I think what really drove me was when I started getting feedback. And I find this with a lot of people when they start teaching or sharing or even entrepreneurs, that as soon as you start getting feedback from others, that you’re making a difference in their life, that can really be the thing that drives you and continues to drive you to do more. So for me, when I started teaching people the LSAT or how to get into law school, and I started seeing feedback from students saying, “Wow, you’re really making a difference in our lives. And it got me a score on the test that I’d never gotten before. I got into the school I really wanted to because of you.” That helped drive me to do more and more of it.

Robert Leonard  04:27
With Thinkific becoming such a successful technology platform, but your background as a lawyer, how did you really end up building a technology company? Did you do any coding or how did that role play out? 

Greg Smith  04:40
So yeah, I don’t have any coding, real coding background. I took a few classes and studied a bit online, but my brother told me partway through. He said, “If you’re not going to go all-in on being a software developer, don’t bother part-timing it.” So I kind of learned from him and decided it was a good idea to back off on that. So I was lucky when we got started in that my brother is a software developer. We were living together at the time. And so when I had the business side, he had the software side.

And then of course, we hired a team and continued to grow from there. So I didn’t have to do any on the code side. And I think a lot of what I took from my background as a lawyer, and in business school really translated. But I mean, it’s entrepreneurship, it’s kind of the Wild West. So you dive in with whatever skill set you have, and make the best of it and learn as you grow. And I certainly did a lot of learning through failure and all sorts of other mistakes along the way, but I definitely didn’t get to a place where my coding ability was anything to add to the company.

Robert Leonard  05:33
It was a pretty brief comment that you said about what your brother said. And I think a lot of people kind of just gloss over it. But I want to go back to that because I think it’s really common, especially right now where everybody wants to start a business. But a lot of times it’s a tech company, but they don’t know how to code. So why would you rather say that if you’re going to go part time on coding, why maybe not go full time?

Greg Smith  05:55
Yeah, I mean, the thing is, if I spend say, two months trying to sell what our businesses doing, I could hopefully make enough money for the business that we could hire a software developer who’s actually spending their life software developing or developing software. And they’re super passionate about it. And they’re going to go all in and they’re going to continue learning and you know, take courses and level themselves up and get better and better, or they’re already amazing at it. Or maybe it’s a year or two of my investment to kind of generate that return for the business. 

But basically, by investing in the places where I’m good at and doubling down on that, allowed me and now we have a team of 40 plus people on our product team. So no matter how good of a software developer I was, I was never going to make up for that ability to go and hire 40 people to help build products here. So I think it was really about doubling down on the things that you’re good at and looking for help in the areas that you’re not and I wasn’t good at coding. I could have been if I’d really doubled down on it, or at least I think I could, but I wasn’t ready to put everything into that. And so I put everything into the business side and the marketing side and team-building side and then found other people on the development side, which was not my area of expertise.

Robert Leonard  07:03
I think it’s really interesting that you had the wherewithal to know that and not dive into that, because I think a lot of people try to wear all hats and they try to do everything. And like you said, you could probably be pretty good at it. And I think a lot of people think that way about themselves, and that makes them want to learn it. So I think it’s really interesting that you didn’t go that route.

Greg Smith  07:22
Yeah, it’s so tempting to do it. And when you’re starting a company, you often do where most, if not all hats. And over time, you have to get better and better at giving those up to people who are better than you at those jobs. I just did it recently for a big chunk of the company here where I’m like, there are people out there who are way better than me at this. And now I have one of them on the team and I get to like, give away… we call it giving away your Legos. It’s another one of my Legos that I’ve given away, which is great because someone else can play with it in a much better way than I could.

Robert Leonard  07:48
Now if you didn’t have your brother there, do you think you would have still done the same thing because I think that a lot of people are in that situation where they may be willing to give up that role, but they don’t have a brother or they don’t have somebody close to them that they can work with. And so now they have to go find somebody. Do you think if you were in that situation, you would have still done the same thing? 

Greg Smith  08:05
Yeah and it kind of depends on the kind of company you’re starting and the era too. So keep in mind, this was eight years ago. And we started two companies together. So first, we actually started the course business together. And so the course business at the time, there wasn’t a solution, like Thinkific where you didn’t need a software developer. So that was kind of the one of the original problems we solved is let people build their own courses and their course business or membership site without needing a software developer, and give them the tool that makes it easy to do that without that development partner.

We can kind of be that partner for you. But we’re, you know, easy, you can get started for free, that kind of thing. So we wanted to actually solve that for people who had that exact problem because that was a big problem. It was probably a year or two that I tried to work with other people before I even thought to go to my brother and say, “Hey, you know how to do this stuff? Why don’t we do this together?” So yeah, it’s tough, finding that development partner in your business, if that’s something that is needed. 

So on the core side, we’ve kind of removed that requirement. You don’t need it. If you’re going out and starting a software company as I did, then you do need development talent. And I’ve seen a lot of friends struggle through finding that right partner. It’s something you know, you just have to go out and find. I was lucky that it was my brother. I was also lucky that he was good at it. It could have been a lot worse if it was my brother, and he was a terrible software developer. It’s not like it’s that hard to find software developers.

But as a non-technical person, you got to make sure you find, I would suggest to because you want one, maybe who’s not working for you or with you, who you know is really good. Maybe they work elsewhere. And they’ve agreed to help you out or you contract them to help you out to evaluate the one that you’re going to work with, because otherwise you just pick the first software developer that comes along and sound smart, you have no idea if their code is good or not. When friends of mine start a company, I always encouraged them to introduce their first development hire to someone on our team. And then we can always do a code review and make sure they actually know what they’re doing.

Robert Leonard  09:02
Yeah, and there are so many platforms out there these days that connect people who aren’t tech-related to people that are tech-focused. So but I think that’s almost put the pendulum so far to the other side, is there are so many opportunities out there now that a lot of the tech people know that they’re in high demand. And it’s almost hard for them to want to get involved because they’re getting inundated with so many opportunities. So yeah, I think it’s really interesting, that whole dynamic and you touched on it on the problem that you’re trying to solve with Thinkific but by focusing on those things that you do differently at Thinkific, is that how you’re able to stand out versus all the other educational platforms that are available in the market?

Greg Smith  10:26
I think the way we stand out, it’s really, yeah, it is about focus and focusing in a few areas. There’s a few things that we’ve done. One is like I said, making it less technical for people so you don’t have to be you know, really get technology or coding to be able to build your own course or membership site with Thinkific now. So that was one thing, it was just making it really easy. Another is we have amazing support. So that was another way we set up to right from the get-go is early days, that was myself and a few other people here where we have to work through the night, any night, every night, whatever it took to answer everybody’s questions on support. 

And now we’ve built out a whole team that does that. So we’re always here to support people because it’s hard when you’re building a business or starting something new. And so we want to be there as easy as the software is to use. We also want the support team here to help you out with it. And then from a differentiation perspective, we’ve gone really deep in some areas that other people haven’t, in terms of the student experience, and making it easy to create a beautiful product that you can go give to the people that you’re educating.

So if you’re creating a course on corporate finance, or hula hooping or cake baking, or whatever your passion or skill or expertise is, we give you the tools to make a really cool product out of it. So it’s not like you just shoot some videos and throw it behind a paywall, and people pay and download it. It’s a much more engaging, interactive experience. And we found that by helping our clients do that we make them far more successful in the long run because they’re able to deliver a much better product to whomever they’re delivering their courses to.

Robert Leonard  11:52
From a business perspective, do you spend more time focused on your product or what the competition is doing? And the reason I asked that is because I can think of maybe three platforms that are pretty similar to Thinkific like Udemy, Teachable or Skillshare. Those are just some that come to mind. So do you spend a lot of time focusing on kind of what they’re doing? Or do you really just focus on what your business is doing and try and grow that way?

Greg Smith  12:15
I focus much more… I mean, we do some competitive analysis, but I focus a lot more on what we’re doing. I mentioned, say Skillshare, Udemy. They highlight those two and their marketplaces. So it’s a two-sided marketplace. It’s one website with a lot of courses on it. And so when you put your course into that, you kind of give up control of the course to them and their audience. And the students are really their customers, right? It’s their customer data, not yours. On our site, it’s your domain, you know, your website, your brand, your look and feel. You own the data and the courses.

So it’s much more that you’re building your own business. So that’s as opposed to say sites like that. That’s one way that we would differentiate. But in terms of my own headspace, we do some competitive analysis, but I’ve always been much more heads down on just doing what we think is best for our clients, talking to our customers rather than looking and worrying about so much the competitive situation and what the competitors are doing. I have seen a lot of competitors take inspiration from what we’re doing, which I think is always a nice pat on the back, that we’re doing good things or at least that other people think we are. But I’ve always personally focused a lot on what we can do and what we can do creatively to serve our customers rather than looking around at what everyone else is doing.

Robert Leonard  13:21
I think that was an interesting point for us to talk about because nowadays there are so many ideas out there it’s very, very unlikely that anybody is going to come up with the next Apple or Uber. And that’s such a small thing but to start a business and be a successful entrepreneur, you can start a business that’s just slightly different than something else that’s out there and by focusing on your business and making it that much better, just from that one little component, you can build a successful business. And you know, you guys showed that. You’ve also built a culture with interesting benefits for employees such as an open vacation policy and flexible work environment. Why did you want to adopt these types of policies at Udemy? How has it shaped the company’s culture?

Greg Smith  14:00
So culture is a super important thing for us here, we measure it in a bunch of different ways. It is been critical to the building of the company. I’d say if it’s even a competitive differentiator, and that we have an absolutely amazing culture. We really don’t have a lot of say, employee turnover. It makes it a lot easier for us to hire and recruit the top talent that can build the best product for our customers and support them in the best possible way. So we’ve invested a ton on the culture.

It originally had happened very organically, and that it was just kind of in my DNA to really want it and everyone else here to really want to take care of the people who are joining the team. Now, it is much more hard coded in where it’s built into our sort of systems and processes. But I’d say early days, the two competing almost paradoxical interests that really drove that is wanting to treat people like family, like take care of them in all circumstances, regardless if it’s sort of typical how you would support an employee combined with being able to make the, for lack of a better word, ruthless decisions that you need to do as an employer. And but doing that in a way where you still take care of people like they were family. 

So one mistake I see companies make when they want to really be nice to everybody they work with is they never fire anyone. As you know, I’d say the most extreme and or they don’t give radically candid feedback, if someone is making a lot of mistakes, so they’re not delivering on their goals. They’re not telling them, you know, they’re saying nice things, and then behind their back, they’re frustrated. And then the other side is, if it’s not a fit with the team, it’s not a fit with the role, they’re not able to deliver the results, not letting them go. And so, we really did a good job, I think and continue to do. It’s never perfect, but do a good job of balancing those two interests of making sure we operate in the best interest of the company to move the company forward. 

You know, giving feedback, helping people improve, making sure people are being held accountable, and letting people go when necessary, with taking care of people like we truly care about them, which we do, because we do, because they’re sort of part of the family there. But it is that balance. And I think if you look at it and you combine those two things, it can be a lot easier even to make the hard decisions when someone has to leave a company, because you know that you’re taking care of them on all fronts, and they’re, you know, going to be either well-compensated on their way out, or you’re helping them find the next position.

And a lot of cases, you’re even coaching them into what would be a better role or fit for them. And in fact, in most cases where people have left the company, I’ve had calls with them months later, where they’re really happy because we coach them out of a situation where they weren’t able to deliver. And now they found a role that they’re super happy in. And because it was a mismatch, they weren’t sort of in the right seat on the right bus.

Robert Leonard  16:30
Why do you think more companies don’t adopt similar policies to those?

Greg Smith  16:34
I think we’re seeing more and more companies do adopt those kind of policies, but they can be a bit scary because you look at them initially as an employer, and I think you just see cost. “Oh my goodness, if we give unlimited vacation, or we let everybody work from wherever they want, there might be a huge cost.” Or it’s sort of the old school mentality of management of worrying about like, carrying the stick and making sure that they’re, you know, going to get the job done.

I prefer and I think what works for us allows us to do all that stuff is by operating more on a results basis and saying, “Here are the goals, here’s the results we want to achieve. Be an adult and get it done in your own time.” So as long as you’re not letting your team down, taking off on vacation in the middle of a major project right before a deadline, when your whole team is counting on you, and you’re delivering on your results, I don’t care how much time you take off or when and where you work from. Just work well within the team. Make sure the team around you is happy to work with you and make sure you deliver on the results. And as long as we all do that, then the business does exceptionally well. And everybody gets the freedom to be adults and take time when they need it.

Robert Leonard  17:33
What have you found with that open vacation policy? Do people tend to take it more frequently than when they’re given two or three weeks? Or do they tend to not take it as much? I think I’ve read articles where it goes both ways. So what have you noticed at Thinkific?

Greg Smith  17:47
Yeah, I think we’re averaging sort of three to six weeks. We have a few things in place to watch for that. And actually, what we found is more often than not, we actually need to encourage people to take something if they haven’t. So we’ll be getting partway through a year and recognizing someone hasn’t had any time off in a while and actually reach out and say, “Hey, you should probably take a break at some point or at least consider it.” So I’d say more of the stats I’ve seen around the end of people don’t take enough vacation, especially when you’re in a high growth, fast paced, results driven organization, people get caught up in it, and they’re motivated and they want to deliver. And it’s kind of sometimes up to us as employers to actually encourage them to take a break because they’ll perform better in the long run for it. And you want to take care of them and make sure their mental health and everything else is taken care of.

Robert Leonard  18:31
With the remote work environment, do you have a big corporate headquarters or do most people work from home or what does that look like?

Greg Smith  18:39
Yeah, so we’re, what are we 108 or nine people right now and about 100 of them operate out of the same office. So most of us are here in Vancouver off out of the same office, but people can work remote and they can work from home and they do, and the rest are remote. Yeah, I guess eight or nine or so are remote right now.

Robert Leonard  18:57
What other innovative policies are maybe on the horizon or have you guys considered adopting that can foster the same culture and growth environment that you’re looking for?

Greg Smith  19:09
We look to the team for a kind of innovation on that front. And we try and add a few things every year to continue to improve on what we’re doing. One, I think that was a couple that have been suggested recently, and I think we’re working on is something around childcare for new parents, because we have a lot of new parents. And another one that could go hand in hand with that was around like cleaning services. And I’ve actually seen a couple of other companies do this where they say the childcare part can be really hard logistically to do anything for but the cleaning side is you know, you can provide cleaning, and then everybody benefits from that even like home cleaning services. So I know one company where they send around cleaners to everybody’s houses and so you get your homes clean once a week or once every two weeks or something like that by the company. So that can alleviate a little bit of stress on people and have another little, I guess, somewhat innovative benefit to them.

Robert Leonard  19:58
Yeah, that one’s really interesting. I’ve heard of the childcare before, but I’ve never heard of a company offering cleaning services. That’s really interesting. And the reason I asked that question was because I read an article recently about Microsoft testing a four day work week in… I believe it was Japan and how they saw a huge increase in productivity. And I mean, you already have a flexible work environment and vacation policy so that probably plays into it. But I wasn’t sure if you had done any thinking into a policy like that, where maybe four days or something along those lines?

Greg Smith  20:30
Yeah, we haven’t considered the four day one very much. We do have, so Thursdays, we don’t have any meetings. So a lot of people work from home on Thursdays. But yeah, the four-day thing would be an interesting one to look at.

Robert Leonard  20:41
What have been some of the biggest challenges you faced as you’ve built your business, and how did you overcome them? 

Greg Smith  20:47
Yeah, I mean, it depends on the stage. Certainly, early days, I’d say product-market fit is the first big hurdle for the first few years. I mean, there’s everything in there from funding and financing. And do we have enough money to keep the lights on? And how do we find those first few really quality hires to join the team and help us build this out? But probably the biggest thing in the first three years really was making sure we had product-market fit. And we tried a lot of different, slightly different models, we always had the vision actually, right from the first day of what we wanted to be, which is what we are now. But in those early days, because limitations on technology and resources and time, it was going to be really hard to build out a platform that could support what we do now, which is anyone can come sign up for free, start building out your course, launch a course, and we would host and support everything for you and make it really easy to do. 

Greg Smith  21:36
So early days, it was a lot of searching out product market fit, talking to customers, working with customers, trying one way, trying another, getting false positives of something that we thought would work and someone was actually willing to pay us for. But then not enough people like that were willing to pay us for it. But that was probably the biggest struggle, is going through that battle of the product market fit and I remember mapping out multiple sort of business model canvas for over that period of time before we found and hit upon what we were doing now, which just kind of blew up as soon as we hit upon it.

Robert Leonard  22:09
What were some of the strategies? Or what were some of the things that you did to test your product market fit?

Greg Smith  22:14
Really, lots of things we did to test it that I’d say, didn’t get us to the right solution, or at least not very quickly. And then there was knowing that we’d hit it. And knowing that we had hit, it was just this moment of feeling the poll of almost like, you can’t do anything wrong. Like there are customers begging for what you have. They’re screaming at you to tell you how you should improve it. So all the feedback is there to continue growing and improve it and they’re jumping up and down to pay for it. So the revenue is starting to roll in. Everything before that that we did to get there was really about taking an idea, putting it in front of customers, asking them to pay for it, playing around with it, working with them. If they were paying for it, then trying to identify other customers of the same type who would pay for the same thing and seeing how big that market was. 

There’s a lot of… I think there’s some… I’m not an expert on establishing the product market fit, which is probably why it took us like two, three years to get there. There are some good books on that stuff. But to me, it’s about failing early and failing often. It’s about being okay with putting something ugly in front of customers, trying to charge for it, trying to figure out what they want, asking them what they like, and don’t like about it.

But being okay with failing fast, because I could have spent those first two years you know, in an office building out what we thought was the perfect product for our first idea and circulating that to customers and finding out that it didn’t work. And that would have been a horrible result, as opposed to building it in a month and putting it in front of people. So I’d say don’t go for the perfect solutions. Go for quick solutions, get them in front of people, find out if they’re actually… if there’s a real business model there and if there isn’t, move on to the next one and just be really okay with a lot of fast failures. 

Robert Leonard  23:47
At what point do you know that maybe some people don’t like it, some people do? How do you know that you should continue to move on? Is there something that that really just stuck with you that said, “All right, well, this was enough evidence for us now. We can forge on,” or what would you give for advice along those lines to an entrepreneur?

Greg Smith  24:06
Yeah, it was, I don’t know if there’s like the defining moment when I mean, for me, there was one when I actually saw our revenue curve go from a nice, slightly sloping upwards angle to a very steep upwards incline. And I saw the whole curve turn over a matter of a couple of days. And we had enough data to know that it was likely to be an ongoing trend because of some changes that we had made. But even that moment was sort of the crystallization of the last six months or years worth of work of slow experiments and iterations and failures and trying this and trying that. 

So I think what you’re looking for though, in that moment, or getting to that place is getting to the place where the market poll is strong enough that it feels like you’re just going to ride along with the wave. So they talk a lot about in success in businesses is a huge component. It is being in the right place at the right time, but it’s not quite the same as just being lucky in that we tried all sorts of right place, wrong time; wrong time, right place; wrong time, wrong place experiments and failed, failed, failed, failed, until we kind of landed in the lucky spot.

But we only landed in the lucky spot by repeated trial and error. I mean, we did get lucky in that the whole online course wave and membership sites and online education was about to blow up as we were getting into it. So that was huge in terms of luck for us. But I think even within finding an area like that, where there’s a huge opportunity, it’s about trying all the different things you can think of within that and getting feedback from customers until you figure out that niche that you fit into that’s really going to work for you.

Robert Leonard  25:39
How important do you think it is to find a trend, kind of like the course trend that you mentioned there, for an entrepreneur to build their business behind?

Greg Smith  25:47
I think it can be pretty key to building a business, but I don’t know that that’s where I would start. I mean, I’ve seen a really interesting model of developing business ideas where you identify a whole bunch of major market trends in the world and you kind of try to identify the intersection of three of them. And that’s where there’s an opportunity for a new business. The problem with that is you’re building a business around opportunity. And it’s the same as I tell the course creators, don’t go build a course around, “Hey, what’s the type of online course that most people want to buy? That’s the course I’m going to build.” You want to build the course around your passion or your knowledge or your skill set or your expertise. And you do need to sort of validate that there’s a market for it. But I think you should still kind of lead from your areas of passion. 

And so in building Thinkific, I didn’t come from a place of “Wow, there’s this going to be this huge explosion of opportunity in the course space. We better go build a business there.” It came more from the “I love to teach. I’ve created a course the course did well, people are giving me good feedback. Now other people are asking me how can I create my course. I’d love to help them create the course.”  That’s where my passion lies. Let’s go build this. And then within that, figuring out what fits with the market. That’s at least the way I do it, or at least I did it. I don’t know that it’s perfect for everyone. But I think if you lead from your heart and your passion in the area where you truly want to make a difference, that’s a much better place to start than trying to identify, “Hey, there’s a huge opportunity. Let’s go build something here, even if I don’t care about it.”

Robert Leonard  27:08
Yeah, I think that passion point is so interesting and so important because I’ve actually heard from quite a few successful entrepreneurs lately that they recommend to people to sell a pick to gold miners. So take advantage of a trend but don’t actually participate in the trend itself. That’s more or less what you guys are doing. But to your point is, you’re passionate about what you guys are doing. You’re not just taking advantage of the trend just because courses are so popular right now.

Greg Smith  27:33
In that analogy, I’m a gold miner myself, right? Because the first thing I did was I actually went out and built the course. It was successful. We saw that the opportunity was real and then said, “Okay, let’s sell the tools to all the people who want to continue to do more of that.”  And I still have my course, it still operates.

Robert Leonard  27:47
Let’s talk about this type of business model from that perspective. And because on this podcast, we do talk about traditional investment asset classes like stocks and real estate, but we do also talk about alternative investments, passive income and side hustles in general. How can Thinkific be used by listeners to create a passive income source or even just a side hustle?

Greg Smith  28:08
My background… So, I didn’t know what the level one, Chartered Financial Analyst exam and I did a finance degree. And I practiced in finance, like the law areas of Finance. So I get the stock space. And I have made some investments and all sorts of options and derivatives and fun stuff. But I’ve never seen returns like I have from building passive income, as you say, or a side hustle. I live from my course. Now, I’d be careful about the term passive income. My course today truly is passive, I invest about 30 minutes a month, and it generates five to$ 15,000 in sales a month.

So that’s, that’s pretty passive as far as passive income goes, but it took a lot of work to get it to that point. So I always like to clarify the passive income space that you do have to put the hustle in to start with to get it going. And then most people are not like me where they get it to that point, and then they bail and say, “I’m going to go do this other thing and just keep this passive revenue.” Most people will think it’s kind of silly of me and not a good financial decision from that course perspective, not to continue scaling the course. Because the opportunity there is absolutely massive. The only reason I’m leaving it aside is because I’m totally focused on building Thinkific.  

So I see it as a huge opportunity in terms of investment of time, at least, it doesn’t take a lot of money to do. And so if you have that time to create that side hustle, I think, right now, there’s this massive opportunity where we see every generation coming online is that first place to acquire a new skill, you know, if you’re 60 and an empty nester, and you’re looking to pick up a new skill in something artsy… You used to 10 years ago, register for a class at the community college and night class, maybe starting in September and waiting for that before you took up a new skill.

Now people go straight online, and they’re checking out YouTube and Google and finding places where they can learn and that could lead them to your online course, if you have it. And that’s just one tiny market demographic as an example, but we’re seeing across all demographics, even students in university, often when they’re looking to learn something new, they’re going online, they’re searching, they’re finding that and that could lead to online courses as a supplement to their education.

But definitely for people who are out in the workforce, who are looking to level up on say, life skills or crafts or hobbies or interests, or self-improvement or even career development, learning online is just continuing to scale massively. And so that creates a huge opportunity for all of us with a skill or knowledge or a passion or an expertise to go share that as a course or a membership and build a business around it and then that can become this amazing investment of your time and create potentially this passive revenue or if you continue to scale it as an active revenue stream.

Robert Leonard  30:38
Given your background with the CFA and your finance studies, and in being a lawyer, you certainly understand the investment world to a certain extent. So I’m curious to hear your opinion on the returns you can earn as an investor in the more traditional markets, whether it be stock market or real estate, compared to the returns you can earn as an investor in starting an operational business, whether it be a side hustle as a course, or whether it be just starting a startup like Thinkific. How do you compare those returns that you can get with an operational business versus other traditional investments?

Greg Smith  31:13
Yeah, I think it comes down to what you have to invest. So if you have a lot of money to invest, then you can probably do exceptionally well on stocks and real estate. And if you have a small amount, you can do well with it. And the nice thing is, you’re not investing your time as much. So you might do the research and you get it going. And then the money’s out there working for you, making a return on that money. The alternative on the core side is you’re making a return on your time.

So if we compare the two, let’s say I invested six months full time, or say one year, full time of my effort to build the course, at a time when my salary was a little over $100,000. So I go full time on that. Now I’m earning a return of say, $100,000 to $200,000 a year. That’s a pretty amazing return on that kind of investment, but it’s a year of my time, and that’s a hard thing to get back and a hard thing to trade for versus money. 

But then you compare that in terms of where could I get that similar return on investment from a financial investment as opposed to my time? Maybe you stick a million dollars in real estate, and now you can get that kind of return. So it’s a tough thing to balance between the two. I mean, if you look at Thinkific, we make a lot of decisions every day as to both where we invest our money for returns and where we invest our time. And our returns are not so much financial investment returns but more around investing and say marketing activities. And if we invest in say, advertising a podcast, or advertising on a podcast, that’s a much lower investment of time, high investment of dollars, really high return on time, and maybe okay or good return on the dollars invested. 

And so we definitely do lots of that, but then on the flip side, we’ll do investments of our time. And I tend to think the time ones tend to return more over the long run, but they take a lot of work to get going. So that’s kind of how I see courses. It takes work to get it going. But over the long run, you can often see a much bigger return on something like that, because you’ve built up something that you now own and continue to see returns from. But it’s hard. It totally depends on if you’re going to compare it to a specific stock or a specific real estate investment or something like that. But I think it can be an amazing place to invest your time and a little bit of money to see an amazing long-run return. I mean, I built my course in 2005. So 14 years running with significant returns over that period of time. So pretty amazing investment of time, considering it took me a few years part-time efforts to get that up and going.

Robert Leonard  33:34
For someone who may have a few thousand dollars who’s listening to this and wants to invest it in the most optimal way, whether it means spending six months to a year studying individual stock and making those investments, or spending time starting a business around their passion, would you recommend an operational business or something more traditional like stocks?

Greg Smith  33:54

I think it really comes down to like you said what you have to invest. So if you’ve got six months of time, I would suggest you could get a course up and running in 30 days. Like I said, you know, mine was a few years, part-time to get up and running. When I say up and running, I mean, like generating real significant revenues, it was up and running in 30 days.

So I gave myself 30 days to get something up and going. So it kind of depends on what you have to put into it. But I love the idea. And I see people every day here through our platform, making great returns from an investment of their time, but you know, not a multi-year investment, like a month or two investment of their time to get a course up and running. And then now you have an asset that you can continue to build on and anytime you choose to invest your time in it, you can continue to grow and build on it.

So to me, it’s an absolutely amazing investment and you have a lot more control over it I think. Then sometimes you do over say real estate market or the stock market or something like that. The flip side on the stock market is you can click a button and have money go from your bank account into a stock and potentially be making returns where you’re going to work with only seconds of effort, assuming you didn’t have to do any research to make that decision, but it’s a different risk profile too.

Robert Leonard  35:01
Given your relationship and starting Thinkific, I’m sure that this probably isn’t much of your concern. But I’m curious for somebody else who is just a course creator. What does it look like if you someday want to exit your course, right? Because if you start an operational business that’s not about courses or creating content, you could sell that company someday, and then just essentially get that windfall of capital. Can that happen with a course or what does that look like?

Greg Smith  35:30
Definitely, I’ve seen some courses sold, seen some course businesses sold. I’ve actually had a number of people reaching out to me even recently now about buying my own my LSAT course. Some competitors in the space, even private equity firms. So the really easy answer is yes, there’s an opportunity to build a business around courses and then go and sell it. And what I’m seeing is people selling it on multiples on top-line revenue. So anywhere from say, for two, in some cases 12 or 14 times your gross revenue on the course. So you got a course that’s making $100,000 a year, you could potentially be selling it for anywhere from 400,000 to 1.4 million, which could be a great return on a business like that. So it is definitely something you can build up and sell. I don’t think that that is the typical path where people build and sell these course businesses. But I think more and more as that industry matures, you will start to see some of these roll-ups where people are amalgamating content into one place or one platform and have interest in buying courses that are well created and successful.

Robert Leonard  36:30
That’s really interesting. I thought about that a bit. I just… I never was sure exactly how that played out. So it’s really interesting to hear that. And with so many different courses available these days, what have you found that like really separates successful courses from unsuccessful ones? How does somebody really make their course stand out from the crowd and in such a competitive space these days?

Greg Smith  36:53
Yeah, and I think it’s important to look at what separates the successful course creator too. So I think, early days where I see success in course creators are the ones who are willing to fail and move quickly. Kind of like how I talked about even in starting Thinkific as a businesses, is they’re willing to set a deadline, like, I’ve got 30 days, I’m going to get this out, I’m going to put it in front of an audience, I’m going to start trying to sell it. And I’m going to learn from that experience and continue to improve upon it.

That kind of activity tends to work really, really well as opposed to I’m going to spend a year building something, try and make it perfect and launch it. I don’t find people who are taking that mentality are as successful. So you want to give yourself an early deadline and get something out in front of people and start trying to sell that because that gives you that product-market fit feedback that you so desperately need in order to figure out if you’ve built the right thing for the right people and how to continue to improve upon it. 

But in terms of what makes successful courses within that, what I see is that the successful courses are often the ones that are focused very much on creating an amazing experience for your customers or for the learners or for the students who are taking the course. So it used to be okay, 10 years ago to throw together a web page, put some videos on it, put it behind a paywall. And say pay me and you can download the zip file of these videos. No one is going to put up with that anymore. And your course business will die super quickly if you do something like that.

Now, I’m not suggesting people are doing that much these days, but the far, far end of the spectrum in the other direction is really creating an integrated, interactive, engaging experience for people who are learning. And when I see people doing that, they generate a lot more success. And I think it’s because, you know, information is now so readily available on the internet. We’re so reliant on reviews and testimonials and influencer referrals and all of these different channels where basically someone is endorsing your product and saying, “I took it or I know about it. It’s great, it gets great results, you should take it.” And that becomes such an integral part of your marketing that if you don’t have a great product, it all falls apart.

And so focusing on creating a great product and continuing to learn as I said, get something out quickly. It’s okay if the first version isn’t perfect, but take that feedback in and continue to improve it. And that’s why in Thinkific we’re so focused on making that great product creation piece easy by building in things. So like a good example of that is, in a course 10 years ago, it’d be rare to seek some kind of like community around the course where all the people taking the course can engage with each other, We have that out of the box in Thinkific.

So if you create a course you’ve got communities built-in, so you can start engaging with people in your program, and they can engage with each other, which adds a ton of value back to them. It makes them much more likely to refer their friends to it. And now you’ve got a more successful course. So I think focusing on the product that is your course and making that a really cool experience really helps drive successful courses.

Robert Leonard  39:37
Is it too late for somebody to start a new course? Is the market too saturated? 

Greg Smith  39:40
I don’t think so at all, I see the demand. I mean, there are so many reasons why it’s working. I mean, people want to be entrepreneurs. They want to create something that generates passive revenue, they want to dive in and teach their passion. We’re making more and more career changes. Those are all kind of driving forces behind this education space, but really what the main force that keeps it all moving is the demand for learning. And that isn’t going anywhere anytime soon. And more and more that is moving online and on mobile, and people going to their phone or to their computer first as a place to learn something. 

I mean, it starts really with like, “Hey, Google, you know, what is the answer to this thing?” Geez, I just say that I see my phone turning on trying to answer it for me. You know, but that’s where people are starting to go to answer any question they have. And the natural extension of that is that they’re going online to learn whether it’s to level up their career or lose weight or become better at something.

And so because the entire world is going online for that, there is this just getting started massive trend of online learning, and it’s huge already, but I see it as still just getting started. And so as course creators, we can dive in and serve that need. And as long as we focus on the things where we have passion and skills and expertise and we dig in and try and figure out that we have a niche of people we can serve really well with it, there’s still tons of opportunities to have success there.

Robert Leonard  41:00
In order to have that success, does somebody need to be super famous or super well known or already have a personal brand built? Or can somebody that isn’t necessarily an “expert”, are they able to still do something like this?

Greg Smith  41:13
Definitely, yeah, we see it every day. I think, obviously, if you have a huge personal brand and a platform to operate from like your, you’ve got a podcast with millions of downloads, you can launch a course and make hundreds of thousands or even millions of dollars the next day, and I see people do that. But on the flip side, I also see people who are farmers, or artists or all sorts of, you know, things that don’t have any kind of conventional online audience, going and creating this thing with their expertise and getting it out there and doing exceptionally well. And they don’t always do well on day one, because they may not have an audience to launch it to. But with a little bit of effort, they can go and find that audience. 

And the really cool thing is with the whole influencer economy going on is if you’re someone with a farming expertise, to pick something like way out of the sort of typical digital space, and you go create an online course around that, you can not only figure out ways to market yourself, which is a slow ramp to, you know, it’s slow and effective. And over time, you can ramp up your success and build a business like conventional businesses are built, by building marketing. You can also find ways and it doesn’t apply just to farming, to any topic that you’re going to teach.

You can find other people out there who already have some of that fame, as you said, built up and leverage their influence to say, “Hey, you have an audience, maybe your audience would be interested in this product.” And usually that’s true, like an affiliate commission revenue share. But you go and say you’ve got an audience, I’ve got the product, why don’t you share my product with your audience, and if they love it, they buy it, and I give you affiliate commissions. So it’s a really, really quick way based on the way the internet and social media and everything works right now to go and take something where you don’t have that fame, but you have some expertise and build it. 

And then the second part of your question, do you need to be an expert? There are some interesting opinions out there. You know, some people will sort of say, you only need to be a few steps ahead of the last person. I think that’s a great way to look at it in terms of personal confidence because so many of us sort of suffer from imposter syndrome, or am I good enough to teach this. And I think that’s a great way to look at it, is if you are a few steps ahead of someone in an area, you can definitely help them.

But I also hesitate to say that if you know nothing about a subject, just read a book and then teach it. You know, you want to make sure that this is an area that you have some passion and some knowledge on and go start creating that education around it and continue to learn as you go. But don’t be so intimidated to think that if you’re not some PhD, or if you don’t have something on your wall that says you’re an expert in it, that you can’t teach. I’d say, you know, 90% of the course creators, I see it, they’re doing exceptionally well, have no special designation of expertise in an area. They’ve just had a passion for it and decided they’re going to be really good at it and go and share that with others.

Robert Leonard 43:47
Yeah, that imposter syndrome is exactly why I wanted to ask that question because I think a lot of people have a lot of really good information that they want to share and they have really good ideas for courses, but they get stuck on that idea of just having imposter syndrome. So I’m glad to hear that, that people can get over that and still have a successful course. And you mentioned affiliate marketing? Is that the best way for somebody who doesn’t already have a well known personal brand to advertise their course? And if it is, what other strategies can somebody use to get their course out there if they’re relatively small without a huge following, if they’re not a major influencer already?

Greg Smith  44:20
On the marketing side, the influencer side or affiliates is a great way to go if you don’t have any kind of audience. And because the nice thing is you can go from zero audience to a decent-sized audience very, very quickly by going through the influencer channels and creating partnerships there. It does take some work and building those relationships and reaching out and getting them to share and promote what you have. And it’s not the only marketing channel, but it’s definitely a great one if you’re starting from scratch because it’s a great way to leverage someone else’s audience to instantly build your own very, very quickly. 

But there are tons of other marketing channels that can work exceptionally well. My course was built largely off search engine optimization, so blog content and written content on the website and YouTube.  So I created some YouTube videos, a small number, that answer some really key questions that I knew my audience was always asking.

And those YouTube videos, referenced my course and said, “Hey, come get some more free videos over at my site.” They came over to get the free videos, they sign up for a free trial of the course. And then eventually they can purchase the full version. So for me, it was less about the partners, and much more about just creating my own content of expertise and sharing that and having people find it and then sign up for the course. That tends to take a little bit longer, but you own it. So I don’t have to pay everyone for a referral fee, when someone comes from YouTube. 

So and there are tons of other ways. I mean, PR or conventional media can actually be a great way now of sharing that you have some expertise, getting a little bit of coverage in local radio or local print or blogs or something like that, where you start to get some media coverage or even going more mainstream media. There are so many different ways to do it.

The one thing I would suggest though, is pick one or two areas of marketing and focus on that depending on your time or expertise. Probably one is best and focus on that for a little while, until you figure out how it’s working. If it’s working for you, iterate on it a few times, get it going. And then if it works, double down on it. Don’t keep switching. A big mistake I see people make on marketing is they either try to do every marketing thing that they’ve heard of, or every time someone tells them about a new marketing thing, they switch and start trying that. And marketing often is about building a more focused strategy over time by focusing on one area.

In fact, even if you look at huge companies with big marketing departments, usually 70-80% of their revenue and growth is coming from one marketing channel. So finding the one that’s working for you and doubling down on it and scaling that is usually more important than trying to do all the latest tactics and tricks that you heard about on the internet.

Robert Leonard  46:42
Now, I want to talk briefly about those using the course. Do you see these types of courses replacing traditional education or do you see it more as a supplement or complement to traditional education?

Greg Smith  46:58
I think it’s a bit of both. I do think you’re seeing, it’s definitely complementing in that someone could do a computer science degree to be a software developer. And then when they get into work, one of the first things they’re doing is probably signing up for… they were probably already doing it in school. But now they’re signing up for that next level online course to teach them in the new programming language or new skill set or taking courses to continue to advance their career. And I pick programming, but it kind of applies across the board and all sorts of different areas. I even see lawyers doing it. So it’s definitely complementary. And I also see universities doing sometimes this flipped or blended classroom model where they’re blended online learning with in-classroom and in-person learning. 

So it’s definitely complementing but in some cases, it’s also replacing it, because I also see software developers where they haven’t gone to school for software development. They are just taking online programs and as an employer, most of us don’t care where you went to school and what you learned, we care about what you can do and what you have done. And so if I have two candidates and one has a four year Comp Sci degree from a reputable university, but has never built anything. And another has been working in a startup for two years, took some online courses and can show me everything they’ve built. And they’re clearly an excellent software developer, and we can look at their code and it looks great, we’re probably more likely to hire the ladder than this university person.

I mean, it depends, hopefully, the university person also did some side projects and has some code to share and stuff. But really, the end result is it’s who’s able to deliver and actually show what they’re able to do with the education. So if you can get a great education online, and you can do something great with it, and you can show that I think that’s going to lean more away from conventional education. Plus the expense of it, both time and money to go spend that time in university is a lot. It’s a huge commitment when you can often get that faster and cheaper online now. And this is coming from someone who loves school, like I did eight years at university, right so. And I loved it all and it was great. But I do think there’s a lot of benefit now to being able to learn some of that stuff online and move a little bit faster with less of an investment.

Robert Leonard  49:02
Yeah, I mean, I’m in the same boat as you. I mean, I did four years undergrad into finance and economics and I did my MBA in accounting and finance. So, I’ve always enjoyed school. I always love what I studied, but the more I do untraditional education, I think back and I don’t know if I do it again. I think I might go a more untraditional route and learn from courses like that. So it’s a really interesting topic. And I’m really curious to see how that trend continues to play out over the next 5 to 10 years. Whether it be someone just selling their online courses as a side hustle or maybe somebody starting a full-fledged business, what advice do you have for entrepreneurs? And what lessons have you learned for both groups that were just invaluable to you on your journey?

Greg Smith  49:44
Yeah, we’ve gone through so much to that. Yeah, lessons for entrepreneurs. I think to summarize a few that I shared that I still think are the most important. It’s kind of being okay to fail fast or for being okay to fail and kind of embracing that as a learning opportunity. In fact, there’s a really good book by Brian Scudamore called WTF, Willing To Fail, to learn more about failure and using that as an entrepreneur and in business, and as a learning opportunity. I think giving yourself goals and deadlines and being reasonable with those like, don’t set goals that are a year out. Nothing wrong with having goals that are a year out. But you should be launching and improving and putting things out in market every month, not waiting months and months and months to get something out. I think we have a tendency as entrepreneurs to be a perfectionist. So part of it is about getting away from that and putting things out in the market faster. So I think being willing to fail and being okay with those mistakes and learning from them, and then being motivated to move quickly. 

And then the last one that I’ve learned that I haven’t mentioned is focus. As entrepreneurs, I think we tend to have sort of shiny object syndrome. And so my brother and I, early days, we actually created a shiny object drawer, we called it. And it was just, it was a Google Doc, where we would go and you know, we’d say throw a shiny object or every time we had a new idea and we’d go into this Google doc and we’d write up a quick description, to get all the passion we had out onto a page about this really cool idea we had. And then we go back to building what we were building. And that allowed us to continue to return to focus to the main idea and put these things aside and get them off our brains by writing about them for, you know, half an hour, and then move back to focusing on the goal that we had in the business we were building. Because I have seen a lot of entrepreneurs shift constantly their areas of focus. And if you don’t continue to invest in an area, it’s you know, it’s not like these overnight successes actually happen overnight. They’re after years and years of investment through all the challenges and failures. So maintaining focus in one areas is pretty key. 

Robert Leonard  51:33
I think I need to create a drawer like that for myself. I’m always having new ideas.

Greg Smith  51:40
Yeah, I’m pretty sure we have a nice description of Tinder, like two years before Tinder was built in that drawer. But you know, you can’t build everything that you have on it. And we probably wouldn’t have done that well with it.

Robert Leonard  51:50
Yeah, I’m not sure if you’ve heard of lambda school, but I had the idea for that years actually before and it’s just, you know, everybody has all these ideas and I guess execution is really the most important thing, right? But how do you decide which of those ideas you move forward on? Because if you’re working on one, but you have another idea, how do you know if that one’s better than the one you’re working on? Or how do you know which one you should really go all-in on and really focus on?

Greg Smith  52:15
Yeah, I think the way I’ve gone about it and you know, this kind of thing, it’s who knows what’s right. But my suggestion is the one you’re working on is the right idea, because the new one is always going to seem shiny and more exciting because you haven’t found any of the problems with it. You haven’t, you know, hit the slog, you haven’t hit the dip. There’s that good book by think Seth Godin called Dip where he talks about, you know, early on in an idea, it’s all exciting and wins and early successes and kind of beginner’s luck. And then you go into this dip, where things are really challenging and difficult. And you got to really work and push through that to get to the other side. Problem is, it’s hard to know if the dip ever does start to turn into some beautiful exponential growth curve where it starts to head up and potentially it just is always a dip. 

Greg Smith  52:56
So I think where you switch is not so much that the other idea is better and exciting, I would ignore that. And that to me is the whole point of this shiny object drawer. Every new idea is going to seem better or exciting or more interesting in some way. So throw those away or put them elsewhere and you can work on them, if you ever give up what you’re doing now. It’s more about is what I’m doing now, still something I’m super stoked on and interested in? Is it something where I see success, and is it worth continuing through to have the, you know, to push through to that success? 

And the reason to give up is either if you’ve lost all passion for it, and you really have no interest in continuing, or you pick the wrong idea to begin with, then there is not an opportunity for it to grow and succeed. And that’s the hard thing to watch for, because you can get a lot of false positives or false negatives that way. That’s where being willing to fail fast and learn from your mistakes is key. But I think it’s recognizing that you’re moving from one idea to the next, you should have identified that this idea isn’t going to work, or I’m not at all passionate about it, which in which case, why did we start it in the first place? But this one isn’t going to work so I need to move on to a new thing. Not having a new idea pull you away from something, but I’m stopping this one now and I’ll go start looking for the next one, because this one clearly isn’t going to work.

Robert Leonard  54:04
So is it not possible to be successful and work on two different things at the same time, if you’re equally passionate about them both? 

Greg Smith  54:11
I’d say if you’re Elon Musk, yeah, sure. But for the rest of us humans, I would suggest, start with getting one thing successful and then start the others and people forget too. Like Elon, I think he was pretty all-in on Paypal before he started anything else and had his big success there and then started one company at a time. And so even for him, I think there was one thing at a time initially. So I’d suggest you know, when you have one thing that’s as successful as you want it to be  really successful then sure you can go and add another thing. And for me, I had my course, it was successful. And now I’ve kind of put it aside, it’s still generating results, but I’ve got to move on to the next thing. But all I have and all I’ve done for the last eight years is Thinkific. I don’t do anything else, for me, it’s work and family and new ideas. I don’t even have a shiny object or I just say no right out of the gate.

Robert Leonard  55:00
I think about what Gary Vaynerchuk says a lot about how he juggles eight balls in the air at once so that if any of the balls drop, he still has all the remaining balls. I’m stuck between, you know, the school of thought that you just mentioned, because that seems to make the most sense to me. And that’s kind of the way I like to think about it. But Gary’s point is also really interesting. But I think that last thing you brought up is exactly what I was going to say is, you could scale something to a point and then take yourself out of that business and stop working in the business and let somebody else take that and so you have some more free time and then go work on something else and take it from there.

Greg Smith  55:30
Yeah, I mean, the thing I’d asked Gary, and I don’t know, the answer is, was he juggling many balls when he started Wine Library? And then the other is how many hours a day are you working right? Like if you’re, if you’re willing to work 18 hours a day, then maybe yeah, you could run two businesses at the same time. But imagine if you put all that 18 into one, how far and how fast you could go or how quickly could you learn that it was actually something that wasn’t going to work and it was a failure and put it aside and move on to the next thing? So I generally encourage people to stick with the one once you’ve had success in, the one thing, like real success, and that one thing, then you’re usually a lot more experienced and ready to start making that determination of whether you should try and do two. But for most people I’d suggest, especially getting started, stick with the one thing until you either fail and move on or see success in it.

Robert Leonard  56:17
Gary Keller’s best-selling book, The ONE Thing, did as well as it did for a reason so I definitely agree with you there. Greg, thanks so much for your time. Where can the audience go to learn more about you, Thinkific, and just all the other things you have going on?

Greg Smith  56:32
Yeah probably easiest place is just https://www.thinkific.com/ It’s the easiest place to go to learn and check our stuff out. And me I’m Thinkific, so just greg.smith@thinkific is probably an easy way to get ahold of me, if they want me directly or on social, everything is just @thinkific?

Robert Leonard  56:53
Awesome. I’ll be sure to put links to all of that in the show notes so you guys can go check it out. Greg, thanks so much. 

Greg Smith  56:59
Thanks, Robert. Really appreciate it. 

Robert Leonard  57:01
Alright, guys, that’s all I had for this week’s episode of Millennial Investing. I’ll see you again next week.

Outro  57:07
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