it every single week. And that's something that I want to start doing because it's a lot more local community. And then it's also really welcoming. You know, a new person comes in that it's, you know, it's less of like, okay, we got our name tags. We're doing this whole meetup thing. You know, it's just like, hey, we're going there.
And, you know, you end up meeting you talk to a bunch of people along the way. There's a interesting, thing I've been thinking a lot about, which is leverage and relationships. And what I mean by that specifically is like, like we discussed earlier, most relationships in today's day and age are, I think, fairly surface level. Right?
And it's because it requires a deep level of vulnerability, in order to actually build this trust with someone, that you are then comfortable sharing the things that are really on your mind and that you are really deeply thinking about. Have you, as you've hosted? Yeah, I think this is now your fifth event. Last year. what have you noticed about group selection and what have you learned?
And you've put together all these different groups of entrepreneurs. It's really helpful to do some I mean, it's critical to do some of the prescreening because we're doing three days together and we have had experiences where there's just different levels of group cohesion. And so the things that I look for up front, at least for the events where you're at, the inflection, are a level of ambition that's that's high, that doesn't need to be financial.
It can be, impact. it can be on a number of different fronts. Positive, some mentality. I'm excited to just, like, help the other person who's there. curiosity and learning. and I think lastly, like actual willingness to be vulnerable because if, you know, as Xavier was saying, when Curtis too is like when that vulnerability starts to flow, then, the group kind of unlocks, so, ideally between silo and myself, we've spent some in-person time with somebody before as one check point and then a prescreening call.
I think that the shared ambition is a really important thing. Yes, because I've been in groups before where everyone's talking about, I'm accomplishing, I'm trying to hit this milestone, I'm trying to do this thing. And someone else would say, like, but why? Like, why not just settle for where you're at? Like, aren't you content? And it just sort of, yes, derails the entire decision and it brings the level of the group down a little bit.
Yeah. And not because it's this striving for more and more and more. But there's this beautiful thing that happens in can you be a better version of yourself? Can you make the world and be in a better place? Yeah. when that's happening from all the forces of the participants together, that's where it becomes more magical. I think that one takeaway I had was, frankly, Nick's just got a high level of ambition and and where I saw him last year saying, I'm going to start eight businesses.
And like, I thought he was, he was way overextending himself and was a fool about it. And I was completely and utterly wrong. Yeah. And actually, like, he was very strategic about it and he just got the infrastructure in place that he was able to do it because he didn't just go straight to doing it. He had a content team that supported him.
He had other forms of support where and and he had a really clear strategy of how he was going to put things together where they did consume his life. Mine is similar of understanding the power of an audience, which on one of his ironic, because that's my entire life and business and everything, but just realizing that I can scale up the audience that I have substantially in order to grow ConvertKit.
And I think I've gotten feedback from other people in the past that, you know, why am I spending time on this when I have a much larger business? And I found myself like one foot in each world and hearing from all of you of the like, yep, you could absolutely do all of this. Here's how to staff team to do it.
And like kind of the full permission to and you know, expectation to dive in and and then the like and keep us posted of how it you know how it's going. That's been really big for me because basically saying all these things that I know work in a certain way, I know the leverage of an audience. I know all this, and I know what I'm capable of just I've been a bit hesitant to phrase both sides of it and to see what all of you are doing, what Nick is doing.
It's like, oh yeah, I can do that to get him to go all in on it. Yeah, actually, we're very similar one. So it's interesting because I sometimes feel like I am the outsider in this group in the sense that, like everyone else here has like a substantial audience. Yeah. Except for myself, just I find it to be a very great position because I, I get to see how much leverage you guys get from this audience, how much you like.
I mean, for Nick, it literally drives his entire thesis of his, you know, all of them businesses. And I sit here and I wonder, I'm like, oh, like, there are things that I have to say. There are messages that I want to get out into the world and that like, it's obviously it's a lot of work. But if you make that investment like the dividends are incredible, right?
And I think actually the thing that I've taken away from a lot of this is like I've historically underinvested in it because I'm like, I want to to your point, like I want to focus on my core business. I'll make pinwheels successful. And in some way, you almost feel like guilty that you're spending your time trying to build either a personal brand or in some way, some orthogonal thing, instead of just putting all your chips on the main thing.
And I think what I'm starting to realize now is that it actually a is additive to that core business, and B that, you know, not everyone actually has a lot of stuff to say, but it's been encouraging for me to engage in these conversations and be like, oh, like I still have stuff to contribute here. And so why shouldn't I be investing more?
And in that, when you have to think about what culture you're part of, right? Because there's a running joke in Silicon Valley, like as an investor, as a VC, the moment your founder starts posting regularly on Twitter, you should just write off the invest. Yeah, right. And that's the idea of like, you should build a company, not build an audience.
Right? And I think it's a powerful thing to be able to hold to ideas at the same time and see how they meet each other. Right. And so knowing, like as I have one foot in each world, you know, I get some of that feedback from other people like, who have scaled large software companies and so realize that like, no, I can do both things.
And they really fuel each other, right? It was actually in a peer group, when I went from being in your position to actually starting to come on the other side because I was participating in a peer group with other CEOs for like six months, and they were like, you're contributing a lot. You have a lot of experience to share here.
Why are you not sharing anything online? And I just felt like I the distraction thing. I just didn't feel me or whatever. And the guy running the group was like, what if you just reframed it as you're withholding, like hard earned wisdom from people who could learn from you? You were the benefit. Yeah, yeah. and that kind of helped.
Got my journey started. I'm so happy you started posting. You're a wonderful content creator. I think you're some of the best content that I follow online, so I'm glad that that I'm glad that you, like, came out, you know, and started talking about I needed though, peer support to like nudge me or else I would know. Yeah. One of my takeaways, for the weekend was having you guys hold up the mirror to me of like, vestiges of like, like older, smaller thinking that were getting into like my big vision opportunities.
getting unanimously told that one of your ideas is too small. Yeah. and I'd stop that shit right now and unbelievably valuable and grateful for that. Yeah. That's like, you know, extremely resonant with, you know, one of my takeaways. Yeah. Because without this type of group and I've been there before, as I'm in my own head, I'm like, this is a great idea.
I'm gonna try it. And then two years in, I'm like, wait, this is not the opportunity. And I've just wasted two years. And, you know, in a group like this, you can bounce it off people. You can get a couple sounding boards, you can send a few text messages and boom, you can head in a different direction. And that's a better use of your time.
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