Keith and I are back with the 10th episode of the podcast.  This time we’re talking about our wives and kids, how much they mean to us (lots!), and how we try to fit being good husbands/fathers around our mutual desire to keep growing the businesses.

[Patrick notes: The transcript below has my commentary inserted like this, as usual.]

What you’ll learn in this podcast:

  • What Keith has been up to with Summit Evergreen and what Patrick has been up to with Appointment Reminder.
  • How having children changed how we run our businesses.
  • How delegating tasks is key to making sure we can spend appropriate amounts of time/brainsweat on being good husbands and fathers, as opposed to optimizing Nginx config files.
  • How Japan’s poor systematic answers to the question of work/life balance decreases the birth rate here.  (Who said this podcast wasn’t educational?)

Podcast: Putting the “Family” in Family Business

MP3 Download (~53 minutes, ~50 MB) : Right-click here and click Save As.

Podcast format: either subscribe to http://www.kalzumeus.com/category/podcasts/feed in your podcast reader of choice or you can search for Kalzumeus Podcast in the iTunes Store.

[powerpress]

Transcript: Putting the “Family” in Family Business

Patrick McKenzie:  Hi, everybody. Welcome to ‑‑ what is this? ‑‑ the 10th episode of the Kalzumeus Podcast. I’m Patrick McKenzie, better known as patio11 on the Internet. I’m here with my buddy, Keith.

Keith Perhac:  Hi, this is Keith. We are on the 10th episode, three and a half years in the making. Probably the slowest podcast ever. I know every time we say we’re going to make these a little bit faster and do this a little more regularly. Hopefully, in this new year, 2015, we’ll actually get that done. Here’s knocking on wood.

Patrick:  Knocking on wood. I think we ship products and children about as quickly as we ship podcasts.

Keith:  [laughs]

Patrick:  In fact, I think that’s almost literally true.

[crosstalk]

Patrick:  This segues nicely the topic for today. We’re going to be talking about what it’s like to run a business as two guys who are very committed to being family men. Not just to grinding away and burning the midnight oil and the work stuff, as we might have done in our younger and stupider years.

Keith:  [laughs] I don’t know. I still do that on occasion, but having a family has definitely changed it.

Patrick:  Yeah, so we are going to talk a little bit about family stuff in a few minutes, but we want to steal a [inaudible 01:06] from Rob Walling and Mike Taber at the “Startups for the Rest of Us” podcast, which is one of my personal favorites. They start off every episode with just a little update on what’s new and exciting in their businesses. I thought, “Hey that’s kind of interesting to pattern after.” We’ll try it and see if it looks it. Keith, we haven’t heard much about Summit Evergreen recently. Why don’t you start us off with that?

How’s Summit Evergreen Going?

Keith:  Summit Evergreen has been going pretty well. May was our official launch. We’re out of beta now and we have, I don’t remember how many customers we have. We have a fair number of customers doing a lot of sales. I am really happy about that.

Patrick:  For the folks who don’t remember what Summit Evergreen is, because it has probably been two years for them, it’s Summit Evergreen in 30 seconds.

Keith:  Summit Evergreen is a courseware platform. It helps people create and sell online courses on the Internet. Think of it like Udemy or kind of like the courses that Patrick does, like the one on lifecycle emails.

The difference is that compared to Udemy or Skillshare or whatever, it’s completely you-branded. You are not just another guy on Udemy. It’s all about you. It’s on your domain, your URL and it’s all about your product and your branding. That’s what we do and we just actually released our New Year’s campaign, which is our annual campaign.

One of the biggest things that we find issues with is that people do not commit to building courses. Everyone always says, “Oh, I want to build a course. Oh, I want to build a product.” Number one thing that has people fail is they’re not committed to it. There is a big psychological impetus, a big psychological effect when you put your money where your mouth is, when you commit something of yourself to your own success.

We launched the Annual Plan, which we started January 5th of this year, so that was yesterday. It’s essentially you get 17 percent discount, two months off, if you sign up for a year. We hope that not only are people going to enjoy the Annual Plan but they’re also going to use that as stopping creating excuses for themselves. It’s not going to be, “Oh, I need to get this course out someday. I’ll do it when I have time.” It’s, “OK, I’ve put my money where my mouth is. It’s time for me to get this done, and I’m going to launch this year.”

The people who do that, we see they’ve launched courses in five days, in one day, in hours, in weeks. People who are committed, people who are committed, who put that line in the sand, those are the people who succeed and successfully sell their course to customers.

Patrick:  Summit Evergreen has been, for folks who haven’t been following the story, it’s like a natural outgrowth of the consulting work that you and your co‑founder, Rachel, were doing over the last couple of years.

You were working with some of the larger publishers in the Internet space who have these courses online and sell them for, in many cases, large amounts of money, both on a per‑course basis and on an absolute basis.

You’re bringing some of the technology that you custom‑built for these publishers to the scales, where somebody like either the two of us could actually implement it without having to free‑write the courseware in Ruby on Rails like I did.

Keith:  Exactly like you did. A lot of the problems that people have is that when they start their own course, they’re like, “Oh, if I want courseware, I either have to have something crappy that’s running on WordPress or I have to hire a dev and pay him $80,000, $100,000 to build it.”  [Patrick notes: Mine probably was a +/- $40,000 job if you bought it at market rates in Ruby on Rails programmer time.]

We took the happy medium. We took all the knowledge, all the things that we’ve learned, built a system that works for actual product creators instead of people trying to sell software.

Patrick:  Awesome. You’ve just launched annual pricing for it. You’re starting to get a little bit of customer uptake and your early‑adapter customers are getting to the point in the lifecycle where they’re actually on‑boarding their customers, so they’re seeing success with it. What’s the next three‑month plan for Summit?

Keith:  We have a bunch of joint ventures, and I don’t want to call them affiliates but people who have publishing platforms already. Not software but publishing houses. They have lots of content creators. They want to come in and they want to work on Summit Evergreen and get their content creators onto Summit Evergreen as well. That’s one thing I think is very big for the next year.

As far as software and features for our customers go, we’re looking at better integration with lifecycle email service providers, better integration for that customer retention.  If you’ve taken Patrick’s course, you know that your existing customers are the number one way you’re going to grow your business. Your existing customers are generally 70 percent more likely to buy than the new customer.

Focusing on existing customers to build out product orbits, to build out retention strategies and things like that, that’s the way you’re going to grow your business. First quarter, second quarter 2015, that’s really what we’re looking to focus on, is increasing that customer retention and increasing peoples’ abilities to build product orbits.

Patrick:  That’s a great way to demonstrate additional value to your customers too, because many of them don’t have the know‑how of, say, a Brennan Dunn or a Nathan Barry, where those guys have, through a lot of hard work, made a bunch of products which naturally feed into each other.

They’ve got, basically, a self‑supporting ecosystem where they can step people through, “Make your business a little more successful by buying our book. After you’ve got the business a little bit more successful, that opens up new challenges for you, and I have a course which happens to slot directly into these new challenges,” to both keep increasing the value to the customer and then keep increasing the value to the business or content creator over time.

Keith:  Exactly, but one thing I do want to mention is that people look at these “product orbits” that they’re called, like Brennan Dunn, Nathan Barry, Amy Hoy has and they think, “Oh, I can never get 12 products out” or “I can never get three products out.” You only need one or two products, or two or three products, and they’re not hard to make.

If you look at Nathan Barry’s “24‑Hour Product Challenge,” which he did again this year ‑‑ really, really amazing. He and Amy Hoy both did it. Amy Hoy put out, “Just F‑ing Ship,” which she put it out in 24 hours. It’s a saleable product, she made some good sales on it and it doesn’t have to be this amazing course.

There’s a lot of content you can make at that beginner, beginner level. Those kinds of gateway products are really more effective as product orbit than larger products.

Patrick:  That makes sense. You want to hear my update on Appointment Reminder?

Keith:  I was just about to ask. What’s been up with Appointment Reminder?

How’s Appointment Reminder Doing?

Patrick:  I’ve kind of lit a fire under myself for the first time with Appointment Reminder due to my daughter being born.  I’ve been running Appointment Reminder for four years now. It’s been like the redheaded step‑child of my business for those four years.

I wasn’t really passionate about the problem space. I always treated it as an afterthought, even though every year I said, “OK, my goal for this year is to finally do some major work on Appointment Reminder.”

Right around when my daughter was born in October, I started to get kind of serious about it and, with the thought that, “OK, I’m going to execute on this seriously for 12 to 18 months, get it to a happy point and then do a check‑in on whether I want to continue with that business or spin it off to somebody, and sell the business and start doing something that I enjoy a little bit more.”

Since committing seriously to Appointment Reminder, it’s actually been almost fun. I spent two months last year working in a very “new dad,” fits and spurts fashion on doing infrastructure for on‑boarding my first couple of employees into Appointment Reminder. They’re actually consultants, not employees, but finally getting some help on the sales and support front, building the CRM integration that would let the sales rep do her work, yadda, yadda, yadda.

In the process of managing that sales process, I’m actually starting to do a little more of the day‑to‑day grind on it, which is helpful because if I don’t respond to inquiries from people then they don’t buy software, so I’ve been responding to inquiries.

We’ve lined up two opportunities for major integrations with platforms that trades businesses use. I’m working on those this week and hoping to ship them by the end of the month.  [Patrick notes: Looks unlikely at the moment.  The below-described customers backed out of their soft-commits.  Yay, enterprise sales!]

Both of them have a sponsoring customer, where we’ve got, basically, a soft commit. I sent them a one‑page letter of a text that they agreed to where, if we ship this integration by the end of the month, then they commit to buying Appointment Reminder at whatever the price is. The price is somewhere above where the publicly available plans are right now, but not hundreds of thousands of dollars.

Speaking of publicly available plans, I’m finally taking my own advice and charging more. As of February 1st, pricing is moving from $29, $79, $199 to the entry point is going to be $99 for a modestly higher quota than we’ve done before.

That’s actually scaring me a little bit. I was talking it over with somebody. I wanted the new entry point to be $49, and he said, as Keith has said on occasion, “Have I listened to myself for the last couple years?” The most successful clients that we have are the ones where the businesses are executing at a certain amount of scale. They literally have full‑time people who are just slaving away on the phones everyday. Appointment Reminder can replace that effort for much less than the cost of a full‑time person.

In contrast, we’ve got a lot of customers who have, say, five appointments a day. 5 times 20 workdays in a month is 100 appointments. They get value out of Appointment Reminder and they pay us $30 a month, but they’re not the heart of the business.

Honestly, it’s been brutally difficult to build up a business to a reasonable scale on $30‑a‑month chunks, so I’m going to be refocusing on the types of businesses where it’s worth at least $100 a month to them to have this problem solved, which is largely the trades businesses, medical, et cetera. Ooh, medical.

Keith:  [laughs]

Patrick:  We’ve had medical customers for Appointment Reminder for about two years now, but it’s been kind of on the DL, hush‑hush kind of thing, for HIPAA compliance reasons. We were kind of skirting the edges of HIPAA compliance, so we had promised HIPAA compliance to people on a very limited basis. They required us doing custom legal work with each customer that had gotten on‑board with it.

We weren’t ready to scale then. As of some engineering and process work that I’ve put in in the last two weeks, we’re finally ready to scale HIPAA‑compliant accounts for Appointment Reminder, which is going to require me going out to the 50 people who have medical businesses that are using us but are not on a HIPAA‑compliant account at the moment and getting them to sign a business associate’s agreement, which is the last bit of paperwork that we need for them.

Then, I’ve already flipped a switch on the back‑end to start treating their accounts in a HIPAA‑compliant fashion, which means…I won’t bore you with the details, because it could take the whole podcast, but we have to encrypt their information on a disk, which we’re doing for everybody now, and we have to enforce some procedural safeguards about access to their accounts, like enforcing a password rotation strategy, which we don’t do for normal accounts.

Keith:  I’m curious. Are you going to be upgrading those plans to a higher tier for that HIPAA compliance, or no?

Patrick:  As of February 1st, we’re going to have HIPAA‑compliant accounts available on the pricing and plans page. They’re just going to be straight‑up 2X what it would be for the same account tier at a non‑medical provider. Medicine is a business, right? You charge 2X as much for literally the same thing, but we promise you formally that we’re doing all the right things with regards to security, which we only promise informally if you’re an accounting firm, for example.

For our early adopters, for these first 50 doctors’ offices that are using us, I’m going to get in touch with them this month and say, “Look. Formally, you’re using $500 worth of services a month and you’re paying us $50 a month, but since you got in early and you’ve been with us for the last few years, I’m going to grandfather you in at that $50 a month or whatever it was pricing, contingent on you making sure to get this document signed for me this week. Because I need you to sign this document so that if, knock on wood ‑‑ this never happens ‑‑ but if the Department of Health and Human Services audits us, I need to have these business associate’s agreements in place with all of our medical customers.”

Similarly, if our medical customers get audited, they need a BA with us or they’ll fail the audit automatically. Many of the folks in the medical industry, especially on the lower end of the scale, not the major hospital chains but independent doctor’s offices, have been kind of dragging their heels on compliance with HIPAA, as they drag their heels on a lot of things.

Keith:  I can imagine. I’ll be very interested to see how the $99 entry-level plan works out for you. I think you’re right. It’s going to get rid of a lot of the low‑tier, high‑support customers. You’re only going to have people who are really serious about business. As we’ve stated before on the podcast, $99 to someone who’s serious is really nothing.

Patrick:  It’s literally like less than one‑third of the cost of publishing this episode of the podcast.

Keith:  [laughs]

Patrick:  That’s not even the time costs. We have plus or minus $250 of hard costs associated with publishing a marginal podcast episode.  [Patrick notes:  Transcript, $90.  Audio editor, $150.  Bandwidth, ~$100.  Finally getting a podcast out the door?  Priceless.]

Keith:  You figure, like I just bought a $20 recording software. You just bought a $20 stabilizer. It adds up. You look at some of our customers for Summit Evergreen, the people who are successful, the people who have big businesses who are getting a million dollars of revenue through Summit, they are people who have support staff. They have Zendesk or Freshdesk, they have a CRM, all of which are more expensive than Summit Evergreen, even though our lowest price point is that $99, right?

You think of a CRM like InfusionSoft? It starts at what, $150, $300. EntraPort, I know, is $350 a month. $99 is small potatoes to real businesses.

Patrick:  By the way, if you don’t follow my blog and didn’t read the end of the year update, starting to be public Appointment Reminder numbers. It’s currently at about $6.5K a month in monthly recurring revenue.

Keith:  Very nice.

Patrick:  Plus an undisclosed amount on Enterprise plans. My goal for mid‑2015 is to get that to $15K a month in monthly recurring revenue, which after you subtract out the costs of good sold for the business, so basically my massive Twilio spend and also after you subtract out the kind of on‑target compensation for my consultants, then that leaves me with about plus or minus $10K a month of profit for the business.

I think if it hits the magic $10K a month number, it will be in a good place for either me continuing it or for spinning it out into a variety of possible acquirers. We’ll think a little bit more about that. Why I want to spin it out in 6 months, as opposed to 18 months, is a story for another day. We’re not public about that information yet.

Welcome Lillian!

Keith:  Good. We want to talk about family today.

Patrick:  Yes, we want to talk about family. Can I give the news about the new entry to my family?

Keith:  I’m going to say no, but then I’m going to say yes. Yes. [laughs]

Patrick:  Ruriko, my wife, and I were pleased to welcome Lillian, our daughter, into the family as of middle of October. I know the date, but I don’t want the Internet knowing the date, because for some reason that is treated as secret information. It allows you to open up credit card accounts in the name of a two‑and‑a‑half‑month‑old baby. Who knew? That brings us up to a total of three in the family. Keith and company, you guys are up to four, right?

Keith:  We’re up to four, yeah. I have a four‑year‑old and a two‑year‑old now.

Patrick:  Both of us previously did time in the salt mines at Japanese organizations, so we are no strangers to overwork. Depending on the day, I think both of us kind of occasionally get a little too wrapped up in this. I think that’s fair assessment for me and maybe for Keith as well.

Keith:  [laughs] That’s a good explanation, I guess.

Patrick:  Yep. I’m doing my deep thoughts and where I want my career and life to move and what’s really important to me. Spending 12 hours a day doing integrations for software is probably not it.

Keith:  Let’s talk a little bit about our life before this entrepreneurial stuff. We’ve talked about when we were at the Japanese mega‑corps and how it was soul‑crushing, and we worked, God, 16‑, 18‑hour days, et cetera. When we left that…

You left before me. I kind of carried over that same work/time ethic, and I was working around 16 hours a day, I believe, at that point. 16 to 18, I guess. How about you? When you left your company and got over that initial shock of, “Holy crap. Now, I’m free,” how much were you generally working?

Patrick:  It went all over the place. I had a good six months there, and you might remember this, of just total burn‑out, where I did virtually nothing and just slept for most of every day. Probably a bit of undiagnosed depression going on there too.

Then, after I stabilized in the business and started to spin up on consulting, it went all over the place. The most consistent thing about my business for the 2010 to 2012 timeframe was inconsistency. [joking] Bah-dum-bump.

There were many days where I did absolutely nothing. There were many days where I just answered email for 20 minutes to an hour and then called it a day. Then, there were some days where ‑‑ at the time I was courting Ruriko. On a day where she was working, there was basically nothing else for me to do in Ogaki other than either play League of Legends or work on my business. There were some days where I got up in the morning at 11:00 or so, dragged myself out to a cafe, had some breakfast, and then just coded straight for eight hours and then went home.

Keith:  There were some days when you did the same thing, except instead of coding, it was League of Legends.

Patrick:  Yeah.

[laughter]

Patrick:  Or somebody once did a time graph of my Hacker News comments, and it is impossible to identify core sleep hours for me, which is a little disconcerting. There are some days when I was hacking on work or work‑related things at 4:00 AM in the morning and heck a lot more where I slipped into like 2:00 PM.  Lots of inconsistency.

One of the things that, since getting married and particularly since having a kid, I’m trying to get on a “more human time schedule.” My schedule today was pretty representative. I woke up at 8:00, played around with Lillian until about 9:00, and then left for the cafe at 10:00.

I typically take one hour a day to go to a cafe, have breakfast, listen to podcasts or something, kind of plan out my day. Then, I got into the office at 11:00 and I’m going to be at the office here from 11:00 to 4:00 working on a combination of, A, publishing this podcast and, B, my three goals for the day on what I want to get done for Appointment Reminder.

Then, at 4:00, going home, family stuff for the early evening. Then, I might do maybe an hour or two of work later in the 10 o’clock‑ish timeframe, which is peak hours for me.

Keith:  It’s interesting to me that you mentioned waking up, you said at 8:00 or 9:00, and playing with Lillian and then you went to the cafe, because when I quit my job, I already had my first daughter. There was still within me that I can work whenever kind of timeframe.

I would sleep in. The kid wakes up at 5:00 or 6:00 or whenever she woke up, because she was a baby. My wife, gracious that she is, would take care of her in the morning. I might sleep in if I had been up ’til 4:00 coding. I might wake up early and start coding. But I had that free‑form schedule, because the baby was just a baby lying around at the house.

I would go into office, but it was so free‑form. The number one thing that, now I have to have an actual time schedule. I have an actual time schedule each day. The reason for that is because my girls are in school now. They’re in preschool and they have to be at preschool at a certain time.

I have meetings starting at a certain time, because now I know that I can’t just have a meeting whenever because I have to time it with taking the kids to school, getting them ready in the morning, making sure everyone’s fed, making sure I’m fed. Same at night, kids come home 4:30. They practice their piano, do whatever.

Dinner’s at 5:30, because if dinner’s not at 5:30, they’re not getting in the bath. If they don’t get in the bath, they’re not getting into bed. They’re not reading their stories. They’re not going to bed. Suddenly, it’s 9:00 and they haven’t gone to bed yet.

It’s interesting, once the kids reach a certain age where they have a schedule, your schedule then 100 percent changes because you have to apply what you’re doing to them.

Patrick:  This is applying magic of consulting pipeline management to the day‑to‑day management of a household.

Keith:  To be perfectly honest, it has helped my business so much to have this rigid structure. We’ll talk about this more in a second. Having the structure is just really important, both from a work‑life balance perspective and then also from a productivity perspective.

Patrick:  I think the word “forcing function” might be relevant to that. Either of us could probably have pushed for a rigid, defined structure earlier in life, but having children concentrates the mind and gives you both a rationale for figuring out what the changes you need to make in your business/day‑to‑day productivity/life are to accommodate these sudden new demands on your time.

In a way that, since failure is not an option, given that we’re fathers, fatherhood succeeds where a bunch of New Year’s resolutions in the previous years did not.

Keith:  That one interesting thing. A lot of start‑ups and even Japanese companies, they talk about, “Oh, if you have a family, well, you’re not going to work hard for us. You’re going to be focused on your family.” I find myself not only working harder, but also being more productive because I have that sense of failure.

If it was just me and I lost my job, meh, so what, I’ll go find another job. If I lost my job having to feed a family of four, it’s a lot more stressful. It motivates me to succeed and do better, because I know I have so much more to lose. These people, my daughters depend on me.  [Patrick notes: Keith has a slightly different take on motivation than I do.]

They can’t go out and get a job. They depend on me to feed them, to clothe them, to put them in school and also to be a good father. I have to improve what I’m doing and improve the work that I do in order to be more successful for them. It’s no longer just my enjoyment or my life on the line.

Patrick:  Yeah, totally understood. I think if we get into an extended discourse on manhood or adulthood in the modern age, I definitely did not feel at, say, 29 [Patrick notes: I am 32] that I was a bonafide adult yet, despite running a business that was theoretically making some other folks lots of money.

Then, got married and didn’t quite feel like an adult yet. But now that I have a little infant who is easy to break and will literally die if I do not treat her correctly, I suddenly feel like a certified adult. Yeah, I’ve been kind of like kicking things into gear on that.

Let’s talk a little bit more about that Silicon Valley mindset, though. I orbit Silicon Valley at a certain level of distance, partly through Hacker News participation and partly because I had a number of consulting clients or less formal business connections out there.

I used to go there maybe twice a year or so to catch up with people. A very common thought in the start‑up ecosystem is that you’ve got to make hay while the sun shines. Your 20s are the time to work like an absolute dog, do 70 or 90 hours a week, get an exit. Then, after you have the exit, you can get married and have kids, if that’s your thing.

A lot of the folks in Silicon Valley look a little askance at that being your thing. It’s like, “Oh, he wants to have kids. Nothing wrong with that.

Keith:  [laughs]

Patrick:  Be that as it may, it’s one of those curious youth‑focused myopias that the industry has. There’s many, many jobs, which are objectively speaking more intense on a timescale or less forgiving of juggling multiple obligations than, say, working at a Silicon Valley start‑up or even founding a Silicon Valley start‑up is.

If you’re a partner at a law firm, you can’t just roll into the office at 2:00 PM and say, “Well, sorry everybody. Late night partying,” which most start‑ups will tolerate pretty decently, if you only do it occasionally.

Keith:  It’s interesting, because my father and my grandfather are both entrepreneurs. My grandfather, I think he started his main company at 35. My dad was, I think, 40 or 42 when he started his company. By current Silicon Valley standards, they were ancient. Who’s going to be an entrepreneur at 42? But they built huge, successful companies.

Patrick:  Can I tell you a priceless anecdote on that?

Keith:  I would love that.

Patrick:  Someone who read to meas being about like 23, asked me when I was 30, on a trip to Silicon Valley, “Aren’t you supposed to be a VC now? I mean, your career is pretty much over, right? You’re 30.”

Keith:  [laughs]

Patrick:  It’s like, now that is a forehead‑slapping inducing moment for me because, oh man, you’re so young. You understand nothing yet. I think both of us plan on doing this essentially forever. Probably 98 percent or so of the value that we’re going to create in our careers is in the forward mirror as opposed to the rearview mirror.

Keith:  Definitely.

Patrick:  It’s so crazy. This is one of the reasons that I can never commit to doing the Silicon Valley lifestyle, just because the social construction of that lifestyle seems to be, frankly, bonkers.

Keith:  Not all of it. You can’t generalize because there are some amazing things going on. You and I both went up there and were talking to a lot of people. It felt like college plus two.

Patrick:  College plus two. There’s so many things about that. [Patrick notes: I have a theory that several Silicon Valley ecosystems pretty much explicitly pitch working at a startup or founding one as a surrogate class that you do to earn the respect of your surrogate teachers.  This is very effective for a certain psychograph of high-achieving Stanford grads who have spent their entire lives doing anything required to please teacher and get an A on the exam.]  We might do that in a different episode. Let’s talk more about our beautiful daughters because they’re much more fun.

Keith:  [laughs] I actually want to talk about something interesting that we briefly mentioned on, which was how we have these time constraints and it’s forced focus. I remember a little while ago there was a talk about comedy on Twitter and how comedy on Twitter and how discourse on Twitter was changing the way that comedy worked and not improving, but creating a whole different genre of comedy because it was limited to those 140 characters.

It was talking about how limitations to art forms create better art forms in certain situations. It’s the whole limitations create creativity. I really think it’s the same with work. When you have forever to do something and you have no constraints and you have no set budget, let’s say. You have no set budget either for money or time or what needs to get done, things take a long time.

You decide, “Oh, I’m just going to do it myself.” You don’t have that focus because you don’t have any external constraints. We were talking about, especially when the kids go to school and, even now with you, you come home at a certain time. I have a hard stop. 5:30, lights go off in my office. I’m at home.

I can work after that. After the kids go to bed, I can go back to work, but at 5:30, I have to stop no matter what. Now, I have limited time and I have these hard stops that I must obey. A lot of people think that’s a bad thing and it’s not. It’s a good thing because this is the basis of business.

Delegating Responsibilities To Save Our Sanity

Keith: Because whenever you’re running a business, whenever you’re doing a business, there is so much more to do than you have time or the ability to do. You have to learn to delegate. You have to learn to prioritize. Having these external forces, these external walls making you, these limitations, it forces you to be smarter with your time.

It’s no longer viable for me to spend 20 hours deciding if we’re going to use Apache or nginx and tweaking the config files and everything, because there’s 100 other things that I need to be doing with my business besides setting up this one server. What do I do? I delegate it to someone. Because it takes five minutes of my time. It might take them 20 hours. That’s fine. That’s what I pay them for.

Patrick:  Do you find that you do more delegation now that you’re a little more constrained on the amount of time you can put into the business?

Keith:  Delegation has always been my hard point. I always want to do things myself because I love solving the problems, but it’s gotten to the point where I have to delegate. To answer your question, yes. I delegate much, much more.

I had done that talk at MakeLeaps up in Tokyo and you had re‑tweeted that. We were talking about meeting notes. The biggest thing I’ve done is delegating meeting notes, so that I record the calls. They go to my note‑taker, and they pull out the to‑do items and everything. I’m not sitting there rewriting all my to‑dos and putting them in Asana or JIRA, making all my calendar invites and everything like that.

Anything that is not moving the business forward, I think, needs to get delegated to someone on my team.

Patrick:  This is historically one of the big differences between your business and my business, because while we do roughly similar things ‑‑ we were both consultants for a while, we both have product businesses now with different levels of consulting still remaining in the business ‑‑ I’d always been kind of like a solo shop until recently.

You have had, for the last couple of years, a team of contractors who assisted you with the provision of consulting services and now help you out with that day‑to‑day business administration. It’s been a major thing for me that I was a solo bootstrapper, accent on the “solo,” for the first eight years or so of running my business. That changed recently.

I think it probably wouldn’t have changed but for the birth of my daughter being a forcing function. It must have been the TMBA guys, “Tropical MBA,” another great podcast, who said that there’s three levers that you get to adjust productivity in a business. You have your time, your level of savviness and money that you can throw at problems.

If you want to increase the number of sales that your business is doing, you either have to throw your time at making the sales, throw savvy at producing systems or being better at sales than the average bear, or throw money at the problem, either lead acquisition or in paying someone to do your sales work for you.

Like we said a little bit ago about constraints driving the business, back when I was salaryman, I had no time and I had no money. 100 percent of why Bingo Card Creator worked was savvy, savvy and more savvy on the media marketing front. That probably actually helped develop my savvy muscle, because I was exercising it so much.

Once I went on to doing my own stuff full‑time, I didn’t have as hard a constraint on time any more. While I probably increased on absolute levels of savviness, the percentage of my maximum capability of savviness that I was using on a day‑to‑day business and the percent I was growing in terms of savvy probably decreased, because there were a lot of problems where I could have solved them with additional thought but I just threw hours at it because I suddenly had a lot of hours to throw at things.

Keith:  Right. It’s interesting, because not only do you have a lot of hours to throw at things but menial tasks are easy to do, right?

Patrick:  Right, and they certainly feel like you’re winning when you’re doing them, which is the most toxic thing ever.

Keith:  I just took all my addresses from Evernote and put them into Excel so I could print out Christmas cards. Like, “I was very productive today,” except for the fact that that took me eight hours. That’s a full billable day that went away. Or I could have hired a VA to do it for $10, $15 an hour. What’s the bigger win there?

It feels like I was so productive, but when you look at the benefits to the company or just the benefits to my life, that’s eight hours I’m never going to get back. I could have done so much in those eight hours. But it felt good while I was doing it.

Patrick:  I think some of the work like that has that seductive quality of feeling like work, even though it doesn’t meaningfully drive the business forward. I’ve been doing a lot of architecture/underpinnings work to get Appointment Reminder in a better situation to move more accounts in the next six months.

Yesterday, for example, I spun up a new server to decouple the marketing site from the infrastructure for the main application.  I’m glad it happened. It has needed to happen for a few years now, but rationally speaking I should probably have found a sysadmin available for this and just thrown a couple of hundred bucks at them and had them do it, rather than losing that day or two to make a 90 percent solution.

I’m trying to get better at that. I’m finally working with a salesperson to do some of the sales activity. I have a, knock on wood, repeatable sales process in place for her, so that I copy and paste it out what I’ve said and done before that actually results in us closing deals. Then, we’ll have her turning the crank at it everyday, rather than me turning the crank on it.

Identifying As A “Solo” Entrepreneur

Keith:  Exactly. I think it’s interesting, that you had that pride of being a solo entrepreneur, a solo founder, a solo product guy with your software. It’s interesting because, when I started doing the consulting the products, I already had one child, right? I never had that time freedom. I think it gets really interesting that, now that Lillian has been born and you have those time constraints now, you’re like, “OK, now I can’t do this solo thing anymore. Because if I do the solo thing, I’m going to be spending all my doing this. I’m never going to see my kid.”

Patrick:  Yeah. There’s ways I could reconfigure the business to make the solo thing still work with both achieving business objectives and not crunching my quality of life at the same time. But it’s like, “Well, you get a certain number of decisions that you’re allowed to make, to move to levers.”

At the end of the day, I like this identity of myself as solo entrepreneur but I’m not willing to compromise on my family, because that’s a terminal value for me. That’s not on the table. Then, it’s like, “OK, do I compromise more on what my desired identity is or do I compromise more on what the desired trajectory for the business is?” I was like, “Well, the solo entrepreneur chapter was a great chapter in my life. But starting a new chapter, I feel like I’m kind of ready for that.”

I might cry a tear or two about my internal conception of what my business is like, but that’s the only change that’s going to happen to it. On the positive side of the ledger, it’s going to grow much faster and help other people out for supporting their families too, give my customers a better experience and let me do more fun work on a day‑to‑day basis. Hmm, tough decision here.

Keith:  Exactly, exactly. For me, that self‑identity I think is important but you also think, “OK, growing the business isn’t just for growing the business,” although with personality types like us, it’s kind of like a game, right? You want to grow the business because we like seeing the numbers go up.

Patrick:  It is totally WoW gold for me.  [Patrick notes: I care quite a bit about my metrics for each year, almost entirely for ego reasons.  Crushing my last year’s numbers makes me feel like I’m winning the game.  In terms of actual money?  Not nearly so interesting.]

Keith:  It is, it really is. But at the end of the day, growing the business and making the business perform better gives you two major benefits for your family. One is, the more automated your business is, the more time you get to spend with your family. Two is, the more successful your business is, the more money you have in order to have that financial freedom with your family.

I went to the States for three weeks a couple of months ago. I was talking with one of my dad’s friends. He’s retired now. He was talking about when he was in his 30s, he had built up a number of brick and mortar stores. He had managers and people were managing them. He was sitting at the pool with his co‑founder on a Wednesday afternoon, just sipping margaritas.

He was like, “Isn’t this amazing that we have this huge multimillion dollar business with 10 stores throughout the area? We’re sitting here on a Wednesday afternoon, sipping margaritas at the pool.”

Patrick:  Man, that is the life. Aside from the margarita. I’d be doing iced cocoa.

Keith:  [laughs] I’d get bored with it. I would get bored with it, but I’d like the freedom to do that.

Patrick:  Definitely.

Keith:  For me, the business automation, the freedom gives me two things. One, it gives me the freedom to spend the time I want with my family. It gives me the freedom to focus on the parts of the business that I want to focus on. I don’t have to worry about putting out the payroll checks and making sure that all the checks get out there, and pressing submit on all the forms, because someone’s doing that.

I can go in and say, “OK, we need to re‑look at our automation funnels.” Or, “Hey, this marketing page is getting kind of stale. Let’s re‑do it.” Or, “Hey, why don’t we call Jeff and set up this awesome new joint venture?” It gives me the freedom to be able to do that when you have a successful business. It gives you freedom when you have an automated business. It gives you freedom not only in your business life, but also in your personal life.

Patrick:  Yeah. One of the things…I don’t know, I have a weird relationship with money. I think that’s true of many people. We both got paid at the Japanese scale when we were working in Japanese organizations, which for somebody right around our age, it’s like plus or minus $30,000 or $40,000 a year. It’s not exactly a secret ‑‑ both of our businesses are doing a little bit better than that these days.  [Patrick notes:  n.b. Keith’s is a whole number multiple of my business and that whole number is not 1.]

Keith:  [laughs] My wife’s very happy, because she can now buy butter. That’s her major thing about me starting my business, is now we can buy butter instead of margarine.

Patrick:  The biggest concrete change it’s made to my family’s quality of life is, for semi‑related to Lillian being born reasons, we decided to move from Ogaki to Tokyo. The rents here are…

Keith:  Astronomical.

Patrick:  Pretty outstanding.

Keith:  [laughs]

Patrick:  My rent is literally more than my last salary was in Japan. Obviously, this would not be a viable option, at least not living in the apartment I currently live in, had we stayed in that trajectory, but it is…I won’t lie, when I see the rent get debited from my bank account every month, there’s still a little bit of, “Eek, that’s a whole lot of money,” But the business allows my family the opportunity to live in a place that my wife really loves and I’m really starting to like, and that I think will be a bit better for our daughter.

Keith:  Actually, it’s interesting that you mentioned that, because that’s something that we talk about constantly is, because of the business and the way I do my business, we have absolute freedom to be wherever we want. The problem is, when the kids…the kids are still in preschool. We don’t have this problem yet, but when they go into elementary and junior high, we’re suddenly stuck at a place.

We can’t go off to the US for three months because we want to, so it’s really making us make the decision. OK, what do we want to do? Do we want to raise them in Ogaki, which is not a bad place but it’s not cosmopolitan? There’s old ways of thinking. Do we want to live in Tokyo? Do we want to live in Osaka? Do we want to go to the States? My wife wants to go to southern Italy. I’m not learning Italian. [laughs]

Patrick:  [laughs]

Keith:  But it brings up a lot of lot of questions about what do you want to do for the family and what do you want to do with your life. If If I was a salaryman, there would be no way to make this decision. It wouldn’t be a decision. I could not make this decision. This is where my job is. This is where I have to live.

Patrick:  Or the decision might be made for you without consulting anyone.

Keith:  Oh god, yeah. The “Hey, now you’re working in Tottori for no reason.”

Patrick:  Japanese companies, for those of you that haven’t worked for them, have this wonderful cultural thing called tanshin funin (単身赴任) which means that the bosses can come up to on Monday morning and say, “Hey, guess what? From Tuesday, you’re going to be working out of our New York office,” or a place much less desirable to live than New York. “BTW, it’s just you. Your family won’t be going with you. We’ll start you off there for three years, but we could call you back at any time, or move you anywhere else at any time.”

Keith:  Yeah, and that’s not only abroad either, because abroad, maybe you’d move your family over there, although most people don’t. They have them inside Japan as well. You’re a three hour bullet train ride away from your family, everyday except Saturday and Sunday.

Patrick:  I know an engineer who was close to us in age range and life circumstances. He just got told that, “Oh, I hope you’ve had a great time living in Nagoya, where you’ve lived your entire life. We will now name one of the most rural prefectures of Japan where we have a factory. You are going to be supervising it, starting tomorrow. Have fun.” Japanese companies, oh boy.

Keith:  [laughs]

Patrick:  That’s another discussion.

Keith:  But it fits in with our discussion of family.

My wife actually works with me now. She does our sales and marketing on the Japanese side. She’s really become an amazing marketer. She has her teaching degree, and she was going to be a teacher. One of the things that teachers have in Japan is, the first three years, you don’t get to choose where you go. In fact, you don’t get to choose most of the time, but the first three years especially, they send you to some god‑forsaken place for no reason whatsoever.

Gifu, where we live, is a fairly large prefecture compared to other prefectures. Other prefectures, it maybe takes an hour to drive from one end to the other. Ours is about…what four hours, three hours? It’s a huge prefecture.

We’re in the absolute south, and they just love to send all the new teachers from here to the north. She’d live five hours away by car. At that point, it’s like, “I have a family. I have a husband, I have a kid. Am I going to live five hours away for three years, just to become a teacher? Then, maybe I’ll get to come back?” It really puts some big questions, and she decided to not become a teacher because of that.

She had the highest ranks in her school. She was number one ranked for all her teaching certificates and everything. She didn’t become a teacher because they would have forced her to move five hours away, and I couldn’t go.

Patrick:  I think a lot of people will make the other decision too, which is given the needs of their career they will sacrifice the dreams of having a family on that altar ‑‑ one of the reasons why the Japanese population growth rate is hitting the lowest of low levels.

Keith:  It’s interesting. Everyone always talks about, “Why aren’t people having kids in Japan?” There are two very big reasons. First of all, we’re worked like dogs because if you have no time and you’re too tired when you get home, there’s no way you’re going to have kids. The second one is, there’s no societal way to raise kids here. All of the preschools are completely full. I had to wait outside for two days to get my kid into preschool.

There’s no babysitters. There’s no after‑school services or anything for little kids. It’s getting slightly better, but not good enough. The reason is, Japan didn’t have nuclear families until recently. It used to be you lived with grandma and grandpa, and they helped take care of the kids. Now, no one wants to do that. Even the grandmas and grandpas, they’re like, “I don’t want to live with my kids. I want to have my own life.”

But society is not catching up to that. This idea that we have in the US of play dates, where you send your kids over to someone else’s house and they all play together ‑‑ then, one day they all come and play at your house et cetera, and the other parents get to take a day off. They don’t have that here.

Patrick:  Or the institution of babysitting. If you explain babysitting to an average, middle class Japanese person, you get looks of unrestrained terror on their face.

Keith:  In fact, I’ve actually been told, “Why would you trust your kid to another person? How could you?” Especially a 16‑year‑old or an 18‑year‑old. “I don’t know, that’s how I was raised. I [laughs] never had any problem, I’m still alive.”

Patrick:  This is one of those things where I think sometimes cultural differences are oversold, but this is definitely an American thing, where it’s like, “Yeah, sure. I’d like to entrust my four‑month‑old infant and my house and all of my possessions to a 12‑year‑old girl from the neighborhood. My only reason for trusting her is that she is from the same neighborhood, and that one person said two sentences of recommendation on her behalf.” It sounds totally reasonable.

Keith:  [laughs] When you put it like that, I don’t know how my parents ever decided to do that. One of my babysitters was actually named Candy, believe it or not, when I was younger. I don’t think she lasted long. [laughs]

Patrick:  Anyhow…

Keith:  [laughs]

Patrick:  Funny we should mention that, but given that it takes a village to raise a child, burden tends to fall in family in Japan, rather than falling on the rest of the village. One of the things that I’m hoping to getout of growing the business is we’re hoping to be able to support Ruriko’s mother moving to Tokyo. It’s been something on her to‑do list for a while, but not something that she can afford on a pensioner’s income.

If we were able to help underwrite that, that would both achieve a goal for her and make life a bit easier for us in having close family close by, helping to raise Lillian.

Keith:  I think that’s amazing. That’s the first I’d actually heard of that. I think that’s amazing. I think it’s good to have those business goals that are not business goals, right?

Patrick:  Yeah, like there’s a purpose to all this grinding that we do everyday.

Keith:  Exactly, exactly. I have a goal for this year that I’m not going to say out loud, because I don’t want to jinx it. But I was talking with some of my friends. One of my friends, in particular, he says to his accountant, “Give me one number. This is the number that I need every month in order to live the life that I want to live, so I don’t have to worry about money. It takes into account all my general expenses. It gives me a $500 or $1,000 buffer every month that I can do fun stuff with. Give me that number.”

That’s the number that his SaaS has to reach every month. That’s the number that he shoots for. That’s what he focuses all his attention on, is raising that MRR number to that point. It’s the same for me. I have a goal that I want to do this year, hopefully in the summer. In order to do that, I have to have a certain amount of money coming in from the business. That means I have to automate it. I have to make sure that the business is growing in the right direction, because even if I make the money and the business goes down, we can’t do it.

It has to be far enough that we have that safety net and that number, and that’s our goal is to be able to reach that and to have this fun thing that I’d like to set up.

Patrick:  I would suggest just as a micro‑tactical thing, put that goal on your dashboard. I had my revenue goal put for Appointment Reminder on my dashboard at the bottom of the screen, which is the wrong place for that.

Keith:  [laughs]

Patrick:  Because as the business got more successful, the goal got pushed down such that I would only ever see it if I Control+F’d and searched for it. Stick it to the top of the screen instead, so that everyday or every Monday, you check in and say, “OK, where are we with regards to plan?” Give yourself a little bit of a kick in the pants to do the work this week, to get you a fraction closer to it.

Keith:  Actually, I think we’re going to need to start winding down this episode but I did want to mention one thing off of the having that number in front of you. In another life, I did the inter‑office dashboards. It’s essentially giant TVs with the KPIs, the numbers that matter for the business or matter for that department.

There’s this great psychological effect that, when you have that number in front of you constantly, you’re subconsciously always thinking about that number. You’re always thinking, “OK, how can we increase that number? How can we reduce that number, if it needs to be reduced? What can we do to move that number?” It’s no longer this thing that I’m thinking about once a week in the shower, “Oh, yeah. We have to increase our opt‑in rates,” let’s say, “or decrease our churn rate.”

It’s something that is always in front of you. Having those numbers ‑‑ not a ton of numbers, like maybe five to six that are important to you and show you the core of your business, psychologically, it’s a huge motivator for getting to accomplish those goals.

Patrick:  It totally tracks with my experience. It’s easy, even our really important numbers like yearly revenue, if you don’t have it automatically updated, you might not know where that is. That’s sort of a surprising statement, right? But until getting my bookkeeping systems improved recently ‑‑ which, by the way, a shout to Bench, they’ve been instrumental in that ‑‑ I did not know my yearly revenue until I did taxes every year. I had a rough guesstimate like, “Oh, it’s certainly above 100, uh…”

Keith:  [laughs]

Patrick:  There were a bunch of times over the years where I had laser‑like degrees of precision with regards to my conversion rate, or I could tell you how many customers I had down to like three significant digits. If you asked me how much money the business made last year, it would be like “Um, I don’t know.” Yeah, graph it somewhere and make it automatic, but if you have company events, make that one of these things that at the weekly standard meetings, “And remember, our KPIs are X, Y and Z currently. The goal is this. Do your best on moving them in the right direction over the next period.”

Keith:  It’s very important, like you say. You said, “X, Y and Z.” It’s important not to have a ton. Everyone starts thinking, “Oh, I’ve got to monitor all these numbers.” These numbers are all‑important, but when you have too many numbers, you’re not looking at any one.

Patrick:  Right. You can spend an unlimited amount of time in Google Analytics, on optimizing the conversion rate to email sign‑ups of people who are entering through this particular blog post…but that’s not ultimately where the core growth of the business is going to come from. It’s not where the major changes to your life or your employees’ lives are going to come from.

Keith:  It goes back to those what we were talking about earlier, with the hard stops ‑‑ the limited time, limited focus. Pick three, maybe five at the most. These are the things you need to focus on. Just like in my to‑do’s every day, I know I have a limited amount of time. I pick three goals that must be done and two stretch goals. That’s my to‑do for the day.

Patrick:  Makes sense. All right. Well, I think we’re in a pretty good place for this episode of the podcast. Thanks everybody for your patience. Keith and I are, knock on wood, going to be trying to get these out a little more frequently, although it sounds like it feels some deja vu.

Keith:  I think we’ve said this for the last two years now. Although I have to say, this podcast was only about 40 minutes, 30 or 40 minutes. Very easy to knock out. Hopefully, we can get these out a bit more often.

Patrick:  Yeah, I’m looking forward to it. As always, we’d appreciate your thoughts on the podcast, whether the new format works for you and what you’d like to hear about. Drop either of us an email. My website is at www.kalzumeus.com, which…well, you’ve presumably figured that out, if you’re listening to this.

Keith’s is at Summit Evergreen, where you can sign up for some email about his service, if you’re interested in that. Our email addresses are readily accessible.

Keith:  All right. Thanks very much, Patrick. Thanks everyone for listening.

Patrick:  Thanks a bunch, Keith. Thanks everybody for your time, and we’ll see you again in a few weeks.

Keith:  Cheers.