The SaaS Podcast
How to Turn Frustration Into a Million Dollar Software Business (Part 2) – with Shane Melaugh 
This is a 3-part interview with Shane Melaugh of Thrive Themes.
- Part 1: Finding & Validating Your Idea
- Part 2: Building a Team and an Audience (You Are Here!)
- Part 3: Failures and Lessons in Entrepreneurship
Shane Melaugh is the co-founder and CEO of Thrive Themes, a company that creates conversion-focused WordPress tools such as Thrive Content Builder and the Thrive Leads plugin.
Thrive Themes was founded in 2013. It currently has over 35,000 customers around the world and generates over a million dollars in annual revenue.
Highlights and Key Takeaways
- We stopped hiring developers on a project basis. When you do that, there's not enough buy-in from them. They just want to get your job done and move onto their next project and client.
- We wanted to hire people who would have a vested interest not only in creating a great product today, but they would also care about our customers and the long-term success.
- We launched Thrive Content Builder to our existing audience and started generating revenue. We waited until we had enough money to be able to pay a developer for at least 6 months.
- We never hire anyone unless they've gone through a trial. A trial allows new hires to actually deliver something and for both sides to know if there's a good long-term fit.
“We never hire anyone unless they've gone through a trial and shown us what they can do.”
Finding a Co-Founder
- Paul McCarthy is the technical co-founder of Thrive Themes. Shane and Paul did some small projects together and over time realized that they worked well together. This led to a long term relationship.
- Creating a social network for co-founders is the ‘worst idea ever'. It removes all the friction and makes it way too easy for people to start working together. But it's the friction that helps you get to know each other well.
“A social network for finding a co-founder is a potential recipe for disaster.”
- Ask yourself if your potential co-founder has an ‘extreme work ethic' and the tenacity to push through the hard times? Not just today or next week, but can they keep doing that month after month?
- Also look at yourself. Do I have the same work ethic? Am I good enough? Would I want to work with me? As a founder, you have to pull your own weight and then some. Take a close look at yourself.
“Ask yourself — would I want to work with me?”
Building an Audience
- We had proven to our audience that we cared and were committed to creating great stuff. That took years. There's no shortcut to building trust. It was a slow and deliberate slog.
“Don't build a mailing list, build an audience.”
- We had the least innovative strategy that you've ever heard of. Start by giving away something for free e.g. a PDF report in exchange for their email. Keep giving people a reason to come back e.g. write emails that are worth reading, keep giving more free stuff that's worth getting, keep communicating with people and build trust.
- Shane had the opportunity at several points on his journey to ‘cash in' and promote the latest ‘guru' product launches to his email list. I could also have created my own ‘half baked' products and charged a lot of money.
- I could have made a lot of money from my audience that way, but I didn't. I kept focusing on what my audience cared about. And I kept creating products that I sold at a reasonable price.
- I always want to create a ‘positive gap'. A negative gap is when you buy a product for $2000 and think ‘yeah this is okay'. A positive gap is when you buy something for $100 and think ‘OMG this worth way more'.
“The reason launching Thrive Themes was ‘easy' is because we first spent 5 years doing the ground work.”
- We still focus on providing as much value as possible. The value should be much greater than the cost i.e. what our customers spend. The value you get from our content should be greater than the time you spend reading or watching it.
- You can't fake it in the long-term. We actually care about creating great products and always creating a positive gap. This is our long-term strategy. In the short term we could do a lot of things to make more money the next quarter. That might be winning approach in the short term, but not in the long-term.
“I still want to be here in 5 years and that success will come from long-term value not short term revenue opportunities.”