SFN156: Startup Advice From Award-Winning Serial Entrepreneur Dan Martell

SFN156: Startup Advice From Award-Winning Serial Entrepreneur Dan Martell


Dan Martell is an award-winning Canadian serial entrepreneur, and the founder of the recently acquired Clarity.fm, a venture-backed startup that makes it easy to connect with top business minds over the phone. In 2012, he was named Canada’s top angel investor, having completing over 33 investments with companies like Udemy, Intercom, and Unbounce.

Dan is back on the podcast giving us actionable steps on launching a startup from scratch. He shares why it’s easier to start a company today than ever before, how to determine your most important tasks as a CEO, and the common mistakes to avoid when launching your first startup.


In This Interview You’ll Learn:

  • 2:08 - How Dan uses the seven pillars to measure his life, and orient his actions to get what he wants.
  • 6:37 - How to focus on high-income tasks with the entrepreneur scorecard.
  • 12:59 - Why the opportunity for anyone with a great idea to start a company is greater than ever.
  • 18:46 - The truth about what it takes to become part of the one percent in America.
  • 19:30 - Why you need a M.E.V.O (Minimum Economical Viable Offer), and not an M.V.P (Minimum Viable Product).
  • 24:45 - How Dan went from 0 to 50,000 customers in 16 months by using content marketing.
  • 32:32 - The most common mistakes new founders make.




Show Notes:

Podcast transcript:

Introduction: Welcome to Starting from Nothing – The Foundation Podcast, the place where
incredible entrepreneur show you how they built their business entirely from
scratch, before they knew what the heck they were doing.
Andy: Welcome everyone to another episode of Starting from Nothing, Andy Drish
here. Today I’m with Dan Martell. He’s back on the show a year -- what’s it
been? A year or two?
Dan: Dude, I think it’s been longer.
Andy: Has it been two years?
Dan: Yeah. I remember my son was born and he’s almost four so it could have been
Andy: Oh my God! Might have been three.
Dan: Early, dude. I might even be the first in the early days.
Andy: Yeah, I think you were. If you haven’t listened to the interview, I’ll find it on here.
It was one of the early ones and it was phenomenal because we talked about
your story of how you got started, what your childhood was like, like all the
challenges that you face growing up and how you ended up being such a
successful entrepreneur of things. So, we’ll put the link to that in the show notes.
If you haven’t watched that episode, Dan, I’ll give you a quick little bio and then
we’ll dive into it.
Dan is an award winning Canadian entrepreneur and founder of Clarity, a
venture backed startup that makes it easy to connect with top business minds
over the phone which was recently acquired. He also co-founded Flowtown, a
San Francisco base social marketing product which raise funding grew to over
50,000 small business customer and was eventually acquired by Demandforce in
2011. In 2012, he was named Canada’s top angel investor having completed over
33 investments with companies like Udemy, Intercom, and Unbounce.
Boom! Dan! Welcome back, man.
Dan: Andy, thank you so much for having me. It’s an honor, man.
Andy: I’m really stoked to have Dan back on the show because we’re going to be
talking a little bit. You see a lot of deals, you see a lot of what’s happening in the
online space, you see a lot of where entrepreneur’s energy seems to be flowing
and I think it gives you a really, really unique perspective on what’s out there in
the market and what opportunities for people who want to get into software
possibly could be. We’ll start there at some point.
But when we were just talking a moment ago, you told me that every week you
review seven pillars of your life and one of the things is hobbies. Can you tell me
how you do that and what that actually looks like so people get a window into
what your day and world was like with that?
Dan: Yeah. No, absolutely. Anybody knows me knows that I’m all about kind of next
level. I don’t care where you’re at in your life, you could be a billionaire. There’s
always that next stage to get to. So I track a lot just because my background’s
engineering. I’ve been building software companies now for almost 20 years.
One of them is just a simple thing.
So, on a spreadsheet that in my calendar, every Friday at 3:30, I take 20 minutes
and I just review what I call the life pillars. So I’ve got seven different tasks. I’m
actually opening it up right now so I can walk you through them.
One’s health like physical, eating. So I just rate myself out of 1 out of 10. So
that’s really that simple. Every week 1 out of 10 on health, love, friends, finance,
mission, hobby, and spirituality. Those are the seven tasks. That gives me
essentially a score out of seven because ten times seven pillars. I could actually
trend my productivity or kind of my impact.
We were talking about an event that’s coming up that is going to be awesome,
some little white water rafting. I almost canceled it but I knew I would have to
score myself like a four on my hobby because that was like half my score for the
year and I stop myself and said no.
It’s just a little thing because our brains are great guilt machines. People don’t
realize it. If you measure anything day after day or week after week, you will
automatically adjust your actions to get the outcomes you want. So those are
the seven pillars that I care about in my life and I measure them on a weekly
Andy: If you measure anything day after day, week after week, you will eventually wind
up orienting your actions to get what you want.
Dan: 100%
Andy: I’m writing that down.
Dan: I got to make a t-shirt with that one.
Andy: That’s a great one, man.
I think people don’t do the metrics thing. I started about a year ago really getting
into this. Like every week reflecting, tracking metrics, all of the key ones. I use a
dot system for daily rituals and stuff. It’s a game changer. I think a lot of
entrepreneurs who were in the starting realm don’t take the tracking pieces
seriously. I think they think that they’ll start tracking once they get traction or
once they get customers or once they get something in the door and I think it’s
actually reverse. So it’s really cool to hear that.
Dan: Cool.
Andy: So that’s a weekly thing. Do you do anything monthly or like quarterly [unclear
Dan: Yeah. I do daily. I’d be pretty much -- This building company, you start to figure
out there’s patterns of scaling. I do a yearly offsite to plan my year. I do quarterly
planning for what I call the 90-day sprints. Then I do monthly reviews of the
previous two sprints. We do two weeks sprints in our company.
My daily is what I call the entrepreneurial scorecard. I actually have defined -- As
part of the yearly planning I create a score carding system for the year in regards
to this type of activities and each one has a different value. So, four different
The one I teach most entrepreneurs when I work with them is the $10 task which
is the minimum wage or $15, depending on what part of the world you live in.
Andy: Yeah.
Dan: Then it’s the $100 task which really reflects people in your business -- your
employees -- and you’ve got $500 and $5,000 because here’s the way I believe it.
If you took a million -- most people want to break a million in revenue, right? I’d
be fortunate to do that pretty much every company I’ve started in the first 12
months. It doesn’t matter what your goal is for your business. You take that
number divided by 200 and 200 comes from the amount of days that you
actually work in a year. If you take away holidays and weekends, there’s really
200 days.
So if you want to do a million, you need to generate $5,000 a day of value
creation every day to align towards that number. So when you measure yourself
on a daily basis using the $500 and then $1000, you start looking at where you’re
spending your time.
What I get when I work with clients I just say, “Set your alarm on your phone for
every two hours and log what you did in those last two hours and give yourself a
score, a numerical dollar value. At the end of the day, send me that number.” It’s
the easiest way to know way before your financial reports if you’re going to be
on track because if you know what’s a $5,000 task per hour and you didn’t do
any of those in that day, you didn’t do any of those in that whole week, you’re
not trending. You’re not focused on the right thing.
So it’s the entrepreneurial score card, daily measurement, super simple, and I
think it will change the game. Anything you measure on a daily basis, it realigns
and you focus.
Andy: This is awesome. I’m so glad we’re going into this.
Explain to me this entrepreneur scorecard. I didn’t get the four columns so I’m
understanding two hours. If we’re working together you’re like every two hours
log what you did and rate it on a scale of one to ten and then you track that
Dan: Yeah. You have four columns, right? So the first column is your $10 an hour task.
So that would be like administrative, manual labor, running errands, travel
Andy: Yup.
Dan: Then you have $100 task. That would be like maybe publishing your content,
post-production on your videos if anything on your business.
Andy: Yup.
Dan: Processing your email, social media, all that kind of stuff.
I really call those first two columns in the business. If you’re familiar with the EMyth
and Michael Gerber’s work, there’s in and on the business. The next two
columns, the one after that, the third is $500 an hour, that’s content creation for
me, working on my business operation manuals or what I call a playbook,
planning with the team, that kind of stuff.
Andy: Yup.
Dan: That’s like executive type work.
And then the $5,000 is leverage strategic growth stuff. So for me it’s marketing
automation campaigns, strategic partnerships, product creation. That’s on the
business but that’s at a $5,000 level. So if every day I need to -- Again, if you
were trying to build a million dollar company, you would try to do $5,000 a day.
So if you don’t at least get one hour in that column then you got to make it up
with the other columns.
Andy: Got it.
Dan: But it’s really simple because if you started logging and all of sudden you’re not -
- and I get emails every day from clients I work with so I see it. It’s like $1900,
$700 a days when the goal was five.
Andy: Oh man!
Dan: I don’t even have to ask them what they’re going to do to tweak it because
they’re just going to go down that path on their own. And then the next day I’ll
see like a $7,000 a day where they did an hour at the five and a couple -- the rest
of the day at $500.
Andy: Uh-huh.
Dan: Powerful stuff.
Andy: Oh man, this is so good. I’ve heard of the task tracking, I haven’t heard of
assigning it dollar values and then adding up at the end of the day and tracking
your days. I’m going to do that and see what happens.
Dan: The entrepreneurial scorecard.
Andy: Nice.
So then take me back to imagining somebody who’s just getting started. It’s like,
“Well, I don’t know what a $5,000 task is, I don’t know if my task are worth
$5,000.” I guess it could be a $500 task. You might be shooting to make $100,000
in a year. You just figure out what it is you want.
Dan: Yeah, you just scale down. If you’re trying to do $100,000 this year, you just take
that $5,000 go to $500, right? But really what it starts to teach you is how to
trade, right? Trade a $10 task for $100, $100 for $500.
This is the big one because I’m all about mindset and transformation beliefs,
right? I can show you the strategy but if you don’t understand the belief side
behind it, you’re not going to implement it.
Andy: Yeah.
Dan: So, for example, my dad who I love, he’s always had rental properties but he’s
also the guy that will always mow his own lawn for all his rental properties. He’s
got 20 different units but he still mows the lawn and I asked him why.
I didn’t understand this until I read a great book called Work the System by Sam
Carpenter. He says, “The question to ask because people would rather not lose
than gain.” I asked him once, I said, “You save $20 let’s say mowing your own
lawn.” “Yeah, I save $20. I can do it myself.” “Would you mow your neighbor’s
lawn for $40?” “No.”
Well, that’s the same thing, right? You’re willing to invest an hour to mow the
lawn to save $20 then you should be willing to invest an hour to make $20 and
the answer is, “No, I would not do that.” So you need to understand that
thinking to actually start trading up your time in those different columns.
Andy: Beautiful. You say all about mindset and belief transformation. What does that
mean to you in your reality?
Dan: There’s an underlying story or script, the different people use different language,
around taking action, right? So we might talk about -- one of the strategies to
scale your business is Facebook ads.
Andy: Yeah.
Dan: But if the person has a story about not wanting to seem salesy or not having the
confidence to do something. They’re worried they’re going to lose all their
money. Or they don’t feel like they have the skill to do Facebook ads so they
might as well do content marketing because they might feel more accomplish.
Whatever their belief is that needs to be addressed before I can teach that
When I think of -- I do a weekly YouTube video, helping entrepreneur scale their
businesses, I’m very aware of that before I get into the tactics, I need to help
with the -- And Gary V. says [unclear 00:11:29] he called it religion versus tactics,
right? You need to fix the religion part which is the belief system, the values
around that area before the tactics will actually be executed because it will stop
you from actually taking action.
Some of them are unconscious. They don’t even know that they’re playing in
their mind. They just know that they never can figure out how to -- maybe
they’re doing their scorecard and they’re like “I never find time to do this task.”
It’s not finding time, it’s prioritizing, and what’s stopping you from actually
making that a priority?
Andy: Totally. So for people who -- when there are the unconscious beliefs that are
coming up in possibly sabotaging the stuff that you’re working on, is there
anything that you’re using to help bring those to the surface?
Dan: What I do, personally, what I’m teaching is I always try to ask myself, “What are
the three biggest reasons people are not going to do this?” right? Essentially,
what are the three biggest beliefs? It could be cold calling customers, it could be
hiring a great person, somebody smarter than you. Based on those three kind of
beliefs, I then try to demystify that.
So when I’m teaching stuff it’d be like raising your price. “Well, I don’t want to
raise my price and lose my customers.” Yeah, but truth is is you’re going to lose
the ones that are not profitable and it’s going to give you more time and
freedom to give more value to the ones that stick around. That help shift it.
So before I even talk about how to raise your price, I got to address those things.
That’s just something that I’ve learned over the years teaching thousands of
Andy: Beautiful. Cool. I love where this is all going. This is awesome.
Let’s talk the market. The overall landscape of what’s happening online. Where
do you see a lot of energy going? Where do you see opportunities for people
who want to get in to these types of things? What do you say in that?
Dan: Yeah. There’s just so many trends, right? Recently I was at the gym and my coach
Matt ask me because he knows that I’ve been doing software stuff for years and
he goes, “It must have been easier 15 years ago to come up with a good idea
that would work,” because there wasn’t a lot of ideas. At first it was like “Yeah,
you’re probably right.” Then I was like, “No, no, no. One sec.” You got to take a
step back.
Andy: Check that one.
Dan: The truth is it’s not about the idea and we can all argue that. But here’s what I
had to explain to him was with every new innovation, with every new platform,
with every new great company -- we’re talking Uber, Airbnb, Dropbox, Facebook,
you name it -- it unlocks the next level of innovation. Right?
So, a lot of the technology over the years back from ‘94 when the internet
started to now is always been about adding that next layer of foundation to
reduce the complexity of understanding or innovating. That’s the opportunity I
see where because you have these online tools like GitHub for collaborating
against code basis with people all over the world, you have marketplaces that
connects you with amazing entrepreneurs like Upwork.
You have collaboration tools where you can have distributed teams and almost
act like you’re in the same office. All these Amazon web services for like really
hard system engineering server rack stuff you use that video with, now you can
get by the drink, right, for dollars an hour.
It’s allowed the level of innovation to be approachable to a less technical
audience and I think that’s what’s going to happen over the next. It’s going to
continue where it used to have to be somewhat technical to run a technology
company or SaaS product, now you don’t have to be technical at all. You just
need to be more able to go to the customer so the market present the
opportunity. That matters more.
The complexity of writing code today, I mean, it’s not laughable but it’s pretty
close to it. It’s drag and drop in many cases. It’s hiring somebody for $12 an hour
in another part of the world that’s very capable, extremely talented, to allow
your dreams come true. And the infrastructure to build these products is zero.
Seriously, it cost you zero dollars for the hosting, for the collaboration. You get
on the free versions. And as you grow and you make revenue then you can
[unclear 00:15:39].
So I just think that is such a now thing that will only continue and it’s really only
happened in the last 16 months where the technology has been [unclear
00:15:48] enough so that it’s not complicated.
Andy: Yup.
Dan: That makes it super approachable for anybody with a great idea to say, “You
know what, it’s not the technology anymore. Anything that you can come up
with you can build.” We got super computers in our back pocket, seriously.
Andy: Totally.
Dan: Any idea you come up with can be built. The challenge is does anybody want the
idea and that’s where things are leaning towards people that follow a lean
startup type of approach or customer development type of approach to
validating our ideas.
Andy: Totally.
So it sounds like in terms -- we talk about this a lot -- the spectrum of history and
what a unique era we’re living in right now for the entrepreneur. For somebody
who wants to be able to generate wealth for themselves, for their family, and be
able to create something from scratch. It feels unprecedented to me. The ability
to build something quickly without any sort of cost that you may have had even
ten years ago. Yeah.
Dan: It’s cost and distribution, right?
Andy: Yeah.
Dan: People forget and I love reminding them. Back before the iPhone, 2007, if you
wanted to build a mobile app, you had to do a business development deal,
hundreds of thousands of dollars, and maybe, maybe be selected to be installed
as part of the phones back then, right? If you wanted to get traction in your
company, if you had a web app, you had to sell the enterprise companies
because you could never make the economics work. What’s happened now is --
and what I love about Apple -- they said, “Look, we want to go after a market
where if we build great products, we win.”
Andy: Yeah.
Dan: And that’s what’s changed. If you build a great solution to a problem that the
market has, you will be number one, right? It doesn’t matter if you’re invoicing
with fresh books or sharing files like Dropbox, you just need to build a great
product. It’s not about who you know or how much money you have to kind of
grease that distribution. It’s really about five star ratings, reviews, SEO, social
media or what’s called the dark net. It’s the emails.
Today, it’s word of mouth but it’s email base. It’s not about social sharing, it’s
friends that they are saying, “Yeah, I’m having this problem.” It’s like, “Boom!
Here’s the link. Just use this product. It’s going to solve your world.” That, I think,
is what’s fascinating.
Again, it allows people that are very less technical but more -- have that empathy
for their customers what I call qualitative versus quantitative. They care more
about understanding the qualitative needs of their customers.
Andy: Yeah.
Dan: They’re going to succeed in this world.
Andy: Totally. Totally agree.
Let’s talk about the world and what are you seeing in the landscape of
opportunities for people? Is there anything that’s jumping out at you and the
industries that you see in particular? Like if you were starting something at this
day and age without the history, what would you be wanting to go to move
Dan: Yeah. I guess my approach to building any company. I’ve built two software
companies, venture back back to back. I’ve seen a lot in the investing I’ve done. I
did 1300 Clarity calls in my previous company; helping entrepreneurs on the
phone one-on-one, just walking them through different challenges. What I see is
that people can build incredible companies.
People don’t realize -- Did you know that if you want to be part of the 1% of
North America, your income for the year is $440,000? People think the 1% is Bill
Gates and Jeff Bezos from Amazon. It’s not. It’s $440,000 a year.
Andy: Wow!
Dan: So for the probability if you follow the process to build a SaaS company doing
that is very, very likely.
Now, my filter is solve a problem that you have, right? Because it usually means
that you have somewhat level of domain expertise, meaning you understand the
problem. You viscerally have the emotion around the problem because you had
it. So that’s step one. The second one is how you build the first prototype.
I’m a big fan of what I call a MEVO, Minimum Economical Viable Offer. How do
you present an offer to solve the problem and get customers interested? You
can do that through blog post, you can do that through paid ads. But essentially,
it always comes back to you pre-selling what you’re going to build, right? I know
you guys talking about that.
Andy: Yup.
Dan: I’ve always done that even when I’ve had venture money. This is not like I have
no money, I do this. This is just the right way to build a company.
Andy: (Laughs)
Dan: And then it’s about understanding the difference between what a true MVP,
Minimum Viable Product, means because my concern with that word and a lot of
people use it is it’s got the word ‘product’ in it, right?
Andy: Mm-hmm.
Dan: MVP, it needs to be a product but you need to break it down. A great analogy
that I use is on my Twitter -- top Twitter pin post is if I was building a car, I
wouldn’t start by building the wheel, then building the engine, then building the
chassis, and then building the glass, and then I would ship a car.
Andy: Yeah.
Dan: Right? Which is what most people do when they build SaaS companies. Why
many of them fail because they don’t actually deliver anything. Instead, we
would start by building a skateboard and you give the skateboard your customer.
Because the problem you’re solving is point A to point B.
Andy: Yup.
Dan: Right? Then you would build the scooter and you give that to your customer.
Then you build a motorbike and you give that to your customer. And then
eventually you would get to very small, super -- like a Mini Cooper kind of car.
That, to me, is the right mentality because most people aren’t thinking about
what are the three core features that you need to build in this product to
actually create value because that’s, you know, “Here’s the problem. I want to
solve it. The value I’m going to create in the middle.” To give that to a customer
and then continue building the other parts of the business. Every time I’ve
shared that with an entrepreneur that has failed. “Well, I made, yeah, the first
one.” You know what I mean?
Andy: Yeah.
Dan: They spent $200,000 on pieces of the car and then they shit the car.
Andy: Totally.
Dan: Unlike build these little solutions and get the problem solve and then that way
you can interact and get real feedback from the customer.
Andy: So, solve a problem you have. MEVO? Can you say those words again? What
does that stand for?
Dan: Minimum Economical Viable Offer. So presell.
Andy: Pre-selling. Great. First thing to get cash in the door to validate that people will
pay you before you built it.
Dan: Yeah. I got to say this. Things get real when you ask for money. I can remember
so many time -- I’m Canadian and so in my world people are polite, “Great idea.
Pursue it.” etc.
Andy: I love it.
Dan: Six months later, you’ll do that, circle back with them and go “Tada! It’s done,”
and they’ll go, “Yeah, that’s cool.”
Andy: Yup.
Dan: I was like “Why aren’t you using it? You said it was a great idea?”
Andy: Totally.
Dan: “Well, it’s just not for me. That’s a great idea. I’m glad you pursued it.” I’ve seen
people just spend so much time in their life. And then when you ask for money in
this process, all of a sudden the questions you get are awesome.
Andy: Oh yeah.
Dan: Like, “Oh, am I going to be able to collaborate with my co-founder with this tool?
Are you going to provide this report? Is it going to have this integration?” Those
are the questions you only wish they would ask in the early days and that only
comes from asking for money.
Andy: Totally. It’s so fascinating to me. There’s been so many times where I’ll ask
people. It’s like, “Would you use something?” I said. “Yeah.” “But would you pay
for it and would you buy something like this?” “Yeah.” “Well, will you pay me
right now for it?” and asking them the real question. Then they’re like, “Well, I
don’t know if …” and then you’re, like you said, you get the feature request or
the thing that doesn’t actually hit you actually get the real objection. Unless
you’re willing to really force that hand at the beginning, you’re just going to
waste your time.
Dan: Yeah. I’m all about speed, right? Every company I’ve built scale. It’s like how can I
reduce the -- or increase the speed of learning.
Andy: Yeah, totally.
Okay, so we’ve got solve the problem you have, MEVO, MVP, then what?
Dan: I mean then it’s really just go to market, right? I mean if you’ve done that right,
you’re paid for the product.
Andy: Yeah.
Dan: That you’ve built [unclear 00:23:38]. I always call it product cook. It doesn’t
matter what market you’re in, there’s a competitive landscape. I always joke
with people if they don’t think there’s competitors, ask your customers who they
would use if they weren’t using you. That answers your competitors. It doesn’t
have to be a direct product competitor, it could be their decision to use a
spreadsheet, not use your product.
Andy: Totally.
Dan: Right?
Andy: Yeah.
Dan: Or do nothing because it’s not a priority in their business to improve, right,
which is the vitamin versus painkiller challenge.
Andy: Yup.
Dan: I think if you do those steps right then you’re kind of co-creating as I talked
about the skateboard to the scooter, you co-create with your customer base that
are paying to get to yourself to where you have a car then it’s about scale. So I
always talk about how to start and then scale your business because to me the
great thing about SaaS and online technology is there’s no limit to how big you
can grow. My brother builds houses for people. There’s a physical constraint
[unclear 00:24:33].
Andy: Very physical with it.
Dan: Totally different. I always joke, he’s the freaking mortar on the ones and zeros.
He last because I can go from zero to 50,000 customers in 16 months and that
would not even -- he couldn’t do it no matter how much money you had because
of the other people he relies on, his trades, the customer, the market size, etc. I
just think that’s a cool place we live in that people should get more excited
Andy: It is a super cool place that we live in and it has my attention of like, “Okay, zero
to 50,000 customers in 16 months. How did you do that? What are you doing?
Dan: That was Flowtown.
Andy: Yeah.
Dan: That was content marketing.
Andy: Straight up just content marketing, blog post.
Dan: Yeah. I teach a framework called Growth Engines and it’s really about -- the first
engine is a demand marketing. So how do you get people aware of your product
and demand? Then it’s sales conversion, then it’s customer success, right? Really
it’s just about traffic, getting them to buy, and then how do you treat them after
they buy and just really create a great experience.
Andy: Yeah.
Dan: But the demand marketing side, you know, there’s really only so many channels
that you can leverage and one of them that I’ve always loved to use, or test
anyways, is content marketing, right?
Andy: Uh-huh.
Dan: So people call it inbound marketing. Essentially it’s blogging. So figuring out
who’s my core customer? What’s my customer avatar? And what kind of
information are they searching about that’s painful in their life that is related to
our product or industry.
So, yeah, Flowtown was a marketing tool for business owners that wanted to
integrate both email marketing and social media marketing. What we did is you
uploaded emails and we would tell you what social network should customers
are on and then build automated campaigns for them. So our blog just talked
about marketing. We got ranked top 10 blogs for small businesses and marketing
in the world.
Andy: Whoa!
Dan: Yeah.
Andy: I just want to pause you here because a lot of people do blogging and a lot of
people write content. You’re doing something differently if you’re getting 50,000
customers, if you’re getting rated one of the top blogs.
Dan: [Unclear 00:26:34].
Andy: Totally. What is different?
Dan: There was a few things. One strategy is called Skyscraper Content.
Andy: Okay.
Dan: Skyscraper Content, the concept is simple. It’s kind of like a building, a
skyscraper. So whatever topic. For example, if we’re building an SEO tool and
actually my buddy Brian Dean -- give him a shout out, Backlinko -- he’s the one
that really has perfected the strategy. He wanted to do a piece of content on
SEO analysis, right? Like you want to do a teardown of top search terms analyze
for SEO.
When he did the research, he found out that a lot of people did 50,000 terms,
100,000 terms, etc, but the top worth 250,000 terms, right? That was like Moz
and all these really well-known blogs. So he decides to invest and create what’s
called a Skyscraper piece which is he did a million. Four times more valuable; a
content in regards to the analysis and the research and the report.
So, instead of doing, a lot of people make this mistake of putting out a piece of
content every day and I agree with consistency. I’m just not sure you need to put
out that much content. Instead, take a step back and say “How can I make this
the most valuable thing that ever discovered and evergreen.” And if they read it,
they would share it with 10 other people.
So, all of a sudden, Brian invest quite a bit of money to build a million research
term. We did this on many, many, many different topics from email, marketing,
best practices. Some people call them guides, right? You might see this.
Andy: Yeah, yeah.
Dan: We just did it as blog content. So that was a big strategy where we would do the
research and figure out for this keyword what’s the best 10 articles ever written
on it and how do we make ours twice as good. So that’s one strategy.
The other one was infographics. Now it’s pretty commoditize but in 2009 when
we started that company, we did an infographic every week, sometimes twice a
week, and we would be really strategic about incorporating certain outlets we’d
mention, certain influencers we mention in the pieces so that when we publish,
we could reach out to them and have them share it with their community.
Andy: Got it. So, at the same level like doing infographics and tagging the influential
people, getting their support on board one way or another.
Dan: We would mention that, yeah. So we’d be like, “What are the top 30?” We do
one on let’s say email automation and we would mention the top 15 companies
that we also knew had blogs but they made the list anyways. We were just smart
enough. I teach this to people. You should spend 20% on content creation, 80%
on promotion.
Andy: Yup.
Dan: Right? So another thing we do is before we’d even create an infogrpahic, we
would partner with Inc, entrepreneur.com, Business Insider, etc, to get
distribution so they would get it for a day and then we would republish it on our
website and they would link back to us. We do kind of collaborative pieces with
some of the top blogs that we’re talking to our customers.
I mean I treated that blog like it’s own online magazine. It had its own essentially
PNL. We spent probably a quarter million a year on it but it was an acquisition
channel and we measured the cost per email and it was our main driver. We
tested a bunch of stuff when we started the company but when we realize that
we are generating leads for like 90 cents from our blog we were like, “Alright,
let’s stop all this other stuff. Double down here,” and that’s how we got that ran.
Andy: Damn! Why did you --
Dan: We can do that with new channel if you just spend the time. I just think people
don’t focus on any one channel and just say, “I’m going to go deep on.”
Andy: And do one really well.
Dan: Yeah, like webinars right now. It’s killing it. If you’re a SaaS company, you don’t
have a funnel to an automated webinar, we can offer at the end, then you just
don’t understand what the guys [unclear 00:30:10] are doing.
Andy: Why did you raise money?
Dan: So Flowtown, I raise money. I built previously that I started company called Spirit
Technology Skill. That’s with 30 people and sold it in 2008, right at the beginning
of the year; moved to San Francisco because I wanted to see if any of my crazy
ideas would hold water amongst the smartest people in the world. Truthfully,
they are. San Francisco has just the caliber of intelligence is amazing.
So, started this tool. Again, solved the problem I had. Found a co-founder I really
-- was inspired by. We got into cash flow breakeven. I put in the first $100,000 to
kind of get it to a point where we’re generating about $20,000 to $25,000 a
month in revenue. It was one of those decisions that say what kind of game do
we want to play? I already had success in business. Did I move here to play a big
game or what was I wanting to do? We both looked at each other it’s like, “Let’s
go for it. Let’s get some gas, pour it in the engine.”
That was the decision. In hindsight, not sure I would have done it again for that
Andy: Yeah.
Dan: But had a blast. We ended up getting acquired by Demandforce. It was a great
outcome for our investors and I learn how to raise money.
Then with Clarity, my previous company, we got acquired actually in February
last year. That was a venture back to business. That was a company that was
totally disruptive which was essentially a marketplace for entrepreneurs to
connect other entrepreneurs over the phone to help them get unstuck at scale.
And we knew that once it started to work, there would be other people that
were going to start -- It’s kind of like a land grab.
Andy: Yup.
Dan: We raised 1.6 million with some of the best investors -- Mark Cuban was actually
one of our investors -- and it was really to just scale the technology because
marketplaces, they take a while for the flywheel to go but once they go, it’s so
defense [unclear 00:32:03].
Andy: Yeah.
Dan: For somebody to compete against Clarity, I feel bad for them because we really
built the flywheel. It’s [unclear 00:32:09]. That was a venture back idea. If you
can logically forecast a story that says we’re going to be $100 million in seven
years then raise money. But if you just want to build like, again, $440,000. If you
want to be a part of the top 1%, don’t raise money because there’s three secrete
agreements that you’re making when you take venture money that you don’t
realize that will not allow you to just get to $10 million a year in revenue and
chill out.
Andy: And then kick it.
Dan: Yeah. So I just think people need to be aware and make the decision accordingly.
Andy: When people are getting started -- let’s talk about common mistakes. What are
the most common screw ups that you see new founders, starting entrepreneurs
making in the past?
Dan: The number one is probably the team, right? At the end of the day, I really
believe the first 12 people that’s part of your team, that’s going to dictate your
success or failure. I mean we all know it. It’s like the core group, you look at the
Facebook’s and the Microsoft’s like the early people were really talented. It
doesn’t mean they’re all geniuses but they really support each other and they
collaborate really well.
I just think the mistake is to move too fast, right? I really believe that you should
collaborate with somebody before you decide to start a business and co-found it
with them.
Giving equity. I’ve seen it so many times where I’m going to do an investment. I
look at the cap table which is essentially whose invest in the company or who
owns equity. Some guy, that’s not even around I never heard of owns a third of
the company, right? Because he was part of them when they started and then he
decided to leave and they didn’t do investing and all of a sudden now. They
essentially have a poisoned cap table and they’ll never be able to raise because
they’ve given a third of the company to some guy that’s not around so it screws
it up.
I’d say hiring and building that core team. So my prescription or solution to that
would be -- All the basic things. You can read a book called Who for Recruiting
which really tells you about the process for recruiting. But one of the things that
is non-negotiable for me. It doesn’t matter what position from contractors to
full-time is I call it the Project, the 10-Hour Project.
Andy: Yeah.
Dan: I do the same project with the same potential candidates for a role. So that way I
can see how each one collaborates, communicates, and then delivers this
solution and compare it to each one of them.
Andy: Yeah.
Dan: I think that’s probably the best one. I can’t work with you unless I work with you.
Andy: Yup. Totally.
Dan: That’s a non-negotiable. So recruiting is number one. Another one would
probably be -- Again, some of the stuff we talked about around charging before
you build the product, pre-selling.
Andy: Yeah.
Dan: I think a lot of people, their biggest challenge is the fear of rejection and that’s
just true in general. But if you’re not willing to pick up the phone and cold call, if
you’re not willing to go to the mall with a clipboard and some wireframes, then
you just do not know what kind of stomach you’re going to need to build the
scale of company.
Andy: Totally.
Dan: These are little, little problems that you’re going to have to figure out if you want
to go full.
I think that that’s just -- It’s a filter and that’s why when you meet people have
scaled big companies, they’re a different type of person. They have a different
approach to life and the other one just didn’t make it. It’s almost like it’s a
natural selection for entrepreneur.
Andy: Totally.
Dan: There’s that.
And then, I would say, if I had to pick a third it would be pivoting too often. I see
this so often with entrepreneurs that they run an experiment, they don’t get the
data they expected and they pivot, right? I had this idea, I put it out there and
nobody liked it, I pivoted.
They use the word pivot and I call it a restart. You know what I’m talking.
Andy: Oh, totally.
Dan: That’s not a pivot. A pivot is like I’m still going after the same problem. It’s going
to tweak my [unclear 00:35:58].
Andy: Little change, yup.
Dan: Yeah. They’re like “I didn’t like that idea. I’m starting a new one.” That’s a
Andy: Totally.
Dan: Right? It’s easier on their ego.
To me to pivot, I have a three test rule. No matter what experiment I’m running,
I try to run three tests and I give them three earnest tries. Let’s call it paid
Facebook ad. So run an ad, doesn’t convert or really expensive cost per lead,
then I’ll do another test at it. Learn, tweak, and then if it doesn’t work, a third. By
the third time if it doesn’t work then I got to really ask myself is this the right
thing to do or pursue.
Andy: Yeah.
Dan: So that’s a big one. But in that nutshell -- So that’s when you have focus.
Andy: Yup.
Dan: The biggest thing that kills a startup is indigestion not starvation. Okay? So what I
mean by that is they do too many things at once. It’s not because they don’t
have enough opportunities.
Andy: Got it. They’re just not focusing on the highest leverage problem.
Dan: They’re not focus. They’re saying yes to everybody. “Oh, we have a partner deal
here. We want to add this new feature. This customer wants that and they’re
doing a bunch of stuff.” Because of that they don’t know. There could be this
gem inside that they’re working on and it doesn’t have the ability to be seen
because it’s clouded with everything else.
Andy: Yeah.
Dan: That’s the indigestion problem. They’ve eaten too many things and that
disruption frustrates your team, frustrates your customers, frustrates your
partners that you made commitments to that you’re not delivering on. And I just
think the real value is deciding, “Okay, we’re going to focus on one thing: go
deep. If it doesn’t work, we’ll step back and keep doing that.” That’s always my
Again, years of building companies, I’ve been able to kind of build a filter for this
but it’s really about having the discipline to say no and the conviction to say,
“You know what, we made a strategy last quarter and we’re going to stick to it
this quarter. And then when we review it, we’re going to decide if it’s the right
thing and the next one if it’s not, we’ll just drop it but we’re not going to
I’ve seen founders change midweek three times. Like, “We’re going to start to
hate to do this.” And then Tuesday they have a conversation with somebody,
they change it in Thursday and then by Friday they’re like, “Scrap all that. We’re
going this way.” It’s like you’re killing yourself and you’re not making progress
and then in three months you’re frustrated because you ran out of money.
Andy: We’ll wrap with this one unless you tell me a little bit about what you’re up to
next. You said you’re not going to build a software company for a couple of
years. If you were to build one today, is there any industries, problems, ideas
that are especially appealing or interesting to you right now?
Dan: Yeah. I mean, again, solve my own problems, right? So stuff I’m seeing is around
really this idea of pixels, right, and remarketing. I think there’s a huge
opportunity for somebody to build a tool, a marketing tool, in that space
because there’s just so many different aspects that need to be integrated and
well-positioned and really just understand what tags do you have. And then now
you can remarket email list. So, synchronizing your email list, your remarketing
list. You could build a whole marketplace on just getting pixels on targeted
customer’s websites to remarket those ones if they’re not doing it.
There’s something there. I know what I would build for myself but it’s very
specific. Again, I would start there and then go wider. That’s always been my
focus is get the hook in the market and then try to expand. I always ask people,
“What did you do three minutes before and three minutes after you use my
Andy: Nice.
Dan: That is how you develop your roadmap.
Andy: Cool.
Dan: Yeah. So there’s that. And then there’s just a lot of opportunity to take products
that are -- I mean people don’t understand but there’s a lifecycle with
technology, right?
Andy: Uh-huh.
Dan: From Salesforce, to Infusionsoft, to all these different products. If you
understand how those things got started, you can build a better, smaller, focus
version and still do extremely well in a very crowded market if you choose to
build a great product experience that does a very focus thing.
So, you might argue that there’s too many webinar tools right now. I would
argue that you could focus and build a webinar platform for very specific used
case with automation templates and click, click, click and you’d do very well. I
mean look at Leadpages. When they started and [unclear 00:40:03], very focus,
simple product offering.
Andy: Yup. Totally.
Dan: And then get the hook then you wide it. That’s my approach.
Andy: Beautiful. Beautiful.
I love hearing that. I love hearing where your energy would be going if you’re
building something right now. But you’re not building stuff right now, there’s
some other stuff that you got coming up. Can you share with us a little bit about
what you’re focused on right now for anyone who’s interested?
Dan: Well, you know what, three years ago I had my first son and then 11 months
later we had my second one. So they’re 11 months apart. It made me reevaluate
the -- Again, venture back startup hustle is all in, right? That’s one of the secret
agreements you’re making. You essentially put everything else in your life on
hold to follow that to generate massive return for investors. It’s your
But, you know, luckily in life, I was fortunate enough that I didn’t have to do
anything. I realize I never documented any of the best practices and lessons
learned over the years so I started a YouTube channel which was crazy because I
never did video prior to that. I feel like it’s a big challenge. I don’t want to do
that. And that YouTube video has grown now, 3,000 subscribers in the last eight
But then has parlayed into just a ton of email from people wanting to have me
involved in their company and support them. So what I decide to do is launch a
program called Idea to Exit, ideatoexitonline.com as URL. I’m putting together a
free mini course for entrepreneurs who want to learn how to start, scale, and
eventually sell their technology company.
The sell to me is not because you want to sell, it’s to provide the optionality. Like
if you don’t understand the value drivers of how companies essentially value
your business, then you don’t know what you should be working on in your
For example, Starbucks. People think it’s about coffee, it’s a real estate
opportunity. Starbucks is not about coffee. Yes, it is but that’s how they value.
It’s like SaaS.
Andy: Oh, interesting.
Dan: Yeah. People don’t understand that in technology, different business models
have different things that are valuable to an acquire. And as an entrepreneur,
your should focus on creating value, or at least half your time, on those drivers
so that you can optimize if someday. I mean you could have an unfortunate
death in your family, you could go through a divorce, you could have whatever
happens in life. Not thinking about that and having the optionality, I think, is just
So that’s one part of the program, or the course. There’s three different aspects
but I go super deep in the stuff that we talked about, clickable prototypes which
we didn’t even get a chance to talk about which, I think, is game changers. How
to identify acquires, how to build your growth engine. Yeah, I put that together.
It’s a free video course and it’s launching real soon.
Andy: Ideatoexit.com, is that right?
Dan: Ideatoexitonline.com.
Andy: Ideatoexitonline, okay, great. I’m glad you clarified that because I went to
ideatoexit and it was something strange.
Dan: Not me.
Andy: Ideatoexitonline.com. I’m just checking that out. Free course there to check out.
Giving away some of the best content that you’ve come up with around what
you’ve learned from building and scaling your whole career of companies.
Dan: Yeah. I’ve done quite a few, yeah.
Andy: Awesome, man. Anything else you want to share with people before we wrap?
Dan: No. I mean the biggest thing I’d love to challenge people because I really believe
if you want to help something change their life, you got to start by helping them
change their day.
What I would love to persuade everybody watching is just start sharing your
story. One of the most valuable things that have come out over the last months
of creating content online is just -- really not only sharing the best practices but
just sharing more about some of your beliefs and values and thinking.
I just think I feel like my two boys were a real gift to me because they were the
reason I started doing that and I think that the benefit of the people I’ve been
able to serve that I’ve never met and I probably never will meet just because of
this beautiful world we live in with social media and video.
So I just think, you know, if you have a story and it’s probably the most powerful
thing you own, start using it and practicing it. When it comes to building a
company, build the community first, right? And then launch the product into the
community to really build that base and understanding.
That’s probably the biggest I’d love for your listeners to take away.
Andy: Beautiful.
Dan, thank you so much for coming back on. This was amazing. I’ve got like a
whole page of notes here.
Dan: Awesome, Andy. Absolutely my pleasure.
Andy: Thank you so much. Catch you later.
Dan: Super grateful.
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.