034 – Noah Kagan And James Schramko Discuss Appsumo.com Over Breakfast

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Transcript of discussion between James Schramko & Noah Kagan from Appsumo

James here, in this podcast I’m talking to Noah Kagan who runs AppSumo, and he’s an interesting guy because he worked for Intel, Facebook and Microsoft. So tune in as I catch him having breakfast.

Noah: Oi

James: It’s morning there eh.

Noah: Ah, yeah… I was like, my phone was like oh you have uh… like 9 o’clock, shit I was still eating breakfast. So how’s everything over there?

James: Ah, mate, things are going very well. We had like a 50% increase. Just in the last two (2) months, from January to now. So it’s been a good year.

Noah: Uh, 50% increase in what?

James: Sales revenue.

Noah: Oh, for your business?

James: Yeah

Noah: That’s awesome.

James: Yeah it is.

Noah: What are you uh – yeah it’s like I love it when it works out that way. What do you attribute it to?

James: I’m paying a lot more attention to the numbers… you know how you’ve got your number?

Noah: Yeah…

James: I’m putting a lot more attention on projections and digging into the data. Coz I’ve had a very low pressure system that’s not forced. So when I start tuning things I get very fast wins, and I have an amazing team.

Noah: That’s it, once you start focusing… I’m actually giving a speech tonight about focus and it’s like, even our own team, we had some issues with refocusing, it’s like, Wow we are getting the results we want. That’s kind of cool. So that’s great man.

James: What do you think your focus topic’s going to be focused around? Like, are you going to tell a story?

Focusing on the right thing
Noah: Yeah I’m going to be telling a lot of different stories that have happened, in terms of focusing. So like, one of the bigger ones that are more recent for us is, I think everyone needs to start with an objective, and a specific number around that objective. You know, ours was always email and a lot of my speeches you always hear me, “oh email this, email that” and for five (5) months though, the past five (5) months we focused on email and we kept hitting our goal.

The sad part though is that the business stayed the same. Which is very depressing coz you’re like oh I’m like focused, I’m hitting my metrics. And what we realized though is that that objective and that metric wasn’t the right thing to focus on.

Because it wasn’t growing our business, so we actually refocused on number of paying customers per day. And that actually now, we just started really digging deep and focusing on that, and now we’re seeing results.

James: Right. So, I was going to ask that, how do you know if your number is the right number because I think a lot of people focus on the wrong thing. Something else that I’ve noticed is a lot of the start-up type companies focus on growth, but I’m wondering if growth for the sake of growth is a good idea unless you’re Amazon, and you want to wait seven (7) years or so. And you’ve worked for that sort of company that was growth focused.

Noah: That’s a really good question. So I think there’re two types of people but I’m just generally more traditional. So I don’t think it makes sense to focus on growth or any of that till you know you have a business. And so depending on where you are.

I mean you’re much further ahead than a lot of people. So your focus is, how do I scale what I do? How do I grow it?

The people in the beginning I would say, like the Silicone Valley, I hate most of those people because they’re like; oh we’re going to monetize it later. I think that’s okay for them, but for me, I’m like, does this make a good business, if it’s a real business does it make money? So my first focus will be value that would make money. Number two (2) will be, maybe then I would think about what’s my number towards growth? So validation will probably be how much money I could make.

James: I want to challenge you on something that you mentioned. You said you’re kind of traditional. And on the surface though, you look like wacky, quirky, you’ve got funny pictures, crazy angles, I mean you’ve got a fat suit logo, so how do you carry that? Is it structured or do you just wing it?

Noah: It’s interesting, have you talked to people about AppSumo? There’s a lot of people… they don’t say, they’re like yeah, they say, I love AppSumo, and some people are like oh I love your branding, your copywriting. Honestly it’s just a by-product of what we’ve been doing. It’s not like an intentional, like we’re trying to have a brand, we haven’t really thought about that. It’s just kind of we act like ourselves, and we treat our customers right. And it works out where people think of us as we’re a pretty cool company.

James: So you must have a pretty loose structure for the team members able to take risks and extend themselves beyond the normal bureaucratic style company.

Noah: Are you recording this? This is good stuff.

James: Yeah I started recording and I just thought we’ll just roll with it since you’re eating breakfast. It’s pretty formal.

The 3 stages of a business
Noah: Yeah I’m eating my breakfast right now. As we talk. It’s interesting so I’m, there’s literally a David’s Skok from forentrepreneurs.com, I love him. I kind of basically marked what he said, but I basically think there’re three stages of a business. And this is answering your question about bureaucracy in the company.

And in the beginning of the business you just try to validate it. You’re very hands-on you’re very day-to-day. You’re very micro.

And then stage two (2) is like, now, how do I market this thing that I have validated? I have proved that some people like it. Now how do I get the word out?

And then stage three (3) you’re like, alright, now I know how to get the word out. Now I’m going to go do it. And you take it to the moon, as fast as you can.

And I think I’ve evolved in stage one (1) where I did everything. Like I literally did programming, sales, support, blahblahblah, janitor… poop cleaning.

Stage two (2) was like, alright now I’m starting to hire people. And the people weren’t the best people but it’s starting to get the idea that alright now I’m moving away from the business. And I’m going to start letting them make their own decisions.

Coz before in my other businesses before AppSumo, I’m much more of a tyrant. I was like, I’m going to do it my way because it’s always the right way, and just do exactly what I want. And then stage three (3) now where I think we’re at the beginning of is, we fire all the people from stage one (1) and two (2), stage three is you hire people that are not employee, they’re actually teamy.

Getting the right people
You know one of things I like looking at is, every week I come back, like let’s say I go away for a week. Let’s say I go to Australia. I go to Australia, and we party for a week. We go scuba diving, fun stuff.

And then I come back. And then I look at the business and I say, is the business the same as when I left it or is it better? And so that’s the combination of it. That’s what I’m trying to do now.

We hire the right people; empower them to make their own decisions and really let them know the company goal and what that is at a high level. Let them make their own stuff. I think some of this team are working at Microsoft.

Here’s the football field. Here’s you with the football, here’s the end zone, I’m kind of giving you the outline. I don’t care how you score. I don’t care if it’s a touch down or a football pass, whatever. You score, you figure it out.

And you hire people that are good so they can figure it out. I’m actually trying to get better of even getting further away from the business. Mostly you kind of get to thinking about, what’s the highest level stuff that you can be doing, and definitely less micromanaging and micro checking in on people.

From remote to working on location
James: Do you go into the building everyday?

Noah: I do, unfortunately.

James: But don’t you control that?

Noah: What do you mean?

James: Well I mean it’s up to you isn’t it?

Noah: I think what’s interesting is the evolution of that. Where I’ve always run businesses remotely, and I hire people remotely.

Finally with AppSumo we did some team outing, we did two of them in Austin. Whereas everyone will come fly in, we’ll pay for it, we got a big house, we drank, we went on a boat, and one of the guys wore Speedos which was awkward. But I noticed when we were all together the output was higher, and the morale was better. And so I’m like, I wanted to take them seriously; I want to see how far we can take AppSumo and said, alright by October we’re all going to be in the same location.

And so we worked remote and then we went to the same location. And when we’re on the same location I said alright I just want everyone to come Mondays and Thursdays. You know sometimes I don’t want to be in an office. Right, sometimes it’s nice outside, I want to work at a café, or I don’t want to work at all.

You know I told the team, come Mondays and Thursdays, I’m very results driven, you get your stuffs accomplished, maybe even try to do more than that, I don’t care what you do. But as it turns out, the best people, they want to be around the others. And I actually want that as well. I enjoy being with the team, I enjoy, we’re working on our mission, I enjoy like being in the office.

So, I’m actually in the office five days a week. Some days like Monday I was getting a little restless. I was like holy f@*& how do people search computers for this long. But for the most part it’s fun to be, like they’re like your greatest calling.

And you could be in the room with other people that are excited to work on. You see that they’re really happy there. It’s just a great feeling to do all day. So yeah I go to the office five days a week. But I only ask them to go twice a week.

James: I mean it’s funny hearing that because I imagined that coming from your corporate background, and you’ve worked in places like Facebook that, that would’ve been the default setting I was surprised to hear that you were virtual. Coz I run a virtual team, and the same as you, when I go and meet them and hang out for a week it is incredible what you can do face to face, but it’s not logistically ideal for us. So, that’s real interesting.

Noah: Well take some more seriously man, so like I worked at Intel, I hope I didn’t cut you off, I’ll ride shotgun, you can drive. Is that word used in Australia?

James: Yeah, well we got a lot of American TV so it’s fine, we know what you’re talking about.

Noah: Dude I watched the, High School High; you know that show from Australia? You know that guy was awesome. Anyway, so the big thing… oh ah I lost my trail of thought.

James: You were talking about getting together with the team. Taking it seriously and what you learned at Intel.

Noah: You know man, f*^$ Intel was like going to hell. Think about everyday you’re just like, you know I think there’s a really easy test to know if you like your job. How do you feel driving to work in the morning? You can do that one, or you can do Sunday, on Sunday how do you feel?

Every Sunday when I worked at Intel, I was like, f*^$ its Monday tomorrow. And then AppSumo, I’m like, hey cool Monday! I’ll see everybody. Like I’m excited to be there.

One thing we found out about putting everyone in the same room, in the same area is we take it more seriously. And we’re playing for real like yeah I think we could do well, you can do your own business but I would challenge anyone who want to make something significant like true, one company that has done it remotely. And even thirty seven singles that have thirty five people in a room in Chicago so I don’t buy that.

And is there even one company that’s big from being remote? I don’t think so. Hopefully I’d be proven wrong.

James: Well that depends on what you call big.

Noah: That’s a fair point. I mean like, any company making over 25 million dollars a year.

James: Yup, well there you go. That’s a good metric so that listeners could pop a note when they think of one. That’s good. I’m certainly not at that level yet. I’m aiming for half that, that’s my next objective.

How big is the company?
How big is AppSumo? Just out of interest. Is that something that’s public knowledge?

Noah: We don’t really talk about the revenue, and I’ve thought about this a lot. I think one of the reasons I don’t is coz I don’t want people thinking that’s only what we’re about. Which is just the money.

It’s like oh what’s your money number? It’s kind of a penis size question but, I think for me it’s more of like how many people are in your mailing list, how many people are affected. For the million now, I mean if you’re curious, it’s not really public but I’ll share it. Our metric and what I care about, I don’t care about anything else besides how many people are there that are paying us. I’m not going to share that number but that’s actually the metric that we have found that affected a lot of pieces in the business.

James: That will be your cohort metric right? From all your lean start up stuff.

Do one thing well
Noah: Yeah I mean, the one thing I talked about when I met you and generally it’s much easier to focus just on one thing. And do it really well. Coz you can tell the problem is people are having multiple things they’re trying to accomplish and then they get it done really shitty.