Transcript
Host: Spencer Guest: Naveen Spencer: Hey, I wanna welcome Naveen Dittakavi to the podcast today. I’m thrilled to have you here. We have been in touch for quite a while about this interview. And you have been the go to guy for over 1000 people inside of a Facebook group. You’re the person that everyone comes to, to formulate their questions were to get advice on really growing a software business and a consultancy business. And that’s why wanted to bring you on, to provide this and said to our listeners. Welcome to the podcast. Naveen: Thank you for having me, Spencer. Spencer: So, Naveen, in our preparation for this interview, we spent a lot of time formulating the message that we’re going to help our listeners understand. And I want to get into – starting off with how you think it might put so much time into preparation, and then we will get into the specifics of the business that you’re running. Naveen: Sure. So one of the things that I learned from one of my mentors, Ramit Sethi, is that preparation is key. That 80% of the work is done before you ever enter a room, and this is covered in a lot of his courses and one of the techniques is called the briefcase technique, basically saying that before you go meet with a prospective client, before you go meet with your boss to negotiate a salary raise, what are you going to prepare and how much work are you going to have shown that you have done in order to seal the deal, if it’s a client, or to be persuasive and convince your boss to greenlight your raise? So I translated that advice into all kinds of preparation. Last December, two Decembers ago, 2012, I had an opportunity to meet Ramit in person. And I’d only been conversing with him through email, just like any other reader of his. When I had that opportunity to meet with him in person, I booked the next flight out at full price and I had brunch with him in Los Angeles. This was one weeks’ notice. I basically took the entire week off of work and prepared for 30-40 hours the types of questions that I wanted to get answered, because I was about to meet someone who has taken his business from one level to the next, and I was sick and tired of keeping my business where it was at. I also wanted to make that disproportionate leap to the next level. And I knew that I needed to speak with someone who has done that before. To understand exactly what I needed to do, as well. Spencer: You and I both study and a lot of Ramit’s material. And Ramit sets himself differently, because he actually focuses on habits, instead of little tactical things are things that aren’t long lasting. You took the time to prepare for that interview, what were the key habits for me to mention that you should develop to grow your business to the next level? Naveen: It was really interesting. I would say that it wasn’t necessarily a habit that needed to be developed in me. Well, there was one, but first thing that I had to recognize is that I was holding myself back artificially. Meaning that, I was not willing to take that chance, that link on my own,
and I had made this journey to Los Angeles to basically seek permission from my sensei, to make that leap. He just looked me straight in the eye, sitting next to him, and he said, Naveen, you have to make a choice to make recurring revenue happen. I asked him, how do I make recurring revenue a bigger part of my business, then? And I was like I okay. I choose to do that. It was really obvious that I had to choose to do that, but there are habits that led me to actually build significant recurring revenue in a seven-month period, that allowed me to hit, basically attain financial freedom, where my revenue exceeded my expenses on a day-to-day basis. Those habits were along the lines of prioritization. What Ramit allowed me to do through his advice and one of his courses, is the ability to prioritize – three specific things getting done each week that work towards whatever goal they were trying to set out. By systematizing prioritization through one of the programs, I was able to set aside time diligently, week after week, for seven months to grow my recurring revenue in my business and work on strategy and how to build that recurring revenue, and then in July, I think on July 8, I announced to everybody in Ramit’s Brain Trust that I had looked at my freshbooks invoicing and the recurring invoices that were going out exceeded my monthly cost of living, post taxes. I was just like, wow. It was just, you know, a slow prioritized march to making that happen. Spencer: So you have been a top performer the whole time. It is not like Ramit took you from being a B player to an A player. But you had to make that transition, saying, I give myself permission, or I’m going to focus on growing recurring revenue. As you did that, you already had a successful business. Let’s talk about the freedom. You mentioned how the recurring revenue has provided you a margin, or freedom, to act differently on your business, or approach it differently. How has that changed? Naveen: It’s really interesting. It happened, as my recurring revenue eclipsed my expenses, and first, I was like, wow, I took it all in. That goal, when it started my business 10-12 years ago had finally been achieved, but the thing is, when you have been doing something for so long, that win is not an overnight win. And your habits and practices continue. I think this is why we hear a lot of lottery winners lose all their money. They get this windfall, but their spending habits and investing habits have not changed at all. So for me, even though I had enormous recurring revenue now coming in, then, rather, I still continued to take on and seek client work. I was still taking the same kinds of clients that I was before, projects at the $25,000 price point. That kind of just continued for months and months and months, after July. I still continued to do – it was business as usual, even the recurring revenue was coming in. But then a few months later, it clicked in that I have the power to say no, because I have this recurring revenue base and I don’t have to worry about meeting expenses anymore. Once I fully internalized what had happened for me, at that point I was able to start saying no to the wrong types of clients and take on only the right types of clients where I can help tremendously. Spencer: Do you think saying no is one of the reasons for sabotage on people plateauing in the business are not going to the next level? Naveen: Not saying no, is that what you’re saying?
Spencer: The ability to not say no. Naveen: Yeah, I think so. Especially if you’re in some kind of consulting world, you are very hungry, and it is very feast and famine. And you can’t say no to engagements, because you don’t know when the next one is coming. And after the crash in 2008, 2009, I think that really rewired a lot of us. Whereas a lot of us, including myself, were sitting pretty fat and happy before the recession, and then during the recession business dried up almost completely and we had to rework our businesses to get them back to where it was. At that point, you build a habit of not saying no to anything. You want to do a $500 project? Let’s do it. You want a $20,000 project? Awesome. You want to do – anything. Let’s do it. I’m not going to say no, because I may not know where this leads. I may not know, it’s a $500 project that we do now, maybe that can lead into a $10,000 project later. You take everything you can, to stay alive. And that’s, unfortunately, does hold you back, because if you don’t stop doing that, you will never make time for yourself, make time for strategy. It will always be tactical hell. Spencer: I have seen that happen many times in businesses. And I’m going to admit myself guilty as well. And before our call we were talking and we said that, you know, when a person, either they have a consulting business offering a service, and they are looking to make that leap into software, there’s sometimes what we call an invisible script is saying, oh, it has to be automated, or I have to be able to scale this before start. Let’s start talking about some of those things, because that’s how you create the automation. And you were actually giving me some insight that made me say, okay, wait. This is something we need to share with the audience. Naveen: Okay. That sounds good. This is really interesting. Because it came to me over time and experience, as well. It’s that, you have to ask yourself, are you a software guy, an engineer, a developer, a technician or are you a business consultant or are you a business owner? But the issue we face is that, when we identify ourselves as developers and looking at problems as developers or engineers or consultants, then we’re kind of looking at it from, you know, what happens if this takes off, if this idea that I have, if it succeeds, you know, what happens? How am I going to handle customer support? How am I going to handle scale? Do I go on Amazon or, what do I need to do to handle the load? This is like, you know, stuff that may or may not happen to you. This is still an idea in your head. One of the things that I learned, through Earn1K and other courses to validate ideas very quickly. This is what we always hear – validate, validate, validate. Customer develop, customer develop. Into the thing is, is that, we listen to what they say, but very few of us actually do it to a very basic level. We tend to do it, jump the ball too quickly and go for advanced automation, advanced scaling. An example that we talked about earlier, was a service that you are thinking about doing, where somebody sends you something and then you go and you are working with another fulfillment service to get that thing done and then handed back to your client as a fulfilled service request. You were talking about your fears about scaling act, and the automation and you would have to set aside time for software development handle the automation. Talking about Zapier and all this other stuff. And I was like, well, dude, why don’t we just put up a form, and work on your marketing and sales collateral,
take in the deliverable, the file that the client wants you to process, take that, an email or google form, storable form, take that file and handed to your fulfillment agency, let them do their magic, do their work, and then they give it back to you, and then you email it back to them. And that is basically the validation, right there. Why don’t we just test it and make sure that somebody really wants this service before we start investing time and money into this, a larger, elaborate scalable system. Which may or may not be necessary. The example that we also talked about is, if this grows to the point where you’re getting 10, 20, 100 orders per day, you know, do you turn the system off until you can handle it? I said no. I said, why don’t you hire some U.S.-based VA’s, like TaskRabbits, and give them a checklist of how to actually handle fulfillment, and update the Google DOC with stuff and they just melt the clients for you, and fulfillment is automated that way. Software does not necessarily have to solve our problems. It can, when it makes sense to do it, but a lot of our problems are process oriented. And if we can solve a process manually, let’s solve it manually, and then automate it later. Spencer: What do you think that is the key to the process of actually getting that out there? We have talked with the importance of validating the idea. Pam Slim, a person that we both mutually respect, she says the real validation is someone giving you money. The idea of saying, how much would you pay, or would you do this, that kind of goes out the window into the quickest a payment is putting it up and doing it manually. Why do you think software developers or entrepreneurs get in this echo chamber of wanting to automate? Naveen: Because that’s what we know. This is the biggest problem that I faced, as well, before 2012, I would say. Is that, I was – I always identified myself as an entrepreneur, consultant, or as a developer. I kept myself inside this echo chamber of being that kind of person. But ultimately, where my skills were lacking and what I was not certain about, what I had a lot of insecurities about were the sales and marketing. I could sell a service to anybody. Which is what I do on a day-to-day basis. Any kind of client that was the right fit, I could very easily sell that. But when we’re talking about a service that is turnkey, it’s on the web, something like that we were just talking about, I would not have known where to start in 2011, or earlier. But in 2012 I made an investment of starting to look at sales and marketing resources. To start learning what the right people had been doing all along. Meaning that, the people who had been selling these solutions all along, how did they get there? What did they read? What did they study? One person who has been very transparent, that was Ramit, and you can go to his delicious page on marketing, which is delicious.com/ramitsethi and choose the marketing filter. I just went tactically through every single article that he had bookmarked in delicious and started to just take notes. I have a lot of notes. I took notes on every single blog post that he had tags that he thought was relevant. I started to understand where my skills were lacking and what I need to study. I took it to the next level. I started buying the books that he had talked about in his Mixergy interviews with Andrew Warner, which was Tested Advertising Methods, and other copywriting and persuasion books. I started to really get myself in the mind of a master marketer. And understanding what goes on in selling a product. Or selling a service. How do you really get inside a person’s head? How do you convince them that what you are doing is valuable? And that’s what I had to do. It took a lot of deliberate practice, but not so much that you
had to go get an MBA or something. It just took diligent study. Spencer: So, Naveen, it sounds weird – you’re not a normal guy to go through and to read all of Ramit’s delicious posts and take mountains of notes and go through this information. So you systematically went through to make yourself a better marketer. A better persuasion expert. Can we get into the things that you used, persuasion wise, to help grow your monthly recurring revenue? Naveen: I don’t think that – I would say that the marketing itself directly caused recurring revenue. The study of it. I think that the study of marketing, study of persuasion, allowed for me to understand the types of clients that are best served by what I can do for people with software. And I think that is really where it starts. When I was reading through, say, Influence, or Tested Advertising Methods, the examples in those books show you how people think and how people are motivated to make purchasing decisions, or make decisions to help others, in the case of Influence. When I got to the core of it, when I started to think about the kinds of clients that I am helping, I was then realizing that the kinds of clients that I was going after, at that time, I was doing more transactional oriented work. When I realized that my business was – it was deeply relationship based, I was doing transactional work, that is when the big shift was. I moved away from transactional work to very long-term strategy work, you know, different kinds of implementations and services that were recurring in nature, so that I could provide continuous value to my clients, rather than building them an app and providing them with incremental, transactional value. Spencer: Okay, that is a pretty big mind shift to go through, looking at it that way. Let’s talk a little bit about the business itself. You have focused a lot on processes. Can you talk about some of those processes and work that you’ve done? Naveen: I would say that like – here is something that I learned. Through some other material. That was that, what we want to do is, we don’t want to model people where they are now. We want to model people that understand what they did to get there. If I were to talk about, what is working for me now, that would not be relevant to a lot of people who are not here right now, or not one step below. What I think people have to master is the stuff a little earlier on. I think I want to talk about the transformation that happened, for me, about two years ago. In becoming a high-value consultant . one of the things that I did is I read this book by Ramit’s mentor, Jay Abraham, and he is a world-class marketer. The book is called, Getting Everything You Can Out Of All You’ve Got. In this book, Jay describes putting your client at the center of the world. The strategy of preeminence. And what I realized, then, was that I was too much I-focused, prior to reading that book. I was always looking at an engagement as, what do I get out of this? You know, looking at the revenue, looking at the numbers. After reading that book, after internalizing that strategy, I started to shift and was like, no, no, no, no. I’m helping somebody. I stopped looking at it as, I’m developing code, I’m developing an app for someone. I am helping my client. What can I do for my client to help him or her succeed? That was the first thing that I learned. The next thing that I learned in the book was how to move upmarket. Meaning that, if I was
charging roughly $100 an hour, then, how are there people out there who are charging hundreds of dollars an hour? What do they do differently? And Jay lays out some techniques, talking about why certain experiences are considered high end, upmarket experiences versus others. So I started to lay out, I took a step back and said, okay, here’s what I do now for my clients. There are some base camp stuff, there some other things going on. What every consulting company does. How can I take it to the next level? How do I make them feel that they are at a Ritz-Carlton or four seasons? And how do I translate that to the experience? A tactic that I use is called awayfind.com. I take my VIP clients, or anybody that I want to do business with, and they put it into awayfind. What happens is, awayfind will send me a text message, will call my phone, and will now do a push notification to let me know that a VIP has emailed in. What happens, I can quickly respond to them and let them know that they have been heard and that their issue will be taken care of. That allows them to kind of rest easy and feel that, like, Naveen hears me, Naveen gets me, look how responsive he is, even though we might not be able to get to that until the next day, they know that their issue has been resolved. They are not going to some kind of support ticket system where they are waiting for a rep, they are not calling and getting voicemail. Your clients, they feel comfortable emailing you because they know they are going to be heard. That is one of the things I did to become a premium service consultant and start setting myself apart. But also, that actually allowed me to build relationships with certain mentors and VIPs, because when they would send me an idea or a note, I would get that message, quickly send them my thoughts on it, reply back, and they would be like, wow, I sent Naveen a message, and within 10 minutes, I got a response. That is detailed enough for me to take a next step. Doing something like that starts to let you build relationships and start to move up the value chain. But you still got to be able to do the work, and do a really good job of the core service that you are delivering. Spencer: That’s something that I’ve noticed, from A players, yourself included. But there’s also another element to that, which is being able to fulfill in long-term. Let’s get into the team aspect. You’ve created an environment, and people around you that work with you, work for you, can you talk a little bit about how important the team role is in growing your business? Naveen: Yeah. I think that, you know, it depends on the type of organization, but what I have seen people do is they start looking at software companies and certain kind of software consultancies as a development shop. Instead of a value added service provider. These two guys, friends of a friend, take me out to dinner recently, a few weeks ago, and we went out to dinner here in Atlanta, and they are bootstrapping a company and they wanted to hear some advice, they had some screenshots, some demo stuff, and they wanted to show me. And they were kind of asking certain questions, and I explained to them that, you know – they asked me, what would you do? How much would this cost if you did it for us? And I was like, look, guys, I’m not a dev shop. This is not what I do. People don’t just ask me that question, I’m not a commodity provider. I said, our rates are over $200 per hour to work with clients. They had these eyes like, what the hell? They asked, why do you charge that? How do you demonstrate that value? I said, like, because, this is what would happen. You come to us with an idea. Maybe you have screenshots or a demo, that is great. But what we’re going to do is we’re going to
rework this with you over and over again, with different audiences, to understand who really wants this product and we’re going to help you develop that, of course, but we’re also going to help you market and sell it and all the different strategies that are around, pushing the product out there. Because the product is going to succeed or fail based on your marketing and selling of the product, not so much any software development in user experience. That matters, to a degree, but it does not matter as much as your ability to sell the product out there. And that’s how I put a full stack together and started to move up the value chain with the entire stack. Spencer: I see that your ability to sell is at the forefront of the skills that you try to focus on. What is it that separates these people that are barely scraping by, versus high producers like you? What sales disciplines do you have that differentiate yourself? Naveen: I really do think it’s like, when you put your client at the center of your universe, and if you remove yourself from being just a developer or consultant or dev shop and look at the long-term success for your clients, if you do that, then you can offer them a full stack of services, rather than just being one commodity, and a plug things that they have to do for the organization. Spencer: this week provided a perfect example. One of your clients that you have had for a number of years recently decided that the person operating your SAS is going to change companies. And so you took the forward pace to it, of saying, I’m actually going to contact the new hire, and you’re going to help them and you’re going to cater that product to them. Can you give that story? Because that is exactly what you are talking about. Naveen: Absolutely. I built this SAAS app years ago. It is 10 years old now. I sold it to this client – actually I leased it in perpetuity to this particular client five years ago. And the client, you know, at the end of the day, if the administrator who is using the app to manage the business. And the administrator decided to move on, after five years, and actually – five years of using our app and many more years not business. And when I heard that he had put in his two week notice, I was like oh, my God, the person who uses my product is no longer going to be there. The value must be immediately transposed to the next person. Because if it does not, I will have turned. They will be like, why are we paying $2400 a year for this tool and we don’t know how to use it? As soon as I recognized that’s going to happen, I thanked my contact, Ken, I said, thank you so much for giving me the chance to provide you this tool, for working with me over these years and all the service that you have done for your organization. And then I actually told him about other opportunities, because I have that same product sold at different clients, I told him other opportunities I had heard about that might be a good fit for him, because I didn’t know why he was leaving. And I wasn’t going to assume that he was leaving because he wanted to leave, or they wanted him to leave. So I quickly offered him, like, hey do want to talk to other people that I know to do other similar work at whether organizations? I’m his friend. I want to help him. Because he has given me a chance. So, I did that and I sent him those details, and finally I asked him, who is taking over? Because this is a huge part of your business, someone has to take over
this role. And he gave me that person. I said thank you, well wishes, and gave him my contact information. I got his. And then I immediately sent an email out to the other person who is coming in, three weeks new to the organization, to take over. I would love to sit down with you and give you a personal tour of the product and make sure that you have any questions answered. I called, I left a voice message. And I heard back from him by email. He was like hey, yeah, Wednesday at one works. That was yesterday. So I went down there yesterday afternoon and sat down with him. He’s a new guy, he is somewhat technically savvy, but not too technically savvy. I walked him through the app I took down what he did at his organization, what he did differently at the prior organization. I told him that, you know, I will make this whatever you need it to be for you, it’s meant for your use. I took down those notes, I made him feel that he can also trust me, and I walked out of that meeting from that client’s office with a new person, a new relationship that I had just deepened. And that churn is probably not going to happen. Spencer: that’s a good point. The churn, in a SAAS business, is the devil. That is what kills a business. What other things do you do to make sure that you don’t have churn? Naveen: it’s interesting. I did that because my SAAS business isn’t at some kind of massive scale where I can start to use always other services, what is it, like, user voice and all these other different tools that are available for people to create email workflows and stuff like that, to avoid churn. It’s not at that scale. I have a handful of clients paying thousands of dollars per year for my products, and that works for me. So churn management in my case is about customer and client relationships. To avoid churn, I just make sure that they are happy. I reach out to them, I will say like, do we need to make any tweaks or changes for you? And that is how I manage churn. And ultimately, that’s what all these different tools that are built for scale do. There are people out there who are working to scale, who are all much scale track, and that is awesome, more power to them. I love to see those people succeed. Those are the big things that we hear about. But for the rest of us, the rest of us just want to continue to be self-employed, because it’s awesome. The rest of us want to be able to – you need to help people, because we take a lot of fulfillment out of it. We don’t want to go back to reporting to somebody. We want to report to our clients, we want to help them succeed. And for the 99% of us who are not, like, covered on tech runs and on the fastest-growing startups and all this stuff, we manage churn by building and maintaining real relationships with our clients. Not lifecycle emails. Spencer: I think we’re starting to get some more now. That’s really good. Because what you are talking about, and in a prior conversation, what you did is you decided to actually move up, pay scale wise, instead of trying to do the scale thing. It was like being the dropbox of $9.99 a month and get 1000 users, you said, maybe what I will do is I will acquire customers at this threshold. Can we talk about, what 1, what type of barriers did you set in your mind that prevented you from moving, and how did you overcome those barriers? Naveen: The biggest thing is, it’s all about identity. I kept identifying myself as the next 37
signals want to be. And I love them and I love everything that they write. A lot of what they write is very relevant to holding great software. But there are very few 37 signals. There are very few Facebooks. There are very few big, huge players out there. And I don’t think that, as business owners, it’s great to have aspirations and ambition. I’m all for that. But we don’t need to be modeling ourselves after them when we are currently at a much lower stage. Our goal is to get to the next level, and then from there, get to the next level. We don’t need to be using the tools and techniques that they are playing with, just because they are the latest toys. I think that is maybe where so many of us who are tech oriented, we’re always looking for the latest toys, we grew up that way, so the next shiny object, the next shiny marketing tactic, the next shiny marketing strategy is what we are always after. The fundamental tenet of marketing is to keep doing what works until it stops working. Because you have a repeatable process to sell, market, and bring people into your business, either as a service provider or as a product provider. Just keep doing that. Until you max it out. Because, why – if you have a goose laying golden eggs because you figured out product market fit, why would you try to clone – spend your time working on the cloning technology of that goose, instead, keep taking the eggs and making sure that you can enjoy them. Spencer: do you think it is a form of self-sabotage, or is it just the conditioning of people reading 4 Hour Work Week and things like that? Naveen: I think those books are awesome. The problem that I had, I don’t know if everyone will identify with this, maybe they will, but the problem that I had is that I wanted to be like DHH. I wanted to be Jason Fried. But, you know – and maybe one day that happens, but I wanted that so badly, that I was modeling what they were doing that wasn’t getting me anywhere. I was mastering things that were applicable to companies at that size. But that doesn’t help me. What helped me was doing things that would help me succeed, helped my business succeed. Once I got over that, like, it’s great to have role models and people who are your mentors, even though you may not directly know them, I think that is great. But you’ve still got to do what’s right for your business, at your stage. Spencer: I’m going to take a different twist for a second. You’re not expecting this one. You have a – we’re going to collect a supporter, but also probably somewhat of an instigator. Your mom. You guys are having – Naveen: She’s going to watch this. She googles me. I think she has a Google alert on me. Anything with Naveen Dittakavi comes up on the net, she clicks on and she’s like, hey, you were on this. Hey, you were on this. Before I even know it is up there. When I was mentioned in Business Insider, she was the one who saw it first. That I was there. She was like, you’re in Business Insider. I was like, what? Anyway. Sorry. Keep going with the mom conversation. Spencer: You guys were driving in the car and – you know, you come from a family, very educated. And she says, well, do you need to go get this degree? Or, do you need to go get a job at this place? And you have had this conversation of, here is my business and it is doing well
and if This recurring revenue. Let’s talk about that for a second. Because that’s very remarkable to have that mom relationship and how you broke through that cycle. Naveen: I don’t think I’ve broken through it. You’ll never win. So, here’s what happened. I was on a road trip and we were driving back from our wedding tasting, we are getting married in a couple months. We had a tasting down in Florida where we are getting married. My mom and I drove down and my fiancée and her dad drove down in a different car. I wish we drove together, now. But on the way up, she was mentioning that a family friend of mine, who got married three years ago, her and her husband bought a $500,000 home, a couple of streets down from where we live. In the affluent part of the north suburbs of Atlanta. And I think that my mom was like, oh, my God, my friends kid is like settled down, doing really well, how’s a 400, $500,000 house, my son is still living in a condo, two-bedroom condo in Atlanta and he doesn’t own property and, like, why not? I think that’s what happens. And I had to explain to her, like, that is awesome that my friend did that. I am so happy for them. They have been married for a while, they are nesting, it’s a great school district, it is the right place to be. That’s where I grew up. And she didn’t get that what is working for them now is not the appropriate life stage thing for me, even though we may be very similar in age. So that was fundamentally what was wrong. The thing is, in the moment, I wasn’t able to convey that. I was kind of like, ugh, I’m making money, Mom, like, what the hell? I could buy that if I wanted to, but I’m not gonna. I used those words, they were the wrong words to use. And I really had to explain to her that like, things are going okay, they’re fine, don’t worry about me. And I don’t think it put the conversation – it put the conversation at ease for the moment. I don’t think it is ever done. Like I said, with a tiger mom, you never win, you never conclude that conversation, until she has X many grandkids and me in some suburban house. It will be like, what’s the next thing? When are your grandkids going to Stanford? So. Spencer: Two of the last conversation pieces that we had are, one, you decided that, hey, you know what? You are not the 37 signals business. You run a business where you really enjoy your customers and you put them at the center of your universe. Same with your mom is saying, look, this isn’t the house that I want, this isn’t the life that I want. Those are two big paradigm shifts, and it’s actually really difficult for a business owner to overcome. What other type of paradigm shifts have you had to go through, like, what was the most uncomfortable one that helped to grow? Naveen: Understanding what I really want, I think, is the most important thing that you can take time and spend analyzing for yourself. If you keep running your life the way that other people think that they should – think that your life should one, whether you are young and your parents still play a big role, you do what your parents say or if you do – for example, if you are in a startup environment like San Francisco, or even Raleigh Durham, or certain circles here in Atlanta, in that startup scene, everybody is expecting you to build a highly scalable, highly exit-able company. And unless – if you want that, awesome. Play in those circles. People who, I think a lot of people who started a business, did it for a particular reason. Maybe one of the reasons was to make a lot of money, and if you find the right value proposition, you can make a lot of money.
But once we start a business, we start to look and see, what should we be doing? And when we start to answer that question, based on other people’s insights and what other people are doing, we are doing things wrong. It’s, what do I want to do with my business? Do I want to make it, you know, a business that is going to stand the test of time and be around and provide me with a fulfilling life that, you know, if I am still working in it, I’m providing a fulfilling life? Or do you want to build something, grow it, and then sell it and then, I don’t know. Is it the beach that you are looking for, or is it the accomplishment of having a business and being covered on techcrunch – what is motivating you? I think you have to answer that question. When you answer that question, you can then start to make decisions to take yourself to the appropriate next level. Because the next level for someone who wants to grow a sustainable business is very, very different than the next level for someone who wants to rapidly scale and play in the startup world. Spencer: You mentioned something that I think, is our listeners take that last piece of advice, and they really focus on what it is that they want, because, earlier on in your career, your goal was to stamp your passport as much as you could. And you traveled the world. You did remarkable things. You went to Germany to get a BMW. Naveen: Yeah. Three times. I’m on my third one. Spencer: There. That is not normal. You know what I mean? Naveen: Yeah. Spencer: And you had to think differently and you had to act if only. Regardless if you want to be a smaller shop or scale, you have to make those decisions. And you have to have supreme clarity. Naveen: I agree. But it takes time to get there. So don’t beat yourself up if you are finishing this interview and you don’t have immediate clarity. It takes a lot of time and a lot of introspection to really understand what you really want. But the thing is, you can’t just keep thinking about it. You actually have to do certain exercises. That exercise may be to write out what your ideal day looks like five years from now, and 10 years from now. What do you really want to be doing? Like, literally write, what time you want to wake up in the morning, not minute by minute, but segment by segment of your day, what happens? Is that what you want? Craft and work backwards. Reverse engineer your path there. Ideas and thoughts about strategy, that’s fine. To dream. But if you want to make it happen, you have to write it down and find, how do you make that ten year dream happen? That five year dream happen? And that is a really important exercise to do. Spencer: That’s really valuable. This is been a great interview for people that are starting a business or growing a business. You have grown your business to scale to a very comfortable
level for yourself. And I don’t use scale in the Silicon Valley term. I am using scale as in, you have the right people in place, you have the right processes in place, and you know what you want. And your customers absolutely love you. That is the benchmark. What other piece of advice can you share, as a part in our conversation, what can you share with our listeners that will help them continue to grow their businesses? Naveen: So, I would say – I think I asked you earlier in this conversation, maybe before we started, who are your listeners? Who is this audience? Who makes this up? What else do they listen to? Who else do they go to? And you told me that there may be some crossover with Andrew Warner and mixergy and I know the kind of people who are doing that, because I’m also listening to that. I am also consuming that information. So I think I’m sitting in, to a great degree, with the vast majority of people who are aspiring to get to the next level, whatever that means for them. My recommendation is for the vast majority of these people to take a step back, do that exercise, and get very real with what they want. I wanted to be able to build significant recurring revenue so that I could work on anything that I wanted to do, whether that was to build a new product, which requires enormous amounts of runway and time. Whether that was to work with elite clients on particular engagements. I wanted to do whatever I wanted to do and I was only able to do that because I built recurring revenue. Because it pays the bills. You’ve got to take care of yourself before you can make your dreams happen. I would recommend that people do that exercise, write a five-year path and a 10 year path of what they would like their life to look like, and then make certain decisions to get there. So that could be building up the recurring revenue stream, if they are a consultancy. That could be, you know, they want to exit their current business. What does that mean? What does their life look like? And then, how do you take it step-by-step, a direction there? Don’t look at what you have to do in your five, look at what you have to do in years one, two, and three, and start taking deliberate steps toward that direction. Spencer: Very actionable. One last question, and this is self-serving for me – when I write through my big goals are my big visions, I have a challenge of chunking down, figuring out the next step. Sometimes it is too big of a picture, it is hard to find that smaller picture. What can you share to me and our listeners – take the time to write down the five-year and 10 year, but they are struggling to find smallest next step? What can you share? Naveen: I can tell you right now. I’ll tell you what I’m doing, I can’t give you a hypothetical for you or a listener, because I am not on a live call with them. I do a lot of live calls and give people a lot of direct, actionable feedback. But in this case I can only tell you what I’m doing with something. I am putting this course together to show consultancies – software consultancies how to build non-time-based recurring revenue. Meaning that, you don’t have to actually do work like a retainer model to build recurring revenue. It’s a lot of work to put this course together. It is an enormous task. So how do you actually take steps to get that end result of this course to be put together? You chunk it out, in terms of like, okay, we need to do content development. That’s massive. That’s the entire part of the course. You have outreach and sales and marketing, stuff
like that. Let’s talk about content development, which is where a lot right now. When I take content development, I can break it up into a few things. So in a few weeks, I’m going up to St. Louis to teach a rails company how to build recurring revenue. And I am preparing my presentation. That presentation has a starting point, the introduction. So how do I then compose the introduction, what am I looking for? So what did I do? I went to a presentation that I really admire, which is Ramit uncreative lives, because he was talking to a very similar audience, an audience that didn’t really know him very well, into was interested in hearing what he had to say. So he had to find a way to introduce himself, introduce the concept of earning more, mastering your finances, refining your dream job, over the course of certain days, so he had to relate to that audience, start from scratch with a didn’t know anything about him, and then build that relationship through the presentation, and then start to guide the audience through the course material. So I was like, this is a really great way to model my course. So then, what were the steps involved? I have a copy of that creative life course. I took the first 45 minutes, which is the introduction portion of it, and I had my transcriptionist transcribe it. Then I started to look at the patterns at the introduction. What is he doing? Why is he doing that? And what do I need to do in my introduction to build that relationship with an audience that doesn’t know me? And that is kind of like how I took deliberate steps – cause and development, introduction, what to any to do in the introduction? I need to understand, what is a successful introduction, and how do I model that and how do I write my own content in that correct model? So that is an example of breaking things down to an actionable level so that you can start moving towards those either year goals or short-term goals. Spencer: That is a great example. Very actionable. Naveen: Thanks. Spencer: You know, I think our listeners want to be able to follow up and say thank you to you. What is the best way for them to do that and to be able to learn more about you? Naveen: Yeah, so, I do some writing and I do have an email list available at dittakavi.com, which is my last name, which is D I T T A K A V (as in Victor) I .com. And that’s where you can learn a little bit more about me and see my trailer with my interview with really and kind of get to know a little bit more about what I talk about and try to be really practical, because I am tired of being a dreamer. I was tired of being a dreamer who didn’t really get anywhere. I found that being super practical and pragmatic led to significant revenue, both recurring and one-time, and that’s just what I was interested in. Spencer: So everyone go to dittakavi.com. We will put a link on the screen, and inside the podcast. And nothing but top, trustworthy, valuable information that you have put out, consistently. I can’t recommend it any higher. It is great. And last is our 48 hour challenge. I’m going to surprise you with the 48 hour challenge. What would you say to our listeners that they should do, or could do, in the next 48 hours?
Naveen: the next 48 hours. I think you could ask yourself that question. You could do this exercise, it wouldn’t take that long. Ask yourself 10 years? Ten years is actually really hard to think about, where do you want to be in 10 years? Ask yourself, where do you want to be in five years? What does that look like? What does your day look like when you wake up on a Monday or Tuesday and what does that look like? For me, I had to do this and I had to be very considerate about my life changes that are happening – I’m getting married in two on this, so I was like, five years from now, if we are fortunate, probably have a couple of kids. So what does my day with my family look like? How does my work fit around my day? And how do I then shifted my business so that I can still add value in and be productive and help people in terms of my clients, while also having the time of my life with my future family? Spencer: Excellent. That is a great 48 hour challenge. Thank you so much, it has been a great interview today. I want everyone to give a shout out to you and follow-up, get more information about what you are doing and connect with you at your website, dittakavi.com. Naveen: Thank you so much for having me, Spencer. Spencer: It’s been a pleasure.
and I had made this journey to Los Angeles to basically seek permission from my sensei, to make that leap. He just looked me straight in the eye, sitting next to him, and he said, Naveen, you have to make a choice to make recurring revenue happen. I asked him, how do I make recurring revenue a bigger part of my business, then? And I was like I okay. I choose to do that. It was really obvious that I had to choose to do that, but there are habits that led me to actually build significant recurring revenue in a seven-month period, that allowed me to hit, basically attain financial freedom, where my revenue exceeded my expenses on a day-to-day basis. Those habits were along the lines of prioritization. What Ramit allowed me to do through his advice and one of his courses, is the ability to prioritize – three specific things getting done each week that work towards whatever goal they were trying to set out. By systematizing prioritization through one of the programs, I was able to set aside time diligently, week after week, for seven months to grow my recurring revenue in my business and work on strategy and how to build that recurring revenue, and then in July, I think on July 8, I announced to everybody in Ramit’s Brain Trust that I had looked at my freshbooks invoicing and the recurring invoices that were going out exceeded my monthly cost of living, post taxes. I was just like, wow. It was just, you know, a slow prioritized march to making that happen. Spencer: So you have been a top performer the whole time. It is not like Ramit took you from being a B player to an A player. But you had to make that transition, saying, I give myself permission, or I’m going to focus on growing recurring revenue. As you did that, you already had a successful business. Let’s talk about the freedom. You mentioned how the recurring revenue has provided you a margin, or freedom, to act differently on your business, or approach it differently. How has that changed? Naveen: It’s really interesting. It happened, as my recurring revenue eclipsed my expenses, and first, I was like, wow, I took it all in. That goal, when it started my business 10-12 years ago had finally been achieved, but the thing is, when you have been doing something for so long, that win is not an overnight win. And your habits and practices continue. I think this is why we hear a lot of lottery winners lose all their money. They get this windfall, but their spending habits and investing habits have not changed at all. So for me, even though I had enormous recurring revenue now coming in, then, rather, I still continued to take on and seek client work. I was still taking the same kinds of clients that I was before, projects at the $25,000 price point. That kind of just continued for months and months and months, after July. I still continued to do – it was business as usual, even the recurring revenue was coming in. But then a few months later, it clicked in that I have the power to say no, because I have this recurring revenue base and I don’t have to worry about meeting expenses anymore. Once I fully internalized what had happened for me, at that point I was able to start saying no to the wrong types of clients and take on only the right types of clients where I can help tremendously. Spencer: Do you think saying no is one of the reasons for sabotage on people plateauing in the business are not going to the next level? Naveen: Not saying no, is that what you’re saying?
Spencer: The ability to not say no. Naveen: Yeah, I think so. Especially if you’re in some kind of consulting world, you are very hungry, and it is very feast and famine. And you can’t say no to engagements, because you don’t know when the next one is coming. And after the crash in 2008, 2009, I think that really rewired a lot of us. Whereas a lot of us, including myself, were sitting pretty fat and happy before the recession, and then during the recession business dried up almost completely and we had to rework our businesses to get them back to where it was. At that point, you build a habit of not saying no to anything. You want to do a $500 project? Let’s do it. You want a $20,000 project? Awesome. You want to do – anything. Let’s do it. I’m not going to say no, because I may not know where this leads. I may not know, it’s a $500 project that we do now, maybe that can lead into a $10,000 project later. You take everything you can, to stay alive. And that’s, unfortunately, does hold you back, because if you don’t stop doing that, you will never make time for yourself, make time for strategy. It will always be tactical hell. Spencer: I have seen that happen many times in businesses. And I’m going to admit myself guilty as well. And before our call we were talking and we said that, you know, when a person, either they have a consulting business offering a service, and they are looking to make that leap into software, there’s sometimes what we call an invisible script is saying, oh, it has to be automated, or I have to be able to scale this before start. Let’s start talking about some of those things, because that’s how you create the automation. And you were actually giving me some insight that made me say, okay, wait. This is something we need to share with the audience. Naveen: Okay. That sounds good. This is really interesting. Because it came to me over time and experience, as well. It’s that, you have to ask yourself, are you a software guy, an engineer, a developer, a technician or are you a business consultant or are you a business owner? But the issue we face is that, when we identify ourselves as developers and looking at problems as developers or engineers or consultants, then we’re kind of looking at it from, you know, what happens if this takes off, if this idea that I have, if it succeeds, you know, what happens? How am I going to handle customer support? How am I going to handle scale? Do I go on Amazon or, what do I need to do to handle the load? This is like, you know, stuff that may or may not happen to you. This is still an idea in your head. One of the things that I learned, through Earn1K and other courses to validate ideas very quickly. This is what we always hear – validate, validate, validate. Customer develop, customer develop. Into the thing is, is that, we listen to what they say, but very few of us actually do it to a very basic level. We tend to do it, jump the ball too quickly and go for advanced automation, advanced scaling. An example that we talked about earlier, was a service that you are thinking about doing, where somebody sends you something and then you go and you are working with another fulfillment service to get that thing done and then handed back to your client as a fulfilled service request. You were talking about your fears about scaling act, and the automation and you would have to set aside time for software development handle the automation. Talking about Zapier and all this other stuff. And I was like, well, dude, why don’t we just put up a form, and work on your marketing and sales collateral,
take in the deliverable, the file that the client wants you to process, take that, an email or google form, storable form, take that file and handed to your fulfillment agency, let them do their magic, do their work, and then they give it back to you, and then you email it back to them. And that is basically the validation, right there. Why don’t we just test it and make sure that somebody really wants this service before we start investing time and money into this, a larger, elaborate scalable system. Which may or may not be necessary. The example that we also talked about is, if this grows to the point where you’re getting 10, 20, 100 orders per day, you know, do you turn the system off until you can handle it? I said no. I said, why don’t you hire some U.S.-based VA’s, like TaskRabbits, and give them a checklist of how to actually handle fulfillment, and update the Google DOC with stuff and they just melt the clients for you, and fulfillment is automated that way. Software does not necessarily have to solve our problems. It can, when it makes sense to do it, but a lot of our problems are process oriented. And if we can solve a process manually, let’s solve it manually, and then automate it later. Spencer: What do you think that is the key to the process of actually getting that out there? We have talked with the importance of validating the idea. Pam Slim, a person that we both mutually respect, she says the real validation is someone giving you money. The idea of saying, how much would you pay, or would you do this, that kind of goes out the window into the quickest a payment is putting it up and doing it manually. Why do you think software developers or entrepreneurs get in this echo chamber of wanting to automate? Naveen: Because that’s what we know. This is the biggest problem that I faced, as well, before 2012, I would say. Is that, I was – I always identified myself as an entrepreneur, consultant, or as a developer. I kept myself inside this echo chamber of being that kind of person. But ultimately, where my skills were lacking and what I was not certain about, what I had a lot of insecurities about were the sales and marketing. I could sell a service to anybody. Which is what I do on a day-to-day basis. Any kind of client that was the right fit, I could very easily sell that. But when we’re talking about a service that is turnkey, it’s on the web, something like that we were just talking about, I would not have known where to start in 2011, or earlier. But in 2012 I made an investment of starting to look at sales and marketing resources. To start learning what the right people had been doing all along. Meaning that, the people who had been selling these solutions all along, how did they get there? What did they read? What did they study? One person who has been very transparent, that was Ramit, and you can go to his delicious page on marketing, which is delicious.com/ramitsethi and choose the marketing filter. I just went tactically through every single article that he had bookmarked in delicious and started to just take notes. I have a lot of notes. I took notes on every single blog post that he had tags that he thought was relevant. I started to understand where my skills were lacking and what I need to study. I took it to the next level. I started buying the books that he had talked about in his Mixergy interviews with Andrew Warner, which was Tested Advertising Methods, and other copywriting and persuasion books. I started to really get myself in the mind of a master marketer. And understanding what goes on in selling a product. Or selling a service. How do you really get inside a person’s head? How do you convince them that what you are doing is valuable? And that’s what I had to do. It took a lot of deliberate practice, but not so much that you
had to go get an MBA or something. It just took diligent study. Spencer: So, Naveen, it sounds weird – you’re not a normal guy to go through and to read all of Ramit’s delicious posts and take mountains of notes and go through this information. So you systematically went through to make yourself a better marketer. A better persuasion expert. Can we get into the things that you used, persuasion wise, to help grow your monthly recurring revenue? Naveen: I don’t think that – I would say that the marketing itself directly caused recurring revenue. The study of it. I think that the study of marketing, study of persuasion, allowed for me to understand the types of clients that are best served by what I can do for people with software. And I think that is really where it starts. When I was reading through, say, Influence, or Tested Advertising Methods, the examples in those books show you how people think and how people are motivated to make purchasing decisions, or make decisions to help others, in the case of Influence. When I got to the core of it, when I started to think about the kinds of clients that I am helping, I was then realizing that the kinds of clients that I was going after, at that time, I was doing more transactional oriented work. When I realized that my business was – it was deeply relationship based, I was doing transactional work, that is when the big shift was. I moved away from transactional work to very long-term strategy work, you know, different kinds of implementations and services that were recurring in nature, so that I could provide continuous value to my clients, rather than building them an app and providing them with incremental, transactional value. Spencer: Okay, that is a pretty big mind shift to go through, looking at it that way. Let’s talk a little bit about the business itself. You have focused a lot on processes. Can you talk about some of those processes and work that you’ve done? Naveen: I would say that like – here is something that I learned. Through some other material. That was that, what we want to do is, we don’t want to model people where they are now. We want to model people that understand what they did to get there. If I were to talk about, what is working for me now, that would not be relevant to a lot of people who are not here right now, or not one step below. What I think people have to master is the stuff a little earlier on. I think I want to talk about the transformation that happened, for me, about two years ago. In becoming a high-value consultant . one of the things that I did is I read this book by Ramit’s mentor, Jay Abraham, and he is a world-class marketer. The book is called, Getting Everything You Can Out Of All You’ve Got. In this book, Jay describes putting your client at the center of the world. The strategy of preeminence. And what I realized, then, was that I was too much I-focused, prior to reading that book. I was always looking at an engagement as, what do I get out of this? You know, looking at the revenue, looking at the numbers. After reading that book, after internalizing that strategy, I started to shift and was like, no, no, no, no. I’m helping somebody. I stopped looking at it as, I’m developing code, I’m developing an app for someone. I am helping my client. What can I do for my client to help him or her succeed? That was the first thing that I learned. The next thing that I learned in the book was how to move upmarket. Meaning that, if I was
charging roughly $100 an hour, then, how are there people out there who are charging hundreds of dollars an hour? What do they do differently? And Jay lays out some techniques, talking about why certain experiences are considered high end, upmarket experiences versus others. So I started to lay out, I took a step back and said, okay, here’s what I do now for my clients. There are some base camp stuff, there some other things going on. What every consulting company does. How can I take it to the next level? How do I make them feel that they are at a Ritz-Carlton or four seasons? And how do I translate that to the experience? A tactic that I use is called awayfind.com. I take my VIP clients, or anybody that I want to do business with, and they put it into awayfind. What happens is, awayfind will send me a text message, will call my phone, and will now do a push notification to let me know that a VIP has emailed in. What happens, I can quickly respond to them and let them know that they have been heard and that their issue will be taken care of. That allows them to kind of rest easy and feel that, like, Naveen hears me, Naveen gets me, look how responsive he is, even though we might not be able to get to that until the next day, they know that their issue has been resolved. They are not going to some kind of support ticket system where they are waiting for a rep, they are not calling and getting voicemail. Your clients, they feel comfortable emailing you because they know they are going to be heard. That is one of the things I did to become a premium service consultant and start setting myself apart. But also, that actually allowed me to build relationships with certain mentors and VIPs, because when they would send me an idea or a note, I would get that message, quickly send them my thoughts on it, reply back, and they would be like, wow, I sent Naveen a message, and within 10 minutes, I got a response. That is detailed enough for me to take a next step. Doing something like that starts to let you build relationships and start to move up the value chain. But you still got to be able to do the work, and do a really good job of the core service that you are delivering. Spencer: That’s something that I’ve noticed, from A players, yourself included. But there’s also another element to that, which is being able to fulfill in long-term. Let’s get into the team aspect. You’ve created an environment, and people around you that work with you, work for you, can you talk a little bit about how important the team role is in growing your business? Naveen: Yeah. I think that, you know, it depends on the type of organization, but what I have seen people do is they start looking at software companies and certain kind of software consultancies as a development shop. Instead of a value added service provider. These two guys, friends of a friend, take me out to dinner recently, a few weeks ago, and we went out to dinner here in Atlanta, and they are bootstrapping a company and they wanted to hear some advice, they had some screenshots, some demo stuff, and they wanted to show me. And they were kind of asking certain questions, and I explained to them that, you know – they asked me, what would you do? How much would this cost if you did it for us? And I was like, look, guys, I’m not a dev shop. This is not what I do. People don’t just ask me that question, I’m not a commodity provider. I said, our rates are over $200 per hour to work with clients. They had these eyes like, what the hell? They asked, why do you charge that? How do you demonstrate that value? I said, like, because, this is what would happen. You come to us with an idea. Maybe you have screenshots or a demo, that is great. But what we’re going to do is we’re going to
rework this with you over and over again, with different audiences, to understand who really wants this product and we’re going to help you develop that, of course, but we’re also going to help you market and sell it and all the different strategies that are around, pushing the product out there. Because the product is going to succeed or fail based on your marketing and selling of the product, not so much any software development in user experience. That matters, to a degree, but it does not matter as much as your ability to sell the product out there. And that’s how I put a full stack together and started to move up the value chain with the entire stack. Spencer: I see that your ability to sell is at the forefront of the skills that you try to focus on. What is it that separates these people that are barely scraping by, versus high producers like you? What sales disciplines do you have that differentiate yourself? Naveen: I really do think it’s like, when you put your client at the center of your universe, and if you remove yourself from being just a developer or consultant or dev shop and look at the long-term success for your clients, if you do that, then you can offer them a full stack of services, rather than just being one commodity, and a plug things that they have to do for the organization. Spencer: this week provided a perfect example. One of your clients that you have had for a number of years recently decided that the person operating your SAS is going to change companies. And so you took the forward pace to it, of saying, I’m actually going to contact the new hire, and you’re going to help them and you’re going to cater that product to them. Can you give that story? Because that is exactly what you are talking about. Naveen: Absolutely. I built this SAAS app years ago. It is 10 years old now. I sold it to this client – actually I leased it in perpetuity to this particular client five years ago. And the client, you know, at the end of the day, if the administrator who is using the app to manage the business. And the administrator decided to move on, after five years, and actually – five years of using our app and many more years not business. And when I heard that he had put in his two week notice, I was like oh, my God, the person who uses my product is no longer going to be there. The value must be immediately transposed to the next person. Because if it does not, I will have turned. They will be like, why are we paying $2400 a year for this tool and we don’t know how to use it? As soon as I recognized that’s going to happen, I thanked my contact, Ken, I said, thank you so much for giving me the chance to provide you this tool, for working with me over these years and all the service that you have done for your organization. And then I actually told him about other opportunities, because I have that same product sold at different clients, I told him other opportunities I had heard about that might be a good fit for him, because I didn’t know why he was leaving. And I wasn’t going to assume that he was leaving because he wanted to leave, or they wanted him to leave. So I quickly offered him, like, hey do want to talk to other people that I know to do other similar work at whether organizations? I’m his friend. I want to help him. Because he has given me a chance. So, I did that and I sent him those details, and finally I asked him, who is taking over? Because this is a huge part of your business, someone has to take over
this role. And he gave me that person. I said thank you, well wishes, and gave him my contact information. I got his. And then I immediately sent an email out to the other person who is coming in, three weeks new to the organization, to take over. I would love to sit down with you and give you a personal tour of the product and make sure that you have any questions answered. I called, I left a voice message. And I heard back from him by email. He was like hey, yeah, Wednesday at one works. That was yesterday. So I went down there yesterday afternoon and sat down with him. He’s a new guy, he is somewhat technically savvy, but not too technically savvy. I walked him through the app I took down what he did at his organization, what he did differently at the prior organization. I told him that, you know, I will make this whatever you need it to be for you, it’s meant for your use. I took down those notes, I made him feel that he can also trust me, and I walked out of that meeting from that client’s office with a new person, a new relationship that I had just deepened. And that churn is probably not going to happen. Spencer: that’s a good point. The churn, in a SAAS business, is the devil. That is what kills a business. What other things do you do to make sure that you don’t have churn? Naveen: it’s interesting. I did that because my SAAS business isn’t at some kind of massive scale where I can start to use always other services, what is it, like, user voice and all these other different tools that are available for people to create email workflows and stuff like that, to avoid churn. It’s not at that scale. I have a handful of clients paying thousands of dollars per year for my products, and that works for me. So churn management in my case is about customer and client relationships. To avoid churn, I just make sure that they are happy. I reach out to them, I will say like, do we need to make any tweaks or changes for you? And that is how I manage churn. And ultimately, that’s what all these different tools that are built for scale do. There are people out there who are working to scale, who are all much scale track, and that is awesome, more power to them. I love to see those people succeed. Those are the big things that we hear about. But for the rest of us, the rest of us just want to continue to be self-employed, because it’s awesome. The rest of us want to be able to – you need to help people, because we take a lot of fulfillment out of it. We don’t want to go back to reporting to somebody. We want to report to our clients, we want to help them succeed. And for the 99% of us who are not, like, covered on tech runs and on the fastest-growing startups and all this stuff, we manage churn by building and maintaining real relationships with our clients. Not lifecycle emails. Spencer: I think we’re starting to get some more now. That’s really good. Because what you are talking about, and in a prior conversation, what you did is you decided to actually move up, pay scale wise, instead of trying to do the scale thing. It was like being the dropbox of $9.99 a month and get 1000 users, you said, maybe what I will do is I will acquire customers at this threshold. Can we talk about, what 1, what type of barriers did you set in your mind that prevented you from moving, and how did you overcome those barriers? Naveen: The biggest thing is, it’s all about identity. I kept identifying myself as the next 37
signals want to be. And I love them and I love everything that they write. A lot of what they write is very relevant to holding great software. But there are very few 37 signals. There are very few Facebooks. There are very few big, huge players out there. And I don’t think that, as business owners, it’s great to have aspirations and ambition. I’m all for that. But we don’t need to be modeling ourselves after them when we are currently at a much lower stage. Our goal is to get to the next level, and then from there, get to the next level. We don’t need to be using the tools and techniques that they are playing with, just because they are the latest toys. I think that is maybe where so many of us who are tech oriented, we’re always looking for the latest toys, we grew up that way, so the next shiny object, the next shiny marketing tactic, the next shiny marketing strategy is what we are always after. The fundamental tenet of marketing is to keep doing what works until it stops working. Because you have a repeatable process to sell, market, and bring people into your business, either as a service provider or as a product provider. Just keep doing that. Until you max it out. Because, why – if you have a goose laying golden eggs because you figured out product market fit, why would you try to clone – spend your time working on the cloning technology of that goose, instead, keep taking the eggs and making sure that you can enjoy them. Spencer: do you think it is a form of self-sabotage, or is it just the conditioning of people reading 4 Hour Work Week and things like that? Naveen: I think those books are awesome. The problem that I had, I don’t know if everyone will identify with this, maybe they will, but the problem that I had is that I wanted to be like DHH. I wanted to be Jason Fried. But, you know – and maybe one day that happens, but I wanted that so badly, that I was modeling what they were doing that wasn’t getting me anywhere. I was mastering things that were applicable to companies at that size. But that doesn’t help me. What helped me was doing things that would help me succeed, helped my business succeed. Once I got over that, like, it’s great to have role models and people who are your mentors, even though you may not directly know them, I think that is great. But you’ve still got to do what’s right for your business, at your stage. Spencer: I’m going to take a different twist for a second. You’re not expecting this one. You have a – we’re going to collect a supporter, but also probably somewhat of an instigator. Your mom. You guys are having – Naveen: She’s going to watch this. She googles me. I think she has a Google alert on me. Anything with Naveen Dittakavi comes up on the net, she clicks on and she’s like, hey, you were on this. Hey, you were on this. Before I even know it is up there. When I was mentioned in Business Insider, she was the one who saw it first. That I was there. She was like, you’re in Business Insider. I was like, what? Anyway. Sorry. Keep going with the mom conversation. Spencer: You guys were driving in the car and – you know, you come from a family, very educated. And she says, well, do you need to go get this degree? Or, do you need to go get a job at this place? And you have had this conversation of, here is my business and it is doing well
and if This recurring revenue. Let’s talk about that for a second. Because that’s very remarkable to have that mom relationship and how you broke through that cycle. Naveen: I don’t think I’ve broken through it. You’ll never win. So, here’s what happened. I was on a road trip and we were driving back from our wedding tasting, we are getting married in a couple months. We had a tasting down in Florida where we are getting married. My mom and I drove down and my fiancée and her dad drove down in a different car. I wish we drove together, now. But on the way up, she was mentioning that a family friend of mine, who got married three years ago, her and her husband bought a $500,000 home, a couple of streets down from where we live. In the affluent part of the north suburbs of Atlanta. And I think that my mom was like, oh, my God, my friends kid is like settled down, doing really well, how’s a 400, $500,000 house, my son is still living in a condo, two-bedroom condo in Atlanta and he doesn’t own property and, like, why not? I think that’s what happens. And I had to explain to her, like, that is awesome that my friend did that. I am so happy for them. They have been married for a while, they are nesting, it’s a great school district, it is the right place to be. That’s where I grew up. And she didn’t get that what is working for them now is not the appropriate life stage thing for me, even though we may be very similar in age. So that was fundamentally what was wrong. The thing is, in the moment, I wasn’t able to convey that. I was kind of like, ugh, I’m making money, Mom, like, what the hell? I could buy that if I wanted to, but I’m not gonna. I used those words, they were the wrong words to use. And I really had to explain to her that like, things are going okay, they’re fine, don’t worry about me. And I don’t think it put the conversation – it put the conversation at ease for the moment. I don’t think it is ever done. Like I said, with a tiger mom, you never win, you never conclude that conversation, until she has X many grandkids and me in some suburban house. It will be like, what’s the next thing? When are your grandkids going to Stanford? So. Spencer: Two of the last conversation pieces that we had are, one, you decided that, hey, you know what? You are not the 37 signals business. You run a business where you really enjoy your customers and you put them at the center of your universe. Same with your mom is saying, look, this isn’t the house that I want, this isn’t the life that I want. Those are two big paradigm shifts, and it’s actually really difficult for a business owner to overcome. What other type of paradigm shifts have you had to go through, like, what was the most uncomfortable one that helped to grow? Naveen: Understanding what I really want, I think, is the most important thing that you can take time and spend analyzing for yourself. If you keep running your life the way that other people think that they should – think that your life should one, whether you are young and your parents still play a big role, you do what your parents say or if you do – for example, if you are in a startup environment like San Francisco, or even Raleigh Durham, or certain circles here in Atlanta, in that startup scene, everybody is expecting you to build a highly scalable, highly exit-able company. And unless – if you want that, awesome. Play in those circles. People who, I think a lot of people who started a business, did it for a particular reason. Maybe one of the reasons was to make a lot of money, and if you find the right value proposition, you can make a lot of money.
But once we start a business, we start to look and see, what should we be doing? And when we start to answer that question, based on other people’s insights and what other people are doing, we are doing things wrong. It’s, what do I want to do with my business? Do I want to make it, you know, a business that is going to stand the test of time and be around and provide me with a fulfilling life that, you know, if I am still working in it, I’m providing a fulfilling life? Or do you want to build something, grow it, and then sell it and then, I don’t know. Is it the beach that you are looking for, or is it the accomplishment of having a business and being covered on techcrunch – what is motivating you? I think you have to answer that question. When you answer that question, you can then start to make decisions to take yourself to the appropriate next level. Because the next level for someone who wants to grow a sustainable business is very, very different than the next level for someone who wants to rapidly scale and play in the startup world. Spencer: You mentioned something that I think, is our listeners take that last piece of advice, and they really focus on what it is that they want, because, earlier on in your career, your goal was to stamp your passport as much as you could. And you traveled the world. You did remarkable things. You went to Germany to get a BMW. Naveen: Yeah. Three times. I’m on my third one. Spencer: There. That is not normal. You know what I mean? Naveen: Yeah. Spencer: And you had to think differently and you had to act if only. Regardless if you want to be a smaller shop or scale, you have to make those decisions. And you have to have supreme clarity. Naveen: I agree. But it takes time to get there. So don’t beat yourself up if you are finishing this interview and you don’t have immediate clarity. It takes a lot of time and a lot of introspection to really understand what you really want. But the thing is, you can’t just keep thinking about it. You actually have to do certain exercises. That exercise may be to write out what your ideal day looks like five years from now, and 10 years from now. What do you really want to be doing? Like, literally write, what time you want to wake up in the morning, not minute by minute, but segment by segment of your day, what happens? Is that what you want? Craft and work backwards. Reverse engineer your path there. Ideas and thoughts about strategy, that’s fine. To dream. But if you want to make it happen, you have to write it down and find, how do you make that ten year dream happen? That five year dream happen? And that is a really important exercise to do. Spencer: That’s really valuable. This is been a great interview for people that are starting a business or growing a business. You have grown your business to scale to a very comfortable
level for yourself. And I don’t use scale in the Silicon Valley term. I am using scale as in, you have the right people in place, you have the right processes in place, and you know what you want. And your customers absolutely love you. That is the benchmark. What other piece of advice can you share, as a part in our conversation, what can you share with our listeners that will help them continue to grow their businesses? Naveen: So, I would say – I think I asked you earlier in this conversation, maybe before we started, who are your listeners? Who is this audience? Who makes this up? What else do they listen to? Who else do they go to? And you told me that there may be some crossover with Andrew Warner and mixergy and I know the kind of people who are doing that, because I’m also listening to that. I am also consuming that information. So I think I’m sitting in, to a great degree, with the vast majority of people who are aspiring to get to the next level, whatever that means for them. My recommendation is for the vast majority of these people to take a step back, do that exercise, and get very real with what they want. I wanted to be able to build significant recurring revenue so that I could work on anything that I wanted to do, whether that was to build a new product, which requires enormous amounts of runway and time. Whether that was to work with elite clients on particular engagements. I wanted to do whatever I wanted to do and I was only able to do that because I built recurring revenue. Because it pays the bills. You’ve got to take care of yourself before you can make your dreams happen. I would recommend that people do that exercise, write a five-year path and a 10 year path of what they would like their life to look like, and then make certain decisions to get there. So that could be building up the recurring revenue stream, if they are a consultancy. That could be, you know, they want to exit their current business. What does that mean? What does their life look like? And then, how do you take it step-by-step, a direction there? Don’t look at what you have to do in your five, look at what you have to do in years one, two, and three, and start taking deliberate steps toward that direction. Spencer: Very actionable. One last question, and this is self-serving for me – when I write through my big goals are my big visions, I have a challenge of chunking down, figuring out the next step. Sometimes it is too big of a picture, it is hard to find that smaller picture. What can you share to me and our listeners – take the time to write down the five-year and 10 year, but they are struggling to find smallest next step? What can you share? Naveen: I can tell you right now. I’ll tell you what I’m doing, I can’t give you a hypothetical for you or a listener, because I am not on a live call with them. I do a lot of live calls and give people a lot of direct, actionable feedback. But in this case I can only tell you what I’m doing with something. I am putting this course together to show consultancies – software consultancies how to build non-time-based recurring revenue. Meaning that, you don’t have to actually do work like a retainer model to build recurring revenue. It’s a lot of work to put this course together. It is an enormous task. So how do you actually take steps to get that end result of this course to be put together? You chunk it out, in terms of like, okay, we need to do content development. That’s massive. That’s the entire part of the course. You have outreach and sales and marketing, stuff
like that. Let’s talk about content development, which is where a lot right now. When I take content development, I can break it up into a few things. So in a few weeks, I’m going up to St. Louis to teach a rails company how to build recurring revenue. And I am preparing my presentation. That presentation has a starting point, the introduction. So how do I then compose the introduction, what am I looking for? So what did I do? I went to a presentation that I really admire, which is Ramit uncreative lives, because he was talking to a very similar audience, an audience that didn’t really know him very well, into was interested in hearing what he had to say. So he had to find a way to introduce himself, introduce the concept of earning more, mastering your finances, refining your dream job, over the course of certain days, so he had to relate to that audience, start from scratch with a didn’t know anything about him, and then build that relationship through the presentation, and then start to guide the audience through the course material. So I was like, this is a really great way to model my course. So then, what were the steps involved? I have a copy of that creative life course. I took the first 45 minutes, which is the introduction portion of it, and I had my transcriptionist transcribe it. Then I started to look at the patterns at the introduction. What is he doing? Why is he doing that? And what do I need to do in my introduction to build that relationship with an audience that doesn’t know me? And that is kind of like how I took deliberate steps – cause and development, introduction, what to any to do in the introduction? I need to understand, what is a successful introduction, and how do I model that and how do I write my own content in that correct model? So that is an example of breaking things down to an actionable level so that you can start moving towards those either year goals or short-term goals. Spencer: That is a great example. Very actionable. Naveen: Thanks. Spencer: You know, I think our listeners want to be able to follow up and say thank you to you. What is the best way for them to do that and to be able to learn more about you? Naveen: Yeah, so, I do some writing and I do have an email list available at dittakavi.com, which is my last name, which is D I T T A K A V (as in Victor) I .com. And that’s where you can learn a little bit more about me and see my trailer with my interview with really and kind of get to know a little bit more about what I talk about and try to be really practical, because I am tired of being a dreamer. I was tired of being a dreamer who didn’t really get anywhere. I found that being super practical and pragmatic led to significant revenue, both recurring and one-time, and that’s just what I was interested in. Spencer: So everyone go to dittakavi.com. We will put a link on the screen, and inside the podcast. And nothing but top, trustworthy, valuable information that you have put out, consistently. I can’t recommend it any higher. It is great. And last is our 48 hour challenge. I’m going to surprise you with the 48 hour challenge. What would you say to our listeners that they should do, or could do, in the next 48 hours?
Naveen: the next 48 hours. I think you could ask yourself that question. You could do this exercise, it wouldn’t take that long. Ask yourself 10 years? Ten years is actually really hard to think about, where do you want to be in 10 years? Ask yourself, where do you want to be in five years? What does that look like? What does your day look like when you wake up on a Monday or Tuesday and what does that look like? For me, I had to do this and I had to be very considerate about my life changes that are happening – I’m getting married in two on this, so I was like, five years from now, if we are fortunate, probably have a couple of kids. So what does my day with my family look like? How does my work fit around my day? And how do I then shifted my business so that I can still add value in and be productive and help people in terms of my clients, while also having the time of my life with my future family? Spencer: Excellent. That is a great 48 hour challenge. Thank you so much, it has been a great interview today. I want everyone to give a shout out to you and follow-up, get more information about what you are doing and connect with you at your website, dittakavi.com. Naveen: Thank you so much for having me, Spencer. Spencer: It’s been a pleasure.
