0:00:05 - Alex
Welcome to the Experience Focus Leaders podcast. I am delighted to bring to you Lloyd Lobo. Lloyd is an entrepreneur, podcast host, community builder. He co-founded Boast AI and Traction Conference. He ran into 10 million in revenue as an ARR, as a bootstrap business and most recently Lloyd has authored a Wall Street Journal bestselling book from grassroots to greatness 13 rules to build iconic brands was community led growth. Lloyd, welcome to the pod.
0:00:44 - Lloyed
Super excited man. You bring out the energy you gave out and your energy is top rate, so I'm super stoked for this one.
0:00:51 - Alex
Fantastic. Well, you and I we go way back and I think it's sort of good to bring in that journey. So we connected in Silicon Valley back around early 2012, 2013,. When you were just kind of early stages of your journey and you were schmoozing and networking and building relationships and connecting and just bringing good vibes. And I think when I rebumped into you at Sastre which is one of our customers and you were one of the speakers there not too long ago you haven't changed.
You got this for a positive energy but a lot of wisdom, a lot of lessons from the last decade. So I'd love to hear a little bit about the journey to bootstrapping to 10 million ARR and what role did the community have a play in this? And I think that's everybody is going to be interested in the current environment to figure out how they can get there. And the community, on the one hand, is very cost efficient. On the other hand, it takes time and it takes a certain type of leader. So maybe you could dig into that a little bit and what it took to get it off the ground.
0:02:06 - Lloyed
Definitely, definitely. So I mean a long journey, but I made a LinkedIn post about this a little while ago, maybe six, eight weeks ago and I've been on now a LinkedIn detox because I spent a lot of time on LinkedIn and try to make my book a best seller. And then I'm like, okay, you know what? I need a break from social media, from LinkedIn specifically. So I took a break from LinkedIn last six weeks now. But I made a post about this and I'd said, basically, the best way to bootstrap a company to one million ARR and in fact this is how we bootstrap boast to 10 million with no investor money. And this was not a very dissimilar path than UiPath, which had one of the biggest IPOs during COVID Nine billion market cap now. And even Basecamp, which we all know about, iconic company from 37 Signals, also started this way, and that is start selling a service. Start by selling a service, and this is a very bad word, especially in the VC world.
0:03:12 - Alex
Oh yeah, all the VCs are going boom, non-scalable. Exactly. How is this going to be exponential? It's not exponential, it's just generational, it's non-generational.
0:03:24 - Lloyed
So, tell us why.
0:03:25 - Alex
Tell us why you're going in this direction.
0:03:27 - Lloyed
Yeah, so low gross margins, labor-intensive, unscalable two services. Like you know, there's a lot of naysayers, but the thing is this man, there's more than one way to build a successful company, right, and a lot of founders. What they don't do is try to internalize what's best for them. You know, the media has perpetuated this addiction to unicorn porn. In reality, the world is run by horses, camels, donkeys, cockroaches right. That the day-to-day businesses.
The thing is, I don't blame the VCs A lot of my friends are VCs in Silicon Valley, right? They raise a lot of money from institutionals and wealthy investors and that they got to show them an outsized return. If they can't show their investors an outsized return, the investors will just put it in the S&P 500. No, why would they give it to a VC? They want to see an outsized return and so to experience that outsized return. The VC doesn't do portfolio theory that this company is going to return 100 million and this one 500. They got to look at every company being like almost a zero sum, like this company is going to be a five, ten billion dollar company. What is the path to 100 million ARR in the next 10 years? Now founders mostly misguided from the environment there and the startup environment there are only coached to win the deal. Show them the big market.
0:05:00 - Alex
Tell me about the pitch, the pitch, like. I mean if you could count the proportion of startup literature about how to optimize your pitch, versus like how to actually like get real and get deep with your customer and like really understand what drives them and how to deliver value to them. And you know, like I think the valuable stuff is like 10 percent. And like what you're calling porn, which I would probably like the unicorn porn to start up for whatever it's sort of lightweight breezy. Every VC is going to write a post like here, by nine tips on how to, you know, impress me, me, me, me.
I'm so smart, like you know, and that's the bulk of the industry. And it's sort of mind-numbing Like why is this? Why is this going on? Because in the rest of the business literature I think it's quite like that, right, like people, they're still marketing books, they're still sales books. It's not all about fundraising, what. What's going? Why is the startup thing so, is it? You think it's just the, the power law that's twisting everything. But is there like some self perpetuating, you know, like everything is greener and my life is only meaningful, as if I had, like I have a disproportionate outcome. What's going on?
0:06:18 - Lloyed
Yes, I like we're going in this direction. Before I walk through why we bootstrapped and how we bootstrapped by an unconventional way, by selling a service, and I prefaced it by saying, like UI, path and base camp, and many successful companies have followed that path. Now raising VC is not wrong. Right, the VC wants to show an outsized return to their investors and if they don't, they won't raise the follow on fund. And for that they need to find companies that will hit that profile of nearly 100 million ARR in a 10 year period Triple, triple, double, double, double growth and the companies that have the propensity or promise to be a multi-billion dollar company in that timeframe.
Now, a lot of the literature, because of the power law and what media has perpetuated and what sells? Right, like you know, the seven deadly sins. One of the deadly sins is greed. The big number sell in the media. The big fundraising, the big ARR, the big IPO is the big exits, nothing wrong with that, but that's what sells. And so that's created this power dynamic where you got to raise money to build a big, successful company, now, yes, if you want to build a massive, high scale company, you want to hypergrow, right. You want to blitz scale. Yes, you got to go that path. Unfortunately, that is, that is the only path. It's like making a Steven Spielberg movie. There's only one way to make a Steven Spielberg movie is to make that movie by raising a lot of money, right?
0:07:50 - Alex
Well, look I think and if I do mind, if I interrupt just a second, I think you know I live in a B2B world a little bit more than a B2C world, even though we're democratizing B2B. So like when you say split scaling, right and a lot of the startup narrative that we hear, I think it got really influenced very heavily by the consumer startups right and the VCs, whether it's like B2B, b2c, you know same thing, right, like they're all looking for the unicorn. There's only that many of those. There are historically a lot more in the B2C world that were really unicorns. So it's sort of influenced.
That, like applying the blitz scaling techniques to the wrong model feels like that's sort of part of the narrative is people are not differentiating what works in the enterprise or mid-market B2B or SMB B2B versus what works in a B2C world. Do you feel like this generic advice kind of muddied the water and people don't know which? You know they're just following the generic Sequoia best practices but there is no like here's a Sequoia for B2B, you know, for an evangelical category which is completely new, versus where you disrupting somebody which is slightly different playbook. What's your take on that? Like you know, yeah, so.
0:09:13 - Lloyed
so here's the thing. Right, If there's only one way to generate a VC driven outcome, then all the advice is going to be best practices that get you there. Right. So, like this is how some of our portfolio companies that are best in class, that are triple, triple, double, double, double have you know that have built multi-billion dollar companies, have done it, and one of them is like hypergrowing, right, and so that's the advice suits the outcome, right, Always. And the outcome is set by the person people, rather distributing the capital. Now, here's the thing. Here's nothing wrong with that, by the way. Right, VCs need to make a return.
It's created a lot of super successful companies, but what I want founders to consider before starting the company is write few questions down for yourself. A lot of pain. We glorify a lot of successes behind it. After you know, instead of every success, or aside every major success that you hear about in the press, there's 99% failure in the venture backspace. Failure meaning founder burnout, founder fallout, founder replacement, company shut downs.
You know, before boast, I had only ever worked for venture back companies. My first job out of university and the last job before boast was working alongside founders. Started as a cold collar, then doing sales in an early stage company alongside the founder, and then running sales and then eventually doing boast, and all those companies prior to boast failed. Then I was in the founding team of a VC incubated company in the AI space in 2015, and that also failed. And so all my learnings, you know, point to it is a zero sum game, right? If you run really fast with the, you know, and you want to get to the other side as fast as possible, you might hit a few cars on the way and you might crash, right. And so the thing is my. I didn't have any success working for any venture back company that was trying to hypergrow. I only failed. And my co-founder, Alex, who originally is from Romania he is conservative in the true business sense. It is like let's make money, let's build a healthy business that customers love and want to pay for and stay, and then, when we can squeeze three out of $1, then we can raise money. So let's build a capital efficient business. So, nonetheless, I had only seen failures in the VC back, and so that was a bit of PTSD combined with having a co-founder. That's very real. I mean, he's an engineer plus accountant, so everything is let's make money right. Let's do it the traditional way. Let's make money, and so you know.
The question I asked advice, founders, today is you have an idea before you create that pitch deck, trying to show a massive time and try to chase VCs to give you money on your big vision? Ask yourself three questions. Number one what is my personal definition of success? And that personal definition of success is not money in your bank account, but what do you see yourself doing when, someday, you achieve this startup success where there's 10 million, 20 million, 50 million in your bank account. What do you see yourself doing? Number one? Number two how much money do you need to have in your bank account to fund that lifestyle? Number three is there a version of the startup that you absolutely do not want to work for? This will give you values, alignment and great companies, great cultures, great personal and professional relationships are built on great alignment. So when you write those things down, this is my personal definition of success.
My personal definition of success is you know what, by the time I'm 45, I want to hang out in Bali and like, do nothing. I want the option, you know, to do whatever the hell I want, and maybe do some consulting if needed, but I want to bum on the beach and do nothing for at least 10 years. Well, how much money do you need in your bank account to fund that lifestyle? And three, is there a version of the company that you don't want to work for and you may be like you know what. I don't want to work for a company where you know the tail is wagging the dog. I don't want to work for a company where there's incessant reporting and change. Or it may be like I want to build a multi-billion dollar company and I want to go, go, go and operate like I'm super charged on Red Bull every minute of the day. As long as you're building your definition of success, it works.
Then you reason up from there. We always reason up from what the society is telling us build a unicorn, raise money, all of this stuff. We don't reason up from our values. Figure out your values, your non-negotiables. Everyone starts with negotiables. That's why we end up unhappy when things don't work out. Maybe the first start up fails, you're fine. But after doing this for many years, if you keep starting from negotiables, you will end up unhappy and you'll be like why did I do this right? And that happened to me.
So start with your non-negotiables. What are your version of the company you don't want to work for? What is my personal definition of success and how much money do I need in my bank account to fund it? And so you might if you are one of those that says you know what I want to create impact at my pace and I want to be able to control, and I want to have a good life, a balance of social and work. So be it, run it that way. But now coming back to bootstrapping, right? So when you bootstrap now, we didn't sign up for those reasons we didn't know right. We didn't write down personal definition of success or any of this. Things I'd realized years later, when I came into money and almost died of COVID and the world felt meaningless to me. So I never wrote this down, I was just running, running, running, running.
Nonetheless, we started in a very small, obscure market, right, we're automating tax credits. Our goal was to basically enable innovators to become successful by providing them with funding and analytics to drive innovation. Every dollar spent in innovation returns 20 to the universe Vaccines, robots, clean drinking water Yet 99% of the innovations die on the vine, and so we started the company to build products for innovators, to accelerate innovation. So the first thing we latched on was my co-founder had experience with R&D tax credits. Globally, hundreds of billions of dollars are given in research and development tax credits to fund businesses, but it's a cumbersome application process, it's prone to frustrating government audits and it takes a long time to get the money. So we said we'll automate this process. Now here's the thing when anyone you talk to hears that they're like what the hell is this? It's a small time. You're targeting startups in 2012.
0:16:02 - Alex
Startups are gonna go bankrupt, they're never gonna pay and this is before, just contextually, this is before the YC boom really has taken off and there's a sort of whole ecosystem of startups selling to other startups, like Twilio and a few others that have worked out. So let's pause for a second, so let's keep drilling into the logic because you're sharing, like here's my story, like I had seen failures in the sort of going big venture-back mode and therefore I chose this more careful path. I'll challenge that. I've seen successes, right, I was part of Salesforce, was there from, you know, intern yet but still like from free IPO through the IPO, like all that excitement repeat, you know, for now for six, seven years at success factors again, from early stage to IPO, to exit and at the time, one of the largest SaaS exits, and so I've seen the success stories and obviously it's motivating to go and do it again, right, like I think that's what motivates a lot of folks that have been in successful companies, serial entrepreneurs. But I still think there's a profound importance in starting out on a journey that you know almost will be successful, regardless of the outcome, right, and I think that's sort of maybe tying back to your kind of being dissatisfied with, like, highly successful outcomes and kind of getting us in the psychological place.
So I mean I'm curious what your thoughts are on, you know, finding a customer that you love. That's your people, right, that you wanna hang out with them. This is your. You know we'll get into community in a bit but like you, I love our customers. I'm sure you loved your customers. I was one of your quote unquote customers types and you know I felt the vibe and I'm sure you have.
You know you've got tons of periods that felt like that and you can't fake that. You can't fake liking your customers Could, over time, build some appetite for the problems and empathy, but still, at the end of the day, the truly like inspirational leaders. They love their customers, they love the problem, they learn to love it, or they felt it, or they feel like this makes their life worthwhile to solve that problem. It puts meaning and purpose in their life, regardless of the outcome. And the outcome, you know, could be an enabler to a very big version of that success story.
But it'd still suck if people went in and just did stuff that was meaningless just to kind of do, hey, I'm gonna check this or check that, or kind of hit that checkbox. So back to you know your situation, like guide me on the meaning right, like what drew you to, you know, to stick with some things for 10 years because bootstrapping is many ways harder. And where did you felt that right? And something in your experience in the past you know, is it knowing the problem yourself? Guide us a bit on that journey.
0:19:15 - Lloyed
Definitely. So you know, what's funny is I made a Instagram video on this, a very like 20 second clip on Instagram yesterday on this exact same topic, and I think it's got already like 65 or 61,000 views on this in less than a day. So you know We'll plug it here. We'll plug it here as well.
0:19:34 - Alex
Make sure it triples that.
0:19:36 - Lloyed
Yeah, at Lloyd Lobo on Instagram double OYED Lobo. So here's what happened. When Alex called me and said let's start a company I'm doing this manually at a big four accounting firm I was already frustrated working for different founders who are being beat down by their VCs and driving toxicity in the company because it's their first time. Founders don't know how to handle it. You know, kind of thing like the company is stressed by like excessive growth requirements that are not being met necessarily and the founders are like, oh, overworking, hustle, porn, all this stuff. So when Alex called me, I said, hey, I don't care what company we build, man, as long as we build the company we want to work for, I'm in. And we did both. But in parallel we did a couple other projects that didn't work out. Both were in AI Nonetheless.
Day one we start, you have an idea for a business, right, and now, looking back, everything looks like a framework when you have some success, but when you earn it, it's spaghetti on the wall.
So day one you start, you have an idea as a bootstrapper. What do you do? Step number one is figuring out your ideal customer profile. So we, you know, we didn't really like put much thought into it. We're like, okay, who are the companies that do product development, engineering, oil and gas, construction, manufacturing? Let's pick up the phone and dial for dollars, let's call them. So we picked up the the bed list from the phone book and the directories and we started calling them. Man, we were in for a rude awakening. Nobody would talk to us, right, because it sounds kind of scamming, like I'm calling you and saying Alex, listen, there's this money that I can get you from the government. You pay no interest. You pay no, there's no equity. It's the best form of capital. Well, you can pay us a small fee when you get the money from the government. They're like man, this sounds like a scam. I haven't even heard you. I can't even look you guys up, right, you seem like new on LinkedIn and whatnot. And if they knew about it, they were working with very large accounting firms like the one that Alex worked for. So, dejected, we said, okay, you know what, let's swarm these people's events manufacturing, oil and gas construction and we just couldn't resonate. We looked like two guys who threw on a suit jacket on top of a hoodie and they felt like the old cigars club Now, super dejected, we said let's go and see what's happening in the startup world. Right, the startup was like a very new and upcoming term kind of thing. This is 2012. And we started going to all the startup events and Alex I kid you not, man felt like I found my tribe Till today. Right, it's my tribe, because not only we built boast for it, we built a nonprofit community called Traction 120,000 subscribers, conference every year, podcast every other week. I also wrote a book which my community made a bestseller and it's for that audience, and so we instantly found our tribe. They were starting a company, we were starting out. We started hanging out together and our startup was our life. There's was their life. So we started eating together, hanging out together, eating, partying together. We started doing hackathons together. It became our tribe. Now, fast forward.
Today, when I give advice to people or they ask me like hey, where do I start, I have an idea. I'm like four things. Number one do you have a passion for the audience or the topic? Do you love this audience? Building a company, any kind of company, is a long, freaking slog. You will not sustain if you hate your audience. And as you scale as a founder, you spend more and more time with customers. It's not less and less time. Your time is spent more and more with customers because you're strategizing on the next thing and the next thing. So if you hate your customers, you will never be able to sustainably create.
But then there are three other things. One is is it a small but growing tam? Right, a lot of people like to start with a massive tam, and the thing with a massive tam is it's hard to find white space because you're trying to be everything to everybody. So I say, when you're starting out, just niche down. So, yes, the business world that does product development is a massive tam globally. But when you niche down and niche down and niche down and you're like startups that are you know, seed in series A is who I'm targeting that's a very hyper niche tam, and so they have specific problem sets.
And the problem sets we found at the time was in 2012,. There was no LinkedIn. That was prevalent for content. A lot of the advice wasn't very tactical, like outside of blogs. Podcasting for business wasn't a thing. All the conferences at the time were high level CEO conversations and a person at seed or series A doesn't need a high level CEO inspiration. They need tactics. So that was one white space we found and outside of TechCrunch and VentureBead there were not many publications that were covering startups. So we found two white spaces and we went all in on that and leveraged to build a community. We started hosting our own events weekly, like small events. That eventually exploded when 200 people came to the co-working space and we started a column, newspaper column, called startup of the week, and you know, convince the newspaper editor to give us a weekly startup of the week column, which became a print column. So that print column started building our audience and whoever would apply we would invite them to our in-person events and that's how we built the community. That's a big community.
0:24:47 - Alex
So but what's interesting and I just wanna kind of highlight for the purposes of our audience, because there's a real nuance here when you say niche down but what you actually did was first you went a little bit broad and you started investigating who is the ICP right? So you went like, before building out the whole thing, you went and explored where there's a best fit for you as founders, maybe for the product vision that you have, and then you niche down. Once you figure it out, you had a few nos. This actually really mimics our what we've learned right and like cause you could go out there, learn about and then see where is there is fast moving water, when are the people that are kind of just moving fast Pleasure to work with, you know, follow up, and then you could say, okay, that's where we're gonna niche down.
Think, too often people the prevalent advice, whether it's investors or even actually in the broad, like launch new business within a larger business, is sometimes people go, go, niche, go, niche, go very narrow before doing that investigative journey of like what's your ICP, to your point, your customer profile, and where it's kind of there's a sort of potential for better product market fit, and then so they end up putting all their eggs into the okay, we're very deep into this direction, Inevitably, like in a lot of venture-backed companies, that fails and then they do the pivot right and then they kind of just keep doing two or three pivots until they burn the money and none of like.
So I feel like that's the opposite, a little bit of the approach that you're doing, where people go build something really fast, narrow. It doesn't work out, they do it again and then you know some teams make it, majority don't, and so what's you know? In your view, do you see a lot of people doing that kind of adjustment and kind of learning from the community, like let the community take you where the pain is Cause I'm sure that's how you've expanded your portfolio right.
0:26:49 - Lloyed
Yeah, definitely. I think you got to start with the customer, right. So that's what figure out. One do you love this ICP? Do you love this ideal customer profile? Niche down right, make sure niche down is a small but growing TAM. Third is do they have a propensity to pay? If they can't pay, you you'll never build a business. And the last one is ease of access. You might love a market yeah, you might love that market, and it may be small and growing, right. But if you can't access, like to sign on like five, 10 of your first paying customers, then you'll not get off the ground either. So keep those in mind. Like do I love this audience? Small but growing niche and propensity to pay in ease of access. But once you have that, honestly, it's a matter of understanding the ICP.
We spend a lot of time with them. So we didn't do this deliberately, like I said, right, we were dejected trying to sell to manufacturing oil and gas construction and we started hanging out with the startups. Now, as a function of hanging out with the startups, we figured out their pains and their goals, but pains and goals are short lived. We also figured out their aspirations. Right, your pains and goals will give you for your first product, but en route to a hundred million, almost every company has more than one product. If you understand your customer's aspiration, it'll give you a product two and product three. So we figure out their pains and goals, which are immediate, and their aspirations and what's stood in the way. The other thing as a function of spending time with them, we understood three very key things their circle of influence, meaning what are the tools and services they pay for. That gave us a list of people we could partner with. Who do they follow, meaning who are the influencers they respect. This gave us a list of people that we could invite to our events as speakers, invite to our podcast as speakers. And as a function of inviting these influencers and hanging out with these influencers in front of our audience, we got their social proof. We got their brand rub, like in the early days when no one knows you and you hang out with people of influence. You get their social proof and you follow this path of visibility, credibility and then profitability. And then the last one was we figured out where do they hang out, right, so what platforms they're prevalent on, what blogs, magazines they read. So that informed our distribution strategy. And now, once we understood this, honestly, man, we just tried to sell a service, nothing else. We literally sold them a service.
Because remember this always, especially now in the age of generative AI I firmly believe almost every SaaS tool that needed to be built has been built. And now, eventually, people are gonna start asking the question why do I need the next marketing automation tool? I want more leads. Why do I need to buy more tools to hire more people and hire more IT staff to maintain it? Why don't you just give me the outcome? I have this contrarian view that, especially with no code and generative AI, we'll see a lot of companies, some really, really successful companies, that are digitizing services to get outcomes. So in order to just like, okay, buy an SFDC with a person to implement it, but like just manage this, give me the outcome. So I truly believe that customers want outcomes, not software, and so that's the advantage for the service.
0:29:58 - Alex
And, by the way, I like to double click on the generative AI. I think we already had before generative AI. We already had an output mentality, at least in like, say, content creation. People like great, created another ebook, fantastic, right, output, my job is done right. Like designers like, oh great, another social posts, great, my image, my job is done.
That's very different than outcome, you know, like that's very different than actually engaged customer working through that and then drive going further into their buyer journey.
So I think, unfortunately, the generative AI almost feels like it's putting fuel to the fire of output and create for the sake of creation, kind of some sort of audited playbook model and what you're talking about.
It feels like much more relevant right In the world of noise, I need either the outcome or some sort of engaging experience and we'll come back to that in the community level that helps you stand out versus just crank out more output Exactly, and you're you know. I wanna come back to one point that you brought up which I don't think a lot of people selling to startups have figured out, which is propensity to pay right, so you probably had a challenge right. And when you're doing events that are broad right, like a. Maybe traction is a good branding for your event, because you're looking for people at distraction stage versus at idea stage. Right, they're a little bit further along, but you had a pretty high price point right 20K or something somewhere there about and I'm curious how you managed to be a service, inclusive, service right For aspiring entrepreneurs while at the same time delivering on your target of actually meeting the types of companies that can't afford 20K, which majority of the startups may struggle with.
0:32:06 - Lloyed
You know, here was the good thing we did, or the positive thing. We had a contingency fee model, meaning we only charged when the customer got the money Got it.
0:32:25 - Alex
So you took on the risk yourself of potentially executing something that may have worked, may have not, and so you were able to open up the portfolio to broad a set of your services, but to a broader set of startups.
0:32:40 - Lloyed
Exactly, exactly Okay, got it Okay.
0:32:43 - Alex
So this is your story, a little bit of the growing in this. We heard the few places where the community come in. You know I'm a believer. Right, I was Salesforce, obviously built in a tremendous community. I've came back to that community and now was relayed to. We were part of the ecosystem and as one of their kind of they had the Salesforce Accelerate program which we went through as a promising partner.
You know, we got to meet with all sorts of folks in the community and I still remember this lady that had a Salesforce tattoo which is probably the first B2B company that I have ran across at the time was tattoos on it and she was telling a story of how when she lost her job as a CRM analyst, the community helped her out, helped her find another job and it sort of became a real source of support in her life and that was really impressive. And you know, and I love the kind of the vibe that Mark has managed to build and maintain. And obviously we all are exposed to other communities. You know the Ferraris and the that you know majority people buy some sort of token accessory in. That's the bulk of the revenue Ferraris, not the actual Ferraris, and so that's sort of a community of brand community. Or I think you talked about Harley Davidson and I think also Harley Davidson is one of those few products where people have a tattoo without owning the motorcycle, which is pretty impressive, right, like as a level of brand and community commitments.
But in your view, you know, people get confused. Right, like a community audience brand, like we talked about brands, help us kind of cycle through that and especially, maybe in the world of B2B, what does that mean? Right? And also we'll come back to this but, like in the world of digital communities, what does that mean? Right, because you know Salesforce got started, where you could all get together for Dreamforce, and you know various local events and that's becoming harder and you grew up in that world yourself. What do we do now? We're kind of a PLG startup and we don't have, you know, dollars to run community events. Potentially Any ideas there and helping audience navigates, really like, okay, I believe in community. How do I do it?
0:35:11 - Lloyed
Definitely so. I think you know you got to understand the differences here. So as I looked at hundreds of companies and talked to thousands of people when writing this book, my book from grassroots to greatness 13 rules to build iconic brands with community led growth, I found something very interesting. Every small little idea that eventually became a global, enduring phenomena, from Christ and Christianity to CrossFit, had the exact same four stages. Number one people listen to you or buy your product or service. You have an audience. When you bring that audience together to interact with one another on a cadence, it goes from being a one way communication to a two way communication. You have a community. When that community comes together to create impact towards a purpose that's beyond your product or your profit, it becomes a movement. And when that movement has undying faith in its purpose through sustained rituals over time, it becomes a cult or a religion. So, audience, community, movement, religion.
A lot of people use the word community, but think about it. If you're creating content online and you have lots of followers, just think if I stop creating this content, what happens to my audience? And if that audience is gone because you stop creating, then you don't have a community. You have an audience. But if the community continues to congregate and connect and get together, then it's beyond you, right? It's now a community that's connecting with each other and congregating around a purpose. Right? The sort of CrossFit May Die or the Harley Davidson right, these brands people come together because of a certain purpose. Yes, the brand gave it a home, but nonetheless, the brand ignited that community through purpose. And it all started with an audience. People bought it or bought into the idea, started to listen to it and then, when they started coming together and interacting with one another around the purpose behind the brand, then it became a community, right, and so that is.
0:37:37 - Alex
So let's say we skip the cult for now. But how do we go beyond community into the third step? What have you seen? Have you seen examples? So in my case, the Salesforce. There is this purpose, there is sort of socially responsible business. It certainly is beyond the CRM and it's always been there, but it's sort of become much bigger, I think, over time. What do you see as the most successful business applications of going beyond audience and into community and beyond?
0:38:14 - Lloyed
Definitely Atlassian. Think about it Atlassian. Last year their community came together to organize 5,000 events self-organize. If Atlassian had to organize 5,000 events, they would need a massive team. So what's happened there is they've got 5,000 super fans who, on average, went and engaged 100 people. So they've now gone and engaged half a million people. And it's around helping people become better at Atlassian as a product but, moreover, leveraging Atlassian to create better outcomes for their customers and while also making money. So that is a great example. And it's not something that happened overnight. It took 20 years of nurturing the community and providing for the community and helping the community A lot of us.
One of the key things I found is community-led company values are very different than a lot of other company values, and some of the key traits I found of a community-led company is they facilitate connection. They give people autonomy. They want to help people get better and better at their craft mastery. There's a sense of purpose that's greater than the profit or the product. There's great energy, because without energy, all communities eventually fall asleep.
And the last one is recognition. They proactively recognize and reward their community members. Every community will have 1% superfans who are super engaged. You want to elevate them to a community leader status, give them active roles, give them opportunities to MC or host events, give them the soapbox. Then you got 9%, who are like casual contributors and you want to support them as well and try to elevate them to the 1% superfans. And then the 90% are lurkers and that's fine. That's for any social platform or any community. 1, 9, 90 is the rule.
So if you can activate your 1% superfans, nothing like it. And the way to activate them is to recognize them proactively. When you proactively recognize people for things, small or big, they keep coming back for more. You infuse them with energy and a big part of that is the vibe and how you communicate and the things you do and the activities you do at your events. And you give them the autonomy. And when people have the autonomy, they take charge and they run the damn thing. And so another example, and not a business one, but this was startup weekend. You remember startup weekend?
0:40:44 - Alex
Yeah, they got bought by tech stars, tech stars eventually.
0:40:50 - Lloyed
And then it fell flat but it's not happening. But there was a time in San Francisco where every weekend there were three or four different startup weekends happening and I was an early champion of this and people would volunteer to host these three-day hackathons, where you come on a Friday with an idea and by Sunday night you create an MVP man. What a community it was. We would just come together to engage people and do it for the love of the audience. We had the autonomy, we would infuse great energy and we would be proactively recognized. Startup weekend would fly us all once a year to a big festival in either in Brazil or Vegas and things like that. There was a lot of love.
0:41:33 - Alex
And so I think, lloyd, let me pause you for a second, because what I'm hearing is a lot of physical. Eventually it all ends up being physical, and so is the answer that to really build a true community, you have to do these physical things. You may start with users, you may start digital, but eventually it's when people come together and they make those human-to-human connections. That's when the magic happens really. Or have you found examples of all digital communities in policing business?
0:42:07 - Lloyed
You know we're now sound in sight, right. Anytime you incorporate more than two senses, like taste, touch, smell, you start to build more, stronger bonds. Think about all your personal connections that are your closest friends. You must have met them in person at one point. So I'm not saying physical is the only way, but I'm saying a cadence might be that, let's say, you host a live weekly webinar, right, and you do a podcast every week, and maybe you have a WhatsApp channel that's blowing up every day because the audience is communicating, and then you do, maybe a bi-weekly newsletter, all this digital stuff that you do. Just make sure, augment it with at least one in-person activity.
And it doesn't have to be a massive conference like a SAST or what we do at traction right, it could be as easy as guys you know you look at the trends in your ecosystem and who the most engaged audience members are. Give them some budget and say, hey, I'm you know. Why don't you just host a meetup to get together? But do that on a cadence. Don't stop maybe monthly, because hosting a pizza night, like we used to do back in the day every week is no skin off anyone's back.
It's easy you host a pizza night, you bring a speaker, you get 10, 20, 30 people to congregate and the thing is, you do it with more and more cadence. People keep bringing their friends and they get more and more involved and they stay longer, they build stronger bonds and they become evangelists for your brand. 99%, and see, here's the thing right, there's always anomalies to everything but 99% of the most iconic community-led businesses and during brands from Apple to Harley Davidson to Red Bull to Nike, there's a big in-person event. Yeah, there's an in-person activity that happens on a certain cadence. And you look, combine this with your personal relationships, like right.
0:44:08 - Alex
Well, this is one of the things that was really fun, like, for example, I came to Sastra, in large part because they're their customer, and then there I get to meet my customers and my people and then you and I bumped into each other and so it heads off to Sastra to building a great community of SaaS founders. But one of the things that you brought up that I still think is really interesting is the idea that the more senses you get involved, the better, right, and so if we go to the early stages of B2B journey, typically, let's say, I wanna learn about something, or read like some kind of quote, unquote, top of the funnel, you know, research document. It's like black and white white paper style, right, and maybe, if you're lucky, we'll have some images in there. So there is at least like visual thing, but it is kind of it feels the opposite of interaction, right. It feels like it's some sort of monologue, monolithic. You have to flip linearly to page 85 to get to the parts you care about on your phone, you know. So it's just gonna feels like all these barriers that we're putting up to engagement and the opposite of that could be. You know, maybe not perfect, but it could be like let's say the same thing, but it's like from an event and it has, you know, your Instagram posts that you were talking about, where you talk, your video, where you tell your story next to some text, and maybe like learning more about your company, so people could contextualize it depending on their learning style. Right, and it could be ability to just pick your own adventure, right, and go to the sections that you really care the most about today. Right, maybe not every day, but today you maybe have different. Or on your device, you kind of want lightweight stuff because it's end of the day and you don't wanna go deep, but like, when it's middle of the morning you might go kind of be in the reading mode and taking notes mode, and so imagine you have digital experiences that almost bring the magic of the community right, bring the people, the personalities.
Do you think this is a let's say not a substitute, but you know, if we believe that communities are not affordable to some? You know organizations on a regular basis. Do you think in livening, the content is part of the solution? Or, like you know most of the people from the events that you like enterprise events, 95% of the desired audience never mix it to the event. It's a tragedy. People put up this event but the big decision maker they're not gonna go listen about your best uses of your product and demos and your product conference, but they're the ones that are signing up. They're the ones that need to believe that you're for real. And so we have customers that are creating these event books now that are kind of bring the experience of the event to all the people who couldn't make it, to the sponsors, et cetera.
So help me kind of see what you in your research. Where have you seen companies be very smart at giving these communities digital superpowers along the lines of what I described? And I'm just talking about what I know, which is us right, but you have the broader universe of where people are enabling that in a clever way. What you know especially, they had to do it during COVID, and you had to do it during COVID. What did you see? Some innovative approaches there.
0:47:33 - Lloyed
You know, during COVID, when we entered COVID I think we had like 30, some odd thousand subscribers and after COVID we have now 100 plus thousand subscribers. And so we had planned a massive conference during COVID which we had to cancel and I freaking freaked out I'm like most of our lead gen was through events and we had to cancel this conference and I dreaded the idea of doing a two day virtual summit. When the world goes, when the world goes buffet, you got to go Michelin star. Everyone was doing two day virtual summits and I had PTSD. I'm like all the tech is gonna fail.
Managing speakers and digital events have more drop off than in-person events. In-person events, honestly, when people buy a ticket, they show up. The digital events, even if people buy, they're like distracted and they don't show up as much. So I said you know what? I can't sit through a two day virtual summit, so I can't expect my audience to sit through it. So I went out to all the speakers and said would they hop on a live Ask Me Anything, a live webinar once a week that eventually turn it twice a week? Now think about it when you have one big conference virtual or in-person you're promoting one activity, right, buy my stuff, come to this conference, come to this conference, come to this conference. That's the only thing you're promoting. And if you are now hosting one different event every week, you have a new dopamine hit, right? You're like, hey, today Alex is gonna talk about content, experience and how to grow your audience through content, and next week somebody is gonna talk about how they build Lume to millions of users. The following week somebody is gonna talk about how they build Atlassian into a $40 billion company, leveraging the power of community. The following week somebody is gonna talk about how they leverage PLG to drive growth. So you send one email exactly a week or a few days before the webinar and people show up. And we're getting hundreds of people show up because it was value, was just in time, and then the next time my email came in their inbox, it was a new dopamine hit, it was a new topic, it was a new speaker of influence. So I think that really works right.
And now probably digital has gotten even harder. I like it when you're a lot of the companies that do well in this are people that try to infuse experiential activities into the digital space, right, and so Lenny is doing a great job with his newsletter, and there are some groups like even Atlassian or even Notion phenomenal right, engaging their audience to create content and then providing rewards, like people are making money creating these Notion templates right and then doing digital augmented within person. So I think there is no substitute for human to human interaction that happens in person. Digital is great and it's phenomenal, and digital should be your strategy year-round, but the way to like 10x your digital output is then give people a way to meet at some cadence and think about it. Whenever people come and meet in person, they're more likely it's a loop man. They meet in person, they get to know each other better. Then they're more engaged digitally too. They're like oh you know what? Now? I met Alex at this event. You know what I'm going to engage with Alex on chat.
0:51:10 - Alex
Well, and then there's this like you said, there's a now. You've created a positive connection, so every time that connection works right, it's a beauty that reminds people that you've created this values for the community. So I love your tagline that you know the only way not to be commoditized is to build a community, or I'm ruining it. But you know we have something similar, which is the experience is kind of the way to get through the commodity trap. What if you had one last bit of wisdom? You know what would be kind of your advice for people that are thinking about? You know building, you know going from the audience stage on towards. You know community and beyond.
0:51:54 - Lloyed
Definitely.
I think once you figure out who you're going to serve and you have a passion for this audience and the content, make sure you've niched down so you're addressing a white space and you're not saying the same thing, that everyone is right. Make sure you're providing specific value for that audience that they're not getting anywhere else. And once you start creating content whether it's on TikTok, if your audience on TikTok create on TikTok, if your audience on LinkedIn create on LinkedIn, wherever it is Consistency is a secret ingredient that turns small actions into big outcomes, like give yourself like six to 12 months of creating consistently and monitor what's resonating and modify from there. Once you start building this audience, then start reaching out to this audience to understand, like their pain points and what value they seek. How can you make the content and the community more helpful to them. And then do one of two things Bring them together, either by hosting a live, you know, once a week, or maybe create a chat group where people can engage, but be very selective because your first 10 people will decide the pace. If you're not maniacal about your ICP and you have all kinds of people there, they'll muddy the conversations and it will be invaluable to anyone. It's almost better to start with 10 people and they get great value. And then the 10 people recommend oh there's this other person like me, and like me and grow from there, because your audience that you create, like whether it's on TikTok or LinkedIn or YouTube or wherever, or your newsletter it's going to be wide because they're going to be your ICP and they're going to be casuals who are interested in the space and a lot of the times, a lot of the times, it's more casuals than exactly your ICP. So figure out who your 1% of super fans are and create a community for them and provide value to them and then let them bring more people in and grow from there in the early days, because it's like doing things that don't scale, like I talked about, right? So, going back to your question, one which I didn't entirely answer, so I want to close out by by taking that right. It's like being maniacal about this audience and you know how we bootstrap was number one.
Customers want an outcome, not software. So figure out who they are, what pains they are, they have and then deliver the outcome by any means possible. It makes you really good at selling, also right, and you have no software or widgets to hide. No outcome, no customer. So we got paid to do this work manually and got customers that desired outcome. And then our first iteration was built using a low code tool called Zoho Creator with Zapier. Now today there are many options like bubble and web flow, but really, once you do this work manually for your customers and spend so much time with them, you identify what are the manual and repetitive tasks to automate and then you can break down into smaller components right, so you can use drag and drop interfaces and templates to build your first prototype. If you use a low code but you can leverage API is if your process involves gathering data, then you can write some code to normalize that data and some code to apply workflow. It's oversimplified, but that's what it is. If you offer a service, you know exactly what to build. Because you're delivering it manually, you know what the pain points are.
And then, in parallel, we started just creating content for this audience, which you've done for like almost 10 years, and just bringing them together. We did an online activity and we did an offline activity at a cadence so, for example, your one zoom recording can turn into a long form. Youtube video, podcast, shorts, reels, right text for LinkedIn, social posts, newsletter substack, and then you can host a virtual meetup and then you can augment that maybe once a quarter with an in person or every other month with an in person. So that's what I would suggest as we close out. But you know, very tied to if you, it's easy in 2023 to build software.
What's hard is building an audience and turning that audience into community. But if you have an audience and can turn it into community, you can sell. Logan Paul can build a $200 million business selling you know, selling the new energy drink. Right, which is there's no dearth of right, because the audience loves you and they're tied to your purpose as a, as an individual or as a brand, and they will buy from you because they get value from you. So figure that out first and start bringing people together.
And honestly, I kid you not, if you have an audience or a community and they love you and they get, they love the value they're getting from you. Look at like Justin Welsh right, he's built this massive community around solopreneurs and people buy consulting from him. Right, he created a bunch of digital products. Now tomorrow he can turn around and sell a full blown software to automate some of his consulting and people will buy it and there he has a SAS business. So that's what I'm saying is like build that audience, understand their pain points, turn that into a community and even if you sell manually, don't get discouraged because people don't tell you. People tell you it's not scalable. We're in the age driven by generative AI, no code.
0:57:09 - Alex
Everything, almost everything, is scalable except for the community, except for the yeah and like what. I think what you heard, what I heard really powerful about what you're saying. That resonated with me and it aligns with some of the other speakers that we've had at the and friends that we had here. So we had the CEO of Altarix, dean Stoker, which is in public list. The company also bootstrap fundamentally underlying theme as community of super users. Right, like in our case, we call them super creators, but these are people that really like had their, you change their career, you change their trajectory and they really like loved all the analytical tools that they built.
Same thing, mark organ, you know, founder of Alquac, you know, fundamentally the same thing. They were like. They created the demand gen kind of community of like super users and they were. They were really people deeply passionate about. They were different than an average marketing person. They kind of they were the first place for the community for them. So what I'm hearing for us, the, the, getting that to that super user, super creator, consumer, whatever your, your product, is the foundation of all that work in the community. Because if you're going like spread you know the peanut butter approach you're going to get a bunch of passive folks that are not coming back, that are not going to be word of mouth promoters of your cause and your community. Did I did? I catch that as a kind of foundational step.
0:58:44 - Lloyed
Definitely start with your customer, provide value to them, focus on a select few. It's better to do things that don't scale much like your product, right, please? The early ones, and then expand the cohorts from there and expand and expand and expand. That's the way I would do it.
0:59:01 - Alex
Beautiful Lloyd. How can people find you and benefit from your brilliant books and companies you've built, definitely so both day I.
0:59:10 - Lloyed
If you're in the US or Canada and you need product development money from the government, we automate that. If you want to learn anything about community, I wrote this great book 13 rules to build iconic brands with community led growth from grassroots to greatness. It's on Lloyd lobo calm, or from grassroots to greatness calm. I'm a student of saster, wrote the forward on it and generally I'm Lloyd lobo. On LinkedIn and Instagram double L o Y ed L O B O. I'm taking a bit of a LinkedIn sabbatical. I'm just experimenting with more video content on Instagram.
In the last few weeks, since my social sabbatical is over, my goal was to make the book of Wall Street Journal bestseller and within after a week of the book launch, it became a Wall Street Journal bestseller.
And to do that, I appeared on 80 podcasts in eight, nine weeks and they all released during the week of my launch and I'm like I need a breather. I need to take a couple months breather, and so I decided to take a little bit of a sabbatical from socials and then now, recently, I started commenting on Instagram. Yeah, and want to leave you with this thought that you know, yesterday's innovation will always become tomorrow's commodity. Right, look at it. We don't say dot com company anymore and we don't say social or mobile company anymore and we won't say I company anymore. To be quite frank, in fact, the largest AI success open AI was also built on communities, open source project and everyone was giving it it's data. But if you build a community, you will not become a commodity. From Harley Davidson to HubSpot some of the most iconic brands out there generational companies are built on human to human connection.
1:00:50 - Alex
Thank you so much, alex, for having me Lloyd it's been a pleasure and just as a symbol of my admiration and stealing your ideas, we have a hat that we've specially prepared. You know that that kind of tries to mimic your unforgettable hats, data. Flattery is, is a is. Imitation is the best form of flattery here. So great job on building out your community, staying, staying top of mind. Even as you kind of are taking sabbaticals, you're kind of you're still out there and you know, I think we love, we love all the nuggets that you shared. So thank you for joining us today. Thank you so much, man, take care.