Liam Martin: Just Do Whatever You Need to Do to Be Able to Trigger the Hate Mail

— Liam, tell us, what was your first business? How did this happen?

— My first company was TimeDoctor.com. It came out of me being in grad school, and I was running a remote tutoring company. And the problem that I had was I couldn't equate for how long a tutor worked with a student. Then I would end up having students that would ask for refunds on build time with tutors. So TimeDoctor was born out of that to be able to measure how long a tutor worked with a student when they worked remotely. And that just pulled into a whole bunch of different verticals, particularly in the remote workspace.

— TimeDoctor was established in 2012, by that time there was Toggl on the scene from 2006, RescueTime from 2008, and Hubstuff from 2011. So, you entered a very mature market. Why did you do that?

— Yeah. I never really thought of it in that context. We're bigger than all those companies now.

I think there was an opportunity to see where that space was and recognize that there was a solution that we could really work on. But I believe that all markets now are honestly mature.

Even when we're talking about remote work… We've just had a nuclear bomb go off in terms of the remote workspace. We've gone from 4% in 2018 of Americans working full-time remotely to 60% of April by our estimates. So, it was already a mature market before COVID happened. But now it's a completely new game.

If there are already some companies making money inside of your market, your total addressable market, your team. That's great, because that means that there's room for you. We don't pay attention to most of our competitors as well. I think it is very important also to figure out a clear niche of what you want to offer inside of that market. We always focused on agencies that were working with remote workers. That was our core customer. And we knew that we could build a good, solid eight-figure business inside of that market. Maybe not a billion-dollar company, but it's definitely something that could get us to the point. We're operational, we're functional, we have a good-sized team, and then we can expand out into other products. So, competition, I don't think, is something that you should be too scared about.

— Your company totally bootstrapped. I've checked your Crunchbase profile. No investments by that date. It's interesting because Toggl is bootstrapped as well. RescueTime as well and Hubstuff as well. Companies in the same field just build a business from scratch. How did you find the money for that?

— You could bootstrap at that point. I would say you really can't do that day, at least to the same degree. It's a lot harder to be able to car customers now than in 2012. I could buy a customer for probably one-tenth of the cost on a Facebook ad that I can't today. And that early acquisition was great to get us to a point in which we built a mini brand. Then people would pay attention to us. The majority of our business is really through referrals and product marketing.

If you now were to build the same type of company that we've currently built, it is very difficult to do it without at least half a million bucks. And to be able to say that we're entirely bootstrapped is a little bit disingenuous because both me and Rob both had the capital to be able to invest. We had probably invested about $100 000 into the business to be able to get it operational and at least make it cash neutral.

— I listened to your interview about SaaS business, and you said that for 12 months, you didn't get money at all. Is that correct?

— Yeah. Horrible mistake. Don't do that under any circumstances whatsoever. We got the wrong feedback. The reason why no one has a free beta is that you'll get feedback, but it will bring you in the opposite direction from the feedback you want. What you really want is hate mail. You want people to email you saying, I hate your product, and I'm unsubscribing from your product. Please give me a refund. And then once you get that email, ask them why and just give them back all of their money, do whatever it takes to be able to get the feedback, because that's what you critically need. With a free beta, you'll have many people that will use it, but no one will give you meaningful feedback because they won't use it passionately. When someone is paying for something, they'll give you meaningful feedback, which was a lesson that I had to learn the hard way.

— And then you decided to switch to the paid version and understood where to develop the product?

— We made $6 000 MRR (Monthly Recurring Revenue) the first month that we went from free to paid. At that point, we were very scared that we would lose all of the customer feedback we were generating from the free product. But ironically, what ended up happening is our hours tracked metric tripled. We had people using the product three times as much as pre Beta.

Even though we had less than 10% of our customers that went to pay from the free product. That's a really important insight: usage is more important than users. And I think that's something that a lot of people just don't pay attention to, at least at the beginning. They think to themselves, well, yeah, we have 100 000 users on our system. I'd rather have 1000 paying users than 100 000 free users; they just give you better feedback.

— You've mentioned $6 000 in the first months, and what was the average check?

— Oh, I think the average seat count was probably three people, so approximately 30 dollars per user per company per month.

We had thousands of companies that were using us for free. And the fear was that we were going to lose all of them. I would suggest that if you're going to build a product now, tell people "Pay me a dollar and I will give you free Beta to access for the next six months as an example." Just whatever the minimum amount of money, but they must open up their wallet. You'll get that feedback, and you'll get people that will stop using it. Just do whatever you need to do to be able to trigger the hate mail.

That's another thing that we do inside of the company as well (for anyone that uses TimeDoctor, I apologize for this), we will remove features randomly from the software simply to measure how many people send us hate mail in support. We used to have a project management feature inside of TimeDoctor, and we didn't remove this feature, but we removed access on our toolbar for that feature, we just deleted that link on our UI, and we measured how many people would send us really angry letters saying, "Hey, what happened to this feature?" And we got 6 emails out of 6 000 clients. So, we realized this was not something that we should invest more energy into.

If you ask someone for a feature edition, everyone will say, yes, they want it. If I said, I would like to add a purple elephant icon optimizer in the top left-hand corner of my UI. People will say, "Oh, that sounds good." But how many people are willing to pay for it? And how many people are going to use it effectively to either expand your revenue or reduce your churn rate? That's what you need to focus on. So randomly removing those features and getting that emotional state from people saying, "Why did you take this feature? I was using it every day!" is absolutely critical, in my opinion.

— Well, it's exciting!
I want to move to your team. And as I see on your LinkedIn page, the TimeDoctor team is worldwide: from the Philippines, India, United States, Canada, Argentina, Canada, Nigeria, Australia, Colombia, Pakistan, Melbourne, Australia. Why do you hire globally? How do you manage it?

— Very, very carefully:)
We're a remote-first company, and we have remote-first work philosophy. We believe that talent shouldn't necessarily be connected to a particular geographic area. That's our generalized thesis in terms of managing talent realistically.

If you have one to two hours of overlap time to communicate synchronously, you can work with anyone, anywhere. You need to be able to take all of your company's processes and digitize them and put them up on some type of cloud service to allow all of your employees to have access to that information effectively. So, that they can manage themselves as opposed to you managing them.

A fantastic example is GitLab. GitLab has all of their processes in their company online and for free. And you can just do your own repo of that document (Handbook) and edit it for your purposes and use it.

So, those are two critical parts: сommunication & documentation. If you've got those, then you can manage teams without any problem.

— It's interesting that you hire in low-income regions like Colombia, Pakistan or India, and high-income regions. How do you pay? Do you pay equally or you just pay a salary, which is good for this area?

— We set the salary, and we don't set the geography. As an example, let's say that we have $70 000 to pay for a developer. Well, then we just look everywhere. We probably wouldn't be able to afford San Francisco or New York, but we would be able to afford the Midwest United States, parts of Canada, a big part of Europe, Africa, Asia. And then we just say anyone that wants to apply from those locations can and we just go through the process.

It's interesting when you don't bias yourself by location; the tunnel almost always ends up not being located in the places you think.

And we have employees inside the company that are paid hundreds of thousands of dollars per year because that was the requirement we had and we couldn't find that talent for a lower price point. And then we have people that are paid tens of thousands of dollars per year because that was the most effective price for us to accomplish the task.

Just recently, Facebook announced they would lower the salaries of remote workers that leave San Francisco. And I think this is such a huge opportunity for developers that are not located in San Francisco or New York. We're going to start to see the disconnection of salary with geography, which I think is a bad correlation, because it has no impact on whether or not you can do the job effectively.

Our product manager is located in Canada; we have a whole bunch of people in Kyiv, Ukraine, India, Pakistan, Sri Lanka, Turkey, just everywhere on planet Earth. We have an office in Egypt. The north of Egypt, next to Alexandria, is a perfect location for fantastic developers.

— What is a regular salary for the TimeDoctor developer?

— The band can be anywhere from 30 to 70 U.S. dollars per year.
It also depends on what the situation is, what kind of particular skill in demand. We would go higher in some cases, but generally, that's the band that you stick with.

Again, that's something that we really can't compete for San Francisco or New York salaries. But I think that everyone going remote in San Francisco and New York and the tech startup space is probably going to result in the collapse of those salaries.

There's been an interesting, problematic situation, which is if you're a very good developer and want to get paid a lot of money, you have to move to Palo Alto to make, let's say, $200 000. However, a lot of my friends that moved to Palo Alto say "I had more free money living in Canada, making $60 000 as a developer than making $200 000 in Palo Alto."

I think we're going to see a massive shift: within the next two years, the tech companies in the Valley will recognize that geography does not suggest skill. And therefore, they will start to expand out their talent search to a much broader group. Talent in that group is as good as the talent in San Francisco. But there's been a very problematic dichotomy suggesting that they're not. I would probably say they are 95% as good as the talent in San Francisco. But is that difference between double or triple their salaries? No, it's not. And that will all just adjust within the next few years.

— Just to finalize with TimeDoctor: how big it is right now? You don't show any numbers, but Owler says it's $ 4 mln per year. Is it more or less?
— It's significantly more.
Yeah, I'll tell you, it's an eight-figure business. We don't like to disclose much because we don't want people to know how much we're making, because that puts us at a tactical disadvantage in the market. But we're doing quite well.

— OK, let's move to Stuff.com. Now it just redirects to the TimeDoctor, but it was a two-sided marketplace for remote workers. Can you just tell more, and what happened to the Stuff?

— Complete failure. I can break it down very simply.
We were running a platform like Toptal, we were providing the same services that Toptal is currently providing, but we were running Upwork model, which is a bad thing to have inside a two-sided marketplace.

It's crucial that the individual is not as important as the service. When I get an Uber, I don't care that it's Andrew from Uber. I just care that it's an Uber.

We were taking 15% of an employee's salary, and we were putting in a very focused recruitment process into that model. We were spending a ton of energy trying to find the right person, thousands and thousands of dollars in terms of labor on our end to be able to make that connection with that person and the business. First year was doing about $86 000 MRR; by year two, we were doing about $110 000. We had 11% monthly churn inside of the business.

And whenever I would call up customers about their churn, they would give me a whole bunch of excuses, which wasn't the real one, which was they were poaching that person directly out from underneath us. So they were taking that 15% cut. And so we realized that that was the wrong model, we would need a lot more capital to take it to eight-figures as a business. So we decided to close it.

It was also in conjunction with looking at TimeDoctor, which was growing like clockwork. And it was a SaaS business, the software instead of people. I mean, there are various problems managing people versus software. We realized strategically it just wasn't our time, and the core problem we had inside of that business model is that we did not recognize that a two-sided marketplace should not exist as a continuous relationship with a singular individual. And if you're going to run a two-sided marketplace like that, then you need to get that money upfront in order for the model to work properly.

— Just to sum up with Staff, what's the biggest mistake did you make?

— The secret churn. Poaching people will generally not tell you the real reason why they're quitting. You need to have deeper conversations with them to really understand why they're leaving your service. Anytime anyone quits the product, particularly in the early days of a SaaS business or any business that's a recurring model, do whatever it takes to get them on the phone for 50 minutes talk with you. So we have a very easy way of affording people, we ask this critical question: what would we have done to have kept your business? And because I'm stating it in the past tense, it lowers their defenses because they think, "Oh, well, I don't want to get on a call with Liam, because he's going to try to get me to use the software again." And that's not my intent. My intent is to be able to figure out what was the real reason why you quit.

The initial reason you gave may not be the real reason that maybe a lot more complicated than that. And then once I understand that I can add that inside of all of our churn reasonings, we categorize all of our churns, and then we add a payroll feature inside of TimeDoctor, it's going to reduce our churn by 10% as an example, and this is going to be worth X amount of millions of dollars within the next twelve months if we do it.

— I want to finalize with a Running Remote Conference. This year the conference will be remote for the first time, won't it?

— Sure. Yeah, Running Remote Conference, like all of the events, got shut down, and we ran a virtual event. We lost about a $150 000+ on the physical event. And then we lost another $30 000 to run the virtual event. For anyone that says the conferences are easy, they're certainly not. But we're continuing on with that, we're going to be implementing other strategies.

We're running the next conference, which is coming up on June 17th. We believe that we could probably become cash neutral just by running virtual events, primarily by connecting sponsors with attendees. It looks like we're probably not going to be able to get back to a physical conference for at least the next year, possibly longer than that. So you have to figure out a business model which is running these virtual events. They're pretty fun, and for us, it's a natural extension because we're talking about remote work.

It's not a business, I would probably say the conference is on life support right now: I am feeding it, giving this amount of cash in order to keep it running. I'm just very passionate about remote work.

You know, support your conferences that you're going to, try to support them with sponsorship dollars. It really does help them. And if you want to see them survive and make it through the next year or two, that you can have a physical event to go to, it's important to give them some money now.

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