“Difficulties surfaced only because we happened to fly too close to the sun,” acknowledges Rodeo’s co-founder and technical CEO, Ben Fisher (@skinnyandbald), as he weighs up a close encounter with the perils of platform risk at his previous startup.
In the following exchange, Ben also justly lists the accruing advantages of building on top of platforms, shares how he has learned to place price before product, and reflects on a deeply personal battle with Adderall.
— Working backwards from a price point and choosing one’s customers
— Even-handedly assessing platforms and still building on one
— Standing out in an ever-crowded landscape
— The best thing to have happened to Ben’s productivity
The reason why we began with price rested, partially, in the market.
A realization that organically — and painfully — arose at my previous startup, CartHook. I left the day-to-day there a few years ago and the company was acquired in Jan 2022.
It was also a Shopify app (I’ve been building in that ecosystem for 8+ years now) which enabled brands to offer post-purchase upsells without requiring their users to re-enter credit card information.
Anyone who has built on top of Shopify knows that they have a lot of small stores. And we learned very quickly that too many of them wanted to use CartHook. For a fairly small team with a raw product that sudden demand spelled trouble.
First, supporting and onboarding these stores took a direct, expensive toll on how effectively we could learn and evolve. Then, there was simply a lot of noise that made it harder for us to figure out who our ideal customers could be.
A combination of those two factors made us increase our prices, again and again, just to slow down the number of sign-ups that were coming in.
To recap a bit here, our first price point for CartHook was probably $50 a month. Whereas a majority of Shopify apps were priced at around 5 bucks a month and many started off as free.
Thus, when we launched, we were already 10 times more expensive than your typical app and that seemed to have had no impact whatsoever on demand. So we kept raising our prices.
Reaching as high as $500 a month and a percentage of processed revenue, and eventually coming to a point where you had to apply to request access.
Without doing this, we would have failed to build a great experience. And we would have failed to maximize the likelihood that the right segment of the market would be successful using the product.
With Rodeo, that lesson came baked in.
From the beginning, we chose a relatively high price point that specifically was a fit for ecommerce brands that had product-market fit and were incredibly successful marketers.
So that we could learn from the best, map what made them successful and find what would help them get even better. And then build that into the product.
From a business model perspective, this meant that even pricing to capture processed revenue (imagine a store doing $10m a year vs one that does $50K) was pretty significant from the get-go and brought in way more than the flat SaaS fee.
In return, we could deliver much more value (more on that in a bit) to this upper mid-market segment. If we could help a brand that was already at $10m increase their average order value and retention by, let’s just say, 15%, it was a disproportionately huge value add.
Then, to consider this from a founder/team-market fit angle, everyone on our team has been building software for a long time and it’s just really fun to be able to work with fast-growing brands. You just learn a lot by solving for their always-ahead needs.
Just like as a musician, it’s fun collaborating with other musicians who’re really fucking good. I’ve learnt a ton about marketing and customer acquisition by observing these merchants.
A sort of selfishly exciting thing?
In terms of learning, I’ve long been a student of pricing.
I wouldn’t say I’m good at it but I’ve read a ton about how to do it well. Patrick Campbell at ProfitWell, who is a friend, was a very loud, beneficial voice early on.
Although I first came across an articulation of our insight (starting with the price point) in a book called Monetizing Innovation.
This was in the middle of the Rodeo journey. We had already started with the knowledge that pricing can help us target a segment we wanted to grow with but this book further deepened our approach.
A chapter, in particular, got me thinking differently.
That it wasn’t just about charging more. We had to work backwards from that to answer questions such as: What should the product consist of? And who should you really serve in order to command that price?
And then to even hypothesize, what would the product look like if we were to charge $10K a month rather than $500. I’ve thought a lot about that too. I’m still thinking about that. :))
A more existential challenge at CartHook came in the form of platform risk.
I must say that we had amazing traction, in part, because of the Shopify network.
There’s great value in it. The ease with which merchants can install an app. The many Facebook communities of dropshippers and merchants spanning different sectors. The mastermind groups. All those things (directly and indirectly) contributed to our success.
Difficulties surfaced only because we happened to fly too close to the sun. With CartHook, we had stumbled upon something that ended up being something that Shopify really cared about preserving/owning: the checkout and the corresponding transaction fees from payment processing.
And I could have gone either way post that agonizing episode. My co-founder at CartHook, Jordan Gal, did go on a separate track. I could have been like, “screw this, let’s run off into the sunset and build for an open system instead, whether it’s Composable/Headless, WordPress or whatever…”
The thing is, platform risk isn’t a new concept.
We’ve all heard stories of Google/Facebook/LinkedIn crushing startups just because they didn’t like how their respective APIs were being used. Plus, there are pros and cons to both open and closed systems.
Nonetheless, the reason why I decided to still build Rodeo on top of Shopify was because I really understood the platform. I get, probably better than most, what Shopify cares about and how they make decisions. To add to that, I had built a deep network of merchants.
Both as an engineer and an entrepreneur I wanted to swim in a lane where I had an unfair advantage on day 1. That doesn’t mean ignoring the risks. To risk mixing metaphors, I knew we were building a house on someone else’s land.
So we’ve been conscious of what to stay away from. We’ve created a multi-platform product that doesn’t have an overdependence on a single ecosystem.
With Rodeo’s core piece of subscriptions, too, there are quite a few guardrails. Like there are very particular APIs you can use and you can only deploy them in a very specific way sometimes.
But there’s still room to be creative.
What fed into the decision of staying on Shopify also formed the basis for Rodeo’s early differentiation in a (competitive) sea of sameness.
Part of our value proposition, especially for some of our earliest customers was:
“We’ve worked within this framework for a long time and have served a lot of brands over the years, so you get access to our expertise and our network.”
As oftentimes you’ll find that the teams that run some of these really successful ecommerce companies on Shopify tend to be non-technical. They’re really good marketers. Great at customer acquisition and the supply chain.
But they don’t necessarily have deep engineering cultures.
And before I started Rodeo I had the perfect window into such teams.
After CartHook, I became a fractional CTO for direct-to-consumer ecommerce brands that sold subscriptions and were at the series A stage. Which meant that I would go in-house, trying to embed myself at a startup, and learn about their hopes, dreams, and fears.
Thus offering a consulting layer on top of the product helped us stand out and position ourselves as experts in the space. If you’re an ambitious brand, you want to work with people who can look around the corner and say:
“Here’s what you need to be thinking/worrying about 6, 12, or 18 months from now because we’ve worked closely with others who’re just that far ahead.”
Another way we’ve differentiated Rodeo is by niching down. The usual advice, of course, is to get so niche that it’s uncomfortable. “I can’t possibly sell to just that one type of person.”
And if you’ve found that there’s a sizable market with that very specific group of customers, why not make that uncomfortable choice?
What you’ve built would still apply to other similar or tangential customers, it just means you need to double down solving for a chosen type.
Hypothetically, we could just aim at good-for-the-earth products. In fact, a good bunch of the businesses we’ve worked with fall into that category. And we’ve known and worked with several of these over the years.
That sort of focus helps with many aspects of the business, not just differentiation.
A lot of it is cultural.
I didn’t even know about Adderall until I was an adult.
I was probably working on my second startup after college and I was dating someone who was taking it. Even a bunch of my friends in tech were taking it.
I was curious to find out why people were taking it and what the benefits were. And the findings resonated with me. I had problems focusing. My thinking could be a bit scattered at times.
I felt I might benefit from it as well. I saw a psychiatrist and she thought so too.
As I was probably somewhere on the spectrum of ADHD. There always is a spectrum with such things, it’s never like you have something or you don’t.
I started taking Adderall. And it was, as expected, great for motivation and energy. There were parts of it that I really enjoyed, which is certainly not a reason to take medication.
But the downside was that I found myself spending a lot of energy and time working on stuff that didn’t necessarily matter in the grand scheme of things.
I was so focused on finishing tasks that I stopped paying attention to what’s actually going to be relevant to or move the needle for the business.
Then, much worse, I noticed myself becoming, for the lack of a better term, a dick.
I’m speaking anecdotally but Adderall makes one rush so much that emotionally you tend to get largely shut off.
I wasn’t nearly as patient with people. I wasn’t patient with situations. Because I would just try to bulldoze through everything.
This was almost 9 or 10 years ago so I’m trying to recall my own reflection of what it was like.
But I do remember that when I published a blog post (still the most popular one I’ve ever published) about it, I had random strangers reach out to me. Parents who would talk about how Adderall had affected their children.
As I wrote back then:
“…it had become clear that my newfound superpowers were less a hero’s cape and more like the blinders on a racehorse. After nine months, it was time to call it quits.”
And I did.
— Tactiq’s co-founder, Ksenia Svechnikova, on how they’ve evaluated the platform risks of building with Google and Zoom
— Tability’s co-founder, Sten Pittet, on the importance of having a system for understanding the impact of pricing decisions
— Butter’s co-founder, Jakob Knutzen, on finding a beachhead market that’s allowing them to compete in a space crowded with incumbents