How to buy a site that already exists and grow it – with Rob Walling

I’m tailoring this interview for someone who has no idea what kind of company to create and is open to the idea of buying a web site that already exists and growing it.

In 2011, Rob Walling bought HitTail, a site that tells content marketers what topics to cover if they want traffic from Google.

We’ll hear how he picked what company to buy, how much he paid for it. We’ll also hear where the revenues were when he bought the company and what the revenues are now.

Watch the FULL program

Rob Walling, Drip

Rob Walling is the founder at Drip which is a web application that improves your website conversion reates by making it easy to setup email auto-responders and mini-courses.

 

Raw transcript

Mixergy's audio transcription is done by Speechpad

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy dot com, home of the ambitious upstart, and I’ve got an agenda for this interview.

I’m tailoring this interview to someone who has, maybe no idea of what kind of company to start, but is open to the possibility of buying a website that already exists, and building that, and growing that business. If that’s you, I want this this interview to be a really good fit for you.

In 2011 Rob Walling bought HitTail. It’s a site that tells content marketers what topics to cover if they want to get traffic from Google. I want to hear how he figured out to buy that business, where the revenues were when he bought it, maybe what he bought it for. More importantly, how he grew it, how he added value to it and made it more valuable than when he bought it, and where it is today. That’s my mission for this interview.

Even though this interview will be about that company, HitTail, Rob also has a new business that I’m hoping to find out about. You can see it at GetDrip dot com, and what you’ll see there, is a little box that anyone can add to their website if they want to grow their e-mail list. It’s really clever the way that it pops up. You can see it on just… go to GetDrip dot com and you’ll see it.

One last thing, this interview is sponsored by WalkerCorporateLaw dot com, but I’ll tell you about them later. For now, I’ve got to welcome Rob. How are you doing?

Rob: I’m doing great. Thanks for having me, Andrew. It’s good to be back.

Andrew: You bet. 2011, you were expecting your second child. That does not seem like the optimal time to start looking for a new business, especially since you have all these other companies. How do those other companies run, if you are about to start something new?

Rob: I actually had my second child in 2010. I was coming off of an eight or ten month mini hiatus. I’d been working about two days a week during that time.

Andrew: I see. So you’re saying, after your child was born, you were just working two… how’d you get to do that with the list of websites that you owned?

Rob: That’s a really good question, actually. I had several folks helping me out. I had hired a couple VAs, virtual assistants, and I had also automated the marketing, and the support, and the other stuff, to the extent that it needed to be that I could really dial it down. It was kind of like a flywheel.

I hate to say autopilot, because it’s so cheesy now, but that was the goal going into having this child. I spent about four or five months really thinking through, what are the things that take time on a day-to-day basis, and how can I reduce that time so I can take some time off and be with my new son.

Andrew: Can you give me an example of something that you automated to allow your business to grow without you?

Rob: Sure. I brought on a virtual assistant, who handled all my tier one e- mail support for all the businesses, including a couple that I had never outsourced support on before, like the Micropreneur Academy, which is an online membership site. I had always just felt like it needed to be me, needed to be such a personal touch.

But as it turns out, I found someone really solid, and he took, it was probably, three to four hours a week of work, which isn’t that much to take away from me. It’s since grown, but at the time, I did that about five or six times and suddenly you’re at 20, 25 hours a week. Poof, I can drop it way down.

Andrew: I see. Was that one of the toughest things to pass on to someone else?

Rob: That was. The other thing that was a challenge was parts of the marketing. I still wanted to oversee the marketing, because that’s just what I do, but I hired someone to help with paid acquisition. Taught him how to run ads, AdWords, Facebook ads, create content, that kind of stuff. That was a challenge in one that it took me a personal struggle to get over with. That someone else can do just about as good a job as I can if I train them right.

Andrew: How do you train someone to do that? What do you do?

Rob: It involves looking… I know how to do it after having done it over and over, but I had no process. So I sat down and said, “How can I turn this into a process?” I just tried to put a bulleted list together in a Google doc and then recorded a screen cast of what I did. I actually went through, and every day, because I was doing…

Paid acquisition, the way it works, at least the way I do it, is I do maybe 20 minutes in the morning, 15 minutes in the afternoon, almost every day. I started recording those highlights every day, and I edited them down into the most important pieces. It was almost a time lapse of an entire week, and I found that I captured a lot of edge cases that way. There was definitely some effort into doing that, but I had an editor who edited it for me, so I just was able to record and give it to her.

Andrew: You just recorded everything and you said, “Here. You find what the key points are”?

Rob: I had a Google doc as well that highlighted the key points. The Google doc was kind of the scaffolding, and then the meatier side wound up being between 45 minutes and an hour of, basically, a five day time lapse and the person that got done with it said you know this is amazing like I’ve never been trained like this you know it obviously resonated with them and it seemed to pass it on pretty quick.

Andrew: I see. When we’re talking about all these different businesses can you give me a list of what you had at the time?

Rob: Sure. Let’s see. I was working mostly on… I had an ASP.net, invoicingsoftwareclub.net invoice, I had an app, a consumer app called Wedding Tool Box that was basically kind of like square space for engaged couples. They can just basically put up a really simple wedding website. I had a job board called apprentice linemen jobs.

I had the Michael Perineural Academy. It’s at michaelperineural.com and that’s an online startup school. I was doing a lot of speaking because my book had come out at maybe, I think the year before, so I was doing at least six speaking gigs a years, which is time consuming and then I was running Microconf. I think this was the second year of Microconf. So a lot…

Andrew: That’s a lot for one person for the first time.

Rob: That’s right.

Andrew: When we’re talking about the different businesses, I want people to get a sense of perspective without getting into the actual numbers. Average revenue or can you give me some sense of what the revenue is on all these businesses?

Rob: Sure. It varied. I mean, I had other ones that are also smaller, anything in the $500 to $1,000 month range I didn’t list because it’s almost inconsequential. Most of the ones I just listed are between one and five grand a month…

Andrew: Okay.

Rob: …or were at the time. Some of them I’ve sold. I don’t even own any more, but one to five grand a month where Microconf is different because it’s once a year thing. You get a spike, but some of them arch up to maybe ten, 12 grand certain seasonal times of the year. So, yeah, add it all together they weren’t even a seven figure business altogether. But they were multiple six figures, I guess you’d say.

Andrew: I see. Well, then with that, why buy a company? I mean, you can spend two days a week on work and still spend time with your kids and family and your own interests. Why buy a business?

Rob: You know what drew me to it was this question that I’ve asked myself, about every 18 to 24 months for most of my working career, and that question is what’s next.

Andrew: Mm-hmm.

Rob: What’s next because when you’re working 16 hours a week it’s really fun for about two months. And then it’s really boring. And if you’ve ever taken time off, and I’m sure you have, anyone who’s sold a business and kind of had that time to step away… I’ve talked to a number of founders who have exited and “been set for life” and almost none of them stay out of the game because that’s not what we do. It’s just not what we do, you know. You see with Dan Martell and Jason Kohn and Headon Shaw, all the guys that we know, we just need to be creating.

And so I knew that I could scale it back more, probably could scale it back to a day a week if I spent more time, but I wanted to dig into that next challenge. The reason I bought instead of building is that I wanted to skip that painful, early phase, that 18 months of vetting the idea, building the idea, doing all the learning, doing customer development, and trying to get to product market fit which I’m actually doing that now, of course, with GetDrip, which is another story. But that’s what I was trying to avoid, and it was a good decision for sure.

Andrew: Okay. So then it’s time to buy. You didn’t go to Flippa, right?

Rob: I did not, well… So I was on Flippa for about… I’m kind of always looking at Flippa to see if good stuff comes up. I was on Flippa for three or four months pretty hard looking for stuff, but I did not find HitTail on Flippa.

Andrew: What’s the criteria that you have when you’re looking through flippa.com for a company or just looking organically to see what comes up?

Rob: Well, so these days it’s I really want recurring revenue, like guaranteed recurring, not just something that’s recurring because Google is sending you traffic all the time. And I also would like SaaS. I’d like a software edge where it’s something that not everyone can dive into.

Back then in 2011 I would entertain like eCommerce and kind of any niche site. I don’t do that so much anymore. I just found that I’m more specialized in it since it worked out better for me. There are valuable opportunities in all the spaces, to be honest.

Andrew: So it was software, you want referring revenue. Got it.

Rob: Yep. And it depends on your price range as to what… These days I wouldn’t even consider something that’s making less than, unless it has a huge potential, I wouldn’t consider something less than about five grand a month that it’s making, but I have a little budget to buy. But that just shows that it’s, at least, solving a problem and people are there.

If you buy something that’s making three or four hundred dollars a month it’s really a 50/50 chance if you’re going to be able to grow that. But if it’s already grown to a certain point, the odds of you growing it further are, it shows it has more traction, and it’s just higher odds.

Andrew: What about this, a lot of the entrepreneurs who I’ve talked to have told me that the way that they finally got something to take off was by cutting off all the other projects they were working on.

Rob: Mm-hmm.

Andrew: You seem to buck that trend. I’m looking at a list of companies that you’ve run consistently that you’re still doing well with. Why? What are you doing differently?

Rob: I think that my projects, I seek projects that are fairly simple or that are fairly contained. And so they, like, none of them have direct employees. I’m not running separate companies, I’m more running separate products under a single umbrella. And I think there’s a difference, because if I had a whole separate company with multiple employees that I was trying to manage and then move on, that would be a real struggle. Right, that’s a lot of big time commitment.

Andrew: Okay.

Rob: But if you have a handful of websites, and they have, kind of their niche and their marketing is dialed in, and there’s just a more, it’s easier to automate than having an actual company undo itself.

Andrew: By the way, I’m looking over your shoulder. I think we recorded a course for Mixergy recently, and I looked over, and I think it was in an office. Now, it looks like you’re upstairs in a home. Where . . .

Rob: I’m at home.

Andrew: . . . were you?

Rob: I’m at home.

Andrew: You are?

Rob: Yeah.

Andrew: So some days you work at home, but you also have an office?

Rob: I do. Yeah. I have a little office in downtown Fresno, here.

Andrew: Okay.

Rob: It’s a little software cluster. And I love being around other techies, so I go in maybe three days a week, but it’s, you know, just whenever I want to be around other . . .

Andrew: Is that the guest . . .

Rob: . . . folks.

Andrew: . . . bedroom?

Rob: This is a guest, it’s an office. Yeah, I guess, bedroom.

Andrew: Okay. Is it ever a little bit annoying that just because someone doesn’t interview with you, they get to ask anything they want?

Rob: [laughs]

Andrew: Like, “Where are you in the house’?”

Rob: No. No, that’s cool.

Andrew: No?

Rob: That’s the fun stuff, you know? Because no one’s ever asked me that.

Andrew: [laughs]

Rob: And I think that’s kind of fun to talk about. I’ve talked about all this other stuff.

Andrew: I feel like I’m allowed to just get away with anything . . .

Rob: Yep. You pretty much . . .

Andrew: . . . when I’m an interviewer.

Rob: . . . are.

Andrew: Yep. You came to know HitTail as a customer. How long were you a customer, and what was it about it that got you to use it?

Rob: I was a customer starting in 2006, when it first launched. And I started using it because I was writing my blog, softwarebyrob.com, and I needed new content ideas all the time. And I wanted suggestions for things that were actually going to bring traffic. And so I signed up when it was still freemium. So I was a ‘customer,’ as in quotes, I wasn’t actually paying any money to HitTail. I was more of a free user.

Andrew: Okay.

Rob: And they had shut down the free plan in 2007, but they never kicked free users out. So I knew the value of the service, and I had been using it on both my blog, on [??] Invoice’s blog, on several of my product blogs for content ideas.

Andrew: How? What did you use it for? Do you have a specific example that you remember?

Rob: Yeah. There was, so basically, HitTail, you install a little bit of JavaScript tracking on your site and it tells you all the organic keywords that people are using to find you. And then, the next step, because you can get that from Google Analytic, but the next step is they had this algorithm built in or it has an algorithm built in, and it gives you the keywords that you’re most likely to rank for if you target them. They’re the underperforming keywords, basically, your low hanging fruit.

And so, I used, there were several invoice related keywords that I couldn’t find through Google AdWords Keyword Tool or any other keyword tool that were suggested by HitTail, and I would up building pages out in ]??] Invoice, and drawing long tail traffic for them. So it’s . . .

Andrew: By ‘pages,’ you mean blog pages or custom . . .

Rob: It . . .

Andrew: . . . sales pages?

Rob: It was actually custom articles. Yeah, it was articles. So I didn’t have a blog attached to it, but yeah. Just an article section that had things, like, you know, I don’t remember what they were. But they [??] this longer term. It was, like, asp.net Invoicing Software for Developers, I mean, it was, like, a four or five word keyword phrase. And it was just not showing up anywhere else. So . . .

Andrew: And it sounds like the way you came to buy it was kind of the way Persians in LA used to be buy homes. They just would say, ‘I like that home.’

Rob: [laughs]

Andrew: Go knock on the door and say, “Sell it to me. Here’s the briefcase . . .

Rob: Is that what happened?

Andrew: . . . of cash.” Yes.

Rob: You know, it kind of was. As we said before, I was on Flip a little bit or quite a bit, and I just could not find anything that I wanted to buy. And I started seeing HitTail having these outages. And about, boy, three, four months in a row, it had, like, a multi-day outage. And so I did e-mail to HitTail and say, “Look, I have no idea how much you’re making or what the deal is, but I buy businesses, basically.” And I didn’t expect an answer, to be honest. But I heard back from the woman who owned it, and she said it was a possibility.

Andrew: Interesting. So it’s just, like, I’m now on hittail.com. It was, like, you’re on this site, you hit ‘Contact,’ and you just send them a note?

Rob: That’s right.

Andrew: [laughs]

Rob: Yep. Except, it looked very different. It looked, if you go to old.hittail.com, you’ll see what it actually looked like.

Andrew: I went to it earlier . . .

Rob: Okay.

Andrew: . . . in the day, in preparation. It does look different.

Rob: Yeah, it’s a little more updated.

Andrew: Okay. So she said she was interested. What do you need to know, in order to make an informed decision about buying it? Sorry, before you answer that, anyone who’s at a computer should just type in hittail.com and then type in, on a different tab, old.hittail.com. The before and after is striking. So sorry, what did you need to know?

Rob: Well, so the thing is with a cold email like this, it’s really easy to scare someone away because even though, when I emailed I said, here’s my LinkedIn profile, here’s a link to my blog and podcast and InConference, trying to build some credibility. Because people do get, just kind of chuckle head e-mails, every so often wanting to “buy” their business and it’s just kind of a lame waste of time.

So I was trying to build up that I was serious about it. As a result I didn’t want to say, when she said, “Yeah, I’m interested. What would you be willing to offer?” Or “Let’s start talking about price,” is kind of what she wanted. And I basically need metrics before that. But I don’t want to send her this laundry list of metrics in order to evaluate it.

So the first things that I ask for are: revenue, expenses, unique visitors per month, and try to get at least the past year of history for those three items and that’ll allow me to get a sanity check. You know, of how much traffic does this actually get, how much room for growth is there and how much is this thing netting per month.

Andrew: Why didn’t you care about, first of all, what is it programmed in so that you know whether you can update it?

Rob: Right. I had done a little looking around and I could tell it was written in ASP, classic ASP. So I knew that it’s not the ideal language because it’s a 13-year-old language. I knew that I could hack it. But if the financials made sense, then I would figure it out, you know. Also, even without knowing that, it would have to be a pretty ridiculous technology for me not to acquire it. I’ve acquired across 5 or 6 different languages including like Cold Fusion and Classic ASP which are typically things people stay away from. And if the financials work, it really doesn’t matter that much.

Andrew: Why not? Someone needs to maintain it. Someone needs to keep it up. Someone needs to fix it if it’s broken, add a feature here and there.

Rob: Sure. I’ve always found people to do that, or I’ve learned it myself. Classic ASP’s something I coded back in 2000 so I knew that I could hack enough that I could improve the site, or I could hire an ASP developer.

Andrew: What do we say to someone who’s listening… first of all I know there’s a lot of developers who say “OK, this makes sense to me, I can do it.” I know that they’re there in the audience. But I also know that there are people who aren’t developers, who wouldn’t even know how to guide a developer. Does that mean that they shouldn’t be buying software, that they shouldn’t be buying websites?

Rob: I think software, I wouldn’t say it means they shouldn’t. It does come with more complexity to buy software than to buy like an e-commerce site or something that doesn’t rely so much on code. With that said, I did buy a website that was reasonably successful for me, that was in a language I did not know. And in fact, my newest app, we’ve talked about Drip, it is also in a language I don’t know. And finding someone to work on those is not… I wouldn’t say it’s easy, but it’s not undo-able.

ODesk has treated me pretty well, in terms of finding developers just to work a few hours just to fix some minor stuff. So it’s definitely feasible. It’s a mixed bag. That’s a learned skill. To find contractors and interview them and when you learn that you can be perhaps more productive than a developer who went out and learned the language. Because you can always replenish your developer supply.

Andrew: That’s interesting. The other thing that’s interesting that you just said is you created Drip from scratch (this is the new site), but you chose to build it in a language that you don’t know how to develop in. Why?

Rob: Because it’s the best language for the job, I think. We’re building it in Rails and you can just get a web app out so fast in that language. As well as, if there were ever… you know I don’t sell a lot of my businesses but if there were ever an acquisition to come across, it’s a really good language for it to be built in. Rails or Python or PHP. Where as I spent a lot of my years building ASP.net and that’s just not a start-up language. People don’t want to buy start-ups built in .net stuff.

Andrew: I got the numbers that you got from the seller about HitTail, but you have them in front of you, too. What are they?

Rob: So the numbers she gave me were that the revenue for the past 12 months was $30,000 total, which puts it at about $2500 a month of gross revenue. The expenses were about $1,500 a month, so that left me with about $1000 of net profit. And then uniques were between $2000-$5000 a month, unique visitors.

Andrew: So where do the expenses, where does $1500 a month go?

Rob: Most of it was hosting. Because the site had been set up in 2006, they had a cage in a colo facility, in Manhattan, of all places. How could you get more expensive, you know? So I knew that, even just looking at those three pieces of data, I knew with that many uniques, she should be, the revenue should be higher, like just, you know, rough numbers.

Like I should be able to convert X percent to trial, X percent to paid, I should be able to drive revenue up. Should be able to cut that expense in half, by using cloud servers. I figured I could get it down to between 500 and 1000 bucks, in hosting. And, right there, there’s some small, some small wins, I didn’t know how much further I could go up from there, but, you know, that was part of the, the risk of course.

Andrew: When you say you could convert X number? How, how can you really predict it? Because, I mean, every business is different, I imagine that the conversion on Hit Tail dot com is different from Get Ripped dot com, which is different from something you owned before.

Rob: Sure.

Andrew: How do you get, how do you know how many people are going to convert?

Rob: Sure, I use kind of loose ranges, or, or the rules of thumb that I’ve discovered, that apply to multiple business of the same type. And, so with a SasS app, I would expect, depends on price point, if it’s more of an enterprise price point, say it’s 100 bucks a month, or more, it’s going to be more higher touch sales and that’s going to convert, you know, maybe between a half and one percent of unique visitors to trial, with a lower price point like Hit Tail was, it was ten bucks a month, starting.

I was expecting between one and ten percent of unique visitors, should be converting to trial, and then if I ask for, that’s if I ask for credit card, up front, in both cases. And if I do that, I would expect to get between 40 and 60 percent of those trials, to paid conversions, and those are the numbers I use when I acquire, and they’ve, there are variants, I know people that are slightly higher, slightly lower. And before you, depth with an optimized funnel, so, when you optimize you can get there. When you start off and just throw stuff out, it won’t be that good, but I realize running the numbers, that if I could get there it, it would be a profitable acquisition.

Andrew: Okay. You got that data from her, that’s the beginning. What else did you need to know that this was going to be the right acquisition for you?

Rob: Yes, so I dug in deeper from there, and tried to get, you know, how many paying customers there were and try to look at the actual revenue. Realistically the next step, I was trying to vet to make sure that the app was stable enough that it would last. That it wouldn’t crash in the next month or two, and totally put me out of business. But, aside from just those three metrics, the next step was to start talking money. That was kind of the next step.

Andrew: That’s it, there was no other data that you needed, you wanted to make sure it stayed up, you wanted to make sure you had the metrics, and they were consistent and that’s it?

Rob: Yes.

Andrew: So how do you negotiate?

Rob: Yes, that was interesting, [laughs], you know, it depends, [laughs], we did it via email. And which, I prefer, because then it gives everybody a chance to think about, and it’s not… because if you try to get on the phone, or get on Skype and negotiate, it’s always like, well I need to think about it, and then you’ve just wasted time.

So you email, at least, it gives people a few days to kind of think about it. And she said, make me an offer. Which is always, that, like I said, well what do you want? She said, make me an offer, it’s like, who wants to name that first price. And so after looking at it and thinking about it for a while, the typical range that I look at is between one and two years of net profit.

And some people pay up to five years, for the right app, and I would too. But for something like this, that needed some help, I wanted to pay between one and two years, so that would put me between 12 and 24 thousand. Because it was making about a grand a month, and so I offered, I think my initial offer was 20 or 25 thousand, and that was a lot of money for me, like I was not, independently wealthy, [laughs].

And this was all money that was sitting in a business account, that had been trickled in from all these other little apps I had, and she came back, and it was funny it was kind of like the dot com luster. She said, well this, I put more than a million dollars into this, you know, over the, you know, the…

Andrew: Really?

Rob: That’s what she told me, I mean, I don’t have any verification of that, but during the course of development, and marketing, and PR, and just whatever, she said that she had put that much into it, and so. But it was like, it doesn’t matter when you’re acquiring, you know? It doesn’t.

Andrew: Those are some costs.

Rob: Yes they really are, so it was interesting. So we went back and forth, she asked for 100 grand was her first counter, and there was no chance I was going to do it. I could build it, I could have HitTail built, pretty well for about 15 or 20 thousand. What I was trying to buy, was the marketing because it had some really good inbound links from Google. She had run a PR firm, which means it had the awesome writeups in, like Ink Magazine, and the Wall Street Journal, and like these great, press mentions.

The TechCrunch, stuff that I really couldn’t get, I’m just not an expert at. And so I wanted to buy that part of it, you know, the marketing, that was worth twice that the 20 grand, because I wouldn’t be able to get that. So she came back with 100, and then I’m pretty sure I came back with 30.

Then, she came back with 60. Then, I said I can do 30 and that’s it. That’s where we wound up. I knew, and I came with I’ll go build this, if we go above this it just doesn’t make sense to do it at that point.

Andrew: I remember when I bought truemind.com I was going to build something on there. Because that was the one domain I wanted, I was worried that the guy who was selling it would sense that and drive the price up and so on.

I emailed John from domainnube.com [??]. I said… Actually, my wife was buying it. I didn’t even want my name associated with it. She emailed him and he gave us a bunch of tips on what to do, incredibly helpful. Do you have anything that you’d advise someone who wanted to negotiate for a domain name to think about?

Rob: For a domain name or for an app?

Andrew: Oh, sorry. Did I say domain name?

Rob: Yeah.

Andrew: For an app. What advice do you have for us if we’re going to negotiate for the purchase of an app?

Rob: I think that there are a couple of things to keep in mind. Kind of the things I had in my back pocket were, one, I had the general rules of thumb like people don’t really pay more than two years ever, in general. And, I can go build this if you don’t sell it to me. Even the marketing side and the code, I can build for less than you’re asking. So, it’s kind of having that back door.

Andrew: Okay.

Rob: Also, frankly, there’s an advantage to buying an app that is on the downswing. Because it typically means that the owner is a motivated seller. That helps. You are definitely in a higher negotiating position at that point.

Andrew: One of the things that John told us about domain names was to not ask about just the one, but ask about multiple that are similar so that you’re not coming across as just really hungry for that one domain name.

Rob: Very nice.

Andrew: It looks like you got it. Then, maybe there was… I’m looking here to see when you changed it. It’s roughly ten months or so that the design of the site changed.

Rob: You mean since the new design has been out?

Andrew: No. Yeah. You bought the site in August 2011, and it…

Rob: Yeah.

Andrew: …looks like about ten months later the site on the outside looks different.

Rob: The new design was out five months later.

Andrew: Oh, five months later.

Rob: It was January of 2012.

Andrew: Okay. Let me see that. January 2012. Yes. No. All right.

Rob: Doesn’t show up?

Andrew: I want to know so that I know for the next person who I interview. Yeah, there we go, somewhere mid-January of 2012.

Rob: Yeah. [??]

Andrew: Did you change anything behind the scenes?

Rob: Yes, that was…

Andrew: What did you change?

Rob: I had to do three things to get this site to where I wanted it to be once I acquired it. This was the biggest acquisition I’d ever done. The night I wired that money I was kind of freaking out, and my wife… I said what have I done. Have I just pissed away $32,000 including legal fees? She said you need to suck it up. This is what you do. You would be bored if you didn’t do this. So, you have to take this risk.

I buckled down. I made a list of three things it had to get done. One, it had to be stabilized, because it was going down about once a month. The servers were having issues. There were bugs in the code. It was doing surprisingly well for being, like, a seven year old, a six year old unmaintained app. But, things just degrade over time. The first thing was stability.

The second thing was I wanted to redesign it and optimize the funnel to get it to those numbers I had earlier. Because it was way, way below those.

Then, the third thing was I wanted to drive traffic.

Right out of the gate I set up on operation rehab and basically just went in. I fixed about 20 different bugs that I found. That was the advantage. I did work pretty crazy hours, like 60, 70 hour weeks for maybe 2 or 3 weeks. I dug way into the code and fixed everything I could find that had any problems with it. I even commented out entire features that weren’t working any more just to stabilize it so that the server wasn’t having a problem.

Andrew: That seems really tough. I’ve gone in to try to edit other people’s writing, and it’s so hard to bring it back to my voice because they’re going in a whole other direction. I’m trying to figure out how this connects to that in their mind. To do it with code is even harder. How do you do it?

Rob: You spend a lot of time. It took me a day just to read through a few of the coding files and figure out what they were doing. It’s a pretty old, archaic architecture. It was even doubly difficult. That’s why it took me so much time.

Andrew: If you…

Rob: But, yeah, I knew it was something that had to be done. My back was to the wall. That’s the thing with an acquisition. If you drop $10,000 or $20,000 or $30,000 you are all in at that point. That’s what I actually like about acquisitions. It’s that if I’m just sitting there building an app in my spare time, what am I out? I’m out the few hours that I’ve spent on it. But, when you drop $30,000 and your wife knows that, and you know that, that’s it. It has to work.

So I was up until 1:00 and 2:00 in the morning. I was both invigorated, I was a little scared, but I was super excited to pull it off and be like can I actually do this – feeling like the underdog. Playing loud music in my headphones. Everybody sleeping. There’s something about being that entrepreneur who’s just getting it done at that level. It felt good.

Andrew: What kind of music do you listen to when you do this?

Rob: I often listen to punk music, Metallica, that kind of stuff to really amp it, a lot of Nirvana.

Andrew: When I need to really crank I listen to Black Sabbath.

Rob: Oh yeah, perfect.

Andrew: Their latest album’s really helpful.

If you’re noticing my eyes just wander around the screen as we’re talking it’s because there’s just so much to look at for you. Everything you say I want to just go in and dive in so I can really ask a good follow up question so I can understand it. But, everything I touch seems to lead to 50 other things.

I was doing a WhoIs search to see a reverse WhoIs email address lookup just to see what other sites there are. There’s a lot, and there’s no direct connection – like the master-cleanse-diet.com. That’s not you? No, okay. Maybe that’s the thing, that there’s a lot of extra stuff in there.

Rob: I’m on shared hosting, so it may…

Andrew: But it’s a reverse server lookup.

Rob: I don’t know.

Andrew: That’s still good to know. When it doesn’t work out it’s still you. Oh, I see. No, strange. Oh well. I thought maybe it was because you were all using GoDaddy as a contact. But, no, you’re actually using your real email address in the WhoIs data. Okay. You stabilize it. How long does it take, roughly, to stabilize it?

Rob: About 60 days.

Andrew: Sixty days, not bad.

Rob: Yeah, it was some coding changes, and then it was moving to a new server as well. That server move was a pretty big deal, because the database was very large. I had to get a DBA involved that I hired on oDesk. Then, we overnighted a hard drive with some data files. This was all… It’s as crazy as it sounds. I felt a little over my head at this point.

Andrew: What about all those credit cards? Who gets to control that?

Rob: It was all in PayPal. It was PayPal subscriptions and the… She transferred the PayPal account to me.

Andrew: Yeah, because she can’t transfer… She has to basically make her account yours.

Rob: Yeah. It’s a business account, though, and you can transfer ownership of…

Andrew: Oh, you can?

Rob: …a business account…

Andrew: I didn’t realize that.

Rob: Not a personal but a business, yeah.

Andrew: Oh, okay, I didn’t realize that.

Rob: You have to actually talk to PayPal about it. There’s some rigmarole, but it is possible.

Andrew: All right. What do you do about the funnel? Now you’ve got a new site. It’s doing okay. You want to make it actually much more logical. How do you create a funnel from scratch?

Rob: There were a couple of places where the site wasn’t doing a good job. One, it wasn’t sending stuff from the home page to the pricing page very well. Because the home page of the old site is pretty convoluted, and there are a lot of links and a lot of other crazy stuff.

Then, the pricing page itself was at a really long pricing grid and was just confusing. There was a lot of noise in it. So, no one was going to the registration page. Then, the registration page not only did it ask for about 15 different fields but it sent you through PayPal and did all kinds of stuff like that that’s going to drop a lot of people.

I was trying to remove friction. So, I simplified the home page was the first step, because I just wanted people to check out the pricing page. I really tried to streamline it and move the testimonials and the logos towards the top with a big call to action. Then, that started driving more traffic to the pricing page. I simplified that.

It was more about cutting out than about adding in, if that makes sense. Then, the registration page, I cut it from maybe 15, 16 fields down to three fields. Then, I added credit card in up front.

Andrew: Before they even get to try.

Rob: Yes, before they get to try. There’s a whole discussion around that, but my rule of thumb is you ask for credit card up front. Unless you have a higher touch sales team that can actually reach out via phone, in general asking for credit card up front is the best way to get qualified prospects in. It works out. The numbers tend to work out better.

Andrew: Every time someone says that in an interview, other entrepreneurs will email me and say yes, I’ve found the same thing, huge difference.

But, I don’t understand why. I would imagine that you just want to capture as many email addresses as possible, and then you can convert the ones who are going to pay anyway into paying customers. The ones who were on the fence, over time you could persuade them if you get their email address and then wait to ask for a credit card.

Why does asking for a credit card work so well, asking right up front I mean?

Rob: Well, there are two things. One, it I guess it’s really one thing combined. It means that someone who is in your, it means that someone who’s participating in your trial really cares to try your app. That it’s not just a curiosity. They’re not entering fake data. They tend to be at least somewhat serious and somewhat able to pay.

And so that means you’re just infinitely more, I mean literally it might be five or ten times, actually I think it is five or ten times more likely to convert to a paying customer, then the volume. You may get five or ten times more people upfront but a lot fewer will convert to pay.

Andrew: Okay. And it’s time to get traffic. How do you get traffic?

Rob: So traffic, this was kind of a new experience for me because I had promoted a lot of sites obviously but I, typically all of them had maybe one or maybe two real traffic flywheels, like as paid acquisition or as SEO or there were some with affiliates and stuff. But with this one, I was kind of starting from scratch and so I had a lot of experimentation to do.

And so I started doing this thing that I later started calling concentric circle marketing where I started with my inner circle, and that was my audience. So I went and wrote a blog post, a couple blog posts actually, and they went up on Hacker News. I tweeted it, I emailed my newsletter, I talked about it on the podcast. Just did a bunch of stuff with my immediate audience just to start getting traffic to it and start getting links and start getting people talking about it so people were aware of it.

Andrew: Okay.

Rob: And then the second circle. . .

Andrew: How helpful was that first circle, the group of people who you knew?

Rob: It was, it drove a lot of traffic, as you would expect. It didn’t convert very well. And I didn’t know that would be the case but in hindsight, you know this is now two years later, in hindsight I’ve seen this curse of the audience. Where you have an audience and you think they’re going to buy something that you have but it doesn’t totally align with who they are and what they’re doing. But you can imagine a lot of, you know, start-ups and single founders, which is who my audience is.

You can imagine them using it to help but many of them may not have full fledged sites or may not get benefit from SEO, may not be making enough money to pay for a service. And so the conversion rate on this traffic was surprisingly low and it was a lot lower then some of the other concentric circles that I then went out to.

Andrew: What about your own personal audience, the blog readers, the podcast?

Rob: That’s who I was talking about.

Andrew: Oh really. I thought maybe meant when you published there and it went to Hacker News. That Hacker News audience wasn’t a good fit. But you’re saying your own personal audience didn’t really come to the rescue here.

Rob: Yeah, the Hacker News audience was especially low. You know, that segment of it was especially low. My audience, like the blog and podcast audience, was higher than Hacker News but it wasn’t as high as the second concentric circle, which is when I went out and talked to friends and colleagues that I have and went on their podcasts or did guest posts for them. That’s when things started clicking a little more.

Andrew: Why? Why does being on someone else’s podcast or blog help?

Rob: I think it’s because, you know, my audience is only so many people. And there are only so many people within that audience who are able to, are actually able to buy what I have or interested in the tool. When I went out to friends and colleagues and kind of started working the network, there’s so many more, there’s so much more variety.

So I went on, like, 11 different podcasts. You know there were info marketing podcasts, there was email marketing, there was SEO, I mean, just the gamut. There was some start up ones. I came on Mixergy actually, I think a couple, within a couple months of launching. And each of those, it’s such a larger birth, larger number of people that it works out pretty well. So that started getting me a little foothold. These are all things that don’t scale right. None of this was going to scale my business up to 20, 30 grand a month. But I was just trying to, I was learning, just trying to figure out what is going to work.

Andrew: How could it have worked or how could it have scaled? Because frankly, you come to Mixergy, the audience goes over to hittail.com, some of them sign up, great. You figure, all right Mixergy is the place to go. You come me, you say, “Andrew, I’d like to be on again”, maybe we come up with one other angle on it and we have you back on. But you can’t do this on a regular basis and have it continue to run, especially without you. So why did you do it anyway?

Rob: I did it for two reasons. One was to learn and to learn which audiences converted. And so when I saw the, there were a couple of podcasts that converted particularly well and one of them was an SEO podcast, actually both of them were SEO podcasts. And based on our audiences that were fairly small, they converted a substantial number of people.

And it totally makes sense, in retrospect, that yes, of course people who know about SEO are going to want to use Hit Tail. But realistically, I thought that any, even any start up founder, or Sass founders, or your audience, would convert, would see the value of it, and convert at a similar level, and I realized that that wasn’t the case. So that was one piece of it, it’s like, just learning who needs this, and why they’re using it.

Andrew: Okay.

Rob: And the second thing was to get an initial bump, you know, at this point I’ve sunk, by the time I had done revamping and moving it, I was in it another 20 thousand bucks.

Andrew: Really?

Rob: So, I’d spent about 50, -yes, yes, paying for a DBA, and new design work, and HTML CSS, all that stuff, and the move, the server move, I mean, it was just, it was another 20 grand, so I was in about 50 grand. And I wanted to get every dollar I could, since it’s a SaaS app, even one time appearances, you know, on a podcast, they do generate recurring revenue for you, because it’s a SaaS app. So I was willing to invest the time to, to start building it up.

Andrew: You told Jeremy in the pre-interview that Mixergy did convert well for you, how well? Do you have a sense of how we did?

Rob: You know, so I did… so I don’t have exact numbers in terms of percentages. I do know that of the, the eleven or twelve podcast’s I went on, Mixergy was, I think third or fourth in terms of clicks that I could track. Because there’s a bunch of clicks that you can’t track, but the people who clicked through and then converted, Mixergy was like three or four.

So there was certainly a residence with the audience. And the ones that were above it had more of an SEO content marketing focus. So people already knew the value prop and really had a more burning desire for it.

Andrew: You know, that’s one of the challenges with podcasts in general. People tend not to listen and watch at their computer. They’re listening and watching away from their computer. And frankly even if they’re listening, on their computer, if I say go to getdrip.com, they’re not going to come to Mixergy and click the link, and go over, they’re just going to type it in and go in. I wish there was a better way to do it.

And I even offered my sponsor, I said, Scott, what if we send people to Walker Corporate Law dot com, slash something, you up for it? He said, you know, that will help us track but, I don’t need that, I would rather give them a clean link that people would go for, then give them two extra things to remember, the domain plus the sub-folder, underneath.

Rob: Yes.

Andrew: So, anyway, so actually speaking of that, I should say my sponsor, walkercorporatelaw.com, instead of doing a plug for them, Rob, do you have any legal tips for entrepreneurs? How to pick a lawyer? Mistake that you’ve made that wish you hadn’t?

Rob: Well, you know, I don’t know that I, I don’t know that I do, I think the picking a lawyer thing has always been referrals for me. Because, just because I am so bad at it, you know.

Andrew: In that case, I will refer everyone to Walker Corporate Law dot com, or just email Scott, Scott at Walker Corporate Law. And, you know, why don’t I ask you this, kind of related, the company name is the Pneuma Group?

Rob: Yes.

Andrew: What does that mean?

Rob: Pneuma is, I think it is, it’s either Greek or it’s Latin for spirit.

Andrew: Okay.

Rob: And I’ve just, it’s different, it’s spelled differently, it’s P-N-E-U- M-A, but the root is spirit, so.

Andrew: The spirit group comma, LLC, and you are, and you don’t even remember why you picked LLC, do you?

Rob: I don’t remember why I picked it, no I don’t, well, it’s something about pass through earnings and other things, [laughs].

Andrew: That’s it, they tell me they’ll give me tax flexibility, I said, alright let’s do it.

Rob: Yes, that’s what I did too.

Andrew: Alright, that’s the next concentric circle, what’s the next one after that?

Rob: Yes, the last one I dove out to was people I didn’t know at all, and so that’s where you get into doing SEO and doing Facebook ads and doing all types of advertising networks to try to just drive cold traffic. And figuring out how, how to expand that, and scale that up.

Andrew: Okay. And it seems like that’s one of the areas where you spend most of your time. After you rebuilt the business, it’s how do I get the right business to my site.

Rob: Yes, that was, well I mean, I spent about four or five months rebuilding it and then I spent about four or five months, trying to figure out how to market it. And I was marketing, I’m marketing during that time, but not achieving much growth.

Andrew: Okay.

Rob: And then by the middle of 2012 is when things started to click for me.

Andrew: What about when, you get people to sign up, and you get better and better at getting them to sign up. But you still have to keep them subscribed, what do you do to keep them signed, to keep them paying month after month?

Rob: Yes, that was an early challenge because I started seeing… the churn was higher than I wanted it to be, right, when I first acquired it. Churn being the percentage of people who cancel each month. And I went on a little tear called Operation Retention, and -it’s a stupid internal code for me. I’m one person, but I come up with these names.

I had my virtual assistant who is doing tier one support email everyone who had canceled in the previous 60 days and ask them really specifically why did you cancel. He said just reply to this email and I will… I didn’t want to send them to a form. I just wanted any data I could get.

So they all replied with different answers. Then he put them into a Google doc for me and organized them by type. Pretty soon I saw about eight different themes that were coming out. I went through and I said how can I fix each of these eight themes.

It varied from oh I need a new feature to oh I need better education. The person just said oh I can get this out of Google Analytics. It’s like no you can’t, but that’s my fault that you don’t understand that.

Andrew: I see.

Rob: So, how can I educate that along the way. There was a series of screen casts that now people are sent during a trial that helps them understand these things.

To be honest, the other big complaint or reason people were canceling is they said you’ve given me these awesome keyword suggestions, I just don’t have time to write content around them. By adding things to people’s to do lists it was making them feel guilty. Really, they weren’t getting value out of it.

I hooked up with an article writing marketplace. They have an API. We actually have an article service now internally. It’s basically a white label article service where people can get a keyword suggestion and do a click, and a few days later they get a $19 article delivered to them that’s custom written for them.

Andrew: Oh wow. But, it all started because you sent out an email to people and you said tell me why you canceled. I’ve done that. People don’t want to respond. They’re kind of guilty for canceling, and if they’re not guilty they’re done with you. How’d you get them to respond?

Rob: I kept it short and I kept it super personal. I’m trying to think if I had Andy send it as me or if I had him send it as himself. Because I could see it being an advantage if he sent it.

Andrew: Yes.

Rob: Because if they know you they feel guilty…

Andrew: Right. I don’t want to tell the founder why I didn’t do it.

Rob: Yes, yes. I honestly don’t remember which way I went. I could see arguments for both ways. But, the big thing was I asked the question, and then I said even if you can just tell me three words – just hit reply and tell me three words – I’d really appreciate it. I’m just trying to improve the business.

That was it. It was kind of a plea more than like an official thing or let’s get into a conversation about it. It was much less. Just give me some thoughts.

Andrew: Okay. A lot of this stuff comes back to virtual assistants. Where do you get your virtual assistant?

Rob: I got him on oDesk.

Andrew: Really?

Rob: Yeah, yeah. That’s the place that I’ve had the most success in the last couple of years.

Andrew: Wow. Who does your web design? I keep… Every time I talk to you I feel like I just have to slobber over your web design.

Rob: Yeah, this is Ryan Scherf.

Andrew: Ryan Scherf, and he’s a full-time guy with you?

Rob: No, he’s not, I just contract him for design.

Andrew: Oh, Ryan Scherf…

Rob: …[??]…

Andrew: …you are amazing.

Rob: He’s really solid, yeah.

Andrew: It’s simple. There’s a lot on the page. I’m looking at HitTail right now. You did make use of the ink article, the ‘Wall Street Journal’ mention, the TechCrunch, and so on – or he did. That’s on the page. There’s a counter on the page. It shows how many keywords analyzed, and it keeps changing. It keeps going up. There’s a button that’s clear, but also take a tour next to it, also clear.

There’s a lot going on here, but it doesn’t feel overwhelming. It just feels super clean.

Rob: Yeah. And, to be honest, that’s the mark of a good designer. I sent him a brief and said I want all of this on the page. I want a screenshot. I want the counter. I mean everything you’ve listed was in that. A mediocre designer gets it all in and it feels cluttered, whereas he’s able to get all that in and make it feel elegant.

Andrew: Yeah. Also, when there’s a lot of color on the page it feels a little too dark. This doesn’t.

Rob: This is why he’s not cheap. This is one thing that I sprang for. This is the most I’d ever paid for a design. I was happy to do it, I’ll say. I knew that it would have a major impact on making this site look legitimate or not.

Andrew: What does something like that cost, roughly?

Rob: Yeah, it depends, but it’s… If you do a few pages, I mean like just a concept can be $4,000. Then, if you do a few pages you can get between $5,000 and $10,000 for this plus three or four other pages.

Andrew: He is in… Where is this? It’s ryanscherf.net.

Rob: ryanscherf.net, yeah.

Andrew: Oh, Ryan, you’re good.

Rob: Minneapolis, I think, yeah.

Andrew: Sorry?

Rob: I think he’s in Minneapolis, somewhere up in the cold north.

Andrew: Yeah, there it is. Ryan Scherf is an independent designer, developer, and entrepreneur located in Minneapolis. I just Googled him to look at his other stuff. Yeah, there is Drip right on his page, and Ringer. I see he has a really nice clean design.

All right, on to the next thing. Do you still have a flywheel yet? No, you have a funnel that works. You have a few experiments that have taught you that SEO people are more likely to buy than entrepreneurs in general you have a way of reducing turn. It’s still time to get a lot of people to the top of the funnel. How did you do that?

Rob: Yeah, that was, well, it wound up being two. Well, it was about three or four different things. That’s one thing I realized in building this up, is there’s no single source, or there wasn’t a single source for this. The things that really started moving the needle at this point, and revenue was probably around 4 or 5,000 at this point, which I was very frustrated with.

The couple of things that really started moving it were one, Facebook ads started working. Re-targeting was doing pretty well, then I did an Appsumo deal that sent a bunch of traffic and not only sold the deals themselves, you know, discounted deal, but also sold some legitimate month-to-month services which I was surprised by.

Andrew: Because no one at Appsumo was selling a block of time on Hit-Tail, and if people wanted to buy more, did they still have to give you their credit card?

Rob: They did, yeah, but it was more like it was a one year HitTail deal, like deep-deep discounted. But, either people, I’m not exactly sure what happens here, but either people missed the 24 hour window, or they just didn’t want to get that deal and they came to the site anyway and bought just the month-to-month HitTail. And that was surprising to me, you know what I’m saying. Like instead of paying 80 bucks for a year they were going to sign up a pay 20 bucks a month or something like that, and there were a lot of people that did that.

Andrew: And Appsumo gets no money from that deal?

Rob: Yeah, yeah, not if they come and sign up for the normal services, it’s only if they sign up for, if they buy the discounted one.

Andrew: I’ve done that and I don’t remember why I did it. It’s some weird reason why I end up going directly to the site to buy when Appsumo’s giving me a deal.

Rob: That was surprising but it worked out.

Andrew: Facebook marketing, what about content creation yourself, using your own tool to get people to come in?

Rob: Yep, that started working but it was such a slow build, like it’s a… I wanted to grow it faster than I could just using that, so this was one piece of it, but I couldn’t drive users as fast as I could by buying clicks on Facebook, or by doing the Appsumo deal or later by getting, I wound up getting several press write-ups. All that stuff sent just a big burst of traffic. And that, again when you have recurring revenue it creates a nice flywheel for you.

Andrew: So everything’s going a long honky-dory, life is good, business is growing, you figured out a way to get people to the top of the funnel, everything’s clean, and then you start to noticed something. One of my past interviewees Rand Fischer changes his company name from SEO Moss, to just Moss. I didn’t realize this but you said Woosh Traffic change your name to Market Vibe, I didn’t realize that.

Rob: Yep.

Andrew: So they were also… What were you noticing there?

Rob: I noticed people were exciting the SEO space.

Andrew: Why?

Rob: Well, so Google started not providing keywords to websites anymore. That if you own a web site, and you run any analytic s software, you used to be able to see how people found your website, the specific term that they typed into Google and about, I’m trying to think, it may have been 18 months ago they started with just a little, little wedge, and it was 10% of traffic.

It was only people who were logged into their Google account or something. And it started at 10% of traffic, well now, that’s not provided. And then it started edging up to 15% and then 20%, and you could see the writing on the wall that Google was probably going to be trying to end SEO and HitTail relies on that keyword data.

Andrew: So what do you do in that case when you depend so much on that data?

Rob: Well, so there’s two things. One, I started looking into alternatives like how can I get this data from somewhere else, and luckily we support Yahoo and Bing and all these other engines, and that winds up being 25 to 20% of the value we can provide. The other thing is I started realizing I may need to explore another app, and that’s where I looked at starting Drip, which is an email marketing app. I was hedging my bet at this point.

I wasn’t bailing on Hit-ail, but I was not seeing a big alternative for completely saving it. Now that has changed though. Google started giving more data and I’m literally in alpha now with a big major overhaul with Hit- Tail that will get almost all of it back.

Andrew: Well what do you mean? What kind of data is Google giving back?

Rob: So here’s what’s interesting. Google is approaching 100% non-provided now, to where you can’t get any of your keywords. But they will give you keywords if you have a Google webmaster tools account. So if you go into Google webmaster tools and link up your website. They give you this big feed of your keywords. It’s a little different format than you used to get.

The data is a little different, but they give me enough information and that CSV, the common separated value file, that HitTail’s algorithm I’m tweaking it to work on that file. So far the results are even more exciting for me than the old way of doing it because actually I have more data points now. So that’s what I’ve been re-writing now for about the past month.

Andrew: So is that something that I can get as an independent website owner if I use their webmaster tools?

Rob: Yes. If you go as an independent, you can download a flat CSV or you can even just look at it onscreen, but it’s all of your keywords people have found you for over the past 30 days. You might see 500 or 5000 keywords and then what HitTail’s going to do of course is suck those in, and you can upload them and then we’re going to run our suggestion algorithm and say of those 5000, here are the 50 that you should target this month. This your low hanging fruit. That’s the part that I’m excited about getting going.

Andrew: I see, but there was a period there where you were saying maybe this is just not going to work out.

Rob: Yes. It’s been about the last five months since Google said they’re going to 100%, and that was the dark day after spending all this time. Eventually I got up to 25. It hit 32 grand a month. Between 25 and 30 grand a month and I was like, gosh all that work. It’s such a shame.

Andrew: That’s how high it got and then where is it now?

Rob: It’s about, I think it will do about 19 or 20 this month. That’s the thing, it’s still offering some value it’s just not able to parse all the Google keywords anymore and I’m open to get it back there.

Andrew: So do you think RAND’s going to go back to SEOMoz.com? It’s not too late. He still owns the domain.

Rob: Yeah right. SEO is having some issues. It’s contact marketing now. That’s where it shifted to.

Andrew: That’s what they’re doing. That’s where it’s all gone to. I’m looking at your traffic sources and I see Ambassador.com is sending you traffic. Makes sense right? You’re using them as a way of rewarding people who send you traffic. Oh. Sorry, I’m looking at GetDrip’s traffic. Anyway, what is app.the foundation.com? What are they doing with Drip?

Rob: So you know what the foundation is. Of course you do. It’s Dane Maxwell’s membership community. I don’t know to be honest, but they must have included Drip as a potential email marketing tool inside one of their lessons, but I haven’t seen. I just know I saw the same traffic.

Andrew: And it’s not something that you’ve done.

Rob: No.

Andrew: Okay. Where did the idea come from for Drip. You’re now in a mode of trying to figure out something else. Why did you come up with that?

Rob: So Drip is to solve a pain point that I had of email marketing software that doesn’t cater so well to online businesses. It doesn’t cater to startups that want analytics and Sass companies. You see the email marketing market splintering as there are new upstarts like Vero [sp] and there’s the old [sp] like Mail Chimp and Constant Contact, and there’s even Infusionsoft with marketing automation. I wanted to try to bridge all of that and build something really well for Sass startups and info marketers.

Andrew: You know I’ve seen people doing something similar to what you’re doing with Qualaroo. You know Qualaroo lets you pop up a box that asks a question, or you can pop up a box that asks a question what’s your email address, and then if you zap there you can pick up that email address and send it over to AWeber or whatever you’re using, Infusionsoft and rest.

I thought maybe that’s what you were doing. I thought you said I see people doing this or I see it as a possibility for having this box pop up and ask for an email address, but no one’s doing it with a focus on that, that why I can do it and that’s not.

Rob: Well, yeah that’s probably the more succinct answer. Basically with HitTail I wanted to collect emails on every page on the site and there’s no easy way to do that, and so we built a custom version of what is now Drip and it gave us a pop up on every page, started to collect emails really fast, and grew the list faster than anything that I had done and then those people converted really well.

At that point I realized there’s potential here for a product, for something that does this really easily, sends the emails, puts together the mini course, the whole deal and that was where the idea for Drip started, but then of course I validated that it was actually a need for other people rather than just solving my own problem.

Andrew: Does it bother you that instead of saying Drip, you keep saying Drip and I keep saying GetDrip?

Rob: No it doesn’t. Drip.com is not available, right? So I have GetDrip.com. It doesn’t bother me because it makes it so people actually may remember the domain name.

Andrew: Yeah. I want them to make sure that they go over and take a look at GetDrip and not just Google Drip. I don’t know what they’re going to get if they just Google Drip.

Rob: I think I rank number three now for the keyword Drip.

Andrew: Really? Let me see.

Rob: Isn’t that crazy? Yeah. Do an anonymous.

Andrew: Yeah. I’m doing it right now, because I think I’ve searched and clicked on your site so much that it… Yes.

Rob: Am I three?

Andrew: Number one is I love Drip, things to do in Orlando.

Rob: [??]

Andrew: I don’t know what they’re… Number two, dividend reinvestment program, Drip. And, number three, Drip equals more leads plus more customers. Yeah, way to go.

Rob: Yeah. I haven’t even… What’s funny is in the old days I would’ve architected that, built links, and done all types of crazy SEO. I haven’t done any of that for this site. I’ve just gone out and marketed.

Andrew: How cool is this? I’m looking at where you’re getting traffic to HitTail. Of course, organic Google searches are big. One of the big search terms is long tail keywords. That’s sending you traffic. Another one is long tail keyword tool. This is really good. Are you confused yet? I don’t know why that.

Rob: That was a… Yeah, I don’t know.

Andrew: You don’t know?

Rob: I have no idea. It was probably an old… You know, there are probably 700 or 800 blog posts in Hit Tail.

Andrew: Okay.

Rob: So, there are all types of funky terms it ranks for.

Andrew: Keyword tool long tail. It’s nice to see that it’s all working for you. You’re actually getting good traffic from search engines. When it comes to Drip I want to tell the audience that Rob recorded a program with me where he taught how he got Drip to… How much in sales did you get it to?

Rob: Drip, first month it did $7,000 in…

Andrew: First month $7,000…

Rob: …recurrent revenue.

Andrew: …and it wasn’t just hey what do you know I did well because I did a post and someone picked it up on Digg, or Hacker News, or whatever. It was a real process that Rob has gone through and used and taught other people for I guess it’s years now. What, two, three years at least?

Rob: Yeah, four.

Andrew: Four years. So, I asked Rob as a favor to me and to my audience to come in and teach it. He broke down his process. We looked at it all. We went through it. He explained how anyone can use it.

If you have anything, you’re launching a new blog, a new web app, a new anything and you want to launch it and do it profitably, catch it. It’s going to be on mixergypremium.com.

Sign up. We keep adding good stuff from good people like Rob, experienced people.

Notice, by the way Rob, that at that point I said Drip. I didn’t say GetDrip. I wanted them to focus on mixergypremium.com.

Rob: Nice.

Andrew: I’ve become a professional. I’m more aware of my words. Mixergy Premium, I guarantee it.

Now, you’ve done it. How long did it take you to make your money back? The $30,000 that you paid that you were panicked one evening, how long did it take you to get that back?

Rob: It was about… Well, there was another 20,000 I invested.

Andrew: Right.

Rob: So, I was up to about 50. I’m trying to think. It was definitely less than a year.

Andrew: Okay.

Rob: It may have been ten months. It was in that range.

Andrew: All right. Well, way to go.

Rob: Yeah. It was good. To be honest, even if Google were to tear this thing to the ground it’s done quite well. It’s fun to Drip, and it’s given me a war chest to kind of do that. It’s been a good ride, but my hope is that I can still… Expectation is that I can still, you know, bring it back to its former glory.

Andrew: It’s interesting, actually, that there’s all this data now coming at you. I saw a look in your eyes that said yes maybe this is it, this is so powerful.

Rob: I like this, yeah. Timing sucks a little bit. I wish that… I don’t like working on two things at once, and that’s kind of what I’m doing right now. It’s HitTail plus Drip, and that’s not the ideal situation.

Andrew: I’m trying to think of where we should send people. Check them both out, actually. Just go and check out, just for the design, but my sense is anyone who’s listening to this is looking for a new way to collect email addresses. Because that’s a way to really start a bond with the audience.

So, I suggest that they go to getdrip.com. Take a look when you’re there. Bottom right corner, that’s probably where it’ll be, but Rob changes things up. So, look around.

You’ll see a popup that comes up. Actually, popup isn’t even the word. You need to coin a new word, a new term for this.

Rob: I know. Widget. Toaster widget. We’ve tried a bunch, and nothing works. Sometimes we’ll say oh it’s like your little chat widget, your Olark thing. People seem to know what that is.

Andrew: Yeah. It’s like that, except here’s what it says, ‘Capture more leads, convert more customers, a free seven day crash course.’ So, if I enter my email address there then I’m getting a crash course. If you want one of those for your site go to getdrip.com.

Rob, thank you so much for doing this.

Rob: Yeah, thanks for having me. It was great.

Andrew: Thank you all for being a part of it. Bye, guys.

Sponsored by

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  • Aj Sorenson

    Awesome interview. Classic Mixergy throwback!

  • OmarSayyed

    Rob is one of the most most sincere people I know in the industry. He really walks the walk. Always love hearing his interviews. Anybody who wants to connect with Rob, I would encourage you to check out http://www.microconf.com/.

    Actually Andrew, you are the one who connected us via Mixergy no less.

  • http://www.JiansNet.com/ Jian

    Rob’s interview is always my favorite, plus his startupfortherestofus podcast, is among the best, kudos!

    BTW, Andrew and Rob, I think the reason people came through appsumo but didn’t order the year long package is because people want to just test the water first. So they would go with one month instead of a full year.

  • Chris Mason

    big fan of rob’s. thx for having him back on andrew.

  • Edoard Perez

    Just listened to this interview, and had to go back and listen the previous ones, including the master class. Some really good thing pointed out, about asking your market first and using a landing page, before building a product.

    Also funny to see Andrew’s bad hair day in the previous interview. I usually have the same problem everyday, but its getting better as I age…….. it must be the damn hair loss….

    @Rob, from this interview, did you have to sign any confidentiality agreement before getting financials, or was it just based on your business track record? If you were just starting your first business, what would you have done to show or prove your trustworthiness to her, and not come up as someone who may be just wasting their time?

    Also thanks for the great tips on building market anticipation before a product’s launch (from the course).

    @Andrew, just wondering how do you currently keep track/organize all the notes and ideas (from your excessive note taking, as you call it) of all your interviews? I always try to take notes from each interview I listen, but have not found a good system or tagging scheme, to easily find or retrieve specific key ideas from all those notes when needed.

    Thanks!

  • Rob Walling

    Thanks Omar, really appreciate it :-)

  • Rob Walling

    Good point. Thanks for chiming in (and for the kind words).

  • Rob Walling

    >>@Rob, from this interview, did you have to sign any confidentiality agreement before getting financials, or was it just based on your business track record?

    I don’t remember for HitTail specifically. But I have signed NDAs several times before people will release stats. That’s not a bad move on their part, IMO. When I acquire, though, I do add a clause in the purchase contract that specifies whether we can discuss the details in public after the purchase.

    >>If you were just starting your first business, what would you have done to show or prove your trustworthiness to her, and not come up as someone who may be just wasting their time?

    Craft a solid email with a link to your Twitter & LinkedIn profiles, and your blog if you have one. Anything that shows you are not some anonymous online lurker and have skin in the game. I would also consider testing the waters with a smaller acquisition or two, so that you can say “I have acquired apps before.” That shows you have some experience making it happen.

    >>Also thanks for the great tips on building market anticipation before a product’s launch (from the course).

    Sure thing! Glad they helped.

  • Christina

    This was such a great interview for me. I can’t believe that I haven’t seen Rob in the other interviews or other spaces. Am now off to watch/read everything about you Rob. The SaaS space really intrigues me and this was a great way to see other ways to enter into the space.
    Thanks so much for taking the time to do this interview!

  • Alain Marine

    Rob is great and guys you should check out his course,it’s amazing.

  • Cordie Walker

    Been listening to Startups for the Rest of us for awhile but never heard this story. This was incredibly useful. Thanks for having Rob on Andrew. And Rob thanks for all you do.

  • Rob Walling

    Awesome; glad to hear it was helpful. Some of my other favorite interviews have been my previous Mixergy interview, and appearances on GrowthHackerTV and TechZing. Google will show you the way to those last two.

  • Rob Walling

    Thanks Alain!

  • Rob Walling

    I had a great time sharing the story, and thanks to Andrew for doing a good job helping me tell it.

  • Cordie Walker

    Quick question: Do you think you’d ever purchase again after starting Drip from scratch?

  • Rob Walling

    I think I may only purchase again after building Drip :-)

    Seriously, Drip is fun, but it’s been so much time both in terms of hours worked and the months that have passed. Buying has allowed me to skip the seemingly endless validating/building/initial traction phase.

    I haven’t made up my mind, but all things being equal, I’d prefer to find an app with a bit of traction, acquire it, and scale it up, rather than starting again from nothing.

  • Cordie Walker

    I was guessing the opposite.

    Shows the value in validating an idea and getting the initial traction.

  • Rex Kramer, Danger Seeker

    Great interview, Andrew. As a listener of Startups for the Rest of Us, since the beginning, I can’t recommend enough how much people should check out his other various podcast appearances. He and Mike truly go above and beyond with great help and advice. He’s quite the (awesome) contrast from the previous, polarizing, Mixergy episode’s guest.

  • Foonatic

    Drip is one of our case studies in The Foundation. That why all the traffic.

  • http://mrirlandes.com David A

    This interview couldn´t have come at a better time. Currently negotiating with an owner of an existing website to purchase and grow. It´s profitable but he can´t continue with the business for personal reasons. Thanks a lot.

  • Pingback: Episode 172 | 12 Signs You Should Continue Investing In Your Product | Startups For the Rest of Us()

  • Michael

    SO GREAT to see this interview here. I love the Startups For The Rest of Us podcast and all it has to offer. Keep up the great work and thanks for inspiring so many of us to follow your path. I am a Middle School teacher moving into the startup arena now and your podcast helps keep me going.

  • http://mixergy.com Andrew Warner

    For interview notes, I use evernote.

    I put all my guest research notes into a research notebook.

    Andrea, April, AnneMarie & Jeremy all contribute to those notes, either directly or by creating Google docs, which I incorporate into my notes.

  • http://alexisgrant.com/ Alexis Grant

    This is an awesome email, Andrew and Rob. I often find your entrepreneurs offer a few things that are applicable to what I’m doing, but this ENTIRE interview was perfect for my business. Thanks!

  • Arie at Mixergy

    That’s great–glad it was so helpful

  • Rob Walling

    Awesome; glad to hear it!

  • Rob Walling

    You rock, sir. Thanks for the kind words.