This week I talk with Jesse Mecham of YouNeedABudget, where they help people get out debt and get control of their money. We talk about how he majored in accounting on whim, sold downloadable spreadsheets to pay rent, switching from a one-time payment setup to subscription and so much more. Hope you enjoy it!

Josh Pigford: Jesse thanks for joining me here.

Jesse Mecham: Absolutely, I’m excited, it’s been a long time.

Josh Pigford: It has, it really has. So I kind of like to jump in with these things starting with like, a little bit of history to give some context and I’m personally kind of fascinated by not so much company, but personal kind of origin stories. Like how you got into stuff.

Jesse Mecham: Yeah.

Josh Pigford: So I guess I would love to hear kind of like what you of a kid were like. Like were you an entrepreneurial type or like … what were you like as a kid?

Jesse Mecham: As a kid, you know, I never thought I was much of an entrepreneurial kind of person. But looking back and kind of, you know, in hindsight I realized that I was a bit of a promoter. And way back like in 7th grade someone was mentioning like Girbaud jeans the other day and I looked on E-Bay and they still sell them. So like I Should pick up a pair of those things, but that was kind of the time and I, you’d wear these big wide jeans and then I would roller blade everywhere and do crazy tricks and you know like that whole, that whole scene. That was my deal when I was like 6th, 7th grade.

Josh Pigford: So wait, so you were wearing Girbaud’s?

Jesse Mecham: Oh, I had … no. I had knock offs because-

Josh Pigford: All right.

Jesse Mecham: … there was no way I could convince my parents to pay that much money.

Josh Pigford: I have a funny story about those. I was in 6th grade and I mean I’m at this point like, short, chubby, I’ve got just the thickest glasses possible and I’m siting across the table from a kid who had like just bought a pair. I mean like they were, that was his first day and I … like they used to serve like grape juice in like what is the equivalent of like an apple sauce, those like peel off, metal.

Jesse Mecham: Yeah you had to peel them off, yeah.

Josh Pigford: Yeah. And so I’m peeling it off and it slips and I spill grape juice all over his pair of pants.

Jesse Mecham: Aw man.

Josh Pigford: And I mean he … there was one of those things like you know, where I’m in like a public school, the lunch room’s got like 8000 kids in it and everybody goes like “OHHHH”. And I’m just coward down like really just wanted to die. So that’s, that’s my-

Jesse Mecham: That’s your Girbaud’s jeans experience.

Josh Pigford: Yes.

Jesse Mecham: So this is, that’s the scene that we have as kids that care a lot about you know, their brand and stuff.

Josh Pigford: Right.

Jesse Mecham: I had to wear wide pants because you had to get them over your knee pads and you had to get them over your skates. Cause we would do like half-pipe and crazy things that kind of make my blood pressure go up thinking about it now. But I did remember I wanted to organize a competition and back at that time there was no like, scene for us. Especially not in Arizona. And so what we were doing, people had never seen before and there were, it was just, there weren’t a lot of kids that were into it and so I contacted a few manufacturers like wheels manufacturers or guys that do bearings and things and I totally lied. I was just like “Oh I’m part of the something something skating association here in Arizona and we just wanted you to sponsor this competition” and I wrote them all letters and then they called me on the phone like called my house, my mom’s like “Mecham’s”. It’s like “Oh you want to talk to Jesse?” Like, it was like so random, but they bought it apparently or they didn’t care. One of the two.

Josh Pigford: Sure.

Jesse Mecham: So I tried to pretend I was like the head of this skating association. But they sponsored it, sent us a bunch of stuff and then once I had the stuff I was like, I should really, I got to really throw this thing now, you know.

Josh Pigford: Yeah.

Jesse Mecham: So I promoted it like crazy and we held it in the parking lot of my elementary school without getting permission from a single soul. And I remember the principal like, pulls up and there was like, probably 80 or 90 kids there and like these ramps were rolled in and like it was crazy town. And then he comes in, good old Mr. Hamond, you know. Comes in and he’s like, “Hey Jesse, next time could you ask before you do this?” Because like, the damage was done, like there’s no way he would pull all those kids off but … So that was my first experience where I was like, oh I am a bit of a promoter, you know? And a lot of entrepreneurial stuff I mean, you’re a promoter. You’re promoting to your team, you’re promoting your vision-

Josh Pigford: Right.

Jesse Mecham: You’re promoting your product. So, it’s a little bit in my blood, maybe more than I originally appreciated.

Josh Pigford: Did it, is that something that you feel like carried, like stuck with you I mean all through growing up? Or did you not do that for a while or was it like you felt like you were always kind of like into something and like wanting to like figure out how to make it bigger or convince people to do something or …

Jesse Mecham: I would do it, but not in a, not in like a grand sense. I’m always trying to convince someone of something and usually it’s like the, you know whether it’s this new fad or that thing. Whatever I’m interested in at the moment. I just preach it to people and not like preachy, but I would … I just love chatting about it. So right now I’m into like mobility and trying to improve my flexibility, so of course someone mentions like, anything and I somehow tie it back to you like, oh yeah your flexibility and they’re like, “Dude I wasn’t talking about that at all, why’d you bring that up?” So I just get into this … Yeah like mostly one on one. Where you’re just, you’re chatting with someone and I’ve got whatever is on my mind and I promote it. So … yeah it’s just kind of my nature.

Josh Pigford: So, you’re a promoter and then you’ve got … I mean jump in the chasm a little bit so there’s ‘YNAB’ which is budgeting software. So like, now how do we make the transition from you, Jesse, as the promoter growing up and then presumably you go to college, right and … Did you major in accounting? Or something.

Jesse Mecham: Yeah I did. I got a masters degree in accounting and I just … My thinking along the lines of … I served a church mission so I had kind of a 2 year hiatus, I was over in Germany, come back and I had only done like a semester of school before I end. So I jump right in and I’m pretty focused and thinking, okay what do I do? And I went to Brigham Young university and they had a, top, you know top of the country like, top 3 accounting program. So my thinking was, oh, that’s clearly like, one of the best programs in the country, so I don’t really know anything about accounting, but I’m going to do that because it’s top notch. So that was my whole, my whole process was just quality. I want to see quality.

Josh Pigford: Wait wait wait. Hold on, you chose account because you just happened to be in a school that had a good accounting program?

Jesse Mecham: Exactly, yeah. Because I just figured like, education wise, whoever knows their stuff the best, that’s where I want to go. I want to learn from the best of the best and it happened that … And it’s still the case today, they just, they run a phenomenal accounting program over there for some reason, I don’t know why. So I picked them. Yeah, like if they would’ve said, “basket weaving, we’re number one in the world”. [crosstalk 00:07:23]. Yeah okay, lets do this. So there wasn’t a lot of thinking to it. I’m like, oh do I like this? Is this my passion? None of that was in there. I just, I saw it as like a very straight path. Also it really scratched like, my big time conservative side where I thought anyone can get a job if they’re an accountant, you know.

Josh Pigford: Sure.

Jesse Mecham: Looks super safe. And it is as far as I know. So yeah I picked the safe bet with the safe program that was really, you know really vetted and then hustled as fast as I could to finish up school. During that time, that’s when I started, YNAB was kind of in the throws of my accounting schooling.

Josh Pigford: And were you married during, while you were at Brigham Young?

Jesse Mecham: Yeah I got married super young, I was like 10, no I’m-

Josh Pigford: Illegal in some states.

Jesse Mecham: It’s a very weird culture thing, but I yeah, so I got back to school and started out … I mean I had all of my schooling left when I met Julie, by the time I got married I think I had 3 years, yeah 3 years left to finish my masters degree. So we were in it together, poor and focused.

Josh Pigford: So I’ve heard parts of the story before about kind of like how YNAB came to be and how it was just this like basically random spreadsheets that you were kind of hacking together. How did you come up with a system at all, I mean like, how did systematizing like personal accounting. Like how does that even come about?

Jesse Mecham: Yeah so I didn’t come up with the system first. First I came up with the spreadsheet out of pure necessity for me and Julie. And we were broke and most, you know most like young, married and you happen to be students, you’re going to be broke and so we were that and I just kind of started constructing this spreadsheet because I had a spreadsheet class. And I thought well that’s pretty good at like adding numbers up and things like that. So I used that and Julie was okay with it, she’s like, “Yeah we can use that to kind of track out money”. She was on board so after about a year of just her using it and … Well I mean we were together kind of just figuring stuff out and then we realized that it was working pretty well for us despite super meager income and that was when, well a baby came into the picture and that was why I thought I got to make some extra money.

Josh Pigford: Those things eat money.

Jesse Mecham: Oh they do, like they eat really like pureed food and then money. Those two things. So yeah so Porter, my first he was the big impetus to like, I got to make some side money. That was my whole, you know, whole thinking. So not thinking, I’m going to start a company, nothing, nothing like that. Just could I make enough to cover rent, was my big question.

Josh Pigford: Yeah, so you’ve been using the spreadsheet, you decide you need some, some side money and you think maybe I can sell the spreadsheet.

Jesse Mecham: Yeah, I go to Julie and I’m like, I think we could sell this and there was another guy selling a spreadsheet for 10 bucks online that I had found. So I was like, clearly like, market research check, you know that’s all done.

Josh Pigford: And what year is this?

Jesse Mecham: This was 2004. Middle of 2004. And Porter will arrive in June and I’m kind of thinking okay I got to get this thing rolling before he comes. So I ask Julie, I say, “Should I sell this?” And she says, “I don’t think anyone will buy it”. And so I ignored that and then I was talking with my buddy on the bus on our way home and I asked him and he said, “Oh yeah you could definitely sell it, but you got to sell it for 20 bucks not 10” like I was thinking. And so that was it, that was all the validation I needed and I got it ready for market and learned how to build a webpage and pays to PayPal button onto the webpage and we were off. Made no sales until I doubled my price which has always been kind of an interesting thinking experiment.

Josh Pigford: So you’re 20 bucks a month … So you didn’t make any sales until you made it 40?

Jesse Mecham: I started at 10 and then he said no double it. So I started selling them and they would sell at like 20. And when I say sell I mean maybe I think 6 months in I had a month where I profited like 90 dollars. So I mean, we’re talking like nothing.

Josh Pigford: Right, well so even at that point where you’re making very few sales, where are those coming from? Like who is buying it?

Jesse Mecham: Honestly, I remember the first lady I know her email, I could email her now. She bought [inaudible 00:12:04] But I had really no clue who it was. I had no sophistication around who my customer was or anything like that. I was simply saying, “Here’s a spreadsheet, here’s how it works. You might want it, it’s worked for us”. And then as I redid my website early in 2005, that was where I systematized it. Or basically sold it as a system instead of a spreadsheet and sales doubled. You know, from small to small, but they doubled nonetheless. And that system where we had these four rules, that suddenly became this marketable thing that carved out a little bit of a niche for us. Made us different than anything else.

Josh Pigford: Yup, so what, I mean I guess I’m still curious about the initial customers. I mean because a lot of times what you hear is friends of family kind of thing or you know, if you’re still in school kind of doing some of the stuff, like maybe it’s around school you’re able to like promote it a little bit or something, but I mean this is on the internet and like random people are somehow finding you on [crosstalk 00:13:13]

Jesse Mecham: Oh, I acquired through AdWords. So that was, I mean I did try to blanket my apartment complex with fliers and that did not work. So then I tried the internet and that worked. I mean back then I would never give someone advice now saying, “Oh yeah you can get traffic through AdWords”. It’s brutal. But at that time I was paying I’m sure 5, 6, 7 cents a click. And you know, I remember I spent 63 dollars to try and test, would people buy this? And that money validated that you know, the numbers worked. And yeah I’ve got from there. So it was, I mean I guess AdWords is still a good place to test viability, but boy it’s tricky once you want to want to try and scale or anything like that.

Josh Pigford: Yeah, for sure. So, okay so you’ve got the beginnings of the system in place. You’ve got some kind of, you know something that you can kind of market, because that, you know it’s easier to kind of tell a story around that then say a spreadsheet. But at this point, is the product that people are buying still ultimately a spreadsheet?

Jesse Mecham: Yes, you would just never say that, but yes it was. As far as like, what are we building behind the scenes, and by we I mean I, it was … Absolutely.

Josh Pigford: Like, we’re talking like download an Excel file kind of thing?

Jesse Mecham: Yeah, and please don’t share it with people [crosstalk 00:14:44]

Josh Pigford: Begging you, I’ve got this newborn whose, you’re basically taking the food right out of their mouth.

Jesse Mecham: Yeah he’s starving, he’s starving right now. You know.

Josh Pigford: Okay so at what point did you make the transition from downloadable Excel file, to downloadable app.

Jesse Mecham: It was Taylor reached out to me who is now my CTO, he reached out to me in February of 06′. So I ended up selling the spreadsheet for about a year, 2 years and to give people context on how it was growing, at the spreadsheet’s best, it was, we were probably doing I think maybe 6 or 7 grand in profit per month. So it was still just a little one-man interesting side gig, right?

Josh Pigford: But presumably it’s paying enough to cover some bills, right?

Jesse Mecham: Oh yeah, I mean I was even entertaining the idea of living off of it, I was working part-time while I was in school and then I graduated from school and took a job at a big accounting firm so I had no idea, or even thinking around, oh when could I do this full time? It wasn’t even on my radar.

Josh Pigford: Okay, gotcha, so Taylor reaches out, I mean just out of no where? Like, randomly?

Jesse Mecham: Yeah, he was looking for a solution to his finances. Like, he’s like, “hey I’m married and my wife and I want to be on the same page” so that was his original just Googling around and then luckily he found me and he liked the rules and wrote to me and said, “hey I’m a developer and I could make the spreadsheet do far more” and I wrote back and said, “well why don’t we just build software instead of doing the spreadsheet at all?” And so he and I went back and forth for a while just chatting and then we got an agreement where I would just pay him per milestone kind of standard stuff. And he would ship and he wrote and shipped our first app. I mean we met over the phone February of 06′ and then launched it November of 06′ so yeah it worked out. And once we launched that, then I thought oh this is making pretty good money, I mean we probably quadrupled profits with you know, software that was actually good.

Josh Pigford: So what I guess was the big difference there do you feel like between the spreadsheet versus the app? I mean cause at that point is the app, the app’s not just like a container around a spreadsheet, I mean like it’s-

Jesse Mecham: No, no, not at all. Yeah, totally from the ground up written and we did steal some interface ideas from the spreadsheet, spreadsheets are killer on interface and we stole some stuff there, but it had reports, it had, you know you could drop in a bank import so you didn’t have to add all the transactions manually. It’s just, you know niceties and then the whole use experience is obviously better around installing and having an icon versus some random spreadsheet, so the value proposition definitely went up, you know for the visitor.

Josh Pigford: So you were selling the spreadsheet before the app for how much at that point?

Jesse Mecham: That was still 20 bucks.

Josh Pigford: 20 bucks, okay then how much were you selling the app for?

Jesse Mecham: And then we launched the app for 34.95. And then quickly bumped it to 39 and then at our peak with that app in a much further iteration we were selling it for 60.

Josh Pigford: So 60 was like the top?

Jesse Mecham: Yeah that was like a couple years ago we were doing 60.

Josh Pigford: Right, okay so by the time, I mean obviously you mentioned quadrupling how much that thing’s making. So I mean at what point do you go full time on one app?

Jesse Mecham: It was kind of late, late 07′.

Josh Pigford: Okay so not that long after, I mean within a year of launching the app.

Jesse Mecham: Yes, I took a little consulting gig on the side to kind of help my mind be at ease and then a buddy and I were also doing some stuff on the side with like buying and selling websites back when it was easy. And so we were doing that. I didn’t go like … If you were just to say eat, drink, sleep, YNAB, like total focus, that wasn’t until 09′ like late 09′.

Josh Pigford: Okay gotcha. So by the time you’re going full time on YNAB, I mean like what … A lot of times when you’ve got a family and you’d had a family early on, not even just your wife, but I mean kids came pretty early too. So I mean, what was that conversation like with Julie? Saying like, “hey I’m not doing any other side stuff, I’m just focusing on YNAB”.

Jesse Mecham: Yeah she, I don’t mean this to sound tripe, but she doesn’t care. Right, so the best, like, a testament to her, well one she grew up having to be super frugal by necessity. So I never, I always knew that like our expenses were in check. And just her nature is one of being pretty content. So when we were doing the spreadsheet, I’m piling up this money, because remember this is like 04′, 05′, so like real estate is starting to become this really big deal and we’re wanting to get into a house and graduate and thinking oh my gosh we’ll never be able to buy a house because prices were just on this rocket ship. And so I remember conversations with us at the time being like, we got to save up for a down payment, save up, save up, get into something fast and get ahead of the curve. And so all of this money that the spreadsheet was making, maybe it was 1500, 2000, you know 4500 bucks a month, I said oh that’s all for the down payment. She said, “great, we’re making progress”. And then I’m working and we’re using that money to survive.

Then Taylor comes along and I started introducing this, you know thinking about doing the software. And it was basically going to take away the down payment. So I go to her, “hey Julie you know the down payment we’ve been saving up and that’s for the house, well what if instead we paid this guy down in Dallas that I’ve never met to do this software” and she was like, “do you think it’ll work?” And I said, “yeah” and she said, “okay yeah, lets do that”. So it was cool because she rolls the dice. So when I say she doesn’t care, I think she has pretty good guts for the most part. Pretty good instinct and she always calls me on stuff that’s off base. And she’s been able to go with the flow over the time that we’ve …

You know, you’ve probably done the same thing Josh where it’s like, there’s always this thing on the horizon you’re like, “and then … and then when we … and then when we …” and Julie’s like, “you realize my whole married life to you is like, ‘and then when I graduate … and then when I become a partner in this accounting firm … and then when we launch this app’”. And in the last two years it’s like, “and then when we finally launch this SAS model”. She’s just like, “Yeah all I know is, there’s always something else you’re doing and as long as the kids are fed, we’re good to go”.

Josh Pigford: Well I mean, we’re the same way Ash and I because it’s like, we haven’t ever had any real tangible stability because … The longest we ever had this stable, me not just trying something random was we had been married for like a week and we moved out to Colorado from Mississippi and had no jobs, just graduated college and it just, we were like, “hey we should probably get jobs”. So she went and got a job, I went and got a job, I lasted at that job for 7 weeks and then didn’t look back. It’s always been this like, you know if you looked at like our graph, our income, I mean it has never, except for the last couple years at Baremetrics, ever been stable. Like, and even the last couple years of Baremetrics have been all over the place.

Jesse Mecham: Well what happens is like you say like there’s no stability, but like if you’re doing things right and you’re working hard and you’re being productive and I don’t mean in the income sense, I just mean like, are you building relationships? Are you learning things? Like stability is in your knowledge, in your network, in your work ethic. That’s where the stability lies and so whenever someone … They’ll come to me and I’m sure they do this to you where it’s like, “Oh man you’ve made the big leap”. And I always am caught like, I didn’t feel like I was making this big leap.

Josh Pigford: There’s never a leap.

Jesse Mecham: You know, like I just kind of stepped where it was pretty obvious where the next step should be. I never like had this big roll of dice. It doesn’t feel that way. Or they’ll ask you really nitty gritty questions like, “how do you do health insurance?” And you’re like, “you just buy it” you know, like it’s not that crazy. So I feel like people got to, they need to recognize that stability comes from, like your work ethic, your knowledge, your network, but like whether you’re on a W-2 or not for a certain company, I mean my word, you never know what could happen.

Josh Pigford: Well it’s just the difference, I forget who it was, I heard someone saying the other day like, there’s no such thing as like actual job security. You know it’s just like you can, when you’re working for yourself you just like, you’re seeing how the sausage is made right, so you can see how unstable it could be. Whereas like when you’re working for someone else, you kind of just offload that and you don’t see the ups and downs, you know?

Jesse Mecham: Yeah exactly. My guess would be when you’re kind of seeing how the sausage is made you probably have more notice if things are going to go south then the person where they announce [crosstalk 00:24:40] you know what I mean? But yeah so, it’s never as scary as people think it’s going to be. Things aren’t as stable as they appear at the moment, that kind of thing I think is true. But man I was so afraid to go like quote unquote full time. I was just not programmed to do that. It took this guy who is a very successful business owner, I told him like, “I’m making this much at my accounting job, you know 70 hours a week, I’m making this much over here on this side gig that I work on from 4 to 5am, so like, what do you think?” And he’s like, “dude are you stupid? You’re making 4 the accounting job”. It was insane, but I had to have someone like, kind of smack me a little bit and be like, “come on man like, go for it, you have zero risk. You have little kids, no kids, no debt, no mortgage, you’re not bound to anything, go for it”.

Josh Pigford: Well and especially I mean, you know if you think back, you chose the really safe route. Like, that was sort of what came natural to you was like, oh I’m just going to choose the safest thing and so changing to something that isn’t the, at least culturally safe route, you know.

Jesse Mecham: Yeah, it was tough.

Josh Pigford: So I’m curious about what do you think would’ve happened had Taylor not randomly emailed you out of the blue.

Jesse Mecham: Oh man, yeah you know, you ever do these weird things that like unsettle you. Like you ever thought about what if this or this didn’t happen and I didn’t meet my spouse? Like I just, I tend to like not want to go there cause I’m like, “no that makes me feel icky” and I avoid those, you know? So he and I will talk, like I read through our old emails and it’s hilarious, they just crack me up, but at the end of the day, you know, it worked out and it still works out. Like he and I we still work super well together and so you hear all these stories of partners or whatever and how they kind of, things go sour or whatever and for us it’s like gotten better. So I feel like we kind of got lucky and I don’t know what would happen. I think I probably would just be a partner at you know, like stressed and fat at an accounting firm, but no. Just kidding, but yeah maybe it wouldn’t have worked for me and I would’ve jumped to something else because I did feel like the accounting was the wrong, like it wasn’t creative enough. Which like, dude you didn’t know that going in? Come on. But you know.

Josh Pigford: So a couple years back you had been doing YNAB. Business model wise you were charging just one offs stuff right? I mean like, there was never-

Jesse Mecham: [crosstalk 00:27:21] License deal, yeah.

Josh Pigford: Did anybody would’ve even like upgrades that they would pay for? Or is it just-

Jesse Mecham: Yeah, like every couple years we would push out like a number upgrade, like 3 to 4 and we’d charge, you know charge for that.

Josh Pigford: Gotcha, so then a couple years ago you guys shifted from that sort of one off model to a subscription model.

Jesse Mecham: Yeah.

Josh Pigford: And I think If I recall the feedback from that was mixed. I mean like-

Jesse Mecham: That’s a good way of putting it, yeah. One way. And you know like in my side gig I work in politics, polishing up statements. Yeah we had selected people as customers that were comfortable with a perpetual license model. Right, so like by definition you’re working in a pool that maybe has a little bit of a stronger feeling against a subscription. And we knew we would get backlash from that and we did, it wasn’t nearly as … It wasn’t as bad as I thought it would be, but it was still, even if it’s a loud minority, it’s very hard to take, you know? So we’re used to having people say how great YNAB is and how it’s changed their life and suddenly they were saying like, you’re just money grabbing or in it and I’m thinking, that’s actually not what I’m doing. You know, like I’m trying to get something sustainable for the long haul. Like writing was on the wall for us with that old model and what we were doing. It doesn’t bode well.

And so yeah we did make the switch. It was brutal. We made the switch right at the end of 2015 like two days before the end of the year and it was brutal. And then all last year we were just trying to survive and now this year it’s you know, it’s better.

Josh Pigford: What was the … I mean obviously you got … From a financial standpoint, like how quickly or I guess has it made since to make that switch to the subscription model. I mean like has the revenue caught up where obviously it was the right decision? Or are you guys like still trying to navigate that?

Jesse Mecham: Our revenue was flat for, from like 15′ to 16′ so 15′ was perpetual license, 16′ was fast and revenue was essentially flat, which for me was a massive victory because we were anticipating-

Josh Pigford: You were afraid you were gonna lose it all. Or a lot of it anyways.

Jesse Mecham: Well yeah I mean, yeah we were like okay now we’re deferring revenue for all you know. And we originally launched a monthly plan and an annual plan and then end of last year so after, basically one year under our belt I nixed the monthly plan. Not a lot of people were using it and I just, I wanted people to be like, “no I’m serious about this” like, “I really want to change my behavior”. And we give refunds and all that if people really change their mind, but it just allowed them to be like, “no I’m really buying in” and it’s been a boost. So that did help with the cash flow bit, but you’re still sitting there wondering like, “okay what’s [inaudible 00:30:39] gonna look like?” And you don’t, I mean you can predict all you want and of course you know all about this, but at the end of the day you gotta wait and see if they’re gonna re-up or not and that’s what we were doing all last year, it was kind of wondering.

Josh Pigford: So do you still feel like it was the right decision?

Jesse Mecham: Oh yeah, absolutely. It’s going to let us do much more on the service side for our customer base that it was, I might I don’t want to say a slam dunk, cause it was brutal, but it was the right move, yeah.

Josh Pigford: Do you feel like the pitchforks have kind of died down?

Jesse Mecham: Yeah, about halfway through last year I thought, okay things are starting to kind of go back to normal. Now the pitchforks out because we’re so slow on our, on a mobile release that’s not from 2010, you know? So we’re excited for what’s coming there because we’ll finally, I feel like that’s, well it’s classic like, oh once we, that’s what I’m doing here, once we get this mobile out then we’ll, I feel like we’ll finally have an offering that people can’t say there are like glaring holes, everyone has their pet [inaudible 00:31:40] that need. But I feel like mobile is kind of our last gaping hole that we’re gonna patch up.

Josh Pigford: So you know, I’ve, Baremetrics is obviously in the b-to-b space and you’re firmly in the b-to-c space and I think like, we get the occasional emotional user. But-

Jesse Mecham: Again with these political phrases, how do you do it?

Josh Pigford: I think the, okay so the b-to-c space though makes me really uncomfortable.

Jesse Mecham: Oh it should.

Josh Pigford: And I think it’s because the reason I guess I’m treading lightly is, I have operated b-to-c stuff in the past and man, just you’ve got passionate users. I’m curious how you guys handle I mean I assume it’s everyday you get, you get people who are just like, “Oh my gosh, you’ve changed my life” and you’ve also got like, “Oh my gosh you guys are the spawn of Satan”.

Jesse Mecham: Yes, yeah we don’t have too many of the Satan comments now, but yeah, okay if you’re in a space where you’re fixing people’s money stress, like it is emotional. Period. Right? Cause-

Josh Pigford: Cause you get people who are like on the verge of losing it all or losing their marriage or I mean you know?

Jesse Mecham: Exactly, so you’re like in the thick of the thickest of emotions and then when you do something right or wrong, I mean we’ve made plenty of mistakes as well so it’s not like it’s just people overreacting, like sometimes you know we make big mistakes. But when you’ve made a mistake in someone’s eyes, perceived or real, it’s rough for them. You know and it was a good reminder for to me recognize like listen, people are really buying into this experience and you need to respect that. We can disagree on what feature should be next and all that, but if you go in with just this very healthy amount of respect for the caring and essentially it’s a really good quality to have in your customers because they’re caring, they’re talking about your product, they’re spreading the word. But with you know, it’s like the Spider man thing great caring comes great responsibility for your customers as well.

So yeah you just have to kind of double down on really figuring out like, what they need and really hearing them and really trying to help. Like genuinely trying to help them. There are some where you just say you know, I’ve got to let you go, I’ve got to fire you as a customer, but the overwhelming majority, we just, I mean we hire people that genuinely want to help people manage their money better and it ends up working out. Change is brutal, but that goes away. You just want to make sure that you are at your core genuinely invested in your customer’s success. Business or consumer and I feel like, yeah you’ll make mistakes and there’ll be some painful spots, but in the end you know, you can sleep well at night. But, were I start another business would I go b-to-c? No way. B-to-b all the way.

Josh Pigford: Absolutely not. So in the like a personal finance and budgeting space, I mean you’ve got like the Dave Ramseys and the Suze Ormans and like, even like Mr. Money Mustache. There’s obviously like tons of people selling … I guess a lot of these people started more in the personal finance advice and they have kind of … You think of like, Dave Ramsey whose like-

Jesse Mecham: Yeah, he’s got a competitive product for us.

Josh Pigford: Right, so like that space, how do you … Is it just like the markets so big because every single person has money that they need to manage so it’s not a big deal or do you find that it is a highly competitive space?

Jesse Mecham: Oh it’s overwhelmingly saturated with competitors. I love Dave Ramsey so I happily compete with him in the sense that if someone doesn’t like us and they go to him I’m like, hey you know, the world’s a little better. And the same, I don’t know if he would say this, but if someone loves Dave, but they don’t quite like his software, they like our software a little more and they come to us I’m thinking, hey this is a net win. Where I compete and I love stealing customers is with into it, you know with a mint team because I feel like there, that it’s like a David versus Goliath feel. So I happily try and go after it, but there are so many new entrants into the market all the time, the thin tech space, that you almost have to kind of keep your head down and just stick with your secret sauce because you can, I mean man you can think that you’re supposed to build every single thing if you you know, look up and look around a little bit. So we’ve had to really just focus on what we know we do well and leave the rest for everyone to kind of duke it out.

Josh Pigford: Well you think of like iOS apps. Anybody can just like knock out a random, what they think is some amazing way to-

Jesse Mecham: Yeah, here’s my checkbook register.

Josh Pigford: Right, but it looks real sweet.

Jesse Mecham: It is, I mean there’s a lot of noise, but we do well in the education/caring space. So software is how we monetize our education. And it does help us stay focused again where we really have proficiency. We do well on software, but compared to our competitors I would say we’re slightly better on the education, caring side I feel like we’re head and shoulders above our competitors there and that’s where we kind of differentiate.

Josh Pigford: Gotcha. So can you, I guess tell me about the day or I don’t know maybe it was over the course of a year or maybe not at all, that you realized, hey we’re onto something.

Jesse Mecham: I would say that’s more gradual than anything else, but towards the end of last year I started thinking, okay if this works out, like if we can survive this year and just keep kind of mixing the secret sauce, we could really be a force for good here, like we could make and impact. So yeah, 10 years, 12 lets see, 12 years after I started it. I’ve always loved the space so I’ve been happily writing about it, shooting videos about it, podcasting about personal finance and budgeting and all that, I love the topic. But last year was like oh wait, this is a company, with a team, with people that like, we could do more than just, you know, sell budgeting software and advice. We could have a place to work that people would … I don’t know there’s more good to be done here than just in the software side, like there’s something internal that’s interesting. That’s kind of been what’s on my mind more lately is the company itself has a little bit of a product.

Josh Pigford: Gotcha. So sort of jumping off that, was there … I remember back, you know you talked about some of like in the early days where you saw these big increases in profit. What were some other ones recently, or have there been any in the past say, 5 to 8 years where the growth really changed, like you did something that changed growth a lot for you guys?

Jesse Mecham: Funny one, we are no longer doing this, but we launched our budgeting app on Steam several years ago, so that was way funny.

Josh Pigford: Call of Duty and budgeting.

Jesse Mecham: Exactly, so one of our developers was like, “Hey, Valve has this opportunity for non, like a little bit of an experiment for non-game software”. We were like, “come on, seriously?” So he goes, “what if I just do it all? Like I get it ready and I get the build ready and I get it all tied into their system?” And we said, “sure yeah, lets do that”. And then we sold it on Steam and it didn’t really do a lot but then Steam said, “We want to do this promotion and we want to sell it” and we were selling it for 60 bucks and they said, “we want to sell it for 15”. It was like a 48 hour sale. And I’m like, “no I’m not going to discount my software, people get way more value out of it than even 60 bucks” and they were like, “listen, you want to do it” and we did it and it was insane.

The volume, like the level of irony is not lost on me where people are impulse purchasing a budgeting app and that was exactly what was happening. So then we were mortified that we would just get overwhelmed with support and of course it was total crickets like nothing had happened. And the reason was because people just, it’s like they bought it just to be like, “oh I might use that at some point” you know, so they’d buy it. And so that was this hilariously profitable venture, cost us no extra money, we launched on Steam and it moved the needle for us for 2 years. We would do them every once in a while and it really funded a lot of our growth for you know, when we had to kind of double down on this task model and rewrite everything. Steam helped us fund it quite a bit.

Josh Pigford: That’s so random man.

Jesse Mecham: Yeah and so people like, “well this one guy and this one guy said we should be on Steam”. That is not what I’m saying. But, it’s just funny, so we’re sharing.

Josh Pigford: So the inverse of the growth or being onto something. What’s been a time where you guys thought like nope, this will not work? Like, the end is near.

Jesse Mecham: Where I thought things were in jeopardy?

Josh Pigford: Yeah.

Jesse Mecham: I haven’t had that feeling. I have end of 09′ when Taylor were basically just the two of us doing everything, I remember running up my credit card for like, the last 30 days before we were going to launch the 3rd version. And we were just, we were hustling and Taylor was working like almost day and night and we had to get it out before the end of the year because we told our customers that we would and you should never do that. But we got it out and so I floated about 30 grand of credit card debt for about 25 days during that time and I didn’t even realize I had done it.

So I was always using a business card just for normal expenses and then you just pay it off immediately and that was that. And I go to pay the card and I took at the checking account. This is hilarious coming from a financial guy, but it was just like, “oh wait, I can’t pay that” and so I paid just the minimum, which was insane. And I realized at the point like I had depleted my personal emergency fund already, Julie and I had cut back like everything under the sun and then we were running up this card and that was the second most stressful time in the business, but that stress lasted for 3 weeks. I knew we had a launch date right, and I knew we had customers live by the app so it was temporary.

Last year when we moved to the SAS model that was more stressful because you didn’t know for a long time, you know? We had to like … There’s just a lot of weigh in and seeing. But I never felt like things were you know we were on a precedence or anything like that. I think I operate a little, I operate pretty conservatively in that way. So we had saved up a lot of money, we knew things would be tight, we were gonna write it out that way.

Josh Pigford: Do you feel like you’re the kind of guy who just doesn’t, is it that you’re not stressed out about things? Or is it that you’ve sort of planned or set yourself up so that you don’t get stressed?

Jesse Mecham: It’s the latter. So you’re constantly like leaving breadcrumbs behind wherever you’re going right? So if you’re launching, if you’re planning on going full time, you’re setting money aside. You’re gonna give yourself this runway. If you’re you know, planning on switching business models, your business better be setting money aside and I’ve just always done that. Even with YNAB and me personally, like of course if you’re the founder of a company the odds are the vast amount of your net worth or whatever, liquid or not is wrapped up in your company. But I’ve always tried to just be like, “okay, what safety net can I kind of weave here behind the scenes just in case everything goes south?” So I’ve done stuff just over the last 6, 7, 8 years to kind of be crafting that safety net just in case and so I’d say it’s much more of like the planner that isn’t stressed than it is just being aloof. I’m certainly not aloof.

Josh Pigford: Yeah, yeah, yeah. Gotcha. So what’s coming up for I guess you and YNAB? I mean you mentioned the mobile stuff, but I mean-

Jesse Mecham: Yeah so product-wise the mobile deal will be coming later this year where it’s standalone, you can never know we have a web-app and still do really well with the software, so that’s a big deal for us. Company-wise we’re going to North Carolina at the beginning of next month for a big company wide retreat that we do once a year so I’m actually really excited about that. And then I was really intrigued by this deal out in Maine where they can teach you in 2 weeks how to build a house so I’m trying to figure out how I can weave that in because that sounds interesting so, yeah but that’s the kind of the stuff that I’m looking forward to and I love the team. The team seems to be really effective together and we’re building this product that is the company that I’m really starting to be proud of so no complaints here.

Josh Pigford: So you guys have a central office right? Or [crosstalk 00:46:10]

Jesse Mecham: Yeah there’s three of those here. Yeah and there there are I think, maybe 55 other people that are spread everywhere.

Josh Pigford: And so all 55-ish are meeting up in North Carolina?

Jesse Mecham: We do the full-timers for the meet up. Kind of a full-timer award.

Josh Pigford: Gotcha. Wait so part-time people, how many part-time people do you have?

Jesse Mecham: Probably maybe 28.

Josh Pigford: Wow, so what kind of stuff are they doing?

Jesse Mecham: They do support and education, like they’ll … I mean we run probably, I haven’t looked lately, but usually per week we run like 130 workshops all live so we have these educators that do that and then we also have just people on email support or testing on some live chat support and they’re … We really want to get our response times just like crazy low, like where our competitors are like, “they’re using wizardry”.

Josh Pigford: So wait, what’s the benefit of having say like, a dozen part time support people instead of like 6 full-time?

Jesse Mecham: We actually have a mix of some full-time that are and there is an advantage there that we’re just starting to appreciate around just kind of knowledge continuity and connection. So we have shift managers and we really make sure like people are like working a specific block of time so that we you know cover our support queue and we use the full-timer support folks to kind of orchestrate that. Where a part-time person, it’s a good gig for a lot of people where they’re like, “I don’t want to work full-time, I’d love to just work this from home” maybe your kids are at school or something, you don’t have to travel. There’s so many benefits to the remote work that I don’t have to tell you and I love being able to give someone a job that’s … Like it’s good pay, it’s very rewarding work and it’s convenient at the same time so yeah.

Josh Pigford: That makes sense. I can see I mean doing the, especially if you’re trying to cover a wide range of times on something like support, full-time staffing say 24 hours 24/7 support is really expensive.

Jesse Mecham: Yeah you start looking at different time zones and things like that, yeah.

Josh Pigford: Yeah, gotcha. Cool, well man that is all I have got.

Jesse Mecham: Excellent.

Josh Pigford: Thanks for the call.

Jesse Mecham: Yeah whoever is listening hopefully they get you know, at least some little nugget, out of it. I don’t think roller blading is coming back so I don’t think that is going to do job but.

Josh Pigford: I don’t know, maybe now it will.

Jesse Mecham: Yeah it was fun, thanks Josh, I appreciate it.