Building a business gives you a lot of freedom. But freedom doesn’t mean you always get what you expect. It’s filled with zigs and zags.
The same is true of the path to success. It is messy. And today’s entrepreneur path to success was no different.
Spencer Fry had just sold TypeFrag.
As a recent college graduate and newly minted millionaire, 22-year-old Fry landed in New York City. He strolled into Barney’s on Fifth and spent $4,000 on a tan suit, which he later regretted.
Although Fry also had a snazzy apartment on Park Avenue, he saved most of his money. And he was ready to start his next business venture.
Fry began to create Uncover, a forerunner of Foursquare. He wanted a professional edge, so Fry reached out to Jason Nelson and Dave Gorum and plopped $500 on flashy business cards. Soon $500 turned into $50,000 in design work. And their relationship bloomed.
Six months later, Nelson and Gorum approached Fry to join their team as the CEO.
Fast forward four years.
Fry took Carbonmade from a side project made by Nelson and Gorum into another booming business. With a few differences in vision, Gorum and Nelson bought out Fry over the next four years.
After a three-month break from Carbonmade, Fry was back to working on Uncover. It was a B2B business. And while he did well and made a lot of money, he hated it.
“I had to sell someone. It was arduous and complicated, and I often wasn’t talking to the right person.”
Fry reflected fondly on his Carbonmade days. He enjoyed working with fellow masters of their craft. Though these people were business owners, they also were individuals.
“One of my friends in New York (Erf) was the #1 tutor for the GMAT, making $500 to $1,000 an hour. We were watching the World Cup together and I was asking about his business.”
Living in New York meant a major commute for Erf.
“I asked him, ‘Have you ever thought about teaching online?’ He had only taught people offline. After some discussions, I started building tools to help him run a business.”
That got the ball rolling for Fry to build Podia. The other catalyst came from his parents, both of whom are professors.
“My dad taught online through Yale. He had millions of views, which was also an inspiration.”
Fry’s father, Paul Fry, was one of the first professors of Yale’s massive online open course Open Yale. Between the artist and designer friends he made through Carbonmade, Fry was itching to get back to serving this community.
First, Fry began by coding and designing the product for Erf. It was first called Coach.
“I was building [Coach] to address [Erf’s] needs. When I started building it for my friend, I targeted other tutors on Craigslist.”
It’s these customer conversations that helped Fry make sure he created a tool that solved an actual problem.
“I know the advice talking to customers is cliche, but it’s critical. Very early on, we were finding out their needs doing customer development.”
“I realized we served our customers. And invoices were used in under 10% of use cases.”
There were more problems Fry noticed. Almost everyone who used Coach was not a coach or tutor. In fact, the majority of his customers did not fit these buyer personas because they were creators.
“When we hit our first 100 customers six months to a year later, I realized maybe 10% of our customers were tutors.
Tutors and coaches do a lot of payments through cash and check, not online. They were not motivated to sell courses or downloads because they felt they were cannibalizing their main source of income. The people who were fans and sharing our product with others weren’t those people, but content creators.”
It goes to show that while you should focus on one customer, as you grow, you need to keep learning who truly are your core customers.
I think about this with our product roadmap. Our customers tell us who they are and what they want. Sometimes those features match up [with what they use], sometimes not. You get data points and then push the roadmap forward. Sometimes we’re right, sometimes we’re wrong.”
After discovering most of his buyers were creators, Fry continued to build around their creator's needs by offering membership sales. And to better brand his company, he rebranded Coach into Podia (the plural form of podium).
To keep things simple, Fry had one pricing plan.
“What’s the point of launching with 3-to-5 plans? We started with one plan at $29 a month. The second plan came a year later when we added membership, which started at $49 a month.”
Like most entrepreneurs, Fry admits he did not have a systematic approach to pricing.
“Honestly, it was a random price point. I wanted to charge so it wasn’t free or cost too much money. But I did not want to dissuade people either.”
Fry also experimented with a freemium plan, but soon discovered this hurt the creators as much as it did his revenue.
“We used to have a free plan, but then we switched to a 30-day free trial. Free customers are expensive. It costs money from a hosting perspective, customer support, and every freemium feature you create.”
But why does Fry feel freemium hurts creators?
“They often don’t value putting in the time for the course they’re building because it’s free. It’s counter-intuitive, but you are actually helping them to force them to pay.”
In time, the 30-day free trial went out the window in favor of a 14-day trial.
“We had the 30-day plan for a while. We saw that most people were upgrading in the first two weeks. You either upgraded early on or on the last day. So we switched to a 14-day trial and conversions went up because they had less time to procrastinate with our tool.”
It seems irrational. But sometimes the best way to serve your customers is to get them to pay faster. Because they take themselves and your product more seriously.
Fry took investor money two years into building Coach. He has no regrets. But it was almost out of the blue.
“I wasn’t planning on taking investor money because I had bootstrapped my previous businesses. I had a casual intro to a VC, I saw the term sheet, and then said ‘Why not.’ That early funding allowed me to build the team I wanted much sooner in the process.”
Fry cautions that not every investor is worthwhile early on.
“It really comes down to the investor you work with. Our investors are quality. They understand the VC investing and are in it for the long-term. There is pressure to do well with any successful company. A little pressure is good. You want to build something that’s valuable. So the pressure from investors isn't necessarily a bad thing.”
The challenge is when you get an investor who’s greedy and impatient.
“A lot of bad investors think they need to make money on every deal. Every investor that’s successful knows they should support the entrepreneur, be helpful when they can, but stay out of the way. Investors aren’t the business operator, they’re the investor.”
A quality investor will do more than give you money. They can help you tap into their network and provide advice around the business strategy.
“We have board meetings once a quarter. These investor meetings help me think about what went well in the last three months, and what didn’t.
We also ask about high-level topics. [Investors] can give advice because they’ve seen what works for other companies. Everything from the hiring processes, marketing, and general business advice.”
In the beginning, Fry did not do a fancy product launch. Almost all the first 100 Podia customers came through Craigslist.
After noticing people were sharing the tool with others, Fry created a referral program. And his team finished it just in the nick of time.
Fry was digital friends with Justin Jackson, a Canadian product manager, entrepreneur, and creator.
“I’ve known Jackson for a while on Twitter and I was on his podcast. I was sharing with him early on what we were doing. It piqued his interest and he took a shot.”
That “shot” became fruitful for both Jackson and Fry.
Jackson was already making over $146,000 with his digital products. But he was frustrated with his platform provider.
“At one point, I reached out to Spencer, because I wasn't happy with the provider I had already. All I could do was digital downloads. I couldn't do self-paced courses,” says Jackson.
Jackson wanted a place where he could sell both and build his business the way he wanted.
“I had this list of things I wanted. And Spencer, from day one, told me, ‘We want to support you as a maker. We want to craft this product around what people like you.’”
Since using Podia, Jackson made over $83,000 with MegaMaker Club. He began hosting coaching calls and charging $500/month. Needless to say, Jackson became a raving fan of Podia.
With Podia’s referral program in place, Jackson began sharing Podia on his blog, podcast, and Twitter community.
“Justin helped us get our next 100 customers and into the mainstream market.”
Product-market fit is still a vague definition for many entrepreneurs. But like Marc Andreessen, co-founder of Netscape, Fry believes you know you’ve hit product-market fit when it happens.
“It’s hard to know exactly when you hit it. It’s a gut feeling, reaction sort of thing. You’ll get a lot of new trials, people start talking about your product in the market, you’ll get compliments with 9’s and 10’s on NPS.”
Building a startup is challenging at every stage. But it becomes a little easier after hitting product-market fit.
“It’s not like the hustle is over, but you can breathe a little. It’s super stressful going from zero to product-market fit. From there, you iterate and continue to make customers happy.
I had a ton of fears it would not work. The biggest question I needed to solve was ‘Who is my main customer?’ I spent a lot of time trying to figure this out. Now that I know this, ‘What do they want?’ Those are the two big things to do early on.”
This is why customer discovery interviews are important. Talking to your customers allows you to find out who they are and the problems they have. You won’t get this perfect from the beginning, but some data is better than no data.
While Fry passed on a product launch for Coach, he had a big launch for Podia.
“When we rebranded in December 2017 we had a proper launch. We were on Techcrunch, Product Hunt, all those places. It was absolutely meaningless. It didn’t help us get new customers. It was beneficial for SEO, but that’s about it.”
After I asked Fry for more information, he feels product launches can do more harm than good.
It can be demoralizing because you get a ton of test accounts, but they don’t buy. The two benefits for us was:
But I could count the number of paid customers on one hand.
At Growth Ramp, I’ve found there’s no better way to create a growth strategy for entrepreneurs than to talk to their customers. Fry agrees.
“A lot of entrepreneurs building their first product either build too much or too little. It’s hard to find a middle ground that has enough value, but you need input. Finding the middle ground is like walking a tightrope.”
It isn’t easy knowing when your product is ready to ship. But you need to continuously talk to customers to make sure you are headed in the right direction.
“There are two things that made us successful:
It’s a cliche. But if you’re not talking to customers, you don’t know what’s valuable. We’ve stressed to our team to get [a feature or product] 90% complete, release it, then build it out to serve the customer.”
Iteration has allowed Podia to become a world-class platform. And Fry was determined to see it happen.
“A lot of people give up in a year. I want to stay persistent and build what my customers want.”
For more interviews like this, check out the series 1,000 True Fans.