In this interview, I want to answer this question: If information wants to be free, how is today’s guest selling millions of dollars of information products online?
Ryan Deiss is the founder of Idea Incubator, one of the best known companies online in this space. It’s a digital publishing firm.
Watch the FULL program
Ryan Deiss, Idea Incubator
Ryan Deiss is the founder of Idea Incubator, a digital publishing firm.
Andrew: In this program, you’re going to hear how today’s guest did
$10,000,000 in sales and still got close to bankruptcy. You might be making
the same mistake right now, and if you’re not, I bet you know a friend
who’s making that same mistake, too. I want to protect you from it.
You’re going to find out about the invisible asset that many Internet
marketers miss today, and how he built his business based on it, and why
you still could. It’s not too late. You’ll hear about the low point that
made him cry, if I can get him to talk about it, and you’ll want to find
out how he overcame that, and I want you to remember that the next time
you’re in that low point, and be able to tap into his experience. That’s
what we’re going to talk about in this interview.
Oh, one more thing. I want you to hear about why the most important thing
in business is probably the one thing that you’re criticizing, and
definitely the thing that you’ve heard people criticize over and over
again. Ryan’s got something to share with you about that, too. Stay tuned
for the whole program.
Three messages before we get started. If you’re a tech entrepreneur, don’t
you have unique legal needs that the average lawyer can’t help you with?
That’s why you need Scott Edward Walker of Walker Corporate Law. If you
read his articles on VentureBeat, you know that he can help you with issues
like raising money, or issuing stock options, or even deciding whether to
form a corporation. Scott Edward Walker is the entrepreneur’s lawyer. See
him at WalkerCorporateLaw.com.
Do you remember when I interviewed Sara Sutton Fell about how thousands of
people pay for her job site? Look at the biggest point that she made. She
said that she has a phone number on every page of her site because, and
here’s a stat, 95% of the people who call end up buying. Most people,
though, don’t call her, but seeing a real number increases their confidence
in her, and they buy. So try this: Go to Grasshopper.com and get a phone
number that will make your company sound professional. Add it to your site
and see what happens. Grasshopper.com.
Remember Patrick Buckley, who I interviewed? He came up with an idea for an
iPad case. He built a store to sell it, and in a few months he generated
about $1,000,000 in sales, while the platform he used is Shopify. If you
have an idea to sell anything, set up your store on Shopify.com, because
Shopify stores are designed to increase sales. Plus, Shopify makes it easy
to set up a beautiful store and manage it. Shopify.com. Here’s the program.
Hey, everyone. My name is Andrew Warner, I’m the founder of Mixergy.com,
hope of the ambitious upstart where over 700 proven entrepreneurs in tech,
in software, and related businesses have come here to share their stories,
tell you how they built their businesses, and help you learn from them so
you can build yours. In this interview, I want to answer the question that,
if information wants to be free, how is today’s guest selling millions of
dollars of information products online and doing it in a respectable way?
Ryan Deiss is the founder of Idea Incubator, one of the best known
companies online in this space. It’s a digital publishing firm. Ryan,
thanks for doing this interview.
Ryan: Yeah. Thanks for having me. Glad we finally got the technology worked
Andrew: Yeah. You’re recording your side of the interview. I’m recording my
side of the interview. We’re making it work. We had a lot of challenges,
and we made it work, and I appreciate you working with me to do it.
Ryan: Yeah. I appreciate the patience.
Andrew: You started out with a lot of challenges yourself. You found a
woman, you wanted to propose to her, and then there was a challenge. Can
you tell the audience about that?
Ryan: Yeah. Just for the sake of chronology, I want to make sure. . .
Because yes, I did, I met my now wife pretty early in life. I was a
freshman in college and I did know pretty early on that she was the girl
that I was going to marry, but I do want to clarify, I didn’t tell her that
Andrew: OK. You didn’t meet her and say, “I’m going to marry you tomorrow?”
Ryan: Yeah, no, that’s called ‘creepy.’ I let a couple of years of dating
go by, but I did know fairly early on that, yeah, this is probably the gal
that I’m going to marry, and I knew that there is some expectation when you
propose to a girl. They’re going to want that ring, preferably with an
expensive diamond in it, and I didn’t have a ton of money, so that was the
first time in my life when I really said, “I need to come up with a way to
make some money.”
I was in college, I didn’t have a lot of money, but you’re supposed to be
broke in college. That’s the idea. Even if you’re rich in college, you
pretend to be broke, but when I met this girl, and I knew, hey I really
want to marry her, that was when I said, I need to make some real money so
I can go buy a really nice ring that’s deserving of her. So, yeah. That was
kind of my first inspiration for getting started and starting a business.
Andrew: In this interview, we’re going to talk about how you started this
business, how you built it up, and what you learned along the way. At the
end, though, you were able to, well first of all, get married, build a
Andrew: …and then there was this issue that came up, where you had a
speaking engagement once. Do you remember what I’m talking about? Do you
remember the story that I’m asking about here?
Ryan: You’re talking about the plane thing?
Andrew: Yeah. Well, yes. You had an issue that many of us have. You had a
speaking engagement in one city and a family issue in another, and years
later you’re able to solve it how? What happened?
Ryan: Yeah. Again, I feel like I need qualify this, because I’m not one of
those “bling, bling, I’ve got spinners on my jet” kind of people, but yeah.
I did. I had an issue where my team had scheduled a speaking engagement for
me I didn’t have on my calendar, but that was my daughter’s birthday. It
was also my son had a T-ball game.
I have four kids now, which still sounds crazy to believe. I had my
daughter’s birthday, my son’s T-ball game, but I had committed to speak at
this particular event and there was really no way I could speak and get
back in time. Fortunately, we were able to charter a plane and get there
and back. I tell that story, again, not to make a big deal. I don’t own a
plane. Right? I don’t want to say that just… For me, it all kind of
started with family.
It started with this girl that I wanted to marry and now we’ve got kids.
They continue to be my reason why I do a lot of this stuff, and why I’ll
spend stupid amounts of money. I spend way more to get at a speaking
engagement than I’d ever make off of a speaking engagement just so I can
fulfill the commitment and still have the family stuff going on.
Andrew: Well, the reason I brought it up is to show the before and after.
Where you were, where you ended up going, and I wanted to emphasis this
because you know what? We often say that money doesn’t matter, family does.
You know what I found is, that if you have money worries, it’s hard to be
there for your family, even when you’re physically present. I know I’ve
been physically present, but my mind is on the problem that I’ve got
How am I going to handle this issue, or that issue when I’m not fully
paying attention. I remember when a member of my family got cancer, and I
needed to go and just be there for him. If I didn’t have the money, if I
didn’t have the ability to stop everything and go and buy a ticket without
even giving the finances a second thought, I wouldn’t have been as present
for him. So, I wanted to emphasis that.
Ryan: Yeah. It gives you options.
Ryan: That’s the beautiful thing about money is you have options. To have
that as an option, whereas most people would have been forced to make a
choice. Right? Do I fulfill a business commitment or do I say screw it?
They’ve got songs about this thing. They got country songs where it’s like,
“I told my boss up yours, screw it. Now there’s this first class ticket.”
I think it’s a Brad Paisley song, I don’t know. I don’t listen to a ton of
country, but there’s a song about it somewhere I’m sure. Sometimes you
don’t have to make those choices. You can do both, you have options. So,
yeah. I think it’s worth mentioning.
Andrew: All right. Before the interview, we went over the list of different
business that you’re in and the products that you sell. Let’s not give the
full list now, but maybe we can give one product that you sell and describe
how it helps people, just so the audience understands what it is that your
business is about.
Ryan: Sure. Well, for Idea Incubator, for the digital publishing company,
we’re in a number of different markets and verticals from financial,
business related, health, moms, and things like that. Really, the
centralizing thing is we’re looking to provide information and strategies
for people who are actively looking to improve their lives.
Whether it be financially or emotionally, getting more balance in their
life. We’re out there offering solutions to people who are seeking answers.
We’re not out there trying to tell these people, ‘Hey, you’ve got this huge
problem. You don’t know about it yet, but you do.’ We really, specifically
target people who are looking for stuff. They recognize they’ve got a
Andrew: All right, and you think about customer acquisition different from
most people. That’s what I hinted at before where I said that many
entrepreneurs criticize the idea of spending money to get a customer. They
criticize even putting off maximizing profits off a customer right now.
They said, well if you’re doing that, you don’t really have a business
If you’re not maximizing your profits on each customer instantly, then
you’re not a real businessman. Anyway, you’ve got a different way of
looking at things. In fact, you once tried to get somebody to resell your
product, a $97 product, and he said, “No, I’m not going to. Or win me over,
I’ve got all these other people, why should I sell yours?” And you gave him
an answer that I think illustrates your point on this. Do you remember what
I am talking about?
Ryan: Yeah, I mean it was really one of the very first products that I ever
did. I was trying to break into a very, very competitive market and I was
doing like a lot of people were doing. Going after people who had lists,
I’m sure that you get hit up all the time from people saying, “Oh, I’ve got
this new software, you know, the Twitter later action smacker thing, that
does . . .”
Ryan: Right. So, you know, and people come up and they’re like if you can
just promote it, that would be great. And, the reality . . . so I was doing
that and I think a lot of people do that. Most of the people didn’t even
reply to me at all. They never got back to me. This one guy though and I
really, really appreciate it, we actually wound up doing a lot of business
and kind of struck up a friendship. But, he was kind enough to say, “Look,
you seem like a nice enough guy, but, you got to understand. I get offers
like this everyday, from people who want me to sell their product and
they’ll pay me a 50% commission.
Why would I sell yours? I mean, yeah it’s good, but lots of people have
good products. I got people who have great products, who pay me 50%
commission and they’ll reciprocate. You know, they’ve got a list of their
own, they’ve got a following of their own, they’ve got a tribe of their
own. What do you have?” I didn’t have anything, yet. So, what I said to him
was, “Look, I’ll give you everything. I’ll give you 100% commission. If it
is a $97.00 product, I’ll give you $100.00.” I just wanted the math to be
easy. Right, I figured if it was $97.00, if you would be able to sell 10 of
these things, I’ll send you $1,000.00. I’ll eat the three bucks.
What I learned there and this was a principle, it’s not one that I
invented, I’ve learned from a number of business people, which is those who
are willing and able to spend the most money to acquire a customer, win.
Right, if you can spend more than everyone else to acquire a customer, you
win. There’s two ways to do this. You can either start with a big pot of
money, right, and there’s some people, if you’ve already hit a lick and you
got a lot of money and you’re starting a new business, that’s good. There
are a lot of people who go raise a bunch of money. I’m sure you’ve got tons
of founders who, [??] that was their model. They went out and they raised
some seed capital. I didn’t know how to do that, nobody would’ve given me
money to begin with.
So, if you don’t have a lot of money, then you’ve got to go out there,
you’ve got to be willing to sacrifice those early profits and just maximize
immediate customer value, maximize your conversion rates and then just be
willing to spend all of it. So, I said hey, if I’ve got a $100.00 product,
you know, I’ll give 100% commission. I’ll give it all away, just give me
the customer. I just want the customer. I knew when I had the customers,
I’d be able to monetize it, again. That was my initial goal. . . .
Ryan: That is still our principle today, even today when we have more cash
in the bank, that’s still how we start all of our businesses.
Andrew: So what do you think of so many of the software companies who I
interview here, who get funding, say I am not going to charge my audience
right away. I’m not going to . . . maybe I’ll follow the Instagram model,
of build up my audience first and then later on I’ll monetize them.
Ryan: I think it’s great when it works out. I have a lot of good friends in
that space and I don’t want to knock that model. But, it’s kind of like a
lottery ticket, you know, I mean, much better odds. Don’t get me wrong.
Clearly, there are founders that are able to go out and repeat it. So, I’m
not saying that it’s a lottery ticket and it’s total chance. I’m not
knocking it, but, at the end of the day, I’ve known some insanely
intelligent people, really smart people, who’ve had some successes in the
past, who’ve raised money and that . . . The Instagram thing, everybody
talks about those types of deals, but they talk about them because they’re
rare . . .
Andrew: Well, how is that different from what you do, which is you think
about acquiring customers differently. You think, I will even eat three
bucks on a customer acquisition because I know I will find something I can
sell those customers in the future and I’ll bring back my money. How’s that
different from the way software entrepreneurs, who say, “I’ll figure it out
years later if I need to .” How is that model different?
Ryan: I mean, at the end of the day, it’s not. I’m just spending my money
and not someone else’s. When I’m spending my money and I don’t have as much
money as they did, I think Instagram . . . I might be getting Instagram and
the Draw Something people confused, but, they’ve burned through almost
$17,000,000 or something like that, before they got bought out. That’s
cool, that’s great. I didn’t have $17,000,000, right, so it’s just not a
model that I could replicate. The numbers are still the same, if you know,
if you believe what a customer is worth to you over the long haul. Whether
it be worth to you in terms of real profit, so I’m going to charge x, I’m
going to charge them something and they’re going to give it to me or I
understand that this customer has this value to this other company that
might acquire me.
Then still that customer has value. And so whatever you are willing to
spend to acquire the customer, however long you are willing and able to
wait, really is more a function of cash flow than it is anything else. For
my particular model, I didn’t have a lot of cash. It’s a function of burn
rate, I guess I should say.
I didn’t have a lot of cash. That wasn’t an option for me. We had to go out
there, we had to maximize immediate customer values. I had to maximize
conversion rates and I had to be willing to give it all away. And I believe
that, does it affect scale? Can you grow as fast? No, you can’t. You can’t
grow as fast but I know within 60 days whether or not the business that I
started is going to work. I know whether or not it’s going to work and
usually I don’t have to spend more than $50,000 to figure that out. So, you
know, I think that’s similar metrics, just different models. Different
Andrew: OK. And when people watch on the outside and criticize an
entrepreneur like you who pays more than, who pays affiliates more than the
revenue he’s generating from the sales that they, those affiliates create
when you are giving out $100 and bring in $97 in sales, they just don’t
understand the model. They don’t understand that you have a backend, which
we’ll find out about later on, that you will monetize them. It’s not just
an ego trip to get business coming in the door.
Ryan: No. It can’t. I couldn’t afford it to be an ego trip. I mean, are you
kidding me? I was broke. Companies that raise a bunch of money can afford
to have ego trips. I couldn’t do that.
Andrew: Did you start out as a spammer, an accidental spammer? How did you
Ryan: Yeah. Well, I was a web designer for a spammer. So I was at UT,
University of Texas in Austin, which right now, where I’m sitting in my
office I can actually see downtown, almost see the UT Tower, which, if
you’re a Texas alum warms the heart.
But anyway, when I was at UT, I started in 1999. That was kind of pinnacle
of the dotcom boom. My dorm was right across the street from where Michael
Dell had started Dell so it was a very entrepreneurial place. And I knew,
and certainly when I decided I needed to make some money, I need to get in
with the dotcom.
So I asked around, I was “Does anybody know anybody who’s got a start up
who’s doing something?” and through a friend of a friend of a friend I came
across this company. And yeah, basically what they were doing is they were
harvesting email addresses and they were spamming people. Now, back than
you didn’t call it spam because they were doing targeted email harvesting
and some of their clients were like Time Warner and Newsweek and…
Andrew: What do you mean by harvesting? They were going online and they
created a program that scrapped email addresses off the net?
Ryan: Yeah. I mean, what today would be pure, unadulterated spam. But back
then, people were happy to open up AOL and hear “You got mail”. So we, at
least, if somebody said, “Take me off your list”, we’d at least take them
off the list. By the standards of the day, it was not technically spam.
Now, when canned spam came out, became spam act and everything, they pretty
much shut down their doors. They tried to pivot but it didn’t…
Andrew: They went out of business.
Andrew: And what happened to you then afterwards?
Ryan: Well, what I was doing for them, I was building landing pages for
them. We called them Flash Pages. But now people would call them landing
pages. I don’t know if you remember this but it used to be when you went to
a home page, you’d go and there’d be like this Flash intro. Remember Flash
Andrew: I still see them in restaurant sites, often.
Ryan: Horrible. But back then that was what everybody wanted. Well, I
didn’t know how to do that but I just wanted to get a job with a company so
they said, “We’re looking to hire a web designer”. I said, “OK. I know how
to design websites”. Wasn’t totally true but I figured I could teach myself
Front Page over the weekend before I started on Monday.
So the sites that I built, everybody else was building these like flashy
things. I was building very ugly, simple pages that just happened to get
much better conversion rates than the pretty ones. And so mine won. And so
I kept getting more and more work and more and more jobs and it wasn’t a
function of me like being this conversion master. It was a function of me I
didn’t know how to build these pretty flash things. I would have done that
but I didn’t know how to.
So when that company shut down, I essentially started doing service work
where I would build websites and things like that for companies. Finally, I
started realizing that what that company did teach me was the value of an
email list. I saw how they can just click send and money came in and that
amazed me. And so, my whole business model and really to this day, it is
about building subscriber lists. I started a number of email newsletters
and things like that. That was where it all got started.
Andrew: Email. That’s basically what it comes down to.
Ryan: Yeah. A lot of people consider it to be passé, and think email is
dead. First, RSS was going to kill it. Then, Facebook was going to kill it.
It’s not going anywhere. It’s not.
Andrew: We don’t even notice how prevalent it is. I signed up for Facebook.
I got flooded with so much email that I created a filter to block it out.
It’s now invisible to me, but Facebook uses email to get me in. I signed up
for Cora, built by Facebook alumni. That sends me a ton of email every time
anything happens on the site. Someone mentions me, some topic I’m
interested in is mentioned. That’s what’s worked for you, too.
Ryan: Sure. You can’t spam people, right? You’ve got to build. You’ve got
to have good value in your content. You’ve got to deliver it in reasonable
time frames and things like that, which is prior to the scope of this
discussion. We still get fantastic results from email. It is rare. In all
of our business, one of the core metrics that we track is dollar per
subscriber, per month. In any market, it’s going to be anywhere from 50
cents to $4. So, the value of an email address, on average, will be between
50 cents per email address, per month, to $4.
Andrew: Per month.
Ryan: Per month. Yep. So, how much am I willing to spend now to get an
email, if I know the email is going to be worth, let’s say $2 a month? I’m
happy to spend $8, $10, $12.
Andrew: What software do you use to send out email and to track the
Ryan: We now use, because our lists are all so big, we’ve had to manage our
mail servers ourselves. We used iContact and had good results with them in
the past. We used AWeber prior to that. I’ve used basically all of them.
They’re all good, but when you’re email list gets over 200,000, they really
don’t want you. They would much rather have a bunch of plumbers with 500
people on their email list, so they can charge $80 a month to them. Now we
use a service called Email Delivered to set it up, so I’ll give a shout out
to those guys.
Andrew: Email Delivered. When you were using iContact…Of course, Ryan
Allis, the founder was [??] or using AWeber. Would you create separate
lists to track where each reader came from and how valuable is that list to
you? Is that the way that you would hook things up?
Ryan: Yeah. We do everything lead source tracking, so I know from each
specific lead source, how much our…I know with the list as a whole, the
list is 50 cents a month, per subscriber, on average. That would be on a
mom site for the stuff that we do there. For the financial stuff, $3 to $4.
Yeah, there’s some lead sources. We can’t get a ton of leads from them, but
there are some lead sources with some of our partners, where those folks
are worth $4 and $5 a month. Others might come in through lower quality
things, they might be worth $1 or $2. You break it down and figure out
after a while, how much can I really afford this particular lead source?
That’s not that hard to do.
Most systems will allow you to do some basic tagging, sublisting and things
like that. You do some tracking. We don’t have insanely sophisticated
analytic systems. We use a lot of Excel. I got…[TD] Chris runs our
tracking analytics. It’s not easy to sort this stuff out, but it’s not
expensive either. It just takes a little bit of time.
Andrew: You and I met at brunch with Noah Kagan, who is incredible at
keeping track of every part of his email, everything. He’s way into that
Ryan: I’m super jealous of their system.
Andrew: Isn’t it an impressive system? He doesn’t talk about it publicly,
but if you have a private conversation, it’ll blow your mind what he’s
Ryan: Yeah. It’s not fair.
Andrew: [laughs] One thing that he said that he did to get more revenue per
user, so he could afford to spend more money to acquire new users, was as
simple as just sending emails out on Saturday and Sunday. More emails mean
more revenue. What’s one tip that you can give somebody who is listening,
that’s an easy one like that, that will increase the amount of revenue that
they get so that they can spend more to get more customers?
Ryan: Well, can I give you a really specific one and more of a bigger
Andrew: Absolutely. By the way, you’re still recording the video on your
side, right? It completely froze for me. I’m not seeing you.
Ryan: Yes. I’m still recording.
Andrew: OK. Cool. Go for it.
Ryan: All right. The thing about email, which you’ve got to realize, is
that when we test, a lot of people want to test the conversion rates of
their pages, right? But, what you don’t realize is, what you don’t think
about necessarily, if I can increase our open rates from 10% to 15%, that’s
50% more traffic going to the page. That right there is going to yield a
ton of subscribers. Now if I could get the click through rate increased
from 20% to 25%, now that’s where we get the geometric increase.
So, when you’re doing this testing, always start with open rate, and then
click through rate, then conversion rate. Typically I see people spend so
much time testing their website, the people who do test, most people don’t
even test, but for the ones who do test they spend all their time testing
and tweaking conversion rates on the site, gosh if you can do some minor
little things on the open rate and the click through rates…
Andrew: Like what?
Ryan: So from an open rate perspective, that’s completely driven by the
Ryan: OK. Almost completely, it’s driven somewhat by the front field, so
big mistake that I see a lot of people making, is they will send a lot of
emails from a company name. We’ve done a lot of tests and we do a lot
better when the emails come from a personal name and that it might be dash
the company name. So you want to have the branding in there but people like
opening emails from other people, that’s a good way to get an open rate.
On subject lines, it’s not always best practices, a lot of people will tell
you, oh the subject line needs to be perfectly clear to exactly what you’re
going to say, but having very provocative subject lines can be good,
numbers, weird characters, weird phrases. I sent out an email the other day
that was, how to not be a marketing douche bag, now that’s a little PG 13
and we got some flak from that, but the open rates were through the roof.
Just having an open rate that just says, bad news, has been proven, now it
needs to be congruent, right. You don’t want to send a subject line that’s,
naked pictures of your mom…
Ryan: inside it’s, just kidding, that’s lying; don’t do that but being a
little bit provocative will increase the open rates.
Andrew: How about one thing about click through rates, what do you do to
Ryan: Click through rates? Images, if you’re sending people to a video, if
there’s any video on the webpage at all, go to the site, pause the video so
it’s visible and then take a screen shot of that images where the play
button is there. You drop that in your email, people are going to click on
it because they see a play button, they’re going to click on it thinking
it’s going to play in there, it’s not, but when they go to the webpage, hey
there’s the video.
Andrew: I see.
Ryan: So it’s still congruent, it’s not sneaky, there’s nothing wrong
there. You do want to make sure that you have, also, on your click troughs,
a combination of anchor texts links and absolute URLs. So, I’ve seen a lot
of people send out emails where they’ll just have words that are clickable,
they won’t have the full URLs sent out. Sometimes there are still people
who do not view those as clickable, where as if they see http://www. sent
out, so make sure you’ve got a combination…
Andrew: Oh, really? I didn’t know that, all right, that’s worth testing for
Ryan: Yeah, definitely do that and emails, links in the p.s., the p.s., a
lot of people don’t use p.s’s, next to the subject line and the first
sentence it’s the most read part of an email, so use it, use it and have a
call to action in it.
Andrew: All right, we did that and we tracked it and the first link on the
email got the most click throughs, and a near second was the p.s. line, the
last link on the page got the second most click throughs.
Andrew: All right…
Andrew: So the company went under, the spam company that you were designing
splash pages for…
Ryan: Targeted email marketing solutions provider.
Andrew: I see, right…
Ryan: … [??] …
Andrew: Targeting email marketing solutions provider went out of…
Andrew: went out of business, and then you started doing your own thing on
the side, and that thing had to do with software licensing, I don’t
understand this part, what was it?
Ryan: Yeah, so when I first got started I wanted to, I needed something to
sell, and so what I did is, I saw a piece of software that was actually
being, that was being promoted in a similar email newsletter that I was
advertising in. so I figure, hey, this is a good tip, if you see people
advertising in the same places that you’re advertising, contact them, they
would probably be a good partner, weather you work out a joint venture
relationship, or a cross promotional relationship.
Now, obviously you’re targeting a similar market and they obviously see the
value in marketing if they’re advertising. So I did that, I contacted them
and I said, hey, looks like you’ve got a really cool product here, I’d like
to promote it as an affiliate, can I sell it for you, and he said well, I
don’t have an affiliate program. I said that’s fine, could I just have a
copy of it and license it, how much for just a license to it, and he said
oh, I don’t want to license it to you; I don’t want competitors in the
market place. So I said OK. Change the name, would you mind giving me a
private label license? I’ll change the name. I’ll rebrand it. The name he
had for it was terrible anyway, I wanted to do that. He was like, “Oh, OK.
Great. Cool. That’s fine. If you’re willing to do that.” Hell, I wanted to
That’s a good little trick. Anytime you’re doing some type of licensing,
whether it be software, any type of IP, offer a private label solution. A
lot of times, people would prefer to do that because they don’t want the
competition. So, we worked out a deal. I think I paid him $500 for access
to this software, and I began selling it.
Andrew: What did this software do?
Ryan: When somebody came to the website, it popped up this little Java
Script pop-up, where somebody could click on a thing and then it would
capture their email address from it. You can’t do it anymore because
there’s all the privacy connections. They had to confirm it. Again, it
wasn’t shady or anything like that, but it basically helped you capture
more email addresses.
Andrew: I see.
Ryan: I had those things. I sold software that… I don’t know if you
remember IP ads? It used to be you’d open up your computer and you’d have
all these little ads that were popping up on your site that were basically
pushed through a hole in Windows. I sold this thing called IP Ad Blocker…
Ryan: …to block those things. See, but I’m not a technical person. I’m
not a coder. I just saw cool things in the marketplace, and rather than
trying to build them myself I said, who’s already trying to sell this doing
a bad job at doing it that I can just license it from? So, that’s how I got
started, and we were probably selling close to a dozen different little
pieces of software. I knew in the beginning, I didn’t have a warehouse
If I was going to sell something, it had to be digital. I wasn’t an expert
at anything. I didn’t want to write, so it couldn’t really be information
in e-books. Initially, that’s kind of what I shifted over to, because I
realized with software you have to be able to support it. I’m not a
technical person, so support…
Andrew: What happened? What kind of support issues did you get, and how do
you deal with them if you’re not the guy who developed the software?
Ryan: Oh, I dealt with them very, very badly. Obviously, it was email the
way I was responding to people, but I was like I don’t know. I wound up
just giving people a lot of refunds, because I’m like, ‘I’m sorry.’ I
remember one time I was in class, and I didn’t have my phone number on the
website, but the merchant account that I set up, I had to give them my
phone number. Well, the only phone I had was my cell phone.
So, that was on, when somebody looks at their credit card statement,
there’s my cell phone on their credit card. I’m sitting there in class and
my phone is just blowing up. I don’t recognize the number, obviously, but
it kept calling me three or four times. Finally, I step out of class and
here’s this guy yelling at me on the other end of the line, because he said
he downloaded my software and his computer started smoking. Now, I need to
buy him a new computer.
Well, there’s no way that what he downloaded from me made his computer
start to smoke, but obviously he felt it was. So, that happened and then
the next day I had another guy calling me up that said I had ripped off his
source code, and he was going to sue me. I’m like 19 years old, and I’ve
got adults yelling at me. I’m just terrified. So, I said, OK. No more
software. I’m not going to do it anymore, and I sold off most of my
Andrew: It’s hard to move past software, because don’t you think in the
Internet space, the software guys are the ones who are the most respected?
Ryan: Yeah. Those are the guys, and I think it’s largely because they’re
the creators. What they’re building really is pretty unique. Most people
believe that they can write. They may not want to, but it’s kind of like
NASCAR. Right? Why is NASCAR more popular than Indy? Right? They look at
those cars and they say, that looks kind of like a car that I own, whereas
Indy looks like a spaceship.
I think that’s the same thing, why people don’t have as much respect. I
also think, because the information side is easier to do, just from a
barrier entry you’ve had way more gypsies, tramps, and thieves diving in
there, and kind of mucking up the space.
Andrew: What do you say, by the way, about people who look at you in that
space and say you’re probably one of these thieves too? …[??]
Ryan: Yeah. It really is unfortunate. It sucks. I think we were talking
Ryan: …before we came on. I use the…
Andrew: I know that you don’t have that reputation. Everything that I’ve
seen and heard about you, and through our research I’ve seen you don’t get
labeled way. I’m talking about from the perspective of someone in the
audience who’s wanting to get into this space, who says ‘Hey, you know
what? Software is a pain in the butt. I do want to go into information, but
I can’t get past this thing.’ How do you describe that thing?
Ryan: Yeah. I look at it like, if I’m trying to sell snow cones in the
Ryan: And there I am, and I’m selling snow cones in the ghetto and I’m
looking, dressing like everybody else, everybody around me is selling
crack, right? If the cops come in and arrest all the crack dealers, they’re
probably going to arrest me also, even though I’m selling snow cones,
because I’m on the same street corner, I look a lot like them. So it’s
unfortunate, what we’ve had to do with a lot of our stuff is, really try to
rise the branding up a number of notches. We tried to make it more
professional and more corporate, well the problem with that is, is believe
it or not, nobody believes this when I tell them this, but we tested it
over, and over, and over again.
More times than not, simpler and ugly out perform professional and pretty.
I don’t know why and I don’t like it, I would much rather create very
beautiful sites but, and this is changing to an extent, but I think a lot
of people, they want to, they connect more. It’s, again, why is NASCAR more
popular than Indy driving, than Indy racing? It’s because it’s more
believable and it’s more approachable. So we’ve had to do things that
actually affect and hurt conversion rates just for the sake of not looking
like everyone else. So that is one of the down sides, but…
Andrew: What about our friend, Noah?
Andrew: With App Sumo he has decided to go for a more polished look. Do you
think he’d do better if he, if he uglified the site, if he made it look
more like Craigslist than what he’s got now?
Ryan: I know for a fact he would…
Andrew: You do, how do you know for a fact?
Ryan: Because we’ve tested, because we’ve knocked off a lot of his pages,
because I was, they’re so beautiful, and the, and our ugly ones, especially
on the sales pages themselves, if you want to maximize conversion rates on
sales, you have a video sales letter. All right, a video with black text on
a white background with virtually no images…
Ryan: …just text. You have a buy button that’s hidden, you make the
pause, you make it to where the video cannot be paused, there’s nothing
else on the page, no logo, nothing else at all on the page. Now we’re not,
I’m not going to do that, right, I’m not going to make it to where a video
can’t be paused, that’s just mean, I won’t do that. There are certain
things, we won’t totally sell out for conversion rate purposes, but I will
do things like make it really simple, not have any other text on the page,
we will do the hidden buy button where the buy button appears after maybe 5
or 10 minutes into the video…
Andrew: Why is that? You know what, I was researching you in preparation
for this interview and I saw a bunch of those sales pages, and I couldn’t
find the buy button, I couldn’t make it pop up, why?
Ryan: Because, if you think about it, go back to face to face selling. So
if you’re going to go buy a car…
Ryan: …the salesmen is not going to be sitting there the whole time
they’re pitching and selling to you holding up a sheet with a price on it
the whole time, right, because what are you going to want to do, oh let me
click on that and see…
Andrew: What the price is, I see.
Ryan: Right, so you want to be able to build the value of it, and then
reveal the price so they see it and they go, oh wow, that’s really
inexpensive, what a great price.
Andrew: I see.
Ryan: As opposed to them formulating in there head what it is. So, and we
did this, we tracked this, we used a service called Click Tale, C-L-I-C-K T-
Ryan: …. com, and we would track on our longer form print sales letters.
People would get to the site, they’d read the headline, and they’d scroll
all the way to the bottom and see what the price was. Just about every
Andrew: They were trained not to read the text and just go straight to
Ryan: Straight to the button.
Andrew: …price, is what you’re saying.
Ryan: Yep, and then they would either go back up, if the price wasn’t
immediately offensive, they’d go back up to the top and read top to bottom,
or they would read your sales copy in reverse, which is just completely
bazaar. With video, and with a hidden buy button, you completely control
the flow, the timing, the pacing, of the sales process. Do people like it?
No, if you ask anybody they’re going to say, look, I want to be able to
bounce around and do all my own stuff. That’s fine; you’re just going to
make less money. So there’s a balance there that you have to walk and some
people would say, oh, but that’s not nice, you need to let the customer
completely define how they’re going to be sold, and all this stuff. Again,
that’s fine, if you’re spending someone else’s money and you can afford to
wait to maximize these immediate customer values, that’s great, that’s
great, you’re, now you’re just having to sell your soul to possibly a VC,
and stuff like that.
Andrew: What’s a site of yours where we can send the audience, too, where
they can see one of these sales pages?
Ryan: If they go to trashcantrader…
Ryan: .com, so there’s a guy that we publish in the trading space. Totally
real, the guys name’s Hubert, he’s an investor out of Kentucky, and got
started trading, learning from a guy sitting upside-down on a trash can, so
that’s why we call him the trash can trader. Yeah, you’ll see it’s ugly,
man, it’s really, really ugly, but it works, it converts better.
Andrew: And that’s because, you’re now–by the way you are sending us to
his page because you’re publishing him–you’re now in a world where it’s
not just you teaching your stuff. You’re publishing other people. You’re
taking them and pulling out their ideas and showing them how to sell it,
and you own the publishing rights to it.
Ryan: Correct. And, you know, we make way more money doing publishing and
doing this stuff than we do teaching and talking about it. I enjoy teaching
and talking about it. It’s a good way for us to maximize and to make income
from our raw materials, from the knowledge and the things we acquire from
actually doing this business, through Digital Marketer. That’s where we
publish that aspect.
Andrew: What’s that website?
Andrew: Right, digitalmarketer.com if anyone wants to see it. And so what
you’re learning by selling other people’s products, you’re bringing back
and selling it as your product and teaching other people.
Ryan: Yeah. They talked about it in the book, the 37 signals book.
Andrew: I can’t think of the name of the book either.
Ryan: Dang it. I can’t believe that.
Andrew: It’s come to me later.
Ryan: Yeah, I know. But they talk about that in there. They tell the story
Andrew: Not Getting Real, the other one.
Ryan: Yeah. We’ll think about it. But they tell the story in there about
Ford, and how Henry Ford, during the manufacturing of automobiles, they
were creating these cars going along the assembly line, and it was
basically turning the chassises that were sitting on this wood, and by the
end of this assembly line, the wood was just chunks of charcoal, and they
were throwing it out. He looked at and said, “I can sell that stuff.” And
they sold one of their cast-offs, their raw materials. They started the
Ford Charcoal company, which today is Kingsford, and it came as a spin-off.
So that’s how we approach that. I have a lot more fun doing it than
Andrew: All right, so.
Ryan: In digital and the offline world.
Andrew: You decided I’m not going to be in software anymore, people think
that I’m blowing up their computers when I sell them software. What’s the
first information education product that you’ve created?
Ryan: The very first–I had a product on how to make your own baby food,
believe it or not that was pretty cool. We went into the professional
organizer market. Gosh, at one point, I was at over 500 different markets
doing this stuff. I mean the guy said, if I can make a little bit of money
off of a couple of, I mean what if I had 500 of them? Well that did not
Andrew: You know, before we find out why that didn’t work out, I saw that
in my notes here. You of course did a pre-interview with our producer
Jeremy, and when I saw that, I said how did he create so many different
products and so many different sites? And now that you’re here, how?
Ryan: I mean again, from a site-creation standpoint, they were ugly little
one-page websites that anybody who know how to use–I was using FrontPage,
okay? I mean literally it’s like I was using Microsoft Word and FTP’ing
these things out. They were ugly as all… But again it was through
licensing. I would go to people who were trying to sell these products on
their own, and I’d say look, let me have a license to this. I’d send out a
ton of emails. And I would also…
Andrew: We’ll get to the email in a second, I’ve got so many follow-up
questions on this. So, all these sites were on the same domain?
Ryan: No, every single website was on its own domain.
Andrew: So you paid $9.95 or whatever you were paying for your registrar,
Ryan: They were way more expensive back then…
Ryan: It was way more expensive.
Andrew: Yeah it was, it was like 35 bucks, maybe even 75 bucks depending on
Andrew: Okay, but you did that that many times, a different domain for each
one of these properties…
Ryan: Yup, I was at 10 to 20 of these things a week.
Andrew: And how did you get–so you told me how you got the product, you
got it from someone else. By the way the licensing. Was it one of those
things where you go on eBay and you can license a package of 500 different
eBooks and resell them all you want?
Ryan: No, those were crap. The content was really, really bad. I went to
people who were–I looked for ugly duckling properties. So, give me
somebody who clearly was an expert, who really knew their stuff, who knew
what they were talking about. If I was going to sell something, I wanted it
to be good. You know? I did not want to just go out there and hock a bunch
of crap. So, I wanted somebody who was really an expert. They just weren’t
an expert at marketing. I think too often people want to constrain, people
who are good at sales and good at marketing, they want to constrain their
efforts, by what they know. That’s–you don’t have to do that, you know how
to sell stuff.
Andrew: If you know how to sell, you don’t also have to know about baby
formulas, you don’t have to figure out how to write a book about it, you
just go find someone who does.
Ryan: Yeah. That’s Steve Jobs and Wozniak. That’s, you know, Gates and
Allen. Every great business was a function of founders, somebody who was
the creator and somebody who was the marketing, visionary type.
Andrew: Emails, you said that you would email. How did you get a list of
people who were both interested in baby products and all these other 499
products that you had?
Ryan: Back then, it was a lot easier because SEO was pretty easy. Google
AdWords, there are five cent clicks all over the place. Overture, which was
Goat. I started using it when it was Go To. Then, it was Overture. Then
Andrew: So, you’re buying traffic or SEO-ing traffic, and then you’d
convert them into email addresses, and then you’d sell?
Ryan: Yes. We drove basically everything into a squeeze page, into an
optimum landing page. I was always a believer in getting the email address
first. A hundred percent of the time, get the email address first.
Andrew: To this day.
Ryan: Yes. To this day. Because now, if you’ve got follow-up, you just make
more money. Even if only 30 percent of those people opt in, they’re the
ones who are most excited about what you had to begin with. They’re going
to be far more likely to do that. Yeah, it’s a lot easier.
Andrew: You bought ads you said. How did the ads do? I think your first ad,
from my notes, says that you spent about $250 for your first ad. How did
Ryan: It made money, which was good. The very first ad that I ever bought,
I think I spent $250 and I made $300 in sales off of it. I said, “Cool. I
can go buy $300 worth of more ads.” I often wonder, what would’ve happened
if that very first ad not [??]. Would I have just said, “Ah, this stuff
doesn’t work.” and just went back to class, and never gave it another
thought? I’d like to think not. I’d like to think I’d try it again. I was
fortunate in that, the first thing that I did wasn’t a home run, but it
worked and I said, “Ah, there’s something here.”
Andrew: Going forward for a moment and then I’ll come back to the rest of
this story. You said that you create a video, a page with basically nothing
but a video, no pause button, no buy button, no nothing. At that point, you
really have a user who’s either going to disappear on you or watch the
whole thing. You have to convince them, through the words that you use,
through the video you’re putting in front of them, one word at a time, to
stay with you and at least listen long enough that you can sell them. What
do you do to catch people’s attention and keep them listening to that
Ryan: Well, the first thing you do is make sure you’re only getting people
to your website who are actually interested in what you have to say.
Traffic is where that all begins and sorts, and making sure you’re not just
going out there and generating traffic for the sake of generating traffic.
That’s the first thing. Then, making a big promise at the beginning, that
you hint at, that you don’t deliver on immediately, so we open loops, and
then we don’t close them until later. If you’ve ever seen, I was a big fan
of the show, “Lost”. Did you watch “Lost”?
Ryan: On TV…
Andrew: They suckered me all the way to the end.
Ryan: Oh, it was a classic example of open and closed loops. They would, in
one episode, open three loops, and you’d be, “Aw, when are we going to find
out about this?” Three episodes later, they’d close one loop and open three
more. So now you’re, “Gah.” That’s how you keep people engaged and how you
pull them through.
Andrew: OK. So, big promise and an open loop. Give an example of what an
open loop would be in one of your videos.
Ryan: Off hand, just basically being able to tell someone, in a little bit,
I’m going to show you how this…Going back to the Trash Can Trader
example, you might say, “I’m going to show you this basically, country
bumpkin from Kentucky, used this strategy where he was able to turn a
$25,000 co-managed account into something like $300,000.”
Andrew: That gets people to sit and listen.
Andrew: They want to hear how that happened.
Ryan: That’s the big promise. So, I’ll tell you how to do that. But first,
let me tell you about this, and then you’ll start to talk about that. I’ll
tell you how to do this in just a second, but now let me tell you about
this. Then, you’ll start to close things up and tie them up. You tell
stories. You make sure that you keep folks engaged.
Andrew: So, why didn’t those 500 or so websites work out for you?
Ryan: Because not all of them were profitable, but I wasn’t tracking all
that well. I didn’t know which ones weren’t, so I’m buying advertising for
all of them. I’m making sales on some of them. Some of them as a whole, I
was about break-even. I did this for a year and a half, and I’m spending
enormous amounts of money. Back then, if you had a pulse, you could get a
line of credit, right? So, I’m going out there and I’m racking up credit
card debt, and doing all this stuff to fund the business, and when I would
look at my shopping cart accounts and say, “Cool, I’m making a lot of
money.” I realized there’s a big difference between making money and
I learned that lesson the hard way. It was clear that I was starting to
lose money, and I remember there were algorithm shifts and some of the
sites that were ranked, now weren’t. Google AdWords got more expensive and
so when it started to turn a little bit, and I started actually losing
money, well I lost it, fast. That was when I focused in and said, “OK, what
if I just focused in on my winners and completely ignored everything else?”
Out of 500 sites, there were maybe nine or ten that were worth anything,
and I just realized how much of what I was doing was waste.
Andrew: How big did you get this collection of sites before you had to
scale back down, in revenue, I mean?
Ryan: In revenue, at that time, I’d do between 10 and $20,000 a month. I
had one month, I remember, where I had $80,000, all the stars aligned, but
it was a total outlier. For me, when you’re in college, that’s a lot of
money. I didn’t realize it was a lot of money. I assumed all adults made
300 to $400,000 a year. I was completely delusional. Actually, when I
graduated from college, I got a job. I didn’t know that what I was making
was really good money. That was doing pretty well. That was in 2003, the
year I graduated and the first year after I graduated, when I had the
realization, “Man, this is bad. I need to change something.”
Andrew: You built up all these sites, you got to 10 to $20,000 a month; it
was time to scale back down to under a dozen of them. When you scaled down,
how big did you get that collection of sites?
Ryan: Of those sites that were there? Out of the dozen of them, some of
them I wound up selling off, because at this point, I had racked up over
$200,000 in debt.
Andrew: With the tax bill?
Ryan: No, the tax bill happened a couple of years after that, after I fixed
everything and started making a lot of money again. I’ve brought this thing
to the brink a couple of times. I’m really good at that. I racked up close
to $250,000 just between credit cards and the line of credit.
Andrew: Buying ads to keep this machine of sites going?
Ryan: Yes, exactly, buying ads, doing everything that I could. Like I said,
I’d do between 10 and 20,000. When I cut everything else off, my top line
when down very little. I was now profiting quite a bit, but I still had
this huge nut. Out of the nine or ten sites that I kept, I probably sold
off half of them. One of them was a pretty big hair restoration lead
generation-type site that I sold off. I had some other sites that I sold
off to try to pay down as much of that debt as possible. I was left with a
couple of them. I was left with a site that was in the financial space. I
was left with a site that was in health and fitness. I had my site where I
would teach and talk about different stuff, and a couple of other silly
little niche sites. Those were just more testing ground.
Andrew: In 2009, you almost went bankrupt even though your company did $10
million in sales. I want to find out how you dealt with that situation, but
first let’s find out how you got to that situation. How do you know go from
paring down your business to a handful of profitable sites that were doing
10, $20,000 in sales a month to now, suddenly, doing $10 million a year?
How did you take that leap? What got you there?
Ryan: People, which was the biggest thing. The whole time it was basically
just me and my publishing partners and people like that and I had a
personal assistant. After I had the whole tax incident, I don’t know if you
want me to tell that. . .
Andrew: Yes, let’s go into the tax incident and we’ll come back to how you
got to 10,000.
Ryan: This was the thing that said, “I really need to start treating this
like a business.” I actually got out of all that debt through selling off
sites and through restructuring things. I got out of all that debt, now
here I am and I’m actually pocketing, banking a lot of money. I don’t like
talking about how much money I make, but what I can tell you is, I got a
call, it was April 11th. It was in the evening, it was a Sunday, and I got
a call from my accountant, and they said, hey Ryan, which I learned now,
you don’t really want to, if you get a call from your accountant on a
Sunday evening, that’s a bad thing, especially in the month of April. So,
he said, for those, I know you’ve got international people but April 15th
is tax day here in the good old…
Ryan: United States of America. So, I get a call from him and he’s, hey
Ryan, looks like you had a really good year last year, and I was, yeah I
did, we turned a corner, it was great, great year. He said, yeah, about
that, did you pay any, did you pay your quarterly’s; you know your
quarterly taxes? I said, yeah, I paid just what you told me to pay. He
says, yeah, did you pay above that by any chance? I said no, man, I just
paid what you told me to pay. He said, OK. Because you made a lot more this
year than you made last year and it’s looking like you’re going to owe
So here I am, I had just paid off $250,000 in debt and I find out on a
Sunday night that on Thursday I need to cut another check for $250,000. I
didn’t have it, I finally started making money and I was, again, it’s not
like I was out there buying Lamborghinis and stuff, but my wife and I
bought a house, we had a couple of kids at this point, we were buying stuff
for them, we had upgraded our lifestyle and nobody told me that when you
make more money you have to pay more taxes. Who knows that, right? So,
there I was, I had to come up with $250,000 out of the clear blue sky in a
couple of days and fortunately I was able to do it. I had lists that I
could tap, we had, I made a bunch of special offers, I remember I gave
myself 24 hours to mope. That was, again, you told earlier, the only time
in my adult life that I have cried.
Andrew: You cried because of this?
Andrew: Because you owed a quarter million dollars in taxes?
Ryan: Yeah, I was terrified, and I thought that I was smart, right? I
thought, because I had already made some big mistakes and got past it and
now I was, I thought I was A-OK. I thought I was, I thought I had it all
figured out and I just didn’t, and it was not only a shot to my pride, I
didn’t know where the money was going to come from. I remember my wife told
me, she said, I don’t know why you’re so upset, you always figure these
things out, you’re going to figure it out this time too. Which to me was
just, a-ha, that was why I married you….
Andrew: Sometimes, I don’t like that answer, I’ll tell you why, because it
assumes I’ll find something, it assumes I’ll always figure it out and it
almost belittles the process that I have to go through to get there…
Andrew: …and it puts more pressure on me because now she’s really waiting
for me to get this right.
Ryan: It wasn’t, at the time I was, screw you…
Ryan: …but really what it did is it made me say, OK. I need to step up. I
think she knew me well enough to know that was exactly what I needed to
hear at that moment, and I said, you’re right, I will, I said I’m going to
give myself 24 hours to mope, because I’m really, really sad right now, and
so I did and at 8 o’clock on Monday I got to work. I got to work creating
offers and things like that…
Andrew: And you just went right back to the same list that were bringing
you revenue before, and this time you said I’ve got a special offer to
Andrew: this is the offer that I’ve got right now, super terrific discount,
but you’ve got to buy now. That’s basically where the new revenue came
from, that’s how you turned things around?
Ryan: Yeah, I went back to the lists, and I had to bust out some
promotions, you can only go back to that well so many times, right? So I
had to expedite some offers that we were going to make down the road, I had
to kind of speed them up and it wasn’t an ideal situation, but I wrote a
check for two hundred fifty some odd thousand dollars and dropped it in the
mail as late as I possibly could on Thursday, and when I cut that check the
money was not yet in my bank account. I was, God, I really hope they don’t
get this on Friday and deposit it on Friday. I was hoping that it would
take a day in the mail and give time for the money to clear because you
don’t want to bounce a check to the IRS, but that was when, it worked out,
it did. I made enough money through that to not only pay the tax bill but
to pay the tax bill that resulted from the money that I made. So after
doing all of that I was at exactly zero.
Andrew: And you owed taxes, of course, on the money that you made that
year, but even if you didn’t get to put it in the bank.
Ryan: Exactly, yeah, so I wound up doing three hundred some odd thousand,
so two hundred fifty went to taxes and out of the three hundred thousand,
oh I owe a hundred grand off of this so none of it, I got to keep none of
the money that I made off of that week long promotion, but I wasn’t in debt
and I now knew, I didn’t worry about money anymore. I knew that I could
make, if I got a list, we could make this happen.
Andrew: That’s the thing, it’s the list, it’s all about the email, and if
you’ve got a database of email, I can’t tell, it’s completely invisible to
me, I look at your website, or someone in the audience might look at your
website five seconds into this interview and say, huh, that’s it? I could
build that website overnight, there’s nothing to this business, and they
don’t recognize the secret asset, which is the email list. The secret
asset, which is the way, of course, the way you know to sell. To hook
people in with that open loop, etc.
Ryan: Yep, that’s exactly it. I mean, I sell products so I can afford to
build email lists. I mean that’s the truth of that. You know, and what
people see is the products sells. That’s the tip of the iceberg. Um, to me,
I sell products so I can give away all that money to build email lists and
make money selling the other products.
Andrew: Um, all right.
Ryan: That’s how the publishing business works.
Andrew: So you then, you then say … [??]
Ryan: Then I was … [??] … yeah.
Andrew: And you got to 10 million doing what? What was … because it’s a
pretty big leap to go from zero as you were right after you paid those
taxes to suddenly 10 million a year. What’s the most significant thing that
got you there because I know that it’s obviously a collection of smaller
things that got you there.
Ryan: Sure. I guess I was doing about a million or so. Um, at that, at that
time. So I really … I went from a couple 100 thousand to a million just
in focusing. You know, so I was doing a couple 100 thousand when I was in
… Uh, you know, and this top line revenues. Right? Not money in my
pocket, but a couple 100 thousand in top line revenues. When I focused and
said, “I’m going to really … Here’s my winners. I’m going to maximize my
winners.” That jumped me to a million in under twelve months.
Andrew: The jump from a million to five million, or so, took a year. Then
five to ten took another year. And that really was a function of people and
systems. So how can, how can we now scale this? How can we do more? Well,
you know, we got to get some people here to help on this. I can’t do
everything. And, um, you know our team grew from 3 people to 15 people. And
now we’re 50 some odd people just in the Idea Incubator. Just in the office
I’m in right now. If you count all the company holdings and outsourcers and
things like that, it’s 100’s.
Andrew: When you say systems, people we’ve heard a lot, but the word
systems we don’t usually hear credited for this kind of growth. What was it
about, what were the systems like?
Ryan: So, the different email follow up systems that we put in place. So,
now when somebody comes through, joins our list, we put them through a
process we call The Machine. And so, somebody comes through and they’re
going to get… We’re going to introduce them to all of our IS performing
offers because we found, you know we were just broadcasting offers, someone
would work great.
Some would work OK, some would bomb. And it was really a function of when
they signed up. You know, but if we had an offer that worked great 12
months ago, people would never see that offer. So we said, “Let’s take all
of our best offers that have worked over time and let’s put them in an auto-
responder sequence.” So it’s not complex systems. It’s just looking at what
works. So we’ll have about 30 days of introducing people to our most
popular best performing offers. And then another 30 days of introducing
them to other offers that might not even be ours, but they’re going to…
or are the highest.
And then they go through this machine and they get put on our primary
broadcast list. So and if we have an offer that works, you know, right now
the machine is about 60 days along. If we have an offer that works, we add
it into that follow up sequence, and that initial kind of machine gets
bigger and bigger and bigger.
Andrew: I got to learn to do that. What happens with me now is, if you
joined today or joined a year ago you’re going to get the same email
address tomorrow or whenever we get around to sending out the email
newsletter. And what you’re saying is, “No. Find those best … The things
that people are the most excited about and send it to them first.” And then
get them on that list where they get whatever else is going on. …
Ryan: Yeah, I mean the simplest place … You know, we do things with
segmenting. Um, and Noah, again Noah’s better at this. You need to do a
call with Noah where he just talks about what he does here.
Andrew: I asked him actually if he would talk about this stuff. I even
asked his developer, Chad, who I’ve known for a decade now. ….
Andrew: … And they both said, “You know, we want to be quiet about this
right now.” “We’ll talk about it with Ryan and Andrew over brunch, but not
Ryan: I’ll go meet with them, and I’ll just record the whole thing without
even [??]. How does that sound? No, I mean if we could ever get them to
talk about it in the more general things. I mean, that’s what’s it’s all
about. I mean, figuring out how to automate, and sequence, and get people.
But what I just described is what got us to 10 million. Right? I don’t do a
lot of the fancy stuff that Noah does. Uh, because I don’t know how. What I
do know how to do is say, “Boy, that email worked real good. Let’s add it
to the series.” You know, we don’t even use proper grammar when we talk.
Andrew: Have you ever heard of Jermaine Griggs?
Ryan: Oh yeah, yeah.
Andrew: I’ve got him coming in to talk about automation. He does stuff like
that that made maybe even Noah doesn’t do yet.
Ryan: There’s no doubt about it. What, what …
Andrew: You know that, right?
Ryan: Oh, absolutely. I had Jermaine come out and speak at an event that we
did a few years back.
Andrew: How did I not know about him, and you knew him a few years ago?
Ryan: Different, yeah, different worlds.
Andrew: Different worlds, I guess. I’ve got him coming on. He’s going to
talk about… He’s going to teach automation. He does things like, he’ll
ask this one question survey. And based on the answer you give to that, he
sends a different collection of emails to get you in a different funnel. Is
Ryan: Yeah, uh, it’s something like that. But the point I want everybody to
understand is, you don’t have to do that. So our stuff is real red neck.
You know, we now do, again I don’t want to talk about how much we do, but
it’s tens of millions a year now just in the publishing business, and we
don’t do a lot of this fancy stuff. Everything that we do can pretty much
be done from off the shelf applications, off the shelf auto responder
solutions, off the shelf. . .
And I go back to, maximize our processes, fix what’s broken, maximize what
is, add what isn’t. You can spend pretty much years just maximizing what’s
already working, so you want to fix the obvious holes, but start at the
top. How can we maximize our open rates? Cool, now how can we maximize our
click through rates?
This goes from all your ads, your emails, everything. Start at the top.
That’s where you’re going to have the highest leverage, and then you
maximize the conversion rates.
Andrew: All right. You know what, I’ll come back to the question I was
going to ask you and instead do a follow-up question, which is: Where do
you get your traffic, then? If it’s the top, then the ultimate top is the
people who send you the email addresses, or the customers who come with
those email addresses. How do you get those?
Ryan: We buy media, we buy banner ads. . .
Andrew: What’s the most effective?
Ryan: It depends on the market. In the financial market, traditional media
buys, so advertising in other people’s email newsletters. We’re building an
email newsletter business, so why not advertise to people who are obviously
email newsletter subscribers, right? So, those things, and banner ads in
the survival space. Same thing, banner ads are great.
We’ve got products on how to drink your own urine, which I wouldn’t
recommend, but if that’s your thing, we’ve got you covered. In those
markets, those are real heavy on the display ads and newsletter ads in the
digital marketing space, it’s very SEO driven. We do a lot of paper click,
we do Facebook ads, but media buying is far and away the most effective
true marketing we do.
Andrew: Not affiliates, but media buying.
Ryan: Yeah, and just to be clear, affiliates have the highest RY [sounds
like], but it doesn’t scale. There are only so many affiliates out there. I
like knowing that I give you money, I give you little checks, and I make
back bigger checks, and with media buying, you get that. Now, we love
turning our media buy people into marketing partners. We love turning them
into strategic partners. . .
Andrew: When you buy an ad from someone, you say, “Hey, let’s go beyond
this ad buy, and I’ll give you a cut of what we make off of our customers.”
Ryan: Absolutely, and we’ll go to people all the time and say, “Look, I’ll
tell you what I’ll do. I’ll pay you the higher of either your media buy
rates, or what you would earn on a rev share basis.” Now, that sounds
stupid, and a lot of people say, “Why would you do that? You’re just giving
up money,” but again, I want to spend as much as I possibly can to acquire
a customer, and I know that if I’m continuously sending people more money
than their other advertisers, whose ads are they going to run? If they have
a big advertiser drop out, whose ad are they going to put in that place?
Me, because they know that they’ve got the chance of making more money.
Who are they going to now begin to recommend more heavily, as opposed to
just being, “This is a sponsor?” Who are they going to have a relationship
with and say, “I know this person. They’re good people. They’ve got good
products,” right? I think everybody’s way too cheap on what they’re willing
to spend to get to customers. That’s our defining thing, and it goes across
everything we do.
Andrew: All right, so what did you do when you were doing $10,000,000 and
still not profitable? What was that answer?
Ryan: That answer was getting some professional management in, because at
that point we were like a real company. I was managing the books by just
logging into my online banking account and saying, “Is there more money or
less money in the bank today? More. OK, good day.” I didn’t understand that
at some point you’ve got to bring things in, like a cruel accounting.
You’ve got to do that, and it made a huge difference. We brought in
somebody to run operations, and they found that we were basically
hemorrhaging about $80,000 a month in stupid stuff.
Ryan: Stupid things. God, it was a ton of little things. Are you familiar
with the service Compete? Compete.com?
Ryan: It was like $500 a month. We had four accounts.
Andrew: Because four different people in the company each decided they
needed to know traffic numbers for your competitors, so they each paid for
Ryan: Yep. Or we had somebody who worked for us, and they set it up, but
they used their own log in. We didn’t have any procedures or SOPs for that,
so we had four, and we only used one. I love the guys at Compete, but I’m
not going to pay for something that I’m only using one of. All types of
subscription services, things like that we were overpaying. We were
spending like $15,000 a month on Gatorade and Coke in the office, which,
people don’t necessarily need that stuff. It’s not even good for them,
So, it was a whole lot of littles, and that was why we didn’t see it. I
mean, it was the death of a thousand cuts, which is often times what you
have, but when you have somebody where it’s their job to look at those
things and to question, we had people that were outsourcers on oDesk, that
were continuing- this is not oDesk’s fault, again, I’m not basking them-
but we had people that we had put on retainer, stopped asking them to do
work, and never took them off retainer. We were just sending them a couple
grand a month to do nothing. They weren’t going to say, “Hey I’m not doing
any work for you guys. You want to stop paying me?” They were happy to take
it. So it was a whole lot of really dumb things that when we added it up it
was $80K. That was big. It was really big.
Ryan: There’s a great book called “No Man’s Land” that most businesses,
when they kind of hit that 10 million and try to push, that’s when they’re
really in no man’s land. It’s when your company’s too big to be small, but
you’re still not big enough to get the benefits of big companies. You can’t
have the big enterprise level solutions and you can’t hire a $300K a year
CEOs and do kind of crazy stuff like that, so it’s tough. It’s a lot of
just [slodding] through and either learning how to, like, I’ve had to learn
how to get good at business. I had to teach myself basic accounting
principles, even though I never took business or accounting classes in
Andrew: You told Jeremy, our producer, that, “At that point I thought that
I could either go back to running a good, a good 1 million dollar company
out of my home…
Andrew: …and be bored, or I could learn how to build a real business.” He
was wondering, “Why not just build it out of your home? A million dollar
business. You don’t have to be bored, and it’s simple, and there aren’t
these headaches of people, and there aren’t the issues of trying to recruit
more people and grow even further. Why not just sit there and enjoy that
from your home?”
Ryan: I really wanted to build something that was multigenerational, is
what it came down to. So I didn’t want to build something that was a great
business but that would never last beyond me. I wanted to build something
that was a real business that could exist beyond me. I knew that while
there would be a greater price to pay today, if it worked out, there would
be huge gains in the future, and there might actually be something there
that could be passed down. I also, just, again, speaking totally candidly,
I wanted to see if I could do it. It’s not a good reason, right, but it’s a
Andrew: Essentially that’s why Kennedy said we needed to go to the moon. We
just had to do it, because we could, to see if we could.
Ryan: Got to see if we can do it. And we’re still, like, I mean, there are
weeks here where it seems like we got it all figured out, and then there’s
weeks where I’m very humbled, and so it’s just, it’s one of those things
where it’s a process, and I enjoy it. I enjoy learning. Business is kind of
the only thing I’m good at. I’m not a particularly good golfer. My hobbies
are kind of my kids. I think I’m pretty good at that, but if I go on
vacation for a week I miss this. I miss doing this stuff.
Andrew: It is fun.
Andrew; All right. Let me read a comment that I got from someone on the
site, and then I want to ask you one final important question.
Andrew: So, guys in the audience, this email, where is it, it’s not an
email, it’s a comment from Paul, one of my viewers, and I think some of you
guys in the audience might be able to identify with it. If you’ve ever
heard a founder on Mixergy or somewhere else say something like, “I earn
hundreds of millions of dollars in business from webinars.” If you ever
hear something like that in interviews and you say to yourself, “Well good
for that guy and his hundreds of millions in revenue, or hundreds of
thousands in revenue. How do I do it?”
Well, Paul took a course on mixergypremium.com and after he went through
it, this is what he said in the comments. He said, “My site is
[sherlockdocks.com]. I did a pre-launch webinar in March. My next stop is
to launch on April 24th with another webinar, and I can’t tell you how
great your site in, Andrew.
And the reason I want to read that to you guys is, I want you to know that
when you take our courses you get action. We make sure you get action. And
I say “we” because I’m not the one who’s leading it. We’ve got people like
Jermaine who’s going to come here and teach it. That course was taught by
Nathan Latka of Lujure. It’s real founders who teach what they’re really
good at, and as you can see from Paul’s comment, we get results.
Now, webinars can generate hundreds of thousands of dollars in sales for
your company, and you’ve seen software entrepreneurs talk about it, like
Nathan and others. You’ve seen other entrepreneurs talk about how they
generated thousands of dollars from it. Mixergy Premium is less than 50
bucks. And if you take a course, or all the courses that we offer, and
you’re still not convinced many times the investment, I’m going to give you
100% of your money back. No questions asked, no argument. I just give it
back to you.
My reputation and my need for you to be happy are too important to me.
Thousands of people like Paul have loved it and continued to be members of
it, and they get every course that you guys hear me talk about. I hope you
go, right now, to mixergypremium.com and sign up. The sooner you sign up,
the faster you’ll get results. Alright, Ryan, you’re a guy who knows how to
sell on video, I’m clearly working to do a better job of talking about my
own product. I think I do a better and better job of interviewing other
people and getting them to talk about their products, but I’ve had some
struggles talking about my product. How did I do there? What’s one thing
that you can say I could improve about it?
Ryan: I thought it was pretty good. I thought it was really good. People
think that video-selling, and selling in general, is something that’s
really difficult. You know how to sell, everybody knows how to sell. If you
see a great movie, you do a really good job of telling your friends about
it. I think what folks try to do is, they try to box themselves in, they
think that selling and marketing is sounding like a used car salesman. It’s
“Sunday, Sunday, Sunday” and really it’s not. It’s just about talking to
people. I’ve had folks tell me, “How did you learn to deliver this stuff?”
I just talk. I emote; I just talk about this stuff. I think if you believe
in what you do and you love it and you don’t try to fake it, just be
congruent to whom you are it’s going to come off just fine. You have to
have a good offer; you have to have a good message. I think for you guys,
I’ve seen your offer; premium for 50 bucks is kind of a ridiculously cheap
offer, in a good way.
Andrew: It’s even less than 50 bucks, maybe even too small. I’m embarrassed
to say how much. Thank you for saying that, the reason that I ask is
because I’ve gotten in my own head about this. It’s so weird that when you
start to recognize that there are people who are listening to you, and then
you start to say to yourself, “Well, what are they going to think?” or “How
is this working? If I’m going to get this right, then terrific, but if I
get this wrong it will be embarrassing.” You just can’t operate, and I got
to that place.
Yesterday I recorded this interview with the founder of Weebly. He’s
killing it, and I think there’s something about him and his story, and I
knew the people who were going to watch it, that I just allowed myself to
get in my own head. This morning I sat down with a cup of coffee and this
notebook right here and I said, “I’m going to just think through how I’m
not going to make an ass of myself with my own promotion.” I know I did a
better job today than yesterday.
Ryan: I’ll give you a trick. I had one of our publishing partners, I had
him deliver it, and he got very worked up. Prior to going on a webinar,
because he would get really worked up, I made him slam a couple of beers.
Not even joking, I said, “Here you go, line them up, pound them.” It
loosened him up a little bit, and. . . .
Andrew: You do that before you go on camera?
Andrew: I had an entrepreneur tell me that he did that before he went on
CNBC, whiskey for him, and it just mellowed him out and let him be fun.
Ryan: Yes, if you speak all the time, you’re going to develop a raging
alcoholic addiction. You want to pace yourself, but I think it’s good to
come off a little more naturally.
Andrew: Well, thank you. With you it was important for me to do a good job
here because I’ve heard about you by reputation for a long time when Noah
surprised me and had you at brunch, I was a little intimidated and I was a
little excited about it, so I’m glad that it worked out here. I’m saying “a
little intimidated” because I could imagine someone in the audience hearing
all these big numbers and saying, “Alright, this is just a little too far.
What am I going to use with this?” or “Ryan’s success is too big for me to
take action on. I can’t just build this ten million-dollar business the way
that Ryan did.” For that person who sees this as too big an achievement to
get to right now, what’s one piece of advice that you can give them that’s
not “Hey, just start?”
Ryan: Number one, my very first goal was to make $250 a month, because when
I found the ring that I wanted to buy for Emily, I could finance it at $250
a month. I did the math on that and I said, “If I can get five people to
give me 50 bucks a month, that’s it.” A lot of people’s goals are to make
$10,000 a month. I hear that over and over again. Ten-thousand dollars a
month, when you start backing it off, that’s 1,000 people to give you ten
dollars. When you start breaking it up into its component parts, you
realize this really isn’t that many people.
If you walk into a movie theater, there are probably more people in that
theater in your town watching that movie, than there are that you need in a
general month to make what you need to make, so have a goal in mind that’s
realistic, but have a goal in mind that’s based on a solid reason “why.” I
don’t get all woo-woo and hokey, that’s just not me, I’m very pragmatic,
but I had a really good reason “why” in the beginning. I wanted to get this
ring. I was going to make this $250K a month. It was going to happen, and
that was thing that allowed me, when all my buddies were going out and
partying, that was thing that allowed me to say, “No, I’m going to stay
here and I’m going to work. I’m going to build these sites.” And this is
Don’t let anybody fool you. Anybody who’s out there saying that starting,
doing this stuff is easy, it’s not. In a lot of cases it’s simple, but
simple and easy are not the same, by any stretch of the imagination. I’ll
tell you, if you don’t have a good enough reason “why” for doing something
you’re probably not going to put the effort in to make it happen. That’s as
woo-woo and hokey as I get, but I tell you…
Andrew: But it’s true.
Ryan: … start with the reason “why” and then break it into its component
parts and figure out exactly, really, how many customers do I really need
to make the kind of money I need to make. Don’t be focused on the, don’t
constrain your products on what’s in your own head. Be willing to license.
Be willing to partner. Be willing to publish. Be willing to joint venture.
Get something out there to sell, and then go do it. Be willing to give away
all the money to get the customer, and I think it’ll work out.
Andrew: And build and build and build. Ryan Deiss, thank you for doing this
interview, and if we want people to say thank you to you directly, I always
recommend, especially with guests that are especially moving to the
audience that they find a way to say thank you, what’s a good way for them
to connect with you?
Ryan: I’m firstname.lastname@example.org.
Andrew: You’re giving your email address, the same one I used.
Ryan: Yeah. I’m not that hard to get a hold of. I will tell you this,
depending on things, I’m not always the quickest to respond, but yeah. I’m
also on Twitter, twitter.com/ryandeiss, if you want to connect with me
there. But, yeah.
Ryan: I mean…
Andrew: By the way, guys…
Ryan: …go ahead.
Andrew: Deiss is D…
Ryan: Oh yeah.
Andrew: …E-I-S-S. D-E-I-S-S for the transcribers, too.
Ryan: It’s the common spelling.
Andrew: All right. Thank you for doing this interview. Thank you all for
being a part of it. Bye.
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