Hey there, Susan here. I am working on some really cool updates for my course, Not Rocket Finance, that will be releasing at the end of March. So I am going to take a very short break from releasing new episodes here to give myself a little bit of breathing room to finish those updates. So, for the next three weeks, I'm going to be releasing episodes that are the best cuts from three of my very favorite Break the Ceiling episodes. This week,, I'm revisiting my interview with Justin Jackson. He's the co-founder of Transistor.fm, which is the company that hosts this podcast. And if you listen to the recent episodes about digital privacy, you probably heard me mention them. In this interview, Justin and I talked about how to look out for opportunities, and we went pretty deep on how to build margins into your business.
I don't know that you guys have necessarily gotten to this phase with Transistor, but how do you think you view the demand of running a company that's sucking up all that really easy available demand in a market? That you picked a good market that is growing, that there is demand that you can kind of just easily suction up to running a more, a slower-growing business with more sustainable growth. That's a very different kind of company that you're running, a very different approach. How do you balance that? How do you make that transition?
Justin Jackson (01:29):
It's tricky. In some ways, I don't have the answer because in the last year there's been new competitors coming into the market, and we've definitely seen an impact from that. In the beginning, we benefited from this being the new kid on the block. We're the fresh face. And, if you had been with one of the old crusty providers for a long time, and they hadn't updated their UI in a long time, it was easy for folks to go, "Oh, well let's look at this new company. This looks great." And, we had some natural advantages, but there's new competitors that have come in that have natural advantages themselves. One thing I've noted before is that John and I aren't really connected to the make-money-online target market, so there's this whole group of people that, and a lot of them pay for podcast hosting, and we're not really connected to that market. And so, some competitors who are more connected, have some natural advantages there.
Justin Jackson (02:39):
And so, yeah, tactically, these days, I'm thinking about, "Well, how do we respond to that? What do we want to do? If I'm not super excited about that particular group, can I even compete there? And, maybe it's not worth it because if I'm not passionate about it personally, I might not be able to compete in the same way that they can." I don't know if there's any easy answers there.
I doubt there, all evolution of business, I'm sure there's not.
Justin Jackson (03:13):
And, I think, one advantage we do have though, is we did grow fairly quickly to our current point, and we're still growing now, but we have a lot of margin. Both financial margin, but also personal margin, mental margin. We have a lot of calm in our life right now. And, our burn rate is we're profitable every month, so we're not burning cash. We have, like I said, we have margin. And competitively, that is a thing. So there can be a lot of entrance to the market.
Justin Jackson (03:52):
But, if they can't get to a sustainable place or strategically, they are making mistakes and they don't last, then we'll be there. We'll still be here, because we're in this for the long haul, we're not trying to, in some ways, that's why we're not trying to grow super fast or apply all sorts of short-term growth tactics, because in my mind, the best growth tactic is, if you're riding a wave, you're surfing a wave, and you're like, "Okay. Man, I really want to ride this wave for a long time," and there's 10 other people on it with you. Well, hopefully you've just got the skill and the margin to wait for them all to wipe out and-
To fall off.
Justin Jackson (04:35):
Justin Jackson (04:36):
And then you now, all of a sudden you have the whole wave to yourself. So, I think that's one thing I think about, is how can we just be sustainable? How can we be calm? How can we not be super reactive, even though we're tempted. We're tempted to react to everything our competitors are doing. We're tempted to make split-second decisions and to go after easy, or not easy, but quick wins. And, I think the right approach is to just hold the ship steady, and keep going, do things that matter, invest in the future, and just grow at a reasonable pace.
Yeah, it's a smart end, at least in the SAS industry, unusual play, even though it's a very commonsense play. Be profitable, give yourself enough room to be able to choose what markets you want to go after. If it's something that you're not passionate, if you're profitable and you're sustainable, you can choose not to go after that market, especially in an industry where everybody's taking VC money and trying to grow at ridiculously fast paces, and then just burning cash and realizing that, "Oh, whoops, we ran out of money, we got to shut down."
Justin Jackson (05:57):
Yeah. Yeah. I think it's funny, but being conservative is a great growth strategy. Because if you're conservative, if you don't hire a bunch of people, and you're not trying to grow really quickly. And, if you're just kind of holding the ship steady, growing at a good pace, and you've got tons of margin, but everybody else is playing these games. And we're seeing this work itself out now. Lyft and Uber are both trying to IPO. And their financials are coming out now, and we can see this is just not sustainable. And in some-
It never was. That's my problem, is it never was. Their business model was never profitable.
Justin Jackson (06:43):
Yeah, but think about how many growth hacking case studies you saw?
Oh, I know everybody's like, "Oh, I'm going to be the next Uber."
Justin Jackson (06:52):
And, so I think there's a little bit of a reckoning coming out now. I think, these things that everybody else was doing. Everybody's buying Facebook ads, and so I've got to buy Facebook ads. And, at the beginning, of course, there's good returns for Facebook ads because it's brand new, it's not saturated. But now, there's startups that are basing their funding pitches on all of these high acquisition tactics, like investing in Facebook ads. And it's just not sustainable. It's not a good channel. And, part of that is the market you choose, what kind of customers are in that market, how motivated are they to buy just intrinsically? Are they searching with intent for your product?
Justin Jackson (07:43):
And, in marketing, we're having a little bit of a time of reckoning right now, where those case studies where it's like, "Oh wow, they grew 300% month-over-month using Facebook ads." Now, we can look at those retroactively and go, "Okay. That worked in that three-month period, but now it's three years later and that company has folded." So, a long-term view, in my view, feels like the best, that's the best approach. And there's obviously no guarantees, but sustainable just month-after-month, just putting in a good amount of foundational work that's going to pay dividends in the future, while at the same time, having as much margin as you can in your business, just feels right.
If you liked these cuts and you want to hear more from my conversation with Justin, you can go listen to the full episode. It's Episode 24, and we'll drop a link to it in the show notes. Now, even though I'm not releasing new episodes for the next few weeks, I am still meeting live with smart business owners like you at my Dollars in Decisions round table. The next one is happening on Tuesday, March 16th, at 2:00 PM Eastern. And, at the last round table we talked about capacity issues, and we had a really great discussion around getting into maintenance mode in your business. So, come join me for the next one. To register, go to scalespark.co/dollarsanddecisions, that's all one word, no spaces. Or, you can just click the link in the show notes. Hope to see you there.
Break the Ceiling is produced by Yellow House Media. Our Executive Producer is Sean McMullin. Our Production Coordinator is Lou Blaser. This episode was edited by Marty Sefeldt, with production assistance by Kristen Runvik.