How does an interest in “intellectually interesting problems” turn a founder into a successful entrepreneur, venture capitalist and a thought leader?
Charles Hudson founded 3rd Power LLC, a conference business which he sold to WebMediaBrands (and I’ll ask him to share the finances there). He also wrote industry-influencing reports at Inside Network.
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All right, let’s get started.
Hey everyone, I’m Andrew Warner. I’m founder of Mixergy.com, home of the ambitious upstart and, as of today, home of 700 interviews with entrepreneurs that come here to tell you how they built their business, so you can learn from them and build your own.
For this interview, I’ve got this question, that I want to answer. I want to know how an interest in intellectually interesting problems can turn a founder into a successful entrepreneur, a venture capitalist and thought leader? Charles Hudson founded Third Power LLC, a conference business, which he sold to Web Media Brands. I want you to hear the one observation that he made that led to that successful business.
He also wrote ‘Industry Influencing Reports’ at Inside Network and you’re going to want to hear how he came up with one question that gave him the understanding that led to those set of reports. One of those reports, Charles, I saw online is selling for 1000 bucks.
Charles: That’s correct.
Andrew: So, clearly, people value your opinion and your insight. Today, he’s a venture partner at SoftTech and CEO of Bionic Panda Games. Wait until you hear how it all started.
Charles, there’s so much for me to cover here. Thank you for coming here and telling your story.
Charles: Thank you for having me. It’s a pleasure.
Andrew: So, you know what, let’s go away from chronological order for a moment and just talk about how when you did a conference, people came and asked you for something that led to those reports that I mentioned, that you published at Inside Network. What was that request that they made of you?
Charles: I’ll just give a little bit of back story. Justin Smith, who’s the founder of Inside Network, and I, had been friends for several years at that point and we’d spend a lot of time just talking about media models. He was building Inside Network to be, kind of, the premier blogging platform and source of information in the Facebook space and I had gotten into the events business and worlds of Facebook and fee-to-play gaming, [which] were colliding. After one of my conferences, I started getting a really interesting email request. Some people said, ‘Hey, I can’t attend your event. Can I purchase a transcript?’ I thought, in this modern era, purchasing a transcript just seemed really outdated. So, I asked them, ‘Why do you need a transcript? I can just tell you some of the highlights or you can read them online.’
It turned out that there were a lot of people inside of organizations who are looking for ways to make the case that fee-to-play games and social games were really meaningful and were a big opportunity. So, the more I probed, I realized that what people really wanted was market data. They wanted insights. They wanted validation so they could go back to their managers at work and make the case for why their company should have a stronger presence. So, I immediately picked up the phone and called Justin. I said, ‘Hey, Justin, you’re on the publishing side. I’m hearing all these people for my events business ask for research reports.’ He said, ‘You know, I’m getting all these major publications, you know, Wall Street Journal, New York Times, writing in and saying, “Hey, do you have any sense for how large this market is?”‘ and I realized that with our collective networks and our relationships, we were probably in a unique position to try a research business and try to aggregate a lot of the data and anecdotes that we had from folks into something coherent that we could sell.
So, we made a pact. We said, ‘Well, we’ll do one report. If people don’t buy it and don’t like it we’ll quit.’ Because, clearly, we misjudged the need. Today, I’m actually proud to announce we’ve released our tenth report.
Andrew: 10 Reports. They sell for $995 apiece?
Charles: Around $1,000 each. We also offer an annual subscription at about $2,400.
Andrew: You’re saying it’s guys like the New York Times reporters who want to just understand the size of the market, to understand what’s going on? You tell me. Why do they want to buy this?
Charles: It’s really interesting. This goes back to pre-Zynga as an IPO or monster force company here in the bay area and before Playfish. Before people really understood how big Facebook games were. When that space started really taking off, a lot of the reporters were unfamiliar with it. They were trying to get the mainstream audience to understand a couple things. One was the dynamics of the industry. This whole concept that the game is free and a small set of people pay. So freemium was still a new concept to mainstream audiences. Two, they wanted to know who are some of the bigger players that they should be writing about and paying attention to. Three, what’s the scale of the industry because it’s a lot more interesting to write a headline that says ‘Zynga’s doing a billion dollars a year in bookings’ than it is to say ‘San Francisco-based Zynga makes a lot of money in free games’.
Andrew: That question that you asked them is so important that I wanted to highlight it in the intro. You asked them why. Most entrepreneurs wouldn’t ask anything. They would just build it. Some smarter entrepreneurs now are learning to ask customers what they want. But you take it a step further. You did something that Paul Buchheit, founder of Gmail, told me that he did. He said people kept asking him for all kinds of things in Gmail, and I can’t even remember what they were asking because it felt a little complicated as he was explaining it to me, but then when he asked them why, he recognized that it’s because the software that he first built for Gmail was too slow. If he sped it up they wouldn’t need all those cumbersome ways of getting around the slowness issue. So you ask why. I don’t even know, actually. I don’t even have a question about it. I’m just impressed by that. Let me ask you this, actually. Why not start with the transcript first because that’s so easy to build, call that a minimum viable product and then see why it works or doesn’t work for people?
Charles: It just seemed like a bad product. Maybe this is just one of those cases where someone asked me for something and I said maybe a transcript made sense back in the day before blogging, where you wanted a word by word audio account of something that you couldn’t otherwise get because you weren’t there or it wasn’t recorded. All this information that I think these people want is out there. It’s just not easily collected. So I just never believed that there was real interest in a transcript. That just felt to me like it was foiled. They used transcripts as a shorthand for ‘I need information and stats about what was said’. They didn’t actually really want a transcript.
Andrew: Nick O’Neil, founder of All Facebook and a competitor of Inside Facebook, which you partnered with to create these reports, he told me that’s one of the key reasons why Inside Facebook did so well. That you guys sold reports that built up this business. But, for now, can you tell me the size of the business? What size revenues were you guys doing in reports?
Charles: In a funny twist, when I sold Third Power LLC to Web Media Brands, they eventually ended up acquiring Inside Network as well. The whole thing is rolled up under a now publicly-traded company. So, unfortunately, I can’t disclose scale.
Andrew: Can you tell us whether it was over $1,000,000 a year or under?
Charles: I wish I could. They’re very strict because they’re a public company.
Andrew: OK. Let’s go back. This intellectual curiosity didn’t just happen on that day when you decided to ask your customers why they wanted to buy from you instead of saying ‘How much would you pay?’ Why don’t you tell me about how you got the job in In-Q-Tel [SP]? What’s In-Q-Tel, what’s the job you got and then how did you get it?
Charles: When I was coming out of college, like a lot of people, I was looking at fairly traditional career paths. You know, finance, investment banking, management consulting. I decided to take a summer internship at a company called Excite At Home, which, sadly, no longer exists on an internet landscape but at one time was one of the premiere search engines on the internet. On one of my last days I went to my manager’s office and I told her I was planning to go take one of two jobs. Either move to New York and work in finance or move to Denver and work in asset management and she said ‘You know, I’ve really liked working with you here. My husband is starting this crazy VC firm, investing money for the CIA. You should really go meet with him because I think he needs help. The worst case is you have breakfast with my husband, you get to meet him and you don’t take the job. The best case is maybe it’ll prove to be more interesting.’
I remember this very clearly. I was a student living down on the peninsula. I got an invitation to go have breakfast with her husband, Gilman Louie, and I was late. I wasn’t just a little late. I was really late because in my naive student time I thought I could get from Palo Alto to San Francisco in the morning in 45 minutes. Nonetheless, we had a meeting. He made me a really interesting offer. He said ‘I have no junior folks on staff. I could really use someone on the team to help me figure out this whole model and the jobs, the one thing he said that clinched it for me is he said, you know, when are you ever going to get the chance to work for the CIA’s venture capitol group again?
If you really don’t like it, I’m pretty sure investment banking, management consulting and money management will still be there in another year or two. And I thought about it and I said, this is just a really crazy idea, trying to marry sort of the sensibilities of the venture model with sort of the needs of the government. I was like, this is a really interesting expirement, I’d love to see how this plays out and I want to see it from the inside, not the outside.
Andrew: So, it was because you were curious, you weren’t asking how much money could I make in this business compared to working for Bear Stern. You were saying, this is something that’s interesting at the same time, you and I had this great conversation years ago that I kind of mentioned in our pre-interview where I was a nobody, I still am a nobody unfortunately, I’d like to be a somebody, I’m building up to that. But Noah Kagan introduced us because I wanted to add a revenue model to my events and I asked you, how did you do it? Where’s the revenue coming from and you were incredibly generous with information. I have in Evernote here, notes on how much revenue you were making, how you got your customers and so on.
And what I noticed there was the way that you thought about business was, it was different from most people and you were also interested in the revenue so talk to me about, I like this idea of intellectually interesting problems attracting you to the work you do but there’s also revenue that you care about and I don’t want us to leave that out of this discussion. What were you thinking the revenue would be here when you decided to take this path that led you to all these great investments and all these great entrepreneurs in the tech space that you helped out?
Charles: Yeah, I mean, I’ll talk a little bit about sort of how I thought about the conference business because I learned that I looked at it differently than a lot of other people.
Andrew: Well, coming back to this and I want to come back to what you said in a moment, but when you set about a path, you went down a bath that took you into start-ups, into venture capital, into leading people’s understanding of what the virtual gaming space would be and so on. But, how much did money factor in?
Charles: You know, it’s funny, I didn’t, most of the things that I’ve started off and done I believed I could make enough money to sort of feel good about the time investment, so I didn’t want to work for free. I wanted to do things that were ultimately sustainable on the back of revenue and they had to feel big enough that if I spend ten, twelve weeks working on these things at the end of the day I’ll feel like, from a financial stand point, it was worth my time and effort.
And if it’s bigger than that, it’s really upside. And I think especially when you’re working on something that’s new. Like one of the most fortunate things with the research report and the conference business, as much as I think Justin and I and others did a good job of managing the business, the underlying market is what made that that big. It wasn’t as much sort of the cleverness of all the things we did, it was just we had really good timing and we saw that this was going to be really huge maybe a year or two before others did and were able to put things in place so that when that market took off we were ready for it.
Andrew: I see. That is very big. I remember Bradford and Reed did well because we got into email at a time when people were dying to have anything in their inbox and we did these newsletters at first and then later greeting cards that went via email. And of course back then if you had anything to deliver to people by email they were excited to do it and today, no way, you know, you can’t get that kind of enthusiasm and I’ve interviewed entrepreneurs now who jump into the mobile space and they see the same kind of reaction.
People are just eager to fill up all those screens on their iPhones and Android phones with as many apps as possible. So there is something to be said for that but I, when I saw that said, I’m going to make some money here and I’m going to live a good life as a result of it. I mean, a good life, not an OK life the good life. Did you feel any of that?
Charles: You know, it’s funny. I’ve always had, as an aside, I’ve always had small business, even at an early age. I had a landscaping business in high school. I had a bunch of different service business in college. And I’ve always started off thinking how can I make this a really sustainable model and to me the most sustainable thing you can always do is to make sure that your business is really good for customers so one of the things I’ve always looked at both with the investments that we do and in some of the business I’ve started is, is this really a long term good deal for the customer? Am I charging them a reasonably good price where I can make money and I can still feel good about them?
You know, when we were practicing the research report, there were people who said, you should charge even more, the market will bear it, but it just didn’t seem like that was a good value trade off for our customers. And when I look at a lot of the start-ups we invest in, there’s some of them where the product is so valuable and it’s so core that they could probably get away with charging a lot more and whenever someone says, we could get away with charging more, that always makes me nervous, cause you’re getting away with it. You’re getting away from sort of an alignment for a fair deal with the customer.
Andrew: That’s a good point, no you’ve given me an answer for all those people who email me and say you can get away with charging more. You can get away with more ads to people about Mixergy Premium because it’s such a good value. You could get away with emailing people every other day about it. You guys at SoftTech have invested in Eventbrite, Mint, SendGrid, Bitly and Facebook, right?
Charles: They acquired one of our companies.
Andrew: They acquired one of your companies. That’s why you’re an investor there? OK. Let’s get into the conference space. How did you discover the idea for the conference space?
Charles: This is a funny story if you’ll indulge me. Back at the height of the first wave of Web 2.0, so mid-last decade, the conference scene was exploding here. No one knew anything about all these new technologies. I had gone to my fourth or fifth conference on web widgets and I finally said ‘I’ve had enough of web widgets’. All these events are the same. They’re too expensive. I don’t like them. I was complaining to a friend of mine who was a VC and in a very VC way he said ‘Instead of criticizing someone else’s model, why don’t you do something different?’
I said ‘All right, well I have to find something that’s intellectually interesting to me and I’ll do my own event.’ He said ‘I want you to go talk to this guy, Erik Bethke’, who was the founder of GoPets. He said ‘What Erik’s doing will blow your mind.’ I went and met Erik Bethke and he told me he moved to Korea and he was doing GoPets and he told me ‘I’m making tons of money selling people virtual items in this little pet game.’ Instead of laughing, I thought ‘This actually makes sense to me. It’s a hobby for these people. It’s a passion. It’s interesting.
People spend money on all kinds of entertainment things that they like. This, for that reason, doesn’t seem crazy to me’. I said ‘Well, who else is doing this?’ He introduces me to Daniel James and a handful of other folks. I asked them all. I said ‘Well, why don’t you guys have your own event?’ There’s the Game Developer’s Conference, all these other game conferences. They said two things: One, there’s this prevailing view that this model only really works at scale in Asia. It’s an eastern model, not a western model. Two, the economics and structure of GDC are that it really is a conference for console and PC gamers. It’s not really for us. We don’t have our own stage. So, naively, I said ‘What if I put together an event for you? Would you all come?’ They said ‘We will do no work, aside from show up. But if you take the initiative and pick a date and put together an agenda, we commit to showing up.’
Then, fortuitously, one of them also introduced me to Susan Wu, who was maybe one of the only investors at the time who really got the model and was deploying money against it. She said ‘I know all of these folks. I can help you put together an awesome agenda’ for the first [?] summit back in 2007. So, not knowing any better, not knowing anything about a budget, not knowing anything about how to do things, that event went from concept to launch in eight weeks, which is still the fastest event I’ve ever produced because I didn’t know any better at the time.
Andrew: Eight weeks to get guests to arrive, to get sponsors, to get speakers, to get the location? Before I find out how you did that, I’m curious why you did it. Why didn’t you say ‘GoPets is doing well. I should launch my own virtual pets online business where I sell people all kinds of food for their dog and so on. Why didn’t you go that direction?’
Charles: I just love stories and I love people. Everyone I met in that 2006-2007 virtual goods era who was working on it was just an awesome character. They were really interesting people, they were working on a problem that, to me, just felt like it was going to work and people just hadn’t heard it. I really felt the thing that was missing from the industry is that it’s all these people, and there were maybe 16-20 speakers, if they could all come and tell their story in one day with press and other smart people there, the light bulb would go on for other people in the same way that it did for me. That’s more interesting to me, at the time, at least, than going and building my own game company. I didn’t know anything about the model. All I knew was that it intuitively made sense and it was interesting.
Andrew: I get that question all the time here. People say ‘Why are you interviewing Charles about his conference business? Why don’t you do a conference business?’ If I interview Nick O’Neil about his Facebook blog, people say ‘Why don’t you build that?’ Usually, it’s actually around software because that is the top of the food chain in this space. ‘Why don’t you build a software company?’ It’s a tough thing to answer because I have a similar answer to yours. I just really love these stories. I think there’s a lot of value in sharing them and seeing other people run with them. Do you ever feel, and I don’t, did you ever feel or say ‘I should be creating these games. I’m watching these guys up onstage and I’m a sucker for just making a few dollars on them instead of building a similar business and being up onstage like them’?
Charles: Through the conference business, I realized I actually really like facilitating community. I think I got more joy out of seeing the people on stage succeed and grow and being able to be there. I remember the first time we had Mark Pincus onstage and Zynga was not a well-known company. I had had various opportunities along the way to join folks but I’ve just always liked seeing these communities come together and stand on their own. That to me is sufficient fulfillment. Being a catalyst of helping other people be successful, creating good will. Maybe I just feel like all of that stuff somehow comes back to benefit you in the long run.
Andrew: You decided to go on this path and you made it successful. At the height, how much revenue were you pulling in with the conference business?
Charles: It was a good six-figure number a year. I have all these weird restrictions about how specific I’m allowed to be. But you have to remember that I was running the business as a part-time business with three shows a year with one business partner. We were able to do three shows a year that were quite good. I’ve reached that point where the business was getting so big, it was time to either quit doing other full-time work and just focus on the events business or partner with someone who had more scale and expertise.
Andrew: At that time you were working with Google, I think?
Charles: I started doing it when I was working with Google. Then I went to Gaia. I had a fun conversation with the CO. I said ‘Hey, I want to keep my events business going, which, at the time, was only one event. By the time I left it was two events, three events a year.’ I kept it when I went to my third job after that serious business, too. I ran it as a part-time job for basically four years.
Andrew: Wow. Tell me how you did it. You decided to put this conference together and in eight weeks you did something incredible. What comes first? Is it speakers first? Is it sponsors first? Location?
Charles: Yeah. So, I realized you can’t have an event without a venue. I really focused on getting a venue. I had friends at Stanford who were kind enough to offer up a really good space at a really attractive cost. Once I had the space I said ‘Now that we have a space and the date, we have to start marketing this thing.’ I didn’t really know much about how we were going to get the word out. We relied a lot on our speakers. One of the best things, again, sometimes it’s about market timing. At the time, TechCrunch didn’t have Disrupt. GigaOM didn’t have their events series, VentureBeat didn’t have it. None of the big blogs in tech had an events business. They were perfectly willing to provide support and op-ed editorial opportunities for Susan and for me to talk about the show because they weren’t in that business. That was one of the single best marketing channels we had in the beginning because no one knew the brand.
Andrew: I see. So you went to TechCrunch and you said ‘I have an event’ and was that enough to get them to mention it or did you also have to write an article about the space?
Charles: I was really fortunate. Susan had a really good relationship with the TechCrunch folks and had been wanting to evangelize free to play virtual goods for a while and was able to get an op-ed in TechCrunch. The second event I did, Social Gaming Summit, which ultimately became the largest event, Jeremy Lu, who is a real thought leader in that space on the investing side as well, had a great relationship with the press and was able to get some really good op-ed coverage on the whole space with some mentions of the event.
Andrew: Susan is Susan Wu?
Andrew: The investor? What’s in it for her for partnering up with you on this?
Charles: Again, sometimes you only stumble upon value proposition by working with people. As I worked with the VCs it turns out that being conference chair or being able to promote yourself through your inclusion in interest in the conference is a good way to get out there. If you’re working in the space, I’m interested in what you’re doing. It’s a really good and I think fair trade for them opening up their Rolodex network to invite people and at the same time be able to broadcast to the world that this is a category ‘A’ where I’m interested in being around [?].
Andrew: I see. As opposed to just sitting in the audience and saying ‘Hey, I care about this. I’m looking to meet people to say I’m organizing this’ without having to do all this themselves gives them much more connections to the people in the space and allows them to invite people who they otherwise couldn’t get to meet.
Andrew: I see. Did you own it outright?
Charles: I did.
Andrew: You did. So what’s in it for them is not ownership. They’re not looking for ticket sales and to split the revenue on every sponsorship. They just want these connections that lead to business and deal flow.
Charles: Yeah. There’s all these other little things you learn, like, VCs sometimes don’t know every one of the speakers who are at the conference. It’s a chance for them to get to know some of these folks better. It’s an excuse for them to reach out and try to pull in some people from their own network who could be value add. So, yeah, it’s one of those things where sometimes you just start and you say ‘Well, I’ll figure out value proposition for all the people in this ecosystem as I get to know them better’ as opposed to trying to figure it out upfront.
Andrew: I see. Mark Shuster by the way in Los Angeles is really good at that. LA venture capitol, I think until Mark Shuster got there, were very hands off. They weren’t the kind of people who mixed with entrepreneurs. They were the people who sit behind these beautiful desks in these beautiful offices and wait for entrepreneurs to come to them. Then Mark Shuster did something like what you’re saying. He helped organize events, he helped have, create conversations in southern California and I saw the benefits of it. I saw how people reacted to him as a result of that and how they wanted to work with him. OK. So that’s how you got guests, what about sponsors? Sponsors by the way, more is where the, is where the revenue I think you told me. You said you break even on sponsorship and the ticket sales are the profit. Do I understand that right?
Charles: Yes. So my sort of, I think there’s a bunch of different models, most people I meet when they get into the events business are really focused on sponsorship and they’re focused on, how do I get money out of sponsors, and I think that’s the wrong way to think about it. The real question is, for which sponsors is your event likely to be the most valuable and why. So my goal is always if you have an event that is 80% sponsorship driven you will have a sponsor driven event, where if you have an event that is primarily attendee ticket sales driven, you can always sort of when push comes to shove about speakers and sponsors and attendees, you can always align yourself with your audience. Which I think is part of what it takes to build a long term audience first events business. And you can make it work.
Andrew: So, how do you get, and before I ask you that question, I’ve got to say, I always ask revenue questions in these interviews because I think as an industry we don’t talk enough about revenue but we do talk about funding and exits. But I’m recognizing that we’re early in this interview and I’ve already asked way too many questions about revenue so I’m going to back off completely out of revenue so that it doesn’t become just about revenue. This isn’t about money or else this would be a Wall Street show. So, but how do you get sponsors when you’re a new guy who doesn’t have those connections yet?
Charles: Yeah, so I found sponsors had a very common set of questions. They all wanted to know, whose going to be there and how many people are going to be there and it’s funny, so you learn. After the first event I was like, wow, my sponsors really want to know who is going to be in the audience and they meant something really specific by who, what companies are going to be there, what level of people, what functional role is going to be there. Because I realized, especially in the game space, most of my sponsors were monetization partners.
They were people who were monetizing social games. So what they really wanted to know was are there going to be new or established vendors or game developers in the audience to whom I can pitch. And I would always ask them after the event, is this a good event for you? And they’d say, yeah I got fifty leads, yeah I got twenty-five leads, yeah I got a chance to catch up with this key customer that’s been winding me for a while. I was like, a-ha, I get it. What they want is sort of business cards in the bowl. They want warm leads. They want new developers who haven’t made a monetization decision yet, or an advertising decision or a technology decision, they want customers.
Andrew: How did you know that? Did you have conversations with other organizers the way I did with you? Did you talk to sponsors of other events and find out what they were looking for?
Charles: So I too come from the tree of Noah Kagan, so he gave me some sort of good tips in the beginning about trying to identify people who would be good sponsors. But it’s really funny, the people who I thought would be good sponsors going into the business never ended up being the people who ended up being my biggest sponsors. One of my biggest sponsors I got through a cold inbound email. I had never heard of them. They were a Canadian company called Sup Kitten Media which turned into Super Awards and I got an email from Jason Bailey and one of the other guys of this and it said, hey, you’ve probably never heard of us, we’re really big sort of incentivized offers company, we want to sponsor one of your shows. And I didn’t even think it was a real company, I was like, how could I have never heard of these guys? And they basically said, well we’re getting to you late in the game, what’s left? And they turned out to be one of my most consistent sponsors over the long haul and I think for them it was because it was a good channel for them to consistently meet and acquire new developers who are building games.
Andrew: And so you gave them obviously signage. You also said that they wanted to get in front of the audience, you let them speak on stage and pitch?
Charles: Yeah, so one thing we tried to do was keep a pretty bright line between editorial and advertising. I had my partner handle all of the sponsorship sales and I worked the editorial because I wanted people to understand that unless otherwise denoted, the people who are onstage are here because editorially I think these are the right folks. Not because they paid ten grand to be a sponsor, not fifteen grand, or five grand to be a sponsor. That’s not what’s driving the editorial speaker session. Because I think as an attendee you know, I think you can tell when the people who are onstage are onstage because they paid to be there versus were chosen to be there.
Andrew: Yeah. So did you give them any stage time? I think Noah Kagan, I remember at Community Next, would allow them to talk for like five minutes and say hey, my company and son, what we’re doing with start-ups is this and if you want we can talk in the back.
Charles: We try to give them commercial opportunities that were relevant, so, ultimately in the end I started selling slots for them. If you want to give a twenty-five minute commercial, obviously I will sell you air time, but you’re going to be competing against other content, and I make no sort of promises that…
Andrew: Oh, I see.
Charles: And, ’cause it got to the point that people said, “I’m willing to pay to give the commercial.” I sad, well, how can I do this in an attendee-friendly way? We can put this either parallel with the break, we can put this parallel with other content sessions. But I always try to figure out what the sponsor likes. What do you want? Some of them said, “I really want to go for the dinner.” That was the biggest sort of [??].
Charles: A lot of them said, “The thing I want is I want the dinner. I want, I will host it. I will pay for it. I want to be able to sit down three of four guys or gals from my company, sit down over dinner, and talk to all of twenty-five or thirty speakers in an intimate environment. That is worth a lot of money to me. Aside from just the website signage and other stuff.” [??]
Andrew: I think Peter Fink cut out the whole conference thing, he told me. And just did the dinners.
Charles: Just did the dinners! There’s a lot of value in being able to sit down with people in that context.
Andrew: What content goes well on stage? How did you decide what content to put up on stage?
Charles: Yeah, that’s a good question. A lot of what I ended up doing was, the benefit of being in the industry and working the whole time was, I would just think, “What are the issues that I and my friends are struggling with? And what are the things that I think would show well on stage?” So, part of the problem with being in the industry is, there’s all of this stuff that’s a little too inside baseball, that if you put it up for your audience, which I guess zooms back to this, you have to ask yourself, “Who’s your audience?” Are you catering to people who are like you, deep in the weeds? People who are intermediate, or people who are true beginners?
I think that, for me, drove a lot of what was the right set of content to include. And then, sometimes, you just get to know people, and they’re like, “I would let that individual speak about any topic that they want, because they’re just a fantastic speaker and they engage in great cooperation [SP].” So it’s always a mix between, like, “I really want this person onstage,” and sometimes you’re, like, “I really want this person ’cause they’re a huge audience draw.” So, I would always try to say you have to have one or two panels for any event or talks where you go, “Wow. I really want to hear from that guy.” So, I think in the 2008 Social Gaming Summit we had one that was Mark Pincus, John Pleasance, folks from Oak Internat-, it was just sort of a who’s who of big-time social gaming company CEOs. And that [SS]
Andrew: Because people want to hear from them. They’re the big names in the space. Why not give them the stage time on their own? Why say Mark Pinkus is going to be on a panel?
Charles: Yeah, so, the interesting decision as an organizer is, what’s the right balance between talks and panels? And, in the beginning, I did panels only, largely as a risk-mitigation tactic. Because, if one panelist flakes, and, inevitably it will happen, you don’t have this gaping hole in your agenda. But audiences enjoy talks, in general, much more than panels.
Charles: And it took me two years to get comfortable that I could sort of suss out what would be a good panel topic versus a talk topic and get enough relationship with the speakers to know that they had actually shown up and put in the work to do a really good talk.
Andrew: You know what, I’ve done panels, and I think my panels are good, and I’ll tell you why. This is something that I’ve seen other people do that drives me nuts, and I’ve compensated for it. They will, in the green room before going up on stage, say, “You know what? Let’s just turn it over to the audience, because it’s not really about us. It’s about the audience.” Not doing any work at all. Or, they show up at the green room, and they meet for the first time, and they say, “You know, we’ll talk about this, we’ll talk about that.” That is also just not structured. It’s not responsible.
What I do is, and this is why I don’t do a lot of panels, I talk to every single panelist for at least a half an hour before we go up on stage. I take good notes on what their good stories are and what they think their good stories are and how I need to divert them, and I do other things like that. But people don’t put in the work.
Charles: It’s really true. And I think that’s why a lot of people will say, “Well, just put me on a panel so I can just show up.”
Charles: My hack as a moderator is I’ll usually ask everyone, “Hey, are there topics you want to cover? Give me one or two things that you really want to get across.” And then I’ll send out a set of questions or topics. I’ll say, “Here’s six of the twelve things I’m going to ask you. Six of them will remain a mystery, because I don’t want everything to come off canned and scripted. But six of them I do want you guys to have had a chance to think about, and we’re going to intersperse some of the things I’ve mentioned with some of the things that I’m holding back because I think I want more raw responses.”
Andrew. OK. What else does someone who’s in the audience right now need to know about the conference business if they’re never going to organize a conference themselves? How about this–what’s the benefit to you as a conference organizer? What’s the benefit of an organizer of anything, whether it’s dinners the way Peter Fam [SP] does, or get the others on the stage that you did?
Charles: Probably the funniest and most uncomfortable thing that happened is that people started calling me a social gaming expert. I said, “Well, I don’t think of myself as an expert. I’m an expert aggregator but the experts are the people who are onstage. I’m here to facilitate.” And he said, well you know a lot about social games. And I’m like, well, that’s because I talk to a lot of people and I know a lot of people. And it was really interesting, you’d sort of become this network hub for whatever industry or group it is that you’re organizing. The same way that I wouldn’t dream of looking at an LA investment without asking Peter and Mike Jones and a handful of people down there who really established themselves as sort of start-up connector hubs.
You have to ask them because it just sort of happens one day where people go, oh, you’re the guy who does X so whenever X comes around I’m going to ask you about it. So you get a couple things, you get a chance to really get to know really, really interesting people like for example when I did my first smartphone game summit, I said, you know, I’m going to email LaRovio [SP] guys. The worst they could do is just say no. And I got to Meet Peter Lesavaco [SP], who I think is a really interesting guy. And everyone’s like, how did you meet him? And I’m like, well, I e-mailed the management team at Rovio and they wrote back and said Peter’s available and he came to our event and I met him at the event and that’s how I met him.
Andrew: I see, it gives you an opportunity to meet people who you otherwise wouldn’t have. Top of the space because those are the kind of people you want at your event and it does set you up to be an expert in everyone’s eyes because your the guy whose getting everyone else together in this space, all the other experts in this space. By the way, one thing that you told me when we talked years ago was that MeetUp was a great way, local MeetUp organizers promotions was a great way for you to get guests at your events. How do you learn how to get customers? Do you do it through trial and error or do you do it through asking the questions the way that I did with you?
Charles: So, the funny was we had basically a zero brand marketing budget for my events business but an unlimited performance budget so my business partner who is far more David Sax, not the Amor David Sax, a different David Sax, whose for more quantitatively rigorous than I was. One day we sort of sat down and said, you know, the margins on these tickets are good. We have enough that we should basically say anyone who is willing to send us an attendee we will give them a discount or referral code and we’ll just go crazy.
And so, we would sit around and say, where are the people who should be at our event, where are they hanging out online? So the first thing we realized was that there are MeetUps and I’m like, well, let’s just basically mime MeetUp, find all of the relevant MeetUps around the country for either free to play games or web games and given enough lead time we can email people in Oregon, we can email people in Los Angeles, we can email people in Florida and some of those MeetUp organizers would say, I don’t know if any of my people will go to Florida, will come from Florida but let me just see. And invariably one of the guys in Florida has a friend in California who you didn’t know about and they forward it, oh it’s in your neighborhood, you should show up.
And so, we would just do these like carpet bombing campaigns where we would go pull together, you know, forty or fifty MeetUp groups, LinkedIn groups, Facebook groups, any kind of group or organization we could find on the web, Alumni groups in the Bay area for like HBS Tech. We were just trying to think where are the people who we think should be at our event, where are they hanging out online and we just got to get there. We got to find a way to like get our message in front of them and give them that organizer something.
Andrew: And that something is the discount and that discount let’s you track so you know whose doing well and where to put your efforts in the future. And that something also is there’s a lot of reputation that they want, these meet up organizers that’s why they put the groups together and to be called on by someone in Silicon Valley to help organize this event or help promote it is a real reputation boost I’ve noticed. One of the things that I do to, when I want to understand how to make a sale or I want to understand how to build a business or get people to my events is I have an educational short cut which is instead of trial and error I come to people like you and I learn. And that’s the while idea MixergyPremium.com. But what do you do? How do you get these short cuts to your understanding so that you don’t have to do trial and error on everything?
Charles: So, again, I think a lot of it comes down to creating good will so I try to help as many people as I can because you never know. I can’t anticipate when I’m going to need to know something in the future so a lot of times if I get stuck on something I’m like, you know, I bet you someone has the answer to this problem, I don’t have to do trial and error. I try to stop and think, who in my network can I activate who I think can really help me? I think if you always sort of try to help people first you end up with sort of a bank of people who are willing to help you when you need help.
Andrew: I remember I had an opportunity to help you when you said, Andrew, can you help promote this event somehow and I said, oh, I know Mashable, Pete Cashmore and I just had a drink the other night, I’ll introduce you to them and they will promote it and they became a media sponsor. But, to get me to do that, and I would do just about anything for you because of that conversation, I mean. First of all, why were you so, why did you give me so much? I knew what your revenues were, things you won’t allow me to say here at Mixergy. I knew where your customers were coming from. Wasn’t there a risk that I would eat your lunch? That I would, I don’t know, there’s no benefit but there’s risk, why would you do it?
Charles: Well, you know, it’s funny, like a couple people, mainly Noah and a couple others, really helped me get started and they told me the same information that I told you in a different format and I realized that it was really useful starting point but I ended up going in my own direction because I was me and they were them and there were certain things that they did that just didn’t make sense for my audience. There were certain things that they did that I didn’t understand and I said these are like fundamental truths about events business that everyone should know because the biggest threat to events business is that people throw bad events. Because if people start throwing bad events, everyone decides events in the aggregate are not a good use of my time and money.
So if I can help credible, and to be fair the things I told you are not things I would just tell anyone, you’re a trusted person because of the way I got to know you but I think in a lot of cases I want people who are doing events to throw better events. In the same I want people who are doing start-ups to do better start-ups. Because creating good sort of end products, whether it’s an event or a start-up, it make the eco-system better.
Andrew: So, I get what your saying. A lot of people will ask me questions about how to do interviews and the questions they ask me are how do you get a mic, how do you get sponsors, how do you make sure that you don’t look like an idiot by asking dopey questions. All those things I can reveal to you and not have you steal my personality, you know. And so it’s not threatening but it is work, and so, the method that you mentioned earlier made me think, there’s a lot of work involved there. You have to help out guys like me on the off chance that one day I get to help you back and do this with multiple people. How do you deal with that, with all the work involved?
Charles: So the funny thing was around Christmas time, I had a goal for this year. I need to productize some of this knowledge, and I had something really specific in mind. I realized that I helped three or four friends in the past year with events questions and they all had the same set of questions, so I started a track. And it turns out it takes me four meetings to kind of break down an events business to someone.
The first meeting is usually I don’t know what I’m doing, can you walk me through the basics. The second is, can I show you my plan, can we talk about it. The third one usually happens about three weeks before the event, which is no one’s registered yet, I’m really worried, should I panic. And the fourth one is, it’s over, this is really helpful, here’s what I learned. And I realized that like, I was giving them all the same basic information so I said, I’m going to write an e-book because I’ve never written an e-book before and a lot of the fundamental stuff, I don’t actually need to deliver in person. Someone could read at their leisure and at least come to me with at least the basics out of the way. So instead of having to have four one hour meetings with people, for people that I like, I can do an hour here or an hour there. But the stuff, the foundational ground setting, budgeting, organizational stuff, why don’t I just write that down.
Andrew: I saw, it’s in the Kindle bookstore. In fact, if anyone is an Amazon Prime member, which I am and I know a lot of people are, they get it for free. What’s the name of the book?
Charles: It’s called Hacking the Conference Business.
Andrew: Hacking the Conference Business. But then you don’t get this good will that comes from it. And I’ll tell you what, why am I blanking on his name right now, from Angel List, not Nivvy.
Andrew: Navel, thank you. What he said he does to still get the good will from all this information is he charges the way that you charge and he gives it away for free for people who are close friends, that’s the way he gets a little bit of good will. Alright, let’s, you told us why you sold the business so we have that checked off. Is it time to move on to the next business? To the next, to maybe the um, what else do I want to know about? Let’s go to business development. We haven’t talked about that. You are phenomenal at it. You’ve done it at several companies, including Gaya. How about telling us how a bus dev deals goes from concept, to initiation to the conversation, to a closed partnership. Do you have one that you could maybe tell us about?
Charles: Boy, there’s been quite a few.
Andrew: And you can mask the name of the company.
Charles: So there’s, I sort of want to try to answer this in a slightly different way and if it doesn’t work you can just redirect me.
Andrew: I trust you, you’re a good speaker, just like you would do with good speakers on your station, just let them go, I’ve got to do the same thing here with my questions.
Charles: So I’ll tell you, when I was at Google, almost all of the deals I did were basically on rails who had a set of milestone check marks that you had to hit in order to get the deal signed. Generally speaking a lot of the broad parameters of the deal had already been ironed out and it was much more of an execution job. When I want to Gaya all of that changed because a lot of the deals that we were doing started with like, paper.
Andrew: I started with nobody knowing who you are. Starting with pen and paper?
Charles: Right, so there was no framework for a deal. It was sort of my boss and I would get together and say let’s figure out what we could do with Sony. I was like, all right. Sony’s a big company in LA. They’re an investor in our company. Let’s figure out what we could do with Sony, for example. And you sit down and you sketch out what would we love to get from that partner? What asset do they have? What thing could we license? How could they help us with distribution? What so they have that’s valuable for us? And if you don’t know, it still might be worthwhile having a conversation.
That’s a really different conversation than, you know what, they’ve got this distribution channel that would be super valuable for us. We really need to find a way to get distribution with them. And the flipside is what do we have that is interesting or unique to them? If the answer is nothing, it gets to be pretty hard to do a unique or startup friendly deal. But a lot of times the thing you have as a startup that’s interesting is either an audience that that big company can’t reach, a product or product insights that they can’t get because they can’t get out of their own way and ship a project, or you’ve got some magic sea dust product thing that they just can’t get there. So I think a lot of it always starts to me like, why would this big company want to work with us? And in a perfect world, what could we bring to the table that they don’t have?
Andrew: That’s interesting. OK, so you would sit down and say what do–we know this person really well so it’s easy to make this connection. What do they have that we need and what do we have that they need? And so if I wanted to do it here through my interviews, I would say, “What does Charles have that I need here at Mixergy? Oh, you know what? He’s working for one of the top VCs in the country. He probably has access to great entrepreneurs. He also has”–I don’t know, you don’t blog that much anymore, but let’s suppose you did–“has this great blog with a big audience that’s adjacent to mine.” I’d put that on the list, and you just put as much as you can on the list for them. And you know your list, hopefully, and you put that on the other side of the paper. And then what?
Charles: And then a lot of it comes down to–we would always try to sketch out our own economics on things. Especially if you were going into a licensing deal, we’d always say, well what can we really afford to pay for this content? Especially when you’re going licensing deals, it’s like how–whether it’s an API or it’s a content license–we would say how much can we really afford to pay? Are we going to make money on the underlying license content or is it just an input for something else? We always–that was information we always knew better than the partner. So we would say, wow, if they’re going to ask us X dollars per DVD view or per movie view, we don’t make enough money on the back end for that to work. Or if they’re going to charge us X amount of money per 10,000 API calls, we can’t afford to run our service on that.
So we would also try to sketch out some broad parameters about for the thing we’re asking for, what business model would work for us and what can we actually afford to spend? And that was usually–that would sometimes–not disqualify the next conversation. You’d go in saying we know we can’t afford anything remotely approaching standard rates. That’s also when we would try to find one or two people in the network who had worked with that partner before and say, “Hey, you don’t have to tell us anything too specific, but broadly speaking how do they think about licensing? Are they looking for minimum guarantees? Do they have some hard cap floors or ceilings around things that we really need to know?”
Andrew: What kind of licensing? Here I’m going to read just directly from your LinkedIn profile of what Gaia is. “Gaia is an online leading virtual world and community site for teens.” And you say, “In my role in the business development team at Gaia, I focus on licensing and distribution opportunities in social media video web content spaces.” What kind of licensing did you do?
Charles: So, there are a handful of relationships with companies they already had in place when I got there around video licensing. There were some partners we had that had really interesting video content that we wanted to . . .
Andrew: You wanted to take their video and put it within the game, within your world. Got it, OK. And so you couldn’t afford to pay them enough for it because you were a new company.
Charles: Yeah, and it’s–a lot of licensing deals, particularly with HollyWud [SP] studios, they have their own set of terms around guarantees and reference points that are standard, that they are just accustomed to getting in all of these deals. [coughs] And so a lot of it was figuring out which elements of this would have to be adapted and modified in order to make it work in a startup context, because we were not a big company at the time.
Andrew: So, can you give me a sense of what a startup that doesn’t have a lot of money, that doesn’t have a big track record can give a company like Sony that is no longer startup, that doesn’t need anything from anybody, feels like?
Charles: So, I think a lot of times the thing I’ve noticed over and over and over is that startups have this ability to do experiments and acquire audience and test things out in a way that big companies cannot do without tons and tons of bureaucratic hurdles. So I think as a startup a lot of times part of your principle value is that you can move a lot faster than the parent company. And they might want to learn something that would take them a year to get approval to do. You could do it in a quarter.
Andrew: So, what would you help them learn? Do you have any example of what you did at Gaia that helped Sony or some other big company learn?
Charles: Well, I’ll talk about another company where I worked, and I’ll mask their identity. But there was another big video player who really wanted to understand how would video play out on some new hardware form factors — connected TVs, tablets and things like that. And they just didn’t have the engineering resources in-house to build sort of UI concepts. They didn’t have anyone who lived and breathed those form factors. So they said, “Well, what if we just took a chunk of video and gave it to this start-up?’ It was actually a pretty interesting viral video. But we gave it to the start-up that is an expert and lives and breathes, sort of, the UI, UX, of connected devices other than laptops and TVs. What could they do? Could they build something really interesting? And the start-up said, “Hey, if you give me a long enough leash with that content and allow me to put it on my platform, I’m happy to work with you guys and bring you up to speed on what we’re doing.” And that ended up being a good deal for both parties.
Andrew: I see. OK. All right. I’ve got a note here also to ask you about why you started Gaia, but I didn’t write down anything about the answer to that from our pre-interview. Do you remember, what did we talk about? Why did you start Gaia?
Charles: [??] it was through the event business, I started meeting folks in the precursor to social gaming, because we were doing kind of web-based free-to-play games, and of all of them, in a stroke of luck, I invited a lot of people to speak. And one of my speakers said, “You know, I don’t really know you. Could we have coffee? I’d like to hear more about you. And it was Craig Sherman, who was, at the time, the CEO of Gaia and is now a partner at Meritech Capital. And I was, like, wow, this is really interesting.
This is one of only two speakers that I invited who didn’t just say, “Yeah, I’ll send you my bio and headshot.” but, yeah, I’d like to actually meet you and hear more about you. And we just had a really good chat. And, he said, “You know, why are you still at Google? You seem way more interested in this thing you’re working on than what you’re doing at Google. Would you be interested in coming to work at Gaia? You’d have to obviously meet my head of sales and BD, and you’d also have to get along, but I’d love to have you meet him.” And that’s sort of how it all happened. It was just, Craig sort of took an interest in meeting me, and I thought we’d get along great. I didn’t realize how ready I was to kind of jump into this [??] with two feet.
Andrew: The start of a beautiful friendship with the company, and a whole new path for you.
Andrew: Let’s see, what else do I want to know about, what else did I [??] to ask you about? Angel investments.
Andrew: We talked about this intellectual curiosity that you have. But you also said that when it comes to investing, you look for that kind of curiosity, that obsession, I think I called it earlier, in other entrepreneurs. Can you tell me a little bit about that? Maybe give me an example from one or two of the entrepreneurs that you’ve worked with?
Charles: Yeah. I’ll tell you one person I’ve advised, and one person where I made sort of a real equity investment as well. So, one of the people that where I made an investment is a company whose product will come out very soon. It’s in, believe it or not, it’s in the music space. They’re basically building a very, very, very cool guitar. [SS]
Andrew: [??] the music space was dead for investors, and I thought new instruments were done?
Charles: And, you know, if you had asked me would I ever invest in a company like this, I would have told you no.
Charles: And then I met the entrepreneur, who was one of the most doggedly determined people I’ve ever met in my entire life. And he’s a musician. And I explained to him, I was like, “Well, I don’t know anything music. I’m terrible at music instruments. Explain to me why you need to build this product.” And he just walked me through all the things that they had done, bootstrapping all of these crazy experiments that they were running out of his backyard.
He had basically built a device foundry in his backyard, and they were making physical prototypes in the garage. It’s like a true hardware startup. And the more time I spent with him, the more I said, “If this product is going to exist, this is the person who’s going to create it..” Because he just lives and breathes this stuff. And he has the background in hardware, electrical engineering, product design, to actually build something that’s beautiful. And I’ve seen prototypes, and they are, in fact, beautiful.
Andrew: So that obsession, that person who just has to just keep doing this no matter what, that’s what you look for?
Charles: I really love it when I see that. For me, I’m really a team person. When I find a group of people who have really great chemistry and who I think are smart and are working on a good problem, those are really hard for me to resist. They really are. And I think, as a fellow entrepreneur, it comes across kind of early on in getting to know someone, just in their demeanor. I mean, another example was, I’m a very small investor in Next Digest, the company behind Start-Up Digest. And Chris McCann loves start-ups. And when I met him, he’s had sort of taken over the Basis list, which had sort of gone dormant and had a few thousand
Andrew: The what list?
Charles: The Basis list at Stanford. He’d sort of been working on that.
Charles: I said, “Why are you so interested in the start-up stuff? Why do you care so much? And he just told me about his journey, and some of the things that he’d done. I said, “Wow, this guy just loves start-ups. Like, he loves start-ups. He loves creating community for start-ups. He is going to find his way into other adjacent interesting products and services that will make life for start-ups better. ” And then I’ve Start-Up VIP Digest now, other things in the works.
Andrew: I didn’t know that. What’s Start-Up VIP Digest?
Charles: It’s a pretty cool job matchmaking service for start-ups. So, you know, one of the problems if you’re a hot-shot engineer is, you get all of this inbound, unqualified, effectively LinkedIn and email spam from recruiters and other folks. But what if you gave the power back to the candidate and said, “Before these people can email you, you get to pick them and self-nominate.
Charles: Say, “I’d like to hear from that company, and, yes, I’m interested in that opportunity.” And, so, it puts a lot of power back in the hands of the candidate. But as a hiring company, you know that the people who respond are actually interested in what you have to offer. And it was one of those things that came about organically from just talking to start-ups, and event people about how hard it was to hire, and they said, “Well, what if we sort of turned the model around and looked at what this looks like from the candidate perspective, and why sort of the LinkedIn bombing and email bombing doesn’t work.”
Andrew: How many people were in the Basis list when you acquired it?
Charles: Oh, I don’t remember the exact number, but it was at least one order of magnitude smaller than it is now.
Charles: And maybe two?
Andrew: So we’re talking about, they had, when I interviewed Chris, he had a hundred thousand people on his list. Is that right?
Charles: [??] for that now. I think when they started with the Basis list, I want to say it was thousands already. It was…,
Andrew: Less than ten thousand.
Charles: It was less than ten thousand. I believe it was less.
Andrew: What did they do to grow their list? What’s one idea that works that you recommend other entrepreneurs try?
Charles: You know, when I was an event organizer, they would always ask me. They were really obsessed with performance. They were, like, “Hey, we listed your event. Did you get any [??]? Did anybody show up? Did we help you sell any tickets? Why not? What can we do differently. Is there a different format we should be using?” They were really obsessed with, sort of, downstream performance, and they were really obsessed with making sure that people who were advertising or using their list for distribution were getting value. And I think that engagement made me willing to keep working with them as an organizer. These guys seemed to care about my outcome, not just their outcome.
Andrew: And the outcome is spectacular. I’ve heard from many organizers who’ve told me that that was the best location for, the best source of attendees for them. But what did they do to grow their list so big that they could have that? I interviewed Chris, and we talked about this, but I’m curious from your perspective, what did they do?
Charles: So, one of the things I’ve always liked about those guys is they come with these experiments, right? A couple of things that they’ve done, and I think to their credit that they’re not afraid to shut things down. So, one thing I think they’ve figured out is how to scale these lists and how to choose really good geographic list owners. You know, what’s the process for identifying and selecting someone who will do a great job with a list in Cedar City, Iowa, or in Barcelona, or in Moscow? How do you, getting the art of picking those people down, right?
Dude, I used to get all of these complaints from them about tools. They were, like, “Oh, we’re trying to publish fifty newsletters in one day. It takes us all night.” And they said, “We’ve figured out some hacks, but we think we’re going to have to hire a technical person to help us actually build some tools.” And so, I think, they sort of pushed the envelope on stuff, but they’re smart enough to realize, OK, this is probably all we can squeeze from this. Let’s look at another solution to that problem. And they’ve tried a bunch of other really interesting things.
They started getting a lot of people saying, “Hey, I just want to know about events or contact in Mobile, or in games, or in these verticals.” And they’ve tried a bunch of different things around verticals, some of which have worked, some of which haven’t. And they’re really just, I think, relentless in wanting to get to know other people in, sort of, the email space. So, I give them a lot of credit for just being kind of obsessed with their core product, and, more important than just their core product, the downstream impact it has on people who are subscribers, the people who are advertising in a newsletter. I think that they’re just, they think about it in the right way.
Andrew: So what did you as an investor bring to them? [SS] Do you have an example of something that you did? I mean, you’ve got the perfect background. They specifically wanted you because you’re the events guy. What did you help them with?
Charles: So, you know, I try to be a really good sounding board for them, and there’s been a few times, and I’m sure Chris could tell you better stories than I could, but he’s come to me with an idea and said, “We’re thinking about launching this thing. We’re not sure, what do you think?” And I’m, “You need to launch that tomorrow. That’s a really good idea.” So that’s sort of, we had a shockingly brief concept conversation around the Ibis [SP] VIP product, which started out as a much more manual matchmaking service with them in the middle, and they’re like “Well it’s working and replacing candidates, do you think we should do more of it?” And I was like, “Yes, absolutely. You should think about how to make it scalable beyond, sort of, you guys having to do this hand match.” So, I just try to make myself available for them when they are trying to think through products and services that they should launch.
Andrew: I remember watching Mike Jones on stage at an LA event, and when he done talking I spoke with a friend of mine, who Mike was an investor in, and he said “you know, I didn’t realize that I was supposed to talk to Mike on a regular basis. I thought, you know, that Mike would reach out to me. I didn’t realize that as an adviser, as an investor, I mean, he wants me to contact him on a regular basis. It’s not an intrusion.” Do you have other advice like that for entrepreneurs who have investors and advisers like you?
Charles: Sure. So, I like always try, it’s funny, I try to write things down when they become common problems for me. So I started, I still advise a handful of companies. I always ask them, “Show me what you send your investors on a monthly or quarterly basis, if you don’t have a board” and a lot of them said, “Well, we don’t do that.” I said, “well, what do you mean, you don’t do that?” They said, “We just sort of tell them when we see them.” I said, “You should get in the habit of writing down what happened this month, and sharing it with your investors.” They said, “Well, what should be in it?”
So I said, “I’ll write a blog post about it,” and for a handful of my portfolio companies that comes for advice, I’ll also give you a copy of what I send to my investors at [??] every month, just so you can see that like, this is how I structure it and this is what I include and I’m like, “trust me, like, they want to be helpful, but you have to give them the seed to be helpful, and it is important to keep yourself accountable on a monthly or quarterly basis for what you’re doing with the business.”
Andrew: You know what, I’ve seen a lot of entrepreneurs start it, I’ve been on their list, and then they stop.
Andrew: Right? Why? What do you say to entrepreneurs who stop? Because you know what, frankly, well first of all, why do they stop? I have a feeling that I know why, but you’d have a better sense of it. Why do they stop?
Charles: I think what I’ve seen, a lot of times, I’ve seen them stop for one of three reasons. One, they just get too busy and they’re not getting any signal back from the people on the list that the content is valuable and being consumed, but the number one reason is because things get bad.
Andrew: Because things get what?
Charles: Things get bad.
Charles: I find quite a few entrepreneurs who, when things get difficult, especially time entrepreneurs when things get difficult, rather than communicating with their investors and saying “some things we’re doing aren’t working. It’s kind of hard. We are coming up with a new plan, but I just wanted to let you know it’s not working.” They just sort of shut down and they say, “I just won’t share the bad news.”
Andrew: Well should they do that? I mean, should they reach out to this list of investors and advisers and say to them, “hey you know what, we’re not getting any customers. Things are kind of flat. We’re just going to keep humming along here until we can figure out, or we’ll keep trying things until we can figure out what’s next.” Should they do that?
Charles: I think you want to have a productive conversation. I think sort of anything that sounds like “we don’t know what to do, we’re bankrupt” should probably be avoided at all costs. I think you can have productive conversations with your investors and say “you know what, we have tired seven different customer acquisition techniques. None have them have worked as well as we have expected. So we are doing a re-think on the product or we are doing re-think on the channel [??]. I’d love to get your input on what we’re thinking, what we’ve learned.” So there’s a constructive way those conversations, which I think is sort of to state “these are the things that we’ve tried, they haven’t worked as well as we’ve expected, and I want to bring you into the conversation about what we’re going to do next,” versus “they didn’t work, and don’t know what to do.”
Andrew: I see. All right. What other advice do you have for entrepreneurs you invest in?
Charles: So, one thing I try to do, even for myself, is especially if you are a CEO or founder, find someone who is at least one stage beyond where you are in your company. You can choose whatever metric you want. Revenue wise, customer wise, fundraising wise, traction wise, team size wise, and sort of get to know that person. Because that person can tell you what’s over the horizon. Because if you are a five or ten person start up, with dreams of getting to twenty to twenty-five, you shouldn’t have to figure out what happens when you go from ten to twenty-five, because that’s a well-worn path.
Andrew: What’s in it for them? If I have this issue where I’m now at a million E-mail lists and I want to go to two million, and I find someone who has two million, what’s in it for them to help me get to two million?
Charles: You know, I think people underestimate the number of people out there who want to be a part of other people’s success, or who like imparting their lessons learned. It’s sort of like, you’d be surprised how few really successful people actually…
Andrew: If reached out to you said, “Charles, you know events. You just came on to do a Mixergy interview. I’m thinking of doing a Mixer G event, and I’m not, I don’t want to have the audience say “let’s do it,” I can’t do it now. If I were to say, “hey, what do I do? Would you have conversations with me on an ongoing basis with me to tell me? Or would you have a conversation, you’re a busy guy, you’re running a company, you’re looking at tons of investments for one of the best investment companies out there.
Charles: So, I’ll give you a really good example, there’s a start up that went through the Imagine K12 incubator, where I’ve known the two entrepreneurs since they were in college. They’ve gone through, and I’m not an investor in the company, I’ve just tried to be helpful to them. And someone asked me, well, you’ve been helping these guys for a few years now, why do you help them? I’m like, because they are two of the most organized people I help, because when they want help they say, hey, we have three things we want to talk to you about, our guess is it’s going to take about thirty minutes, here’s the three things we want to talk about, do you think you can be helpful on these three things.
And on that, I’ll say, you know, I can help you with two of the three and I’ll talk to them on the phone and we’ll go through it, it’ll take twenty minutes and then six weeks later they’ll call me back or some email and say, you know, we just wanted to give you a heads up of those things you suggested we did one, we punted one and we’re still thinking about the other one and we really appreciate your help. So I feel good about spending that time because I feel like it’s contributing somehow to their success. Oh, I think I lost you on mute.
Andrew: Oh, there we go. I see. You see the results, it does get exciting and it feels satisfying to know that their using what you’re telling them. Bionic Panda games, can you tell me a little bit about that? What’s that sound by the way that’s been going on in the background, is that a cell phone vibrating?
Charles: It was a cell phone vibrating which is not on the table anymore.
Andrew: And I’ve just taken you for an hour and a half, including the pre-interview here, so we won’t spend much more time but I want to find out a little but about Bionic Panda. You’re the co-founder of the company, a start-up building Android mobile games. What’s going on there?
Charles: It’s been really awesome. So, the last company where I worked, Serious Business, was acquired by Zynga in February of 2010 and through the course of working at Serious Business, I loved our team and I became especially close with our VP of engineering and sort of for stage of life reasons we really wanted to do a start-up after the acquisition.
And so, he and I started working together shortly after the deal closed and it took us a while to sort of come around to Android as a platform and to focus on the games after trying a couple of other ideas that were not as good and we decided that Android is a really interesting platform and this is sort of rewinding back to like December 2010, so Android was a really interesting platform, it’s early still, it’s going to be a huge opportunity to build awesome games with consumer entertainment content as it’s platform. Going in eyes wide open that it’s not as clean and simple as IOS, it’s not as well manicured, it’s going to be harder but we think that that’s worth it.
Andrew: I see and maybe because it’s going to be harder there’s going to be fewer entrants, there are going to be fewer competitors and you might be able to get away with a little more on Android than you could at IOS.
Charles: That was our thinking. Our thinking was that, you know, at the time we looked at the IOS landscape and there were a lot of really, really high quality games companies that we respected and we just felt Android was neglected. So we said, we’re going to go where we think the puck will be in 18 to 24 months, not where it is today.
Andrew: Alright, let me tell people quickly about Mixergy premium a little more in-depth. We’re getting more and more members and I want to get even more members. So I’ll tell you guys, if you’re a member here’s some courses to take, if you’re not a member join up so that you can take these courses. And you join just by going to MixergyPremium.com. That’s where you go, MixergyPremium.com. So based on what you and I talked about, Charles, I’m going to recommend that people take the Networking for Introverts class that Ruben Gomez at Bidsketch taught.
This is the guy who was so nervous he didn’t even want to come on and do an interview here about his website. I loved how he was able to connect with people like Heaton Shaw, who you and I both know of KISSmetrics, and get them to help him out. And so, if you want to figure out how to get connections like Charles Hudson and others that we talked about in this interview, Ruben teaches that in Networking for Introverts. I’m also going to suggest, since we talked a little but about email, talk to, I mean check out the email marketing course that we have with Justin Premic [SP] with A Weber, this is one of the top email companies out there.
And since early on in the interview we talked about how to talk to customers and get them to tell you what they want, I’m going to suggest that you check out the course that Cindy Alvarez of KISSmetrics did for MixergyPremium, where she didn’t just say these are the kinds of questions you should ask, she on her computer screen showed the questions that they asked at KISSmetrics to help them figure out what product to create and how to sell that product to their customers. And finally, Clay Collins also, he talks about how to talk to customers and get them to tell you what they want to buy before you even sell it, before you even make it and in fact, get customers to buy before you create. So all those are great entrepreneurs, we have many, many others on MixergyPremium.com and if you’re a member go check them out, you have access to all those interviews and courses, and if you’re not, I hope you go to Mixergypremium.com [SP] and join up. All right. How did I do, by the way, Charles? You’re a guy who understands sales. Give me some feedback.
Charles: This was great!
Andrew: This was good?
Charles: I really enjoyed the interview. I’ve been reading through a lot of the back catalog and you’ve interviewed a lot of people that I admire and respect and know and so I think I’m just really happy to have been able to be …
Andrew: Why did you want to do this interview? You are a busy guy. You could have said no and I still would have loved you. Why did you decide to do this interview?
Charles: You know, the real prompt was that you interviewed Sam Rosen, someone who I got to know when he was in the 500 start ups incubator, and who Jeff and I spent a lot of time with as an entrepreneur. I thought you captured everything about Sam that I love as an entrepreneur, in an hour. And it took me sort of many, many meetings of meeting with him to get a sense for what it is about him that makes him so awesome and relentless. And I said, Andrew really …
Andrew: What did I capture? Tell me what I captured. I want to make sure that I pick up on what I’m doing well so I can continue it.
Charles: So with Sam, one of the things I love about him is that he’s sort of relentless to the end but he when he reaches the end he’s not afraid to say I’ve given all I can on this idea or this topic. It doesn’t work. It’s not a question of effort. It’s a question of the thing that we’re working on. Let’s go do something different. And I watched him do that with Speakertext [SP] and a couple of other things he was working on where he just had conviction and conviction and conviction until he got that one piece of information that finally swayed him that he was sort of barking up the wrong tree. I think the way you got him to articulate going through that process was very revealing and very much in line with my experience in dealing with him.
Andrew: You know, I was at brunch with Noah Kagan and this investor, and he said, Why do people come and do these interviews? And he goes; I saw this one interview and the guy revealed so much. Why did he do it? And I thought later on, I know why. Because you watched it. You’re an investor who invested in his company and this is a way for him to connect with you and to see the way we all think. And that’s what I really cherish about this. I love that people sign up for Mixergy Premium and the funding helps me get research on guests like you and grow the site, but what I really cherish is when you say I’ve watched this guy who’ve I’ve known personally. When people in this space watch the others who they know in this space or want to get to know in this space. That’s what makes me feel like this work is really valuable and that I’m on the right track. I’m not even ready to compliment myself and pat myself on the back and say I’m doing a good job.
Charles: I’ll do it for you.
Andrew: I’m on the right path to doing a good job, and I’ll just keep getting better and better and better with this site. And I appreciate the compliment and Charles, the way that people can connect with you, you told us just give them your Twitter handle right?
Charles: Yes. CHudson [SP]
Andrew: CHudson. All right. And your partner has one of the best Twitter handles out there. Jeff@Jeff [SP].
Charles: Yes. He’s got an awesome Twitter handle. And he’s very active on Twitter.
Andrew: All right. Again. One more time, over the years … You know what, I should end the interview right here, but I’ve got to thank you one more time. You got on the phone with me for I don’t know how long. I took out my notebook years ago. You probably didn’t even know my name at the end of the con… maybe you did because you’re a guy who connects with people, but there was no reason for you to have done that. And I love being in a space where you’re here doing that for me and others are too. This is just a great business to be in because of the kind of conversation that we had. Thank you so much for doing that.
Charles: And I’m so proud of what you’ve built with Mixergy. It’s really been awesome to watch you build it. Keep up the good work.
Andrew: Dude, thank you. Thank you all for watching.