There was an odd uproar when people found out that the sharing site, Pinterest, was trying to monetize its business using Skimlinks.
Like many entrepreneurs, I took the opposite view and said, “way to go! When startups earn revenue, it helps them grow.” Then I wanted to go a step further and invite the founder of Skimlinks to talk about how she built her company.
Alicia Navarro is the co-founder of Skimlinks, which makes it easy for sites to monetize their product links by replacing them with links that generate affiliate revenue.
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All right, let’s get started.
Hey everyone, my name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart where almost, very close to, 700 entrepreneurs have come on to tell you their stories. How they built their businesses. What they learned along the way. So that you can take it all back, build your business based on their learnings and hopefully come back here and do an interview yourself where you teach others.
I’m doing this interview because there was an odd uproar when people found out that the sharing site Pinterest was trying to monetize its business using Skimlinks. Like many entrepreneurs I took the opposite view of some of these uproars. I said actually way to go. Startups need to earn revenue. It helps them grow. It helps them stay around for us. It helps them improve for us. Then I wanted to go a step further. I wanted to invite the founder of Skimlinks here to talk about how she built her company.
Alicia Navarro is the co-founder of Skimlinks which makes it easy for sites to monetize their product links by replacing them with links that generate affiliate revenue. I invited her here today to talk about how she built her company. Alicia, how am I doing pronouncing your name?
Alicia: Pretty good, Andrew.
Andrew: Very Spanish, right?
Alicia: Very Spanish.
Andrew: Are you Spanish, by the way?
Alicia: My mother is, yeah.
Andrew: All right.
Alicia: I’m Australian though, as you can probably tell from the accent.
Andrew: Yeah. You are in San Francisco right now, right?
Alicia: I am. You can even see the [??] building over there.
Andrew: I am peeking outside your window as we talk, to get a sense of where you are and what your office is like. All right, to the numbers. How many publishers now are working with Skimlinks?
Alicia: Over the last four years we’ve grown. It’s about the 20,000 mark in terms of publishers but that includes, obviously, tiny blogs or really big content networks that have potentially hundreds of sites within the network.
Andrew: All right, way more than people imagined. They thought that Pinterest invented Skimlinks. You guys have been around for a long time and you’ve got a lot of publishers, 20,000 you’re saying. With some duplicates because some publishers own multiple sites. Number of clicks per month? These are people who are clicking on links that take them to product pages and you make sure that the publisher who has the link on their site gets paid an affiliate commission. How many clicks do you send out?
Alicia: At the most recent check it was over 110 million clicks a month. That includes not just existing links that we monetize on behalf of the publisher. But also we now have a product called Skimwords which also finds product references and turns them into links to where you can buy them. That’s contributing to a lot of those extra clicks as well.
Andrew: I’m going to come back and ask you about Skimwords. I’m going to find out about Skimtool as we continue. But let’s let people understand, sometimes these numbers are so big that people don’t fully get it. Let’s explain what you do and how effective it is by telling the story of one publisher out of 20,000. AV Forums, what did you do for them?
Alicia: So, they were one of our early clients. They were fantastic audio and visual enthusiast’s forum, based in the UK, but, with an international audience. And, they had never done anything in text. They had always, actually, refused any type of in-text advertising because they didn’t want intrusive ads popping up inside their content. And, they actually didn’t allow merchants to add out-bound links or any kind of out-bound links on their site because only made money, at the time, if they kept people on their site. So they, for instance, would strip out any links to external retailers. So, then we came along and we talked about…
Andrew: So, this is a forum, and if I as a forum member said, hey people should go and check out this link over here on Amazon for good A/V equipment, they’d strip it out because they wanted to keep their users on their site, not me sending their users to Amazon or my own web site where people could buy. Okay?
Alicia: Correct, and so, in 2008, we approached them and collaborated over what we were doing and they’ve been a very happy, active customer since then. And, so what that has done over the years is, a fantastic revenue stream alongside their, sort of banner and sponsorship, and that’s revenues that they earn. They successfully have used the skim links product, so that’s the one that converts existing links to affiliated links. And then two years ago when we launched, [??] launched the Skim Words product, they added that as well. And the reason that they particularly liked it is they still were able to earn in-text revenues that would be kind of annoying in text advertisements.
And what it’s changed for them, also editorially is that they now, not only allow, but encourage users to talk about products and to link out to different retailers because, now they are actually earning an income, it’s people who chose to leave their site to buy something from the retailers, stuff like that. And they’ve been fantastic, they’ve disclosed, very openly, and the community accepts that it’s a free and this is a way that the site can maintain a revenue stream without interrupting user experience. So, it a win-win-win situation.
Andrew: So, A/V, audio-visual forum, if I’m on there now and I say, put the best A/V in is this, in answer to someone’s question. You guys will take the link that I’ve put in there and you’ll convert it into an affiliate link that makes money for A/V forums.
Alicia: Yes, but we don’t change the destination link. So, whatever the user has placed there, users [??] they click and know then they can get where they want to go. But in the background there’s a tracking that’s added and, so if the user buys anything, A/V forums gets a commission for that sale.
Andrew: Okay, how long have you been working with A/V Forums?
Alicia: Three and a half years now.
Andrew: Are you guys profitable?
Alicia: We just raised another round of funding at the end of last year. And, prior to that, we were but now, obviously, we are doubling down and growing even further. So, we have big things afoot.
Andrew: You were profitable because you take a percentage of the revenue that’s earned on these affiliate links and you give the rest to the publisher. And, when you say that we are no longer profitable, it’s because we’re doubling down. You are spending your money where?
Alicia: Team. We have a big team in London. Predominately product and R&D and we now are based here in San Francisco as well growing ourselves a marketing. So, our happy team is at about 35 people and growing.
Andrew: All right, before we get into this story, one of the questions that popped up on the message boards is that, why do merchants allow this, people kept asking. If a merchant is going to get the link anyway, from a site like A/V Forums, why would a merchant say, I’m going to get this link anyway, but now because they’re using some new software, I’m going to pay out a commission on this. How do you get the merchants to say, yes, to that?
Alicia: Because they didn’t, I mean, the traffic, they have rights to take down external links. They have the right to disable their hyper-linking capability. The fact that they are allowing and encouraging there to be outbound links is entirely up to the discretion of the site itself. And, that’s what affiliate marketing is about, you create content that links out to retailers and you get rewarded if you drive traffic that converts. That’s, kind of, the basis of affiliate marketing. Merchants, you know, are under the assumption that these site, kind of, exist purely for their benefit. But, these sites are becoming a business and they are serving a really valuable role in driving high quality converting traffic to retailer’s sites. Obviously, no one likes to pay for something that they think should be free but the majority of merchants are aware that this is great. At any stage they could decide, any of the publishers could choose not to allow [??] traffic or give a preference to merchants that do pay.
Andrew: Ah, OK. If, for example, Amazon says, I keep using Amazon because we all know Amazon is one of the monsters of the affiliate space. Big company there. If Amazon says we don’t want this any more the publisher might choose to say you know what? Buy.com has the exact same products and where they do we’re going to replace the links to Buy.com and we’re going to send traffic there. Or links that aren’t links we’re going to make into links to products, if people mention a product we’re going to make it into a link and send traffic to Buy.com. Amazon’s saying we’re paying to lock these people in. Do I have a good understanding there?
Alicia: That is all entirely possible, yes. We’d certainly provide tools that allow publishers to make that happen.
Andrew: Can I as a publisher of a forum say, if people do talk about Amazon. Amazon’s not paying me enough, if they’re talking about products and linking to the product page on Amazon I’d rather just send them to Buy.com. I believe in Buy.com’s mission more than Amazon’s. I get paid from Buy more. I could do that?
Alicia: Yeah, that’s entirely possible. That’s certainly the message that we send to merchants. Actually the majority of them are fantastic. eBay’s a really good example. eBay, when we first started, had some concerns about the forum space because that’s free traffic. We should get it for free. But they very quickly realized that something really interesting happens when you are supported with forums. You get moderators that encourage certain discussions. You get new sections of the site created purely for the discussion of products on your site.
You are paying a publisher a lot more money which means they can invest more time in better moderation, better quality design. It’s kind of this synchronicity which is all about fostering an environment and fostering the creation of sites that drive you traffic. What we’ve seen as a result, particularly in this Pinterest discussion and other similar discussions, is people realizing wow, if I build this kind of business I can make money in this way from day one. Therefore I might start this business.
Surely you want there to be an environment where there’s lots more sites that are driving all this new incremental traffic to retailers. Pinterest didn’t exist two years ago and the fact that it does and is driving all this great new traffic is something to be really celebrated by merchants rather than admonished that it should be for free.
Andrew: Yeah, I found that in these interviews all the time that when I interview affiliates they come up with these clever ways to promote a product. That there’s no way that the manufacturer, that the merchant buying the affiliate program, that anyone else except for this guy in his room would have figured out how to promote it. But it works for them.
The way it works, by the way, with Pinterest is this. I wear the most consistent, repetitive, boring clothes ever I feel. I got someone to help me find clothes. One of the first things she did was she said Andrew, here’s my Pinterest. I pinned all these things that I want you to potentially buy or consider and you tell me what you like. As she was going to different online clothing stores she clicked on the things that she thought I might like. I got a collection of photos that were all pinned on Pinterest.
If Skimlinks was used at the time and I clicked on one of those sweaters and bought it, even though she didn’t use an affiliate link it would generate revenue for Pinterest because the merchant would give Pinterest affiliate revenue. As I understand that deal if Pinterest, if she, the woman who was helping me find clothes, did use her own affiliate link in those pins, in those links to clothes, to sweaters, to pants, etc. If she used her own affiliate link Pinterest wouldn’t mess with it. It would just leave it in there so she could collect revenue, right?
Alicia: That’s my understanding. We certainly don’t fiddle with existing affiliate links.
Andrew: I’m sorry? You don’t.
Alicia: We ignore existing affiliate links. We only [??] that aren’t yet affiliated.
Andrew: It’s only when there is no money being made, or no affiliate revenue, that you guys come in and replace it. All right, so that’s how it works. That’s how big it is. Let’s talk about how we got here. Because this is a really innovative business model. I want to know where do you come up with something like this? You actually didn’t come up with something like this. I’m looking here at my notes. 2006, my research said you were in Sydney, Australia, as we can see from the accent, and you founded a company with a different name. What was that name and what was that business?
Alicia: My initial idea was, funnily enough, I guess an early Pinterest clone. It was called Skimbit because it skimmed the best bits of sites that you liked and helped you make group decisions. It allowed you to kind of pin products that you liked and be able to share them with friends. I built that for here in Australia using my own savings and a team of developers in Romania. Then after a year realized that Sydney was no place to start a start up, particularly in 2006 so I packed my bags and moved to London where I had live previously and became a full time penniless entrepreneur. Hitting the streets, trying to raise venture capital.
At the time we had pivoted the business to be not just a B to C website but a B to B where we would license that technology for other publishers to add to their site. For instance, we had a wedding website as a client and so on. It was hard. It was a hard business model.
Andrew: Let’s stand on it before we move on to what you did afterwards. Because you clearly hit on a good idea here. The idea was if there’s a wedding site out there that wanted to enable brides to collect all the wedding dresses that they were interested in, all the food that they were interested in and share it with their sisters, with their mothers, with their husbands and get some feedback. They would pin it all on this one page. They would then send that page out to their friends and get the feedback. You would power it on behalf of someone else’s website.
Where did this idea come from?
Alicia: I was always organizing group holidays. It was just to fulfill my own need. I remember at the time I was trying to buy a sofa with my boyfriend at the time and I was constantly sending emails with what about this sofa from Amazon? What about this one from a different website? It just got painful so I came up with this idea as a means of solving the problem of deliberating over group decisions.
Andrew: I see. How long did it take you to launch the first version?
Alicia: About a year. I was working full time at the time in Sydney and working at night and weekends. Then I went part time and was increasingly spending more time on it. We built this B2C version and it didn’t really get anywhere. Then we built the A2B and we had some traction but it was difficult because were selling it, at the time, on a license model so you would have to pay this quite large up front fee. That’s when we came up with this idea of why don’t we do some advertising on the site and then do…
Andrew: I’m sorry, let’s pause it. I want to really understand this whole evolution here. This is too important a story to brush over. You spent that long building it. You said you used your own money. How much of your own money did you use?
Alicia: It wasn’t a whole lot, it was about $15,000.
Andrew: $15,000. Why did it take so long to put the first version out?
Alicia: It turns out that there are challenges inherent in outsourced, offshore development. It just took a bit of time to get the design. I was a bit of a perfectionist as well. I did not, at the time, know about lean start up [??]. I was very much a, I was a product manager by trade and I just wanted to build the most perfect product.
Andrew: Share some of the things that you were looking for that were perfect so that the rest of us, when we get that way, will identify with you and say well, you know what, Alicia did that. I’ve got to back away from getting this obsessed. How obsessed, give me an example, if you would, of one of your obsessions.
Alicia: I had this kind of idea that, you know, that once you collected all these items that you’re considering and you have this one page the next step would be collecting feedback. I had this idea that it would be nice to have, it’s so silly in retrospect, a visual representation of other people’s feedback. I thought maybe we could do visual, we could represent what was the favorite, what was the second favorite, what was the third favorite by a horse race.
Alicia: Each item was represented by a horse and the one that was winning the race would be the one that had the most votes. I spent a lot of time perfecting how that would look and work and, of course, no one ever looked at that page and those that did thought it was kind of ridiculous.
Alicia: It was in retrospect. I thought it was brilliant at the time. And then I spent a lot of time doing things like crazy account management. You could like edit certain items and allow different admission controls. None of which was actually that important. In retrospect what was really important, and I think the reason that other sites that have come and gone trying to solve problem have failed, and why Pinterest has succeeded, is design. Pinterest is a beautifully designed site that invites exploration. And mine was a murky green site that used horses.
Andrew: That used, I see.
Alicia: Horses, yeah. We did not win on the design front.
Andrew: You mentioned also that there are challenges in outsourcing. I do courses on MixergyPremium.com with entrepreneurs who teach how to outsource and I worry sometimes that, because it worked so well for them, I’m sending people out with this message that it’s a snap. What are some of the challenges that anyone who’s listening to us who decides to build a business using outsourcers might encounter? What did you encounter?
Alicia: I mean, the benefit I had is that I came from a computing science background, so I can call bullshit if someone was quoting me something wrong or saying something was going to take long to do or that they were going to use an approach that wasn’t sensible and that was important. I think that I encountered a lot of people that wanted to get into outsourcing but that have zero technical background and pretty much categorically, they’re going to fail. So that’s one of the biggest issues, not knowing enough about what you’re getting people to do because you’re going to get duped.
The second challenge is that, especially in a startup, the one biggest weapon you have in your arsenal is the ability to motivate a team and get them enthused and excited and inspired by what we’re doing and if you can’t jump around them and cheer and smile at them and pat them on the back when they’re done well or commiserate with them over a beer when they’ve worked really hard. When you can’t do that because they’re in a different time zone and a different country, that little magic, that little oomph isn’t there, and it’s difficult for them to succeed.
I think the cases where it does succeed is one, when it’s done by someone that knows what they’re doing and is very technical, that can do things like code reviews and system architecture reviews and knows exactly what they’re getting and asking people to do something very specific and secondly, if they are being asked to do things that are not central to the strategy of the company. I don’t think you should ever outsource your R and D. You can outsource web design development or CMS integration, that sort of thing, but getting other people outside of your company who are not there with you to build something that is the core of your system, the core of your (?), I’ve never seen work.
Andrew: I’ve also seen it work for smaller projects. So maybe a small iPhone app, a small Android app that’s outsourced but I guess once it becomes the core business and it’s a growing business to the extent that you’re looking to grow skin bit, I could see how that would be a challenge. What else? You also mentioned Sydney was an issue and that’s why you left? What are some of the issues involved in being there, beyond the fact that I have the hardest time interviewing people from Australia? I keep trying. What else?
Alicia: (?) a bitch, right?
Andrew: It’s so tough. I’ve got these great entrepreneurs in Australia. We always end up with me staying at work late, them getting to work early and it’s a challenge.
Alicia: So that’s right. That’s one enormous issue. The other is that it’s a teensy, teensy, teensy market. Like we’re talking 20 million people, which is like the size of one small state (?) in the U.S. and it’s very distributed and it’s not as advanced technologically as they would like to think they are. Ecommerce is several years behind. You don’t even have local Amazons and so on. So there’s a lot of challenges there and further more to that, at the time there was just no startup community and no VC community. There was one VC that kind of was looking at this space at the time. I went to pitch to them and they just, they looked at my green background in horse designs and they didn’t see (?).
So moving to London was a good decision perhaps. Perhaps in retrospect would I have move to the U.S? I don’t know. I’m glad I did. I think a lot of the success that we had when we first (?) to become (?) was because we were based in London where we could hop on the tube and pay two pounds for your pass and be able to visit any of the potential big customers and win them face to face.
In those early days, you’re trying to convince people to trust you and to take a risk on your business and it’s a lot easier to do that when you’re there in front of them. They can look into your eyes. They can see that you’re going to do anything to make it work and I think you couldn’t do that in the U.S., where as a startup, do I fly to New York City, to Manhattan to do this? Do I fly to Chicago to meet a client? You just can’t afford it as a startup in US. And it was also helpful because once we had won a lot of big UK based clients, they gave us a way into their U.S. counterparts. So that was how we grew a lot of our early US business.
Andrew: Right. I’m writing a note here to come back and ask about how UK clients led to US clients, but let’s talk a little about the launch. You spent a lot of time building this product, this product that we would now, in retrospect, (?) may not have worked, the horses may not have worked, but the concept we know makes sense. It’s worked for others. You launch it, what happens?
Andrew: Nothing? No one came.
Alicia: I mean, you know, that was another issue. I was in Sydney. I kind of was at a, yeah I was at a loss as to what to do next. I did at that stage what a lot of other Australians do in time of trials and tribulations. Which is I packed a rucksack and bought a round the world ticket and went backpacking for six weeks to find the answer.
Andrew: Oh, you mean to just look in yourself for the answer.
Alicia: And it worked.
Andrew: Tell me about that. You know what, I just did a four day running trip where every day I got up to run and I took a journal with me so that I could think through where I want to go. Sometimes that really works and sometimes it doesn’t. What did you do to make that experience work for you?
Alicia: I’m a big believer in that. One of the core sayings in our company is ‘we believe in the power of rumination.’ Where you kind of have an idea but rather than try to get the answer right there and then you seed with your mind with all these potentials. Then you just go off and do something relaxing and you wait for inspiration to hit. It comes from anywhere but it generally does.
I went traveling and I went to the Black Forest, and Munich, and to Romania to visit the developers, and to Vancouver for a wedding. Then I went to London because I had lived there previously and I met up with an old friend who’s an entrepreneur himself. I said look, this is my situation. I have this Skimlink.com that’s not really doing anything and I don’t really know where to take it next.
He says well, here’s an idea for you. Why don’t you turn it into a white label service that you can license to other customers? And, by the way, I have a potential first customer for you who I will introduce you to. And I’ve got a friend of mine who can give you some free office space here in London. I think this is like a Wednesday or a Thursday, anyway, and he arranged this meeting with this wedding website.
I basically had two days to create a demo, to borrow a friend’s business suit because I didn’t have anything client [??] on me. I had to call up my guys in Romania and say we have two days to build a working prototype. Then I completely, what’s the expression? I bribed my way in. I basically went into this meeting, said so I live here in the UK and I’ve built this product. Look how nice it works. Would you like it? In my head I’m thinking if they say yes I’ve got two months to build it and to move to the UK.
It worked. Every single bit of what he arranged for me worked. I won this client over. I got the free office space and an initial first investor. I had this idea, which was a good one. I remember vividly it was August the 18th and I went back to Australia and by September the 18th, exactly one month, I had given up my apartment. Sold my car, sold all my furniture. Quit my job. Written the specifications for this brand new product that I had said I already had built. Got it built and moved back to the UK as a penniless entrepreneur. It worked and we launched with this first client and we were in business.
Andrew: How did you make outsourcing work within two weeks when before you had all these challenges that kept you from launching?
Alicia: Because we already had the basics and we just now had to make it dynamic and be able to be integrated into another website. I yelled a lot and we got it done.
Andrew: You were able to motivate them over the phone. Did seeing them in person help?
Alicia: Oh, completely.
Andrew: Because you were backpacking and you visited them.
Alicia: Yeah. Funny enough I’m still really, really good friends with the guy that owns that outsourcing company. He’s now a very successful entrepreneur himself based in London. Running a company called Brainiacs.com [SP] which is worth checking out.
We made it work and then when I moved back to London one of the first things I also did was hire a developer, an internal developer. Which was fantastic because then I finally had someone that I could motivate in house and that really had, his vision was aligned with me. He’s now actually our CTO and is fantastic. That was helpful.
Andrew: One of the things that I’m wondering, I was thinking maybe it’s too small to ask but it feels important to me. When I’m in a tough situation I can’t bring myself to even take a weekend off. I feel like I have to be at the office, I have to be doing something. If I took six weeks off, even when it’s the most, the time when you really need it more than any other time in your life. Take six weeks off to really think things through and to explore other options I’d feel I just can’t afford that and I wouldn’t do it. How did you get yourself to do it?
Alicia: Well, keep in mind I had zero visitors to the website so there was, you know…
Andrew: But didn’t you feel like, I’m thinking of, it’s Naomi Simpson’s birthday I know, that’s the founder of Red Balloon. I know because Skype just popped it up and I remember interviewing her on Skype and, anyway. She’s also Australian. When she couldn’t get customers to Red Balloon she told me that she walked around Australia with a briefcase and these red balloons with her website on them thinking that would bring in customers.
Which clearly that’s, no, that’s not the marketing plan that’s going to build up an empire but she just needed to do something. When she had no people she was even more desperate and more eager to try new things. How do you get yourself, at that point, to not make phone calls? To not blog or to link on other people’s sites? Or I don’t know what, to email every person you know?
Alicia: I mean I did. I did all that stuff. I just kind of knew that I was at an impasse and I needed a seasonic[SP] change in order to get to the next stage. I needed to work out what that was going to be and this is the way to do it. Looking back I don’t know why I did because you’re right I’ve never had as long a holiday. I’ve never had more than a week off in the six years since then but at the time it felt logical. In retrospect it was the best thing I could have done. I would never be here today if it wasn’t for that.
Andrew: You told us that going from business to consumer to business to business was a step forward but that also wasn’t the answer. And you told us about some of the challenges there. Then you discovered something. How did you discover what became Skimlinks, a business unto its own.
Alicia: We, as I said, our initial business model for the white label version of Skimbit was a license fee but a lot of potential clients were balking at that and were wanting to do a revenue share. We just didn’t have the scale to do banner ads sharing. My business partner, so at the time, he’s my very, very, very good old friend, Jerry Stoneski[SP]. We went to university together and he was in London as well and running a successful internet marketing company predominantly involved in affiliate marketing. I brought him on as kind of a consultant and to help me out and work out how to monetize what we were doing.
Together we conceived this idea that we had all these links on this site from people bookmarking products that they liked on Amazon, on eBay, on Macy’s, etc. We thought wouldn’t it be great if there was a way to automatically make them affiliate links. Because we could do it manually but why would you do it manually? We came up with this concept and he and I built it.
What I found after that, I was then going back to the same customers saying OK, you didn’t want a license fee. How about rev share on this? Then they all go oh, tell me more about that. How does that work? Well that’s very clever isn’t it. It took me a while. At the time I was like yes, yes it’s great isn’t it? So how about this white label Skimbit service. And they would still say no. Then I would talk to VCs and I’d be telling them all about this great revenue model and about this automatic link affiliatization. They would all go oh, that’s very interesting.
It wasn’t until the world ended that I realized that I had to make a decision. This is all happening in the latter half of 2008 when the financial crisis was starting to take effect. If it’s hard to raise money when it’s good times it’s bloody hard when the financial markets are in despair and very panicky. I realized if I didn’t change something I was going to not only lose everything but lose pride and lose all this time, all these two years that I’ve spent doing this.
Desperation breeds innovation I guess. It was about October, September or October of 2008 that I had this moment of realization where I thought gosh, I’m pitching to these VCs and to these publishers and all of them are not interested in my horses but in this kind of monetization method that we’ve come up with. What if we disentangled that from the rest of it? Dump everything else and just focus on this monetization method and make it accessible to any publisher.
I did something kind of weird then. I picked up a phone on a Friday afternoon and I called [??] and the reason I picked [??] is I had been using them a few months ago to buy [??] on television.
Andrew: To buy what? Oh, on television.
Alicia: You know, it’s a good source of research for that. I completely cold call this person and I said look, actually we had spoken before about the white label service so I called him up and said look, I have this proposition for you. If I was to make this monetization method accessible to you, would you use it? And he said yes I would.
I hung up and I called my CTO and I said Karen how about we do this? I told him my idea and he was like yep, let’s do it. For the next two weeks he worked his ass off and prepared the launch version of what was to become Skimlinks. I hit the road and I approached every single publisher that we had been pitching the white label service to and asked them if they wanted this new [CMS] product. They said yes. They all said yes.
Suddenly we had all these new clients. Then two weeks later we had our first [??]. That all went down the week after Lehman Brothers collapsed. I think we were like the only company getting funded at the time. Somehow from the jaws of death we survived. That was, yeah, end of 2008, early 2009 and the rest is history. We’ve gone from a small handful of people, Joe ended up at that stage joining full time and became co-founder.
Andrew: At the time was Joe, he was just a friend who was giving you some advice based on his own experience. Is that right?
Andrew: How do you get these great friends? A friend who gives you office space. A friend who gives you advice. A friend who lets you wear her clothes to a pitch meeting.
Alicia: Yeah. I mean why do you have friends that help you out?
Andrew: I’ve asked that question a few times. Some people have said you know, I’m part of this group YE and as part of it… But there’s nothing like that. It’s just you’ve made friends over time and they’ve been good sounding boards.
Alicia: I think we do good, and that’s again one of the kind of really central things we hold dear within Skimlinks now. We really passionately believe that if you are a good person and you mean well and you try hard and you are sincere that people reward you with loyalty and with support and with encouragement. It’s been that way [??] really lucky and we’ve got a fantastic collection of very loyal customers because they like who we are and not just what we do.
Andrew: How did you afford a CTO when you’re not doing that well? You said the CTO was key to being able to develop quickly and the CTO was the person who was able to rebuild this business around this one idea that was working. How did you get a CTO?
Alicia: He was a developer. He was this fantastic guy that applied for the job as developer. We had a few different people who applied but Karen was fantastic. He not only wrote a great application but then he followed it up with a phone call. It was a cold call and he said I just want you to know that I really, really want this job. I’m going to be perfect for it. He says afterwards that he didn’t apply for any other job. This was the only one he wanted and he knew it was his destiny.
Andrew: Even if he wasn’t a CTO…
Alicia: He was just a developer.
Andrew: How did you afford a developer?
Alicia: Because it’s not Silicon Valley.
Andrew: I see. That’s a good point.
Alicia: Basing R&D in London we are not competing with, I mean the only people we are competing with are the banks. There’s either people that want to work for banks or people that would rather have a soul. And people that would rather have a soul aren’t motivated by money.
Andrew: UK leads to the U.S. I said I’d hold off on asking you that. How’d you end up in the U.S?
Alicia: We were doing regular visits out here anyway. Pretty much from day one half our business was in the US. What we believe is the benefit of meeting our clients face to face and building those kinds of relationships. Both me and my co-founder were coming over here on a regular basis.
But we found that were still being seen as a UK company. British start up Skimlinks does blah, blah, blah. We felt that was inhibiting our ability to win certain deals. Because we felt that there is a subconscious patriotism with Americans that, given a choice of a few options, go with all American.
Andrew: I don’t think it’s that subconscious but OK.
Alicia: I was being polite. We thought look, if we believe in this. If we believe in the US as a really key market for us not only are we going to have a presence there but it’s going to be one of the co-founders that will set up base there and show everyone that we’re committed to being a local [??]. My co-founder is married with a wonderful wife who runs a local fashion PR company and wasn’t able to do the move. [??] I moved over about a year and a half ago and we’re building up the team here now. It’s been fantastic. I do go back to the London office very often but we are now indisputably an international company.
Andrew: You put out the first product pretty quickly. How did it work? What was in that first product?
Alicia: It worked by integrating a number of affiliate networks, so the commission junctions, link shares, trade doublers, [??], etc. of this world and then had on script, java script, that would automatically detect links that could be monetized by one of those networks. And would do so on the fly. We started with the most high priority networks. That was kind of our MVP. We had very basic reporting. We didn’t even build, we hadn’t even built the way to pay clients when we first launched. Because we knew that it would take, the first payment cycle would take three months so we had three months to build it after the launch.
Andrew: What a turn around from the time that you built the first business, from Skimbit where you wanted everything just right. Now it’s OK not to even to include payment, which is a key reason why people are doing business with you. The way that it worked, if I understand your explanation of the product, is the publisher, of course, wouldn’t have to change anything. They would just have their links out. The page would be served up with those links as they are and then your code would convert it afterwards.
Alicia: [??]. Yeah, nothing, I mean the links were normal links. They are normal links until they’re clicked and then we basically rewrite them to their affiliated end point. The destination URL is still exactly the same but there’s just the appropriate tracking id added to the link.
Andrew: I see. Kind of like, I think this is the way that a lot of the analytics products work that I use on my site. Right? That’s how they’re keeping track of where people are clicking.
Alicia: Indeed. Yeah.
Andrew: All right. I’m a little bit out of my depth with that question so I’m going to back up and say getting customers, you told us that you just made a single phone call to AB Forums, a company you told us about in the earlier part of the interview, and they went along with it. Was it all like that? Was it that once you hit on the right product customer after customer just says yes? It’s that easy.
Alicia: Some customers took a little bit longer. Like the bigger the client, often, the longer the legal process for example. Some of the easier sites were the self managed blogs or forums that they could just make a snap decision and go for it. But yeah, we pretty much found that if you build it they will come. We were very active in promotion and in calling and I think word of mouth really served as well, in the early days. I think that, and perhaps I’m biased, I’m a product manager by trade so I believe if you build good products good customers come. I still kind of think that.
Andrew: Well, they come but you also went to them. You were making sales calls at a time when really, when your previous products, when Skimbit didn’t work, when Skiminabox.com, the white label version of Skimbit, didn’t work. Here you are, a brand new product and you have to go out and talk to people and sell it. Sometimes when I’ve had failures like that I just can’t be as confident as I should be when I’m talking about my product. Even if I believe in it. How did you, did you have any of those? How did you get over any hesitation that you had a sales person for this new product?
Alicia: I loved my business. I was selling myself along with the company.
Andrew: You didn’t feel like boy, I thought I was on the right track with Skimbit. I was wrong. I thought I was on the right track with Skiminabox.com. I was wrong. No, you just said this is a new thing. I believe in this just like I believed in the first one. Maybe even more because I’ve had all this experience up until now.
Alicia: Right. Yes. But I think that along the way I talked a lot with all these customers. [??] the reason I could call all those early Skimlink customers is because I had been selling to them for the last year. Trying to sell to them. Along the way they had kind of said no but they were nice as well and they would say why and well, if you did it this way maybe and how about this. I would ask them about their business. That’s how I kind of got a really good sense of what the appetite for what we were doing was in the market.
I still think that. I think the most important part of any product manager’s job, or in fact any CEO’s job, is to be out there talking to your customers all the time and understand what their challenges are. What [??] wants. How they use your product, etc. I still do that on a daily basis. I think it’s really important. It gives me, then, a lot of confidence to be able to sell what we do. I think it’s, you get a lot of no’s before you get yeses. And as long as along the way you listen to why it’s a no and when appropriate you make the necessary tweaks eventually there are going to yeses.
Andrew: You told us about the main product. You told us how it got built and how it got customers. How you ended up in the US. What I didn’t let you finish in the earlier part of this interview is a discussion of the new products that you’ve added. It wasn’t just the product as you talked about it with more affiliate programs and available to more publishers. Tell me about the next new product that you created.
Alicia: Oh, [a ton]. We went through this kind of crazy innovation phase in I think it was 2009 and probably every year. To the point where my team kind of laugh at me and my board, every time we have a board meeting it’s like what new idea has Alicia got to present us with today? But we went through this phase of trying a lot of different things and some worked and some didn’t.
For instance we created a URL shortener so that publishers that wanted to monetize their Twitter, Facebook, or even email newsletter presence could do so using Skimlinks. We also built like an RSS monetization tool. They were good. We then built something called Skimkit which was a research tool for editors to look up products so that they could add them to their site. The idea of it is good and still something that I believe in. But it turns out that the execution of it was troubled and that one we ended up pulling. Although watch this phase there will be something else…
Andrew: You’re going to do something similar to Skimkit?
Alicia: Yeah, yeah.
Andrew: Skimkit was, it seems like it worked on Adobe Air so you can run it like a native app sort of. It would let you find products that you could write about and then gives you the links to include in those articles when you write about them. Why didn’t it, what were the issues that you found in that?
Alicia: The platform was not our friend. I liked the idea of Air because I liked the idea that it would pop up every time you logged in and it would always be there. But, especially at the time, there were some challenges to it that required a lot of support. It also made it very difficult to integrate very quickly because the user would have to continually update upgrades to it. Then there was, it’s a difficult product to do like aggregating product feeds and normalizing them and [dejuking] all the fades. For all these reasons, people wanted to use it but it didn’t do its job as well as…
Andrew: If it was a web app that people could log in to would that have worked? Was the only problem Adobe Air and the desktop platform?
Alicia: Probably. Yes, that is…
Andrew: I see. And that may be where you’re going in the future. What about, excuse me, what about the issue of telling people to write blog posts for revenue? Or telling people to write content just so they can make money on it? And the whole FTC question about disclosure and the search engine optimization issue of are people passing off ads as content? How did Skimtool deal with that?
Alicia: It was very much a research tool as opposed to a monetization tool. The idea was that an editor that was writing an article anyway about these new shoes would be able to look up the retailers that stocked it and how much it was. That they could copy a link and paste a normal link to Macy’s, to Zappos, etc. on their site. They were never forced to think about the fact that it was an affiliate. Because it wasn’t. It was just a normal link to Macy’s, a normal link to Amazon, etc.
Andrew: But it would, forgive me, but it would push if there was a product that was generating more revenue it would say hey this, it would do that?
Alicia: No, we deliberately didn’t do it that way. We had a button so you could, if you wanted to, press a button to see what the average cost per click was for that retailer. But [by the book] that was hidden deliberately so that editors could make their decision as independently as possible. The idea was that they would then add that direct link to Macy’s or to Zappos and they would write whatever they wanted to write about. They were going to write about it anyway. We were just providing them a quicker way to find an appropriate product [??].
The idea is that then, once they’ve written it, Skimlinks then works after the fact. You’re separating the editorial process from the monetization process. That means that you’ve got editors writing content that is independent from thinking about the fact that it’s monetizable. URL shortener, I read a little bit about it in preparation for this interview but didn’t fully understand it and I still don’t understand why didn’t it work? It seems like such a great idea. If you’re going to Tweet anyway about a product.
Alicia: What didn’t work was goodly. We also launched a charity version of the URL shortener called good.ly. The idea being that end users could Tweet about products that they liked and if someone bought it they could nominate which charity that commission would go to. Which I think is a fabulous idea.
Alicia: The challenge of it is that to get scale you either have to have people really pushing products and potentially alienating their friends or it being the domain of scammers. We found that there just wasn’t enough scale in that kind of business. The idea of it was great but unless you’ve got like millions of people doing it, it just isn’t going to work. It’s much better if it’s a publisher that’s sending out an email newsletter and they want to monetize a link they’ve got there.
Andrew: All right, what did work is Skimwords. Can you tell us a little bit about what Skimwords is?
Alicia : Yeah, so we launched this almost two years ago now. The idea of it was that Skim[??] product would only work if there was an existing link to a retailer and that there were a lot of sites that wanted to work with us that had great content about products but that didn’t have a lot of existing affiliate links. Or didn’t have editors that were willing to spend the time to add the links themselves.
We came up with the concept for Skimwords which would deliberately look for specific [??] content and on page load [??] integrate you could purchase that item. What we didn’t want to be is an [??] network. Like we didn’t want to be selling the keywords to spammish advertiser with [??]. This was very much about facilitating a [??] and being able to provide a service so that if you [read about] a product and you want to go buy it we’re sending you to a place where you can do so.
Andrew: The connection dropped a little bit as you said it but basically it would be if, not basically. You explained it but just to give an example to explain it a little bit further. If you and I, in this interview, said I love my Kindle Fire. I read books on the Kindle Fire every night before I go to sleep. I think any entrepreneur who wants to read should get a Kindle Fire. And we had this all transcribed, which we will, then Skimwords would automatically make those links to Kindle Fire clickable and generate affiliate revenue. My users would be able to not just read that the Kindle Fire is great but click over and see it on Amazon and I would get revenue if they did that.
Alicia: Yes. When we first launched it was just a direct link and exactly as you say that’s exactly what it would do. Over the last two years we’ve evolved that service in really exciting ways. Now we also do things like offer an optional flyover or mass-over that just shows in text price comparison and product comparison. You want the Kindle Fire well here are, well it’s not a good example because you can only buy it at one place. But here’s the Samsung b910, you can buy it from Amazon for this price, BestBuy for this price, and NewWave for this price. Give the user both information without having to leave the publisher site as well as giving them the price of different retailers that stock it.
That’s been really successful which we’re really excited about. There’s a lot more that, oh, and the other big development that we made was making it work in real time. It senses what [broken audio]. It can read any page of content and in real time decide if there’s any product mentioned on it in any [combination] of words with any kind of punctuation in between. And match it to a set of potential products, which I think is about 20 million products in size and growing all the time. And be able without any page lag to identify the phrase and link it to where you can buy it and show other alternatives to where that can be purchased.
Andrew: And anyone can use it. They don’t need to be a huge site like Pinterest. They could be even a site like Mixergy. They could be a blog. If they want to do it they can go to Skimlinks.com and just sign up and get active. They don’t even need to know the founder like I do.
Alicia: Exactly. Then the other really nice thing is [??] revenue side I think is great but [??] the analytics side is really valuable, I think, for publishers to have a sense of what are the retailers that their users are more interested in clicking on and buying from. When they’re doing [??].
Andrew: Ah, so I get analytics on where my users are going.
Alicia: Indeed, and how much they’re spending on these other sites and what their propensity to buy from certain retailers is. He’s doing some interesting things. We’ve got this one mothering site in the UK that as a result of our reports discovered this kind of really random retailer in the UK that they would have never thought to talk to for advertising. But they saw that wow, our users actually like to buy from there. They initiated a call and arranged a really great sponsorship relationship because of it. That’s the kind of stuff that can go down with our data.
Andrew: I’m going to read a quick email from a reader and then I’ve got two very important questions to ask you to end this interview.
All right, here’s the email. Andrew, I was just thinking about how I converted to become a premium member and I thought I would pass it on. He says one of your plugs in an interview, not sure which interview, referred to Cindy Alvarez’s course on customer targeting. You mentioned something like Cindy will teach you exactly what to say when you call your prospects and what questions to ask them. He goes on to say at the time I was doing cold calls for customer development and wanted to get as much help as I could. I bought the premium membership and I’ve been a member ever since.
The tip for you, Andrew, he’s saying to me, is plug specific courses that are related to the current interview and the benefit that the course will provide. I love what you’re doing. I’ve benefited tremendously from it and I wanted to help out. This email comes from Amir Taranya.
Amir’s right and so now that we’ve done this interview I’m going to recommend one course. If you’re a premium member you already have it. If you’re not I hope you join us and get all these courses. The course is, specifically, Cindy Alvarez’s customer targeting. We’ve seen in this interview, Alicia. Alicia, I’ve got to do it the Spanish way. We’ve seen how by talking to customers you’ve understood what products they wanted and through those conversations, I’m learning from you, you had them tell you what to build. That’s what made Skimlinks so successful.
If anyone wants to do a similar thing they could listen to Cindy Alvarez’s course right there on MixergyPremium.com. She’ll tell you how to find the right customers to interview. How to ask them right questions. She’ll show you what to do. Of course Cindy has done this at KISSmetrics where they’re building an incredible metrics company and they did it also by asking these questions. Go to MixergyPremium.com.
All right, here are the two questions. The first is you are an incredible sales person. I mean, you haven’t talked about it the way that I’ve talked about it. I feel like you’re down playing it but maybe you’re not. What I’d like to do instead is learn from you. What’s one piece of advice that you have for entrepreneurs who are listening to us about how to sell? How to take that product, knock on doors, convince people to say yes. Even if you’re wearing somebody else’s clothes at the time you’re making your first sale.
Alicia: It’s a good question and perhaps I need the people I’m selling to to tell you how. I think it’s just about trust and likeability. I think people like to do business with people that they like and people that they trust. I approach selling not by selling but by finding point [clarities]. Creating a sincere bond and then them wanting to do business. It ends up being a pull as opposed to a push because they want to see me succeed.
A lot of my customers are our biggest kind of fans for that reason. Because they know that we act with integrity. We do what we say. We stir a little bit of passion into everything that we do. Hopefully that kind of pays off in the long run. I think, you know a lot of these early customers were people that didn’t want my white label service but the second I called them up to say hey, what do you think about this? I ask their opinion and they valued there was a kind of friendship there. I think that has probably been the most important thing.
Andrew: OK, that is really good advice. That even when they turned down the original product they didn’t turn you down. They kept building that relationship with you.
The second is, you raised $7.2 million my researcher says. Rumor is you took some money off the table. That is wasn’t all money that goes into the business. Some of it was to give you a little bit of piece of mind. True?
Alicia: Where’d you get that rumor from?
Andrew: I can’t say. It’s a rumor.
Andrew: That is not true?
Alicia: I’m all in baby.
Andrew: You’re all in? You didn’t even get your initial $15,000 or so back out?
Alicia: Not a penny.
Andrew: This is an inspiring story. The company, of course, is Skimlinks. If you’re looking to generate revenue with your site the way many of the sites that you guys are following do you go to Skimlinks.com. But more importantly I hope now when you read about Skimlinks instead of following the crowd you just stop and say, you do what I do, root for them. Skimlinks is an inspiring story of a discovery of a way of generating revenue for entrepreneurs that’s going to help companies grow. There will be entrepreneurs in the future who say because of Skimlinks I was able to build this business. It wouldn’t be around otherwise.
I’m proud to know you here and I’m proud to get to know the story behind the business. Thanks for doing this interview.
Alicia: Thank you, Andrew. That’s such a lovely thing to say. It’s a delight to meet you.
Andrew: Thank you. All right, thank you all for watching. Use as much as you can from this interview. I hope to see you the way that I just saw Alicia here doing this interview at some point in the future after you build your business. Thank you all.