Why did a company that raised over a quarter million dollars shut down?
Sam Rosen is the founder of Speakergram. His vision was to create a site which simplified the way speakers are hired to appear at events.
It was accelerated by 500 Startups, the high-profile investment firm. It was backed by the founders of Reddit and Seamless Web others. And it got top speakers from the tech community to list themselves on the site.
So why did Speakergram shut down?
Sam Rosen, Speakergram
Sam Rosen is the cofounder of Scaffold, which builds the foundation for identity and reputation on the web. (Launching Soon)
Andrew: Three messages before I fire you up with another great interview. Well the first one is this. You ever have a user who comes to your website maybe five, six times and never buys? Well, what if you can get that user incentivized enough to buy? That’s where Spring Metrics new product called Smart Coupons comes in. It detects that a user’s been coming to your website without buying and pops up an ad like this. A coupon that incentivizes them to buy.
What about all that traffic that you’re getting from Organic search? How about converting some of those people into paid buyers? Spring Metrics Smart coupon will bounce up at just the right time to just the right person and give them that nudge to make them close the sales. And it’s all as I’ve said from Spring Metrics, a company I’ve been using for a long time. I know one of the founders very well. Spring Metrics is what I use to help me increase my sales here at Mixergy. If you go to Springmetrics.com/Mixergy they’re going to give you a free 30-day trial and they’ll know that you came through me and that they won’t want to disappoint me or my customers, so they’ll treat you extra well.
Second message is from Scott Edward Walker. I’ve been telling you forever that he’s the entrepreneur’s lawyer. And the reason he’s the entrepreneurs lawyer is because he’s in the community. He’s on the websites that you’re visiting. He’s probably the person that those websites turn to for advice on the law when they want a lawyer to tell their audience about the law as it applies to startups. He’s on Quora he’s everywhere. And most of all he’s on WalkerCorporateLaw.com. I’ve known him way before he bought his first ad on Mixergy and I’ve been friends with him for years and years and I recommend going to Walker Corporate Law.
Finally, Shopify.com. You probably if you’re listening to this, my guess is you can probably blindfoldedly, blindfoldedly? Yeah, sure. Blindfoldedly you can create an online store for anyone of your friends or anyone of your customers. So, why send them to Shopify? Well, for a few reasons. First, Shopify stores will be beautiful; will be easy for anyone who you send to to create a store. They increase sales. And to me as someone who sells online, that matters more than any of it. Beautiful stores, great. A store that increases sales is ideal and that’s why I recommend to you and anyone that asks you for advice to go to Shopify.com.
All right, I’ve yapped enough, let’s start giving you one of my great programs here on Mixergy. Let’s get started.
Hey there everyone, my name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and the place where as of today almost 700 entrepreneurs have come on to talk about how they built their businesses. And with each interview, as you know, I have one focus and try to stick to that focus really tightly, and my focus for this interview is this question. Why did a company that raised over a quarter million dollars shut down?
Sam Rosen is the founder of SpeakerGram. His vision was to create a site which simplified the way speakers were hired to appear at events. It was accelerated by 500 startups, the high profile investment firm, it was backed by the founders of Reddit and Seamlessweb among others. And it got top speakers from the tech community, including me, to list themselves on the site. So why did SpeakerGram shut down? Sam, welcome.
Sam: Hey, how are you?
Andrew: Good, good to have you on here. So, I want to take this interview in a very narrative form, but let’s skip. But I also want to make sure that the audience knows that they’re going to learn what you learned through this process and that they’re going to get a lot of useful information. So why don’t we talk about one of the things you learned first and then we’ll go back and get into the story. One of the things that you told me before the interview started was that you wished you talked to your competitors. Which of your competitors when you were running SpeakerGram wanted to talk to you, and how did you come to the realization afterwards that you should have had a conversation with them?
Sam: So I think what happened first and I came to this realization was, when we sent out the email to our users about shutting down, several of the competitors that we knew about but just never had a conversation with emailed us saying, hey, you know, great job in the fight. Like we really enjoyed you guys and respected you. And one of them actually was interested in talking to us about acquiring the assets. Right. Nothing ever went anywhere because we’re focused on our new company. But it was interesting to hear and I, at least, met with the CEO.
And what I realized was these people had always been on our radar. There were a few companies that had always been on our radar. And it would have benefited us so much more to talk to them earlier rather than later. Even if we had a friendly conversation and said you know what, we’re going to compete literally head to head. And in startups, things change so much that you rarely do wind up competing exactly on the same thing. I think we would have learned a lot more about the industry because they might have been a little bit more experienced. And at the same time we could have given them a lot more feedback as kind of being new eyes. That’s what was going on.
So, everyone has more to benefit than to lose. And they’re not sitting in the same office as you, working on exactly the same thing. And I think that’s the other point, it that in start-ups things change so frequently that you’re better off just talking to them and finding out what they’re thinking. Rather than sitting in a vacuum and not talking to them at all.
Andrew: Could you have worked together with your competitors if you had a conversation with them?
Sam: I think that there were some competitors that we could have worked with and others that it would have been to close to doing a similar model. Right, so let’s say SpeakerGram, for example, if you choose to do a listing model, like Homeaway.com does for their homeowners. For instance, a percentage of a transaction the way Air B and B does it, they are inherently different business models but they compete.
Sam: So, there are certain competitors that we could have shared insights with because maybe they were doing an SEO on how to find a speaker for social media which wasn’t really our business. Ours was more focused on being, like, a productivity tool for the speakers and for the corporations. Right, so, we actually could have benefited, at least, from talking to people who were doing something different but still in the industry.
Andrew: So, the idea could have been that, or one way for you guys to work together, tell me if I’m wrong, is if you got a speaker like me to be on Speaker Gram you could have worked with one of the other speaker-rep services and said, hey you guys can rap Andrew, we’ll just facilitate that interaction. But, you guys can tell, you guys can offer him to your customers too.
Sam: Yeah, it’s almost like, you guys are SEO experts, and we’ve got Andrew on our platform and he trusts us. Why don’t we work together to have you guys help us get Andrew more engagements through SEO. Right, because that’s one of the things that we, and we’ll talk about this more, we didn’t really want to do SEO, which is a big part of this industry. Getting people ranked highly for social media, or for entrepreneurship, or for tech, and going outside of the tech community for a lot of other things. Working as an organizer I would pipe in, event speaker so-and-so. So we could have absolutely benefited from talking to the experts in like SEO. Something that we didn’t want to do, I mean join together, I think it would have been an interesting conversation.
Andrew: And you didn’t want to talk to them, why?
Sam: I don’t think it was a, not want to, and that was the problem. It was, we kind of had this, like, don’t look in the rear view mirror, you’re doing what you do. You know your business better than anyone else. So there’s no point in looking around, kind of, at your competitors. And that’s something that entrepreneurs talk about a lot of time. Especially very seasoned serial entrepreneurs. It’s like, I didn’t care what my competitors were doing, I was building my business. At the same time, like, if we potentially could have been sitting in the seat together and actually going faster, it might have been beneficial to everyone.
Sam: So, with our new company, we had conversations really early on when we heard other people in the space, we wanted to talk to them immediately. Because, especially when entrepreneurs jump on top of an opportunity, maybe there’s a recent change in technology, maybe there’s a recent change in laws, it’s early for everyone. And it’s somewhat of a land grab, but it’s still early enough for people to have to figure out what’s going on. And, who better to talk to than someone who thinks like you.
Andrew: OK, so, one of the big lessons, talk to you competitors and you explain what you would have gotten out of those conversations. And you also explain why you didn’t do it. Hopefully people in the audience when not talking to their competitors will identify with why you didn’t do it and say, well maybe we need to take a similar step. As you said, you’re not out, you’ve got a whole new business, the backers are still there, you’re in the home of one your advisers, Sam, the founder of Red Beacon, you’re sitting there, so that you can do this interview.
So you’re clearly, you’re doing well and you’ve got this new business, let’s just quickly tell people what this new business is so that they could understand it, that set-back isn’t the end. And then I want to go, as I said earlier, into a narrative and I want more tactics, more ideas, like, I want to hear through your words why talking to competitors would have helped and, actually, why similar understandings would have helped you back them. But, what’s the new business, what’s it called?
Sam: It’s called Scaffold. The URL is www.getscaffold.com. And really whenever you talk about, you know, pro tips to entrepreneurs, when you talk about something, start with why. People care about why. So, when you have to meet someone on the internet, in person, face to face, for the very first time, it’s a very troubling, uncertain, fearful experience. Right? On-line dating has this pr blitz about meeting that person in public. It says you might not use your real email address or you’ll use a different phone number.
There’s all these kind of hacks that people have to do. But, these really cool services , like Air B and B, and Get Around, and Relay Rides, and Task Rabbit, are putting us in much more intimate settings. But, still, how do you know if the person that you’re working with is who they say they are? And we put a lot of responsibility in these market places to, kind of make sure that things don’t go wrong. But, bad things have happened.
So Scaffold is a really simple way for marketplaces to verify their users. We combine offline and online checks and types of verification, like, address verification, SMS, email address. We actually send a post card to the house, potentially, even a background check, for services, like tutoring sites, or babysitting sites, that a parent wants to have considered checked and vice verse. The sitter’s parents want to have the parents of the child checked to make sure that they’re okay too. Or driving record in case they’re driving their kids somewhere.
And we provide these services right now, we’ll start providing it through an API and then go back to these services and say, hey if you want a quick, easy, way to say, is this Sam Rosin, does he have a verified address, yes. And we walk the user through a process. And at the end, if they pass our verification, we just put a badge back on their profile saying this was verified by Scaffold.
Andrew: You know what, I had a need for this product yesterday. Since I had Bo from Zarly to do an interview, I told him I was going to use someone from Zarly to go and do my grocery shopping at Trader Joe’s for me and I hired someone, I paid them $40 do go do my grocery shopping and I know that, you know, since I paid through Zarly, if the guy doesn’t, sorry, if he doesn’t deliver, I get my $40 back. But I was thinking, what if the guy is a killer, and he’s coming to my house. What if I’m a cheat and I just made this guy go out and pay, I don’t know how much, for groceries and I don’t pay him. Or, I somehow don’t like the groceries he got and he gets stiffed. There’s no way for him to know who he’s dealing with here, it’s just a name on Zarly, in fact, I don’t even think Zarly gave me the guy’s name.
Sam: Absolutely, and if you guys remember that crazy, like I remember watching as a kid, that nut-so on TLC or something. Where the pizza delivery guy got that bomb put around his neck. Do you remember this?
Sam: So this guy, like, got, he was delivering pizza. He went to this crazy person’s house. And they put a bomb around his neck, and he was out in the street, like, please don’t shoot me. Police, help me get this bomb off. And the cops are standing there with rifles and all of a sudden he blew up. And he had this note on his chest, like, please don’t hurt me, someone did this to me, and no one believed him until, literally, it blew him up.
Andrew: I like that you’re telling these stories it’s already a huge, this freaks people out enough that they’re going to want to sign up for getscaffold.com or have that integrated with their services, with their sites.
Sam: It’s not just on the person ordering the pizza, it’s the person delivering the pizza, too. When you have to facilitate these peer-to-peer transactions, we want to make sure that people are who they say they are, that they are credible people, that they’re not going to, you know, rip you off, or, you know, take…
Andrew: Alright, fair enough, I get the point of it, and I want to come back and see, and see how transitioning from how Speaker Gram led to this. Let’s go back and understand what happened at Speaker Gram and learn from your experience. So, where did the idea come from?
Sam: Okay, so, I went to the University of Virginia and so did one of our, now investors, Alexis O’henian, who co-founded Reddit. And. I tried to reach out to Alexis, about 7 o r8 times, we had twitter linked to him, email saying, hey I run this local meet-up for UVA entrepreneur’s, can you come chat with us? And after, like, 8 emails I was, like, there’s got to be a better way to get in touch with, like, important people. Specifically for us finding someone to [??]. Because, my first problem was who do I have speak. Is it Katie Barber, is it Katie Couric, like, who do I get and I found Alexis. I didn’t know he was a UVA grad. So, Linked In was providing me that type of, way to find the people. And at the same time I really had no better means than to get in touch with them then through these noisy, noisy channels.
So, I said to myself, I want to create a channel that’s not noisy, that’s structured, that isn’t unstructured, now, I know you’re a big three sentences guy who’d want it short and sweet. So, the short and sweet version of getting a speaking request. There’s billions of dollars in the U.S. About 7 or 8 percent of the total conference budget is spent on speaker’s fees alone. So, billions and billions of dollars are spent on speaker fees, the people that manage them. And, that wasn’t, kind of, my focus. My focus was saying, like, meaning when I started, I wasn’t thinking about how big it could be. It was just, is it an easier way to get in touch with someone, like yourself, or like an Alexis O’henian, who really values it. That’s where it started and we, kind of, just went from there.
Andrew: OK, what did you do to build it? What’s the first thing that you built?
Sam: Yeah, so I was, I’m non-technical, I’m sales, I kind of built up my sales experience, my whole life. My father was a salesman, my grandfather was a pharmaceutical salesman for Barbados, I’ve got sales in my blood. And, really, in start-ups there’s two things, building and selling. So, I said to myself at one point. I had left my job at one point, I was doing, like bumming around, trying to figure out exactly what I did, I worked on my first project. Again, hired someone else to do it, it wasn’t this local event’s thing, like, every entrepreneur make that same mistake.
So, I said, I can do two things, I can try to take six months and teach myself to code to build that hack, like Vin Vacanti did from Yipit, right? Or I can sit here and say if I know exactly what I want, I can get just enough of a product, and I know I can sell better than anyone. So I actually paid a developer that I met through the New York Tech Community. It was a pretty decent amount of money.
Andrew: How much?
Sam: It was 15 grand, so …
Andrew: Fifteen grand to build a first version?
Sam: Yes. So I put up my own money, right? I was, like, “You know what? I’m committed.” But I had done a ton of custom developments, and before I was there, I was out there selling the Balsamiq Mockups, right? And I was so broke because I was putting all of this money into the prototype that I actually emailed Peldi from Balsamiq and was, like, “Look, I’m a do-gooder. I do this work for the Gift of Life Bone Marrow Foundation, which is an organization I do some volunteer work with. I promise I’m going to do good in the world, and I will buy your license when I can. Can I get a free license?” because they had this [??] thing. And he was, like, “Absolutely. I’m willing to help you out.” I actually emailed him about a month and a half ago and bought a license. I said, “Can I donate a license?” He said, “Just buy another one for it.” And I did.
So, I was out there selling before we even had the product, meaning, like, “Would you use this?” and I think that’s another mistake a lot of people make, is not getting out there and talking to people. People are happy to talk to you.
Andrew: So you created these mock-ups in Balsamic. You took it out in person? You just printed it out on a piece of paper and you said, “Would you use this?”
Sam: I met Alexis and was, like, “Would you use this?” I got him to meet me finally. I was, like, “Would you use something like this? And here are the …” And I showed him websites, and he’s, like, “Yes, absolutely.” And you will need a few people because at this early stage, a lot of it is hunch-driven. You got to go on what your gut says, and that’s something my co-founder and I have kind of stuck to the whole time. If your gut says, “This is something people will use. This is something I would use,” then you should build it. And even if it’s something that just satisfies your need to build something, you have more to gain from building it than less. I mean what’s 15 grand in the grand scheme of things?
Andrew: What do you get for 15 grand? What does the product look like?
Sam: So for 15 grand, I got a full working prototype, and it was actually … well, it was an MVP. It was the minimum viable product that I needed people to say … I shouldn’t say “prototype.” There is a difference. People could actually use this. They could sign up. And I actually didn’t do a lot of development. I didn’t do any development really after kind of that first contractor. He did a few minor things like apps and, like, one more feature that people wanted, which were team pages, so allowing a company to put on their speakers. We did, like, one main more thing before I actually got funded by Dave. It was just literally enough of a product that people could sign up, start receiving requests, and we got, like … we actually … our biggest one was we landed Foursquare, and people were, like, “How did you land Foursquare?” And this is where I think when they say luck equals preparation and opportunity.
That first startup that I worked on, we were on a panel in August of 2009 with then-60,000-user Foursquare with Dennis Crowley. It was about a month and a half before they raised money. And I met Dennis and I went back to Dennis. I emailed him. Here we are, like almost a year, six months to a year later, and I said, “Dennis, if you remember me, I was on this panel with you. Would you mind putting me in touch with the PR person? I’m sure this could save a lot of time.” And there you go. That happened. He just…
Andrew: And that’s it. You got Dennis Crowley, the founder of Foursquare, to be listed as a speaker on SpeakerGram for anyone in the world to go and potentially hire him through SpeakerGram.
Sam: More so than that, we got this entire company, right? So his company was receiving about 800 emails a month just for speaking engagements, and they had to have an external PR agency manage these inflows. I mean it’s so much. And they want to maintain a very high level of customer service, if you will. If you received 800 emails from customers, you’d respond to every one, so why would PR be any different? And they had to hire an external agency. So our thought was if this tool helps them be more productive, then why wouldn’t they want to use it for the entire organization?
Andrew: So if you had this product that was working so well, why did you get a co-founder at all?
Sam: Well, there is a difference between having, and I think this is a mistake that non-technical people make, is that I’m going to find someone to just build it, right? More than … this is about execution, right? Entrepreneurship is about execution. Everyone has ideas. But it’s not just about, like, building something, right? It’s about kind of this entire product vision.
So when I was accepted at 500 Startups, and we can talk a little bit about that too, I was looking for someone to join me who was a founder and someone who had founder DNA who was willing to go through the ups and the downs. Because someone who just builds something once might not be there when you’re saying to yourselves, “Are we going to just not take salaries anymore?” They might not be willing to sleep on the couches when you’re taking a trip to San Francisco.
You want someone who is in it with you ’til the end, right? Not jumping off the ship when you crash it into the coast, into the lifeboat while everyone is off and still on board. And I think that’s kind of a big mistake people make, is they think someone who can just build it, that’s the thing that they want. What they really want is someone who has a vision like we do and really has the guts to do a startup.
Andrew: So, how did you find your co-founder?
Sam: So I moved out to San Francisco about a year ago today, actually, Feb. 8, 2011, and I got off the plane and was this really emotional wreck for me because I was … I moved within a week. It was very difficult on me and my girlfriend. We’re still together, thankfully. And I moved out here on, like, the middle of, like, a Wednesday, right? So my friend from college, my best friend took me down to Mountain View on the Caltrain. I had no idea how to get there. And I got to a place at my friends who were doing YC [SP].
And I stayed at their couch, and I’m literally looking at, like, my calendar, these big things that come up like tomorrow and the next day. And I said to myself, “I got to get out there.” And there was an event being thrown by zozi, the email company that does kind of like DailyDeals for activities, stuff like that. They were throwing an event all the way out in the Presidio in San Francisco at the House of Air, which, I am, like, “How the heck am I going to get there?”
So here it is, like, a two-hour train ride after just taking off this cross-country flight and hour-train ride down. I’m, like, “I need to meet people.” I just, like…
Andrew: Right away, within hours of getting there, you say, “I’ve got to meet people here?”
Sam: So literally within hours of getting there, I’m, like, back on a two-hour train all the way up, taxi to the Presidio, right? And I get there and I just started talking to people, like, “Well, how long have you been in San Francisco?” I’m, like, “Four hours.” And I wound up meeting this guy who had worked at Google, and I told him about my project and what was going on. He said, “That sounds really cool.” And he said, “Is it just you?” and I said, “Yes.” He said, “Well, my friend who I used to work at Google with is actually working on something similar.” And he was kind of, like, “Oh wow. It’s his project.” And he’s, like, “I think he is working on something similar. He is technical. He is a very smart guy. He is by himself. You guys should talk.”
And it just went off from there, and we had initial conversation, and we kind of just grew it from there. We spent a lot of time over, like, three or four weeks. And like I said, at a certain point, you have to have a hunch because you got to move quickly. And it was, like, “I like you.” He likes me, right? “I have this skill set. You have a completely different skill set. We mesh perfectly. Let’s take the jump together. Let’s, as they say, jump off the cliff and build the airplane on the way down.”
Andrew: How did you get $15,000 to build the first version?
Sam: You would be surprised how quickly, if you have a job, you can save money by, like, being kind of thrifty, right? So I would make my lunches everyday. I eat very healthy. I’m a vegetarian so I don’t like to go out and get tons of food. But I would make my lunches. I saved up. I put money away.
One of the things that I would never do is touch my assets, like my liquid assets, like 401(k) or stuff like that. The penalties just aren’t worth it. And then…
Andrew: But you saved, from working, $15,000?
Sam: I was in banking so it was easy to kind of put away some money after they’re paying you a pretty decent salary.
Andrew: Oh, so this is after college? You graduated 2007, right?
Sam: I graduated in 2007, and I worked at Citigroup, Citibank for two years.
Andrew: I see. OK.
Sam: So, during the worst financial time, yes, I could still put away money. Actually, the three months after I graduated college, I lived on my grandmother’s porch in Brooklyn. It was, like, because I wanted to save up enough money. Then I was thinking about buying a place. I’m glad I didn’t [??] with the market. But I was, like, I need to save up money because really, it just opens up so many more opportunities if you have this nest egg that you can tap into and not feel bad about doing it.
Andrew: Right. So far, you are doing everything right. Saving enough money. You’re building your first version instead of waiting for a magical co-founder to come and do all the heavy lifting for you. You end up in Silicon Valley where everything is happening. You don’t just sit on your butt there and say, “I’m here so some bit of luck needs to hit me.” You get up right away. You go to events. You meet your co-founder. And then, do you feel at this point actually, by the way, that any seeds of this setback with SpeakerGram were sown?
Sam: No, not at all.
Andrew: So far, everything is good?
Sam: I mean everything all along is always good. Yes, I really felt like I earned my co-founder. I didn’t find a co-founder. I think there is a big difference. Finding someone to join you is one thing. I felt like I proved that I can sell, that I have an idea for a product, that I executed, that I raised money on it before. And the biggest question that a technical person has is, “What’s this guy going to do while I’m building? Are they going to sit around and twiddle their thumbs or whatever while I’m building everything, and they are just, like, ‘Well, I sell. I’m the ideas guy’?” I felt like I really had said, OK…
Andrew: You did earn it.
Sam: I showed I can do my part, and I’m going to get someone who believes just as much in me as I believe in him or her.
Andrew: OK, you even meet Dave McClure, the founder of 500 Startups, one of the big-name investors in all of tech. How do you connect with him and how do you end up at 500 Startups?
Sam: So, at the end of January, well February 1, January 31st, February 1, I go to the General Assembly in New York City, and I was meeting with Dave [Lipsin SP], who is a scout for Angels. Angels is a service that every entrepreneur should sign up for. It makes it so much easier to get in touch with topnotch investment, especially is you have great product. The guys that run it really are great guys.
So, I wanted to learn more about Angels, and I went to meet with [??] Lipsin, who is what they call a scout. He helps companies get on board and perfect their profile and things like that. And at the time they were mostly just emailing people’s profiles, ‘cuz the whole website wasn’t built yet.
Andrew: The idea was they were going to find great startups for their Angel investors to invest in and they would email their Angel investors about these startups.
Andrew: Okay, so they meet you and what happened?
Sam: I meet with Dave and somebody says, you know, my investor is coming next week, which is like a few days before the end of the month. And I wound up getting really, really, really sick. I mean, like deathly sick at the end of that week. And I said to myself, I got to get up, get my butt out of bed, and get to the General Assembly on Tuesday night. So, I get there and there was a dinner [??] and 500 Startups that I was not invited to, right? So I said to Dave Lipsin, I know Dave McClure. Would you mind introducing me? So, here comes Dave, right, and I didn’t know anything about this guy other than he’s like a cursing pirate, right? And I had no idea about him and he walks in the door and immediately just gets swarmed.
So, here I am, not feeling well, sniffling, I want to go home. It’s late; I want to crawl into my bed. And I’m like, you know what, you’re already here. You got to talk to the guy. So, as I’m about to approach him and ask him to use SpeakerGram just as a speaker, not to even invest in me, and that was all that was on my mind–not even about investment. He gets swarmed again, and it’s about a minute before he has to go in for dinner, and I go up to him and say, ‘Look, Dave, I really want to talk to about using my service, SpeakerGram.’
I give him about a 20-second pitch about what we do and how we could help him. I said, ‘I’m not invited to this dinner, and I would love to kind of chat with you tomorrow. I’m working a consulting gig to help pay the bills.’ Because at that point, I was out of money. And, ‘Is there any chance that I can meet with you tomorrow?’ He said, ‘You’re not invited to the dinner? Well, it’s my dinner, so why don’t you just come in?’ And here I am, it’s your dinner, sweet. I go to the dinner and there were a ton of people around. It was awesome. I was like, wow, this guy’s cool.
After the dinner he asked me, ‘So, tell me about what you’re doing.’ Because, again, I went up to him and said, ‘Look, I can’t meet you tomorrow, ‘cuz I’m working as a 9 to 6 consulting gig to pay the bills.’ So I whip open my laptop right there at General Assembly, and I just walk him through the [plot]. There was no pitch, no slides, there’s no this is that. And Dave looked at the product and he was like, ‘I’ve used this, and he starts talking about all these terms, like convertible notes, and things I had no understanding of. So, I’m like, he said are you raising a deal, you come in at this term, I should come here. The next investors come here; the next person should come after this. And literally, it was like I’m sick, and was just babbling in my head. I go home and I tell some friends, right? I met Dave McClure, he talked about this.
What does this mean? What does that mean? And the next day I was super excited, right? I called out of work the next day ‘cuz I was that sick. And I see Dave McClure calling me on my cell phone. I’m like, oh, crap. Someone who I told got back to Dave somehow that I was talking about him potentially being invested. I think the whole thing’s messed up.
He said, ‘Look, Sam, I just got back from San Francisco airport, I’m driving home, and I can’t stop thinking about you. I love the hustle. If you can move here and start the 500 Startups Program, we’ve got one more spot for you. It just started about two weeks ago. I asked, ‘When’s the program?’ He’s like, ‘Well, you need to move here like this week.’ And I’m like, ‘Sorry?’ It was Wednesday, and he was literally like, ‘You got to accept by tomorrow, Thursday.’
And there were a bunch of things going on in my life. So I was like, I can’t accept [??] Monday. So, can I have five days to just think about this? I wound up staying up a whole night with my family talking to them, and gave him an answer by Friday, actually, saying I’ll be out there, and packed up my stuff and went to 500 Startups a week later.
Andrew: So, that’s why you ended up in California. I see.
Andrew: Even though you had this 500 Startups incubator program to be a part of you still when you landed said, “It’s time for me to go out and meet people.”
Sam: Yeah, I mean, and we were the first batch of 500 Startups, right, so I didn’t expect this to be like a YC or TechStars. I had no idea. And frankly, Dave took a huge risk on me and some of my other batch mates, and as we did on him. Because he had this brand that he was building and I really believe, and I think that’s one of the things that my advice to other entrepreneurs is, really believe in, like, your investor because that’s one of the main things. Because you have to trust them as much as they trust you.
Andrew: How much money did [??] put in?
Sam: It comes with a standard 50K investment, kind of like, TechStars and YC where they give you…
Andrew: 15 or 50?
Andrew: 5-0, yeah. TechStars will do closer to 15.
Sam: Yeah, so Dave’s belief is…the companies that he invests in are sometimes a little bit further along, they’re generating revenue, right? And that, really, 15,000 was too little. Dave did this 50 before Start Fund, before the money that now comes with TechStars. So his approach was, “You need more money because you don’t need to worry about how you’re going to get through the summer or through the winter with too little money, right?” And very often, now, these entrepreneurs have $100,000-150,000 from their [??] start fund or through TechStars and their network that says, “This is so you don’t have to worry so much.” And the emphasis is not so much, on, like, “We need to get the demo days, so we can raise money as soon as possible.”
Andrew: All right. And all this is because you hustled your way into an event that you didn’t belong in, and you stuck around and showed a product that was fully built and made sense to Dave.
Sam: Yeah, I mean, I’ve hustled my way into a lot of things. And like one of the stories I wanted to share with you was my story with Tim Ferriss. So it was [??] that January and I’m walking to the Ace Hotel, just kind of like on a whim to go, I think, to go meet someone who is a friend of mine, an associate in venture capital, and I’m walking into the Ace Hotel because I had, like, 45 minutes to my next meeting around the corner, so I really just wanted to pop and do something else. And out of the Ace Hotel walks Tim Ferriss. And I’m, like, “That’s Tim Ferriss. He’s an awesome speaker. The guy gets paid, like, tens and tens of thousands of dollars to speak, who better to talk to?”
So, I go up to Tim and I’m, like, “You’re Tim Ferriss?” And he was, like, “I am.” And I said, “Do you have, like, ten seconds, really I want to tell you about a product”? And he looks at me, like, “No.” And I’m, like, “Well, where are you going?” And he’s, like, “I’m going to Columbus Circle.” And I’m thinking to myself, “I’m in Manhattan, I’m down in the 20’s, Columbus Circle is up in the 60’s, it’s 40 blocks in the middle of the afternoon, we’re hitting traffic and I’m, like, looking at my watch, like, “I can’t be late for my next meeting.” I said to him literally in an instant, like, “I’ll pay for the cab.” And he’s, like, “Sorry?” And I was, like, “C’mon, I’ll pay for the cab.” Can I get in? I’ll pay for the cab.”
And he’s almost baffled at this point, like, “A random dude just came up to him on the street and was, like, I’ll pay for your cab if I can talk to you.” Now Tim Ferriss who charges probably $50,000-$80,000 for an hour of his time, I got him for about 13 bucks. For, like, 30 minutes, right? Because, luckily for me and unfortunately for him while promoting his book, we hit traffic along the way. And I got the chance to sit in a cab and talk to Tim Ferriss about my idea, but more importantly, it was, like, I didn’t start off by jumping in that cab and talking about SpeakerGram and how it can help him. That really was…you know, 97% of sales is building a relationship; 3% is actually selling what you’re selling.
So, I waited to the very end to talk about SpeakerGram. I just wanted to hear his story, right? He talked about the book, his first book. And essentially that was the type of productivity hack that Tim probably liked and why he let me jump in the cab in the first place, right? So, I think…
Andrew: Did he end up partnering with you in any way? Listing himself as a speaker on SpeakerGram, investing? What did he do?
Sam: So at the end he gave me his assistant’s contact information about how we can work together. He gave me insight about why he would use it, why he wouldn’t use it. It was still pretty early on for us, and we really hadn’t [??] our own startups, we didn’t have a huge user base at the time. But absolutely, I think, you know, when someone who admires that type of, kind of, boldness, would absolutely help out [??] in any way.
Andrew: So, the biggest thing you got out of it, though, was not money, not him listing on a site, but the relationship and also he gave you some advice. He told you why people might not use it. What was that feedback?
Sam: Well, actually, one more thing was when I saw him later at South by Southwest, actually at your event, that you were throwing, I ran into Tim and I think I was standing next to Gary Vaynerchuk. And he says, “Do you know Sam Rosen?” And Tim’s, like, “I know Sam. This guy paid for my cab.” So Tim meets thousands and thousands of people, remembered me for, like, this one crazy thing that I did months and months earlier. Tim’s feedback was mostly, I think, around branding. Like, Tim’s a really…Tim’s, like, an awesome self-promoter, right? Like, that’s his thing.
And at the time, like, I hadn’t focused much on branding the site, right? Like, it worked, but it didn’t look great. So his advice was really [??], marketing, branding, how you position yourself. And then also, in terms of placement, how is this better than email? I hire an assistant, right? So there was some type of an educating process, as well. Ultimately, the feedback that he gave me was very, very useful. But like everything else you have to take some user feedback and say, well, they might be different, like everyone is Tim Ferris. So the things that Tim wanted, how can we actually help . . .
Andrew: What did he want?
Sam: If I recall correctly, like, it might have been more stuff, for example, related to how he receives paid travel. So, professionally speaking, people get paid, or reimbursed for their hotel, for their flight, in addition to getting paid a fee. Right? So it was more around, again if I remember that long ago, around the accounting of certain travel expenses, or other things that are built in. So rather than me building a line item that doesn’t affect 95% of my users, right, I took his advice and say he’s the top one or 5% of the service who needs this, but it’s not enough of a feature that affects everyone else.
Andrew: All right, we’ll get back to Gary Vaynerchuk. But you’re now at 500 startups; you’re starting to get feedback. Tell me about some of the negative feedback, some of the push back that you’re getting on your idea. Because you know, so far everything here looks rosy. And if everything looks rosy and you end up with a business that you have to shut down then we’re not really giving a good understanding of what happened, where the problems were as you were building it. But you did get feedback. You did get pushback. Give me some of the meaningful pushback that you had early on that maybe you could have listened to.
Sam: Again, it goes with people’s hunches, right? And I think that’s one [??] of entrepreneurship. We had people, whether they were speakers or potential investors say, ‘We don’t think this idea is big enough.’ Plenty of people have heard that this idea isn’t big enough. [??] had heard that this idea isn’t big enough. Square has heard this idea isn’t big enough, right?
Andrew: So when you’re hearing this idea isn’t big enough you’re not taking it in, you’re saying, wait. What about all these other guys?
Sam: I’m saying I’m the next Air BnB, right? Like, if you don’t see it, great. The Fred Wilson keeping the cereal box in his office because someone at one time said, ‘I don’t think this idea is big enough.’ It’s that they just didn’t understand.
Andrew: The cereal box from Air BnB. That’s the way that they made money, by selling cereal in order to fund Air BnB. And he kept it because he turned them down and he needed some kind of reminder of how great they were, and never let those kinds of opportunities pass.
Sam: [??] that don’t turn someone down maybe initially on just ‘this idea isn’t big enough,’ or these guys aren’t smart enough. It’s like, there are other things there, and give it a real look. So, were there any early signs? We got the 500 startups and we’re in the program and I think the first thing I started realizing is I underestimated a little bit about customer acquisition, how I’m going to sell people. What we were selling was a somewhat technical product to non-technical people, right, especially on the way we imagine making money by selling [??] for corporations. And the other thing is we were actually in talks with one of the major social networks about running a speaker bureau for them, because they sent out a lot of people. And we spent, like, a good six weeks talking to them. And it was all great stuff, knowing features, talking to them.
And literally, at that time we realized this is just for one big customer, and how much are they going to pay us? It wasn’t like they were paying us $50,000 a month. We realized this won’t scale fast enough, and we’ll run out of money if we keep trying to build these types of things for these big customers. And one of the lessons learned there is don’t go after the headline. Don’t go after the person with their name in lights. And this is a social network that every professional has heard of. So, don’t go after the big clients that you think are just going to like it. They’re the ones you want to put on your pitch list.
Go after some of the small Bs and Cs and say, hey, what do you think, because one, they have more time for you; two, they probably have less requirements? And that’s one of the things I’ve carried away from that whole thing was, we spent a lot of time trying to build that and then ultimately the relationship didn’t work out.
Andrew: So, six weeks at a critical time was spent going back and forth on features and development ideas for a big social–I don’t know who they are, but let’s suppose that they’re LinkedIn-like, that they’re similar to LinkedIn. So, it’s that kind of network, and you’re saying, it’s too much time, and you might want to pass up those big deals early on when you’re trying to figure out your model. Because you can’t scale that, and if they’re not paying you a lot of money, and it sounds like they weren’t, then it’s definitely not worth it.
Sam: Right. And part of it is, it’s not just don’t talk about yourself. Think about the person that you’re dealing with. They have a boss, they have co-workers, and they have people that report to them. And if you let them down, right, you make them look bad, too. So as an entrepreneur you can’t selfishly build a product just for you. You’re like, you’re building something for someone else, and someone else has their things too. So when we decided like this is, just it’s not going to scale for us. Like there was a huge kind of like weight on our shoulders which is how do we communicate this to the other person who’s graciously spent so much time with us, right? It’s like, it was almost one of the hardest things to do. Like, that was hard.
Andrew: How do you do it?
Sam: You know I think you have to be completely open and honest and do it as ….
Andrew: You just went, you said, we’ve got to go be open with them, we can’t keep going any longer.
Sam: Well, we had a phone call, right. It was like I couldn’t get there for whatever reason. I think we were up in San Francisco. But scheduling wasn’t working out. I didn’t email, it wasn’t a blast email. It was like, you know this person, hey, like you’ve been awesome and you’ve helped us so much, some things have come up can we have a phone call? And just getting on the phone and when someone can hear it in your voice like how much it means to you that they spent that time talking to you or building that relationship. And explain what’s going on, I mean, they’ll understand. Right. And doing it as early as possible rather than later is kind of like the best way to do it too.
Andrew: You told me before the interview in our pre-interview that you had a conversation with a venture capitalist who from his ski house called you and he said to you, look this idea just isn’t big enough for us but I like you, I like your hustle, I’d like to work with you at some point in the future so let’s keep the relationship going. But it’s not big enough. You thought that it was a bigger opportunity than he thought. What was your analysis of it that made you think that this was a bigger opportunity then other people were seeing?
Sam: So we, there’s a way to look at it which is the transactional volume that goes through, right? And marketplaces always have to worry about other people going, you know people going out of (?). And that wasn’t our main focus, right? It was more about how fast we could get there. And when someone says this isn’t big enough, like, a lot of the VCs are highly arbitrary rather than highly selective, right? It’s like they have a thesis and if it doesn’t fit their thesis they don’t invest. So for us looking at like how big is this opportunity, we saw the numbers, we saw the users like on the platform. We kind of tested a little bit of the willingness to pay. But he’s a VC, right? He wasn’t, and he wasn’t Dave McClure.
And Dave believes in revenue generating businesses that an acquirer can buy between 50 and 150 million dollars and the entrepreneur has a much greater chance of success. He’s a typical, he’s like a standard I guess, well not standard but he’s a more traditional early stage investor that’s going for big home runs. And that’s what makes his portfolio. And if this is a double, that’s great for the entrepreneur. The entrepreneur walks away with a 50 million dollar exit. That’s awesome, but that’s not for him. And understanding what investor you talk to, or the right investor for you is the key to the deal, right? I can’t hear you Andrew. I can’t hear you.
Andrew: There we go. Yeah. So I understand him saying it’s not big enough. But you thought it was, so, it wasn’t hundreds of millions of dollars that you were trying to create in value in this company. It was maybe 50 million. When you analyzed it before you closed it down, what made you say we’re not going to even hit 50 million valuation on this business?
Sam: It wasn’t that. It wasn’t about how much money we will or will not make. It was the passion about what we want to keep doing.
Andrew: So you shut it down because you lost passion?
Sam: Yeah, absolutely.
Andrew: I’ve got to. You know what, I’ve got to push back on this. Because you have people’s money on the line, you have business that you’ve built up. Just because you’re not feeling that passionate about it, it’s okay to shut it down?
Sam: Well it’s not a matter of shut it down. There was, it’s a few things. First off it’s passion. It’s like, is it the real opportunity? When we shut down we wrote a letter to our investors. We called all of them and said we have to have these conversations, right? And first of it was scale, right? How quickly we could get to people. Like how quickly we could have this sales cycle. And it was a longer sales cycle then we expected. But the number one thing that investors at an early, early stage invest in is you. They invest in the person. Like they believe in the idea but they’ve seen pivots, they’ve seen restarts, they’ve seen people give them money back. Right. It happens all the time. The number one thing that they’re betting on is that the person that they put money into is going to do in everyone’s best interest.
Andrew: But they’re going to stick with the idea. If the business is still there, if the model still makes sense, if the customers still exist, and everything else is still the same, they want you to stick with the idea. You want to stick with the idea, don’t you? At least for a few years.
Sam: Honestly, that’s in my opinion that’s 5% of the investment. 95% of the investment…
Andrew: So what happens when with Getscaffold.com you say, you know what I’m not that into verifying. Verifying is you know, it’s a business but it’s not an exciting business. Who wants to go to a party and say I’m the guy who verifies people on Air B&B. Do you drop it then?
Sam: Well, first off we’re building something much bigger which is the ability to understand, is this person trustworthy on the internet, which is a concept that’s been around for a long time and we think it’s right now..
Andrew: No, I understand that that’s the way you look at it when you’re excited about the idea and passionate. No, here’s the thing. There’s more than just a lack of passion that made you say, “It’s time to step away”. There’s some analysis that made you say, “We’re not going to scale fast enough. We’re not going to get a big” … and that’s what I want to get at because this is the kind of understanding that we all need to do on our business. This is the kind of analysis that we all need to go through with our businesses.
You went through it. Show me what you did. How did you say: this isn’t going to scale, this isn’t going to be big enough. It’s not going to be exciting enough to change the world and get enough business.
Sam: Right. So, that experience where we were selling to a corporation for a long time made us realize, OK, if we do that for how many organizations before we hit profitability, we’re going to run out of time.
Andrew: And your profitability was based on partnering up with companies like that.
Sam: At the same time if we have to build a solution that scales a lot easier, that’s a little bit like lighter weight for organizations, kind of like 37Signals where anyone can sign up for their products, and they don’t have to do a lot of marketing for it. But it’s a completely different sales process that’s kind of not my specialty. I’m great at building relationships with a lot of higher level corporations or people in general, kinder of higher profile.
But you have to look, as I said, on things on a whole, and you have to honestly be true to yourself and your team. So, I looked at my co-founder in the eye and we had this long conversation about “Look, this is not [??]. This is the other part of this business, and it’s not like it’s flip on a light. It’s not like you turn on a light switch, and all of a sudden you want to do something else. It’s a process that you kind of go through. It’s not just the ups and the downs of startups, realizing more about the market.
Our pivot was still in peer to peer service. Is it something that we only realize by spending that amount of time?
Andrew: So, it seems like one of your key assumptions was that these big partnerships was where the revenue was and where the real value was. As soon as you went out to build one of those partnerships, you realize it’s not going to be the way that we expected. It’s not going to be as much revenue as we expected. It’s not going to be as short a sales cycle as we expected and other expectations just weren’t there.
At that point, you said that it doesn’t make sense. If one of our key assumptions don’t hold true, we need to find a new set of assumptions that we’re going to build this business on, or we’re going to need to find a new business. Is that right?
Sam: Yeah. And there were a few other things which was I under estimated how much Twitter has democratized access to important people. Let’s say I @tweeted you, “Hey, Andrew Warner, I want you to speak at my so and so event.” You might not get that, but if I tweet it enough times, you’ll finally find it, and if you’re interested in the event, you’ll probably click on the link and, at least, check it out.
What we realized is that…Shaquille O’Neal, you could tweet him to pay 100 grand to show up at my birthday party, and someone from his team will probably respond to it and find out if it’s real. Twitter has really democratized access, whereas before, you’d have to go through his agent. You’d have to find out who his agent was, his team, his publicist. Twitter has really made it easy to get in touch with important people who all have it.
Andrew: All right. So, you under estimated how easy it is to get to people, and Twitter is one example of that. You also under estimated how easy it was to build relationships with the big networks that control the purse strings. You under estimated how much revenue was at the end of those purse strings. What else, what other assumptions did you make that you didn’t realize you made until you started a business?
Frankly, this isn’t me criticizing you. This is me trying to understand what happened there because you know what? It seems like this is the right way to come at a business. I remember when I took Entrepreneurship at NYU. One of the things they told us to do was sit down with a pen and paper and write down all your key assumptions. Well, you know what? I can only be so aware of what my assumptions are. It’s not until I actually get into the real world that I realize “Oh wait, I’m assuming that it’s harder to reach people than it is”, And now that I have a real product, I realize oh, people are tweeting at potential speakers. People have back doors to reach them.
Sam: I think it’s exactly that. It’s like some of these things you don’t know them before you actually build it which is why, sitting with a pen and paper, assuming all the things, you don’t know what’s going to come up. You have no idea what the market will want, what the market won’t want. So, by building it and getting it out there you start to realize these assumptions.
Andrew: Conversations help beforehand, but products help even more. And that’s why people create minimum viable products. Should you have created smaller, simpler version? Instead of the $15,000 product, should you have created a $2,000 WordPress site with a guy in the Philippines who was going to take all the entries and make them into blog posts on WordPress, which would have cost you less than $5,000?
Sam: In the lean startup idea, that movement barely existed when I first started. I get what you’re saying, test some things. My testing … is this worth putting in my money because that’s ultimately at the end of the day the biggest question. Is it worth putting in time and money, and really it’s time. You can always make more money, but you can’t make more time.
So, can you quickly determine with an experiment: is this worth it? My experiment was saying, “Hey, Alexis, is this a problem for you?” This was my experiment. My experiment was talking to 50 to 100 of these people who… I emailed Jason Calacanis. I said, “How many speaking engagements are you guys getting a year in your email?”
Andrew: You said…I’m sorry. You emailed Jason Calacanis, the founder of Mahalo and the Launch Conference, and you asked him what?
Sam: How many speaking requests are you getting a year in your email? I emailed this to a bunch of different ones. I emailed him, Peter Shankman, Barry Vee. I was tweeting them. That was me putting together my data. It was like, if they’re getting 400, 500 requests a year, this has got to be a problem for a bunch of other people as well. One of the things that we didn’t realize, and again we would know until we looked at the market was that a lot of people who signed up for our service were doing it for SEO because they wanted their name to be ranked higher in Google because we had someone like Dennis Crowley on the platform.
They wanted to market themselves as Social Media Sandy from Kentucky. She’s a social media expert. It’s like, she wants to get a paid speaking engagement. Someone like me, it’s like, I would never listen. Who is Social Media Sandy? It’s not Dennis Crowley who knows about social media, and that’s one of the things we didn’t see. There were a lot of people that the product they wanted was not the product that we wanted to build.
Andrew: SEO, you said that you realized the value of SEO after you built the business, but it just wasn’t you. Why not?
Sam: I think for helping people raise up through the ranks of Google in terms of search, I really believe in [??]. I really believe that it’s one of the most powerful social networks. In fact, the team there has done an excellent job, and I think that’s going to happen. That type of search and discovery is going to happen within that platform as opposed to Google. But, also it’s like it was anything core to our team. That skill set was not something that my co-founder had; it’s not something that I had. So, to sit there and try to learn how to be better at SEO, you could either have hired someone or not focused on building a product for SEO.
Andrew: I see.
Sam: I’ve had some conversations like, for example, my mentor, Sam, from Redbeacon. At Redbeacon, you type in local service professional in New York City, and they rank pretty highly. They do paid stuff. All these companies do paid stuff as well, but they ranked really highly because they had people who were good at that stuff, and that just wasn’t our skill set. So, you also have to focus on opportunity that you know that you’re better than other people of doing, if not the best.
Andrew: All right. I want to just pack as many of these lessons as possible before we end the interview here. So, we talked about assumptions. We talked about talking to competitors. No, we didn’t. We didn’t talk about the go, no go decision. This is a pretty big decision to make. I don’t want to just pass over the fact that you decided to shut down a business that you invested $15,000 of your money in, your reputation in, that you built up connections around.
That’s not an easy decision to make, and I want to know how you did it. But go deep and really think about how you got to make that decision, and I’ll tell you why. Because I remember when I had the first version of Mixergy, and it wasn’t working. I spent months and thousands of dollars after I should have known that it was time to shut it down. I just kept wasting that because I couldn’t bring myself to do it. I know that there are people in the audience who are in the same situation where they know they need to shut down but they’re not going to.
So, talk about the analysis that you went through and maybe, you’ll give us a framework for understanding how we can go through this.
Sam: I got out the pen and paper and I was like, what is important? What are the challenges that these marketplaces face? What is it that I just faced? What we realized was again, this problem with reputation, and we thought this collaborative consumption peer-to-peer marketplaces were just going to be huge. And speaking frankly, it was just another peer-to-peer marketplace, but what’s the common theme that we all need. We really focused on reputation and trust.
So, we went back to the drawing board and now that I had a co-founder is one of the smartest guys that I know and we could build something really, really quickly, instead of going out and spending a lot of money or spending time, we built a hack. So, we hacked up my Air B&B profile, my GetAround profile, my eBay profile, and we put it on a static web page. So, it literally took my co-founder 20 minutes to build, and I went on Craigslist and posted an ad saying, “I’m selling a bike”. And then, at the same time … That’s it. I’m selling a bike. Here’s a photo. You can see other trust reviews of me here and put a link.
We A/B tested how many people clicked on the link versus how many people responded to my ad. Bicycles in New York City are something that are stolen often, right? So, trusting that this is not a stolen bicycle is something that is important to people who want to buy a used bike or, at least, some people who care that it’s not stolen. And we were surprised that people responded more when there was a link showing what it was. So that doesn’t mean that’s the eventual clock you build. It just means it’s enough of a gut decision not only is this what I’m thinking of but other people are reacting to it positively. And at the end of the day your customers don’t really know what they want, this is a classic Henry Ford quote like build a faster horse. There’s something there that makes them feel they can’t really describe it to you and it’s your job to figure it out.
So, we had enough of an inclination that said there’s something here and obviously we know that this concept is a big idea so let’s dial it a little bit. And we basically rewrote a two page document of your thoughts of where this was going and that founded a basis for our communication with, at the time, our investors. We say we really want to focus on this new concept and we’d love you to be on board and if you’re not we understand and we’re prepared to make accommodations for that but we want to move in this direction.
Andrew: I see, and so you got this new direction and the reason you were able to shut down is because you tested this new idea on Craigslist you got positive feedback. Alright this is why we need to shut down.
Sam: Yeah, you have to be very data driven. It’s like…..
Andrew: But shouldn’t there be more analysis then that. Because, frankly, this test is good but it’s not the most scientific of tests and it’s not necessarily proof that there’s revenue in this, that you can partner up with sites like Craigslist, one of the bigger assumptions is, will you get sites like Craigslist’s, sites like Arabian BP use you and that doesn’t test for that. Another assumption is will people be willing to connect their sites into a new service which is a pretty big assumption. Not of that are tested so it can’t be the only reason why you decided to move over. There must have been some analysis that said SpeakerGram is not a business that we need to be in. What was that analysis? How did you go through that?
Sam: Well, like I said, the common theme here all along is you have to on the gut. And my gut was telling me that Speakergram, it’s a good business but it’s not the opportunity we want to focus on at this time. It could be a great business but where I had to go based on the user feedback was not exactly the pipe we wanted because we didn’t all the assumptions when we first started and what exactly we had to build. So when we realized this is not our slow set, we’re not the team to do it for this opportunity
And when we were more informed I was saying to myself, is this something I’m going to waitlist or work 18 hours on love versus at the same time saying here’s this thing that I am really excited about. As long as you can, at the end of the day, hang your hat up and say I did my best and I was the one made this decision, I think you better off. And someone will respect if you come to them and say I can’t work my butt off for 18 hours a day because ultimately at the end of the day there putting money into you as an entrepreneur to succeed and to figure it out.
Andrew: See I don’t get that. And maybe this isn’t the right conversation to have to help me figure it out. I’ve heard the way you’re thinking about things and I know that it’s worked for other people, I’ve heard from others and I’ve seen it at work, to me it just doesn’t make sense because when I look at some of the happiest things, the best things I’ve accomplished in my life, you look at Bradford and Reed, even in the early days when things were going well, my heart wasn’t in it. I said “online greeting cards? I don’t like sending greeting cards; I can’t stand it when people email me a greeting card. I don’t want the waste of time why am I even in this base?” You spend maybe a month feeling that way and maybe another month trying to get yourself out of it and eventually your right back in saying “This is a wonderful business where there are numbers that I care about, if not the actual product, and I can sell the product and I love selling” and then you find your passion, same thing in relationships.
You’ve been in a long-term relationship, how many frustrating weeks or day or weeks, at least, with your girlfriend where you said “look at all these great girls here in San Francisco. Look at all these great girls here in New York. I could be dating other people and why am I with this other person if she doesn’t get me fully?” You have those moments, it’s getting over them that really get you to the good part where you really invest in each other and get to know each other.
Sam: I think, specifically, in personal relationships, you say to yourself “is this the person I want to spend the rest of my life with,” right? You can’t say “is this the company that I want to build forever,” or for a certain period of time. I understand everyone has the ups and downs weather its companies, personal relationships, that all happens. Who in this room has not checked out other girls in San Francisco? No, I understand what you’re saying . . .
Andrew: You know what, I fully own the fact that I’m bringing this all from my own experiences, but yeah I’ve been with girls who at times I said, hey maybe I should be dating other people. Maybe I, maybe even more fun and getting through that and being with the person helped me discover the good parts of that person.
Sam: That said, there’s also the factor of when you build a team around you, right? You have to have your team on board. Like, fully 100% and there’s other stake holders here it’s not just myself, it’s what does my co-founder want too? Like, what are our, in some pieces it are customers telling you they hate you? They hate your product? Are they telling you they love you? So it’s looking at everything on a whole. Are your investors, if you have them, saying “Hey, we understand these challenges, what’s going on here? This is not what we bid on?”
So, there is a whole bunch of factors so it’s not just me. Literally if you were in a relationship and you had a dog, you would think, or a child, you would think what are we going to do that’s best for the dog or the child, not just ourselves. I think as, like, I don’t really call myself CEO but as, like, the non technical business CEO person it’s saying you’re chief psychologist and you have to realize what’s best for everyone and for everyone the best decision was to move forward. You’re investors or our investors didn’t put money into us so we could build like a small company. They want a return and they want as big a return as possible.
Andrew: See, that part I understand if your analyzing from that point of view and I want to understand how you knew this was going to get then return that they were looking for especially if you walked into saying this isn’t going to be hundreds of thousands of dollars exist, it’s going to be $50,000, but that part I totally get. The part about passion, I’m writing it down even though it, here’s the thing, I have to learn to listen in these interviews, as good as I am at listening, I have to just keep, I have to keep working on being a better listener. I wrote this down because I think it’s important to remember, to be honest with you it’s not something I relate to in my mind I would say, speaking of the example with the dog, I had a do which for months, maybe even a year was just a big pain in the butt but as he warmed up and relaxed a little bit, he finally stopped being a mental case that he was and now he’s a terrific dog.
I feel sometimes in life you have to stick through those tough periods in order to get to the good periods where you know the real value is but I can’t shut myself off to the point that you’re making just because it disagrees with my view of the world. I get it and I’m, I wrote it down and I want to leave the audience with you’re point-of-view not mine, which is hey, if you’re feeling this isn’t the long-term vision, if you’re feeling this isn’t the long term love and you’ve got something else that seems to work, in your case it’s a scaffold, consider moving over to it, that’s another big take away that you took from it.
So, here’s what I got, talk to competitors, analyze your key assumptions, think about how big you want it to go and also think about how passionate you are about the business and all those things are what you’ve learned and as a result of that you’re no longer at SpeakerGram you’re now at Getscaffold.com where you offer reputation services, where you offer reputation services not for individuals but for companies to make available to their end-users, true?
Sam: Yeah, to verify their users, yeah.
Andrew: Okay. Tell me the Gary Vaynerchuk, I’m moving along because I know you don’t have much time here today, tell me the Gary Vaynerchuk story. How did you meet him? What happened with him?
Sam: So Gary’s obviously a really well known personality in New York and I met him a few times prior to this experience that I have, but Gary’s a guy that I love because he’s an immigrant, he talks about it all the time, he’s just, he says he’s not the smartest guy, he never wanted to go to college, he went there to make his parents happy and he’s a guy that I truly admire his passion for what he does. By the way, he did shut a service down that we wasn’t passionate about anymore but that actually made him famous. So . . .
Andrew: Which one?
Sam: Daily (?) but he doesn’t do video content anymore, but it made him famous. So we were out in out in Mt. View and we were racing around and I just love Gary at the time it was still SpeakerGram and he’s like who better to have than a public voice like Gary Vaynerchuk. And I’d been trying to get some time with him and he’s so difficult to get a hold of, I’m sure you can imagine right? And I see on Twitter that Gary is in like Los Altos or wherever it was, again I barely know California, but he was somewhere like 15 – 20 minutes away at a book signing. I didn’t have a car, I couldn’t get there on the train, so I literally yelled out on the floor at (?), I need a car, right? Gary Vaynerchuk is at a book signing in ten minutes. So my friend (?) throws me the keys to his car, like don’t crash it, I’m like, I won’t, I jump in the car, I floor it to the book signing. I have no idea where I am, right.
I get into the book signing, I kind of come in late, there’s all these, they’re like, you have to buy a book. I’m like oh my god, I’ve already got two of these things, I’m like what? So I buy another book just for the heck of it. And Gary was promoting his latest book. So, I see him there; he does a talk, he acknowledges me, like with a wink, a nod, right? And I’m like okay, here it is. I go up to Gary at the end of the line, ‘cuz there’s this huge line for him to sign the books. I’m really the last person in line, and I’m standing there with something very important in my hands.
So, Gary’s sitting there signing books, ‘Hi, Gary.’ ‘What’s your name?’ ‘Nice to meet you; thanks for coming.’ Right? And he’s doing this like with 50 or 100 people. I’m the last person. I’m getting nervous; my palms are sweaty. Gary looks up. I’m like the one person before, and I’m getting ready and I throw down, essentially, the convertible [??] that we were raising on. And I say, ‘I heard you were in the mood for signing things,’ and just smile. And he like gets up and starts reading and like before he saw me he just saw what I threw down and what I said. And he just looks up and he’s like man, ‘I love your hustle; like I just love it. I can’t believe you did this.’ I just, basically, grab the card, went over there. I was like, ‘I heard you were in the mood for signing things.’
Now it wasn’t a random occurrence. Gary knew who I was, right? And I wasn’t just Joe Schmoe at a book signing. But it was the fact that I was like, I’m not taking no for an answer because he had given me like a soft [??] before, like, no I’m not really doing stuff like that. So, he’s not an investor. But it did spark more of a conversation. We talked a lot more. He went through and I think I learned a lot more about Gary and Gary learned a lot more about me in those conversations. But, it was that type of thing like, yes, I’m sorry, no, sometimes yes at a later date.
And my take is I will never take no for an answer. It’s just like you fall six times, you stand up seven, right? And that’s like the key to what I think makes someone like what they describe as a hustler. Having that mantra, like just not accepting failure. If you ever go to Gattaca, the movie Gattaca, Sam Hawke, I forget the other one, they’re swimming out and the one brother says to [??] brother, he says like, ‘How do you do this? How can you beat me every single time?’ And he’s like, ‘Because I don’t think about going back. It’s only about the trip out there. I don’t think about how I’m going to get back; I’m just going to get back.’
And that’s the type of mindset that I’ve always had. It’s like, we have to be delusionally optimistic about the opportunity you’re approaching, and in some cases, don’t think about how you’re going to make it back. You’re probably going to be okay. You’re not going to [??]. Right?
Andrew: One of the things I admire the hell out of, with you is your hustle, the hustle stories are just inspiring as hell. The way that you met Dave McClure; the way that you got into Taxi with Tim Ferris, with Gary Vaynerchuk, you just told that story. I could listen to those stories all frickin’ day, and frankly, maybe that’s the way I should have gone with this interview instead of staying what went wrong with SpeakerGram, I just should have said, here’s a guy who’s a hustler. We’re going to spend an hour just listening to a bunch of stories like this and you’re going to be inspired by them. And you’re hopefully going to be moved to have your own hustle story, too. Do you have a moment? I want to ask you one more question and do a plug first.
Sam: Yeah. Absolutely.
Andrew: All right. The plug, of course, is for Mixergy Premium. If you go to Mixergy.com/premium not only will you get all hundreds of interviews in every single format that we have available, you’ll also get me grilling entrepreneurs, sometimes a little bit too hard in the courses. And in the courses what happens is I get on with an entrepreneur who does something incredibly well. I say, ‘Turn on your computer and show us how you do it.’ Anyway, I got this email from Gabriel [Machurette SP]. He is in Australia. He is Internetninja.com.au. And here’s what he says, he goes, ‘Andrew, I’ve made over $100,000 more last year thanks to you.’ So I congratulate him, and of course I dig in deeper, even in email I dig in deeper and I say, ‘What did you do specifically.’
And here’s what he said: ‘Glad you asked me.’ Very Australian. He goes, ‘I applied the following. I use a technique from Liam Martin of The Time Doctor.’ He did a course. He said, he did a course on outsourcing, and so Gabriel says, ‘I used what I learned from Liam and I set up my own team in the Philippines and now have five people. And then I took the tools that Mark Brooks had about organizing your team and I combined that with my focus system to have a really sharp team of five people who were helping me.’
And then he goes, ‘But mainly the money came from the Nicholas Holland course about teaching me how to close sales. You know, they don’t teach you in school how to close sales. You obviously benefited from the ability to work up the courage to do it. And Nicholas Holland had a whole process for how to do that. Gabriel learned that and used it. I know you get this s**t all the time, but your site has changed my business.’ And then he asked me for my address so he can send me gift. Gabriel, no gift necessary.
The fact that you’re letting me use you to promote Mixergy Premium is gift enough. But, the point I’m trying to make is, it’s all about specific tactics in those courses, and my goal is to deliver real results like Gabriel got. So, if you’re an entrepreneur, and you want to learn from other entrepreneurs the way that Gabriel did, go to Mixergy.com/premium. All right, here’s the thing Sam, here’s the last question that I have for you. Was I being a dick in this interview? Was I pushing a little much? Be open with me.
Sam: No. No. So I think my feedback is, you’re a great interviewer. You push on the right buttons and you don’t make me feel uncomfortable because just as much as its an exercise for you and your listeners, it’s an exercise for me, right? And at the end of the day if you think about that conversation that Fred Wilson must have had with Brian Chesky, there’s people who sometimes get it and there’s people who sometimes don’t and like you said, maybe I should’ve asked you about all the things that you did right and all the sales and all the hustle things that you did rather than the things that went wrong, because like I said a few times in the interview, there’s so much more to entrepreneurship than just an idea. I know something that raised a few million bucks on ideas.
He’s an experienced entrepreneur, raised a few millions bucks and without a product, no users, because people are betting on the fact that he’s going to do it again. That he’s going to take it to the finish line again. And you’re reputation in this business is what precedes you, right? So someone that has a reputation that stands as a hustler, right? And introducing me to all the investors on demo day as the New York Hustler, like those are the things that people are going to remember and as I carry that to my next business, nothings going to change about me. And like I’m saying, if you cross the finish line, it’s like the, it’s more the jockey than it is the horse.
Andrew: I mean, even that the fact that you’re at Sam’s home. I’ve asked, I believe I’ve asked Sam a couple of times to do an interview here on Mixergy, he has said no. I haven’t even been able to get him to do an interview, you are in his home. The guy’s incredibly successful in this business, right?
Sam: I mean, Sam is one of the most impressive young guns in the valley. Just everything that happened with Red Beacon, like the recent acquisition by the Home Depot, you know he is a force. He is really an inspiration to me.
Andrew: Are you sitting across from him at breakfast? Does he even eat breakfast?
Sam: Uh, he gave me a cup of coffee. He’s left. He had a breakfast meeting, so I think he does eat breakfast.
Andrew: He does. Do you have a like a meal with him at his place? Are you sitting around and having dinner together?
Sam: Oh, I mean, I’m staying at his place for two or three nights, we’re going to hang out and get pizza or something on Saturday, you know, we used to do four hour body, four hour body diet together so we’ll grab some cheap day food. So, yeah, I mean, we…
Andrew: Do you feel the need when you’re having private conversations with Sam to just keep grabbing as much information as possible or are you comfortable enough to just hang? You’re comfortable to just hang.
Sam: See, and that’s the thing. I feel that I offer up enough to Sam back that he offers up to me. What’s funny is he is an official mentor for my start-up right, but he has questions for me all the time. And like, what do you think of this? Did you see that? And it’s, I’m not getting feedback from him in like, in anyway that he wouldn’t be giving it to me. And like I said, 97% of sales is building the relationship, 3% is actually asking the question. If the car dealer says, you know, what do I have to do today to get you to drive home in this car.
So, in life if you’re using people as a means to your own end, they’ll see through it, they’ll see right through it. Sam is my friend, Sam is my mentor, he’s kind of like a life coach and he’s really an inspiration to me, regardless if I didn’t have any company, to be associated with someone you can say, you know, this is someone who’s going places and this is someone that I get a lot of positive energy from and a lot of inspiration from, you should really kind of get as close to them as you can and it’s a lot easier to get that person than you would think.
One quick story, my friend Matt Merilis, friend/acquaintance from New York and now he’s out here working on a company called Humanoid/Speakerdecks. He cold Facebook messaged Mark Randolf. Most people don’t know who Mark is. Mark is the co-founder and original CEO of Netflix. I mean, he cold Facebooked the guy and said I want to me you, blah, blah, blah, I’ve moved out here and now he’s one of his, I think his board member, one of his life coaches and marketed this very detailed post about how to get that. So it’s like, people are more accessible if you just want to be there and say, you know, I want to build this relationship, I really admire you and you show them that you’re worth their time. They’ll be there for you.
Andrew: See, now I want to have a whole conversation just on that.
Sam: Let’s schedule another Mixergy on that.
Andrew: Do you have, what would it be, it would be about ten hustler stories in you?
Sam: I’ve probably got more than that, I mean, I can go back for a long time. I mean this is a long sequence of events, right, it’s like the butterfly effect, there’s no one particular thing. Again, at the end of the day my mantra is just don’t take no for an answer. Someone, and the other thing is you’ll never know who you run into again, right, so, do things, like don’t take no for an answer, don’t embarrass yourself, but remember that like, there’s such a thing as karma, like it will come back to you so treat people the way you want to be treated and don’t use them as a means to your own end. Don’t be the sleazy sales guy that just wants to rip you off on this one car and not worry about, you know send you home with less money in your pocket. You want to be the sales person that has that person coming back to you for the rest of their life.
Andrew: All right, I’m going to consider this the first of many conversations and interviews that we’ll have. Thanks for coming on here and having the conversation with me. Thanks for being open about SpeakerGram and for letting me push your buttons a couple of times and for the hustler stories. I’d love to have you back on to talk about that. For now, let’s let people know to go to Getscaffold.com to check out your new business and to watch it evolve. Sam Rosen, thanks for doing this interview.
Sam: Thank you, Andrew.
Andrew: Thank you all for watching.
Spring Metrics – Am I the only one who finds most analytic packages so freaking confusing that I don’t even use them to grow my sales? A few months ago I found Spring Metrics, a conversion tool that’s so easy, you’ll actually use it. If you go to springmetrics.com/mixergy, you’ll get a 25% discount that their other customers would salivate over. I, by the way, pay full price. It’s that good. Go to springmetrics.com/mixergy.
Walker Corporate Law – Scott Edward Walker is the lawyer entrepreneurs turn to when they want to raise money or sell their companies, but if you’re just getting started, his firm will help you launch properly. Watch this video to learn about him.
Shopify – Remember the interview I did about how the founder of DODOCase sold about $1 mil worth of iPad cases in a few months? He used Shopify. It’s dead simple and very effective. To get a longer free trial, use this code: Mixergy