Wait till you see what today’s guest did to a venture capitalist to get his attention.
Andrew: Hey there freedom fighters. I’m going to try a new intro right here where I tell you what’s coming up and then hopefully more people will stick with this interview. I want people to watch to the end. So, there are three things that are coming up. Number one, I want you to see what today’s guest did to a venture capitalist without asking for permission. You’re going to be shocked, but I think you might want to copy this too or learn from it.
The second thing is, you can walk over to the light switch in your house right now, right, and turn it off and on all day long. Today’s guest couldn’t. I think you’ll laugh when you hear why not.
The third thing is, somehow today’s guest got $3 million which he did something that will shock you, but if you’re an entrepreneur you might recognize it. So, all that and so much more is coming up. My name is Andrew Warner. I am the founder of this here website and business called Mixergy and I want this interview to help you grow your business.
It is sponsored by Scott Edward Walker of Walker Corporate Law, but we’ll get to him later. For now, I want to introduce you to today’s guest. He is Alexander Torrenegra. He is the founder who started off as a hamburger flipper at McDonald’s and ended up launching a slew of sites, including most recently Bunny, Inc. which is the creator of Voice Bunny and Voice 123. Two sites where you and other entrepreneurs can go to get voice-overs if you need them.
Pandora and other companies are customers of his. You’ll find out about them in this interview. You were smiling Alex as I did the intro. I’m trying a new approach. It looks like you like it.
Alex: I love, yeah.
Andrew: It’s because you gave me such good material with your background. Let’s get into the story. First I want to understand the boy who became the man who’s running this business. It started in Colombia. Did you come from a rich family in Colombia?
Alex: No. My mother’s family actually. We didn’t have money to buy a computer, so that’s what I (?) to create my first company.
Andrew: No money? What does no money in Colombia mean? Well, what does it mean seriously? It’ll help me get to know what your background is.
Alex: Not having money in Colombia?
Andrew: Yeah. What does it mean? You didn’t have money which means you didn’t have a second car or didn’t have money . . .
Alex: Well, not having money in Colombia means probably being middle class or being in the bottom of the social strata. We lived in an apartment with my grandma and my mom and my sister. It was 400 square feet and we didn’t have a car. We didn’t have money for a computer. We only had a black and white TV and this is the ’80s. That’s not having money. For us, grabbing a cab was a luxury. So, we had to always ride public transportation. Sometimes in Colombia it’s not that safe, but yeah.
Andrew: 400 square feet is essentially the section of the office that you’re in right now. We’re talking about a small, small space.
Alex: Yes. It was really, really small. We actually had two bunk beds and one I share with my sister and the other one was shared between my mom and my grandma.
Andrew: Wow. And so you’re smiling as you say this. Was it just the way life was or were you feeling suffocated by it?
Alex: No. That brings me a lot of good memories.
Alex: I didn’t know better. I mean, one of the things that I love about having being raised without a lot of money is that you end up enjoying everything in life because it’s more than what you were probably expecting from it. So, that brings me just a lot of cool memories.
Andrew: Wow. And you were starting to say that at some point you wanted to buy a computer. How did you do it?
Alex: Yeah. We came obsessed with the idea of getting a computer when I saw one for the first time when I was four years old. We didn’t have the money to buy one. I had to sneak in the computer lab at the university where my mom used to work in order to be able to use computers. After that, that (?) of thinking what to do in order to get one, I realized that maybe I could try to get a loan and then use the computer to build a business to be able to pay for the computer.
Back in the day, a lot of college students didn’t have a computer either, but it became popular to ask other people to transcribe the work and then give the homework to the professors in a really nice format that you could only achieve by using a computer. I realized that some people in my neighborhood in Bogota were offering that. I asked the only friend that I had that had a computer to print a sign that says, we transcribe homework to the computer.
I mean, literally it’s a bad translation, but to some extent that’s what it says in Spanish and I took that and I posted that in several areas of the neighborhood on the walls on the street and then people started to come to my house and ask for that (?). The only challenge is that I didn’t have a computer, so I couldn’t do it but it gave me an idea of the flow that I could get, of the cash flow that I could get and how much (?) could I charge for that.
I then took that information and I went to a bank where I had a savings account for children. I asked for a loan and they laughed of course. I got mad. I asked them well, I’ve been one of your clients for three years. I’ve saved the equivalent of $50 and now you’re not giving me a loan. What kind of people you are that don’t treat your clients properly? The bank manager was listening to me or it seems she was listening to me because she asked me to go to her office.
Then she asked me about where my parents were, why I was asking for money, what were my plans with that money and I explained everything to her including how I was planning on paying back that loan to the bank. She asked me to fill some paperwork and to come back two days later. She gave me a loan equivalent of 500 bucks or so which is what I needed to buy my first computer (?) Colombia.
Andrew: Wow. And you were in business.
Alex: I was in business. Later I realized that it wasn’t the bank the one giving me the loan. It was actually a personal loan from the bank manager, and so I usually refer to her as my first real angel investor.
Andrew: Wow. So, she personally said this is not something the company can do, but I like this kid. I believe in him.
Alex: Yes. I think that was the case.
Andrew: Wow. When did you find out?
Alex: Many years later. The last payment actually fell behind. She gave me four receipts to pay back the loan and the last one I couldn’t pay on time. I had to pay two days late and when I go to the bank they couldn’t accept that payment because due date was wrong. So I asked them to look for my loan in the system and they couldn’t find it. They ended up giving me another receipt (?) date and I ended up paying and I left.
Years later when I realized how the banking system worked I realized that I wasn’t paying back a loan. I was simply depositing back the money on her bank account and that’s why they couldn’t find me. That’s why else they couldn’t give me information about that bank account that I had on the receipt because it wasn’t my bank account. It was somebody else’s bank account.
Andrew: Wow. That is so touching. I see. She gave you deposit slips that you were using to deposit the money back into her account.
Andrew: Wow. And did the business work out the way you wanted it to?
Alex: Yeah. Initially my plan was to pay for the loan within two years, but when she gave me the loan she told me I can only give you the loan for one year. I mean, I had pretty much the money in my hands and I really wanted that computer so, I told her okay. I’ll do whatever it takes to pay the loan within one year. I had to work really hard. I got home.
I mean, I was working probably four or five hours per day doing data entry work, but that wasn’t enough to be able to do enough work in order to pay for the computer. So, both my mom and my grandma learned how to use the computer as well.
Alex: Especially my grandma. She was really, really vested into the idea of we having a company. So, she learned how to use Word Perfect, but she didn’t know how to save the work. Whenever I fell asleep she would jump on the computer. She would continue doing data entry work. Then I gave her the instructions of simply leaving the computer turned on and not touching anything. The next day when I woke up, the first thing I did was to hit Control + S to save all of the work that she had done.
Andrew: Because she didn’t even know how to save it. You didn’t want her messing with that.
Alex: Yeah. She didn’t know. I tried. She knew how to type on the computer, but the idea of hitting two keys at the same time didn’t compute in her head, but still she helped me a lot.
Andrew: Wow. But she was that supportive?
Andrew: Was she supportive because she wanted to encourage you to be an entrepreneur or was it just grandmotherly love?
Alex: I think grandmotherly love because she was never an entrepreneur. So I think she grasped that idea. Just love for her grandchildren.
Andrew: Wow, so where did this come from? This idea that you were going to figure out if there was a business before you got a computer so that you’d know that you could afford to pay for the computer. Where did these entrepreneurial instincts come from?
Alex: I heard some people say that scarcity is the mode of innovation and I think it was out of the need, out of the passion of really wanting a computer. I mean I was constantly saying what can I do to get a computer, and that idea simply popped one day, and if I wanted a loan, I needed to make sure that I could pay for that loan, so I had to do that market research. Eventually I learned that people call that customer development, right? But initially it was just out of necessity.
Andrew: This is the early nineties, was the company called Cyber Price?
Alex: Well, it was a part-time, I was, initially only me, working three to four hours per day or so, and the name I gave it was Apache X Cybernetic Enterprises Limited.
Andrew: I see.
Alex: It was 1993.
Andrew: Okay. And I have a note here from your pre-interview with, I guess it was Jeremy you talked to?
Andrew: And he says that the company reached 25 full-time members at its peak, could that be right?
Andrew: Wow, this little thing that started out with you borrowing money to buy a computer, grandma helping you when you fall asleep, how did it get to 25 people?
Alex: So when I paid for the, finally for the loan, I wanted, as any passionate kid out there, I wanted to upgrade my computer, and I realized that if I wanted to upgrade it, I had to pay for whatever hardware piece I wanted, but also for somebody else to actually put the piece inside the computer, and it was equally expensive.
So I asked a friend of mine to teach me how to open the computer, and upgrade different parts of the computer, and at that I realized I was good doing that, and then started helping friends to do, to upgrade their computers. And I realized when they, oh, maybe I can start offering that kind of service, so I posted that in the newspaper.
I bet like 200 bucks on that ad, because it was expensive, and it said, we fix computer on site, and the phone number. It was Sunday, because back in the days when Sunday newspapers were big and full of classifieds, and I sat next to the phone that Sunday, starting at 7:00 a.m., and I didn’t get a single phone call.
Alex: And I didn’t know how to pay back that, because that was like four months of that (?) work. I was quite sad and disappointed, but I did some research, and I realized that on Sundays, no one was offering professional services. Sundays people were selling stuff but they were not selling services. People selling services were posting classifieds during the week, so I upped the ante, and I posted the ad, a second classified, this time during the week.
And as early as 9:00 a.m. on Monday, I started getting calls from people wanting me to fix their computers. The surprising part is that I didn’t get people asking me to fix the computers in houses, I instead getting phone calls from companies wanting me, being, I was 15, wanting me to fix the computer in their office, and it worked, and that business ended up (?). So I shut down data entry, since what, and I focus on becoming the IT, the outsource IT department for small and medium sized businesses in Bogota, and I ended up becoming a 25 people company.
Andrew: I know that you came to the U. S. in ’98. What happened to that company?
Alex: So in 1997 or so, Colombia started to get internet, and it was by the minute, and I had some clients that had the cash flow to pay for internet access, and towards the end, and it was a fixed number of minutes per month, that if you didn’t use them, you would lose them, and because I was managing, or we were managing the accounts for those clients we knew how many minutes they had at the end of the month.
So we started using those minutes the last day of the month, uh, accessing the internet, and I realized that everything related to technology and innovation will happen here, in the U. S., so for six months or so, I kept thinking, and I was waking up thinking that I’m in the wrong country, I need to be in the U. ., if I really want to innovate in terms of technology, and one day I finally get the visa.
Back in Colombia it took like nine months to get a visa appointment, so I had to wait that long. I finally got the visa. The moment I got the visa, I called my team, I told them, hey, I’m splitting the company, each one of you is going to get a little piece of it, and I called my clients, and I told my clients thank you, now this person is going to be the one in charge of the account, and wish me luck. I got a one-way ticket, and a month later, I was cooking hamburgers in McDonald’s because I realized my English wasn’t that good.
Andrew: So you have no, no more equity in the business.
Alex: No, I just . . .
Andrew: That’s it. Because it wasn’t a profitable business on its own. You were selling people’s time and if you weren’t there to manage it, it wasn’t real business. It was jobs for all these people. Is that right?
Alex: Back in the day I didn’t have the tools to manage a team remotely. So, it was a profitable business and probably I could have continued having the business, but back in the day the only tool that we had to communicate in real time with other people was ICQ.
Alex: The idea of managing a team remotely didn’t even cross my head back in the day, so that’s why . . .
Andrew: So, you just said, that’s it. I have a new future. I’m going to risk all this money that I could have made by sticking around with this business and just go start fresh.
Andrew: You said that you took a job flipping hamburgers at McDonald’s because you didn’t speak English. I want to make sure that the transcribers get that right because that’s so shocking. I introduced that at the top of this interview. You’re smiling as you say it, but you’re a proud man who built up a company with over two dozen people in it with real business customers and now you’re flipping burgers for people who are complaining that you have too much ketchup or not enough ketchup or too much whatever. Wasn’t that demeaning?
Alex: It was tough and the toughest part actually was that because my English wasn’t that good I couldn’t interact with people. I remember sometimes I had to actually be on the register at McDonald’s. I usually was in the back just literally cooking hamburgers, but sometimes I had to be in the front on the register. I knew the numbers. I knew how to ask people for Visa or MasterCard or whatever, but when they ask a more complex question I would simply stare at them not knowing what they said.
Some people thought that I was actually retarded and it was very kind of McDonald’s to have hired me. I’m like, no. I just don’t know how to communicate in this situation, so it was a very interesting, humbling experience I think because it allowed me to realize that the fact that you cannot communicate doesn’t mean that you’re not (?). It’s only that you might not know how to express yourself.
Andrew: But that’s big. This is a person. Really, you came to the U. S. with big visions. You accomplished so much, so you feel like you can and now you’re working flipping burgers. Seriously, how does that feel? It’s easy? You can go through it and you’re okay?
Alex: Yeah. Well, for some time actually I never talk about it, but then I realized it’s okay to be proud of your past even if that means that you were cooking hamburgers. Actually, I think that I learned a lot from it. McDonald’s is a really good Franchise in terms of a really good company structuring franchises.
The few months that I worked at McDonald’s on the overnight shift, I ended up learning a lot about how to franchise business, how to write instructions, how to delegate and actually that was quite a good learning experience for me today in terms of implementation of procedures.
Andrew: All right, I’m writing a note here to see if we can get to talking about how you implement that at your current business. Let me tell this one story because I don’t know how to ask a question that tease this up perfectly for you, but it’s so funny that people have to hear. A person apparently came to you and asked you where the bookstore is. Wait, you’re smiling. You know it. What happened there?
Alex: Well, when I was at Starbuck’s, I was doing the (?), but one person came to me asking for something. I thought that he was referring to a store that was on the other side of the shopping mall. So I pointed that way and five minutes later the person comes back really mad at me yelling. I had no idea what was happening.
Then I asked one of my colleagues that had the patience of talking to me I mean, translating to me and he explained to me that what the person wanted was the bathroom. Here was an emergency and I ended up sending him to the other side where there was no bathroom. Of course he came back really mad and that’s why he was yelling.
Andrew: You thought he wanted . . . all right, let’s fast forward.
Alex: (?) because the bathroom was actually like just next door. I mean, literally so . . .
Andrew: Let’s fast forward actually to voice one, two, three to 2003. In fact, before we do that I want to make sure to thank Scott Edward Walker, the entrepreneur’s lawyer from Walker Corporate Law. Do you know Scott by the way?
Alex: I heard about him. Yeah.
Andrew: How did you hear about him? Let me see if I’ve got Scott’s photo. Maybe you’ll recognize him because apparently he moved not to far from your office right now. This is him.
Alex: Yeah. Well, I think that I’ve . . .
Andrew: I can even scale it. Take . . . no, that’s scaling me. Let’s scale Scott. There.
Alex Through your publication.
Andrew: Oh, through Mixergy. Oh, great. Then it’s working. Scott, I don’t need to run this ad. It’s working already. He’s the entrepreneur’s lawyer. Go to walkercorporatelaw.com. Apparently enough said. I already got the message cross. Thanks, Scott.
Alright. Let’s go into. . . I never know. I’m just experimenting just like with the intro. I’m also experimenting just how much of a promotion do I give Scott. How do I do it so that Scott feels like he got his money’s worth and the people understand that when they need a lawyer they should go to Scott Edward Walker, type in WalkerCorporateLaw, whatever, but not so much that he feels like I am just overdoing it. Because if you overdo it, then he comes across too needy or maybe people, they’re turned off because they did come here to watch a commercial.
I don’t know. I’m going to figure it out, but I think I’m getting better. I think I’m getting better at knowing where to stick it in. Alright. Let’s move on and talk about 2003. You were married at this point. Your wife, what kind of work did she have?
Alex: She was a voice actress, an aspiring voice actress. When I met her she was actually working as a receptionist at a hotel.
Andrew: Okay. And so when she is an aspiring voice actress, that means she does, well, what kind of work?
Alex: She did a program for an hour every single day at a radio station. She was a non-paid gig. It was just for fun. And every now and then she was contacted by agencies wanting her voice to be part of an operation.
Andrew: And how did that go? Was that profitable? Was it easy? Was it fun?
Alex: Not easy whatsoever. When she decided to go full-time she took some coaching classes. Most coaches would tell her, “Now you need an agent and a demo so that agent can listen to them and agents can convince them to hire you.”
So she went on to work with two agents, and the two agents sold her a demo and actually none of them believed her. One of them kept the money and then they never gave the money back to her. So it was literally a rip-off. Of course, that was really sad for her but that led me to research about [??}.
And then we realized that back in the day if you wanted to hire a professional voice, if you were a buyer, if you needed a professional voice you had to go through a custom director who would go through talent agents, and talent agents would go through auditioning studios. And the auditioning studios would then send out back to the custom director and then to the buyer.
And if everything went according to plan, then you would still have a session at a professional recording studio and the payment would have to go through yet another person called a “pay master” that would send part of the payment to you, part of the payment to the talent agent, part of the payment to the union and part of the payment [??] as well.
Andrew: Alex, as you’re saying this, I could see that this is an area that needs reform, but immediately I’m thinking of something that our listeners are thinking, which is even if you solve it, how big of a business is this? How many voice-over artists are there in the world? How many clients are there for voice-overs in the world? Is it big because it seems small? No?
Alex: No. It’s big. I had no idea how big it was and I think I’m grateful that we were on that front because when I talked to VCs the most common question I get was how large is the industry. And the reality is even to this day we don’t know how large it is. The business continues to grow and we are expanding the industry. [??]
But if I had [??] Voice 123 which is the business that we built to automate this process to VCs back in the day, chances are if somebody had told me, you need to beef up. But we didn’t do that.
Andrew: And so you boot strapped it.
Alex: So we boot strapped it, but also because we had no idea of the size of the market we didn’t work full-time on the idea. She turned to becoming an online marketing consultant and she was investing 50 percent of her time on the project building [??] voice actors. And I had co-founded another business [??] and I invested 50 percent of my time building the technology for this.
And we wanted to learn this as an experiment as a side business, and our expectation was to make $3,000 a month. That’s it.
Andrew: Three thousand a month?
Alex: Three thousand a month.
Alex: We went to Voice 123 and very quickly realized this was becoming much bigger, and within three months we decided [??] and in six months we were [??].
Andrew: Let’s understand the evolution even to that period, and later on I want to know how you get to where you are today. But the first version of the site, what was on it?
Alex: So the first version was a very simple way for voice actors to list their capabilities and the kind of voices they could do, and for buyers, that we called “voice seekers”, to post a project that would match the details of the project with the profiles of the actors, send them an email telling them “Hey, we have a lead, would you like to submit a quote for this?”
They would submit a price, some remarks, attach an MP3 file or a WAV file with a demo that they consider appropriate. That’s it.
Andrew: They would attach it in an email?
Alex: No, they would go to the website and upload the [xx] file.
Andrew: You know what? As you’re saying it, everything that you just described could pretty much I could put together with WordPress and Gravity Forms, or Woof-Woof Forms, we’re talking very simple stuff.
Alex: It was very, very [xx] back in the day.
Andrew: How did you get customers? How did you get your first customer?
Alex: For voice actors, when you have a marketplace you need to…
Andrew: Right. You need the voice actors and the customers who are going to hire them. So which one did you start with?
Alex: Inventory, meaning, the voice actors. So while I was building the technology, which took like four months or so to build, my wife was browsing online collecting email addresses of voice actors.
When we had the website ready, we used software that you would setup in your computer to send emails. We sent ten thousand emails to voice actors inviting them to join the marketplace.
Andrew: And she copied those each one of those email addresses one at a time and sent them an email. Forgive me for saying this, is it spam?
Alex: Yes and no. We would get the email address from web sites voice actors that were soliciting work and we were telling them “Hey, you can join this marketplace where we might be able to get work for you.” So it is a grey area, to be honest.
Most people reacted very positively. I think that spam, to some extent, is measured in terms of how much people hate getting that email. If most people actually like getting that email, is it spam? I don’t think so.
Andrew: So about a thousand emails sent out. How many people signed up?
Alex: 10,000 she got, it was six months of hard work collecting email addresses.
Andrew: Oh, 10,000 email addresses she found.
Alex: We got around 1,000 actors to register within two months or so.
Andrew: That is shocking, wow. And the reason you went for that is you figure you have a marketplace, who do you go after first? Well, it is easier to get people to list themselves for free rather than pay for a product that doesn’t exist. We’ll start with the voice actors and then we will go and get the customers.
How did you get the customers, then?
Alex: Good old pay-per-click. In 2003, pay-per-click was relatively new, especially Google AdWords. We setup some campaigns and that’s where we invested most of our money.
We had saved $20,000, that was our life savings. We took out that money and invested in pay-per-click for Voice123 and it worked, we started getting clients.
And very quickly the main source of new buyers in the marketplace shifted from pay-per-click to referrals. To this day, 80% of new customers get to us not because of pay-per-click efforts but just cause someone else told them how awesome Voice123 is.
Andrew: How did she convert a new customer into a referral for another customer?
Alex: From the very beginning we did something that to this day still there. When a person posts a [xx], seven days after we send a personalized email that says “Hey, thank you for using Voice123, if you liked it could you tell your friends about it? Because we plan on new referrals for our growth.”
And that’s the most effective referral mechanism that we have discovered.
Andrew: How can you track that it is working? Are you giving them a link that is trackable or is it just that you know that is how people are coming in?
Alex: Sometimes we have a link for people to share with others, sometimes they get a discount. Whenever you add money to the equation, people feel dirty to some extent so we prefer not to mention money.
When you mention money the performance is better. But the way that we know that it works is that people reply to that email and say “Thank you, I loved your service and told my friends about it.”
Alex: That’s the best way to determine whether it works or not.
Andrew: You know Alex, I have to take this interview in a very slow progression to really understand it, but I’m good about staying focused. One thing caught my eye. I’ve got to take us off track for a moment and ask you about. I’m on Voice 123, here. I see a phone number at the top of the site. All well and good and then I notice it’s a 212 number. How did you get a 212 phone number?
Alex: With a lot of work. I think that we were able to get that number. I think that was a mobile number back in the day. We were eating lunch somewhere in Manhattan and Cingular back in the day had a store and the store had a big sign saying, we got 212 numbers. I cancelled my contract with I think it was back in the day, AT&T just to be able to get a 212. Then we ended up using that number for the company.
Andrew: I see. So, this became your cell number for years and you transferred it to the company? It is impressive.
Andrew: I can’t believe I even noticed it, but man that’s impressive. Okay, all right. When you say that you turn cash flow positive, how much revenue are we talking about month four?
Alex: $8,000 or so.
Andrew: Okay. So, wow. You were aiming for $3,000 and you’re already at month four $8,000.
Alex: Yeah . . . [SP] . . .
Andrew: But you were also spending money on pay per click ads.
Alex: Yeah, but when we reached that level, we slowed down the investment in pay per click. We decided to invest in pay per click only the same amount of money that we were getting for people paying for this subscription because we decided to monetize charging (?) subscription to participating in the marketplace. So, it didn’t require any investment any longer. It was simply cash flow.
Andrew: Wait. So, now you change the model where you were charging a subscription for whom?
Alex: The voice actor.
Andrew: Okay. How did that go over where you told people, come to the marketplace, it’s free and then suddenly you were charging.
Alex: Oh, people were hating it, but . . .
Andrew: That happened to me on Mixergy too when I started charging.
Alex: Yeah, some people hated that especially because people have this idea, some people not everybody, that because it’s on the internet it should be free. Right? The reality is that quality content is expensive. Quality leads are expensive, so we had to do it. Yeah, some people hated that and they left the marketplace, but many others ended up joining and we always (?).
Andrew: Why did you decide to go with charging them a monthly fee instead of a referral fee?
Alex: For a couple of reasons. One is that back in the day it was relatively common. Elance used to charge both a subscription fee and a commission. Humaway [SP], well Humaway didn’t exist back in the day, but the companies that Humaway ended up acquiring back in the day, VRBO, Cyber Rentals, all of those were marketplaces subscription based where they didn’t get any kind of commission for the transaction.
We also realized that some companies wanted to hire the voice actors directly. They didn’t want to go through a third party to pay, so we wanted to make it really easy for people from the very beginning. We always wanted to simplify the process not to make it more complex. If that meant not being in the middle of the transaction well, we should find a business model that is not in the middle of the transaction. So, that’s why we decided to go that way.
Also because by charging a subscription we were able to monetize ahead of time, generating the cash flow required to actually invest in bringing more buyers to the system as opposed to a commission. The commission is usually paid after you get the transaction done or you get the client for the seller. When you sell a subscription they are paying ahead of time based on how much money they expect to get from marketplace within that year or so. So, it’s a really good way of boot strapping a business.
Andrew: That’s 145 a year. That’s what did it and that gave you dependable revenue I see and that changed your business. Alright. This is something I can do now in my office. Look at this. It’s all on remote. Turn the light off. Turn the light on. Wait, there we go. Professional lighting, but it’s all set on this.
I said at the top of the interview that you couldn’t do that because . . .
Alex: Because initially I wanted people to upload MP3 files, but then quickly we realized that some voice actors even though they were professional voice actors, they had no idea how to do MP3 files. They knew how to go and stand in front of a microphone and do recordings, so during those days Flash at Flash Communications Server which was the first tool that would allow you to record audio from the browser.
Then no hosting company would host that server. So, I had to build a server. I had to build a computer in my house and install flash communication server, and do dynamic IP directioning, or addressing, so that people going to Voice123, audition for a job, voice actors, would be able to record the (?), but they were really, even though it was the Voice123 website, they were really recording in my computer in my house.
But we were living in a really tiny studio, and the only area where I could plug my computer was actually connected to the main switch of the house, so we couldn’t turn off the lights, because the website would go offline, at least the audio area of the website would go offline.
Andrew: Wow, these are like the funny things that you go through as an entrepreneur to make things work.
Alex: Well . . .
Andrew: And meanwhile, now I’m looking over your shoulder, and you’ve kind of gave me a tour accidentally earlier when you were looking for a place to sit, I saw your office, it looks beautiful, to see where you are now, and to think of where you were back then, it’s just phenomenal.
Alex: You can see my team, they’re having lunch now, we have home cooked lunch every single day.
Andrew: And that’s just even a small portion of the office. All right, here’s another milestone. So one milestone was obviously getting the site up, the second one was buying all that traffic that converted into your first sales, next one after that was charging subscriptions, and then you launched version 2.0 of the site.
Alex: Yeah, so (?) became so successful that we ended up having an issue, and that is we had some buyers posting projects, and they were getting over 500 quotes and demos, and there is no way that you are going to through 500 quotes when you are in auditions, when you are looking for a voice for your project, so it became a waste of time for voice actors, because now they have to submit 500 auditions in order to get one job (?)
Andrew: Wait, so it’s because you had so many customers who are buying, wanted to pay for the service, that all these voice actors couldn’t spend time creating auditions for all of them, got it.
Alex: So voice actors, the platform became so popular with voice actors, that we got many people paying for the service, and anytime we had a new project posted by a buyer, 500 of them will submit a quote, for each individual project.
Andrew: Oh, I see, and now he was swamped with way too many audition tapes, and how is he going to spend time doing that, okay, hundreds.
Alex: Yeah, so if you want to listen to demos of 500 people, you need 12 hours. So we realized that if we wanted to continue scaling the business, we need to fix that, and that’s when we work on version 2.0 of Voice123, which included an algorithm that we called SmartCast, that limits the amount of people that can submit, propose (?) project, based on multiple factors, including how much proposals they have submitted in the past compared to other voice actors in the marketplace.
And that, of course, wasn’t popular with many voice actors, especially the ones that were trigger happy, and were submitting proposals for every single project as soon as they saw the project show up on their screens.
Andrew: I see, but it made it better for the overall community, because it meant that more buyers would come in, or feel more comfortable buying, not thinking that they’re going to be swamped.
Alex: Yes, but they were quite outspoken, and it was PR, almost a PR disaster back in the day, because those people that were submitting 50 auditions per day, now were being limited to one audition per day or so, and guess what, they have a lot of time in their hands, and what do they do with their time, they go online and they type negatively about the company, so.
Andrew: What do you do when there is all those complaints out there?
Alex: So we tried to manage this situation by having people actually go online, and explain what we were trying to do, but after two months or so, we realized that we were not going to be able to convince them. I mean, some of them were real trolls, and we decided, you know, let’s forget about it, let’s forget about people are saying about the company in public, let’s focus in the product, let’s focus in marketing, and let’s show them that the decision was good, and that’s what we did.
So publicly speaking, we had for some years a bad reputation, but now when you go online, you see many of those voice actors that left and bad-mouthed the company, came Voice123 making money once again with the clients that we get for them.
Andrew: I did a search for Voice123 sucks, and I see Kyle McCarley [sp] apparently doesn’t like any, doesn’t think anyone should be a voice over actor, are auditions worth the fee, actually interesting thing is like you said, if I’m doing the search right, and I could not be, but just by skimming the results it looks like most of those top ones are old. It’s from 2009, 2010, 2012. OK. I see one from 2013. Good bye from me to the voice-over community. He is done with the whole… Oh wait, no.
This is on your site, so that must be something else. Alright. So that was a challenge. You got over it by focusing on the product and ignoring the hatred out there. The next big thing apparently happened, or one of the next big things is a major studio contacted you and started using your service. Which one?
Alex: Well, actually not one, but many. The one that we usually talk about is Pixar. Pixar. When Toy Story 3 was going to be released, a week before the release, we got in contact. One of our voice actors told us, “Hey guys, I can finally share this with you. But one of the clients that I got through you is actually Pixar and they’re releasing this movie. Do you want to do some kind of PR or do you want to right about it? Let me know, because there is no longer an embargo.”
So what we realized that day is that we have many native studios are using Voice 123, but they don’t use the real names. Because a lot of those projects are secret projects. So they use fake personas, they use fake email addresses, they even have fake companies posting projects, finding those talents, having those talents sign NDAs. And then some cases months later, some cases years later we know that, wow, MTV used Voice 123 to find the voice for the MTV Music Awards. That kind of thing.
Andrew: How much revenue are you guys doing today?
Alex: So, one of the great things about being a bootstrap company and having venture capitalists is that we don’t have to disclose that information, but I can share some of those numbers with you. We have more than 150,000 voice actors in the system. We have more than 75,000 buyers. Our team is 32 people distributed in many locations in the planet, primarily here in San Francisco and [??]. And we are cash positive so that probably can give you an idea.
Andrew: Can you say what year you passed a million dollars in sales?
Andrew: Oh wow. And you launched the company 2003, I think, right?
Andrew: OK. Wow. Do you remember the day when it happened?
Alex: When we reached one million dollars?
Alex: No. In part because we didn’t know that we had reached that. During the first four years of the company, believe it or not, we didn’t have a profit analyst. We had no idea. We had no business background whatsoever. We had no idea about our expenses, investments, how to do proper accounting, none of that.
So we knew that we were making money just because the bank account was increasing in balance. That’s it. So we hit one million dollars, but we had no idea we had reached that dollar. We simply knew that we had something that was working.
Andrew: How did you pay taxes then if you didn’t do your books?
Alex: We had an accountant, right? But the accountant checks the numbers the next year.
Andrew: I see.
Alex: So 2008 is when we were like, “Oh, we made more than a million dollars last year. OK.” [laughs]
Andrew: Let me see if I have this right. At one point in the interview you said… I don’t have it here. It was, you were talking about how things were tough back then, but they’re not anymore and you can appreciate now how good things are because they were so tough back then. What’s one thing that makes you really excited, that the child that we talked about at the top of the interview would not believe that you can do today?
Alex: Whew, there’s so many things. Coming from Latin America, one of the issues that we have in Latin America is that we think we are second class citizens of the planet. We don’t think that we can compete globally. We don’t think that we are, to some extent, as capable as most American economies. As a consequence, I think that most of my dreams were very localized. I never thought of myself as a global innovator.
I thought and I think again that this happens with most Latin Americans, we think that we might be good at copying something that’s good in the US and trying to localize it to Latin America. But competing globally, I never thought that I would be able to do that. So I’m very happy and proud of the fact that we are now developing something locally in Columbia that is being used globally.
We have clients all over the planet. Something else back in the day. Well, I hated making my bed. So, when I got this first call from a company wanting me to fix their computer in their office, I charged a minimum of $40,000 pesos which is the equivalent of $25.00 or so.
I got back to my house and I gave the money to my mom and I told her from now on, I’m going to pay for a person to clean my room. I’m never going to make my bed again and I’ve never done it since. That for me, might sound so stupid, but not having to make my bed actually makes me happy every single day.
Andrew: Part of this growth and before we started I said, how could I make this a win for you and you said, you know Andrew. The universe has been very kind to me. I want to pay it back by teaching other people what I’ve learned. If someone becomes a customer, terrific, but I want to pay back. I want to learn more about what you learned to get here.
One of the things you said early on, working at McDonald’s, watching their system, seeing how they delegate helped you become a better business man. What’s one thing that you do today because you learned it from McDonald’s?
Alex: About five or six years ago I was reading an article in Fortune magazine. It was a survey they had done with the richest people in the planet. No, Forbes.com. They asked the richest people in the planet what they thought was the key to success. Why they became so successful. The most common answer or 70% of the people selected delegation, knowing how to delegate. When I read that, immediately I thought about my days at McDonald’s and how well described everything was in terms of processes.
That kind of connected and since then I’ve been really into documenting processes especially on the software side. Documenting the requirements of the software so that new engineers can join the team and read all of the specs before they actually have to look at the code. That has been key for us at having engineers get up to date really fast and get into the code without feeling that they are breaking something apart. That also applies to every single other area of the business.
Andrew: For example?
Alex: For customer service, customer service client services, marketing, etc. Once you realize how something works, document it in such a way that you can bring other people to do it and then you go to the next step and try to figure out what’s the next thing you can do.
Andrew: I see. That’s something we’ve been working on here internally at Mixergy. It’s a challenge, but we’re working on it.
Alex: Oh, yes it is.
Andrew: I said that you did something to a venture capitalist without his permission. We got to talk about it. What did you do? Then it’ll introduce us to the other part of your business that I talked about at the top of the interview. What did you do and who was it for?
Alex: The person we did that for was Fred Wilson. I mean, Fred Wilson is probably the most famous VC in New York City. He’s a real intelligent guy. I had not talked to him in person, but I had seen him at a couple of events where he gave really good feedback. So, as a consequence of that I became an avid reader of his blog.
Almost two years ago when we started working in our new product, Voice Bunny, which is an API for professional human voices to give us what you want and the API gives you back a couple of minutes later a professional voice recorded. We wanted to (?) something with that API.
Andrew: I’m sorry. Let me just be clear about that because you just explained what the business was and I want to make sure that the audience understands it. This is simple. This is the idea of you don’t have to if someone who needs a voice over go to Voice 123, post your job, look at all the auditions, pick the right one and work with them directly. You can just say, I need this recorded properly. You go to Voice Bunny, Voice Bunny does the whole thing and just shoots you back the finished product. That’s it?
Alex: That’s it.
Alex: We give you the price ahead of time. That doesn’t happen in Voice 123 because Voice 123 voice actors usually charge depending on how friendly the client is. In Voice Bunny we give you the (?) of time. We give you the estimate in terms of how long is it going to take for the audio to deliver ahead of time and all that stuff. So, yeah. It’s a very (?) system. It’s an API and we build also our website of (?) API, but we have all the people who used to be (?) API (?).
Andrew: Okay. Now I understand he business and I understand your interest in Fred Wilson. So, what do you do to get his feedback and to get in front of him?
Alex: So, I realized I wanted to (?) something with our API and we were looking for things that we could convert into voice. I remembered that Fred had written an article about Permissionless [SP] Innovation. As a consequence of that, he made his blog publicly (?) through a creative (?) license. I realized well, maybe we can convert Fred Wilson’s articles into podcast without his permission because that creative (?) license as long as we give him credit for that.
So, we got the domain name avc.fm. His website is avc.com and we (?) something together and what this (?) us is every day when Fred posts an article, within one minute we have a voice actor working on recording the audio, the article. Within 15 minutes or so, we have the article of (?) Fred Wilson’s blog. Now, how we ended up being embedded in Fred Wilson’s blog initially we simply indicated avc.fm and avc.fm was this list of audio files.
If you go there, you can probably still see it. We have a little (?) that says, are you Fred? Click here. It says, if you like what you see here simply take this job as (?) and put it in your blog and all of the audio files are going to show up on each article so that people can listen to them.
Alex: We were working on this and we wanted to have six or seven of those (?) ready before telling him. The way we were going to tell him was simply by tweeting because he uses Twitter, but then the day before I was supposed to send the tweet he actually tweeted about it. Like, hey. I just discovered avc.fm. This is cool.
The funny thing though is that we were not raising capital because we (?) the company . . . [SP] . . .
Andrew: I just assumed that that was because you guys wanted to raise money, but it wasn’t what did you want from it?
Alex: Well, I think it was a homage to the quality of his content. I mean, I think that many people don’t have the time to read his content, so if now you can listen to his content (?) much better. It was . . . [SP] . . .
Andrew: Did he give you any feedback on it?
Alex: Yes. We ended up meeting and we have met several times. He’s probably the best mentor anybody out there could get. He’s down to business . . .
Andrew: What’s one piece of feedback that he gave you that you learned from him?
Alex: We had Voice 123. We had Voice Bunny and then we had the potential of this new idea of converting articles into podcasts. So, I told him well, which one would you invest out of the three if you were to ever invest in one of them. He said, I would invest in all of them. You need to have all of them under just one company because we would like to invest in the entrepreneur not in the specific business idea.
It was interesting because several other people, mentors, VCs have told me you need to have two different companies. One should be Voice 123 another one needs to be Voice Bunny and with Fred it was very clear at giving me reasons why I wanted to have everything under one umbrella. So, that was (?) and that’s why the company today is Body, Inc. Body, Inc. is the umbrella company for two brands and now maybe three (?) going to be launching soon that we have.
Andrew: I see. Did you get any customers from that? Does it send you business?
Alex: Oh, yeah. A lot. That’s why we to this day continue doing this not only because we love Fred, but also because it’s a really good source of new customers for Voice Bunny.
Andrew: He’s the most popular recent post on his site and then the most popular audio of recent posts on his site, is T-Mobile Rocks. It’s this post about why T-Mobile’s so good. It comes out to 2 minutes 42 seconds on your site. It has over 600 plays. For a 2 minute 42 second recording like that, what would it cost on Voice Bunny?
Alex: So, Voice Bunny, a recording of this length is usually $120, but that’s a great price for let’s say advertising. We know that publishers usually don’t have that budget, so that’s why we are right now experimenting with a new service called Bunny Cast which is tailored for publishers. It’s limited compared to Voice Bunny, but gives you this kind of audio deliver and within Voice Bunny this kind of article will probably cost 20 bucks or so.
Andrew: The person who’d be happy to be paying 120 bucks or so for something like that and actually they want even less time is someone who needs to run radio style commercials. Pandora for example. How did Pandora find you?
Alex: (?) people told people. Some of our users told their friends and some of their friends were Pandora producers and they learned about Voice Bunny and they started using Voice Bunny. We tried having sales people go after large enterprise clients and we realized that the best way of getting enterprise customers today is from the bottom up. You need to get them to use your service and eventually they are the ones that are going to sell the service inside the organization.
Andrew: So, now when we listen to commercials on Pandora, it’s probably your service that was used to record them. They just say, here’s the text, send it over to Voice Bunny. Voice Bunny shoots back audio, audio goes into the Pandora system, Pandora plays it when people listen to the radio there.
Alex: That’s it. We recently released what we call search and (?). Now you can listen to voices and say, I want this voice and we get that voice for you. So, it’s not as fast as (?), but it gives you more control. We know we have a lot of information about speech voice actor, we invest a lot of time doing a statistical analysis in tracking the stuff. We can tell you more or less how long it is going to take for each individual voice actor to get the voice recorded back to you.
Andrew: All right, every single thing that I promised the audience I’d talk about including the hamburger flipping, the crazy thing you did to venture capitalists, the lights and so on. I talked about except for one thing. Before I say that last thing and ask you about it, I want to just mention what I’ve been holding up right here. This is not a sponsor. This came. Can you see that right there? Let’s see. (?), like that.
Andrew: This is from one of my fans. He listened years ago. He now started a company called Soma [SP] which makes water filters. It’s just water that I pour right through the top right here. It goes in, it gets filtered here, comes to the bottom unlike the Brita’s. There’s nothing on the bottom there. It’s all really crystal clear.
He listened years ago. He sent me an email saying, Andrew I want to do interviews like you. I explained. I got on the phone with him and I showed him how to do it. He’s been staying in touch ever since. He came on to do an interview. I guess he was so happy with it. He invited me to dinner and then he gave me one of these to just show me what he built.
This guy who was listening years ago and still is a fan and I’m so proud that my audience is entrepreneurs that build things like this. This is beautiful. The water tastes great. I’m so happy to have it here that I’m actually going to probably take it home where I have more people over to see it. I want to say Mike, congratulations on this from Soma and anyone else who wants to learn how to do interviews the way that I showed Mike, I can’t frankly get on the phone with everyone. What I can do is just say, go to mixergypremium.com where I have a course on how to do interviews. You can take that.
I have a course on how to promote products if you’re creating physical products like this. So many other courses taught by me and other entrepreneurs who actually do it and we’ll show you how to do it. Go to mixergypremium.com. Sign up right now and congratulations to Mike with Soma. All right, here’s the final thing.
Alex: I just ordered one.
Alex: I just ordered one.
Andrew: You did? I think you’re really going to like it. The coolest part is this whole filter, I can’t even take it out. Do you do dinner parties a lot? Do you have people over?
Alex: Yes, every Friday. Everybody’s invited here. Bunny Hour, 6:00 pm.
Andrew: What? Every Friday’s Bunny Hour?
Alex: Yes at 6:00 pm . . . [SP] . . .
Andrew: Oh, 6:00 pm. I like it. With drinks?
Alex: Yeah and Colombia food.
Andrew: All right. I got to come.
Alex: You’re more than welcome to join us. Please.
Andrew: Except, Friday’s usually date night, but I think Olivia’s got a friend from out of town this week. So I think I might be able to come in and I’m right down the road from you. Cool. I think I’ll like it. Here’s the last part, Alex, that I didn’t ask you about. I said, you took $3 million and put it somewhere. Where did the $3 million come from? In fact, what’s the story behind that sentence that I teased at the top of the interview?
Alex: Voice 123 became a very profitable business, but we knew the industry was relatively small. So, I did a mistake and that is I ended up getting a lot of money out of the business as dividends and investing that money in some other things. Now, some of the things did well. I became a limited (?) investor. Limited because I only invested like in ten companies or so and some of them are doing pretty well. Then I also took most of that money, and I decided to create something new.
And I from 2008 through 2011 I worked in a company called Let Me Go. I created that company. The idea behind Let Me Go was to allow travelers to tell us what they wanted and have hotels compete for them. Kind of a Price Line but more manual auction. Price Line is not an auction, really. I really wanted an auction where hotels will be competing for travelers.
And I was so convinced and so full of myself that this was going to work that I didn’t do customer development. I didn’t do an MVP. I decided to build a full blown service from the get go. And building that platform cost around 2 million dollars and took me three years. And when we launched it, we realized that there wasn’t a market for that.
Andrew: Oh, wow.
Alex: Very expensive. And the other million was marketing and business people. But on the meeting side alone, we investing 2 million dollars building that.
Andrew: That sounds so much worse even than it reads on paper here. I don’t want to leave it on a down note. I see here a list of other companies that you started. Some did well, some not, including Language 1 2 3, which sold, Casting 1 2 3. What’s the most successful of all these companies that I have on the list.
Alex: I think this one. Bunny, Inc is the most successful one. A few others I’ve invested or I’ve helped create include Viva Royal, which is one of the largest real estate market places in Brazil. They just raised 14 million dollars at a 60 million dollar evaluation or so. I also co-founded WeHostels, which is a mobile app to book hostels, kind of Hotel Tonight for hostels. They went on to raise 1 million dollars last year and they are doing pretty well. And I also co-founded Hubbug [sp?], which was the first co-working space in Bogota, Colombia, which is now a campus for innovation. It’s working heavily with the government of Colombia, teaching people how to become entrepreneurs and how to launch their online businesses.
Andrew: Yeah, I have a big list here, and I’m glad we get to leave it there. Thank you so much. I was starting to actually go to all these web pages, to search for them as you were talking. And I go, what am I doing. I could do that afterwards. I’ve got the list here. I’m so proud to have you on here. Congratulations on the success and thank you for being so open.
If anyone wants to follow up and check out the site, they can go to VoiceBunny.com and Voice123. and if they want to say thank you to you in person, they can come to your office every Friday. Maybe you should tell them that they should ask first, otherwise is there a good place for them to email you?
Alex: Yeah, or my twitter, @Torrenegra. And I will be more than happy to provide you details for the bunny hours here on Friday and also to answer an questions about entrepreneurship that I might be able to answer.
Andrew: Alright. And thank you so much for doing this. Thank you all for being a part of it. Bye, guys.