Special Acquired x Indie Hackers

In this episode of "Acquired," hosts Ben Gilbert and David Rosenthal, along with guest Courtland Allen of Indie Hackers, discuss the evolution of entrepreneurship in the digital age. They explore how the internet's reach has enabled niche businesses to thrive, and how platforms like Indie Hackers empower underdog entrepreneurs by providing inspiration, community support, and visibility. Courtland shares his journey from starting multiple companies, including the challenges and lessons learned, to Indie Hackers' acquisition by Stripe—a move that has significantly expanded the platform's reach and impact. The conversation also touches on the importance of aligning incentives in acquisitions, the value of trust, and the potential for tech companies to invest in media platforms to connect with audiences.

• Ben Gilbert announces he is using a new M1 MacBook Air for recording the podcast.
• David Rosenthal comments on the silent recording capabilities of the new MacBook Air, referring to its active cooling system.

"I've got new m one MacBook Air. This is the first episode we're doing on it. Nice." "Nice. Silent recording in the background."

The quotes highlight the excitement about the new recording equipment, emphasizing the silent operation due to the MacBook Air's active cooling system, which is a feature of the MacBook Pro.

• Ben Gilbert introduces himself as the co-founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle.
• David Rosenthal introduces himself as an angel investor and advisor to startups based in San Francisco.
• They mention that the podcast typically covers big companies and those with significant press coverage.

"Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle." "And I'm David Rosenthal, and I am an angel investor and advisor to startups based in San Francisco."

The quotes introduce the hosts and the focus of the Acquired podcast, setting the stage for the discussion on technology companies and entrepreneurship.

• The episode diverges from the usual focus on big companies to explore stories of underdogs in the startup world.
• Courtland Allen's experience with Indie Hackers, a community for startup founders, is highlighted.
• The discussion will explore the potential of the internet to enable niche products and the impact of millions engaging in small business entrepreneurship.

"But today's episode is quite a bit different. In our conversation with Courtland Allen of Indie Hackers, which is the largest community of startup founders, we dive into the stories of the underdogs."

The quote sets the episode's theme of exploring the journeys of underdog entrepreneurs and the role of the internet in facilitating their ventures.

• There is speculation and anticipation about Stripe's potential IPO.
• Stripe is considered one of the hottest private companies in the world.

"No kidding. And a lot of people cannot wait for it to IPO soon enough." "That's going to be I got to imagine our biggest episode of next season. Hopefully next season."

The quotes convey the hosts' anticipation for Stripe's IPO, suggesting it will be a significant event for the podcast to cover.

• The Acquired Limited Partners community offers additional episodes and live events.
• Members have a significant influence on the podcast's content.

"The community of Acquired Limited Partners is now an army in the thousands. For those of you who aren't already a part of the gang, becoming an LP gets you twice as many episodes, access to live events with us and other LPs."

The quote promotes the Acquired Limited Partners community, emphasizing the benefits of membership and the influence members have on the podcast.

• Pilot is a long-time partner and sponsor of the podcast, offering accounting services for startups and growth companies.
• The company has grown to be a billion-dollar firm backed by notable investors like Sequoia, Index, and Jeff Bezos.

"Our next sponsor for this episode is one of our favorite companies and longtime acquired partner Pilot for startups and growth companies of all kinds."

The quote introduces Pilot as a sponsor, highlighting their focus on providing accounting services to startups and their growth into a significant company.

• Courtland Allen is welcomed to the Acquired podcast.
• He is a former YC founder, MIT alum, and the founder of Indie Hackers, which was acquired by Stripe.
• Indie Hackers represents a different philosophy from the typical startup path, focusing on small business entrepreneurship in the digital age.

"Okay, now on to our crossover episode with Indie Hackers, Courtland Allen. Welcome to acquired." "Yeah, I'm excited to do this. People have been asking for a while for me to do an episode on myself."

The quotes introduce Courtland Allen and his platform Indie Hackers, setting the stage for a discussion about his journey and the indie philosophy in entrepreneurship.

• Courtland Allen discusses the impact of the internet on enabling niche businesses.
• The global reach of the internet allows entrepreneurs to create valuable and fulfilling ventures from their homes.
• The discussion includes the potential for growth in small online businesses and the shift in entrepreneurship dynamics.

"And so people are creating these very tiny niche businesses that could never have existed 20 or 30 years ago, and in some cases not even five or ten years ago."

The quote from Courtland Allen highlights the transformative effect of the internet on entrepreneurship, allowing for the creation of niche businesses with global reach.

• The conversation touches on the historical constraints of local small businesses.
• The internet has expanded the addressable market for niche businesses.
• There is surprise at the size of certain niches and the opportunities they present.

"With the Internet, you can just do one thing in one niche, but you have a nationally, if not globally addressable, market."

The quote emphasizes the paradigm shift in entrepreneurship, where the internet allows niche businesses to reach a global market, contrasting with the geographical limitations of traditional small businesses.

• Courtland Allen shares his background, including the entrepreneurial influence of his parents.
• He discusses the early exposure to computers and the internet, which shaped his interest in technology.
• Allen reflects on the hardships and encouragement he received growing up, which prepared him for his entrepreneurial journey.

"So I was just talking to Jason Calacanis about this on his podcast, where he was talking about, kind of know, can anybody start a company? Does everybody have an equal chance to do this?"

The quote introduces Courtland Allen's perspective on the varying starting points individuals have when embarking on entrepreneurship, acknowledging the mix of advantages and challenges he faced.

• Courtland Allen recalls his initial business attempts and aspirations to attend MIT.
• He reflects on his first entrepreneurial project, Fmail, and the attention it received.
• Allen's story includes multiple Y Combinator (YC) application attempts and the eventual acceptance into the program.

"So the very first one was this company called Fmail, which stood for, get this, Gmail for Facebook."

The quote recounts one of Courtland Allen's early entrepreneurial ventures, showcasing his innovative approach to combining existing platforms to create new products.

• Courtland Allen discusses his YC experience, including the funding and support he received.
• He describes the project he worked on during YC, Task Force, and the challenges it faced.
• The conversation covers the evolving perception of success in startups, influenced by the social media boom and the movie "The Social Network."

"We did winter 2011 for YC. So this was like in the fall of 2010, like November, December."

The quote places Courtland Allen's YC experience in a timeline, providing context for the development of his project and the broader startup ecosystem at the time.

• YC demo day presentation led to investor disinterest due to moderate growth and skepticism about email startups.
• Past experiences with email startups had been unsuccessful, leading to investor hesitation.
• The startup faced challenges in differentiating itself and convincing investors of its potential.

"And we presented and investors, just like, they weren't interested. They're like, yeah, you've had okay, growth, but where is this really going?"

The quote highlights the lack of investor enthusiasm due to the startup's moderate growth and unclear future direction.

• Kevin Hale's approach to business was distinct and influential, focusing on profitability without external funding.
• Wufu's business model included profit sharing, remote work, and a lifestyle-oriented approach.
• Kevin Hale's talk at YC provided an alternative perspective on success beyond raising large amounts of capital.

"And he was just like, yeah, we're not raising any money. We packed our bags, we moved to Florida. We're making forms, but we're making forms sexy."

This quote illustrates Kevin Hale's unconventional approach to building a successful business without the need for venture capital.

• YC's portfolio construction requires some startups to aim for billion-dollar valuations.
• There is an initial focus on growth and becoming a unicorn, but survival and incremental success are also valued.
• The "hill climbing algorithm" metaphor suggests that finding a series of small successes can lead to larger ones.

"They need people to go for the gold. What ends up happening is just a lot of YC companies died."

This quote explains the high-risk, high-reward nature of YC's investment strategy, where many startups fail while aiming for massive success.

• Indie hackers focus on building profitable businesses without necessarily aiming for billion-dollar valuations.
• The movement represents a shift towards self-sufficiency, freedom, and the creation of value for customers.
• There is a growing community of indie hackers who may eventually choose to scale their businesses or raise funds.

"Being an indie hacker is really about the idea that you can achieve your own sort of freedom, whatever that means to you."

The quote captures the essence of the indie hacker ethos, which is centered around personal freedom and self-determination through entrepreneurship.

• Taskforce began generating revenue after implementing Stripe payments.
• The initial success of monetization led to a reevaluation of the business model and the potential for profitability.
• The team faced a decision between continuing with their current project or pivoting to a new idea.

"So we threw up kind of a stripe subscription in maybe like a day or two, just like over a weekend. And the next weekend I think we made like $3,000 in payments."

This quote demonstrates the rapid impact of implementing a payment system on the startup's revenue, leading to a critical moment in the business's direction.

• The founder's journey involved multiple startups and learning from failures.
• Emphasis on enjoying the process and ensuring sustainability through frugal living and occasional contract work.
• The creation of Indie Hackers was a systematic approach based on past lessons, focusing on building something quickly and with minimal coding.

"Really all you need to do is just to make sure that you don't quit before you get to that number. That's really the entire name of the game, just don't quit before you get to the number where you succeed."

The quote underscores the importance of perseverance in entrepreneurship, suggesting that success is a matter of persistence rather than immediate success.

• Indie Hackers was launched with a focus on sharing transparent entrepreneurial stories, including revenue figures.
• The platform aimed to solve the problem of inadequate information about the success of business ideas.
• The founder built the site from scratch to leverage his skills and provide a unique brand experience.

"I want to build kind of an indie hacker business so I can sort of pay my rent, pay my bills, and then figure out what I want to do next."

This quote reflects the founder's intention to create a self-sustaining business that could also serve as a stepping stone to future endeavors.

• Courtland Allen (Speaker C) named his site "Indie Hackers" and chose a dark blue color scheme to stand out from other platforms.
• He wanted the site to be memorable and distinct from the white and black text prevalent on platforms like Medium.
• Courtland also opted for a custom build to avoid platform risk, having experienced issues with changing APIs on other platforms.

"I decided I wanted to make the site like blue. So it's like this very dark blue color that's probably not very accessible and kind of hard to read. But every other site in existence was just like white with black text. Everybody was writing on medium. It all looked the same."

The quote explains Courtland's intention to differentiate Indie Hackers visually from other content platforms, emphasizing the importance of unique branding in digital spaces.

• The term "indie developer" was already in use, and "hacker" was commonly associated with technical people starting high-growth tech startups.
• Courtland wanted to capture the essence of independent programmers not working for large corporations but creating their own ventures.
• The name "Indie Hackers" was chosen to reflect the independence and limitless potential of individual programmers.

"I wasn't thinking about, honestly, any of that indie even. I wasn't even aware that there were indie developers. I was just like, okay, well, I want the idea of an independent programmer..."

This quote highlights Courtland's focus on the concept of independence in programming and his lack of awareness of the existing indie developer community, reinforcing the originality of the Indie Hackers concept.

• Courtland discusses the trade-offs involved in building on someone else's platform versus creating your own.
• He emphasizes the importance of being aware of the risks and benefits, such as distribution versus branding and control.
• Courtland's decision to avoid platforms like Medium was due to potential limitations in distribution and branding.

"There are no hard and fast rules. Like never build on a platform, right? Like if you build on a platform, maybe it can give you additional distribution, but then you get the risk that they might shut you down or change things..."

The quote reflects Courtland's nuanced understanding of platform risk, suggesting that while platforms can offer benefits, they also come with significant risks that must be carefully considered.

• Courtland's friend Greg Eisenberg's idea of unbundling large communities like Hacker News inspired the creation of a dedicated space for specific discussions.
• Indie Hackers was born out of noticing sub-discussions within Hacker News that lacked a dedicated platform.

"Budy, Greg Eisenberg, has this whole idea of unbundling Craigslist, unbundling Reddit, unbundling hacker news. It's a huge community. There's all sorts of sub discussions happening in there that happen regularly."

Courtland's quote reveals the inspiration behind Indie Hackers, which was to create a focused community for discussions that were otherwise scattered within larger platforms like Hacker News.

• Email was identified as a significant growth driver for Indie Hackers, both for sharing stories and building a reader base.
• Courtland understood the importance of tapping into habitual online activities, like checking email, to reach and retain an audience.
• The strategy involved collecting email addresses and consistently sharing content to remind users of the Indie Hackers brand.

"You can almost imagine the web is like a collection of feeds or destinations, and some of them are places where people go habitually."

This quote explains the rationale behind leveraging email as a channel, recognizing it as a habitual destination that could be used to maintain engagement with Indie Hackers' content.

• Courtland's initial revenue came unexpectedly from a company seeking to sponsor Indie Hackers.
• The experience of selling ads to smaller startups was stressful and not always successful, leading to the creation of a "dream list" of potential sponsors.
• Stripe was at the top of the dream list due to its alignment with Indie Hackers' audience and potential for a larger budget.

"So I created kind of like a dream list of companies. Like, okay, which companies actually have a lot of money? That would be good sponsors."

The quote illustrates Courtland's strategic shift from targeting smaller startups to larger companies with bigger budgets for advertising, highlighting the importance of aligning with sponsors that have the financial capacity to support the platform.

• Courtland received an unexpected email from Stripe's Patrick Collison about acquiring Indie Hackers.
• The acquisition was considered based on alignment with Stripe's values and the potential to empower and support startup founders.
• Courtland weighed the benefits of joining Stripe, such as the impact on the Indie Hackers community and his own independence.

"I get this email out of the blue... 'Acquire Indie Hackers?' from, like, patrick at stripe. And I was just like, holy shit, there's like, there's no way this email is real."

Courtland's reaction to the acquisition offer from Stripe conveys the surprise and significance of the opportunity, indicating the potential for Indie Hackers to align with a larger entity that shared similar goals.

• Courtland Allen discusses the importance of trust and valuation in the context of selling Indie Hackers to Stripe.
• The process began with back-channeling to assess the trustworthiness of Stripe and Patrick Collison.
• Positive feedback about Stripe and Patrick's ethical nature was received.
• Trust is critical due to potential contract loopholes and unforeseen issues.
• Courtland hired a lawyer named Mattel who was very cautious and protective.
• The lawyer helped tighten contract language and represented Courtland's interests.
• Trust, but verify approach was essential for Courtland's peace of mind.

"So I just emailed as many people as I knew who either worked at Stripe, had dealings with Stripe, or had dealings with Patrick in the past. I'm like, hey, what kind of person am I dealing with? And I got a lot of really positive stories."

This quote highlights the process of due diligence Courtland undertook to establish the trustworthiness of Stripe and Patrick Collison before entering into any agreement.

• Initial agreement on numbers was broad and non-specific.
• Detailed negotiations involved considering various edge cases not initially contemplated.
• Courtland had to negotiate specific terms for stock options, vesting periods, and other contractual details.
• The acquisition allowed for unique contract terms not available to typical employees.

"And part of that was also doing research, like, how much do engineers at Stripe get paid? By that point, I was pretty good at getting people to reveal numbers to me from working on Indie Hackers."

Courtland used his experience and research to inform his negotiation strategy, ensuring he was well-prepared to discuss compensation and benefits.

• Courtland discusses the complexity of structuring incentives in acquisitions.
• Equity is often more attractive than cash, especially in high-value companies like Stripe.
• Creative structuring can align incentives and result in a win-win for both parties.
• Courtland's situation at Indie Hackers shifted from revenue generation to growth focus post-acquisition.

"If it's Stripe, for love of God, take the equity, take the stock. If it's a Groupon, then I don't know, maybe you want the cash."

This quote emphasizes the strategic decision-making involved in choosing between equity and cash during an acquisition, depending on the company's prospects.

• Indie Hackers maintained its brand identity and operational independence post-acquisition.
• Courtland enjoys the freedom to make decisions without heavy-handed oversight from Stripe.
• The relationship between Indie Hackers and Stripe is based on mutual trust.
• Indie Hackers' association with Stripe accrues positive sentiment towards Stripe without the risks.

"There's like a very small little logo that says Stripe at the very bottom of the website that you kind of have to search to find, which is freeing in a way."

This quote illustrates how Indie Hackers retained its unique branding and identity even after being acquired by Stripe, benefiting from association while remaining largely independent.

• Since the acquisition, Indie Hackers has experienced significant growth in its community and offerings.
• Courtland emphasizes the shift from a media company to a community-driven platform.
• The community forum and user-generated content have become central to Indie Hackers' value.
• Courtland measures the impact of Indie Hackers by estimating the number of companies started as a result of the platform.

"And one of the things we like to measure is kind of like a rough estimate of how many people have started companies as a result of Indie Hackers."

This quote highlights Courtland's focus on the tangible impact of Indie Hackers on entrepreneurship, using metrics to assess its success in inspiring new business ventures.

• Courtland reflects on the success of the acquisition, citing benefits for Stripe, Indie Hackers, and its users.
• The acquisition is seen as a positive investment that has generated goodwill and customer growth for Stripe.
• Indie Hackers' growth since joining Stripe is discussed, with a 100x increase in users.
• Courtland suggests that more companies should consider creative acquisitions that ensure continuity and growth of beneficial platforms.

"Oh, a plus. I think it's, I'm slightly biased here. Like, Stripe is a company, as you may know, that has lots and lots of money. And the India Acres acquisition did not cost billions of dollars."

Courtland rates the acquisition highly, recognizing its value and impact relative to the investment made by Stripe.