Jason is a serial entrepreneur that has already sold one company, and in this episode, he teaches us how to create a money machine through the predictable acquisition of recurring revenue with annual pre-pay in a good market.
Jason is the first person to be on Growth Hacker TV two times as a guest. In this episode, you’ll see why we invited him back. He talks to us about the growth issues that appear after customer acquisition, and how to trade growth for profit (and vice-versa).
→ The growth issues that appear after customer acquisition
→ How to trade growth for-profit and vice-versa
→ How he handles the two things scaling problem
→ His insights in this kind of second scaling problem are building slack into the system
→ His capable or adept at certain kinds of challenges
→ His thoughts on VCs
→ His thoughts on Slack
→ What does a bootstrap business do
→ The most important personal habits that he thinks have led to success
→ And a whole lot more
Bronson: Welcome to another episode of Growth Hacker TV. I’m Bronson Taylor and today I have Jason Cohen with us. Jason, thanks for coming on the program.
Jason: Thanks for having.
Bronson: Me. Yeah, absolutely. Now, Jason, you are the founder of WP Engine, but you’re also the first guest on growth hacker TV to make a second appearance. Your first episode was one of the most watched and talked about interviews, so I’m sure this will be no different. So thank you so much for coming on a second time.
Jason: It was supposed to alleviate pressure and pressure. I can’t tell.
Bronson: You. I want to add pressure because I want high value in this. So feel the pressure. Make it great.
Bronson: So last time you came on and I recommend people going and listening to that one if they have it and then listening to this one because it’s almost like a saga. And this is part two. The last time we talked, we talked about the initial validation of WP Engine. What you actually did find out that people actually were willing to pay for this and how to know that it was the right direction to go in as a business as opposed to your other ideas. And we’re not going to revisit those topics. So we talked about acquiring new users, but lately you’ve been writing about a second scaling problem, not the issue of acquiring new users, the issue of infrastructure as a business to really handle those users. And in a recent blog post, you said scale causes rare events to become regular. I think that’s a great quote. What do you mean by that? Scale causes rare events to become regular.
Jason: Well, so we have 1500 servers now, so you figure the server fails every four years. I mean, the hardware, some catastrophic thing. Who knows? A power supply goes out, kernel panics, you know, drives corrupted in some way. And so it’s not surprising that a server would fail every four years on average. So is your laptop. It’s not even doing as much as a server. Right. But if you have 1500 servers, that’s about four years worth of days. So that means every day something that would happen only once every four years, like a catastrophic failure happens every single day. And that’s something very rare and catastrophic. Of course, things that are slightly less rare happen by the dozens every day. Mm hmm. And so things that are rare probably are hard to detect, might be hard to fix. I mean, just by their very nature, they’re weird. That makes them hard. And yet they’re commonplace in time. And so that means you’re constantly having to deal with difficult things to find and fix all the time. That just sounds hard for us to say to it.
Bronson: Yeah. And so to kind of a nutshell, that is the second scaling problem. The first scaling problem is, does anybody want what you’re selling? The second scaling problem is rare. Events which are very difficult become regular. Does that sum it up?
Jason: Yeah, there’s kind of two things, at least in the scaling part. One is what you’re referring to, which is the sort of infrastructure stuff where there’s things if there’s things like servers, network connections, database entries, you know, things in the you have millions of them or billions of them and so on. We also, for example, serve more than a billion objects a day. So, you know, if there was a problem, one in a billion times, we’d see that every day as well. So there’s things you have that part of that that problem, that something there’s a lot of standard deviations away you experience all the time. The other problem, too, is humans. So some companies can scale without adding humans, which is great. Instagram had, you know, huge numbers that very few humans, so did WhatsApp and so on. But we also know those are rare, right? That’s great. That’s why we know their name. Yeah, that’s terrific. Good for them. Right. But also, that’s that’s the exception even in high tech. That’s the exception. Right. And so having a lot of people is hard, but not because of rare things becoming common, but because it’s just hard for a large group of people to work together. And that’s even if they’ll have a great culture, if they all see eye to eye and so on, it’s just hard to stay on the same page. It’s hard to communicate about everything with each other. It’s impossible for any one person, even the CEO, to know everything that’s happening at any given time. So people always have imperfect information. As you get much bigger, you have issues of physicality, like you’re not in the same place splitting up, you know, or you may have that from the beginning. If you have remote workers, which again is really awesome, but everyone will tell you it also takes a lot of work to make that happen. So whichever way you cut it up, it’s work and difficult.
Bronson: Now, that makes a lot of sense. You have the technology has to scale, but the people that have to deal with the technology also has to scale. And the people that don’t deal with technology, just the whole thing has to scale. Is that what you mean when you say your ability to handle problems morph too? Is that what that quote means, that the people side of it, or is that something else?
Jason: Yeah, some of that is people and some of it’s your customers. So, for example, if we have one of these rare one, you know, 1500 events that happen, it could affect, you know, one customer or it could affect ten or it could affect 30 customers. If it affects 30 customers, you have issues of like, do you still have the right email addresses? If you do, is that the right way to communicate with them? Is that an email address of the billing person or is that the. Technical person that can do something about it and so forth. And if that’s happening again all the time and everywhere. Are we always sending those emails out? I mean, you know, and then some of them respond and then we have to respond to those. And so if all you have is a couple hundred customers, it’s it’s pretty easy to deal with that. The data may not be up to date and so on. Mm hmm. But as you just get, again, more of everything, some of that’s the rarity. Sure. But, yeah, there’s just stuff is going to happen and at a scale where it matters. And so instead of just. Well, we had a blip in downtime, but we’re back because we only have four servers total. We had a blip. And so what. Yeah, blip in every year is really good. You know, so too, the consequences are also more intense and it’s something you actually have to deal with. Then if you think about it, it was a means to deal with it. Well, there’s processes and automation and keeping up with that. And who’s looking after that, you know, whose responsibility is it that that continues to do well and continues to evolve? That’s a person with their job title because we only have ten people. There’s nobody’s job title who who’s is to to work on strange projects that if you’re only when you have scale right like that’s that’s the thing so you have to have more, even more people to deal with the meta issues of scale. So it’s just complicated from, you know, people process technology and so on.
Bronson: Yeah. Do you think one of the insights in this kind of second scaling problem is building slack into the system, building slack into the amount of hours some people have, so they have extra hours to go do random stuff. Or maybe there’s a person that just has more free time than you could get out of them. Or is that really the wrong way to think about it?
Jason: Well, it certainly helps because then if a spike of anything happens, you’re better prepared or better able to deal with it. So, yeah, I challenge you to find any sort of on earth of any size, as in Microsoft, that has lots of slack everywhere.
Bronson: That’s true.
Jason: So if the even if that’s incredibly wise, apparently it’s really hard. You know, one reason it’s hard is usually you’re trying to hire ahead of need anyway, just so that just to keep up with your scale. This is, again, if you’re a high skill business. Mm hmm. So, for example, if we’re growing 30% a quarter and it takes about a quarter to source, interview, hire, train and get up to speed, for example, one support rep, then we need to hire a quarter ahead and support reps. But if we’re growing a 30% per quarter, that means we have to have 30% more people than you might say is quote unquote needed. That’s already a ton of slack in terms of, you know, work, in terms of the cost, in terms of everything. Right. So again, you could argue, well, you need even more slack and you might be right. But again, you’re getting to some really big numbers that may not that may be the right thing to do. You may be right, but it also may not be plausible. And, you know, even these huge, well-funded companies don’t you know, you could pretty much say don’t have slack. So it might be hard. You know, companies may be like the closet. You know, your stuff expands to fit the size plans that you have. Yeah. So that’s probably the case in companies at least.
Bronson: I think just.
Jason: Pretty materially. It seems to be what happens. Right.
Bronson: I think it’s great. You know, here you talk about these catastrophic, catastrophic events and how they become normal. I think about entrepreneurship in general and it seems like, you know, at first we know entrepreneurship is catastrophic, you know, quitting your job, maybe starting a company doing that first leap. But the way you describe it, the hits keep coming and faster. So really, it’s not about can you get over one initial hump. It’s do you like the lifestyle of dealing with chaos, right?
Jason: Yeah. I mean, it’s not until you’re really big and mature that it starts to that that really it’s not that there’s no problems, but some of the chaos gets better. Um, we’re definitely not in that stage. Yes. The thing is, as.
Bronson: The clarity change total.
Jason: As you go from ten people to 80 and from 80 to 300 and 300 to 3000, like of course, the types of problems that you encounter change and they’re not easy ones. And who would think they’re easy, right? Then you make sense that they be easy. And that’s true in people. It’s true of the technology. I mean, again, like looking at any technology company that has scaled their tech and every one of them has all kinds of cool stuff that they had to do that was incredibly custom, and it was the only way they would get the cost that low. And, you know, you just go on and on with every single company that is skilled in tech and all the amazing stuff they do. Some of them are nice enough to blog about it so the to share the knowledge of the folks like Facebook with their open data centers. Netflix is really good at it. GitHub does that really well, but you can just go on and on of the companies that that share that that information. But we all have to do it. And none of that sounds easy now.
Jason: And to a large extent, to some extent, it’s idiosyncratic to the company. The way that we’re going to scale is going to depend on our culture, where we’re located, what types of people we hire, what they’re supposed to want to do as a company. And for those people, same thing with the tech. What’s next do you use when is it useful to go off the cloud you know is depend on the talent base and so. It’s not it’s not that every company is completely unique needs. But, you know, you read about what WhatsApp did to scale their app and what Facebook does, what Twitter does, and so on and so forth. And they’re all different. Hmm. Right. Even though there’s principles that are are definitely shared, no doubt about that. But actually, the details are different. And so, again, that sounds really hard, idiosyncratic, really tough issues. Well, that just sounds hard. So, no, you’re not on a beach sipping martinis because of course, that’s really hard.
Bronson: Yeah. No, I think you hit the nail on the head. The problem with scale is that everyone has to do it differently by definition, which means you have to chart your own course, know if you get a little bit of help. Now, the next question I have for you. You know, to so many people, growing a user base is the only problem they have because they haven’t got there yet. They don’t have any users. And so they’re watching all these episodes try to figure out how do our first ten customers, first hundred, first thousand, whatever. That’s their problem. But I’m going to ask you this question because you have the customers and you’ve had to deal with scale of the second kind, which is harder, you know, to other people. The hardest part is getting customers. They don’t have them yet. But do you is there one that’s obviously harder than the other?
Jason: No, they’re different challenges. So I would say that for one human being, you are going to be more capable or adept at certain kinds of challenges. And so frequently a frequently not saying always a tech founder could find all of this challenging. But for example, what if the tech founder was able to find algorithms and methods to make AdWords effective for scaling customers? Okay. Or perhaps the product has a viral component and you actually one of the very few to get over that critical mass and have that work well then further customer development is not a problem after that point. Great. It’s probably the other stuff. And a lot of tech founders are not adept at, for example, being a CEO of a large scaling company the in the human problems there but then many are right and.
Bronson: Which is why the VCs fire a lot of them.
Jason: Well and a lot of VCs nowadays do the reverse and say, how is it that we can make those people successful with things like CEO coaches and other kinds of things, making sure that they have the right team around them to support them? And, you know, other people who are adapting have seen that path before. They can work with the CEO like there’s there’s both. I think you’d I think it’s it’s kind of an anachronism to talk about VCs, to fire the founders and rather than trying to do the best thing for the company, not that it never happens, but, you know, that’s one of those things that were, you know, kind of undeniably true in the nineties and maybe true last decade. But I think I think actually you’d be hard pressed to find any VC with any real good reputation nowadays that has that attitude. Actually, it’s kind of getting rare.
Bronson: Yeah, that’s a good thing. That’s good news. Yeah. Now, this whole conversation about scaling, it seems like it could almost double as an argument for why you should go into business that can charge premium prices, because if you become a commodity, you’re pricing in your margins are low, then you have to have a ton of skill to make money. But what you’re telling me is with a ton of scale comes all these new catastrophic problems on a daily basis that can eat up that margin. So is that is everything you’re saying just an argument to have a premium priced business?
Jason: I think for small I think for business that is not raising money. Yes.
Jason: Because since you’re funding it yourself, you can’t they literally cannot afford to invest ahead and all those things. The money coming in has to pay for it all. So it has to be enough money. There’s no other way to invest in what you need for your own business. And that’s true, too, in marketing, as we talked about last time that we spent a lot of time on that and we should because it’s one of the primary things. Sure. I think if you’re if instead and by the way, of course, I love those kind of businesses. I built several of those businesses and I love it. So I don’t I don’t prefer one or the other kind. I don’t have that that sort of bias. There’s simply different paths. There are different goals. If your goal, though, is to be the next Facebook or WhatsApp or whatever, then you should not be concerned with whether a particular price point or source will pay for scale or pay for your optimization of scale you should be concerned with. I still think you should be concerned with business model, even though some of those companies aren’t. I still think this is the most important for business. Gee, that’s weird. I guess it is kind of weird, though. It is.
Jason: Sometimes, yes, I think that’s important. But I think I think if the if the idea is, look, the whole point of this company is to have 100 million users, then you can ask it, do I have a valid business model at that scale? And if the answer is yes, then the whole point of the venture funding is to get you to that point with least risk, which probably means fastest. It definitely means hiring way ahead of a quote unquote need in these areas so that you can innovate as quickly as possible. It probably means that in marketing, like it means that in lots of. What aspects of the business. Yeah, but like, if I told you, look, your business is going to be unprofitable, unprofitable for five years, but you are going to get to 100 million users. And even though each of them is only paying 20 bucks a month, you’re going to be making $1,000,000 a day in profit. Is that a good business, you’d say? Of course it’s a good business. Let’s do that, even though it’s not profitable along the whole way. So, again, it’s not right or wrong or price should be high or low. It’s that whatever the goal of the business is and the end goal where you want it to be in terms of its business model and so on, like is to decide what that is.
Jason: And then be consistent about how you attack that.
Bronson: Yeah. No, I mean it makes total sense. I mean it’s looking at cash flow and if you’re a solo founder, if you’re bootstrapping it like you just don’t have the ability to go into huge debt to get a ton of users. But if you know that on the other side that in five or ten years is a great business, it makes sense to go into debt. So you, you know, you know, join up with VCs. So it totally depends on where you’re at or what your goals are. I think that’s awesome. Now in this blog post where you talked about scale of this nature, you said that you wrote the post in a sense, because one of the startups that you invest in was getting ready to pitch for a series B, and you were helping them with these kinds of things because you saw some holes in their pitch that you knew you want to address with them before they went and tried to go on the road with it. Now, I don’t want you to give anything away so we know who this company is. That’s irrelevant. But what can you tell us that was wrong with their pitch? Because that’s part of it is you could say all these things we talked about, hey, scale is hard. Black swans become, you know, their every day. But still we may have bad thinking and not know it. What specifically were they going to do that would not have worked because of scale? You know what I mean?
Jason: What they were doing is not raising enough money.
Jason: And there’s a there’s an adage that you always should raise more money than you think you need. And often just in the way that you just just now said VCs like to fire founders. Similarly, VCs always say you should raise more than you need. And since they’re trying to get you to take money and raising more money than you need, literally dilute to more, it’s easy to pass that off, as is a self-serving advice that’s not helpful to founders. And I suppose there are instances where perhaps that’s what’s happening. But actually this is correct. And the the way to see that this is correct that you need more money as you build your business plan. You’re conservative over here and optimistic over there and so on. Right. You know that you’re not going to execute your 18 month business plan as planned today. The only thing you know is that’s not exactly how it’s going to go. How is it going to be run? Who knows? You know, is it won’t go like this. Yeah, it’s a suppose it doesn’t go quite as well on the revenue side, but it did spend according to the budget. That means.
Bronson: We got to.
Jason: Running. You know, you’re spending money faster and that’s okay. Like the answer is not to go fire everyone and do that right. Like imagine what that would do inside the company. That’s clearly not the right thing to do. Yes. You need to lean into marketing. Yes, you need to focus, blah, blah, blah. Meanwhile, you proceed, but you’ll need more money than you thought and that’s the right thing to do. Similarly, let’s suppose you’re way more successful with revenue than you thought. That means you’re you’re spending plan was also wrong. You need to spend more at minimum on things like servers and whatnot. But, you know, there are other things and whatever marketing is working really well, you’re going to want to continue to spend into that. And again, this is for a company raising money specifically. So some of this may or may not apply to a bootstrapped business. I think there’s other things you can do with a bootstrap business that is scaling faster than you thought. You don’t necessarily have to blow more money. That that’s a that’s something else we can talk about. But if you’re again, if your goal is on raising money to get as big as possible, then huge, you know, you know, better than expected revenues is a good thing and something you want to lean into. But that means trying to catch up on everything else, having to deal with scale issues sooner, having to hire ahead of need sooner because your needs are changing faster. And again, that costs more money. Yeah, especially in the SAS business where you make the money over time. But all the costs, most of the costs are upfront and so and so. Either way, you need more money no matter how you differ from your plant. Need more money and that’s why you need more money. That was their issue, is that they were going to, quote unquote, hit their plan with this money and just barely. And that’s that’s not going to happen. Even though I don’t know what’s going to come. I know that isn’t going to happen. So they need more money.
Bronson: Is there a savings account?
Jason: Yeah. And by the way, you know, that’s you know, almost everyone learns this lesson. This is not like you need to them. This is everybody has this lesson that that is the case. You could even make the argument here at WP Engine that even knowing that I still didn’t do it enough, you absolutely can make that argument because, you know, hindsight’s 2020, of course. Right. So it’s not fair. Maybe. But you absolutely could have made that argument.
Bronson: Yeah, well, it kind of goes back to the idea that we talked about earlier of Slack and that, yeah, in a perfect world, Slack is great in a system, but when it comes to hiring people and business processes, there’s really not going to. Slag because you, like you said, you fill up the closet, however big it is. But in this scenario, when it comes to raising money, it’s a one time event or an event. It happens a few times. Series A, Series B, series C. So you might as well make it a little bigger or quite a bit bigger because that is a way to build slack into the system and kind of plan for those unforeseen things.
Jason: Yeah, I mean, it is foreseen that you’ll need more money. Yeah, I guess that’s the point. And yeah, you could say it’s slack or just you are like, even though it’s not in your plan, it’s going to be you just can’t represent it accurately because you don’t know where it’s going to come from. So you can’t really put it down on paper. Except that it’s true.
Bronson: Yeah. So now what does a bootstrap business do? Because if I don’t ask this, people are going to kill me. Because you said you have to know what that is.
Jason: Of course, you could just say, this is great. I’m going to continue adding a lot of customers and all that. But there’s other things like if it’s that if the need is that high and it’s that easy to get them right, and so you’re exploding. There are several kind of aspect avenues you can go. Again, in a bootstrap business, I always feel like you’re maximizing for profit, not for speed of growth or that kind of thing. I mean, sure, it’s good. It’s good to grow, obviously, but really at the end of the day, you’re maximizing for take cash in home in your pocket. Some of it along the way, maybe some of that if you sell it, whatever. But one way or another, you’re getting the money out of this thing. You’re not so sure. You’re scaling really fast. You can start asking, okay, how is it that I can I can continue to optimize these other things like profitability because just adding a lot of humans and whatnot may not be the kind of company you wanted to build in the first place. Sure. And in fact, if you did want to build a company like that, maybe you should have taken extra money so you could build that in a better way. So you kind of kind of back into it that way. So so, for example, a lot of people raise prices at that point. There’s clearly a lot of demand. And so the idea is if I raise prices by 10%, 50%, 100%, then even if that slows my growth, well, I just said my growth was super high and I didn’t really want to deal with some of the scale aspects of that in terms of tech support, in terms of new feature development interest. So they didn’t really want to deal with that scale stuff. So I don’t really want that growth. Let’s let’s kill the growth off. Not by being worse at it, but by getting more money per person, which is just pure profit in your pocket and trade that growth rate for literally profit, right? Yeah. And that can change the kind of customer you have. I think if you change your prices 10%, it won’t change the nature of the customer. But if you change a ten X, it might and it might be a whole different user base and you might have a different business on your hands, which you may like and you may not. So there’s some limit to that. I do know of two different entrepreneurs in the last couple of years who did the ten x ten x difference in price. Both of it succeeded. And in fact, in both cases, it didn’t affect the growth rate that much. Yeah. Did it have an idea that was.
Bronson: Yeah. Did it transform the kind of business they were in, like actually what they did?
Jason: Yes, it did. But in a way that they ended up liking. Right. But again, that’s that’s the that’s the sort of flag is that it might be that and it might not work. Right. That might put you in such a different place in terms of business that you it’s that it’s just one thing. But you can change prices a bit, certainly to bleed off that growth. So that that’s an example. No.
Bronson: The quote you just said, it literally just it made me learn something hearing it. You’re trading growth for profit. And I thought that is that is exactly what is happening. We’ve never heard it put in that kind of proverb form. And so now it makes sense, you know, where Facebook is doing the opposite. You know, they’re trading profit for growth, or at least they were until, you know, they have a liquidity event. Like you said, the the WhatsApp and, you know, the Instagrams, they’re trying to get as much growth as possible and they don’t care about profitability. So in a sense, there’s this scale and you’re showing me on the far right, the far left or somewhere in the middle, and it’s profitability on one side and growth on the other. And you got to decide what kind of business you’re going to be at and where are you going to land on that continuum. Is that true or.
Jason: Yeah, I mean, Facebook, we probably shouldn’t get into it. It’s not really relevant to any of us. Definitely not me. They’re trading they can’t tax their growth because there’s not that many human beings on earth. So they’re they’re they’re trying for strategy. How is it that they’re a 30 year or 100 year old company someday? And, you know, because they’re in the media and at scale and all these kind of things is, of course, going to grow. Right. And it needs to feed into their entire ad strategy and other revenue strategies. But, you know, human growth is maybe part of it, but it’s more media and control and strategy. It’s and, you know, we don’t think about that ever. Right. Because and I imagine a lot of people watching don’t either like those those are very different yet again, problems to have, by the way, a good indication that it never gets easier because these problems are hard. But how about the problem of literally thinking about how to be a 30 year old company in tech where everything changes dramatically every decade? How is it that you can do that? What trends to do or not? Those aren’t easy questions either. It doesn’t.
Bronson: That might lead into my next question, because the next question is what is the third growth challenge, if there is one? First is getting customers. Second is the infrastructure of having those customers. What’s third running out of customers, that being Facebook, I mean.
Jason: Well, actually, so running out of customers is another way of saying sort of saturating the available market. Yes. At some point, companies all, you know, sort of plateau off the other side of that growth curve. Just because there aren’t as many customers, they’re more expensive to acquire. The more expensive to acquire is the more interesting one, because that kicks in way earlier than actually tapping out the customers available. You could argue Oracle’s pretty much tapped out the the large database market. It is what it is. They fight over them with IBM and a few other players and they’re basically fighting over things that exist. Right. So there’s example that again, like we’re not in that case and probably no one watching us is in that case. But here’s something that all of us, including the people watching here, would run into. So rather than running out of customers, marketing channels, running out. Absolutely. Mm hmm. So, in other words, if you figured out AdWords, that’s great. And you’re able to spend five grand a month. Ten grand a month, essentially, you know, in a in a long term, profitable way. Mm hmm. You will find that you’ve tapped out what is efficient in AdWords. There’s only so many searches, and that does increase over the years. But not a lot, actually. Mm hmm. And so you’re tapped out in that particular channel, and then, furthermore, channels typically degrade.
Jason: So more people will bid on those AdWords over time, not fewer. And that means they’re more expensive, and so it gets less efficient. Furthermore, in things like AdWords and other things that are auction based and actually most things that are zero sum games like affiliates as well, the price is set by the dumbest bidder. So even if a company comes in and they’re spending some money like they have to be losing money here, maybe they are. It doesn’t matter because that’s what’s happening. And you can see how stupid they are all day long and may or may not be in fact smart for them.
Jason: But regardless, it’s what’s going on. And so that means your slot for not one or it’s more expensive or whatever one way or another is less efficient. So in other words, even when you figure out channels, they tend to get less efficient and less productive over time. In any way they top out. And that’s something that everyone finds. And so that’s why it’s important in SAS to or any company really I suppose to to find more and more channels because that’s what happens. And so it’s great if you’re scaling at a certain rate, but actually it’ll tell us if you’re not developing new channels and so on.
Jason: Now so channels is a very but I mean there’s lots of other things like, you know, we said people in infrastructure scale, but they do change in nature yet again. So for example, an infrastructure example would be you you finally realize you have to have multiple data centers around the world and the issues of data integrity and sharing and failover and such. When you have those kind of latency, there’s actually a whole nother engineering issue and it’s unlikely that all the code is perfectly ready for that, right? So that’s an example of like a second order scaling thing challenge that can come later. Another one in people is again one of physicality. So, you know, WP Engine, we have 110 people, so we’re still all in one big area. But what happens when we can’t sit here? And so there’s a we have another floor or another building or it’s another state or, you know, and you keep going because it’s inevitable those things happen. And of course, communication becomes orders of magnitude worse when that happens. And so, so even so, even if you thought you had things figured out, then there’s that. And so that’s an example. And people where it kind of bifurcates yet again. Of course, everyone knows Dunbar’s number 150 is the sort of magic number of humans where where these communications breakdown, even if everyone is in the same physical place, where it’s hard to remember everyone’s name anymore. And, you know, even at that level, much less communicate with them. That’s tough, right? If you don’t can’t remember their name, you certainly can’t remember other things that are important about interacting with them and working with them. And so would you. That’s a whole different kind of problem to solve. So, yeah, it doesn’t it doesn’t start coming in. And then the business challenges change, too. So an example there for us, you know, we get approached a lot by people that say, hey, I’ve got this plug in. I think a lot of your users would like it. Why don’t you promote it to your customers? And of course, we don’t want to just promoting it for customers like that’s that would be a violation of the trust. Like, look, we’re just hosting, we don’t want to start selling you stuff like that. That would be a bad use of our our email base. But you know, you could say, well, what if we did something together like a new offering that combined it or, you know, there’s like things that would it be bad to do that are accretive and not and not like just selling into our base kind of stuff. But usually when you do the math on it, you realize like this could only possibly generate $1,000,000 a year in revenue max ever. And actually, that’s not that’s already completely uninteresting and wouldn’t move the needle for us this year. So in other words there’s. So that’s just a long way of saying. Another thing of scale is the, the, the opportunities you go after have to get much bigger and that’s harder. Like it’s hard to find really big opportunities that are that can be 100 million in revenue or $1,000,000,000 in revenue. There’s not just thousands of things that can generate $1,000,000,000 of revenue. Mm hmm. And so do you have to create a new market, or do you have to be that disruptive in a market like that’s really hard and a totally different challenge than eating into an existing market. And so the nature of that is different and much harder. And of course, attacking it is a bigger trajectory. It’s not like one person goes off and works on something. This is now is there a whole team of people and what are they doing and how do you measure success early? And it’s actually really hard to do all that stuff. And yet those are the only things that are going to positively change the trajectory of the company. And so you have to tackle problems like that. So that’s that’s those are things I would lump in that third order of things.
Bronson: Yeah, that’s awesome. You know, again, it’s theoretical for a lot of us, but it may not be at some point. It’s good to have a touch point there. You know, one of the things I think about is you talk about these scaling problems. I think about Amy Hoy, and she had an app that she was trying to scale and ran to some serious problems with it. And people like Hacker News give her the hardest time because rookie engineers just think everything’s easy. And I looked in the comments of your of your blog post and somebody was in there saying, oh, you know, data redundancy, you know, fail saves backups. This stuff’s easy. Like that’s the problem is that until you’ve dealt with scale, you just think it’s easy when in fact WP Engine is dealing with things that possibly no other company in the world has ever dealt with. Now, because you guys are so awesome, but because that’s what business is like at scale, what do you have to say to the people that just think they know it all when it comes to scale when in fact they don’t?
Jason: Yeah, actually, what what’s maybe the very worst are the people that do know what they’re talking about at scale. And they have built those because a lot of times they’re right. It’s just maybe unconstructive the way they’re doing something about it. I think I actually you know, we actually great if you could come help but complaining on Hacker News is not really a great way to do that, right? Yeah, of course. It’s like anything. It’s like people who have never built the company, who don’t understand what it means to quit your job, what it means to watch your bank account go down, what it means to take this idea that, you know, you have you have no idea where they are or you just really want it to be really badly. I mean, of course, you can never have enough evidence that it will work. Of course you can. No one can, you know that. And yet you’ve told all your friends and family coworkers that this is what you’re doing and put that part that much of your life and reputation in. You can say that those words all you want, but someone who hasn’t done it doesn’t understand. And sure, that’s a lot worse than the scaling thing, but it’s the same kind of thing. We’re having kids and it will change your life, I can tell you that. But if you have any kids like you don’t really know what that means. Yeah. And until you have been in that place where everyone’s kids will know exactly what I mean when you’re sitting there with the baby and it’s dusk outside and you look out the window and think, I wonder, is this fence coming up or going down? If you if you had kids, you’re just like, yes. And if you haven’t like you can intellectually completely understand what I just said, but it’s not the same thing. So, look, having kids is a much bigger deal than starting a company, which is much bigger deal than than scale issues. But they were the same principle.
Bronson: That is the best analogy. I have newborn twins at home right now and a four year old, which means sometimes my workday starts at two or 3 a.m. now because that’s when I wanted to get out. That’s what I’m getting on. And my single friends or friends that are married without kids want to give me advice. I actually just don’t even hear them anymore. Care be helpful because they have no clue what they’re talking about.
Jason: That’s right.
Bronson: That’s great. I love that. Well, again, this has been an awesome interview and I do have two last questions for user. I’m actually really excited about this next one. I just got on reading a book about habits. And so I’m just thinking right now in my own life a lot about habits. And so I’m, I’m excited to get to kind of pose this question to you because you’ve grown multiple successful companies. What are the most important personal habits that you think have led to your success? What do you do on a daily, weekly, monthly, whatever that makes it a habit that you think really made a difference in your life?
Jason: I think there’s two ways of things. I mean, not a false dichotomy, but you can split it up into two if you want to. Sort of the principle that nobody has more than 24 hours in a day and everyone has to sleep. So how do you optimize the time you have? I think the good analogy I think of there is is there’s a fun math problem. So I’m traveling from here to let’s say I’m in Austin, so let’s say I’m traveling to San Antonio, which is 60 miles away. And I want to get there. I want to average 60 miles an hour. So I want my average velocity to be so I get started and there’s traffic. So I’m an hour in and I’ve only gone 30. Miles. In other words, I’m I’m half my current average is 30 miles an hour. Right. How fast do I have to go to make up for that so that my total trip does, in fact, average at 60?
Bronson: Mm hmm.
Jason: Just get 90.
Bronson: Is the answer, but it probably isn’t.
Jason: 90, 120, something like that. The answer is it’s you can go the speed of light and you will not get there in an average speed of 60 because you’ve already spent an hour to go half the trip and to. Oh yeah, you’re out at 76 there. They’re at 60. You have to have gone the whole 60 miles in one hour. So it’ll take a little bit longer and they’ll average more. And the takeaway from that, from a math example is that the math is that if you’re slow at some stuff, it literally does not matter how fast you hit other things. You’re slow and you actually can’t make up for it by being faster at other stuff. You actually have to tackle the things you’re slowest at. That’s where the winners and it’s just math. Yeah. So knowing that is sort of, you know, sort of a mental model, you start asking, what am I slow at and or what do I spend my time on? And you optimize for that direction of the stack. So for a lot of people, it’s email, of course. So you start asking, how do I do less email? How do I receive less email? How do we process it smarter? How do I unsubscribe from things or tell people to go away or change my email address? And then how do I start Inbox zero after that? Right. So emails just because that’s a lot of people’s answer, right? Or result, of course it’s looking at yourself. One trick to do this is you blog literally. If everything you do all day, including task switching in the computer, it’s extremely tedious and usually you can’t do it. For many is poor. You just go crazy and stop, but you don’t even have to do any metrics or math or anything. You just by having to write it down all the time, you’ll already just know what those things are. It’s because you’re sick of writing and you’re like, I got it, I got it. Like, you don’t even have to do analysis. So that’s again, a very super easy, no math, no anything. Just use a pad of paper, even way to find out what those things are and, you know, address them or eliminate them somehow. So that kind of mental model is one thing. And so and of course that implies things like good at, you know, zero and good to do processing with prioritization and all that kind of stuff. Right? It’s kind of obvious. So that’s one thing, the time optimization. The second thing is just sort of personal optimization. If you exercise regularly, you will be smarter and have better attention span and you’ll feel better and you’ll be able to work better than if you don’t. And if you get enough sleep, same thing. And if you meditate, same thing and if you eat right, same thing. And we all know that. We all know all those things. And of course, there’s studies about that. But who needs that? No kidding. Of course. Of course. So taking care of yourself in those ways literally makes you more productive. And there’s just really no argument to the to the other way. And I don’t mean one time you didn’t, you know, you had to go nuts for one week to get something. Of course, that right. And we’re talking about lifestyle, not temporary things. Of course, temporary things. So that kind of kind of correct or right lifestyle for using Buddhist terminology, right lifestyle, right view, right, stuff like that. It’s huge. It’s obvious. And people don’t do it because it’s hard, but it’s true.
Bronson: Yeah. And the things you rattled off, I mean, it kind of makes I mean, it’s almost like that is life, you know, it’s what you eat. It’s meditation clear in your mind. It’s how much, you know, sleep. It’s just I mean, there’s not a lot of other variables. There’s 5 to 10. And if you get those right, like it goes pretty well.
Jason: If you’re maximized wise, you’re just not. And you know, again, like we all know that I’m not saying anything we don’t know. Right, but but are you doing it?
Bronson: Yeah. Yeah. And we don’t do it because we’re too busy, but we actually have more time. If we did it because we’d be thinking smarter and working more efficiently and be more tuned in. So it’s like we have to make the time and bite the bullet on the front end to probably have a more optimized life overall.
Jason: You know, my wife also had her own business for almost a decade, and she had a great thing on this topic of, you know, I’m too busy to do it kind of a cycle, which is there’s always an infinite amount to do. Matter what, there’s always an infinite amount more. And they’re all good ideas. They all would be better. They make you more money or more whatever all of them are. This all with infinite number. So whether it’s through 12 or 11 of them today, it’s actually not as important as you feel. Now, if you’re just, you know, spending the rest of the time twiddling your thumbs, I guess then you’re done. Yeah. But if you’re spending it making those all of those working hours maximal, maximal because you’re taking care of yourself and being healthy, of course, that’s the right tradeoff and no getting one thing done, quote unquote, which, you know, done worse, done slower, done, you know, done in every way worse. Well, you probably burn out due to health issues. Clearly, that’s the wrong choice.
Bronson: Yeah, that’s a great way to put it in a number of things. You know, getting a few less done a day it better instead. So that’s the. Last question asked last time. I honestly don’t remember your answer, and you probably don’t either. But I want to ask it again, because people are always evolving and they have new things to share. So what’s the best advice you have for any startup that’s trying to grow?
Jason: I think last time I said raise your prices because that was one of the themes. So it’s probably still true, but let’s do a new one. I’m trying to grow. Well, so let’s assume early on. My best advice is to double down on what’s working instead of running off. Find the next thing that could also work. So in other words, a lot of people, they’ll get one channel working on SEO or blogging Twitter, Twitter ads, Google ads, Facebook ads. I don’t know. This is direct mail or whatever. They go to door and then then the mentality is great. I have that working. I’m going to continue to optimize it, continue to see what I can get out of it. But since I’ve got that down and that’s rolling, I’m going to now look for the second thing to add even more growth to the company. And eventually that’s a good idea. We just talked about that. Right. I feel like early on, though, people are too too quick to run away from that thing. And the way to think of it is if your immediate goal at any time is probably to double the company as quickly as you can. That’s a good way to think about your next ten bucks. Sure. But that’s that’s kind of hard to even think about what that’s going to be like because it’s so much bigger. Right. To X, though, you kind of still can see what it’s like and only a few things might break between now and then, especially early. Right. You can. That’s a reasonable goal all the time. So if you’ve just gotten a marketing campaign working, probably there’s two X left in it. So you’re easiest, quickest, highest are y, blah, blah, blah. Way to get to two x right now is to flog that campaign, to take what’s working and really make it work and get 2x3x out of it.
Jason: Now, at some point you can, you know, you really start maturing into that like, no, you keep squeezing this rock and the blood is coming up or you hire a firm to run that or you hire employer, you know, in other words, you actually put a lot of attention on it so that it really is going quote unquote, at the same time for real as starting to think, well, then now we’re talking, right? Like, of course, you get to the point and the reason quickly where you need to do another thing. But I think people run off to the next thing rather than realizing their easiest way to double. Right. The second is to double the double what’s already working. So again, the one sentence is double down on what’s already working.
Bronson: Yeah, no, I love that. I mean, you know, you think about it and it’s almost like I enjoy marketing. It’s fun to me. And so I can think it’s fun to try a new channel instead of let’s think business wise, not marketing wise. If this channel is working, let’s double down. And a quick thing, I think I’ve said this before, the people, but I’m really tall. I’m like six, four, six, five. So when I play basketball, if I missed mixed match and I got a short guy, I literally stand in the basket, they throw it to me and I make a layup and I’ll do it till the game’s over. Because that’s, that’s what doubling down means. Something’s working. You don’t stop. And people can say it’s unoriginal and inventive. Boring. I don’t care. I’m going to win the game. So.
Jason: That’s right. Well, you know, that’s right. And there’s there’s other ways, too, besides just the channel. Like, for example, who are you selling to? So sometimes, again, you get good at selling to SMB small business and then you decide, well, now that I have that under my belt, let’s attack Enterprise. And again, like S&P is really big. Probably don’t need to go attack Enterprise and take that on yet. I mean, even though that may be a fantastic idea and there’s.
Bronson: Probably two problems with it.
Jason: But if you ask how do we get to X or even ten X? Probably don’t need to go there. So, you know, getting that next small business account, using the case studies from your existing small business account and that reference of all stores that are like them and the marketing messages that, you know, we’re working and you know, you’re going to two events here, but you could go to five, right? In other words, because it’s working, you know, you can get more. So rather than giving yourself literally brand new challenges and not being able to reuse or depend on the things you’ve already earned, that’s just harder. And unless you tap that out or again, you have such an organization around it that is able to continue your improvement and growing it really autonomously. So that in fact the second organization is tackling something related or adjacent really doesn’t make sense. You know, until you’re there, it’s just you’re just not using the things you’ve literally already earned for yourself and just not taking the easiest after that to X. And even if you’re right, that that’s that is a place to go at some point, people tend to do that too quickly.
Bronson: Mm hmm. That’s great advice then, Don. Jason, thank you so much again for coming on growth narrative.
Jason: You bet. Thanks.
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