Selects Edition – How to Double Your Revenue with Serial Entrepreneur Jason Cohen

Founder of WPEngine – Jason Cohen

Jason has had 4 businesses that were all a million or more in revenue. He gives hardcore advice and tactics to get you more revenue, AND tells us how to know if we have a great business idea.

His newest startup is WPEngine (my hosting company that I LOVE!) and he describes in detail how he knew that this would be a million dollar plus business before he started.

Check out WPEngine.com for more info!

He also has an amazing blog at ASmartBear.com

Thanks so much for listening!

Transcript:

Jaime: I?m so lucky to have Jason Cohen on the show today. He is a serial entrepreneur who has started over four businesses that have all done revenue of over $1 million ? way over on some of them ? so he is the guy to listen to. Today he goes through, step-by-step, exactly how he recently created WP Engine, which is a hosting company that I use, and he has got it over $1 million already, even though it?s still a baby. He talks about how to validate your idea ? what he went through, the step-by-step process that he went through to figure out whether it was a good idea or not. It?s not just people saying ?Yes, that?s a good idea.? That?s not it. He also talks about how to increase and double your revenue ? he?s all about doubling. I hope you get a ton out of this interview ? I know I did.

Announcer: Welcome to the Eventual Millionaire podcast with your host, Jaime Tardy. Real talk and real advice from real millionaires, with a sharp focus on you ? the eventual millionaire.
Jaime: Welcome to Eventual Millionaire. I?m Jaime Tardy and today on the show we have Jaosn Cohen. Jason is super cool,I met him in Austin, Texas, and he is the founder of WP Engine which I actually just switched over to, about two or three weeks ago, for my hosting company. So far I love them, they?ve been wonderful ? which is what he wants he hear! HE doesn?t want to hear me say they suck! One of the things that I?ve found really interesting about his background is that he?s started over four companies, all with over $1 million in revenue, all profitable, which is also huge, and he hasa ton of experience, so I?m super excited to have him on the show today. Thanks so much for coming on, Jason.

Jason: Thanks for having me.

Jaime: You have an incredible track record. The first thing I want to ask is did you always know you wanted to be an entrepreneur?

Jason: I always knew that I needed to do things my own way and the really nice way to say that and hopefully make some money is to become an entrepreneur instead of just a disgruntled employee which, I have no doubt, I would have done if I hadn?t been lucky enough to find this path instead.

Jaime: Fired over and over again, right?

Jason: I think you?re either built to need to do your own thing and start your own company or not. Hopefully that can be channeled in a positive way and you?ll also be successful and stay on that path. Some people watch movies like the Facebook movie and say ?That sounds fun, I want to do that,? and they won?tsucceed because it?s not in their DNA. I think they just have it.

Jaime: That?s a question I get often ? is it something that you can get or is it something that you?reborn with? You think that it?s something you?re born with, no doubt?

Jason: I think the need to do it comes from within. But the skills and everything ? no one?s born with the skills to be a CEO and do everything; they don?t exist. You?re not born with that and neither are there any classes in that and if you?ve jumped in and done it you know that, whatever classes there are, are not that helpful, and perhaps they couldn?t be. Perhaps the only way is just to jump in and do it. You can read blog posts and things like that but, at the end of the day, you just have to do. That?s the way it is. That?s also the truth of larger companies ? you can?t train to be Steve Jobs, you just do it and make mistakes and find your way. By definitionthere isn?t a path ? and that?s part of why we like this, because we?re not doing something rote, that?s part of the excitement.

Jaime: New and interesting and sometimes really sucky but that?s what makes it interesting.

Jason: The highs aren?t high unless there are bad parts, unfortunately.

Jaime: I agree 1000%. So what was your first company and how old were you when you started it?
Jason: The first one was called Sheer Genius Software. I didn?tactually name it, funnily enough. It started as a company that did cross-platform C library code, meaning back before Java and so on, where if you wanted something to run on multiple platforms, Mac and Windows and so on, it was hard. So I had a library that did that and I got a little bit of funding, about $1 million, which is only a little bit when it?s 1997. On one hand it was abnormal to raise money and on the other hand it was approaching bubble time when money was just being thrown out for nothing. Nevertheless that ended up being a not-unsuccessful consulting company ? we did about $1 million a year in consulting revenue but, as you probably know, VCs don?t want consulting companies so we ended up stopping that in around 2002 when I kind of fell into my next company which was IT Watchdogs which was more of a product company.

Jaime: I have a couple of questions about the first one ? how old were you when you started that and how did you get $1 million in funding?

Jason: It?s one of those serendipitous things that can?t be learned, it?s just serendipitous. I had made some comments about how Java isn?t cross-platform in a GUI sense, because nothing was, I was just being an arrogant little prick, and then this guy happened to see it on  a mailing list and he turned out to be a partner at a VC firm called JMI, John Morris Inc., but he had his own money so he put his own money in and John Morris put some money in, and I know that wasn?t because John Morris thought it was a good idea, it was because this other guy did and it was a favor. It?s serendipity and this is where luck comes in. what wasn?t luck, and this is the interesting and important thing, is that I was out there, talking about it. What?s not luck is that I had a strong point of view that was interesting to someone else and I had built this thing on my own time and it was that valuable. That wasn?t luck. That my musings got into the hands of the right person was totally luck but being out there, doing things, and being able to take advantage of luck when it happened, wasn?t luck. That?s the lesson, is to be out there, doing that, knowing that it?s going to take luck but to keep casting your fishing line. It?s luck as to whether a fish bites or not,but it?s not luck whether you?re out fishing or not. That kind of persistence and having something special, unique, interesting and valuable in the first place, that part?s not luck and that?s the part that you can control and must do.

Jaime: I love that analogy too. That?s interesting ? I thought you were just talking about it and they somehow heard of it, but you had actually taken the action of creating something to show them.
Jason: I wasn?t trying to show anybody ? I was using it for my own consulting. So I would get jobs porting software from one platform to another and like a lot of consultants I had my own toolkit that I had built along the way that was useful to me, so I wasn?t seeking that. I guess if there?s something to learn from that it would be that you?ve got to have a vision andbe doing something but at the same time have your eyes open to what that could mean, what form that could take. I hesitate to say ?pivot?, I hate that concept actually,but you might seek other things besides what is right in front of your face or whatever you thought that vision was. That?s another way to take advantage of luck ? if luck is going in a different direction maybe it?s okay for you to take that direction if it?s still compatible with what you want.

Jaime: I have another question ? because you did consulting, so you?re scratching your own itch to create this thing, is what it sounds like.

Jason: Yes ? all of the companies that I?ve started were started to scratch an itch, in some fashion. But scratching an itch doesn?t make a valid company. I?ve had other itches that didn?t turn into companies, weren?t good ideas for companies. Having a company takes so much other stuff ? are there other people that have that itch? Can you communicate that to them? Do they agree after you?ve cajoled them for 45 minutes on a customer development call or do they agree in three words? Can you get to them in the first place? Can you access them in a cheap enough way or is it too expensive or difficult to do that? There?s a lot of things that haveto be in place for it to be a company and not just an interesting idea. So I love ?scratch your own itch? as the idea formation but that is far from sufficient, that?s just the first step.

Jaime: Then you have to validate. So tell us what you normally go through ? you?ve done this quite a few times ? and can we talk about WP Engine? Because i like the other things but this is right now. How did WP Engine come about and how did you go about that validation process?

Jason: I have a popular blog about startups called A Smart Bear ? asmartbear.com.

Jaime: I?ll definitely link to that.

Jason: When a blogger like me says you should stop reading blog posts and get on with it then you know I?m telling the truth, because I would sure prefer that would subscribe to my blog! But I have this blog, it was popular ? I got on the front page of Happy News every week when I posted and the blog would crash because of the traffic so, as an engineer, I thought it would be fun to solve it, which it is, but I was also running Smart Bear, my third company, which is why the blog is called A Smart Bear. So I started e-mailing other blogger friends that I knew saying ?I don?t care what it costs, whether it?s $50 a month or whatever, I just don?t want it to go down ? where can I go?? and the resounding response was ?I don?t know but let me know if you find it.?

Jaime: I had the exact same problem.

Jason: Right. So this turned from me asking into customer development. I said ?If I made this site fast and it didn?t go down when you got a lot of traffic and I had a staging area so you could test it out before it goes live, would you give me $50 a month?? I got 30 people to say yes out of 40, which is a really, really high hit rate for validation, so it very quickly coalesced into a proper set of pain points, solutions and price ? that?s another thing, I don?t think you can do validation without pricing ? and it seemed like a fun problem for me to solve. As an engineer I like optimization so this was a good idea for me. the original intent was to just build a cash machine, something that I could build up to where it would make $30-50,000 per month in profit and that would be really neat. We did build that but there was so much more we could do, such a huge opportunity, so I made the choice, 18 months in, that I wanted to go after that even bigger opportunity, especially as I had had prior success not just building companies but selling them and so on. I had enough money, I didn?t have to have another small company and I felt like I wanted to, at this point in my life and with this particular opportunity, that I wanted to swing for the fences. So 18 months in it turned into a ?Go big or go home? kind of venture.

Jaime: That?s amazing. So it was a case of ?All my friends need this too, I?m going to create it.?

Jason: No, it?s not. Because you can?t make $50,000 a month in profit from your friends needing websites.

Jaime: You?d have to have a lot of friends!

Jason: That was the kernel of the idea. It was terrific that other people needed it but it?s not a business, it?s not validated, until there?s a bigger market. I think even small companies need a big market. If there?s a big enough market, lots of need, I think I can get thousands of customers.

Jaime: Let?s break that down, because I definitely want to talk about what you just mentioned. So you talked to 40 of your friends?

Jason: No, because your friends will lie to you. The kernel came from friends ? that?s great, that?s terrific. We?re just acquaintances. That?s not customer development and they won?t tell you the truth. In fact, sometimes the worst people are other people who are sort of entrepreneurial and thoughtful, because they?re going to second guess the customer development process and try to help you, which they?re not doingbecause they?re trying to think through your business for you, which is not their job in customer development. So actually they?re often the worst people to talk to in many ways. What you have to do is find completestrangers in your target market and they?re the ones you need to test. So I went to LinkedIn and looked for people who are WordPressconsultants because they?re the ones who build the sites and tell their clients where to host them. I?ll give you the exact technique I used, because a lot of people say ?I don?t know how to find 50 strangers to talk to me, how do I do that?? So here?s how to do it ? you go to LinkedIn, you find your definition of your targetcustomer as best you can, job titles and so on, and you send them a mail, you have to get LinkedIn Pro in order to send them, and you start with people who are a second connection away from you, and you say ?I?m starting a company. You are my target customer so I?d love to ask you questions for an hour to understand your life and see if I?m on the right track.? Here?s the next part and this is important ? you say ?I realize your time is valuable so I?m happy to pay whatever you think is appropriate for an hour of your time, even if that?s more than your normal hourly rate, because I realize this isn?t a long term relationship, so whatever you feel is appropriate I?m happy to do and I?ll send it to you by Paypal. Can I get on your colander in the next two weeks?? Every single person said ?That?s really interesting. Yes, let?s schedule it,?and every single person said ?I?ll do it for free.?

Jaime: That?s awesome!

Jason: I never paid. But by saying that you?re respecting them, that separates you from the 99% of other emails they get. It says ?I mean it? and ?You?re valuable? and they won?t take advantage of it, as it turns out. If they said it would $100 it might even be worth the $100, but it may not, so you could say ?My calendar?s full, never mind!? That?s one way to break in. other people do it with cold calling. You could do that too, but LinkedIn?s an easy one. You could do that on Twitter too, I suppose, but LinkedInlets you have a little bit more text and lets you hone in on people you don?t even know yet and lets you know that you?re in the right ballpark. You?ve got to get strangers otherwise it isn?t validation.

Jaime: I love that. I?ve done the cold calling, that?s a pain in the ass, so having LinkedIn works a lot better. So what do you say to them on the phone call?

Jason: We could go on and on about what it means to do customer validation ? there are a lot of theories out there about how you should do it. I have a lot of opinions about this and I continue to do it today ? I never stop figuring out what is going on with people?s lives. Time moves on and people?s needs do change as well as your understanding of the part of the market you?re tapping into. That all changes so it never ends. There are couple of things, just off the top of my head ? you have to decide what you believe is true about their life or about the world ahead of time ? those are your theories ? and then you can make questions that test them,not directly but indirectly, in other words you can?t lead the witness, you have to ask things that will validate or invalidate or quantify your theory. So an example, for me, my theory would be ?I think that the average consultant manages 20 customers,? so then the question I ask would be ?How many questions do you actively manage?? I can?t lead them by asking ?Less than or more than five?? It turns out that it?s bimodal ? there are people who have 40-50 customers that they ping now and then and there are people who are only active on three at any given time and don?t do maintenance work. That?s how it turned out, but you can?t find that out unless you ask open ended questions around a theory that you have. As you go, you validate and invalidate and change your theories and new stuff comes up that you didn?t think of that you add to your pile of theories and, hopefully, by the end of it you have some validated set of theories about how the world is, which is the key thing because that?s what you?re building the rest of the stuff around, those assumptions.

Jaime: How do you know when you?ve had enough?

Jason: It?s not a number of customers ? sometimes you can tell from a dozen calls but I know people who have done 150 calls and still trying to figure out where their path is. Maybe at that point you can say ?There isn?t one ? go and find something else!? Fair enough but at least they know they haven?t found it yet. But before doing WP Engine I had another idea for a startup that was really cool and every time I talked to someone they said ?That is a good idea! You know what you should do with that?? and then the next thing they said was different for every single person that I talked to ? and that means it?s not a business yet, it?s an interesting idea. That?s why you can?t stop a good idea ? of course it?s a good idea to some people but so what?

Jaime: There?s a lot of really good ideas!

Jason: So that actually ended up not working out ? one person would say ?This is great, you should charge $2000 a month,? but the next one would say ?It should be a freemium model or I?d never use it,? and someone else would say ?It should be $50 a month because if it was free I would think it had no value. Everyone I talked to said something different.

Jaime: How many people did you end up talking to, to validate that that was not a good idea?

Jason: 20 or 30. Because they kept saying it was a good idea so I kept going. But WP Engine didn?t go that way. The way I would characterize the difference between those two things ? i.e. an idea that is leading to a business and one that isn?t and when to stop is that, first of all, you stop when you?re bored. I got to the point with the WP Engine calls where the first three questions would place that person in a certain category and I could tell you what they weregoing to say to all the other questions. The variance became nil and that?s when you know to stop ? not because you know everything but because the process is not generating any new information for you right now. So the process, right now, is not helpful. Now you have to go and do something else other than that because it?s not helping you anymore.

Jaime: You?ve got all you can get from that specific thing.

Jason: Yeah, so there?s nothing to do but something else. Whereas with the other thing that wasn?t the case ? I didn?t know what the next person would sya so I couldn?t stop. So how do you know that that?s not working out? The way I think of it is that there are certain laws of physics that are completely immutable, like the law of conservation of energy ? if I raise a ball up it gets potential energy so if I let it go the potential energy is lost and it gains kinetic energy as it starts moving. Not only is the law never invalidated but when you think it?s invalidated the law isn?t invalidated, you?re mistaken. For example, you roll down a ramp and it stops and you think ?Hey, it stopped. It lost energy, it must be wrong,? but no, there?s this other thing called heat. In other words, the law isn?t wrong, your understanding of the world is wrong and if you keep looking you?ll realize heat is actually little things moving around which is kinetic energy again! Oh my God, it?s all kinetic energy ? you were right all along! If I know it?skineticenergy I can predict things about how heat should work and how gases should work and all those things turn out to be exactly true. In other words, the law is so immutable that we learn things about the world, not vice versa. It?s true in quantum mechanics and it?s true in relativity ? it?s just true, and the way you can tell it?s true is that, as you explore the world, every time you think maybe it?s invalid, it?s not ? you?re the one that?s wrong and that is true. It?s always true. But then there are other laws where that?s not the case ? there?s a law for the drag that an airplane has in flight and it?s one half times the velocity squared times some constant that has to do with the nature of the plane. That?s amazing if you think about it ? there?s air swirling around this thing and interacting in all different ways with the surfaces. After all that complexity there?s just a simple constant of that drag? That?s amazing. but it turns out that it?s not a fundamental law and the way you cantell is when you start exploring that you find that the law keeps breaking down in all kinds of directions ? if the plane?s going really slowly towards stall, it doesn?t work, there?s a differentformula. If it?s going really, really fast the air actually swirls around it a different way and it?s a different formula. As the plane is turning there?s  adifferent formula. If you remove one wing the drag on the other wing changes because the wings are connected structurally and that matters, as it turns out. In other words, every time we poke at it and test it, it?s wrong every single time. It?s a neat coincidence, it?s cool,it?s even potentially useful, but it isn?t a fundamental law ? it?s just an interesting thing we?ve found. So, to me, when you?re doing customer development this is exactly thecase and this is how you can think about the WP Engine ? as I poked and prodded it just kept coming back to people wanting their sites to be fast and scaled, secure, to be able to talk to someone on support who knows WordPress and have a staging area. With those five things, anyone who gave any kind of a crap about their website was willing to pay $50 a month, end of story. That was a fundamental law ? it was converging on something that was fundamentally true. Then,with that, combined with boredom, as the things happened, then I could stop and I?ve got something. Whereas the first idea, it was an interesting idea, there was a law that was interesting ? not that there was no good idea there, there was ? but as I poked at it, it just fell aside and that meant that there wasn?t a company there.
Jaime: So that previous idea ? do you think that would ever be successful in any aspect?
Jason: I know it would because I?ve seen other startups do different aspects of that. That doesn?t mean it was my idea ? this was an idea in online marketing analytics. Every kind of idea in every kind of market that can be tried is going to be tried. So it?s not that I?m so smart that I found this, no, no, no. You can see other companies trying certain paths that I was doing, which doesn?t mean anything about me at all. Yes, I absolutely could have picked that. Some of the stuff is personal ? where you are in your life, what you?re trying to do with it. At this point in my life I had already made more money that I can spend selling Smart Bear so, to me, if I found an idea that was okay, it could probably become a business, even a huge business, but I couldn?t see the path really quickly, I wasn?t interested in pursuing it because I didn?t need that struggle again. I had the luxury ? it wasn?t luck, because it took15years to get to that point but I had earned the luxury, financially and otherwise, to be able to wait for the perfect thing.

Jaime: So it wasn?t even about the challenge and figuring it out ? you were like ?That idea?s not worth it.? You didn?t need the cash.

Jason: I don?t need cash so I don?t need to rush into some other company. It sounds passive but I can wait for another idea, another thing that is valid that does seem big that seems like it would be easier. I mean look at how hard startups are, who could argue with that? Of all the things that are difficult, all of the risks, all the things on top of that ? I?m not sure how to find customers either ? I don?t need to have more problems, I don?t need more barriers. I can wait for something where all the barriers are gone except for the things that can?t just be gone early on.

Jaime: But starting with a much better foundation so that it?s easier to build your company.

Jason: Yes, and I can literally afford to wait until I have that. By the way, that could have turned into someone else had it and I wanted to join them and become their cofounder, had I found something else that I was really passionate about. It could have been anything. I was in a luxurious position. After I sold Smart Bear I stayed at home, we had a baby and I was a stay-at-home dad for a year. That?s how much I was doing whatever I wanted to do at the moment, that was the deal. I could have just stayed a stay-at-home dad and kept writing. I do still write, of course, but I really enjoyed that. It could have been anything; it was just that WP Engine was something that did hit on all the cylinders in the business sense, also for me personally, in an intellectual challenge sense, around the busyness and the technology, and so on and so forth, so I did do it. It was fortunate that I could wait for the right thing. I don?t think that everyone should wait for the right thing, even if that means treading water in a day job or consulting, because life is too short and it is too hard to do these damn startups, it?s too difficult ? how many people want to do it and how many people have their sights set on $1 million or a monthly revenue of $10,000 a month so you can definitely quit your day job, stop consulting and be comfortable that, even with some variation, you?re going to be fine. Those are fantastic goals ? I love businesses like that. I just told you that WP Engine was supposed to be a business like that even after I built the bigger business, that?s the bigger business I wanted to build, so I?m so personally in line with that.

Jaime: I love hearing you say that this is the smaller side of it because I know a lot of people who are listening think $1 million in revenue sounds crazy but there?s a lot more out there, which I think is important. One question, though, going back to what you were saying as far as the waiting goes, you highlighted it a little bit but I just wanted to dig a little deeper ? if someone does have a day job and they?re trying this stuff and they want to quit, what would yousuggest to them about waiting?Especially if they?re so desperate to start this thing.

Jason: I don?t think you should wait in the sense that you?re not working on it, that you?re not doing something about it, just the opposite ? you?ve got to be constantly out there trying to do something about it. What I would say, though, is I do talk to a lot of folks who just clearly don?t have a business in that these things that I?ve listed aren?t there. To me, does that mean you give up? No ? it means you tackle it head-on and be honest with yourself. ?I don?t know how to get to 100 customers. That?s not clear. I?ve got to tackle that next. Not do nothing, not give up, but tackle that.? What happens is that whatever you naturally enjoy doing you just decide to do that and ignore the thing that you actually need to do to build a business. The quintessential example is the engineer who loves to write code and is in love with an idea, and rightly so because it probably is a good idea, in isolation, and so, rather than tackling the notion of ?How much am i going to charge? How long am I going to charge? How am I going to find them? How am I going to get them to the site? What will I do on there that will convince them to do it? What are the three things that are really going to get people?s attention? How do I communicate that? What does that mean in terms of a great user experience? What does it take in a great onboarding experience so that I don?t get covered in texts or e-mails that I can?t answer in a timely fashion because I?m working?? These are all the things that are needed for the business to be successful at any level and yet it?s so much easier to just go and work on a feature that is cool ? I?mnot even arguing that it?s not cool ? but it?s not the business. You go back into that hole and do what?s comfortable. So I wouldsay that that is the key thing ? it?s not giving up; you?ve really got to tackle the things that are needed for the businesshead-on and work on them because that?s the only way that you can get the business to work so you can quit the damn day job.

Jaime: I love that. So tell us a little bit about what happens after you?ve got that validation. So for WP Engine, you got the validation, then what?s the next step?

Jason: You build it.

Jaime: So you just built the whole thing?

Jason: Well you build enough to get people?s money. What I recommend is that you get the money first. I wish I?d done that with WP Engine so that I could tell you that I did it, but I didn?t. But I have advised other startups since then on this technique, which is that you get the check first.

Jaime: And that?s valid, right? Because I know Tim Ferris talks about that ? it doesn?t matter if you have the product or not, you want to get the money, so validate and ask for it. Is that legal? People always ask that.

Jason: Of course.

Jaime: That?s it?

Jason: If you?re honest about it ? you?re honest that this is vaporware you?re talking about. But that is the ultimate validation and I know quite a few startups that were successful at doing that. It sounds like it?s impossible but, you know what? If the people you?re talking to aren?t really stoked about it, they won?t give you the check. Usually it?s fear that you will get rejected ? that?s why you?ve got to ask the questions to find out for real whether they?re just giving lip service or they really would say yes to your product. You don?t need to have 100 of those checks and not every person is going to give you a check and that doesn?t mean it?s invalid but if you get 10 people giving you checks and another 20 people saying they will give you a check, now you know that this is worth plowing all of your spare time into. Otherwise you don?t know if you?re wasting your time.

Jaime: Their ?yes?s are only ?yes?s when they pull out their wallets and give you the cash.

Jason: That?s why I completely disagree with people who say you don?t talk price during customer validation. I appreciate and respect that approach, I understand it, but I disagree completely. I don?t think you are doing validation unless you talk price and the way to see this is to imagine a conversation and at the end say ?By the way, it?s $1000 a month? and see what their reaction is. It will change, won?t it? You need to know what they expect it to be and how that will work. Isn?t pricing one of the biggest questions that every single person doing a business asks about? ?What is the formula, what are the tricks, how do I charge more?? It?s one of the criticalquestions that every single person asks so, what, are you not going to ask the people you?re going to charge? It?s also, in a weird way, marketing and branding ? when you go to the product page and it says it?s $1000 a month, that sets the tenor of what the product is, who the customer can be, what they expect from it, as opposed to it being $9 a month ? then what are the expectations? It?s part of the brand and positioning of the product and since customer development is a lot about trying to figure that out, let?s do that right at the top because it?s part of that perception, or it will be when you set up your website. The counter argument to that is to not get into finance when you?re just trying to find out the person?s pain. When you?re just trying to find out what?sgoing on in their life you don?t want to complicate or conflate that with things like marketing crap like price. So, again, I respect that position, that makes sense.

Jaime: Marketing crap? I don?t know, that?s a lot of what business is, so it?s hard to say!

Jason: That makes sense to me. This is a fundamental thing to understand and, by the way, if all that pain point stuff works but your price does not work then you don?t have the business and you haven?t validated it. You?ll notice a lot of people who talk about that are also talking about businesses that are funded and businesses that are consumer. I actually agree with them ? because if you are funded you can?t decide to go after traction defined by activity and engagement because the funding can mean you can figure out your business model later, and especially for consumer, who doesn?t want to pay for anythingonline. So I can see it in that category but for you, me and everyone watching this, who just wants to just quit the day job and have $1 million in the bank, all of that is complete horseshit. None of that is relevant to anything that we?re talking about, so screw it, it doesn?t matter. In my opinion, the first goal for a small company, and when I say small company it sounds pejorative only because the TechCrunch and the Silicon Valley attitude decides that it is, but it totally isn?t so you have to avoid that. It is a small business but it?s not pejorative. So, to me, the first goal for a small business is to get to $10,000 revenue per month per founder so everyone can quit their day job ? it?s not until you?re doing it full time, no consulting, no day job, that you?re really going to have a business that?s solid and can be all it can be. Whatever the size and shape of it is, you have to get to that point ? it can?t be on the side. So it?s a race to getting to $10,000 a month in revenue per founder. So if you?re not talking about price right off the bat and getting to that.

Jaime: You?re not going to know how to get to that number.

Jason: You?ve got to know how to get there to be comfortable quitting your job and know that you?re doing it in a way that?s responsible.

Jaime: I love your perspective. I know that we have to start wrapping up really soon, because I?m sure we could chat for way too long, so the last question that I always ask is what is one action listeners can take this week to help move them forward towards their goal of $1 million?

Jason: Raise your prices.

Jaime: That?s it? Raise your prices.

Jason: There are lots of ways to do that. You can just raise them. You can create different tiers. You can create different usage within the tiers. You can create add-ons. You can raise your prices for certain kinds of customers. You can raise your prices for a week. You can raise your prices and then, since you?re scared of doing that, you can have a coupon that puts it back where it was so that some people can have that coupon and the people who don?t find that coupon can just pay more. I don?t think I?ve ever met someone who?s trying to get what Rob Brown would call a micro business or micro ISV off the ground whose prices are too high.

Jaime: Really?

Jason: Never met that person. But I have met lots of people who weren?t high enough and I told them to raise it ? it works. The generalthing is that you raise your prices 50%, maybe double, and nothing happens to the signup rate at all ? you just get more money.

Jaime: You?re grinning! I love this one; that?s awesome.

Jason: Everyone?s scared, they don?t want to do it, and by the way I totally understand ? at Smart Bear my first product was $19.95. Within three or four years it was $1300 a seat ? and every single time I raised my price, every time, I was sure it was a stupid idea, and Smart Bear, by the way, was completely bootstrapped, the whole thing, so just what we?re talking about here, we just kept growing. It destroyed me every single time I did it.

Jaime: For how long?

Jason: Every time orders went up. Every time! And yet it still destroyed me every time ? I didn?t even learn from the pattern I was seeing in front of me. It still destroyed me, so I still had to give excuses ? ?Well you can buy the old version for cheaper?, I?d raise it by 30%, not 50%, because I was too scared. There was always a reason. I never even learned my own lesson and yet there it was all the time. The other day I was talking to someone here in the co-working space that we?re in and he was talking about his prices and I said ?That?s great that you get people to pay that every month? and he goes ?Oh, no, those are my annual rates.? I said ?Just do this ? say ?per month? instead of ?per year? and see what happens,? and he said ?Oh no, I don?t know if I can do that.? So I said ?Here?s what you do ? how many people sign up every day?? it was like one or two, and that?s not bad for a small business to have one or two signups per day ? paying customers.so I said ?Just do this for a week ? the worst case will be that you lose between five and ten signups, and that sucks, but even if you just get a couple of signups at that rate, that would actually more than pay for that already, so that?s better already. The very worst case is you get zero signups and that would suck, but then you?d know. You?d be right and I?d be wrong.? So he changed it and nothing happened to his signup rate at all. So he multiplied his price by 12 and nothing happened. Another technique of raising your prices is drasticallyincrease your monthly rate but then offer an annual rate with a heavy discount. So multiply your current monthly rate by five or ten but then offer an annual rate that?s half off if you sign up for a year, or two or three months free, that sort of thing. Because if you?re worried about price then people will just do the annual and that will get them back the original price, except it brought the cash flowforward for you. So if you increase your prices and people sign up annually and that ends up being the same monthly rate, you got paid for 12 months today. That means you can quit your day job because your cash flow just multiplied by 10, just by doing the annual thing with a discount ? and, by the way, you can raise your prices when you that. The people who still like to pay monthly and not give you that cash flow upfront are paying you a lot more! That works all the time. I don?t think I?ve ever told that to a small business owner who has implemented that where theyhaven?t increased income as a result. Even at WP Engine we did this and our cash flow tripled. Tripled!

Jaime: And of course every single person that you said it to is like ?But I don?t know!?

Jason: That?s right, they?re all scared. And I get it because I was totally scared even though I was seeing it through my own eyes. Although I?m not acting like I?m empathetic to that, I really, really am ? I totally get that it takes some therapy to get to this point but that is the most important thing that will, without a doubt, completely change your cash flow revenue, your ability to quit your day job andtherefore put you on the path to having $1 million in whatever format, whatever timeframe. Raise your prices!

Jaime: And take all the cash that you make from that and use it on a therapist so they can help you through more of it! Thank you so much, Jason. Where can we find out more about WP Engine or your blog and all that stuff? Give us all your links so that we know where to go.

Jason: I write about exactly this kind of stuff every two weeks or so on asmartbear.com and then the company that I started three years ago and am running now is wpengine.com and we host WordPress sites.

Jaime: Just like mine!

Jason: Just like yours. So if all that stuff made sense to you about sites being fast so that you rank higher in SEO and all that.

Jaime: Huge! And I love you guys because I want to install W3 Total Cache, the geeky [people will know this stuff, and you wouldn?t let me because you already have that stuff set up and I?m like ?I love you!? I love the fact that you care about this stuff, because my previous server was a nightmare and I?m a huge geek so, anyway, thank you for existing ? I appreciate it. Thank you so much for coming on the show today, Jason, I really appreciate it.

Jason: It was fun, thanks.

Jaime: I hope you enjoyed that interview with Jason and I have to thank him because just a little while ago I had over 10,000 visitors in about two hours to my website and my website didn?t go down! Thank you, this is huge! One of the reasons why I got that much traffic, by the way, is because Amos Winbush III was on the TV show ABC?s Secret Millionaire ? so if you guys like the interview I did with him you?ll definitely like Secret Millionaire ? check it out on Hulu, it?s an awesome show. If you like these interviews and would like to listen to more we have tons available, all for free, on the website eventualmillionaire.com. Check out the case studies and pick one that?s going to help you today. Take care.

Announcer: Thanks for listening. You can find out more great information like this on eventualmillionaire.com.

Tags: business idea, increase revenue, Jason Cohen, millionaire interview, WPEngine

Categories: All, Business, Business Model, Entrepreneurship, Featured Millionaire Interview, Marketing, Millionaire Interviews

Hi I’m Jaime. Each and every week I bring you the top business advice from the people who know best.

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