Practical Founders Podcast

#43: A Tenacious Bootstrapper’s Journey to a Profitable and Sustainable SaaS Business

Josh Haynam grew up in the Central Valley of California just 100 miles from the tech center of Silicon Valley without any awareness of tech jobs or tech businesses when he lived there. He was a successful high school entrepreneur who supported himself through his college years with a digital SEO agency. Their experiments with custom website quizzes showed promising results, so Josh and his cofounder friends started a company to build the first lead-generation online quizzes as a standalone plugin for websites.

Interact quizzes showed promise with great customer value, but they struggled to sell their new solution to small business owners or marketers who had never seen quiz software before. They experimented, pivoted, and kept going for seven years before they finally reached $1 million ARR with some profits. The ups and downs continued with well-funded competitors, COVID booms and busts, target market pivots, and more.

Interact now is profitable and growing with nearly $3 million in annual recurring revenues, 11 remote employees, and thousands of customers—still without any outside equity funding. Every day, users complete millions of Interact quizzes on their customers’ websites.

Best quote from Josh:

“I think the biggest thing that I’ve been learning, especially of late, related to resilience and all these things, is not getting too up or too down. The situation we’re in right now looks incredibly positive, but it could change again. 

“So I take it in stride and I’m going to enjoy this for what it is but not hold onto it because it might change and then things can go downhill. And so, appreciating what I have now, but not getting too attached to this continuing forever.

“This is why it is so important to have the other things we do like the four-day workweek and have your life going on. Because if you’re all in and that’s all you do, you can burn out like crazy. I’ve done that many times.”

In this episode, Josh explains:

  • How his high-school and college entrepreneurial adventures lead him and his cofounders to create a new category of online quizzes for lead generation
  • Why it took Interact 7 years to get to $1 million ARR and be profitable and sustainable
  • The challenges of creating a new category with a new thing that their customers didn’t understand yet
  • How they are using AI to help their quiz creation team members improve productivity and quiz quality
  • Why they don’t use shady lead-generation and user-tracking tactics in their software at all
  • What they wish they never had the influx of bigger customers during COVID that weren’t a good fit for the Interact solution

Edited transcript of Practical Founders Podcast interview with Josh Haynam, CEO and co-founder of Interact.

Greg Head : And we’re live with Josh Haynam, the co-founder and CEO of Interact internet quiz software. Welcome to the Practical Founders Podcast, Josh. 

Josh Haynam: Yeah, thanks for having me, Greg. I’m actually super excited to be here. I’ve been following you on LinkedIn for a while, so this is a treat.

Greg: Yeah, and I’m really curious about your journey too. There are so many interesting twists to it. One of them is that I helped buy the domain name back in the year 2000. But you’re at; you’ve got some cool software. We always start with kind of where you’re at right now and then we’ll go back to the beginning here on the podcast. Josh, tell us about what is Interact, and where your company is right now, and then we’ll go back in time.

Josh: It’s a funny small-world moment. I was wondering if that would come up, the Interact domain. Yeah, we are a quiz software. We’re a bootstrapped company. We started in 2012 and then formally launched in 2013. We serve a variety of businesses, everything from educational institutions to universities. But our core demographic is a lot of mental health professionals and coaches, people who advise on fitness and nutrition and relationships, all that kind of stuff. So it’s kind of that soft market if you will, the soft skills market.

Josh: The reason why they’ve really gravitated toward quizzes is that our whole ethos is that quizzes help you connect with your customers in a more personal way. That’s just kind of how we ran with it. Like, we stumbled across this and we realized that it works.

Greg: And it’s really interesting looking at just who your customers are and hearing from you because there’s some quiz software that’s about kind of the “huckster Internet, get more leads” thing and you’ve got relationship values… You’ve got that kind of vibe for your customers. Tell us where your company is now, Interact.

Josh: Yeah, employees-wise, we just hit 11 and we’re really excited about that. Our team is just incredible. Like, I can actually not work for whatever amount of time and trust that it’ll keep growing, which is amazing.

Greg: Well, talk about that. What’s life like for you, adding employees slowly and changing your role? I’m sure you did it all at the beginning.

Josh: Yeah, a hundred percent. It was more like “hire a team and then have to lay them off a bunch of times because we couldn’t grow.” It was terrible.

Greg: Oh, okay. Here we go, yes. So, you’ve got 11 employees and you’ve got a profitable SaaS company. About how much in revenue have you got?

Josh: Maybe we had like one year back in the early days that was negative. But yeah, the last five or six years, profit every year. We’re at $2.75 million in terms of Annual Recurring Revenue.

Greg: It sounds like a steady-growth business that you’re building. Like, you had some adventures along the way, but pretty meticulously, you’re growing this thing.

Josh: Yeah, pretty meticulous. The pandemic was a weird blip because the first year was a huge spike and then the last two years were tough times. This year, especially because we just switched into implementing a ton of AI stuff, it looks like that’s going to spur growth and we’ll hit kind of our normal growth rate, which historically was like 30 to 40% year over year.

Greg: That’s awesome. Well, let’s go back to the beginning. Were you an internet marketer who kind of ran across all these ideas? And quizzes are pretty common on the Internet. Social media quizzes, take this quiz and capture an email or capture a lead. Were you there when quizzes were up and running, or did you help start the wave?

Josh: I’m pretty confident in saying that we started the wave.

Greg: Oh, wow.

Josh: Because back in 2011 and ’12 when we were kicking around this idea, I called the big-name marketers that you can think of, the ones whose faces are plastered everywhere, marketing influencers, and I was like, “Does anybody have software for this, making these quizzes?” And they could send me specific examples of custom-built ones, but there was no platform. I mean, Squarespace was just getting started back then.

Josh: It’s interesting to hear you say, “Oh, people know about quizzes for getting leads.” In the first five years, that was not the case. It was, “What is this? Is this for school?” That was the first five years.

Greg: Oh, right. Is this, “Can I make a quiz?” “No, this is about internet online quizzes for your customers and all of that.” Were you in the internet marketing business, some kind of agency guy or SEO guy or lead gen guy or something like that?

Josh: Yeah, agency SEO. We would just take on clients. We mean my co-founders and I, there are three of us. We would just take on clients and build out websites, and so that’s how we got first exposed to this.

Greg: So, you had a team of three. Is it the same team of three that’s working on Interact with the quizzes?

Josh: Yeah, one of them is still our CTO. The other one was a designer. And so unfortunately, we couldn’t afford to keep him on for the middle years, but now he’s coming back in now that we’ve grown, which is just awesome. We’re all like really close friends and it’s a blast to kind of work on things together.

Greg: So, you were working on these websites for, I guess, small businesses. Where were you back then?

Josh: Physically, I was at UCLA.

Greg: Oh, so you were in school. You were building websites as a side gig. That’s cool. You’re the side gig guy. Were you the high school entrepreneur making more money than anybody on the block, anybody in your high school?

Josh: Yep.

Greg: You were. All right, let’s go back here. Where are you from, Josh?

Josh: I’m from Turlock, California, which is…

Greg: A famous place, yeah.

Josh: It’s super famous. Actually, I think like 90% of the world’s almonds are grown near Turlock. So, there’s our claim to fame. If you eat almonds, they’re probably from somewhere near Turlock. Also, incredible produce. Like, the best peaches you will eat in your entire life.

Greg: So, that means the Central Valley, the farming epicenter of California.

Josh: Yeah. Beautiful place, beautiful people. The original entrepreneurs, the O.G. Entrepreneurs were people that had almond orchards in the 1970s.

Greg: Right. Land and farmers and..

Josh: Unfortunately, that time has passed and they’re not worth anything anymore because it’s all become these conglomerates. So, you can’t eke out a living these days.

Greg: How did you eke out a living as a high school, moneymaking kid?

Josh: I got my start in 2008, which was a tough time. In Central Valley, the combination of the conglomeration of agriculture, which took out the main market, plus the economic recession, I want to say effective unemployment in the Central Valley was close to 40% in 2008. And so, I grew up super poor and I kind of had to support myself when I hit 15 or 16 years old. But it was also 2008, so I couldn’t get a job. I just started going door-to-door flyering with my lawn services. I knew how to mow lawns. I knew how to install grass and put in sprinkler systems. So, I did that and that’s how I got my start. It was incredible. I would like move mounds of dirt for a living.

Greg: So this wasn’t like me, in a bygone era, being the snow shoveling, lawn mowing guy for the neighbors coming home with a $5 bill in my pocket or something. This was… Did you get trucks and teams and things like that?

Josh: Yeah. I was selling the deals. You know, I had a beard when I was 17, so I was not talking to anybody about how old I was. I was selling $1,000, $2,000 contracts, which at that time… You know, you’re 17 years old, that’s all the money in the world. Yeah, I was selling these things just as a straight-up “We are a landscaping service.” I had business cards. I wasn’t talking to anybody about, “Oh, I’m just a kid down the block.” I’d come in with a truck and a team and we would take on jobs that we had no business taking on and undercut the market by like 80% because we didn’t have any overhead.

Greg: And then you went to school at UCLA. Did you keep doing side gigs or keep that business? What did you do?

Josh: Halfway through high school, I shifted to buying and selling laptops. I discovered that you can make a huge profit by buying laptops with viruses. This is back when viruses could just destroy your laptop. But the reality was it wasn’t destroyed, you just had to reset it. So, I learned that, self-taught. And by the end of high school, I was making a lot of money buying and selling laptops, like $1,000 a week in cash profits. I drove this pretty new Mercedes coupe that I bought in cash to my high school graduation. I was 17 years old.

Greg: Oh, my goodness. What was the lesson you learned from that? I mean, what did you come out of high school with? Just saying, “I can create any business. Profits are king. It’s easier to do it without being out in the sun.” I don’t know. What were your takeaways from those entrepreneurial adventures?

Josh: I mean, to this day, my biggest takeaway is that you can recover from anything. Statistically, like my coach likes to remind me, I shouldn’t be here, right? I grew up even below the poverty line and in a place where the effective drug use rate is the highest in the world by some some measures that you look at. That’s probably what I should have done, but you can kind of recover from whatever happens. That’s really helpful running a company now where it’s like every two months there’s an existential threat, something threatens to take you out. And so, just having that background of, “Yeah, if it takes you out, it’s fine, you just start over again.”

Greg: Yeah, you can’t touch me. So, why did you go to school and not keep printing money?

Josh: You know, I almost didn’t. I was pretty risky in high school in terms of that I didn’t really focus on school that much. Thankfully, I just had some good people in my life who kind of helped me make sure to keep those things a priority and luckily got into UCLA. I’m not really sure why. I don’t think I had quite the credentials to actually get in there. But yeah, there was a second there where I was like, “Man, I’m making incredible money. I should just stay here and keep running this business,” which would have been a terrible decision because, buying and selling electronics, that window has closed. It’s not really a market anymore.

Greg: What did you study? Did you study business stuff? What was your intent going to college?

Josh: Interestingly, I got in for mechanical engineering because I didn’t know about software growing up in the Central Valley. I didn’t know that was an industry. All I knew was the best job was engineering, which was outdated at the time. Like, this was around 2014, 2010. The window had kind of already passed for mechanical engineers, but that’s where I got in for. And then as soon as I got there, I realized that was going to be way too hard because I didn’t want to spend time actually doing school because I was still running the electronics business.

Greg: Making more money out of your dorm room or whatever, yeah.

Josh: One hundred percent. I majored in doing as little as possible.

Greg: It’s really amazing that there you were in the Central Valley, the central strip of California, the North-South Strip, hours from Silicon Valley, the epicenter of super tech, and you didn’t really know much about it and it wasn’t really a thing. It’s like a completely different state over there, for sure. I know you’re in San Francisco now.

Josh: You know, it’s interesting. I kind of have some of both elements. My fiancé and I just bought a 4unner, which is not a big city car, and we love going outdoors and camping. And then, I also enjoy the big city stuff of like being around the energy and working hard and working with people to solve huge, difficult problems.

Greg: You also have this nose for opportunity. You’re making a living doing websites. What was it that you saw in this quiz business that didn’t exist yet that gave you the sense that there’s something there? I’m sure you were trying all kinds of stuff saying, “Where’s the opportunity?” But like, what was it about the quiz thing that piqued your interest?

Josh: I mean, building websites is terrible work, in my opinion. You’re at the whim of… My favorite one was I built a website for this artist and he was insistent on having these giant gorilla eyes on the front of his website. Every time I would make it bigger, he’s like, “Make it bigger.” And I’m like, “Gosh, man. This website looks terrible.” And then that’s your work. It’s such a defeating existence, in my opinion, because you’re at the whim of somebody’s terrible ideas. So, that was definitely not fun. What we found was that the quiz just converted people to subscribers.

Greg: So, you had built a quiz, like a manual… You coded some quiz things and gave it a try and said, “What are we going to do here?” It was just one of the things you did.

Josh: Yeah, we used to sell them on Upwork for $200 one time and then spend a month building it, which is like $0.33 an hour. Not a good rate. But yeah, we saw that they converted. The average conversion rate is 40%. 40% of people who finish a quiz.

Greg: Started a quiz and end a quiz with an email.

Josh: Yeah, 40% of people that start a quiz put in an email.

Greg: Wow. Yeah, that’s amazing.

Josh: And it’s still the case. Even though now we’ve collected 80 million leads.

Greg: That’s the proposition here. Why internet quizzes? Why don’t you just introduce what the quiz game is that you’re working on for people that haven’t used quizzes in their marketing?

Josh: In human terms, because that’s how I think… I’m not a huge technologist, to be honest. I don’t really know how to use other technology other than ours. But what it actually does is… So, there’s this divide in marketing. There’s what your customers are thinking about and the problem that they have on their mind, and then there’s what you have and your services and you’re like, “This is what I do.” Those are like never the same. I’ve been doing this for 10 years and they’re never the same, which is wild. What a quiz does is it literally just connects the two, in very simple terms.

Greg: And what’s an example of a quiz that would work for one of your clients?

Josh: A prime example would be like a business coach. And the business coach is like, “Here’s my offering. I help with mental health and mindfulness and people seeing themselves and being relational.” It’s like, “I don’t want all that.” What’s often on the mind of a customer, and this is a very common use case, is, “Oh, I just have problems with time management. That’s it. Nothing else wrong with me. I’m good. I just need to learn how to manage my time better.” And the coach is like, “No, you need X, Y, Z, A, B, C. That’s why you can’t manage your time.” And the customer is like, “No, I don’t. I just have problems with time management.” So then what you do is you make a quiz that’s “How Can You Improve Your Time Management?” And then, the outcomes of that quiz are “Work on your mental health,” “Mindfulness,” and “Decrease anxiety.”

Greg: So, that’s what the quiz taker gets, which is a recommendation, like a prescription or something.

Josh: Right. And the recommendation is what the business coach wants to offer you. But if you just jump straight in and are like, “You need these things,” the customer is like, “I don’t need those things. I need to manage my time better.” So, you start with what the customer wants and you end with what you want to tell them.

Greg: Interesting. And a quiz is “press the button to take a quiz.” Does that show up in an email or social media or on your website? “Take the quiz to figure out how you can manage your time better.” And they know there’s a prize. They know there’s an answer. I don’t have to talk to somebody, another product-led kind of thing. Through your software, you create the questions, the answers and the prescription, right?

Josh: A hundred percent.

Greg: If they answer “A, A, B, B,” you can recommend this. Is it all custom recommendations at the end, custom prescription based on the quiz or is it everybody gets the same, “Buy my course or something,” right?

Josh: Usually, there’s like somewhere between 3 and 10 different recommendations at the end. Our software, we just ask you about your business and what you want people to experience with the quiz. You tell us whatever you know, and then we create it for you using AI.

Greg: But it wasn’t AI in the beginning. Let’s go back here. You’ve got this company, you’re building these quizzes. It’s actually working. You know, a lot of services people, especially in thankless services like create a website, have the dream of creating a software company, Recurring revenues, growth, the crazy multiples. It’s a much sexier thing. Did you have that or did you just say, “There’s a product business inside here somewhere? Let’s go build it?”

Josh: Yeah, I mean, I had that from that services business and also from the laptops business, the electronics business, realizing that the only way to make more money off this is to put in more effort. It’s literally just like my time is going to max out at… You know, even if it’s high, like $200 an hour, $300 an hour, there are only so many hours in the day. You can’t build a multi-million dollar-a-year business trading your time for money. So, that’s why I wanted to switch.

Greg: How long did it take you between, “Wow, quizzes work,” and you’re looking around, nobody else is doing them, and, “We have an up-and-running product, Product 1.0 that somebody would pay for and buy?” How long did it take you?

Josh: Pay for and buy was about a year.

Greg: Yeah. Was it one of your co-founders or, really?

Josh: Yeah. He taught himself to code on a vacation and built it.

Greg: Okay. You guys are resourceful here. How did you get more customers in the beginning? You didn’t go out on a street corner with a sign. Was it paid ads or was it social media or what was it?

Josh: No, I basically went out on the street corner. I went door-to-door flyering.

Greg: Literally?

Josh: That didn’t work.

Greg: Yeah, okay.

Josh: Yeah. We live next to Brentwood in L.A. and I was like, “Oh, those people are rich. I’ll make flyers about our quiz service and go door to door.” I just got like, run away before they called the police, basically.

Greg: So, how did it grow in the first year or two? What was the first flame that brought you customers?

Josh: Content. We did a bunch of manual outreach and that didn’t work. It just took too long to go back and forth. Nobody was interested anyways. But then we just started creating content around how to make quizzes, and it turned out there was a minuscule amount of demand there.

Greg: Meaning, people were searching for “quizzy” things on the internet. All 10 people, and you were on the other side saying, “Here’s how you do it,” and then the conversation started.

Josh: Yep, that was literally it.

Greg: Awesome. Okay, so now it’s the few of you. Did you quit your day job or were you guys all in on this and living lean?

Josh: We went all in. And that was rough.

Greg: How long did it take you before you actually felt like you could pay yourself and “not rough” anymore?

Josh: Five years.

Greg: Five years. New category. So, you said, “We’ve got quiz software,” and they say, “What’s that?” And then, there’s a half hour discussion about what it is and why it’s better. You guys didn’t have a ton of customers. And this isn’t like $10,000 at a time. This is $50 bucks a month, something like that, right? I don’t know what it was in the day, but you’ve got to do a lot of those to feed three people.

Josh: Yep. And they were half an hour conversations, sometimes multiple hour conversations, and then, “We’ll think about it.” And then they never come back.

Greg: For a $50 a month thing. What was it in the beginning? $29 bucks or something a month?

Josh: Yeah, it was $29. It’s $39 now.

Greg: Right. So, why didn’t you give up, Josh? Most people would say, “The market ain’t there. I’ve got to get a day job. This sucks.”

Josh: Stubbornness, and also, we knew it worked. For the people that actually implemented it, it worked like bonkers. So, there was something there and just good old-fashioned stubbornness.

Greg: And for the people it worked for, was this like they had a big social media following and then they could engage that big following or they had a big email list or they did it with their customers or they did it with paid ads? What was it that made the numbers big enough? Where was that?

Josh: It’s really just traffic to website. As long as you have a couple hundred people a month coming to your website, you switch out whatever offers you have for a quiz. It almost always increases your leads that come in.

Greg: All right. So now, we’re talking to everybody who’s listening to this podcast. You’ve got a website. And if you have a form like I do that says, “Fill out this form,” a lead form or something like this, you’re saying, “Stop doing that. Put in a quiz and you will increase your conversion better and you’ll have more information to have a reasonable conversation with somebody.”

Josh: A hundred percent. You get a ton of information. And it’s all information that you own, not gathered from a third party.

Greg: So, if I put out a form and it had, whatever, the 10 fields and it says, “Okay, tell me about your industry. How many employees?” People would never do that, right? But if you did it as some kind of useful quiz, there’s a prize inside. People are filling that kind of information out all day long.

Josh: Yep. And they want to.

Greg: And they want to. All right. Isn’t that interesting? You’ve totally flipped that. So again, that’s, so this isn’t just for SaaS founders, it’s for anybody with a website who wants to improve conversion. This was just scrapping around. Were you living in San Francisco so expensively back then? All the cool kids in tech and you’ve got this thing on life support, trying to get it out of the ground? Were you part of the whole tribe of wannabe SaaS founders in San Francisco?

Josh: Not San Francisco. We lived in Walnut Creek, which is an hour and a half outside of the city. As close as we could get.

Greg: So, you had made more money in high school than you were making now.

Josh: Way more.

Greg: Way more. And you resisted the urge to go back and make money the old-fashioned way. You said, “I’m going to stick with this thing.”

Josh: No, I mean, I knew that would cap out. In retrospect, I probably would have done somewhere in the middle, like made some money by trading time for money and not just gone so all in. But yeah, I knew there was a cap and I didn’t want a cap.

Greg: Yeah, there you go. Exciting. But you also didn’t beg for funding. “Hey, I’ve got 30 customers. That’s really amazing. Give us $1 million bucks or $2 million bucks.” You know, the classic seed funding round or early VC or whatever. You didn’t do that either.

Josh: No. I mean, we saw how that destroyed companies in our space. Combined funding of our competitors over the last 10 years is north of $250 million, and most of them are out of business because they got pushed to grow fast and they couldn’t do it.

Greg: Okay, well, there’s a whole ‘nother thing here. So you actually saw that, and you said, “Let’s use our entrepreneurial chops and get there.” How long before you got to, “We’re paying ourselves and it’s a real company?” Maybe that’s a $1 million ARR or something like that.

Josh: Seven years.

Greg: Seven years to a $1 million ARR.

Josh: Yeah, I think a million was a big milestone. It ended up happening on my birthday, so almost exactly seven years.

Greg: So 2012, seven years later is 2019 when you hit a million.

Josh: Exactly. Yep.

Greg: Wow. Just before the pandemic. So, you kind of got a foundation and then the wind in your sails, I’m sure it went down before it went up like for most software companies. How did that feel a year later into the surge of the tech boom during the COVID crisis?

Josh: Dude, I wish it didn’t happen, honestly. It was pretty terrible. I mean, almost everybody that signed up in 2020 ended up churning out because they were people who had big ambitions and they thought, “Web3 and crypto are taking over the world.” I’m very disdainful of that audience. Yeah, it was not good for us. They all came and signed up and it really messed up our business. We’ve recovered now, but I really wish there had not been that surge.

Greg: I’m imagining your revenue curve and everything going up and down, thrashing about here, dreams going up and down. As entrepreneurs, we follow the dotted line. It goes up 100% this year, we imagine the dotted line times ten. And then it goes down and you imagine the dotted line. How did you manage that personally? I guess you’ve got some resilience to get through these things. How did you and your founders manage the roller coaster ride there?

Josh: I’d say we’re still learning. I have a really great business coach that I’ve met with every week since 2015 and I have a second business coach that I’ve met with every other week since 2016. So, that. A lot of help, a lot of support, therapy, great friends in my life, a great partner and fiancé, just people that can help keep me rooted to reality rather than following every up and down.

Greg: And are they mindfulness coaches? There are business coaches that are more about the head game, what is us and our limits and our challenges and our bad thoughts and all that. And there are others that are more coaching about the business. “Oh no, you’re spending too much here. Think about this, and do that.” And some that are some mix of that. Do you have a mix of those or are they one way or the other, more “businessy” or more head game?

Josh: I have one that does everything. And actually, my co-founder meets with him. He’s kind of part of the team at this point. Now he’s actually scaled his business, which is awesome because I’ve known how great it is for years and now other people are getting to experience it. He does everything. We’ll do one week where it’s literally like time blocking, and then the next week where it’s just like, “Man, I’m feeling down this week.” So, that’s incredible. The other one is also kind of in the middle, but I would say more on like the therapy side of mental well-being.

Greg: Well, that’s very wise. How old are you now, Josh?

Josh: 30.

Greg: You’re 30. Usually crazy entrepreneurs have to hit a few walls in their 40s and later to go actually talk to somebody and get help about their business and view their own life as a startup where not everything works and you’ve got to try some things and learn a few things. That’s very wise. For a kid from Central Valley, man.

Josh: Yeah, it’s a wild ride. I mean, like I said, probably not where I should have ended up, and I feel grateful to be here.

Greg: Yeah, that’s awesome. And now you’re in a different place. Maybe we’re not through all the crises, I guess we can all agree. There’s Silicon Valley bank a couple of weeks ago, almost punched a lot of tech companies in the nose. And I don’t think the world will be the same in funded tech, Silicon Valley tech over there. But do you feel like your company and your personal life is on a very stable ground? Or are you like, “I’ve got to do the next adventure.” Where is your head these days?

Josh: It’s interesting, the last two years with the pandemic, because at least the last couple months, there are signs that we’re about to experience growth like we’ve never seen before. Which is crazy given all the layoffs and the other news. We’ve just kept our heads down through the whole pandemic.

Greg: But you don’t sell to tech companies that can’t get funding anymore.

Josh: Nope, we do not. We sell to entrepreneurs in Michigan and Wisconsin and other places who have small businesses.

Greg: And was that a pivot for you or was that the steady crowd that always bought your software in the beginning and the long run?

Josh: It was the ideal customer. Honestly, we just took a look in about 2016, 2017 about who was actually using this and who’s sticking around. The big companies and the tech companies were not sticking around and these folks were because it was front and center on their website, it was a huge part of their business and it was incredibly valuable to them. They were happy to pay for it, so we doubled down on them.

Greg: So, it’s not the marketers who manage landing pages and have advanced conversion metrics. Why do you think that is? Maybe they use different tools up there. Is the quiz not useful for somebody who is doing $1 million a month in Facebook ads to a landing page? Is the quiz not useful? Why do you think the big marketers, internet marketers, didn’t become your target?

Josh: I think it’s really about the pace of change. The whole concept of the quiz is to build a longer-term connection. Like you mentioned, you get a lot of information about your customer, you understand them. You turn that into a long term relationship. And at least in my experience, with the vast majority of the big internet marketers, it’s a campaign a week or a campaign a day or a campaign every four hours. You’re not thinking about, “Oh, I can actually build these deeper connections.” It’s more like how much money you put in and how much money you get out.

Greg: Transactional. That’s interesting. And you know, my perception of the quiz as a marketing, lead gen kind of thing has been, “Well, they’re just trying to get my email. They don’t even know who I am.” But you’re actually in a relationship. Like, you’re focus is the relationship value of quizzes, right?

Josh: Yeah. I mean, it won’t work for that stuff because we don’t do server-side tracking and refreshes and all this stuff that you would want. We don’t even have a real Facebook pixel integration. So, if you’re trying to do that stuff, then we actually can’t work with you.

Greg: Right. You kind of turn them off and you kind of tell them no between your pricing and your features. You look at your website and you’ve got hundreds of these coaches that say, “This is awesome, I love it.” And of course, this is a product-led growth kind of thing. You don’t have salespeople at all, do you?

Josh: Nope.

Greg: And do you talk to your customers either when they’re trying to buy or for support either by chat or by phone?

Josh: Yeah. We have upwards of 100 conversations a day.

Greg: Okay. And that’s all chat or is there any phone?

Josh: Some of both, mostly through email. Like, if we can help out with email, we do that. Otherwise, we’ll hop on a call.

Greg: Okay. So, what is the difference between what your platform does now and what it did five years ago? Maybe you have more templates, more integrations, more intelligence, more features, more ease of use. Or maybe it’s just 100 times easier than it was. Before we get to the AI story. We’ll layer that on here.

Josh: I would say some of the things you mentioned. Integrations are better and deeper, which is big. If you’re gathering leads, you want them to connect with your email software. Templates are huge. We have a few hundred templates now that are hyper-targeted towards our audience and what they actually care about, because we understand that audience better than, I think, anybody in the space. And now, the AI is really the game changer because we take everything that we’ve learned over a decade, teach an AI, and now the AI makes the quizzes.

Greg: How many quizzes have been taken in the lifetime of the Interact quiz maker?

Josh: Conservatively, because I don’t know the exact number, 500 million.

Greg: 500 million. So, you’re on the way to a billion quizzes served, like the McDonald’s sign. And so, once you have hundreds of millions of quizzes taken, you have data that your AI can now say, “No, this works. This is better. Do that.” Tell us about AI. It’s probably not like what we’re hearing now, the large language model, the GPT, you know, “Write something for me.” What is AI in the quiz space and why is it so powerful?

Josh: Like with everything that we do, we’ve taken a very human approach to it. We don’t actually use any of the data from our customers quizzes because that’s just a decision we made at the beginning and it’s served us very well. This is like a tangent story, but we were on the opposite side of the Cambridge Analytica scandal. The government of the United Kingdom was using our quizzes and the Brexit people were using Cambridge Analytica. And we don’t track anything, we don’t take any data from Facebook, we don’t do any of that. But I’m glad that we didn’t because obviously what happened with Cambridge Analytica happened.

Greg: And that was they blew up because they were secretly using Facebook data and other data. Facebook was secretly letting them have data and vice versa.

Josh: Yep. And then the government on the other side did a “How Much Do You Know About Brexit?” quiz using our software. It got taken like 200,000 times, but they didn’t know anything about who was taking it. It was entirely anonymous. It was just meant to educate the public.

Greg: Yeah. Okay, so what does AI mean to the Interact Quiz Maker now?

Josh: What we’ve actually done is that we have 10 years of intuition data about what works. I’ve seen, I don’t know, 200,000 quizzes at this point. I’ve seen what works, I’ve seen all the analytics. I know exactly what to pinpoint and works. So, we basically wrote our own proprietary AI that creates quizzes based on what we’ve seen to work. And then, we still have a human component where we make sure we get the right information from our client to make the best quiz.

Josh: Essentially what works best is you get the customer who’s trying to make the quiz to tell you something about what they’re trying to do, and you get them to speak in their own voice. And then, you feed that to the AI and it creates the whole quiz in their voice. You don’t want it to be in AI voice, you want it to be in your voice. And so, we know better than anybody exactly what you need to tell the AI in order to get it to create the perfect quiz in your voice. And then, we do all the AI stuff on our end and we just pop the quiz into your account for you. You don’t have to do anything.

Greg: So, AI is doing a quiz of the customer and producing a quiz for their customers. I mean, it’s literally interviewing them like an account rep would do or something like that.

Josh: Yeah. And we still have a human component of that. There are five of us on our team who are the humans directing the AI because the AI is not going to get it right and maybe the human, the customer, wants something specific. So, it’s totally worth our time because we get a great quiz implemented for somebody and that’s a customer for life.

Greg: Okay, so now let’s talk about the leverage of this business. Because you didn’t say, “AI does it all and there’s no human thing.” They’re giving you, as humans, leverage to do all this work and then you show up and add the most value that gives you leverage. And then, there’s a huge lifetime value and they stay for years and years right? That math equation works for you, right?

Greg: Some people would say, “I don’t want to have any variable cost to my business. I want to add 10,000 customers and no more cost and have the software do it all,” something like that. But you didn’t say that. You see a lot of leverage in this. AI helped you create leverage in your business.

Josh: Yeah. I mean, I highly disagree with taking all the people out of businesses. I think that people at the right place… I mean, the Nintendo story is a great example of this. For years, they would coach people through playing Nintendo games. Now those people still play Nintendo games and they’re 50 years old. Like, you get a customer for life if you spend the right time at the right place.

Josh: It only takes us about 8 to 12 minutes of our personal time to onboard a new user using AI. And with a lifetime value… It’s to be seen what the lifetime value will be of that customer, but most likely north of $1,000. Would you trade 12 minutes for $1,000? Of course. And it’s better because, it’s great to work with great people. So, we get to keep adding great people to our team instead of just constantly trying to eliminate them.

Greg: Or, hiring people inexpensively to do the manual labor of quiz building. And now the AI can do it.

Josh: A hundred percent. And I think there’s actually… This is my personal view, but I think there’s actually a lot of negativity that comes from trying to hire people really cheap because you’re paying somebody $2 bucks an hour. Is that really great for that person rather than hire somebody, pay them a really solid salary and they can use the AI?

Greg: Well, Josh, as we’re talking here, I’ve seen quizzes used. I guess I’ve used them in some corners of some of the marketing I’ve done. But now I’m imagining a perfect use for the quiz on my website that asks founders about what they’re doing and what their path is and do you like this? Because there are a whole bunch of paths for founders and nobody’s talking about all of the different paths. You’re one of the paths. So, what if I had a 10 question quiz, a 5 question quiz that asked them some questions and said, “Well, you probably shouldn’t go VC funding.” Or, “You should probably do this,” or, “You should probably run it for profitability,” or, “You should probably run it for growth.” There are all kinds of ways.

Greg: And that’s actually the practical founders motto. There are a whole bunch of ways to do this. There’s no religion involved, and you could change your mind. What’s the best thing for you right now given your market and the rest? Am I thinking about it in the right way? You just turned me on here.

Josh: You’re absolutely thinking about it the right way. I’ve probably built 100 of those quizzes that are “What’s the best path for you?” or a variation of that.

Greg: Isn’t that interesting? All right, so let’s get back to your path here. You’ve got a profitable business. Is this really freaking profitable and you’re finally in a high-leverage position again, making more money than everybody in your neighborhood?

Josh: I mean, it’s getting there. It’s tough, especially with the funding of our competitors that I mentioned. It really ate away at our customer base. We had a couple that really highly targeted our customers the last few years during this tech bubble, which is why I have such disdain for it. Companies raised many millions of dollars and then went after our user base. I expect some of those companies to go under soon because they’re not going to hit their next funding round.

Greg: Yeah, you can’t raise. And you’re stuck, you’re dead.

Josh: But yeah, it pretty much killed our profits the last couple of years. But I think we’re getting back on track now, which I feel excited about because I think in another couple of years, we should be much, much more profitable than we ever were before.

Greg: Right. So, you could see growing customers and not growing expenses at the same rate. Did you ever take any funding or any debt or anything beyond credit cards?

Josh: No, no funding, just bad debt that we’ve paid off now.

Greg: What kind of debt was that? Was that like bank debt or credit cards?

Josh: Credit cards, those like… I don’t know if they exist anymore, but those small business loan people that weren’t banks had terrible interest rates.

Greg: Did that save you in one of these crises or would you recommend or not recommend that at this point if somebody needs debt? Usually, debt is for when you know what the game is and you’re just trying to accelerate. It’s not like you’re in crisis and you’ve got to take a bet.

Josh: I would never do it again. I thought I knew, but I’ve thought I’ve known like five times and I’ve been wrong four out of five. So, I’m not going to take that bet again.

Greg: Okay, let’s stop there. You said, “I can loan you this money, but you’ve got to pay it back. Do you really know that you’re going to grow this fast and be able to pay us back and you’ll have profits?” And you’re like, “Yes, I know.” And you didn’t know.

Josh: Nope. I mean, I’ve thought I’ve known many times and I’ve been wrong most of them.

Greg: Right. That’s really powerful. You were right one of the four times. And you didn’t die, and you’re kind of right overall. But there are a lot of little wrongs in there that people are so convinced that, “I’ve got an idea and it’s going to grow. And if I got it to $1 million, dot, dot, dot, it’ll go to $3 million.” The world doesn’t really work like that. And overall, you can look back and say you got to $3 million ARR, but how many times did you think you had it and then it would just go and it didn’t go just like you thought?

Josh: Seven.

Greg: Seven. And you were betting on that. So, you didn’t bet it all. That’s actually the power of practical founders. If you don’t bet it all, you can live for one more try and you get two more tries than everybody else or ten more tries than everybody else. That is awesome.

Greg: So, tell us about where this Interact quiz builder goes. Is it keep going for quizzes and sell to more coaches? Do you expand it into new markets? Do you AI the crap out of this thing? Do you, I don’t know, go international? Do you buy companies? What happens to this?

Josh: I think some of all of the above. We’ll see. That’s kind of the beauty of the practical founder way, right? You can kind of do whatever you want. And I try not to get too far ahead of myself. Right now, we are doing great in the market we’re in. We also do stuff with e-commerce, so that’s another market for us that’s really great. And figuring out how to make the AI create quizzes using our touch as quickly as possible and as high-quality as possible, that’s the challenge for now.

Greg: Okay. So, if you were VC funded, you would have said, “I got to $3 million, and we are definitely expanding internationally. And that’ll give us 3X growth and we’re definitely going. We’ve had this therapist, we’re going to go sideways into chiropractors or whatever, and that’s going to give us 3X growth. And then, we’ve got these 10 new features and that’s going to give us 3X growth.” But you’re old enough now and wise enough that you say, “There’s a bunch of tests.” Are you now the chief experimenter? You have a theory, you have your nose, you have your sensibility, and you know what to try, but you don’t know if it’s going to work. Is that where you’re at now?

Josh: Yep. And that’s the beauty of having an amazing team. My co-founder and I are the chief experimenters and we absolutely love it. And we get to spend a good chunk of our time doing that.

Greg: It’s so different than the funding game where you’ve got to say, “I know what it’s going to be like in three years.” I’ve been there and it generally was for one of the inventors. And then I’ve been there and, you know, five years in, it wasn’t exactly the same. The world changed a little bit and we didn’t get it just right. You know, it’s worth something now. Do people say, “Hey, you need our funding and we’d like to buy you.” Do you get that kind of offers constantly?

Josh: Yeah, quite a bit. I would say more on the funding side.

Greg: Yeah. So, you’re like not even on the funding drugs. Have you had an offer that was almost interesting? Maybe you have a number in your mind about, “If somebody offered me X amount, I would take it.” Has anybody gotten into “interesting zone” yet for you and your team?

Josh: Honestly, no, not yet. Not in the “interesting zone.” Just, “non-interesting zones.”

Greg: All right. So, what do you want to do with this thing? Do you imagine 10 years from now, you and your new wife, you’re having fun every day with this and the team is up to, I don’t know, 30 or 15 or, I don’t know, whatever it is, amazing people. You’re helping change some industries and spitting out money or whatever, ski or whatever it is you do? Where does this go? Or, do you have a number in mind? About half the practical founders have a number in mind. They say, “Well, if I hit this number, I would take it.”

Josh: Yeah, I mean, that’s always an option. I think for now I just really love what we’re doing. Like, the people that we work with, it’s cliché, but it’s almost like a dream to be able to come in. Everybody deals with their own stuff, everybody is contributing and not selfish and wants to help each other out. After seeing all the other options out there, I’m like, “Well, that’s pretty great.” And we’re building a really profitable… I think it’s going to be a fast-growing again business. So it’s like, that’s kind of the extent of my thinking at this point. That’s something I try to do, especially at this point, not get too far ahead.

Greg: Well, congratulations. That’s a very magical moment where your customers love it and you’re not trying to sell the wrong thing to the wrong people just because of some desperation move. And you don’t have to hire the wrong people and you don’t have to have the wrong funders. And I guess you’re all remote these days? So, you’ve systemized what everybody does and how it connects to everything else. Has that been a challenge?

Josh: Yeah, I mean, it’s definitely a shift. We started going remote actually in 2019, which was fortuitous timing. But over the years, especially with the team that we’ve built around us now, we have one person who just makes sure the team is connected and we do really fun virtual events. We have offsites that are incredible and everybody enjoys each other. We have a four-day workweek, so we also prioritize just doing other stuff. Like, go on a hike one day or take a three-day weekend and travel somewhere. We have one person who travels full-time. So, it’s really about work and life coinciding in a way where both are exciting, and that’s not bad.

Greg: That is not bad. It is one of the wonderful things. Part of the excitement of all this software that I’ve been doing for so long is you get to build things that really help people and create a lot of value and change lives. And we don’t go back to the old way to do it. It creates jobs and companies and all of that through it.

Greg: If you get too greedy and if you add too much money, the whole thing turns into not so much fun. And you can do what you want. A four-day workweek. If you can get enough leverage out of your team in four days, they get to have the other day off and it’s worth it. And what was this amazing offsite that you did, Josh? You mentioned something.

Josh: Oh, we’ve had a few of them. They’re all incredible. We did a Scottsdale one. We’re doing Palm Springs in a few weeks. It’s honestly like a retreat, spa resort every time. And we just have a good old time. And we’re also pretty frugal, so we find out how to pay for it with discounts and things like that because we are bootstrapped still. But we’re able to kind of live large at a low cost. And the team is so small we can afford to do it. It’s so much cheaper than renting an office, too. So, it is really awesome.

Greg: Well, that’s really awesome. And why would you want to change that? You’ve got the team and the customers and the game that you like to play and you’re good at it and you keep learning along the way.

Greg: Josh, is there anything else you’d like to share with practical founders out there? Just a little bit of wisdom that we didn’t talk about, either about coaching or the long run or resilience or funding or something?

Josh: Yeah, I think the biggest thing that I’ve been learning, especially of late, related to resilience and all these things really, is not getting too up or too down. Like, the situation we’re in right now looks incredibly positive, but it could change again. And so, I take it in stride and I’m going to enjoy this for what it is but not hold onto it because it might change and then things can go downhill. And so, appreciating what I have now, but not getting too attached to this continuing forever.

Greg: That’s pretty tough. Attachment is what we do with all of these things. That’s really tough. So, thanks for admitting that. I’m still working on it. A few years older than you are.

Josh: Oh, a hundred percent. It’s tough.

Greg: I spent time with a co-founder of an incubator accelerator in Bangalore, India, the tech center, one of the tech centers over there. And they help, effectively, practical founders get to a million in revenue without any outside funding. And like most incubators and accelerators, they’re all about the funding. And this accelerator is called Upekkha, which I think is a Buddhist term for equanimity. And equanimity is when you’re not too low and you’re not too high. So, you just described it right there, and I think they would agree with you. And that’s the way to do it. You have some superpowers. You’re going to get the leverage out of that bet right there. Not getting too high, not getting too low. Place another 10 bets and not die like your funded competitors.

Josh: Yeah, I love that. I’ve got to go look that up now. Upekkha, that’s incredible. But yeah, I agree. I think if you can stay in the game and not get overwhelmed one way or the other… It’s like that quote, right? If you work at something long enough, it’s going to work out.

Greg: And the only question is how long can you keep working at it?

Josh: Right, which I think makes it so important to have the things like the four day workweek and have your life going on. Because if you’re all in and that’s all you do, you can burn out like crazy. I’ve done that many times.

Greg: Yes. And do you say sustainable? I don’t know. What’s your word for that?

Josh: Yeah, I like sustainable. I think most of those words have gotten ruined by tech because they claim to do all those things. But the actual definition, yes.

Greg: Yeah, that’s great. Well, what an amazing story. Congratulations on your success. And now you’re set up for another 10 years of experimentation and leverage and helping real people do real things in real ways. I’m definitely going to check out your software and all that. Thanks for being on The Practical Founders Podcast, Josh, and for sharing your story.

Josh: Yeah, thanks for having me on. This was super enjoyable. Thanks.

Interact Company Facts

  • Founded: 2014
  • Employees: 11
  • Description: Interact has helped over 150,000 customers improve their hyper-personalized marketing nurture campaigns with smarter product recommendations and high-velocity lead generation. 
  • Funding: Self-funded with a minor small business loan that he paid off 
  • Headquarters: Josh lives in the San Francisco area and his team is remote



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Greg Head recorded this on episode on April 28, 2023 for the Practical Founders Podcast see all of the episodes.

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