Building smart, scaling right: Jason Cohen on practical strategy

0:01It's an intersection of what do you love to do and what are you good at and what the company actually needs done. which is big founders often forget because they just do what they want. And so I use that, and I know it sounds simple, but I do use that, and I have used that over time to make these very big decisions. Welcome to the SaaS Revolution Show, a podcast by SaaS.com. Here we interview SaaS founders from around the world who've been there and done that. They share the ins and outs of how they built their businesses, their operations, their path for securing investment, and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry.

0:44I'm your host, Alex Duma, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success. Welcome to a live edition of the SaaS Revolution show. I'm here in Austin, Texas at the inaugural SaaS.USA. Who am I? I'm, of course, Alex Duma, founder of SaaS. and I'm really thrilled to be joined by Jason Cohen, who is the founder of WP Engine. Welcome, Jason. Thanks for having me. Yeah, great to have you at the conference. So you spoke earlier, did a fantastic keynote, first time speaker at Sastoc, who's been watching a lot of your content for a number of years and you're a serial entrepreneur.

1:25Asides from all of that, who is Jason Cohen as a person? Well, I'm a dad. after selling my previous company, SmartBear. I was a stay-at-home dad for a few years before starting WP Engine. That's now a long time ago. That's now 14, 15 years ago. But I wouldn't give that time back for anything. And also, that's harder than making a company. I was about to say, what's harder? Stay-at-home dad or scaling multiple companies. Very, very cool. And you're Austin born and bred? Yeah, that's right. A rare breed. Well, great city you have here. Hopefully, this is the home, I'm sure it will be, for SaaStock for many years.

2:06And so, I think I slipped that in there that you are, I think WP Engine is like your fourth business or something like that. So, you're a serial entrepreneur. Obviously, there are many serial entrepreneurs there. But some people, after doing it once, won't do it again because it is bloody tough, right? What makes you keep going back and now fourth time and really, I guess, is WP Engine the biggest one? in terms of scaling? Yes, definitely. In WP Engine, we have 1 ,200 people now. It's 13 years old. We have over 200 ,000 customers. So yeah, it's definitely the largest by far. I mean, I think the reason I started, subsequent ones are the same as the first one and the same as a lot of founders, which is you just do.

2:47I don't know that there's a lot deeper than that. And people say things like, well, no one would want to hire me or I'm annoying and I have to do things my own way. Those things are all probably true, but I know a lot of people who are annoying and have opinions and don't start companies. So I think there's just something in a person that they decide to do that. And so why do you do the second one? Because you did the first one. I don't know. That's still there, whatever that is. How about some of the challenges that come with it? So I'm a first-time entrepreneur, and I certainly get my share of grief about working hard and not being present or traveling a lot and the strain that it can put on family on the one side.

3:25Have there ever been that conversation like, oh, no, Jason, don't do it again. or you've got a very supportive partner. I do have a supportive partner, but also my wife was an entrepreneur for 10 years as well. So she gets it. She gets it. And so in food, so a different place, but of course there's a lot of commonality in terms of the human aspect of what it means to do it and what that company means. An interesting fact is they did MRI studies of people's brains, and they had entrepreneurs who also had kids. What they do is they show them pictures of their neutral landscapes, and they see the brain in this sort of neutral state, whatever that means.

3:59And then they show pictures of their kids. Oh, and the brain gets all excited in a specific way. Whatever lights up when they see the pictures of their kids. Then back to the landscapes, brain goes back. Then they show a picture of the logo of their business. Not only does the brain light up, it's the same configuration as kids. So whatever that kind of mixture of emotions and attachment and everything, it's that kind of thing. So when they say it's like your baby. It is in your brain kind of like that in fact. So I think I bring that up just to say that that's science and, or it's like, let's say it's objective and why it means so much.

4:34And it's not just a job and it's so it impacts everything else. Yes, it does. Just like having kids does that. And you would do anything for them. Same kind of a thing physically. Yeah. I don't know if you know, Jason, or you probably shouldn't know this, but I have the Sassock logo tattooed on me. So every day after I shower, I'm smiling because obviously I'm seeing one of my kids on my shoulder. It makes it hard to sell too. And so you mentioned WP Engine has 1 ,200 employees. What does WP Engine do? I guess kind of why did you found the company? Well, we're now the largest managed WordPress platform, meaning all the tools to build WordPress sites and the real-time platform that serves them.

5:16We serve millions of websites. We're a top 10 public website platform, period. Not in WordPress, but it's a little bit more than Digital Ocean, about the same as Google in terms of public websites. So now that's what it is. It's just part of the internet. About 9 % of every human being on earth who is online, which is about five billion people come to one of our properties every day. So now it's just one of the main ways that people have a website, period. What it started out as was I had the pain myself because I've been writing about startups and marketing for maybe 16, 18 years or so is when I started the blog, when it was actually cool to do so.

5:58I did it at SmartBear, my previous company. It was supposed to be the company's blog, like 37 Signals. This will be our voice. And then no one ever wrote on about me, which maybe does tell you something about culture or voice, right? Anyway, so I sold that in 2007. I left in 2009. Again, my wife was pregnant. It seemed like a good time. That was a completely bootstrap company, by the way. And it's still going. The Smart Beer is still going now and is a unicorn. It was recently resold a couple years ago. And so I just kept writing. Even once I was a dad, it was a way to have like an intellectual project that had no deadlines or other requirements.

6:32So it was just a way to stay connected to the world, but with really no constraints. So that was a good thing. So then it got popular. Then the site would crash when I got on things like Hacker News. So I'd go ask other people, other bloggers, like, what do you do to keep WordPress running when you get on Hacker News? And the answer was always, I don't know. But if you find that, tell me because I need that. And that was the origin of, oh, this is something people need. So it was bootstrapped for two years. And my only thought was, it seems like we could make like 30 to 50K a month in profit because there's enough people that need this.

7:03And it turned out, well, yes, it's a good business. It's unit profitable. But way, way underestimated how many people needed it, obviously. So it turned out it was a much, much bigger market than that, which is fortunate. And so it was a good idea, a good product. But then we had the fortune of things like a great, that WordPress itself as a movement grew. Thus, the market grew. Thus, we had a great product and a great market. And that's the kind of thing you need. Very cool. Well, I don't know if you know, but Sasstock is a happy customer of WP Engine as well. And so you both, so four companies, you bootstrapped a few, or was it three that you bootstrapped?

7:36Yeah. Or two, yeah. But WP Engine, venture-backed, raised a bit of... Yeah, after about two years, the opportunity became clear, and I wanted a different path. Yeah. Because, of course, raising money, different constraints, different things, you're trying to give them goals. And so it was a combination of having Bootstrapped several times already, a combination of this is a new game, a different game, so I want to try a different game, and just a place of my life. I want a bigger team. I don't want it to be just me because I want to be home more, et cetera. So the combination of personal things and what the company could be.

8:10Also, again, the market became obviously huge, which is another factor you have to do if you raise money. because if you raise money, institutions need to see you become a unicorn or possible to become a unicorn for the math to make sense. But this one, it became clear over time, like, oh, this is one of those. Of course, it did. And so those factors together, I decided to raise money. But at first, I only raised a million. And so it's not like I went out and did nuts. It wasn't nuts. So we were always sensible in terms of how much money we were raising. it was always fairly like same order of magnitude as ARR so we never got ahead of that and always had a good multiple meaning not too high not too low too low and you dilute too high and you have a lot to grow into and we never did that it was always like a sensible multiple and a sensible amount of money and so it just has always made sense and I do think that's what most companies should do there's always exceptions so I think that's a good rule of thumb anyway but that should be your default attitude if you raise money which most people should not but if you do That should be your default attitude, and you should get away from that only if you have good cause.

9:15Maybe just to elaborate on that comment, like most people should not raise money, because sometimes it's a bit more glorified and gets more attention when you raise capital, and some startups will go in there just looking to raise capital out of the bat. Why should you not do it? Well, it gets glorified if you read TechCrunch, and it does not if you read 37 Singles Blocks. So you might want to pick which bubble you're in. And I mean that in a good way. Of course there's bubbles of people who think this, think that. Of course. So you should pick a bubble of people who are like-minded so that you have positive reinforcement.

9:47And anyway, if you're outside the bubble, you'll get quote-unquote advice and ideas that may be inappropriate for you. Not because they're bad or wrong, but just not for you. So you should pick a bubble. That's right. Anyway, well, the fact is that almost no company is funded. Like only a few companies get funded a year relative to the number of companies. There's like a million companies get started a year, literally, right, in the world. and how much you get funded? You know, a thousand maybe, you know? So first of all, it's just not the normal way. So the status quo is it's not right. The second thing is, again, if you're, well, I don't, I'm not really counting like friends and family who raised 10K and never more.

10:24To me, that's still sort of self-funded a little bit. I mean, if you're thinking heavy angel or institution, that's what I mean by funding. Because as soon as you get into an institution, the math of their portfolio is such that you have to be able to get big because so many things will fail or not return enough. So they need the big ones. I mean, you know this. The big ones need to return enough. So how many companies can be worth a billion, should be worth a billion or more? How many can get to 100 million in revenue? The answer is almost none. And that's not a bad thing. That is not a negative statement in the least.

10:54It's just most markets aren't that big and the product or niche you've picked isn't that big. So what? So just don't. Why did you say it should? That's your fault for saying that. Whereas you could have a company that's thrown off a million dollars in profit a year that you as a founder can just put in your pocket because it's doing$5 million and putting one in your pocket after everything else. I mean, what the hell's wrong with that exactly? I don't know, because you read TechCrunch? Well, don't read TechCrunch then. That's the problem, I guess. I know a founder who's been on the podcast. He's got a$100 million ARR business.

11:27And I think they're doing something. I'm pretty sure he's right, 50 % net profit. He owns 100 % of the business. And he is taking a lot of that net profit every year. You know 10 of those guys? No. No, that's my point. So it's like, yeah, that sometimes happens. Wonderful. Well, that's not usually what happens. So what are you doing? It's sort of like saying, well, Apple did this. Who cares? What, are you going to be like Apple? No. And that's fine. Why should you do that? No, absolutely. Absolutely. Yeah, and I think, yeah, it's easy to get caught up in what other people are saying or thinking.

11:54And I say, like, it's fine to be caught up in that. I do, too. I care what other people think. I wish I didn't. But so pick a bubble. So you were second on stage today, did a keynote at Sastoc. can you tell the audience that are listening what was the keynote about and maybe a couple of takeaways, we will be publishing the talk on YouTube but for those listening to the podcast what were the learnings and takeaways today? Yeah, so it's about how to build a practical strategy that involves the whole team and I love the topic of strategy by which I mean, how are you going to win and you figure out how you're going to win it's always an amalgamation of things like we have to lean to what we're strong at, again, these things are not these things are obvious.

12:34Lean into what you're strong at. Sidestep rather than try to deal with weaknesses. You have to deal with things like the competition but not focus on them. You want to hopefully have tailwinds that's in your market rather than trying to go up against a trend that's happening that makes it harder. And it needs to be self-consistent. A lot of times, like we say, we're going to serve this customer, but then you look at the bug tracker, and there's all kinds of bugs that are not relevant to them, and you're fixing them anyway, and that means you're wasting a lot of time. And moving at a fraction of the speed you could be moving, If you knew to close half of those because they're wrong.

13:05On the other hand, when you say strategy, so much of it is academic. Make a SWOT, people say. And I think that's ridiculous because I don't know anyone who's made a SWOT. And if you don't know what it is, who cares? But I don't know anyone who's made one and said like, wow, that was so insightful. Now I have a great strategy. I also don't know people that make a SWOT. And then three months later, they're wrestling with, do we do this feature or that feature? And then they consult the SWOT. They don't. Well, if it's not insightful and you're not using it to make decisions, it's not strategic. It doesn't mean it's stupid, not at all, but it's just not quite the right tool.

13:39It's maybe academic but not useful. So a lot of strategy stuff is academic and I think not practical. So the talk is, here's what I think is a practical thing. We've used it lots of times, WP Engine, on individual teams, all the way up to the whole company. But it's simple. You might even say too simple, but I'd say, but if it's simple enough that you have one that makes sense, that actually does align everybody, and you start from there, and then you can make it more complicated in whatever way you see fit, man, you're in a much better, stronger position. So why not start simple and get to a good strategy, which again is your decisions about that everyone's going to have to make consistently, which is how you're going to win.

14:14Is this a framework that you've created or you've read from textbooks or something like that? How does it come together? It is a framework I created, but huge asterisk because this is standing on the shoulders of dryants type of stuff. when you see it you'll see hints of blue ocean in there with making decisions the idea that strategy is decision making or consistent decisions is an old notion like good strategy, bad strategy that's at least a third of what he talks about so you can see that coming to life there so of course there's an integration of a lot of ideas but this particular thing I haven't seen before so I guess it's something of an innovation and also I find even if what I'm bringing to the table is just a certain exposition of the idea a certain excitement, a certain experience that's enough otherwise if I have not seen farther it is because giants have been standing on my shoulders I think when our MC introduced you he mentioned that you've pretty much done I think all of the C-suite roles in WP Engine I don't know if that was accurate but obviously being founder, CEO, CTO I think there was a whole gamut more that I'm sort of leaving off there.

15:26Tell me a little bit about that and why that is and going into all these various different seats and replacing yourself. Yeah, yeah. So I was a CEO for four years as the founder. Then we, and this is, I think, the best decision I ever made, the second best decision I ever made, because the best decision was marrying my wife. The second best decision was hiring Heather Bruner as our CEO, and I became CTO as product and engineering is, of course, what I'm best at. I say of course, but anyway. And she's still the CEO now, 10 years later. And then I was that until very recently, and then I moved over as the chief innovation officer, which is a fancy way of saying I get to work on things like strategy and helping with special projects like internal data stuff, maybe AI stuff coming up, which we shouldn't talk about because everyone talks about it.

16:13But still, of course, we're doing something with it. So it's a way for me to have no direct reports and to be impactful. So the way I think about that and the reason I did all that is a system that I published about so you can go to my blah, blah, blah and read it. So I won't belabor it. But I'll just say it's an intersection of what do you love to do and what are you good at and what the company actually needs done. Which is a big thing founders often forget because they just do what they want. And so I use that and I know it sounds simple but I do use that and I have used that over time to make these very big decisions.

16:47And that's kept me in a place where I'm not burning out and where I'm contributing and all this nice stuff. Very cool. So we're going to move into the quick-ish fire round here, Jason. So we'll go through this. What one thing has moved the needle the most for you in your career? Focus. When you can say no to things that are not the most important things, it's amazing how much faster everything seems to move. In fact, the strategic talk I did today, again, I don't want to belabor it because you'll just go watch the video. I don't have to repeat it here, but a lot of it is about that. It's about, like, if we are just going in the same direction on the same things, like, we'll go so much faster.

17:24Yeah. But it's so hard. You don't want to say no to any good idea. You don't want to say no to any customer, especially if they're already paying you money. So to have the fortitude to do that anyway, it is the best kind of highest leverage thing you can do. Yeah. What's the best advice you've ever received? I think it's so dumb because it's so commonplace, but when people say be yourself, I would say that with a caveat. Because you can't completely be yourself if you're, say, the founder or an executive because you can really cause a lot of trauma if you're flailing around having every emotion and every thought in your head flying around at everybody else.

18:06That's actually quite disruptive. so in that sense you can't necessarily always be completely open or be yourself but the notion that you have whatever your personality is or your strengths, the notion of like rather than saying these are witnesses, I have to fix them the notion to say those are my strengths, those are my superpowers and so I'll put myself in a place where that's needed, that's wanted that's useful and I'll sidestep, there's many ways to sidestep I won't build that kind of business or I'll hire other people who will have this responsibility, there's many ways to sidestep it rather than quote unquote fixing it.

18:39It is possible that you have some weaknesses that are so bad, so destructive. You have to bring it up, not into a strength, just file it off so it's not so horrible. Maybe it goes just to neutral, right? Occasionally. But mostly you should be focusing on those strengths. And so in that sense, to be yourself and to lean into that and make decisions around you that do that. Although, of course, this is not new advice. To me, it's an S-tier piece of advice. Biggest failure made that you've made and lesson learned from that? This is always a real disingenuous thing. We have a really successful company.

19:16It's like, you've had failures. It's like, I don't know. I guess it was fine. So instead, let me pick a useful, instructive failure. We tried to do an affiliate program early on, and it didn't work at all. So our conclusion is affiliates are not going to be good for us. Then maybe four years later with a new head of marketing, he was like, I want to try a Philly program. Like, yeah, it doesn't work. So he's like, let me just try it anyway. Of course it worked. And so the nice learning there is, um, you know, failure is kind of like in quotes, like, I don't know, like maybe something that didn't work works later or works if it's someone else.

19:50Maybe you're not as smart or good as you thought you were. Um, and that's really useful because a lot of times in startups, there's things that fail the, this feature, this marketing channel. Lots of things like that are failures. It's kind of neat to know, it might not be a permanent failure. You may not want to try it immediately. Something's got to change. Time has moved. Market has changed. New persons. Something's got to alter. So you're not just repeating a failure that's done. But if something substantial has changed, hey, maybe it's still on the docket. So that's a useful way to realize not every failure is permanent.

20:19What do you think, in your opinion, would be the hardest thing about scaling a business in 2023? three? I think right now it's the general malaise that I feel everyone has. And I can't tell how much of it is like a COVID hangover that we still have. We're still traumatized by all that. I don't know how much of that is the work from home stuff, which even if you like that most of the time, that doesn't mean that's not causing you other kinds of effects. Or just the fact that we're in general not seeing each other or people who are more extroverted and do get energy from people aren't getting that.

20:53So how much of it is caused by what? I have no idea. But I do believe that across the board, there's malaise, there's anxiety, cortisol levels are up, people are not as happy. And that is tough because if you combine that with being at scale where everything's harder, especially people stuff, and then you combine that with work from home or work virtually or whatever, so that again, it's even harder for those types of things. You could argue it's fine for writing code, but I don't think you can argue for social connectivity that it's better to be a part like that. And I'm not saying that means you've got to go to the office.

21:25I'm just saying, surely that's a negative downside is like, it's a lot harder to do that. And so if you have malaise, this can't be good for that. So I feel like trying to continue to scale, have a culture, be upbeat, man, it is tough right now for that. Well, Jason, like we said for the audience, if they want to see the full keynote, they can see it in Sasso's YouTube channel. I really appreciate you being a great guest on the SAS Revolution show today, live at SAS.USA. If people want to reach out to you, listen to the podcast, how can they connect? Like, where are you active? Yeah, so the writing, including some of the stuff I mentioned, is at longform.asmartbear.com.

22:03And that's what I am on Twitter, asmartbear. That's the name of the previous company. So that's where that identity comes from. So I didn't tattoo it on my ass, but I did. I do have it tattooed on my Twitter, I guess. Very cool. I guess, allow me for the final question. Why did you call that last company a smart bear? Well, the company is called Smart Bear. It's from a novel, a John Irving novel called Hotel New Hampshire, which is a sort of semi-surrealist novel where bears factor a lot. In fact, there's one person who wears a bear suit. But that person, even in the bear suit, they feel probably more like themselves being in the bear suit, which is a nice metaphor anyway.

22:38Maybe not even a metaphor, maybe real. And one of the lines in the book is, A good smart bear makes all the difference. Very cool. Very cool. Well, thanks for sharing that. Thanks so much, Jason Cohen. Really appreciate it. Thanks for tuning in to this week's episode of the SaaS Revolution Show. I hope you enjoyed it. And if you learned something from it, check out sasdoc.com forward slash events to find all the upcoming SaaS Doc conferences around the world. Want exclusive SaaS content and actionable insights to grow your SaaS? Join our community of over 36 ,000 SaaS founders at sasstock.com.