775: Playing Chess When Everyone Else Is Playing Checkers With Nathan Barry

Child: Welcome to my Mommy’s podcast.

Hello and welcome to the Wellness Mama Podcast. I’m Katie from wellnessmama.com. And this episode is the second in a short series with my friend, Nathan Barry, who is the founder of convertkit.com, as well as several other things. He has a podcast as well as a blog with a lot of articles. And this goes into, again, the world of things like business and content creation and wealth, which is a topic you guys said you were interested in hearing more about. And I share some examples from my own life about this, as does Nathan. And in this short episode, we specifically talk about the concept of playing chess when other people are playing checkers, finding patterns and opportunities where others might not even think to look, and the value of staying a perpetual student. And I always learn so much from Nathan. He is an incredible human and an incredible business owner. And without further ado, let’s jump into our conversation. Nathan, welcome back.

Nathan: Thanks for having me on.

Katie: Well, we’ve had a couple of fun conversations now. I’ll link to those in the show notes. If you guys missed them, they were phenomenal. Nathan’s a wealth of knowledge. And in this one, I would love to kind of dissect and learn from an idea I’ve heard you talk about in other podcasts, which is the idea of playing chess when other people are playing checkers. And I would guess people can sort of intuit from that statement what you mean by it, but I feel like your explanation is really valuable. So can you sort of broadly define what you mean by playing chess when other people are playing checkers?

Nathan: Yeah. So sometimes you come across this story and you expect it to unfold a certain way. And then, but you actually get to this point where there’s this twist and you go, oh. You are operating on an entirely different level than what I thought. And there’s two examples that come to mind for me of really content creators who would, I understood what they were doing behind the scenes, like the full game that they were playing. And I say game because like, this is one of my favorite games. I don’t mean that to trivialize it. I mean that in like, this brings joy, lets me hang out with all of my friends and, you know, lets me have a great time.

And so when I think about the game of building a business as a creator, these two examples just blew my mind. And the first one is Reese Witherspoon, who may not be who you’d immediately think of as a creator, but she is creating movies, all of this. But when I heard about her book club, I was absolutely shocked of how this actually works. And so what she does is, you know, with her book club, she is able to get the early rights to these books. And so what happens is she has an audience, a whole bunch of people who want to follow her. And then they’re asking her, hey, what book should I read? And so she said, okay, I’m going to put out, you know, on a monthly basis, this is my recommended book. This is not a new concept. Oprah has her book club. So many people have it. And so what happens is it’s a good business. She’s able to make a bulk buy of, say, there’s 100,000 people in her book club. She can buy 100,000 copies of this book, send it out to everyone. They’ve paid for their subscription to the book club. And she has a bit of margin in there, right?

For the author, something happens that’s really good is if their book is selected for her book club, then they’re getting this big spike in sales, attention, and everything from there. And so the book might take off. But Reese does something that’s very, very clever. And what she does is she buys the option for the TV rights, TV or movie rights for that book. And so in that, for every book in her book club, she owns the option for those rights. And so if it takes off and does extremely well, of which she boosted and given, you know, the best possible chance for that, then she can then say, okay, the story took off. It did really well. We’re going to option, you know, going to exercise our option for those rights and turn it into a movie or a TV show. You’ve seen her do this with a whole bunch of great fiction works that were featured in, in her book club, but it’s ended up building, you know, taking this idea that’s moderately valuable. Like you can build a good business as a book club and actually built Hello Sunshine, her company into something that she sold for, I believe $900 million. Like just absolutely astonishing exit because she focused on how do I own equity in these things long-term. And so I just love that of most people like, Hey, how do I use this attention to sell more books? A great goal. And she goes, no, no, no. How do I use this attention to sell books that I own the rights to that then can turn into something that’s ultimately creating hundreds of millions or billions of dollars’ worth of value. And it’s just far beyond what I would expect from anyone else.

Katie: Yeah, I loved hearing you explain that example. And it has made me think, in what ways could I do that? Kind of get back to a more first-principles approach and see opportunities where I haven’t in the past. And I will say I’ve done that a little bit with investing. I think you might have done this as well, where years ago, I knew nothing about investing. And I got approached by Thrive Market. They were trying to raise money at the time. And long story short, I ended up becoming their first investor. And they were my first investment. So I learned, I kind of call it my real world MBA. I learned as I went. But what I realized was, if it was a company that first and foremost, of course, was like mission-driven and was going to create good in the world, and if I could help them through Wellness Mama, connect with people that they could help and then benefit from doing that, it ended up becoming a repeatable system. And it sort of led to me learning about investing and doing it. So that’s one of my like sort of small scale examples of what you’re talking about.

And I think that also touches on something we mentioned, at least in the first episode or the most recent episode, which was the idea of compounding. Anytime that you can do something that builds and builds better results over time that can be really beneficial. And most people are familiar with that in a financial sense, at least. If like you invest in index funds or mutual funds and the money stays in there and it compounds over time, you’ll end up with more money in the long term than if you just put it in a savings account, for instance. But I think there’s a lot to learn from that as well. Are there any, I know you shared some other examples as well of this sort of playing chess when other people are playing checkers. And I’d love if you could just give us a couple more.

Nathan: Yeah, two more that come to mind. One is a creator named Sahil Bloom. I talk about him a lot in flywheels. And if you go and listen to our last episode, where we talk about flywheels and then read some of the essays that I’ve written. I talk about his flywheel that’s important for building to a million subscribers, right? That’s his goal to build this newsletter to 1 million subscribers. He’s very focused on it. When I talk about that, he’s like, oh yeah, that’s my small flywheel. He’s actually got a much bigger flywheel, which I think is fascinating. And that is, he has gone through and looked at everywhere that he spends money in his creator business. You know, he’s got a, he was hiring someone to create clips from all of his podcast episodes. He was hiring someone to run newsletter growth for him. He had hired a designer. He went through and looked at everything he was spending money on and said, okay, what if I could provide those services? And this is actually a concept from Amazon of turning your cost centers into profit centers. Like Amazon was spending a huge amount of money on web servers, right? And they said, this is one of the biggest line items in our budget is all this servers and hosting. What if that could be from a cost center to a profit center? And they then started Amazon Web Services, which now hosts most of the internet, hosts Netflix, hosts ConvertKit, like, and this has turned into the most profitable part of their business by far.

And so Sahil looked to do the same thing. Okay, here’s everywhere that I’m spending money to grow my creative business. Those are all costs. How do I turn those into profits? And he would then went and started a series of agencies. And so if you go and look at, say, one of his posts on LinkedIn, it’ll be a carousel or on Instagram, either place. He might be talking about like five mental models for better decision making. And you flip through it and it’s well-designed. It’s great content. And you get to the end, and he has a call to action that you’d expect. And that’s, if you enjoyed this, subscribe to my newsletter called The Curiosity Chronicle. You know, I send it out every Tuesday and Friday or whatever it is. And, you know, go here to subscribe. But if you flip one more slide, what you’ll get is if you enjoyed this content, you like the style and you’re a creator yourself, then I use an agency called Bitesize that I founded, you know, that created all of these graphics. If you want that too, go here. And so deep down in his funnel, you know, these little like obscure, only the like biggest fan creators are paying attention to, he’s sending off all these leads to an agency that has grown really well. And most people would do that with one agency. Sahil is like a great investor and entrepreneur. So he’s actually launched nine agencies over the last 13 months. And he’s scaled these. They now have a combined $8 million in annual recurring revenue. And I know because one of them he and I did together. Because we had the same thing of newsletter growth services. He was like, look, I’m paying individual people for newsletter growth services. We’ve got a playbook dialed in. We should start our own agency. And so we did, we hired a CEO who’s amazing and we’ve built that up and that business is now doing $750,000 a year in revenue nine months in. And that’s because we just have this world-class lead source. And so everyone’s looking at Sahil’s business and saying like, oh, I see how you’re building an email list to promote a book. That’s amazing. And then separately, like in a way that people barely even notice he’s built a, you know, a business doing $8 million a year that I bet by the end of 2024 will be at $20 million a year. I wouldn’t be surprised at all. And I was just like, okay, you are playing chess when everyone else is playing checkers. Like I was impressed with what we were all doing and you’re just operating on another level. And that’s phenomenal. So anyway, I’ll pause there. And then I have one more example that I can dive into.

Katie: Yeah, I love that. It’s such first principles and outside the box thinking, but also with things that are sort of right there when you step back and analyze from that perspective. I’d love to hear the other example. And I’d also be curious if you’re willing to share any examples from ConvertKit, which is the email system I use to email you guys if you’ve ever gotten an email from me. I know you apply these things, both flywheels and this higher level thinking there as well. So any examples from a personal perspective in your own business you’re willing to share?

Nathan: Yeah. So I wrote this essay a few years ago called the Billion Dollar Creator. And the reason I wrote it out is I felt like creators were thinking too small. They were thinking about, you know, if I have this attention, how could I monetize it? And on one hand, that was turning into amazing returns, right? Like you and I have both made many millions of dollars from our content and helped tons and tons of our friends do the same thing. But that’s actually, I think, thinking quite small. And so I shared an example in this essay of Emily Weiss, who had a blog called Into The Gloss. It was talking about fashion in New York City, and she built that up. And then she ended up, instead of selling books and courses, she ended up creating a company called Glossier that turned into a multi-billion-dollar makeup brand. And. That was basically looking at an audience and saying, what’s the highest ROI place that I could direct this attention that I have? It wasn’t selling content. It was something much, much bigger.

And so that’s actually what I did with ConvertKit, where I took this attention that I had from people I was teaching design marketing to and sold them a software product and said, you know, why don’t you use this? I’ve made it just for content creators. And that scaled and that business is now doing over $40 million a year in revenue. But I think one of my favorite examples and the one that I want to go with is the one that I end up with, you know, each evening before I go to bed, you know, as I’m using my Wellnesse toothpaste. And that is, you know, what, what you’ve done with Wellnesse of having a, you know, all of this attention that is coming to you and people are saying, Hey, what’s the, like, what’s your recipe for toothpaste? Okay. That’s great. Can I just buy it from you? You know, and, and it’s something that you can do continuously. And so I think that brand and company is phenomenal because you’ve been able to make something before you were selling attention and now you’re selling products.

I actually have three, three basic principles for what I consider like a billion-dollar creator-style business. And the first one is you have to build more than a personal brand. You can start there, but if you look at all these examples, whether it’s, Kylie Cosmetics or Beats by Dre or so many of these other things. There’s still a personal brand element to it. But they built something that is much, much bigger than that. And then the second rule is you have to sell products rather than attention. And so that’s like making a move from advertising and sponsorships and some of these other models to, okay, I’m going to sell an actual product, right? And that’s what I’m doing with ConvertKit. That’s what you’re doing with Wellnesse. And then the third thing is you have to have recurring revenue or repeat purchases. So if you think about ConvertKit has recurring revenue, Wellnesse has repeat purchases, right? You’re using up a consumable and the more you love it, you know, like I got to replace that toothpaste at some point. And then when I’m on the website buying more of it, then I’m like, all right, well, why don’t I get these other products too? And it’s the same thing with another example of this would be Mark Sisson with his blog, Mark’s Daily Apple, right? Great blog, great business. I think you’ve probably co-invested alongside Mark in a few businesses. But when he built Primal Kitchen, that was taking that exact concept and saying, okay, I’m going to sell a product, right? In this case, paleo-friendly mayonnaise and salad dressing and all of that. And it’s a consumable that needs to be purchased over and over again. And that was a $200 million exit. So billion-dollar creator concept and creators who are playing chess when everyone else is playing checkers.

Katie: Those are such great examples. And I love those three principles to build on as well. I’d love to shift gears into something a little different, but I know that dovetails with this. For people who are listening and not watching, you have the word create behind you. And we’ve had a lot of talk about creation and creators. And I would love to talk a little bit about that side of it and sort of the benefits of writing and creation. And you’ve talked about this online quite a bit as well. I think even for people who are just starting out and maybe don’t aspire to create a billion-dollar company, but to create something small and sustainable, there’s still a tremendous amount of value in that. But also, like you said earlier, it can be, you can get lost in the minutia of it. You can kind of be sporadic and jump all over. But I feel like writing and creation, both on a personal level in our own lives as creative beings, but also on a business level can be so helpful. So can you speak to that aspect and why the word create is behind you?

Nathan: Yeah, I think that good things come to those who create. And I want to spend as much as my time creating, you know, rather than consuming. And then the consumption that I do, I want to be focused around helping me create more, right? So I’m listening to podcasts and watching YouTube videos of people who inspire me and give me ideas for new things to create. And you know, in that, I just look at all these things that came in my life as a result of creation. Like I sat down, and I decided this is in 2000, early 2012, I decided I wanted to write a book about how to design software. And I’d had a couple of false starts here and there where I’d write a little bit. And, you know, the effort was tied to my motivation, which means it’s never going to be that consistent.

And so I heard this creator named Chris Guillebeau talk about how writing a thousand or sorry, talk about how writing a huge amount of content is really easy. He was talking about how you could write a book every year, which I was like, that sounds hard in itself. But he goes on, he’s like, you write a book every year, a hundred blog posts, 50 guest posts, like some long-form magazine pieces, maybe another self-published project all in a year. And that’s pretty easy. And I’m like, there’s nothing, nothing sounds easy about that. But I kept going and he said, if you just write 1000 words a day. And I was like first thousand words sounds like a lot, but that’s about two, maybe two and a half pages. I thought, okay, I know how to write. I can write, you know, in an hour, I can write a thousand words. If I did that every day, then that would turn into something pretty amazing. And so what I ended up doing is I built a habit of writing a thousand words a day. I think I got like five days in a row and then missed a day and started over. But by the time I finished my book, I had about 75 days in a row of writing a thousand words a day. And some of those had been spent on editing and other things. And I counted that as a thousand words. You know, I checked it off in my little app. But that resulted in me going from a designer who was not well-known in the space to being the guy who wrote the book on how to design iPhone apps. And that got me tons of new business and opportunity and made me $20,000 on that book launch.

But what happened next, I thought was most interesting. And that’s when the little app that I had made popped up on my phone and said, are you going to write a thousand words today? About that and I was like, no, I hit my goal. I published the book. But then it had that 75 days in a row and that streak, I was going to break that. And, so I looked at it and said, okay, I’ll write a blog post about how the launch went and the lessons that I learned. So I did that, checked it off of my app and went on. Turns out the next day it popped up again. Are you going to write a thousand words today? And again, I thought, no, I don’t have anything else to say. And then I decided like, you know what? I can’t break the streak. I now have 76 days in a row. I got to keep going. And so I sat down and I started writing another book. And over the next three months, I wrote another book and published that, launched it to twice as big of an audience, made twice as much money. And that really kept things going. And then, but the app kept saying, are you going to write a thousand words today? And I found, you know, from this flywheel idea that we’re talking about in the previous episode, it got easier, right? I built that habit. I was just expected to write. And so I ended up writing a thousand words a day for 600 days in a row. And basically, everything good in my career came from that habit. I met hundreds of amazing people. I built an audience that I was able to use to launch ConvertKit. I made over a million dollars from selling the three books and the courses that, you know, that I created with that content and on from there.

So I think the biggest thing that you can do is the most important is to just create consistently. It could be a hundred words a day. Could be a thousand, whatever your goal is. But, if you do that, you show up consistently, then all these amazing things will happen towards that goal. And we can talk about so much of it, but I just think that anyone who has a goal should be building an audience around that goal. And you’ll just find that you end up living an entirely different life from so many people in your community. And then you’re the one that’s playing chess when everyone else is playing checkers because they’re doing it on hard mode and you’re doing it with an audience.

Katie: And I think this is beneficial even if you actually don’t plan to publish it. In fact, sometimes I found my best writing comes out when I’m not planning to publish it or share it at all. But that’s why I would encourage people, even if you don’t consider yourself a writer or you were given a story in school about not being good at writing and you don’t plan to use writing for a business purpose, still writing in the morning is actually really cathartic. And you might actually find that you have a message that could help someone that’s ready to come out. But if not, you’re going to sort of process the things in your head and let them come out onto paper, which in and of itself I find is incredibly valuable. I’d love as a follow up to that briefly, what app do you use to track that? I love the idea of a daily reminder.

Nathan: Yeah, so I wrote my own app called Commit that I ran for years. I am now focused on other things. So that app is no longer around. But there’s an app called Streaks that exists today that is much better and, you know, has all the features that I never had time to build. And so Streaks is a great app. Lets you add multiple things in there. So you could say like, I’m going to write a thousand words and practice the piano, right? You can have multiple goals within there. And so I think it’s really fun and builds that momentum of you know, having this one thing, I really. It’d be easy to get in and say, oh, I’m going to do these six things every day. And that’s going to have me live in the perfect life. And it’s just going to be way too much. It’s going to overwhelm you. And so I would say start with a single thing. And build up that habit and then layer on some other ones from there. So, you know, in my case, I would just say, like, I’m going to write every day. Maybe build that habit. And then once you’ve got 20 days in a row of writing every day, then say I’m going to write 250 words every day. Like, sort of make it a little bit harder so it’s more substantial.

Katie: I love it. And I’ll link that app as well for you guys. I’m going to definitely try it out. Another thing I’ve noticed as a trend among people who do well in business and also in every area of life that may seem unrelated, but I think I would make the argument that it actually might be very closely related is the idea of constant learning and challenge and getting out of your comfort zone is actually really helpful to the business process as well. And I know from reading your blog and from just knowing you in person that you’re working on getting your pilot’s license, which is something I have not finished yet either, but started twice. And I would love for you to speak to this aspect of the benefits of constantly learning something new, pushing your comfort zone and trying new challenges, even if they don’t directly relate to what you’re doing in business, but how that is related and also beneficial.

Nathan: Yeah, I love flying. I didn’t know that you’ve started to work on your own license as well. Are you going to pick that up again?

Katie: Probably so. I actually started the first time when I was 18 and then went to college and didn’t get to finish and then started again a couple of years ago. So my plan is actually to finish this year with my two sons who are both old enough now. And for us to all do it together is sort of like a bonding experience.

Nathan: Oh yeah, that’s amazing. I’m so excited. I am currently, I finished all my requirements and I’m waiting to get, to be able to schedule my check ride because the FAA has a long, long backlog. But I’d love the process of learning to fly. It’s interesting as an adult, you don’t have to be a student that often. And I’m like making flashcards and studying flashcards, you know, and like memorizing all of this information. Actually, I picked up my son, my two older boys from school yesterday, and they’d just been learning about the principles of flight. And I didn’t know that in school, you know, but they like my nine-year-old goes, dad, what are the four, like the four components of flight? And I’m like, oh no, I do actually know this, like lift thrust, you know, like listing that out. But it’s fun to be a student again.

It’s also really interesting to get exposed to an entirely new industry, right? Like now I’m a consumer of online courses about getting your private pilot’s license. You know, I’m watching an entirely new set of YouTube channels. I’m seeing new examples of people like, actually, I have this friend, Trent, who is using an audience to shortcut the goal that he wants really effectively. So Trent is an entrepreneur. He’s built a couple of companies. He’s 53 years old and he decided that he wanted to be a professional airline pilot. Which is a crazy, like, that’s something that people start when they’re 20 because it takes so long and there’s all the seniority. And he’s like, look. I just exited a company. I’m not ready to think about retirement. I have always had this dream. I want to be a pilot.

And so as you embark on this journey, like I have 100 hours flying an airplane right now as I’ve been doing it for the last year. To even qualify to be an airline transport pilot, which is a certification, you have to have 1,500 hours. So like, that’s a crazy number of hours. And so, and you have to have all these ratings, right? Private, instrument, commercial, you know, work your way all the way up. And Trent said he’s going to embark on this journey. And he went to flight school. Instead of doing it like you and I did of, oh, we’re taking a lesson, you know, maybe one or two a week. He said, this is my full-time focus for 90 days. And he ended up getting seven ratings. So all the way up to being a instrument rated flight instructor. He got seven ratings in 90 days because that was his whole focus. You know, he’s studying, he’s using simulators, he’s flying twice a day, all this stuff. And then the coolest thing about it is he started a YouTube channel about his process. And so in nine months, he’s grown this YouTube channel. From 0 to 20,000 subscribers. And he has endless opportunities compared to what a normal flight instructor has. Like a flight instructor is actually a, I mean, you know, but it’s like a $20 to $25 an hour position. Even though we as students are paying flight school like $70 an hour. And that’s because all of these flight instructors are trying to get their 1,500 hours. And so they’re putting in all this hard work.

But Trent, because he decided to build an audience and document his journey, now he’s an independent flight instructor. So he’s making all $70 an hour himself. He’s not having to pay another school. And he has a steady stream of fans of his channel that want to train with him specifically. And so he’s now picked up, I think, almost 600 hours so far. So he’s a third of the way to his journey of, you know, being able to be an airline transport pilot. And his audience has let him do it in a totally different way. He’s actually making more money referring students that he can’t take on to other flight schools because they pay out a $2,000 referral bonus. And so I just love that example of Mike. Here’s a very, you know, like in food or design or any of these spaces, we can think outside of the box. But then you get into a profession like being a lawyer or a pilot or something else. It’s like, nope, there’s all these constraints. You have to operate a certain way. And Trent’s like, actually, an audience helps me a crazy amount here as well. So anyway, I love being exposed to new stories and learning new things. And I love it when people build an audience in pursuit of whatever goal they have.

Katie: Such a great example of the power of building an audience. And I love that it’s in an area, like you said, where you would normally not think it was even possible and that he’s turned it into something that’s helping people and helping him. I think that’s a double win is always beneficial. And that story made me think of a quote I read recently, which was to sell your knowledge and purchase bewilderment. And I think, like you said, there’s tremendous value in staying in the mindset of a student and constantly learning. And once we’re out of the school phase of that, we actually get to do it in whatever area we choose. And it’s beautiful and exciting. And I think often we forget that when we’re adults, that we can still stay constant students of life and learn constantly. And I know I always enjoy our conversation so much. I wish we could talk for hours and hours. But until next time, where can people find you and keep learning from you? I know you publish online, and you are involved in so many things.

Nathan: Yeah, so I have a podcast called The Billion Dollar Creator, where I like to riff on all things business and building teams and really on the power of audience. And then I write a newsletter at nathanbarry.com. And then I also have a day job of building ConvertKit, where we get to work with, now at this point, 50,000 creators powering all their newsletters. So if you’re building an audience, definitely do it on ConvertKit.

Katie: Awesome. Well, Nathan, it’s always a joy. I love our conversation. Thank you so much for your time today.

Nathan: Thank you.

Katie: And thanks as always to you for listening and sharing your most valuable assets, your time, your energy, and your attention with us today. We’re both so grateful that you did. And I hope that you will join me again on the next episode of The Wellness Mama Podcast.

If you’re enjoying these interviews, would you please take two minutes to leave a rating or review on iTunes for me? Doing this helps more people to find the podcast, which means even more moms and families could benefit from the information. I really appreciate your time, and thanks as always for listening.