Happy Customers, Happy Wife (and Co-CEO), Happy Life with Dave Sims of Floify

Courtland Allen: 7s

What’s up, everybody? This is Courtland from IndieHackers.com and you’re listening to the Indie Hackers podcast. On this show I talk to the founders of profitable internet businesses and I try to get a sense of what it’s like to be in their shoes. How did they get to where they are today?

How do they make decisions both in companies and in their personal lives? What exactly makes their businesses tick? And the goal here, as always, is so that the rest of us can learn from their examples and go on to build our own, profitable internet businesses. Today I’m talking to Dave Sims. Dave, welcome to the show.

Dave Sims: 34s

Hey, thanks so much for having me, Courtland. I’m excited to be here.

Courtland Allen: 37s

Thanks for joining. You are the founder of two different tech companies, both of which are self-funded, both of which are profitable and generate many millions of dollars in revenue and both of which have dozens of employees. My first question for you right out of the gate is how do you do that? How do you juggle running two multi-million dollar businesses simultaneously?

Dave Sims: 55s

First you start with naiveté, you don’t know what you’re getting into. First business I started back in 2000, and it was my third attempt that year. So in 2000 I tried three different businesses. The first two just weren’t going anywhere and I gave up on them. The third one seem to take hold. The next one wasn’t until 13 years later, 2013. I just had the energy and by then we had grown. I was able to recruit and retain some really talented folks. That makes all the difference in being able to run two organizations at the same time.

Courtland Allen: 1m 31s

How much time would you say you devote to each of your businesses, Flux, which you started back in 2000 and Floify which you started in 2013?

Dave Sims: 1m 40s

Lately with Floify charging hard I’ve been 90-95% Floify and 5-10% Flux. Let’s just call it 90/10 these days. That’s where the attention seems to go.

Courtland Allen: 1m 56s

You must have a lot of delegation going on. You mentioned you have employees and good hires you’ve made at Flux. You’ve got, I think, six employees at Flux and 35 at Floify?

Dave Sims: 2m 4s

That’s right. You got it right on the head, 6 at Flux, 35 at Floify. Floify grew out of Flux. In the beginning Floify was just a part of Flux. We spun it off and it’s been growing really hard and we are up to 35 now.

Courtland Allen: 2m 18s

We talked a little bit before this podcast and you must be really good at delegation because two businesses even isn’t really enough for you. You’re considering a way to potentially partner up and maybe help start a third venture somehow. What would that even look like with you spending so much time on these first two businesses?

Dave Sims: 2m 35s

That’s a really good question. I’ve learned from some of my customers at mortgage companies. They have a successful mortgage company, they have 400-800 employees, sometimes more. And they are the CEOs and they spin off these little side ventures, if you will. What they’ve done is they don’t do it all themselves. It doesn't become an in-house thing.

They partner with people that they know well, entrepreneurs who are really motivated. I think it’s a way for them to tap into that entrepreneurial excitement. Where maybe that mortgage CEO couldn’t recruit someone to join the mortgage company but they can say, “Hey, let’s partner up legally. I’ll own some shares, you’ll own some shares and let’s do it together.”

One of the really neat things about working with mortgage CEOs, they do it for cash money. They work hard and their companies pump out profit. It’s very different than the tech world where it’s all about your valuation and who is going to acquire you? It has none of that. It’s very grounded.

Courtland Allen: 3m 41s

I have so many questions I want to ask you about that, about the mortgage industry in general and also some of the things you’ve learned from working with some of these founders. It’s completely off my radar as a tech founder and I’m sure people listening don’t know very much about it. I think it’s interesting that you mentioned entrepreneurial energy because every time I talk to a successful founder who is running a very profitable business and yet they’re still working super hard on their business and talking about starting more businesses, they have some reason why they keep working hard, that stops them from just retiring to a life of leisure on a beach somewhere. What’s that reason for you, Dave?

Dave Sims: 4m 13s

I just think that there’s always something exciting that you get pumped up about and you really want to go after it. I am thinking, a friend of mine, we are considering going on a joint venture and no, I wouldn't work in it day to day but I’m really pumped about the idea. I like to say, “Dave doesn't scale.” I know I don't. This is the way I can have my fingers in a few additional pies.

My wife and I own Flux and Floify completely and so I feel like I have my thing, my little sandbox and I can play in my sandbox and it’s great. All of our employees have what I call ownership and trust. That really means autonomy and trust. They get to expand their sphere of influence the more they lay down a really good track record. Maybe if they break trust maybe that sphere collapses a little bit.

But I’ve got Flux and Floify. I really feel that it would be a great opportunity to tap into that entrepreneurial energy. I no longer feel like any additional businesses I do, I need to be the sole founder of. I’m really happy to partner with special folks that I already know.

Courtland Allen: 5m 27s

Is it safe to say that you’re doing this, as cliché as it sounds, more for the journey rather than some sort of destination you want to hit, or is there a destination that you really want to get to?

Dave Sims: 5m 34s

There’s a little bit of a destination. It’s just Floify and this alternate business, there’s a synergy to it. It’s not this new, completely different thing, like jet ski tours in the Caribbean. No, it’s nothing like that. There is a connection and I want to see where we can go with it.

Courtland Allen: 5m 55s

Let’s talk about your most recent business, Floify. Your older business, Flux, you started back in 2000. It’s been going for almost 20 years now. But Floify you spun out of Flux, and you started it in order to solve one of your own problems. I want to dive into exactly what that looks like. What was the problem you were facing, and how did that lead to the idea for Floify?

Dave Sims: 6m 14s

My wife and I moved here to Boulder, Colorado. We used some short term financing to get into our home. But then after 90 days I wanted to refinance my house for a long term loan, and so I went through a local credit union to do the refinance.

I just discovered, oh my goodness. The loan officer was great. He gave me all these options, and when I finally, it took me a little while to decide, “I’m going to go with the local credit union.” He handed me over to his loan officer assistant. I thought, oh my goodness, her job. I could make it so much better.

She lived in her Outlook email. That was her job, saying, “Hey, I need your tax returns. I need your W2’s. I need your bank statements, all of this kind of thing.” She’d email her requests and she’d send this long list of things. I sent most of them back and I missed a couple things because I’m just human. She’d remind me, “Hey, you missed a couple things.”

Then when I sent in my tax returns, being a geek I was not going to email tax returns, security and all that. So I encrypted them, sent them off, and I started waiting. I waited a couple days and didn’t hear anything. I called her up and I said, “Hey, did you get my tax returns?” She’s like, “Yes.” And I was like, “So?” She said, “Oh, I couldn’t open them.”

That was really the genesis of everything. I thought that I could make it so she could be a loan officer assistant to five loan officers, let alone one. And also me, as a borrower, I knew I could make my own experience so much better. That’s the origin story for Floify.

Courtland Allen: 7m 57s

I think plenty of people encounter problems and annoyances in their everyday life, whether it’s trying to get around a new city or renting an apartment or something that’s annoying about buying groceries or cooking. What made this particular problem stand out to you as something you should start a business to solve?

Dave Sims: 8m 15s

At the time, I was looking for a new business to enter into. Flux had been going strong for a long time, 13 years by that point, and I was starting to hunt around. I was thinking, “What else could we go into?” I had no idea what that might be. So that was in the back of my mind.

I did dig into it. I dug into the industry. I learned that there are about 400,000 loan officers in the United States. Without doing much too deep analysis I thought this was probably a big enough market. Didn’t need to become a unicorn or anything like that, cause I knew how the structure of it was going to be ahead of time. It just needed to be able to get to $10 million.

Courtland Allen: 8m 56s

So you’re already in an idea-generation, lookout mode when you encountered this when you were in a financing situation and you were extra aware that anything you ran into could be a business idea. Are there any other ideas you considered, or was this the first one that popped into your head when you decided that you wanted to start something new?

Dave Sims: 9m 12s

There was one other idea. I won’t even go into too much about it, but it centers around creating bank accounts electronically. We have a meeting with JP Morgan Chase and there was an initiative there. Basically, you could create bank accounts via API.

After meeting with the Chase folks, they were excited about it but I could just tell this was going nowhere. There weren’t a sufficient number of people interested, and when you’re working with a big bank, things just don’t move as fast. So I was juggling this, create bank accounts via API idea, the mortgage idea, and in the end, it just became crystal clear. If something was going to start happening, it was going to be with the mortgage idea.

Courtland Allen: 9m 57s

Here’s how you think about coming up with business ideas. I’ve talked to so many different Indie Hackers at meetups or online who are in the same phase you were, like “I want to start something but I’m not sure what it should be. Let me keep my eyes peeled for different opportunities.” How did you go into that situation? How do you evaluate whether a business idea is good? Did you have any criteria or requirements, or were you just willing to work on whatever excited you?

Dave Sims: 10m 20s

I’m not going to say that I was so smart and brilliant and had a deep analytical mind. I’m a little bit of the type where I just tend to dive in if it feels right intuitively. It was a little bit of research there. You know, how big is this market? Of course we all intuitively know, how big is the United State mortgage market? We hear numbers coming out on the news all the time.

It was a medium level of effort, of insight. Sometimes you just don’t know. Everyone talks about, work on what you know, but some of these industries are so deep. You start on what you know and you get into a little bit. Then you find whole other areas that you never knew even existed. That part’s fun, when you just go deeper either in the industry, you’re in or some adjacent technology or some adjacent business need, something like that. That’s how it’s been going for me.

Courtland Allen: 11m 17s

Did you know anything about the mortgage industry before you started doing this research?

Dave Sims: 11m 21s

No. I knew nothing, other than I’d gotten a couple mortgages before then. I think it’s the old fresh look, like, “Hey, I’m going to put a fresh look on this industry. I haven’t been in it 20 years like a lot of other folks.” I think the fresh look worked.

Courtland Allen: 11m 38s

Yeah. That’s scary though. I was talking to John O’Nolan way back earlier on the podcast and he had a good point about how when you look at an industry that you don’t know very much about, you might see a gap in the market. You might see an opportunity.

But a lot of times that hole is only there because you don’t understand what’s going on, and there’s a lot more that, when you learn, you realize oh, there’s reason why this hole is there. There’s a reason why no one’s done this. Were you at all curious, why hasn’t somebody made this easier for these loan officers?

Dave Sims: 12m 5s

I was curious, and I did my digging around. I found a couple small software companies in the United States who had ostensibly been doing the same thing. They didn’t seem that big. They didn’t seem to have a whole lot of traction.

So it seemed like from the perspective of, as a borrower or a loan officer assistant and what I now know to be mortgage processors and everyone involved in mortgage operations, I know they don’t get the same love that loan officers get or compliance people get.

Because in the mortgage industry, compliance is huge, as you might imagine. If you don’t do things just right, you will get a very large parking ticket from the federal government, and nobody wants that.

Courtland Allen: 12m 50s

That’s fascinating to look at the different industries that different amounts of love from developers and entrepreneurs. If you’re, for example, a software engineer, there’s probably a startup out there that could fix every imaginable problem because there’s so many software engineers who want to solve their own problems.

If you’re in the mortgage industry, it’s like you said. Unless it’s something that’s super important, like compliance, there’s not as much love, so it’s easier for you to enter that industry.

Dave Sims: 13m 15s

It is. And again, I do feel I got lucky, just stumbling across something that needed love. We brought the love that it needed and we’re still going. But it’s great to be able to provide the people who are not necessarily at the front of the house. When you walk into a mortgage company or a bank or a credit union, you're not necessarily shaking hands with the back office staff. But that back office staff still needs lots of love.

And then we’re going through, over the last couple of years especially, there’s been lots of changes with rates going up, up, up. I know recently they’ve been going down, of course. And the mortgage industry is trying to figure out, how do they do the same amount of loan volume? How do they increase the amount of loan volume with the same staff?

When I started six years ago, we were in a boom time. Some of the loan officers who did tons of loan volume, they would say, “Oh, I have a greater need? No problem. Just go hire somebody,” because that was the kind of climate where they could do that. They could go hire somebody.

And me, just thinking, “Okay. This can’t last.” The solution is never just go hire a small army of people. But it was maybe slightly ahead of time the right time, but that was all okay. The need was still there and we fulfilled it. But then over the last 18, 24 months with rates going up, and they’re still volatile, of course, it’s become abundantly clear. Everyone wants to do more loan volume than they’re doing today with the same number of staff.

Courtland Allen: 14m 44s

Explain to me the idea behind Floify, at least the initial idea when you first came out with it. What was the exact business that you wanted to start? What was the product you wanted to build?

Dave Sims: 14m 53s

I wanted to create that one screen that a borrower could go to, and interact completely with their mortgage loan officer and the mortgage company or the bank or the credit union behind that mortgage, and to make it easy to do things like provide the documents like my encrypted tax returns or my W2’s and my pay stubs, my driver’s license, all that information.

That’s how it was in the very, very beginning. Then I got connected with our very first customer. Her name’s Melanie Taliaferro. She’s down in Austin, Texas. She’s awesome. Still a customer, love her. And I started talking a lot to her. I’d go visit her office for a couple days at a time and just hang out, and just see what’s going on. Lots of great ideas came from spending time with Melanie down in Austin.

So we built some additional capabilities, capabilities for messaging out to realtors, like, “Hey, realtor. Here’s generally where we are in the process.” Realtors send lots and lots of deals to mortgage loan officers. Loan officers love their realtors. They would love to bring them cookies every day but there are federal laws against giving any kind of compensation to realtors. You can’t do it. It’s illegal. You cannot give tickets to the game, nothing like that.

So what’s the one way you can thank a realtor? You can thank them by keeping them up to date. Don’t let them wonder what’s going on with their deal. And number two, get the loan closed on time. That’s the way you can thank your realtor. A lot of these additional ideas came out in the early days just by, I literally went and physically hung out with our first customer.

Courtland Allen: 16m 34s

I love that. It’s the way to compensate for really not understanding an industry, not being someone who’s worked there for 20 years. You’ve got to find someone who has and attach yourself to them at the hip.

How do you convince a customer to let you shadow them and hang out in their office? What are some of the things you look for when you’re in that situation to come up with business ideas and feature ideas?

Dave Sims: 16m 54s

That part’s easy because you’re there to help them. You’re there to understand their business. I’ve met very few people who have said to me, “No, I don’t want you to understand my business better.” Everyone’s got that open arms perspective. I think everyone’s always been willing to let us in.

And in the beginning, it was just me. I would just go hang out for 8 hours a day for a couple nights, couple days and just talk to the crew there. They were all happy to share with me whatever they were doing.

Courtland Allen: 17m 26s

Do you remember any of the surprising things you learned or any of the hypotheses and assumptions you made that ended up not being true, as a result of talking to them and figuring out how things really worked?

Dave Sims: 17m 35s

There was a ton of things that, just with my own intuition, we got right from the start. I think the fundamental premise for how our software works turned out to be a good guess and a good bet on how it all worked. And then there were other things that were a total whiff.

I didn’t fully understand that first of all there could be - at the very beginning I just thought a loan officer would be my customer. That’s it. It took a little while to realize, wait. Multiple loan officers roll up into a single company. That took a little additional coding a couple years down the road, different things like that.

Sometimes I made the right guess in the beginning and sometimes I didn’t and we’d have to go back and recode, re-understand what the requirements ought to be. About half the guesses were right and half the guesses were wrong.

Courtland Allen: 18m 29s

I want to stay on this topic of entering an industry that you don’t know very much about. One of the most oft-shared pieces of advice is that you want to start a business where you actually like your customers. At the very least, you like what you’re doing, so that when the going gets tough you stick with it.

Ten years down the road you don’t want to abandon your business. With Indie Hackers, I have that. I’ve always been an Indie Hacker. I get to talk to people like you about your stories which is exciting to me. I get to talk to people on the forum and in meetups all the time. With you, you’re entering a completely new industry.

It probably wasn’t a guarantee that you were going to enjoy dealing with loan officers and people in the mortgage industry. How did that turn out? Did you end up liking your customers? Do you think that if you hadn’t, you would have stuck with Floify?

Dave Sims: 19m 8s

It turns out I do like my customers. They’re just a crazy bunch. When you get with them in person, and it’s an evening celebrating a great year or great month or what have you, these are a partying bunch of people who are the complete opposite of me. I just want to go back to my hotel room with my book.

But they’re all so friendly, and they love what we’ve built. They recognize that we help them. They’ve always been super welcoming, and they became, effectively, my friends and I want to help my friends. Even if I’ve only met my friend once over the last five years, I still consider them that way. I want to deliver something that’s really high value for them and makes their day better, and the whole team’s day better.

Courtland Allen: 19m 57s

That’s a cool idea, that becoming friends with your customers is probably the best motivation hack, because now you have a whole extra reason why you want to do a good job and build something that they want rather than focusing too much on what you think they want or some misconception of what you should be building. It’s sort of forcing function for building the right thing.

Dave Sims: 20m 15s

Yeah. One of my customers told me, a couple months ago, he said, “Hey Dave, I know you like to please people and like to please us.” He was talking about his mortgage company. I thought about it. I hadn’t really heard about it that way, but I was like, “Yeah, you’re right. I want the people using our software, even if they’re borrowers and don’t pay us a dime, that doesn’t matter.”

I want the borrowers to come in and just have the seamless experience. They don’t even think about the software. They just think about how quickly their loan closed and how easy it was to get into their house. I think in the end you do it for people.

Courtland Allen: 20m 52s

That’s crazy that you’re able to, in 2013, find an industry, the mortgage industry, which is huge, and they were still doing everything over email. I’ve heard it said that one of the best ways to come up with a business idea is to look at things that companies are doing over excel or spreadsheets and build a web app for that.

But yours was, look what people are doing over email. All this swapping of files and communication and asking for different documents, not being able to encrypt things and just build a dashboard for that. I wonder how many other industries exist where that’s not happening, where people are just sending emails. It makes no sense but there hasn’t been a developer or an entrepreneur who’s come in and built something better for communicating that way.

Dave Sims: 21m 30s

I think that is a really excellent way to think about it, because I’ve heard that, too. Spreadsheets, what’s happening in spreadsheets? What am I going to do next? What’s happening in email? Almost all of our customers are in residential real estate, but we have a few who in are in solar or commercial real estate, and we never really went down those particular niches.

Floify could ostensibly be used for attorneys and accountants as well. We just didn’t go down that route cause we wanted to stay specialized, in niche. Then we could build highly specific features that met the needs of the mortgage folks. But oh my goodness, when was the last time any of us used an attorney?

Talk about email. It’s like sending word documents back and forth. Obviously, SaaS for attorneys exist but I think you’re on to something. When you’re sending email back and forth, boom, automatically, there’s got to be a better way.

Courtland Allen: 22m 28s

So you started Floify almost seven years ago. With the benefit of hindsight, what do you think is harder, keeping a business running once it’s big and it’s growing and you have employees to manage, or the initial phases where you're just trying to get this fledgling idea off the ground? You don’t have any momentum but you also don’t have any overhead yet.

Dave Sims: 22m 46s

I’ll probably say a little bit of all of the above. In the beginning, of course, it’s hard to find something that somebody else really wants to exchange their hard-earned dollars with you for. So that’s really hard, and it’s really hard to know if there’s enough of them who want to exchange those hard-earned dollars for what you’re willing to build for them.

But once I got into that - and it’s worked out for me twice in my life and it’s not worked out for me about eight times in my life. Once you hit that, it’s really exciting. It’s just so easy, for me anyway, to want to talk to customers and say, “What are you feeling? What are the pain points you’re feeling right now?” And then we go away and we build and we write code.

That’s easy, and we sell, we market and we repeat, repeat, repeat until the business starts getting business, and you think, “Oh my goodness, I’m ready to hire my first two salespeople.” Per Jason Lemkin, I won’t just hire one, I’ll always hire two when I’m starting out.

That became hard, the business of finding and trying people who would join your startup and trying to create that attractive environment where they can have autonomy and trust and really build their sphere of the organization.

It’s hard in the beginning, especially when you’re really, really small and people think, “Oh, you’re just a small company.” Maybe you don’t get as much respect as when the company grows and grows and grows, and people really see that you’re a true growing concern and this thing is going to be around for the long term.

Courtland Allen: 24m 18s

Let’s talk about that early phase you mentioned, where it’s hard to get people to part with their hard-earned dollars to use this tiny little app that you’re just now getting out the door. How long did it take you to convince anybody to pay for Floify?

Dave Sims: 24m 29s

Let’s see. I still have a GitHub check-in from June of 2013. That was the first code check-in, although I’d been thinking a lot about it prior to that. But anyway, first code check-ins went in June 2013. I think we launched – I remember I wrote a press release that went out in August of 2013. Within a couple days, they had the first couple leads, one of which was Melonie Taliaferro from Austin.

Back then I was doing 30-day trials. One of her loan officers signed up for a 30-day trial. I called right away. We did training, screen shared trainings over the phone. At the end of 30 days, it’s like Jason Fried of Basecamp fame. We didn’t have credit card processing code, so I just called and took the credit card over the phone and we ran it manually. That was in September. First code check-in in June, launch in August, first paying customer in September.

Courtland Allen: 25m 33s

Three months. That’s super-fast, especially if for 2013 when there weren’t quite as many tools for building web apps and there wasn’t as much knowledge shared for how to get things out the door. You must have had a super bare-bones MVP.

Dave Sims: 25m 46s

I think so, thinking back. But it solved a real problem. So it was MVP, but while still solving a real problem, not dancing around the edges of utility. It was a real problem solver. Then we just focused in on - it was another developer and I - just focused on bringing real value and not bringing fluff.

It was just real value. The user interface was utilitarian. One of the things I still feel lucky about to this day, it was written in Bootstrap. And every one who has seen a bootstrap web application recognizes it. They’re like, “Aha, that was written in Bootstrap.” But we were selling to loan officers. They didn’t know, and so they didn’t care. All they cared about was ease of use, so that worked. As long as the software was easy to use and it was fast, that was okay.

Courtland Allen: 26m 37s

What about on the backend? Do you remember what you were using for your database and for the server side code and things like that?

Dave Sims: 26m 42s

Yeah. The backend was all in Java. We were using a NoSQL database at the time, no longer on that. But it really helped with speed of development. It didn’t have what I would have found clumsy tools and architecture. I and this other developer I was working with, and he’s still with us, we just put together a development system that we could iterate on really, really fast.

We worried about some other problems. We kicked that can down the road, because what if this business never took off? We took on some technical debt and it was okay, because once the business was rolling, we went back and addressed that.

Courtland Allen: 27m 26s

There’s a lot of things in starting a business that I think sound counterintuitive. They sound like things you don’t want to do. They sound like problems to be avoided but they are good problems to have, like taking on technical debt.

If you don’t know if this business is going to work, you don’t know if you’re building the right features, you probably don’t want to unit test every single function in your code and make sure everything is using the perfect technology. You just want to get things out the door as quickly as possible, because you might throw all this code away next month. It can seem like you’re doing the wrong thing, but in reality, I think that’s definitely the right way to approach it.

Dave Sims: 27m 58s

Yes, I’m a big believer in speed, just speed. Go, go, go. Bring that value just as fast as you can, because as one person said to me many years ago, “YAGNI. You ain’t gonna need it.” Don’t develop for the scalability or this functionality set that you think you’re going to need in a year’s time, cause you're probably not guessing right. You’re probably not guessing that the bulk of your code needs to scale in one particular area of the app versus another particular area of the app. Don’t pre-optimize. Was it Paul Graham who says that kind of thing? It’s so true.

Courtland Allen: 28m 36s

There’s a good anecdote. I don't know if it’s true. It’s about survivorship bias and how the planes would come back from the war. They would look where all the bullet holes are and they would say, “Oh, the bullet holes are on the wing, so we should put more armor on the wings.”

But it turned out that’s the wrong conclusion. Those are the planes that came back, so if they got shot in the wings, obviously it’s fine to get shot in the wings, and you should put armor where you don’t see bullet holes. Maybe that’s true for companies. You can look at companies like yours or bigger companies.

Look at all the different problems that you still have today and conclude that those problems aren’t the most important problems to solve. If Facebook has a lot of technical debt, then that probably is evidence that you can start a successful startup and grow to billions of dollars while having lots of technical debt.

You shouldn’t worry about that. What are some of the problems that you still have at Floify, Dave, that perhaps someone who’s starting a company shouldn’t worry about because you’ve been able to build something successful despite having those problems?

Dave Sims: 29m 23s

We still have technical debt, and sometimes we’re interviewing developer candidates and maybe they get a little bit too focused in on that that technical debt. I’m like, “Hey, how about serving our customers and our real estate agents our borrowers? That’s the most exciting thing. Let’s focus on serving them in a very useful, timely, fast way.”

Technical debt is always going to be there. Like you were just saying, Facebook has technical debt. Who doesn’t? There’s that joke. Legacy code is any code that was written last month. It’s real easy, and I did it, too, earlier on in my career. It’s easy to go into a new shop and look at it and say, “Oh my goodness. What were these people thinking”? I’ve done that too, but when a developer does that, they’re really looking at -

Courtland Allen: 30m 13s

Like the bigger picture?

Dave Sims: 30m 15s

Yeah. The developer is really thinking about their outlook on things. Their outlook is, how does the code run? How do I keep this software running 24/7/365? Maybe their focus isn’t quite on serving customers.

The important thing is to be serving those customers and yes, they do need new features. We’re not lucky enough to be like a Twitter that has a very small feature set. Or look at Basecamp. We use Basecamp here, and Floify is far more complex than Basecamp, but good on DHH and Jason Fried for building this wonderful business that doesn’t have a hypercomplex set of features.

Now in our industry, it just doesn’t work that way. There is just so much that goes into doing a mortgage. So I would think, again, keep sight of the bigger picture. It’s not all about refactoring the code. But scalability is the real deal. You will hit scalability bumps.

When I finally stepped out of an engineering role, and a long friend of mine of 20 years prior, he came in and headed up our engineering team, he did take that look at things. More scalability, addressing some of the technical debt, and he’s done a great job. I’d say that was the right time.

When I was heading up or engineering team, I was like, “No, let’s deliver value, value, value. Let’s go. Let’s go, faster.” That was what we needed in the beginning, as we were coming towards a million in revenue. But then, sometime past that, all right, we need to bring in someone that’s more talented than me, smarter than me at these engineering things, and can look at them while still not forgetting about the customer.

Courtland Allen: 32m 0s

You did an interview back on the Indie Hackers website a little while ago. We asked you about attracting users and growing your company. You said that in the beginning it was very difficult. The first few years were pretty rough. You were asking for referrals. You were creating content on your website.

You were spreading the word through friends, just using every different method that you could to grow in the early days. Give us a picture of what that looked like and how it turned out, because I know now you’ve got, I think, a million customers for Floify or something ridiculous. But in the early days, how did you scrape together those first few users and keep it going?

Dave Sims: 32m 33s

In the early days, I just tried everything that I knew. I knew press releases. I knew content. I knew having a mailing list, email list, all those things, asking for referrals. I always ask for referrals. Especially in the mortgage and real estate industries, everybody lives on referrals, so they get it.

I did what I knew, and then it took two years to get to $100K in annual recurring revenue, which is fricking forever. I’m a little bit surprised in hindsight that we didn’t give up on the whole idea, but every month our revenue always grew, even with churn. That was encouraging, even though it took two years to get to $100K in revenue.

But then things started speeding up. We were able to hire additional people and it did get to the point, just like with our head of engineering, we hired a head of marketing. And this head of marketing is really good at lead generation, far better than me. He was able to come in and start cranking in the leads.

So we have tons of inbound leads, which are great. We do our share of out bounding. In our space, we do have six-figure customers, and we have $59 a month customers. So we don’t outbound for the $59 a month customer, but the six figures absolutely, we do.

It just became a mix of which approaches to use. But again, our head of marketing, so much better at generating leads than I ever was. And so the way I look at it is, I did as best as I knew how to do, drive some revenue and then we got some revenue going and I’m like, “Oh, thank goodness, people are much smarter than me.”

But I had to be the first one to do it. I had to be the first one to sell initially. I was doing all the initial sales, all the initial marketing. Cause you don’t really know who will be the right person, even though they’re so much more talented than you, you still have to be able to recognize some of the right qualities to come in after you and do a better job of you at sales, marketing, engineering, so on.

Courtland Allen: 34m 37s

Yeah, hiring is not easy and if you don’t know what you’re doing, then how are you going to hire somebody who’s better than you? You’re probably just going to hire somebody worse than you.

Dave Sims: 34m 43s

Yeah. And you do hear a lot about, someone’s working on a startup and they’re like, “Oh, we’d have sales if I could just find that right VP of sales,” and it totally doesn’t work. You have to sell yourself.

Courtland Allen: 34m 54s

What was the inflection point that helped you start growing faster? Was it just that you had a certain size and word of mouth growth really became meaningful, or was it that you hired someone and that flipped the switch? Or was growing faster what allows you to hire somebody?

Dave Sims: 35m 8s

There was no inflection point along the way. It was just steady growth throughout. And when I got the steady growth going, I and a couple of the folks who were with us in the beginning, and then we all got the growth going a little bit and we got a little bit bigger and a little bit bigger.

We got to the point where we were ready to hire some folks who could take over ownership of certain segments of the business and really run with that. I won’t say it was this one particular point. It’s just been a continuous path.

Courtland Allen: 35m 44s

Slow and steady.

Dave Sims: 35m 44s

Yes, totally. It’s been that way.

Courtland Allen: 35m 47s

But you are out in Boulder, Colorado. I’ve been meaning to get out there and visit at some point but I haven’t yet. What’s the tech scene like in Boulder?

Dave Sims: 35m 56s

It’s a really good tech scene in Boulder, and Denver’s nearby. All up and down the mountains, the Colorado Front Range, there’s lots of good tech folks doing all kinds of things. Certainly nothing like San Francisco, of course, the Bay area, absolutely not. But there’s a lot of folks who are just into tech here. It’s become a kind of tech hub all of its own.

Courtland Allen: 36m 19s

Are a lot of companies raising money? Are there a lot of self-funded companies like the ones that you started?

Dave Sims: 36m 23s

Well the funny thing is, I only hear about people raising money because the press picks it up. Who can blame reporters? Reporters need to write about something, and small companies don’t really want to reveal their revenue, and why should they? It doesn’t exactly help them to do it.

So when someone raises money, say, “Hey, I raised $10 million buck.” Well news outlets will pick it up, right? Because it is hard, factual news. So I don’t hear much about self-funded folks, but that doesn’t mean they’re not out there.

Courtland Allen: 36m 54s

You mentioned a couple of Jasons a couple of times in this episode, Jason Lemkin who runs SaaSter and Jason Fried who runs Basecamp. It gets me thinking about who you learn from as a founder.

When you’re in these early stages, there’s a lot of books out there. There’s a lot of stories of people getting started. As you get bigger, the number of companies who’ve reached the same size as you or bigger that you can look up to shrinks, especially in a particular space.

How many SasS companies in the mortgage industry can you look to for a playbook? So I’m curious, Dave. How do you learn, and how do you gut-check yourself and figure out, “Am I doing the right things,” when you’re running multimillion-dollar SaaS companies?

Dave Sims: 37m 32s

The way that I do it and the way I’ve always done it is I just read everything I can get my hands on. I listen to every podcast I can get my ears on like Indie Hackers and SaaSter. And I read the books that Jason Fried and DHH put out.

When you’re listening, when you’re reading a tweet or reading a blog post or a Quora post, there’s usually not any one thing in there that you say, “Oh my goodness, this is going to change my year.” But collectively, they all add up. And you do need to be a little bit wary of internet startup wisdom.

There’s a lot of internet startup wisdom that we all just assume to be the case. One of that is, you cannot start a tech company without raising money, and in fact I think part of the internet wisdom is, starting a tech company and raising money go hand in hand, like going out for a run and putting on shoes.

They go hand in hand, right? Let’s forget about the barefoot runners for a second. You wouldn’t normally think of going running without your shoes, hand in hand. I think it’s good for folks to realize that there are other ways. There’s lots of other ways, like Tyler Tringas, Earnest Capital, folks like that.

There’s going to be 10 other ways to make it possible, and not all markets are going to be these markets that can generate billion-dollar valuations. What’s wrong with running a $10 million a year company?

There’s really nothing wrong with that. Maybe you’re not going to be able to compete in some markets. In a lot of markets, in fact, you’re not going to be able to compete, but also in lots and lots of markets you can compete really well.

Courtland Allen: 39m 9s

How do you compete in the entry that you’re in, cause I know there are probably some well-funded competitors who’ve raised from venture capitalists, who are trying to swallow the entire market. How do you continue growing your business? Do you think about the competition at all?

Dave Sims: 39m 21s

Yeah. I think that some of our top competitors, they’ve all raised money, and so how do we compete? We go out and we listen to customers, and we move fast on what we hear. I still say speed wins. It’s what I’ve said for a long time. So you can take that analogy too far.

You can say oh, you’ve become reckless. Don’t take the analogy too far, but by having that tight feedback loop, staying agile, moving fast, it can beat a lot of the bigger companies. And some of our competitors, in my opinion, my humble opinion, they’ve over raised. They’ve raised too much money, and so they have to start looking in adjacent markets.

And that’s all well and good, but it’s a little bit harder. It’s a little bit harder when you’re looking at six different things that you need, six different business units within you company perhaps. That’s not to knock them at all. They all serve their customers well, as do we. But we also naturally become rather unique, because we’re only just serving folks who are doing mortgages, and we do it in a particular way.

We’ve all read about, your software would naturally and normally become differentiated in some way. You never want your software, much as you can help it, to be a total clone of another, cause then you’re just competing on price and nobody wants to compete on price.

Courtland Allen: 40m 43s

It’s interesting to think about the fact that because you haven’t raised money, you don’t have any pressure to go into these adjacent markets. You mentioned this earlier in the episode. You focus very much on your segment, and that allows you to basically serve them better than anybody else, because you can only focus on their needs.

You don’t have to give them these watered down solutions that kind of sort help two different types of customers, whereas a company who has raised from venture capitalists needs to be worth a billion dollars to justify the company even existing, and so now they’ve got to target all these other markets.

So I think a big part of the equation here is just being part of a market that’s not quite big enough for any one company to own it all and still get the returns that a VC would want is a huge advantage.

Dave Sims: 41m 25s

I definitely am not the type I want to knock competitors or anything like that, but you look at Google, for example. Google does a lot of things well, but everything they do, they don’t do well. Right? We really like doing one thing particularly well, and the market is still big enough for us to serve our customers well. We’re going towards $10 million in annual revenue, and our top competitors can also exist. It works out that way and that’s okay.

Courtland Allen: 41m 57s

Another thing you’ve mentioned a couple times is working with people that you give a lot of autonomy to and a lot of trust to. That seems inherently appealing to me. I’m not someone who loves being a manager. I’m not someone who loves building out a team and having to transition from working on the things that I like doing, and I’m sure lots of listeners are the same way.

They’re developers or they’re creatives. They really like working on the business. They don’t want to manage other people. So having a team of other people who are similarly minded, who can take responsibility for things, who you can trust to get a lot done when you’re not looking over their shoulder, sounds quite frankly pretty awesome.

The only catch is, how do you do that? It sounds like it’s much harder to hire someone like that than it is hire more of a normal type of employee. How do you build a business full of people who you can give so much autonomy and trust to?

Dave Sims: 42m 42s

It helps a lot of times when you’ve known someone before previously in your career, but that happens to me pretty rarely. I never discount anybody depending on their background, but I love seeing people who have had to be scrappy at smaller companies. If you’ve been working at IBM, just think of how easy it would be to become complacent.

I’ll go in every day. I know even if I totally screw up and I accidentally delete a database table out of production, the business is still going to pay me my salary, right? But in a startup, no, that could probably not happen. Bad things could happen.

And so I do look for people who have been scrappy and had to really scramble and had to own a lot of responsibility and be left alone to run with that responsibility and be very well organized, and could be left alone for weeks at a time, even though I do weekly one-on-ones with my direct reports.

But still you want to provide overall guidance, see how you can help. Let them know what some of the principles of the company are. Customers first, speed, simplicity. Don’t overcomplicate solutions. Don’t get so narrow focused with tunnel vision, so all I can think about is whether my code is running on the latest version of my development framework or not, different things like that.

Courtland Allen: 44m 10s

It’s tough when you’re the founder, because you’re wearing every different hat and you think about the overall business outcomes, but as an employee with a specific role, sometimes you need a reminder that it’s not all about your particular role. Sometimes you might have to make sacrifices for the greater good of everything going on at the company. It’s not the natural way to think if you’re not at the top.

Dave Sims: 44m 30s

I would agree with that. I do even talk about succession plans, for everyone, not just me, but everyone. Who are you starting to groom to take over your spot? You never know what’s going to happen.

I’m not married to being CEO. I just love being a part of these great organizations that bring such awesome benefits to customers. I personally don’t necessarily need to be at the top. I love being part of these organizations and that’s what I think about. So I do talk to my direct reports about succession plans from time to time.

Courtland Allen: 45m 7s

Well you may not be married to being CEO but you are married to your cofounder. You are a husband and wife duo running both Floify and Flux, is that right?

Dave Sims: 45m 17s

That’s right, we are.

Courtland Allen: 45m 20s

How do you make that work? I’ve met a lot of couples who have not made it work. It’s a little bit of selection bias going on. They don’t ever come onto the podcast. But you’re here. You guys are making it work. How do you keep your relationship healthy and how do you manage your personal lives when you basically work together all the time?

Dave Sims: 45m 36s

I don't know. I think it just works. We work at home a lot. We work in the office a lot. When we come to the office we’re usually riding together. We talk a lot about the businesses, what’s going on, high level, of course. For us, it works. It’s a lot of fun. I love working with her, Michele, and it just worked out for us. But I totally get it. Some couples, it may very much not work out okay.

Courtland Allen: 46m 3s

How did it start? Did one of you or the other suggest the other to get involved, or was your wife already entrepreneurial?

Dave Sims: 46m 10s

With Floify, for example in the beginning, just a lot of code needed to be written. So initially it was me and another developer. His name was Arul. He’s in Texas these days. Initially it was just Arul and me writing lots of code, and then I naturally handled support and sales and marketing.

But eventually, when things got a little bit of traction and momentum, my wife started coming in and she started working a lot on marketing. That seemed like a good role for her. Ironically, she’s an operating room nurse. She’s a nurse and that’s what she’s done most of her career, but she really adapted well into marketing.

She eventually took over management of our support team. She runs our finance. I’ve mostly fallen back to engineering and product. I think of us as co-CEOs, but I hold the title and she’s our CFO. It’s just worked out well for us.

Courtland Allen: 47m 7s

What would you say are some of the biggest challenges that you had running Floify in particular in the last six and a half years. It sounds like things have been pretty smooth-running. Your partnership with your wife is going well. Your hires seem to have gone well. You’ve been able to build more or less the right product and grow to millions of dollars in revenue. What have been some of the speed bumps?

Dave Sims: 47m 27s

There have been lots. It all looks like peaches and roses on the outside, so making sure that we’re moving at the right pace. Oftentimes I feel like we’re moving too slow, whether it may be, whether it be sales or customer success, growing our existing accounts or making sure our customer satisfaction scores coming out of our support team are high enough.

There’s lots and lots to worry about, and there’s lots and lots to initially back in the early, early days, I just doubled down if I thought we were too slow, and I often did. We would sit down and talk about it. We’d say how can we figure out how to move faster?

And that still happens today. It happens with more people and sometimes I still think that, hey, we move a little too slow. So you ask what are some of the greatest challenges? Some of them are of course sales. We always want to be increasing our sales.

We want to be selling so much in monthly recurring revenue but we also want to figure out how to be increasing that amount of new MRR that’s coming in every month. It’s great if you’re adding $1,000 in MRR every month, that’s great, but if 12 months later you’re only still adding $1,000 a month in new MRR, it’s a little tough.

You do want to be looking for ways to increase from $1,000 to $1,500 to $2,500 over time. It doesn’t happen month-to-month. That’s pretty tough to sustain. I’ve always said sales cures all, and I say that mostly because I’m the introverted software developer.

So if I see a problem, a challenge that could be solved in software or talking to customers and seeing what their real pain points are, to me that’s a much easier problem than getting out there and getting new customers to come in and see the awesome things you’ve built for them. To me, that’s a much harder problem. So just in a nutshell those are a few of the challenges that we faced along the way.

Courtland Allen: 49m 29s

Two of the things I think a lot of founder underestimate in growing their businesses are churn and monetization. Obviously, you want to keep your churn as low as possible, otherwise it’s hard to grow your revenue, but also monetization.

The more money you can charge, the more frequently you can charge, the easier it is to grow your revenue. How have you thought about those two problems with Floify? Have you had any challenges with either one of those?

Dave Sims: 49m 51s

Those are always tough, churn especially. We have both small customers, pay us $59, customer who pay us six figures and up. Those are two different segments, two different cohorts, if you will. We have different churn numbers with both those segments and you always want to be working on driving them down, driving them down.

Find out what’s a good churn number for you and your industry and take that as benchmark, and just work at chipping away at it, chipping away at it. Churn is always a concern, in parallel with getting sales numbers up.

Courtland Allen: 50m 30s

I’ve spoken to some founders who’ve had the good fortune of being in an industry and having the type of product where churn is just intrinsically low. I spoke to the guys at Honeybadger, for example. It’s a monitoring service you set up on your servers.

You install Honeybadger, you just forget about it. They have something like half a percent monthly churn where it’s miniscule. They can grow super slowly in acquiring new customers and they never lose anybody. They grow steadily over time.

With what I’m working on in Indie Hackers, it’s literally the polar opposite. I’m talking to founders. Founders quit all the time. Building an online forum, people churn out of an online forum all the time. It’s a huge problem. Where would you say the natural churn levels are for your industry?

Dave Sims: 51m 10s

I would probably say if you’re selling $50 a month subscriptions, you want to be trying to get under 2% churn a month. Half a percent is just amazing. Shoot really hard for getting under 2% if you’re selling something that’s less than $100.00 a month, I would say.

Courtland Allen: 51m 32s

What about monetization? You’ve talked about how you’ve got customers who pay you $55, $60 a month and you have customers who pay you six figures. Which customer segment did you go after first, and how did you decide to expand into the second segment?

Dave Sims: 51m 44s

I went after the smaller customers first. The sale cycle was much, much shorter. In the beginning, when I’m making sales calls, if I wasn’t talking to a loan officer who had her boots on the ground and she was actually doing loans, if I talked to someone higher up in the organization, that person would tell me, “I’ve already got software that does that. I don’t need your software.” And it’s true. They did have software that did it.

The problem was it was really poor. The early adopter loan officers knew that. They knew it was poor, and they knew that there were people out there on the interwebs, thinking about making this a better experience. So very much it was early adopters and the small folks.

It took time for the folks who weren’t in the trenches but they were higher up in the lending organizations to realize that our software could really benefit them and it did not hurt that a few years ago, Rocket Mortgage had a Super Bowl commercial that said, “If you tap the face of your phone, you’ll get a mortgage in 15 seconds.” That really helped us a lot, because lots and lots of mortgage company owners were like, “Uh oh. Things are changing now.”

And no, by the way, you can’t get a mortgage in 15 seconds. We’d all love that to be the case, but there are lots and lots of laws in place that require mortgage disclosures to be sent out three days in advance. It’s not easy to borrow $400,000.00. People want to make sure that you’re going to be able to repay that money. But the Rocket Mortgage commercial helped us a ton.

Courtland Allen: 53m 20s

Let’s talk about some of the broader learnings that you’ve had as a founder, Dave, because you’ve been doing this for a long time, as you said. You’ve had a couple businesses that have succeeded. You’ve had eight or so where things didn’t quite work out.

You’re also serving a lot of business owners. There’s people you’ve mentioned who started mortgage companies, and they’re making millions of dollars a year, not in an industry that I’m familiar with at all. So I guess my first question is, what have you learned from your customers and the businesses that they run?

Dave Sims: 53m 43s

I’ve learned it’s all about relationships, all of it. It’s all about relationships. It’s about how you can partner with and serve other folks in different areas of the entire mortgage spectrum, but in the end it really all does come down to relationships. Are you a good partner? Do I love working with you, or do you let me down? Do you deplete the trust battery, or are you always growing and filling up the trust battery?

How good and reliable of a partner are you? And it all comes down to those relationships. So the CEOs that I text with, they know if they hit me up for anything, they know that either I personally or someone on my team will address it, or we’re helping them by getting out ahead of the curve. We’re thinking about some of the problems that we anticipate they’re going to anticipate, and so they look at us, too, as a partner, because we care their business.

We want to help them recruit more high-performing loan officers to their organizations. And it goes both ways, too. They know that if I and our team are asking some questions, “Hey, can we hang out in your office for a couple days and just learn?” They are doing their part, too, as part of that relationship.

So I think it comes down to relationships. It would be different if we were like a Netflix. Netflix charges $13 a month. You can’t invest in relationships at $13. And kudos to Netflix. They’re massive and they made it work for them. But for me, it’s come down to relationships.

Courtland Allen: 55m 14s

What about the differences between starting a business back when you started Flux in 2000, and starting a business when you started Floify in 2013? I’m sure a lot has changed, and a lot has remained the same. What are some of the learnings you’ve gotten as a result of seeing the differences between these two businesses?

Dave Sims: 55m 28s

The biggest, most obvious, difference for me, when I started Flux way back in 2000, because back then the software was on-premise. There was downloading the software and installing it on your server or what have you. I missed the early wave of cloud. I certainly was not there for Salesforce when they launched in ’99 or ’98, whatever it was.

It took me a little while to come around to the cloud idea. I remember having an employee, and he said to me once, “I don’t want to rent my software, I want to own it.” Meaning, I want the CD or I want the download. And he was a software developer. I know that he would have changed his mind over the years as well, just like I do, too. I know that I missed some of those early cloud learnings, and I know I missed a lot of the early things.

One thing I like to joke about it is I’m old enough - I’m going to date myself a little bit here. Way back in 1984, I was post-graduation from high school, and I wasn’t even on the internet yet. But with all the old dialup modems and bulletin board systems, I was running one of them and other hobbyists could dial in and store their files on my computer, and they could dial in later and download them again.

So that’s how I like to talk about how I missed the whole Dropbox phenomenon. I could have hit it in 1984, but I remember thinking back then, I was thinking, “Who would want to store their files on someone else’s computer? I want it on my computer.” So I missed that, too. There’s just so much I’ve missed.

Courtland Allen: 57m 2s

Do you think having such a long career in the tech space and seeing these different trends that you missed makes you more attuned or better at spotting new trends as they appear, or is always different every time?

Dave Sims: 57m 14s

I think in my case it doesn’t necessarily help me, cause I still miss tons of trends. I think the one thing that’s maybe helped me is to realize that change happens. That’s not that exciting or profound.

But change happens, and what’s happening, you know, we all came of age using our electronic devices in high school or middle school or elementary school. Things change, and what you learned when you were 8, 10 years old is different at age 20. Just be open to the change.

Courtland Allen: 57m 49s

Just be open to the change.

Dave Sims: 57m 50s

Yeah.

Courtland Allen: 57m 51s

Well Dave, I’ve kept you for an hour. It’s been super cool hearing your story with Flux and with Floify and talking about how much relationships matter. I could not agree more. A lot of people listening in are just getting started in their careers as founders. They hope to someday build a business as successful as the two that you’ve built. What would your advice be for someone just getting started? What do you think they can learn from your story and your learnings?

Dave Sims: 58m 13s

I would probably say, be passionate about it. Be hard-charging about it. Move fast. As they say, move fast, break things. That’s all great stuff in the beginning. Also, know when to let go.

In 2000, I started three businesses. The first two, I realized along the way they weren’t going to work, and I knew when to let them go, even though at times it was hard because I’d put in so much work. So I would say know when to let go, but then try to spot when you should keep going forward and something might start clicking, and you’ll see the future. Stick with it.

Courtland Allen: 58m 50s

Dave Sims, thank you so much for coming on the podcast.

Dave Sims: 58m 53s

Thanks so much. It’s been a blast.

Courtland Allen: 58m 55s

Can you tell listeners where they can go to learn more about what you’re up to with Flux and Floify?

Dave Sims: 59m 0s

Floify.com, F-L-O-I-F-Y.com, and Flux is at Flux.ly.

Courtland Allen: 59m 8s

All right. Thank you so much, Dave. Listeners, if you enjoyed listening to this episode, I would really appreciate it if you’d get in touch with Dave and let him know. He’s on Twitter, @floifydave. Also, I am now writing about each episode. I share my thoughts and some of my take-aways and key learnings from each episode. So if you want to sign up for that newsletter, go to indiehackers.com/podcast and subscribe. Once again, it’s indiehackers.com/podcast. Thanks for listening, and I will see you next week.