The Magic of Choosing a Great Market with Justin Jackson of Transistor

Courtland Allen 0s

Justin Jackson, welcome to the Indie Hackers podcast.

Justin Jackson 3s

Hey Courtland, it's good to be here, man.

Courtland Allen 5s

It's good to have you. You are the founder of Transistor where you provide podcast hosting and analytics, and I've got to say you guys are really killing it this year. You launched to the public in August of last year, 2018 is that right?

Justin Jackson 18s

That's right, yeah.

Courtland Allen 19s

About a year ago, you hit $10,000 a month in revenue. In April of this year, just three months after that, you doubled to $20,000 a month in revenue. That was July. We're recording this, what is it, August? And you're already tracking past something like $30,000 a month in revenue, which is amazing. So first of all, congratulations and super fun to watch all this go down.

Justin Jackson 41s

Thanks. It's been really a ride. I don't know how else to say it. When we launched, I thought it would take us about five years to get to this point. To have it happen faster has been really gratifying.

Courtland Allen 59s

This is just you and your co-founder, John, right? Just two people. No employees.

Justin Jackson 1m 4s

That's right. Just John Buda and myself.

Courtland Allen 1m 8s

And I believe you're entirely self-funded. So no angel investors, no venture capitalists. Just what you're putting into the business.

Justin Jackson 1m 14s

That's right. Although, we can talk about this later. There was a stretch where I was really feeling the cash crunch personally and I was looking at investment because it was almost overwhelming. But we managed to make it through that and now we're in a pretty good spot.

Courtland Allen 1m 39s

I'm making it sound like it's all sunshine and rainbows here. There's definitely a tough stretch before you launched where it was looking like little like deer in the headlights, "What's going to happen?" What about your expenses? How much does it cost you to run a business like Transistor?

Justin Jackson 1m 52s

We're aiming for gross margins of 80% or higher. One big expense that people wouldn't see on our top line revenue is we have affiliates and some of those affiliates bring us quite a bit of business and we pay 25% ongoing revenue to them.

Those affiliate checks haven't gotten too big yet, but 2.000 to 3,000 a month on affiliates and everything else is pretty standard. I could look it up. But we use all the same hosting providers. And one thing we always have to keep an eye on with podcasting is bandwidth.

Courtland Allen 2m 42s

Right.

Justin Jackson 2m 42s

And this is something I didn't expect. I thought that you just pay for the hosting. But I never thought, wait, you actually have to pay for these files to get transferred to millions of podcasts listening apps around the world. And a lot of these apps will download the episode regardless, whether it's user initiated or not.

If they're subscribed, they will get the episode. And these files can be 20 megabytes all the way up to 250 megabytes if they're really big. That was a big thing we had to figure out, is 1 cent or 2 cents per gigabyte transferred sounds so cheap, doesn't it? But when I looked into it, I realized, wait a second, this is going to significantly impact our ability to make this a business. We've had to figure out a lot of that stuff out.

Courtland Allen 3m 40s

So we've got a ton of different stuff to talk about. But let's start with Transistor itself. It's podcast hosting. What is that exactly and why are your customers using it?

Justin Jackson 3m 51s

Just like you need hosting for your website, you also need hosting for your podcast. Every time you click play in Apple podcasts or Pocket Casts or Google podcasts, those apps are downloading or streaming that file from a podcast hosting platform somewhere. A lot of people think you just submit your podcast to Apple.

Even Spotify, who they re-host the feed. You still need an original feed hosted somewhere. You need a hosting provider that can generate this RSS feed and also host the files. And then most podcast hosting providers also provide analytics. How many people are downloading? Where were they listening from? What are your most popular episodes?

How many downloads on average do you get per episode? We provide all of that inside of Transistor. And then we also provide the website. So if you don't want to manually update your WordPress site or whatever, you can host the podcast website on Transistor and every time you publish, we automatically update your website as well, which has been really popular.

Way more popular than we'd like sometimes because it also means we're in the CMS business, which is a little bit messy, but actually all of podcasting is messy.

Everything about it is messy. We provide hosting and analytics, but one of the main things we provide is customer support, helping people to get their podcast published and out into the world and answering all of the questions they have along the way.

Courtland Allen 5m 38s

You're doing something that I love. Something that I think probably most Indie Hackers should do, which is you're solving a very straightforward, dare I say, boring problem. People need to have their podcast episodes hosted somewhere. People needed to have their podcasts episodes hosted somewhere before you came along with Transistor.

In fact, this problem has existed and been solved by numerous companies for decades now. Whereas on the flip side of things, today we are living in what you might call the golden era of podcasting.

There are so many more shows, so many more listeners, so many more startups, in fact, creating solutions for podcasting, making podcasts more social, connecting listeners to each other and to hosts, providing a bridge between podcasters and advertisers and things like that. Why did you choose such a straightforward well-trodden problem like podcast hosting instead of one of these newer, flashier, unsolved problems?

Justin Jackson 6m 29s

I have so much to say about this. First of all, one of the things we noticed before we launched is that the market had momentum. What this looks like is we could see lots of people signing up for other podcast hosting platforms. For example, our first customer was Cards Against Humanity. John was working for them at the time.

And so he's in meetings and they're planning a new podcast that they're going to fund for a year called the Good News podcast. Already there's something interesting about this because here's a company who is spending money for a whole year. They're not just spending money on the hosting. They're paying two people's salaries. They're going to pay for equipment.

They're investing, let's say $200 to $300,000, probably, right off the bat on a show. Well, that's interesting because there's momentum there. You can see they're willing to spend money on this thing. And the more we looked at it, the more -- and I'd been podcasting since 2012. I'd noticed an uptick in people interested in publishing shows.

Similarly, like the whole Creator Maker Movement, I think, lends itself naturally to podcasting, but also to corporate PR communications people were starting to read all of these New York Times op ads about podcasting and they were taking note and they wanted to start shows. So you had this movement that we could see.

And I think, in most cases, you do just want to solve the most boring problem that has the most momentum. Meaning, if I have to spend a bunch of effort, this comes from April Dunford, actually. She's written a book on positioning, and she says, if you have to spend a bunch of effort trying to communicate what your product is, specifically, what category your product is in, you've already lost me because human beings are lazy.

When we encounter something new, we immediately want to use something we already know about to put it in a box. And so when I say, "Hey, we provide podcast hosting. It's kind of like hosting for your website, but it's for your podcast" Instantly you can put that in a box. And if you're at all familiar with podcasting, you know what a podcast host does.

I don't have to communicate anything else. "Oh, that's interesting. I might check that out. I might recommend that to somebody. I might use that myself." I've been exposed to tons and tons of podcasts, add-on. Add-ons can work, especially in a marketplace that has tons of momentum. So the Shopify app store. You've got thousands, millions of stores who are already spending money who want to make their store better and there's tons of momentum there.

You can see it. You can go into the Spotify app store and release a new app and if it helps people make more money or what have you, then they'll probably use it. But something innovative in podcasting, like if you're creating a new category within the podcasting space, you're going to have to spend so much energy and time communicating, explaining, convincing people what that thing is.

And if you're bootstrapping especially, you don't have that much money or time. That's just the way it is. And I think I see a lot of folks spinning their wheels on things that seem like a good idea. For example, lots of people notice that there's no common platform for people to leave comments on podcasts, for adding membership options. There are all these add-ons you can add on.

Part of this is because podcasting is distributed. It's built on RSS and there's a bunch of different podcasts listening apps and there's a bunch of different podcast hosting providers and there's a bunch of different directories. People look at that and go, well, this is broken, right?

This is so complex. We need one unified place where people can comment and discuss their favorite episodes. And Mubs just launched something like this called Pod Hunt. And I think he's actually doing something different there that might work. But the reason it often doesn't is because you just don't have the platform. It's distributed.

You don't have a good, single channel that you can tack onto and get the traction you need. And also, you're going to have to spend a lot of time convincing people that they need this in the first place. And the beauty about podcast hosting is we just don't have to spend that time. People are already searching best podcast in Google.

If you're creating something that doesn't exist that they wouldn't even have the idea to search for in the first place, you're already way behind. You're already missing out on one of the best channels for Indie Makers, which is just people typing stuff into Google, right? So I'm happy to be in a boring, competitive niche.

The other thing, nice thing about a boring, competitive niche is if you show up and you have any personality at all, or you're doing anything that's fresh, just by being the fresh face, that the new kid on the block, you're going to get attention already. Because if you, "Oh, hey, there's someone new, Ah, Libsyn, they've been around forever, They're old. Let's check out this new thing."

Courtland Allen 12m 42s

They just look old.

Justin Jackson 12m 44s

Yeah, it just looks old, right? And some people love using Libsyn and that's fine. But you are automatically going to get new attention because hey, you're this new player in this old, boring market. And if the market is big, you can carve out just a tiny little bit for yourself and make a good Indie business.

Courtland Allen 13m 4s

There's a lot of good stuff there that you just said that I could also talk about for a very long time. I really love that you painted this picture of how most people think about building a business, how they look at a market like podcasting and look at things that are broken. And when I hear description about what people think, number one that's spot on, but I think people are too obsessed with the product.

They look in the product, they look at the way that things are built and say this could be better. They're probably right. This could be better, but that's not the only thing that goes into a business. There is also the market to think about this. There are also distribution channels to think about and if you build a better product but there's no market for it, there's no way to get it out to people, then it doesn't really matter.

You don't really have a business. The other thing that you said that really resonated with me is the fact that as an Indie Hacker, as a fledging founder, you don't have a lot of time. You don't have years and years, you don't have millions in funding to try to convince people that this problem exists, and they should take it seriously and then try to sell them your solution.

Ideally, they should already have done step one and you could just move on to step two. I get so many pitches about how people can make the Indie Hackers podcast more social, et cetera. I'm like, “Why do I want that? Why do I care?” But Transistor comes on the scene and immediately I'm like, "Hey, I want Transistor. I want a newer, better podcast host." I already know how to think about that.

There's no mental calculus to do in my mind. And even then, even when you're sort of solving this problem for which there's already latent demand, it still takes a while. It wasn't like immediately out of the gate Transistor was killing it. You guys still had a while where you hadn't caught on.

So even resolving a boring, straightforward problem, you have to take the time to solve it properly and get your first customers. So I think it's really easy to underestimate how long it can take to get started with a SaaS business.

Justin Jackson 14m 35s

Yeah, it's true. But the market will help with that a lot. I'm actually really glad that Sahil from Gumroad articulated this and I just keep repeating it because it is so true, which is, "The market you're in will determine most of your growth." I think people actually misunderstand what he's saying there.

What he means is that the market you're in, the market you choose, the market you're targeting, that's going to determine how fast you grow, what the bounds of growth are going to be. And think about it as a like a room that you're slowly filling with a balloon or quickly filling with the balloon. If there's lots of space in the room, you could blow that balloon as fast as you want, and it'll grow really fast.

But once it hits the walls and the roof, it'll stop. Your growth will slow down. Right now in podcasting, it feels like we're in a room with lots of space because we're pumping air as fast as we can and it just keeps growing and growing and growing. We know eventually the market will hit a saturation point and it'll be like, "Okay, now we're going to grow slower."

And that feeling of being in a market that's growing rapidly. Well, first of all, this is the first time I've really felt that. And comparing it to the other things I've done and then thinking about this, it's like, I never knew what Derek Sivers meant when he was like, "Hey, instead of like trying to create demand, you're just trying to manage all of this demand," right?

So instead of you trying to push this rock up hill, or actually instead of you trying to pull the market towards you, with a rope, you're just tugging on this thing, come on, get over here. Everything comes easier. All of a sudden, you're not pulling it all. The market is just showing up at your door.

And I think sometimes folks build a product and then they're like, "Okay, who's this product for? I'm going to bring it to the market. I'm going to bring this product to the market." I think in most cases, the market actually just comes to the product. You launch something and if it's something where there's demand, where there's growth, like Sahil says.

Where there's a magnetism already there, they will show up at your doorstep. You don't have to go knocking on their door like a traveling salesman going, "Hey, you gotta buy this new thing." They're already saying, "No, no, no. I'm going to look you up on Google. I'm going to drive my car down to your shop and I'm going to show up where you're at."

And I keep trying to articulate this because as someone who's been trying to do business since -- well my whole life. The difference between being a traveling salesman and showing up at people's doors and trying to convince them to buy and having people just show up at my door is night and day.

And the growth potential of a business, even if you're an Indie entrepreneur, you still need growth. In fact, in some ways you need to grow, maybe not as fast as a venture-backed company because they are basing it on user growth or whatever. But in terms of revenue, you want to grow as fast as you can, especially in those early days.

Because if you don't make enough money soon, you might starve. Your savings might run out. And so these principles are important. We can't afford to make mistakes, especially in terms of who we're targeting. Now that I've gone through this process, I'm advocating market first as opposed to product first.

And in some ways, I've been saying this for a long time, but it's become particularly vivid now. It's about the market and if you can find a market that's hungry for something and then just provide the solution that they're hungry for, they will show up to eat. If I want to continue to metaphor.

Courtland Allen 18m 58s

I love that you're so enthusiastic about it. I think it's the kind of enthusiasm that can only really come from having experience both sides of this equation and seeing how hard one is and then how amazing the other is.

I think it'll probably be obvious to listeners somewhat from the way that you talk about these things, the way that you've carefully considered things that you have spent a lot of time helping to educate SaaS founders and helping to teach them, especially bootstrappers. And you've done that primarily through content.

I think you first popped onto my radar three or four years ago when I first started Indie Hackers and I've always mentally put you in a similar bucket to the one that I place myself. You've been writing, you've been blogging, you've released courses, you've written books. You started at least four podcasts.

I think I'm subscribed to at least one of your newsletters. I want to talk about learning for a second because when you're in this sort of educator role, you're also doing a lot of learning yourself. A lot of it is very theoretical. You're not actually building a straightforward, normal SaaS business yourself. Now you're actually at the helm of a SaaS business of your own.

How much does one learn through reading and talking to other people versus how much are you learning by actually being in the driver's seat yourself? Learning from experience.

Justin Jackson 20m 5s

I think those are kind of symbiotic, is that the right word? Because when you're actually doing the work, some of my best ideas for blog posts came out of what I was doing as a product manager during the day. Man, this is frustrating. Wow, this is hard. Oh, wow this worked. This didn't.

Those insights felt so powerful and vivid when I was experiencing them, so I'd write about them. But at the same time, you're also getting exposed to other voices that help guide you along the way. I remember the first day at my job, first day in the software business, 2008, my boss handed me a copy of Getting Real by 37 Signals. And that book just kind of blew my mind open to all of the ways you could run a business and all the ways you could build a product.

And lately John and I have been discussing their new book quite a bit, Shape Up, which I highly recommend. Being exposed to other thinkers, then it kind of informs what you do and what you try, what you experiment with. I think they're both necessary.

Part of the learning process happens through experience, which then sometimes prompts you to do some research, which then sometimes prompts you to get all of these other perspectives and kind of pull it in. I think also, I've always been someone who likes to learn in public. So when I encounter something that's difficult, for example, when I was thrashing about in the early days of Transistor, we haven't launched officially yet.

We’re it's $750 MRR and I'm starting to feel the money crunch. My wife is asking me, “Okay, you've been working on this for six months, you know, when are we going to see some money?” And I'm just kind of thrashing in public. Like, why do I do about this? Do I get investment? Do I hold on? And in that process, I brought in some people that I trust who had different perspectives.

Primarily in this case it was DHH and Jason Cohen. And in some ways, I moderated this public discussion that they had about the different ways to think about funding or not funding your business early on. And that was really helpful to have these folks who are experienced, who had different points of view, give me their thoughts.

I was able to kind of synthesize that and go, “Okay, that's what they're saying. Now for Justin Jackson, what does that mean?” And then make a decision and move on. I think there's immense value in figuring things out in public and then sharing those things with other folks because it might resonate with them, too.

Courtland Allen 23m 15s

One of my favorite talks is by Gail Goodman. She was the CEO, I think, of Constant Contact, an email marketing company. It was called,” The Long, Slow SaaS Ramp of Death.” The talk was basically about how long it takes to get to scale and how to navigate that slow growth period.

You're talking about the first six to 12 months of Transistor being kind of a slog. Right now you guys are crushing it with revenue growth, but early on it was pretty slow going. Why was it so slow and walk us through these early days and what you were thinking the time?

Justin Jackson 23m 46s

The original calculation I did that prompted all this angst was – bare metrics has this forecasting tool.Forecastbaremetrics.com. I had a conversation with my wife. My wife says, “Hey, how are things going? You and John have been working on this thing. You're putting all your energy into it. What's happening?”

And I go, “Well, we have 50 Beta customers and right about $750 MRR.” And she goes, “Okay, well how long until it's paying our bills?” And I go, “Well, let me figure that out.” I'm thinking we're going to launch August 1st, 2018. What's the best-case scenario. Well, maybe best-case scenario is that we double MRR. Okay, that'd be $1,500.

Okay, well if we grow at 10% month over month, that's pretty good. And we have 5% churn. That's probably about right for our industry. How long will it take us to get to $20,000? And it was 60 months. And just looking at that, I thought that is such a long time to wait for a paycheck.

I think it would have been fine if John and I – I always joke about this, maybe I should stop, but I always joke that John and I are old, meaning in our case it means I'm going to turn 40 next year. So we're both in our late thirties, just hanging onto our 30s by our fingernails. Maybe I say we're old because I kind of feel like often we're the oldest people in the room when it comes to tech.

Courtland Allen 25m 27s

Why do you look younger than I do? That's ridiculous.

Justin Jackson 25m 33s

I've got all sorts of face filters going on right now. I've got four kids, we both have mortgages. We've been in this industry for a long time. Sometimes I'll say, “I feel like Rocky. I feel like Rocky in Rocky III, like I've just had a bunch of battles. I'm all beaten up, my joints are sore and I'm just looking for something to carry me through.”

And so all of this feeling is kind of weighing on me. I think it was like, “Well, what's gonna happen?” And then we launched and instead of growing 10% month over month, we grew 20 to 30% month over month. Which, at the beginning it still feels quite small. When we launched, we did get to 1500 MRR, but then the next month it was like 1800 or something and then the next month it was like 3000 and you're like, “Okay, that still doesn't pay our bills,” but all of a sudden you hit 10 and then that 20 to 30% starts to really pick up.

Like you said, we went from 10 to 20 pretty fast. And in some ways Gail Goodman’s talk, which was great, didn't apply to us as much because the long, slow SaaS ramp of death is five years. But ours was like a year and a half. And I think this is another reason, and I want to be careful here because I realized in some ways we're just in a lucky, fortunate situation.

But on the other hand, like Jason Cohen says, “Bootstrapping is already hard. Why are you making it harder?” I think Indie Makers can make it way easier if they just choose the right market that has momentum already, that has good distribution channels already. You definitely have to pick your battles. I think project management software is hard that that market would be difficult, but maybe there's still a chance.

But something like WordPress hosting. You've got Jason Cohen there. Something like email marketing. You've got ConvertKit there. There was already a 3000-pound gorilla in that space and Nathan carved out a space for him and his team. There are certain markets where folks can come in and make a big enough splash that they can attract customers to them without as much effort as trying to build.

When I tweet about this stuff, people reply “Well, what about the light bulb? What about the automobile?” Yes, there are certain inventions that required an enormous amount of capital or an enormous amount of time. I would say leave those for other people in most cases. You can do that if you want to sign up for that road. I would say read The Walt Disney biography because that book is just about Walt Disney, who believed in this new technology called animation that nobody else believed in and the slog of his life.

He ate shit for 10 years before he got to Snow White, Ten years. And if you read it, it's year after year of bad deals and just grinding out these little shorts for theaters that nobody cares about. Nothing is working for them. They finally get Snow White and that's great. And then they have another trough of sorrow that lasts forever.

If you want to sign up for that, if you wanna sign up for you to be the next Elon Musk, that's fine. Go do that. But recognize what you're signing up for. If you're a parent, you have kids and you want to have a good lifestyle, don't do that. Instead, build a product for an existing market that has momentum. There's already movement. You don't have to create any of that.

It's like having your boat plunked into a rushing river where you don't really have to paddle that much. You just have to steer, as opposed to being plunked into a stream where you're really paddling hard. Maybe that's too Canadian of a metaphor.

Courtland Allen 30m 15s

I think I get it. I like that you mentioned earlier that one of the good things about learning from other people is that, when you're doing things on your own, you're going to have a very limited perspective. You're going to have your own experience and that's it.

But when you read a book by 37 Signals, when you listen to a podcast, you get to hear all these other perspectives with different ways to do things. I think for the longest time in the startup landscape, the only perspective we ever really heard was the high-growth, VC funded startup perspective, which tends to equate startups for better or for worse with inventions.

The idea that you need to do something world changing, and it needs to be tremendously huge or you need to just die and then come back next time. And I think one of the things I'm trying to do with the Indie Hackers podcast is show people a different way by showcasing stories like yours where it's okay to not invent something completely new.

That's not what you need to be going for. We're talking at a high level about being part of a really fast-growing market, about being part of an ecosystem that allows you to not make it harder on yourself as a bootstrapper. One of the things you've talked about is looking for something that's growing and has momentum.

We've talked about looking for things that are, not to say old, but established, where you can come in and be solid or sort of breathe some fresh life into it and stand out from the older players. One of the things that I look for a lot is look at where money is changing hands. So you might say, “Okay, podcasting is growing as an industry, but what are people actually paying for?”

They're probably not paying for sharing podcasts on Twitter. That doesn't seem to be where most money is changing hands. It seems to be advertising, it seems to be hosting, etc. So even within a fast-growing market, you can narrow in on where the actual value is by seeing where money's exchanging hands.

What else would you say people should look for if they're trying to follow your advice and choose a market that's healthy for their business?

Justin Jackson 31m 53s

Yeah, you're so good. This is so good cause this is exactly, you want evidence. Where's the evidence? I love this book by Rob Fitzpatrick, the Mom Test.

Courtland Allen 32m 8s

Love that one.

Justin Jackson 32m 9s

It's a great book. I've been trying to articulate that idea again and he just kind of put it so clearly. You can't base your business on what you think people might do. Or even worse, what they say they might do. You want to see, what are they doing right now. Or what have they done in the past?

I like to observe, or in conversation go, “Hey, what's the last thing you paid for?” If you are starting a podcast, for example, you shouldn't ask, “Would you listen to a podcast like this?” I would say, “Hey, what are the last five podcasts you subscribe to and why?” If they're listening to a lot of podcasts like it, they’re listening to Product Hunt Radio, Indie Hackers, Build Your SaaS, Art of Product.

Those were the last four podcasts you subscribe to? It's likely you'll subscribe to a new one if it's different enough, or it has a unique perspective on that thing. But there's already momentum there, you know, from their prior actions that this is something they're likely to continue to do in the future.

We could see, for example, Cards Against Humanity is investing a bunch of money in podcasting this year. What are they going to need? They're going to need the staff. That's going to be most of the money. They're going to need equipment and they're going to need podcast hosting.

When John is in that meeting, he can hear people go, “So where should we host this thing? Should we host it here or over here?” And it's visible. They are about to make a decision. They're about to make a decision and they've probably made this decision in the past with other things. There's a template there that I think you can start to recognize.

If you are working a full-time job, get yourself in meetings and just listen to how those decisions are made. If you're in Slack and the boss goes, “Hey, we need something that will help us generate graphics faster. What have you folks used?” And people will say, “Oh, I've used Canva. I've used –" they'll start to recommend things.

That's where product decisions are being made. And it's actually one reason, even though it's super distracting, I like to be a part of multiple Slack groups. Because all the time people say, “Hey, what have you used for this? And then you get to see what people recommend and why they're recommending it. There's momentum there. You can, you can recognize it.

Those are some things I've used to try to quantify, “Is something going on here?”. Another thing you can do, too, is, when we were going to launch Transistor, we knew we had Cards Against Humanity. And so before we had really finished the product, I started going around going, “Hey, John and I are starting a new podcast testing platform. Cards Against Humanity is our first customer.” That's nice social proof there. “Would you switch to us if we offered you this?” And I probably asked 20 or 30 people. I'd say about 10 to 15 said, “Yes.” That's a good sign. I had this group of people that said, “Yeah, when you launch, I'll switch for sure”. Some of them were switching for other emotional reasons, like relationships I'd built up over time. Just the fact that they were willing to do that. I would switch for something with an updated player, a better embeddable player or better analytics. Yeah, I'll do that. It's like a no brainer for them. That was a good sign. You think I missed anything there? Is there something that you've seen work that I'm not talking about?

Courtland Allen 36m 10s

There's nothing obvious that I think we're not covering, but I think it's, it's a lesson that I hope people take to heart and learn vicariously through our conversation rather than having to experience trying to prove their product to somewhat resistant customers over and over again for years before they finally decided the market actually is important.

There is a lot you can do early on to analyze the market and decide whether or not it's a good one before you jump in and force your will on everybody else.

Justin Jackson 36m 34s

A counter example would be project management software, which I think is a really hard market. You could prove me wrong, but from my observations it's difficult. And the reason it's difficult is if you go to someone on a team and listener, I'm going to ask you this question right now through the airwaves. “When was the last time your team switched to project management software and what did that process look like?”

Now if you're like most teams, you'll go through a list. Well first we tried Jira and then we tried Basecamp and that didn't work because Al in engineering didn't like it. And then someone recommended Monday. And so we tried that. There's a list of products that people have tried. As you're going through this, you're like, oh wait, there's a few things about this market.

Number one, decisions are made by committee. That's a bad sign. Janet in engineering likes it, but Mark in marketing doesn't like it and they have to duke it out. This is not an easy decision. It's made by over a lot of months. People are trying lots of them and are often not satisfied. That's a bad sign, too, because it's going to take something really special for people to switch.

I think these are the kinds of things you can observe and take note of before you jump in. I've worked for a project management software company and I know from experience how hard it was to get people to switch. You can get that information just by asking people, “When was the last time you switched? When was the last time you switched before that? How hard was that? What process did you go through? How much did you pay?”

You can ask those questions now based on their past behavior and decide, “Is that something I want to sign up for?”

Courtland Allen 38m 37s

The common theme behind everything you're saying is what you mentioned earlier, which is look for proof. Don't just look at what people are complaining about because that's not proof that they would use your thing. Look at what people are actually switching to, what they're actually recommending, what they've actually tried in the past.

You can't argue against that. If someone's tried something, they tried it, they paid for it. But if someone is just complaining that they get too much email or Slack is too distracting. I've started project management companies in the past. That was a bad idea. I started companies in the past to try to help people with email overload because so many people were complaining about feeling overloaded with email. Guess what? No one's paying to alleviate that pain no matter how many people complain about it. And so it wasn't a good signal. I was sort of talking to customers, but not talking to them in the right way.

Justin Jackson 39m 16s

They come to you and they're complaining, “Oh man, I'm so overloaded by email.” “Oh, so what have you done about that?” “Well, nothing. I just want to talk to you about it.” Okay, well, if you haven't been motivated enough to search for a solution, that's a bad sign. If you are motivated enough to search for solution, but all you wanted were free solutions, well that's not a good sign either because Indie Hackers need to make a living off the things they create.

So these are conversations you can have right now, and you really can't delude yourself. You can't just base it on some aspirational dream that you have that this will make a difference because it has to because I thought of it and because it's so clear this is broken it.

There needs to be something more than that and that's why I liked this idea of, okay, well what are people actually doing about it? Prove it to me that this is such a big deal in your life that you've already shown some initiative in finding a solution and paying for it.

Courtland Allen 40m 25s

I want to talk about a couple of the inflection points and Transistor’s history with how you've grown your company. You already covered one, which is in the very early days, how did you get your first Beta users? A lot of that came from you reaching out to people and sort of doing things the hard way.

But in August of last year you launched and that's when you sort of flip the switch to turn on growth. What was that process like? How did your launch go and how did you go about getting customers in a different way than you were beforehand?

Justin Jackson 40m 49s

I think our first group of customers, like our first hundred, maybe about 75% of those came from my audience and network. And then some of them came from John's network in Chicago. He was plugged into Cards Against Humanity, which was kind of a creative hub, lots of folks in that community.

And initially I thought, you know, I've built this great big audience that's going to be a primary driver of our growth going forward. And it turns out, no. We still get customers from my audience, but it's not the primary driver of growth. It helps, for sure. But it's not the primary driver.

We launched on Product Hunt and that made a big splash. But the real kind of things that that helped were number one, our affiliate program. We had a few folks that signed up that drive a significant amount of business to Transistor.

Also just search like people searching for podcast hosting and looking for something fresh and new. What else really helped? Going on podcasts helped as well. So I've been surprised by how many folks that, “Oh yeah, I heard about transistor on a show that you are on and it sounded great,” or they connected to our story.

That was another thing. We've been chronicling our journey on the Build Your SaaS podcast. I don't think it will ever be the main driver of your business. I think search engine optimization needs to be the first for most businesses. Word of mouth needs to be a pretty big one, too. But the emotional connection that people can have with you as founders or as a company,

I think shouldn't be overlooked. I would say about 20 to 30% of our growth, I'm just guessing, but 20 to 30% could be attributed to us sharing our journey to being open, to talking about our struggles to, saying this is what worked, and this is what didn't. Some of the folks listening to our podcast where we just every week say, “Oh man, well, this was hard.”

They're cheering for us. And they work for big companies with big budgets. And so when the boss, when they're in those meetings where the boss is saying, “Hey, so what should we use for podcast hosting?” They go, “Oh, you know what, Transistor would be great.” And it's because they have an emotional connection with us.

So again, I don't think that should be the primary driver, but I think it's often overlooked. The big ones were search engine optimization. The affiliates have really helped. And that was almost an accident. My friend Kyle Fox was building this product called Rewardful and he begged us. This shows how much tenacity you need to have.

He had to, he's my friend and he had to reach out like 10 times before I finally got that code snippet in our website and was working. So he reached out and we wanted an affiliate program, but it got moved forward because he was so tenacious. And then I was on a Matt Giovanisci podcast and a lot of affiliates listen to that show I guess, and they signed up from that.

You could call it luck, but it's also just kind of doing the work, getting out there, telling people what you're working on, telling people what's available and making some sort of connection with folks so that they are motivated to sign up.

Courtland Allen 44m 39s

That's a lot of different things that need to be going your direction. I want to talk about those things. I want to talk about a few things you've tried that didn't work. First let's talk about SEO a little bit. You mentioned that SEO needs to be first. I'm increasingly being moved over to this viewpoint for kind of the same reasons.

What you said, market is more important than product. Market is huge and the upper bound for how big you can grow. SEO is also probably the biggest channel online. So many billions of people are running billions of searches on Google every day.

It's ridiculous. It's such a driver of traffic and as Indie Hackers has grown and I've looked at other similar sites and how they've gotten big, it almost always seems to be they're really good at SEO. How have you gotten transistor onto the SEO radar in such a crowded market where there's so many other podcast hosts, you have so much more longevity.

Justin Jackson 45m 25s

What helps in certain markets, to start, is having some good affiliates. Because if, for example, you search best podcast hosts, that first page is either ads or these blogs that review podcast hosting sites. By having a relationship with some folks that are affiliates, they want to make money off their blog, that increases the chance that they're going to write about you and link to your site.

That helps your overall search ranking. It's going to lift your boat as well. The other thing has been to do experiments. I'm almost hesitant to talk about this one because it's been a good hedge for us, but I will anyway. Private podcast hosting as a keyword was something I recognized using tools like Ahrefs and other things.

I started to write content about how to start a private podcast and that’s driven a lot of qualified traffic to us. Now it's not a ton of traffic but the people that click end up on our site and end up starting a conversation on our chat widget and then end up converting into customers. So that was an opportunity I observed just by using some of the tools.

Once you get some initial traction, this is why I think it actually does make sense to launch on Product Hunt and get that splash and get people kind of thinking and knowing about you. Because when they show up on your site, you're going to start to notice trends. One of the ones that we noticed was a lot of folks were asking, “Hey, can you do a private podcast for, you know, I want to do some trainings with some employees.”

And so once we recognize that and we launched the initial feature and people responded to it, I said, “Okay, well we should double down on this.” And then you write the content, you put it out, and then you see what happens. And I'm not sure. Private podcast hosting. We're still on the first page for that for private podcast hosting. That was how we kind of fell into that one.

Sharing your story helps too, because if you're sharing an interesting journey in a transparent, vulnerable way that resonates with folks and it's more likely that they're going to write about you, they're going to want to interview you on their podcast, they're going to want to share your story, and that, in turn, turns into links for your show.

Sure, there's a lot of competition for SEO in terms of podcast hosting, but it's not like it's unreachable. We can compete in that space. We can write good content, we can help people to start a podcast. For example, how to start a podcast in 2019. Well, I'm going to write about that and start sharing that and hopefully, eventually, people start to find it and land on our site.

Courtland Allen 48m 31s

It's cool to hear how harmonious all of this is for your business, your product, your market, your distribution channels. You're not thinking about these separately, but they're all sort of informing what you do in one particular area. So the fact that you're using affiliates is actually helping you with SEO.

The fact that there's certain SEO keywords that drive a lot of traffic is actually shaping the direction of your product and helping you decide to implement features for private podcasts, for example. That all comes together.

It all sort of works together and builds on itself. And so it's not shocking that you're growing so quickly because not only are you in a great market, but you're also making sure that your distribution channels and your product development decisions sort of take full advantage of what the market wants.

Justin Jackson 49m 11s

This is, by the way, a market decision as well. Certain markets have certain distribution channels that work for them. And in the hosting market we could already see this. So when I talked to Ruben Gamez about, “Hey, I'm thinking about launching Transistor, what do you think?”

He goes, “Hmm, this sounds a lot like the hosting business in the 90s.” He was right. It's a lot like the website hosting business in the 90s. And so his instructions to me was, “Look at what worked for them back then and try to replicate some of that.” And that's a good sign. This market has a distribution channel that really works. It is search.

So this is why choosing the market is helpful. If you choose a market that doesn't have any channels, then you're already going to be grinding a bit.

Courtland Allen 50m 4s

And it's not that many things to think about. Like before you start your company where you've listed three or four things. It's not like you've got to do eight months of research here.

But if you think a little bit about your distribution channels, a little bit about your market and the customer problems and other companies that are solving this problem and how much money they're making, etc., that can solve you many years of heartache and pain from starting the wrong business and not being able to get at the customer's hands.

Justin Jackson 50m 27s

The thing that makes it hard is you have to pass each of these things through an additional filter and what ends up on the bottom can sometimes feel like, “Wow, there's nothing really here.” You need the right market. You need a market with distribution channels. You need a to build a good product for that market, for sure.

Then you need founder fit with all three of those things. Founder product fit, founder market fit, and founder channel fit, we'll say. That's where people get frustrated because they're like, I just want to start a business and I'm just going to choose something. And my recommendation would be to just keep looking. Yes you want Checkmarks on each of those things.

But when you finally find something where there's alignment, again, like I feel like I'm finally somewhere where there's alignment between all of those things. You know, before there was founder product fit, but there wasn't product market fit in the sense that there wasn't a good market for the product.

Like all of these things have to all be cohesive. I'm so glad I waited and I felt the pressure as this, as this guy that's almost in his forties and I'm looking at the graph of who starts startups and it's all people in their twenties and thirties and there's this big drop off when people get into their forties. I'm like, well maybe it's just not going to happen for me.

But this continual exploration and waiting for the right alignment to happen is way better than investing years and years and years in something where one of those pieces isn't quite right. When there is alignment, like you said, so much of this just feels fluid. For me it feels like, “Oh yeah, this is the business I was meant to run.”

It all just kind of works out. It's not as stressful. I'm not having to pull or push as hard. Every day I just wake up and it feels natural. It's still hard, but it feels natural. It's like Usain Bolt was born to run. He still has to train hard, but it feels natural for him. If you look at him run, it's like, “Yeah, that's natural,” and now I feel like I'm in a similar place.

I waited and now we've found this thing that is a fit and that process, that journey for me was basically two things. Creating things and putting them out into the world and number two, building relationships. That's what helped me get to where I'm at now. When you're creating things, you're trying out different stuff, you're seeing what resonates, what doesn't.

You're seeing what distribution channels work and what doesn't. And when you're building relationships, you're opening yourself up to new opportunities. I met John in 2014 and stayed in touch with him. Now we have built this company together. But if I had never gone to XOXO in this case, in Portland, and I'd never opened myself up to meeting new people, I would've never met him.

And that relationship has now become this crucial thing. If he hadn't said, “Hey, Card's thinking about starting a podcast, I'm thinking about building this thing,” then we would have never arrived here. So sometimes when you're looking for fit, the journey to get there is to build relationships and to keep making stuff, keep putting stuff out into the world.

And that, in turn, sometimes helps you build more relationships and move forward. Really, I don't know if you can do it any other way. I'm saying that's what's worked for me, but I think that's actually what works for most people.

Courtland Allen 54m 17s

Yeah, there's different levels of luck involved. And I think it's possible to just miss what's going on. But I think if you take the more methodical, considerate approach, which you've taken, which is you’re aware of the different levers that you can pull, you’re aware of the different mistakes you want to avoid, you can sort of think about it upfront. And then I've interviewed quite a few people who just got lucky their first time out of the gate, didn't really think about things, but still all the stars aligned. And the consistent thing is, all of those factors have to align. You can't build a car with one wheel that works. The product wheel is working great, but the market wheel and the distribution wheel are both flat. Like that doesn't work. Your car is not going to go very far. And so I think you're right. You really have to do it this way. There's really no alternative.

Justin Jackson 54m 57s

I know it's frustrating for folks. I know there's people listening right now going, “Oh, I've been looking forever”. They're just so frustrated because they want to find something that works. I just want to encourage people to keep looking, keep challenging themselves.

The thing that holds people back is that they end up just choosing something because they want something so badly and it's not a good fit. And then they get stuck in that rut for so long. And that's what ends up holding them back is that they're in an idea that just isn't a good fit. But when there's alignment in all these things, when I heard John was going to build this on his own, I begged him to let me be in part of it because I said, “I was made for this.”

John, you gotta trust me, man. I know if we team up, we will be like Voltron. It will be incredible. I just could feel it. Everything was aligned. It wasn't like one day I was daydreaming, and I said, “You know what? I should really start a podcast hosting company.” It wasn't an idea I just had out of the blue. It was something that came out of a relationship.

And then years and years of experiences. When the opportunity came up it was like, this is it, this is it. There's alignment in all of these areas. And we still didn't know when we launched it if it would work, but all the signs were so good. And then when we did a little Beta launch and the signs were still good and then we did the actual launch and the signs were still good.

It feels better. And for the first time in my life I actually feel relaxed. I feel like I'm not working. super hard to launch another course or super hard to try to build software on my own. This just feels right.

Courtland Allen 57m 8s

You look relaxed. You sound relaxed. I've seen videos of you on YouTube where you are wound up, you are just like so full of energy and it's like I could tell you're passionate about it. But there's pressure on you. Right now you are as relaxed as I've ever seen you.

Justin Jackson [00:57:22] A lot of other people have said that to me, too. My Dad just said that. He was visiting, he's like, “Man, you seem relaxed.” And it was because before I was in this constant cycle of having to launch something new, mostly because I needed the money. And when that is the primary driver, when you are – there’s this desperation scale.

When you become desperate, this idea has to work. But things aren't aligned. You're not thinking clearly. Things aren't quite right, that you're just setting yourself up for a grind. And we all know business owners like this. We all know somebody who started a cafe 15 years ago. They did it and maybe they were passionate about it, but they didn't consider the market and they didn't consider the channels and they didn't consider all of these other things.

And now they'd been doing it for 15 years and they should have got out of it right away. But instead they stuck to it and they're just ground down. They started a business to give themselves a better life, but they didn't get it. And in some ways, I'm lucky that I was able to get out of that because I was in a business where I wasn't in alignment.

And for sure they're going to – a few things don't happen there. And you know, I'm a miserable person somewhere. There's some definite luck there. But I can also see that waiting for the right thing was a good decision. Now I feel fully invested in this, which by the way, still might not work out.

But I also have this peace about that, too, which is, okay, if this all blows up tomorrow, will I have enjoyed the journey? This is something else that Jason Cohen said that just stuck. He's like, you should be having fun. Steve Jobs said this too. Make sure you are so passionate about it. Because building products is so hard. If you're not enjoying it, you're not gonna survive.

And so if this all blows up tomorrow, I'm still going to be thankful for it because I enjoyed the journey. From the beginning it just felt like, man, that was great. That was such a good experience. Building that product with John, doing the things we did, serving those customers, helping them get their audio out into the world, amplifying these voices. This is just something I can believe in. That's given me a lot of peace.

Courtland Allen 1h 0m 4s

Well, I'm happy for you Justin, and I think everyone listening will be, too. You've really put in the reps. As I listed early, you have a long career of countless launches, podcasts and courses and books and communities and blog posts and all sorts of things. And now you're just sort of, the reps are paying off and you've gotten to the promised land, so to speak.

After such a long career, after all of the things that you've learned before working on Transistor and also the things you've learned through experience having worked on Transistor, what would your advice be to a fledgling founder who is just getting started? And I know this whole episode we've been basically non-stop giving advice.

But besides the things we've talked about, what do you think they should know? What do you think from a zoomed-out point of view, they won't see about a startup, but once they get into it, they'll wish they'd known before?

Justin Jackson 1h 0m 48s

Sure. It really depends on your age actually, I think. If you're a teenager and you're listening to this, I know this one kid, he's a great, Miguel Piodefeda (ph). He is a Laravel programmer. He's building stuff right now. He's building products right now and putting them out into the world. He's building relationships with folks online.

If you start that early, if you're putting in the reps early, man that makes a big difference. I would say it's similar for folks in their twenties. For folks in their 30s, 40s, 50s, and 60s one thing that helped me, because I felt like in some ways I'm washed up, I'm done, I'm Rocky in Rocky III and this is done for me. One thing that helped was this line from James Clear.

Before he'd released his book, he has his book, Atomic Habits. I think everyone should read it. But he was sitting with me in an airport and I was just kind of down, just saying some of the same stuff. Like, it's never going to happen for me. And he said, “Justin, you can start right now. Every action you take is a vote for the kind of person you'll become.”

And so the things that you become good at, the things that you end up cultivating in your life, they're not, they don't come out of nowhere. They don't even come out of like beliefs or you know, positive thinking. They come out of what you do repeatedly. So if you get up today and here's a good example. I'm teaching myself how to Code. If I get up today and I code today and I get up tomorrow and I code tomorrow and I get up the next day and I code, then eventually if someone asks me, “Hey, do you code?” I would say, “Yeah I do code.” Now I might be 45 by that point. I might never be as good as DHH, but will I be better? Yeah, for sure.

For sure I'll be better. I think one thing that held me back in my thirties and now in my forties was, “Oh it's too late for me,” But you can start putting in the reps now. Sure, you might not end up Arnold Schwarzenegger because he started in his teens, but if you start putting in the reps now, you'll be significantly stronger than when you started.

And so I think that's the big thing is you've got to put in the reps. If you're in your teens and your twenties, don't wait, start doing it now. Build relationships, put stuff out there. But if you're older, you're not done yet. You've got lots and lots of years left and you can put in those votes for the person you want to become as well.

Courtland Allen 1h 3m 39s

Love that advice and as annoying as it will sound to the people who are older than me, I had the same feeling in my twenties like, “Oh, it's too late for me. Should I just go get a job? Am I done with this?” And I'm so glad that I kept pushing and kept trying. Justin, it's been a pleasure having you on the podcast.

I’d love to have you on another time in the future when Transistor is pushing a 100K a month in revenue, which I'm sure it'll get to you. Can you tell listeners where they can go to learn more about what you're up to or they can go to become Transistor users? When I can actually sign up for Transistors for the Indie Hackers podcast, which I've been waiting for so long.

Justin Jackson 1h 4m 8s

Yeah. Transistor.fm. You can sign up there and you can also, John and I answer the little chat widget. So if you want to just talk to us there, you can. On Twitter. I'm @MIJustin, the letter m, letter I Justin, that's where I test out material, you know, stuff I'm thinking about. So if you want to interact with whatever's going on in my head, that's a good place. And I blog at Justin Jackson.ca.

Courtland Allen 1h 4m 35s

All right, Justin, thanks so much.

Justin Jackson 1h 4m 36s

Yeah, thanks man.

Courtland Allen 1h 4m 37s

Listeners, it would really help the show if you took a minute to reach out to Justin and let him know you enjoyed hearing from him. He is @MIJustin on Twitter and I would really appreciate it if you just show them some love. I also appreciate hearing from you myself. I am @CSAllen on Twitter that's C-S-A-L-L-E-N.

If you learn something useful from the podcast, let me know. Or if you have any suggestions at all. For example, guests I should bring on, topics I could cover, ways I can improve the show, I am all ears. It's pretty hard to get feedback on a podcast so I love it when you reach out to me on Twitter. As always, thank you so much for listening and I will see you next time.

Courtland Allen 1h 5m 15s

If you enjoyed listening to this conversation and you want a really easy way to support the podcast, why don't you head over to iTunes and leave us a quick rating or even a review. If you're looking for an easy way to get there, just go to IndieHackers.com/review and that should open up iTunes on your computer.

I read pretty much all the reviews you guys leave over there and it really helps other people to discover the show, so your support is very much appreciated. In addition, if you are running your own internet business or if that's something you hope to do someday, you should join me and a whole bunch of other founders on the IndieHackers.com website.

It's a great place to get feedback on pretty much any problem or question that you might have while running your business. If you listened to the show, you know that I am a huge proponent of getting help from other founders rather than trying to build your business all by yourself. So you'll see me on the forum for sure as well as more than a handful of some of the guests that I've had on the podcast.

If you're looking for inspiration, and we've also got a huge directory full of hundreds of products built by other indie hackers, every one of which includes revenue numbers and some of the behind the scenes strategies for how they grew their products from nothing. As always, thanks so much for listening and I'll see you next time.