What happens to a successful entrepreneur when Facebook changes the platform he built his company on?
Last time I interviewed Nathan Latka we talked about how he did over $400,000 in revenue in his first year of business.
His company, Lujure, made it incredibly easy for businesses to create robust pages on Facebook.
Since then, Facebook stopped allowing businesses to make these pages the default and instead shows a business’s timeline. Fortune magazine said it’s a tweak that killed a billion dollar industry.
So I invited Nathan to talk about how it impacted his sales.
Nathan Latka, Lujure
Nathan Latka is founder of Lujure.com, which helps businesses create custom fan pages in under 30 seconds.
Andrew: Coming up, how can you be that inspiring boss that you always wanted to be? You’ll find out in this interview. Also, are you paranoid? Do you worry when you go to sleep that when you wake everything you built will be destroyed? Well, today’s guest is going to show you what to do to avoid destruction. He did it himself and I’ll show you how you can avoid that, too.
Also, you know how there are moments in my interviews that make you just [??], just wince? Listen to my question about the way today’s guest wore his shirt and then you tell me if that was a wince moment or if is it a moment that you happy that I’m here doing this interview. All that and so much more, including financials. I know you love financials.
First three messages. Who’s the lawyer that founders in the Mixergy audience trust? Scott Edward Walker of Walker Corporate Law. Have you seen what Chris Prichard posted on my Facebook page? His new company’s incorporation pages that Scott Edward Walker helped him get. Scott Edward Walker is the lawyer that publications like Forbes trust. Go to WalkerCorporateLaw.com
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Finally, when Dave Jackson and Dave Petrillo invented a product that keeps coffee at the perfect temperature, what platform did they use to create their online store? Shopify.com. Look at how beautiful their store looks. It’s because it’s built on Shopify. They did hundreds of thousands of dollars in sales. Shopify stores are designed to help you sell. Patrick Buckley invented an iPad case and used Shopify as his online store. Within months, he sold over a million dollars in cases. Get your beautiful online store at Shopify.com
Here’s the program. Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitions upstart. And what happens to an ambitious upstart who builds a successful company on the Facebook platform and then Facebook changes their platform?
Last time I interviewed Nathan Latka, we talked about how he did over $400,000 in revenue in his first year in business. His company, Lujure, made it incredibly easy for businesses to create robust pages on Facebook. Since then, though, Facebook stopped allowing businesses to make these pages, these beautiful pages that Nathan’s company built. Facebook stopped allowing those kinds of pages to be the default pages that people see. Instead Facebook shows Timelines for businesses as the default. Fortune magazine said that this little tweak “killed a billion dollar industry”.So I invited Nathan back on here to talk about what happens when that kind of tweak can have such a big impact on a successful entrepreneur. Nathan, welcome
Nathan: Andrew, thanks for having me. I appreciate it.
Andrew: So one of the things that we’re going to talk about today is the name change. Over your shoulder I see that there’s a brand new company name. Tell me about that. What is it?
Nathan: So on September 6th, today or yesterday, I forget what day it was we decided to essentially shift away from what Lujure was about because we wanted to empower more small business owners and we decided to switch the name from Lujure to Heyo because what we saw happening, Andrew, was a lot of folks would get on our webinars, which I learned how to just perfect those from you and your interview with Louis. They get on our webinars and then the next day they’d be with their friends over lunch and they’d say ‘Oh, yeah, you got to check out Lujure for small business marketing. It’s the best tool out there.’
And their friends would then go home and not remember how to spell Lujure. So we didn’t want to lose on that opportunity and while it was difficult to transition our current Lujure-ians because they love the brand, Andrew, they call themselves Lujure lads and Lujure ladies and we spread the Lujure love, I mean, it’s great. But what we were looking at was the opportunity to reach the millions of people that we haven’t reached yet and we felt that this was an opportune time to move to Heyo. It just feels good to say it, Andrew.
Andrew: And it allows you to expand beyond Facebook, to not be dependent on any one platform that could change your business so dramatically. True?
Nathan: That’s exactly correct and that’s a huge piece of why we’re doing it.
Andrew: All right. We’re going to get into details on what you’re doing and why you’re doing it throughout this interview, but let me ask you the important question that I think is on my audience’s mind. Facebook made the change. What happened to your revenue a month after that?
Nathan: So Facebook made this change right at the end of February, going into March. And I’ll be very honest. We didn’t have any, we’re a company, Andrew, in the Southwest Mountains of Virginia. Here at Virginia Tech in Blacksburg. We’re not in New York or Austin or Silicon Valley. So we didn’t have any insight into Facebook. We weren’t speaking with Facebook, but we were taking a gamble, a guess.
So what I did is I had our whole entire team take the day before the change off and I said ‘We got to be in the office for pretty much 30 hour straight when this change happens so we can react very quickly’. And what we did is the update got pushed out, actually much earlier than it was supposed to be pushed out at about 4:00 am, actually. And we had a product out that addressed all the consumers fears by 8:00 am that same morning, which we just called it The Timeline app builder.
So when everyone switched from fan pages to Timelines on Facebook Fan Pages, we were prepared to basically answer every fear consumers had about timelines. And what was great about change, and this is one of the reasons I love the team we put together, is change is actually a blessing. If nothing ever changes, there’s no kind of ebb and flow and you can’t take advantage of the valleys and the mountains, right?
So because of that change, we saw a lot of our competitors go out of business. They were seeing 50% turn rates in that month of their entire monthly recorded revenues shrink. We saw the opposite. We had the star align properly, the small business loved what we did and we actually saw 31% growth in monthly recurring revenue.
Andrew: Thirty-one percent more revenue after this change.
Nathan: Exactly. And it all happened in about two days and it was just because of our reaction time to the change.
Andrew: Last time you were on, I knew your monthly revenues. You didn’t want me to talk about them publicly and I respect that. This time I’m going to ask you, would you at least talk about your monthly revenues back the month before the change and the month after the change?
Nathan: Yes. So the month before the change we were right around, and I want to get this as accurate as possible, I believe we were around $50 or $60,000 a month.
Andrew: In revenue?
Nathan: In revenue, yes. And then, after that change, again we grew about 31% and just popped us up and that put us right on our track to meet a lot of our goals that we were aiming towards the end of this fiscal year.
Andrew: So roughly $75,000 in sales, after this change.
Nathan: Correct. 31% growth and it really was something unlike I have ever seen. And we had a system set up that just made this great. We actually grew too fast. When you actually go back and look at it, we actually grew way too fast. we didn’t have the internal infrastructure to support all the small business owners and that is really what I love. I mean, I before that was calling every single new user, every single person that cancelled, building a relationship with every single one of them and with that burst I just couldn’t keep up. And it was great for us from an entrepreneurial perspective because it forced us to build a great team and we’re chugging along doing phenomenally well. Now to this point, as a credit to that change that Facebook made.
Andrew: OK. So here’s my vision for this interview. We are all going to have as entrepreneurs, this wholly crap moment where the world below us just shifts and it can knock us on our butt and everything that we built could get taken away from us or we could do what you did which is find a way to stand firm and grow. I mean, we go to sleep at night worried that when we wake up we will check our email and the world will change like that.
So what I want to understand is why you were able to do this? What specifically you did to anticipate the fears the customers had, how you made sure to respond to it, what you did to grow your sales in that month? I want to know everything and I want it with this one thing in mind, we love you but we as an audience we love ourselves and care about ourselves and our family frankly even more. We want to know how you did it so that we could do it too. So with that in mind, let’s first make sure that we understand where you were before this change. What was it about this product, for anyone who doesn’t exactly understand it, what did you build that allowed you to get to even $50,000 in monthly sales in such a short period of time?
Nathan: Well, there was a lot of great companies out on the market, that were kind of building like baby fan page builders, right? They allowed you to kind of put your brand in a template, and then post a face book out. And Andrew, what was happening in the social world, is a lot like what happened in the dot com boom. When the dot com boom happened, you saw brands, web site builders pop up like nobody’s business. And all I did, and what my team did, is we saw an opportunity. It was a parallel, right? With the social boom, everyone wanted a fan page, just like in the dot com boom, everyone wanted a website.
So all we did was, we studied the business model of website builders, and applied it to social. And what we did to take it a step further is we were the first to market with a product that truly was free form. In other words, you could go in, drag and drop together a face book fan page tab, and you work restricted to a template, which was really important, Andrew, for our users, because they didn’t want to use a template, and then turn around a week after and see that their competitors were using the same template.
Andrew: But the idea is Facebook would say to businesses, “Hey, congratulations, you guys can now have a page on our site.” So it could be facebook.com/mixergy. And they said, “You can do anything you want as long, as you understand how to code up that page.” And most businesses just said, “I don’t know how to code up that page, I want to run my business, I don’t want to figure this out.” And your competitor said, “All right, here is a simple template solution that will enable you to create a Facebook page, facebook.com/mixergy can now look like this template allows it to look, with a few changes that make it its own.” You said, “Screw that, that’s not robust enough, we want businesses to be able to put YouTube videos on, to be able to move elements like YouTube anywhere on this page.” That’s the product you built, you sold it on a monthly fee basis, right? You told me you had a 333 sales proposition, 30 bucks a month, 300 bucks a month, or 3,000 bucks a month, that’s your plan, that’s what you were selling. And the way you sold it, you said last time was through webinars.
Nathan: Correct, yep, dead-on, and it was . . . a lot of it was about thought leadership, so . . .
Andrew: Tell me about that, because we talked about the webinar way that you sold before, we talked about how you sold on Facebook, but thought leadership we didn’t get into.
Nathan: Sure, so look, I’ll open up the chest and tell you exactly how we did it, because this can work in a variety of different industries. We wrote a blog post the night before the changes, on our blog, that was specifically optimized around when people would search new Facebook changes in Google, because all that we knew the things would come the day after, we didn’t know what they were, but we knew if we optimized right away we can capitalize on the traffic. So we posted this blog post, Andrew, it’s still on our blog today, and it was literally a guest post, not only is Lujure posted to our blog that had a list of about twenty changes that were going to happen.
Instead if you want to understand how to get more traffic, leads, and sales, through these new opportunities and changes, join Lujure on the webinar on the day after. And we put a little opt-in, Andrew, and you’re smirking because you know where this is going, we put an opt-in in there, peak traffic came to this thing like you wouldn’t believe. Totally free, I got a 113,000 unique views in 24 hours. We had a thousand people in our live webinar, and then I just hustled, Andrew, I hustled, and hustled, and hustled [??].
Andrew: Because . . . you had to hustle because you didn’t know what the changes were. You had to hustle to understand the changes, to explain the changes to an audience of people, and then to say, ‘Here’s how we have a solution that will help you deal with these changes.’
Nathan: You’re exactly right. I stayed up that whole night studying the changes, thinking about new marketing strategies.
Andrew: OK. So you build this thing up, 50,000 . . . I remember the look on your face when you did well. I remember the excitement that you had for this, and the vision that you had for how much bigger it was going to get. And then do you remember the day, when Facebook announced that there was going to be some change to this platform that you build your business on, do you remember? Did you have a, “Holy crap, what am I going to do” moment?
Nathan: Well, what was really interesting is I didn’t have that kind of moment necessarily, because what I . . . but what happened was everyone around me was, right? So it didn’t matter what I felt. All of our consumers, even people on my team are going, “What are we going to do?” And what’s really interesting is you kind of have to . . . when you’re building a team, and this is, I think, the biggest secret that Lujure, and what now Heyo has is going to make us very successful in the long run, is that it’s not about the product that you build. You have to build very beautiful products, but anybody can do that, right? You have to build a team that can learn anything quicker than anybody else, right? Because change is the only 100% positive thing that’s going to happen. So if you can get people around you, developers, designers, sales folks, marketing people, that understand how to learn quickly, adapt, and think on their feet, those are the kinds of people you want to surround yourself with.
So when I was recruiting for team, I’d go out to restaurants and I’d say really random lines to waitresses and waiters and see how they react. And if they reacted good, I’d try to hire them. Right? You want to find people who think on their feet. And that was a real credit to what enabled us to stabilize after we realized Facebook might be making these changes.
Andrew: But you didn’t have that moment where everything changed, where you said, I don’t know, this could take away everything. You didn’t have that?
Nathan: Well, I told and I shared and my team [??] about it now. I told my team, hey guys, look, we’re about to be in a fuck ton of trouble. And what we did is, that causes everyone to work extra hard. Right? Because hey guys, we’re going to be dead tomorrow if we don’t do this. And it puts everyone on this thing and there’s been studies about this on a thing called death ground. And when your whole team’s on death ground, productivity and innovation just goes through the roof. So our whole team was on death ground and it wasn’t fake. Right? It was very real. And we just created a great product.
We had so many phone calls from small business owners that were really upset that you couldn’t make the fan page tab the default landing tab anymore because it was going to drive away more traffic away from that tab and no one would see it. And you probably, in your research [??] interviews saw, there were apps, Andrew, like static HTML, that had 80 million monthly active users before the change. Today, when you go look at that app, it’s got 14 million monthly active users. I mean, this was a catastrophe and it still is. And these companies didn’t evolve with what Facebook was doing. We were fortunate enough to do that and we’re going to continue to do that.
Andrew: Death ground. I actually never heard that expression before. But I do know that one of two things can happen when people feel that death could possibly hit them at any moment. It’s either, I am so motivated I could do anything, this time it’s for real, what I do now could really save everyone’s life and we can change everything today. Or it’s, I’m freaking out, I think this company’s gone, I better go look for another job. Maybe the waitering job I had before Nathan came in and talked me in a clever way is still available to me. How did you keep people from going there? And then I’ll get into specifics of what you did to recover.
Nathan: Well, I could tell you. But let’s put ourselves, let’s act like we’re flashing back and you’re on my team . . .
Nathan: . . . and you’re the waiter that I hired. OK?
Nathan: This is the spiel that I’d give you. I’d say Andrew, you are going to have very few moments in your life where there’s a whole industry that’s changing and you’re right at the point where you can shape an industry. Andrew, you know that [??] the past several months, we’ve grown from a ramshackle room above a broken-down bar in Blacksburg, Virginia. We now have the opportunity to compete with these Silicon Valley firms backed by hundreds of millions of dollars and these Austin firms and New York firms because with Facebook’s change, everyone’s put on even ground. And so Andrew, this is a moment, we’ve got to capitalize on this, it’s going to be 24 hours of hard work and man oh man is it exciting. And I’d say, you know, are you in? Right? Who is with me? All right? And you get the troops going and you get them rallied and again, you go, you move forward.
Andrew: Nathan, one of the things I always love about you is that you can talk, man. You can talk. All right. I . . .
Nathan: [??] bad thing or a good thing?
Andrew: That’s a great thing. That’s the kind of thing, actually, that you want your boss to be able to say to you. A lot of times, we go into work because we want to be inspired, because we want to be led, because we want someone who’s going to bring out the best in us. I still think of my old boss when I was in college, Paul Servera [SP], and how he talked to us. And I keep thinking of how would he handle this situation, because he was such a motivating force in my life and that’s the kind of job that I want. Unfortunately, most people have jobs that they go in and the boss is not really paying attention and he’s really, he’s scared to death of what’s going to happen to him and he doesn’t do what you do. He does the opposite. All right. So let’s talk now more specifically. How did you know what fears your customers would have so that you could then anticipate them and build solutions for them?
Nathan: So the answer to that is I actually knew very little. I just knew that people feared change and with the [??] marketing funnel before I knew what the specific changes were, we built the whole funnel around change because, again, people were fearful. And so we had a few clues. Right? We knew Facebook was going to be changing. We weren’t sure if the tabs, which were listed across the top of the page previously, were going to be moved. We weren’t sure where they were going to be moved. We weren’t sure if the width was going to change. There’s a lot of things we were unsure about. So all we did is we made sure that when that small business owner logged on their computer the next morning and they saw the change, we knew the first thing they would do is check our fan page or go to Google and type in new Facebook changes. And at that time, we were ranked number one for new Facebook changes. So all that traffic just piled in and by that point, here’s what we did. We set up that blog post without knowing the knowing the changes, but as the changes came in, and I got strategies I updated the blog post, right?
Andrew: It’s a webinar opt in. So, it’s kind of tricky from a time perspective to manage it, but that’s how we did it.
Nathan: I see. So, you knew that they were going to be afraid. You knew that they were going to do certain things to deal with that fear. One of them was Google for solutions, and the other is do what I did, which is . . .I wasn’t sure what was going to happen to Facebook fan pages, so I went to your Facebook fan page, to see what happened to your page. And then, I figured the same thing’s going to happen to my page. And the way you handled it was probably going to be the way I handled mine. All right, so you jump on it. What else? What else did you do?
Andrew: Then what we did is on that webinar. We just made sure we give it a ton of value. We, shoot — what was the title? We had a great – it was like 11 tips and tactics to leverage new timelines for profit. Something like that was the head of that. We were doing webinar, after webinar, after webinar, and people just got on it. And when people were on the webinar, I’d say something like, “Hey, guys, at this point in the webinar, I need to pick someone live from the audience to use as a live demo. So, what I need is your website. So, I need you to go to our Facebook page and post. Nathan, this webinar is blank.” And then I said, “I want you to write two friends who we could gift this webinar to on your behalf. They’ll love you for it.”
Nathan: And then, you’ll pick one of them, and you’ll change their stuff, right?
Andrew: Here’s the thing though, Nathan. Your product, essentially lost value because . . .
Nathan: That’s correct.
Andrew: . . . right before the change, someone goes to facebook.com/yourcustomer. And they get this landing page that’s optimized for a specific result. And after the change, your customer goes to the same page, and it’s just a Facebook timeline with what happened most recently. Not a call to action, not a clear push towards that action, but just a list of what happened recently. So, your product wasn’t as powerful, wasn’t going to deliver the same kind of results. So, what do you do now?
Nathan: Damn it, Andrew. You always ask the hard questions, right? Look, it did lose value. It did lose value, because no one understood how to use the new timelines. We didn’t understand how to use them. You know? Facebook didn’t know it was going to happen, either.
Andrew: And you can’t build anything for it. You can’t now build a landing page within the timeline, can you? No.
Nathan: No, you can’t. So, what we did was there are a few positive things. One was each tab was now featured, right under the cover photo, with a much bigger thumbnail image that used to be attached to it. So, you could put call to actions in there like: sign up now, or free webinar, or free eBook, or free Mixergy class.
And what would happen is people would click those, and then go into the tab experience. Another massive advantage of the change is that the canvas was now 810 pixels wide, as opposed to 520 pixels wide. So, you could fit way more juicy real content in there; specific content that drove traffic, leads, and sales with email opt-ins, and even ecommerce. So, what we did is we focused on the great new things, and helped teach folks through our leadership how to use the new changes.
Andrew: I see. So, you’re saying just to recap my understanding of it is; you said there’s got to be some opportunity in here, something in here we could do, something in here that successful business will figure out over time. We got to figure it out right now, and then we got to make it easy for our customers to be able to use it. And then, you figured out, as you said that those top images, the thumbnails that link to tabs, because they are bigger, can now be used to promote.
In fact, I’m looking at your page right now, and it says daily webinar. So, I click there to go to a page that lets me sign up for the daily webinar. Free trial, I click there and I get to go to a page that sends me to that, and so on. So, it’s really effective call to action on a smaller scale, but you can do multiple calls to action there. How long did it take you to figure out that that’s what you can do with those buttons; that that’s how you can make them useful for people?
Nathan: So, we figured all that out in about ten hours after the launch. I mean, it was again, it was very, very, very quick. We were just looking at it going, “What can we do?” There were other strategies that we’d share with people, like using the new milestones feature, which was organic to the timeline. It was a new feature Facebook released. In a milestone you could say, “Congratulations to Andrew, [??] who just got 10, 000 fans on Mixergy,” with a big picture of you smiling. And then under it, it would say click here and see how he did it. And when you click that link, it took folks into a custom tab. So, there were . . .
Andrew: But how long did it take you to figure out that these things were available to you? You’re saying within the same day before that big webinar?
Nathan: Yeah, we did the webinar at 7:00 p.m. that night, and we just worked our tails off, man. We just worked.
Andrew: You just sat down and you said how can we use this? You know what? They have something called milestones, which means that an image can be made bigger. If we’re clever marketers how would we figure this out in a month, OK? This is what we could probably do in a month. Let’s just launch it right now. And let’s tell people about it right now.
Nathan: Exactly right. Time was of the essence, because you had these huge companies, these other companies competing with us that weren’t going to change for two, three months because they’re so slow. So, I mean we had people joining us, leaving our competition coming to us in droves; because our competitors, all their tabs were showing 520 pixels wide, and an 820 pixel canvas. It looked like crap.
Andrew: How did you change that?
Nathan: So, all we did is we created an 820 pixel wide, in the Facebook editor, which they could install in the actual canvas and drag and drop it together. So, it was actually a very simple fix for us. All we had to do, the harder part, was about letting folks know about it. We were sitting on, just a rocket ship and had to tell people.
Andrew: Were you able to, same day that you discovered the canvas got bigger, change your editor so that your customers can make their pages bigger?
Nathan: That actually took more time. It took more like three days, because we had to do backwards compatibility stuff, and all kinds of other stuff. What we did though, is we used this in Facebook editor as an on-boarding strategy.
Now, it’s not as effective now because it’s not a shiny new object anymore, so I can share exactly how we did it. And all we did was when people installed that, we were getting email addresses, we were driving them into the webinar; and again, it was a ton of traction. I mean that’s what we leveraged; leases on an onboard strategy, sold to a bunch of them, and grew 31%.
There’s a lesson, Andrew, here. People are probably listening right now going, “OK. This is great, but I’m not a Facebook company. How do you change quickly and like what’s the lesson here,” right? The point that you guys listening should try and take away from this is; I would go so far as to say as, “You should embrace change, especially if you’re a startup, competing against dinosaurs in the industry. You should get some sense of what the change is, or try and create it yourself. And then, present yourself as a marketing funnel, or something on the back end, that eliminates those fears that the consumers have about the change, if you’re B2C company. It all comes down to be agile, not getting stuck in a twelve month product roadmap that’s not flexible.” You know these are all lessons, Andrew, I think your audience could potentially use.
Andrew: I see. Did the growth stay?
Nathan: Oh, no, no, no.
Andrew: It went back down?
Nathan: I wouldn’t be here right now, if we grew 31% a month, over a month. We’d be in Boca together.
Andrew: But, did the new $75,000, a month revenue stay, or did you jump for a bit, and then go back down?
Nathan: Oh, no, no, no. It stayed. It’s just stack, stack, stack, you know it’s phenomenal, we just keep stacking. There wasn’t like a 60% churn in the month after, if that’s what you’re asking.
Andrew: Is part of it that you guys have stable revenue because you charge monthly fees that you won’t lose all your customers, all at once?
Nathan: Well, I don’t know if that’s true. I mean, you know this with your membership fees. I mean, the things that drive our business are churn, LTV, and RPOO; and CAC to an extent as well. And what happened, for those who are listening and are familiar with your software companies, CAC is cost acquired customer. And because of the change we were able to acquire customers at just a bottom out rate. It was pretty much free. I mean we didn’t spend any money marketing that blog post or the webinar. So, no Andrew, we didn’t see a big drop-off. I mean we didn’t have customers leave. I love the monthly recurring model. I mean you’re going to have churn between, you know 1% and, maybe as high as 10%, and you want to aim for 2ish%. But, that’s the great thing about a recurring revenue stream is it just stacks itself.
Andrew: All right. So, I already can see some things that I can use and other people can use in their businesses. Big change happens first of all don’t hide from it, just stand up and use it as a motivating rallying cry for the troops. Look at the transcript of what you said and try to copy something like that, or try to come up with something similar. Second thing is there’s going to be a bunch of people who are going to be freaking out; think of them as potential leads. Set up a landing page to capture all those potential leads, and say, “Hey, you guys are freaking out, I’ve got the solution.” Third thing is find a really quick solution that can actually work. Have your head about you; keep from freaking out, and ignoring opportunities that are right there. Find a few opportunities, and sell those. And that’s what you did. You sold them and tied them into your product.
Nathan: Exactly. And then we built great relationships with them to make sure that a lifetime added value is always there.
Andrew: Then why are you leaving Facebook? Or why are you going beyond Facebook, if this is working so well for you? Why not build, and build, and build since you guys have mastered Facebook?
Nathan: Well, I think if I just showed you a stock chart, a Facebook stock, it would knock most of that question out. You know, Facebook is great for a lot of reasons. But small businesses, small to medium-sized businesses, what they don’t have is a lot of time and a lot of money. And what they need are traffic, leads and customers. Sales. Right? So, you know, what Heyo is, is it’s three things all in one. Right? It’s basically a fan page builder on steroids. It’s a breakthrough mobile app creator, Andrew. And it’s just a simply remarkable website builder. And what we’ve done is the small business listening right now could just connect their fan page and Heyo would automatically generate a mobile app and a website all from data that already exists in the social, you know, cloud, whatever you want to call it. The social world. And one of the key things, and this is another thing that ties to the change dynamic, Facebook, this is just ridiculous, Facebook right now, as of this interview taping, Facebook does not have mobile optimized fan page tabs.
Andrew: I didn’t know this. I didn’t know that.
Nathan: Yeah. It’s crazy. So in a great turn of events, we’ve been able to do it here at Heyo. We’ve got a great team. Our consumers told us they want mobile. And for the first time, small businesses, with one click, can take their fan page tabs and make them viewable on mobile with the specific goal of making sure that their content is always in their customers’ pocket because it’s obviously on their cell phone.
Andrew: So you’re saying, hey look, Facebook’s not grown that much more. That Facebook’s not going to continue its growth rate, it can’t continue that crazy growth rate that they had. In fact, based on what you’re saying with the stock price, Facebook is starting to go down. Is that right?
Nathan: Well, so yes to an extent. But we love Facebook. We’re going to continue building on Facebook. What we’re seeing, though, from small business owners like Lydia, for example, a Northern Virginia restaurant owner. She was frustrated that she paid, what did she pay, $3500 for a website. And then what she did, and Andrew you’ve probably seen this on folks that listen to your stuff, is they’ll cram a bunch of widgets on the right side of the website. So Lydia had jammed a Yelp widget on the side, a menu widget on the side, operating schedule on the side. This is what the whole website experience should actually be. Not a big long about page and all this other crap. So we’ve done, is taken all the social data and with one click, this website is built all based on social data for that restaurant.
Andrew: I see. So one website, all that data is used to create different pages, content comes from other sites, largely.
Nathan: And it ties all together. It all starts with Facebook. And then you click it, we mobile optimize it, so in that mobile optimized app, it shows your Facebook fan pages. We pull in your Facebook photo albums. But we also pull in your Twitter, your YouTube. You can create deals. So it’s, you know, small businesses don’t have time. They don’t have time to do all these outlets. And we think by putting it all together, we’re essentially giving them, with one click, three times the power. [??] three times as much.
Andrew: You got the domain, Heyo. Incredible domain. Four letters, easy to spell, H-E-Y-O.
Nathan: I’ll sell it to you for a million, Andrew.
Andrew: I happen to know what you got it for. It was a great deal. Are you saying that publicly?
Nathan: Yeah. No, no.
Andrew: No. All right. It’s not critical to this interview so I’m not going to push you for it. But what I do want to know is, you got it from your investor. Right?
Andrew: Why did you get investors when you’re pulling in $50,000 a month, $70,000 a month? Why go after investors? You’re doing pretty well on your own.
Nathan: And that’s exactly why we did it, because we had every piece of negotiation leverage on our side. You know, we didn’t have, we weren’t cash strapped, we’re still not cash strapped, we’re doing phenomenally well. And when you go out and, you know, for all [??] listening that have raised money or are trying to raise money and I, look. My experience is I’ve done seed round for [??]. But what I learned was you have to create the supply and demand. Right? And we were able to drive so much demand because, you know, an investor would say, well, hey, [??] this term? And I say, OK. Well, we’re not interested. We’re already overcommitted anyway. Right? And so you’re able to drive just great deal terms on the seed round because . . .
Andrew: All right. I could understand how there’s demand when you don’t need it. I could understand how there’s demand when you’re showing one investor what another investor’s interest is. But what I don’t understand is why do you need it? Why do you need the money? Why bring in investors? Why complicate the business? Why add more revenue? Why add more cash when you already have revenue?
Nathan: I think you might . . . So, we didn’t look at it like that. We looked at it as we’ve got a phenomenal product. It’s helping 95,000 small business owners already. Who can we align ourselves with that are going to help us put this great tool in the hands of ten million companies? And that’s why we chose very, very strategic investors.
Andrew: Which investors did you pick, and how are they going to be able to help you get to the millions of customer?
Nathan: So, I’ll give a great example here. So, 500 Startups; Dave McClure or Paul Singh, right? We’ve been testing a lot of great new things in our customer acquisition. I just got off the phone yesterday with a guy named David Quick [SP] who ran all the small business marketing for Intuit, and Homestead Technologies. The way that I found him was through the 500 Mentor Network. I mean we learned so much from that.
Andrew: I see, but you’re saying by taking money from 500 Startups, you also get all the connections that 500 Startups bring to the table.
Nathan: And that’s true with even individual investors.
Andrew: OK. Do you have an example of how an individual investor already helped you?
Nathan: Yeah, but . . .
Andrew: You’ve only had investors for a few weeks now, right?
Nathan: Yeah, we’ve had investors for a while, probably two, three months now. So, you know one of the investors which I won’t name has a lot of experience with marketing and sales. And as we’re thinking about, you know, marketing and sales he’s been able to say just basic things like, “Hey, Nathan. When you’re thinking about inside sales, recognize that you want to make sure you stick to the rule that we set, which is only spending one third of capital on LTV. And it’s going to be very hard to keep that metric, unless you put a human touch on every sale, rather than an inside sales team.” It’s pointers like that, plus when I have a shitty day, I can just call and tell him I had a shitty day here’s why I’m worried. And they’re like, “Hey, Nathan. Buck up. Get over it. It’s going to be fine.” And we move forward.
Andrew: All right, let’s talk about that now. Here’s a thing that I’m noticing about you. I already said you’re a great talker. You’re expressing a lot of confidence in this interview. A ton of confidence. In fact, your shirt’s got like four, five, six buttons that are unbuttoned. I’m usually, if I just show a little bit of hair at the top of my shirt, I feel like I’m naked. I need an undershirt. At what point did this happen? Talk openly. Really allow yourself to be vulnerable, and tell us about the time before you had this kind of confidence and what the hell happened that got you to be this confident right here.
Nathan: Andrew, it’s . . .
Andrew: Dig deep. Be like the kind of person who you’d want to hear on Howard Stern, who exposed himself a little bit.
Nathan: Yeah, let me do this. Let me keep my shirt on. You know what it really was honestly? When I was really, really – when I was young. I want to make sure I tie this together. When I was really young I grew up with a dad who was a coal miner, and a mom who worked as a pharmaceutical consultant. And she also was an entrepreneur.
It’s kind of like rich dad, poor dad. I just had these two very opposite things, right? Dad didn’t like putting money in a bank. Mom wanted to invest and start new companies. And what I just learned very quickly is you have to kind of understand your risks profile. And one of the reasons that we haven’t talked about one of the things that I think has helped me, help my team at Le Jour become successful is I dropped out of school.
And I dropped out of school for a very, very important reason. I feared, as I was nearing graduation that once I had that diploma, I was going to use it as a safety net. And I wasn’t going to take as of big of risks because I knew I had — there was like a safety net. I was like, “Oh, well if this fails, I can just fall in this safety net.” So, I wouldn’t try as hard. And so, by forcing myself because there’s no back-up plan by forcing yourself, when you have no degree, you have to become successful.
And what I did is every time that I worried, even right now, I’ll be candid with you. Right now, I’m worried about a few things. Our industry is consolidating. There’s been over $1.5 billion of acquisitions in this space [??]. Facebook stock is going into the ground, right? But, the reason I have confidence is because I know that my monthly expenses, could be covered by me going to Walmart, and getting a full time job at Walmart and I can cover it. So, I just don’t have — there’s nothing over my head. You know, I come in every day. I enjoy working, and thinking about Le Jour every day, because I know worst case scenario. I’ve planned for it and I have it covered. And that allows us to take massive risks that pay off handsomely, this Heyo launch being one of them. And then I can also unbutton my shirt.
Andrew: What about was there a moment with revenues where you suddenly felt like you were much more powerful because you had a big profit? Because you were earning more in a month than you had in the year before, anything like that?
Nathan: Like, I’ll tell you what I’ll show you, I’ll show you what I’m talking about it. I’ve done these interviews for a long time now. If you look at the early interviews, I was nervous as hell. Partially, it was like, just flop sweat because I’m not comfortable speaking in public. I never was. It was never my big passion, but I changed, and it wasn’t just because I had more experience. You can look and see, I changed because Mixergy was producing revenue. As soon as I turned on the spigot and Mixergy starting bringing in revenue, you could hear in my voice there was a “fuck you” type of thing. If you don’t like the way I’m doing things, I know things are going well.
Nathan: Freedom fighters.
Andrew: And it’s not that I needed the money. My life doesn’t change at all because of that. Theoretically, I should have been fine. It was the exact same, but that extra burst of revenue gave me the confidence to speak up. It gave me the confidence to stand up straighter. It gave me the confidence to push back in a way that I might not have before in an interview, and you can see it before and after. As I say this to you, I feel a little bit exposed for sharing it, but I know that the audience can understand that. What was it for you that got you to be where you are now?
Nathan: When we first started Lujure, again, you know the story. It’s above a bar in downtown Blacksburg. We didn’t want to spend a bunch of money or time building a product and seeing it if it would sell. So what we did was we built a video that showed what we wanted Lujure to be, and I went and pre-sold 30 Lujure plans based on the video idea, and I said, “You’ll get this in seven days if you buy now.” Holy crap, my two co-founders, Josh and Brian, were sitting with me and hey said, “Holy crap, we’ve got to build a product in seven days. People bought this thing.”
The second that happened, I mean, it was just, “Let’s go”. I’ll tell you, the reason you’re feeling what you’re feeling from me, like through this computer screen and the reason the audience might be feeling what they’re feeling right now. There are times when I just go off of my team. I’m very candid with Josh and Brian, or I’ll go and praise when praise needs to be given out. I’m a super perfectionist, and there’s a lot of times in our industry where things are just in the crapper, and what I do is I try and shift it. I try and shift it and say, “What’s the opportunity here?”
We’ve had this happen so many times. When North Social exited, which was a competitor, I’m going like, “Why did they exit? The market’s great. We’re growing. Why are people exiting? Are they seeing something we don’t see?” And then [?] sold and Buddy Media sold and WildFire sold and Visher [SP] sold, and I’m going, “We’re growing. I don’t want to sell.” And so, that’s why I have confidence. We have a great team around me as well. I’m looking around at them right now. They’re all looking at me, going, “Why is he waving his hands?”
Andrew: You’re in a conference room with big, big windows and they can look inside, but they’re not in the room with you.
Nathan: Yeah. Let me switch this back real quick.
Andrew: Is there anything hidden up on that calendar? No?
Nathan: I wanted to make sure there wasn’t. So, yeah, that’s why you’re feeling what you’re feeling and you’re from a confidence perspective.
Andrew: So it’s where is the opportunity? Now, self-help books always tell us that’s the way we should be looking at business, but, man, go try it. When you’re feeling really crappy, go try to find the opportunity. How are you actually able to do it?
Nathan: Act me what in a different way.
Andrew: What I mean is, how do you take that from an idea that you know works to actual practice when you’re really freaking out?
Nathan: Give me a real life example.
Andrew: Let’s just talk about the change with Facebook. They make this big change. You’re supposed to say, as an entrepreneur who’s back, as an entrepreneur who brought in this big team, as an entrepreneur who brought in all these customers, who is supposed to reassure them. You’re supposed to say to yourself, “Find the opportunity here, Nathan. Find the opportunity” but a part of your head says, “I’m screwed. I should have sold before. Why did I tell everyone that I was going to change the world when I just didn’t do it yet? Why didn’t I keep my mouth shut until after I did it? How do you, in that moment, say, stop that second guessing and find that opportunity?” It’s harder in practice than it is in theory.
Nathan: Yeah. So I agree with you. I completely agree with you. I never found myself thinking, like, Lujure isn’t Facebook. Lujure means… It’s a French word. I typed into Google “an experience” and it spit out lujure. It was a French word. I’m like, OK, I’m going to use that because maybe, this one gives me confidence actually. I think you ask the perfect question, hopefully. What Heyo is, is a tool that empowers small business owners to bring their strengths to market quicker. You’re going, “Nathan, that’s bullshit. It’s words that just sound good”. So I’m going to give you an example. When every single person that’s listening right now to this interview, when you were born, there was some trait that you were just good at.
For me, I loved Lincoln Logs, and math, and Connects. I love that stuff. And I would get an A+ in my math classes. When I’d get like C’s and B’s and D’s in everything else. And my parents and the world as a whole would always say, “Oh, why’d you get C’s and D’s?” They would never say you have a natural talent in math. Only focus on math. And then find other people in the world that are really good naturally at these other things and put them around you, like tell me that.
And I’m realizing, kind of in what we’re doing at Lujure, everyone is focused on their strengths, not trying to compromise for their weaknesses. So, once I have that team, and you have the idea that you always stay focused on empowering small business owners to market online, that’s always going to be a need. That’s where the confidence comes from. I always ask myself, “OK. Facebook is changing. How do I help small business owners to market themselves online?” And that’s it.
Andrew: That makes a big difference, right? To not define yourself as the guy who’s on this platform, but instead define yourself as the guy who’s empowering small businesses; who’s helping these customers. And if the platform changes, if it goes away tomorrow these customers are still going to need help. Small business owners are still not going to be able to build web pages, mobile app, mobile phone apps, or even Google Glasses apps.
Nathan: Yeah, exactly. That’s exactly the way we’re thinking. I mean, and I can tell you right now, it sure as hell isn’t going to be these large companies in the Valley, and Austin, New York pumping out new fresh ideas every week. They don’t look at small businesses as a big opportunity. They see it as, “Oh, I got to have and build relationships with all these people. And they don’t pay me a lot of money. It’s not worth it.” And we love that. I could name our customers right now. I talk to them every day. We love our customers. And we’ve figured out ways to drive a healthy RPOO, a healthy CAG, a healthy LTV, volume sales. And it’s just working really well. And as long as we’ve got that. You know you’ve got your Freedom Fighters. We’ve got our Heyo and our Lujure lads, and our Lejure ladies. And as long as we have that, don’t you kind of feel invincible?
Andrew: Yes, it does give you that sense of power. I’ve got to say too, to the audience. If you’re a Mixergy premium member, and you haven’t seen the course that Nathan did for Mixergy premium members. Go, in fact stop right now, you can always come back to this. Go download it. And even if you don’t care at all about Facebook, listen to that last part where Nathan shows you how he sells in his Webinars. Man, you are good. It’s not just good, it’s clever and it’s fun. And the way that you not just sell in your Webinars, but you talked about how you get real time stats on revenues and how much you’ve sold during the Webinar is fantastic. And then what you do after the Webinar to make sure that people who didn’t buy don’t just walk away. You say, “Hey, you know what? That’s not a failure. That’s another opportunity for me to pick up another sale later on.”
That is incredible. You offer to do that at the end of the course that you taught, Nathan, on Mixergy. I wasn’t sure we should do it. Man, was I wrong and I’m glad that you pushed for it. It is for many people, it’s the best part of your whole program. I actually got a complaint from a customer who heard it. Who said to me, “Andrew, I want to do Webinars, too. I didn’t even know this was at the end of the course. You’re not doing a good job of telling me where the good Webinar stuff is. Nathan’s – you’re talking about Nathan. There’s a Facebook guy, Nathan. Is it this guy? Tell me about the Webinar in the course.”
So, I don’t know exactly how to do that overall, and let people know what’s in every interview. But I do know in this course, you’ve got to check out the part where Nathan talks about how he does Webinars. Of course, that’s just mixergypremium.com. If you’re a member you’ve got access to it. If you’re not, dude join already. mixergypremium.com. OK. Let’s talk about the team, and then maybe spend a little of time about what happens . . .
Nathan: Hold on. Why can’t we just gloss over that? I got to tell you. You’ve gotten so much better at that right there. I just love that. I love that. It’s just perfect, like on the . . . I mean great. I love it.
Andrew: Thank you. I do feel like I’m getting better. You know what? Give me some feedback. Getting better is helpful to hear, but as a guy who’s done it before, what would you say I should be doing differently in the way I just promoted it?
Nathan: No, that’s just great. Because I’m talking on a Webinar, and you’re going, “Hey, guys at minutes 35 and 20 seconds, Nathan gives a secret that you just cannot miss. When he goes through exactly how he does a Webinar. You know, it’s going to make your dreams come true. Go there.” I mean, you just did it. That was just fantastic.
Andrew: All right. Well, thank you. Team; you’ve mentioned several times that you have a good team. By the way, I’m so glad that even though you’ve got a cold, you’re coming across really well here in this interview.
Andrew: Anyone else would have been completely justified to say, “Andrew, let’s do this interview another time.” And I appreciate you doing it now. Do you have a few more minutes?
Nathan: Yes, I absolutely do.
Andrew: OK. Team, you’ve mentioned it a few times. I want to know a little bit more. Because yes, if you ask the right question and you challenged a waiter at a restaurant, you’re going to get a sense that someone is a person you’d like to work with. But I want a little more me. Let’s talk specifically about Webinars. There’s a talent that goes into selling the way that you do. There’s a skill that goes into selling the way that you do in Webinars. Your whole business is based on it. But you can’t do it every day. So, you said, “I want to step back and hire someone to take that on.” How do you do it? And the reason I’m asking is because that’s such a unique job. If you tell us how you hired that person, it’ll give us insight into how we can hire other tough, easier people in our company to find.
Nathan: Yeah, so this was the biggest liability in the entire company. And my opinion, was that I was the one doing; this was probably five, six months ago; I was the one doing most of the sales. Now I haven’t sold one plan in this whole month, nor did I last month. We’ve got it completely built out now. It’s working phenomenally well. We’re experiencing – Andrew and folks listening know about building a sales team. A thing called a Cash Gap, which we’re working on getting through by selling annuals, and doing a bunch of different things.
But the team is doing really well. And the way we found those people is we interviewed people. I think I told you this. I had one of the folks that work with me look up every radio broadcaster within 50 miles of Blacksburg. Mike and Mike in the Morning. Tasha and Tanya. I mean you tell me any name that’s a broadcaster in southwest Virginia, and we had them in here. I said, “You know that’s the kind of person you need on a Webinar.”
Because what people don’t understand are products can be great. Products can change the world, right? But Steve Jobs didn’t go up, and pitch the iPhone as something that you could hold in your hand, press a button, and make a call. It was a breakthrough; an Internet communications device, something else and something else. And being able to be excited about what you’ve built, that’s half of selling, right?
Then, the second part is what I see a lot of people do that even compete with us, is they record like a 30 minute words running across the slide, put up on a landing page, and then sell. And I hear all the time, over and over again is that the people who buy those courses always end up back in the Heyo family. Because they want an online relationship. They want to talk to somebody. They want that experience, right? And we . . . That’s really what we’re focused on is creating a great, great support system.
Andrew: Wait. So you said it’s not just about words on a screen for us. It’s not static selling for us. It’s a relationship. And so we need someone who’s going to be good at communicating that with his voice to an audience of people. So, you went out and you looked at all the different radio broadcasters. What happened next? That seems like a great place to find them. What happened when you hired one of the broadcasters?
Nathan: It failed, actually it failed miserably. It worked for a little then it failed really badly.
Nathan: Because he was great doing the thing . . . He actually was in the middle of a Webinar, and just on the fly he said something like, “I’ve got a guest that I want to bring in, and he did his Ozzy Osbourne impression.” And I’m like, “Lord have mercy. You just started doing Ozzy Osbourne.”
Andrew: Which is fun on the radio, but doesn’t work well in this format.
Nathan: Because he didn’t know the tactical strategies that work well on Facebook. So, you have to blend the two. It has to be personality mixed with rock star strategic advice, right? And so once you bring those together, that’s where the magic happens.
Andrew: So, how did you find someone like that? And how did you train them?
Nathan: I got one. Hold on.
[knock on door]
Andrew: Oh, you’re bringing this person in?
Alex: Are you on the phone? Right now?
Nathan: Come in. He’s in the middle of a phone call, too. Hey, are you in the middle of a phone call?
Nathan: OK. Do you enjoy . . . Here, just come in real quick. Just say how much you enjoy Webinars. This is Alex.
Andrew: Hey, Alex.
Nathan: This is Live Interview with Andrew Warner.
Andrew: Hey, are you doing the Webinars now?
Alex: Every day.
Nathan: What makes the Webinars work so well?
Alex: It’s by far the easiest way to like, talk to a person; people like that. That’s why we do them daily because . . .
Nathan: How did you find Lujure? Where did we find you?
Andrew: Craigslist, really? What was it about your background that . . . He’s got to go take the call. What was it about his background then?
Nathan: Thanks, Alex.
Alex: You bet.
Nathan: What was it about his background? Well, you see him. He’s just an outgoing kind of guy. And I spent a lot of time, and he spent a lot of time teaching himself about Facebook. So, once you get your personality together and the strategic advice, it works really well.
Andrew: How did you train him on the open loops, and all the other tactics that go into doing Webinars?
Nathan: He shadowed me for a lot . . .
Andrew: He sat next to you, watched. He listened in on the Webinars.
Nathan: And I’d throw him in. I’d be in the middle of a Webinar, and he’d be sitting next to me not expecting me to do anything, and someone would ask a question and I’d go, “You know, that’s a great question!” I’d say, “Alex, what do you think about that?” and just throw him in. Sometimes he’d be like, (inaudible), and I’d be like, “Oh! We lost Alex!”
Andrew: And then jump in
Nathan: Exactly. But by making him get in it, you can feel it, that’s really important.
Andrew: All right. What else? Growing too fast. You made phone calls to every single customer in the beginning. I could understand how when you grow fast, that’s something that doesn’t happen What else is a problem with growing too fast? Feels to me like if you’re growing, great. If you’re growing fast, even better.
Nathan: No, you can really grow too fast. One of the most important things about what we’re doing is we want people to be with us for 64, 100 plus months. We want them with us for a long time, and so many companies that compete with us right now, they do some flash sale, they get a customer, and then ignore the customer. The customer turns and then comes and joins us. So we really focus a lot on building relationships with folks and that’s really what’s so important, the lifetime value of the customer and the relationships.
Andrew: All right. I think that’s everything that I’ve got on my list. Let me ask you something that I don’t have on my list. I told you before this interview started that I wouldn’t reveal anything that you told me in private. I always ask entrepreneurs to tell me a little bit about their business beforehand, just so I know what’s up, but I promise them that I’ll keep it off the record. I don’t know if I promised you that I’d keep off the record who you hired and I don’t know that I promised to keep off the record that you have investors. When I asked you both those questions I looked at your face and I thought, “Ooh, maybe he’s not comfortable revealing that publicly”‘ Were you? How did you feel about me talking about those two topics?
Nathan: Andrew, I’m real with people, man. Ask me what underwear I’m wearing and I’ll tell you the strategic reason why I’m wearing them.
Andrew: Tell me about the strategic reason behind you underwear.
Nathan: [laugh] You know I’ve built a brand around these Christmas bo- . . . I’m not wearing them today, these Christmas boxers my ex-girlfriend got me is when I made my first sale on Facebook, and the whole beginning part of the brand was built around that actually. So I mean, I was happy I-
Andrew: So the idea is that everyone knows that you wear this specific brand of boxers, which is lucky for you?
Nathan: [laugh] Yeah. When we first started that’s what it’s about, but people like a real person. We’re not trying to sell to the Fords and Proctor and Gambles, and all that. We want to focus on all the small business owners that continually get ignored by these massive companies, and we’re going to keep empowering them, and I’m going to tell them what underwear I’m wearing, and we’re going to have a lot of fun together and they’re going to grow their businesses.
Andrew: I’ve got to tell you, the boxer briefs that I’m wearing? Actually do have a strategic purpose.
Nathan: Tell me!
Andrew: [laugh] Noah Kagan sent them to me because when I interviewed him the last time, he was traveling through Europe and his thing was he was only going to bring two pairs of underwear with him. I go, “That must be really stinky underwear”‘ And he goes, “No! There’s this brand of underwear that stays really clean and they don’t smell and you can wash them in the sink and they dry quickly.” And we talked about it for a little bit – I think he even showed his underwear in the interview – and then soon afterwards, a box arrives at my office with a pair of this underwear! And I happen to have it on today, it’s good stuff.
Nathan: That’s phenomenal. Noah, when I went down there at South by Southwest, he was kind of enough to invite me to a panel that he was putting on at AppSumo and I actually learned a lot about acquiring customers just by watching how he runs AppSumo. Now I know more about his choice of underwear as well.
Andrew: [laugh] Good stuff. All right Nathan, congratulations on the business doing so well, congratulations on the brand new name, and now if we want to go check you out, the new website is H-E-Y-O.com.
Nathan: Say it Andrew, it feels really good.
Nathan: Love it! Thanks, buddy!
Andrew: Thank you. Thank you all for being a part of it. Bye.
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