June 19, 2020

MFM #84: Noah Kagan, founding AppSumo and losing out on $100m

Today’s guest is Noah Kagan, founder of Sumo Group. The Hustle exists because Noah’s post (11 Steps To Making $250k Hosting A Successful Conference) inspired Sam to start a conference business.

He introduces himself as “a cyclist, chess player, founder of AppSumo, #30 at Facebook, #4 at Mint, founder of Sendfox.com and OKDork.com”

Noah’s rich, so what drives him? 💰🧘

  • Namaste: Noah tries to model his life like the Dala Lama’s “Art of Happiness”: He “doesn’t have to do anything, he wants to do things”. He’s driven by curiosity.
  • Solve a problem: The best business to start is one that solves your own problem. Example: He started Sendfox because he found Mailchimp and Convertkit tough to use.
  • His fulfillment comes from: “promoting dope stuff”, “sharing what [he’s] learning”, and “making stuff [he] wants for himself”.

How to grow a kickass community 🌱

  • Engagement: Your email size isn’t important. What matters is your active audience — the number of people that have opened your emails within the last 3 months. Noah’s email size is 120k, but only 55k are active.
  • Getting them on the hook: When growing an email list, if users don’t start using it immediately, you’ve lost them. “Welcome”, “thank you”, and “unsubscribe” emails should be really good. Examples of a great welcome email: CD Baby.
  • Relationship: The most important thing about emailing is not the format, it’s more about creating a relationship so that people look forward to your email.

Here’s Noah Kagan’s approach to starting businesses 💰

  • Advice: Think about what trends are going to continue within the next few years and focus on that. Sendfox is betting the market for creatives will grow and will target them as users for it’s email service.
  • Deciding on a new project:1) will the business break even within 18 months?; 2) will it be a 7-figure business?
  • Netflix vs. Amazon approach: Noah’s company (Sumo Group) is composed of multiple companies. However, he also feels he would have been successful focusing on only one product. He compares this to the difference between Amazon and Netflix: Amazon relies on multiple revenue streams while Netflix only has one. Both are successful, but take different approaches.
  • Art of delegation: Noah (and Sam) have built their businesses by delegating to CEOs and GMs. Noah does this by finding impressive people who want to run their own businesses and whose goals align with his. He gives them boundaries and challenging goals before leaving them alone.
  • Avoid being a seagull: Always avoid seagull management.
  • When starting a business: 1) What’s your goal?; 2) Who’s your customer?; 3) What’re your core messages? 3 parts to  messaging: 1) challenges to overcome fears; 2) million dollar weekend; 3) behind the scenes of an 8 figure company. 
  • What would you do if you were 21 again? Noah would try as many things as possible. His two recommendations: 1) create a newsletter or make YouTube videos (Ryan Holladay challenge); 2) Aggressively network (he put on events and hosted luncheons and conferences).

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