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Mixergy

• How “The Celery Test” Will Help You Figure Out What Advice Is Really Useful [clip] 16 March, 2010, 6:00 am
  In this clip from my interview with Simon Sinek, author of Start with Why, you'll hear him explain how knowing your purpose will help you decide what advice is really useful -- and will make you a better leader.
• Upcoming: REWORK With Jason Fried Of 37Signals (Submit Your Toughest Issues) 26 March, 2010, 10:30 am
  Who: Jason Fried is the co-founder of 37signals, and co-author of REWORK, a New York Times bestseller. When: Tuesday, March 30 @ 11am Pacific Time Where: Mixergy.com/live (watch & interact on your computer)
• How The Founder Of iContact Reached $1 Mil In Sales A Few Days After Turning 21 – with Ryan Allis 11 March, 2010, 5:13 pm
  I submitted this post to Hacker News, my favorite news site. When he was 16, Ryan Allis wrote and framed a big goal: to build a company with $1 million sales by the time he was 21 years old. "I missed it by 18 days," he says. "But I sure as heck would have missed it by [...]
• How The Author Of “Founders At Work” Helps Y Combinator Discover And Mentor Startups – with Jessica Livingston 19 April, 2010, 1:21 pm
  How does Jessica Livingston do it? How does she look at new, (usually) unproven entrepreneurs and figure out which of them are worth banking Y Combinator's money, reputation and mentorship on? When I asked her co-founder at Y Combinator, Paul Graham, he said she has a "social radar." "She is very rarely wrong," he told me. I invited her to Mixergy to find out what she looks for. How can she tell who's going to be clever and persistent enough to see a business through to success? And, more importantly, how can you be as perceptive when you're deciding who to work with? I also wanted to find out how she wrote one of my favorite books on entrepreneurship, "Founders at Work," a collection of interviews about how the founders of admired companies like Apple and Adobe launched their businesses. Skip to: full video | audio download | about interviewee | full transcript | sponsors | answers The FULL program Prefer audio? Great! "Right click" here for the MP3 format. I use my sponsor Wistia's video hosting platform because no one else gives me the stats they do. See my stats for this video (Can't see video? Go to Mixergy.com) Embed the video: Business Tips via Mixergy, home of the ambitious upstart! About Jessica Livingston Jessica Livingston is a founding partner at Y Combinator, a seed-stage venture firm based in Cambridge, MA, and Mountain View, CA. She was previously VP of marketing at investment bank Adams Harkness. In addition to her work with startups at Y Combinator, she organizes Startup School. She has a BA in English from Bucknell. She's the author of Founders at Work. *Raw* transcript This is a raw, mechanical transcript. Readers (like you) are editing a better version here. Andrew: This interview is sponsored by Grasshopper, the virtual phone system that entrepreneurs love because you can use your own phones and manage it on the Web. Check out Grasshopper.com. It's also sponsored by Wufoo where you can go right now to get embeddable forms and surveys that you can add to your website for free. Go to Wufoo.com. And it's sponsored by Shopify. When you go to Shopify.com, you can create a store within minutes and have all the support and features that you need to make that store grow. Check out Shopify.com. Here's the program. Hey, everyone, it's Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. Today, I've got with me - man, I've really been looking forward to this interview. I've got Jessica Livingston, she is a founding partner of Y Combinator, the seed funding firm that helped launch over 200 startups and the author of “Founders at Work,” a book of biographical interviews with 32 founders including the founders of PayPal, craigslists, Hotmail, and TiVo. Here's my goal for this interview, Jessica and the audience. Two things. First of all, when I interviewed your co-founder at Y Combinator, Paul Graham, he called you the "social radar." He said that you know who to invest in, who’s the right fit, who’s got what it takes. I want to learn that from you. I want to find out how you know, and more importantly, how I and my audience can pick up on some of those tips, some of that ability to pick the people that we're going to be working with. The second thing is, I'm fascinated by “Founders at Work,” a lot of people who care about entrepreneurship, especially in the Internet space, just keep talking about these stories in that book. I want to know how you got those stories. In fact, let's start with that. Here's what I do when I do interviews, and I model a lot of my work here on your book. I hear people say, “Andrew, it's just stories, they're not useful. It's just interesting” or fluffs, somebody called these kinds of interviews on Hacker News earlier today. What do you think the value is of reading or listening to stories of successful founders? Interviewee: I can tell you, it's anything but fluff. The reason I worked on “Founders at Work” was because I felt like the early stages of starting a company were totally mysterious. You don’t hear about companies or read about them in the news until they're much further along. So, what happens when you're first getting started, like weird things happen with startups, and it's very mysterious for people. So I thought it was really important to share the stories of the early days with the world. So, if you're thinking about starting a startup, it's not quite as mysterious to you. The best way to do that is to sort of unleash the stories that are in the startup founders had in a story format. That’s the way they're most interesting. You learn important trends based on these stories. For example, how many startups got started by accident? I don’t think the world like really necessarily knows that. These big companies like Google now and all these successful companies, the founders didn’t say, “Oh, we're going to do a startup.” Most of them just started working on something that interested them or tried to solve their own problem or just had a little side project going and it evolved. So I don’t think these stories are fluff at all, I think you learn like some really important lessons. Andrew: Why leave it up to your audience to learn those lessons on their own instead of doing some of the work for them by maybe interviewing the same 32 founders that you interviewed for “Founders at Work,” and pulling out ten lessons from it and saying, “Guys, here are the ten things that you can go and apply tomorrow.” Interviewee: I think it's much more interesting to hear from the founders themselves. Who am I to distill this information? I certainly have, I certainly try to draw some conclusions and to try to find personality traits that cut across all these 32 people. I tried to pick out some themes, but who am I to share these stories? It's so much more interesting when it's being told by the founder who experienced it. You can sort of get in their mind a little bit better and you can really sense the emotion going on. Some of these stories, I was honestly on the edge of my seat listening to. For me to not include those, I think, it would just have a different feel. Andrew: What kind of conclusions were you able to draw? What kind of themes stood out? Interviewee: There were several. The first one I already touched on was that a lot of these successful founders don’t go out trying to start a startup. They're often trying to fix something that’s broken in their own world... minute 5 to minute 10 Interviewee: …they're often trying to fix something that’s broken in their own world. A lot of them are programmers, so they're curious by nature. They think, “Oh, what would happen if I did this?” Or, they're trying to solve a problem that they had. Hotmail, for instance, they were working on another startup idea, there were colleagues at work, and they couldn’t communicate via email because of firewall at their company. So they thought, “Gosh, how do we solve this problem?” And they came up with the idea of Web-based email to solve their own problem. So, Paul just wrote about this in an essay the other day, the organic startup ideas, and we see that all the time at Y Combinator. People get started with something to address their own needs. So that’s one theme. The other theme that I think that’s really important for people to remember was how often startup founders, that are hugely successful now, get rejected early on. [pause] will say, “This is a dumb idea. You shouldn’t be working on that. No investor will invest in them.” I mean, there are countless examples of people trying to raise funding and they just got turned down by investors because they thought it was a bad idea or didn’t think the person was formidable enough. That’s important because it's hard to start a startup. If you're a first time founder, you're going to get rejected a lot in a lot of different ways, and it's really hard. So I think if you can see that gosh, these successful people were initially rejected, it makes you feel a little bit better. Another theme that’s really important is openmindedness you have to have and flexibility to change your idea and to listen to users. A lot of the startups in the book, and I see this again in Y Combinator startups, they start out saying, “We're going to do this.” They try to do it and it doesn’t really stick, and so they think, “Oh, gosh. The users are actually more interested in this aspect of our site,” and they work on that. So there's a lot of trial and error, and it gets glamorized, I think, in the press with these successful startups. They say, “Oh, he had this brilliant idea. We knew this was going to be big and it was great.” That’s not the way it usually is. It's usually a lot of testing one thing out, if not working, and then happening up on the right thing. Andrew: I've noticed that there's the PR story that actually very often, is manufactured by a PR person, and then there's the real story. I'm wondering how can you get past that PR story? I should say this, too, that sometimes, we kind of make it up ourselves. We look back at our history and we overlook the things that don’t fit our perception of the world and we highlight the things that do stand up for what we believe in the world. How do you, as an interviewer, get underneath and find out what the real story is? Interviewee: I interviewed the founder and not the PR person of the company. Definitely going straight to the founders is important because they were the only ones who were there. I did interview the first employee with Yahoo, but for the most part, every other person I interviewed for the book was a founder, because things can get changed. If you're talking to someone who is a later employee, maybe they’d heard stories about what it was like when they first got started, but only the founder knows what it was like when they just got started. So that’s important. I don’t know, I don’t know how I'll see and try to get the real scoop. It was interesting, when I asked Steve Wozniak about the garage, the famous garage that Apple got started in, and he was like, “Oh, we didn’t really work in the garage. Yes, we did some QA testing out there, but no, we didn’t really start in the garage.” You just sort of wonder how these things get passed on. I don’t know. Andrew: You mentioned Hotmail earlier. There was a note on your blog that said that, basically, two pieces of information in your story about Hotmail were false. How did you insure that the information that you got from entrepreneurs was real? I have that issue here with my interviews. I can't fact check everything before putting it out there. I have to just open myself up, but I'm wondering how you did it. Interviewee: One of the things that I did was I told every person that I interviewed, before I interviewed them, that they’d have the ability to review the interview and make any edits that they wanted to or deletions or whatever, and they’d have the final approval. Interviewee: And I did that and I got final approval from everyone in the book. And so that’s the best you can do. I don’t know how else. You have to trust that the founder’s going to tell you the truth. Andrew: What about this? I did an interview recently with the founder of an online casino company and he did this back in the mid to late 90s, back when he says it was a grey area, online gambling, and back when it was still possible for a kid in his 20s to build a casino online. It’s not true anymore. Today we know that black and white online casinos in the U.S. are not allowed. The ability to create a casino in your 20s isn’t available to anyone. And there’s some feedback you get from people who say, ‘Well this doesn’t apply anymore. Bring me people who started a company last year or two years ago to learn from them.’ What’s the value of learning from entrepreneurs who seize the opportunities that no longer exists? Interviewee: Well I interviewed a lot of people from all different eras and I think there’s always useful information. Even if the world doesn’t look like that right now, I think there’s some sort of trends and definitely personality traits that will always apply. Like was this person doing the casino, what was unique about what he did? How did he recognize that there was an opportunity there? That’s a big thing. It doesn’t really have to be like, what is the world like right now? I mean, you can learn a lot about going back to, I’ll give the Steve Wozniak example again and that was in the 70s. There’s some interesting examples from that time. He built that computer because he wanted a computer himself. And they originally thought that they’d have this build-at-home, build-a-computer kit and you can do that, And wow, they learned something interesting from the users. No one knew how to sauter [sp] themselves so they had to do it. So you see some interesting themes like listening to your users and making something that you yourself have a need for. And so I don’t think it really matters if it’s like, what’s happening right now. And in fact, sometimes it’s hard to get good interviews about what’s happening right now because the people that you’re talking to are still deeply involved with their startup. And I found that people tend not to share quite as much when they’re still deeply involved in their startup. In fact, the more time you can have between the end of the startup or the person’s liquidity event or something and the interview, the better. Because they’re more willing to be open about the embarrassing and funny stories. Andrew: Yeah, I’ve noticed that too. The more time I could have separated from the subject that I’m interviewing about and the interview itself, the more truthful and the more open that the person can be. Interviewee: Yes. Andrew: What about the way that you did it? How much time did you spend with each entrepreneur, with each founder to do the interview? Interviewee: Well, a lot of these people are super busy, super successful people so I tend to do…I usually have about an hour and a half with each of the people that I interviewed. Some of the super busy ones, it was only an hour. An hour was pushing it because I’d find that I’d always start the interviews trying to warm the people up by saying, ‘Take me back to when you first got started. Tell me what was happening at that time and how did you first got started.” And someone can go on for half an hour giving you the backdrop. And then you’re just getting into the really interesting stuff and that hour’s up. So I usually try to get an hour and a half with the people. And then I went back and transcribed everything myself and then edited all the interviews myself. That was the most time consuming part, actually. That and doing sort of the preparation, trying to learn about the company and what questions would I find interesting. But I’d go back and edit all of them. I wouldn’t put new things in but I would definitely delete duplicate thoughts and certainly take out the ums and the so’s and all that and just try to make it so it was in an easy to read format. That actually was the most laborious part of the whole thing. Then I’d send back them back the interviews for them to review so it wasn’t super time consuming on their part. Andrew: OK, so say somebody was listening to us right now, it’s going to be at a cocktail party with someone who has time to teach them. A successful entrepreneur has time to talk about his past… minute 15 to minute 20 Andrew: If, say, somebody who is listening to us right now is going to be at the cocktail party with someone who has time to teach him. A successful entrepreneur has time to talk about his past and to teach him based on the past, not an hour, not an hour and a half, maybe not even half an hour. What questions can they ask to extract the most value out of that kind of conversation? Interviewee: I would probably ask them what mistakes did they make, because you can learn a lot from people’s mistakes. What did they get wrong? I might ask them, “What did you wish you had known when you were just starting a company?” They’ll tell you, “Oh, man! I had no idea about this. No one told me how hard the emotional rollercoasters would be.” I'd also ask them what surprised them most about a startup, because that’s a very good question to ask people. What's the most surprising about X? These are things that even man(?) themselves might not have thought about. You can't really read too much. If you want to learn about incorporating or you want to learn about something that you can easily find online, don’t waste your time on that. Ask them like, “What did you get wrong that I shouldn’t?” Andrew: Interesting that you bring that up. I interviewed Jason Fried, co-founder of 37signals and I asked him what he got wrong, and he said he doesn’t think of that. He says, “There's so many things that could go wrong, so many mistakes that you can make. Even if you study five different mistakes a day, you still will only touch on a small percentage of the overall mistakes that you can make. So why bother learning that instead of focusing on just the successes?” But I share your point of view, that there's a lot to learn from mistakes. What do you think there is to learn? Interviewee: From mistakes? There's a whole general class of mistakes that I know that first time founders all say will get wrong. For example, they spend a lot of time worrying about their equity distribution. There are two founders and they spend all these time, “Should we divide it up equally?” Or, “I've spent a little more time or should I get more stock?” and they agonize over this. That’s a mistake, it's a waste of time. Talk about it, be comfortable with how much stock you're getting. In most cases, I would suggest dividing up the stock equally. If you're the next Google, optimizing that initial share distribution is not going to make a big difference at the end of the day. That’s an easily avoided problem that I see, and there's a whole class of this problems. I can't solve someone’s problem in terms of what they're going to do for their startup idea. But something that I see patterns, it's easy for me to say, “Don’t make this mistake. Don’t agonize over this. Don’t worry about competitors.” I'll see someone saying, “Oh, my God. Oh, my God. Google just released this, what are we going to do? We're dead!” Sometimes, you shouldn’t spend too much time worrying about a competitor. You should focus on your own startup. How are you going to beat them in terms of teachers(?). Again, a lot of times, we'll see people worrying about things that they shouldn’t. So, don’t make those mistakes. Don’t worry about those things that aren’t important. Or, “Oh, I have to bring on all these advisers right now. I have to build my adviser team.” You don’t need to build your adviser team when you're a month old, work on the product. That’s all you need to care about, it's making something people want. Andrew: I do see a lot of commonalities in the interviews that I've done here with entrepreneurs who’ve had failed businesses. If we were to say that there's an 80/20 rule, what's the 20% of mistakes. How many mistakes do you think account for 80% of the failure? Interviewee: I'm sort of an expert in early stage failure; early, early stage failure. I definitely see some themes, like a lot of the failure is due to not making something that people want. Again, our motto is to make something that people want. If you create something and no one uses it, you're dead. Nothing else you do is going to matter if people don’t like your product. I see destruction causing death for a lot of company, and that could be destruction of squabbles between co-founders or working on building out that advisory board before you get a product. That’s definitely a big mistake, letting yourself get distracted and a lot of people can get distracted in fund raising and doing all these other things and not working on their product. Interviewee: And not working on their product. It is hard cause there are co-founders not getting along, and I do not know if I'd call that a mistake. I guess you can classify it as "you chose the wrong co-founder", but that is a major cause of early start-up death. It is like co-founders disagreeing and then they break up. Oh, it is awful! A lot of mistakes are fixable. A lot of mistakes, the real bad outcome is that they are mere distractions for you, which again is the biggest cause of death for start-ups. We see a lot of people making mistakes and most you can bounce back from but my point is if you can learn what mistakes to avoid and have other founders say do not spend your time doing this. Then why not learn from those? Andrew: What mistakes have you made at Y Combinator? Interviewee: What mistakes have we made? I hate being on this side of the table... Well, one that comes to mind in my world, and I used to, not so much anymore because we have a lawyer on retainer who works with the local start-ups. I used to be very involved in helping the start-ups incorporate and do all their paperwork, to setup their company properly - equity distribution and employee agreements and stuff like that. And one of these mistakes was that, early on, we had all these templates, and we had them created in a very standard format, and we didn't want to impose too many rules and restrictions on people, and so I said, in terms of vesting, I said, it's totally up to you, we recommended vesting, but its up to the founders if they want to have vesting. And so, a lot of founders said, we don't want vesting; why should we have vesting if we don't need to? And I saw that led to a lot of bad things, not having vesting. I won't waste time talking about it, but a lot of bad things happened when there's no vesting. And so now, years later, and actually it didn't take me too long to figure that out, but now I basically say, you absolutely have to have vesting, Y Combinator never tells you what you have to do, but I strongly recommend it, and if you don't want to have vesting, come talk to me because I'm going to convince you otherwise. So that was a big mistake, because we still have some founders who have some major problems because of that. Andrew: By vesting, we mean that instead of giving the founders the share of the ownership of the company all at once, you say, in time, you're going to get your full ownership of this business, and the reason you want to do it is because if you give one of the founders all of his shares right up front, he doesn't have an incentive to stick around, he can just go on and do the next project. Is that true? Interviewee: That's absolutely true. In a nutshell, you have the standard vesting, is sort of your - all of your shares vest yearly over a period of four years, and what happens if you don't have vesting is exactly what you said. All of a sudden, someone outright owns a large equity stake in the company, and after two months, says "I'm not really into this anymore, I'm going to go work for a big company, or I'm going to go back to school", and you have a huge equity holder in your company who's not doing anything to contribute on a daily basis, and that causes lots of problems in terms of founder's morale, the person stayed behind working but also investors don't like to see that, so causes a lot of problems. Andrew: Okay, and we just anticipated Danno in the audience's questions, so I'm glad we were able to answer that question for you Danno. Okay, so take me back to just before you guys co-founded Y Combinator. What was that original vision? Interviewee: Original vision? I didn't know there was a vision! When we first started, it was all an experiment, what happened was, Paul, Robert and Trevor definitely wanted to give back to the start-up community and do some angel investing, because they had been helped out, years before with Feo Lab, but someone who invested $10,000 in their company and helped them incorporate cause he was a lawyer. And so, they wanted to do angel investing, but they didn't want, but Paul didn't want to have to read business plans every day and he didn't want to deal with all the things that go along with being an angel investor. And I was leaving my job - I worked at an investment bank - and I was leaving my job to work on the book full-time, cause I had just gotten the book deal. minute 25 to minute 30 Interviewee: …So I said, “Well, I’m really interested in this sort of thing. I can help with all the business side and the organizational stuff and you, guys, can help work on the idea and strategize with the startups.” So we just sort of said, “Okay, let's just form something that we can invest in startups.” It was in March, I think, when we said, “Well, we don’t know anything about angel investing. Let's try to get a whole group together this summer, and if we invest in many startups at once, we'll learn a lot.” I remember Paul wrote the Y Combinator website in like a day. We put up this application form and kind of crossed our fingers that people would apply. And, oh, my gosh, we got applications. The deal was they’d have to move to Cambridge in the summer and we sort of based our investment amount on an MIT grad student stipend. So I forgot what the amount was back then, but it's a small amount of money. They moved to Cambridge and we'd worked with them over the 3-month period and we actually got people to applied and came to interview. There really wasn’t a vision back then other than we wanted to help people start startups. I mean, there was sort of the whole Paul’s philosophy, he had written that essay, he had written how to start a startup. So it's definitely on his mind thinking about these things. But he had written, “Hiring is Obsolete,” and we thought, “You know, it's really interesting. It's a lot cheaper to start a startup now, even compared to during the bubble time, it's a lot cheaper. You just need your computer and pay some server fees and that’s it.” So he wrote this essay “Hiring is Obsolete,” which was, you know, start your own startup, don’t climb the corporate ladder. Start your own startup and get Microsoft to buy you in order to get you to work for them. We sort of thought this could be an interesting trend about younger people starting their own companies out of college instead of going to work as a junior junior programmer at some big company. So, we did this at summer. We got eight groups that came, and it worked. We called everyone we knew in town to be guest speakers, people who were experts in the startup world. We had guest speakers every week and we had a demo day. So lot of the early stuff worked out really well and we're still doing it today, of course, on a much larger scale. But a lot of those initial ideas worked. But I can't say we had a big vision, I really can't. Andrew: Here's what I'm wondering. By the way, the decision to do it in batches, that’s why even your competitors say, that’s the biggest innovation that you, guys, brought in. That, and I guess the small amounts that you invest in a company. But what you're saying is that you didn’t know enough about investing, and so you decided to invest in many companies at once. Why? How do you go from not knowing to say, “We're going to do multiple startups”? Interviewee: I think we just thought that’s how we'd learned. If we had eight groups, you learn a hell lot more dealing with eight different companies that just one. Let me tell you, every startup is different, even though they're patterned, everyone is different. The personalities of the founders, the ideas, things that happened to them, like the outside circumstances, everything is different. So, we said, “Let's just learn by helping a whole group.” You know, it was an experiment. What we found from that experiment was that investing in batches turned out to be amazing. One of the reasons is because it's overwhelming(?) doing a startup. If you're just one or two people working on at your apartment, it's very isolating. You're always working in a state of uncertainty, and so it can be depressing. So, we found that this eight groups just bonded, they could lean on each other for support. “Oh, you're facing this problem, so am I,” and they helped each other. Now, of course, the Y Combinator community has grown to, I think, around 500 founders, and everyone helps each other. If you have a technical problem, there is someone in this community who can help you. It happens over and over where through the older alumni who’ve been through it before help the new people with problems that they themselves faced. They feel this need to give back to the Y Combinator community. So, it's really amazing that it worked out so well. Andrew: I've seen it even as an outsider, “Man, they're the most incredibly helpful people I've ever met.” I keep saying it to them both in the interviews and in emails afterwards. I feel like I owe you so much, I don’t even know how I could pay you back… Andrew: I mean, I don't know that I could bring up specific examples, but they've just been really generous with their time, with dealing with technical issues during an interview like this, and helping me get other interviewees. How did you get that original eight? Interviewee: They were. I'm telling you, we put up the application, and hoped people would apply. I forget how many groups we interviewed, but we accepted eight. I think they were fans of Paul Brown's essays,you know, that was sort of our initial marketing thing that we did. So they were fans of his. We had met one the groups, I think the Retec guys we had met at Paul's How To Start A Start Up talk at Harvard. So we had met them and loved them. And God, these amazing people.. like Sam Altman of Looped was in that batch, and the Justin Tv guys were in that batch. They were doing a different idea at the idea. Jolie Yun of Tex Pay Me, the Retec guys. It mean, it was this great group of people. We were lucky. We were lucky. Andrew: Okay, now we get into the social radar part. I think it was Alexis O'Hanyan who said you guys didn't like his idea. He had an idea for using a mobile phone to order food or something kind of convoluted. And he spent years on it it seemed like, really had a lot invested in it. You guys helped him change his focus and got him to, helped him come up with the Retet idea. So, it wasn't that you loved his business, it wasn't that you loved his website. There was something about him. How do you know? How did you know he had it? Interviewee: Well, it was both of them. It was Steven Huffman and Alexis. Andrew: Right. I say Alexis a lot, not to take credit away from his co-founder, but because Alexis was here doing an interview on Mixer G, but you're right. How did you know that they both had it? Interviewee: Well, I'll tell you. One thing that I thought was amazing about them, and this was back when I didn't have nearly as much practice at judging start up founders, this was all brand new, but I saw some interesting characteristics in them. The first was that they came up to Cambridge from UVA, like on the train to hear Paul's talk, like they cared enough about what he had to say and were interested enough in start ups to like, to travel all that way from college. So I was kind of impressed with that. And then, I just sensed their genuine, like their interaction was really good, you could tell they were good friends, that they got along, and that they could really trust each other. I could just sense that. Even. Back in the original interview days, we did like thirty minute interviews. None of these ten minute things. So we had more time to sort of witness the dynamics. And they just seemed so earnest, and like thoughtful, and sort of almost wise beyond their years and mature. And I just loved them. I loved them both immediately, but we thought oh my gosh, these like twenty-two year old guys, they can't do this idea with like, where they have to cut deals with fast food companies like McDonald's. This isn't going to work. So we turned them down. And I then I was, I was like in pain all night. I remember thinking like I love those guys, I really want to give them a chance. And Paul did too and. So I actually I don't think I quit my job yet. I was wrapping things up at my job, so I went to work. And Paul emailed me and basically said The Retet, we didn't call them The Retet, we called them The Muffins actually. Andrew: Why? Interviewee: It was just sort of a term of affection. I just loved them so much, and I just called. It was a dumb term, but I called them The Muffins. We have nicknames, had nicknames for everyone. And Paul sent me this email saying The Muffins have been saved. And I was like "Yes!". And what happened was, that morning Paul called them and was like we really liked you guys, let's try to think of a different idea. And they got off of the train in like New Haven, and came back to Boston, and like brainstormed with him, and they cooked up this idea for Retet, and the rest is history. Like, those guys are, those guys are amazing. Andrew: You mentioned that now you give a new applicant ten minutes. When I interviewed Paul Graham, one of the big questions that people said I should have asked him was how can you pick within ten minutes, how can you decide if someone's a good fit. It does seem like a short amount of time to decide whether you're going to invest not just money but time and trust in someone. How do you do it in ten minutes? Interviewee: It is, it is hard, but I think if you talk to a lot of investors, in hindsight, they'll say I kind of had a feeling after the first five minutes. Like you really don't need an hour to spend with someone, you know. And I guess it's different if you're a VC and you're investing five million dollars, you want to spend more than five minutes with the, ten minutes with those people. Interviewee: But, it's hard to judge, but like you can have a lot of conversations around that idea in that amount, and judge like how are these people thinking about their idea. What have they built? Can they demonstrate that they're able to build something good. So my three partners are kind of assessing their technical skill, and what I'm doing, I'm embarrassed to recall the social radar, because I don't know if it's true, but I'm sort of looking you know, at how, you know, how is the interaction between the two founders. Do they seem to get along or is one sort of steamrolling the whole conversation while the other one doesn't talk at all. Do these people seem earnest? I know it's a quick amount of time, but I try tell like are they sort of nice, earnest people who are going to work hard and care. Or are they phony? You know, it's hard, it's very hard to tell. And like, sometimes we get tricked, but I think, I think you can tell a lot about a person in ten minutes. You really can. And of course, we have the, now we have the videos where we can, on the applications, we can sort of see people, but it's not interactive, of course. But you can sort of tell, and you can tell like what someone's attitude is like in a short amount of time. I don't know, it's hard to put into words. Andrew: So most people aren't going to be sitting on your side of table looking at founders in this kind of ten minute structure, but they are going to be looking at co-founders, people to trust with departments in their business, people to hire in key positions. What can they do to find that right match, now that you've seen so many different co-founders who work well together or work poorly together. What can they look for? Interviewee: Well, assuming that you've never met the person before. I mean, the best kind of person to hire is somebody you've already have worked with or know very well, but assuming you don't know them, I definitely would suggest having a trial work period together. Maybe it's like you work together for two weeks, and then you decide if this person is right, because I definitely wouldn't recommend a ten minute interview when you're hiring someone. And hiring by the way, just as an aside, seems to be like the biggest problem lately that our, the Y Commonator Founders are facing, it's really tough to find good people. So I'd recommend, you know, the trial, working with them on a trial basis. See what they've built before, I mean, have they, are they capable of getting something done. That's important. Have your best technical people assess, like if you're not a technical person, find someone who is technical to be able to assess if this person technically is good. Like I can't judge if someone technically is good, but I have three partners who can. And just like do you get along with them, do they seem reasonable. I know that sounds crazy, but you want to be sure that you work with someone who is level-headed and not obstreperous. Even though a lot of programmers can kind of be ornery, you want to work with someone who has that open-mindedness and flexibility to do different things and you want to kind of judge, look for that I think. Andrew: How have you been tricked? How does somebody trick you? Interviewee: (Laughs) Oh gosh. I'm sure I've been tricked a lot. (Sighs) I think what happens with me is if I'm, I'm looking for like determination, I'm looking for someone who's going to hang tough, when the going gets tough. Because, I don't know if you've ever, if Paul has ever talked about this "Trough of Sorrow", but there's this idea that when you launch, you get this initial spike. You get a lot of publicity, and then it drops precipitously. And then, this "Trough of Sorrow" which looks like a flat line there. And every start up hits the "Trough of Sorrow". I mean, some are lucky and they don't, but most of them do. And that's when, you know, you can't grow your user base, and you can't find investment, no-one wants, you're getting rejected all the time, okay. So, how do pick trick me, or us I should say. They seem super determined, and they seem like we're going to stick with this no matter what. And if this idea doesn't work, we're going to try something else. And then we find that like they're not really that interested in sticking around. And they sort of thought, they had thought oh gosh,we are going to join Y Combinator, and everything's going to be easy, and we're going to build the thing, and everyone's going to love it, we're going to make an investment, and it's not going to be hard. And it is hard. I think I get tricked by people who seem super determined, but don't hang in there. Interviewee: ...But, don’t hang in there. Andrew: Okay, let’s go back then to the second group. You had that first eight run, it worked out well. What were you going to do differently, what, what did you say didn’t exactly work out that we want to improve it next time. Interviewee: Well, one thing that we did differently to improve was we moved out to Silicon Valley. I remember that, that was a big turning point in Y Combinator actually. Cause, I didn’t want to go initially. I was like, ah, how can you –Paul was like we should go out to Silicon Valley because if we are going to be involved in start-ups, that’s where all, a lot of the action is. And I thought, oh my gosh, we just got everything set up in Boston. We don’t have a place –this is in like October. You know, we don’t have a place to work. We, what are we going to do. I don’t have, like, slow cookers, you know, crock-pots, and like silverware for twenty-five people. All these different things that I thought would be a huge pain in the butt. But we worked it out and Trevor, our other partner, who has space with anti-bots, like, loaned us the space. We moved out there. Got everything set up. And it was the best thing we ever did because we really go connected with a lot of key people out here, investors, guest speakers. I mean, if you are going to do a start up its very important to have some connection with Silicon Valley. So that was something that, that we improved. I can’t, I am trying to remember what we thought we needed to change. There wasn’t, there wasn’t anything dramatically wrong. I don’t think there was anything that we said we’ve got to do, you know we’ve go to do this differently. I think we just said we’ve got to get more investor connections so at demo day there are more than twenty people in the audience. You know, get more people to write checks as follow-on funding. Get more connected with guests, people who could serve as guest speakers and who could serve as advisors to our start ups. Because we do, we spend a lot of time connecting our start-ups with people that can help them, and a lot of people that can help them are out here. So, that, that was one thing we improved upon. Andrew: Guest speakers seems to be important. How do you make those speakers really helpful to the audience because we’ve all gone to events. You watch, we watch speaker, the speaker was interesting but you know, you still have to go back to work the next day. What he talked about the night before doesn’t necessarily translate into, into practical, useful information that you can use the next day, how do you make them useful? Interviewee: Well, a couple, a couple things. The first is all of our talks are off the record. And that’s, that doesn’t happen too frequently. I mean, now, everyone wants to live-stream everything, and blog, and tweet and we say no, everything is off the record and that genuinely makes people share things that they wouldn’t share otherwise. And I’ll tell you I’ve learned more things at Y Combinator dinners from these famous successful entrepreneurs that I can’t even share, really but that are mind-blowing because they, they, totally open up. It’s amazing how much they open up. So that’s super useful to learn these sort of secrets that would otherwise not been told. And the other thing, is a lot of these people, it doesn’t just end with here’s my talk, goodbye. A lot of these people maintain relationships with the founders, like the founders get to pitch to them during the dinner and like they’ll carry on conversations. Maybe, that entrepreneur is also an investor and maybe, you know, we’ve had definitely have had some of the guest speakers invest in the companies or connect them with useful people. Or bring them in to get acquired, I mean, that’s definitely happened where someone has been the champion within the firm, so a lot of interesting relationships develop as a result of these dinners. Andrew: I see that there a couple of people in the audience who asked this question. Do you guys only invest in companies that have a technical co-founder? Interviewee: Yes. Although, I believe, actually, a, Harge, Harge and Coal of Optimatic and Harg now works with Y Combinator. They were not technical. They were the only people we’ve ever funded who, who were not technical. But, but, they were teaching themselves to program! I heard that, and I was like “Your business guy is teaching yourself to program. I don’t care what your idea is, you’re in,” like I loved them. So, yes, every single group, I believe, that we’ve ever funded has had at least one technical person on the team. Interviewee: I see, that’s what I thought. Alright, advisors... Andrew: All right. Advisors. How can a startup make the most out of a relationship with an advisor? Interviewee: Hmm. Well, I mean it's hard because people who are advisors are probably very successful, busy people themselves. So you want to use their time efficiently. You know, how do they make the most... I think being well-prepared when you go to talk to the advisor. And say, "Here's what I've done. I'd love your opinion on this specific thing. How can this be improved? What am I doing wrong? And really not go in with sort of vague ideas, like definitely use the advisor's time efficiently. And ask them like, "Can you help us do this? Can you help us hire people? Here's what we need." And people, at least in Silicon Valley, like love to help people out. They want to give back. And they want to help do what they can to help a startup succeed. So I think like using their time efficiently, and knowing what their area of expertise is, and like, I hate using this word, but like leveraging that, with a particular advisor. I think that's sort of the best way. Andrew: Before we started the interview, I asked you how many startups did you guys fund or help launch. And I was thinking the number was 172. And you said, "It's actually over 200 because we just accepted a new group of startups in the program." Ordinarily, just accepting wouldn't mean that you helped launched them. But I said, "Yeah, let's include them because what I know about the way that you work is, when you accept a startup, you already start helping them out. You already start thinking through their idea, the way you did with WuFoo. They already start picking your brain, and spending tons of time with you, the way the guys behind Air B&B said they kept doing with Paul Graham. My question is, how do you do it? How do you help these dozens, and now hundreds of startups, think through their ideas, and decide what company they're going to go and build? How can you do... How can you help somebody come up with valuable ideas within minutes, within the first time that you meet them? Interviewee: Paul Graham. [Laughs] No, that is really his department. He works very closely with the startups on their idea, and on their vision, on their strategy, what can they launch with, well, what is the grand vision. That's his area of expertise, and he's really good at doing that. And these new founders that we just accepted, the first dinner's not till June, but we're working with them now. I'm working with them along with our lawyer to help them get incorporated, to get that out of the way. Paul has office hours so they can sign up and meet with him and brainstorm. But it's really, Paul's got the energy and that's his area of... Andrew: He's the product guy, and when I interviewed him, and I asked him how he can do it, how he can help entrepreneurs think through their product, he said, he really doesn't know. And he has this fear that that gift is going to go away. Now, you as an outsider, you're laughing before I ask this question, why? Interviewee: I'm laughing because I don't think it's going to go away. Andrew: I don't think so, either. But I can see how when it's so innate, it's hard for him to figure out exactly what he's doing. But you're watching on the outside, you've got a talent for spotting patterns. What kind of patterns are you noticing in the way that he helps entrepreneurs create their products? Interviewee: Well, patterns? I mean, he definitely helps them sort out, they might have this vague idea, he helps them, directs them in a way that's going to be best for that company. And direct them in a way that's going to be best for those particular founders. I mean, if they're not super duper salespeople, maybe there's a way that they can build this to get users without having that sales person. That's sort of a bad example, but he's really good at sort of being a chiropractor for ideas. And helping people brainstorm like new ideas that they might not have thought of, different directions. Helping people sort of wade through the many ideas that they have and boil it down to like, this is what you should launch it with. Focus on this, focus on getting users for this, bearing in mind that your vision is going to be over this way, but you got to start here first. And he's just really good at that. And I was laughing when you said that he said he was worried this gift would go away, because I've known him for a long time now... Interviewee: Because I haven't, you know, I've known him for a long time now and I just haven't seen... He always has new ideas and he's always trying to help people improve things and do new things. Andrew: You said that he was a chiropractor for new ideas. I wrote that down to ask you what does that mean? Interviewee: Well that means like you know i have this, i have this bad back and you know he can come and say "er er er" lets move it a little this way just a little bit in this direction and all of a sudden you go "oh its so much better" and so you know chiropractor for ideas like someone will come to him with like sort of a good idea that for some reason isn't taking off or is going in the wrong direction and he'll just make, like, you know a suggestion for a little tweak and all of a sudden, whoa, it's like, a great idea you know and he's good at that. Andrew: You said he helps them come up with the new ideas. He helps them brain storm. I remember when I talked to Alexis he said as they began brainstorming the idea that became Reddit they were inspired by delicious', i forget what it was called, the most bookmarked for within the last day or websites they said "Well it would be nice if there were a way to find to find relevant sites or to find an interesting post." It seems like one way to find a new idea is to see what already exists and you'd want more of. What other ways are there that, You've seen Paul Gram or you guys at Y Combinator or the companies that you've, you've helped launch. What are some ways that they've come up with new ideas? Interviewee: Well I mean definitely what's broken what. What is really broken out there and also sort of you know like air b and b is an example of you know a company that's taking advantage of like, the hotel business being a little bit broken you know and like their letting people rent out space now. Unthinkable 10 years ago. It just seemed so crazy and so if you think about something that, sort of, now with the internet you know consumers can participate more, its not controlled, like newspapers with Reddit. Newspapers were controlled by the editors and that sort of thing and then, like, now that you democratize all these things on the internet there's all these new opportunities and like that's sort of a hotbed for ideas i think. Andrew: How much time do you spend thinking about these questions, looking for patterns of, I asked you earlier about the number of ways that entrepreneurs can fail I'm asking you about where new ideas come from, do you spend time just sitting around saying where do all these ideas, the ones that have worked for us, where do they come from how do we figure out a pattern here that we can then apply in the future or do you feel it. What's, how much of it is thought out that way. Interviewee: Do you mean with like regard to start ups like with their, I'm not sure... Andrew: To everything, do you sit down and, how methodical are you, how methodical are you at saying you know, i really, there's something about my social radar here that's worked, I've discovered these 20 guys that worked and these 5 that tricked me, what patterns do i see in the five and what patterns do i see in the other 20. Interviewee: Well we definitely have a lot of data that we do try to keep organized and we're getting better at keeping organized, Paul writes a lot of software. We've been you know just things we'll think like well, you know, what was it about this group that was so good that you know that we recognized in the interview. Let's find more people like this you know and we definitely do spend a lot of time sort of trying to be methodical but a lot of it's just like start ups you know. You can't plan everything out. So you can only be methodical up to a point but we're always like trying to improve things, we're always trying experiments to see if we can make... Andrew: Can you give me an example? Interviewee: Experiments...well you know one experiment that we've, that was new to this last batch was, we'd always had done this informally, we used to have Paul Bucheit who, if you haven't interviewed him yet, have you interviewed him yet? Andrew: Not formally, just at a conference, we flipped the camera on. Interviewee: Get on him, get on him to do an interview he's awesome. He was the founder of Friendfeed, now acquired by Facebook and he was the creator of gmail. He's in my book too. So Paul is an angel investor and we used to have him come in and spend an afternoon listening to the pitches of all the start ups and he'd say like, why he would invest or not invest and he's really straight forward and it was great. It was great feed back for these start ups. This was prior to demo day and so we'd do this all the time and we'd definitely introduce people to investors informally. Minute 55 to hour 1 Interviewee: …in the past, but this year, we thought, ‘let’s-, you know, we really want to get people prepared for Demo Day, and we wanna, like, put these founders through the-, through the investor ringer before they present to the investors so they’re not shocked when someone says ‘oh I don’t like that idea.’’ So we had, like, a little Angel Day a month before Demo Day and the founders had like ninety seconds to give their elevator pitch and then we matched them up with, you know, a few angels, you know, eminent-, eminent angel investors in Silicon Valley, and they met with them every week up until Demo Day. And the point was to give their pitch. You know, Paul was in the background working on the strategy and the product, and then they’d go test it out with a real live investor who sees tons of pitches and each week, you know, they’d give the pitch and say ‘would you invest or not?’ And a lot of times the investor, of course, would say ‘no I wouldn’t. And here’s why: I’m skeptical about this. Or, I think you need to go in this direction.’ And we found that that was real useful for people leading up to Demo Day. I think their-, their pitches at Demo Day were a lot more refined, and even they were more confident about their pitches ‘cause they had sort of been through this ahead of time. So that’s just one example-… Andrew: Give- Interviewee: …where we didn’t know if it was going to be good or not, but I think it was. Andrew: Give an example of an experiment that failed. Interviewee: An experiment that failed…? [clears throat] I can’t think of one off the top of my head, I really can’t. I’m sorry, I have to roll my eyes. I’ll-, I’ll think about it. I can’t-, I can’t come-, think of one off the top of my head. I’m sure there are plenty. I know, but again, we don’t put a whole lot of time into some of the things, so I’m sure there are plenty of examples where we tried something and it wasn’t super successful, so we just moved on. You know, it’s sort of like interning [SP] with software, you try something, it doesn’t work, do something else. Andrew: I know that you’re-, that you haven’t been feeling well this week, and if you wanna take a-, a moment away from the camera, that’s fine, we can come back. I don’t-, I just have a few more questions to ask though. Interviewee: No, that’s okay. Andrew: Keep going? Interviewee: I just apologize for having to blow my nose on camera. [laughs] Andrew: I do it too. And I don’t do it ‘cause I’m sick, I just do it ‘cause I’m a big nerd who’s always had a runny nose. So if I do it all the time here, you might as well. Let’s see… Michael Jung- before the interview I took questions from people for you- Michael Jung asked, ‘what’s your biggest lesson from interviewing and working with so many entrepreneurs? Is there one biggest lesson that you’ve taken away?’ Interviewee: There’s so many different ones it’s hard to think of just one. Except that startups are hard, and startups are very fragile. And it can go either way at so many points, like, success and failure are not that far apart at so many points throughout the life cycle of a startup. And, like, the lesson is: you’ve got to be determined, you’ve got to be tough to get through all these challenges and these, like, overwhelming emotional rollercoasters: the rejection, the changing of the ideas, the, like, imminent failure every day it seems like. If you are not determined, like, you’re not-, you’re not gonna make it. And that-, that to me is sort of the most important thing that I took away from all these… it was… oh, one other thing is that a lot of these people who are famous now were not famous when they first got started. And that is, like, so inspirational to me because anyone can start a startup if they really want to. The barrier to entry is not that high. I mean you have to build something that people want, that’s a pretty high barrier, but, like, anyone can do it. And, like, all these people started out getting rejected and not feeling confident, you can do it too. Andrew: Moses asks, ‘do you have any advice for entrepreneurs who are not part of the program?’ ... Not part of Wycom Adiner [SP] Interviewee: Well, I mean, a lot-, a lot of the advice that I… a lot of our advice, like, Paul writes about this, and that’s, like, easily accessible. Advice for people who are not part of Wycom Adiner? Find-, you know, always pick a good cofounder, make sure you have that, but once you have your team, try to meet other people working on startups. And even if it’s a matter of, like, getting together with them once a week so that you feel like you’re not alone, I think that’s sort of a big part, in-, again, in the early days of starting a startup, is to find other people who can understand. ‘Cause a lot of people, you start a startup and people are skeptical, people won’t understand, ‘why aren’t you working at a big company? That’s so weird.’ And you feel kind of like an alien. And so if you can find other people to… Interviewee: ..and so if you can find other people to understand what you are doing. I think that would help, finding community. Andrew: Can entrepreneurs duplicate some of what’s going on at Y Combinator. For example, take what you just said now, meet once a week to show each other what they’re working on, and talk about the progress they’ve made. Maybe invite a different angel investor in each week to be pitched for a minute and get feedback. Maybe bring in a speaker. It seems like all of these can be duplicated, they won’t be exactly a hundred-percent. Seems like some, some value would still happen, would still come across. Interviewee: ...maybe? I, mean, I never I never say never. That is one thing I learned through Y Combinator, is to never say never. But, you
• The Man Who Survived eTour, Grew Ask.com And Launched Clicker – with Jim Lanzone 11 June, 2010, 2:59 pm
  I met Jim Lanzone over 10 years ago and I was sure he would quickly IPO his startup, eTour, which was a web discovery site similar to Stumbleupon. He raised over $50 million in funding, had top backers and generated a lot of buzz. Then the internet went through what past Mixergy interviewees called a “nuclear winter,” and the company lost its stability. I watched others disappear from the industry, but Jim ended up selling his startup to the company that became known as Ask.com, and he made it into one of the few surviving search sites. In this interview you’ll hear how it happened, and how he’s making Clicker into the most complete guide to Internet television. The FULL program Prefer audio? Great! “Right click” here for the MP3 format. I use my sponsor Wistia’s video hosting platform because no one else gives me the stats they do. // See my stats for this video (Can’t see video? Go to Mixergy.com) Embed the video: if(!navigator.mimeTypes['application/x-shockwave-flash'])Wistia.VideoEmbed(‘wistia_135842′,600,290,{videoUrl:’http://mixergy-cdn.wistia.com/deliveries/d453d6374e7410479daaf93ced2764ad8cf608bf.bin’,stillUrl:’http://mixergy-cdn.wistia.com/deliveries/a1a0f69e7ae263fec21274eea38849b6f1fae8e0.bin’,distilleryUrl:’http://distillery.wistia.com/x’,accountKey:’wistia-production_1621′,mediaId:’wistia-production_135842′,mediaDuration:4156.6})Business Tips via Mixergy, home of the ambitious upstart! About Jim Lanzone Jim Lanzone is the Founder and CEO of Clicker, the complete guide to Internet Television. The company’s mission is to make it simple for you to find the right show, right now. Jim has spent the past 13 years in the Internet industry, starting as co-founder of a startup called eTour and most recently serving as CEO of search engine Ask.com. In between he had adventures with such colorful characters as Mahir “I Kiss You” Cagri and a butler named Jeeves. *Raw* transcript This is a raw, mechanical transcript. Readers (like you) are editing a better version here. Interviewer: Before we get started you got to know about 99designs because it’s the largest crowd source market place for graphic design. When I used them, I wrote a description of the design I needed and how much I was willing to pay. I got back a bunch of designs. I gave each designer feedback and then I got a bunch of new designs back, I only picked the designs I liked and I paid just for that. Try them for logo design, for blog design, for app icons and so much more. 99designs.com. Grasshopper is the virtual phone system that I use, it lets me add extensions and change my greeting and forward my calls and so much more. Even I have a toll free number from them. Try it for yourself at grasshopper.com. And finally I have a brand new sponsor, picclick; it was launched by an entrepreneur that you are going to admire because pick click is bootstrapped and profitable. Previously the founder created a visual way to search Cregg’s list, but then Cregg’s list banned him. Instead of calling it quits he launched picclick, a visual way to search eBay at sea and see plenty of fish and other sites. I want you to check out his website and tell me why you think it’s profitable and support this crappy founder because he has a good business. Picclick, PICCLICK.COM. Here’s the program. Interviewer: Hey, I am Andrew Warner, I am the founder of mixerg.com, home of the ambitious upstarts. You guys know what we do here everyday, every single weekday, I think I have been doing this now every week day since the last eight months at least. I bring on a different entrepreneur to talk about how he built his business or how she grew her company, we talk to entrepreneurs about their big successes, we talk their big failures and we learn from everything that they have experienced, so that we don’t have to experience it first hand to learn for ourselves and more importantly so we can go out there and build a incredible businesses ourselves. Today I’ve got Jim Lanzone with me, he is the founder of clicker, the programming guide to T.V. there he is. It makes finding online video very easy, incredibly easy. I just typed in a few people to prep for this interview and I got carried away and started looking at all their videos. Previously he was C.E.O. of Ask and before that he founded eTour. Welcome. Interviewee: Thank you. Interviewer: Jim, by the way, how do you do such a freaking good job… (I won’t ask all this soft ball questions. We are going to talk about eTour. I’ve read lots of interviews. I saw the Jason [Calic Candice] interview with you and I plan to ask questions that others had not talked about . We will be talking about eTour but I’ve got to ask, what seems like a soft ball question because I am fascinated.) How do you get all that content sorted and so easy to find, much better even than Google does? Interviewee: Well, I guess truth is, so one is, we did spend a year in stealth building it and it doesn’t just happen. The thing is that there are so many videos, premium videos and that is all we index, we are not dealing in cap videos, or excerpts or clips or illegal stuff. We are only categorizing the things let’s say that are worthy of the 10 Foot experience or that we would deem to be that. But even with that, but still, hundreds of thousands of episodes across thousands of sites and so the way, you cant do that manually so from a technology standpoint we search. We are search guys and the core team here comes from search and so what we spend our time dealing with is kind of plugging all the technology into these thousands of sites and doing it so that we could suck down all the data and then normalize it into one consistent data structure, because our, if you go back to the beginning I mean our goal here was to build the T.V. guide to the next generation or what we thought was more, what would look like a lot more like yahoo or IMDB or Wikipedia would schedule grid. It’s no longer about when things are on, right? But the problem is that there is no, there was no metadata that existed yet. It wasn’t like plugging in the shopping search where you could just say, size 13 blue, Nike running shoes, suck that down and its all kind of already there. We had to go create it site by site. So the reason we were able to get all that data is because we set up technology to go suck it all down and that is why even when things change, you have a new website, we know about it automatically and the UI site, I just think , we have, we’ve always I think gone back to Ask, they have a very good UI scheme and we took a lot of pride now, we have put a lot of effort into it, we care about it, which I think is half the battle sometimes so hopefully it looks and feels vey, very easy to use. Interviewer: Alright. I want to come back to this. We are going to go in a chronological order and I will come back to the UI because I would love to find out how people improve their UI and how they even watch users interact with their websites so they know what needs to be improved. Why don’t we start with a website that I only read about in the New York Times article recently, something called NO X. That apparently was the gateway drug for you. What was that? Interviewee: It was the gateway drug to me. Interviewer: That was what got you into Internet entrepreneurship? Interviewee: oh, it was my first job really, I mean I never, so I mean the short version of this is I went to UCLA and you know as a kid growing up, my dad was a lawyer, my mom was a teacher, our family business was a fishing ship store, I mean am not coming from a big linear people who were reading the wall street journal here and growing up I had never done anything other than read the sports page and the entertainment section and that pretty much existed all the way through college where I was a river guide and I worked in a book store. I mean I never really had a career track and so I did what all people, who don’t know what they want to do, do. I went to law school. Very expensive and boring way to figure out what you don’t want to do and so I got really lucky, I switched over to business school and one of the professors there hooked me up with a bunch of internet start ups, this is ‘96 and one was hot wired here in San Francisco which created the first ad, one was jam TV, which was the first, it became emusic and then the third was a company in Atlanta called InformationAmerica, which wasn’t a real online business. It was kind of like … in fact it had been thought by westlaw, and they did public records, they sold them via, you know through online to lawyers and businesses and private investigators and my first job there interning was build us a web version not just me, I mean I was with a team of people who did it. It just kind of clicked and I spent 8 months helping build it off the ground and around the same time two of my classmates at Emery business school were starting a company which became eTour and they needed a product guy and so I got cocky and said sure I could do that and so I joined this start up in August of ’97. Their name, by the way, through the corporate entity was [Jaxtinet], awesome name. Interviewer: For eTour, right? Interviewee: Yeah, it became eTour after we got funding. Yeah, so I joined the two down and started helping them build that out. Interviewer: I see, so we talk before the end of the interview. Back then you and I did business together, I think the first time I met you was in Atlanta in your office. We used to send members to you, you used to send big nice checks to us, it was a great relationship for a while. Interviewee: Crazy days. Interviewer: Those were the days. Here is what I haven’t seen in the bios of you and actually and of your co-founder. I see sold to Ask Jeeves, I see you raised over fifty million dollars, in fact the New York Times article said we sold the company to askjeeves.com by the skin of our teeth in 2001 but what no one says is, this is the hard part for me to say because I want to make sure that you feel comfortable here being open and that you, well I want to make sure that you feel comfortable. The company went bankrupt, right? Interviewee: No, I mean not technically. I think what a lot of companies in that period, what happened was we didn’t sell for as much as the company had raised essentially. The thing with eTour was that you know, the company did raise all these money. It was the top website and the funny thing is we were one of those companies. Again I was the product guy I wasn’t on the board or in a position to be making these decisions, but we, you know have these incredible offers, for four hundred million dollars and three hundred million dollars and it’s just a great example of what was happening at that time. Where our board was, you know, the script of people who had already made a ton of money by going public, or whatever is the founder of … the founder of IXL, which was like a big agency at the time, the founder of Relevantknowledge which became Media Metrix so these guys kind of all hit it and you know the company decided not to pursue these options at the time in order to go public, which is a very you know, common thing in 2000 and … Interviewer: ……back then and a list of all the people that were going to get friends and family shares when we went public and here I was, an unfunded company, I got from no where and I was thinking in that direction so I completely get that. Interviewee: Yeah and so, if you, I mean the long story short is, the market crushed, we didn’t go public, we went on fumes and sold what we had wanted and so we sold to Ask and you know what we made on that deal, you know was not going to cover everything that the company had spent on, so in order to build up to go public. Its one really funny and interesting thing is that, one of the models for kind of priming the punk to go public was Ask Jeeves. I think I remember being in these meetings and people saying you know that we need to like buy wall street journal ads, these things were expensive and you know we were doing good revenue but it was you know, eight, ten million a year, it wasn’t enough to really, these days talk of, going public and buying these expensive ads we did television ads, you probably remember this and that was supposed to kind of like increase awareness before we went public and then they were like if we go public I think five hundred million is the original price that we were supposed to go out at and so you know it’s interesting from our beginnings which was as you said we were not funded, we were just three guys at a business school in Atlanta, and we actually had to prove ourselves, and we had to think about, I mean for people who don’t know what eTour was, it was such a stumble upon. The only real difference was that there was no such thing as social at the time on the web and we had a team of editors essentially putting all the websites in the cue, but it was the same model whenever we x number of sites would be paid to be there. The sites would match our interests, thumbs up, thumbs down, hit the next site button, you know, so. Interviewer: It was a great company. You would say what your interests were, you would see a big button on the bottom of the page and you could just keep flipping through pages that match your interest just like you said. Just like stumble upon, the revenue came from those, the pages that were sponsored and you were sending traffic directly to the sponsors websites so that they can make, so that they can use the full page to sell users on their servers and to get them to understand what the product was, which is so much better than just a little banner ad. Interviewee: Yeah, but it was definitely ahead of its time and I would say, I mean what happened with eTour after we sold it was interesting because ask was on its own precarious position at the time and we actually had to make a lot of choices. Etour was one of the things that we got rid of along with our dance points, such and yahoo answers three years before that and we just killed it too. We didn’t even raise our first dime for eTour until we were already the number one ring site in the web and user loyalty and then all of a sudden the, you know the frothy market had taken off and people were thrown off the idea, but you know it was a very cool site and good idea and just early you know. Interviewer: I thought that, actually, you’re right, it wasn’t bankruptcy there was something like bankruptcy and we had to deal with lawyers in order to get our final payments and we were told that if we pushed it then we would be pushing the company into bankruptcy and then the lawyers would get more of whatever cash was left in the bank than we would end up getting and so. Interviewee: It just that it didn’t cover you know, all the expenses that the company had made out during that period it included things like advertising and we did CPA deals your company Mailbits , you know all kinds of things like we were getting a hundred thousand users from the Island of [banatude] through [melben] so in an island that only had three thousand in abidance so we were wondering you know what was that and there were all kinds of things that we could have gone into, I think the thing is that the company had also done things like, it bought a ten year lease on a building in down town Atlanta. You know, things that you just don’t, this is beyond lean start up and you know, this is the same thing that you would have seen at two hundred companies in San Francisco as well, so anyway, I mean the, at the end of the day we are able to, you know, ask it or eTour has a very good reputation product wise at the time and so ask was one of the multiple companies who wanted it and so we wound up there. The interesting thing about that is that Ask was, I think the day that we were part of that month was worth 30 million dollars, it was probably capital, it was worth 30 million dollars and you would have hundred million in cash at the bank. So it was actually negatively valued from a market perspective. Most of the money at the same time, this is also getting kind of tug of war in the market, was being put into the software division of the company which was a, be – to – be kind of prefabricated question – answer product. Like if you were good in Nike site, you would type into their search box, you know, how can I return my shoes online, and it would already kind of have an answer for you and that was like all the investment most of the market had and the reasons because ask didn’t have a business model yet and so you know the whole story of how Google happened has a lot to do with, I think what are the search, quote and quote such kind of things we were doing the time which is that they were bastardizing their websites with seventeen different forms of banner ads and all these things trying to get profitable, not become delisted and so this was still those days and so that’s why ask showed off at the eight different lines of business including eTour as one of them and our international businesses, things like that, so crazy crush occurred. Interviewer: Alright, I don’t want to make you feel uncomfortable so I am not going to ask many more questions about eTour, if there is something that you feel you want to say about Mailbit, yeah, if there is something that you want to say about our relationship with it, I am completely comfortable with it, you can say even the negative stuff, I just want, I want to be open as you feel comfortable and if there is anything you remember about our experience, feel free to say it too. Interviewee: I mean, I think the problem at the time was, you know I guess this is just wildwest, for everybody who was in existence then. And frankly it’s not even just the people who didn’t make it also the people who did make it, some of the missteps they made at the time that they are still paying for it. Yahoo is a great example, then you are shifting to becoming a portal or losing their brands as a search engine, kind of giving their businesses to Google, which have a lot of implications down the road, you know I think one of the things that happen a lot of times, people value in companies based on the number of user it’s not based on revenue but again if you look back and think of the thousands of the companies founded that go public versus the three in our space that do so every year now, it was I think it was a very hard time to even gauge. If I look back the biggest thing for me is just experience and knowing, hey I know how to build really good stuff and my team, some of them are still here, you know. You know how to build really good things, you know how to draw an audience and so those lessons were important. But say even some of the business lessons maybe don’t even apply so much just because of how crazy ‘99 to 2000 was, the sheer period when, I mean it was just insanity. I remember being in conferences where they would run a ticker on the wall of all the IPOs and all the public companies, I mean everybody would go on stage goes public and I don’t know it’s funny; I keep waiting for someone to have catalogued that era in a really appropriate way. Maybe the best, what was the start up, the government start up in New York? I think I heard a documentary about it. Interviewer: Oh, easystrartup.com or something was the name of the movie? Interviewee: That may have been the best overview of what was really happening maybe at the time and what people were doing and thinking or their instinct. Interviewer: I tell you I can never see that movie because it was too painful. Here is what happened to us. First of all for a long time companies were using us to go public in this way. We were able to generate registrations. All they cared about was the number of registrations because the market then would value them at a multiple of their registrations, so they might pay us about lets say for registration but the market said every internet company is worth twenty dollars times the number registered users, so they pay us a buck, they’d end up making the nineteen dollar difference by going public and then they would go public and the world would change for them. What happened to us, here is one of the mistakes that we made. I remember you guys coming into our office and we had this stinky little office in Queens, New York, not even Manhattan, the first time that Roger, your co-founder wanted to come see us I was so embarrassed, I said, “Why don’t we just meet at the airport, I’ll make it easier for you.” And so we met at the airport and then the next time he insisted on seeing the office. And so he came in, we showed you guys the office, I don’t know if you were there with him or not but I’m so embarrassed. We quickly moved across the street to a Chinese place which at the time I thought was more impressive, and now I look back, I look, what was I thinking, a Chinese restaurant in the middle of Queens, that’s where I’m taking these guys? Interviewee: Well, you were, it was probably your first job, or one of them, right? I mean… Interviewer: It was my first… essentially it was my first internet company. Soon after it my first company in general. Actually no, before that my kid brother and I tried a bunch of different things. Soon after we bought and did a ten year lease on office space in Manhattan; just like you’re talking about. Ten years of full floor of space because there were no offices with internet access on them. We had to gut the whole office, rewire it so that we could have the internet that we needed and then we were stuck with this office space, and to this day, I still have the lease on. I’m now subletting it. Interviewee: Really? Interviewer: Yeah. Interviewee: That’s cool. Interviewer: It’s cool, except when it hurts. Okay so… Interviewee: Probably always… well, why don’t you live in there now? Interviewer: In New York? I then, I got burned out. We were just working non-stop and then when the bubble burst was when I was ready to just take a break and go explore a life, but the bubble burst and I had to stay on top of my business. And then when things finally leveled off I said I’m going to go and take some space. That’s when I went to Los Angeles; I hang out for a little bit, I put work behind me. I think that there are a lot of us who went through that period and were changed by it. For me, I was more open to non-work activities. For others, I noticed that they were treated from the internet and never able to go. One of the things I admired about you and a few others who were at that time, and kept at it, is that you kept at it. You didn’t disappear the way that I did, you didn’t take time off the way that I did, you stayed with ASK, you stayed on top of the industry, and you grew and you grew and you grew until you became the CEO of ASK which was a part of IAC, a publicly traded company. Did you at any point feel like, ‘I got to get out of here; I got to get a freaking break. I was running this one company, the bubble burst, I’m now here, and now then, do you ever feel that? Interviewee: No, to tell you, I wish I had first of all. Not then. One interesting thing for me is I had taken a year off between college and law school and I went and lived in Barcelona and just — I had a year off where I kind of did all that. But then, and then the first day at law school I met my wife; my eventual wife. And so when eTour went to Ask and I was from the area. So I grew up on the peninsula, five minutes from Stanford, half my friends’ parents worked in the valley, so I was kind of swimming the wrong way there starting an internet company in Atlanta having been from here anyway. And so ASK… I spent three months integrating e-tour into ASK from Atlanta, and then I got the luckiest thing that ever happened to me. And this is why eTour was becoming kind of a blur, because ASK then became my real start-up in a way. In fact, I would say that I made a mistake ultimately in feeling that it was mine, when really it wasn’t. That’s how attached I got to it. But the week that that acquisition happened, ASK hired a new president, for their web division named Steve Birkwoods who became my mentor. And so, we hit it off and by the end of that summer he was offering me to… he was going to pay me to move home. We had just had our first kid, my parents were still here, and so I looked at it as like, “Great! Pay me to move me out and if it doesn’t work” because, I really was not a big fan of Ask Jeeves at the time. I thought like everybody else did, I was not a fan boy. I kind of ran into trouble when I first started because I shit talked too much about it, but he liked me and he moved me out as head of product and actually it wasn’t even overall product, it was the head of advertising products. And so, he wound up bringing me along and the two of us wound up kind of turning it around together was a really incredible way of teaching about business. So I wound up being there for what, seven years? And the first three in product, then two is general manager of the ASK business because we bought a couple other companies and so ASK chief’s Inc, — one of them which was ASK, so when I became CEO, technically it wasn’t even a new job, it was almost more of a different title for the same job. But that kept me going. That whole time it was just like, I was doing, ASK was my IPO ultimately, because it was 79 degrees cents a share the day I joined, we got up to 45 dollars a share by 2004, and so, sold for over 2 billion dollars. It was an incredible rise. Interviewer: Let’s talk about how you did that. And it kept doing well and it survived even after the sale. Talk about the toughest area to be in. Its online search, huge competition, lots of money at stake, nobody’s taking their eye off the ball even for a second and you’re in there competing with them. When you came in there, you were shit talking them. Why? What did you see that was wrong with the product at the time? Interviewee: Set-up. I mean, right, remember? Interviewer: You made the promise of answers… if you asked the question, it would give you the answer. Interviewee: It was the exact opposite of Google. I mean, ASK overpromised and under-delivered. It said it would answer questions and it didn’t. And the reason it didn’t is because it’s extremely hard. It’s the hardest problem solve and search. That’s why nobody does it, even today at a high degree of… high percentage of accuracy. And I mean, let alone in 1997, 1998, give me a break. So, then you had the crash, which decimated the company, and the morale, of everybody there, you had rolling blackouts in California at the time and so to like save money, the lights went off early. Literally the lights in the whole building would go off and like tabloid; everybody would go home. So people in the blackouts ending the lights would come back on, everybody would go home. You’d almost reestablish this start of culture… they start charging for cokes. So meanwhile we’re doing all this, we’re not profitable, we have 17 ads on the page, and Google came along with a real search that works, no ads on the page, they only did search, which was still the number one user need online, every one of its competition had taken its eye off the ball to become a portal, and you know, the day I joined I think Google already had twenty times as many searches as ASK. Now, with ASK we did have, was a brand and it may have been one that people didn’t like, it may have been the butt of a lot of jokes, but it was well known. And so it still had millions of users. And so we didn’t have the money to invest in a lot of technology, and a lot of people and search advertising had not taken off yet so we weren’t going to get that revenue anytime soon. So we resolved simply to take the people who were already coming, give them a better service, so that today if 17 out of 100 people liked what they got, tomorrow it would be 18, and then they would come back more often, and we would grow traffic that way. And so the day I left, that was always the strategy. I mean even through times that we did television ads and things like that under [Berry Dealer], it was still that we never expected to beat Google or to be larger, but it was “how much can we grow as a percentage for ourselves?” and so everything we did at that period of time was dedicated at that. The first thing we bought was that we bought a search engine, or I should say Stephen did, because it was really an ASK thing and I was just part of his team. A search engine called Teoma, in New Jersey which was founded by a couple of reckless professors, and it was legit, I mean it was a theory, it was only 7-10 people but it was a legit search technology and so ASK I think traded 10% of its market cap to this little startup, who they all wound up doing very well, and started building its own search engine. We decided that the one thing that we could do very well, is that people are already coming to us to do search, so let’s do search, get rid of everything else and let’s do it well. So from that day, we got Teoma, we started building out what ultimately became 200 people and scattered away New Jersey and we began building search. Interviewer: Where were your search results coming from before? Interviewee: Well, technically I don’t thing ASK had search at that point. So ironically even though, if you would look at the user data, even though it was known for questions, what people were using, well people were using it for research, and if you surveyed any user, they would actually tell you that links were answers. So in a way, what Google was already doing was already answering question. So it wasn’t in our strategy to do anything that they were doing, and even later on some people said that we tried to become more like them. That wasn’t true at all. We were trying to answer questions or more accurate searches because people were being trained to type queries however they wanted to, not be forced to do it as a question. And so what we realized is that you have to play defense not offense. You can’t tell people how to use a search engine; you have to let them use it the way they’re going to use it and then be on the other side of that search box waiting for them, with the best answer or tools that can help find the answer possible. And that could only be done after the query. If you try and force the user before the query through advanced search, toggling of any kind, you’re hopeless, because…. Interveiwer: How did you try to do that- did you try to do it at any point by asking the beginning of the question by trying to encourage them to form their search query as a question, did you say over and over in different ways that users need to ask questions, how’d you do it? Interviewee: ASK had spent a lot of money and a lot of time and they ultimately would have gone bankrupt if they hadn’t figured out a way to do this right; explaining to users that they needed to ask it in the form of a question. It was like jeopardy. Interviewer: So you would just keep buying ads to say, “This is the way you interact with our site?” Interviewee: By the time I got there, there was no money for ads. They weren’t advertising anymore; but that was… the brand was very well established. Jeeves was part of culture. I mean it was an easy day parade. People knew Ask Jeeves. And that turned out to be a great asset again, no matter how negative that brand was. So what we said was, “what can we do to answer these questions better?” and so the first was try to let them answer…. Ask it anyway they want, don’t force them into framing their question a certain way because what it did was it added a step of work. It made them think; horrible. So don’t make them think, let them ask it anyway they want, and then answer it as best you can. The only way to add scale across billions of searches, answer questions is with plain old search technology. Because it’s the only thing that’s going to broadly bring back enough results that are accurate enough. Because if… You know what I always say about search – a lot of people think they know how to go on a search engine because they use search, because its so… it’s the number one thing that you use online. And that’s like to me, that’s like people thinking they can write a screen play because they watch movies or sitcoms. It’s actually… if you sit in the other side of the search box and you watch what comes through, first of all, it’s disturbing. Second of all, it’s extremely educational. Just like how crazy broad it is. How the same topic can be asked a hundred different ways every single day; and how it changes based on… Some things never change. Like, how can I tell if I’m pregnant? Or dictionary, things like that. Other things, like the oil spill and whatever’s happening today, are going to change a lot. And so there’s no way you can manually deal with it and there’s no way you can ever be prefabricated. Interviewer: That’s right. Two months ago, oil spill would have been, maybe “I spilled oil on my carpet,” “how do I clean it” – is the result I would look for. Today oil spill is a query that oil spill’s looking for information on the recent oil spill. Interviewee: Right. And so we have to actually make a very tough decision; because we actually do make the decision to be less differentiated. Which kind of goes against every fiber in my body in terms of branding that it’s exactly what people tell you not to do. But the truth is it’s the only reason we grew as much as we did after that because we started answering what people were asking. And if we… it would have been cutting off our noses from our face to try to simply differentiate from other search engines, just to be different. And so the decision was we’d rather have a slice of a water-melon than a whole grape and we’d rather… and so even today, when ASK is kind of off the map and considered being all so rand and… its still…. They just released the Google top 1000 sites it was still 18th… I mean, I mean its crazy. And its because there’s not that many brand destination people know for search and if you do a better job than you did yesterday, more people will come back tomorrow. Interveiwer: So, how did you change, it would be, You were asking people questions and if they typed in a question where would the results come from and what were those results? Interviewee: I mean, the day I got there, the thing at the top, well… so first of all one of the best things Steve Birkwood taught me was about being obsessive with data. And we; luckily, one of the things that ASK had done, by the way, there were so many talented smart good people who had been through ASK or were still at ASK and it was great it was the people who cared the most. I think it had gone from 800 people down to 250 people when I got there, but Peter Norbick, one of the coming… the head of relevance at Google had been through ASK and all kinds of very good people had touched this. But the first thing you would get was called the knowledge base. And that was the prefabricated hand matching answers to your question. So that if you would say, “Is it raining in Seattle”, there would be an answer there. It turned out that would match 85% of the time, first thing of the page and it would only be picked out 25% of the time. So you’re just shooting yourself in the mess. I mean when you do that to your site, it’s just, you’re just done. Interviewer: Why? You’ve just… I’ve just asked you what the temperature is in Seattle, you’ve told me the answer, I’m not clicking, why? Interviewee: We’ve only told you the answer, basically 1 out of 5 times. Interviewer: But it’s… Oh I thought it was an 85% result rate, 85% of the time we had the answer. Actually, it would come up 85% of the time, but it would only be picked up 25% of the time. Interviewer: Yeah, why wasn’t it picked on more? Interviewee: Why wasn’t it? – because it was inaccurate. Because if you’re trying to hand match these things to billions of queries, you’re going to start stretching the system and it would come up when it shouldn’t. Now, partly, it would come up when it shouldn’t’ because of failures in technology, partly it came up when is shouldn’t because the company was married to its original concept. And so, the question was how can we get the 85% matching to the 27 where honestly, what we wound up seeing was that if you just replace that with regular search results, even Teoma, day one, which was not a very good search engine when we got it, that pivot went up to like, it matched 90% of the time and it was picked on 80% of the time.. Right, so that first year, we increased traffic like 40, 50% I think, from where it was. And that was just based on the people coming, coming back more often. Interviewer: Okay, that’s a tough… that’s more than a pivot. That’s a big change and it’s a tough one to make. How did you guys come to that decision that you were going to change the business that dramatically? Was there a champion inside who said you have to do this; were there conversations that you can tell us a little bit about? Interviewee: Yeah. Well I’d say the person most responsible was Steve Birkwoods, because, myself, Paul Gardy who’s the head of Teoma, several other people, we saw this and were pushing to kind of dump that knowledge base and go with more search oriented products that were proprietary, that we could own, that we saw the data on as opposed to outsourcing it. One of the ideas was outsourcers talking to me or Google, or somebody. But we said, look, we’re going to …. We went to the board, which included the founder of Ask Jeeves and we said we want to take this in a completely different direction, and it was a lot of arm wrestling. It was very painful. I always would say I had a lot of arrows in my back from pushing so hard against historical product of ours. Interviewer: So how did you convince them? I’m going to have a situation in my life and everyone listening too is going to have a situation in their life, lives; where they’re convinced that they have to make a drastic change but they have to convince others in order to make that change. How did you do it? Interviewee: It was the only way. So we owned Teoma already at that point. We’d already put them in there… AB testing, but in 2001, AB testing wasn’t that common. We just did a crap look of it. And every click, every breath a user took on our site, we measured; everything. We had a data warehouse that we call “What’s up,” which dates us because that was from the Budweiser commercial. Where every morning Steve and I would get in, and our offices were next to each other and we would go online and we would start shouting to each other like, “Why was the clicks on this product down 0.1% during… between 3.00 pm and 4.00 pm yesterday?” And you just start analyzing it and seeing and then you would test other configurations and, by the way, this wound up also changing us from a revenue point of view because what we also proved to ourselves was that there’s only one click that you can get on any page. So make it the most valuable click it could be. And that you would rather… and ironically, you could by having fewer ads in the page you could make more money because you would drive the clicks into the things that were most valuable. We had Overtures on at the time and it was amazing to see higher RPNs by having fewer ads and things like if you got rid of this banner, the results get moved up the page. That increases the clickthrough rates both on your regular results and on the search ads. That increases loyalty. Measure that over six months, you see that after six months loyalty is now… you’ve now broken even on getting on the money you would have made through those ads and you are now getting more users back and that’s the gift that keeps on giving. All those kinds of decisions are made with data and at the end of the day whether it was the Ask [Ford] in 2001 trusting us to go in a new direction with the product or it was [Barry Dayler] when he acquired us letting us go from ten ads above our search results which we had to do as a public company and we can talk about how we got into that because that was a misreading of data and someone led us to think that that was good for the business. But once you went to ten ads above the results you could never go back because now you had to keep making quarterly numbers. Barry trusted us that we did the eight months of research that said if we went from ten ads to three that it would take us X amount of time to break even and then 2006 we grew 50% after we got rid of those ten ads. And Barry trusted, so I guess, I don’t know, we have a good way of telling people to trust us but we always had data that would tell you, you would be okay if you did it. Interviewer: What was the misreading of data that ended up that caused you to have ten ads on top of surf results? Interviewee: Well, it was both misreading and it was going back to drug analogy, it was heroine where I can’t remember what it was but long story short, we went down to just search ads Overture made that market, she gave it all the credit in the world for it, people now, you know, victors rewrite history, but it wasn’t Google, it was Overture, Google copied Overture, they did it in a unique way, but for the most part it was Overture. And then 2002 we switched to Google. There were two reasons. One was Google was making this product for themselves so they gave it to us as long as they were making $1 and it was just an X amount fee that their ads. They could do it, so they could give us such a high revenue share that Overture which had no proprietary traffic, they had to pass those costs on to their partners. So, it just wasn’t even close! Besides that, Google broad matched their search terms and it took Overture a while to catch up to this. They were, they had better relevance but Google had made you more money because their ads were just… match even times when they shouldn’t. Those two things meant that Google’s revenue per thousand searches were so lucrative that within one quarter of switching to them in 2002, Ask had its first profitable quarter ever in Q4, 2002. And that started our stock settlement. While I would like to take credit for all of it and I’m sure the team back then would… and you know, I think we all had a big impact on the product side, really the search market was so hot and made us all so much money that say that was at least half of what made us perceive it to be such a great turn around, right? Luckily for us we had the grand view of the traffic. Now, a year later, when your –- over your costs starts slowing down, well, you are not going to have a double impact of traffic growth in the incredible revenue or PM growth. So, now you are now you start twisting dials to make your numbers within the EPP couple. Google right now will never really see when they are doing this but they have every knob that they ever want to turn change the font sizes, change the shading of the ads from blue to yellow back to light blue. So many things that you can do especially when they have a network the way that they have it. For Ask which did not have that footprint, we had our own website mostly that we could deal with. And so, we started having more ads on the page. It wasn’t on every query; it was maybe sometimes. And then as you go you start thinking, maybe we could stomach this on 5% of all queries having ten ads. Well, it turned out it was more than 5%, it winded up being 15%. Then a year later as Google grew its business and they got more and more companies advertising that 15% grew to 30%. It was every commercial querry and it is a fact that every click into an ad is at the detriment, not every click, four to five clicks, my opinion. Interviewer: Four to five clicks on an ad? Interviewee: Results negatively on user loyalty because it textually matches but when you get to the page, it rarely is what you were actually looking for; because its targeting running shoes, it doesn’t mean that you want to buy them on the spot at that moment. Anyway, that’s why later, we knew this and that’s why we AB test ourselves to death trying to figure out how we could get out of the death sparrow having so many ads and to [Barry Dayler] credit, he trusted us and we had the best year ever in 2006. Interviewer: A couple of years ago I read on Blogs those ads were coming back. You guys went from two ads to three ads and that there is more and more, why? Interviewee: I think it’s a lot of the same reason. It’s just something that there’s a lot of private conversations that I’ll probably… I’ll leave that to be corporate business. But a long story short, what I would just say that every lesson that we had to — was not wrong. And so, if you want to turn that dial, well there’s consequences of user experience that there’s consequences for the user experience going back to the history of the web, you can see that there’s a penalty to pay with users. Interviewer: How do you get more users and search? I saw the ads that you guys were doing on TV, it’s the algorithm ad and I think I saw some ads online, what do you do to grow search? Interviewee: Well, the most important thing over that time was the thing the thing we — about, least understood. It was just that we innovated our asses off! We were very well respected even when we were Ask Jeeves. During that period among the… the people at the core research, starting to their credit with Danny Sullivan, Chris [Sherman], Garry Price, Barry [Shorts], the people at the heart of the search industry, they didn’t have banisters against us, at least until we started to prove ourselves, John [Datel] is another one , where they took our innovation at face value. We were in many of the things that then became standard search, whether it was saving search results, this thing called ‘My Jeeves’ at the time, which is very forward looking, related search – we were the first ones to actually put it on the page, Interviewer: Search types? Interviewee: Yeah, things that we could… yeah exactly, type ahead, things that we called “smart answers”, which were hacking back to the knowledge base that didn’t work, but now it did work and we restricted the matching to only when it was appropriate and then the clickthrough rate was insanely high, which Google, we gave Google one box. Even today, we were the first ones to change the home page, the way Bing and Google now have; having images, pretty background images, it’s cheesy, but people liked it. We were scrappy, and we were the 4th placed search engine, it was our place to innovate it our way from where we were. The most gratifying thing was the — twice within one year, wrote full column ad our articles that were basically ads for Ask saying that we were awesome! Mistakenly I thought that would make us but then big things started happening online in 2005-2006. This was the Blogger-sphere , social… people’s attention just started getting very dispatched and so one article couldn’t make you the way it could five years earlier. In fact no articles would have the impact they had five years earlier. And it still exists today, it takes massive word-of-mouth volume and consistency over time to build any brand online. But luckily at the time we couldn’t afford new TV ads or anything like that. So, user loyalty was how we improved originally, then we could afford to do advertising but we couldn’t afford to do very much. And so we actually experimented ourselves with TV ads but they were very descriptive, they were just re-introduction of the brand to people, asking each other how I would call the ‘long’ orbit, which is, we touched almost everybody online it’s just that instead of once a day or once a week it was once every three months or when you had a question. So even loyalty would take us a lot of time to get to everybody because they didn’t come to Ask so often but what we found was you stocked people’s awareness of us and then they would come back once a month, and then we had the opportunity to show them the new sites. So, TV ads were actually affordable for us when we did them affordably, cheaply and scriptedly. We saw this even in 2006, we did ads that honestly just showed our page and what was different about it. So, those were all works and I would argue that we were in a unique position with our brand to do those ads once people are not it’s not a good brand introduction. [Doodle] maybe, was a good example of one that was. Now, interestingly, [Doodle] wrote the same ad agency we did for the algorithm. Big expenses over-the-top and it just didn’t work. It was a company-wide IC Ask decision, I was definitely part of it to experiment with, some much more dramatic and creative ads. Barry, to his credit, believed so much in our products that he wanted the world to know about it and it was just a shitty campaign – there’s no other way to put it. It just wasn’t very good in a way it made us seem grabby. I think we may have gone from the kid from the back of the class everybody roots for to the one people thought was snorty and I think that’s a fine line. I think people were starting to root for us in the search industry and then all of a sudden they were like, “What are they doing?” But they never did that when we ran other TV ads, just these ads. So, anyway, by the end of the year we were back to running these ones that literally just showed people using our website and little… you know, we had our highest track report ever in Q4, 2007. Interviewer: Is there a way to add viral marketing to search? Interviewee: No, I would say that viral marketing its searches word of mouth. It’s… and to that extent I think… so many things get tried over and over again. And I always say, just because something is new to you doesn’t mean it’s new. And so many people kind of wet through these search companies that you get new blood in and then they go back to trying the same old things, like Microsoft just tried CashBack thing and that didn’t work. Interviewer: Didn’t you guys do that too before? Interviewee: No. Interviewer: Someone did. Interviewee: Ask didn’t do it. But there were businesses that were coming up… [Greengo] that did it, that they sold to Columbia House maybe… or whatever that … yeah, Columbia House. Interviewer: I don’t remember. Interviewee: It’s interesting, I’ve thought a lot about this and I think again, the misconception of Ask and the misjudgment of Ask would have been the failure if it didn’t get more traffic than Google and Yahoo. When it was starting from a base of ten million users to twenty or thirty as opposed to four hundred million users or where Google was even when I got there which was the biggest brand in the world. At the time you would have never, now Facebook and Twitter have taken some of these but you would have never seen anything like what had happened to their brand where every television show was talking about them, news channels talking about it. So it was incredible kind of headway to walk into, so, what I was trying to get the team on was, measure us versus ourselves, measure us versus last week, last month, last year, not only against these other guys, especially then we are going to start trying to copy them and that’s not going to take you anywhere good. Focus on our users, focus on innovating and focus on the data. What I want to say about viral, to wrap up, research, Google has such a large talented team on search and they have a killer app for search, which is traffic. They seal the queries, they can apply technology that improves the queries through the just as their own users usage of their site, which also is what we were doing but they could do it at a massive scale beyond us that….aAnd users never became sophisticated, they wanted a different way of searching. It was kind of default, that no matter what you tried to do majority of the time when they search they are under duress, they want to get something done, they want to get it done right now, they are not going to think about, you know, some feature that you may have that’s different, they are not going to think about… you know, it’s going to be, ‘What do they think works?’. And actually, even worse, it maybe what is good enough that they will trust it will work versus the risk that the upside of Ask, for example, is worth the downside of not getting what they want before they have to get back to check on their baby, to deal with this recipe that they were looking up. So, it’s a very hard place to… I’m not going to say that Google had to check mail on people but even from a design point of view, white space with nothing else in the way, if you just do that, you are just copying them. Right? Interviewer: Right. Interviewee: But it’s what users want! What do you do? Do you do something different just to do that or do you give your users what they want even if it’s more similar to what other people are doing? Interviewer: But, let me ask one of these questions about Ask and then I’ve got to come back to Clicker. One of my viewers is Gabriel [Wineberg] guys creating duckduckgo.com, do you know that search engine? Interviewee: Yeah. Interviewer: Do you have any advice for him? Interviewee: Look, I think, two things. One is, whatever he’s doing from a brand point of view is appealing to a certain group of people and I love that. One thing I love that he did is privacy, so right before I left Ask, we decided that we kind of saw that the market was going on Privacy. Everybody’s going to regulate the shit out of us if we don’t regulate ourselves. So, we are going to draw a line in the sand here and we are going to say we are only going to keep user data, I can’t remember now, whatever it was, it was like a third as long as the other search engines, it was whatever the European Union because 40% of our revenue is UK based, whatever the European Union said was mandatory. And then we went deep on broadcast on the fact that we were doing this. Now, DuckDuckGo has done that and I think that they are making headway on being a place that doesn’t record what you are doing. Now, again, I don’t know if that’s enough to overcome the good enough problem under duress, but I think if it’s a way to become default for a certain number of people then that’s great. The great thing about search is you don’t have to be a big search engine to make a lot of money. The revenue is so powerful in search that you know, again, you can be very misleading be called a ‘Google-killer’. I mean Taoma, when we first bought it in 2001, I learned that this Google-killer thing is not that fruitful, I mean, we were on CNN as a Google-killer with Taoma! You couldn’t even pronounce it, or spell it! And the press loved that story but people wouldn’t buy it. I think it has got to be feature based, quality based then I would be sticking to it. Interviewer: Okay. Alright, I have a note here to come back to UI and Clicker. What do you do for UI, do you do listening labs? Are you watching people? Are you… How are you tracking clicks online? What are you doing? Interviewee: It’s a really good for us to be very creative — process. So, first of all, we know that at the core we have a plan, so I like to think of my strategy for team building, as kind of like the A-team so that makes me handball. Not the new A team which looks like it will suck, but the real A team. You have these guys who are just really good at certain things and have proven themselves over time, and that’s your team. And that core team for me has been together now a long time and they are here on Clicker, and so we knew that through the user they needed this presented in a more directory or taxonomy format. We knew that with video things would be very visual, and we knew that we were going to have information overload even on our pages to do this right. So, I will never be the cleanest from the standpoint that our there’s a tone of data around every one of these shows and episodes that’s important to the user and we’re going to be very data-rich. And so then it just went to 15 different ways of designing. The good news for us is we had a year to do it, you know, because it took it took someone to do the research technology to get all the data in the first place that we had time to get it right. I don’t like usability lab because the problem is people are being paid to be there. It’s one person being interviewed by another one person. And what I discovered in 09 was a website called usertesting.com which I love. If I was an investor I would have invested in and put as much juice behind it as possible because for now twenty five dollars a person I can have them use my website under password protection. I can target it by country, by age, by browser type you know. And I can then watch them screen themselves using my site and you will find when people are alone in their homes they are brutally honest. They will tell you what they really think. And so whether features are confusing or you look so much like somebody else, or they think this is better than somebody else, you hear it. And so I don’t know we may have made four hundred tweaks to the website between the first data and when we launched. There’s some feedback we got through user testing. Interviewer: I see. So that’s how…I’m sorry, you go ahead. Interviewee: No ,no just to say that we had a two month official data period where we had close to fifty thousand people on tech cranch on site using it and even the site that we launched to everyone in November was not the same site exactly that we had in September. Interviewer: So now I think I understand how with the long period of time where the average person couldn’t come on your website you were still collecting user data because you were using services like usertesting.com to watch people and to see how they were interacting and get their feedback. Interv
• You Have To Hear How The Founder Of MailFinch Built His Business – with Paul Singh 28 April, 2010, 2:31 pm
  Skip to: full video | audio download | about interviewee | full transcript | sponsors | answers You probably never heard of Paul Singh or MailFinch and might blow this interview off. Do NOT make that mistake! If you listen, you'll learn how Paul launched his business with nothing but a landing page and how he built it into a profitable, growing business by getting input from his users every step of the way. The FULL program Prefer audio? Great! "Right click" here for the MP3 format. I use my sponsor Wistia's video hosting platform because no one else gives me the stats they do. // See my stats for this video (Can't see video? Go to Mixergy.com) Embed the video: if(!navigator.mimeTypes['application/x-shockwave-flash'])Wistia.VideoEmbed('wistia_116053',640,310,{videoUrl:'http://mixergy-cdn.wistia.com/deliveries/6b0e038e8bd686bf268fb72f01ceabe12c5981cb.bin',stillUrl:'http://mixergy-cdn.wistia.com/deliveries/cb01fb294c1e58ec950d8b6aa5e94161b63aa5a2.bin',distilleryUrl:'http://distillery.wistia.com/x',accountKey:'wistia-production_1621',mediaId:'wistia-production_116053',mediaDuration:4423.27})Business Tips via Mixergy, home of the ambitious upstart! About Paul Singh Paul Singh is the founder of MailFinch, the company that helps you send direct mail. All you have to do is upload a PDF and they'll take care of the rest: printing, mailing, contact management, campaign blasts, drip campaigns and more. He also runs a business consulting company called Results Junkies. His previous company, Philtro, was acquired by CityVoice in late 2009. *Raw* transcript This is a raw, mechanical transcript. Readers (like you) are editing a better version here. Andrew: Here’s a quick way to improve your online business - add a form or a survey to your website and make it easy for your audience to give you feedback. I've been using Wufoo for years and I recommend that you use them for your embeddable forms and surveys. Not just because they're my sponsor, but because they're so easy to use that your audience will actually fill out your forms and take your surveys. Check out Wufoo.com, use them for free today, have them embedded on your website in minutes. Wufoo.com. This interview is also sponsored by Shopify. Many in my audience have said that they’ve heard my sponsorship messages about Shopify here on Mixergy. They checked it out, and it is, just as I've been saying, easy to set up a store with them. You'll have all the features that you need in order to sell and maintain inventory and take credit cards and everything else. You can even customize it, check out one of their themes and customize it and make it your own. With Shopify.com, you can be up and running with the store today. Within weeks, you'll be selling; within a month, you'll know how successful your online store can be. So check out Shopify right now. Finally, this interview is sponsored by Grasshopper, it's the virtual phone system that entrepreneurs love. When you set up a phone number with Grasshopper, you can have multiple extensions. If you're business doesn’t have multiple departments, that’s okay. You can still set them up and give the impression of size to anyone who calls you. Let them hear that they can call and reach the sales department, IT department, etc. Of course, as your business grows, each one of those extensions can have a real person and a real department behind it. Check out Grasshopper.com today. Here's the program. Hey, everyone. It's Andrew Warner, I'm the founder of Mixergy.com, home of the ambitious upstart. The goal here at Mixergy is to talk to a mix of different entrepreneurs, find out how they built their business, learn as much as we can from them. More importantly, as great as it is to find out about other people, I think it's more important for us to take the best ideas and use them in our own business. Then, email me if you're going to do it and tell me what you use. I love hearing from the audience about how they’ve used these ideas. Today I've got with me Paul Singh. He started an online business as a joke, got his first customer within the first day, business has been around for six months, has been profitable since the beginning. I'm going to grill him about how much money he's making. I'm going to grill him about why he did this as a joke. Also, just learn as much as we can about how the business grew. MailFinch is the name of this business. Paul, what is MailFinch? Interviewee: MailFinch is an on demand, direct mail platform. We basically make it super easy for you to send small batches of direct mail. Andrew: This is direct mail, that’s the paper-based mail that goes in people’s mailboxes, they open it up, the old stuff. Interviewee: That’s it, yes, it's the old stuff. Incidentally, it makes people a lot of money. Andrew: I'm going to find that out how much money makes you in a moment. But we're going to hold off on that for now and find out just where this came from? What was the original name for MailFinch? Interviewee: So the original name, it was called SnailPad, and realistically, there was no real reason I called it SnailPad other than it was an available domain and I thought, “Well, the name is really not going to be important.” Five seconds later, I bought the domain and launched something on that Monday. Andrew: You told me in the pre-interview that this was just a one-pager. What was on that one page? Interviewee: It was basically a single page that basically had a little textbox at the top where you can like paste your letter in. At the bottom, you put in your return address, destination address. When you press the send button, it actually took you to PayPal. You had to pay me $3 to send that one letter. Again, I kind of thought that maybe people would want to send letters to their grandmother or they want to send one letter to their mom. But that didn’t turn out to be how people use it. Andrew: (Paul, let's see if our video camera just…good, I thought we lost each other). Paul, once somebody paid, was it automated? Did you automatically set it? No, nothing like that, right? It's just a single page, goes to PayPal, and that’s it. Interviewee: Yes. And then it actually would email me a confirmation email. Obviously, the one from PayPal, telling me I got some money and then a separate email from my system that would say, “Here's what they want to mail, they want it on this date. Do it.” Then I would go into Word and make it look pretty and send it out. I was using a free printer that I actually got from my sister-in-law when she bought her last laptop. So, it was so ghetto. It's still is ghetto. Andrew: When the interview started, actually, I said that my goal here is to learn from entrepreneurs like you and play your best ideas and give it to my audience so they can use them. Before the interview, you said that one of the biggest take aways that you have from this is that minimum viable product, the link startup idea, that it really does work. This really is, the minimum viable product. It's just an HTML page that links over to PayPal, PayPal gave you the button, you didn’t need to do anything beyond that. Interviewee: That’s exactly what it was, actually. Andrew: How did anyone discover it? There are people out in the audience right now, they have Web pages, that they’ve been blogging on, and people still haven’t discovered. How did they discover your page? minute 5 to minute 10 Andrew: How did anyone discover it? There are people out in the audience right now, they have Web pages, that they’ve been blogging on, and people still haven’t discovered. How did they discover your page? Interviewee: When I emailed out the link to a couple of friends of mine…again, in hindsight, I know the answer. At the time, I was like, “Holy shit, how did somebody even find me?” But in hindsight, what had happened was that when I emailed it out, somebody that was in somebody else’s network decided to try the service. It just so happened that he turned out to be a real estate agent. Andrew: I see. So you just emailed it to your friends, you said, “Hey, I've created this website, if anybody wants to use it, go check it out.” Interviewee: Yes. Andrew: Now, I introduced this as a joke because you told me it was a joke for one site. Was it really a joke or were you trying to test out an idea that’s been rattling in your head? Interviewee: It definitely wasn’t rattling in my head. What had happened was that I had just exited my last startup and I was having dinner with a couple of friends in downtown DC. I'm fudging this, so if any of you, guys, listening, I'm sorry. But, in general, they were saying, “Paul, maybe you going to have to go get a real job now.” I said, “Oh, God, no, that’s not going to happen.” I'm going to try to figure out that there's something I can do that touches the real world, and that’s sort of how this kind of all happened. Actually, if you talk to some of those guys from that night at dinner, they’ll tell you that like, that day, they didn’t really think that I was going to do anything. Then the following Monday, when I launched it, they were like, “Oh, shit.” Actually, one of the guys at the table turned out to be an early customer and he was actually the first one to give me his actual credit card so that I could cover some of his mailing needs. Andrew: What option did you have with that first version? Interviewee: With the first version of the product? Andrew: Yes. I mean, I could understand that they can only write one letter, they can only address it to one person, and they can only come from one address. Right? So those are the three fields, basically, that you had there. But did you give them the option to send it first class versus third class? Did you give them the option to send one versus a hundred? There was only one letter that they could send out this way. Interviewee: Yes, it was just one. Within a day or two, once they started kind of seeing what people are mailing, it turned out that it was generally the same thing over and over. So I just experimented and I added a PDF upload area. That actually, turned out to be - I think in hindsight - what kind of helped the users use it ever more and give me more feedback about how they were using it. That’s how I really figured out what they're using it for, it really was just newsletters. It was all the email marketing stuff that your audience probably already knows about. But it turns out that a lot of brick and mortar places or a lot of specific industries still rely on high touch marketing. So, once they had that PDF upload, I started to see a lot of patterns in the data. We're not talking like thousands of data points, it was like, “Hey, this guy just sent the same PDF to ten people, I wonder why?” And then you look at his domain name, that’s actually how…before I got to the phone with anybody, the first thing I did was look at their domain name. I captured their email address on the premise that I said, “Hey, I'll send you a confirmation when the mail guy picks it up tomorrow.” So, when I looked at the domain name, I'm like, “Oh, this is on a gmail account. He's making money off of me, I got to figure out why.” Andrew: Actually, before we continue with the story, I got to say that the audience here is loving this idea. I see Dan Blank saying, “SnailPad, love it.” Eddie, “Yes, he sounds cool.” A guy in my audience who calls himself The Guest says, “Pretty cool idea, something most think of, but something a lot of businesses need.” I guess not something most people think of, but what a lot of businesses need. Casey loves the name SnailPad and hopes that you use it for another business. Dan Blank, “It's so simple, it's genius.” Omar, “It's always the simple ideas.” AppRabbit, “What I love about this idea is that it's the type of thing you could ask a small business owner, what are some of your problems? This might be the answer to one of them.” Really, people on the audience are loving this idea. I want to see how it evolved. So, before we get into the PDF, let's understand, were there any steps beyond that? Actually, no, I want to go even simpler, my goal here is to really dissect this so I can understand every piece of it. That first email, the first letter that was sent out, what did he send out? Interviewee: I probably need to go back and look. I want to say it was just some sort of test letter to himself, I think. [xx] to that, but I think it was like a test letter back to himself. Andrew: So he wanted to see what it would look like, how it would work. Interviewee: Yes. That actually, in hindsight, that told me a lot about how some of these high touch marketers got into this business. They don’t necessarily just trust something right out of the gate, they needed to see what they were going to get. minute 10 to minute 15 Interviewee: Yes. That actually, in hindsight, told me a lot about how some of these high touch marketers got into this business. They don’t necessarily just trust something right out of the gate, they needed to see what they were going to get. Samples became a big part of what I do. Andrew: Do you give out free samples now? Interviewee: Yes. There's actually like a trial account mail that I call. When you sign up, it allows you to send one letter to yourself. Andrew: Because you saw the people were doing that to themselves, you said, “Let's give them that so that they can understand that this really works.” Interviewee: Yes. I wish I had done it sooner, actually. I probably waited, I want to say about 60 days, before I did that. Honestly, in hindsight, I was really scared that people will going to abuse the system and just like using multiple accounts. In hindsight - I hope your audience doesn’t take advantage of this - nobody has done that yet. Every once in a while, I do get a guy that will just sign up and send like a notice to a credit agency or some one off letter, and that’s okay. I mean, it amounts to such a small amount of my current volume that I'm happy to do it. If they want to come back and use me again, they’ll pay for it next time. Andrew: What did you charge for that first letter? Interviewee: Three dollars. In fact, today, it's still $3 for one letter. Andrew: So, one letter, it's $3. Did you email him afterwards and asked him anything about why he used the system or how he found you? Interviewee: Not until I saw somebody used it multiple times, and by multiple, it was like, at least, twice. In the early days, we really talked about like three or four guys. Andrew: So, these people were using it, some of them used it multiple times, you decided to email them. How did you ask them about what they were doing with the system? What did you ask? Interviewee: Actually, I just sent an email saying, “I could probably send you the template if you want,” but basically, I think, the first line was like, “Hope you give me 30 seconds of your time. I'm the founder of the service called MailFinch, that you recently used to send a letter to so and so.” I used that name that I thought it would keep them from just deleting email right away. And then I just basically said, “Look, this started out as an idea. I just really want to learn more about how you use it. Could I jump on a quick 20-minute call to talk to you?” I can't remember where I heard this or where I read this, but it was definitely not my idea. I used one phrase at the bottom that I believe, fundamentally, made these people want to talk to me. I just said, “I promise I'm not trying to sell anything, I just want your advice, or your expert advice.” I'll tell you, like, without that line, I don’t think people would have replied. Andrew: It's pretty cool. Okay. So, what did you learn in those conversations? Interviewee: I learned that these people were really hurting. I remember one lady I was talking to, she worked out of a Century 21 office, she was an office manager there. Basically, once a month, they have a pecking order of like their top real estate agents, depending on how much volume you had. But basically, at the end of every month, they’ve got like the bottom three or four guys, the ones with the worst sales, would actually have to spend a Saturday in the office printing, folding, stuffing, addressing, and licking envelopes. They had to do this 800 times. That’s like 12 hours worth of work and like that’s lost time in the field. You know, it was just really painful. I just said to her, “Look, what if you could just upload the list and be done with it,” and it was like a no-brainer for her. That’s kind of like where the light bulb started to turn on. It's easy for me to say this in hindsight, but at the time, that was kind of where my light bulbs start to turn on. I'm like, “Wait. These guys are just sending newsletters. They have somebody in there that just writes a newsletter and then, they have people fold it.” This was not rocket science, guys, but this is how they make money. Andrew: So, what was the first improvement that you made to the site? After you had that basic site, what did you add to it? Interviewee: One of the first things was that you could log in and have your own, like you could have a return address. It turned out that when repeat users came back, they would always use the same reply address or return address. Okay, I did that. I just created a log in area, you could log in now. You could just, in your default settings, create a return profile address or whatever, and that was it. Andrew: Why did you think of that? After those phone calls, I would think the first thing you would add is the ability to add a list of contacts. Interviewee: Yes. I wish I was that smart. Actually, the reason I did the return envelope thing was, one of the early users was actually having his admin send these letters. So, she emails the support thing, which was just me, and she's like, “Hey, I'm so and so and I have to do this all the time. It really sucks that I have to copy and paste the same address every time.” I was like, “Well, that’s not rocket science. I can fix that.” So, I did that really quick, and it was just a [xx] point. In hindsight, she was actually turned out a virtual administrator. Interviewee: ...and it was just to solve her pain for me. In hindsight, she was actually it turned out, a virtual administrator so she had multiple clients and by making her happy she was able to bring me a few more of those guys. Andrew: I see, she was one of these virtual assistants that you get in a foreign country that work for multiple customers. Interviewee: Yeah, I think she was actually in Kansas or Missouri or something like that. I didn't know this at the time because it looked like she was an employee for that company, she had their domain name and everything on her email address. But in hindsight after I sent her, I was like hey, I built this for you. I hope things are a little bit easier. Tell me what else sucks. And she replied back and she was like this is awesome! I'm a virtual admin, blah, blah, blah. I'm going to tell all my friends about it. I was like oh, shit, this is awesome. Andrew: All right, another basic question, but I also ask the basic questions. The tactical basics I get into... how did they find your contact information? How were they even able to contact you through these people? Interviewee: Oh, I just used that feedback button on the right side -- I'm forgetting their name now. Andrew: It's either Uservoice who I use or... Interviewee: UserVoice. Andrew: UserVoice, it is, OK. You just put a UserVoice button on the side of your site. Interviewee: That's what I did, yeah. Then I started experimenting with live chat and that actually I'll tell you right now, the live chat I wish I'd done sooner. One of my goals early on was that I was not gonna invest any money in this. Other than my time, I just wanted this thing to be profitable. And so the way I gained the system and for you people that run those live chats, I'm sorry, but what I did was there were two main ones that I liked. I'd just sign up for fake accounts because they all had 30-day trials and switch it up, or 2-week trials and switch it up. And anyway, that was awesome because that helped me talk to people in real time. In hind sight that if you can solve somebody's problems in real time so that they never leave the site, they're more likely to make an order right there and then. That's something that you could've told me, but I wouldn't have understood until I actually saw it myself. Andrew: ISee in the audience is pointing out that the button that people use is Get Satisfaction. What are the two live chat programs that you used? Interviewee: Well now I use Olark which is a Y Combinator company and they've been really good in terms of support and all that. It's just olark.com. And the other one was...oh, come on, I can look this up, but it's basically an orange logo that I remember. Andrew: Tell you what, tell me afterwards and we'll include it in the program. Moses wants to know how to spell Olark? Interviewee: OLARK.com. Andrew: All right, cool. So you're using both of these and you settled on Olark. And what happens is, only when you're online, when people are the website they'll see this little box that says do you want to chat, and if they have an issue, they chat with you. Interviewee: Well, actually yeah, that's generally how it works, but for example, right now I'm offline. The box is still there and users can click on it and still submit a request and I'll get it via email. Andrew: I see, so they get the box, but they're not told that you're there live. Interviewee: Yeah, it actually tells them whether I'm there or not. Andrew: How does it work when you're not there? How effective is it I mean? Interviewee: Well that's really hard to say. I do know like very few people have actually sent an email in. So I try to be online and whenever I'm on the laptop I'm online. Well, in fact, this interview is probably the one time where I'm online, but...so you're costing me money. Andrew: Good, it's worth it. I'm costing you money, but I'm getting you a lot of admirers for you here in the audience. Let's see, Todd W. in the audience is asking if the other live program was a LivePerson? Interviewee: No, no, no. LivePerson is great, they're a great company, but they weren't as easy to integrate I don't think. I guess I had an affection for smaller companies and so I just went for the small guys. Andrew: OK, and Y Combinator is a supporter of Mixergy so I'm especially happy to hear you work with one of their companies. Interviewee: Awesome. Andrew: OK, Olark, what did you learn from having them and this other company? What did you learn from having them on your website? Interviewee: Well, I learned if I really had to boil it down into one statement, if I could solve...if somebody is on my website and has an issue and I can answer it right there and then and they never leave my site, they're more likely to buy something right there and then. And fundamentally, that was a dollars, revenue-driving. It was just really fascinating to me that if you can answer their question right there and then, they were never going to leave the site and if they were going to put in an order, they were going to do it right there and then. Andrew: But were you discovering features that you never thought of, were you discovering needs that you weren't aware of... Andrew: … were you discovering features that you never thought of, were you discovering needs that you weren’t aware of because you were answering questions in real time? Did it impact your ad copy? Interviewee: You know, I don’t think any live chat helped me do that, I think it was really calling the customers, and one thing of things I was really adamant about was, early on especially I called at least two people a day and you know, especially early on a lot of those were cold calls, so I can tell you a lot about my tactics for getting those cold calls done, but early on a lot of the success was not through like, Adwords or like, word of mouth or anything like that, it was just good old-fashioned like, “Hey please don’t hang up on me, do you mail stuff?” or “Hey, please don’t hang up on me, I saw that you sent a flier to my house,” or “Hey don’t hang up on me, I see you have an ad in the local paper.” Andrew: Interesting, so you would say “Who’s out there using a service that, who’s out there doing something that they could be doing on my site” call them up cold call, find out what they’re doing, how they’re using it and see what, how do you make the transition to information that you could use for your site? Interviewee: So, so here are my assumptions right, is that I basically today was actually recycling day so I don’t have any with me, but basically I called a lot of my friends, I live in the Washington, DC area and I called a lot of my friends, and they _____ around me and said “Look, send me your local newspapers, I don’t want Washington Post or something big, just send me your local newspapers.” And then what I did was, I just flipped through them and my wife will tell you, because I, she helped me a lot and she still does a lot, thanks babe, she would open them up with me, and we would basically circle all the ads that were half-page or larger. And our assumptions, our core assumptions were these were people with money, these were people that already bought into the idea of print marketing, and hell, all these ads had their fucking phone number on them, and so I would just call and say “Hey, I saw you in the paper,” and that was an, for example I realize if you just say “I saw you in the paper,” and you then said “Hey I’m running this thing,” they would realize you’re selling something and hang up. So, early on I would start it off by saying “Hey, I saw you in the paper, don’t hang up, I’m running a start-up in the area here, you know a lot of this stuff that I don’t know, and I just really wish you’d give me 20 minutes of your time, I promise I’m not selling anything.” And that was really a line in general, some people hung up on me, other people like wasted my time for 20 minutes and then hung up on me, but the rest of them, and I’d say it was over like half, would actually like, take pity on me and say, they would explain to me how they currently did stuff, and what I found was, they did send fliers and they did send newsletters, and most importantly, they tied revenue to that. They knew like, it’s high touch. In the industry I learned that was the word, “high touch.” And so once I learned that it was kind of like “Well let me see the patterns across two or three calls,” and it turned out they all sent newsletters, and they all had to print, fold and stuff. Well, hey I can do that. And you know these people would contribute, you know the core question I would ask them was, like once they told me their problem I would say like, “Well, so how much time do you think that takes you?” And that was really important because when they would say you know “Oh well, each one I do takes like five minutes,” you know, or “Each one takes three minutes,” in my head I’m thinking, because you know that’s how I think, I was thinking, “If they can do, if I can cut that down to like 10 seconds for the whole thing, they would pay me for that.” Because it would add up. It turns out that these people mail a lot of stuff. So… Andrew: So that just tells you that there’s a market there, what are you learning about how to improve your product through these phone calls? Interviewee: Yeah, so, one of the things was in hindsight I wish I had learned this sooner or at least seen the light a little bit sooner but, about two months after I started I realized that these people were sending their newsletters to the same list every month. And I know you can laugh at me because it’s not rocket science, but I just didn’t get it. And then I realized like, “Hey, I wonder if I just made it easy for them to, I don’t know have all their contacts in one place?” And you know, I built this thing and I’m like, “Huh” and I start seeing people like, put stuff in, and then I was like, “Well, oh,” and then I started showing it to users and I started watching and they would type in all the addresses and put all their contacts in and that’s how they did it. And I called one of the users back that day and I was like, “Hey dude, what do you think?” And you know he’s like, he’s an old guy and he’s like “I have all my stuff in Excel, how do I get it in there?” and I was like, “Well that’s not rocket science.” So I like, put this .CSV import thing in there, and it was so ghetto, it’s still ghetto today, but literally within that first hour I had 2,000 contacts imported, and that was maybe one of the early tipping points, was that I realized the product became like, silly, silly sticky once they got their contacts in. Interviewee: …and… Andrew: Interesting. Interviewee: Yeah so… Andrew: Did you have a rule for what you’re going to do for these customers and what you just couldn’t do and you were going to leave out for now at least? Interviewee: Well you know my, my, my B.S. filter in general was like, you had to be a paying customer for me to build you something. And so the way it really boiled down, like, in that, if I had said it in those words to people, I don’t think they would have responded very well. But, what I found was is it people generally understood that if they were asking for something, that was not currently in the product, I would effectively say something to the effect of, “look, I’m happy to build this for you, it sounds like it’s a problem that other people in your industry have. But I just need a little bit a show of faith from you that once I build this, you will use it. And so if you’ll go ahead and give me your credit card number, I promise I won’t charge it until your happy, that would at least make me feel comfortable about the time I invest.” And, these were all salesman you know so they understood it too they’re like, “yeah, I wouldn’t go to your house to sell you a house if, you weren’t like seriously in the industry either. Or seriously in the market either.” So that was my B.S. filter is like, if you’re willing to put your, you know put your money where your mouth was, I would say yes. And knock on wood anyway, I haven’t pissed anybody off yet. Andrew: What about size of request where there any size, sizes, or any big requests that you couldn’t handle? Interviewee: You know, I think there’s really only one and its still been a request. It’s coming in more and more right now, and… you know if any of you guys, customers are listening, it’s gonna take a little bit longer. But, it’s white label. It turns out that one of the niches that I’ve kind of uncovered here, is that there’s a whole bunch of people out there that write direct mail newsletters, and sell them to the people that want to send them out so if like you’re a real estate agent, and you don’t want to write that stuff, there’s like a whole industry of people out there that will write those for you, put your name on it and then send you a PDF that you print and stuff. And so, I’m starting to hear more and more from those guys that are saying, “give me a white label product, that I can kind of put under my own thing.” Without sounding like a tool, that’s really…it’s really complex, and I’ve just been putting it at the back of the pipeline. It’s gonna have to be built, I just don’t want to build it right now. But, it’s coming soon, so… Andrew: Okay I’m gonna take questions from the audience, but first, one from me. One more from me. You do two calls a day. Did you do a cold call today? Do you still… Interviewee: I did not today actually, I had a couple meetings early this morning. Andrew: Yesterday? Interviewee: I you know, yes, I did do two yesterday. Andrew: What did you learn yesterday? Interviewee: Yesterday…it turns out, so, I’m starting to try to get into the non-profit space, so… it turns out they have a lot of mail to send, especially like every donation, they send some, I’ve been trying to call more and more non-profits. What I’ve learned is that gate keepers are a bitch. So, I’m trying to find a better way to like, get to the decision makers, and so now I’m trying to use Linkedln, to try to filter out and figure out who actually sends those for a particular organization. Andrew: Are you just trying to learn from them or are you trying to also close a sale when you do these cold calls, or is it both? Interviewee: I think that’s, I think that one in the same. I think I…well just to be clear, I don’t get on the phone, directly saying, “hey I want you to be a customer, don’t hang up.” I start out by saying, something to the effect of, “you’re smarter than me. I’m just a small time entrepreneur. I was wondering if you have a problem like with mailing stuff?” And… if I, if I by using that tactic, I try to get them to talk, and, what I’m trying to get out of that is, for them to identify the problem, which I hope is not too different from what we do, and then say something to the effect of, “well, hey, so I got this thing called Mail Finch. We send x amount of mail. Would you be willing to try it?” And… I just try to get them to try it. I just try to get them to say yes. And if they don’t say yes, then before they hang up I try to say something to the effect of, “well, can I just send you a sample, and just get some feedback on what you received, to just see what you think?” And, so those are the two, the two goals that I’m driving for. The worse case scenario is they just hang up on me or they just say like, “please don’t call here again.” Luckily that hasn’t happened too much. Andrew: What percentage do you close? You do ten calls a week how many of those, do you close? Interviewee: Honestly, I’d say about… it’s a little bit over like 60% that will give me one of those two answers. They’ll either let me send a sample or they will sign up. Andrew: Wow. Alright let’s take questions from the audience. I promised them. Let’s see, “is Paul building all this stuff himself?” [inaudible] Rabbit want’s to know. Interviewee: Yes. Caveat is that just about two weeks ago, I brought on a part time contractor, as an engineering intern to help me. But yeah, I mean, code and the back end… End of transcription. Interviewee: ...and the back end automation, the printing now that I'm starting to work on, all that's in-house. That's me. When I say we for any of this, it's me. Andrew: Andrew SG is asking why not hire a few salespeople and have them work on commission? Interviewee: Yeah, so actually that's a great question. That's actually what my meetings were about this morning. I'm trying to figure out how to break into that space without any cash outlays on my side. Before any of you call me cheap, I'm OK with that, but the reality is I haven't proven or I do feel comfortable getting a bunch of sales guys across the country or in one big office just sitting there dialing for dollars yet. So, what I'm trying to figure out is is there a way I can build a commission only structure to start with and use that to prove out the model. I think we'll get there. I think within the next six months I'm going to try and bring on a sales guy and just try that idea, but I'm not convinced that it'll work just yet. Andrew: All right. By the way, I will never call anybody cheap in a bad way. Cheap is good! Let's see, have you ever considered using direct mail to promote your business, Mike B. wants to know. Interviewee: You know, I've started to think about it, but I don't yet have a good way to filter out who should receive those letters just yet. And each of those leads would cost me like $.50 to send out, right, because of postage and all that. So just in the interest of being cheap I haven't done it yet. Andrew: I should tell you that my audience also respects cheap. Afrabbit respects cheap, he's saying Dano, I respect frugal. Good, this is the right kind of audience that I'm getting off here. I don't want these people that are more into the trappings of success then they are into the work that goes into it. Again, from Andrew SG, why not create an affiliate program? Interviewee: So actually there is one. It's not advertised yet because somebody just started asking for it three weeks ago, so I'm testing it. But there is one now. I'll probably put a page up in the next few days. Incidentally, I can talk a lot about what I learned about distribution if you like, but affiliate channels are one of them right now. Andrew: What are you using to handle your affiliate programs? Interviewee: It's all kind of in-house and manual right now. I have this philosophy that I don't build anything until I generally feel comfortable that it will work. So, right now, basically I have this script... So the way we do it, I modeled it after...I just ripped ideas from 37 Singles, sorry guys. I looked at their affiliate program. I saw how they were doing it, and if you guys don't know in a nutshell, I think they pay you 20% of the first month's base fee; and then 5% for each month thereafter. And they pay you -- this is the beauty of it all, man -- they pay you 45 days after they collect money. That's awesome. So basically I collect the money and I don't have any outlays, so that's how I do it. I have this script that runs in the background that just tells me in the morning, hey it's been 45 days, you owe this person this much money, and then I just go pay via Paypal. So, if you know of any vendors, I could use some help on the outside, but otherwise we'll build this in-house...but affiliate program is gonna be a big channel for us. Andrew: We'll get back to distribution and channels in a moment. I want to keep taking questions from the audience. Let's do some rapid fire questions. Todd W. wants to know what programming line, which is probably a friend I met on Hackety's [? 33:25]. Interviewee: Ruby on Rails. Andrew: Ruby on Rails. Awesome. Let's see, Tanya wants to know who does the printing, stuffing, and mailing today? Interviewee: You're looking at him. Andrew: So you're still printing and stuffing these envelopes by hand? Interviewee: Yeah. Andrew: Paul, are you folding the paper and putting it in the envelope or do you at least have the machine that folds it for you? Interviewee: I was for a long time. I found a few machines on eBay that help, but it's still kind of a manual process. Basically, the beauty of this to be honest with you, I don't think the innovation of MailFinch is in the website piece of this. To be really bluntly honest with you, any joker could do that. The real innovation for us is what we're doing on the back end. And basically what I've done is I've built something here that you know, large printing houses have to spend half a million dollars on to go to Pitney Bowes or whoever to build these huge mailing systems. For us, I've taken off the shelf printers -- these are all like $300-400 dependable machines -- and built this custom thing that just spits out rapid fire pages, spits out a envelope next to it, and puts a collating page in between. And on a bad day, what I've learned was you know, when I walked into this, I thought that over a 30 day period it would be an equal amount of mail for 30 days. In practice, that's not true. You see this lump at the beginning of the month because people want the mail to hit the target... Interviewee: Because people want the mail to hit the target and then they want to close the deal before the end of the month. So true, it will not be right and so on a really bad day I have been calling local temp agencies and I just get them in here and having actually one of the printers is right next to me, they are still in the basement but they will just send in some temps in four hours and knock out even the worst load because this isn’t rocket science. Andrew: I just added a note here to my sheet of paper to ask you to flip not yet but towards the end of the interview to flick your camera around so we can see where your office is and what it looks like. Are you at home by the way? Interviewee: I am at home, yeah. Andrew: Okay, we are going to see that a little bit. Okay, the business only six months old guys, I don’t want to, in fact I wasn’t sure what this interview would be like Paul to be honest with you, I can never tell if an interview is going to be a hit if the entrepreneur is going to be interesting, and be able to teach what he does or if it is just going to be somebody who sits there. I have had the big news here, I sit down to an interview with them and they just sit there like they had the worst day of their lives and this is just adding to it and what can we do to just give Andrew a quick answer and move on. And today I had no clue what you are going to be like, it turns out you are one of my best guests here, and I could see here from the audience, Mike B who is hard to please in the audience, [36:15] earlier and saying that’s a success. I feel like this guy is one of us says Kasion, yeah they are loving you and I feel the exact same way. I could feel when an entrepreneur is really bringing it. Interviewee: I am glad to be here, thanks for having me. Andrew: I am really glad you are here too. Why the name change? Why did you change to Mailfinch? Interviewee: Yeah, so what had happened was, as I kept calling to, when I was doing these calls per day, the two calls per day, it really was a little bit more than that, it was like five, but what I found was that I was calling these people on the premise that I wasn’t going to take more than 20 minutes of their time and so the first 10 minutes were spent explaining snailpad and I am not lying people would be like wait, so you are telling me that you are going to send mail guaranteed next day and you have the word snail in your name, and I am like that’s not the point, just listen, and so before I changed the name actually a friend of mine is the founder and CEO of Brandstack, and I have been talking to him and on his website I saw there was this logo from Mailfinch and the guy who has put this logo up I think he was a designer in California or somewhere, he was offering to sell the domain with this thing, and like it was going to be $400 and I was like well I don’t really want to spend that money but let me just see if it works. So I actually just called, my cold calls that day was like hey I am Paul, I run this thing called Mailfinch and there was no site, there was nothing, and as I run a site called Mailfinch we basically make it easy for you to send small bursts of direct mail without any hard work and people got it, they were like mail check finch, oh so it is like a carrier pigeon with a little brother, I get it, and Res will tell you from Brandstack, I think I was in an airport that day and like two seconds later I went to the website and bought it, and it took me a couple of days to kind of get around and switching everything over, it was customers or I should say user calls or whatever cold calls that drove that name change. Andrew: I really admire the way you are doing these lean tests. Well design, somebody in audience as I think it might have been Tanya, who does the design of your sites? Interviewee: So there is a guy named Robert McGuire his link is actually on the bottom of my website, down at the bottom right, really awesome guy, he is down in San Antonio. There is not much bad I can say about the guy, he took the idea and ran with it and how that worked out, I basically said to him hey my site is really shitty looking, can you make it look better, and I said look it is not rocket science, just make it look better, I just need one or two screenshots, just give me your vision. He came back with this image that looked really awesome, in fact there is not many differences from what he came back from with and what the site looks like today. I went to psd2html.com and had them cut those images into CSS and then I just Andrew: It is the website, you are talking about that will take an image and it into a website. Interviewee: That’s right. Andrew: What’s the name of this company? Interviewee: It is called psd2html.com and just to be clear, they don’t make the website for you, they just give you the code back, and then I had to kind of skin it on top of my site. Andrew: Okay. Interviewee: There is still a lot of work to be done, but it was pretty fast. Andrew: It is interesting, I didn’t know that service existed, I just got an email from somebody today who said Andrew keep asking for these services, we want to know what’s out there, we want to know what tools are out there that people are actually using. The PDF story. How did you discover that you needed to do PDF. Interviewee: Oh, well that was pretty easy. Early on I realized that people were sending the same thing over and over, I mean, I can’t drive this point home far enough minute 40 to minute 45 Interviewee: That was pretty easy. Early on, I realized that people were sending the same thing over and over. I can't drive this point home far enough, it’s like when I look at the database early on about what people were sending, it was all the same. It was like word for word was all the same, maybe the name was different at the top, but it was all the same. So it was kind of like no-brainer. Andrew: Where do you get your customers, beyond cold calls, how were you getting customers? Interviewee: Actually, I'm glad you ask, because I think that was something I didn’t want to touch on. So, we service four verticals right now, three are kind of proven, the fourth one is getting really closed to being proved in my mind, but real estate agents, insurance agents, attorneys, and now non-profits. What I learned early on, like with real estate agents, and this holds true for all those verticals, but with real estate agents, I originally thought that the agent was going to be the one that sends these newsletters. But, what I learned was, remember when I talked about the newspapers and how I circled the ones with the big budgets? It turns out, when you have a big budget, you actually also have like an office admin that does all that ‘bs’ work for you. So, I realized that my customer was not the agent, because the agent already knew that they had to send mail, my customer was the office admin. It was like this 20, mid-20 something-year-old office manager who just hated the fact they had to sit their and do this work. What I realized was that office managers have a lot of friends that are office managers. So, what I found early on was that if I could get even one foot in to the door with a small agency, like a small real estate office, I could get everybody else in that office network, because all the office managers were friends. Then, down the road, I realized that they were all bastards, maybe like me. So that's where I started kind of the affiliate program idea came up. One of those people was like, “Hey, I referred so many people to you, can you pay me?” I was like, “Well, I don’t know how, but that's fair.” Andrew: Love this. Dana in the audience says, “McGuireDesign.com, if anyone wants to see who did your work.” Andy Dang in the audience, he's a member of the Mixergy community, so I'll give out his website. He says he can do design work, too, if anyone needs it, AndyDang.com. (Let's see what else is out there. All right, they're just talking to each other here). My next question is competition. MailFinch isn’t the first business to do this, I've seen other sites do this. Interviewee: Yes. I heard that from a lot of like my tech friends or entrepreneur friends. It was like, “Paul, this isn’t like rocket science.” I didn’t know what to think, so I did two things early on. One thing I did was I looked at some of the competitors. I've no problem mentioning them, they're guys like PostalMethods, Postful. There's a couple of others that actually had fizzled out now, but those are probably the two big ones; at least, have a large Web presence anyway. So that was one group of companies I looked at, and I'll talk about those in a minute. Then the other group of companies was like, I looked at the big mail houses. So, again, I live in the Washington DC area, it turns out that there are lot of bulk mail facilities nearby. So actually, I called ten of them and three of them never called back, but the rest of them did talk to me. It turns out they're all family-own businesses, so I end up talking to people. Fundamentally, what I learned was that if I wanted to tackle the whole market, I'd probably get hurt. Those guys are going to annihilate me. So, early on, I wasn’t really worried about like PostalMethods or Postful, any of those guys, I was worried about the big guys. I was like, “Why would an agent come to me instead of going to a big mail house?” The funny thing is when I talked to those six or seven bulk mail facility owners, they told me themselves, they were like, “Paul, look, we invest a ton of money, like upwards of a quarter million dollars in this specialized mailing systems. We cannot touch anybody that wants to send less than 5,000 or 10,000 pieces of mail.” It's just the economics of the game, they have so much money invested, they couldn't do it. So, I kind of scratch my head, and I was like, “Okay.” So, I don’t really want to touch the guys with a million pieces of mail every month, because I don’t know how to mail that. I have to sit here and fold all of that, it's going to suck. But, I get a lot of fliers in my neighborhood, I wonder how they do that, so I kind of like narrowed it down. So, then when I looked at some of those two online players that I looked at, I noticed two things about them. One was, they don’t talk, like you can't talk to the founder. You can't talk to anybody on either of those sites, easily. That’s one thing. The second thing is that, at least, with one of those competitors, and I won't name this one but you can figure out when you go to their site, if you want to get the best pricing, you have to pay a ton of money upfront. minute 45 to minute 50 Interviewee: …If you want to get the best pricing, you have to pay a ton of money upfront, like $10,000 worth of money upfront. Then you have to eat out of that money, as you send credits, and we don’t do that. I wasn’t worried about them, because if somebody had $10,000 to give upfront and then burn through that over the next 60 days, maybe they're not my customers right now. I needed people that directly attributed this month’s revenue to this month’s mailing. These people were okay with paying a little bit upfront to get that mail on the target by like the third business day. That was kind of like why I went after the target that I did and, frankly, that’s why it's worked so well. Andrew: Casey Allen in the audience asked if you were intentionally following the Lean startup ideas. Did you hear about that process, the whole methodology, and say, “I'm going to build my business that way,” or did it just happen that this is the way you've been building? Interviewee: I'd be lying if I said that a lot of the stuff that you learn in the Lean startup movement or whatever didn’t affect me. In hindsight, I would say that what really drove me to build the business this way was the fact that…you know, my principle was that I would not spend my own money, that this business had to pay for itself. Right now, our profit margins are terrible because there's people involved in every step of the process. But that’s okay, because we're still eking out a little bit of profit. I don’t pay myself, but that’s okay. It will get better, the profit margins will get better. I think I'm getting to the point now where I'm starting to think about the larger scale investments. But, again, the major innovation for us is going to be in the backend. The good news is that the economy sucks for everybody. So, I've been calling Xerox, HP, and Canon directly and saying, “Look, nobody is buying stuff from you, guys. I want to build the custom solution, I want the patent to it, and I want to pay good money for it. Let's talk.” All three, actually, sent me demo units and one of the units, actually, is still here, I can't show it to you yet. But, that’s going to be - I think, knock on wood, anyway - our secret weapon. Andrew: They're building something custom for you. Interviewee: With off-the-shelf components. Andrew: So they're taking components that they already have, they're just piecing them together, they're saying, “This is just for MailFinch because he asked for it and because we have a bad economy and somebody is finally asking to buy something. We have nothing else to do, anyway. Let's do it for him.” Interviewee: Yes. Just to be clear, the main driver for them, the main incentive for them is that I didn’t promise to just buy one, I promised to buy a lot. The reason is that I've got a large customer who - I can't name, but their logo’s on their website - they send a lot of mail and they are helping finance this, indirectly. We already do just in time, everything goes in the mail the next day, but all mail goes out of the DC area. So that means if your targets are in San Francisco, we won't get there until four business days. Well, it turns out, with a lot of these high touch marketers, they want it there the next day and they want to be able to call these people within 24 hours of that. So one of the things we're doing is once we get these units, I'm going to try to place them in different areas based on our volume. That’s going to be a little tricky, but that’s the direction we're heading. Andrew: Talk to me about how you're getting a customer to fund your business. That’s another thing that I'm seeing in scrappy startups. They're not raising money, they're getting it from their customers. How did you do it? Interviewee: In hindsight, if I had gone to, for example, this large company and said, “Guys, this is my idea, dah, dah, dah. Pay me and I'll build it,” I don’t think it will work. They don’t know me, there was no warm intro, like how could they trust me? So, instead, actually, it started out with one person at their company started using us to send newsletters to their prospects. It turned out that they were already doing this, because each agent at this firm had to send - it was a sales topic - they sent these newsletters, and within 24 hours, they had to call them. It turns out that one agent works in an office with 12 other agents. As soon as this one agent is making more money, the other 11 or whatever in that office are like, “Oh, shit. I need to do this, too.” They were willing to pay me, this one girl that was the first customer of that company, she was willing to pay me. By paying me, she could spend more time on the phone, and that to her, translated into money. Anyway, so I went up the chain from there and what I started hearing, I didn’t make this up. These people came to me and said, “Look, Paul, you've got this one office using it now. That’s great for this one office and all the offices that are like within 50 miles of it, but it sucks for offices that are like 600 miles away.” How do we get that office to be able to get mail to their prospects, which are all within 50 miles, within one business day? Interviewee: How do we get that office to be able to get mail there prospects which are all within 50 miles within one business day? I said well we could put another facility there by facility that sounds like fancy. But that’s actually like a printer, its like a printer in one room or something with like me getting an intern or something and go down there. It’s not rocket science and I said, “Well I can do this but you know I need a commitment from you that if we invest this capital in this hardware you know I am not expecting you to pay for all out right but I do want a commitment that you will stay a costumer for X amount of months. I am not going to ask you for all that money up front I just want a firm commitment.” And you know my dirty little secret is I didn’t have a lawyer to review it, so I didn’t ay anything but I just like a little one page document says, “ I promise to pay so and so this much money over the course of this much time.” Maybe it will come back and bite me in the ass but they paid there bills so far. Andrew: I like this a lot, I like what where hearing here. OK, let’s know talk about revenue and profits. Six months in business what was the revenue last month? Interviewee: The revenue probably just under $22,000. Andrew: $22,000 in revenue last month. What was the revenue the month before that? Interviewee: Revenue then was a little bit over $7,500. Andrew: $7,500 and you suddenly went to $22,000. Interviewee: Well the volume jumped as well. Andrew: Yeah. Interviewee: Actually as the volume jumps with individual clients per piece margins go down considerably. Andrew: How about the month before that? Interviewee: The month before that was probably I want to say just about $2,000 bucks. Andrew: Wow, so this phenemal growth $2,000 to $7,500 to $22,000. Interviewee: Yeah. Andrew: OK, and last month was month number five? Interviewee: Last month was month number six. Andrew: Number six, OK.
• How SEO Book Earns A Profit By Selling Content That Helps The Little Guys Take On Giants – with Aaron Wall 24 March, 2010, 1:38 pm
  We covered a lot in this program with Aaron Wall, founder of SEO Book. The big areas are: 1. How Aaron built a profitable business selling content to his readers. 2. Why Aaron keeps urging Google to police big sites like Mahalo, and why he thinks they have an unfair advantage over unfunded competitors. 3. How you can get more traffic from Google search results.
• How A Fed Up Employee Used A Few Hundred Dollars To Launch A $5+ Mil Per Year Business – with Ed Richman 1 April, 2010, 1:18 pm
  Ed's story is one that any entrepreneur (or aspiring entrepreneur) can relate to and learn from. He spent most of his life working for other people and felt "boxed in." His wife was tired of hearing him complain about it and pushed him to start a business.
• How A First-Time Entrepreneur Sold His Company For $17+ Mil Then Launched IngBoo – with Rikard Kjellberg 10 June, 2010, 1:18 pm
  Before launching his mobile startup, Ellipsus Systems, Rikard Kjellberg spent most of his adult life as an employee of Swedish Space Corporation and a company it spun off. But in the late 90s, he saw the opportunity for mobile apps, so he left the corporate world to pursue it. It was a tough economic climate for a startup (the dotcom bubble burst) and his first approach was off, but he and his cofounder adjusted, found the right partners and sold it for over $17 million. You’ll hear they did it, in this interview. You’ll also hear about his latest startup, IngBoo, a web-based utility for consumers to organize their routine web activities in one place. The FULL program Prefer audio? Great! “Right click” here for the MP3 format. (or on iTunes) I use my sponsor Wistia’s video hosting platform because no one else gives me the stats they do. // See my stats for this video (Can’t see video? Go to Mixergy.com) Embed the video: if(!navigator.mimeTypes['application/x-shockwave-flash'])Wistia.VideoEmbed(‘wistia_135337′,600,290,{videoUrl:’http://mixergy-cdn.wistia.com/deliveries/c622f13cb5a6dc10ee00556e5434d8cc9dd1727f.bin’,stillUrl:’http://mixergy-cdn.wistia.com/deliveries/472001e80a9cb09346a80150302a9575c19b105a.bin’,distilleryUrl:’http://distillery.wistia.com/x’,accountKey:’wistia-production_1621′,mediaId:’wistia-production_135337′,mediaDuration:3640.43})Business Tips via Mixergy, home of the ambitious upstart! About Rikard Kjellberg Rikard Kjellberg is the co-founder of IngBoo, “The Intelligent Distribution Channel for Changes on the Web.” Previously he pioneered the first mobile e-commerce solution for mass-consumer deployments as the co-founder and CTO of Ellipsus Systems. Sprint was the first to launch a mobile retail solution in the US. The Ellipsus solution became an integral part of Sprint’s successful launch. When Ellipsus was acquired by Openwave Systems in 2002, Rikard continued to lead the business unit that carried the Ellipsus’ solution. [read Rikard Kjellberg's bio] You should follow him on Twitter. *Raw* transcript This is a raw, mechanical transcript. Readers (like you) are editing a better version here. Andrew: Before we get started, I want to tell you why I keep urging you to use KISSinsights. Haven’t you noticed that one of the big ideas that keeps coming up in my interviews is the need to ask your customers and users what they want instead of imagining that you know? Now, when you add a survey to your website, isn’t it true that hardly anyone fills out your survey, and people who do fill it out aren’t necessarily your typical users? Well, what KISSinsights does is give you surveys that are so easy to fill out that your users will actually complete theme. Here’s a screenshot of how I use KISSinsights. You can use it for free, right now, just go to KISSinsights.com. Next thing I want to show you is the phone number at the top of DNAmail.com. When you have trouble with your email and it’s costing your business both money and reputation, how frustrating is it? Well, who can you call at those moments? If you use DNAmail, you’ll have a phone number you can call 24/7. DNAmail offers complete hosted exchange, free setup, free activation, free support, and if you and your company need Google apps, they’ve got you covered there, too. DNAmail.com. These aren’t just sponsorships, these are tools you should use. Finally, I want you to know about Shopify.com. If you already have an online store and want to increase your sales, go to Shopify.com. If you have an idea for an online store, go to Shopify.com. With Shopify, they’ll set up your store in minutes, you’ll get professional themes to customize your store. You’ll even get a mobile app to manage your store from anywhere. Check out Shopify.com. Here’s the program. Hey, everyone. It’s Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart. You, guys, know we do here every weekday. I bring a new entrepreneur on who’s built a successful business to come and talk about how he built that business, what he’d learned along the way. And more importantly, to help my audience go out there and build their incredible businesses so, at some point, in the future, I can interview them. Today, to help learn, help show us how he built his business, I invited Rikard Kjellberg who founded Ellipsus Systems back in 1999 and sold this company three years later to Openwave Systems. Today, he’s the co-founder of IngBoo which aims to bring blogs, news, and deals to Web users in a clutter-free place. My goal with this interview is to find out how he launched and grew Ellipsus and also to find out what he’s done with this current company with IngBoo. Rikard, welcome to Mixergy. Interviewee: Thank you very much, Andrew. Andrew: So, let’s start with Ellipsus. What was that company? Interviewee: Ellipsus was a mobile Internet startup in 1999, and we started in Stockholm, Sweden which was really kind of the hub for mobile at the time. Obviously, a lot of the things that we thought we’re going to happen are happening now, 10-11 years later. But, it was exciting times, and so we ended up building one of the first mobile apps stores for deployment with wireless service providers. Andrew: So, wait, actually, it looks like the live audience is telling me that they can’t watch us. I’m going to hit a button for them. We’re dealing with a few technical issues today but I think we’ve got most of them solved by now. So, what was in the apps store back then? Interviewee: Well, back then, actually, a mobile apps store was actually a combination of things. Especially, in Europe, you would actually go to a physical store, buy a magazine, open up the centerfold, and see a bunch of short codes. Punch in one short code, and before you knew it, you’ll get a free SMS with the ringtone. Today, it’s obvious that you use your browser or some shopping client on you phone, etc. But we actually worked with Siemens and Sony Ericsson and other mobile providers or manufacturers to integrate browsers with the content environment. It could be a Java execution environment or the ringtone manager or whatever in the phone so that we could create a shopping experience on the phone, actually. This was groundbreaking in 1999. Unfortunately, in Europe, the model remained kind of, you know, buy a ringtone with an SMS. So, we found our market in the US, actually, and did the Delaware Corporation and set up an office in Dallas, Texas because our CEO that we recruited lived there. Before we knew it, we were working with one of the larger wireless service providers, Sprint. Andrew: Let’s take this step by step to understand it. So, before you got in this business, people were actually going to centerfolds in magazine, not to see women, but to see short codes, typing those short codes into their phones, then they’d get that app delivered to their phone remotely. People actually did this?” “minute 5 to minute 10 Andrew: …typing those short codes into their phones, then they’d get that app delivered to their phone remotely. People actually did this? Interviewee: Yes. It sounds like it’s ages ago, but it’s actually about ten years ago. So, yes, that’s how it was done. Andrew: What kind of apps did they get at the time? Interviewee: It would just ringtones. Started with monophonic ringtones, you know, (makes some sounds) and then polyphonic was the big thing. Yes, and then, of course, with Sun Microsystems, starting to work really hard on Java 2 Micro Edition (J2ME), it became more and more interesting to be able to download applications to your phone. Actually, the fact that Sun was working on this in parallel with our efforts, created a fantastic opportunity for us. We ended up partnering with Sun, actually. Andrew: So you see this, what’s the vision for the business that you have? What do you envision launching? Interviewee: At the time, we were envisioning launching an Internet experience for mobile phones that was truly mobile, wireless, consumer-friendly if you want, and turn the phone into marketplace. That’s really what we wanted to do. Andrew: A marketplace for what? What were you thinking people would buy? Interviewee: Anything that you could consume on the phone. It’s funny you mention this because some of the conversations we had with unnamed characters, they thought that we were kind of looking at it as a vending machine for physical goods. But we were very much focused on anything that could be consumed on the device. So, ringtone, obviously, wallpaper – change the background on the phone – and then, obviously, games; and, later on, video, etc. So, that was the idea, and we thought that those things have value, and people would be willing to pay for it because a phone is a very individual, personal device. If I can make it more personal, I will, and I’ll pay for it. I think, the ringtone market in Europe proved that that was indeed the case, and we thought you could replicate that with other content like Java games, for example. Andrew: How would you get your store, your marketplace on to people’s phones? What did you imagine you’ll do? Interviewee: What we ended up doing was focusing on the wireless service providers. Initially, I think, that was the right strategy. But as soon as these apps stores were getting deployed with the wireless service providers, you start to realize that they are not really good at merchandising goods. So, later, between 2000 and 2005, you saw the emergence of services like Motricity is an example. They’re running a lot of mobile content stores for in-service providers today, AT&T being one, I believe. So, it was better for the service provider to actually partner with someone who understood marketing and content merchandising, recommendations, etc. and can run it as a business. It kind of morphed into revenue share model instead. But we were actually deploying a product, which was the platform on which you would build your branded mobile apps store, basically. But the business model would have been better if we had offered it as a service. Andrew: How do you mean? What’s the difference between offering the platform and offering the service? Interviewee: One thing you have also to think about here is we got acquired by Openwave Systems, and Openwave Systems is in the products business, infrastructure business. So, in that business, you would build a product which you would deploy servers, that you may or may not own. But then you would sell that product to customers who would own it and manage it themselves, and do whatever they want to do with it themselves. That is very different from striking a deal with the service providers saying, “Hey, we can provide this value-added service to your customers, the end users, and you don’t really have to pay anything upfront for this. But, as we sell goods to your customers, we’re going to make money and we’re going to share that with you. So we’ll write you a check.” That’s the difference. So, instead, you would, basically, operate the whole thing and there’s only one product, which is what you’re running, and you have branded experiences with your partners, the service providers. Andrew: Why is it better the other way? Why is it better to just hand it over to them and just sell them, I guess, a license?” “Andrew: and to sell them, I guess, a license? Interviewee: Well, I mean, in this case, with mobile app stores. It is not better. It is better to run it as a service because your customer partner here, let’s say a Sprint or a Verizon or an ATT, will actually end up making more money if they partner with a company that is really focused on the whole, having the store online, merchandising goods, promoting new content, making sure that there’s relevant content tied to current events available etcetera right? So, that drives revenue. And more so than…I mean, some software should be sold as products. You know, mobile access gateways, sure. Messaging gateways, like in (audio blanked out?) But this is an end-user focused service and partnering would be better and, as it turns out, that’s how it’s done today mostly. Andrew: I see, okay, I misunderstood. I thought you did partner with them and you’re saying that’s how we should have done it. Interviewee: That’s how we should have done it. We licensed the product to them. Andrew: What in your background led to this? I was looking at your LinkedIn profile and saw Swedish Space Corporation, you were software manager there. You were CTO of Saab Transporter Tech. What about your background said “I love ringtones? I’m going to get into the wallpaper of cell phone business.” Interviewee: Yeah. Well, sometimes I call myself a rocket scientist, having worked at the Swedish Space Corporation. And indeed, we did build rockets and satellites there. However, I was part of a small group who was developing a mobile wireless location solution for the aviation and maritime industries based on an invention by a Swedish inventor by the name Håkan Lans. Håkan Lans was actually credited to be the inventor of color graphics. He has the patent for that and has been in litigations for years and years with a lot of the developers of the color graphics screens etcetera and the boards. But he invented a communications scheme that was completely autonomous and allowed two vehicles, if you want, or two mobile units to communicate with each other in exchanging information without need for any base stations. So it works really well anywhere on planet Earth. So I spent almost five years working on this solution. So came the emergence of mobile technology through this effort and, of course, in parallel working closely with a lot of Swedish industry. You know we got Erikkson right next door. You have Nokia across the pond. And a lot of mobile technology was starting to integrate GPS which was what we were basing our solution on in a lot of cases. So I started getting interested in more consumer-oriented applications for mobile technology actually. The thing that really intrigued me wasn’t so much building the mobile app store as “Hey, I want to download really cool apps to my phone and turn them into things other than just making a call on.” You can download an app that can make use of the technology on the phone and you can turn it into a gaming device or a way to exchange positions with your friends. I mean the possibilities were infinite. Andrew: So a lot of what we are seeing today with the iPhone and the Android, that’s what you were envisioning even back then? Interviewee: Yes. In fact, we were envisioning exactly that. Then, there was a time when I didn’t believe in downloadable apps. And actually, that belief stuck with me until the day that Apple opened up the iPhone for developers. And then I came back and said, “You know what, this is here to stay now.” Because it wasn’t really happening. It wasn’t really taking off. Sun wasn’t truly successful with Job on the phone. Callcom was trying something called BREW…Binary Runtime Environment for Wireless. BREW and Job, they were all competing. I think it was a kind of gimmick but it wasn’t really taking off. But, of course, what they all failed to realize was that you have to have the right device. And I think Apple cracked that nut basically. Andrew: And, the ease of use…I used to have a Trio for a long time and I would add incredible apps to that thing.” “minute 15 to minute 20 Andrew: And the ease of use. I used to have a Treo for a long time, and I would add incredible apps to that thing. The thing is that if you try to teach someone else how to add an app to it or even how to add music to the Treo, you get lost and frustrated just trying to teach them, let alone leave it to them to try to figure out how to do all that for themselves, they never would. I would see my friends carrying around these Treos, and I knew how powerful the Treo was. I would connect it to my computer and use the Internet off of my Treo through tethering. I would do all kinds of great stuff with it. I would watch movies on it, and I would watch my friends do nothing but make phone calls and text because it had the keyboard, and I get so frustrated. Interviewee: You belong to an exclusive group called the early adaptor. Andrew: Called the nerds, the big freaking nerds. Interviewee: Yes. But, early adaptor is a good term. I think iPhone made the smart phone a mainstream device, that’s the big difference here, made it accessible. Andrew: The other thing that is not screaming out of your background is entrepreneur. Were you entrepreneurial before launching this business? Interviewee: I started my first little business when I was 17. Now, I’m going to confess how old I am, but when I was 17, basically, that’s the era of the IBM-PC. I was obviously living in Sweden at the time and there was, literally, no one who understood the PC platform. I just learned a lot about software at the time, and I was also kind of a self-taught programmer, if you want. There were a lot of issues around the PC connecting it to printers that didn’t work or connecting it with different peripherals that needed a driver and so forth, etc. So, I really started, at that time, as a software consultant and did that off and on for several years. But then, you’re right, I worked for other people who were innovators and the creators of business, but I learned a lot from that as well. In that sort of technical profession, you have to be entrepreneurial by nature in order to make things work as well. But then, 1999 is when I truly did my first large scale startup. We took in funding, we were 38 people at the peak, basically, and we went after some big business, and we got acquired. That didn’t happen with my consulting business at 17. [laughs] Andrew: Can you describe what it was like to take the leap from having a good job with a company that was spun off of Swedish-based corporation. So dependable company, good job, you then leave that to go start your own business, what was that leap like? Interviewee: It wasn’t as dramatic as a lot of people think, and I think that has more to do with how you think about risk, and also what kind of heart you put in to your work. So, anywhere I’ve worked, I’ve always given it 110%. At that time, the spin off have gotten acquired by SAAB and we were a subsidiary of SAAB and I was a CTO there. I’ve gotten to a point where I’d put a lot of innovative thought into making this a product and taking it to market, which we did. But I also put in a lot of energy and heart into this thing. I just woke one day and I said, “There are all these things happening around me, I don’t mind putting all this energy into work, but I should probably do it for myself for a while and see where that takes me.” It wasn’t a revolutionary thought, it wasn’t a dramatic mode, it just started as a process. After about six months, I had been able to fool a friend of mine to become a partner, really good, Martin Bergljung, who is a terrific software architect. I had been able to get the support of an angle investor. With a little over, I think, we had $40,000 in angel funding, we resigned from our jobs. Andrew: So you really thought after you’ve got the funding to resign.” “Andrew: So you waited till after you got the funding to resign? Interviewee: Yes when we did this kind of on the side and got this angel funding committed. Andrew: How much did you build on the side before you got your funding? Interviewee: Nothing we had vapor work. Andrew: Just a vision? Interviewee: A vision and a powerpoint yeah. Andrew: And did the vision include a business model? Did you say this is where our customers are gonna come from and this is where our revenues is gonna come from? Interviewee: No we had ideas and we had a conviction, of course none of those ideas materialized the way we thought, but that’s just the nature of doing startups. I mean someone said doing a startup you gotta run like crazy and then change directions you know and so I think a 180 is a dangerous thing but I think course corrections along the way are just a necessary part of doing a startup and if you’re not willing to do then you shouldn’t be doing a startup. Andrew: So tell me about that how did you, what did you think the direction was gonna be and then what did you have to change it to? Interviewee: Well when we started elipses we believed that a lot of our business would be enterprise. As an example we believed a lot of enterprises would be building mobile apps, mobile works, course tap applications, they will need you know app stores. If they need a system that will make it very easy to access for the employee to download the apps you know and then manage all that. So we thought that that where we would find our business and we were wrong. Andrew: Tell me how you figured out you were wrong I’m curious to see how those adjustments happened as you build a company. Interviewee: Well I mean here was a lot of hyper and mobile first of all and the hype was justified because if you look at the enterprise as an example a larger portion of the work course is mobile. Not only are they working remotely but there also mobile in their daily activity and there were so many ideas and applications that should help any enterprise opptimise their business so the oppurtunity was there. Now I would say that the devises that came out didn’t support these apps. For example motorola made a huge mistake when they launched their first device that had an overway browser on it and job on it they took an existing phone I can’t remember the model right now they took an existing phone and changed nothing but the software inside the phone and they relaunched that. And people look at that thing and go on like ok what’s different you know. There was nothing, there were no apps on it, the form factor was the same, I mean mistake after mistake like that was bieng done and we failed to initially to see that quickly. I mean there was another company that launched in our category also with the support of some microcist thats called jamthat, they very quickly that the apps are going to be , sorry the oppurtunity is actually going to be in building the apps themselves not the platform. We build the platform and so jamthat they started to build games and even though sun invested in them they said forget that were’re going to go with ball comet brew and actually they went Ipo and got aquired by electronic arts possibly. They changed faster then we did basically but you know. Andrew: When did you realize you needed to change? Interviewee: We needed to realize that first of all our market would not be in Europe, well as soon as we realized that this is a consumer case and play we had to go look at a market that would use our model for engaging in mobile comdent, eye through the browser, downloading through the browser and then launch it. I mean it sounds obvious but it wasnt at the time. So the US market was the right market for that. Andrew: Can you help me understand or take me through to the time when you realized it because a lot of the time when your in business and your hitting the one direction it’s hard to notice anything in any other direction and if things aren’t working out sometimes and especially if you have a partner you cheer each other on and you keep each other going in the same direction.” “Andrew: …cheer each other on and keep each other going in the same direction. So the fact that you even realized it, whether it happened late or early or just on time perfect isn’t as important as how did you realize it so that the rest of us when we go through our situation where we’re going in the wrong direction might look back and say “Ah, Ricard, he experienced something similar; he adjusted. Let’s stop for a second and reconsider.” So, what was it like for you? Interviewee: I mean, first of all, don’t ignore the data. Okay? You cannot justify something or discount the data. So, in this particular case, fortunately for us, we were still in Sweden, in Stockholm, at the time and Sun Microsysetms had decided to put their mobile business unit in Stockholm because Ericcson and Oak and all these companies were there and we ended up working with them and they opened a lot of doors for us with wireless service providers all over Europe and we weren’t really getting anywhere and, then you know, we started to talk to some carriers in the U.S. and in the U.S. not only were they willing to work with a little start-up but they were looking at the same model and when you sit down and just look at your track record you see that the traction is in the U.S. We need to move over there. And we did. And we did. Andrew: I see. What got you started looking at the U.S. in the first place? Interviewee: Well, it was actually primarily through this partnership, which is the other thing that is really important. The right kind of partnerships for start-up is crucial and the right start-up is defined by what it isn’t. A partnership with another dinky little start-up like yourself is going to go nowhere. What you need is a partnership with a solid, large corporation who is willing to champion your technology and be your chaperon and support you, and that can be through personal relationships or just a great technology fit. The reasons are many. We had been able to partner up with Sun Microsystems. Now, we weren’t the only company that they had partnered with but they were very supportive of us. So they said “You know what, we’re talking to Verizon,”—well, not so much Verizon—but “We’re talking to AT&T; we’re talking to Sprint. They’re getting interested in this whole mobile java idea. They want to talk to some companies, come on over.” And we said, “We’ll come over.” We went over and that’s how it started. Andrew: I see, okay and then they introduced you. Let’s go back then to funding, speaking of introductions. Who is the “angel” and how did you meet him? Interviewee: The “angel” is Leif Midean who is a very successful entrepreneur in Europe. He has had several businesses, but the thing that kind of provided him the opportunity to do angel investments was actually to develop a PC distribution chain in the former Eastern European block starting with Poland. There was no infrastructure in place there and he saw the opportunity, went down there and did it. He’s Swedish, by the way. I’ve known him since I was 17 and I had my little consulting business. Andrew: How did you meet him at 17 as a consultant? Interviewee: We did business with the largest PC distributor, in Sweden at the time. He was in the education space, teaching employees at different companies how to use computers and I was working for this distributor, fixing things, basically, and that’s where we met, and we’ve stayed in touch through the years. Andrew: How did you stay in touch? A lot of times people will meet great contacts like that and lose touch or work hard to stay in touch but, as Heidi Roizen said here when I did an interview with her, they end up being pen pals, which isn’t a useful relationship. How did you make that relationship last? Interviewee: Well, first of all, it’s okay if there’s a few years between staying in touch at times, but it’s good if you’re moving in the same circles or similar circles. You’re inevitably going to bump into each other. In this particular case with Leif, I would say that the fact that we have the same interests outside of business was very helpful. Andrew: Like what? Interviewee: He’s an avid windsurfer and so am I.” “Interviewee: So, that helped a lot. Andrew: I see. So, you would go win surfing with him? Interviewee: Yeah. We would go win surfing together or we would bump into each other win surfing. I mean not physically, but, yeah, we would be at the same place and go to same events and stuff. So, that was always a lot of fun. And I always took a big interest in what he was doing and he did the same with me, so that’s how it was. Andrew: See that’s interesting because a lot of people would say when they’re doing their hobbies, when they’re out there being active, they don’t want to see people from work. They don’t want to talk work with anyone. How much work was going on? How much of it did . . . How much of it felt like you were bringing the office into your hobby? Interviewee: Well, I think, I mean if you’re taking any interest it’s somewhat, it’s life. It bound to be about work to, at least fifty percent. So, I mean, this was not sitting down discussing business deals or opportunities or stuff like that. This was about taking interest in the lives of each other and I think that’s different. Even though a lot of that is work related, you’re right. Andrew: All right. I also don’t see in your background sales, that you were a salesman at any point. What was it like to sell someone on giving you, I think you said fifty thousand dollars? Or, 40, what was it? Interviewee: Well, we started with 40. I mean we ended up raising seven million dollars for Elipses. Andrew: So, what was it like getting that first 40 thousand from Leif [sp]? Interviewee: We were, uh, this is the other kind of really interesting thing, and I don’t know if I’m, I think this is pretty common though. I mean with Leif we were excited, obviously because it was pretty quick. We were talking to him for a couple of months and then he said, “Okay, guys. I mean, let’s do this.” So, that was pretty exciting. But, from that point on, anybody that does sales will tell you that it’s a process. And when you get to the end of that process and when you do the deal, if you’re not in a business, you would think, ‘Oh, that’s must be like winning the lottery.’ It isn’t. It’s anything but. It’s a long tedious process and maybe it’s a sigh of relief. But, the excitement isn’t really there. So, you have to learn to be excited about the process. So, I can’t say that we were opening up the champagne and celebrating all night the Swedish way or anything, it was a sigh of relief.. Andrew: What is the Swedish way to celebrate all night? Interviewee: Get really hammered, I would say. Andrew: [Laughs] Interviewee: I’m too old for that. [Laughs] Andrew: Just like the American way. Interviewee: Well, yeah, maybe, yeah. [Laughter] Andrew: Okay, so, you get that. Actually, let’s talk about your age. I have a note here to come back and ask you about that since you said you were aging yourself. How old were you when you started that company? Interviewee: Elipses? Andrew: Yes. Interviewee: Yeah, so, Elipses was 1999, I was 34 years old. Andrew: Okay. I had it here you were 37. 34 years old. The reason why I asked is because a lot of times people assume that you’ve got to be in your early 20’s or late teens in order to start a business and anytime after that it’s just impossible because you have obligations because you’re stuck in your rut. Frankly, I use to believe that to. Interviewee: Yeah. Andrew: I want to just keep highlighting the situations that don’t fit that stereo type. So, what was it like for you later on to do it, later on in life? Not that 37 is that old. Interviewee: Right. It’s 34 by the way. Andrew: I’m sorry, 34. I’m thinking, my guess is 37. So, I’m thinking of my own guess. Super imposing my answer. Sorry. Interviewee: [Laughs] No problem. Well, first of all when I started Elipses I still didn’t have any kids. I wasn’t single, I got married that year. So, we got married, started the company. But, I would say this, anytime you’re decide to start a new business, it has it’s pros and cons. If you’re like a PHD or you’re working on your master’s at the university, and you’re in your early 20’s, you have certain assets. Like a stamina that is incredible probably and no distractions, maybe a nagging girlfriend or something, but other than that no issues. But, you lack experience and you make up for that by being maybe arrogant, but actually it’s ignorance. And actually ignorance can be an asset if it’s properly applied.” [This section of the transcript (minutes 30 - 35) is being redone by the transcribers.] “Interviewee: Total cash and stock, yes. Andrew: And you had 8% of that? Can we do the math on that and kind of figure out? Interviewee: We can do the math as much as we want. Andrew: No, we don’t need to do it together, I don’t want to get that detailed. I just want to get a sense of what happened? Interviewee: It allowed me to invest in a couple of houses and to save some money for my next startup. Andrew: I see, okay. Alright, how did those investments turn out for you? Interviewee: Well, I am still living in one of them and the other one were are traveling to in the end of the month. Andrew: You still have them, you haven’t sold them, you haven’t flipped them or anything? Interviewee: Yeah, that’s why I am reluctant to call them investments. They are life investments. Andrew: I have seen people winded up doing better with their real estate that they bought after they sold their business and they did with the business or anything afterwards. Interviewee: Yeah, that can happen. We’ll say I am hoping that these places will stay in the family for a long time. Andrew: Where are you by the way, where in the world, today? Interviewee: I am in Santa Cruz, California, it is a small enclave here on the coast. Andrew: And you still own place in Sweden, is that where the other place is? Interviewee: We bought a little summer house on the north tip of one of the popular islands for summer vacation, yeah, and incidentally the area where we had our wedding reception when I got married to. Andrew: When did you get married? Interviewee: When, 1999, same year as I started my first company. Andrew: I see, so you went to back where you got married, and you bought a place there. Interviewee: Yeah. Andrew: Cool, still married? Interviewee: Oh yeah. Absolutely. My wife is my biggest investor in me. Andrew: Did you have kids now I think you said. Interviewee: Yes we have kids. Andrew: At what point did you get, did you have kids? Interviewee: My first kid was born the year I started to [unclear] in 1999. So he is 10 years old now. The second kid was born a year before we got acquired, two years later, so she is 8, and then we had a little straddler show up here three years ago as well. So I have got three kids, keeps us really busy on weekends and evenings and my wife is working part time so she is taking care of lot of that fortunately for me. That is lot of fun. Andrew: What was it like, it is also very demanding, what was it like to have your first child just as you are building your business, just as you are getting ready to take off? Interviewee: It was tough, especially for her I believe, I think men are little bit, when the kids are one or two years old, it is more fun when they can walk and you can run around with them, so for me it was okay, but for her, I had some extreme like 200 travel days during the first year and so I was largely absent but you got to have a good partner, that’s the key thing here and I have a good partner. She is very resilient and positive person, so it is key. You got to pick partner even in private… Andrew: You are kidding, that’s the most important partner you are ever going to get, that’s a partner for life whether it turns out good or bad. Interviewee: Yes, exactly. So it is as important in business as in life, privately. Andrew: Do you have any advice for somebody who has a child soon after launching your business. What did you learn the first time around? Interviewee: Well, what I learnt, it was really how important your spouse is and to managing the stress. The amount of stress a couple can generate from sheer friction is incredible and there is so much stress that you really don’t need. There are so many issues and problems that you really don’t have time for and shouldn’t be worried about and if you can find that sort of Zen of life where you learn to just focus on the important issues that thinking get a lot of stuff done. Andrew: Alright, how do you go after running your company, after being the captain, how do you end up working for two different businesses over six years, what was that like? Interviewee: Well, I mean if you look at it, at Openwave, I end up being the captain, like one of the Little Emperors over a couple of product units. Actually, those product units were twice the size of Ellipsus, so it was certainly was like running a business within the business. But of course, I learned a lot about kind of corporate politics as well, and I think, I learned fairly quickly how to navigate that as well. So that was the added sort of dimension, but it was really like running a business, both at Openwave and then at Venturi Wireless where I was the Product Manager there as well. Again, you have profit/loss responsibility, you got to take the product to market, you got to make sure it’s doing the right thing at the right price, etc. So, I mean, it wasn’t different. It was just that your ownership is different. You know, you own less. Andrew: Can I just say I notice the mistake that I made as an interviewer? As I ask that question, I notice that I was making a face and also acting like how do you go from being a free man to being in jail, which is just no way to do an interview. What I really need to find out is what it was really like, not how bad it must have been, not impose my own expectations on the situation. So let me ask the reverse of that, what was good about that? What did you notice about working somewhere else, going back to having a job that actually was better, that was reassuring? Interviewee: First of all, if you work for larger corporation, you will develop your personal network very, very quickly. If you work for a company like Openwave Systems, at the time, it was the best company to work with in terms of meeting great people, and who since then moved on and done great things. Several of my friends ended up going over to AdMob and AdMob got acquired for over $700 million was just approved. All the people going to Google, Yahoo, Microsoft, via Danger Research, etc., etc., just great, great people that I’m still in touch with today, and who can be helpful in the future. You help them, they help you, and you can’t take any of that away from you. So that’s helpful. Also, like I said, learning more about corporate politics and it’s always going to be there large or small. In a large corporation, it’s significantly more complicated usually. So, navigating that is good. So, I think, very, very positive experience for me. Andrew: How does the stress level compare, in your case? Interviewee: You’re asking the wrong person because I think that’s part of being kind of a startup guy and entrepreneur. The stress level will never go above here. [laughs] You know, it doesn’t matter. The responsibilities are largely the same except that I’m responsible to other people, I’m not responsible to the investors. I’m responsible to the CEO or the General Manager for the infrastructure product unit or something. So there’s a responsibility there, and that’s no different. It’s just that it’s based on different aspects. So for me, it wasn’t any different, really. The difference, though, would say, with my most recent startup, the difference is financial. So with this startup, we really decided to put in our sweat equity even though we raised a million dollars in seed funding, we haven’t taken any salary ourselves. A lot of people call themselves startup guys and they’re basically moving on, getting someone to invest, and then they give themselves a hefty salary. If it doesn’t work in six months, they all do something else, but we decided not to do that. We had the luxury that we could afford to kind of invest our own into it, with the hope that we would keep more of the company also, at the end. So, it’s not a charity business for us, but there were some ideas doing it that way. But, that has been a big difference for the family, we have to be more careful with the economy. We’ve been at it for two years, so we’ll see how it goes. Andrew: You launched the business in 2008. What was the original vision? Interviewee: The idea was, I mean, it was born out of frustration with daily life actually, and trying to become more productive. Like most people we have a hectic business life and we have the family as we discussed; with kids and etc. and I really needed to save time as opposed to waste time. And we were struggling, both Vercan and I we were struggling with using the internet to be productive and so the idea was to create a solution that would reduce the clutter on the internet and make sure we can stay focused on whats relevant. Its turning into a syndication service that allows publishers to syndicate content in a high attention environment and it allows the consumers to organize whatever they do on the web, we call them web activities, you know. Organize that in a way that they can pay attention at the right time to stuff that is important to them. And web activities would be; looking for a job, looking for a good deal on a laptop, finding the right airfare to Sweden etc. etc. Those are all activities that we do and we do them repeatedly so by automating that process and then organizing the results in a, what we call a list, a subscription list. Its essenetially organizing stuff in a task list but making sure the task list is organized in the right order at all times for you. So. Andrew: So lets use the examples that you just gave. I am thinking of going back to the U.S. in a couple of months I’m now in Buenas Aires. Interviewee: Ok Andrew: I do a search for airfare everyday until I find a great rate. Interviewee: Yes Andrew: That would be an activity that would be on the site? Interviewee: Yes Andrew: If I were also looking for a job, I might look every single day instead of going out to other sites and getting distracted and doing the same search repetitively, I would just bring that search to my ingboo page. Interviewee: Yes. Andrew: And maybe a couple of other things like stories that I might read on a few websites that I’m into. Interview: Yes Andrew: And all that would be on the web page and the idea is, is that I can then sort it based on high priority and low priority Interviewee: Actually, actually, actually the system sorts it for you. The system has, there’s a building algorithm that we have pantented that will organize all this stuff; based on its age, how old it is, and how important it is, and how your are interacting with it. So its a learning system also. So the idea is really not to require users to have to configure stuff. Because when you do that, it won’t be mass consumer or consumer friendly. It would be back to the early doctor. (laughing) Andrew: Oh I see, so if im interacting with one activity often; like the job search everyday, then the system says aahh, thats a high priority activity for him, hes going to it everyday lets have that bubble to the top. If I’m subscribing to the Wallstreet Journal but i really don’t read it everyday, that would just get pushed down to the bottom. Interviewee: Yeah, it straight goes down to the bottom for you on your list and then of course it’ll expire. And then if there is new information it may perk up towards the top again. Its fairly dynamic environment. And then we made this available now in popular destinations. I mean you can consume this list in Facebook, you can consume on mobile devices, you can consume it on a portal and by Twitter as well. So its really about making sure that your activities are with you where ever you spend your time on the internet. So. Andrew: How are you getting users with this service, the consumers, how are you getting them on? Interviewee: Yea, so really, we are, our partner, we are partnering, so here it goes back to the partnerships. So, we are partnering with publishers. For example, our biggest partner is Technorati.com out of San Francisco. They use our service to provide a connective search function to their audience. You go to technorati.com and you got the search window there in the center. I may be interested in iphone 4.0 right or whatever. And so I put in iphone and then they list all the articles around that iphone. And the user can now click a little button or function that says connect with the search, and consequently that ends up in the users list and if there is a new article popping up related to that search, they will get notified and they can go back and read that article Andrew: Notified by email? Interviewee: Email, tweet. Andrew: And then it brings them back to the article on technorati or on? Interviewee: Yes. it brings them back to the article in technorati.” “Interviewee: Brings it back to the article in Technorati but even the email, you don’t get any email for everything that changes, you get a digest. This is about reducing the information, reducing the clutter, so it gives you digest, there may be updates from Technorati and your job search and that laptop you are looking for. So you get that digest in the morning once and then you can review that and you may be clicking on one of the topics so you may be going and look at a whole list etc. You can do all kinds Andrew: What’s the business relationship behind that? Do you pay Technorati to be able to serve that up and then you earn advertising, do they pay you for the technology? Interviewee: No, it is a revshare relationship based on contextual advertisement. So the updates are being generated, we monetize those, and this opens up a new venue for monetization for a publisher, we call it preview monetization if you want, and we monetize it even in Facebook, so Andrew: How do you monetize the updates? Ads within the stream or something else? Interviewee: Yeah, in different places but in the stream, if we create a list of new search items from Technorati around the iPhone for example, well that user is obviously interested in consumer electronics so we will match a suitable ad with that context, someone selling iPhones etc and at a place in that context. So that goes with the email if it is an email update. If the user goes to our portal, show in the portal, and of course if he looks at it in Facebook, the user will see that adding Facebook to it. Andrew: Mike B in the audience is asking how did you get Technorati to pay attention? So how did you make that relationship happen and broaden it a little bit? Interviewee: Okay, so if you ask me about another publisher how do you get Forbes to pay attention for example, I would say Andrew: Okay, are you working with Forbes, I didn’t see their logo on your site? Interviewee: Well, I can’t talk about Forbes unfortunately, but there was an offer on the table but it would cost us too much to do. So pay, get attention, okay, money gets people’s attention. So in the case of Forbes, money would have gotten their attention. Andrew: Do you pay upfront? Interviewee: Well, it depends on what the publisher’s base [unclear]. If publisher is kind of like a Forbes, a traditional old media kind of publisher, they are going to hate me for saying this, but they are more driven by, maybe their quarterly quota and they want to get x million dollars in ad revenue as opposed to looking at a strategic partnership where they can really monetize their content syndication over time in a rev share agreement, maybe even get a piece of equity in the company for doing it, all the kinds of things, and they are just not interested. Technorati on the other hand which is a new media type of company who are really looking to drive new business malls on the internet, they understand the internet [unclear], they are more interested in looking at new technology. In their case it was all about timing. They were looking for a new syndication solution for their content, and they have decided that they did not want to do it themselves. So we ended up approaching them when we were at the [unclear] Vegas in October, go to conferences, best place to meet potential partners, that’s my recommendation. You can corner them, they will listen to you, they dare to talk to you, and don’t forget to do the follow up. But anyway, so we started there and it was good timing for them. It was good timing for us. But you have to have a valid proposition that makes sense for the publisher. Andrew: Alright, finally, how can people check this out? Should they go to your website to ingboo.com to experience the product, should they do something else. Interviewee: If you are a consumer you can go to ingboo.com and look for the consumer button down to the right. Andrew: It is right on the bottom of the page. Interviewee: To the right, yeah. Or you can go directly to ingboo.com/pvm/portal that will take to the consumer portal directly. Andrew: So [unclear] just link to that ingboo.com/pvm, okay and you are going to say one other way? Interviewee: I was going to say, or you can go to one hundred so partners, like Technorati or Dragon Blogger is a blog that is using us, Deals of Americas and other site that used to connect the search to track deals, so those are the ways to explore it. Andrew: Or they could meet you at a conference and corner you there and talk to you about the software and the website. Interviewee: Yes, yes. We are cheap, we don’t have a booth. Look for the guy who is running around trying to corner other people and corner him. Got a question? Got a question about the topics covered in this program? Ask the Mixergy community on our site, FoundersMix.com: - Sponsors I mentioned KISSInsights – If you add a free survey from KISSInsights to your site, your users will give you feedback that will help you build your business. I did, and got 650 responses from Mixergy users in just 3 days. Go on and try it. It’s free. DNAMail – See the number at the top of DNAMail.com? Call it. See how fast they pick up. 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• [Upcoming] How Jennifer Kushell Bootstrapped A Business By Writing A Book 21 April, 2010, 7:24 am
  Who: Jennifer Kushell, co-founder and president, Young and Successful, and author of three books When: Thursday, April 22 @ 11am Pacific Time Where: Mixergy.com/live (participate from your computer) This post was written by Mosses Akizian, founder of monoGiggle. You can find him blogging at monocat.com and twittering @monocat Short Bio Jennifer has 15 years of working experience with over 10,000 young people in 100+ countries Called the "Career Doctor" by Cosmopolitan and a "guru" of her generation by US News & World Report. She is the co-founder and president of YSN.com - Your Success Network- a network for entrepreneurs in 110 countries. She has written three books; Secrets of the Young & Successful; They Young Entrepreneur's Edge; and No Experience Necessary Her book, Secrets of the Young & Successful is a New York Times Bestseller. Timeline 1993 At age 19, she co-founded The Young Entrepreneurs Network, the first online community for young entrepreneurs on CompuServ in college, which grew into a community that connected 10,000 entrepreneurs in 70 countries. 1997 Wrote her first book No Experience Necessary. 1999 Jennifer joined the advisory boards of The National Foundation for Teaching Entrepreneurship and the National Mentoring Partnership, began drafting the first NFTE Advanced Entrepreneurship Curriculum for schools. 1999 Published her second book; The Young Entrepreneur's Edge. 2000 During on vacation, Jennifer and her partner had an epiphany. Young & Successful Media Corp. (Y&S) was the outcome. 2002 Her book The Young Entrepreneur's Edge was translated into Spanish; Sólo para emprendedores. 2003 Published Secrets of the Young and Successful with co-author Scott Kaufman. 2003 The book Secrets of the Young and Successful becomes New York Times Bestseller within first three weeks of its release as #1 business book and the #3 book in America at Barnes and Nobel.com... just behind Harry Potter & South Beach Diet. 2009 Global Opportunity Marketplace- YSN's proprietary patent-pending tools to better match emerging adults with high quality opportunities and organization around the world- rolled out in January Follow Jennifer Kushell on Twitter | She blogs at youngandsuccessful.com and jenniferkushell.com | Company site: ysn.com