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Today, I’m talking to Colleen Schnettler, co-founder of Hammerstone and build-in-public podcaster. We talk about getting bootstrapper-compatible funding, juggling way too many projects, and selling a business when you know it’s time to move on. Here’s Colleen.
00:00:00 A lot of podcasts
00:06:01 Building on Heroku
00:12:25 Building on Marketplaces
00:16:59 Dealing with support requests
00:21:49 Pressure to sell?
00:26:27 Hammerstone
00:31:24 Business Value
00:35:46 Value of value
00:41:11 The risks of having just a few big customers
00:46:12 Getting bootstrapper funding
The blog post: https://thebootstrappedfounder.com/colleen-schnettler-stair-stepping-into-saas/
The podcast episode: https://share.transistor.fm/s/281dbe46
The video: https://www.youtube.com/watch?v=PpcYTO5x3cY
You'll find my weekly article on my blog: https://thebootstrappedfounder.com
00:00:00 A lot of podcasts
00:06:01 Building on Heroku
00:12:25 Building on Marketplaces
00:16:59 Dealing with support requests
00:21:49 Pressure to sell?
00:26:27 Hammerstone
00:31:24 Business Value
00:35:46 Value of value
00:41:11 The risks of having just a few big customers
00:46:12 Getting bootstrapper funding
The blog post: https://thebootstrappedfounder.com/colleen-schnettler-stair-stepping-into-saas/
The podcast episode: https://share.transistor.fm/s/281dbe46
The video: https://www.youtube.com/watch?v=PpcYTO5x3cY
You'll find my weekly article on my blog: https://thebootstrappedfounder.com
My book Zero to Sold: https://zerotosold.com/
My book The Embedded Entrepreneur: https://embeddedentrepreneur.com/
Creators & Guests
Host
What is The Bootstrapped Founder?
Arvid Kahl talks about starting and bootstrapping businesses, how to build an audience, and how to build in public.
Arvid Kahl
Today, I'm talking to Colleen Schnettler, co founder of Hammerstone and build in public podcaster. We talked about getting bootstrapper compatible funding, juggling way too many projects, and selling a business when you know it's time to move on. Here's Colleen.
You're the co host of two podcasts where you talk about your software businesses at this point. You can talk about this later. You share a lot about them on Twitter, too. And people can read a lot about this whole journey. Do you consider yourself somebody who builds in public? Is that like a kind of perspective that you take on your social media appearance?
Colleen Schnettler
Yes, but really, I build in public to keep myself motivated more than anything else.
Arvid Kahl
That's interesting perspective. Honestly, I think that's one of the basic reasons why people do this, like for motivation and accountability.
Colleen Schnettler
Especially in the beginning, like I'd love to say it's altruistic, but I'm gonna be honest. In the very beginning, so I started Software Social with Michelle before I had a product. So there's nothing quite like, you know, tweeting about what you're working on and getting on a podcast every week to keep you motivated to actually build a product. So you can have something to talk about on your podcast.
Arvid Kahl
Yeah, I think you can see this, I listened to your podcasts, because both of them are very interesting. But mostly Software Social, that's something that I take out on my walks with the puppy, that is usually my morning entertainment. If there is a new episode, you follow me along with a little pup. And throughout the year, two years now almost that you had your your little SaaS product, and we can talk about that too. There's also the big SaaS product. But you know, so let's start with the little one. I've seen, you just go through all these little challenges, all these moments of doubt, moments of joy, you know, the ups and downs of a journey. And what I found, Michelle always pulled you back or pushed you forward. There was always this accountability level between the both of you. You both give each other the opportunity to be accountable to each other, which is really nice. Was that an intention when you started the podcast? Was that something you wanted to do with it? Or did that just happen?
Colleen Schnettler
I think it was a little bit of both. I mean, Michelle is so much further along in her software journey than I was, especially when we started. We had a really nice dynamic where she has already seen a lot of these things that I am going through and was going through, as I got that business off the ground. So I think it just kind of naturally flowed in that direction. And has worked out really well for both of us.
Arvid Kahl
Yeah, it's quite noticeable. You still seem to enjoy talking to each other every now and then.
Colleen Schnettler
Yeah, we're very good friends. So that helps. And now that she lives on the other side of the world, it's nice to have dedicated time to catch up.
Arvid Kahl
Yeah, I bet. I think it's important to keep in touch with friends to begin with, if you can then combine that with an actual like business consulting
Colleen Schnettler
It's a win-win
Arvid Kahl
Right? It's wonderful. How do you manage timewise because like recording the podcast is quite a lot and recording two podcasts co hosting two podcasts is quite a lot and then running a software business beside that is a lot. Running two software businesses beside that is even more. How do you manage that?
Colleen Schnettler
It is a lot. You know, it's interesting because when I got into all of this when I started this and things started just working out for me and you know, opportunities seem to abound and these things all just bring me so much energy. And not to sound cheesy, but like they literally bring me joy. And so I have had people in my life who are a little concerned. They're like are you going to burn out. And all of these things like just bring me energy because I am my professional life goal is to build cool things with people I like. And so that's all of these things that you mentioned that they all do that. Like for Simple File Upload, I hired my sister. I've got the podcast with Michelle. I've got the business with Erin. All of these things I'm doing are kind of filling my bucket and pushing me in the direction I wanna go.
Arvid Kahl
Yeah, I think that this directionality that's very obvious because to me it feels your journey is almost like the poster child example of stair stepping interests like from one thing into the other, right? You come from a software developer background. You started a little project which was an add on an existing platform which is Simple File Upload and we can talk about that. You might want, too.
Colleen Schnettler
Yes, for sure
Arvid Kahl
Now you're moving into like a standalone SaaS with the whole Hammerstone business which is also super exciting. Let's go back to you starting your your first product. Let's start with Simple File Upload because that to me is the epitome of the first step of stair stepping. That's what at least what Rob Walling of Tiny Seed
Colleen Schnettler
He was exactly who I was thinking of.
Arvid Kahl
What he says, build one thing on the platform, try multiple if it doesn't work, and then build this steady stream of income. How did you start building Simple File Upload?
Colleen Schnettler
So I think, you know, I got the advice. I have a friend who has a very successful Heroku add on. So he, you know, I have always wanted to start a software business. But when you're starting from zero, it is completely overwhelming. Because not only do you have to build the product, then you have to figure out how to sell the product, which is a whole nother skill set, and distribution. And all of these things are two separate things. And so he had encouraged me to look at the Heroku marketplace. And I'm so glad I did because having that built in distribution channel for my first product made a tremendous difference. So yeah, I wanted to build something, I had no ideas. This was not my first idea. You know, I had come up with ideas before and tried to do customer interviews. And I just felt like I wasn't making progress. I wasn't getting anything off the ground. So eventually, it was just, I just had to build something and ship it. I was pretty new to software development. I'd only been a developer for a few years. And so I didn't have this like wellspring of competence in my development ability. And so I think it got to a point for me, where I just needed to build something, put it in a marketplace. And even if no one bought it like I had to that was my first hurdle like, can you build a product? Like, yeah, you can do your work at work, and you can close issues, and you can build features, but can from start to finish? Can you figure out how to build a product people can use?
Arvid Kahl
Let's say anything surprising along this learning journey towards building an add on even just and I don't wanna belittle it, you know. Even just a plug in where a lot of things are already taken care of. Was there anything you did not expect to happen?
Colleen Schnettler
Well, I think the whole thing was new. So I didn't really have any kind of expectations. I mean, I think that for me, it was like a lot of new tech, actually I had to learn because I didn't really know how to build something that would be easy for a user to integrate. And there was so much of that like, instead of just building the thing, it's one concept to build a feature in an app, right? Most of us are pretty competent and familiar with that. But like things that I had to figure out was how do you build this feature? Pull it out, make it you know, make it so this other person can implement it in their app? And what is the tooling surrounding that? And so from a technical side, it was a lot. Even I have always had other people at a job, right? You have a DevOps guy, you have the guy who knows everything about AWS. I was just me so I didn't have those people.
Arvid Kahl
You have to be those people, right?
Colleen Schnettler
Yeah, I had to be all of those people. And so I had to learn a whole lot about CD ends and architecture and things that I had always just pushed off to another developer on my team. Be like, yeah, this person knows how to do the CD ends and the Cloudflare and all that. So honestly, for me like from a technical perspective, I think I've learned so much like leaps and bounds just to get there from where I had been because you suddenly own every piece of the product. Like where the file is going, where are the backup files going out, you know, just you own that whole product. And it's a lot.
Arvid Kahl
It's a surprising amount, right? These little things that are left behind the facade. Even if you already are an established back end developer and you understand how backends work, the business part of it, the fact that you have to deal with compliance sometimes or backups, the stuff like that, all of a sudden, you have to support a whole other infrastructure there. Yeah, that's what I wonder because I've never built anything on Heroku. And I think it's an interesting platform. I run my own SaaS there, permanent link is on Heroku. And just you know, chugging along, I don't have to do anything, which is great. And using add ons on there, too. So I was wondering, like, how was working on that platform in particular for you as somebody who's never done this before?
Colleen Schnettler
Yeah. Okay. That's an excellent question. I think Heroku is a great platform. And let me tell you why. Because back in, when I was first learning to code back in 2012, I wrote an iOS app, and I published my iOS app to the App Store. And you know, that this was, again, this was 10 years ago. So this is that guy had just published some stupid game and he made a million dollars. So everyone thought they were gonna be able to do that. I published this app to the iOS store, and I sell like, I make no money, right? Like I make zero negative $30 because I made $60. But you have to pay $100 to be in the developer program. Thanks, Apple. And I'm bringing that up because Apple didn't have and again, it may be different. This was 10 years ago, Apple didn't have like, really strict rules, like it wasn't hard to get in the App Store. So the app store was a totally flooded marketplace. Heroku makes it really hard to get in the App Store. You are not even allowed, like it's reviewed by a human. You have to write documentation that meets their standards removed by a human. You have to get 100 users before they will let you charge for the product.
Arvid Kahl
Wow!
Colleen Schnettler
So it takes like months to be accepted. But because of the high standards the marketplace has, it's not crowded. It's just I mean, there's other apps in there. But it's not like an Apple iOS App Store where there's, you know, who knows how many apps, it's not that crowded. Their API is good. Like building on top of their API, like the documentation was good. It's really nice. Again, for your first app, it's really nice, too. They do all the billing, right? So they just, you know, send to your endpoint. So it's really nice to have that managed for you. Those are the pros, I'd say the biggest pro is just being visible in their marketplace. But I have cons too, if you'd like to hear them.
Arvid Kahl
Yeah, of course.
Colleen Schnettler
The cons is 30% is kind of high. That's what they take. They take 30%. And so you see and, you know, so every month they give you a report, you're like yes, like, whatever it is. And then you're like, what you've build and then their share, and then what they're actually gonna pay you out, right? And again, when you have nothing, you don't care. But once you're actually making money, you're like, oh, wow, I gave you hundreds 1000s of dollars. Okay, cool. But what are the kinds of interesting cons? Okay, so the other also they're not as big as like Cloudflare. Not Cloudflare, someone else has a marketplace that I had looked at to maybe it was Cloudflare has a marketplace? Do they have a marketplace? Do you know?
Arvid Kahl
I'm not aware. Shopify has that kind of stuff. But
Colleen Schnettler
Anyway, there's some other. It might be, I'll have to look later. They don't have the kind of like I wouldn't, you know, like Shopify is a good example. Like, they don't have that kind of reach, right? Heroku is not that big. I mean, they're big, but they're not that big. So it feels like you are prematurely capped by the reach that they have. And then also, billing is weird. You don't really have, they don't give you access to your billing metrics. And so you have to manage all that yourself. So now, you know, trying to get like a valuation, I don't know what my churn is because I don't have access to that data. Like I just haven't been, I didn't set up my own analytics thing. And so I just don't have access to that. And the way they bill is confusing, so they'll bill people based on prorated usage. So if you sign up for it, try it for a day. And then deep provision the add on you get billed for that one day. So things like that are kind of hard, and you have very little control over your marketplace listing. You get one page, it has to be in a certain format. They tightly control your market listing, which is kind of a pain once you actually wanna do marketing.
Arvid Kahl
Sounds like a pretty typical walled garden, you know
Colleen Schnettler
Yeah
Arvid Kahl
A high barrier to entry, which is great. But also, I guess, for that reason, high constraints, which make it kind of hard to deal with it. And the fact it is such an interesting thing about these marketplaces. The fact that they don't give you access to these analytics or insights just shows who they're building this for. Certainly not for you.
Colleen Schnettler
It's not for me
Arvid Kahl
Quite obvious. Yeah, that's interesting. I'm thanks for sharing this, I never knew that the platform itself was so picky, which is really great. At least for me, as in the perspective of a customer of Heroku that is good to know, that the stuff that makes it onto that their marketplace is actually vetted. Reminds me a little bit of the Firefox browser extension people for some reason. Like for Chrome, you can post whatever. They have some automated system to validate your extension, but Firefox has, to my knowledge and that is also a couple of years old gonna have to put in the time passes caveat here. They have people looking through those extensions and actually checking them for malicious code. It was great to know, it kind of sucked when somebody didn't understand my code, you know, and
Colleen Schnettler
Yeah
Arvid Kahl
Came back to me and said, no, we're gonna de-platform the whole extension until you fix this. And I was like, okay, we have a couple 1000 customers using it, but sure, why not. So that was a sad moment. But you know, it's good to have platforms that do this, find that very interesting. Okay, so that extension seems to be, from what I know and I have to make absolutely sure that I'm not parasocial relationship in this conversation because I'm listening to you every week. So I know exactly what you're doing, what you have been doing for a year. I know that the people listening to this show probably don't do this all the time. So just wanna make sure that we catch up on the things that I already heard about. But you know, that's your extension currently is around $2,000 in monthly recurring revenue, right?
Colleen Schnettler
Yup
Arvid Kahl
And yes, and I heard on that the very show that not everybody listens to, unfortunately should really, that you're ready to move on from this. Two questions. Why? And why now?
Colleen Schnettler
Okay, these are excellent questions. So I am, why don't I say ready? I'm considering moving on from this. Well, because my other startup has raised money. So, you know, as you pointed out at the top of the pod, I have a lot going on. I have three children. And so I'm a little bit busy. And I think, to give my other business the full chance of success to grow it to the size I wanna grow it, it needs all of my time and attention. And that also, I mean, we just raise money. So that's both why and why now, like the timing for that is ideal.
Arvid Kahl
Yeah. That sounds about right. You only have so much time in a day. And even though this is nice to have this income coming in for what I assumed to be a pretty low touch business, because it's an extension that, you know, it doesn't require too much in terms of support and stuff, but it still requires some of that. And it has some, I would assume from my experience with passive income that is never passive.
Colleen Schnettler
That's never passive. Yeah.
Arvid Kahl
There's always some some brain space occupied by that project, right? Is that still happening for you, even though it's low touch?
Colleen Schnettler
Yes. And I have kind of a funny story. So I rarely get I haven't told this yet. I rarely get support requests. But when I do, they can be gnarly. So I had this support request come in from a customer in the country of Colombia. And he was clearly panicked, right? Like, so he emailed me and scheduled. I have an open scheduling, like he emailed me and schedule the call, like that day, like, you know, in an hour. And I get on the call with him and he can't see any of his images because I'm a hosting service. So I both upload your image, and I host it for you. And it's essentially it helps you get around Heroku is a femoral file system. And man, I could see all of his files were loading for me. I checked my firewall. He wasn't being blocked at the firewall like, so it was a complicated. It turned out the DNS in the country of Colombia was down. It's always DNS, right? And so this is like, kind of one of those situations where I didn't even like, they took us a while to figure that out, right? I had to ask like a friend who's like a DNS expert. I'm like, why can't this guy get his files. And so he showed me how to like, here's how you check the DNS in different countries. Turns out, it's down in the country of Colombia. So you know, sometimes the support requests are challenging and they'll take several hours out of a day. And so and the other thing you said, it's like, the mental overhead of having something. And it's hard for me as kind of an ambitious excited person not to, it's hard for me not to think. Like I have so many ideas for Simple File Upload ways that could grow. It's hard for me not to just wanna oh, if I could just take like one day, one day, you know. So, yeah.
Arvid Kahl
Yeah. Oh, man! And then that day turns into a week because you have a much better idea on that day, takes a little bit longer. What could happen? I mean, I think that this is the perfect position to sell because you're not desperate to sell, right? You have a growing business that just keeps doing what it's doing. And you have these ideas of how it could grow even better. That's a great sales pitch. And I think that is the perfect opportunity to sell it and and I'm from what I know you listed it on MicroAcquire for 120k. That's what currently and depending on when this is released and might already be sold. That is substantial amount of money for a really cool project with a lot of potential. So I think it's a perfect time, the perfect position to be in. Yeah, I'm just really happy for you that you got to this point, and that you now get to experience this. It's such it's really a cool time, like to sell business, to find people, to make it not just enrich you in the process, which is always great. But also keep your customers happy. Keep building this product into something even better, right? I would assume that's important to you.
Colleen Schnettler
It is very important to me. And I've had a couple people reached out and they just didn't feel like a good fit for that. I mean, it's really important to me too, Arvid because there have been so many people who have been supporters of mine since I started the podcast and the business, which started at the same time about two years ago. It's just important to me that I don't sell it to someone who doesn't care, I guess.
Arvid Kahl
I mean, buying something for $100,000 that you don't care about, that would be pretty stupid, to be quite honest.
Colleen Schnettler
It'd be quite weird, right?
Arvid Kahl
It would be very, very short sighted. But you never know. And I think
Colleen Schnettler
You never know.
Arvid Kahl
I call this seller side due diligence what you're currently doing, like making sure that people are actually the right people for the process. I think that's extremely important. Because we have a lot of buyers that due diligence. They wanna look into your non existing analytics, they wanna look into your dashboards and whatnot, right? To your P&L and whatever, we have documents, you have to draw up for them. But you can do that, too. As somebody who's interested in actually selling a business, you can check them out. I think that's what probably most important thing you can do at this point, besides picking a number that's high enough for you. So I'm glad you're doing this. So I heard you already had a couple of pretty interesting offers, but that to the client, right?
Colleen Schnettler
I did. And okay, so I mean, you know, I haven't done this before. So I'm just winging it. I did have two people. And these weren't like letters of intent. These were, would you take 80k? And I said, no. And so I mean, I think to your point, I'm not in a rush. And I know the economy's bad right now. It might be, it might not work out because of that. But I have infinite time. I don't have any pressure to sell this business. So I'm gonna wait until I find the right buyer at the right price point.
Arvid Kahl
Yeah, yeah, I think people will need file uploads, no matter what the economy
Colleen Schnettler
Right?
Arvid Kahl
This is a great economy protected feature or tool that you have there. That definitely are products, I would assume in the many Shopify and Heroku marketplaces right now that are suffering because they are nice to haves. But if you use if you have customer data, which files are definitely and most SaaS businesses have filed somewhere, I think you're in a pretty good position, that you are not one of the first ones to get cancelled if people have to reduce the budget for things that they have or things they buy.
Colleen Schnettler
Right
Arvid Kahl
That was a good position. Was that an intentional thing? I don't wanna like, talk too much about the business that you're already in the process of selling. Although it's interesting. I just, you know, but was that an intentional choice when you picked that particular problem to solve?
Colleen Schnettler
It was not. I was, you know, I was a consultant. So I'm working on random, maybe I'd work on a new app every six months, everyone has this problem. And it's one of those features, that's just a pain to build. It's more complicated than it should be to get right. And it was just like I really, I just built it for myself, like I went to my you know, I had started with a new client, whoever wrote their file uploading software just didn't seem to really have a good grasp of what they were doing. And so I had to rewrite it. And I was like, this is ridiculous. Like, I need to just productize this, make a component and then sell it. And I think people will buy it. And there's a lot it's interesting too when you look at the market because there's a lot of really big players in the space. But there are not a lot of players that cater to small businesses. So I feel like that was kind of where I'm trying to slot in with this business.
Arvid Kahl
Yeah, it definitely has the first of the name is very clear that it's a simple tool. I think that's like compared to stuff like cloudinary that are
Colleen Schnettler
Exactly
Arvid Kahl
Already by their name, trying to encapsulate everything, right? You're just this solves one particular problem. Enjoy! That feels like more indie product than the competitors in the space. Yeah, very cool. I was just amazed. Yeah, I can just flat out say it's cool to see somebody solve a problem that they found, be critical in many other things, which is like doing consulting or freelancing and figuring out the things that are common that you commonly solve that don't seem to be solved in a good way. And wonderful ways for stair stepping into building software service businesses just perfect for that because you have the professional insight not only on how to build it. Because you've done it multiple times before, but you know what they need, you know, not just what you can build, right? Typical software engineering problem, right? Oh, you can build everything but do they need it? Did you sell it back to these people that you build other things for prior or did you go for a new customer base?
Colleen Schnettler
No, that was who I started with. I sold it back so I built it not for like, I built it on my own time, like I didn't get, I didn't have the opportunity to build it for a client and keep the IP. So I built it on my own time. But then it was such a win-win because I'm able to sell it back at depending on their storage needs. It's like 35 to $80 a month, which is so much cheaper than hiring a developer to build that out for you. So it was a super win-win, selling it back to clients that I had worked with before as kind of like a first, is this the right direction product?
Arvid Kahl
Were these people among the first 100 that you needed to be able to monetize it and under platform?
Colleen Schnettler
Yeah, they were.
Arvid Kahl
That's awesome. That is such a nice way of bootstrapping your bootstrapping. I love it. Cool. I think that's inspirational. If I was a software engineer right now, trying to figure out what to do and doing freelance work, I would take a pretty huge example here and doing what you're doing just trying to follow the same pattern. Very cool. Now let's talk about the next step that is currently happening. Let's talk about refine.
Colleen Schnettler
Yeah
Arvid Kahl
There's one thing that is quite distinct here, other than the fact that you took money, which is a whole other thing. But you're doing it with a partner, you're doing it with Aaron, Aaron Francis, right?
Colleen Schnettler
Yes
Arvid Kahl
How did that happen? How did you first so, how did you meet? How did you come up with the idea? And how did you kind of channeled into an actual business?
Colleen Schnettler
Yeah, so this is kind of a funny story. So Aaron is a Laravel developer. And at his full time job a couple of years ago, he found himself constantly having to write custom reports. So he basically line items into his contract that he was gonna build a report. It's really more of a filter builder than a report filter, but a filter builder and keep the IP because he saw the potential in this product. And Aaron likes databases more than most people on the planet. So he was super into this. And so what happened is he built out the product for the Laravel space, and a big enterprise client came to him and said, and so he started with another partner. We had a third partner. And they worked on the front end and the back end to make a full stack solution. And an enterprise client came in and said, hey, we want this for Rails. We've been following your work, we're really interested, we're doing this rebuild. And we want this for Rails. And so Aaron doesn't write Ruby on Rails. So I know him. I mean, kind of the same way I know you through random Twitter, social networks, like it beyond this the same. You're like, wey, wanna come build this? So he reached out to me and asked me to build it for Rails. So I actually was working for him and his partner, as a consultant, building out the product in Rails. And so we did that for maybe a year, products, maybe like, almost feature complete and the contract was over. So I actually went and took a full time job. And about three to three months into the job, the enterprise client reached out and said, we love this product. We have a huge vision. Like there's just a vision for what this could be, we need full time support building this product in our app. And so through a lot of excitement and negotiations and fun, they brought me on as a full partner, I quit my job. And so that's how I joined Hammerstone, which is the company name Hammerstone. Yeah.
Arvid Kahl
That's a lot of ups downs and sideways and back. Cool. I thought what an interesting journey, though. It sounds to me like having a customer actually wanting the product that you're building, that's pretty good validation for joining a team and making a thing happen.
Colleen Schnettler
Yes, yes. I mean, and it's really interesting problem too. Like it was super fun. I love working on it. It's a real gnarly technical problem is how do you take the super complicated thing and make it fun, not fun, make it well, fun, but also make it easy for people to grok, make it easy for people to add in their application. So it's a fun technical problem. And I think a lot of us, especially us in the indie space, like we'd like solving fun technical problems.
Arvid Kahl
Oh, yeah. And I have just a question about that. Because I've been thinking about this, like following you on the journey. You're trying to sell a product to people who love solving problems, like you're selling to developers, essentially. Or at least you did in the beginning. Can you talk me through like the process of how you found your actual audience, your potential prospective customer base in this? If they're so hard to convince to buy anything they could build by themselves?
Colleen Schnettler
So this is such a good question because we were selling to developers, but just what this week we decided we need to change our focus and sell to product managers. And it's a little bit funny because my original kind of idea with this was lean into the interesting technical details to get developers interested to get them to want to buy the product. So I gave two. So I speak at conferences, a lot Rails's conferences, Ruby on Rails conferences. And I gave two very technical talks at these Ruby on Rails conferences. And then, of course, as you just alluded to, what happens is afterwards, people come up to talk to you. And they don't say I wanna try your product. They say, that's really cool. I wanna go build it with that tech, you just talked about.
Arvid Kahl
Shooting yourself in the foot, great! Good job!
Colleen Schnettler
Big time, big time lesson learned, like that
Arvid Kahl
That's developers, right? That's just people who whose whole job it is to find interesting problems to solve, it's gonna be hard to give them a solution to something that they would like to try to shot at by themselves. So if you're now looking at product managers to sell to, you probably have to change a lot in your positioning to, right? Because if you're selling a tool to developers, you can't sell a tool to product managers. You have to sell an outcome. You have to sell something more tangible to a product manager. How are you gonna approach this in the coming weeks and months?
Colleen Schnettler
Yeah, so that's a lot. We've been thinking about that a lot. Because you're absolutely right. When we first thought we were selling to developers, we had one plan, which was kind of show them how cool this tech is, but also how hard and how we've already solved it, that was a terrible idea. That didn't work at all. So I think with product managers, we're gonna be focusing more on the business value because of our 20ish early, maybe 20, 25 customers, the people who are buying our product are very small teams, where the engineers are very product minded. And so they can see, I can buy this. It's gonna save me months of time, and then I can focus on my differentiating features. But to your point, most developers don't think like that. They don't value their own time. And so for product managers, the focus is gonna be more on for less than the cost of a developer, you can buy our product, and you can give your customers custom reports or segmentation background email jobs. So for you, like if you're the product manager, it makes it stickier for your customers. So now your customer can come in. Let's say you have an analytics tool and they want to segment their email list, we do that. Let's say they wanna build custom filters and save those filters, we do that. So that's kind of the new positioning, like for less than the cost of a developer, we can give you the sticky features to keep your customers engaged, to bring you new customers, to set you apart from everyone else who doesn't have this.
Arvid Kahl
That's very outcome oriented. And I love this because as a developer myself, I had to train myself to think that way. Because nobody ever told me that that's the way that most people in the world see purchases. Like particular what you just said, like I don't really value my time that much. I could spend 10 hours solving a problem that I could easily like pay 5, 10 dollars for, have it solved for me and it will still go for the 10 hours every damn time. It's bizarre, but it's just how, yeah, how I'm trained and what I've developed over time. So I love the fact that you're going for outcomes. And I love what you just said in terms of the pricing of it like for less than the cost of a developer, that leaves a lot of room for interesting pricing. How have you been approaching charging the right amount of money for those, I would say more enterprisey kind of customers?
Colleen Schnettler
Yeah, this is such, it's so funny because we just last week, were at the Tiny Seed retreat and we spent a lot of time talking about pricing. And so pricing is hard. Even for our base package like we initially to buy the component, it's initially like $1,000 a year, which we are realizing is way too cheap for what it is. And so that's one thing and then you have these big customers, and the big customers involve an aspect of support and onboarding. And so I mean, I don't know yet. We're gonna be I think it's gonna land for the bigger customers depending on what level of support they need. We're looking, here's what I learned. Here's what I feel like I have learned since I started all of this, like, if you wanna build a really profitable business, you've got to be able to charge really high prices. Well, I guess you did that without charging really high prices but is not a hard and fast rule but it helps. It's not hard. Okay, so what we wanna do is we are already in a position with this one and we really have two bigger clients that we've been able to charge really high prices for and so what is the price and how do you structure that offering? Like is it one person successful founder like runs multiple 100 million dollar a year business was like you should charge $100,000 a year. Really? That's a lot. So I'm not saying we're gonna do that. But I think we are trying to think differently about this. Like, if we really now our product needs to meet that statement, right? Like the product needs to be good enough that it can replace a developer and it provides that value to their customers. And it is stickier. But if we can do that, I think we're gonna probably start at 25k. And this is for like, the bigger enterprise clients. We're still gonna do something different for the smaller, lower touch customers. But it's just a different mental model, I think, compared to a Simple File Upload where you're like, I should only sell this for $10 a month. You know, like, when I listed Simple File Upload at $35 a month, it felt like, I was like, no one's gonna buy this. Like, it's way too expensive, you know?
Arvid Kahl
Honestly, I think that that is one of these extremely limiting beliefs that we have, particularly if we're developers because what you just said that this kind of moment of oh, no, this is $35. Come on. Like that is just, we wouldn't pay for it. Because again, we don't value our time. We would rather spend the day solving this than spend $35. But most people out there have a completely different perception of how much something is worth. And I found in many founders, indie hackers, solopreneurs, people who come from the software scene, they have an extremely hard time charging more than they would be willing to pay for something like this themselves.
Colleen Schnettler
That's an excellent point.
Arvid Kahl
Extremely limiting because they cannot imagine that somebody out there would actually spend money to solve problems. It's bizaare.
Colleen Schnettler
That's an excellent point. Yeah, cuz we wouldn't do it. Because we're like, I could build this, even though, you know, with what we charge in a day as a consultant, it's a lot more than $35.
Arvid Kahl
It's this weird cognitive dissonance between the lived reality of everybody out there and our little developer world and our minds bizarre. I'm just yeah, I'm very interested in seeing where you go with this. I know that at some point, during the next couple months of my dog walks in the morning, I will learn more about this. So I'm very happy to know that you are building this, at least you're talking about it in public, building this in public too. Now that you have the Tiny Seed team and the mentor network and all your peers and stuff behind you, beside you, around you, how is this gonna change the way you approach this business? Just I'm asking because many software businesses that don't take funding, they just you know, slowly grow over time. But the moment funding is involved, even though it's bootstrapping compatible funding, you know, they don't have these gigantic growth expectations, you still take funding to be able to move forward in a different way? How are you gonna approach this for Amazon?
Colleen Schnettler
So I think, I mean, this funding really enables us to focus on growing the business. And it gives us a little breathing room. So I'm not gonna like hire, you know, it's not like, it's not that much funding. Like, I'm not gonna go hire a team and you know, try to scale real quickly. That's not what we're doing. It gives us but it gives us a little breathing room to try and grow the business in a sustainable, profitable way. And the difference for me personally, is I am still consulting. I'm consulting as a Hammerstone co-founder, but I am still consulting, essentially full time. So all of the business stuff takes a backseat to that, the talking to customers. I mean, it's amazing what amazed me Arvid talking to some of these people, is how many customers they talk to. I mean, I'm like, we're like we talked to 20. They're like, they talk to like 20 a week. You're just like, it's a whole different game when you can focus on the business. And you don't, you're not so I mean, I'm super involved in product. And I am, you know, this developer on the product, but this will give me a little more breathing room to focus on the business. Like I hear people talk about talking to like 10, 20 customers a week. And I'm like, that's how many we've talked to total. So yeah.
Arvid Kahl
Yeah, most people would like to talk to 200 people, but then they look at their calendar, and they see all the little items. And they they just turn off the calendar, right? Okay, that's enough. Yeah, you have to like it. And that's I wonder that about you because you're a developer. You were outspoken about your developer stuff, which is great. But you're still a developer and we, developers, you know, we'd like to be product people. We built the thing. And that's what we do. So how do you enjoy I guess this foray into the other side of the business? Is that something you're looking forward to doing more?
Colleen Schnettler
It has been a learning experience for me. I mean, obviously, I have Michelle, who was excellent at it, who's been helping me, you know, coaching me on interviewing customers. But I think fundamentally, it comes back to Aaron and I genuinely want to make people's lives better. And it sounds cheesy. I know. But like, it's true. Like we genuinely so when I get on a call with you. And let's say it's a customer interview, and you're showing me we're in this situation, you're showing me how your customers can't get the information they need out of your database and it's frustrating. And then you have to have, you know, you have to do it and you're doing these custom reports like, Man, I hear that. And I'm like, I can actually make your life better. And that so I really enjoy that aspect of it. I really do.
Arvid Kahl
Yeah, that's exactly how I feel and how I felt when we were doing Feedback Panda. Like before that, never cared about, like who this was for. I just enjoyed the technical challenge. But the moment I noticed that these online teachers said, we were serving actually had hours more in the day they could spend with their children, something flipped. I understood that, okay, I'm actually having a meaningful impact on somebody else's life. And ever since then I really enjoyed that part so much more than before. Glad to hear that you have the same experience there. I think that's just a nice little level up in terms of the breadth of the skill set that you have as a person, right? Once you understand that you're not just a developer, you're a helper like at scale. You're supporter, you're motivator, you're just making people, make people's lives better. That's really cool. Glad to hear it. Well, let's talk about another thing, maybe a less happy thing. And like more of a risk calculation thing. You were talking about having huge enterprise customers? And from what I figured out, it's like, not too many of them. How do you see the risk of having just a few huge customers? And then, yeah, how do you see? Is that a risk that you see in the business that if a couple of them churn, you have a lot of trouble on your hands?
Colleen Schnettler
Yeah, it feels like a huge risk to me. And it also feels like a risk too because like this one client we have, which they're beyond wonderful, I love them. But we also, so if they want a custom feature, we build it for them, and they pay us. But you have to be very careful with that model not to build for only one customer.
Arvid Kahl
You also become their agency, right?
Colleen Schnettler
Yeah, exactly. We don't wanna become their agency, you know. And so to me, it feels like a really big risk. And I also think this Tiny Seed money is gonna help us de risk it because they are paying my salary. So they are who I work for essentially full time, even, you know, as a Hammerstone employee. So I think the money enables us to de risk that because we can focus on the business, and we can focus on seeing what other customers of size and budget need and see if, you know, see how to make the product work for multiple customers. But yeah, I mean, I think the biggest risk there is getting kind of, like, sucked into the comfort to it's very comfortable, you know?
Arvid Kahl
That's just deluring, right?
Colleen Schnettler
Yeah. I mean, it's, you know, but we don't want to be a consultancy, we want to be a product company. And so you have to know what you want to get what you want. So,
Arvid Kahl
Yeah, I think having some kind of funding and in particular, beyond the money having people around you in the mental network and the peers of the cohort that you're in that have similar dreams, you know, that have a similar goal that want to build a business that is not beholden to any large customer, that kind of influences what decisions you make, how you make them, and for whom you really make them. It's not just for you, it's kind of for you in the future. And that makes a whole lot of difference. I'm really looking forward to seeing where this goes. I think having that level of funding is the perfect thing for bootstrappers who are already showing signs of validation for product market fit. And I think you did a great job. How did you get to actually have that funding? How was the application process? Can you walk me through that a little bit?
Colleen Schnettler
A little bit funny because I didn't tell my co founder I was applying
Arvid Kahl
Oh, boy!
Colleen Schnettler
It was a little bit funny. We laugh about it now. So actually, so man! This is a tough decision to be honest because we didn't need the money. We are self sustainable. We are making money as a business. Everything is working great for us as a business I'd say. And but I have known about Tiny Seed forever. So the other day, I'm driving to the gym, and I say to my phone play something I like and it played startups for the rest of us.
Arvid Kahl
Okay
Colleen Schnettler
Which is both embarrassing and telling about like what I listened to all this time, right? So anyway, I feel like Rob Walling is my best friend even though I've had never met him in my life. So I'm very familiar with Tiny Seed. I'm also was familiar with some of the other companies that do kind of bootstrap level funding and Tiny Seed only invest twice a year and the minimum MRR is $500. And they have a couple like constraints. So minimum MRR is five under dollars. They, what else, I feel like there is something else, you have to show some kind of product market fit. They wanna see that you already have a product, they don't invest in ideas like they don't. They're very B2B. And so I don't know this for a fact because I didn't ask, but I don't know if they would have invested in Simple File Upload just because they seem to be interested in companies that can hit those kinds of enterprise level deals that can do the bigger deals to become more profitable. And so it's literally a Google form. I mean, it was no big deal. It was so easy. And it's just like, what's your MRR? What's your business plan? Where are you? What are you doing? What do you think your market size is? What do you think your churn is? And so some of them I had like cheeky answers because it's like, what's the size of your market? And I'm like 10 million because it's all developers everywhere, you know. So it's literally Google form, easy to apply. And then I thought we were I was, you know, we, after I applied, I told Aaron, I was like, oh, by the way, I applied for Tiny Seed. Don't worry about it. It's gonna be like, we're not gonna get in. And then we got the interview, and then you do a couple interviews. Yeah, it was a whirlwind.
Arvid Kahl
How did he take that? Like did he actually buy into it quickly? Or did you have to convince him about it?
Colleen Schnettler
Oh, no, he was all in quickly. Like, he was super excited. I mean, I think we're both like, being in this world. We've just known about it. You know, he went to a micro conference like 2012. So he's been in this world, way longer than I have. And, yeah, and it was just, we filled out the form. We did the interviews.There's a couple interviews and we got the offer.
Arvid Kahl
Wow! Yeah, congratulations! That's cool.
Colleen Schnettler
Thank you. It's very exciting.
Arvid Kahl
I'd like to be in this position. You know, because you got a lot of applications every couple of months from people who got the dream. You're making it happen. That's so cool.
Colleen Schnettler
That's what it you know, it is really, really exciting. And it's only been a month, right? Today's, it's December, but it's just something to me, it's so interesting how we perceive and move the bar of success. Like, before I had started the SaaS. I mean, before I was a stay at home mom for like 10 years. So it was like, man, I'd like to learn to code then it was like, I'd like to get paid to code. I'd like someone to pay me for something. And now it's like, I've raised money. It just feels like this, you know, it's just cool. I don't know, it's just cool. It's exciting. I guess if you'd told me five years ago that I would get Tiny Seed funding, I'd be like, no, there's no way like, I can't do that.
Arvid Kahl
I'm thinking about this too. Like five years ago, I wouldn't have been able to tell you what Tiny Seed is. For me being in the software space since 2004 or something, this whole indie hacker indie funding, bootstrapping space just opened up to me during Feedback Panda really. Like leading up to it and a couple of years 2014, 15 those kind of years that were, you know, before we started the business, but there was always the willingness to explore the space. But I never took the time, always too busy being a traditional software engineer doing these things. But once I was in that community, man, stuff changed quite a bit. I gotta say, like, I met Rob and Tracy at MicroConf, 2019 in Europe. Like that was because they were there organizing it. And honestly, Rob Walling both for you and for me probably as an enabler because he put me on stage with Danielle. And that was a little talk that gave me in particular the opportunity to talk to more people in the space. And then that kind of jump started my whole Twitter growth situation. So I probably wouldn't be here doing what I'm doing without Rob Walling and MicroConf. So you know,
Colleen Schnettler
That's awesome. I love that!
Arvid Kahl
Having such a such an impact on the community with the work that he's been doing for what is it now 550 episodes of startups with the rest of us. Something like that. It's such a, that's just consistency over decades and is mega impressive. It blows my mind. So you met them too recently? Am I right?
Colleen Schnettler
Yeah, we were like last week. Literally last week, we were in Austin for the Tiny Seed retreat. So I got to meet them finally, which was lovely. So it was pretty cool.
Arvid Kahl
Yeah, that's cool. Yeah. I think that was also like a MicroConf local there.
Colleen Schnettler
Yes, WP Engine with Jason Cohen. Yep. There was a MicroConf local.
Arvid Kahl
Yeah. What do you think of conferences? You've been there as a tech person? Now you're kind of moving into tech entrepreneur. Do you think this is gonna change how you're gonna approach going to conferences, even maybe giving different talks than giving away all your secrets so that other people can build the thing you're already building?
Colleen Schnettler
I don't know. We'll see. I mean, I have deep, deep roots in the Ruby on Rails community. So I think things like Ruby comp and Rails comp will always be things I want to attend. But I don't know. I do think I mean, I do think these things change and move over time. I've never been to a MicroConf until last week. And so you know, I'll go to the one in Denver this year. And so I do think like, from a conference perspective, you do start moving from purely technical to kind of like not like to business of software, not the business software conference, but like to, you know, the concept of like software as a business and building a business and growing a business. And yeah, so I do think there will be a little bit of a shift there.
Arvid Kahl
I guess that's just a development over time, right? It's like how most people in the regular employment world they go from doing the thing to managing the thing to then deciding about the thing. Like it's just a regular kind of career, but for solo people for depths for indie people, it just takes a takes a different path. That is so cool. Well, I'm just I'm super excited to hear how this is gonna go on. I'm also very excited to see how your little smaller SaaS business and potential acquisition is gonna happen. I know that the people can follow your journey along on a couple of podcasts. And not just that, also Twitter. Where would you like people to follow you and your amazing journey?
Colleen Schnettler
Oh, well, thank you. So I am on Twitter as leenyburger. I have the Software Social podcast and the Hammerstone podcast and you can check out our website at hammerstone.dev.
Arvid Kahl
I highly recommend all of these things. Thank you so much for being on the show today.
Colleen Schnettler
You're welcome.
Arvid Kahl
And that's it for today. Thank you for listening to The Bootstrapped Founder. You can find me on Twitter @arvidkahl. And you'll find my books or my Twitter course there as well. If you wanna support me and the show, please subscribe to my YouTube channel, get the podcast and the podcast player of your choice and leave a rating and a review by going to (http://ratethispodcast.com/founder). Any of this will really really help the show. So thank you very much for listening and have a wonderful day. Bye bye