Flywheel Masterclass, Flying Planes, and Building For Creators with Nathan Barry of ConvertKit

Smart Friends Episode 75: Nathan Barry

Today’s guest is a good friend, ​Nathan Barry​. He’s a pilot, designer, author, and most of all, the founder of ​ConvertKit​.

Behind the scenes: this newsletter is drafted, designed, and sent using ConvertKit. I’ve been a very happy customer for years. This company, founded in Boise, Idaho, outside of the major hubs, is one of the biggest email marketing platforms in the world today.

Nathan and I talk about his passion for supporting creators, and how he designed ConvertKit and his other businesses around creators. Nathan gives us a masterclass on flywheels that now impacts how I run ​Scribe​.

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Here’s what we explored in the ​episode​:

• Nathan recently ticked off an item on his bucket list: getting his pilot's license. He shares insights into the safety and discipline required for flying small planes.

• Flywheels create momentum and make processes easier and more efficient over time. Flywheels exist at multiple sizes and levels in a well-run company.

• Nathan highlights the transition from hand pump processes, which require constant effort, to flywheel processes, which build momentum and become more efficient over time

• Decision-making flywheels help streamline processes by providing clear, actionable steps for his team members to follow, especially in mid-level management.

• There is huge value of working in public, teaching what you know, and defaulting to generosity as key principles that drive personal and business growth.

• Nathan was advised to either shut down or fully commit to ConvertKit. He did the latter, which led Nathan to focus, hire dedicated staff, invest more capital, and niche down, resulting in massive growth and wealth creation.

• It’s important to structure incentive compensation in a way that balances short-term and long-term rewards, guaranteed and performance-based.

• ConvertKit developed a culture where everyone felt responsible for the company's expenses, reinforcing a sense of ownership.

• Nathan shares four mantras he lives by: create every day, teach everything you know, work in public, and default to generosity.

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Learn more about Nathan Barry:

• Twitter

• LinkedIn

• ConvertKit

• Website

Additional episodes if you enjoyed:

• ​The Synthesis of Media and Ecommerce with Kevin Espiritu of Epic Gardening

• Bootstrapping Epic Gardening to 8 figures by mixing Media + D2C Biz models. Oh and Poker, Pink Pineapples, and Male Models with Kevin Espiritu

• ​Rolling Fun #8: New LPs, Mark-ups, Giant Guns for Space Cargo, How to Find a Lead Investor, Software for Manufacturing, AI for Ecomm.

Episode Transcript:

Nathan Barry: People don't teach because they're experts. We perceive them as experts because they teach. And so, the very act of teaching not only builds expertise, but also refines your perceptions in your own expertise, and like people think of you as an expert. And then if you're wrong on something, they'll immediately correct it. And they will help you become more of an expert because someone was wrong on the internet and he needs to fix that. 

Eric Jorgenson: Hello again and welcome. I'm Eric Jorgenson, and I don't know much, but I have some very smart friends. And if you listen to this podcast, then no matter who, where, or when you are, you do too. Together, we use technology, capitalism, and friendship to create a brighter, more abundant future. Today, we have Nathan Barry, who's the founder and CEO of ConvertKit, among many other things. If you're subscribed to my newsletter, all the emails you received were drafted, designed, and sent using his company, ConvertKit. He is an OG of the creator world and spent his career supporting creators. It's really an incredible story and I'm very excited to finally get a long form conversation with Nathan on this podcast. I've learned a lot from him and I'm very excited to share that with you. In this episode, we talk about the founding of ConvertKit and the struggles that he had finding his focus and getting this thing off the ground. Nathan's based in Idaho, so we talk about starting businesses outside of these like major, quote unquote, tier one business hubs. Nathan's got some really interesting personal philosophies on life and work. But my biggest takeaway is the absolute masterclass that he gave us on flywheels. I've never heard this framework from him before, but it's extremely valuable. I changed a bunch of stuff immediately in how I run Scribe as soon as I heard it. It's something I'm going to think a lot more about and am re-listening to immediately upon completing this interview. I don't do outside sponsors for this podcast, but I will invite you to consider investing alongside me in badass potential future monopolies that we invest in through Rolling Fun. We make it our mission to provide capital to obsessive geniuses building utopian technologies. And if you would like to support us in supporting them, please open your browser right now and type in rolling.fun, F-U-N. In the past two years, we've invested in 30 companies, including Aalo Atomics who builds nuclear fission micro-reactors. They're driving the price of electricity down massively, and I think the impact that they could have over the next 10 years would be mind-blowing. Atom Limbs who’s building non-invasive mind-controlled robotic prosthetic limbs which will be an incredible miracle. This is a space that desperately needs innovation and the places that this company can go after solving that first problem are really incredible. And a next generation battery company, they could be the foundation of the electrification of air travel, a massive change in even the electric cars that exist today. I've done episodes with all of those founders previously. So, if you want to search any of those company names or keywords, you will find them in the Smart Friends feed. I'm very honored that dozens, dozens upon dozens of listeners like you now invest alongside me in these early-stage tech startups. Accredited investors can invest through AngelList today. They make it super easy and handle all the paperwork for you. With a rolling fund, the sooner you invest, the more of our deals you get to participate in. Every quarter, there's a new train leaving. So, if you want to put your money to work alongside ours, click on rolling.fun, which is linked in the show notes below, or type it in your browser, or if you just want to learn more, chat with me about it, reach out through Twitter or email. Now I invite you to take a deep breath, relax, and enjoy your favorite podcast, Smart Friends, arriving at your ears in three, two, one. 

I've been schooled by all the people in your Twitter mentions that Idaho is not in fact in the Midwest, which I know that it's not, but I don't know what to call that region. 

Nathan Barry: Northwest. 

Eric Jorgenson: Okay, it's Northwest? You put yourself in the same category as like Seattle? 

Nathan Barry: Yeah. I mean, we border Canada. I mean, if you look geographically, look at the Rocky Mountains and just look at which side of the Rocky Mountains Idaho is on, and that should definitively answer it. 

Eric Jorgenson: All right. So, you're Northwest. Oregon, Washington are Pacific Northwest to be specific? 

Nathan Barry: Some people say Idaho is Pacific Northwest as well. I think that might be a little bit of a stretch. I'm willing to concede that point. 

Eric Jorgenson: I do stand by my Midwestern is like a state of heart and I feel that energy from you. There's just like something wholesome that comes through in everything that you do, which I deeply appreciate and resonate with. And like a lot of my very favorite people seemed to have, for whatever reason, grown up in the middle of the country. I will include the Northwest and the Midwest and the Great Plains and whatever. And then even if they spent some time on the coast, still sort of have those roots. 

Nathan Barry: Wholesome roots and values. 

Eric Jorgenson: Yeah. But this is a thing that we have in common, I think, which is like living outside a major hub but being internet people or like in the mix of stuff that's happening in like Austin, San Francisco, New York, whatever. I'm just curious what your relationship with that is. Is this like an extremely deliberate decision? Is this a path dependency thing that just happened that you're sticking with? Like, how's that happened for you? 

Nathan Barry: Yeah, I mean, it's probably more that it just happened or a combination of the two, really. I grew up in Boise, and a lot of people are like, oh, you’ve got to live somewhere else. And I've traveled a whole bunch, but actually I've realized the longest I've ever been away from Boise. Actually, Codie Sanchez and I were talking about this for a project she was working on where I realized I didn't even move away for college. The longest I've ever been away is I spent five weeks in South Africa once, I've done six weeks in Thailand, five weeks in Europe. I've done those type of stints, but I think six weeks is the longest period of time I've ever been away from Boise, Idaho. And now family's here, we have the farm, we've got- we're never leaving. But I end up on the road a decent amount. And I was in New York two days ago. I probably do 15 to 20 trips a year. And so it's a good amount of travel, but Boise is a good home base. 

Eric Jorgenson: I feel the same way about Kansas City. I think there's like- it's just different trade-offs. But something I've always seen in you is like the ability to play your own game. Like you can pick and choose the best of what other people are doing but never get too sucked into the whirlpool, which I think is just really easy to do when you are deep, 100% in the echo chamber of one of those big hubs. 

Nathan Barry: You have the advantage in Kansas City of being right in the middle of the country as well. And so getting to a lot of places is… Not that Kansas City has a huge airport, but I think it's probably bigger than Boise. 

Eric Jorgenson: Yeah, we just built a new one. Kansas City's got 2 million people in it. It's a pretty big city. 

Nathan Barry: Yeah. Boise, the valley is like almost a million, but not quite. But I think I've underestimated how being right smack in the middle of everything helps. My good friend Grant Baldwin, he's a pilot and flies his own plane, and he's in Nashville. And just where he could fly within two hours of Nashville, I'm like, oh, okay. I intellectually knew why all the bands were based in Nashville for touring. Because you could reach, whatever it is, 70% of the US population in a 10-hour drive, five hour drive, whatever the stat is, but watching that, I was like, oh, being over here in the Northwest is pretty established. It does make it harder to get places. I was looking at maybe in your neck of the woods for Capitol Camp and like getting to Missouri, I'm like, oh, it's going to be- that's going to be tough. I'm going to go to- like two flights to Kansas City and then drive or something. 

Eric Jorgenson: Fly into Kansas City. We can ride out together. It's like the one time a year when the internet comes to visit our little neighborhood, which is fantastic fun for us. How much is the- I know you've been flying for a while. Has that changed your- is that how you actually get around and go see people on some of those trips? Or do you just fly as a hobby? 

Nathan Barry: So far, it's mostly as a hobby. I actually just got my license like four weeks ago. It took me about a year. And definitely, I did a bunch of trips with flight instructor friends of mine where it's like I feel good enough to do this trip, but like legally I’ve got to bring you along which is fine. Because I waited for like two and a half months to be able to get a check ride with the FAA to be able to take the test. So I met all the requirements and they're just crazy backed up on everything. So yeah, I've flown it; I own a Cirrus SR22. 

Eric Jorgenson: Yeah, it's like a Sky Ferrari. That thing's amazing. 

Nathan Barry: Yeah, it's pretty great. Ferrari might be a bit of a- I describe it as like a Honda Civic that flies. 

Eric Jorgenson: Oh, it's bright red. That's what I was going with. 

Nathan Barry: It is bright red. I've flown up Boise to Phoenix, which is like 600 miles, but that was like four hours with a headwind, and that was like, eh, like maybe the Southwest flight would have been a little more efficient. I've done Palm Springs, LA, San Francisco, that kind of thing. It's great for that. But I did look at like, oh, I could fly to Capital Camp like… Missouri. I looked it up and it was like, no. It's like six and a half. I think I could do it in six hours if the wind was neutral. And that's- 

Eric Jorgenson: Probably with some stops. 

Nathan Barry: Yeah, exactly. Oh yeah, in the app where you plan everything, it pops up and it's like, this flight exceeds your maximum fuel allowance, and you're like, yeah. So not worth it for that kind of thing, but it's a ton of fun. My son and I, he's nine right now, and we went down to Palm Springs and just him and I in the plane, three hours. It was a great trip down there. 

Eric Jorgenson: Was this a huge, had you been working towards this for a while? Or is it pure like, oh, I can do this now, I’m in?

Nathan Barry:  I've wanted to do it for a long time. There's an organization in Boise called Mission Aviation Fellowship, and they fly small planes all over the world. So, think like the earthquake in Haiti or the tsunami in Indonesia, they do all this aid work because they're insanely good at logistics because they fly planes and helicopters. And so in these situations, the Red Cross would be like, all right, you're in charge of communications and logistics, like tell us what to do, because they'll be the first to like rebuild cell phone towers and all this stuff. And we have friends, like a few of my friends that are flight instructors with them. And it happens that their world headquarters are here in Boise because there's all this back country flying, like in the mountains from here. So in 2008, I got to go to South Africa and Lesotho with them and do backcountry flying with them in the mountains where they put their runways on hillsides, like they want them on a slope because you can come up the valley and land uphill and you're against gravity, and so you need a shorter runway. And you like taxi to the end, turn around, and when you want to take off, you're taking off downhill, so like you build speed so much faster and you get going. But it's just like this crazy mountain flying they do. And so ever since then, I'm like, this would be so cool to fly. And then I guess this is just over or right about a year ago that I was like, all right, it's time to pull the trigger on it. And it took me longer than I would have liked. I think it was, yeah, 13, 14 months total from like, all right, I'm starting training to actually having my license. 

Eric Jorgenson: Is it still- it's considered or has been considered quite dangerous. Is that a thing that has sort of improved over time as the rest of aviation has, or small private flight is still kind of dicey? 

Nathan Barry: It's definitely better. It's probably equal to riding a motorcycle. People like to say it's equal to riding a car, but when you look at the stats, people spend way more time in cars than planes, so you can't actually equate it. The interesting thing about it is that in a plane if you die, it's probably your fault. Like, you made a mistake. And I don't know if that's better or worse. But in a motorcycle, you probably got hit by a semi truck if you die, or who knows what happened, or you're being an idiot, but like there's a whole bunch of things. In the accidents with planes, it's all like, I don't know the stats exactly, but something like 70% pilot error when something goes wrong. So, on one hand, that's really encouraging because if you're like, oh, I'm on it with my checklists, I'm like dialed in when I fly, then the chance of something happening is way, way less. On the other hand, you're like, oh, this is all- like, I can really screw this up. So, there's definitely things that you can do. Having the right plane makes a big difference. The Cirrus, if you were to find yourself in icing, it's got equipment for that. It's got a really good autopilot if you find yourself in the clouds and you weren't prepared for that. So it's really just a commitment to fly the right plane and then also to like keep investing in training. So even though- it's basically like, all right, I got the most basic license and now just keep training from there and adding ratings. 

Eric Jorgenson: Yeah, it seems like a certain personality type either is drawn to this or at least knows themselves well enough to know that they can trust themselves with their life and their checklist, like their diligence to get it done. So, I have a few friends who have got their license now and they all kind of like fit this mold of like, no, I am confident enough in my logistical discipline to take my life and my family's life in my hands with this plane. I'm wearing two different colors of socks because it's laundry day. So, I'm not pilot material. That's not going to happen for me. I know that. I'm good. I just know who could get it. So I got a few, I think two main topics that are passions for me that I find you to be an inspiration for that I think definitely I can learn from you on, just because you're just farther down the path of this like CEO organization building journey with two of these very, I don't know if they're counterintuitive, non-consensus, but definitely in the like self-educated CEO, like non-MBA driven school of thought, which is flywheels and incentive comp, that I think those of us who are just kind of like, we just picked up the books and tried to figure it out are like, oh my God, these are like Rosetta Stone concepts. And I know you talk about flywheels a lot, you write about flywheels a lot, both on the creator side and I believe to a large extent in the ConvertKit side. So, I want to just kind of pull your string on some of these things. And I'm just curious sort of where you got the ideas and how you start to incorporate them in like day-to-day management of ConvertKit. 

Nathan Barry: Yeah, man, there’s so much here. So first I think flywheels is something that people talk about and they don't know what it means. And so actually to step back and just like break down what a flywheel actually is, because I think it's you read it in some article that got published once or Jim Collins talked about it, flywheels in Good to Great. That's where I first heard about them. But it's like, yeah, flywheels. And then I taught a workshop the other day, and I was like, who could actually explain what a flywheel was? And like two hands out of 100 went up, and I was like, all right. Let me explain this. 

Eric Jorgenson: It's not just a circle with arrows. Like there's a deeper metaphor here. 

Nathan Barry: Yeah, exactly. And flywheels are useful for all kinds of things. Like sometimes we'll talk about one example, and people are like, well, but flywheels are used in cars and all of this stuff. And it's like, yeah, it's a way to store energy. I was actually listening to Elon Musk's biography yesterday on my run, and they were talking about their ideas for using flywheels inside of the early Tesla cars. It's like, yeah, they're used for all kinds of stuff. But my first introduction to flywheels came from actually that trip to South Africa and Lesotho that I was mentioning with Mission Innovation Fellowship in 2008. We were working at this orphanage in Masera, which is the capital city of Lesotho. Population, maybe two, two and a half million, I think. So a good sized city, but not- like the infrastructure was not that great. And so, they had electricity, but it would, like I was there for two weeks and it went out, not every day, but close to it. And so as we're putting in the well, we knew we didn't want to do an electric pump on this well. And we also knew that a hand pump would be a lot of work for 100 or 200 kids to rely on, and it's an orphanage, for water. And so, Jason, who was leading the trip, who's a flight instructor, very mechanically inclined, he'd lived in Africa for 20 years. He was the person where, like when some appliance that someone had brought from the US broke, like the blender, he would go like machine the new part, like some plastic part that broke, he would go machine a new one in the airplane hanger and all their stuff and then replace it. So, whenever they left, everyone was like, oh, we want Jason's stuff. Because we know that it all broke, and we can replace it with a better version. And so, we're like, what's the plan? What are we going to put on this? And he's like, oh, we're going to put in a flywheel, so this big metal wheel that sits on top of the pump. And instead of a linear up and down motion, it has this circular motion. It's way harder to get going, like that's a key thing about a flywheel is that they're much harder to get initial momentum. Actually, when we got it going, my friend Luke and I were like standing on either side of it grabbing the handles and really leaning into it. It took real effort to get it moving. But then the effort decreased over time, so it'd spin faster and faster. And then, we started to get more and more water coming out of the pump. And so, taking this metaphor and then applying it to real world things I thought was quite interesting. And in reading Good to Great, I was actually kind of frustrated that it was so high level. He talks about the flywheel for Amazon, and it blew my mind. Basically, in short, more scale leads to lower prices, lower prices leads to more scale. There's more steps, but read Good to Great if you haven’t. But I struggled for years to put it in practice inside of ConvertKit because it was the absolute highest altitude flywheel. And it wasn't until I really started to try to implement these like very detailed level flywheels that I started to get momentum. And so, the example that I came to that I probably use the most is just like a content ideas flywheel for your newsletter. We have this idea that, okay, if I write a newsletter every week, I'm going to run out of topics eventually. And any writer knows that the more you write, the more you have to say. But like take a step back from that, most people run out of topics. And so, if you think about it, you're like, okay, how can I have a flywheel that the more I do of something, the more it gets me? So basically, the more I write, the more it gets me to write about. And basically what we have a lot of ConvertKit creators implement is, as you have new subscribers come in, it's the first step. Then you send them an automation. It's like, hey, here's some of my greatest hits. Here's the content you need to know. For me, it's like my flagship essays, the Ladders of Wealth Creation, some of these other ones. And then a couple emails in, I like to send like a personally formatted email that looks like it came just from me. And I'm like, hey, what's your biggest struggle related to learning this topic? Hit reply and let me know. You categorize all those responses, Google Sheets, Airtable, Gmail label, I don't really care. And then when it comes time to write the next newsletter issue, you look at those replies of someone saying like, oh, I'm really struggling trying to figure out how to grow my audience on this platform, or when I was teaching design, it was like, here's this niche thing that I'm trying to figure out how to do in designing iOS apps. It's like, well, that's what my audience is about. So let me take that one topic, write it into a full newsletter, send that out to everyone, and go from there. And so I really defined three laws for flywheels. And I'm toying with making a fourth. But the first one is with a flywheel, every step should flow smoothly from one into the next. So that's that completed loop. The next is that every rotation should get easier with time. Every rotation should produce more results than the previous rotation. And then finally, the one that I'm like toying with, I think it's a law, I'm not sure yet, is that a flywheel can only have one goal. And if you try to have multiple goals, it will put unnecessary friction on the flywheel and you won't get momentum. So looking at this content ideas flywheel, it's basically as I get readers, those readers give me their frustrations, give me things to write about. Writing about it gets me more readers, which gets me more frustrations. And on you go. And so, it both is easier because I can refine my process, my automations, and then it produces more because I get more ideas, the bigger the audience, the more ideas I get, and then the more people those ideas go out to, and so on, and watch it compound. 

Eric Jorgenson: It's so interesting how much easier it is to write or speak in response to a question than without one. Like just night and day. You could struggle for three hours to write a blog post and then as soon as your friend calls you and says, hey, what are you thinking about? What's on top of mind? Or, hey, I have a problem. All of a sudden, 5,000 words just falls out of your mouth before you even know what happened. 

Nathan Barry: An example from yesterday, my friend Sean Sweeney, who does all this real estate development in Minneapolis. He's like, all kinds of epic projects that he does. And then he's playing this like creator Twitter. He like has one foot in this world. He's like, do I want to get on this path? I'm getting all of these questions on like very specific things. And people want like one on one coaching and consulting. I don't want to do that. Like, maybe I do, I don't know, for a certain price. What should I do? And so he sends that to me, and I would have never thought to write an article about this, but I'm just like, oh, Sean, look, it's handled three ways. First, people do the public podcast or that format. I'll answer any question, but I'm going to do it in public. So that's the Ask Pat podcast or any of these other ones. And so, the price that you pay for your problem to be in the public domain. 

Eric Jorgenson: Yeah, that's what you're doing with the Creator Podcast, right? 

Nathan Barry: Yeah, exactly. So that's one version. The second version is that you sell your course and you add group coaching to it in some way. A lot of people do this. Dan Martell does this really well with his Buy Back Your Time book, and then he has this whole group coaching program that he's scaled to millions a year in revenue, where people are getting on a weekly call and learning, you have to ask your question in public. 

Eric Jorgenson: Semi-public, yeah. 

Nathan Barry: Semi-public, right. But then you also get to learn from the answers to everyone else's. Or the third one is you say, all right, two grand an hour, and yes, for the right price, I will do it. And then, Nick Hubert did this a bunch with his audience. And I mean, he made, I think, well over a hundred grand just on coaching and these consulting calls. And so, it was interesting, getting that question from Sean, like having the actual question, I was just like, oh, boom, boom, boom, here's how it's done. And then I was like, all right, this is us like trading voice memos. And I'm like, all right, well, I'm going to transcribe that voice memo and that's a newsletter issue. 

Eric Jorgenson: That's a draft. Yeah, that's perfect. I'm thinking about your hypothetical law, your potential law. The version that I have or the flywheels that I've driven is I try to be really meticulous about each step can only have one goal. But when you look at- you think of multiple different flywheels, you think of the Uber flywheel or the Amazon flywheel or some of the corporate-level ones, and as a company, you can't just have... Maybe there's a keystone, but there's not one goal. But as you subdivide them into the marketing goal, the story of the company's goal is to tell the best story the most broadly or the sales or the product. Each of these sort of steps has an optimization whose output goes into the next step. I think that's a very good law. But if you define one- the point of it is to have multiple functions working in concert. And so, if you have one priority that doesn't take into account all the work across every step of the flywheel, I worry that you maybe subjugate some of the other steps to just one of them. 

Nathan Barry: I think the altitude of the flywheel really matters. So you're talking about a very high level flywheel. And a lot of the ones that I start people out on are very specific, very low level flywheels. And I try to get people to rank the altitude of a flywheel on a one to five. Like, the one that I walked through, that was a level one flywheel. It's the lowest altitude. The one that you're talking about is like level five. That's kind of up there with the Amazon flywheel. And I think most people should start, this is where I struggle with Good to Great is that I started at the top and tried to work down, and I really think the flywheels should start at the bottom and try to work up. And then you'll end up with different flywheels at certain stages. So I use Sasha Bloom as an example. He has a very focused flywheel that lets him write two newsletters every week, keeps him interesting and engaging. And the goal of that flywheel is not even to grow the newsletter, it's all about quality of content. And how do I get good content out twice a week up from there. Then you move up one level in the altitude, then there's another flywheel that's all about growth. And that's where he's taking subscribers from social, amplifying with ConvertKit’s Creator Network, sending out the newsletter, selling sponsorships in it, taking revenue from sponsorships, dumping it back into growth to make the newsletter bigger. So, the bigger the newsletter, the more partnerships he can do, the more people the newsletter goes out to, the more he can sell the sponsorships for, which gives him more to reinvest. And so that one snowballs like crazy. In early rotation, that flywheel was like 10,000 new subscribers in a month, and now he's putting out 50,000 subscribers in a month for list growth. But then he has another flywheel above that, which is basically where he makes his money. And that's his agency flywheel. And the very high level version of that is he's going from like taking his audience, figuring out what his cost centers are, what he's spending money on, and then he's creating an agency around that, promoting that agency back to his audience, and then using that money to complete the loop. I can pull up a- Okay, I just pulled up the flywheel. So, the first step is he's growing his audience by operating a creator business. Next, identifying his cost centers, starting agencies so that it's an internal, cost center to profit center. Then he's hiring an operator and everything within that. Then he promotes that on social. He's got a very set way that he promotes his businesses on social. That's driving and fulfilling the clients, that generates profits, and he uses the profits to scale his creator business. And he's taken that to, I think he has eight agencies that he's scaled up, and to a combined 10 million or so in ARR. And so it's really important to look at those different altitudes. I consider that a level four or level five altitude. 

Eric Jorgenson: That's super interesting. And as you point out, much easier to build from the bottom up, much easier to- you always hear about the high level ones first in the blog posts or on Twitter or whatever. 

Nathan Barry: I always think about which ones drive decision making. So sometimes the high level ones can really help. In Amazon's case, people would say, okay, what is our goal? Our goal is to drive down prices to get economies of scale. That's really clear to us. And so when a mid-level manager reaches a fork in the road, they can use that flywheel to answer a decision. When the creator writes out a flywheel, it's often like produce great content, to grow the audience, for new opportunities to help me produce great content. That might be true as a level five high altitude flywheel, but I'm like, how does help you make a decision? And so, especially early on with the framework, then I'd go really detailed and say, all right, what's the production function? Like what needs to be- as a creator, what needs to come out of our factory every week or every month? Okay, what's a flywheel that I can make to make that easier? 

Eric Jorgenson: So, as you're breaking down roles inside ConvertKit, do people have as part of their job description individual KPIs or something? Like, do you think about those roles or those teams as flywheels, as lower level flywheels?

Nathan Barry: Yeah, I think I'm still pretty early in implementing this across ConvertKit. So, it's really in the last, I guess almost a year ago that I published the flywheels essay and started talking about this publicly and really focused on the creator aspect of things and used my own content as a guinea pig, and there's flywheels that I documented retroactively. We very much- I didn't know to call it that, but for direct sales in the early days, I was like, oh, that was a flywheel. It definitely got easier with each rotation. Here's exactly how. It definitely produced more. Here's exactly how. But it wasn't like in 2015, I was like, oh, this is our magic flywheel. There's some revisionist history on that one. But now what I'm doing- 

Eric Jorgenson: There's always intuition that like gets codified. 

Nathan Barry: Correct. And that's when you're learning, like reading any business book or something like that, if you have some level of experience, like I'm usually somewhat skeptical of like, would this work? And then when it pattern matches to my own life experience, I'm like, oh, I think you're probably right about this because like you're now giving, you're now naming something that I've experienced. I just didn't know how to articulate it. So on the business side, what we did at our last team retreat, let me back up a little more, wrote the article, people started thinking in those terms. Then over the course of last year, I tried to document more of it in course form. And so probably October, November, I did two cohorts of creators through a course. And then I also shared it with the ConverKit team. And so like, hey, watch this for two reasons. One, to think about flywheels and your own work and role in the team. And two, we serve creators, so to be able to use this format to coach creators. And that was good. That got traction. But then what I did is I actually tasked our ops team and said your job is to get to where at the end of 2024, we have 12 fully functioning flywheels, like operational in the company. And we defined what that meant. It has to go through a certain number of rotations, like this is a weekly flywheel, monthly. We got to have at least, I don't remember what we said, maybe six rotations on a monthly flywheel. It has to be measured, because you can put a spreadsheet to a flywheel and say like, all right, I've measured every single step. I've measured the results, the friction, all that. I can track how it's trending over time. And then they led the effort at our team retreat in February of like teaching the concepts, breaking people into groups and saying, okay, this is like our star creator onboarding flywheel. What else did they do? They had one around brand, another around like we made an incident response flywheel. So, like when the pager duty pings to say, hey, like a server's down or like the email sending queue is backed up, it kicks off a very specific flywheel. And normally it'd kick off a linear process. But the difference is that flywheel, it's loop closer is all about how do we make it better so that that's less likely to happen? In this case, it's a negative flywheel or like a do less of the thing. Most flywheels are like, how do we get more? 

Eric Jorgenson: How do we fix the issue flywheel? How do we make this one thinner and happen less often? 

Nathan Barry: But that has really- like now the team is tracking metrics on a weekly basis to the flywheels that they're working on. 

Eric Jorgenson: Yeah, that's a really- what a holy grail system of like micro to macro quantified system of continuous improvement. That has to be- you couldn't describe a better, tighter system for continued success than a transparent system of interconnected, like ever more positive results. And if you design that all the way through and can actually rigorously do it, it’s amazing.

Nathan Barry: Let me give you another really practical flywheel because something that happens, if we go back to the original analogy and think hand pump versus flywheel, the most common thing that we would put on that well would be like the hand pump that you'd find at a campground. On one hand, it has a nice long handle. That gives you leverage. That's way better than dropping a bucket down and then pulling it directly up. But it has like linear up and down motion. There's still a pretty strong correlation between effort and impact. The moment you stop pumping, you stop getting results. And we ran a influencer program for ConvertKit. It was very much, I realized later it was a hand pump process. And basically what it was is we said, okay, we want user-generated content of people talking about how they use ConvertKit. And so, we- in hindsight, I’m like, what were we doing? But we went out and like identified 30 or 40 creators we wanted to work with, a mix of like Instagram, Twitter, YouTube, that kind of thing, short form, long form video. They were all different sizes of audience. We figured out what content was the right pitch for each one of them, like for them to talk about, made that bespoke. We negotiated custom contracts because some were like, I don't have a big audience, but I'll make you great content that you can then run as ads. Others were like you're really paying for access to my audience of 100,000 subscribers. So it was all custom from there. And then the reporting and everything else. And we ran that, we probably got four months into that before we realized, actually what happened is the person running it took another job somewhere else. And it just died. Like there was no momentum and no continuation on it. And when I looked at- one thing that bothers me is anytime something that I think will work really well dies out and the team is like, no, that was a terrible thing. That was a terrible idea. And I'm like, no, but there's something here. And so I dove in and was trying to figure out, okay, what went wrong here? And I realized that we had just made the most ridiculous hand pump process. There's no flywheel there. There's really no leverage. And so the bigger this got, the more work the person managing it had to do, and we're going to have to hire someone else and on from there. And so, I sat down with Tom, our head of social media, and mapped out, we worked together to come to, okay, what's the flywheel version of this? And what we realized is we need to focus on earlier stage creators. So they all fit into a nice bucket and a single contract can work for all of them. And if someone's like, hey, but what about like my audience is five times as big and it's like, cool, this program's not for you. And so what we came to, we said, okay, we're paying all these creators a thousand dollars a month. It's locked and we'll do it for six months at a time. The next thing is every creator gets the same brief. So our product marketer knows here's what we're promoting this month. Our automations are way- like huge release for our automations. They already wrote this brief for the whole marketing campaign. That brief gets tweaked a little bit, then dropped in, and all 15 creators who are in this program get the same brief. 

Eric Jorgenson: And it would be the same if there's 150 of them. Super high leverage. 

Nathan Barry: Exactly. And then as it goes through, you think, okay, we need to- we have a content review process, is this something that we would want to post? Well, let's do that in public. They're all creators. They can give feedback on it. Now they're all posting. So we want three videos a month. Oh, we streamlined and said we're just doing short form video. So, another thing in the hand pump process was but there's so many platforms. It's like, great. For this flywheel, short form video is it. And then what we realized is, okay, now they can start to give each other feedback and riff off each other and be like, oh, that was a great idea. Like, mind if I do something similar over here, have them talking to each other in the Slack channel. And then we realized that amplification is really important. And so what if we incentivize them to all engage with each other's videos? And so, we just said, hey, we'll pay out a bonus for any video that crosses 10,000 views on it. And so now they're all incentivized. You could easily end up with something like, say you and I are in it together, and I'm like, I could be rooting against you. But now we just flipped the incentives, and now we're working together. And so my incentive is to comment on your video, because that's what the algorithm wants. And you're going to get this boost, you're going to comment on mine, and we're going to drive that early engagement. And we've paid out a bunch of these like, I think, $3 to 500 bonuses for videos that go over 10,000 views and get that traction. And then the next step is that we take the videos that get the most engagement and we give them to our ads team to amplify. And then, as we go around, we can further grow the program from there. So it's like a very stark contrast between the hand pump version and the flywheel version. And we had to like cut out a bunch of stuff that would have been nice. We had to exclude a bunch of people that would have loved to partner with us or something else. But now, Tom runs this process in five to ten hours a month, whereas it was someone's full-time job. 

Eric Jorgenson: Amazing. And you designed it to be, like that's a huge win-win for the creators also. Like, if they are having successful videos, it's growing their audience, they're collaborating with their peers, they have a really stable agreement with you. It's really clear what success looks like from your point of view. That's an awesome, that's a great one. And if that process works, you can very easily adapt it for long form written or long form audio, whatever. 

Nathan Barry: And I would clone the flywheel and make the appropriate tweaks instead of early version is like, oh, we can accommodate everybody in every format. And it’s just like, ah. And that's the thing that I love to do in flywheels is to measure the friction. And you could do it, like try to do it scientifically. I just do it on a one to five scale. And I go around for each step. And I was like, all right, how much friction using that one was it to create the creator brief? It was a two out of five because I already made it over here. All right, that's easy. How much friction was it to review content? Oh, maybe we got a bunch of new people in and maybe that was a four out of five this time. We work our way around. And then I can track that over time. All right, six months later, reviewing content is still a four out of five in friction. Why is that? And I can figure out how to improve that and really focus on law number two because it should be easier with every rotation. And so if it's not, like I'm doing something wrong. And it's just a completely different way of running the business. The other thing is I operate, someone described this as like the eye of Sauron – I don't know if that's a good or bad analogy, but we're running with it – where like I focus on something in the business, and we like get that dialed in, and then I move on and focus on the next thing. And now there's like hobbits scurrying around over here, like trying to destroy a ring. Basically, when I move on to the next thing, the natural state, like entropy or whatever, it just declines. And so an example of this is in 2022, I decided I was going to grow my Twitter audience. The goal was to go from 30,000 to 100,000 in 12 months. I pulled it off with days to spare, but we got it done. And I think it'd be a natural assumption to see that growth and to assume that you go from 100,000 to 200,000. Like, this should accelerate in 2023. But what actually happened is it went from 100,000 to 125,000. And the reason is because flywheels aren't perpetual motion machines. Like, you have to stay on it. And what I did is, eye of Sauron, so like Twitter was the most important thing, then I moved over here. And later I came back, and what happened? And the flywheel is just sitting there totally still. Because I didn't have a step in my process to stay on top of it. I did not hire someone who that was their job. And so those flywheels really keep things moving if you come back and have that monthly metrics check-in, make sure that you're maintaining and tweaking it. 

Eric Jorgenson: Have you interacted with Brian Balfour at all or done the Growth Loops Reforge course? 

Nathan Barry: I've heard good things about Reforge. 

Eric Jorgenson: It is the closest model I've seen. And they call them loops. There's all different types of loops, but that kind of like stacked flywheel or feedback loop, the positive feedback loop approach. And they have a really kind of thoughtful from sort of simple metaphor through spreadsheet. It's really engineered around growth very specifically and usually like venture-backed scaled growth. But I'm pattern matching to some things I learned from him and from that, which is, as you point out, like pretty awesome when you see metaphors agree across domains. Like that's very cool. 

Nathan Barry: Exactly. And I think that's kind of the- what they've done such a good job of in like the startup growth world is giving people that curriculum that you can really follow and then the shared language across like a whole marketing or growth team. And that's a lot of what I'm trying to do with flywheel is where if we can get a whole bunch of creators and then creator support managers and all of them to say like, oh, I'm going to go implement this flywheel, like something that I'm trying to do is build up a library of flywheels so you could effectively copy and paste into your business if you find one that's the right step. 

Eric Jorgenson: I love that. I would bet that ISR on entropy connection is a good sort of segue to the second big topic which is incentive compensation and giving people ownership and how do you make that transition from where you are the person making the thing work, whether the load’s on your back or whether you're just really hands-on helping someone get something done to, okay, this machine does work well enough now to be a perpetual motion machine. This flywheel will continue when my attention shifts. I assume a big part of that is incentive comp, though there's also a lot of other things that go into it. But I think you are certainly in this new school of people paying a lot of attention to this. And I appreciate how publicly you're doing it because that's always a brave thing to do. But I want to start with the same thing. Where did you first come across this idea? What were some of your inspirations to pursue this? 

Nathan Barry: I think I heard about profit sharing or employee stock programs from, it probably wouldn't have been Good to Great, maybe like Small Giants, some of these other books that talk about maybe some more classic companies that have ESOPs or similar programs. Honestly, some of it came from the inverse of some of my heroes.  One thing that came up is, so I've learned so much from Jason Fried and David Heinemeier Hansson and reading Rework, reading their blogs from early on. And just like so many things they say, I'm like, oh, absolutely. It pattern matches to my experience I learned from when I tried it out. Totally true. They would say something that I was like, oh yeah, that's totally true. And then I was like, I don't think that's true. I think the opposite might be true. And one thing that they would say is, they talk about why they don't do equity. And they'd say like, oh, equity in a private company that's not going to sell doesn't have value. And I was like, that's right. We're building this for long-term. We're not going to sell the company. It doesn't have value. I shouldn't give out stock options. At the time, I had given out equity to an early team member who had joined me at 2K in MRR, taking over all engineering. And then he had stayed with the company for exactly two years. And in those two years, we scaled to 500K in MRR. And he had led product and engineering through all that. And he's like, look, I want to move on to other things. He'd done like a Y Combinator starter before. And he's like, I don't want to manage teams and all of that. So, I was in the- talking about how equity doesn't have value. Well, I was in the process of buying back millions of dollars of equity from this individual that had a big impact. And so, I was like, this doesn't quite match. And I got to about 2018 when, I don't know what revenue it was, maybe 10 million a year, something like that, and I realized that we created something that had insane value. Like the rate, I'd done some math on multiples, like okay, again made up, but if we're adding $1,000 of MRR a day, and software companies are valued at 12 times, or sorry, seven times ARR, then we're adding something like $84,000 of enterprise value to this company on a daily basis. And of course, you’ve got to keep it growing, and there's so many things in that. But I just watched that, and I was like, I think this equity has a lot of value, and I think that the equity value for Basecamp is like actually the thing that pays for that fancy yellow Lamborghini that DHH drives and the fancy, beautifully architected house that Jason has. And so, I just realized I think this is something I need to change my opinion on or that I have changed my opinion on, and I need to change my public stance on. And so, the very first thing that we've done is profit sharing and that I'd always had, and that was actually a really special thing to roll out. 

Eric Jorgenson: Well, you were super thoughtful. That's worth a deep dive on its own too because you were super thoughtful about that. And it's really, you're in an interesting position as basically the, I don't know, sole, but certainly majority owner to basically, yeah, unilaterally make that decision to share that, the profits with your team in a place where a lot of people wouldn't and haven't in your position over the course of the years. So, I think it's a really interesting thing to do, which gets back to the Midwestern is a state of heart. And I think in one of your posts, you said like, I saw myself really doing much better disproportionately to the team, and I wanted to correct that. Like, you felt compelled to kind of fix that on a near term and long term basis. 

Nathan Barry: Yeah. I think I’ve just always, I don’t know if I’m a pure capitalist in- there’s some version of like, when it comes to running and scaling the business and winning the market and all that, I am a diehard capitalist. And when it comes to taking care of the team and family and everything else, probably pretty close to a pure socialist. And I think that, I don't know, when you have this much abundance- Like one of my things, the mission of the company is we exist to help creators earn a living. And we live in this world where all of these creators get some pretty amazing paydays. Like for our site, if we were to make up someone and I'm like, yeah, and they did this thing and built an audience of 10,000 subscribers and they launched this product and they made $100,000, you'd be like, yeah. Like that would be the most normal thing for us to talk about because we all have firsthand stories of a hundred people that have done that. And I didn't want to ever have a situation where we were telling the story of a creator that we served, that our software was the backbone of their business. And they did like a $50,000 launch. And our team's reaction would be like, oh, that'd be nice, I wish I could do something like that. And to think like, oh, should I be on that side of the fence instead of this side of the fence? Or to think, I'm just doing it for the mission. Like, I could go out and make a bunch of money and be a mercenary as a creator, but I'm the one building a platform to serve everyone else. Like, I don't think you should have to make that trade off. And so, with profit sharing, being able to, I don't know, I guess it's like a creator getting a launch twice a year, and when we distribute profit sharing, someone gets their $15 or 20,000 check, then one of my goals is to make that a bunch bigger. I really wanted to apply that we exist to help creators earn a living to not just the creators we serve, but also the creators of the platform and the team. And so that's gone really well. It's a key thing that I'm really proud of. I'm not certain, there's probably someone out there who like knows incentive compensation super, super well, and they're like, actually, this is the perfect system. So I'm not so prescriptive to say that, oh, everyone should do this, but I'm very, very glad that we did. You and I also have a lot of friends in common who run very, very profitable companies and then take those profits and reinvest them in buying more companies and really compound and snowball that. If you add profit sharing in the way that I have, it does limit your ability to snowball those returns into something else. 

Eric Jorgenson: Well, as fast. 

Nathan Barry: As fast, correct. Because if we're thinking of it like a flywheel, all of a sudden, your flywheel has two goals. One is to make the team rich, and two is to fund new opportunities, acquire new businesses, all that. And so, obviously, that's going to, if we're splitting it, let's know we're adding to our- I don't know where this analogy is going, but if we're splitting it off over time, it's not going to accumulate as fast. And so you just have to be thoughtful about all of that. But then I also think that, in compensation, most people over-index on one category and miss another. And so, the Basecamp guys were like, look, and correctly so, whatever, 90 something percent of startups that you got all your equity comp in are going to fail. They're going to go to zero. I have an equity check from a company for 64 cents. I actually didn't know that you could write a check for less than a dollar until I got that check. You write in the memo line, normally you write like 12 and 1,000, and then you write the cents after that. This says zero and 64. I don't think I would have known how to write that. 

Eric Jorgenson: This is less than a stamp. You could have just kept it. It's a tip. 

Nathan Barry: But that was like my equity payout from the first startup I worked at. And so the Basecamp guys were correct that that's the most common outcome for your equity. And so people way overvalue it. It can be totally misleading. 

Eric Jorgenson: I can't decide if you did better with your 64 cent check or I did better with a t-shirt. 

Nathan Barry: I think the t-shirt can keep you warm. They both can. I can burn the check. The t-shirt would keep you warm for longer than the check would. 

Eric Jorgenson: If you lit them on fire, there are more calories in the t-shirt. 

Nathan Barry: So, I guess realizing that the traditional startup culture was correct, that if you have a wildly successful company, the value is best delivered through equity. And the Basecamp guys were correct, that most of those never happen. And so I realized, it's something I do all the time in my life, I feel like everyone wants to put things on a single axis. Do you want to be high growth or profitable? And that's a slide of like, where in there do you want to choose? 

Eric Jorgenson: Both would be great. Can we do both? 

Nathan Barry: And I'm always saying like, okay, take this one axis, like it's this. It's like we have profitability and we have growth. And there are some horribly unprofitable companies that grow painfully slowly. And there are some absurdly profitable companies that grow very, very fast. And there's characteristics that will put you in each of those quadrants. And so I feel like one of my missions in this world is to take everyone's single axis decisions and graphs and way of thinking and to put them at least on two axes. And so, one thing that I did in that is what I coined as the ConvertKit compensation method is to say our two axes are short-term versus long-term compensation and performance-based versus guaranteed. And that gives us a quadrant. And so short-term guaranteed is salary, long-term guaranteed is a 401k match. We've got that covered. Short-term performance-based is profit sharing, and long-term performance-based is equity. And if we hit each of those four buckets and we find the right balance within that, then we'll make sure that everyone shares the success of the company in short term and long term. Everyone's taken care of, so they're not worried about how am I going to pay my mortgage or whatever else. And honestly, if this all fails, at least we've been making 401k matches for the entire time. And there's 10 grand in the 401k somewhere, and we've mitigated some downside. And it's simple, and I just wish more people would take that approach. 

Eric Jorgenson: Yeah, I love that. And that really protects against, there's a huge set of failure moats that come with over-engineering or making too powerful your incentive comps. Like you can over-incentivize people to the near term or the long term, and either of those will destroy your company in different ways. There's pitfalls all over the place and landmines in incentive compensation. So, designing it so that you have, so that people are hopefully making smart trade-offs between like, oh yeah, I'd love my profit share to go up this month, but I shouldn't do it so aggressively that I'm robbing the future because there could be a big payout one day… Yeah, absolutely. So that's a really clever thing. And I think the other thing is going back to what you said about the trade-offs between the time or the reinvestment opportunity and making the team rich along the way is that you're giving up something quantifiable, which is an additional expense to your company that will result in hopefully a bunch of amazing qualitative things, either like longer retention or incremental effort or even something as vague as robustness of the system. Your company will just run better and more reliably and require less of your Sauron-ing and hopefully have a lower entropy rate if everyone is well taken care of to tend to the flywheel under their care and the person next to them and the person next to them and just work together a little bit better as a whole machine. And there's not that many people who can make those quantitative for qualitative trade-offs and really see the wisdom in it. 

Nathan Barry: And there's some really interesting side effects that come from that of, and like some natural tensions. One example was a few years ago, we had an engineer that was running some experiments on AWS, accidentally left the server running, and it was like 2,500 bucks. And in the grand scheme of our AWS bill, it didn't really matter. I think our bill was smaller then, it was probably like 40 or 50,000 a month at the time. And so it's like, look, this is not even 10%. And so no one was mad about it. But then it had this, like I heard of later, someone made a comment like, hey, don't worry about it. We'll shut it down. We'll clean up that server. We're good. But that's our money. Be a little more thoughtful next time. And they didn't say it like, that's my money. It's like, that's our money. And so you get those little things. Now we complain the other way, where sometimes people are like, oh, I saw this red flag the other day, where someone's like, the cost of this app, I think it's like a Twitter analytics thing or something, went from like $50 to $100 a month. And like, is it still worth it? And I was like, I think we're good. 

Eric Jorgenson: Yeah. We've already spent too long thinking about it. 

Nathan Barry: Yeah, exactly. So, there's trade-off in all of that, but it also keeps that balance of how people think about long-term and short-term. And you'll find I've given equity to people that didn't understand it and didn't value it. And I don't know, that's kind of a cost of doing business. I'd rather, well, I was going to say, I'd rather default to generosity than the other way. And that's actually one of our core values of the company, so. 

Eric Jorgenson: Amazing, yeah. I think that is its own little flywheel of like good karma. You just give and 90% of people who are all the best people will figure out a way to give back. And you will never regret really giving something to somebody who doesn't and taking the chance on it. 

Nathan Barry: You also end up just with a huge number of people in your corner. Like that's probably been one of the biggest things that's led to ConvertKit’s success. It's just the number of people that are in our corner. We had an instance maybe six months ago where someone out in the space was just trying to like, like they were out on Twitter, just absolutely trying to trash my reputation. And a bunch of other friends like Sam Parr and Codie Sanchez and others were just like, dude, you can keep trying, but like I don't think you're going to get anywhere. No one believes you that this is the case. And just one of those things of like, I think you're going to have a pretty big uphill battle to make Nathan out as a villain, just in general. That's just because there's so much good karma out. Like, it's just this is how we run the business. It's how we operate. And so, if someone's trying to be like, oh, here's a secret evil thing that happened, it's like, no, it really didn't. And when you say that, people are like, I believe you. 

Eric Jorgenson: Yeah, how incredible to have the kind of reputation that when someone attacks you, it lowers their credibility. That's a really- that is hard earned, 10 years of giving the way you have to the community and the internet and making many, many friends along the way, which actually I'm interested to ask you because I feel like we have enough mutual friends who've overlapped paths with you in a bunch of different areas that I'm wondering what the professional networks, whether informally or formally, I don't know if you're in any of those groups, how transformative have any of those experiences been for you or what have they done for you? 

Nathan Barry: Well, I mean, the very first one that was totally transformative for me was in 2012. I formed a mastermind group with like five other creators. And those are people like Barrett Brooks, who ended up being our COO at ConvertKit for a long time. He did a bunch of creator stuff before and after. He actually just launched a podcast today, I think, called Good Work, everyone should go check it out. 

Eric Jorgenson: Oh yeah, with James Clear, it's his first episode. It's incredible. 

Nathan Barry: James Clear's the first episode. I think he's got Matt Mullenweg coming up and a bunch of other great ones. So him, Caleb Wojcik, who's an amazing video creator, Ryan Delk, James Clear joined that mastermind. We were all together for a very long time. And we all just really heavily invested in each other, businesses. We do mastermind retreats twice a year where we'd get together and we'd give each other tons of feedback and advice and support. So that was probably the most impactful one. And eventually, our businesses went different directions, and it made sense to focus on, like change the cadence of that. But then there's still things. Barrett's launching a podcast, he's like, hey James- really good friends. And James is like, I would be thrilled to be your first guest on a podcast. I'm pretty sure 99 out of a hundred people that ask James to be the guest on a podcast, it's just a straight up no. 

Eric Jorgenson: He's done his time on podcasts. He must be up in the four figures by now, man. He's a machine. 

Nathan Barry: Yeah. So that was the first group. There's others on along the way. I mean, I hate to bring this one up because it's not around anymore, but the World Domination Summit that Chris Guillebeau put together and ran for 10 years, like so many people tie their work back to it and their connections and everything else. Like I have a really good friend, Tim Grawl, who's I think one of the best book marketers in the world. And he and I have known each other for eight years. He's helping advise my next book and just like so honored to work with him because it feels like you're working with a person, like when you look up pop songs and you realize the same four people are behind the hits. Tim is one of those people where you're like, oh, this is how it's done at an expert level. And I met him through through that event. I think other ones, there's one called Mastermind Talks that I have been a part of the last five or six years. That one's really, really good. Good friends like Dan Martell and plenty of others are in there. I went to Baby Bathwater, I spoke at their event. That was a really interesting one. 

Eric Jorgenson: There's so many of these out there. 

Nathan Barry: I haven't done Hampton other than like guest lecturing at some of their events, but I've heard really, really good things. And then people still rave about YPO. I know a lot of people who are just like, basically if you get in an amazing YPO forum, then there's nothing else like it.

Eric Jorgenson: This is probably an overlapping question. I'm in some of my final kind of like little broader questions here if you’ve got time for a few more. What do you think, as you're kind of looking back, the biggest inflection point was? Like I followed you since you were selling PDFs on the internet, like $10 ebooks basically direct from your blog. So, I imagine there's a lot of different sort of transformative gateways you've been through, but I wonder if any stand out. 

Nathan Barry: Yeah. One in particular. So, this is 2014. I'm 18 months into working on ConvertKit. And a community I was a part of a lot back then was called MicroConf. And Rob Walling put this community together and I made a lot of really good friends there. There's really people focused on like early stage SaaS or even just selling WordPress plugins or content or that sort of thing. Very developer focused, really great group. And I was walking back from the speaker's dinner one year with Heaton Shaw and he just stops at some point, and he goes, you should shut down ConvertKit. And I remember being like, what? Because it was out of the blue. We're talking about something else, but you can tell, like it'd been on his mind. He says that. And I remember thinking like a bunch of things – where did that come from, that's not a nice thing to say, and what do you mean, basically. And he just keeps going. He's like, yeah, you're going to be- like you had a bunch of successful ebooks. You're going to be successful with whatever you do  next, but you’ve been working on ConvertKit for 18 months, it stalled out at less than 2k of MRR, like you should shut it down. And I just kind of like stopped there. And I didn't know what to do with that. And he let me sit with it for a second. Then he goes like, or you can take it seriously and give it the time, money, and attention that it deserves, like build it into a real thing. And I think what was popular or what I'd seen modeled at the time was like this multiple products, you're diversified, you're selling the eBooks, you're doing the consulting, maybe you got a SaaS that you're running, all of this stuff. And I was trying to do that exact thing with ConvertKit. And I just realized that, thanks to Heaton calling me out on it, like that is not going to work. He's basically like, shut it down or double down, but whatever you're doing, it's not working. So, stop. And it ended up taking me like six months to actually really take his advice. And I made a really simple framework and I basically just came in with two questions. The first question was, do I still want this as much today as the day I started? Because there's so many projects that you start, you're like, I'm going to write a book. And like three months in, you haven't yet, you didn't make much progress. And then 12 months in, you're like, I should pick that up. And it's like, okay, but do you want to? And feel free, if you're like, no, then just let it go. In my case, I said, yes, I absolutely want to, to start this SaaS company and grow ConvertKit. I was like, okay, so then you go to question two, and that's have you given this every possible chance to succeed, like truly your best effort? Because if you have, then you can shut it down knowing like maybe it was the idea, maybe it's the market, maybe the timing, whatever else, but I know I did everything in my power to bring this to life, and it didn't work, and I can have peace as I put this to rest. And I knew that I still really, really wanted it, and I had kind of half-assed the effort. And so, I realized like, oh, if I shut it down now, I'm going to be that person. Like three years from now, you and I are going to be hanging out at the bar, and you're like, yeah, so you shut down ConverKit, that's probably a smart move. I'm like, yeah, I think I could have pulled that one off if I'd just done X, Y, and Z differently. I don't want to be that person. And so then that was the decision, like, okay, I got to go all in on this. And that was, I mean, obviously, a wildly transformative decision. 

Eric Jorgenson: What are the tactics? I have a few follow-ups on that because it's a really interesting story. What did you, whether it took six months to come around to it or took six months to implement, what did you actually change about your approach? Like what did you give up to get the time? Was it a capital? Was it time? Was it just a mindset shift? Like what had to change for you to feel like you were giving it all to ConvertKit? 

Nathan Barry: Yeah, I think it was four main things. The first thing was focus. And so I'd written three books at that point. I was making good money from selling them. And I just stopped focusing on them entirely. And I said ConvertKit is the only thing. The second thing is I'd been working entirely with contractors. And my friend Danny Innie had this line that I heard around this time. And he said, if you pay for half of someone's time, you get a quarter of their attention. And it just stuck with me because there's something different about when you hire someone and you're like, you get- like, they're just working on this problem, you're not one of six clients, all that. And so, I hired my friend David to lead engineering, and like the product got so much better so quickly because he just obsessed over it. And then I needed money. I had this whole thing of trying to bootstrap it just with customer funds and the initial money I'd put in. And I realized we needed a step function. And so I took $50,000 and put it in to pay David's salary and hire a couple more people on the team. And then the last thing is that I really focused on a niche. This is actually advice from Tim Grawl, where he was like, look, you are trying to be all things to all people, and you have to choose a niche. And so first I tried to focus on authors specifically, but I was attracting a lot of like my dream someday is to write a Kindle book, so maybe I'll- it was like very wantrepreneur level. And so I ended up pivoting it slightly and saying it was email marketing for professional bloggers. And that got me like very targeted because I was trying to reach like Chris Gillibaud and Joel Runyon and like Brendan Dunn and people who are making real money off of an audience. And that combined with direct sales, choosing that niche, let me just go, all right, let's list all the Paleo recipe bloggers who are women in this area. And I could do super targeted messaging, who I named dropped if a customer was super relevant and on from there. So it was those things that made the difference. And we did direct sales from 2K to about 25K in MRR. And then that's when the word of mouth flywheel really started to kick in. 

Eric Jorgenson: That's awesome. That's a great story. I'm interested, now, you probably have either the opposite problem or the same problem at a very different level. You’re just surrounded by opportunities. You've got a wildly successful platform. You're surrounded by creators. You are running basically a creator business as Nathan and running ConvertKit and writing a book. And you have this thunderstorm of opportunities around you and a ton of leverage. So, how do you triage and sort of prioritize your work on the other side of that? Because you probably don't have to be all in on ConvertKit to get it through each day. That flywheel is huge, and a lot of people are looking after it, but you've got so many things coming to you. I know you're buying and renting real estate, you run Airbnbs. You are a fun Twitter follow because you're just like an ADHD entrepreneur who chases different things. But I imagine you have a framework for what you choose to bite off. 

Nathan Barry: Yeah, I think I need a better framework. One thing is to focus on what keeps the game interesting and worth playing for a long time. Dan Martell talks about this in his book, Buy Back Your Time, of how the biggest risk to any business is the founder burning out or losing interest or giving up. And so, be aggressive. A lot of founders who are like service focused will take on way too many things because that's what you should do. Like, oh, let me carry your burdens for you. And you have to realize that that has its limits. Otherwise, you could be jeopardizing the future of your own company or your ability to do this for a long time. If you're down and you're burned out and all that, then the offer to sell, it's not a great offer, but like you might take that and move on. So the first thing is keep it interesting. And I feel very privileged to spend so much time with creators that I genuinely love. Like, I could have made a software product for realtors, and I think my life would be remarkably less fun. I adore the audience that I serve. I don't want to take that for granted. 

Eric Jorgenson: Realtors are tough customers. 

Nathan Barry: I guess you have first-hand experience. 

Eric Jorgenson: You don't have to say anything. I’ve got first-hand experience on that. Realtors are... I built software for plumbers and realtors, and I would choose plumbers every time. That's just a very different level of need. 

Nathan Barry: Different world. But I think... So the first is, setting this up for a long time, what keeps it interesting. The next dynamic is realizing there's a point that you're a value add in your company, and there's also a point, there's some curve of peak value and more and more effort like starts to bring you down. And the humbling thing about that is that curve, as you put in more and more effort, can actually dip below zero in value provided, like where you are actually a net negative at the- like me doing 80 hours a week on ConvertKit on the wrong things, I'm actively adding friction in the flywheels probably.

Eric Jorgenson: Yes, and driving people crazy while you do it. 

Nathan Barry: Oh yeah. And so I’ve got to draw that graph. There's probably actually a graph there that actually makes sense. And so, I think finding the right altitude to operate at is really important. And the other thing is there's conversations. I've gone back and forth on writing more books for a long time because I was a very prolific writer for years, a thousand words a day for 600 days in a row, and like I built the foundation of my whole career on that. I haven't published a book in 10 years, but I have very well thought out ideas for five books. And so we're trying to decide like, okay, which is more- should I just focus on ConvertKit? Is it worth taking a step back to write some of these books? And what I realized is that or decided, I guess, because we don't know for sure if this is going to work, is that there are certain conversations and marketing and all of that that you can do as an author that you can't do like as an entrepreneur or something else. Like as an author doing a podcast tour for a book and getting invited on 50 podcasts or even playing that up with the right media team to a Good Morning America appearance or something else, totally normal. Nathan Barry has this book coming out, all of that. It fits into a preset mold that the marketing world, society has. Author, promoting book, let's have him on. Founder, growing company, same company he’s been growing for the last 10 years, doesn't fit the mold. The storytelling is not there. Good Morning America's like, okay, is it Mark Zuckerberg? No. Okay. No, we're not interested. 

Eric Jorgenson: I'm sure we will talk much more about this on your podcast, on part two of this conversation, but there is something so magic about a book that is just a bat signal about an idea or a person to have conversations. Nobody's like, come on my podcast to talk about your podcast or your course or even your company. There's just something about the artifact of a book that is so concrete and complete and comprehensive. It is just like a starter pistol to have a conversation about this topic. It puts out the discourse and it's just like it's what that artifact is for. And to your point, there are paths all over the world through every language, through every media channel, to every conference that unlock when you have a book. And it is just- You can know it exists, it seems too obvious and too stark to actually be true, but it is absolutely true, and it's hard to feel the power of it until you've actually gone through it, and you're like, holy shit, this is arbitrary and amazing, like night and day difference. 

Nathan Barry: And you can complain about the rules of the game, or you could just learn the rules and play the game. And I think what I realized is this next stage, my story as a founder, my ideas, whether it be around audience building or flywheels or wealth or any of these other topics, company culture, I can use those to further amplify like in partnership in ConvertKit and my personal brand can grow together. And so now the thing that I'm thinking about is what team do I need to staff on the personal brand side? What are the flywheels? What team do I need to run them continuously? So, it’s not a 40 hour a week job to grow to the personal brand and write these books and everything else, because there has to be a balance. 

Eric Jorgenson: Yeah, it is interesting to see, people often see a personal brand and think it's one person doing the work. It's like, no, no, no, there's an author's name on the front of the book and 100 names in the back. 

Nathan Barry: Oh yeah, 100%. And whether it's someone who has just done interviews and hired a much more capable writer to write the book for them, like that's a fantastic path. Or the other end of the spectrum is they've worked with a really good editor and they've primarily written the book, but it's been checked and like pressure tested every step of the way. But there's still some idea that people have out there of like, oh, a book is, Eric, you probably went off into a cabin in the mountains and just like unplugged with your typewriter for six months, and then a book came out the other side. And it's like, that's not how things work.

Eric Jorgenson: No, no, it's not how- often it's not how Instagram works. It's not how podcasts work. Like, if you hear somebody sound like a genius on a podcast, maybe it's because every single thing, every edit, every um, every pause was pulled out. And there's an Instagram filter for speech on there. It's just sped up 0.2%. There's weird shit people do to their podcast. Not this one. We sound like normal people on this podcast. But there's all kinds of illusions out there that people take advantage of that aren't healthy to like compare yourself one to one against. But yeah, I think that's awesome. I would love to see more of your ideas out in more forms. If you're not already writing this flywheels book, you should be because this is a deeply fundamental concept... 

Nathan Barry: I'm trying to live the book right now so I can write it. 

Eric Jorgenson: Yeah, that's amazing. It is definitely, I remember having that feeling too reading Good to Great and some other blog posts of just like this is a labeled door of a great idea. I felt the same way, honestly, about the leverage chapter in the Almanack of Naval. This chapter doesn't satisfy people about this concept, but it is an amazing introduction to what should be its own whole really maze of content and ideas and structures and things. Yeah, it's really fascinating. Okay, one more. What are the rules of thumb that you sort of use most often? Or what are the Nathan-isms that people who work with you would say come out of your mouth most often? 

Nathan Barry: I mean, I have these four mantras that I come back to all the time. And they actually used to be posters on my wall in my old office. And they started around audience building, but they apply in pretty much every area of life. The first is create every day. Like in the early days of ConvertKit, I would think about is this product- like you're going on such a giant journey. I just say, hey, is this product better today than it was yesterday? That's it, that's the whole bar. Did we just move it forward a tiny bit? Did we take at least a few steps in this marathon that we're on? And as a creator, like it just points to consistency is the thing that matters most. If anyone's going on a creative journey and I can only embark or like only instill one trait in them, it would be consistency and that ability to show up every day for a very long period of time. The second one is teach everything you know. And people think a lot about, oh, I can't share this info, I can't teach it because I'm not an expert, and they just completely misunderstand that people aren't experts because they teach. Or I'll say it differently. People don't teach because they're experts, we perceive them as experts because they teach. And so, the very act of teaching not only builds expertise, but also refines your perceptions in your own expertise. And like people think of you as an expert. And then if you're wrong on something, they'll immediately correct it. And they will help you become more of an expert because someone is wrong on the internet, and he has to fix that. And then I think, quickly, the other two are work in public and default to generosity. And so work in public is just go on a journey that's worth following and talk about it. Say like, I'm here to build this company to 100 million in revenue and serve creators in this way. Or I'm going to publish my first book and here's everything I'm learning and doing in the process. Or I bought this small business that I actually probably shouldn't have bought because it's a terrible thing, but now I've got a million dollars in debt on it and follow along as we turn the worst decision of my midlife crisis into something that will be a good legacy for my family... But there's something so powerful in working in public and saying this is where I'm going and follow along in the journey. And people want to follow individuals. And I think it's a small thing of just a small shift – hey, what did I do today that I could write a Twitter post about? And then once you do that for 90 days in a row, then say, okay, what could I compile of that that I could write a weekly newsletter about? And then you watch it go from there. And the last, one default to generosity. It's just when you hit a fork in the road and you're like, should I do A or B? It's like, which option is more generous? And nine times out of ten, that will serve you just fine. 

Eric Jorgenson: I love all of these and how they support each other and the sort of worldview expressed by them. And I hope more people adopt them. It's great.  Hopefully it's a contagious worldview. I think there's a good chance it could be. 

Nathan Barry: I think if I would sum it up in one thing, it'd be a level of optimism that comes from the idea like I believe that the future will be better than the past because I'm going to play a role in making it so. Like it's a very active maker mentality. And it's like, yep, here we go. And then like invites people around you to do the same thing. 

Eric Jorgenson: Yeah, I love that. And I find that guiding a lot of my progress now. Like, if I find myself- I spent so long making decisions where the first variable that I was optimizing for was like does this generate more income than my other options or save more money than my other options? Which is like the first 10 years of almost everybody's career. It is just like what Brett Beshore calls the knife fight of entrepreneurship of like wake up, grab knife from nightstand, try to survive another day. And being able to now make those decisions that are like, if you're doing this just for money, don't do it. But if you do things that are going to make the future better that happen to also make money, you will enjoy every single day, you'll have much better relationships and you'll still make plenty of money and probably actually even more than you would have if you optimized for that in the first place. 

Nathan Barry: I think that's absolutely true.

Eric Jorgenson: Cool. All right, this concludes part one of the Nathan and Eric saga. We're doing a little swippy swappy. So we'll pop up next on your podcast. Although we don't know the publication dates. But this has been awesome.

Nathan Barry: We don't know the publication dates. But yeah, on Billion Dollar Creator, if you search for that, then, yeah, we'll do a full deep dive on the story of what's going on at Scribe, our thoughts on publishing, what I'm doing with books coming up, all kinds of things. 

Eric Jorgenson: This is going to be very, very fun. I'm excited about it. Thank you for coming and teaching everything you know. It's very generous of you. 

Nathan Barry: Thank you. 

Eric Jorgenson: I appreciate you hanging out with us today. Thank you for listening. If you enjoyed this episode and you want to jump into a similar one next, I recommend searching for Kevin Espiritu of Epic Gardening in the Smart Friends feed. I've done two episodes with him over the past five years, and I think you'll get a very similar vibe and very similar stories from him. So, if you resonated with Nathan, if you left this feeling energized, queue up my interviews with Kevin next and double down on that feeling. If you are an accredited investor, please consider putting some money to work alongside us. We keep our minimums low so our friends and fans can put their money to work in these high potential, high growth startups. If you've been thinking about it for a while, please reach out. This is a great time to do it. We're seeing some amazing deals right now. And we've never been more excited about the portfolio we're putting together for you. We will cap this fund at a specific number of investors and AUM, and only existing LPs will be able to increase their allocations after that. So, to support this show, please text this episode to a friend or founder you think would enjoy it. I think there's a lot of people that can benefit from the ideas Nathan just shared, and I'm really grateful that he took the time to do that for us. Remember, every episode you listen to, every good idea you learn, and every friend you make brings us one step closer to utopia, so thank you for listening, and I'll see you next time.