How did you split equity in Transistor?
Hey, folks. Before we get into the show, an announcement. We have a new sponsor, podcast insights.com. I'll be telling you more about them later on in the show. Hello, and welcome to Build Your SaaS.
Justin Jackson:This is the behind the scenes story of building a web app in 2018. I'm Justin Jackson, and normally, Right now, you'd be hearing my partner, cofounder, software engineer, John Buda, but he is doing the American Thanksgiving thing, and we thought I would do a solo show where I answer your questions. And maybe next week, John can answer some of the more technical questions we got as well as answer his version His answer for some of the answers I'm gonna give today. Alright. Let's get into some Patreon shout outs.
Justin Jackson:Actually got a voice mail from one of our patrons. Let me play that for you right now.
Listener Question:Hey. It's Adam. I am a Patreon patron of this podcast? And I wonder, do you really know how to pronounce my last name?
Justin Jackson:Okay. Oh, boy. Okay. So I Assumed it was Adam Duvander, but now, obviously, it that's not the case. I I think I've been mispronouncing it.
Justin Jackson:The French Canadian in me wants to say Du Vendee, but Adam lives in Portland. I I don't think I don't think it's French. Folks, if you think you know the correct pronunciation or, Adam, if you wanna tell me, it's spelled d u v a n d e r. Not Duvander. So we'll see.
Justin Jackson:Let's see if I can pronounce the rest of our Patreon supporters' names correctly. We have Colin Gray, Samori Augusto, Mike Walker, Brad from Canada, Darby Frey, Kevin Markham, Adam Duvander, Dave Giunta, and Podcast Insights .com. Alright. Let's get into the next voice mail. This is from Vineet Sinha.
Listener Question:Hey, John and Justin. Love your podcast. It was interesting hearing how you became cofounders. I had a question. I was wondering how, you both split equity in Transistor FM.
Listener Question:You both doing so much different things like your network, your skills, but at the same time, Transistor had already a bunch, built and had an amazing first first customer. I'm curious, to hear how you guys got into the details of the decision, negotiated, to place that you're both happy. This seems like a question that most, cofounders have especially when they're bootstrapping. You know, when, You're getting funding from external investors. It's easy, because you don't necessarily have a company.
Listener Question:It's easy to decide how cofounder should Split equity, but in bootstrapping, you've got something usually that you're bringing to the table. Love to hear how you guys, thought about it and, what decisions you made. Thanks.
Justin Jackson:That's a good question. It'll be interesting to hear what John says next week. We have a 5050 equity split, and, we came to that decision, I mean, over weeks of discussion. So again, if you haven't heard episode 2, go to sas.transistor.fm/2. You can hear how we met, how we built our relationship.
Justin Jackson:And, you know, we went into this knowing about each other. You know, he'd been burned by partners before, and I was definitely aware of the risks. Yeah. There's all sorts of different ways to split equity. I do not like the way that equity is usually split, especially in venture funded Startups, basically, whoever, has the idea often gets most of the equity.
Justin Jackson:And At the idea stage, I think most startups are just not worth that much even if you have software built, until you get some customers, and until your product hits a market and gets real feedback from real human beings, It yeah. It doesn't matter really what you have built. And, you can you can see this when you see people trying to sell startups. So If you go to a site like Flippa.com or Empire Flippers, there's all these online marketplaces for startups. And what you'll notice are some sites sell for a couple grand and some web apps can sell for 1,000,000 of dollars.
Justin Jackson:And the difference between the 2 is traction. And so pretraction, there's really Not that much there, maybe a couple $1,000 worth of software even if you've invested years of your time. So you really need both. You need product and you need marketing. And it's only when you put them together that you get that full powered Voltron, something that has value.
Justin Jackson:But I I guess, really, when you're in a discussion with a potential cofounder. You're going to have to figure out how to Value the work you've already put in, how to value what you bring to the table. For example, I believe about 70% of our initial users came from my audience, something I've been building up for years years years. These are, you know, relationships and things that don't just come overnight. And so we had to figure out a way of valuing that that thing that I was bringing to the table.
Justin Jackson:For John and I, it came down to trust. We wanted to be able to trust each other and never feel like, you know, something had been held back. And we trusted each other enough that we're saying, you know, let's go into this equal partners. So we are going to share equally in all of the the benefits, Any any of the great outcomes that come out of this start up, but we also assume the same amount of risk. That meant, you know, putting in equal amount of work, equal amount of cash initially.
Justin Jackson:And I think it was important to both of us, But speaking for myself, it was important to me that we're both on equal footing. And this I know, like, for example, Basecamp, Jason Fried, and DHH do not have an equal, you know, equal equity, and that's something they had to work out amongst themselves. It it really is a private thing, but I think the important piece is that you do what's right for you and for your cofounder. And so In our case, that ended up being 5050. Maybe that doesn't work for you and your situation.
Justin Jackson:Maybe that doesn't seem like a good split. But for us, that's what felt fair. And it also felt like the best way for us ultimately getting what we wanted, which is we want this thing to provide, at least a full time income for both of us. And if we are both working As hard as we can to get to that goal, that seemed like a more efficient way to negotiate the partnership than, You know, saying, well, you only get 30% and I get 70%. And then, you know, in the back of the other person's Mine, they're thinking, okay.
Justin Jackson:Well, I guess I only give 30% of the effort as we work towards this goal. It's it just makes things more convoluted. But when things are split evenly, that that workload balance feels a little bit more even. So, hopefully, Hopefully, that answers your question. Check back next week.
Justin Jackson:Maybe John will have a different response. Alright. So let's get into these next questions, and these all had to do with starting a podcast, running a podcast, tips for creating a podcast. And this is a perfect time to highlight our new sponsor, podcastinsights.com. Please, folks, write that down.
Justin Jackson:Go and visit the site later, because if you have questions about podcasting, this is the place you need to go. They have tons of guides on topics like where to submit your podcast, a podcast starter kit for in terms of gear, podcast hosting reviews. There's one for Transistor coming out soon. How to monetize your podcast, podcast equipment, podcast industry stats, podcast editing and production companies. They have millions of readers that are reading these guides and learning how to start and grow and monetize a podcast.
Justin Jackson:We get these questions all day in our support forums. All you need to do is go to podcastinsights.com. Thank you so much to them for sponsoring the show and paying for all of our editing. Alright. So here is the next question from Gavin.
Gavin:So I have a question about starting a podcast. If I was to start a podcast tomorrow, what are the steps that I need to take? Obviously, signing up for Transistor AFM is the first step, But what else would you say is preliminary steps I need to take? Itunes, Cover App, sort of give me the rundown of all the different things that you think that someone starting a podcast should really put on their little checklist.
Justin Jackson:Alright. Right off the top, I'm gonna give you 3 resources. First is a blog post I wrote called How to create a podcast and submit it to iTunes. That's in the show notes. 2nd is a live stream I did where I just, from start to finish, Create a podcast, do cover art, all of that stuff.
Justin Jackson:That will also be in the show notes. And 3rd, podcast insights.com. This is their bread and butter, but let me give you a few things. First of all, choose your topic. The most important step for a new podcaster isn't buying the right gear, choosing the right platform, or even finding guests.
Justin Jackson:Before you do anything else, you need to pick a topic, and you're really trying to answer 2 main questions. Who is this podcast for? And second, what is it for? So for example, this show is for people starting a software business in 2018. Its purpose, the what it's for, is to share our journey and help other founders navigate the startup stage.
Justin Jackson:Alright? So that's really important. Before you you get too excited, Let's figure out who the show is for and what it's for. What difference is this going to make in the world? Next, do your research.
Justin Jackson:It's not enough to just pick a topic to really stand out. You'll need to ask yourself, what unique perspective can I bring to the subject? What hasn't been done before? How can I stand out? And a good tool for doing podcast research is Chartable.
Justin Jackson:That's also in the show notes. You can use it to browse the different podcast categories and see what types of shows are ranking highly. And the benefit is you can See, okay, what kinds of shows get popular? That's 1. But the second is to identify any gaps.
Justin Jackson:You know, what are some opportunities for shows that might not exist yet? What are some opportunities for a new take or a new slant? The other thing you can do is look for categories where there are shows that are still popular, but have not been updated in months or years because you may be able to create a new show and fill that space. Right? So definitely figure that out.
Justin Jackson:Next, you wanna start practicing, So don't run out and buy a bunch of gear yet. You're you're not ready for the expensive gear. Just take out your phone. It's in your pocket right now. Flip on the recorder, you know, voice memos or whatever app you have on your phone, and just start Recording yourself speaking into a microphone.
Justin Jackson:You could try, you know, practicing. Choose a topic you like to talk about, and then write an outline, 5, 10 bullet points, and then record a short episode, and try to be compelling and interesting about a topic for even 5 minutes. And just repeat that step over and over again. The idea is to start small. It's easy to fall into the trap of buying equipment, but having all that gear will delude you into feeling like you've already arrived.
Justin Jackson:Podcasting is about creating compelling audio, And if you've never recorded your voice before, you're going to need a lot of practice. Now once you've practiced, once you've played some clips for your family and your cat and your friends, and they're saying, okay. This is okay. You know, maybe you can look at doing this. Now you can go out and buy some gear.
Justin Jackson:My starter pack that I recommend, is the ATR 21 100 USB microphone for, it it's usually, like, $50 on Amazon. A pop filter. That's actually the setup I'm using right now, just that same mic and a pop filter. Some good headphones. Sennheiser's 2 o twos are good, and then some basic editing software.
Justin Jackson:I use ScreenFlow, which is actually video editing software, but you can use GarageBand or Audacity. That whole setup should cost you under $100. There's also some other gear guides I've linked to in the show notes. And then you will need podcast hosting. That's where Transistor comes in.
Justin Jackson:They'll provide 2 things, a website, a home page for your podcast in the RSS feed, and a place to host your audio files. So when I first started podcasting back in 2012, I used, I hosted it myself using WordPress and then Put the files on Amazon S3, and I thought it would save me money, and I was wrong. I ended up spending 20 to $30 per month on AWS bills. So it turns out Bandwidth is expensive. That's why we started Transistor.
Justin Jackson:FM. We manage all of that for you starting at $19 per month. For creating cover art, I have 2 tips. First, just take a screenshot of iTunes and then cut out a square where you'll put your cover art and just practice putting different, you know, thumbnails in there for your show and see which ones stand out from the crowd. And you can create cover art fairly easily using something like canva.com.
Justin Jackson:There's also snappa.com, and those will allow you to create cover art, without needing Photoshop or or something like that. And finally, when you do submit to iTunes now some folks think that all of this submission happens automatically, but then they will own that property on that platform. So if you get someone else to submit to iTunes for you, you won't be able to see any of iTunes analytics. So you won't be able to change your feed later on, so we recommend that you submit it yourself. I will have a guide for that in the show notes as well.
Justin Jackson:Hopefully, that's been helpful. If you have more questions about that, feel free to reach out to us. Alright. So next up, we have a question from Alex who is a transistor user.
Alex Bass:Hi there. I'm Alex Bass from CyberBytes Inc. I started a podcast earlier this year around January called Analysis Paralysis. And When I first started, it was just myself, and then it very quickly turned into interviewing and talking to others. And one of the things that I've kinda run into is when you record a conversation, typically, that might run an hour, hour and a half, even 2 hours sometimes because that's where things really start getting interesting.
Alex Bass:But I've noticed that a lot of the most highly produced podcasts are around that, you know, 15 to 30 minute area. Do you think it would be sacrificing the content by chopping it down or somehow condensing the conversation? Because I really feel like to build that rapport of the new person that you're talking to you really need to kind of build that up. So I'm a little bit stuck. Should I kinda stick to what I'm used to doing and what works well, Or should I instead kinda change the formatting to what I'm typically seeing in the podcast area?
Alex Bass:Thanks so much.
Justin Jackson:Alright. This is such a great question. Gavin also asked a similar question. So I'm going to give you a few ideas here. The first thing is this is one of the reasons we allow folks to create multiple shows on 1 account for 1 price on Transistor, because I think the future of podcasting is going to be giving the listener the format they want.
Justin Jackson:Some folks Love the 1 hour, 2 hour shows. Lately, I've been listening to Hardcore History. Those episodes are like 2 hours each, and I will listen to them front to back, not even speeding it up. I just love that show. Long form.
Justin Jackson:So there is a place for really long shows. However, you're right. There's also a lot of listeners who want that podcast to listen to in their commute, and the average commute is, like, 30, 35 minutes, I think. So that's why you see a lot of shows in that kind of time frame. And finally, there's also folks that just want a really short podcast, 5 to 10 minutes.
Justin Jackson:And I think there's a place for all 3. And if you have the bandwidth to do it, I recommend editing 3 different versions of your show. So you have the long form feed, You have the medium form feed, and then you have the short form feed. And it's really the same podcast, but cut into different lengths. Authors like Jason Fried and Seth Godin and others have said, you know, there's a place for a book, there's a place for a blog post, and there's a place for a tweet.
Justin Jackson:And often, it's the same topic that authors will cover, but they are doing it in different form factors. Have the almost unedited long form version for those folks that want that. Have the, you know, edited 20 to 30 to 40 minute show, that is shorter and just really hits on maybe 3 big points, and then have the 5 to 10 minute show that maybe just hits on 1 element that you want people to know, the most important summary of that big conversation. Now a good example of this in the YouTube world is off camera. Go to off camera.com, but also search them up on YouTube.
Justin Jackson:What the host, Sam Jones, will do is interview all sorts of different celebrities. And if you want to watch Just little clips from those interviews. You can do that for free on YouTube, and they're usually 4 to 5 minutes long. But if you want the full interview. You have to go to the website and pay.
Justin Jackson:I think it's a few dollars to watch the entire thing. And so you could experiment with this. Maybe Your content and these interviews are so compelling that folks might pay, for example, to join your Patreon to get the long form interviews, and the free podcast feed is only the medium form or maybe even the tiny little clips, the 5 minute clips from those longer interviews. So that's something to keep in mind. I hope that's helpful.
Justin Jackson:And I am out of time for today. I've gotta go pick up my kids from school. If you have a question, you can reach out to us, transistor.fm/voice mail. Thanks again to our sponsor, podcast insights.com. Please reach out to them.
Justin Jackson:Tell them that we sent you. Next week, we'll be back with another show. That might just be John answering questions Or it might be both of us together. And, again, if you wanna reach out to us on Twitter at transistor f m. I'll see you then.
