Andrew: Hey there freedom fighters. My name is Andrew Warner. I am the founder of … you guys are not going to want to listen to this interview when you hear the intro. The reason you’re not going to want to listen to the interview is because we have that for an introduction but it’s true and I’ve got to address it to so that people who will actually listen to it because here’s the deal.
I am going to introduce you guys to an entrepreneur who started his first company or the one that we are talking about today in the 10th grade. And then in the 11th grade he was offered $2.5 million. The problem with introducing you to a guest like that is that you are going to think, “Ah, this is another one of these guys who just really got rich very quickly, everything worked out very easily for him.” But that’s not the way it is, and I think that there’s a lot of creativity and a lot of hustle for the way that he built his business. And if all you see is that headline, all you see are few data points like that and you walk away, you’re going to miss it. I don’t want to miss it.
I want to find out how he did it with so few resources, how he built his company. The guest that I am going to introduce you to is Rajiv, Rajiv Khaneja. He is the founder of Sparklit. Sparklit really is a company whose name you’re probably never going to know but the products it creates are what you might have used or will use at the end of this interview.
He runs a company that owns several SaaS products including Adbutler, which manages your online advertising, Activeboard which offers hosted forms and Web Polls, which as the name implies, is online polls. His latest product is FourEyes. FourEyes makes creating forms really easy but what’s amazing about it is that it offers data mining and analytics on all the responses you get to your forms. I have invited him here to talk about how he did it, to pry into his finances and to find out well as much as we can about entrepreneurship from him. Rajiv, welcome.
Rajiv: Hi, thanks for having me, Andrew.
Andrew: Hey, before I get into the sponsorship message, I was looking at you as I gave you that introduction and I saw your eyebrows furrow off a couple of times, what did you think about that. Be open with me.
Rajiv: Well, so what you haven’t mentioned is that was in 1996 when I was in grade 10 and I haven’t done any interviews that have gone back sort of that far so digging in to that I can see the last, what’s that now? Fifteen or 19 years just crazy sort of flash through my mind and I guess that shows on my face.
Andrew: I see, all right. I thought maybe it was like, “How the hell is Andrew introducing me? As the interviewee you wouldn’t want to listen to. I think there’s a point to that because I do really get a lot of push back when I introduce people to people who started their companies that young.
Hey, before I officially get into it, I got to actually pay for Mixergy here by talking about my sponsor which is HostGator. We talked actually you and I before I started the interview about how if you had to start a today with nothing but a HostGator account and figure out how to build a brand new business, what would you do? You started telling me, what was the idea that you had?
Rajiv: A back-end booking engine.
Andrew: What’s a back-end booking engine mean?
Rajiv: We all know about Airbnb. That’s a back-end and booking engine, specifically for condos or apartments or whatever you want to rent out. There’s a ton of other businesses out there that need to book things like kayak tours or whale watching or whatever and the tools to do that are . . . There’s a ton of them out there, but I think that’s something that you can do, sort of better. There is still a huge growth in that market with a ton of people still booking stuff like that with a spreadsheet or pen and paper or some cloud-based thing. It’s incredibly sticky whereas once you bring a customer on board, they’re probably your customer for the life of the business or for a long time. So I just . . .
Andrew: How would you figure out what to do booking for, whether it’s kayaks or bicycles or something else?
Rajiv: I think you do it for everyone.
Andrew: I see, for all of these things, one universal booking system that allows people to . . . Well, doesn’t that seem like a little too general? You wouldn’t focus?
Rajiv: Well, I am sort of stealing this idea from a company I invested in. It’s called CheckFriends and they are absolutely killing it. They’re small now, but they are growing at a massive pace so I know that that space is working really well.
Andrew: I see, all right. I wonder if someone could actually could you think that could be made using say WordPress’ as a back-end, a smaller simpler version of it?
Rajiv: I think you can use WordPress for a lot of it, but you would need to to do some sort of custom database or some custom bit in there.
Andrew: All right. HostGator.com/Mixergy, if you have an idea for a booking system for a site where people can book things like kayak adventures or bike riding or frankly any idea that you have. If you go to HostGator.com/Mixergy you can be up and running within minutes. They give you unlimited disc space, unlimited bandwidth, they give you email, they will host your site using WordPress or so many other platforms.
You can start off simply and expand and expand and expand as your business grows because they’re a hosting company. They let you host your site, not just one platform. If you go to HostGator.com/Mixergy and actually HostGator.com/Mixergy there is no end and you sign up I guess, in the end, you’ll get 30% off. HostGator, thank you for sponsoring. Rajiv, thanks for helping me do this sponsorship.
Rajiv: Thanks for letting me help you.
Andrew: Hey, did you have any kind of a life if you started in the 10th grade? Or were you just a business man the whole time?
Rajiv: I had a life. It was very different, I think, than your typical high school/college life. I actually went to a high school that … well I’ll start before that. I went to sort of like a fancy private school that I got kicked out of.
Andrew: Why?
Rajiv: For serious reasons. For hacking.
Andrew: For hacking? What did you hack?
Rajiv: I was accused of hacking …
Andrew: Come on, you hacked, it’s okay to look back and talk about it. Bill Gates hacked, Steve Jobs hacked, they’re all proud of it.
Rajiv: Yeah, but I didn’t do anything terribly interesting or special. I made other people’s computers crash remotely.
Andrew: That was it? It was just for fun to see if you could randomly pick someone’s computer and make it shut down.
Rajiv: Yeah.
Andrew: Okay and they kicked you out for that?
Rajive: Well, at that age I was and still I am pretty iconoclastic and didn’t have too much respect for authority and this was the type of school that didn’t fly so I was constantly skipping class, I didn’t go to chapel, it was an Anglican school. We would hide out in the locker room instead of going to chapel. I was sort of on the radar, I think, a bit and then this school is very academically inclined and they find students that they think may not excel academically, not to be a good fit for the school. I don’t want to say too much about the school but I think I sort of …
Andrew: They kicked you out.
Rajiv: Yeah, and then when I got caught hacking, it was a nice way to show me the door. I ended up going …
Andrew: What kind of personal life? Did you get to have friends and you hung out? Did you get to play baseball? Did you get to play… you guys are I guess Canadian, did you get to play hockey?
Rajiv: We actually played a ton of soccer down there, that’s like …
Andrew: You did?
Rajiv: I still do.
Andrew; Did you have girlfriends, boyfriends, anything?
Rajiv: I had girls I was infatuated with.
Andrew: I did too and they were not interested in me.
Rajiv: I had some success but looking back it was one of those over blown teenage things, but yeah I went to parties. I had a really good friend and we were both super car stereos and car audio. So I bought my mom’s 1986 Toyota Corolla from her, which is apparently the best car for drifting and took out the back seat, replaced it with sub woofers. It had like six sub woofers in there. Because I was making some money, I had this $5,000 car with a $25,000 stereo system in it. That was the kind of stuff that I did.
Andrew: Why did you need a $25,000 stereo?
Rajiv: I think I was super into the technical side of the stereo when you get to that level and anyone out there listening who is sort of into car stereos which I was at the time, knows about the difficulties of drawing that amount of power from a car, sound quality, hi-end equalizers and all that stuff. There’s a ton of like any other nerdy …
Andrew: It was a challenge. Could you build this stereo using what the car had?
Rajiv: Yeah. There’s a challenge there and it’s also like any other sort of nerdy, geeky thing that people keep diving into whether it’s comic books or stereos or whatever. There’s a whole universe there.
Andrew: I see, and you got sucked into it and the reason you had, what was it? $25,000 to spend on the stereo plus 5,000 on the Corolla is by then, it seems like you’d already built your website, EntertainmentLand.com is that right?
Rajiv: That’s correct. The stereo came after … after but you’re going mention is that the polls got big but yeah. EntertainmentLand was the starting point.
Andrew: I am looking at the early version of EntertainmentLand. It’s got funny humor, It got massive archives of jokes, it’s joke a day. I had a joke a day email listed at some point, probably around the same time. We are talking about late ’90s, right?
Rajiv: Yeah. Earlier.
Andrew: No, we did it all by email. My theory was that with the website, you have to keep bringing people back in every single day but if you have nothing but a mailing list, someone joins, they’re stuck with it. Not stuck, they’re there every single day until they unsubscribe. And so it makes more sense to spend money to acquire a subscriber to a mailing list than to get another [Inaudible 00:10:11]
Rajiv: Yeah. I had a mailing list as well. You could actually pay, I think, it was four bucks a month or maybe it was a dollar a month, or something where you get a joke a day. And I think I had like a thousand people or something signed up to that at some point.
Andrew: Here’s how it started actually. It was a free joke a day sent and supported by a graphical banner advertising at the top and bottom of the email, however you can get these banners removed for only 12 bucks a year.
Rajiv: Yeah. There you go and I think after a while we only went to the 12 bucks a year.
Andrew: I see, and for that you get three juicy jokes every day. Three juicy … is in red. This is the kind of site that you had. What got you to start the site?
Rajiv: I am actually a bit hazy on that. I think I started the site just to see if I can make a website and I honestly can’t remember why I put jokes on there but when I did start it, it became one of the biggest sites on the internet and I remember being surprised and that traffic is what motivated me to keep building it and making it interesting so that wow, people care about this and I remember being somewhat surprised by that.
Andrew: One of the reasons why you got so much traffic is Yahoo helped support the site by highlighting it.
Rajiv: Right.
Andrew: What did Yahoo do?
Rajiv: Back then, Yahoo wasn’t a search engine. It was …
Andrew: A directory.
Rajiv: Yeah. It was a directory. It was a hierarchical directory and for certain categories, where you were positioned in that directory gave you either more prominence or less prominence. And I think I don’t remember clearly, again, it was 19 years ago but I think for one of the important categories on Yahoo, they put us in the top five, or something like that where they had a special section and we were up there for a while and that obviously gave us a ton of traffic.
Andrew: Yahoo is huge for traffic and humor was actually pretty big on Yahoo.
Rajiv: Humor was big on the web.
Andrew: Yeah.
Rajiv: I mean, back then people were on dial up. Images weren’t, you would have to wait for an image to download so textual content was sort of faster, it was quick and that was perfect for jokes.
Andrew: Yeah. Like you may not be able to do a YouTube video but you can post that “Your mama” joke like this one, “Your mama’s so ugly, she looks like you.” “Your mama’s so ugly, they filmed Gorillas in the Mist in her shower.” All these are goodies from the site. I see advertising on here. Did advertising come first or polls?
Rajiv: Advertising came first.
Andrew: Ads first.
Rajiv: I had this site without advertising and I never had the idea of making money from the site originally, and there was a company called the Pacific Coast Down Company and I later found out, like years later, that the owner of that company which just makes down duvets, down pillows, nothing tack at all, the owner happened to be good friends with Jeff Bezos. And through one of their conversations, he figured I am going to try to promote my company online. I am going to create banner ads and pay people five cents a click and try and sell some pillows or whatever online. They were actually one of the first, if not the first, online advertisers, and they were certainly the first to add any site sign up and I started earning the five cents a click.
I signed up with them, they were my first advertiser. I remember on my way to,I think, it was just 7/11 with a friend of mine, I was explaining to him how I was going to make hundreds and thousands of dollars by putting this ad on the site and doing the calculation mark, I get X visitors a month, if only 10% of them click on that, then I’m going to make whatever, I think, a few hundred dollars. And at the time my allowance was 10 bucks a month so it sounded amazing and I put the ad up and lo and behold I didn’t make a hundreds of dollars. This was back in the day before there was any real time statistics where you could know how you’re doing until the end of the month. I was eagerly waiting the end of the month and I get the first check and its for six bucks. So at that point I realized I need more people coming to the site if I want to make any money.
Andrew: Maybe more advertisers. I see you ended up getting a lot of different kinds of advertisers. SafeAudit.com was one of the platforms you used to run your ads. The other thing that I see is you have these things that were big back then which is like a list of freebies online, right?
Rajiv: Oh yeah.
Andrew: Each one of these freebies gives something free to the user but also gives you a commission for getting the lead.
Rajiv: Right.
Andrew: Did that work better for you than banner ads? We are talking about things like here, “Try for free, free magazines, free catalogs, free gift certificates, free email like free email account, free software, et cetera.” All you have got to do is it’s free to try and when someone does that, when they go to free the number two try.com you got paid a commission. How did that compare to the banner ads?
Rajiv: I think the banner ads were still king. What really was better than the banner ads or that free to try back then was when I found about Commission Junction which was an affiliate marketplace. Vendors would come, they could offer their affiliate programs and users could sign up because back then before the dot com crash, there was a ton of money that a lot of startups had and they were all about hyper growth and some of them would offer up some ridiculous amounts of money on Commission Junction which if any of the investors in back then are listening, that’s where all your money went.
Andrew: To you.
Rajiv: Straight out for Commission Junction to guys like me, yeah.
Andrew: They would pay maybe a buck per registration, maybe $3 per registration. The registration just meant the user had to just come to their site, fill out a form, and say that they were a member.
Rajiv: Exactly.
Andrew: We did that. The first time I think I came to San Francisco was when Commission Junction flew me here to speak at their conference because we did a million dollars a year in affiliates, and they wanted me to speak to the other affiliates. And we were doing the exact same stuff you’re talking about. The problem was the people back then didn’t recognize that the forms, the registration forms should be kept short and so they would ask for a little too much information but that worked. Did that work better for you than banner ads, I forget what the response was?
Rajiv: Yeah, that was when we started making real money.
Andrew: That’s the real stuff.
Rajiv: Yeah.
Andrew: Back then you didn’t have to disclose that it was an affiliate, you could just link over, people get their free stuff, et cetera. Did you start creating the software for ad serving at that point or were you creating the poll software?
Rajiv: The polls came first.
Andrew: First and the polls happened because of an argument that a friend of yours had.
Rajiv: Yeah. So this was before I got kicked out of that school I was talking about. I had a buddy who went to that school, and he was from Iran and actually he was adamant that Pepsi was more popular than Coke, which it is in Iran, but it’s not in North America.
Andrew: I see.
Rajiv: Somehow this argument got heated, I don’t know why we cared about it so much but he was sure he was right, I was sure I was right so we bet 50 bucks on it and I said to him, “I will put a poll on my website and whoever wins, wins the bet.” He agreed to that. At the time, I didn’t know any programming, I knew HTML which I taught myself and I figured, there’s probably some sort of HTML poll tag or whatever, I’ll go stick that on. I had seen a poll on CNN.com and figured, how hard could that be? I started searching around and I couldn’t doubt at this time, how to make a poll.
All I would come up with is hundreds of other people asking the same question on internet forums and the answers were always the same. It was always, you have to learn how to program, you have to learn Perl, which was the big web program language at that time. If you have to learn how to program, you have to learn Perl.
I looked into what Perl is, and I’d see a ton of weird dollar signs and some gobbledygook and I would be like. “Oh, this is not HTML which is kind of understandable. This is totally different.” I remember I did that for a day and then I sort of gave up and then about a month later we had the same discussion again. And I thought, “I am going to get my 50 bucks, I am going to figure out how to put a poll on the website” so I locked myself in my room for a weekend and how I taught myself to program was I downloaded the simplest Perl program I could find. I think it was a web counter and essentially what the web counter did is when somebody came to a website, it would increment a number by one which would be stored in a file somewhere and then displayed on the website. Super simple.
I took that script and by randomly changing stuff in the script, taught myself how to program. I looked out and said. “I think this is the bit that saves the number to the file. Let’s try and make it save the number, increment a number by two before it saves it” and I changed it, and I’d load the file up and it would break in some horrible way and I go, well, I guess that was important and I put it back to how it was. And then basically through that kind of trial and error, I cobbled together a script, a poll script, which is essentially a bunch of counters that get incremented based upon which option you select, so not terribly different than a simple counter but it’s some stuff added on. Through that trial and error process, I cobbled together a poll script, I wish I had a copy of it but I don’t, but I imagine it was like the worst script or the worst quality program I ever …
Andrew: The program is still hard to find it, I can’t find it.
Rajiv: Yeah, the other thing is the actual programing of the script, wouldn’t be publicly available anyway so.
Andrew: I just wanted to get the a screenshot to see what it looked like. I wanted to see if there’s any … you never know, internet archive can save a lot of stuff maybe even …
Rajiv: There is on internet archive if you put it in pollit.com, you’ll see the oldest versions of poll.com which is once I put it on, it’s on domain.
Andrew: Okay, let’s go back to that.
Rajiv: While you find that, i’ll just continue with my story.
Andrew: Yeah, go ahead.
Rajiv: It’s just . . .
Andrew: I see the site and there we go, I can create a poll, I can modify a poll.
Rajiv: What year was the earliest one in there?
Andrew: ’98.
Rajiv: Oh yeah, so it started in ’96, I think.
Andrew: Okay, so ’98 I could say, would you like to add a poll like this to your site? Yes or no? I clicked the Yes radio box, I submit my vote, and it breaks because archive can’t get that. All right, cool. You had it up. You figured out how to code it up on your own. You had it up on the site, what happens?
Rajiv: I put it on the site and the visitors that were coming in to my site loved it. It got a ton of responses and people would come back and check the results of the poll.
Andrew: All right.
Rajiv: So I thought this is something that’s great for every website on the internet, and I remembered that as I was looking to put a poll on the site, I found hundreds and hundreds of other people asking the same question. And they were all getting the same answer, you have to learn how to program, you have to learn how to program and obviously none of these people knew how to program so they couldn’t put a poll on their site. What I realized is that through some changes to that script I made, I can create a new script in which anyone with a website can sign up, create their own poll, and put that poll on their site. And I can put a banner ad on it and that’s a way to massively increase my traffic. And I made those changes and I put it live and the response was absolutely amazing.
We were hosting, I think, a million polls inside of a year or two, I don’t remember the actual stats. I wish I did but it was massive, it completely dwarfed my entertainment website which I abandoned it after that because it was a rounding error compared to the popularity of the polls. And as far as I know, it’s the first ever what we call today, “SaaS product.” I don’t know of any other one. If anyone knows of something that was earlier let me know but as far as I know it was …
Andrew: Is it SaaS if you’re not charging for it?
Rajiv: I don’t know, is it?
Andrew: I don’t know because SaaS just means software as a service. Does that mean that you have to charge for it or?
Rajiv: I don’t know SaaS is a interesting term. Back in the day we used to call it remotely hosted, like it was remotely hosted web polls or remotely hosted services and that was sort of the term for it. And then SaaS, somebody invented it one day and then I go, oh I guess that’s what I am doing now but prior it was called remotely hosted.
Andrew: That process still holds up today, to see if there’s a problem that you can’t figure out on your own and then notice that no one else has the solution, they’re all saying go hire someone to do it or learn how to code. You see that problem and then go productize the solution for it. That seems like something that still holds up to this day.
Rajiv: For sure.
Andrew: You monetize by banner ads within the … I may not even call it a widget, the people would place it on their sites, they probably wouldn’t do that these days but they would pay for it more likely.
Rajiv: Right.
Andrew: And if they wouldn’t pay for it, they would take a free version with some capabilities on their site with the link back to you and then pay to remove the link back to you or pay for extra features. It feels like that’s the whole “Summa me model” right now.
Rajiv: Right, yeah, exactly.
Andrew: Okay, so that was the business, that’s the thing that started to really take off. How do you then go from that to being in the ad business?
Rajiv: We were advertising supported and what I realized is that, hey, if there’s a ton of demand for this poll product that will improve someone’s website, there’s other products that people would want to put on their website so things like Guestbooks were big at the time but they were difficult to put on your website. I can make a simple Guestbook that you can add to any website. You don’t have to be a programmer, you didn’t have to install a Perl script on your own server. There were Guestbooks, forums, we did a little counter with an ad in it.
What I did is I was actually going at that point to a new high school just close to a university, and I was ahead by a year because I sort of finished everything early so the principal arranged for me to go to our local university which is University of Victoria and which has a great computer science program. I started doing my first year of computer engineering while I was in high school. That computer engineering department had a co-op department where 3rd and 4th year students were looking for summer jobs or for eight month co-op placements and I started hiring those co-op students thinking that, me as a high school kid who just learned how to program a few months ago could make this product, I can hire all these guys who had four years, three or four years of schooling, and they’re just going to rip out all these great ideas they have. So I hired a bunch of …
Andrew: What do you mean by rip up all these great ideas that you have?
Rajiv: I meant, rip out, you know, like just bang them out.
Andrew: I see, that they could be so much faster than you because they are more experienced than you, got it.
Rajiv: Yeah, I mean they’ve got most of the university’s degrees so I figured, they’d be good to go. I quickly learned that not everyone who goes and gets a computer science degree is necessarily that perfect, but I think that’s another story. Long and short of it, I had four to five guys. I think it was four is what I said around my parent’s house, and they were making a bunch of these different products and we were putting banner ads on all the different products.
Andrew: I see.
Rajiv: I needed what we now commonly call an ad server to help manage all of these banner ads across all of these different products. At the time, Double Click was around, there were like a few other ones, some of which are around still. And they didn’t want to talk to a 17-year-old high school kid who called them up and said, “Hey, I want to use your ad server.” It was an enterprise sales model, they were guys looking to talk and sell ads on Yahoo and they all …
Andrew: Double Click especially was very Elitist back then. They had this sense that they deserved to be at the top of the pyramid, and everybody else deserved to die. Even when the dot com crash happened, they would essentially say, “We’re going to wait for that guy to die and then we’re going to buy him, or we’re going to beat him that way.” I guess it’s okay to feel that way internally but when you have that external attitude, you have a lot of people who root for you to fail and have just a need to build stuff that’s competitive the way that you did.
Rajiv: Yeah.
Andrew: They could have been a little bit more engaging.
Rajiv: They had lots of varied entry, they weren’t interested in SMBs. They certainly weren’t interested in a 17-year-old high school kid, and I didn’t want to pay them.
Andrew: Right and they were extremely expensive because they could rip off these giant companies who didn’t know any better.
Rajiv: Exactly and I never even got to the point of pricing, but they had this aura of enterprise around them, very expensive and at the same time, I looked at ad serving and at the time, it was really simple. It was essentially put in a few parameters, maybe some quotas, there was no GEO targeting or anything complicated that I needed to do. It was show this banner X percent of the time and see how it does or a new advertiser wants to advertise, show them 2% of the time. If we make more money, then show them more often. I looked at that and looked at my programming knowledge, and I can make this. We can make our own ad server.” I made an ad server for O News and then naturally they made that into its own product.
Andrew: By then you were already making more money than your parents just because of your own ads.
Rajiv: Yeah, so yeah. Back then I was making more money than my parents, more money …
Andrew: How much are we talking about roughly?
Rajiv: I think that our top month before the dot com crash was about a 100,000 or a 110,000 U.S. dollars.
Andrew: Wow.
Rajiv: We’re in Canada here. Back then we used to get a $1.50 for a U.S. dollar so it was really good for us down here.
Andrew: That’s phenomenal and that’s the period where someone offered you 2.5 million?
Rajiv: Yeah, so there was a company and this is a super common business plan back in the pre-dot com days, was take a bunch of companies, buy them out at 10, 11 times earnings or whatever it is or whatever you could get away with and then roll them all together, go public at 60, 70 or 100 times the earnings. And so there was a company down there that was trying to do that. They flew me out to Burbank, the first offer was 2.5 million with half of that in cash and half of that in pre-IPO stock. And I looked at what their pre-IPO stock was valued at and it was 60 times earnings and I said, “Hey, you’re valuing me at less than that.” I flew back to Victoria. They called me up a week later and said that if I was still interested, they have a significantly better offer for me. But at the time, I’d just started this and I was so into it that I just didn’t want to exit and …
Andrew: Why? Why did you think you were going to do with it that was going to be better than what they were offering you? What was your vision?
Rajiv: My vision was essentially to continue on the path that we were going down. and I looked at what they were offering and it wasn’t more than a couple of years of earnings. And I basically said to myself, “Hey, this is tons of fun.” I was having the time of my life and I am getting paid for it and as long as in two years, I am going to be at the same position as what they are offering me so why would I take that offer?
Andrew: That’s interesting. That does make sense and it does assume that everything is going to continue which it felt like it would.
Rajiv: Well, if at the time, if you drank the Kool-Aid, it wasn’t only going to continue, it was going to get better.
Andrew: You are making the Kool-Aid. You were really pumping it up out there. You decided you were going to build … That’s what became AdButler …
Rajiv: Yeah.
Andrew: Right? You put it out Did the dot com crash happen after AdButler launched?
Rajiv: It did, yeah.
Andrew: Okay, so what was the launch like for AdButler?
Rajiv: Today when you talk about launching a company or launching a startup, it’s very well baked. There are certain steps you follow, a lot of best practices …
Andrew: My part of the steps for . . . you right now as you’re launching FourEyes?
Rajiv: Yeah.
Andrew: It is, so I got introduced to you through Joanna from copyhackers.com. She said you got to meet this guy. Is that because you’re launching and you asked her, “How can I get some press for this new thing?
Rajiv: Exactly.
Andrew: It is, okay so what other press have you done right now? I will get back to how you launched AdButler.
Rajiv: We’re doing a bunch of blog posts that are designed to help people with various tasks that they need that could also be advanced using surveys.
Andrew: Okay.
Rajiv: We are hoping to get some traction there. You’re actually the first sort of big-ish press that we’re doing.
Andrew: What’s the hell with the “ish?”
Rajiv: Nothing.
Andrew: Okay.
Rajiv: You’re the first big press that we’re doing. Basically we were toying with the idea of like a hard big launch or a soft launch and a ramp up. We are sort of being pushed into the soft launch side of things instead of the …
Andrew: Why?
Rajiv: Whatever is launch day because we’re getting tons of amazing feedback from the customers that we’re on-boarding and as anyone, I think, anyone who develops all these SaaS products knows that you have . . . I think we have 10.000 elements on our road map that could be completed and the idea of the product being done is in a sort of very gray area, like when is the product done? When is it ready for the public?
Andrew: I see.
Rajiv: Probably, I think it was like a year ago, we set the date as May, 2015 and obviously in a year a lot of things change. And what we sort of wanted to do is make sure that when people find out about the product and they use it for the first time, they absolutely find it amazing, they find it magical because I know if somebody comes and evaluates FourEyes today and it doesn’t meet their needs, it is vastly more difficult to get them to come back when we add the feature or add the workflow that they want.
Andrew: I see. You don’t need everybody to go on the site all at once, you just need a constant stream of new people who could keep giving you feedback and trying out the features that you’ve built based on previous feedback.
Rajiv: Yeah, so in May, when we thought we were ready to launch, the product hasn’t changed since May but the marketing has. We were giving people a particular message about the product and people weren’t necessarily vibing with that because there’s a ton of survey products out there and there’s tons of forms out of there and we created, least I think, a better survey product and a better analytics engine that helps you digest the responses to that survey. But communicating that to people so when they come to the site and look at it for 10 seconds, they get it.
That was something we wanted to make sure we had perfect before we go and announce to the world, “Hey everybody, come check this out.”
Andrew: I see.
Rajiv: Even if the product’s better, if we can’t communicate that to you, it’s not really going to go anywhere.
Andrew: The home page is really brilliant. I like how immediately when I get to the home page, I don’t just see marketing about what is, I get to drag and drop my first form. It’s just so sweet.
Rajiv: Yeah, that’s the balance we’re still trying to nail down. We tested a version that was just the drag and drop form and nothing else, and now we’re testing a version where it’s a drag and drop form first and then you can click through and get more information about the product. And then we’ll do another version where you get the information first and there’ll be a try button that’ll take you to the drag and drop.
Andrew: I see.
Rajiv: I am super excited. I’ll be sharing that in various blog posts in the future, how those different tests will go but I am super excited to see just the psychology of it like, what works better. It’s one of those things where I have no idea til I test it.
Andrew: Can I tell you something? I am seeing an attitude change as you’re talking about FourEyes. You’re more excited, you don’t feel as … I don’t know, I feel like you’re more relaxed as you’re talking about it. How does it feel to come back here and talk about what you did over a decade ago?
Rajiv: Well, it’s interesting that you notice that because I have always been a starter not a finisher. At Sparklit I’ve built a great team of people who are amazing and get a lot of work done. And they know that I have a lot of ideas and I start a lot of stuff and I am very lucky that I have great people that can take all that stuff and make sure it gets through to the finish line. So I am always more excited when I am talking about what I am starting, what I am doing next and what’s coming in the future. Looking in the past, now as I get older, I find it super interesting but it’s more of like introspective, more …
Andrew: You have time for that kind of thing now.
Rajiv: Well, it’s more like sitting around the campfire with a beer talking to buddies, being like what happened over the last 15 years whereas what’s coming up is more, sit up straight and let’s talk about the future and what it could be.
Andrew: I guess I feel more excited about both but when it comes to doing interviews, I am always more excited about the past than the future. And the reason is that when I started doing interviews I would interview entrepreneurs who are on their way up. And they would have all these stories about what was going to work and what they were doing and inevitably, by maybe a month after I publish the interview, everything would change completely, and they’d be doing something completely different and they were just as excited about that. And so what I took away from it was it’s not … there’s no real message in it until you see, until the story is over. Right? I still have to see, did these ideas actually work out? Otherwise I’m …
Rajiv: Yeah. I think from a learning point of view and from the take away point of view, looking at the past especially looking at past failures is where you get your insights from.
Andrew: What’s your biggest failure in the past?
Rajiv: We launched a product called BlogBaker, which went head to head with WordPress and that was probably our biggest failure.
Andrew: Why did you think that BlogBaker was going to work out?
Rajiv: We had a history of launching products that improved websites, and we had a very synergistic quality between those different products. We started off with the Polls, got a ton of users and then we said, “Hey everybody, the company that did Polls, the team that brought you that, we’ve now launched forum software.” and everyone went ” Oh, that’s awesome, we love the polls, we’re going to love the forums, we have a website that was improved by the polls, our website could use a forum too,” done. That was sort of our pattern, in the early 2000s. It was leverage our existing user base, give them something else that would also help them and improve their website.
What happened with BlogBaker is that it was the last in that iteration, in that pattern, and I think what happened is the web matured, search engines got better, Google came online and it was vastly easier to research all of the offerings in a particular vertical. So if we launched BlogBaker, it’s super easy to go find all of the other blog products out there, and people were used to getting lots of different products from lots of different companies. So this synergy kind of fell apart there, and we happened to pick a product category that was in the process of being dominated by a very large product which is WordPress.
Andrew: Yeah.
Rajiv: We essentially made a product that was equal in quality to WordPress but not significantly better in any way. It wasn’t significantly worse, but it was about as good as WordPress and we kind of did what we did with all our other products which is just throw it up there and let the world find us. We never, in the past, had to put a lot of effort into marketing. Our landing pages were essentially a feature list so all of this psychology surrounding landing pages that we know about today; Social Pro and all the other things that go into making a great landing page, we didn’t have any of that.
The biggest, absolutely biggest thing that we missed the mark on is blogs are incredibly sticky. If you create a blog with WordPress or Blogger or whatever platform you’re on, it’s very difficult for us to go to you and say, “Hey BlogBaker is slightly better in maybe some small way, switch your entire blog over.” No one’s going to do that all, right? They’ve got years of posts or months of posts and dozens of comments and thousands of comments, and they’re not just going to wipe that all and start fresh.
Which is a big lesson we learned for FourEyes because when we were looking at …
We had a survey product before there was enterprise focused and we re-branded it and we redid the entire front-end for FourEyes. When we were looking at doing that, I realized that surveys are not sticky at all. If you did your last thousand surveys with Survey Monkey, you can do your next one with FourEyes. FourEyes is better and works better for you because there’s no reason to be stuck with the previous product.
Andrew: Why? Why do you think people like SurveyMonkey? I don’t get it. As a user, when I get a Survey Monkey survey, where the survey goes wide across the site and looks so old-fashioned, I don’t understand why anyone sends it. And at the end of the survey from SurveyMonkey, I get hit with an ad for SurveyMonkey, not even a clear confirmation but something really confusing that I imagine a lot of people don’t know what the hell they are doing there.
I don’t know why SurveyMonkey is doing as well as it is, it’s not that good. Frankly, I am going to go on record as a person who just thinks it stinks, and I would love to get the founder of SurveyMonkey on here. I’d love to do an interview with them, but as a user it just feels like … especially compared to frankly, Wufoo is a much better product but they were acquired by SurveyMonkey and it’s now being completely ignored. Every once in a while they’ll add something to it when you think …
Rajiv: You just answered your own question. The reason everyone uses SurveyMonkey and this is my analysis of the situation. And this is why we launched FourEyes is that, in my opinion, SurveyMonkey is a M&A company, a merge and acquisition company that sort of happens to have a survey product. They have got very good ties to Wall street, they’ve had a great ability to raise money, they’ve raised a ton of debt in order to fund their acquisitions.
And what they’ve done over the past decade or longer is buy companies like Wufoo, Zoomerang, Fluid Surveys and there’s a whole ton of other ones and they’ve done a great job of buying those companies, folding in the user base into their survey product. And in my opinion, a lot of the times and a lot of the companies they bought have better products. They are sort of more modern, they don’t have these super wide surveys and everything you’re talking about.
They buy those and then essentially ignore them for a while and eventually shut them down. What they did is they just cleared the entire survey landscape and we have an enterprise survey product which has an amazing back end. We made it in 2005, and we never really updated it since then. And I am sitting and watching SurveyMonkey buy this company and that company and this company got shut down and that one did this. And I’m thinking, we’re doing all this amazing stuff, in our builder apps and after board app. If we just took sort of all that in-house knowledge of how to build an amazing web app and we redid our survey product, we could have the best survey product in the world, not because people don’t inmpvate in that category but because SurveyMonkey has been systematically taking out all of our competitors. That is really why we stepped right in there.
Andrew: You said you’ve got one competitor in SurveyMonkey.
Rajiv: Yeah, it’s a competitor that doesn’t seem to be focused on the product. They seem to be focused on M&A and growing the business that way.
Andrew: I do feel that people are willing to switch to a different survey product, but it’s hard to stop paying for the previous one if it’s … Well quite frankly, I don’t think it’s hard to stop with SurveyMonkey because it stinks and it doesn’t embed itself really into your site but Wufoo is hard. I haven’t created a new Wufoo form in a couple of years because I am using Gravity Forms. I still pay them every fricking month because it’s embedded into my site. I don’t know where it is. If I’m going to pay someone on the team to go down and hunt everyone of their surveys and recreate, it is going to cost me more money than whatever peanuts they are asking me. What 25, 30 bucks a month?.
Rajiv: Yeah.
Andrew: So it’s not worth it. So they keep it going. Then I’ll use a competitor.
Rajiv: When you’re talking about surveys that are embedded into a site, that’s where it does tend to get a little sticky, but there’s a massive universe of surveys that are used for employee feedback. So a quarterly survey that’s set out by a different employee in the company, things like customers satisfaction surveys where you get MPS scores and stuff … There’s this massive universe of surveys that are distributed by email. Anyone who’s right now trudging through SurveyMonkey is clicking buttons and waiting for full page reloads …
Andrew: Is that true? Is it still in the background?
Rajiv: Yeah. I mean, it’s a 2005 product.
Andrew: Still doing that.
Rajiv: Yeah.
Andrew: I haven’t actually gotten in to create a survey with SurveyMonkey, and the reason I haven’t is that because every time I use it as a user I just hate the experience. It just feels so awful, and I feel that people who use it misrepresent their brands. And I have a few people in mind who’re so careful with so many things, but they just started to use SurveyMonkey at some point and now I feel they are stuck with it.
Rajiv: Yeah. I think …
Andrew: I hope I don’t end up doing an interview with the founder. I can’t on my stuff around.There’s no way. It makes no sense. I’m not even saying that FourEyes is better. I don’t know FourEyes well enough to say that. I’m just saying that SurveyMonkey just makes no sense.
Rajiv: Well, I think what’s super interesting with SurveyMonkey is that if you look at it 10 years ago to today, they haven’t added a ton of stuff and you look at other apps that we’re used to using like Slack or all these great modern apps that are coming out. And then you look at SurveyMonkey and you are like, “Oh! What happened? Did I just enter a time machine?”
Andrew: Right. Why couldn’t I just enter like corporate America and I can understand why your boss tells you to use it?
Rajiv: Oh yes. It’s like those people that you sit down with them and they still fire up IEs so their active x-controls can work because they’ve got some weird thing.
Andrew: Right. Right. Right. I can’t tell them why they shouldn’t have just … it just doesn’t feel like the world I want live in.
Rajiv: Yeah.
Andrew: Boy, this is just us putting down SurveyMonkey. Me, actually putting down SurveyMonkey. I don’t get it, but their landing pages keep improving year after year. You can go to archive.org, and you can see over time their landing pages really look nicer and nicer.
Rajiv: Right.
Andrew And they add more languages and all that but oh my God! The product, please …
Rajiv: Their main message on their landing pages, if you kind of tease it apart, is surveys are good. You should use surveys.
Andrew: Yeah. I mean, they’ve nailed the fact that people want to get feedback, and they are encouraging them to get more feedback but that’s it. Here is the homepage that says “Paid surveys get answers. The basics is always free, upgrade from our powerful features.”
Rajiv: Exactly. Great surveys gets answers. I mean, I don’t want just keep bashing SurveyMonkey although it’s fun to bash your competitors, but you don’t see them comparing themselves to their competitors. They’re saying use SurveyMonkey because we’re the only product that does this or wherever. It’s just surveys are good, so use SurveyMonkey is sort of the …
Andrew: I used to pay 300, no. okay. Failure to pay three hundred bucks a year to get what they call survey logic which I guess is the FN analysis. Surveys could be incredibly powerful, you could basically … I wonder what that pinging is? Is some app that’s pinging here?
Rajiv: Oh yeah.
Andrew: I think it’s my computer, not yours but who knows? Is that on your computer?
Rajiv: No. I don’t think it was mine.
Andrew: What do you do to get through the dot com crash? Here you are in an ad-based business and ads are dying everywhere. You had a client of yours who just went bankrupt as you were trying to collect money from them. What else did happen?
Rajiv: I think during that point we were a small freemium model. So we had ads. We had like a kind of side option which really didn’t do much where you could pay to remove the ads. But nobody really was so most of our revenue was ad-based but we had the ability to accept credit cards. We already had that infrastructure. I remember one morning just waking up and all the advertisers picked paid at 90 at the time.
We had an advertiser that would pay us about 50 grand a month and that 90 means they owe us for three months of payments so that is $150,000. I remember waking up one morning checking my email and it was just a short email like four lines long that said, “We’ve gone bankrupt and we are not paying anyone.” That was that, $150,000 just gone. I remember feeling just like a punch in the stomach because I was like one of the biggest advertisers. I think I was the biggest and I had these four guys sitting in a room at my parents’ house and I had to pay them every month and I was like whoa, what am I going to do here? Right.
Basically overnight, that night we pivoted from freemium to paid model. We vastly restricted what you could do with the free version. We still kept it around. I heavily pushed the papers especially for AdBuild, for the ad serving because with ad serving it was a product in which people were making money out of it. It wasn’t nice to have or something cool to add to your website, it was fundamental to a lot of revenue streams out there.
Andrew: You shifted from ad based business to charging customers.
Rajiv: Yeah.
Andrew: SaaS though, I guess not SaaS but to charging your customers. A lot of people try to making that transition, The only people who seem to get it right were the dating sites. People were paying for them month after month. What did you do to get it to work?
Rajiv: Honestly, it was so long ago, it’s difficult to remember all the details, but we had this site sort of thing where people could pay. So we had this large user base and we basically said, “Hey, the free version is going to have less and less features and the paid version … I think, if I remember correctly, I think what we just had some features on the road map which hadn’t launched yet. And rather than launch them for everybody including the free version we only put them in the paid version and it was a mental shift for us.
It used to be like our company is app supported and all these four years are awesome to a sort of a mental shift. These free users are unsustainable. How do we get them to pay and how do we get new users to pay. And we focused really on improving the paid version of the product and just added as many features as we could to get people to pay. I wish I had a better answer because … what was it, 16 years ago now and I don’t remember exactly how that transition went.
Andrew: Fair enough. I do remember actually when these companies went out of business. There was one that was called ETOUR. I interviewed the guy who ran it, Jim Lanzone. He’s now CEO at CBS Interactive and I flew to …Where were they? Louisville, Kentucky, of all places. They had their start up. I flew up there and I said, “I’m going to convince them to pay.” I don’t understand they are going through bankruptcy. You can’t just start handing out money to your … to people you’re buying ads from. I was convinced, I could convince anybody I would make sure that they pay and I’ve got a tactic. None of it worked.
Rajiv: No way.
Andrew: It was a difficult period. What are your revenues today?
Rajiv: Our revenues today are about 1.8 million, give or take.
Andrew: Okay. And profits?
Rajiv: I don’t want share that being a private company, but we have really healthy margins.
Andrew: More than a quarter million you guys have taken in as profit.
Rajiv: Well, more than that yeah.
Andrew: Well more than that.
Andrew: And you are the only owner of the company?
Rajiv: We have a team. We have team now of seven guys and we are sort of … I love like a sort of a small team model. I have seen other friends companies grow and get larger, and I see that a lot of people grow based upon the funds available to them. Whether that’s revenue that’s coming in or money that have raised or wherever. Their head counts just eats up all the revenues, and it’s like how many employees do you have? We have X employees. Why do you have X employees? Because we have Y money. That’s the math. Right. I always want to run a company for the very long-term which in an incredibly disruptive environment they are in with tech changing all the time, I want be able do things like, “Hey we want to make Four Eyes” and it is going cost us a couple million bucks.
I don’t want to go with my hat in hand to investors and VCs and beg them for money and have them scrutinize my business plan and possibly go down their road and set up my own up. I want to say, “Hey, we have made some good money in previous years. We can self-fund anything we want. So we need series A type of money for some new product. Well, we have it. Let’s just do it,” and that’s what we did with FourEyes. We didn’t have to go to anyone. We didn’t have to raise any money. We just …
Andrew: Does it bother you then that Ryan Finley, that’s the founder of SurveyMonkey, he started roughly around the same time you did; 1999 was when SurveyMonkey was founded.
Rajiv: Yeah.
Andrew: He just built this thing up because he was willing to take outside funding. He just kept growing and growing it, and now it’s worth over a billion of dollars.
Rajiv: For sure.
Andrew: Does it bother you that your approach is going to be easier but more you but less profitable?
Rajiv: I think those two times that answer, like so the one hand he took money and he was successful. I’m not sure that both of those things, one follows the other. He also had a vastly different strategy than us in our survey product. So we had a survey product that was started a few years after that, and we went the enterprise route because essentially we built the product as a SaaS product. Like all of the other products.
And we ended getting a bunch of RFPs for surveys, different six figure RFPs for governments, for Fortune 500s, with HP EDS, and we won those RFPs and we just kind did it as a side thing. We had one guy that was like, “Hey, we got the survey product. Why don’t we do these surveys?” And then we and then we said, “If we’re taking six figure like 200,000 bucks from EDS, how do we turn around and sell this for 50 bucks a month. We can’t really do that.”
Andrew: So what’d you do?
Rajiv: We took the easy money upfront which in hindsight that’s what I’m really upset about is we should have built up the survey product as another SaaS product and said no to all of that … all of that enterprise money. I mean, we still made money, we made a good return, wherever it cost us to make the product, we made a healthy ROI on it. Anybody in any other business would be happy with, but then you look at SurveyMonkey, it’s valued at two billion today. And I go jeez, I should have done that.
As far as taking outside money to build it, yeah. There are obviously tons of examples where people take outside money to very quickly ran businesses, but at the end of the day you’re getting diluted out. You might have a billion dollar business but, you might own 10% of a billion business or in some cases … I think we know the famous examples where you own one or two percent of the … the founder owns one or two percent of the very large business. Sometimes it’s not very clear what the founders actually left knowing and that process of ramping up a company that big can be super stressful. It can take a huge toll on your health, and there’s a ton of sacrifices that can be made.
Andrew: What’s the best part of having built your to where it is right now? Over a million in sales, profitable, what is it? Are you able to buy a bigger car now? Not just a Corolla end and hook it up with Muzak?
Rajiv: I don’t know like … I looked at all the studies as far as happiness and wealth goes and there’s no correlation there beyond a certain …
Andrew: So what’s makes you happy? What are you able to do right now that you couldn’t do if you hadn’t built your company, Sparklit?
Rajiv: Well, obviously being in a better financial position …
Andrew: What could you do since you’re in a better financial position?
Rajiv: To be honest what makes happy is doing interviews like this where people actually care about what I have done.
Andrew: Do you really like doing this interview? I feel really lucky to have you on here because you don’t really do a lot of interviews. I was trying to get into a sense of are you into this interview or not and I feel at times you were thinking, “You know what? I know there are better ways for me to grow my company. I should just be spending an hour growing my conversion rate instead of even having an interview. That’s the way I was sensing.
Rajiv: An hour growing my conversion rate would probably be nothing.
Andrew: Right.
Rajiv: No. I love, I love …
Andrew: Do you like being the face of the company?
Rajiv: It actually makes me really happy that people care about what I have done and people using like the products that we’ve created and seeing or hearing that in a while because I mean, you do anything in this world and everybody that you know friends of families are going to say, “Oh, it’s amazing it’s great.” And you hear that quite a bit and starting a company young, there is this idea of sort of the Doogie Howser syndrome which is people who start young have a spotlight on them because of their age. And then, of course, like everyone else they grow up and if you are doing the same things at a later age it’s not never as impressive. I’ve sort of been in that for a while, and now I’m 32 and it’s no longer amazing that I’m doing what I’m doing. right? It’s not like you’re a 17-year-old doing this …
Andrew: That’s your computer I think. I wonder what that is? Did you hear the ding twice in the last two minutes?
Rajiv: No. I didn’t hear that.
Andrew: Oh weird. So maybe it is me. I don’t know what it could be, I do have all these websites. Maybe I’m going to just shut up Chrome.
Rajiv: SurveyMonkey, dinging here.
Andrew: Right.
Rajiv: Anyhow so being 32, just hearing, you’re going to events and stuff and hearing people talk about … when they don’t I’m involved in it, talk about AdBuild, talk about … I’m starting to hear people talk about FourEyes. That I find, that makes me happy. I think that’s super rewarding.
Andrew: Well, I’m hoping that the people who are actually listening to this interview and using your software will contact you and let you know what they think of it. What’s a good way for them to connect with you?
Rajiv: So my personal email is gfk@sparklit.com and I’m pretty active so if you email me you’ll probably get a reply.
Andrew: All right. Sounds good and the URL is GetFourEyes.com, right? G-E-T and the word, F-O-U-R Eyes, GetFourEyes.com.
Rajiv: All right. Yeah.
Andrew: All right. Thank you for doing this interview. Thank you all for being a part of it. If you like this interview and want more, please subscribe … no. You probably already subscribed. Here’s what I’d like you to. If you like this interview and believe in this line of questioning and the approach that I have, grab your friend’s phone and say. “I’m going to introduce you to Mixergy, and just type in M-I-X-E-R-G-Y into the podcast and let them get Mixergy. I’m trying to grow my audience by guerrilla-marketing techniques, And one of the ways I’m going to do is by recruiting you, the listener, to push this on your friend and once they fall in love with Mixergy, I will ask them to push it on one more friend. What do you think of that, Rajiv, as a marketing strategy?
Rajiv: I think that’s a great marketing strategy.
Andrew: Okay. Thank you for doing this interview. Thank you all for being a part of Mixergy. Bye everyone.
