From Idea to 8-Figure Exit in 10 Years Flat — Aaron Foss, Nomorobo

David Barnard:

Hello, I'm your host, David Barnard, and my guest today is Aaron Foss, founder of Nomorobo, an app that stops annoying robocalls and spam texts forever. On the podcast, I talk with Aaron about the ultimate freemium strategy, making low risk bets with potentially asymmetrical outcomes and how Aaron bounced back after almost running out of money. Hey Aaron, thanks so much for joining us on the podcast today.

Aaron Foss:

Oh, my pleasure. Thanks for having me. I'm super excited to share my story with all the Sub Club listeners.

David Barnard:

Awesome. And it is quite a story. I launched my first app back in 2008, and it feels like every two or three years there was a think piece about the end of apps. And it was 2010 was the end of apps and 2012 was the end of apps and 2016 was the end of apps. And in this time span, after multiple pundits have declared the end of apps, you went from idea to launching an app to exiting at over eight figures. And it's such a cool story, so I want to start digging in by painting the picture of the assets you had in place that allowed you to take advantage and to have an advantage in building Nomorobo. What were you doing before you started Nomorobo that gave you those building blocks to then build this company?

Aaron Foss:

When I got the idea for Nomorobo, I was actually between companies. There's a lot of people that are between jobs when they're unemployed. When you've just sold one of your companies and then you're trying to figure out your next adventure, that was the spot that I was in. And I love leaving it up to the universe to push me in the right direction. And I was reading TechCrunch one day, and there was this robocall challenge from the FTC. And I just got interested in that, and that is how it all started.

David Barnard:

That's awesome. And before that, though, you're actually a programmer, but then also have an MBA have started multiple companies. You had this entrepreneurial base where while you were waiting for the universe to push you a direction, you actually had some experience, some foundation behind that, right?

Aaron Foss:

Yeah. And I knew what made me cranky and what I didn't like. Exactly. My undergrad was in information technology, and then I bolted on my MBA. I went to school up in Rochester, New York at RIT. And I thought I wanted to work at a big company. And to this day, I don't know why, but just seemed like the right idea. And even back then, my mom was like, "You know you're going to make a terrible employee." I was like, "Oh, okay. Well, let's see what happens."

I was a bad employee for all the right reasons. I worked for basically Motorola. It was a company called Symbol. It was acquired by Motorola. And I was building really cool stuff really quickly. And that was just incompatible with big companies. My 401k vested on, what, week 52, day 365. I was there for two more weeks, and then I started my own thing. I started a consulting company, and then one thing led to another where I had a few successes and failures in the startup world until I finally hit my stride in roughly around 2011.

David Barnard:

Yeah, that's awesome. And everybody has different advantages. I think there's folks listening to this podcast who are a marketer at a bigger app or they're in product or they're have different experience, life experience, business experience, entrepreneurial drive, whatever it is. And putting those building blocks together and going for it is what it takes to build a company like Nomorobo. It's really cool to see that story of how you had this entrepreneurial journey and push you into creating the app. Then let's talk through the FTC contest. You saw in TechCrunch the FCC wanted to solve robocalls. Where'd you go from there?

Aaron Foss:

I had been building telephony apps for years. I was one of the first adopters of Twilio. When I saw Twilio... I still remember this. First time I saw it, I was like, holy crap, I've been looking to be able to hook my code into the phone system and it's always been impossible, and Twilio makes this simple. I got a modem for my bar mitzvah. I was on BBSs in the '90s. I go way, way, way back. And I saw Twilio, I jumped on it, just built a whole bunch of stuff with our user group here in New York City. I entered TechCrunch Disrupt Hackathons. And everything that I built had some sort of communication, telephony, SMS, something like that. I had a lot of experience in that area, but I had never built anything commercial.

This is what's weird about it is that the FTC is the government agency that is tasked with stopping robocalls, and they put out this competition. It was a crowdsourced competition, which were 13 years ago. It was really popular to have a crowdsourced contest and a competition and get the best ideas from people who ordinarily wouldn't be in this industry. And that's exactly what happened. They put up $50,000. 800 people entered, and they picked me and another guy, and we split the prize.

What's interesting too is that that was super controversial back then. There was so much negativity with, wait, you're the FTC and you're given $50,000 to someone to solve the problem that you are tasked with solving? But we in the industry understood that if it wasn't for that... Not that I needed the money, but that was the... Cool, there's a big prize. And then I became aware of how big this problem was, and then I was incentivized to try and solve it.

David Barnard:

One of the things you and I have talked about before is how Nomorobo is ultimately the compounding of thousands of small decisions and a few large decisions. And this is one of those large decisions, but it was also a super low risk decision. You didn't have to put hundreds of thousands of dollars on the line, you didn't have to quit a job because put yourself in a position where it was a low risk opportunity. Yeah, tell me more about jumping headfirst into that contest and how long it did take you to pull something together.

Aaron Foss:

I love things where the risk and reward is out of balance, where obviously the risk is low and the reward is high. You don't want it the other way. That's not it. But that kind of framing is why wouldn't you at least take the shot?

As I mentioned, before that I was with a company called Side Tour, and we went through Techstars in 2011. It was just a little bit earlier. And what I learned in Techstars was your technology is great and wonderful and the product is great and wonderful and all your team and all those other pieces, what's really important is how you pitch that idea to people. It's going to be if you're pitching to investors, if you're pitching to potential hires, if you're pitching to partners, investors, whoever it may be, getting that idea across.

And so I knew I had a technological solution. And thinking back, the rules were basically impossible. It had to work on mobile and it had to work on landlines. It had to be easy to use, it had to work; no false positives. It knocked out apps. This is the thing that a lot of people forget about is we're known for one of the top apps in the app store now, but when I started the company building apps like this was impossible. I don't want to say illegal, but Apple prevented it. And you know this is Apple's world, we just live in it. How insane is that to start an app company building an app that is against app store rule?

We couldn't do it. But what I could do is on the landline side, I had this idea on how to use SimRing, which is one of those little dark corners of telecom. And it's a feature that... And everybody knows voicemail and three-Way calling and all those other pieces. But SimRing basically let us put a phone number; it was powered by Twilio. People would be able to put it into their SimRing list, and then we would basically get a copy of the call. As the call came into their house, it would also ring on our server. And that way we could do all the analytics.

I was able to pitch that, and that really was the key. If you read the competition guidelines and you read between the lines, you could see that the FTC wanted something that went around the carriers. It couldn't have carrier cooperation because the carriers weren't incentivized to fix this. My idea of being able to go to the consumer directly, have them do something relatively simple, and then get robocall protection, that's ultimately why they picked it.

It's interesting, but the second person that we split with had a better algorithm. I basically had no algorithm at that point. I was like, "We'll figure out how to do that." But the key was almost like this distribution, this go-to-market, this how are we going to get to consumers? And that other person... Or I guess 799 other people just didn't have anything that was good enough to win.

David Barnard:

Yeah. And so sharing that, quote, "idea," you came up with an innovative solution using existing technology, getting around the carriers, and then you talked about it on stage. How did you build a company on an idea that was already out in the public before you even launched?

Aaron Foss:

What's really interesting about this competition, I won and they also picked another winner. He had a better algorithm, I had a better way of getting to the consumer. Thing is he didn't want anybody to, quote, "steal his idea." When the press conference came, they invited us both down to DC to be in the press conference, he didn't want anybody to steal his idea, he didn't want to talk publicly. I jumped on a train and was there as quickly as I could get there.

And so it's a giant press conference about a giant problem from a giant organization from a giant government, and there's one guy there. There's all these cameras. I'm doing interviews with CNN and Fox Business News. I just talked to everybody. Do you have time to talk to the New York Times? I'll stay here all day and I'll talk to everyone. Did I go into the technical details? No. Did I talk about SimRing and... No, but using a part of the phone system, it's going to be launched. And again, nobody ever heard from the other guy again. I don't know what he did.

David Barnard:

Yeah, it's interesting how you did share and the other guy didn't. But part of the value in sharing was that you got a ton of attention that you wouldn't have otherwise gotten. I know you eventually created a signup page. Did you have that before you went to this press conference? Were you shouting from the rooftops, "Go to nomorobo.com and joined the wait list?"

Aaron Foss:

Yep. That's the simple answer. I knew that that was an opportunity, the amount of... We call it earned media now. But I was just like, yeah, I got to get as many people and capture their information as much as I can because I knew that that was my cheat code. That was the thing that I had that no one else did. Even when I entered the competition, I put together a video. Nobody else put together a video. I built a prototype. Maybe some people made prototypes. Most people made a business plan, a 30-page description of what they were doing. Mine was a one-pager, maybe it was two. Talked about the general technical pieces. It was all the source code, the database schema, a video literally at this desk. This desk, what I'm sitting at right here is where I built it.

And then I just sent it on over there and still remember the day. I was sitting right here and I'm coding and my part of my brain just came up with the name, it was just thinking about it, no more robocall. I'm like, "Oh, call Nomorobo." And I checked the domain was there; I registered it. Cool. Went and moved on.

And maybe that's the other part too is for this competition, I named it something catchy. Nomorobo, no more robocalls. This other guy, it was a white list, gray list, blacklist way. The name was 17 letters and everything, and it just wasn't catchy, whereas for me, they'd be like, "And his idea, Nomorobo." Cool. That's what got it.

Go to nomorobo.com. It was the video and a little box that said, "Put in your email and we'll let you know when we launch." And by the time I launched, I had over 30,000 people that had given me their email address for free. Just that was what I used as an analog for do people want this? I wasn't earning revenue, but every day that I was seeing more and more email addresses coming in, I knew that this was a big problem that needed to be solved. I couldn't not do that.

David Barnard:

Yeah. And that's the thing is there are ideas that you want to have a big launch and so you want to keep some things close to the chest, but when you get something out there, you validate whether you should spend the next six months of your live building this or not. And it's just such a great story that you shared all of that, and instead of just getting ripped off, it actually was this lever for you to then launch from a much stronger position. And again, another thing that you told me in the past was if the idea was that easy to just rip off, you probably don't have a business anyway.

Aaron Foss:

That's exactly. And you know what's funny about that? The way I use SimRing, in my opinion, even to this day, there was only one way to win that competition was by using SimRing. When I'm writing the code, I figured that there was going to be five other people that were going to come up with this because when I looked at the problem, there was only one solution, and it was using SimRing. That was what I was most worried about, that I was just entering with something that everybody else did. No.

As a matter of fact, I talked to the CTO of the FTC afterwards. He was the guy that was in charge of this whole competition. And they looked at all 800 entries, and when mine came up, he basically said, he's like, "This can't be true." He's like, "Because if this was so true, it looks easy. Everybody would be doing it." And this is the story he told me. He called his friend at AT&T and is like, "I don't know, there's this guy in the competition and using SimRing." And he's like, "That wouldn't work." And the guy went, "Actually, that would." He went, "No," and he hung up the phone, called up another guy. Come on. He's like, "When the second guy told me, "Actually, that's just stupid enough to work,"" he was like, "we knew that you had won at that point. But if I hadn't done that, I don't know where we would be.

David Barnard:

Okay, you win the contest, you get a bunch of press, now you actually got to build the thing. Did you raise $10 million, hire a huge team and hit the ground running? Or what'd you do?

Aaron Foss:

Well, first part, I was also doing some consulting and so I had to wind those down. Okay, I got to get some breathing room. Cool, great. Tell everybody class train and everything. I won the competition in April of 2013, and then I got invited to speak in front of Congress in July, which was, okay, this is an opportunity. And I've now testified in front of congress three times, so if anybody has any questions on what to do, give me a call. I've done it a lot. The last time I did it, I was sitting in the chair that Mark Zuckerberg sat in just a few weeks before. His did not go nearly as well as mine did. But that became more media, that became a bigger part of the story.

And I was already building it. If you look at my testimony, go on C-span, you can see I say, I'm like, "And I already have 3,000 people who have signed up," which I thought was great, in a couple of months, getting 3,000. As I mentioned before, right when it launched on October 1st, it had over 30,000. But no, what I figured was, okay, I got $25,000 from this competition, I don't know, maybe that'll last me a day, maybe it'll last me a year. I don't know. And I always figured that that was an economic thing. My only expense at that point was Twilio, and it was the biggest one because the way my idea worked is we have to answer every robocall and then hang up on it. I know everybody's, "Oh, it's free calls and everything like that." Yes, but at volume and things. When I flip the switch on, it's the standard story. The email servers got shut down because they thought we were spamming so many invites. I'm running, I'm jumping from one foot to the other and everything. But after that first week, did the numbers, I'm like, "I'm going to run out of money in six weeks."

Turning to Twilio again, I know Jeff, I know all those guys, it was like, "What can we do?" We started negotiating that. I figured out what can happen, and then we opened up a convertible note, but it was friends and family. It was my mom, my stepfather, a couple of guys that I knew that had successful exits. But it was very, very small. Let's see what happens because there was no business model at that moment.

And maybe this is the really important part is in order to stop robocalls, you need a lot of data, but in order to get the data, you already need to be stopping robocalls, so none of that data existed. This is the other part; I needed to prime the pump somehow. Giving away the robocall data would get me the real time data that I needed. I needed something else.

I was talking to the FTC about this and telling them about this problem, and they said, "Well, would it help if you got five years worth of all of our do not call complaint data?" I go, "That would be really helpful." And because again, I don't know anything. They're like, "Well, if you FOIA it, we are going to be obligated to send it to you." I said, "I will go and do that."

Day one, I got the CD ROM in the mail and I crunched through it. Ridiculous looking back at it, the false positives, it was blocking stuff it wasn't supposed to and whatever, but it was a enough to start and then give away the robocall blocking on the landline side, which arguably has much less value than the mobile side. But again, I didn't even know how we were going to do mobile but I just needed time to basically figure it out. I figured, okay, we'll monetize this somehow, we just got to go and get this data, get people putting their number in their SimRing list, and I'll figure the rest out. That's why if I went and tried to raise $10 million, what are you going to do with it? I have no idea, so it was just enough to keep the business running.

And our first KPI is only one. And I recommend this for all entrepreneurs. A startup can do one thing barely. Ours was robocall blocked. Because that meant that it was working. People were signing up, people trusted it, it was growing and that kind of thing. That was the only metric that we did. And then everything that needed to block more robocalls when I needed more money, that was where it came in.

David Barnard:

Right. You built it all yourself. You use that engineering background and built it all.

Aaron Foss:

Still to this day, the devs now call it Aaron Code. There's initial code. And I built all the website. Literally every single thing was written by me.

David Barnard:

That's incredible. Then that fall, you launch on the web to block landlines. And you're not making any money. You raise a little to keep the lights on, keep yourself fed, keep the office AC going. When did you first start thinking, okay, we're going to monetize this, and this is how we're going to monetize it?

Aaron Foss:

The turning point really came with iOS 10. Apple said, "Devs can now build apps that block calls." One of my investors actually had a house on Fire Island, and we were walking to it, and I just happened to mention, I was like, "Yeah, apple iOS 10 is allowing it." "Okay, so then you're going to have to build it." I went, "Damn, yeah, you're right." It was one of those, I was like, "Okay, okay, okay."

Now, to that point, well, you're giving away the landline, give away the mobile. But I was like, "No, we got to monetize this at some point." And that's really the turning point. That's the part that's interesting. And I think maybe to your listeners, you're on Sub Club, we were one of the first robocall blocking apps in the app store, but more importantly, we were one of the first apps that use subscriptions. Everything was IAP, in-app purchases and everything. I don't know if we were the first, but easily one of the first five because I knew that that's how we needed to monetize it. $2 a month or $20 for the year, but at least that way... And it was just using all the data. It's all the same data, that we're just getting it in different ways.

And that was the inflection point where once the mobile app came in, now all of a sudden... We had some API enterprise deals and we were selling queries and things. It brought in an amount of money, but not enough to be a viable business. But when Apple changed everything, we were able to sell direct to the consumer. That's really when it changed. And I could talk about the rest of it because it changed a couple more times after that.

David Barnard:

Right. I wish I would have, in 2014, 2015, said, "The only real viable way to monetize that weather app is via subscription," and been a little bit earlier to that bandwagon. There was consumer pushback during those early days. People were used to free and cheap and paid up front apps. It's interesting how the cost probably helped force that decision. When you have ongoing costs, the better it works, the more calls it blocks, the more calls you get, the more expensive it is for you to run the service. It's just not practical to do this in upfront payments or any of the other really models available. You could have sold bundles of calls, and it would've been a mess. And there's just so many ways that Apple opening up subscriptions as they did in 2016 when you started doing it allowed an app like Nomorobo to exist. The platforms, because of the limitation on business models...

And I think things have improved with subscription and as much as a bull as I am on subscriptions specifically, I still wish Apple would allow other options like upgrade pricing. There's so many other business models. That's a whole nother conversation. But it's cool that the timing of you landing on an app coincided both with you understanding that I need to monetize via subscription, Apple allowing it. And then even iOS 10, it was a perfect storm of technology and monetization to launch at the right time.

Aaron Foss:

One other piece too is our price point, and everybody complains about the Apple tax, but on $1.99 a month, we were actually getting a better deal. If we had to go and get off the shelf pricing and we had to run it ourselves, I actually did the math, I'm like, "Actually, Apple is cheaper for that." And so everybody was fighting me on $2 a month. "How are you going to do this? What about that one?" I saw it very simply, or maybe I just didn't know any better, and I was like, "Here's a service that you need, constant updating every 15 minutes. $2 you're going to pay for." We have the ability to do subscriptions easily. We don't need to go and craft all this from ourselves, we just latch onto Apple and then we just collect checks.

And that was the beginning part, if we want to call it even phase one. That was the beginning of the company. And when the light at the end of the tunnel, well, there was a light. If you're walking down that tunnel with a flashlight and looking and looking and looking, that was the first point. It was like there was a glimmer. I always knew I was on the path or a path and I knew the general direction, but that finally was like, wait, wait, here it is. Here's the answer.

David Barnard:

Again, talking about all these small and big decisions that are compounding over time, you've won the contest, you've built up this email list, you've launched on the web, you've got users, you've got people's attention, how did you launch the app? Was it just a massive splash? By that time, did you have 100,000 emails? Or in 2016 when you launched the app, what did that look like?

Aaron Foss:

I'm not a big fan of big bang launches, maybe I just got burned that one time. There's so many things that can go wrong. Every launch we've had, I don't want to say it's been like a soft launch, but it's ready when it's ready, and then we push it out. And then on our end, we've never done any paid acquisition, it's just organic, and it's also leveraging what we already had. We had all of these landline people that we were covering. We had their email address. They loved it on their landline, so when you send somebody an email and you're like, "Hey, you love it on your landline, why don't you try it on mobile?"

This is also probably pretty important too, is from the very beginning, we built in the free trial. I didn't want this to be a freemium, and we gave a two-week free trial because we wanted people to try. You may not get a robocall today or tomorrow, but by two weeks in, you're going to know. In so many words, giving people more than they expected, it made it very easy just push the button, try it on out. And we even say, "If it doesn't work for you, totally cool. Just cancel your subscription." Those things just made everything easier. If we had charged, whatever, $7,000 or we gave a three-minute trial, or we need you to literally take out your credit card, write it on down, send us a check, all these things that are just putting friction in, I think that's why it was really successful.

I don't want to say we didn't have to work hard. Obviously we worked really, really hard, but we didn't have to work hard convincing people that... The demand was there, the problem is there, people were screaming for a solution, and we had already proved ourselves, so that part, yeah, we put it into the app store and we might've sent a press release. I don't even remember. Went to the reporters that had been covering it for a while. "Hey, we got this new thing." They were able to just, "Oh, cool. That's new. Let's go and get that out there using it." And then that train just started chugging along, that flywheel started moving, and then we just kept on adding more fuel to that fire.

David Barnard:

The launch, you said you soft launched it. Did you get tens of thousands of downloads, hundreds of downloads? And at what point did you really ratchet up the spigot? Did a lot of press come in right away? Or are you saying you launched it and waited two or three weeks and make sure everything was going good, send out a few emails, check in, and then you told the press and sent the big email blast?

Aaron Foss:

Yeah, basically we launched it, made sure that... We had to obviously get some bug fixes and all those other things. Then once it was ready, yeah, I would just write to a reporter and, "Hey, Herb, I know you wrote about this all the last time. Go in." And we grew. And maybe this is a flaw of mine, but I build something, and then I'm onto the next thing. And I don't even look back. So many people are looking at the analytics and this and that. All I figure is, okay, that's, quote, unquote, "done" for now. It's launched. Cool. Onto the next one. I'm not a big goals setter like that. I don't think goals work and deadlines and things, so I like systems and things. And things just take as long as they do, and then when they're ready, they get pushed out.

And literally that worked, we talked about the press, and then we were onto our Android version. Cool. "Okay guys, let's do it again." Build out that whole thing. And you have to find the team and everything. And then once that's done, just keep on moving. I couldn't even really tell you. I don't want to say I stopped looking, I had it in my board deck and everything like that, but it was just like, okay, this is making money, this is working. Let's fix it. Keep on moving forward. What's the next thing? What's the next thing? And not in a squirrel or shiny new thing, but just what's the next thing that we need to do?

Again, I don't want to give away the ending, but that's how also I knew that the company was ready for acquisition, when my work was done, everything obviously can be better and better and better, but I got to the end of what I'm really good at, what makes me special, what makes... It needed to grow up, it needed to graduate. And that was a thing that I had a lot of time wrestling with, but ultimately that was the right decision.

David Barnard:

At what point in this story did you start hiring? You're a lone wolf. Did you hire to build the app? And how did you think about that hiring process? I know we've had other solo developers on the podcast, like CardPointers, Emmanuel Crouvisier, and the Slopes app, Curtis Herbert. I don't think Emmanuel has actually hired somebody yet. I know Curtis now I think has two employees. But when you're a solo, it's a big leap. It's important to really think through when and who to hire. How did you think through that process of growing the team around you?

Aaron Foss:

Couple of pieces. First one was it was a lot of work, obviously, and doing everything, so the first piece that I'm like, "Okay..." And I love customer support. I love talking to all the customers and being right there, but I can't talk to every customer and do this and do that, so the first piece that I thought is, okay, I can break off customer support.

As it turns out, it was a guy that I was in Techstars with. He was a hack star, and the company that he worked for had folded, so he was looking for opportunities. And in that case, it was just, as a contractor, he's like, "Do you have anything to do?" I'm like, "We need to set up customer support." He's like, "Oh, I set up Zendesk and..." "Oh, awesome. Can you do that for me?" That might've set the tone for working with a lot of independent contractors. It wasn't just because... I don't want to say race to the bottom cheapest, I actually found that some of the best people, you can't hire them. You can contract with them. They may be here. And looking at that opportunity.

He set me up, he did all the customer support, then he went and got another job and he's like, "Good news, bad news. Bad news is I'm not consulting anymore, the good news is my brother is graduating from college and he's really good at this stuff also." "Cool." He took over and was able to build the entire thing, and now he's actually the product manager; worked his way up.

I did the same thing on the technical side. Okay, I can write all the code, but I could use some help. And this is funny is that I've never put out a job application or done interviews or anything like that. Everything was written in Laravel and PHP. And there was guy, Jason Gilmore, who's very good friend of mine even to this day, he wrote basically some of the original books on Laravel. And he was offering to buy the books and whatever. I was like, "I want to be a better developer." I just saw him from his offering. I go and buy it, and it's like, well, you can get the book for X and the book and the videos for $100, or the book, the videos and a one hour consultation for $200. I get it now. It was like lead gen.

We jumped on and we talked and we really hit it off, and I just want to learn some more. I'm like, "Do you do consulting?" And he was like, "Yeah, I can." And we worked together for years from that. We just found each other. It wasn't now hiring or doing... That seems to be the way that we've grown the team. And I can give you seven other examples of how that happened.

David Barnard:

No, that's really cool. For a lot of entrepreneurs, that's how you have to think. It's like when you're at 110%, what's the 20% you can carve out to give yourself just a little bit more breathing room to work on those higher leverage things? And then you start working on those higher leverage things and you get back to 110% capacity, and you're like, "Okay, now I got to carve out another 20% or 30% to free myself up."

The ad hoc, bootstrap, very scrappy, starting with contractors, I think it's just such a smart way to operate in the mobile space, I think it's been interesting and will continue to be interesting seeing companies like Nomorobo get built and have fantastic exits. When the narrative around VC, do you go raise $1 million? It just sets a whole different set of priorities, a different set of expectations. And, yeah, you can then go hire somebody full-time, hire a whole team and build out the team, but sometimes doing that doesn't help you go faster. And being scrappy and hiring as needed, working with good contractors is a great way to build a business and own more of that business in the end.

Aaron Foss:

Yeah, what I found very early on, you just don't know what to focus on as a startup. "Oh, we can do this, we can do that, we can do this." If you then have unlimited resources, you're like, "Oh, we'll just hire this person, we'll hire this person." Now all of a sudden the focus gets even less focused.

I don't really have a methodology. I've never, again, worked with big teams or anything, but I just call it a hopper. My job was to keep the developers' hopper full and to manage what's important on that. And then their job was just to pop out the thing on the top. And sometimes that thing on the top gets pushed down because there's other things and whatever. And so I have two timeframes, now or later. Are we working on it now? Cool, let's do it. Or we're working on it later.

Sometimes later never comes. And then that feature just wasn't important. But knowing that here's your resources. And that's a constraint, that you're confined in that. Okay, cool. What do we get? And that means we can't do these three things, we can do one of them. Cool. Okay, well, let's run then do the next one. Like I said, there's an infinite amount of work because once you do something and we got to do... And there's of course bug fixes and those kinds of things. Those obviously pop up to the top. I love that constraints just breed creativity. That's the way I like to build a business.

Yeah, looking back over the last decade, VC has even said it, it's just a different game. And I don't know what we're calling this here, it's indie development or whatever, but this is going to become the norm. Even when I started, even remote businesses weren't really popular. My board was like, "When are you going to buy your own servers?" Yeah, I laughed. I was like, "Never." He just looked at me. I was like, "We don't do that anymore." I'm going to rack and... No, that's not what I'm going to use the money for. That doesn't make any... Of course, I couldn't say that, but that's what I was thinking. I was like, "You just don't get it." Nowadays, I think people are getting this. I don't know what this is, but hopefully it'll have something.

David Barnard:

To be fair, I think there's times when the money can be an accelerant. But that's what you really need to understand is when will the money actually be an accelerant? And when will it unfocus you? As you put it. When will it remove too many constraints where the constraints were actually helping pull you in the right direction? You did end up raising money, right?

Aaron Foss:

Mm-hmm.

David Barnard:

What was a total you ended up raising over the course?

Aaron Foss:

It was two and a quarter.

David Barnard:

You did raise money, but you raised money along the way, not I need $1 million to even build this thing out. What was the thinking behind when and how much you did end up raising?

Aaron Foss:

We basically did it in two tranches. The pre-seed, basically $1 million, and then $1.25 million. And that was before safes existed and everything. It was a regular convertible note. But the first one I opened for half a million, but I raised I think $50,000 of that. Okay, cool. Because it was rolling. Okay, let's see what that happens. And then I did the $250,000, and then we extended that. When it got up to the $1 million, that's when we did a raise, and then that got to profitability.

David Barnard:

It was just on an as needed basis. It was like, okay, there's traction. We're moving the right direction. We're not going to go raise a ton of money, we're going to raise just as much as we need to get to this next step. And then you just slow those raises?

Aaron Foss:

And I never thought about it in that way, but yeah. And it's not one of those things... We didn't have to meet any milestones. And it wasn't adversarial or anything, like you'll get this when you get that. This isn't like training a dog or giving treats to an animal, but it was just like, hey, I need this much because we have a lot of assumptions that we have to go and test and we don't know. And so we didn't even do any advertising because no way to do it. But I was able to literally call or email all the main reporters. We did a lot with SEO and organic, so didn't have to budget for that. What do we need to budget for? Our telecom development folks. And that was how we just kept on growing that way. And then, I'm glossing over it, but we have the white knuckle, $944 in the bank account story, if you want to hear that one too.

David Barnard:

Yeah. No, tell me that story.

Aaron Foss:

Well, I gave it away, but basically we launched the mobile app, but as you know, there was a 14 day trial, and then there was 30 days from Apple and then another 30 days. And in that time, the investors were even saying, "Oh, you're going to run out of money." And that's when it got a little bit tense and they would invest again, but it was under very, very poor terms. It was really, really bad.

I saw the way that this was going. Just the timing had to be absolutely perfect. And I reached out to Twilio, and I was like, "Instead of net 30, can I get net 90 for three months? I need a bit of a loan here because of this whole thing." And they were like, "Yeah, absolutely." I went to the bank; I was able to get a line of credit. Didn't need to touch into that, but at least I got that in case I need it. I had backup plans in case things went poorly. And then there might've been, oh, we paid this bill a little bit later and everything.

But literally $944 in the bank account was probably an over exaggeration because if you go and look at all the bills that we owed. But it literally potentially to the day, to the minute, to the whatever, just coincided that then those apple checks started coming in, then we were able to do it. Then we went back down to normal terms, and then it just flew. It really was. But it was a dangerous, dangerous game that even looking back, I don't know how it worked.

But I knew at that point the deal that the investors were giving me was untenable because they had backed me into a corner. Basically if I took that, I basically would've had nothing. Even if this thing got to be huge, I would've had nothing. There was a zero chance of me having anything at the end of that. And if I rolled the dice, there was a non-zero chance of having it, so I was like, "Well, rationally, I got to roll the dice." And in that case, pulled out all the stops and it worked.

David Barnard:

Yeah. The scrappiness, it's how you have to operate right?

Aaron Foss:

Yes.

David Barnard:

Back in 2008, I was in the same position. Apple's paying 33 days after the close of the fiscal month. It's tough in many circumstances. Actually, after launching my apps, I hit probably very similar... I don't have the exact number in my head that I've remembered all these years later, but I ended up selling my wife's car to keep going until I got that first Apple payment. It's like I knew the money was coming, so I just needed whatever it was, 30 days of runway for my wife and I to get the bills paid. And we sold her car. And we're a one car family for another five years just to keep the lights on and stretch until that first payment came in.

Just before that story, you glossed over a few things. You didn't do paid marketing ever, but talk me through some of the things that you did do from SEO to press. Let's go through each of those individually, what you would consider the top three or four growth levers that you did put effort into and probably even spent money on contractors and other things. Even if you didn't actually pay for ads directly, you spent on marketing, you just didn't pay for advertising. Let's talk through those key leverage points that you unlocked in this journey.

Aaron Foss:

The way I look at it is your product is part of your marketing. Offering the free landline blocking, my Twilio bill peaked at like $120,000 month. It was pricey. It was always during political season because that's when all the robocall... You may have remembered there were one or two really big elections in that time when just the calls skyrocketed. But because of that, it's like, okay, well, then the next piece is now we have everybody's email address that we can then go and say, "Hey, try out these other pieces." That was really huge.

Second, from the data that we were able to build up, we were able to do a lot of organic and SEO. What happened in addition to the consumer calls that are coming in, we built a honeypot. We bought all of these old dirty numbers from Twilio and other carriers. It grew to over 300,000 lines of a honeypot. But we're never answering and recording the consumer calls, and we're super privacy conscious focused. We got our start with the FTC, we can't touch that, but on company owned phone lines, we can do whatever the hell we want. That balance of using the consumer side to figure out some of the data points, then sending it over to the honeypot where we're able to get recordings and more data, and then generating programmatic SEO pages from that.

One of the thoughts that I had was, okay, what happens now? If you get a call from an unknown number, while it's ringing, you run over to Google and you type it in and you hope that you can get there. Well, let's just make landing pages for every one of those phone numbers so when you type it in, it'll say Nomorobo, and this is a scam call. And when you clicked on it, it would give you the recording, it would give you the transcription, and then it would say, "Hey, block this and 7 million other."

All of that could have been our organic side, our marketing budget, but that's where I said, "This is a really good use." I would rather spend $100,000 a month and block robocalls and then funnel that into something usable on the SEO side rather than $100,000 in an ad budget. Which maybe that would work too, I don't know, but I just felt that it was better to build the product and then bring people together. When you're looking for... you just see a phone number.

That was the thing. Maybe our set, it was like if you have a different kind of app or whatever, maybe you don't know the long tail keywords. Ours were so long tail, it was just a number, a 10 digit number. But it worked really, really well. And that was one of those moats that we built, is that you couldn't really compete against that. Once we were there and we were offering value on both sides and then saying, "Hey, you want to go and do a trial?" "Yeah, sure."

We took away all of the friction, and then it just made everything... Even the new acquirers, they're big into paid. Well, that's just going to make the paid better. Cool. Click on it, get your trial, move on through. And if we had anything that increased friction, I don't think it would work very well.

David Barnard:

Okay, number one, you have the freemium landline product that you're upselling the mobile product to.

Aaron Foss:

I would consider landline free. Even to this day, you can't pay for it, and there's nothing you got. You can't get anything better, it's just literally, we just protect your landline for free.

David Barnard:

That's awesome. Okay, you have this totally free. And I was saying freemium because for a lot of your customers, I would imagine they're using the landline for free and they're using the mobile app paid, so it's a weird kind of freemium.

Aaron Foss:

It is. And maybe this is another piece. I left this out, but because we were offering it for free, the carriers came to us and said, "Can we tell people about it?" Yeah, literally, I did a call. At the time, it was Time Warner. Right now, it's Spectrum. They were coming to us because they were like, "Oh, if we build this in and then we can basically check off the box that we're providing robocall blocking." "Yeah." "And we don't have to pay for it." "No." Literally in the control panels, there's one click access where they would hit our API, send us the phone number, get it activated, put the SimRing number into their whole thing. And yeah, that was another huge channel that we didn't have to pay for it or we would've needed to spin up the whole biz dev division and work on these whole things. And again, we talk about 10,000 little things. Would they have done it if we had not won the FTC competition? Probably not. Would they have done it if they couldn't try it out on their own and seen it? Probably not. Each one of those, then they came to us and, "How do we do this? Cool. Let's just go and do that." And that started building. That was the free side. But you're right, all of these, I guess you could technically say is part of a marketing budget,

David Barnard:

Yeah. And this is where I think a lot of people get freemium wrong, where when you're going to offer a free product and not directly monetize, ideally... Now, there are some cases where you are just going to give away value for totally free and maybe not even have ads or whatever, but ideally, when it's most synergistic, when it works the absolute best, those freemium users are delivering value in some other way.

It's like All Trails. They're suggesting new trails and tracking new trails and correcting trails and part of the community. And they're helping build out the value that then All Trails sells in the premium subscription. And so in your case, it's fascinating that it really is a form of freemium, and what you were doing was subsidizing the free landline blocking because that gave you so much data that then made the mobile product that was paid so much better. Such a fascinating end around of freemium. It's not your standard freemium, but that's exactly what you're doing. And it's that perfect kind of synergistic freemium.

Aaron Foss:

Free and freemium are dangerous games. If you do it, free and freemium are user acquisition paths. It's not a revenue model necessarily, it's a way of acquiring customers. Yeah, looking at it through that lens, I always joke, it's like riding a unicycle, juggling chainsaws that are on fire. If you do something wrong, you're dead, but if it works, it's really impressive. And if you can reduce the risk of it not working... And again, this is defined in all these different ways. That seems to be the theme. But yes, 2023, we're looking at it very differently. People understand it. Back then, Instagram was six months, maybe a year old or something. Maybe it had just been acquired. Airbnb was still new, Uber was still all shiny and new., And everybody just looked at the world differently. It's like, just give it away, give it away, give away. That's, well, other than being a Red Hot Chili Peppers song also, but it's just that was the thing back then. Nowaday, you just can't do that. You have to use those as user acquisition channels, and you have to think about it in your business as that. It's not going to earn you revenue.

David Barnard:

How is it bringing you value? Is it bringing you value through data? Is it bringing value through community? Is it bringing you value through being an amplifier of word of mouth? How are those freemium users actually delivering business value? And if they're not, this is a pretty big question whether you should be operating freemium.

Aaron Foss:

You nailed it. That V word, value, so many people think, again, revenue expenses. But you're exactly right, value comes in a lot of different ways. And so as long as in your company where they're creating... Again, in our case, the landline was value of dollars. Yeah, but there's other ones. What about data? Ooh, yeah, that we can then monetize. You're exact right, you have to look at everything as far as what kind of value are you gaining or giving? Or all of those put together.

David Barnard:

Okay, landline freemium strategy is number one. Number two was programmatic SEO, which was a brilliant move. Number three, I'm going to give you number three, press. How did you manage press and other earned media getting featured by Apple and that sort of thing?

Aaron Foss:

I'm a one trick pony man. It's a good trick. What do I do? I look at it and I go, "Okay, news wants news stuff." And look, some of the competitors in the robocall space always just put out data and analytics. Eight billion robocall. I always just thought that was cheesy. I still do. It's like, yes, robocalls are bad. That story's been told 1,000 times. But you know what story hasn't been told? Hey, what's this robocall that's coming in right now? What's going into Seattle? What are the robocalls that are hitting Austin? And because we had all of this analytics from the consumer side, we had on every carrier, every major VoIP carrier across the United States, and we had our honeypot that can go and catch, record, and transcribe them and everything, so we could go to a reporter who is in Austin and say, "Hey, here are the top scams that are hitting Austin right now, along with audio. Now we'll talk about it."

Well, that got people... Because again, it wants to be local and things. We've got national news stories. We're on NBC Nightly News, all that. And it was all because of if you're just giving data, okay, that's great. According to blah, blah, blah, you're getting all this. With us, they were like, "Well, now we want to see how do you get this? Let's hear it. Let's play it." And this was all on our landing pages, but all of that, just leveraging that, if you give a reporter something to work with, boom, they're just going to write the story, and it's going to be written in a way where you're obviously going to get it mentioned. Yeah, just dear reporter, robocalls are really bad. Do you want to do a story on it? No, that's just been done 17 times. Hey, here. And then finding the new ones, right?

David Barnard:

Yeah.

Aaron Foss:

Recently, we found President Biden is telling you that you won the Publishers Clearinghouse Sweepstakes. Yeah. No, you haven't won that, but now we went, "That's a deep fake, that's a persuasion technique." It's all these other things. Now we've just gotten better at that. But what is that story that is new and interesting and you can give them some... You've got to make the job easy for them. And then, again, when you cut through the clutter, when they know, "Tell me what's new." That was honestly what was happening with a lot of the reporters that we kept in touch with. "Hey, next month tell me what's going on." Whenever there was also a gap when they didn't have a story going on, "Okay, let's go back to robocalls, but let's look at what it's different here." And then obviously the robo texts and the spam texts and any kind of consumer protection, those evolved from that.

David Barnard:

On the Apple and Google front, did Apple feature you out of the gate as one of the early iOS 10 robo calling apps?

Aaron Foss:

Yeah, that was helpful. From day one, I was never trying to be shady. We're in consumer protection, so no tracking, no shenanigans, none of this. Why don't we just offer what we do? That also worked with the Apple ethos. Without getting into the technical details, Apple and privacy. An app developer can't see calls that come into your phone. On our basic version, we have to load a block list, and then Apple proxies that. Some people are like, "Oh, blah, blah, blah, and Apple, and blah." We just say, "No, that's the privacy conscious way.

When we built ours, you don't even have to give us your phone number with our basic product. We could do a better job if you do. We just basically, rather than fighting, we slip streamed, hey, this is how Apple wants to do it. We agreed. We love that. That's how we would want to be treated. And then we were able to say, "You should feature us as app of the day. Why? Because we protect somebody and we're privacy conscious." That just became a competitive advantage to us.

David Barnard:

Any other leverage points that you feel the years on growth and user acquisition?

Aaron Foss:

The best thing that I'm thinking about on growth is we grew so slowly. It might've gotten people really frustrated to grow slow, but the thing about growth is it means that you're getting better each day. It's always the dollars. But in my mind, it was how are we growing value? The best I can say is, yeah, we grew slowly. I guess if we had maybe... I don't know. If there's a parallel universe or I could invent a time machine and go back in time and try it again, what would we have done if we raised $10 or $20 or $50 million? Would that have changed anything? I don't really know, and we'll never know. But I know that the path that I took was growing at a sustainable pace, and that meant not overextending financially, not overextending hiring, not biting off more than we can chew until the right time. I don't know if that's the right answer, but that's the way I looked at it.

David Barnard:

That leads us to the last topic I did want to talk about today is that by approaching it that way, by being scrappy, by only raising the money you actually needed, by not taking bad terms when you did need the money but weren't going to get... It's always that way with VC and investors. It's like when you don't need the money, they'll give it to you in great terms, and when you do need the money, bad terms. If you are on that track, and if you do think you might need money, do it before you need it because you're just going to end up in a better situation.

You're growing, you raise money as needed, you're scrappy, and then you exit for over eight figures. And to spoil the story a little bit, you own a very big chunk. This is life-changing money for you by making those crappy decisions all along the way versus getting on that treadmill where you're raising more and more and more money, owning less and less and less of the outcome. Tell me about the acquisition. Did you go out looking to get acquired? Or at what point did you start thinking it's time to maybe exit this business?

Aaron Foss:

On the acquisition side, we always had people knocking on our door. And when you have a good app, when you have a good business, people are going to, Why are you knocking on it?" And so we got weekly a couple of times a week. And most of them were boilerplate and most of them you just ignored and it was noise and whatever.

We did a process a few years back. Again, the investors wanted a return and so, okay, we'll go through that. And we worked with an investment banker. And effectively, all of the deals that we got we're just low ball. At that point, we looked at the numbers, and, "This doesn't make any sense. What they're offering is where we're going to be, so why would we do that?" We were just like, "Okay, whatever." I'm just making a ton of cash, right?

David Barnard:

Yeah.

Aaron Foss:

And so that's a great place to be, and we can then grow and hire and all those. And then we got an inbound offer from pretty big company. I brought it to the board, and we looked at it and where are we going here? And this and that and the other thing. Maybe now is the right time. One of the lessons is actually really important is to make sure that two is one, one is none. I went back to all the other people and said, "Hey, look, we're not running a process, but we got this offer." Because of that, we had our choice. And we could have gone with the big company, and instead we went with a smaller company that I felt it was a better fit for the product. The timing was right, the value was right. And again, on the ownership side, it worked out. I got a great return, the employees got a real good deal, the investors got a real good return.

The acquirer, if anything, I hope that this is the worst the company ever is because just by putting on... There's just stuff that we just never got around to. It was an extra terabyte directory that was just hanging out in AWS; we just didn't look at it. I can't even imagine how much that cost, but it was... Those kinds of things. And I just keep on joking, I'm like, "Now that you guys know what a terrible businessman I am, I'm okay with that," right?

David Barnard:

Right.

Aaron Foss:

Because it's fine, just nobody understood why I made certain decisions. It was like I only have a certain amount of resources, and I had to concentrate on what... If that bucket cost I don't know how much per month, whatever, I'll figure it on out. What's more important is when the robocall blocking robocall industry changed maybe two years ago, new technologies came out, Stir, Shaken, the carriers were stopping more and more of these, it could have blown up our entire business. I bet the business on our product now; it's called Max. And it is 100% protection. It has our block list, it has our allow list, it has call screening because now it's is an unknown number. Should I answer it? And you don't really know.

Looking at it from that way, I got to build out Max. Great. Max is not $2 a month, it's $5, it's $50 a year. There's a family plan for $80 a year. There was just way more value there. And those were the things people were screaming for on our basic version. "Hey, can I protect my whole family?" Listening to those people building out Max, and then saying, "Look, this needs paid, this needs people that are experienced with this." We could build out this whole thing, or is now the right time?

And yeah, I would've stayed here for another decade or two doing exactly what we were doing and it just made sense for everybody. And that's when you're in the driver's seat too, when you can say no to something, you're like, "No, thank you." Unfortunately I see this so many times. I mentor and coach a lot of startups, and I'm like, can't say this to them sometimes even if they have just a disgusting cap table, "Even if this works, man, this isn't going to work. You're putting in all this effort and whatever, and unless it is like $1 trillion company, maybe you'll walk away with $1 million." I never wanted to get myself into that jam.

I'm a very amateur DJ, and I love defining things with music and things, and so when the deal was closing and it was going by between 10 and 12 and I'm just sitting there waiting, but it was like I didn't know what was happening or anything so I put together a playlist. And one of the songs was Closing Time. Remember that? That's when it came up to that. And then right after that, Frank Sinatra's My Way. And I was like, you know what? Because I took a very different path than everybody else that I know, and it took a lot to listen to people and incorporate that into my thinking. I'm not saying I'm perfect or right or anything like that, but to hear somebody who says... And again, even on a board member, "Well, you should be doing this," and then make it your own and have a 10 year... You're not going to find the answer out for 10 years. I just had to know that, look, this is the way I'm wired and this is the way it works. And I think it's great. And that's why that song just I did it my way.

And that song, if you listen to the lyrics, it's when he's towards the end of his life and he did it his way. And regrets, I've had a few, but overall I think it's what been great about this journey, this story, and that's what I loved about it. And so I think hopefully your listeners will be able to take from this.

David Barnard:

Yeah, absolutely. It is such a great story and it's such a great outcome. And as someone super bullish on this industry, somebody had apps, I've had exits, I've actually sold three apps, it's just such a cool opportunity. And it's a cool opportunity that you didn't just go exploit people. You're not a scammy subscription. You brought value to people over the course of a decade and made life-changing money by doing that. And that speaks to the power of software and entrepreneurship.

And a lot of people get in this rich people, they've worked on the backs of others and stuff like that. And there's cases of that for sure where people get rich, not taking care of people, not truly bringing value into the world, but there's so many great entrepreneurs like yourself and hopefully a lot of our listeners as well that, yeah, make a ton of money, but make a ton of money bringing a ton of value into the world. And that's the best way to do it. The people who are trying to scam their way to the top, the people who are growth hacking and other stuff, it's like often those are the ones that just flame out. But when your goal from the beginning, when you slow grow by bringing value to people, you just create better stuff and better outcomes for yourself.

Aaron Foss:

It's like the line in the hip hop song. Is it Tupac? Where, "I made a G today. Yeah, but you made it in a sleazy way." Just drive value. I love the fact that we're talking now because I've been reminiscing and looking back. And obviously I had to put together a bunch of stuff, but for literally 10 years straight, we had two to three press mentions every single week for 10 years straight. I wasn't paid or anything like that either. No more robo or me or something. 10 years every single week on average we were getting something.

And that just doing it, they say that consistency, for your listeners, number one, create value. Don't just make tricks and dialing it in and optimizations and everything. Number one is value and number two is just consistency. I know it sounds so cheesy, but those are really hard to do. So many people just create things that just don't have... They're cool. Okay, cool, and that's great, and use those on side projects. I'm not saying no to that, but if you're looking to have a business, the business has to create value. The value is reflected in money. It has to be because how we keep score in this game. And the more value you create... Again, if it was robocalls block, I'd have $6 billion. I'm not exaggerating. We blocked billions of robocalls. But obviously it doesn't equal that way. But yeah, this stuff is a very, very long road, and it takes a lot. But build value and do things consistently and you're already halfway there.

David Barnard:

Well, I think that's a fantastic place to wrap up. You've exited and you're going to be moving on soon, so you're not hiring or anything else, but anything else you want to say as we wrap up?

Aaron Foss:

Yeah. You know what? The biggest request that I would have is I would love to talk to founders that are like me, the indie developers, small teams. Just reach out to me. What are the problems there that I can help solve? Or what are the problems that you're seeing? Or how can we solve these things together? Because people keep on asking me, "What are you going to do next?" And my answer is, "Whatever I want." And what do I want to do? Is I want to help people like me get to this place.

I was at Techstars founder com one year, and I don't remember, it was a founder that was telling this story, and I don't remember the details, but his company got acquired and he had reached the mountaintop. We're all sitting around like, "What's it like?" He's like, "You know what's up here? Nothing."

I thought, okay, if I've gotten to the mountaintop, I had an idea, built it up and it was acquired. That's the lifecycle, and this is great, and I got to the mountaintop and it's great, it's amazing. The grass is soft, the air is so clean, and there's lots of bunnies that run over, and they jump up and they're nice and fuzzy. I'm like, "It is so cool up here."

What I want is to bring more people to that mountaintop. Now, I'm not investing. There's way more people that can do that way better than me, and you can get money from anywhere. I do a lot of mentoring and things, but what are these pieces that people like us need to get over to that next level, to move on, to have their companies grow onto the next one and graduate and things like that? I would love to talk to anybody. Yeah, my email is just me@aaronfoss.com. Drop it. That's my personal. Would love to talk to people and see if there's anything that we can do together. That's my goal here. Now that I had a lot of people help me up that mountain, and now I'm going to be helping a lot of people up that mountain.

David Barnard:

That is amazing. I think you're the first guest who's ever offered to just help. Thank you so much for joining. It was just such a fantastic story. And thanks again for offering to help our listeners. I hope people take advantage of that. Again, thanks so much for joining me today.

Aaron Foss:

My pleasure. And thank you for having this podcast. And you're helping out everybody on this end. And anybody who's listening to this, all the value that you've been creating and giving away, how many lives have you changed there? If we can go help out together, that's really the goal here. And thank you so much for this time.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.