Finding 22,000 Paying Customers Despite Stiff Competition with Tyler King of Less Annoying CRM

Courtland Allen 7s

What's up everybody? This is Courtland from IndieHackers.com and you're 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, both in their companies and in their personal lives? And what exactly makes their businesses tick? The goal here, as always, is so that the rest of us can learn from their examples and go on to build our own profitable internet businesses. Today I am talking to Tyler King. Tyler, welcome to the show.

Tyler King 35s

Hey, thanks for having me.

Courtland Allen 37s

You are the CEO and founder of a company called Less Annoying CRM. I love that name. I've had a couple founders on the podcast recently who have product names that tell you exactly what they're doing and pretty much spell it out, but nevertheless, why don't you explain to us what Less Annoying CRM does.

Tyler King 51s

That's the goal because, as I'll probably say several times today, we're bad at marketing, so it's good if our name says the whole value proposition at the beginning. Basically, we are a CRM, a customer relationship manager. There's a whole history of the CRM industry that's basically designed for really, really big companies with really sophisticated needs.

So Salesforce and Microsoft Dynamics and all of them are really powerful, but probably overkill for a small business. So what we do is we make just a simple contact manager for people who need a place to store all that for their business, but not all the bells and whistles, and automation, and all that stuff that a bigger company might need.

Courtland Allen 1m 28s

The CRM space is obviously not new, it's not particularly unique. There are tons and tons of companies working on various types of CRMs and there have been for the last two decades and yet, you guys have managed to stick it out and do really well for yourselves.

You've bootstrapped your way here and you have 22,000 paying customers and you charge them, what, $10 a month per customer?

Tyler King 1m 51s

That's right. And we actually hit 22,000 about an hour ago. So yes, we're officially at 22,000.

Courtland Allen 1m 57s

Cool, I was just rounding up from 21,000-something, but now I'm actually right. I feel pretty good about that. So you're doing over 2.6 million dollars in annual recurring revenue. I think what's cool, putting these two things together, is the fact that you came up with an idea that's not particularly unique.

It's not like you found some entirely unexplored market that no one's ever hit before where you have this totally brand new, unique idea. You've done something in well-trodden territory, and a lot of people think that they can't get started with an idea unless it's totally unique.

I'm excited to dive into how you did that, how you realized this was a good idea in the first place and how do you make a business work when you have so much competition and you're not innovating at the front, bleeding edge of new technology and new ideas.

Tyler King 2m 44s

Yes. There's a certain risk you take by going into an industry that has a lot of competition. That risk is that you can't build the better mouse trap, but there's a different type of risk if you go into something brand new, which is that no one even wants it. If I have to pick between those two risks, I trust myself to build the mouse trap a lot more than I trust myself to create a market that didn't exist before.

Courtland Allen 3m 5s

Yes, it's a trade-off. A lot of times people go into one and they think that's not a trade-off. They think, "I'm doing something that's brand new, and so that's perfect. Now I just win." But you're right. Now, you have to prove that people even care about this new thing that you're building, that no one's ever built before, and a lot of times that kills people's companies.

In your situation, you've got a lot of competition, which means you have to innovate in other areas. You have to either somehow build a better product, or you have to figure out distribution channels, even though they're super competitive, or niche down in a way that like others aren't really doing. You got to somehow make yourself unique to compensate for the fact that you've got a ton of competition.

Tyler King 3m 38s

It only really works to do that if it's not a winner-take-all market. That's one of the great things about CRM. If Company A is using Salesforce and upstairs in their building, Company B is using us, neither product is worse as a result of that. Whereas if you're using Facebook and I'm using Twitter, neither have any value to us.

I wouldn't do what we're doing against Facebook, but I'd absolutely do it against Salesforce because of that lack of a winner-take-all dynamic.

Courtland Allen 4m 7s

I think that's one of the key ingredients to being an Indie Hacker. Choose a business that's not a winner-take-all market. Even if you innovate and you build something completely new in a winner-take-all market and you're thinking, "Oh I want to be and Indie Hacker and just generate revenue."

At some point, there's probably going to be a well-funded competitor who comes along, who's got a ton of VC funding and they take that market from you because you're not focused on growth or whatever, and you're screwed. But if you enter something that's not a winner-take-all market, you can always carve out your niche.

You're not really worried about the competition making it so your business is now obsolete, and it's just a lot less stressful and a lot more profitable for you. I recommend all Indie Hackers to go that route.

Tyler King 4m 43s

Yes, absolutely.

Courtland Allen 4m 45s

Let's talk about how you got started on this journey because you say that you got started by mistake. You didn't grow up super entrepreneurial, you didn't always dream of building a business, and yet somehow you found yourself working at a startup and doing a lot of entrepreneurial activities. Tell me about how you got there.

Tyler King 5m 1s

This is the least reproducible story. It's totally worthless as advice for other people because I just lucked into it. Basically, I was doing my fifth year of college to get a master's, and a friend reached out to me and said, "Hey, do you want to come work at this startup?" I'm not being falsely modest or humble or anything.

This is 100% true. At the time, because I wasn't great in school, I wasn't terrible, but I didn't get good grades or anything, I just assumed that would translate to a lack of professional success. So I thought, "I'm not going to be great professionally.” This startup already raised the Series A, they had a really great team. I was like, "If I just join, maybe I'll get rich without doing anything."

Which is stupid. That didn't make any sense. But that's what I thought when I was 21 years old. So I left school and went to go work at that startup, having no interest at all in entrepreneurship. That was the first stroke of dumb luck, is that that fell into my lap. The second stroke of dumb luck was that – that was in 2007.

In 2008, this was not lucky for most people, but it worked out for me. The recession happened, and so the company was a year into having raised a Series A, growing quickly. I think I was employee number eight, I think a year later it was at 30 people. Everyone gets laid off in one day, except for me and four other people.

And when I say everyone, I mean the CEO, the CFO, the COO, every single person above me in the org chart was laid off. So I showed up to work the next day and was in charge. Myself and one other guy were the only ones interested in taking on that responsibility. So we just showed up and effectively were the co-founders of this company all of a sudden.

Courtland Allen 6m 41s

How does that happen? How do you not get laid off as someone at the very bottom of the org chart? I thought it would be the opposite.

Tyler King 6m 47s

Yes, I did too. I now understand how boards of directors and CEOs work, but at the time I was like, the CEO is the God. How could that person lose their job? But payroll could not be made, so they kept the five cheapest people. All five of us were the lowest paid people of the company, no responsibility.

I now understand that the goal of the company was to just keep the lights on long enough to sell, but that didn't happen. As a result for the next year, we were just running the company, not knowing what we were doing.

Courtland Allen 7m 18s

So what was this company that you found yourself basically running and what are some things you learned by going from bottom of the totem pole to suddenly at the top?

Tyler King 7m 26s

I learned a lot of what not to do, which isn't to criticize them. I think a lot of startups get stuff wrong and that's the main thing I learned. The company was called Zane Benefits, it's actually still operating, miraculously, under the name PeopleKeep. It's in Salt Lake City, Utah now. It was a health benefit startup.

I learned a bunch from it. One thing was, we had a ton of great ideas that we couldn't do because it was against insurance commissioner codes or something like that. I was like, "Well, I'm not going into a regulated industry after this." The company did a very traditional venture capital playbook.

Raise a $3 million Series A, which at the time was big. Now that doesn't sound like much. Grow really fast, hire. After I joined, the next five hires were all VPs of a higher management team and ran the traditional playbook. I saw that in action and I just hated it. The biggest takeaway from that was, "If I ever start my own business, I'm bootstrapping for sure."

Courtland Allen 8m 29s

It's not a bad takeaway. It ended up with you starting Less Annoying CRM after a somewhat winding path of going through other ideas and working on other projects. I want to dive into that because that's where most listeners are at. They haven't found an idea they really want to work on.

They're trying different things out or considering it. I think it's a tricky path to navigate. It was tricky for me to navigate earlier in my twenties as well. How did you go from basically running this company and learning all these lessons on what not to do, to eventually starting your own company that ended up working out?

Tyler King 9m 0s

The first question anyone faces is, "What is the impetus for actually starting the business?" Maybe it's scratching your own itch or having some passion for something. In my case, it was the third of these strokes of luck happening to me, which was, the right co-founder fell into place. I would not want to run a business by myself.

A lot of people do it. It can be great. I'm not saying you shouldn't, but for me, having a co-founder is the only way I'd want to do this. It's hard to do. You can't just go out to a networking event, chat with someone for 30 minutes, and be like, "Yep, that's the person I want to hitch my wagon to for the rest of my career potentially." Because that's how long I want this to last.

There were only a few people in the world that could have been the right co-founder, and basically what happened is my brother, who was in grad school at the time, came to me with a business idea. He had even less entrepreneurial spirit than I did. So I was like, "This is a once-in-a-lifetime thing. He's really, really smart. Obviously, I trust him. He is my brother. This is not going to come along every day. So even regardless of what the idea is I'm going to do it." That was the first step.

Courtland Allen 10m 0s

Was his business idea Less Annoying CRM?

Tyler King 10m 2s

No, it was not even in the ballpark. Do you remember sense sports from back in the day? It was a way to gamble for free on sports. The idea was to do that but for stock market picks. Give people a small amount of money for free, let them play the stock market, and if they hit a certain threshold, let them cash out real money.

Courtland Allen 10m 24s

At this point, you said neither one of you are really all that entrepreneurial, but you're pretty excited about working with your brother. But as someone who's not an entrepreneur, someone who hasn't really dreamed of doing all this, how do you even evaluate an idea to know if it's a good one? How do you say, "Oh, this is a great idea, let's work on this together.”? How do you decide to move on from that idea when you realize it's not?

Tyler King 10m 42s

I think it really helps to have constraints. If you have the whole wide world of options available to you, it's almost impossible to pick something. Like I said earlier, one of the constraints that I knew for myself was, I want to bootstrap. There are a lot of businesses that could work but can't work bootstrapping.

For example, what we really both wanted to do was build a fantasy football website. We'd already built one. We were running it on the side as a hobby. We both knew we couldn't bootstrap that. It just wouldn't work. We wouldn't be able to monetize it quickly enough to support ourselves, so we threw that out the window.

Then we thought about this stock picking thing and we actually threw that out for a variety of reasons, but one of the big ones is the same thing. Almost anything that's primarily monetized through advertising is going to be a tough thing to bootstrap, probably.

Combined with a million other reasons, we knew we could throw that one out. We just kept trying. We had a whole bunch of different ideas we went through.

Courtland Allen 11m 40s

Yes, I love that you mentioned that you need constraints. I think, generally speaking, when you're getting into something, it's really helpful to have some sort of checklist, some sort of list of things that you can go down and be like, "Let me make sure I'm not making a boneheaded decision.

Let me take five minutes to make sure I'm doing something that will not get in the way of my goals or prevent me from reaching my goals." I have my own gigantic validation checklist. A lot of it is stuff that's like, "Okay, I need to check this box to make sure the business will actually work."

But a lot of it is just totally personal stuff like, "Will I enjoy working on this project? Will it be something that I can bootstrap? Will I like working on it for the long term? Can I explain it to my mom in a way that she understands?"

Which is just an important thing for me when working on a business, and I think more people should have this list of constraints. What else was on your list besides just, "I want to bootstrap this thing"?

Tyler King 12m 27s

So, one I mentioned earlier is I didn't want it to be a regulated industry. I'm not saying that I am opposed to regulations, it's just that I'm not a very thorough person. If someone gives me a terms of service to read, I make it through one sentence and I'm like, "Whatever, I agree. I can't make it through this."

I'm just not the right person for that. Which I think you can generalize to say, "What are all your weaknesses?" Another one is, I know I can't do sales. If you look at Less Annoying CRM, you might ask, "Why are we going after small businesses and not enterprise where all the money is?" A variety of reasons, but one of them is I just know I could not sell to the enterprise, so I can remove that from the list of possibilities.

Courtland Allen 13m 5s

I love that you mentioned that you put your weaknesses down, which I think is the best way to take advantage of prior experience as an entrepreneur. People talk about, "Oh yes, try lots of things and you can basically learn from your failures."

I think it's super true. If you correctly identify what your weaknesses are and what you don't like, you can make sure not to run into those problems again. I did the same thing for Indie Hackers. One of my biggest weaknesses is that as a developer, I love to code, and I will just sit down and code things for a year straight and not look up.

Not do any sales or marketing, and so, one of the things that eventually got onto my checklist and my constraints was, "I cannot work on any idea that would even allow me to code for that long, otherwise I am probably going to fail." I think it's really important to recognize your weaknesses and build that into the things you will or won't do.

Tyler King 13m 47s

Yes, definitely. I also think, just to contrast, a lot of the startup advice out there is assuming a certain outcome that's really based on what the venture capitalists' outcomes are. That assumes you have to have a certain set of skills. You have to be ready to blitz scale, and you have to crush it really hard in these various ways, and if you remove that you can say, "Well I don't have to be good at any of that."

Every entrepreneur can decide, "I'm going to make these aspects of the business harder on myself so that I can make these other aspects easier on myself." And by doing that you can say, "I'm going to play into my strengths and avoid my weaknesses."

Courtland Allen 14m 22s

Exactly. Having a checklist, having some constraints, that's a good way to filter out ideas to say, "Okay, this idea is not going to work, let's move on to something else." But how do you come up with an original, new idea?

How do you go from having nothing in your head to suddenly knowing what you're going to work on? Because there's no list of constraints that will magically create an idea from nothing.

Tyler King 14m 41s

What we were talking about earlier is that I didn't invent a new thing. This CRM isn't an idea, exactly. It's more like identifying an opportunity that there are certain types of customers that weren't well served. If your question is, "How do you come up with an idea for some brilliant new thing?"

I have no idea. I've never done it before. I'm probably never going to do it. But if it's, "How do you identify those opportunities?" I've heard some classic ones. Back in the day, it was to look at what people do on Craigslist and then spin it off. And now you've got Airbnb.

In the business world, the version of this is, look at anything people are doing in Excel. Is it big enough of a problem that, by making a specialized app for it, you could charge for that? A lot of stuff out there, people are still using Excel for, but could be spun off.

In my personal experience, the best way to come up with this idea is to just get a job at some company that's dysfunctional in one or more ways and software could make it more functional. So just see it, experience it in person, and fix it. That's what happened for me. I had that experience with CRM from my previous job.

Courtland Allen 15m 44s

Tell me about that. How do you work a job and identify a particular problem? Because a lot of people have jobs and don't see any problems and don't see any challenges, and I think that doesn't necessarily mean there aren't any business opportunities, but sometimes it's hard to put your brain into a mode where you can recognize these opportunities and turn a problem into a business idea.

Tyler King 16m 2s

It helps that I think I'm a complainer. I'm probably insufferable to hang out with, cause I'm just constantly saying negative stuff, but that's a good way to come up with these ideas. I had three different points of contact with CRM that led me to believe that this would be an opportunity.

One, my mom was an MLM, like a multilevel marketing sales rep person. Not something I would recommend for anybody, but I grew up in that environment and it's this army of people who don't have any sales background. They've never heard of a CRM, and their companies were providing nothing for them.

There are no tools provided by these companies. That was just in the background, thinking, "Why aren't they taking advantage of software?" Then I had two more specific experiences at my last company.

One was, they put me in charge of setting up Salesforce. This was 2008, I guess. I spent about a month on it full time. I have a degree in computer science. I'm pretty tech savvy. In a month of full-time work, I didn't get anywhere. I couldn't figure out how it worked. I couldn't even get it set up.

So I was thinking, "Well, what does a company do that doesn't have me?" There are a lot of companies out there that no computer scientists work there. The third experience I had was – what the company did that I was at is, it sold software that enhanced group health insurance for businesses, and so we sold it alongside health insurance that insurance agents were selling. We built a tool to let insurance agents sell our product when they were selling insurance.

That tool looked an awful lot like a CRM without really intending for it to, and they ended up putting all their other leads in there, and they were like, "Can you build a little more reporting in here?" And, "Can you give me a way to enter notes?" Eventually, we found out these people had never heard of a CRM before.

They loved what we built, but they had no way of buying something like this as a standard. They had to pay us $1,000 a month to be a member of our reseller program. So I looked at that and I was like, "The bottom end of the market here hasn't even heard of a CRM yet, and they're probably still using Excel for that, so let's pull that out and make a specialized tool."

Courtland Allen 18m 7s

One of my favorite hacks for coming up with business ideas is, at the very least, looking at what people are willing to pay for, and if you see people constantly paying for a particular thing or asking for more features so they can pay for those, it's usually a good clue that that's a solid market.

You're not entering a market for something that you're going to have to innovate and prove that there's product market fit. It's like, "No, people are already paying for this. There's already value." The fact that you had these experiences with your mom and with these other companies who had heard of a CRM additionally validated that not only is this a product that people will pay for, but there's lots of people who need it and also don't use it yet.

Tyler King 18m 42s

If I can piggy back off that, a lot of people talk about how to write marketing copy and that you're supposed to use this jobs-to-be-done framework where you're explaining, "Here's the job that needs to be done and here's how our product does the job." If you're looking for these really boring ideas that are already proven, ask yourself, "Does anyone need to be told the job to be done here?"

Because we don't do that type of marketing copy at Less Annoying CRM. We assume you've already tried Salesforce and didn't like it. So all of our marketing is like, "You already know you need a CRM, but you can't bring yourself to do it. It's like, you know you need to brush your teeth. With our product, you're finally going to be able to do it consistently."

Courtland Allen 19m 19s

This is a good example of why I think a lot of advice should be prefaced with, "It depends," and it's frustrating if you're looking for advice because you're like, "I don't want to hear it depends. Just tell me what to do," but usually it does depend.

If you have a business that's in a crowded market that people are pretty familiar with and people already pay money for, so the product market fit is already decided, then you have a whole different playbook for how you market that thing, and how you advertise it, and what you should be looking for than if you're going the other route and trying to build something brand new that no one's ever used before.

If you're going that route, you need to do a lot more education. You need to do a lot more explaining to people what the jobs to be done are and showing them how to use it, et cetera, et cetera.

You look for customers in different places, but if you're going the route that you did, like you said, it's not as much about education, it's more so differentiating yourself from the existing options or finding a gap in the market where people don't really know about this particular thing.

You say you're not good at marketing, but the fact that you named your company Less Annoying CRM, put the value proposition right in the name. I think it speaks to some knowledge about the situation that you're in and the fact that you're really just trying to differentiate yourself from other players in the market and explain to people why they would use your CRM instead of somebody else's.

Tyler King 20m 23s

That can be a superpower. Every other company in the world is putting up the same jobs to be done explainer video. When people call us up, I have this conversation every time I talk to a customer. They say, "What's different about you guys? What features do you offer? Anything like that?"

I'm like, "Oh, none. Not a single one. We don't have a single unique feature," and it puts them on their heels and they're like, "Wait a second. Now I'm talking to a different type of company here."

Courtland Allen 20m 46s

Yes, If I'm going to a coffee shop and they're just like, "We'll sell you coffee." Then it's like, "Well, I guess that is your value. It'll keep you awake." I get that's your value proposition, but how is that different than any other coffee shop? Usually they have like some differentiator, something that makes them unique.

You're telling people that you basically don't offer any different features than other people, but you're also called Less Annoying CRM for a reason. Tell us about how that differentiation helps convince customers to sign up.

It really comes down to that word, annoying. I think people immediately get an idea in their head of what that means. They think it's the user interface, which it is to some extent, but -- I love Indie Hackers. A lot of the advice on there is to do annoying stuff.

So, for example, if you're asking for someone's credit card before the free trial starts, it might work. It might make you more money, but undeniably no customer wants that, right? There's no customer that's like, "I really wished they would have taken my credit card before I could try it. That would have been great for me."

Pricing pages, our pricing is $10 per user per month. Now, first of all, that's lower than a lot of CRMs cost, but setting that aside, there's no tears, there's no extra fees. The pricing page is literally $10 per user per month.

That's the end of the page. So even before someone starts using the product, we're sending all these signals to people like, "You know all that nonsense that you have to put up with. Calling their sales team, getting quotes, all that stuff. You don't have to put up with that here."

Courtland Allen 22m 11s

So your pitch is like, "Hey, our features are the same as other CRM tools. However, every feature is less annoying than it would be with the competition."

Tyler King 22m 20s

At the end of the day, it's a crud app. It's a spreadsheet with a slightly better user interface on top of it. No one wakes up in the morning dreaming of using their CRM. They don't use it for fun. They don't get joy out of it. I think the business world took too much marketing from the social media and video games and stuff like that where people really love using them. It's like, "No, this is a tool. It's going to do what the tool's supposed to do and then get out of your way."

Courtland Allen 22m 48s

So let's go back to the early days of you working on this, because you mentioned you tried a few other ideas. You tried a stock trading app, you did your brother's idea and that didn't really work out. What was it like when you just hit on this idea and were you convinced early on that it was going to be a good idea that stood out from the other things that you tried?

Tyler King 23m 6s

Yes, we were pretty excited about it, and it's a little weird. We would have probably gone with CRM from the beginning, except I thought I couldn't because I had built that CRM-like thing at Zane Benefits, and I thought it would be a conflict if I were working on this because I had not yet decided to leave my job.

Then I had a pivot point where I was just like, "You know what? Screw this. I'm going all in. I'm leaving that job." They offered to let me stay on part-time and I said, 'Sure, but I need it in writing that I can work on a CRM."

To me, it was really obvious. All the other ideas we were bouncing around were because we didn't think we could build a CRM, and as soon as that became an option, we were all in on that.

Courtland Allen 23m 50s

How do you fund yourself when you're working on this business in the early days? You could work part time at your business, but your brother also needed to work on this, and it's, quite frankly, pretty harrowing to have a business that's not really making very much money, and you're dividing your time between this other job that's paying your bills but distracting you from what you want to do.

Tyler King 24m 9s

Of course it'd be great to be able to spend your full time working on your idea. I think the sacrifice of not doing that is normally worth it unless you have enough personal wealth that you can do it without sacrificing anything, but our original idea, which actually, if I had to start a new business, I think I'd go back to this, I think it would have worked probably, is, my brother -- He was in a PhD program at the time at MIT. That's where you went, right?

Courtland Allen 24m 34s

Yes!

Tyler King 24m 34s

Yes. All right. Maybe you were there at the same time.

Courtland Allen 24m 36s

Maybe. What year was this?

Tyler King 24m 38s

He finished maybe in 2010-ish.

Courtland Allen 24m 41s

I graduated in 2009 from undergrad.

Tyler King 24m 43s

Yes, you were there at the same time. He was getting a PhD in biological engineering there and, through his lab, he knew a bunch of biotech startups that could use a normal software engineer to basically do what I said earlier, take an Excel spreadsheet and turn it into a little piece of software to manage your lab equipment or whatever.

He thought he could get me a bunch of consulting jobs, and the plan originally, even before we came up with CRM was to do these things to pay the bills and wait for a pattern to emerge. Like, "Are these companies asking us for the same types of tools over and over? If so, let's productize that." So that was the original idea. I think that's a valid way to go, but I ended up getting lucky because after I quit – I never had any intention of this – the company came and said, "We'll pay you for 20 hours a week to consult." That was enough to cover my bills, so I was 20 hours a week consulting, but it's not really consulting. It's like a long-term multi-year contract.

The rest of my time, which was probably another 40 to 60 hours a week was spent on Less Annoying CRM. My brother was full-time on his grad school. When he graduated, we didn't have enough revenue for him to go to Less Annoying full-time, so he ended up getting a job at a different startup and was doing this on the side.

Everyone's going to have to find their own path, but having no runway, being able to go for an unlimited amount of time, is an amazing superpower because there's so many things that work, but they work really slowly, and so they're only an option if you have that runway.

Courtland Allen 26m 20s

Yes. With Indie Hackers, I basically spent a couple years contracting and working on side projects on the side, but I could never really focus on my side projects the way I wanted to. Eventually, I had saved up enough money to live for a year and I quit contracting, and that was the kick in the ass that I needed to get super serious.

I think it forced me to make better decisions because I saw the money in my bank account declining and I was like, "I need to make something work in the next six to eight months, otherwise I'm screwed and I just wasted a whole bunch of money."

But that's not the path that everybody necessarily wants to take. How long did it take you guys before you were at the point where you could fully support yourselves from Less Annoying CRM's revenue and you could actually quit your jobs?

Tyler King 26m 59s

We took a somewhat nontraditional path here, I've got my numbers pulled up here... So we were about two years in when we were making enough to pay. So two years after launch we were making $5,000 MRR. That's not the amount of money you want to make long-term, but it's enough to pay one person at least enough to survive.

We faced the question two years in, "Which one of us goes full time?" What we settled on was neither, and we just hired someone else. So neither of us were the first full time employee of Less Annoying CRM, actually.

Courtland Allen 27m 37s

That's pretty fascinating. I don't think I've talked to anybody who's done it that way. Why not pick one of you two to go full time? You guys are the founders and the most invested in it, why hire somebody else?

Tyler King 27m 47s

The question we asked ourselves, and I think you could debate whether we made the right decision or not, but we are a very product driven company. We were asking, "What moves the product ahead of the fastest? Is it for me to have an extra 20 hours a week to work on it, or is it for me to never think about customer service again?"

It still ultimately came down to how to leverage my time better, but what we decided was having a full-time customer service person. Customer service was not a full-time job at the time, so he could also help out with marketing, help out with all kinds of other stuff. That would actually free up more of my time for product than losing that 20 hour a week thing would have.

Courtland Allen 28m 23s

Something I hear pretty consistently from the creators of SaaS software is that there is this huge unexpected customer service burden, especially early on, where you can spend hours and hours and hours a day just answering emails, responding to questions and requests. I think it's very common that the first hire is somebody to take that burden off your shoulders.

Tyler King 28m 43s

Yes. I listen to a lot of podcasts from founders in different stages of the company, but the people who haven't hit that point, they think, "Ah the revenue is going to get good enough. I'm going to be able to go full time, and it's going to be smooth sailing, and it's like, there's a lot of gravity and friction working against you as you move up and having help, helps.

Courtland Allen 29m 3s

You and your brother were both developers. Your brother is a back-end developer and dev ops and you're a designer and a full stack developer, so for the two of you, I imagine building the product was the easy part, right?

You're not necessarily innovating, you're building a CRM and you'd worked with CRMs and built them before, but there's all this other stuff. We're talking about customer support, there's marketing, sales, all sorts of stuff, legal. How do you build a business when you're essentially strong in one area, all the product stuff, but you don't necessarily know how to do all the other legal stuff? Or did you guys get good at that other stuff?

Tyler King 29m 35s

We got good at one of those other things you mentioned. I think you can summarize it to say, anything that fundamentally comes down to trying your hardest to make the customer happy, we ended up being good at, and what I mean by that is customer service.

In the early days, I was so averse to the idea of dealing with customers that we literally tried to sell off 50% of our revenue in a revenue share to someone else to handle all the customer facing side, and all we would do is the product.

Which, once again, is stupid. I've made a lot of stupid ideas in my day. It didn't work. Luckily, the other person didn't accept it. The point is, I did not want to deal with customers, but as soon as we started getting customers, it became really easy. It's the same as product.

It's figuring out what they want and giving it to them. There's nothing complex about that. We got really good and I think our support right now is the number one thing that propels our business. We never got good at marketing, sales, legal, any of that.

I think your options are bringing someone who knows what they're doing, which I tried, and we can talk about that. It didn't work. Earlier I said, you can decide what's going to be easy and what's going to be hard, and we decided that's going to be the stuff that we're not going to make any harder than it has to be.

So really low price. We're willing to spend way more on customer acquisition than a normal company with our price point, and so basically we're just bad at marketing, but we make up for it in other ways.

Courtland Allen 30m 56s

I like that idea. That you can strategically be bad at certain things because I think it's very easy, especially as like someone considering being an Indie Hacker to think, "Oh, I don't have enough skills. I don't have enough know-how to really start a business. I have all these blind spots."

But it turns out that you can actually build a very successful business even though you have blind spots and things that you don't love doing or you're not good at doing it because you just avoid that and just compensate in other ways.

Tyler King 31m 17s

I will say though, if you're growing, if you're doing the venture capital route, A, you probably can't afford to have those blind spots because your investors expect more from you and B, you have to move so much faster that I don't think I would've had time to learn the things I didn't know at that pace. If we were quadrupling year over year right now, I would have been ousted as the CEO already. I'm learning, but I can't learn that fast.

Courtland Allen 31m 44s

Did you ever at any point think that you wanted to raise venture capital? I know you were a little bit traumatized after your experience with that business, with all the layoffs and you wanted to bootstrap, but you guys are growing pretty fast in the early days. Did you think, "Maybe we should raise money, maybe we should try to grow as fast as possible."?

Tyler King 32m 1s

Not really. The only time we considered raising money was when we had an idea for a different product that would have been complimentary to Less Annoying CRM, but very different. It would have been freemium and potentially had a little bit of a consumer play to it. I think rightly, we said the only way to execute that would be with funding.

Ultimately, we decided to not raise and to not work on that idea because we didn't want to raise, but this is a weird instinct I've never fully understood from a lot of entrepreneurs, this idea. We were growing pretty fast for a while. That's all the more reason not to raise money in my opinion. This is working. I don't need to raise money.

Courtland Allen 32m 38s

Yes, that makes perfect sense to me. I also am not a particularly big fan of raising money just because it comes with so many different strings and so many expectations, and again, you're right. If you're already growing really fast and you're getting to keep 100% of your profits because you own everything, why put the added pressure of having to hit some crazy metric that you're not really sure you can? Otherwise, you're a failure.

Tyler King 32m 56s

We would have failed. I'm 100% sure. We had a two year stretch where we weren't like shrinking, we were still growing, but our growth just tanked. That two years would've been the end of a venture-backed company, but because we were bootstrapped, we just weathered the storm and got back on track later.

Courtland Allen 33m 12s

It happens to so many venture-backed companies where they're like, "We're growing so fast, let's raise money, we're killing it." And then the growth peters out as it often does because it's very hard to sustain killer, super-fast growth for 10 years. The vast minority of companies can actually do that. Most companies either never grow that fast or they are growing fast, but they eventually hit some natural slowing point. At which point, if you have a bunch of investors who expected you to go for a billion, you're pretty screwed, and your life goes from being super happy to being miserable as a founder.

Tyler King 33m 42s

Yes. So much so that there are a few noteworthy stories of people getting out of it, like Gumroad for example. It's so rare that it makes national headlines when it happens.

Courtland Allen 33m 53s

I know a lot of founders who will talk to you in year one living in SF who raised money from investors and they're super happy and then a few years later, they're just like, "Yes, I don't know. I mean, the company is growing, but it's not growing fast enough," and it's a tragedy because if your company is still growing 30 40, 50% a year, but that's not good enough for your investors, then you're in this weird position where you've done a really cool thing, but you feel bad about yourself, and you feel like you're letting other people down, and you in fact are letting them down. Yet another reason to really think hard before you raise venture capital.

Tyler King 34m 24s

Yes. Our growth has not been great this year we were shooting for 25 to 30%. We're only going to grow 20%. That's still $500,000 in new ARR. I'm not mad about that.

Courtland Allen 34m 35s

Yes, why feel bad about that? But if you had been investors you would probably have a lot of reasons to feel bad about that. So let's talk about your growth. Early on, you said it took you two years to get to the point where you were making about 60 grand a year. You could hire your first customer support rep.

What did you do to find your first users when neither you nor your brother were particularly good at sales and marketing?

Tyler King 34m 55s

We took the lazy route, which was just paid advertising. We tried other stuff. Nothing else worked. So blogging. When people make blogging work, I'm just amazed because I really respect it. It's so appealing because its marginal cost is zero. It seems great. We were able to write blog posts that got traffic.

The things people wanted to read never had anything to do with Less Annoying CRM. So then we'd write other blog posts like "How to improve your sales funnel" and we got no visitors to that. But we'd be like, "How to hack Chrome to let you add an application link in Mac OS" nothing to do with our business, and we got a ton of traffic to that one. We were never able to get that to work, still to this day.

Courtland Allen 35m 33s

You have got to marry these two things where it's relevant to your business and it gets people reading it, and that's pretty hard to do.

Tyler King 35m 39s

Right and some businesses are just fundamentally boring. CRM is one of those. I'm not aware of any CRM companies that have been particularly successful. The only model I know of with that type of thing is if you're selling to other entrepreneurs, writing about your journey, like Groove did.

They're a help desk. But we're not selling to startups. So anything we could write about our journey, I think we could get followers, but they wouldn't be potential customers, really. Anyway, that didn't work for us. Ultimately, the only thing that really did was Google AdWords.

Nowadays, we found a couple other ad channels like that, pay per click stuff. We just had to pay way, way too much to get a customer. I think our first customer was $1,000 or something like that, and they pay $10 a month.

This was not positive ROI, but the hope was, you got to start somewhere, every little bit counts, and then we'll just figure something else out. We honestly never really did figure anything else out except that word of mouth kicks in. It's really hard to measure second order effects, but if you pay $1,000 to get a customer and they're really happy and refer another customer, that just cut your customer acquisition costs in half. We can't totally track that to prove that it works, but one way or another, now we're profitable. I don't really have a good way to connect the dots there.

Courtland Allen 36m 51s

It's pretty interesting that you could look at something like AdWords and you can say, "This is a bad ROI channel for us. We're only making $10 a month. It's going to take us a thousand dollars to acquire this customer," and yet, do it anyway.

I think most people would be like, "Oh, that's ruled out. We can't do this. Let's try something else," but the fact that you were able and confident enough, I guess, to try a channel that looked like it was going to be bad and you stuck with it until it worked for you is pretty amazing. Why did you go with this route even though you looked at the numbers and it didn't look like they're going to work?

Tyler King 37m 21s

The reason was wrong. What I'm about to say was what I thought at the time, and I don't think this anymore, but I was very confident at that time. I had bought into the idea of like growth optimization hacks where, even if something's not working, run some AB tests and your conversion rate will go up, and work on your onboarding and your trial to paid conversion will go up and all that.

We did get it up. At one point we were paying $150 to acquire a user, which is probably on the border of acceptable, but I thought, "We're bad at everything right now. Our homepage is bad. Our product is bad. We don't know how to use Google AdWords. It can only get better from here.

Courtland Allen 38m 1s

That's such an interesting approach. Basically, it's not good, but we'll just do it anyway. We'll eventually iterate and improve enough where it becomes good and it's fine. You did an interview on IndieHackers.com a while back, and you dove into your exact customer acquisition numbers in the early days.

You were at six paying users after six months. You had 47 paying users after a year. You had 200 paying users after a year and a half. It was actually a slow process where you're building up momentum. Was all of this from Google AdWords or were you guys using other channels that were succeeding and getting customers in the door?

Tyler King 38m 36s

I think of every marketing channel as planting seeds, and then the seeds grow into a network of people through word of mouth. Google AdWords was our main way of planting seeds, and then word of mouth has always been our main channel beyond that.

But I'll say this, one of the hard lessons I've learned is no marketing channel scales, at least for us, and even a marketing channel that's working at a small scale will stop working eventually. So for example, we had a brief period in time where the Chrome web store was driving almost all our growth. I don't know if you remember the Chrome web store from back in the day?

Courtland Allen 39m 8s

I do.

Tyler King 39m 8s

Now it's just basically Chrome's extension library, but their goal was to make an app store for web apps and nobody was on it. We were one of the first, maybe the first CRM to list on it because it was free, and we just got a ton of free traffic for two years. And then they shut it down, or I don't know what happened, but all the traffic stopped.

Courtland Allen 39m 31s

How do you deal with that emotionally when you're getting a ton of traffic and you're like, "Aw man, we're killing it," and then suddenly your distribution channel just disappears?

Tyler King 39m 38s

At the time, it was really hard. Now, I've come to terms with this. Marketing channels are all temporary. Even Google AdWords, we are doing it now. We have stopped four times because it stopped working for us, and then we'd wait six months and be like, "Let's give it another shot," and then we try it again.

I think you just have to be zen about the fact that everything is temporary. The one thing that's not temporary is word of mouth, if you can get it. Not only is it not temporary, but it scales with the size of your customer base whereas everything else doesn't. I felt this way. I've talked to so many other founders that expected this.

You're small. Let's say you're making $1,000 a month in revenue and you're on pace to double it every six months. You're thinking, "Well, I'm going to keep up that pace forever, and it's even going to get easier because I'm going to hire an AdWords specialist. I'm going to hire a content specialist."

The reality is doubling a $1,000 a month business is much, much easier than doubling a 5,000 or 10,000 or a $100,000 a month business, and gravity eventually pulls you down, but word of mouth is the one thing that keeps up with the size of your customer base.

Courtland Allen 40m 42s

Yes, I love the way you put that, that it gets harder to grow, especially using these different channels, later on. I tell a lot of founders that the easiest time to double your customer base is going from one user to two users. All that requires is one conversation with somebody, but when you're trying to go from a million users to 2 million users, you've got to be crazy clever.

You've got to do all sorts of strategizing and marketing and have deals and you need distribution channels set up because there aren't that many channels online where you can reach an extra million users. It's not an easy feat to pull off.

Tyler King 41m 12s

You asked, emotionally, how do you deal with that? I think you just have to fail and get hurt and then realize it's okay. The business is still around, but I guess what doesn't work is to put yourself in a position where that failure ruins you. Where you're not profitable, you've overextended yourself and then that failure would've just killed us when the Chrome web store died off it could have been the end of the business.

Courtland Allen 41m 36s

So you guys are, a little bit, relying on word of mouth. Your channels for growing can disappear, but at the end of the day, your customers are still recommending Less Annoying CRM to other customers, and so you continue growing. How do you fuel word of mouth growth? Is it just building a good product or is it something else?

Tyler King 41m 51s

I'll say this, it's a really hard channel to optimize for because it's very hard to measure. Maybe it depends on the product, but for us, we've never been able to get a good read on how much of our – we have a certain amount of signups that we can attribute to a source. These people came from AdWords, these people came from our newsletter.

The vast majority is unattributable traffic and we think a lot of that is word of mouth, but we can't really prove that. We've tried asking on sign up forms. We've tried all kinds of stuff. We have a referral program, where you give a month, get a month for free. Nothing we've done has worked to get this information, which makes it really hard to optimize because you can't really run an AB test on that.

You can't say, "Well, let's change this thing here and see if word of mouth growth improves," because even if it improved, we couldn't measure that. Our strategy is basically intuition, and a part of me is really jealous of more data-driven companies, and I want to be that way, but I also think the startup world has abandoned intuition. Sometimes, you just know that this thing will provide value to customers and so just do it.

Courtland Allen 42m 58s

Your intuition definitely gets better as you run your business. You've been running Less Annoying CRM for 9 or 10 years now?

Tyler King 43m 5s

Yes, just over 10 years.

Courtland Allen 43m 6s

Ten years. That's a long time to develop good intuition to see, "Okay, we've changed this thing. How did growth change? How did word of mouth growth change?" Maybe when you're brand new, intuition is not worth that much because you haven't really trained it, but you've been running this business for so long that you probably have an intuitive feel for what kinds of things to change, even if it's not 100% supported by data, which is hard to gather anyway because how do you measure word of mouth growth?

Tyler King 43m 28s

It's also a huge advantage for anyone out there like me that is thinking, "I don't want to do customer service," like I was in the early days. Talking to customers -- it's not even your intuition at that point. It's their intuition.

I, obviously, at our 22,000 users, I'm not personally talking to every single one, but we have a team of nine or 10 support people who are on the phone all the time with people, and we have a meeting once a week where they bring all that feedback and talk about it with the whole company. When we launch a new feature, there's not any uncertainty about, "Are people going to want this or not?" We really, really know this is one that people are going to love.

Courtland Allen 44m 6s

One of the things that I struggle with with Indie Hackers, because Indie Hackers is also largely fueled by word of mouth growth, but it's also fueled by me doing particular things like content marketing. The podcast brings in a lot of people.

Sometimes building certain features just changes the way that the website works, and it can contribute to lower churn rates or higher customer satisfaction, et cetera. So I'm always pulled between these two different approaches of, "Should I do the obvious things?"

People are asking for this particular feature or this bug fix or this incremental improvement on the website or, "Should I do these more experimental things where it's like I want to build this totally new feature that might not even exist on other websites?

Or maybe it does and it's working really well, but it's not on Indie Hackers." I wonder if you have the same pool at Less Annoying CRM where you can either just make the existing product better or change how it works.

Tyler King 44m 49s

If you'd asked me what the number one struggle or challenge I'm dealing with right now is, I would have said exactly word for word what you just said. Throughout the history of the company, we've never really innovated in the way that Steve jobs would talk about innovation.

Maybe we've had micro innovations, like this button is in a better place or something like that, but we basically told ourselves, "We're going to take the easy win until we have enough resources that we can do both," and I think we're at that point right now.

We're not huge. We have five developers, or let's call it four. I don't really have much time for that anymore. Two people can work on the core product and do the easy stuff, the things people are asking for. Let's just call it, for example, performance improvements.

No one's ever complained about a site getting faster, so then two other people can go take a risk on something else, but this is the first time we've ever been in that position, and trying to figure out how to do that, what to do, how wild it should be. Should the next thing we do be adjacent to CRM, maybe invoicing, or should it be something like you said, no one's ever even thought of before?

We have a variety of ideas, but I can't describe things like invoicing because there's not a word for it yet, but things that we think would play nicely with the CRM, but that literally no one's asking for. It might completely fail. Deciding how to prioritize that stuff is definitely on my mind.

Courtland Allen 46m 14s

I'm a little bit jealous because at Indie Hackers, at least right now, I'm the only developer and so I'm violating my own advice to focus and stay small and I'm rapidly oscillating between a week where I'm doing these little quick easy wins like you said, performance improvements, fixing bugs, making existing features better.

And then other weeks where I'm like, "Let me build this totally new thing," and it's really hard when you don't have the resources to try to focus on both of those things because it means both of them are going to suffer.

Tyler King 46m 42s

Would it be inappropriate for me to ask you a question here?

Courtland Allen 46m 44s

Go for it.

Tyler King 46m 45s

So a while back, I don't know, was it a year ago or something? When I went to Indie Hackers, the main community page, it went to what was almost a Twitter feed. I imagine that's the type of thing you're talking about here, where like that was one of those experiments.

Courtland Allen 46m 57s

It was definitely an experiment, and it did not work well, but I had a lot of reasons for doing that, and it turned out that there were all these second order effects that I did not anticipate that really made it backfire. I'll go into it briefly.

One of the things that really bothered me about running an online community is that so many people would make posts that didn't get responses, and so you'd see some posts at the top of the community that had 30-40 comments and everybody was collaborating, and you'd have other people who'd be like, "Hey, I make these posts on Indie Hackers and nobody really responds," and so a lot of what I did was try to educate people, "Here's how you make a good post." "Here's how you come up with a title for your posts that people are actually going to want to read."

In lot of ways it's good training for being a founder.How do you write good marketing copy? Posting on the forum is good practice for that. But also I was like, "You know what, how can I structurally change the product itself to make it better?" And so, I made all these changes to make it a little bit more Twitter-like, a little bit more like a feed.

I changed the algorithm such that, instead of being super winner take all and the top posts getting hundreds of comments and everyone else getting very few, it would be that every post got a middling number of comments. Everyone got five or six comments, and it actually worked really well. The number of comments got spread around, a much higher percentage of posts were getting commented on, but the downsides were all the second order effects that I didn't really predict.

For example, people will come to a forum and will judge whether or not it's a lively place based on the amount of activity on some of the top posts. And so, when I'm spreading out the activity in the comments about among a bunch of different stuff, people come and they're like, "Oh, these posts are only getting a couple of comments.

This site's dead. I'm outta here." Versus only 10% of people are getting responses, but they're getting a ton of responses, and you come to the homepage and see that. You don't really see all the posts aren't getting responses, you just see the ones that are, and so you're like, "Oh, this site's great. I'm going to make an account and sign up."

So it was death by a thousand really small, invisible, unpredictable cuts. I ended up reverting the change back to the original forum. I would definitely be further ahead if I hadn't spent time doing that experiment.

But then there are other experiments I could point to where I've built these new features, and they are largely the reason why Indie Hackers is as big as it is today. It's hard to say I shouldn't take these risks, even though they sometimes don't work out. There wouldn't even be a forum if I didn't take these risks.

Tyler King 49m 6s

Right. I've basically never taken that level of risk. I mean, we've had redesigns or a new feature that maybe we prioritize more than customers, but there's never been anything where -- I imagine nobody suggested to you to make it like Twitter.

Courtland Allen 49m 21s

No. (laughs)

Tyler King 49m 21s

That was an idea you had. We've never really done that. What you just said, that's what's on my mind is, most of the time it will fail. Are the wins enough to make up for the losses, or is it better to take that slow but steady approach we've been taking this whole time?

I'll say on my end, I would guess your audience is a little more forgiving of experimentation than mine is. So we've been pretty conservative about that thus far. It's not just about does it work for us. Yes or no? It's about, I don't want to give my customers whiplash of like, "Oh, there's this whole new thing," and then, "Oh no, six months later we're going to shut it down." They would not like that.

Courtland Allen 49m 58s

Let's talk about your customers a bit because you have a very particular audience. Specifically, you're selling CRM software to, I think, people who aren't the most tech savvy. You're not like, "Let me target brand new startups." You're moreso targeting people who've never used CRM software before, and you're targeting the end users rather than their bosses who are higher up the food chain.

You mentioned earlier that you don't really excel at doing sales, and so you need to a user up, bottom up approach to finding customers. You're not calling enterprise customers and making the sale over the phone. I think that's a hard thing to do. To decide who your ideal customer is going to be because, early on at least, you have so many different people who could use what you're building.

You have so many different directions to go in. It's really hard and painful to basically say, "You know what? Forget about everybody over here. We're going to only focus on everybody over there." How did you end up making that decision and when did you make that decision?

Tyler King 50m 49s

I'd probably be lying if I said I remember making that decision, but I know this – what I think the tempting thing for everyone to do is to say, "The easiest thing is to sell to someone like me because I already know a lot about them. I have a lot of insight," and that's really tempting, and you've got the grass is always greener thing, and a part of me is like, "I want to build software for remote - Not that we're remote anymore but at the time, remote, tech savvy startup companies."

The problem is, of course, everyone who makes software is that type of person. It's just incredibly crowded. So we just went with the exact opposite route. In the middle I would say is enterprise businesses where they're not like us, but there's so much money there. There's lots of software serving them.

I think if I were to make up my rationale at the time, it was probably just looking at it and saying, I'd rather be the only one trying to serve these people than be one of a million project management apps for design agencies or whatever.

Courtland Allen 51m 51s

That makes sense, but then there's the downsides that come with it, which is "Okay, why is nobody else targeting these people?" Number one, because they're hard to understand because they're not you. You're super tech savvy. They're not particularly tech savvy. Also, people who aren't that tech savvy are pretty hard to reach online.

They don't all hang out on a particular internet forum, and they don't listen to a ton of podcasts. They're harder to figure out how to reach. Third, I think they're generally more okay with the status quo. So somebody like me, if I've got to do something that needs a CRM, I'm going to immediately look up a great CRM to use.

Some of your customers might be like, "You know what, I'll just do this in my head," or, "I'll do this on paper," and not even think to find you. How do you compensate for all those challenges?

TYLER KING: 00:52:31] Well, first of all, I'll say, if you go back to what I was talking about earlier, that you get to decide what's easy and what's hard. If you just accept that you're going to be bad at marketing, no matter what, all those things you just said are downsides if you otherwise would have been capable of taking advantage of the upsides, but if you aren't, and you're just like, "I'm going to do product-led growth here, I'm going to build a great product and hope people are happy and they're going to tell their friends."

In a sense, you almost want to be in a space where all those other marketing tactics don't work. That was not an intentional decision. This is definitely rationalizing things after the fact, but I think if someone wants to build that type of thing, really slow growth, patient, product-led growth, I think these non-tech savvy, offline people are actually pretty good to sell to.

When they're happy about something, they're really happy about it, and I think they're more willing to recommend stuff, and there's just no one else serving them. But you're right. All the time, I'd say every few months, I have some daydream about like, "Oh what if I built something that had a viral loop? Wouldn't that be cool?"

Courtland Allen 53m 32s

Oh, it'd be so cool. Unfortunately, not the easiest thing to do, especially in your particular niche. Let's talk about this idea of competition. You said something there I think is interesting, which is, if you don't have a particular strength, then it's advantageous to be in an area where no one else can really utilize that strength anyway, so you're not really missing out. If I'm terrible at dribbling and basketball for example, I'd probably want to play in like some special league where everybody has to have one hand tied behind their back so everybody else is also bad at dribbling. This reminds me a lot of Peter Thiel's book Zero to One. Have you read it?

Tyler King 54m 2s

I've had it summarized to me many times, but I have not read it.

Courtland Allen 54m 5s

I read it a few years ago, and there's only really one idea that stuck out and stuck with me, and it was this idea that as a business, you really don't like competition. Competition is almost always bad, but that doesn't necessarily mean don't enter a crowded market. It mostly means that if you do, you need to somehow differentiate yourself from other businesses.

You need to find a distribution channel that works for you that doesn't work for others. You need to niche down and target a really particular, specific subset of people that no one else is targeting. You need to somehow have a much better product. You need something where nobody else can really compete with you. What do you think that is for Less Annoying CRM?

Tyler King 54m 40s

This one's the easiest question to answer because it's pretty obvious where we are right now. We experience this every day, we feel it. The difference is, we are willing to forgo revenue that other companies are not willing to forgo. That sounds vague, so let me make that more specific.

Every one of our competitors is venture backed or publicly traded, and so, they will not pay customer service people what we pay them because it's not profitable to do so, or it's profitable, but it's not profitable enough. They will not charge as little as we do aside from a loss leader, like a freemium type product.

They just won't do it. They won't stay committed to small businesses because the money is in enterprise. So across the board, if you look at everything that's unique about us, it comes down to the fact that I'm okay making a million dollars instead of a billion dollars or whatever the numbers are.

That gives you this unfair advantage in certain markets. A thought experiment I do all the time with myself is, if a private equity company bought Less Annoying CRM and tried to turn it into a cash cow all of a sudden, what would they do? All of the things that they would do are our competitive advantages.

They would come in and they'd lay off most of the customer service people, they'd raise prices, they'd stop doing phone support. All these things you can look at and say, "Great, that's what no other company is going to be willing to do. Let's keep doing this."

Courtland Allen 56m 2s

I think about businesses as almost having four different areas where they can differentiate and be really good. So there's product, what you're building, and what you guys baked into your product is really good customer support, and the fact that you're a low churn business, partly as a result of having good customer support, and partly as a result of what you're doin.

Intrinsically, a CRM is low churn cause you put in all your data, and so you don't want to just leave. There's pricing, which you just mentioned. You charge $10 per user per month. Other CRM tools are much more expensive. A private equity firm would come in and jack up those prices.

So those are two different ways in which you're very different than other people. There's your market, the third leg, which is who you target, and you're targeting people who are a little bit less tech savvy, a little bit more like end users.

Again, very different from other non-Indie Hacker CRM tools. Then there's distribution, which is like how you reach people. I think for you that's primarily through word of mouth. Out of all four of those quadrants, it's pretty hard for you to differentiate in terms of distribution, like Google AdWords is taken and very competitive, but the other three, it seems like you've got a really good way to stand out. So it doesn't matter that you're building something in a crowded market because you've got these at least three out of four different ways that you're different.

Tyler King 57m 8s

I'd actually disagree with that fourth point. You're absolutely right, over the same time period, we cannot differentiate ourselves, but patience is something we've got that no one else has. So, if you have word of mouth growth, all you have to do is wait. If you have investors, you can't wait.

You have to get them their money back. If you don't have investors, you can be like, "I love this job. I'm making plenty of money personally. So if it takes the rest of my career to get where we want to be, then so be it."

Courtland Allen 57m 38s

That's super fascinating. So your distribution channel is... patience, basically. Just waiting, and no one else can really afford to wait because they need that money now because investors are clamoring for it. But you can wait 5 or 10 years and build a really super solid business.

Tyler King 57m 49s

Yes. It's also awesome because every day we continue to survive, we're a day ahead of the next company that's going to start tomorrow and compete with us. There will always be venture backed companies that leapfrog us, and get huge and all that, but it's harder and harder and harder for a bootstrap company to come along and do what we're doing the older we get.

Courtland Allen 58m 8s

Very cool. Let's talk about the future because you're at this point now, you've been working on this for 10 years. You are thinking about building completely new features, and new projects, and things you haven't done before. What do you think the future looks like for Less Annoying CRM in the next few years?

Tyler King 58m 24s

Fundamentally, I guess I'll start with nothing hopefully changes too dramatically. The number one word that matters to me is trust between our customers and us. Our customers trust us, and I would rather slow our growth tremendously, or not even work on those innovative things if it means keeping that trust.

That's the number one thing. We're working on a major redesign right now that we have to do for a variety of reasons, but we've spent the last nine months emailing our customers like, "It's coming. Here's screenshots." We're not doing a big, splashy launch because we don't want to rock the boat with them.

Anything we do, we want it to fit within the expectations our customers already have. Having said that, I think we've come close to hitting a point where we are constrained by the price, and so, we have no intention of raising the price, but we probably need to sell something else for a different price so that we can fund. For example, I really want to build email integration at some point. Whether it's now or later, I don't think we can afford to do that at our current price point.

Courtland Allen 59m 26s

That's fascinating. The fact that you charge $10 a month and that definitely limits who you can serve. I mean, it determines who your market is, and at the end of the day there's certain things you can't build because it doesn't necessarily fit in with your existing customer base, and it'd be like going in a totally different direction.

I wonder what some of the advantages you have are. Some things that you guys have that others don't that will enable you to build new products going into the future that really take advantage of the fact that you have maybe cheaper customers, or less sophisticated customers, or whatever you have.

I think whenever you're leapfrogging from one area to the next one, there's always advantages you could build on. Does that make sense?

Tyler King 1h 0m 4s

Yes, absolutely. What most companies do is, they try to go vertical here and they say, "We've got a CRM. Let's make it more powerful, or add machine learning here, do whatever," because we don't want to leave our small business customers, pretty much the only option is to go broad with it and say, "Let's keep our exact current perfect customer and figure out what other product they want to buy from us."

I think there's probably some slam dunks in the same way that Less Annoying CRM is not innovative. We could make an invoicing tool that's the same as any other invoicing tool, and just by virtue of it being built into Less Annoying CRM, probably a lot of people would want it. There are some easy slam dunks like that -- I say easy, nothing's easy, but there are some things that seem obvious like that, and we're thinking about that.

We're also thinking about ideas, for example, how to do internal team chat in a very different way from how Slack does it because our customers, primarily, are not Slack user. That's much more risky but higher impact, potentially. So that's what we were talking about earlier, but we're probably going to do one of those two.

Either the easy invoicing, appointment scheduling, something like that, or we'll try and solve a problem in a more novel way.

Courtland Allen 1h 1m 17s

What a dilemma. You're probably going to do one of these two very opposite, completely different path things. How do you decide between those two? How do you think about it as an Indie Hacker or bootstrapper who's not really beholden to anybody, who's already making a lot of money? You can do pretty much whatever you want to do.

Tyler King 1h 1m 33s

Well, let me tell a little background on this, so the second half of 2018 through maybe February of this year, we had actually already decided what we were going to do. We are calling it Sparse. We had sparse.app. We had a website. We were collecting emails for it.

The idea is we wanted to take a big bet, but like I said earlier, we don't want to rock the boat for our customers, so we didn't want to build it into Less Annoying CRM because if we then decide to kill it, that wouldn't be great. Sparse was basically a combination of a team messenger tool, like Slack, a task management tool, and an inbox, basically. I still to this day believe it would be great, but we worked on it for about eight months and then just killed it.

So, that doesn't give me any clarity on where we're at right now, but that's a little important context that we haven't completely given up on the idea of trying bigger ideas. What we decided at the time was, we are big enough to invest resources in other things. We're still not big enough to compete with the resources of a venture-backed company if they're going entirely after that one thing.

We need to get bigger first. So, we decided it'd be easier to build something into the Less Annoying CRM platform and take the revenue from our existing customers like an easy win and build up. Then, if we want to go take a bigger risk, we can do it later. So we've narrowed it down that much. It was too big to bite off. We're still not big enough to really go after that type of idea. That doesn't really clarify it, but that's something.

Courtland Allen 1h 3m 2s

It makes sense because you're basically learning by trying different things, and those things don't always work out, but you're armed with a new knowledge and it closes off one small path and opens up other ones. I think that makes sense to proceed incrementally, and it's a testament to the fact that you've been doing this for 10 years where you have the time to actually try these experiments.

Tyler King 1h 3m 19s

We do have the time. One thing that I was very deliberate about when working on Sparse was that I was the only person at the company working on the product. The reason being, it is emotionally hard to work on something for eight months and kill it. I thought it would be demoralizing.

I knew from the beginning there was a high likelihood of that happening, and I wasn't trying to hoard it or keep anyone out or anything. I talked about all the time, I did brainstorm with people, but I didn't want anyone that works for me at the company to get too emotionally invested in it because I thought that could be damaging.

Courtland Allen 1h 3m 52s

Yes, I think about that all the time with Indie Hackers. I mean, it's really just me and my brother full time, but we have some contractors, and we've tried lots of different things and shut them down, and I'd run into firsthand how demoralizing it can be for someone to work on something and then the pull the plug and be like, "Hey it's not going to work."

As a founder, it's not that demoralizing to me because I'm going into this expecting it to be an experiment. "Let's try this content series, let's try this feature. Maybe it'll work, maybe it won't." But I think sometimes as an employee, you're not really looking at the bigger picture as much as the founder. It's a harder hit when something doesn't work out, and that was your whole job.

Tyler King 1h 4m 24s

Some startups have this very risk tolerant, "Maybe we'll all be unemployed in six months, go big or go home," type of attitude. We have much more of an emotional safety thing going on here. Our team is not really built for those big risks.

Courtland Allen 1h 4m 43s

How do you think about your role as the founder and CEO? It's pretty fascinating that you can take eight months to really sit down, and plan a new product, and code it, and do all these things as an individual contributor, but you also have a growing team that you have to manage and lead. How do you balance this as your company grows?

Tyler King 1h 5m 1s

Probably less intentionally than I should. I've done things on and off. Things like Monday is no meeting Monday. I'm just going to work. Like it's hard to stick to a diet, it's hard to stick to those things, but they do work. Recently over the last year or so, I've come to terms with the fact that we're not growing nearly as fast as we were before, and that's a good thing in certain ways.

One of the ways it's a good thing is, if you're at a company that's growing really fast, your goal is not to get better. Your goal is to get bigger. Do things at the same level of quality you're already doing them, but with twice as many people. When your growth slows down, you lose excitement in a certain way, but now you say, "Well we can actually try to do things better or not do them at all."

A huge amount of the work that we were doing was on scaling, and now we're not. That actually freed up a lot of my time just coming to terms with that. Like I said, our growth hasn't been great this year. I could go out and be like, "I have to fix this. I have to go spend all my time on marketing."

Instead what I'm saying is, "Let's spend another year making the product better, and if it hasn't fixed itself, then we'll see." So partially just taking a lot of pressure off of myself and saying, "I want to do product. That's what I want to do, and so I'm going to."

Courtland Allen 1h 6m 10s

I'm a little jealous. I think, ironically, Indie Hackers has become a high-growth startup. I'm not really trying to generate revenue. I'm really trying to grow as fast as possible. It's very ironic, and I like it on one hand because it's like, “Well, I don't have to focus on generating revenue.

That's an interesting place to be in," but in another place, when you're focusing on growth, just like you said, you don't necessarily have as much time to just make the product better and do these types of incremental fixes because at the end of the day, it's probably not going to make you grow 10 times bigger, and so, you're always worried that, "Oh, there's all this stuff I want to improve and processes I want to automate or outsource, or just things I can just do that are no brainers." But you just don't have time to do.

Tyler King 1h 6m 49s

Absolutely. Another thing to add onto that is, a common question in interviews like this is, 'What's the biggest mistake you've ever made?" I never have a good answer. I do have an answer if you choose to ask that, but my answer is not great because if you're growing a little slower, you never make a huge mistake because you fix it.

If you're growing really, really fast, you see all these little mistakes that you're making. I'm sure you've experienced this where you're like, "Ugh, I really wish I could do something about this, but I can't," and that's what turns into big problems down the line.

Courtland Allen 1h 7m 19s

Yes, it really does. At the same time, you have to be okay with it if you're prioritizing growth where you're like, "Yes, I know this thing is not good, but that's a strategic sacrifice that I'm making." Then you just have to hope it doesn't blow up in your face.

Tyler King 1h 7m 31s

Exactly, yes. We're built on mountains of technical debt, but over the last couple of years we've been paying it off in a way that we never have before. That's another example of this, where it probably wouldn't make sense for you to do that, but it probably doesn't make sense for us to do it either, but we're all happier with less technical debt.

Courtland Allen 1h 7m 49s

Well, Tyler, we're running close to your hard stop here. I've really appreciated basically digging into your brain and trying to figure out how you make all these decisions that are very similar to the decisions that I have to make, even at a much smaller company.

A lot of people listening in are dreaming about getting to the point where you are, where they run their own business, generating millions in revenue, and they can make these decisions that just make them happier.

What's your advice for somebody who's just now starting out, or maybe even somebody earlier, who's maybe working as a full-time developer or something and they're not sure if they have a good enough idea to get started or if they should even go this route?

Tyler King 1h 8m 21s

Like you said earlier, everyone takes different paths. I guess the most general advice I can give is, assume everything you're thinking right now is wrong and that, 10 years from now, you'll have a better idea, but that the only way to learn that is through action. Even if your ultimate path is, you don't want to start a startup, the best way to determine that is to start one and hate it.

Then you can live the rest of your life knowing that it wasn't for you. My story involves a handful of lucky moments that I could never reproduce, but the one thing I will take credit for is when those lucky moments happened, I took advantage of them.

Basically, if anyone's interested in this or they're doing it, the only thing you can do is do something and then realize how dumb you were and do it better next time. Sitting around and waiting is never the right answer.

Courtland Allen 1h 9m 15s

The only thing you can do is do something. Tyler King, thank you so much for coming on the show and sharing your story. Can you let listeners know where they can go to find out more about Less Annoying CRM and what you guys are up to in the future?

Tyler King 1h 9m 27s

Yes, sure. So, our website is lessannoyingcrm.com. We've got a blog and a newsletter and stuff like that. I'm on Twitter, @TylerMKing, and I've also got a podcast at startuptolast.com, so you can find me or the company at any of those places.

Courtland Allen 1h 9m 40s

Thanks so much, Tyler.

Tyler King 1h 9m 42s

All right, thank you. This was fun.

Courtland Allen 1h 9m 44s

Listeners, if you enjoyed hearing from Tyler, I would appreciate it if you reached out to him and let him know. He is @TylerMKing on Twitter, so if you learned anything or you appreciated hearing his story or his advice, just take a second and tell him thanks.

I also appreciate hearing from you. I am on IndieHackers.com all the time, which is a community of many thousands of founders and developers who are just helping each other build profitable online businesses, so if you're working on something new or you're just thinking about getting started, I encourage you to sign up, make a post, and feel free to tag me. I am @csallen and again, that's IndieHackers.com. Thanks so much for listening, and I will see you next time.