Episode 31
· 39:59
This is the much anticipated part two with Dan Martell of Clarity. If you haven't listened to Dan's crazy story in part one, rewind and listen to that first. But before we get into that, I wanna tell you about some great sponsors. Sprint.ly has been with us since the beginning. Their web app is the best way to manage the software development process.
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Speaker 1:Now let's get to our interview with Dan Martell.
Speaker 2:I'd like to fast forward a little bit here and jump to clarity. And I think what we'll do in this section is we'll use clarity as an example of some practical things that our listeners can do and use as they're building their own products. Does that sound good to you?
Speaker 3:Sounds awesome.
Speaker 2:So let's talk about Clarity. It launched about a year ago. How did you get the idea? Well, you've talked a little bit about how you got the idea, but how did you get the idea and how did you know that it was a good idea?
Speaker 3:I how did I know it was a good idea? Well, I get the idea after Flowtown was acquired. Like anytime you get any press, I started getting emails from people I didn't know asking me to, you know, pick my brain, have coffee. And maybe it's the Canadian in me, but I just felt I always respond to my emails. Any you know, anybody's email me, I always respond.
Speaker 3:Even if it's no or yes or, like, short, I do respond. And some of these people, like, I actually wanted to to help, but I could there was no way my ADHD would kick in. Like, I couldn't read these lengthy business plans or, you know, seven paragraph emails. So I had this need. I thought, well, I really like talking on the phone.
Speaker 3:What I wish there was a way for me to, like, get their information, and I would call them back. So I actually sat down one night and built a prototype that was a link that I could reply and say, hey. Fill out this form, which was, you know, what do you wanna talk about? Your name and your phone number. Mhmm.
Speaker 3:And when I'm free, I'll call you back. And it was this this pay it was this app that I built on Twilio, and, like, I could just share a link. People could put their information, and then when I was free, hit start calls. It would actually call me first and then read to me what the person wants to talk about, and then dial them, you know, proxying my number so they never got my cell. Yeah.
Speaker 3:And then we would talk. And then when they hung up, it would it would read to me what the next person wanted to talk about and dial them.
Speaker 2:No way.
Speaker 3:That's That was Clarity. That wasn't Clarity's first tagline was the social call list manager.
Speaker 2:How how long did it take you to build that? That first prototype that worked?
Speaker 3:Two days. It was it was pretty much like, it didn't have multi user account. It's like you Facebook connect. Right? Yeah.
Speaker 3:Twilio makes it have all the APIs. All I did is I Facebook connected to the app. I put in my cell number, and I got a URL that was based off my Facebook username. Mhmm. Clarity dot at that slash m martel.
Speaker 3:And then on that URL was those three fields, and it would just build the list, which, I mean, if anybody's built a Rails app, it's you know, you get that for free just running a command. And then all I had to code was, alright. Call me first. When I answer, read to me what they wrote, and then call the person. And if they answer, let's talk, and if they don't or they hang up, go to the next person.
Speaker 3:And that was version one, and the the you know, so I had it for, like, two weeks, and I was using it in my email. Right? People would email me, and I would just reply and say, hey. Put it here, and I'll call you back. Mhmm.
Speaker 3:But it was really two weeks after I built the prototype that I went to the roof of my condo in San Francisco, and and it was, like, 08:00 at night, and I tweeted out, like, do you need advice on your startup? Let's talk. Let me know. And and then I started the calls, and I spent two and a half hours talking to entrepreneurs all over the world. People I people have been following me on Twitter for three or four years, and I finally talked to them, and it was just the most I I it was like this feeling of this is what the Internet was supposed to do.
Speaker 3:Yeah. Like, real conversations, not tweets and blog posts, but like, hey, man. I I've been following you for a while, and I'm trying to figure out how to start my business. What do you think? And it was ten minute conversations that I would assume they got some value out of it, and I did like 30 of them in two hours.
Speaker 3:I could unlock this for every person in the world, any person that had knowledge that other people wanted, if I could enable that for them to talk, that would be really impactful.
Speaker 2:You know what I love about that story? This is something that Derek Silvers talks about is he says, you know, if you have you get an idea for something, just do what could you do like right away that's the smallest version of that that could prove whether there's some sort of demand there? And so it sounds like initially you were just taking phone calls, which is the tiniest version of that. Then you took two days to build this Rails app.
Speaker 3:Well, then what happened is people yeah. I know I mean, I built the app. The the Rails app with the phone calls was, a night or two. Right? It wasn't hard.
Speaker 3:And then what happened is is over the two week period, would I would just do the email. So nobody saw the link, but it's when I tweeted it out and my friends saw it like he and then a bunch of guys, they all said, hey. Can I use this?
Speaker 2:There you go.
Speaker 3:And that was when I think I think, you know, when you think it could be bigger, it's like, you don't know how big it'll be, but if somebody asked to use this thing you built for fun to solve your own problem, that's kinda cool.
Speaker 2:Yeah.
Speaker 3:Right?
Speaker 2:How did how did you know or did you think about whether people would pay for it?
Speaker 3:So what happened quickly was once I put my email, my link out there, everybody started using it. Yeah. So I I had no control. Once it was out there, it's like my call list got unmanageable. Mhmm.
Speaker 3:So I actually had to what I did is I built a paywall on the public call list, so the slash Dan Martell. But then I created what I call these these free calls that would be like slash whatever. So I could write like slash email VIP. And those were they didn't have a paywall. Yeah.
Speaker 3:That makes sense?
Speaker 2:Yeah. Yeah. Exactly.
Speaker 3:So I built the paid version just as the way to solve the other problem I then had, which was everybody knew my URL. If you weren't stupid, you could figure out what Heat and Shaw's was and Andrew Chen's and Eric like, you know what I mean? Yeah. Yeah. And they were testing it.
Speaker 3:I was watching in my logs, like, had four zero four. They were like people are like, who else is on this thing? So I added the paid for that, and I added the charity because a lot of these guys didn't wanna look douchey, and they didn't wanna, like, charge for their time. So they figure and and that was that was when I I kinda it really hit me that this is a big idea from a business point of view was the fact that so if you think about in a charity component, it's like the charities need they need help. Right?
Speaker 3:They're not this is like business wise, you know, they don't maybe they're not great Internet marketers. So Yeah. Guys like me might have experience in Internet marketing, but I don't have the time. Right? But I have the advice.
Speaker 3:What they need is my advice plus money. So what I figured was like this trifecta was the the the nonprofit would get the money that the entrepreneur that needed the advice needed, they would pay and it would be win win win.
Speaker 2:Yeah. And I'm assuming that when you put up that paywall, people started paying.
Speaker 1:Is that what happened?
Speaker 3:It was crazy. I don't wanna talk about the numbers, but I mean, it it it was like, okay. There's something here and I walked away from so what happened is I I left Demandforce to come and acquire us after two months. You know, like, I got acquired in October and I left in December, And I pretty much walked away from half of my, you know, my outcome because I believed in clarity so much. And this was before I raised any money.
Speaker 3:But my bet was, could I create more value than the millions I would have got staying that in a year than than going off and doing my own thing? Not only that, like, I'm gonna what do I want my day to look like? Do I wanna work on something I'm not passionate about or something that I can't sleep at night because I'm so excited about it? And so I made the bet. Right?
Speaker 3:I felt like a big hypocrite if I wouldn't. And the cool part of that story was two things. Two months later, I ended up raising 1,600,000.0 on a very healthy valuation for clarity, and demand force got acquired by Intuit accelerating investing all of my shares. So I ended up getting my earn out either way.
Speaker 2:Gotcha.
Speaker 3:Wow. It's crazy. Yeah. How that happened? I don't know.
Speaker 3:Somebody said the world rewards courageous decisions I honestly believe that. That's the only thing I can say to explain what happened in that one month period.
Speaker 2:Yeah. Yeah. And I'm just guessing, like, what can you give us a sense of what you were seeing though? That because some people don't know what it's like to see a hit. Like, is it what's it like to experience a
Speaker 3:Like, this this is it's it's really simple. It's not you know, people call me out and they're like, yeah. I'm not sure if I should raise money. We just got 500 sales and we didn't do any marketing. And I go like, that's not interesting because that means you don't know actually how to scale what just happened.
Speaker 3:You got 500 sales. Why? You don't know. I don't know. You can guess, but that's not interesting.
Speaker 3:What I saw in the product and what I look at, you know, if I invested in 23 companies, an angel investor, and I always help with the growth hacking, growth marketing side of things
Speaker 2:Yeah.
Speaker 3:Is great product retention. That when somebody uses it, they keep using it. And and if you can get a product that not only if they use it, they keep using it, but if they use it, it actually introduces the product to more customers like Clarity. Right? Somebody added themselves, it did take me long to say, okay, if you add yourself to my call list, then you created an account.
Speaker 3:Now you can do this. And it just kept going.
Speaker 2:And because the funny thing to me is that if I think a lot of people, especially like our listeners, they're always trying to figure out what do people pay for. And if you came to me and said, you know, I think people would pay to, talk on the phone with people. I would say, well, you know, like that worked in the sex industry, but like for it to work for businesses seems kind of crazy, you know? So but you must have seen something really working when you tried it out.
Speaker 3:Well, I I put the paywall as a filter hoping that nobody people would stop doing it. Yeah. But it turned out that people actually were willing to pay. That's crazy. Right?
Speaker 3:And if you think about it, this is this is why I think it's really interesting. Now do I think that do I like the business model? No. I I would much rather something more social and interesting and filters and you know, I don't I don't like the fact that you gotta pay because my whole thing was how do you allow the 18 year old version of me connected to somebody who'd been there before. I didn't have a credit card when I was 17, 18.
Speaker 3:Right? So Mhmm. But it's been a great story since because now there's 16 year old that are borrowing their parents' credit card, and they're doing, you know, ten, fifteen calls, and we have to take study on Clarity. This kid, Rafael, he leaves his class in high school. He's 16 Yeah.
Speaker 3:To go do calls with experts. Like, go read the case study. It's amazing. It's under customers. And I asked them when we were doing it.
Speaker 3:Was like, how did you get a credit card? You know, we actually say when you sign up, you agree that you're 18, but I don't really kick people off. Yeah. And he goes, I can parents said it was education. And they said as long as it was more than, you know, $2,000, they were okay for me to do a call.
Speaker 3:And I'm like, I love this because what I thought would happen even though it took a long time, it eventually did happen.
Speaker 2:Yeah. That's awesome. I'll put that link in the show notes. People can check that out on the site. Okay, so you figured out there's a business here and you just touched on this.
Speaker 2:So it sounded like you had another problem to solve because this is a two sided market, right? You have to convince people to call and you figured that part out. People wanted to call and they were willing to pay for it. It sounds like you had to figure out the other side of the market, which was getting entrepreneurs to take calls. Is that true or were they willing to do it?
Speaker 3:Would love to, Justin, I would love to tell you that I hate doing these interviews because I know what people want. They want the success stories. Right? They wanna hear that Flowtown went from nothing to 50,000 businesses gets acquired and everybody made money. Like Yeah.
Speaker 3:And it and it's true, but there was that part that you know, which is we got shut down and had to build it up from scratch again.
Speaker 2:Yeah.
Speaker 3:Right? But nobody really wants to hear that when you're just telling the overview. So for me to sit here and say, oh, yeah. Clarity day one, like, knew exactly what it was gonna look like, and it looks like what it is today, I'd be full of shit. I mean, the first version said social call list manager.
Speaker 3:What does that have to do? I thought I was building utility. I didn't even wanna admit that I was building a two sided market Yeah. For almost a year. It wasn't till December, six months ago, that I finally said, Alright, Dan, come to terms with it.
Speaker 3:There's two sides of the market. There's a supply and the demand. For the longest time, I was living in this utopia world of everybody can be an expert and anybody can be a member and I don't want to discriminate. If you're smart and people want your time, then that's okay. And it turns out to be a really shitty way to build a marketplace.
Speaker 2:I love this. This is good. This is good honesty. And so so you had that realization. What what did you do with that realization?
Speaker 3:Well, there was I mean, there's a couple more before that. I mean, we didn't have search or directory for four months because a lot of the experts that signed up in the beginning built it. They they signed up because they wanted the utility. They didn't want to have people searching for them. Right?
Speaker 3:So it was it was, like, four months in, said, okay. I was, like, doing customer interviews. People have visited the site and signed up. And everyone that signed up said, I'm looking for advice. Where are the people?
Speaker 3:Mhmm. And I was like, oh, well, that's all Clarity's about. And then I would do more customer interviews. And, like, 98% of conversations I had with people saying, I need advice. And I'm like, good luck.
Speaker 3:I'm not gonna tell you who's on here. Yeah. If you're smart, you'll go search Twitter, you know, or or hack away at our URL. I mean, you could probably still find a cash version of our FAQ. It's like, how do I find extras on clarity?
Speaker 3:It's like, well, we don't have a search, but if you're smart, you can go first name, last name at the end and see if they're on Clarity. Like, that was our it's ridiculous.
Speaker 2:I did
Speaker 3:that for four months. I mean, so it was kind of like, you know, to me, what I did is what I've always done in business was, you know, I had a vision. Right? I had like, here's what I want this thing to look like at the end of the day. And I try and I put it in front of users, and then I listen to what they were saying.
Speaker 3:Now I didn't react really quick and say, okay. They all want this. Right? I didn't do that. I just listened and I listened and I listened.
Speaker 3:Some people think I listened fast and I moved fast. I think I was a little slow to do the the draw. But Yeah. You know, it took me four months to build search in a directory. It took me another eight months to add scheduling.
Speaker 3:For eight months, the way the product work is you would request a call with somebody, and they would call you back whenever they wanted.
Speaker 2:Gotcha.
Speaker 3:Think about this. Think about this in my profile. I wanna talk to Dan. I'm gonna request a call. Yeah.
Speaker 3:After it gets submitted, we're like, alright, stand by your phone and he may call you at two in the morning when you're sleeping because he's in California and you're on the East Coast. Isn't that ridiculous? Eleven months, no scheduling.
Speaker 2:And were people still willing to use it though even though For sure. Interesting.
Speaker 3:But it was a you know, when I realized what happened here's what happened. It's an interesting product conversation is my personal preference on how I wanted my life to be managed was got introduced to the product. And what I mean by that is for the longest time, I believe that having meetings scheduled all day meant you had no freedom. Yeah. So I never wanted to introduce scheduling.
Speaker 3:Now what changed in my life was I had a newborn son last August, and all of a sudden, I didn't have a choice to but have my day scheduled. Yeah. And when I when I was talking to my friend, he's like, dude, I really like Clarity. Why why do I have to like, there's no scheduling. And I'm like, yeah.
Speaker 3:And he's like, that's dumb, man. Like, you should add scheduling. I was like, No, but you don't understand. The experts are busy and if I added scheduling, they probably wouldn't do it. And he goes, Is that you or are your experts saying that?
Speaker 3:And I was like, Oh, that's me.
Speaker 2:Was that the point of realization? Someone that you trusted calling you out and saying, you've got a blind spot here?
Speaker 3:But why can't I schedule? And I'm like, people don't want that. He goes, no. I want it. I'm on there.
Speaker 3:And I'm sure if you ask people, they'd want it. It's you that and I was like, yeah. But experts are busy. He's like, this cannot work at scale. It's a shitty experience.
Speaker 3:And then what happened the next day is I I use Clariq for Clariq, and I went and I found this guy I didn't know, and I wanted to dude, there was no messaging in the product for a long time. Like, all these obvious things that you would expect a marketplace to have for a year was not there. And we were still making it work, but we weren't seeing another one. So so let's say directory and search was one. The other one was scheduling.
Speaker 3:The other one was anybody could be free or paid. So imagine you search in the directory and there's you don't know who these people are. Some people are free and some people are paid. That's weird. Like, why is this guy free?
Speaker 3:Why is this guy charging? Yeah. What's the difference? So, like, it was it wasn't till December we said, okay. Let's let's have let's just all agree.
Speaker 3:As a team, I apologize. I screwed up. Like, I really like, I own a 100%. You know, I always joke with people that I don't need engineers to be more productive. I just need to spend more time planning so I don't ask them to build shit that nobody wants.
Speaker 2:Because I
Speaker 3:think that's the biggest that is number one the biggest way. You don't need more designers than engineers. You need to stop building stuff that doesn't matter. Yeah. That means you have to really get your shit together.
Speaker 3:So, you know, so so those were like the big things in the product that I think if you as a founder or product person, you might not realize. You gotta ask yourselves like what biases or beliefs do I have that are actually being reflected in the product that are not reflected in the customer's need.
Speaker 2:And it seems like one key there was having that friend that was willing to call you out and the second that you mentioned was customer development, customer interviews. How do you do customer interviews?
Speaker 3:So I will throw out a challenge, not because I want to be cocky. Nobody on this listening does more customer development than I do. Really? That's a fact. Oh.
Speaker 2:Let's put some numbers behind it.
Speaker 3:I've emailed every single person that signed up for Clarity introducing myself, and we're tens of thousands. I've done over 2,000 calls through Clarity in the last twelve months. I do surveys, customer development surveys on a weekly basis with my cohorts. I do problem. I have an email sent out to me every day with the new members and experts from the day before, and every afternoon, I call three of each and talk to them.
Speaker 3:Oh, wow. I mean, no nobody nobody spends more time with their customers than I do. I do meetups in every city. I call them clarity pop up sessions. I'm traveling, and I invite my top 20 experts into 30 members.
Speaker 3:And I sit down and I ask them, like, what can I do to make Clarity work better for you? And they show me and I don't do any of it per se right away. I just listen. And what's the what's the
Speaker 2:key to a good customer interview? What do people need to keep in mind?
Speaker 3:Don't sell. That was the biggest problem I had. My my co founder Ethan at Floatown used to call me Sell Martell. I here's my customer development. So I think you have this problem.
Speaker 3:Do you agree? No. Are you sure? Because I think have you ever done this? Well, yes.
Speaker 3:Well, then then you were trying to solve this problem. No? Maybe. Exactly. So you have this problem.
Speaker 3:What is that worth to you? What? So you should buy because we have you know what I mean? Like, that is not how you do customer development. Yeah.
Speaker 3:What you do is you ask, you know, you ask questions like like there's different ways to approach it, but usually, the format I suggest is problem solution like, problem, how you solve it today, here's how it could be the IPO question. So it's, do you have this problem? Yes or no? If they say no, stop talking. They don't try to convince them that they have it.
Speaker 3:Mhmm. If they say yes, go, cool. Here's how I think some people are solving it today. Spreadsheets, script, integration, Zapier, Wufoo, whatever. They go, yeah.
Speaker 3:Yeah. I agree that I have friends that do it that way. Is there anything that we've missed? And then let them answer because your customers know way more about their problems and how they've solved it in the past than you can ever imagine. Yeah.
Speaker 3:Right? So they'll give you the things that you haven't thought about. Right? Other competitors, other techniques, whatever. And the third one is, here's how I think it could be solved.
Speaker 3:And you explain your product or solution. Ideally, they don't know it's your product. Right? So if you're doing early customer develop, I can't hide anymore. People know it's Clarity.
Speaker 3:It's me. Yeah. Early days though, you can say, and I did this was, I have a friend working on this idea and and he's asked me to help him kind of, you know, go to get some feedback on it. Do you mind if I ask you some questions? Yeah.
Speaker 3:Then the feedback was often true, not, Dan, I think your idea sucks. It's, hey, your friend should probably think about this and this and I don't agree with that. I was like, oh, perfect. I'll let them know. But it was me.
Speaker 2:Yeah, I love that. You know, I think sometimes people need those like kind of key phrases. And the two that kind of stuck out to me are the solution phase saying, Here's an idea of how it could be solved. And then I have a friend working on this. What do you think about it?
Speaker 2:I think that's a great idea. I could see how that might get more honest answers.
Speaker 3:It's real because there's no cost to them to tell you they're honest in that situation, but there's all the costs in the world. The say it it comes down to the same psychology of, like, why like, getting somebody to pay for your solution is true customer validation. The reason why is because there's real cost to them to not pay or pay. But for them to ask somebody, it's like, hey. Would you use this?
Speaker 3:And they say yes or no. They're gonna say yes because they're kind, especially Canadians, and you know this. Yeah. Yeah. Totally.
Speaker 3:That's great. That was a great idea. You should build that. And so you go off for six months and spend, you know, hundred hours a week for six months building something, come back to them and go, oh, that's really nice. Yeah.
Speaker 3:We don't really do it that way, but, yeah, good luck. You know? And you're like, what the hell? Yeah. Right?
Speaker 3:Same thing. If you're doing customer development, right off the bat, you should try to figure out how how you it's not your idea. So it's like, hey. My friend's doing this thing. In early days, you can do that because they haven't seen you tweet about it.
Speaker 3:They haven't seen it on your bio. They haven't you know what I mean? So Mhmm. You can do these customer and you and you can still do those after the fact on on product like, specific product features. Right?
Speaker 3:So, like, for instance, if I had a specific type of feature that's you know, it's still in the phone, but let's say it's around discovery or, like, hey. I think that people would do x, y, and z. I could just pick up the phone and call my friends and be like, hey. My friends are working on this new start up that's trying to do this, this, and this, and here's how he thinks he's gonna solve it. What do you think?
Speaker 3:And that feedback is for my product feature, but it's I'm pretending it's somebody else. And and it's really honest because they're not gonna be mean and and poo poo my idea because they their social capital at at risk. That they just don't it's not worth them saying that sucks. I do it because I know how important it is. He does it.
Speaker 3:Andrew Chen does it. There's a handful of people that I turn to personally because I know they're gonna be honest and real and I don't have time for people to, you know, as Mark Souster called it, grin fuck people. Yeah.
Speaker 2:Rounding off this part here, I want to get to some questions about business, creating business. Let's talk about creating a real business because this is something I've struggled with because in the startup space seems to be a lot of products out there that don't seem like real businesses to me because they don't have profits. Do you Sorry?
Speaker 3:Give me a couple of examples so I can use those in my answer.
Speaker 2:Oh sure. Well Twitter right now is trying to figure out profitability. Facebook is starting to get revenue. But there's a lot of money in that company. Price to earnings would seem a little bit low.
Speaker 2:There's a lot of companies out there that have a product and they have revenue, but they might not have profits.
Speaker 3:So the question is
Speaker 2:What's your definition of a real business? At what point do you become a real business?
Speaker 3:Well, I think the the business becomes a real business when it actually makes money. You know, create and keep a customer is the definition of a business. Right? Mhmm. So create and keep means you got and you retain, and then customer means they actually paid you, not user.
Speaker 3:Right? Mhmm. You know, Instagram didn't have a business model. Their customer would have been advertising agencies. Twitter, same thing.
Speaker 3:Right? Mhmm. And what people, especially not in the Valley, and I didn't understand when I first moved down there is there's a the proxy to revenue is retention, right, or growth. So there's certain businesses like a PayPal, like a Twitter, like a Facebook, etcetera, that is a land grab. Right?
Speaker 3:There's only gonna be a number one, maybe a number two. And I need to really spend all my time becoming number one and getting recognition distribution. And that's why people raise capital. Now if Twitter if Twitter had a and and that's that was Twitter's problem for a long time is people would sign up and they wouldn't use it. Right?
Speaker 3:How many people had Twitter accounts and it's like, I signed up for Twitter and I haven't used it in two years. Yeah. But then all of a sudden, it made sense. Right? Yeah.
Speaker 3:So Twitter knew that. They had these numbers they saw where people were like, these people really got it and these people didn't, but we know what the problem is, and we're gonna work on fixing it. Right? But their challenge as well was the scaling issue where they were spending most of their time and resources trying to keep the site up because they're growing so fast. But that that so the proxy of retention is in lieu of revenue.
Speaker 3:Mhmm. Because if you you can just assume right? And Andrew Chen did a great blog post about, like, if you wanna build a, you know, a media property or a site that's gonna monetize using advertising, here's the kind of traffic that you need on a monthly basis to even be somewhat remotely interesting.
Speaker 2:Yeah.
Speaker 3:I don't think people understand that. So Instagram, no business. They never charge for revenue, but their growth and retention was through the roof. Mhmm. So just using really bad average CPMs for ads, they were a really big interesting business.
Speaker 3:Not to, you know, not not putting aside the fact that they probably could unsat Facebook as a social network because Facebook requires language. Instagram is images, meaning that I'm friends with people in Japan that I'm not friends on Facebook, which is that's what interesting because the language is not Twitter.
Speaker 2:So you think that Twitter could easily become a profitable business?
Speaker 3:They will be. They're just building see, if so the how how do I explain it? Facebook was doing 20,000,000 a year in revenue back when anybody remembers in the college days when they had banner ads. 20,000,000 a year in banner ads. Zuckerberg said, take the banner ads because it screws up the experience, and we'll figure it out later.
Speaker 2:Mhmm.
Speaker 3:Right? And he did. And he and they became Facebook, a $100,000,000,000 company. Twitter, early days of Twitter, we had AdSense. If you look back at the very first YouTube video, Jack Dorsey demoing Twitter when he said, and this is a tweet, there's an AdSense ad on the tweet page.
Speaker 3:He took it away. They knew that they could monetize. Is that the right experience? Does that create a great product experience? Hell no.
Speaker 3:But what they all decided was when we feel like we finally locked in spot number one or two for our category, then we're gonna try to figure out a way to monetize the product that enhances the experience. That's what's hard. There's only one company that I know that's called Google that their ads are better than their links sometimes.
Speaker 2:Right?
Speaker 3:That's what all these companies are trying to figure out.
Speaker 2:Yeah. But you don't think there's a question mark as to whether they will figure it out? You think they will figure it out sometime?
Speaker 3:No, there is a question mark, but that's why it's risk capital. It has to be a question mark. It can't be certain. Can't be guaranteed. If it's guaranteed, they're not gonna get the 100x returns.
Speaker 3:Their investors aren't gonna get the 100,000,000,000 IPO on the stock market. That's the whole game they're playing. Not a service business or I build houses or real estate play. You know, there's obviously risk, but that's why they're selling small portions of their company for higher valuation because they're buying into the future. Mhmm.
Speaker 3:So if you're asking me, do I think that Twitter can be a 100,000,000,000, they're valued at 6 right now? For sure, because Facebook is. Twitter, I think, is fundamentally a more meaningful platform. It's a protocol. It's it's it's almost like the Internet.
Speaker 3:It's like TCPIP. Mhmm.
Speaker 2:And and so with Clarity, are you pursuing something similar or what's your strategy for growth with clarity? Bigger than Twitter.
Speaker 3:Bigger. Look, Google indexed the Internet and made every text document available by search.
Speaker 2:Mhmm.
Speaker 3:I want to do that for people's brain.
Speaker 2:So you want to be you want to be as big as Google, as big as big as Facebook? Bigger you think?
Speaker 3:Think about it. The Internet the Internet's fun, but I got to sit there and I got to read. Yeah. I want I want Google to talk to the person so they can teach me in ten minutes what I would've took two or three hours to read and understand, and I probably would've understood it wrong. Because we all know, everybody on this the reason why people are listening to this podcast is because conversations carry a lot more information than text.
Speaker 2:Mhmm.
Speaker 3:There's context. There's there's there's the person's background and who they are and what they've done. Right? I think that voice and conversation and I'm not don't I don't wanna pretend for one minute that none of the big guys are thinking about this, but I think Clarity is uniquely positioned to actually go after this opportunity. But yeah, it's going be huge.
Speaker 2:So just to kind of close off, for any of our listeners that are, you know, they want to build their first product, what advice would you give them to someone who's trying to build their first product?
Speaker 3:Build a landing page with some mock ups of like try to build like a one pager. Visual like maybe it's like the benefit statement, the name of the product, some screenshots. PDF or a website, doesn't matter, a
Speaker 2:link. Okay.
Speaker 3:Try to find 10 people to buy it from you.
Speaker 2:Try to find 10 people who will pay you
Speaker 3:Give you money. Dollar bills. Interesting.
Speaker 2:See, and this is where you're different from kind of a lot of the other startup talk is
Speaker 3:I'm not though, but then because what I would say after that is depending on the opportunity, maybe you don't wanna charge anymore because it's a land grab. See, that's the thing.
Speaker 1:It's right on.
Speaker 3:Eric Rees talks about this. Yeah. Clarity, like, who knows what the business model will be for clarity? Maybe I stop maybe I stop taking the 15% that we take today because it's not important. Mhmm.
Speaker 3:Right? It's a it's a success tax. Right? Why do I wanna do a success tax for my expert? I don't.
Speaker 3:Mhmm. That's what I'm trying to say is Eric Reese was the one that taught me right time, right action. There's things you should do today to validate that you would maybe stop later because you've proved it. And that would be an example, depending on the opportunity in the market. So why do I think clarity is important?
Speaker 3:It's because I don't think anybody actually knows. And the best way to find out is to talk to people who've been there before and you'll learn faster. And information economy, everybody agrees we're in this world. 60% of the workforce are information workers and that's growing. The only thing that's going to make us compete better faster is to be able to learn faster, make faster, better decisions.
Speaker 2:For you then, if you can validate that people will pay for something, depending on the idea, you could say, Well, I know people will pay for this. Now we can actually turn that part down for a while and grow this thing.
Speaker 3:But if you're bootstrapping, you actually need to do the opposite and say, how much can I get people to pay for it? Because I don't have that much runway. Where's the yield pricing? Where's the curve? Talk to Jason Cohen on Clarity for that advice.
Speaker 3:He knows it best.
Speaker 2:Yeah. Right? And if you were like If you were bootstrapping Yeah. If you were bootstrapping, how would your your how would the steps be different?
Speaker 3:I mean, this is the context part that you don't get reading Hacker News. Right? How would it be different? A, you would probably wouldn't quit your day job until you actually validated it. Once you validated it, then the next thing I would do is figure out what's what's the highest I could get for it because I need to get the highest margin initially so that I can somewhat get to a point where I'm, like, covering my cost, let's say, thousand in a month Yeah.
Speaker 3:That's lived. And then I want to, as fast as possible, actually validate because here's the other part that you didn't validate is you went in front of somebody and got them to pay you. Cool. They looked at you. You communicated well.
Speaker 3:But that's not your business. Your business is, will this person, not knowing me, show up to a website, feel the pain that I think they have, go on Google to try to find a solution, find my solution and buy at the same price. That's a different step.
Speaker 2:Yeah. That's an important one. You actually don't hear about that as much, I especially with customer
Speaker 3:was talking to an entrepreneur yesterday and they're like, look, we just closed $12,000 we had we have $612,000 a year plan that we got, and we're building this product. And I said, congratulations, but it doesn't mean shit. Because every one of those customers were your previous customers at your service company. Mhmm. So they've already paid to trust you.
Speaker 3:They know you. They've gotten the product and all you said is, hey, you can do this yourself using our tool. The only validated learning to me, and I told them this, is go and try to put your product in front of people and see if they even get to a level of gratification because the way it looked that day was it sucked because every product sucks in the beginning anyways. Mhmm. Nobody right?
Speaker 3:So those are all, like, what are the riskiest he right? I don't wanna, like, you know, kind of, like these are the guys. These are the guys that taught me. Heat know what says. What's the riskiest assumption that you believe that if it doesn't prove true, your business does not work?
Speaker 3:It's not the technology. Maybe is. Maybe you're in a maybe you're trying to build some new search engine and maybe it's the technology, but that's not more than for 90%, 95% of people out there, it's should you build it? Does anybody actually want it? And you don't need to build anything to learn that.
Speaker 2:And what do you think is a good profit margin for a bootstrap company?
Speaker 3:As much as you can get.
Speaker 2:What's the baseline? It
Speaker 3:all depends. Like, it depends who the customer is. Like, you can actually you can get people to pay $5,000 a month if you generate $30,000 of value. So if I said $50, I'd be doing a disservice to the people that could've got 5,000. Mhmm.
Speaker 3:It all depends. How much pain does the customer have and what's the value of a solution if it was solved in a way that they would actually use?
Speaker 2:Yeah.
Speaker 3:If you're if you're selling Boeing jets and your profit on a jet is $12,000,000 and I have a tool that lets you sell 20% more jets per year, you better believe you're paying $7.08 figures for my solution. Exactly. Because the ROI for you is three or five or 7x. It's all different. It all depends on the customer, the market, the product set, the problem.
Speaker 3:But again, the biggest challenge is it's not can you build it, should you build it.
Speaker 2:That's probably a good place to leave it. Hey, Dan, thanks so much for coming on the show.
Speaker 3:No, Justin, absolutely my pleasure. If anybody wants to reach out to me directly, they can email me at danclarity. Fm. Short emails, please, because I don't read long ones, as I said earlier. Dan Martell on clarity.
Speaker 3:So clarity. Fm slash danmartell and danmartell on Twitter. You know, tweet at me and I tweet back and love to hear from you.
Speaker 2:Beautiful. Thanks again, man. Talk to you soon.
Speaker 3:All right, Justin. Thanks again.
Speaker 1:Show, you can rate us on iTunes. Just search for product people and click five stars. That really helps the show get noticed. We've just been featured in What's Hot for iTunes under Business Management. So thanks to everyone that have given us ratings so far.
Speaker 1:You can follow Dan Martell on Twitter DanMartell. You can follow me, Justin, on Twitter MIJustin. And you can follow the show on Twitter well ProductPeople TV. Join us next week where we take a break from bootstrapping and we try to look at things from another perspective. Jason Kallikanis is on the show to talk about funding versus bootstrapping.
Speaker 1:Join us then. Hey, is this on? Alright. I promised you guys an Easter egg. Here it is.
Speaker 1:A little bit embarrassing, but if you search Canadian selfie in Google images, my picture is the first result that shows up. Cheers.
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