SPI 517: The Best Way to Start a Successful Business Today with Arvid Kahl

SPI 517: The Best Way to Start a Successful Business Today with Arvid Kahl

Pat Flynn:
So, we're well over 500 episodes now, of the Smart Passive Income Podcast. Several of our guests were people that I've met in person, who I got to connect with at an event, or who reached out to me, we built a relationship together. And because I knew they had value to provide, they've been on the show, and many of them are great. Many of the people in the show were a result of you. So, crowdsourcing ideas.

I have either asked you who should be in the show, or you have told me, and many of those people have been on the show. But today's guest is a little bit different because I actually crowdsourced this from my team, several team members within Team SPI. You've met many of them before here on the show. They all recommended this person, and I could not be more thankful, because our guest today, Arvid Kahl, is one of the most fascinating people that I've met in a very long time.

Author, but more than that, he's doing business the right way. Everything that I've talked about in terms of, well, how should you start a business? Everything that I've spoken about in my books, he is doing it, and he's going to tell us exactly what he's doing and how he's doing it. He has a website over at TheBootstrappedFounder.com. As far as people on Twitter, he's probably the best person I've found who uses Twitter to build an audience in the right way.

You're going to find a number of principles in this episode that you will be able to take home with you to get started right now, as far as the easiest way that you can get started to build a following, a community, and business right now. You've got to stay tuned. This is an epic episode. Again, Arvid Kahl from TheBootstrappedFounder.com, @ArvidKahl, K-A-H-L. We'll have links in the show notes and stuff, but this is going to be epic. Anyway, let's play the intro so we can get right into it. Here we go.

Announcer:
Welcome to the Smart Passive Income Podcast, where it's all about working hard now so you can sit back and reap the benefits later. And know your host, he actually met a family member through one of those genetic tests: Pat Flynn.

Pat:
What's up, everybody? Pat Flynn here, and welcome to session 517 of the Smart Passive Income Podcast. I'm so excited to welcome author and fellow, just person who cares about their audience, because it becomes so apparent here. Like I said, so many principles that are so easy to grasp that are right in front of us that, for whatever reason, we just don't do. Arvid is going to talk about them today. Again, you can follow them on Twitter if you want to see how to do Twitter right, @ArvidKahl, and TheBootstrappedFounder.com. Here he is. Arvid, welcome to the Smart Passive Income Podcast. Thanks for joining us today.

Arvid Kahl:
Thanks so much for having me. I'm a big fan, so this is awesome.

Pat:
Well, thank you so much. I've only recently gotten to know what you've been up to and, oh my gosh, you have so much experience, wisdom, and things to share. This is going to be a really great episode because today we're going to be going, almost from start to finish, from building an audience, learning about that audience, building something for that audience. I know you've even exited before and have done very well for yourself. Why don't you give us a brief history of what you've done and what your specialty is?

Arvid:
Oh brief, that's going to be complicated because that's really not my forte, but I'm going to try. I used to be just a software engineer. That's kind of how I describe myself today, because a lot of stuff happened since I've been just a software engineer. I cofounded a couple of bootstrap SaaS businesses with friends here in Berlin. I worked for a VC-funded software business in Silicon Valley. I did a lot of SaaS stuff, and I did a lot of software development stuff. Most of the projects that I cofounded with people failed, and learned a lot, but one that didn't fail, one that actually succeeded was the project that I cofounded with my girlfriend called FeedbackPanda we started.

Yeah, an ed tech productivity SaaS, because she was an online teacher. So, we built something for people like her and her. It was called FeedbackPanda. We started that business, bootstrapped it in 2017, and we sold it when it was around $55,000 MRR in 2019, just under two years later for an undisclosed, but life-changing amount of money to a private equity company. Ever since then, I kind of flipped the script and started talking about what I was doing instead of just doing it. I still run a little SaaS at this moment, but I've been much more actively trying to teach people understanding how the SaaS world works, like from the start to finish, from zero to sold essentially.

I've been building an audience on Twitter. I've been sharing what I know with the audience. They've been telling me what they want me to talk about, and I've been doing that. I recently released a new book that yeah, contains everything I know about audience building and finding your audience. That's what I've been up to then. I've been a software engineer, then I turned into an entrepreneur/software engineer, and then I turned into an author/entrepreneur/software engineer. It's a pretty interesting journey. So, I wouldn't even try to categorize myself anymore. I'm just doing everything that helps people maybe the best way.

Pat:
Yeah. I mean, it sounds like your journey was very similar to mine after having gotten laid off from an architecture job that I loved and then building something and then having people go, “Well, how'd you do that?” And then just basically stepping forward to help as much as possible. That's what I loved and what I connected with you when I was researching your stuff the most, was just how giving you were, how just kind and generous you've been. So, I'm just very thankful for your time here today. Audience building and SaaS can ... For those of you who are listening who might not know what that means, Arvid, can you explain what SaaS specifically is, as far as how that helps people?

Arvid:
SaaS, essentially, it's a short for “software as a service,” and it kind of describes any kind of business that has an offering that is continuously used by people to solve their problems, and they usually pay in some sort of recurring form, so a monthly fee or something like that is usually involved, and it's always a software business because that's what the first S stands for. It's always a service business because that's what the second S stands for. It's kind of a mix, a digital service product.

Pat:
Gotcha. What is the benefit of doing a SaaS product versus say, for example, online courses or coaching or consulting or things like that?

Arvid:
Well, the moment somebody pays you every month, you know that next month this person's very likely to pay you. If you look at the metrics that most SaaS businesses track internally, they're looking at churn and retention, and most businesses have like 80, 90, some percent retention. So, you know that this month you got $1,000 from your existing customers, just figure here, the next month, you're going to get at least 800 or 900. If you sell the book, if you sell an infoproduct, or a course, but you have to sell something to new people all the time. You have to have the sales pipeline coming in. But with a SaaS business in particular, you have a pretty plannable runway for the business.

Obviously, lots of stuff can change, and pandemic certainly changed a lot of these numbers, churn and revenue numbers for SaaS businesses all over the world, but it's usually pretty nice to have this because it generates money even when you're not actively seeking new customers. Since we're talking about potential passive incomes, it may not be as passive as something that just prints you money while you sleep, but it's pretty damn close.

Pat:
I know what a lot of people who are listening to this might be thinking, and I know because I've thought this myself before diving into the SaaS world a bit. It sounds like the holy grail, it's like, wow, this recurring income, you set up the software that you create once and it just kind of churns, like you said, and that's a good thing. I'm not a software engineer. This sounds very expensive. What do I even create? There's so many softwares out there already that can serve people. So, keeping those questions in mind, why don't we just start from the beginning? Because a lot of the audience here, they have audiences or are going to build an audience.

Before we even get into the solution of building a product like that, how do you recommend we build an audience to eventually lead us to that point?

Arvid:
No, that's the million-dollar question, I guess, because I found one thing, and maybe this has a little preamble to this actual, like the actual response to this. I found that a lot of people, particularly when they're software engineers and when they're from a technical background, they try to build products. They're so focused on building solutions that they kind of forget who they are building this for. They start with an idea. I want to build Tinder for cats or some weird software product that they exactly know what it's going to look like and how it's going to feel.

And because they need it most of the time, but they don't make sure that anybody else needs this. They don't make sure that there's actually a viable audience, a potential audience out there for this product. They're just so focused on the solution, so focused on the product that they go essentially product first, right? They built a product, they use like half a year's worth of their time to build something, and then they put it on Product Hunt or another website where you launch stuff, and then crickets. Nothing happens, half a year wasted, no customers, no people that could actually cheer for you. Nobody wants you to succeed. You just fail.

This is the kind of failing that is actually kind of sad. Lots of fails that you have in your life are learning opportunities. Most of the time, if we fail, we learn something cool, or we learn a way how not to do it, which increases the chances that we get it right the next time. So, failing is usually awesome, but there is the failing that you could have prevented because you just went and added the totally wrong way, and that wrong way to me is product first because I see this playing out every single time.

I have a somewhat sizable Twitter audience at this point, and I see a lot of people complaining. “I built this and nobody wants it.” What I want to do is to go to people and tell them, well, let's try this again, but this time, don't start with the product but start with the people. Figure out who you actually want to empower, who you want to serve, and then find their most critical problem and find a solution to it with them, for them, not just because you want to build it. You don't matter.

The actual solution that you built also doesn't matter in the beginning. What matters are those people. The idea now, that shift that happens here is that we now start really looking for those people and we just start joining their communities. That's how you find an audience nowadays, I feel at least, because I see this play out very effectively for lots of people on Twitter, on LinkedIn, on Facebook. Doesn't really matter. If you want to find a community, if you want to find an audience, you have to go to where they already are.

You have to go where those people are actually already congregating, talking to each other and exchanging information. That usually is a social media community, that could be a forum. It's better if the forum looks like it's from the '90s, because then it actually might be from the '90s, and it's an old community with a lot of people that have been interacting with each other for a long, long time. You can go to Discords or Slacks, or if you're a little bit older, IRC channels, and find your audience there. There is a whole lot of potential hunting grounds for your audience out there.

The easiest way to actually find them is to go there and to join them, to embed yourself in their communities, and then to start observing them, figuring out how do they talk? What do they talk about? What do they care about? Figuring out, what of those things that they care about do they have problems with? Do they complain about them? Do they look for recommendations, alternatives? Any these kind of little messages that you can find. Can I build something for that? And then asking them, communicating with them, actually talking to people, and figuring out, is this something that you need help with?

Would this solution help you? That's kind of the first steps, and only then do you ever start building. Then is when you start coding, or then is when you start writing, or then is when you start recording your course, but all this stuff from before that has to happen before you go into the making part. A lot of people love to skip all the audience exploration and discovery parts, and they start making, because that's what they've been trained to do. If you look at a software engineer, right? They are trained to build.

They're not necessarily trained to talk to people. Even worse, lots of software engineers actively get discouraged from talking to people because they're supposed to be nerds or weird or socially inept, and that is something that is highly destructive to technical people who want to build a business, because they come in and they think, “Oh, I can talk to people so I better start building.” Super destructive, super high risk because there's no validation in this. If you build something, you don't know if people out there need your solution, you don't know if there's even a problem that you're solving, and you don't know if people have a budget for that.

All of this can be reversed and actually validated if you go to where people are, figure out what they're already paying money for, and then solve their problems with them and for them.

Pat:
I love it. It reminds me of a Seth Godin quote, which is, you don't want to find customers for your product. You want to find the products for your customers or create the products for your audience. When you say put yourself in these communities, I'm imagining, and this is probably why your book is titled The Embedded Entrepreneur, right? You're embedding yourself into that group of people to learn more about them, to communicate with them, and that's the only way to do it.

I would love to hear from you, more specifically, we have a niche or a market that we're into. We're getting excited about it. We embed ourselves in that community. What specifically do we do? What questions are we asking? How?

Arvid:
It all starts really with talking to people. This might be scary for some people and quite enjoyable for others, but it needs to happen nonetheless, because once ... There are situations where you already are part of certain communities, and that's kind of what I'm trying to get to in the book. That's one of the first things that you do in the audience discovery chapter, is to figure out, what communities am I already a part of? What potential audiences do I already feel connected with? For me, that would be, I'm a software engineer, I'm an entrepreneur, I'm a bootstrap founder. I'm a regular founder. Yeah, I'm a writer. I'm a maker.

All of these communities already exist out there and I'm part of them already, but I'm also somebody who really likes coffee in the morning, and who loves to have fish in an aquarium, and who really enjoys like semi-hot showers. You can be very specific with these things. And all of that is a potential audience, because there certainly are a lot of info products and coffee out there. Just looking at any bookstore. Or there are a lot of tiny little tools for people who want to have some auto-feeding device for their fish when they're on vacation; that is the market, and you can build stuff. They actually have like Arduino integrations, really interesting stuff, but don't want to go into that.

There are a lot of potential niches and audiences out there, and you might be part of a lot of them. For those that you are just interested in, but not part of, and that's kind of where your question comes from, I guess, you talk to people who are a part of this community, and you ask them, well, where do you go to learn more? Where do you go to hangouts with other people that like the same stuff that you like?

Then they tell you something and you go there. If it's a subreddit, you go there, you join Reddit, and you make a little account and you go into the subreddit, and you figure out what other subreddits are connected to this, and you go there. Or if it's a Facebook group, you'd go into the Facebook group and you find a lot of people, you talk to them, and you ask them, “Well, where else do you go? Where else do you hang out?” Then, over time, this is kind of an audience community location recursion. Because you go to one place, you ask, “Where else are you?” You go to the next place, you ask, “Where else are you?” then you have this graph of interconnected communities and if you've a pretty solid lay of the land.

I know that you've been writing about this too, with the “four Ps” and all of that, like an actual ... the market, a representation of the places where people are and where communities are engaging with each other. Because if you want to be actually good at helping people, you need to be where they are, you need to listen to them, and you need to be able to be in contact with those people, either for just this kind of exploration calls that you sometimes can do with people. “I'm interested in building something, if you have half an hour.”

Or, once they are your customers, you actually do kind of feedback cycle communication with them. You need to know where these people are because otherwise, you will never be able to attract them to the thing that you want to help them with. This recursion strategy works pretty well if you already are in communities, really just talking to people will expose you to new and interesting locations. That's how you get in there.

Then the question is obviously, how do you learn more about people? How do you start actually building a reputation as somebody that people can trust? Because that's the next step, just lurking in the community, that's probably not enough. You need to interact with people. You need to engage with them, because otherwise, you're just going to work on assumptions the same way as if you had gone product first and built your Tinder for cats, and then hoping that there would be enough cats out there who could use computers.

Now, even that is a, it's a pretty hilarious example because it's obviously wrong because yeah, but most products out there work like that. People hope that there's an audience. It very likely isn't there, because if they need to hope, then it's a sign that it doesn't exist. Otherwise, they would already know. You really need to build a reputation as somebody that is an active member of the community. Let's go into the example with fish, with Aquaristic, like having aquariums. If you go into this community for the only purpose to sell, with the only purpose of just try to sell them something, first off, you're going to be kicked out of this community quite quickly.

And nobody will ever buy your thing other than a few victims and they will burn your reputation forever. Honestly, we are entering a phase in online business that is more and more, even than before, reputation based. There were ways to get away with this, but there are not as many ways to get away with a burnt reputation anymore. A solid reputation is something that will just make a lot of stuff possible for you.

I'm noticing this now. At this point, I've been building an audience, building a following around being empathetic, around being helpful and supportive, and it comes back to me already. I've been doing this for a couple of years. Before that, I was a software engineer, not doing much community work at all, but I decided to give back to people because I'm standing on the shoulders of giants, that people that taught me what to do are still out there teaching, and I want to join them. I want to be like those people, helping other people succeed.

That's what I make my mission now. I see that, by having this very positive reputation, and by maintaining it, more and more people join me in the cause. They read what I'm writing about. They talk to me about what I'm doing. They suggest things to me, and some of them even buy my book, which is wonderful, but it's not why I'm doing it. I'm doing it so that people actually get to the point where they themselves can teach other people and write books about it. That's where I'm heading. That reputation is essential, and that is what you get by being part of a community, being an active member of communities.

Pat:
When you build that reputation, when you start to make actual friends, people begin to open up about what their problems might be, what they might need help with. When you start getting in these communities and you start getting 20 people saying 20 different things about the things that they might need help with, how do you begin to go, okay, this is the thing I'm going to build a solution for? How do you validate that?

Arvid:
That's a big problem because there's a lot of noise and a lot of communities. The best way to deal with this that I have found, and I've been doing this myself and with mentees and consulting clients, is to actually keep a tally. To literally take some time every single day, 20 minutes, an hour, if you can spare the time as much time as you can, to go into the community and to look for the four kinds of messages that kind of hint at the existence of a problem, try to identify the problem, and then keep a list.

Those four kinds I've already mentioned that I think, is people just complaining, people just being fed up and complaining about something kind of shows that there's a problem. They don't need to know what it is, but they are complaining. Then people asking for help, which is, when people explicitly say, I'm having trouble with this, where they have recognized that this is a problem, they just don't notice solution, then people asking for a recommendation, where they know the problem exists, the solution must be out there, and now just tell me what it is. And then finally, people asking for alternatives to existing products, where they know, I know my problem, know the solution, know a product is out there, but this isn't good enough. I need something better.

Funny enough, this maps perfectly to Eugene Schwartz's awareness scale. The prospect awareness scale that is used in marketing quite a lot, where you're looking at problem aware, solution aware, product aware, and completely aware, and you use that in marketing as a means to figure out how much you need to teach people about the problem or the product. But this is the same thing in communities. You could find all these four steps or these four kinds of messages. Of course, the higher they are up that ladder, the higher they are closer to asking for alternatives, the easier it is to build something.

Because you don't need to teach people about the problem or that there's a solution already. They know. They're just looking for something, right? But the further down you go, the more people you have in the funnel, because it's a distribution, usually, it's that most people are unaware and only few are climbing those ladders. It maybe depends on what you're building, what kind of product you're building and what industry you're building. But it's interesting to look for those four, maybe decide for which one you're looking for most, and then starting to tell you them.

After a couple of weeks, or maybe a couple of months, this is not going to be a two-day thing or a two-hour situation. If you want to embed yourself in a community, you're going to spend some time there, and I think this is true for all kind of entrepreneurship, right? If you want to be successful, you've got to be consistent and persistent at the same time for long. Same deal here. If you want to do problem discovery, you need to tally every single day. Then after a while, you just look at the list and you will find some sort of affinity for certain problems and those you dive into.

It's a half number-driven thing where you look at what is most commonly brought up in the community, what do people complain about most? And then you look into the quality because it also needs to be an urgent and important problem for you to solve. Particularly if you're trying to build a bootstrap business. I'm looking at this mostly through the lens of a SaaS business right now. This obviously applies to info products or courses or other things as well, but from a SaaS business, if you're only one person and you're trying to solopreneur your way into wealth, you need to solve a critical problem.

Otherwise, you're going to try and do sales, and nobody wants to buy it unless you go really cheap, and then your margins shrink. If you solve a critical and urgent and important problem, the likelihood that your business is going to be having positive revenue is much higher than if you solve any old problem that may just be a nuisance. You try to figure this out too. Because if people complain about the same thing every single day, it's quite likely that it's an actually urgent problem, or important. You don't really know, or maybe both. You can use this like this Eisenhower matrix of urgency and importance that people use for prioritization.

You can use that for problems too, right? Because you don't need to necessarily yeah, look into just feature prioritization for your business. You can also use this kind of, what is it? Methodology for figuring out the urgency or the criticality of a problem. We did this with FeedbackPanda, and maybe this is a good time to bring an anecdote into this because it's getting a bit theoretical. But for FeedbackPanda, Danielle was experiencing a problem herself.

She noticed that she was teaching for 10 to 12 hours a day, every single day, online, from her computer, and she was teaching English as a second language to kids in China. It was the cutest thing. You cannot imagine how cute that is. If you see somebody teaching kids that are from anywhere, from four to 12, really young, actively in front of a computer with a lot of toys, a lot of singing. It was wonderful. The teaching part, extremely cute, and it's a good way to make money because you can do it from home, but then came the administrative part where it needed to write student feedback for the parents of the kids to read. What did they learn today?

What can they exercise for the next lesson? What should they try to get better at? That kind of stuff. These were Chinese companies, so the curriculum was very strict. It was very clearly laid out. So, every teacher working for them, and when Danielle was teaching, it was already like 5,000 teachers doing this online, they essentially taught the same thing the same way and wrote the same feedback, but they all wrote it by hand. We noticed that people were already starting to create their own little systems.

They had like Google sheets somewhere or work document with text templates that they would use and just fill in the name of the student or some additional information, and that's usually a good sign that there's an important and urgent problem right here. Then we looked into the Facebook communities that Danielle was already part of, because she was a teacher, and it was a community of a couple of thousand teachers, and every single day, somebody would complain about student feedback. New people joined, and the next day after their first lesson they would ask, how do you deal with feedback?

Then somebody would come in and they would say, "Well, some people try their system. Here's a Word document that kind of works for 10% of the people." And it would be a whole thing. What we thought is, well, if we can build something that sits on top of this curriculum, that integrates into this online school and makes it easier for people to just really write their own templates and reuse them all the time, we would help every single person that is complaining about this, every single day. That's what we did.

I built a tool for her. She told me what she needed. Then we figured out to get it into a workable condition. I'd built a couple SaaS projects in the past, so I knew how to build authentication and billing, and all these things that you need to turn it into an actual business, not just a hobby product. And then we launched it within the community. People could ... Anybody asked about feedback on any given day, so we really just needed to wait for our opportunity to tell them, “Well, if you want to deal with feedback, use FeedbackPanda.” Then, at some point, we would say, “Well, we also built a FeedbackPanda. But come on, use it, try it out.”

And it turned into an extremely recommendable product because we built it with recommendability in mind within this community. Because, not only could people have their templates in there, they could also share them with each other. That feature of sharing templates from teacher to teacher, it turned us into an extremely recommendable referable product. We didn't even have a referral system for a year, and people started referring like crazy. We did zero paid advertising because we didn't need to. It all happened with the mass in the community.

That's the strength of a community, and that's the strength of figuring out where your community is before you actually build something, because we knew a critical problem right there. We have a solution, the solution works. We just need to put it back in. Then people automatically created the buzz, because whenever a new teacher joined, they would ask, how do I deal with feedback? Then somebody would come and say, well, have you tried FeedbackPanda? It's really nice. It's worth the 10 bucks a month. That's what people said. These are online teachers, people who are online teaching as their third job, because they already have two jobs, but they don't make enough money to make ends meet.

Those people who have no budget for nothing, they still recommend it as a monthly subscription tool because it had such an impact on the quality of life. That's kind of where you want to be, and we would have never been there if we hadn't had access to people from the start who told us, this doesn't work for me, this doesn't work. Danielle was one of the biggest people who criticized the project, because it needed to work for her. But then, once other people were in there, we saw other use cases and other configurations that we didn't think of.

They came back, we fixed it within minutes and turned them into glowing evangelists for the product, because we really focused on making fast choices and making it much better for them quickly, and it took off from there. That was my first real contact with a community-driven business, and I've loved it ever since. In a way, I'm kind of building a media business around myself within the community at this moment by writing books and having a podcast and having a newsletter and all that stuff.

It's just the most enjoyable thing that I've ever done in my life, to be there for people, and interact with people every single day. That's where my passion is right now, and that's why I grew this passion, grew within FeedbackPanda, because being able to interact with those teachers, seeing them light up when we would do something nice for them, that washed away every kind of passion that I felt before. Because when we sold the business, when we sold FeedbackPanda in 2019, it was the weirdest thing.

Because I thought this would be great, but I fell into this void of not knowing what to do, because all of a sudden, you take your business that you work on for 24/7, and we were just two people. Danielle and I were the only people in the business because we didn't hire, and that was a mistake, I guess, at least my mental health is severely impacted by that. Maybe we can talk about this too, because I think we should, it's an important topic, but we sold a business, and all of a sudden, I had nothing to do.

I thought, “Hey, great. Finally, time to go back to World of Warcraft. I wasted a couple of years at the university there. It's probably going to be great again.” And I played the game, crickets, nothing. No joy. Because all that passion that I thought I had for the game, that was not good enough anymore. Because here were people, thousands, we had 5,000 some customers at that point, that every single day would interact with me in some way, and helping them was my passion, and gaming could not compete anymore.

Maybe kind of sad because I just paid for World of Warcraft, but in many ways, it showed me that I wanted to do this again. I wanted to help people again. And by being able to now talk about my journey. That's the first thing I did was start a blog and write about what I knew, mostly also about mental health issues. This was a very strong thing at the time. I was very, very anxious, had a lot of anxiety, very stressed, very mid burnout when we sold the business because I was the only technical person in a two-person company with thousands of customers, and a lot of responsibilities hanging over my head.

The company was our only source of revenue, only source of income, and we didn't have any diversified assets. Everything was riding on me not getting sick. It's not a good way to run a business. That was one of the motivations that I started writing, and it immediately resonated with people. The fact that here's a founder that's actually also talking about the dark sides, the sad and the anxious parts of running a SaaS business. That was really helpful in getting a couple of eyes on what I was writing about.

Then I started branching out into all kinds of topics. Some of them found residents within the community. Some of them not so much, and I continued writing about what people wanted me to write about. Led to one book where I just really detailed the whole journey of FeedbackPanda, and then led to another book where people told me, "Hey, this part of the book, you could write more about this. I really want to know about audience building and who to serve." That led to The Embedded Entrepreneur. And that book itself is an audience-driven project. I started that with a tweet, told people, “Hey, I want to write about audience-first.” That's what I called it back then.

At some later point, people told me, “Hey, your definition of audience first is not my definition of audience first.” We had this little Twitter exchange, and then I thought, hey, these are my readers. These are actually my potential customers. If they tell me that the title of the book is not what they thought it would be about, maybe I should listen to them, and then I renamed the book. Everything about this book was audience driven. I had an alpha reader stage where I had 550 people involved in the manuscript, just editing it with me.

That's a gigantic list, the acknowledgment section at the back of the book with all those people called out that wanted me to put their name in the book. It's just such a cool effort to do this with people instead of just doing it and then throwing it into the market. I did it from within the market, and the resonance has been extremely positive and I've had so much support. I'm beyond grateful for everything there. It's been really cool.

Pat:
Congratulations to you and all that success. That's amazing. We at SPI are very much focused on the audience-driven stuff as well, because that, in of itself is validation as it's happening. There's no better way than that. Again, The Embedded Entrepreneur, check it out. Where is it? Amazon, elsewhere?

Arvid:
Yeah, it's, it's on an Amazon and on Gumroad. The website is EmbeddedEntrepreneur.com, but yeah, you'll find it on Amazon or on Twitter, because people talk about it a lot, which is really nice because that's my audience. They are now reading the book. They have been reading the book ever since I put out the first manuscript, the first draft of the manuscript, because they've been part, a lot of the people in my audience have been part of this process. So, they've been sharing it with people.

And now those people have read the book and are starting to actually implement it, and now they're sharing it with people. It's just a wonderful effect to see people recognize somebody who understands what they want and understands how to talk to them, speaks their language, speaks in the kind of the concepts and patterns that are in their industry that they use every single day.

I really, really enjoy the resonance that I've been getting. A lot of pictures of the book, a lot of people tweet pictures of themselves with the paperback. For some reason, my book gets to travel more than I do. I've seen my book in front of pools, in airplanes, like on really nice balconies in Italy. And here I'm sitting in Berlin in my little apartment. I'm still having a great time, but I'm envious of my book at this point. That's where I am in this pandemic. I could tell you about that. Yeah.

It's just wonderful. I'm having a blast. Like I said, best time of my life is being involved with people that I actually care about and doing stuff for them, with them.

Pat:
A lot of what you're doing is something that is based on a phrase that I once heard ConvertKit talk about recently, and that's called working in public, right? You're essentially building with everybody and letting people know, instead of putting yourself in a hole and then revealing something, and then kind of hoping, which is to your point earlier, and then crickets. You get to actually build this thing along with your crowd in a way that becomes the way that they would want it anyway. It's kind of selfish to take the approach of, “I know exactly what my audience wants, and you'll just have to wait for it,” versus, “Hey, I don't know everything that you might need, like, let's work on it together,” which I really love. The next question, Hoard or Alliance?

Arvid:
Well, I'm a Hoard kind of person, but I do dabble because ...

Pat:
I'm more of an Alliance guy, actually. World of Warcraft sucked away a year of my life in college. So, I'm very much able to connect with you on that. That kind of relates to the next topic here, which I wanna talk about, because I do wanna talk about bootstrapping and how one might, if they're not a developer, for example, how they can still get a software developed. But I do want to talk about this really important thing called mental health.

Can you dive a little bit more deeper into what you wish you had done differently to stay a little bit more sane, stay a little bit healthier and be there for the people who you to be there for? I mean, there are so many things that can happen if you don't take care of yourself first. Can you dive into that a little bit?

Arvid:
In the beginning, it's fairly easy to run a business by yourself. As a team of two, there's really not too much to that. But the moment you have a couple customers and you need to be available for them, you start feeling a certain responsibility, which is also fine. That's just how business works. You create something and other people consume it, and if they have trouble, you help them. But we created this kind of ... I, myself, let's just talk about myself here, I created this notion in my mind that I need to be as fast as I can when it comes to a message on Intercom.

We were using Intercom as a little chat system. For all purposes of customer service, we were using the Intercom bubble. So, I tried to have a sub-ten second response time on Intercom at all times. Somebody would reach out to me. I would be there. Yeah, right? It's not the smartest thing, but what it did in the beginning was wow people. What? Are you a robot? Like, I got a lot of questions about being a robot or not, and then I had to be an actual human being. It's like a, yeah, a Turing test essentially, was really funny.

Over time, people came to expect this, because obviously, the first time it happened, their mind was blown and I served them quickly, and may even have fixed the bug that they gave me and fixed it within like 20 minutes, deployed it, and said, just refresh the page. And their mind was blown that they had actually impacted the product in some way. That was really cool because those people turned out to be the loudest supporters of our business in their community, which is an obvious consequence of helping people beyond what they expect, is they will tell people about this because nobody really does that.

That was yeah, the expectation. Over time, we had more customers, we had more things to take care of. I had more integrations to take care of because we'd started supporting more schools. So, to not support people as quick would've felt like something missing, but I just couldn't do it anymore. I just could not keep up with this. So, that created an internal narrative in my mind where I thought, “Oh, I'm not good enough anymore.” That's one of those things, which is like, obviously in retrospect, it's completely wrong.

Circumstances have changed. My job has changed and the systems in place have changed. So, this has nothing to do with being good. It's just an optimization problem, right? We're optimizing for different things. So, it might just take 30 seconds or a minute, or maybe an hour to help these people. They will still be helped and they will still be happy. It's all in my mind. One of those things. The expectation management was a big problem because I really didn't reflect on this. Who really reflects on stuff while they're in the middle of things?

It's hard to reflect on how else could this be if this is your 24/7 experience? Taking yourself out of this is something that I had trouble with. I sometimes succeeded, but most often failed at just stepping back, take a bird's eye view and seeing, what's really important? Because I was so caught up in the business. Big problem. I didn't really know about this. I didn't really know how much it would suck me in. No matter how much literature I read and no matter how many podcasts I listened to, it did not prepare me for that. What I'm trying now is to tell people the actual stories of what happened so they can kind of sense, “Oh yeah, I've heard this before.”

I don't want to repeat this at or go as far as other people did. Maybe I can stop myself right now. Another story that I have is one of feeling helpless or feeling the lack of control. We were in Canada; my partner, Danielle, she's Canadian. And we were at a family function. It was a yeah, a somber event. It was late at night. People were in the basement having a good time as much as they could, and I got a ping on my phone from yeah, Intercom. A lot of people were reaching out about something. So, there was something going on.

I had to retreat from this family affair, take my laptop, sit on the bed, that was somewhere in another room where nobody was at the time, and look into this. Need to talk to people, needed to respond to them and tell them “Okay, I see what's going on.” Something broke in our browser extension, because we had this browser extension that integrated our tool into their online classrooms, and one of those companies, one of these schools had just launched an update to their software and the browser extension didn't work anymore.

It really wasn't critical because the browser extension was a helpful tool, but you could still do everything all by yourself within FeedbackPanda. It's just that people were so used to the quality of service that they were adamant, that somebody please fix this browser extension. So, here I was sitting while the family was gathering somewhere else, trying to fix a browser extension at what was probably 10:30 at night in the darkness, cold, empty darkness of a bedroom. I was just sitting there like, “Is this the life? Is this my life now, that I'm just jumping at whatever comes up and retreating from my actual personal life just to repair something that I could have easily repaired the next morning and it would still have worked?”

That was a moment where I felt completely helpless, because this Chinese company launching something new, I had no control over that. And that could happen anytime. There was no warning system for me to actually tell me a couple days in advance. They certainly didn't talk to me about it, and here I was really feeling, “Ah, this is such a waste. I would love to not live this life. I would love to not be responsible for this business at this moment.”

Pat:
I mean, this is not why you built the business.

Arvid:
Yeah, this is exactly right. Yeah, didn't build the business to sit alone in a bedroom at night. I built it to help people. One consequence of helping people was building stuff for them when, even I didn't want to build stuff, but yeah, that was a pretty, pretty low point. I could have hired people to deal with this. I could have hired another software engineer to take care of the browser extension. I could've hired another customer service person to talk to people while I am doing whatever I'm doing. But I didn't because I had this weird perception that, unless it's a full-time position, we don't need to hire somebody into it, which is, if you think about it, maybe not the smartest way of approaching building a business or growing a business.

Because you can easily hire a freelancer, somebody on retainer, some part-time job. There's many, many different ways of easing somebody into a position that is not 40 hours a week, but in my mind, and that I'm coming from salaried software engineering background, a job is a job, and you go there five days a week, and that's what it is.

Pat:
Those were very real stories that I can relate to in many ways, especially with how, in the beginning, I was very responsive on email and on social media. Then, as the audience grows, it's just like, then all of a sudden, I have 10,000 unread emails in my inbox, and I just felt terrible. Felt like I was letting people down. Again, you and I are very similar there. It took me a lot to let go of some of the stuff to eventually hire out. That is something that I think, and correct me if I'm wrong, would you, if you could do it all over again, hire people to help you instead?

Arvid:
Much faster. It was one of the things when we transitioned to business, the first thing was to hire our replacements, and we found wonderful people, amazing engineers, amazing customer service people, CEOs essentially, the three positions that we hired for to replace the two positions that we were, and they were great. And they took it over and they had no problem doing everything that we did before. We would just look at each other was like, “Oh, this is easy and surprisingly effective. Why didn't we think about that?”

The thing is Danielle told me to do this all the time. I was just like, nope, I could deal with this. As long as there's no full-time position that has to be hired for, I could deal with this. I'm, I'm great. I'm a solo founder. I want to be like all these people that did it by themselves. There was a lot of glorification, hustle glorification that I had there, that I'm now trying to actively warn against, but it took me to actually fall into that hole to understand that it was a hole.

Pat:
Glorification at what expense? Of course. I mean, and we don't feel that expense until either it's too late or we're burned out, or what-have-you. Thank you for sharing those. I think a lot of people could avoid those situations, or if they're going through it right now, hopefully realize you're not alone, but there are some decisions that you have to make. I would love to ask you about bootstrapping. Let's say, let's go back to this community that we've been embedded into, we're a part of it, we're understanding what their problems are, we're learning the language, we are now having conversations with people and we want to build something.

The solution that seems to come up is one that we don't have experience building. It's not necessarily an online course where we could find information or use our own experiences and share that information to help people. It literally would require coding and hard coding and other things that we just don't know how to do. We're not like you and have that ability. So, should we pass on that idea? How might we still be able to help this audience?

Arvid:
Two solutions come to mind. One is find somebody who can actually code and help you. Find a cofounder, that is always an option, but it requires a lot of work and a lot of interpersonal stuff to be right. You have to figure out if this person's actually interested in this audience that you're interested in. You have to figure out if they have plans. Yeah, right. So, it's one that needs to work because if it doesn't, the whole value chain collapsed as well. A big problem. The easier solution is to actually look into no-code, and look into tools that are not coding tools, but tools built by coders for people who want to build tools that coders would build.

Yeah. The no-code space is ... There's a lot of really, really interesting tools out there. I don't know if you were around for Microsoft FrontPage and for Dreamweaver, do you remember these things?

Pat:
I built my first websites on Dreamweaver.

Arvid:
Yeah. What you see is what you get. That's what we called it back then. This, but much better and much more integrated with each other is what no-code is. Imagine you can really drag and drop everything together from a website. There's tools out there that do just websites with CMS systems in the background to create content that flows into it like a blog. All of this exists, and you don't need to write a single line of code, to membership communities where you just integrate one no-code tool, like an actual account management payment system no-code tool into a community no-code tool, and they are all interconnected. The big player in this space is Zapier, or If This Then That, or Integromat, these little glue tools.

They have APIs, little interfaces for all these tools to interact with each other. If you have a no-code tool, they will very likely have a Zapier API. And if you have any other no-code tool, they also have one. So, you just kind of connect them through this central API, and you can build apps like full-fledged mobile apps with Bubble. You can be able to build websites with Webflow. There is a lot of interesting competitors in that space, so these are just examples. I'm not sponsored by any of them, but they're all great.

And you can build really, really cool things that you would've never thought a person without coding could be building. I've seen people build financial planning tools that integrate with financial institutions and they have not written a single line of code. There's stuff out there that is ... You still have to learn those tools. It's like any tool that you're interacting with, that you're using. You have to experience how to build certain things, and then you have to kinda graduate into really understanding the tool. I guess that, yeah, that's true for any more complicated piece of software out there, but you don't need to know how to code. You just need to know how to click stuff together and connect it, and that is something learnable, very quickly compared to learning how to code.

Pat:
Thank you for that. That's really interesting. What about the so thought of, or potential solution to build a solution, to hire a person on contract who is a coder to work on that project? That they're not going to be a cofounder, they're not going to be involved in the business. I just hire a person, I pay them a certain amount of money to build the thing for me. I have some thoughts I'll share in a moment, but I'd love to hear your thoughts on that.

Arvid:
If you can afford it, that is an option, but that's the big problem, right? Most people do not have a solid $20,000, $30,000 for such a project just laying around. There are options to get funding for bootstrap businesses. Funny enough, bootstrapping kind of sounds like you shouldn't take money. It's more about building a sustainable, slow growth, or non-hypergrowth business with the resources that you have at this point. But there are companies out there or funds out there that give like tiny cash injections, 10, 20, 50 something thousand dollars for bootstrap businesses. But most of them look into bootstrap businesses that already are creating revenue.

That's not the easy way to do it. You can take a loan or something like that, but with software businesses, in many countries, that's complicated. I certainly experienced it here in Germany with a couple friends. We tried to build a local food marketplace in Berlin, because it's a gigantic city, has lots of hipsters, so they didn't want to eat good food from around the city. That was the idea. And it's kind of true we horribly failed with the product, but it doesn't matter. We went to a bank and we asked them, can we get a loan? We kind of want to build this. They looked at us and said, no.

If you had a factory, I would already have given your check, but software, not gonna happen. That's still a problem. Getting a business loan for a software business, there are not too many banks out there who really understand that so they don't give you money. Unless you have this kind of cushion or you raise a little friends-and-family round where you get some money together, it's not an easy thing, which is why I would go into no-code or finding a co-founder for bootstrap businesses. What are your thoughts? I'm quite interested.

Pat:
I mean, my thoughts are, and I've done this before, I've paid a company to build some WordPress plugins that were going to be premium plugins that I was going to sell, and I failed miserably, partly because A, I rushed into it. B, I was chasing money. I didn't really go into communities. I just thought what I knew would work, would work, and it didn't. But number three, I didn't even think about the future. What if there is some WordPress compatibility issue? Well, then I'd have to go and figure out how to hire this person again, like pay them on call for retainer, or pay a massive amount of money with agency fees and other things on top of it to help them fix things that break that I wouldn't know how to break.

That would be 10 times worse than the mental health that I think that was already bad if I knew how to solve the problem, let alone, "Oh my gosh, this thing broke. I don't even know how to fix it. Oh, that's just not good."

Arvid:
That's the problem. Because sometimes, as a founder who is not technical, you don't even know what part broke and who is responsible for maybe fixing it, particularly if you work with multiple people. You need to get somebody to actually do some inspection of your thing to tell you who to talk to, to maybe fix it. There's a lot of complexity in this, obviously. It's still, for some things, it's good. If you look at info products, hiring somebody to lay out your book or to edit your book, obviously it's a task you do once, and there's no additional editing.

You can do that maybe in a revised version of something, but it's a standalone task, but software's never finished. That's one of the core tenets of SaaS is that you're never finished building your SA. You're only finished for what is currently the best version of its product. But next week, you might need to integrate a new thing, a new solution or, and I don't know, Chrome gets an update, and for some reason, that doesn't work anymore. Everything is changing all the time, and dependencies are everywhere. Just like the thing like with these Chinese schools for me. That was a big dependency because if they changed their system, I needed to react.

It was just one dependency, and it already drove me insane. Imagine building a business that is sitting between six or seven different dependencies, like you're building a tool for business A that interacts with business C through business B, and now you need to be between A and B and integrate them, and then B and C and then A and C and everything is really, really, depending on you getting the integrations right, and you never know what's going to happen. Not a fun time.

Look at all these Flash tools. Sorry. One more example, because that's a very current one. Flash was sunset. The whole technology of Flash, like the video, animation thing. What YouTube used essentially before they turned to HTML5 video. And that was sunset out of the browsers because Adobe, the company who bought Flash from Macromedia, or they acquired Macromedia and got Flash with it, they decided not to update it anymore. So, they said, hey, by 2020, we're not going to update it anymore. So, the Chrome team said to the Chromium team, which are the people building the actual engine that Chrome is built on, this is the whole complexity of this, they said, we need to get this out of here because we're not going to ship a browser with a tool, with a part, a plugin that is insecure.

Now, Chromium needed to put a roadmap out there to take this out of Chromium, so all the tools that were depending on Chromium, like there's a lot of other browsers out there that integrate Chromium, just like Chrome, needed to remove this from their browser too. And these Chinese schools were using a plugin for their video that used Flash. You couldn't believe the dependency here. Chinese school using another plugin that uses Chrome, that uses Chromium, that uses Flash, and Flash got sunset. Now it rippled all the way back, so they needed to come up with a way to either change their vendor for their video stream or lock the version of Chrome you're using in time, which is impossible, because Chrome auto-updates.

And there was a whole thing going on. I think 2020 was a year of many, many tools changing one really big, important infrastructure part because Flash was outdated. Because Flash is not just used for video. Flash was also used for file transfers or for real time communication. You don't even know where Flash was in, but a lot of companies figured out that they were having Flash some in the dependency chain and it caused a lot of headaches.

Pat:
Flash, I was actually into developing Flash animations back in high school for fun. It was such a cool tool, but yeah, it's definitely outdated now. As we finish up our conversation here, and again, Arvid, thank you so much for this, so insightful, and to hear the stories and the realness of it. That's what I appreciate so, so much. Launching your product, right? So, we now have solved this problem. Maybe we're building or are building the tool, info product or SaaS, it doesn't matter. How do you best let the world know, let your community know, that this thing now exists? How do we do that in a way that makes sense, especially at the start? Do we offer some special deal for those who are first in? Do you recommend a beta program? Tell me what your thoughts are.

Arvid:
With the book, I think I can share this here because that is the most current example that I've been going through. It's like the most refined version of a launch that I've ever done. I've involved people from the start. Like I said, they were there since the tweets. That's why I said, “I'm going to write about this.” There's been a lot of goodwill and anticipation baked into this process because people who are involved in something, they want to see it come to light, and once it comes to light, they want to share it and see it become successful.

By having people part of the journey, you also encourage them to help you launch the product. I did two launches. I launched on Twitter, where my whole community is 22-ish thousand people at this point. That's, that's my Twitter following. I did that on a Wednesday in the middle of the week. I announced it a week before that I will launch next Wednesday so that people could understand that something is going to happen, and that Twitter stream is probably going to be full of my stuff, but that's, that's all right. I put a big thread there, like a big, big video-led thread, where I put a little video where I explained what the book is about, that it's finally out, who was involved, and how good it is to actually be able to launch it.

Then I explained all these things, put more videos in there explaining all the little sections, put links to the product, and a couple of reviews that people gave me, just built some buzz, and I launched this thread and then I spent the whole day effectively retweeting this, interacting with every single person that interacted with me, giving them the opportunity to further talk to their audience about my product. I did not have a coupon code or anything for the actual launch, but I also sent out emails to my alpha readers, the people who were there for the first manuscript, to my review readers that were doing essentially a review of the final product.

To the people who bought my previous book Zero to Sold on Gumroad, I had an email list of them, and I sent an email to all three of them with a specific coupon code, or I gave them a toolkit for free. I did a little Notion-based toolkit for people who are interested in doing this data-driven approach with preexisting databases and sheets. So, I have a toolkit there, and it's also on Gumroad that is like in addition to the book, and asked people to quickly go through these steps that I outline in the book to, how do you find your audience? How do you find the problem? What's a good schedule to use with Twitter? These kind of things.

I put this, gave that for free to all the people who helped me with the book, because I thought, “You're not going to pay 10 bucks for this. You helped me so much already. Here's the toolkit.” To all the other people I gave a 20% discount. Whenever I go do an AMA somewhere, I put a discount out there with something like that. But honestly, discount wouldn't even have been a necessity because there was already so much hype, in a good way, by the people who were involved in the product that they carried it out with me.

A week later, I launched a product on Product Hunt, which is usually where software products or more yeah, techy products are launched. I launched it two minutes after the server went to the new day, which is like Pacific Time. Yeah, in the morning. It's 2:00 after midnight, and immediately engaged my audience. I'm living in Berlin, which is nine hours ahead. So, it's nine in the morning, good time for me to start engaging my audience. My audience is both American and Indian, because I'm in the middle of these really big startup and entrepreneurship communities. In the morning, all my Indian friends helped me upvoting the book on Product Hunt. It went to number one within minutes, and it stayed there for the whole day.

Because in the middle of the day, my European friends started helping me upvoting the product. And at the end of the day, my American friends started helping me upvoting the product by upvoting the product. So, I ended up as number one product of the day, number two product of the week. I'm extremely proud of where this launch went. Obviously. people like it, people supported me, and they got something out of it, both for me, for themselves, and for all the other founders out there who might be interested in learning how to understand your audience and build for and with an audience.

Pat:
All right. So cool. Thank you for telling me about that. Super smart to use Product Hunt, especially for your tech, more heavy audience. That's perfect. You might, out there listening, have your own version of a Product Hunt or a marketplace where your thing could be featured. Wow. So much to unpack here, and I'm sure we could talk for even more, but maybe we'll have to bring you back on at some point to uncover more and go deeper into the details, but The Embedded Entrepreneur, check it out on Amazon. What website would you want people to go to, to also check it out? What's your Twitter so we can all follow you there as well?

Arvid:
My Twitter is @ArvidKahl, A-R-V-I-D K-A-H-L, and I have a blog called The Bootstrapped Founder, and that's at TheBootstrappedFounder.com, and you can find all the books and my newsletter, my podcast, and all the things I write about every week on there as well. But yeah, find me on Twitter. My DMs are open. Every founder who wants to talk to me can talk to me, and I'd love to talk to you. So, please reach out.

Pat:
Thank you, Arvid. This has been such a pleasure and such a blessing to have you on. Thank you so much, and I hope y'all enjoyed it. Take care.

Arvid:
Thanks, Pat.

Pat:
All right. I hope you enjoyed that conversation with Arvid, and again, thank you to my team for recommending Arvid to come on the show, because, as you can tell, super genuine guy, cares about his community, knows exactly how to build a business as a result of guess what? Getting his audience involved, finding a problem, really going at it with working in public to solve that problem so that, by the time you launch this thing, you don't have to sell it anymore. You've been selling it genuinely and authentically this entire time.

I use this exact same process with, I don't know why I said it like that, exact, I use this exact same process when selling and promoting the SwitchPod with my partner, Caleb. We worked in public, just like Arvid talks about. We got people involved so that by the time we kickstarted that thing, it was sold already. It was already sold to those people. Truly embedding yourself into that space that you're in. Arvid, thank you so much @ArvidKahl. And you can find him also at TheBootstrappedFounder.com. That was his Twitter handle just there.

Of course, you can get all the links and show notes over at SmartPassiveIncome.com/session517. Again, SmartPassiveIncome.com/session517. Whew, this was a fun episode. Thank you so much for listening in. As always, I appreciate you. Make sure you hit that subscribe button, and I'll see you next week, or actually this coming Friday for our follow-up Friday episode. I'm going to go deeper into this topic of audience driven with you very soon. Anyway, peace out, take care, and as always, Team Flynn for the Win.

Thanks for listening to the Smart Passive Income Podcast at SmartPassiveIncome.com. I'm your host, Pat Flynn. Our senior producer is Sara Jane Hess, our series producer is David Grabowski, and our executive producer is Matt Gartland. Sound editing by Duncan Brown. The Smart Passive Income Podcast is a production of SPI Media. We'll catch you in the next session.