Rob Fitzpatrick: How an entrepreneur’s journey yields compound interest

Transcript of episode 23

Matthias:
Hello, dear listeners of the Audience Explorer podcast, this is Matthias Bohlen again with another episode. Today, I’m happy to have Rob Fitzpatrick here. Hello, Rob.

Rob Fitzpatrick:
Hello, thank you for having me.

Matthias:
Yeah, thanks for coming.

Rob is an entrepreneur. He has done it for 14 years, and he’s written three books about his learnings along the way. And especially one book, which I’m particularly fond of. It’s The Mom Test, of course; how to talk to customers and figure out whether they’re lying or not. And so, plenty of stuff to talk about, Rob. And to get started, please tell us a little bit about your journey up to now.

Rob:
I fell into entrepreneurship largely accidentally. I want it to be an academic. Then on a whim, when Y Combinator is quite new, back in 2006, I believe, I pitched my master’s research, which was in an experimental video game, to YC. And Paul Graham said, “You know, this isn’t really a business. It won’t work, it won’t scale.” But he likes what we built. We had a really good product team. So, he sort of helped us come up with credible business ideas and that set us down the startup journey.

So, I dropped out of grad school, moved to Boston, then California, then London; sort of following investors and never looked back.

Rob became an entrepreneur by accident

Rob:
The first startup was a terrible fit for my personality, for my goals, for my strengths. So, it’s kind of an uphill battle when you’re working against your natural inclinations. We ended up in this, like, enterprise sales-driven mess; selling to the advertising and the media industry, which really isn’t what I wanted to be doing. But it was fun and we did that for three or four years.

And since then I’ve built a bunch of different types of businesses, consumer products, stuff that gets marketed. We crowd funded a physical board game. I built a service business. I built a bunch of other tech products. And now I’m doing stuff community-led for non-fiction authors; building tools for indie authors.

So, there’s been a whole mix of different – took a three-year sabbatical in the middle also, because I was quite burned out and I just wanted to relax and enjoy life for a while. So, I learned to sail and lived on a small sailing boat around France, England, Spain for three years.

Matthias:
Oh, that’s beautiful!

Rob:
Oh yeah, it was such a treat. I thought that’s what I wanted. I thought my whole goal was to retire early. So, I raced toward that goal. And after a year or two of it, I was like, “Actually, I kind of like working on interesting stuff with fun people.” So, now I’m back into it.

Matthias:
Great! How did you get into entrepreneurship at all? Was it from your background? What was your background till then?

Rob:
Video game design was what I studied in university. Experimental video games was what I was researching. And I plan to teach it, because there’s no commercial market for that stuff or at least there wasn’t back then.

Yeah, but what I liked about academia was the idea that you got to pursue your interests.

Matthias:
Yeah.

A bootstrapped entrepreneur enjoys less bureaucracy

Rob:
And I thought it was free of corporate bureaucracy, which is obviously not true, which I learned. And it’s one of the reasons I left. And so, what attracted me to startups, and especially bootstrapping even more so, is that there’s even less bureaucracy. It felt like the purest way, the purest connection between what you think and what you do and the rewards you get. And that really appeals to me.

And we did investors in my first business, and we ran like the VC-funded, hyper growth thing for three or four years. But since then, I’ve been bootstrapping and working for myself, writing books, set up a publishing business, set up the agency, with tech products. And it’s always been either by myself or with just a couple of other people. And I really enjoy that way of working.

Matthias:
Yeah, bootstrapping is a very special thing to do, I think. When you have a VC, you already have a boss; someone who is interested that everything is growing and it’s always this growth stuff. And somebody who already tells you what to do, right?

Rob:
Our investors treated us so well and with so much respect, but it still creates pressure, because you have signed up, you’ve taken on this. For me, at least, it felt like I’d taken on this serious obligation that I was trying to make this thing as big as possible.

When I’m bootstrapping, I can talk to my business partner, Devon, and say, “Hey, I’m pretty burned out. I need a couple of weeks off to recover; get some mental space.”

And probably I could have said that to the investors and they would have been fine with it, but I never felt like I could. And so, it was because of just the situation; I was putting all this crazy pressure on myself. It was my first business. I was 24 at the time. I was pretty young. I didn’t know how to handle that stuff. It’s like a lot of money. I’d never seen a million dollars before, and suddenly I was like, “Wow, these people gave me a million dollars.” It’s like, “Oh, it has to succeed.” And so, it’s all this like self-imposed pressure that I didn’t handle very well.

Matthias:
Yeah, the 24 year-old with a million dollars. It’s amazing! It’s a really big opportunity, but also a big obligation, I think. Yeah, that’s right.

Rob:
Exactly, yeah.

Matthias:
And how did you come into this Mom Test thing; this customer development thing? What was the reason for that?

Rob tried to talk to customers, but…

Rob:
We started up in 2007 with the first business. So, Paul Graham was saying, “Go talk to your customers.” He has this line where he says, “The only two things (or three things) you should be doing before you’ve launched is talking to customers, writing code and exercising and hanging out with your loved ones; basically maintaining your basic emotional health.” He added that third one after a couple of years later. And so, I was like, “Okay, talk to customers. Got it.”

And then when we raised our next round from VCs, they were like, “Go talk to your customers. Ask your customers what they want.”

And I was trying; I read Steve Blank’s books, I read all the sales books, and I was like, “Yes, this makes total sense!”

But when I tried it, it didn’t work for me because – I thought it was working, but we were getting lied to.

I’d say, “Hey, customers, what do you want?” They’d say, “We want this”, and then we’d spend six months building it and they’d go, “Never mind.” I was like, “Ah, that can only happen so many times before you go out of business.”

And it was actually one of my advisers, a fellow named Peter Reith, really amazing dude in London. And he came with me to a sales meeting we had with one of the major film studios in L.A. He was like, “Rob, it sounds like you’re doing the right things. I don’t know why it’s not working. I need to watch you.”

A mentor showed Rob why he struggled with customers

And so, he actually came. He flew to L.A. with us or well, I guess he was going to L.A. anyway for whatever. He came with me to the meeting with Sony. And after five minutes, he sort of took over the meeting for me, and we ended up closing the deal.

And afterwards he goes, “Okay, I now know exactly what you’re doing wrong.” And having seen him catch me and my mistake and then do it properly, I was like, “Wow, I see what you’re doing right.”

I couldn’t have gotten that from the books, but I got it from someone being in the meeting with me; being there as a coach or a mentor.

After that, it slowly started to improve, but by then, we’re already two and a half years into the business; the economy had collapsed in the 2008 financial crisis. It was a hard time. It wasn’t easy to get more money and we just weren’t going fast enough. So, that business by then was already dead. We just didn’t know it yet.

Rob packed his learnings into “The Mom Test”

But that was when I started to learn. And that one experience, I was like the pieces started clicking. And then over time, as I understood the sales side, I was able to work backwards from there to the custdev side, understand the mistakes I’d made.

Then the Mom Test, … I’m an introvert, right? I’m more comfortable writing codes than chatting to strangers. I’m never going to be comfortable chatting to strangers. And so, I was trying to find a way to do like the Steve-Blank-style customer development, in a way, which suited my kind of introvert, techie personality.

And so, that turned into this – and was also time efficient because I was always very conscientious; the time I spent talking to customers is time I’m not programming. So, it’s valuable. You need to know that you’re programming the right thing, right? Sometimes, a one-hour conversation can save you six months of coding.

Matthias:
Absolutely!

Rob:
But I was very aware; it’s like, “Is it comfortable? Is it authentic to my personality and is it time efficient?” And so, I came up with this casual, quick, conversational approach, which is “the Mom Test”. And it really resonates with technical people with no sales experience. But even some salespeople like it, because they go, “Oh, I was pitching too much. I was being too convincing. So, I wasn’t getting the truth.”

Matthias:
Yeah, that’s really interesting. I’m astonished that you ask yourself the question, “Is this authentic? Does it resonate with my true personality?” I find that a very, very good question to have.

Rob:
It wasn’t. It was more pragmatic than moral, because I found that if it doesn’t align with my personality, I might be motivated enough to force myself to do it for a week or two, but I’m not going to continue doing it.

Matthias:
Yeah. Not sustainable.

Enjoy speaking to the customers you like to hang out with

Rob:
Whereas if it’s something that feels honest and enjoyable – Like, for example, the best hack I found for business is to pick customers that you enjoy hanging out with.

Matthias:
Oh, yeah.

Rob:
So, right now, I love talking to people who write non-fiction books, because they care about a topic deeply and they’re an expert in it. They’re always fascinating to talk to. So, I love hanging out with authors, even aspiring authors or in progress authors.

And so, now that I have them as my customer segment, it’s incredible for me because customer development doesn’t feel like a chore. It feels like a pleasure because they are people I would want to go to the bar with and talk to anyway.

The same was true when I was selling to universities. I hate advertisers. I don’t respect advertisers. And my first business was serving advertisers. So, you can imagine how difficult customer development and sales is when you don’t even like or respect your customers? I would never go to the bar and hang out and have a coffee with an advertiser.

Matthias:
No.

Rob:
But I would with a professor. I would with someone who ran a university. I would with an author. I would with an entrepreneur. So, that’s like an incredible hack. And that was part of it also. It’s like customers; you like to talk to them like humans:

• find ways to hang out with them,
• keep it casual,
• understand them like you would a friend.

All these pieces come together and suddenly you have this very deep understanding of your customer’s worldview, which is like a product design superpower. And it felt like it took zero emotional effort, right? It was all comfortable and fun. So, that’s been my life trick.

And I apply the same to community. I apply the same to Twitter. I apply the same to email. It’s got to be fun for me and like something I’d be doing anyway for its own sake. Otherwise, I’m not going to follow through with it.

How Rob got into the audience of book authors

Matthias:
So, this really shines through what you say. I’m experiencing the joy, even through this video medium here. It’s amazing.

And how did you get into this book writing? You said book writers, authors, are your customers now. How did that happen?

Rob:
So, I wrote my first book, The Mom Test, in 2013. I self-published because I talked to publishers and – Publishers as an industry are really good at helping a successful author to be bigger, but they’re very bad at evaluating unproven first-time authors. So, if you’re a first time unproven author without a big platform, you get really just terrible deals. The sort of deal if like a venture capitalist offered it to you, you’d laugh them out of the room. And publishers offer this to first-time authors. So, I was like, yeah.

So, anyway, I self-published and I was like, “Okay, that was pretty fun.” And it ended up becoming a pretty meaningful revenue stream for me. It kind of grew each month through organic word of mouth. And like after a year or two, I was making 3000 a month from it, the next year I was making 5000 a month now, making 12 thousand a month from that one book. And it’s like, “Okay, this is like meaningful income” because it’s designed like a long lasting product that can grow through word of mouth.

And you have to do some stuff. You have to obviously create the original audience. Otherwise who’s going to recommend it? But cool.

So, for me, like I’d seen the impact of the book. The book didn’t succeed because of my reputation. I have a reputation now because the book succeeded because the book proved useful to people. And that, as well, felt very pure to me. It felt very free of bureaucracy and bullshit. It’s like, oh yeah, if it’s a useful idea and it’s presented in a way that people can internalize, then great anyway.

So, going through that experience, I was like, “What do you look for in an audience?” One of the things I look for is like, it’s a group I understand and like hanging out with. And I kind of get that they have sharp problems. And I saw all of that with Indie authors.

At first, Rob couldn’t find a way to market to authors

However, I couldn’t find a way to market to them, because typically people, especially in non-fiction, they write like one book and then they move on with their career. So, they’re not like social media marketers who sign up for newsletters and read blogs, and they’re always trying to keep learning about the same thing.

For non-fiction authors, writing a book is like a moment in their career, and then it’s done. So, you can’t really build the mailing list. You can’t really put them on a subscription. It’s a very difficult audience to build, or at least I couldn’t figure out how to do it.

Fiction is a little bit different because once people start writing fiction, they keep writing fiction.

Matthias:
That’s right, yeah.

Rob:
But nonfiction is not like that. So, I was like, “Yeah, super desirable. I see the problems. I get them. I like them. But how do I find them? How do I get the audience, you know?

Matthias:
Yeah, exactly! Then now it becomes interesting to me because that’s my specialty. How did you get this difficult audience?

Rob wrote two more books and finally understood

Rob:
They’ve been in my notebooks. I had business model sketches. I had ideas. I had product ideas. I had wireframes for 10 years. I could show you like old diagrams of product ideas in this category, but I never built them because I couldn’t crack it.

And then for my third book recently – My second book, also did pretty well. That was about education design, because education is one of the things I love and I built this little education agency. We bootstrapped it up to about a million dollars a year and then shut it down because we had four founders and we all wanted different things from life. And so we reached a strategic impasse. We’re like, “Oh, it’s fine.” So, we took the profits, we took a nice dividend and we shut it down.

And afterwards, I wanted to capture the learning. So, I wrote the second book. That one also did well. It behaved the same way. And I was like, “Most books don’t behave this way. Most books peak at 12 weeks and then never recover.” And people are always like, “You can’t make money from books. It’s impossible.” And so I was like, “Okay, there’s something about the product design approach that I get for books, for nonfiction that other people don’t get.” And so, I wanted to document that and that became the one – write useful books.

Finally: the marketing idea became clear

And this is a long story, but I realized that once I had “Write useful books”, I was like, “Wow, that becomes the entry point and the top of funnel marketing and like the education that enables the rest of the business model for this customer segment.”

So, once I was writing the book and it was resonated with beta readers and I was seeing signs of early organic growth and word of mouth within beta readers, I was like, “Wait a minute, I can now build the software because the book will tell them about the software.” And then I had this problem like, how do you carry people from awareness, when they read the book, till six months later when they’re ready for the software? It’s like, “Ah, community.”

And that also solves this problem: they’re only going to use the software for a moment within their books journey. So, a subscription doesn’t make sense. But you go, okay, we’ll call it a “paid community” and they get the software for free.

And so, then suddenly you’ve extended the relevance of the subscription from three months to say, 12 months. Then it goes, okay, can I build a piece that’s like post-publishing support that adds an extra three months to the retention?

So, now we’re building up this stack. And it’s still a very new business. I think last month we did about seven thousand. It’s been live for a couple of months. So, we’re still in the beginning of it. But so far I’m pretty excited about it.

Matthias:
That’s pretty good; seven thousand MRR. It’s already pretty good for a few months into the project!

Rob:
Well, if you don’t count the two years I spent working on the book. (laughs)

Rob is adding software to the mix

Matthias:
Ah, okay. Of course. And what does this software do? So, if you are in non-fiction author, why would you want to use the software and for what purpose?

Rob:
The software, in a funny way, is kind of like customer development for books. It’s for beta reading. So, it’s the early, qualitative and quantitative data about how readers are engaging with your manuscript before you’ve launched it. Because you want to find out where people get bored, where they get confused, where they think it’s tedious, where they think you’re full of garbage. You want to find that out before you launch. You don’t want to find that out in the Amazon review. (laughs)

People often look at it like qualitative. It’s the same problems with customer development. You show someone your manuscript and they go, “Oh, it’s amazing.” You’re like, “Okay, that’s a compliment; an opinion. That doesn’t help me build a better product.”

Matthias:
Yeah, exactly.

Rob:
And so we felt we needed to build like a whole custom tool. We’ve use Google Docs for it before, my co-author and I, and we’re like, “Okay, that kind of works, but it’s pretty tedious when you have 50 thousand words and five hundred comments at a time. And so, we’re like, “This is a sharp pain. And it directly correlates with the book’s success.”

Rob and his friend created “Help This Book”

So, that’s the first problem we wanted to solve. It’s called Help This Book. And currently about, I think, about 12 authors have used it and launched their books through it. It’s still in private alpha. Basically people sign up, they read the book, they join the community, then we pull people out of the community, onboard them onto the software. They use that.

And then there’s a fourth layer, which is based on the quantitative and qualitative performance of their book during beta reading, we extend publishing offers. And we extend publishing offers and we publish them ourselves. So, we cover all the costs of their editing and production and everything.

(Matthias is amazed at the combination of different options)

And we focus specifically on the authors who the publishing industry undervalues; these first-time, unproven, un-platformed authors, because we have their beta reading data and so we can offer them way better deals. It’s like crazy; the deals we’re able to offer to authors. We’ve only published one so far, but there’s more in the pipeline.

Matthias:
Yeah.

Rob:
And that’s like the full stack. So, it’s like book, community, software, publishing is like the business stack.

Rob gets a small team going

Matthias:
Wow, you’re building an empire, right? (laughs)

Rob:
Right. But bootstrapping. And we’re trying to be relaxed also. The team right now is three people. It’s me, Teresa, my girlfriend, she’s over there. She runs our ads and publishing.

And then my best friend and longtime co-founder, Devon Hunt, he built list.com. We all work half time. It’s very much like a relaxed business, but we’re also being ambitious with it. We think it’s a huge market. We have big plans for the industry, but trying to do it in a calm, independent way.

Matthias:
Great, great. I like that. It sounds totally attractive. And the help a book; what’s it called? Help This Book?

Rob:
helpthisbook.com

Matthias:
Help This Book. I think I use it already as a reviewer for Arvid Kahl’s book.

Rob:
Oh yeah, Arvid used it for “The Embedded Entrepreneur”. Ramli John used it for Product-Led-

Matthias:
Product-Led Onboarding.

Rob:
Product-Led Onboarding.

Matthias:
Yeah.

Rob:
Michele Hansen used it for “Deploy Empathy”. There’s been quite a few books that have come out recently that have done their beta reading through it.

Matthias:
Perfect. Amazing. I seem to know them all. So, there must be some connection. There must be some kind of community around this concept of bootstrapping a book, right?

Product people write useful books

Rob:
A lot of product people have naturally approached their books like this; they want the data, they want the analytics, they want to iterate on them. And it’s not surprising. It’s just everyone’s had to kind of roll their own solutions or do it tediously. So, we’re just taking this existing behavior, making it easy for the people who are already doing it and then also telling everyone else it’s like, “Hey, there’s a better way to write a book.”

So, our early adopters were kind of already doing it. I was just chatting with a dude on Twitter, and he basically showed me one that he built for himself. It’s just custom code that he made for his own book, and it’s like, “All right, people are doing this.” It’s what you want to see in an early adopter audience.

And then our mainstream audience who will join later are the people who have to be convinced that beta reading is a good idea. And that’s kind of what the book is about. The books like the manifesto, the education, the Hey-this-works.

It’s kind of a complex business model because it’s got all these pieces together. This is why stuff like this has been in my notebook for so long. And I haven’t done it, because I wouldn’t have felt like I had the credibility to run the publishing. I wouldn’t have felt like I had the audience to… – All these pieces, were missing, right?

Matthias:
Yeah, it’s a step-by-step approach. Yeah.

A founder’s enabling resources are compounding

Rob:
Yeah. My view on career entrepreneurship, especially as a bootstrap or an indie hacker, is that over time you’re building these compounding founder resources like insight, skills, connections, network, audience, and you can carry those resources with you from project to project and company to company. And as they grow and as they compound, you get access to new opportunities that you wouldn’t have been able to go after at the beginning of your entrepreneurial career.

Matthias:
Yeah.

Rob:
So, now I’ve been doing it for 15 years and it’s like, “Oh yeah. Now, I can get a little bit fancier with what I’m doing, and I can go after more complex stuff in a calm way.” Whereas I wouldn’t have been able to do this earlier in my career.

Matthias:
This also is an interesting point. It’s kind of network effect between all the skills you get, all the people you know, all the topics you have been into. And yeah, things are happening now that wouldn’t have been possible before. That’s right.

And about this first moment when you say you opened this beta list where people could join, what do you think?

There are projects where such a beta list takes off and there are projects where it doesn’t. Or, for example, people sign up. And then when you arrive with the actual product and say, “Yeah, yeah, now you can try.” People say, “Oh yeah, it’s three months in now. So, I’m in a totally different fairytale now.”

So, what do you think? What’s the reason for the ability to take people from the beta list, into an actual product trial?

Overcoming uncertainty with small tests

Rob:
There’s never going to be 100 percent certainty with these early indicators. But they give you little pieces of evidence. So, for example, the ultimate value proposition of everything we’re doing for independent authors is like, “Hey, you want your book to be more successful. You probably need some support and help and tools along the way; yes or no?”

So, we are kind of able to validate that core problem. We didn’t even need the software for it, because we got a lot of that validation before the book had even been released by what was happening with our beta readers.

And even before that, my first MVP for a book is coaching conversations.

So, I go to people and I say, “Hey, I remember you once said you wanted to write a non-fiction book. Do you still care? Like, let’s talk.”

And I try to help them and say, “Let’s talk through your book. Let me help you with it.” And sometimes people go, “Nah, it’s okay. Send me a link if you write a blog post about it” and it’s like, okay, that person doesn’t actually care that much.

And so, by piecing it together, it’s kind of like in the Mom Test; there’s this idea of “before you are able to ask for money, you can ask for time”. And time is like a smaller commitment compared to money, but it still means something.

Matthias:
Yeah.

Rob:
And so, before writing a book, like someone beta reading is a big commitment of time, right? Someone paying the cover price of the book is even more or doing an early access or pre-order; that’s financial. Before that, you get time.

And even before that, there’s the smaller unit of time, which is like the coaching conversation, like, “Let me help you for free. Give me an hour of your time and let me help.”

And so, progressing through this, it’s like I’m getting more and more evidence that there’s this group who cares about doing nonfiction differently than the traditional publishing. And so, it’s like, “Okay.”

As for the beta reading software itself, we looked for analogs. So, that is a case where it very much relies on the user experience of the product. It’s not a sharp, unsolved problem. So, you can think of there’s like 10X product improvements and there’s like unsolved problems.

Matthias:
Yeah.

Rob:
It is not an unsolved problem because you can use Google Docs, or you can email or PDF.

Matthias:
Yeah.

The moment you “click” with your audience

Rob:
It’s that; it’s just ten times nicer. And so, when that’s the case, you still want to understand your audience, but we do because we’ve been playing in this industry for a long time. But then you lead with a prototype because you can’t be like, “Imagine Google Docs, but better.” People don’t get that. You can’t have that conversation for your product.

And so, we built it. And what we did is one of our important theses for the product is that it has a viral loop built into it where people who beta read non-fiction books also tend to be the sort of people who write non-fiction books.

And so, we believe that when an author brings their beta readers, those people will also become future authors, which will simplify our marketing. So, we’re like, “Okay.” And we saw that. So, far for each book that’s run through Help This Book, we’ve seen 15 other people sign up for the waiting list!

So, we’re like, “Okay, a 15-to-1 viral loop is pretty strong. We’ll take that. Obviously, they’re still going to be friction of the acquisitions and blah blah blah. There’s a whole funnel yet to go. But we’re like, “All right, that’s one step of the viral loop, and it’s like pretty good.” And we’ve seen it actually improved since then. So, we’re like, “That’s good.”

I think one of the myths about validation and about Mom Tests – I’ll try to clarify this more when I write the updated 10-year version, is that you’re going to get perfect certainty. You’re not going to get perfect certainty.

Matthias:
No.

De-risking the assumptions

Rob:
But what you’re trying to do is answer a few of the questions, right? Like if you can answer a few of the risks. I feel that’s the way we did it. The book answered some of them. The viral loop from early beta readers answered some of them. This something else answer some of them.

And there were analogs in the industry, also. We actually tried to acquire. We tried to do a micro acquisition of another beta reading tool that’s built for fiction. Because when we decided to go down the route of this product, we looked around and there was another one. And it didn’t have – I don’t want to share any of their private metrics – but they like they had a meaningful number of fiction authors who were paying $10 a month to use it and a bunch more in a free tier. And it was like a nice little business, but it wasn’t their main thing. It was clearly a side project that was generating a little bit of revenue for them.

And so we got into a micro acquisition conversation because we thought it would be easier to build on top of what they’d already built than to start from scratch.

Matthias:
Yeah, sure.

Rob:
In the end, we disagreed about the multiplier by a frustratingly small amount. We were off by like point five of a revenue multiple in like what they wanted versus what we could pay. And so, it fell apart. So, we’re like, “Okay, we’ll have to build it ourselves.”

But that was also encouraging to us, too, because we’re like, “Okay, well, here’s an analog of another similar product. Different industry: fiction, non-fiction. But it’s like they have paying users. So, that gives me a little bit more confidence.”

Matthias:
Yeah, it gives you more confidence. Yeah.

Rob:
We’re just like pulling in data from where we can. None of these is a guarantee, but it all adds up and it made us feel like, “Okay, this is worth carving out a chunk and building a credible prototype.”

Coaching conversations = exploring customer conversations

Matthias:
And when we go back to this moment with a coaching call conversation, what kind of people were that, with respect to stage? Were it early sign ups from your beta waiting list or in what stage were they just before you ask them for this coaching conversation?

Rob:
So, it started with people I happen to know; as it often does. You know, you go, “Who do I know that is in this industry?” And then sometimes founders complain. They go, “But I don’t know anyone in the industry. That’s unfair.” And it’s like, “Well, you get to choose which industry you start in. Why not starting an industry you already have some knowledge and connections, too?” and if not, it goes back to pick customers you like hanging out with, right?

Matthias:
Yeah.

Rob:
Because if it’s an industry you don’t know, but you really admire or you love, then you’re going to enjoy finding your way into that industry, going to the events. Anyway, it was authors.

I just thought back and I’m like, “Who are the people I know who have said, ‘I’d love to write a book someday?’”

And I emailed a few of them. I said, “Hey, let me help you out. Is that still a thing?”

Rob’s book started as a bullet point list

Rob:
And what I did is before we had the first meeting – this is specific to books, but whatever – I wrote a little like bullet point list, and it ended up being ten pages long; just like, “Do this. Don’t do this. Think about this. This is important. This isn’t important.”

Matthias:
Ah, okay.

Rob:
And I said, “Before we talk, just read this. Because that way, we can spend our time talking about your problems instead of me just lecturing you, which isn’t going to be helpful for either of us.” And so they did. And then-

Matthias:
That’s very good.

Rob:
Yeah, the more you’re talking during one of these conversations – same applies to customer interviews – the more you’re talking, the worse you’re doing.

So, if there’s like a “data dump”, it’s good to do it in advance. And then you can spend the meeting listening and answering questions and actually learning.

So, we did that. And the coolest thing, it came from a friend of mine named Veronica in Barcelona. And after the meeting, she goes – she has so many more questions. I wrote down what her questions were.

Then I followed up and I said, “Hey, here are the answers to your questions.” And suddenly my 10-page outline had become 30 pages.

And she goes, “Can I send this to a few of my friends? I know so many people who need this information.” I’m like, “That’s a good early indicator. The book has word-of-mouth triggers.”

And it’s just these pieces. And over time, you move from the friendly first contacts, the people you kind of know or you have a connection to, and there you’re less worried about burning bridges or being an idiot. You can’t make a fool of yourself.

And this is also true for customer interviews. If you’re like, “I’m terrified of it”, well, start with friendlier people. Don’t force yourself to do something you’re terrified of. Find a way to make it less terrifying. And then over time, it’s like, “Who were the beta readers?” Well, the original beta readers were people who happen to be whatever; my Twitter orbit or all my mailing list and whatever. And you don’t need that many.

And then who is the next group? Those people they recommended it to. And then who is next? It’s like, well, at that point I started treating it like a paid product.

And I switched from it being free beta reading to paid early access. And we did about, I think, ten thousand dollars in paid early access, which was basically people paying me to give me free editing, which is pretty awesome, right?

Matthias:
Just a moment; people paying you to get you free editing? How does that work?

Attracting beta readers starts a viral loop

Rob:
So, beta reading, I say, “Hey, please beta read my manuscript. It’s ugly and messy, but I would really appreciate your feedback. Please give me your time.”

Matthias:
Yeah.

Rob:
At a certain point, I’m like, “Look, it’s nowhere near finished. It’s still a mess, but if you want to see the early version, you need to pay me.”

And so, they paid $24 to buy early access, to provide feedback to help me make a better book.

Matthias:
Amazing, totally!

Rob:
Which is incredible.

Matthias:
Yeah.

Rob:
And that was like $10 thousand, I believe. And then those also became my early testimonials and reviews on Amazon. They became an early word of mouth. They became my early everything.

By that point, I knew – And this applies to any product; these are generalizable principles. You don’t want to charge money when it’s just a landing page, because then you’re putting yourself in a position to have been an asshole because you don’t know if you’re going to be able to deliver.

Matthias:
(laughs) Yeah.

Rob:
So, at the beginning, maybe you ask for something else; the time, the email address or something. And as you progress, you’re able to ask for more and more. But you start asking for what you can ask for, as early as possible. And so, I felt like … $24 early access.

Matthias:

(amazed) Oh no! Why didn’t I know this?

This sounds so simple what you’re telling me. And I say, “Hey, this is obvious, but it is not. This is non-obvious stuff.”

Rob:
Yeah, as you de-risk the product and feel more confident that you’re going to be able to deliver what you promised, you ask for more.

And the size of what you ask for tracks along with the maturity of the product in the business until at a certain point, you’re charging launch prices.

This is kind of weird, but I actually charge more for early access than I do for launch, because I want to isolate the most excited early adopters because that’s who I want to be paying attention to for feedback. So, are people like, “Oh, how steeply should I discount?” It’s like, “Don’t discount. Charge them more, if anything. Isolate early adopters.”

Matthias:
And how much more do you charge as a percentage?

Rob:
I didn’t do much more. I did $24 for the early access and the finished book is $19. And so, it was a few dollars more. And they got a lot of stuff. It was certainly worth it for them. They got a ton of access. They got lifelong access to the community. They got the audio book, the PDF, the paperback like. I tried to make sure they were like, “This is amazing.”

Matthias:
Oh, wow. Yeah.

Turning early access into a subscription

Rob:
But I didn’t make it cheap, right? And as soon as I could, once the book was getting closer, I was like, “Okay, now, early access is a subscription.” So, I cranked it up again and I was like, “It’s no longer $24. It’s now 19 per month.” And that transitioned into our final community model.

Matthias:
Yeah.

Rob:
And then over time, we’re going to increase that. Our target is to get it up to about $49 a month, but never higher than that. But right now we’re at 19. And we’ll just grandfather people in. So, there’s a group that got it forever on that early access. There’s a group that’s getting it locked in forever now at 19. And as we continue to round out the offering.

And we hope that it’s like a cheap way to get like the majority of the benefit a traditional publisher offers. And then you still keep all the rights and royalties from your book, is our long term goal.

Matthias:
Wow. (speechless moment)

I am totally blown away. I have to think about that. Because what I see is you could write this down as a number of steps. It doesn’t only apply to book writing. It applies to any business that you can structure in a way; like offering a little value at upfront, asking people for their time, then offering more value and so on and so on. It’s amazing. This is great!

Early revenue as confirmation and learning

Rob:
I say in the Mom Test that the point of early revenue is not the revenue; it’s the learning. You’re using the early revenue to confirm that you’re on the right track. So, you’re not trying to optimize the revenue or at least I’m not, early on. I’m just trying to be like, “Do they care?” Because if they don’t, I want to know now so that I can avoid wasting my time or so that I can fix things and find either whether that means changing the value proposition or changing the customer segment or changing the way I describe it. You don’t want to bang your head against the wall. And it’s nice.

I built a little silly, no-code product over two weekends, just as a fun thing. Because I’m learning – I can code, but like everyone’s going crazy about no-code and I’m like, “Hey, you got to learn the tools to stay in the loop.”

So, I found one called Browser Flow, which basically automates like clicking around. It’s kind of like a visual web scraper. So, you automate clicking around websites and it kind of records it. And I built a thing for authors that tracks their Amazon ratings each hour across all the different regional stores and all the different categories and stuff.

Matthias:
Ah, it checks it by scraping, right?

Rob:
Yeah.

Matthias:
It goes to Amazon and looking for the results.

Rob:
Exactly. So, they don’t need to log in or anything like that. It was fun. It was two weekends; like fun little project. And then after that, I’m like, “It kind of works.” I put up a landing page. It’s called The Amazon Alerts. And I was like, “It kind of works; kind of buggy, but hey, like, who wants it?” And right now there’s like five paying customers paying ten dollars a month and I’m like, “Okay.” And it’s buggy, though.

So, what’s happening is every time their payments click through, I immediately refund them for that month. But the fact that they had to put in their credit card details shows me that they have intent to purchase. So, I’ve got real user data, helping me find all the edge cases and bugs. I know I’m not wasting my time, because from their perspective, they were buying it. And then afterwards I was of like, “Hey, here’s the situation. Here’s how I’m dealing with it.”

It’s just this. It’s the same concept, but it’s really hard to explain because it’s different for every product. And so, all these checklists that people try to make, like do these exact steps in this exact order.

Generalizing the de-risking approach to any product

Matthias:
Yeah, it doesn’t really work. It’s it sort of works, but it doesn’t really work.

Rob:
Exactly. It’s training wheels. It’s a way to get started. But as you master this skill, you want to drop the training wheels and start thinking at each stage of your own business journey. And I’m sure you know this. You’ve been through this just as much as I have.

You start thinking like, “Okay, given where I’m at now, which information’s easy to get? What can I do risk in like an 80/20 time efficient way? What’s the low hanging fruit? And what’s the stuff that’s going to be just impossible to do risk and it’s not worth the effort?” And I’m just going to need to leave that as an open risk because there’s not a practical way for me to get that information at a time efficient way.

So, you’ve got to leave some risk in there, but if it’s easy to answer, answer it. It’s like you get 20 percent certainty here, 30 percent certainty here, 80 percent for this one. You go, “Is that enough?” and you take the next steps and then it’s a new set of questions.

But that’s a hard thing to teach to someone who’s never been through it before. So, people use their checklists. (laughs)

Matthias:
It’s kind of like the mental model behind it is much more important than the concrete steps that you take.

For example, if you think in terms of risk, de-risking things, getting data from somewhere, judging that data, making decisions based on that data, it’s much more important to teach people these mental models instead of exact this checklist and you’re done, right, because it doesn’t work. But the mental model may be adaptable to different categories of products and different creative stuff.

Rob:
Exactly. My friends joke that I’ve written the same book three times because it’s basically the same; this process you just been describing,

• just applied to start ups with The Mom Test,
• applied to education design with The Workshop Survival guide
• and then apply it to books with Write Useful Books.

And each of them is just taking this same mental process of like

• what are the unknowns and
• how do I chip away at them in a way which is comfortable and time efficient?

You do it for education; you do it for everything.

Someone who got that model, they wouldn’t need to read all three books, because they’re like, they got the model and they’re like, “Yeah, I can just apply it now.”

But people really benefit from the practical applications when they’re new to a space.

Building a community is hard

Matthias:
Yeah, people like examples. Yeah, as an example, people like examples. Yeah.

And about this community of authors now, don’t you find community building hard?

Rob:
Oh yeah.

Matthias:
I think it requires a special skill. I had Rosie Sherry on my podcast, for example.

Rob:
She’s amazing. I’ve been learning so much from her!

Matthias:
And I think there’s a special gift, isn’t it?

Rob:
I think it’s learnable. I think that it’s going to be the same thing I experienced with sales. Where the first wave of people doing it are the ones who are naturally good at it. And this is why I had to write The Mom Test.

And this is why sales books didn’t help me because they were all written by people who are naturally going to sales. That doesn’t mean that other types of people can’t do it, but like a natural salesperson is terrible at explaining sales to an introvert, because they don’t know what that’s like.

Matthias:
Is it because they don’t know? Yeah.

Rob:
Yeah.

And so, it took like me, in the case of sales and custdev to be like, “Well, I suck at this! I’m like the world’s worst salesperson and customer developer – like I tried, I went out of business. I was so bad at it, right? Even though I spend 40 hours a week doing it.

And it took me to be like, “Well, let me write the guide that’s not about how to go from naturally good to world class, but how to go from naturally terrible to functional.” That’s what The Mom Test is about. That’s what it promises!

And that’s really important for people. That’s what I needed in my first business was to be functional. I didn’t need to be the world’s best because once I’d taken the first few steps myself, I could have hired that expert salesperson to optimize it. I just need to prove it out in the early stages.

So, I think that community, my read on it, is the same, where right now the people who are doing community and succeeding a community are naturally good at it. I am not. For me, it’s been a nightmare to try to get even like baseline functional at community.

And I feel that like once I’ve worked my way through that, I’m going to be able to describe it in a way that might resonate with you, for example, as someone who’s not a natural community person. But right now, it’s like all the natural people talking to each other and it makes no sense to people like you and me! (laughs)

Matthias:
Yeah, the natural people say something like, “Yeah, you’ve just got to help people to connect and you just got to make them-“ and always this word, just. I wonder it’s not “just” for me, right?

Three building blocks to design into a community

Rob:
I’ll describe a couple building blocks that I think are important right now. So,

1. One is you’ve got an onboarding ramp, which is about setting an aspiration. So, a shared goal and then bringing your new members to both buy in to that goal as being worth the journey.
2. And also carrying them to their first win, which makes them feel like, “Wow, I got one meaningful step closer and it was because of this group.” So, that’s your first month. The first month is essentially a trial period for any community, because they’ve bought into the promise. But every community has a high time cost and a high interruption cost. And so, the first month is about demonstrating to a new user. They buy into the goal, but you’re like showing them that you can actually get them a step closer to it and that the interruptions and the time cost are worthwhile. So, that’s like one piece.
3. Another piece is: everyone’s busy, so, they naturally drift away. So, you’re looking for a heartbeat, which is a repeatable process. Some people use live events. Some people use content, like a newsletter. Some people use whatever; community rituals. So, there’s a heartbeat that engages them at a regular period. It brings them back in.

And by bringing them back in repeatedly, you’re given the opportunity to change behavior, which again brings them to the next little win, which makes them feel like, “Yes, I get this.”

And the vanity metric of community is engagement. Every engagement is the easiest thing to measure in communities because you can see how many Slack messages people are sending or whatever. But it’s a vanity metric. It’s very misleading. And in some ways it’s negative because every engagement is also an interruption.

Matthias:
Yeah. It increases the interruption cost for the others.

Rob:
Exactly. And so, like in some cases, that’s driving your best potential users away. So, in my group, like the goal I’m thinking of – We have about 200 members now in the non-fiction authors’ community. And their goal is to write a number-one bestselling book that grows organically for many years.

Matthias:
Okay.

Rob:
It does not matter how many Slack messages they send or events they come to on the way there. If they join the community, say nothing, do nothing, but launch the number one book, we’ve succeeded.

Matthias:
That’s right. Yeah, that’s right.

Rob:
And so, that’s what I try to stay focused on. And it’s like, my job is sort of like to put a structure in place so that if they’re falling off that making progress toward that goal, we catch them. And if they’re not sure they can start, we help nudge them to get started.

Matthias:
Yeah.

Rob:
That’s it. And it’s like, okay. And then you’ve got the onboarding and you’ve got the heartbeat and you’ve got the goal. And that’s it. Everything else is like people getting hung up on like technical details that don’t really matter and getting obsessed about easy-to-measure vanity metrics and blah blah blah.

Matthias:
Yeah. So, what was it? Onboarding, heartbeat and the goal. Yeah.

Rob:
Onboarding, heartbeat and shared goal. Yeah.

Matthias:
Yeah.

Make the heartbeat work for every “player profile”

Rob:
And then it’s like, you work backwards from that and you go, “Yeah, it’s like.” And that’s not easy. I’m not saying that’s easy, but it’s no different from any other products.

Our heartbeat in our group right now is, twice a month, we have a guest author who’s like someone famous who comes in and talks about their process, and we do a live Q&A. Three times a week, we do writing accountability groups, which is like a one-hour live writing session on different time zones. Every two weeks, we send out a newsletter.

And we try to trick – People join; it’s not trick. We try to deliver three different value propositions with each of our newsletter communications because people join for three different reasons:

• for inspiration,
• for education
• and for connection.

As far as we’ve seen. And education is kind of like problem-solving, like, “I’m stuck. How do I deal with this?” So, it’s like time efficiency.

Matthias:
Yeah.

Rob:
And so, we try to make sure each communication, each event ticks some of those boxes.

I actually learned that trick from Minecraft, weirdly.

Matthias:
Minecraft?

Rob:
When Minecraft they do – When they do updates – And this is like a general game design principle that’s applied to a lot of long lasting games. So, Path of Exile, Minecraft, World of Warcraft, …

when they do their updates, they know what their player profiles are. So, in Minecraft, it’s explorers, builders, fighters, and there’s a fourth one that I can’t remember socializers, I think. And they try to make sure that every update they send has one exciting new feature for each of those groups!

So, the builders always get new blocks. The fighters always get new enemies. The adventurers always get new terrain types. The socializers always get whatever. And if you look at their updates for each update, it’s always broken into those four groups. They don’t call it that. They’re just like, “New thing.” But once you understand how they understand their player base, you can see that in their update tempo. Path of Exile does the same thing, and all of these games do that have been able to last for a decade.

And so, that really informed my community comms, also. It’s like, “What are my community profiles?”

Community profiles in the author community

Matthias:
Yeah, what would be the archetypes or the stereotypes that you can identify in your community?

Rob:
So, we’ve got a group, that’s like for nonfiction, they’re usually between 25 and 40 and they’re sort of at the peak of their career. And if they want to write a career-multiplying book. And they come in and they just get shit done. They do not want accountability. They don’t need it. They’re already organized. They do not want socialization. They’ve already got their support group. They don’t care.

What they want is when they run into a problem, they want a quick canonical answer to get them unstuck so they can continue making progress. So, they’re actually are lowest engagement, but highest success group within our community. They say nothing and they quietly succeed.

Matthias:
Interesting. But how do you know all these things that you just told me?

Offering yourself as a perk = getting a free custdev call with “them”

Rob:
I talk to them. So, what I did when I was setting up the community in the early days is one of the tricks with customer development, everyone treats customer development like the customer is doing you a favor.

This is wrong.

You want to set up the interaction – I mean, it’s not wrong. You can do it like that, but it doesn’t scale. But you can do your early conversations by asking for favors. But it doesn’t scale. It’s not repeatable.

So, to make it repeatable, you need to find a way to structure the engagement so that they feel like they’re getting a favor from you.

Matthias:
Ah, interesting!

Rob:
So, in the case of my community, I sold myself as a perk, and I said,

When you join, you get a 30-minute call with me to talk about your book; your goals, your problems. I will help you out however I can with your book.

People show up they go, “Yes, I get to talk to Rob.”

I’m going, “Yes! New customer, about to describe exactly why they joined, what they’re stuck on and what they need.”

And again, that’s someone paying me a subscription, grabbing my Calendly link and booking a custdev call with me. Zero time cost. Zero outreach. One hundred percent success rate, right?

And they’re delighted. And I’m getting paid for it. Nothing like a cynical way. I’m not trying to take the piss, but it’s like-

Matthias:
No, it’s exchange of value. It’s amazing!

Rob:
Exactly.

Matthias:
Because both people get something out of it.

Rob’s three different groups in the community

Rob:
They get a ton. And for them, it’s incredible. And for me, it’s like, that’s how I figured out who my community, like customer profiles, were and what I should be offering them.

And it’s what made me happy to be like there’s a group I never hear from, but they’re still happy. And they’re a really important group.

So, there’s that like mid-group of just like, get shit done. There’s a group who’s more aspirational who’s like, “I want to write a book someday. How does it work? Show me what’s involved. Show me the process.” They’re the most education-happy group.

And then at the other side, you’ve got a group that is what you might call like the lifestyle authors, where they’re just having fun writing. A lot of them are older or retired and they’re writing for the joy of it. Some of them have written 10 non-fiction books already. It’s just what they do.

Matthias:
Yeah.

Rob:
And for them, the socialization is the most important. And what’s interesting is some of them don’t finish their books or their books don’t commercialize that well, but they don’t care. But they’re in it for the joy of writing.

Matthias:
They simply enjoy writing. Yeah.

Rob:
However, they’re the most engaged and the most helpful within the community, within the Slack channel, within the events. And they’re the ones who answer all the other questions from other authors.

Matthias:
That’s interesting.

Rob:
And so, they’re like the content creators and the supporters. So, you’ve got like the quietly-get-stuff done and then you’ve got like the people who are – So, it’s a very cohesive ecosystem where everyone is playing a role in helping each other out, but they want different things.

And if I tried to get everyone to go to live events, I would lose the get-shit-done group!

Matthias:
Yeah.

Rob:
So, it’s kind of interesting because all of the normal product advice – And this is a challenge about community. All of the normal product advice is to choose your early adopters and obsess over them and ignore everyone else.

My experience so far in community has been that that is not possible and that it’s more like building a user generated content business or you’re going to have creators and consumers, at the very least, and possibly even more.

So, you need to think more like multi-sided marketplace about how the different groups fit together and try to serve all of them or like Minecraft or something like that. That’s what I think so far about community, but I don’t know. I’m still figuring it out. (laughs)

Matthias:
That’s an interesting way to put it because a multi-sided market place. Yeah, a community is kind of like that.

In principle, everyone is able to give something and everyone wants something. So, it’s a kind of multi-sided marketplace, but in a more friendly way, right?

Rob:
Exactly. Yeah.

Matthias:
A community, is more kind of friendly marketplace.

Rob:
Yeah, there’s no money changing hands, but there’s value trading hands. Some people receive socialization and give advice. Some people receive advice and give back case studies for inspiration. So, it’s like it’s very abstract, but there’s something there. I’m still working through it. But this is what most of my time is going to at the moment is figuring out how this works and changing it from, like what you said, “Just help people.” That doesn’t work for me at all.

Matthias:
All right. (laughs)

Rob:
I don’t know what’s going on in my brain, but I need systems. I need flow diagrams. I need structures. So, this is how I’m starting to think about it. It seems like it’s starting to work. We’re growing at a decent rate. And that’s always nice.

Matthias:
Nice. I perceive you as a person who has a natural talent for breaking things down, right?

• Observing,
• creating a theory,
• de-risking the theory and then
• breaking things down into actionable steps.

I really like that.

Rob:
Yeah, I have the advantage of being naturally bad at most things, but quite willing to spend the time. And like systems oriented, I guess.

Matthias:
Yeah.

Rob:
Teresa makes fun of me constantly because I can’t remember any of the places we visited or the – So much gets lost in my memory. But if I’ve got a system, I’ll remember it forever. And so, that’s the way I try to get to.

Matthias:
Wow. I’m still trying to figure out a system for audience development; that’s what I do.

Rob:
Yeah.

Matthias:
You helped me so much, Rob, today. I enjoyed the conversation so much with you. I wish you good luck with all your efforts; with the books, with the communities, with the software product, with everything. And keep me posted if the software really takes off. Maybe I will write a book one day.

Rob:
Yeah, please do. The way we’re doing it now is it’s basically bundled with the community. So, people pay for the community and they get the software for free, or they can think of it as paying for the software and getting into the community for free or whatever.

Matthias:
Great.

Rob:
And yeah, it’s fun. And certainly, if you crack the system for audience building, that’s a pretty important book to write. So, I hope to see you in the group someday!

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Outro

Thanks for listening to The Audience Explorer podcast, today.

You can find me on Twitter at @GetTheAudience and you can check out the blog at gettheaudience.com

If you have any questions about this episode, reach out on Twitter or send an email to matthias@gettheaudience.com

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