One of the scariest what-ifs for an online company is “What if Google comes into our market and competes with us?”
Clicky, a real-time analytics company run by just 2 people, has been competing with Google since it launched. Noah Merritt, the company’s co-founder, says the company did over $500,000 in revenue last year, with a 60% margin. And the business continues to grow even as newer, venture-backed startups enter the market.
In this interview you’ll learn how to developed a product with features that even Google can’t match, how to get customers without spending a lot of marketing marketing, and how to run a business without any employees.
Noah Merritt, Clicky
Noah Merritt is the co-founder of Roxr, the company that makes Clicky, creators of Clicky Web Analytics, a “Web 2.0” analytics tool that makes it easy and fun to discover how people are using your web site.
Andrew: Before we get started, I’ve got to tell you about three great companies. PicClick is the first. It’s a one person start-up from my friend Ryan in San Diego. PicClick gives you a visual way to search eBay, Etsy, and other sites. Ryan is already doing one million product sales per month on PicClick.com. Not hits, but sales. Go to PicClick.com to see how he is doing it.
99 Designs. It’s the largest crowd source marketplace for graphic design. When I used them, I wrote a description of the design I needed and how much I wanted to pay. I got a bunch of designs back. I gave each designer feedback and picked the one I liked best, and that’s the only one that I paid for. Try them for logo design. If you need a blog design, use them. If you need app icons, use them. There’s so many different reasons why you might want to use them. Check out 99 Designs and you’ll see why so many past Mixergy guests have used 99designs.com.
And Grasshopper. I’ve had them now as my longest sponsor for a reason. Not only does my audience love them, but you might have heard several guests here on Mixergy say that they use grasshopper.com as a result of these messages and they love it. It’s the virtual phone system that entrepreneurs like me love because it offers us multiple extensions, music on hold, call forwarding. It gives an impression of having a big, professional organization, but also caters to your need to travel and to be flexible. Check out grasshopper.com. Here’s the program.
Hey everyone. I’m Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. Today’s guest is Noah Merritt, the founder of Clicky, which offers real time web analytics. I use Clicky on all of my websites. So, I emailed the company to find out more about them and that’s how Noah and I met a few months ago. Here’s what I found out in my conversations with him and research for this interview.
Even though he has competitors like Google, Clicky is both bootstrapped and profitable. The company tracks 100 million page views and is used by over a quarter of a million websites. Noah, welcome to Mixergy.
Noah: Hi, thanks Andrew. Glad to be here.
Andrew: I say a quarter of a million websites use you. You explained earlier that it’s more than a quarter million. Can you talk about the difference between the quarter of a million that I gave and the three quarter of a million number that we could have used?
Andrew: I want to give people a sense of how big this site is, how big you guys are.
Noah: Well, about the quarter of a million sites that you mentioned is directly tracked by our service. But, we also have another revenue stream that we created several years ago called White Label Service. And, it allows other organizations, like, for example, maybe an SEO firm or a web design firm or a lot of web services too, that would just like to offer analytics within their environment to their clientele. So, we actually have quite a few partners. A couple hundred White Label subscribers and a big partner called webs.com which is a website building tool online. We track with them probably another 500,000 sites.
Andrew: So, for example, I go to Webs, webs.com. I create a website for myself and I add analytics to it, it’s Clicky that’s really powering those analytics, even though I may not understand it. It’s Clicky that’s powering it up. I want to tell people why I love Clicky and then I want to tell them what they can expect to get out of this interview.
The reason I like it is it’s real time analytics, unlike Google analytics. It’s the analytics and the information I need, so I find out where you guys are coming to my site from. I find out where you guys are going afterwards. And I can adjust in real time. Now, I try not to get too carried away with Clicky, because, Noah, you guys give me so much data. It’s so addictive that I actually had to put a block on my computer not to keep going over to your website. And I am a paid user, so I love it and I pay for it because it’s so useful.
Noah: Thank you.
Andrew: So, let’s talk to people about what they’re going to get out of this interview. First of all, they’re going to get to hear an incredibly story, I believe, about a guy who bootstrapped a company. So, they’re going to find out how to build a company with no outside funding. They are going to find out how to compete against a giant like Google. You know how most companies, when they try to build a company, when they try to launch, others will say, “Well, what happens if Google gets in your market?” Well, we are going to find out how Noah handled it. And we’re going to find out about marketing.
The reason I wanted to find out about the White Label product isn’t just to explain to people how big you are, but to also explain to them that you’re marketing in new ways. It’s hard to market a product that’s aimed at businesspeople because there isn’t the viral component. There isn’t the conversation that happens in the consumer world. So, we are going to learn all of that.
Why don’t I start off with this? How profitable is the company?
Noah: Our margins are probably around 60 percent.
Andrew: 60 percent margins.
Noah: Yeah. I mean, we’re just a software as a service business. A lot of the processes that you would find in a brick and mortar store are completely automated. Like, people finding us. It’s pretty much automated. I don’t spend anything on marketing, honestly. Yeah, I mean, people go to our website, they register their domain and we give them a snippet of tracking code that they include in the footer of their website and it tracks every page. And it’s as simple as that. We’re open to talking to anybody through email, Twitter, our blog. We’re completely available, but it’s not necessary in most cases because people can set up Clicky in five minutes.
Andrew: I know that you guys are a young company. Have you exceeded a million in profits yet? A year?
Noah: Actually, we’re just about hitting that threshold. Next year completely will supersede a gross revenue of a million dollars. Right now, we’re almost there.
Andrew: Can we say last year was a half a million in revenue?
Noah: Yeah. We can definitely say that.
Andrew: OK. All right. And then, that’s 60 percent margins on the half a million. Which brings us to, what are we saying here, 300,000 dollars in profit.
Noah: Well, 60 percent of our gross revenue is profit, I would say.
Andrew: So, that comes out, am I doing the math right, guys? 300,000 dollars in profit on 500,000 dollars of revenue.
Noah: OK. Gotcha.
Andrew: And you said that you did more than that. So, it’s more than 300,000.
Noah: It’s a good business to be in.
Andrew: It’s a great business to be in. If you can do it right. So, let’s talk about how we got here. What did you do before you launched Clicky?
Noah: Good question. I actually was involved in another start-up, and just basically had an idea with a friend and we launched this company. It’s called nowtowns.com. If you get a chance, you could probably check it out. I believe it’s still up and running. It’s actually a pretty interesting concept. Back in ’04 we launched it. And that was a local, I guess you could say, search engine database for a particular city we launched in, Corvallis, Oregon. It’s a really small city, but it’s got Oregon State University.
The idea behind Now Towns was that we wanted to make all local business information available to people. And not just information that you would find in the Yellow Pages or on the business’ website. We actually wanted to go into the business with our team and categorize their inventory, make it fully searchable.
So, for a restaurant this is particularly cool, because we would go into, pretty much the majority of the restaurants in Corvallis, and during breakfast, lunch, and dinner, we would take photographs of all the menu items that would come out that people would order. So, we basically amassed good looking pictures of pretty much every menu item in Corvallis and it was all searchable.
We would enter in the prices, the sizes, all the extra ingredients that they came with. So, you could type in bacon burger in Corvallis, Oregon, and we’d return search results of all the different bacon burgers. You could see them and compare them side by side. If you wanted to check out the establishment, say you’d never been there before, you can easily go and see the atmosphere and see what people are saying about it.
It was completely in depth and still no one’s ever tackled it. Probably because of the work that’s involved in doing so. So, that’s one of the reasons that business failed, was because it was too much work for us to do and we relied on the business owners to update it themselves, and most of them did not do that. Business owners, they’re just too busy, and whatever, they don’t see the value in it, a lot of the times.
So, that one failed a couple of years later, so we cut our losses there, which is a good thing. From that was born the whole Clicky concept because when we originally had our Now Towns website, we wanted to see when people were logging into our site, you know, how they were using these different features that we were launching with Now Towns. And we wanted visitor details, details on each visitor that was coming in. Not just general tables and stuff. And, so we kind of built this prototype inside of NowTowns and once we decided to call Now Towns quits, we were trying to figure out what to do and we really liked Clicky and thought it’d be useful for a lot of other websites.
A real time analysis hadn’t really come along yet. In 2006, there wasn’t a lot going on with that. So, we thought we could do it way better. We didn’t like any of the other analysis tools out there. And, so it was a pretty simple decision. It was maybe like a five minute conversation. Once the idea came, we were like, “Yeah. Let’s launch Clicky.” And what I mean by our conversation, my business partner and I, Sean Hammons is my business partner. He’s the developer for Clicky. He’s developed it completely from scratch.
Andrew: Sean’s an animal. Sean’s the guy who, if you do research on Clicky and you look at TechCrunch, in the comments, Sean’s the guy who’s responding to even the crazy people, who is outspoken.
Andrew: He’s the one who apparently got drunk on caffeine, I don’t know, got buzzed on caffeine and started emailing Michael Arrington taunts about why Michael Arrington isn’t covering you guys. The guy’s an animal. I don’t even know much about him, but I love him already.
Noah: Oh, yeah. Definitely. He is the ‘manimal’. He does plenty. He’s cool.
Andrew: [laughs] So, did you and Sean launch Now Towns together?
Noah: Actually, it was my friend Luke and I. We launched it and we found Sean through a friend of a friend type situation. And Sean was just beginning in programming. He had done a couple websites. But, we looked at his code, and it was really clean, and we thought, “Hey. We don’t know that much ourselves, but I think we could work together and possibly build a product.” And so we hired him on.
He basically left Portland, which, he has his girlfriend. He left his girlfriend. I mean, he’s still with her, it’s his girlfriend. But, he moved down to Corvallis, got a year long apartment lease, you know, we were paying him maybe $1500 dollars a month. I can’t remember. It wasn’t that much money at all. And he had a small stake, a very small stake in Now Towns and he took all these risks.
He left his nice job at Fred Meyer, even though he didn’t like working there, he was getting paid, I think it was, like, $18 dollars an hour. And so he took these huge risks, came down, and just worked on Now Towns with us for, like, three years. And, once we decided to call it quits, the next logical step was to start another venture. To try and make it work.
Andrew: What specifically was missing in other analytics packages that you guys had to go and create your own for Now Towns?
Noah: Very good question. Just the amount of detail that we wanted on a per visitor basis is what I am trying to say.
Andrew: Can you give me an example of a piece of information that you wanted and how it would have helped your business in Now Towns to have it?
Noah: Oh, completely. Off the top of my head, let’s say that we launched a new feature that allowed people to follow businesses on Now Towns. Or subscribe to that business. Any updates that happen to that business, whether we change the menu, whether they have a special promotion going on. That person, say they subscribe to that business and they want to know what’s going on. We would like to know how people are responding to that new feature we just launched.
And so, we decided to just build our own internal thing. So, we could track what people were searching for on Now Towns, because we were basically a search engine. So we needed to know how people were using it in every possible way. And so we just had to custom tailor a solution to Now Towns. And, it was kind of the perfect environment to sprout the concept.
Andrew: Was the idea from the beginning that you would do it for yourself so that maybe in the future you could build a separate business out of it?
Noah: No. Not at all.
Andrew: It was just, “We need this for ourselves.”
Andrew: And if you had real time data, how would your business change back then? How would Now Towns be different with that?
Noah: I mean, we were actually hitting the streets. We were on the pavement day to day talking to lots of business owners everyday, people who were using our site everyday. I mean, we were in a small town, you have, like, 50,000 people in Corvallis. And, so everybody kind of knows what’s going on and we wanted to track that. So, it was a really good environment to know what people were doing.
Andrew: How long did you spend building it just for yourselves before you released it?
Noah: Are you talking about Clicky?
Andrew: Clicky, yes.
Noah: Building it for ourselves. Well, we had that initial product that wasn’t much. I mean, it was just kind of a tool to help us. It wasn’t really something that other websites could really use at that moment. So, we basically had to pull it out of Now Towns and then turn it into some type of data product that people would actually want to use in a data situation. Sean did that in probably a couple months.
Andrew: A couple of months of taking it out of Now Towns and making it into its own separate product?
Noah: Yeah, I would say so. Two or three months.
Andrew: What did that initial version look like? The one that was done at the end of two months?
Noah: Oh, geez. That’s hard to describe. That was three and a half years ago. You might be able to check the way back machine to see how crappy our website was. As far as the tool itself, we were working on a real time feed of people’s click information. So, you know, somebody clicked, we wanted to create that spy capability, is what we call it now.
Andrew: So, the spy capability is the one that let’s me go in and see who’s on my website right now and what part of the world they’re on and what page they’re on.
Noah: Completely. Yeah.
Andrew: So, that was in Version one. What else was in Version one?
Noah: Oh, just your basic, it was just really, really basic analytics information. There really wasn’t any tools to do that much analysis. Maybe a couple filters, like filter by country, maybe, or something. I don’t know.
Andrew: I see. So, people could see how many people were on their website right now, where in the world those people were, and where on the website those people were?
Andrew: They could see how many people were on the site yesterday and the day before and there was a little bit of filtering.
Noah: That’s pretty much it. As far as I can remember.
Andrew: How did you know that that was enough to launch with?
Noah: See, I don’t even know if we launched with a spy yet. Because we kind of launched unofficially into beta. We didn’t mean to. We leaked our URL. We were trying to get beta testers, talking to people. But, we leaked our URL to Emily Chang over at eHub. She had actually, like, a 10,000 feed burner subscriber list. And so, overnight, we woke up in the morning and had 500 new accounts or something. And then, within 30 minutes later, our server crashed and Clicky was down for two days.
Because, we tried to switch over to DreamHost and that didn’t work in that environment. So, we had to switch it. It was just running on a server initially in some guy’s apartment on the east coast. So, we didn’t actually mean to launch at all, but it got leaked and, you know, there’s nothing you can do about it.
Andrew: Are you saying that the whole business Now Towns and then Clicky was on some guy’s server at first?
Noah: Actually, Now Towns was on a different server. Hosted in a data center. But, when we moved out of that, we moved Clicky over to one of Sean’s friends’ servers.
Andrew: And then from one of Sean’s friends, it went to DreamHost, where it just wasn’t the right environment, and then you took it somewhere else.
Noah: Yeah. Right.
Andrew: Who’d you go to?
Noah: I think we went to, I think that’s when we started hosting at our local data center.
Andrew: I see.
Noah: And that’s where we are right now.
Andrew: OK. So, what did Emily Chang tell people was available on your website? What got all those people over?
Noah: All she did was post a link to us. That’s the funny thing. And maybe, like, a one sentence description. But it was on her front page and people were checking that at that time period. A lot of people were, everyday, and it caught on. I guess we had enough stuff that people wanted to have an account and test it out.
Andrew: What I’m curious about is what was the essence of the product that got people interested enough. Got Emily interested enough to link to it, and got 500 people interested enough to go and register for it. Was it the offer of real time? Was it the offer of specific information?
Noah: It was completely the real time. I mean, the information we were providing is pretty standard to what other analytics companies at that time had. It was the whole real time idea of who is on my website right now and what are they doing exactly right now. Can I see what’s happening? That whole thing.
Andrew: I see. So, if there were magic words back then, it would just be real time. It didn’t matter what was set around it, as long as it’s real time and your URL was given out, people would go out of curiosity.
Noah: Yeah, I would say so.
Andrew: I see.
Andrew: And out of need to. OK. So, she sent people over to your site. They started registering. As I understand it, this was 1996 when you launched this separate site? Excuse me. 2006. I don’t know what 1996 was.
Noah: Yeah. Yeah, that would be 2006.
Andrew: 2006. Five months you offered it for free?
Noah: Yeah. Five months we were in beta, and then we started charging for accounts. In February. Late February.
Andrew: Why did you just, I’m sorry?
Noah: Late February of ’07, we started charging.
Andrew: Why didn’t you just do what everyone else seems to do online and say, “Information wants to be free. I’m going to make this available for free and make my money off advertising? I’ve got a whole audience of webmasters.” [xx]
Noah: Honestly, I don’t think the business could have made enough money just through ads. And, it’s not the way I wanted to build a business. It’s not the way I thought it should be. So, we both decided. People will likely pay for this, and that was our ultimate goal, too. But, we offered it so cheap, and at such a great value that we’re still pretty much the cheapest, the most affordable solution out there.
Andrew: For real time?
Noah: Yeah. If you look at other real time competitors. I mean, for what you get, if you factor in all the features and the ease of use, the intuitive interface, the easy way to understand the data. A lot of the solutions out there are just really ugly and bloated. It’s hard to drill down to what you want. So, there’s a lot of value in that, too.
Andrew: Let’s take the question that Joseph Jacks[sp] had earlier. How much money went into building Clicky?
Noah: Well, if you didn’t count the development within Now Towns, honestly, I think we’d be strapped with a couple thousand dollars. We just bought a cheap server after the initial server crashed and didn’t pay ourselves for several months.
Andrew: You guys didn’t even pay Sean?
Noah: No. No. No, Sean and I were partners by this time, in the venture. Because the other one fizzled out, we called it quits, and then Sean and I decided to pick it up from there.
Andrew: So, a couple thousand dollars. Plus some code that you rescued out of Now Towns, plus neither one of you was taking a salary until you bring in enough money to take a salary.
Noah: Yup. Completely.
Andrew: And what’s the breakdown between you and Sean, the animal?
Noah: Breakdown, as in?
Andrew: In ownership.
Noah: Ownership? Oh, we’re 50/50.
Andrew: 50/50. Alright. When I say animal, I mean that in the best way. I love reading his comments. Sean, leave a comment on my website anywhere. OK. So, you knew from the beginning this was going to be a separate business. Did you reincorporate? Did you put anything down legally between the two of you to indicate what the ownership was?
Noah: I mean, we worked really well together in Now Towns. Sean’s got a great personality, super easy to get along with, to work with. And, I mean, he’s his own person. He’s a really smart guy. He’s like the ultimate dream partner in my case. So, I’m lucky to have him. We incorporated, and we just set some rules. We didn’t officially go to lawyers and say, “Hey, we gotta do this. This is our agreement. These are our agreements,” We just try and work together. It’s not hard.
Andrew: There was no vesting period? There was none of this stuff they tell you to do when you’re thinking of getting funding?
Noah: Oh, no. Not for us. I mean, we were completely 50/50 from the get go.
Andrew: Alright. So, I understand how you got the first few people, from Emily Chang and maybe a couple of other people who were linking over to get Clicky.com.
Andrew: But, beyond that. Where did the next round of users come from?
Noah: Well, that’s a good question. Honestly, it was more of a gradual accumulation. See, Emily sparked it, and then people would write blogs, blog posts all the time on it. Which is just great. You know, it always generates traffic. And we had some other big blogs write about us. Like, Micro Persuasion, Steve Rubel. And some other heavy weights were using Clicky, testing it out in the early times. And then we just kept in touch with our user community. We were talking to them day to day. And I think, just because of that bond that we created, people wanted to promote us, wanted to talk about us.
Andrew: How did you talk to your audience? How’d you talk to your users?
Noah: Let’s see. Basically, initially in beta, it was just a blog. Our blog. It was a good forum for people to comment and us to talk back and forth. We still employ those same tactics today. But now we use Twitter and email and phone support for our White Label customers. So, as many ways as we can just to make sure people can get a hold of us. Just, the Noah and Sean of Clicky.
Andrew: What was the original pricing?
Noah: It was, I think it was, maybe 30 bucks a year for Pro, and maybe 18 or something for Blogger. I mean, we just had two premium accounts. And, so really affordable.
Andrew: How’d you come up with that? How’d you come up with the breakdown of Pro and Blogger? How’d you come up with the pricing for it?
Noah: Well, I mean, our initial target market were bloggers and smaller websites. But, we figured we had enough features at the time we launched that we could break it up into a couple different plans and then still offer the free plan, which anybody can use that has a low amount of traffic. It was just a matter of really paying attention to our user community. It wasn’t really a matter of doing all this research in competitors and stuff. We just had a really good pulse on what our users wanted all the time.
Andrew: How? How can you tell that 18 would be the right price and that 40 wasn’t gonna be the right price or the free wasn’t gonna be the right price? Well, actually, I understand why not free. But, how could you tell that 18 was the right price?
Noah: You can never tell. I mean, I’m just pulling those numbers out of my, I’m just guessing.
Andrew: Whatever it was. So, is that what you did back then, too? You said, “Let’s just come up with a price that we feel is right based on who we think is gonna use this and then we could adjust it later based on the feedback.”
Noah: Yeah. And the whole adjusting later, that’s kind of an iffy thing. But, we went into it as an open book from the beginning, saying, “Yeah.” Eventually, from the beginning, when you signed up as a beta tester, we’re gonna eventually start charging money. So, when we did finally make that transition, there wasn’t any lash back or anything.
People were kind of open to it, with open arms, or welcomed it with open arms and really just wanted to support us. I mean, we basically wanted to throw a price out there that people weren’t feeling like, “Hey. I can’t do this. This is too much for my pocketbook, but I want to support these guys and have them to continue to build the product and develop it to my needs.”
So, we built that rapport early on by listening to our user community and building what they wanted and I think they, at the end of the four or five months of beta, they saw that and decided to get on board with the paid plans.
Andrew: OK. So, let’s see where we are in the story. I understand how you launched it. I understand how you charged. Let’s talk about the first kind of marketing that you did. Was it White Labeling that you did first? Or was it affiliated programs that you did? Or did you go out and buy ads or something else?
Noah: I’ve always been kind of a skeptic when it comes to marketing, well, advertising, I should say, as in generating traffic. Marketing, in general, we really didn’t put that much money towards anything. I mean, we might have, I don’t even think we bought ads early on. At minimum, we might have had some Google ads or something.
Andrew: Which came first? The affiliate program or the White Label?
Noah: Oh. Good question. The affiliate program, I believe. OK. Yeah. OK. That’s a good segue. Yeah. I would say that is a very good marketing tool. Building an affiliate program.
Andrew: What was your first affiliate program like?
Noah: It’s the exact same to what it is now. You want me to describe the affiliate program?
Noah: OK. Yeah. So, we have a two tier affiliate program. Which means that your referrals, a referral gets paid and then any referrals, any people who that referral generated that also referred, you get a cut. The referrer gets a cut of that, too. It’s hard to explain.
Andrew: I think I see what you’re saying. If I refer Peter, Peter be who’s watching us in the audience, I get a cut of what Peter pays you.
Noah: You get 20 percent.
Andrew: If Peter refers Moses, I get a cut of what Moses ends up paying you.
Andrew: So, I get to earn money twice. Two levels.
Noah: Yeah. So, you get a 20 percent cut of Peter’s payment. And then, you’d get a 5 percent cut of Moses’.
Andrew: Here’s what I think is especially smart. It seems like as soon as I create an account, you guys automatically make me an affiliate, am I right?
Noah: Completely right.
Andrew: I see. And, I don’t need to apply for anything, I don’t need to do anything. You give me that one link, and I think it’s really clear everywhere on the website and it’s a short URL, not like a lot of other affiliate programs. And you say, “Pass this around and you’ll get a referral.”
Andrew: How soon did you do that?
Noah: Initially. Man, I think we launched that in the early summer. I mean, it was, like, probably three or four months after. We just both thought this would be a great way to propagate Clicky. And get people.
Andrew: What percentage, Moses is asking, what percentage of your users end up sending you new users through that affiliate program?
Noah: What percentage of our users end up sending us new users through the affiliate program? That’s a good question. I don’t have those numbers off the top of my head. But, I’m looking through, it’s pretty easy for someone to actually get a referral because the affiliate badge is automatically enabled in the tracking code. A lot of people leave it visible. But we tell you how to take it off. I mean, it’s just the first line of the tracking code. You can take it out, but most people just enable it. And then, we also have badges that people can place on their website, too. You know, whenever somebody comes to me, saying, “Hey, would you like to do a link exchange,” or something like that, I just point them to our affiliate program, and say, “Hey, this is how we do things. If you generate a lot of traffic, you should be able to make a decent amount of money for three referrals.”
Andrew: So, the code that you give people automatically puts a little chiclet, a little image back to your site and the person who has it on their website, who feeds traffic to you, ends up getting credit, and ends up getting revenue from that. That’s incredibly clever and it goes right in the footer of their webpage, right?
Noah: Mm-hmm. Exactly. And we actually have created our affiliate programs from the beginning so that their first referrers, if they’re not a paid subscriber, will go towards getting them a Pro account. So, I mean, it’s in our favor, too. And it’s in their favor. If you’re promoting Clicky, we want you to have a paid account, or, you should be using Clicky to its fullest.
Andrew: I think that’s how I found you guys. I was looking at Gary Vaynerchuk’s website, I think, to prepare for my interview with him. I see a link on the bottom of his site to Clicky. I go, “Well, he doesn’t have a lot of stuff on his website. Let’s go see what Clicky is.” Checked out the website. I understood it was a free trial. I said, “Alright. Let’s give it a shot. Let’s put it up on the web.” And, I had it up on Mixergy and I understood.
Noah: Right on.
Andrew: And in my interview with Gary, he spent a little bit of time talking about how much he loves Clicky.
Noah: Cool. Right on.
Andrew: What’s your relationship with him? Are you guys paying him? Is he in an advisor, an investor?
Noah: No. He’s a subscriber, man.
Noah: No, he’s a subscriber, man.
Andrew: Just a passionate fan.
Noah: He’s a passionate fan. He’s a passionate fan. Whenever he comes across something that he thinks is cool or he outright likes, he will champion it. And, he’s a great…
Andrew: How do you encourage that kind of passion? Because, I imagine he uses a lot of stuff that he likes. But, he doesn’t talk about it as much as he might talk about this. Are you emailing him? Are you supporting him somehow?
Noah: No. Not at all. I honestly haven’t noticed him talking about us that much. OK. Well, here’s an example. Like a lot of people, he checks Clicky multiple times a day. So, I guess when some things, when you are seeing something everyday, multiple times a day, I guess it’s kind of hard not to talk about it.
Andrew: Ah, got you, yes. Because it’s real time, I do want to go back and check it several times a day, unlike Google Analytics, which, it’s gonna be the same right now as it was half hour ago and as it will be in an hour.
Noah: There you go.
Andrew: So, I keep going back and checking. You guys keep sucking me back into your website. Same thing with him. And because we keep checking back on the website, it stays top of mind. I see.
Andrew: I see. And that’s why he talks about it. This is why I love Sean, by the way. Sean happens to be in the audience watching us. So, Ted in the audience asked a question. He said, “How much do you guys pay out through the affiliate program per month?” And Sean’s response is, he responded before I even had a chance to ask you this question, “We pay out between 500 and 1000 a month.” That seems low to me. Is that 500 and 1000 total to all your affiliates?
Andrew: Wow. I would have thought much more. So, is that the biggest, uh-huh?
Noah: OK. Well a couple of reasons why that number would be low would be because I think we require a $10 dollar minimum to cash out. Also, the money initially goes towards paying for paid plan, so we’re not actually giving out money until they earn themselves a paid plan. And then on top of that, a lot of affiliates, I mean, we have a backlog of affiliates that haven’t cashed out. Just like those lottery tickets that no one cashes out, so, they’re just sitting there, waiting to be cashed out. So, I’m sure we have a lot…
Andrew: I see. So, Sean, again, in the audience coming through. He is saying, “We have over $10,000 in pending payouts. People have to request them in order to get them.” Alright. I get that. So, they have to go back into their account, see how much money they have, hit the button, and get the check.
Andrew: I see. I would have thought Gary Vaynerchuk himself would have earned at least that every month, considering how much he talks about it.
Andrew: But, now I understand differently. Now, I understand how it works. By the way, what’s your lifestyle now, the two of you? Now that you’ve got a profitable business?
Noah: It’s more just a mental lifestyle. I mean, we’re living the same. Sean and I live in the same city. We’re like a mile apart from each other.
Andrew: You guys traveling more?
Noah: No. No. Not at all. We went to TechCrunch 50 last year, and we’ll probably go to Disrupt. We’re planning on going to Disrupt this year. That’s about all we travel.
Andrew: I know one of you was traveling recently because when Duck Duck Go said they weren’t going to pass along data, I forget what it was. Search data. One of you guys jumped right back to the blog and said, “I’m interrupting my vacation just to respond to this critical issue.”
Noah: OK. Well, for pleasure, yeah. Sean just took a vacation to Hawaii.
Andrew: That’s what I mean. Yeah, so what kind of stuff do you do for pleasure? What kind of trips do you guys take now that you’re profitable?
Noah: Well, Sean and I golf every once in a while. It’s really kind of low key, local type of, maybe have a cigar, go out and have a cigar and a meal, you know? But, it’s really not, we don’t really do a whole lot as far as traveling to other states or locations.
Noah: I guess we’re not really spending all of our money. From the beginning, I learned a lot of lessons in Now Towns and so did Sean. About how not to run a company. And how, instead of spending all your money and running a bloating lifestyle to run a lean start-up. We’ve done that from the very beginning with Clicky. We bootstrapped ourselves, and only taken pay when we can afford to from the beginning. And so our expenses are really low, that’s why our margins are so high comparatively to other companies.
Andrew: Did you guys spend a lot of money at Now Towns?
Noah: Yeah. I had never run a company before. My business partner had never run a company before. Sean had never run a company before, even though Sean was just the developer in Now Towns, mainly. But, yeah, we learned a lot of lessons by trial and error, and some of them…
Andrew: What did you spend money on? How much?
Noah: I think we were spending about 7,000 to 8,000 a month. And that’s just in labor and just other miscellaneous costs. When we could have tightened it down to probably about 3,500, I would say, a month.
Andrew: Where did that money come from?
Noah: Oh, it came from sales. I mean, we were generating sales initially with Now Towns. You know, we’d go to a restaurant or a business and I’d bring my laptop in and show them the product and say, “Hey, if this is what Now Towns can do for you, this is what your business can look like,” and, “It’s pretty cool, isn’t it?” And a lot of times they would just write me a check right there.
Andrew: Oh, to be on Now Towns? Or for you guys to build a whole separate site for them?
Noah: No. For them to be on Now Towns.
Andrew: Get out! Wow.
Noah: Yeah. Now Towns was a centralized search engine database, a lot of local businesses. So, they’d see all their friends on there and they’d want to be on there, too. In a lot of cases.
Andrew: Wow, I would have thought that they’d want to do it, that they’d be too cheap. That they’d say, “Yelp isn’t charging us anything. YellowBot isn’t charging us. Google isn’t charging us.”
Noah: Well, see, Yelp wasn’t really that big of a player back then.
Andrew: I see.
Noah: In 2004.
Andrew: How many new people come to you guys a month from the affiliate program?
Noah: OK. That’s a good question.
Andrew: I’m wondering, because it seems like it’s more successful than the numbers in the revenue indicates.
Noah: Yeah, I would think so. Maybe Sean can pull that number up real quick.
Andrew: Yeah, Sean. What do you think about that? Let’s see, are you guys planning on doing an AB testing service?
Noah: Yeah, actually, Sean and I were just talking about that yesterday. Yeah, he’s got a couple things on his plate right now that he’s developing and one of them is a AB testing service which he is either going to employ in the next month or so, or he’s gonna wait several months and do it.
Andrew: I see. Alright. Well, first of all, that’s something that a lot of people can use. I’m glad that you guys are doing that. Second, there’s a number that I think makes sense to me. That Sean is saying 25 percent of new users sign up through that affiliate link. And I get that. As soon as you put it on your website, the image is there. Multiple people don’t even know how to remove the link. And, if they understand that they get some revenue or at least a free account, I don’t see that they have a big enough incentive to go and figure out how to remove that image.
Andrew: And, of course, the pros will figure out how to do it, and the pros will have other ways to get revenue. Let’s see what else we’ve got here on my list. The White Label. At what point did you add the White Label?
Noah: It actually wasn’t too long after the affiliate program. I think it was, actually webs.com approached us early on. They actually approached us early on in that summer of ’07, and decided they wanted to partner with us. And, so we partnered with them. It took a couple months, at least, to do the programming for that and figure it all out. And, shortly after, we said, “Hey, a lot of other companies like Webs and a lot of web hosts would probably want to use this, too.” Is what we were thinking. And so, we launched the White Label service, I think in the fall or early winter of ’07.
Andrew: How long did it take you to build that?
Noah: Sean built the majority of it through the webs.com partnership. Just figuring how he was going to do that. And then, probably another month on top of that to actually launch the White Label Service by itself.
Andrew: OK. So about a quarter million websites are using you directly, and half a million websites are using you through this White Label program.
Noah: Well, more exclusively, I would say our Webs partnership. But, yes. I guess you could be safe to say that.
Andrew: OK. Alex James Wilhelm and I were on the phone before this interview. I said, “I can’t find any information about get Clicky and Noah online. I’ve got to find someone who can help me.” Alex used to work for you guys. What did he do for you guys?
Noah: Right on. Yeah, OK. Well, he was working a farm job, just right out of high school. The guy is young. He plays it off like he’s this older guy, but I think he’s just turning 21, maybe, like, July?
Andrew: Oh, really? Oh, I did think he was a lot older.
Noah: Really. No. I met him…
Andrew: I said, I’ve got to find an adult who can fill me in on the information behind this business.
Noah: Yeah, I met him. We played the trumpet together in Youth Symphony and he’s, like, three grades younger than me. Right out of high school he was working a farm job and I told him, “Hey, man. You should move up to Portland here, just stay in my apartment, and we’ll just work on Clicky together and hit up some web hosts, try to get them to use our White Label service type thing.” So, he moved up and worked with us for a good two months, I would say. And then, Alex is a bright guy, obviously. He’s definitely a people person too, which is a big benefit. And when he left for college, we kept in touch, and we had hashed out an early business plan for another venture before he left. And we were talking it over, and decided we wanted to launch that business, and so he came back the following summer to work on that business.
Andrew: Is this Concensure?
Noah: Yeah, Contenture. That is what it was.
Andrew: Contenture. I saw that on TechCrunch, and I see that on your Twitter account. But, when I went to contenture.com, it was down. What happened?
Noah: Yeah. We shut it down last year. It did not catch on. I mean, it was…
Andrew: What was the idea behind that website?
Noah: It was a content modernization service. Basically, we created some easy plug-in tools that would allow people to create micro services on their blog or website and then charge a micro subscription for these micro services. And micro service, when I say that, I mean, like, disabling ads for the micro subscribers or maybe some type of premium content or something. But we created this service that automatically was a payment platform that collected those micro subscriptions and then divvied them out to the different websites that used our service based on the amount of traffic they got.
Andrew: I get that idea. Because, I may not want to spend money on the New York Times. And I may not want to spend money for access to CNN. And I may not want to spend money for access to thenextweb.com, because I could live without those websites. But, if you give me one membership that gives me access to all of those sites, to extra information on all those sites, to no advertising on all those sites, I think I might be more likely to do it. It seems like a good idea. Why didn’t it work?
Noah: Yeah. Initially, we didn’t launch that type of capability. We launched more on a micro scale. We wanted bloggers, smaller bloggers and sites to use our service. And basically enable those micro services and we would collect micro subscriptions. People could say, “Hey, I want to go premium with this blog.” And pay, like, 50 cents a month or something like that. And through our service, we’d collect those subscriptions and then pay them out to the different websites.
But, it didn’t catch on, because the sites weren’t willing to charge to wall off part of their content, or, we didn’t ask them to wall off part of their content, but we asked them to add premium content. They weren’t willing to go the payment route, the micro subscription route. So, it just didn’t catch on. But, there have been a lot of clones of Contenture since then. I mean, it got a lot of hype early on. Everyone was talking about it. So, we decided to shut it down. It just wasn’t doing anything.
Andrew: OK. In the beginning of the program, I promised people that we’d talk about marketing. We talked about affiliate programs. We talked about White Label. We talked about some networking with bloggers. Is there anything else that has worked well for you guys, as far as marketing?
Noah: Well, Twitter, completely. Sean administrates the Twitter account, and we are always talking to people everyday on Twitter. It’s great for the real time notifications.
Andrew: How is Twitter bringing you new customers?
Noah: Well, we monitor Twitter conversations, and then try and respond to people who are potentially looking for different analytic solutions. That type of thing. We have our own…
Andrew: I see. So, if I say, “I’m pissed at Chart Beat because they cost too much,” I might get a direct message from you guys, or an app message from you guys, saying, “Hey, do you want to try out Get Clicky?”
Noah: Yep. We actually have a Twitter keyword monitoring feature in our service. And it’s very useful for especially businesses who want to monitor the conversations around a keyword and then participate in those conversations. So, we track Chart Beat and Web Analytics, those types of keywords, and so we know what people are talking about all the time on those conversations and we can easily jump in and out of them.
Andrew: OK. Here’s what else I’ve seen that seems to work for you guys. Giving out data. So, when the iPad comes out, you guys come out with data that says, “Here’s the day of the week that most people used their iPad. Sunday is the iPad day for people.” If Android comes out with lots of different phones, you come out with a report that shows what the breakdown is in web usage for all those phones.
Andrew: How helpful has that been?
Noah: Oh, completely. I mean, it’s gotten us quite a few big articles, just because we’re the first to market, on as far as tracking those new devices or platforms. Especially, I think the first one was Chrome. When Chrome first launched, that day we were just like, “Bam. Got to track it.” And Sean had it up and running that day. So, we were already generating numbers and then TechCrunch and other blogs just had to pick it up, because they wanted to be the first to report some type of data.
Andrew: So, it’s not a PR company. It’s Sean who is doing that.
Andrew: Sean, in the comments. Can you tell me, honestly, if you have four or six arms? I want to find out. How many people in the company? Is it just you and Sean?
Andrew: Wow. Alright. Anything else about marketing that we should talk about? Anything else that works for you guys?
Noah: Let’s see here.
Noah: Just a lot, guerrilla marketing, I mean, you don’t really have to pay…
Andrew: What other types of guerrilla marketing do you do?
Noah: Let’s see. Any time I paper something I haven’t gotten the value out of it. So, whether it’s a official press release, definitely haven’t gotten value out of that. Or paying for ads. Usually I don’t really generate the traffic. But, as far as guerrilla marketing goes, it’s just trying to, I think marketing, rather than pushing yourself out there onto people, if you do things, who you are is more of a marketing tool than who you want to talk to. Because, our user community will just pimp us out because we’re always there for them. And, let’s see here, yeah, I guess I’m kind of stuck here.
But, I’m just trying to say that if you keep innovating, that in itself will keep you on top and you won’t have to do as much marketing. Because you don’t really need to talk about yourself if you’re showing people that you are who you profess to be. If you’re always coming out with cutting edge new features and cutting edge technology and you’re always communicating with your community, then they’re gonna talk about you. You’re not gonna need to talk about you.
Andrew: OK. Fair enough. Let’s talk about the product. That’s the other thing that I promised people we’d be talking about. User interface is beautiful. How did you develop it?
Noah: Again, credit for that has to go to Sean. He and I aren’t graphic designers, but Clicky isn’t a graphic design central type service. It just tries to be clean and relevant. And powerful.
Andrew: Do you do any testing? Do you bring people in? Do you do your own AB testing? [SS]
Noah: Again, it’s just our user community. We’ll release something and then we’ll get instant feedback. 20, 30 comments in a blog post that we announce it with and we know if we are going in the right direction or not.
Andrew: Do you have an example of how user feedback has shaped the product?
Noah: Yeah, you can go to any blog post, pretty much, that we’ve posted. There’s probably, like, 50 or 60 of them right now. Maybe 100. And you can check the comments and you can see what people are saying. That’s all we’ve done.
Andrew: OK. I’ve got an example of that. A small example, but it’s the latest one. You guys blogged how you respond to customer feedback via email.
Andrew: And you said, basically, I think it was, you have the email route go from the support email to both of your email accounts and then you tag it and so on, and people just hammered you and said, “Are you crazy? Why don’t you create a Google Apps account, and then you won’t have to do this whole routing thing.” And you responded, I think within a few hours, saying, “Alright. We get the feedback. We’ll try that.”
Noah: Yeah, when multiple people keep saying something, you just kind of need to listen. You should listen. It’s great that we have a user community that won’t sit back and just be quiet. Kudos to everyone out there who’s helped us in that respect.
Andrew: Jordie by the way, in the audience, wants to know if you’re thinking of hiring a third person. I wonder if Jordie means himself.
Noah: [laughs] Yeah, that’s a good question. We’ve always talked about it. It’s just kind of one of those initial hassles that we don’t really want to deal with. Just because Sean and I would be looking for the right type of person, and it’s just really hard to find that person and when you are busy all the time, it’s really hard to devote time to searching out people and hiring and potentially researching them out. So, I don’t know.
Andrew: So, what’s your growth plan then?
Noah: Our growth plan? Last time Sean and I talked, I mean, it’s just basically to keep doing what we’re doing. Keeping it small, keeping it lean. Releasing new features often. I wouldn’t say that we’d be hiring anyone anytime soon, but you never know. We did have a developer for a summer and he built the mobile interface for the iPhone. And, Android device and other mobile devices for viewing Clicky. And then he also helped us out with some infrastructure data center issues we were having. But, he left on his own accord to move to a different country. So, I mean, we probably would have kept him around quite a bit longer. But, it’s just the way things have been. So, yeah, we’ve only had one other employee for a summer. That’s as far as developing.
Andrew: Wow. How do you compete with Google?
Noah: I guess we do. How do we compete with Google?
Andrew: I don’t mean today. Today, I understand that you’ve got some advantages over them.
Andrew: That you’re offering real time. They don’t really offer real time. There’s a way to get close to real time data from them, but it’s not really real time.
Andrew: But, how do you keep competing with them as they grow and add new features and acquire other companies?
Noah: Well, they’re actually pretty slow to do that in the analytics arena. I mean, we’re doing a lot more than they’re doing. At least that people can see. I don’t know what they’re doing behind the scenes. But, I mean, yeah, Google’s a big company and everything, but the market’s still really big.
You could look at it two ways. You could look at it as being really saturated, there’s a lot of analytics services out there. Or you could look at it as being, there’s a lot of opportunities, because lots of new websites are being created everyday. So, I don’t know.
We’ve kind of found our niche and we’ve just grown from there. We have a little chart on our homepage how we stack ourselves up against Google, and other competitors. We just point out the features that we do and they don’t, or we do. In the long term, I guess who knows what Google’s gonna do. Right now, they are just a free service. And they’re not real time. So, we just have advantages over them right now, for this, for the right type of market. A lot of people [SS]…
Andrew: Andrew SG is giving you advice. He is saying, “Scare everyone and tell them that Google can use analytics to penalize search rankings. Boom. Everybody switches to Clicky.”
Noah: Right. Nice. [laughs] That’s some good advice there.
Andrew: What about, I think Mixpanel is backed by Y Combinator. I’m imagining that because I keep seeing them on Hacker News a lot. What about ChartBeat? How are you competing against these leaner, faster, faster to improve sites?
Noah: Yeah, that’s a really great question. The market’s always changing. They have different purposes right now. ChartBeat, I think they charge $10 dollars a month for any amount of page traffic. That’s great that they can do that. They are backed by a venture capital company, Beta Works. So, that’s great that they can do that. But, they don’t have any history. You can’t check your history. It’s just a live feed.
Andrew: Oh, really? I can’t use ChartBeat to find out what my traffic was last month?
Andrew: Oh, interesting.
Noah: No, not to my knowledge, anyway.
Andrew: Let’s stick on this for a minute. Because, one of the reasons that we set up this interview was I read Mark Suster’s blog. Mark Suster is a venture capitalist who has a good handle on what’s going on in this space. He was talking about ChartBeat and how much he loved it, and how it let him know what was going on in real time, and I said, “Hey, Mark. You missed out on Clicky.”
And I emailed you, and I said, I hate when people miss out on a company like yours, just because you’re not part of the whole funded eco-system. But, we have to acknowledge that there is this little club of companies that get venture backed.
They are all friends of each other who invest in these companies and show these companies off to each other and talk about what’s going on there. And you are out of the club. Do you ever feel that you are out of the club and so you are missing out?
Noah: Yeah. I mean, if we did get venture funding, I can’t imagine, no idea, it would just be a totally different direction. It’s not something that we’ve wanted to do or needed to do. We are doing fine as we are and I don’t know if we took on all this extra funding and hired all these extra people, I just don’t know what would happen. I don’t feel it’s necessary right now. Maybe in the future, though. Who knows.
Andrew: Let’s see what else we’ve got here on the list. Expenses. Earlier, when I said that your expenses were over 200,000 a year, Andrew SG in the audience said, “Where does the money go?” What kind of expenses do you guys have in the business?
Noah: Well, we are paying for our data center, which is about over four grand a month. Because we have a lot of servers that we have built and our hosting ourselves. So, we are always buying new servers each month, probably an average of two servers each month. We have probably 40 servers now in the data center or something like that.
And then also we pay for other services, like CDN, content delivery network. We have a little bit of payroll, not that much. But, a lot of it just goes into equipment and data center costs, I would say.
Andrew: So, 200,000 is data center, it’s servers, it’s your salary, it’s Sean’s salary, and maybe it’s coffee for the office.
Noah: Yeah, all the other expenses that go into running a business. You’ve got accounting and a lot of other miscellaneous things that you can…
Andrew: What about the affiliate? Well, I guess the affiliate program, would that be included in the 200,000?
Noah: It actually is not, because it comes directly, let’s see, actually, no, it’s not included in the 200,000.
Noah: I think we pay it out of our PayPal account, actually. So, it never actually goes to our ledger.
Andrew: And you are sitting in what looks like an office. Do you guys have an office?
Noah: It’s an apartment that the living room has three glass desks in it.
Andrew: And, do you live out of the office, too?
Andrew: Oh. Really?
Noah. Yeah. This is my place. And, Sean’s place is like a mile away. It’s not too far. He’ll come over here every once in a while and we’ll work together at the office.
Andrew: Otherwise he’ll work out of his place. Today, he is at his place?
Andrew: Cool. Can you turn the camera around? Can we see the place where you’re working?
Andrew: Oh, wow. This really is just an apartment. Three desks.
Noah: Yeah. And then we got outside.
Andrew: Oh, cool.
Noah: Whoa. Sorry about that.
Andrew: Did you say you were in Portland?
Andrew: Portland looks beautiful right now.
Noah: Yeah, it is nice outside.
Andrew: Let’s see. I got a bunch of questions before I started the interview. Let’s see if I hit on all of them. How did you get the marketing right, did you partner with a lot of companies. How did you reach out to the companies you partnered with? I understand that webs.com reached out to you, but after that, you said you went out and you looked for other partners. How did you find them?
Noah: Yeah. When Alex was here, we were basically hitting up all the different web hosts for our White Label service, and we did not get hardly any response back as far as any deals that actually really happened. Maybe one or two. And, we’d send proposals out to Ming and other software companies that could use an analytics component. We’d write out these proposals, saying, “Hey, this is how you guys can make money by adding a value added service.” And, we just didn’t get any real bites. We tried. I guess, the partners have just kind of happened on their own. We haven’t really solicited that many partners. They just find us by searching on Google if it’s for our White Label Service or referrals.
Andrew: Where does most of the revenue come from? Is it from the direct service that you guys offer or from the White Label?
Noah: It’s definitely from the direct service is the majority, but our White Label is also a decent chunk of revenue. I think it’s probably 20 percent of our revenue or something. Maybe more.
Andrew: Here’s something interesting. Before the interview, I got a question about B2B and virality. There’s no viral aspect to B2B businesses. But, now we see that there is. Because, businesses want to earn revenue, and you’ve added the ability for them to earn revenue as soon as they sign up. And, you’ve also added a viral component by putting your little image on their websites.
Andrew: That’s pretty clever. I love it.
Noah: It’s nice. It’s really nice. Yeah, and then, I think Google gives us a good page rank. I think we’re at 8 of 10.
Andrew: Oh, that’s right. Because it’s all of those chiclets are linking back to you.
Noah: Yeah. If you look at those types of stats, like the Alexas, and the Competes and the Google page ranks, we’re definitely doing pretty well because of those chiclets.
Noah: A lot of people are linking to us. It’s part of the nature of our service.
Andrew: Cool. Well, I am glad I got to meet you and it’s great to hear the story.
Noah: Thank you. Thank you for doing this interview. Appreciate it.
Andrew: You bet. Thanks for giving me all this great stats, thanks for coming here and doing an interview. I know that you don’t do many interviews. I’m especially glad that you came here and did this one.
Noah: No problem, Andrew. Appreciate it.
Andrew: And, Sean, thanks for all the feedback in the chat room. Thank you guys for watching. Bye.
Noah: Take care.
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