We Lost 50% of Our Revenue. Here Is What We Did Next.

Episode 387 of Noah Kagan Presents, 23 minutes. Listen on Spotify or Apple Podcasts.

What is up you sexy bastards. I recorded this one bottle-feeding my two-month-old daughter. She’s spilling milk, I’m spilling AppSumo updates. Everybody wins.

Friday I was like, I love my life. Sunday me and my wife were looking at each other like, please Monday, please come. Our parents’ generation, the best parenting was throw them in the room, close the door, come back later. Now we’re the always-on parents. And the little kids come up and hug you and maybe they poo on you. It’s really nice.

When it’s hard, I feel strong

I was watching a bike race. Not Paris-Roubaix, the Liège one, however my Euros say it. There’s this 19-year-old French phenom, Paul Seixas. There was a climb at the end, he pushed on, beat everyone, won. When they interviewed him after they asked, so what happened? He said: when it’s hard, I feel strong.

I love that mindset. So much of life is just what story you tell yourself in the moment. With parenting I used to think “just get through it.” Now: instead of getting through it, be with it. When it’s hard, that’s my favorite part. When it’s uncertain, when I don’t know how things are going to work, that’s my favorite part.

I have dad friends and we send each other voice notes about how we’re feeling. Almost every time, a day or two later, I’m like, that wasn’t as bad as I thought.

Same thing with work.

First time in 16 years

Staying in business has come into question. That has never happened in 16 years of AppSumo.

At peak we were 140 people. We’re around 40 now. I wrote about the cut from 140 to 40 already. Since then we lost more of the team. I find it hysterical when companies say “we lost someone.” I know where they went. It’s not like I lost my phone. Some of it was voluntary, they left. Some was involuntary, we asked them to leave. Some we converted to contractors, which I generally think is better for everyone when we can do it.

The roles: VP of finance, our only product manager, senior designer, BI analyst, head of support, people in marketing.

It stings. I got overly fixated on getting the company stabilized and I wasn’t investing in the team. That’s one of my top priorities right now, and I’ll come back to it at the end.

One more thing on this, because I hear the undertones at our company too. Am I secure? Am I getting replaced? This is happening to everyone. I read Facebook fired 10,000 people and closed 6,000 open roles. Some people at AppSumo understand AI is coming for their job and are doing something about it, which is amazing to see. Some people in tech still aren’t aware how fast things are changing, and it’s easy to blame the company or leadership. The reality is we’re moving to a world with more builders and fewer experts.

What I feel fortunate about: the 40 people we have are a really solid team. Humble hustlers.

30 and 300

With a smaller team and less revenue we got back to simplicity. Our business is finding great products someone made and promoting them. So the whole company now focuses on two numbers.

30 great deals a month. 300 products sold in the store.

Then you work backwards. How do we expose more products? How long does it take from reaching out to a company to getting them live? Are we doing as good of marketing as possible during a campaign? All of it feeds 30 and 300.

Mantras and stupid quips work. “30 and 300” rallied the team more than anything else we tried.

March came in 18% above expectation. April is also looking super promising. The focus of the company has gotten tighter every month since we were a little all over the place this winter.

AI: what actually happened

Everyone talks about how they’ve got a trillion in ARR in two days with three people. You guys are all liars.

Here is the scorecard on what I said we’d do in the last update.

AI implementation: way harder than it sounds, and messier. We’re trying to replace some of our support with AI, with an amazing engineer (shout out Eric), and there are so many nuances. It takes longer, it’s more expensive, and it’s harder than “just have AI do it.”

Reducing costs: done. Fewer people, and some quit. Less software. You can negotiate all your software costs, or get good software deals on AppSumo.

New deal types: not solved. Lifetime deals still work, but in an AI world where variable costs can be unlimited, partners can’t do the margins they did historically. Selling tokens is doing better. We tried a deal type called Outcomes, selling user-generated videos. It’s selling okay, not amazing. People are used to buying a website. They’re not used to buying three leads, and then are the leads good, and it turns into a weird service business. I wouldn’t say it failed. It taught us something and now we’re experimenting with a different item, which I’m not talking about yet.

The goal is to build a great company that sustains and to get our money’s worth when we spend a dollar. Emily and Anna are driving how AI becomes central to AppSumo, and the point is people building and improving the systems, the way I wrote about when we gave Claude to every teammate.

I’ve been building with it myself. A bookmarking site, marks.sh. A desktop tool called Two Factor Helper that saves your 2FA code to the clipboard on Mac, which I use every single day. Updating them is a pain in the ass. Everyone saying “you just one-shot it and now you’re rich” is not telling the truth. But I’ve seen so many regular people say I built an app for real estate, I built an app for groceries, I built an app for clothes. More people want to be entrepreneurs, and those people need tools. That opportunity is still here for us.

Tailwinds and headwinds

Where is everything going and where is it not going?

Tailwinds: skills. AI agents running your business. Claude, Codex, usage-based pricing. Things people are already excited to spend money on.

Headwinds: selling something people don’t want anymore and trying to convince them. A lot of times when I’ve seen people struggle in business, that’s what it is. “I spent all these years building something no one wants.” It’s literally why I wrote Million Dollar Weekend, so you find the thing people pay for quicker and cheaper, and spend your time only on that.

Where AppSumo goes next

Three things for the next quarter’s update.

One, new deal types. Right now it’s 30 super high quality SaaS tools a month. We’ve been talking to a lot of customers and partners about product types that aren’t a fully polished SaaS product.

Two, Central Intelligence AppSumo. The CIA. Right now a sales call or a product launch kind of falls off into the ether with the one person who did it. Everyone is going to have a central hub where every call and every interaction feeds in, and the machine gets smarter and smarter. Companies will sell this. Some are open-sourcing it. I don’t think it’s as good as people say yet, but that’s the direction company structures are going.

Three, happy team, happy life. It’s not an easy moment in tech and as a CEO I can’t promise anything. What I can do is treat the people here with dignity, give the high performers everything we possibly can to feel rewarded and appreciated, and help them feel sustained so they’re excited for the next 16 years.

We’ve come some ways from wild costs and a pretty large team. I’m very proud of what we’ve done.

One last thing. I’ve been watching Bon Appétit videos about chefs. The most eccentric pizza maker in New York, probably the most competitive restaurant market in the world, said: if the devil came to me today with a contract that said open the restaurant but you’ll never make more than a penny, I’d sign right away.

Find the thing you’d work on for free. Or the people you’d pay to work with. Then when it gets hard, that’s your favorite part.