Sage Advice (and Reasons You Probably Won't Follow It) from Jason Cohen of WP Engine

Courtland Allen 7s

What’s up everyone? This is Courtland from IndieHackers.com, and you are listening to the Indie Hackers podcast. On this show, I talk to the founders of profitable internet businesses and I try to get a sense of what it’s like to be in their shoes. How did they get to where they are today?

How do they make decisions at their companies and in their personal lives, and what, exactly, makes their businesses tick? And the goal here, as always, is so that the rest of us can learn from their examples and go on to build our own successful businesses. Today, I am excited to be talking to the one, the only, Jason Cohen.

Jason is one of the most successful, knowledgeable, analytical and honest founders that I know of. He’s the author behind A Smart Bear, one of the most informative blogs for founders to learn from online.

He has bootstrapped four different software businesses from $0 to over $1 million in revenue, and with the latest of those companies, WP Engine, he eventually decided to switch gears, take a different tack and he’s raised almost $300 million from investors and is now at over 600 employees, over 90,000 customers, and recently reported that they are on an annual revenue run rate of $133 million.

So Jason really knows his stuff, been around the block. He’s seen things from every angle, and he’s literally succeeded over and over and over again. Jason, welcome to the show. It is an honor to have you on here.

Jason Cohen 1m 20s

Wow, that was an awesome intro. Thanks for having me.

Courtland Allen 1m 23s

Yeah, I’m really glad to have you on here. People tell me all the time, “Courtland, you should do more failure stories,” and I disagree. I think you learn a lot more from success stories like yours. I think there are a million ways to fail at being a founder, and only a smaller handful of ways to succeed so I like to bring on people like you, who’ve succeeded a ton of times.

I wonder what your thoughts are on that. Do you think you learn more from success or failure? And also, looking back on your career so far, what are some of the experiences that you’ve learned the most from?

Jason Cohen 1m 51s

It’s actually hard to learn from either one, because either way you made a whole bunch of decisions, and there’s a lot of factors that were not in your control. And it’s not even clear sometimes what factors are or are not in your control in the first place. And then there’s an outcome and the question is, “What did I learn?”

But to ask what I learned, sometimes there’s obvious things, but you don’t know. Maybe if you knew that and made different decisions, maybe it wouldn’t have been a different outcome. So it’s not an experiment. It’s not an A, B test. So it’s kind of hard to tell, “Have I learned anything?” Also I feel like sometimes with failures, sometimes there’s something to learn, and sometimes there’s not anything to learn.

You know, you have some sort of problem with the product and you made the right decisions with the information you had. And you can always make up something like, “Oh, we should have known more. There’s probably something we could have done to know more.” Again, it’s not clear if that’s really the case. And if so, that’s not a very interesting learning anyway. That’s kind of always true. Maybe we could have learned more. No kidding.

I’ll give you another specific example from WP Engine. Early on, when we were trying to get early growth, one thing we tried was affiliates. So that means people who have websites that teach people, in our case, how to build WordPress sites or maybe they have newsletters, or maybe they have review sites. There are different ways that people have, through content, hypes to potential customers.

And the idea of an affiliate is, they send you some customers and if they convert then you pay them. So it’s an obvious type of channel to use. Also, it’s very common in hosting in general, and WordPress in particular, very common to have affiliates as a channel, so it’s all very obvious to do. So we tried and it did not work. We put a lot of effort in and didn’t really generate much growth and the customers we got had a high churn rate, and all this kind of stuff that indicates it’s a bad idea.

So you could say that what we learned is, affiliates are a bad idea. But two or three years later we tried again. We took a different tack and this time it worked better. And so to this day, affiliates are still not the majority of how we grow, but they’re still important enough that we have an affiliate team and we do have a - that’s one of the many marketing channels that we use.

So it would be wrong to have learned, quote/unquote, from the failure that affiliates don’t work in our industry, although some of our competitors have learned that lesson. And by that I mean, they’ve tried it and they say publicly affiliates don’t work. So that’s not the right lesson, it turns out.

So how do you know if you’re really – this is again, what I mean about, do you really know if you’re learning something? I don't know. So on the other hand, you want to have a mindset of, “Am I learning? What can I learn?” The other hand, at a macro level it’s hard to say. And I think on the one hand, yeah, sure. Failures, you see, maybe you can identify some things you can do differently, but in success it can be hard to tell why you succeeded.

So WP Engine’s a success in terms of things like growth and market share and product market fit and all that sort of thing, so you can say, “Oh, what did you learn?” Well, some of the decisions we made were probably very important for that outcome, and some weren’t. Some, we probably grew despite some of the decisions we made. Well, which is which? Of course you try to figure it out. But ultimately, hard to say, actually. But I think it’s not good to be too quick to decide what you think you’ve learned.

Courtland Allen 5m 17s

So you are sort of a famous giver of advice. You’ve got your blog, A Smart Bear. You spent many years giving founders advice. In your experience, do people listen to the advice that you give?

Jason Cohen 5m 29s

When they want that advice, yes. And I say that because I get emails or people find me at conferences or whatever, and say, “Oh, you wrote this one day and we did it and this happened.” And so in those cases, the answer is yes. Surely, the majority case answer is no. But again, they may not be wrong about that.

So the thing about advice is, generally when people give advice, they’re giving advice essentially to themselves. What I mean is, they’re giving it to someone who is like them. They have the same goals, values, maybe even came from the same sort of background, the market, the product, the customers that they’re in, things that have happened to be successful or unsuccessful in their life up until that point. Very rarely does the person giving advice do what they need to do, which is to understand who they’re talking to.

The person I’m talking to, what are their goals? What are they trying to achieve? What does success look like for them? What is their marketing or product or customers, et cetera, look like? And then what would be advice that would be appropriate for them? That something that almost no one does, which is why the advice is sort of ad hoc.

So it’s not evil. It’s not like they’re trying to mislead people when someone gives advice, but if that overlaps really well, then the advice may be relevant, but often it doesn’t overlap. Of course, especially with blog posts where it’s the nature of the blog post, that “I’m just going to post an idea and of course I don't know if that applies to any given reader,” obviously.

But as a reader, you can use that filter and you can say, “Okay. Does this really apply to me? Does it resonate?” And so what I would say is this about advice. Anyone on the internet that says, “You should do X,” you can find an equally intelligent, expert, experienced person with a cogent argument that says, “You should do exactly the opposite of X.” And that is true of all X. So what do you with that information? How do you know which advice to take then? It becomes an important question, because you can just sort of get whatever you want to get.

So to me, the answer is, you want to be clear on what your goals are. “I want to have a small company forever. I want as big a company as possible. I want to do this for three years and get out, whether that means selling or whatever it means. I want to do this forever.”

Of course you can change your mind on this, because we’re people and we can change our mind. It’s okay. But still, at any given time to have a notion, this is the situation. This is my context. These are my primary problems, and these are my goals. When that’s clear, you can pick up a piece of potential advice and ask, the person giving this advice, are they giving it to a person like me?

If the answer is yes, it’s more interesting. If the answer is no, it still might be interesting, but you have that extra skepticism you can apply. And in general, another lesson I take from that is, if all of these different -- if kind of anything works, potentially, then take the advice that really resonates with you, where you go, “Yeah. That sounds like something I wish I had said. I wish I had made that up, because it sounds so like me.”

When that’s the feeling you get from the advice, when you have that personal resonance with it, to me that means just take it. Why? Because if that or the opposite of it is equally valid, well then take the thing that you’re super excited about, that you know how to put that into practice, that you’re already buzzing with ideas for how to do that, and you’re excited.

Because if you’re excited like that, you’re going to do a better job. You’re going to put in more energy. You’re care more about it, whatever. So find those things that have that resonance and then do them. And to me, that is probably a pretty good formula.

Courtland Allen 9m 7s

I’m asking you these questions because I just got back from an Indie Hackers meetup last night. I’ve been to maybe a dozen of these all over the world. I talked to many hundreds of founders and I see people making the same “mistakes” over and over again.

These are the same mistakes that I repeated myself with many companies in the past. These are the same mistakes that people are making despite listening to the Indie Hackers podcast, despite going to conferences and watching talks and reading books and blog posts that advise them to do otherwise.

You, on the other hand, have succeeded repeatedly. You’re presumably avoiding a lot of these mistakes, but you’re telling me that it’s hard to learn. It’s hard to learn from your own mistakes, and it’s hard to learn from your successes. So I’m curious, in a world in which it’s so hard to learn, how do you learn, Jason?

Who are you listening to? Whose advice are you following? What books do you read? What is your engine for improving your skills as a founder?

Jason Cohen 9m 56s

I think even when the advice is out there, and like you said, people are failing in the same way or making the same mistakes, that doesn’t mean it’s not useful to have that advice out there anyway. What that means is there are things where people just need to find out for themselves.

I think that’s probably generally true for a lot of things in life, and maybe even more true for entrepreneurs because what is the mindset of the entrepreneur anyway? It’s a person saying, “I have a different way and mine’s better,” or, “I don’t even care if it is better, I just have to do it my way,” because otherwise you’d get a job.

So a person with that mindset, like me, and you, we’re not going to take to advice very well. The whole idea is, you know, “Nah, I’m going to do it my way.” The advice is still useful because once you do find out for yourself and you go back to that advice that you’re like, “Okay. Now I get it.”

Well now you’re reading it with a different lens, and usually advice comes with something like, “Well, most people do this. What we should do is this other thing.” Now they’re read to hear about the other thing. And so it’s still useful even if they’re not heeding it right away.

Now, WP Engine is now -- this is the current company -- is now, as you said, over a $100 million in revenue and 600-plus people. We’re growing in terms of humans, in terms of computers, in terms of all the dimensions. So the kinds of things that I am learning and thinking about are simply different than when the company is small.

So the way I’m learning, and what I’m gathering that from is different. For example, strategic frameworks or strategic thinking in general is really important for us now. Just finding product market fit obviously is not important in general, because we’re obviously way past that, but even for brand new products that we bring to market, it’s still not the usual way you’d find product market fit as a startup, because we have so many resources.

We have almost 100,000 customers that we can ask or see their behavior to help lead us to additional products that they will want to buy. That’s not something that you can do when you’re finding product market fit as a startup.

That’s just one example, but there are many examples. Where there’s a product, for example, we can probably launch, because we have a great sales a marketing engine, we could launch some product and make certain millions of dollars a year off of it in the first year, where a startup simply couldn’t because of not having an engine yet.

And so that changes the kind of product a startup might come to market with first. So again, this isn’t about good or bad or better or anything like that. It’s just different in kind. It’s just different context. But now the way I learn is not going to be reading blog posts by Thirty-Seven Signals, it’s going to be strategic thinking, systems thinking.

So for me, often books can be better for that than a blog post, although there’s stuff like maybe Harvard Business Review which still falls in that category of something that’s strategic. You know, you don’t really take a book and implement every idea in it, but rather to inspire ways that you think about things.

So for example, everybody quotes it, but the Innovator’s Dilemma is a typical framework which does happen to apply in our market. I think people maybe over apply it to every market they can find.

In our case, it’s actually true for enterprise content management systems WordPress is disrupting in exactly that way, with exactly that patter of, it starts out being inexpensive but also not very good, but then the technology gets better and that’s exactly what we did as a company, is cause that betterment of technology, thereby making it a practical tool but still much less expensive than normal enterprise stuff.

So that’s a key way in which we win enterprise deals. So that’s perfect. The book that I really like on that topic is not Innovator’s Dilemma but the sequel, which is called Innovator’s Solution, because the original book describes the situation, which is cool, but the sequel describes what you can do about it. How do you go about disrupting? What are some ways to think about it? If you know the jobs to be done, the framework, that came out of the sequel, not out of the first one, for example.

It also talks about if you are an incumbent, what does it mean to stay that way and not get disrupted? We can start seeing that in some of our competitive market where we’re the incumbent. So we kind of have both sides of that. Therefore, that sequel books is pretty useful in our current situation, for example.

So I find books and stuff like that, also talking to other executives at larger companies, in other words people who have similar experience. This is what everyone does, find people with similar experience that are maybe two to four years ahead in the journey, which is far enough ahead that they have some perspective and can lend some thoughts about what they did and what worked and didn’t work, of course subject to the caveats that we just talked about, but still. But not so far ahead, like 20 years, that they forgot what it was actually like, which I think happens as well.

So something like that, the two to four years ahead person, is probably an experience set that’s useful. And if you’re serious about what you’re doing in terms of your company, then you’ll find a lot of people are eager to help in that sense. You could say mentor, but it doesn’t have to be so formal.

What I think people are not interested in is, “Hey, I’m not really doing anything. I’m not really serious. I have a day job. But can I pick your brain?” That’s really uninteresting. But someone who’s really got something going, really working hard at it, has some interesting traction but also has the typical problems that you have, that’s just intrinsically interesting to folks, so that’s a good message to try to get a launch or something.

Courtland Allen 15m 33s

Let’s talk about this process of getting serious with what you do. If you are, let’s say, a developer at Google, you’ve got a cushy salary, but you really crave a little bit more freedom. You want to work on the projects you want to work on. You want to build your own company that has a lasting impact or that you can control. It might be hard to make that decision.

How do you know whether or not you should be a founder? I think a lot of people listening in to this show are in that exact position where I wouldn’t say they’re not serious, but they just haven’t yet decided to take the leap. How can you know, if you’re in that position, whether or not it’s a leap you should take, and what are some of the things you can do to make it easier?

Jason Cohen 16m 9s

Well I don't know who it should be easy. It’s scary. You are jumping off. You don’t really have any objective way to know if this is right. You’re going to be spending your savings or whatever. It’s also your reputation. If nothing else, you’re telling your coworkers and your family and your friends, “I’m doing this,” and so if it doesn’t work, that’s going to be your story. So I don't know why that should be easy.

I think, on the other side, if you hear any stories of founders, usually the story is not, “Well I had this cushy job, and I thought well maybe I’ll just try this thing cause it sounds kind of like maybe.” That’s not the motivation.

It can be a compelling event, something happened and so I did it, or just something internal. “I just can’t work for anyone else right now or maybe ever again. I have to do this.” I don't think it’s something that you just sort of slide into.

But what you can do is be somewhat planful or thoughtful about how to take the leap. You can say, “Okay. This is how much savings I can spend until this is not okay anymore.” You can do a whole lot of research or product market fit type research first to have more of a feeling that maybe this will work.

I think just quitting your job and not having talked to any customers to see if whatever your idea is, is worth doing. That doesn’t sound right. You can do that while you have a job. It’ll take extra time. You’ll be working nights and weekends. But again, if you don’t want to work nights and weekends then you should definitely keep your day job at Google, because that’s what it takes.

So you can certainly put mockups in front of people or otherwise test your ideas, and of course that’s a whole question. How do you test your ideas, which of course we can go into if you want? But anyway, of course you can do all that kind of stuff while employed. In other words, you can gather some evidence, even if it’s not super objective. It’s still evidence that this is actually a risk worth taking.

If you’re worried about reputation, -- and it’s okay to be worried about that, ego’s okay -- I think a lot of companies get started because of ego. Again, “My way’s better. I have to do it,” is an egotistical thing, so I don't think that has to be bad. That certainly was compelling for me. That’s also why I started the blog, because it’s nice when people say, “Oh, what you wrote was really great. That really helped me.” That’s nice for my ego, and what else would I do that for, right?

So there’s nothing wrong with that. But still, you could say, “How do I mitigate the possible reputation damage?” You can say you’re running a test. You could say, “Look. I’ve done some research. I’m going to make a go of it. I know it may not work, but I’m going to make a go of it for six months.” When you describe all that, it sounds pretty rational, and if it doesn’t work you still sound like a rational person, though you can even mitigate that part if you want.

You can be thoughtful about how you go about doing it to mitigate the risk or the downside or limit the downside. But if you’re like, “Well, I don’t really have an idea. I don’t really want to talk to customers. I don’t really feel like doing that. I like my weekends,” well then you shouldn’t. That’s not what it’s like.

Courtland Allen 19m 15s

It’s a hard thing to admit to yourself, to say, “Hey, maybe I shouldn’t be a founder.” Even if all the good things about being a founder, all the shiny things really appeal to you, maybe you’re not the sort of person who’s cut out to go through the harder parts.

I mentioned in my intro that you’re an honest guy. I’ve watched a lot of your talks, and you’re very honest. I don’t just mean with the audiences that you talk to. I mean you’re honest with yourself. You’re good about not lying to or misleading yourself as a founder, and I think even when you find yourself doing that, you’re pretty good about saying, “Oh, actually the truth is, I’m stroking my own ego.”

I think a good example is, you gave a talk recently at the SaaStr Conference. You talked about how you were hesitant to make a particular hire and the reason was, at the end of the day, because at some level you were worried about not getting the credit and kudos that you wanted to get as a founder, someone else sort of stealing your glory. I think that’s something not a lot of us would admit or even realize it’s true. It’s hard to be honest with ourselves.

Jason Cohen 20m 9s

Right. It is very hard.

Courtland Allen 20m 10s

How do you get to be that honest with yourself as a founder? I’d also like to talk about, what are some of the things that we as founders commonly lie to ourselves about, especially in the early days?

Jason Cohen 20m 20s

Oh, man. What do we not lie to ourselves about? Aren’t all founders the smartest person in the room, always? And their ideas are better even on subjects that they are not expert in, like if you’re an engineer founder, then you think every business problem can be solved with code, and marketers are not that useful. Salespeople are coin operated. Finance is not necessary cause you’re good at spreadsheets.

I mean, it goes on and on about how you’re -- if you were saying in words what your behavior is, that’s what they would say. Then in the subjects that you are expert in, like say engineering or development, great. Well then once again, your ideas are going to be better than whoever else’s ideas, it’ll be the next developer on the team’s ideas because they’re yours.

You’re probably terrible at managing people, especially if you’re an engineer because most are. Just because you’re the founder you end up being the CEO or some kind of leader like that, but man, most engineers who are super smart and even those that are good at product as well, very few of them are good at leading people or even know what the means.

They think the only part of the interview process is whether the person can code. They have no idea how to understand what other people need or personalities or performance management or establishing a culture or any of these things. They don’t care or pay lip service to it.

Yeah, your actual motivations for the company, your real goals for the company, people lie to themselves about that all the time, I feel like sometimes you see overreactions on social media on that basis. In other words, if you’re a bootstrapper, you probably overreact, literally hate TechCrunch or VCs, and if you raise money you probably overly dismiss some bootstrap companies.

That’s a good example of, I mean just objectively, why in the world would you not just say, there are many kinds of companies and many kinds of journeys, and that’s cool that all those can happen? I mean, you could say VCs or evil or I don't know, whatever you can say that, I guess.

And some are, but bootstrapper founders are evil too, by the way, in the way they treat employees, what they do, whether the success is shared with all the people that took risk or not. There’s some pretty evil bootstrappers out there as well as evil VCs and of course all vice versa on both fronts.

Why wouldn’t you just say that, as opposed to these weird extremes? And again, I think you can trace that back to a lot of that bias of, well whatever I’m doing is right, and that means you’re wrong. Or maybe envy. I wish it were like that, but I’ll sort of react to that in a way that I’m almost arguing to myself that I made the right choice, even if maybe I didn’t.

I’m not trying to call any one person out. I’m just saying all of that just doesn’t feel pretty -- doesn’t feel that genuine to me. Feels like justification or something like that most of the time to me. So what do we not lie to ourselves about?

It’s ultimately not very productive to do that, because you’re not getting to the truth. It’s probably not healthy either, but even if you set that aside and you want to be Vulcan about it, it probably doesn’t lead to the best outcomes for the company if you’re lying to yourself about the performance of all the aspects of the company -- the performance of marketing, of sales, of finance, of engineers, of product, of design, of your own way that you are contributing or holding things back.

I think the more honest you are about that, just with yourself if nothing else, then you can improve. And while you are not honest, you will not be better than whatever you are now. And that is often the case especially with engineering-led startups, that other department just aren’t any good.

Usually, with an engineering-led startup, the product is pretty good and the distribution, meaning the marketing and sales, getting more customers, is the problem. And rather than facing that and understanding there’s lots of skill sets and things to do, they don’t. That’s a common failure mode.

I think what happens also is, a lot of times you haven’t worked with someone who’s really great at a certain position. You haven’t worked with a tremendous digital marketer before, or even a brand marketer, so you feel that’s bullshit, because people you’ve met who are calling themselves brand marketers were bullshit.

And you’re probably right, by the way, but that’s true of every discipline, that most people you meet aren’t that good at it. Shoot, even engineers would probably agree that the average engineer -- you say, well the average engineer is not that good, but the super stars, they’re worth 10X everyone else. Isn’t that what we always say about engineering?

Well, the truth is that is true of marketing and sales and finance and human resources, and everything else that a company does, that is also true. But the engineering founder doesn’t want to admit that, because the engineering’s the best and the 10X engineers, they think, smarter and better than everybody else that you could ever even hire.

But if you have that attitude, then that is exactly what you will get. You will never hire that 10X marketing person, because you don’t even think they exist. You’ll definitely not find them. You’ll find what you’re looking for. That’s just one way to demonstrate how not being honest with yourself, holding on to these ideas, will hurt the performance of the organization, just objectively hurt the organization.

Courtland Allen 25m 35s

Let’s apply this to some specific challenges that entrepreneurs go through, especially in the early stages. Let’s say I’m trying to come up with an idea, something that I should work on that I think is going to lead to a profitable self-funded business. What are some of the lies I might be telling myself that lead me to come up with less than a stellar idea or to have a lot of trouble coming up with an idea in the first place?

Jason Cohen 25m 57s

Okay, so you said profitable self-funded, which I love because number one, I just love those kinds of businesses because I agree with the idea that a lot of the VC-funded businesses don’t have a business model. They agree. They just say they’ll find it. Personally, I don’t like that attitude, but it’s okay, I guess, but I agree. That’s kind of weird.

So I like the profitable self-funded model. It also creates lots of restrictions, and I mean that in a good way, on what a good idea can be. Because if it’s profitable and self-funded, you can’t be wasteful in certain ways. You can’t spend a whole lot more in marketing and sales than you pull in. A VC company can do that. And maybe they even should so they can win market share, for example.

But when you say profitable self-funded, you can’t. Whether you should or not is not relevant. You cannot do it physically. You can’t spend more than you’re getting in. That creates a restriction. Of course, you could see that as a bad thing that you’re restricted, but it’s a good thing because when you have constraints, that helps focus on, what is a good idea? What is a valid business model?

And that helps you throw away ideas that are in fact bad, whereas with a VC-funded company, it’s actually hard to throw away bad ideas, because you can afford to try any idea. It’s actually kind of a harder thing to do.

So, for example, and you have to be really clear about how you’re going to get to whatever the first milestone of revenue is for you. So I typically expect it to be about $10,000.00 in revenue per founder as the first interesting milestone, to me, of a bootstrap company, because at that point you can definitely have quit your day job. And it’s not until everyone’s working on the company full time that the company can really flourish and go see what it can really do. Obviously, numbers change based on circumstance and location and everything, obviously. So that’s just a rule of thumb for me.

So what will it take, for example, with your pricing model that you’ve got in your head, to get to $10k a month per founder? If the answer is it takes 10,000 customers or even 1,000 customers to get there, my general feeling is that’s too many. It takes a long time to get that many customers normally. I know you can always find an example of a company where they got there faster. You can always find examples, but normally, it takes years to get to even a thousand customers.

WP Engine, our current company, is a super-fast growing, big company, blah, blah, blah. Still took us two and half years to get to a thousand customers. All of our competitors took about two to three years to get a thousand customers, even the really good competitors. And you can go down the line. It’s very, very common for that to be true.

Well, a couple of years is kind of a long time to be slogging it out on the side. It’s just rough. And so why would that take that? And the answer is because the price is too low. That was why it would take a thousand customers. So it kind of implies this price range of $50 to $150, maybe even $250 a month, being a better price range for a bootstrapped, profitable company.

Not a low price point high end, but a higher, like a mid-level price point, so the end can be smaller, especially to get those first couple dozen customers because for that, you don’t even need some kind of super-repeatable marketing.

To scrape together a couple dozen customers, you can just use elbow grease. You can use LinkedIn and guest posting on blogs and podcasts and going to certain places and beating your network. That should be enough for some customers. Now that’s not scalable. That’s not repeatable forever. But it can get the ball rolling.

By the way, if doing all those things you still can’t get 20 customers, then you might start questioning whether you have product market fit at all. So you can do that, and then maybe you need just one marketing channel to work reasonably. That could be advertising on one of the social networks. It could be SEO or other kinds of organic. It could be ad words or other kind of advertisement. It could be affiliates. It could be whatever. Again, many, many channels to choose from.

But again, you don’t need to be super scalable to get up to, say, 2, 300 customers, which is what you’d need if you were charging $50.00 or $100.00 a month for the product. It’s not totally crazy. It’s not out of reach. It shouldn’t take a couple of years if the product is desirable. So pricing is an example of something that falls out of this idea of, “I want to be profitable. I can’t take four years before I quit my day job.” You start backing into these things like pricing.

Another thing - there’s many things. Another thing that it implies is that annual pricing is your friend, because it means you get the money up front instead of over time. Of course, usually you discount for that, so you get less money total when you do annual pricing. But getting it now makes all the difference.

And you can do the math yourself. You can take out a little spreadsheet and figure out, okay, if a third of new customers take an annual plan in which they get two or three months free, and the rest pick a monthly, how much cash flow would that be per month? You can play with all those parameters. What percentage would do what? What’s the discount? You can play with all that.

And what you’ll find is the cash flow is crazy different. It is game changing when you can quit your day job. It could be that you can quit your day job in a month just by thinking about annual pricing because the cash flow’s so much better.

And then you can come to the conclusion, “Oh, that’s more important, the cash flow is more important right now to get going than the total amount of revenue I might get this year. Because it allows me to spend that money today, whether that means quit my day job, spend it right now on marketing or development or et cetera, whatever is needed for the company to get better. I can do that now.” That just seems so incredibly valuable. It sounds obvious cause a lot of people do annuals. It’s way more important than it even sounds like it is.

So those two things, again, a VC-funded company can do that. We do that cause cash flow matters to anyone, really. But you could choose not to. You could say, “Yeah, but we don’t care. We can bring cash. We’ll be able to make more money in the long run,” which you will. You don’t have to do that. But for a bootstrap company to me, it’s like you can’t afford not to because the impact to how you can run your business is so big.

So those are just two examples of what I mean by the constraints actually create these clear ideas for what to do to make the business more likely to succeed.

Courtland Allen 32m 21s

I love this stuff about deciding on realistic pricing and business models for hitting your goals as a bootstrapper. And I wonder why a lot of these constraints are so unintuitive.

You can do exactly what you’re saying. Sit down and do the math and say wow, if I charge $5.00 a month it’s going to require a huge number of customers for me to get to $10k a month and be able to quit my job. Why do you think it is that a lot of us aren’t doing this math? Do you think it’s the result of another lie that we tell ourselves?

Jason Cohen 32m 46s

I wouldn’t quite call it a lie. It’s probably more ignorance than trying to deceive ourselves. But I will say this. Most needs in a startup are multivariate. They’re complex. Pricing – all these things pull on each other.

“Well, if I lower my pricing, I could have more customers and that’s good, because then I can weather cancellations better and also I have more ideas for how to charge more later. I’d rather just get them in the door now. I can upsell them in a year when I have more features. I don’t think I have enough features to charge more right now. Let me just get the in right now.” That’s a reasonable argument.

Then you can go the other way and say, “But, actually tech support scales with M, not with price. So that actually will overwhelm me, and I really want the fewest number of customers possible. That will minimize my overhead.” Well actually, it will minimize whatever scales with the number of customers. Like tech support or even billing. There’s a lot of things that scale with the number of customers. So I actually having the fewest number of customers for the money is the best.

Also they’re probably of higher quality. They may churn less. It is, generally – again, all this is rule of thumb, of course, but rule of thumb is, the more someone is paying actually the less they churn, and sometimes even the less they use tech support.

Certainly, in hosting, in our industry it is true that the lower dollar customers actually use tech support more and churn higher. It’s like, yeah, but that’s a lower dollar customer. What the heck? So you should want high dollar customers. So that’s just an example of that argument. Which argument is right?

And of course, the thing is, there’s good really solid arguments on all sides. That’s the truth. We only picked one dimension, which is price, but there’s lots of dimensions, like is service important at this company that you’re building? Nowadays, that’s something that people pick on or select products based on.

On the other hand, especially as engineers, we love the idea of the sort of self-serve model, where there’s little to maybe even no tech support like Google has with Gmail, where it just scales, scales, scales and you don’t have those costs.

Okay. That’s fine. But then service, quote/unquote, is not part of the product. I imagine the user interface better be very intuitive so people can be successful without calling tech support. Maybe you have a lot of documentation. Maybe there are public forums. What are the other things that would have to exist so people can be successful despite the lack of customer service?

Or you go there other way, where you differentiate based on customer service. Yes, it’s going to cost money. It’s also why we’re going to win. Because when you treat people well, they stay. Through reciprocity they spread the word to their friends and so on, and so we’re going to differentiate based on service. Of course there are a lot of successful startups that have done that.

So again, which one’s right? And we go, well, they’re both very logical. They just come with different consequences. Does that go with price? Yes, because low price and very high service might not be affordable. Anyway, there’s all these dimensions, and they pull on each other as well, so it’s complex.

That makes it very easy to either justify any particular combination you want, or at minimum it just makes it -- the argument I just made for annuals and a price range between $50 and $150, that sounded clear. But if you start going through all the other stuff, suddenly it sounds muddy. It sounds less clear.

So what to do about that is, when you go through these different choices, making some strong decisions about some of these dimensions is important. For example, are you going to be heavy on customer service and try to maximize how much value you deliver because of that? Or do you want to minimize customer service and minimize the amount of cost you have there?

Just deciding that alone, just in isolation, what kind of company am I building? What do I want to do? By deciding that, all these consequences can then flow, like the one I just listed, and also those will flow into other decisions like pricing.

So having a couple of, you might say, putting pins in things or a couple of fixed points like that that you’ve decided, that’s the deal, that helps. That helps lower the field of possibilities elsewhere, so that can help you reach a consistent decision across all these items.

Also, thinking about the items together is helpful, I think. Again, people will think about customer service alone. And they’ll think about pricing alone or not at all. They think of it later. “First I have to see if people want to buy the product, and then I’ll think about the price.” I say no. I say price is part of the product.

When you think about cars, price is part of what the car is. It’s part of what the product is. It’s part of the brand. It’s part of what it means to buy and drive that car. It’s not a separate thing. First, let’s see if you want leather seats or not, then we’ll talk about the price is not how it works. To me, those are not separate.

So I think people try to think of them separately, maybe cause a lot of advice from blog posts does take them separately, just because of course you have to pick something to talk about and it’s hard to think of them together. But again, if you have a few fixed points and then you try to think of it together, ask what is consistent, what are consistent decisions across all this, maybe that’s more helpful in arriving at a consistent business model.

Courtland Allen 37m 59s

Let’s say you’re a founder. You started your company before listening to this episode. You didn’t follow any of this advice. You thought about everything separately or far too late, and you find yourself in a position that I commonly find founders in when I go to these Indie Hackers meetups or talk to people online, which is they’ve got a product.

They’ve got a product roadmap that’s another six or nine months of coding. They are trying to sell their product for $5.00 or $10.00 a month, and they barely have any customers, but they’ve already invested a year of their life into coding this thing. How do you get out of that situation? How do you turn it around?

Jason Cohen 38m 32s

Well you just do it. People are worried. “Oh, I got three customers, or thirty, so I’m restricted.” No, you’re not. You can do literally anything you want. You can change the price however you want. You could change the brand. You could change the name of the company. You can do anything.

Now the more customers you have the more careful you have to be or the more you have to communicate and explain or help people along or et cetera, but typically, what we want is the situation you’re describing. You feel that, but it’s not actually true. 99.99% of anyone that will ever visit your website or any customer you’ll ever have is still in your future and has not seen you yet. It’s not too late.

Now WP Engine, my current company, is now 9 years old with 100,000 customers, so then this advice is not true. It’s not true we can just do absolutely anything and that will just work. But we can do anything. It just takes a lot more planning, communication, alerting. This is going to happen. Now it is happening. It already happened. Can we roll it out slowly? And all kinds of stuff. We still can do it, though. It just takes a lot more effort.

So how do you do it is, you just assess. What is it that you think it should be? Decide, and then you can decide the right amount of process or communication needed to affect that, but the answer is probably not that much if it’s early. Plus, you get to use the real little “startup and I’m the founder” card, which is the best card ever. We don’t get to use that card anymore. If we mess up, then we mess up, and that’s it. Dang it.

If we want to change pricing, we have to face a lot of people talking about that, whereas when you have 30 customers and you reach out and say, “Hey, it’s a little startup. It’s just me and a friend. We’re just trying to make this work and we realized we have to change pricing because we bought ABC but it turns out DEF and we’re so grateful that you trusted us early on. We want to continue doing that for the next decade, and to do that we need to fix our business model and that means we have to do DEF. So we’re changing our price like this, and we’re blah, blah, blah, blah.”

I have counseled people to do that when they’ve needed to do things like drastically change pricing, for example, and the outpouring of support from customers is always just so heartening. When you’re honest and open about all that, you just get people saying, “That’s awesome, you guys. I’m pulling for you. Love your product. I totally get it.”

Now of course, sure, you have 10% of people who are complaining, obviously. But if 90% say, “I’m with you. Let’s go,” and 10% don’t get it, okay. So what? That’s great. When you’re small, that is the outcome that you get. You’re not restricted, really. Just be thoughtful about how you effect the change.

Courtland Allen 41m 22s

Let’s talk a little bit about when WP Engine was small. I know you said this is nine years ago, so we’re reaching back into ancient history. How did you make some of these early decisions to set yourself on -- for bootstrapping to let’s say even that first milestone, $10,000.00 a month in revenue?

Jason Cohen 41m 37s

Well, the most impactful thing was a process I use to validate the business idea. And the reason I know that is impactful is I had other ideas first. I used the same process and I was able to discard the other ideas but the idea for WP Engine, it just withstood the test. And so I did it, and then it did work.

And so, again, as we said, being [Indiscernible] is that proof that my method’s the best? No, but it’s alright. It’s evidence that maybe it’s good. So I would say that was really important because it found the company, whatever that might be, and discarded other ones that maybe weren’t right.

What I did there is, usually you have some idea because you’ve noticed a problem or you got an idea for something new, something different because of some experience you’ve had and so on. So what you do then, or if you’re following the thing that I did, is you write down a bunch of theories that you have about the market, about your customers, et cetera.

So in my case, for example, I wrote down things like, “Your typical WordPress freelancer has 10 customers.” And I write down another theory, “WordPress freelancers have to log into a bunch of stuff all the time, and they hate that because they have to keep passwords everywhere and it’s annoying.”

And then I wrote down, “People want their sites to go faster. They always want it to be faster. Faster, faster, faster.” And then I wrote down, “Everyone’s worried about security and they’re willing to pay more if their site is demonstrably secure,” and so forth. I wrote all these theories.

Then, I think, “What question or questions could I ask which would validate or invalidate the theory -- the second was more important -- without a leading question? So, for example, on the theory that on average they have 10 clients, what you would not ask is, “So do you have about 10 clients?” cause that’s leading the witness.

You would ask something like, “How many clients do you have? How has that changed over time?” That’s getting to the answer without leading to any given answer. So you write down all these questions. I did all this in Google Sheets or Excel. Maybe it wasn’t Google Sheets. I can’t remember.

So then those are the questions I would ask in customer interviews, those nonleading questions. And of course, what you find is that some of your theories are right and they’re validated and maybe you have even more numbers to put on, and some of them are wrong and you find out why. And then also there’s brand new stuff that weren’t on the list at all, either way, that you learn as you’re talking to them and that’s all natural.

You just take notes and every time you do a conversation you look through your notes and you update. “I’m going to update my theories. I think stuff that wasn’t there before.” You know, maybe turning the thing I was wrong about into a negative statement. “Okay, people don’t want to do that.”

So sometimes that’s true, that you found the negative and sometimes the answer is it’s neither. It’s all over the place. Some people say yes, some people say no. It’s just not a thing. It’s not an interesting point, because people sort of think all kinds of different things. That’s not a strong signal either way. That could be another result.

So this morphs. And then what happens is this. When the idea is -- I don’t want to quite say the idea is bad. I think generally, people come up with lots of ideas, and it’s hard to say an idea is bad. Surely there are good parts to the idea. That’s why you’re excited about the idea, because there’s something good about it. The real question you’re asking is, can I build a business around the idea, which is a very different question.

For example, I had an idea for a marketing analytics tool. There were some basically good ideas in there. In fact, when I would do the customer interviews, when I talked about the features, invariably people would say, “That is cool. I want that.”

That’s where a lot of people stop, by the way, when they do customers interviews. They test the features. People say, “That’s cool,” because it probably is, and they say, “This is a good idea.” But that doesn’t make it a good business.

So when I start asking about pricing, like how they buy and other things about their life and would this be in the budget now? “Well, not now, but maybe it could.” That doesn’t sound so good, as opposed to, “We have budget for this right now. I know what line item you’d fit into.” Aha. Now see, that sounds good.

Or I ask questions about what they read. Where do they go to online? Some markets exist but you can’t get to them. You can’t advertise to them. You can’t find them. They’re not on social media and they don’t go to events, so it’s just hard to get to them. So the idea might be great, but if you can’t get to the customers efficiently, then it’s a bad idea for a bootstrap business who does need to get to customers efficiently.

So this is what I mean about is it a good business? You have to ask about the market. How do I get to customers? Do they agree they have the problem without me having to talk to them for 45 minutes like a customer interview? Is it already obvious to them or do I have to convince them of it, and so forth?

These are the things that answer the question, is this a business? Often you have a great idea in terms of features. People say, “Sure.” But the business stuff doesn’t come together. That’s what happened to me with the marketing analytics. Feature’s good but the business, “Aw, it’s too hard with the cost.” The pricing was weird and didn’t really coalesce around one way.

People had all kinds of different ideas. It was weird. People saw different specific applications of it. Instead of just saying, “I already know what to do with it,” they would say, “That would be great, but only if you do this other thing,” and then the other thing’s different for every person I talk to. That doesn’t feel like it’s coalescing around an idea.

On the other hand, WP Engine, what that felt like was, of course there were still theories that were right and wrong and all that other stuff, but after 10 or 20 interviews, it started coalescing. Like, wow, I just keep getting positive responses to almost everything I ask. It just keeps being the same answer.

So by the time I did 5-0, 50 interviews in total, which took about four months cause it takes forever to schedule and do all that stuff. But if you want to be honest about things, you better get a lot of data points. And it was just getting boring. and that’s great. Boring is good. It means you’re not learning anything because you’ve actually settled on what’s basically true about the customer and the market and the business model.

So if that business model works in terms of pricing and, by the way my initial price was -- my lowest initial price was $50.00, and there was a tier that was $99.00 and there was a tier that was $249.00, so you see, I took my own advice there. There you go. I was able to validate that people would pay that through all these conversations, and I knew that if they would pay that, that would be the right general ballpark in terms of price per customer.

But that validated that, yeah, they would if we did a couple of basic things: make sites fast, secure, scalable and have good support. See, in our case good support is actually one of the things we differentiate on. If we did that, people would pay these much larger prices, ten times what they would pay GoDaddy, for example.

So the business model part was validated. So then when I went and did it and it worked, it wasn’t a surprise, cause I did all that work, and also invalidated other ideas and was honest with myself that that was the case. There were good ideas in there, sure. Just not a good business model. Or maybe there was a good business.

I just couldn’t figure out what it was. That’s fine. I just -- I couldn’t figure it out. That’s the only thing that matters, I guess. So that was exactly the technique I used for multiple things. So surely that was the most important thing, to eventually alight on a business, not just an idea, with that technique.

Courtland Allen 49m 0s

I want to do something a little bit different now and get your opinion on a few dichotomies. You might call these false dichotomies because they are, but I think it’s a little bit more fun to make you choose one.

Jason Cohen 49m 10s

Fun.

Courtland Allen 49m 11s

Okay. First one: The importance of the initial idea and idea validation, versus the subsequent execution.

Jason Cohen 49m 19s

Execution. Very few first ideas survive, but certainly you could have the best idea in the world and without execution it won’t matter.

Courtland Allen 49m 27s

Cold, hard analysis, versus following your intuition as a founder?

Jason Cohen 49m 33s

I challenge the idea that your cold, hard analysis is cold. I think you bring bias into things. I think you read data the way you want. I think you probably don’t do statistical analysis correctly anyway, and you probably don’t have enough data to do statistical analysis, and therefore you have to fall back on intuition. I would say the former.

Courtland Allen 49m 53s

So it’s not even a choice? There’s no way to analyze?

Jason Cohen 49m 56s

You can when you Google and you have enough data points, but you don’t have those data points. That doesn’t mean you shouldn’t look for data. You should. But I challenge the idea that like, “Yeah, I’m a cold-hearted Vulcan making rational choices out of data.”

No, you’re biased, and you don’t have enough data, and that’s the truth. And that’s okay. That’s fine. That’s not bad. That’s what it is, though. So when you do use intuition and you’re simply convicted is the word I use, you have conviction on something as opposed to incontrovertible data, you can let the data point to that. That’s good. That’s good. But I do think it’s good to be clear about what you’re convicted about.

In other words, even if you use intuition to get there, no problem. Then, after the fact, be really clear on what are your convictions. “The market is like this. People will want that.” Just be clear on what that is, because those will be your pillars that you’re building your product and marketing and other things around. You’ll be building it around those ideas. So regardless of where they came from, be clear about what they are.

Courtland Allen 50m 53s

Quitting your job cold turkey versus working on your business on the side.

Jason Cohen 51m 0s

I think working on it on the side is a good idea, to a point. There are people who have been working on a business on the side for four years. I think at that point it’s not working. Something’s not working. Either the business could work and you need to quit your job so that it can, or it really isn’t working and the reason, because you don’t need it to work. You’ve just got this thing making a grand a month, two grand a month, and it’s just enough money that you don’t want to kill it, but it’s just not a business. So that’s the trap.

I still think, to the extent that you can get ahead of things -- so, for example, do all that customer discovery before you quit your job, for sure. That way you can fail and try another idea and buh, buh, buh, buh. And once you have that conviction, then you can start thinking about, how do I plan my way into doing this, into really throwing myself into this so that it can really work?

Courtland Allen 51m 44s

Following your passion as a founder, so choosing a product that you’re passionate about or a space that you really love, versus being more opportunistic and trying to look at what you think has the highest chance of success.

Jason Cohen 51m 55s

Hmm. I’m conflicted, because it’s so easy to find examples of both. I think the common answer is, you need to care about the market, but when you look at lots of successful companies, they actually didn’t care about the market. In fact, it’s especially true when you have an initial idea but that was wrong, and you pivot it into something very different that turned out to be right. Well then almost by definition you weren’t passionate about that second idea, because that wasn’t the idea, and yet that was a success.

So I will say this. I think you need to love your customer. In other words, there are people who have contempt for their own customers. “We’re making this product because our customers are too dumb to do it themselves, so we make it easy.” That’s having contempt for your customers. I think that’s a really poisonous place to be. That happens a lot when you’re opportunistic and you’re like, “Yeah, we’ll get them here.” That doesn’t feel right.

But I think it’s okay if you didn’t have incredible visceral passion for the problem. You came to that. But you had better love the customer and love solving the problem. I think that’s probably true.

Courtland Allen 53m 10s

Solo founder versus taking on cofounders in the beginning.

Jason Cohen 53m 14s

That is a personal, personality decision. For me personally, solo’s better. I know a lot of people, where cofounder is better. So I can answer definitively for me it’s solo, but I think I absolutely do not believe there is one correct answer. That’s an introspective question.

Courtland Allen 53m 37s

What are some of the things that you can look at in yourself as a person to decide that being solo is better? Is that just something you have to try on your own, or can you kind of tell before you even get started?

Jason Cohen 53m 46s

I don't know. My guess would be introvert versus extrovert. If you’re extroverted and you have to do this incredibly difficult journey alone, that’s going to be contrary to your personality. If you’re introverted and you have to work with someone else for 10 hours a day every day and agree on everything with them, that’s probably contrary to your personality too. That’s just a guess. This is not an area where I feel like I know a lot.

Courtland Allen 54m 14s

Well I’m just one data point here, Jason, but I’ve started numerous businesses over the years. I’m an introvert. Every business that I’ve started with cofounders did not go well. The only thing that I started by myself, Indie Hackers, has done spectacularly well. So maybe there’s something to your theory. Okay, final question here, final dichotomy. Bootstrapping versus fund raising?

Jason Cohen 54m 34s

Again, the answer is, what is the goal you have for your company and yourself? What journey do you want? They are just simply very different journeys, and you need to pick a path that is consistent with the journey that you want.

The other thing I’d say is -- well, okay. So the default answer is bootstrap. That should be the default answer. Almost all companies are bootstrapped and should be, simply by numbers. Most things don’t get funding, and most things shouldn’t.

Courtland Allen 55m 5s

That’s very true.

Jason Cohen 55m 6s

So what I would say is the default is bootstrapped, and the reason to raise money is only if you meet a whole bunch of criteria, like you want that particular journey. That is exciting to you. You want to go big or die. You want to have the goals of highest growth with certain constraints, versus bootstrapping where the goal is to create a sustainable business.

Growth is important, obviously, but the profitability’s even more important because, out of necessity, and so you’re building a different kind of business and maximizing different things, so it just is a different journey. Some people don’t like losing some control over having an investor and some don’t care, so that’s another criteria.

So there’s a lot of criteria. Obviously, you shouldn’t raise money unless you really believe the company can be big, meaning be worth a billion dollars or more, which means having revenues of at least $200 million or more later, like in 10 years maybe. If it doesn’t give you that possibility because of the market, the product, et cetera, then it’s definitely not a good fundraising candidate.

So there’s all these criteria that if you meet all the criteria then fundraising’s maybe the right path. Otherwise, bootstrapping is the right path. And by the way, if you pick bootstrapping you can change your mind like me. Like you said, I bootstrapped three -- well, four companies, but the last one, two years in I then saw all these other criteria like the ones I listed, were true for me this time. They weren’t true for me before.

I made the right decision there before, even in hindsight. But this time, I’m still glad I started by bootstrapping. That was also still right, but it got to this point where I did want a different journey. The market was there to be had, which is unusual. That there’s a market that large that you could maybe be the leader in is unusual. This was a possibility, and so forth. There was a few things like that where, wow. This actually would be right, I think, for me this time.

Again, in hindsight, I think so, again, with the caveat that it’s not an A-B test. Nevertheless, I’m happy with the results and I don’t regret it so I think it was the right choice. So I guess, since you’re making me pick, and rightly so, I’ll pick bootstrapping because you can always change your mind, and because most companies should do that anyway.

Courtland Allen 57m 15s

Good answer, Jason. I’m going to have to steal that one from you. At this point in the episode, I would normally ask you to give indie hackers advice for how they can get started with their businesses, but we’ve already covered that. And in fact, I think this episode has been nonstop advice about what people should be doing, so why don’t we flip it around. Jason, what are some things that indie hackers should certainly not be doing during their journeys?

Jason Cohen 57m 37s

You should not read TechCrunch, even if you want to raise money. You should not pay too much attention to what competitors are doing. You should decide what you think is the right thing to do and do it. You should not charge too little. That’s just extremely common.

Another thing is this. There’s all these little quote/unquote rules about what a good business looks like, which may be true for many people, but I just feel like they’re way over applied. For example, they say, “Don’t do services, only product, because services aren’t valued as much,” and all these reasons.

I think that a SaaS product in which there are services to help, especially to help you get going but even ongoing, can be this incredible business because they’re paying you to help them be more successful and therefore be a customer for five or ten years. They would pay you to make sure they’re a high LTD customer. That sounds really good to me.

Now that’s not a Wall Street story. It’s a bad story for Wall Street. It’s a bad story to raise money, because of that rule of thumb and about gross margins. There are all the reasons that people give.

I just think that that’s not necessarily true for a lot of businesses and I like that model. I think it’s a good one, unless you want to be on Wall Street, and then I guess you can’t do it but why should you care what models work for Wall Street. Who cares, right?

Another piece of advice I don’t care about that’s common is, you need a unique product. It has to be unique in the marketplace. I disagree. I think there’s tons of bootstrap companies whose products are really not unique. And you can say, “Well they have this one feature.” I guess, but in a reasonable person just looking at the high level at the home pages would say, these are basically the same thing.

That’s fine. You don’t have to do that. In fact, I don’t want to name them, just because maybe it would be taken as a putdown, and it’s not at all what I mean, but I could easily name you companies that are bootstrapped and are in the tens of millions of dollars of revenue and profitable that are not unique. They’re just well-executed. They’re great companies, great culture. They don’t have a unique product. It’s a good product, don’t get me wrong, just not unique. Who cares? Maybe they were unique on some tertiary front.

So I don’t care much about unique. It’s good if it’s unique. I think that is a benefit if it’s unique because it helps you sell. It helps you differentiate so that’s good. But I don't think it’s mandatory, especially in well-established markets where there’s already tons of competitors, huge amounts of money being spent total in the market. That’s probably a market where you can add another competitor, by definition, and how unique can it be if it’s mature like that? So that’s okay.

So you can go make another time tracking software, another to-do list software. And you need to get attention. That part can be hard, obviously. But is this to-do list manager really all that different than the other to-do list managers? Maybe not. That’s okay. So that’s another one. I don't know. Isn’t that five? I don't know. It’s a number of them.

Courtland Allen 1h 0m 42s

It’s a lot of things not to do. I think the last one is fascinating. I want to ask you one last question about that one, because I think it’s something that will be helpful to a lot of people listening, because most people that I meet are just stuck in this idea phase. They think I can’t come up with something that’s totally unique that the world has never seen before, and so therefore I can’t start a startup.

Here you are saying that you don’t need to do something that’s unique. Why do you think people have this misconception that you need to stand out, and what are some of the ways that you can find success and find customers who will pay for what you’re doing when there’s something that already exists like that in the market?

Jason Cohen 1h 1m 16s

I think it is very, very common advice that you need something unique. And then we have words like your unique selling proposition, USP, and we plaster that and say you need that, almost as if it’s not unique then you don’t really have a USP, and so what are you going to do?

The truth is, kind of calling back to a point made earlier, the company as a complex entity. And all of these pieces of advice, including every single piece of advice I’ve given today, is an attempt to take a simpler view of some of it, like carve out some simpler piece, make some conclusion, and therefore come up with a rule of thumb or a little thing to follow. And that’s fine. It doesn’t make those things wrong at all. But it isn’t the full story. And that’s why any one of them can be wrong.

Because let’s take the uniqueness. If you have something really unique, well, then of course that’s going to be your lead when you market. People are going to go, “What? Huh?” and you’re going to beat the crap out of that thing. You may even be missing features that other people have, as long as you’re unique.

And so you’re going to beat that drum and you will build the whole company around this uniqueness, and that’s fine. And that’s great, but that does not mean, the other way, that you might not have something unique is impossible. Of course not. You can just see, right now there’s a lot of products that are not unique. So obviously it doesn’t have to be unique.

But then other things follow, like what would that mean about your marketing? What would that mean about pricing? Maybe your thing is not unique, but it’s cheaper. Maybe your thing is not unique, but it’s friendlier cause the other sites are all these cold, enterprisey horseshit no one can understand. Yours has the same features. It’s just people can understand the damn thing.

Or maybe some people like buying from smaller companies instead of big ones, and you can be that. Or maybe it’s not unique and it doesn’t even have as many features, but the quality is super high. “Yes, this other product has more features but it’s not that good. We have 20% of the features but it’s done so well, it’s such a joy to use it. If you can get by with those 20%, you kind of want this tool.” In fact, maybe you’ll buy both, cause sometimes you need the crazy complicated things, sometimes you want the simple joyous thing.

I do that with, for example, Excel and Google Sheets. Sometimes you have to go to Excel because Google Sheets just can’t do some things. But most of the time, Google Sheets is better, cause you can share it and it’s fast. So, so what? The answer could be both and so you can have a very successful non-unique product just because there’s something else that’s part of your value.

Maybe you’re better at marketing into a certain niche, so those people find you and identify with you, so even though the product is absolutely identical, it works. In fact, isn’t that how drop shipping works? People have drop shipping businesses. The products are literally identical. They don’t even make the product. They are drop shipping it from China. You can’t be more identical and non-unique than that. So how do they get business? The answer is they’re really good at marketing, so they just get in front of people. That could be where there’s differentiation of some kind, or that’s how you get in front of customers in some way.

So what I would say is, any rule of thumb like “be unique” or any of the other ones, including even my own advice about price, any of them, you can build a company where the opposite is true. But there are other consequences of that that you would want to be consistent with.

The only wrong thing, I think, is of all these different choices you have, you pick a set that are inconsistent. Like, “I’m not going to be unique. I’m not going to invest in marketing.” And eventually you go, “Well that just doesn’t make sense.” You need something. Something’s got to give here.

I think the decisions you make need to be self-consistent. That’s fair. But any given decision can do whatever you want. So if you’re stuck because it’s not unique, then say, okay, fine. I’m going to declare that I’m building a business that is not unique on purpose. You can change your mind later, obviously. This is a thought experiment, just a thought experiment. “I’m declaring my business will not be unique. I guarantee it. I can promise you it’s not unique.”

What else has to happen for it to be successful? You could look at other competitors and what they’re doing or other markets, and what are other commodity markets like and what do people do there to be successful? You get ideas for what are those other things? And you might get excited about those things.

I would much rather become an expert on X, online, and get business that way than be an expert in ad words. And so I’d like to differentiate through brand and recognition than based on ad words and features. Awesome. That sounds like a very consistent idea for a company to me. If you’re stuck on something, you can just assume the opposite or something like this, and then start asking what else would be consistent with that that I would have to do?

Courtland Allen 1h 6m 9s

But don’t worry so much about the common rules of thumb. Just consider the adjustments and the tradeoffs that you’ll have to make if you ignore those rules.

Jason Cohen 1h 6m 17s

Right.

Courtland Allen 1h 6m 18s

Jason, you’ve given us a ton to think about. Thanks so much for coming on the show. I feel like I squeezed you like a sponge to try to drop out every last drip of advice, and yet it’s still only a tiny fraction of what you’ve shared over the years on your blog and on the videos and talks that you’ve put out. Can you let listeners know where they can go to learn more about yourself and WP Engine?

Jason Cohen 1h 6m 37s

Sure. My blog, which I’ve been blogging on for 13 years is blog.asmartbear.com, “smart” like intelligent and “bear” like the animal because that was my third company, which I was at when I started the blog. It was called Smart Bear. That’s the name. So asmartbear.com is the blog. @asmartbear is also the twitter handle. And the current company is wpengine.com, so if you have a WordPress site you could take it with us and we’ll take care of you.

Courtland Allen 1h 7m 9s

Alright, Jason. Thanks so much for coming on the show.

Jason Cohen 1h 7m 12s

Thanks for having me.

Courtland Allen 1h 7m 19s

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