What does it take to build an inbound marketing platform? Chris Mack is the CEO of Spokal, an inbound marketing platform for Wordpress. Spokal helps small businesses market themselves without having to learn online marketing. Chris spent 10 years automating manual processes with technology for Fortune 500s, including Microsoft, American Express and GE. He is well versed in the technical challenges Spokal faces. Prior to Spokal Chris also started a successful online dating company that grew to 50,000 users.
Say hi to Chris at getspokal.com.
How do you make $100,000 in your first 3-months in business? Ben Hebert is a serial entrepreneur. In the following interview Ben Hebert shares how he is building Natural Stacks. Natural Stacks is an open-source dietary supplement company. Ben is also the founder of WhiteRaverRafting (WRR), an electronic dance music blog. Today WRR is one of the premiere dance music websites in North America.
Say hi to Ben at NaturalStacks.com.
Have you ever wondered what it would take to build a location independent business? Libby Tucker is building not one but two location independent businesses. Libby is the Founder CEO of Beer2Buds and PromoBomb. Beer2Buds is a marketplace where friends can send beer to friends anywhere. PromoBomb is a SaaS product that enables businesses to efficiently create, track, and distribute promotions and analyze promotion effectiveness over time. While building businesses Libby finds time to travel and live abroad. She has lived in countries like Hungary, Nicaragua, Argentina, just to name a few. Listen to the following interview if you ever wondered about how to start a location independent business.
Say hi to Libby at anywherestartup.com.
How do you go from freelancing to building an 8000 strong virtual assistant forum? Tess Strand is the curator and creator of Virtual Assistant Forums, an online community for established and aspiring virtual assistants. Listen to the following interview to find out how Tess built her VA community.
Say hi to Tess at virtualassistantforums.com.
What does it take to sell your business? Jock Purtle is the CEO of Digital Exits. Jock helps CEOs structure their companies to be salable and pairs them with investors who want to buy a proven business and scale it up. Listen to the following interview if you want to know what makes a business attractive to buyers.
Say hi to Jock at digitalexits.com.
What does it take to be a sales superstar? In the following interview, Wes Schaeffer the Sales Whisperer, tells us how. Wes is a sales and marketing industry leader whose team educates and trains clients on sales and marketing automation, social media marketing, and much more. He is a motivational speaker and author, the latest titled “It Takes More than a Big Smile, a Good Idea & a Twitter Account to Build a Business that Lasts.” He is a graduate of the United States Air Force Academy and Texas A&M but he has never let formal schooling get in the way of his education.
Say hi to Wes at thesaleswhisperer.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone this is George Meszaros with Success Harbor and I have Wes Schaeffer with me. He is the Sales Whisperer. Wes is a sales and marketing industry leader whose team educates and trains clients on sales and marketing automation, social media marketing and much more. He is a motivational speaker and author. The latest title, it takes more than a big smile a good idea and a Twitter account to build a business that lasts. He is a graduate of the US Air Force academy and Texas A&M but he has never let formal schooling get in the way of his education. Welcome Wes.
Wes Schaeffer: Hey George, thanks for having me.
Success Harbor: Thank you for being here. Let me know how you became the Sales Whisperer. What’s the story behind it? It’s an awesome name by the way. I’m sure you know that. But I wanted to mention that.
Wes Schaeffer: Good, thank you. You know what, I just anointed myself. That’s one of the things I get into in my training with entrepreneurs and sales people. You know, you have to toot your own horn which goes against our upbringing in America. You don’t want to be around a braggart, you know, when you’re hanging out at the family reunion. But in business you have to toot your own horn. And I was literally, it was September 1, 2006 -- and I’ll always remember it because I see the registration renew every year with GoDaddy -- and I was watching The Dog Whisperer.
I had already been doing sales training for about a year. I saw him, Caeser Milan, and he said he rehabilitates dogs and he trains the owners. And I said you know what, that’s what I do. I rehabilitate sales people who have been mistreated and I train sales managers how to be sales managers because most of them have never really been trained on how to be a good manager. They would just promote it because they were a top performing sales person. But the traits that make a good sales person a good sales person are usually at odds with what makes them be a good manager.
Success Harbor: It’s almost like the best athletes don’t always make the best coaches right?
Wes Schaeffer: Exactly. And quite often you’ll see it was that average athlete that had to work really hard and had to really study the game. My son plays football and I tell him, if you’re big strong and fast, you don’t have to be that smart, ok? But my son is big and strong, he’s not that fast. So I tell him, you have to be smart to overcome your physical limitations, ‘cus there’s some, you know, phenomenal athletes out there. But when you’re smart, you can still succeed. And so you know that’s how I -- I literally bought the domain name and ten days later, a guy e-mailed me and asked me if he could buy the name from me. I said, hey I just got it, nope, I’m keeping it and so that was it.
Success Harbor: Yeah, that’s a great story. How many domains do you own? Sometimes I ask that because some people get addicted to buying domain names.
Wes Schaeffer: Yeah I was kind of addicted for a while. I do buy them. I probably buy one-- one a month now and I let them expire if I’m not using them. I probably own in the neighborhood of about 60 right now.
Success Harbor: Yeah , I do the same. I don’t buy as many as some. You know, it’s a small investment right? And maybe it’s going to turn into something, maybe nothing, but it’s worth 10 bucks right?
Wes Schaeffer: Oh, absolutely. And I’ll buy them for my podcast. I bought the salespodcast.com and that just forwards you straight to iTunes where you can subscribe, ok? So I own a lot of domains that I use just for ease of mentioning. Primarily verbally or put it on a business card so it’s a concise little URL. Like in FusionSoft, you know, and we’ll talk about that later, but I bought the domain name buycrmnow.com so it’s a lot easier than saleswhisperer.com/buy/dash/fusionsoft/ dash whatever. You know what I mean?
Success Harbor: It’s a cheap marketing tool, it makes perfect sense.
Wes Schaeffer: : And when you buy a bunch of them through GoDaddy you can get domains in the $7 to $8 a year range, so they’ll give you a little discount for bulk. So, it’s you know, be smart about it. Rarely do I buy, like the .net, .org, .us, ‘cus you know, they try to up-sell you. I just buy one name. I buy the .com and I see how it pans out.
Success Harbor: So tell me how you got into sales training? You mentioned that you had been doing sales training even before you started or registered The Sales Whisperer.
Wes Schaeffer: Yeah. Well, I had always been in sales. When I got out of the Air Force in ‘97 I went right into sales and never looked back. And --
Success Harbor: Why sales? Did it feel natural to you or did you just have to do it? How did you get into sales?
Wes Schaeffer: I don’t know if it's ever natural. It kind of is, kind of isn’t. I’m a big believer in the nature and the nurture for being a professional salesperson. But honestly I was drawn to the money. I wanted to be paid for my efforts; for the results that I produced. You know in the military it’s very rigid. You’re going to spend a certain number of years at your different ranks and some people they call it getting promoted below the zone which means they get promoted early. You got to serve 2 years as a second lieutenant, two years a first lieutenant, six years as a captain and then you can start to get promoted a little bit early and I just didn't like it. You know, If I’m a superstar, then pay me accordingly. And that’s what drew me to sales.
Success Harbor: Thank you for your service, by the way.
Wes Schaeffer: Yeah, thank you. You’re welcome.
Success Harbor: So that’s interesting. Talk about The Sales Whisperer. You registered the domain in 2006. Is that when you started the sales whisperer? Or you mentioned that you were already doing sales training. Was that your own business or were you doing it for another company?
Wes Schaeffer: I was doing it for myself but I licensed the training material from a guy. So it was his content but I could brand it under myself. So you really didn't know that it wasn't mine. And so with that licensing agreement I had access to him. He’s probably old enough to be my dad. He had been in the business for decades so I sort of had that mentorship for several years which helped me just solidify what I was doing, rather than recreate the wheel from the ground up.
Success Harbor: So talk about the challenges starting The Sales Whisperer and building that business.
Wes Schaeffer: Oh, you name it --
Success Harbor: I mean it’s a competitive area but what area is not really competitive? Everything is competitive if there is money, right? Talk about maybe some of the most difficult things that you had to do to get it off the ground.
Wes Schaeffer: You know, there’s always a challenge. Even now as you grow your business, there are still challenges. They’re just bigger challenges but you grow more adept at addressing them. But you know, I had to learn a lot of technology: about hosting, blogging, SEO, copywriting, video marketing, I taught myself about podcasting, I had to learn about publishing as I've written two books. I had to learn about getting my merchant account squared away. And then, you know what, I had to learn about personnel. You know, I've had turnover, like anybody else. I've had people come on board and they were just terrible and I had to let them go. I've had people come on board that really just wanted to ride my coat tails for a bit and then go out on their own, essentially stealing business from me. It’s just the nature of the beast. That’s just life in the big city.
But what I've learned, looking around at other business owners that I know, that are friends, that are clients, I look at other InfusionSoft certified consultants, some have succeeded, a lot have struggled but in any business, regardless of their size, certainly the small business size, if you keep your expenses low and you focus like a mad man on sales and marketing, everything else will take care of itself.
Success Harbor: So let’s talk about “focusing like a mad man.” How do you focus as a mad man in your business? What does that entail?
Wes Schaeffer: Well, when I say that, as entrepreneurs it’s tough. We chase the shiny objects: I’ve got two monitors on my computer, I've got multiple tabs open on each of my browsers, I’ve got text messages going off, yada yada. So in some ways it is hard. I hired a virtual assistant about four and a half, five years ago, she’ still with me. So that took a load off of me. And I was able to hire her for 800 a month.
Success Harbor: And does your VA do for you?
Wes Schaeffer: So Ana has always been my technical VA; so she handles hosting, putting up new landing pages, things like that. She does some graphics work for me but very much on the technical side. So the things that I was not an expert at, I outsourced that. I learned it enough to be conversant so I understood it, but then I did not become an expert at it. And then 2 years ago, I hired a personal assistant here locally. So she would come to my home office- she does fulfillment, she’ll mail books and CDs, she’ll coordinate my calendar, things like that. So taking those little things off your plate, ok? So those things enable me to focus. But when I say focus like a mad man, on the sales and marketing side, I made sure every day I did something to advance my business from a sales and marketing standpoint. So whether that’s writing a blog post –
Success Harbor: So give us a few examples, so one is the writing--
Wes Schaeffer: Yeah, making blog posts, making new videos to put up on YouTube, doing a podcast, I do The Weekly Whisper which is my email newsletter. So something like that to get the word out, to put myself out there in the marketplace. You know, I always tell people, if I arrested you with the charge of being a salesperson or a marketer, would there be enough evidence to convict you? All right? So I just ordered new business cards the other day, and I updated the look and feel but I used both sides of it and I changed the call to action. And I have a call to action on my business cards. Yesterday I created brand new bookmarks - I wasn't doing that [before]. And I use both sides of the bookmark, so when people order a book, they’ll get a bookmark and that bookmark has marketing on both sides ,talking about both of my books, CDs that I sell and sales training courses. So, you know, always doing something to advance the business.
Success Harbor: How do you promote your content? You mentioned you write blog posts. Writing is one thing and you can create some great content but if nobody sees it, it’s almost wasted time in a way. So what do you do to get hat word out and promote all that content?
Wes Schaeffer: Well in a way it is wasted time but you have to begin, ok? My website now let me see here, I’m logged in and I have over 500 blog posts, over 200 pages. You have to get started because over time if you learn the fundamentals of SEO, search engine optimization, learn the fundamentals and you don’t have to be a rocket scientist about this-- but have good titles, use the keywords, name your images, things like that and you do it consistently, you will build up this body of work. So my business, I’ve done some pay-per-click advertising here lately, but for the most part, 99% of my growth over these last eight years has been organic.
Success Harbor: That’s awesome -
Wes Schaeffer: Yeah, you got to get started.
Success Harbor: So how many visitors do you get, approximately, to the Sales Whisperer, organic?
Wes Schaeffer: You know, I don’t get a ton. Maybe 5 to 6 thousand a month. You know, I’m not one of these million person kind of websites, but The Sales Whisperer is very niched. Especially now it’s become very niched around Infusionsoft. I’ve done a lot of work for them over the last six years and so that’s a finite community. But that proves the point. You don’t need 10,000 or 100,000 visitors a month to have a $50 or $60,000 a month business. I’ve been providing for a staff of 12 and a family of 9 with 5,000 visitors a month to my website.
Success Harbor: Yeah you’re B-to-B, right? So you don’t need a million visitors to have a successful B-to-B business?
Wes Schaeffer: Well people always say: I need more traffic, I need more traffic. And I always ask them, do you need more traffic or do you need better conversions? Until you have maximized your conversions, you’re just wasting money by focusing too much on marketing. It’s literally like putting gas in your gas tank and you have a hole in the gas tank and you’re leaking gas. Make sure your sites are optimized, make sure there’s a call to action, and make sure there’s an enticing offer. Make sure it’s easy for people to contact you either by phone or drop by your place of business or opt in for a newsletter or coupon or promo codes. Once you are maximizing conversions, then you can turn up the marketing faucet to truly grow your business.
Success Harbor: So how do you measure these different channels from the blog posts to the e-mail? Do you have a system to manage it all? Which one is working for you better?
Wes Schaeffer:: That’s one of the nice things. John Wannamaker said 100 years ago – he had a store, eventually it became Macys, and he said, “I know that half of my marketing dollars are wasted, I just don’t know which half.”
Success Harbor: Oh yeah, I hear that.
Wes Schaeffer: Right? So nowadays you know, if I run an ad on LinkedIn or Facebook; I know what the conversions are, how many impressions I got, how many click-throughs. I can track how many opt-ins. I can track the sales. So, with Google analytics, which is free, you can see visitors, bounce rates, time on site, number of page views. Everything is measurable now. There really is just no excuse to not have things – to not have tracking.
Success Harbor: So sales training is a super competitive area and some people never get beyond just being a ‘solopreneur’. But you managed to build a pretty successful business. What do you think made the difference in your business that you were able to have more success than most? Was it the systems or what is your secret recipe, so to speak? That’s probably not so secret.
Wes Schaeffer: Over time I built systems, but in the beginning and even now, I was just tenacious. Hey, call it pigheaded determination. I got up early, I stayed up late. I got frustrated at times. Things happened. And things always happen in threes or 33s, right? Your website will go down, your computer will crash and your cell phone will reboot itself. You say ‘oh my gosh’, the world is conspiring against me! So do you tuck your tail and run? Or do you stand and fight? And you know, look, I’ve had some dark days, I’ve had some sleepless nights.
Success Harbor: So what were your dark days in your business?
Wes Schaeffer: Oh man, like I've said, I've had people quit. I've had people steal clients. I've had people just not deliver.
Success Harbor:: So how do you get over that? How do you say, you know what, this is too hard, I’m going to go get a job, I’m not going to deal with all this. How do you pick yourself up, personally, yourself? Do you have a method or a mantra? Or what do you say?
Wes Schaeffer: You know, after doing this for so long, I just know that it won’t last. Good times don’t last and bad times don’t last. So just enjoy the ride. And you have to realize, we see all the glamour on TV of athletes and celebrities but what we don’t see is the behind the scenes. They’re working their butts off. You go see a concert, you know, they do that concert, whomever, Beyonce, Lady Gaga, George Strait; they practice that thing down to the second. And you see them on stage for 90 minutes and they've put in 2,000 hours of practice and they do it the same every time. So having a system, practicing, knowing that it won’ last. Get through it. The show must go on. Having a family, relying on you--we've got 7 kids, been married almost 19 years. Two weeks before we got married, my wife quit her day job. So you know, I’ve found a lot of entrepreneurs and I call it “back against the wall marketing”. We've got to have a struggle; we have to have something at risk to help us focus. So fear is a good thing, stress is a good thing as long as it’s in moderation, right? I've had people depending on me and I say, hey you know, suck it up.
Success Harbor: Let’s talk about sales a little bit. I started out in IT a long time ago and I always had a bad impression of sales people and one of my businesses-- we build websites for companies, so I do sales. And I've done a lot of sales. And I have a lot of respect for sales people and I have become a fairly good sales guy. But I would watch a Zig Ziglar presentation and I felt a little uncomfortable with that type of selling. It’s almost like twisting peoples' arms and, nothing against Zig Ziglar, he’s a legend in selling, but there is something about –some people think that selling has to be forceful almost, as opposed as trying to help people and that was hard for me. And I think for a lot of entrepreneurs it’s hard to get over that. There are different ways of selling. What advice do you have on that? To get comfortable with selling?
Wes Schaeffer: There’s a mantra that I live by and a guy, Steve Clark, when I first started selling, he told me this: selling is a calling, serving is a purpose, the questions you ask is a process and a sale may be the solution. So when you know that what you offer is better than anything on the marketplace, that you take better care of your clients, that you offer great value, then you will approach hat prospect knowing that you’re there to help them. You’ll charge what you’re worth. You’ll stand your ground. You’ll deliver. They’ll be thrilled. And everybody wins and you can just do it over and over again. You can’t look at people with dollar signs on their heads. You have to see them as human beings. The best sales people are empathetic. They can walk a mile in the shoes of the prospect. When you see things in their view-point, you can connect with them. It’s the old, “people buy from who they can like and trust” and that’s it. That’s how you do it.
Success Harbor: So when you sell, a lot of times you get a lot of maybes and silences. And I like to get a no fast. And I just can’t stand ‘no’ or ‘maybe’. Can you push a prospect into telling you no or yes? The maybe -- it’s hard to deal with maybe.
Wes Schaeffer: It’s that indifference, it’s that unknowing. That uncertainty. That’s the killer. Traditional sales trainer will tell you never ask a close ended question. Never ask a question they can answer with a yes or a no. And I say BS on that. Hearing no early is a victory. It lets me move on. It lets me go focus my time and resources on somebody I can help. It’s all right to ask those kinds of questions. And you can tell people, speaking of domain names -- so they visit thesalesagenda.com. They can get a free download of my sales agenda that I follow with prospects up front and I cover how the meeting will be up front. And so once the guidelines and rules of engagement are established and agreed to before the meeting and part of that we say, I’m going to ask for an answer at the end and ‘no’ is okay. So once they know the answer doesn’t have to be yes I’m buying, but the answer can be yes, we can move to the next stage. Okay! Then the uncertainty is removed, we’re going to the next step, maybe they want a demo, maybe they need to do a trial, whatever, but at least we’re clearing moving forward and the uncertainty is gone. And so you know, that’s how you grow, by eliminating doubt.
Success Harbor: Yeah, that’s really good. What are some of the most effective ways for us to use social media for sales in 2014?
Wes Schaeffer: You know, I have a love-hate relationship with social media. People are obviously on it. But people forget that first of all, it’s social. Too many show up and just start blabbing. So social means maybe you’re funny, you’re certainly interesting, you’re engaging. You need to listen more than you talk so in that regard promote others, re-Tweet others, and share valuable resources that are not yours. And then sprinkle in your offerings and your solutions, present something they can buy. It’s ironic, they call it social marketing and most people are neither sociable nor good at marketing and they think because they have a twitter account, they’re going to make money and it’s just not that simple. Social media is just a medium. It can be more; it can be less effective than a billboard. People still make money off of the yellow pages. If you sell to baby boomers and senior citizens, they still look through the yellow pages. They don’t do Twitter. So, you know, look at social media, look at anything as just the medium. The medium is not the message. The message is the message. So make sure you have a powerful message as to why people should do business with you, and then you’ll figure out the right medium to use to get that word out.
Success Harbor: Ok let’s talk about creating systems and sales. Especially for a small business, what kind of systems do you think they need to start with to create an effective sales system for themselves, even if it’s just a company with few employees?
Wes Schaeffer: First of all, focus on selling, right? Even cold calling. People want to say cold calling doesn’t work. You know what, business to business, cold calling does still work. And if you’re not making any money now and you don’t understand web design and you can’t blog ‘cus you think you can’t write, pick up the phone. So first of all, commit to being a professional sales person and then the systems can be as simple as bunching or batching your sales and marketing and prospecting efforts. So what I mean by that is, set a time, maybe it’s the first day , first thing when you come it, 7 am or 8 am when you first come, for an hour or two hours or three hours, I’m make nothing but make outbound calls, ok? And so group your activities. Like do not check your e-mail, do not check mail, do not let someone walk by your cubicle. Batch those calls. And then batch who you call. My last job I was in sound and technology, we sold into manufacturing, financial services, military and healthcare. So rather than calling all of those randomly, I would just call hospitals for a day, so I could even batch that. And what happens is you get into a rhythm, the language is the same but you pick up on little things. Like ‘Hey , may I speak to the boss? No? The boss is out, he’s at the HEMs conference,’ which was a local and a national organization. Then I call the next guy and I get him on the phone and its like, ‘hey how come you aren’t at the HEM conference?’
Success Harbor: Yeah, exactly.
Wes Schaeffer: So I’m using industry lingo, so the guy, now he knows that I know about the organization. So I appear to be more an insider which helps build like and trust, helps him know that I’m not just some random cold calling dude. I have deeper ties to the industry which means I may be able to provide resources to help him grow his business. So by batching your effort that’s a big help but you got to be able to put it on your calendar and commit to doing that and by grouping your efforts, you’re going to see much better results, I guarantee it.
Success Harbor: Plus you might stumble on something on maybe an industry that’s working much better for you. So talk about how you got involved with InfusionSoft?
Wes Schaeffer: You know I was and still am, a fan of Dan Kennedy. I was still in the Glazer-Kennedy Insider Circle, I was getting his material and I was doing sales training but then I was learning how important marketing is for my business. I was applying those tips and tricks and strategies to my own business, InfusionSoft was doing a four city tour back in July of 2008 and they were coming to Anaheim, about an hour away from me. So I said hey, at least I can go meet Dan Kennedy, and maybe I’ll pick up a couple of things. It was free to attend. So I went out and I saw what InfusionSoft does and I bought it. I bought it for myself and I started using it, started seeing results, learned about their partner program so I got certified a few months later. And because I focus on sales and marketing and I’m not a technical, I’m not a technician, but most people were very technical that were partners and they weren’t just doing the behind the scenes stuff but I was out front selling and marketing it. And so I was almost working in a vacuum, I mean very people were doing it so I was just able to build a big presence and the rest is history. And I’ve stayed at it for six years. Now I’ve written a book and done other things to help me stand out from the crowd.
Success Harbor: Yes, so you kind of had an old school mentality about a new school technology that wasn’t really exploited or utilized yet, right? So a lot of people felt great with the technology but not so great making cold calls or you know, doing it the old-fashioned way. And the combination proved to be deadly, so it really worked out for you.
Wes Schaeffer: Yep.
Success Harbor: You know, I have some general entrepreneurial questions, I know we’re at like, 30 minutes, do you have some time for a few more questions?
Wes Schaeffer: Sure.
Success Harbor: So most businesses fail, at least about 50-percent of them fail in the first few years of business, four years, according to some stats. Why do you think so many of them fail? Is it sales?
Wes Schaeffer: Well, you know, I’ve always said, there’s no problem a business has that can’t be fixed with a 100 percent increase in revenue. I see too many people who really ignore, abhor, hate, sales and marketing. So what they’ll do is go out and spend all this time and money creating a new widget, they’ll trademark it, they’ll patent it, before they’ll ever know if it will sell. I will put up a landing page and send an email out to my list, buy a little bit of traffic, literally, a little, $50 to $300 of traffic to see if there’s an interest in a book or a webinar or a three-part or ten part sales training series and if there’s an interest – and I did this for my book, I pre sold my book with a four-month lead time, ok? So I said you can buy it now, it’ll come out in four months. But at pre-ordering you can get it at a discount and here are all these bonuses, so then I knew what the interest was, then I was motivated to complete it because I didn’t want to refund everybody’s money. And this goes back to what I said at the beginning, if you can keep your expenses down, you cans stay in business a long time. And sometimes just being to live, to fight another day and outlast your competitors is the key to success. But people will go out, they’ll get a new car, they’ll wrap it, they’ll get a ten page full color brochure that nobody every reads, they’ll overpay for a website, they’ll buy fancy phones for everybody and there’s no revenue.
Success Harbor: That makes sense. What do you think is the biggest time waster for entrepreneurs?
Wes Schaeffer: Oh, man. Multi-tasking is a myth. Multi-tasking is doing multiple things half as they good as they can be done. So what’s where batching comes in. When I’m really busy – and I’m guilty of multitasking too, so I’m not saying I’m perfect in this area but when I’m really busy, like this week, I've been busy. I get up at 4 am and I write. That’s when I knock out my podcast, that’s when I write my Weekly Whisper, that’s when I update my website with a new blog post or tweak some of the pages that I want to better optimize. Like the old Army [saying], “we do more before 8 am than most people do all day.” And as an entrepreneur you have to do that, so, my assistant has been on vacation so that’s one of the things slowing me down. I got to juggle a few extra things. My dad has been out visiting so I didn't want to work as much during the day, so I could hang out with him a bit, so I just get up early. Focus on what’s absolutely important and the rest I just kind of monitor. Make sure you get the important stuff done, no matter what.
Success Harbor: What is the best advice you have ever received? It could be personal, it could be business.
Wes Schaeffer: From a business side, I think it goes back to Dan Kennedy. When he talks about the number one most important thing a business owner should do is market their business and whoever has the biggest list, wins. And closely related to that is relevance. Relevant communication is the key to building a business. Making sales. And so, it’s the key to Google as well. They deliver relevant ads at the moment of relevance. Focus on marketing, focus on building your list. Do that by delivering relevant content and the rest will take care of itself.
Success Harbor: And my last question, if you could train someone to be a successful entrepreneur or just teach one thing to a person who hasn't had a business yet, what would that first thing be that you would teach them?
Wes Schaeffer: Well, I think it’s what I just covered. The importance of marketing; the importance of listening. You can deliver the relevant content when you know what interests the person. So understanding how to be empathetic, how to put yourself in their shoes. How to ask for their business card, rather than hand yours out. That’s how you build a list. I’ll keep my business cards tucked away because I want to get theirs. ‘Cus I’ll get back in touch with them. Everything you can see kind of loops back on itself. Focus on building a list. Focus on marketing, focus on listening which means you can ask good questions. Seek to serve so people, people will then like and trust you and you’ll grow a business
Success Harbor: Well Wes, thank you very much for coming on the Success Harbor to share your story and your wisdom. How can people find out more about you or the sales whisperer?
Wes Schaeffer: Yeah, they can visit the saleswhiperer.com or find me on twitter @SalesWhisperer, or LinkedIn. I’m everywhere, but you know, visit the website, I’ve got a ton of free resources there and my phone number is there, so just let me know how I can help.
Success Harbor: Thank you very much everyone out there check out the saleswhisperer.com wish you much luck for your business and thank you for your time today.
Wes Schaeffer: Hey thanks for having me.
What does it take to build multiple successful businesses? Josh Pigford is a serial entrepreneur. He is the creator of Baremetrics.io, Temper.io, PopSurvey.com, PugSpot, Tiny Farmstead and other little bits of internet stuff. Josh's most recent business is Baremetrics. It is a zero setup, one click SaaS analytics for your Stripe account. In the following interview Josh shares his business story.
Say hi to Josh at joshpigford.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone this is George Meszaros with Success Harbor and I have Josh Pigford with me. Josh is a serial maker of things. He designs and builds things like Baremetrics, which is analytics for your Stripe account; he also created Temper and Pop Survey. Josh had solved, designed and developed INAUDIBLE for companies like Adobe, AOL, Dell and even a U.S. presidential candidate. Welcome.
Josh Pigford: Thanks for having me on
Success Harbor: Thanks for being here Josh. How did you end up working with companies like Adobe, AOL and Dell?
Josh Pigford: So there was a period of time where I focused almost completely on consulting and client work like that. And it was always just word of mouth stuff. So a friend of a friend… I was doing a ton of projects and I ended up working with a lot of different people and then over the course of a couple of years, they would move into different roles and so… through word of mouth really.
Success Harbor: And then you were a freelance designer or programmer?
Josh Pigford: Yeah, I went to school for graphic design and while I was in college, I kind of picked up the programming side of things out of necessity. And so I would usually do UI work…that’s what it started off as and then on the tail end of when I doing consulting work, it kind of morphed into this full stack: I’ll design the front end and the back-end, sort of thing.
Success Harbor: So from college you went into a freelancer/consultant role immediately?
Josh Pigford: Correct. There was a seven week period where I was employed for an interactive design firm in Denver Colorado. I was newlywed. I’m from Mississippi, my wife and I went to school there. We got married one week, the next week we moved out to Colorado. The next week I got this job at an interactive firm and then 7 weeks later, I quit it.
Success Harbor: Why did you quit?
Josh Pigford: Well the pay was awful, I was getting paid like maybe $30,000 and I knew spending a couple of hours in stop and go traffic plus making 30 grand a year, it just wasn’t worth it. I didn’t have any ownership in that and that was kind of a big deal to me. Owning something I build… that kind of stuff just wasn’t doing it for me.
Success Harbor: So it took you a whole 7 weeks to say “this is not for me” and were you worried at all when you quit? Did you quit with having some clients already or was it just, you know, “I can’t live like this and I don’t care what’s going to happen, I’m not going to work for these guys?”
Josh Pigford: Well in college I was doing…I had already started some kind of freelance work and a lot of that stuff, I played in bands in college, so I had work from record labels and things like that so that was a lot of what my first clients were…they were in the music industry.
Success Harbor: Pretty much word of mouth or did you do anything else to market yourself?
Josh Pigford: No, 100-percent word of mouth and just like making connections with people. You know, friends would end up at…and lot of it really did kind of funnel through the music industry, which was kind of interesting. Just people in bands I would be buddies with and they would end getting signed to some labels and those labels would hire me and those people from those labels would go to other labels and it was just all word of mouth
Success Harbor: Are you a musician?
Josh Pigford: I would not call myself a musician now. But there was probably a 10 year period where, yeah, I was dedicating a lot of time to music.
Success Harbor: Ok, ok. So, how long were you working as a freelancer/consultant before you started to think about some product ideas like Temper or Pop Survey?
Josh Pigford: Sure, so, I think, historically, I’ve always been kind of, or had this sort of entrepreneurial mindset. Even as a kid, going to hustle and cut yards for neighbors or baking stuff and selling it; always trying to find ways to sell something. And then in college, I was already doing web design stuff and programming stuff. My first real taste of “oh I could make some money doing something other than just making stuff for other people,” like building something I would build sites. So like, ad revenue, you used to be able to make a ton of money of ads with relatively little work. So this would have been like early 2000.
Success Harbor: So give me an example, what kind of site would you put together?
Josh Pigford: So the first kind of site that actually made some money, at least for college kid which was worth something, I had a site called reallyfunarcade.com and another site called reallydumbstuff.com.
Success Harbor: Sounds like great stuff to me --
Josh Pigford: So, high quality stuff here. And another site called Tutorial Outpost. So, all three of these sites were ultimately me creating things. So like really fun arcade was like these flash arcade games, which were huge in early 2000s. This was so far before an iPhone or anything like that. So I would curate, find all these different games to play, put them in different categories, you could comment on the games you were playing and I would put ads next to all this stuff. And I think at one point, at the height of it, I was probably pulling in anywhere from $3 to $5,000 a month.
Success Harbor: Not bad for college.
Josh Pigford: No, it’s great for college. So I have virtually no expenses. So it was awesome. And that’s when it hit me. And I think that was the big reason I had no problem leaving this job in Denver after only 7 weeks. I’m killing it. Doing only ad revenue, which requires almost no work, so why would I work a 9 to 5?
Success Harbor: So even when you were working that seven weeks, you were generating ad revenue from these sites?
Josh Pigford: Yes and that was sort of…shortly thereafter, I had an inkling that the ad revenue stuff wasn’t going to stick around a long time. I figured its sort of a bubble, this won’t keep up forever.
Success Harbor: And was it a bubble?
Josh Pigford: Oh yeah and that was in 2005 was when I had that job for a few weeks and by 2006 or 2007, things had really kind of hitting the fan. And I forgot…I have so many different random sites..so there was this one other site, called theappleblog.com, and this was like my foray into journalism. But still I wasn’t doing any of the writing, I had convinced people to write for me. Same thing, it was ad revenue based. But ultimately, sites like reallyfunarcade and Tutorial Outpost, I ultimately sold those for, I don’t know, maybe under 10 grand a piece. But then The Apple Blog got acquired by a big type publication called GigaOM.
Success Harbor: Yeah I saw that in your angel list profile.
Josh Pigford: And they acquired Apple Blog in… 2008 and I think at that point this was a major turning point for me. Okay.. .So this is legit I can build a business
Success Harbor: First of all, how did you find writers? You mentioned you convinced some people to write? How did that happen?
Josh Pigford: So I think it’s somewhat unique to the Apple industry as a whole. People who love Apple are kind of Apple fanatics. Saying, I’ll get you free stuff to review in exchange for you writing, um, was an easy way to get started. Now these weren’t all product reviews. But like, as a sort of payment they were happy to write about Apple, they already loved Apple and that they could get some free cool tech gear, that was enough payoff for them. Eventually it moved into…like I was cutting checks for these people. To start off, I probably had about a dozen people writing for me with zero overhead as far as me having to pay them goes.
Success Harbor: And so selling The Apple Blog, did you actually reach out to somebody or did this company just find you basically?
Josh Pigford: They knew about me. The Apple Blog started gaining pretty good steam. It was one of the bigger Apple related sites at the time. They were familiar with it already. And we had a mutual friend who ultimately made the intro. And then within a few weeks of that intro, it was a done deal.
Success Harbor: And what happened when you sold it? Did you stop doing stuff for a while? Or did you continue? What was the impact on your life?
Josh Pigford: So as part of that sale, I was on board for a couple of years and sort of helping build it …while still building other products at the same time and still doing a little bit of random consulting work. I was juggling a bunch of different stuff at the time; it wasn’t taking up all my time.
Success Harbor: So when did you actually start to build products? And why? How did you get into that whole thing?
Josh Pigford: So my first product, what i would call a web service sort of thing, was back in, we’ll say 2006 or 2007 and I had another business called Fugitive Toys. It was an e-commerce site my wife and I ran. We sold actual toys; these are collectible art toys. We sold these out of our house. We had a basement full of collectible toys. And As part of that, I was always ordering products from overseas and so, I wanted to track all of those packages to figure out where they were. So, I built this package tracking application, I was going to keep it internal and then ultimately, decided to just put it out there and see if anybody wanted it. So this is called Track the Pack and so I built that for myself and let other people start signing up for it and then eventually I turned it into this sort of commercial thing so that other ecommerce thing could offer package tracking on their site. So instead of sending someone to UPS or FedEx or something like that, they could just give the package tracking information directly to their customers on their site. And that didn’t do great from a business perspective, but that was one of those…sort of my, first taste as far as an actual software as a service kind of thing.
Success Harbor: And how many people or businesses end up using it approximately? Was it 10, 100, 1,000, approximately?
Josh Pigford: Well there was two different sides to it. There were personal, this would be like a consumer focus thing. And then there was a commercial side, like a b-to-b kind of thing. On the consumer side, there were like, 20 or 30,000 free users. These were people just not paying anything. And there might have been a couple hundred who were paying like 25 bucks a year. And then on the commercial side, I think the most I ever had were a couple dozen paying anywhere from 10 bucks a month to a 100 bucks a month. It wasn’t making anything significant, so ultimately, I shut it down a couple of years back.
Success Harbor: And when did you start or get the idea for Pop Survey?
Josh Pigford: So Pop Survey is an interesting story. I was actually consulting at the time, this was 2010 I think. Ultimately, came on board with Pop Survey as like the developer on it. So I was getting the guys who initially had the idea, I was getting paid as a freelance developer and then by the time we launched it, I had moved into this co-founder/CEO role. So I did that. And in 2011, I officially moved into the co-founder, CEO role. And then Temper was an offshoot of Pop Survey that we kind of came up with about a year and a half ago. It’s part of the same company.
Success Harbor: What I really like about Temper is that it has that smiley face. I don’t know, maybe you can describe it quickly so those people in the audience who don’t know and then I’ll talk about that. But how does Temper work?
Josh Pigford: So Temper is a way to track customer satisfaction across your business. So you have this three smiley face system that you can put in e-mails or a pop up tab on websites or embed it on any page in your website and with any interaction you have with your customer, you can include those smileys and then have them rate it. What that does is gives you this graph that shows you a trend of customer satisfaction over time. So that’s the basic gist of it.
Success Harbor: I really like that it’s kind of a gut reaction outlet. Because you know, a lot of times, you don’t want to take the time to take a survey. You can just say, happy face, or green or red, and it gives you a kind of quick gut reaction as opposed to ‘I don’t to take 5 or 10 minutes to take a survey.’
Josh Pigford: Right, totally.
Success Harbor: I wish every site would have it and every phone call would have it so at the end, you could give a quick response to your experience.
Josh Pigford: Sure.
Success Harbor: So where did the idea for Temper come from?
Josh Pigford: So Temper, so Pop Survey, at the end of the day is ultimately a traditional survey system. Like you think of Survey Monkey or any other survey platform. It’s got some unique stuff about it, as far as the way you take the surveys. But the initial thing is, the survey industry has a ton of turnover because people don’t send a bunch of surveys. Most people would send a survey once or twice a year, so churn is super high for that industry. So the first thought was, we’ve got to come up with a way to keep people around longer. We can’t build a business with this much churn. We need something people can use on a daily basis. So that was the initial idea. And we found that …so Pop Survey uses these smiley faces for rating scale stuff. And typically you would say, hey rate this from 0 to 5 or 0 to 10, and instead of using numbers, we used smiley faces just cuz its sort of easier for people to relate to that than a number. So we decided to pull that out into Temper and pull it off into its own product and go from there.
Success Harbor: And so how did you come up with the whole idea of the smiley face? Did you see it somewhere or was it an experiment?
Josh Pigford: Well that was one of those things that was part of Pop Survey early on. Almost from day one. I don’t remember exactly how we settled on using smileys instead of numbers but that was core to Pop Survey really early on.
Success Harbor: Yeah. Yeah, it’s a really unique way of dealing with it I think. So let’s talk about Baremetrics. How did you come up with the idea for Baremetrics?
Josh Pigford: So Pop Survey and Temper both use Stripe for handling payment stuff. And I had needed, for a long time, a way to get those sort of business metrics from Pop Survey and Temper, so, monthly recurring revenue lifetime value, churn, all these things. And I knew how to calculate them, you could load all this stuff up in a spreadsheet and manually do it or I could hook up any other number of custom analytic platforms. But the problem I always had with all of those was that it required so much work on my part to either a) set up… which was the perfect opportunity for me to screw it up and throw all my numbers off or b) it took up so much time to annually calculate all these things in spreadsheets and have to constantly keep it updated and all that stuff. I knew that Stripe pretty much had all the data I needed and it was a matter of me just pulling it out of Stripe. So one day in October of this past year, I decided I was just going to build something for myself and a month later, launched it.
Success Harbor: So basically, from idea to validation to product, it took about a month?
Josh Pigford: There was no validation, except I turned on the site and people started giving me money. I didn’t try to validate anything; I was going to build it regardless, because I needed it.
Success Harbor: Kind of a scratch your own itch type of thing?
Josh Pigford: 100-percent that. Totally. Like a week before I launched it, I was very close to not launching it at all because I was talking to my wife before I launched it and was saying, I don’t need a third SAS product to manage. I don’t need any more stuff on my plate. But ultimately after I started talking to some other buddies who also had SAS businesses and used Stripe, they were saying, ‘oh, I want this.’ So I decided to go ahead and push it out the door. And it hit a nerve.
Success Harbor: So let’s talk about marketing and building a customer base for Baremetrics and Pop Survey and Temper. I wonder if you could compare the two. Was the experience the same? Did you have the same experience marketing strategy? How are the two experiences different?
Josh Pigford: Well they’re very, very different. Pop Survey and Temper – Pop Survey’s market is super competitive. When you say online surveys to anyone, what do you think of? You think of Survey Monkey and that’s an extremely hard market to compete it. And then the Temper thing, the problem there is it’s a solution looking for a problem. There aren’t people who are looking for customer satisfaction tracking tools. When people see that, they say, ‘oh ok cool, I’d love to that info.’ But it’s not solving some major pain for them. And so, those are very hard products to sell. Whereas Baremetrics is an instant sell for most people. If you use Stripe, you know Stripe doesn’t have great analytics in their dashboard as it is. So you see you can click one button and get all these metrics: ‘yeah, absolutely I’ll pay for that.’ And so, I don’t have to do so much work to try and convince people that they should sign up or pay for it. That’s the major difference.
Success Harbor: You know it’s funny, because I interviewed the CEO of (INAUDIBLE) and he told me the same thing that if the product doesn’t sell itself, then there’s something wrong with the product. And not 100-percent itself, but he says, it has to pull itself forward and it sounds like Baremetrics is doing that as opposed to Pop Survey -- is all about you guys have to sell it in and compete in a super highly competitive area.
Josh Pigford: And the market is really different too. Pop Survey is super-focused on the marketer person or the researcher within a company. Whereas -- and a lot of time they have to get permission to spend the money that they need to for Pop Survey. Whereas Baremetrics is targeted at the business owner and they need this information desperately and a lot of them are already spending a lot of time doing it manually or doing it themselves. So the prospect of being able to get this stuff with no work is a huge selling point.
Success Harbor: And how many people are using your products, starting with Baremetrics, today?
Josh Pigford: Sure, so Baremetrics, current customer count is 220 or something like that and that’s all pay. We don’t have a free plan, so that’s all paying customers.
Success Harbor: Why no free plan? How did you decide that?
Josh Pigford: It comes down to value, right? The reason for a premium sort of business model or pricing plan set up is that you need to use that for people to realize the value that they’re getting. So, let them sort of see the tool, try it out and hopefully they’ll eventually upgrade to a paying plan. For Baremetrics, it’s kind of instant. There’s this small window of time where we have to pull in all of your Stripe data and generate it for the first time but for all practical purposes its instant. There’s not this setup period where you have to do a lot work. That’s another reason for people to have free plans. A lot of times there’s a lot of setup work involved to get people on board. But with Baremetrics, it’s not that, its instant value. For me, if your business is offering another business value, there’s no reason why someone shouldn’t be paying for it. But legit businesses, businesses that you want for customers, don’t have a problem paying for things that solve problems for them.
Success Harbor: And some would not even want it free. I’ve even heard people say if it’s free, I don't want it because you’ll either go out of business or there’s something wrong with it.
Josh Pigford: And well, again, it’s like positioning the value that you’re offering. So if you position yourself as the free product, then like if it’s free, then it’s probably not doing a lot. If something is worth something, then you charge for it. And not everybody has that mind-set. And people who are early on in their businesses and aren’t making much money, tend to have this…sort of.., oh, I’m not going to pay for that. Well it’s just cuz they don’t have any money. So businesses that have money have no problem paying for things.
Success Harbor: Yeah and you know it saves them time and that’s what it does, Baremetrics. I think I heard somebody say they loved this product so much they want to kiss you on the mouth. I forgot the name of this person. And when you hear that, that’s a really good sign.
Josh Pigford: Totally, totally.
Success Harbor: So how about Pop Survey and Temper, how many users are using those apps?
Josh Pigford: I don’t know of the top of my head honestly. Both of those products we’re in the process of selling. Both of those products are on autopilot at this point and I’m 100 percent focused on Baremetrics. So I honestly don’t even know off the top of my head on those products.
Success Harbor: Ok, ok. Let’s talk about challenges running a SAS business. So you know it sounds great for a lot of people who are web designers and consultants out there. I think they all want a SaaS project. But there has to be some challenges around that. So let’s talk about that. What are some of the biggest challenges running Baremetrics?
Josh Pigford: Biggest challenge is probably, I think right now, the biggest problem we have, this is sort of unique to a metrics, analytics world, is helping people know what to do with their metrics or what the metrics mean. Like you tell them what the lifetime value of a customer is, but what do they do with that? How does that have an impact on their business? Having knowledge of what the LTV is? So, we’ve doing a lot of educating people. So I started this SAS metrics academy thing to help people know what to do with the metrics and how they can improve them. There’s so much, so much stuff work that we have to do in that regard.
Success Harbor: So you like tell them, if the lifetime value of the customer is $1,000, then you can spend this much to acquire a new customer and this is why, sort of thing?
Josh Pigford: Yes totally, totally. It’s that kind of stuff. (AUDIO CUT OUT) LTV is so important because it basically determines how much you can spend on customer acquisition. And there’s all sorts of that kind of stuff to help them know what to do with it better. And so that’s a unique problem to us and I think a lot of SAS business in general have some common problems and I think a lot of it has to do with, 1) most SAS products aren’t solving real problems and that’s why most of them fail. But then at the same time, even if they are solving a real problem, most people are really bad at selling things or marketing those things. So they’re not good at conveying what pain is actually being solved and I think that actually ends up being the downfall of a lot of products.
Success Harbor: What about churn? Has that been an issue for you with Baremetrics?
Josh Pigford: Yeah, so there’s user churn and revenue churn. The user churn doesn’t bother me, that much. The number of customers we have isn’t that huge. So there’s not this big sample set. So a couple of people cancel and it throws the percentage off a lot. So the user churn doesn’t bother me. I don’t pay attention to it that much. Revenue churn bothers me some because that’s what affects how much….or if I’ve got a lot of revenue churn, or if revenue churn outpaces MMR growth, then you end up losing money. And it’s higher than I want it to be now, but at the same time the business is only 7 or 8 months old. We spend a lot of time trying to figure out what customers want long-term and I think we’re on the right track in that regard.
Success Harbor: So you have a product -- you’ve tried other products, you’ve mentioned several of them and it looks like Baremetrics is different. It’s a little bit easier, it takes off a little more easily than these others. How long do you think we should, if somebody has a similar product, how long before you should say, it’s time for me to try something else?
Josh Pigford: Sure, well actually, I gave a talk about the like four signs that you’re business is dying, I think it was called. And so I gave a few different metrics there that I think kind of help drive…or should be an indicator of when things aren’t looking so hot and you should move onto something else. And I’m trying to think what some of those are off the top of my head…So like, if you’re a year in and your monthly recurring revenue is less than $2,000. So for a lot of people you don’t even know what’s a normal number? What’s a normal, like, after a year, how much money should I be making? And that varies a lot from person to person, obviously. But, at the same time, take that $2,000 in recurring revenue after a year and if you’re not able to make more than that, after that much time, chances are you’re not solving a big enough problem. And so, I think those kinds of things, like checking out or checking into your metrics and knowing, okay, these things, you can’t overcome them. Things like if the average revenue per user is less than 20 bucks, you’re not making much money on a per customer basis and if you can’t get that higher, you’re going to have a really hard time building a business. Because if you’re only making a few bucks per customer, you have to have so many customers to be able to make a legitimate business. Like if you have really hard churn, like if it’s over 25 percent, then you’re bleeding out a quarter of your customers every month and you can’t possibly grow fast enough to overcome that. So just looking over your metrics and being honest with yourself that there are easier things to tackle, more profitable ideas than what you’re currently working and you have to get out of the tunnel vision you currently have.
Success Harbor: And it’s a good thing to move on too, right? It’s a bad thing to just grab onto stuff as you’re going down with it. It’s actually a good thing and you say, I’m a year in, these are the metrics and it’s not working and I need to look elsewhere?
Josh Pigford: Totally and in some cases you just might not be the right person for the job. Like with Pop Survey and Temper, in the process of working on selling those, it’s not that those are inherently bad businesses, it’s that I don’t personally have the right expertise to keep running them and grow them. There’s somebody else who would likely have more interest in that or have certain skill sets that I don’t have for those kind of industries or those kind of businesses. It’s not that those need to necessarily be shut down, it’s that somebody else might be better for it. And I think each person brings a certain skill set to the table and so working into things that kind of play into your skill set is also a big deal.
Success Harbor: Yeah I mean I actually sold a business that is running fine now. But it just was not the right business for me and it’s a successful business today. I just had to say, you know what, this is not for me, I hate it. Here take it. I sold it and it’s all good, you know? I think instead of trying to be something you’re not, it’s a good thing to do. So we’re like at 30 minutes or so, I have two more questions, you have time for that?
Josh Pigford: Absolutely, go ahead.
Success Harbor: I have a few entrepreneurial questions – what is the most important for an entrepreneur to do during the first months of being in business in your opinion?
Josh Pigford: Shipping something. Most people get caught up in building a product or trying to do this weird validation thing, trying to figure out if anyone will pay for their product before they have a product and I think people spend too much time trying to mitigate risk. And the fact is, being an entrepreneur is just risky. And the sooner you can get something out the door and actually get a feel if someone will pay for it, the sooner you can either say yea, this is a great idea or no, let me move on. And I think in those first few months, people get misled by things like having this landing page that collects e-mail addresses and they get a 1,000 e-mail addresses and they somehow convinced themselves that validates their business idea. But nobody ever gave them an idea. They get misled, they go down the wrong path by some weird bad validation technique and they waste their time. I think it’s extremely important to ship a product that people will pay for and figure out if they will pay for it. If they won’t, you should keep trying something else.
Success Harbor: So we’re still talking about the first year. What should they not focus on? What should entrepreneurs not spend their time on that you see they’re spending their time on from your own experience or people who you know in business?
Josh Pigford: This might go against what I’m building here, but Baremetrics, I think people can get too obsessed with certain metrics or the wrong metrics. So I think early on people start worrying about the lifetime value of a customer or churn rates when they don’t have any customers. I’ll have people who sign up and they have ten customers and they’re like, “my churn rate is super high” or “one person cancelled and my churn rate just went up 10 percent.” And it’s like, well, yeah you’ve got 10 customers, so of course. So they focus on these numbers at this stage of their business that do not matter one bit, so at Baremetrics, the focus the first few months, was 100 percent on MMR, the monthly recurring revenue, that’s the only thing I worried about for the metrics standpoint. That’s what let me stay in business
Success Harbor: Yeah, if you could teach just one thing about being a successful entrepreneur, based on all your entrepreneurial adventures? What would that one thing be?
Josh Pigford: Get good at selling. I think most people are really bad at being salespeople. And they’re scared to talk to people about the product or convince people why they should pay for stuff. And it’s not just talking about getting on the phone with people and that translates to the kind of copy you write for your marketing site. I think people are just really bad sales and I’m not some great guy at it, but I think I’ve gotten a lot better and that’s something a lot of new entrepreneurs lack is the ability to sell stuff.
Success Harbor: Josh, thank you very much for coming on Success Harbor today to share your story . how can people find out more about Baremetrics. Or connect with you perhaps?
Josh Pigford: Sure, Baremetrics, you can find it at Baremetrics.io or if you want to get in touch, shoot me an e-mail at email@example.com or find me on twitter @shpigford.
Success Harbor: Well thank you very much Josh and everybody check out Baremetrics, I’m going to have a link to your site in the show notes. Thank you
Josh Pigford: All right, thanks for having me George.
What does it take to get a do over in business? Matt Theriault is the guy behind both the Your Do Over and Epic Real Estate Investing podcasts on iTunes. Matt is a Desert Storm Veteran (USMC). He started out as a producer and marketer of hip-hop acts that were distributed through an EMI affiliate channel. After digital downloads had destroyed Matt's business, he struggled. He was flat-broke. To make ends meet, Matt got a job bagging groceries. After about a year-long soul-searching, Matt started his career in the real estate business. Through hard work and education he was able to recreate his former level of success, and more. In the following interview, Matt shares how he started over from nothing and how he succeeded in business.
Say hi to Matt at matttheriault.com.
How do you help entrepreneurs save over $1 billion for retirement? Chad Parks is the CEO of The Online 401(K). He started the business in 1999. Today, The Online 401(K) has 80 employees and $12 million revenue. Listen to the following interview to learn how Chad built his business and how he plans to take it to $100 million.
Say hi to Chad at theonline401k.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone. This is George Meszaros with Success Harbor and I have Chad Parks with me. Chad is the founder of the online 401k. His company of 50 employees is helping over 4,000 businesses with their retirement. Welcome.
Chad Parks: Hi George. Thanks for having me.
Success Harbor: Thank you for being here Chad. Can you tell our audience about the online 401k and how you help entrepreneurs with their retirement, what the business is about?
Chad Parks: Yeah, absolutely. So it's hard to believe that I started the company way back in 1999 right when the internet was coming along and I did that out of my financial planning and investment management practice because I would work with a lot of small business owners in that capacity and would help them with their overall financial planning including retirement planning, and one of the big pillars of retirement planning is to have a retirement plan in place so that you don't spend tax dollars unnecessarily and that you have a good vehicle or accumulation over your lifetime. And most of my clients at the time didn't argue with me, they said, 'sure, go find me a plan'. And so I went to market as an independent advisor looking for a turning key solution for my small business clients and lo and behold I didn't find anything that met my needs or their needs. And then with the internet coming along I saw this as a great opportunity to sort of level the playing field and create a new business model in the retirement saving space that would be able to serve small businesses regardless of their size and regardless of their assets.
Success Harbor: So you have started the online 401k in '99, have you had other business ventures prior to this one?
Chad Parks: Yeah, you know, I'm one of those, I guess, serial entrepreneurs that they call us. I was the kid who had the newspaper route, and the lawn mowing business and the car detailing business. I had a real job for a while there in High School and College and then I also, prior to this in Grad School I published a menu guide-book to San Francisco's city restaurants and then I also prior to the online 401k, that was my independent financial planning and investment management practice and I've got to say I've had a few hobby businesses along the way on the side with this one as well.
Success Harbor: So those other businesses prior to the online 401k were you making a living with those businesses or they were kind of like side businesses?
Chad Parks: I mean, you know, those when I was a kid were just more like side businesses but the financial planning practice and the other businesses that I've had while I've been running this company have definitely made money.
Success Harbor: Okay, and so how much of your business was online back in '99 when you started it?
Chad Parks: Well, we had some local clients in the San Francisco Bay Area, and I had built a website because I wanted to have something that was a leave behind for me, that would represent me when I wasn't on site, you know, to help them enrol their employees and educate them to sort of just replicate me. And so we started with that and our local clients started using it and I was not the third-party administrator / record keeper so I was merely the advisor on a plan, and I was using other people's administration or record keeping. And my clients liked that so much so they said 'hey can't you do the rest of it?' and you know 'we don't really like this other part of it, but we like what you have, it seems pretty cool, pretty advanced'. So that's what really has driven me into this space and I said 'okay, you know, what really is going on here?'. So it didn't take us long from that, from you know '98 or '97, to say there's something bigger here and so we committed to that at the end of '99 and basically all of 2000, for the first nine months of 2000 was when we committed to taking our light approach to a more institutional quality back then and we began engineering again full-scale. And so by the end of 2000 we were fully online.
Success Harbor: So, when you started your business did you have a partner or did you go alone?
Chad Parks: I had, my wife at the time was one of my co-founders that made it convenient since being an entrepreneur as your audience knows, having family support is very important. And we also had an attorney friend who had helped me with some contract work with some of my other businesses and you've got to remember we were all sort of getting the dot com fever and he was looking for an opportunity and so we needed a lot of legal work and things in the early days so he came on as a co-founder and helped us as well.
Success Harbor: So, I read one of your interviews that your company took off and really kicked ass with the small business audience. So what did you do right, what were the things that resonated with the small business audience, because you're in a very competitive area and there are a lot of very competitive areas but yours is one of them and so a lot of people try to succeed there and most fail. So, what did you do right?
Chad Parks: Well, I think, and you know I appreciate that, thank you, you have to kind of understand our industry to understand my answer and our industry being the financial services industry still to this day is very, very interested in your money. And they like to work with people and businesses that have a lot of it and that's how they generate revenue and that's how they pay their bills and they pay their distribution. And so many of them were not able to figure out how they could make money with small businesses while charging asset fees and retirement plans because brand new companies or small businesses with small plans they don't have a lot of those assets. And so what really worked for me was I basically, I remember, had this epiphany one Sunday morning in my living room with my whiteboard and I was modelling this and I said, 'you know, yes, the asset model is attractive no doubt, that's why most of them are doing it this way, but it, how can I get into this market and serve the small end of the space without having an asset model?'. And basically I just did some calculations and turned the model upside down and said 'what if I was to do a flat feature service model where a company would pay me a fair monthly fee to run their plan regardless of if they have one dollar or a million dollars and I don't really care what they invest in because I'm not going to broker or get sold on the investments or get paid to be selling the investments'. So that's basically how we approached it and then-
Success Harbor: So it's kind of like an all you can eat financial planning service for small businesses?
Chad Parks: We don't necessarily do the financial planning for people and individuals but what we do is definitely help a company install and run a successful retirement plan for themselves and their employees. And I think what resonated to answer the question 'why have they been as appealing?' it's because we've always fair with our pricing, we've been transparent, we show them how the other guys are out there trying to, you know, either they're ignoring them or once you get a lot of money how they kind of gauge you. And I think it also resonated that we are also a small business serving small business, you know, we'll end the year this year with about 80 employees so we're still, you know, a small business that serves small businesses.
Success Harbor: So what were some of the greatest challenges during the first let's say a couple of years in business? You know, again, it's a very competitive field, what did you do differently and what were some of the big challenges, before I go around anymore circles what was some of the big challenges in the first couple of years?
Chad Parks: Well, I mean first and foremost it was just figuring out what we're doing. We were definitely blazing new territory, no one had done what we were about to do so there wasn't a model that we could copy and do better, we really were creating it from scratch and so we just had to really be smart and think about, you know, what would I want and what's makes sense and what is logical and what tools are available to me. So that was the first part, but really the day-to-day struggles and most of your audience will appreciate this is just that, you know, you don't have much capital, you don't have many resources, you don't know what you don't know, you're having to scrap and put it together, you know, you're a limited number of people I think in the first year or so we were like six or seven people max and so everybody's doing everything and its very, very challenging and then as we start to grow past that the challenges are about just really where do you put your resources? Where’s the best return on your dollar? How do you stretch people thin and still, you know, be able to deliver a good product and so I'd also like to add to that, is that you've got to remember the time frame in which we started so we really came to market at the end of 2000 and for those who are old enough to remember, you know, the first quarter of 2001 was the internet dot com bubble bursting. And then six months later we had September 11th and then, you know, by 2002 we entered into a bit of a recession so it was really, a really difficult time to start a business and we did everything we could to survive including using credit cards and home equity, and other things, because we knew that in the long-term that this was something that was worth keeping going.
Success Harbor: Did you ever get close to shutting down or bankruptcy or anything like that during those years?
Chad Parks: Yeah, we got very close, we had been fortunate in February of 2000 we raised a little bit of Capital from an angel investor, about $300,000, and so we really stretched that and that attracted other investors but when all those things happened in the Summer of 2001 we were poised to raise another little bit of money, maybe a million dollars. And what they came to us and said was 'well, you know, times are very strange right now, we're not sure we just want to hand over a million dollars, we too still believe in the business so here's what we want you to do, we want you to get to get to cash flow positive within 12 months, come up with a plan to do so, we'll fund your monthly difference, and then once you're cash flow positive then you won't need us and you'll be in a much better spot'. So that was probably the toughest love that anybody could give but it sure did forge a good solid foundation for us and lo and behold from October of '01 to October of '02, you know it was monthly maybe 40 or 50 thousand dollars a month in some cases short, they did fund it, and by October 2002, we were breakeven, and then all of '03 we were breakeven. So it was a tough time but we did it.
Success Harbor: So what were some of the changes you had to make during that time period?
Chad Parks: A reduction of salaries across the board, renegotiate rent with your landlord, work on payables with people, I mean you remember it was a bad time for everybody so I think it's always relative, you know, so everyone kind of understands. You know I was the type of entrepreneur who I wasn't going to be the one who took my investors’ money and walked away from it and we saw that happening all over San Francisco where people would raise all kinds of cash and the first thing they would do is go out and buy and furnish a really fancy office space and not worry about their fundamentals of their business and I don't know, something about me was very different and I just wasn't going to be that guy so I just really felt the personal obligations just to ensure that my investors trusted me was worth it and you know, that their investment would be preserved.
Success Harbor: Did it change the way you do business, does it have an impact on your business today, the changes you made back then?
Chad Parks: You know, I think that's a very good question, and I would say if anything it taught us a lot of discipline and not being, I guess, loose with the capital and making sure that you're very, very careful about where you spend the money. I remember once we got to breakeven and I mean this sounds silly now, you know, we didn't even have a photocopier type of machine in the office, and I remember when we were able to finally commit to a photocopier / document management system so we could get rid of a lot of our paper. But even spending those few hundred dollars a month that was really, just felt like it was a huge commitment, so I think there was sort of that DNA was sort of set and it carries forward to our company and today it's allowed us to do a lot with very little resources and capital throughout the rest of its history.
Success Harbor: So how did you market your business during the first couple of years especially when you started the online 401k?
Chad Parks: So the first was we looked at other benefits, types of providers where these businesses would be going to get them, and we knew that retirement was a very underserved area when it came to that and so we partnered with several. One that the audience might know is a company that's actually survived a long time as well called TriNet, and they were a professional employer organisation, and they were one of our first partners, and they would refer their clients to us for their 401k needs, so that was a good pipeline for us. We began to replicate that with other distribution partners, benefits, payroll, financial advisors, and then I don't know what year it was but this also sounds crazy to say but there wasn't always - there was a Pay Per Click, I can't remember the name of it now, but the early days of Pay Per Click advertising we got into that and we said 'Oh this is good' and you know, using the paid advertising on what is now Google and something else that again, that I'm blanking on the name.
Success Harbor: I don't know if it was Inked, was it Inked or something?
Chad Parks: Inked actually I think eventually bought the one I'm that I'm thinking of. But you know, that, we're like early entrance into that and that started the drive on our business and that was our direct channel. Before it got too popular and it got too expensive so it was just a lot of that, a lot of highly leveraged relationships and really just trying to build a little bit of a brand.
Success Harbor: So instead of going directly to the customer you went through a partnership route mostly?
Chad Parks: Yeah in fact throughout the last fifteen years, I would say that we really re-emerged as a strong company, we got in 2004, '04 was when the rubber started to hit the road. But for the last ten years we have been nothing but a relationship driven business, we have not had a true direct to the consumer, to the business owner presence, they've always come to us through referral partnerships or they'd find us online. And the reason I'm stressing that right now is because we are finally at a turning point in our company where we are changing that. We're going to keep that existing model but we are now finally where we have the revenue and the momentum and the technology to take a sales force to the streets, so you'll start to see that happening for us real soon and we're very excited about that.
Success Harbor: So what shape is that going to take? Are you going to have just direct sales people or are you going to put on events? What additional marketing channel will you introduce now?
Chad Parks: Yeah, I think direct sales people, you know, we're fortunate in this case, we don't have to reinvent that wheel, you know, or invent a wheel that didn't exist before because there are many organisations that have very successful in person sales forces that, you know, cover the country and so we can model that, we can take our product and our business model and our different way of doing business to the consumers directly. We know what the metrics are going to look like and we feel pretty confident that that's going to be successful. I think that it is a little bit of a different approach, I mean when you're an online company for you to be coming to somebody directly is somewhat novel. I think the time is now because in our market one of the things I didn't mention to you is the statistics are frightening. We work in primarily the under 30, under 50 employee market, but our speciality is those business with two to twenty employees. And the data shows that 92% of businesses with two to twenty employees do not offer any kind of workplace savings for their employees. And there's a lot of reasons why but those numbers are, that's almost four million businesses, forty million people, so we have a natural market that raises their hand and says 'hey, maybe I'm interested in retirement, I should do something about it'. But when you have 92% of them out there not realising that they can have an affordable tax savings vehicle and the true benefits to their employees, we feel like we're going to be very successful by introducing them to this concept.
Success Harbor: So how are you using social media for marketing, if at all?
Chad Parks: You know that's a great question. So what used to be our direct panel of PPC, search engine optimisation, etc., once the rest of the industry caught on and started outbidding us and our ORI kept dropping, I think it was probably 2008 or 9 we basically, we abandoned that as our direct effort. In 2011 we hired a new director of marketing and creative and one of the points of what she was here to do was to create more of a social presence as well as humanize our brand. We'd gotten a little bit stuck in selling features and benefits which I think a lot of people do in our space with retirement plans, you know, they're plans, they are complicated and there's a lot of jargon but you know if I tell you that I'm doing your 5,500 for you that doesn't really mean anything to you, you know? It shouldn't mean anything to you, if I'm in this business that should be a given, what I should really be doing is trying to connect with you on an emotional level and let you know that I'm like you and that we're really here to help and be the good guys. And so part of the humanizing of the brand, was to engage our social channels, so that direct channel went from nothing, contributing nothing to the business because we'd abandoned it, to today where it is contributing about 20% of our business again and so I think that's a pretty good success story. And what comprises that is that we have internally a team of people that we call our 'twitterazi' and so there's seven or eight people who, there's one person who's responsible for it but there's seven or eight people who help contribute to it and we have a corporate presence but you know also a personal presence on all the major platforms. You know, Facebook and Twitter, LinkedIn, Pinterest, Reddit and the bunch of others where we have that presence out there and it actually does work, it does generate a lot of exposure for us.
Success Harbor: Yeah, that's great. I read about your revenue a little bit online at you had a 1.2 million in 2003, and this year you have 2014 forecasted to be a 12 million, which is very impressive. What is- it sounds like things have been fairly smooth, right, I'm sure you have made some mistakes and maybe you can share one learning experience or mistake with our audience that you think would be beneficial for us to learn. I'm sure you have a lot.
Chad Parks: I was going to say, I'm sure I have more than one. But yeah I mean this, you do a lot of introspection and reflection over the years and I think that the best advice that I could give or the experience I could share is that as an entrepreneur, as the founder, as the someone who has the vision, and in certain cases has the strategy to see it through, doesn't mean that you're always the one to execute. So there's two parts to this; one, is make sure, and it's a little bit cliché but it's very true, make sure you surround yourself with people who can complement you and don't be afraid to delegate. But the other part of that is what I've learned is that as that entrepreneur you really have to trust your gut, you really have to trust your instincts and where I've made mistakes is that you know I had my instincts and my gut telling me one thing, but then maybe logic and or others having different opinions and sort of overrode that decisions, and I went down that path and I can tell you every time that has happened I have regretted it, and I wish I had just listened to myself in the first place because it wouldn't have happened.
Success Harbor: So entrepreneurs sometimes, you know, we're looking at other businesses and you know for example in your business somebody looks at your business, you know, wow, you know, he's making 12 million dollars revenue, I'm never going to get there, people get discouraged or all that so, who do you look to, to get motivated for your business and how much should you look outward as opposed to at your own business? So you can keep your focus but you're also keep motivated at the same time.
Chad Parks: No I understand exactly that it's a really, it's hard, you know, who do you compare yourself to, right, that's always, and if you're comparing yourself to the Facebooks and the Microsofts and the Googles and Apples of the world then guess what? None of us are ever going to get there, those are sort of once in a lifetime things for those people, and the odds are very, very rare, and that's one of the reasons we love small business too, because they're not all sexy, they're not all glamorous but man they take care of their founders families, and they take care of their employees and they help to fuel the economy in their community. And so I think that when you're looking for some sort of, you know, validation in the world, benchmarking, you really just really need to look at those around you and say what is enough and when is enough. But there's a couple of resources that I really like, that I've always drawn on over the years, one of them is called Entrepreneurs Organisation (EO) and it's a global organisation of about 10,000 members, the entrepreneurs, you know, you do have to qualify to be in and that qualification is a million dollars of revenue for your business at least. They do have starter programmes to help people get in, but what it is, is it's a peer group, and it's a peer group of people who are just like you, founders and CEOs, managers, who are facing the same struggles that you do with personnel, with your own belief in yourself, with market, with, you know, a variety of everything and they have this infrastructure to support you with that and it's not a networking group, in fact networking and solicitation is prohibited, so it's a really great group of folks, who have instant brotherhood, instant camaraderie, no matter where you go you can find an EO number and you're going to click. So I definitely recommend folks looking into that, they have chapters in every major metropolitan area and then some, and the other is Inc conference, the Inc. 5000, Inc. 500 group. When I was early on as an entrepreneur I used to read those magazines, there was Inc. and there was Entrepreneur, and they each had their subtle differences and I felt like Entrepreneur was more focused on franchises and didn't really speak to me, and I felt like Inc. was something but to your point will I ever be that sort of company. You know, how does this help me? Well, years of pushing and eventually attending some of these conferences and networking and it sort of opened up a lot of things. I'm happy to say that we've been on the Inc. 5000 list eight years in a row. I think there's very few companies who have done that. And so it's really just about getting yourself out there and surrounding yourself with people who are going to positively support you and give you that sort of witness test to, you know, maybe it's not easy but you're sure moving forwards.
Success Harbor: Great, so what do you think is the biggest timewaster for entrepreneurs?
Chad Parks: So, I'm glad you asked that because for the last five years or so I've been actually looking at that myself, and really just try and get control of my schedule and figure out where my time is going and how can I be more efficient with it. And part of that answer is what I mentioned earlier which is that you really need to surround yourself with good people who can complement you and you have to trust them, and you need to do some of the hard work of making sure that the systems and policies and procedures are in place so that you're not always chasing fires. And so those last five years of work have really been for me to challenge myself and challenge my team by adjusting my schedule and by putting myself off-limits in some cases and by keeping myself out of things in some cases. And really just trying to come up with a rhythm for my week. And most recently within the last six months I came across an organisation called Strategic Coach, and they are exactly about that, which is maximizing your time, making sure that your input gets the highest output and they come up with a sort of series of ways of segmenting your time and in a very simple form they call them buffer days, focus days, and free days. And so when you start to think about your life in that way and how your spending it then you kind of change your mind about it’s not just about hours worked, it's about output and when you get into that mind-set then things really become more of a game for you and you say 'how can I get it in and get out, get it done, and how can I ensure that my team is operating like that too?' And so it's been an evolution, I have to be open-minded to it, but I know a lot of entrepreneurs get caught in that trap of I have to do everything, you know there's no predictability, but my challenge to them would be to say, you know, there are ways to get control, it's just a matter of wanting it bad enough and finding the tools to help you do so.
Success Harbor: If somebody in your family or maybe a good friend came to you and saw your success as an entrepreneur and they say, you know, 'Chad, I want to be a successful entrepreneur', what would be the first thing that you would teach that person?
Chad Parks: Wow, that's a good question, I hadn't thought about that.
Success Harbor: What's the one thing that they need to start with?
Chad Parks: I guess, I was going to say a dose of reality, but then that would probably stop them from doing what they wanted to do. So I guess, you know, here's what it is, I advise some entrepreneurs as well so this is what I think I told the last one. Basically, if you have a clear vision, if you see it, and you know it in your body, in your soul that it is the right thing and it is doable and it's your passion and you want to follow it then by all means do so because the Universe will have a way of showing things along the path that will continue to surprise you but also take care of you. And so you just have to have that leap of faith, you jump off the cliff, and there will be something there to catch you and I have done that so many times myself and I call that sort of the entrepreneurs paradox too because once you get a little bit more successful than you tend to not want to take those chances. But then you have to remember, like if I hadn't taken those chances to begin with then I wouldn't be where I am today. And so that's really the main thing, just trust yourself, if you can see it and you know it's real and it's clear and it's your passion, that’s the recipe right there. If it's not, if your doubting it, if you don't know why, if you don't have a strong belief, if you think, 'well I'll try it, if it fails it's okay', then those cracks in the armour are almost going to be self-fulfilling. So you know if that vision isn't there for you then don't necessarily pursue something that is not yours and continue to work on it and wait for the one that is yours.
Success Harbor: Where do you see the online 401k five years from now? Do you plan that far ahead?
Chad Parks: We do, in fact I'm working on right now as we speak, in this time period not on this interview, what's called a five-year growth plan and capital needs analysis. And so unfortunate that my companies not fifteen years old so if you think about it that way I've had three five-year cycles and the first five were so absolutely out my control and unpredictable, the second five from '04 to '09 that's when things started to look better and I had some idea about where we were going and I made some commitments and I was able to deliver that pretty good. From '09 to '14, remember '09 was difficult because we were in the middle of the recession so again a lot of uncertainty but I said here's where I think we can go and I think we'll get there. And so now here we are in '14 and it's hard for me to look out to 2019 and '20, and of course it's going to be a lot of uncertainty and unpredictability in the markets and in the economy but at the end of the day, you know, what I have is something that everybody needs, and I think for us we're in a fortune spot that it's not a matter of will we grow and be successful, it's like how much will we grow and how fast. So in looking forward in the next five years we're at a very interesting inflection point where I feel like the momentum that we have, the infrastructure, and the experience that we have in place that's internal, with the hiring of the external sales forces and increasing our relationships out there in the market, plus let's not forget that again what we have is something that everybody needs and I think more awareness is being put on that issue of retirement savings. Then I see us really growing strong, I kind of put out a goal internally for our company that says we want to hit a hundred million in revenue in five years and that sounds like a lot to go on, I just thought what you said earlier, how do you go from a million to 12 million, like how do you do that? Well going from 12 million to 100 million how do you do that? I have a lot more clarity and certainty about how we can do that now and it doesn't scare me and I think that we're going to be on a pretty good trajectory to hit that.
Success Harbor: I hope you hit it and thank you very much Chad for coming on the Success Harbor to share your story and I hope you come back in maybe next year, or in a few years, and report how your business is doing. I really appreciate your insight.
Chad Parks: Yeah, absolutely, George, thank you for the opportunity and congratulations on what you're doing.
Success Harbor: And how can people find out more about the services that you offer or maybe connect with you.
Chad Parks: Sure, theonline401k.com is our website and me just search my name Chad Parks on 401k, I'm pretty much full up the first page of Google with you know LinkedIn and many other ways to get to me so I'm happy to talk to anybody further if they'd like to.
Success Harbor: Thank you very much Chad and everybody check out the online 401k and I wish you much success going forward in the next five years.
Chad Parks: Excellent, thanks George.
Success Harbor: Thank you.
Chad Parks: Bye.
Success Harbor: Bye.
How to build a marketplace for publishers and advertisers? Todd Garland is the founder of BuySellAds, the marketplace for online advertisers. Todd was an early employee at Hubspot. As a one man show, Todd grew BuySellAds to $1.5 million in 11-months. He did it without spending zero dollars on sales and marketing. Listen to the following interview to find out what it takes to build a successful marketplace.
Say hi to Todd at buysellads.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone, this is George Meszaros with Success Harbor, and I have Todd Garland with me. Todd is the founder and CEO of BuySellAds. BuySellAds is a marketplace for buying and selling ads. Todd also writes at his blog at toddgarland.com. Welcome.
Todd Garland: Thank you, George, and hello to everybody at Success Harbor.
Success Harbor: Thank you for being here, Todd. Would you please give our audience an example of how a company would use BuySellAds, and maybe how it’s different from AdSense or something like that? The name sort of gives it away, but most people haven’t used it, so if you can give an example that would be great.
Todd Garland: So we serve 2 different types of customers. One is what we call a publisher, someone who owns a website and is selling advertising on their website or blog, and what we help them do is sell ads directly to advertisers. It’s much different from Google AdSense in that with AdSense you install a code and you’re magically making money as it’s on your site, but you tend not to make the kind of money you could make if you were selling directly to the right kinds of advertisers. What we do is help the publishers automate the process of selling directly to higher-end advertisers.
Success Harbor: And you have more control than with AdSense as well, right? In terms of what’s showing.
Todd Garland: You do. You get to approve every ad before it shows on your site, so there’s a great deal of control.
Success Harbor: You started BuySellAds in 2008. What were you doing prior to starting it?
Todd Garland: Well, rewinding the tape a bit, I was working at an interactive agency, so building websites for people and extricating marketing plans for other people and other businesses. After that I joined a local company here in Boston called HubSpot, which pioneered the inbound marketing movement. I launched BuySellAds a little bit before and a little bit during my time at HubSpot.
Success Harbor: So how did you get the idea? What clicked that told you, “Yeah, this makes sense”?
Todd Garland: Well, I’m a web developer and web designer by trade, and I had a few blogs that were both geared toward programming, stuff like CSS. Advertisers would reach out to me wanting to advertise on my sidebar, and I thought it was great to make a little extra money in addition to my fulltime job. The problem was that each advertiser wanted to work with me a little bit differently. Some would negotiate and some would pay what I said and some would pay differently, so I had to go through that every month and there was a lot of maintenance to make money. It seemed a little silly to be going through all of that for a couple thousand dollars extra per month; I wasn’t getting compensated for all the extra time involved. I wanted to automate that and respond to an advertiser’s email and say, “Here’s a link where you can go buy it,” and let them buy it or not buy it, or just put a link on the site where you could see all the sizes available, and if you really want it, you click “Buy Now” and upload your creative, and you’re off. I wanted something that simple.
Success Harbor: So it was kind of a scratch-your-own-itch evolution, so to speak.
Todd Garland: Yeah. I consume a lot of content online, and anything that can help content creators make money and do what they love is a great thing for the web. It’s really about letting people share things, and allowing them to continue to share things and make content that people can consume is very fulfilling.
Success Harbor: When you put BuySellAds on the web, was it more automatic and software-driven on the back end, or was it more manual on the backend and automatic on the front end? How did it work at first?
Todd Garland: The core problem we were solving, which was making a transaction as seamless as possible, was all automatic. The other things that go into running a service like BuySellAds that weren’t absolutely necessary to the transaction weren’t automated at first. So for example, if someone wanted to cancel their ad, they would have to email me, which is crazy. People also had to email me to withdraw money. There are a lot of things that we’ve built up since the launch to make the service what it’s turned into today.
Success Harbor: So how soon into starting BuySellAds did you feel that there was traction and that people were using it and that it was taking off? How long into the whole process did it take?
Todd Garland: I’ve gone through different phases where I felt like it was taking off. The first one was within the first 3 months, because as soon as a started emailing people and telling them about it and putting boots on the ground, people were responding. That was the first big sign from publishers especially that there was a need there. That was followed by advertisers buying those spaces from the publishers, so those 2 sides of validation really happened within the first 3 months. Like any business, there are ups and downs, and I’ve definitely felt different ebbs and flows of momentum.
Success Harbor: Yeah. What were some of the early challenges of BuySellAds?
Todd Garland: Well, the first big challenge was that I still had a fulltime job and I was in the middle of buying a condo and getting married, so it was a really busy time personally. And I had the limitation of not being able to work between 8am and 6pm because I was working at another company, and I took my work there very seriously. I don’t want to pretend it was this heroic thing about getting up early to work and going to bed late to work some more; it was more this feeling of, “Oh my gosh, people actually like what I’m building, I need to work on it some more.” Interestingly enough, initially the more difficult part was the publishers. Imagine you’re making a couple thousand dollars a month advertising on your site; are you going to want to turn it over to this person you don’t know and give them a 25% cut? For them it was really a leap of faith that I was going to do what I said I was going to do. Publishers look around to see what other people are doing, so every large publisher I successfully recruited made it easier to get other large publishers. The other thing was me working really hard for these people. For the first 12 months it was just me alone building this thing, and I still have really great relationships with those first publishers who were on the system. It was about building relationships, and I think what further convinced them we were a good solution was that ultimately we would help bring them more money. People started to see the value of a functioning marketplace that has liquidity.
Success Harbor: So you proved to them that they can actually make more money with your platform?
Todd Garland: Yes. Publishers would come in and sign up and have 3 or 4 advertisers, and within a couple weeks we’d bring them a few more advertisers, so they’d see that benefit right away.
Success Harbor: So when you were trying to get other publishers, you would just show them the numbers of these other publishers that were already using your service?
Todd Garland: In many cases, we didn’t even have to show people numbers; they would see their competitors with more advertisers than they had, and that’s what would convince them to sign up.
Success Harbor: What about challenges around technology? Did you encounter any of that?
Todd Garland: Yeah. I’m more of a front-end developer than a back-end developer, and the first version of BuySellAds that I wrote by myself was trash. About a year after I launched, around the time of my first hire, we actually rewrote the whole BuySellAds program from scratch, so we had a better foundation to build the rest of the business.
Success Harbor: What were some of the most eye-opening things that you learned from your first customers, especially on the publishing side?
Todd Garland: Well, for a lot of these people, this is their livelihood and I think it was really important for me to be so connected with them and for me to be their support. It was cool to get every single support request and to see how passionate they are about sharing content and making money through ads so they can continue sharing that content. There are a lot of people out there doing really neat work.
Success Harbor: How did they shape what BuySellAds is in terms of the features on the site and functionalities? Did you learn a lot from the customers, especially the first year or two?
Todd Garland: Yes, definitely. Even 6 and a half years later, I’m still seeing a ton of iteration. So yes, those initial folks definitely helped shape the product going forward.
Success Harbor: When you hear things from customers, how can you tell whether it’s just noise or whether it’s something you need to react to with some kind of adjustment?
Todd Garland: That’s a great question. Over the years we’ve used intuition, which is almost never the best way to go, but we also will hear things from people over and over again, and these themes will evolve. We have a system we use to track things, so we can tell how many people have talked about something, and once it gets to a certain point we know it’s time to get something done.
Success Harbor: Is there anything that was surprising for you on the other side of the marketplace, with the advertisers?
Todd Garland: The craziest thing is that for the first year and a half, as an advertiser, we didn’t actually provide you with any statistics for your ads. Picture spending $5000 or $10000 as an advertiser, and all you get is a receipt that says, “Thank you!” Truthfully, them not requiring stats for so long was very helpful to us, because it’s a huge technical thing. And things have really changed since 2008, so while we used to see some folks who focused on brand and not tracking, that’s completely changed now and everything’s focused on ROI and performance.
Success Harbor: Building a marketplace business is difficult, because you’re dealing with a balance of supply and demand. What were some of the challenges in bringing the buyers and sellers together,, and we need some kind of a balance. Have you struggled with maintaining that balance from the beginning?
Todd Garland: We’ve always struggled with that and we continue to struggle with it today. It’s always tricky, especially in a business like online advertising that’s continuing to evolve today. The temptation for publishers to create endless inventory is really high, especially because of products like Google AdSense that you put on your site and start instantly making money. There are challenges with keeping the balance. One is that we only accept about 3–5% of the publishers who apply to work with us, so we can usually find enough advertisers to keep them happy. That doesn’t mean every single publisher we accept immediately starts doing well and making money. But it means for publishers who are creating good content, there are advertisers who want to be associated with that content. That’s what we’re really good at matching: the quality content creators with quality advertisers.
Success Harbor: Can you share some of your processes for selecting the right publishers for BuySellAds? You mentioned it’s a crucial part of your business; do you have a system for the things that matter to you?
Todd Garland: The most important thing is quality content. We understand that quality content is mostly a subjective thing, but we’ve found that what matters isn’t so much the amount of traffic somebody has, but more the quality of their content. So let’s say there’s a blog about VMWare and one about Android phones. You might have a blog about VMWare with 20,000 visitors a month and we could make you a couple thousand dollars a month because the focus of that site and the demographic is so targeted, whereas you might have a blog about Android phones with 500,000 visitors a month and we might not be able to make you any money. The number of people talking about it and the demographics might be very different, so we try to look for publishers who will bring good value to advertisers because they have good content and audiences to publish towards. Traffic isn’t the main thing, but we do look for sites that have a decent amount of traffic. The more traffic you have and the better your content and the more focused it is, the better the cahnces we can sell advertising for you.
Success Harbor: So this probably isn’t an easy question to answer, but if you’re a publisher, what’s an easier path: B to C, or B to B?
Todd Garland: I think the vast majority of people on the web are consumers, and whether they’re consuming from a business perspective or not, I can’t say one wins out over the other. So let’s use a different example: a site about horoscopes versus a site about freelancing. When you’re talking to freelancers, you’re usually talking to a very specific group: they’re work-from-home professionals or they have a small office, and there’s a very specific toolset that they need to run their business. But look at a person who’s going to a site about horoscopes. It could be my grandmother, it could be a 12-year-old kid, it could be me—it’s such a broader, less defined, less passionate demographic. That’s a great way to think about being a publisher. You’re already passionate about something and you can write great content about it, so you think, “Who would perfect advertisers be for me?” If you’re running the horoscope site and you think “Car insurance would be the perfect advertiser for me”—anyone who’s buying car insurance ads is doing that through an agency that doesn’t care about your site with 500,000 impressions a month. But if you have the freelancing site, you can think, “Accounting software,” so there’s Intuit, which might be a little too big, but then there’s Freshbooks. That’s like online invoicing for freelancers—perfect. You can think through this ahead of time before you get into building your audience.
Success Harbor: Yeah, that makes perfect sense. What are some of the best marketing channels for BuySellAds?
Todd Garland: Well, ironically enough, it’s not buying ads—it’s word of mouth. Our sweet spot for a buyer is someone spending between $5000 and $50,000 a month, and our sweet spot for a publisher is someone making between $1500 and $50,000 a month. Those ranges might seem large, but they really fit in nicely for us, and it’s just word of mouth.
Success Harbor: You can’t beat word of mouth. How many publisher sand advertisers are using BuySellAds?
Todd Garland: Well, I can give you a ballpark, but it’s not necessarily something we keep track of. If you look at other ad networks, they'll say, “We have 30,000 publishers,” and crazy things like that, and it’s like, “Well, how many of them are making more than $100 a month?” On the publisher side, we have around 1,800 publishers, and on the advertiser side, I believe we have around 3,000 active.
Success Harbor: When someone wants to become a publisher, how much traffic do they need for this? I’m sure it’s not an easy number to give, but what’s the bare minimum for them to even be considered?
Todd Garland: It depends on the site, but we start looking at sites with more than 50,000 page views per month. But the best sign that they’re ready to start selling advertising on their site is if advertisers are already reaching out to them directly.
Success Harbor: So your revenue model is 25% commission, right?
Todd Garland: We have products that range anywhere from 10% up to 25%.
Success Harbor: So how do you set that commission, and do you get pressured to change it at all?
Todd Garland: Our commission has always been 25%. We have some other products that are cheaper, around 10%, but the core has stayed at 25%, and I’d say we’ve gotten equal pressure that it’s too low and too high.
Success Harbor: As the CEO, what do you do to make sure you have great customer service? It’s a very hard thing to do, so as you grow BuySellAds, how do you make sure you have outstanding customer service?
Todd Garland: We treat folks equally: if you’re making $100 a month or $10,000 a month, we’re going to treat you the same way. We respond to people, on average, within 4 hours, which is good because some things take us awhile to look into. A lot of the folks who work at BuySellAds are publishers themselves, so we know what’s going on with them and it’s easier for us to empathize with them.
Success Harbor: If you could go back to 2008 and talk to yourself about your business, what would you tell yourself to do differently?
Todd Garland: One thing about starting a business is that it’s okay to be naïve. A lot of people think, “I don’t know enough about the industry or XYZ,” and that’s great. The less you know, the better. But honestly, I would tell myself to stick to the business. Anytime we weren’t doing as well, it’s been because we were distracted by some shiny new business model or something, so I’d say, “Focus on the mission.”
Success Harbor: With the experience that you have now, how do you know which shiny objects to ignore? Can you ever really learn that?
Todd Garland: It’s a really hard lesson to learn, and I learn it time and time again—I have a little side project I tinker with right now, at night. But anything that's not centered around the core thing you’re trying to do with your business is a waste of time.
Success Harbor: And the last question: If a friend or family member comes to you and sees your success as an entrepreneur and says, “Help me; teach me,” what is the one thing you would tell them to set them on the course to building a successful business?
Todd Garland: I think the hardest thing is getting over the initial hump. A lot of us are scared to start, and ultimately you just have to try. There's a great quote that was always hanging on my dad’s bed growing up: “He who is afraid of making mistakes is afraid to succeed.” It’s true: if you’re afraid of making mistakes, you won’t succeed, because you’re going to make mistakes in order to succeed.
Success Harbor: Todd, thank you for coming on Success Harbor to share the story of BuySellAds. How can people connect with you or find out more about you?
Todd Garland: You can reach me on Twitter at @toddo, or you can email me at firstname.lastname@example.org, but I’ll warn you, I’m kind of boring.
Success Harbor: Thank you very much, Todd, and everybody out there, check out buysellads.com or toddo on Twitter. Thank you very much for coming on to share your entrepreneurial story; we really appreciate it.
Todd Garland: Thanks, George; thanks, everybody at Success Harbor. Take care.
What does it take to start a successful business? Peter Shankman is best known for founding Help A Reporter Out (HARO). HARO is currently the largest free source repository in the world, sending out over 1,500 queries from worldwide media each week. HARO’s tagline, “Everyone is an Expert at Something”, proves over and over again to be true, as thousands of new members join at helpareporter.com each week. In June of 2010, less than two years after Peter started HARO in his apartment, it was acquired by Vocus, Inc. The New York Times has called him "a public relations all-star who knows everything about new media and then some,", while Investor's Business Daily has labeled him "crazy, but effective." Peter is an author, entrepreneur, speaker, and worldwide connector. He is recognized worldwide for radically new ways of thinking about Customer Service, Social Media, PR, marketing and advertising.
Say hi to Peter at shankman.com.
What does it take to build a $6 million training business? Kevin Cope founded Acumen Learning in 2002, the leader in business acumen training. Kevin's ideas and business models have been taught to some of the world's most respected and successful companies – including 17 of the Fortune 50, reaching tens of thousands of participants in over 30 countries. In 2012, ISA, The Association of Learning Providers, recognized Acumen Learning as their Training Company of the Year. Also in 2012, Kevin came out with his New York Times and Wall Street Journal bestseller, "Seeing the Big Picture: Business Acumen to Build Your Credibility, Career, and Company". Since Acumen Learning opened its doors, it has continued to grow strongly every year, even through the recession. Last year Acumen Learning did $6 million in revenues.
Say hi to Kevin at acumenlearning.com.
What does it take to take action? Chris Taylor founded ActionAbleBooks, a company dedicated to help business leaders develop themselves and their teams through the application of lessons from leading business books. Chris has published over 150 articles, speaks regularly, and has read more business books he cares to count.
Check out Chris' new book, "Beyond the Picket Fence."
What does it take to start a business at 7? Syed Balkhi created his first business when he was only 7 years old. Syed has been doing internet stuff since he was 12. He is an online marketer with design and development experience. His work has been featured in The New York Times, Wired Magazine, Yahoo, just to mention a few. Syed is the founder of WPBeginner a wildly popular site that provides quality tips, tricks, and hacks for Wordpress users. In 2011, Syed created a site called List25 which is an extremely popular site. Within 3 months of launch, the site was receiving 5 million pageviews per month. List25 has over 700,000 subscribers and 100 Million video views on its Youtube channel.
Say hi to Syed at balkhis.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone this is George Meszaros with Success Harbor and I have Syed Balkhi with me. Syed created his first business when he was 7 years old, yes, that’s 7. Syed has been doing internet stuff since he was 12. He is an online marketer with design and development experience. His work has been featured in the New York Times, Wired Magazine, Yahoo, just to mention a few. Syed is the founder of WP Beginner, a wildly popular and successful site that provides quality tips, tricks and hacks for Wordpress users. Welcome.
Syed Balkhi: Thank you for having me George.
Success Harbor: Thank you for being here. I really appreciate Syed. Let’s get into your beginnings in business. I read about you that you have started at 7. Your first business was at age 7, is that correct?
Syed Balkhi: Yes, that is correct. I started a greeting cards business when I was back in Pakistan because I grew up there and we have 2 very popular holidays and [line breaks 1:07] you have and you ask people are doing--, kids are doing lemonade stands, we have like, you know, a lot of kids doing greeting cards so that was my first business.
Success Harbor: Anything after that, after 7? Because I think I read about, what was it, 12?
Syed Balkhi: Yes.
Success Harbor: You know, you’ve been doing stuff online so, I mean, it’s kind of crazy to start that young. Why, what’s the attraction to business at that early age?
Syed Balkhi: So, one of the big motivations at age 7 was I saw other people doing it and, obviously you know, kids were a little older than me but you know, it’s not really uncommon for you to see like a 9-year-old having their own greeting cards stand and that’s what the adults would buy from. I have given a long talk about this and I’ll try to keep it very short. I saw the power [inaudible 01:53], with the chips, one of the chips brand, they were giving away toys so I got into the greeting cards business and it went real well and kept on doing it for as long as I was in Pakistan and then my family moved to US when I was 12 years old and that’s when I got into all the internet stuff, buying and selling domain names, building proxy websites, arcade websites, getting really involved with the SEO industry, with the web directories and then consulting and then blogging and all that.
Success Harbor: And then later you got into buying and selling domain names right?
Syed Balkhi: Yea.
Success Harbor: What age was that and how did you get into that business?
Syed Balkhi: So that was age 12. I started high school fairly early, I was 12 years old and I didn’t have a lot of friends, you know, I was playing a lot of online games at that time. I would get up in the middle of the night and start playing games. Didn’t really have a schedule, you know, my parents weren’t really strict. So one of my cousins says, “Dude, you wake up in the middle of the night to play games and to earn fake money that the games would have right, the game point, why don’t you wake up and buy something that has actual value, like expired domain names, and he explained to me the whole concept, that expired domain names expired a certain time and if you can get it they can be worth some money and that’s how I really got into it.
Success Harbor: Do you have a number or was it just a few domain names or did you buy and sell thousands or hundreds of domains?
Syed Balkhi: No, at one point I had over 450 domain names and then after that I slowly started cutting down, selling them as part of bulk packages and now I have like, I think closer to 100 but those are the ones that I like to keep.
Success Harbor: Ok. So they’re not for flipping, they’re more of a long-term investment for a potential business?
Syed Balkhi: Yeah. Now they are yes but in the past, I would buy and sell, like flip a lot of domain names. I had 3-letter.us’, 3-letter.coms, 3-letter.net and you know, I would flip them.
Success Harbor: Wow. Do you think that’s a viable business model even today, this 2014?
Syed Balkhi: It’s more risky because a lot of the good domain names are already taken, unless you come up with a new industry name that you think is going to be worth money. The one thing I always tell about domains is, it doesn’t matter what you think its worth, it’s what the buyer is willing to pay you for it. But you’ll be sitting on that domain name for a very long time because there’s no--, the value of it is completely on the user.
Success Harbor: Yeah, yeah. So you have then started, and now we’re jumping way forward but I want to get started talking about WP Beginner which you started in 2009 if that’s correct, right? 2009?
Syed Balkhi: That’s correct, yeah.
Success Harbor: So, when you started WP Beginner, what were your goals with the site? Was it for business, hobby? What was your dream about that site or what did you want with it?
Syed Balkhi: Yeah, so I started using Wordpress in 2006 and I had built up quite a portfolio of clients that I was working with, you know, building their websites using either static html or like custom php framework and at one point it just came to me that I make a lot more money when I sign a new client versus keeping long-term retainer clients on like, you know, maintaining their websites practically the small businesses and I thought to myself what if I could give them WordPress? They don’t have to ask me to maintain it or ask one of my staff members to maintain it and I sent all of them an email saying, “Hey, would you be willing to pay me an upfront fee if I switch you over to WordPress and then you would never have to pay me again on a monthly retainer?”, and most of them agreed so I switched them all to WordPress, only to find that I was getting emails from them again but it was a different type of email. They were asking me how do you do this in WordPress and how do you do that in WordPress. I reached out to a bunch of my friends that were consultants and developers and asked them how they were doing it and most of them had a pdf that they would give out to their clients to learn how to use WordPress and so on. I didn’t want that and the reason for that was because I asked everybody. “What was your biggest complaint about this method?” and they said “Updating them.” So I started looking at web-based versions because you know if you have a site that’s powered by WordPress, it’s fairly easy to moderate and manage; there was none. Most of the sites about WordPress were by developers for developers. Nobody was really targeting beginners and there were some coaches that were selling the courses for, I think like $400 to learn WordPress and I said well I’m not going to send my client to somebody who’s going to charge them $400 because I just billed them a significant chunk of money. So instead I decided that there’s a huge need in the market and I started WP Beginner.
Success Harbor: So, did you have to do anything special for WP Beginner to stand out? I mean, we’ll talk about it later, your Alexa ranking which is super impressive but when you started it did you think that you had to do something special or you just kind of added some articles and then see what happens?
Syed Balkhi: So WP Beginner was not my first site so I was very familiar with how the search engines work, how social media worked. Back then, social media was a lot of Digg and a lot of stumble upon so I had fairly decent profiles on all those platforms. So I knew exactly what I had to do to grow the business right, in terms of like, getting traffic. Getting traffic wasn’t the issue for me thankfully because I’ve had so many different sites but the one thing that really helped to differentiate WP Beginner was that I actively listened to the users. I used ‘search.twitter.com’ and I just sat there like a hawk on the WordPress hashtag and I would check it several times a day to see what kind of questions people were asking about WordPress and that’s how I got all of my article ideas, because I saw exactly the questions people were looking for so I know if I gave them that, they would automatically help me stand out and build trust because somebody--, you know, most people would just rant about their problem on Twitter. Somebody actually listened and gave them a solution; that will make sure you stand out.
Success Harbor: So, I want to just understand how you did that so, you did a search and then did you respond immediately or did you develop the content and then said, “Hey, I have an answer to your question”? What was your process?
Syed Balkhi: A little bit of both. So, if it was--, I did a little bit of both when answering the Twitter questions. If the article was something really simple, like too, too simple that it didn’t really need an article, I would reply to them in a tweet but if it was a little bit more complexed, I would write about it. If it was too complexed that it wouldn’t really fit the WP Beginner type of audience, I would find a resource that the user would find helpful so I try to cater to all of them.
Success Harbor: Ok. So it was more important to be helpful than just to push people to WP Beginner?
Syed Balkhi: Exactly. That’s very important. I didn’t always, you know, get the users, there were several people who were developers that were looking for questions and I still answered their questions because I had a development background. It was just to be purely helpful. The goal wasn’t always to bring the user back to WP Beginner, it was to build trust.
Success Harbor: So, I want to talk about your Alexa ranking for WP Beginner, you have about 1400 the last time I checked, I think a couple of days ago which is amazing, I mean, some people in the audience may not be very familiar with it but Google is number 1, Facebook is 2, Twitter is 9 so to have 1400, that’s out of all websites in the world, is just a super impressive accomplishment. What are the reasons for you to reach that level of popularity for your website to get that kind of traffic? What were you doing right?
Syed Balkhi: To be quite honest, I have very strong reason to believe that Alexa’s flawed and that’s mainly because I have other websites that get a lot more traffic than WP Beginner and Alexa’s not as high as WP Beginner. So, I don’t…
Success Harbor: So it’s not very accurate but I mean, if you have like, a 10 million Alexa ranking or a 3 million or a few hundred thousand, it kind of gives you kind of an idea but it’s not an exact number right, we agree on that.
Syed Balkhi: Yeah, so it’s not very accurate at all. I have higher sites that get more traffic that should be at 1400 versus WP Beginner but to answer your question, it was just a word-of-mouth advertising. I was helping people, people were talking about it, I had a decent profile on ‘Digg.com’ so I would occasionally get my articles to hit the front page of Digg and that would instantly bring a good chunk of users, close to 60-80,000 people on the website in the matter of like, a few hours or as soon as the article would hit front page. So I wasn’t new to social media. I did use all of my skills there to get the traffic but a lot of it was building relationships, trying to be as helpful as possible and then let the organic growth begin.
Success Harbor: And so how long did it take WP Beginner to really take off from 2009? Was it within a matter of months, weeks, I mean yes you had experience to drive traffic to it but was it more of a hockey stick type of growth or more of a gradual growth?
Syed Balkhi: No, it was very much of a hockey stick growth in the beginning because every time--, imagine getting like several articles on the front page of Digg.com when it was really powerful? So you’re getting like 80,000 people in a day, 100,000 people in a day to a brand new website and that’s what caused the initial big burst of growth and then the word-of-mouth started coming in and then several influencers that started noticing it and then they started twitting about it and then ever since then, the growth has been very steady.
Success Harbor: So, help us out, for those that are starting a new site or a blog, what do they have to do today, 2014? Let’s say it’s just a one-person business, they don’t really have people helping them or they don’t have a whole lot of time or experience, what do they need to do to set themselves apart from competitor sites and to get traffic?
Syed Balkhi: So, what I would say is find out what your audience is looking for, ok and you can do that by creating your audience profiles, [inaudible 11:46] profiles, user profiles, there’s all the different words for it and see exactly what they need. Now start offering what they’re looking for, whether they are articles, whether they are podcasts, videos. Next, find out exactly where those users are going to be. Which websites do these users go to currently and then see if you can work out a collaboration deal with them or if you can target them using either advertisements but also, you know, everybody’s on Twitter - it’s an open network; you can build relationships that way.
Success Harbor: Ok. Ok, you have also co-founded ‘List-25’ in 2011 and that site has over 1 million subscribers on YouTube which is more than BBC Worldwide so again it’s a very, very impressive number. What do you do right to become one of the top 700 YouTube channels for List 25?
Syed Balkhi: The YouTube channel was a pretty good experiment so we did an experiment and it turned out real well. To be quite honest, we didn’t really do too much special. We just tried to create videos that triggered some kind of emotion and then we just based all of our content based on some sort of emotion whether it was the ‘huh’ reaction or the sad reaction or the happy reaction and we continued to build videos that way and we would occasionally send emails to larger websites that had few tweets like the Cheese-Burger Network and the New York Time editors and there was just a lot of sending email, “Oh we have a video about this, we have a video about this…” and occasionally we would get picked up by one of the publications and that would help us captivate the audience. Our content was good, the video quality might not be the best but our content was good and it triggered the right emotion in the users and after that it was just word of mouth, people started sharing it and the type of content that List 25 has, had a lot of viral potential when it’s done right and we were able to hit the nail.
Success Harbor: How did you learn to create good content? Was it easy? Did it come to you easy or you had to really work at it?
Syed Balkhi: So, yeah, I obviously had to do a lot of work on it and creating good content is not something easy. Even now when I hire new writers I have to spend good several months training them. Yes, they’re great writers but they don’t know how to write for the people. A lot of times people write for themselves. You have to understand, you are not your own audience; you have to break it down for whoever your audience is. Imagine if I start writing an article on WP Beginner that caters to me? I would alienate 95% of my audience and that’s exactly what all the other blogs at that time that were about WordPress were doing. It was written by developers, they were writing for themselves so they were writing for developers, which is why they were only targeting 2 or 3% of WordPress users. The 97% that are do-it-yourself for businesses weren’t getting that. So 1 - Write for your audience; figure out what your audience needs and then give them that and if you can hit that then you know, it just takes time and practice and you’ll get consistently better and better.
Success Harbor: So what do you think is the proper way to do SEO in 2014? Is there still such a thing as SEO or it’s really about content creation and content promotion anymore?
Syed Balkhi: I mean, good content always trumps any dirty black-hat trick you can find. I’m sure if you start doing your research on Google and start following several black-hat forms, you can find all the black-hat tricks. However, I wouldn’t recommend you doing any of that mainly because black-hat is short-term, they’re short-lived. You are in right now and then maybe a week later you’ll be kicked out because you were manipulating something in Google. So I recommend writing good content. Make sure your on-page SEO’s optimized if you’re using a WordPress blog or WordPress site then you can use the WordPress SEO by Eos Plugin, configure that and just keep on writing good content. You can use Scribe content which is another plugin that kind of gives you an idea of what your keyword density is but you know, you don’t really need that. It’s nice to have, it’s one of those plugins that’s nice to have but you don’t absolutely must have it to create good content. But just focus on your on-page SEO and then start building relationships. If I build a relationship with you and you write a blog post about me and you naturally gave me a backlink, that’s a good backlink of course instead of me trying to force a backlink into a website that’s completely unrelated or kind of buy links, which are also inaccurate.
Success Harbor: So, let's talk about it. You've been in business basically most of your life. Talk about a good learning experience that may be a big mistake that you have made that our audience could learn from that you could share with us.
Syed Balkhi: I’ve made a lot of stupid mistakes. Some of them were not as big but they were just as detrimental because a lot of stupid mistakes can add up to be a big mistake. 1 - Always keep back-up. Just because you think you're not going to get hacked or you're not going to need the back-up, you will. Spend the money and make back-ups for your website because I have lost months and months of content because I didn't make a backup. Thankfully it wasn’t on WP Beginner or List 25, it was on one of my older sites so definitely, definitely make back-ups. Don’t try to think too far advanced. A lot of times, people are looking at their 5 year plan versus looking at their 6 year plan, because guess what? If you don’t execute on your 6 month plan or your 3 month plan, you’re not going to get to the 5 year plan that you spent most of your hours planning for. So start building short-term goals; short-term goals that you can easily evaluate and those short-term goals should lead to your long-term goals. And when you can do that, you’ll be pretty good.
Success Harbor: You know, the average consensus is that about 50% of businesses fail within the first 4 years in business. Why do you think so many businesses fail?
Syed Balkhi: I don’t know why every business fail or why some of the businesses fail but the general idea that I’ve seen from people who have reached out to me, you know, they started something and didn’t follow through, is because they don’t follow through, they’re not really passionate about what they’re doing. People say, “Oh, I think I can really kill it in this particular industry” but maybe you don’t know enough about that industry. Maybe you’re just not that into it, you know, like I am very passionate about WordPress so I think I can do real well on WordPress. I don’t always write on List 25 because I’m not the best suited person to write for List 25. That’s why I have my co-founder and I have other--, a group of writers who write for it so not everything can be done by you and a lot of the times, by the time most people start realizing it, it’s too late.
Success Harbor: How do you deal with the roller coaster ride of being in entrepreneurship? You have been very successful with the sites that we talked about but I’m sure there have been some downs as well so--, and you’ve been in business most of your life so I’m sure you’ve had a lot of ups and downs that you had to deal with. What advice do you have for our audience for dealing with the roller-coaster ride so to speak?
Syed Balkhi: Embrace it. I live for the ups and downs and a lot of times when people are going towards down, they start putting negative vibes out there and they start discouraging themselves. Take it one day at a time, look up and keep moving. If you’re having a bad day, tomorrow will be better and that’s the attitude that I’ve used and gone through but I really enjoy what I do and I appreciate what I have right now versus what I could have or what I could’ve had, so learn to appreciate what you have.
Success Harbor: What’s the best advice you have ever received?
Syed Balkhi: The best advice that I would ever receive is that time is the most valuable asset you have and it’s also the most expensive teacher so try to learn from other people's mistakes rather than making the same one over and over again by yourself.
Success Harbor: Ok. What is the most important thing for an entrepreneur to do during the first 12 months of being in business? I ask this because I think the first 1 year in business is so crucial and a lot of people make a lot of mistakes or maybe they focus on the wrong thing. So based on your business experience what is your recommendation they should focus on?
Syed Balkhi: It's really, really hard to say what you should focus on because every entrepreneur, every different business has different needs but I would say try to nail down exactly what you’re building, what you're creating. A lot of times people say they want to create something but they kind of have an idea or sort of idea of what they want to create. Nail it down. Nail it down to exactly what you want to build and then build it versus trying to go in and then figure out as you’re going.
Success Harbor: What do you think is the biggest time-waster for entrepreneurs?
Syed Balkhi: Distraction. It could be anything, it could be social media. I think not being organized is the biggest time-waster. Start time-tracking yourself, whether you use something like a Rescue Time, I personally use Time Doctor, it takes screenshots and really hold yourself accountable and see where you're wasting your time.
Success Harbor: So, where do you see the biggest opportunities in business today? You've been in business most of your life, where do you see the big opportunities now and not just something general like online or social media but do you have anything specific that you been thinking about or you think is a good opportunity now?
Syed Balkhi: Yeah. I'm always a believer that you create your own opportunities. If you're talking about which sector is hot right now, e-commerce is fairly hot right now. Just because I was looking at one of the numbers the other day, it said only 6% of all businesses actually have an online presence like e-commerce presence, so imagine the 94% that doesn't and so I think e-commerce is really big, or is going to be really big, if it’s not already; it’s pretty big.
Success Harbor: Ok. If someone came to you, a friend or a family member that had a job but they saw your entrepreneurial success and they said, “Syed, teach me”, what would be the first thing you would teach that person to succeed in business, to set them up for success?
Syed Balkhi: I probably wouldn’t because most of the time when somebody comes to you and say, “Oh, I see you’re successful, I want to be successful”, I tell them to go and figure out what are they trying to accomplish first. I’ve had several people who’ve come and done that but it’s not like--, what does success mean to you? Most people don’t know that, they just think that this is successful. Define for yourself what does the successful George look like? What does successful Syed look like? And whatever your name is, determine what does success look like to you and what do you need to get there and if that means ‘I need to create a business around this’, figure that part out and once you have that, then come back to me and then we can work on how you can get customers, where you should be looking at, what you can do but a lot of times when people come to you, they’re not really there yet. They’re in a very, very early stage, they haven’t figured it all out themselves and quite frankly I don’t think helping them figure out what they want to do is what I need to do.
Success Harbor: Ok. Well Syed, thank you very much for coming on Success Harbor today to share your story and your wisdom basically, I really appreciate it. How can people find out more about you or connect with you?
Syed Balkhi: You can find me by going to ‘wpbeginner.com’. You can follow me on Twitter @wpbeginner or @SyedBalkhi. Thank you for having me on the show George.
Success Harbor: So everybody go and check out WP Beginner. Syed, thank you and I wish you much luck with all your endeavors.
Syed Balkhi: Thank you.
What does it take to sell more than 10 million custom stickers? Andrew Witkin President and CEO of StickerYou, the company he founded in 2008. Andrew got the inspiration for StickerYou walking down the street through Manhattan Beach, CA. It was there that Andrew noticed how stickers were such a big part of the local scene. Today, Andrew is focused on building StickerYou into being the best custom sticker platform in the world.
Say hi to Andrew at StickerYou.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone. This is George Meszaros with Success and I have Andrew Witkin with me. Andrew is the founder of Stickeryou. Sickeryou provides the best platform in the world to create custom products that make you stick. Welcome Andrew.
Andrew Witkin: Hello George. Great to be here with you.
Success Harbor: Thank you for being here I really appreciate it. Let’s talk about starting Stickeryou , I believe you started it in 2008. What were you doing prior to starting Sticker U what is your business background.
Andrew Witkin: My Background was a mix probable about 15years of Licensing Consumer Products, Marketing and Brand Management. So I work for two different companies one in Canada it’s called Course Entertainment where I heading up the licensing for North America for consumer products our entertainment characters and then shortly thereafter that I went to a company called Mega Brands a big competitor to Leago and there I did Brand Management of a lot of their Toy lines where I headed up the Marketing and also the Licensing internally at Mega Brands and I think those experiences probable shaped you know maybe some of the vision eventually that I came to pulled at Sickeryou.
Success Harbor: So how long were you thinking about starting some kind of a business before starting Stickeryou, Did it just come to you or the spur of a moment or were you thinking about it for years what that was like?
Andrew Witkin: Well I think, I probably would divide it into two aspects, I think though out my business career prior to Stickeryou. I was more the entrepreneur type of you know business marketer, brand manage perpetual within other big businesses. So I think I always had a desire to grow businesses and you get a lot of learning when you’re at a lot of businesses along those lines and at a certain point you kind of collect enough experience that I think there were certain trends that i saw on the market that got me really excited and that started.
Success Harbor: For example what were some of those trends?
Andrew Witkin: Well for us, you know as a lot of my career was also watching you know kids actually customize their toys and when I started to take a look beyond kids I notice that really the entire consumer market today or even five you know six years ago was starting to evolved where by people weren’t just buying readymade products as much anymore, people were starting to buy customize products that they could influence themselves a by you know as a way of example. Many people don’t do traditional photo albums anymore where you develop your pictures and then put them in an album you know you might go to shutter fly upload your photos, add text, backgrounds and designed an entire photo book and so I think by looking at the way kids play and then all of a sudden the way adults were starting to buy products. I could see that the youth movement was going to push that trend further and faster and so between that and just the accessibility of images because of technology and the internet weather be Google Images or Photo from phones it’s just all of a sudden people just had so much more access to imagery that was important to them. I think those two trends along with finally then going out and researching more about what was happening in the production technology world in terms of being able to make out how people were making these customise products. When i sell all those three trends around me I got kind of really excited that, that is really the future biggest growth area consumer products and obviously you know seeing the worldwide web I realize that you know having something that was back ended and either creatable and then orderable through the web was probable a big big trend I wanted to capitalize on.
Success Harbor: So did you quit your job before starting Stickeryou or How did you transition from employee to entrepreneur?
Andrew Witkin: It’s a great question, you know I was in a situation where I actually when I was in Montreal, I had started a family and my kids were two and four and I just sorted hit a wall where at a certain point I think my wife and I were in Europe and it just dawned on me one day that something was not right in our lives and the main thing that sorted stuck up on me was that I wanted to moved back to Toronto from Montreal, I wanted to be closer to My Parents, My Sister, Her kids, My Friends. I’ve been away for six years and it just seem like my kids were getting older they weren’t connecting as much with the people we were most connected to and so I made a value based decision that said regardless of what happens in my career where I’m working, I’m moving back to Toronto unfortunately my employer was at the time ok with it that I could moved back to Toronto and still work with them. Once I was in Toronto I think it became apparent that they actually needed me in Montreal and I was further confident that, that was not what I wanted to do again and so it was fortunate because we actually were able to cut a deal that allowed me to still get paid for a little bit of time and then that I would then stop working for them and actually pursue my own ideas and what I wanted to do and so is there that i started to really do a deep dive into formulating the business for Stickeryou.
Success Harbor: So how did you get the idea for Stickers, What inspired you?
Andrew Witkin: Well so I like the trends out there and I think what happens is you know naturally you look at what is being done today in the customers edition world of products that is maybe not as good as it could be because there were some great you know Photo albums, Mugs and T-shirts were starting to be done quite rapidly across different websites and when I looked at the Sticker category one I was always enamoured by it, I remember actually at the time I was doing some business in L.A and I was in a speech and I noticed how sort of lubricous customs die cuts sticker culture was to everything around me from stickers being slapped on a mail boxes, to skate boards, to shops and I just fell in love with it and it was there that I kind of realize that in the customization world online everything was actually what you would called today begin like template based products so you could do a 2inch by 2inch round sticker you could do a bumper sticker but you know these were all set template that you had to work you images in if you had by way of examples a Harley Davison logo with the wing tips the sticker wouldn’t be that based on what you would make online you had to go to a traditional printer for that intentionally invest in a dire and have a much larger expense to do custom stickers so there I saw a void because I kind of felt that the sticker market was so lubricous everyone love stickers it’s actually a very happy product and yet it’s very functional when you actually break down all the front areas of it from you packaging labels to give away stickers to you know anything so from there I just kind of got enamoured by the idea of what if you could then create a platform online and make die cut stickers which would considered to be more the best type of quality sticker in the world and then build an interface that allows people to actually order that in extraordinary low quantities as little as one.
Success Harbor: So was there no other company that offered this online or how did you wanted to improve that whole process of getting custom die cut stickers?
Andrew Witkin: Yeah, the short answer to that is in the way in which we in vision it no, no one has been doing it, you know there were some more antiquated printers that would have a website and would say yes we can so die cut stickers you know here is our pricing send us your file we'll take the file, we'll make a die cut of it ,we'll send it back to you by email you can reach and you know it would be a very long process a very touch oriented and of course serve with more a 9-5 hours of the day availability to we really wanted to create an interface that took a lot of that touch away and really became something that empowering to 24/7 so an interface that a few literally would wanted to designed a sticker using our interface and typed text and add images it would create your own die cuts sticker on the fly and then also if you wanted to upload an image you could see that image die cut right away and that has never been done before and even to this day it actually has not been done in that format there is still a template based models out there so I am.
Success Harbor: Is it very difficult to do why do you think because usually there is a site something that is successful and there is a hundred knock off within a few months right so why do you think they aren’t more of these types of companies?
Andrew Witkin: Well yeah, through my own experience I could definitively say it is difficult technology to build a lot of advance math and geometry goes into creating a file that is both image base and die cut base that can get sent to printers and when we embarked upon it, I think that was one of the key differentiator that we knew was going to be make a better product for the end customer but also be something that we ourselves had risk in doing because it had not been done before and so one of the initial challenges of course once you sort of come up with the business plan I had to raised some funds to hirer a technology team to try and build this and proved that it can actually worked.
Success Harbor: So you got some angels or did you got some venture money how did you, what kind of money did you raised?
Andrew Witkin: So we raised about Half of a million dollars and it was basically an angel round no Bcs but by the various people, some people I knew, some people I’ve been introduce from people i knew and I guess ideally people like the business plan but knew that this money was really kind of funding the prototype if you will.
Success Harbor: The technology pretty much did most of that money go into the technology that you describe earlier?
Andrew Witkin: Yeah, I mean in the sense of you know software talent that you have to hirer to build. Yeah absolutely the majority of it was completely for that and yeah that was the investments and luckily eight months later we were able to not burn out all our cash but actually come back with a real product that could work and so that precipitated our investor base to doing a second round and we collected we were able to raised about a Million dollars in the next round to be able to actually build out an entire website to support this.
Success Harbor: Was it difficult to find investors?
Andrew Witkin: You know, I think it’s always a process and it’s a long, It’s a Hard process weather inheritably you do or don’t have those investors I think everyone goes through that process were its a bit difficult but I think if you got a sound business plan and you are confident in it you know an investor can see the visions for it and what you have built to prove you know part of that evolution. I think it can be done and so I was fortunate enough to have good angels that you know were able to you know come back in on a second round we expanded the angel network to about twice the number of investors on the second round but yeah I would say that no matter who you are and your ideas it’s always a hard process.
Success Harbor: You know the connection is really starting to go bad do you have anything running in the background maybe on your computer that could chew up bandwidth like Google drive or drop box or something like or maybe just email do you have your email open that constantly like pops and eats up the bandwidth.
Andrew Witkin: I just closed my email, If that help, Is that any better George?
Success Harbor: I mean it comes it goes, It comes and goes you know but the last answer you gave was like you know we could hear like 90% of it but the 10% we didn’t. Let’s see how this goes.
Andrew Witkin: OK
Success Harbor: So let’s talk about what kind of market research you have done prior to starting Stickeryou, Did you do anything formal or you just had a really good feeling about this business so talk about that a little bit.
Andrew Wikin: So, sure you know in terms of market research it was a combination of trying to analyze the sticker market but you know the interesting thing with the sticker market is that its fragmenting into many different types of market so a label that goes onto packaging is a label even though it’s still a sticker, Stickers that are for your kids that you buy at retail with rainbows and unicorns that’s a different market then you know a business that’s you know ordering vinyl die cuts stickers for their swag and you don’t really have a lot of great statistic out there each for these sectors all be if the label market was probably much more buoyant in terms of rich information to pull from so we had to do some non traditional research: Interviews with people and leaders of certain industries to kind of gather what thought was decent Intel on the market and I ultimately I was kind of trying to literally combine to go five kind of markets that this could ultimately compete in to shape sort of where the opportunity lay so it was a bit of gut, it was a bit of you know you had to l kind of extend the numbers and then you also had some real data to pull from but it was a mixture.
Success Harbor: So let’s talk about some of the adjustment that you had to make based on your gut feelings and your initial research and then starting the business and then running it in the early years. Did you have any assumptions that were wrong that you had kind of pivot?
Andrew Witkin: Yeah, we definitely made a few, I mean there was a few assumptions we made that were, I think interacts in the sense that because of my history I really had a good sense for the youth market and the kid market and I certainly felt that there was no reason why our platform wouldn’t be very creative and Inciting for uses to make their own customs stickers so we built it to be extraordinary creative in terms of the power of what it could do for you, It was some you know Photoshop like features that you could utilize to make some really cool and colourful stickers but what happen was once we have launched it the small business market was actually one of our biggest customer bases and we quickly also realize lesson number one the web is that 13year old skate boarder actually doesn’t have a visa or a lot of disposable income so we quickly found that was going to be a smaller part of our business and that ultimately we had to look at the small business market and start to say well why are they excited about this and is this platform proper for them and the underline technology was pretty good but the user interface was certainly a lot more dared to someone younger and you know was there to have make some fun personalize stickers not necessarily you know to fill a immediately business need that you wanted to get in and check out quickly and so we had to refine the interface we also found that we built it on flash which had been timed in 2008 when we were, well 2008-2009 it seem appropriate but you know quickly with the advent of HTML5 a few years later we realize that, that was already antiquated the flash based built and so we needed to already pivot there so you know taking customer insights in terms of their user experience and what they wanted in the tool and the underline technology we obviously pivot a few times, It didn’t take anything away from the original business plan that said there was a massive market opportunity for what we were building cause we looked at what we were building as being universally appealing depending on how you wanted to stand out weather was personal or even if it was for your brand but we did have a bias initially that it was to be more youthful and inevitably there is a real pragmatic side to what it serve and now we've I think adjust that a lot better.
Success Harbor: So how do you make a decision as the leader of your company when to pivot you know what to ignore and what to pay attention to in terms of feedback from your market?
Andrew Witkin: It’s a good question, I mean I think you combine a little bit of gut probably about a third gut 40% gut and about 60-70% real data and because what happens is you start to get you know a number of customers and then those customer experiences are really the truth that tells you what is right and what’s not right and also what people want and what they value and so we found that you know we got one piece of feedback one something we would note it, if we started to get multiple feedbacks of something similar we would take it very seriously and then start to look at that compared to other things we're seeing and prioritize accordingly, I would just try to do a gut check to actually sometimes reach out to certain customers and really try to del deeper into what they were asking for to make sure we built something or pivoted or added a new feature to the site that was in fact what they wanted maybe, I was more a validator but I try to look the data and even some of our sales marketing team with feedback with customers really try to guide where we were going to evolved Stickeryou to.
Success Harbor: And how did you get your first customers?
Andrew Witkin: You know, you launched a website and then when I say that, that’s like a year of building something and it always gets delayed and we finally went live and you know I think like anything you send out a massive email to every person under the sun you know and it’s a rather passionate one because you know you’ve just put so much into this and it’s such a co venture and so you know I think that’s how ultimately how we started, I mean we all everyone I think we had about seven people or eight people maybe nine at the time when we launched and so I think everyone you know told everyone of their friends and that sort of started Sickeryou, and maybe the first day we had a few hundred visitors a best, but like anything I think if you start to create something that has some utility people on the web are often telling other people about it and obviously it takes also a few years to start to get a more significant traction even with Google when it comes down to like organic search and you know search optimization but that was the starting point was really friends and family we didn’t do any press release on day one or anything like that.
Success Harbor: My question is what the most effective marketing channels were when you started out and has that changed now over the years?
Andrew Witkin: Yeah that’s a great question, I think initially one of the things we did was we actually had built a widget for our platform where by the Stickeryou application that begin where you could actually go upload a logo and design a sticker was a widget that could actually go on third party content orientated website so for example we had a little mini batman sticker maker on a Batman website and the same went for a Scrap booking website and stuff like that and that was actually a decent driver of traffic, we even did a implementation with mini clip for Avatars but interestingly enough we found that it didn’t convert very well because a lot of people who were then you know making cool stickers in the end thought of it as like a game and so they didn’t really kind of expect in the end that they actually would have to being pay for stickers and with their credit cards and so we found that, that strategy action was not as good as just people who did a link to Stickeryou and we would built a Batman sticker maker at Sticker U and then people then could find about shipping and quality of product and all that other information and so we went more towards a more linking strategy than a widget strategy and in addition to that as we built a better and better tool we found that we got better at search, we had because the platform could actually do many different types of products from CD labels to (0:20:48.5 - 0:21:02.2 BLANK) .
Success Harbor: What were the most effective marketing channels when you started Stickeryou and has that changed over the years?
Andrew Witkin: With respect to marketing channels when we first started Stickeryou, we thought one of the innovated way to market the company was to allow third party website that had rich content to have a sticker maker on their website so we forged a deal with a Batman website and we got the licences for you know economics and people could make Batman stickers customs Batman stickers on their website and so we actually built a widget that was our sticker making tool itself but not the rest of the website that could go under a third party website and we did a lot of those, we did a scrap booking line, we did a ghost busters line and it was found that is kind of we thought it was a great idea but we actually found that the user paver was such that were made for stickers on these website they got to a point where they all of a sudden had that they buy them and check out and they didn’t have all that surround information that a normal website provides you such as how long it takes to do shipping, and more information on Stickeryou and so we found the conversion rate really low as compared to websites that actually would link into Stickeyou and creating a learning page for Stickeryou about their content and people could make stickers at Stickeryou and check out we found that converted much better so we had to change our strategy from kind of dell these widget deals results takes a long time implement to a more simplify learning page deal that the content rest on our website there is one thing that changed in our marketing strategy, the other thing is really that we started to realize that as the platform was so much more powerful for doing other products form CD labels to learn labels to customs die cuts stickers to packaging labels we found that actually the a lot of learning pages that are on our websites that under the products and the Google search is becoming a bigger and bigger channel in terms of driving customers to our website so we pursue that a lot harder we pursue affiliate marketing more considerably than in the first 6-12months and I think today it’s still bring some of the biggest drivers of traffic into our website, you know we got some deals just like dialler, talk user. People go from their websites to our website they could make their own customs details to elevate it, we then again makes these companies that are called bearden the norms make gender labels they come from their websites to our website and they have a interface that these things are what they buy from them but that has I guess evolved at some level for us and it still but social media has become a bigger part of what we do cause we can really inspire people with a lot of ideas behind how they can use our platform there and it still engaging and it also gets more word of mouth from them if they like our ideas and tell their friends about it and I think that social media evolves more in the couple of years.
Success Harbor: So do you have an idea of what percentage of the business is word of mouth?
Andrew Witkin: I think that i can put a real number other than a official number on that but I know that ultimately when we do have a effective customers i think about 20% found out about us from friends and colleague that all learn about us and 20-25% and by 70-75% who whether it be affiliate marketing, third party website, Google search that sort of stuff.
Success Harbor: How effective is affiliate marketing for your business?
Andrew Witkin: You know I think it has a role because you know it always depends on the affiliates then when we define affiliates two ways one are they are content affiliates like bower hawky like I said before in bernarden and then they are sort of more discount deal type affiliates and I would even put like a social group on you know a lot of those affiliate discount websites that provide promo codes to people as another channel and there I think they’re Important from a trial stand point I think you used that as a way in which people trial your service for a little bit less and you know as long as you don’t, you have to change up that though so that people don’t go back to that all the time and depend on getting a discount, you want to be able to provide that sporadically as a benefit to people and as a bonus to existing customers but it does play a role for sure in our marketing strategy.
Success Harbor: So what are you doing to drive traffic to your site, is organic search a big part of your marketing?
Andrew Witkin: Yeah, I think it defiantly is and I say that because I think ultimately what we realize in our platform is that it is you know if you’re running a small business there are a lot of things you’re doing on a day to day level to make that business successful, where you get your labels for some of your products or your custom stickers becomes a intermittent need when you need it and so when you think about that you’re not really that accretive to hearing a message about stickers from somebody all the time but when you need it you really need it and when you do you often search for it, because you don’t necessarily top of my know where the best place to go, so we balance the fact that there are a lot of users when you need you know the custom die cut stickers or custom labels or in invent we've also been in the personal world to invent a platform where you can make you own custom temporality tattoos again in quantities that are as little as one, so that type of experience is something that we really want to allow people to find via search but we also now using a more video via YouTube and content website that showcase video as well as a lot of social media to just randomly inspired people by what you can do so you may not have the need right away but we want to put something in front of you that is very engaging and entertaining and inspiring so that you know to stands when the need does come up or we might actually stimulate a idea more faster for you than later on it will come back to us, it’s a bit of a hybrid I guess you could say.
Success Harbor: So which social, I’m sorry were you saying something I didn’t mean to cut you off.
Andrew Witkin: No No No I finished.
Success Harbor: So which social channels are the most effective for you?
Andrew Witkin: I think for us we find, I think Facebook and Pintrest for probably the two biggest ones, you know YouTube if you considered it as also a social network at sorts its great for arbitrary videos but I think in terms of conversion and being able to target customers I think Pintrest is very inspiring where you get a lot of DIY, women sort websites who makes for examples for their weddings, party favours and wine labels that are customize and pintrest is a good environment because when we want to inspire people that’s a fantastic environment for that we certainly Facebook is the biggest social network and we do find that it has a significant role in obviously people being able to see through their news feed unique ideas that we can share with them and obviously they can share themselves so for us those two are probably the most prominent ones that we work with right now.
Success Harbor: How may orders do you process within a year?
Andrew Witkin: Thousands haha we process a lot of orders its definitely in the high thousands.
Success Harbor: OK, How many stickers is the millions I mean you mention that you know that its a big point that people can order just one of your die cut sticker, is that pretty average or because you also mention the small business part of your business
Andrew Witkin: Yeah, The real great point of differentiation is that as a business you might have a time when you need just ten stickers for some mini events that you’re doing or some signage for your store, or your actually an entrepreneur and your trying a new product and you just want 40 labels for this new flavour and you want to see if it works, so certainly people can order on a low end there and of course it scales up now because when you need 500 or 1000 or a few 1000 of the sticker then obviously we can provide that also, so averaging we can do around 10million sticker within year including labels in one have you and that can run you know sometimes some of my orders well under a thousand and then some people are ordering 10 or 20.
Success Harbor: Wow, can you share a mistake that turn into a really good learning experience that would really help my audience as well if you could share maybe something that was like you know it didn’t look great at the time but it was really sort of a good learning experience for you.
Andrew Witkin: I think if I look back there is one thing that always stands out if was the classic we had reinterpreted who our target market was that being kind of use and we built a platform to be appealing to them, in hindsight you know you learn more about the development as you go through these things and we in hindsight I think I would have started the build being more about a small little area on our website where you can upload a file a and we can allow you to make a sticker of that and you check out. You didn’t have text tool, you didn’t have coloured background, you didn’t have all these images you could add not that isn’t now a big part of our business it is but if I think all the time, money and energy that went into the first bill that was trying to do some many things for people creatively I would scale back all the way back to one simple little thing and then grow it out from there, I think that in hindsight was probably our biggest mistake but you know we did it with the right intent but I would did that differently if i did it again.
Success Harbor: Ok, I just have a couple of more questions do you have time for it, I know we probably over the 30 minute mark.
Andrew Witkin: No No its
Success Harbor: You know most businesses fail unfortunately and especially they fail during the first couple of years in business so this question has to do with that. What is the most important thing for an entrepreneur to focus on during the first one year of being in business what you think they should spend most of their time on?
Andrew Witkin: You know I think every business is a little different so I don’t know if its universal but I do think when you are doing a new business a start up of sorts I mean ultimately the business is going sink or swim there a lot of variables that can affect you how many capital you have the right people those are all big big variables but at the core of everything you do is the value proposition of the product or service it’s what your charging to what your producing against what it cost you to produce it, is that differential valuable to people enough to pay you know the price that you think it worth, and I think ultimately you got to constantly be focused on when where and how and in what form does your product or service best meet your customers need and how you continually mould the product and service to what that is and I think staying focused on that and not getting lost and a lot of other distractions is so important and I would say that would be for us or any entrepreneur I think very fundamental to, and I actually believe CEO and the founder its probably in a very passionate good position to be monitoring that because they would probably had the initial idea in the first place as to why it would be valuable and hopefully you can then inspire a team to you know come on board to want to build something that you think you know is going to be something very valuable to people and they all have a big role in that but somebody is got to ultimately be evaluating is this collectively , universally as a entire brand or a product service is it delivering to people the value that you need long term to make this thing a successful business cause if it’s not your going to be kind of going down the wrong path and so you really need to focus on that you know right from the start and especially in the first year where your getting a lot of raw data to help to kind of guide you as to whether or not you’ve made good decisions or bad or certainly can you provident time to rectify what you may have amorously thought.
Success Harbor: Ok, What is the best advice you have ever received either personal or business?
Andrew Witkin: The best advise I’ve ever received in personal business, I would say the one thing that somebody once said was one of the most important values that you bring to a business in terms of how you conduct yourself and what is the most important thing people need around you and I think vision and leadership is huge but I actually someone once said to me the most important thing you can do with everything you do is honesty, and I a 100% subscribe to it because you know I think everyone around you depends on a sense of transparency you know you always hear the big companies the problem is the politics and everyone cut their own agenda and its very disruptive when people don’t feel like they completely know in a grounded way where they stand and what they’re trying to do its hard enough when your competing out there and your trying to be great to do that but to not be candid and honest about where you are how people are performing and i mean you want to be positive and you also want to be pragmatic and honest and I find that more i gotten to older repeated that advise I realize that people really appreciate that and good or bad sometimes they really appreciate knowing that you’re going to give the honest story of what you think and it’s amazing how well they can build off of that as opposed to things that not always being so clear and transparent where it creates a lot of uncertainty and I think as a company it can make you very inefficient and it can be toxic.
Success Harbor: Well Andrew I want to thank you for coming on Success Harbour to share the story of Sticker you with our audience how can people find out more about either you or Stickeryou?
Andrew Witkin: Well first of all it was a pleasure speaking with you George, you asked great questions and I like your show.
Success Harbour: Thank you!
Andrew Witkin: Yeah you can go to its simple you can go to Sticker You, that’s you.com and you can see everything and experience for yourself what its live to create your own customs die cut products that make you stick theres really alot of inspiration there hopefully the tool is very easy for you and I find that when you do that its actually a fun experience when you start to see what you can create so I would encourage everyone to try it cause its quite addictive when you start to see the possibilities.
Success Harbor: So everybody out there check out Stickeryou.com that’s Stickeryou.com Andrew thank you and I wish you much luck and much success with Stickeryou going forward.
Andrew Witkin: Hey thank you very much George stay in touch.
Success Harbor: Thank you!
What does it take to build a business with $10s of millions in revenue? Jason Cohen is a successful serial entrepreneur. WP Engine, a managed hosting provider for Wordpress, is his 4th startup. In just a few years, Jason has built WP Engine into company of 125 people and 10s of thousands of customers. His took his previous company, Smart Bear, from start to multiple millions in profit, without debt or VC, then sold it for cash. Jason is also a mentor at Capital Factory (like TechStars or Y-Combinator in Austin) and investor in a few companies.
Say hi to Jason at blog.asmartbear.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone. This is George Meszaros with Success Harbor and I have Jason Cohen with me. Jason is a serial entrepreneur. He built and sold Smartbear software. He's now behind WPEngine. Welcome.
Jason Cohen: Thanks, thanks for having me.
Success Harbor: Thank you for being here Jason. Now WPEngine, those few people that may not know in the audiences is a managed Word Press hosting solutions. What were you doing before you started WPEngine?
Jason Cohen: Well WPEngine is my fourth startup so I was, I had sold Smartbear in 19, oh sorry, 2007 and left in 2009, had a baby, was a stay at home dad for a year and then at the time I had this, I still do have a blog about startups that was getting popular and the blog kept crashing every time I got good press like getting on Hacker News and so I had this kind of pain myself and of course I recognized that just because you have the pain doesn’t mean that's a business. There's a big business between the two things but it turned out in this particular case, the pain was very common. In fact it turns out that more than a fifth of the entire Internet is powered by Word Press right now so lots of people with lots of websites have the kind of problems that I had, wanting to make their sites faster, or scalable or protected from hackers and so on now we have lots of features and various things but it all stemmed out of a personal need and I didn't have a solution that I could just use.
Success Harbor: So how did you test that to go beyond your personal need that there was actually a wider need? Was it just your own network or did you do some tests, advertising or what kind of research have you done?
Jason Cohen: Yes, so, I think, I mean, I know I'm fortunate in starting, you know the more reputation you have and so on you have a bigger network, the more people you can ask. That makes it easier but there's a lot of things. So I was able to use my network and also just sort of reach out in general but there's a lot of interesting techniques for finding people to talk to when you don't have a network built in. So for example, something that I did at WPEngine later on that did not rely on my network, in fact it didn't want to. I wanted something less biased and so I what I did is I'd go to Linked In and you could do this too, anyone can do this particular technique. Go to LinkedIn and you find people whose title of their company matches the thing that you're interested in and if you say well I don't know what the title would be that's impossible to know, then I would argue that it’s going to be very hard to market to that person since you can't describe who they are. So supposing you can and in this particular case, it was people who were independent word press consultants in my case, so that was pretty easy to find people who said they were freelancers or consultants specializing in Word Press so then I would reach out to these folks and say, ‘hey I know you're a consultant about word press, we're trying to build a product for you and I’d love to ask you about your daily life and the pain you have and describe some of the things we're thinking about and see if that resonates with you. I also know you're’, this is the key thing, ‘I also know you're time is valuable and I don't want to get your time for nothing so I'd be happy to pay you whatever hourly rate you think is fair even if that's bigger than your normal hourly rate because this is a special one off thing but I really do want to know what you think and I'm happy to pay to hear what it is.’ Now what's interesting is I sent this message through LinkedIn to thirty people, or at least thirty people responded I think maybe it more like forty people. Thirty responded. One hundred percent of them took the call and said yeah I'd love to see what you're up to and zero percent of them actually wanted money. They all said no, no, I'll just take the call. I'm just interested. In other words, just because I respected their time, and came at it from that angle, that was sufficient to get a meeting and in fact I didn't have to pay out even though of course I would have because it would've been worthwhile to do that so I think even if you don't have the network you can do things like that to reach out and actually talk to the people you need to.
Success Harbor: So do you recommend that basically for anyone regardless of what product it is you know that they're trying to build, is to talk to you know I'm not saying as many people as possible but at least some people? I don't know what the number is. Do you have any idea of what the number would be?
Jason Cohen: Yeah.
Success Harbor: Is it per a gut feeling?
Jason Cohen: No. It's not a gut feeling but it's also like everything in life, of course you can't use every technique in every circumstance. Of course not. Should you talk to people first before you build and should you try to talk to more than just a few and should you get out of your network? The answer has to be yes because you're going to have to anyway. In other words if you're going to build this business at all, you are going to have to find potential customers and talk to them somehow. Whether that's getting them to a website or talking to them on the phone or chatting with them or chatting over a ticket or emailing or going to conferences or sending out post card mails. I don't care how you're going to reach them you're going to have to do that, so why not start with that and see if you can reach them first and learn something since you're going to have to do it anyway. So I think it's very hard to argue against that particular concept. In fact that's where you get into trouble of course, you go build something without knowing how to get to people and then it doesn’t matter if you built it or not. It doesn't matter if it's awesome or not if you can't reach out to people. Now so, yes I think you always have to do that. Now, the question is how many people? The answer is definitely not like three because then you don't have enough data points to know anything. Well a lot of people do that. They'll say, well I [00:05:48.23] Inaudible
Success Harbor: My neighbor and my cousin.
Jason Cohen: Well and maybe if.
Success Harbor: [00:05:51.22] Inaudible
Jason Cohen: It's a consumer product but maybe more like, I got this idea from my dentist so I talked to him for a while and then and I talked to another dentist and he agreed so I'm going to do it kind of thing right. That's not really validation but how many? You know I've seen people talk to one hundred and fifty, two hundred customers before they felt comfortable or you know as few as twenty before it was really clear. What I'm going to say is I've seen a lot of people. Another thing that I’ve done is that I cofounded capital factory which is an incubator here in Austin and that was 5 years ago so I actually have quite a bit of experience with new startups, trying to help them through and help them grow and help them exactly because this part this hardest part of the phase where you’re trying to figure out what do I even have, how do I communicate that, is there someone who even wants it, is that the right price and all that sort of stuff so how many people, so here’s what I think about that. First of all, you, the likely outcome is that you're wrong and there isn't a business. It doesn't mean you're wrong, there's no pain or you're wrong but you’re product is not interesting or that your features aren’t interesting. Of course they probably are or you wouldn't be so excited about them. So that's not really a question. The question is, is there a business meaning there are people in and you can find them cheaply enough and you can communicate what it is you do and they agree to and they want it and they want to give you money for it and they want to give you enough money for it and so on. That's a business. Unfortunately a lot of ideas are not businesses, in that sense. And a lot of, pretty great products are not business’ in that sense. And a lot of pain that you see in the world is true and yet you can’t formulate a way to make money off of that pain so first of all the likely outcome is failure that you can't really formulate how to make this work and therefore you should be seeking that failure. In other words you should be almost trying to disprove that this idea is so good, because it probably isn't and the faster you get that the faster you can move on to something else or change what your idea is or change how you're approaching it and so forth. So you should be going in to disprove, not to validate and as evidence of that WPEngine was not my first idea and I went out and validated it. It was just the last one that worked when I was validating. I had other ideas before that and when I went out and talked to people and I would still talk to 30 people, I would find that it wasn't really converging on something you know. I would show the product or I would talk about the product and inevitably the person I'm speaking to says, that's really interesting. You know what you should do with that? And then they'd run off on some rabbit trail. You should charge a whole lot of money and sell it through consultants and it should go to Fortune500 companies. The next person would say, that's a brilliant idea but you really should do is add this completely different feature, make a premium, go after like really small business and see if you can upsell this way. And then literally every person I talked to had like a different, said, ‘that's great’ but then kind of veer off into a kind of different way and so I could not find a sort of consensus on what it is that I should build that seems like it matches the truth that many people see and I couldn't find it and so even though the idea I had was quote on quote good, in fact everyone said it was good. That was the initial reaction, actually it wasn't a business and with WPEngine, though it turned out was a business too but that's just the point. So, also in that story is how you know how many people to reach. So I mean it's got to be in the double digits or you just don't, you just haven't talked to enough folks but what happens is, either it's not feeling right, you're getting different mixed messages. Some people just say no that's okay. If some people aren't interested, that's fine. That's why you got to talk to more people. It's okay if three in a row say no if the next five say yes right? So you know discarding the no’s and how many yesses do I have and then are they, is the story kind of converging on something that everyone's pretty much nodding on what price you're charging, how you're charging and what features would be necessary for it to get going and the state of their life and what pain they have and how they articulate it. Either that sort of converges on some kind of shared truth. I mean it's fuzzy. It's not precise right. It sort of feels like you're having the same conversation over and over again. In fact it gets boring because the conversations are so similar, you kind of know what's coming. At that moment you've talked to enough people and you've validated it and the way you know is you stop learning. If you're bored because you've stopped learning then this particular activity is not useful. That doesn't mean you know everything but it does mean that this activity is not helping you learn more so stop it and maybe it is time to build and get going so you can have different conversations and move it along. On the other hand if it sort of gets disparate and it's not converging on a truth and a lot of people are saying no and it's always a struggle and you're kind of afraid almost of what people are going to say next because it's going to be another god-awful thing. That's a sign it's not working and you know just talking to more people is not likely to solve that. What could solve it is maybe you seeing that maybe a different pitch or a different thing and you go down a different path and keep talking to people. That could work but again the usual outcome is, it's not going to work so rather than beating your head against developing a product that people will eventually not buy anyway and waste all that time, it's a good signal to stop early and say okay, this was too hard. This is too hard to make work. I got to find something easier. Another way I put it early on with WPEngine was, it was just super easy to get people to say yes to $50 a month hosting. We made Word Press fast, scalable, secure and if we answered the phone we could answer Word Press questions and not just say, is my server up or down. It was so easy to do that and so I used to say, startups are so hard. There are so many things that are going to go wrong and that you don't know yet and this is going to be so much struggle. Why in the world would you also set up other barriers, like the stuff when you talk to someone needs to be really easy because plenty of other hard stuff that's going to stop you.
Success Harbor: So should that process earlier on involve taking people's money just to know that you have traction or people are actually serious when they're talking to you?
Jason Cohen: Oh I'm a big fan of that and I almost always advise that people do try to get a check, even if it's a small one like $9 because as you say it's a signal. You're not really doing sales though so you don't want to fall into this trap where you're trying to convince the person that you're right because you probably can't. You're probably persuasive; you're probably passionate about it. You're probably knowledgeable about the subject so if you sit down with someone who is in fact a potential customer and you beat them over the head for 45 minutes they'll probably give you $9 just because of that and so that isn't validating anything so although yes I think in the end it's really interesting to ask for a check because that is the best validation, I don’t think you should go in thinking about that goal and driving toward that goal because I think you'll actually miss the point of talking to customers early which is to learn from them, learn how, what their life is like, not to sell.
Success Harbor: So even if you would go in and say, you know what, pay me fifty percent and I give you a year's worth of service, at the end of the meeting, before you actually decide that this is a good idea to build, you don't think that's something that we should strive for as a business?
Jason Cohen: Well as I said you should. I think that it is wise to ask for that at the end. That's the ultimate validation but what you should not do is think that that is the goal of the meeting.
Success Harbor: Okay.
Jason Cohen: Because then you get into a salesman mindset and that's wrong because you're not going to be able to sit down with every client for over an hour and beat them over the head in future. Now I guess if your business is that way where you are going to have that kind of sales then maybe that's okay but if you to expect sell things over the internet and not have those kind of protracted sales things, if it's possible that you won't always be the person doing sales, then that's not validation. That's you, that’s coercion and you're missing the whole point which is to find out what you should build, what their life is like. So for example, one of the great things you learn from these conversations is you learn the language that your customers use to describe these things which is almost never the language you use. Their language will be less precise, less accurate. They won't use technical terms. They won't use the right words. They'll sort of be trying to say something but they won't say it the sort of the way that is accurate but those are the words you need on your home page because those are the words in your own heads, those are the words you’re going to need in ad-words because those are the things they're going to be keying off of. Precision might be wrong and so this is one of the things you get to learn is, of the way they don't think of this as, like when I say scalable site I mean you get a lot of traffic. Almost none of our customers would ever choose that word even though it's the correct word so I shouldn't say scalable websites here in my adwords. I should say something like you know, you get a load of traffic, we'll stay up or if a thousand people hit your website at once, we stay up or whatever the customer would say when the customer is thinking about it. So again if you're in sales mode you're just plowing through this. You're not listening to their words. You're not learning how they think about the world and how they think about stuff so that you can form your home page. You're just, ‘let me show you this feature. Let me show you how great it is. Let me tell you the benefits you'll have. Think about how your life will be like afterwards. Isn't that terriffic? Won't that save you a lot of money? So isn't that at least worth the $100 a month. Tell you what I'll write.’ That salesmanship, you’re convincing and cajoling and explaining to them instead of listening to them and having them guide you into how you should then be selling the next thousand customers. You'll be selling the whole rest of your life. This is your chance. This is not your only chance but this is your main chance to get out of the gate with something that's kind of in the right ball park.
Success Harbor: So you don't want to sell during the meeting but in the end before you leave it's okay to say, would you pay fifty bucks for this a month or would you pay 100 dollars?
Jason Cohen: No wait a minute. There’s two things. If you talk price which is what you just said, ‘ould you pay 50 bucks a month?’ You must talk price. This is controversial. There are a lot of folks who say you must not talk about price. Their argument is that it will taint the argument, taint the conversation that is, because the conversation and discussion should be around their life and their perception of things. The last thing you want to do is name a price and start talking about that and the value and the dollars and the budgets because you're still trying to find out what would they would even find valuable in the first place for any price, for a dollar. What would they find valuable so let's not taint the conversation; that’s' the counter argument. I actually don't believe in that argument at all and the reason is that I think your price determines many things about your business, really the whole business. If I tell you the product is a dollar a month, you're like, ‘oh god a dollar a month, jeeze it must not do a lot, a phone number.’ Certainly when you can't sell it with sales calls you're going to have to do it super cheap, maybe even word of mouth. You probably can’t even pay to acquire customers at that rate. Like just all this stuff that appears when you say a dollar a month. If I told you a thousand dollars a month. Oh I can't even afford it. Oh well it does it do X because do I need to get approval or will I tell this other person? I didn't think I was would have to talk to them. Do I have to? Now I do. It's a, in other words if the price changes, everything about how you get to market, who has that kind of budget, why they make choices in buying, and what their product might need to do and what might be okay for it not to do. The price determines a lot of that so to me if you leave that out of the initial discussion, you've actually left out tons of important pieces of information of your business that you're going to need to understand so you have to talk about price for sure. I definitely did and I said, would you pay me fifty bucks a month and I tried different prices of course as I was talking to people but fifty was what we converged on.
Success Harbor: So let's talk about pricing. What do you think is the best way when you price a product? Should we start high and then work our way to low or start low and then keep bumping the price up? See what resistance we're finding?
Jason Cohen: Well pricing again is like these questions like hey how do I get my first one hundred customers? There's no clean answer. It's going to depend on lots of things. I mean are you trying to boot strap a business that only has one person ever? Are you trying to do a small boot strap business? Are you raising money to build a huge business? Are you selling to consumers or bid or businesses? Is this something that, what kind of businesses, how much value are you delivering? I mean in a case of
Success Harbor: So in the case of WPEngine.
Jason Cohen: Yeah.
Success Harbor: How were you think about pricing? Were you thinking well you know I'm going to try $300 a month? See where it goes and then lower it or increase or decrease. What were your, what was your thought process?
Jason Cohen: No I talked to customers and asked them, what would you pay for this? That's why you got to do that because you can't just draw numbers out of a hat and hope that works. So look, I mean that the rule of thumb of course is charge the most you can and not just because that's not leaving money on the table or whatever cliché you like, but also, for any business but especially a bootstrap business, the price you charge also determines the number of customers you need before your business is really a growing concern or before you get to a million dollars in revenue or whatever kind of milestones you might want. How profitable you are. The price determines that so higher is better. I mean you much rather as a small business, much, much rather you charging in like the fifty to $150 range per month say and then you only need about one hundred and fifty or two hundred customers before you're making ten to 15k a month in revenue and you can quit your day job and this is really a real business and getting a hundred and fifty to two hundred customers is doable. I mean you can scratch and claw your way there. You can have phone conversations if you have to get to that point. In other words, you can sort of brute force your way there. You can brute force your way into a thousand customers. Certainly not to ten thousand but you can definitely do a hundred to two hundred customers so if the price is high enough, you really have a better shot of success. Most businesses period and full stop never get a thousand customers, never get as many as a thousand paying customers ever so if you charge enough, you have no choice but to get a thousand customers. So for example, if you're charging $10 a month you have to get a thousand customers even just to make ten grand a month in revenue which depended on your job cost may not be enough to quit your day job just depending. Maybe it is. The point is you need a ridiculous number of customers that's going to be hard to get to. Most companies don't so again why are you choosing that path that's so much harder? So in general you know more is better but again like every order of magnitude you go in price, everything changes so you could take that to its logical extreme and say I want to, it should be $1000 dollars a month or it should be $10,000 a month or $100,000 a month and indeed it can but then the business needs to be different things you’re selling to different people who require different things that you probably can't deliver on right now anyways so that may not be an option. So again you know for better or worse, this is, there's a lot of things tied up in that so it's hard to give one answer so.
Success Harbor: It's like how long is a piece of string right? It's hard to answer it like that.
Jason Cohen: Well what it is, it actually, it's a very good discussion if you have a very particular example of either this business which has this goal with this model we'd like to use. Then what should I do, what kind of tricks should I use? What should I do now or later? Of course you have to start lower now, because the product sucks now. It's the first product. It always sucks and then it gets better later, you can charge more so that's clear. At the same time again if you charge too low you've set wrong expectations. You're getting customers who by definition don't spend a lot of money on software. That's a bad place to start and again you may need too many customers. A final thing on price though by the way is with a higher price you can afford to pay more to get the customer. That can come in the form of time, like actually getting on the phone and doing a sales call. You can do that for $100 a month customer but you can't do that for a $1 a month customer. There's not enough time to do it but it's also true of whether it's ad-words or Twitter or doing guest blogs or anything, anything where you're spending money in order to get attention and get sign ups. The higher the price the more you can afford in those arenas and that means the more channels are available to you and more of the channel you can go bid against and so again a low price, very few marketing channels will be cost effective and so you've closed those doors and again that's hard for a business to close those doors. You need lots of options because who knows which of these marketing channels will work for you. Who knows which ones you'll figure out so more options, that's the de-risking, that's the power. It’s having more options and the higher price allows you to have more options and that's why that's such a de-risker for a small business.
Success Harbor: So companies that want to be cheap because maybe they’re afraid when they start out that it's going to be expensive, it's going to be hard, they're actually increasing their chances of failure right, in essence because they just limit their own options?
Jason Cohen: Yeah you got to get a ton of customers and you can't pay enough to get them so.
Success Harbor: Sounds like you need magic. You need something viral which almost never exists right?
Jason Cohen: Yeah, viral doesn't, almost never exists, that's right. Some, now, there’s a difference between word of mouth and viral. Word of mouth can exist but the problem with both true viral, meaning the product itself truly does pull in additional users, that's what viral really means, the product does it or word of mouth. The problem with those things is, before you have a critical mass of customers those effects are nil. In other words if I have ten customers, doesn't matter how much word of mouth they do. One way to get one more customer. Like, I can't grow that way. Now once you have you see some of these consumer businesses, once you get ten thousand customers or even one thousand customers, certainly a million customers, then word of mouth has a real effect or viralness can really be powerful but you're still going to have to in a car analogy you're still going to have to have a starter motor to get the engine turning over before that effect matters. Therefore to get going, word of mouth and viralness even if you have it, is actually not a growth driver, not for a while so you’re still going to need an answer. Now for some companies the answer is raising money so that we don't have to. That doesn't mean you don't have to charge although that's also a route some people take, but raising money means well I realize that I mean, going to charge, I realize I'm going to need tons of customers for this to work but by raising money I can spend it anyway to get that engine turned over, to get some of these effect happening and so on and that again of course is a perfectly rational answer so again this is part of the problem with the generic answer of raising money, the answer is very different because your constraints and your goals are very different so your actions need to be very different than if you're bootstrapping so it's not a right or wrong of course. It's a matter of aligning your goals with the business and the market you're going after and so on. Aligning things so that it's consistent.
Success Harbor: So how did you or I don't know, how this applies to WPEngine but going from monthly to yearly or one versus the other, what was your thought process in that and do you think you can go, I mean, what, how do you determine which one is a better model for your business?
Jason Cohen: Well you don't have to pick. We don't. In fact most companies don’t have a monthly rate. Well that is, most companies which have a monthly recurring revenue model in the first place of course have a monthly rate and then they have an annual rate in which you have some discount right. So if you're on an annual plan, it's cheaper than a month times twelve and so by you're essentially paying the customer for the privilege of getting a year of money up front and that is always a good idea and we can get into why but you know, maybe it's better to cover more topics but the basic and obvious reason is you get the cash today. You get the cash today you could spend it today. You can spend it on that next set of marketing or that next feature you need to make or that conference that you finally can go to or you name it right. You can go put that to work now instead of waiting and that's huge. At WPEngine we have marketing campaigns which pay themselves back in negative one months. What I mean is, we get, because enough people pick annual and that of course gives us more cash up front, that cash more than covers the cost of the marketing campaign and so because the cash we get immediately but the marketing campaign is paid on credit card which we pay the following month, we actually get more money than it costs and we don't have to pay that cost until next month so that's why it's negative one month to get the money back. When you have marketing campaigns like that which an annual plan affords you if course if people pick it, when that's possible like that's the kind of cash flow you can suddenly have and that's transformative to what a business can do especially of course if you're bootstrapped and therefore you're absolutely aligned to cash only. But even if you raise money as we eventually did at WPEngine, still cash is king no matter who you are and it's phenomenal. So it's absolutely transformative to offer the annual plan. One little note on that. In our case we're fortunate that a lot of people pick the annual plan up front and that's great. Most products that’s not true or even in our case, most people don't right, but a pretty high percentage do more than you think. Most companies, it's not true because you haven’t developed a relationship yet. You haven't developed trust yet. Customer doesn’t necessarily know if they want this product for a year yet. And trust in a relationship is something that builds over time. You don't get that immediately. You get benefit of doubt immediately but you don't get trust immediately and so a lot of people are just not prepared to do an annual plan but if you then message people six months after they sign up and say, ‘Hey, so glad you're getting all this use out of the product. So glad you're happy. By the way did you know we have annual plans. If you wanted to now switch to that you know you get two months free’ or whatever your deal is there. At that point, since they do like the product, they do trust you, they can see themselves using this, well this is just a good deal for them. So just a reminder that coming back behind later, after you've built that relationship is a great way to get the annual plans going, even if it doesn't work out in the initial sale.
Success Harbor: So let's talk about what works for WPEngine in terms of signing on new customers especially the first year or so in business?
Jason Cohen: So in our market, Word Press there's a large community of people who already are active and talk to each other online and also at conferences. That's actually pretty rare for most markets that that would be true but if you think about it these are people who are freelancers therefore they're online to get business and to talk to each other about what's going on and also there are people who are bloggers which means they write and they're active on social media and so on and so they're particularly adept at that and therefore using social media channels and so on was actually a really good way for us though obviously that wouldn't necessarily automatically apply in other markets. Again also there are these conferences. Now, you know, every reasonable sized market has a couple of conferences of course, but Word Press has over three hundred conferences a year around the world. They're called Word Camps and they're in different cities and so with you know with literally dozens of conferences per weekend that you could go fly out and attend it was really possible to get face to face with people, potential customers number one but number two, these people in the community and those people are very influential. You know a lot of people look to them for advice on things like you know, hosting so we're fortunate and that there were these dynamics in the Word Press ecosystem that we could, we could tap into. Of course today, we have lots and lots of channels in which we acquire customers. We try new ones all the time but just to calibrate the discussion we have about one hundred and seventy employees now and we're still growing really fast in revenue and in employees and of course customers. And so of course now it's very different. There's tons of stories there. You know it's a whole team of people doing different things and so on. There's specialization, lots of different channels but you know we had some, things that were particular to the market and I think when you look at lots of companies who are successful, you find that similar story. In other words it's very, when you see a successful company, it's very rare they said, I just took out some ad-words and it just worked. That's actually not usually the story. Usually there's something about the audience, the market that they're selling into where they had something unique. Either they had something unique to say and that people wanted to hear because they had an interesting story or they had some kind of creative marketing and that doesn't mean it has to be super creative and no one’s ever done it before. Not that kind of stuff. Maybe another company did something sort of creative in another market and you just copied it in your market because in your market, no one did that creative thing. That's good enough right? It doesn't have to be unique in the world. It just has to stand out a little bit and so turning perfectly fine copies of other people's creative ideas for other markets to do that so I don't mean to sound like it's impossible or you have to be a genius. We certainly weren't super geniuses when it came to how we approach that. It's just that we said what's available to us in the market? Where did the influencers go? Can we go there too and again we're fortunate this market is very a well-versed in social media and therefore that was a good outlet for us. Again though like you can look at it in either end of the telescope. You can either say okay so I have to find the interesting or easy or unique parts of this market or messages in this market I can use or you can use this as a constraint in deciding whether the business is a good idea at all. Again going back to the idea that, the idea is fine but is it a business? So whether you can get two people easily especially those first two hundred people, real customers, that is a big factor in whether the business will be successful so if you have no ideas, there is no particular way the market's noisy and too hard to break into. Well that might mean it isn't a good business idea or that is the idea, that's not an easy business to follow unto it. That might be one of the main
Success Harbor: Yeah.
Jason Cohen: Of the main things that kill a business.
Success Harbor: So when you start out how many channels should you test simultaneously. Is it, let's say you just have maybe like 10, 20 customers starting out, should you try just a little bit, maybe multiple channels and the one that hits, the one that works, drop the others and just focus on that one or?
Jason Cohen: Well here's how you know that's not a good strategy. That is what everybody says, and most businesses don't hit on. It doesn't work that way. They don't find that one channel that works. Most businesses never find a channel that really works, so I think the spray and pray thing is not particularly useful. So rather let's not assume we know nothing at all about any of the channels and spray. By the way, of course as a person or as a small team, of course you don't have expertise in all these channels so we start with, I don't have expertise in this channel, then you layer on, also since we're spraying to 10 channels or even 4, I don't have expertise and I don't have time to really try to do a really good job. I'm really trying to learn how to use that channel so I won't do a very good job and so of course, why would that work? Like there is no particular reason why that sounds like a good plan right? So instead I would say, look, as the founder or as a small team, some of these channels are just naturally something you understand better. Like you might say, I'm a big Twitter user but Facebook is just weird. Great then work on Twitter ads, work on Twitter social media and don't do Facebook ads because you don't understand that. You don't understand that environment. You don't understand that tool. You, the kinds of people who are there and love it aren't you so you're guts not even going to be right. So the last thing you want to do is go there knowing this is you're set up for failure right. Instead you know, of all the social media things out there, maybe there's one that’s the one that you understand the best already. Focus that one, or say, look we're going to hit in person. We're just going to do this in person or we're going to cold call. I'm good on the phone. I'm good at closing stuff on the phone. Now will cold calling be the best strategy for ever and ever. Maybe. Probably not. So what. The goal isn't to do this forever and ever. The goal is to get to a critical mass of customers so that this is a real growing concern and you're really reinvesting in the business and it's a real, going business. That's the initial goal and getting to that by any means necessary is perfectly fine. I think calling people on LinkedIn all day or other lists that you bought or whatever, if, if you love the phone, you love calling, is a great strategy and I've seen tech companies and actually other non-tech companies be really successful at that but only because the founder already felt comfortable in that medium. That's why. I wouldn't feel comfortable in that medium. I hate the phone. I have to force myself to do these customer interviews because I hate getting on the phone. I don't know why. I have like a phobia of the phone. I'd rather do anything than to answer a phone call. But so, I shouldn't start my business with cold calls. Those other folks, if you send them an email are like ‘ehh, I don't want to talk by email, let's get on the phone.’ Well that person maybe you should start with cold calls. So what is it that you are sort of naturally adept at or comfortable with and then just lean the hell into that. That is your best chance of success. No it doesn’t mean it'll work and maybe you will have to try another channel but get focused unto something that's your best chance of success before giving up and trying a channel that's actually less, even less chance of being successful and certainly don't dilute over a bunch of channels. That's, to me that's the worst use of your energy.
Success Harbor: So, WPEngine has, I don't know how many customers you have but its tens of thousands right.
Jason Cohen: Right.
Success Harbor: Customers at this point approximately. So at this point, what is better, how do you grow? Do you grow by adding more services or do you grow by adding more customers? Which is a better way to grow for you?
Jason Cohen: At this point?
Success Harbor: Yes right now.
Jason Cohen: Based on current day? Okay. Alright so now you have to make a mindset shift because I've been speaking all about getting your first, you know, fifty customers, a hundred customers, two hundred customers. At our current stage, totally different mindset, totally different goals, different constraints and so on. So, there is quite a few answers to that question. There's not, at scale there is never one answer to things. It's just more complicated than that. There's more moving parts, more things to do. So for example, any business that, that's a recurring revenue business has cancellations. Let's suppose that is three percent a month, three percent of your customers cancel every month. So let's suppose also that your company at scale, is growing at three percent a month. That's actually pretty fast for a company that's making say fifty to one hundred million dollars a year. Growing three percent a month is actually pretty impressive at that size. Like that's about fifty percent a year over year and once you're say over fifty mil’ in revenue, that's pretty damn good growth rate. Even in tech, that's a good growth rate, certainly everywhere else. But wait a minute, so I add three percent but then three percent cancelled so actually that three percent which I added which is super-duper hard gets literally removed by the cancellations. I can't grow. At all. In that scenario. Now early on none of this matters, you're not focused on that at all. In fact these factors are not there. But at scale, these statistical factors are a law of nature. So for example, lowering your cancellation rate is one of the most important things you can do at scale, which isn't one of the things you mentioned for growth. But lowering the cancellation rate is actually an incredibly powerful leverage against growth. The second thing that's related to that you’ll see why in a second is, do the existing customers upgrade? Do they upgrade automatically because it's like a you know pay by use and so if they use it more they already pay more money or maybe it's tiers, like hey, you're on the middle tier, you should be on the higher tier. You should get these features and do you try to upsell them on that or as you say, are there additional services they could purchase? That's yet another way right. There's different ways in which a customer could grow their business with you or for an enterprise customer. We have both small business and enterprise customers. We have both small business and enterprise customers. On the enterprise side we have conversations around, hey this whole campaign went really well but there must be other campaigns there. Maybe we should be talking to them, and that's another way to grow on the enterprise side. There's many ways to grow an account that you already have. Growth of accounts you already have in a way if you think about it, mathematically, counter balance the cancellations because if two percent of people literally leave but of the ones who remain, you get two percent more revenue from them due to all the factors I just mentioned. That, literally cancels out the cancellations even before we get to the growth side, just focusing on the customers you have. Some leave but some grow but within you when you can get that to counter balance, that is people are growing within you, as much as their cancelling, that's a magical point mathematically because instead of having this cancellation rate which is an exponential decay that's very hard to get in front of you've now eliminated that. In fact the best companies have a negative net churn as that mathematics is called. In other words they grow even despite cancellations with just a customer base. RexSpace, a public hosting company which has that characteristic so though. SalesForce has that characteristic. Zendesk has that characteristic. So that’s part of why those companies are so highly valued and why they can grow so fast even though they're big at scale it's because they actually have negative net churn and their customer base itself actually grows even despite cancellations. Then on top of that you have growth so the reason I'm like dwelling on this is these are the interesting factors which appear as you grow and they suddenly become mathematically important. In fact, not just somewhat important but literally, prevent you from growing any further unless you've addressed them and of course you need to address them early and not wait until there's a problem right. So when you think about growth in all these dimensions, retentions, cancellations, these upsells of say new products, is growing within us, enterprise is different than small business, and so on and so on. And then also there's new customer growth and so there there's a whole bunch of channels you know. Some of it is sales assistant, some isn't. There's all kinds of different channels and then different advertising channels which have different strategies depending on what's going on there. I'll give you an example because this is applicable to literally all businesses so hopefully this is useful information. So you think of these marketing channels all like ad-words, Facebook ads, Twitter ads, going to conferences, sending out mailers, doing magazine ads, billboards. I mean you name it, like these are all ways to reach people through channels right. So each of these channels has some kind of limit or inventory limit where there's nothing more to buy. So like with Adwords, you can bid the highest possible on whatever keywords are relevant to you and however many clicks you get, you can try to optimize that a little more of course, try to get more clicks, but ultimately there's only so many people searching for those keywords and who will see you and click you. There's only so many, so much and Google click traffic is actually going up very slowly now. Last decade it was going up fast so people think of it as going up fast. That's no longer the case. In fact, it's one of these questions that Wall Street now has on Google is how they will grow, continue their overall company growth and an interesting clip when search traffic is not growing in an interesting clip. So anyways, the point being whatever ad-words can deliver, that's pretty much all it can deliver. It will maybe grow kind of slowly but there's just not that much left. You tap out the channel. So when you're thinking about growing a company at scale, you tap out these channels, there's nothing left to provide so you have to go get additional channels to continue growing and so at scale yes you are testing multiple channels and doing that but that's because you're attention isn’t divided. You in fact have a whole team, to go after that so you have the time and money to in fact go after that in an intelligent way unlike when you're first starting out and that dilution of your time is deadly. Here you can simply plan for it, hire for it, budget for it, you can get consultants in certain areas and so in fact you can and must attack that but only because you have the time and resources where that is rationale. So we have lots of channels. Some of them are saturated and so our efforts there are around optimization and then others are not saturated so our efforts there are how we can take the most inventory there. Another interesting point, I know maybe I’m rambling but hopefully.
Success Harbor: It's okay.
Jason Cohen: It's interesting.
Success Harbor: It's good information.
Jason Cohen: Okay even when you’re starting out this is useful. There are marketing channels which are zero sum games and there are marketing channels that are not. So what I mean is, there are channels where if you get a click or a customer or a lead then someone else doesn't and there's other market channels where that's not true so. Like in social media that's an important channel but it's not true that like if you talk to someone, no one else can right. It's not like that. It's simply that you're present and you're part of it. Adwords is also not zero sum. You have an ad but so do other people and yes maybe you can get a better ad position but still other people get clicks. So it's not zero sum either but other things are. So an example would be an affiliate program so these are people that when they give you a lead or when they give you someone who closes, then you pay them you know like a kick back for having done that. And some affiliates use email lists to drive that. Some people are good at SCO's so they'll write articles that get ranked highly, that drives traffic to the article and through the article it clicks over to you and they get credit. There's different ways affiliate works but you can, there's a fundamental way. Affiliates are a zero sum game because an affiliate who has an email list of say a hundred thousand emails he’s not going to show up through a whole lot of companies in the same space. Like he's not going to show up for ten different hosting companies because he doesn’t have a good story for why he's recommending so many different ones. Like he wants to say look these guys are the best. Let me tell you why. It's a service to you that I'm even telling you this. So you can't tell that message ten different ways in a year right. Like that's just disingenuous. So that guy is going to promote somebody. He is going to promote some hosting company because he can make money at that and wherever he promotes, he's promoting them and not anyone else. Whatever leads he sends, he's sending to them, not anyone else. That's a zero sum game. So one thing I want to point out is that zero sum games, again when you're first starting out, this distinction is not as important because you're just trying to get customers. You're just trying to crawl your way into this thing. Once you get to scales, since that's what we're now talking about, zero sum games are interesting because it's more valuable to get a customer in a zero sum game because it's someone you got and the competitor didn't. And so that's an interesting, different dynamic along those channels and so your strategies there might be different than you would in other channels where that's not true. So, and of course, word of mouth kind of stuff is still kind of super important. I think we still get sign ups through word of mouth even today so word of mouth is definitely important. How can you? So early on as we said earlier, if you only have fifty customers, there's not much they can do to help you in any way. There's not enough people but now as you say we have tens of thousands of customers, and so yeah if one percent of them a month help us find a new person to sign up, that's a hundred or one or two, actually hundreds of new customers in a month, that's a lot. That's material to a company of any size to get at one percent a month by word of mouth. So that.
Success Harbor: Yeah.
Jason Cohen: Becomes really important at skill so that becomes a really good campaign so lots of different things all going at the same time. Those are of course not even all of the things that we think about, when it comes to growth at skill but as you can see there's actually a lot of components that go into driving real growth because skill brings complexity.
Success Harbor: Yeah you know earlier you mentioned that most businesses never get a thousand customers.
Jason Cohen: Yeah.
Success Harbor: And that's so, you know, I believe you and I, you know, and all of that but why do you think that is? Why do you think, it doesn't sound like a huge number.
Jason Cohen: It does to me.
Success Harbor: But why do you think they never get to a thousand? I mean, you know, okay your business is tens of thousands of customers, okay, and there are of course businesses with millions of customers, you know, but a thousand sellers is doable.
Jason Cohen: Not really. No I disagree. Name three companies with millions of customers, and I mean paying customers, not people who downloaded an app. That's not a customer.
Success Harbor: Well Dropbox is one but I don't think that they have, most of those are free accounts right?
Jason Cohen: Right, paying customers.
Success Harbor: So I, Google drive, I don't think most people are paying so.
Jason Cohen: Right.
Success Harbor: Yeah. It's tough.
Jason Cohen: Amazon does.
Success Harbor: Yeah.
Jason Cohen: Apple does.
Success Harbor: Yeah.
Jason Cohen: Ebay you could argue. They're not recurring customers but they're customers. You can count.
Success Harbor: Well what do you need to do to have a thousand customers? Why, what's missing from those businesses that just can't get a thousand customers? Is it systems or is it just the market they're in?
Jason Cohen: No it's just super hard to get that many people to agree to pay for something, like to get enough attention from enough people. I mean you think about the chain of events that has to happen. For a small company, for person to buy from them and it's like, it's basically impossible. Like if you were to describe it, it's like, that's never going to happen. Like first you have a company with no brand and no money trying to get attention on the fricking Internet which is where all the money and all the brands and all the other little companies are yelling. It's like basically impossible to get any attention ever on the Internet number one so then somehow or another, you, you know , you don't have an SCO, you don't have a brand, you don't have anything to go, you don't have a budget, you have nothing to go on. Somehow or another you find someone on the Internet. Who knows how you did that and they lean on the home page and you and I know that most of the time people bounce off the home page in four seconds right? Like literally most of the times, you get four seconds and they're gone. That's the usual case after that rare event that you even found somebody. Okay, great. They're gone. Alright somebody stayed. Who knows why. Who knows what caught their attention on the home page. Who knows but I hope you can find it and I hope you find some of those hooks when you’re talking to some of those customers by the way because it is hard to hook them in four seconds isn’t it. You better have the right words there. Anyway so they stay. Then they read through your tripe. You know this weird marketing copy. It's not very good. You have [00:50:38.10] Inaudible you forgot to find. It's not really speaking to them yet. They're reading through screen shots. The design isn't great because this is your first website. Somehow or another they're not deterred by all this nonsense and they use the product. Now how do they use the product? Well they download something or they had to log into something or somehow or another they had to get through more barriers, more reasons to not do it before they used the product. Also they saw the pricing and they weren't deterred. By the way, they could be deterred because it's too low and they think, ‘Oh, this is just some crap, it's too low. I need a serious company’, or vice versa. ‘This is too high. I don't have the budget and they leave.’ All kinds of reasons why the pricing can deter someone right so okay, so they're undeterred by the price, they're undeterred by trying the product and then they try your product. You're a new company so the product can't be that good. It can't have all the features they want. It can't work the best. It can't be the fastest. It can't be anything that's the best because it's new. Of course it's not. Somehow or another they decide nevertheless, they're going to pay money for this pile of crap and eventually give money. Now the idea that that chain of events is going to happen with any frequency is almost ludicrous and so it doesn’t. So it doesn't. Like why would it? It's crazy. And even if you say things like I'll find those people because I'll use ad-words. Great. A click through rate that's great on an ad-word is one percent. I mean that's tops if you get one percent. Right. That means 99 out of 100 people who searched for the thing, you know, at best you get like one out of a hundred coming in so you start working the math backwards to a hundred, a thousand paying customers. A thousand paying customers. How many get that ridiculous funnel I just said, like one in a hundred? No. One in a hundred only just gets you the click on adwords. Right, and at best another one out of a hundred get through that damn web page a conversion rate for a home page, oh sorry, a whole website of one percent. Again pretty good. So that's ten thousand to one right there so those thousand people, you've got ten thousand to one. Right off the bat like just conversion rate off the home page and off the adwords, even this, I'm ignoring the whole rest of the funnel, all these other reasons why they wouldn't do it or they believe. Right away you're at a ten thousand to one disadvantage. So it's not, you have to get in front of ten million people to get to a thousand people and that's being optimistic about your conversion rates. Ten million people to get to a thousand. How the hell are you going to get in front of that? And again with no brand, no SCO, no you know, no social media presence. No budget.
Success Harbor: Yeah.
Jason Cohen: Of course it's impossible. Now I say impossible. Of course I don't really mean that. I'm being superlative on purpose to make the point of why it's so hard. It should be hard. Why in the world would we think that was easy. Course it's not. Again, even if the product is good, and your idea is good, course it’s not easy and again that's why I get back to you, well could I get twenty just by the hard way like calling people or going door to door physically or paying too much in ad-words or you know, again these other things which you might say are quote on quote not scalable, not cost effective. Okay but could I claw my way in anyway? Or PR like I get a guest post at a great blog and I get maybe a twenty people out of that right because I get a couple thousand hits to my page, maybe twenty of them sign up because they're sort of predisposed to like me. Yeah that's possible but if you claw, you can claw out ten or twenty people out of you know one or two good PR hit and you can claw some people out of like yeah you can definitely claw and scratch your way in there but to a thousand, maybe but man, maybe but why again you know going back to the top, like why set yourself up for that slog when it's so hard. Let's set it up so that one hundred customers actually gets you cracking and two hundred customers means it's really, you've quit your job and you can plow one or two grand a month back into the business. If we can set up the business model like that, man at least then if you're successful, in all these difficult things, you don't have to get to a thousand first with that impossible thing. Let's get to something else first.
Success Harbor: Okay, you know we're like way over the thirty minutes so I'm just going, I just have like one more question and.
Jason Cohen: Sure.
Success Harbor: I appreciate you’re staying on. If you started a business today, a new business, what would it be and why? Where do you see the opportunities in business today, 2014?
Jason Cohen: Well I mean, again like that's, there's opportunities anywhere.
Success Harbor: Okay.
Jason Cohen: Anywhere. Like even the big huge successful businesses that sounded so stupid at first like when possible, really, people are going to rent out their sofa and they trust strangers and deal with money and damage and that's impossible. And of course everyone at B and B is one of the big success stories out of Silicon Valley. So no idea is too weird, to potentially be successful. No market isn't, is done and there's no room for innovation at all. That doesn't exist. So, it's anywhere. It also depends on your goals like if you say look what I want is just to take control of my own life. It's okay if I never make ten million dollars or something. What I want is to quit my day job, put 10K in the bank in profit every month after, I want to get to that point. It won’t happen immediately. I just want to get to the point where I’m putting 10, 20, 30k a month in profit in the bank. I'm in control of my own life. I own something. It's an amazing journey. It's an amazing challenge. Well then that's incredibly great and its possible but of course the market's you go after, the choices you make in product and the business model and the support model and what opportunities would make sense for that kind of business, it's going to be totally different than if you say like, ‘hey I’m going to disrupt hotels and be worth ten billion dollars. Okay, well, great.’ Well you know the guy working by himself should not try to disrupt the hotel industry but someone else totally can so again you know what is it that you want out of the business and then how can we find opportunities where you're the right person to attack that opportunity for some reason, you have some edge like you have an insight, or you have industry experience or you have some customers you know you can bring in and solve some of that problem or whatever your insight is into this particular problem that you're bringing in and you know how can we get to a sustainable business at a reasonable number of customers and reasonable marketing channels and get a product that's not too terribly hard to build, not too terribly risky so we can get it out there and you know all these, basically all you're doing is de-risking different aspects of the business. How can we do that in a way that's going to work with the goals and path that have in mind. That is the right question because there's no area or industry or market or audience of anything that in which it's not possible to innovate and do something valuable.
Success Harbor: On that note Jason, I really appreciate, there's so much that such a great information from you and I really appreciate you coming on Success Harbor. How can people find out about WPEngine or connect with you?
Jason Cohen: Sure so for WPEngine, it's wpengine.com and you can see what we're doing there and if you ,look if you need a Word Press site then maybe you should be using us because we are, our success is ultimately earned by having a great product right so maybe it's useful for you but, if you want to find all these kinds of thoughts. Part of the reason I have so much information to share is because I help other startups as an investor, as a mentor and I've been writing about it for I don't know seven years or something. It's just been a passion of mine to get better at writing, get better articulating and put that into words and so I blog at Blog.Asmartbear, the letter 'A' smart bear the animal dot com and so there's hundreds of articles there. I don't post often because I try to do higher quality, lower frequency especially recently because WPEngine is taking so much time. I really don't have time to write a lot but there's years of archives there too so that's a good way to find a lot of advice.
Success Harbor: Sounds good. So everybody out there check out wpengine.com and say hi to Jason at blog.Asmartbear.com. Thank you very much Jason. I hope you'll come on again sometime in the future. I wish you much luck with WPEngine. You guys are doing awesome.
Jason Cohen: Thanks. I appreciate it. Thanks for having me on.
Success Harbor: Thank you very much.
What does it take to build and nurture a network of influencers? Dino Dogan is the CEO of Triberr, a social network for content creators that sends millions of monthly visitors to its members. Dino is also a professional speaker. He has been the subject of stories in publications such as Forbes, Yahoo!News, The Huffington Post, and many more. Dino has also spoken and consulted for a variety of companies and audiences such as IBM, Rutgers University, Vocus, New Media Expo, 140conf, and many others.
Say hi to Dino at dinodogan.com.
What does it take to build a blog valued at $3 million? In 2005, Jim Wang started a popular personal finance blog, Bargaineering, that would later be valued at $3 Million dollars. Today, he is sharing all that he had learned on Microblogger. Jim’s mission is to show you how to build a business today, so you can live life on your own terms.
Say hi to Jim at microblogger.com.
Read Raw Transcript Now:
INTRO: Hello everybody and welcome to the Success Harbor podcast with George Meszaros, where it’s all about making success happen for you.
Success Harbor: Hi Everyone. This is George Meszaros with Success Harbor and I have Jim Wang with me. Jim is the host of Microblogger. In 2005, Jim started a popular personal finance blog called Bargaineering that would later be valued at 3 million dollars. Jim's mission is to show you how to build a business so you can live life on your own terms. Welcome.
Jim Wang: Thanks George. Happy to be here.
Success Harbor: Thank you for being here Jim. When you started Bargaineering back in 2005, what were your, what were your goals with the site?
Jim Wang: That's interesting. Back in 2005, I didn't really consider myself an entrepreneur or you know a business owner and if you can remember back to that time, most blogs were like personal journals and essentially how I arrived at starting it. I just started working a couple of years before that, you know I, when you get your first corporate job you get the huge employee handbook and especially if you're just out of college, you don't really understand about money management and 401Ks and all these acronyms. I also worked in the defense industry so there were even more acronyms on top of those acronyms and so it was kind of like a blurb and I thought, why don't I, you know, I was, I did software so I was familiar with, you know coding and all that stuff and I soon stumbled upon a WordPress, installed it and said why don't I just start a journal where I would just write down like my thoughts and most of them revolved around personal finances and that's essentially how I started the site. It wasn't, it wasn't a, you know, I didn't have a business plan. I never thought that I would quit my job to run it full-time. None of those things so in that regard I was actually exceptionally lucky.
Success Harbor: So it was kind of a hobby and it wasn't even personal finance initially it was just about your life or things that were happening to you?
Jim Wang: Yeah. They all had some sort, some aspect of money involved in it I mean because so many of the things you deal with in life involve money and it wasn't until later that I sort of focused it down on money management and personal finance specifically.
Success Harbor: So let's say the first year, what were happening with Bargaineering? I mean what were you writing about? What were your thoughts about the whole thing? I mean it sounds like it was kind of a hobby, you didn't really look at it as a business but can you share that?
Jim Wang: Yeah, it was completely a hobby. It was mostly you know, talking to other young professionals, because I was a young professional, college graduates just trying to figure out what to do with their money, trying to figure out how to save more, what budgeting was. I mean I didn't budget before I got a real job so that's basically what this site talked about.
Success Harbor: And we, go ahead, I 'm sorry.
Jim Wang: I didn't approach it like a business. It's kind of funny but when I look back, some of the things that I did were smart but then I actually probably wouldn't have done if I was treating it like a business because I would spend a lot of time like networking and talking and emailing most, not actually talking, but like instant messaging and emailing other bloggers and like building up friendships and just meeting people just for the sake of meeting them with no real objectives and looking back you know had I done it differently I probably would've been more precise in my networking or at least more organized and I was, I guess I got lucky there again too.
Success Harbor: Okay. It's funny because I talk to a lot of bloggers that have you know achieved a lot of success and they're telling me the same thing. You know, networking, reaching out and making real connections with other bloggers
Jim Wang: Yep
Success Harbor: And it sounds that like you were doing that but you weren't really laser focused on the types of bloggers maybe that you
Jim Wang: Yes
Success Harbor: reached out to
Jim Wang: Yep
Success Harbor: So you did some of the like you said you did some of the things right but you weren't really that proactive about it or strategic about it?
Jim Wang: Yep, well it's so I'm a very analytical, like numbers-driven, statistical type of person so if I were doing it, if I were treating it like a business I would get a spreadsheet right and I first, I’d find the people who I want to talk to and I put them on the list and then I, you know I analyze, what's the best way to reach out. Should I reach out on Facebook, Twitter, email? Should I you know go to an event that I know they're going to and I'd just be a little more, proactive is not the perfect term. I'd be more of a, I can't think of the term right now but like exacting, like strategic. I would, because your goal when you're, obviously your goal of networking is to meet people and meet people who you can help and that can also help you and I was just meeting people haphazardly and when I think about it now like, that type of, being too precise and too calculating is, can sometimes be bad because when you're actually talking to someone, interacting with them instead of being like a genuine person, like a nice person, in the back of your mind if you have a very clear objective there is, there might be a tendency, however unconscious, for you to sort of you know be the guide that when you're at the networking event, immediately pulling out your business card and saying, "What can I do for you? What can you do for me?” instead of being like a good person and actually getting to know so I mean it's a double-edged sword but you know I feel like in business you have to be laser focused. You have to be strategic and constantly be thinking about your process and improving it and so in that regard I wasn't and but you know when you're early on and you're just starting off, it's okay to not be super precise as long as you're still going in the right direction.
Success Harbor: Yeah it's funny because you know as long as you're early, you know, I mean you were early, 2005 is when blogging pretty much started. I mean yeah there were other sites that had journals and things but that's very early in the process so as long as you're early make, I don't want to say mistakes but you don't have to be that great in marketing yourself I guess.
Jim Wang: Yeah, yeah, you could afford to make mistakes.
Success Harbor: Exactly.
Jim Wang: And they won't cripple you.
Success Harbor: Yeah. So let's talk about the point where you say you're very analytical, so were you even looking at things like shares or you know likes or traffic and comments and any of those things to see, yeah this is going somewhere?
Jim Wang: Yeah so back then 2005 I, Facebook was obviously around but I think back then it was still relegated to, you had to be you know graduate a certain college and was still kind of solid so social media, Twitter, I'm pretty sure that Twitter did not exist or at least certainly wasn't as.
Success Harbor: It was MySpace. 2005 was still MySpace.
Jim Wang: It was MySpace.
Success Harbor: more of a MySpace that a Facebook.
Jim Wang: And that was all mostly music. I mean when people are talking about it there were like you know bands and such were leveraging that more often than blogs but I mean so what we really cared about back in the day was just search traffic because that’s that was essentially the biggest channel for you to get traffic was through the search engines so there was a lot of SCO and building and I was focused on that level.
Success Harbor: Okay so even the first year you already had done some SEO for your site or not really?
Jim Wang: No, no, definitely not in the first year [00:07:04.22] Inaudible.
Success Harbor: So at what point did you start to get more strategic about SEO?
Jim Wang: Once I started getting search traffic so probably about a year later once. See back then, so much has happened in search, it can sometimes be difficult to remember but back then there was still that thought that there was the idea of a sandbox. Like the first year or 9 months or however long it was when you first started a site, back then, even if you were linked to and were getting crawls, Google just didn't give you as much credit because you were still new. That’s kind of gone away, at least no one talks about it but it's kind of gone away. I think that first year I was sandboxed and then it wasn't until the following year that search traffic really started picking up and was beating out referral traffic from other blogs that I started taking a closer eye towards search and trying to understand what all that meant because when you think about SCO at least in 2005, like 90 percent of the stuff was fixing, like duplicate content, it was like e-commerce sites that you know had duplicate content because they were publishing from the same catalog of products and what not and so WordPress out of the box did 90 percent of on page SCO for you and you didn't really have much else to do.
Success Harbor: Yeah. Yeah. I remember 2005 you could basically get a whole bunch of back links even if it was junk and you could get thousands of visitors a day you know, you didn't have to be a genius to get traffic back then.
Jim Wang: Yeah. You know the meta-description tags were actually used, like you had to try to get into, you had to try to get into, was it an open directory like Yahoo and then it was Deemaz.
Success Harbor: So I want to go and talk about what happened after the first year but before we get there, if you started Bargaineering today, how do you think it would have to be different in terms of you know getting the word out and marketing yourself and even you know SCO, I mean we talked about you know it's almost 10 years ago everything has changed so what would you have to do today to get traction?
Jim Wang: I don't know what I would do today in terms of SCO but what I, to get traction and to get traffic I would have, I would go to social media and just figure out where, see every niche, or niche, I don't know which way I'm supposed to say that word, but whatever niche you’re in
Success Harbor: Either way is fine.
Jim Wang: I'm going to go with niche because it sounds, in my head better, but so each one has a different, like they're different social media sites that work well for each so, obviously like Pinterest, if you're a food blog with gorgeous photos or any type of blog with gorgeous photos, Pinterest is an incredible tool. In some cases, Twitter is better than Facebook and other instances Facebook is better than Twitter so I would go out, you know try all the networks, build relationships with people who are using them, try to learn from them and use social media. That's the quickest, fastest way.
Success Harbor: Okay. Now after about the first year, you know it sounds like you started to get a little bit more serious about Bargaineering or not that you weren't serious before, but maybe it started to look more like something that was gaining traction so at what point did you look at Bargaineering as a business?
Jim Wang: When it started making a couple thousand dollars a month. Actually.
Success Harbor: So.
Jim Wang: When it was started making a couple hundred, I started thinking, huh, this is more than a hobby. This is something that could get a lot bigger and I started reading a lot more online, other blogs about Internet marketing and then once I made a few thousand I saw a path forward where I could quit my job and actually do this as a business.
Success Harbor: So let's talk about the couple of hundred dollars because that's very important to me because a lot of businesses fail very early, within the first couple of years, people give up and even a hundred dollars, even 10 dollars is a big deal I think initially just to get a proof that what you're doing is worth your time, so how much traffic did you have at that point when you first started to make a little bit of money and how did you make money back then?
Jim Wang: So my traffic was probably maybe 3, 4, 500 links a day which I mean when I think about it still blows my mind that 500 people were visiting something that I was writing in the first place so I was, I was thrilled and that resulted in a couple hundred bucks of earnings because I was making it off AdSense and that was you know pay-per-click and it was generally a few cents per click. In finance it's a little higher. I don't remember the exact numbers but you know I would later on start other more hobby type of blogs and the earnings there were much lower on a pay-per-clip basis which makes sense I mean personal finance. I think why a lot of people fail is because they don't see the path forward right. They feel like they're doing, if they're doing the same things over and over again they're seeing no results, they don't see a growth path then it can become very frustrating and easy to give up on something. For me I was still working a full-time job so this was a hobby on the side. I didn't have the pressure of having to make money, like I didn't have to make money or me to continue to do it. I still enjoyed it. I was still learning and it was a very exciting time of growth and education and I saw a path forward. I saw okay. I put AdSense on. It's making a couple bucks a day. This is, I mean it’s awesome; I'm not going to quit my job. I started learning about affiliate marketing and how instead of you know having someone go in the way for dollar click they can go maybe they apply for a credit card, I get $50 a click. Now this starts getting interesting and I see a way forward where I'm not just doing the same thing over and over again for a hundred dollars a month. That wouldn't be something I’d be interested in and no business owner should stop themselves at that you know that level. You don't think I'm going to make a hundred bucks a month for the rest of my life and this is a quote on quote business so I saw the path forward and then you know I just kept learning as I get more traffic, more traffic means more people are seeing it.
Success Harbor: And so how much, how many years were you into Bargaineering when you started to make a few hundred dollars a day?
Jim Wang: I was about, a few hundred dollars a day.
Success Harbor: Yeah because at 3, 400 dollars a day you know when you started to make some money with AdSense because you started in 2005 right?
Jim Wang: Yeah.
Success Harbor: So at what point did you start making some money and you know I'm not talking about thousands of dollars yet?
Jim Wang: I think.
Success Harbor: So maybe.
Jim Wang: It was maybe like about two years in that I was making a few thousand a month.
Success Harbor: Okay.
Jim Wang: Like 3, 4, 5 around that.
Success Harbor: Yeah. That couple of years that sounds pretty you know I've interviewed a lot of bloggers and the 2 year mark is a very important mark. I mean I'd love to actually you know dig deeper in what happens in two years but I don't know if it's, just you know, you get links by then or you get some other you know content, you have enough content on the site.
Jim Wang: Yeah.
Success Harbor: I don't know what it is but the two-year mark is a very important mark so by about a couple of years into it you start to make some money but not enough money to quit your job. So what were you doing then to grow Bargaineering more? Was it just doing more of the same or did you also change some of your strategy?
Jim Wang: So there were two things that changed. One was I became more diligent in getting guest posts because that's back then, what would that be, 2007, that's when, no one was really talking about guest posts as a link building methodology or approach and it wasn't done on the scale that it is you know today or a year ago because you just go to your other blogging friends and you just link back to your own articles with keywords and it would be very specific and no one thought it was bad because no one said it was bad and that helped Search tremendously. The other thing I did was keyword research on the content production site. Up until then I just wrote whatever I was interested in, whatever was happening in my life. Well, as I soon realized that each of the articles, each of the blog posts I was writing was essentially a seed right. You take a bunch of grass seeds and you go out on your lawn and you throw all of them, right. You don't put one down and go to the next one and put another one down. You just throw as much seed as you can and the ones that grow, grow and the ones that don't, no problem you try to learn what went wrong and so that's what I started doing with blog posts is I would do keyword research and I would write articles that were specific to various keywords to try to get them to rank and then convert with various offers on those pages and I would just pick different industries. I started with credit then went into banking, did credit scores, all these areas I felt like I could be as a smaller set be competitive and I avoided areas that I didn’t think I could be competitive. For example mortgages and insurance are two extremely competitive areas that I didn’t think I could you know have any success in so I didn't, I didn't do those but.
Success Harbor: Okay so do you think guess posting this year still something viable as a strategy?
Jim Wang: I would not do it for link building. I would do it to gain a greater audience. What I do now is when I write a guest post. First of all, a lot of places are about much more careful who they let guest post and so they'll also be careful about what you link to in the articles so no keyword rich, money keyword rich links and posts but I don't think doing that has much value anymore unless you're a huge brand and this is one of like a couple thousand links that you're building. I instead when I write an article just have a byline link that goes back to my site that just says, Jim writes about, and in the case now with Microblogger, I write about entrepreneurship and building a blog and building a business so I say, if you want to read more tips about building your own business or building your own blog sign up for our free newsletter and the free newsletters linked up or it says click here to sign up for the newsletter and instead it just goes back to a page, a lending page or micro-blogger that lets them sign up for a newsletter and I don't want it for the length necessarily like the length of equity. I want the people who are interested to come back and sign up and so I can reach them again later with that guest post so it's about audience growth and not search engine optimization.
Success Harbor: Okay, so then a few years into Bargaineering, I actually, I meant to ask you how long did it take for you to quit your job into Bargaineering, how many years from '05?
Jim Wang: Three years. I quit in 2008.
Success Harbor: So in 2008, you're site made enough money or more money than what you'd been earning I guess from your job and you said, yeah I'm going to take the plunge and go all in?
Jim Wang: Yep.
Success Harbor: And did anything change at that point or were you just really looking at Bargaineering as a business and just be very strategic about all the content that you created and how you reached out and how you marketed your site?
Jim Wang: Yeah so what I was, quitting my job the site was making far more than my day job and I was spending 8,9,10 hours a day at my day job, which I enjoyed. The hardest part of quitting my job was that I enjoyed it and you hear a lot of stories where people hate their jobs and they're always looking for a way out and I was a special case where I was fine with my job. The people were good. I loved working there but it just didn't make any sense anymore and to convince myself that quitting was the right choice, because it had done so well without me working on it full-time that I thought I need to chart a path and figure out what am I going to do with this extra time and be, you know how do I think about strategy and be smarter about it so that I'm not quitting a job just because I want to sit at home for more hours but I'm doing it for the right reasons and yeah so I became a lot more strategic and I chartered out all the time that I was going to spend, how I was going to use it, how I was going to grow it and just have a path forward.
Success Harbor: Okay and so by 2000, was it 2012 or ‘13 when the sale of your business was completed? To, you said, you, actually I read this online that [excuse me], your business was valued about 3 million dollars with an additional earn out of 500,000 dollars and did you seek out someone to sell to or did someone seek out you, seek you out I'm sorry?
Jim Wang: There was a period of consolidation in personal finance blogging where there were these large corporations that bought out a bunch of personal finance sites so I was just part of that, sort of that wave.
Success Harbor: Okay and did they have to convince you to sell or did you think you were ready to do this, you were really ready for it or did they have to do a lot of convincing to convince you to sell your site?
Jim Wang: I think at the time I was ready. I mean it's sort of tough to say because it's a, it's like a good decision either way. If someone offers you an X dollar amount for something you can't, it's never a bad thing and I don't, I thought it was a good process and so I liked the end result.
Success Harbor: Okay and after you sold did you take time off or did you immediately want to start something else? What was, first of all how did it feel to sell? I mean you did something that most people are unable to do, to build a multimillion dollar blog, how did that feel and then how long did it take to you know start something else?
Jim Wang: It was like half exciting, half sad because the thing that I had spent the better part of five years thinking about all the time and like being excited about and learning and all this other good stuff was no longer mine and so it was kind of a little sad in that way. In terms of starting new things, I wanted to start something new almost immediately and I think once you get that bug, that entrepreneurial bug and you have all these ideas and you just want to try to get the minimum viable product out there to see if it resonates. Yeah I wanted to start something the next day. I wanted to catch that like excitement back of like waking up in the morning. I mean and now I have kids so kids got to replace that excitement or at least temper it a little bit but yeah back then you know you always want, you always want to be working on something and you want it to be your something and not someone else's project if that makes sense.
Success Harbor: Yeah, yeah and so did you start Microblogger right after or did you start something else?
Jim Wang: No, so I started Microblogger last year so it was a short while later. What's interesting was I actually registered Microblogger six months after I registered the Bargaineering domain because I thought it would be fun and I just never did anything with it. So yeah Microblogger was last year's, it was a couple of years before I started something new.
Success Harbor: Okay and how are you building Microblogger differently from Bargaineering or is the experience different at all?
Jim Wang: The experience is different because the tools that are available to you are different. I leverage social media far more than I did with Bargaineering, dabbling in podcasting and that's been an extremely fun experience. I love talking to people so when you emailed me and you asked me to come on I thought this would be a lot of fun and so I, back then 2005 no one was, very few people were podcasting, you know the technology just wasn't, today you use Skype, it's free. You have Call Recorder that's also free. You just have to buy a mic, a decent microphone and you're off and running. A lot of the editing audio editing software comes out of a box for free if you buy a MAC so it's a wonderful tool. I mean if you have a site and if you have a blog or any business really and you can start getting into podcasting I think you'd gain a big advantage.
Success Harbor: Yeah I mean I agree. I think any business even if you install blinds you know.
Jim Wang: Yeah.
Success Harbor: You could benefit from a blog.
Jim Wang: I would get into YouTube. I would get into videos too. I haven't because the, I don’t know, I haven't had enough time to really investigate it but if you were installing blinds or you were a blind installer or you sold blinds you could do all sorts of like tutorials and useful tools like that, that when someone searches for any how-to stuff, YouTube is always first or second.
Success Harbor: Yeah I think especially because you know in those areas personal finance is a very crowded place and it's crowded for a reason. There's a lot of money to be made in that area but you know there is a lot of other areas that's every underserved when it comes to you know.
Jim Wang: Yeah.
Success Harbor: Online presence so you know if people like that with those kinds of businesses, I think there are so many opportunities today. So let's talk about social media. What channels are you utilizing for Microblogger, because obviously there are so many of them out there and you can't focus on everything, so what works for you?
Jim Wang: I use Facebook and Twitter. I'm not very good with social media because with Bargaineering I didn't, I didn’t use it a ton and so I'm still learning it and understanding it and Facebook I'm trying to get involved in as many groups as I can that are sort of Internet marketing and I'm doing it in a way, I'm not joining Internet marketing groups or blogging groups. I'm joining groups that are you know filled with a specific type of blogger, whether it's like a lifestyle blogger or deals blogger or writers or whatever and going to those places because that's where you’re going to find new people, like people who you didn't know already. You can't go to the same. If you go to an Internet marketing group it's going to be the same group of people as you. You want to try to branch out and meet different and new people.
Success Harbor: Yeah, yeah that makes sense. So what are some of your goals for Microblogger? I mean it's still very new, you know, you started last year. What would be a successful micro-blogger to you?
Jim Wang: I think that changes all the time and for me it's I don’t know, I haven't really thought about the super long-term goals. I think a successful, I'm always constantly trying to learn and so sometimes I do things because I think they'll be fun and because it could be good learning process so for example starting the podcast and you know getting up to you know I think, getting up to I think the high 20's number of episodes, you know thousands of downloads, it's reached, I don't know where it would be if I set a goal. I don't know what number I would've picked because I don't have an informed way of picking you know number of downloads that I'd love to see. Obviously a large number would be better than a small one but I've just been enjoying that process and so I've been doing that. I want to put out some sort of product so I sent out a survey to the people in the newsletter, who read my newsletter to see what they would want me to produce and so make a product, do the podcast, meet interesting people and for the most part, have fun. I don't have any revenue targets for it because I feel like that, I've never liked to judge my progress based necessarily on this end goal, especially not an end goal of how much revenue it's making but instead I like to look at the process that I'm going through and whether I'm learning and growing and getting better every day and as long as I'm doing that I feel like progress is being made and so that's how I like to look at my goals.
Success Harbor: Yeah well what are you using to look at your downloads? What app are you using?
Jim Wang: It's a, so all the podcasts are being uploaded to Lipsin and they'll tell me how many downloads they get.
Success Harbor: Okay, sounds good. I have some general entrepreneurial questions for you. One of them has to do with the first 12 months in business because to me you know with Success Harbor, I'm very focused on, you know trying to focus on the first couple of years of business because I, it's so important and so many businesses fail, so what do you think, what do you think is the most important thing for an entrepreneur in the first 12 months of being in business? What do you think that person should especially focus on?
Jim Wang: I firmly believe in the lean start-up mentality and so even before you open your doors or whatever you’re doing try to do whatever you can to prove out the model and by that, you know, if you're selling blinds right, try to go door to door and sell blinds. Do the minimum you could possibly do to figure out whether or not you’re cut out for that business because so many people. What happens is you get this idea in your head like and it sounds fun because you've never actually done it and you've never faced the challenges that the people who have actually done the work face every day and so you have this romantic view of a business in your head and then you get into it and then you start putting money and that becomes a sudden cost but you don't, you're not able to pull yourself away because you see the sun cost and you keep pushing forward, forward, forward. Perfect example is everyone thinks it's fun to own a bar or restaurant right because you think of like shows like Cheers or other things where you always have fun in a bar, why not, it's like you're constantly throwing a party but in reality starting a restaurant or bar is miserable if you ask anybody who's ever started a bar or restaurant and so it's trying to force yourself to get into the mentality of making those decisions and doing the work without having to put in the huge financial investment. Something that most entrepreneurs fail at, they don't actually make themselves go through the decision-making process.
Success Harbor: Okay. What do you think is the biggest time waster for entrepreneurs?
Jim Wang: That's probably email and social media and surfing the web. It's distractions. It's going down, chasing the next shiny thing and being able to focus is huge and so to the extent that you can reduce the number of distractions and you know build yourself a work day where that doesn't happen as often. That's what I think is the biggest.
Success Harbor: If you had a friend or maybe someone in your family that currently had a job but saw your success as an entrepreneur and they said, Jim I want to be successful, help me. What would be the first thing you would teach that person?
Jim Wang: That's a good question. I would, actually, I would teach them how to implement make that lean start-up mentality of what's the idea you want to do. Let's go through and think about all the questions that you should be able to answer before you spend any money on it and you know it's not because you know my experience is extremely limited. I started a blog right that did well in part because it started early. Certainly I learnt a lot through the process and could impart some wisdom about it but ultimately I think just having a more analytical mind was the only thing that I brought to the table in terms of the success of the site and so I think that's what I would try to offer a friend or family that said, hey I want to try to do what you did. I said okay let's sit down and talk through what you want to do and then maybe out of that we'll figure out, alright these are the skills you need to learn and I can't teach you because I probably don't have them but this is what you need to learn before you get started.
Success Harbor: That's good advice. I'm pretty sure you looked up my site Success Harbor and if you have any suggestion for me to improve my site, I would appreciate your thought.
Jim Wang: I don't know anything off the top of my head but I did, what I did was I, from what I remembered because I looked at it last week when we were scheduling it, I remember thinking that the, you have a carousel at the top right where it changes who your
Success Harbor: Well I do change it when I put a new interview on. I do change that part so it doesn't, it's not like a slide show but it does change at least a couple of times a week.
Jim Wang: But it's not always the latest one right?
Success Harbor: It's always the latest one and there are a couple of other lists. There's one under it with some thumbnail photos of some previous interviews and some longer lists under it.
Jim Wang: Oh what I was going to say, I think what happened was I was scrolling through the various guests because I had seen someone I knew and I forgot who it was but I remember thinking that the one that you had at the top was sometime someone new and then sometimes it was one way in the past like a month or so ago, maybe not a month, a couple of pages back, actually I was going to say that that was a good, that's a smart idea to not always have the latest one at the very, very top and sort of cycle through , just to give your older podcasts some more life.
Success Harbor: Yeah, yeah. I mean right now I have so much content and I think a lot of bloggers have the opposite problem that you don't have enough it's just that I'm trying to actually you know I mean I want to make videos, you know I transcribe, you know, I haven't done everything, but you know there's just so much content there's only so much time to do it but you know, just, I'm trying to come up with many more creative ways of using that unique content that I generate here all the time. So anyway, I like to ask that of people who had success such as you because you know I want to learn as well so I do appreciate it. How can people connect with you or find out more about Microblogger?
Jim Wang: They can come to microblogger.com. You can also reach me on Twitter. My handle is @wangerrific and you, email me, email@example.com. I'd love to hear from everybody and happy to help out whenever I can.
Success Harbor: Well thanks for coming on Success Harbor and everyone go and check microblogger.com out and hopefully you can come back maybe in a year or so and give us an update on Microblogger.
Jim Wang: Sure.
Success Harbor: Where you are and what progress you made and I'm sure we can learn a lot more from you then too. Thank you.
Jim Wang: I’d love to. No, thank you George.
What does it take to be a super creative marketer? Jason SurfrApp (formerly Jason Headsetdotcom & Jason Sadler) is an unconventional marketer. Jason made over $1 million with IWearYourShirt, the company he created that used sponsored T-shirts to promote businesses on social media. To take his marketing creativity further, Jason auctioned off his last name in 2012 and 2013 to the highest bidders. Jason was featured on The Today Show, CBS Evening News, CNN, and The New York Times.
Check out Jason's new book, "Creativity For Sale."
Read Raw Transcript Now:
Success Harbor: Hi everyone this is George Meszaros with Success Harbor and I have Jason SurfrApp with me. You may know Jason as ‘Jason SurfrApp’ or ‘Jason Headsetsdotcom’ or ‘Jason Sadler’. We’ll get into why all the different last names. Jason had made $1 million wearing t-shirts to promote businesses. His unconventional thinking enables him to create business opportunities which he documents in his book ‘Creativity for Sale’. Welcome.
Jason Sadler: Thank you for having me.
Success Harbor: Thank you for being here Jason. You have had so many unique marketing ideas that it’s hard to know which one to start with but tell me how you got started with ‘I Wear Your Shirt’, a company that uses sponsored t-shirts to promote businesses on social media.
Jason Sadler: Yeah, back in 2007, I left my 9-5 job working for a sports agency to start a design company with a friend and while at that design company, we had a lot of our clients ask us about social media and so this is like 2007, 2008 before anything really took off in social media time and I just saw an opportunity where brands wanted to reach people and that people were on these platforms and so I thought I could kind of fill in the gap and be the guy that promoted the company via social media and created a unique way to do that through this company, ‘I Wear Your Shirt’.
Success Harbor: And so, how did you even come up with that idea, it’s a genius idea to wear company shirts but I mean, was there a process to it or one day it just came to you?
Jason Sadler: Yeah, I think the idea just kind of came together through looking at these different free platforms; Twitter, Facebook, YouTube, seeing that people were just posting content and that a lot of people were able to talk to each other quickly and so those things were working in my mind and I remember one day, standing in my closet, as most guys do, staring at all these shirts and just not caring which one I was going to put on for the day and as an entrepreneur and somebody who works for myself, I didn’t have to wear a suit and tie or anything so it was actually more trouble to pick my outfit than it was to have it picked for me so, I just said, I got all these shirts that already have brand names on them, why not try and get brands to pay me to wear their shirt, that seems interesting, and that’s kind of where things started.
Success Harbor: And how much outreach did you have to do initially, and did people even take it seriously? Did they think it was a joke of some kind when you first tried to reach out to people?
Jason Sadler: Yeah, well I originally sent the idea to a bunch of my friends and probably more than half of them rightly so said, “Jason, this is a stupid idea, we’re in a recession right now, no one’s going to want to pay you to wear t-shirts, go back to doing whatever you were doing. And so, you know, I got that feedback and said, “Alright, well that’s their opinion, I still think this is an exciting idea, and so I had a website built, ‘iwearyourshirt.com’ was put up in October 2008 and only 12 people showed up to the website on launch day and I was really bummed because I thought I had come up with this amazing idea and yet no one seemed to care. So as you mentioned, I did some outreach, I started emailing some of my contacts and I didn’t have many, just friends and family, I didn’t know any businesses and just started to say, “Hey, here’s the idea”, personalized emails, I didn’t mass email them and started to get some interesting feedback and people started to see, “Oh yeah, I could buy a day”, you know, I was selling this whole 2009 calendar, starting at a $1 on the first day and $2 on the second day, all the way up to $365 on the last day, so it was very affordable, I mean cheap, to get on board early, and so that average really started to help and I jumped on Twitter and started looking at hashtags and started [inaudible 03:44] people and following interesting people and just jumping in conversations and not trying to sell but I think when people saw the username ‘IWearYourShirt’, they were intrigued by it and they started kind of looking into it so, you know, that was really how the outreach started when I first got it launched.
Success Harbor: So initially you didn’t think about giving up maybe because some of the feedback you received, you had enough positive feedback to kind of keep you going?
Jason Sadler: Yeah, I think--, I will never forget this moment, I was sitting on my couch and this was like right before the website was launching and I had reached a couple of friends and family who told me this wasn’t a great idea and I just sat there and said you know what, how many successful businesses are out there where people have told the owners of those businesses that that idea probably wouldn’t work, right? I mean we’ve all heard those stories, so many success stories and so I just told myself that you know, listen, I believe in this idea, I think it’s interesting, I had set myself up to only try it for a year so I said worst thing that happens, I put this out there and no one buys and who’s going to care, right? I’ll just move on with my life and luckily people did start to care and I just kind of trudged forward and said I’m going to make this thing happen because I think it’s interesting.
Success Harbor: So, ‘I Wear Your Shirt’ sounds like a lot of fun but I’m sure there was a lot of learning there. What were the most important things that you have learned during your ‘I Wear Your Shirt’ project?
Jason Sadler: Oh man, lots of things. You know, I think a lot of them, from owning a business, what it’s like to manage people and that’s not one of my strong suits, to things like really realizing, and we all preach this and read this but, quality of content wins over quantity of content and every day I was filming a video, I was putting tweets, I was putting Facebook posts up, putting out a lot of content and the quality wasn’t phenomenal in the beginning and I even go back and watch some of my early videos and I cringe at them but I had to learn, I mean, I had never made a video before so I just kind of jumped in and said, “I’m going to try this and I’m going to try and get better” and so yeah, it was just always a learning process for me and what I kept telling myself every time I put something out there was, “What can I learn from this?” When I put things out there in this way, whether that’s a critical remark or whether that’s a happy photo of me smiling or a video this way or that way and it just--, all these different things. What can I learn from each thing each time and how can I improve upon it and really build something that people want to kind of consume every day? So that’s kind of the lens that I looked at it through.
Success Harbor: So in 2012 and 2013 you took another great idea when you auctioned off your last name to the highest bidders. Where did that idea come from?
Jason Sadler: Yeah, over the years, having the company, I reassured--, we always got--, I say we because there were multiple people who were a part of it over the years, it wasn’t just always me; in the beginning it was but it grew and I was always trying to find ways to get exposure for ‘I Wear Your Shirt’ because when you do something every single day, sometimes people can forget about it and say, “Oh I’ll come back to that because there will always be more”, so I was always trying to get attention and media attention and just get more exposure so I can grow and get more brands to come on board and an unfortunate situation happened in early 2012. My mom called me and said she was getting a divorce and unfortunately that was my third father at the time and so I had this last name now that I no longer wanted which was ‘Sadler’ and I just joked when we were on a call, and just said, “Oh well, you know, I’ve sold my t-shirts, now I’ll sell my last name” and we laughed. And a couple of months later, we were sitting in a meeting with ‘I Wear Your Shirt’ and the people who worked for me and I said you know what, I think I’m going to do this last name thing, like I joked about it but I can’t stop thinking about it, kind of in the way that ‘I Wear Your Shirt’--, I couldn’t stop thinking about that. You know, I’ve built an audience over the years, I think that’s valuable for a brand to be a part of and I couldn’t really find anybody that had done this in a way where they were putting it up for auction and saying like, “Hey, I’ll be your company basically, on paper for the next year”. So I had the website ‘buymylastname’ built, started the auction at $0.0, I built a pre-launch email list of like 600 people, nothing crazy and in the first 24 hours the biding was up over $30,000 and I knew that I was kind of on to something even though I had a lot of doubts along the way and that idea--, I mean, you want to talk about people giving you negative feedback, try to tell people you’re going to sell your last name, that really brings the angry people out of the wood works.
Success Harbor: Give me some examples of negative feedback because I think people need to hear some of that, I mean, you still kept going right? I mean it didn’t really stop you so…
Jason Sadler: Yeah, I mean, there were so many emails and over the years, when you do anything kind of unconventional or different or unique, you’re always going to get people who are jealous or they’re angry at their thing that they can’t do something unique and so they kind of take that out on you and so--, just a lot of messages, especially with the last name thing that this is the ultimate sell-out, you know, how could you do this, you have no soul and these types of things--, and I’d be lying if I said that they didn’t hurt me a little bit but I’m the type of person who, I never got my sense of self from my last name. I mean, I’ve had 3 of them throughout my life right? And most people have 1 last name so it makes sense for them to keep it and they’ll have it forever but that’s not who I am, that’s not how I was raised and what I was grown up with so yeah, it was really interesting for me to kind of hear that feedback and this constant thing of ‘you’re a sell-out’, it’s just so interesting to me because every project that I’ve done whether it’s ‘I Wear Your Shirt’ or selling my last name or my book, which I’m sure we’ll talk about, has involved doing something that I’ve just really enjoyed and I’ve had a lot of fun with and it’s been hard but it’s been something that I control and I really, really like being a part of, doing these projects and the people who I think are sell-outs are ones who take money for stuff that they don’t love doing, right?... which is a lot of who work in jobs in cubicles and no offence if you have a job in a cubicle, but if you’re going to call me a sell-out and yet you sit there and you hate your job and you go home every day wishing you were doing something else, to me that’s selling-out, not selling your last name for a year and then changing it to whatever you want.
Success Harbor: I think--, I mean, I don’t know, I’m not trying to figure out or know what these people think but a lot of times it’s fear that’s speaking I think, you know?
Jason Sadler: Of course, absolutely, I totally agree and I think that I’ve actually turned people who’ve sent me angry emails or angry comments on a blog post or whatever, I’ve turned them into fans, not because I’ve had some magical thing but I just told them, “Hey listen, I understand that this may make you feel a certain way or that you don’t like it but here’s the reason why I’m doing this”, and a lot of times those people, well not a lot, I would say maybe like, a quarter of the time, those people will email me back and say, “You know what Jason, I’m really sorry I said what I said. I was just having a bad day myself and I took it out on you and you are doing something interesting and now that I hear that story, it really makes me understand what you’re doing”.
Success Harbor: Yeah, I mean it worked for Bob Dylan right?
Jason Sadler: Yeah.
Success Harbor: And I thought about changing my name so many times and I would imagine many people thought about changing their last names you know? I don’t understand what’s the big deal about it right? I mean, the paper work is huge right? To do it, so that’s probably the biggest thing about it.
Jason Sadler: Yeah and it’s funny you mentioned that because I had so many people email me--, way more people emailed me that said, “Jason, I can’t believe someone’s actually doing this. I’ve been in this situation for years where I’ve had this last name I don’t want and I haven’t known how to get a new one or what to do with it and you’re making money doing it. This is amazing, I’m so inspired. We’ve so many more of those emails than the ‘you’re a sell-out’ email. I mean, it’s crazy how many people came out of the wood-work that said, “I’m going through something similar, I want to sell my last name” or whatever and there was a small moment when I thought about, kind of brokering people’s last name for brands but then I just decided, I don’t think it would’ve worked for the everyday person and I’m fortunate to have built a following online that I could basically monetized with that sale and get some attachment for it.
Success Harbor: Yeah, I’m surprised you haven’t turned it into a product you know? This is how you change your name, steps 1 to 5 or whatever.
Jason Sadler: Yeah, there’s a ten step process to selling your last name online. Yeah, I guess I could but I kind of know that it only really works for someone who has following, it’s not going to work for everybody.
Success Harbor: Yeah, yeah. And were you still doing ‘I Wear Your Shirt’ in 2012 and 2013?
Jason Sadler: Yeah. So, ‘I Wear Your Shirt’, I officially retired in May of 2013, I stopped wearing shirts after 1437 days or something like that, not that I know the number but yeah… So the ‘buymylastname’ thing was basically a way that I thought we could get some exposure for ‘I Wear Your Shirt’ and it totally worked, I mean when I sold the last name to headsets.com at the end of the first auction for $45,000, I was on Fox & Friends, I was on USA Today, I was on a lot of these news outlets and that brought a lot of brands to ‘I Wear Your Shirt’ saying “Ok, we know we can’t buy your last name but how can we do some fun stuff together?” And so we ended up getting a lot of business from it.
Success Harbor: So then, I mean it sounds like ‘I Wear Your Shirt’ wasn’t an easy project but it was fun and you succeeded with it, you made over a million dollars. Why did you stop it? Did you get burned out? What was the reason?
Jason Sadler: Yeah, just a couple mix of things. I mean, I think that when I started ‘I Wear Your Shirt’ in 2009, I had thoughts of grandeur where I knew I wanted to do the first year and that was going to kind of be my test but in the back of my mind I said, “Alright well, I want to grow this thing to 10 people in the second year and 50 in the third and 1000 in the fourth year or whatever and create this new model for advertising right? This word-of-mouth through t-shirt wearing kind of marketing idea and what I realized was that I was putting all of my chips, if you will, on social media platforms, continuing to let me post all this content in a way that everyone would see it and as social media became more crowded, my messages got diluted. As my company got older, I think people--, they received kind of similar content, if you will, that just--, it wasn’t as exciting to them anymore and so I think there’s a combination of the fact that the idea of ‘I Wear Your Shirt’ lost some of its excitement for me personally and I think for people viewing. I think social media had a big change and when Facebook changes their algorithm and my stuff doesn’t show up, it’s really hard to tell a brand you know, “You’re going to get exposure to these people” when I know deep down it’s not going to happen because the reach isn’t there anymore and so, I started waking up. I had to let people go at one point in 2012, we had bills that weren’t paid in 2011 because clients hadn’t paid on time and that stuff happens when you own a business, everyone knows that and it just started to weigh on me and I took a look at my situation in 2013 and said, “You know what, I’m really unhappy with this and it’s not what it used to be. I doesn’t work the way that it used to. I’m not getting the value out of it at all and I know that the brands that are paying me are not getting the value that they used to get and I got to pull the plug and I have to let go”, and it was a super hard decision because it was basically my baby but if I would’ve kept going I mean, who knows how much worse off I would’ve been, just kind of trying to keep this thing alive.
Success Harbor: I’m amazed by your creativity and even just one, I mean, you had multiple great ideas but you didn’t just come up with one great idea, it’s awesome. How did you develop this skill, is this something that you--, it’s kind of like a muscle that you used to train, I mean, talk about that.
Jason Sadler: Yeah, that’s a good question. I really do think that--, there’s a couple different ways that I think I could answer this question. One is that I think some of us are a built and wired a certain way and I think Gary Vaynerchuk talks about that a lot right? It’s in his DNA to do the things that he does and I feel that it’s in my DNA to do the things that I do right? I mean, create these crazy ideas and make them work and hustle behind the scenes where no one sees all the effort but I make it happen and then I do think it’s also a creative muscle. Like you said I mean, I think that you can--, if everybody just took some time in the day to, kind of what you call ‘woodshedding’, where you go into a woodshed and you sit and you focus and you do one task and you only do that thing and you work on that thing for hours and you become really good at that and I think this is what professional athletes do and this is what the greatest minds of our time do and that they turn off all others things in their life and sometimes that means walking away from family and relationships and other things to become really great at something and I think there’s a happy medium there but you can work that muscle if you turn everything else off and you focus on exercising it and doing different things and so I think creativity is one of those things where we have it within us and some of us, a lot more than others but I think it’s also something where, if people just gave themselves the chance to stay off of social media for a day or a week or a month, not check emails excessively, maybe just once a day for an hour and really focus on learning a skill or practicing something or doing actual work, they would learn wow, I’m going to get so much better at whatever it is that I’m doing because I’m going to not be constantly looking at other things, I’m going to be focusing on this task at hand.
Success Harbor: So let’s talk about Creativity for Sale, your book. You have self-published it, which I really appreciate to be honest, not going through a traditional publisher. Why did you decide to self-publish instead of going--, I’m sure you could’ve published something through a publishing house.
Jason Sadler: Yeah well, I think it was really interesting. In 2013 when I struck down ‘I Wear Your Shirt’ and I was kind of at a low point in life and you know, both personally and professionally I was just trying to find my way and what my thing was, what my next thing I was going to do and I met with a friend of mine and he said, “You know you should write a book, you’ve done some crazy stuff over the years, I think it would be really interesting for people to read your story and you might find that in writing this book, you find your next thing”, and I said alright, yeah, I think I could make that happen so I started reaching out to some author friends and they said, “Yeah Jason, the publishing world is a little bit messed up these days, you know big publishers - it’s kind of hard to get in with them. You’re not going to make any money up front with the book. If you do get an advance, it’s basically a loan and you have to sell a certain amount of books to actually get that money back”, and I started looking into all this stuff and I had a lot of people tell me, publishers are going to change your story. They’re going to write it the way that they want it, they’re going to pick the book cover that they want, they’re going to have all the say and I just--, all that stuff just made me throw my hands up and go, “No way”, like I’m not doing that George so I basically…
Success Harbor: Plus it takes about 2 years right? To publish the book, at least.
Jason Sadler: Yeah, the process is really slow and for some, I think some publishers are probably way faster than others and again, I haven’t had any first-hand experience, I’m just going off what friends who work with publishers have told me. But I just wanted to control everything, I’m a control freak. You know? I’ve run my businesses the way I’ve wanted to run them and I knew that about myself and that it would drive me nuts if someone told me I couldn’t put a story about how I met my girlfriend in my book, right? If they’d be like, “Oh, this doesn’t matter to the story that you’re telling, I would freak out so…
Success Harbor: It’s almost like you’d become an employee instead of an entrepreneur and controlling your own destiny.
Jason Sadler: Exactly, right? I mean, someone else is the gate keeper to the information that you want to put out in the world and my friend Clay, he talks about gate-keepers a lot and I kind of get that from him and so when I started to put the idea of the book together more as I thought about it, I said, “Alright well how can I make money with a book. Right? What’s something that someone hasn’t done and then what’s also something that I have done where these things can kind of meet in the middle?” And so I looked at sponsorships, you know? I’ve done the sponsored t-shirts, I’ve done the sponsored last name, I’ve never seen a book with sponsorships on it and since--, you know, where it is now, I’ve heard from a couple of people who people have tried this. They’ve done sponsored chapters or a couple different things but I had the sponsorship on all 200 pages of the book. Its 140 character message, there’s no logo, there’s no QR code, it’s just a very simple, basically footnote style message and so, I sold those pages, along with the 4 covers of the book, the 2 outside covers and the 2 inside flaps and made over $75,000 in 5 months selling these sponsorships in the book and that’s a book advance right? I mean, that’s basically money that I made before a single copy of the book was sold, before a single word of the book was written. That was basically just companies and people opting in and saying, “Jason I’ve seen what you’ve done over the years, I believe you’re going to write a good book, I want my brand to be a part of it”.
Success Harbor: And ideally every book should be done like that or every business should be done like that right? I mean, sell it and see if people are going to pay for it before you even invest anymore time or create a product right? I think its genius.
Jason Sadler: This is very much like the lean start-up method…
Success Harbor: Exactly.
Jason Sadler: Yeah there’s a lot of--, prove that something’s going to be of value or worth and that someone will pay for it before you do it and I would be lying if I said it was easy; I mean I didn’t just send out an email and the book filled up, you know? Through email…
Success Harbor: How many months did it take you to actually come up, to sell the $75,000?
Jason Sadler: Five months.
Success Harbor: Five months?
Jason Sadler: Yeah, and I sent out multiple emails to my lists and I responded to a lot of emails from people who came to the website and I had a lot of phone calls to people and so it took quite a bit of time to make this book happen but it was worth it right? I mean because again, the day that that sponsorship--, and the last one that sold is funny enough, was the front cover sponsorship to tree house and when that sponsorship sold I basically had a huge sigh of relief and said, “I did this, I mean I made this thing happen. Now it’s time to get to work to actually write the book that everybody wants to have their name in.”
Success Harbor: And for the audience most books don’t ever make $75,000, I’m talking about books that go through publishing houses right? I mean, most of them sell less than 5000 copies and make peanuts so your book was more successful even before it was published than most books out there that got published.
Jason Sadler: And yeah it’s a great point that you bring up because I’ve read 30 blog posts on how to make your book a best seller on Amazon and the New York Times Best Seller and as a self-publisher you can’t even get on the New York Times Best Seller list I just learned so there goes that, accolade that everybody wants as an author but yeah I mean these people hustle and have all these systems and gimmicks and tricks an all these hacks that they do to reach these lists and you’re right, most of them don’t even make $75,000 even when they get to be a Best Seller on Amazon. Maybe they’re making a couple thousand bucks a month but it kind of tails off after a while and again Amazon controls what book show up where, right? And so, they’re like another gate keeper in this world of where social media changes their algorithms; we’ve heard about this with the Amazon and the big publishers that there’s some kind of head-butting going on there and again I don’t want to be in the middle of that. I want to be able to say I’ve got lists of people, I’ve got outreach, I’ve got things I can do, I can hustle, I can make this thing happen on my own and I don’t need an Amazon or anybody else to help me make that successful or profitable.
Success Harbor: So I don’t want to put you on the spot but is there may be an action item from ‘Creativity for Sale’ for entrepreneurs that they can take? Maybe just one idea, I mean they should go out and read your book but is there something that they could take action on?
Jason Sadler: Yeah, I think that one of the big messages for me in the book; and we’ve heard this before, is ‘the harder you work, the luckier you get’, and I think that there’s a very simple math equation to having a successful business where we are in life right now and that is ‘Effort equals Success’, right? And the more effort you put in and the more work that you do and that doesn’t mean checking social media and email and signing up for the newest thing that comes up, that means actually putting in work and honing a skill and becoming better at something and creating content and putting that out into the world and you’re going to have success if you get better at that and you work at that and you really do that and that process is something where people don’t--, they don’t want to put in the hard work. Right? They want 'what’s the fastest way I can make money' and not have to put in any effort and those things they really just don’t exist, it’s a lot of bluff and it’s a lot of fake things that are out there and I know that as people have read my book. I’ve gotten a lot of great emails from people, I’ve been so happy to read these emails that people are like, “Man, I had no idea how much work you put into the things you did and it really made me think. I thought it was just easy for you all these years, now I know how hard you had to work and it makes me want to work hard at the thing I’m doing.”
Success Harbor: Yeah you wrote on your blog; ‘2013 was a rough year for me, I went through some of my lowest lows and did some heavy soul-searching’. Can you share what those lows were?
Jason Sadler: Yeah.
Success Harbor: … because you had a lot of success so people think everything is rosy and it’s only fun times and a lot of laughs but can you talk about some of the lows and how did it change you or how did it change your perspective going through all that?
Jason Sadler: Yeah, I mean earlier on in 2013 there was a point where I had to pay salaries for two employees and myself included and I had $92 in my bank account and I had credit card debt and I had basically nothing in sight that said I was going to make enough money for the next month to be able to pay these people and that was probably one of the hardest things to deal with; is to know that people rely on you and that you can’t provide for them because number one, I had lost some of the desire to keep the business going but also that it just wasn’t working anymore and so personally, that takes a big toll on you and I think that I really just got caught up in a lot of the media hype for the stuff that I did over the years and I kept hearing those stories and reading those things and so you kind of build yourself up in your own mind and you compare yourself to the previous more successful version of yourself and it just wasn’t the same anymore and so I just had to take a step back and I went to this conference in Fargo, North Dakota in May of 2013 called ‘Misfit Con’ and I heard from people who were fellow entrepreneurs and people who had been through stuff and this guy, Joshua Fields Millburn, who’s of ‘theminimalists.com’ and he talked about how he had racked up this debt and the more money that he made, he realized the more money he was spending and I was in that same frame of mind and I had to change that stuff and so I just started to peel back the layers and just share not the intimate details of my bank account, but to say I’m not happy with where I am; I’ve been too prideful, I’ve been thinking I’ve been really successful and I was early on but I haven’t had that same success now and everything looks great but it’s not and I need help, I need to figure out how to get out of this. So it was really tough the share that stuff and to put that stuff out there but it was also great at the same time to help me kind of grow as a person.
Success Harbor: Ok. Let’s talk about dealing with the roller coaster ride of the ups and downs - one day you feel like you walk on water, the next day you feel like an idiot. Has it become easier? I mean, I know I go through that as an entrepreneur but my question I guess, is why do you think there isn’t more sharing about the downs of entrepreneurship? I mean, when you read about entrepreneurs it’s always about how somebody sold a business or exited a billion dollars and I know maybe that’s the story people want to hear but I wish there was more interest with the downs and failures from people because I think that’s really what makes business work.
Jason Sadler: Right, I think Chris Boone said it best and I wish I would have said this before him but he beat me to it is that, “No one wants to see your before pictures”, and when you talk about like--, we see these fitness photos online all the time of like this before photo and this after photo and like how amazing this person looks afterwards and that’s what the media does with entrepreneurship, is they talk about the Instagrams making a billion dollars and the WhatsApp’s making this money and Facebook going IPO and all this stuff and they don’t talk about alright well, what happened like a year ago to those people and why was there no article written about when they were a couple hundred thousand dollars in debt and it looked like they were going to have to close their doors, where were you when they were going through that and why weren’t you sharing that story and it’s just because unfortunately George people don’t want to read that stuff. You and I would appreciate it because we could relate to it and it’s something that like we could learn from and maybe we could get some value from but the media and kind of people reading all of this stuff; they don’t want that stuff, they want the great success stories and I think that’s a lot of just kind of our American culture that dictates that and that’s what we strive for and so I’ve tried to just be way more real and relatable with my content and I know that I write for some publications and I try to make sure that the stuff that I’m putting out there is not just the ‘here’s the perfect path to success stuff’ anymore because it’s not perfect and it’s not all rosy like you said and I think more of that stuff does need to put out there and I’m not sure if that shift is going to continue with other people because I think unfortunately the things that get the page views and get the ad dollars spent on them are the big success stories.
Success Harbor: You know because it’s so interesting that we have all these ‘how to write a title’ that it’s going to grab attention and those titles; they all look the same, they’re exciting and boring at the same time. The 7 ways of this and the 5 secrets of that and the 10 tips to do this and it’s something that I’ve been thinking about for a while. Tell me what was the best advice that you have ever received?
Jason Sadler: My buddy Shane Mack was really helpful last year when I was kind of through my low times and he was out in San Francisco and he’s had a couple successful start-ups he’s been a part of, and has a new one called ‘Skedaddle’, that’s really cool and he basically just told me, “Just ask”. Just those two simple words just ask and I kind of turned that into my life motto which is ‘you don’t get what you don’t ask for’ and that’s whether that’s a big client for your business; whether that’s someone to help you do your thing but the thing that’s been really helpful for me is to just not think I can do everything myself and to realize that there are a lot of people who are out there, family included who’ve been through a lot of this stuff and have experienced a lot of these things and if you just ask them for their help and support they can really help you get through years of struggle because they can say, “Hey, here’s how to avoid this” or “Here’s what this is going to feel like, you probably want to do the opposite.”
Success Harbor: What do you think is the biggest time-waster for entrepreneurs?
Jason Sadler: Social media, and it’s funny because I’ve built my living on social media and I built my name on social media but the value of social media has plummeted, I mean there’s really almost no value because of the way that we interact with these networks. If you look at anybody on their phone looking at twitter or Facebook their finger is scrolling at a speed that could start a fire, right? I mean, it’s so fast and how is your message going to resonate or do that and why do you need to read so much of that stuff. We’re literally dumbing ourselves down because we’re over consuming all this information and I think that there are so many talented entrepreneurs out there who focus on just consuming all day long instead of creating and you can lean so much more from creating when you came from learning all the ‘7 tips’ blog posts and the ‘4 ways to do these things’ and I think that social media is so great in so many ways but it’s also so hurtful in so many ways because of how much time we spend and how much effort we put into consuming all that content.
Success Harbor: So you have had a lot of success in business and let’s say you have a friend or a family member that has a job now and want to become an entrepreneur, what would be the first thing that you would teach that person if they came to you for help?
Jason Sadler: I think, one of the things; I talked about this in my book, is you’ve got to find the thing--, and Simon Sinek says this, like what’s your why? You have to find the thing that gets you up in the morning out of bed and like you’re just so excited to work on whatever that thing is. I’m really excited to talk to entrepreneurs who come to me for consulting or whatever and they’re just so fired up about their idea but they’re not sure how to put the puzzle pieces together for it right, and I think that’s the start; you have to have that foundation that, don’t just go into an idea and do it because someone else made money doing that and you think you could do that but go into it because it’s something that you can poor all your effort into and you’ll be really excited about and then start building. And again like we talked about earlier I think ‘The Lean Start Up’ is probably one of the most boring books I’ve read in the past year but it’s also probably one of the best because it really shows you kind of this new model for selling things especially in the internet age of, ‘if people don’t buy it you’re going to take a step back and look at why people aren’t buying it’, don’t just keep trying to push it and get more people to look at it thinking that, “Oh well, it just needs more people to see it for people to buy it”. No, there’s a reason why if you show it to 10 people and none of them want to buy it, you’re missing out on some opportunities there so I think those are a couple of places I would start.
Success Harbor: I want to ask just one question about my business ‘Success Harbor’, what do you think would help make it a little bit different from other sites that interview entrepreneurs because I love doing it but at the same time I create all this unique content interviewing entrepreneurs but I want to have a twist. I want to have something, you know, well Success Harbor’s a little bit different. How do you think I should think about my business to have more creativity and maybe to come up with a different angle based on your business experience?
Jason Sadler: Yeah I mean I think for, especially people doing interview series and stuff I mean, no offense to Success Harbor but there’s an interview series out there for entrepreneurs from many people right?
Success Harbor: Yeah, exactly.
Jason Sadler: I think you need to find what it is that really excites you about talking to entrepreneurs and what you can really pull out of them that other people aren’t pulling. I think you’ve asked some great questions today and I think some of the best interviews that I’ve done are when people do--, they don’t just have a scripted list of questions and they segue into each one differently but it’s when they really try to dive deeper and figure out like what’s making this entrepreneur tick that people can take away from that and to me I think that’s where some people are having the most success with podcasting or interviewing or any of these things. So yeah I would just challenge you to say like what’s the thing that you can do or the way that you can interview someone that’s interesting or different or unique that it’s not just asking questions about what they’ve done but it’s really like diving into what’s makes them tick or maybe it’s something completely separate, maybe it’s with every entrepreneur you talk to you want to figure out what’s their lifestyle and how can people adapt that lifestyle to their lives. I think its finding that little sweet spot of the thing that you can really pull out of people.
Success Harbor: That’s great, that’s great. Jason I want to thank you for coming on Success Harbor today. I’m so stoked that you shared your story because so many people see--, I remember years ago I saw an interview with you and I thought you know this guy is a genius and everything is great and that’s never the story. You can look at any business; any successful business and it’s not all rosy and it’s not perfect so I think people need to hear that, that even if you have success there’s a lot of struggles and I’m so excited that you shared it. How can people find out more about ‘Creativity for Sale’ or connect with you or find out more about you?
Jason Sadler: Yeah, I would love people to grab the book, you know, ‘Shameless Plug’, find ‘Creativity for Sale’ on Amazon and grab it on Kindle or Paperback and then also I’ve got a little catch-all website called ‘jasondoesstuff.com’ because that’s what I do, I do stuff so that has all my social media links and email if people want to reach out and I would love to hear from some of the Success Harbor listeners who just want to learn more about my story and maybe what they’re doing and what they’re up to so yeah ‘jasondoesstuff.com’ and find the book on Amazon.
Success Harbor: So everyone out there, check out ‘Creativity for Sale’, Jason is somebody that actually did all that, there’s a lot of people who write a lot of books but Jason is actually somebody that has done all that so I think his story is awesome so check it out. Jason thank you very much for coming on.
Jason Sadler: Thanks for having me George.
What does it take to build a $25 million business? Rick Day is a serial entrepreneur. For over 25-years Rick has been starting, growing, downsizing, restructuring, and selling his businesses. One of his more recent businesses not only survived the Great Recession, but it grew to over 55 people and over $25 million in revenue. After a multi-million dollar exit, Rick became involved in several other businesses as an advisor, investor, and leader.
Say hi to Rick at businessbyday.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone this is George Meszaros with Success Harbor and I have Rick Day with me. For over 25 years Rick has been growing, downsizing, restructuring and ultimately selling his business. Even though he sold his business of $25 million, he is very much involved today with businesses. Rick also blogs and advises entrepreneurs at businessbyday.com. Welcome.
Rick Day: Hey, thanks so much, it’s a pleasure to talk with you.
Success Harbor: Thank you for being here today Rick. I really appreciate it.
Rick Day: Of course.
Success Harbor: Before we get into anything else, I want to talk about your first business venture. What was your first experience being an entrepreneur?
Rick Day: Well it’s funny; it was not my telecom business. I had served 3 years in the Navy and got out of the Navy here in San Diego and I decided to put myself through college and finish college afterwards so I was an enlisted guy and so I ended up working at one place and it was redundant work and I had a buddy that I met in one of my classes and he was detailing cars and I didn’t know much about that business at the time, I was 22 and so I asked him to teach me and then I went and found some clients. So he taught me; I provided him with a couple days of labor, he taught me the business, showed me where to get my supplies and then I started just kind of knocking on doors and telling some friends that I was in the auto-detailing business and so that business actually got me most of the way through college, great flexible hours, met some really great people who drive nice cars which I like and then I ended up selling that business to another student.
Success Harbor: So, thank you for your service; I didn’t want to interrupt you but thank you for your service. And what was that first business experience like? I think a lot of people, you know, to look at the Facebooks and the WhatsApps of the world, billion dollar exit or sale, just unbelievable businesses but starting a business like this when you do everything from actually doing the work and marketing your business, everything from the nitty gritty to just running it daily, why do you think it’s important to have a business like that or have that kind of experience?
Rick Day: Well I think the first and the biggest step that I had to get over George, was just the fear of ‘what if this doesn’t work?’ and I had rented a room from my grandmother at the time and so, I’m living in her house and I’m talking with her a little bit about this and I’m going to college and I said you know what, I think I can do this but what happens if it doesn’t work? What happens if nobody wants to do their cars and maintain their cars for them and she said, “Why don’t you give it a try because you could always go get another job if you want to?”, and she really encouraged me but taking that leap was the most difficult thing. And then I just sort of, you know, my degree that I was perusing is in Finance; my degree is in Finance now and so I knew that you’d had to have the basic operations of the business. Somebody has to do the marketing and sales, somebody then has to perform the work or provide the service or the product and then somebody has to do the administration and the books and you’ve got to pay your taxes and do your banking and so, I had to do all of that myself.
Success Harbor: So then you decided to sell that business. So how long did you run that business and why did you decide to sell?
Rick Day: Good question. So I ran it for about 2 ½ years and I actually ended up picking up an account from--, so one of my bankers was a girl who’s boyfriend worked at this computer company and so I went down to the computer company and I said, “Hey, I would love to come and detail your cars.” They had really nice, like a Ferrari, they had some Porsches, they had a Corvette, the Toyota Supra, one guy had a Lamborghini, and it was really cool so they hired me and I was detailing their cars and we got to talking and they said, “Well what are you going to do when you get finished with school?”, and I said “Well I’m getting my degree in Finance and I love people and talking to people so maybe I’ll go and be a stockbroker or something like that”, and after some discussions they said, “Well why don’t you come and sell these computer systems with us, we’ll train you, if you like sales and you’re good with numbers we can help you with that”, and so it was really kind of a story of where, just taking that initial leap into one business led to opportunities in another business so they hired me and I had a buddy of mine at school and I said, “Hey, I’m going to have to turn over my business, would you be interested in taking it over and maybe we can work it out where you can buy it from me?”, and he said yes.
Success Harbor: So then, in ’92 after getting out of the Navy, you were still putting yourself through college and you founded ‘Daycom Systems’ so did you go right after this job selling telecom to start a business or what was actually the reason to strike out on your own?
Rick Day: Oh, well ok, so after the detailing business then I went to work for the company that I just mentioned, with all the nice cars and I started selling the IBM mid-range computer systems and equipment and that lasted about 3 years. It was a straight commission job so you really kind of ended up working for yourself, there was no salary, there was no safety net, but I was comfortable with that at that point and so I had some success there and this was ’87 so I got out of the Navy in ’85. So in 1987 then, I went to work for this other company, worked there for a couple of years and they ended up going out of business because they literally grew too fast and they did not have enough funding and enough money to purchase the equipment to fill the orders, that’s how fast they were growing. And then, so I ended up working for another company in a similar situation and I didn’t like the way they were doing things and so this was ’91 ’92 so then in 1992 I finally decided, you know, I think I can compete in this industry, I think I know enough people, I know enough of the tricks of the trade, I’ve got the right connections so if I could just put together a little bit of money, I can start my own business and that’s how Daycom started in 1992.
Success Harbor: Is this something that you recommend for people that, you know, maybe they have a job now but they want to start a business, to try to get a job with a business, to kind of learn the ins and outs instead of taking--, because that way it’s almost like somebody’s paying you to learn instead of just trying to strike out on your own and get into something that you don’t know that much about.
Rick Day: Yeah, I think that’s great and I think that’s where most opportunities really present themselves. I think if someone has an interest in a particular industry and they know nothing about it, they absolutely should be willing to go to work in that industry for a period of time, to learn as much as they can, to see how it works and then if they still want to--, I mean they might decide you know, this industry is too complicated or it requires too much money for me to operate so I’m just going to enjoy my employment here but there will be those entrepreneur that say, “You know what, I see how this works, I think I can do it better, I think I can do it faster or in a different way or with a different spin” and I think that’s a great way to start a business.
Success Harbor: So can you talk about some of the early challenges of growing Daycom? I’m very interested about the first 1-2 years in business because that’s when a lot of businesses fail so maybe you can talk about some of the greatest challenges especially, like I said, during the first couple of years in business.
Rick Day: Yeah, sure. So I started--, I knew that I didn’t have a lot of money to start the business and so I knew that I needed to keep my overhead low and I had to really watch my money so I rented just a cheap office and kept the overhead as low as I could and I just concentrated most of my efforts on sales during the day and then at night I would do my invoicing because I knew that it wasn’t productive for me to do that during the day so I really tried to maximize my sales and marketing time during the day and I tried to…
Success Harbor: So how were you selling? Were you cold-calling or what was your sales strategy in the beginning?
Rick Day: At that time, yeah, it was all over the phone. And you got to remember this is 1992, so I did have a pc and I had a fax machine but there was really emails just coming in and the web was just getting started and so a lot of our business was done over the phone and over the fax.
Success Harbor: And how difficult was it to get those first sales?
Rick Day: Well I had had some customer relationships when we talked earlier about people working for a particular company and then striking off on their own. Often times what happens is, when you’re working at a particular company, especially in a sales position, you’ll end up getting to know some customers and so when you strike out on your own, you can call those customers again and say, “Hey listen, I’m striking out on my own, you know, you had a good relationship with the company where we were before, if you’d like to see what I can do for you and how I’m changing the business and doing in a different way then I’d be happy to talk with you about how I might be able to do business so, it was cold-calling, it was referrals, it was a couple of customers that decided to give me a shot at my new company.
Success Harbor: Ok so, sales sounds like it wasn’t a big, big challenge in the very beginning, was it?
Rick Day: Well I think sales is always a big challenge for any business and it was really where I spent the majority of my time but like I said, I did have a couple of customers that would buy and I kept my overhead low and just trying to be really efficient about my time and make sure that I was doing the right things at the right time during the day.
Success Harbor: And you mentioned one of the companies that you worked with, grew so fast they just were unable to finance their own success so to speak, so what did you do in your business to be able to finance just your growth.
Rick Day: Well it’s interesting; I had just a little bit of savings but I only had maybe $10,000 in savings and that might seem like a lot of money to some people but when you’re buying and selling computer and telecom equipment and you have to buy it from your vendor and pay cash for it now and then ship it to your customer and invoice them net 30 and they’re going to pay you in 30 days per the contract and really the check takes 45 days – 60 days, which is one of the things you learn very quickly is, they like to use your money as long as they can. I ran out of money very quickly. So, like most businesses, the first place that you go is family and friends to see if they can loan you some money and so I talked to my grandmother who had been very supportive and she watched me progress over several years and I said, “Here’s the business, here’s what I’m doing, I’ve been doing it for a couple of years” and so I ended up borrowing some money from her and then every single dollar that I had, I rolled back into the company until I had enough cash that I thought that I can operate and then I paid my grandmother back too.
Success Harbor: So it sounds to me that you really did things right in the beginning. What do you think are some of the mistakes people make during the first couple of years being in business?
Rick Day: Well one of the mistakes--, and maybe this is just a matter of opinion but one of the mistakes is that people, I think, project when they start off in sales or they start off in their business, they project that sales are going to grow much faster than they really will and when you do that, you tend to be very optimistic about your sales, very optimistic about your profits and sometimes you take on too much overhead and sometimes you don’t have enough financing to really last though some very lean times so I always kind of tell people to look at their growth forecast and their sales forecast and then cut it in half and see what would happen then.
Success Harbor: Ok. I’ve heard you say that systems were very important for your success. Can you give us some examples of systems that you have created in your business?
Rick Day: Oh of course, yea. So when you look at--, the book that really got me going on that was Michael Gerber ‘The E-Myth Revisited’, and he talks about how you--, a business owner in early stages wears so many hats, you’ve got the sales and marketing hat, the production hat, the accounting hat, you know, everything right? And so then, as you start to bring people into the business, you’re hiring people to take over a particular area and so you need to be able to say, “Ok, I’m taking this hat off and I’m giving it to you so let’s talk about how I like to do that and how my customers expect that done”, and you write your procedures on that particular area or on that particular hat if you will, and then that person can take off and they can improve on it and they can grow. But as soon as you hire somebody, I think you have to start creating the systems whereby they can be successful and whereby they can do business the way you want it done.
Success Harbor: Ok. Now you grew Daycom systems to over $26 million in revenue with over 60 people but then in the early 2000’s the dot-com bubble burst. So, we know the story, a lot of companies ran out of business, it was just a rough time for business so what did you have to do to adjust to such a shock and what helped you stay in business at that point?
Rick Day: Yeah, I got to tell you, that was one of the toughest periods in my career. We were going really, really well, we were $26 million with 60 people and then the dot-com bubble burst and people stopped buying these big companies that I was servicing like Sysco and Intel and Geico and the Gap. So many of these big companies started and; they really slowed down on their technology buying and so my revenues dropped from $26 million to $20 million in one year, which is like 25% and I think I lost almost a half a million dollars that year and it was really, really painful and you know, as a young CEO who had only experienced growth and success after ten years, this was really a slap in the face and a reality check for me and I really had to just buckle down and do the work in figuring out where I could cut expenses and that was when we got into--, the first time I ever had to lay anybody off, it was terrible. It was very emotional, it was very scary. I was losing money, I wasn’t sleeping at night but we ended up doing it. And then the next year, we went from $20 million to $15 million so the sales continued to slow down but I started looking more at the prospect pipeline, the forward-looking indicators and that was one of the things that I did, was put in place where I could really look forward and project what the revenues were going to do and I could make changes sooner and that really helped a lot.
Success Harbor: Ok. So do you think the companies that went out of business were unable to adjust or refused to look at reality? What do you think are some of the biggest reasons some companies just can’t survive? And it’s true even today. This economy is still not a good economy that we’re living through now, although it’s not as bad as it was a few years ago so why do you think some companies are just not able to hack it?
Rick Day: Well you’re right about today’s economy. It certainly is not an easy economy and I think you have to be on your toes and you have to be really alert and you have to be really paying attention to everything and just on edge. It’s hyper-competitive if you’re going to succeed in today’s economy. But I think that the reason, to answer your question, a lot of people failed, was that they would stick their head in the sand and they would say, “Well, it’s going to get better next year, it can’t possibly be this bad”, and they don’t react, they don’t do the hard things that they need to do, like lay off their friends that are working there or cut their--, maybe sell their expensive car or return it on the lease or downsize their office building because they get so much ego involved, or they get themselves in over their head debt-wise so I really encourage that growth, especially in fixed expenses and long-term leases and things like that, keep that stuff low because you never know when you need to ratchet back and if you’re committed for a long term for big dollars, you’re going to be in trouble.
Success Harbor: So then by 2009 business was good right? Because ‘Daycom Systems’ was acquired, at that point you had $25 million in revenues, so how did that exit impact your life, selling your business basically?
Rick Day: Well it was interesting because after the dot-com bubble burst, we really had to go, and I say ‘we’ because I had a really good management team at that time that I surrounded myself with and we really had to look at the business and re-tool the business, and so, you’re correct at $25 million and 50 or so, 55 employees when we sold, but it was a much different business when I sold than it was when I began and that’s another important lesson for people, is you have to continue to morph your business and change in response to what your customers want. So then after I sold the business, I had a bunch of money that came in. I began to invest and then I volunteered at Connect here in San Diego to be a volunteer mentor and entrepreneur in residence so I could help other small businesses grow and I invested in a sailboat and powerboat dealership that I am now a part of and so, just travelled a lot and had some fun and did my earn out for a couple years.
Success Harbor: Ok. So today you’re involved--, you mentioned this dealership, a sailboat dealership so you’re a partner in that business right?
Rick Day: Yeah, that right, it’s really fun. When I bought myself a new sailboat in 2007, I became friends with the guy that sold me the boat and then in ’08 and ’09 we had that very difficult financial crash and the company that he was working for went out of business right about the time that I was selling my business so again, it’s one of those fortunate situations where, when you’re doing something, sometimes the timing just works out and you see another opportunity and so he told me that he had a great relationship with Beneteau, the French baker, the largest yacht builder in the world and that he could become the dealer here in San Diego and he asked me if I would help him start it, if I could help him get the financing together and if I would help him run the business and operations and so we did that and we’ll be 5 years old in September and doing great.
Success Harbor: So how is this new business different from your ‘Daycom Systems’ business in terms of, what are you learning now about business, how has the business environment changed with this recession. Can you talk about how you had to adjust basically?
Rick Day: Sure, well I think the first thing I would say is how surprised I am that it’s very similar to my past business. If you understand that in my last business we would consult with the customer, we would provide the telecom equipment and the software, we would install it and provide the services, we would take care of the customer in the long-term and then offer them upgrades when they wanted to upgrade their business systems. You could say the same thing about boats right? So we consult with the customer, we provide a boat, we provide our services, we help them maintain it and then when they’re ready for something different, we take their old boat back and sell them a new boat. So in that way it’s very similar. The big differences are that this is marketing to consumers so there’s a lot of social media involved so business to business sales are much different than business to consumer and it’s been a big learning curve for me, especially around the social media. But also, what we’ve learned is that the boating business is a lifestyle business and so you’re providing people with those dreams and answers to those dreams of sitting on a boat in a harbor or watching the kids swim or having a cocktail with friends and so not only do we provide the boats and the services but we also schedule a lot of social activities and we give people a reason to use their boats and that community develops so, the community development part has been a big learning curve for me.
Success Harbor: Ok. Now you mentioned earlier that we’re living in a hyper-competitive environment right now so what advice do you have for entrepreneurs to take their business to the next level? What do we have to do today in this kind of environment to really just stand apart, stand out from the competition?
Rick Day: Well I think anybody who’s had the passion and the guts to start their own business, that’s the first step, is you’ve got to have that courage. I think maybe a second point would be that you have to stay connected with your customers and ask your customers what they see coming and things that they see in their future so that you can move there with them and offer them the services and products that they will need in the future. I think you have to continue to look at technologies and how new technologies can benefit you, such as social media today and all of the free marketing. I mean it’s essentially a free referral system out there so those are key things and then just be committed to learning; learning more about your product, learning more about services that you can provide and learning more about your customers and their needs.
Success Harbor: So you had a successful exit when you sold your business. I want to ask you about why so many businesses are unsellable and what can we do to prepare our business for sale?
Rick Day: Well, that’s a great question and I think a couple things are key. One is, it goes back to why I’m such a believer in systems, my opinion is if you want a business that’s saleable, you have to create and you have to visualize a money-making machine and so ultimately it becomes your vision, your values, the product and customers that you want to serve but you’ve got to put those systems in place and you’ve got to get everybody the right operation systems, the right compensation systems so that people’s compensation is aligned with what they’re supposed to do in the business and ultimately, you’ve got to get it to a place where you can step out of the business and the business runs itself.
Success Harbor: Ok.
Rick Day: That’s a big key and I think a lot of businesses don’t sell because if you take the founder away, the business can’t function without that person and it’s really difficult to take a person from the outside and put them in there and you’ve got personality conflicts and you’ve got learning curve and those businesses are hard to sell.
Success Harbor: So it comes back to creating systems right? So try to think about systems and try to create systems from as early as you can.
Rick Day: Yeah. Yeah, and hire the best people that you can afford right; and you’re not going to create all these systems by yourself right? You want to hire great people and they can help you create these systems but ultimately, you’ve got to work yourself to where you can walk away from your business for 30 days like I did back in 2007 when I did an Atlantic crossing on the sailboat; I walked away from my business for 30 days and they didn’t miss a beat, it just kept going.
Success Harbor: Wow. What do you think is the biggest time-waster for entrepreneurs?
Rick Day: I would say worrying. Worrying about the future, worrying about what might happen if things go wrong and then I would say the second time-waster would be, when you start off on your path and you start a company or you’re pursuing your dream, that attracts a lot of people and you make a lot of noise if you will or if you’re a boat, you know you’re kicking off a big wake and people are attracted to that and they want you to--, they want to join you, they want your advice, they want you to sell their product for them and so, you get so many distractions that come at you, you really have to stay focused and say no to a lot of things.
Success Harbor: If someone came to you, maybe somebody in your family or a good friend that currently had a job and they saw your success as an entrepreneur and they say, “Rick, I want to become a successful entrepreneur”, what would be the first thing that you would teach that person?
Rick Day: The first thing that I would teach that person would be, look at yourself and what you can offer and then find a problem to solve. Find somebody’s problem, maybe it’s your own problem, maybe you hate the way your dry-cleaner works or maybe you hate having to wait in line for a particular service and so, solve a problem and then ask around, so you really have to assess the market, how big is the market, how much--, how strong is the need for the service or the solution that I would like to offer and then do my skill sets fit that ability to fill that need or to offer that solution and if you get those 2 things, then the rest of the things will fall into place.
Success Harbor: So, you had a lot of success in business but I’m sure you’ve made some mistakes so perhaps you could give us an example of a really good learning experience or a mistake. I don’t like to call it ‘mistake’ but you know, maybe a learning experience is better for our audience that you could share with us.
Rick Day: Yeah. No, I think I agree with you on that you know. One of my favorite authors Tom Hopkins, and this is early days of sales back in the late ’80’s but, he said something along the lines of, “I never see failure as failure, only an opportunity to improve my presentation” right? So you can use that same thing in many areas but I would say big failures and mistakes that I made were at Daycom when we were coming out of that dot-com bubble. I created services for my business and kind of morphed the business, we talked about that, but I also tried to add on another product line, in fact I tried to add on 2 new product lines because I thought I would diversify and I was overwhelmed by the technical training, I was overwhelmed frankly by my people’s resistance to learning something new. They would always go back to their comfort zone. So even though we had product ‘A’, if I told them, “I want you to offer product B & C”, they would always gravitate towards going back to product ‘A’ because that’s where they were comfortable and I really underestimated how powerful that was and lost a lot of money trying to do that.
Success Harbor: Wow. So today, tell me a little bit about ‘Business by Day’. What is that business, what are you there; how do you help businesses?
Rick Day: Well great, thank you. So I told you that when I sold my company, I invested in South Coast Yachts and helping them and I invested in a couple other small businesses, one didn’t work and a couple more did but in my volunteer time at Connect here in San Diego, one of the things that really occurred to me was all of these companies, these young companies that we were seeing coming through the Connect system, they had great products, they had great services but they were all asking the same questions. They’ve been inspired to start their own business but how do they manage sales and marketing, how do they do products, how do they protect their intellectual property, how do they finance their business and I thought, you know, ‘they don’t have enough money to afford a full time consultant but if I could somehow package these answers and provide this advice and make it available at a lower cost, then my only answer is I’ve got to have the scalability’. And so, that’s when starting the blog occurred to me and then I’m just getting ready in July to launch my first coaching class and it’ll be for 9 people where I can say, “Ok, let’s talk about your business, let’s talk about the problems that we need to solve”, but we’ll do it in a classroom environment that will also be interactive. And then it’ll be more affordable for them but they’ll still get great advice.
Success Harbor: Well that’s great. I appreciate you coming on today to share your story Rick. Where can people find out more about ‘Business by Day’ or about you or connect with you perhaps?
Rick Day: Oh great, thank you, yeah. The website is: businessbyday.com, just like it sounds. My last name is Day so businessbyday.com. I have also, a podcast that is called by the same name and also it’s named ‘5 Minutes to a Performance Business Podcast’. So that’s being picked up in I don’t know, 40 countries now, which is really fun and exciting and then my email address is: firstname.lastname@example.org.
Success Harbor: Well Rick, thank you very much. Everyone out there be sure to check him out at businessbyday.com. Thank you very much.
Rick Day: Yeah, thank you very much too. I enjoyed talking with you.