454: How Founders Can Buy Back Time with Dan Martell of SaaS Academy

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2:42Hey guys, welcome back to another episode of The Founder Podcast. Today we're speaking with Dan Martell. He's the founder of SaaS Academy. He's founded multiple successful SaaS startups. And he recently launched a book called Buy Back Your Time. So if you want to understand how to get leverage, how to scale your business really fast and avoid burnout, then you have to listen to this interview. Dan's a super smart guy. He's very, very well respected in a lot of entrepreneurial circles. He's amazing when it comes to leadership and managing people as well. So Dan, I'm really excited to speak with you today.

3:17The first question that I ask everyone that comes on is, how did you get your job? Okay. How do you find yourself doing the work you're doing today? So I got a crazy story. I'll give you the short version because, you know, I want to get into the meat of our convo. But so what I do today is kind of software. So I run the largest coaching organization for software CEOs, but I've been coding since I was 17. But the way I got into software development is I actually got in a lot of trouble as a kid. like like sons of anarchy type style like like legit you know group home foster home crisis center high speed chases prison and i ended up in rehab and it saved my life at 16 17 i went through a program for 11 months that literally allowed me to build my self-worth and rebuild the trust with my parents that i'd lost and at the end of that program i was helping rick this maintenance guy I clean out one of the cabins.

4:14It was built on an old church camp that they donated to this place. And in one of the rooms in this cabin was an old 486 computer and a yellow book on Java programming. And I opened the book and something spoke to me. I don't know why, but I just like followed chapter one, booted up the computer. And within 20 minutes, I got the computer to say, hello world. And I thought, so whatever reason I thought it was like a computer genius, but, um, that's literally how I started, you know, growing up with a entrepreneurial air quote tendencies and then becoming obsessed and addicted, honestly, to writing code and software.

4:50And, um, I haven't looked back. Yeah. Wow. So you're a dev first and foremost. Yeah. For a long time. Yeah. So, uh, did you, you said what happened next? Like what was your first business? Well, this is always a fun question, right? It's, uh, I always ask people like how many projects or domains that they buy versus their business. Cause like those are two different things. So the first thing I ever made money on was actually this app I built. This is 97. So I come out of rehab and I discovered this little thing called the internet, which obviously turned out to be kind of a big thing. Perfect timing.

5:28And I built a CD burning tool that my friends would pay me 20 bucks. Cause the problem with it, if you had a CD burner back in the day, some people are like, what's a CD burner? is that they would sit on my computer to build their playlist. Cause you could put like 150, 200 songs on a CD. So I built this tool. They would download, it would synchronize with my file drive on my computer from all my MP3s. I've downloaded off Napster and in LimeWire and Kazam and all these different tools. And then they could build their playlist and then they give me 20 bucks and then I would burn them a CD. And that was like the first like thing I built on my computer that I actually got paid to do.

6:09But my first company was probably at 18, 19, like not too long after I built a vacation rental website for my dad. Initially, I kind of lied to my dad. My dad was like, Hey, I need this webpage for, cause he kept getting calls. He had a cottage he would rent out. And he asked me, he goes like, can you build me a webpage? And then I went online and I wanted to learn this new programming language called cold fusion. So I told him that to build a webpage, it was going to cost 600 bucks. And he's like, why is it going to cost 600 bucks to host a web page of my cottage? And I was like, it's just what it costs.

6:44The truth was, is I wanted to rent a server on the cycle one and one, one and one.com. And I needed that specific one that would run the cold fusion software. And so I took my dad's money and his project and built this vacation rental site, no different than VRBO, almost identical in concept, uh, in 1998, 99. And, um, and that was the first business that I actually launched. We called it a maritime vacation.ca. And the way I got customers was kind of nutty story is, and I didn't know anything about marketing or honestly making money on the internet at all. I was just a software guy. Um, and I told my buddy Dave about this idea I built, you know, the software that lets you create like a listings page for your, your cottage, your bed and breakfast in our area that we grew up in, in Canada.

7:39And he goes, Hey, there's this magazine that the government prints. It's like the tourism magazine. And on the back of the magazine is a listing of like, uh, all the bed and breakfasts and cottages for rent in the province. So I bet those people would want to pay you for one of your pages. you could build with that thing you built. And I literally sat there in like awe, immediately ran to my computer, got this magazine, paid my little brother, he was like four years younger than me, to add all of the contact information, the addresses into a Microsoft Access database. And I paid him like three bucks an hour and then created a form letter in Microsoft Word and literally sent out to people a blanket like sales.

8:26You would probably call it direct mail, but it was just like this page that said like, we're a maritime vacation. If you're looking to build a website for your bed and breakfast, fill out this application, which had all the details, send us$30 and three photos of your listing that we'll scan in and put on your, on your page. And if you want the photos back at an extra$5 and we'll, we'll ship them back after. And, uh, I sent out like hundreds of these. and I remember like maybe seven days after my dad came home and he like checked the mail and there was like a stack of envelopes and he just looks at me because you know obviously I grew up in a pretty I was a little mischievous and he just he just literally asked me like what did you do and I was like holy moly and we started opening up these letters because you know this is 99 98 people people had no problem sending 30 bucks in the mail in cash but they were full of cash and that was the first time I kind of made internet on the money from somebody that didn't know me.

9:26And I kind of joked that was the day that I went pro. Like, you know, there's like the day that you finally like quote unquote, make it for me. I, that was 18 with maritime vacation, even though it completely failed because a competitor called at the cottage.com kind of came in and absolutely crushed me. Um, it was an incredible experience. I learned a lot that was valuable to other people and marketing it. And that was a fun experience. So you've been in the game for a long time. 25 years. Yeah. Wow. So, you know, we were talking about this offline, you know, I was trying to do an interview with you seven, eight years ago.

10:05We never got there. But you've been typically known as kind of like the SaaS guy. So I'd love to know, you know, you have a really large SaaS academy and some of my friends have joined it and spoke very, very highly of it. I'm curious, what was your first SaaS business and how did you fall into SaaS? Yeah. SaaS was one of those things I think growing up in a world with a lot of chaos that the predictability of it just spoke to me. So back when I started, we just called it like ASP, like application service provider. like we would host the application there were hosted services we didn't even call it that i mean it's gone through this evolution of like i would say hosted solutions to web-based products to subscription to cloud to now sas is kind of the thing we call the category um the the first i mean i built a bunch of sas tools with my company spheric which was like the next company that um Well, actually, no, I did a hosting company that failed.

11:11I failed for seven years. Okay. Enthusiastically, this is what people I think don't know is like, I didn't side hustle these things. I was all in, like I would sit there and code 12, 14 hours a day. I would, you know, whatever I had to do. And so like I did the hosting company and that, and that failed because we had a bank as a customer. I almost got sued. So I got way over my skis on that one. And then my third company was a company called Spheric Technologies and we built enterprise portal portlets, they were called. So this is back when intranets, I'm dating myself. Some people were like, what is that?

11:49Well, it was big companies started customizing the homepage experience for their employees, right? You open up the browser and the default page would be their intranet, but then intranets got smart and those were called portals. I built SaaS products for Fortune 500 companies to integrate with their ERP systems. We're talking Siebel, Oracle, SAP, you know, BEA, WebLot, like all these different enterprise solutions. We built these subscription software tools that people would install inside their companies, but pay us for them in 2004. So that company, I mean, when I started it, I hired a business coach.

12:35He was an E-Myth certified coach named Bob. and um yeah he was the reason why i finally had success in business and that company sphere uh we almost did a million in our first year just shy and then we literally grew about 150 every year for four years um and i just i went with it and eventually we got acquired in early 2008 and that was that was my first kind of uh successful entrepreneurship experience and it laid the foundation for a lot of things afterwards. Hey, FounderFam, I want to talk to you about something super exciting. We're officially partnered with OmniSend, the email marketing and SMS platform built specifically for e-commerce founders.

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14:31But it's hard. It's super hard. Like it's super hard. Well, yeah. So what's interesting is in the book, I actually talk about what I call the three levels of trades. Level one is employee, right? Where you trade your time for money, which, you know, you can make a lot of money. The highest paid employee in the world makes over a hundred million a year. And that's Tim Cook of Apple. So it's not even like, there's no good or bad. It just is, you know, People trade their time essentially for money. And then when you go to level two, which is entrepreneurship, that's when you start to learn how to trade money for time, right?

15:06You hire an employee to buy back your time to then reinvest it in things that make you more money. And then level three is money for money. And that's where you learn the skill to invest in opportunities that have your money working for you. And I just got lucky that when I was 27, I read Rich Dad, Poor Dad. And I started to understand the quadrant he talks about and the investor element. And I just started investing my money. So what people don't realize is I have a portfolio, a pretty substantial portfolio of SaaS companies I've invested in. And that's what I do day to day. So I have SaaS Academy, which is the largest coaching organization for SaaS CEOs in the world.

15:53We have, I mean, over a thousand active clients. We've coached, I think 4 ,000 people at this point. And then I have high-speed ventures and high-speed ventures is my kind of personal family office where, you know, we'll evaluate buying companies. We invest in companies. Now we're considering putting together a fund to actually invest in some of our earlier stage companies that we coach. Um, so yeah, I kind of a while ago decided to ask myself, and it's why I wrote this book is, you know, what would my perfect week look like? What kind of work would I be doing? What's important to me at this stage of my career?

16:33You know, what do I, what do I want my life to stand for? And I just like, to me, I'd rather support CEOs of SaaS companies and either through coaching or investing and then, um, you know, just work, you know, cause I have two young kids, like have a little bit more, I wouldn't say worth like, like work-life integration. That's kind of what I'm optimizing for. So I think that especially doing a venture back company is completely different. A lot of my clients I coach are bootstrapped. So I think that, but again, I, I now hire CEOs to run companies. So I'm not, I don't need, again, it's the whole buying back your time.

17:08At some point you go, look, I love being a CEO, but I don't want to be the CEO of this company. I can just hire somebody to run it. Yeah, no, you mentioned work-life integration. I like that term a lot because, yeah, I think that's what life is all about. I read this tweet storm by Sahil Bloom and he does some great stuff. And one of the things he said was like, the most important decisions you have to make. And one of the most important decisions you have to make, like there's a few of them, like who's your life partner and one of them is who you work with and then the other one is what you decide to do with your time in terms of work and like yeah like work doesn't have to be something that you have to you know balance that you do too much of like how do you integrate it into your life that you have like an incredible life yeah i mean so it's funny because sahil and i were actually chatting yesterday nathan barry introduced us for i think his new book he's working on and we absolutely share the same philosophy.

18:15The way I do it is I think there's three things you need to integrate work and your life into a rhythm. First thing you need is a vision. And I actually cover this in the book because I realized when people are trying to understand the value of their time and buying it back, and then what do I do with the newfound time? Without a clear vision, it makes it really hard to make decisions today. So I always coach my clients to look out at least 25 years. And in the book, I call it the 10X vision map. So once you understand on these four dimensions, I share what our life looks like, then you work backwards to what would be the next 12 months directionally accurate decisions, both the quality of life, how you want to show up as a parent, how you want to show up as a leader, the empire you want to build over the next 12 months.

19:10And then you then come to the week cadence. Because I think that's like, if somebody says something's important to me, I just ask them to see their calendar. Because usually they will, whether they like it or not, where they allocate their time is a clear indication to what's important to somebody. So to me, I always start with the rhythm in my calendar that's aligned with the 12-month goals, personal and professional, that's aligned with the 10X vision map so that I can be super intentional about today. So when it comes to work-life integration, because I have that long-term view and short-term view, I make decisions on a weekly, monthly basis, such as every week I have date night with my wife.

19:59every week I have a night off to go spend it with friends every week. I, you know, we have, uh, the full day is dedicated to the family. Usually go skiing right now. Cause it's winter wake surfing in the summer. We, you know, I work out every day. Like there's when you know, what's important to you and you actually add to your calendar, you like insert it as block time. You know, again, I teach us in the perfect week framework, you realize there's a whole lot of extra time to do other stuff. And then you don't get to a place where you're having to fix things. See, the reason why I got so intentional is because there was a point in my career where I was, I was moving forward really fast, but then I'd have to slow down to fix what I call emotional shrapnel, right?

20:42You have to apologize to somebody for missing something, or you gotta, you know, you gotta go to the gym because you put on 15 pounds because you were traveling too much or whatever it is. So like what I've decided is if I can be more intentional today, aligned with my goals, I can actually get more time long-term back because I'm not spending time fixing those things that I'm creating emotional shrapnel around because I'm kind of measuring twice and cutting once, if that makes sense. Yeah, it does. So in the book, you talk about how to scale your business fast. You help entrepreneurs scale a business fast without avoiding burnout.

21:17So I want to talk about that one because i experienced burnouts uh post-covid um the online education industry you know so found it like we we you know had a big big wave through covid and i didn't stop and you just work right like in melbourne we were like the longest city to be locked down it's like canada and australia were not not doing well during covid yeah i don't know why i didn't escape. I don't know. But anyway, so come out of lockdown and just experience this deep burnout. I never experienced burnout in my life. It was just such a crippling feeling. I used to wake up in the middle of the night, my heart beating really fast, this like crazy anxiety.

22:02And I didn't even want to go to work at times. And I worked through it. But I'm curious, have you experienced burnout? Is that, you know, and I'd love to hear how you've worked through it and And some of the things that perhaps you help guide your founders to not experience burnout. Because I think it's easy to get it fall into that. I really appreciate the question, Nathan, because that was my reality. 24 to 28, when I was building my company, Spheric Technologies, I only had one gear and it was all in. I didn't know any different. And because I'd failed prior, I was so scared to do it again.

22:37that once I started to get a taste of success or momentum, I was so scared of losing it that I just allowed my work to absorb me, to become me, my identity, everything, my relationships, what I valued. And I was engaged to a woman that for the most part put up with it. I mean, it was kind of, when I look at how I showed up in that relationship, it's absolutely embarrassing. and what happened was is you know towards the you know two and a half years i was into this relationship with uh this woman we got engaged i was you know we ended up buying a house together and um you know one sunday because i worked every day saturdays sundays but sundays i was usually home by noon and she told me you got to be home by 11 30 we've got to go my friend's having a birthday party and i went to the office and you know i look up i was in the zone i was getting stuff done and it's 1 30 and i free i'm like oh no so i like jump in my car this old volkswagen jetta and rush home pull into our driveway and i run in the house and i found her in tears in the kitchen and she's just beside herself and can't even breathe she's just you know and she just looks at me and she goes i can't do this anymore and she takes her ring off and she drops it on the counter and walks past me and goes and lives with her parents and that was that was the last day seven weeks before our wedding.

24:04And it was such a shot to my self-worth and my identity. Because as entrepreneurs, we say we're doing it for our families. We're doing it for our future. And it's a sacrifice today for that future. And I just totally had it backwards. So when you talk about anxiety, I mean, I got to a place where I felt like there was an elephant on my chest. I had to go see a therapist because I was having anxiety attacks. And he made me walk around with a rock in my pocket and would squeeze it. I mean, it's just... And what I love about the work I get to do today, that was the moment that I realized I had to find a different way to build...

24:43I think if I didn't go through that, I would never have written the book. I would have never found the tools to build the kind of companies I have in the way I have. And today, like, you know, I, in, in chapter two, I opened it with a story of one of my clients, Stuart, same scenario. Like he just, because he could do everything, he did everything. He had a background in finance. So he did all the bookkeeping. He taught himself how to code. So he would write code, even though he was like, you know, a team of like 20 people, he would still be in the customer support tickets and doing all this stuff.

25:15And, you know, 60, 70 hours a week wasn't an issue, but when you'd have to like do a big product release and sprint, like he went through and it required those 90 hour weeks. Like it takes a toll on your body and you don't even know it at the time. And he found himself in Disneyland. So they shipped the software at Christmas, this big release, they shipped the software. They, he decides I'm going to take my kids and my wife and her sister to Disneyland as a, sorry, I've been busy, but I want to like, you know, give you something kind of gift. And as he's walking in towards the magical kingdom, he has a full on, what he thought at the time was a heart attack.

25:54Um, and didn't want his parent, his wife to freak out. So it tells her, I got to use the bathroom. You go ahead, sits on a bench and summons help and goes straight to the hospital or to the emergency on site. And they, they realize it's not a heart attack. It's a panic attack. And he's telling me the story because I only started working with him probably seven months after that moment, because he just kept every two weeks, like he just lost his ability to work. It was almost, he explains it like he was like hung over, right? Like where he's tired and fatigued. And this is where I find a lot of entrepreneurs, right?

26:29When they eventually come into my world, you know, people that have adrenal fatigue, they have their body literally says, I don't want to do this anymore. And you don't seem like you're going to slow down. So boom, and they just drop it. So the short answer of how I help them is this framework called the buyback loop. And the buyback loop is based on a principle called the buyback principle, which states you don't hire people to grow your business. You hire people to buy back your time. So it's a calendar over capacity problem. And to do that, you need to figure out what your buyback rate is. How much can I afford to pay other people to do things so that I could, and this is where the loop comes in.

27:10The buyback loop is audit transfer fill. When I hit the pain line, I need to immediately go to an audit, what I call a time and energy audit. And we walk through their calendar and we figure out all the things that take energy from them, all the things that give them energy, all the things that are low cost to pay somebody else to do. And then all the things that would cost a lot. So I use a$4 sign symbols. $1 sign is low cost,$4 high. Then we take all the stuff that's red and$1 sign task, and we put it into a bucket. And that is the person we're going to hire next. Okay. We're not going to go hire somebody to write more code.

27:45We're not going to hire somebody to run a support department. We're not going to hire somebody to publish your social media photos. We're literally going to start with all the things in that bucket. And that's the transfer step. So first is audit, then transfer. And we, and I have a system that I teach people on how to get things off your plate in a way that you still feel in control, but that you no longer own those outcomes. And then the third step is to fill. And if you don't fill properly, then you actually don't create the momentum in the loop to go to the next stage, right? Most people don't get this right.

28:14Filling is one of three things. Filling is a decision to invest in either doing the thing that you do best that makes you money. So if you buy back 10 hours a week and you're a designer and you're getting paid$100 an hour and your buyback rate's only like$12, yeah, go do more design work, right? But if that's maximized, then you gotta go look at, where's the biggest leveraged opportunity? And I usually look at it through skills. These are things like strategy or know-how or acquiring knowledge, right? The other one is beliefs. A lot of entrepreneurs are stuck where they're at because they have a belief about the world that just simply isn't true.

28:51So they need to do some mindset work. That's my favorite part that I help founders with. And then the other one is character traits, right? You could be incredibly skilled, have a great view on the world, but are not consistent character trait, and you'll never create momentum, right? So that's the fill part. If you do that, then you get to go up the buyback loop to the next opportunity or pain line. Because the whole point is I want to teach people how to build a company they don't grow to hate. And I actually have proven through my own personal experience in my life and many of my clients like Omar, who I know you know at Webinar Ninja, where the more you grow, the more freedom you have in your life, which sounds impossible to many entrepreneurs.