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


About Rajiv Kumar

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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company can be reached no matter where they are? Go to grasshopper.com.
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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  • 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.