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0:33

Thursday morning, everybody. Welcome back to

0:35

the podcast. We are continuing on

0:38

our 2024 theme of

0:40

simple operational practices in

0:42

businesses. And to talk about

0:44

that topic, we got one of the best of

0:47

the best CEO of AppSumo, Noah Kagan. You

0:49

can check him out on YouTube as well. He's got over

0:51

a million subscribers and he is the author of the upcoming

0:54

book, Million Dollar

0:56

Weekend. This book comes out in

0:58

just a few days. You can go pre-order your copy online

1:01

right now. It's an incredible book. Actually, he

1:03

co-wrote it with Tal Raz, who

1:05

also wrote a couple books featured on

1:07

the show in the past, including Never

1:09

Split the Difference. So check out Million

1:11

Dollar Weekend. I actually sat in the

1:14

office with Noah this summer as he was working on it. There's

1:16

so many details in here, specifically if you're

1:18

starting a new product, if you're starting

1:21

a new business or a side

1:23

business, or you want to keep things

1:25

simple for your team, I think

1:27

Million Dollar Weekend, I mean, there's literally like

1:30

emails in here. It's broken down how to

1:32

launch a new product, how to get a

1:34

new idea. Super cool book. So

1:37

check it out. In today's conversation, we

1:39

spoke more about how to operate at scale, something

1:41

Noah does every day. We talked

1:44

about his 7% growth goal

1:46

this year and why he said it

1:48

there versus 20% and how that

1:50

can affect the whole team. We talk

1:52

about some specific processes around leadership. We

1:55

talk about how to manage team members. And

1:58

the cool thing is, is everything we talk about in this episode... none

2:00

of it costs money. These are all

2:02

simple tools, but I think the

2:04

art and the power is in how you

2:06

apply the concepts. So hopefully today's

2:09

conversation will inspire you to install one

2:11

new process in your business that

2:13

will make it just that much more

2:15

powerful this week and

2:19

we'll keep

2:22

that momentum

2:26

going through

2:29

2024. What

2:33

I'm curious about behind the scenes is I just want

2:35

to ask you some simple questions about how you

2:37

run AppSumo, please. And specifically

2:40

I'm thinking about like quarterly

2:42

and annual diagnostic questions in

2:44

different categories. And so the first question is this,

2:47

how do you guys set goals? Are

2:50

goals what you start with when

2:52

you think about thinking about a company?

2:55

I think goals can trip you up if you started too soon.

2:58

Like, hey, I want to make a million dollars this year. And

3:00

it's like, have you made any dollars? No. So you don't even

3:02

know how you're going to perform. So why

3:04

don't you get some base data before you make

3:06

that decision? Because maybe you should be at two million. Maybe you

3:08

should be at a half a million. With

3:10

AppSumo early on, I think you

3:12

really need to start with what's the core of the business and the core

3:14

of this is the problem, which is, can we promote

3:16

software deals for entrepreneurs? That's the

3:18

core. I would say what we did very early

3:21

on and we still do this day is like, what's the one goal this

3:23

year? That's never changed. So

3:25

early on the first year's goal is 100,000 email subscribers.

3:28

Because the idea there is like, what's the goal that leads

3:31

all other goals? So you can even argue today, if AppSumo

3:33

really only had one goal, it really

3:36

had to do one thing. It's like, how many deals a month

3:38

would we do? And then that subsequently

3:40

kind of can inspire like, all right, how much

3:42

revenue does a deal make? Well, that will be

3:44

our revenue goal. But really, it's just get 33

3:46

deals a month. And we'll have a

3:48

successful business. So is that how you

3:50

guys discuss goals in your annual meetings? We've

3:53

decided that our

3:55

main goal for the past, now

3:58

it's the second year, not we change. changed it is

4:01

net revenue. So we, five years

4:03

ago, started just doing gross sales as

4:05

the main goal. But the problem with gross sales is

4:08

it includes refunds. Yeah. It includes

4:10

credits. And then it's like you could actually have a really

4:12

high gross sales. So like last year, we had $80 million

4:15

in gross sales, net revenue was 53 million. Wow. 27 or

4:19

25 million in refunds and credits. Right?

4:22

Because we have a 60-day refund policy. So

4:24

it sounds cool, but reality, what's

4:26

real in terms of how the business is performing.

4:28

So two years ago, that's a decision you made.

4:31

Yeah. So two years ago, we shifted from gross

4:33

revenue to net revenue as like the number one

4:35

goal in the business. We don't really

4:37

have a three-year target. We have a three-year vision, but

4:39

we didn't set like in three years, we want to

4:41

be $100 million. Personally, that just doesn't motivate me. And

4:44

I think that's important to think about it. Like, are you excited

4:46

about your goal? Our goal issue is 56.6

4:49

million. Last year was 45. Am

4:51

I excited about it? Not really. It doesn't

4:53

really make a difference to me. I want to

4:56

set our goal. I don't do we need to surpass it? Not

4:58

necessarily. I'm more excited actually about how we're

5:00

operating the business. But I do find it

5:02

helpful direction to have one destination that we're all moving towards.

5:05

For me, it's like, are deals dope? Do

5:07

I like the products on AppSumo personally?

5:09

Am I excited about the original products like

5:11

Tiny Cal and that we're working on a DocuSign

5:13

alternative? So you can have one

5:15

price forever DocuSign product working on other

5:17

things that I'm just like, I just love what we're

5:20

doing. Yes, I like the base foundation to split a

5:22

goal. And then those goals then

5:24

have sub-goals. Right. Supporting goals. So

5:26

the way we've broken it down is

5:28

you have your main goal. And then

5:30

you have what are the core KPIs?

5:32

So there's core KPIs and then

5:35

there's secondary KPIs. And I think the

5:37

thing I would recommend for people out there is that don't worry about how

5:39

we do it. This is 14 years

5:41

in the making and in the next 14 years it might be

5:43

different. Right. But I think the core thing that I would recommend

5:45

is you have one goal. What are the highest level things that

5:47

really change that goal? So for instance, we

5:49

set a goal of 45 million last year and you can break

5:52

that goal into really three things. How much traffic do we get?

5:54

How many people buy? How much do they spend? Traffic

5:57

times conversion times average spend is our

5:59

revenue. So then, okay,

6:01

well, who owns each of those three things? And

6:04

then you make sure that there's three owners with clear goals. And

6:07

those people need to be the most talented people in your company.

6:09

I hope so. Like, God willing. You know,

6:13

like, here's what's interesting. So our goal last year was 45.

6:15

I think we ended at 53.3. And

6:19

so Sean, who runs our head of revenue, he

6:21

did modeling and was like, all right, well, based

6:23

on 45, we could do 10% growth,

6:26

give or take, and we'll end up at 55, 56. But

6:29

we ended at 53. So we go

6:32

to the board and I think everyone should have some form of a board, which

6:34

is more just like accountability and like strategic outsiderness.

6:39

And the board is like, all right, so you finish at 53 and you're going to try

6:41

to do 56. Like way

6:43

to be very unambitious. And that

6:45

was a moment where I had to really think about what kind of business do

6:47

I want to be a part? What kind of

6:49

business do I want to lead? And I've noticed

6:51

over the years and I've gotten more sustainable

6:53

and more about compounding wins

6:56

versus sprints. Like

6:58

this book is a sprint, even though I've worked in

7:00

it four years in the marketing, I've been doing for nine minutes.

7:03

This last month is a sprint, but I think

7:05

in business, how do you sprint and sustain a sprint

7:07

over a decade or two

7:09

decades? And so with AppSumo, even though the board was

7:11

like, you guys should try to get to 193 years.

7:14

I don't like that. It doesn't do s*** for me. Right?

7:16

I'm already making more than enough money. I'm really happy with

7:19

that. Team seems to be pretty really content with how we're operating. I

7:21

like the idea of like less aggressive goals, but then we

7:23

can kind of like keep improving it each year. And

7:26

so it gives us more creative freedom throughout the year. And

7:28

then I will say seeing the team each month be like, crush

7:30

up all this month, crush up all this month, crush up all this month.

7:33

It doesn't build full resilience. So if we have some

7:35

challenges, but it builds confidence and excitement to be a

7:37

part of a winning team. You mentioned that you're winning.

7:40

We're winning every day. Achievable

7:42

goals. I mean, you can set a winning

7:44

habit in a company by having goals be achievable.

7:47

And that doesn't mean you can't be

7:49

experimenting with upside opportunities. So while we

7:51

have achievable goals that are, I

7:53

think a 7% growth rate from actuals to

7:55

where we are this year, it creates space

7:58

where you still have to improve. things at

8:00

least 7%. It's like you

8:02

can improve your affiliates. We're doing video ambassadors, or we're

8:04

doing partner marketing, or we can improve our Google ads

8:06

a little bit better. But 7% is pretty doable.

8:08

What that means though, is that then we have space

8:10

to try on the side experiments

8:13

that could be a 10x, do something crazier. Yeah,

8:15

because we're not worrying about every day having to

8:17

do something crazy. Yeah. I love that.

8:19

So yeah, some of the 10x experiments are like, we

8:21

were going to buy a product competitor, but

8:24

they wanted like $2 million. We're like, we could literally build you

8:26

in a month. So we're building it in a month. And

8:29

then we're going to market it and see how that goes. But

8:31

the idea is like we want to keep promoting customer tools for

8:34

entrepreneurs. So that's a way to get

8:36

people at the top of the funnel. And then we had

8:38

an idea for how do we get more people affiliate market,

8:40

like empowering software creators, who is our customer and our hero,

8:43

to have their own marketing. So

8:45

either at the beginning, they want to do a deal, or

8:48

if they want to have their own marketing tools promote themselves.

8:51

I love this concept of the

8:54

goals being like less

8:56

anxiety inducing. Because I think

8:58

I came from a school was like, it's always better to have this

9:00

big thing. And then the problem is, is like, I

9:05

even saw between Ian and I would create anxiety, like

9:07

we couldn't answer how to solve the goal. So there'd

9:09

just be like this downstream of everybody being like, I

9:11

don't know, we're just going to do a bunch of

9:13

stuff. There's some greatest in that we're like, we got

9:15

to be creative, we've got to try something out. But

9:17

like, what I've noticed is to do that year, after

9:19

year, after you

9:21

is exhausting. And at a certain point,

9:23

if you're running the company as an executive, it's like,

9:26

you can't even define how to get there. Like you

9:28

just give very clear dials. Here's the

9:30

three dials, and then break those down per group.

9:32

Yeah, the engineering team has conversion rate, Nick and

9:34

me and the marketing team have traffic. And

9:37

then average order values kind of the BD team to

9:39

make sure that average order of the deals with the

9:41

way the price points doesn't go too low. But

9:44

it does create opportunity. People will say, how

9:47

do you have a goal and something new then? So for

9:50

instance, we're doing content. Even though I do

9:52

content, we're building out a content team. And so

9:54

the goal isn't you have to get so much traffic. The

9:56

goal is we want you to try, I think it's like

9:58

15 pieces of content. And based on who

10:01

the customer is and some other areas, they're deciding the goal,

10:03

which I actually think is a really interesting way to approach

10:05

we can talk about. Just go experiment with

10:07

a lot and at the end of the quarter, let's be clear on

10:09

how do you decide which one you want to go choose to do

10:11

for content. And I think

10:13

it's really nice when people can choose their own goal,

10:16

because then they get to choose their own motivation. No

10:18

one wants the best people to only be told what to do is

10:21

what I found and people want to have creativity. And

10:23

with the content, let's say what I think a lot of people do

10:25

is, all right, I want you to get 10,000 views this month. I

10:28

want you to get 15 followers. Okay,

10:30

but are you just getting actual followers or good followers? Yeah.

10:34

Right? Because then their incentive is just to

10:36

get clicks or views or followers or subs, but the

10:38

quality might not be there. And so instead of pressuring

10:40

it on the outcome of that, let's pressure on like,

10:42

let's create just a lot of experiments. And

10:44

at the end of the quarter, we could say based on the

10:46

quality of the different things, which of this content do we want

10:48

to now double down? I like that. So

10:51

you create like kind of a habit target for

10:53

the quarter and then you see what the outcomes are. Well,

10:56

I think for goals, by the way, for everyone, have a

10:58

yearly goal and then have monthly kind of you break it

11:00

down into, okay, if I need to have, let's

11:02

say it's 56.6 million, each

11:05

month, then you just have different numbers, right? So

11:07

this year, and we look at it every single

11:09

day, we have our own custom bot

11:11

on Slack called Daily Pulse. That's like, here's how

11:13

much money you need you to make today. You've

11:15

seen that, right? Yeah. Yeah.

11:18

So let me pull it up. Let's see it. I think

11:20

the big takeaway for people out there is that if you have

11:22

a goal, how often are you looking at it? And if

11:25

you're behind, how are you mindful of it? And if you're ahead, how are

11:27

you understanding and being like, okay, I don't need to be as anxious. So

11:30

Daily Pulse, we're behind. I

11:32

know there's a cool story about this. So

11:34

this month, we're supposed

11:37

to hit 4.1 million net revenue. We're at 1.7 and

11:39

it says red X. So

11:42

red X means we're not on track. Growth

11:45

profits on track, new buyers on track,

11:47

total buyers on track, AOV is off.

11:49

Our VIP customers called Plus members is

11:51

off. And what

11:53

I try to balance is not over correcting in the day. And

11:56

I think that's so easy in small businesses to like have a

11:58

pendulum to be like, okay, so we can hear it. I'm like, Sean,

12:00

do I need to be worried about this? He's like,

12:02

no, it's because we do things a day in the month. Okay,

12:04

cool. There's an owner that is looking at this and paying

12:07

attention to it all the time. Right. And

12:09

so it's just nice to be, for me, I'd check it, but really,

12:11

I'm like, well, I trust him. And that's what you'd have to do if you want

12:13

to get to a business to a larger size, have people that

12:15

own this stuff, and then you can trust them to execute towards. Do

12:18

you have a rhythm that officially you're being told

12:20

about these metrics? So the daily

12:22

pulse is every single day. So first thing in the

12:25

morning, this stuff gets updated with how the numbers are going.

12:27

And then there's a revenue sink every single Monday, three that

12:29

Sean facilitates. And it

12:31

has the BI team, the finance team, marketing

12:34

team, and BD team. And you all show up in live

12:36

for that? Yeah. So you show up live

12:38

and you're kind of breaking down like, Hey, what's coming

12:40

up? So like we have Sumo Day coming up, or we have a

12:42

last call coming up in traffic. Let's

12:45

say for traffic, there's like new traffic, brand new people, and there's returning

12:48

traffic. And so we separate those out to two different

12:50

groups. So one person's response for bringing new people in,

12:53

and then we separate those out to two different groups. So

12:55

one person's response for bringing new people in, one person's response

12:57

for bringing them back. So like, are they

12:59

on track? And even more or less, it's like red,

13:02

yellow, green. And so I

13:04

think what people need to ultimately get to is like, what

13:06

are the, coming back to the book, million

13:08

dollar weekend, what are the inputs that are you are

13:10

in control of? Well then lead

13:12

all the way back up to these things. Because if

13:15

I want to make revenue change, I can't, there's no revenue dial. I

13:18

can just go revenue dial. But what are

13:20

the inputs that lead then ultimately to these

13:22

three specific categories for us, traffic, conversion, AOV.

13:25

So for instance, in new traffic, it's really

13:27

new traffic is like ads can be

13:29

new traffic, affiliate can be new traffic.

13:32

Nick's got some other crazy ideas. And he has a new traffic sales goal.

13:35

So new sales. So

13:37

how he really wants to get it, he can do it. Right. And

13:40

if it's off, then it's like, I'm going to be a little bit more in it. But

13:42

otherwise, like, all right, however you think is best to go do that,

13:45

do it. What do you think

13:47

about then your personal inputs relative to the company? And

13:49

how might you take a look at

13:52

that on an annual basis or a quarterly basis for my

13:54

responsibility to the company? Yeah. So

13:56

the way I like to do it, and this is something that

13:58

you've inspired me and worked on. on it

14:00

for the past few years around scorecard. So the company

14:02

has a top three priority. And

14:04

then every single leader in each department has their

14:06

own top three outcomes that they're trying

14:09

to do in this specific time period. So

14:12

what is your scorecard cadence? Is it

14:14

90 days? We do

14:16

quarter, quarter, half year. And to be

14:18

clear, we're in year 15. Yeah.

14:21

Year one it was like, I don't know what's happening. Year two it's like,

14:23

I kinda know what's happening, we're improving. So what I encourage

14:25

everyone is just start. And then each year just make

14:27

it a little bit better. I think people try to

14:29

jump so far. Think there's one magic bullet. What's

14:31

the right way for your own business? I

14:33

feel like that's where a lot of our audience is at, Noah,

14:35

is figuring out which of

14:37

these tools to put in place. Yeah,

14:40

because we can help empower to get to

14:42

that next jump, you know? And

14:44

this is something that, I mean, there's still problems with it. And

14:47

maybe I can address some of that. So

14:49

the top three priorities of the company is

14:51

new revenue, which Nick owns, return

14:53

to revenue, which I own, because we haven't hired a VP of marketing

14:55

yet. And then plus members, which Katie owns.

14:59

And then Sean is doing the long bets,

15:01

so an experimental section. So

15:03

you have the scorecards of your team, executive team on your

15:05

phone right now, you're just pulling it right up. Yeah,

15:07

everyone in the company has this. There's no

15:09

hiding. I love that. Everyone

15:11

needs, and to be clear, you don't

15:13

wanna be at the end of a quarter, end of a period,

15:15

and both people are surprised at success. You

15:18

want both people to be like, here's what you said you do,

15:21

and they wanna know they're successful. Everyone wants to feel success. So

15:23

you need to both be very clear what it is for these

15:25

people. So yeah, everyone's

15:27

got their own scorecard. So there's

15:29

high level metrics. I'll read it, because I think it's

15:31

helpful for people. So high level metrics, Sean owns all

15:33

net revenue. Nick owns new buyer growth sales.

15:36

I own return buyer growth sales. Sean

15:38

owns net new plus customers, which

15:40

are our VIP customers. And

15:43

Sean owns the experimental metric. In

15:45

terms of supporting metrics, there's gross profit. Because again,

15:47

you don't just look at speed, right?

15:49

You have to look at multiple dials. So

15:51

supporting metrics, gross profit, your

15:53

margins, conversion rate, sessions,

15:56

average order value, your lifetime value to

15:59

your customer acquisition. of costs of your marketing

16:01

spend, net email signups, number

16:03

of return buyers, and number of new buyers. You

16:07

mentioned earlier this year that you thought the system

16:09

of a scorecard was powerful enough that there could

16:11

be a whole book about it, 100%. Why

16:15

do you think that? What

16:17

I've noticed is that people and yourself

16:19

want to be... You need to think more of what's

16:21

really the most important thing in the business. And

16:24

then how do you make it just black and white, what that destination

16:26

looks like for both people? I don't think people

16:28

are thinking enough what's really the priority, and I don't

16:30

think they're clear on when they're actually there or not. And

16:33

so the way that led to this one document, and I'll go

16:35

over more of our priorities, I thought,

16:37

hey, if I left from today

16:39

until the end of the quarter, would the business

16:41

be worse, the same or better? And

16:44

to me, having this very clear scorecards for

16:46

literally every single department, by the end of

16:48

the quarter, I'm like, I'm pretty sure I could leave. There's great people

16:50

at AppSumo, Chata, Alona, Kellen,

16:52

Anna, Lakin, Sean, Chad, Nick.

16:56

Everyone knows what they're supposed to do, and they

16:58

helped create it. So they first see the company

17:00

priority, so the AppSumo top three, as I said,

17:02

new return plus in the long bet. And

17:04

then knowing the top 30, then they help decide themselves.

17:07

And then as a group, we all look at

17:09

each other's priorities and then argue about them, challenge

17:12

each other, and then commit to them. So

17:14

one of the key things from Ricardo Semler, who I

17:16

love his leadership style is let people choose

17:18

their own destinations and make sure it's aligned to the thing

17:20

you're trying to do though. Yeah. So

17:23

don't just have them go totally rogue, but say, here's where I want to go. What

17:25

do you think the most important things are to get there? They

17:28

suggested, most of them are better than I would have thought

17:30

of. Let's go do those. And they're also excited because they

17:32

got to choose it. I'm curious

17:34

as to what does leadership mean to you? What

17:37

are some regular things

17:39

that you do that you believe are

17:42

the things of leadership? I thought

17:44

about it this morning. So it's cold in

17:46

Austin. And people's last

17:48

few years ago, there's freezing and there

17:50

was grocery stores were out of everything

17:52

and you couldn't drive your car. And

17:54

I thought about the team this morning, and

17:57

then I decided to just post on...

18:00

And our Slack group said, hey, if you need anything,

18:02

can you post it here, everyone? And if you need

18:04

support or if you're cold or if you need supplies,

18:06

let's help each other. And leadership

18:08

is either from the front or the back,

18:11

directing people in a certain direction and supporting them and

18:13

what they need. And so I, frankly, I

18:15

was proud of myself that I said, hey, I thought

18:17

about what's going on with our company in terms of

18:19

specifically the team in Austin. And I

18:21

took action to then make that happen.

18:24

And to me, I thought, wow, this is great leadership. And

18:27

that's kind of a small one. So I'm kind of small,

18:29

but I think that's representative of what I admire in leadership,

18:31

which is people taking initiative

18:33

necessarily almost without permission. That

18:36

makes sense. I was thinking about

18:38

leadership when you were talking about all the goal setting and like

18:41

getting alignment about how they're going to

18:43

contribute and thinking of ways

18:45

in which they can contribute to the goal. I mean,

18:48

yeah, give them the autonomy. I mean, how cool, like

18:50

the best you want to go be creative, just give

18:52

them the destination. I don't know who

18:54

said it, but I really liked the way they positioned it. Like

18:56

your job is not to necessarily lead, it's to be an advisor.

18:59

I was Joe Hudson. And I liked that

19:01

as a concept. Instead of me being like, you come to

19:03

me and I'm the superior and I know things. You

19:06

come to me and I'm your consultant. I'm your advisor. Let me see.

19:08

And I keep working on like, how do I just support you in

19:10

the things that you're trying to do? Instead

19:12

of being like, here, let me tell you what to go do. What

19:15

happens when you get frustrated with an

19:17

employee's performance? So

19:20

two days ago, I'm doing this book thing

19:22

and I have a guy, I'll just

19:24

call it Tommy. And

19:27

I sent him a task of

19:29

working on this article for Nier.

19:32

He wrote the first draft and I sent

19:34

him to do it again. I said, Nier didn't like it. And

19:37

I was like, can you redo it? Here's his feedback. I

19:40

gave it to him. He said, I'm at capacity. And

19:43

speaking of came to me, I was like, Nier, I'm at capacity. I'm

19:47

barely sleeping. I'm not doing a good job being present for my girlfriend

19:49

as much as I like and all these things.

19:52

And I'm really proud of myself in that. I didn't

19:54

write. And I would say even a few years ago, no, it would

19:56

have been like, you know, you're not at capacity.

19:59

Get to work. up, chewed them out. Yeah. No

20:01

one's excited to work in being criticized. And

20:04

I think one of the worst things you can do as a

20:06

leader, probably my biggest fear as a leader is demotivating someone. But

20:09

the opposite of that is the best thing you can do for a team is

20:12

motivating someone. And you motivate

20:14

through optimism. Really?

20:16

Because you built this incredible business

20:18

though. And for most of that time, you

20:20

would chew the guy out. I

20:22

think it's interesting that there's a fear element to

20:25

meeting a standard like this guy

20:27

has this incredibly high standard and I

20:31

could be in trouble. What

20:33

I've observed is over time, how many people like being

20:35

worried about their jobs? Yeah, they want

20:37

to feel secure. And I have recognized that

20:40

there's a lot of value and tenure. That's

20:42

something that's very undiscussed in companies, which

20:44

is like, people who really want

20:46

to be there and have invested, not that they're, they're

20:48

even complacent, they're just they're invested, they want to be

20:51

there and then they've stayed there a long time. I

20:53

think compounds value in them being there is what I've

20:55

observed, like with Nick being there five, six years, Sean's

20:58

been here six years, and they've

21:00

been able to grow. And I think they've had a lot like

21:02

the YouTube team on the other side, and we can talk about

21:04

the Tommy example, the video editor and

21:06

the producer quit, and the transition

21:09

cost to someone new and ramping up. It

21:11

was a really fast and reminder, like how expensive it

21:13

is to replace people that are wanting

21:15

to be a part of it. And like, I should just

21:17

pay these guys double or just whatever they would have needed

21:20

to really want to stay longer, probably been more mindful of

21:22

it. But I've got enough things going on that I

21:24

didn't prioritize that. That's really interesting. And

21:26

so with Tommy, and I'll tell you a tactic that

21:28

helped with it, I wrote this thing like, you're not

21:30

at capacity, I'm at capacity, choo,

21:33

choo, choo. And I didn't send it. That

21:36

was the power, the power was writing it, yeah,

21:38

deleting it. And then responding the next

21:40

day, the next day I responded, Tommy, tell

21:42

me all the things you got going on. And let's see where we can

21:45

prioritize my request, presented all the things going

21:47

on. And I was like, just do those things. And I'll

21:49

take care of this. He was right. No,

21:51

I could have re prioritized stuff. I'm just at a point where

21:53

I straight up, like I just like, just do those things. And

21:55

I'll take care of this. Yeah. Could

21:58

I have asked him That's

22:00

when I just need it done because I have two weeks for this book is

22:02

done. Now I think the powerful thing

22:04

that I've done is every week

22:06

I rate myself on my emotional consistency.

22:09

Wow. So I have a Google form. Everything

22:12

I do is like free. There's none of the stuff you need

22:14

to buy like some expensive software system.

22:17

So every single Friday, I get the slack

22:20

bot. And it says Friday weekly

22:22

review. And it's just automatic.

22:24

This is personal diagnostic. Yeah, it is just me.

22:26

You asked for diagnostic. Yeah, yeah. I

22:28

can give other ones that have worked. And so it

22:30

comes to me and it says fundamentally my question for

22:32

you is diagnostics. Yeah. Yeah. I'll

22:35

give you two other ones that are really good. So how was your

22:37

week? One through five? One

22:39

being sucked, five being fantastic. Any

22:42

comments about that? Number two,

22:44

were you consistent? One through five. And

22:46

that one is the one that has changed my behavior because I

22:49

just notice in meetings when I'm interacting with people,

22:52

if I'm super funny and we're joking, and then

22:54

the next day I'm ripping you off, you're pissed.

22:56

Yeah. How do you behave? How do you show

22:58

up when you're not sure what you're going to get? And

23:00

part of going to a restaurant is you want consistency for working at

23:03

a company. That seems like leadership to

23:05

me is consistency. I mean, is

23:07

what I've learned is I've gotten older. And so I want

23:09

it. It's not that I don't want to be emotional. The

23:11

emotion doesn't go away. What's so fascinating

23:13

to me because there's so many things in business that

23:15

piss you off. And being pissed

23:17

off is great. Yeah. Let that motivate you.

23:20

But I would say don't let that make you

23:22

reactive instead of being responsive. Yeah.

23:25

The reactive is, Tommy, you suck. Why

23:28

aren't you working harder? Just do this thing. Yeah.

23:31

You think that's going to get him to want to stick around? Yeah.

23:34

I would say what have been optimal is that, Tommy, let's not do

23:36

this one. I want you to take this one instead and

23:38

reprioritize that. And so the

23:41

third question is what are the three things I'm

23:43

doing next week? And I do this every single Friday.

23:46

I'm curious, are there more things like

23:48

this and scorecards that you do regularly?

23:50

Yeah. Other ones that I like doing, I do a

23:53

monthly review of my life. I've done it

23:55

for about 10 years. So wow. Yeah.

23:58

Every month I do like a. four of

24:00

my month. So the first thing I do is I pull

24:02

up my photos and I look through everything that happened

24:04

in the month. And you're always kind of like, holy

24:06

s***, I can't believe how much I did this month. But

24:09

it's a cool way to kind of see what happened in the month and then I rate my

24:11

month one through 10. And it's also you

24:13

kind of see how your mental stability is going. It was

24:15

like a few years ago, it's like 10 and then it

24:17

was like five. It was like all over the

24:19

place. But it was nice to be

24:21

able to rate that. And some of them like this month review

24:24

because I know it's coming. I'm like,

24:26

how do you want your month to be? It's not really trending well. Like

24:28

what do you want to do about it? Or

24:30

I'm going to rate myself. So do I want to rip

24:32

on Tommy or try to get a good score? Do

24:34

both. The thing

24:37

is that then I

24:39

do past, present and future. So I

24:41

take the future of the previous month, which

24:43

is always bullet points put at the top. And I say if I

24:45

did all the things I said I would do or not. And

24:48

it's just for myself. It's not like again, none of this is

24:50

there's no pass fail. Right. And

24:52

this is something that I like doing. Like I miss it when I don't

24:54

do it. Then the present is everything from

24:56

the photos and things that happened about how I felt,

24:59

what went down and then features what's coming up. So

25:02

I do that every single month. I email it to my girlfriend, my

25:04

brother, and then a few other friends. This

25:07

is for me. I don't need it for anyone else, but

25:09

I do think it's vulnerable and nice to share with people in my circle.

25:12

I do that. We do two other ones in the

25:14

business. One, we do a monthly leadership

25:16

survey. So this is how I get better

25:18

as a leader. Besides having coaches, I use reboot.io. I

25:21

send to the leadership team a survey that's, do you believe

25:23

in the direction of the company one through five? Do

25:26

you trust the rest of the leadership team one

25:28

through five? And do you feel free

25:30

to speak your mind? Is it anonymous? It's

25:33

anonymous. Oh, wow. They think it's anonymous. Is

25:38

it useful? Super useful. But the key part

25:41

about it is that I encourage them, it's

25:43

not here to complain. It's here for you to provide a

25:45

solution. Yeah. And that's also a good

25:47

mentality because I want them solving problems. Don't bring me your

25:49

problem. Bring me the option. And so

25:51

when they're saying, hey, I don't believe in the direction, okay, well,

25:53

what about it? Don't you believe? And then

25:55

each month I then show the results and

25:58

the graphs of how it's been. one or two

26:00

items that I'm going to do based on that.

26:03

Now it's every two months because every month is becoming too

26:05

frequent and the scores aren't changing that much. But in the

26:07

beginning when I came back three years ago, it was like,

26:09

no, it sucks. No, it doesn't get buy-in from us. No,

26:11

it doesn't listen to us. What have you changed about your

26:14

behavior? I try not to speak

26:16

right away. I noticed I do that

26:18

in the company where I try to give the idea or

26:20

try to respond to it right away. I'm trying to

26:22

pause for a second. I think pausing is one

26:24

of the probably best things of last year in

26:26

business. I try to get

26:28

more buy-in. I think there's a lot of times

26:31

that especially if you're the founder, you're like, well, I did this. I

26:33

know it's right. And then just telling some

26:35

other people to do it doesn't really get them excited to be a part of

26:37

it. So how do you include them or

26:39

even your customers in that process? So now when we

26:41

do planning annually, it's like we

26:43

survey the entire company about the future of the business. You

26:45

can do here's a simple framework, start, stop, keep. It's an

26:47

easy one. What should we start, what should we stop, what

26:49

should we keep and survey your whole team? And

26:52

then you show them like, hey, thank you. Here's how we're doing what

26:54

you said. And then including the leadership team. So

26:56

I'd say total buy-in. That's a nugget. I like

26:58

that one. You know, what I stole from

27:00

you is the monthly business review. Oh,

27:03

the MBRs. Yeah, we do them now.

27:05

Do you? Yeah. Those are great. On

27:07

the fourth day after the month closes,

27:10

we sit down with a finance person and examine

27:12

whether we're tracking the right financial metrics

27:15

in the business and whether we feel

27:17

they're empowering, things are healthy, unhealthy.

27:19

Yeah. What did you guys notice by reviewing this

27:21

stuff? One of the

27:23

really powerful things that came away is like,

27:25

well, we need to do a break-even analysis

27:27

on events. Because we found like a financial

27:30

metric that we wanted to jump into was

27:32

events in our business because they're a huge

27:34

cost. So setting these targets

27:36

months in advance for the team has been

27:38

incredibly empowering for them. And

27:40

what it's allowed for us, we have a small

27:42

businesses. We never really, people, I think

27:45

there's, when you talk about things

27:47

like goals, leadership, they're so big, it's

27:50

easy to just have an assumption in your mind about what

27:52

it is. So here's a word that we

27:54

didn't take seriously in our business's budget. That's

27:57

a big word. You can really dig into

27:59

the beat. and figure out it can mean a

28:01

lot of different things because we didn't

28:03

have financial planning. It was actually

28:05

impossible to have a budget. Budget

28:08

in our company meant everyone's opinion

28:10

right now about a topic

28:12

generally about money. That

28:14

was what budget meant in our company and now

28:16

we have a budget. Good for you. Like a

28:18

technical budget. I'm trying to imagine the listener

28:20

depending on where they're at because I think a lot of

28:23

your listeners are like six, seven figures, some eight. And

28:25

then I'm trying to think what's the core operate. I know

28:27

there's like EOS and we've tried some of the other ones

28:29

and we kind of have the AppSumo way I would say.

28:31

Yeah. So I'm trying to think like what are the core,

28:34

like in life when in America you have the core four,

28:36

which is like your will, your trust and a few

28:38

other documents. What happens if you are

28:40

sick and who makes the decision? There's like four documents.

28:42

Yeah. So I was trying to think

28:45

in business what are your core things you need to

28:47

operate? Yeah. Well, can you think of any? Yeah,

28:49

I was trying to take a step back. So I think like one

28:52

having a budget is a great one.

28:54

Yeah. I'd say a model. What

28:56

is a model? So your

28:59

budget is like, we're going to make 5 million from

29:01

here. Team cost is here.

29:03

Health insurance cost is this. 401k cost is

29:05

that. Our net operating income

29:07

target is 11.5%. Okay. Did

29:09

we hit our budget or no? Okay. We did. What do we need

29:11

to change? So that's a budget. Our

29:14

model though is if we want to hit this revenue

29:16

target, what are the inputs? So how

29:18

many deals we do? How many people get back?

29:20

How our revenue can go day by day

29:23

or month by month to

29:25

see if it actually gets us to the 45 million that we

29:27

need for the budget. So I would say

29:29

you definitely need a model in a budget. And to be clear,

29:32

there's baby steps. I feel

29:34

like the early stage model is not good math.

29:37

Yeah. It's like we need to sell 45 widgets

29:39

to get to our revenue. Yeah. I

29:42

would say other core documents, I

29:44

would say are your culture. But

29:47

the way you can do your culture is actually

29:49

reverse them. People teach you. Do your culture like

29:51

after a year of running your business. Yeah. And

29:53

notice the behavior that's just been natural in your

29:55

business. Everyone will be different about how their business

29:57

operates. Because I created the culture deck when I came back. Like

30:00

here's how we operate and then

30:02

people didn't want to do any of it. But

30:05

then I just noticed their behavior. What's the point of even writing

30:07

it down then? What, how does the

30:09

business operate when I'm not around? And

30:11

so there's two types of operating manuals. There's your

30:13

cultural manual, which is behavior. And then

30:15

there's your operating principles of the business.

30:17

So one is in AppSumo,

30:20

we hire adults. That's a huge thing.

30:23

So what does that mean? Don't come and talk

30:25

behind people's back. In the past, we used

30:27

to have a lot of talking. Like, no,

30:29

we hire adults. Don't come and complain.

30:32

We hire adults. If you have a problem, you can

30:34

fix it. Test and invest. Huge one

30:36

of our cultural values. Like don't go and do

30:38

crazy s*** without testing first. So

30:40

those are behavioral values. Double down. I

30:42

mean, just things that, ways that people operate and how

30:44

you know culture matters or it's working really, is that

30:46

you hear people saying it. Yeah. More as

30:48

well, you'd like to see them do it, but you're like in a meeting

30:51

and someone's like, Hey, do you test and invest that? Okay.

30:53

That's a good one. The other ones we delete. Operating

30:55

principles are, what's our net operating income? And

30:57

it has to be at least 10%. Yeah.

31:00

If we're going to do a test, how long does the

31:02

test go? How much do you spend on a test?

31:05

And then what are the principles that you can have? So again,

31:07

if I'm gone, people know how to behave like the Netflix culture

31:10

deck, which is pretty famous kind of mirroring

31:12

was where the inspired R2 documents. That's cool. So

31:14

yeah, I call them tenants. So I think some

31:16

people call them tenants. Like these are the sort

31:19

of tenants that we try to achieve

31:21

our goals vis-a-vis the tenants like of that.

31:23

Yeah, that's cool. By the

31:25

way, there needs to be a book called

31:27

the app Sumo way, because I do think

31:29

that you guys or, or a blog

31:32

post, something we can get out into the world

31:34

because how you guys

31:37

have organically come to a way to operate, there's

31:39

a bunch of different

31:42

executive minds and coaches and your board

31:44

and partners. I think it's

31:46

really impressive. And I've been inspired by

31:48

it to come up with our own home brew. I

31:50

just think the way you talk about it too,

31:53

just improve a little bit every quarter. Just

31:56

add one little thing. I think a lot

31:58

of founders are convinced of their inadequacy. in

32:00

this department. But like I think the way you

32:02

present it is like it's always going to be a challenge is always

32:04

going to be improved. Yeah, it's not gonna be great. Yeah, you just

32:06

keep getting a little better. I mean, easiest thing you

32:08

can do in your business is every quarter just ask people for

32:10

the things you feel like about it and three things to improve

32:13

called T3 B3. This is we learned from Uber.

32:16

And we used to have like lattice, which we pay like

32:18

20k, you can just do a Google former like literally just

32:20

do it on your notes. So

32:22

I meet with the team a lot of time, not

32:24

almost every time I have their notes. So I have

32:26

their name on my Apple notes. To be clear, you're

32:28

talking about surveying your team. Yeah, I asked them what

32:30

they like about me what they want to improve. Yeah,

32:32

I don't need to make it fancy. And a lot

32:34

of times like the last quarter is really

32:37

big on like you need to have more long term vision, you

32:39

have more autonomy and trust.

32:42

And then you know, do more things. So

32:44

like, okay, also more time on that. What's

32:46

funny is we few years ago, when I came back, three

32:48

years ago to be CEO, and I met this

32:50

guy from square and I met up I looked up all these

32:52

people to do strategic planning. There's different the last

32:54

unit hired a bunch of them. No one's

32:56

is better than yours. It's what I realized. And

32:58

what I mean by that is just start your

33:00

system. And then just be okay that like

33:02

no one else is really better but just stick with it and

33:05

keep getting it a little bit better. And each quarter, for

33:07

instance, we do project planning for

33:09

the development team for all the engineers

33:12

and designers. And it's just like it's never perfect.

33:14

And it's always like, okay, well, what do we learn from

33:16

this time? You know, an extra look better and then try

33:18

to document that. If you always

33:21

say SOP

33:23

is like the unicorn of the business

33:25

world. I don't think anybody

33:27

ever has used one. No, people always say

33:29

it. I'm like tell me what your SOP

33:32

is. Who is he? But what has to

33:34

be actually is is that with

33:36

our engineering thing we have, they have a conversion

33:38

rate as their main thing, let's say.

33:41

Now what are all the products are going to do? And

33:43

how do they then present them to us? And

33:45

then how do we decide it in each I will tell

33:48

you we do it every quarter, quarter half year. Every

33:50

time we're like that was a problem with it. Okay,

33:53

let's write that down. Now each quarter, it's getting a

33:55

little better, but it's still messy. And I think that's

33:57

important for people to recognize. Yeah. And.

34:01

I'll. Bring my goodness and mercy of our system. I

34:04

don't think we have a pretty organization of all of it, but

34:06

I do think maybe in the future. I've. Thought

34:08

about sharing more of it as a way of

34:10

does even bring attention that of since I like

34:12

that and that's for everyone like. Some. The

34:14

most popular restaurants share their cookbooks.

34:17

Yeah. I was. I love that concept. Words like

34:19

to share what you're doing more and you'll be surprised at

34:21

how people get excited to see that. Yeah, I'm.

34:23

Very interested in that project because essentially that's

34:26

what I've been working on. Saw us continue

34:28

the conversation. No

34:31

gain. Congratulations on a new book and thanks for trying

34:33

some of her guests. With

34:41

new the Tropical can be a podcasting

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