How does a startup reach a million dollars in sales within a year?
Jason Cohen is the co-founder of WP Engine, a web hosting company that focuses only on WordPress hosting.
In this interview, you’ll hear how Jason dealt with cancellations. If you’re charging customers on a recurring-basis, this part of the interview alone will be worth thousands of dollars to you.
You’ll also hear about the problems with growth and what happened to his co-founder. If you have a co-founder, or plan to get one, you’ll want to hear that part of the interview.
Jason Cohen, WP Engine
Jason Cohen is a co-founder of WP Engine, a web hosting company that focuses only on WordPress hosting.
Andrew: Three questions before I fire you up with another great interview. First, if you need a video for your site to help increase conversions and make more sales who do you turn to? Revolution Productions. Their videos make it easy for customers to understand your product. Even though they’re inexpensive Revolution Productions uses animation techniques and high quality video production values to tell a compelling story. And Revolution Productions is trusted by Singrid, Snap Engage, Freelancer, and others. Go to Revolution-Productions.com.
Next, did you know that adding a phone number from Grasshopper.com to your site can increase your sales? Well, Les Accounting found that sales grew when they added a Grasshopper phone number to their site. Seeing a phone number for help makes people feel safe. Flower AB tested having a phone number on their site from Grasshopper and not having one from Grasshopper. Look at how much impact it had. Try it on your site. Go to Grasshopper.com.
Finally, will you trust me if I tell you that the lawyer that entrepreneurs should use is Scott Edward Walker of Walker Corporate Law? Well, what if Jason Calacanis, Neil Patel, and these founders tell you that they recommend Scott Edward Walker of Walker Corporate Law? Well, you don’t have to take our word for it. If you’re a start up founder who’s looking for a lawyer put a call in to Walker Corporate Law and talk to them. You’ll know for yourself. WalkerCorporateLaw.com.
All right, let’s get started.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. The place where proven entrepreneurs come to tell you their stories. Teach you what they learned along the way, and send you out there fired up and ready to build your own success story and hopefully come back here and do your own interview like today’s guest. For this interview I’ve got a big question that I want to focus on which is how does a start up reach $1 million in sales within months?
Jason Cohen is the co-founder of WP Engine, a web hosting company that focuses only on Word Press hosting. I am a customer of WP Engine, as I’ll talk about later on in this interview. Past guests told me to promo what’s coming up in the interview, so here’s some of the notes that I’m going to cover in this interview. I’m going to ask Jason how he dealt with cancellations. If you’re charging customers on a recurring basis, I want that part of the interview, the part where we talk about cancellations, I want that part alone to be worth thousands of dollars to you and, of course, the time you invest in this interview.
I want to find out about the problems with growth. If you’re someone who thinks yeah, that’s a high class problem. Growth problems, you know, I’ll never have to worry about those. If you think that way pay especially close attention to that part of the interview. Because you’re going to get a lot out of it and most people aren’t talking about it for the same reason that I just mentioned, that most listeners don’t think it’s important. It is, listen to that.
Then we’re going to find out what happened to his co-founder. If you have a co-founder, if you plan to get a co-founder you’re going to want to hear that part of the interview. Most people don’t talk about it and frankly I don’t know how much we can get into it in this interview. But Jason and I have some rapport. He understands this audience. And I know that he’s going to give us as much as possible about the issue of co-founder and where his co-founder is today.
More than anything, Jason, thank you for coming here and doing this interview with me.
Jason: Thanks for having me.
Andrew: I said reach $1 million in months. How many months has it been from launch to $1 million in sales?
Jason: Let’s see. It was about a year. Yeah.
Andrew: About a year.
Jason: Yeah, so not like two months but yeah.
Andrew: What kind of clients do you have?
Jason: We actually have an array of clients because we have price ranges from $29 a month, which is obviously accessible to anybody, all the way up to our largest clients pay us more like $10,000 a month once you include bandwidth and stuff like that.
Andrew: OK. Do you have any names that you can give us as examples of people who are using WP Engine?
Jason: Oh sure. There’s a bunch. You know the website has a lot of logos on it. Here’s a fun one. There’s a musical festival in Tennessee called Bonnaroo. If it’s not the largest in the country it’s close. They have a tradition which is every time they announce their lineup their website crashes because of all the people that hit it. Of course this year they switched to us and that didn’t happen to them. Their website loaded fast and all that. That’s a typical kind of story of people who moved to us. Because we make Word Press fast and scaleable under traffic, like that. We handle security for you. And we do tech support for Word Press as opposed to just saying the server’s up and the network’s up so it’s your problem.
Andrew: So just saying the server’s up and the network’s up so it’s your problem.
Jason: Here’s why this is significant. We toss around a number like $1 million and people, I think, don’t even pay attention to it because it seems so big. The reason it’s significant is because of two things. First of all, there are people like me who pay $29 a month to host a website. The second reason that it’s big is because it’s a tough transition. Now, I made a big mistake with my wife’s website. I said, “I know WordPress. I will manage her WordPress. I live in WordPress on Mixergy. I can handle anything that comes our way. Why make the move?” And the move is a challenging one. In my mind it was.
You have to basically uproot your data, move it to another site, point the DNS records to the site, and all that. It seemed bigger in my head, and it does in most people’s heads and the clients that you’re going after. Now, the fact that you can get those people to move something, to overcome that big a hurdle, and to do it at price points that aren’t $100,000 a client, that’s the impressive thing and that’s what I want to learn from you – how you were able to do that. My case isn’t a testimonial, but by the way, in my case, I made a stupid mistake. I didn’t realize how little time it would take to move. I also made a stupid mistake in that I forgot there are now viruses online. Mixergy had a virus that took us down for weeks, and for months we had to deal with it. My wife’s site had a virus, too, and that’s what took her down and that’s what made me say, “You know what? There is now important stuff on there.” She was about to go speak at a conference. She needs the website up. A virus took her site down completely.
That can’t happen when she’s traveling across the country to speak at a conference and I can’t possibly have the patience to anticipate, protect, and recover from viruses. And God forbid if all her data was lost. I don’t want to tell you how bad she was feeling. She was feeling miserable. That’s a mistake that I made. The important thing is that you’re able to get people to make this transition faster than me. You’re able to get them to put up money and buy something from a new company. That’s what I want to learn from. And a moment ago, I interrupted you. What were you going to say?
Andrew: I’d love to talk about how to do that, especially at that lower price point. So far, this has been a great testimonial for us, by the way, so thanks for that. I’d like to tell how we’re doing that so that other people can use that. First of all, here’s something that’s not obvious, but very interesting. In fact, when I tell this to investors or other people who are interested in the business, this always surprises them. If you look at our tiers, just again, to set the picture, there’s $30 a month, $100 a month, $250 a month, and then again, this big range on the top that has kind of a sliding scale depending on just how big they are and just what it costs us to maintain and run their blog.
What happens when you graph the amount of revenue we make per tier times the number of people in each tier? So what’s the aggregate revenue of the $30 folks? What’s the aggregate revenue of the…and so on. What you expect to find is that there’s one or two tiers that are much more than the rest. For example: “Oh, we’re super efficient at small customers and it’s very effective for us to get them, so that’s where the money is and we shouldn’t be bothering doing all these customer large sites. Even though they’re paying us a lot of money, it just doesn’t add up.” Or the reverse: The little sites, the anchovies, just don’t add up to a big enough meal and you’ve got to go get a couple of sailfish and that’s where the dough is.
These are sort of the normal results. For us, and we have these numbers and we graph them over time as well to see whether they’re changing, they’re all about the same. All of them are about the same. It’s an interesting question to ask why that is, although that’s guessing. But the fact that it is that way sort of tells us that we shouldn’t be cutting out one of those tiers or optimizing for those tiers, at least not yet, and we’re okay hitting up all those folks because all of them make us a reasonable amount of money. One answer to the question, “How is it that we get to that point with a low price point?” The answer is we have many price points; they’re all important, it seems, at least for now; and they all contribute approximately equally to that big amount.
So, you have different effects going at the same time, like when we do land a big customer, it might add $1,000 a month to our “bottom line”, let’s say. Of course, that’s in quotes because there’s people, time, and all this other stuff, so it’s not quite to our bottom line like that, but it can move the needle visibly, even today. But of course, there are so many more of the smaller sites and it is very accessible and so on. So the low end, of course, you have to make it up in volume, but WordPress is a massive market. They say there’s 50 million WordPress bloggers. Even if a small fraction of them care enough about their blogs to, as you say, get over the static friction of moving into us…
Jason: … and care and find us. By the way we have competitors who many of them are pretty good.
Andrew: Many of them I interviewed here.
Andrew: You know, let’s go into your story and through your story I want to hear how you did the kinds of things that my audience is going to want to do. Starting with how you came up with this idea. Now, you had an idea before that wasn’t the right idea for a business.
Can you talk about that and then how you ended on WPN Engine?
Jason: Sure. I had an idea for an online marketing tool, sort of like Google analytics and that there’s a Java script there. The idea is at Smart Bear, the company that I did before Work Plus Engine of course. The company was interviewed here a couple of times about that.
I had built a marketing sort set of tools. It took two years. I didn’t know what I was doing. It was extremely manual but at the end of it, I could tell you it was so sensitive and so accurate. I could tell you the day that a magazine its people desk and they saw our ad and reacted it.
It was even for offline stuff, it was super accurate, incredibly valuable. So, I thought I’ll build this into a tool. I had a prototype and showed it to about 20, 30 people. This is actually really instructive for customer development. The first reaction everyone had was, this is awesome.
If we had sort of ended the conversation there and said, great. We’ll let’s us know when it’s finished. Which most people do because they want to hear that it’s awesome. It would of been a disaster because what I did I would say things like, and by the way I’m thinking of charging $50 a month.
As soon as I said things like, $50 a month. They say, wait, wait. No. I thought it was going to be free for me. I thought you were going to say it was $9 a month. Other people said, Oh, I thought you were going to say it was $1,000 a month and I, some consultant gets a cut.
All of sudden for example just talking about what it costs suddenly it blew apart what everyone was preserving about it. Everyone had a different idea of what it ought to be. It wasn’t a consensus of what it should be. I decided that since every time I talk to someone they have a different idea of what’s smart to do with this.
I decided there was some good ideas there but I couldn’t see a business forming around it.
Andrew: I see.
Jason: Again, I think that’s a critical thing that people say but it’s a good idea and you’re right but that’s not what customer development is. It’s seeing if you can find a business around the idea and I couldn’t do that. In contrast with Work Press Engine I went around and saying, hey what if it made your Blog fast and scale.
Would you pay $50 a month? Some people said yes because I just got on Hackerism and I went down. I don’t want that to happen again. For other people there were other features. For example, we have a staging area where you can test things out.
Andrew: You have a what? I’m sorry, you have a staging area?
Jason: A staging area.
Jason: For some people that was key, I’ll pay you 50 bucks a month just to have a staging area. That was interesting. I sort of landed on this sort of set of things, speed, scale, support, security, and staging. They all start with “s” that was not intentional. Those were the things that coalesced.
Rather than blowing apart the more people I talked to one or more of those five things resonated and they were fine at $50 a month. Which was the initial price point. It coalesced on something and I thought this is what I want to try and do.
Andrew: OK. If I understand you right. [??] If you were to pursue the other idea it might of taken you a year to just figure out what those core elements are of the business and who the core buyer is versus this idea where just having conversations with potential customers. Boom.
You say exactly what the product needed to have and you saw what people were willing to pay for and they were willing to pay for it in a way that made sense. Not in multiple different pricing schemes.
Jason: Yeah. I think what I found is the market was very fragmented for the analysis tool. There were just a lot different needs, a lot of niches. This is good. It means just pick a niche that you’re comfortable with. That you can get some customers with. That you think you can sell.
You can try the premium route, you could try the enterprise route. They’re both viable. You can pick what you’re comfortable with, what you want to do, and run wit it. I feel like that’s a great strategy. For me I just sort of felt like I’ll be a little fish swimming in a big thing. I just didn’t want to do that particular struggle.
Jason: In this other Work Press Engine it seemed like a vast majority of people had exactly the same problems and more or less agreed on what those problems were worth to them. That has so much more clarity. It was so much more obvious of what to do. Much easier of what to put on the homepage and so forth.
Plus Word Press again is a massive market and growing. That just felt like it was going to be easier. One thing that we were talking about is how it felt like this company was easier. That is it grew fast, people liked it, it made sense and so forth. Some people want to say it’s easier because I’ve done a bunch of startups and therefore now it’s easy. That’s completely not true by the way and we can get into that, that it’s easy. It just means that maybe that you have a little bit more wisdom or you notice a pattern, but that’s here and there. Not everyday. It’s just an absolute struggle everyday, period. I credit, actually, the customer development part of that for why it was easy.
Jason: Because I set it up for something I saw was easy and I didn’t stop talking to people until I found something that was easy and I was willing to let go of my other ideas. Even though they weren’t bad, just because I wanted to make something that was even easier. What it really means is even less risk.
Andrew: All right. I’m learning that, actually, from the interviews that the things you do before you launch like having conversations with customers. In fact, not like, especially having conversations with potential customers before you launch set you up for success afterwards.
In fact our course at Mixergy premium, with Cindy Alvarez, where she teaches people how to ask the right questions and how she, at KISSmetrics, figured out, went through the customer development process and how other people can, too. That’s one of the most popular courses.
I’ve got this question for you. Through our experience, I’ve been wondering this. When you came to me and asked me about would I move to this idea as you were describing it before you launched. I remember I gave you this convoluted response where I said, “I can’t move away from my hosting company, but I do like everything else that you’re offering me. Like not letting my site go down and avoiding viruses.” and whatever else you had I like, but I was afraid to move my site over. That’s a legitimate piece of feedback to get.
When you get feedback like that, what do you do with it? I mean you obviously didn’t act on it, and you shouldn’t have, but how do you know that you shouldn’t have acted on Andrew’s feedback? Even though Andrew is clearly is a friend and he knows the space. How do you know what to not listen to, I guess.
Andrew: That’s my question. How do you know what not to listen to?
Jason: Number one, if I didn’t have the context of 30 other interviews, in which most people were OK moving . . .
Andrew: I see.
Jason: . . . then I would have given it more credence, but because I knew that this was an exception and there’s plenty of people that feel the other way. I knew I could remain focused.
My objection to that was, if we don’t control the whole environment, how are we going to ensure all these various things? It’ll just get really complicated. Very hard to scale trying to do, essentially, custom consulting on other systems which are not normalized. Obviously, that’s very difficult. Won’t scale that well.
I don’t want that to be true, either, just because let’s say it is true. It’s a terrible business model in the sense that it’s very hard to scale . . .
Jason: . . . a whole bunch of custom things. Essentially you’re really a consulting company. Again, not a problem if you want to build a consulting company, terrific.
The second point I’d make is it wouldn’t have necessarily been wrong for me to say, OK. Done that as a consulting gig and seen whether that would work. For example, I might have learned what I just said. It’s too hard, it won’t scale and now I’ll know that. Very valuable to know that, right?
Or I might have determined we can organize things on your server so that we don’t own the hardware and we don’t have the physical firewalls. There’s certain things in which we don’t have quite the control we normally do, but I can reorganize your stuff on your instances enough that it does match our system. Enough that it is normalized enough and all of a sudden maybe that is an entire branch of the company.
Maybe that’s our big differentiating factor. By the way, neither we nor any of our competitors do what I just said. I might have identified a really cool business idea for us or our competitors or someone else for all I know. I don’t know the answer because I didn’t say, “Yes,” to that.
Andrew: I see.
Jason: My second point is, it wasn’t necessarily right of me to say, “No.” I think it’s OK to focus when you have data to confirm that choice. As long as, again, you’re going to this choice going, “What am I going to learn from this? What could this result in?” Therefore, what am I going to try to do there to learn that fast so that within a month I’ll know if that was smart.
If that’s how you go into it, I don’t think it would have been a mistake to try.
Andrew: You did 30 of these? You had 30 conversations like the one you did with me.
Jason: I did 50. 50 interviews.
Andrew: 50 interviews with potential customers?
Jason: I found 30 of them that, “I will do this and give you $50 and I will actually do this.”
Andrew: How many? 30 committed before you launched ToBuyIn [??].
Jason: By the way, the materials I had at hand were nothing. No PowerPoint. No brochure. No domain name. No company name. No co-founders. No employees. No technology. I literally had nothing but a discussion like this over lunch or that sort of thing. I don’t believe you need all of that stuff to do this sort of level of customer development.
Andrew: What about this, is it an advantage that you have over a newer entrepreneur or one that is not as well known is, that if you would have called me up at 1:00 AM, I would have taken your call. I would have woken up and made myself a cup of coffee so that I could be fully aware and give you ever ounce of attention that I could, because we’re friends, but also because you have a reputation in this space, and I know that at some point I’m going to want to work with you, and so the guy who has that has the advantage over the no-name entrepreneur who’s building his first company who then has to talk to 50 people and just getting 50 conversations would take forever because no one knows him and no one has any reason to be there for him.
Jason: I’ll give you two ways to absolutely fix that no matter who you are.
Jason: So, number one, you’re right, I couldn’t have asked you. But that’s okay, because actually there’s not a lot of you. My target audience is literally a million people who have blogs, it doesn’t have to be Andrew Warner. So you’re right that I couldn’t have gotten a hold of you, but that’s not at all necessary. So let me give you the two specific ways in which anybody can go do this, and I’ve seen people do this.
Jason: The first one is, I’ll tell you how we did some tools for consultants, and I’ll tell you how I got a hold of those consultants and how I got them on the phone. It’s exactly what I did, and anyone can do this. You go to LinkedIn, and you search for the type of person that you want to interview. In this case it was WordPress Consultants, but you could say just people who have WordPress in their blog, you could say designers, you could say anything obviously, there’s something you can do on LinkedIn to roughly find them.
Then I simply went through anyone that I could find, and, of course, looked through their information a little to see if it would make sense. And I found people who were professionals, that is, they charge money for their time. Then, I contacted every one of them, which is easy, since, as they are consultants you can find them and their e-mail addresses and they answer it because that’s their sales line. So, it’s very easy to contact people who are professionals in the field. So, I would send an e-mail to each one, and this is what I’d say exactly. I’d say, “Hey, we’re thinking of building these new tools for WordPress.
You are exactly the kind of person who we’d want to use these tools. I would love to get your opinion on what you’re doing because it seems like you’re someone who’s doing something nice in the world and I care what you think. I also know that you’re a consultant and you have an hourly rate, and I’m happy to pay for your time, in fact, you can quote any rate you want since this is just a one off. If you want to charge $200 an hour for the one call, I’m okay with that because I’m not just trying to “pick your brain”, I will compensate you for your valuable time but I really want to know what you think.”
Here’s the result, I had 30 hours of interviews, because I literally logged them so I know. One hundred percent of them agreed to the interview, and one hundred percent of them said “Oh, you don’t have to pay me. This would be fine.” OK? This is why I’m saying anyone could do it. And, by the way, they didn’t really know who I was per se, because I didn’t come through a blog.
Jason: And it wasn’t all that kind of stuff. So even if you want to argue with me and say “Well, maybe some of them looked you up and it wouldn’t have been 100%”. OK, so it would have been what, 80%? The point is you can go get interviews that way. There are other similar ways, but that’s a way. And the second thing that I’d say is if you’re really cold calling and what not, here I am promoting something else, but on my blog I had a guest poster recently talk about how exactly he did what you just asked with cold calling literally with the phone, and how he morphed his conversation on the phone to get them to engage on the phone, so he could just dial and get meetings and so forth. It was super successful, again, he said word for word exactly how he talked and why he did it and how he found them too. This is another guy with literally no contacts, no presence on the internet, just like you’re saying, again it’s a step by step, in this case the context is the phone, which he argues is way better than e-mail, which is an interesting argument. So, I’ll refer just in the interest in time and to indirectly promote my blog, I’ll refer people to go there, that’s blog.asmartbear.com[SP] and again he had an almost 100% hit rate on that. So, it really does it work.
Andrew: All right. Now I see where the idea came from, I see how you picked up on the key elements, I see how you got your pricing structure, and surprisingly what I see is the answer to the next question I had, which is, how did you get your first customers? You got them before you even launched. You said, “Would you pay for this?” and when they said yes you took money from them. Do I have that right?
Jason: Yeah, some of them I took money from and some of them I just committed and I left it at that. I think it’s enough if they verbally commit and you have that social thing, because even if they don’t commit that’s OK, this isn’t a sales call. That’s probably enough. But I do encourage people to literally take money, and one of the capital factories last year did exactly that. Once again, they have no presence online and so forth, they forced their way in through these techniques, they literally did take people’s money and they collected one or two thousand dollars, I think twenty to fifty dollars at a time before one line of code was written. And that’s when you know people are committed. There’s no risk, you can just give it back if you’re not doing the company or something, it’s not a big deal.
Andrew: OK. And capital factory is the accelerator company that you’ve co-founded and helps entrepreneurs launch their businesses. I know now where you got your first customers. What I’m curious about is what the first version of your product looked like. Now you have these guys who are expecting something from you. What’s the first thing you delivered to them?
Jason: In our case, because it’s hosting, the product is WordPress. You just log in to your blog like you always have except it’s faster. Then when you get on HackerNews, it doesn’t go down. In other words, the product isn’t very visible to them. In general, people’s installations of WordPress are just completely unoptimized in every possible way. Of course they are. It’s just whatever you used for the one-click install or it’s just whatever Apache comes with because, for small blogs where nothing is happening, that is enough. Just by being a little smarter and some tools that we use.
I could go into that. I’m not sure if that’s interesting to everybody. I’m happy to do it if it is. Just by being smarter about which tools we’re using and in what way, already you can stop going down because of traffic from a place like HackerNews. Over time, of course, we made it even more substantial so you wouldn’t go down even if you got on 20/20 and stuff and Good Morning America which, again, our customers…
Andrew: But was that all in place? Were you really able to keep people up, no matter what, on Day 1 when you launched? Were you really able to speed up their sites on Day 1 when you launched? Did you have enough equipment in place? I’ve got to just check on my mic while you answer that so I’ll go off camera for a moment. Was all of that in place, or was some of it not?
Jason: The immediate speed in some scale was in place on Day 1 although, of course, we’re vastly different now and have learned a lot of stuff. No, of course we don’t have things like perfect uptime. We still don’t have perfect uptime. In fact, we use Pingdom to monitor all our competitors and none of us have perfect uptime, I can say with complete certainty.
Andrew: So what was in place and what was missing on Day 1? One of the things that I’m seeing is that many entrepreneurs who I interview here will tell me, “Andrew, we just needed to launch quickly to get feedback and, as a result, we had to make some decisions on what we kept and what we didn’t keep.” Of course, I’ve seen the other side where people say, “It had to be perfect. I needed to make sure everything was right for my customer.” What are some of those decisions that you had to make to balance launching quickly with launching right?
Jason: For us, after knowing what the problems were, we could just solve those particular problems enough and just do something along each of those columns. We knew the experience would definitely be better than what the customer has today. Give them what they want.
Andrew: I see, because I would be managing my own site today and, as much as I know WordPress, I don’t know WordPress that well, you guys could, even on Day 1, even without a company, you can walk in and fix my current WordPress installation and make it a little bit better. I see. Okay. So you can give me an easy win and you can give yourself an easy win. What about this? One of the things that you were using to sell in private conversations is that you had a rock star in the WordPress business. I’m trying to think if whether I should say ninja or rock star. They’re both bad terms now, but whatever it is. How much did that help you get people’s attention, get their trust, and deliver the result that you were offering them?
Jason: For specific accounts, it was very useful, especially for some of the larger accounts, some of the well-known people, and so forth. Obviously, having a big name, by definition, means that some people find out about us that way and so on. We track things like how many sales came from this blog or that blog, including mine. The truth is that none of those were very effective. In fact, I wrote about all those very specific metrics and you’d think I have 30,000 subscribers that I would get a lot of sign-ups, not only when I announced it, but when I then keep talking about it. The fact is, when I did the big announcement, the big launch thing on my blog, I got two sign-ups. Two. It seems like that kind of thing, having visibility and so on, would give you an automatic leg up in things like launching or getting customers.
At least, in my case, that’s not true. I talked to some other people like Eaton Shaw [sp?] about it and he said, “Yep. That’s the same with me. It doesn’t really do that.” I don’t think having some kind of a presence on the internet gives you an advantage. One of the reasons I was able to attract a co-founder who was well-known in the industry and who wanted to hook up, there is where my past successes, the stuff on the blog where you can see how I think and whether you want to work with somebody who thinks like that and so forth, that kind of stuff helps a ton. That definitely is a leg up that is harder for people without a reputation to just put together.
Andrew: I wonder how much an interview like this would help in getting customers. Is this something that’s just good for potential partnerships? Is it something that is useful if you are trying to make a biz dev deal with someone or is this actually end up getting orders? Would you tell me how many orders? I can’t accept any payment for it because
I don’t anyone to think that I say when I migrated for one reason or another. When I push you with questions in one direction or another that I’m doing it because I want to make money off this interview. I want them to know 100% that my only intention is for them to do well through this interview.
Would you feel comfortable talking publicly about how many orders you got as a result from this interview, even if it’s zero?
Jason: Absolutely. I will give you all the data. We’ll put it in the comment section or we’ll update to post or something. Happy to do that.
Andrew: All right. Let’s do it. I love it. All right. I see how you launched. Any problems after launch? Any issues that made you say, maybe we’re on the wrong track here.
Jason: Well, I did start by doing some consulting work. That seemed to be more distracting than helpful.
Andrew: Tell me about that. What kind of consulting work?
Jason: Word Press stuff but only for our customers that came in. Here’s one of the interesting conflicts that happened. I feel like this conflict may be relevant to a lot of the listeners and not obvious at least in the front. At least, not obvious to me. Which was we have tech support and obviously we want to help you in tech support.
In some point though the complexity off the thing or the custom nature of the thing is such as our tech support is not the appropriate anymore. It is just custom. It’s definitely your fault and not ours. As much as we try and go over and above it just beyond reasonable amounts of tech support.
At that moment you need probably not an employee obviously you need a consultant. Of course, consultants ranging from $20 an hour to $200 an hour would be happy to help you. What we found is if we sold consulting services.
Number one, there is a conflict of interest within the customer because now, where are we drawing the line between tech support and starting to charge you by the hour. So, now you can start feeling bad just as what you just said about you want to send people here just because you want to not to make money.
If you were making money suddenly it’s conflict of interest. It’s the same thing right. Secondly, we don’t want to compete with consultants. We want to send Word Press consultants more work.
In fact, we want to be a generator work for Word Press Consultants and if we are probably the karmic way consultants would want to move clients to us as well. Knowing this is a friendly business situation.
Andrew: Tell me then how you ended up in the consulting business when you specifically didn’t want to get into that business?
Jason: No. Now, specifically don’t want to get into that business. I wasn’t.
Andrew: No. When you started you were doing consulting work and charging people for this work to.
Jason: No. What would happen is that the know its custom and they’d say I know this is custom work and it will take 5 or 10 hours, can I just pay you guys to do it. We said yes.
Andrew: You said yes.
Jason: Yeah. Initially we said yes.
Jason: And we thought that would be the whole branch of the company.
Jason: It seemed like an easy branch to just make money. Know the profit margins wouldn’t be the same but it seemed like we could have this consistent quantity of work and just the more we grew the hosting thing. Sort of by definition we would just automatically grow this consulting arm.
Any bench time we would have from the consultants is stuff we need anyway on the hosting site. So, there is no downtime penalty either. It just seemed like a really logic way to have more revenue.
A lot of people especially with the online stuff try to have multiple revenue sources like you can subscribe to have this premium content but also there is advertisement for this but also we might do consulting and so forth.
There is some strength in having different kinds of things and this is a one off thing with high margins, consistent monthly thing and that’s predictable. They all have nice qualities and combining them can be healthy.
That was also a thought why we should do consulting because it is another sort of strength, another leg that could grow independently and yet be fed by the hosting site. The bottom line was actually there were these conflict of interest within the hosting site.
In retrospect maybe it sounds obvious, but at the time it wasn’t obvious that we would be competing with consultants and therefore not working with them as much as we could. It’s actually much more in our advantage.
In fact I would argue and advantage to the Word Press ecosystem as a whole that we generate work for consultants instead of put our arm in around everything. Let’s just try to do what we do and be really friendly with what other people do in the ecosystem.
Andrew: OK. I mentioned in the beginning that you have customers who pay you month to month to month and at one point you were getting cancellations. How bad were the cancellations? Before we get into what you did about them. What kind of cancellation rates were you getting?
Jason: Sure. There were kind of two areas were we had a big lump of higher cancellations. One was a little over a year ago, we were at, I won’t name who it is because I’m not trying to cast disparagingly, but we were at a hosting company which has lots of problems.
In other words, our service was hosted at a place that had lots of problems and actually continued to continuously have problems. Which is why we moved away from them, but those problems of course flow through to us; and so our customers don’t care whether if it’s our data center having problems or us. The bottom line is they’re paying for us for a blog and it’s going down and I don’t blame them. It doesn’t work to blame someone else, it’s still you. Well you chose the hosting company, didn’t you, right? Then there was a second wave when we started really scaling and really ramping revenue, when suddenly the revenue curve ticked upwards and we were not prepared. We were actually prepared from a hardware point of view, but not from a human point of view and I’m happy to get into detail about how we got behind and what we should’ve done and all that.
Andrew: Yeah, I’ve got that as a separate part of the conversation that we’ll get back to.
Jason: So, I’ll tell you something interesting, number one, how we measured the cancellations, and number two, a very interesting thing about how we managed that and we were able to mitigate almost all the cancellations by changing our behavior. So let me tell you exactly what that was, because again, I think this is something that literally 97% of the readers can absolutely just copy. I believe this is a completely universal rule.
Jason: So, what we do is we graph the number of cancellations of people who were relatively new, like they signed up within 15 or 30 days. That’s very typically a hugely different rate than your overall cancellation rate, what I call the ‘long-term rate’ which is people who are older than that. Some people have more segments than that. In hosting, it’s just a general rule of thumb that you’re overall cancellation rate is . . . you’re healthy if you’re around 2% per month. So if 2% of your customers leave per month, that’s about just normal churn, even if you’re doing a fantastic job. Like, there’s literally no hosting company where you can get much lower than that once you’re at scale, once you have a lot of customers than that.
But the short-term rate is all over the map and you can imagine if you have a marketing campaign that brings in a lot of crappy leads, then your cancellation rate, your short-term rate, might increase just because those weren’t great leads anyway and so forth. So there are a lot of things that go into that. But here’s what we saw, the short-term rate spiked when we had these problems again, and this was not January, but the previous January and February. It spiked at 20%. 20% of people who signed with a credit card, by the way, cancelled, which is just tremendously high . . .
Andrew: For a hosting company, yes, because it was such a big move to get into you and now it’s big move to get out of.
Jason: Right, and they’ve already committed to paying money. Like, it’s just huge.
Jason: So one out of five. Here’s what’s interesting, the thing we did the first time where had that 20% cancellation rate is we said . . .So, we’d be down for an hour. We would hope that people didn’t notice that. Well, that’s not how that works. Of course they noticed it and so then it just looked like we didn’t know what was going on. So, in other words, we tried to sort of cover up what was going on and I don’t want to say cover up, like lie about it, but we weren’t that forthcoming about it. We were just sort of hoping that people wouldn’t notice what’s going on and therefore we wouldn’t get penalized for what was going on.
Andrew: And it is just an hour, right?
Andrew: I mean, I’d know it, but I don’t know that I would’ve known it a couple of years ago if my site was down for an hour.
Jason: That’s what we hoped. And you can say that we were bad for doing that and so on, but most companies don’t . . .
Andrew: I like to keep things open. Uh-huh.
Jason: Yeah. Most companies don’t tell about every single bug and post entire bug tracking system online and stuff like that so people can see everything. This is kind of, since we’re really a service company rather than a product company, this is sort of our equivalent of saying, ‘Well yeah, of course our bug tracking system’s not completely public.’ That’s kind of the equivalent. However, we had another big period of downtime, also due to this host, in the following month. This time it was 12 hours of downtime. Oh my God, talk about . . . So we should’ve had the same cancellation rate, actually worse, because it is worse. Our cancellation rate did not change at all. Nothing, it’s a straight line. I wish I had the chart up here to show you.
In fact, I’ll send you the chart, by the way, so you can post it. Remind me, we’ll post my actual data on the blog and I’ll show you this so you can see what I mean. It didn’t change at all and the difference is how we handled the situation, the problems. What we did is, at the very first moment of problems, we started Twittering and we have a status blog separately from our stuff. We started immediately communicating, ‘We know there’s a problem. We’re looking into it. It’s affecting all our customers. Oh my God, don’t worry, we’re all awake forever until this is fixed.’ and all that sort of thing.
Of course, again, it turned out it was our data center. So we started repeating whatever the data center was telling us and so forth. So, the short version is by being not only transparent and honest, but proactively honest; like, not just answering questions honestly, but going out there and throwing out the truth, even when it’s ugly and still showing this is what’s going on; that behavior mitigated 100% of the problem with regard to the cancellation rate. 100%
Andrew: Unbelievable. So people tolerate a higher, I mean, a longer downtime if they know about it and they know that you know about it and are telling them.
Jason: Right. Now, there’s always some limit. I suppose if we had not moved off of this hosting company eventually and we just keep having these problems all the time. Obviously, we wouldn’t always get the pass for ever and ever. We’re all customers.
Jason: Nevertheless, I think the lesson is strong. I don’t see why it doesn’t apply to anything. People appreciate and respond to proactive honesty.
Andrew: All right, you said there was another situation you were having high cancellations, right?
Andrew: What happened there? How did you learn about what the problem was?
Jason: Well, again the first thing is that I have these graphs of cancellations. So, if you’re not doing that. I know this is the lean mantra that everyone is sick of hearing about that you need to graph things to track metrics.
Andrew: How do you do that? You know what, I want to know how I can track cancellations here at Mixergy properly. What are some of the ways that you do it?
Jason: Well, at Mixergy you have subscriptions and people probably don’t hit a cancellation button, maybe they do. It may be more like they just don’t show up again. You just have to define what cancellation is.
Andrew: When they sign up for Mixergy premium it’s a month to month…
Andrew: … situation. What software would I use or what software would someone who is not developer use to come up with numbers on that?
Jason: Well, presumably you have a customer database of some sort. Where you have emails, whether they’re subscribed and all that. Whatever is in that database surely there’s a cancellation flag in there. We simply use the date as a flag.
It’s either null column if they haven’t cancelled or it’s the date in which they cancelled. You’re kind of finished at that point. You have all the data you need in that table.
Andrew: I see.
Jason: You know when they cancel and sign up. It’s just a matter of writing certain circle queries and reports. Which if you’re not technical perhaps you can do something like access, or crystal reports or something like that.
Of course, if you are technical it’s kind of trivial from there to put together what you need. That’s what we do. We just make own charts literally, make a quarry, and use a Google chart to display it.
Andrew: Noah Kagan said, he tells entrepreneur to just take the last 50 or 25 cancellations that they had and see how long those guys subscribers before they cancelled it. That would give you a quick understanding of cancellations. You’re a big data guy, what do you think of that approach.
Jason: Oh. It’s fine. Especially when you have the kind of scale of customers that Noah has. You need sort of things that throw away most of the data so you can focus on sample set. For us, we literally call every cancellation to this very day.
Andrew: Every cancellation that the day of.
Jason: Every one. We go run it down. We go, hey what’s going on? Why did that happen? Occasionally we’re actually able to turn them around. So, that’s kind of valuable but that’s actually not the goal of the call to change their mind. The goal is to genuinely learn what, why they did it.
Whether there is something we could have done about it. Whether if we change something in the future they’d be willing to come back, which sometimes there is, by the way. We have this share Google spreadsheet where we know at that level of detail everyone.
We look at it weekly to try understand sort of our current weak points are.
Andrew: So, if I cancel today I will get a phone call today from someone at WPN saying, hey Andrew just saw the cancellation, why? Why did you cancel? How do you guys go about? First of all, will I get that phone call?
Jason: Yes. We try to gather phone numbers and call. Obviously there’s also email which is usually how you signed up. I mean you don’t want to harass people. If the phone call was ignored we’re not going to go crazy about it. But we’re going to try really hard to find out what’s going on because we really want to improve.
By the way, here’s how it works. You get this chart or you get this data and you look at it. You don’t need metrics and statistics it’s really obvious what the big things are. It’s just like the old Sim City where it just bubbled up. Oh, it’s just terrible, pollution is awful you just have to do something. Like it’s that clear.
Also like Sim City when you fix one of the problems, well now the next problem bubbles up. Oh, well now there’s no pollution. School sucks. What do you mean school sucks. I just, why how come you weren’t complaining about that. Well, because of pollution now I’m complaining about schools. Also like Sim City you never win.
It’s always like more stuff, it’s different stuff and hopefully better stuff. As you grow you’re going to have more SO terric [sp] stuff and different kinds of people. It will change just because with mask you get the less likely things start happening more.
Andrew: What are the questions you ask?
Jason: You start of course, why are you leaving us? What happened? Sometimes that’s all you need but a lot of times they’ll say things like, well my site wasn’t fast. I say, really. OK. How did you measure that? They’re like, well, I just went to it with my browser and it was slow. I say, Oh, from home? Yeah.
Oh, let’ use one of these speed test online and see if the site is fast. Of course it turns out that the [??] is 203 milliseconds and actually it was their modem connection that was slow. Sometimes by sort of probing in what did they say, what do they really mean by that.
That’s an example of when we might be able to say because they probably just don’t know how to measure speed. There’s cases where, let’s say they sent an email to tech support, someone started working on it but then it got dropped.
This is what happened in the last couple of months as the number of customers scaled faster than the number of humans. We literally weren’t able to keep up with the tickets, which is really bad. And then we started making the same mistakes as before and not, for example, saying in the ticket, “We know that we’re getting behind on this, but we know that and, don’t worry, we’re still on it,” and stuff like that, which probably would have helped save it. If we don’t do that either, then we start having the same kind of effect as before. We’re not being proactively honest about what’s happening. So we see that and, often, even if we say, “Oh, we’ll fix that,” they don’t believe us.
Again, I do not blame them because most companies don’t fix those kinds of things; it only gets worse, and I understand that. We have fixed it in that we now have ten people manning tech support, where just three months ago we had two besides myself and other technical people. About ten dedicated people to that, and so forth. So we actually have fixed that. We have really good matrix on how long it takes us to respond to tickets and all that kind of stuff so we know we’ve fixed it. We have…
Jason: I’ve got a couple of questions about this.
Jason: First of all, Max Teitlebaum of WhatRunsWhere said that he does that too, that he calls cancellations, and he said you’ve got to watch out for time zone issues because if someone cancels and you happen to call them up right away and not realize that it’s a bad time of the day, you’re in trouble. What other areas should we be aware of for trouble like that?
Andrew: That’s true. If it’s dinner time and you figure they’re at their computer canceling something, so surely they’re available. But actually …
Jason: Yeah. I mean, you can’t call them as soon as they cancel, but you call them up later in the day without recognizing that it’s way too late because they’re in Australia or something.
Andrew: Right. That’s fine. Of course, you can use email and not actually pick up the phone. You’ll get a lower hit rate, but you certainly will avoid those kinds of issues because it’s in their control. That’s true. In the final analysis, you have to say, “Look. They’re canceling anyway.” You probably won’t piss them off that much more than whatever they’re pissed off at and you need to improve and you need to grow. That’s really genuinely what you’re doing. You’re not trying to piss them off. This isn’t like an automated call trying to save the business with some line that an AB test has said works. It’s not what this is, and you know that. Again, as long as that is true and this is genuine, I feel like, I suppose you could piss someone off even more, but I’m not sure that that’s…
Jason: You’re saying, “Andrew, don’t be a wuss.”
Andrew: Yeah, well…
Jason: The other question is: What about issues that they bring up that you can’t help? You can’t help the internet connection that they happen to be on.
Andrew: No. All you can do is explain that. If they accept that, fine. If they don’t, fine. That’s why there’s always this background radiation of cancellation rate because there’s stuff. Another way I put it is this: We have customers where, for whatever reason, everything works absolutely perfectly for them and way more than they even expect. It just so happens that all seven of their tech support emails were answered in under five minutes. It just so happened their migration went perfectly smoothly. It just so happens that whatever hosting situation they were on before was so ludicrously bad that our normal default thing was just night and day. And they’re our biggest fans and think we’re amazing and they can’t believe it.
And we have exactly the opposite as well where, for whatever reason, their email was dropped and then our response went to spam so they didn’t see it and they thought we didn’t respond. But whatever, their experience is that we didn’t respond. And their site wasn’t faster even after we struggled. And their migration got botched and we lost a table and had to go back and get it so they were down for two days. They have exactly the same opposite problem just by chance. So they hate everything and they’re not going to listen to anything I have to say and you’re just going to lose them. And that’s just going to happen. I feel like you have to understand that there’s definitely those two extremes and you ask, “What do you do about it?” Nothing. You just say, “If we can learn from some of the things within there, great.”
But if we have data, as we do, that shows that we respond to tickets within 30 minutes almost 100% of the time and with this guy, it didn’t happen, you just have to just say, “Well, we hate to lose them, but it’s going to happen.” So just move on to things you can affect, like the people that are more in the middle where their complaints are sort of more reasonable or you are learning something you can fix, and just focus on doing just those things right now and not try to fix everything you hear.
Jason: We talked about how you got the first customers. I need to follow up on that and find out how you grew from there. What’s the next place where you got your customers?
Andrew: We started doing AdWords. AdWords is not that cost-effective, I should say. What I like about starting with AdWords is that you can test your messaging, your landing pages, and stuff like that. Even if it’s not cost-effective in the final analysis, it is a way to test different messages to see if they’ll click on it, or if you do get people to come, it is a way to test different landing pages or your home page to see whether people get it. For example, we iterated our home page until the bounce rate on our home page was only 20%. That means 80% of the people who came to the home page did something. Ordered, looked around, checked out the blog.
Jason: Right, now every metrics person will tell you that’s not good enough. You have to go all the way to the end. They’re right. But the thing is when you don’t have a lot of data. At the beginning if we signed up one person a day we were thrilled. Oh, today we signed up three. Oh, my god it’s pulling up the moving average. Right, so if you’re at that level you really don’t have any data that’s end to end that is statistically significant. So you have to use some other proxies like that just to be making progress of some kind.
Andrew: You were getting traffic from Google Ad Words just so you could optimize and just so you’d have someone to interact with. Even though it wasn’t an efficient use of your cash.
Jason: Yeah, well at the time I think it was fairly efficient because everything else cost more money to develop. Making ads, finding places, doing six month ad buys, all that kind of stuff occupies more cash and more time than Ad Words. Obviously, since we were very new we haven’t iterated on designs and whatnot so we don’t know what’s going to work anyway. We’re putting all this money to work online and not getting anything. Might as well use Ad Words where we can completely control the expense and make sure we’re learning and improving something. That’s all very valuable.
Most of our growth came from word of mouth. That does not mean us twittering or us blogging. We actually just recently started twittering and blogging. I mean like a month or two ago. For the first couple of years we literally did not do any of that. What we did do was try to make incredible customer experiences for the people we did have and people talk. Especially in the blogging world. What they do is talk and they go to conferences and they twitter and they do stuff. Having a terrific customer experience was our marketing.
Andrew: What’s the most effective way of getting that customer to talk or to give them an experience that’s so good that it got them to talk. I’ll give you an example. There was a sandwich shop in Queens, New York where I launched Bradford and Reed that would make sandwiches that were great but who talks about great sandwiches that much at the office? What they did was they put a stick of gum on top of the sandwich wrapper as like an after the meal here’s something to freshen your breath. And that’s what people talked about. They could have put all the effort into the sandwich that they wanted but that’s not going to get people to talk around the office. It’s that little bit of candy that they include with the sandwich, that’s out of character for sandwich shops, that we all talked about. Do you have something that’s that small that has outsized results?
Jason: Yes, we have done similar things. Here’s a bunch of specific things.
Jason: The general concept is what James Altura says, you give them what they want and then you give them one more thing. That one more thing is the thing that puts it over the edge. I think that actually characterizes what you said too.
Here’s a bunch of one more things that we’ve done. Number one, just cross applying the same stuff about having immediate and honest service. That is something that is still unique in the world and endears people to you because it is genuinely better.
Number two, after they do sign up what can you immediately send to them? For example, we’ve experimented with things like sending handwritten thank you notes, sending cookies in the mail, sending free t-shirts. There’s a whole bunch of stuff you can do. For example, there’s a company called SwagLove.com where they specifically have a service for this. Again, I have no, there’s no benefit to me if you go there. Same as you. But you can generate unique URLs and one use URLs where you can send it to someone and they can go get a shirt, just like Cafe Press, and they can pick their size and put in the shipping and all this stuff. And they ship them the shirt and then bill you. Right?
You can give away a shirt really, really easily, even automatically, based on a sign up. There’s an example of being able to do a one more thing. Probably costs you $20, $30 per to ship a shirt which sounds like a lot except the effect it has is unreal. Not to mention if they actually wear the shirt that’s nice. But even just the fact that you did that is really cool.
Another example for us is you move your blog to us and it generally is a lot faster and it certainly will scale more. But there’s usually a lot of low hanging fruit that will make your blog even faster. Some of it’s just in the browser. Some of it is a configuration change that we can poke around and say oh, we can do a custom tweak for you and in your case this will actually help a lot. Stuff like that. Because we’ve done it literally thousands of times it’s really fast and easy for us to go in there and get some of the low hanging fruit. We even do things like do a PHP profiler of the code looking for things that we can kind of easily do.
Andrew: I see. A customer might get a note that says hey, we see something that will speed up your site. Do you mind if we take care of it? And they go no one else has ever done that for me before in my life. This is great, I love them.
Jason: Exactly. It could be as simple as, and a lot of people in this [??] will already know this trick, but a lot of people have not combined and minified their CSS and Java Script. Which means take your seven CSS files and make them just one file, just in a row. Like literally pasting them in a row. Same with Java Script. Of course, there are tools that do this automatically so you don’t physically do that. In fact there’s a plug in called WP Minify that’s free that does it. You don’t have to move to us to know that. That can visibly speed up a site. That’s a very common trick if you’re used to this. But again most of our customers just don’t know that kind of stuff so even little tricks that we throw in for them, it’s a huge service to essentially do that. Again, it’s the kind of thing where they just telling me on Twitter I can’t believe @WPEngine just blah, blah, blah for me. That kind of thing.
Andrew: I see.
Jason: Those are all very specific ways in which you can kind of do one more thing.
Andrew: All right. How about another big source of customers? Because I get this, I get the early customers, I get this delight in encouraging word of mouth. What else do you do to get customers? Where’s another big pocket of customers for you guys?
Jason: Well, in our particular case a lot of Word Press blogs are built by consultants. In other words there’s this ecosystem of people who build sites on behalf of other people. You can try to go sell to the other people, in other words the non-technical blogger, business owner, and so forth and that’s fine. And they do look for sites and there’s a lot of them. There’s a lot more of them than anybody else. In that sense they’re your biggest market. But there’s also the consultants who make sites and also end up being the sort of, when someone else has a question about Word Press, whether it’s a friend or it’s on Twitter or they’re on a forum or anything, they’re more likely to pipe up and answer rather than a non-technical person.
For example, we’ve been going to Word Camps which are the sort of very organized but still not like hyper-structured conferences for Word Press. There’s about four of them a month around the world. We try to go to at least two of them a month and just talk to people and say this is what we do and so forth. A lot of times we start forging relationships with these consultants. Of course one consultant might bring you a bunch of clients so there’s a force multiplier there.
Andrew: I see. How much money do you guys spend on going to conferences or going to events like Word Camp?
Jason: At the moment a lot because we think it’s valuable and also because as trying to contribute back to the Word Press ecosystem we want to sponsor it and literally give money to the Word Press Foundation. Which is what you do when you sponsor one of these. We try to take the top premium spot which can run between $1,000 and $3,000. Plus, of course, all the travel in going and other things, give aways and other things that we might do. In total $10,000-$15,000 a month on conferences is not unusual for us and we think it’s worth it.
Andrew: Oh, wow. Can you measure the, can you tie back the revenue you get back to the conference that you spend $10,000 plus on? The way you could at Smart Bear?
Jason: Yeah, so the trick is that again, if it’s a consultant the customer’s usually signing up with their credit card and it’s very hard to draw the line back to that consultant and then back to the Word Camp. Especially because sometimes we have to run into a consultant a couple of times before they’re like yeah, I’ve seen you guys. That sort of thing. Just anecdotally, and this is a general rule for start ups as well, again we’re told to measure everything and blah, blah, blah. Especially when it’s new and you don’t have a lot of data and it’s hard to draw the line between, you know, an action that’s definitely valuable and what caused that action. You have to say this to yourself, only results that are violently obvious are useful.
In other words if only 100 people are coming to your site a day getting your conversion rate from 1% to 1.1% doesn’t actually change your bottom line in any meaningful way. Even though at scale that could be huge, that could be a hugely important thing. But even if you did, and by the way you couldn’t measure that statistically but even if you could it still doesn’t matter. It’s too small. There’s only room for things that make big, obvious changes in the business.
For us Word Camps, with the amount of conversations we have afterwards, the sites where we do know it’s a consultant bringing it to us because he literally emails hey guys, just wanted to let you know I’m bringing this and this and this. Oh, cool, thanks. Like we don’t have to track that in a super careful way to see that’s having a big a effect. Now, if that obvious effect diminished over time, which it might. So far it hasn’t but it might. In fact, I expect it to. We will probably want to get better at measuring it more exactly so that we can really see how it stacks up and really decide how to spend the money.
Andrew: What do you do to make sure that you get the most value out of a conference that you’re spending to both sponsor and to attend? I want to [??] some ideas from you for…
Jason: Oh, wow. I have a ton of thoughts about this.
Andrew: Oh, hit me.
Jason: It kind of depends on the conference type. If it’s a traditional conference where there’s press and vendor booths and all that kind of stuff. For example, [Word Campus] don’t have a vendor booth and no press so it’s a very different kind of conference. For a traditional conference, actually literally, here I am pushing the blog again. I have a blog post that literally has like 100 things about preparing for it, how to get value, and afterward and everything. But one of the biggest things you can do is talk to editors in the press. It’s very hard, otherwise, to get press from people because their inboxes are stuffed and who are you and all that.
They’ll all be there at the conference because they’re covering stuff so they’ll have a journalist. Find out who’s going. You can make a meeting ahead of time with them and just talk to them for literally 10 or 15 minutes. That’s another thing that’s important. Make a meeting with them so that you’ve carved out time. You’re not trying to like corner them while they’re traipsing through the booths. I, at Smart Bear I always made sure I was talking to two or three editors of an important magazine every time we did a conference. It was not hard to do. That way they stayed on top of stuff. We got our name dropped all over the place just because they remembered us. They would take articles from us, again, because they knew who we were. We cut through the clutter. I think that’s super valuable.
I would say things like exchanging business cards and all that is some of the least valuable stuff that you can do. That is not interesting. If you can get them to actually sign up on the spot that’s really cool. By the way, now you’re tracking things. I would actually gear your booth or your strategy to actually getting sign ups. Because that’s a pretty thing you get people to do and it’s easier to measure.
I would say if you’re new, if you’re early on in your company another tremendously valuable thing you can do, especially if you have a booth, it’s a chance to make your pitch 300 times. 300 times. Think of it that way. Don’t memorize one and just do it. Intentionally shake it up. Try emphasizing different features or different pain points or different ways of getting their attention as they walk by the booth. Different stuff.
You will see, just because you’re doing it 100 times you will start converging. Again, you don’t need metrics and tools. You will converge on a really tight, amazing, powerful pitch that hits a lot of people. That is so valuable. Now you just turn away, that’s what you put in your ad words. That’s what you put on your homepage and so on. You can get a tremendous amount of kind of marketing optimization by treating your booth as marketing optimization without tools, just kind of mentally.
Those are some specific things. I think the final thing is editors aren’t the only people that are influential that are going to conferences. That was just specifically useful to me. Nowadays, particularly, so many people are bloggers or influential that you can sort of expand that scope to lots of people. You could probably search Twitter even just to find…
Andrew: What do you talk to them about? If you can find an editor, if you can get a writer to agree to a 10 minute conversation with you what do you do? I keep hearing Andrew you don’t pitch at that point you want to build a relationship with them. But then what’s their reason to come out and have a conversation with you?
Jason: OK, this is a good one.
Andrew: Hit me.
Jason: Editors and writers in general, well editors in particular have the same problem. They need interesting content and they need it all the time. That’s hard because almost all press releases are some crap no one cares about. Oh, we released 5.2 and it has this feature. Nobody cares. It’s news only to that company. It’s not really interesting to anybody else. Most of the stuff they see in their inbox, once again, it doesn’t teach anyone anything. It’s not actually that interesting. It’s not that different. It’s not that new. It doesn’t tell a story. It’s just not that engaging in the way that any kind of blog or content online is engaging.
That’s what they need because if they get that, for the same reason for anyone else gets it, then they’ll get some retweets. They’ll get more readers. Maybe somebody subscribes because they have good quality stuff. That’s their problem. That’s what they wake up in the middle of the night, they worry that tomorrow they won’t have 12 interesting things to post tomorrow. Or they won’t be able to fill the space in the magazine. That’s what they worry about. Everything you do should be geared towards solving that pain.
I’ll say things like this, I’ll say yeah, Word Press Engine we have a lot of interesting customers with problems that a lot of other people have. A lot of the solutions that we have for it are things that a lot of people can do. In fact, we found that one of the best ways for us to sort of market or advertise is to share those very secrets that are common to a lot of people. We love to talk about that. In fact, if you ever wanted to do an article sometime on us, like maybe we released some feature, maybe we could actually talk about how other people can kind of get 70% of the way to where we are just by doing this. That maybe could be the focus of the article.
You see I’m telling him or her that we can produce content that is valuable and useful. Another thing you can offer is hey, anytime you need an opinion or a thing or a quote or some filler or anything just let me know. I do that kind of thing all the time. It’s very easy for me. Because often they’ll have a story and it’s not quite long enough and they need some justification. You can become an expert in their eyes and fill that in. Again, a lot of times they’re in a pinch.
When they say oh my god, this is due at 5:00 pm today and I really need some info about x. You come to their rescue, oh my god. Tell them, so when you say salvation of the relationship literally tell them, hey I’m up for that and I can turn that around fast. I know that’s rough, like I’ll be there for you. Literally just say you understand and, hey try me for that, and they will. That kind of thing again is a relationship and establishing yourself of course as an expert, but also as a go-to person for their specific pain.
Andrew: You know, the story that I hope you get out there at some point and that others in the WordPress community get out there is the vulnerabilities in WordPress. We as WordPress owners think that vulnerability is something that’s an issue for bigger companies that were using WordPress. It’s open source, it’s been bedded, it’s been trusted, we’re not going to get any viruses, we’re not going to be attacked, but it’s out there and I don’t see enough stories about that.
Jason: Yeah, well.
Andrew: The company that does it well and I’m sorry to interrupt but I’m so passionate about this as you can see. Sakori Security, I use them to protect my site because they keep blogging about all these issues and I didn’t know about these issues before their blog post.
Jason: Yeah, so two things on that. One is it’s a common misunderstanding that WordPress itself has a lot of security flaws, it does not. A lot of the third party systems that track this will show that to you. They’ll show you that there’s been barely any vulnerabilities in WordPress for years.
Now sure, if you wind the clock way to the beginnings yes, there were various things, but they’ve literally all been fixed and they just don’t have problems anymore because the team is really good at that now, so I just wanted to make that really clear. If you do get hacked all the time anyway that’s because of all the other plug-ins and themes that may be vulnerable especially if there’s custom code.
Andrew: OK. All right. That’s a good distinction, you’re right. I actually remember emailing Matt Mullenweg when he said something about the strength of WordPress in a Hacker news comment. I emailed him privately and I said well there are all these issues and he helped me see that I don’t understand the difference and you’re right, I don’t understand the distinction. I just know my WordPress site is vulnerable at times and it’s an important distinction to make.
Jason: Right. And the other thing is the hosting company. A lot of the things that go wrong are because the hosting company didn’t have one customer silo-ed from another and therefore one infected another and things of that nature. So the hosting company does matter and there are tools like security, which we also use by the way. We bundle security, we just do that for you. Security scans all our customers, we pay security directly.
Andrew: You do?
Jason: Oh yeah.
Andrew: I wonder how well those guys are going? You can’t tell by the design of their site, but they must be doing really well.
Jason: Yeah, so the second thing about security is people say, well my blog is not important and it’s not political or anything so I won’t get hacked and it’s just completely not true, because that’s not how almost any of the hacking is. It’s people just scanning domains and IP addresses looking for vulnerabilities, not because they care at all about your site, but because if they can compromise it they can then do the real thing they want to do, which is spread malware or send spam email or whatever the thing is.
They’re just bouncing off that server to get to another server to hide their identity. So it’s whatever they actually want to do, they’re just trying to use you as a pawn and that’s why it doesn’t matter who you are, you’re going to get attacked all the time anyway.
Andrew: All right. I’ve got to move on from that. That’s painful for me to even hear. Thank God for Bob Hyler who handles my website and he’s been telling me forever that he wants to move me over to a WP engine because he says, you know Andrew at some point I could hit by a bus or I could have some other issue and if you’re not on a company that can manage this for you you’re going to be screwed and he’s right.
All right. I’ve got two other big notes here that we have to make sure to get to and we don’t have that much more time. In fact, do you have another let’s say, fifteen minutes? I know I’ve been taking up a lot of your time here.
Jason: Sure. No, that’s fine.
Andrew: A problem with growth. A lot of people say and you’ve told me before that when they hear that there are growth problems they say that’s a high class issue, it’s never going to affect me and congratulations to the people who it does affect, but I don’t need to hear from them.
Jason: Yeah, so when you’re embroiled in the problems of scale, which I’ll tell you when you’re not ready for it, it sure does not feel like you have a great problem and this is a great problem to have because your customers are super pissed and they’re correct. Now your reputation is changing from these guys are rock solid and they’re super nice and responsive, to oh they’ve jumped the shark.
By the way, normal people know that when a company starts growing that they turn into a big, bad company that sucks and doesn’t retain their original culture generally. Of course there are exceptions to that, but in general they don’t. People know that so they see that and they go yup, this is a sign that they have now jumped the shark officially and it’s downhill from here and I’m out of here.
When you see people start saying that on Twitter, telling you that, people start leaving, it sure does not feel like this is a high class problem and oh I wish I had that problem. Well, it kind of feels like the ship is sinking. It feels pretty bad. The worst part is they’re right and how bad does that feel? You are literally destroying your company.
Andrew: Illustrate it with some examples from your experience. Where did this problem pop up?
Jason: In January we were like three months into a [??] up in the number of customers joining…
Andrew: I am sorry. This is January, 2012. This year?
Jason: Yes, and right now it is March. So, in January it had to have been about three months of our customer growth rate just going crazy. That is cool, except we still had two text support people. Now we are signing up dozens of people a day with two text support people, you know, full-time text support. Now everybody in the company is in fact technical and does text support, especially in a pinch. But that does not matter. There was still not that many people in the company, and so we were under water. I mean literally everything you can imagine from ‘nobody is answering my email’, ‘my site has been down for two hours and no one has even responded to me’, ‘is this what I should expect from you guys’, ‘I sent people to you and this is how you repay me,’ – these are all emails we were getting all right? – ‘I put my own reputation on the line telling my client to sign up with you and it has been a disaster,’ and ‘I would be calling the number and no one would be answering.’
Of course we are not, we are under water. Which is another thing: Do not put up a phone number unless you can answer it. Just a little tip. All of these things sound obvious in retrospect do not they, but there we are. Again, here is me. I have done this how many times? This is my fourth startup and you would think I would know not to put up a phone number if we are under water, but there it is on the website. We did not think to take it down. This just happens. So just devastating stuff and no happy stuff to bounce it out with, by the way. No happy like ‘Oh, thanks’ little kind of stuff.
So, the reason we got into this position is because we should have hired ahead of the growth need and we should have done that a lot earlier. We started hiring really in earnest in November, which in retrospect is super dumb because who quits their job in like December the 17th? I mean you are busy doing holiday stuff, maybe you are waiting for a bonus; like that is not when you hire people. So even though we sort of tried to hire before the need, because of the timing on the calendar we were literally not able to hire a single soul until January.
Jason: And even then it is like ‘Well, I have got to give two weeks notice’ and then they start at the end of January. Then, of course, now we have suddenly seven to eight new people who are all very capable in themselves but completely untrained with us. So, now we have to do that while we are still being pummeled with tickets, which means it is not immediately solved. Now we have to sort of deal with the tickets while we train people and all that kind of stuff. Now I feel like we have dug out of it. So the last three months have been really, really hard and just staying up late at night just trying to keep on top of all of the stuff. It is all human issues. Like our hardware has not really been a problem. You know we have hundreds of servers now, but we have pretty good tools to deal with that at this point.
Andrew: So what do you do when you have a problem like that? I mean I understand suddenly you are growing so quickly you do not have customer support people. Suddenly you are growing so quickly and in other people’s cases, their site cannot handle it and it goes down. That happened to us at [??]. I was suddenly getting so much traffic [??] I do not know where, and as a result the site kept going down, which meant that it looked like we were struggling to even stay alive and that is not a good thing.
Whatever those issues are, they pop up. How do you handle them?
Jason: Yes, so again, the proactive honesty is key. Here is another thing that we did and I felt it was really the right thing to do. It ended up kind of backfiring in a positive way. I do not know if there is a word for that. So what would happen is that we would have someone, it is a complicated site, they are having issues. It is hard even to tell whether it is really their site or it is really us, and let’s suppose we are in these dark ages of we just do not have time. I would literally write them an email and say ‘Hi, I am Jason. I am the founder of [??] Engine. We have given you a terrible service. Your site is not up. It is hard for us to even tell where the fault lies and it does not matter, because the bottom line is you are having a terrible experience and that is not acceptable. We clearly do not have the time to work through all of this right now, and therefore you are only going to continue having a bad experience if we continue.
So, here is what I would like to do for you: I want to find you another place for you to host your blog wherever you want. I want to help you migrate there. I will stop charging you immediately, but take your time. I am not going to shut it off. I am only going to shut off the part where we bill you. Once you do switch, our computers will continue forwarding data in case the DNS [SP] takes a long time to wrap over. So, there is completely continuity as much as we can [??] migration.’ I would literally say everything that I just said. ‘I am going to do everything that I can to get you into a situation where you are happy, and I just honestly do not think that that is us right now.’
Boy, the reaction. Talk about proactive honesty. And that really worked. In many cases they said ‘I appreciate that. I might take you up on that. But I’ll tell you what, I’ll hang out a little while longer and see if you guys can fix it because I can’t believe you just said that. OK, I’ll hang out. Some people did decide to leave.
For example, I know you’ve interviewed Vid here from Zippy Kid, one of our competitors.
Jason: I love Zippy Kid although we, sure we’re going to fight over customers in the field. But the fact is I love Vid. I think he’s awesome. I think he has a great attitude. I think the company of Zippy Kid is good. I think a lot of the stuff they do is great. I mean, again, a terrific listing company.
Andrew: Did you send customers to him?
Jason: And so we sent customers to them.
Andrew: I was wondering why he loved you so much in the email. Why he was glad that you guys had met each other.
Jason: Exactly. For example, here’s one of our competitors. I think they happen to be a good fit for your size blog and what you’re doing. They’re a good fit. They’re awesome dudes. You know? Let’s do that.
By the way, Zippy Kid has done the reverse and sent people to us. I don’t think due to problems. I think maybe due to the size of the blog. I’m a little fuzzy right now on what it was. But we do that with each other and it’s good. Because I really do feel, let’s say they even leave. Still, what kind of experience are they left with with you? Would they tell someone else to try you? I think they actually would. Or at least they wouldn’t bad mouth, they wouldn’t go to Twitter and say those guys are completely awful. You’re going to mitigate a lot of the bad effect in general again, when you’re just practically honest about what the situation is.
Andrew: All right, final big idea. We have a couple of other things I want to talk about but here’s the big idea I promised the audience I’d ask you about. Co-founder, what happened?
Jason: Yeah, so Erin, he’s on the website so you can still see. Erin Brazell was a co-founder that, it’s a correct name in that he came on very early in the company. He didn’t, you know, put in money. He did take a salary right off the bat so he wasn’t putting in that kind of skin in the game. And certain other things. But nevertheless still a co-founder. Still instrumental in us getting going and getting customers up and having a deep insight into Word Press itself and so forth.
Andrew: He’s not with you anymore?
Jason: Right. He’s not with us anymore. It was a completely amicable sort of breakup which is, perhaps, rare. Part of the reason it was amicable is the reason it didn’t work out is it was a culture mismatch. I say that and that sounds all touchy feely. Oh, culture, that’s stupid. That’s for people who talk about what kind of personality type are you. Which is close to saying I’m a gemini so it didn’t work out kind of stuff. I realize that’s how it sounds but the truth is that, and I’m stealing now a quote from somebody, but every company has a culture. The only question is do you decide what it is or does it just appear?
I think it’s important that you decide what it is by literally writing down what it is that you stand for, what’s important to you, the kind of attitudes you have about different things, what will you spend time on, what won’t you? Even down to the kind of thing like what kind of customer behavior is acceptable to us and when do we ask them to leave? Those kinds of things are vital. When you know exactly what your culture is you can hire for that culture and therefore preserve that culture even through growth.
Today, right now I can very confidently say that everyone shares exactly the values of our company. Which we publish online on our website, by the way, on our careers page. Because we say if this doesn’t sound like you just don’t bother. Because this is who we’re hiring, this kind of stuff. Now, it’s been very important to point out that culture is not right or wrong. The fact that Erin was not a culture match does not mean that we were right or that he’s a bad person.
Andrew: How did he not match your culture? What was the difference? What were you like and what was he like?
Jason: Yeah, an example would be we really bend over backwards in tech support to try to help a customer even if it’s custom code and even if its all that kind of stuff. Even if you really totted up the hours we probably in a lifetime value sense probably are no longer making money, ever, because of the amount of time we spend on it. But our attitude is number one, we’re going to be better for it. We’re going to have someone who loves us. We hope. We might, in fact, improve our own process and stuff so that we can do this kind of stuff more efficiently later.
We just want to be that kind of company where that happens. It will be balanced out by other people who don’t need any tech support and therefore they happen to be very profitable. This is just the other end of the spectrum and we don’t want to just cut that out on the basis of some numbers or because it’s annoying.
Erin did not share that feeling. And in fact I would say some of our competitors do not share that notion. They’re very much like, ‘If you don’t fit in this box, if this is how it’s going to be, you should leave.’ Again, I 100% respect that. I think it’s also a smart business decision. I think it’s a terrific business decision to say, ‘We know who are most profitable customers are and so we are going to, literally, try to get rid of the other ones.’ I think that’s very valid. I think it’s logical. Of course, you can handle that in a good way, of how you ‘get rid of them.’
Andrew: So, you wanted to shower people with attention and he didn’t want to shower people with attention. He wanted less attention so you could pick the people who weren’t so demanding.
Andrew: How do you then deal with that? How do you break it off, especially when he’s the guy you brought up, when you and I were talking about this idea, when you said, ‘Andrew, this is one of the big assets that we bring to the table.’ It’s not an easy breakup.
Andrew: How do you do it?
Jason: Number one, again, honesty about what’s going on, ‘this is why it’s not working out and therefore . . . ‘
Andrew: You sit down with him and you say, ‘Aaron, it’s not working out because I want to spend more and more time on this and you apparently don’t have the patience?’
Jason: Again, I want to really be careful not to say that he doesn’t have patience. I would characterize it as, he strongly believed in a different business model and he’s not necessarily wrong. [laughs] It just wasn’t our model. Right? That’s why it’s a mismatch and not a right/wrong. I want to be super clear about that. Of course, I don’t speak for him either, too much, because he’s not here to say what he thinks and so it’s unfair for someone else to project on him.
Jason: But, anyway, you can sit down, because, obviously, there were a lot of specific examples. So, we weren’t talking in the abstract. It was like, this was all sort of exemplifying this basic thing and, you know, there were other things, this is just one particular kind of thing that I’m calling out.
Andrew: You and I talked before the interview started about how these kinds of issues could destroy a company. Why do they often destroy a company when there’s an issue with the cofounders, what happens?
Jason: Well yes. I think there’s data that Noah Wasserman has about this very thing where, on the one hand, of course, the benefit of having cofounders is that at the beginning of a startup there is an infinite amount of work, so having two or three people who are turning themselves inside out trying to make it happen, is a lot better than having one. You do get a lot more done and, in that sense, it might [de-risk] the company. At that phase, there’s no doubt that it’s a force multiplier, but he has some data that something like 50% of companies that failed, failed because the founders broke up and, therefore, there wasn’t enough of that left, and maybe employees, if there were employees . . .
If there weren’t employees, there may not be enough manpower to go around and if there are employees, they may get disillusioned and so forth. The bottom line is that if they fight and breakup then the whole thing is likely to break up. It’s kind of clear, like, what do we do now, especially, a lot of times it’s, ‘This is the tech guy, this is the sales guy,’ or some kind of division of labor like that, in which case, if you lose one . . . If you lose either of those it’s probably destructive for a company, not always.
Andrew: So, how did you avoid those issues?
Jason: Number one, we had more employees at the time, so there were other people to help, were other things going on, so it wasn’t as devastating as if there’s only two people at the whole company and now there’s one. I think that may be the single most important thing, actually. The other amicable part is, again, because he agreed, and this is a big issue, because he agreed that was the problem and that it’s probably not going to get solved over time, it became amicable. I don’t know if it’s always so amicable.
Another thing you really have to do is make sure your legal paperwork is in order, from the start. You need a prenup, in other words. And just like you don’t want to have that prenup conversation when you get married, because it’s awkward, like, ‘Why, Are We Planning on Breaking up?’
Andrew: You had a prenup?
Jason: No. I did not for my marriage.
Andrew: No. I don’t mean for your marriage.
Andrew: I mean for work.
Jason: But for work, absolutely. No one can start work without everything written down, and all that kind of stuff.
Andrew: What happened to the equity?
Jason: What about it?
Andrew: Was there an equity split when you guys started?
Jason: There was equity but, again, because he actually came on board after the company had already begun, after I had already put in money for the company, the [cap table] was already established and so on and so forth, he had options that vested, over time. Again, because all that was all set, it was very clear what happens next. He keeps all the options that vested. There was no discussion or argument over what that meant and, again, that is a super important thing. Any lawyer will tell you that, but, tons of people go into it and I understand why. On day one, maybe not, although I think you should. But, I understand people just start projects and then become something. I get that. But, then as soon as it ‘becomes something’ and you have something with stock, as soon as someone has ‘a share’ in something, you absolutely have to have all those in order. That’s one of the components to save yourself.
Andrew: All right, we went so far over but there’s still another story that you told Jeremy that I’ve got to get in here.
Jason: That’s fine.
Andrew: I like the way you are thinking about how you spend your time, which is, do you remember the example that you talked to him about? About how you spend 10 hours a month saving about $1000 a month in hosting costs, etc?
Jason: Yeah. I’m a big fan of, I think Don Mershaw[SP] was the first person that told me this, but he said a founder needs to value his time at $1000/hour, and you hear that and you don’t even know what that is, and you’re barely making any money that just doesn’t make any sense, so when most people think of what their time is worth, they say, “I quit a job making $120,000/year, so my time’s worth $60/hour.” Or they say, “I was a consultant and I was able to charge $150/hour. And you know what, I could probably charge $200/hour over time so my time is worth $200/hour.” That’s the typical calculus and it’s completely incorrect. The reason that it’s incorrect is when you’re a consultant charging $200/hour, you get paid. There’s a little asterisk there, maybe you don’t, but in general you get paid for the time. In a start-up, you’re not making that money, you’re risking that maybe you’ll make some money and maybe of course, you won’t make any money.
And so, if all you do is consider your time worth $200/hour, then you’re essentially saying, “Even though I’m taking on this incredible amount of risk that I’ll ever actually see any of this money, I still think my time is only worth $200/hour.” And, as you can see, you have to increase the value of the hour based on the fact that it probably won’t come back to you. So, what if you had a consulting customer that said, “I’ll pay you $200/hour but there’s only a one fifths chance that I’ll actually pay you.” Now, what hourly rate would you quote? Now you’d quote more like $1000/hour, because you probably won’t get paid, but if you do you need to be paid disproportionately high to account for the fact that you took on the risk. That’s exactly what’s happening in a start up, and that’s exactly why it needs to be $1000/hour.
Andrew: I see, and so when you talk and think about whether you should make a phone call, what you should be doing with your time, whether you should make a phone call to save money, you keep having to think, “My time’s worth $1000. Will I be able to get $1000 back from this hour that I’m going to be having with a customer?” Am I understanding that right, or did I oversimplify it?
Jason: Pretty much, so it helps answer questions like this really clearly. Should I get a part-time assistant to do things, either personally in my life or data entry or messing with credit card collections or stuff that that kind of person could do, or should I just do it and save the money? You should have the other person. Yes, even if you’re small. Yes, even if you barely have any money coming in. For example, for something like $5200/week, you can have a maid service clean your house so you’re not doing that. Now, do you have to use all that time for your start-up? No, either you can use that for more recharging of yourself, which is also really valuable because sleep and rest is also very valuable, or yeah, you are working another couple hours. And there’s no doubt that that calculus works. Or, whether you have a part time bookkeeper or whether you do QuickBooks yourself, and so forth.
The more money you have the more freely you can start using that logic, because obviously if there’s no money coming in and you don’t have a lot of money, you just don’t have a choice because there’s just no money to do it. But you can still have that mindset. It also goes toward that thing we said earlier about things that have only a chance for small change are just not worth it at all. So, if you take two hours to try to optimize some landing page to change a conversion rate a little, for something that gets almost no traffic, that is not a good use of your time even if you feel like you’re making progress (?) testing. Whereas taking those same two hours to try to find a blog with a significant number of readers where you could guest post, something that might get you a lump of 500 views to go that page, may be a much much better use of your time because there’s more possible effect. That’s a random example but it helps set your mind on “what types of things should I be working on?”
Andrew: All right. I want to give premium members a more actionable way to see results and use what they just learned here. So, here’s what I’m going to say guys, there are two courses I recommend you take as follow ups to this conversation. The first, as I mentioned earlier, Cindy Alvarez, I’m looking at my notes here about her, she’s a product manager at Kiss Metrics, and the notes from the course are so in depth that what you’re going to learn if you take that course is how to have the kind of conversations with potential customers that Jason said that he had before he launched WP Engine, and you can do it before you launch a company and before you launch a product to understand what your customers really want and Cindy didn’t just say, “This is what we did at Kissmetrics.” She wrote out the actual questions that she asked, she told you how you can find the right people to ask and how can make those conversations actionable.
And the second person I mentioned whose course I recommend is Max Teitlebaum[SP], he is the founder of What Runs Where and he did a course here on how to find customers and he walked you through step by step how he does it by basically spying on his competition. That’s what whatrunswhere.com does, and that’s what he taught in this course, how you can spy on your competition to figure out where they’re getting their best customers, how they’re doing it, and then create your advertising campaign based on what they do.
So if you’re a premium member, first of all thanks for supporting all the work we do here by being a premium member, and second, go and take those two courses if you haven’t yet. And, if you’re not a premium member, go to mixergypremium.com and join us, you can see that there’s a lot of valuable information that’s over there and the people who are teaching it actually use what they teach, and very often, like Cindy and Max, they’re friends of mine, they’re doing it as a favor to me and I’m incredibly grateful to them for coming here and teaching you and being so open. Mixergypremium.com.
All right, Jason, final question is this. It’s a little inside baseball, but I think the audience should see how we improve here at Mixergy. What can we do to make the prep for these interviews better? You’ve gone through the pre-interview with Jeremy, you see that we do a little bit of research, in fact I was completing my research before you and I started here. What can we do to make it a better interview from your perspective as someone who’s seen it 360Â° here?
Jason: Well, for me, I do a lot of interviews and I’m sort of used to doing this, and I have a live show where people call in with questions about start ups, sort of like Love Line for start ups, so I’m really used to just getting questions and trying to give answers, just like today. And so, the prep work was clearly designed for someone that’s not used to giving interviews and needs some time to think about structure and good stories and so on, which is fine, but I know you also interview a lot of people like me where that structure is actually limiting, and maybe there’s a different set of questions that would uncover interesting problems. For example, there are questions like, “What’s one thing you learned?” And that’s not an interesting question.
Andrew: That’s one of the questions from the interview and you’re saying that’s not deep enough, it’s not creative enough and it’s not the kind of question we should come to with someone with experience. So what should we be asking someone with experience to prep them to get the kind of attention that I know you can get because you have experience and you built up an audience of followers? If we get at the right topic with you, we can tap into that base that’s following you. What should we be asking you beforehand?
Jason: It might be too much work to research into their companies a lot to get very specific questions, that’s obviously the best, but I realize there might not be enough time. And some people don’t blog obviously and you can’t do that.
Andrew: We’ll find the time. So, specific questions is one thing. OK.
Jason: I mean, any blog post that has a strong opinion one way begs the question of surely you can think of some arguments to the contrary, and there always are, and so challenging, if it’s an interesting relevant thing and they clearly have a strong opinion, maybe a thought about that topic. Saying, “Well, you said this, but what about that?” might result in a deep answer by someone because they’ve been thinking about it by definition. Another thing is, of course, one of the other things I love about Mixergy, I listen to Mixergy also, it’s not like “Where were you born?” and all that garbage no one cares about, it’s always actionable and you try to get the truth that isn’t usually published.
So, I wonder if there’s a set of that kind of stuff. I know you always ask “How did you get your very first customers” and stuff like that, and you should never stop asking that. You can also ask stuff like that for a more mature company that might be interesting or maybe more emotional stuff, there’s a lot of “How do I do this? How do I do that?” which is good, but, one of the things I’ve found, maybe this is just the readership of my blog or just my personality, I don’t know, but what I’ve found is when you admit painful stuff, or personal problems, or how you feel about things, your own insecurities and all that kind of stuff, maybe it doesn’t go into a course, maybe it’s not that actionable, but I’ve found is that when people who are struggling with that very emotion find out that somebody else has it, somebody who doesn’t seem like they should have it, that is actually a hugely valuable thing and there were no questions in the interview that sort of tap into that side of things.
Andrew: Oh, yes, yes.
Jason: So, while I still agree with the Mixergy model that everything should sort of be super actionable, because that’s part of why it is so valuable, surely there is room for a little of that, maybe 10 to 25% could be that. So, for example, one that hits home with a lot of people that I talk about a lot is imposter syndrome, which is where you feel like everyone else is doing better than you, everyone else is smarter than you. Who am I anyway to be doing this and especially at the beginning of a start up where it is terribly dark and horrible and it’s just, you’re scraping to get customer and no one cares what you’re saying and everything is just hard, everything is hard, and you probably will fail and you even know that so you just sort of assume, obviously I’m not doing well and then you see all these other founders and even if you read things, like Founders Dilemma and even if you listen to [??] and here people go ‘yeah, that was really though.’ It’s still just words.
They’re saying it was really tough but look at them now, they’re successful and they’re confident and they confidently say things in their blogs and even though they say, yeah, it was hard at the beginning you’re just, like, yeah but I really don’t feel like I can do this. I don’t really feel like I belong. Maybe it was hard for you, but still, then you took off and it’s just to get into that unless you get into detail of, like, no, I literally at the beginning of Smart Bear [SP] I was a year and a half, I was two years in and I had even started with an employee and I still, literally, would sometimes go looking at job postings of, you know, I could just walk away.
I could just take the cash in the bank, I could give my employee 3 months of his salary and just say it’s over and I could just, I could get a job writing code for IBM for kind of the same amount of money as I have collected in the last two years and I wouldn’t have to work that hard because I’m really, really good at writing code. I could slumber through that and yeah, I could play ultimate Frisbee more, just kind of get healthy again. It would just be easy and besides I like writing code and I mean, I literally was like, I’m going to flush this. Each month we were doing OK and, you know, it’s, that’s how bad it is. Two years…
Andrew: Why didn’t you?
Jason: Why what?
Andrew: Why didn’t you then? Why didn’t you go and play ultimate Frisbee or just do code comfortably?
Jason: I don’t know. [laughs]
Jason: Well, what I mean is, why did I start a start-up in the first place? I’m not sure I can answer that either, I mean, I think there’s just something in your DNA, something on chromosome 14 about half way through that says, you don’t want to work for IBM. [laughs] You can say maybe it’s you don’t want a boss, maybe you think you know better for stuff, maybe you just want to have control of your life, maybe you just get a thrill, maybe it’s fulfilling to create stuff, maybe, you know, there’s all kinds of, maybe you just want money? I certainly like money, that’s certainly a big influence for me. A lot of people won’t admit that but it’s true, I admit it, I like money, I want money. It sounds bad and I hope the rest of the interview it’s clear that we want to get money in a way that’s actually good in the world, that is of course the counter balance, but that doesn’t mean I don’t want money. [laughs] It’s OK to want it.
So maybe all of those things are why but the fact is it’s not that intellectual. It’s not like you go make a spreadsheet with the risk and reward profile of all these things. If you did, probably start-ups don’t ever come up on top. [laughs] They probably don’t win that, they just don’t, right, because then you go to Google and get even more money, that would be a fun environment. The spreadsheet does not work out in favor of a start-up founder, so that means that’s not why you’re doing it, so it’s for these other sort of non-rational reasons and that’s OK. When I say I don’t know, there’s a bunch of reasons it could be but the truth is, I don’t know. So the same reason I didn’t got to IBM in the first place is probably why I didn’t flush it down, that’s why I didn’t go to IBM in the second place.
Andrew: See most people don’t feel comfortable talking about that and I guarantee you that anyone who listened to the interview all the way to this point would connect with this more than any other part of the conversation and I still haven’t figured out how to get entrepreneurs to be as open as you are right here and you just volunteered it and that’s my challenge as an interviewer. It’s not anymore to figure out where you got your first customers, those are easy questions I could practically do those by email but it’s getting them to trust that by being open about the imposter syndrome, as you said, or about anything that makes them feel a little vulnerable that, that’s not making them weak it’s making them identifiable, it’s not making them someone that people feel sorry for it’s making them someone that people remember and aspire to learn from and that’s a challenge that I have…[SS]…
Jason: Yeah, it’s just the truth and maybe that one of the threads throughout this entire thing is when you tell the truth people love you for that. If you just tell the truth that that’s what happened to you, good, it’s just the opposite of ‘oh, in that case he’s an idiot and not that smart and I don’t trust anything he says.’ It’s just the opposite. It’s, yeah me too and that means that if I feel this way it does not imply that I’m bad at this or I shouldn’t do this and so forth because that guy did it and he’s felt exactly the same way…
Jason: and I’m just as smart as that guy, and so on, which is true. So it actually gives strength to other people in the truth of it and it certainly doesn’t diminish you at all. What? You think everyone is a Superman? That’s ridiculous. It’s just not true. You just don’t know what is true so it’s just kind of sitting there in limbo. I guess another thing you could say, I don’t know if this would help people open up or not because I don’t know how to do that either but it actually to me makes someone look stronger because to admit weakness is of course even more strength than to beat your chest and show your muscles, right. It can be cathartic too to say you know what. That is what that was. Crap.
It is cathartic so I think there’s something in it for the interviewee and maybe if there’s some way to express that.
Andrew: All right. I’m glad that you said that. If nothing else now I can say well Jason Cohen of WP Engine said and then it won’t be me trying to pull information out of them. It will be me pointing to a credible source that can get no benefit out of squeezing the guest and pushing him to say something he’s not comfortable with and maybe that credibility will help me get entrepreneurs to open up.
All right, so we’ve gone long. I want to make sure that we end it with this – with a big thank you to you, Jason, and to your team. I did call them up and I did get someone and I’m confident. He didn’t know who I was. It wasn’t until later on that someone realized that hey he knows Jason and then it worked it’s way out. But I believe I could even reach him at home. I feel pretty confident that if I needed to call you guys that I could even get your dev people in the bathroom because I think I’ve got their cell phone just by calling in to tech support and in racking with them.
So, thanks for helping make this move easy for me and thank you more than anything else. The move is great but more than anything else for doing such a good interview here that’s useful to my audience. And I hope that the audience will do what I’m doing right here which is say Jason thank you for doing this interview.
Revolution Productions – Do you have a great product, but people aren’t trying it? You might have too much text on your site. Video, more than text, helps people understand what you’ve created and convinces them to buy it. I recommend you go to Revolution-Productions.com. When you do, talk directly to the founder, Anish Patel, and tell him I sent you. He’ll make sure you have a great video that convinces people to buy your product.
Walker Corporate Law – Scott Edward Walker is the lawyer entrepreneurs turn to when they want to raise money or sell their companies, but if you’re just getting started, his firm will help you launch properly. Watch this video to learn about him.
Grasshopper – Don’t make the mistake of comparing Grasshopper with other phone services. Check out their features and you’ll see why Grasshopper isn’t just a phone number, it’s the virtual phone system that entrepreneurs (like me) love.