The Bootstrapped Founder

Arvid: 00:00

Hey. It's Arvid, and this is the Bootstrap founder. Today, you'll get a raw glimpse at the state of a mind of a founder who is occasionally struggling a little bit. It's me. I'm that founder.

Arvid: 00:17

And the thing I'm struggling with at this point is the stability of my businesses, finances. That's what we're gonna be talking about today. Before we get to that, the episode is sponsored by paddle.com, my merchant of record payment provider of choice, who's been helping me get Podscan as profitable as possible from day one. So they've been there for this whole time. They're taking care of all the things related to money so that founders like me and you can focus on building the things that only we can build.

Arvid: 00:43

And Paddle handles the rest, sales tax, credit cards failing, all of that. I highly recommend it. So please check out paddle.com. They'll make it very easy to get money into the business once you convince people to actually pay you for it. I've been talking a lot about Podscan and the positive developments, the improvements, the good things, all of the stuff that has happened to the company and to me over the last year and a half since I started this journey.

Arvid: 01:08

But I think building in public is about sharing the ups and the downs, the wild joyride and rollercoaster that is entrepreneurship. So I think it's time to share the not so happy parts of the business as well. Recently, I announced that Podscan was profitable, and it was, but only for two months. The profitability that I had at that moment was very quickly eclipsed when one of my major customers churned out of a reason that I had no control over, had nothing to do with the product, it was all in there. And so that brought me back down under the profitability line.

Arvid: 01:43

And with expenses to where they are, I'm struggling to get back there. Right? It was a pretty sizable customer. So I feel it's a great opportunity to share what's going on in my own entrepreneurial mind right now, what the options are that I think I have at this moment, how I approach this, what challenges I'm facing, and how I and the people who support and advise me strategize and plan in situations like this. Every founder has this opportunity to deal with these kind of things at some point, so this might be a helpful little exercise in reflecting for yourself what you should be doing in a moment like this once it happens to you or what you would be doing if it were to happen to you.

Arvid: 02:25

It's a good exercise to go through. So let me be completely transparent about where Podscan stands today. Like I said, building in public. We are at around 10,000 or so dollars a month in expenses. You know, all the GPUs, all the servers, all the AI stuff.

Arvid: 02:41

It's a lot to take in 50,000 new podcast episodes every single day. We have somewhere around $6,000 in monthly recurring revenue stretched out over monthly and yearly customers. So we're 4,000 or so dollars short of breaking even each month at this point. Now, first off, just let me set the scene here for for my own intentionality. Potscan is a really interesting project, and it's something I would never stop or throw away just because things get hard.

Arvid: 03:11

Just to make sure. Right? Entrepreneurship is about building something that has never existed before and that always comes with the risk of it being anywhere between impossible and extremely hard to do. No new business ever was easy. So in this position that I'm in, not being profitable after being profitable for a bit, well, that certainly sucks.

Arvid: 03:30

Alright? But it's also framed in a reality where profitability was already there. So it's possible. It's not impossible to achieve. It just takes some more work.

Arvid: 03:39

But here's the thing that's been weighing on me. After a year and a half, profitability is still something that I'm chasing. It's not something I can reliably depend upon. And realistically, I also have to look at the fact that what I've been doing until now, that may not have been sufficient to get this business into a self sustaining state. It is quite clear that it hasn't.

Arvid: 03:59

So I need to make a significant change to get there. As usual, when I get into a position where I don't really know exactly what to do myself, I talk to people who have done it before. I share with them as much as I can privately to see where they would take it if they were in the same situation. And a lot of the feedback that I've gotten from my investor peers and my Bootstrap business owner pals and other peers has been to look at the business realistically. Just look at it almost from a neutral, non emotional point of view.

Arvid: 04:30

Look at the product market fit, see if it's in range, or if I'm just chasing something that's not possible with what the business currently looks like and what the team, and that's mostly me, is currently capable of and then make changes accordingly. I heard terms like founder market fit, founder product fit, founder whatever fit. It might just be a founder problem. Right? I'm not a big salesperson.

Arvid: 04:52

I'm good at doing, like, social stuff, social marketing, and I'm really good at product and at vision, but there might be things that I'm not good at and I need to compensate for that. So here's the big change that I recently made over the last couple weeks because I saw where this was going and I needed to make a change. I had to overcome my expectation that Podscan would be a product led growth kind of business. I always thought that the product itself plus my blog and social media presence would be enough for people to discover it, to use the product, to subscribe and get us to profitability that way. And in a way, we got halfway there.

Arvid: 05:26

Right? A significant part of the way there, but I'm not fully there. And even if I had $10,000 in revenue, it would still be a kind of net neutral kind of business and as much coming in as going out. Something needs to change. And that's something is my whole perspective on how this business is monetized and how it finds new customers.

Arvid: 05:45

I bit the bullet. If you recall a couple episodes ago, maybe like six or eight, I talked about needing to find people to help me with sales. So through that podcast episode, I found a wonderful person who's now helping me set up a sales pipeline and outreach systems, booking demos, having conversations with people in our ICP, our in our ideal customer profile, bringing success stories to the front and having actual sales conversations. That person has been helping me over the last couple weeks getting this started, and we're already seeing something. It's pretty nice.

Arvid: 06:18

It's nice to see somebody who knows what they're doing do the work. It's been very, very helpful. So these are things that I personally have never done before and have never done well before, I guess, and never needed to do them before. But now there's something that I'm focusing on because I have to make this thing profitable, and for that, I need to make a change in my own approach to how I run this business. I also changed my pricing structure quite significantly at the same time.

Arvid: 06:42

My most expensive plan now adequately reflects the actual cost of providing that service and then some. Before, my highest plan was $500 a month, which to me, coming from low touch, small customer SaaS, was quite a bit. It's a lot, I felt. But that's now the second highest tier. It used to be the advanced tier.

Arvid: 07:00

It's now the professional tier. Right? I have essential, premium, professional, advanced. I added one in the middle and push one at the end. The highest tier now is a $2,500 a month tier, pretty much access to any kind of data you need through the REST API, the Firehose push API, backlogs, like JSON exports, everything, all the data, 2.5 k a month.

Arvid: 07:21

And it's probably still underpriced in some ways because the data is extremely valuable, but it is a price point where if I find customers to pay this, they very quickly make up for a significant part of our financial gap. And I've seen people look at it, like, realistically and seriously. But the requirements of API access and the kinds of data some people need, plus the fact that we've identified that ideal target customer profile where budget is not as much of a concern, That also happened over the last couple of weeks. We found agencies that we're targeting that have themselves very high budget clients so they can kind of pass along this kind of budget there. This pricing can work and will work.

Arvid: 07:58

In fact, the $500 plan that used to be the biggest one has now seen quite an uptick in people purchasing it because there's an even bigger plan. I've already found people to purchase that smaller tier now right from the get go. Like, after conversation, they jump right onto this because their budget allows for it and the expansion budget is also there along the road. So in this approach with sales, I'm finding that direct outreach and building better relationships with people, individual agencies, individual customers, helping them onboard, like helping them with the example data they need to convince their own stakeholders and decision makers in the company to get a subscription going. That's a very targeted approach.

Arvid: 08:41

It's different from what I've been doing before. It's a high touch approach, and it's far from the product led growth approach I tried to have until now. But I think it's where I need to be. I have limited runway and if that runway cannot sustain this business as it is right now, things need to change. And this brings me to something that as a founder, I always need to think about.

Arvid: 09:02

What happens when or what happens if? And obviously, the ideal path would be setting up the sales outreach approach with a couple months and give it some time and then capture enough monthly recurring revenue to pay for expenses and slowly or quickly increase revenue enough to sustain the sales team and a couple technical people and take some time off my plate, build out more secure, more reliable, and more maintainable systems and infrastructure. That's the happy path. And in all my conversations with other founders, of course, we talked about this because that's where I wanna go, but one topic has often come up that I hadn't really thought about much until now, and it has been, well, what if it doesn't work? And founders are always very optimistic, very positive, and I count myself as one of these people, maybe overly optimistic and overly positive.

Arvid: 09:47

I think it works well when I interact with people, but when I look at systems like a business, you know, the reality is the reality. And as much as I wanted to manifest joy and happiness, that necessarily doesn't just happen in my mind. It has to happen in the product and in the business. So I think this positivity, it's just the nature of the beast for founders. We have to be optimistic about believing in our ideas and wanting the things we build to be things that last, things that work.

Arvid: 10:13

Investors, though, and people who look at this from a more neutral point of view, they have a different perspective. They look at it as a gamble, as a risk, a calculated risk, but a risk nonetheless. And while founders perfectly understand that there's always risk, I think we under contemplate that particular risk and overanalyze the happy path and what's needed to get there. Again, that's kind of how it has to be, but it shifts, it skews our perspective a little bit. So in my conversations with investors, something that often came up was, well, how would you feel if the business didn't work out at all?

Arvid: 10:48

How would you feel if no matter what you do, you cannot reach product market fit or founder market fit or whatever? And it's something that I'm trying to find my peace with just internally that Potscan, as great as an idea that it is and as useful as it is to my existing customers, might not be of sufficient size or scope than a way that I'm running it at least to be this hyper profitable business at the end. It is almost profitable and it was profitable. So it's always a somewhat profitable business. But is it going to be profitable enough to sustain, let's say, a team of 10 or 20 people eventually?

Arvid: 11:23

Is it going to be sustainable and maintainable enough for me to wanna work on it for many years? So that's something that I need to think about, and it makes me consider what options I have at this point besides, obviously, increasing revenue and keeping it going. There's always the option of just pulling the plug. Right? That's the thing that nobody wants to do.

Arvid: 11:43

No founder ever wants to kind of turn things off. And to me, that's the least interesting one. But I think there are other options here too. Can I hand this off to somebody else? Can I bring on somebody who takes over the business?

Arvid: 11:55

Is there somebody who wants to take that business that currently costs 10,000 a month in expenses plus labor and make 6,000 a month in revenue but has over 100 customers already and turn it into something bigger, something else? Is there a company in the field, in the industry that I'm either competing with or that I'm augmenting with my data that just wants to take this on as part of their own business in a strategic acquisition? Initially, when I started the business, I was saying, yeah, yeah, acquisition would be nice at some point, but I want to build something first. I want to get to that certain point first. But honestly, as a founder who's quite technical in nature, maybe I am at that point.

Arvid: 12:32

I'm at a point now where I wouldn't mind if somebody who has the experience and insights and how to take a business like this and just sell the hell out of it or cross sell it with their own existing product or integrate it or just take it on if they did exactly this. I think that's also a substantial change in my own perspective about how this business works. Just like when it was a change initially when I thought I was going to bootstrap this all the way, but then realized that with 50,000 new podcast episodes coming out every day in the world and me wanting to having them all, transcribing them all with the service, I would have a certain baseline of expenses no matter how many customers I have. Because the thing that increases cost is the reality of transcribing all these shows that may or may not be valuable to my customers. I think I already got those expenses down from like $30,000 that it was initially to just under 10 k right now.

Arvid: 13:28

It's extremely efficient, the system, compared to what could be spent on transcription and data analysis. I think if you were to use something like OpenAI to transcribe all these episodes and then analyze them, you would be spending roughly, what is it, $5,000 a day just in OpenAI cost and platform costs. Well, in my case, that is, I think, like 300 or $400 max just in in those expenses. So that's certainly an order of magnitude difference. And it's yeah.

Arvid: 13:59

Like like I said I said, I guess I'm going to get some funding for this at that point. And now I feel like, well, I guess it's fine if this is taken over by somebody who has the capacity to turn this into something bigger. I mean, things shift when you build something. What I was just saying, no plan survives contact with reality, no battle plan. I think that's kind of what this is as well.

Arvid: 14:19

And I would probably still be around in this. I would probably still wanna work on the product, but maybe I should start looking into alternative approaches to just solopreneur ing the whole thing until the end. And I'm gonna give myself a couple months here. There's still runway. Right?

Arvid: 14:33

I know that the sales pipeline we're setting up takes a while to heat up and produce results. And for profitability, we only really need to reach an additional 4 or 5 k a month in recurring revenue. So we already have more than that in total revenue. So we just need to find more people who are like the people that currently pay for this and who want to build something on top of the platform. So what I'm currently looking at is setting a deadline of a couple months for myself and the team, telling everybody involved what the situation is so they can feel what they need to do, the urgency of it, and then jumping on every single opportunity to make this happen.

Arvid: 15:05

Find high value clients that are similar to the ones we already have, reach out to them, show them what the product can do, be specific, be present, be relational, like build a relationship with people, and turn those relationships into customer relationships that can sustain the business. It's kind of like Tim Ferriss' fear setting exercise at this point that helped me understand that this is a gamble. This is an entrepreneurial adventure. It can end in many different ways, like wild success, fatal crash, anything in between. But it's in my power to decide how much of that I wanna do and which of these options I can set my aims at and what I can live with.

Arvid: 15:38

So I'm choosing to give it some time to still become the wild success that I think it can be. If I look at the people who cheer me on on Twitter, like, it has to be because everybody sees the potential here. And along the way, I'll make opportunities visible to myself and the team for how this business can continue in other ways as well just to be realistic and be transparent. So I think this is where I really need your feedback as a listener to this show because I think it's very hard for me as a solo founder to look at things from different perspectives. I just don't have an outside view.

Arvid: 16:10

It's hard to look at it from a perspective of gratitude when I'm deep in the trenches of fixing yet another bug or helping yet another customer with something that doesn't quite work for them for some reason. Kinda pulls my attention away from the big picture. And it's hard to look at it with complete neutral detachment too when it's something that you've built with so much effort and so much joy for over a year and a half. So this question goes out to you. What do you think of the situation that I'm in from how I describe it?

Arvid: 16:36

A business that was profitable, lost profitability, and is now hovering just a couple thousand dollars underneath breakeven. What should this business be? What does it deserve? Like, what could help Podscan and its mission to provide conversational data insights into all the podcasts everywhere? Where could this go?

Arvid: 16:53

I'm very interested in hearing your perspective, the perspective of someone who comes from a different point of view. So please let me know what you think after listening to this. Just send me a DM on Twitter, tweet at me if you want, or send me an email to arbitt@podscan.fm. I appreciate every single thought. Thank you so much for listening to The Witcher Founder today.

Arvid: 17:13

You can find me on Twitter at avikal, a r v I d k a h l. If you wanna support me on this show, please share podscan.fm with the people who you think will benefit from tracking mentions of brands, businesses, names, or podcasts out there. Podscan is a really capable near real time podcast database with 33,000,000 episodes, 3,800,000 podcasts that we constantly scan, and we have this really good API that you can build whole businesses on. So please share the word with those who need to stay on top of the podcast ecosystem. Really appreciate it.

Arvid: 17:44

Thank you so much for listening. Have a wonderful day, and bye bye.