As regular listeners know, we typically cover some of the biggest companies who often receive the most media attention (see Airbnb and DoorDash). But today's episode is a little different. In our conversation with Courtland Allen of Indie Hackers, the largest community of startup founders, we dive into the stories of underdogs. What happens when there are millions of people doing small business entrepreneurship? How does anyone having access to the globally addressable market of 3 billion internet users open the door for the niche-est of products? We tell the story of Courtland’s own “Indie Hacker” journey, how he came to found Indie Hackers itself, and the lessons learned along the way.
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1. As long as you don't quit your journey, you're still in the act of succeeding.
2. The journey is as important as the destination.
3. Stories are always paramount.
4. Don't try to create budgets — sell to people that already have them.
5. Utilizing platforms, like everything in business, has tradeoffs.
6. Trust and mission alignment are critical in acquisitions.
7. Acquisitions can enable established brands to take bigger risks.
8. There is an infinite number of "indie hacker" opportunities.
We finally did it. After five years and over 100 episodes, we decided to formalize the answer to Acquired’s most frequently asked question: “what are the best acquisitions of all time?” Here it is: The Acquired Top Ten. You can listen to the full episode (above, which includes honorable mentions), or read our quick blog post below.
Note: we ranked the list by our estimate of absolute dollar return to the acquirer. We could have used ROI multiple or annualized return, but we decided the ultimate yardstick of success should be the absolute dollar amount added to the parent company’s enterprise value. Afterall, you can’t eat IRR! For more on our methodology, please see the notes at the end of this post. And for all our trademark Acquired editorial and discussion tune in to the full episode above!
Purchase Price: $4.2 billion, 2009
Estimated Current Contribution to Market Cap: $20.5 billion
Absolute Dollar Return: $16.3 billion
Back in 2009, Marvel Studios was recently formed, most of its movie rights were leased out, and the prevailing wisdom was that Marvel was just some old comic book IP company that only nerds cared about. Since then, Marvel Cinematic Universe films have grossed $22.5b in total box office receipts (including the single biggest movie of all-time), for an average of $2.2b annually. Disney earns about two dollars in parks and merchandise revenue for every one dollar earned from films (discussed on our Disney, Plus episode). Therefore we estimate Marvel generates about $6.75b in annual revenue for Disney, or nearly 10% of all the company’s revenue. Not bad for a set of nerdy comic book franchises…
Total Purchase Price: $70 million (estimated), 2004
Estimated Current Contribution to Market Cap: $16.9 billion
Absolute Dollar Return: $16.8 billion
Morgan Stanley estimated that Google Maps generated $2.95b in revenue in 2019. Although that’s small compared to Google’s overall revenue of $160b+, it still accounts for over $16b in market cap by our calculations. Ironically the majority of Maps’ usage (and presumably revenue) comes from mobile, which grew out of by far the smallest of the 3 acquisitions, ZipDash. Tiny yet mighty!
Total Purchase Price: $188 million (by ABC), 1984
Estimated Current Contribution to Market Cap: $31.2 billion
Absolute Dollar Return: $31.0 billion
ABC’s 1984 acquisition of ESPN is heavyweight champion and still undisputed G.O.A.T. of media acquisitions.With an estimated $10.3B in 2018 revenue, ESPN’s value has compounded annually within ABC/Disney at >15% for an astounding THIRTY-FIVE YEARS. Single-handedly responsible for one of the greatest business model innovations in history with the advent of cable carriage fees, ESPN proves Albert Einstein’s famous statement that “Compound interest is the eighth wonder of the world.”
Total Purchase Price: $1.5 billion, 2002
Value Realized at Spinoff: $47.1 billion
Absolute Dollar Return: $45.6 billion
Who would have thought facilitating payments for Beanie Baby trades could be so lucrative? The only acquisition on our list whose value we can precisely measure, eBay spun off PayPal into a stand-alone public company in July 2015. Its value at the time? A cool 31x what eBay paid in 2002.
Total Purchase Price: $135 million, 2005
Estimated Current Contribution to Market Cap: $49.9 billion
Absolute Dollar Return: $49.8 billion
Remember the Priceline Negotiator? Boy did he get himself a screaming deal on this one. This purchase might have ranked even higher if Booking Holdings’ stock (Priceline even renamed the whole company after this acquisition!) weren’t down ~20% due to COVID-19 fears when we did the analysis. We also took a conservative approach, using only the (massive) $10.8b in annual revenue from the company’s “Agency Revenues” segment as Booking.com’s contribution — there is likely more revenue in other segments that’s also attributable to Booking.com, though we can’t be sure how much.
Total Purchase Price: $429 million, 1997
Estimated Current Contribution to Market Cap: $63.0 billion
Absolute Dollar Return: $62.6 billion
How do you put a value on Steve Jobs? Turns out we didn’t have to! NeXTSTEP, NeXT’s operating system, underpins all of Apple’s modern operating systems today: MacOS, iOS, WatchOS, and beyond. Literally every dollar of Apple’s $260b in annual revenue comes from NeXT roots, and from Steve wiping the product slate clean upon his return. With the acquisition being necessary but not sufficient to create Apple’s $1.4 trillion market cap today, we conservatively attributed 5% of Apple to this purchase.
Total Purchase Price: $50 million, 2005
Estimated Current Contribution to Market Cap: $72 billion
Absolute Dollar Return: $72 billion
Speaking of operating system acquisitions, NeXT was great, but on a pure value basis Android beats it. We took Google Play Store revenues (where Google’s 30% cut is worth about $7.7b) and added the dollar amount we estimate Google saves in Traffic Acquisition Costs by owning default search on Android ($4.8b), to reach an estimated annual revenue contribution to Google of $12.5b from the diminutive robot OS. Android also takes the award for largest ROI multiple: >1400x. Yep, you can’t eat IRR, but that’s a figure VCs only dream of.
Total Purchase Price: $1.65 billion, 2006
Estimated Current Contribution to Market Cap: $86.2 billion
Absolute Dollar Return: $84.5 billion
We admit it, we screwed up on our first episode covering YouTube: there’s no way this deal was a “C”. With Google recently reporting YouTube revenues for the first time ($15b — almost 10% of Google’s revenue!), it’s clear this acquisition was a juggernaut. It’s past-time for an Acquired revisit.
That said, while YouTube as the world’s second-highest-traffic search engine (second-only to their parent company!) grosses $15b, much of that revenue (over 50%?) gets paid out to creators, and YouTube’s hosting and bandwidth costs are significant. But we’ll leave the debate over the division’s profitability to the podcast.
Total Purchase Price: $3.1 billion, 2007
Estimated Current Contribution to Market Cap: $126.4 billion
Absolute Dollar Return: $123.3 billion
A dark horse rides into second place! The only acquisition on this list not-yet covered on Acquired (to be remedied very soon), this deal was far, far more important than most people realize. Effectively extending Google’s advertising reach from just its own properties to the entire internet, DoubleClick and its associated products generated over $20b in revenue within Google last year. Given what we now know about the nature of competition in internet advertising services, it’s unlikely governments and antitrust authorities would allow another deal like this again, much like #1 on our list...
Purchase Price: $1 billion, 2012
Estimated Current Contribution to Market Cap: $153 billion
Absolute Dollar Return: $152 billion
When it comes to G.O.A.T. status, if ESPN is M&A’s Lebron, Insta is its MJ. No offense to ESPN/Lebron, but we’ll probably never see another acquisition that’s so unquestionably dominant across every dimension of the M&A game as Facebook’s 2012 purchase of Instagram. Reported by Bloomberg to be doing $20B of revenue annually now within Facebook (up from ~$0 just eight years ago), Instagram takes the Acquired crown by a mile. And unlike YouTube, Facebook keeps nearly all of that $20b for itself! At risk of stretching the MJ analogy too far, given the circumstances at the time of the deal — Facebook’s “missing” of mobile and existential questions surrounding its ill-fated IPO — buying Instagram was Facebook’s equivalent of Jordan’s Game 6. Whether this deal was ultimately good or bad for the world at-large is another question, but there’s no doubt Instagram goes down in history as the greatest acquisition of all-time.
Methodology and Notes:
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Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)
Ben: Courtland Allen, welcome to Acquired.
Courtland: Ben, David, thanks for having me.
David: It’s so great to have you here.
Ben: Our pleasure. For anyone who has not listened to your voice for the many hours that I have on the Indie Hackers Podcast, obviously we're going to reference it lots and lots throughout the show, but go check it out. We’re very excited to be doing a crossover episode with you.
Courtland: I'm excited to do this. People have been asking for a while for me to do an episode on myself because obviously Indie Hackers is kind of an interview show. I just tell other people's stories. I've always been, as weird as it sounds, shy to do an episode of my own podcast. Congratulations on being the first people to convince me.
Ben: Well look, we are the Acquired Podcast and you did that megadeal exit to Stripe, so how could we not cover the acquisition of the century?
David: This is great. It's got all the hallmarks of it.
Ben: David, who is Courtland for listeners who don't listen to Indie Hackers or haven't participated in the community?
David: Courtland is a former YC founder, MIT alum, and founder of a company that has been acquired by Stripe. All of which seems like it would fit very much into the Acquired theme, but there's a twist which is unlike the big go-for-broke, we were jabbing before we hit record here about the typical startup path to we cover all the time on the show is trying to build the new version of the standard oil out there except 10, 100, 1000 times bigger is that in the Rockefellers in the Carnegies could ever imagined. Courtland is all about a different philosophy out there. The Indie philosophy, of course the company that he started and what he runs within Stripe and the website, and the community, and the podcast is Indie Hackers.
Indie Hackers, I think, is really cool. We're going to get into it in this episode. It's like if big tech and startups are the Rockefellers, this is the small business entrepreneurship of the 21st century and I think it's really cool.
Courtland: Are you saying Indie Hackers is not a big splashy, go-for-broke story, David?
David: I don't know. You're going to tell us.
Courtland: No, it’s really not. I like to think of this as the underdogs. The internet has been around for decades and I think the world is still kind of slowly waking up to how much it's changed the game for just regular people. Everybody's connected to everybody. You can reach literally millions of people, if you're clever enough, for pretty much $0. People are creating these very tiny niche businesses that could never have existed 20 or 30 years ago, in some cases, not even 5 or 10 years ago. I think it's becoming possible to sit down in your living room, wearing your underwear or whatever you're wearing, and just create something that's super valuable to your community and your customers that's really fun, fulfilling, and challenging for you to work on as a person, and that makes you rich in the process.
I think that's pretty crazy, to check all three of those boxes. Thousands of people are doing this today. The question that I'm asking myself constantly is what happens when millions of people are doing this 5 or 10 years from now?
David: I think that's what's so cool is small business entrepreneurship in the past was a great way to build wealth and do well for your family and for yourself, but with the same or honestly less amount of effort now on the internet this path exists. The wealth you can build even by taking this path is still so much bigger than you could building a dry cleaning business in the past, or running a restaurant.
Courtland: A lot bigger.
David: A lot bigger.
Ben: Not to foreshadow our playbook too much but it does remind me that in a pre-internet era the local small business owner was geographically constrained. You could have a general store that sold everything but it can only sell everything to the people in your town. Obviously, the large scale version of that is Walmart, but that is a very different type of business to run. With the internet, you can just do one thing in one niche but you have a national, if not globally addressable, markets. Courtland, from listening to your show, every time I listen to an episode, I get smacked in the face with wait, that niche is that big?
People find these crazy opportunities. I just listened to the Patio11 episode and he was talking about bingo card creators. A bingo card creator could be a business? These niches are so deep, or so wide, or however you want to describe them. If your TAM is the 3 billion people with the internet, then every niche within that TAM can be on its own big.
David: Starlink's coming soon. It’s going to be $7 billion.
Courtland: Exactly, if you have a business that only appeals to one-in-a-thousand or one-in-a-million people, you need to live in a very big city to create a brick and mortar business that's going to survive. On the internet, that turns out to be millions of people who can use your underwater bingo card creation, whatever it is that you're going to make. Pretty much everybody can figure out something really specific that no one else is doing and stake their claim on the internet, which I think is super cool.
David: I hear the real estate is cheap too. Let's get into your story. Let's start way back, before MIT, your family and your mom specifically was an entrepreneur when you were growing up, right?
Courtland: I was just talking to Jason Calacanis about this on his podcast. We were just talking about opportunity. Can anybody start a company? Does everybody have an equal chance to do this? I think, in a way, nobody's quite equal. Everybody's got a different starting line. When I look back at my childhood, I had a very good starting line. I had two loving parents. They're very attentive, they're very devoted. We were femiddle class, we’re very comfortable. Like you mentioned my mom was an entrepreneur. She was always doing her own crazy hijinks startup selling computers and stuff in the 90s.
My dad was part of this elite team of furniture makers. There's like nine of them. They each had a different role, they would make crazy furniture for celebrities. He wasn’t making a ton of money, but he's doing something that he found really fun. He was the furniture finisher. He’d take an ugly piece of wood and make it look amazing. I grew up with these two people in my life that showed me that you can do pretty much whatever you want and scratch out a living.
David: Yeah. You can do this and it'll be fine. You can have a good life, right?
Courtland: Yeah, exactly. You can have a good life. We were eating, we weren’t missing meals. Had a bunch of other advantages, too. I was an American, I was born in the late 20th century. Because of my mom's computer business that she ran for a year or two before it crashed, we had a computer and the internet when I was in the third grade, right after the web came out. Of course, I was addicted to video games and whatever I could play. From the adult's perspective around me, they're like, this is a computer whiz. Whenever I've got a computer issue, Courtland spends so much time on this computer. He can just swoop in and fix it.
I was doing all this IT work on the side and of course nobody ever paid me. I made $0 as a nine-year-old fixing people’s computers but I got a lot of positive encouragement. From my perspective, I was just playing games and fixing bugs and stuff, but from the average adult perspective in the mid-90s, they're looking at the tech boom. They're looking at Microsoft's stock price and the fact that Bill Gates is mega rich. They sort of paid me in encouragement. They're like, you're going to be like the next Bill Gates. Keep it up.
What was cool about that was I got to be a little computer nerd and also see that this really old computer nerd was universally respected by every single person that I ever met. Everybody told me that it would be a cool thing to aspire to kind of be that. By the time I was 10 or 11, I was like, I want to be Bill Gates. I want to start my own company. I want to go to college. How do I get on that path?
David: In some ways it's like echoes of the Tim Sweeney story and Epic Games. Tim started out first with his older brother, right Ben, that had a computer hardware business. He went out to visit his brother, got hooked up with computers, got obsessed and started an IT consulting business after the lawn mowing business.
Ben: Nolan Bushnell too. I remember when we asked Nolan about starting Atari, he was fixing TVs. Not at all to put myself in the same category, I was fixing teachers computers in middle school. I think I was making $7 an hour, Courtland, I'm so sorry, I was dwarfing you there but that's so many people's entrée. Before they actually get into programming, it basically is just fixing stuff.
Courtland: Yeah. I think it's important. I've taught people how to code in subsequent years. It's just kind of the base layer that gets ignored just computer literacy. Where the people who learn the fastest are people who are just very comfortable if their computer crashes or has an error, they know all keyboard shortcuts, they're good at Googling stuff. If you have that kind of base layer of skills, it makes everything else much easier.
Ben: You're 11 or 12, at that point you know that you want to go into the technical field, or programming, or computer science. Did that ever deviate or was that pretty much like laser focus from that point forward.
Courtland: I had this real embarrassing phase where I was trying to choose between—do I want to be Bill Gates or do I want to be Kenny G? I had a saxophone. I was playing a lot of just corny contemporary jazz music. Luckily the computer stuff won out at some point. After that, I didn't deviate. That was 100% what I wanted to do. I had a ton of fun just doing stuff in the 90s on my computer, a lot of support around me.
In one way, I think I had the world heavyweight champion of childhood scene. It was really good, really advantageous. I also had some hardships. My dad died when I was pretty young. I was in high school. For me that was a huge wakeup call, sometimes things get real. No one’s going to swoop in to save you. You have to learn how to survive and make it through tough things on your own. I got almost kind of the perfect mix of hardship, encouragement, and privilege in a way. By the time I left to go to college, I felt pretty ready to take whatever the world's going to throw at me and also pretty far ahead of the curve in terms of knowing what I wanted to do.
There's never a question of what major do I want to have? What do I want to do after I graduate? I was always 100% certain what I wanted.
Ben: I'm sure that tragic death in the family also forces a lot of early maturity. You have to take on more responsibility or at least think about the broader context around your life than just yourself earlier than you otherwise would have.
Courtland: Totally. I think for me, the biggest impact was just like, you get a floor. You establish that this is the worst thing that's ever happened to me. I survived it. It was terrible, all sorts of bad side effects that you didn’t even think about. Once you establish a floor, like a lot of other things just don't look that scary. They don't look that big of a deal. What if I started a company then it fails? I'll go get a job. I think that's what I got out of it.
David: I assume that the love of computers and knowing what you wanted to do, getting out of the Kenny G phase, that's what brought you to MIT.
Courtland: The Kenny G phase was a good one to escape. I remember I really wanted to go to MIT. I somehow figured out that that was the best school you can go to if you wanted to be a computer scientist. I had no idea that Stanford even existed. If I'd known that and that was in the heart of Silicon Valley, I probably would’ve tried to go there. I also didn't know that it was even feasible to just not go to college. If I’d known that I could do that, I probably would’ve just done that and try to start some stuff.
I remember talking to my mom and asking how do you get into MIT? She’s like, get good grades, and study, and apply and hopefully they let you in. I'm like, what if they don't? She’s like, you just go somewhere else. I remember thinking how frightening that was. I got one shot to do the thing that I wanted to do. If I got rejected then I would just be done, a lot of ways that was a much scarier thing than anything, starting companies that have the risk of failure. You can start a company a million times. If it fails like, there's no, alright, that's it. You have to go somewhere else now. You can just keep doing it over and over again.
Ben: How many companies have you started now?
Courtland: Seven. Indie Hackers is my 7th attempt to do something that worked and the only one that really worked.
David: I was going to say, so when you get to MIT, I think if I understand the history, you start applying to YC regularly.
Courtland: Yeah. I played a lot of time.
David: Is this like an every quarter thing, like register for classes, put in the YC app?
Courtland: I was a pretty bad student. I just didn't really want to learn. I thought all the stuff I was learning in my CS classes was boring. I spent a lot of time working on my own side projects. At some point, I discovered that there's this magical entity out there that will give you a bunch of money to take your project to try to make company out of it. I got really hooked and I would spend a lot of time applying. I got rejected at least two or three times.
David: Had Dropbox already gone through YC at this point?
Courtland: At some point during when I was in college, Dropbox went through. Dropbox is also an MIT startup, so everybody on campus had a bunch of free Dropbox codes. We have a ton of free space and everybody knew their story. It’s a lot of positive encouragement there as well. You want to apply to YC? Everybody knows what that is and thinks it's cool to just apply even if you get rejected. I got rejected once and I got an email from Paul Graham and he was like, I think you could have done this better. I remember showing that email to my friends, so proud that PG responded to me.
David: What were some of the ideas you're applying with?
Courtland: The very first one was this company called Fmail, which stood for, get this, Gmail for Facebook. Facebook released their platform sometime when I was a junior. At that point, I’d never really built a web app, but a buddy of mine was super encouraging. He was like, this is so easy Courtland. You just got to learn PHP. I was like, PHP, what is that? I went online. I started learning it. How do I store user information?
David: Facebook was all PHP.
Courtland: Yeah. It was all PHP. I just kept asking like, how do I do this? He’s like, just to learn MySQL. After the semester, I learned all this different stuff. I'd been able to build this app from scratch. I thought it was amazing. I didn't know anything about this stuff. Now, I can make my own web app. I applied for YC and, of course, got rejected.
A really cool thing happened, because there weren't that many Facebook apps and because I think people were just looking for stuff to write about, a bunch of these small tech publications just wrote about it. Crazy MIT genius figures out a way to put Gmail inside of Facebook. We scanned it to look like Facebook. It barely even worked. It was super crappy but it was really easy to get the press to write about you.
You can do a really simple thing that takes a semester even for a total beginner. If it’s creative and unique and people haven't seen it before, you’ll get attention. That was a good experience even though I got rejected
Ben: That was an error, too, where they were so few web products, where when you did one and you made a new website, it could stand out because there just wasn't a lot of noise. I remember you flood back so many memories there. When I was in college, it’s funny, yours was Fmail, mine was called Hacker Follow and it was Twitter for Hacker News. I want to be able to follow people on Hacker News and have a timeline view of when they updated. My buddy and I built Hacker Follow. Similarly, I learned PHP and MySQL to be able to store the stuff in the database. That's what everybody did then. That's even what Facebook was written in. David, as you mentioned, the web felt like a small place.
Courtland: Yeah, it really did. I think to some degree, it always feels like that in hindsight. I think 10 years from now, people will look back, like the quaint times of 2020 when you could do anything and it would get attention. To some degree that's true. Very few people have the time to sit down and just think creatively about ideas. One of the easiest ways, if you want to come up with any creative idea, you just take two or three things and combine them. Once you do these combinations, you instantly start getting to ranges where no one has ever done that before.
If you type like the dog into Google, you're going to get like 10 billion results. If you typed the dog left, you're going to get 1 million results. If you typed the dog left the store with a bone, there’s going to be like no results. It would be a sentence that no one has ever said before in the history of the world. The same thing is true with ideas. I think there's always this framework you can use to come up with interesting ideas. We both found the same one. Let's take this one thing and put it inside this other. That was enough to stand out. I think that's still true today.
David: Okay, so you mention Hacker News which I assume is going to continue to play a big role in the story here. Were you hanging out on Hacker News while you're at MIT and doing all these YC applications?
Courtland: Back in the day, Paul Graham used to write on his blog all the time about startups and all sorts of different stories. He was very motivational, inspirational, and positive. He had this website he created. Again, he seemed like he was very haphazard. He's like, what if I had a little Reddit clone? Of course, now there’s millions and millions of visitors or whatever. If you wanted to apply to YC, you had to be on Hacker News.
David: Yeah. Ben, you know the story, right?
Ben: It exists because he was dissatisfied with our programming and was asking Alexis to make that better. Alexis and Steve, I think, it's either to make it better or maybe to invent it at all. That sub-Reddit didn't exist and he got frustrated with their slowness and started Hacker News.
Courtland: That’s hilarious. He was like, this is not good enough, even though he's an investor at Reddit and just made his own competitor. I'm pretty sure that's a good assumption of code of ethics. You're got to have to have a Hacker News account to apply, to be in YC. Not only did you want to have a Hacker News, but you wanted to have a history of smart, intelligent, thoughtful comments because you know Paul Graham and the partners are going to look at what you have posted. If I look at my YC account right now, I think it's created October 8th, 2008.
I was on YC way back in the day, reading everything, digesting everything and then trying to leave smart comments that I’d be probably embarrassed to go back and look at right now.
David: It's so funny to think about now, there are over 300 companies that go through YC about every year, but it was this little corner and community of the internet. I mean it still is a community, a very large community now in a certain sense.
Ben: I remember being a YC fan first and foremost and using the products. I was proud to be a Dropbox user and abandoned my flash drive because it was a YC company. I suppose that that has even actually a bigger effect today, but it felt at some point like a club. I think it's like senior year in my high school. I felt like I was in some sort of club for even knowing what it was.
Courtland: Yeah, I had that feeling. I eventually ended up doing YC and I remember distinctly, there are maybe 35 companies in my batch or something. All of us felt YC had jumped the shark. It used to be so intimate and so small back in the day. Now, it's just this huge impersonal thing. You only get to see Paul Graham once or twice a week, what even is this? Of course now, it's 10 times bigger than it was back then.
Ben: Catch us up there. What idea did you end up going through YC with?
Courtland: In college, I ended up meeting with these two grad students who had this cool idea for this new version of email. We tried working on it and it's pretty cool actually. We got a lot of press, we got a lot of attention, but we didn’t charge any money for it. After a year of working on that, we ran out of money. We had won some business competition, it was like $25,000. I just lived frugally on that for a year in downtown Boston, ran out of money and I decided I was going to move to SF and somehow get into YC. I worked, I got maybe enough money for four months of rent, moved out to SF.
I just started reading Paul Graham’s RFS, Request for Startups that he would publish. One of the ideas on there was related to what I'd already been doing. He had this whole thesis that email inboxes, unexploited domains, you can have Trojan horse where you get in there with some sort of productivity app or something. Once you get all of the email users of Gmail, you convert them to your own thing. That was his obsession. These are clever tricks you could use to get a ton of people on your apps. I was like, okay, let’s just do that. I met another guy again on Hacker News who I kind of posted, I'm looking for a co-founder.
David: Let’s get to that, you met your co-founder…
Courtland: Yeah, he was one of my previous competitors in my earlier email thing. His app also wasn't doing that well. Why don’t we join forces? We met in a coffee shop in San Francisco and I had maybe a month of money in my bank account. I don't know what I would have done. I had to somehow find money or get a job immediately, but we applied together and the process was super quick. We got in. PG asked us a few questions. We had the YC partner interview. I was like, yeah, cool. When do we get the money?
David: Was this what?
Courtland: We had won our 2011 for YC, so this was in the fall of 2010, November or December we were applying.
David: This was before the Yuri Milner SV Angel deal where you got…
Courtland: That happened during our batch. We were the very first batch for that. I remember the previous YC batch was super jealous because they only got $17,000 or whatever. That’s what we got at first. It was $17,000 divided by two, me and my co-founder. We have enough for the two of us. We ended up moving into this rent controlled apartment in SF. We’re just eating a lot of oatmeal, and crackers, and stuff.
I remember one day during YC, they called us down on a Friday or some off day. They're like, hey, it's very important. Everybody come down. We went down to the YC headquarters and they had these telepresence robots walking around. It’s sort of like a screen on wheels. Yuri Milner's face was on it, like this Russian oligarch billionaire walking around and talking to everybody. We've got an announcement, and I was like yeah, we’re going to give everybody $140,000 of additional money, sort of no strings attached, as an investment. That was one of the best days of my life. I'm going to upgrade to ramen now, I don't have to worry about where the money’s going to come from.
Ben: We structurally understand that. Was that a convertible note that they invested on with that?
Courtland: I couldn’t tell you. I can't really remember. I think it probably was a convertible note. This is before they have the safe. I think the safe came around 2-3 years later.
Ben: It wasn’t like literally free money.
Courtland: It wasn't literally free money, there were no strings attached…
David: I think it was uncapped though.
Courtland: It was a really good deal and none of us questioned it. We just signed it.
David: At this point it probably feels like a huge amount of money in funding. You don’t have any customers.
Courtland: Literally nothing. We had a bunch of junky code that I was writing and my co-founder was going around doing some marketing stuff and trying to generate press for a thing we hadn’t built yet. The idea we were working on was called Taskforce. The idea was you get all these tasks in your inbox, you get Ben and David from Acquired saying, hey Courtland, have you prepped for the podcast yet? I didn’t receive that email—but if you had, I can use Taskforce to convert it into a little to-do and it will be added to your to-do list in your inbox. Then when I work on that to-do if I had to-do day or I tick it off, you'll get an email that says hey, Courtland is this far along in the to-do or Courtland just completed it.
We're supposed to be this viral thing that would take over the inbox and everybody would have it. It eventually did launch in YC. We got a decent number of users. By the end of YC, I think we had 100,000 users, but back in the day there was nothing. The social network had just come out a few months earlier, $1 million is cool. That was kind of the mantra and no one cared that your app had 100,000 users. That was meaningless.
Ben: I'm also dying over here, because after Hacker Follow, my first app which was a task list that I launched for iOS 3 which is right around the same time period. If I remember right, Gmail Tasks was still this really terrible UI. You built the missing connectivity for Gmail tasks that would eventually become—I think they turned it into its own thing, but it was like constrained with an engine…
Courtland: I think it's still there. If you know the right combination of keyboard shortcuts that you press, Gmail Task will pop-up in Gmail but it's not the most inspired idea like a to-do list. Every entrepreneur and every programmer has a bunch of stuff they want to do when you think about solving your own problems. If only I can organize my tasks into a little list of checkboxes, and so we did that. It kind of sort of worked, but it wasn't like the homerun that you really—there was like a combination. That's exactly what the press wrote about. You’ve seen a task list. You may have seen a task list in an email, but if you’ve seen one in Gmail and people were like, no, I haven’t. Maybe I should sign up. You got to combine those things.
We got to demo day in YC, at the very end of YC. We presented and investors were just like, they weren't interested. They're like, you have okay growth. Where is this really going? We've invested in email startups in the past and they're all dead. What's going to make yours different? We didn't have a good answer to that. We went to the summer after YC with probably $120,000-$133,000 of this money in the bank, trying to figure out what we are going to do with this startup? It’s not growing fast enough for us to raise money.
David: Again, if we have a lower rate—one of the talks, it was like a Tuesday Dinner talk while you're on YC was Kevin Hale from Wufoo.
Courtland: Kevin Hale was the coolest guy on planet earth. We have these YC dinners every week, and people would come in, and we had the Heroku founders come in and they just sold for $300 million and they just bought us all the nicest steaks, they were dressed super suave. It was so cool and flashy.
David: Drive up in lambos.
Courtland: I think PG brought in the CEO of Yahoo at the time. It was this super extroverted guy. He said a lot and it sounded really good, but you could never quite tell what he said afterwards. PG was like, this is an example of a stereotypical CEO. Kevin Hale came in from Wufoo. He was cool, calm, and collected character. He was just like, yeah, don't raise any money. We packed our bags, we moved to Florida, we're making forms, but we’re making forms sexy. We did profit sharing with our team. We go to the beach all the time, people work remote. I don’t even know when they're working really. We get 10 calls a week from DC. You want to invest? We’re like, nah, we're making millions of dollars, we’re cool. No one else had said that. No one was making money. I don't even know how you could make money, because Stripe wasn't even a beta at that time.
David: Like in your cohort, nobody was linked.
Courtland: No one. There were a few companies that had some sort of revenue model, but all the companies that were celebrated by the ones that just raised the most money. Who raised from a16z the earliest. There's one founder in our batch who I won’t name, who raised from a16z in the very first week of YC and there were millions. They were putting up Facebook growth numbers. Everybody worshipped the ground that these founders walked on. It was obnoxious to the point that I didn’t want to see them, but you're kind of jealous too because I want that level of success.
At the end of the day, nobody was making money, nobody wanted to make money, it was all about growth. When I heard Kevin Hale talk about how Wufoo was just crushing it, I remember running up to PG and like, we're not growing that much. What if we just did this? What if we charged money? He was like, that's cool. Whatever it takes to stay alive. He's very much like, be the cockroach. Don't die. You need to make money to survive until you pivot to a better idea, that's what you should do. That sort of asterisk was always there. What you're going to do is pivot to a better idea that can make you a billion dollar unicorn because who wants to just make a few million dollars a year?
David: That’s so funny.
Ben: David always reminds me that incentives drive behavior. If you think about YC’s incentive here, do you think back on it and say, for their portfolio construction, they needed us to be a billion dollar company, or at that point would YC have been happy with a bunch of Courtlands building profitable businesses.
Courtland: When you interview, they really want to know that you have a shot at becoming a billion dollar business, because that's how the physics of the situation work. They need people to go for the gold. What ends up happening is a lot of YC companies die, even before the batch was over, it was kind of clear that a few people have given up. They think they really weren’t going to make it. Especially in the summer after the batch was over, a lot of companies fell off the radar.
I remember talking to PG over the summer. We signed up for office hours and went in. He was just happy we were alive and still working. He's like, oh yeah. We don’t even know what happens to a lot of these companies after a certain amount of time. We’re happy that you're here. I think after that, it's less adamant. You got to go for a billion, you got to be a unicorn. They're like, do whatever it takes to survive and get to the next stage. I think in a lot of aspects, that's the hallmark of being a good entrepreneur. How can you take one small success and parlay that into something bigger.
Eventually, maybe you get another shot at going for the unicorn company. In the beginning, they're very focused on us being big. There's also the question about how this gets big, which is easy to answer, because it was PG’s idea that we are working on. Later on I was like, how do you not die?
Ben: It reminds me, he's got that one essay, I think it might be in Startup=Growth about the hill climbing algorithm. You basically always try and find the next highest hill and you would think that you could accidentally find a local maximum and not the global maximum that way. In practice, whenever you're on a higher hill, that's a better way to get to the next hill. You can always use that way to find your way to the absolute maximum. It’s a little ethereal. Do you agree with that?
Courtland: I completely agree. I think if you are creative enough and you think about it enough, you can figure out a way to your next hill. Indie Hackers today is to my knowledge, the biggest online community of startup founders. Indie Hackers on its first month was a blog. There's a lot of blogs out there. You start off looking at a very tiny hill and I made the blog as big as I want it to, maybe it could have been bigger, but it was pretty big. There's always some way we can say, now I have this advantage that I didn't have last week, or last month, or last year. What ways can I use this advantage to parachute over to that slightly bigger hill? Maybe you lose a little altitude on your way there, but then you're on this bigger hill and it's much easier. The analogy I like to use maybe not hills but a staircase.
A lot of people want to jump to the top of the staircase. It's very hard to jump to the top of the staircase. Very few people are capable of that feat, but it's pretty easy to walk up the staircase one step at a time. I think a lot of being a founder is figuring out how you can go one step at a time even if you have some grand ambition. How can you start super small and work your way there?
Ben: I love that. Without jumping too far ahead to Indie Hackers, it just reminds me, the threads of your ability to be a community builder and a participant in online communities starts with meeting your co-founders on Hacker News and being an obsessed participant with that. Like you said, today you run, how do you describe it? The largest online community of…
Courtland: Startup founders.
Ben: …startup founders. That's cool.
Courtland: I mean, they're Indie Hackers. They don’t mostly have billion dollar ambitions. They're the underdogs, but a lot of them I think once they get started, realize, I'm making some side income. In a few months they’ll go, wow, I can quit my job. At some point, you're making a lot of money and you're thinking, what do I want to do? Do I want to retire at a beach somewhere or maybe what I want to do is build something even bigger. A lot of Indie Hackers I talked to are no longer even Indie Hackers. They’ve raised money, they're building bigger companies, that's where their life path took them.
David: That's what I think is so cool about this, unless you disagree. You're the authority, but I don't think being an Indie Hacker means you don't want to raise money or you don't want to build something big. You want to build something that people want and the customers will pay you for and go from there. Sometimes, those become Notion, or sometimes they become Indie Hackers. Sometimes they become just a business that makes you a couple hundred thousand a year.
Courtland: Yeah, exactly. I don't like to juxtapose Indie Hackers as a counter argument to raising money so much as a counter argument to having a boss, working a desk job, and wondering what if for the rest of your life. Being an Indie Hacker is really about the idea that you can achieve your own freedom. Whatever that means to you. Maybe that's financial freedom, maybe that's creative freedom so you can work on whatever you want, maybe that's time freedom so you can work whatever hours and schedule you want. Being an Indie Hacker is really this confidence in yourself. You can create something that’ll make your life better, make other people's lives better in the process, and give you that freedom. Maybe that looks like raising a ton of money in the future.
Ben: Not to mention, it is the ultimate option value preserving activity. If you start by saying growth at all costs, don't make any money, we're going to raise venture dollars, you're on a path. You're on a very specific path. If you say I'm going to build something profitable that funds itself, you got all the option value in the world to continue to take whatever trajectory you want to.
Courtland: Yeah, exactly. The kinds of companies that I've seen people build, I almost feel like we need a new word. If you think about business, it has all these connotations, you imagine a bunch of men and see a boardroom or something, reading the graphs. The word startup is not quite right, it's closer. If you think about tech and technology, it's internet enabled.
David: Or t-shirts instead of…
David: But they're still the same thing.
Courtland: Exactly. We need something, I don't know what it would be, some sort of third word where I'm just looking at people—I interviewed this founder Sam Eaton on the podcast earlier this year, his sister at some point was like, I want to sell cookies. He’s like this software engineer who's worked in the growth roles at Airbnb, and he just got a job offer at Google. He's like no, we're not just going to sell cookies. We're going to have a cookie company. We're going to be tech enabled, we’re going to have an app, our own fleet of delivery drivers. He’s just in heaven sitting around coding his own apps.
They don't use Uber Eats, or DoorDash, they have their own delivery drivers, their own internal mechanisms. His sister was the head of cookie RnD. They're making $100,000 a month selling cookies to their local town. He’s doing all these cool tech stuff and they have 50% margins too. They're living a really good life. It’s not just your traditional idea of a business. He's trying to make his community better, trying to make his life better, and he's not stressing over how fast can we grow and how much bigger can we make this. He's thinking about what do I like to spend my time doing? While at the same time, he’s getting rich and making everybody feel great.
David: I think this is such a big movement alongside the traditional startup, raise venture capital, be something big right off the bat. The economic activity generated by this class of entrepreneurs is probably going to be equal, if not larger, than the Rockefellers of the world.
Courtland: Do you guys watch that series Chernobyl? That was on HBO last year.
Ben: That’s so good.
Courtland: Great series.
David: I heard about it.
Courtland: It was good. They timed it so that right after Game of Thrones went off the air, boom, here’s another series, don’t unsubscribe from HBO. It kind of boiled down the entire story of the work of this one scientist. It was an amazing story. It was great, but obviously in real life, it was probably dozens or hundreds of scientists and engineers working together to try to figure out how to contain this nuclear disaster. The reason why they did that is because it's just easier to tell a story about one person. It's the same in business. It's easier to tell the story of one company.
We're all fascinated by how big Apple is and the impact that Apple has. McDonald's is crazy, they have 20,000 restaurants in the United States. That's an easy story to understand and to tell, but I think the much more impactful story is there are 600,000 individuals who have restaurants in the United States. That's way more impactful than McDonald's having 20,000 restaurants, but it's a harder order to wrangle. It’s a harder story to tell and to connect the dots.
I think the way I look at what I'm doing with Indie Hackers is I'm trying to connect the dots of all these really tiny tech businesses. They're never going to make the news. They're not Amazon. They don’t have $2 trillion in market cap. What happens when a million people are building businesses and make millions of dollars online? What does that look like?
Ben: When this comes out, we will likely have just done the DoorDash and the Airbnb IPO episodes. There is a narrow set of practitioners, whether you're a founder or an employee, who can learn from the tactics in the playbooks accomplished with DoorDash and Airbnb. But based on all the media coverage, those are the stories that get told because that's the simplest and most interesting narrative. If you're looking to actually learn, let's say Indie Hackers continues to grow and expand, you figure out more ways to parallelize it and at some point, there's 100,000 stories of businesses and the playbooks that they run on your website. Someone can find an incredibly narrowly applicable business that's just three years ahead of them and run their playbook on their own business in a way that is far more useful than the one story that everyone focuses attention on.
Courtland: Yeah, exactly. That's the goal of a lot of things that I'm building at Indie Hackers. How do you see these company’s very early days and how do you filter down to a very specific niche so you find the company that most matches the profile of what you're trying to build? We have this directory I haphazardly built 2.5 years ago. I was like, we should have a directory of products. I haven't touched the code in 2.5 years, but when I built it there were 50 people on it. I checked the other day and there were 12,000 products on there. They all have a little timeline where they're saying okay, here's what I launched. Here's what I thought about my launch.
Ben: I thought I was being ridiculous saying 100,000 but it shouldn't be long.
Courtland: No, it shouldn't be long. I think it's just a resource that needs to exist. You need to be able to go out and see how other people are doing it, because that gives you the confidence to go do it yourself. When you see someone that’s not that different from you and put their playbook online.
Ben: I'm going to do David's job here. Take us from the light bulb of Taskforce that should be making money to the founding of Indie Hackers, how did that period of time happen?
Courtland: I'll give you the whirlwind story. At some point during the summer after YC, Stripe entered the beta phase. This is 2011. Stripe is like hey, do you want to make money with your product? Go for it.
David: Within your batch or they were before you?
Courtland: They're before I was, maybe by a year or two. It took awhile before they got their product to the point where it was ready. Understandably, because there's a lot of regulation dealing with banks and stuff.
They got a launch at the beta and we got a good first look because we were on the YC mailing list. We threw up a Stripe subscription in maybe a day or two, just to go over a weekend. The next weekend, I think we made $3000 in payments, charging people $5 a month with this crappy to-do list chrome extension. I thought we were going to make $100 or something. I was like, holy shit, we can pay our rent. We can pay for stuff with this.
Of course we went to the YC partners and said, look at this, this is cool. We’re making a few thousand dollars. They were like, yeah, but what if you were making way more, and you had a different idea that wasn't a tiny Chrome extension which in some ways is good at that. In hindsight if we'd stuck with what we were doing, we could have probably grown into a much more substantial size and iterated. Instead what we did that we should never do, we just completely started over from scratch with an idea that we thought was bigger and better. We sort of violated that principle of taking it one step at a time.
Probably over the next 6-7 years, I started 5-6 different companies. Each one got to a point where it made a few thousand dollars in revenue, but it was never really a big deal. It was never the success that I really wanted. I think this is an important thing that I realized. The first couple of years, I was just pedal to the metal, on my computer every day, coding as much as I possibly could. This is going to be it. I'm going to succeed. It has to work. It never did. Not only did I not succeed, but I also wasted a bunch of time not living a very fun and productive life. I don't even remember one or two of those years of my life because I was literally just doing the same thing every single day.
Now my model that I have for it, kind of the framework of the way I think of it, in a way which I thought of it then was that everybody's got a certain number of companies that you need to start before you succeed. For some people who are exceptionally talented, or lucky, or both, that's just one. They're going to succeed right out of the gate. Some people maybe it's 35. For me it was seven. Really all you need to do is just to make sure that you don't quit before you get to that number. That's really the entire name of the game. Just don't quit before you get to the number where you succeed.
You just structure your life to make it so it's easy for you not to quit and to make it so that the journey itself is actually pretty fun and you're learning a lot along the way, because you're not just building a startup in a vacuum, you're meeting people, picking up new skills, you're learning new things. A startup is like the journey is as important as the destination at the end of the day.
Nowadays, eventually I figured it out. I’m learning so much stuff. I should make sure that I’m really enjoying my life while I’m building stuff. The last few years before I ended up starting Indie Hackers were actually really pleasant. I feel like I leveled up as a person while I was building my startups instead of just worrying every step of the way. Like, am I there yet? Is it going to work? Is this going to be the one?
Ben: That’s such a great lesson. A couple points of clarification, were these all inside the same entity? Or is it different co-founders? How did that technically play out?
Courtland: The first one or two were inside the same entity. And then my co-founder and I split up and declared our OIC startup dead. This is the end. I think I quit and he bought me out for my shares and then I did my own thing. By that point, I realized, okay, what I need to do is figure out how to make this last. I want to spend the rest of my life just working for myself on whatever I like. I don’t want to go get a job. Part of it was I just didn’t like the idea of having a boss.
Me working at Stripe today is the first full time job that I’ve ever had. I just don’t like to be told what to do, I guess. Part of it was this pride of I don’t want to have an interview somewhere. I don’t want somebody to be able to reject me. I want to be unrejectable. I don’t want to ever put myself in the business where somebody could say no. Okay, I just want to keep doing this myself.
I would just survive off of my income from somebody’s apps. Because I would keep them running and they would make a few hundred dollars a month or a few thousand dollars a month. And then when I got low on income, I would just go get a contract job and then work on the side, etc., etc. and just make it so I never had to quit.
There’s a lot said about startup failure. Okay, maybe your ideas failed because the market was too small, because your product took too long to develop, or you ran out of money. But my take on it is that none of those things actually kill company. Those are just obstacles. Your market wasn’t big enough and then what? You quit? You didn’t have to quit. If you imagine a startup journey being you walking from you being an early pioneer walking from the East Coast to California. Those are just obstacles—those are like rivers and mountains. You can step over those and go around them. Or you can just be like fuck it, I’m going to stop here and just live in Kansas.
You don’t want to stop and just live in Kansas. You want to keep going and find a way to keep going. For me, that was just living super frugally and figuring out a way to start the next thing. Which meant taking on contract work and building up my savings whenever I needed it to.
Ben: Yeah. Default the life. At one point, I ran a startup weekend in Seattle and Bo Lu, who actually I think went on to do YC with his company Future Advisers and Sequoia funded it. He gave this great talk called You’re Alive as Long as You’re Not Dead. He was like, yeah, a lot of bad things can happen at your company, but as long as you don’t shut it down, you have not failed. Your company is still in the active succeeding. You’re not successful yet, but you’re in the act of succeeding until you call it quits. That’s always stuck with me.
Courtland: Yeah. Even if you do quit a particular company, I’ve quit lots of different companies, but as long as you don’t quit your overall journey, you’re still on that path. You’re still headed to California and you’re going to eventually get there. Who knows how many startups it’s going to take, but you’ll get there as long as you’re learning and you persist. I think the most important thing you can do is figure out how to keep going.
Ben: All right. The genesis of Indie Hackers. How did that happen?
Courtland: I just rolled off a contract job. I had about a year of runway in the bank. I was like, okay, here we go. Take four. I’m going to figure out something to work on that’s going to work this time. Worst case scenario, that’s going to all fail and I’m going to go back to working contract jobs. I started working on this one app that I called Knox. This was like this Mint clone for your phone that would buzz you with your finances. Maybe two or three months into it, I was like, this is an endless slog of coding. This is going to take me forever. I don’t see the end of the rainbow. I need to just call it quits right now.
In the time where I was working on that, I saw a couple stories in Hacker News that people would come up with new ideas and were already making $5000 or $10,000 a month. I haven’t even launched my thing yet. Okay, this is a dud. I should scrap this and go back to the drawing board and figure out what are all the different lessons that I’ve learned after years of doing this. Let me make sure I’m systematic in how I approach this, I’m not just going to make the same mistakes again. Because I had repeatedly made this mistake that a lot of software engineers make where we just spend way too much time coding.
I think the biggest lesson at the top of the list was only work on things that you can build in a few weeks. I went from idea to basically launch with Indie Hackers in exactly three weeks. It didn’t require very much code at all, it didn’t require a lot of marketing or anything. It was super, super easy. Running this is one of the levers that a lot of founders don’t realize that they can pull. Everybody is trying to figure out, how do I get enough money to work on my idea? Do I need to fundraise? Do I need to borrow money and go into credit card debt? Like the other lever people pull is like, how do I get more time? Maybe I’m going to work nights and weekends and all the stuff. You want to work at a three day work week instead of five day work week.
But I think the third lever that’s probably the best is how do you just start smaller? How do you figure out what’s an easier thing to do? For me, my idea is like, okay, I want to build Indie Hacker business so I can pay my rent, pay my bills, and then figure out what I want to do next. A ton of other people clearly want to do this. I see them on Hacker News every day asking all these questions to people who’ve done it and sharing their stories.
Maybe what I can do in a very meta sort of way is build a better version of these hacks and news discussions. People are always talking about this, but their stories suck. They’re leaving out important details and everybody in the comments is asking, how did you come up with your idea or how much money are you making? That’s not necessarily in their stories. If I can compile all of the stories that I found and tell them in a really compelling way, I make sure I always ask for revenue numbers. I always ask for how they come up with their idea. I always ask about technical details. I can put that in one place then I’m making life easier for both me and a bunch of people who are like me who are trying to figure out how to be Indie Hackers themselves.
That was my idea—phase one. I didn’t have a revenue model, I didn’t know where I was going to go from there. I was like, that’s a really easy place to start. All I have to do is email some people and get their information, put it on a blog and launch it. I’m 100% sure people are not going to eat it up because they’ve already been eating up stories like this before.
Ben: And is the idea that this is going to become a business for you at this point or is the idea really like, this is a project, I have it envisioned in my head. I know the scope, I know how to build it, I think people are going to love it. But it’s a project.
Courtland: 100% it’s going to be a business. I don’t know how I’m going to make money yet. At some point, I’m going to start in this really small pool. I’m going to take the first step on the staircase and do something that works and then from there, I’ll have some advantage that I don’t have today. Maybe I’ll have an audience, maybe I’ll have a lot of traffic, maybe I’ll have a big mailing list. And from there, it should be easier for me to figure out how to make an actual business.
David: The revenue and profit aspect of the stories you were telling, was that super key? Because I can imagine, you’re trying to find like, yeah, he’s talking all these games about how great it is, is it actually working? That feels like almost this estimate before Zillow. It’s like, hey, this house looks good. But what’s it worth? How important was that?
Courtland: It’s extremely important. If I could write a startup book, I would call it Problems First. Where the first thing you want to do is you want to figure out, what are the problems that your potential customers have so you don’t build some random product that doesn’t solve their pain points. When I was reading all these comments on Hacker News, I was trying to find a business idea. I didn’t want to read comments from people who didn’t have proof that their business idea worked. Somebody said, oh, I’ve got this great company. I’m working on it, it’s really great. Does this and this and this. They don’t share the revenue numbers. For all I know, they’re making $5 a month and it’s not that great.
I can tell everybody else in the comments had kind of the same problem. They’re like, hey, we only want to upload the stories that share the revenue numbers, we only want to upload the stories that have inspirational things that we can grasp on to to know this person is legit.
Ben: And to have a close cycle that this advice worked. Like this advice is trustable.
Courtland: Exactly. Right. Anybody can give you advice and tell you what to do, but there’s no outcome as a result of that, how should I know if it’s good?
Ben: Don’t drain your model on garbage data.
Courtland: Exactly. That’s a thing where there were a lot of other interview sites on the web that talked about entrepreneurs. They were pretty much none at the time that realized how important it was, you needed to be transparent, you needed it to include revenue numbers. When I went out and I started emailing people and saying, hey, my name is Courtland. I’m starting this website, it’s going to be called Indie Hackers. Will you tell me your company story and oh, by the way, I need all your revenue numbers.
Half of them are just like, fuck off. You’re nobody. Why would I give you my revenue numbers. Half of them didn’t respond. A tiny percentage were like, hey, you know what, I think this is super cool. I’m happy to pay it forward. Somebody did the same thing for me in the past. By the time I launched the thing, I got 10 people to agree to share their entire story and their revenue numbers.
David: You built the site. You didn’t go to Squarespace, you didn’t go to Webflow. What was the thinking behind that?
Courtland: I had a couple of reasons for that. Part of it was I had a bunch of other ideas that I’d come up with and my brainstorming. Indie Hackers scored the highest on my rubric because it was so quick to build. But I felt really bad because here I am the software developer, from building all of these other startups, I learned so much stuff from building startups over the years and failing time and time again. I learned how to design, I learned how to do frontend development and backend, server admin stuff, and here I was going to start a blog.
I was like, this is such a waste. I want to throw myself some kind of bone to make this fun. Because starting a company should be fun. You should enjoy the journey, not just the destination. I said, okay, I’ll do a blog, but I’ll allow myself to just build my custom blog from scratch. Even though that’s going to add another week and a half to my launch time or whatever. I’ll allow myself just that little bit of fun.
Part of it was branding and strategy planning.
David: You weren’t yet thinking like, Stripe revenue Connect or building a community.
Courtland: That was in the back of my mind. The community stuff, definitely not like the product directory and Stripe revenue stats like a lot of the stuff that exists today. But I did have a strategic session with myself. I spent one day just thinking about strategy. Because in the beginning of every company, there’s a bunch of decisions that you make that are much harder to undo later on. You can tell yourself, like, oh, here’s a crappy design now and redesign it later. But really, that’s a lot of work and you have a lot of more urgent things. You say, oh, I have a crappy name now and a better name later. But really, it’s hard to change your name later on.
I have been through all of these issues. I said, okay, I’m going to take one day and make all of these semi permanent decisions. What I want the color scheme to be, how do I want the site to work, what I want it to be called. Kind of the three decisions that I came to were number one, I want the site to be named after a new class of people. Because I was like, there’s no name for these people and these discussions. It’s really hard for them to find each other even because what do you even search for? Story of person who bootstrapped startup and makes $5000. There’s nothing to search for.
I’m like, I’m going to call it Indie Hackers. I had a bunch of worse names. But Indie Hackers is the best one I came up with. I decided I wanted to make the site blue. It’s like this very dark blue color that’s probably not very accessible and hard to read. But every other site in existence is just like white with black text. Everybody was writing on medium, it all looked the same. I wanted mine to stand out. If you ever read two Indie Hacker stories, you would instantly remember that you’d been to this website before.
And that I wanted to customize. Because I just didn’t want to build on somebody else’s platform. I didn’t like the platform risk. I’ve been burned by that before building on Gmail. They would change their API all the time and break our apps. I didn’t want to deal with putting up a blog on Medium and having it look like every other medium blog and then Medium changes their business model or something and now I’m screwed. Those were the three decisions I made back then. All of them, I think, turned out to be pretty good in the long run.
Ben: The etymology of the name, it’s interesting thinking about when you started this, that notion of an indie developer was already a thing. I remember considering myself an indie developer in 2008, when I started working on my first iPhone app. Craig Hockenberry and a bunch of the icon factory people, they were saying, oh, I’m an indie developer, indie iPhone or Apple developer. Obviously, Hacker News was a thing. But those communities were basically non overlapping. Hackers were what people who work technical and wanted to start high growth technology startups refer to themselves as. But indies were what the lifestyle developer community, primarily centered around Apple platforms called themselves.
Courtland: And I wasn’t thinking about honestly any of that indie stuff. I wasn’t even aware that there are indie developers. I was just like, okay, I want the idea like an independent programmer. Because again, it wasn’t so much rebellion against raising money, it was rebellion against going to work for the man and making Google $10 million a year from your code. But you’re only getting $200,000 of that. Why don’t you start your own thing and be your own indie developer.
Hacker News was so called because hackers is another word for programmers. The idea is okay, you’re a programmer, but you’re independent. There’s no cap on your salary. There’s really no limits. You can do whatever you want.
Ben: Before we move on from this point, talk to be about platform risk, because in my mind, we think about this for Acquired too. We’re always trying to get the most direct relationship possible with our listeners, with our LPs, with everybody. There’s always some platform risk. We’ve collected email addresses from one out of six or seven listeners from all the various reasons that people join our Slack or they sign up for the emails. Which now have the playbooks so there’s even a further incentive to sign up for the emails. But at the end of the day, even if you have someone’s email, you could go to their promotions tab. It’s not like you can call that person. There’s always some amount of indirection between you and your end customers.
What do you think about how far you should go on eliminating platform risk?
Courtland: I think everything in business is basically a tradeoff. What you really want to do is just be aware of the tradeoffs that you’re making. There are no hard and fast rules like never build on a platform. If you build on a platform, maybe they can give you additional distribution, but then you get the risk because they might shut you down, change things, or you might lose out on the branding or the ability to differentiate yourself, etc. Maybe you can charge a high amount of revenue per user, but that means you’re going to get maybe fewer users in the door for your customers. But then also, you could spend more to acquire customers. It’s all tradeoffs.
For my particular situation, when I did that tradeoff, really the only contender was like, maybe try to build a big Twitter account where I share these stories. I can repeatedly post on Reddit or Hacker News, or I could have a Medium blog. Those are the big platforms that I considered. Every one of them I thought would give me either very limited distribution. Like how much did Medium really help at distribution. It was kind of hit and miss and they would also completely destroy my ability to have any branding.
I knew that step two in this playbook might be to build a mailing list or a community. I wasn’t sure. But I knew that if I was going to name it Indie Hackers, go for something where the brand actually mattered, which I think is important if you’re going to have something that’s free and I was getting a lot of users in the door, but it didn’t have a business model, then I wanted to own my brand.
It wasn’t worth it for me to use any of these platforms even though they would help at distribution if I could instead just do my own. I also had my own distribution strategy. I already knew that people were going to be eating this kind of stuff up on Hacker News because they already were and Hacker News had a lot of traffic. It’s like, okay, I don’t need Medium. I can do it on my own. I get no real benefit from Medium and I get all these additional risks. The tradeoff just wasn’t worth it.
David: Yup. It’s funny, in some ways you may have run the Airbnb playbook of exfiltrate Craigslist. You did for this segment of Hacker News.
Courtland: My buddy, Greg Eisenberg, has this whole idea of unbundling Craigslist, unbundling Reddit, unbundling Hacker News. It’s a huge community, there’s all sorts of sub like discussions happening in there that happen regularly.
David: Totally. It’s a pretty big tent.
David: You built the site, launched a blog on your site. As I understand it, pretty quickly, you figured out that email was a pretty big unlock on both the interviews you were doing, call it the supply side of these stories and for readers, for the demand side too.
Courtland: Totally. You can almost imagine the web is like this collection of feeds or destinations and some of them are places where people go habitually. I habitually check my email, I habitually check the notifications on my phone, I habitually check Twitter—I'm addicted. I’ll sit down and just press T on my keyboard and black out for a second, I’m on Twitter.
There’s other places where people just don’t have a habit. I made Indie Hackers, no one on earth had a habit of regularly visiting Indie Hackers. They weren’t going to have that habit any time soon because I was publishing once or twice a week. Twitter’s got new content every single minute.
For me, how do I hook into one of these feeds that everybody already habitually looks at? It was a combination of both Twitter and email. I made the Twitter Indie Hackers account, I tried to tweet every story that I had. You incidentally run into them when you check your Twitter and be like, oh yeah, I’m a brand hacker, let me go back there. And then emails are huge one. Because they actually own the email addresses when people sign up. I can take that with me anywhere. You can’t shut down my email list.
From day one, I had an email collection box at the very top and at the bottom of every interview, just trying to get people’s emails. I think in the first week, there’ll be like a thousand or 1500 emails and it continued on that pace for a while. A thousand emails a week from people from Hacker News and all over the web who just loved these success stories. They would come and read them and they will be so inspired to hear that so and so is making $10,000 a month from their travel startup. I’m like, I’m a developer, I could do that too.
They would immediately get on the email because they want more of these stories. They want more glances, what’s possible. When the day comes that they’re ready to start their startup, they haven’t forgotten where to go to see those examples.
David: You have to have a reason that you’re going to show up for people. I joke about it, there’s no way to scientifically know and we didn’t plan it this way, but the fact that our podcast name is Acq, in almost everybody’s podcast feed, we are at the very top. Because for whatever reason, podcast feeds are organized alphabetically. How much benefit have we gotten from that? I don’t know. But I’m pretty sure we’ve gotten a lot.
Courtland: Probably a lot.
Ben: We got at the top of an accidental feed, which is the podcast player.
Courtland: It’s a hard won lesson for a lot of people who are starting startups. If you’re an indie hacker, you don’t have a bunch of investors and mentors. You probably by default believe, if I build it, they will come. I’ll just build some cool stuff and get a bunch of people in the door. But it turns out that building stuff is easy. Even if you’re not a developer today.
I talked to a guy yesterday who built a whole Slack bot without using code at all. He doesn’t even know how to code. The hard part was getting people to actually care about what you’re building and actually find it.
David: And you run into it. It’s not just running to it once. It’s like running it several times.
Courtland: Repeatedly. That’s very hard to do. But if you think about it really carefully before you start, then often, you can come up with something. What I found as helpful is you go to one of the places where people find things. You just look at what they’re sharing. That’s accidentally what I did with Indie Hackers. I was already in Hacker News and it took days of me reading these threads before it clicked. Wow, everybody is here sharing this thing, why don’t I just make my thing better than what they’re sharing here and then share it in the exact same place.
Ben: Okay. We’ve talked about this insight that you had that enabled growth. We sound Circa 2011 YC. Tell me about your growth rates. Now, let’s shift to the Indie Hacker conversation. How did you start making money?
Courtland: Yeah. Actually, what happened is my very first hit of revenue was completely unexpected. It was maybe two weeks after I launched and some company was like, hey, can we sponsor you? I was like, sure. How much do you want to pay? They’re like, how much traffic do you have? And I told them, sure, we’ll give you $750 a month. That to me was insane. Because everything that I had ever built was something like a rinky dink consumer app where I was begging people to pay me $5 a month. People were like, no, it doesn’t have this feature. I can’t possibly afford $5 a month and then they’ll go buy a bad coffee and dump it out.
This company offered me hundreds of dollars. It was like a wake up call. Like, oh, I can make money from sponsors. I was also super focused on growth. I was thinking okay, well, I may have maybe six months of runway and I’ve got six months of savings on my bank account. I’ve got time. Why don’t I just grow the site even bigger, because there’s only one of me. I don’t have that much time to try to sell ads, build a site, and do all these interviews every single week. I’m just going to grow it, not worry about money and I’ll worry about it later.
I did that for three months. I just kept trying to grow the site. I didn’t figure out how to grow the site at all. I never found something that was bigger and better than getting on the front page of Hacker News, go figure. I launched in August, by December I was like, screw this, I’m going to start trying to make money. I started basically emailing my list. Which at that point I’d probably have grown to 10,000 or 15,000 people saying hey, here’s the email with this week’s interviews. But also, by the way, here is an empty ad slot. Your company could be here.
David: Literally, it’s the billboard that you see with the ‘Your ad could be here.’
Courtland: Yeah. It was exactly that, but in email form. I put that on the website too. It turns out when you have a company that targets people who were starting companies, you have a lot of potential advertisers on your mailing list who all want to basically advertise with you. It also turned out, which I didn’t realize at the time, that indie hackers were some of the worst possible customers to buy ads. Because these are very fledgling startups. These are people who had decided to start something because they read about it on Indie Hackers two months ago. If they were going to spend $500 or $1000 on an ad, that ad, it better work. That’s their whole yearly ad budget.
David: It’s almost like you would want a company that is selling tools to people.
Courtland: Almost like that. I went through a lot of these awkward conversations where I run ads for people. I just wanted to do right by them, but the ads didn’t always get enough clicks and sometimes I would refund people. It was just very stressful. I didn’t like doing it.
I created a dream list of companies. Which companies actually have a lot of money that would be good sponsors? I have no experience doing sales, but I’m going to have to figure how to do this. I had at the very bottom of my list, my number one dream company who should be sponsoring Indie Hackers was Stripe. I was like, okay, I’ll eventually get to them. I want my shit to be good.
Ben: Get some warm ups in first.
Courtland: Yeah. Get some warm up.
David: The warm up on Broadway.
Courtland: Exactly. You don’t want to embarrass yourself in front of everybody. I got some warmups. I sent a lot of cold emails. I found the heads of marketing on LinkedIn. My buddy Jeff who ran a podcast I was on gave me his list of leads of who was advertising on his podcast. To my surprise, it was way more pleasant selling to big companies than it was selling to small ones. I would get someone who’s entire job it was to spend a marketing budget. They would just want to talk about their kids, talk about their vacations and be like oh yeah, you’re cool. Here’s a check with $5000. I’d be like holy shit, this is a thousand times easier than selling to people who are broke.
Ben: Yeah. Not to mention, one of my key startup lessons learned over the years has been to sell the things that have budgets. Don’t try and create budget fit into a budget. I’m sure there are emerging markets where the budget line item is not going to exist for your thing. But you’re so right that if there’s somebody whose job it is and they have a budget to spend, your life is just going to be so much easier.
Courtland: I think that applies to even coming up with startup ideas and trying to figure out a business model. It’s kind of counterintuitive. People repeat this mantra, solve an unsolved problem. It’s almost like you want to do the opposite. You want to look at problems that people are already paying a lot of money to have solved and insert yourself there.
My friend started a company called Key Values. She’s been one of my best friends for years, her name is Len. Her company helps startups hire engineers. You know what, startups are hiring engineers just fine well before her company came along. We picked that idea because we looked at like, where are companies spending money? Where are they spending a lot of money? It turned out hiring engineers, hiring recruiters. It was a huge cost for their companies. They’re just willing to spend a lot of money on it.
Within a year starting her company, she grew her revenue into $100,000 a quarter. She was living a great life. She made it look easy—her first time out of the gate. Part of it because she picked a problem where people had budgets.
Ben: Right. I think the insight here is if you really want to overly simplify the sales process, there’s educate and then win. Educate people that their need is real and then once they are convinced that they want to solve this problem, then go win and be the way that you solve that problem for them. If you’re selling to people with budgets, you don’t really need to educate because they are totally bought in on solving that problem already.
Courtland: Yeah. And education is hard and it’s risky. Because you might educate somebody and then lose. Because someone else comes along and wins.
David: Yeah. Or more frequently you educate somebody and they’re like, I’ve got these other things that I need to solve.
Ben: Broadway comms.
David: Then you get a particular email.
Courtland: Yeah. I don’t know. I’m selling ads for a few months. I’m just happy, to be honest. Because I got to the point in February 2016 where Indie Hackers is going to pay all of my bills. I was like wow, in less than a year, I’ve gone from nothing to finally one of the ideas I’ve done works.
David: None of the other companies you’d worked on, you’d gotten to this point where it’s revenue is covering my personal expenses.
Courtland: No. It was better in literally every single way. I had a community. People were talking to each other. I began to see a path of like, oh I can do less work. Maybe people can interview each other, I don’t have to do anything. People really liked it. I wasn’t making to do list software where all I got were angry customer emails because I don’t have the right feature. Every email I got was something positive, people talking about how inspired they were by an interview that they heard. It was 100% good for my life in every single way. I was just blown away and super happy and just high in life. To make things even better, I get this email out of the blue. I hadn’t gone to Stripe yet. Am I list of sponsors to reach out to is maybe halfway down.
David: And you weren’t in the same batch. You didn’t know them.
Courtland: No. I think during the Stripe beta, I’d maybe gone in there and looked at a little Stripe chat room and pointed out some bugs and asked some questions. But I never really talked to the founders outside of that. The email, I just stepped off a plane actually. Just going to a buddy’s bachelor party in Mexico. I stepped out the plane, I was checking my emails and the very top of the inbox was like Acquire Indie Hackers? From like Patrick at Stripe. I was like, holy shit. There’s no way this email is real.
David: You’re getting trolled.
Courtland: Yeah. I’m definitely getting trolled. But I read it and it was real. He was kind of like, Courtland, I’m really admiring what you’re doing at Indie Hackers. Is there any way you’d be open to Stripe potentially acquiring it? The first thing I did was I forwarded it to my mom, sent it to my brother, sent it to my friends.
Ben: It’s the program email all over again.
Courtland: Yeah, yeah. It was the coolest thing ever. We ended up meeting, talking, and feeling each other out. And had brunch the next Saturday. Over the course of a month, worked out a deal and I joined Stripe in April 2017.
Ben: Lots to unpack here. Before we get too far into it, let’s relate it to our previous conversation on educating and then winning. Had Stripe and/or Patrick wanted to own an asset that was a community of people talking about building stuff on the internet that very likely would need Stripe to monetize and then you were the pick? Or was it like, hey, wow, that guy’s really got something cool.
Courtland: I think it’s a combination of both. It’s been funny looking at just acquisitions over the years, talking to friends and also seeing a little bit of stuff internally at Stripe. It’s just so idiosyncratic, almost random how these acquisitions happen. In many cases, depending on how a particular person feels, this seems like the thing to buy. I think in my case, Stripe has this cool project internally—collect the crazy ideas list. Hey, everybody write down the craziest ideas. If it’s a reasonable idea, it’s not allowed on this list. You need to write down just crazy things that we could potentially do that might go big.
I think some version of Indie Hackers has been on that list for many years. What if we have a community for early stage startup founders? Where companies like Stripe that want a lot of business from early startups, these startups grow. They might be making a thousand dollars a month now, but five years from now, they could be lifted. Winning the hearts and minds of early stage startups matters a lot. That idea was on there. They just never did it. Because there was like a thousand ideas on that list and then I started Indie Hackers, it just worked. It worked really well and it happened very luckily, perfectly aligned with what they wanted to do. It’s like okay, it’s empowering people to get started and inspiring them.
Stripe is a company that cares a lot about its reputation. It’s not an accident that Stripe hasn’t had any major scandals in almost every other huge unicorn company. It’s because the founders care a lot. We have a lot of good well among founders and developers and make a lot of decisions that the company has in mind. To do best by people. Indie Hackers was like a huge check in that direction where people just really liked Indie Hackers. They liked the positivity, liked the optimism. It was all about how you can do, how you can stick it to the man, start your own business. It was very empowering.
Crucially, it did two things. It inspired people to start businesses who previously might not have had the confidence to do and it also helped people with businesses succeed. Both of those things are very good for a company like Stripe that it clearly wants more businesses to exist and more businesses to succeed.
Ben: What were some of your concerns after you have had the initial wave of oh my god, then you’re like, wow, would I sell this? Should I sell this? How did you think about some of the tradeoffs intentions there?
Courtland: A lot of my concern at the time, one of the things I was weighing heaviest on my mind, I just really didn’t like selling ads. I was really not having a great time. I was making money. It was fun to get checks. But I wanted to make Indie Hackers bigger and better. I wanted to spend a lot more time coding the community. At that time, the community only had maybe 40, 50 conversations a week. Now, it's got tens of thousands and I just wanted time to do that.
I was thinking If I go to strike, what are they going to have me working on? How much say are they going to have in what I'm doing? And how much does their vision align with my vision for the company? And if it's off by even a small amount, maybe that's not a big deal today but four or five years from now, that could be a huge deal, a small gap can turn into a really big gap. I wanted to know, are we going to be aligned? I wanted to know because that's for the betterment of the community.
The people at Indie Hackers, is this going to be good for them. If you have a community and you have something like all your users are quite vocal, especially if they come from Hacker News, which most Indie Hackers did, these are opinionated people and they don't tend to look kindly on acquisitions that go wrong and watch their favorite products die. I wanted to know if Indie Hackers is going to be better off for this. I wanted to know if I was going to be better off from this. How much money is this acquisition going to make me?
David: The whole point of Indie Hackers—
David: Is this is going to be—
Courtland: I'm going to no longer be technically Indie. What is the trade off I'm making? How Indie will I be? I have this whole point that I make to friends and it always gets a mixed reception. I think everybody is a business. Even if you're an employee, you should think of yourself as a business. Anytime money changes, you must think of yourself as a business.
David: A hundred percent.
Courtland: If you want to learn how to improve your career, read a business book and think about yourself as a business. As an employee, you might seem like you have no power but I learned from contracting that you have a lot of power. If you can make the value of the service or product you provide to your employer unique, it's harder to fire you and you're more valuable. You can get paid more, you can get paid what you're worth rather than being paid very little because you have so many competitors of the exact same job title as you.
Some of the other parts of the employee experience relate to being a business. Everybody has marketing experience. If you've ever made a resume that's basically an ad and when you've shipped it out to potential employers, that’s basically marketing. If you've done an interview, you've done sales because you were trying to sell yourself. I thought about myself in that light. How much freedom and independence am I going to have as an employer strike? Who am I going to report to? What are they going to be telling me to do if anything?
David: I got to imagine even though this idea was on the Stripe crazy ideas list for a long time. Probably the reason nobody ever did it is you got to focus on doing it. You can't be pulled in, I know you're doing this thing but we've got this bug, can you just jump in and fix them. We got to do this thing, you can get back to doing that thing, but you have got to do this thing.
Courtland: It's also a completely different type thing, the average engineer at a bigger startup is not someone with a lot of startup experience. There isn't a road map for, here's how you start a large community of founders. There's no step by step process. It hasn't been done before for some reason. There just aren't large communities of founders that have thrived online so it's easier to wait for somebody else to do it than it is to pick a random employee and be, good luck, you're going to be able to do it.
David: Were going to make you a star.
Courtland: Yeah, going to be able to do it. Some people can do it, but that's not why people typically apply to jobs because if they wanted to do that, they would go start their own thing. I was worried, what is my responsibility going to be like. Am I going to be a normal Stripe employee or not? Then the third box, it’s just like me and the community was, what does Stripe want to get out of this. I wanted to know what Stripe wanted to get out of it because it's hard to predict if we're going to align, if I don't know why you're even doing this. To Patrick and the leadership team—credit. They're very open minded folks. They don't necessarily need a ton of proof that something is going to work. If something is directionally pointing in the right direction and it can work, they're more than happy to take a chance.
With Indie Hackers and Stripe, Indie Hackers doesn't capture a lot of the value that it creates. If people start companies and their companies succeed because of Indie Hackers, because of a story they heard, because somebody helped him in the community—how do I make money from that, it turned out it didn't, but other companies can capture that value, including Stripe. Because if Stripe is the best product on the market, what are they going to use for their new companies? They’re going to use Stripe.
Patrick just trusted that we think that you can make Indie Hackers really big and meaningful, you've done a great job so far. It's hard to even measure. Even if you do make it big, we'll never know exactly how much it’s contributed and added to our sales, but that's fine.
Ben: A couple of questions here and I'll ask them together so you know both are coming. You don't have to give me numbers or clauses but I'm looking for broad strokes. What do you need to put into a legal contract in order to allay those concerns? What do you just leave to trust? Because ultimately, these things come down to do you trust me, do I trust you, and are we aligned? That's the first one. The second one is how on earth do you go about figuring out what a fair deal looks like based on what your business was before it was acquired?
Courtland: These are tricky questions and I never feel the most qualified to answer acquisition questions, even though this is acquired. People call me all the time, hey, I'm going through an acquisition, you went through one, what happened to you? It's so specific to my situation.
David: I have no employees.
Courtland: I was the solo founder with no employees, hadn’t even incorporated. But there's some little tricks and things that help me. The first thing that happened was that Patrick suggested that we communicate over text. We got on WhatsApp, which instantly, I was like, this is so smart because I've been sitting there on a Sunday, typing out an email on this acquisition numbers negotiation. It was such a high pressure thing, what am I going to say in this email versus text, just so casual. Just firing off messages and it just lowers stress and almost the adversarial nature of it in a strong way. That was the first step.
But then I thought about, how do I value what Indie Hackers is worth? What am I going to be happy with here? Your first question is also how much does trust come into it.
The first thing I started doing was trying to answer both of these questions actually through back-channeling. I emailed as many people as I knew who either worked at Stripe, had dealings with Stripe, or had dealings with Patrick in the past, hey, what kind of person am I dealing with. I got a lot of positive stories—this is a person who cares deeply about what's good for people, et cetera, very ethical et cetera.
You need that level of trust because in a contract, as I soon found out, there's so many random loopholes, and edge cases that you haven't considered, and just really easy ways to get it screwed over. At some point, I was talking to Patrick and we were hammering things out. At one point, I got an email that wasn't from Patrick. It goes from Stripe general counsel and I'm like, oh, shit, maybe I should have a lawyer, because I don't know what this guy is talking about.
Then I went and hired a lawyer and her name is Matau. She was great, but she was just the most paranoid person ever. She was like, here are all the ways they’re going to screw you up, they’re going to do this, they’re going to do that, and every single contract that came, she found some way to tighten up the language or just go to bat for me because I had a lot of trust. Perhaps naively, I just would have been like, ah, it's fine, they have the best intentions here. Trust, but verify. I had a lot of trust and I don't think I would have done the deal if I didn't trust that everybody involved was being sincere with what they said, that they're thoughts aligned with their actions and their words, but also having someone in my corner to make sure that these things wouldn't happen was important, and gave me a lot of security.
David: The thing about situations like this, the documents and the clauses and all that, they exist for when things get sour. Anytime you are looking at those documents, things are on a bad path. You don't ever want to look at them. But if you have to look at them, what is written in those documents is what is going to happen.
Courtland: Exactly. They're important and they matter. In my situation, what happened is that we agreed on numbers but in a very high-level, non-specific, this is what would make us all happy. That happened pretty quickly. It didn't take that long and part of that is also doing research on how much the engineers it's right to get paid? By that point, I was pretty good at getting people to reveal like numbers to me. From working on Indie Hackers, I got a lot of numbers and I'm like, this is what I want. I was trying to be a firm negotiator. But you can agree on these numbers and then you go draw up a document and it turns out, there's a million little edge cases.
For example, we're talking about stock, what kind of stock do you want? What class? When does it vest? What period does it vest? How long? I had refresher work on all sorts of different things that if you're a typical employee you might not consider. But we're coming in through an acquisition, the sky's the limit. You can ask for or demand literally whatever you want and put it in a contract that's going to be your special contract that no one else at the company has anything that's even like that. For me, it wasn't just the worst case scenario. It was now this whole phase two of negotiations where we’re talking about all these little details that we haven't even considered.
Ben: What mechanics did you put in place? Obviously, it wasn't hey here's a bunch of cash, welcome to Stripe. It's either stock, or it's vesting, or it's tied to incentive-based targets for Indie Hackers, or it's tied to Stripe as a company rather than Indie Hackers. How did you structure the way that there would be incentives overtime for both sides?
Courtland: I don't know how much I'm legally allowed to say.
Ben: Don't even get close. What we're interested in is how should people, if they're going into a situation like this, think about that?
Courtland: The first thing to be aware of, is just all the different options that you have. It's very easy when you think about an acquisition to think of the number. This company sold for X amount, but that's from my experience rarely how it happens, it’s rarely that simple. Some of the other options are just much more advantageous. Often, companies will give you more equity than they will give you cash. If you can evaluate the company if it's Stripe, for love of God, take that money, take the stock. If it's GroupOn, I don't know, maybe you want the cash and this is an exercise—
David: This is the difference, between Salesforce buys Slack, it's about the number. Because it's a corporate entity buying a corporate entity. With an Indie Hacker business, no, it's you.
Ben: It’s literally you.
Courtland: I don't know what Elon Musk's situation is, but he's all these weird earnout bonuses or he gets more money if the stock price goes up. Even in those big company situations, there's all sorts of ways to figure things out. If Salesforce buys Slack, what does that mean for Stewart Butterfield? Perhaps he could say that I want more money if we have these extra targets, et cetera. Marc Benioff will be like, sure that's fine. If you can think about these creative ways to align your incentives, it can result in a happier process, and maybe on both sides, maybe you require people once to pay you more if you hit performance targets because the risk for them isn't the initial cash outlay. It’s that it's not going to pay off in the future. If they know you're incentivized to do a good job, then that can be a win-win, even though they are on the hook for more money in the future.
In my particular case, it's funny because Indie Hackers is very much an indie hacker business. I was just making money from advertisers. I'd like some affiliate links on the site. I was making $7500, $8000 a month by the time Stripe acquired the company. Today, I feel much more like a high growth startup where Stripe owns Indie Hackers but they're almost an investor and my goal is to grow as much as possible. I don't make any money, Indie Hackers doesn't have any revenue we bring in. We have a budget which is almost funding to help us grow. It's represented by a complete change in how I viewed growing my own business and I went to this almost to the exact opposite of what the stereotypical Indie Hacker company is trying to do.
Ben: The comp at that point is more to entrepreneurship, which is such a funny word because they took a French word, and then changed it to sound like an English word to get the point across. Anyway, what differences do you notice between Indie Hackers which is a wholly owned subsidiary of Stripe—and I'm sure that that may not exactly be technically correct—but it's sort of its own brand. It just has a By Stripe thing on it, it’s run by you. Versus the things that start within Stripe, but are their own self contained thing like Stripe Press or like Stripe Atlas.
Courtland: Branding, by far, is the biggest difference because it's pretty obvious to—most people who are aware of Indie Hackers know that Indie Hackers started before Stripe. They know that it's my thing. I'm very transparent. They're going to listen to this podcast and clearly the crew is running this on his own. This is not a super heavy handed Stripe initiative. Plus, a lot of people don't even know Indie Hackers is owned by Stripe. There's a very small little logo that says Stripe at the very bottom of the website. You have to search to find which is freeing in a way because it gives me the ability to make my own decisions that don't necessarily reflect on the Stripe brand.
I remember a buddy of mine at Stripe who ran the Stripe Atlas community got an email from Indie Hackers. He said, Oh my God, you said fuck in an email, and it’s a Stripe email. I’m like I said fuck in probably a dozen of these emails. There's no one at Stripe that is monitoring that. There's a lot of trust that goes both ways—I trust Stripe, they trust me.
It's weird in a way a lot of the positive things and feelings people have about Indie Hackers get accrued to Stripe, but some of the risky decisions don't weigh on Stripe at all. It's almost the best of both worlds. If I started some Stripe product internally, Stripe Press. That Stripe’s name, literally in the name, which means there's a certain level of quality it has to rise to, a certain standard that it has to rise to. It's harder to get things off the ground when you do that. You need to match certain accessibility standards and have a certain reach of people in different countries and have all these different languages. It's harder to iterate on any startup-type initiative than trying to find product market fit if you have all of these expectations on you.
This is why it's smart for Google when they're doing their innovations to try to spin things out of the Google brand and just have them be dissociated. People don't have these expectations because you just need to start with something embarrassing and rough and what I've been doing for the last—
David: YouTube is a great example. When Google bought YouTube, there was still the Viacom lawsuit going on. People were up in arms, crazy stuff happening, maybe there was this crazy stuff happening on YouTube, for a while now.
Ben: Meanwhile, Google video was a failing product. It was trying to do the exact same thing, but was going through the Google standard process.
David: They weren't going to just put movies that were filmed with it, camcorder in the theater.
Courtland: You could take bigger risks through an acquisition, especially if I can establish a brand on its own.
Ben: That's cool. Tell us now why it has made sense for Stripe. This is a little bit of a softball question, but how's it going? How’s it gone? Was it a good idea for Stripe to buy Indie Hackers? What have you built to do any integrations if you have?
Courtland: It's worth noting my working style at Stripe is that I reported to Patrick since I got here. We don't meet all that often. There have been years when we met twice, other years, I've sent him weekly updates—not on his request, but on my request—because I want him to know what's going on. Everything I've added to Indie Hackers, literally everything that I've done has been 100% my choice. There's not been a single request from Stripe saying, hey, can you do this, that's happened.
A couple things have happened since we joined Stripe. I remember meeting Patrick maybe nine months after the acquisition and he's like this looks good. I was worried that for you to grow, you just run faster and faster because when Stripe acquired Indie Hackers, it was still primarily just a media company, we're doing nothing but putting out these interviews. We had this very fledgling community forum but it was like you had to click a link to get to it. It was only a small number of people. Whereas today, the bulk of what happens on Indie Hackers is user-powered. It's more of an actual platform or the vast majority of the value that Indie Hackers creates in the world is it does not come from me.
Ben: You did it. You shifted from a media company to a software product.
Courtland: Exactly, which I always wanted to do, but it took a long time. I would say the biggest accomplishment since joining Stripe was just the growth of the community forum, which is now on the home page. If you go to indiehackers.com, you just see dozens of conversations where hundreds of people are helping each other out, asking questions, and helping each other start companies, meeting cofounders, without me doing anything.
David: The company profiles, you create their interviews, and that people create themselves—they're all mixed together.
Courtland: Yeah, and I've been trying to consolidate things that are not quite consolidated yet. There is a separate section on the website where you can go, and you can read, and we've done about 500 interviews now. All of the different interviews from Indie Hackers have shared their stories, and you can sort, and filter those.
You can also go to the product directory, which I mentioned earlier, where it’s just more self serve. Anybody can add a product there, you could share how much money you're making, share your milestones along the way, and everybody there competes to have the best milestone every day with this leaderboard that resets and overposts the best update for that day in terms of upvotes, gets to the top of the leaderboard, and they get more traffic, et cetera.
It's a mechanism to incentivize people to fill out these little timelines, which as a side effect, that everybody else can go read the timelines, and learn how to build a company from these examples. That's going to 12,000 products, we've got 500 interviews, we have a podcast that went from just maybe a thousand downloads total when Stripe acquired Indie Hackers, to now millions of downloads, and the community forum has gone from just a few dozen conversations a week to the point where there are a thousand comments a day, over 250 posts every single day in the community forum, and just tens of thousands of people helping each other out. Based on the numbers, Indie Hackers has grown tremendously since we've joined Stripe.
David: So awesome.
Courtland: One of the things we like to measure is a rough estimate of how many people have started companies as a result of Indie Hackers. We send out a survey to people maybe six months or so after they join, and we ask them to say true or false to different questions, and one of them is, would you have started your company, if not for Indie Hackers? Most people are like, yeah, I would have started it anyway, or I haven't started yet. But a good 15%-20% of people depending on the month, say they would not have started their company if they didn't encounter some story or some person on Indie Hackers. If you multiply that by 140,000 different people who joined the community forum, that's a very substantial number of companies.
David: That’s a lot of companies.
Courtland: That’s a lot of tiny companies, and some of them have gotten bigger, gotten acquired, a lot of them are on Stripe, and the way that Patrick explained to me earlier when I first joined Stripe was like, hey, it's your job to get people to start companies. It's our job to have a product that's good enough to win them over. I'm not sitting here trying to hawk Stripe and convert people to Stripe. That's something that Stripe does on its own.
Ben: Was that 140,000 user numbers when you were acquired?
Courtland: Let me look it up.
Ben: I'm also curious—this is the third time I've done this to you, I’m queuing up two questions—approximately, what percent of Indie Hackers use Stripe for their company?
Courtland: The second one, I don’t know the answer to. We don't have a process, we don't measure. It's a lot of just trust. We know that Stripe is pretty damn good as a product, it comes up on the community forum all the time. It was the most referenced company in all of the interviews that I did even before joining Stripe.
David: Honestly, I don't even know what else you would use if you want to take payments on the internet. You could use a ton of other stuff but they're just custom services that are white labeling Stripe underneath. I don't even know if there is another alternative.
Courtland: It's a really good product.
Ben: Yes, David. There are alternatives. It is also a very good product.
David: Alternatives worth using, let's put it that way.
Courtland: For me to answer your question on exactly how many users are when I joined Stripe, after I run a query, it'll probably take me a couple of minutes, so is it worth it?
Ben: On-air sequel writing, do you have any mental ballpark of, on the order of 1000? 10,000?
Courtland: It was on the order of certainly fewer than 5000, probably more than a few hundred.
Ben: Alright, that helps us understand the scale, and it's been what, 3 ½ years?
Courtland: Yeah, it's been 3 ½ years. I joined in April 2017. Indie Hackers has been in Stripe for much longer than it existed before Stripe.
Ben: That's really cool.
David: Even just super ballpark numbers, let's say, 100,000 companies added since the Stripe acquisition, 15%-20% Indie Hackers played a major role in that company being started, 15,000 to 20,000 companies presumably, a large portion of them are using Stripe. That seems like a great outcome for Stripe.
Courtland: For people who listen to more Acquired episodes, we've been through history and facts. A little bit right now, we're in what would have happened otherwise, and we've done a lot of playbooks as well. But we can specifically call that out. If Stripe hadn't acquired Indie Hackers—it's not like all the companies that have been created wouldn't have used Stripe. I don't think you influenced any of their decisions on what to use for payments. What they were doing is saying like, man, this thing is good for our business, that it exists. Let's make sure it can thrive as much as possible. It's interesting to me trying to think through the scenario where Stripe didn't acquire Indie Hackers, and the exact same outcome happened for Stripe.
Courtland: Again, I don't measure, would you have used Stripe? It's not even my goal to make people use Stripe. It's my goal to make people start companies and I want people who would never have started a company because they didn't think it was possible, they hadn't seen anyone like them start a company, they didn't see a path.
When they hear a story on Indie Hackers podcast, or when they go on the forum, and they see somebody who's like, I met a YC founder at the Stripe event a couple of years ago, and I was talking to him and he's like, yeah, I love Indie Hackers. I’m like, what’s your experience with it? He was like, I read the story you did with this guy who started this review site, and I'm like, I'm way smarter than this guy. I could start a company, so I did. Then, I got into YC, and then I don't go to Indie Hackers anymore. That's pretty common. I meet a lot of people like that who were just inspired, and they literally started because they just read that it was possible.
When I think about me, I started my career because people told me it was possible, and spreading those stories helps people get started. That's literally all I care about. I don't care how many of these people end up using Stripe, that's the job of Stripe engineers and product managers to make Stripe the best product.
Ben: Alright, so it looked like you were writing some sequel there in the background while I was pontificating. What did you come up with?
Courtland: We had exactly 1403 users on the day that we got acquired by Stripe.We're 100X bigger today.
Ben: Almost exactly 100X bigger.
Courtland: Yeah, almost exactly 100X. Just pretty cool, it's cool to see that—
David: Wow, that's cool.
Courtland: There's a lot of stuff to look into. How much bigger is the podcast? How many more conversations are people having? Because it's not just about having more people, but it's about engaging them more. How many return visits do people have? We track a lot of random stuff, but the number of users straightforwardly, 100X bigger in three years.
Ben: It's awesome. It's a bet on the internet being able to enable people to create far more companies than they otherwise could have.
Courtland: Did you see these stats that came out last quarter about new business creation, where it's 600,000 people a quarter in the United States are creating businesses 10 years ago, and then last year was 800,000 people a quarter, and this year, it's 1.6 million people created a business or filed to start a business in Q3 of 2020, which is insane.
David: So cool.
Courtland: It’s doubled.
Ben: Aren't there more and more winner-take-all opportunities? Are we seeing—now, we're well into the playbook—but are we seeing basically a barbell-ification, where the big startups consolidate to only a few big winners in each market, but then there's a massive opportunity to go after a long tail?
Courtland: Yeah. Number one, there's a lot of these winner-take-all startups but almost all of them create niche business opportunities for other founders. It's not this exclusive thing like, oh, Facebook took the social networking market, now there are no business opportunities. It turns out, a ton of media companies get started off the back of that, and a ton of app companies get started off the back of that, and these companies teach you how to build a Facebook page to get started off the back of that, so it's an Indie Hackers. You have to worry too much about the winner-take-all companies.
Then we have all these platforms—YouTube, Substack, OnlyFans, Arguably, Twitter, where people are just building audiences and businesses off the back of all those things. What’s cool is all the niches are taken, there are no ideas left. Also, what people underestimate is just the number of people adopting technology for the first time. Just because Zoom exists, doesn't mean everybody uses it.
We've seen very clearly this year way more people are using Zoom because they've been forced to adopt this thing that's been ignored in the past because they didn't want to. As more and more people get on the internet and create businesses and use these products, it’s more opportunities, and then most successful Indie Hacker businesses sell to other businesses. It’s the self-fulfilling chain reaction where the more businesses there are, the more products they need. It's cool to see it accelerating. I wouldn't be surprised if that number in a few years is five million Americans a month creating an online business.
David: Yeah, what I was thinking on that is, you've got the platforms—Stripe or Shopify—and then, you've got people that start Shopify stores, or start businesses on the internet, and use Stripe, but then there's this whole other category that is perfect for Indie Hackers of like, oh, well there's actually stuff that you can build to help the people that are using Shopify, that are using Stripe. There's so many businesses that have been started around Shopify and Stripe, too, that are not a business on Shopify. They’re a business that provides us a custom set of tools for a certain set of users that need hobby businesses like your hobby game store, and you are both buying and selling from your customers. Your customers come and trade in stuff, you can run on Shopify, great. But you also need some custom functionality to buy stuff from your customers. Boom, business is like—
Courtland: A lot of the smarter founders are figuring out ways to escape the competition. Okay, you can build a Shopify plugin, but it's a lot of other Shopify plugins. It's a cool opportunity but then you get crowded out. I'm talking to a guy tomorrow, his name is Jordan O'Connor, and he's got a cool story where he's a father, a husband, he had a full-time job, and he would eek out time every morning to work on his business because he knew that after 8:00 AM, Sam is going to be awake, he's going to have no time at all to do anything. He ended up doing, was escaping the competition, and he built a bot for this app called Poshmark, which is huge.
A lot of people buy and sell their used clothing on Poshmark, but they don't have a marketplace. They didn’t even have an official API, so you just reverse-engineered things. There's not going to be any competition here, but it's the same playbook, build an ancillary tool for this bigger platform. He bought a bot that helps you do well on Poshmark. He got to $20,000 a month and now he quit his job, he's just set, and he's just doing other fun projects that interest him from year to year, while that bot makes money for him in the background.
Ben: Magic of software.
Courtland: It's pretty crazy.
Ben: Alright. I'm going to start bringing us home here. Courtland, answer this question however you see fit, but how would you grade the Indie Hackers acquisition by Stripe in terms of was that a good use of capital and resources for Stripe?
Courtland: Oh, A+. I’m slightly biased here. Stripe is a company, as you may know, that has lots and lots of money, and the Indie Hackers’ acquisition did not cost billions of dollars. It's generated only goodwill toward Stripe—more customers, more users for Stripe—and it's done well for literally everybody involved. Stripe’s happy to have it. I'm happy to be part of Stripe. For the people who use Indie Hackers, they're very concerned early on, they're very worried, and I don't think I've met a single person who said they aren't happy that it happened. It's hard to imagine it having gone better.
Ben: Should more people do this? The way that I'm categorizing this in my head is they made an investment to ensure the continuity of this thing that was creating new customers for them, and do other companies do that? Should more companies do that?
Courtland: They should be a lot more creative and imaginative. As humans, we have this impulse to just mess with things. It's hard to buy something and then not touch it. It's really hard to do that. When people think about like, okay, if I buy this, what am I going to do with it? It's going to be so much work. You have to do this, or do that, and they don't make these acquisitions. Whereas, with Stripe, they are very much like no, Cortland’s doing a good job, and we don’t have to do anything, and if we can just ensure that it keeps going, like you said, that's a huge win by itself.
But there are other ones too. One of the trends we're going to see going forward is tech companies basically owning some media company, which is super powerful because media companies connect with actual people on the ground. In a way, Indie Hackers is still very much a media company, I still spend a lot of time in the podcast, I spend a lot of time under newsletter, put out a ton of content, and we're becoming a platform, almost like Substack Ask, or we’re enabling other people to build newsletters and grow their audiences on Indie Hackers.
Even without just having Indie Hackers continue to exist, and even without it driving access, additional customers for Stripe, it's just a good way for Stripe to be able to communicate in the future if it wants to—we're launching this thing or where we think this about the world—and now they have a place that's not just Hacker news or Twitter to do that.
David: Has Stripe done anything else like this since you've been bought?
Courtland: Yeah. Stripe has a magazine called Increment Magazine. It’s increment.com. It's the best magazine for all sorts of work that gets done. They've done issues on software engineering and APIs, and the Cloud, and being on-call. People love this magazine. It’s well-produced, and it’s created by, initially, Susan Fowler, who's the engineer who blew the whistle on Uber back in the day. Now, she works at the New York Times.
That's a cool Stripe project that I don't think gets enough press and attention. There’s also Stripe Press, which is an in-house thing, it wasn't exactly acquired, but all these initiatives involve often people who come in from outside the company and help, they’re moon shots. I put it in a very similar category to Indie Hackers even though it's different but it's something that most companies wouldn't do. But Stripe trusts like, okay, what if we put out these books that help people become better founders, make better decisions, start more companies.
It's hard to measure how many people actually read this book and made a decision because of it, but we can trust that they will do that because we know that's how inspiration works, and it will increase Stripe’s bottom line.
Ben: Yup, makes total sense. For Acquired listeners—because I know we're releasing this in both feeds—where can people find you? What should they check out first of the various Indie Hackers and Courtland properties?
Courtland: The easiest way to get into Indie Hackers is the podcast. If you just go to your podcast player and search for Indie Hackers, it'll come right up top for you. Check out any of the episodes, they're all pretty good, they're all different stories of founders and how they succeeded. I just recommend listening to a few of them, and really absorbing what is this path like, how can you start off maybe as an Indie Hacker then eventually grow to start a much bigger company. I’ve interviewed lots of founders of YC-funded companies and VC-funded companies, but also tiny Indie Hackers that don't want to grow anymore. Check out the podcast and you can find me on Twitter, @csallen.
David: Love it. Thanks for joining us. This was a blast.
Courtland: Yeah, it was a lot of fun. Thanks for having me, and I'm looking forward to listening back, hearing my own voice on the guest side of things.
David: We’re looking forward to this being far from the last episode we do on Stripe and Orbit companies in the future. It's going to be probably an enduring Acquired company here.
Courtland: Yeah, looking forward to listening. Thanks, guys.
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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