Episode Transcript
[00:00:00] Speaker A: I think SaaS founders are worse off because of AI in the near term, but I think in the long term, those who survive will do better.
[00:00:09] Speaker B: Yo, Mike Check. What's up everybody? You're listening to the Street Pricing Podcast, the only show where proven SaaS leaders share their mindset and mistakes in pricing so we can all stop guessing and start growing. Enjoy, subscribe and tell a friend. Now let's break it down with your host and sought after slayer of bad pricing, Marcos Rivera.
[00:00:32] Speaker C: What's up and welcome to the Street Pricing Podcast. I'm Marcos Rivera, author, founder and CEO of Pricing IO and today's guest has walked the walk, talked the talk, I mean, wrote a bunch of books on this subject. I see him as an authority when it comes to startups and SaaS and that sort of messy journey that a lot of folks go through. Today. My guest is Rob Walling. Rob, welcome to the show, man.
[00:00:55] Speaker A: Thanks Marcus. Great to be here.
[00:00:57] Speaker C: And Rob, introducing you is so much fun, man. Cause you're an investor, you're an author, right? You're gonna release your fifth book coming out here pretty soon here, invested in over 200 companies. You've done this yourself like half a dozen times, like you're the real deal. Because you've been there, you've done that. And then I love your mission of helping other SaaS founders do it as well. Why don't you take a couple seconds and just tell us a little bit about you and what you do.
[00:01:21] Speaker A: Yeah, appreciate that. It's always a little tricky because I do a lot of things, but I have a podcast with called Startups of the Rest of us with 700, 160 episodes. As you mentioned, I've just written my fifth book on entrepreneurship. It's called Exit Strategy and that actually hits Amazon on March 11, which I'm guessing will be right around the time this, this goes live. And I run Tiny Seed and microconf. Tiny Seed is a, an accelerator for mostly bootstrapped but ambitious SaaS founders. And we've invested, as you were saying, in, you know, about 190 companies and then about 20 on my own. I've done private, private angel investments. So it's funny, I don't think of myself as an investor though. Like when I introduce myself, I say I'm an entrepreneur. I start things, right? And these days, as you said, I'm, I'm trying to multiply the world's population of independent, self sustaining startups. Like that is my mission in life. And that's what all of these things the Commonality of all the things, you know, line up with that mission.
[00:02:16] Speaker C: I'm smiling ear to ear. That is fantastic. The mission around just helping others sort of rise up and elevate. And so your mindset as an entrepreneur versus an investor, I like that too, because it's really less around the money and more around sort of the. The. The experience, the coaching, the guidance and everything to help navigate through money is money. Of course you need that piece, but I think it's the. The mind and the mental that actually matter even more where you pour yourself in. I love that.
[00:02:42] Speaker A: Yeah, absolutely. And it's something that's evolved organically over. Over the course of 15, 20 years, because 20 years ago, I myself was an aspiring entrepreneur and trying to bootstrap software companies, and there was no one out there doing it. You know, it was Joel Spolsky. I don't know if y'all even know who he is, but Joel on software, Creak Software. And then they started Stack Overflow and they started Trello, you know, but there was really nobody talking about it. And so that's how I got my start, was blogging about stuff I was trying on the side. And then being an entrepreneur is so much fun, but for me, talking about being an entrepreneur is even. It's just a little more fun than actually doing the daily grind, you know?
[00:03:17] Speaker C: Well, no, I mean, Jolon Software is one of my first things I ever read too, is I was looking for different sources on Ask Jeeves or on Netscape and all those fun things back then which people are wondering, like, what the hell are they talking about? Right? But I would love to unpack a lot things with you today. Are you ready to get street with me?
[00:03:33] Speaker A: Let's do it.
[00:03:34] Speaker C: Let's do it. All right, man. So for everyone listening here, quick roadmap for you all. This show is based on the book Street Pricing. And so I break it down. Rewind, play fast forward. Right, so what we're going to do is rewind back into a story. Rob's going to tell us a bit about a struggle and a success and how he was able to figure things out. And I want to always hone in on pricing, packaging, but we can extend that a little bit because you've done a heck of a lot more than just pricing packaging. We're going to go to play on what's working today, what are some of the biggest things that help entrepreneurs break through, and then we're going to go fast forward, which is what's next. And the landscape is changing so damn Fast. I can't wait to talk about that. Right, so we're going to get into a little bit of that. So let's go ahead and start things off. Rob, I'd love for you to go back into either one of those six startups you did, or maybe one that you've been close to and talk through a story or struggle around, you know, how to figure out how to charge something and build the right stuff.
[00:04:28] Speaker A: I think I got a pretty good one, man. So my last SaaS app I started is called Drip. It's drip.com and I started it in 2012 and sold it in 2016. And that was my, that was my swan song in terms of SaaS. And startups had treated us very well up until then. I really enjoyed it and they had treated us well financially. But Drip was the moment where it was like, cool, I don't have to do this again if I don't want to. You know, I could essentially retire. I was, I think I was 40 or 42 when I sold it. The thing, the struggle is going to be a pricing, it's going to be a pricing story. So it's right up your alley. But when we first launched Drip, it was very simple. All it was was an email capture widget like a put a piece of JavaScript on your website and it popped up to capture emails and then it had a seat, an email sequence or autoresponder sequence built in. That's all it was there. That didn't exist in 2012, 2013. So there was no, you know, what would you use for today? Like, you know, maybe Sumo.com or OptinMonster was one. There's a bunch that came out since then, but that was, you had to basically hand code stuff or use open source, you know, projects at that point. So we built it, we launched it and I was charging a monthly fee based on the number of new subscribers that you received per month. Because to me it was an opt in tool and the value was, hey, new subscribers. Growing your list. Well, that it plateaued pretty quickly. I got it with my audience and everything I know about marketing and sales. I got up to about 8k 9k of MRR, 8 or $9,000 a month. And then it plateaued hard and we did not have product market fit. It was just bumping along. Churn was high, it was just working. So over the next nine months we pivoted into becoming like an email, a full blown email service provider and frankly edged into marketing automation, you know, which was a new newish Thing the only marketing automation that existed at the time because Mailchimp didn't have automations, ConvertKit didn't exist yet. You know, it was like Infusionsoft, which became Keep. It was marketo part of these big enterprise things that were like thousands to get set up and hundreds, four or five hundred, up to five grand a month, like very expensive. So we were edging into this market. So we pivoted into. And so we were marketing automation now competing with, you know, we're lightweight, competing with infusionsoft and all those. The thing was, is our pricing was still new subscribers per month. And think about how much money and expansion revenue we were leaving on the table. Like, it's insane. You would never build an ESP or marketing automation today and not just charge based on total subscriber count. That's how everyone charges. And there's a reason for that. You and I both know expansion revenue, right? So it took us. We had to rebuild the whole pricing engine because it was. Wasn't based on this. We had to go to our customers and say, we're going to start doing this. Some of them got really upset. New customers. It was fine because we just changed the model. It was a struggle. It was a struggle in the early days both with trying to find product market fit and then our pricing was off. It was just something wasn't working with it.
[00:07:21] Speaker C: So I'm curious because what were you tracking to tell you that this stuff's not working? You must have been seeing something in the numbers.
[00:07:28] Speaker A: Yeah, I was watching people, maybe we had a couple hundred customers, and I was watching their lists get bigger and bigger and bigger and being like, wait a minute, you know, it's clicking with me. It's like, wait, they have. Someone had 20,000, 30,000 subscribers and they were paying us $49 a month. And I'm like, this is, you know, and I go to mailchimp and type that in. I go to infusionsoft, type that in. And it's like, no, no, no. We are like dramatically underpricing in a way that we are leaving a tremendous amount of value on the table.
[00:07:57] Speaker C: It just didn't make sense. Right. And so when you see something that is growing, that's adding a lot of value and see that your share isn't growing, you know, proportionally or at least to some degree, that's when you know you're probably not charging for the right thing.
[00:08:12] Speaker A: Right.
[00:08:13] Speaker C: I think a lot of entrepreneurs are kind of worried that am I going to maybe if I charge too much they may not buy it, or that value exchange is it off. But they're typically not tracking what's going on behind the scenes. So there's some anecdotes or things that pop up here and there. So when you think about, okay, I have enough evidence now to tell me I'm not doing this right, what was the first thing you did when you're like, okay, we're going to change this and we're going to do it in a smart way. What did you do?
[00:08:42] Speaker A: I took a weekend. Here's the thing. Redoing the pricing I knew was going to be some effort, both technically and then we had to read, we had to think through the tiers. So there was like some logistics and then it was going to be communication to prior customers and new customers. And I knew all of that. It was just something, you know, that thing that sits on your to do list for months and you just don't. You keep not doing it because you're just like, have this resistance to it.
[00:09:07] Speaker B: Oh, yeah.
[00:09:08] Speaker A: And that was, that was what was happening. So the, that's the first thing I did was procrastinate and not do it. The second thing I did was like, after a month or two, I was like, oh, I know this is a problem. And I took a weekend and just kind of got up the. I don't know, the gumption to just. I had some coffee and like, sat down and I mapped out everything. I was like, this is what I think the pricing should be, you know, and it was 2500 subscribers at 49amonth and 5000 to 99amonth. You know, it was just kind of mapped it out and I wanted to just sit with it for. For several days to just feel. I try to use as much data as possible, but there's often times, like being a founder is making hard decisions with incomplete information. And it's rare you have less or more, you know, less information than in the early days of a startup. And usually your V1 pricing and maybe even V2, you're kind of making it up. You know, as much as we. I want there to be science and I want to do a survey and I want to do this and that. I was just like, you know what? I'm going to take a crack at it. So I sat down, mapped it out, and then I met with my developer and said, what's it going to take to implement this?
[00:10:06] Speaker C: Excellent. And so you sat your butt down and finally said, okay, I'm going to figure this thing out. Rolled up your Sleeve took whatever data you had, which I think is the right scrappy approach. Right. You're not going to have perfect information at that stage. And by the way, things are going to look pretty darn different a couple years from that point anyway, so you got to stay nimble. So I totally key into that. But now that you got, you sketch something out, say, all right, let's go ahead and put this out there. I imagine you were looking for some signal that this is better, this is worse, what am I going to change? And I'm curious to know what that signal was.
[00:10:38] Speaker A: Yeah, the signal that we saw was that folks like, especially new customers that signed up, I saw within 60 to 90 days, folks that had existing lists. I saw expansion revenue start popping in. And I had. I was getting an email every time someone went from that 49 plan to the 99 and the 149, you know, and I started seeing like, oh, man, this is it. This is the cheat code. One of the cheat codes of SaaS is expansion revenue, which leads to net negative churn. And I had never owned a SaaS company that had net negative churn before. We didn't see it within 90 days, but we saw expansion revenue within 60, 90 days. And then further out, we eventually did hit net negative churn in most months.
[00:11:21] Speaker C: I got to get this because it took courage to put that out there and wait and see if this thing was going to work. What I seen a lot of founders out there, or even just folks that are SaaS operators today, is that they know they should probably change it, but they're. They're kind of nervous. Like, they're. They're scared. Oh, man, I'm going to kill my. My momentum. I'm going to, you know, customers are going to leave me and Churn or whatever it is. And so I want to ask you, how did you feel? Did you feel any. Any anxiety or any nervousness before rolling it out? And how'd you overcome it, Marcos?
[00:11:50] Speaker A: I feel anxiety before I do pretty much anything. Like, that's just. That's just how I'm wired. Hell, yeah. I was super scared. And in fact, the most. One of the most common advising calls that I do with founders I'm invested in is pricing. And it is telling them. Usually it's either raising or adjusting. There's a value metric that's off. There's something that's just not working. And finding pricing that's probably 80 or 90% correct, I find is not. It's not as hard as it sounds. The hardest part Is I do coach the founders on, you're going to be really stressed and you're not going to want to do this. Like, I'm going to talk you, not talk you into it, but I'm going to help talk you through it is probably a better way to say it. You will feel anxiety. Fewer people are going to be mad than you think. You know, I've seen this dozens, if not hundreds of, you know, of times, of people changing pricing. So that's the long answer. The short answer is, yeah, I was pretty stressed about it, but I knew it was just one of those things where I knew I had to do it. And so I just, like, said and I told the team. Our team was probably three or four. Yeah, it was probably three people at that point. Tiny, tiny. But I told everyone we were doing it. So then, I'm the boss. I have to do it now. I can't back out. It was a nice account of forced accountability to be like, let's implement this. And then the other thing that helped me actually was I sat down and I wrote a blog post and an email to all the customers and prospects. And I worded that in a way of like, here's what we're doing and here's why, and here's why this is justified, and if you have questions, get back to me. And that actually was a bit cathartic. It helped me be like, oh, this is actually a pretty reasonable thing. I'm not being a jerk here. And even through that, of course, you get a couple people that are pissed off, right? And they email you huffy things. I can't believe I'm changing to blah, blah, blah, which they never do, really. You know, I mean, they're gonna switch and it's like, no, you're not. So it was stressful. It was more stress leading up to the moment. And then once we did it, it was actually not nearly as stressful as I thought it was gonna be.
[00:13:39] Speaker C: I think you're right. I think it's the anticipation of it that really, you know, gets you wound up. And then once you do it, you do it and you just kind of ride the wave. Like, as it happens, I will say this, I think that is fantastic advice for anyone listening today. If you're thinking about changing your pricing, updating something, it's probably been on your to do list forever. Sitting down, taking that weekend, talking to your co founders and just kind of putting together a plan. It's gotta make sense, though. You can't just like, fly blinds. I'm Just gonna make this up. I'm gonna quadruple the price and see what happens. That could be a little reckless, but if you think it through and then put it. And then put it through, I think both things, you need to take those steps, increase the pricing confidence, and then the next step is likely going to be easier. So if I had to go back in time with you, Rob, and sit next to you as you were contemplating, should I change pricing? I'm curious to know. Right. What would you have done differently now that you know, you saw things play out? And 20, you know, hindsight is 2020 vision, as always. But what would you have done differently?
[00:14:38] Speaker A: I would have done it sooner. I think. I waited to. I waited an extra month or two because I was procrastinating and quote, unquote, scared of the backlash. I also would have told myself, this is not nearly as big of a dragon as you think it is. Like, I built it up in my head and I had undue stress. I did this with too many things building drip, to be honest, with things that in my head seemed like a really big deal, and I made a big deal out of them. And then we do them, and it was like, this is not a big deal at all. What am I. Why am I ruining my nights and weekends stressing about this, waking up sleepless when we're executing, we're doing it. You know, that's probably one of my bigger regrets with growing the company, if I'm being honest.
[00:15:17] Speaker C: If I had a nickel for every time someone said, I wish I would have done it sooner. Right. The idea here is that you do push off things that are uncomfortable, uncertain, you feel nervous about. It's often you're right. It's that it's your brain protecting you and creating these very scary scenarios in order to keep you from potentially making mistakes. The problem, though, is that the sort of exacerbating of the issues, the exaggeration of the trauma, isn't always there. Your brain is designed to do that. And so being aware of that, taking a step forward. And by the way, again, you don't need to 10x your price necessarily, or do something crazy. You can sit down, be thoughtful, use the data you got, and then make a move and then make the next move. So my last question here is, once you saw this working and you're like, oh, actually, this wasn't that bad, what was the next move that you made afterwards and how did that feel?
[00:16:13] Speaker A: There were a couple things we did. So the interesting learning is that the pricing that I had laid out and that we implemented the, you know, the V2 pricing, we'll call it, it wasn't exactly right. It was mostly right. It was 80, 90% right. But we then, within probably eight, six or eight months, we changed it again. We didn't change the model. It was still subscribers. But I adjusted the levels. How many subscribers you got per, you know, the value metric. Right. How much you got per dollar, Basically, so. So that wasn't the next thing we did, but it did. I think we. By the time we sold, we had four different pricing. Again, not pricing models. It was only two different models, but it was like four different pricing structures. Because I remember in the code There was a V1, a V2, a V3, and a V4, you know, class that each defined how the billing engine worked. To be honest, the thing after increased pricing or change pricing, and I saw that a little bit of expansion revenue, and we had already launched some of our automations.
The next thing I did was to market the shit out of that business. Cause I knew with expansion revenue that every dollar I put into it, assuming people stuck around, was just gonna multiply this flywheel. And so that's what I did. I mean, I spent the next couple years just hammering on marketing and sales.
[00:17:24] Speaker C: I love that, man. From fear to flywheel. I love that. Like, that worked in my mind. Like, just paints a really good picture. And so I am, to me, very encouraged to hear you say the things that I've been hearing from other founders. And you're so brutally honest. So I love that you put it out there like that. Team, I want to take a quick pause here to ask you for a huge favor that'll mean a lot to me. Please review and share the show. Share it with your team, your friends, your peers. Not only will it help them stop the guesswork in pricing, but it'll also help you and increase the chances that you'll take action and change for yourself. All right, much love. Now back to the show. If you had to go back. Just the one thing that. Just listening the last 10, 15 minutes here, the one thing that you would tell a founder about pricing, monetizing, charging for stuff. What's the one piece of advice you want them to take away?
[00:18:15] Speaker A: I say this often. Pricing is the biggest lever in SaaS. It's the biggest lever. So if you haven't revisited it since you launched or you haven't revisited your pricing in the last year, at least take a swipe at it. And it doesn't mean you need to change it. Look around at the competition, talk to someone who can give you some advice if you, you know, if you have an advisor or an investor or a mentor. Again, this is one of the most common calls I do across these, these, you know, I have more than 300 founders that I'm invested in across these 212 companies. And revisiting it is something that we forget because the business is working, this is working. Why should I revisit it? Well, because you are likely leaving money on, on the table if you have not at least thought it through. You know, again, it depends on how fast your space moves. If you're in a really slow moving space, construction firms, legal, maybe, you know, Maybe it's every 18, 24 months. But if you're in a, in my opinion, like a CRM or an ESP where there's just all these entrants like every six to 12 months, I think you need to at least rethink what.
[00:19:12] Speaker C: You'Re doing and not even turn it upside down. Maybe just tweak, adjust it, things like that, based on what you learn. I think that's solid, solid advice, man. But you mentioned the most powerful or the biggest pricing. The biggest lever in SaaS is pricing. And I want to move into other levers as well. Now we're going to go for rewind to play you probably in your seat. Listen to a lot of challenges that startups go through, that SaaS companies go through to try to scale, to try to reach the next level level. And I'm curious to know today, if you had to pick and hone in on say like two things that you're like, here we go again. This is one of the most common blockers of entrepreneurs in trying to get to the next level of their SaaS company. Let's pick the first one. What would be that big blocker that you're seeing today with the folks you talk to?
[00:19:55] Speaker A: So I'm going to make a couple assumptions because if you are, if you have no or weak product market fit, then your biggest problem is churn and you need to get product market fit. So let's ignore that. That's early stage, right? But let's say you're doing grand a month, 50 grand a month, 100 grand a month. And you know that you've built something that people want and are willing to pay for, right? So churn is not your biggest problem by far. The number one is always more leads, more new customers.
[00:20:24] Speaker C: Right.
[00:20:24] Speaker A: It's just growth in general and there's a bunch of different ways to Troubleshoot that. Of course, it's like, well, do I. Do I need to expand on a marketing channel I already have? Do I need to start up a new one? You know, there's some conversation that can happen there. I think the other thing that I see is. So I did a talk at microconf Europe last year, and it was about, I think I called it the seven types of SaaS plateaus. It's either seven or eight. I forget the number. But I tried to. What I tried to do is identify every reason that I've ever seen for SaaS companies to plateau. And so example is like, well, you're in a tiny little market that only serves, you know, there's only like 3,000 potential customers in the entire US or in the entire world, and you already have a third of that market, and you're just not going to grow very fast. So that's like, that's one way. Another way is you just have too much churn. Another one is you don't have enough leads. You know, there's these different reasons that I've seen folks plateau, but plateauing is by far the. The second thing that I hear the most often, which is I've plateaued. Help. And then I get to say, all right, well, first we need to figure out why you've plateaued and then figure out how to fix it. Can you fix it? You know, do you need to launch a whole strategic effort to pivot? Do you need a second product? Blah, blah, blah. There's a whole troubleshooting thing there to.
[00:21:35] Speaker C: Yeah, the plateau. And I think that is the, what I call the. The plateau, I think is the better term. I call it the oh, shit moment where you're trying to figure stuff out and you're like, I am not growing. Like, things aren't happening, things aren't moving. What do I do now? And you said a few minutes ago, like, you're making hard decisions with very little information. Right? I mean, the point here is that you don't know what to do. You have to figure it out. That's the point. Right? And so going, let's unpack this a little bit more because I think that, that the plateau happens for different reasons at different stages for different companies. Right? So there's no, like, formula that can tell you, but I would find that connecting it back to the leads or growth piece. Right. I think in any business, right? You build something that people want and people want to pay for. You let a bunch of folks know about it, and then you sell it, and then you keep on growing, right? So usually the letting people know about it is a much trickier thing than folks realize. Right. You're spending a lot of those early years building, you know, iterating, you know, getting that right and getting the delivery of value to the point. Right. What I call the building value piece of it. And then there's the letting people know your stuff exists and that your stuff's awesome and that there's lots of channels for that. That takes time and money to figure out. And most folks don't take the time and money to figure it out. And then from there, then how do you continue to sort of create like that flywheel effect you talked about earlier? So if you can give me maybe I would say the ninja moves that you've even probably done yourself, but that you think have been able to unlock different reasons for plateau. And let's pick like I would say one that is maybe growth related on the marketing side and then maybe one that could be, I would say like TAM related, where you're like, oh, I don't think I'm in the right market. Let's pick those two because I think those happen quite often.
[00:23:24] Speaker A: Yeah, they do. And let's also, I want to continue to assume that you have at least decent product market fit that you have built something people want and are willing to pay for. Okay, so the first one with growth related. And so usually what I sit down is I ask the founder, where are you getting most of your new leads right now? New, new, you know, your traffic. If you're kind of a marketing funnel or your new leads, if you're a more of a sales driven funnel and talk through kind of the sources for those. And then my first question is always, so you have this one source or these three sources or whatever, which of them is working the best and which do we think we can 2, 3, 4x, you know, should. And that's. This is again, hard decisions, incomplete information. We are kind of guessing. I mean, these are educated guesses based on history, gut instinct, you know, what we know of this particular market. If it's education, it's one thing, if it's construction firms, it's another. If it's a horizontal play, it's a whole other, you know, question. But that's usually where we start is can we double down on what's already working? Because that's easiest. And if not, if everything's totally tapped out and we kind of dig into it and you know, we do some research to do that, then it's like, okay, so do you need to start another one? Another marketing or sales approach and which from the list? Because I have a list in my, my fourth book called the SaaS playbook, a list of all the 20 B2B SaaS marketing approaches that I know of. And then we, we go through those and I say which of these might apply, you know, that you're not already doing.
[00:24:48] Speaker C: I love it. I love it. It reminds me a little bit of something that I read in a book. I think it was one of Hormozy's books where he talks a little bit about doing something, just doing more of it, like just not doing it enough, thinking about like paid ads or something like that and then doing something better, right? So taking your process now and just kind of adjusting it, improve. And then there's doing something new, right? Doing something totally different, new channel, going after new, you know, tam whatnot, new product, et cetera. And so I think a lot of folks, when they're trying to break through the plateau, jump to the new. I think a little bit too fast. I think you should assessing what you're doing now and like you said, double clicking on it and making sure that there's no opportunity to just do like more of it or just do it a little bit better. I think is the first thing that if you know, for those listening that you probably want to start there and then before jumping into something new. Something new could actually distract you. It could actually complicate things and it could actually slow you down. So I think there's nothing wrong with you. Just make sure that you're. You handle the stuff in front of you first, right? If I were to take this a little bit further and play it through, say, okay, fine, checked everything, everything is working. I can't do anything more. I can't do anything better. And now the new piece, which again, I find the most highest risk maneuver. How do you help them think through where they should place their new bets? This is an unfair question. I know, but no, I have a.
[00:26:09] Speaker A: Whole framework around this. It is unfair. But so I have, of these 20 B2B SaaS marketing approaches, I have what I call the, I think I call them the big five. It's just the five most common that I see in B2B SaaS. It's Content, SEO, Cold Outreach, Integrations and Partnerships, which I include as one, the same one, and ads of some kind. Content, SEO, Cold Outreach,' Integrations, partnerships and ads. And so usually I start there, but then there's another five that are like my next. The most Common and these depend on the space you're in. So one is in person events. And it's like you need the annual contract value to be able to sustain that. But there are plenty of tiny seed companies or companies I've been involved in that just mint money at in person events. They go and it's the in person. And if you charge them 20 grand a year for your software, you can justify this. You know, you close two deals and you kind of make it building free tools, starting an affiliate program. Capterra and G2, which I kind of separated away from ads. So these are kind of my top. Those are like top nine, I guess. And usually I'm talking to the founder. I know enough about their business to be like, you know, talk to me about ads. How did you know how expensive they are? You know, can we, can we get a mentor who has an opinion on this to get in and recommend if this is feasible for your business? Given your funnel and given your, you know, your economics SEO, I have, we have a tiny seed mentor who will do an SEO audit and will basically say, I think there's opportunity here or not, right? Or sometimes the founder's knowledgeable enough in SEO that if they're, you know, already doing it or looking for a new thing, they can go do the keyword research and such. But that's usually what it is, that cold outreach. I think you just need to go try it, you know, and, and most SaaS companies these days are trying it. What I, what we used to see, even like five years ago, was that about one in four, maybe one in five companies had tried it. It worked. That number is less now. It's more like 1 in 6, probably 1 in 5 to 5 to 7. You know, I mean, it's. So it's dropping, right? It's 25, 20. It's down probably around 10 to 15% because there's you and I, I probably experienced this. You get so much cold outreach now. And anyway, so that's how I would do it. It's just like one by one, we walk through and talk through and say like, is it even feasible for you to do in person events? Your annual contract value is on average is $2,000. So no, not possible. Scratch it off the list. Right? So are there affiliates in your space? You know, in order to make affiliates work, you usually want someone with a big audience, blah, blah, blah. Are there affiliates in the electrical construction, you know, space? Well, probably not, you know, but if you're marketing to aspiring entrepreneurs for ex. Well, you know, there's tons of podcasters and YouTubers, you know, that have that space. So maybe it's a, it's a thing. So I try to help them. It sounds like it's. I used to think marketing was black magic. It really is just a process that you think through and you take your best guess and then you execute. And if it doesn't work, you need to execute quickly and you need to try the next thing.
[00:28:59] Speaker C: That, that is as practical as it gets, right. I mean, thinking through, there are steps you can take, right? And as you take each one, think it through, try it, it doesn't work. Try something else. Right. Or try it again. And my point behind that is there are these options. And so don't just be paralyzed and do nothing. Probably the worst thing you can do is do nothing when you're trying to break through a plateau, grow your business, et cetera. I love that. That is fire. Those big five things, the content, the SEO, et cetera, the partnerships, all those things I think would work across the different landscapes of ACVs and verticals and stages that you're in. One of those options are probably underutilized, under optimized, and you can probably push a little harder. I love that. Super practical. Now let's think about those five things and even the rest, the events in Capterra, things like that. And let's go into the fast forward segment where we're thinking about now what? Right, you got this huge revolution in AI happening. The way people code to the way people buy to these agents marching in and taking over use cases. A lot of things are changing now. I'm not going to pretend to know what the world's going to look like in two or three years from now. Probably different is my guess. How do you're five or how did. Just, you know, when I think about the landscape changing, how are entrepreneurs, how are they positioned to really grow their SaaS companies in this new landscape, in this changing ecosystem? Are they better off, worse off? Like, tell me, what's your point of view as the world shifts?
[00:30:28] Speaker A: Yeah, I think anytime there is a seismic shift like this, like when businesses move from exclusively brick and mortar to being online. When the Internet, you know, really World Wide Web started in the 90s, whether it was a lot of folks moving to mobile, when the iPhone came out in 07 or 8, whenever, 6, 7, whenever that came out to now AI, these seismic shifts are really uncertain. And in the near term, Right. And they're pretty scary. And so they are. They do threaten existing business models 100%. You know, think of all the stores, the clothing stores that like in the 90s don't exist today. And really it's because I buy a lot of my clothes online, right? I think a lot of us do. And similar with mobile if you know, everyone doesn't need a mobile app obviously, but there were some web sites that if they didn't, if they were a social news site and you didn't have a iOS, you know, or a mobile app like their history, right. So yeah, it is uncertain and I think SaaS founders are worse off because of AI in the near term, but I think in the long term those who survive will do better because that's usually what happens. Those who survive and are able to latch on and use AI not only in the operations of their business but as they add features and AI enhanced stuff. I think that is long term, I'm bullish, short term, a little bit concerned or bearish on a lot of fronts. It's like if you do a lot of content and SEO right now, well, we know there's a bunch of kind of AI slot being produced and so can you in the near term, will you be overwhelmed by it? Will you lose your SRIO rankings? Can you survive long enough for all for Google to get ahead of that and then swipe those out of the results? Because that's what's ultimately going to happen. You're not going to outrun Google's. I don't think you're going to outrun Google with AI. And then even Google's search volume is inevitably going down because of all the AI. You know, how many times do you go to ChatGPT or to Claude or whoever these days, Gemini to do a search. I know that probably at least half my searches now have switched already to using an AI and so that threatens SaaS business models, you know, that rely on SEO. So I do think there's a shift to happen. But I don't believe people are saying like developers are going away. There's going to be no developers because cursor and these things are going to get so good. I don't believe that at all. I think the best developers I know today are way faster and way more capable and the mediocre developers are way more mediocre. They turn out a lot more shitty code than they used to, you know. And similarly with, with business models, I've seen people claiming that age AI agents are going to just SaaS is going away and there's just no, there's no chance of that. I do not believe that for a second. In fact, I just recorded a YouTube video about how like 15 minutes of me ranting about how. Why I think that SaaS is going to stick around in some form or fashion. Now will it look exactly like it does today with a little form field that does this and it's all. It's a crud app doing XYZ? Probably not, but. But the SaaS that I use today is a lot different from the SaaS I used in 06. You evolve or you die.
[00:33:21] Speaker C: You evolve or you die. I think that's a beautiful way to sum it up. I do think that it is interesting though with agents and against the existing. Think about the application tier, right. And think about the logic tier more than anything else, right. Where you're just taking a bunch of data, doing a bunch of stuff and when you're thinking about agents abilities to do that versus static code or things like that, I mean yes, it can do heck of a lot more. Is it the extinction of SaaS? I think that's a. There's been, there's been a lot of things that try to, you know, I think a lot of folks predict will be extinct and they actually, you know, never really happen or happens takes a lot longer than people think. And So I think SaaS is definitely one of them. But how that shift or how quickly that change will happen remains to be seen. I think we need to buckle up. There's going to be a whole big change in a lot of different places. Healthcare or health, it's fintech a lot of different places that are ripe for even more disruption and change. I think it'd be really super interesting to see how they, how they put on their skis and go down this slope. It'd be really interesting. Last big takeaway for if I had to say, hey, I just got this wonderful prediction from Rob Walling and he said for sasters out there, for people in the software world, he predicts this in the next five years. What would that prediction be?
[00:34:38] Speaker A: The prediction is that SaaS is not going away, but it is going to evolve pretty heavily. And if you are not paying attention and you're, I know some founders who are ignoring AI and saying kind of like AI is a fad, like crypto or AI is a fad, like you know, drones or whatever, like it's a thing that will come and go. It's not, it's not, not going to go well for you. But again, the prediction is also, I don't, do not believe SaaS is going away. It's just going to evolve and you're going to need, you know that there's APIs and then there's agent command interface that ACIS they're talking about. That is like a. It's how agents are going to interface. Like, that's something that should be on your radar, right? The prediction is within five years, SaaS will look significantly different. But businesses and governments willingness to pay for software on a monthly or an annual basis is not. That's not going away. So that's. To me, SaaS doesn't need a user interface. We've backed tons of companies, probably at least a dozen, maybe more, that are. That are just APIs. You know, they collect data. So would you call that a SaaS? Well, you're paying monthly or annually for a code base that is providing you something. Even if SAS becomes just all APIs or all ACIs, to me, that's still SaaS if I'm not building a JavaScript, clickable, whatever. So that's the type of thinking that, you know, I am seeing or that's in my head for the next several years.
[00:35:56] Speaker C: I love it. I love it. Don't ignore it. I think it's one of the big things I took away from that as well, because it is coming, actually. I would say it's even here in some degrees. And so get ready now. I'm with you 100%, man. Thank you so much for taking us through that. I could probably ask you a thousand more questions and you'll give me a thousand more wonderful answers. But I appreciate all the knowledge that you dropped today for our audience. I do have one last question for you, though, one question that helps me understand Rob a little bit more on a human level, because I'm almost convinced you're AI. But let me just make sure here. What was your favorite jam growing up? Or just give me that jam that just lights you up every time you listen to it. It. What's that song?
[00:36:35] Speaker A: I have been looping this song by a rap group called Third Base, and the album is the Cactus Album. And the song is Words of Wisdom. And if something about that beat and there's a horn sample. And I haven't heard this song in 30 years. And I. It came on the other day and I was like, I forgot how good these guys are. So anyways, that's. That's been my loop for the past few weeks.
[00:36:58] Speaker C: You just. You just made third bass. Oh, my God. I have not even heard. Yeah, it's been decades.
[00:37:04] Speaker A: I would say in a minute, huh? Yeah, they had two albums and disappeared. But that first album's good.
[00:37:09] Speaker C: Oh, man, no doubt, no doubt. I love. I have a whole new appreciation. Did not see that one coming. So third base for Rob again. Thank you again for jumping on here. Would you be willing to come back in the future, give us an update on what's going on?
[00:37:21] Speaker A: Absolutely, anytime.
[00:37:23] Speaker C: All right, man. Wonderful, everyone. Team, that was Rob Walling here, and he gave us a ton of things to think about all throughout that SaaS journey. Take what you learned, get 1% back, better experiment. Don't let fear paralyze you. You want to try to break through, sit down, think it through, get a mentor, talk it through with someone, your co founder, a coach, anyone, and just make, you know, make a move, take a step, and then just adjust and iterate along the way. It's part of the journey. I would follow Rob on anywhere you can find him in his podcast, LinkedIn, grab his. His next book and drop the title for me. Again. It's the exact exit.
[00:38:00] Speaker A: Exit strategy.
[00:38:02] Speaker C: The exit strategy. That's pick it up on Amazon. I think for those of you that are not just thinking about what's happening today, but perhaps the end game and then what happens afterwards, I think that's going to be a great one to grab as well. So, team, I want you to get better, move away from that guesswork, and remember, stop guessing and start growing. Until next time, thank you and much.
[00:38:23] Speaker B: Love for listening to the Street Pricing podcast with Marcos Rivera. We hope you enjoyed this episode. And then don't forget to like and subscribe. If you want to learn more about capturing value, pick up a copy of Street Pricing on Amazon. Until next time.
