Secrets Of The Fastest Growing SaaS I Know Of - With Clay Collins
Clay has taken leadpages from nothing to over 109 employees and 30,000 customers in 2 years. All while being cashflow positive. Learn how he did it.
Starting from Nothing – The Foundation Podcast
Guest Name Interview – Clay Collins
Introduction: Welcome to Starting from Nothing – The Foundation Podcast, the place
where incredible entrepreneur show you how they built their businesses
entirely from scratch before they knew what the heck they were doing.
Dane: In this episode of Starting from Nothing, we’re talking with a good, dear old
friend of mine, and massively successful SaaS entrepreneur, Clay Collins of
Clay does not typically do appearances anymore but I called in a favor and he
was generous enough to speak with us on his amazing growth from zero to
109 employees being cash flow positive and from zero to 30,000 customers
in a couple of years. That’s unprecedented growth for a software company of
its kind and he’s done it all being cash flow positive. Whereas HubSpot and
other big SaaS’s are spending $11,000 and making money back from their
customers over two years. Clay is cash flow positive every day. Here’s how he
Welcome everyone to another edition of Starting from Nothing. I’m your
hopeful host, Dane. I have an old, long-time friend of mine, and just an
absolute superstar in business, rock star marketer, amazing human, master
meditator, reader of the weirdest books, and running one of what I think,
and what I see, as one of the fastest growing companies around. Clay Collins
from LeadPages. Clay, what’s up man?
Clay: Not much. It’s good to be here, Dane. It's been a while.
Dane: It is. Where in the world are we chatting to you from? Where are you at right
Clay: We are in beautiful, gorgeous Minnesota right now. We’re downtown, or I’m
downtown with the [unclear 00:01:47]. That’s weird. Downtown Minneapolis
in the Warehouse District and we just got a new space. I don’t know if you
could see kind of any of that out there. We just moved in here. It’s good to
finally have a home. That’s where I’m at.
Dane: Was that sarcasm when you were talking about the beautiful, gorgeous
Clay: No, this is my favorite state.
Dane: That’s awesome. I’ve got a little bio I want to read for you here so just you
guys can know a little more about Clay. Clay is the founder of Leadbrite, the
little game that you put little picky things in, you turn in up and it turns on.
Clay: LeadPages. Leadbrite is no more. It’s just LeadPages.
Dane: LeadPages? He was a homeschooled child – for the win bro. Me too. A
founder of a software company at 15, a college graduate, and a PhD student
with published – You’re a PhD student?
Clay: Yeah, I dropped out of Grad School twice but I didn’t finish it.
Dane: Oh, okay. I was like, “Well, how did I not know that? We’ve known each other
for so long.” He became a social-media expert, a niche marketer, and a
lifestyle design blogger and coach.
Dane: Yeah. You better rub your face in shame there.
In more recent years, he has become known as an expert at conducting prelaunches,
in particular how you could determine market demand and even
make sales of your product before you create it. This bio sucks. This isn’t even
close to the magic that I know of you, Clay.
Clay: I need to fill out your forms, man. I should do the pre-survey. Dude, that
totally works. It’s my history.
Dane: It’s your history. Dude, tell me about – This is the podcast Starting from
Nothing. We want to talk about the process of how you started from nothing.
Dane: Before we talk about that, I want to talk about the man you are and how that
guy shows up in the world.
Dane: Can you just tell me a little bit about your belief system and how you view
Clay: Yeah. I think Steve Jobs said it best. A lot of people see their life as this thing
that they’re put into, and it’s this box that they have to live within. I think
that’s – You realize if you poke around enough that you can actually poke a
port of the box and something will move over there and you can adjust
things. You really can put a dent in the universe.
There’s a lot of bunch of woo-woo whatnot around that. But I think that
people just have a lot more power than they give themselves credit for. It is
much easier to create multimillion dollar things or million person movements
or whatever. You just need to have something that you’re just incredibly
aligned with and stay focused for a long period of time. Pretty much anything
can happen at that point.
Dane: You speak about that with such calm simplicity. You can do just about
anything if you’re incredibly aligned and focused for a long period of time.
Clay: Yeah, it’s kind of weird.
LeadPages started in January of 2013. We launched in January of 2013. We
just hired our 109th person. We’ve got over 30,000 customers and it’s just
been a rocket ship. It really happened when everything came into alignment.
It’s been a fun journey. It’s kind of weird to see new people come in here
who think I’m the CEO figure and it’s like, dude, two and a half years ago I
was living with my parents basically. Yeah, anything’s really possible.
Dane: What are you feeling in this moment now as you’re sharing all of this?
Clay: I think probably …
Dane: Hold on, not think.
Clay: A disconnect. I’ll tell you right now. There’s four key hires that we’re waiting
to hear back on. There’s this compliance thing that’s going on. I’ve got an
attorney who’s going to be sending me something soon related to a
trademark violation that we’re sort of executing against. Outside my window,
people are playing shuffle board. We’re probably going to be shipping within
the next hour one of the biggest releases to LeadPages just yet.
I really want to connect here with you and deliver value to someone who’s
starting from nothing. Whatever word vibrationally, it’s hard to connect to
that energy of like “I’ve got nothing and I want to build something because
my problems …” The good things and the bad things are so different from
that world that sometimes it’s very hard for me to even remember that. I
think, just personally, I think I did better podcast and I gave better
information when I was six months into it. Now, stuff’s different. I
I used to go to these conferences and they’d have Stewart Butterfield or
some of the Silicon Valley guys and they’d all be up stage saying very tripe
things like “Focus on culture” or “You need to find product market fits.” None
of this helps me. I think, in some ways – I’m not Stewart Butterfield but I now
am that person in a lot of ways where I’m not sure I have much value to give,
but I’m going to do my best. That’s probably what I’m feeling right now.
Dane: I feel a lot of hope hearing that. I think we’ll actually be able to guide a pretty
remarkable interview that people could get value from. I think it will be
Clay: Cool. Awesome.
Dane: You said you’re launching your biggest launch in an hour.
Clay: Well, it’s not the launch of a …
Clay: Yeah. We’re not even launching features, we’re launching a new front-end
WordPress is a theme-based system. You can rewrite, you can install, or
uninstall themes. We’ve been paying off slowly technical debt with
LeadPages around the front end. A lot of that was built almost during the
very first release. We’re releasing the ability for inside the app to run really
cool. Split-test within the app to write themes for our app. So every time we
want to change our UI, we just change a few CSS files and a few other
themes. JSON files and it propagates throughout the whole thing.
We’re paying off tons of technical debt, and this is something that has
affected developers and slowed us down in a number of areas. This is
something that no one – there’s going to be no … like all this headache I’m
feeling right now. It’s not a headache, but everything I’m thinking about right
now. There’s probably going to be no real payoff in terms of short-term
growth. This is just a long-term. This is paying off debt. People talk about
technical debt, this is real … this is debt being paid off. It’s going to look really
good but there probably won’t be any features to come with it per se.
Dane: There will be a lot of freedom inside of LeadPages that wasn’t there before.
Clay: Yeah. We have this landing page market place. There’s a new on boarding
sequence for marketplace authors that’s going to make it so much easier for
them to just kind of step through this process, to upload and sell templates in
our marketplace which is really cool because we give 100% commissions on
templates sold in that marketplace and hopefully more people will sell them
and make a living. We’ve got a guy who’s earning enough to quit his job right
now. I think it would be really cool if that happens as results. Hopefully, we’ll
do some more good things there. Yeah, it’s just paying off tech debt.
Dane: Is technical debt actually financial debt? What does that mean?
Clay: Yeah. Technical debt is – It’s really a metaphor. Technical debt is – I’ll give
you an example. One thing that’s hard – If you’re selling software and let’s
say you have a sales person. You’re selling to enterprises, you’ve got
someone selling to a Fortune500 company and they’re like, “Man, we want
this but we want to have multiple seats per account. We want sort of a
multiuser thing involved.” In most cases, there’s a couple of ways to do that.
There’s a way where you create sort of a foundational directory of
usernames and user accounts. Individual user accounts are sort of assigned
under a Super Admin and they have different rights within the systems. You
could engineer a very logical way to do that, or you could just say, “Okay, well
you could come up with a very quick and dirty way to do that to get the
account.” What happens when you have thousands of people now on these
[multi-seed 00:11:52] accounts that were never engineered to be scaled and
that don’t allow for permissions, they’re not under a Super Admin, there’s no
administrative functionality there that allows sort of the enterprise control.
If you ever want to add those things, you’ll probably have to re-do
everything. You will not only have to re-do everything and start all over,
you’ll have to re-do everything and pour everything from the old system to
the new system. It’s like changing the tires on a race-car while it’s moving.
The reason why the term technical debt is used is because it actually
increases over time, just like debt does if you don’t pay it off, and it could
potentially bankrupt you but it’s also a tool that you can use strategically to
get things done. You might say strategically we will incur this technical debt,
it will allow us to get this customer which will bring in $5 million which will
allow us to hire a whole bunch of developers who eventually can fix this
problem. But if we don’t do this, then we have to raise venture capital and
give up equity.
I think the main thing about technical debt is you’re strategic about it. You’re
not just sort of haphazardly doing a bunch of crazy whatnot without
consciously considering the tradeoffs. I’m very happy with most of the
technical debt that we’ve incurred, it’s allowed us to grow fast, and it’s
allowed us to – Now, we’ve got closer 25 person engineering team and we
can pay it back which is fine. So we made the right decision but it cost us.
Dane: Yeah. I understand what that is now. I always thought of it as just building
stuff kind of sloppy and then you have to fix it later.
Clay: Yeah, that’s it. That’s a simple way of saying it. Yeah. That’s probably a better
way of saying it.
Dane: Well, I had to do that a few times with my smaller software products.
You’ve got technical debt and it’s going to be fixed today in an hour. You’re
thinking about culture, you’re thinking about people you’re hiring on, and
you’re not really thinking about the days when you started. What is it that
you actually do think about on a day to day basis right now? I’m going to
mute the mic and take this shirt off because I’m super hot, but go ahead.
Clay: I do think I have some things to share about getting started, especially
around sort of like starting with a blog and stuff. I think every day about what
is the temperature of our culture, are people happy here. I really think they
are but I also realize that can change pretty quickly in some companies. I
think about the competitive landscape and what’s going to be happening five
years out. Honestly, I think about maturing as a business really. There’s so
much that – Again, because we grew so quickly … We were acquiring
customers for like a 2-digit amount.
To put this in perspective, HubSpot recently released their S1 filings. They’re
paying about 11 grand to acquire a customer. We were paying 2 figures to
acquire a customer. We were acquiring as many customers as we could for 2-
figures. We had a scalable repeatable system and we were just … and we are,
still, scaling the hell out of that system and really just trying to survive.
Dane: What does 2 figures mean? Does that mean 10 bucks or … somewhere
between $10 and $99?
Clay: Yeah, exactly.
Dane: Are you able to give a rough ball park or is that too competitive secret?
Clay: Yeah, it was more towards the $10 than the $99.
Clay: We had all that but we didn’t have information like – we knew what we were
Dane: Actually, can I ask another question?
Clay: Yeah, totally.
Dane: I was curious about the thing that’s close to $10. Let’s just call it $15.
Dane: If a customer comes to you, you’re paying $15 for that customer?
Clay: Yeah. Basically if you include cost of sales and marketing, and the cost of
making those sales, and supporting people through the sales cycle then yeah.
It would be, let’s say $15. For a while, we didn’t even know what our
customer acquisition cost was. We didn’t know what our lifetime value was.
We knew what our bookings were.
We knew what we were bringing in every month, but we didn’t know what
our monthly recurring revenue was. We didn’t have term figures. We didn’t
have a dashboard for the business. We didn’t have a VP of Engineering. We
didn’t have a VP of Marketing. We didn’t have a set of core values. We didn’t
have an on boarding process.
I think a year into it, we had at least 10,000 customers and it’s all these things
that most SaaS business had at that point, we just didn’t have because we
were just growing so fast just trying to not break.
What I think about on this year is maturing, having the client services
department, having real SaaS metrics that can be reviewed at any time – and
we do have those; just doing the kinds of things that businesses at our size,
with our customer base, at our valuation just should be doing. There’s lots of
catch up. There’s lots of technical debt to pay off, there’s just lots of work to
Dane: I think I want to dive into the genius that you have. I’m nervous to say the
works. We were joking about this earlier. Marketing to scale and grow so
quick. Did you ever grow so fast that you were growing four times in a year?
Four times in revenue in a year?
Clay: Oh yeah. Oh definitely. Yeah. From 2013 – the difference between what we
did in bookings in 2013 and 2014 was definitely … it was over 4X. We did 7-
figures in 2013. When most marketers say 7-figures they mean just above a
million. That isn’t what I mean when I say 7-figures. We did pretty well. We
have 4X in the last year.
Dane: Just so I get a flavor for the amount of transparency you’re able to give on
this, how close are you able to get with giving us a perspective on where the
business is at revenue wise?
Clay: I guess I could say we’re 8-figures now. We went from 7-figures to 8-figures
having started in January 2013.
Dane: Cool. Thanks. I notice how nervous I am just to ask. We have a relationship
where like – Okay, I got to tell a story real quick. Back in the day when you
had the marketing program, a guy called me to get my case study and he was
working for you. I asked the guy how much you were paying him. I was like,
“Hey, how much is Clay paying you?” The guy’s like “Oh, it’s funny. Clay had
mentioned that you’d probably ask that.”
Clay: Don’t give Dane your Social Security Number.
Dane: I’m very notorious for asking for specifics and I feel like I’m blushing over
here but it’s all in good fun.
What I love to hear you say is you got up to 10,000 customers without having
a lot of the more mature things in place that most 10,000 customers had. The
reason you got 10,000 customers is because you grew so damn fast. The
reason you’re able to grow so damn fast is because you had a scale of a
model of acquiring customers that you knew that worked that you could just
Dane: What was that model?
Clay: That model had to do with – We had this theory. I was looking at companies
like SalesForce and what SalesForce makes per sales person. What sales
people at SalesForce are responsible for giving, bringing in, in a given year. I
don’t remember exactly what that figure is. I was looking at that and I was
like, “I bet that we could get every content producer to bring in as much, or
more, over the period of a year as a top selling sales person at SalesForce
doing enterprise deals with billion dollar companies.
What if instead of hiring a first sales person, we hired a videographer? What
if instead of hiring a second sales person, we hired a blogger? What if instead
of hiring a third sales person, we hired a podcaster? What if instead of hiring
a forth sales person, we hired someone just do webinars? What if instead of
hiring a fifth sales person, we hired a second blogger?” You start doing the
math on your content.
We realized that not only could we outperform what those content
producers were doing at a company like SalesForce. If we hire the right
people and train them and sort of did everything right, it would actually build
this fly wheel where that was not only return of the business that year but it
was return to the business the year after that, and the year after that
because it ranks in the search engines, it gains more popularity, people share
it, that kind of thing.
I’d say our business model for the first year was based on tracking and scaling
content marketing, which isn’t anything new but it works. That was really our
Dane: I’m on your site right now and I’m looking at your blog.
Dane: Tell me how this started for you. How did you start this from nothing, this
content producer – Actually wait …
Clay: No, we can do this.
Dane: I know. I want to talk about it. Really badly I want to talk about it.
Before, I want to talk about the brain that you have that even strategically
thought this way in the first place. Chet Holmes would say there’s a tactician
and a strategist. Very rarely do they actually combine. But the strategist will
destroy the tactician, eat their lunch every day. What you just did was a
brilliant as a strategist because you were like, “Tactically we can hire these
sales people.” but as a strategist you’re like, “What if you change the whole
game?” How did you even - You do this all the time, Clay. How did your brain
come up with that?
Clay: If you look at most growth case studies in software as a service, they’re
primarily sales person heavy. It’s not Hiten Shah, it’s Dharmesh Shah from
HubSpot. I was listening to this interview. He was doing, I believe on Mixergy,
and he was saying something that just … it just didn’t sit well with me. What
he was saying was that in SaaS businesses you have this – There’s this issue
that happens where you have to pay upfront, you have to finance upfront the
lifetime value of the customer. Let’s say a customer’s worth 5 grand [of
00:23:56] lifetime, it costs $1,000 to acquire them, right? But the first month
they’re only paying $100. You have to wait a long time to sort of hit your
I was looking at companies like Zendesk which takes 2.5 years to payback
their customer acquisition cost. 2.5 years. And companies like, again,
HubSpot where it takes a couple of years of someone being in HubSpot for
them to payback their customer acquisition cost on average. I was
bootstrapped, that wasn’t a luxury for me. What’s wrong with this model is it
actually gets worse overtime that the faster you grow, the more debt you
incur, the more venture capital you have to raise because the better you’re
doing, the worse you’re doing from a cash flow perspective. I realized that
that’s just what worked for us.
We needed to think how these larger software as a service companies think
in terms of like we need a scalable model. What they do is they get their
pitch down, they find out where they get their leads from, they have scripts,
they know what the top five objections are, they know how to trust them,
and they take everyone to the sales training. As long as the sales process is
working, you just hire as many sales people as you can and you just freaking
I like that kind of thinking. I thought it was a good way to think about growth
because it was systematic, but I also knew that the unit economics behind it
weren’t scalable and wouldn’t work for us as the bootstrapped company that
we were at the time. I was like how can I take sort of that kind of thinking but
have unit economics that actually allow us to not incur more debt the further
we go? That’s probably what encouraged me to think like that.
Dane: How can we have unit economics that what?
Clay: That don’t punish a bootstrapped business for growing so fast.
Dane: Yeah. It’s pretty scary to think that the most established, largest software
players in the world are doing things in a way that takes two and a half years
to pay back.
Clay: It’s pretty much all of them. If you look at the data for Box, if you look at
Zenefits, Zendesk. Yeah, they’re all doing it this way. It would probably be
arrogant of me to judge them for doing that. I just think constraints are a
good thing. They’re working out of one playbook. It’s probably not a play
book that we’ll ignore forever. It’s just a play book that we’ll take some good
things from and maybe throw some things away and experiment with. We
just hired our second sales person. We’ll be going down a similar path at
some points but I think the way we’ll do it will incur less risk ultimately.
The reason why we did content marketing, and why we started with that, is it
was just something that I understood. LeadPages actually started out of a
blog. A lot of the times people talk about having a minimum viable product
and I really – Something Brian Clark talks about is having a minimum viable
audience. I really believe in that. I think if you can’t build an audience for
what you’re doing, then it’s very unlikely that you’re going to be able to sell a
product to anyone at the other side of that. I believe that unless you have
kind of different market dynamic scaling.
What I found through blogging is that every single blog post was like its own
launch. If you look at agile software development, you go from launching
something every six months to doing multiple releases per week. That’s very
similar to a blog except what you’re iterating on are your ideas about how to
communicate to the market. You might have one blog post where you get
lots of comments but not a lot of shares. You might have another one where
there’s a lot of shares but very few comments. Or you might have something
where it results in lots of buyers but it doesn’t result in a lot of comments
and it doesn’t result in a lot of shares.
You start to understand the messages, the ideas, what’s going to resonate
with your mark in your audience and what’s going to get people to subscribe.
That’s another metric. You might have some blog post that doesn’t get you
anything you want but it gets you a lot of subscribers, but people wouldn't
know that unless they were running a blog themselves. You hone this skill of
talking to people.
LeadPages really grew out of the hate – I don’t really mean hate – but the
envy I felt towards Gary Vaynerchuk. Gary was doing this thing called Wine
Library TV. He would just pull three wines off the shelf and he would draw
from 10 plus years of knowledge about the wine world. He would just taste
the wines on camera. He wouldn’t even edit them really. And then he would
publish them and he had hundreds of thousands of viewers.
I was like screw that, I’m spending a couple hours a day for like a week
writing these epically long blog posts and people don’t seem to care about
them very much. Maybe I’ll just review some landing pages then I’ll talk
about what works, how it works, any split test data I had around it, and then
I’ll just give these away.
I hired some dude off 99designs to give those away. People in the comments
would respond to these landing page templates that I was giving away and
just like – they were complaining. “Hey, I upload this to WordPress and it
doesn’t work,” or “How do I integrate this with MailChimp?” like all these
different things that people were really trying to use these pages.
At first I was upset. I was like, “What do you guys want for free?” I’m giving
this away. But then I thought there’s an idea here that given the level of
frustration, I probably had worth something to sell. I found that there’s a
correlation between the propensity of blog comments to make me want to
do shots of whisky and get drunk and the market opportunity.
Dane: Say that again?
Clay: Basically, the more frustration there is around a topic in the blog comments,
the bigger the market opportunity is usually. As long as you’re addressing
something that has some commercial application.
Dane: When you were making these initial blog posts and designing landing pages
and giving them to people, I think I remember this actually. I think I used a
couple. Thank you.
Clay: It’s called The Marketing Show. Yeah, it was like back in the day.
Dane: Were you designing those with the idea of maybe making lead pages as – not
the business LeadPages but – brilliant name now that you mentioned it
because I can’t actually talk about a lead page without it being LeadPages.
Did you do that on purpose?
Clay: I didn’t sit there and like strategize around it. We had a product called
LeadPlayer and I was like I hate naming things. Names of things and logos,
everyone has a freaking opinion. And it’s like, “Dude, just do something.”
Especially logos, logos are my favorite. The Google logo is like a font, the
Facebook logo is a font, the New York Times magazine logo was a font, Time
Magazine’s logo is a font. Just freaking go to a word processor, type out the
name of your thing, take a picture of it, and you have a logo. I was just like,
“Well, the other thing is called LeadPlayer and this is called … it’s for pages,
landing page, so I’ll just call it LeadPages.” I was hoping people would say
something like that but it wasn’t strategic.
Dane: There sounds to be a little bit of an element of cynicism towards the folks of
the world that are complicating things they may not need to complicate. In
other words, they may be focusing on things that may not be that important.
Clay: Yeah. I think that … For whatever reason, different people do things for
different reasons but I think that a lot of that just comes out of insecurity.
The longer you postpone launching something – if someone asks you like,
“Hey, how is your thing going?” you can just be like, “Oh, I’m still like kind of
tweaking with the logo” or if your mom asks you. “How is that project to that
business you’re running?” You’ll be like “Well, I’m still working on some
things” or still interviewing users or something like that.
Once you actually launch something, you risk the possibility that it might fail.
I’m not against design thinking in general. I think when your business is at a
certain point then hire the best designer or UX person you know and just
crush it on UX and design. Certainly, don’t do that at the very beginning.
That’s in there, a little frustration with that kind of thinking.
I don’t know if I’ve told this story before, I don’t know if you want to get into
it at all. Based on these comments and what people were saying in the blog
post about how do I make this work, I was like maybe I have something here.
I pre-sold LeadPages before it came out which I’ve talked about before. I
almost did that out of spite. I’m coming off as incredibly spiteful person. The
reason why I did that out of spite was because I did this interview on Mixergy
about pre-selling products and the pre-sell formula. There was all these
people in the comments that were like, “You can’t do this with software. This
won’t work with – I get it for information products and membership sites and
coaching and consulting and all that. You can’t do this with software.”
I was like, “What are you talking about? A product’s a product. Yeah, you
have to do some other stuff but let’s just go do this.” That’s what we did and
we did it with software. It works great with software. In fact, I think it works
better with software than information products.
Dane: Why is that?
Clay: Information products are just the hardest thing in the world to sell, in my
opinion. The margins are good, you can to market quickly, and there’s all
these private label rights things that are gross. In the end, it’s nice to sell
something that’s tangible and real and right there. You can show and click on
this and click on this and click on this and your problem is solved. Whereas in
information product, you have to speak to what would happen if someone
took the thing, and they consumed it, and they implemented it, and they
implemented it even when their self-control is not so good, and then you
need to bring in all these – I don’t know. You have to be a lot better at
copywriting, I think, to sell information products. Whereas … I don’t think
that’s the case with software. In fact, it’s almost like a problem if you’re too
good at selling out comes with software.
I hate those freaking … I sound so worked up. I’m just passionate. I dislike
those explainer videos. It’s like, “Here’s Bob. Bob wants to do this thing.” It’s
like, “Dude, just show people the freaking app. Just show them a 4-minute
demo of what they’re going to click on and what the output’s going to be.
Just give them a case study. Stop abstracting and talking about making things
more complicated. Just open up screen flow, record yourself doing whatever
the main use case is, show them how they can get their thing up and running
in a matter of minutes, and show that. If you go a little bit longer, 90 minutes
or whatever the hip length is for an explainer video, then you’ll probably do
Dane: Ninety seconds is I imagine is what you meant there.
Clay: Oh yeah, 90 seconds. I didn’t mean that.
Dane: Beautifully said.
You’ve got this marketing show and you’ve got this blog and you’ve got these
templates coming out and people are asking you questions about how to
implement it. They’re struggling with the implementation with the
Dane: I am like you in that I would always be kind of surprised. Like “Just figure that
out. This is really easy to do.” I’ve been in Brian Clark’s program Teaching
Sells. I’ve been inside the back end of that. The most popular part of that
forum is the technology side where people are like, “How do I implement
this? What about this and this?” I’m like this is a no-brainer. But that’s just
me being an idiot overlooking an opportunity that I’m seeing, now that I’m
on this call with you.
Dane: You take that and you decide to build LeadPlayer first. I want to talk more
Dane: What’s your step-by-step – as well as you can remember – for getting
LeadPages to its MVP?
Clay: We did the pre-sell. Basically, people were frustrated. I just took pictures of
all the people that were frustrated and I kind of went back to the audience.
It’s like, “Whoa, people are frustrated about this. They want to know how to
make these pages mobile-responsive, how to upload them to WordPress,
how to publish them to Facebook, how to publish them on their own
domains, how to hook them up to MailChimp, AWeber, Infusionsoft,
HubSpot. Well, no one was asking us about HubSpot back then or Marketo,
or SalesForce, or Eloqua, Pardot or any of those things.
I basically went to people and I was like, “Hey, if we did this would you guys
pay for it?” They were like, “Yeah.” And then I gave them a survey, got a
bunch of responses, then I just basically told them we were going to sell it
and I told them the date for that and then we sold it. We gave them a
massive discount if you bought it upfront. To this day, there are people
paying $17 a month for LeadPages because they bought in then. Through
that first sale, we did $40,000 in bookings, in sales. We hired a developer and
he spent six weeks to two months building it and then we released it in
January of 2013.
We released it with three templates and four integrations or something like
that. Very, very super MVP. It was rough but it worked. To kind of keep up
with that, we just were like, “Well, we want this product to be good and we
want to serve on the larger vision that we outlined here.” We basically were
forced to – because of this launch schedule that I shocked people, we were
forced to ship an integration, pretty much a new integration every week, a
new template every week, new features every week. We were doing multiple
releases per week.
I actually believe now that that was like a happy accident. You can go a lot
faster by starting out with very little and launching a new feature every week
as opposed to spending six months building something and then launching it
all at once and nobody cares. But if you can actually build the story arc, this
plot around launching every single feature separately and people see. You
take pictures like, “So and so asked for this. We just built it. Here’s the
release.” The next week ,“So and so asked for this.” People actually just start
following the story of your product and its evolution.
I think you can get a lot more traction that way because when you do these
large releases, you [bathe 00:41:05] so much into them that no one can
actually really appreciate or acknowledge any one, awesome thing in there
because there’s so many things kind of crammed in there at the time. You
can actually give each of those things their own treatment if you release
them overtime. And then people can see that the product is gaining
momentum. They see more and more people commenting and you start
building. Movement is way too grandiose of a term but you start building this
momentum around your product. That’s what we did.
Dane: How did you find the developer that was skilled enough to build in six weeks?
Clay: He was a best friend, or one of the best friends, of our technical co-founder.
We had a technical co-founder who built LeadPlayer before this and they had
worked together on multiple projects in the past. His friend was [Moto
Shanade 00:42:08] who worked together on so many products. In fact,
Simon, our technical co-founder, had taught [Motosh 00:42:16] how to code
in Python. They actually had learned from each other how to do this and
grew up together.
I think you’ll find that most – A lot of engineers comes in pairs. They usually
have a best friend, or a coding buddy, or someone where it’s like they’re up
on Steam playing some video game at night and talking about Python or
whatever. He brought on his friend and his friend was incredible and got the
Dane: How much did you pay for the first version in six weeks?
Clay: I’d rather not kind of divulge that person’s salary but it was – We had the
40k. We knew we could cover this person’s salary for some portion of time
and then we paid him that.
Dane: Were you able to get it built with some of the 40 leftover?
Clay: Yes, yeah we did.
Dane: I’m just imagining ball parks in my head.
Clay: No, we didn’t – It wasn’t like 40 grand for two months [unclear 00:43:25].
Dane: How about the user interface? Did you build the UI first and then have the
code built into that? How did the UI get built for this?
Clay: The UI was – Simon is …
Dane: By the way for people listening, UI is the User Interface. It’s the thing that you
click on on the web screen.
Clay: Both Simon and [Motosh 00:43:47] … They liked UI. They’re product people.
They absolutely understand sort of the back end and architecture but they’re
also generalists. I was very fortunate and that I kind of just generally
described what I wanted. There wasn’t really any requirements written up or
any of that. They just sort of made it.
I honestly think that that’s the beauty of hiring people full-time. In-house is a
wrong word because they’re technically contractors but full-time with you.
They’re in it, they’re going to build this thing. You have daily meetings, you
have daily brainstorms.
It’s not another person in another time zone and like they’ll spec it out and
they give it to some dev shop that’s going to over promise and under deliver,
and it’s going to have all this bunch of buggy crap in it, and it’s not going to
work in IE9 and all this crap.
It’s really nice to just have someone who’s like in. This is your project. Bring
him inside the company and have him on hand. That’s why we could do that.
Dane: What’s driving you, Clay?
Clay: Oh man! What’s driving me? It’s a really good question.
Dane: You had financial freedom before LeadPages.
Clay: Yeah. Actually I had – I literally had The 4 Hour Workweek.
Dane: As did I before The Foundation.
Clay: Yeah. I think just large problems drive me. I think doing things that I haven’t
done before drives me. Scale drives me, honestly. Fast growth and scale
drives me. A lot of people’s version of lifestyle is drinking a Mai Tai on the
beach. There’s way too many car and beach photos when people start talking
about lifestyle. My idea of lifestyle is you can hire the best people anywhere,
and you can afford to pay them what they’re going to cost, you could work
on the largest problems that sort of you’re interested in, and you can make
things happen. It was nice.
My version of lifestyle is we wanted a space for the company. There was over
80 people here, we were crammed in this co-working space, and I wanted a
place where we could just get together, we could have parties. There’s a
shovel-board table out there, there’s swings. We could have a home. That
thing, it’s not cheap. There’s a mezzanine level and we were like, “Screw it!
Let’s hire an awesome architect. Let’s make this happen. Here’s this barrier,
let’s just get rid of it.” I think having the resources to be like there’s this huge
thing we want to accomplish, there’s this thing in the way, no problem. We’ll
just move through that. That really drives me.
I think that I’m not driven to fill some hole or some gap, I don’t have some –
I’m pretty happy on a day-to-day basis. I’m not driven to compensate for
something. Once you have this base-level of happiness, then it’s all like
you’re just in the playground of life. It’s like what ride do you want to jump
on? This one seems really enjoyable.
I really love working with awesome, awesome, awesome people. I think
that’s probably, more than anything else, working with amazing people on
huge problems who are far smarter than me, far more experienced than me,
and have done way more than me. Getting to see them team up with me to
do something cool is holy crap that’s motivating. I guess that’s one of the
reasons why I like that we’re not a virtual company. Because it’s nice to sort
of cross the board room table from a genius whose going through some
problem or white boarding it of real time. That’s what drives me.
Dane: What’s that feel like?
Clay: It’s the coolest thing in the world. It’s awesome. It simultaneously makes you
feel hopeful for the future. You get a creative high because you’re getting to
co-create with this person. If you’re in a band and you know how to play an
instrument, playing with someone who’s really good. It almost makes you
feel like a better player yourself. It also makes me feel – In any startup
there’s a whole bunch of uncertainty.
So it also makes me feel safe. I can go to bed knowing that if some crazy stuff
pops off, I’m not going to curse. But if some crazy stuff pops off, like one of
the best dev ops people in the world who studies this kind of server
architecture is going to be looking at it and he can call five of his friends. And
there’s a whole bunch of people in the company that know what to do. We
have multiple backups and all that stuff. It also makes me feel safe, and that’s
Working with incompetent people does not make me feel safe. It’s hard for
me to feel happy when I don’t feel safe. I guess that’s sort of a deeper
psychological thing. Safety is a big part of it too.
Dane: You said it’s the coolest thing ever. You get this creative spark, you get the
safety. You also get to sit across from this genius and also feel like you’re
more of a genius, this person.
Clay: It opens up the world too.
There’s this theory in linguistics that having access to a larger vocabulary, or
different words, makes new ideas possible. There’s stuff that I’ve thought up
that we could accomplish, that I would not even dream of if I didn’t sit across
from someone showing me sort of this unique way that they solved a
problem, where no one’s ever solved a problem like this before, but they
solved it. It sort of makes me think of – It’s a creative high because now I can
think of other problems that were previously unsolvable that now we can
solve because we have a team that can actually execute against us. I have a
new concept in my mind that didn’t exist before so, yeah, all those things.
Dane: Wow! That’s a really great – I don’t know his argument but case for hiring
Clay: You know what, I think at the end of the day, once you get past product
market fit, the only things you compete on – That’s not true. You really
compete on strategy. You compete on three things: strategy, hiring, and
culture. I’m not sure there’s much more than that.
Dane: I’m curious – How old are you now?
Clay: Holy crap! I’m 34.
Dane: Thirty-four. What’s your identity? How do you view yourself?
I imagine, for someone who’s never started a business before, could not even
come close to imagining running 109 person organization. For me, a few
years ago, that didn’t ever, ever see it being a possibility. I could actually start
to picture in my mind. I was walking around AWeber with Tom.
Clay: Oh, cool.
Dane: I was walking around this giant company and I could actually picture myself
energetically holding space for that in my life for the first time. I’m wondering
about your identity. Do you picture yourself energetically holding space for
all of this to flow through you?
Clay: No. I’m not as good or deliberate about holding space for things. If I get
things, it’s because I’m just so excited about them and I can’t stop thinking
about them, so then I hyperfocus on them and then just somehow they
appear in my reality.
Dane: Say that again.
Clay: I get so excited about something that I start compulsively thinking about it
and hyperfocusing on it and it just sort of runs everything. When you have
that level of focus, it just sort of shows up in your life. That thing you’re
focusing on just kind of shows up in your life.
Dane: Instead of focusing on like maybe a belief level or an identity level of who you
are, you just focus on what excites you and you deeply, deeply focus on it
until it happens.
Clay: Or I just let it hijack my psyche. I don’t have to do any amplification, I just let
it run wild in my mind. I get worked up – The engineer … I’ve heard that many
of our engineers like doing demos in front of me because they like seeing me
“freak out.” Because I will literally see something and just freak the F out
because I’m so excited about what I just saw. I think I just tend to freak out
about things that I’m excited about.
Dane: It makes sense.
Clay: You said what does it feel like? Honestly, it almost feels like I’ve come home.
So I was homeschooled and then, like, that was weird, but school was weird
too, and college was weird. I never really felt like, “This is what I’m supposed
to be doing with my life.” I never really sort of felt that. Even when I had kind
of a smaller company it was like, “Yeah, this is taking advantage of my skill
sets and I’m generally happy.” I didn’t get up every single day completely
thrilled about what was going to happen. I’d like sleep in. That was the thing.
That was my luxury.
“Oh, I have this lifestyle thing” this lifestyle business “so I can sleep in.” I
don’t even want to sleep in anymore. I’m up 7AM, 6AM. I had like
transformed into an early riser because I enjoy doing this so much. That’s
probably a pretty good sign. It’s not all awesome. I mean there’s a lot of
frustrations and there’s a lot of emails to respond to. There’s always
headaches and stuff. Generally, things are really good. It feels like maybe, for
the first time in my life, I’m on this journey that’s the journey I’m supposed to
be on, which is cool.
Dane: Whoa! For the first time in your life?
Clay: Yeah. It started I’d say probably in 2009. The journey started 2009. It took a
while to get here.
Dane: You said in the beginning, just about anything can happen when you’re
incredibly aligned and you’re focused on something for a long period of time.
Dane: How did you know that doing these lead pages would be aligned for you?
Clay: I didn’t. I don’t think I was thinking about it that deliberately. I think I was just
kind of tinkering with what was exciting to me, or what was exciting at the
time. Who knows if I was doing it now it might be like Bitcoin because I find
Bitcoin to be super fascinating, but not as fascinating as the [promise work
00:56:19] right here right now. It could’ve just been Bitcoin. It could’ve been
I think the important thing is to pay attention to what distracts you and just
get really involved. Because usually those are the things that end up being
the big wins. Don’t even think about opportunities because all the cool stuff
is really – The only reason it’s cool, or a big win, or a high-growth opportunity
is because no one else really thought it was that big of an opportunity, and
you had some insight that other people didn’t have. You don’t really get
those insights by studying markets and doing some sort of high-level analysis
about which niche you should get into. You usually accomplish that by just
sort of going crazy around your interest and just seeing what it develops into
in my opinion.
Dane: If you go back to your writing these long blog posts and you see Gary V
drinking wine and getting hundreds, thousands of views and you’re like, “Oh!
That! I’m going to do that!”
Dane: So you started just tasting lead pages.
Clay: Yeah, I started sampling lead pages. Yeah.
Dane: How did you come to that idea?
Clay: Gary V. I was like, “Screw this.” He’s getting all these responses and he’s just
pulling some wines off the shelf. I’m just going to do this with landing pages.
It wasn’t …
Dane: You didn’t have any other ideas of like, “Okay, my audience is marketers.
What do they want to …” Did you have any of that?
Clay: I knew that I wasn’t going to get anywhere unless I had a more scalable,
repeatable way to create content. That didn’t require me to come up with
these dot pieces or make some, like expertly made point that I crafted in
I needed a more scalable way to create value which is why I turned to
software also, but I need a more scalable way to create value and this
seemed to me like something I could do because in the past I’d been a
hoarder of landing pages. I had this big swipe file, like 40GB of landing pages
on my hard drive that I had just been saving and looking through.
It’s something I do with friends. They'd be like, “Hey, what should I do with
this?” I’d be like, “Maybe I’d go with this color. I’d have this on the right side.
I’d have this above the fold. Get rid of that slider. Kill the header, make it half
the size. Maybe have some two-step thing here.” I just kind of like do it. I
guess I was just thinking what can I do around my blog where I have a skill
kind of like Gary Vaynerchuk where I could just riff for ten minutes and
people might enjoy it.
I don’t know a lot about Dan Sullivan but I know he has started these ideas
about what your genius zone is, or your natural talent, or whatever he calls it.
I found there were guys like Gary Vaynerchuk where there’s this comedian
Bill Burr who has this podcast. I freaking love his podcast. I swear, he doesn’t
– there’s no intro, there’s not outro, there’s no editing. I’m not even sure he
takes notes. He just flips this thing on and rambles. It’s my favorite podcast in
the world. He’s totally scatter-brained, totally ADD, and it’s completely
entertaining. It’s like, well, yeah, that makes sense. You’re a stand-up
I was hoping that I would find some way to turn whatever I was good at into
an outlet for quickly and scalably creating content. I had a hunch that that
would work, and it did, so that’s what I did.
Dane: I want to talk, just for a minute, as we wrap up the last few minutes, on how
you structured the pricing and the offer of the program and how you got so
many affiliates. You mentioned content marketing. I was actually surprised to
hear that because I thought you grew it all through going through affiliates.
Clay: The affiliates – It’s nice to have affiliates if affiliates were part of it. It wasn’t
really even – It was less than a third of our revenue was affiliates.
Dane: If I go to LeadPages and I click on the blog, give me an example of one of
these blog posts and what kind of numbers did they bring in terms of
customers or how this works.
Clay: Yeah. I think …
Dane: Or tell me about your most popular content piece of all time that you’re like,
Clay: I think, in a lot of ways – and this goes back to kind of having a minimum
viable audience and seeing what resonates with them. I’d say it goes back to
leveraging the fact that we have a platform to create content. If you look at
most of what’s on our blog, it’s all, again, very scalable content, very
repeatable content that leverages what’s on lead pages as a platform and
For example, we’ve got a marketplace round up where we show what’s in
our marketplace. We’re just taking stuff from our marketplace and putting it
on the blog. Then if you scroll a little bit beyond that, you’ll see there’s a split
test, and you have a little split test widget so you can vote on which version
of a landing page won.
Again, we’re drawing these case studies from our blog and from our
platform. If you got past that, you’ll see a free download for a template.
That’s actually what we started out with. Here's a template, here’s why we
created it, here’s how it works, we’re giving it away. Those things remain
really popular. I think things where we’re giving away something that is
absolutely of value, in and of itself, but inherently promotes the value of lead
pages, those things work really well.
As an example, let’s talk about a template giveaway. It’s pretty valuable that
we’re just giving away this template. Here’s this thing. We designed it. Our
product team made it. It’s mobile-responsive. It’s pretty awesome. And you
can download it., That’s awesome. Just in and of itself. You might go to
ThemeForest and pay like $20 for this template, right? But here it is for free,
and it works, and it’s good.
You’ll download it and you’ll realize that you need to hook up an integration.
This goes back to, again, the minimal viable audience and the discoveries we
made there. You’ll realize you’ll have to hook it up to something, you have to
create an integration, you might want to run split-test, you might want to
post to WordPress, you might want to have to do all these things, and it
would cost you a bunch of money to give that to a designer or a developer –
mostly to a developer. Or you can just use LeadPages, $37 a month, and
you’ll have it up and running within 5 minutes or so.
That kind of synergy works incredibly well. It’s this combination of scalable
content that has a ton of value and inherently promotes the product that the
blog is on. Really, that’s like the trifecta.
Dane: Scalable content that has inherent value that also promotes the product the
blog is on.
Clay: Yup, without being sketchy. It’s not pitchy, it’s just factual. Here's the thing,
we’re giving it to you for free. And if you use LeadPages, you could go from
spending maybe $500 on this and a whole bunch of time, to $37 you could
have something up in 5 minutes. Very simple, very clear, very concrete but,
yeah, those are the three things.
Dane: I’m really excited to see that you got into software or back into software. I
remember when we were at your place, your apartment in Minnesota, I was
showing you the back end of Paperless Pipeline, and how fun it was and how
much fun I was having with software. It’s really fun to see you getting in
software and so many other really, really smart marketers, smart business
owners, smart entrepreneurs. They seem to be starting to trend towards
software whether it’s Pat Flynn, or Laura Roeder, or you. What do you think
is causing that shift and why did you get into software?
Clay: I don’t know that it’s … I’m not disagreeing with you but I don’t know that it’s
a shift. I think marketers are often drawn to software because it’s easier to
market. I think where they tend to get tripped up fairly easily, and I haven’t
seen a lot of people successfully over a multi-year period with consistent
growth from the marketing world do it. Not to say that it can’t be done. I
think Laura will do it. Pat Flynn actually absolutely has the team to pull it off
I think the reason why people get tripped up is because it’s really easy and
fun at first and you can outsource it and you can get – But then you start
getting bugs and you have to fix those, and you have to support it, and then
you start – all these headaches come up. Operationally, it’s much more
difficult but in a lot of other ways, it’s easier.
I think in terms of just like a flat – from just like a pure lifestyle point of view
– If you get really good at something, you can charge $500 an hour for
consulting. Do that for a few hours and be done. I think if you want to put a
dent in the universe, I think that’s where software is at. I don’t know of any –
maybe there’s some. You would know some. I don’t know of any growing
SaaS businesses where the founders go in for it where it’s a lifestyle business.
I think people are doing it because in a lot of ways – I think there’s kind of a
movement to it. Things like Google App Engine, and Heroku, and Amazon
Web Services [have arrived 01:07:11]. You don’t have to pay those upfront
expenses. It’s cheaper to get into the business. I think it’s really attractive to
people who already have blogs, they can leverage those blog audiences to
create software. Yeah, I think that probably has something to do with it.
Dane: Yeah, absolutely. I really appreciate your perspective on it. You have to be
very intentional if you want it to be a lifestyle software business. It has to be
from the outset and very specific.
Clay: Design from the ground up.
Dane: Yeah, which we teach and it’s possible. You just don’t go after really, really
big, big problems. You might build an API integration for one product and
make 5 or 10 grand a month with that API integration for a few years.
Clay: Cool! That sounds cool. Yeah, I agree. I also think that any big business that
existed started by solving a really small problem. Facebook was just sort of
connecting people at Harvard and then they rolled it out to multiple – Like
you have to be huge in a small niche before you’re going to be huge in a huge
market most of the time. I think whether or not you’re doing a lifestyle
business, it’s good to start small.
Dane: Yeah, amen.
I want to say it’s been amazing talking to you. It’s also been really cool to
hear the LeadPages story. I know you don’t do interviews very publicly
anymore so I really appreciate making FaceTime on here.
Dane: I’d like to give people a link to refer to LeadPages, that’s also tracked as an
affiliate for The Foundation, if that’s okay.
For people that are interested in LeadPages, if you’d like to purchase – I’d
love it if you did purchase through our affiliate link. It would be nice to be
compensated and I appreciate it. You could do that
Clay, I hope you get some business from this. I notice how much more I want
to talk to you about – there’s so many other things to talk about. You did so
many things real well in software. Even on the right side of your page here I
see “The four most important pages in your business that can triple your
conversions” and I’m like “Oh, damn! What are those four pages? I have to
register for this webinar.” You marketing’s so good. “I have to get on that
webinar.” And then of course LeadPages is probably going to help me host
those four pages and blah blah blah. What are those four pages, Clay?
Clay: Obviously, it’s your sales page.
You can know that but there’s some insights. You know what I’m not even
going to market it. The pages are a webinar registration page, and opt-in
page, a sales page for your website, and your thank you page. I think you can
do a lot with those four pages. There’s this thing we refer to as the 95-5 rule.
Formally, it’s true. Anecdotally, it’s true. It’s not like – we haven’t done … It’s
hard to really collect from a scientific methodology perspective. It’s hard to
really do this.
In our informal polling we found that in our business, and in a lot of the
businesses that use lead pages, on any given website, 95% of the business
results that you get out of having that website are created from 5% of the
pages. You might have a blog with hundreds of blog posts but if you can
tweak these four pages on your website, you can double your revenue.
We have grown a lot. Not as much by focusing on optimizing a bunch of crazy
stuff but focusing on some of the most important pages on your website. For
a SaaS business, it’s your pricing page. Even before your sales page, optimize
your pricing page. Holy crap! From a revenue perspective. In any given
business, there’s a handful of pages that are the most important pages on
If you have a massage studio, you might have a contact us form, you might
have an about page, you might have a page for every single massage
therapist, you might have a tour of your space, of your studio. But really, it’s
the page where someone signs up for your newsletter or the page where
someone signs up for a massage. Those are the most important pages on
If you want to focus on the big levers, double your conversion rates on those
pages and that will be a multiplier that affects everything else you do. It will
affect the conversion rate on your ads, you’ll have to pay less to acquire
customers, you’ll do better with affiliates. Everything will work – Not
everything, a lot of things will work better for you if you focus on those
Dane: Just briefly, was there some strategy to discounting 40% off at the annual
billing versus 30%, versus 20%, versus 50%?
Clay: Yeah. That’s really a legacy …
Dane: I went to the pricing page figuring if you are optimizing pricing pages, I’ll
probably going to model yours.
Clay: Damn it!
The theory there was – it wasn’t really a theory. This is a legacy thing around
40%. That isn’t something that we’ve tested. We’ve got a lot of things we
need to test.
The reason we did that was because we were originally a bootstrap company
and we needed cash upfront. If we could get people to pay annually, then we
could actually get people to fund their own customer acquisition cost and
fund some further developments in the product. Really from the point of
view of being a bootstrap business – which we are no longer – trying to
optimize for cash flow. If we had to give up a little bit and get more of it
upfront, then that was something we wanted to do. That’s really why we did
Dane: That’s cool.
There’s so many things I could ask you, Clay. We’re eight minutes past the
hour though and I want to really respectful of your time.
For those of you that have enjoyed the interview, if you’re curious about
getting into software, if you’d like to learn this amazing business – in my
opinion – that just enraptures my imagination. It captures my attention from
how do you contact people, to talk to them, to extract a pain, to create a UI
that solves it, to create this really useful thing, to possibly move on to
building a business that you can build this legacy behind, I’d love to work with
you, we’d love to work with you at The Foundation.
You can do so at thefoundation.com/apply. You can check out all of Clay’s
brilliant magic at leadpages.thefoundation.com, through the affiliate link. You
can also just reach him if you Google LeadPages but I’d prefer if you
Clay, I’d love for you to leave us with one parting thought.
Clay: Oh man! One parting thought. I’d say optimize 100% for what you’re good at
and don’t spend another second trying to compensate for what you’re bad
Closing: Thank you for joining us. We’ve taken this interview and created a custom
action guide so you know exactly what action steps to take to grow your
business. Just head over to thefoundationpodcast.com to download it for
free. Thanks for listening and we’ll see you next week.