Rick (00:00.819)
What's up this week, Tyler?

Tyler King (00:02.2)
What's up? I'm a little under the weather, so sorry if I sound congested, but we'll make it through here.

Rick (00:10.025)
Yeah, Tyler, you don't look great,

Tyler King (00:12.856)
Well, part of it is normally I shower before going in. Normally we do this like on work days where I have to like presentable, but this is a Friday. I don't have to like presentable. Everyone's talking about video podcasts these days and I'm like, absolutely not. I will not be on video ever. Yes. If it was video, people would see Rick's dad in the background.

Rick (00:21.225)
Yeah.

Rick (00:26.421)
No, this is audio only. We only do audio.

Yeah, he is. He is witnessing only one side of the conversation, so he will not understand. He's just it's funny is I could see his face over my head and he's just grinning. So he's making me laugh, which is going to be really funny.

Tyler King (00:41.856)
Yeah, this has got to be tough to follow.

Tyler King (00:47.854)
Yeah.

Man, this is gonna be bad for me because now my dad who listens to every episode and claims to be a Rigist fan, he's gonna be listening to this like, why have I never been invited to a live recording? Thanks for that, Rick. Yeah, not much, mostly kind of just business as usual. I did think before getting into that, I'd say this is episode 200 of the podcast. Little milestone here.

Rick (01:01.173)
We will make that happen if he wants. Yeah. What's up with you?

Tyler King (01:19.384)
Do you remember, don't open the card up in Notion if you haven't yet. You haven't, okay. Pop quiz, when do you think this podcast started?

Rick (01:22.441)
I haven't done it.

Rick (01:29.023)
Are you asking for a month and a year or just a year?

Tyler King (01:32.067)
as close as you can get.

Rick (01:34.869)
I will go 2021. No, 20, 20. I was gonna go two more years before that. Okay, that's wow.

Tyler King (01:39.822)
2019, June, okay. I would have gone earlier than that. didn't, because that means, because my memory is this podcast had a pretty long period of us trying to find our way. Like if you go back to the early episodes, each episode had a theme, like the very first one was salary transparency. I just looked that up and we were trying to be more thought leader-y and it was less discussion-based and it took a while to find our rhythm, I think. But that was just like,

Not that long before the pandemic where I anyway, I just, feel like to everyone, the pandemics is big milestone. I thought we were doing it for quite a while before that, but I guess not.

Rick (02:19.753)
That's crazy. It seems like we've done more than 200 though. I'm more surprised that it's only 200 episodes versus the, I guess it's been seven years.

Tyler King (02:22.306)
Well.

Tyler King (02:28.344)
Yeah.

Tyler King (02:32.397)
Yeah, so here's the rest of the timeline because at first we were doing it weekly and then August 2021 you started at windfall and it wasn't clear what was going to happen like up health or like, you know, how secretive do you have to be about windfall? So we just stopped for about six months until January 2022 and then picked it up. So there was a pretty big gap there with no episodes. And then we switched after that to bi-weekly, but

With bi-weekly you miss an episode and it's monthly all of a sudden. Like in a typical year we're not doing 24 episodes, we're probably doing closer to 18 or something like that.

Rick (03:06.517)
Mm hmm. Yep. Yeah, it's it's and it's I think like when we came back, we lowered the bar for what or I lowered the bar big time for myself. I was just like, just want to talk to Tyler every week or two, and have conversations and get help on my business. And that's like, that's what I get out of the podcast.

Tyler King (03:23.246)
Yeah, well, but I think part of it is we lowered the bar, but bi-weekly is so different from weekly. With weekly, you remember the last episode and it's more of a continuous stream. feel like with even just bi-weekly, it doesn't sound like that big of a difference, but you come in and like all the context from the last discussion is gone and you're kind of starting over, which definitely changes how it feels, I think. anyway, episode 200, we did it. Good job.

Rick (03:46.111)
Totally.

Rick (03:50.719)
What are your updates this week?

Tyler King (03:53.358)
yeah, nothing major. I've, one thing I wanted to loop back on, cause we talked about this a while ago. a few episodes we've talked about how, you want to get, if you, if you want to enable employees to do stuff with AI, they need access to data among other things. so I made a few API functions just for internal use. This is the first time I've ever done this.

Rick (04:10.645)
Mm.

Tyler King (04:17.662)
just for our marketers to use to pull marketing data out and then build their own reporting dashboards and stuff like that. It's not actually shipped yet, so I can't talk about results. Anyway, maybe this is obvious to everyone, but that's probably a pattern going forward that will be more common. I've always thought of our API as being a thing for customers or third-party developers to consume as opposed to a different person on my team to consume.

Rick (04:45.779)
Yeah, we have a saying at windfall and we're, we're, we're recently releasing a white paper shortly called data is AI's foundation. and windfall is data's foundation. so it's, it's basically like, that is the exhaust. That is the most important thing to enable AI. So, how are you, how are you thinking about that in terms of giving people access to the, to the data, but not necessarily letting them change it.

Tyler King (05:11.67)
Yeah, so these are read only functions which for now is all they need like the specific use cases here. I mean three functions. One is affiliate just list all the affiliates and what their commissions have been because one of we kind of have one and a half marketers. The half person is a serum coach that gets extra time for marketing. Her project right now is to basically try and juice our affiliate program a little bit. So in the past she'll like ask me to.

can you query the database and get me this and this and this and I give it to her in a spreadsheet and then she can work with that but it's not live. So she can't really run any tests or anything like that. Like to see, this person actually had more activity after I sent this email out or that type of thing. So read only, yeah.

Rick (05:57.834)
Have you only had to like do access control or have you had to restructure the data to make it more ingestible or usable by the people?

Tyler King (06:07.822)
They make it work. I just kind of export it in the format that it's in in the database. I think it depends on what the data is, and we're not doing anything that sophisticated. So list of all the affiliates. Another one's just a list of all our customer accounts. Not with any like no data that... So the way our architecture works is we have two databases. One is called global, one is called local. The idea is so if we ever needed to scale, we could have like each customer is on the local database.

Rick (06:10.922)
Hmm.

Tyler King (06:36.546)
The global is like the list of all our customers. But once they log in, we're pulling data from the local, if that makes sense, so we could shard to multiple databases. So it's pretty, actually our architecture makes it pretty easy to say, just pull everything out of global. That contains no actual customer data. Like it contains their name and email and phone number, but it doesn't contain who their leads are or what their tasks are or what notes they've entered in the CRM. So I realize that's not what you were asking.

Rick (07:02.015)
My dad is leaving and he's giving us a big thumbs up. So nice job Tyler, nice job Rick.

Tyler King (07:08.11)
Listening to just one side of a podcast would be pretty miserable.

Rick (07:11.913)
Especially when the other person is on the update.

Tyler King (07:14.966)
Yeah, right. You're just sitting there.

Rick (07:18.261)
Tyler's Washington St. Louis guy. JD is the Villanova fan.

Yeah, he's like Washington St. Louis doesn't have any basketball.

Tyler King (07:32.98)
No, well, WashU does very well in D3 sports, pretty dominant D3. Well, no, was bad enough of a team that I was on it. I think they actually got good after I left. WashU cares about sports so much that going there four years and being very, very good friends with a starter on the football team. I never once went to a football game. I never once went to a basketball game.

Rick (07:36.785)
That was great D3 sports. Water polo, right?

Rick (07:44.757)
Okay.

Rick (07:58.582)
That's terrible, Tyler. There's a big game tonight against St. John's and I'm looking forward to being able to watch that game with my dad and I hope that they win so I can watch another one on Sunday.

Tyler King (08:00.216)
How's your Duke, how are your Duke people doing by the way?

Tyler King (08:11.244)
Nice. Well, I always root against the Death Star, so I gotta root against Duke, but I'll be happy for you when they ultimately win, which they always do.

Rick (08:15.093)
man. The, what I was going to tell you though is what this made me think of is our leg of health. One of the things that we're talking about doing this year is building some benchmarking tools. Like we're really focused on when a small, what can we offer a small business, regardless of where they are in their buying cycle for health insurance that provides them immediate value and differentiates us from all the other, you know, brokers out there.

and I'm just realizing that this week and it triggered what you just said triggered it. Data is the foundation of a benchmarking tool. Like we have to have all of the rate tables for all of the available options in a structured format. So, so, or some version of like some summary of that, some proxy for that. And, I'm really, I did a search, last night. I was just like, I wonder if this stuff's available because we, found this.

API that wants to charge $20,000 a year to basically give us data. and all these, all these rates are filed with the state every year and raw data format.

Tyler King (09:28.172)
Like, state by state, I guess we only care about Utah for now, more or less.

Rick (09:31.583)
for now. But yeah, Utah Department of Insurance publishes all the rate tables for all of the plans.

Tyler King (09:36.792)
So every, okay, so there's just like a list of all the plans and then here's how the rates change if people are old or sick or I don't know what the variables are.

Rick (09:47.367)
In small group, there's no health, there's no health underwriting. It's all age rating and family size. So there's just like a big old tape and zip code based.

Tyler King (09:52.022)
Hmm, age and family size, okay. Okay, the age is presumably the proxy for health.

Rick (09:59.338)
Yeah, risk.

Tyler King (10:00.886)
Yeah. cool. So you can pull that down and just basically we can do live quotes for, people.

Rick (10:10.901)
I don't know exactly what the output is yet. need to, your prompts have, I've been thinking about your prompts that you gave me for what, this could be. but, but I guess my point, my, my only point in connecting it was that here is just like the data is that if you can get the data there, that's like step one, but you still have to figure out what to do with it.

Tyler King (10:25.122)
Yeah. Yeah, I've actually sent. So like I'm excited to expose these API functions to the marketers and interested to see what they'll do with it. But I've also sent them. I wrote up a very long warning email to them about. It's just so tempting to want to be data driven and to want to do all kinds of stuff, and it's really, really easy to get misled by this. I forget if I mentioned recently like I had a big the big metric that I've been looking at recently.

is conversion rate from trial to paid, right? Because all the product stuff we're working on, we're not trying to increase the top of the funnel. I mean, that'd be great. We just have failed enough that we've given up. We want to convert the leads we've got. And so I was looking at trial to paid conversion rate and seeing, that's actually been going up recently. I guess things we've been doing are working. And then somewhat recently I realized, have I said this already? This metric's just totally wrong.

convert when our trial paid conversion rate goes down it's because we got more leads that month and each marginally is less likely to pay then we have kind of like a baseline of referrals coming in every month and they're very likely to pay.

Rick (11:34.837)
the source is different, has a different conversion rate than the average. That's hilarious.

Tyler King (11:38.722)
Yeah, exactly. And you know, OK, you can control for that, but this is after 16 years of trying to figure out what metric to look at. And every time I pick one, it's just it's way less useful than you think it's going to be.

Rick (11:53.524)
Yeah, that's a bummer.

Tyler King (11:54.732)
Yeah, so I sent that warning to like this person who's doing the affiliate stuff. She wants to look at what do our most common, what do our most successful affiliates have in common? And I was like, I can name off the top of my head our three most successful affiliates. And it's a power law thing. They make up probably 80 % of all our referrals. And I'm like, each one of those is an outlier. Like you're just not going to see anything useful in the data there, but I guess go try, you know? So yes, data is important, but it can be.

disappointing if you get too married to it.

Rick (12:26.383)
And that's where I'm like, I think it's important to focus on what is the outcome that you're driving and how do you get there? Like, and hopefully like AI tools can bridge the gap for us versus like us having to think too hard on this. But the, the outcome, like for this benchmarking thing is a business owner knows how much money they need to spend on health benefits to be competitive for talent. Like that's fundamentally like the most important question to answer. And then the second is the second question is, okay.

What's the best use of that money given where I live, the makeup of my employees to maximize the value of that investment for benefits to my employees?

Tyler King (12:58.574)
Mm-hmm.

Rick (13:11.615)
So first is how much do I spend? Second is how do I spend it so that it goes as far as it can for the employee? And we've never really focused on the first question, but I think that's the question that every small business is asking is, how much money do I need to spend on health benefits to be competitive?

Tyler King (13:29.656)
Yeah. Yeah. And, and as you've said a million times before, one thing that makes like a health different from most people who are available to answer that question are selling a specific product. And so the answer is going to be, you need to spend the amount of money that my product costs. Right. Whereas I think brokers, which like up health is a insurance broker, brokers are often worthless middlemen that are just taking

Rick (13:47.771)
Exactly.

Tyler King (13:59.486)
money from a transaction that they're providing no value to. But when a broker is actually providing value is when there are a lot of options to choose from and you're saying, out there has a motive to try and get you to buy their thing. None of these things belong to me, so I'm going to help you find the best one. I know I'm saying very obvious stuff that you know, but yeah, that's the magic is we are not biased in terms of what we're going to recommend to you.

Rick (14:25.781)
Correct, correct. ideally this benchmark, this tool that we build can provide like that unbiased sort of framework to have that conversation. So it's like, no, no, is our product does this, not us. There's inevitably data is the bias, you know, whatever we feed it and however we structure it. like, I'm excited about it.

Tyler King (14:40.92)
Yeah.

Tyler King (14:48.226)
Yeah. Yeah. Cool.

Rick (14:49.621)
But we need data. How do you benchmark? How do you, how do you tell? Well, I got for the second question. So I've, I think the second question is much easier to answer than the first question, which is if I am a marketing professional services firm on average, how much do I need to spend per employee on health benefits? That's a different question. What data do we like? What are the data sources for that? That's, that's where I'm starting to think. And I don't, and I don't know. I'm assuming there's surveys out there and

Tyler King (14:52.502)
Right. But it sounds like you solved that. You just got to download it from the state.

Tyler King (15:01.006)
Hmm.

Tyler King (15:15.148)
Yeah, is it true? that actually how people are coming in or are they? That's probably how they should think about it, but maybe the way they are thinking about it is like I'm setting a budget of 300 bucks per employee per month. What can I get for that?

Rick (15:28.657)
that is great when they have that, what, what a lot of people are, are constantly asking whether they are in a buying cycle or not, which is, this is the thing that we're focused on for like triggering a demand is am I spending enough? Am I spending too much? Can I save money or should I spend more?

Tyler King (15:43.234)
Yeah. Yeah. To compete with other employers. Like I'm trying to hire employees. I want this to be competitive.

Rick (15:48.437)
Correct.

Yeah, or just like avoid the risk of benefits being the reason I lose someone or don't get don't make a hire.

Tyler King (15:55.651)
Yeah.

Tyler King (16:00.364)
Any thoughts on how to get that data?

Rick (16:01.845)
I I just I just I need I saw the second question I was right. It's like, okay, this is solved. But it's not the most important question. And I was like, crap. So

Tyler King (16:12.044)
Yeah, although one thing at a time. I mean, before we weren't solving either, we weren't answering either question and now we can answer one of them. Let's, I mean, maybe that's a pretty good start. You don't have to solve both, I guess, right away is my point.

Rick (16:25.343)
I would love Yeah, you're right. You're right.

Tyler King (16:29.134)
all right. In terms of other stuff, yeah, we're, kind of wrapping up a bunch of our, big projects from 2025. I've talked about this, that both Kanban and mobile have like soft launched. it's all, it's always, quieter than you expect when you launch something because especially the, you know, the people that meet needs to impact are the new users signing up, but they don't know you didn't have that before.

No one's signing up and being like, wow, a mobile app, incredible. They're just like, yeah, of course you have a mobile app. So not a lot to report there, but it means we're starting on kind of the next wave of stuff and really what the theme for 2026 is going to be, which I've talked about before of like the first 30 minutes or because that's kind of a mouthful, just simplicity. Like normally we're working on new features, new capabilities. The theme this year is nothing new. It's just making what we've got simpler.

Rick (17:18.569)
Mm.

Tyler King (17:27.086)
So we're starting on that. It's been an interesting challenge from a product management standpoint because there's going to be a lot more change management in terms of like our current customers. To simplify stuff, you have to change stuff. Like when you're adding new features, it normally just gets layered on top and current customers can just ignore it. Like, I'm just not going to go to that settings page and turn it on. If I don't want automations, I'm just not going to make an automation. This simplicity stuff is like.

the way you view a contact is changing. The fundamental view of the lists, the list view, know, that's the navigation is changing. Not in ways that I think will be too disruptive for people, but just where you have to be thoughtful about. Okay, we've got, the big challenge is we've got four, I've broken it into four main simplicity projects. I don't love the idea of, so let's say we launch one every two months or something.

Every two months, the navigation changed again. it changed again. this this other big thing changed. I don't like that drip, drip, drip of. It's kind of like how they say when you're doing layoffs at a company, do one big round instead of like round after round, because then people are thinking this is just going to go on forever, right? So anyway, I don't I don't know that I have a concrete thought there aside from just I'm really liking the work of.

Rick (18:43.507)
Mm-hmm.

Tyler King (18:50.984)
Rethinking our product in terms of if we if we could do this from scratch and make it better and higher quality how would it be but it is a difficult logistical thing to figure out how to roll that out.

Rick (19:01.397)
And what is the outcome you're hoping for? You're just like parody with other CRMs?

Tyler King (19:06.858)
No, I think we're already better than other CRMs. So the kind of information, the insights that led to this strategy came from Eunice doing customer interviews with people 30 days after signing up for their free trial, whether they paid us or not. And two of our big conclusions, one is the spreadsheet thing we've talked about, that even people who are technically switching from another CRM, they were really using a spreadsheet.

Rick (19:09.662)
Okay.

Tyler King (19:33.088)
And we need to really focus the experience on upgrading from a spreadsheet. So a lot of the stuff we're building is like import your spreadsheet while you're doing onboarding. So it's ready to go when you first hit the CRM, give the view, like a table view so you can look at it like a spreadsheet, stuff like that. the other thing though is. I don't know if this will work or not, but, okay. The car play strategy we had been doing the premise of it is.

People are comparison shopping between CRMs and they're going to pick the one that fits their needs the best. They like us. Everyone likes us. Everyone uses us. They're like, I can tell you have the best customer service. It's simple. It's easy to use. But the people we're losing are the ones where we don't have a key feature that they need. That's the CarPlay strategy is, okay, what are those key features? Some people need a mobile app. Some need Kanban. Some need email. Let's try and close those gaps. This strategy this year is the exact opposite, which is saying there's a different set of people.

for whom we already are the right fit and they are our ICP, the problem is they don't have the momentum to go from trial to actually using it. And we need to get them onboarded as quickly and easily as possible because they are the right fit, they have intent to buy, they're just chaotic, busy, lazy, whatever the explanation is, we need to get them onboarded as quickly as possible. So that's a big part of what we're trying to do here.

Rick (21:00.297)
That's cool. That's great.

Tyler King (21:02.926)
Yeah, we'll see if it works. I don't know.

Rick (21:04.327)
Yeah. Do you do you have like any major releases coming out in the next couple weeks?

Tyler King (21:12.694)
Not major, I mean, so Kanban and mobile were major. Most of our customers still don't know about either of them. We have not announced them to people yet. You have to like go find it. So we can kind of like from a marketing standpoint, those launches are still yet to happen. From a product standpoint, no. There's normally kind of, you ship the big thing and then there's a pretty big lull and then there's another big thing later. But we're probably two months away from.

Rick (21:22.453)
Mm.

Rick (21:35.987)
Yep. Cool.

Tyler King (21:40.386)
The first wave of this simplicity stuff. it's not like. Distant distant future that that like we're breaking these into small enough projects that. Compared to Convon and mobile, we were both working on those for nine months or something. None of the projects this year going to be nine month long projects.

Rick (22:00.533)
Cool. Awesome.

Tyler King (22:02.466)
Yeah. How about you?

Rick (22:05.235)
I mean, I, I've got two kind of updates. The, the main, the main one is I, I, I've, I'm ready to sort of draw some lines in the sand. So one thing that I've been working on, made a mistake and I will, I somehow forgot to, I didn't set up billing correctly in our licensing management software. And so when I renewed our license, it didn't go through because I didn't pay the invoice. Yeah. It's not our personal licenses, but like our entity license.

Tyler King (22:30.286)
This is the health insurance slightly.

Rick (22:35.317)
Uh, and so I, got, it got canceled. And so I had to get it reinstated, which was not a big deal at all, but like it did two things. One, it exposed like how poorly our systems are to manage our licensing, which actually is pretty critical to the business. Um, yeah.

Tyler King (22:51.192)
Can you just for the listener and my own benefit, like what does licensing mean and what's the role it plays?

Rick (22:56.071)
Yeah. Yeah. So context is when you are in a regulated industry, generally there's going to be some sort of certification or licensing that is required to participate in that industry. And usually tied to that licensing is some sort of continuing education requirement that you have to certify that you're up and, you know, knowledgeable on the topic after you get licensed. Usually there's an exam you take at the very beginning to get licensed the first time. And then it's a renewal process as long as you take your continuing education requirements. And generally there's like

individual licensees, like me as a person, JD as a person, and then firm license licensing. And because health insurance is regulated at the state level, you have to get one of these at every state for both JD and me, and also leg up health entity. it becomes, and this is just the right to do business. It is not the actual appointments and contracts with the insurance companies. So to do business in a regulated industry like health insurance,

the amount of effort you've got to put into one to just be compliant on a licensing front. Cause I haven't even spoken about the federal licensing requirements is just state second. You've got to manage all the appointments in each of those States. And if you let a license lapse, it triggers all the appointments to be canceled in that state. Correct. Yes. So, so I didn't realize this happened and then I started getting all these emails, canceling leg up health appointments with all these insurance companies.

Tyler King (24:11.871)
Appointments meaning like UnitedHealthcare says, can sell my product. Aetna says, you can sell my product.

Tyler King (24:24.206)
Hmm.

Rick (24:24.405)
Um, and, and they, this happens a lot. So they're like, they don't like, go, we're going to cancel it. go, have until. You know, this to fix it, or we're going to cancel it. So I had to like respond to all these emails and, anyway, I took the opportunity to clean up everything and upgrade the software we're using to manage all this so that JD, my, my personal licenses and like up health licenses are all in the same place. And I can just like have it on like autopilot. So I took the opportunity to upgrade our systems. I feel a lot better about it. I.

probably have saved JD hours of angst in doing this and my I made my time much less like like my time investment here is nothing now.

Tyler King (25:04.681)
So what does that actually look like when you say you automated it? Like you just set reminders on a calendar or?

Rick (25:08.949)
No, I upgraded to a what's called an agency account with this software provider called Sircon and they basically manage everything through the software. All I have to do is click in and hit buttons to renew and they send all the reminders. Yeah. So it was a very easy thing to solve 20 bucks a month.

Tyler King (25:25.55)
What does that cost? Like they're charging money for this. wow, okay. Cool.

Rick (25:30.793)
What's really expensive is the $150 licensing fee renewal per person and entity. It starts to add up.

Tyler King (25:38.284)
Yeah. Yeah. Especially per state. Yeah. This is this as you're talking about this, I, and I'm guessing a lot of our listeners are like, man, I would never want to work in that industry. But also like, this is regulatory capture, right? This is saying we're going to hurdles up to prevent competition in our space with this regulation. And then a person like you or JD, who has like, I, just, I could never bring myself to study this and get

Rick (25:41.375)
Yeah. Yep.

Tyler King (26:08.29)
get licensed. It sounds so tedious, working with people who have that level of rigor, it's like, okay, that's kind of a superpower.

Rick (26:14.773)
Yeah. Exactly. And I've never gone this deep on this stuff. I just did the minimum to like, make sure it was done. And I never always had anxiety about it because I didn't understand it. But like, I basically eliminated that. That's the that's the milestone is like, I now fully understand this and have control over it. I'm not worried about it anymore. But I probably worried about it for seven years. So the, the other thing I was gonna tell you is what one like, this is something this this kind of interesting.

Because of our leg up benefits product, we end up having customers that are headquartered in Utah or have one employee in Utah that become our customers, but they have employees in different states. And we have like thousands of dollars in like unpaid commissions in states that were not licensed. And so what JD's been trying get me to do is like, can you please like, get us license these states so the carriers can pay us because they're like holding these commissions that they can't pay.

Tyler King (27:01.646)
Mmm.

Tyler King (27:10.328)
Sorry, so these are the employer client is using leg up benefits, which is our software platform. It's not insurance. And then we're selling, helping them buy individual insurance. So JD is helping them buy individual insurance in their state and we're somehow connected to it.

Rick (27:24.173)
they're using they're using my marketplace link to buy health insurance that's connected in the app. So we're like in the carrier's eyes. Jay's probably Jay's probably like helping them like guide through the process some of time. He's licensed individually. But like the firm's not licensed. I'm licensed individually, but the firm's not licensed. And so they couldn't pay like a health commission in the state.

Tyler King (27:29.666)
Hmm. So they're literally just self-serving. Like we're not even talking to them.

Tyler King (27:41.198)
Mm-hmm.

Tyler King (27:47.818)
In the state you're saying you're saying like in Tennessee JD is licensed, but leg up health is not licensed.

Rick (27:53.384)
What? That's not a good one. But like North Carolina. Yes. And so we, know, by getting licensed now, North Carolina can pay a or not North Carolina, but like a carrier in North Carolina can pay us thousands of dollars. So it's kind of interesting, like, like a the leg up benefits thing kind of has some legs where we end up like getting into other states through consumer deals. And at some point, it's it's meaningful enough to like, immediately make money.

Tyler King (28:19.278)
Cool. And then you can also sell group at that point in those states, I assume.

Rick (28:25.543)
If we wanted to, think that's like the, I think that's like the thing that's next is like, okay, well, how do we serve the employer that has, you know, employees in multiple states? Well, it turns out that like a benefits or, you know, an HRA of some kind is the best solution for that because group health managers, small group health managers doesn't work great in multiple states.

Tyler King (28:44.972)
Yeah, okay, got it. Like, yeah, we face this less annoying where everyone's in Missouri and it works fine for that, but then Bracken's in Massachusetts, so we have one person on a Massachusetts insurance plan, which is weird. Yeah.

Rick (28:56.437)
Yes. Yeah. And so what ends up, I was going to go with this, uh, going back to the benchmarking tool. That's one of the questions that you need. We need to ask is, you have employees in multiple States? Because that sort of puts the, puts a, uh, you know, sort of a benefit in favor of the HRA individual health insurance, give people money route.

Tyler King (29:18.348)
Yeah. Cool. Another thing I like about that, are you going to go into the AISDR thing next? Because I feel like this is related just to say, you should explain what that is, but what's on my mind is the thing Rick's about to talk about, one of the potential problems with it is that the state of Utah is too small for the total addressable market to be big enough. But if we could go into other states, that would help a lot. So go ahead.

Rick (29:20.739)
Rick (29:24.061)
Yes, yes.

Rick (29:42.292)
Yeah, yeah. So, so I'll just kind of go through my updates here. So, our, as, just as a reminder, our North stars for this year that we've, we've kind of set our, we need to, increase, the, the lead flow of, of people who want, of small business owners in Utah who want to like, get our help. and then the second is we need to figure out when they do want our help, how to like,

have JD not spend hours and hours and hours before they get value and JD like feels good about the deal. And so we're calling that like, faster time to like, value to the to the like first call like, in that first interaction, like, how are we getting the value where they're like, you guys are great. Yes.

Tyler King (30:28.322)
And can I elaborate just on what was happening before? like my understanding of the previous model that we're trying to improve on is JD would set up a call with an employer, 20 minutes, talk about, you know, nothing really. I mean, like trying to build trust. And then the next step is like, okay, you need to get me a census of all your employee data. How old are they? How many of them are they? Do they have dependents? And then I can put a quote together for you. And then we're to set up another hour long call and I can get you actual numbers and consider your options.

A lot of people were falling off in between those two calls because they're like, I don't want to get all this data for you. I don't even know what my options are yet. So we want to get them their options on that first 20 minute call without requiring them to give us all that data.

Rick (31:10.889)
Yes. And then the only other factor there would be like JD was spending an inordinate amount of time. If he did get the data, tried to figure out how to present it. and so anyway, this, want to basically ask a few questions before we get on a call with someone and be able to demonstrate real value on that call, real expertise that gives them like guidance and then sets up whatever they want to do next. could be, Hey, call me in a year. It could be.

we need to make a change or it could be here's my census, go do more, go do a deeper analysis. So those are the two sort of overarching things. One, on the lead front, one thing that that has been working is our Benapath. We purchased leads from a company called Benapath. And they're kind of not non they're kind of like fringe ICP accounts, like they're they're more blue collar.

less technically, technically sophisticated firms that are doing online like searches to find quotes. but, but there is a steady lead flow there that we're learning from. That's where JD's getting reps on how to improve our TT, our, first call value. So we don't want to turn that off. but we also have this like budget constraint and we want to do more outbound. And so I'm sorry, I'm to, I'm going to come back to the AISDR thing in just a second. One thing I just want to take a step back. One thing that I, I have struggled with is we have this waterfall that manages the business where

Tyler King (32:29.71)
Mm-hmm.

Rick (32:36.287)
Basically everything is constrained by profit. And we sort of had this 1 % at the top line that takes revenue and pays it out to partners as a, as a carrot. And then it just waterfalls to expenses. And then, you know, until JD gets his full comp, and then we have leftover money. there's tack, you know, a tax savings thing, that kind of thing. but what this incentivizes is, is not spending money on marketing beyond profitability.

And if you, if you know anything about business, if you, if you want to grow, generally you spend money to make money. and so the investment exactly. And so I had this epiphany when we were trying to decide between the AI investing in the AISDR or Benapath and realizing we should do both. was like, our waterfall is making us stupid. and so I'm going to change the waterfall. I'm actually going to change the waterfall to exclude some specific amount of money for lead generation.

Tyler King (33:11.682)
Yeah, investment, right? Like you're not spending, you're investing.

Rick (33:34.943)
from our cash balance from the waterfall affecting partner distributions and JD's comp.

Tyler King (33:35.054)
Mm-hmm.

Tyler King (33:41.752)
So let me make sure I understand. So the waterfall was previously saying, I'm going to oversimplify it. Basically, whatever we don't spend goes to JD. That's not quite true, but something like that. And so JD's kind of incentivized to say, how do I, I want to make the most money, the most revenue we can, but like, I want to also get the most of that as comp as possible.

Rick (34:03.941)
It's a little bit more nuanced than that. like he has a set target comp. If he wants to get his target comp, we're kind of like right at that. If we spend more money, he stops getting his target comp.

Tyler King (34:13.516)
Yeah, so if we spend on growth, he's making less money, and so he's incentivized to not spend on growth.

Rick (34:18.058)
Yes.

Rick (34:21.713)
or he's punished to spend on growth is a better way to say it. Like, because I think he is incentivized to grow the business like through other means like, right.

Tyler King (34:23.789)
Yeah.

Tyler King (34:28.182)
Okay, so that part of it makes sense to me. How do you fiddle with the numbers and have money for growth without taking it out of his pocket? Like what's changing?

Rick (34:38.165)
So what I'm doing is I'm gonna set a line item which is investments excluded from waterfall. And I'm basically gonna have a monthly number that we can basically add to our loss, like our profit loss every month and have it not impact JD's account.

Tyler King (34:57.71)
So where's the money coming from? Okay. So if we didn't have a cash balance, this wouldn't work. A different way of thinking about this is we have some amount of money in the bank. Let's spend that. Okay.

Rick (34:59.347)
cash balance.

Rick (35:08.351)
That is the way to think about it. That's a much better way to explain it. So we have, that's the, that's the thing that, you know, in past years we've been, you know, trying to get to breakeven, right? And grow on breakeven, but we've built a cash balance as a result of being thoughtful for the last year. And we now need to spend that cash balance to grow. And it's like our waterfall wasn't working for that. So like, that was the major epiphany. And so that leads me into, we're going to keep Benepath going versus just turning it off. And we're also going to invest in this tool called Artisan, which is an AISDR.

And we got a great deal. I'm not going to, I think they gave us a special deal and I don't want to like, I don't know if we're allowed to share it. So I won't share the details, but let's just call it. We're going to spend a small amount per month. And we have basically four months to test outbound AISDRing to our ICP prospects through the stool. Okay, man. The world I live in. Okay, so

Tyler King (35:56.054)
And what is AISDRing?

Rick (36:02.289)
AI SDR starts for artificial intelligence sales development representative. so this is basically an outbound, AI, generated, fake bot that is reaching out to people on behalf of JD. So the, you, it's hard to explain, they basically have built a platform to spam people. That's the best way to, think about it, but they actually do a very thoughtful job of spamming people. The con the personalization.

And the targeting is very precise. So like you can really say, I want to go after this persona and this segment with this messaging. And it is not an, like when you get an email from it, when it's well, they call their AI Ava, when you get an email from Ava, it looks like JD and it is actually really thoughtfully written messages. And so yes, it's spam and it's, annoying, but it's not

Tyler King (36:58.124)
It's like well-researched cold emails from pre-AI, which were annoying and they were spam, but it was different from, they worked and it's different from like the email that's not personalized at all and not targeted at all, which is even worse. Yeah.

Rick (37:03.913)
But they worked. Yeah.

Rick (37:11.989)
Correct, you got it. So we're gonna launch that. We are signing the contract this month and we basically are gonna test it for four months. anyway, so I think I'm pretty excited about this because basically I've been kind of wondering like how do we do both? how do we grow? do we get GD as Target Comp and how do we invest in growth? And I was like going back and forth in this waterfall, I'm like, I can change the waterfall. I'm a business owner.

Tyler King (37:41.624)
Yeah. Now the, the, so the, the next like obvious thought, so that's great. That makes sense to me. If you've got money in the bank, do something with it. I think it changes is a company gets bigger and you have more employees and stuff. You need money in the bank for like security sort of at this stage of the business. Everyone involved is taking risk. that the security, it's not worth having money in the bank for safety. I don't think at this size business.

Rick (37:42.494)
I'm like, this is cool.

Rick (37:56.969)
Mm-hmm.

Rick (38:08.053)
some amount, but like, we have more than that. I think like the number just gets big. The number needs to be big enough to not, but at the end of the day, I could put more money in the bank and pay JD.

Tyler King (38:17.55)
Yeah, so you could do that, that's part of it, but also, like in the early days of less knowing CRM, I regularly made decisions that I was thinking explicitly in my head, maybe the whole company will die because of this. That's okay, that's a risk I'm willing to take. I'm not willing to take that risk on anything right now, like, cause 18 people would lose their jobs and like 25,000 users would lose their CRM.

Rick (38:35.829)
Mmm.

Rick (38:40.885)
That's interesting. Let me pull that through a little bit, because that's not what I'm doing here. I'm definitely being cautious, but maybe the number I was thinking was $2,000 a month, but maybe what you're saying is it should be higher.

Tyler King (38:49.454)
Mm-hmm.

Tyler King (38:53.03)
Maybe, yeah. I just think that there's asymmetric upside here where the downside is, LikeUp Health is basically an insurance broker. Just keep being an insurance, like it can't really fail in the way less annoying CRM could just disappear. The people will still be buying those insurance policies and we'll still be getting a commission.

Rick (38:54.056)
Okay, that's interesting.

Rick (39:08.469)
Yeah.

Rick (39:16.339)
Yeah, that's interesting. wonder like.

I there's probably two line items then there's like experimental, like these are new programs for experimenting. And then this is like, if we find something that works, you can spend this much. If as long as the payback, we believe the payback is X. Those are probably the two line items. And like, I would, I mean, I don't think we should experiment this, this burn the money, but like we should be burning some of the money to learn. And then when we learn something, we should be spending it.

Tyler King (39:40.067)
Sure.

Tyler King (39:44.888)
This is exactly the framework we had at LessonRing CRM. Yes, there's a fixed experimental budget. I think for a long time we were doing like $5,000 a month experimental and then an unlimited if it's proven. Now, very few channels scale well enough that you can actually, if you have $100,000 a month, even if you find a channel that works at $1,000 a month, you can't now like 100x the spend because nothing scales that way.

But if it does, if you find something that does scale that way and you know there's that acceptable payback period, yeah, there should be no limit. We should go take out loans, go, you, me and JD, I'll put our money in. how do we grow this faster?

Rick (40:26.805)
Totally. All right. Well, anyway, so I'm very happy. It took longer than I usually spend on planning to get to this, but I just feel like we're gonna have a really damn good year because we've taken our time to come up with a really good plan and the plan just keeps getting better and we're starting to execute it, which takes me into my final update and I'll turn it back over. Go ahead.

Tyler King (40:37.005)
Yeah.

Tyler King (40:47.64)
Well, sorry, I one more thought on this? Unless, was your final update gonna be comp waterfall stuff? Or you already talked about that.

Rick (40:56.457)
Yeah, well, I was going to go to JD's AI work. Yeah, good.

Tyler King (40:59.126)
Okay, sorry, let me, before we get to that, the thing that stands out to me about what you just said, because lesson, again, lesson-giving serum took a very similar approach. In many ways it worked well. It's something you have to dig yourself out of though, because now you're basically operating at a loss. And while you don't need that, whatever amount of money you have in the bank right now, you don't necessarily need that money. It also creates a cashflow thing where the growth is like,

New money isn't going to the waterfall it's going to like getting back to cash flow break even which does delay other things like paying you or hiring or something like that.

Rick (41:37.013)
hiring.

Yep. Yep. You're right. And that's where it goes. Kind of goes to this AI stuff where it's like, we have to increase JD's capacity so that we don't have to like, yeah, exactly. So, the, JD's, I just want to give kudos to JD. The most important way to get better at AI is to try to use AI. If you are listening to this and you're like, I don't know what to do with AI, just start doing shit with AI and forcing yourself, go, go, go to a course. Like just get in.

Tyler King (41:49.111)
Yeah, don't need to hire.

Rick (42:09.811)
dirty with it because JD did that. And he's gone from like maybe like a fringe user of AI to like a he is driving AI now and it is cool to watch the velocity at which he is improving his processes, the value to our customers, etc is awesome. And he's doing it himself. And I can just tell it's like, it's, it makes this business so much more fun when we can take technology and still be a broker to your point, but like be a super powered broker.

Tyler King (42:25.486)
Mm-hmm.

Rick (42:38.901)
And I could tell JD's having a lot of fun with it and it's going to unlock so much potential for our business to grow without hiring people.

Tyler King (42:47.384)
Yeah, so can we talk specifics? One thing I've observed him doing is he's so every call is being recorded in demo desk automatically. That gives you a transcript and then I think he's feeding the transcript plus he has like a pitch deck into AI and basically saying what should the what the pitch deck should have been based on how the call went and he's taken this like 30 page PowerPoint presentation and turned it into like four pages that are way tighter and way better. Is that right? Am I getting that right?

Rick (43:15.861)
That's the general gist and he's spending five to 10 % of the time he was spending before.

Tyler King (43:22.306)
Yeah. Because he was personalizing the deck for each lead, each, I don't know where in the process he was doing this personalization. Yeah. Is there, is there other stuff you've seen how he's using AI?

Rick (43:23.775)
for a 10x better output.

Rick (43:28.797)
early stage opportunities. Yeah. So and he's getting just rap after rap and it's getting better every time.

Rick (43:36.938)
Well, I just I think the open like AISDR stuff, I think he's starting like to do that TAM analysis. And so like he's doing he's starting to plan out the AISDR with with AI, like what's our TAM? How do we segment this out building the because listen, it sounds like yeah, we're just gonna sign up an AISDR is going to do outbound. it's a shit ton of work to figure out how to make an AISDR successful. You've got to manage it. It's a human.

Tyler King (44:02.67)
Yeah, it's presumably very similar as if you wanted to build out a real SDR team. don't have to do the hiring and you don't have to pay them, but otherwise it's the same work.

Rick (44:07.027)
Yes, or it.

Rick (44:14.713)
I think it's actually arguably more work because you have to be so much more precise in the prescription of what they're asking me to do. They don't learn like without you, you have to like teach it. So anyway, I'm excited. I feel like this plan is coming together and it just keeps getting better and I am excited.

Tyler King (44:21.933)
Yeah.

Tyler King (44:35.406)
This is just such a theme for me throughout my career of like a question I've gotten a lot on, you know, back in the day when I would do interviews of, how are you, what led to your success or whatever. And the thing that came up a lot is Lesson Knowing Serum took a really long time to start making enough money to be interesting. But then when it did, it kind of ramped up pretty quickly. And I've gotten the question, well, how did you stick with it for so long? And you see all this advice of if it's not working after three months, abandon it and stuff like that.

There's just the feeling of I can tell things are getting better and it's not money yet. It has not yet turned into money, but it's like to use less knowing serum as an example. For a long time, we didn't have any visitors to the website. Okay. Now I figured out I can pay Google AdWords money and I get visitors to the website. Okay. Well, none of them are, they're all bouncing. Okay. Well, I can work on my H one and I can get people to sign up for trial. Okay. They sign up for a trial, but then none of them are paying. Right.

So we're still like far away from the part where the money comes, but you can still see all these little signs of everything getting better. And I do think for a year or two at leg up health, the part of the process that you're focused on right now of the, the first half of the sales process, let's call it. That didn't really change for a very long time. And there were no signs of it getting better. And now there are. like, yes, that that's just such a great feeling. And.

Rick (45:59.094)
Mm-hmm.

Tyler King (46:02.294)
And also identifying what part of the process needs to get better. You talked last episode about how we did this whole journey of talking about a lot of stuff and it was uncomfortable for you. And I don't know that we've said it quite in these terms yet, but like there's a funnel. What part of the funnel is leaking the most? It sounds obvious in retrospect. Of course we should have had that conversation, but we weren't talking about it in those terms before pretty recently.

Rick (46:26.591)
Mm hmm. Yep. Yep. So I'm sorry for thank you for letting me go through all that. I'm very excited.

Tyler King (46:33.868)
No, that's great. I feel like it's been a while since you've taken over an episode.

Rick (46:38.623)
What's anything, any quick ones before we sign off?

Tyler King (46:42.894)
I'll say this just because I think I don't even know how much I care about it, but a while back we did that AI Week thing where our devs were just working on a bunch of random little features to see how fast we could ship them. And a thing that came out of that is we shipped 12 small but very customer-facing features, the types of things customers ask for all the time but that are going to have zero impact on the business. We shipped 12 of them in one or two weeks. There are all kinds of challenges with that. How do you...

write the code fast enough, well AI helps, well how do you test it, how do you code reviews. One of the challenges, how do you tell customers about this? I think this is gonna be an interesting thing in the world of AI when people can, it's so tempting with AI to just ship a bunch of little crap that you would have never prioritized before and A, that's probably already a mistake. But B, customers don't want a pop-up in the corner of their app every day telling you about a new feature.

Rick (47:32.475)
Mm. Ugh.

Rick (47:40.18)
tell you like, I mean, this is the bane of my existence at my day job. I am in charge of all of our tool stacks, our tools and our revenue technology stack. And everyone is rushing so much to get features out and repackaging and trying to figure out how to price it. That over like the last six months, I have I've had to go to every single one of our vendors saying, What the hell do we have with you now? Like, you've changed the pricing packaging, I don't know what you have. And you're not exposed and they don't know the answers. You go to these reps and they're like, I'm sorry, like

Tyler King (48:02.062)
Yeah.

Rick (48:08.885)
Let's pull up the sheet. It's like this has this and this I'm like what you just said that had that and this had this they say the same thing. Like which one is it like they're like I let me come back to you. I'm like I need to know what we have.

Tyler King (48:18.156)
Yeah. We're switching you from the professional pro plan to the pro professional plan. Yeah, it's crazy.

Rick (48:23.229)
Yeah, plus.

Yeah, but it's just getting worse as we as people ship more features. So please don't do that. Thank you for having $10 per month price or $15 per month pricing and everything all including

Tyler King (48:37.686)
Yes, well, it's the pricing side, but even with one price, it's like, okay, we shipped 12. Like again, we knew that this week was not sustainable and this wouldn't be a model, how do you, I don't know how you communicate that to people and get them to hear it. So I think I definitely am not saying don't use AI to move faster, but I feel like a lot of people are changing their priorities because certain things, it became way easier to ship a little tiny feature.

and not nearly as much easier to ship a big, big feature. But I actually think right now, my mindset is AI means focus more on the big stuff. Because if you're moving faster, that's kind of a natural like counterbalance to it that's going to, it doesn't slow you down per se, but it slows down the rate of change for customers, which is important, I think.

Rick (49:29.557)
Yep. That's right. I think that's I think that's a model that you can apply to just about everything in your life or in your work life with AI is like, stop like with AI, it's about leverage. And if you're still doing like, tactical things, you probably should stop. I and I'm finding myself like, where is noise? Like, okay, what I used to do to man like get get get signal is no longer the right way. Like I need to stop that and force myself to get the information other way because it's not efficient.

but I'm doing that constantly and reevaluate like, where are my sources of information and how do I eliminate that source? Because it's way too noisy.

Tyler King (50:07.714)
Yeah. And the people who, any number of possible outcomes with AI, but I think one of them is that it's very real, it's very helpful, it changes things in a big way, but also causes so many mistakes, so many unforced errors. This might be the way to say, like, what we're all trying to do is say, how do we get all the benefits without the downsides? And I think this is not the full answer, but it's part of the answer.

Rick (50:30.773)
Well, that's awesome.

Tyler King (50:31.896)
Cool. You wanna call it?

Rick (50:33.651)
Yep. Well, if you'd like to review past topics and show notes, visit startuptolast.com. See you next time and Tyler's dad, should join us for a live one-sided recording.

Tyler King (50:42.104)
Pfft!

Do you want to, your dad and my dad do a like pop in an actual, get on the mics.

Rick (50:48.533)
I would be hilarious. I would love to see that. I don't think my dad knows how to listen to a podcast episode. I don't think he's ever listened to one. I think he's just curious. My mom listens to these. I don't think my dad's ever listened to an episode. I'll have to ask him. I don't think he knows what this is. I need to actually ask him if he understands what this is. Well, have a good week.

Tyler King (50:56.884)
he's not a listener. Why was he observing? Okay.

Okay.

Well that makes it even more funny that he was back there watching. All right, I'll talk to you later.