Stormpulse: What Happens After A Site Goes From Free to Fee?

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All right. Let’s get started. Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart.

How does a new weather site get 6.5 million unique users a year, including the White House Situation Room? And what happens when the site decides to go from free to fee? Matthew Wensing is the co-founder of Stormpulse, which gives its users insight into significant weather events. I invited him to hear how he grew his audience and what happens when he told them they’re all going to have to pay up? Matthew, welcome. How are we doing on the connection?

Matthew: [??]

Andrew: Ah, there we go. I thought I lost you there for a moment.

Matthew: A little. There we go.

Andrew: All right. If we have a bad connection, Matthew, I’m going to ask you to go and plug into your router, if we can. But it looks like we’re OK for now.

Matthew: Sounds good.

Andrew: So, let me ask you this. Where were you when you found out that the White House was using your site, Stormpulse?

Matthew: [laughs] I was in my kitchen pouring myself a bowl of “founder’s” breakfast cereal. I got a voicemail translation on my phone that said… Virginia, I think, was the calling city. I read my voicemail and it said, “Hi, this is-I forget her name-Rhonda from the White House Situation Room. You know how Google messes up the translation sometime, so I laid it down and like, there’s no way. Google messed it up again. Google Voice is great and all, but my daughter was actually standing in the dining room. I told her like, I think the president might use Stormpulse. She’s like, really. I never heard that before.

Sure enough, while I was eating, I wasn’t going to call her right back then with a mouthful of Cheerios. So, I just decided I was going to call her back in a few minutes, and then she called me while I was eating. So, I run into my home office, and sure enough it was really her. She said, yeah, we had a few questions about our subscription. As you can imagine, I was on the spot them.

Andrew: They were paying?

Matthew: Yes. Yeah. They were a paying consumer level customer, and then last year we announced our business subscriptions, and they wanted to know why the price had gone up. And so, I had to put on my founder’s hat and marketer’s hat and figure out why did the price go up. It went up for good reasons, so they appreciated that, and they decided to renew, so.

Andrew: I’m going to come back to why the price went up in a moment because I think it’s important for us to cover your pricing decisions because you just made a big one right now by saying hey, guys, this is going to be a paid site.

Matthew: Yeah.

Andrew: First, for anyone who doesn’t know it and frankly even for me I’ve been on your site, and I still don’t fully understand what it is about Stormpulse? Can you explain, in fact, to me like a ten year old, what is it about Stormpulse that the White House can’t get anywhere else that they have to sign up and pay you?

Matthew: That’s a great question. So, one is …

Andrew: Like a ten year old, basically.

Matthew: Yeah. Yeah. No, weather is really complicated, weather information. But weather outr outside your house is this beautiful, obvious thing. You open the door, and it’s stormy, or it’s not. You understand it very instinctually. But most weather sites are nothing like that, they’re just really complicated, and lots of numbers and jargon, and things that most people don’t understand, so I think our site is the first one that gives people a window into the weather, as it’s going on in a real-time way, and that clarity is something that people have shown they’re willing to come back for and pay for.

Andrew: What do you mean? I actually don’t think that the weather is that tough, I look at my iPhone, it tells me the temperature outside is 70°, and it tells me that it’s windy, in fact it even gives me a nice image of the wind, it tells me hour by hour what the weather is likely to be. But you guys are doing more than that. What else are you doing that I can’t get on my iPhone, or can’t get on weather.com?

Matthew: Actually, it’s hard for our customers even to articulate, because it’s just, I hate to use “user experience” too much, but weather can be a very personal thing, too. It might not be a big deal if you’re in California, and you know, “is it going to be Birkenstocks A or Birkenstocks B,” or what are my decisions here, but if you have a major crisis going on, like a major hurricane or hailstorm coming your way, the experience that you get from using the site is really, really important, and it needs to give you just exactly the right information really fast, and right now, and then get out of your way.

And that’s something that most weather sites don’t do, and by focusing on the severe elements of weather-we didn’t start with sunny weather, we didn’t even have temperatures when we first launched the site, it wasn’t even about daily weather, it was literally just about “Is your house going to be blown down?” kind of decision-making- and those kinds of use cases beg for a different experience than the kind where you’re just checking the temperature, and the rain, and things like that. So we’ve really optimized around people who are feeling very stressed out, or are under a lot of pressure and have to make really big decisions, and we’ve geared the whole way the site presents itself to those people. And they recognize that, by coming back over and over again, even though they might not be able to explain exactly what the magic is.

Andrew: And we’re going to talk about specific niche that helped you grow to the size that you are, and why it might even be okay, maybe even preferable, that I don’t fully get what the site does, and what’s so magical about the site, and we’ll talk about that, I see it here in my notes with Jeremy. Jeremy Weiss [SP] our producer, of course, spent some time with you going over the story, to make sure that we fully understood how you built up the business, but you told him that you got actual visual confirmation that the White House is using your software, right? How did you see it? And then we’ll go into your story and how you built up in a moment, but how do you know?

Matthew: Well we know, the phone call was of course surreal, and I talked to her, and I finished the phone call, and I explained to her the new pricing model, and she was cool with that. And then I went back to breakfast, and my wife was sitting there telling me, “You should’ve gotten a picture, or something, the marketing value”, because I told her what the renewal price was, and she’s like, “Well that’s great and all, but the shot of them using it, the action shot, would’ve been gold”. So I’m kicking myself, going, “I’ve got to call her back and ask for that, it’s crazy, but I’ve got to ask her”. So I did call her back, built up the courage and I dialed the number, and I was expecting it to say, “Thank you for calling the White House, 1600 Pennsylvania Ave., for gift shop press one, for directions press two…”

I called this number, and the guy picks up the phone, and is like, “Situation Room, this is Dave”. And I go, “Did I just call the red phone”? I just called the basement, so, direct line into the basement of the White House, which is surreal, of course. So I told him, “First thing, it’s not urgent, so please don’t send any black helicopters, I don’t want to get in trouble for calling this number, but I would love to talk to Rhonda again, I have a question”. He had her call me back later in the day, but in the meantime, I went to the Whitehouse.gov website, I did a Google search for “situation room”, and sure enough, there’s a public domain tour of the basement of the White House, and you can download the QuickTime video, and in the background in multiple places, you can actually see our product running on some of their big screens that they have in the basement, and you can imagine I was pretty excited to see that. So, freeze frame, screen grab, take the picture, and it was on the product page within a few minutes, I think.

Andrew: I tell you… think like an entrepreneur, always hustling to make sure that you use every opportunity to increase sales. That’s the kind of thing I want to get out of this interview. My audience is really excited to hear that you’ve done well, but frankly, you know my audience, you’re probably in my audience, they love you, they’re rooting for you, but they’re rooting for themselves way more. So let’s go through your story with that in mind, how can we help them learn from your experience getting clients like the White House, getting clients like some of the other big names that we’re going to find out about like the U.S. military, Homeland Security. How did they get and how did they get big numbers of overall users and then whether that’s enough or whether they need to charge I want to learn along the way, too.

So, let’s go back to before you launched. What were you doing just before you started Stormpulse?

Matthew: I was working as a software developer in Chicago, so there was this really neat company called McMaster Carr Supply Company which most people will never have heard of, but it’s got to be one of the most profitable private companies in the world. It’s there in Chicago and I went there after graduating from the University of Chicago.

I’m a Maroon, so I graduated from there in 03 and was working there for a couple years and it was there that I met my co-founder and that’s ultimately-, we had breakfast one morning and I was eating my breakfast burrito and he asked me like, “So what are you into. Matt?” typical managerial chit-chat wants to get to know me. I said, “Well, I’m actually really into the weather.” and he’s like “Okay, well most 23 year olds in Chicago aren’t going to say they’re into the weather so what does that mean?” and so that was actually the year when a bunch of hurricanes hit Florida, so it kind of opened his eyes and lo and behold, we started a business together.

That’s what was keeping me busy before I ever launched the site publicly.

Andrew: What were you doing for McMaster Carr?

Matthew: I was actually working in a couple departments. The first one I started out-, I replied to a monster.com job listing for web designers. I graduated from this amazing institution and was still on monster.com looking for a job and I said ‘Well I know how to make websites.’ I guess the career placement services didn’t work out too well for me. So I applied for this web designer position and they had me in there basically taking data from their catalog and entering it into an Excel spreadsheet.

Andrew: You mean manual data entry was what you were doing.

Matthew: Manual data entry was my job. Making, I’m comfortable saying $40,000 a year after graduating from this amazing school and thinking that I was doing web design and I was expecting CSS and graphics and all these things. No, that wasn’t it.

That was my first job and then I couldn’t handle the monotonous, awful nature of that so I started writing programs that would automatically scrape that same catalogue information and put it into the database automatically. So, my managers noticed I went from, like, adding like one product per whatever to all of a sudden in 15 minutes I’d have 4,000 products added to their database.

That raised enough red flags and trouble there that I got moved over to their systems department. That’s where I met my co-founder. We were doing software developments.

Andrew: You’re kidding about, by the way, the red flags and getting in trouble, right?

Matthew: No, actually, I’m not. [laughs] So, it turned out that as a merchandising just grunt, I probably saved [sounds like] their internal production server, just ASP code, anything I wanted to, locked that down, so I started writing software without the company’s permission that would start to automate our jobs basically because I just couldn’t handle it any more.

Andrew: I see, so you weren’t supposed to be using-,

Matthew: About the time-,

Andrew: Sorry, go on.

Matthew: Yeah. Right, you know, about the time I started saving.. new code just started appearing on one of their servers, that’s when they said, you know, enough is enough, you need to be a developer, so…

Andrew: You know what? I’ve got to tell you something. That is a characteristic that I’ve noticed a lot in my audience, and sometimes it’s coming up with code like that that scrapes the content that they need and automates the work that they need to do. Sometimes, it’s-, well I had a past guest on who was also a fan who said “You know, Andrew, I couldn’t tell you in the interview, but while I was finishing out the last year at my job and building this business on the side, I couldn’t really do both at the same time, and so, well, I out-sourced it.” He said he found someone on line who could do his job for him remotely, and he outsourced that stuff to them…

Matthew: Brilliant.

Andrew: â?¦ and he basically was paying peanuts and that’s how he freed himself to get this kind of work. He couldn’t say it publicly because if you got in trouble for what you did, can you imagine what the world of trouble he might have got into?

Matthew: Oh, man, yeah. But those are the things that keep you alive. You always want to do the right thing. I’m not into breaking the rules that hurt people…

Andrew: This isn’t about right or wrong this is about….

Matthew: Yeah, it’s not about right or wrong, it’s just about finding the hack, right?

Andrew: Yeah, it’s a certain mindset, and if you tell this to people who aren’t in our world, the people who aren’t Mixergy listeners, and I have. The whole idea is too shocking for them.

Matthew: Right.

Andrew: If you even say to them, ‘Look, you can go and get someone to re-design your PowerPoint slides.’ ‘No, they hired me to do this, that would be wrong for me to even have someone redesign my PowerPoint slides for a presentation.’

Matthew: Yeah.

Andrew: All right, if it’s wrong, then it’s wrong, that’s what it is for you.

Matthew: Yeah, so that was the first breakthrough. Then I was getting paid to be a software developer and that’s actually how I started to learn how to write software, so. . .

Andrew: Well it was a nice move for you.

Matthew: Yeah, yeah.

Andrew: All right, so here you are, you eventually meet the guy who’s going to be your co-founder you discover that you’ve got way more powers that the average person would effect or have…

Matthew: Yeah.

Andrew: … and you still don’t have the idea for what would become Stormpulse. Where’d the idea come from?

Matthew: The idea, I was itching to start on something because I guess I had too much free time, so I would go home and say, ‘What am I going to create?’ I just had this itch. And it that fall, this is 2004, so we’re going on almost eight years ago. No overnight success here, but eight years ago, four hurricanes hit Florida. And my family was in Florida at the time, which is where I was born and raised, and I was in Chicago. So I went on the internet looking for…

This was late 2004 so Google Maps had just come out, but not Google Maps API or anything around this time. So I went on the internet looking for some kind of amazing interactive weather tracking service, which seemed reasonable three years after the Internet had changed everything and the dot-com boom and everything, but I didn’t find anything. Everything was just horrible TV content slapped on the internet, like static graphic.

And then, the classic picture of Jim Cantore from the Weather Channel standing there on the beach getting blown away by these fans or winds or whatever it is going on there. I’m going, ‘Wait a minute. My family is within a hundred or something miles of this huge buzz saw of death, this massive hurricane. The best data I can get is some person standing in front of a camera on beach? This is just wrong.’ So, that was frustrating and so that led me on this quest to find all the data that I could get my hands on.

Andrew: And what were you seeing when you did that search? What did you see that was already out there in the world?

Matthew: Well, I saw a lot of ugly formatted government data web pages. But what blew my mind equally was that because of the wonders of public domain and our tax dollars at work, all the data was just there for the taking. It was like this huge trough. Just like that catalogue at work, there was no shortage of data. It was just: who’s going to take the time to collect and [??] all this stuff and make sense of it.

Andrew: And that was going to be you?

Matthew: That was going to be me.

Andrew: You were going to take data that already existed. You didn’t have to go and create it. You didn’t have to hire meteorologists. Just take government data, organize it in a way that made sense, and present it in a way that was easy to use.

Matthew: Yeah, and instant access. Your viewers might not know too much about all the Weather Channel’s tricks, but there’s a reason that they put the latest hurricane update after a series of commercials. This is a business for them, so the ability for me to upend that whole way that they were taking advantage of me and a lot of other citizens. I’m not trying to make them sound evil. They had to do what made their business work, but to be able to go from that world to, “I can just get a straight line into the data and not have to wait for any commercials. ” that was a huge power trip.

Andrew: And I couldn’t go to weather.com and get that back then, or weather underground.

Matthew: Back then you could not get the same kind of all-in-one visuals, no. You could go to ten different pages and try to make sense of a bunch of different ugly charts and graphics, and then, from there, break out a calculator and try to figure out what is the likelihood that this is going to hit my house. But programming can solve all of that. They just weren’t taking the time to do that.

Andrew: I see. In the intro I said that you were a new site, and you’re not that new. You aren’t a start-up anymore. You’ve been around for a while.

Matthew: Yeah.

Andrew: But I still say that compared to your competitors, you are newer.

Matthew: Yeah.

Andrew: You’re clearly way underfunded compared to those guys. And I’ve felt like weather had already been conquered. I remember back in the early days of the internet when I had a site called webowner.com, where I was basically telling my audience of affiliates, people who were just my company’s affiliates, what I was seeing online. One thing I saw was that Aida [SP] was doing really well back then. And I remember looking and seeing that in the list of the top hundred, and certainly the top 500 sites, the weather sites were up there. They were dominant sites. They were some of the top sites and they were in control. And here you come to this market, with the Weather Channel even Weather Underground, and you’re competing with them.

Matthew: Yeah. You’d like me to explain that right?

Andrew: Well, actually, at this point, tell me why you thought that you could compete with them. What was the business model that you thought you would have?

Matthew: Even though we weren’t venture backed, and this was a long time ago, we didn’t have a business model at first. Our idea was, I was a kid who grew up with hurricane tracking maps with, literally, a pencil and paper, and my dad and I watching the Weather Channel and writing this stuff down manually. And up until 200-, even till today, they will hand out paper maps at the grocery store in everywhere from Texas to Maine, so that you can plot the position of these storms.

So, the model that I was trying to actually disrupt, wasn’t so much the business model, it was the way of collecting and capturing the data, and then storing it from a personal level, where: OK now I’m going to put this on my wall. Now I’m going to bookmark this site. That whole old world way of doing it had to die and be replaced with: get me the data. Get me a really gripping presentation of it and then get it out of the way. That was still the model I was trying to disrupt, that way of doing things that I was so used to, that was really inefficient.

Andrew: Where did you think you were going to get users?

Matthew: We thought, initially, we were going to get users by paying some kind of… We actually paid $50.00 per blog post, so I would write blog posts as early as, whatever it was, 2007-6-5. Whenever the site came out… supposed to have some guy, in who knows where, on the internet.

Andrew: Sorry the connection again went bad.

Matthew: OK.

Andrew: I should’ve had you move over, but we’re here, I mean closer to the other router, but we’re here, so we’ll just deal with the connection as it is.

Matthew: Sure.

Andrew: Tell me again, you were going to buy blog posts, and you started saying, ‘I was writing blog posts…’ and then..

Matthew: Yeah, I was writing blog posts. Then, for $50 per blog post, some guy would go around and, basically, ethically spam the internet with links to our blog and conceivably our site. I didn’t know any other way of getting traffic.

Andrew: So you were writing the blog posts?

Matthew: Yeah.

Andrew: And you were paying people to put them up on their sites?

Matthew: Yeah, then some guy, for $50, would go around to every Technorati or link dig site, or whatever, and post it at 150 different web sites and you just hope that you start to get some organic traffic.

Andrew: You can post blog posts on other people’s sites or in the comments?

Matthew: I guess, it might have been in the comments. But this is more like dig and all of dig’s hundred clones. He would go and post it on all of those.

Andrew: Oh, I see. OK.

Matthew: Yeah.

Andrew: Did you even know that this was going to work? What were you trying before? Did you have a side affiliate business that you were screwing around with? Did you have a friend who told you about this?

Matthew: Oh, so this didn’t work, right? This was just our really lame attempt at internet marketing.

Andrew: Oh, I see. You just had this idea and it didn’t work.

Matthew: Yeah, it didn’t work.

Andrew: Why not? It seems like it would work perfectly for you. You can get the keywords that you need and you have a business that people are, clearly, searching for online.

Matthew: Yeah. Well, once we had those people coming, the traffic was so tiny. We’re talking about hundreds of visitors, maybe thousands on a good day, and we weren’t charging anything for the site. We didn’t even have advertising actually, for the first two years. It was just a pure product play and we were just trying to see what stuck with people.

Andrew: What other theories did you have about where you’re traffic was going to come from? Since we’re going to spend a lot of time here talking about where you’re actual traffic came from and your revenue, tell me more about what you thought was going to happen for traffic.

Matthew: I think the other thing we thought was going to happen is just a grassroots effort to get the word out to different kinds of demographics. I figured, “OK. It’s a weather site. The people that are important when it comes to weather sites, there’s always somebody in everybody’s family who is like the weather guy.” So my thought was, “If we can get the weather guys to talk about us, then it’ll spread.” You ask your uncle, “What’s the cool weather site today?” and he’ll tell you, and then it goes. So we started reaching out to actual scientists, like people at NASA and there’s a lot of weather junkies out there, and posting it on their message boards and things.

Andrew: So one at a time, you were going to reach out to them?

Matthew: Yes, this was our attempt at marketing. It was maybe 12 at a time, but that was it. We were just emailing people.

Andrew: Looking back, would you consider it naïve?

Matthew: Oh, yeah. Supremely naïve.

Andrew: Don’t get me wrong. I don’t say that as an insult. Looking back at some of the things that I did or thought would work out, I was naïve. I was stupid.

Matthew: Yeah.

Andrew: OK. So that’s where you thought traffic was going to come from.

Matthew: Right.

Andrew: We’ll get to where traffic actually did come from. Where did you think your revenue was going to come from?

Matthew: Definitely advertising.

Andrew: Even though for the first two years you had no ads, ads were what you were banking on?

Matthew: Yeah, ultimately that’s what we’re banking on. We ended up putting AdSense on it in the second year we had it up, we put a little bit of AdSense on it. We made like $143 because we only had it up there for a few days. We were just going to take this thing really slow and try things out. We weren’t trying to monetize very aggressively. We thought AdSense was going to be, kind of, this silver bullet, especially in 2007, or 2008, when we were thinking about this stuff. Putting AdSense on it was the way to monetize anything.

Andrew: The first version, what did it look like?

Matthew: The first version was very, it was a shot gun approach, so we knew we needed to have a map. So the map was a must-have, but where do you go from there? So I actually scoured Flickr for photos of weather and put that on the site, a little social media. I’m a big fan of Edward Tufte [SP] who does a lot of information design and a lot of design principles. So I put a bunch of charts and graphs on there. And I really loaded it up with a lot of different elements to see what would stick, what would excite people. And so, it was a very unfocused, I would say, presentation.

Andrew: I see. So all those images were just there to communicate what the product did, right?

Matthew: Yeah. Well, actually, the images in those cases were people on Flickr tagging their photos with weather tags or here’s this hurricane. So you bring up the hurricane on our site, and then in Flickr there’s these photos appearing. It shows what people are going through, so it was more like a news media publishing.

Andrew: I see. OK.

Matthew: Yeah, yeah. So that was the first version. So it was loaded. Even at the bottom we had tables and tables of data, just hundreds and hundreds of rows of data. You want to know what the temperature is, here’s 500 temperatures.

Andrew: I see.

Matthew: So, yeah. It wasn’t thought out, in that sense. We didn’t know what to think through, really. We just knew we wanted to get this thing out there.

Andrew: Tell me what you did right, though?

Matthew: Yeah.

Andrew: You told me some of the things that were crazy like putting all the data in one big table on your site and giving people way too much data. What did you do that was right from the beginning?

Matthew: Yeah, the thing that we did that was right…I felt it when we created the first version of the map. And this was actually my first Flash application. So we wrote it in Flash, and that was a good decision back then. We’re revisiting it now and all that good stuff. But we wrote it in Flash, and like the first time that I had a stage, a blank canvas, and the data came back to me and I had this blank canvas and I realized that I can just fill this canvas with anything I want to. I can draw the storm. I could draw my house in the storm with a big ruler that says, “It’s 500 miles from your house, Matt. And here’s what it’s going to be like.” Once I knew I had this blank slate, I could finally give myself the answers I was always looking for. So I think the thing we did right was, “Hey! Guess what? Here’s an interactive map.” The weather’s on a map that you can zoom in, zoom out, pan, drag, drop, all this stuff.

Andrew: Oh, OK.

Matthew: There weren’t any other really interactive weather maps at the time.

Andrew: So it was a big map. And where’d you get the map, by the way, Google? Was it available then?

Matthew: We created it. Yeah, we created it from scratch.

Andrew: You created from scratch a map of the world?

Matthew: Yes.

Andrew: Not even just the U.S. but the whole world?

Matthew: The whole world.

Andrew: The whole world, you created from scratch?

Matthew: Yes.

Andrew: Wow! And then you took all the data that you told us was available free online and just waiting for somebody to organize, and you put it on top of this map.

Matthew: Yes.

Andrew: And because it was dynamic, you could allow people to move the map, to zoom in on their city.

Matthew: Yep, yep.

Andrew: How do you create your own map?

Matthew: I got up at 5:00 a.m. every day for a year writing.

Andrew: Are you screwing with me?

Matthew: No.

Andrew: This was real? Every day you got up and you created a map, from what?

Matthew: From an MP file. So I found an image of the world, which our tax dollars had paid for. NASA has this huge 500 meter per pixel map of the world called a blue marble which is this gorgeous…if you use Bing maps and there’s like some views of the world that look photo realistic, that’s what we started with.

Andrew: OK.

Matthew: I started with that big map of the world, and literally, I started writing a mapping client from scratch. I had never written anything like it before. I had to break out all the old-school cartesian [SP] coordinate algebra. I had to learn what map projections were all about.

Andrew: And this, by the way, could have been done way easier once Google made their maps available?

Matthew: Yeah. Well, a lot of it could have been done a lot faster. That could have been the catalyst to skip all of the painstaking work that I just described. But the one thing that you can’t really replace is, it’s kind of like saying you can create the iPhone (I’m not going to abuse the Apple examples) but you could create the iPhone just by adopting an open source operating system and just making it look like iOS. It’s like, well, you can, but I think the labor of love and all the details, cartography that we put into this thing, we would have had to rewrite most of the Google map stuff to do what we wanted to. And the other benefit was, this thing was super tiny basically the size of one jpeg, like 150K. We had an entire mapping client in the person’s browser, no external dependencies. So like I said, the whole frustration with the high-stress situation, being able to download 150K file and have an entire mapping client be part of you.

Andrew: As opposed to Google where whenever I slide from my neighborhood to the next neighborhood, it takes a while for it to load it.

Matthew: Yeah, all those Java Script dependencies and who knows how many files and all that stuff. We just made this thing super tight and compact and really fast. And people love speed, so we were very focused on speed.

Andrew: All right, we’ve got to get to where you got the users.

Matthew: Yep, yep.

Andrew: So, the first users, we knew what you were going to do. You told us that you tried buying these blog posts and it didn’t work. What did work for you?

Matthew: So, what finally worked was…

Andrew: In the beginning. Don’t take me to the end. I want to go step by step to understand your logic. Because when you say, “Look, I was thinking of buying blog posts,” I see some of my stupid mistakes in that way of thinking. I want to see even the bad decisions because we can learn from both them and from the good ones.

Matthew: Yeah. So, I think the next thing that I did was to say, “OK, I’m going to post this thing myself on Hacker News that just came out.” You can actually still find my post from eons ago on there, saying, “Here’s this new hurricane tracker site.” So that got us, like, 245 new visitors, and that seemed like a lot instead of, like, 12. Right? So I remember running downstairs and telling my wife, “Hey, we had 245 visitors today!” And she was like, “Great, now let’s have lunch and celebrate or something.” So we upped the scale a little bit. And then it turned out that some of the people at NASA were pretty positive, and it started to work where those serious hard core weather users did start to tell a few of their friends, and a few more of their friends, and by the time 2007 rolled around, when a big hurricane went through we would get, like, 1000 visitors in a day, which, we were doing 50 before that. So we were up an order of magnitude or two, but still nowhere near a real business.

Andrew: You mentioned earlier that targeting the weather-obsessed is one of the reasons you guys did well and why it’s OK that I am not that into the site.

Matthew: Yeah.

Andrew: Even from the beginning, the first version of the site, when you showed it to the end users, what did they say?

Matthew: Oh, yeah. That was really scary. They would look at it and say, “This is really cool, Matt, that you built this, but this isn’t for me.”

Andrew: You worked at the Palm Beach Post, and you go to your manager there, and the manager is supposed to encourage you, is supposed to be supportive. What did he say?

Matthew: He said, “Yeah, you know, I’m a simple guy, and this isn’t for me. This is for you, and this is for people who are really into the weather, but, nah, this isn’t for me.”

Andrew: When you got that, why didn’t you say, “Hmm. It’s not for this manager. He knows something, he’s obviously the manager at the Palm Beach Post, that’s not a nothing newspaper. Maybe I can learn from him. I’ll adjust, I’ll make this more user friendly, and I’ll go after a broader audience.” Why didn’t you go that direction?

Matthew: Well, we ultimately did. It took a lot of back-and-forth between my partner and I to really decide. I was probably more on the weather junkie side, just growing up where I did and knowing as much as I did. He was not; he was in Chicago, and Chicago has a lot more bad weather. He would look at things a lot more skeptically and say, “Do we really need to show this thing? Do we really need this?” He would question and question and question. So, it was a back and forth. It took about a year, believe it or not, to just get rid of all the stuff. I defended, initially, every single element that I put blood, sweat, and tears into. I didn’t want to just get rid of it all. I defended a lot of it. So it didn’t die easily, but ultimately, when it did die, we ended up coming to what you are talking about, where he goes, “OK, maybe this is for me.”

Andrew: I see, so you eventually did end up going for them?

Matthew: Yeah. So what we did was, we read the Google mantra, which is, “Attract beginners but engage experts.” We said, “What we need to do is take all this amazing functionality and just bury it one step below.” What hits you shouldn’t be the advanced version. It should hit you with, like, Grandma [??] version. And then, if Grandma wants more data, she can find the little button to click to get more information. But, it took us a year of re-architecting the whole user interface just to get that kind of simplicity out of something that initially had been an all-you-can-eat buffet of widgets and elements and all kinds of stuff.

Andrew: Are you thinking that I’m a jerk for saying that it’s still too complicated for me?

Matthew: Uh, no, because…

Andrew: It’s OK to say that. Look, if I’m going to ask you questions and be straight up, let me know…

Matthew: No, it’s fine, it’s fine. Look, there are always going to be people who don’t need more than the weather app on their phone gives them, and that’s cool.

Andrew: Here’s what I’m going to do. I’m going to go to your site right now and I’m going to type in my zip code. “Red flag warning in Washington.” OK. “Red flag warning, strength severe, chance greater than 50%, less than one hour.” It does tell me the weather like, 66.9 degrees Fahrenheit, wind 13 miles per hour, but to me this seems like it’s much more of a site for really engaged weather people.

Matthew: Right. Right.

Andrew: It’s way beyond me. I’m looking to see the five day forecast, boom. Can I go running on Friday? Yes. Terrific. Let’s move on.

Matthew: Yes. Yeah. You know what it is? It’s a little bit nuanced.

Andrew: I’m not putting down your site. I’m putting down my own understanding of the weather. I don’t think if you cater to me you would be going into the White House is what is my theory here.

Matthew: Right. Right.

Andrew: But you push back if I’m wrong. God knows, Rand Fishkin and so many other people did, and they were right to.

Matthew: No. You’re right, and the appreciation of it probably comes when you are one of those people who is about … You hear the lightning, you hear the thunder, you hear the tornado siren, and then you come to our site. And then, you see tornado warning for my little town, and here’s where it is, and here’s where it’s going to go. Thank you so much, and then you write us a letter. We’ve gotten letters from people saying, “You saved my family’s life.” I kid you not, people saying, “We made an evacuation decision because of your site.”

And so, I think what our site is really good at is playing to its strengths. And so, yeah, we’re not about the five day forecast really. It’s about how dangerous is what’s going on right now, and there’s that Unix philosophy that says, “When you don’t have anything interesting to say, don’t say anything at all.” Our site really tries to do that. So, if there’s nothing interesting to say, it just kind of quietly sits back and says, “Here’s the temperature.”

But if there is something interesting to say like, thousands of people could get drowned in New Orleans”, then it’s going to light up and say something interesting.

Andrew: All right. There is one big tactic that did work for you for getting users and getting your name out there, but it didn’t happen apparently, until after Y Combinator said what? You applied to Y Combinator, asked for funding, asked for help from the Accelerator program. What did they say to you?

Matthew: They sent me the vanilla rejection letter. So, I’d love to say that Paul Graham pulled me aside and consoled me, but it was really just …

Andrew: You didn’t even get an appointment to come in and talk about your business and yourself.

Matthew: What we did get, which was cool, is we got invited to the night before startup school. We got to go to Y Combinator’s offices. That seemed vintage. People like Justin Kahn and Drew Houston and guys like that, which now I look back and go, wow, those guys were really onto something. But we met a lot of really cool entrepreneurs and got a taste of California, and that was good.

One of the things that we got a taste of was this whole freemium model. It really changed our thinking as far as OK, the site is free like, we’re really marketing it. If you have a free marketing mechanism that can get this out there to the millions of people that want to see it. And up to that point, we were holding it close to our chest saying, “No way, we’re not going to give away the map for free. That’s what we worked so hard on. That’s worth something.”

So, we went and we listened to Chris Anderson give his everything should be free pitch in 2007, early, sorry …

Andrew: May, 2008.

Matthew: Yeah, May, 2008. He gave this pitch and something just kind of clicked in our heads, and we said, OK, my manager at the newspaper said I’m not going to pay you for this, but when I went into his office and said, “Hey, you can have this map on the stormpulse.com for free.” He was like, what’s the catch? I said, oh, OK, one catch. You’ve got to put a link on the page, on your weather page that links back to stormpulse.com. And I want the link part to be hurricane tracking, not like stormpulse.com.

He was just kind of like, OK. He thought it was crazy, and it was crazy. We were taking a big risk, right? But instantly, we got in front of tens of thousands of people when he said yes. That was a really big day for us.

Andrew: And CNN also did the same thing?

Matthew: Yeah. So, that’s a funny story. So, what happened is that news media sites are copy cats, and they hate being left behind. You’ve got to love them, but if WPTV Channel 5 has it, then Channel 7 is going to want it, too. So, when they start going to the Palm Beach Post, and the Palm Beach Post didn’t negotiate any kind of exclusivity with us, they just said, “Can we have this thing, too?”

And I became … my full-time job that summer, that early summer, became just sending out API keys to news media sites that wanted to have it on their websites for free. And again, all of these links just kept building up and up and up. I got an email one day from this guy who said, “I want to put it on my personal website”. We were trying to distinguish at first that no one needs to be real news sites, but I said, whatever, OK, fine. I had noticed that you can actually use an iFrame to embed our entire website in his website. I was like, ‘Is this stealing?’ It’s free, but he’s stealing it before he even asks me for it, but it’s free. Whatever. Just like, let 1000 flowers bloom, we’ll see how this works out.

Lo and behold, like September whatever it was, a few months later, he emails me, he’s like, “Hey, Matt. My name is Sean [SP]. I used it on my personal website but what I didn’t tell you was I’m actually the Senior Weather Producer at CNN and what I’d really like to do is I’d like your permission to put your map on the air in 30 minutes.” I was like, “You got to be kidding me.” I’m sitting there in my cubicle working for somebody else, CNN’s asking me to put my product on their channel, it’s like, this is huge. I didn’t even know what to say other than, “Go for it. Can you mention Stormpulse while you’re at it?” He’s like, “Oh. For sure.” I was like, OK.

Here, I am at a metro newspaper where people would love the thought of being on CNN, people whose career is journalism. Go over to this 40 inch plasma screen in the conference room and it’s already on CNN, because that’s what they watch all day long and sure enough, here comes the weather segment and boom, the CNN meteorologist has my map on his 40 inch screen and at the bottom of the screen, in front of millions of people it says “Stormpulse.com.” He gave us a shout out and everything else. I was like, “You can’t be serious.”

Andrew: Unreal.

Matthew: Totally surreal.

Andrew: By the way, as you were talking about how much of a reputation maker CNN is for journalists, I’m thinking about the days when Ted Turner was just getting CNN going and people kidded him, not kidded him. They made fun of him and they called him it the Chicken Noodle Network, CNN is what it was. Sure enough, he just built it and built it, and today it’s become the gold standard for television news.

Of course, it’s been insanely profitable and it’s helped make a reputation for him and I imagine the same thing’s going on with the people who are listening to us right now. That there’s someone out there who’s company’s being considered the equivalent of the Chicken Noodle Network, but because they’re just arming themselves with whatever they’re learning from you and from other people here, and frankly, from other people off my site or from their own personal experiences, they’re going to end up being like Ted Turner. Where people almost forget that they used to make fun of him at one point and today they look to them for credibility. They look to them for assurance that they’re on the right track.

I want to investigate this thought process that went into giving your stuff for free. You spent a year creating your own map. You spend time making sure that the site was going to get traffic and here you were, suddenly deciding to give it away to others. I don’t want to brush over that and say, “Yeah. Of course, you had to do that,” because a lot of people I know will not do that. Will say, “I need to build up my own site, I need to do Ba-ba-ba-bah.” All these things make sense when it’s your own thoughts. How did you come to the decision to say, “We’re going to pass this on,” and what were you thinking was going to happen to your own traffic?

Matthew: You’re right to say it that way because that was no easy thing and we thought of it as the crown jewel. When we pitched [??], we’re going to give you the crown jewels of our business for free. We thought we were crazy.

Andrew: Hit that power button on your iPhone. That’ll make it go away. There you go. OK. So how did you decide to say yes to that?

Matthew: We thought we were crazy and I think the reality was our backs were against the wall. I had gone back to work. This was a bootstrap company, we were out of money. Our initial seed investment, my friend’s retirement savings and my tiny savings were gone, so when your back’s against the wall and you have no choice, you have to do something to make it happen. It was a last ditch effort but I think we thought it could work, but we had no idea how well it was going to work. We gave it a shot and at that point, though, it was terrifying because we go, “Well, how are we going to make money off this now if we give it away for free?” It was the right decision at the right time, I think.

Andrew: Palm Beach Post. You ended up having to go there for a job after you started your own business and were thinking that this was going to be the thing for you. What was that like to go back and say, “I need to get a job?”

Matthew: It was part disappointing, part reality. I’m married. I have a few kids. Bills come and I can’t just move to Thailand and eat noodles or something. I’ve got to support people here so I had to keep making a living and the awesome thing about it was the person that got me that job actually was the first comment on one of our first blog posts. His name is Mark, and Mark worked at Palm Beach Post, he was a data geek journalist and he got me in the door there for an interview and they didn’t have any developers at the Palm Beach Post in the newsroom. I interviewed for a job, and they didn’t even know what to do with me. They said, “What do you do?”, and “How much do you get paid?” I was an alien to them. It was a really cool job and the freedom was huge, and I knew I was now joining up with the 500 pounds gorilla. The Palm Beach Post was actually our rival. It was our competition.

Andrew: For weather news, you mean?

Matthew: For the weather news part. I didn’t know how that was going to work. It was really awkward at first before we had this idea to give it away for free. They knew I was working there, but I had this company on the side that was trying to eat their lunch.

Andrew: In retrospect, was it a mistake or a good idea to go work for the man?

Matthew: That was really, it had to be. If it had been any other way, we wouldn’t have gotten the launch that we did. I don’t know how we could have. Fate, destiny, whatever, it had to be. I think it was good because I was still writing Python. I was learning geospatial technology. I was actually free to do whatever I pretty much wanted. If it was a job to go work for the man unrelated, on some old-school tech, then that might have been really hard, and I might have done something else. It was a golden opportunity still.

Andrew: Yes. It is what got you your real start as far as reputation, traffic and introduced you to people who ended up helping build up Stormpulse.

Matthew: Yes.

Andrew: All right. Let’s see what’s next in this. How did you get the $150,000 you mentioned?

Matthew: Are you talking about the fund-raising amounts?

Andrew: Yes.

Matthew: Yes, well that $150,000 is actually we’ve closed, if you will, a couple rounds of family and friends financing. I’ve had some pretty good valuations from our loyal supporters and family. Actually the bulk of it still comes from my co-founder who, in addition to his early retirement savings, which was really just a loan to the company, then continued to put in the rest of his retirement savings to fund my development on the site. That was actually the bulk of the $150,000. There was probably another half of it again from friends and family, but that was spread out over the course of the last five years.

Andrew: How hard is it to go to friends and family and say, “Dud, I need some money. Trust me, it’ll come back.”

Matthew: Those people sometimes are colleagues, people that are actually my generation who just went down a different path or some of them have already had an exit, so they’re excited and they’re excited about what I’m working on, and they’re like, “Here’s $10,000.00, Matt. I believe in you.” I heard somebody say this once that fundraising in one sense should be kind of a ladder where you raise it from yourself, your co-founder, you try to raise it from friends and family, because if you can’t get them to believe in you, that’s probably a good sign.

Andrew: Why do they believe in you? We all know some people in our family, we all have some friends who we believe, we know they’re going some place, and we also know some other people who are hard workers, who think they’re going to make it, and we all know that guy’s going no where. He’s so clueless. What was it about you that made them say, “That guy, Matt, he’s going some place. We should give him money.”

Matthew: I think by this time it was probably some of the stories we would tell. I couldn’t come in there and say, “Hey, we just made a treasure chest of money, and here’s why you should give us more money, so we can make more money.” It was, “We’re on to something really big. We just got on CNN. We were on TechCrunch if you’ve heard of that.” Things like that and the stories. The only thing we had to sell was the stories. Then we would say we’ve got millions of people using it.

Andrew: What about you personally. If they’re investing in you, then chances are they saw you interact with them at Christmas, or they saw the lemonade stand you refused to let die back when you were a 7 year old. There was something about your personality that made them say, “Yeah, we trust Matt.”

Matthew: I’ve heard people tell me that I’m a pretty transparent or down to earth person. Raising from friends and family is a little different than trying to raise from a VC. You’re going in there, and I’m not going to lie to anybody anyway, but you can’t exaggerate. You are who you are, and they see right through you. I think it just comes from building good relationships with people.

Andrew: How? Give a specific example of what you did to build those relationships?

Matthew: Some specific examples would be, some of it was friends I went to college with. They would say, “I was across the dorm from Matt. I lived in the same dorm as Matt, across the hall. I knew Matt in 2001 ever since I met Matt I always knew that he was a super smart guy …

Andrew: How? Be specific. What was it about you because frankly, a lot of people they went to college with and were across the hall from they wouldn’t trust with their six-pack on the table if they were in the same room. There’s something about you.

Matthew: Yeah.

Andrew: Do you have a specific example?

Matthew: Yeah. I’d love to give you a specific example …

Andrew: What were you? Were you bookish? Were you the guy who just loved to ace every class? Were you the guy who kept saying no I’m not going out for beers with you and then they filed that away in their heads as well, this guy is not the guy we want to go party with but he’s very responsible. We should hand him money when we can.

Matthew: I probably fell under that category a lot. I mean I really put myself out there in college and did a lot of jobs that were helping out kids install their stuff on their computers in the dorm room and that’s actually how I got to know this one guy. So he saw me in the trenches doing tech support for college kids and I think you just you know, you see the work ethic, you build some camaraderie, and you go, these guys like me. Ultimately, I can relate to this guy. And we kept in touch and I think then the follow on story is you can’t let it drop. You’ve got to tell him, hey still going well and here’s what’s happening but we could really use some money to get to this next level. I think that’s what it was. I engage people a lot. I’m not this sit in the corner kind of guy. I introduce myself, get to know them, talk and that give me energy.

Andrew: You know what? A lot of times it’s in those moments that we don’t even recognize that people are watching us. And they’re not actively watching us. It’s in those moments that our reputations are made. Like for example, I imagine that right now, I feel like there’s hardly anyone watching, frankly. I take a look at even CNN and CNBC and how big an audience they have and I compare it to mine and I go what the hell am I doing?

But I know that somewhere out there is a guy or a woman who’s watching this, building up their company and filing in the back of their heads, hey you know what that Andrew will not … even the Stormpulse guy, he just had to do his research, he had to really work hard and maybe 20 years from now when they build up the biggest empire on the planet and everyone wants to sit down with me, I’m going to sit down with Andrew. I’m giving him his story. I’m going to let Andrew really uncover what it is that I did over here because I’ve got to pass that on to other people. And passing that on to this person who will eventually do that killer set of interviews is going to be more valuable to them then passing on their wealth. You’re aching to say something. What do you say about that?

Matthew: Yeah. It just came to be as you were saying that. I think the one story that I share with my personal life is that I have a family; I have children. So when I tell this entrepreneurship story at Boot Strapping and they hear well on top of that I’m married, I have four kids, here’s what I’m doing in all my free time. Here’s what life is like for Matt on the ground level. I’m feeding kids and changing diapers and doing all that stuff and trying to start a startup. They look at the risk that I’m taking on and they go OK this guy’s either completely insane or he’s on to something, right? And they know me well enough to know that maybe I’m a little bit of both. And that gets them to say I want to help you out. So that’s what it is I think for a lot of people.

Andrew: All right. At some point you decided that you were going to have to add revenue and you told me about adding AdSense, always seems like it’s the first place you go when it’s time to add some advertising. But you also told me that you were charging.

Matthew: Yeah.

Andrew: Where did the charging come from?

Matthew: The charging came from the whole freemium model as well. We realized that we have the free version but now we need the paid for version. So what’s the pro version of Stormpulse going to be? And so we actually came out with a plan. Super complicated; super cheap. Like the worst of both worlds. Low profit margins and really hard to maintain for us. But we just wanted to see what people would do. So we put out some surveys and said would you pay $3.95 a month for this service, which includes Stormpulse for free but then has these extra

features. And people were like, yeah, I’d pay that. And we’re like, well, let’s try $8.95 a month, you know? And then it turned into let’s ask for $50 for the year. And we started just raising our consumer level prices.

Andrew: And this was all on surveys or you actually launch with a price and then you kept increasing it to see where the market was going to allow you to be?

Matthew: So at first it was the surveys to kind of go from the 99 cents a month to what’s the right first price, which we ended up saying $3.95 a month.

Andrew: And so you were actually charging $3.95?

Matthew: $3.95 a month is what we charged for our first consumer plan for the pro edition. And then after that, a couple of months later we said let’s try $5.95. Couple months later we said let’s quit trying to charge for six months. Let’s do a yearly subscription for $50. And then the next year I told my co-founder next season, I said, you know because it’s kind of a cyclical business, I said let’s try $8.95 a month for the cheap version. And we just kept raising the prices and people

kept buying so …

Andrew: What did you put into the pay version?

Matthew: People love their radar. I want to see the animated radar, things moving on the maps so the initial version had no animation. The animated version of Stormpulse costs money and then the ability to get alerts, weather alerts, costs money. Those are the biggest selling points. The animation and the weather alerts. People are paying us anywhere from $9 a month to $50 a year for that.

Andrew: And how would they know that you are doing this? Did you do it on the site or was email the way that you reached them?

Matthew: We had the onsite upsells. Just links, banner ads on our own website and then we had the blog and then we collected about 20,000 email addresses from free accounts which we launched. We just said, “Here’s the free version of free.” It’s like a free account on top of a free site, but that was just to get the email addresses. We ended up, call it firing the cannon, this is really non-sophisticated email marketing, but “Before I go to bed at 3:00 in the morning, so that I can pay myself next week, I’m going to send out an email to 4000 people and see who signs up.” When 25 people signed up the next day and we made $500, that was huge for us.

Andrew: Did you get any angry emails from people? ‘You jerk. How dare you try to make money?’

Matthew: Not in.

Andrew: No.

Matthew: Not in those days because we weren’t taking anything away. We were giving them more for more money.

Andrew: I see. So [??] one day and suddenly they were there only for paid members. The alerts were not there one day and then suddenly they were a paid addition to the site.

Matthew: Exactly.

Andrew: Gotcha. You kept increasing and increasing and increasing. You collected email addresses. Why didn’t you email the whole 20,000 people at once and say, “Hey. Tomorrow I’m going to charge?”

Matthew: We did end up doing that. I tried to be a little bit more sophisticated and do it in stages and my pathetic attempts at A/B testing and things like that. We did end up emailing everybody and we ended up getting about 1000 subscribers that first year. Thousand subscribers is great. Thousand subscribers to those price points isn’t a business but it was money and that gave us hope.

Andrew: Let me talk quickly to my audience here for a second. Guys, if you’re seeing and charging $3.95 a month, it’s not the right way. He’s just feeling his way around and you’re in a similar situation, let me suggest something to you that I wish I had done and I think, Matt, you could have benefited from this, too. Rob Welling [SP], did a course on [??] about how to charge. How to actually get your users to pay. Actual course this guy walked us through how to do it, especially if you’re launching a new product and you want to know how to charge, go through his process. I guarantee it’s gonna open you up to a better way of selling. Selling before you even launch. I know it works because a good friend of mine is the reason why I even had Rob on in the first place.

Ruben, from BidSketch said, “This is the reason this guy, Rob Welling, is the reason I was able to make a profit with my site. As soon as I launched it, in fact, before I even launched it, he was generating revenue.” I brought Rob Welling on. I had him teach the course, you’re going to see it step by step, pay attention especially to the end part where I specifically mention Ruben and his case. And you’re going to see how to sell and how to do it right and really generate revenue. When I see you get $3.95, Matthew, I feel bad. You could have gotten so much more. Frankly, I was even worse. I had a three payment process for the same thing you could pay three different prices and a link on the bottom that says, ‘Pay what you want.’ I just didn’t know, ‘cuz you’re not sure.

Matthew: That’s exactly us.

Andrew: But we don’t have to figure it out for ourselves. Rob Welling and others have done it.

Matthew: That sounds like a great course. We were so complicated at first and we thought we were going to do this consumer site and that’s why we had such loaded price points. I figured, what’s a consumer going to pay for this site? It wasn’t ’til we started looking at our analytics more closely that we realized, there’s a lot of businesses using this thing.

Andrew: How could you tell in your analytics that businesses were using this thing? This really feeds into the question of how you decided to increase your prices to something more substantial. How’d you know, based on that?

Matthew: The host names or the organization names at Google Analytics were things like the United States Navy or FedEx. You name a Fortune 500, Exxon Mobil. These are big companies with really big issues and a lot of them are related to the weather and, I kid you not. I was in denial because I looked at that and I go, ‘Fine. A guy’s visiting us from his work but there’s no way that our little toy of a website is helping him solve real business problems. I’m sure he’s got some multi-million dollar enterprise solution in house. He’s not going to pay for us. I psyched myself out for a long time and just said, “This is not a business level tool.” Even though all these business are visiting us, I just couldn’t believe it. Until I started talking to those people directly on the phone, and I go, “Wow, this is real.” These people are really using it in an amazing way.

Andrew: What’s the highest price that you charge?

Matthew: Well, we have custom pricing, so the sky’s the limit in one sense. I can tell you that these days we’re quoting prices anywhere in the $10,000 to $20,000 a year range for some of our larger accounts.

Andrew: And what does somebody get for $10,000 a year?

Matthew: What they get for $10,000 a year is, they get weather alerting for up to 1,000 locations in the United States, so if you’re a company that drives those- you know those big fuel trucks that you see driving down the highway when you’re on the road?

Andrew: The ones that are circular, oval?

Matthew: Yeah, exactly. And let’s say you’ve got, like, 50 filling stations, and you just want to know if there are any tornadoes or filling stations that are going to blow those up. You can come and pay us $5,000 a year, $10,000 a year, load in all of those locations and facilities, and now you’ve got weather alerting for everybody on your team that tells you, “Did weather just strike our plant, and what are the odds of that?”

Andrew: How do you go from being a guy who nervously charges $3.95 a month to charging thousands of dollars? What got you to take that leap?

Matthew: You know what you have to do? I love this quote. Cindy Alvarez, who you may know, she’s brilliant and I think she worked at KISSmetrics. She had this blog post that talks about not being afraid to poke your soft spots. Like, really finding that part where you are squeamish about your business or your business model and really just poking it really hard and finding out what’s underneath. I think I was squeamish or scared to go to these companies and find out how they were really using us, because I think I was afraid for them to realize, “You’re right, Matt. Why am I using you? This isn’t worth it.” But, I overcame that fear and talked to them on the phone. I’ve talked to hundreds and hundreds of people on the phone about how to use our products.

When I started going closer and closer, as I would say, to the end of the rainbow, I started realizing. Two months ago I was in a $500 million manufacturing facility where they build cars. There’s a specific car they build there. When I went to that $500 million facility and I saw what they were using today, and I knew what we could offer them to replace it, all of a sudden, you go, “OK, $3.95 a month isn’t going to cut it.” Because you see, if this production line stops, that’s $10,000 a minute. We were giving them the ability to reduce the likelihood that production line stops. So, the better you understand the ROI for that customer, it just builds confidence because you know the value that you’re offering them.

I think that’s really the answer, that I became confident in the value that people were getting out of our products and I just said, “We’re not doing anybody any favors by undercharging.” It makes the product seem cheap, it doesn’t reflect what they’re really getting out of it, it doesn’t actually even encourage them to take full advantage of it. There’s a lot of signals in pricing, too, and I was sending all the wrong signals. I needed to start sending the right ones.

Andrew: So, by charging $3.95, what signal were you sending?

Matthew: The signal we were sending is, this isn’t an enterprise solution. Are you really going to trust your $500 million facility’s weather services to something that costs four bucks a month?

Andrew: You know, I’ve got to say, that’s one of the most shocking things about human psychology to me. When you charge a lower price, people don’t think, “Great, I’ve got a better value here.” They think, “Little. Chintzy. it’s not the right solution for us. Good luck with your amateur audience of consumers.” Cindy, what you just said there, I can’t allow it to just pass on. It’s too freaking brilliant. You’re right. As entrepreneurs, we are often too afraid to talk to our customers, potential customers too, because we are afraid that they are going to say, “That’s true, why am I buying from this guy?” or, “Who is this guy? He’s just calling me out of the blue? I can’t do business with him.” Because of that, we miss out on learning things like the value that we have to them, the current product that they have that we could replace. You must have looked at some of their software, as you said, and thought, “This is ugly. I could have coded that in my bedroom in an hour and done better.”

Matthew: It’s incredible. And that’s the thing. Getting to that point where you face the truth, that’s the moment of truth and you’ve got to just face it and say, “OK, fine. Fact is that we’re a $500 solution, but boy, that’s better than charging four bucks.” And, in our case, we’re finding out that the solution is worth a lot more than $500. And it’s so much more rewarding and exciting for both parties then, because you go, “We’re happy to provide this service to you. We don’t feel like we’re getting taken advantage of. And you also feel like you’re getting a world-class service. And, in fact, because you’re paying us a fair amount, we can provide you with product enhancements and service that’s going to make you even happier.” When the right price is set on a product, it actually make everybody, I think, end up happier in the end. Undercharging doesn’t help that.

Andrew: Cindy Alvarez. I’ve been telling people in the audience about her for a long time. She is fricking fantastic, and the reason most people don’t know . . .

Matthew: She’s a gem.

Andrew: Sorry?

Matthew: She’s a gem. Yeah.

Andrew: She is.

Matthew: She’s a diamond in the rough.

Andrew: And the reason people don’t about her is this, it’s because she works for Heaton Shaw in a company that Heaton and Neal Patel founded, and those two guys get a lot of attention in the world. In our world anyway. In the start up world and the analytics world for sure. They run KISSmetrics and Trixie Analytics Company. When they’re around people are paying attention to them, and they’re not realizing Cindy Alvarez is fricking brilliant. She did a course for Mixergy, Mixergypremium.com, where she talked about how she talked to her customers, her potential customers for KISSmetrics, and discovered what they were going to pay for.

Basically what you were saying. She’s got that in her. She’s got the blog post that you’ve got on her. She really has a fantastic understanding, and I think because maybe she doesn’t have founder in her name, and we’re living in a world where founders are all that we respect and look up to. I understand there is a lot that a founder does that other people don’t do, like risk everything for a dream. She just knows her stuff, and I’m really glad that you brought her up, and I’m not the only person who’s doing it.

Matthew: Yeah.

Andrew: Let’s go on with this story because you kept growing. You still needed to get the top of the funnel, the free audience to come in so that you could get some of those people to the bottom of the funnel, which is paying customers. Obama’s speech somehow helped you?

Matthew: Yes. Of course, he was inaugurated in early 2009, and in late 2008 is when we had the explosion of traffic. We ended up having 4,000,000 uniques visit the site in 2008, which was up from 20,000 unique the year before because of that widget program and because of the CNN exposure and everything else. During Obama’s speech I’m still sitting at my day job, not having quit yet, at the Palm Beach Post, and we’re watching the inauguration, and what it did for me it just crystallized, as they looked out on the mall, and the announcer said something like, “There are 4,000,000 people gathered here on January 20,2009, to witness this inauguration.” It just hit me that every single face in that crowd represented a person that visited my silly little website that I made in my pajamas a couple years ago. To me, there’s nothing like visuals and faces, too. You just say, that’s the audience we’re talking about that uses this site?

Andrew: I know what you mean. I heard the founders of Myspace say that one day they went to some sporting event, I forget if it was football or baseball, but they looked out at the stadium, they heard how many people were in that stadium, and they said, “Huh, that’s how many people are on our website.”

Matthew: Yeah.

[laughter]

Andrew: When they’re just blips on a Google Analytics chart, or a Clickey chart for me, it just doesn’t feel real.

Matthew: No.

Andrew: But here it does. Let’s see, not Nassau. We’ll cut to Nassau in a moment. You guys set up your payment process, how simple or sophisticated was it?

Matthew: The payment process for us was pretty sophisticated at first. We used Braintree, their payment gateway, so a lot of it was “write our own”. It was Braintree’s first API, so it was a considerable undertaking for that, but the first time we could take credit card numbers over the website was pretty exciting. Here’s the home page. You’ve got to click a little link at the top right that you could hardly find, and then you come to this other page where you choose, “Do I want a monthly subscription, a 6-month subscription or a 12-month subscription?” From there you hit a registration and payment page. It was a lot of steps on a really hidden funnel. That’s one of the first things we started to fix was that this funnel was broken. The price was broken, but also it was just too complex.

Andrew: I see. The first day you emailed 2000 to 3000 people on your list. You sold 21 accounts.

[laughter]

Andrew: You brought in $20 on your first day?

Matthew: Well, if $21 counts for $20, we made about $400 and something.

Andrew: OK.

Matthew: Yeah.

Andrew: And that $20 gets them how many days, or how many months? . . . Let’s wait for the connection to come back here. Again, we are frozen. What were they getting for $20.00? How many months of service?

Matthew: They were getting six months of that animation and alerting capability that I talked about.

Andrew: Gotcha.

Matthew: Yep.

Andrew: Later on, Nassau bought 12 subscriptions of your app.

Matthew: Yep.

Andrew: What else do I want to know about this thing? Lowest point? What was the lowest point in your business?

Matthew: Lowest point was not that long ago, actually. We’ve been going down the fundraising path for a long time here, and, of course, there’s an epic blog post coming at the end of all this that tells everything I wish I knew before I started fundraising. But it’s not easy and even with all the traction that we had, it was a pretty arduous process and, I had to travel a ton, which was really hard on the family to have me gone all the time. But you know, you got to do it. As a founder, you have to be there. And so, realizing… I remember coming home after a trip to New Jersey, and I was pitching this possible strategic investor who’s in the risk management space, and I came home and my wife, basically, asked me, “Have you been thinking about anything other than your job for the last however many weeks or months or…?”

Andrew: Yeah.

Matthew: You’re completely [??]. And I think the lowest point was just realizing that I didn’t, first of all, I had no funding to show for it, yet, and I also couldn’t deny it. It was a fact. It’s like Holgrem [SP] talks about it being the top thing in your mind and Gabriel Wineberg [SP] said, “If fundraising [??].” So but that’s really…

Andrew: Basically… Sorry the connection was breaking up. What you’re saying is, you were obsessed with funding to the point where nothing else was fun. Where you were just spending every minute that you had available for it, including time that you should have spent with your wife, and you didn’t have anything to show for it. I would be pissed at the same time, also.

Matthew: Yes, yes. That was hard and that was… this is months after starting. But by this time, we had a term she’d given to us, which we turned down one, and then a couple of other cropped up recently so our fundraising is about to be over. But that was a real low point because here we are thinking, “This business needs to become profitable or this business needs to raise money and every minute that I’m spending on fundraising and not the product is hurting the product. Every minute I’m spending on fundraising without getting funding, is hurting my family.” You do that for long enough and you hit a pretty low point. I really feel like I reached my limit as an entrepreneur, in terms of making things happen.

Hustle is exciting and we all think that we can do things, but one of the smartest things that anybody said to me recently was, “Fundraising is not a deterministic process. You can just decide.” Some people can decide this. Mark Zuckerberg can decide this. Andrew Mason [SP] can decide this. Whoever can decide this. Maybe, Andrew Warner can decide this. But there’s a lot of people who can’t just decided, no matter how great their start up is, that I’m going to raise money and it’s going to take me two months. And I’m going to have it on the terms that I want, and then I’m going to be done. No, no guarantee. You could just end up dying instead. So it is really hard and I had a lot to learn. Yeah, I feel like I really hit my low point there.

And then at the same time, this is a funny story. You know that job I quit in Chicago, really well paying job, when I moved down to Florida to start Stormpulse. And I had a call from my friend, he stayed on the same career path that I would’ve been on. You could argue he was on a better career path because he’s smarter than I am. He was on a similar trajectory career path and he called me up to tell me, this was in December, he said, “I just got my Christmas bonus…”, it’s a yearly bonus for them, and you’ll never guess how much it was. I was like, “I don’t even want to hear this.” And he was like, “Five months salary.”

Andrew: Whoa! In the newspaper business, they’re giving five month salaries?

Matthew: No, no, no. Not the newspaper business. He’s a software developer and he works doing software development in Chicago. And so he’s on a similar career path as I was in Chicago.

Andrew: Oh, and he’s in a different place, because he got a job while you went and started your own company.

Matthew: Yeah. And he got a five month bonus check. We were like twins so I was right there with him. Yeah, when I heard that and I told my wife, “Yeah, we could be hang off a house right now. We could be putting $50,000.00 down on a new place, but instead we’ve got a bootstrapper’s bank account and this Stormpulse site.”

Andrew: You were going to… First of all, did you just say… I want to go back to that a moment, but let me do a little quick fact checking here. Did you just say that you were about to raise money or did it not work out for you?

Matthew: We actually have two term sheets on the table.

Andrew: OK.

Matthew: We haven’t accepted either one yet and I can’t say what we’re going to do exactly. I can tell you what we are doing, which is: we are going from this free model to paid, but in the mean we do have two term sheets.

Andrew: … [SS] … a sign says, ‘Attention everyone: No more free. It’s going to be paid.’ That means, will there be any part for free?

Matthew: There will be what amounts to a marketing page with a little preview box that shows you a live view of the weather. But it’s like trying to watch an amazing movie on your cell phone.

Andrew: And all these sites that are linking to you and using your content, what’s going to happen to their content?

Matthew: We actually pulled it. Last year we pulled it from over 900 websites. We had that free widget program going for a couple years. U.S. Today was using. We pulled it from over 900 websites. There really wasn’t anything left in it for us. Out of those 6.5 million visitors, over 70% of that traffic is direct, so not even coming through a referral link or search.

Andrew: Really?

Matthew: Yeah.

Andrew: So what happened to your traffic when you pulled all those links away?

Matthew: It didn’t change.

Andrew: So, why not keep them up just for credibility, just for, I don’t know what?

Matthew: Well, you know what it did? It created a glut of all our products in the marketplace where access to that product was cheap and easy. In one sense we were setting ourselves up to what we did this year, which was we called up the last four or five of these people and said, “You know what? The ma is going away.” I actually finally had to break it off with the Palm Beach Post the other day. I emailed my old manager and said, “Sorry, we’ve got to take it away. Otherwise, people aren’t going to pay for our site anymore.” He understood. Now the only place he can get Stormpulse will be Stormpulse.

Andrew: All right. Now that you’ve announced that you’re going to charge. . .

Matthew: Yeah.

Andrew: You and I talked about what happened to your revenue, what do you feel comfortable telling the audience publicly?

Matthew: I will say that the people that found value in Stormpulse, the most value, the businesses, are very happy that we started to charge, and they have not hesitated to reach out to us and ask how they can get subscriptions. They are buying them in bulk. I just closed one of our biggest sales this morning through a couple emails with a company that most people have never heard of but is paying us enough. Like I said, we are at that price point of $5,000.00 for the year where we’re happy to give them the service, and they’re happy to get the service. Everyone is happy, and we’re starting to collect those kind of four and five figure sales now that is actually going to make us profitable. That is exciting.

Andrew: You haven’t yet, as of the time of recording this, gone paid only?

Matthew: That’s correct.

Andrew: And you also haven’t yet profited? You and I agreed before this interview that if the audience asks for it in the comments of this interview, you will tell them, you will report back and say whether you’re profitable yet based on this.

Matthew: Yes.

Andrew: But they have to ask for it, and I can’t ask you now because it’s too early to tell. By the time we close this, you’ll know.

Matthew: Yeah.

Andrew: You’ll know because it will be paid only and you’ll know what your numbers look like.

Matthew: Yeah, absolutely. We’re really excited about that. It’s hard, because I built this site originally for people like me, and now people like me can’t even use it because it costs too much money. I’ve actually priced myself out of my own products.

[laughter]

Andrew: You’re still taking a salary out. I know your revenue, I know your expenses. Your expenses that you told me before include a salary for yourself.

Matthew: Yes.

Andrew: Are you now making what your friend would have made, except for the bonus?

Matthew: No I’m not.

Andrew: You are not yet?

Matthew: Not yet.

Andrew: Not even getting the same monthly paycheck that he is?

Matthew: No, no. Definitely not, but I have, based on the initial feedback, this is an insane moment. This is that make-or-break moment where 6.5 million people are going to be asked to pay for Stormpulse. If a tenth of 1% or some very tiny number of those people say yes, then I will catch up to my friend very quickly.

[laughter}

Matthew: Right now, Stormpulse is actually still two guys and a few part-time contributors.

Andrew: Wow.

Matthew: Yeah.

Andrew: All right. I think that’s everything I have here. It is everything that I have here in my notes that I wanted to go over with you. I’ve got this one question that’s been in my head.

Matthew: Yeah.

Andrew: Zack of Conversion Voodoo suggested that I interview you.

Matthew: Yeah.

Andrew: What the hell is your connection to Zack of Conversion Voodoo? The guy is busy. He’s not reaching out to me to just chat. Why would he introduce me to you? What’s your connection to you?

[laughter]

Matthew: Yeah. I reached out to Conversion Voodoo back in whatever year it was because I knew Stormpulse needed to get with the program and start doing A-B testing and start getting more people into our sales funnel. I actually filled out the form on his website. I filled out the form, I click the submit button, and then I get an email from some salesperson that worked for him. She said, “Oh, thank you Mr. Stormpulse guy. We need some more information”, and I don’t know if I was just feeling cocky or what, but I wrote her back with like, “I don’t really have the time to fill out another form after I fill out a form. If I could just talk to you that would be great. Otherwise, no thanks.”

I put in the little form for how much traffic do you get that we get over 25 million visits per year and 5 million uniques. I’m guessing, or I can only guess that the salesperson went to Zack, or her boss or whatever, and said, “I don’t know what to say, but this guy has got a pretty popular site and is pretty upset right now.” I ended up getting an email from Zack who is an amazing guy, and he said, “I would love to talk to you.” We talked, and we tried to work something out where Stormpulse would work with Conversion Voodoo. We ended up being a kind of round peg for a square hole. We didn’t really fit their model, but we’ve kept in touch ever since and have gotten closer and I’d say we’re good friends now and he’s been watching this whole story unfold like, he’s just loving it.

He just told me this morning on IM, he’s like ‘When you write that book, I am buying a copy of the book’ and that’s definitely something I plan on doing so. Yeah. Zack’s an amazing guy and he’s the kind of person that helping [??] to get through this time and get to…

Andrew: Did you do anything to increase conversions as a result of talking to him?

Matthew: Yes. I mean, what he has offered us is, as you know, and your audience, some of the audience may know, he’s just a brilliant conversion expert so, what he did for us was actually, I showed him just the other day at 11:00 at night, I showed him the new pages that we have going up to replace the home page of stormpulse.com and said “Zack, what do you think? What are the big changes, like, what’s wrong with this picture?” and his response was, typical smart Zack, he’s like “What you’re doing is so radically different than what you’re doing right now. You just need to get it out there and then we can start measuring”.

Andrew: I see.

Matthew: And it’s true because he can sit there and pontificate about the color of the buttons but that’s what he eats, sleeps and breaths but he knows, you know what you’re [??],

Andrew: You’re practically changing your business model so you can’t really tell you need. We need a base line. Sorry, the connection’s bad but basically what you’re saying is, hang on a second.

Matthew: He’s been very helpful, off the record.

Andrew: Boy, this connection’s just driving me nuts.

Matthew: Sorry.

Andrew: No, it is what it is. I mean, this is the medium that I picked for myself. Back in the early days when I was just doing phone calls and no Skype, the connection was much stronger, actually.

Then people got cocky and started going on their cell phones and, you know, getting distracted so you know, it has its ups and downs. On the plus side, that means I get to see your face when I say the shocking things or push your buttons a little bit and I get to see if I pushed too far. On the negative side, you know, bandwidth gets eaten up by video. So we take the good and the bad.

For the audience, it means that they get to have interviews with people who they couldn’t necessarily hear from if I had to wait for them to be in the same room with me or had to set them up with the perfect equipment. But also means there’s a little bit of a down side.

Everything has a plus and down, pluses and minuses.

All right. By the way, if you’re out there and you’re interested in conversions, first of all, check out the guy’s website and second, do Google Search for Mixergy and Conversion Voodoo. The interview with Zack freaking rocks and you’ll see why, if you listen to it all the way to the end, you’ll understand why Zack got so many emails at the end of his interview with me. How did you even find out about Zack?

Matthew: Well, I complained to his company and then he emailed me.

Andrew: No, I mean, how did you even find out about Conversion Voodoo as a company that does conversions?

Matthew: Oh, it was a blog post on somebody’s site. It might have been, actually it was a blog post that he had written and I think he might have put it on Hacker News and I followed the link so.

Andrew: I wonder how did I even hear about him? He’s the kind of person who, you know, his whole site is about increasing conversions but he’s not there to increase the average person’s conversions. He wants only the big dogs, only the people that not can afford to pay him. A lot of people who can afford to pay for conversions. He wants the people who, an increase in conversions at so much freaking money that their bottom line is, then he can take a piece of that.

That’s what he wants. He doesn’t want to get paid.

Matthew: And he succeeds.

Andrew: And he succeeds and he’s doing well. Well, congratulations to him. Congratulations to you.

If the audience cares and who knows? You never know. Sometimes, the audience thinks that me asking about revenues and break-even, I think it’s important. Sometimes, the audience they couldn’t give a rat’s ass so we’ll find out.

If you’re interested, ask in the comments. Maybe if we get, let’s say if we get three people asking for it, then Matthew will tell you in the comments about whether he broke even and how well he’s doing. If you’re not interested, then that’s fine. Hopefully, you’ve got enough about not having an audience and why to charge that audience from this interview.

My big take away, I’ve got many take-aways but one of my big take-aways is 6.5 million unique users is not all that it’s cracked up to be. We’re always thinking about how do we get more and more users but, screw that. I don’t want hits. I want revenue. I want a real business.

Sounds like you do, too.

Matthew: Great take-away.

Andrew: The website is stormpulse.com. Storm P-U-L-S-E.com.

Matthew, congratulations on building this business up and looking forward to hearing and seeing what happens next and I’ll be reading your book also.

Thank you all for watching. Bye.