Ten Years In The Making is a weekly podcast on how to effectively grow a startup.
Adam Robinson: Jonathan Cronstedt, known as JCron, thank you for joining us today, former president of Kajabi. I watched you on a panel at War Room. I flagged you then afterwards because I was so captivated about everything that you were describing because you were describing a journey from where I was at the time and have made a couple of small steps in the right direction to where I want to be. And like the statement that you made, which really sold me, just captivated me entirely, was this idea that we were sitting there looking at the business, and I don't remember what the approximate revenue level was, but let's say I think it was like the 10 million feels right to me. Was it something like that? Or like maybe a single-digit ARR at that time or something? And you're like, "We're looking at the business,” and we're like, "Okay. We'll make a little less money in the short run, but this thing could be like a 10X or a 20X from here if we just went all in.”
Jonathan Cronstedt: Yeah. So, my specific brand of experience that I was probably talking about was I bought into Kajabi as partner and president. We were doing 6 million in ARR with about 25 team members at the time. And when I stepped down, we were now over 100 million in revenue, 400 employees, and the platform's powering $2 billion in GMV for our user base. So, that's kind of my window of from here to here.
Adam Robinson: Right. And typically, I have direct-to-consumer e-comm founders on here. In your experience, do you think scaling is scaling because like that's my instinct?
Jonathan Cronstedt: In my opinion, yes. I think scaling is scaling. I think that anyone who really wants to make the argument that scaling is something specific and esoteric that is so unique per industry that it requires a completely differentiated approach. Those are people sometimes that make me nervous because it either means they're a complete savant that is about to change the game or they're somebody that's, you know, business model is built on selling $100 bills for $20, and when financing goes away, they're out of business.
Adam Robinson: Yeah. I got you. So, can I dig into that moment when it's like you're looking at this business at whatever it is, 6 million ARR?
Jonathan Cronstedt: Absolutely.
Adam Robinson: What made you stop and think that? Like, what were the signs? And then what were some like outside influences?
Jonathan Cronstedt: So, I think it's an interesting phenomenon to dig into, and it's actually a phenomenon that only bootstrap entrepreneurs typically deal with that if you're a venture-funded out-of-the-gate company, you're very accustomed to the fact that you've already sold people on this being the greatest thing since sliced bread and so you have to take it there. You don't ever have that inflection point of, "What am I holding? How big can it be? How successful can it be? And what do I need to do to bring it about to actualize that potential?” It's very unique to bootstrap founders because what you'll often find is you're going to be in this mode of varying degrees of product market fit. If you have milled product-market fit with perfection, you're actually almost seeing what could be a perfect lifestyle business that is growing on its own. You can't stop it. Every month it gets slightly better and slightly better and slightly better. To use some SaaS acronyms, your net dollar retention continues to go up every year, regardless of how many people you're telling about it. Because you have a transformative product experience, you probably have a spectacular customer experience. Those things are taking care of the growth engine.
So, then you run into this inflection point as an entrepreneur. I kind of did what I set out to do, likely. I built a business that's providing for my life. It's doing so predictably. It's giving me great cash flow. It's giving me great quality of life. What could this be? And in that moment, you're going to be almost staring into this abyss. And the abyss is I can see far enough on the other side of this abyss that I see something amazing. I see something spectacular. I see something that is the potential of what this could be. And it's way off in the distance. And the abyss is all of the uncertainty of what scaling will look like. What does it look like transitioning from a lifestyle business that I'm familiar with the headaches I have and now moving into scale mode where I'm going to get the headaches I choose, but I don't necessarily know the price of success until after I've paid it that I'm not going to be able looking into the abyss to tell you what it's going to take you to get through that. I'll be able to tell you exactly what it costs when you're on the mountaintop on the other side of the abyss, looking back, saying, “Oh my gosh, that was so cool, so glad we did it.”
So, for us, as Kajabi, it was that moment where the industry started to become an industry. So, when Kajabi began, this industry that we served because we’re a platform-as-a-service serving digital commerce entrepreneurs, largely no different than e-comm. We're just e-comm without fulfillment. And so, you've got all of this digital product stuff happening, which previously was DVDs, workbooks, CD, shipped to your house. Kajabi’s on the scene, all of a sudden, now, it's digital. It's available immediately. We're creating that unboxing experience in theater with pixels rather than packages, and we're excited the business is growing, but then the industry starts to mature. You start to see these trends of what is the creator economy. You start to see these trends of digital-first entrepreneurs that are creating brands around their knowledge, brands around their career proficiencies, and experience. And all of a sudden, you ask yourself, “Well, wait a second, if this industry is growing at this level and rate of speed, there will eventually be a book written about it, and we're either going to be the subject of the book or we're going to be a footnote of the book.”
If you've ever read category design, Play Bigger, they talk about companies like Salesforce that own the category of software-as-a-service. They talk about companies like Jabra that created three different categories and own none of them. So, it's in that inflection point where you have to ask yourself, “Do I feel confident enough in the fundamentals of this business, and do I feel confident enough in the growth of the market that I'm going to dive headfirst into a season I've likely never experienced before?” Unless you've done it before. And I'm going to dive into that experience with no end date, with very little certainty around what will be required, i.e., team, i.e., cost can change in financial metrics, upset to my current cash flow business that I'm taking the money out of every day, all of those things will change, but when you call it right, you then get to have the opportunity to see your product in its finest form, on its largest stage, ultimately actualizing its potential by creating the transformation you built it for, for way, way, way more people.
Like, when I look back at what Kajabi was doing for entrepreneurs when we were a $6 million company, comparative to today, over 100 million in ARR, powering $2 billion in sales for our creators, we would never have been able to achieve that level of impact as a $6 million company. It just wouldn't have happened. Now, it doesn't mean that we couldn't have run forever as a beautiful lifestyle business, but we wouldn't be an industry-defining category-creating global entrepreneurship force of $2 billion in products sold per year.
Adam Robinson: I just got the chills when you describe that. Because like, you know, I think that's the dream but like there's also this kind of, how do I say this? Maybe like you're now a class of person that you would not have been if that was a lifestyle business. Does that make sense? Like, you're attached…
Jonathan Cronstedt: A million percent true.
Adam Robinson: You're in the world that we live in like you are now this type of wizard, you know, and everyone in this ecosystem treats you that way, right?
Jonathan Cronstedt: Well, I think what's so interesting, Adam, that you bring up and you and I have talked a lot about this, given all the things that you're doing at Retention.com and those inflection moments where you recognized things needed to change. Like for us, that critical moment was when Kenny was like, “Man, you know what we got to do? We are going to completely cannibalize our original platform with a new freshly built greenfield platform that will do all of the things we want that will carry us to that next level but we got to have the balls to eat the thing that brought us to the dance.” Like, those inflection points are very, very critical but I do agree with you that it does change who you are. And I think looking back on it at that inflection point then, I would have told you it was a professional choice. It was what we see the business, we see the industry. This is what we want it to look like. But looking back on it now, I think I thought it was a professional choice, but ultimately it was a personal one. It was literally a moment of saying, “I'm going to take on uncertainty, the risk, the possible failure, all of those things because I want that journey. I want to step into that and I want to see it through to the completion of it.”
And now, looking back on it, I could have made that with professional justification for the choice but without the emotional personal commitment, all the professional justification in the world would not have been enough to power us through that season.
Adam Robinson: Right. I totally, totally agree. It's like you’re like 1,000% in.
Jonathan Cronstedt: Yeah.
Adam Robinson: Go ahead. I don't want to cut you.
Jonathan Cronstedt: Oh, no. Completely. And it's not even 1,000% in just in your professional career like it very much becomes at least it did for me and it might be, you know, my dysfunction. It largely becomes your identity like you are no longer the work-life balance, “I'm going to neatly compartmentalize what I need to compartmentalize and I'm going to pursue this when I can pursue this.” It was much more of a whatever it takes, whenever it requires it. Sometimes that meant a six or eight-hour day home for dinner, hanging out, no stress, no email after clicking off for the day. Other days, it was a 24/7 job handling social, our community, interacting with our users, all of the things that need to happen when they need to happen. So, it took it from this is a business that I have a job and it moved it to I want this to be representative of who I hope to be in the world.
Adam Robinson: Yeah, I love that. This is just a really circumstantial question but like, do you think it's easy to confuse signals when you're at that inflection point? You said identity. You said ego. I think even when I was totally bought into this lifestyle entrepreneur thing, it was very much my identity and who I was. And I've always had the struggle that I've recently identified to be harsh. I was selling crappy products but I was unwilling from an ego perspective to actually admit that they were crappy products. It was lacking this product market fit thing. And now, I know that we have it because it just feels a way like I have read, you know.
Jonathan Cronstedt: Well, and even could talk a little bit about that moment in your journey because I remember it. And for those of you that are having a front-row seat to Adam's journey now with Retention.com, the thing that I respect so much about the journey you took is not only would it have been hard to admit to yourself that this isn't the product we should be selling, you had all of the third party validation that you were already successful, that the product was working, the company was growing, you were cash flowing. Like, everywhere you would look of third-party external validation, they’re like, “Yep. You got it. Yep. You're doing it. Yep. It's awesome.” And inside you're like, “I don't think this is it but sh*t, everything's working and everyone's liking it.” And so, that's really where you begin to understand that good can be the enemy of great, that lifestyle can be the antithesis of a category-defining skill of company. Like, they don't always work in tandem because things that make a great lifestyle business are often going to be counterproductive and unhelpful in a category-defining enterprise.
Very, very different businesses across the board and being willing to sacrifice that is very hard, especially when everyone around you is like, “Oh no, it's doing exactly what you wanted it to do. You're winning.” Like, why? Why would you reevaluate this? Why would you kill this thing that's so good? And you're like, "Because it can be great. And if it's not great, it's not going to do what I want it to do. And if it doesn't do what I want it to do, all I really am is a more comfortable version of being slightly bored and slightly dissatisfied. I’m more comfortable, but I’m still pissed. It's like I'm uncomfortable. I'm just uncomfortable in a nicer car and a nicer house.
Adam Robinson: I mean, I'm just laughing because I just lived that for, you know, five years in one way or another, right? Like, that is…
Jonathan Cronstedt: Well, that's the thing, Adam, that I think you've nailed and what I love in the authenticity of everything you're displaying, building in public, and talking about that journey, that's the real sh*t that people don't often think about in these type of businesses. Like, I think the thing is, I remember talking to Steven Pressfield. This was right after my mortgage bankruptcy and I was with Joe Polish at Steven Pressfield’s house, bestselling author of War of Art, a bunch of other amazing, amazing books. And we were talking about this idea of work, and he actually quoted the Bhagavad Gita and said, "We are entitled to our labors, but not necessarily the fruits of them.” And I think what gets so hard in business decisions, myself included, is we oftentimes future pace the economic outcome and use that as the driving force to engage in the labors. And the reality of it is that economic outcome may be exactly what you thought it would be. It may be like in my case, it may be multiples beyond what you thought it could be, or it might not even be as big as you think it will be. But if you're choosing the labors that you want because that's who you are and how you want to show up in the world, the economic outcomes are going to be amazing whatever you decide to do.
But if you're only doing it for the money, there are going to be so many places where you're like, “I hate myself. I was making more, working less. Why did I do this? Why did I ruin this thing over here where I wasn't happy, but at least I was comfortably unhappy? Now, I'm uncomfortably unhappy and hating myself.” And that's the moment where it's like, "Okay. Did I make any fundamental mistakes in my evaluation of the business and the industry?” And if the answer is no, it probably means you're exactly where you're supposed to be and you're forcing that innovation which is causing the stress. But make no mistake about it, there will be those inflection points where you're like, “What did I do to myself? Why did this happen to me?”
Adam Robinson: I've never had a conversation where someone's articulating and like rearticulating things about me that like I haven't really dug up yet because I don't know. Just like I don't have many people in my peer group that like did that lifestyle tech guy limbo. Like, I just don't have a network of that, really. It's amazing how clearly you articulate the emotional side of it.
Jonathan Cronstedt: Well, when you have 18 months of being out of work and the best way that I can describe it is Harvard Business Review has an article that very few people have read because nobody wants to dive into this journey until you're forced to dive into it. But the article says, “Congratulations. You sold your company. Be prepared for depression.” And I was always like, “No. I mean, come on. I did what I got into business to do.” Like, you know what I mean? But what you begin to realize is, all of a sudden, you're a dog catching a car and you catch the car and then you're like, “What do I do now?” And I think that that's the thing for most entrepreneurs that at some point and Sigmund Freud said this, "At some point, you will look back on the days of struggle as the most beautiful times.” And I can say that with absolute clarity and certainty after 18 months of living in that, is that the journey, the purpose, the customer transformation, the impact, and opportunity to change, however small the corner of the universe you're changing, that is what you all look back on and miss, and the bank account honestly won't matter.
Like, you'll reach a point where hedonic adaptation offers you nothing and you will have gone through enough levels of hedonic adaptation that you will know with certainty that another level up isn't going to fix it. So, you will find yourself looking back for what is and, I mean, bear in mind everyone listening to this like I don't mind being totally transparent and vulnerable. The reason Adam and I are on this podcast is I hit him up and I was like, “Dude, I remember we were at War Room. We're talking about some stuff. I've seen all of your content out there right now about this Retention.com thing. What's going on? What are you building? I've never seen you so excited.” And I reached out, number one, to say, “Rock on. So excited to see the growth.” But I also reached out. I was like, “Dude, tell me about this transition.” Because now 18 months post exiting Kajabi, I'm like, “I have way too much in me to just do nothing. I can't golf. Like, if I was golfing by the time I got to the ninth hole, I'd be trying to figure out how to sell golf clubs and sh*t to all these guys that are really in love with this sport.”
Like, I'm not a hobby guy, so business is very much what I love the most. And being able to find that journey of purpose and customer impact is without question the coolest thing in the world. So, if you have it and you're wondering, "Well, where's the success? Where's the money?” it's going to come. But believe me, after the success and money comes, you're going to be missing and focusing most of the time the customer impact by far.
Adam Robinson: I mean, this is so awesome. I'm just like, thank you for coming on. So, I have so many things I want to ask you. The first thing I'm going to start with is, I don't remember. Maybe Roland was interviewing you. I don’t remember who it was but somebody was like, “If you're about to hit the phase that you're like, ‘I'm going to scale,’ like, what would you start doing now?” And you said, which this was the first thing that got me moving towards this founder brand posting on LinkedIn, doing all this podcasting and sh*t. So, you're like, “I would be posting on LinkedIn consistently about why you should work at my shop.” In like just that sentence, it like took a while for it to sink in but then it started like connecting to all of these other things that I heard. Like, okay, when you're like a 10 million, when you're like a $1 million guy, it's about tactics. When you're a $50 million guy, it's about strategy. When you're $100 million guy, it's about people, right? So, like, can you, A, talk about that? Just talk about that for a while. Like, did it take you a while to learn that lesson?
Jonathan Cronstedt: Well, it definitely did and it came out of really, I mean, f*cking it up. Like, it's one of those things that like if you think about any business owner today, especially in the wake of the great resignation or even worse than the great resignation, the quiet quitting, and quite frankly, all of the numbers aren't quite quitting and great resignation as scary as they are about employee engagement, they're woefully underreported because nobody wants to indicate that, yeah, I actually hate what I'm doing that much. And I think what that says to me is if you look at great resignation, you look at quiet quitting, there's not a company that people right now are wanting to quiet quit that doesn't have a mission, vision, and values. Every company on the planet that's big enough to deal with any of those issues has mission, vision values. So, we're confronted with this giant, "What are we going to do with this mess?” where the thing that everyone thinks is going to fix it isn't doing its job. So, you have this mission, vision, values that's supposed to enroll your team and get everyone rolling in the same direction. They get all excited about it. We have a bajillion books written on this, and yet here we stand with the most disengaged workforce on the planet. Why is that?
And the reality is because most mission, vision, values today are, at worst, done as a push mechanism, basically from the top, your employees in this company, we're going to ram this down your throat, which guarantees they're not going to give a sh*t about it at all. It doesn't matter how great you think your mission, vision, values are, if you're jamming it down their throat, they're for sure not going to care, and that's the worst case. The better but still really bad case is you crowdsource it with your existing team, hoping to get something that is super fulfilling and motivating. To you as the owner, you stood out there, took the risk, built this thing, and you're hoping to now crowdsource buy-in from a group of people that are already there, that are all bringing with them different family situations, personal situations, worldviews, all of that stuff. So, now, worst case, getting one nobody cares about, ram down everyone's throats. Bad case bought in, co-created, crowdsourced with your team, and as a result of making everyone on your team happy and bought in, you've now diluted the purpose that you had when you started it. It's no longer exactly why you're doing what you're doing and who you're doing it for. Both of these things are terrible.
Now, if you take the opposite approach that Adam was talking about, which is a pull methodology of putting your purpose, your vision, your values on display for the universe, and having people say, “I want to be a part of that.” That's the way that mission vision values empower people to go beyond just the paycheck because they're opting into a universe and they're opting into that universe based on what they know of it. Like, to think about it in a random metaphor way, if I was going to go join Yellowstone after watching the first five seasons of Yellowstone, I know what it looks like to be a cowboy on John Dutton's ranch. I know what I'm going to do. I know how I'm going to do it. I know the bar fights I'm going to get into. I know the guns I'm going to carry. I know everything about that. But at no point in that show did John Dutton tell me the mission, vision, values of Yellowstone and jam it down everyone's throats other than, you know, "Hey, keep the land together.” He also never did a workshop with everyone on Yellowstone of, “Hey, let's co-create our mission, vision, and values.” It's just there on display and people get to choose to opt-in or opt out of it.
To me, that is the single greatest leverage point of getting amazingly talented people because you're constantly putting out there, “This is the world I have. This is what matters in this world. These are the rules by which this world operates and these are the people that we are trying to benefit in this world. You want to be part of that. We want to talk to you.” It's a completely different level of buy-in, and it's the exact opposite of the way that every company is approaching it today. So, I think that it does multiple things. Number one, in the early stages, it keeps you as the founder honest. You're going to be transparent about your journey. You're going to talk about the good, the bad, and the ugly, and you're going to share the things that you're learning, which you think you're doing it for everyone else, but really you're doing it for yourself. You are literally codifying your lessons in a way that when you write them, you're not going to forget them. You know, the shortest pencil is longer than the longest memory. And as a founder, you are going to learn so much so quickly that if you're not cataloging it, you will not remember it. Like, I was smarter 18 months ago about my journey than I am today, which is why I am working on a book because I'm like, “Man, if I don't get some of this somewhere, I'm going to forget all of it.”
So, for you as a founder, the early stage looks like it's for everyone else, but it's actually for you. It's for you to sharpen your presentation, for you to clarify your mission, vision, values, for you to get better at presenting what you do to the world. In that middle tier, when you're getting now your true fans, your individuals that are on the same page as you in the same book, wanting to be read by the people that they want reading it, they're going to be excited. They're going to be loving the early stage. They're going to be loving the messiness, the hypergrowth period. That's going to be something they're going to be signing up for. And God willing, they will be the people that then move into the scale and beyond stages with you assuming they have that appetite. And that is something that at Kajabi I would say was a big learning of ours is we wanted more for our team and at times they want it for themselves and it prompted us to over-promote and over-title. We can talk about my screw-ups later.
And then as you move past this middle tier period, continuing to build in public is designed to now become a very leverageable owned media asset or earned media asset that you now can point to whatever it is you're doing, whatever the campaign is of your company, the mission, anything that you want to draw that attention to. You built this following up over time, everyone knows what you're doing, who you're doing it for. They're excited to have a view into that. And the snowball of talent attraction only gets bigger and bigger and bigger. But if you think about it in the most summarized fashion, it's meant to be a pull methodology for mission, vision, values to fix the issue that everyone is experiencing today because you all have the company owners that are like, “I don't get it. Why are my employees so disengaged? We have a mission, vision, value.” Well, how did it get created? And you know, by the way, if it was created in concert with your whole team, are you as the owner still excited about it? Because if you're not, you're not going to continue hard-charging, taking the risks, leading the team, all those things.
So, that's what prompted, Adam, that desire of like, hey, building public, if only to avoid the giant fees of recruiters for when you need talent, that's the self-serving economic angle but there's also a whole lot more foundational elements that, in my opinion, doing this in public fixes.
Adam Robinson: I mean, that was incredible. That could have been in a book right there. I mean it.
Jonathan Cronstedt: I'm glad you're recording this because that's actually the first time I said it that I've never actually… It's why I'm such a terrible guest because if someone doesn't ask me a question and someone's like, “Hey. Be smart. Tell people smart things.” I'm like, “Somebody asked me something, please.”
Adam Robinson: So, I have three or four things to say about that. One, I just want to go into some tactical stuff. Because when I heard that, I'm like, “I don't have time. Where do I even start? I am not this guy who publishes.” One thing I've heard over and over again, and I can f*cking tell you it's true because I went from zero piece of content created to now it's 26 per week that I'm doing in a three-and-a-half hour period. And I have a team that is repurposing it across all the platforms, wherever. But I sit there, so I type-ish videos that I'm going to make and then I sit down on Monday morning and I make six of them and I do one of these interviews a week. And then there's just a team that like publishes and repurposes, right? But that's huge. You don't have to start there. You know, start with some or like if you can afford to pay $5,000 a month or something, there are guys that are very good at posting on LinkedIn. They know your voice, they know your content, they know what you're trying to achieve, and they can just make it work and they can grow your audience. So, that was just tactical thing number one.
Tactical thing number two, if you want further inspiration on why you should do this, read Founder Brand by Dave Gerhardt. It just…
Jonathan Cronstedt: Can't say enough good things about that too.
Adam Robinson: To me, I’d had people tell me, “Oh, you should go tweet.” But like, dude, I know the game. I’ve been at this for a while. I am not just going to go compete in this arena with LeBron James on Twitter with no followers and no idea how to play that game. Absolutely not.
So, it took me a while to where before I internalized this notion that right here, right now, in today’s world, there are 1% of engaged LinkedIn members are actually content creators. So, similar to Facebook and Twitter as well, there’s a dearth of content being created on LinkedIn, so it’s a great environment to do that. And five years from now, when people see it working for guys like you and me, everyone’s going to be doing it. We’re going to have to pay to reach our audiences, whatever. But for right now, that’s there to be had, which is another thing that’s interesting.
A question I had for your opinion, I know what I think about this, but it just pertains to my own business. Like I’m telling you this yet. So, I’m going to create my work in public as a show. Literally, I have a showrunner director, series editor, and clip editor for social media called Billion-Dollar Challenge, 44 episodes throughout this year. And this woman who’s running the show, she’s following the emotional journey of actually being in the middle of all this because it’s just the biggest, you have changed so much in ways that you didn’t know is all that you were describing earlier, right? And it is so invigorating.
And I know being incredibly forthcoming with financial information is just viral. Like people that can’t believe you’re doing it. And especially you make this outrageous call, you’re like, “I’m going to grow to 50 million by the end of the year. I’m going to be super powerful. I’m going to show you everything.”
Tactical, financial stuff. I’m not worried about getting copied because we actually don’t have any direct competitors right now. And it’s going to take people at least a year, a year and a half to catch up, at least that’s what I’m telling myself. I think, otherwise, my position would be you shouldn’t be worried about your competitors anyway because you’re building a moat with this. That’s kind of what I think, but I want to ask your opinion about somebody here who is working public stuff, like how revealing should you be? I literally just did a video that was like my QuickBooks account, right?
Jonathan Cronstedt: I could not agree more because if you really think about for a moment the idea of competitors, the idea of our secret software sauce, whatever it happens to be, we’ve always lived in a world where anyone who wants to build you probably has the cash to build you if they wanted to. Like, if Microsoft woke up tomorrow, “Hey, we’re going to build this thing.” Yeah, no problem. They’re going to build it.
So, the idea of a competitive advantage being some secrecy element, very rare. Unless you’re operating in a world where intellectual property, whether it’s patents or medical formulation, I mean, there’s worlds where this may or may not work, but let’s just talk for our world in software, e-comm, those universes. I think that what you’re keying into is the only sustainable advantage in any business, and that is culture and community. Those are the only two things that are not duplicatable, that are not cookie cutter, code is code. If someone’s got 100 engineers and you’ve got 10, they probably can build an element of what you’re building from a functional level.
But today, authenticity is currency. I’m going to choose Retention.com because of who Adam is and what Adam is building and what that company represents. I’m going to stay with Retention.com for what Retention.com does for my business. But make no mistake about it, every buying decision we make is an emotional decision with logical justification. So, if I identify with that culture and community, I’m going to choose them. Whether I stay, now that’s on the product, that’s on what does this do for my business.
But the initial portion, that’s very much going to be who do I feel like when I’m engaging with and desiring to engage with this platform, software, founder, whatever, that’s all going to be on that community side. And I think it’s something as well that the idea of will someone copy me, I mean, we’re in a world today where I think the VP of marketing over at HubSpot or the CMO said there will only be two businesses a decade from now, businesses that are leveraging AI and businesses that are out of business, that the bullsh*t social quotables and stuff that is useless, unoriginal pandering-type stuff for likes, that’s dead. Like a computer will be able to make that today, tomorrow, any other day.
So, how do you win? And you win by what you’re talking about, Adam, exactly, which is how can I be more authentic? How can I be more out there with what I’m doing? How can I be creating a culture where it’s not about an apple-to-apple product? It’s a culture that people want me to win because they know who I am, what I stand for, and who I’m doing it for. That to me is the ultimate advantage that the brand will always be far more valuable than the software.
I mean, it’s the same reason why you go to Costco and there’s Kirkland signature everywhere, but Kirkland signature hasn’t taken over those shelves in any other store other than Costco because Kirkland signature isn’t a brand, it isn’t a culture. It isn’t something that people want affinity with. It just happens to be the same stuff in a different non-branded bag.
And if you look at that example as it applies to e-commerce, it applies to software, as it applies to anything that can be commoditized, the difference is how does that brand make me feel? Why am I choosing it? And that all comes down to that authenticity, culture, and community that you’re creating. And I mean, I can’t wait to have a front-row seat for this show because, I mean, I know exactly how it’s going to go. It’s going to be frickin amazing. And I think you’ll probably find that a whole lot more people are going to be like, “Well, sh*t, I want to be that.” Like you’re sort of taking it to the next level.
Like you look at Nathan Barry when they were doing their ConvertKit build in public, their dashboard of all their metrics was always available, plug in, and take a look at it. He’d send out an email every now and again. That was like 1.0 of building in public. Like, I’m going to tell you what happened in text form. You’re now saying, “I don’t actually want to just tell you about what happened. I want you to watch it happen. I want you to see all of the interactions. I want you to see how the sausage is made.”
And I think what you’ll find is it’s going to be incredible because, in a way, I hope your show scares away people that shouldn’t be entrepreneurs anyway, that it scares away the people that think that entrepreneurship is your two-and-a-half-hour morning optimization routine and your three hours of social feeds and video consumption and just all of the stuff that it’s just like, that’s not it. And it’s darling that you think it is, but if you think it is, you and I would both be better served if you find a good job that maximizes your skills and you will be much happier than you will, engaging in entrepreneurship the way that you think it happens. Your show is going to show them, not every day is great. Your show is going to show them the days of figuring out how to make payroll and the days of do we spend it on this ad campaign or that ad campaign or that IRR, or how do we allocate these resources in the journey. And did we have some things go our way? Did we have some things not go our way? Did our app crash? Did we upset somebody, like all of the real stuff?
But for those people that are watching it, it’s going to give them a tremendous amount of permission because the moment that you’re like, “Yep, here it is, it’s all here.” The good, the bad, the ugly, what we’re doing right, what we’re doing wrong, all that’s going to do is give other people permission to say like, “Oh, you know what? This is really authentic and it’s real. And I can do that and I want to do that and I want to do it the way he’s doing it.”
And what I also love about it is and what I think that you’ll find and I think you’ll agree with me on this, the people that everybody wants to listen to are oftentimes just doling out mental masturbation, just stuff that has no value, but it’s exciting to consume. It’s my 37-point Facebook ad and it’s like, oh, okay, that’s going to get a ton of engagement. That’s like, but that’s not really where business happens. I mean, if you look at all the people that are sitting in rooms trying to figure it out, listening to talks, reading books, listening to podcasts, we’re all drawn to this quick-fix certainty thing.
And really what drives the business forward are those fundamental strategic shifts that inform all of those tactics because if you’re doing all of the tactics, but you have a product that you’re not going to admit it too, you’re not going to win. You might be somewhat successful for a certain period of time, but you’re definitely not going to win.
Adam Robinson: Yeah. I keep saying this is just so awesome. So, just listening to you, I mean, not rant about this, it sounds like you think like if you were about to scale, this would be an instant institutional imperative for you to figure out, maybe not today, but like, get on a trajectory to have this media operation humming in six months. Like, make f*cking do that, right?
Jonathan Cronstedt: I cannot think of a more multi-faceted, impactful move than doing exactly that. You are going to find out from members of your community or future members of your community. Do they care? Does it resonate? What actually drives results in your product versus what you think drives results in your product? Spoiler alert, it’s probably not what you think because you’re probably too close to it. It is the greatest litmus test of anything and everything you will do in your business and it’s available for you. All it takes is effort.
And I think that the funniest part is I’ll meet entrepreneurs saying, “Oh, I don’t have time to build in public. I don’t want to build in public. Well, how’s business going?” “I don’t know. We spent a hundred grand in Facebook ads last month.” It’s like you’re totally okay, just YOLO in six figures on an ad campaign, but the idea of writing a post the day before you sign off is a bridge too far. Like, you can’t be serious right now, right? I mean, it just basically, and those are the part where it’s like that entrepreneurial junk food of like, oh, no, no, what deal? Run the ads? Let’s go.
And it’s like, okay, but that’s not where the insights are. That’s not where the wisdom is. That’s not how you’re going to win. That’s you just doing the thing that you think is exciting, that gives that feeling of risks. But really, it’s just– and I’ll give Tim Ferriss credit for this, but his quote of busyness is the new laziness, that busyness is simply a symptom of undisciplined thoughts. And what I like about building in public is it doesn’t allow you to be undisciplined because if you’re actually building in public, you’re going to get tired of writing posts every day of yeah, didn’t do anything today. Played a lot of Call of Duty. Just still hoping for the best. I don’t know, sure enough, woke up Monday morning, you’re covered in Cheeto dust again. Really can’t wait to change the world.
Like, I mean, if you’re really, truly authentic, it becomes self-correcting. You can’t help but succeed because you’re the one accountable to yourself every single time you talk about it. And hopefully, if you’re full of sh*t and you’ve been lying about it the whole time, eventually, you’ll get tired of lying about it. You’ll stop writing those posts about how awesome everything is when really, it’s not. To me, it’s just that ultimate crucible of bringing the company, the culture, the vision, all of that stuff into stark, objective reality. And it allows you to engage with your haters, which, quite frankly, is the most you will ever learn about anything in business.
The most I ever learned about Kajabi customers and the most I ever learned about our failures as a company was taking a step back to not get triggered and then actually having a dialog with someone that was really angry at me at that moment. And that was when I realized, wait, hold on. For me, this is one customer in a $100 million company. For them, our tech stack is their whole stack. And our tech stack is not just a software application, it’s rent money, it’s groceries, it’s car payments, it’s kid’s college, it’s whatever it happens to be. And once you understand that that’s what’s coming through this interaction, it completely changes how you structure, how you support, and how you build for somebody that’s in that mode on your application.
Like, I mean, I had a good buddy of mine who owns a large enterprise email autoresponder company, and he’s like, “Man, your growth is incredible. Like, I wish I could get that kind of growth.” And I was like, “Yeah, but let me tell you what comes with it.” I was like, “When your app goes down or the emails don’t go out on time, what happens?” And he goes, “Well, man, if I can get 5% off next month’s invoice, like they’re thrilled.” And I was like, “Yeah, me, when our app breaks, I’ve got pitchforks and torches outside my house within 45 minutes and the entire world that I’m in is ready to lynch, like whole different deal.” And he’s like, “Oh, that does sound stressful.”
Adam Robinson: Right.
Jonathan Cronstedt: So, that’s where I think that, again, why you’re doing it and who you’re doing it for truly is the greatest foundational shift you as an entrepreneur will make because absent that, all the rest of these headaches are things you’re just not going to have the energy to deal with.
Adam Robinson: Yeah, so media brand is a must-do. You mentioned, you thought the only two real moats are that basically building in public and the authenticity that comes along with it and communicating for the purpose of full recruiting, love all that. And by the way, I think we can talk about some other stuff that comes from it in a while because it’s just all sort of just, oh, and another– I’m jumping around all over the place. The other execution tactic I wanted to say on this founder brand stuff, something that I’m proud of myself that I thought was rather clever, was like, I’m doing all this stuff. I put a link that says podcasts and then lists these three things. One is Ten Years in the Making, which I call this podcast because I respect the game so much. Every overnight success is 10 years in the making. Almost 10 years to the day from when I decided to get into the game, I’m like on this scaling thing that you’re describing. Fascinating, right? The second one…
Jonathan Cronstedt: By the way, Adam, congratulations on being just another overnight success.
Adam Robinson: Yeah, exactly. So, the second one is the work in public link, and it just kind of takes them to the YouTube page on me just showing people what I’m working on. And that’s obviously going to get very– that’s the one I’m turning up the most by hiring all these people to make it into a cohesive narrative, right?
And then a real media brand rather than just like me getting the most, but I think the first step is doing what I’m doing and just getting used to creating the content because there’s something real to that. Like, I can now– it’s not hard for me to crank out five pieces. When I started, I’m like, what– it’s just weird. It’s a muscle, right?
Then the third one, which I think every CEO should do, regardless of whether you decide to go all in on this or not, is we went from six full-time employees to knowing we wanted to hire 30 before the end of the year in October. So, I was just saying like, how is anybody going to get this? The three had mission, values, vision communicated to them even on this push effort, right? So, I created 11 five-minute videos that are like, what’s going on today? Where did we come from? What do we do? What do we think about work-life balance and remote work? And what’s our path to 100 million revenue?
And like, basically, everything that I get excited about when I think of what we’re about to do. So, when we got a warm lead from the recruiter that was running it, she would send them this link and say, “Adam created one five-minute video. Just watch it.” But it’s a playlist of 11 and it’s me talking for an hour about this opportunity that I’m so excited about, right? So, the right employee watches it all. They connect immediately with the mission. They get on the next interview. They are selling. You know what I mean? Like, they are so done. They’re like, how quickly can I sign this contract? So, like, I think that’s a way to hybrid it. You know what I mean?
Jonathan Cronstedt: Yeah, but like the effect you’re creating, though, if you think about it, let’s flip it for a minute. So, you’re an employee. Recruiter comes to you. You know the recruiter gets paid on placing you anyway. So, the recruiter just really wants to get you into this new gig. As an employee, I would guess the majority of that feeling’s always going to be anxiety. It’s like, what am I getting into? What’s the culture really like? How does the business operate? How are they on work from home? How are they on parental leave? How are they on all of those aspects of a business to be able to hear that directly from the CEO founder and to be able to hear it in a way that it is now memorialized so that if you’re ever not representing that? He’s like, “Hey, Adam, I’m going to need you to go back and watch that video.” You said yes and uprooted my life and family to doing your game because you had this video that I kind of don’t feel like we’re sticking to.
Those kind of things, I can’t overstate the value and the camaraderie and the trust that it in genders when you’re willing to be upfront about that, because I think most of us as business owners are always guilty of romancing an employee into saying yes without ever really telling them what they’re actually in for. It’s like, no, you don’t understand. Here, we’re in our little walled garden. Everything is perfect. Everyone is perfect. We are the perfect company. Dear God, please join us because we’re just so good. You can’t lose.
And that’s not true. And every employee knows that it’s not true, but we still give that impression. And then what we really have is we have a hyper-growth scale-up serving the top 1% of 1% of e-commerce entrepreneurs. And this person thinks that they just joined a company that’s just chill and hang out, clock in when you need to. No big deal. Get your check. It’s sort of like a retirement program, but it’s a job and it’s like, no, it’s not that. So, that’s where having people be able to opt-in and get a piece of that culture is so critical.
And it’s one of those things that it’s like most people that do that, I can hear the objections in the back of my head about why they don’t do that. It’s like, oh, well, no one will watch that. Well, guess what? If they don’t watch it, why do you want them in your company? Like, wait a second, you mean to tell me they can’t watch an hour’s worth of videos to choose their next career path? And you’re still selling them on why you want them in the company. Like you’re insane. This isn’t a box to check. This is a future liability and a future problem if you ever need to do downsizing, like you’re basically saying, I want to make it as easy as possible for them to get into the company. Terrible idea.
By the way, when you put out those videos, what was the reaction like in the interviews that you placed afterwards? Like if you were to look at before videos…
Adam Robinson: Luckily, I was like we have to do something. Otherwise, there’s not going to be a vetting that happens because we have to do this so quickly. VP sales starting February 1st, he was a CEO of another company and he took four months to unwind it just out of respect to them. He was like, “Dude, I made the mistake of watching those when I was on vacation in Mexico. Did not sleep.” And like this guy is the best guy that we could have gotten for that role, right? So, like…
Jonathan Cronstedt: That’s how you know, by the way, and that’s where it’s so frustrating because everybody wants the PDF download of how you built this thing and what you just said is a pearl of wisdom that most people would miss. But the fact that he said, “I made the mistake of watching this while I was on vacation,” it means that you created a vision and an environment and an opportunity so compelling that he literally couldn’t stop thinking about it while he’s supposed to be unplugged, like that nails it. Absolutely nails it in spades.
Adam Robinson: Yeah. I mean, the feedback has been fantastic. I mean, obviously, we ended up hiring the people that were really excited about what I said there, which is the whole message that we’re talking about. So, I was kind of like on an execution front, it’s like, okay, it takes a while to get this media thing going, how I have it now. And I think it’s a large ask to do the next step that I’m doing. But that’s crazy. No one’s ever really done it before in that way.
It’s spaghetti I’m throwing against the wall. That thing that I described, every CEO should do and every CEO should have their recruiter on a warm lead, feeding them with that exact line. It’s like, hey, Adam made one five-minute video, just take a look. And then they have this rabbit hole to go down. And if they go down it and they’re not excited, you don’t want them.
Jonathan Cronstedt: No. And what you’re learning and what I think everyone eventually learns, they either learn it by force or they learn it by choice, the people equation is one of the most powerful equations, but it doesn’t unlock the way most people think it unlocks. Most people approach the people equation from a hiring perspective of how do we interview, how do we get the right people, how do we get them on board, and then how do we struggle to keep them? How do we get the mission, vision, value, all of those things?
And in my experience, that to me is a flawed system and it’s something that, quite frankly, is too heavy of a lift to ever actually work. Like every entrepreneur knows, people are important. Everyone. You don’t need to read a book to learn that people are important and that they unlock amazing things in business.
But what I don’t think anyone actually pays enough attention to is people don’t join companies for the reasons you’re selling them on joining your company, most often. People join companies because they’re good people and they want to join good companies. Like having poor talks about this and powerful, the Netflix culture book, and the reality of it is all A players care about is doing work they care about with other A players.
Like if you think you’re going to trick an A player in the coming because you’re giving them more money, if you think you’re going to get an A player coming in because you’re jamming your mission, vision, values down their throat or you tricked them in the interview process, the only thing that will have an A player stay with you is are they doing work they care about in a company that has thought through what makes a great company. So, do you have the commitment to your product? Do you have the commitment to the experience? Do you have the commitment to the systems that their job lives up to?
And if you do, they’re going to be so excited to build and optimize and improve those things. But if you as the owner have been lazy or derelict in your product, in your experience, in your systems, and you’re now hiring people as Hail Marys to fix bad systems, there is no faster exit path for an A player than to see you got sh*t systems, you want me to fix them. So, you want me to fix your problem? No, I’m out. I’m going to go find a company that is going well that I can make go even better. I’m not going to go fix your dumpster fire just because I’m talented, won’t do it.
Adam Robinson: Amazing. Can we do another hour in a couple of weeks? Because, like, I didn’t get to anything.
Jonathan Cronstedt: Absolutely. I want to hear more about your show. I’ll come back just to see the episodes.
Adam Robinson: Yeah, I didn’t get to anything I actually wanted to ask you because I just felt like we’re both so passionate about this one thing that you literally put in my head and I just wanted to go deeper on that. And I’m glad that I did because you articulated a lot that I think was like instinct, but I didn’t have words too. And now, I think for the explanation about why I’m going to do what I’m going to do for the next 18 months, I’m literally just going to send people this episode. This guy explains it better than I can.
Jonathan Cronstedt: And I cannot wait for you to put these episodes out there and just watch what happens. I mean, it’s the kind of thing where all of a sudden, you see it becoming a case study in business schools because they actually have all of the iterations in real time. It’s not Built to Last, Jerry Porras, researching a company 20 years at the end of their journey, subject to revisionist history, and the best recollections of things which don’t get me wrong, great book. You should read it if you have it, but that’s very different than a real-time study of how a business is built versus the business is now subject to that survivorship bias of it, one, and now we’re trying to deconstruct it. When in reality, the majority of the learnings that are most impactful for you are all the businesses that didn’t make it and you’ll never read about. There’s way more learning then than there is in the one of that.
Adam Robinson: Yeah, I have thought and said that it’s like, I don’t want to know about Warby Parker’s journey. That doesn’t do anything for me. Like I want to learn about all the other glasses guys.
Jonathan Cronstedt: That’s the thing to you. That’s the thing about this social media echo chamber. It’s like you want to just like shake these entrepreneurs, and they’re like, oh, I’m following this guy. It’s like, no, success is often a terrible teacher. Like, talk about the mistakes, the missteps, talk about the things that you assumed were true that weren’t, like those are where the unlocks are, not everyone parroting the same thing. It’s all about mission, vision, values. Like, okay, that’s great, gets a lot of tweets. It’s super fun. But did it work? Because if it worked, we wouldn’t have the most disengaged workforce of all time in all of the companies that have mission, vision, and values. But that’s not the part anyone wants to dive into.
So, I think your show is going to be awesome. I can’t wait to tune in. I’m going to be watching with bells on because I know all of the things you learned on your first iteration, which for anyone listening, the first generation was still really successful. It wasn’t what you wanted, but it was still really good, and now, it gets to be great. So, yeah, this show is going to shoot the lights out, man.
Adam Robinson: Well, thanks so much. I’m going to just hit you over email and arrange another time. This is so awesome. Thank you, Jon Cronstedt. And where can people…
Jonathan Cronstedt: Thank you for the opportunity.
Adam Robinson: Where can people follow you and listen to what you’re talking about and all that good stuff?
Jonathan Cronstedt: Well, just like any good influencer, I am nowhere and really don’t put out much of anything ever. So, you can find me at JCron.com, just J-C-R-O-N dot-com. Hopefully, this year, assuming my daughter stops dragging me into the playroom, that will evolve into more social media commentary as well as a book. But right now, you’re going to follow me in hopes that someday I say something brilliant, so.
Adam Robinson: Hey, well, you didn’t disappoint today, man. I mean, this is so awesome.
Jonathan Cronstedt: My pleasure. And it’s such an amazing opportunity to see the evolution of you, the business focus, who you’re serving, the transformational impact you’re having. I genuinely can’t wait to watch because, like I said, as somebody who’s been through that movie, I know how your show is going to end, and I’m really excited to have all of that context watching the journey because when the conclusion inevitably takes place, I’m going to be excited for that too.
Adam Robinson: Rock and roll, man. Thanks a lot.
Jonathan Cronstedt: You got it.
Today, I’m talking with Jonathan Cronstedt, who took the e-learning software giant, Kajabi, from a $6M revenue business to $100M+ and a $2B valuation in just 5 years.
In this episode of Ten Years In The Making, we’re talking about the realities of scaling.
When do you know it’s time to grow? What are the hidden downsides? Is it always the right choice to scale?
You’ll also learn:
✔️ Tactics and strategies for hiring amazingly talented people
✔️ Why building in public has outsized impacts for startup founders.
✔️The push/pull dynamics of a company's mission, vision and values — and how they can demotivate or empower employees.… and a whole lot more!
Key Takeaways from Jonathan Cronstedt
- When Jonathan decided to scale Kajabi past $6M ARR to become more than a lifestyle business.
- The uncertainty around scaling — and the question entrepreneurs should ask themselves before making the decision to scale.
- Is scaling a professional choice or a personal choice?
- How scaling a company can become your identity and eliminate a work-life balance.
- The challenge of pivoting from something that's working well in favor of something that could be great.
- Balancing the economic potential of a business with what’s best for you personally.
- The unexpected emotional downside to selling a business.
- The push/pull dynamics of a company's mission, vision and values — and how they can demotivate or empower employees.
- For founders building in public, how revealing and transparent should you be?
- Why Jonathan believes building in public has outsized benefits for entrepreneurs.
- The greatest foundational shift entrepreneurs can make.
- The value of being fully transparent with potential employees about culture and expectations.
- The questions founders can ask themselves when trying to attract top-tier talent.
Jonathan Cronstedt | The Biggest Reason Startups Lose Top Talent
Jonathan Cronstedt Inspiring Quotes
- “If you're choosing the labors that you want because that's who you are and how you want to show up in the world, the economic outcomes are going to be amazing whatever you decide to do.” – Jonathan Cronstedt
- “I can say that with absolute clarity and certainty after 18 months of living in that, is that the journey, the purpose, the customer transformation, the impact and opportunity to change, however small the corner of the universe you're changing — that is what you all look back on and miss, and the bank account honestly won't matter.” – Jonathan Cronstedt
- “The shortest pencil is longer than the longest memory. And as a founder, you are going to learn so much so quickly that if you're not cataloging it, you will not remember it.” – Jonathan Cronstedt
- “Every buying decision we make is an emotional decision with logical justification.” - Jonathan Cronstedt
- “Success is often a terrible teacher. Talk about the mistakes, the missteps, talk about the things that you assumed were true that weren’t. Those are where the unlocks are — not everyone parroting the same thing.” - Jonathan Cronstedt
- “Today, authenticity is currency.” - Jonathan Cronstedt
- “The only sustainable advantages in any business are culture and community. Those are the only two things that are not duplicatable.” - Jonathan Cronstedt
- Jonathan Cronstedt
- Follow Jonathan Cronstedt on LinkedIn | Facebook | Twitter | Instagram
- War Room
- Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets by Al Ramadan, Dave Peterson, Christopher Lochhead, Kevin Maney
- Steven Pressfield
- The War of Art: Break Through the Blocks and Win Your Inner Creative Battles by Steven Pressfield
- Dealing with the Emotional Fallout of Selling Your Business by Jeff Giesea (Harvard Business Review)
- Founder Brand: Turn Your Story Into Your Competitive Advantage by Dave Gerhardt
- Nathan Barry
- Built to Last: Successful Habits of Visionary Companies by Jim Collins, Jerry I Porras
- Warby Parker