Jason Cohen AMA

Depends on what your *personal* goals are for your business.  You raise money generally when you want to "go big or go home" -- not only growing as fast as possible, but because you want to build a truly huge business.  Think $200m+/yr in revenue, but more like potentially $1b in revenue.

To build truly large businesses *in tech*, you want to reduce as much risk as possible, since it's already almost impossible to build such a business.  You want to get there as fast as possible, because time is the enemy (competitors, market changes, tech changes...).  You want the best team early on even if they're expensive.  You want to not be budget-constrained for office space, materials, marketing, etc..

Thus, money is the fuel that helps address the major risk areas.

If you have any other goals at all for the business -- retaining control, being profitable, controlling your destiny, making your own mark in the world, working with the people you chose, etc., then raising money is unlikely to be optimal.

It comes and goes in waves.  As WP Engine grows and changes, I sometimes feel like I'm the perfect person for the job(s) I'm doing, and other times as it describes in that article.  I think that's the normal state of things, especially when you're introspective.

Sometimes the little voice is correct.  There ARE always people more qualified than you to run a certain function or make certain decisions or even lead things, even in your own company.

In fact, as the CEO, if you're NOT hiring people better than you to lead every function, you are not doing you job!

It's this last fact that gives me solace.  I'm not supposed to be the best, and if I were, I'm actually failing.

It's never "one thing."

For SaaS businesses with intent to "go big or go home" I would say:

1. Take investment as soon as you have enough proof that you're not selling your soul, and then take as much as possible so it's never an impediment.

2. Focus on top-line growth first.

3. If cancellations > 3%/mo, fix that, otherwise keep it from growing.  (For now -- eventually you need to do better!)

4. Build a business where revenue for a pariticular customer grows over time, by itself as much as possible.  It's the only way to build a large business.

Procrastination and exhaustion are not the same thing.  One is avoiding things you need to do because you have an emotional desire to not do it, and the other you can't bring yourself to do anything.

Burn-out is very real, and a real cause of startups "failing," because they ALL are that hard, and often a person cannot tough it out, at least not a that point in their life.  Here's an guest-post on my blog about that: http://blog.asmartbear.com/burn-out.html and here's my own personal exposition on this: http://blog.asmartbear.com/startups-emotionally-draining.html

Procrastination is something you also have to deal with.  We all have aspects of the business we prefer, so we put too much time into them or, rather, we starve the other things that need attention.  The quintessential example in high-tech is the technical founder who won't work on marketing/sales, so the product is interesting and no one will find/buy it.

Of course I've been there, not only "all the time," but in the case of procrastination, EVERY DAY!  These are the personal battles that are required to do something this difficult and wide-reaching.

It's one of the reasons business fail so frequently.

We also had trouble!  Our first version of it failed.  Our second version would probably also have failed, except we used a great outside firm (Marketing Clique) to run it, and they've done a great job.  It took us almost 2 years to make it really work, and it's still changing all the time.

It's a hard nut to crack, and you're always fighting other companies who are willing to spend ridiculous CAC -- even when the payback period is unthinkable.  If it works, it's great, but you can't rely on it.

When I was starting in 2000, it was Joel Spolsky and Eric Sink.  Both wrote business articles from the point of view of the geek-founder, but also for boostrappers which I was as well.

Today, and now that I'm building a large, scaling company, I'm inspired by big thinkers and big risk-takers.  I know it's cliche, but Bezos.  And probably Musk for the most inspiring products.  Also Reid Hoffman for being a founder of a multi-billion-dollar company, getting the "credit," but also knowing when it was correct to bring in another CEO (one didn't work, the next was wonderous).  I admire that introspection.

That's a lot of questions.  :-)

There isn't a lot of competition for the sector we're going after, which is people who have money to spend for quality (i.e. speed, scale, security, service, and tech support who will actually answer WordPress questions), or people who BUILD WordPress sites (developers who want tools like git-push to deploy, staging areas, modern backups, profiling tools).

In the latter, think "Heroku for WordPress."  In the former, think "What RAX did for managed hardware."

In fact there's almost no competition there, but we see a tremendous opportunity in that space.  So far the growth rate of the company is justifying this theory.

In terms of macro trends, I believe that all applications that can be done "as a service" will be. This started with email (the first real "app" to be outsourced and in the "cloud" before there was a cloud), then with virtualization of hardware -- in which the "instance" is a service and not actual hardware.  Apps of all sorts of next, already with CRM/sForce, with Heroku, with hosted Java (Heroku, CloudBees), with transactional email (SendGrid, Mailgun, and many others), with Drupal (Acquia, DrupalGardens) and of course with WordPress.  

I believe "managed services" at any level of the stack, when executed well, is something that a large number of customers of that app want.  And because WordPress is so massive (about 20% of all domains on Earth today are currently powered by WordPress, including 20% of the top 10,000,000 sites by traffic), that "number of people" is very large.  And WordPress is growing.

We differentiate in both small and large ways.  In small ways, our uptime is better than our competitors, our security promise is better (we're the only ones who will fix security issues as part of normal tech support), our support is better (we're the only ones with a telephone number, and we have more support folks per 1000 customers than anyone else).

In large ways, we're the only ones thinking about it as "Heroku for WordPress" meaning not just the deployment side (for which there is competition at the low end, but almost none at the Enterprise end), but for the developers of those sites.  No one has the developer features I mention above, and we continually put out more functionality for them.

There will of course be more in the future but I'm not going to publish our roadmap here.  :-)

I have no idea what will happen in 100 years.  Or 20.  Or even 1.  But it's hard to bet against the growth of the internet and content.

Here's exactly how I think about solving Marketplace business models:  http://blog.asmartbear.com/marketplace-business-model.html

To answer your specific question about "people with multiple interests," I would respond to you "Everyone has multiple interests."

So I would ask "What niche of people NOT ONLY have multiple interests, but VALUES that fact and CARES about it in some tangible way?"  Without understanding your product I can't comment more specifically (although feel free to expound here and I'll try!), but you need to find people who not only "match the criteria" but are zealots about the specific thing you're doing.  And ideally they will pull in the people who also match, but are less zealous.

I've built, sold, and am currently running several multi-million-dollar software companies, both bootstrapped and funded.

I like all sorts of tech and am happy to discuss anything from ideation, validation, fund-raising, boot-strapping, marketing, dev, founder struggles, you name it.

http://blog.asmartbear.com
http://wpengine.com

We do all sorts of unsuccessful things!  :-)   The first time we did affiliate marketing was an abject failure.  We tried really hard too.  The second time almost was, but then it caught on a bit and now it's successful.  It took 2 years and a restart for that to work though.

Second huge failure was Facebook ads.  We've restarted that attempt maybe 4 times.  All complete failures.  Maybe FB is just not a good ad channel for us, or maybe we just suck at that.  Don't know.

Third was AdWords.  We still do AdWords but we've alternately had great success but then great failures there.  Some campaigns have good ROI but some of them are $1000 to acquire a customer.  Some of that is other companies doing weird things with the auctioning, but some is probably just us.

There's a lot more. Of course the key is to test with an amount of money you can afford to lose so that the "failures" are not really company failures.

Thanks for the kind words!

My blog doesn't generate many leads. In fact, here's an article about how it didn't, even though I expected it to: http://blog.asmartbear.com/reputation.html

I first had the need in my own blog, going down every Monday when it got on HackerNews.  I asked around to see who else was doing this so I could just pay $50/mo and not have the WordPress blog go down, but everyone said "don't know, but tell me if you find it, I need it to."  So it converted into customer development and it looked good.

Here's the story of the vetting: http://blog.asmartbear.com/vetting-startup-ideas.html and in general how to tell when customer development is going well (like WP Engine) or not (as with other ideas I had before that): http://blog.asmartbear.com/good-startup-ideas.html

To your last question:  WordPress today powers 20% of every domain on Earth, and nearly 20% of the top 1,000,000 domains by traffic.  That means: both large and small.  Enterprise WordPress penetration is nascent, but being on the front end of a new and growing market is valuable.  "Bloggers" indeed don't spend much money on hosting, but few of those top 1,000,000 domains are for "bloggers!"

WordPress has an (old) reputation as "blogging software."  It's not, it's the largest general-purpose website CMS platform on Earth, by an order of magnitude.  The market is amazingly large.

Well you asked what it's like *now*.  :-)

But yeah I think it doesn't go away.  You just manage it.

WordPress won't move away from PHP.  It can't even move from MySQL, which would be much more useful.

Yes we're extremely data-heavy here at WP Engine.  We have lots of dashboards, tools, CSV exports for Excel wizards to mess with, etc..

My first metric is sign-ups.  (Growth is #1!)  My second is ticket volume.  But I don't really run the business on a daily basis like that -- I spend most of my time on monthly metrics, looking for trends and explanations in the mechanics of the business -- the "why" behind the numbers.

The trouble with going head-to-head with them is: (1) they're very well-capitalized, so they can do customer acquisition with pay-back periods that you cannot afford, which means they win that battle, particularly in auction situations like AdWords, (2) they have a lot of experience and infrastructure so their marginal costs are close to zero, (3) their growth engine and development engine is mature.

So I would turn it around and ask "why do you want to do that?"  I don't mean that in a bad way -- I'm dead serious!  Because I think the REASON you want to do it-- the type of company you want to build, the product insight you want to bring to market, the pain or frustration or amazing thing you see -- that's the thing to build your company around. 

If you can say what that is in a few sentences, I'm happy to brainstorm further.

If there's honestly not a real answer, then I'd submit to you that you NEED that kind of passion and insight to build ANY sort of company.

I've found that the more I try to self-promote, the LESS I get views and shares.  Rather, it's out of my control, and I have to rely on a steady stream of good content and the Internet "will provide," even if it takes years to build it up.

Here's a post from 2009 (!) about how I did it:  http://blog.asmartbear.com/how-i-got-6000-rss-subscribers-in-12-months.html

Now I have >40,000 RSS subscribers and the information here hasn't changed in terms of jump-starting a following.

Thanks for the kind words!

The word "scalable" is usually reserved for when you have real traction with an accelerating growth curve, and also at a certain absolute scale.  That is, it's easy to "double every month" when you have 4 customers, so a 100% MoM growth rate doesn't mean you're "scaling!"  But, doing e.g. 5x-10x in a year starting the year with e.g. $1m run-rate, that's scale.  Or 3x in a year starting with $5m is scale.

It really means "human scale" more than anything else.  You're hiring at a clip where the scale itself is one of the biggest threats to the business.  It's hard to hire quickly and keep quality and culture.  It's hard as people's existing positions shift around or become irrelevant.  It's hard as you need different skillsets to navigate the new challenges.  If you get it wrong, you get very behind and broken very fast.

If it's still just you, by definition you're not scaling yet -- you'd be underwater!  :-)

Don't worry about a threshold.  It's sort of: If you have to ask, you're nowhere near that threshold.

I would ask this: How many customers and/or what revenue is needed so you can quit your day job?  That's the only interesting milestone at this time.  If you still can't, you don't even have product/market fit yet.

As a devil's advocate -- because I'm genuinely trying to help by challenging, not trying to shoot you down -- I would say:

The well-documented financially super-success of that company demonstrates that CUSTOMERS DO NOT CARE about the things you list.

If you think they SHOULD care, you need to be able to articulate that in SECONDS on a visit to the home page, and in interesting stories which can be spread in the news, on social, etc., so that it "gets around."

If you think they DO care, but there's no other choice, then you need to tap that desire directly and strongly.

But I would say the evidence until proven otherwise is that they do NOT care.  It's hard to educate.

You might start in a niche that already DOES DEFINITELY CARE about the things you offer, and try to own that niche.  Then expand outside that once you have some stories and advocates at your back.

If you think that, you're probably right.  :-)

I say that as someone who writes about running businesses and hopes for the sake of my ego that you in fact continue reading.  :-)

I do try to keep reading to stay fresh, think of new things, etc..  Sometimes reading other forms of writing also helps you think though.  Business writing is best if you're researching a specific question.  Maybe find some bloggers/sources who write infrequently but high quality so you can keep reading but not too much and not wasting time on fluff or "news" or fads.

For me personally, the only way to help/mentor is to have a two-way conversation.  I do very much like the detail you provide -- awesome!  That gets a lot of mundane stuff out of the way and gets the gears turning.

But for many things the answer only comes by asking lots of questions of the founder. Their goals, their market, their perception, what they've done or seen, what they mean by "validation," and so on.

I find lots of so-called "mentors" give advice without seeking to understand first, which means you have no idea *really* whether that's the right advice *for you*.  I refuse to follow that fallacy -- it's just an ego-stroke for the mentor and a crap-shoot for the founder.