Paul: Welcome to another episode of The App Guy Podcast. I am your host, it's Paul Kemp. This is a show where we get experts who help us with our businesses - it could be app businesses, mobile businesses, whatever it is, but it's a wonderful world and we learn from the guests who we get on because they help us with our own revenue, with our own startups. I've got a great guest here; he is basically the author of Predictable Revenue, which is a book that took an outbound process from Salesforce - you know Salesforce, you would have heard of them - and this process that they helped achieve added another hundred million dollars to the revenue, so it's definitely a book worth reading. Also, there's a new book from this author, Aaron Ross, and the book is called From Impossible to Inevitable, which we're going to touch on today. So Aaron Ross, welcome to The App Guy Podcast!
Aaron: Hi Paul, happy to be here.
Paul: First of all, let's talk about your new book that's coming out, because you are going to help a lot of app entrepreneurs, people that are running their own businesses. What is From Impossible to Inevitable all about?
Aaron: Right, and I think it's out in the United States, but I heard March 9th is when it's more publicly available in the UK.
Paul: Actually, Aaron, this is probably going to go live after or around about that date, so that could be really good timing
Aaron: Perfect. Well, the new book is called From Impossible to Inevitable: How Hyper-Growth Companies Create Predictable Revenue. It's really a book that, between myself and my co-author, Jason Lemkin - he is a guy who started a company called EchoSign, and he grew it from zero to more than a hundred million dollars, as well as selling it to Adobe - so all these lessons learned around what does it take for companies to speed up how fast they grow, but even more importantly, what are all those mistakes that everybody makes time and time and time again, and how to avoid those.
Paul: So your co-author then actually created a company called EchoSign and sold that to Adobe for one hundred million dollars did you say?
Aaron: Yeah, well he grew it to more than a hundred million in revenue and he sold it to Adobe for more than nine figures; it's not a public amount, but it's...
Paul: So what is he doing? Why is he not on a beach?
Aaron: He is a machine. He's created something called SaaStr, it's basically the world's biggest community of SaaS (Software as a Service) companies on the planet, it's really growing fast. So now he does these huge conferences in the Bay Area called SaaStr Annuals, where thousands of the top B2B SaaS entrepreneurs come. They actually just finished, it's usually like every February. It's amazing, it's like the single biggest concentration of tech entrepreneurs that are I guess on the leading edge of [unintelligible 00:04:03] how to grow things.
Paul: You know Aaron, this is what I love about this show, is that you start to unravel what drives people, and a lot of people when coming into entrepreneurship feel it's about the money, but clearly sometimes it's not; it's about your legacy, it's about making a change in the world. Do you have any thoughts on why it is that people run businesses, try to sell them on - is it about the money or is it about something bigger?
Aaron: Well, it's both. It's partly about the money, and then if you don't need money then it's probably about status; it's also probably about having something to do. If you're a natural entrepreneur, usually sitting on a beach for more than... You can do that for a little bit, but you're just getting antsy and you want to be doing something. Part of it is giving back, and a lot of what drives Jason, for example, and probably myself, you see the same mistakes, whether it's the app world or the B2B world - people make the same mistakes, over and over and over. And we're both - I don't know exactly how old he is, let's call it 40-45, and we've been around long enough to see again the new generation of younger entrepreneurs who are in their twenties or in their thirties making the same mistakes we'd made once or twice. Part of it actually for me is that we get the same questions over and over again, and we're like "Why don't we put these into a book?" so people can just read the book, avoid these landmines. I guarantee this will be a million-dollar book for many people, because it will save them so much money, time and heartache.
Paul: What are the common mistakes? One of the things that we try to help on this show is we try to prevent entrepreneurs from losing a lot of money, in fact, losing everything. Because you know, in the app business people get very excited, they start to think of...
Aaron: Oh yeah, dreaming of what if a million people bought this and...
Paul: Exactly, yes.
Aaron: Yes, so there's seven parts to the new book. The new book is really for anyone if you already have something - you may not be making money with it, but if you've got something and you're trying to figure how to make money, or how to make more money, it's a good fit. A bit different than my prior book, Predictable Revenue, which is really more of a sales book. This book is a growth book, and there are seven parts. The first part is really going to be the most important part for almost everybody listening, and anyone who does apps. The first part - and each part - has a painful truth, and the first one is "You're not ready to grow." You might be struggling to grow [unintelligible 00:06:18] because you're not ready, and you're not going to be able to grow faster until you nail a niche. That's where you start. I think this is the most common problem we see across so many companies, especially early, but also big companies like SAP and Oracle. It's about nailing a niche, it's focusing on the specific kind of customer who most needs what you've got, avoiding the nice-to-haves, like where are your need-to-have, what do they care about and how much is it worth to them, why would they pay money to you. And that's trickier than people realize.
Paul: You see, on this show we've had a lot of entrepreneurs come on, and we've had examples of something blowing up really quickly. For example, there was a BuzzFeed article last year that suddenly got 60 million posts, we've had apps that have gone and got a hundred million downloads within the space of a few months, and clearly the whole business has blown up, but what do you mean by "You are not ready to grow"? I mean, if anyone is in that situation where they are getting rapid expansion, lots of interest in their app business for example, what sort of lessons should we be learning from that kind of thing where you're not ready for this?
Aaron: Well look, most of the people, 99.9% of the people who listen won't have that problem, of "How do we keep up with this huge growth?" So let's start there. This is part one. Part two would be for the people who get a ton of growth and they're either like "How do we keep it up?" or "How do we make money?" But again, for the 999 people out of a thousand who don't have this problem of "Oh, I have so many people banging down my servers are crashing", people struggle with like "I got this app. I've got it." They launch it and there's crickets. They get ten downloads, or a hundred downloads, or a thousand downloads, rather than the 50,000 or a million that they need to have some kind of viable model. You know, a lot of the challenge around entrepreneurs and getting a new thing off the ground - and this is true whether it's a new app, whether it's a new market, because in UK it could be different than US, or whether it's a new kind of lead generation program - we find entrepreneurs vastly underestimate the time and effort and iteration it takes to get it right, to get it to the point where the customers not only are interested in it, but they download it, they use it and they love it. In the software world, it usually takes two or three years - in B2B software - to go from starting a company, to getting it up and running, to getting customers and to get the product to the point where you're like "Yes, there's a viable business here, and we can see a path to growing in a way where it's not a flash in the pan." It takes way longer, and it's way harder than people expect.
Paul: In this show we really do try to take an onion and unravel it, so that we get to the genuine truth, because there's so much misinformation out there for people listening, entrepreneurs. We've had people on this show who have quit corporate jobs to go and follow a dream, and it's just so nice to hear you talk about a two to three-year time period at the very minimum for something to perhaps work.
Aaron: Yes, and especially if you're a first-time app person, you're selling something in the consumer space, which is a little bit more possible big hit, but also... It's like you either get a zero or something, it's more risk/reward, whereas in the business-to-business space you can follow more of a playbook or a template. You might not have the hundred million download, but you're not going to have the zero either. So there's these different things to consider. But with first-time entrepreneurs, they have the dream like "Wow, I've built this app, people are gonna love it" and a year later they quit, because "Oh my god, I didn't have enough savings." They've lost faith in themselves because they've gone through so many iterations and it's still not clicking the way they think it should, or people still aren't paying more than a dollar, or paying anything. They don't realize if they just keep going for another year or two - I'm not saying it's easy... Sometimes you just have to do the time. Actually that's a whole other chapter, how it takes years longer than you want, it's the painful truth number five.
Paul: Aaron, I just wanted to switch gears slightly and talk about you, because on this show we have so many inspirational guests, and people listening to the guests have changed their own life because of what they hear, and you're someone who's become an author, you've got a successful career. First of all, is it worth being an entrepreneur, in your mind? Is it a lifestyle that is for everyone?
Aaron: It's for sure not for everybody, just like being a parent is not for everybody. I associate these two a lot, because over the last few years I grew my business and my income by 10-11 times, but I also grew my family. I was single without kids five years ago and now we have 12 kids, but in both cases... Having a business - it's worth the work, but it's hard to deal with the uncertainty, it's hard to deal sometimes with the financial uncertainty, or it might be the self-confidence, you're putting your heart out there in a product or in a post or in an idea, and having people reject it time and time again. But if you can get through that and you can get to the other side, when it starts to click and starts to work the rewards can be way worth it. So it's not for everybody, not everyone should be an entrepreneur; some people should work for entrepreneurs. Not everyone should be a parent, some people should have friends who are parents, they can visit, but for me both having lots of kids and a growing business have been the best parts of my life, really.
Paul: Let me just make sure I understood right - you've got 12 kids, you said?
Aaron: Yes, not all... Through mixed, you know...
Paul: Alright, I was just trying to do the math, I didn't think it was... Within five years. Unless you're one of these sheiks that can marry multiple times.
Aaron: Not a bad idea. I do have one wife, and I really do believe she is... You can call it cheesy or not, but she's the kind of person you're excited to grow old with, and we've adopted eight. So eight out of twelve are adopted, and a couple from a prior marriage, a little bit of everything. We're a very diverse family.
Paul: Wonderful. We're kind of getting on the family theme, but is it important - because sometimes we do this for our families, a lot of entrepreneurs. In fact, only just recently I was speaking to someone who's quit to start a company and he's got a family, he's just had a newborn, but it does change you, doesn't it? Because you want to leave a legacy for your kids, you want to make sure they're okay and they have something, is that right?
Aaron: Not yet a legacy, that doesn't drive me personally, but I will say - and I write about this in the book - in order to create a successful business, in order to make a lot more money that you're making now, and to go through the ups and downs... In fact, the year or years of hell sometimes, to do the time, you have to find a source of motivation that will keep you going. Because when the going gets tough, and if you quit... It's okay to take a break, but at some point you just have to push through, and for me having a big family and adding to it has been sort of this irreversible motivation where I can't afford... Like I have to be successful. That has been the motivation which has driven to not just... It's like the family came first - by having a growing family, that forced me to make more money. I didn't have any other option.
Paul: Right, okay. So what I'm learning from you is like having a motivation, something that really drives you to push through those times where you feel like you want to quit.
Aaron: Yeah, and you're tired. One thing I've learned is that energy and passion and luxuries. And time. Energy, passion, and time are luxuries. Especially the first year, I've had two baby babies, and we'll have a third, and then we're adopting a baby, and my wife's not here - she's in Florida with a newborn baby and she's been there for like three weeks, I guarantee that if you have to do something, and I talk on it in the book and I share some tips on how this works, but I rarely have time for extra things like writing a book, going from zero to twelve... I've written like three books in the last few years, grew a business 10-11 times... I don't have a lot of time, I rarely have energy. Frankly, I used to have a passion for writing, but because I'm always tired - emotionally, physically, mentally - I only write by deadline. So I think that what we think of, like you have to find your passion - that's all true, but you also can't wait. Sometimes you find your passion by doing something that you know is important even when you don't want to do it.
Paul: I sort of remember the time when I quit my successful career and started a new... You do have this boundless energy and boundless passion.
Aaron: Yes, it lasts for a few weeks, or months.
Paul: For me it was quite a long time, but then it starts to fade, because it's almost like you're getting over the honeymoon period of your switch.
Aaron: It is, it's exactly like that.
Paul: This is great, I'm learning so much.
Aaron: You're confronted with the reality of... Look, you've done almost 500 episodes here, with your podcast?
Paul: Yes, that's right.
Aaron: I would be shocked if the podcasts now are... I'm sure they can be super interesting, but I'd be shocked if there's the same level of excitement like the first 5, 10 or 20. Again, this is sort related to what a lot of - if any listeners, if they have employees, which is a whole different story; a lot of you don't, but for those that do, and you have these new, especially younger employees that come in, they're super-excited, and then after three months they're bored and they want a promotion. Something in the book I talk about - this might be you, too - a company or your job, whether it's your job or yourself, or whether you have an employee - the company is not your mom or your daddy. Half of the responsibility is for the company to provide a great environment and some opportunities for employees, but a lot of employees - and this is a lot of people - start saying "Oh, I'm getting bored and frustrated, it's all my job's fault, it's my company's fault." They don't realize that they have to take half the responsibility of figuring out what keeps them motivated, what keeps them interested. It's not the job. It's half the job, and it's half them. They're like "I'm bored, I'm not learning. It's my company's fault." No, it's not! Look at yourself!
Paul: But isn't that the case where sometimes it's hard to try to inspire entrepreneurialism in employees. I know that when I first quit my career and set up my first company I had to close it after a year, which was quite painful, but I just couldn't believe that these people that I was employing were not acting like they were owners of the company.
Aaron: Well, that's because they weren't owners. It's that simple. Part six of the new book - your employees don't act like owners because they're renting, not owning their jobs. Think about it this way: when you rent a car versus you own your own car, how do you treat it? Or you rent an apartment versus buy a house. Or if you're babysitting someone else's kids versus if they're your own kids, what's the difference? The experience for employees almost generally is that they rent their jobs, they're sort of like biding their time; they don't have that emotional ownership that an owner or an executive does. It is hard, there's ways you can work with that, but that's the reality.
Paul: It is. Now, you're famous for building this process and the sales team for Salesforce that added so much revenue, over a hundred million dollars. What could we learn from you from that episode? I mean, I guess it's a whole book we need to read to predict revenue, but are there are any big takeaways from what you've learned from doing that?
Aaron: Yes, I can summarize it. And if you're wondering which book to start with, for sure it's From Impossible to Inevitable, because I sort of summarize updates and key things from Predictable Revenue, but some of the lessons from the hundred million (now it's way more than a hundred million) at Salesforce, it's the idea that your product and your sales people or sales process aren't what determines your growth. The growth is determined by your lead generation. Having a great product might be related to generating some leads, but it's only related. Marketing can be related, prospecting, word of mouth... And there's three types of ways to generate leads for your business: word of mouth, marketing and prospecting. Those can be either for finding customers directly or for channel partners. So it's not your product or people that generate growth, it's lead generation - that's one. Also, if you have a sales team, or people who sell - really any kind of team that interacts with customers - you need to specialize them. So in sales, it would be prospectors who prospect. Again, this is true if you have to sell apps, or it's just related to probably some kind of enterprise program. Prospectors who prospect, closers who close, other junior reps who respond to inbound leads and different kinds of post-sales roles. So anytime you have a team of people who are juggling too many things - it could be customer support, customer success, sales - look at how can you divide and conquer better to create more types of jobs, so people can do fewer thing better. That's a core, core idea. In fact, if you do have a team of people who sell, that's the number one thing that will transform everything, specializing. And the third, a lot of the book was around just the techniques of creating an outbound prospecting system and systematizing it, so it's more like a manufacturing assembly line and it doesn't need cold calls, like someone who's just sitting there and calling all day. Those are some of the highlights from Predictable Revenue. But ultimately, doing outbound prospecting, growing a business, that's just not gonna work, or work very well, unless you first nail the niche. So that's where you begin - nail the niche. Usually, you have to get to like a million or two in revenue before you feel like "Okay, we've got this. It's not just an app that people like, but we're actually making money from it. Now how do we grow?"
Paul: I love this, Aaron, because what you're doing is reminding me of actually the things I learned when I did have a career in finance, and we raised about 20 billion in under-management funds in the UK. Really the selling point for what we were doing was the specialization with the fund managers and the analysts. They were all specializing into different industries, and in fact many of them would spend 20-30 years getting to know an industry. That's kind of what I am learning from you, based on my own experience as well. That's really useful. Aaron, there's one more question here from a listener: what is the single biggest thing we could be doing as a startup? I know that's a very broad question, but what is the single biggest thing we could do to succeed as a startup?
Aaron: Probably make sure you're talking to your customers enough. Get off of e-mail, get off of chat, especially go visit them in person. If it's like a business type, or a consumer type, go to where they are and watch them and talk to them while they do whatever they do. If you have to go get on a plane, get on a plane. If you have to get in a car, or in an uber, or on a bike... Get out of the office, get out from behind your computer and go watch them. People love to sit and whiteboard, strategize on PowerPoint or some brainstorming app... Go interact in person with your targets, your customers or your prospects. Even the CEO, or the executives - get out of the damn office. Or at least bring them to your office, whatever, but in-person. Turn off Instagram, put down your Snapchat, whatever, and go look at them in the eye and talk to them, get coffee together.
Paul: Aaron, there's one more thing we need to do before we say goodbye to you. This is a show about apps; now, you're a successful author, you've done a lot of things, we'd love to know what's on your phone. If you have one or two apps, and feel free to pick up your phone now and have a look at it, are there any apps that you could recommend to us that would be good finds?
Aaron: You know, I'm probably like the least... I'm a little bit of a chromogen; when I was younger I loved technology and now I feel like all these apps are distracting from [unintelligible 00:24:27] But if I had a favorite... It's funny, I have three apps for e-mail, that I use in different ways. I have a bunch of kid apps, but I think for me, if I had to pick an app that I would recommend... Funny enough, the one... I've got one for watching my baby. There's this cool game - I actually haven't found a really good game for a long time, I'm sort of jaded that way, but it's called Letter. You have to spot a letter in a bunch of other letters. My daughter showed it to me, I was like "Wow, that's cool."
Paul: What's the one with watching your baby? That sounds interesting.
Aaron: I just got a Nest Cam. So they set up a cam and then put an app on my phone, in case she's asleep and I need to - especially with mom gone... If I can even get her to sleep. So we have a one and a half year old that I'm talking about. We actually have three babies here. We use a Nest Cam. Funny enough, I've got Gmail Inbox for one sole purpose and Gmail the app for another, and Apple Mail, I use it in different ways. Sorry, I'm not that interesting that way.
Paul: Well, you're reminding me of an app creator who was creating an app for babies, I think it was BabySleep, and I did one several years ago now called Newborn Baby Sleep, which plays the sounds of the womb on your phone.
Aaron: Actually with kids I got Circle, MyCircle might be the site, but it's a neat way to integrate with your Wi-Fi to give you a little bit more control over kids with what time their Wi-Fi can turn on and off, what they can see, and try to put some boundaries around electronics use at home. That was neat.
Paul: That is very cool. I was driving to school the other day with my kids and they're constantly like "Dad, we can't connect to the Wi-Fi, we can't connect to your phone", it was a personal hot-spot. It seems to be their big challenge and they're only six.
Aaron: Yes, now I try to rein them in. I am talking to audience, I've never focused on it, but a great app for From Impossible to Predictable Revenue, but if there's someone there who has a great idea for something they can build for predictable revenue, or from impossible, I'm totally open to ideas.
Paul: Let me mention this finally, one of the big things I've learned from this show is to actually launch an app with a great audience, and authors always have terrific audiences, but many authors don't have an app, and I was only speaking to a best-selling author last week and she wanted to sell this app, and I think she's been doing quite well. So if anyone can build an app for you, and could do some kind of deal with you, then it's much better doing it like that rather than trying to do something on their own.
Aaron: Yes, I try to leverage people with audiences, because it's hard to build your own audience.
Paul: But it's also hard to build your own app if you're an author, and you've obviously been used to...
Aaron: Yes, I'm focused on other... I'm a content person. We have a software company and I do consulting, but the idea of apps... You know, I have enough to focus on. One of the ways I've done, I've written multiple books, and lots of kids and businesses, is just do a few things really, really well at a time, and not to scatter myself over too many projects. There probably could be a great app for me at some point, with the right partner who comes along who I can really rely on and they can do that. Partnerships work really well for me.
Paul: Wow, let's wrap on that, that sounds great. Actually just on that, how can people best reach out to you and connect?
Aaron: fromimpossible.com is the best, it's about the new book with a free sample. You go there, or predictablerevenue.com. I'm easy to find, but fromimpossible.com is where I would start. I think that book is going to be life-changing for many of you, and predictablerevenue.com is for my day-to-day business stuff.
Paul: Terrific. Aaron, thanks very much. Just to remind everyone as well, you can go to theappguy.co - it's episode 434 - where there will be links to Aaron and those books. Terrific. Aaron, thanks for coming on this show and making it such a great show. We've got more energy on this one than we have the last 433, I can assure you.
Paul: You're such an inspiration personally, from like a family perspective, and an author, and all the great content you're putting out, so thanks very much for being a guest on the show.
Aaron: Well, I would say, a lot of people will [unintelligible 00:28:41] adoption, as a lot of people and I too used to be afraid of adoption. A lot of people wanted to, but they're like "You know, I talked to my spouse, I don't know..." You know, having kids, and adopting kids - and we haven't adopted many babies, but teenagers - it's been an amazing way to expand the family, it's been fantastic for the kids we already had. That's where a lot of the joy has been, all our kids and family time. And I really enjoy what I do, but joy-joy, the love-love, comes from the family. So [unintelligible 00:29:13] but there's a lot of kids out there who don't have parents, and that's just a crime.
Paul: Well, I do a hobby podcast called theentrepreneur.podcast Aaron, and it is for those reasons - what we do - because it gives us the time to have a family and spend it with our kids, so I'm all on board with what you're saying.
Aaron: Yes. Actually, one thing I struggled with is at work, the more I worked to support the family, feeling guilty about not being with the family, but I think what really helped me was accepting the fact that when I'm working to make money for the family, that is family time. It's something that's important, that has to happen to support the family.
Paul: Yes, that's a good way of thinking about it. Aaron, great, thanks for coming on!
Aaron: Thank you, Paul. Thank you, everyone.