now. All right. Please do a clap for me so we can sync the audio and video later. No, you can just do it. Yeah. Perfect. So this will help us in syncing the audio and the video at the beginning so we know if there's any gaps. So we need to, you know, take care of that. Okay. Awesome. All right. Hey, Matt. Welcome to the show. How are you doing today?
Are we doing this together? No? Okay.
Thanks for having me.
Awesome. Usually when I talk to anybody, I start the whole conversation with the context of their life. I believe whoever we are today, there's like a huge history behind that. There are a lot of stories, whoever we are today. So give us the earliest context of your life. Who is Matt? Where do you come from? What's your story?
Well, you know, so I was born in Oklahoma in a trailer park and, you know, was the product of a one night stand. And so it started out kind of rough, but, you know, as a teenager and young adult, I was very hungry and wanted to go do stuff very opportunistic. And you know, I went to school for software development and again, was just always looking for things to do and very hungry.
had an entrepreneur spirit. My dad worked at flea markets the whole time I was younger. And so I think that kind of helped me be more entrepreneurial and started my first company when I was 22 years old. And the rest was kind of history from there. And I think that had a lot to do with my upbringing.
Okay, what are you doing today?
So I do a couple things. I own a company called Full Scale that does software development for other people. So we have about 300 employees in the Philippines. I actually started that company about five years ago because I needed to hire software developers for a SaaS company, a different startup company that I had started in. And then just recently started a new company called At Capacity that does digital marketing related stuff for home services.
Okay, awesome. So we were like doing some research on the whole podcast thing, and we come across your bio which says, 4x founder, you're a CEO and a CTO as well. So what do you learn from all those startup and what eventually happened to all those four companies? Like they're still running, you exit all of them, so yeah.
Yeah, so the first company I started of the four was a company called Vin Solutions. He started in 2003 and sold in 2011. Um, was sold to autotrader.com slash Cox automotive, um, for $150 million. And so I was the original founder of that. Um, and then I started a company called stackify after that, which we sold to Netreo.
And along the way of that started a company called FullScale, which does software development for other people. It's a services company. It's not a, it's not a software company. I mean, we build software, but it's not a, you know, SaaS company. It's a services company. And then recently started at capacity. So been, been doing a few things for the last 20 years.
So if you were to start it right over again, going back to 2003, if you have to start it right over again, what lesson that you think you have learned over these 20 years that you can implement when you're starting out your first company?
Woo. Where do we start? Well, I think. I mean, the hard part for me is so I'm a software developer at heart, right? And I'm a software engineer at heart. You know, I like writing code. I like solving problems and you know, definitely a lot of lessons in regards to software development along the way, but probably the biggest one in regards to the software development side is kind of learning that the code kind of doesn't matter, it's more about the product, you know, and, and
I was, you know, so my company does software development for other people, right? That's what we do, but it's pretty easy to find software developers. I can help you find software developers. Software developers are pretty easy to find. Finding people that are really good at product, like actually building products, building good products is super hard. And it's also super hard to figure out working business models, go to market strategies and everything that work for those products, right? It's, it's easy to write code. It's hard to architect like a working business and product.
is a whole different skill set. And I think that's probably one of the biggest thing over my career is, is coming to, coming to realize like, you know, the engineering part of it, the nuts and bolts part of it is important. But if you don't know how to sell it and build a business like on top of it, it that's the really, really hard
Yeah, yeah, totally agree with that. I had a funny story to share with you. When we were building our own startup, that was a couple of years ago, we had a person who was a solutions architect on the team. And then his focus would shift from building new things to going back and doing, what do you call that, like when you clean up the code?
like technical dead or refactoring.
Yeah, exactly, the reflecting thing. And he would like, hey, I just need to just go back. We just need to just do the reflecting. So three months in, and he'll just go back, start rewriting the code again, start rewriting the code again. That probably never took off for various reasons. But funny thing that you mentioned, that I think marketing and distribution and that kind of thing that matters the most. So as a software developer, how did you learn all these skills? How did you learn?
marketing, distribution, sales, and stuff like that.
Well, I think, you know, a lot of it just comes with experience, right? I started as a software developer and as an entrepreneur from a very, very early age. And, you know, of course there's a lot of things you don't know until you just go through the experience of it, right? Like an experience of selling a company and raising capital, fighting with business partners, getting the lawsuits with business partners, buying out business partners. Like all.
You know, all the trials and tribulations of all sorts of things, living through a recession and how that would affect the business, living through COVID, like you go through so many different things that it's all experience, right? It all comes from experience. And, you know, I went from being a software developer to being a CTO, you know, running the product teams, building the product, you know, being like the solution architect, as you, as you described, um, to then starting my own company and being a CEO.
Right. And then, you know, it's a whole different skill sets and learning all of those things along the way. And it just, it comes from experience.
Yeah, so if anybody who's a startup, who's working at a startup and he is a software engineer today and he wants to be a CTO someday, what advice would you have for that person?
Go work for the smallest company you can find.
like one person company or two person company so you can have more responsibility? Okay.
The smallest company you can find. And the reason I say that is you will get the most beneficial experience, right? Like if you go to work at Microsoft or whatever, you're going to do this one thing. And then there's 10 other people that do all these other things, right? Where if you're working at a super small company, you have to learn everything. You have to, you have to talk to customers. You have to help make decisions about what the product's supposed to do. You got to write the code. You got to deploy the code. You got to fix the code when it breaks in production.
Right? You got to deal with all of it. And that is the only way you get like the full experience of all of it versus a working in a big company. You just hide in a cubicle and write your few lines of code a day and check them in and don't care and go home. Right. Versus in a small company, it's a whole different world. And if you really want to progress your career into management, leadership, CTO, any of that, you need experience with all the things and the smaller the company you can work in, the better.
So CTOs are usually part of the leadership team, right? So coming from somebody who was a very technical person at the beginning, beginning of his career, beginning of your career, and you ended up becoming more of a people manager, you know, person who's managing a lot of teams or something like that, what's the most difficult part in becoming a CTO and in becoming that manager's sort of a person?
Wow. I don't know. We could talk about this all day. This is one of the hardest things to go from being a individual contributor, right, to being a manager. And, you know, a lot of software developers are terrible at it. You know, it's like, Hey, I like writing code. I like solving problems. I like being heads down, you know, in the corner somewhere with the lights off, you know, with my headphones on writing code, right. To talk to people like I don't even like, they don't even like to talk to people, let alone manage people. Right. And so.
There are a lot of software developers that will never make this leap from software developer to manager, let alone CTO, because they don't like to talk to people, they don't like to communicate with people, they don't like, you know, leading people and it takes the right personality. Not just anybody is even going to be able to do that. Like even if they wanted to do it, they don't have the personality to like manage other people and that's okay. And it's okay because we need people at all these different levels and, you know,
There are a lot of people that would rather spend their day writing code than being the manager of other people and just listening to all their personal bullcrap and trying to convince them. Like they still need to come to work every day and do a good job and why they should do that and blah, blah. Like managing, you know, sometimes I feel like as a manager, you're like the psychiatrist of your employees, right? Versus just like, I just want to go write code, leave me alone. Like I get it. So, I mean, it's not, it's not cut out for everybody. And.
Especially when you get to executive leadership roles in certain companies, a lot of it's the bureaucracy and dealing with other people and trying to convince management teams, we need to do this and hey, we agreed to do this and now I can't get you to do it. Like all the different crap you deal with is a whole different world. And there's a lot of us that would be like, Hey, you know what? I'd rather just go write some code and y'all leave me alone.
Okay, there's nothing wrong with that, right? There's nothing wrong with that. Yeah, exactly. I think we're living in this age where this thing is not widely accepted. If you just want to go to your cubicle, just write the code, that's okay. You can get paid fairly or whatever, but that's okay. I don't think people are willing to accept that. Or maybe we will at a certain point.
And there's nothing wrong with it. We need all of these people. We need all of them.
Well, they do. So, and when I say they do, it's because as a software developer, there's at least three or four different career paths, right? One career path could be, look, I wanna be an architect. I wanna be an expert at the code, and I wanna architect how the code's gonna work, how the applications are gonna work, right? Like that's one career path. Doesn't involve management. You can be an expert at code, right? You can be an expert at architecture. And then you've got career paths that are...
managing people, managing process. Like that's a different career path. And you've got other people that are like, I just, I want to go to the product side. I want to be more on the product side of it, which is, you know, kind of rising above the code and understanding the user experience and what we should build and why we should build it. Those are three very different career paths. And there are other ones.
And they're all okay.
Yeah, exactly, they're all okay. We recently hosted somebody, and what they do is, so he runs a psychometric analysis, sort of a firm, I don't know what they actually call it, but that was some sort of psychometric, and then he brought up a point is, every single time you're hiring a co-founder, you're looking for a co-founder, one of the co-founder needs to be technical. Like,
that's how the bond should be made. A non-technical person should have a technical co-founder. So I wanna ask from you, is because you identify yourself as a CTO quite often, you started out with software engineer. Do you think that it is important to have a technical person in the founding team? Or do you think that's okay? It's good to have. What's your opinion on that?
So I would describe it like this, when you go to start a company and it's gonna be a software company, you have two options. Somebody on the founding team has to be able to write code or you gotta be able to write checks. You wanna write code or do you wanna write checks? You gotta do one or the other, right? So I mean, you can hire companies and you can outsource it to a company like mine, like Full Scale, or somebody locally around you, some consultants, Upwork, whatever, any of these places. You can find software developers.
The hardest part is the product side, telling them what to do, right? What's the right architecture, what the product's supposed to do. All that part is still hard, but some people can still do it. They're like, Hey, I have an idea and a vision of what we need to do. And I can work with some external developers. Um, but you can't outsource the product division part of it, right? That that's the super hard part. I mean, unless you hire some extremely expensive consultants, but I agree with you. I'd rather have somebody on the team that has.
the product tech, at least product background, even more than the technology side. Like has worked in a product team or maybe they used to be a software developer or whatever. That's okay. But I think it's way better off if they have a strong technical founder. But the problem is a lot of people, they're like, hey, I'm starting a company. Where do I find anyone who could write code? Literally anyone. And I will make them my co-founder, my technical co-founder. Like, oh yeah, I know they were a junior developer and they've been at a college for, they're my CTO. And that is a huge problem as well.
Speaking of that huge problem, we recently had, I recently met somebody and they were like building on something, some product, this is a pretty big one, they said the CEO is former CTO of HP so he has a cool idea or something like that and they were like you know we just raised a couple million dollars and the first thing that comes to his mind is let's just find a developer so we can make him a CTO or a co-founder one day or something like that. So the question that comes to my mind is...
which is a little unorthodox to ask this early in the podcast, is when you start a business, like when you start a company, it could be a SaaS company, could be a services company, could be anything, right? It's just a business. What are the five first hires that you're gonna make? Absolute, important necessity.
Wow. So, I mean, so it depends on the company, right? I mean, you, the struggle as an entrepreneur is, you don't wanna go hire five salespeople if you don't have a product to sell, right? And I've been there. It's like, hey, I was building the product. I was one of the ones helping building the product, had a couple of other developers, and we think we have an MVP. We think we're ready to take it to market, hire an expensive enterprise salesperson for like 200 grand a year.
come to find out nobody wants to buy the product. We don't know how to sell it. We don't, the product's not ready. And this was my company. I'm not making this up, it was like literally me. And we hired a salesperson way too early. Like we weren't ready to pay, we paid this guy a ton of money to do nothing. And so I don't know if it's really about the five people. Right, I think it's more about, you have to figure out your go-to-market strategy and you gotta validate the product and the market, how you're gonna sell it.
who you're gonna sell it to, what they're gonna pay for it, and make sure it's viable. So when you say minimum viable product, it's not just that the technology works, it's that you know how to sell it and somebody wants to buy it. And the hires kind of align to all of these things, depending on your kind of business, right? So it could be like, hey, I need a marketing person to help do this, or I need a salesperson to help do this. But that's the problem is you have to balance the.
I have to build the product, but at the same time, I got to figure out how to get it to market and how to sell it. And you have to do both. You can't just do one or the other. And that that's the really difficult part as a founder is you don't want to over hire in a certain area or spend a bunch of money on something and you don't have the product right. And vice versa. That's the hard part is the power.
Yeah, you mentioned something that you thought that you had an MVP, you thought that you had a marketing strategy and figured out. One question that comes to my mind is, what's the better way of evaluating a product market rate? Like, we hear this term all the time, right? So you build an MVP, we build a, we got a product market rate. How do you actually evaluate if a certain product is at its, like, PMF stage or not? Like, how do you evaluate that?
Well, the problem is it's a little tricky because you start a new business and you go sell it to friends and family or your local network, and you can be pretty successful with it. You're like, oh, I talked to 20 people around town. They were interested. They all gave me great feedback. But the problem is that does not give you any real world feedback. Just because those 20 people were interested doesn't mean that the next thousands that you talk to will be. And if you look at the like,
It's like the curve of adoption. And there's a book about this, Crossing the Chasm. There's a book called Crossing the Chasm that kind of talks about this where, it's easier to find like the early adopters, the early tech adopters, they're like, they love cutting edge stuff that they'll talk to you, they'll get excited about it. They might help you beta test it and all that kind of stuff. But then it's very difficult to sell it to the full like mass market, like getting to the full mass market, it's a whole different thing.
And a lot of people get totally disillusioned because they're like, Oh, the first five people I talked to really liked whatever I had to sell, but that doesn't mean like, you know, how to get it to scale. It's like you need to get 100 customers before the company makes any money. And you're at five, don't get too excited. You got a long ways to go. Right. And so it's, it's okay to be excited. But, you know, there's like this trough of disillusionment, I think is what they call it in the book, right? We're like,
You think you're going to be successful, but then reality kicks in. You're like, you know, we still have a long ways to go to figure out how to get to like the actual next level of validating that product market fit. And a lot of it comes down to the traction channels. It's the sales channels. We don't, we, you know, yeah, I called my friends and family and my network. I already called all them. How do I get to, how do I get more sales channels, more random people to talk to? And so my new company at capacity.
This was pretty easy for us because we kind of spun out of another company called Camp Digital. So it was just kind of like an internal entrepreneurship venture thing that kind of spun out. And so we already knew the market. We already knew a lot of that stuff. And so that made it easy. Right. So our first few clients were basically people that would call them and they would say, hey, you know what, your product is too expensive. Go call this other company. And we were the other company. Right. And so we knew exactly what we were selling and all of it.
That was a dream situation for us to be in. And, you know, we kind of knew we immediately had product market fit, but there's a great book called Crossing the Chasm that kind of talks about this.
Okay, okay. Do you also think that, and this is just like speaking from purely my own experiences. Do you think a lot of the time founders talk to people who are not the right audience? I call that like an audience fit or something like that. For example, if I build something which is, I don't know, a humanoid robot or something like that and I talk to my mom and dad about that, probably not gonna understand anything. But they can say, yeah, okay, I'm gonna buy that, right? So the first five people,
customers I get are friends and family, but they were not the ideal customer. So a lot of people, yeah.
Right. Yeah, I think, I think you're absolutely, I think you're absolutely right. And that's why a lot of companies kind of pivot along the way, right? They're like, we thought we were going to solve this problem. Come to find out, you know, we talked to a lot of people and they really wanted something different, or we figured out like this niche, you know, audience, like this specific industry, these specific people were actually the better fit for what we were looking to do. So now we've doubled down on, on focusing on that. Right. And so like at capacity.
You know, our focus is HVAC, electrical and plumbing. Um, but we're looking to expand to other industries. So I'm talking to other people all the time and I'm trying to figure out will this work well for hair salons or massage car dealers, like, uh, who knows lots of things and maybe we talked to enough people and we, we figure out it works great for, for one of those. And maybe it doesn't right. And that's why you have to do a lot of trial and error, but, um, it, it just.
That's why a lot of companies pivot along the way, right? They're like, they think, they think, oh, this is going to be great for massage or whatever. And then they figure out, man, they're too hard to sell to. They won't pay enough money or whatever. But then I talked to funeral homes and funeral homes will pay a lot more money because they have a bigger budget and they spend more money on this. And for whatever reason, now we sell the funeral homes or whatever it is. Right? Like you just never know. And that's part of the fun of startups too, is that process is kind of fun, but you've, you've got to realize that it's a hard process too.
Yeah, one particular thing that I want to talk about when it comes to pivoting, and I think I have talked to a lot of people about that, so I want, you know, take your opinion on that as well. So what usually happen is, I call that as somewhat of a crossroad. So you have an idea, and now you have two options. So like three months in or something like that, now you have two options. So option one is, you stick to that.
you know, it's more of a perseverance sort of a role, like you stick to that idea, you continue to work hard on that, and you kind of fix that, and you go that way. The option two is you pivot right away. You build something else, and then you test it, and you build something else and test it. So the question is, how long you should stick to an idea before you start exploring the pivoting option?
I think the issue, if I use that capacity as an example of this, we're kind of in that situation, right? Like we can keep selling to HVAC, electrical and plumbing. It's a great market for us. We can be super successful. But on the other side, we're looking at automotive industry. We're looking at car dealers. We, you know, that's my background and my business partners are from automotive. We know there's opportunity there. What's even worse is not pivoting and trying to do both, you know, right? Trying to look at both of those. I'm like, man, we want to do automotive and we want to do home services.
But to be great at either one of them, we're gonna need a lot bigger team or a lot more capital because we can't focus on both, right? The reason we're so successful in home services, we spend all of our time there. People in the industry know us, they're referring us, right? Like we're building a name, we're building a presence. Nobody in automotive knows who we are. But if we went and spent all of our energy there, we could probably have the same success. And I think the biggest mistake that people have is they're trying to do both, right? They try to do both and because of it, they never get enough traction.
in either one of them, right? Of critical mass, of just mind share and thought, referrals, all of it. It's just like if I go on LinkedIn and I post every other day about a different kind of industry, it's just not as likely to resonate with the audience. They're not gonna go, what does Matt do? Right, he keeps talking about different shit every day. I don't know what he does. Versus if I'm like, oh, I'm very focused on one thing, like I'll be known for that one thing, right? So, to some degree you have to pick, and I think that's the biggest problem that people make is they try and do too many things for too many people.
So, somewhat of a lack of focus sort of a thing. Like, you know, you're trying to do everything, end up doing nothing. At least nothing well.
Well, you've got to be best at breed at something, right? And so that is a slightly different topic, but that was the problem I had with my last company, StackFi, is we were doing application monitoring for other software developers, and really what we ended up doing was built a platform that did like five different things. And because of that, we weren't necessarily best at breed at any of them. You know, we had a good product and a solid product at all five of them. But if you were like, Hey, I need to find the best X, we weren't on the list.
Right. We were like, Hey, I need the, I need the thing that does all five of these. We might've been the number, number one on the list, but people don't shop for that. Right. They, they're, they're looking for like best of breed solutions for different things. And that doesn't mean you can't have a platform and sell multiple products. I mean, actually my first company, Venn solutions was wildly successful because we were best of breed at.
CRM, actually more specifically, handling of internet leads for car dealers, we were best of breed, we were best of breed. And we had like five other things that we also sold, like we sold websites, and we fold full CRM and inventory management and all these things. And so we could sell all these other things because we had the market leading best of breed product, we could sell the all the other things like an add on, right. And so I think that's one of the things is the startup is, if you're if you're good, if you're if you're
product is to like just copy everybody else like, oh, we do all of these things. Like nobody cares. You got to be best at breed at something. And then maybe they care about the other things. But if you're just like mediocre at best at like five different things, you're never going to sell your product. It's super, super difficult. And the more things that your product does, the harder it is to sell. It's way harder to sell.
Yeah, absolutely. Speaking of that, I think that that's more of a vertical versus horizontal sort of a debate. So you need to be really good at one vertical, and then you can expand horizontally. A lot of the time, there's an AI part came out. There's like a ton of those coming out every day. So the one that comes out, and this is what they are. You can say that tagline or whatever. That's the tagline size.
So you don't need Notion, you don't need Google Teach, you don't need anything to do your mind mapping, you don't need Figma, you don't need this, you just need us. When you start looking at the product, oh yeah, okay, so it has like high level features, but missing out the depth in like almost all categories. Yeah, and now they're like, yeah, okay, so you can just get rid of that. The problem is nobody's gonna get rid of anything, they're probably not gonna use this product because people don't shop for that, right? Okay, awesome.
Yeah. Yes. Yeah.
Yeah, I mean, it's like saying a butter knife is the only knife that you need. It's like, no, it doesn't work, no. And actually in the Philippines, they tend to use a spoon as a knife. So saying like the only thing you get is a spoon as your knife, like, you're like, no, it's not gonna work. But that's the way, but you're right, that's exactly what they do, right? They're like, oh, we did the 80% of the functionality that people need.
Yeah. No. Yeah.
But then you basically end up with the spoon. They can't cut the certain things you need to cut. And you're like, when you really need the different kind of knife, right? So it's the same problem.
Yeah. Okay. Awesome. Do you think a lot of companies end up shutting down? They fail just because they don't know how to work verticalize?
I mean, I think ultimately every company shuts down because they run out of capital, right? They, you know, maybe if they had more time, they would have figured it out, but eventually they run out of capital, right? I think that's the number one reason. But you know, I think you're right in the fact that is focus, trying to do too many things to too many people. I mean, that was our problem at Stackify. It's like we sell the software developers. Well, which ones? All of them on the planet. That's not good. That means you sell the nobody.
All of them.
If you sold to everybody, you sold to nobody, right? You can't focus. So I mean, that's the problem as a startup is you gotta be best at breed of something. You gotta be very focused on a specific industry, a specific vertical, a specific geography, specific customer, and really tailor to their needs, right? So you can be best at breed to that specific focus. And the biggest mistake people make is they're like, I'm gonna sell everything to everyone and be a billionaire. But you can't start that way.
Yeah, exactly. Okay, awesome. So Matt, what we do is we have a decent community and most of the audience that we have is aspiring entrepreneurs, first time, second time founders, people who have not had that high level of success, like people who haven't sold a company for 150 million or something like that. So what we do is before every podcast, we float out a questionnaire, like if somebody's coming on the podcast, if you wanna ask them questions, so we have a few questions, handpicked ones. So just wanna run them by you.
In no particular order. So the first thing that I want to ask you is How do you evaluate an idea? Now that you have like four or five companies that you have started. How do you actually validate slash evaluate an idea?
So the first thing I would think of is this, is this something that is really gonna help the business and the product or is it a distraction? Right, is it an opportunity or a distraction? And that's one of the hardest things as a founder or business leader, right? Cause you get these things every day. Every day different things come up and you have to very quickly decide, is this an opportunity? We drop everything we're doing and we go do this or it is a distraction from the thing we said yesterday was the most important thing, right?
And I think that's one of the biggest struggles as a startup is you're dealing with that every single week. Is this a distraction or an opportunity?
Awesome. Second one is, assuming that you know a whole lot of marketing, I think, so this one is, how do you optimize for CAC and LTV? Because they are running into some marketing that you're problem. They're like, we have a lot of customers, but CAC is going higher up as well.
So some of that is focusing on who your customers are, picking the right kind of customers. At Fullscale, for example, we do software development for other people, but it has to be the right fit. It has to be the right fit for us. It has to be the right fit for our customer. And after five years of doing this, we can tell pretty quickly when you talk to somebody, like, you know, this is probably not the best fit for us. Like, they, you know, for example, for us, for like, they need to have other developers. They need to have a product owner or...
development leadership of some form. If they don't, like we just know over time this probably won't work very well, right? So sometimes it's making sure it's the right fit. At Capacity we just had this issue where it's like some customers we talked to that they're going through different business coaching and they're real gung ho and they wanna invest a lot of marketing and whatever versus somebody else to talk to that's like an entrepreneur that's just sort of distracted and it's hard to get them to focus and invest time and effort in this. It like just doesn't feel like the right fit, right?
But so the point is, as an entrepreneur, you have to sniff that out and figure out, okay, I need to focus on the customers either with the right fit, because that's gonna help with the LTV. I'm gonna have less churn. I'm gonna focus on acquiring those kinds of customers and just avoiding the ones I know are not gonna be a good fit. They just don't fit. But the problem is most entrepreneurs are like, we're gonna sell to everybody. How do we make everybody work? How do we make everybody work, right? And then they sign up and they cancel, they churn, they waste all your time, right? So it's like you've...
That's the hard part is you have to work against that and focus on who is the right fit for you. So again, you will have a higher LTV, right? They will be around as a longer customer. Like at Full Scale, we have customers that have been around for five years and continue because we've got the right kind of product service fit for them and we are perfect for them, right? Versus if we keep chasing all these people that are not really the right fit and we keep churning them every three months, like that doesn't get us to where we wanna be.
But the hard part is, is working against that, because again, you want to try and service everyone.
Exactly. How do you find or define an ICP? Like how do you make sure like, okay, so this is my ideal customer profile looks like, and this is the type of people that we're gonna talk to. How do you do that?
That's really hard and it takes a lot of continuing measurement, right? Of figuring out what works, what doesn't work and the type of product that you have. And so at Stackify is a good example of this because in the heyday we were doing like a thousand trials a month. We'd have a thousand people a month signed up to try our software, right? And we had the metrics to know, you know, how many of them installed our software, how many of them tried it. We had the firmographics and demographics. So those. So.
Demographics, most people understand, but firmographics, as long as I'm getting this backwards, firmographics are also like what country are they from, where do they live, what size is their business, what industry are they in, right? And then you have demographics as well. So it's understanding all of those things to try and identify. So for at StackFi, it's like, oh, we do well in these countries and this industry, this size of business, right?
and constantly monitoring that and trying to figure out what works and what traction channels work the best for. And then it's like, how do we double down on this type of customer? So we figured out we have the highest conversion rate with this kind of customer. But the problem is for a lot of people, they also don't have enough volume to get any real statistics out of it. If you only sign up like five people a month, you're not going to get statistics out of it. You can get some gut feeling out of it.
And that's okay too, but it's not enough to like really be super statistically relevant. But when you're at a thousand, you're like, okay, now we've, we've talked to a lot of people and you know, now we understand the pattern.
Exactly, exactly. So the follow up question is probably on that. So what metrics do you focus on and why? What metrics should a first time founder focus on and why? I think that's a better way to put that.
Oh, well, I mean, ultimately it's going to be like for StackFi, it was how many would sign up for trial, how many would install, and then how many would buy. But then it's also the, you know, average revenue per user or average revenue per customer. Right. So all of those things kind of go into it. It's like at StackFi, did we, did we want to sign up a whole bunch of customers that pay $200 a month or just a few that would pay $5,000 a month. Right. So.
It's kind of tracking all of those things and it depends on your business model and who you're trying to get. Are you trying to get a lot of little fish or a few whales and trying to get those bigger accounts and just trying to measure whatever metrics make sense to help you get to those goals, right? And a lot of companies, it's also, it's how many...
How many leads do we have? How many marketing qualified leads? How many sales qualified leads? How many appointments do we have? Like all these kinds of metrics that people track. So, but product growth led companies are different. Like StackFi was kind of a little more of a product growth led. It's low touch sales process. Another company I invested in recently was called Insight Voice. And they were having a lot of problems in their signup process where people wouldn't sign up for free trial or they wouldn't pay.
the drop off rate was massive, like nobody was signing up. So we overhauled the whole like sign up process and it improved it by like 90% or something like that. Like the amount of people that would sign up for a trial like went up like orders of magnitude. And so those are the things that you have to focus on, right? You're like, we need this to be low touch. We need as many people to come in as a trial and sign up for trial, use the product. So it's like, you have to work.
endlessly to improve every step of that. And a lot of people don't realize how hard it is to optimize those things. It's like one thing to build a product, it's another thing to optimize it for that journey of like from sign up for a trial to sign up to a buy. There's so much effort in fine tuning every single step of that goes into it.
Yeah, how did you fix that, the whole onboarding slash sign up process of that company?
from the company I mentioned called Inside Voice. So I think...
Yeah, yeah. Because you mentioned, you know, because you mentioned like nobody was signing up, signing up or something like that, and then all of a sudden that went up to like 90%. So that's like crazy, crazy improvement. So like, what did you do and how did you, you know, improve that process?
So I think what he did, and his name is Matthew Curtis as the founder, I think like a lot of startups, you build the software and like, hey, you can sign up for it and you just, they log in and they dump you into the software and you're like, I don't know what to do. What do I even do with this thing? Why did I, what do I do, right? Versus creating a curated experience where you ask as few questions as possible and what you've got to get them to is that aha moment, right? The like, oh, I see value in this thing, this is cool.
I can see why I would invest more time in it, why it might be valuable to me or my company, right? And so it's shortening that journey as much as possible. And so for him, it was like he did, a couple explainer little videos that were part of it, asked just a couple key questions, got the customer to do basically like a demo of using the product for which for him, which required like recording a short video, and then his software like transcribes the video and does a bunch of stuff.
But basically the kind of signup process did all of that in a really nice, elegant way, where before it's like you would sign up and it would just dump you into some software and you're like, I don't really know what to do with this thing. Like, what do I even do? Right? Like you have to hold their hand and get them to go exactly where you want them to go to get to that aha moment. And that's why I say there's so much effort in figuring all these things out that nobody thinks about.
Exactly. Yeah, absolutely. Okay, so the next one is around venture debt or venture capital, I think. I don't know, like, why they say venture debt, but it's venture capital. Did you raise money for your company? If so, how much? And now that you mentioned that you also invest in the company, so what's the whole criteria that you have in mind for investing in the company? And part of one of the questions is when you were raising money, did you raise money or not?
So if you did end up raising money, how did you raise that much amount of money?
So my first company, which was called VinSolutions, that we sold, never raised any capital. It was bootstrapped the entire way to doing like 35 million a year in revenue, all bootstrapped. So that was great. When we sold it, we didn't give any money to any VCs. We got to keep it all, which was great. My second company raised, I think about $3 million from some local angel investors. It was not institutional money. It was kind of...
Some of it's sort of like friends and family network, local money from angels basically. And then eventually we did raise some venture debt. You mentioned venture debt. Eventually we raised a couple million dollars in venture debt. We went that direction too. I'm also a big fan of that. I think that's also really great. I think the main thing that people need to think about is, is their company even something that's investable? I had a call with a guy this morning and that was the thing I was trying to coach him on is like, hey,
You might be able to build this great business with you and your business partner over the next year and it'll do a million dollars in revenue or whatever. You'll make a million dollars in profit, but nobody's going to invest in that. Unless you can see a path where this will do like tens of millions of dollars in revenue, nobody will invest. Forget about it. It's not going to happen. But you can have a great little lifestyle company that makes you a million dollars a year in profit and it'll be awesome. It'll be amazing business, but nobody's going to buy it and nobody's going to invest in it.
And so you have to understand that going in, because a lot of people think that like, they're just going to go magically raise capital. But as an investor, same thing, like I'm not going to invest in something unless like there's a huge opportunity there. Right. Like it's very light, very unlikely you're going to invest in somebody's little project that might make a million dollars someday. Like that's people just don't invest.
Yeah, exactly. And then we talked to a lot of VCs on the podcast. We host like, you know, entrepreneurs and the VCs and we asked them the same question like, why so many people don't get venture capital? Like why they're like not successful in raising it out? Like because the rate is like pretty low. So they get like 100, exactly. You get 100 application, maybe one or two of those that you're going to take a call with, let alone invest in them. So
is very low.
And then everybody was saying the same thing, it's just like not every business is an investable business. So it's a lifestyle business. 2K, 200K a year is a decent lifestyle, but it's not a investable business or something like that. But I wanna ask you something is.
When you invest in any company, what's the criteria that you have in mind? Apart from the most obvious one, that's an investable business, what's the criteria you have in mind?
I mean, the big thing I'm looking for is the product and the team and are they solving something that I think is interesting? Do they have the expertise to do it? Do they have the go-to-market strategy figured out? Do they know how to sell this thing? Do they know who they're gonna sell it to? I mean, I had a lunch with a friend of mine today that actually just quit from some venture backed company that's raised like tens of millions of dollars or something because the company still can't figure out how to sell their product.
They've raised millions and millions and millions of dollars, still don't know how to sell it. They don't have like product market fit. They don't have the demand. They don't have the go to like go to market sales motions figured out. And that's the thing that I think is so important to me is like, I want to know like who is going to buy this thing. How are you going to sell it to them? I want to, I want to understand the distribution of this thing because when I invest, I want to be like fuel on the fire. I would like, I want to see this thing grow, right? I want, how do we grow this thing?
Now, I also understand sometimes you don't know that. Like, so on my podcast the other day, I had a CEO of a company on, I feel silly because I don't remember their name, was a publicly traded company that had never had any revenue. Publicly traded company with no revenue that was 15 years old and had raised $500 million, which sounds absurd, sounds totally absurd, right? But they were, but totally absurd to me.
Wow, yeah, doesn't add up.
But they were doing research and development on new technology for lithium ion batteries. And so it's one of those things, you know, that you spend all this effort and all this research dollars hoping that if it pays out, it'll be like this billions of dollar company, right? If you can invent a new way to improve lithium ion batteries, would be a huge deal. Well, guess what? They did. They figured it out.
and they were getting ready to go to market with it and go into development and they figured out a way that can increase the storage capacity of lithium ion batteries by up to six times, up to 6X what they are today. And they had already figured out how to get it to like one and a half times what it was today and they were gonna go to market with that. And it was just super fascinating. But like there are some things like this that require an enormous amount of capital is the point. There are some kinds of business to do that require a lot of capital and you don't even know if it's ever gonna work.
but you have to invest a ton of money to figure it out if it's gonna work. But I'm also not a great investor of that. And if you want, I got another great story along these lines.
Yeah, yeah, go ahead, please.
So there's a local, another local entrepreneur here in Kansas City named Toby Rush, and he came to me, and it was like 2011, 2012, with, he had secured licensing of a patent from a college to scan the white of your eyeballs for biometrics, kind of like a fingerprint accepted to the vein in your eyeballs. And he's like, this is gonna be a big deal for security. It would make sense to embed this in like smartphones for like,
unlocking phones and biometrics, like online banking, all these things. And I just looked at it and I'm like, dude, I have no idea how you're ever gonna sell this. How would you embed this into the phones? How would you sell this to banks? And all it is just scanning the eye. I don't know how you would monetize this, how you would do the go-to-market strategy. I'm out, I don't get it. Because it just seemed like too many barriers of how are you gonna figure this out. Well, well and behold, he did and he sold it for $100 million.
It took a few years, but you know what? Every one of you who's listening that has a Samsung phone, you're using that technology right now. And so you just never know is the point, but some of these, you know, it's hard to see as an investor like the path to like revenue and market adoption. And that's why I think to some degree, you have to spread your money around. You invest in a lot of different things. You invest a little bit of money in a lot of different things. And some of them are wild bets that have big payouts.
Right, and I miss that.
Okay, that's a fun story. One thing that I actually want to ask, almost all the VCs that I could invite on this podcast, so it's the same question to you. Why people invest in companies who haven't found their product market fit?
that haven't found it?
Yeah, they haven't found it. And that...
Well, some degree you need, sometimes you need money to find product market fit, right? You need money to hire a sales team, to hire a marketing team, to go figure it out. I mean, I kind of don't like being that investor, right? I'd rather them figure that out first. But you know, there's a local company here in Kansas City called VinQ, and the founders were people that had worked for me before. And when they were starting out, they were pretty early. Like it was kind of like I...
they were competing with other products where in the industry, right? So it's like, okay, I know they have, I know there's already a market for this, but can they compete? Can they build something and compete? And they had some early success and then I invested in it and it is like grew like 20 times my investment or something. It was a wildly successful, and I say that I have like 10 other starved investments that totally failed. So it was the one, it was a successful one, but you just never know. But that was a good example of one where like, I knew there was a market for it.
Like I understood the market because I had worked in automotive and so I knew there was a market for it, but didn't know if they could beat the competition or find their like slice of the market, right? And so sometimes I think it's just understanding the market you're playing in, who you're competing with, how do you differentiate yourself, how do you get your own product market fit? But it's even better if there's already an existing market. And I think that's kind of a different conversation, right? Is it's terrible to build something that is like a totally new market where people don't buy that thing.
because that was part of my problems with the previous company I had is if people don't currently buy that thing, it's really hard to sell something new to a market that's not used to buying it.
But the other, the exact opposite to that is, and I never got to understand that. So you see a lot of people are making the same product in the same industry and everybody's making a lot of money. How?
Yeah. I mean, a good example, that's a plumber. There's lots of plumbers, there's plumbers everywhere, right, because it's not a race to be like a winner take all market, right? That's the key to those kinds of products, it's not a winner take all market, where a lot of tech ends up being that way, where it's sort of, you know, you'll have two, three, four market leaders that are gonna control 80, 90% of the spend, right? And then everybody else is chasing like crumbs.
Right. But there's, there's a lot of company or a lot of opportunities in places where they're not winner take all markets.
Yeah, okay. Oh yeah, that makes sense, that makes sense. Okay, so if you could share three lessons that you have learned across all the companies you started, for the first time founder, what would those be?
So my number one tip would be, it's way more important to be best known for what you do than being best at what you do. It doesn't matter if you're the best at what you do, if nobody knows about it, literally doesn't matter. So we all buy products every day from the best known companies, be it Android, Apple, Slack, Microsoft, all these different people, right? They all have competition, you just don't know who they are, right? So being best known is so much more important than being best, and that's why it's so important as a-
as a startup and a founder is you gotta spend a lot of energy on sales and marketing. You can't just hide in the basement and build a product. You gotta focus on being best known. And that goes with everything, right? It's like just, it could be like, hey, I just see Matt's content on Leaked In and he seems like a smart guy. Like, I don't really know, but I know him. So if I ever had an idea that I needed somebody like Matt, I would think of Matt, right? That's the whole thing is you gotta be best known for whatever it is that you do. That would be my first tip.
Any other ideas that you want to share?
So my second tip would be if you're starting a new company, I would definitely consider having a co-founder. If you're starting brand new, you've never been an entrepreneur before, I would not really recommend going it alone. There's lots of statistics that show startups that actually have two, three, four founders are way more likely to be successful. And part of it is just being a startup founder is super hard.
And also you only have one skill set. So if like you're really good at sales, well, you're not very good at building the product, or if you're really good at engineering, you're not very good at sales and so you, you potentially need different people and hopefully one of them brings the sales side of it, the relationships, like things that can help and get the product to market. Um, I would rec, I really recommend having a co-founder now, you know, like me, I've done this for awhile, so I understand all the pieces, I understand all the game, I understand the game.
I don't feel as bad about being a solo entrepreneur anymore. It doesn't scare me. But to do it all over again, I would highly recommend that you have a co-founder. And so then my third tip would be, there's a, as an entrepreneur, there's a never ending opportunities to start a business and they don't all need to be SaaS companies. They don't only need to be software companies. I would highly, highly recommend to people, especially if you're, wanna be a first time entrepreneur, start a services company.
And I think you can be a solo entrepreneur as a services company way easier. You can be a consultant, you know, like you were talking about before, like, oh, you could be a little marketing company or a little video editing company, or like my company FullSkill does software development. I mean, these are all different kinds of services company. Start a service company. Whatever it is that you do that you're good at, just instead of working for somebody else, start your own company doing the same thing. The challenge is you gotta find customers.
You gotta be good at sales, you gotta have a network, you gotta have somebody to sell to, but start a services company. There's so much easier to start a services company. They're a little harder to scale, but they're great cash flow companies, they don't need a lot of capital, you don't need to go raise money. You can just slowly grow the company, and like my company Full Scale, five years later has 300 employees, right? It's just slowly growing these kinds of services company is a great way to be an entrepreneur. You don't have to.
build a SaaS company and I spend like two or three years trying to build a product and it's hard to sell it and I had to raise all these millions of dollars and all this crap. Start a service company, it's a great kind of business too.
Awesome, awesome. So, we kind of rushed through all the things that we have. So, we do have this small ritual on the podcast. So what we do is we ask a guest a question for our next guest without knowing who the next guest is gonna be. So we have a question for you, and obviously gonna take a question from you for the next guest as well. So the question that we have for you is, who's the most courageous person you have ever worked with in your entire career?
The most courageous? Oh man. I mean I think it's probably, probably one of my previous sales people that I'd worked with who was like our VP of sales. That dude could have sold anything to anybody and he's the kind of guy that it was fun to rally around and watch him do his job. And uh.
He always had a lot of courage to get up there and go close the big deals. And so, um, I guess he's the first person that comes to mind.
Got it. Awesome, that's a good one. Okay, awesome, thanks Matt. Please stay, you know, after the recording, but yeah, thanks Matt, appreciate it. We had a fun conversation, so appreciate the time.
Thank you so much.