As we’ve discussed before on the show, everyone at every level usually has a side hustle going on. It’s the process by which we leverage what we’re doing now to do the next, bigger, and more gratifying thing.
Sometimes the signals are clear that the side project is ready to become the main thing (or at least part of your ever-expanding main thing). Other times, it takes a serious gut check and a leap of faith in the direction you truly want to go.
Nathan Barry had created a remarkable business for himself at a young age. And now he’s becoming seriously well known thanks to the success of ConvertKit – an email service for professional bloggers.
You probably don’t know, however, that not long ago ConvertKit was a languishing side project to Nathan’s main business. Hear the advice, and the leap of faith, that brought the SaaS project to the forefront – with stunning results.
The Show Notes
When to Shift Your Side Hustle Into Your Main Thing
Nathan Barry: Hey, I'm Nathan Barry. I write books, teach design and marketing, and build software companies. And I'm definitely unemployable.
Voiceover: Welcome to Unemployable, the show for people who can get a job, they’re just not inclined to take one — and that’s putting it gently. In addition to this podcast, thousands of freelancers and entrepreneurs get actionable advice and other valuable resources from the weekly Unemployable email newsletter. Join us by registering for our Free Profit Pillars Course, or choose to sign up for the newsletter only at no charge. Simply head over to Unemployable.com, and take your business and lifestyle to the next level. That’s Unemployable.com.
Brian Clark: Hey, Everyone, welcome to Unemployable on the Rainmaker.FMpodcast network. If you want to check out other great shows, head over to rainmaker.fm for all sorts of interesting shows about marketing, sales, digital business, and much more. That's Rainmaker.fm. And by the way, I am your host of Unemployable, Brian Clark, CEO of Rainmaker Digital.
Today we're talking to Nathan Barry who's done a lot of interesting things online in his brief career. But he's probably most well-known right now as the founder of ConvertKit. It's an amazing email startup.
We are very fond of Nathan and his team, to the point where he has integration with the Rainmaker Platform. Rainmaker Platform along with people, or I should say big companies like AWeber, Mailchimp, Infusionsoft, and we've got this scrappy little startup who is also one of our integration partners. And you'll hear more about that story.
The interesting thing was that ConvertKit was a side project and became what it is, because Nathan made a bold decision, and we're going to get into that in detail. It's really a great story.
Before we do that, I have to make a request. I am really each week getting more and more passionate about Unemployable, the overall project, but especially the podcast. And that means I need to do well in iTunes. One of the key criteria for doing well in iTunes as far as exposure is ratings and reviews. So, I hate to ask favors, but I'm going to, because it's important to me and I want to continue to do more and more with Unemployable for you.
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All right, with that out of the way, let's say hello to Nathan.
Nathan, so glad that you could join us today. How are things in Idaho?
Nathan Barry: They're going well. It's actually nice and warm here which is amazing.
Brian Clark: I almost said Nashville, because that's where you and I met last summer, but of course, you don't live there. Everyone else in the world seems to live there. We had a good time at that conference. That was the StoryBrand thing, right?
Nathan Barry: Yeah, exactly. That was a good event. And then I enjoyed the couple hours that we spent in the hotel lobby just drinking wine and catching up. It was good.
What Was Your Journey?
Brian Clark: Yeah, that was very cool to get to know you. That's really, I guess, when we really took a look at ConvertKit, which we're going to talk about a little bit later. There are only a handful of email providers with other services obviously that are integrated with the Rainmaker Platform and you’re one of them, deservedly so. But we'll get to that.
First of all, I did get the benefit of talking with you that evening, and I was just fascinated. You've had such an interesting life for such a young person and I thought we should share that.
A big part of this show is for people to understand the journey that we all go on to get to that point where people think you're a rockstar. But we all paid our dues. Why don't you recount that story for us? Really kind of starting with emerging from your educational period, which was fascinating in itself.
Nathan Barry: Yeah, my background has always been in web and software design. I led the design team at a couple of different startups and left that to get into building iPhone apps. And then that transitioned into writing a book on how to design iPhone apps.
I really didn't know anything about building an audience and that kind of thing. I just kind of stumbled into blogging and stumbled into the idea that you could make a living from online and then became obsessed with that. So I wrote a few more books, released some courses and that went really, really well.
Then I gradually made the transition from teaching people how to design software to wanting to get back into software myself. I think this happens for a lot of people who are teaching the skills that they know really well is that you spend so much time teaching that you may not actually go back and do the skill.
I realized I'd spent two years teaching user experience and interface design. I was like, “I kind of miss just designing software and building companies.” And so that was combined with… right at the time, I was really frustrated with the email marketing tools out there.
I was using Mailchimp and I was amazed that email converted so well for selling products. But then I’d learn this best practice — tagging all your customers or sending drip email or content upgrades or any of these things that are now pretty common. I'd feel like I was fighting with Mailchimp just to get it done and to figure out how to do it. So I was held back from implementing these best practices.
That's when I thought, “Okay, this book and course sale business and this blog business is going well, but I want to get back into software and I have the perfect product to do it with, because I think I can do better. I think I can build a better email marketing product, targeted specifically to people like me who want to build a big audience and sell digital products to them.”
That was just over three years ago that I started that journey to build ConvertKit.
How Young Were You When You Started?
Brian Clark: Yeah, it's interesting, because…. Okay, let's go back a little bit, because I'm trying to remember this exactly, but did you not go to college at some incredibly early age?
Nathan Barry: Yeah, I did.
Brian Clark: This is interesting to me. Let's go back there and talk about that a little bit, because I was just blown away when you were telling me this story and how young you were when you really started your entrepreneurial journey.
Nathan Barry: Yeah. One of the biggest lessons that I learned is probably about – and this is something that Derek Sivers talks about in a blog post about There’s No Speed Limit. You can look up that post.
But my personal story with it was I was homeschooled and so I definitely had a lot more freedom and flexibility than other people. All of my friends in middle school, junior high type age were a few years older than me, like two to three, even maybe four years older than me. So they were all quite a bit ahead of me in school.
I think I was 13 or so when I realized that they were all getting close to graduating. As I was thinking about starting high school in not that long, they were all sophomores or juniors, and I realized I was going to get left behind. They were all going to go off to college in a couple of years and I was still going to be right smack in the middle of high school.
So I went to my mom and said, “Look, this high school thing, I know it's officially four years, but what if we could structure it as a checklist instead of an amount of time? Do I really have to put in all this time or do I just have to do the work?” And she said, “All right, let's make the list of everything that you have to accomplish in order to graduate high school, and then you can do it at your own pace.”
She gave me this list and I just ran with it. I didn't want to be left behind by all my friends. We would take these road trips from Idaho over to visit family in Washington. It was like, “Okay, an eight-hour drive to Seattle. I'm bored during the drive. When I do algebra, I'm also bored, so why don't I just combine the two?” And so I would get 20, maybe 25 lessons, almost a month's worth of algebra done in a single road trip to go visit relatives.
And I figured I had my siblings in the car with me and my mom was there to help if I got stuck. So I just went at my own pace. I ended up graduating high school, finishing that whole list when I was 15, and then I went straight on to college at Boise State University, so that I could be with my friends and not be left behind.
Brian Clark: That's an amazing story, because number one, people are going to be like, “Wow, that's the most ambitious guy on the planet.” Yet, as a father of a teenager, you're driven by your peers. I mean, it's a very interesting look at what motivates us when we're young.
Where Did You Find Motivation to Start Your Own Venture?
Brian Clark: Okay, now we're going to fast forward a little bit. Do you think you were motivated in any sense by your peers or others that you saw doing their own ventures? Or was that a different motivation?
Nathan Barry: I don't know that I had very many peers doing their own ventures, but I had learned web design in high school. Someone had just introduced me to, “Hey, you type this in Notepad and then hit save and refresh your browser, and the background’s now red.” I love that immediate feedback loop, so I'd picked up on that. And then I had the story of “Somebody paid me $75 to design a website” from there.
All through high school and then into college, I was getting more and more of these freelance gigs. So that was really my start into, “Hey, I can make money on my own.” And I actually dropped out of college two years after I started going.
One of my claims to fame is that I dropped out of college at 17 before most people have a chance to drop out of high school.
Brian Clark: That's great.
Nathan Barry: The reason that I dropped out is because I landed a $10,000 web design gig and I thought, “What am I doing? I like making money more than I like spending it on school. I've picked up the lessons that I needed.” And it’s not that college wasn’t valuable. College was insanely valuable for me, because I learned a ton of social skills. I learned how to work with groups, and I basically got what I needed to out of it, and then just moved on.
Brian Clark: Yeah, it's interesting. I've talked to a few other people who got started freelancing in college, and it was really a very pragmatic thing, which is, “All my friends are off at spring break spending money and killing brain cells and I'm here making money.” And then I think that once you get a taste of that, that you can make money on your own, then you're thinking, “Well, can I make money in other ways?” I mean, is that kind of how you felt as you evolved beyond freelance web design?
Nathan Barry: Yeah, absolutely. I was always enamored with everyone talking about building side projects. Anytime someone wrote a blog post about how their WordPress theme business made a certain amount of money…. I was just always fascinated by that world of being able to sell products.
Actually, I'd been following Brian Gardner and Revolution and StudioPress ever since the day he launched the very first theme, just because I loved that world, and I loved anybody who was selling products.
Brian Clark: Yeah, it's interesting, because that's a big transition step. You hear it all the time. They've got a client-based business, they may be okay with it or they may really be dissatisfied with it, but products are the next step.
I'm always telling people courses are a great way to get started. That's how this whole journey for me, since starting Copyblogger — I started with the course, because that's something I could create. Now, we got into software and I had to get a lot more creative about collaboration and whatnot.
The interesting thing to me is though you had the skills and you were actually teaching those skills to others as far as programming and development. And then of course, you're like, “Wait a minute,” and this is going full circle to what you already mentioned, “Why aren't I actually doing this?”
Nathan Barry: Right. That was something where I've always tried to acquire as many skills as possible. For the last eight years or so, or seven years, I've wanted to be a product person. So I looked at, “Okay, what are the skills necessary? You need to know design, you need to know development and neither of those matter if you can't sell and market.” I always saw that as kind of a three legged stool. Whenever I felt myself falling behind on one of those, then I'd spend time and focus on it.
Even though I've never been that great of a programmer, there was a season of time where I spent all my free time learning how to program Objective-C in iPhone applications, because to me that was at the moment the weakest leg of the stool. And so I'd just go back around in that circle.
How Did ConvertKit Go From Side Project to Full-Time Thing?
Brian Clark: Yeah. So you've got a successful business, you're married, you have children, everything is great. But then you start ConvertKit, because you see a problem. It's a tool set that you're using and understand how important email and marketing automation are to actually having a product-based business. But ConvertKit was a side project for a while, right?
Nathan Barry: Yeah, because I was making really good money, like you said, from courses. Courses are a fantastic business. And so, ConvertKit was a side project to that.
I hired a developer to work on it and then I did all the design and front end code. It spent a year and a half as a side project. And I kept thinking, “Okay, I'm going to build it up on the side. Then once it's big and successful, then that'll be the full time thing.” And that kind of worked.
Brian Clark: Yeah. Kind of hard to juggle between… I mean, I have an organization now of 65 or so people and we still find it hard as a tools and training type company. So I can imagine as a smaller shop, you're awful tired at the end of the day running the business in the first place.
Tell the story about when you made the decision to put ConvertKit front and center.
Nathan Barry: About six months after launching ConvertKit, we were at 2,500 a month in revenue. And this is recurring revenue. As I learned firsthand, it's way harder to get one time payments.
I was happy with that, but then we just stayed at that level for a full year after that. Then over 18 months, ConvertKit still just barely losing money each month. I'm making good money on my other businesses, and I'm at a conference and my friend, Hiten Shah — he's run a lot of software companies. If you’ve ever used Crazy Egg, Kissmetrics, those are his companies. He just pulled me aside and said, “Look, Nathan, it’s hard tell you, but you need to admit that ConvertKit’s a failure and shut it down.”
I’m like, “It's not a failure. We've got 50 customers and I like it. I use it every day.” And he goes, “It’s time to admit it’s a failure and shut it down.”
I was totally bummed out about that, because I really respect Hiten. But then he continued and said, “Or you can take it seriously, stop treating it as a side project. Give it the time, money and attention it deserves and turn it into something real, but stop what you're doing. You can't build this as just a little side project. You've tried, it's not working. So do one or the other, but end what you're doing now.”
I did what everybody does when they hear really good advice, and that's that I waited six months to act on it in any way.
Six months later, October, 2014, ConvertKit was declining in revenue, because churn is killer in subscription businesses. And I needed to do something with it. I truly needed to shut it down or double down on it. And that was a really hard decision. I couldn't decide.
I came up with a process and that was ask myself two questions. The first question was, “Do you still want this as much as you did the day you started?” So I was like, “Do I still want to run a software company as much as I did almost two years earlier when I started working at ConvertKit? Because if the answer is no, then just shut it down and move on. It doesn't matter. But if the answer is yes…” For me, the answer was a definite yes. I wanted it just as much, if not more.
The second question came out like, “Okay, why isn't this working?” The second question to ask is, “Have you given it your truly best effort? Have you given this project every possible chance to succeed? And if the answer to that is yes, then shut it down, because you've really tried to make it work and it's not.” But for me the answer was no, I hadn't given it a lot of money. I hadn't given it a lot of time and I hadn't given it my full attention.
When I realized the disconnect between those two things, I decided to double down on ConvertKit.
So I did a few things. One, I narrowed down the focus of the market. Instead of being email marketing for everybody, we were focusing first on email marketing for authors. That didn't work so well and we switched to email marketing for professional bloggers.
The second thing that I did was I invested $50,000, so that I could hire a real team rather than just whoever I could outsource to for cheap.
Then the third thing was I made a list of all the programmers that I had the privilege of working with over the past five years in software development and ordered them by who I most wanted to work with. Then I went down the list and basically said, “Hey, will you join the company as my director of development?” I got “nos” from the top, I think, five people on the list, and they were very nice about it.
But then a few weeks later, the number one person on my list came back and said, “Look, things have changed with where I'm at currently and I'd love to talk about that.” His name is David. He's my absolute favorite developer of all time to work with, and he's been running our development for the last little over a year now.
So those are the three big changes that we made to focus on it and we've just seen consistent, solid growth ever since then.
Brian Clark: That's such an analytical process and I think that's to be commended. But it's also a huge emotional decision, because everyone struggles with this to some degree. I know I have several times over the years.
It's really a matter of pragmatism. You have a business and it's doing well and you've got responsibilities to people obviously, and you have this other thing that you'd rather be doing. And yet you tell yourself, “Well, maybe I should stick with what's already working or maybe I shouldn't take this risk.”
I keep telling people over and over that “should” can be the worst word in your vocabulary. I mean, yes, we have obligations, but this is not a dress rehearsal. We're here to build the kind of business that we really want. And it sounds like you made the correct decision for sure, and we'll talk about that in a second.
But at the time, you really to a certain degree had some confidence that you could pull it off if you did give it the full attention that it deserved, right?
Nathan Barry: I did. But I also had a track record of two years of it not working. It wasn't like we had signs of growth and I was like, “Okay, we need to pour fuel on this fire and make it go crazy.” I truly had a lot of doubt if we could do it at all, because I'm like, “If it was possible, why haven't I been able to do it in the last 18, 20 months.”
I have to give a huge amount of credit to my wife, because when I talked through this with her, I basically said, “Look, we have this company that's not doing well. I think we can make it work. But we need to dedicate everything to it and I can't keep running these two businesses. So I need to basically shut down or put on autopilot the businesses making us money and focus on the one that's losing us money every month.” And she just said, “Well, what's the worst that could happen?”
And so she maps out the scenario; “ConvertKit fails, we lose the house that we just bought six months earlier and spent $100,000 remodeling. And then we move back in with my parents.” She was just like, “That's the worst case scenario and that's fine.” I was like, “Whoa, whoa! Okay, no. Worst case scenario is I take a consulting project. It's not ever going to get that bad.”
It just gave me a lot of encouragement to have her supporting that much where it's like, “Okay, if you think that's the worst case scenario and you're okay with it,” that's a huge amount of support. So that gave me a ton of confidence knowing that even if we failed with ConvertKit, it was okay. And that just told me that we needed to take the leap and put all of our savings into this company and see what we could do.
Brian Clark: It's amazing how close that is to a conversation I had with my wife in 2005 when, after a life threatening incident and just hating the business I was in for a lot of reasons, I just walked away. She's always been amazing with that kind of “What's the worst that could happen?” thing. And then of course, I started Copyblogger the next January and she's very happy, trust me.
But it takes an amazing person I think to stand by you like that. Even if they don't understand necessarily what you're doing or going to do, they have that faith. It's an incredible asset to have.
What’s Happened to ConvertKit Since Then?
Brian Clark: So, okay, again, your wife is very happy, because… what happened with ConvertKit since then?
Nathan Barry: Yeah. We started doing direct outreach to customers. Instead of waiting for them to come to us, I would reach out to all these bloggers and say, “Hey, I know you're frustrated with Mailchimp, whatever you're using.” And we’d do these direct sales and we'd do all this work to migrate them over to ConvertKit for free. It was a whole process.
Then we gradually got from that 1,500 a month in revenue to the next month was 2,000, then 2,500, then 3,000. By June of 2015, we were at 10,000 a month in revenue. And that's when things started to tip a little bit. In July, we landed a couple of the biggest sites on the web, one of the biggest health and wellness blogs. And then also Pat Flynn from smartpassiveincome.com signed up.
July was a great month for revenue for us. I think, let's see, we started October with $25,000 a month in recurring revenue. And then those two blogs — Pat Flynn and the other blog from back in July — started promoting us. Then we grew by 50% in October, and then another 50% in November. We hit the magic million dollar a year run rate of 83,000 a month a little before Christmas.
And then now we're two and a half months after Christmas, and we're just about to be at double that. We’re at about $155,000 a month in revenue, growing at 20% month over month and a team of 13 people. It's been absolutely amazing and I couldn't have predicted this level of success.
Brian Clark: That is truly amazing. You deserve it. It's a great service, so that's no mystery. But still I always love to hear when someone rejects the pragmatic path a little bit and takes a little bit of a gamble, because that’s really after giving it the proper consideration.
I think it's telling that you said you waited six months before you even acted on that advice. That sounds completely actually reasonable to me. When I laughed earlier, I was like, “That sounds like me,” because you really have to let it marinate, even though the advice is solid. I think you could recognize it was, and yet I think your subconscious was working on, “What am I going to do here?” Even before you did that very logical analysis.
Nathan Barry: Yeah, and it's something where I almost didn't want to accept the advice was true, because the advice was basically saying, “Hey, this thing that you've put a year and a half into, it's not working.” Then when I realized that I truly didn't want to accept that as true, then it came to a point where it's like, “Okay, well, prove them wrong. Make it so that ConvertKit being a failure is no longer true.” Once I realized that I had that drive, then the decision was clear.
Brian Clark: Yeah, absolutely. So you're killing it right now, which is awesome. What's next that you can share with us without obviously revealing anything you don't want to tell the entire world? But where do you head from here?
Nathan Barry: I used to run a lot in the bootstrap software circles where people, on a smaller scale, might sell up to the $50,000 a month level, and that was fantastic and that is an amazing success. But we've just found that with ConvertKit we can build something far, far bigger.
So we're basically going to continue serving bloggers and content creators as best as possible and build a company the size of Mailchimp or Campaign Monitor or Basecamp or any of these now really massive self-funded companies. I don't see a reason that we can't get to those levels.
Brian Clark: Yeah, how many people are working with you now?
Nathan Barry: We have 13 people now.
Brian Clark: Lots of growth. This is amazing.
Well, thank you first of all for your time. You're a great guy. I knew that the minute I got to meet you. And even since that conversation last summer, all the best stuff actually happened after that with your success. Again, we're very happy to have ConvertKit integrated with Rainmaker. So let's hopefully keep talking on many levels going forward.
Nathan Barry: That sounds good. Thanks for having me.
Brian Clark: Oh, no problem at all.
All right, Everyone, take this to heart if you've got the side hustle going on, if you are choosing between which direction to go with a line of business or a foray into products, whatever the case may be. I think you’ve got to let it marinate in the back of your head a little bit like Nathan did. Just sit down and figure out what do you want to do and how am I going to get it done, and then decide if you can go forward or not.
That’s really the key to everything. There's no magic. We all face these hard decisions. But very often when you follow the thing you really want to do, instead of the thing you should do, you end up with some wonderful results.
All right, we will back in the next episode with more great stuff. Until then, keep going.