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The Ladders of Wealth Creation: A Step-by-Step System to Up Your Earning Power (Greatest Hits)
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- [00:00]
A
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- [01:16]
B
What's up, what's up? Nick Loper here. Welcome to the side Hustle show because you can be a creator or or consumer, but it's the creators that get paid. On the docket today, the ladders of wealth creation, how you can level up your earning power following a simple framework and why chasing so called passive income streams right out of the gate might be a recipe for disappointment. To help me talk through this one is Mr. Nathan Barry. He's a serial entrepreneur best known as the founder of convertkit. Com, the leading email marketing service for creators. And fun fact for you. ConvertKit started as a side project in 2013, same year that side Hustle Nation started and is now a mid 8 figure a year company. A little bit of a different growth trajectory there, but it's all good. Nathan, welcome to the Side Hustle Show.
- [02:03]
C
Thanks for having me on.
- [02:05]
A
You bet.
- [02:05]
B
I feel like it's a long time coming. We've both been in the game for a long time. You can find Nathan at nathanberry.com where he blogs about all things online business, marketing, entrepreneurship and he hosts the Art of Newsletters podcast. You want to learn more about email marketing? Growing your email list, monetizing it? Definitely. Check out the Art of Newsletters podcast. But stick around in this one to hear how Nathan went from working at Wendy's to owning this multimillion dollar SaaS company. Some of the side projects that he's working on. Once a side hustler, always a side hustler. And the marketing strategy, or a marketing strategy that is working well today. But first, I would love if you could give us the big picture thesis behind your ladders of wealth creation. Why did you write this post? What's it all about? Again, this is at nathanberry, if you want to go check out the full article, but we'll dive into it here.
- [02:56]
C
Yeah, so I see things in the world and I start to notice these trends and I want a way to explain them. You notice something and you realize like, oh, this is true, or this works better than that, but you can't articulate why. Exactly. And so I wanted to put together a system to say, this is exactly why certain paths to wealth are better than others, and try to break this down in a framework that I could show to someone else. I struggled for a long time to come up with a metaphor, to write it out, like, what are the principles? What are the stages? All of that. And I got help from a few friends like, like James Clear and others. Actually, I had you read one of the very early drafts of this when we were hanging out at Fincon 2019. I don't know.
- [03:41]
B
Yeah, you're right. Oh, 2019 in DC. And, you know, I remember thinking, oh, this might be a cool episode. So I've had it penciled in for years. I'm happy that we're are finally making it happen.
- [03:50]
C
Yeah. So basically I was trying to break down a bunch of problems. One, how do you build wealth rather than just earn more income? And then two, why, when people are saying, like, pitching different business ideas, why some are inherently really bad and others are quite good. And then the third part is, you know, why are some types of businesses way harder than others? And why when someone comes out and says, hey, I'm gonna make Uber for Dock Walkers or ebay for this, or I'm going to start a SaaS company or all this, and they're early on in their career, I'm immediately like, oh, God, no, don't do that. Like, that is a horrible idea. Not that it's a horrible idea altogether, but it's a horrible idea for you and the things that you've learned. And so the ladder of wealth creation is this. This idea of making money as a skill. Business is a skill, really. The collection of A thousand individual skills. Same way that you'd think about like playing piano or the drums or something like that. There's a collection of a whole bunch of skills that you have learned over time. And how can we break it down into something where you actually understand? Here's the skills that I'm trying to learn in sequence and knowing that some businesses are playing a simple scale or my kids are learning to play the piano right now. So I walked in, into the house and I heard Old MacDonald playing. Right. Some businesses are the equivalent of Old MacDonald, very basic, simple skills. Others are the equivalent of like some incredible concerto. And it's like don't sit down and try to dive right into the, you know, the hardest version. And so the ladders of wealth creation is really trying to break that down into a bunch of the individual skills, how you learn them in sequence. And like giving a framework to building wealth rather than it feeling like it's luck or chance.
- [05:34]
B
Okay, that's fair. So you're saying if somebody's trying to build the next Uber, the next ebay, the next Amazon, the next Facebook, and they don't have a ton of entrepreneurial experience under their belt, you're saying take a pause, that's a red flag. Like start with a simpler business model essentially.
- [05:49]
C
Yeah. And so I'm trying to break it down, right? There's the earning potential and the complexity. Right. There's a few different angles here. And so we're really trying to break it down into these four ladders. And if we want to dive into it, the four are first one's trading time for money.
- [06:03]
B
Right.
- [06:03]
C
So that's having a job working hourly for a company. You can move up that ladder to a salaried position and there's actually a lot of room in that. There's just very little leverage. Right. So your highest paid time for money positions are going to be things like a doctor, a lawyer, stuff like that. And the very early on is doing yard work, mowing the lawn for someone.
- [06:26]
B
Getting paid for that, working at Wendy's in your example.
- [06:30]
C
Yeah, exactly. Right. 5, 25 an hour I think is what I made there. And like you can move up that ladder, but you're going to be capped.
- [06:41]
B
Yes, there's a limit. Your limit is your number of hours in the day or the number of hours you can reasonably work even if you're a very high paid professional. That could be great. But the income pie chart is still 100% active income at that point.
- [06:55]
C
Yep. And you know, it's hours you can work or really hours you can work and get paid for multiplied by that hourly rate rate. And there's lots of things that you can do that have a high hourly rate, but you're moving up within that ladder.
- [07:11]
B
But your recommendation is everybody starts here, or most people need to start here to learn on the job skills and showing up and being responsible and doing the work.
- [07:21]
C
Yeah. Now some people are never cut out to be their own boss or any of that. But you, if you think about, if you know someone in your life who like just can't even hold down a job, can't show up consistently, that's when they have this outside like authority or pressure being like, look, if you don't do this, you're going to lose your job. If you don't like, if you want to get paid, here's the minimum bar. And those are skills, right. To be able to show up consistently, do the work, to learn, apply that, and it's the base level skill when someone else is providing that accountability or supervision. And so you have to learn that before you can do it on your own.
- [08:03]
B
Right.
- [08:03]
C
If you're the person who's like, I'm going to go and I'm going to start my freelance business, that's kind of the next ladder is your own service business. And if you didn't learn the skill from the previous ladder of showing up consistently, you're going to have a really, really hard time. And actually now in your own services business, you have to provide that accountability yourself because you, I mean a lot of creators find this, right. They quit their job and they go off and they're like, I'm going to have so much time, I'm going to do whatever I want. I'm, you know, I made this much progress when it was a side hustle and I could only work three hours a week on it. Now that I can work 40 hours a week, like the sky's the limit. And what happens is they actually don't have the skills to focus and hold themselves accountable and all of that.
- [08:49]
B
This is ladder number two. So ladder number one was time for money, part time job, full time job, salary, job, time for money. Ladder number two is your own service based business where you're solving problems for customers and clients and getting paid for that.
- [09:03]
C
Yep. Yeah. So that example of the skill that translated between both of them that's really important is like the ability to show up and do the work. And you know, one, you know, ladder number one, it's like stay accountable when someone else is providing that accountability ladder Two, it's like, well, now you have to provide that accountability because you are your own boss. So as an example of just like a simple skill, do you run into people?
- [09:26]
B
Because I'll meet people who, you know, especially the last couple years, like, oh, I just have a really hard time, you know, focusing when I'm, when I'm working from home or like, and that's almost foreign to me. And I'm curious to get your take. As Convertkit is a remote first company, you got people all over the world. It's just, it's kind of surprising. I've been working from home since 2008 and never really had that problem of like, sure, yeah, I'm going to. Yeah, I'm going to do what I set out to do. And it's always. It's interesting. It's like, I don't know, is that, Is that. Is working from home really the symptom here? Do you need somebody looking over your shoulder to make you accountable?
- [10:02]
C
I think working from home is not the symptom, it's the excuse. Like, a lot of people really struggle or they don't have the habits to show up consistently and do the work. Right.
- [10:14]
B
Yeah.
- [10:15]
C
Like, your mind is a wild thing. It'll go every which way that you let it. And so it takes a level of skill and discipline to like, channel that in and to say, hey, for the next 30 minutes, I'm going to focus on this blog post that I need to write or I'm going to do this design work or whatever else. And that's something that you have to learn. And so when someone or you have to have tools for it, right. Like the Pomodoro method or writing a to do list the night before, you know, diving into the hardest thing that you've been putting off, like diving into that first. And so, yeah, that's just one example of like a thousand things that you have to learn. And if you're failing on some of these early ones and you're trying to jump ahead and you're like, oh, I'm gonna start a SaaS company or I'm gonna do this other thing, it's like, no, no, no, you're going to fail so hard and it's going to have nothing to do with the SaaS company. It's going to have to do with that. You haven't learned these basic skills.
- [11:07]
B
Yeah, it's not that the idea itself was bad. It's like you're not in a position to execute on it and execute on it well yet.
- [11:14]
C
Yeah.
- [11:14]
B
Okay, so your own service business. This is ladder number two. This is where a lot of people start their side hustle journey. I think last time I did this study, over 500 episodes of the side Hustle show, more guests started with a service based business than any other model. And most often that was started on the side. And so this is kind of like I can dip my toes into the entrepreneurial waters in this method.
- [11:38]
C
Yep, exactly. And what's nice about a service business is the time to money is often pretty short, right? So if we think about, you know, talk about future ladders, right, of productized services and selling products, you might have to put in a ton of effort before you make any money. But a service business, you can be like, sure, sure, Nick, I'll, I'll design that for you. You know, 50 bucks an hour. And like, I do the thing for five hours and you pay me 250 bucks. And like, my time to generate money in my side hustle was very, very short. Now I have to learn a bunch of skills in this. I have to learn how to find and talk to clients. I have to learn how to invoice. I don't know, like, I remember the first time I was trying to figure out how to invoice a client. Like, what's professional? Should I. I'm sending out this invoice. The template has like invoice number on it. Should I start from one? Should I try? Should I start from 57 to make it seem like I've done this before? 512. There's just all of these things. You have to figure out basic business skills. How do I set up an llc? How do I get a bank account? What's an ein? You start to learn all these things that are really complicated until you've done them. And you're like, oh, that, that's the simplest thing. Like any I. And you call the IRS or fill out a form, like, and five minutes later you have it, you know, but if you don't understand it, those are hard things, right? So it's a ton of skills to learn. And then, you know, as you move up that, that work, right, you can start to charge by the product or by the project, right? So instead of saying, hey, I'll do this design work for you for 250 bucks or for $50 an hour, then I'm saying, hey, I'll design a logo for you for $250. I'll design a website for 2,000. And now I start to have a little bit of leverage Right. Because if it takes me four hours to do the logo for you instead of the five that I estimated, well, now my hourly rate's a little bit higher now. Leverage can go both ways. And so if it takes me 10 hours to do the logo when I estimated 5, I'm now making 25 bucks an hour and that loss is mine. So I can either have the win if it goes well, or the outsize win or the outsized loss, whichever way. And that's leverage. And so learning about that, usually the first time people learn about that is when they switch from hourly work to project based work. And that's a skill you start selling.
- [13:57]
B
The outcome rather than your time. What's the deliverable? What's the thing that the client is going to get? What's the, hopefully the transformation that they're going to have at the end of this thing?
- [14:06]
C
Yet the top of the ladder is just your own service business where you're managing a team, doing work for you.
- [14:13]
B
Right.
- [14:13]
C
And so I'm now leading a team of designers in my web design business. Right. I've got a couple designers, developers and all of that. Right. And there's so many things. How do you hire, how do you do payroll, how do you like, hold people accountable, make sure the business is profitable that you've got to deal with at that scale?
- [14:29]
B
Right. How do you mind your margins?
- [14:31]
C
Yeah, yeah, there's a lot to it, but yeah, that's kind of the service business ladder.
- [14:36]
B
What was the, in your case, what was the service business for you as you sort of started Wendy's time for money? What was the service business for you on this ladder?
- [14:44]
C
Yeah, so in time for money, you know, I did a bunch of, a bunch of jobs. I worked as a designer. Right. Had a salary making $60,000 a year as a designer at a software company. And then I made the switch to freelancer, you know, doing hourly work for clients. And that was a lot of like 100 bucks an hour to design iOS apps charging by the project. I started doing like estimate. We started building web apps for customers. And that's where you know, I charged $10,000 for this application. And you know, I'm doing a bid up front and they're not responsible for overages. I am. I never got to like a team of employees. I got to, you know, two or three contractors that I'd be working with. But a lot of people, right, running a design agency or something would be, be that example of the top of the service work. One thing to say is you can build great businesses or you can earn good money anywhere in here. It's not that.
- [15:41]
B
Like yeah, you don't have to keep going. Like if you find you find satisfaction and fulfillment on, you know, Ladder Water too. Like, hey, you know, keep at it.
- [15:49]
C
Yep. But. But Ladder 3, I think, is where it starts to really get interesting. And that's productized services.
- [15:55]
A
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- [18:10]
C
And so let's say we were doing this is where we're, we're still selling a service, but we're starting to act like it's a product. So let's say I do SEO audits, right? I'm a search engine optimization consultant. I was charging a hundred bucks an hour and now I'm saying, hey, for $1,000, I will do this audit of your website. You'll get these deliverables at the end, this checklist, this training, you know, that kind of thing. And it's both a fixed scope, so you know exactly what you're going to get and a fixed price. And what's interesting about it is it turns into this thing that now you can buy as a customer without really talking to me. You can come to my website and say, oh, that sounds good, and maybe just click purchase without me sending an invoice or all of that. So if you think about the skills at this step, I now have to learn copywriting. I have to know how to make a website. I need to know e commerce in a way. It's not just sending an invoice through FreshBooks, it's like, oh, throughout ConvertKit Commerce or Stripe or something like, I gotta be able to collect payments. I probably need to send a follow up email automatically and be like, hey, thanks for, thanks for buying. Let's schedule the consulting call. And so you start to get this next level of skills that are critical for selling products. You know, of building a sales page, copywriting, design, all of that. But you do it in a way that's still more approachable because you're taking your services and packaging them as a product.
- [19:38]
B
Okay. I'm trying to think as I'm going through my own ladder progression, like time for money. In my case, shelving books at the library. Best job in the world. If you know your ABCs and your numbers, you are qualified for this job working at the Mongolian Grill, which is another incredible job. These mountains of free food on the service business side. And actually a really important time for money was a marketing internship, which my first exposure to e commerce and affiliate marketing and SEO and pay per click advertising, all that stuff. Service business side for me was painting houses in college, charging by the project like, hey, for 2,500 bucks, we'll come out during this week of the summer and we'll paint your house and then Managing a small team to do that, and doing a lot of painting myself too, but hiring and firing and recruiting, all that stuff. On the productized side, I didn't do a ton of this. I did a little bit of freelance writing, a little bit of freelance nonfiction editing in the self publishing space. I did a little bit of virtual assistant recruiting. I had a virtual assistant directory and review site for a long time. And people would approach me and say, could you just do it for me? So I said, sure, who are you looking for? So I'll go out and try to find those person, find that person for a fixed price and present those candidates.
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A
But that was about it.
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B
On the productized service side, a lot.
- [20:58]
C
Of people skipped this ladder.
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B
Okay, did you skip it or did you go down this path of selling a productized service? In design, I think I went to.
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C
Products and my first eight products did not really make money.
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A
Right.
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B
So products is ladder number four, products.
- [21:16]
C
Is ladder number four, and productized services is the bridge between it.
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B
Okay.
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C
And so if you jump from pure services to pure product, then in this one leap between ladders, you have to learn a ton of skills. Basically E commerce, copywriting, page design, how to make a sale without someone ever talking to you, how to fulfill a sale without someone ever talking to you. How to actually make. There's just a ton of things. And so with the product as services step, you can learn probably a third of the things you need to make that leap and still make money.
- [21:52]
B
Right?
- [21:52]
C
If you talk to people who make their first product and it didn't go anywhere. One of My first was WordPress Themes. I was building and selling WordPress Themes. I sold $72 worth of WordPress Themes.
- [22:02]
A
Nice.
- [22:02]
C
Did not work, did not get traction. You look at the hourly rate, total disaster, probably $4 an hour. I don't know, probably less. And it's because, I mean, there are so many. I didn't know how to capture attention without talking to someone. I didn't know how to. To like actually make a sale effectively on the Internet. And I think had I done productized services, I would have saved myself. It still would have been pain. I was gonna say it would have saved myself a lot of pain. It still would have been painful.
- [22:28]
B
But like, in that case, it could have been like theme design for somebody or a package of okay, for a. For still doing client work, but, you know.
- [22:36]
C
Yeah, still client work, but it's packaged up, hey, I will design your WordPress theme for you for a thousand dollars.
- [22:40]
B
Gotcha.
- [22:41]
C
You could buy this off the Shelf or I'll do customization. Right. I'll take, you know, any, I don't know, woo themes or revolution or what, like Genesis theme. And I will build this for you. Like I'll customize it to your look for X price. So you can do a lot of things and you can learn those lessons. And basically your goal is to learn in a profitable way. If you make a huge leap, you're going to spend all this time learning and you're not going to get paid for it for a long time. And if you don't have more money coming in, that can be really challenging. And so this is like, okay, how do we get money coming in consistently and get paid for it?
- [23:18]
B
Yeah, I love that. Learn in a profitable way. And I'll have to dig up the link to this guy's Twitter thread I found recently. And it was about how I made, I think it was like 10 grand on fiverr learning this new video editing skill. Like, hey, this was a skill that I wanted to learn. Started out with a really low price and sure enough, you know, my hourly rate for those first projects were pretty bad. But over time I got faster and faster and I learned this new skill along the way and I made some money doing it. Learning in a profitable way. Let's go to ladder number four. This is selling products, digital products. I'm imagining courses, books. Yeah. I don't know what else falls under this. Software, of course.
- [23:59]
C
Yes. Software definitely does all kinds of things. Even selling on Etsy, right. It could be, you know, handmade products. It's a little closer to a productized service since it's not like make something once and selling it a whole bunch of times. But really, here's where you start to get leverage. And you have leverage on two sides. One, you can make sales without ever talking to people. So you start to get to the point, like an ebook. If I make an ebook, it's the same amount of work for me if I sell one copy or a thousand copies. Now that's pretty amazing. Well, again, leverage cuts both ways. It's both horrible because I could write an ebook and spend hundreds of hours on it and sell one copy and that's really, really common. Or I could spend hundreds of hours and sell 10,000 copies and be like the next case study that everyone should follow.
- [24:45]
A
Right?
- [24:45]
C
So yeah, there's all kinds of products and there's a huge amount of nuance and complexity in it. Right. If I'm selling a product of I'm a designer and I'm like, hey, here's my Photoshop templates. I'm selling a byproduct of something that I already do professionally. It's easy to fulfill. There's not a lot of support. Someone might be like, oh hey, could you add this to a future version? But it's not on the same level of like maybe a WordPress plugin would be a few layers up, right. It could be a certain amount of complexity. I've got to support it to an extent. But it's still hosted on the client site. Maybe it's sold through a directory or something, you know, a marketplace, so that's easier. Whereas then a SaaS company is even higher on there of it's saying right now I've got to host it, I've got to support it, I've got to continually develop it. It's recurring revenue so it's a harder sale to make. And then at the top of that products is a marketplace, right. Something like Creative Market or Uber or Facebook Marketplace of social network where you have to have both sides together. You know, you've got to scale these equally. Like it's really, really hard. But if you pull it off, the earning potential is insane. You know, the richest people in the world are running social networks and marketplaces.
- [26:03]
B
Sure, yeah. If you don't have the demand side, none. There's no reason for the suppliers to be there and vice versa. Okay, yeah, yeah.
- [26:13]
C
And so on the product side, what I'd look for early on is a simple product to sell and support so you can learn some of these lessons. Well, one of my favorites is like selling an email course, like a paid email course, because you don't have to design it, you don't have like you can put these emails in a sequence. I did one on money. You know, if you're a creator who's already earning over 200,000 a year, like I wanted to put together content just for that, like what do you do now? Kind of thing. But I did it in a paid email course so that it was really simple. I could add to it gradually over time. And when someone buys it, you know, every Friday they just get an email from me for like 14 weeks in a row. It's a really simple product to make and sell if you're a decent writer. Whereas something like a video course, right? I've got a, you know, I want to have a bit of a studio, I've got to write a script, I've got to practice, I got to edit, I got to shoot. You know, I have to get the kids to be quiet for long enough to be able to do that. So it's a little bit harder. And then, you know, you work your way up the ladder as you learn more lessons.
- [27:10]
B
Where would you say a content based business, a YouTube channel, a podcast, a blog would fall on this spectrum? Because I, you know, think about for, for side Hustle Nation, for example, monetized through sponsorships and affiliate partnerships for the most part. And some of my own products and services are mostly products these days. Like, I've really dialed back the service side, but, you know, would that be considered a product in a way? Like, I'm creating content I hope to attract eyeballs through SEO.
- [27:39]
C
So basically actually have another blog post that another time we could spend an hour or more talking about. And that's called the Billion Dollar Creator, which is asking the question, when you have attention, what is the most profitable place to direct that attention? And so what you have with side Hustle Nation, right, is you're capturing attention from the podcast, from the blog, newsletter, everything, right. And then you're choosing where you want to channel that. So it's not a product in itself, but you're saying, hey, I want to channel that to sponsorships. Right. Other brands. That's one level of profit, right? That's the product that you're selling. In this case, you're selling it to brands rather than to the consumer, or you're channeling it into a course, or you're channeling it into other things. One of the principles is that each step is easier with an audience because you have captured this attention. So really the audience is that you're talking about is the attention. And then you choose what product you want to channel that attention to. And it doesn't have to be one, it could be many. But yeah, there's a lot of different directions there. And so the Billion Dollar Creator essay is basically saying, what's the highest ROI that you could possibly do? And the short version of it is channeling it to a product where you own substantial equity. Think like Dr. Dre creating beats by Dream. You know, that's something he's making billions of dollars off of selling a headphones company versus making millions of dollars making and producing music.
- [29:12]
B
Okay, yeah, A step up the value chain, sure.
- [29:16]
C
Yeah, exactly. But in your case, once you have attention, then you choose what you channel it into. And there's varying levels. Most people, you know, in the, in the blogger content creation space find that some combination of books, courses, or memberships are the highest ROI place to channel that attention.
- [29:37]
B
Okay, yeah. So you could consider all of those under that product category.
- [29:40]
C
Yep, Exactly. I chose SaaS. I said I did books and courses and I was like, that does pretty well, you know. Well, books and courses were making me 200 to 250,000 a year in revenue. And then I said, I'm going to put all of that on hold and I'm going to build a SaaS company and I'm going to take all of my attention from my 5,000 and 10,000 subscriber newsletter and channel it into building a SaaS company. And that's then created, you know, tens or hundreds of millions of dollars worth of value.
- [30:12]
B
Right.
- [30:12]
C
As we've moved up that value chain.
- [30:14]
B
What was that like taking that leap? Because ConvertKit was doing what you said, maybe a thousand bucks a month. When you say, like, I'm going all in on this versus and you know, kind of turning your back to this other thing, like, I got this cash cow, it's working. But there's a. I don't know, did you feel like there was a ceiling there or like the ceiling on the SaaS side was obviously much higher. What was the thinking there?
- [30:35]
C
Yeah, the ceiling was much, much higher. And I wanted to know, like, could I pull this off? I think there's a lot of people working on a side project where they're like, oh yeah, you know, if I went all in on this full time, then it would blow up. And you're like, would it? Do you know that for sure? You know, and you're like, is that just a story that you're telling yourself? And so I was wondering, you know, as I was deciding to shut down or double down on Convertkit, if I shut it down, I'd always wonder, could I have made that work? And that wasn't something I was willing to live with. And so I was like, okay, I have to make sure I've given it my best shot and make it a full time venture for a while. And I actually set a goal of within six months I wanted to get to 10,000. So two years in I was like, shut it down or double down? I decided to double down. I'm like, okay, in six months I'm gonna go from 1500amonth to 10,000amonth in revenue. And that'll be proof that doubling down worked.
- [31:29]
A
Sure.
- [31:30]
C
And if it doesn't hit 10,000amonth, then I'll shut it down. Of course it didn't hit 10,000amonth in six months, but it hit like 6,000 and it was like, that's pretty good. Actually, you know, and then two more like eight months in after that decision, it was at 10,000. And then, I mean it took in 14 months since the decision to double down. We went from 1500amonth in revenue to 100,000amonth in revenue.
- [31:59]
B
Wow.
- [32:00]
C
So it ended up exploding in a huge way and then now it's doing two and a half million a month in revenue and up from there. But that's like an example of. Well, I guess two things to say on that. Principle number eight in this essay is it takes longer than you think. But the results can be incredible. Like Converkit's now, I've been working on it for almost 10 years, from inception of the idea through to today. And it took so like two years in, it was not a success. Right. And then, you know, it's just been working on it away for a long time. But then when you let that compound over a long period of time, the results are absolutely amazing. Like way more than I could ever earn off of any combination of ebooks, courses, et cetera.
- [32:50]
B
Agree. Patience is this underrated entrepreneurial skill. It takes longer than you think. It sounds like you kind of put some value in. Another guest. This is Scooter from the Sleep with Me podcast. Like a podcast designed to put you to sleep. The world, he calls it like the world's most boring podcast. And he described his journey early on, was just putting a mark on the calendar six months out and he called it his arbitrary quit date. And he's like, I'm not even going to think about quitting or throwing in the towel until that date, because I don't know. And then I'll reevaluate when it gets there. Is this fun? Is this seeing traction? Is this something I want to keep doing? Yes or no? And he just kind of gave himself permission to put his head down and do the work until that day and then reevaluate it there. And so you kind of put those blinders on a little bit and just go to town, do the work before letting the self doubt creep in. Every week or every day in some cases of like, ah, is this project really going to be worth it?
- [33:45]
C
I think that's really good because otherwise you spend all this energy. Like imagine if you're questioning whether or not you should do a project every day or every week. You know, like, that's energy that's going into, like, oh, is this working? I don't know. That could have gone into like actually making it work. And so I love that idea of saying, I am allowed to reevaluate this decision on January 1st on whatever, whatever date, putting it on the calendar and when pops up. Like, I don't know if this is working. Oh, not allowed to think about that. I have a date set aside, some journaling and my favorite cup of coffee, you know, to like hand tackle that. And right now I'm supposed to do.
- [34:25]
A
Other things more with Nathan in just a moment, including what drives him to keep leveling up, even though he may not need to right after this. Whether you're a seasoned business or you're experiencing your very first Black Friday Cyber Monday, you need a platform that can handle the rush. The last thing you want is inventory errors or your point of sale crashing when new customers are trying to buy for the first time. So make sure your business is ready for the busiest time of the year with help from our sponsor, Shopify. Shopify is the commerce platform behind millions of businesses around the world, including dozens of side hustle show guests and 10% of all e commerce in the U.S. shopify has thousands of templates and tools to make sure your site looks great and is functional at the same time. And if you ever have any issues or questions, Shopify's award winning customer support team is standing by 247 so you can get back to business as fast as possible. If you want to give your customers the best shopping experience this holiday season, you need Shopify this Black Friday. Join the thousands of new entrepreneurs hearing for the first time with Shopify. Sign up for your free trial today@shopify.com sidehustle that's shopify.com sidehustle go to shopify.com sidehustlE and make this Black Friday one to remember when you're growing your business and your team, you need a hiring partner that can help you rise to the challenge you need. Indeed. Our sponsor Indeed is the hiring platform where you can attract, interview and hire all in one place. Here's our recent guest Skylar from episode 645.
- [35:54]
B
What's your recruiting look like?
- [35:56]
C
I would use Indeed Indeed was really really helpful at first.
- [36:00]
A
Plus, with Indeed sponsored jobs, there's no monthly subscriptions, no long term contracts, and you only pay for results. How fast is Indeed in this 60 second commercial? 23 businesses just hired their next team member. There's no need to wait any longer. Speed up your hiring right now with Indeed side Hustle show listeners get a $75 sponsored job credit. To get your jobs more visibility at indeed.com side hustle hu show, just go to indeed.comsidehustleshow right now and support our show by saying you heard about Indeed on this podcast. Indeed.com Sidehustleshow terms and conditions apply. Hiring Indeed is all you need.
- [36:41]
B
Very good. Well, that is the ladders of wealth creation. Climbing from time for money to your own service business, to productized services, to selling products. Very similar to what we've described on the show is the side hustle path. Hey, look, I'm working full time. I start freelancing on the side. Maybe I graduate to freelancing full time. Maybe I graduate to building an agency out of that. So I have got other people doing the work. I'm, you know, adding a little bit of leverage into my. Into my work, into my effort, and then graduating into selling either productized services or products. And you can skip these steps, but you do so at your own peril because the skills that you need to learn along the way are kind of the. The bridge in between the ladders. You still have to learn all the skills. And if you haven't climbed the ladder in sequence, then you know the learning curve is going to be a little bit steeper there. Am I interpreting that correctly?
- [37:29]
C
Yep. Yeah, exactly. And so just know that you can jump from one ladder to another, or like you could jump from the first ladder all the way to the top of the last ladder, but you still got to learn all the lessons. And so just expect that it's going to take a lot more time. Like, I know someone who jumped from a salaried position to running his own software company, right? He's jumped three ladders and five rungs all in one move. And he's absolutely successful with it. But it took, you know, four years or so to get that traction and to build it up. Whereas I think he would have felt more motivated and just had more signs of results along the way if he learned these skills at each step rather than learning the skills all in one big jump.
- [38:18]
B
Yeah, that's fair. I'm thinking back to my first real online project with this comparison shopping site for footwear and learned a ton along the way. But when I first started, the skills were very, very myopic in a way. Like, okay, I know how to do pay per click advertising, and here's a product that can work. But in terms of negotiating with the developers and speccing out this whole custom build and database and all of the. Yes, it took a lot. I mean, it was three years of nights and weekends before I finally felt comfortable quitting my job to do that business. But yeah, it was a steep learning Curve. So I really appreciate that. There's another essay that you've got. This is nathanberry.com journey and this was a very thought provoking thing for me because I have stuck solely pretty squarely in the lifestyle business lane where you've gone on to build this big company. I was hanging out with some of the ConvertKit team at Kraft and Commerce in June in Boise and they're like, oh, we got 70 something employees now and this is our MRR. And so this essay is. They say it's about the journey, not the destination. I say pick a destination that will take you on a journey that will truly change you. And you talk about, I'm going to have to become a different person to take ConvertKit to a nine figure company, to make it be a hundred million dollar company. And that is an exciting journey that I want to go on. And this is why I'm the world's worst gambler.
- [39:47]
A
I'm good.
- [39:47]
B
If I was ever up 20 bucks, be like, I'm good. I'm walking away. I just want to throw that out there. And get your take on growing something that is truly a personal transformation. What's the drive to get to that next level? You don't necessarily need to, but it's like it's this internal drive that I want to go do it.
- [40:07]
C
You know, when you read some of your early writing or you listen to like that early podcast episode or watch the first YouTube video and you're like, oh God, that was. I can't believe I put that on the Internet, you know? Or then you even look back two years or something and you're like, oh, it. Like if what you were doing two years ago doesn't make you cringe, then I'd wonder like, all right, do you have the growth trajectory? Are you living this out in a way where you're leveling up significantly? And then I'd look the other way. Like that's sort of a negative way to look at it. But the positive side is think about a problem that you encountered two years ago that was like really hard to manage. If you encounter that same problem today, how would you feel? And I have a lot of examples where I was like, that was so difficult when I went through it and now I hit the same thing and I'm like, no big deal. Typical Tuesday. Cause I learned how to do it. It's like the equivalent of, you know, if I was like, hey, Nick, we're both going to get into running. Neither of us are runners and we're going to run a six minute mile, like we're not going to be able to do that. Total failure. But if we said, hey, for the next two years, our number one goal is to be able to run a six minute mile and we're going to work towards that consistently. Here's our training plan, all of that and we're going to spend two years just focused on that one thing. We could both get there, right? And so it's thinking about setting a goal that's big enough for me. I chose 100 million in revenue for ConvertKit where it's like I have to become a different person to lead a company there. There's so many skills that I don't know. There's so much like stress and anxiety that it would cause because they don't yet have the level of resilience. And so I'm like, how can I chip away at these individually and build it over time and set a goal that's big enough that I know I'll be a different person. I think back to our very first team retreat. We had 21 team members gathered in McCall, Idaho and we're sitting in this living room of like a big cabin that we rented and I was just like, oh, it's so great to have everyone together for the first time, you know, And I'm like looking around, this is great. This little excited conversation's going. I'm like, someone should like, who's gonna say something and like get this started, you know. And then I realized like, oh, me, that's me. Like I'm the CEO. It's my job to step up in front of all of these people and actually lead something. And, and I, I felt anxiety. I was scared. Like I am like, I'm a learned extrovert. I'm much more introverted normally, but I've, I've learned a lot of skills to be able to do that. Just last week we had a team retreat. It was our 10th in person team retreat. The team's grown from 21 people at the first retreat to almost 70 at the most recent one. And I'd done a lot of prep but I had no problem getting up in front of the team and share, like sharing things even to the point where we have a running joke now where the team, they write a speech for me, like a joking speech making fun of the, the team, the retreat, all the inside jokes and all that. And I deliver it like they hand it to me on a phone and I just deliver it from the stage like right off the cuff. I've never read it before, and it's so much fun and, and years ago that would absolutely terrify me. And now it's tons of fun. Cause it's just like skills that you learn over time. And so on that note, it's just like reflecting back on things that would have been hard before that now you're like, oh, no problem. Because I've built. Built the skills and the resilience and strength to do that. And so it's not for everyone. But I would say choose a goal that's. That's hard enough that you have to become a different person to achieve it.
- [43:35]
B
Yeah, I like that. That one really resonated with me. And this note about, did the work you did two years ago make you cringe? I will credit Joe Salsihai from Stacking Benjamin after a podcast conference. He's like, look, I want to be embarrassed by the work I did a year ago. And a year from now, I hope to be embarrassed by the work I'm doing today. It's about practicing your craft, about building a better product, about constantly improving your game. That one stood out. But choose a goal that is going to force you to grow and change. I want to go to round two. And this is a side project that you're working on or a business idea that you would be curious to kick around if you had more time to dedicate to it.
- [44:16]
C
Yeah. So I was thinking lots of people are brainstorming ideas or they constantly encounter business ideas. And I think as an entrepreneur, you're supposed to be the type of person who always sees ideas. And I don't know that I am. We were joking before being on, like, Sam Parr's My First Million podcast. You know, they're always throwing out ideas and I'm like, that, that's not me. But I do have these series of things that when I think of it, I execute on it in some way. A couple examples. One is people would always ask, if you weren't running ConvertKit, what, what would you build next? And I was like, oh, I'd build a better way to sell digital products. Like, you know, I grew up using Gumroad. They didn't run that business well, like, stop supporting it and all of that for a long time. And so I was like, oh, I'd build the next version of that, like, digital products for me as a founder. And then I just went and did that inside of ConvertKit, and that's ConvertKit Commerce. And so a lot of these things I end up building inside of it. Another example would be talked to a lot of creators who wanted a much better way to sell sponsorships, right? And they're like, I have this 20,000 subscriber email list and I want to monetize through sponsorships, but I don't want to do any of the work. And so then that became another ConvertKit product called the Convertkit Sponsor Network. A random thing tying it back into the latter's wealth creation. I did not pick up on this, but at crafts and commerce this last year, I delivered, you know, my, my keynote talking about, like announcing the sponsored network and talking about the marketplace and how it works. And my younger brother the next day told me, hey, you know your ladders of wealth creation post. And I was like, yeah, what about it? He's like, what position does SaaS have on that post? And I was like, I think I have it second from the top of the product ladder. And he's like, yeah, what's above it? And I was like, social networks and marketplaces. And he's like, yep, you just announced a marketplace, right, of building, you know, a whole team to match up, you know, a huge number of creators with a huge number of brands and make that all work. And it was just fascinating to me that he's like, I thought it was just an amazing business. And I was like, let's dive in. He's like, yeah, the earning potential is so high and you already have it positioned at the very top of the ladder. But we could only do that once. We had, you know, 40,000 creators paying for ConvertKit and relationships with all these brands. So we don't have that cold start problem, a marketplace. So anyway, those are two things initially that I'm doing and we could dive into more. But I'm curious for your thoughts on those.
- [46:50]
B
Well, I know you've got your Airbnbs and everything too, but what I'm hearing is if you've already got something going, you don't necessarily have to find something totally out in left field. I've talked to another friend of mine who's, they've got this successful online course business and they're like, I really think I want to really just want to launch a food truck. Like, well, that came, that came out of left field, but like, okay, you know, go for it. But you're saying, hey, look, if you can build something that already serves the same audience, helps them in a different way, helps them with kind of the next logical problem that they may have as they grow, then that makes a lot of sense. What's going well for you guys on the marketing side, obviously heavy into content marketing, but what do you see either for creators in your community or for ConvertKit itself?
- [47:34]
C
We've spent a lot of time focusing in on our funnels. I think as a creator, maybe others are better at this. When I wanted to sell more books and courses, I always looked at how can I increase the top of the funnel, how can I get more attention? And that's good, right? You're trying to reach more people, build your network and influence. But I didn't really focus much on conversion optimization or where people were dropping off in the funnel. And so for ConvertKit, that's something we're focusing on like crazy. You know, we realized we have a ton of people coming in at the top of the funnel, but like, the free to paid conversion rate isn't that high. That could be better. People are dropping off after the first 30 days. And so we did a couple things. One that just worked really well is we switched our defaults from monthly plans to annual plans. And this would be a huge thing if you're running a membership or a paid newsletter or something like that, or a SaaS company. Right. Like, listen to this. So we just changed the default on the pricing page from monthly by default to annual by default. And that took our split from 4% signing up for annual plans up to 14%.
- [48:41]
B
Wow.
- [48:42]
C
And so that's a big jump, right? Like that was fantastic. We saw it show up right away in churn and retention numbers as well. Right. Like those people, three months in, six months in, a lot more of them were sticking around. And so that was a big jump. We then changed like deeper in our funnel when you're adding a credit card, we tweaked that page to like recommend an annual plan more. And that took it from like it had been bouncing around to that 14% up to 17%. And that that second change jumped it to 28%. And so if you're thinking like, oh, you know what, users will just choose whatever's best for them when they want to buy. I don't need to push them to like one plan or one package of a product versus another, just in small tweaks. We went in the last year from 3.5%, 4% of customers sign up for annual plans to now 28%. And that's going to have a huge, huge effect in the business.
- [49:38]
B
Yeah, that's awesome. What I'm hearing is stop the leakage in your funnel or try and tweak the different variables. I know Perry Marshall would call it the tactical triangle of traffic conversions and economics. It's like, okay, if I can tweak that conversion thing, how can I make more from the same traffic that I already have? I've already done the effort to get the attention of these people, but how can I do a better job of making sure I serve them where they're at?
- [50:03]
C
Yeah. And take a membership or a paid newsletter as an example. The churn on those tends to be really, really high. Someone says, oh, I want recurring revenue, so I'm going to switch to this model and I'm going to charge $10 a month. You quickly find like the churn is, you know, is like 15% a month or something, maybe even more. And so if you can push to annual plans and then that gets the churn lower and you're collecting maybe less money total but more upfront because you're discounting giving a few months free, that's huge. Or if you look at like, what does it take? When are people dropping off, say my membership, it's 50 bucks a month. When are people dropping off? Like by month three, they're not really interested. So what can I do in an automated way to really engage them at that point? So I can say, what if at month two, I'm automatically pairing them with another community member who they should know something like that. Like really focusing on those ideas, it.
- [50:58]
B
Just reduces the decision fatigue of seeing that hit the credit card statement every month. Like, ah, is this something I'm really using? You know, if I can just make that a, you know, once every 12 month decision versus, you know, every month. That makes a lot of sense, especially at a lower, relatively lower price point.
- [51:15]
C
Yep, absolutely.
- [51:16]
B
Well, very cool. So we've got the sponsor network now built inside ConvertKit. Really cool feature there. Anything else that you're working on? What's got you excited these days?
- [51:26]
C
We're just constantly trying to improve ConvertKit. I'm also using it, you know, myself for a side hustle on a local newsletter from Boise.com so we can talk about that at some other time. But yeah, it's just constantly growing the team. Now my time is spent like recruiting execs and recruiting engineers and building the team rather than the individual things. But one fun ConvertKit thing for anyone listening who uses it or is thinking about using it is we have an overhaul of our email design and email template editor coming out really soon. And so that, that's been two years in the works or something like that. And the early beta testers have been really excited. So it's really just like keep focusing on the product, keep improving it and show up every day.
- [52:16]
B
Well, very good. It's been awesome to chat. Lots of notes taken during this call about choosing a goal that's going to change you, about leveling up your skills to level up your income, being somewhat embarrassed to cringe worthy about the work that you were doing a couple years ago. Like, hey, look, am I still dealing with the same problems I was dealing with two years ago?
- [52:35]
A
I'm not growing.
- [52:36]
B
I'm not leveling up. But in any case, Nathan, thanks so much for stopping by. Thanks for sharing your insight. That is it for me. Again, you can find nathan@nathanberry.com convertkit.com thank you so much for tuning in. Until next time, let's go out there and make something happen and I'll catch you in the next edition of the Side Hustle show. Hustle on the.