Ep. #720 - Don’t Get Stuck in the Middle
In this episode of Startup Hustle, join Matt and Matt for Part 39 of “How to Start a Tech Company” as they discuss what it’s like having your startup get ‘stuck in the middle’ and how to avoid it.
Covered In This Episode
Businesses that don’t fail but don’t scale are typically considered “stuck in the middle.” This is usually caused by factors such as premature scaling or failure to achieve product-market fit. Business owners must learn how to pivot and move forward to get out of this stuck phase.
Matt DeCoursey and Matt Watson discuss the common mistakes founders make that lead to them getting stuck in the middle. They tackle issues such as premature scaling and failing to pivot. They encourage entrepreneurs to make tough decisions and have tough conversations to avoid the tougher endings.
Join the Matts in this Startup Hustle episode to learn more about moving forward when you feel stuck.
Missed the previous episode? Click here to listen to the other episodes of the “How to Start a Tech Company” series.
- What does it mean to get stuck in the middle? (2:23)
- Premature scaling (5:15)
- What factors contribute to or lead you to the middle? (6:23)
- Common mistakes Tech companies make (7:18)
- Possible outcomes of being in the middle (8:32)
- Tough decisions in business (10:45)
- The competition is tighter now (14:55)
- Innovation helps you get “unstuck” (15:15)
- Full Scale’s story (16:08)
- When a business is not growing (17:27)
- The traits that make entrepreneurs successful (19:05)
- Employee relations (20:53)
- Tough decisions and tough conversations (21:42)
- Working on the business vs. working in the business. ( 23:25)
- Having tunnel vision (24:28)
- Self-discipline is tough (26:29)
- Make it easy for others to help you (29:44)
- Risks in doing business (32:26)
- VinSolutions’ story (36:16)
- Radical changes in industries (44:05)
I’ve talked to a lot of founders over the years that seem unable to make tough decisions. They realize they’re burning their capital quickly, that they have people that are underperforming compared to what they’re being paid or what they could be replaced for. And they just don’t want to make a tough decision.Matt DeCoursey
You can’t have million dollar ambitions with minimum wage budgets. It usually doesn’t work that way.Matt DeCoursey
In the startup, everybody’s got to pull their weight, or it drags everybody downMatt Watson
A lot of times you’re just trying to do too many things for too many people. And you haven’t honed in on a niche enough yet to really focus on that specific audience and build a really superior product for them.Matt Watson
You have to redirect. Figure out how to sell more or spend less. Those are the binary-type options for getting out of the middle.Matt DeCoursey
People avoid doing things that they don’t like.Matt DeCoursey
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:00
And we’re back, back for another episode of Startup Hustle. Matt DeCoursey here with Matt Watson. Hi, Matt. What’s going on, man? I’m stuck in the middle with you, bro.
Matt Watson 0:11
I feel like there’s a lot of songs we could sing right now about being in the middle.
Matt DeCoursey 0:15
Like literally stuck in the middle with you. Yeah, that’s one of them. I don’t know who’s saying that. I feel like my setlist should include that. You know Matt, a lot of entrepreneurs and startups and businesses, in general, get stuck in the middle. And I’ve even referred to them as Metaline. And that’s what we’re going to talk about today, sir.
Matt Watson 0:39
Yeah, I feel like I was there. So I’ve been there. I have those scars.
Matt DeCoursey 0:45
And plenty to talk about. I’m the same here. Now, what would you like to do? Would you like to mention who’s sponsoring today’s episode? I want to keep growing your skills. So you’re not stuck in the middle here on the podcast?
Matt Watson 0:58
Absolutely. Today’s episode of Startup Hustle is sponsored by Chatdesk. Does your business receive a high volume of phone calls? You can deflect over 10% of your calls to Facebook Messenger and save up to 80% on your support costs. For Startup Hustle listeners, Chatdesk is offering their call deflection service for free throughout the holiday season. Learn more at chatdesk.com/shift or click the link in the show notes, chatdesk.com/shift. And by the way, I was using my Android phone the other day to make a phone call. And it offered to do a chat instead. And I was like very happy. So thank you, Chatdesk, for enabling this wonderful innovation.
Matt DeCoursey 1:39
You know, Matt, you are no longer stuck in the middle. Congratulations, we’re going to change your title to brand ambassador. Okay. Brand Ambassador, uh, Chatdesk relations. So there you go. So, as we mentioned, and thanks again, do I have to say chatdesk.com, forward slash shifts, Chatdesk.com, forward slash shift, Chatdesk.com, forward slash shift? If you’ve been keeping up? We’ve been trying, I did it three times faster. Now.
Matt Watson 2:08
That’s pretty good. Yeah, that’s pretty good. Yeah,
Matt DeCoursey 2:10
I’m gonna keep practicing. If we’re going to switch roles. Now, you mentioned being stuck in the middle thing. I mean, this is real. It’s real. So when you think about getting stuck in the middle of the business, I mean, what does that mean?
Matt Watson 2:23
Usually, when it relates to a tech company, it has to do with product-market fit. And what commonly happens, and you know, I can, I can be guilty of this, I’m sure you’re guilty of this, we we have some grand vision of building some software product, and we build it, and we think it’s cool. And we like it, and we find three of our friends that like it enough to try it and use it. But then nobody else really cares about it. And you just struggle to get market-wide adoption. And it’s just the product doesn’t just quite have a product market fit. And it’s a fun topic to talk about.
Matt DeCoursey 2:58
I think you can be stuck in the middle, even if you do have a good product, product market fit. There’s a lot of different reasons for it. You know, and I didn’t write this that our production team here at Startup Hustle literally has a note here, businesses that don’t fail, but don’t scale. Yeah, like, I think that that’s I think that that is a great explanation. But when I think of meddling, I think of any business. And this could this isn’t just tech companies, but businesses in general. So you look at you go through the early stage, you’re not meddling in year one and year two. And if you’ve grown enough to stay in business, sometimes that’s all you end up doing is just staying in business. And for a lot of tech companies, too, it becomes for for founders, it becomes an increasingly challenging situation to address professionally and personally. Because, you know, typically, as founders, we often work for peanuts for a while, and then all of a sudden, you get older and things change. And you have a wife, you have kids, you have a house payment and stuff like that. And all of a sudden, you’re realizing you’re the business isn’t growing and providing for you the way you need it. At the same time. You don’t want to throw it in the trash, because you’ve got like five years in it, but you get stuck in the middle. So these businesses that aren’t growing very quickly, are almost impossible to get investors and funding for. Yeah, which leaves them in the middle as well. So you kind of like shit, what do I do? And this is why you see people well, tech companies, they’ll either just trim everything down to a minimal level and I call that cash counting. They just kind of put the cash cow out to the pasture. They don’t innovate anything new. They just kind of collect what it is or they sometimes just shut them down. So or sell them for pennies on the dollar.
Matt Watson 4:45
Yeah. And it’s it’s a very frustrating, frustrating place to be and you’re right investors aren’t interested in these companies because they don’t have the growth rate. You know, if you’re growing 5% A year 10% A year just zero. Like that’s not very attractive. You know, these venture capitalists and stuff want to see 40 50% plus a year. And of course, they love to see even more. But
Matt DeCoursey 5:08
if you’re just wanting to learn about your year 12% growth year over
Matt Watson 5:11
Yeah, this is not very exciting to them to get their money back.
Matt DeCoursey 5:15
Yeah. Unless that 12% is on a huge number. It’s not going to be. Yeah, it’d be very exciting. So when you talk, you know, you mentioned product market fit, which is the degree to which a product satisfies a strong market demand. What about premature scaling? I mean, do you think that sometimes this occurs, because companies are trying to scale before they’re ready, and then they blow through their capital? And now they’re like, oh,
Matt Watson 5:41
yeah, that happens a lot for sure. In a tech company, where you almost over engineer the product in some some way, right? Like, we spent all our time trying to perfect this one part of the product. But if you were to take the time to go talk to the customers, they might even care about that part of the product, or that was money you could have spent on marketing or on sales or something else. But you’re putting all of your time and effort into, you know, the product or certain type of product, I was referred to it is like being the mad scientist in the laboratory. Right, just continuing to build and tinker. But you know, not getting out to market and finding out what the what the, you know, the market really wants and trying to sell it
Matt DeCoursey 6:23
all. So yeah, and we’ve also compared that to this, that we have that kind of fable we tell the shopkeeper that so obsessed with keeping the store clean that he forgets to open the door. And I mean, that can happen a lot, too. Now, we’ve mentioned premature scaling. So according to the startup Genome Project, premature scaling happens when entrepreneurs start focusing on one dimension of the business and advancing it out of sync with the rest of the operation. Yeah, so then that, so that could be over building a product, it could also be under building a product, and then you blow through all your money trying to get people to use it. And you’re like, Oh, wow. Okay, so we didn’t adapt, pivot change, move forward or lesson through what people said? Yeah, happens a lot. What? What are some other things you think are that will contribute or lead you to the middle?
Matt Watson 7:18
I think a lot of it is product market fit for a tech company, you know, I was, had lunch with some people, you know, we’ll mention their name yesterday. And they were having this same sort of conversation. It’s like, you know, why do people buy your product? How are you different than your competitors, right. And they’re like, Well, we do best with enterprise accounts that have you know, 10 or more users. But we’re thinking about spinning, spinning off, like a light version of a product that’s designed for one or two users. And they, you know, part of the problem you have as a tech companies, you want to try and do everything, and you want to try and own you know, the whole market, right. But that’s usually what kills companies. It’s like, Look, if enterprise businesses your forte, go focus on that, forget the rest of this shit, instead of trying to spend a bunch of time also trying to chase the customers that want to spend $20 a month, but could use Excel instead of buying your product. Right? Like, that’s not, that’s not the place to be, go chase these big enterprise accounts, if that’s where you’re having success. But more often than not, companies struggle with focusing on a specific particular niche, or particular, you know, persona or audience, they just try and solve every problem for everyone, which means they usually solve no problem for anybody.
Matt DeCoursey 8:32
No, I agree. I agree, I think there’s a lot of stuff that getting caught in the middle, I think some of the things that we mentioned are definitely, you know, there, I mean, you’re gonna see a lot of companies in tech, they get some early funding, and then they just don’t really meet up to the expectations of what they have what they’ve done. So like, if someone gives you $2 million, and you don’t do shit with it, it’s hard to get someone else to give you 2 million. And, you know, you hear you hear the term down round, which in, in the world of tech is like not a tag you usually want on you. But that’s when you raise money at one valuation, and then the next round you’re raising at a lower valuation. These are some of the signal flares that that’ll come up. That might suggest you’re heading to the middle now. You know, it’s now in some places, the middle isn’t the end of the world. You know, you can maybe survive and live in the middle. Do you think you can live long term in the metal? Or is it kind of like you, you’re eventually going to die on the vine?
Matt Watson 9:34
I think there’s a lot of companies that do they get to a certain size, that in some forms that may also become just kind of a lifestyle business, right? It’s like, oh, we have 10 employees and we’re doing fine and we’re just kind of plugging along. We’re not really growing very quickly, but we’re doing okay. And and that may be okay, and depending on the type of product you have and the market you’re in that could be fine. Like you could personally be there forever. But if you’re in a, you know, a real high growth market that’s a got a lot of competition and stuff like that, eventually, you may just get steamrolled. But I was talking to a friend of mine, just yesterday, he has a business like 15 years old now. And he eventually kind of pivoted into a certain type of software product where that he was helping hospitals manage their facilities. And it was like a real specific niche. And he was doing great in that, you know, little niche, just, you know, and it’s like, a real obscure thing that nobody would ever think to build software for. And just, you know, plugging along, right, and that’s okay. Not, you know, not every business needs to raise millions of dollars and become a billion dollar business one day, and frankly, 99% of them won’t, right. And that’s okay.
Matt DeCoursey 10:45
So there’s a few things that I think contribute to being stuck in the middle, when you talk about, you know, a business and its capital, especially, you know, one of the things is, I see a lot of, I’ve talked to a lot of founders over the years that seem unable to make tough decisions, you know, like, they realize they’re, they’re burning their capital quickly, that they have people that are underperforming compared to what they’re being paid or what they could be replaced for. And they just don’t want to make a tough decision. And it’s kind of it’s the equivalent of like, a boat out at sea that’s like, Hey, captain, there’s rocks. And they’re, they’re a little out in the distance, but they’re common. And if we don’t change course, we’re going to head on, and the captain just sits there and stares and stares and stares. And just for whatever reason doesn’t feel like changing the course of things. Which leads to hitting the rocks. I mean, do you have you I you know, I don’t want to say I’ve hit the rocks. But I think all of us that own or manage the business have had some part of it, that fit that description.
Matt Watson 11:56
Well, and in definitely in in just specific app, you know, aspects of the business, right, like be like, Oh, marketing, like marketing is just not working, like the strategy does not work. And we were sitting here every week staring at it knowing it’s not working like to your to your point. And I think that that definitely happens at time. So all of us with different aspects. And you’re talking about the analogy, the boat, like I always think of that kind of analogy, whenever you take venture capital, like I feel like you, they give you a bunch of money, they expect you to go spend it and grow fast. But then you like start racing towards those rocks in your boat, like very quickly. Because if you don’t grow to a certain number, you’re not gonna be able to cover you know, all the new employees you hired and all this stuff, and you’re gonna have to raise more money. But if you don’t perform well, they’re not going to give you more money. So you are seriously speeding toward those rocks at a very quick rate, and that is crazy. I mean, I honestly,
Matt DeCoursey 12:51
they want you, they want you to hurry up and build a ramp to jump over the rocks.
Matt Watson 12:55
Yeah, and that’s a really tough place to be. Because if you don’t hit your numbers, you pretty much have to jump off the boat, or the boat crashes into the rocks. I mean, it’s a and there’s a lot of companies that have just totally died in those moments, right? Like the VCs put in a bunch of money. They didn’t hit their numbers, and then the VCs are no longer interested in the whole thing is just poisoned.
Matt DeCoursey 13:17
Yeah, and that’s really problematic. Because if you talk to folks in that situation, they’re like, Yeah, we raise money at this valuation. And you’re kind of like, yeah, that in your valuation anymore. So when you do get stuck in the middle, the longer you stay in the middle, the worst that part gets, I was talking to a friend and founder, this is over probably about a year and a half ago, but I’ll never forget it because his business actually had decent revenue, but it was still just basically, still losing money. At that point, he needed more capital, went out and aggressively sought someone to try to acquire him and literally got a less than one multiple out in the business. Like it was I mean, it was like a 10th. Like, you know, like a point one kind of, you know, of revenue valuation because here’s the thing is, you’re not in a buyer, you’re, you’re not in a seller’s market at that point, you’re in a buyers market, and you just don’t have, you know, an auction with one better. doesn’t last very long. And it doesn’t and it doesn’t go very high. It’s a fire. So. Yeah, so I don’t know. I mean, I honestly, you’ve been hearing me say this for a while. I think that there is on some levels. were due for some corrective measures and the overall startup scene because there’s so much money and capital flowing into things and there’s so many people doing things that are similar and you know, 2015 years ago, it was a lot easier to be the first doing something. Yeah, and maybe run away with it. Now you’re competing with, I mean, it’s almost impossible to find something that someone’s possible to find something that someone isn’t doing. So I mean, I think it’s going to be real interesting to see what happens and how those, those consolidate now, you know, one of the things you can do to help get yourself stuck, not stuck in the middle is be innovative and creative.
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So you know, some of the levels of innovation and, you know, you’d scale things down, can reduce your cost and provide capital for you in areas where you might not need it. Now, we’re talking about tech companies and tech companies are, are very dependent on developers, and sometimes that we talk a bit to people a lot about that Full Scale, because we help our clients build offshore teams, which can save them a lot of money, if they need if they need to, or want to. And that’s another example of like finding some innovative solutions. Like even recently, I know you did this at stack epi at one point, and we tried to do it regularly at Full Scale is just sometimes just sit down and just have a kind of a come to Jesus meeting with yourself about when, how and when and how you spend your money. Yeah, you know, like, I mean, dude, I just went through this the other day just went through and you know, we have 220 employees at Full Scale. And, you know, it’s just like goofy little shit starts to pile up, like subscriptions that you want to use that you now don’t, or extra licenses for this or something for that. And next thing, you know, you know, you’re chopping a bunch of stuff out and you’re like, Wow, this is like 500 bucks a month, or 1000 bucks a month. Now, that might not solve your problem of meddling, but waste, wasted capital, and ineffective or inefficient, inefficient spending isn’t helping it either. So you know, you got to find a way to redirect, you have to either figure out how to sell more or spend less. I mean, that’s really in the end, those are the binary type options for getting out of the mill.
Matt Watson 17:27
Well, and I mean, I honestly have all my friends that I have a huge percentage of them have kindness small to midsize companies that have never raised capital. And they’re just, they’re just growing. And, you know, there’s nothing wrong, nothing wrong with that. But I think true, what’s wrong with it, is when you’re not growing at all, right? You’re like, you people, we struggle to sell our product. I mean, that’s where you’re really, really stuck. You know, if you’re growing and you’re growing 10% A year 20%, and you’re happy with it and all that stuff. There’s nothing wrong with that at all. But if you’re not growing at all, because you’re like, Oh, we built this thing, but I can’t get anybody to buy it. That’s where you’re really, really in a lot of trouble. And you’re talking about we’re talking about budget and spending money. One of the biggest problems that startups have is not spending enough money on sales marketing. You know, though, they’ll like the guys I was meeting with yesterday, they don’t know they’re probably got 2020 Something employees, only one of them is in sales. Everybody else is basically an r&d and customer service. And they wonder why they’re not growing, right? Like you’ve you’ve got to invest as a good percentage of your budget in sales and marketing if you’re gonna grow sales. And I mean, that’s a big problem with companies is they, especially tech companies invest all over money in the product and not enough money in sales marketing.
Matt DeCoursey 18:50
You can’t have million dollar ambitions with minimum wage budgets. It usually doesn’t work that way. And same thing, work ethic now. But
Matt Watson 18:58
But that does work if you shop off the dollar menu at McDonald’s because I do look like a million dollars.
Matt DeCoursey 19:05
My wife went to the Dollar Store today or the other day and spent $91. And I was like, that’s kind of the antithesis of the dollar store. Jill. She was really excited. She was like, I got all this stuff. I saved all this money. I was like, No, you actually spent $91. So but that’s the way you have to look at it. You know, it’s like spending money or spending money regardless how you do it. Now. Next thing I want to I want to pivot to here, Matt, in our conversation is you know that some of the things that some of the parts of the entrepreneurial personality that have enabled businesses to get started to grow enough to even have Hey, the one thing that’s worse than Well, I’m not even gonna say it’s worse someone’s going out of business, in my opinion is better than being stuck in the middle. But the things that enabled you some of the personality traits, the habits the skills that make entrepreneurs successful, can also undermine their bill. ability to grow and lead bigger organizations. You know, one of those is what I mentioned earlier, which is loyalty to certain people. And I’m not saying you shouldn’t be loyal to your employees, but it’s all that the employer employee relationship is a business relationship. And it has to yield some amount of return for the business, otherwise, it’s not a great fit. So that’s like I mentioned, it’s like, Well, Mark has been with us since the beginning. And he’s definitely like one of our worst employees now, but he’s been with us from the beginning. Now, if your company is growing like wildfire, that might not matter. But if you’re stuck in the middle, you might have to take a good look at whether markets still a good fit, and that that’s a good way to spend your money. Well, I mean, this is a problem, I’d be part of why you’re in the middle.
Matt Watson 20:53
I mean, this is a problem with companies of all sizes, right? I mean, when I was working at Netreo, we had this issue, it’s like, Oh, we got this developer, that’s not very good. But nobody’s willing to fire them. Right. And, and that’s okay, in a bigger company, because that person can sort of hide somewhere. But when you’re really small company, everybody’s got to pull their weight, if you’ve only got one salesperson, and they’re not very good. It’s a huge problem when you’ve got 20 salespeople, and one of them’s not very good, you may not notice, welcome to the corporate world. But in the startup, everybody’s got to pull their weight, or it drags everybody down. And you’re absolutely right. One of the worst problems is you hire one of your buddies to come work at your startup, and they’re terrible at what they do. But now you’re stuck with them. And they’re your buddy, so you don’t want to fire him. And that can be the death to a lot of companies.
Matt DeCoursey 21:42
Yeah, one of the things that it really is if you’re listening like you, if you want to be a successful entrepreneur, you want to build a profitable company, you have to you have to train yourself to make tough decisions and have tough conversations. And, you know, and that’s an no one likes doing either. You know, it’s not like, you know, like, you’re sadistic. If you wake up and you’re like, Well, you see an occasional TV show or something where there’s someone that’s like, Hey, man, how many heads? Can I chop off the budget today? Haha. But you know, that’s not really the way it looks and feels you’re you’re a little sadistic in that, you know, another thing now, and we talked about this earlier, I’d like to expand on it is that tunnel vision, kind of feel, it’s like, you’re just, okay, you’re so obsessed with one part of the business that you ignore the rest of it. And for tech, that is almost always product. It’s like, we got to have one more feature. One more feature, and where does that end? And are you better to be, you know, one of the things that I’ve really, this podcast experience working with you, and just a lot of different things have really enhanced the whole concept that if you’re not, if you can’t be a plus, at one or two things, you have no business trying to be good at a bunch of other shit. Absolutely. I mean, it’s, that’s like the whole concept of an MVP, like if you’re just hey, we’ve got, Hey, man, I’ve got this great business, and we do a bunch of stuff in a really average kind of way. We’re not really good at anything. We’re like, average it all of it, and maybe not even average it other stuff. I’d like to sign you up for it. What do you think?
Matt Watson 23:25
Well, I think another topic that’s really appropriate here is you always hear the conversation of working on the business versus working in the business. And especially when you’re very small, if you’re if you’re the founder, and you’re, you know, CEO, or whatever, but you spend all of your time like doing sales, then you don’t spend any time looking at all the other aspects of the business, hiring people that you need to hire, raising capital, you know, doing doing a lot of different things you need to do, that you’re so busy working in the business that you don’t have time to work on the business. And that’s one of the reasons you kind of get stuck in the middle, right is you’re you’re you’ve got that tunnel vision as we’re talking about focus on one part of the business and you can’t step back. And frankly, one of the biggest struggles, a lot of companies is just hiring, just taking time to hire the right people, and putting the effort into it. So that you can grow. It’s like, yeah, we need another salesperson, but I don’t know anybody or whatever. So I just do all the phone calls, well, no, go hire somebody. So you don’t have to do that anymore. So the business can grow and do other things.
Matt DeCoursey 24:28
Alright, I think an expansion on that as the denial that you’ll hear from a lot of founders, that’s like a no one can do this, like I do it. Or it’s just faster if I do it myself. You know, and that not training other people to take some of the things off your plate when it comes to working in the business. And then another part of that is just people in general, don’t care if you’re an entrepreneur or a guy walking down the street that never had a dream of being an entrepreneur. People avoid doing things that they don’t like. Yeah, And, you know, you mentioned raising capital, like episode two of now 700 Plus on Startup Hustle. And thank you for all of the people that, that have listened to all of them. And man, those, I apologize to some of those people for our earliest episodes, let’s just say, you know, but you know, episode two is titled getting funded sucks, because it does, and people are in so people avoid it. And if you, you know, your business is going to need capital, then you need to get started on that now. And that’s an overall, like, that’s probably the most valuable thing you can do for your business as a founder on many days, because the idea that and especially if you’re like, even if you even have the scent, or possibility of meddling, you’re not gonna investors aren’t beating your door down. Yeah, you know, they’re not. So you got to go out there, and you got to look for it. And, you know, that kind of leads into let’s leave it, like, kind of lead this into some of the solutions, because, you know, we talked about tunnel vision tunnel vision is that what I just described is a bit of an effect on tunnel vision, because it’s easier to have tunnel vision where you’re like, hey, I’ll just forget about all the shit that I don’t like to do. Now, when it comes to like solutions. I mean, dude. Okay. Do you know someone in business that doesn’t have self discipline when it comes to the business? Well, I think we’re strapped for cash. But if we just got that new bowling alley in our office, we would attract the talent that we really need.
Matt Watson 26:29
Well, I mean, but that that self discipline is tough, right? You know, and I can be guilty of this, right? Like, I’d rather go write code, and solve tech problems or whatever, then spending time on raising capital or hiring people or whatever. And, for me, it’s, it’s like, it takes that self discipline to say, No, I’ve got to spend time on these other things. But it’s really hard. It really is. Especially you mentioned earlier, it’s things you don’t want to do. And we just procrastinate them all.
Matt DeCoursey 26:57
You can you can head check yourself here on these on this stuff. And, you know, I try to just regularly just make take a minute and sit back and go, Okay, what’s the most valuable thing I can do for the business today? Tomorrow, next week, next month. And you know, inherently, as a founder, you’re guaranteed to have to have to run around and put out fires and spin plates and do some different stuff. You know, that’s, that’s the nature of being a founder. But at the same time, it’s like, you know, so much of what we’re talking about here is about okay, sales cures sales. Man, I think we’ve established that I think we that’s almost like a law and not a, you have the law of gravity. And then there’s the law of sales, cures sales, because everything we’re talking about today, is cured by selling more. So, you know, my wife gets mad at me sometimes, because she says, I’m too black and white. You don’t consider the emotions. I’m like, Dude, that’s why I have the funnel, I’m down to the bottom. You’re like, we’re gonna sell more or we’re not. So if you’re in the middle and you’re not selling, you’re not selling making an effort to sell are spending time on it. I don’t think you have the right to complain about being stuck in the middle, you lose the ability to bitch about meddling. Yeah, for sure. Most people don’t like trying to sell stuff. Do you know they don’t. I mean, I’m a salesperson at heart. And you know that, I know that. And that makes it easier for me to do it. But it also makes it easier for me to really see when people are like, I’ll talk to me about like, what are you doing to grow your sales? Like? Well, we’re building another feature in our platform. Okay, that’s not the right answer. Because Is that is that feature being built to help you to outreach and find more people and drive more users and whatever, it could be built to retain more users and that that’s the only time I’m buying that excuse.
Matt Watson 28:51
Sometimes you get products that really do sell themselves, and they’re very product driven. But that’s really rare.
Matt DeCoursey 28:59
I do I think that’s harder and harder to do. It’s a really, really noisy world. There’s a lot of competition out there for advertising for products for all of it. Like, you know, I was I was I saw a post on LinkedIn. And it was, as someone that’s written three books, I appreciated this because the, you know, there was like the wonders of the art, the subtle art of not giving an F and then there were like six other books that were basically the exact same thing and exact title. So it was like mimicry is not innovation. You know, so you know, some of that is you’re gonna fool yourselves with it. So all right, so another thing man, get some input. Listen to and seek input from others.
Matt Watson 29:41
Nothing better than worse.
Matt DeCoursey 29:44
Yeah, and dude, I saw I’ve kind of been on my soapbox about this lately, cuz, you know, Matt, you get it. I get it. Our peers get it. People want your input, and then they make it difficult for you to help them. Don’t make it don’t make it difficult for me to help you and I will probably fucking help you like, it blows my mind how bad people are at this, like if you want it. And then another thing is if people are helping you don’t bitch about the way that they’re helping you
Matt Watson 30:17
just accept it and take it under advisement, if you don’t like and that’s fine. But
Matt DeCoursey 30:21
if it’s free, that’s the price was appropriate in some cases, you know so well we have a money back guarantee on Startup Hustle. If you don’t like this episode, we’ll give you your money back. And last year Chatdesk. They they’re the only people of all of you that paid to associate with this episode. So I’d probably be careful with that. Chatdesk.com forward slash shift Chatdesk.com forward slash shift Chatdesk.com forward slash
Matt Watson 30:53
show. Up job. Good job. That was good way. Oh, good.
Matt DeCoursey 30:58
I don’t know if I could I don’t know if I could have done a fourth one. You’re getting better. I felt the tongue really getting tied into knots. And my my mental. My whole mentality shifted now. And that’s the next thing I want to talk about. How about shifting your outlook on your business? Like, what’s the definition of insanity? Matt?
Matt Watson 31:18
Doing the same thing over and over and expecting different results?
Matt DeCoursey 31:23
That is correct. That is correct. And if your business is driving you crazy. Are you just defining insanity? Like you mentioned earlier? Like?
Matt Watson 31:33
Or it’s just about what? Or it’s my sister, she’s insane. So
Matt DeCoursey 31:41
Oh, my God, maybe? I don’t know. For those of you that are unaware, Matt has three sisters named Stacy. So if I said which one and he said Stacy, that wouldn’t have narrowed it down. Then there are other sisters too. So yeah, we don’t want to get into that we don’t want to get into that. We talked about Yeah, but dude, so are so many people that own a fucking business now. I mean, dude, you mentioned earlier, you’re like, so you’re like, Oh, the market is not working? The market is not working? Why is it going to work in the third week, or the third month or the six month like Test test test, like force change, do something different? Like, if it’s not working? What do you have to lose by trying something different?
Matt Watson 32:26
Well, and in a lot of that is risk, right? They’re like, well, I could hire a salesperson, and then I have the money to hire, you know, pay them for two or three months. But if they don’t sell something, I can’t pay them anymore after three months, so but at some point in time, you have to roll the dice, right?
Matt DeCoursey 32:41
So on some levels, though, you can do the opposite. Because some companies have salespeople and sales forces that are ineffective. And what’s better dry, okay, you were talking about starting a tech company. If you’re a pure software as a service company, you don’t have salespeople to go out and do stuff like you don’t need a salesperson and some points, you may need a marketing person to drive people to your site, not someone that’s going to be like, yeah, it’s 12 bucks a month. I mean, sometimes I mean, can that can be the suck to like, salespeople are expensive. And that’s another thing too, if you’re going down that route, you need to know that ahead, usually get what you pay for. And if you’re getting a bargain on that, that salesperson probably isn’t going to last in your organization long because everybody’s looking for the best salespeople. And that is a seller’s market and not a buyers market at that point. And yeah, and you
Matt Watson 33:40
are really, by the way, dude, especially
Matt DeCoursey 33:42
in tech, especially in tech man, like, I talked to people that sell at tech companies that sometimes make 300 400 grand a year and they’re like, its sales rep. I’m like, do you build anything now? Do you have to find leads? No, not usually. What do you do? I sell to clients? Man sounds pretty easy.
Matt Watson 34:04
I said on Zoom calls all day in my underwear.
Matt DeCoursey 34:08
I mean, pants are optional at most tech companies, especially with when it comes to zoom. So Okay, how about a radically different approach? How about saying fuck it and just taking the risk and just seeing what happens? You’re stuck in the middle? Do you want to live there? Because if you don’t you make radically different moves and changes or shut the thing down and put what you have left in your pocket.
Matt Watson 34:32
point in time. Yeah, you got to decide to hurry up and fail, right? So it’s like, like the guys yesterday. It’s like, Hey, you’re you’re kind of stuck here. You’re grown just a little bit and you’re struggling. Like, you need to just go all in on the Enterprise deal and figure out if it’s going to work and if it doesn’t work, then this doesn’t work and figure it out from there. But you just got to put push all your chips in one direction at some point in time.
Matt DeCoursey 34:54
So this next solution and I mentioned it earlier, I call it I call it cash counting Hello, this is this is not a long term solution. And I don’t necessarily recommend it because it’s not customer centric, it’s not client centric, you do always have the option of just chopping your expenses to the absolute minimum possible, which in many cases may make you profitable and not stuck in the middle. Now, there is a price to this approach, which is innovation, client and customer service, general growth. But I mean, scaling back can often lever you into I mean, in some cases, possibly a quite lucrative situation. Now, I say cash cow, because that cow is going to sit in the field, it’s going to give milk and it’s going to give milk and it’s eventually going to get older and give less milk, and then it’s going to die. Because you’re not taking care of your clients. You’re not looking for new ones, like unless there’s something now, you know, if you had taken a proper marketing approach, like for example, like with Evergreen marketing, I haven’t Dude, we get new people that sign up for Giga book every day from blog articles we wrote five years ago, you know, some of that you can justify it. But I mean, Matt, have you ever? What are your thoughts on on the cash cow out in the pasture?
Matt Watson 36:16
Well, we we used to joke about this in my VinSolutions days about worst case scenario, too. It’s like, Hey, we’re doing two or $3 million, a year and a month, two or $3 million a month in revenue. It’s like, well, worst case scenario, we fire everybody. And like five of us run the business, and we make a million dollars a month in profit. Right? Like that was worst case scenario, not where we wanted to be. But it was absolutely what you just described, right? And, honestly, it’s what a lot of private equity people and stuff do when they acquire your business, they just they strip it down and and try and make you know, high EBIT margins and just take the profit out of it and just let it run. And honestly, a lot of businesses just continue to run, especially if they’re SAS based businesses, and you got people that have signed up, they got it all configured, they’re happy with the product, they just
Matt DeCoursey 37:04
keep using it, how sticky is your product, right?
Matt Watson 37:07
That’s why companies are so valuable to yep, that’s
Matt DeCoursey 37:11
Because here’s the thing is that cash cow, if it’s gonna give milk, and doesn’t need a lot of oats and stuff, you know, it’s, it’s, it is what it is. And you do see that happen a lot. And, you know, that’s like kind of you talking about stripping things down. So it’s the sum is the sum of all the value of all the parts more than what they are. So, you know, as a whole, and that and then I can have you see that actually happened with massive companies, too. I mean, the, it’s a little more difficult now because of the accessibility to encode data and whatever. But you know, one point my mom worked for TWA airlines, which Carl Icahn, who’s still a very well known investor, and sometimes an activist investor, the purchase TWA, and a hostile takeover and just sold it off for parts because he made a shit ton of money doing it. Now, there was a price that came to that because like my mom who worked for that company for 20 freakin years, lost her pension, her retirement and all of it. But that’s an example of the parts being worth more than the sum.
So now what is worth a lot more than what you’re gonna do is that what you’re going to spend is first off the knowledge of knowing that today’s episode of Startup Hustle is brought to you by Chatdesk, they help you reduce the number of phone calls coming into your business by over 10%. By shifting calls over to Facebook Messenger and other channels, you can get started in just a few minutes and the service is free for a limited time. You check it out at chatdesk.com/shift. That’s once again, chatdesk.com. There’s a link in the show notes. You can find them on our sponsor section at startuphustle.xyz, which is also where you can go if you think you’d be a good guest for the show, or you want to recommend someone for the show. That’s it, startuphustle.xyz.
Now, Matt, we’re here we are at the end of our time together, we are no longer stuck in the middle because I have found so many solutions from today’s episode to lever us forward. Thank you for reading that first. That ad read that was a radically different shift in our mentality of how we approach the show. But from today’s episode, I mean, what really sticks out?
Matt Watson 39:20
Well, you know, I want to focus on the product market fit. I think that’s one of the biggest struggles for tech companies. And I’ve mentioned this before, there’s also a book called Crossing the Chasm by Geoffrey Moore, that you can check out that is kind of about this topic. A lot of times companies get started and they will sell their product to early adopters, right, but they really struggle to get the larger market to buy the product like they, you know, whatever it is like you may have like, oh, like say you’re selling something to car dealers, right? It’s like well, the really super techy car dealers really love what we’re doing. But all the other 90% that are a little more old school are not into this, like, it’s just not their thing. And that happens a lot with whatever kind of product you’re building, where there’s like a very small percentage that may really like what you do, and it really fits their need. But it doesn’t solve the needs of the greater market that everybody is looking for. And sometimes maybe you’re in a brand new market, and maybe the rest of the world has yet to realize that they need the product, which is equally as bad. But that whole product market fit of it a lot of times is that death to companies is just not, you know, sometimes you’re too early to market, you’re too late to market, or you’re not funded well enough to get to market and your competitors beat you to the broader market. But a lot of times it’s you’re just trying to do too many things for too many people. And you haven’t honed in on a niche enough to really focus on that specific audience and really build a really superior product for them. So I definitely recommend that book if that’s something that you’re struggling with.
Matt DeCoursey 41:00
Well said, sir, well said, you know, so Matt, as I close out today’s episode, so recently, I went to a Halloween party, and it was the most elaborate Halloween party that I’ve ever been to. I mean it I mean, every floor, the yard, all of it was all set up. And I was talking to the husband of the husband and wife team that live there. And he was telling me he was like, you know, she’s just been stressed about this. I was like, how much of this did you do is like, well, I did whatever I was told. And I was like what she stressed out? And it’s like, yeah, she wouldn’t quit stressing about it. I said, How do you handle that? And he goes, I just said, you know, do less? Do less. Two words do less? And, you know, I keep thinking about that do less? I think a lot of businesses tried to do too much like what do you get out, do less focus on it. And then probably, if you really, you know, to try to figure out what you need to do last, you have to really kind of be honest with yourself about what you’re spending time on. And you can’t lie to yourself self deception is terrible as an entrepreneur, and, you know, that’s part of that self discipline and part yeah, so I defined self discipline as doing the things that you need to do at the times that you want to do them the least. And, you know, that’s the thing is just, you know, you’re like, hey, we need to sell more. And you’re like, hey, so I’ll spend tomorrow working on sales, then you need to spend tomorrow and every other day working on sales until sales is not your problem. Because if sales is your problem, you better get comfortable in the middle or get ready to have the middle be what you want to get back to. Because businesses need revenue, and nothing happens until you make a sale. So I don’t ever there’s someone out there that has the problem that they’re selling too much. But I haven’t been able to find them. You know, like I mean, in there, like that’s a good problem like, well, we kind of have that problem and Full Scale on some days. But that’s not a problem I’m willing to live with. So why, if we’re selling too much, what do we need to do to meet the demand, and you know, like, so there’s a lot of different things. But really, in the end, it’s all centered around revenue, you’re stuck in the frickin metal. Because you haven’t done a good enough job selling stuff. It could be product market fit, it could be something, but in the end, you have two ways to go, you have to sell more or spend less, it’s really been profitable. And at a business, in my opinion hinges on one of those two things occurring. Yeah, you’re gonna sell more, you’re gonna spend less and the and they can have an equal effect. Because a little can’t raise your sales you can you can lower your expenses somewhere somehow.
Matt Watson 43:48
May not be fun, but you can do it, I think.
Matt DeCoursey 43:50
And then I think the last thing is still with those tough decisions is you know, like, if you don’t think that there’s a way to get out of the middle, you got to look for something different because these problems usually just don’t self correct. It’s not really the way that it works. So yeah,
Matt Watson 44:05
You’re talking about selling too much. You know, the there’s one whole industry right now that has that problem is the karmic archers. Can’t they can’t make cars fast enough no matter what they do. It’s insane right now buying cars. I mean,
Matt DeCoursey 44:19
What an opposite effect. Prior to the pandemic, and when the pandemic hit, I remember there was like news at one point that all the car dealers in the car rental places were rented at Arrowhead Stadium. So they had a place to store their surplus. And now, man, how’s that looking like? Now, I’ll tell you what, though, you talked about making changes and getting outside of the model. So how many of those car dealers reduced their
Matt Watson 44:46
Sales force? Yeah, they had to
Matt DeCoursey 44:49
We saw it, you know, history in the ticket business. And I know you do too, like a great example as you remember when LeBron James and Chris Bosh and D Wade all signed with the heat? And they were like the big three and whatever? The next day, they sold out on three year contracts for season tickets, there was zero availability for the Miami Heat for three full years. The next day the heat fired all their salespeople. What they need them for? Yeah, right. So that’s the thing. That feels foreign and like a fundamental shift, but it is a radical change. And, and you say, well, could that be risky? We can talk about it in two and a half years and figure out a solution.
So you know, it is what it is. And it’s very difficult to change reality. People have different views of it and whatever, but really, in the end, I mean, I’m going back to the fact that some more, spend less, maybe do less. I’m going to do less right now by ending the show, Matt, next week? See you!