How Shapeup Reached 700K Users And Landed Big Company Clients – with Rajiv Kumar

How does a startup get 700,000 users to improve their health?

Dr. Rajiv Kumar is the founder of ShapeUp, a wellness platform that companies join to improve their employee’s health by creating a social network where employees help each other with their nutrition, exercise and other goals.

I invited him on here to figure out how he gets big companies as clients and how he gets all their users to be active on his network.

Watch the FULL program

Rajiv Kumar, ShapeUp

Dr. Rajiv Kumar is the founder of ShapeUp, a wellness platform that companies join to improve their employee’s health by creating a social network where employees help each other with their nutrition, exercise and other goals.

 

Raw transcript

Mixergy's audio transcription is done by Speechpad

Andrew: I got the notes I took on the interview you’re about to watch, and

I want to call your attention to three things that I think you should pay

special attention to. First, notice the section where we talk about will

power and why it’s not enough. Listen to today’s guest talk about what will

help you get things done. Second, listen to his first version and what it

looked like. A lot of people want to go way bigger. Listen to how his first

version launched quickly and how it impacted his later versions. Finally,

you should notice how he sells to big companies by having these big giants

come to him. People who he, otherwise, couldn’t get a hold of, he found a

way to get them to call him. All that and so much more coming up.

Three messages before we get started. First, do you need a single phone

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It’s the virtual phone system that entrepreneurs love. Next, does anyone

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is easy to set up and manage? Send them to shopify.com, the platform that

top online stores are running on right now. Finally, do you need a lawyer

who actually understands the startup world that you and I live in? Go to

walkercorporatelaw.com. I’ve known Scott Edward Walker for years, so tell

him you’re a friend of mine and he’ll take good care of you. Here’s the

program.

Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of

Mixergy.com, home of the ambitious upstart. How does a startup get 700,000

users to improve their health? Dr. Rajiv Kumar is the founder of ShapeUp, a

wellness platform that companies join to improve their employees’ health by

creating a social network where their employees can help each other with

nutrition, exercise and other goals. I invited him on here to figure out

how he gets big companies as clients and how he gets all their users to be

active on his network. Dr. Rajiv Kumar, welcome.

Rajiv: Thanks for having me.

Andrew: Do I call you doctor? Can I call you Rajiv?

Rajiv: Rajiv is just fine.

Andrew: Rajiv is fine. I was looking at the notes our producer Jeremy made

on his conversation with you, and one thing that stood out for me is the

end users, the ones whose companies sign up for ShapeUp, compete with each

other. Why do they care? Why do they compete? Why are they so engaged? By

the way, your video’s doing this thing, which we sometimes see with video

Skype, where it sometimes goes letter box, other times it goes square. We

just deal with it. The ideas are [??].

Rajiv: As long as you can hear me.

Andrew: Tell me, why?

Rajiv: This was something that we stumbled upon accidentally. When I was a

medical student, I began to notice that most of my patients were struggling

with how to lead a healthy lifestyle. How to eat healthy. How to exercise

on a regular basis. How to manage their weight. My insight, as a medical

student, was that the people who worked together with their friends and

their family and their colleagues to achieve their health goals, were much

more likely to succeed. Most people were failing because they tried to do

these things alone, and so they would go to the gym alone, or they would go

on a diet alone and inevitably, they would fail because, as human beings,

we tend to not do very well at solo journeys. There are some of us who are

very self motivated, self disciplined, but for the most part, we’re not. I

started to think about this idea of bringing people together in a social

capacity to support each other, but the problem with that was it wasn’t

necessarily fun and there wasn’t real call to action.

If you think about a program like Alcoholics Anonymous, or other group

based behavior change programs, you go there when you are in trouble, and

you don’t have any other choice and it’s not something you look forward to

going to, but you do it because you need the help. In this case, we wanted

to inspire people to get active and to lead healthy lifestyles to prevent

them from getting into a very bad situation. We decided that we wanted to

make it fun and engaging, and it turns out that by turning it into a

competition, which is the form of a game, we were able to drive that level

of excitement and give people a call to action to get involved. It turns

out that even people who think they’re not competitive, deep down inside

have a little bit of a competitive streak and this is the way to activate

them to start to take action on their goals.

Andrew: It’s both working together and against each other. Working together

by having other people who are trying to become healthier and, at the same

time, trying to one-up them also, that you can be the one who works out the

most, or becomes healthiest?

Rajiv: The core of the model is actually a team based competition. So, you

have a team of people that you are working together with.

Andrew: I see.

Rajiv: And that team is, we say, competing with not competing against, but

competing with other teams at your company. So, there’s that friendly

competition, but you also support where your team members are pulling for

you and trying to help bring you up and support you when you fall down.

Andrew: And do you think this? By the way, before we even get into how you

built up this business, do you think this is true for every bit of self-

improvement, that I, for example, decide that I’m going to stop watching TV

that instead of working on my own day to day, to cut back on my TV hours

and become television-free, that I’d be better off working with other

people and somehow motivating each other to stop watching TV. Does it work

for that? Does it work for business? Does it work for all areas of self-

improvement?

Rajiv: Yeah. I believe it works across the board.

Andrew: Why?

Rajiv: Because if your [inaudible] is inherently social, since humans are

social and emulate what the people around us are doing, we look to them as

role models, and they can influence us. Think about how many times at the

end of the day your colleagues say, “Let’s go out for Happy Hour”, and

suddenly everybody’s eating wings and drinking beer. Imagine if your

colleagues said, “Hey, let’s go for a walk together.” Suddenly, you’re out

walking and you’re exercising. We’re influenced by that.

We see that on our platform. We have our challenges where people can cut

back on TV, and by sharing what they’re doing and helping each other,

giving each other tips and other alternatives like what we used to do, you

see people dramatically reduce the amount of TV they’re watching. You can

also think about it, not necessarily in the sense of working together with

strangers, but how about your family? If you really want to cut out the TV,

if your spouse keeps turning it back on, that’s not going to help you. So,

you have to make it a family goal. So, it’s just truly social because the

people around us in our lives influence every single thing that we do.

Andrew: You’re right about that. I remember growing up, wanting to cut

television out, and I’d make this big effort not to watch, but it became

impossible because if I walked over to talk to my dad, he was watching

television, and I’d be sucked into it or I’d have to be engaged in it if I

wanted to spend time with him. I’d have to force myself, not only to stay

away from television but to stay away from my family. When you’re living in

a small … Well, it wasn’t such a small place, but when you’re in a place

with other people, it’s hard to avoid them. It’s awkward, too. It’s

damaging.

Rajiv: Absolutely. So, we chose the work place as the ideal location for

this type of intervention for a couple of reasons. One is that work places

tend to breed very unhealthy behaviors.

Andrew: Like what?

Rajiv: Like muffin Mondays, bagel Tuesdays.

Andrew: Ah.

Rajiv: Going out Wednesdays, right? Or people bringing in their leftovers

and dumping them at the office. People taking the elevator to the second

floor just because everybody else is doing it when there’s a staircase that

works perfectly fine. Or even people fighting for the closest parking

space, you know, that prized spot next to the door when maybe, if we’d get

some extra steps in, it would be good for our health to walk across the

parking lot. So, and then also in terms of the food that’s served in the

vending machines and the cafeteria. We said, “Why not use this as a place

to spread healthy behaviors” and it tends to spread more quickly in the

work place because people are highly concentrated. You spend a lot of time

with your colleagues. You see them on a regular basis, and one person’s

healthy actions can actually spread to other people in the office.

Andrew: All right. Let’s see how you built this business up and how big it

got. I’m fascinated by human psychology and the reasons why I get to

improve and the things that keep me from becoming a better person.

Sometimes, they’re not. In fact, often I’ve discovered they’re not just

willpower. I just want to willpower my way through everything, but sometime

you discover, well, willpower is only so powerful. The people around you

are sometimes more powerful. You can want to eat healthy all day long, but

if you live in a neighborhood with nothing but McDonald’s and bodegas that

sell potato chips, you’re going to really struggle to do it.

All right. Let’s see how you built up this business and how you got all

these customers. Going back to even before you got in this business, you

always wanted to be a doctor. You’re a doctor first, right?

Rajiv: Yeah.

Andrew: Since you were five. Why did you want to be a doctor at five years

old?

Rajiv: Well, talking about social influence, I grew up in a family of

physicians, so I come from a family of 35 doctors. My mother, my sister,

all my aunts and uncles and cousins. So, in some ways it’s the family

business, and it’s one of the only professions I ever knew, but I also

realized that our health is the most important thing that any one of us

has. The opportunity to help people when they’re sick, when they’re at

their most vulnerable is truly a privilege, and it’s something that I

wanted as my goal. That was my value to society, so I was always interested

in health and medicine.

When I got to medical school, I started to feel a sense of frustration

which is that all of medicine and healthcare is always focused on treating

people after they’ve been sick, instead of helping to prevent the illness

in the first place. It seemed very logical to me that we would invest more

resources upstream, upfront in prevention than we would in disease

treatment and end of life care.

So, I started to get really frustrated that we weren’t having that

conversation in medical school on in the health care arena in general. We

have been having that conversation now with healthcare reform but this is

back in 2005 and it wasn’t necessarily a topic that was very popular.

Andrew: There’s also another issue as I understand it, when you were going

to school. You looked around, you saw all these people who knew exactly

where they wanted to go, that were clear on their lives and enthusiastic

about the direction that they were headed in and you felt different, right?

Rajiv: Yes. I hadn’t figured out my purpose yet, my calling. I was trying

to figure out how to have an impact on the people around me. And in a way

that was a little bit different and innovative. I didn’t want to just go

along with what everybody else was doing and feel like I was on a track I

couldn’t get off of and that I would end up stuck somewhere and feel like I

had no options and opportunities. And so I was constantly looking around

and saying, “How can I be creative? What can I do that’s different that

would have an outsides impact on society?”

Andrew: Why didn’t you just say, “Hey, you know what? I’m going to be a

doctor. I’m already going to school here. I’m clearly on a clear path here.

As long as I do well, I’ll have my life set and maybe later on in life I

can go and give to charity”. Why did you give into this internal need to do

something bigger?

Rajiv: I think some of it, I got to be honest, is natural. I think some of

us are born with the entrepreneurship in our blood and a little bit of

ambition and thinking that because we can potentially have a greater

impact, we should. And because we have interest in it, and maybe some

talents or skills in that type of area of building something and be

creative, that we can have an obligation to do that. So, I felt that pull

and I felt obligated to do something more.

Andrew: Do you ever feel that it’s a little depressing too to have that?

You know, that everyone else as you’re looking around the school and you’re

seeing they’re clear on their lives, they know exactly where they’re going

to go, life is good for them. And because you have this bigger vision for

yourself you don’t know what to do. It sometimes feels stuck and unsure and

living below your potential for a guy who wants to be beyond his potential.

Keep growing it. Do you ever feel that way? That it’s depressing?

Rajiv: Yes. I think maybe less, not depressing but maybe frustrating. Maybe

sometimes you feel like the odd man out. But I think that’s right. It was a

lot of the energy around trying to figure out and that motivates. It

motivated me.

Andrew: How?

Rajiv: I didn’t want to stay in that situation to just constantly feel like

I didn’t know where I was going and I didn’t know what I wanted to do. So,

I went on and explore and looked and I think that I was more open to seeing

opportunities than I would have been otherwise.

Andrew: You know? If you’re driven to be a good student and get a good job,

there’s a clear path you can take. You know what the grades are based on.

You know what the tests are like. You know where the jobs are and what

books and who you need to talk to to become a better interviewer and so on.

But when you don’t know the direction and you have all this internal need

to make something happen, where do you channel that need? Where do you

channel you inner energy? How do you discover what that thing is?

Rajiv: I think you go out and you talk to people and you listen and you

watch and you look for what other people are doing and where you think

changes happen. And I think anytime there’s change or disruption, there’s a

lot of opportunity.

Andrew: Can you give me an example of who you talked to or what kind of

conversations you had?

Rajiv: Yes. One of the examples is I talked to a lot of my patients, beyond

just about their blood pressure or beyond just taking their past medical

history. And I talked to my patients about why are you struggling, why are

you failing to lose weight, what’s standing in your way. Or somebody who

came in and lower their cholesterol, lower their blood pressure, lower

their glucose and gone off their diabetes medication. I spent time trying

to understand what they did that was different. Why did they succeed when

everybody else was failing? And I think if I hadn’t spent that time, I

wouldn’t have seen what was pretty obvious observation which is when people

work together, they’re more likely of achieving goals.

Andrew: So, it is obvious but a lot of people, a lot of doctors and even

non-doctors, who talk to people who are struggling with weight gain, who

are struggling with their health, missed it. What was it about the way you

asked those questions that helped you uncover what the obstacles were that

were keeping people from succeeding?

Rajiv: I think the reason that a lot of physicians and health care

professionals miss that concept is that we’re trained to see healthcare as

an individual private endeavor. And so, like you said earlier, personal

responsibility and will power is this belief that if you’re overweight or

you’re obese is because of a lack of will power and so it’s up to you to

pull yourself up and figure it out and motivate yourself and nobody else

can help you.

But we totally underestimate the power of the social environment and the

built environment and the cultural environment. And I think, in healthcare,

when you keep everything private, worry about other people finding out

about your health status, you don’t talk about your weight, God forbids

somebody finds out how much you weigh. We do these things in private and I

think when you’re trained in healthcare, you train you do that over a long

period of time. I was new to healthcare. I was a first year medical

student. I hadn’t been trained that. So I was more open to this idea that

maybe healthcare was actually not individual. Maybe it is social. And maybe

obesity is not an individual problem based on personal responsibility but

actually it’s a social problem that rests on all of our shoulders. And I

think I wouldn’t have been open to that concept had I been trained in the

dogma that health is individual, it’s solo, it’s private.

Andrew: Weren’t you trained in that? I mean, you went to medical school.

Rajiv: I was in the first year so I’d been in medical school for a few

months and in the first few years of medical school, you spend all of your

the time reading books, learning the signs.

It’s in the third or fourth year when you start to see patients that you

get trained in how medical care is delivered and how patient information is

protected. How do you work with a patient, primary care fifteen minutes at

a time, help them to deal with the health issues. So. I think sometimes

being new allows you to be a little bit irreverent or in fact you’re a

little bit clueless and that can actually be a great asset.

Andrew: You, as part of this need to do something bigger, you started

something called Adopt a Doctor in 2003, right? What is that? What is Adopt

a Doctor?

Rajiv: It’s an [??] that really was targeted at funding salaries for

doctors in some of the world’s poorest countries. All African countries,

Mali, Malawi, Sierra Leon, and Liberia. And funding the salaries for those

doctors who are local, trained locally who want to stay home but had been

leaving in droves through a massive brain drain that’s happening across the

entire developing world.

And so, we saw a situation where doctors were leaving these countries and

going to South Africa and going to the UK. They’re going to New Zealand.

They’re going to the United States and sometimes they would leave and not

even practice medicine. They would come and they would be taxi cab driver.

But they were having problems putting food on their tables for their

families. They felt they couldn’t take care of their patients and so they

graduate from medical school, try to practice, try to live on $50 a month

and end up leaving because there were opportunities elsewhere.

So the idea was to reverse the brain drain by funding these doctors with a

couple hundred dollars a month. Give them enough to put a roof over their

heads and stay home where they are really needed.

Andrew: A couple hundred bucks? That’s all it takes.

Rajiv: Yes.

Andrew: Wow. How did you even find out about this?

Rajiv: There was an individual, who became a good friend of mine, his name

is Ray Rickman, who is a local community leader in Providence. We met when

I was around and he actually put out a job ad saying I’m trying to start

this organization. I’m looking for somebody to help me research on the

developing world and help push this model out and so worked for him for a

summer doing that research and we ended up getting along famously well and

we decided to co-found this organization together.

Andrew: All right. To raise money, I hear you went out and spoke at

different Kiwanis Clubs, at Churches, at Libraries. I remember going, by

the way, to Kiwanis Clubs out of curiosity and these are old school

organizations. It’s interesting to see how they work. Where people are

supposed to do business together but also help out organizations like

yours. And when you stood there and talked to them, what did that feel

like?

Rajiv: It was a very new experience for me. I was an undergrad in college

and starting this organization. I never really started an organization

before and I certainly never asked anyone for money in any serious way

other than when you’re little and you do magazine drives and what not to

support your school. And so I think it was a little bit frightening to get

up in front of a group of strangers and tell them about a problem and show

them your solution and ask them actually to give you money. And fundraising

is never easy. It’s never easy.

I think as human beings we have a natural aversion to asking people for

money, asking them for charity but when you really believe in your cause

and you think that you’re making a difference, it comes a lot easier. I

think after you many times, over and over again, you start to realize that

you’re not just asking them for money, you’re giving them an opportunity to

help others. That’s something that they should feel good about. You

certainly feel good about.

Andrew: What else did you learn about asking people for money? That is a

tough thing to learn how to do and God knows schools aren’t teaching us how

to do it.

Rajiv: Yes. A lot of what we learn when we ended up leveraging, when we

raised money for ShapeUp and we had to go out and raise C-Capital and Angel

Capital or Venture Capital. I think what we learned is that if you come

from a place of passion and authenticity, people are much more likely to

pay attention and be interested. If it looks like you’re simply doing

something for the sake of doing it, right? or you’re heart’s not in it, you

don’t believe this is truly transformational, people are not going to give

you money.

The moment they see in your eyes that you believe in this and you’re

willing to bet it all and you eat, sleep and breathe this concept that

you’re talking about people suddenly become opened up, because people in

Best Nodden [SP] programs or in organizations they invest in other people

and that’s really what it comes down to. When my co-founder and I went out

to raise money for our startup, we got people to believe in us as people

and that’s really where we started to be able to raise capital.

Andrew: How much money did you guys raise for Shape Up?

Rajiv: We raise just over $9 million across three rounds.

Andrew: Over 9 million for two guys who aren’t trained developers, who

aren’t trained salespeople, who nevertheless both raised money and ended up

developing this great product that we’re going to find out about in a

moment. Shape Up, as I understand it, started because you and Ray wanted to

raise money for Adopt a Doctor, right?

Rajiv: Exactly.

Andrew: I guess talking to people wasn’t bringing in enough money and you

said we need our own business so we can fund this ourselves?

Rajiv: What happened was right around 2005 the tsunami happened in

Southeast Asia and people gave all of their money to the tsunami and there

wasn’t a lot of money left for international giving and so we started a see

funding dry out. All right, well, how do we do some fundraising? We had

trouble with getting people to pay attention to other countries they hadn’t

visited. They didn’t even know where they were on the map. [I don't know

how] people Molly if you gave them a map of the world.

So we decided to find alternative ways to fund it. What we said was we’re

trying to get people to focus on helping to improve the health of others

around the world. Maybe we could do that by getting them to focus on their

own health. We looked at this obesity epidemic and said, “Wow, maybe we can

get people activated around losing weight and exercising and help them

personally in their lives and create a connect between their own improved

health and the improved health of someone halfway around the world and that

was [??].

Andrew: The idea was to sell directly to the consumer at first, it was.

Rajiv: Exactly. It was a community program. We went direct to consumers and

we asked individuals to pay a fee to join the program and it was a 12-week

exercise in weight loss competition.

Andrew: Was that on the website, or was that done differently? How was it

done?

Rajiv: It was done through the web. We had a very elementary software

platform and we did a lot of duck tape and shoestring in the background,

but yeah, it was [??]

Andrew: What do you mean by duck tape and string? What specifically?

Rajiv: A lot of it was done via e-mail. We did e-mail marketing

communications through constant contact. We had a very simple database that

people could input their team weight and their team names, and then on the

back-end we would calculate the average team weight loss and then we would

post the standings on a different webpage, but we didn’t have a robust . .

.

Andrew: You manually did that?

Rajiv: Yeah.

Andrew: You just had a form online, people would enter in their stuff

manually, you would take it basically with, not a pencil and paper, but

probably with an Excel spreadsheet type of situation, and process it, and

then put on at different web pages, manually type in their results, and

that’s how they knew where they all stood?

Rajiv: Exactly.

Andrew: I see, wow. All right. How did you get all these people who are

participating?

Rajiv: All through word of mouth, which is really fascinating. We had no

marketing budget. We went out to the community and we started e-mailing

people we knew at Brown and beyond and we ended up with close to 2,000

people signing up for the first challenge that we offered.

Andrew: What was the essence of it that you think drew them in? Because if

something is going spread through word of mouth, there needs to be a simple

concept that makes them say, “Yeah, I get it, and yes, I’m going to sign up

now.”

Rajiv: What drew them in was the team captains, who were these kind of

social influencers, brilliant doctors, highly motivated individuals. So we

put out a call to action and we said there’s a team competition happening

weight loss and exercise and do you have what it takes to lead a team of

your friend’s family or colleagues to better health?

We tapped into these highly motivated people we all know in our lives who

are either very physically active and healthy and they’re out evangelizing

all the time and banging their head against the wall because nobody else

will follow them, or they’re people who have been struggling with how to be

healthy and they’re looking for a way to create accountability for

themselves. These 200 hundred team captains signed up and they were tasked

with inviting at least 5 other people to be a part of it.

Andrew: Or else they wouldn’t be a team captain?

Rajiv: Otherwise, their team would not qualify to be in the program.

Andrew: I see. So there was an incentive if you were a team captain to go

and evangelize this system to other people and get them to sign up.

Rajiv: Yeah, I think there was a natural inclination in that they had. they

wanted to help others and they wanted to pull their family and friends in,

but then we created some requirements in order to qualify there was a

threshold they had to meet.

Andrew: Rajiv, I’m thinking now of myself. I interview people every day. I

have a big audience of people. All I do is this. You are focused on your

education, you’re focused on doctors around the world. If I can’t come up

with 200 people right now who could potentially join, how did you come up

with 200 people, 200 leaders? What did you do to draw these people in?

Rajiv: I’d like to say that it was something magical about our marketing

campaign, but I think it was a compelling idea, and I think we also had

timing on our side. There’s a little bit of luck and timing in anything

that you. In many ways, Facebook had the perfect timing when it rolled out

in 2004. People were just starting to become aware of this obesity

epidemic. 2005, you’d turn on the TV and you’d see Mike Huckabee and Bill

Clinton on there talking about obesity, “Two-thirds of all of us are

overweight or obese, what are we going to do?” I think people started to

look at themselves and say, “Wow, how did I get to be this overweight? How

did I get to be so sedentary?”

Andrew: Then how did they even know about you? What did you do? Did you go

into your email address book and say I’m going to email everyone who I’ve

ever interacted with via email, and my partner’s going to do the same

thing, and maybe I’ll…was there anything else?

Rajiv: I think it was a lot of spamming. Any good entrepreneur does some

mischievous things. We collected email. We would go on as many email

addresses as we could, anybody we knew at Brown or in the community and

we’d email them. They’d ask us to take them off the list and we did, but we

bulked up an email list and started inviting people to be a part of it. It

was a nonprofit organization, it had a social mission, so I think people

were receptive to receiving those emails. The other thing that we did that

was accidental was a couple local companies heard about the program, and

they actually promoted it to their employees. That’s actually where a third

of the participants came from in that first year was through these networks

of employees in corporations. They had their HR department messaging it

out, saying, ‘Hey, our company’s going to support this initiative, we’re

going to be a part of it.’

The other thing we did is, because we were new and didn’t have credibility,

we needed to build that credibility, or at least bring what we could to the

the table. So, we went to community officials, elected officials, community

leaders, and invited them to be co-chairs of the operation. So we got

Congressman Patrick Kennedy on board, and we got the House Majority Leader

Gordon Fox on board, we got the president of (?) Hospital, we got the local

news anchorwoman, who was the most popular public figure on TV. We got all

these individuals to say, ‘Yeah, you can use my name and my photo. I

believe in this, I want to help do something about it. (?), and if that

helps you to spread the word, then absolutely.’

Andrew: How’d you get the local anchorwoman to participate?

Rajiv: We cold called her.

Andrew: So there we go. Now I’m starting to see something else. Yes,

spamming and sending out emails is powerful, but you also said we’re going

to go to these influencers, and we’re going to bring them on board, knowing

that they’re not only going to have a big network, but they’re going to

have a big name that’s going to help us get other people’s networks. That’s

brilliant.

Rajiv: We tackled it from multiple angles. Any one of those efforts would

have failed on their own. We did everything we could do.

Andrew: What else did I miss? You’ve got cold calling celebrities and using

their names, you’ve got companies who participated, it seems like they

started out by just finding you, but once you discovered they were a rich

vein, you tapped it. Then you also had, did I say celebrities, yeah,

celebrities, and email. So you’ve got these three big channels. Anything

else?

Rajiv: And then, I think we really had that viral component, where it made

it easy for that.

Andrew: Right.

Rajiv: That helped us get 200 people. That’s all we had to get, that’s not

a lot of people. Those 200 people brought 1800 additional people by sending

out emails to their social networks. Those people would have never heard of

us or knew who we were, but because somebody they knew trusted to be on my

team, that was a hard invitation to ignore. If I invite you to join a

service and I say, ‘Oh this is a great website, you should join,’ you might

not join. But if I say, ‘Be on my team and help me lose weight. I’m

struggling, help me achieve my goal and I’ll help you achieve your goal.’

That’s a very hard invitation to ignore.

Andrew: That’s brilliant. And you charged. How much did you charge?

Rajiv: The first year we charged $15 per person via credit card to join the

challenge.

Andrew: OK. A lot of companies that I interview will say that they decided

to charge. Maybe not even the companies that I interview, a lot of people

in my audience, will say they’ll build businesses, build up their audience

and charge them later. They’ll say, ‘I’m going to get all these people to

participate, and then Jenny Craig will pay me for advertising or leads.’

Or, ‘I’ll get all these people to participate, and then the local gym will

sign up.’ But you decided, ‘No. I’m going to get them to pay.’ Why’d you do

that? Why’d you go for a fee-based business?

Rajiv: We had to. Part of the model was that when you join, we would ship

you a welcome kit, and in that welcome kit you got a log book that you

would use to track your weight and your steps and your minutes. Part of the

welcome kit, you get a pedometer to track your steps and your walking. We

didn’t have any funding, so there’s no way we could have bankrolled

shipping out thousands of kits all across the state. We had to charge.

There was no other way to do it, otherwise. We were broke medical students.

Would that we had our own deep coffers to tap into, but we didn’t, so we

decided to charge. People, because they saw a value in the program and for

whatever reason it looks like we got that early price point right, people

were willing to sign up.

Andrew: It was 15 bucks a month, or 15 bucks total?

Rajiv: It was $15 for the three month program.

Andrew: Let me see what else here. Rena Wing. You watched her give a

lecture somewhere and that influenced ShapeUp. How?

Rajiv: Dr. Rena Wing is the Director of the Weight Control and Diabetes

Research Center here at Brown. She’s a professor at the medical school and

she came and gave a talk about the rise of obesity in America in the last

20 years. That was an eye opening lecture for me. I didn’t quite comprehend

the weight problem that we had as a nation. We all knew that we had some

overweight people in our communities and we were always [??] eat healthy,

but to actually see that two-thirds of us became overweight or obese and 90

percent of people don’t exercise on a regular basis, to see that charted

through the CDC data over time, really brought it home to me. The message

that this isn’t just about a few people that I met that wanted to lose

weight, this was about a national epidemic that we were facing. This model

[??], it’s not just for Rhode Island, but for the whole nation and turns

out the whole world.

Andrew: As you were doing this first, I guess it’s like a Biggest Loser

competition. You wanted to see who could lose the most weight? That was the

metric?

Rajiv: metric was, ‘Which team could exercise the highest number of

minutes.’ There’s three competitions, highest number of minutes, highest

number of steps and highest amount of weight loss. We stayed specifically

and purposely away from any comparisons to The Biggest Loser and any over-

emphasis on the weight loss component because it turns out that weight

creates a sense of stigma that scares away men and really focusing on heavy

amounts of weight loss in a highly competitive situation can promote

unhealthy behaviors. It was exercise and physical activity in the service

of weight loss, or weight management, and you could track that. It was a

competition, but it wasn’t focused on being the number one team, it was

focused on setting a goal as your team and working together to [??] the

goal. Competition was a little bit of fun gaming element added on top of

that.

Andrew: Employers called you up and wanted to participate. They wanted to

have their employees come in. One of them was CVS Caremark. What was their

conversation with you like? Because I know that they ended up being a

pivotal client of yours at ShapeUp?

Rajiv: CVS Caremark had their Rhode Island employees participate in the

program in the second year and they thought it was great, and one of the

comments that they made was, ‘We saw our employees walking around during

lunch in groups all around the campus.’ Every day, lunch time would come

around and people would be walking around in these packs and trying to get

their steps in for the day. They said, ‘We’ve never seen that before. Our

employees are usually sitting in the cafeteria chowing down and instead we

saw this sense of excitement, [??] physical activity and healthy eating. We

want to take that beyond our corporate headquarters in Rhode Island, we

want to take that all across the country. Will you create a platform, or

give us a platform that we can use to scale this across all of our

employees?’ Over the course of a year, we negotiated a contract with CVS

and we built them a platform that they did roll out over three years to

their population.

Andrew: This is at a time when all you had was a great idea. There was no

real platform. The platform was an Excel spreadsheet on the back end,

Wizard of Oz style, running the numbers and showing people a finished

product on the front end. Right?

Rajiv: In the second year, I partnered with my colleague and classmate, Dr.

Brad Weinberg, and he is a self taught computer programmer. He had been

running an online event management company and he built a newer version of

the platform and that was the platform that CVS used and fell in love with

and wanted to scale across their [??]. It wasn’t necessarily a scalable

platform. We had to rebuild it a couple of times since then, but it was

enough of a beta site that they were excited. Their employees benefited

from it and they wanted us to roll it out across the country.

Andrew: I see. And so, one of the things I’m always curious about in my

interviews here on Mixergy is what you learn from that first launch that

shaped the next version. First time you launch it, you’re pretty much on a

guess at what people needed. Second times, you have some facts. You have

some real feedback from real users. What did you learn? What did you say we

have to adjust, because we didn’t know this until they had told us?

Rajiv: Well speaking in a general sense, we learned that our assumptions

about what people want are usually wrong. And so, we can make guesses, but

we actually need a large number of data points to actually see what people

like. And so we learn things like in the first iteration we didn’t have

this concept of team goal setting. Everybody set individual goals, and

turned out that what people wanted to do instead of team goals and worked

together to achieve that team goal. And in future iterations when we

studied it, people who had team goals did better than people who simply had

individual goals. So a lot of those small mechanics and what might seem

minor learnings turn out to be quite powerful over time and we couldn’t

think of all those different features and game structures and popcorn

design elements, and we got that feedback and we were able to test and

iterate, and over time we built a platform that produces very [??]

significant outcomes.

Andrew: Can you give me another example of something small that you

discovered early on or something that seems small but you couldn’t figure

out on and it was important.

Rajiv: One of the things we found was that people were obsessed with real

time data. So one of the things we did was we had to wait two weeks before

you could see the updated team [??]

Andrew: Sorry, if you do what?

Rajiv: If you put in your results and you were tracking daily or weekly,

you have to wait 2 weeks before you could see the impact that it has on

your team and on the team’s ranking. And turns out people were incessantly

refreshing a team’s standing page to know [??] because it wasn’t updated.

So one of the things we did, we now have real time standings. We freeze

them at the end of each round so you can see how your team did for that

round, but you can also go on in real time and see how things are doing. So

I think we learned a little bit about impatience and instant gratification.

Andrew: How do you know that? Because if they’re hitting refresh, you don’t

have, at the time, any counter on the number of time that people hit

refresh, so what made you understand they want real time data?

Rajiv: Couple of things. One is the system kept crashing because of the

heavy load. So it turns out to calculate these numbers for thousands of

teams is actually pretty heavy data processing load. The platform was in a

very stage, so we had a lot of load times and bandwidth issues, but also

people would email us and say, why are you not updating the standings

everyday, every hour, every minute? Why are you making us wait? And the

most vocal participants sometimes give you the greatest ideas and the best

feedback.

Andrew: You and your partner had a very interesting way of creating a

partnership agreement. Can you tell the audience about that?

Rajiv: We were sitting in a library and we have been [??] back and forth

and we’re really got both really passionate and excited about it, and we

were studying for our microbiology exam, and we said, all right let’s make

this official. We gotta just start this. How do we start a company? What do

we do? So we took out a piece of white paper that we were taking notes on

for our exam and we just hand-wrote a partnership agreement out. And it

basically said we were going to divvy the company up 50/50 and be equal

partners, and give the company a name, dated it, and signed it, and we

considered that our official company founding document.

Andrew: That’s the way, by the way, my brother and I, when we started

Bradford and Reed together, created an agreement, and I know a lot of

people do, but we keep getting advice to be more formal, to have shares

that [??] so if your partner skips out on you he doesn’t have all the

shares. He has to wait a little to leave in order to get his shares. What

do you make of all this formality? Do you agree with it? Do you feel like

you just lucked out by having a notebook page as your partnership

agreement?

Rajiv: [?] place of not knowing how to do anything else, and from a place

of naiveté. We wanted to start this, and we trusted each other, and luckily

it all worked out and we never had any issues, but you can imagine a

situation where there would be issues. Say, if one person lost passion for

the business and wanted to leave after a year, or there were disagreements

about the direction of direction of the company. I think that in hindsight,

would I do that again? Probably not. It worked out really well, we had no

issues this time, but is that replicable? Possibly, but I wouldn’t

necessarily advise that to other entrepreneurs. I think that sometimes when

you start your company with a best friend, or someone you feel very close

to, you sometimes throw caution to the wind. That’s part of being an

entrepreneur, it’s being risk tolerant. And certainly, those risks, we were

both tolerant of at the time.

Andrew: Your investors made you vest after they signed, right?

Rajiv: Yes, they did.

Andrew: Yeah, things change. Was it kind of freaky to hear that they were

going to take all your shares away and not give to you until you wait a

little bit?

Rajiv: Absolutely.

Andrew: It was.

Rajiv: Absolutely, it’s something that you feel like you’ve earned, and

that it’s therefore yours, and it suddenly gets put at risk. You feel like

you’ve gambled your house in a game of roulette, but people do it, and your

investors, if you think that they’re audible, and you look at the

agreement, and (?), and they’re not going anywhere. If they’re committed to

the business, then you know you’re going to vest. Obviously, there are

precautions that you put into place. (?) door.

Andrew: Like what? What kind of precautions can somebody put into place?

Rajiv: Accelerated vesting. So, if the company is bought or sold, 100% of

your share is vested. You can’t prevent from being cheated out of your

shares if you want. I think it’s very standard, so I think there is very

sound legal (?) that’s used. I think entrepreneurs have figured out how to

manage that situation.

Andrew: Yes, I’ve heard a few entrepreneurs come back from investors after

hearing that for the first time. Not only will they have a smaller

percentage of shares in the company because they’re bringing in investors,

but their share won’t vest for a period of time. That’s scary, it sounds

suspicious. Then I watch them have conversations about it and realize that

it makes sense, that it’s standard, and so on. Then they deal with how to

protect themselves the way you started talking about. Your first site

looked a little bit like Facebook?

Rajiv: Yes. It’s an online social network, so there are a lot of similar

elements in most social networks. I think to some extent, we’ve seen some

conformity among social networks and how messaging, news feeds, and all

those kinds of things work. It was a simple platform with a white

background. We had a color scheme we had selected and it was a basic social

network that had a purpose. It wasn’t just about people sending messages to

each other and posting on each other’s walls, it was about people forming

alliances to achieve goals that they really believed in and wanted to

achieve.

Andrew: I’ve got a note here about something that’s very important for us

to talk about, which is how you got customers. See, if I wanted to get

customers who are consumers, I know what to do. I can go and buy some

Google ads, or I can build a blog and have them come over. Maybe if I

wanted to get businesses, definitely if I wanted to get businesses, maybe

it’s easier, because I can Google ads, I can advertise in certain places

online, and so on. To get the level of customer that you have, it’s not so

easy. You can’t just blog to them. You can’t just pick up the phone and

talk to the founder and say “Hey, I saw your name on this website. You and

I should do business.” It’s a much tougher process. How do you know who to

go to? How do you know what to do? How do you make a sale to someone? Let’s

see who you have. You have Sprint as a customer. You have Blue of

California. You have Keybank. Big companies, how do you do it?

Rajiv: It’s a long hard slog. Our sales cycle is anywhere from 12 to 36

months. So when you start talking to a potential customer, you have to

realize that it could potentially be a multi-year conversation. So first of

all, you have to come from a place of patience. Secondly, you have to come

from a place of knowledge. You have to be very knowledgeable about what

you’re doing and why what you’re doing is different and better than what

has already been done. That was easy for us, because we came with a very

different approach. We said everyone is treating health as an individual

endeavor. You’re doing individual coaching. You’re doing disease

management. You’re not doing anything social.

What are you doing to unite your employees, and leverage them as social

support networks. We came from a place of thought leadership. We educated

them about all the research that showed how healthy behaviors can spread

within networks. It shows that we’re more likely to be healthy if we work

together as a team. We [??] thought leadership, we were very consultative

in trying to understand their organization and talk about how this solution

could help them meet their goals and we were very patient and, over time,

that led to wins.

Andrew: Walk me through the sales process. Do you have a list of companies

that you’d like to have on as clients, and then you start from there?

Rajiv: That was originally our sales model. Basically, “Let’s get contact

information for any HR person at any Fortune 1000 company. Let’s email them

a bunch of information about ShapeUp and tell them why it’s great, and

hopefully they’ll email us back, or they’ll call up and leave a voicemail,

and hopefully they’ll either answer or call back.” That’s really an

outbound marketing approach. We’ve shifted 180 degrees and refocused all of

our efforts now on inbound [??]. An inbound marketing, what I mean is

creating compelling content and educating people. Putting that content and

information out there and letting them come to it. Therefore, having them

come to you and request more information because they found your content

compelling. We don’t really do cold calling, or cold emailing anymore. We

don’t make lists of who we want as customers. We know our space. In

general, we know what our ideal customer profile is and we will create

content that we think educates.

Andrew: Like what?

Rajiv: For example, two weeks ago we put out the first ever Technology and

Employee Wellness Survey. Conducted a survey of 350 employers of all sizes

and we asked them about how they’re using technology in their workplace to

make their employees healthier. Are they using social networks? Are they

using online gaming? Are they using devices and sensors? Do they use the

internet, or the intranet, or blogs? All different [??] of technology and

then we asked them what’s working, what’s not. Why do you invest in this?

Did you see your leadership support it? What are the barriers to adoption?

What percentage of your employees have access to the computer, to email, to

mobile phones? Collected all this great data that nobody had really

collected before and we put it out in the form of a survey. We got nearly

1000 people, 1000 different companies to come onto our webinar to hear

about the results of the survey.

Andrew: They all take the survey and then they come back to hear the

results of the survey to see how their answers stack up against other

people’s answers?

Rajiv: Exactly. And other people come as well. Even people who didn’t take

the survey, they want to know. Again, we’re all social. We want to know

what our peers are doing and if you’re an HR person on an island at a

company, you feel isolated. You want to know what other HR people at other

companies that are charged with improving the health of their employees are

doing. You want to know what the early doctors are doing so you can keep an

eye on that for a year or two later when your company gets ready to begin

to dip their toe in the water. That’s the type of content. I’m doing that

survey. We get to talk to 350 companies and then 700 more came on to the

webinar and that content lives on the web. Anybody can download it. It’s

free. It’s a wonderful report and it spreads. People forward it around.

That really is our model. That’s our marketing [??].

Andrew: That’s inbound marketing, really, at its best. You create something

that others want to come and see and, as they see it and read it, they want

to know more from you and they want to know how you can help them solve the

problem that you’ve identified, or the opportunity to identify through that

free content?

Rajiv: Exactly. You put yourself out there as an expert and when they start

to have questions, or face challenges, they come to you. Sometimes it’s

about something new that you don’t do, or that you can’t provide for them,

but you can at least be a resource and you build that relationship and one

day they’re going to, you know how you would say, “By the way? We do want

to roll out you product.” It happens again and again. It’s almost magical.

The funny part about it is, I wouldn’t say it’s easy to do. It’s easy to

understand the model. It’s hard to create good, compelling content. That

takes effort and time, but it has such a huge return on investment. When we

change our whole model, we cut our marketing budget in half and we’re

generating five times more, and opportunities, than we ever created doing

outbound marketing. It’s high yield and it has so many virtuous effects on

the company because it also generates PR and speaking opportunities. When

you’re an expert, you have something to say, people want you to come and

share your content live. It’s really moved the company forward in a very

significant way.

Andrew: That’s fantastic. I’m wondering how you got all those companies to

fill out the survey. What’s in it for them if they fill out the survey?

Rajiv: What you do is you promise them an early copy of the results and,

like you said earlier, they get to benchmark their results against their

peers.

Andrew: If they don’t fill it out, they don’t get the early copy. They’re

going to have to wait with everyone else to get it? What else? Is it all

digital? You don’t have to call up and do this all one at a time, do you?

Rajiv: We’ve done phone surveys. We do an annual wellness survey of large

employers and we’ll pick about 30 employers and we’ll actually call them

and do one hour interviews. Cuz we want to capture quotes and some of the

less metric driven results. We’re interested in metrics and rating things

on a scale of 1 to 10, and yes or no questions, but we’re also interested

in stories, and we find that those stories provide that rich, compelling

content that other people want to consume. We don’t get those stories if we

just have free form text boxes. They’re not as rich, so we do like to do

the phone interviews but that can be cumbersome as well when you’re a start

up.

Andrew: So, it might be a graph with some data, an explanation of the data,

and then a pull quote from a conversation that you guys had with one of the

big customers that helps add color to the data that we’re all reading in

the report.

Rajiv: Exactly.

Andrew: What’s one of these reports that someone in my audience who wants

to go and check out what the top of your marketing looks like.

Rajiv: On our website at shapeup.com, on the resources tab, all of our

reports are hosted there. There’s an annual wellness survey, there’s a

technology, employer technology and wellness survey. We’re putting out

survey results in another month or two about what employees want, so we

actually surveyed employees about how they like their wellness program and

what they’re getting out of it. Later on this year we’re going to be

following up with a survey about insurance companies and how they’re doing

wellness for their members. We’re going to be doing these reports annually

so we’re going to start to build up trend information over time and start

to see how things are shifting year to year.

Andrew: How do you know what questions to ask? Is there a company that you

guys partner up with that helps you put this together?

Rajiv: We’ve used different firms each time, but usually we’ll work with

someone to help with the survey design to make sure the questions are asked

properly, as well as with some of the analysis on the back end, but really

the best way for us to make sure that the design is good is to actually

send it to a few employers in advance and get their feedback. And that’s

what we have creating a conversation and a relationship already with

potential customers, but we’ll call people up and say hey we’re doing

survey, we’re wondering of you would review the questions and let us know

if you understand them, if you think they’re relevant, and we’ll get

feedback from them and pulling people in as a resource starts to build that

relationship.

Andrew: A tandem dance that you guys do I think we should talk about. Can

you tell people who’re in the audience so don’t know it, what do you mean

by the tandem dance?

Rajiv: So, we call our company a B to B to C company. What the means is we

sell to businesses, so largely to Fortune 1000 companies and insurance

companies, but then those businesses have to market the program to their

employees or their members and usually the consumer, and those consumers

have to like and value and stay in touch with the program. And so we have

two different client types. We have the client that pays us, which is the

business, but then we have the clients that are the end users who we are

trying to satisfy and help and bring back and keep engaged over time. I

think there are not a lot of companies who have both, that have two

different customers in that sense. The challenge for us is when you have

limited resources, how do you allocate them appropriately between

satisfying the business needs of your customers and satisfying the personal

needs of your users, because often they can be in conflict. Sometimes they

are aligned, but sometimes they can be in wild conflict.

Andrew: For example?

Rajiv: If you have limited development resources how do you allocate them?

For example, an employer will say well we want your company to spend [??]

Andrew: Sorry, can you say that again? We lost connection for a second.

Rajiv: Sure, yeah, no problem. We have to [??] Sorry, I’m going to [??] I

apologize.

Andrew: Sure, I know we went a little bit over because we started a little

bit later with this interview. I wouldn’t be surprised if you had a call

scheduled or a meeting scheduled for now. Thanks for sticking with us.

Rajiv: No problem. We’re good. So the employer will say can you invest in

creating back end reports and dashboards so that we can look at population

wide metrics and be able to pull these reports and show our CFO.

Andrew: Right.

Rajiv: That takes development time away from our ability to build a better

nutrition tracker or more social tools.

Andrew: Which is better for the individual.

Rajiv: Exactly. Or the employer will say, when we bought this platform this

button was on the left side and it was blue and all of a sudden you moved

it to the right side and it’s green. We already educated our employees on,

in both training manuals on where that button is and we’ll say whoa, what

we know that employees find it easier and the reason we moved it over there

is because the data is showing us that it’s a better place. It’s better for

the user but the employer doesn’t like rapid change. When you’re Facebook

and you’re selling just to users, you can push new features all day long,

or some features to some users and withhold from other users. We can’t do

that in our workplace. We get some features [??] a company, [??] company.

We get a phone call [??].

If we start to change things around weekly, we’re going to get a phone call

from our clients. There are limitation [??] constraints that having two

different customer sets puts on your business, but at the same time, we

have a revenue model. We want to make sure that we’re satisfying both

constituencies. At the end of the day, if we satisfy the business needs,

but we don’t get high user engagement, our clients won’t come back to us.

Ultimately, that’s what we’re looking for.

Andrew: How do you do this tandem dance? At the one hand, make the customer

happy who’s bringing you in, on the other hand, make their employees happy

who are engaging with your product much more than the company itself ever

could because they’re bringing it into their lives. What do you do?

Rajiv: We do two things. One is we balance. It’s constantly balancing. We

don’t always get the balance exactly right, but we’re constantly tweaking.

Do we put more resources here, or more resources here? Or making sure that

we have equal voices at the table so our Client Services team is giving us

the voice of the customer, our User Team and Product Team is giving us the

voice of the end user. Making sure that there is equal input into the

product development process and the product road map. The other thing we do

is we work hard to educate our clients about why we make changes to the

platform to help their users. Ultimately, the clients purchase the product

so that they can help their employees.

If we, upfront, educate them about the type of testing we’re doing and the

analysis that we’re doing and what we’re learning, and then use that to

inform the decisions we’re making about how we’re out getting our

resources, they become much more receptive to a button changing color and

moving to the other side of the page. We can actually show them the data

that their employees are going to click on it twice as often and,

therefore, they’re going to get to a valuable piece of real estate on a

platform twice as often and be able to benefit from it.

Andrew: There’s so much that I want to cover. Let’s talk a little bit about

this person who you had to let go of. That’s a tough thing to do. Can you

share that experience with the audience? Don’t be specific, so that we’re

not identifying the person, but your issue as an entrepreneur is one that

many other entrepreneurs are going to have to go through, so share as much

as you can.

Rajiv: We’ve had to let go of a number of people over the years. We’ve been

at this for over six years. Unfortunately, you don’t have a perfect hire

rate. I’m not sure if there’s a specific story that you’re referring to.

Andrew: How about the first person? You guys were still in school?

Rajiv: The first person that we had to let go is the first person that we

ever hired. When you first start a company, sometimes you don’t do the

diligence that you need to do when you bring people on. I look at what we

used to do back then, versus what we do now. Back then we posted an ad on

Craigslist. We looked at a bunch of resumes. We picked a couple of people.

We brought them in for interviews, and we hired one of them. Usually that

process would take about a week or two. I look at what we do now. We put

people through psychometric testing. We do heavy reference checking. We do

background checks. We take them through a multi-week interview process.

Often there’s a recruiter involved. We bring them through a series of

rounds of interviews with different departments and managers and

individuals in our company.

It’s a much more rigorous and robust process and, therefore, our win rate

has dramatically increased, in terms of finding people that are the right

fit. That was a misalignment for us and that was a person that we’d created

a very good bond with. This was a person who was our office manager and

admin, and we ended up not really being able to work well together, and

that person wasn’t really growing with the company. We ended up having to

let them go. It was challenging to be, that first time, when you actually

realize that somebody was counting on that paycheck to feed their family

and you were the one who took that away. You gave it to them, but then you

took it away and you feel like a cruel, heartless bastard when that person

starts crying and gathers her stuff up and leaves the office. You go home

and go, ‘What did I do? I’m a horrible person.’ At the end of the day, it

gets easier over time and you start to realize that you have to separate

personal friendships and the emotion from the need to run a business and to

make the business successful and have the right people in the right places.

Andrew: Knowing how hard it is, a lot of entrepreneurs just won’t do it.

They’ll either put it off and never get to it until it’s really a crisis,

or they’ll marginalize the person who they need to let go of, in the hopes

that the business will run without them. They’ll spend a few bucks every

week paying their salary, but it basically would be paying a few bucks not

to suffer the pain of letting the person go. How did you get yourself to

come to terms with this and to take the action that you needed?

Rajiv: I think that’s where having a business partner is often very

helpful. Although we’re not as strong, when you have somebody else that are

backing you up and saying this is the right thing, you do this and when you

have that initial support it’s easier to do that.

Andrew: I see.

Rajiv: I will not say [inaudible].

Andrew: Sorry. You’re not through what? I see what you’re saying. Again,

the connection was dropping off a little bit. You’re saying that having a

business partner, someone you can talk to about this will help you realize

what you need to do and find the guts to take the action, and then we lost

you.

Rajiv: So, you have that social support, and then I wouldn’t say that we’ve

never [inaudible] or regretted not making it any sooner. I wouldn’t say it

never happens. It happens all the time in any organization, but I think

we’ve gotten better at it, at identifying people who are under performing,

and taking swifter action than we have in the past. It’s always a constant

struggle as an entrepreneur because it is such a hard thing to do. It’s the

worst part of the job actually. There are a lot of things that are

stressful and frightening and painful, but really that is the absolute

worst part of the job is having to [inaudible] someone in your office and

let them go.

Andrew: You know what, on television it always makes it sound like bosses

want to let go of people. They’re so proud to say, “You’re fired” but the

reality is so much different than that. You don’t want to do it. You hate

yourself for even thinking about it. You regret it. I know, for me, one

person that I let go, I still think about it; a little less now because

it’s been so long, but you think about it for years afterwards. I wish I

didn’t have to do that. The guy was good, but we were having some issues.

Let me see, final. I’ve got a couple of other questions here. One thing you

told Jeremy is you had a sales person that went to work for a competitor.

You had the sales person sign a non-compete, but the competitor happened to

not be on your non-compete. I guess you guys forgot or left them off for

some reason. How do you deal with situations like that when that comes up?

Rajiv: I think the initial reaction was surprise and maybe, a little bit of

anger. And then, rational heads prevailed. I think there are ways that you

can usually protect yourself. It’s not the end of the world if an employee

goes and work somewhere for a competitor. At the end of the day, what we

had that person do is make written statements that they would not share and

divulge confidential information [inaudible] and what that confidential

information entails. That person is off working for the other company. I

hope they’re doing well, but we feel protected simply by the fact that we

have these statements down, at least, statements from the individual

attesting to the fact that they’re not divulging confidential information.

Andrew: I see. So, instead of freaking out and going to war, you said,

“Hey, let’s have a conversation with this person. We’ll get him to agree

that he’s not going to say anything that he’s not supposed to, and that’ll

be it. That’ll be it, and that will be fine.”

Rajiv: Yeah. It’s funny because we found ourselves on the opposite side of

the table of every [inaudible] where we hired somebody away from a company

that decided that we were a competitor. It was a large company, a

[inaudible] company. They sent some angry emails our way and threatened

legal action. A year or two later they calmed down [inaudible]. This is the

best person. This is what they want. We’re a large organization. You’re not

going to take us down because one person left. Let’s figure out

[inaudible], and we came up with a similar [inaudible]. It’s funny the

first time you experience something like that on the other side of the

table [inaudible].

Andrew: I’m sorry. The connection is going bad again.

Rajiv: Sorry.

Andrew: Basically, for people who were unable to catch what you said, you

were saying, and tell me if I’m wrong, that you had the same situation come

your way where you hired someone whose past employer said, “Hey, you guys

are competitors” and that this person who you hired could potentially be

giving you secrets and it was interesting to be on the other side of it.

You also came to the same agreement. You said, “We will not steal your

information through this person, and he is, or she is not going to pass on

secret stuff.”

One thing that I got from the notes in preparation for this is that it’s

not just this one issue that you were able to resolve, it’s the mindset

that you’ve come to as an entrepreneur, as a person who has faced

situations that, at times, felt like they were life and death. Over time

and having had some experience, you realize that not everything is life and

death. You can’t freak out over everything. You can’t worry that everything

is not going to knock you out. You have to accept that there’s going to be

highs and lows, and as an entrepreneur you need to keep your head about you

and come to conclusions and agreements like what you just did with the

employee who went to work or a competitor. Do I have that right?

Rajiv: Yeah. It happens over time. The first time you lose a customer, you

feel like the whole world is collapsing and your whole company is exploding

and you lost one customer and suddenly you’re going to lose all of your

customers. When you lost some key customers, you start to realize, OK. You

can lose one customer, and it is not the end of the world. Obviously you

don’t want to lose any customers, but your company does not cease to exist

the next day or another company sends you a threatening letter to try to

scare you about something, right? You suddenly feel like all of the sudden

you’re going to be engage in crazy lawsuits and somebody’s going to shut

your company down, and you realize that that’s the way of business. People

send threatening letters to each other all the time. Some of them turn out

to have teeth and some of them turn out to not. So you start to, over time,

become inured to these system shocks that early on can really throw you off-

course and you start to be able to deflect them and process them in a more

methodical, analytical, and rational way over time.

Andrew: Let me say this. To anyone who’s watching this interview and wants

to take our relationship and you, the viewer, to the next step, go to

mixergypremium.com and I’ll give you a great example of how

mixergypremium.com can change your life. And Rajiv I’ve got one more

question for you after I give this promo for maybe the most important part

of Mixergy. So here’s an example. Let’s suppose you watching us and you’re

saying, hey you know what, this guy Andrew, I read blog posts all day long

but I somehow feel more connected to Andrew. He stands out in my life a

little bit more because this guy Andrew, me, has a video, and you say, you

know what, maybe we should be adding videos to our site instead of just

blogging. Maybe, we should do video interviews. Maybe, we should do some

kind of video program.

Well, you have that idea, and as an entrepreneur you say, where do I go?

Well, you can go online and look for people who are going to teach you how

to set up those kinds of video shows or video interviews, and many of them

are going to come from a point of view of how to get famous or how to get

discovered on YouTube. And that’s not right for you. What you want to do is

just put out some content and build a reputation and build a connection

with your audience. And so those aren’t going to make sense for you, but

what will, I believe, is the course that we have on Mixergy premium

including one by me where I teach you exactly how I do interviews and how I

get sponsors and how I also build a business around. And there’s one that’s

fairly new up on the site by Andrew Loch who says, you know what, not

everyone wants to do an interview, but some people just want to put their

face out there. And he shows you the exact equipment and the exact system

that you need to take if you want to put together a video show for your

site.

Those two courses and dozens of others are available on mixergypremium.com.

Every one of them is designed to take a problem that you, the viewer now

and an entrepreneur has, and show you how other entrepreneurs have solved

those problems and how you can solve them too. They’re available to you

right now at mixergypremium.com. If you’re a member, you already have

access to all of them and you will have access to all the dozens of others

that we’ll continue to do this year and beyond. And if you’re not a member,

dude, get cracking, or dudette. Get cracking. Go to mixergypremium.com

right now. The sooner you join, the sooner you’re going to start to see

results. I guarantee it. mixergypremium.com. All right. Final question .

You’ve gone through all this and we’ve seen all the little things that

we’ve learned from your experience. What’s the one takeaway that you have?

One thing that you say, hey you know, I am better because I have this one

understanding after having built this business.

Rajiv: Yeah, I think it would probably sound very obvious and maybe

somewhat cliché, but at the end of the day, every single thing that a

business does, successes and failures, are all about people, and can’t

underestimate that. I think we know it, but we forget it sometimes. But it

is the people that makes everything happen or makes thing not happen.

There’s a huge opportunity cost to having a wrong person in a position, and

you don’t realize that opportunity cost until that person leaves, and

because either there’s a void and you realize that this person was actually

dragging the company down, or someone who comes in that’s much better and

you realize how much more quickly you’re accelerating. And when you have

that right person in place, magical things start to happen and it really

has an amazing effect on the company.

And so, at the end of the day it’s all about the people and you can’t

invest enough in people and culture. I think in early parts of start-up

companies, often you just focus on the product or the vision or whatever it

is. You don’t focus as much on people and culture. But it’s true. It’s not

just smoke and mirrors or just something that people are paying lip service

to. It is all about people and we need to optimize our companies around

investing in people and finding the right people and keeping the people

that we have happy and motivated.

Andrew: Yeah. One person that’s been helpful to me and is a mutual friend

of ours is Chris Savage of Wistia who introduced us. He’s been a long time

friend of yours since school. He’s been a big supporter of mine here at

Mixergy, and Chris, if you’re watching, thanks for helping us put this

together. Doctor Kumar, thank you so much for doing this interview, and I

hope everyone in the audience will go to shapeup.com. There’s no way for

them to join, right, as individuals just to experience the products

themselves, right? They have to . . .

Rajiv: Right. Right now it’s only opened to businesses that have signed on

the offer the program to their employees. But we are building products for

insurance companies to offer them to much larger populations and eventually

in the future we hope that there will be a direct consumer as well, so we

hope people stay tuned for that.

Andrew: Well that’s one of the reasons why I’m especially appreciative that

you came here to do this interview. You didn’t come here because you wanted

to get a big audience to come on and sign up for your site. You don’t need

us. You didn’t come here because you needed more fundings and you trying to

get in front of the investors. You have enough funding, and I have a

feeling if you wanted more, you can get it fairly easily. You came with the

idea that you were just going to help entrepreneurs. That’s what you said

before we even started recording, and I know that that’s what you did here

for the last hour and ten plus minutes. And I appreciate all the time that

you put in here.

Rajiv: Glad to be here. Thanks for the opportunity and we look forward to

having another conversation.

Andrew: I love it. And everyone, check out shapeup.com even if you’re not

going to join, we talked a lot about the marketing of this site and the way

that they put themselves out there as thought leaders. And I think that if

you look at that thought process, you’ll learn a lot as an entrepreneur. I

think that’s the next step after this interview. Thank you all for being

part of it. Bye.

Rajiv: Thanks.

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Share

  • http://mixergy.com Andrew Warner

    One of the impressive parts of how he built his company is that he partnered with bigger companies and they brought along their employees. It’s 1 sale that brings in thousands of users.

  • http://www.facebook.com/heyaziz Aziz Ali

    Loved the way they marketed the product. Thank you Rajiv for coming on and sharing. And thank you Andrew as always.

  • Maxime

    Am I the only who is unable to download the iTunes version ?

  • http://mixergy.com Andrew Warner

    Thanks. Impressive.

  • http://mixergy.com Andrew Warner

    Sorry I missed this comment before.

    What do you mean by the iTunes version? Are you having trouble grabbing it off iTunes on your iPhone?

  • Maxime Jobin

    Exactly. It’s what I meant. (sorry for the delay)

  • http://mixergy.com Andrew Warner

    Thanks, I’m checking the feed.

    In the meantime, you can always grab the mp3 from the link above.

    Thanks for telling me what’s going on.