Hey, what's going on everybody? This is Russell Brunson. Welcome back to the Marketing Secrets podcast. I've got a really cool episode today. So, all of you as know I have a mastermind program called My Inner Circle. It's funny everyone now is knocked off that name for the most part. And, the day back when I had a dank Kennedy had one called Insider Circle and I was like, I don't want to copy my own, so I changed mine to Inner Circle.
And now it seems like everybody's gone to Inner Circle. But I was new original OG, I think. Maybe not. I'm not a guy who's got something else. I'm pretty sure I took Insider Circle from Dan and termining to Inner Circle. So, I'm still like great for it. Regardless, Inner Circle will be launched over a decade ago and I ran it. I have 70 years where I was the core facilitator and trainer.
And, you know, you saw the success stories that came from that program over the years, like all the who's who of the marketing world nowadays. Basically, I'll come through the Inner Circle one time or the other, which is really cool. I'm now going to go two or three or hiatus. Because I was tired and I wanted a little break and then a couple years ago I re-broad Inner Circle back.
And what's interesting is, for the first two years we brought it back, I ran it differently than I did before. I had other people help facilitating and we just did the meetings different. It was really good. But for some reason, this time I wanted to go back to the roots and go back to me facilitating the meetings. And so for the last three weeks I've been facilitating Inner Circle meetings in the opposite clickfunnels HQ and it's been so much fun, so cool.
Some of the coolest experiences, everyone's like, you know, Inner Circle was great before, but this has been insane. I had no idea this is what it used to be like. I was like, ah, yeah. So it's been fun to get snow everybody really close and hang out, have dinner with everybody. And, you know, it's been pretty special.
So, anyway, I digress. The reason why I thought of Inner Circle is because last week I had one of my friends come in as a guest speaker. He owns a company called KIT. He used to be called Convert KIT. Same as Nathan Barry, great marketer, great business owner. Some people would look at this as maybe competitors, but regardless, I still want him to come speak to our people because I respect him and how he's built his business so much.
It's interesting. He comes from a different background, different world than me. We look at business differently. And so it's just fascinating to see how he's grown his company from, you know, a couple thousand dollars a month to the empires today for some. I did it and I don't think either of us to write or I think they're both things we can learn from each other. I learned so much from him in this interview.
I'm not interviews talking to you, but I was insane. It was so good. So I want to share with you guys just so that you can hear the story behind KIT and Nathan Barry's story and just get some ideas about how he's grown his business so really fascinating. So, I was taking more notes than anyone. I was geeking out. A lot of cool stuff. I'm implementing from this, but I thought you guys would enjoy it. So, with that said, here's a really cool presentation from Nathan Barry, the founder of KIT.
In the last decade, I went from being a startup entrepreneur to selling over a billion dollars in my own products and services online. This show is going to show you how to start, grow and scale a business online. My name is Russell Brunson and welcome to the marketing secrets podcast. All right. To kick off today, I'm excited. We have a special guest coming in and I'm not telling anybody who you are. I told me to special guest and got him all fired up.
This is someone who I, so I don't even know this man, probably 15, 16, 17 years ago. I saw his work online and I tried to hire him as like a designer developer like he was insanely good. I don't know if I tell you I tried to message him because he was on dribble, I think and he was in Boise and it was insanely good. I can message him. He didn't respond back to me.
Then I started following him and then I saw he launched like an info product and he made like a whole bunch of money and was like, dang it. Now he's like, unhierable because he's making too much money. Then over the years, I was watching him do stuff and then eventually launched this little software company called ConvertKit.
He has never heard of ConvertKit. So he launched this company and it was kind of doing well and then also like overnight it felt like it just blew up and exploded and became this huge business, huge brand. And then recently they probably tell more of the story but recently changed the name from ConvertKit to kit.com with a K. And anyways, it's been really fun watching him from afar and it's interesting because I think he lives in a similar but different world than me.
I'm more of a, I don't even know. Whenever world the funnel hacker are people are he's more like on like a lot of content people like hanging out with Tim Ferris and those kind of guys and so we're similar worlds but different worlds the same time and we look at business very differently. I think a lot of times and I'm always impressed by what he does what he says I've quoted him in a lot of my books and a lot of times I speak and stuff.
And so I'm excited to have him here. He happens to be a local Boise I as well because Boise is the greatest town in the world. If any of you guys go to Boise.com slash Russell Brunson you get your real estate there when you buy your houses here which would be amazing. So anyway that said we're excited for next hour so he's come up tell some stories talk about some stuff and then open up Q&A you guys ask some questions about whatever you want. So that says Per Hans together for Nathan Barry.
Russell I did not know that you tried to hire me but I've had that experience multiple times where you're like oh this person's great. Oh they're kind of discovering the content creator the audience world. Oh man they're even better to hire because now they understand what I'd hire them to do and then oh shit they're making money now.
They're making way too much money and then you realize like okay this isn't going to be an option. So I thought I'd do a couple things today first to give a bunch of context just on my story building convert kit or talk about some of the rebrand to kit which just went live.
I think 10 days ago and yeah I kind of play in this world between content creator you know building my own audience and earning the living that way and then also I get to see you know behind the scenes very similar to what rest like it's the of like hey what actually works at scale from across so many businesses.
I think some quick stats for convert kit we do about 45 million a year revenue 58,000 paying customers like 500,000 free users and our focus is really on content creators it ranges from.
People like James clear Tim Ferris Gretchen Rubin a lot of authors like that podcasters like Andrew Huberman and then you all the way through we did a big push into music so we've got like Tim McGraw Mandy Moore Leanne bridges a bunch of people in that space and then we've been having some fun lately in the like full celebrity space weirdly celebrities are getting really getting into contact creation and newsletters. Which is fun so over the next month we're launching newsletters for.
Mathematon hey Morgan Freeman Ellen generous and then weirdly the one that I'm most excited for is Lil Jon is launching a newsletter about meditation which is going to be fantastic so if you're ever wondering whether or not what you're doing a building audience you know and email and funnels and all of this is cool.
Cool to the general public like even all of the celebrities are like I want that so I think Morgan Freeman will be on Jimmy Kimmel and next week to talk about his newsletter that is starting so it's a lot of fun to see it come together.
My story I grew up in Boise I can attest that Boise is in fact the best place to live I have been told by many people here to stop saying that because there was a point where we're trying to convince people of that fact and then now everyone seems convinced of it we have to tell people that like it's actually not you shouldn't be here.
Though I had I don't know if you get this I have like ten people text me the Wall Street Journal article from this week like Wall Street Journal is like boy sees the greatest place ever and so I agree but grew up here went to Boise state super briefly I lasted there all of two years before dropping out I was always in a hurry to grow up and to learn how to make money.
And so in that process I graduated high school when I was 15 I dropped out of college at 17 when I got my first $10,000 web design project and I was like all right I think I'm I'm here to learn how to make money I think web design is going to work for me and and you know no point in continuing this you know business and marketing degree.
And then I really did web design for the last number of years I worked for a company down an eagle where I love the design team and then we had some fun projects we had to work on an app for the iPad like the day the iPad was released and so that was fun to like there's no Apple store here so we flew to Portland at like five in the morning.
But you know 30 iPads like tested our software to see if it works and and then like should be those iPads the clients and flu home and so that got me into the world of designing for iOS.
So I fell in love with that did a bunch of projects over there the next couple of years and then ended up leaving that job writing a book about how to design iPhone applications and my idea was that if I wrote the book on designing iOS apps then I would be I would get so many more clients right that would make people say like you want to hire a random designer the guy who wrote the book on it.
And so that was the goal I wanted to make $10,000 in sales from the first like in the lifetime of the book I thought you know this is a charity project or purely an authority project I do want to make money from it. And so I launched it to an email list of 798 people on Mailchimp and ended up making $12,000 in the first 24 hours and then never took on another design design client and decided all right this like audience selling the job products thing is what I'm going to do for a long time.
One thing that's been key for me is consistent execution so I had started a bunch of projects of like I tried to write a book multiple times and not succeeded. And there's a creator that I followed named Chris Gillibot and he talked about your Chris Gillibot fans I learned so much that man.
He was one of the first people in the blogger content creator space who was talking about the money that he was making in probably 2008 to the nine you know he was just like I made 50 grand a year as a blogger and I can travel full time. Oh look now it's 100 grand a year and so it was fun to come across the stuff.
But he had this line that he said he was like it's really easy to write a book every year and all of a sudden I'm like okay first of all I disagree with that statement but the sentence keeps going. And he goes it's really easy to write traditional published book every year. I have a 100 blog posts 50 guest posts a self published book and a few other projects it's easy to do that in a year and I'm like bullshit I've had the hardest time like even making progress on a single book.
But he said I'm just seeing the point in the chat. Yes thank you for dropping the Chris Gillibot link it's good to have the point of helping us out. But he said it's really easy if you write a thousand words a day and on one hand I was like okay a thousand words a day is a lot. On the other hand it's two pages two and a half pages maybe and Tim Ferris has talked about this as well of like that consistent execution over time.
And so what I ended up doing was I actually didn't sit down and start writing a thousand words a day immediately the first thing I did is I built and designed an iPhone app to help me track the streak of writing a thousand words a day and then I started it. But I like wrote I got it for 12 days in a row and I broke that chain but then I built it up to 20 days in a row and broke it and then by the time I published the book I had 80 days in a row of writing a thousand words a day.
Every day that I didn't the my phone pop up and say hey are you going to are you going to write. And so the day after I published the book my phone popped up and said are you going to write a thousand words a day and I was like no I published the book. Like it did better than I expected like that was a success that streak is over. But then I was thinking like why don't I break the chain and so I thought okay let me write a blog post about how the launch went and the lessons that I learned.
And so I wrote that and published it and then the shocking thing is that the next day the iPhone app popped up and said are you going to write a thousand words a day like it had done for the previous you know 80 days. And I didn't have I was like well I don't know what to write about and so I said I wrote another book and I just started the process and 90 days later I published a book called Does Any Web Applications which made $25,000 in the first 24 hours.
The email us had grown to a few thousand people by that point and then I just kept it rolling and so that creative habit of writing a thousand words a day. I built my entire audience I wrote so I kept that street going for 600 days in a row. I finally got shingles and that like I got sick enough from that that I broke the chain but over that 600 days.
I put wrote in published three books I started the software company convert kit probably made seven or eight hundred thousand dollars in total revenue. And it like kicked off my entire creator journey and so that like consistent execution has been always really core to everything that I do. I guess getting into convert kit started in January 2013 and the idea was I just got frustrated with Mailchimp of like it felt like it wasn't made for people like me you know for content creators and so.
I embarked on a project to get to five thousand a month in recurrent revenue in six months. I wanted to self fund the whole thing because I'd seen people like make a bunch of money over here and then say I'm going to build a software company and then waste just a huge amount of money because they used their money that they had from somewhere else to build for too long without talking to customers.
And so with that I decided like okay this has to be customer funded from the beginning and you know I got to launch with pre sales because I just learned from some other failed projects that if you go to build something and you ask people will you buy this they will absolutely lie to you and say yes. And because they're speaking of hypothetical like if this existed and it was a perfect fit for my business and I hadn't solved the problem a different way already.
You know and like probably five other things and yes absolutely 100% I would buy that. But we don't think in those terms and so we just end up saying like oh. He said he'd buy it like great. Let's take that. But what I learned is that the only way to get honesty back from people is to ask for their money and to see like will you actually buy this thing. And so I built up that product with your pre orders and then use that money to build the product.
You know as long as I think I did like 15 20 grand in pre orders so it wasn't a crazy amount. But that gave me money to fund it. I ended up building to 2000 a month in revenue in the time period that my goal is to get to 5000. So on one hand it was a failure on the other hand. You know it like 2000 month in revenue in six months I was really happy with that.
But it stalled out from there and it actually wasn't until I decided to double down on building a product a couple years later that we really got traction. So it like probably six months in we hit 2000 month in revenue and then it stayed there for the next year to 18 months and to end like bounced around. Everyone talks about like how recurring revenue is the best thing ever and it is. But no one talks about churns and churn can be absolutely brutal.
I'm curious for everybody just quick show hands who has recurring revenue in their business. So two thirds of the room probably. And who has been at one point like very very frustrated trying to reduce churns. Yeah it's just it's so hard and there's all kinds of times where you think like wait a second maybe I should be charging one time and collect my entire lifetime value upfront. And maybe that would be better especially in memberships where you know you find that the churn.
You know like good churn software might be three to five percent good churn memberships might be 10 percent per month. And like the math gets really really difficult. So we fought against churn trying to build a good product and all just being too small and difficult for a long time. And then my friend heat and shot pulled me aside at a conference and. He just said like look I love what you're doing.
You're going to be successful whatever like you said your mind to but you've worked on convert it for a year and a half and it's not working. I think you should shut it down. And I remember just kind of being shocked by that like that's not a nice thing that you say to someone of like hey this thing you worked on like shut it down. But think you got more it's like one of the kindest things that you can say to someone and sort of the difference between like nice and kind or polite right.
If I'm being placed in like your project is so great like keep going like you know all this do get there eventually. But the kind thing might be like looking at from a first principles perspective and saying like hey you've got these skills. You've got something here you've worked on it for a long time but it's not working like something has to change. And I think as business owners if we can be kind to each other in that way of giving that real hard feedback.
It can really serve each other as a community really well. And so like especially in like a mastermind format. It's so easy to fall into a trap of like how's the business going great. Okay. And just like building each other up without the kindness of real hard feedback. And because he ended up going on with his feedback and what he said was you know you should shut it down or take it really seriously and give it the time.
Money and attention it deserves and build it into something really meaningful. And that sort of that brought me to a turning point because I realized he was right. I was putting in you know not the full level of effort that I should. What's up everybody this is Russell Brunson. I've got something really cool for you today from my friend Taylor Wells. Taylor spoke our last funnel hacking live because I wanted to share a really cool concept about when he calls the revolving pricing method.
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Hey, this is Russell Brunson and I want to jump in really quick to share with you a new assessment I found out that is insanely cool. You guys know I'm obsessed with personal profiles and assessments, but this one is different because not only does it help you to understand yourself. But more importantly, especially for us who are entrepreneurs, it helps us to understand our employees, our teams and get people sitting on the right seats in the bus. So you get more stuff done.
I just had a chance to interview Patrick Lane Choney talking specifically about this new assessment they created called working genius. And the working genius is awesome like this test. I had actually blocked an hour to take it. So excited for the for the new assessment and only took me like 10 minutes or less to get it done. Yeah, even though it takes only 10 minutes like you can actually apply this immediately. I took it for myself. I had my team take it and what's cool about it is from there.
We figured out exactly what people's working geniuses are. And that's important because if you're building a team or a company out of figure out make sure you have first off the right people. Make sure the right people are sitting on the right seats on the bus. And this is what this assessment will teach you how to do. Normally this assessment you can go to working genius.com and there's two Gs in the middle working genius.com. But I got you a 20% discount on the assessment, which is only $25.
So don't stress. It's not an expensive test at all. But you can 20% discount off when you put in the keyword secrets at checkout. So go to working genius.com again, two Gs working genius two Gs in the middle working genius.com and then use promo code secrets SEC RETS. Check out your 25% off. But then we'll take the test again. It takes you 10 minutes.
But even in a 10 minute session, you will get something that is so insanely valuable to help you understand yourself to make sure you're working into spots and you'd be the most joy number one. But then number two, it's going to make sure that you are with your teams getting them in the right seats as well. So anyway, I love this assessment. Go check it out at working genius.com and end of the promo code secrets for 20% discount.
Take this test for yourself and for your team and promise you will change the working dynamics amongst everybody and help your company to grow. And so I ended up asking myself two questions. But I think you can use anytime you're trying to decide whether to shut down a project or double down on it. Because really, if you think about it, if something if you try to do something and it doesn't work, that's good.
Because at least you know, or if you try to do something and it really works, that's good because you know. But like so many things in life, there's like death and frustration in the middle where something kind of works because then there's there's not clarity. And so if you have a project that kind of works, there's two questions I think you should ask. The first is, do you still want this as much today as the day that you started?
And if the answer is no, that's totally fine. Right? There's all kinds of things where like, oh, I want to write that book. I want to build this company. You know, whatever it is, complete this, you know, run a marathon on it. You know, as you get into the middle of the training or wherever the process you're like, actually don't want this anymore. And I think it's fine to admit that to yourself and say, all right, I can in good conscience shut down because I realized I want something different.
Then for me, when I got to the point, I was realizing, wait, I do really want this. I want to make this move from selling info products into software. Right? That's where I got my start. This is a software designer like I want to build this company. So it's like, great. Okay, move to question number two. And that is, have you given this every possible chance to succeed?
Because again, if you, if you really want this and you've given it everything you've got and it still hasn't worked, you can feel good about shutting it down. Right? Like all we can give is our best. And sometimes that's not going to work. Right? The timing might not be right. You could be way too early with this idea.
There's all kinds of things that people have tried and it didn't work. And then five years later, when tech is different, or the market is different, or, you know, social opinion is different. The same idea works by a different founder. But then the other thing is if you have this disconnect, if you say like, oh, I really, really want this thing, but I have not given it every possible chance to succeed.
And if you shut it down in that moment, I felt like I would be in the worst position there. I'd be that guy, like five years from now at a party, who's like, oh, man, what happened with the market? Well, if I would have just done this, this, this, this, I could have totally made that work. But because it's something outside of my control or whatever else, you know, I didn't work out.
And whether that would show up as, you know, sort of ignorant bragging of like, oh, you know, this would have worked in a different way or regret. And that was because I wasn't okay with that. I had not given, convert it every chance to succeed. I'd worked on it on the side. I limited the amount of money that went into it. And so I realized I had this disconnect. I said I really wanted something and my actions didn't match it. And so what I decided to do was double down on it.
And so I changed a handful of things, high to three or four. Let me listen to them out and see how many it is. First was I decided to go all in and I stopped working on my digital products business entirely. A quick side note, I thought that, you know, without a launch, I was selling about 10 to $15,000 a month. And I was like, okay, if I stop paying attention to it, it'll like coast down to just 10,000 a month. It actually coasted down to like 2000 a month.
And I learned that, you know, passive income isn't quite so passive. So first thing was double down on it. Second thing is I took $50,000, which was a huge part of our savings and put it immediately into the company. And I got rid of this arbitrary constraint of like, no, it has to be entirely customer-funded. The third thing is I narrowed down the target market. I think we've all heard the advice of like focus on a niche.
And I had given that advice many times when it came to writing a book or talking about like, oh, get as narrow as possible. Don't write a programming book. Write a book on how to do payments and ruby on rails. Right, get very, very specific on the problem that you're solving. But I wasn't taking that advice myself. And so I was making an email product for anyone who sells things on the internet or needs email related services.
And so I ended up focusing very narrowly on email marketing for authors. That ended up being not a good niche for several reasons. And I tweaked it ever so slightly to email marketing for professional bloggers, which worked really well. And then the fourth thing is I focused very much on direct sales. I think as content creators and business owners who build things on the internet, we can get very caught up in focusing on the only unscatable things.
Right, like, okay, how can I scale this ad budget? How am I going to sell thousands of these? And we mess out on the direct sales and things that takes to get it off the ground. Paul Graham from My Combinator says, do things that don't scale is very important to get things off the ground.
He talks about how when the callers and brothers were building Stripe, they, if they were talking to someone, you know, another company in My Combinator, the sort of incubator, who's talking about, yeah, like, yeah, we need to get payments figured out. We haven't done that yet. They would get their laptops out and be like, oh, we can help you with that right now.
And they would actually pull out their laptops and help that person code Stripe payment processing into their app MVP, like, on the spot, which 100% not scalable at all, but absolutely necessary to build things up. So I focused on direct sales and then we did a lot of what we called the concierge migrations, which is a very, very fancy way to say that I like pulled up someone's WordPress site, you know, and all that on one screen.
And then, or like, I guess mostly I'd pull up Mailchimp on one screen and then convert it over here and I'd copy and paste between them well, like watching a Netflix TV show on the other, just to like do all this $5 an hour work, but to get someone up and running. And then it just compounded from there. It was sawd, momentum build, we had more and more customers, every sale got a little bit easier to make and on from there.
So for the next two years, we grew from 2000 a month to 100,000 a month in revenue. The year after that, or so that was in 2015, was 2000, 100,000, 2016 was 100,000 to 500,000. And then it just steadily grown from there. And we moved from there into, you know, affiliates, webinars and workshops, things that are much more common, but it's really important to build that base with a very, like, scalable hands-on touch.
I think taking that all the way through to today, the company is 90 people, we're distributed all over the world, probably 60 in the US, 10 in Canada, and the remainder in Europe and around. And we're just very, very clear on who we're serving. The types of creators we're serving, that market they were building, and we've continued to stay entirely self-funded. And it's a lot of fun. Now at this point, we're doing projects that feel really exciting.
So part of this rebrand to kit, one thing we're doing with it is building a full app store on top of platform, similar to what Shopify and WordPress have. So people are building AI apps and podcast hosting, and all the other things directly on top of kit. And so we're able to see, like, how can we leverage the entire community and ecosystem to build that?
And then another project is we launched something called Kit Studios, which is high-end podcast recording studios that are free for our customers to use. Our first one is in downtown Boise, it opened two months ago. Brooklyn should open in another two months, and then we'll expand from there. So we're saying, like, how can we help the creators and our ecosystem make the absolute highest quality content? And then, yeah, just keep expanding from there.
So the business has become a lot more methodical and I guess, deliver it over time, even as it's reached scale. So that's my story. I'd love to open it up and to any topic that you guys want to cover, it could be anything from what's worked for us. Hiring, company culture, we do some odd things around profit sharing with our team, team retreats, what we see working in the industry of people who have grown newsletters to hundreds of thousands or millions of subscribers, all of that.
So yeah, we got a catch box right there. And so thank you for sharing. A couple questions for you. At the beginning, what did the team look like? Getting to the, I think you said, is it 48 million? 48 million? Yeah, 45 million now. 45 million. So what did it look like at the beginning? Who are those first hires? And what does the team look like as you were scaling to the 48 million? Yeah, so I always try to be very deliberate with hiring and add people slowly.
There are companies that won't talk about revenue and instead they use headcount for like the public and so far we're going to ask you, like how's business going? You're like, oh, it's great. We're at 20 employees. And that's a proxy for how all the businesses doing it. I'm like, all right, while I'm assuming you're making at least $10,000 a month or $15,000 a month for employee, you know, all of that, what happens is you end up optimizing for the wrong metric.
Like there's a company here, T-shirts, they grew really, really well and then had this massive of exits into it. And I have a ton of respect for what they did. And I even did a lot of design work for them in the early days. But I was always, I always thought it was weird that headcount was the metric that they optimized for. You talked about like, oh, we're going to crush it at businesses here. We're going to double headcount this year. And that was such a weird metric for.
And and some something that I always did is I talked about revenue publicly. So if you ask me how business is going, I would tell you like, oh, you know, we've added from 5 million in revenue this year. I'm talking about a metric that actually serves the business. Headcount is not a metric that serves the business. And in fact, I think today with what you can do to scalability with software, automation and AI, like you should be thinking the opposite.
You're like, all right, how do I keep, you know, this headcount pretty lean? So to answer your direct question, it was just four of us really early on. Three of us actually. So myself, I did all the front end code, the marketing and the sales. And David, who was our designer, mostly developer, but he was a designer as well, who like really leveled up the product. And then Dan, who led all of our customer support and all of that. That was through to probably 10,000 a month in revenue.
And then we started hiring more people. Our first team of treat. We were 20 people, probably six or seven engineers, a handful of customer support, a couple of marketing on from there.
Today the business is 30 engineers, five designers, our marketing team is seven or eight people across content, social, SEO, SEO is a really big part of our business, which it's an interesting time to have SEO, maybe a big part of your business, both from a couple, both because of algorithm changes that Google makes, the impact that AI is having and going to have on SEO. And then also if you change the name and domain name of your company, it's an interesting time.
So like moving from convertit to kit.com, like we'll see how it plays out. You know, if anyone wants to throw some kit.com backlinks and I wouldn't be mad at all because we're just praying to the Google gods that, you know, we only have like a 10 or 15% dip. And then across the board, things that I've always invested in, one thing is storytelling. So we hired a full-time storyteller, probably about 40, when we were about 40 people, and then a full-time filmmaker shortly after that.
And those are two roles that I just absolutely love. And a quick example about storytelling in the time of AI, which I think is really interesting, when you can do original research on your customers and you can bring in AI writing, it's really powerful.
So something that I can do now is we have, we took all the stories we've ever written on our customers, pulled them into a single Google Doc, it's 200,000 words, and uploaded that, I tried a bunch of things, but notebook LM has been the best one for doing this. So now when I'm writing something for a book or an essay or a video script, there's a point that I wanna make about consistent execution or whatever else, or whatever other trait for creators. But it's always having the right story.
If you read something like a Ryan Holiday or something like that, that what I'm always impressed with in writing is when someone introduces a character, uses them to make the point, and then moves on. Sometimes in as little as one sentence, and I just think that's so hard to do, you know? But the perfectly illustrated stories are so important.
And so now I will ask, you know, my notebook LM bot, like here's the section I'm trying to write for, from the 200,000 words of original stories, research from our customers that we've done, who's a creator that matches this, and will give a handful of suggestions, and so it's really sped up my writing.
And so that's something I just love storytelling, and I think that, you know, if you have customers that you've created transformations for, it's really, really worth investing in someone, either contract or full time, who is finding all those stories. Yeah, it's going right there. All right, I've got a few questions, but I'll ask one first. So what is your why? So I grew up in a family where my name is very scarce. Is anyone here from Boise? Just wrestle? Well, I've lived here a lot.
Well, I've lived here a lot. I've lived here a lot. Well, I've lived here a lot. If you drive, there's a race called the Race to Rubikree, and it goes up overall, Dope summit, the mountains over here. Unfortunately, that whole area just burned like last week. But if you go up there, you'll like run by the little tiny house, like a tiny house before tiny houses were cool, where I was born and all that.
So money was just very, very scarce, and I watched that be like a big point of conflict in my family growing up, but watch my cards fight over it, ultimately, they were so over it. And I think there's two questions that are really important to ask yourself in your life, to understand what drives you. The first one is, what's the time in your life that you watch something happen and you said, that will never be me.
And for me, that was watching my parents fight over money, and I'm like, that will never be me. I don't know how, I don't know if this making money thing is luck or skill or whatever it also is, but I'm gonna figure this shit out. And then the second thing is, what's the time in your life where you watch something happen and you said, that could be me. And if you know those two things, like what really speaks to you from observing other people, you can really find your why and what resonates.
And so I decided that I was going to get very good at making money. And somewhere along that journey, probably early, or maybe right after I dropped out of college, someone in there, I read an article from Jason Fried from Basecamp where we talked about how making money is a skill. You wouldn't expect us to down at the piano or the drums or something else and play something amazing if you had no skills, but many times we expect to start a business and that would work out.
And we don't understand why people's second, third, or fourth business to wave at it than their first business. And really it's just like playing the piano is the combination of 1,000 little skills. We need to know the finger position, the timing, music theory, all of these things. Well, in business, we need to know, right? How to show up consistently, how to do what we say we're going to do. How to sell in person, how to sell without talking to someone, right?
That's a new skill to learn to sell through a landing page instead of face to face, right? Automation pricing, like there's a thousand things. And so when I understood those two ideas that really anyone could get good at making money because it was a set of skills, and I applied that and got to the point where I was making hundreds of thousands dollars a year, way more than I ever expected to.
And I'm doing it with an audience where I realized like, wait, this is the biggest cheat code in every way. Like imagine any big goal you're setting out on, and you're like, do you want to do it alone? Or do you want to do it with like a thousand or 10,000 people cheering you on? And that's what your email list is, right? That's what your audience is. And so this big group of people who are just rooting for you to succeed, then I just felt like everyone should know this.
And so my why is, and the reason the company exists is to help creators earn a living, to get to the point and teach people like, this is a set of skills. We're gonna automate as much as we can with software, but we're gonna teach you these skills. So you can get to the point that money is not a point of stress at all. And there's just an insane amount of freedom that I think all of you have experienced. And we could keep it quiet.
We could tell it to just our friends or we could just shout it from the rooftops of like, look, all of this stress around money doesn't have to be that way. If you're willing to put in the work, to learn the skills, to earn a living, build wealth, and have the amount of freedom that comes from it. Hey, it's Russell Brunson. And if you're anything like me, you understand that in business, time isn't just money. It's everything.
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So my next question is, how do you manage your time and keep yourself accountable to that time? Yeah, poorly. Yeah. Awesome. Awesome. Best answer ever. Honestly, right? Authenticity. Yeah, I juggle way too many things right now. I actually had. I really, really struggled to say no. And I think that there are these traits that serve you really well at one season in life and then sort of backfire at another season. And so I'm someone who wants to do everything.
And so I say, yes, like this project and that project and all of that. And then I will not say no if it means I'm letting you down in some way. And so managing time, there's a lot of hiring people, setting priorities, all that. I don't think I'm good at it. There's probably other people to take that advice from. One thing I will say is in my inability to say no, I get myself into a lot of trouble. And then I will just work my way out of it.
But I won't actually fix the core problem, which is like developing the skill of saying no. But because early in your career, you opportunities don't come to you. You have to fight for every single opportunity. But then later on, all the opportunities come. And so you have to develop an entirely different set of skills. And it actually wasn't until breaking my ankle that I realized how over committed I was and that I actually couldn't work my way out of it.
And so the other psychological thing is I realized it was easy for me to cancel things. Like I had two different masterminds that I canceled and various other things when I could blame but on something out of my control. And I was like, I would love to do that, but I actually just broke my ankle and I can't. And so that was just interesting realizing, with me letting people down, I was playing Vival. It was the guy's fault who came under the net. He shouldn't have done that.
And then I could have done that mastermind for you. So the biggest thing that I'm still working on is the ability to say no and say, because this is what I'm truly focused on right now. Someone said this to me recently, I'm still in the struggling to say no. And then if I say no, I'm like, no, because of these things. And someone said to me last week, did you know that no is a complete sentence? And so that's what I'm working on the most. So good, I'll let somebody else out.
I've got another question, but I'll let somebody else out. Here we go. I can still relate to that with the no. That's me too, thank you for that. Some curious, you were mentioning churn earlier. So what is your most effective strategy that you found to reduce churn in your memberships? Yeah, so the very first thing is the quality of the product is ultimately what matters.
Everything else is a hack or a check, not that you shouldn't try them or pursue them, but quality of the product is everything. I will say all of my effort related to reducing churn is in software as a service specifically. So some of that will translate to other businesses someone. The more we can match expectations with what we actually delivered, the better. So that meant on sales conversations, we would start talking about how difficult some of these things are.
And we would just try to be really realistic. Some of the idea when I'm hiring people, especially managers or executives, is I try to talk to them out of taking the jobs. And I talk about all of the things that are going to be really, really difficult. And it's sort of like, has anyone read the book, Extreme Ownership by Jaco Wollink and Life Abund? Yeah, you have four people. Let's say that something goes wrong between our two companies, right?
One of us is a vendor of the other one and all of this. We actually had this with an integration partner who they had registered to Domain. It's happened on Monday. And they didn't set up appropriate tracking on it. It was a domain that only set up to manage this integration. And so it was not part of their core infrastructure. And they let it expire. And so a part of our service stopped working, or just a fringe of it. And they didn't catch it for like a day.
And we're trying to figure out why it's broken all that. And we're like, wait a second, it's because this domain expire. Who lets the domain expire? This is the most amateur hour thing ever. And our team was pissed. We were like, four engineers spent 24 hours trying to forget us out. And I think that the first reaction was to go to them and be like, what the hell get your shit together?
And then, Brendan, my director of engineering, who keeps extreme ownership sitting on his desk, was like, what of this is in our control? And so they had a bunch of conversations, but he ended up going to them and saying, man, I'm sorry guys, we should have had monitoring in place. We should have, I know this is something that you guys set up just for this integration. Yes, it's in your infrastructure, not ours.
But like he's like a list of five or six things that we as an engineering team could have done better. And they, I think they went into the conversation expecting a fight of like, I have some things like get your shit together. And instead of you shut up, here's what we should have done better. We're sorry, we'll make sure that that doesn't happen again. And the other company, their tone, was 100% different. They were like, oh, I mean, it's in our infrastructure.
We should have had the monitoring on it. Like the conversation was night and day when I think what everyone is expecting because Brendan modeled the six-stream ownership. And so I think the same thing is true in sales where when you come in, and if you talk about, here are the hardest parts of this job. Here's why you shouldn't take it. Here's all those problems. Then someone goes, oh, like I can overcome that. I can overcome that. You're not hiding anything from me. It's not making me less one.
It's not making me want to have the job less. Actually, making me want to have it more. And if it does make them want to have the job less, then like you filtered that out early and that's way better than knowing 36 months in. So if we bring that all the way through to customer acquisitions, then you're being very realistic about like, hey, here's the transformation that I can help create for you or for your business. But here's what it's gonna take from you. Right, there's no magic bullet.
And so then when someone gets two or three months in and they're like, I didn't just buy this program and my business transformed overnight or like whatever it is, they might be frustrated for a second and they might, oh, that's exactly what she told us would happen, that I had to do my part. And so I think that setting of expectations is really, really important in sales and then really limiting churns. The next thing is really focus on conversations with customers.
Like if you have, I don't know, maybe 500 people in a membership, I would say how often are you talking to them, doing interviews, what's their experience, all that. In our product organizations, that's our designers and product managers, they have a rule where they have to talk to, like do an interview or a detailed conversation with the customer every week, each. So that means like, it's not a crazy high bar. I'm talking like 45 minutes a week for a person.
But when they implemented that habit, they just got so much closer to the actual problems. And now they're at the point where they just have deep relationships with customers, they're working at something like, what do a J would think about this? And they'll just DM them on Twitter or something and be like, hey, J, I'm working on this design for this new thing, what do you think? Makes customers feel awesome.
So I think the user interviews are really, really important to find out that experience. And then the last thing is for us, this is like common wisdom, but moving to annual plans really made a difference. And so we went from the point that like, we used to be three to five percent of subscriptions, like new subscriptions coming in were annual plans.
We're now at like 52% and churn drop from four and a half percent to like 3.3% which in our business is a difference of like $10,000 a month in churn. So hundreds of thousands of dollars a year. And obviously all in a recurring revenue business, everything compounds. So even the smallest things make a big difference. So yeah, those are the things that come to mind. Wow, that was brilliant. Thank you so much. Yeah, it was question. Russell.
Yeah, so we did the move to annual was first we changed the pricing page. For some reason, there's something that I felt were sneaky. For whatever reason, I used to think like, oh no, everyone wants to pay monthly. And it's like it's sneaky when it everything defaults to annual. And then I ran a business for a little longer. And I was like, I'd actually rather have one credit card charge than 12. You know, it's all these things.
I don't know if anyone is in the position of like finalizing random tax things before October 15th. Just me. I'm the other one that the cross-nance. I've been knowing people. Yeah. There's only four more days. But who's counting? I'm definitely not getting on call with my accountant today to get them the last things I need. But anyway, like it's simplified so many things. So we changed all of our pricing. This sounds dumb.
We actually just got over ourselves and implemented all the best practices that everyone in the software industry talks about. So annual by default, we increased some of the discounts on our lower plans. So for example, on our very cheapest plan, it's $15 a month if you're paying monthly. But it's only nine a month if you pay annual. So it's actually a, I don't know what that is, 35% or 40% discount. Compared to the usual 20.
Because we found at that lower price point, the annual version of it is still, there wasn't that big of a difference. It's still relatively small. But we wanted to make it substantially cheaper. We also run upgrade to annual offers periodically, like in our lifecycle marketing, based on milestones that people hit in the app. Hey, you're growing fast. Why don't you switch to annual and get two months for free, right? Things like that.
So if someone's upgrading to the next year and you're like, oh, wow, this business has momentum. Then you're like, hey, you know, if you make this switch now, you'll get two months for free. We've also at times gated features to annual only. And that can work. And then we've also offered bonus content for annual only. The other one that we do is sometimes, I don't know if we'll do it this year, but when we run Black Friday promos, they're only on annual plans.
And we might offer a bigger discount. So like three months for free for a Black Friday promo. And then it renews at the regular, and we're clear about this, but it renews at the regular two months for free that the regular annual plans have. Things like that. What else? Welcome back here. Or did you have one? Did you have the catch box? Oh, didn't you have a question? No, that's not that. That's not okay. Perfect. So going back and I asked for a very transparent moment from you.
It's not, I don't even think that's not impossible for you because I think you can really answer this. But based on the journey you've been on to get to 45 million and a lot of people say they want that level of success. Yeah. You don't know what it looks like and what you have to go through. Can you share with us a moment where you almost gave up, right? And that moment that hit you of, you know, I quit. What did you do? Who did you talk to?
And how did you recover the mindset shift that was needed for you to get to where you are today? Yeah. Let's see. So early on, you're talking about the shutting down a double down moment. Let me think past that. But this isn't an almost give up moment. In 2021, so 2021, we had an exit offer from Spotify that I really strongly considered. And that was like really think about this and decide, do I want it? And you know, that was like, sit at my favorite coffee shop, really journal.
I understand why I'm doing this and I ultimately turned it down. I thought that my team would be really like energized and motivated by that. Like we always said, we're never going to sell like we're building this for the long term. We're all about mission. And so now we had this opportunity to like have an exit. And you know, I thought the people would feel like an exit would mean we were giving up on the mission and maybe really excited about continuing.
And very broadly, the team felt that way. What I didn't realize is that a lot of the execs felt differently. And so what followed there was actually people saying like, I thought you said we'd never sell, but I knew that when an offer for $200 million came along, you'd sell. And so for some executives who had joined us really early on, that would mean, you know, a two to five million dollar payout, right? And that was really, really important for them.
And it's like exit to a name brand company, right? That's a big deal. For other execs who joined more recently to be able to say like, oh, I came over from this company and then I joined Converkit. I worked there for 18 months. I mean, exit to Spotify. I thought it was amazing on your resume. And so what happened is actually we had four executives leave over the next six months, over the next nine months. And that was probably the hardest time of doing something.
I think we believe in life that if I execute in line with my values, my mission and my vision, then things will fall into place. Like the universe will align to help make that happen. And I still believe in that. I just think that it's over a longer time horizon than we wish. And so what happened is I made this decision in line with what I really, really believed in and ended up creating all of this other change.
Now it's worked out really well in the long run where I've recruited other executives that are just absolutely phenomenal. But it resulted in a lot of like pain and loneliness in the in the in between. So I think it's, I guess my takeaway from that is still always make decisions in line with your core values and your mission. But you just realize that it might get a lot harder before it gets easier. I had put together, you know, we're not venture backed. And so we don't have a traditional board.
But a few years earlier, I'd put together a board of advisors. And I would really encourage you to do that. And you know, if your business is over a million dollars a year in revenue, you should have a board of advisors. I think it's worth writing a monthly board update of like how things are going. Now they don't have the ability to like, I don't think he's doing a job. Let me replace him as CEO and we're installing, you know, professional management, right?
But there's still accountability to like saying, this is what we're going to do in the business. Here's what we actually did. Helps you calibrate. Like are you always too low or too high in your estimates? You know, are you like delusually optimistic in a way that holds the business back? Or are you actually in a really good spot? And so I think that like advisors like that are really, really helpful.
And I would, you know, even in like an infoproduct business, basically any type of business, I would put together a board. Who else has one? I think we have time for one more. Are you wrestling with everybody else? You tell me what you're going to do on time. So what do you compensate the board of advisors like how's that look? Yes, I do equity. You could pay cash or equity. I do equity. And you know, we have a set up where we do secondary rounds over two years.
That's when they came out of like turning on the offer for Spotify, but then it was clear I had to create liquidity. And so I created this vehicle where team members could sell equity every two years. And then like friends of the company could buy in and all of that. Equity is going to work better in a business that has a vehicle for liquidity like that. But profits, interests or just straight cash.
You know, I'm saying something like, I had love to be, you know, I've done paid $10,000 years a year to be on the board. Here's the expectations and all that. Or you could even, if you have that relationship with someone, you could, and maybe if you of you in this room would want to do that for each other, you could swap board seats for each other. Just define the relationship, right? When we are having a board meeting and you are on the board of my company, these are the expectations.
I want you and I would write this down. I want you to push me to hold me accountable. I want you to read the room and know if I'm in the point where I need that or maybe I just lost three executives and I need the like, you know, arm around me and being like, hey, we've got this. I'm going to help your crew or all of that. And then the knowing that the role at some point is flipped, right?
Because now I'm like a month later, we're having a board meeting and I'm on the board of your company, right? And we have those defined, defined rules. But having that, um, I think it gives you a couple things. Who are long term committed to your success, uh, who are around your business for a while, right? If you hang out with someone at a conference, like, hey, man, you grew up podcasting really well, I'm trying to grow one. What, what should I do?
You got three minutes of context followed by 10 minutes of advice. Like, it's worth something, but not that much. But if it's like year after year, that's worth a lot. Um, I think the carrier is there. Yeah, I think it's really that context and long term relationship. So I, three ways, cash, equity or a swap is how I would think about competent, important numbers. Perfect. Thank you. Yeah, for sure. Um, I'm happy to hang around and chat for a little bit too.
If you guys have questions and all that, but, uh, I'm a huge fan of Russell and everything is built and, uh, I mean, you all have learned in a huge way what it means to build a business that employs people that, you know, changes your lives, lives of your family members.
Um, I've just heard so many stories of people getting to this level of building a business and they're able to do things for their parents, for their siblings, for like whoever else, whether it's like helping out financially or just being like that steady rock in other people, like, in a relationship with other people. And so I just commend you in a huge way for what you've built, how you continue to show up to serve each other and everyone around you.
And, uh, it's really, especially the party script, so thank you, Adam.