Justin McCarthy kicked off his marketplace by buying the company he worked for. His company is SmartShoot, a marketplace that connects customers with local filmmakers and photographers.
Andrew: Three messages before we get started. If you are a tech entrepreneur, don’t you have unique legal need that the average lawyer cannot help you with? That is 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.
And do you remember when I interviewed Sarah 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 is a stat, 95% of the people who call end up buying. Most people, though, do not 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.
And 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 million 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 is the program.
Andrew: Hey there, freedom fighters. My name is Andrew Warner, and I am the founder of Mixergy, home of the ambitious upstart. How do you create an online marketplace? Those of you, who have tried, or have seen their friends try, you know how tough it can be, and we will, of course, explain some of the difficulties here in this interview. But, today’s guest did it in an innovative way. Justin McCarthy kicked off his marketplace by buying the company that he worked for. His company today is called SmartShoot, and it is a marketplace that connects customers and local filmmakers and photographers. Justin, welcome.
Justin: Thank you.
Andrew: So you are connecting both sides. I am a business. I need someone to come take a photo of me to put up on my website on the About page, for example. That is one example of how people are using SmartShoot. How many orders like this are you doing in a month? Give me a sense of the size of the marketplace.
Justin: Today, we processed roughly 1,500 to 2,000 orders. They come in all shapes and sizes.
Andrew: What size revenue are you doing?
Justin: We are on track this year to do, and some of this is with the legacy business obviously, but we are on track to do close to $5 million in 2012.
Andrew: $5 million in 2012?
Andrew: It is interesting how you discovered this opportunity that created Smart Shoot, and it came to you while you were working in what you call the legacy business. What is the name of that company?
Justin: It was a company called TurnHere. TurnHere was a company that was founded really way ahead of its time. Founded in 2005. It was founded by a freelancer, who really understood the challenges of freelancer. He was a writer. He was a storyteller. He understood really what it was all about to convey a message, and he was just enamored with video and thought there was going to be this migration of video online. Absolutely right about that. Probably early, but essentially, this gentleman created a market and defined what online video looked like to a certain subset of the online population. In this case, it was highly dedicated towards, really exclusively dedicated towards small businesses. Getting a small business to have a profile, if you will, a video profile online.
Andrew: Give me an example of a typical customer of the previous business.
Justin: You know, so our customer, we are channel partners, so folks like AT&T, CitySearch, big Yellow Page providers, folks like that, who essentially had sales teams out there, and they were the ones with feet on the street, or in many cases, inside sales teams on the phones dialing away to small businesses and trying to sell them a package that would, let’s say it was a spa, or it was a restaurant, or a hardware store, or any of these things that wanted to get above just the old quarter page Yellow Page ad, if you will, and wanted to stand out in this new medium, if you will. For them it really was in the mediums because, often times, these small businesses did not even have a web page, and so TurnHere would be commissioned to go off and, on location, shoot an hour and a half worth of footage, cut it down to 60 seconds, then hand it back to AT&T, to display on AT&T’s pages, for example.
Andrew: I see, and so TurnHere, the previous company, wouldn’t get the customer directly, it was these partners that would get customers. Basically, they were up-selling it, right?
Justin: That’s right.
Andrew: (?) would be on the phone with the local businesses, a hairstylist, as you said, and they’d say, “Hey, do you want to buy an ad?” Hairstylist might say, “Yeah, sure.” They go, “Hey, you know what works really well with our listings? If you add a 60 second video to personalize it. Do you want that?” Person would say, “I don’t know how to shoot video online.” “Don’t worry, we have a guy who can do it, expert photographer, local. We’ll send him out. It’s only going to cost you a few bucks, whatever it is.” Customer says, “Yes.” They take that order. They hand it to TurnHere.
Here’s the amazing part. Behind the scenes, what would happen at TurnHere when that order came through?
Justin: There would be a flurry of activity. This was the challenging part. This is where it wasn’t as scalable as it could have been. We would essentially, let’s say, that video request was for a restaurant in Tuscaloosa, Alabama. We would then look at our list of Creatives that we had vetted and recruited, and we’d say, “OK, let’s call John Smith. He’s number one. John, are you available to shoot on such and such a date? More often than not, they’d say, no. So, you’d serially dial a bunch of calls and that would lead to a confirmed shooter to go make that shoot. The dates would always change. The business would move the scheduling. So, it was a mad scramble, essentially, to get that creative to show up. It wasn’t that the creative couldn’t do it. They absolutely could, and all of our Creatives could, it was just the scheduling, the process, was really, really challenging, particularly for Turn Here, as it was really manually done.
Andrew: Then, it wasn’t because of this clunky process that you decided to take the business in another direction, in the direction that led to Smart Shoot. It was a question that you asked users, not directly, but indirectly, as many entrepreneurs, who I have interviewed, have done, and the shocking response that they gave you that led to this. Before I get to that shocking response, I’ve got to ask you, you’re a guy who was just working at TurnHere. I’m looking at your Linked In profile, you’re not an entrepreneur by birth, you’re a guy who started out wanting to work at the New York Times, right, who had a different path in life? How did you end up being an entrepreneur?
Justin: Yeah, it’s just one of those things, those rare times in your life, when something hits you that this process can be done better. The team around you, you kind of talk with them a little bit, and vet whether or not that’s a real idea, or that’s just crazy talk, crazy thoughts. In this case, we all felt the same way, that there’s a real opportunity that we were missing. I didn’t set out to buy the company, I actually set out to migrate the company into what we later became, Smart Shoot. The challenge was, this was an old company. It had old investors. It had a very admittedly, a structured way of doing things. Then it became a question of, how good is this idea? Is it good enough that you’re going to go do it by yourself?
The answer, for me, was a resounding, absolutely, we’re going to go do this idea. So, it was a question of, do we do this idea with these assets, or by launching ourselves afresh.
Andrew: I’ve got your Linked In profile information here. Before you came to work at Turn Here, you were an advisor Tweet Photo.
Andrew: What’s Tweet Photo?
Justin: Tweet Photo later became Plixy, (?) and was acquired by Lockers. (?) It was, essentially, a picture uploader for Twitter. It had over 20 million users. It scaled really quickly. Then it got into the challenge that many of these companies that sit on the ecosystem over Twitter, for example, face; which is, A, do I monetize, and B, will the ecosystem exist around me, or will it supplant our business with its own, you know, freshly built for Twitter, which is what they ended up doing.
Andrew: Just before that, again in your background, something that shows how tenacious you are, you worked at Google, where you had an idea that you pitched to the three top guys, right?
Justin: Yeah, the whole e-staff (?), but Larry, Eric, and Sergei were there as well. I was just ignorant enough, and I think this is a good lesson for entrepreneurs, to be fearless, slash, ignorant enough, to think it’s a good idea to do this. I got on the slate to pitch this idea that was this real estate search product. I walked in, and I really didn’t do a lot of research about this particular meeting, I just knew I had no more than five minutes. I went off into my pitch and, literally, within three minutes everyone said, absolutely, thumbs up. Where should this group sit? How many people do you need? How many machines? How much money? How much time, etc.?
Andrew: Just like that, your idea becomes a whole team and an upcoming product that Google launches.
Justin: That’s right.
Andrew: What was the idea?
Justin: It was the notion that it, it was called Real Estate Search, and it was this idea, this is in 2005. It was this concept that if you do a search on Google for most things, you get great results. If you do a search for real estate listings, houses for sale, for sale by owner, agents, etc., you have really lousy experience. In fact, back then, you probably don’t remember this, but you had a bunch of intermediaries that would buy keywords, and they would say, “Hey, fill out this form and we will get you in touch with all these great listings”, and then they just resell your information to agents. Great business for them. Terrible experience for consumers, and I later learned the reason, and this is the ignorance part of it, but the reason that everyone signed up for this at EastApp [SP] was simply that they were all in the market looking for houses.
Andrew: I’m sorry, one second, it looks like, excuse me. Oh, for the thermostat. No it is not in this office. Thank you. I wish I could turn the camera around; the guy just started moving things.
Justin: I love it. We’re live here.
Andrew: Yeah, there is no thermostat in here. Sorry. So you were talking about what the experience was.
Justin: Yeah, and so, you know, that the net was that everyone had been looking for houses. They had, obviously, they had used Google to look for houses. Had a really lousy experience, and true to form, you know, each of the founders, and all E-staff wanted a better experience for Google, and so that is why it was approved right there on the spot.
Andrew: So, here is the thing. I, as an entrepreneur, my whole life, looked out into the world and said, all right, other bootstrapping entrepreneurs have it tough, but those guys at Google, when they have an idea, everything must fall into place. Now here you showed me that in your case, you got a team, you got a product, you take it out into the world, does everything fall into place? Does everyone say, “Yes, I want to do business with Google.”
Justin: No, absolutely not. In fact, you know, I have been head of the classifieds vertical at Google for some time, and so I had a great relationship with the real estate community. My challenge was when we started to ask them for listings, we became “competitive,” and I had one of the largest real estate companies out there, who I had a great relationship with this chairman of this company. He got up on stage, once he realized we were looking for listings, and we wanted their listings specifically, and he got up on stage, and he said, “Hey, I just want to go on record, and I want to say that the guy from Google, the fellow from Google.” He knew my name, but he just kind of, you know . . .
Andrew: It’s much if you are going to say what he is about to say to depersonalize it.
Justin: Yeah, he totally did. It was great. It was, I mean looking at it from afar, it was well done. Justin: He basically said, I just want him to know, and I want all of you, my colleagues to know that we will never, I repeat never, ever give our listings to Google, and so that set the tone. That was really our coming out moment that we were asking for listings, and here probably one of the biggest personalities in real estate, with the most listings out there, was saying, he was telegraphing what he would and would not do. The rider to the story is nine months later, he ended up giving us his listings, but, you know, when you are big, and you are perceived to be powerful, and people don’t understand exactly what you are asking for, you are more of a threat, and so you can’t be that guy in the startup garage.
Andrew: I got to come back to the question that you asked your users that lead to the successful pivot and growth of SmartShoot. But, first, nine months, you get this guy on board. Let’s not brush over that. What did you do to get him and others on board. Think about it from the point of view of me and the person, who is listening right now, who is saying, I am listening to an interesting story, but until they teach me something, I did not get enough out of this interview, and Andrew failed. So, what can you teach us about how to convince people, based on your experience.
Justin: You know, I am definitely, if nothing else, I am tenacious about once I get something in my head. I believed in this concept, and I believed this was good for him, I believed it was good for us, and it was good for consumers, and, so I really set out in a really specific way to figure out how I could better describe this to him, how I could get more time with this guy, and so, you know, one thing I did is I basically stalked him, and I followed him around. You know, he had a very public schedule, and I was always present, and I knew . . .
Andrew: He would go to a conference. You would be at the conference. He would go to some big dinner, celebrating somebody, and you would be at that dinner, too. You would buy your ticket and show up.
Justin: Yes, absolutely. Sit in the front row, and actually, I remember hearing, you know as Zagat was acquired by Google, and I remember hearing Tim and Nina Zagat saying that they sat in the front row of every conference that Marissa Mayor was at, and I thought I was crazy. They did the same things, and they have been in business a lot longer than I was, but I basically did the same thing, and I just became less threatening. I had many more bites at the apple, I got to explain myself in different ways. There was some credibility that was developed over time.
Andrew: How do you get from being a nudge [SP]? From being, “Everywhere I go this guy just shows up, I can’t get a break?”
Justin: Yeah, I think one of the things that notion of rushing the stage, let’s say he’s doing a presentation and you see 20 people with their cards. Here’s what you can do for me, please help me kind of thing. You don’t want to do that. Maybe mix in some of that but that is nudging and I think that’s a problem. What I tended to do is I’d hear something he’d say on stage. He’d say, ‘Yeah, one of the challenges we’ll have is we’re thinking about this technology issue and it’s really…’ I’m making this up but, ‘… storage costs are really expensive. Well, I just sent him a note and I’d say, ‘Have you heard about Box or have you heard about Drop Box or one of these things?’ I wasn’t asking for anything, I was just there.
Justin: So I started to ingratiate myself. I like the guy actually. I thought he was very personable. Under different circumstances we would’ve been friends so that made it easier. But either way, I was still coming. I kept pushing away at it, trying to get to know him and his business as well as everyone around him. It worked out.
Andrew: Alright. So now you’re a Turn Here and you don’t explicitly ask your customers how we do and where should we go… In fact, before you get to what you do do, why can’t you do that? Why can’t you sit there and go, “I am the president of this company. I can make anything happen. I’m going to call up my customers and say, guys what should we do?” Why is that not the right answer and why is the way that, I’ll ask you that in a moment, better?
Justin: It’s challenging and I think this is one of the big eye openers for me. Once you’ve set something in motion, once you have a board, once you have investors, once you have customers, that see you a certain way change is scary. It’s no different than Google. Google is a big organization moving in a direction, when it hung it’s shingle out to do real estate, that scared a lot of people. It was the same with TurnHere. We had a view and the view was we were this white label channel partner. We didn’t talk to customers directly. That was potentially perceived as conflicting or competitive.
Andrew: Even calling up a customer and saying, ‘What would you like us to do?’ That’s a potential conflict that could get you in trouble. I see.
Justin: It wasn’t, the customer didn’t originate from us. It was passed to us. Frankly, in a lot of our agreements we had terms set where we couldn’t do that. We abided by those really closely. Even beyond that, just convincing folks even internally, even employees, investors, board members, etc., “This is where we think this market could be.” It takes a lot longer. Nine months it took to close this real estate guy. It probably took that long just to get people comfortable with the idea of directionally where we wanted to go.
Andrew: All right, so you placed an ad…
Justin: Actually what we placed is on our site, which got very little traffic, we placed just a button on the site that said, ‘Get a quote for any video, any photography.’ It looked like early HTML, it was very basic. We didn’t have great designers and it was just a, ‘Let’s plop this up there and see what happens.’ We were pretty floored by the responses that we got. To this day I don’t know how people found us. But when they clicked on that link and they filled out our form, they asked for everything that probably we could have never white boarded. Products that would have not been product ties.
Andrew: For example?
Justin: We had someone… Frankly, we weren’t dealing with consumers. We were always dealing with businesses. So we had someone say, “Can you shoot my son’s bar mitzvah or my kid’s birthday? Can you come do family photos?” These people are asking us to come into their homes. This isn’t even a business asking for something other than business profiles. That was eye- opening for us.
Andrew: So it’s just a button that says, ‘Get a quote’ and when they click it they get a form that says, “What do you need done? Where is it going to be?” that kind of thing, they hit submit, and you’re going to fire off a quote to them later on.
Justin: That’s right.
Andrew: I can see now, someone in the audience thinking, “I don’t know what to create for my customers. Justin put this box up, I could put this box up. Justin got feedback that turned his business into a growing company now. $5 million in sales, big chunk of it from this new product and it’s growing and growing. I’ll do this… Wait a minute, if I do put this up on my site…” They must be saying to themselves, “… and I get quote requests for things that I can’t do, I’m going to have to look like a liar. Or I’m going to have to turn people away.” So, what do you do when people ask you, “Come shoot my kid’s birth.” and you’re not equipped to do that yet?
Justin: One of the things that was really beneficial to us was that we always knew we were the gatekeepers. We were the ones that were blocking access to these Creatives, who could really; pull off anything with a camera. They had the skills; we essentially had this arsenal of Creatives out there that could do anything that could come down the pike. We just never let customers tell us what we wanted. Which sounds really backwards, but this happens. We were never promising something that we couldn’t deliver.
What I would say to entrepreneurs is that there are firms that do that. They do that bait and switch a little bit. I would not do that. There are things, though, that you can offer. Not necessarily in an automated, scalable fashion, but things you can deliver with a lot of sweat. Even this for, turn here, we’d literally read this form and say, ‘Oh my God, that’s interesting.’ Our Director of Marketing would then cut that into a more digestible email, and then he’d fire it off to those ten filmmakers in that market. He’d say, ‘How much would you guys do this for?’ Then he’d play telephone between customer…
Andrew: Manually hand dealing. So if I posted, before you guys ever talked to customers, if I was a business owner who happened to be on your site, and happened to click the Get Quote button, and said, ‘I’m going to propose to my girlfriend next week. Can you send a photographer to secretly take pictures so that we have it, and our grandkids have it?’ You would get that email, copy and paste it in to something a little more prepared for photographers, send it to those photographers, get those orders and then say, ‘A-ha! Andrew, I’ve got a photographer who can do it. Here’s the quote.’
Justin: That’s right.
Andrew: All manually.
Justin: All manually. Think about it. For seven years, this business was a small business video production firm. That’s most exclusively what it was.
Andrew: You’re talking about Boards of Directors and investors. Still very small
Justin: That’s right, but, that’s all we did. Putting this Get a Quote up there, this feature was really market research. It was going to tell us if there was a market beyond small business video profiles. Most astounding to us was roughly 85% of the requests were for things other than small business profiles. This is the ecommerce 101 lesson. If everyone comes in asking for Adidas and you only sell Nike, then you’re selling the wrong product. That was the big a-ha moment. There is a business here.
Andrew: Where did you get this idea? It seems so simple in retrospect, but it’s one of those simple ideas that have outsized results. Where do you get that?
Justin: You’re starting to see this trend of collaborative consumption, toward vertical marketplaces, and this frictionless environment you could create. We were seeing it in other areas where it was being done effectively. This migration from horizontal marketplaces that do everything from shooting video to car repair, like Craig’s List, for example, enabling all of those things is tricky. Just focusing on one thing, or in our case two things, video and photography, allows us to do much more vertical specificity around that. We thought since we’re sitting on all these Creatives, all of these jobs, and all of this process experience, let’s build this marketplace to enable these two sides.
Video is one of those things where you can match Creatives together, creative with a customer. There comes a time when you have to go offline to shoot this experience. Then you have editing so it comes back online. That online to offline to back online is an experience that was great for us. We had the assets to do it.
Andrew: When you went back to the investors, to your Board, to your bosses, and you said, ‘This is the direction I want to go in’, one of the things they said to you was, ‘If we match customer with supplier, people won’t need us, right?’
Justin: That was always a big fear. We were sort of the Wizard behind the curtain. That was the belief, anyway. If you didn’t obscure pricing, then all of the sudden you’d put these two sides together, and they’d cut you out of the equation. We thought if all we are is a match, a pricing marketplace, then we probably don’t have a long business here. This is not a sustainable business. We believed matching is probably less than half of it. Now it’s, “How do I work with you creative?” now that I’ve matched you we’ve got all these tools, online collaboration tools, and scheduling, and asset validation, all this tough stuff that individual customers and individual Creatives do not have at their disposal, and so they’re typically doing back and forth with edits over Email or telephone or all of these systems that can be better served with a true platform, so we never really worried about that, but that was a concern with some of our folks for sure.
Andrew: Why did you then not just start adding the service, and, well, you didn’t do that? Why did you instead say, I am going to acquire this company, I will do a management buyout?
Justin: You know, part of it was the company had been going on for a while, and there was some investor fatigue to be perfectly honest, and so the notion was, “Well, do we ask insider investors to raise another round, do we seek external investors?” Neither of those were particularly something we were looking forward to, just, we had been at this business for a while in its current form, and we thought, and we proved this. We thought that investors would have a problem trying to understand this new business, and they did. And then it becomes a question of execution. “Hey, can these guys, who have done this in the past this way, reshape and pivot into this new company?” And the thought was probably not. That, and to be perfectly candid, we had a messy cap table, and so that made it challenging to raise money on top of it.
Andrew: What do you mean? What was messy about it?
Justin: TurnHere had raised, prior to my getting there, had raised three rounds of capital, an A, B, and a C round, and so that makes it, you know, “What are you going to do, go off and raise an E round?” Well, there are implications, there is past dilution that happened in the company, and that means that the existing investors would have to think about, well, “What is the value of this company to me today and going forward?” And new investors, they like things nice and clean, and we knew that. They were not going to wade into those waters. It is really rare that they do.
Andrew: How much money did TurnHere raise?
Justin: In total, about $13.5 million.
Justin: Yeah. It is actually, what is interesting is in TurnHere basically paid out creative is about $13.5 million, so literally, as the money came in, we paid Creatives more than anything else, which makes a lot of sense. Obviously, it was passed through.
Andrew: But, you are saying that the money you raised, you gave to Creatives.
Justin: It happens to be the same number.
Andrew: But it is not.
Justin: It is not because obviously we are doing gross revenue on top of that, that was above and beyond the $13.5 million in capital that we raised, but it is just nice symmetry, in that we liked to think that the vast majority of the money that we pulled in we passed back to Creatives, and most marketplaces aren’t’ quite that way, or many aren’t. Many obscure what your take is, and you keep 50-60% of that take, and you give you know the Creatives or your workforce a much smaller number.
Andrew: So what is the problem with marketplaces?
Justin: Well, one of the biggest problems, right out of the gate, is being able to build both sides. That’s the challenge is can I get supply and can I get demand, and
Andrew: Most companies getting even one set of users is tough and will often kill them because they can’t do it. Getting two and getting them to show up at the exact same time, and to like each other, and like their business, really tough. What else is the trouble with marketplaces?
Justin: Well, there’s always the question of centralization or decentralization. How involved are we in the process? And, you know, this comes down to do we take payment, for example. Some marketplaces don’t. They take the match, and they figure out a different way to get commission. Do we hold the assets? Are there releases? Do we get releases? Are the contracts between us and the Creatives and us and the customers, or do we make the contracts between these two sides? And so you ask at every step of the process, “Hey, how much of this do we, the company, take on, and how much of this do we decentralize and let Creatives and customers manage themselves?” Any of those decisions can really trip you up. I can either be a too much of a gate for customers, problematic for Creatives, in our case, or it is just a lousy experience. You know, you come through this really smooth, seamless process, and then you are dealing with a workforce, you know, customer interaction that is completely sub optimal. You know, it goes off this nice, neat platform, and then into the real world, where people are making phone calls, and going to voice mail, and so there are a lot of things that can come up.
Andrew: Let’s come back to that because I want to continue with the narrative, and then find out how you made the marketplace work because it was a new product for you. You now have this new idea, this new way of; you have to relaunch it by buying the company that you work for. Where do you get the cast?
Justin: We got it ourselves essentially, and you know, partly my co- founder, and I came from Austin and came from, actually the original founder as well, who believed in the [??] Forward Project.
Andrew: So you, co-founder, who’s the co-founder, Steve?
Justin: John McQueen.
Andrew: John McQueen, and the original founder of TurnHere decided you were all three going to do a management buyout. Were you a Google millionaire?
Justin: [laughs] I did fine at Google. I was a very early guy at Google, for sure.
Justin: OK. So that helped you. You got… Were you a Google millionaire?
Justin: I did… I was the 300th employee. I’ll let you do your math.
Andrew: OK. Well, congratulations. Why’d you leave?
Justin: I’d been there for seven years and I really capped off a great experience there throughout the process. The company went from 300 people to, I don’t know remember what it got up to, 30,000, somewhere in that range. It was just a big organization. I’ve always liked working with small companies, and I like the starting period. The same was true for me at DoubleClick. I was the 90th employee there. I like when it’s not clear that there’s a bear there. Then there’s a lot of hope and anxiety and opportunity and negotiating internally and really trying to figure it out.
Once there’s a bear there and people want to work there and they understand this is a stable environment, you start to get into an entirely different type of company. Frankly, I don’t buy that.
Andrew: So why didn’t you buy the whole thing out yourself?
Andrew: No. Yes, why didn’t you buy Google from those two guys, Wiley[SP], Larry and Eric or someone? Why didn’t you buy TurnHere directly and turn it into SmartShoot on your own?
Justin: A couple of reasons for that and I definitely thought about it. But my co-founder was really one of the early guys who understood the process. There is a ton of intelligence in this process. Just going through interest in a video down to actually delivering final asset and all the in- between. It’s very challenging and he really got it. He was one of the early guys, that actually built the creative network and so there’s a lot of experience and intelligence there.
On the founder side, John and I own the company. We executed the management buyout of the company and then we brought all the employees in as owners as well. The founder of TurnHere. We thought it was important. This is a guy who’s been a very successful entrepreneur. He sees the big picture in a way that most folks don’t and we wanted the wind at our backs. We wanted him to participate in what we thought an enormous opportunity in this new company and he agreed to do so.
Andrew: It looks like the guy who came in here to find the thermostat. I guess he found the thermostat somewhere on the floor because it’s finally starting to get cooler in here.
Andrew: The lights are really hot. They switched to cooler lights. A past interview we [??] has been helping me figure out which lights. I’ve got to come back and ask you later on if I could go to SmartShoot and get somebody to come in here, not to take my pictures, but to just set the whole thing up. You do the lighting for me. Set the backdrop. Do the whole thing. I just want to sit and ask questions. You’re saying I could do that. Right?
Justin: You could. I mean, obviously, it wasn’t designed to do that. But, and this is another thing I would encourage entrepreneurs to do. Unstructured feedback is really good. One of the things that we offer in our pull-down menu when you’re posting a job is, if you don’t see the product that you want, there’s another. That other you could really fill- in, not ideally, but you could certainly fill in, I just need someone to set up lights and what-have-you. You have 16,000 Creatives who will absolutely tell you how to do that. Will show up, will quote you a price, will tell you why they’re the experts in light hanging and light purchasing and what.
Andrew: Photographers love lights and now I understand why. It makes such a huge impact.
Justin: It does.
Andrew: Even you and I before we started I couldn’t see you and I suggested, hey, you know what, put light in front of you. Big help. Then we came up with the idea of opening up a text doc right behind the Skype window that you’re using to talk to me and, boom, now I can actually see you.
Justin: I think you ought to apply to be on our creative network.
Justin: That’s good on the ground thinking right there.
Andrew: I’m becoming a lighting geek. All right, so, now you’ve got the business, you’ve got the vision, you have market feedback that tells you this needs to work. The problem I see next is you still have to get customers, and you don’t have experience going after consumers like me who need photography and sometimes come up with wacky ideas like help me set my lighting. You no longer are going to reach out to photographers and videographers individually, you need them to show up and understand this process. So I want to understand both sides of those equations. Which side should we start off with here as we continue with your story?
Justin: Well, I think once people find us, getting through that process is really the first part. You can layer on the top of the funnel but the [??] generation side next, but you have to have a product that gets you through. So that’s what we focused on first.
Andrew: First getting the Creatives in there.
Justin: Not getting the Creatives, but getting the process of filling out that form and having it be something other than this manual chaos behind the form, which is what it originally was, into this nice, seamless experience. That’s what we built. That’s what we launched on October, 2nd. We wanted it right out of the gates to be a fully-automated platform.
Andrew: October, 2nd, which year?
Justin: This year.
Andrew: This year? Today it’s December, 11th. We’re talking about a couple of months ago.
Justin: That’s right, yes. We notified Creatives what to expect, we built this form, and then we built this marketplace to essentially allow Creatives to bid. It showed their portfolios, it showed their sample work, it showed all their job history. All the information –
Andrew: How did you email them and get them to do all this stuff?
Justin: We contact them regularly. You know, there’s thousands of them we deal with on a weekly basis.
Justin: No, they were already in the system. So there’s 16,000 of them that have been recruited, and we’ve got 50 thousand jobs from the previous company. We exhaustedly recorded every one of those events. We asked customers, “hey, what did you think of that person that showed up at your site and hung lights for you,” for example. What was their personality like, rate them zero to five. How about their work itself? Rate that 0 to 5. So we had all this great information on those guys. That was all part of the process. One, now that we established that we had this great repository of information and incredible talent, now we need to make it simple for customers to execute an order and go through the process without our intervention.
Andrew: I see. So you didn’t even need them to come in and list themselves and participate. You just said, “They’re in our database. Let’s just make this database more public.” They didn’t need to be public at all. They just needed to respond to orders as they came in. We got it. We had some basic rules of engagement. When we said show samples, not a generic sample but a sample that’s relevant to this particular job request. Don’t put your phone number in there, try to keep this on platform. All the obvious things that you ask for, but we didn’t really police. First 60 days, we just wanted to see what kind of activity and how these two sides engage, and we were pretty blown away, to be honest with you.
Justin: You told me how you got the Creatives in there. You already had them in your system, you just had to move to this new process. What about users who don’t have experience going after businesses one on one; how did you do it?
Andrew: One of the things we did was, Turn Hero was a company that was white labeled. No one talked about it, and we didn’t message about it. Smart Shoe was a company that absolutely should be playing the space that most consumer-facing companies are. Using tools like social media amplification, and that was a big thing that we did. What does that mean? In our case, we had this great finished asset whenever a job got completed, it was a video. That video was looking for eyeballs, and customers wanted us to get them those eyeballs. So, one of the things we did is, the minute we finished your video, we let you share it on Facebook, tweet about it, put it on YouTube, etc. We basically gave them those tools away. Not surprisingly, customers paid for this video, they wanted to make noise about it, they started to tell friends. So, initially, for the first 90 days, it’s all been about word of mouth. Every one of our orders we started day one with zero orders up to –
Justin: If you have zero orders, how do you get word of mouth for the first order?
Andrew: One of the things we did is we pinned our creative network. We said, “Hey, this is available. Let people know.”
Justin: Why would they? I’m sorry, you were going to tell me about it too. I’ll follow up with more questions.
Andrew: Part of it is they’re building the platform with us. They know they want jobs. If they tell people about this, they’re not necessarily telling people about their particular market, you can still interact with them directly, but they may be telling friends in San Francisco if they’re in New York, “Hey, there’s this market.” or someone that’s getting married and they don’t do wedding videos, “Hey, you should use this marketplace.” So they started to talk about it. We started to get some press around it. People around the valley, a lot of small companies that are getting started, they found out about it. Actually, we had a great, First Round Capital has a great network of founders. Someone put out a request, “Hey, where do I get this done?” They said Smart Shoot. That started to drive customers to us. So, every time we got a customer and satisfied them, they’d tell the world about it. We started to see that over and over.
Andrew: I see. How long did it take you to get your first customer?
Justin: It actually happened the first day. You’re on pins and needles, obviously. It’s like throwing a party and seeing if anyone shows up. We built this neat functionality, and we’re waiting, waiting, waiting. There was some anxiety around, obviously. It moved the minute we had that first request. It moved to the other side of the anxiety, and that is will anyone pitch? It’s one thing to say, hey I want this job and this is the job I want executed. It’s another thing to have someone actually respond to it, and we had within the first 30 minutes, someone responded with a really intelligent, well thought out pitch. 30 minutes later another person, then another person, and we knew we were on to something there.
Andrew: After the buyout you had to let some people go, right?
Justin: We did.
Justin: Just the direction we were going, we were . . . the prior company was, was really heavily involved in the business development, signing up new partnerships. It was involved in account executives, managing each of those partnerships, and we essentially said, hey there’s a handful of partners that we want to go forward with, that make a lot of sense. The rest might not make sense. The group that’s managing the rest of those folks, we really didn’t need, and the direction of the company didn’t require.
Andrew: Why cut that off? Why not keep growing that business and keep nurturing it? Since it was still profitable and still to this day is responsible for, I’m looking at the numbers here, the majority of your orders.
Justin: It’s one of those things I think entrepreneurs can see this, and this is the balance is an order that comes through, that actually looks like it’s profitable, isn’t always. It isn’t always in that and Google did a lot of those things, say hey, that takes 10% of that person’s time. That product manager gets pulled into that 10% of the time. That engineer gets pulled in 20% of the time. If you actually do all of your soft cost analysis, you realize, wait a minute, this isn’t exactly profitable, and it’s not growing. Or it’s not directionally were we want to be going. So, the other side of it, and this is the gospel for entrepreneurs that we all know, is preserving cash in the early days is everything. Making sure that your burn is ahead of seed financing and eight rounds alike. You want to make sure you have a real business here and you want to give yourself as much runway as you possibly can to get there. That’s really why we did that.
Andrew: I see. Do you ever miss anything about working at a big company, now that you’re working by yourself?
Justin: Other than the cafeteria, in Google’s case, yeah it’s great. The water cooler is more diverse, I would say. You can run into ten times the number of people, and there’s something to that. But, no, I like the, what feels like the quiet before the storm at a small company, where you’re in idea stage and it really all comes down to execution and all the little decisions that you make. That, let’s be honest, you get to a certain point at a company that grown to the scale of a Google, and it’s hard. Maybe, I have an ego, and that’s the problem. It’s hard to sit at your chair and say, boy if I wasn’t here, this place really wouldn’t function as well. You’re just a small, a very small part of it at that point, and it’s difficult to make an impact or make a dent, as they say.
Andrew: I remember reading a Wall Street Journal article years ago about entrepreneurs who went back to working at the big companies that they started off with. There’s the story of one guy who said, “You know what? I has my office and one day there was a hole in the carpet, and I was responsible for fixing the hole in the carpet. In the past, when I worked at this big company, there were people around to notice it before I did, and then to patch it up before I had ever to bother with it. Now, I’m responsible for those little things. I don’t think that we have those issues anymore. I mean, I’m in a shared office space here where they take care of everything, except for the heat sometimes, or the temperature. I can still see that there are things in big companies that we don’t have, when we’re on our own, that make us feel like we have to do everything. Frankly, even just the advisers, even just the person who can guide you, someone else who has a vested interest in your success. We don’t have that. Do you have anything like that, that sticks out?
Justin: Yeah. That all makes a lot of sense. By the way, my, my duty, internally at SmartShoot, is I load the dishwasher. So, we all have . . .
Andrew: There you go. Yes.
Justin: So, absolutely, I don’t know. I think there’s some camaraderie that gets built around that, that, that I think is cool. It keeps you connected to what you’re all trying to accomplish in a shared goal. That, miraculously the kitchen gets cleaned, or the carpet gets repaired, that detaches you from the fact that you are building a business and there’s not a guarantee that you will succeed in building this business. I like that reminder. I’m definitely one of those kind of people that I’m not a . . . a holey carpet or having to load the dishwasher is in a way, a reflective reminder of what we’re trying to do here. We haven’t accomplished anything yet, and so we’re all hell bent on getting there, and until we do , we’re going to be doing a lot of things, a lot of menial tasks that some of these larger companies maybe don’t have to do.
Andrew: You listen to Mixergy interviews, and you gave me, before we started, a list of the ones that you loved, and I asked you why do you listen, and you said, “You know what, as an entrepreneur, it’s lonely.” What do mean by lonely to be an entrepreneur?
Justin: Well, so you hit it on the head. Right? You know, there are advisors, vested interests, or sometimes it is hard to even find those. SmartShoot, we are really lucky. We have some folks, who really understand what we do, and care about it, and are constantly thinking on our behalf. But, you know, by and large, you are facing a set of problems that you, as a founder, as a co-founder are the only ones thinking about, and some pretty what feel like scary moments and some incredibly exhilarating moments, and you know, you look to your left and you look to your right, and these are not generally speaking the kinds of things that either person on either side could handle, or you think they could handle. And, so, you know, you don’t want to disrupt, but so you kind of have to manage your own psychology, for the most part, and that’s, you know you are living in your own head for a while. There are doubts, like any other instance, or any other issue that you are facing, and I think not, in my case I have a co- founder, and so we bounce things off, and we are really transparent about hopes, desires, fears, etc. But, even still, you’re two people trying to make a dent in the world, and you kind of wonder, Are other people facing this? You know, you can get lost in the blogosphere, and you see all of the, you know this great writing about this company has done this, and they have done that, and you can, you can get caught in that spin cycle and think, jeez, we are not moving quickly enough, or we should have thought of that, or what have you, and that is lonely, you know.
Andrew: And, frankly, I sometimes talk to entrepreneurs one on one, and I say where here is an issue I have, and they are like instantly the master experts at your issue. You know. You ever hear that?
Andrew: And walk away going, why don’t I have the answers as much as they do, and then I realize, you know, a lot of times, the guy did not even hear my question, did not even hear my issue. He is just being Mr. Bigshot.
Justin: Yeah. I know there is definitely that. You know, it’s funny, there are sources out there, obviously, it is social sources, and likely, you know, you look at a core, for example. That gives you a tiny bit of you are not alone, you know, when someone asks a question, “Geez, we are thinking of switching payroll,” menial things like that, or down to more existential questions that people flip out there. It is amazing to see people with their own name, and you know who they are, you can look them up on LinkedIn. They will actually go in depth, “Wow! I just faced that, and here’s what we did.” That’s helpful.
Andrew: I love that.
Justin: So, there is more of that, but, you know, you get that from the kinds of things you do as well. Hearing in a long-form interview what people were afraid of and how they tackled that problem is helpful.
Andrew: All right. Let’s see what else I’ve got. I think all I want to do now, since you just said so much about Mixergy, is I am just going to say, guys, if you are into long-form interviews in depth, the kind that we just did right here, go to, you know what I am about to say. Go to Mixergypremium.com right now and sign up. There are hundreds of interviews with entrepreneurs, who have talked about their struggles, how they dealt with them, how they came up with creative ideas for figuring out what their customers want, the way that Justin just told us about, and when you listen to interviews, yes, it will, hopefully, it will help you feel the way that Justin does, which is less lonely and more connected to other people’s solutions, and understand that we are part of something big here, we as entrepreneurs, and the struggle is eventually worth it. But, also, I feel like a lot of people I have watched them, now that I have come to San Francisco, I meet a lot more of my listeners than I ever met before, and they will show me like, EverNote Notebook one guy showed me, with a breakdown of what he got from interviews, and I loved that he does that with everything that he learns, he just wants to break down what is useful, what he learned, and that’s phenomenal.
I also want to say, guys, if you are listening, and you are not taking notes like that, I believe, because I have seen this in my life and others, if you just listen to peoples’ stories, those stories will stay in your head, and when you need those solutions that you heard about, because they are told in story form, you are going to have them there. It will just feel like it is part of you. And, one the reasons why that happens, Justin, is because early on in doing interviews, I just interviewed people, and talked to people about how do you tell the story in a way that sticks, and you can see that if you are paying attention for it, you can see that whole hero arc, so can see that we really thought through the way that we tell the stories here, so that you will remember it, and it will have impact on your life. So, anyway, all that’s to say, if you believe in this vision and you want more of it, you have hundreds of interviews at Mixergypremium.com. Justin, one of the interviews you told me earlier that you liked, I’m going to recommend right now, which is Barbara Corcoran. Why do you like Barbara Corcoran?
Justin: She is a real estate luminary in New York. Long before she was on Shark Tank, she was Corcoran Real Estate and she built a business, in a tough sport. Real estate in New York City, no MLS, it’s hand-to-hand combat and she was really smart.
Andrew: You were in New York so you know what I know which is, you walk around New York and you see her name everywhere. She dominated that space.
Justin: Yeah. She really did. And she created a brand personality. It’s funny, coming out to California, you see agents on the bus shelters, promoting themselves as ‘List your home with me’. I never understood that and we never really saw that. What we did see is something like her where it was actually the company. It became synonymous with her brand and, obviously, her namesake company. That was a very powerful company, later acquired by Realogy or NRT at the time.
Andrew: And she is so clever with the way that she gets things done. When the world seems against her, she comes up with something, with a way to get an advantage. Like her book was famously titled something like ‘If you don’t have big breasts then wear pigtails’. Because she was a waitress and the other waitress who had big breasts kept getting big tips and kept getting attention. So her mother said ‘All right. If that’s not your asset, go the other direction’, and wearing pigtails got her attention.
Andrew: Tons of stories like that.
Justin: She’s a great marketer. I grew up in Brooklyn and there was an area called Red Hook and I remember (admittedly the New York Times classified section wasn’t the most staunch on the editorial advertising divide) a picture of her, shot from behind, looking at Red Hook and she said ‘This is my next market’ or something like that. Sure enough, she bought houses and she set up shop there. I think she’s done well; just a great marketer.
Andrew: All right. Mixergpremium.com. Listen to that interview. It will electrify you and fill you up with great stories.
Two things before we end, Justin. I’m going to ask you one more question about marketplaces and then I’m going to ask you about what I should do when I go to your site and look for somebody to help me with lighting.
First, about marketplace; someone who is listening to us now says ‘I want to build a market place but, you know what, I don’t have the advantage that Justin had which is all these great people who are already in my system who I can start day one with.’ What advice do you have for anyone who is building a marketplace and doesn’t have a leg up like that?
Justin: First of all, establish that there is a need for that marketplace; even before anything else. I think that a lot of times we have these great ideas but they are answers in need of a problem. It’s hard to disconnect your personal problem with ‘Is there a market out there?’
That is a real challenge for you as an entrepreneur, in that early stage: Does this make sense? I think a lot of the reading and the understanding in interviews like these that we hear is that people love the doggedness and tenacity of that entrepreneur. “When everyone else said it wasn’t going to work, I just kept plowing ahead.”
Absolutely but it helps to start with that there is a need for what you are doing. I think people jump into that, whether it’s marketplace or anything else, probably without doing their initial homework.
My feedback on that is, try and find your version of the get-a-quote button. You’ve got 1000 friends on Facebook; drop a get-a-quote type thing in front of those 1000 people and see if, even your friends, who have a vested interest, you would think, in your happiness; if they respond to it. If they don’t respond to it, maybe pick 1000 other friends but, generally speaking, I think there are cheap, easy and down-and-dirty ways to figure out whether or not your idea actually has a market place, if there’s a need.
Andrew: That’s a great point. All right. I’m on now smartshoot.com. There’s a button that says “Post a Project”. This is what people like Zagat has used you, Yelp, Groupon, Living Social, Google; these are your customers?
Justin: That’s right.
Andrew: All right. So now I click “What kind of video do you want?” Book video, business profile, music video, wedding, shoot only, edit only my video. I’m going to go with ‘Other’. So if I wanted someone to edit this video, I can do it on your site, too.
Justin: Without question.
Andrew: How many videos do you want? Let’s just say one. Approximate video length? What happens if I say . . .
Justin: This is great. You’re giving us some good product intel here. Let’s see how this works.
Andrew: I think for other how many videos and approximate video length doesn’t apply. Giving my project a name, “Help me with my lighting and backdrop”. And ordinarily what I might want to type in there is I need to look good on twitter or.
Justin: Yeah, that’s right, That’s right. But even in the time you might say, in the description, you might want to say, how long is it going to take someone to come to my business and sit down with me and hang these lights, just throw out a random number.
Justin: You know nothing about it, then just explain the problem. And what you will find is that Creatives will say, “I just set up lights and it doesn’t take ten minutes it takes 3 hours, or it doesn’t take a day it takes 2 hours.” They are the experts so you don’t have to be the expert.
Andrew: OK, I could see, I always, I love lately companies will take a group shot of employees.
Andrew: And it will be some sort of funky set up, It’ll look great and it’ll be fun and this is the place to get it. Just come to smartshoot.com.
Justin: Yeah, we’ve actually got a bunch of these requests recently, corporate profiles make me seem a little less stiff. But light me well so it’s professional.
Andrew: Say best shoot time is flexible, desired month is December, all right It think what I want to do is what is my email address, put that in there. How did you hear about us? They don’t have a box for enter the founder, I’ll put other. I’ll have to do this afterwards but what I’m imagine I’ll do is I’ll take a picture of what I see here or maybe a video of around the office and say, “How do I make this look better?”
Justin: Yeah absolutely do that, include that link if you like, really easy, this will be a first.
Andrew: Yeah I can’t imagine too many people needing this.
Justin: No maybe this is a new product, maybe this is our get a quote for hanging lights right here. This is the beta test.
Andrew: All right, maybe this will be another item on what kind of video do you want drop down. All right I will do this after we are done here, hopefully I can get someone in here soon to make me look handsome. In the meantime, thank you for doing this interview.
Justin: Make sure to mention where you found that on the next interview when you are perfectly lit.
Andrew: Oh, how I look so good? Oh absolutely, I’ll do it.
Justin: There you go
Andrew: Oh, good, I see some people in person, I’m not a handsome looking guy, but I know I look better than them, on video they look so good. I see them online and go if I looked that good I’d have a huge audience. Of course, people would want to watch this guy, and I meet this person over drinks and they just look, first of all they are always shorter than they seem online and I know I am, too, because I am dominating the camera here. And the second thing is they just don’t look that good. But on camera I guess they have the light behind them…
Justin: That’s what I was going to say, one of the things you should ask for is a little set dressing.
Justin: Creatives are really smart about exactly oh you know that plant over there or that clock really don’t fit your time but maybe an interesting poster or something that puts you in context. I’m a betting man, and I bet you’re going to find some good tips in there.
Andrew: I’ll go very slow because anything to do with design freaks me out. But I need something here. All right. Justin McCarthy, thank you for doing this interview.
Justin: Thank you for the time.
Andrew: You bet. Thank you all for watching. Bye, guys!