How does an online escrow company do $1 billion in transactions?
Brandon Abbey is the president of Escrow.com, the leading provider of secure business and consumer transaction management on the internet.
I invited him to talk about how Escrow did it.
Brandon Abbey, Escrow
Brandon Abbey is the president of Escrow.com, the leading provider of secure business and consumer transaction management on the internet.
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All right, let’s get started.
Andrew: Hi everyone, my name is Andrew Warner. I’m the founder of Mixergy.com. Home of the ambitious up start. 700 entrepreneurs have come on here to tell you their stories so you can learn from them. And hopefully come back and do what today’s guest is doing, which is teach after you build you own successful company. A question for this interview is how does an online escrow company do a billion dollars in transactions? Brandon Abbey is the president of Escrow.com, the leading provider of secure business and customer transaction management on the internet. I invited him to come on and talk about Escrow.com and how the business was built. Brandon, welcome.
Brandon: Thank you Andrew, pleasure to be here.
Andrew: I know a lot of our audience has used, or knows Escrow.com, in fact we invited you here after the founder of the [Site5] said, I do so much business with these guys, I’d love to hear their story. But for people who don’t know it, I thought maybe we could explain how Escrow.com works by talking about the deal you guys helped with Marijuana.com, the domain name. What happened there?
Brandon: That was a unique deal because it’s a sale that’s spread out over time. So what they needed was somebody to actually hold the domain in escrow while the payment schedule was met. And that’s going to be, I believe it’s 40 years. And the buyer will make the payments. As soon as we get the payments the money goes off to the seller and when the financial obligation is finally met the domain will be transferred into the buyers account.
Andrew: So you hold on to the domain in this case and hold onto the money, and it doesn’t go…
Brandon: Yes, we have the domain secured.
Andrew: And that’s unusual for you.
Brandon: We have the domain secured in our account.
Andrew: The domain is secured in your account. Sorry, we have a little bit of a lag here today. So I’ll hold off on firing questions at you. I’ll give you a moment to respond. That’s a little bit different for you. You usually don’t hold on to domains right?
Brandon: That’s correct. Usually it’s just a transfer, we’ll hold the money, the domain transfers to the buyer. The buyer tells us they’ve got control of it and we release the funds to the seller.
Andrew: Gotcha, and that’s a typical deal. Beyond domain names, what else do you help facilitate?
Brandon: Any kind of personal property that’s being bought and sold over the internet. So if you’re thinking of buying a car from somebody in Chicago, and you’re here in California, we’ll hold the funds until you get the car and you have a chance to inspect it and it’s what you want, you except it, and we’ll pay the seller, if not you’ll need to return that vehicle to the seller, and once he gets it back you’ll get your money refunded to you. But, vehicles are an excellent example. Jewelry, high end watches, art work, anything other than real estate that’s being bought and sold over the internet.
Andrew: The reason I have you here is I want to know how this business was built, but just to get people a greater understanding of how deep escrow is into the lives of many of the people in our audience. You’re partnered with Flippa.com right. So if I go to Flippa.com to buy a domain, you’re the site that they encourage me to use, right?
Brandon: Yes. We do have a partnership with Flip it, and also we do the back-end processing for Go Daddy on there.
Andrew: For Go Daddy. What other companies do you work with?
Brandon: We work with Auto Trader, Cars dot com, eBay. There are a lot of companies out there that recommend our services.
Andrew: All right. So, let’s go back to before you started. Do I understand this right, you are 50 years old, without a job before this business?
Brandon: Unfortunately, I was without a job when I was 50 years old. I was trying to get you know, my second and third through college at the time, and it was tough. So, I’ve had a pretty successful career with some very large corporations. Climbed the corporate ladder, and moved around. Had some pretty significant management opportunities, and one day woke up without a job.
Andrew: What happened?
Brandon: The company I was working for at the time was being acquired by another company and they offered me a position where I would be. It would have been a good position, but I didn’t want to travel the world representing a company. It didn’t just work out, and I ended up looking for something, which was hard to do then.
Andrew: What year was this?
Brandon: This was in 2000.
Andrew: 2000? And the job market was tough, because this is after the dot com bubble burst, right?
Brandon: Right in the middle of it, yeah. So, it was a tough time.
Andrew: How did you feel being in the tech industry, in the world where it felt like it was all 21 year-olds, and 16 year old wonder kids who are building the next big site? And you weren’t in your 20s anymore.
Brandon: No, I was a dinosaur back then.
Andrew: Is that what you felt like?
Brandon: You would go in, and you would be in an interview with somebody that was potentially 20 years younger than you were.
Brandon: It was awkward. I did not enjoy that time.
Andrew: I can imagine. So, at that time, was escrow dot com already essentially built and launched?
Brandon: It really wasn’t launched at that time, but, it was in the process of being built.
Brandon: And they were establishing some relationships. The first significant relationship they established was with eBay. That kind of got them on the map.
Brandon: But, that’s back in 2000, and I was off doing other things. I did not have any idea that Escrow was around at that time.
Andrew: In 1999, I see here, it was founded by Fidelity National. Can you tell us a little bit about their back story. What happened there, that got the bid? Where did the idea come from, how did they launch?
Brandon: They had a group of very bright people that had the idea and, put it together. They got some outside investors and there was about 40 million dollars that went into the building of the company. And they got it started, and had a little bit of revenue. Later on, around 2002, they decided it was not their core business. At the time, I was the Vice President of Channel Sales for a company called Ilumen. Ilumen had a digital signature product. they were out of Orem, Utah, and later moved to Rustin, Virgina. As part of that, we were making a sale to Fidelity National Financial. When the terms of the sale came down, Fidelity offered us, Escrow dot com, in lieu of payment.
Brandon: Yeah. It was a very interesting transaction. If you happen to be the commission sales guy on that transaction, it’s not exactly what you’d hope for.
Andrew: Why did you take it?
Brandon: Why did I take the transaction?
Brandon: It wasn’t my choice. It was the Chairman of the company’s choice. It looked like Escrow could fit into a strategic direction we were going towards. Escrow also had a little money in the bank. The [??] company needed the money so. In the long run it turned out great for me but, at the time, it was a little different.
Andrew: You told our producer Jeremy, that when you took that job, you didn’t do your research. What did you mean by that?
Brandon: Not that job. It was a.
Andrew: Oh, the previous job?
Brandon: Yeah. No, it actually came after that.
Brandon: I went to work for somebody, after the software company acquired escrow.com. They pretty much laid off everybody and tried to focus in a new direction, so I was, my sales team was gone, I was gone, and at that point in time I took a couple jobs just to keep the money coming in and you know, trying to pay the bills and the mortgage. And when that, the jobs I took, I didn’t research very well, and I ended up working for some people that I wouldn’t want to shake hands with if I saw them on the street today.
Andrew: Wow. What happened?
Brandon: Well in one case they were selling a product that really didn’t exist, and in the other case the guy was so financially upside down that he was trying to take everything he could from his customer base and pay off his personal debts. It was, it was not a good situation.
Andrew: I see. And you took those jobs, or did you take those jobs because you just felt like you needed something, you needed to pay the mortgage as you said?
Brandon: Yeah. Yeah I did, I was scrambling at the time, and you know, I’d still go out and I’d interview with the thirty year olds and, yeah. It’s not a fun position to be in, when you’re out of work and you need to work, so you get a little, I guess I was a little bit more desperate than I should have been.
Andrew: Before I continue with the story, how do we avoid being in that situation?
Brandon: I think anybody can get in that situation, I mean there are a lot of good people out of work right now. Fortunately we’re in a position where we see a lot of those people that come through and the job market is still very tough. But…
Andrew: So what is it? I’d love to say its entrepreneurship because then you take full control of your life and no one can fire you or have you sell things that don’t exist. But really, I’ve talked to entrepreneurs on mixer G who have run into trouble, so that’s no safety net.
Brandon: No. I don’t think there is a safety net out there.
Andrew: So there isn’t? It’s just it’s a chance it’s going to happen to any one of us and the question isn’t what could we have done wrong to avoid in necessarily, but what can we do to get out of it once we’re there.
Brandon: Yeah, what can you do to see it coming and when you do see it coming, how do you plan your escape?
Andrew: Alright, so Fidelity National in 1999 starts this business, it ends up going to Ilumen as part of a deal because Ilumen basically wanted the cash and maybe saw how escrow.com could fit in with it’s business, what happens next?
Brandon: Well next Ilumen kind of changes their direction and they’re now based in western Virginia. And escrow.com happens to be in Irvine California. So there’s not a lot of attention given to it and it basically stagnates for a couple of years. Ilumen is in a position to be acquired by computer associates, and computer associates doesn’t want to be in the escrow business, so escrow.com goes up for sale and an investor here in Orange Country who is a very close friend of mine makes an offer for the company and after eight or nine months of negotiation he acquires the company in May of 2004. And at that time he asked me to come and run it for him.
Andrew: Why you?
Brandon: Well you’d have to ask him that question, but I think it’s because we’ve had a long standing relationship and he knows me well, he knows my work ethic, and he trusts me.
Andrew: He knows you well, knows your work ethic, and he trusts you, what about your ability to execute, your ability to have a vision for this company that was essentially neglected as it was passed from one company to the other?
Brandon: Well we had a lot of discussions about the company, and I really believe in the product. The most I know about the product and where we’re headed, and where our future is. It’s certainly an exciting place to be, but at the time, you know, it had been neglected.
Andrew: What was it like? I mean it had a partnership with eBay still right?
Andrew: OK, and beyond… That seems like it was doing well.
Brandon: Well it’s great to say you have a partnership with eBay, but if eBay is not actively promoting your service it’s, you know, I mean I can tell everybody that eBay recommends us, but until eBay gets there any say, “use us for a .com” if you’re going to buy something for five thousand dollars off of eBay, you know, wouldn’t you want to use an escrow service? I mean $10,000, wouldn’t you pay a hundred and seventy five dollars to ensure you got the merchandise?
Brandon: Last year alone there was a billion and a half dollars in internet fraud reported in the US alone. So it’s…
Andrew: So it’s part of eBay, but even though these kinds of transactions were going on on eBay, they weren’t really promoting escrow.com is that right?
Brandon: That’s correct, yes.
Andrew: OK, and a lot of the deals that were going through, what size were they? Were they these big, hundreds of thousands of dollar deals, or millions of dollars, in the case of marijuana and sites like that that you work with today? Or were they smaller?
Brandon: They were much smaller, I mean back then if you went into the system and reviewed it you’d see a $7.50 escrow with a $2.50 escrow fee. And the way our process is, every transaction is reviewed and closed by at least two escrow officers, so you can imagine it’s not very profitable when you’re doing $7.50 transactions.
Brandon: But we have… One of the things we have focused on when we got here was we would raise that average price from four or five hundred dollars, and today it’s over ten thousand dollars.
Brandon: The volume has increased and the transaction target has increased as well, so.
Andrew: So clearly a product, a business that was neglected, that was just sitting there with some potential, and you saw the potential, your friends saw the potential, what was that? What was that vision that you guys had that made you say, “Yes, I’m willing to invest my life, he’s willing to invest his money, we’re willing to drive and make this thing into what it became today, in 2012, the leading escrow company”.
Brandon: Well it started with the need for a secure way to transact vehicles online.
Brandon: Cars, yeah.
Andrew: Cars, OK.
Brandon: And we do a fair number of cars, but there’s still a lot of cars out there that get transferred and sold without our service.
Andrew: So you were looking out at the world and you said, look at all these cars that are going to be bought and sold online from people who don’t know each other from Adam, and they’re going to trust each other with cars and money, somebody needs to hold onto the money to make sure that the car gets delivered where it needs to go before the cash is delivered to the seller, and that’s the vision that you saw? You said, if we could do that, we could really build a business here.
Andrew: So how did you know that that would be it? I mean I’m thinking about buying cars online and if I were to buy a car I would think I would walk over, I would see the person, I would see the car, had him the check, maybe it would be a certified check, and everything would be OK. I don’t even see the problem, how did you see this problem where I, looking back with 20/20 hindsight still don’t see it?
Brandon: Well I had…
Andrew: What did you see?
Brandon: I had purchased a car from somebody in Omaha.
Brandon: And, you know, back then you could jump on a plane and go look at the car and pay for it and drive it home, but that’s a hard thing to do, and you have people that are car collectors, and they want that Austin Healy 3000 that they saw down in Florida, and that’s the car they want, but they don’t want to send the money to the guy because they don’t really know the guy.
Andrew: I see. And it was buying that one car that opened your eyes to how big a problem this is?
Brandon: Well it certainly got me excited about the possibility.
Brandon: And then, yeah it just makes a lot of sense. And the more people that use our service, that find out about our service, you know they tell their friends, and once you use the service, most people come back and use it again and again, especially in the domain community.
Andrew: Really? What percentage of your customers are repeat?
Brandon: Oh, I’d have to go in the system and check, but it’s a pretty high number.
Andrew: You’ve mentioned earlier about fraud, you mentioned earlier that fraud is an issue. Can you talk about some of the issues you had in the early days when your friend bought it, and you come in to turn things around, what were some of the fraud issues that you had?
Brandon: Well we had some issues, we had some policies in place that didn’t fully protect us. We accepted checks for pretty much unlimited amounts and…
Andrew: So if I were to buy a car from my buddy Ben, who suggested that I interview you, I would write you a check for say twenty five thousand dollars, you would hold on to the check, say Ben send the car, and we’ll get you the check. But you wouldn’t know if my check was good or not?
Brandon: Well we would hold the check for 10 days.
Andrew: You wouldn’t deposit it?
Brandon: No, we would deposit it, but we’d put a hold on it…
Brandon: And make sure it cleared back at your bank.
Brandon: But we found in one instance where we had a check for an amount close to that, and we had assurance from the bank, the buyer’s bank, that the check had cleared, the funds were good, and this happened on a Friday and the transaction closed so…
Brandon: We paid the seller, we paid the seller by a wire. And on Monday we get, from our bank, what’s called a large item return notice, which basically says the checks no good…
Andrew: After they cleared it they come back with this?
Brandon: After they cleared it, after they had given us an assurance, both banks had given us an assurance that the check was good and the money was there. Now this is on Friday, and on Monday, in the mail, we get the check back, I mean the large item return notice, which had been post marked on Thursday, The day before, so it was… So anyway we do not accept checks for anymore than two thousand dollars right now.
Andrew: I didn’t know that that could happen with checks. I figured once it cleared, that’s it, you got the cash.
Brandon: Well that’s, yeah that’s what I thought too.
Andrew: So does that mean if I write somebody a check for a large amount I could always come back and take my money back?
Brandon: No, it was, I mean this was clearly a mistake by the banks.
Andrew: I see, OK.
Brandon: Said the check was good.
Andrew: I see, so this isn’t common practice, you just realized, hey wait, there’s some mistakes that could happen when it comes to checks.
Andrew: Alright, so instead of checks, what do you do if someone needs to buy something for more than a few thousand dollars, which is your check limit?
Brandon: You know most of our payments are through wire transfer.
Brandon: And once the wire comes in, the money’s in the account and nothing can be done with it. We also accept credit cards up to five thousand dollars for certain items.
Brandon: And those items, a domain name would be something we’d accept a credit card for, but we’ve been burned before on credit cards where somebody bought a designer purse.
Brandon: And, in the way the escrow works they had a few days to, you know, make sure it was what they wanted, so they’re delivered the purse, they tell us to pay the seller, we pay the seller, six months later the handle is coming off the purse. So she takes it down to the store and the store says, “Well, this isn’t ours, this is a counterfeit” and she goes back and she calls her charge card company and does the charge back against us. Now in that transaction we’ve already paid the seller a thousand dollars, and our escrow fee on that was sixty three dollars.
Brandon: Of which, you know about 3%, or thirty dollars was going toward the credit card company and merchant fees. So no I’ve got this charge back, which we fight, and we lose it, because the credit card company says, you know, it was for stolen, or you know, counterfeit goods, and we’re going to back our customer. So in that instance, you know, she had her inspection period, she didn’t obviously go down and ask if it was a real purse, and so on something that I was going to make a gross profit of about thirty dollars on, we lose a thousand dollars we paid to the seller, our sixty three dollar escrow fee, and plus there’s a charge back fee on top of it. So, you know, we lose eleven hundred dollars on something we were going to make thirty dollars on. So we have revised our credit card policies as well.
Andrew: How? To what? How do you stop an issue like this from happening?
Brandon: Well we don’t take designer goods…
Andrew: I see.
Brandon: We won’t accept jewelry. If somebody wanted to use the service to buy a pet we would not allow that, a credit card for that.
Andrew: I see, so every time there’s a problem it seems, like a check that there’s some issue with, or a credit card for a Louise Vuitton purse, that turns out to be counterfeit, you guys end up creating a policy that protects you from this kind of situation happening in the future?
Andrew: To me, looking back that seems like a very reasoned approach to business. But I know that if I were faced with those issues, in fact if I were faced with ever smaller issues, I’d freak out. Like the internet went down here today in the office, I’m thinking, “How am I ever going to make this business work if the Internets going down and I can’t even keep the basic… Internets working on my iPhone, it’s not working in my office? What’s going on? How am I going to get this thing to work?” Like my mind goes to this place like it always happens to me and it’s a disaster. Did you have that, and if you did, how did you come back from that kind of thought process, and end up with a reasoned response that gets the business to be on more solid footing in the future. Did it happen to you?
Brandon: Well in this situation we just talked about, where it’s over and it’s done and you learn from it.
Andrew: But in the moment Brandon, are you the kind of person that who goes, my goodness, I just took on this business in one of the toughest internet markets ever. And already I’ve got people who are out to get me with fraud. I got people who are out to get me with banks who won’t take the responsibilities. This just isn’t going to work. And I say that because I know that it’s not just me. It’s also the kinds of things that I’ve heard from people in my audience. They’re building their business, they have this one big issue and yes, in retrospect it wasn’t such a big deal. But in the moment they get heated. I’m curious how you handle it so we can either see ourselves in you and learn from the way you handled it or change because of the way you handled it.
Brandon: Well I do get upset. But if it’s something that I can’t control, and it’s already happened, figure out how to make sure it doesn’t happen again, and that’s what we’ve done with all these instances.
Andrew: How do we keep this from happening again, and frankly in this case you said you tried to fight it. So it’s how do we keep this from happening now, and then keep it from happening again, but you don’t freak out.
Brandon: I don’t freak out. If you’re the president of the company and all your employees see you freaking out, that’s not a good [??].
Andrew: I see. Is it a product of age and experience?
Brandon: I think it is. I’ve had some interesting experiences. You know, back when I was probably 27 or 28 I had a job which was to fly around and make product presentations for [Burels] Corporation. You’d leave on a Monday, come back on Friday, and you’d have all of these appointments and presentations in between. One day I was flying into Orange county airport. I lived in San Jose at the time. We’re coming in for a landing and in a 737 at John Wayne airport, and all of the sudden you hear the landing gear come up, and the engines go full throttle and the next thing you know you hit the runway with no landing gear and the engines. Anyway, the 737 crashed at John Wayne.
Andrew: With you on board?
Brandon: With me on board, sitting in seat 14c. Exit rows up in nine. The plane, it finally stops and it’s close to 5:00 at night in February, it’s almost dark but it’s not dark. So we’re able to see where the exits are. And I made sure everybody got off the plane in front of me, and when it came my turn my thought was now I’m going to have to jump 10 or 15 feet to the ground going out this little window in the exit row. Well with no landing gear and no engines underneath that plane, it was on the ground right. So everybody gets off the plane and runs away and the plane catches on fire. Nobody was killed, worse injuries were broken bones, but after that I… It’s just one of those things. It’s kind of a life changing experience. There’s certain things that are going to happen around you, and that situation I couldn’t control. I was just there, once we got on the ground and I was able to get out my seat and tell people where to go, and get off the plane. You kind of live for today and do the right thing.
Andrew: So how did that situation change the way you’d looked at a bank that asked you back for the money it gave you, or purse that turns out to be counterfeit. How did that steel you, or prepare you for situations like this?
Brandon: You don’t sweat the small stuff.
Andrew: Because it’s all stuff compared to nearly losing your life. Suddenly you recognize that’s important, life is important. A purse that ends up getting through our system some how is a learning experience.
Brandon: Somebody worked the system and got me. Let me figure out how I can prevent that from happening again. But it’s not life or death. Our business is here to protect your money, and that’s what we do and in that case we didn’t protect our own money, because that was a loss that we took.
Andrew: Right. So that’s the situation the company was in. I mean these policies weren’t in place, these protections weren’t in place, the deals weren’t’ in place that you talked about at the top of this interview. Can you describe what the first steps you took, when you took on this business?
Brandon: Well first I wanted to find out about the nuts and bolts of the business, what the employees were doing, what their day-to-day job was. And how it’s really a very intricate system because you’ve got your customer facing website, but behind that you’ve got your administrative systems that’s connected to the trust accounting system, that’s connected to the banking system. From a technology standpoint it’s really very impressive. Everything worked, the system worked.
Andrew: The software worked.
Brandon: The software worked.
Andrew: What about management for the business.
Brandon: The business has been neglected. Certainly the owners being back on the east coast, all they wanted to do was try and get some money out. They were probably cutting more corners than they should have, and the person that was managing the business out here was kind of an absentee manager. Showing up a few times a week, and it wasn’t a good work environment. You didn’t have a team of people working together with a common goal. Everybody had their own space, you know, leave me alone, I’ll do my job. That’s one of the things we immediately worked to change.
Andrew: How do you change this manager when she comes in just a few days a week?
Brandon: Well I started making here more accountable for what she was responsible for one. Eventually she thought I was being a little too accountable, or making her be accountable and one day she stormed into my office and yelled, I can’t work for you anymore. Stood there for a few minuteness like she was expecting me to say please, work for me some more. I just waited for her to leave. When that happened the place got a lot better.
Andrew: I heard people were high five-ing, but I don’t know her and I wasn’t there.
Brando: There may have been a few high fives.
Andrew: How bout rallying the troops. As nervous as I am about speaking in public and going to conferences and being on stage and telling people what I’ve learned and how they can do a better job with their business. Sometimes it’s more challenging to talk to the few people who work in the business and fire them up. Did you have to do that, and how did you do that?
Brandon: Well for me, I’m much more comfortable sitting in a meeting with two or three people then being on stage in front of 5 or 600. So I enjoy those meetings. But here, everybody believes in the product, and we’ve created a work environment that is a very nice place to work.
Andrew: Why did they believe in the product back then when it was languishing. It was just being milked by an outside investor, an outside owner, when the person who was their boss finally showed up, and when she did from what I hear, there were some rough situations there. You’re now walking in, you have to get these people to understand, this is going somewhere. I believe in this vision, I’m going to show you what this vision is and, I’m going to show you what this vision is, and I’m going to progress along the way. You have to turn people around. How do you do that?
Brandon: Well you give them a little bit of rope and let them do their job, then you help them do their job. If I look back at the people that, you know, I probably have with me today, 70% of the people I had back in 2004 when I started. So they certainly believed in the product, and believed in the, and the vision was to support him and grow the company.
Andrew: So how do you communicate that? Are you the kind of manager, Brandon, who sits down with your people one on one and explains the vision? Are you the kind of person who sits down one on one and asks for feedback and lets them feel that they’re heard? Or do you do company wide, all hands meetings, what do you do? Because I’d like to learn from you because you were in a really tough situation with escrow.com, I hope I’m never in such a bad situation with my business, but if I am ever in trouble with my business and my people lost faith I’d like to learn from you and do some of what you did. How did you get their faith in the business?
Brandon: Well I’m very open with everybody.
Brandon: And my door is, it’s closed right now, but this is the first time it’s been closed…
Andrew: Thank you for doing that.
Brandon: In a long time. But it’s just little things, I’ve got a candy jar sitting over there and everybody comes in throughout the day and gets candy, and I ask them how things are going. I’ve very open, I’m one of those guys that I don’t need to hear myself talk. So I don’t call meeting so I can get in front of people and bore them to death over things that I think are important. I’ve always, you know, I’ve never liked those meeting where you work for a big company and they call, you know, a hundred people in to talk about something and they take four hours that should have been done in half an hour. So I’m, you know, I’ll go out to lunch with the staff, we’ll have meetings after work, casual meetings, just go have a beer. Very, very open door policy, and I think that’s where you really find out what’s going on and what the potential issues are or if there’s some personnel issues going on. You’ll find out about it that way. And then once you find out about it you can address it however you see fit, but I’m not a big meeting guy just for the purpose of having a meeting.
Andrew: I see. All right, you get people to meet you, or to get to know you, you take charge of the business, it’s time to get more customers in right? How do you do that?
Brandon: Well back then it was, you know, dialing for dollars, we had a very small marketing budget, and we would try and do some Google advertising and then we decided that we had a lot of people in the domain business. A lot of smart people in the domain business, and we made some contacts, I went to a few shows, met people like Ron Jobson and just some of the other players in the industry and they were all telling me what a great service we had and, you know, do these little things and make it even better, and we listened to our customers.
Andrew: What kind of things did they tell you that you didn’t think of? Or that helped shape the business?
Brandon: Well one of the things recently that we’ve done, well 3 or 4 years ago, we started offering a domain name holding services, which is what you mentioned about marijuana.com. That’s been very well received. We have a number of people, especially in the domain business, that broker domains, and we’re in beta test right now with a broker system and that’s scheduled to be released probably in about 60 days.
Andrew: What about in the early days? What are some of the things that the domainers, the guy’s that are buying and selling domains said, if you do this you’d really help us out? If you do that we’d be sending you even more money?
Brandon: Well they wanted faster turnaround on some of the transactions.
Andrew: Meaning that once a transaction’s complete they wanted the cash to come out quickly?
Brandon: We’ve made some changes that allow us to track the transfers quicker. We’ve revised some of the internal policies. We’ve straightened up the escrow instructions a little bit. We’ve done some things with our API which makes it much easier for some of our larger customers who’ve integrated with us.
Andrew: You mean the GoDaddys of the world?
Brandon: The GoDaddys, the Flippas.
Andrew: That makes it easier for them to work with you almost as if you’re part of their business?
Andrew: Because your software is integrated into theirs. When you said dialing for dollars, I’m wondering, who do did you dial for dollars? We’ve all been in situations where we need to bring in more revenue and we’re so fired up and willing to do anything that we are willing to pick up the phone, and we are willing to be persuasive, and we’re so passionate about our business that we’ve convinced that anyone we talk to is going to buy. But who do we talk to? Who did you talk to when you were in that dialing for dollars stage?
Brandon: Well, I talked to Cars.com, I talked to AutoTrader.
Andrew: So you went straight to the guys who had your customers. What was the response when you were going to Cars.com, and AutoTrader back in the beginning?
Brandon: It was all very positive. They recognized the value. If you think of our service and you think of their market place, it’s a value add. It’s a win-win for their clients, it’s a win for them, and it’s a win for us so. Every one of these deals that we’ve put together have been mutually beneficial for all parties.
Andrew: But is it as easy as that to as just having such a good product that you can call up Cars.com and say, look, we have an escrow service, you have customers who are worried about the money. We’ll plug in with you and make sure that your customers get protected and you’ll make a little, we’ll make a little Do we have a deal here. Was it as easy as that?
Brandon: Well it took a little longer than, but.
Andrew: But that’s essentially what it was?
Brandon: But they did recognize the value and the company I always shake my head at is Craigslist. If you go on an add on Craigslist, it’ll say right there. Do not use escrow services. And it bugs me a little bit, that they’ve taken that approach.
Andrew: Why do they say that?
Brandon: We’re a market place, you find somebody here, good luck.
Andrew: They don’t want anyone disinter mediating.
Brandon: They want to distance themselves. My opinion is that they want to distance themselves from the transaction. Personally I think that’s a mistake. I think they get a lot of bad press on people getting held up, and car jacked. I go back to that that billion and a half dollar number from last year. A lot of that is misrepresentation of goods, and option fraud. If you think of those two things. Both of those can be fully protected using Escrow.com services.
Andrew: I know what you mean about Craigslist. I bought this bike for getting around Santa Monica when I lived there. The person who sold it to me had a decent bike, but I had to go to the middle of nowhere to pick it up because it was convenience for him and-he was the seller. I had to make sure that I had the money on me and it was in a place that was kind of protected. We ended up meeting at the back of a fast food restaurant. I was so desperate for this bicycle, but that’s where I was willing to go and I thought, I could get killed. I even emailed a friend of mine and said if I get killed, this is where I was going and here’s who I went to meet.
Brandon: You shouldn’t have to do that.
Andrew: I shouldn’t have had to, right. So you started out with the idea that the auto industry would be the industry. You told us that you discovered this whole new place of customers. The domaining world. How did you discover them? How did you discover that these are the guys who are going to use you, these are the guys who are mean for you?
Brandon: Well it was basically just looking at some of the business we had done.
Andrew: So you were already doing business with people who were buying and selling domains you said. Maybe there’s a bigger pocket there.
And that’s when you went to those conferences.
Brandon: Went to Domain Fest, went to a couple of conferences up in Seattle. Got to meet some of the people. There were a lot of the them that like our service, and then we started expanding our marketing a little bit. Put some adds out there, and people started coming to us and day before yesterday, we were voted the best domain escrow service on Domain Name Wire. Which was pretty exciting for us. And we’ve had that honor before but we received 60% of the vote. I think the next closets competitor received 10 or 11%.
Andrew: Where did you advertise to get your customers?
Brandon: Domain Name Journal was where we started. We’re on a number of blogs. Then we started increasing our spend with Google AdWords and that’s been good for us. And our traffic has been increasing ever since.
Andrew: How did you land the GoDaddy deal?
Brandon: We met with GoDaddy at a conference.
Andrew: It started as a conference, OK.
Brandon: They were getting ready to release their [??] site, and they didn’t want to be an escrow company. And they new of our services, and worked on putting that together. It was easy to put together from a business standpoint because they knew us and we knew them, and certainly we wanted to do business with them, and we have an online escrow license in Arizona, and I’m not sure anybody else has that distinction.
Andrew: I read about the process that you went through to get that, I mean, can you talk about that? Where did I read that? I read that on someone’s website, it was on Elliot’s blog. Can you talk about that? Just so people realize that you guys really put in your time to build this business, it wasn’t just like that. And we’ll talk about one of the other challenges here, I don’t want to leave people with the impression that you just lucked into this successful business, but it was hard work. What did it take to get the license to work in Arizona?
Brandon: Well when we got here in 2004 the previous owners had not renewed the Arizona license, and they didn’t feel that…
Andrew: So they had it, they just neglected it and…
Brandon: They had it, they let it expire. They didn’t want to pay the fee. It didn’t make sense to me to be able to do business in 49 states and 100 and some countries around the world but not Arizona, and I get these calls from people in Arizona and they say, “OK, North Korea?”…
Andrew: Can you really do business in North Korea or is that a joke?
Brandon: So I contacted the department of financial institutions over in Arizona and we submitted the application, and it really was, I mean, they definitely do their homework. And we put that together, it took quite a while to get it done, and eventually I had to go over there with my escrow manager, my CFO, and we had to make a presentation to them and they, I guess there were three of them there, and they, you know, they asked a lot of tough questions, and they went through the business with a fine toothed comb and we ended up getting that license so, I think that’s important. You want to be able to do business in all 50 states and not just 49 states. One of the issues…
Andrew: You can have 49 states, and everyone always wonders, “What’s up with that one?”
Brandon: Yeah, what’s wrong with you? Did you get booted out of that state or something?
Andrew: And when you were saying North Korea you said, you customer’s said to you that they understood that you are not in North Korea, but why not in a state in the union? A legitimate state in our union. Another big issue you had was denial of service attacks from hackers in the early days, can you talk about that a little bit?
Brandon: I had one. There’s so many fraudulent escrow sites and I could point you to them, maybe we’ll talk about that later, offline, if you’re interested, but there’s a website called escrow-fraud.com and it’s somebody that has chronicled all these fraudulent escrow sites that have been up since day one. And if you go there today you’ll see that since that time there have been over twelve thousand fraudulent websites that are just put up and the scam is they put the car for sale on some website and the buyer says well boy that’s, I want that car, and it’s really a good price. And the crook says well you don’t know me, you should probably put the money into an escrow company and here’s one I’ve used before. Here’s the link. And the guy goes on the site, and you know it looks legitimate and they don’t check the who is, and they don’t see that it’s only been registered for three days and they end up sending ten thousand dollars to somebody, a large part of that 1.5 billion dollars, and then they’re scammed so…
Andrew: Scammer’s are so clever, I could, I tell you I could read a blog of just scams just because they’re so clever that it makes me smile at how they do it. And if they only would apply themselves, now I sound like a schoolteacher, but frankly if they would apply this cleverness towards real businesses there’s no telling how far they could go with their companies. They could be sitting here doing this interview with my too.
Andrew: And instead they’re putting this brilliance into ripping people off for two or three thousand dollars.
Brandon: Well, it’s organized crime. I’ve sat in on a few meeting with the FBI and it is, it’s organized crime. They’re professional criminals.
Andrew: I see, so it’s not just two or three, these guys are just knocking this stuff out left and right.
Brandon: Oh yeah. It’s very impressive if you’re… It’s like a mafia family.
Andrew: I still say it, I think Al Capone, I don’t remember the exact quote but Al Capone said that he could have gone really far if he went legitimate instead of going towards crime. There’s a lot of cleverness there. To protect yourselves against denial of service attacks, you guys are now hosted on a government owned data center?
Brandon: Well, we’re in a government owned data center. We’re…
Andrew: How do you do that?
Brandon: We’re hosted by a private company. The actually lease space out, so we’re in a cage in the data center. But it’s… Yeah we got hit by the denial of service attack and basically it was just all these requests coming into our system and you couldn’t tell if it was a legitimate request or not. Each one was from a different IP address so you couldn’t block that IP. And you know, it was 36 hours of, not much I could do because I’m not the technical one in the company. But eventually they got it under control and we haven’t had to deal with that sense. There’s some bad people out there on the internet.
Andrew: Yeah there really are. And I imagine that they gravitate towards you because this is where the money is.
Andrew: Alright, but you got through them. This is what I’m learning from this interview, I’m learning platform, that’s the big lesson that I take. You’re not going after one off customers by buying ads off Google, for people who happen to be trying to buy something and are looking for an escrow service, no it’s partnerships with eBay, with cars.com, with GoDaddy, that’s what delivers you a lot of customers, and the way you get those partnerships, it seems like it’s dialing the phone and just working the deal. Going to conferences, like you went to domainfest, that’s where you met GoDaddy, that’s the key. Am I right?
Brandon: I think so, I mean, bottom line is you’re going to do business with somebody you like and somebody you trust. And, you know, when you’re an internet company and you get the opportunity to shake somebody’s hand and tell them who you are and talk about your business it goes a long way. And the other thing that’s been key to our success is our customer service department. We have, I have always wanted to be very accessible to our customer base, and especially since we are holding their money. Nothing frustrates me more than pushing the phone and push number 3, push number 4, push number 5, and then you wait on hold and get another recording. We staff our call center from 4 to 8, 8 to 4 every day, pacific time. And then any customer sends us an email, a support email, on the weekends we always answer those on the weekends.
Andrew: So if I were to call you right now, the number on your website, on escrow.com, I’d get a human being?
Brandon: Yes. Well you might get a recording that says please have your transaction number, and then you would be put in the queue and then you would be able to speak to somebody.
Andrew: I see. So it’s a little bit of a hold to get to the person, but I’m going to talk to a person, I’m not going to talk to a machine, I’m not going to be blown off?
Andrew: Alright, and so you’ve told Jeremy, our producer, that a few things have happened as a result of this, can you talk about that? I mean you hit a billion dollars, that’s one of the big rewards, what are some of the other rewards of having gone through all this?
Brandon: Oh, you know, it’s been a very exciting few years at escrow.com. Our numbers are up, we’ve got, everything is going in the right direction right now. We’re very fortunate, we’ve got a good team of people here, everybody knows what they’re doing. We’re making a lot of changes, you’ll see the new customer facing website here very soon, we’re putting in a new back end system, we’re putting in a new trust accounting system which is going to allow us to do business in different currencies, so…
Andrew: Now I’ve got to tell you, I looked at your website, it doesn’t feel to me like it’s changed from the first time that I saw it.
Brandon: It really hasn’t.
Andrew: It doesn’t matter though right? Because it seems like most people don’t come to escrow.com, they come through another site, to work with you, am I right?
Brandon: Well, it depends. We have a lot of general traffic that just somebody types in escrow.com and they come to use and they see our homepage. But for our returning users, most of them know to go right into their transaction screen. It’s different, but you’ll… Keep and eye on it because it’s going to change and the look and feel will be much nicer.
Andrew: I’m going to say a quick thank you to someone in the audience and then I want to ask you one final question that I’ve written down here and circled it to make sure that I get to that. And the thank you is to Ben from Site5, Ben is a premium member at Mixergy, he’s actually one of the people who got… Back when I started selling premium memberships at Mixergy I offered a lifetime membership, he said, “hey, you know, I like where Andrew is going with this, I want to keep taking the courses he’s offering on MixeryPremium.com, I’m going to sign up for a lifetime membership.” It’s gone. A lot of people now have been e-mailing me and saying, “Andrew, is there anyway to do it?” No. Sorry. It’s gone. He jumped on it quickly. I suggest you do the same thing for what’s available now. We offer incredible rates. You’ve heard people, past guests, say that they think my rates are too low, and they’re berating me and telling me to increase prices. We will.
If you sign up now you’re going to get that price, and other people will be e-mailing me saying, “Why can’t I get the price that you used to have that my friend has?” It’s going to be gone, but if you get it now you’ll lock it in and enjoy it forever. So, what am I saying here? I’ve got to tell you, Brandon, I’m a little embarrassed. It’s not one of my best pitches.
Here’s the thing; you can talk to Ben at Site 5, one of the top web hosting companies in the country, and he will tell you why he and so many other people who are running incredibly successful companies who can go to anywhere to learn how to build their businesses come to MixergyPremium.com.
They do it because it’s not me teaching on there how to get traffic. It’s not my mother. It’s not some slick talker teaching how to get customers or how to get traffic or how to do any of the other things that you need to grow your business. It’s real entrepreneurs just like we have here in these interviews. Real entrepreneurs turning on their computer screens and saying, “This is how I do it.”
We offer for a low rate now, but we will increase it. If you lock in your price right now it will be yours forever. Go to MixergyPremium.com. I was feeling embarrassed. I had Brandon Abbey on here and I was doing one of the worst pitches. I had to fix it. MixergyPremium.com deserves a better pitch than that first one.
I had made some mistakes before we officially started the interview. I didn’t see it. The audience doesn’t see it. You were calm through it all. Through this process when you were talking about some of the toughest moments at Escrow.com you were calm. How do you maintain this calmness? Is it meditation or something else? I’d like to be that calm.
Brandon: That’s just me.
Andrew: That’s just your personality. Was it always was your personality?
Brandon: Yes. Yes, it has been my personality.
Andrew: Has it helped you or do you ever sit back and say, “You know, I see these guys like Jason Calacanis who are yelling and fiery all the time. Maybe I need to be like that. Maybe I have a disadvantage because I’m not like that.”
Brandon: I’ve heard that from some people. I’ll get fired up occasionally.
Andrew: What are the advantages of having this kind of personality, the one that you have, where you’re calm instead of, when someone rips you off, saying “frickin’ jerk,” saying, “I think we can improve our process.” In fact, that seems like one of the benefits. You can sit back and say “I think we can improve our process here and prevent this from happening again and build a better business for it.” What else do you get because you’re this way?
Brandon: You tend not to make too many emotional decisions when you’re in the heat of something going on. It’s better to sit back and analyze what could happen. You may make a decision that sounds like the right thing. Somebody wrote a blog post about us one time and it was completely off base. The guy wasn’t telling the truth.
I was talking to Ron Jackson about it, and Ron said, “Just let it go. You have enough support in this community. Everybody knows who you are. They know the job you do. They know this guy’s not telling the truth, so don’t worry about it.” Really, I just wanted to slam the guy, but I stepped back and it went away.
Andrew: Well, I’ve got to learn to be more like that. I’m relaxing. I’m drinking tea. Is this calm tea? No. This is decaf Vanilla Nut Cream tea in our coffee. I really admire what you’ve done here at Escrow.com. I know, for a lot of people, coming here and doing this interview is good for business.
Your business doesn’t need this, which is why I especially am grateful that you’ve come here and done this interview. Escrow.Com will do just fine without us, but I think that we’re better off for having you here to be a part of this project at Mixergy where people like you come and talk about how they build their business. So, thank you for doing this interview.
Brandon: Thank you. I enjoyed it.
Andrew: Thank you for watching.
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