Andrew: Hey there, yo there! Hey, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Whew. I’ve been wondering if saying the ambitious upstart actually resonates anymore with the audience or does it just sound like something I say, but I’m noticing that there are so many people in my audience who just feel out of place in the world because they don’t want to just be happy with where they are.
They’re not happy with whatever revenue they’re getting or…we’re going to meet an entrepreneur today whose revenue was good but it was flat and he wasn’t excited about it and so he fought for more. When I say ambitious upstart, that’s what we are. We’re people who start with nothing and we just keep fighting for more and more and more. We’re never satisfied looking back and saying, “Look at how far I’ve come. I’m going to be okay right here.” We just want more.
All right. In today’s interview, we’re going to hear about a developer who says he knew nothing about business and still, it took him a long time, but he created a profitable, successful business and I’m so excited to have him on here because I’ve known him now for, what, five, six years? His name is Jay Gibb. He is the founder of CloudSponge. What’s CloudSponge?
Well, have you ever gone to a website, where you needed to invite your friends? Like, maybe it was a greeting card site and you needed to send a greeting card to your friends and invite them to come back and see it or maybe you were on Kiva and you wanted to get your family members to join in on a campaign that you were supporting or whatever. And you ever notice that some of them, instead of asking you to remember your friends email addresses and type it all in, they just have a little button that allows you to grab your address book from whatever system you have, like Gmail, and just find the contacts you want and invite them to join.
Well, if you’ve ever seen those things, there’s a good chance that that feature is created and managed by CloudSponge and easily integrated into those sites because of CloudSponge’s system. That’s what CloudSponge is. I invited him here to talk about how Jay built up this business and our interview is sponsored by TopTal. If you need a developer, check out TopTal.com/mixergy. Later on, I’ll tell you why TopTal is the company to go with. Let me articulate it, TopTal. And it’s also sponsored by HostGator.
If you need a hosting company for WordPress, for anything, go to HostGator.com/mixergy and later on I’ll tell you about them. But first, I’ve got to talk to Jay. Hey, Jay. Good to see you.
Jay: Hey, thanks for having me.
Andrew: Jay, I’m scrolling to the bottom of your website and on the bottom of CloudSponge, I see something called CloudCopy Inc. What is CloudCopy?
Jay: CloudCopy is the company that owns CloudSponge.
Andrew: Well, there’s a history there, right? CloudCopy was a company that you ran before and it didn’t do so well.
Jay: Right.
Andrew: What was CloudCopy?
Jay: So the original vision for CloudCopy was a B2C product. It was back in, I guess, 2008 time-frame. And we had a hypothesis that people were going to be uncomfortable trusting the Cloud, at least for a while. And by that I mean, people were putting their photos into Picasa and Facebook and all these other tools out there. And they were starting to trust Gmail and Yahoo Mail and other…Hotmail and other places like that with their address books, rather than having them store it locally like inside their Outlook.
And I guess, technically, that stuff started happening long before, but we just started to detect that there was a need for a tool that would allow just regular consumers to be able to sort of suck that stuff out of the Cloud and keep a personal copy of it. So if those other businesses in the Cloud, if they went away, that their data wasn’t going to go away with them. And so, that’s why we called it CloudCopy when we registered the company. The whole idea was to make a copy of your data in the Cloud.
Andrew: You know, I still see when I go to If This, Then That, recipes as they call them, that allow you to pull out your contacts out of your address book on your phone and into a spreadsheet, pull them out of Gmail and into a spreadsheet. When you launched it, what was their reaction? Were other people looking for this?
Jay: We didn’t really get that far, to be honest. We didn’t get so far as to actually do a big launch. What we did was we spent some time and money building…we had some previous experience with address books and so we decided to focus there first, just because we had some previous code written and we had done it before. And so, we went through the process of sort of copying address books and figuring out all the nuances of getting access to them and OAuth and scraping and all the other different ways of getting at those things.
And by the time we had built all those things and gotten deeply familiar with that and built something that we were happy with, it was pretty clear that we didn’t have enough runway to launch the full CloudCopy vision so we scrambled to try to figure out what to do with the IP that we had built.
Andrew: Why? How much money was it going to cost you to launch it?
Jay: Well, we had set aside a budget of $100,000 at the time and I think it’s been a long time now, but if memory serves me, we kind of burned through three-quarters of it by then.
Andrew: Okay.
Jay: And so, we were burning through and we had like, a burn rate. We have developers working on it. We knew how fast we were going and how many months were left in that budget that we had set aside and we just realized, no, we’re probably not going to make it. It was obvious to everybody who was intimately familiar with the situation.
Andrew: You were running, and you still are running, a development shop called Arizona Bay.
Jay: Yep.
Andrew: What kind of work were you guys doing there?
Jay: We’re a back-end shop, mostly. It’s about 25 developers building all kinds of products for web-based back-end systems for entrepreneurs, for the most part. We’ve been doing it for 15 years now. My partner started it at the end of 2000 so I guess we’re going to celebrate 16 years pretty soon here.
Andrew: Okay. And so you set aside developer time. Actually, it seems like CloudCopy only cost you developer time, right? You didn’t spend anything else, did you?
Jay: We tried to keep all the books pretty fair and so we make sure to actually treat our internal projects as if they are clients. So we set aside a budget the same way that a client would. And this is developer time. Of course, we pay ourselves different rates than clients necessarily would, but it’s the same basic idea. It’s budget that always kind of bubbles up to be a monetary thing.
Andrew: Right. Okay.
Jay: Yeah.
Andrew: And so, that was a time suck. And you saw that it was going to cost more and more money to put it out than you guys were willing to pay. I’m looking here, you were actually one of the first sponsors of Mixergy. That’s how you and I met.
Jay: Really? I was one of the first? I knew I was a sponsor…
Andrew: I didn’t really run ads for a long time. For the first couple of years, I wasn’t running ads.
Jay: Okay.
Andrew: Yeah. I’ve got a note here…I take notes all the time and so I looked in Evernote and I found a note from our conversations from October 20, 2010, right around the time we’re recording it, at 12:10 pm…I don’t know why I get obsessive about writing the time of the call, too. You said you had a consulting firm, Arizona Bay. One of the things you guys got paid for was to create software that grabbed addresses for your clients, email addresses for them. And that was part of the inspiration for what CloudSponge is today. Can you give me a sense of what one of the projects was before you actually launched the project, the product CloudSponge?
Jay: Yeah. Well, when it comes to address books, unless you’re building some kind of new address book, there are really two use cases. One of them is what you described at the beginning of the interview, which is you’ve got a form field on your website where you’re expecting your users to type in email addresses of other people and you don’t want your users to go to a different browser window or you don’t want them to switch off your website to go copy and paste it from somewhere else because you have a certain amount of drop-off when they do that.
So that’s the primary use case we solved back then, what you’re talking about. And the second one is really what you see on social networks or like, Yelp or Facebook or LinkedIn, where they want to use your address book to help you quickly find other people in their social network, and to match you up with people that are already there.
Andrew: And so did you have clients who were building social networks at the time and wanted an easy way to get started the way that Facebook did?
Jay: Specifically, no. Yeah, it was really just a desire to make it so people didn’t have to type in email addresses and so…
Andrew: You guys coded something up that would essentially scrape people’s address books, right? Gmail at the time was not eager to give up their addresses. None of the other services were.
Jay: No, that’s not right. Gmail has had OAuth. They used the OAuth at that time. So did Yahoo and that was before outlook.com, so that was Hotmail. I get confused with Microsoft branding, so it was either Hotmail, MSN, or Windows Live at that time or all three.
Andrew: Yeah. And they also made addresses available?
Jay: Yeah, they had OAuth as well.
Andrew: Oh, I see.
Jay: So they did it through a normal, OAuth dialog where you give permission to the service to
Andrew: So it wasn’t like that the key to switching things up every time they made a change to their service?
Jay: You would, but they didn’t change it very often because it was an API. Usually with an API, it’s something where when they change it, there’s like a deprecation policy and they give you some time. They tell you what’s going to change and give you a period of time before you have to make those changes.
Andrew: Okay.
Jay: Whereas with scraping, they just change it when they change it. And it’s up to you to notice that it’s broken.
Andrew: Yeah. So if I understand you right, you realized CloudCopy wasn’t going to work out, you said, “What other ideas do we have?” You know what, there’s this tool that we kept having to create for many of our clients. Why don’t we productize that one thing?
Jay: Yeah, you’ve got it almost right. The thing you missed was that CloudCopy was that tool. We had spent that time to create that address book importing tool-
Andrew: But it was only for personal use. And you said, “Let’s adjust it so that it works for companies and allow companies to let their users grab addresses out.”
Jay: Yeah, that’s right. So we realized, “Okay. Well, we just solved this problem for ourselves.” And in solving that problem, we were looking at forums and newsgroups and we were in Stack Overflow every day, working through issues that we were having. And we were just alongside with dozens and hundreds of other developers. Lots and lots of people were asking questions that we had. So it was pretty clear to us that a lot of people were building the same thing, a lot of developers were solving the same problem.
Andrew: Which one? Sucking contacts off of the Cloud and putting it on people’s personal computers?
Jay: Yeah, just accessing address books, just downloading them and going through the OAuth, APIs, and figuring out how to use Google’s and Yahoo’s and Microsoft’s APIs.
Andrew: Okay. So that led you to believe that maybe there was a product here that could solve all these people’s issues and if they’re all constantly trying to figure out how to code this up, if we could just figure it out for them, they could use us instead of trying to recreate it.
Jay: Right. Yeah, exactly. So we had that realization that we weren’t going to have enough runway to realize the original vision so we said, “Let’s just stick a price tag on this thing and see if people want to buy it.” And it was really obvious what the distribution channel was going to be at that point because now, it’s become kind of more of a B2B and we were in these communities already with all these developers who were having the same problem. So we made a homepage, put a price tag on it, and went out to those communities to-
Andrew: What was the price?
Jay: The first one? It was very amateur, but it was very selfish pricing, which was pay as you go, right. So it was not value-based pricing, it was cost-based pricing. So we said, “Okay. If it cost us X to deliver this service, then let’s go add a margin to it and sell that so that we can make money,” which now, in hindsight, I know better. But, at the time
Andrew: Why? What’s the problem with that? What’s the problem with saying, “Hey, you know what? It cost us…” Here, I’m looking at an old version of your site. You say, “Pay as you go, 25 bucks for 2,500 imports.” That’s a penny per import. That’s what you were saying, your site says. What’s the matter with that?
Jay: Man, there’s a lot of problems with that, but the one main issue with that, honestly, was that entrepreneurs are a very optimistic bunch of people. And so they would actually take that price and they would punch it into their spreadsheet with their business projections in it and just be like, “Wow, this thing’s going to be just astronomically priced if we hit all of our numbers for the next year.” And so, counter-intuitively for me, it became a huge friction point.
Every single conversation we had about pricing with people at that point in time was like…probably one out of 10 would actually be realistic and realize, actually, that’s a really great price for this. And they would do the math to figure out how much money we were going to save them in the development time and do the math mentally and figure it out. But there were so many entrepreneurs and start-ups at the time that you know
Andrew: How did you know that that was the problem that they had?
Jay: Because I talked to them all.
Andrew: How?
Jay: At the time, I think we just had email addresses. It was just support@CloudSponge.com. And I would just see people would sign up and then I would talk to them.
Andrew: You just emailed them and say, “Why’d you sign up?” What was the process for getting feedback?
Jay: It was all inbound leads. We did outreach, just in terms of answering, being helpful and answering questions on Stack Overflow and on Quora and wherever else we found people asking questions. We’d get into the Gmail forums or Yahoo forums, developer forums and so on and occasionally plug CloudSponge when it wasn’t too shameless.
And so, all of the people that came through were all inbound, coming from those leads and so I would see that somebody signed up and I would just talk to them, just email them, and ask them why they signed up and have a conversation with them about the pricing and whatever came up. It was all very organic.
Andrew: Okay. And so then I see that you switched to unlimited pricing, $25 a month for unlimited use or $275 a year for unlimited use.
Jay: Right.
Andrew: And? Did people react the way you expected?
Jay: Absolutely, yeah. It was great. I kind of knew that they would, right, because I had been having so many conversations with everybody. And yeah, it removed the major friction point and we started getting people happily giving us $25 a month for unlimited imports and most of them went to 10 imports a month or 100 imports a month, 50 imports a month, nowhere near 2,500 imports a month.
Andrew: So it would’ve been cheaper for them to go with the pay as you go program, but they just were being overly optimistic.
Jay: That’s right, yeah. Some of them actually laughed at themselves and came back and got it and realized that most of them didn’t say anything after that.
Andrew: The interesting thing is that, on your site, for a while there, you were keeping the pay as you go option available. You’d say, unlimited per month $25 and then underneath you wrote, “Not ready to commit yet? Just contact us and we can let you go the pay as you go program for a penny per import.” And you were still getting, I guess, more people at the $25 a month for unlimited.
Jay: Yeah, nobody wanted it.
Andrew: Okay. Your first customer was who?
Jay: Oh, I’d have to look. I don’t know-
Andrew: I’ve got here my notes, Causes. This is the
Jay: Oh yeah, from your producer notes. Yeah, that was kind of the…when I was talking with the producer, he asked me to come up with the first household name. Like, the first customer that we got really all excited about, where it was somebody that we’d heard of, and at the time it was Causes, yeah. We were super-
Andrew: Causes was Sean Parker’s company, right?
Jay: Yeah.
Andrew: So they wanted to do what? Do you remember?
Jay: Yeah. So they had a tool that was was for birthdays so when you’re having your birthday or when your birthday’s coming up, you could use this tool that they’d built to encourage your friends and family to make a donation to a charity of your choice for your birthday, rather than getting some tchotchke from your mom, you could say, “Hey, mom, give $25 to the American Diabetes Association,” or whatever.
And so they had a tool inside their tool, inside this whole birthday tool with cards and all the other features they had, to send out this preference that you had to people in your address book, where you could say, “Okay. I’m having a birthday. Upload my address book, click on all the people who normally buy me a birthday gift, and send them all an email to tell them that this is what I want them to do this year instead of buying something else.”
Andrew: I see. Cool. That must have been really exciting. What I’m curious about is how did Sean Parker’s company…how did any other company at the time know to buy you? Was it just those Quora and those other forum mentions, or were you doing anything else at the time?
Jay: It was very bottom-up. It was very much developers searching for solutions and stumbling across our solution, either through the forums or through just organic search or whatever they were Googling, an error message and they saw a page from CloudSponge and came and checked it out. The vast majority came from there. That’s where the first traction came from. And then, early on, we did a couple podcast sponsorships, including yours, which was sort of, at the time, one of our only paid marketing experiments that we tried. Yeah.
Andrew: What else worked for you?
Jay: You mean, in terms of growth engines?
Andrew: Marketing, in the early days, the very beginning, when you were just getting this thing going.
Jay: So very, very early days, we only had an API so we didn’t have our widget, which we can get into more later from here about it. We didn’t have the concept of a powered-by-marketing engine yet because the API was all we had. So really, it was those developer forums, was the big one, and then you guys talking about us.
Andrew: On Mixergy.
Jay: Yeah. You and Mark Suster.
Andrew: Mark Suster.
Jay: Yeah.
Andrew: Mark Suster from This Week in Venture Capital, I think, was the name of the show.
Jay: We actually sponsored his podcast just before yours, and that experience went fairly well and I was a fan of yours, watching your podcast all the time. And so I decided to reach out to see if you’d take my money.
Andrew: Cool. I was glad that we did. I really like working with good sponsors and, speaking of sponsors, one of my sponsors today is a company called TopTal.
What is TopTal? Well, imagine you needed developer or maybe several developers either to fit in with your team or to do just part time work for you. Well, if you want the best, if you want people who are really good and could fit in with your team, almost like the employees of yours, I recommend going to TopTal. In fact, I recommend going to TopTal.com/mixergy. I speak very fast because I’m a New Yorker.
Let me make sure I communicate this clearly. Top, as in top, top of the heap, top as in top. That’s no way to speak, right? Top, as in top of the heap, the best of the best, T-O-P and Tal, as in talent. That’s what they have, the top talent in the business.T-O-P-T-A-L.com that will slide into your company like they’re one of your employees, stay with you for as long as you need, be a part of the team. In fact, one of the first steps that you’ll see that TopTal goes through is their onboarding process. I went through it. I signed up.
I needed a developer to work with us at the Mixergy team. And one of the first things that happened was I got on Skype with someone from their team, that guy’s still on my Skype, Mark Basma, and he and I and one other person, Alvaro Oliviera. Anyway, Alvaro and Mark and I were on the phone, we talked about what Mixergy needed and they got me a developer. And then, they got me a second developer.
And the second one we fell in love with and started working for us within, not hours, in a matter of days, and built out the product within a week. Jay, you said that you checked out their on-boarding process. What was your experience with TopTal’s onboarding?
Jay: Yeah, I don’t know how long ago it was. I should look at my call history in Skype here. It feels like it was a couple of years ago, though, maybe a year and a half. And I was fascinated by how quickly they got me on a Skype call. The guy’s name was David Castro. And I went through the sign-up process. And I assume at some point in that sign-up process, I gave them my Skype ID and within 5 minutes, we were on a video call, talking about the problem that I was trying to solve.
And it wasn’t a short call. I’m pretty sure we stayed on the phone for a good 30 minutes, talking about the business and they gave me the pitch and went through the whole thing. So it was a pretty fascinating on-boarding experience.
Andrew: And if you go to TopTal.com/mixergy, you will get that same experience. In fact, they liked Mixergy listeners so much they really want to win us over. They’re giving every Mixergy listener who signs up…for every one of your friends who signs up by going to TopTal.com/mixergy, they’re giving you 80 free TopTal developer hours when you pay for 80. In addition, they are also giving you a no-risk trial period of up to two weeks. They want to make sure you’re a 100% satisfied.
That’s unusual for anyone to do in this business, but they want to really get a beach [Inaudible 00:22:49]. They want to get into the Mixergy community. They know that if you guys start recommending them, then word will spread even further than it already has for them. So, go sign up at TopTal.com/mixergy. And frankly, if you want a personal introduction from me, just email me. My email address is andrew@mixergy.com. I will introduce you to them. I’ve gotten to know the team really well. The founder was over my house for dinner.
Other people on my team, I didn’t get to go over to their place for scotch. We’ve really become close because they’re so good to our audience and I’d like you to check them out and recommend them to your friends who need developers. Go to TopTal.com/mixergy. They’ll help round out and build up your team.
All right. Should I say that it’s the end of sponsorship message or not? I feel like, Jay, my sponsorship messages are really clear that they’re sponsorship messages and not part of the content.
But I want to be absolutely sure because I remember, one of my interview coaches looked at my transcript and said, “Oh, but why are you suddenly talking about this program?” and he didn’t realize that it was a sponsorship. That’s why. I’m getting paid to talk about them. But you felt that was all right, right?
Jay: I guess, I can see how he might feel that way if you read a transcript. Sure, but if you listened to it or listened to a podcast or you watch the video, I think it’s really obvious.
Andrew: I think, also the fact that you and I are engaging with the sponsorship message, maybe that also makes them feel like it is part of the interview?
Jay: Yeah. Don’t listen to him.
Andrew: Listen to him on interview advice, not on any sales and marketing advice. Cool! So you’re starting to do well…and let me see if I understand this. You had a product you’re about to build, you didn’t have enough money to keep going or didn’t want to spend more time on it. You said, “Let’s just stop development where we are and see if we can sell what we have right now as basic API. And you started to make some sales, right?
And that’s when you said, all right, it’s time to iterate on it. You started talking to your customers, seeing what frustrations they had with the way you did it. The way you priced it was one of their frustrations. So you adjusted it. Another thing you mentioned was that you started out with APIs, but a widget became more important for you. How did you realize that a widget was going to be more important, more important than you thought?
Jay: I can’t take credit for that one. That was a guy who worked with me at the time, his name is Blair, and Graeme, who is the CTO of CloudSponge. They just identified the…integrating with an API was another friction point. And they started to circle around this use case. The pattern started forming. They started to see, okay…So there’s this thing that it seems like everybody is doing the same thing or it’s very high percentage of people doing the same thing. And so, they actually pushed on me the idea. I don’t even know. I have to ask them. It was months, certainly months. They said, “We need to build the widget, we need to build a widget.” And I was resisting and kind of pushing back until eventually, they persuaded me to do it. It was definitely a good call.
Andrew: What did they envision when they thought of a widget? A widget that does what?
Jay: Well, a widget that basically
all of these developers that they were talking to, that we were all talking to, they were all wanting to get access to the address book in the user’s browser. And they wanted to display it right there in an overlay or an Iframe or a pop-up window of some kind. They wanted to be able to select, to have a search feature, to search for their mom or search for somebody specific, sorting alphabetically, whatever it was.
They wanted to have
they were all building different interfaces for being able to see the contents of the address book and select some people, not all people, but have some selection of a few people and then close the widget and have it populated so the person now didn’t have to type
Andrew: In the field that they already have, so they create the field themselves. Your widget will collect those email addresses that their users want and populate the field on the developer’s website.
Jay: Right.
Andrew: Okay. So it was that simple. That’s what they were looking for, even though they were developers?
Jay: Yeah. They were all building their own independent version of that same
that were solving that same problem. So what Graeme and Blair figured out was if we made a widget, where the entry point was the initial import of the address book and the exit point was pushing email addresses into an HTML ID, like a form field somewhere on the page, then we would cover a vast majority of the used cases of these people that were solving this problem already with our API.
Andrew: I see.
Jay: So that’s what we decided to build.
Andrew: And how did you know that that was a success when you launched it?
Jay: Conversion rates just went up and activation rates were shorter, activation times were shorter. We had enough people building already that we were able to say, “Hey, why don’t we try this thing? All you’ve got to do is give us the ID of the field and we’ll handle everything else.” So when you’re a small team and you’re so close to all the customers or all the people who are coming in, it’s really obvious when you hit something that removes a major friction point, right.
Andrew: Okay.
Jay: I think it is, anyway.
Andrew: Do you do a lot of interviews like this?
Jay: No.
Andrew: No? Yeah, it doesn’t seem like it. Because when we talked away from this interview, you are much more, much louder and not that you are screaming like I am, but you’re a different personality. I feel like you are quieter now.
Jay: Okay.
Andrew: How do you feel being on here? Do you feel a little nervous?
Jay: Yeah, maybe a little. Sure?
Andrew: What do you think it is? Because I feel like I’m making guests nervous lately.
Jay: I don’t think you’re making me nervous.
Andrew: Good. There’s no fear that maybe I’ll get you to say something you don’t want to say or you’ll say something racist out of nowhere and suddenly everyone will hate you. None of that, right?
Jay: No.
Andrew: All right. I said in a recent interview something that I don’t know if I regret or not, but I’m just going with it. I really liked the woman and I said, “You know what, I love you so much I’m going to divorce my wife and marry you.”
Jay: Oops.
Andrew: And I thought that I was just saying it to be funny and interesting. I went home and told my wife, “Here’s what happened at today’s interview,” and she was shocked.
Jay: Did you publish that one?
Andrew: The whole…Sorry?
Jay: Did you publish that one?
Andrew: I’m totally publishing it. I don’t care. I’ve got to publish everything. But she went from being so excited…I don’t know what happened. It was a Friday night, something happened. She was really excited, she was ready to sit down for dinner and I could see, like…taken out. And she tried to get it together and just all taken out. What am I going to do? I’ve got to roll with it. I’m trying to be more myself in the interviews.
It is a little bit tough to do it, especially since…if I make a mistake in real life, so what, I burn a friend. If they can’t recover from it, then fine. But on camera, you’re screwed! That always lives on. I keep thinking of…what’s his name, from 1938 media, Lauren Feldman. Is that his name? Lauren, something.
He suddenly went from being a guy who is a just a blogger to suddenly getting this Verizon deal, where his videos are going to be on Verizon and someone discovered an old bit that he did that sounds just a little bit racist. I don’t remember what it was, but he lost the deal completely and I haven’t heard much from him since.
Jay: So you’ve got to be careful.
Andrew: No, I can’t. That’s the thing. I can’t let that stop me. I have to just keep ignoring that and try to be myself and accept that if Verizon doesn’t like me, who cares. I’m going to find my audience somewhere else.
Jay: I think that’s wise.
Andrew: Okay. Breaking even, you told Jeremy in the pre-interview was $20,000 a month. How long did it take for you to hit that number?
Jay: Let me get there. I think it was a couple of years. It was a slow ratchet at $25 a month per customer.
Andrew: You got a whole lot of businesses going on, why didn’t you say, “You know what, let’s just stop putting money into this thing. It’s not in the thousands of dollars, not hundred or millions of dollars. Why we are letting it suck in more of our time, instead of building something else?”
Jay: That’s a good question, actually. I’m not totally sure what the right answer is. I haven’t thought of it before. But just off the cuff, I think it’s because we’re useful. We’re being helpful. There were a lot of people that are really happy that we existed. And so it was really reassuring, it’s really…We’re making lots of connections, lots of customers, like thousands of customers, people, coming to us and wanting us to help them and us solving their problems for them. And it just seemed like the kind of thing that, it would be unwise to stop that momentum. There was a clear signal that we were solving a problem that was valuable.
Andrew: Let me I ask you something. I started this interview by saying you’re a developer who doesn’t see himself as an entrepreneur. So far, everything you are doing sounds very entrepreneurial. You’ve got a product that customers want, you’ve checked out to see that they want it by looking on online forms. You’re adjusting the product as you need to, you’re working with a team of developers. Where does the lack of entrepreneurship or the comfort in business come in?
Jay: Well, it’s been developing. When this whole story began, I was very much just a developer. Even with CloudSponge, I think it probably took me a year to realize that this was a thing called B2B SaaS. It was a business-to-business software as a service product that we were selling. I didn’t think of it that way. I just thought of it as just a piece of software that is helping people solve problems and they’re paying us, paying us.
And so, for me, it’s been a process of learning that there is a community of B2B SaaS products out there. And there are writers and bloggers. And I’ve learned a lot about all the things that are peripheral to the software part, the marketing and sales and all the other departments that go into actually having a company. And none of those things were even really on the radar
Andrew: Which one thing that you missed out on because in the beginning, you didn’t think of yourself as an entrepreneur or didn’t have much business training?
Jay: Probably outbound sales.
Andrew: Okay.
Jay: I think outreach is something that any developers listening here can relate. They don’t like it. Most developers are people of that engineering mindset that don’t see themselves just calling people, which is what we did, right? That’s where we missed out.
Andrew: You mean, you just build a website because you’re more comfortable with codes, instead of saying, “How do I make some calls to people and make sales proactively?”
Jay: Correct. So we did a self-service model, where people, they discover us through organic channels and then they sign up and then they go through the on-boarding process. And they sort of figure everything out, email us if they have questions. But at no point in that are we developing a list of a million different customers that could use CloudSponge and starting to pound through them like 100,000 at a time.
Andrew: I see. What’s another thing that you missed on because of that?
Jay: Well, I guess it’s taken a long time to get oriented with marketing best practices. Benefits-driven messaging, for example, I think it’s pretty common for developers and on [green] entrepreneurs to talk about features instead of benefits. And if you look at enough of the CloudSponge home pages on Wayback Machine or whatever tool you’re using, you’ll see that progression.
You’ll see that progression, like benefits-driven messaging. Coming out, where it started off with just features, features, features and then, we throw in some benefits. And we just slowly got better in understanding how to talk about benefits. And that’s like Marketing 101. That stuff that we just, we figured it out the hard way.
Andrew: Here’s one of early landing pages. Headline: “Meet everyone your users know.” And then, underneath it, “Meeting your users’ friends takes five minutes in three easy steps.” Sign-up button and then you actually have a screenshot of HTML code and then an image of two hands shaking, your users’ contacts. Let’s fast-forward a little bit, let’s see how it changes. And then, there’s a big demo. “Your users have friends, we give you address books.” That’s what the next headline was, “Meeting your users’ friends takes five minutes in three easy steps.”
Let’s keep scrolling forward. Then it goes to, “Tap into the power of address books. Import contacts from Yahoo, Google, Gmail, etc.” I see, I see what you mean. Look at it today. Let’s see what CloudSponge.com has. “Sharing made easier. Business grows faster when it’s easy for your user to tell their friends about you.” I see. Now it’s, “Your business is going to go faster and here’s how we do it.” You have an image showing what people’s forms looks like now and why it stinks and what it will look like after they start working with CloudSponge and why it works.
I see. And then it’s why choose CloudSponge and a whole lot of really…Your testimonials are solid. They’re so good because it’s not just, “We love them,” but, “Here’s how we used them.” I know Mike Bracco from JibJab, here’s his quote, “Since implementing CloudSponge, more customers get through the process of sending an e-card.” So now we see that it could be used as sending an e-card. Here’s one from Survey Monkey. “We picked CloudSponge because of the features they offered, coupled with their robust SDK and support and have found service very reliable.” I don’t love that that one as much as this one from Kiva.
It’s the last one I’ll read. “Integrating CloudSponge was a snap. It makes that easy for our user to invite their friends and families to join Kiva and send them Kiva cards.” I love that because now I see what you guys do and how you benefit a company. Cool. All right. So that’s where you needed to learn a lot. What about in dealing with people? Management is a pain in the butt. You really have to spend a lot of time learning it. Were you good at that?
Jay: Oh, yeah. I’ve always been good at that. I mean, I’ve been with the agency, operating the agency, running the agency, however you want to look at it, for a long time, before this CloudSponge tour even began. So doing account management, client management, developer, managing developers and doing all the stuff that goes into being in charge of relatively large development projects for an agency. So that was one of my strengths and it still is.
Andrew: What’s something you can impart to me and other people who aren’t as good at management?
Jay: It’s a good question. I guess, you should be empathetic, listen to people, pay attention to them, make sure you surround yourself with people who are smarter than you are.
Andrew: Okay. Someone’s going to walk in your office and say, “We absolutely need to create a widget. I’m going to do it. Now, shut up and let’s try it.”
Jay: Yeah. That was probably not the highlight of my career. Making it take so long for them to persuade me to do it, but I’m glad that eventually, I let them do it.
Andrew: 2013, things are going well, but they are starting to flatten. Now, as I said before, you’re not happy with flat, you want to grow it. Flat meaning what? What was going on that caused the flatness in revenue?
Jay: Well, everybody who is just familiar with basic subscription economics knows that at some point, when your customer base is big enough, even if you’ve got a healthy churn rate, you’ve got a churn rate 2 or 3% per month, eventually, it’s going to balance out with your growth rate if you don’t put more people in the top of that funnel. And so we were basically lazy.
We were relying on our organic channels and not doing a lot of marketing activities, not doing a lot of blogging and content creation or paid advertising or really putting more gas into those marketing engines. And so, eventually, we got to the place, where the growth and the churn were basically the same. We were growing about as fast as we were churning customers. And so, we just started to flatten out in terms of the revenue just stopped ratcheting up. Because it has been such a consistent ratchet, was going up every month for three years, four years. And so then, when it started to flatten out, that started to…it didn’t feel good. That’s for sure.
Andrew: What was the alert that let you say, “All right. I have to go do something about that”? The thing about flattening out is that it just creeps up on you and the things are okay so there’s no pressure to do anything about it.
Jay: It didn’t really creep up on us. I mean, the first Monday of every month, I write a report to the staff and to the people that are involved in the project. And so, every month, like I’m looking at our KPIs and I’m looking at our metrics, I’m looking at our growth rate, I’m looking at highlights for our new customers that we brought on-board and those types of things. And so, for me, the first month that was flat was obvious that I should pay close attention and then, within a few weeks and seeing the same numbers again the following month, it was obvious that something needed to be done.
Andrew: Okay.
Jay: So it’s not something that really festered for too long. That’s for sure.
Andrew: Okay. We’ll get into what you did in a moment. But first, I’ve got to tell everyone about my sponsor, which is HostGator. They saw that I was using a Gator hat that I just bought on Amazon. And they said that’s really not our mascot, so they sent me this, their mascot, which I now have in my office and they sent me this cup and they sent me these sunglasses, which I haven’t opened, but I will open it right now on camera.
HostGator sunglasses, now I’m ready to do this spot like this… well, we have this sticker on here. Let’s get rid of that. There you go, now I’m ready to send a sponsorship message for them. All right. Here’s the deal with HostGator. One of their products is web hosting, managed hosting for WordPress. Why is that important? Because the problem with WordPress is every one of these little plug-ins could eventually cause a problem and a conflict with every other little plug-in that you install on your site. Sometimes you install a plug-in that you should never have installed in the first place.
And there are all kinds of other issues that happen with WordPress, like if you guys have been watching Mixergy for a long enough time, you know that I had…what was it, an invasion? Somebody actually went all over my site and put Viagra and Cialis ads everywhere. That kind of stuff happens. What happens if you have to manage your site yourself and you don’t know how to deal with these issues? A way to avoid it is to either hire a developer or spend some time really learning your stuff or you go to HostGator.com. And if you look at the top of their site…go to right now, HostGator.com. You’re going to see that they now have WordPress hosting, very top of their site.
And unlike other services, hosting companies that charge hundreds of dollars for this kind of thing, I know I’ve paid hundreds of dollars to have managed WordPress hosting. These guys charge less than…let me see. Where is that? Oh, every one of their plans is less than $100 and they have one that comes in at well under $15 a month for managed WordPress hosting. That’s incredible.
So I’ve got to take those glasses off, Jay. Let me ask you this. If we were listening to this interview and we wanted to create a simple WordPress site that somehow included sound…I keep saying sound. I don’t know why. SoundCloud, CloudSponge because it’s like going to the Cloud and sponging up my contacts. What’s one thing that we can quickly build with it? I know WordPress site… What have you seen that works well?
Jay: On a WordPress site?
Andrew: Yeah.
Jay: So there’s a developer out there who has developed a really cool way to get CloudSponge integrated and it’s for people who use the BuddyPress plug-in on WordPress and…
Andrew: That’s the social network feature that WordPress allows you to add to your site?
Jay: That’s right. So if you use BuddyPress, there’s the plug-in that this guy developed that’s for inviting people to your BuddyPress site and you can
with just a few clicks away and you can turn on Clouds to make that better.
Andrew: I see it now. When people are joining at your site, they’re encouraged and invite their friends and you’ve got this hyper-speed invitation process, courtesy of CloudSponge, and this guy already wrote a plug-in for it.
Jay: Yes. Tons of people use it all the time.
Andrew: What about this? A lot of us have forms that ask people to join our mailing list. What if afterward we said, “Now, invite your friends to join the mailing list.” I can’t think of the reason yet, but let’s suppose we come up with a reason, can we integrate CloudSponge into that form so that we collect email address…so that we make it easier for users to invite their friends to come to the site?
Jay: Yeah. If there’s a form field, in this case, for typing in friends of people that…addresses of your friends who you think would benefit from it, then you can just basically point the widget at that field and we’ll fill it out, we’ll let the person fill it out from their address book for you.
Andrew: All right. So there it is. Go to hostgator.com. Usually, I tell you about a discount that you get for being a Mixergy listener. These guys’ price is so freaking low that I don’t think they could offer any kind of discount.
So I’d love for you to tell him that you heard it on Mixergy, but frankly, you’re not going to get any discount for it. What you will get, though, is incredible service with tons of an email accounts, tons of storage. They actually say unlimited. I don’t know where unlimited actually ends anymore. Oh, there it is, it’s unmetered storage space. They pretty much don’t care how much you use. Go sign up. Show me your website. I’m looking forward to seeing what you guys are building with it. And I’m grateful to HostGator for sending me these sunglasses and for sponsoring Mixergy.
So what did you do, now that you find yourself with flattened sales? Let me stop playing with the sunglasses. Flattened sales is what I’m saying, let me show the world. It is a little darker. How did you turn it around?
Jay: How did we turn it around? I guess we did a few things. We doubled our price, was one of the things that we did that helped.
Andrew: For existing customers too?
Jay: No, never. Just for new customers. And as so many places will tell you, we didn’t see any change in the rest of our conversion…
Andrew: Really? From 25 to 50?
Jay: Yeah. No change at all.
Andrew: Okay.
Jay: All the conversion rates and all the inbound lead rates and everything was the same. We just basically started making twice as much and we wish we’d done it a long time before that.
Andrew: What about the turn? Did churn go up because now you’re charging more per month?
Jay: Well, the funny thing about churn is, you don’t know for a while, like…
Andrew: Yeah.
Jay: Our average customer lifetime, I think, is 27 months or so right now. That’s the last one I’ve looked at the beginning of September. And so you really don’t know, you change the price and you’re like, “Call me back in a year on a half and I’ll tell you if our churn rate’s any different.”
Andrew: You said 27 and so it could actually even be like 23 months, you know, as long as you’ve kept them for the time then you’ve broken even?
Jay: Right, yeah.
Andrew: But now, you’ve had that kind of time. Have you gotten to see if churn rate’s gone up?
Jay: No, it’s gone down. It’s better…we’re attracting a different class of customers. We’ve actually increased our price a couple of times since this point in the story.
Andrew: Okay.
Jay: But yeah, our churn rate’s excellent, it’s a pretty sticky product once it’s in there and people are getting value from it. They just forget about it, which is exactly what we want. It’s there, it’s working, it’s doing its job there for the referral program. The referral form is performing better. And, you know, they…
Andrew: They don’t have to keep fudging with it because you guys are doing it so they can ignore it and focus on the rest of their business?
Jay: Right. Yeah, yeah. Everybody who does churn, I always ask them, “Why’d you leave? What’s going on?” And not everybody responds. I’d say maybe one out of the five people actually replies to my email about that. And 100%, like almost 99.9% of people churn because they stopped, they went out of business. They stopped operating whatever project they were doing.
Andrew: I see.
Jay: The other small percentage, let’s say it’s 1% or so, like a very small number, are people that are doing seasonal business. They’ve got something where it’s like, “Oh, our business is only really relevant when we do this marathon every year,” or, “When we do this one thing every year so we don’t need it anymore.” And they leave. But, for the most part, our people are really happy and they stick around. I mean, they don’t churn.
Andrew: So did you do anything else to your marketing to get more people in the door?
Jay: We started re-targeting, which actually…we tried a bunch of little experiments, but because we’re a pretty small team, we didn’t have strong marketing people. A lot of them weren’t measured properly, that kind of rubbed me the wrong way and we didn’t have a proper attribution. It felt like throwing money at experiments and not knowing if they worked or not.
So we never did very much of it. But we did some Twitter advertising and some Facebook boosting and some LinkedIn ads, some AdWords on Google a couple of times and some re-targeting. And the re-targeting was clearly…we could tell, even with mediocre measurement tools, the re-targeting was really working well.
Andrew: What do you use for re-targeting?
Jay: AdRoll.
Andrew: AdRoll?
Jay: Yeah.
Andrew: What do you do to make it work well for you?
Jay: I think just doing it is really most of the problem, to be honest. There are no special secret sauce.
Andrew: Okay. Is there anyone that has been on your site that hasn’t hit the confirmation page after ordering, they get to see your ads on other sites?
Jay: That’s right, yeah. Once they come to our site through one of our other channels, then they start to see CloudSponge ads as they travel around the Internet, right, and it reminds them that we exist.
Andrew: Yeah. It just kind of feels like you’re advertising everywhere.
Jay: Yeah, yeah, that’s awesome.
Andrew: So that helped. All right. And that got you to the next level up and then you decided, you know what, we’re not going to wait for orders to come to us, we’re going to start reaching out to people, we’re going to start looking at enterprise sales. How did you go after enterprise customers?
Jay: So we’re still not doing a ton of outreach. We’re very careful about the outreach part of things. The enterprise sales, at this point, that we had done were also inbound leads, right. So those are different things. Yeah. So we have, again, a developer from Airbnb who has been told by his product manager that his problem needs to be solved and they go around searching for solutions and they come across CloudSponge. Then all of the sudden, we’re thrust into an enterprise negotiation because they signed up, right.
Andrew: What makes them enterprise and other people non-enterprise?
Jay: And I could be using that expression incorrectly here, but the way that I think about it is any time there are more than five or seven people involved in the sales conversation, I call it an enterprise sale.
Andrew: I see.
Jay: Right?
Andrew: That makes sense.
Jay: I mean, maybe it’s a company of seven people and all seven of them are in there, and that’s where I’m probably misdefining it. But, in most cases, the bigger companies…you’ve got legal and security and accounting and some product management and some developers. You’ve got a whole bunch of people who all have to check their boxes on your product.
Andrew: And you all end up, Jay, getting the exact same product as the pro version, right? And now you have the standard pro version, which is now $92 a month.
Jay: Right, yeah. So they do, but they’ll get the additional consulting hours and services from me and my team to help them with other things that are outside the product, right.
Andrew: That’s fantastic. You get more consultation, which is not that bad for you. You get a high-profile customer, you get much more revenue.
Jay: Yeah, yeah. It’s more work. It takes longer. It is more boxes to check and a lot of these guys have audited us and made…because for these companies, their users’ contact data is extremely sensitive data and they don’t want to be on the wrong end of a leak of that data. And so part of that process for us, in almost every case, has been some kind of audit from the security staff of these companies.
Andrew: Really?
Jay: Yeah.
Andrew: Is Airbnb one of your customers?
Jay: Yeah.
Andrew: So they sent in somebody to do a security audit to make sure you guys weren’t messing around?
Jay: Yeah.
Andrew: Wow. That makes me so much more comfortable about using the test drive button on your site.
Jay: Yeah, yeah. That’s the friction point in our sales services as well, is people that are, “Whoa. I don’t want to put up my own address book here.” So we’re working hard now. We’re working on a new site that hopefully addresses some of those concerns and help those people get to know us a little bit better and trust us.
Andrew: Guess the problem here is LinkedIn. LinkedIn did stuff with people’s contacts and so they’re all…we’re all worried that other companies do that too.
Jay: Do they?
Andrew: Yeah, they started…from what I remember, I don’t remember the details specifically, but what I remember, they started inviting people’s friends, even when the people didn’t understand that the friends were going to be invited.
Jay: You know what? I know that had happened. I didn’t have LinkedIn attached to it, but I know the story you’re talking about. But, you know what, LinkedIn is always on that edge. Right now, I love and I hate the fact that I get this email from LinkedIn, telling me that six people are looking at my profile. I find that fascinating that they’ve got that kind of thinking going on in the company because they’re such a big company.
Andrew: Yeah, I do too. They think like hustlers even at this level.
Jay: Can you imagine if Facebook did that?
Andrew: Yeah.
Jay: Right.
Andrew: I know. I feel like I have the LinkedIn pro-account because we need it to research guests.
Jay: Yeah.
Andrew: And it’s a kind of mind blowing how much information I get on what people are doing on my profile. Where do I even see that? I don’t know. But I like seeing who clicked to see my profile. It’s often people who we’re about to interview. See who’s viewed my profile, let’s go look. Who’s viewed Andrew’s profile?
Jay: Am I in there? I might be.
Andrew: Might be.
Jay: I might have checked in the last week or so. I forget.
Andrew: I see a guy named Pradip Shah. I see David Albin, he checked me out. Clark Nolan, I know him because he’s doing some work with us. It’s kind of weird, though. Owen McGab I know, he checked me out. He’s someone who is on Mixergy a while back. Matt Holmes…I’m looking for more recognizable names to mention here.
Jay: Owen McGab? Isn’t that the Intercom guy?
Andrew: No. [Sachin] Gupta, who sells our ads for us, he checked me out. No one especially standing out. Cool. So what do you do then to bring in enterprise? Did they just happen to come in?
Jay: Yes, so they came through organically, the ones that I’m talking about now. And we just worked really hard to close them basically because we really wanted them as customers. And it wasn’t about making more money from them, really, it was more about the social proof of being able to say that they’re customers.
Andrew: That I would stop and say, “Oh, wait, is Airbnb a client of yours?” That’s what you’re going for?
Jay: Yeah, yeah. Well, that and again, a lot of people go to their site to figure out, to reverse engineer how they solved something. “How did Airbnb do it? Let’s just go look at their thing.” Use that as a playbook, right? And so, again, you get a lot of people who are like, “Yeah, I saw you guys on Airbnb,” or, “I saw you guys on Yelp,” or, “I saw you guys wherever I saw you and I want that too, so let’s just use these guys and look further,” right?
Andrew: By the way, I do see, three weeks ago you did check out my LinkedIn Profile. They don’t give that to non-members, do they? If you’re not a pro, do they do that?
Jay: They give you something, it’s like clickbait, right? They just give you something with a whole bunch of silhouettes.
Andrew: Right, right.
Jay: “If you want to know who these people are, then pay us.”
Andrew: Got it, yeah. Someone in enterprise sales just looked at your profile, someone in IBM just looked at your profile.
Jay: Exactly.
Andrew: You told Jeremy, the pre-interviewer and producer here at Mixergy, that one of your biggest challenges was getting out of your comfort zone and doing proper sales and marketing. You said you forced yourself to learn sales. How did you learn sales?
Jay: I’m still learning it now. I mean, I don’t think I’ll ever stop. But right now, I’m working on…one of my personal challenges and projects is really to get better at getting out of my comfort zone and doing those outbound sales. One of the things that I’m trying to avoid is doing what everybody else is doing. I see these lead warming campaigns. I’m at this point, because I’m the CEO of CloudSponge and my email has been on the internet for so long, I’m the target for a lot of sales campaigns and they’re just awful, most of the time.
There are just these people, they send you an email that claims they’ve already had a conversation with you and pretending like you haven’t responded to them or they’ll send you an email, asking you, “Hey, could you please introduce me to the person at your company that handles advertising,” or whatever it is that they’re trying to sell. And then they’ll do a five or 12-email campaign that tries to warm you up to eventually wear you down in a way to eventually respond to them, so they can just give you the
Andrew: So that, you don’t like. What do you like?
Jay: Yeah, I hate that.
Andrew: What do you like?
Jay: I like a personal touch. I think it’s better to scale slowly and not necessarily try to reach out to hit those numbers of like 100 people a day or whatever an SDR nowadays is tasked with.
Andrew: What’s SDR?
Jay: A sales development rep.
Andrew: Okay. So your sales development rep, 100 people a day and that person just contacts them manually?
Jay: No, I’m saying most companies have SDRs that they have this 100 person a day kind of number they’re supposed to hit to try to warm up leads that eventually, once they’re warm, they get handed over to an account exec or a closer.
Andrew: I see.
Jay: And that’s what I’m avoiding. That’s what I don’t want to do.
Andrew: So what do you want to do?
Jay: Just take the time to actually develop a relationship with the people that I think…
Andrew: How do you get them into the door to develop that relationship?
Jay: Ask me again in
Andrew: That you don’t know. So far, it’s still all inbound?
Jay: Yeah. So we’re working on some things that are working. One of the things that we did recently that worked was I watched…do you know who Brian Balfour is?
Andrew: Well, let me go and check my…
Jay: I think he’s the VP of Growth at HubSpot.
Andrew: Okay.
Jay: And he puts out a lot of a great content. He got this blog called Coelevate. He puts out a lot of really, really good growth content and he’s kind of like the thought leader in my mind on the best way to grow. And I attended one of his webinars and I just decided that I wanted him to be a customer. And I’m still in the process of winning him. He hasn’t become a customer yet. HubSpot is not a CloudSponge customer as of today. But it’s one of my challenges and so the idea there is take the time, go read some content, comment on the blog, do some tweets, get to know the guy a little bit, put a little bit of work into the relationship before you start trying to sell them something.
Andrew: One customer at a time?
Jay: Maybe I’ll be proven wrong that it just doesn’t work and it doesn’t scale, but at least it feels good and I still have my pride. It just feels so shameless to email thousands of people a month and just hope that some people respond.
Andrew: I got something that is absolutely horrible that just…I saw you on LinkedIn and because we’re connected, I’m sending this to you and I have to go and unconnect them. Just because I know they’re not even reading it. There’s one company…their emails are so bad I actually had to reach out to the founder and say, “Can you please talk to your sales people? Look at these three emails that all look personalized, but they’re exactly the same.”
Jay: Yeah.
Andrew: What are yourselves rev…? What’s your revenue now, monthly?
Jay: We’re about half a million annual run rate.
Andrew: Half a million a year?
Jay: Yeah.
Andrew: Okay.
Jay: Around there.
Andrew: Actually I had…strange, I saw here, “We’re on target now to do a million in recurring revenue,” you told Jeremy. Were you guys getting close to that and you had to pull back?
Jay: Well, so what I told Jeremy, maybe he just mistyped it, but what I told him is that’s the current target, that’s the goal, that’s the thing that we have
we have the whole company focused on, where everybody, that’s the North Star is to try to get to $1 million run rate. So we’re halfway there.
Andrew: Gotcha.
Jay: A little bit more than half way there.
Andrew: And now you’re a little bit more than half way. All right cool. Let me show you something before I go. This comes from Emma, who runs a site called Bespoke Backdrops. I just pulled one of the staples out of this thing. Let me pull it out fully. Now, we’ll get to it later. You guys might have noticed that over the years, and you especially, Jay, have noticed over the years, I’ve had nothing behind me. Whatever happens to be there, happens to be there and except for back, when I really started in the very beginning out of my home office back then, where I had…and now, I’m bleeding, there was a staple in this box and I couldn’t let it go. I had to play with it.
Jay: I hope Mixergy has insurance.
Andrew: Right. The first interviews that I did were from my home office back when I lived in Santa Monica and I had paper books. Today, I’m a Kindle person, but my bookcase was just jammed with books. And ever since then, it’s just been whatever happened to be on the wall, which is nothing. So then Emma sent me this. Let’s have a look. Let’s see what people think of this. I’m going to try not to get any of my blood on it. We have to do it within the interview because I’m not going to do anything off the interview. This is my chair. This is where I would continue to sit. Here is her backdrop. Ready? Hold it up.
Jay: All right. Yeah, books.
Andrew: These are some of the old books. I think…
Jay: Are you supposed to be able to read them?
Andrew: No, you’re not.
Jay: Okay.
Andrew: We’re going all the way back. I think I might have to move
let me put this away for a sec. I think I
I might have to actually move my desk and the lighting back a little bit so that there’s no wall sticking out from behind me. I’m thinking I do one of those and maybe do two or three other colors and solid colors, backdrops, and I’ll have some variation. Now, it’s within the interview, people could give me feedback and I could actually hit rewind on this after we’re done and see what it looks like. What do you think of it?
Jay: It was all right.
Andrew: All right?
Jay: Once you put it up there, you’re going to feel compelled to switch it up occasionally, I bet.
Andrew: I bet. I know and I don’t like design. I don’t like messing with design at all. All right. Well, by the way, I said what do you think of it? How are you not going to say, “You know what Andrew, it’s great?” You’re going to really say, “This is really crappy. Emma did a bad job. You don’t have any taste”? Of course not. So doesn’t that happen too when you’re talking to your customers and saying, “Hey, this is what we’ve got, this new widget what do you think? We’ve increased prices or we’re thinking of doing this change.” Don’t people want to make you happy as long as you’re on the phone with them?
Jay: No, not really. No. First of all, I didn’t say it was great.
Andrew: Would did you say?
Jay: I said it was okay.
Andrew: Okay.
Jay: But no, I found that our guests are pretty honest, especially the ones…once you get to the right price point, I feel like they’re honest because they’re going to have an honest dialogue about, “Is this worth the money that you’re charging me for and does it solve the problem that I need to have solved?” And so if either of the answers are negative there, then they’re going to tell you, I find, anyway.
Andrew: You’re saying because it’s at a price that matters to them, they’re not going to just smile and say, “Okay. Here’s my money.”
Jay: Right. And if it doesn’t quite solve the problem in a way they want it to be solved, they’re going to let me know, usually. And that’s why we’ve been able to iterate towards something that’s a very good fit for most people who are solving a related problem to address books.
Andrew: All right. The website is CloudSponge.com, people can check it out there. My two sponsors for today, of course, are HostGator and TopTal. You can go to HostGator.com or TopTal.com/mixergy. If you guys like this interview, I’d love for you to rate it in the iTunes store. Apparently, iTunes is the only store that matters for ratings. Let me know if you guys think otherwise. And if you haven’t subscribed yet to this podcast, you’d better subscribe because we’ve got some really good interviews coming up and I’m going to continue this journey to 10,000 interviews.
Actually, is that the number I should be aiming for? No, I don’t want it
I don’t care about a number. I want to continue to do interviews for an audience of people like you, who are listening and then you end up with this company that’s so good that I want to have you on here to do an interview too. I want it to be like FUBU, the old clothing company For Us, By Us. I want to be like that. For real entrepreneurs, by real entrepreneurs. And if you sign up to the podcast, you’ll get it for free, every single one of the interviews, on my journey and your journey. I’m looking forward to having you persons listening to me on Mixergy too. Jay, thanks for being here and thanks for listening over the years.
Jay: Thanks for having me.
Andrew: You bet. Thank you all for being a part of Mixergy. Bye, everyone.
Hey, listen up, guys. I know I said goodbye, but we’ve been talking afterward and Jay started telling me some of the numbers that he pulled from back when he was sponsoring Mixergy and I thought I’m really proud of this, I want the audience to hear. This is back like five years ago. What happened?
Jay: Right. So back then, I don’t know if you still do this exactly this way anymore. Back then, you sold your sponsorships in half months. So 24 blocks per month and I think at some point, you missed an episode for some reason. It was December or something like that and so you made that up. And you made it up into a half month at the time. And we purchased two half months from you. It was, I believe it was the first half of December and the last half of January. It might have been the first half of January. Each of those half months cost $650 at the time.
Andrew: Yeah, it was really inexpensive back then.
Jay: And so when you said earlier oh, that, I was one of your first sponsors, now it kind of makes sense.
Andrew: Yeah.
Jay: I’d actually…of course, I don’t realize I was one of the first but…
Andrew: Yeah.
Jay: So I pulled some numbers just for your benefit before the interview and we actually, from people who used the Mixergy promo code, we generated $11,000 in revenue. So that works out to about 8x ROI. Of course, that’s revenue that accumulated over several years. Three of those people are still customers today, so that number is still increasing every month, but that’s a pretty interesting number. Anyway, I thought you’d be proud of it.
Andrew: Oh, that’s fantastic. I love hearing that.
Jay: Yeah, total of 32 paying customers came out of the Mixergy promo code sponsorship.
Andrew: And I do remember people being really happy that they tried you out, happy that they’ve been introduced to you. It’s something I always under-valued… In the tech-world, in the start-up world, people really do appreciate being introduced to new software, to new apps, to something new that they hadn’t experienced before that’s online. And it’s almost like this little gift that you give someone when you introduce them to something that they’ve never seen before but they might be interested in using.
That’s why I really like doing ads for companies like yours, for software companies, for things that are discoveries because the audience then appreciates me for introducing it to them. Anyway, I had no idea. I’m really glad that you told me at the end after we stopped recording and I hope the audience appreciates hearing it because I’m really proud of it.
Jay: Yeah. If you want one more stat that I love, that I think you’re going to like too is that anybody who gets
who’s familiar with conversion rates is going to be surprised by this number. One hundred and sixteen people signed up with the Mixergy promo code and 32 of those actually became paying customers.
Andrew: That’s why
I wonder why the others didn’t follow, through. We’re talking about filling out a form that they didn’t need to.
Jay: I know, but 32 that’s…whatever you do the quick math, it’s like a 32% conversion rate. That’s a huge conversion rate.
Andrew: I guess in my mind, I’m thinking why isn’t it 100%?
Jay: If I compare that to all the different channels, all the different inbound channels, then look at all the conversion rates, it’s like 32 is off the chart and it’s great. It’s really good.
Andrew: Well, thanks for being one of my first sponsors and thanks for being a long-time listener of Mixergy. I appreciate it.
Jay: All right.
Andrew: Cool. Thank you all for being a part of it. Bye again.
