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Check them out and let’s get started.
Andrew: Hey everyone, it’s Andrew Warner, founder of Mixergy.com, home of the ambitious upstart with take number three. I screwed up with the intros three times with someone who deserves much better treatment. The big question for today’s interview is: how does a founder generate over $20 million in sales by helping entrepreneurs get legal documents easily?
Joining me is the woman who had to listen to the two failed intros and deserves much better. His name is Jennifer Reuting. She founded three companies that make it easy for entrepreneurs to file the paperwork that make their businesses official and make them into official, legal entities. Her latest company is DocRun. They are the makers of software that instantly creates complex and highly customized legal documents for attorneys and small businesses. I want to hear how she built those companies. Jennifer, thanks for sticking with me as I jumbled up the first two intros.
Jennifer: You know what? It’s only because you told me that I had no retakes.
Andrew: I say that to everyone, and now I understand why that’s such a frightening thought. As soon as I thought of it, I realized, wait a minute. One of the reasons that I stopped was I saw in my intro as I read the first time that you generated over $20 million in sales. I said, wait a minute, I’d better check that number before I release it in the interview. Can I ask you about it? You said it was… Can you explain that number to the audience the way that you explained how I got to it?
Jennifer: Yeah. So, I have two companies. My third company hasn’t launched yet, so we’re pre-revenue. InCorp we do about $15 million. We’re set to actually go over that number this year. We’ve been growing 20% each year since we founded it. MyLLC, we’re set to do just under $10 million this year. We did $7 million last year.
My business partners are going to kill me for releasing those numbers.
Andrew: Good. I love that.
Jennifer: I feel like transparency is key, so.
Andrew: Thanks. And you founded both of those companies, true?
Jennifer: I did, yes. I founded the first one at 17, actually.
Andrew: The first one you launched at 17?
Jennifer: I did, yes.
Andrew: You know what? Let’s hold onto that for a moment. I want to go back in time and find out how you built those companies. I’m going to do a lot less talking because apparently I’m not doing such a good job of talking today.
Jennifer: You’re doing great.
Andrew: People are going to want to know what you’re dong right now. Can you explain what this new company, DocRun, is, and then we’ll go back in time and figure out how you got here. And then, we’ll talk about DocRun at the end of the interview. How did you come up with the idea? What is it?
Jennifer: So, I wrote the book, “Limited Liability Companies for Dummies.” That’s a mouth full. I was writing the first edition actually, and it all started with the operating agreement. I think that the operating agreement is actually where the majority of the formation happens in an LLC. It’s not the actual one page, fill in the blank, state form, that Legal Zoom or whatever company you go with fills out and submits. LLCs are very flexible, so how you structure your company really has to do with… It’s outlined in the operating agreement, who’s managing it, what rights do they have, how you distribute the profits to the members.
Andrew: Every LLC needs this operating agreement?
Jennifer: Absolutely. Especially, in some states if you don’t have an operating agreement, you have no liability protection. In other states, like New York, if you don’t have a specific provision in it, then you have no liability protection.
Andrew: I didn’t know that.
Jennifer: You completely eliminate the need for a LLC or the benefits of a LLC. I was telling users that you really should go to an attorney. That’s the one thing you need to involve an attorney who specializes in LLCs in your jurisdiction.
Andrew: I’m sorry to interrupt. But, Jennifer, if I wanted a LLC, I just go to a website or pick up the phone and basically pay a couple hundred bucks and create a LLC. I could use the two companies that you founded or a few others that are out there. It doesn’t cost much, very easy to do. You’re saying, at that point I still don’t have the protection that I need because I don’t have the operating agreement, and I have to go to my lawyer and get an operating agreement?
Jennifer: Yes. Absolutely. That’s where the need really occurs. It’s a very nascent market. You can start the company very easily, but all the steps after that, there’s really no assistance for small businesses and entrepreneurs. It’s like, here’s your paperwork. Now, go off and do your company. They’re left saying, well, I’ve got my LLC. I don’t know what to do with it. I want to make it so that I bring on an investor, say three guys come and they create a LLC and one’s putting in the money and he wants to get paid back, maybe plus ten percent. But he wants to make sure he gets paid back before the profits are split.
Well, all of a sudden you are dealing with varied allocations and distributions, and they don’t know how to even accomplish that. That happens in the operating agreement. Unless they go to an attorney and they spend thousands and thousands of dollars, there’s really no option for them.
Andrew: How much money would that cost if I went to a lawyer and asked him for an operating agreement?
Jennifer: Well, really, after I wrote that in the first edition, I got a huge blow back, and a lot of the readers were saying, I went to an attorney and they wanted a $5,000 retainer. They wanted $2,500 just to do the agreement. I needed it in writing for the second edition. I needed to find a solution.
And so, I called some of my attorney friends, and I’m like, is there a way that we can create a viable solution where you just do these agreements at a price point where small businesses can afford. Across the board, they said no. It’s not worth it to them. They have their practices. Their time isn’t worth it et cetera. So, it really forced me to… When you have all of your readers saying, what’s another solution? Give me another solution, it really forced me to take a step back and evaluate the process of attorneys creating these complex documents and agreements.
Really, all they do is pick and choose provisions from other documents they created and create this patch work, and yes, there is knowledge behind that and experience. But that stuff’s very easily quantified and computated.
Andrew: So, what would it cost? I’m a dollars and cents guy as you saw from the intro. What would it cost me to get a standard operating agreement? And I’ll come back for the audience. I’m going to come back, and we’re going to get the biography of Jennifer’s businesses in a moment, but what would it cost?
Jennifer: For an attorney to do it?
Andrew: Yeah. No, sorry. I have a sense now of what it would cost for an attorney. What about at your company, at DocRun?
Jennifer: We’re starting it at $149. We might go lower.
Andrew: A hundred and forty-nine dollars?
Jennifer: Yeah, mm-hmm.
Andrew: Wow.
Jennifer: Super customized. We take users through a TurboTax like process, a dynamic Q&A flow so you can do operating agreements for . . . and, by the way, this is just one of 80 agreements that we actually have in our system right now, because we have employment agreements and stock option plans . . .
Andrew: I want to move on from this, but I want to know as soon as the company opens, as soon as the company is ready to do this. I would like to get an operating agreement; I didn’t realize that I needed it. I’m not even sure if I have one. I should talk to my lawyer and see if I have one.
You’re now blowing my mind. I see Andrew back there is looking me, the guy over your shoulder, and he can’t believe that I don’t have one. Andrew, could you please let me know when you guys have, when you guys are up and running? I could use that.
He’s saying yes. All right, yes. Man, with the freaking legal system – I thought it was easy to create a company. Apparently there are all these agreements that I’m not aware of. I hope that my lawyer’s aware of it and set it up for me.
Jennifer: Shame on you.
Andrew: Shame on me is right. All right. Let’s move on and find out how you got here. You said you were 17 years old and you decided that you wanted to start a company.
Jennifer: Well, I don’t really remember it that way.
Andrew: Tell me about it.
Jennifer: You don’t decide you want to start a company, you just decide you don’t want to work for anybody any more.
Andrew: I see. So what do you mean, you don’t want to work for anyone any more so at that point you were already done with it? What were you doing up until then?
Jennifer: You know, it was funny. I actually got fired from a retail job for a stupid reason, and then I ended up going to work for a – I was in college at the time. I started college early, and I was working for these investment bankers, and they were taking companies public during their first mergers. One day I come to the office and it had been ransacked and they had fled the country!
So yeah, they essentially were doing some shady stuff, not paying their taxes amongst other things, so the whole staff basically took off. But I realized that the office had been paid up for six months. And at this point I’m, like, well, I have to take advantage of that!
They’d taken about 60 companies public at that point, and I knew that I couldn’t take companies public. I’m 17 – you can’t do that on your own. I mean, a lot of people are involved in that process. So I was wondering, what can I do?
A registered agent service is actually very simple. You wait for somebody to get sued, and when they do get sued you forward the mail onto the company. Basically you are the place of business in the state, that’s state required. Every URL you see probably has a registered agent and all corporations and LLCs are required to have one. And Nevada being a tax haven at the time I knew that a lot of people needed to hire a registered agent, someone to act as their office.
So I started mailing to the Secretary of State’s database to the companies listed and offered them a free year of registered agent service.
Andrew” You e-mailed, you contacted who?
Jennifer: I started mailing.
Andrew: This was ’98, before e-mail was the common way.
Jennifer: So this was before e-mail was really popular, and they didn’t even publish e-mail addresses anyway. So I started mailing to these presidents, offering a free year of registered agent service.
Andrew: Ah, presidents of companies.
Jennifer: Presidents of companies.
Andrew: Saying, ‘I will give your company a free year of registered agent service.’
Jennifer: Exactly.
Andrew: Which basically means, if you ever get sued the mail will come to me and I will forward it to you. Now you’re doing this with an office that you didn’t pay for, that just happens to be vacant and paid for, for the next six months.
Jennifer: Yep.
Andrew: You’re not even sure that you could be in business for the next year, but you feel that confident about yourself that you say, ‘I’m going to start this!’
Jennifer: It’s not confidence, it’s that youthful stupidity that, you know, you’re just, like, I’ll figure it out!
Andrew: And where’d you get the addresses of these companies?
Jennifer: They’re listed publicly on the state database. Now I actually started the practice of masking the address, so for their addresses I put my company name.
So anyway, I started getting them back. We’re charging $200 a year, and I was thinking, oh my god, if we can get 1,000 of them I’m going to be wealthy beyond my wildest dreams – in my 17-year-old brain.
Andrew: Yeah.
Jennifer: I ended up getting some traction. I hired some sales reps from my competitor . . .
Andrew: Now, we’ve got to stop here because I can’t take this story too quickly. We’ve got to go very slowly so I understand all the steps. You can’t go from suddenly having this idea to having all those people support the idea without explaining the in-between for my audience. They’re going to love this stuff.
So you have this idea. You start sending mail-outs. I understand how you find the people who you send mail to.
You say, “I’m going to be a registered agent.” You said it’s easy to be a registered agent, but don’t you have to file some paperwork with someone? You don’t have to do anything? You just say I’ll be a registered agent, and that’s all it takes?
Jennifer: Uh-huh, it’s true. And a lot of attorneys were being registered agents for their clients but they were charging $400 or $500 a year for a simple service. So ultimately, when people need to form another corporation or LLC, they’ll generally call their registered agent and I named it InCorp, you know, and promoted it and [??]. At the time, I didn’t have any money to pay for postage, so I ended up using my scholarship and grant money to-, I think the government’s OK with me now because I’ve hired a lot of people in the mean time. Eventually after a few semesters they caught on because I’d like enroll for class, get the checks and then pay for postage. So . . .
Andrew: I see. And not go to class.
Jennifer: Yeah, no, I’d enroll and . . .
Andrew: Oh, so you’d just-, wait, wait, wait. You enrolled, you took the money, you un-enrolled and then you went back and re-enrolled?
Jennifer: It sounds so bad in retrospect, yeah.
Andrew: Oh, believe me, entrepreneurs have said such bad stuff here on Mixergy, the people who are insulted by that, I hope at this point have stopped watching my interviews.
Jennifer: I did pay it back though. I did pay it back.
Andrew: You did pay it back?
Jennifer: I did. Yes. After the company was successful, I wrote a nice check and . . .
Andrew: OK.
Jennifer: So . . .
Andrew: So, I see what you’re saying. You set up the office. I see how you got postage. I see the offer to companies, it’s $200, but the first year’s free. What I don’t understand now is, the first year you have to operate beyond getting money that you’re supposed to use for school and using it to run your business, how else are you getting-, what are you doing for the year when you’re not getting any revenue and waiting for the people who you gave freebies to start paying? Where’s the revenue come then?
Jennifer: Well, you’re 17, so you don’t-, you eat Ramen and I had a sleeping bag in my office floor, so I didn’t need anything.
Andrew: What about the second six months of office space? How do you pay for that?
Jennifer: Well at that point, because I had traction and people calling in, I-, and actually when I first started, it wasn’t a free year, I charged $29 for the first year, which was, you know, a great, huge amount of money. No, but then I switched to free, but that lasted for about three months and then I was like, “I’m getting enough traction” that I, you know, I just kept thinking, I was like “In one year, it’s going to be amazing. In one year, it’s going to be amazing.” And that’s kind of actually been the guiding principle of success for me it’s like, “Sacrifice, sacrifice, sacrifice and in one year, it’s going to be great.” Then sales people are awesome because they’re commission only, so there was a time when they actually had seized . . . this is so bad . . . so I had a team of sales people were starting, you know . . . I brought them over and they were basically just calling our client base asking if they needed more entities or etcetera and making sales that way and all of the furniture was seized.
Andrew: What?
Jennifer: So there were a few weeks where everybody was sitting on the floor and, like, making phone calls. But you know what? It’s the best of times and the worst of times.
Andrew: What do you mean? How do you get your furniture seized? I didn’t understand that part.
Jennifer: Well, it wasn’t ours to begin with so . . .
Andrew: Oh, because it was the company that fled the country? It was their furniture and your furniture was seized. How do you explain to your sales people who are waiting for commission checks from you that this is how it is at this company? How do you explain that to them and keep their trust? You did it. I’m curious about how you did it.
Jennifer: It’s just-, you just bond, you know? It really was just like, “Hey, guys? This is how it is.” And they like you enough and care about you enough and they took the plunge to come work for you so, you know, they want to see it through. We make it fun, you know? I was surprised-, I’m really lucky I didn’t get sued because that’s like, you know, there’s some serious orthopedic problems from sitting on the floor.
Andrew: How long did you have them sitting on the floor?
Jennifer: [??] to buy some furniture.
Andrew: Oh, I see. Do you remember how much you brought in that first year?
Jennifer: It was small. It was probably like-, I started it in the middle of the year, so by the end of December 2001, I think it was like $80,000-90,000. But the second year it was over $1 million.
Andrew: Whoa!
Jennifer: And I remember, I wasn’t old enough to buy cigarettes at the time and I was like, “My company has made over $1 million” so . . .
Andrew: Get out!
Jennifer: Yeah.
Andrew: Why? How do you make such a big leap, from $80,000-90,000 the first year to suddenly $1 million in sales the second year? It was sales, right?
Jennifer: I had some great sales people and also that I was able to start invoicing so the second year I was really able to start invoicing and now we have over 100,000 clients nationwide and 55 employees and you know . . .
Andrew: And this company is InCorp?
Jennifer: InCorp, yeah.
Andrew: People can go and check out incorp.com and they can see the business that you launched, as a 17-year-old, using office space that was just sitting there.
Jennifer: It was funny, because I was in a pitch meeting-, this was actually a preliminary interview with a venture capitalist. He was on the board of a competitor previously. While InCorp was growing and we’re gaining so much market share, and when the introduction was made, he apparently was really shocked, because I didn’t tell anybody I was the person running InCorp, nobody would have taken me seriously. And our clients probably wouldn’t have . . . so, you know, I was in the background a lot.
Andrew: Because you were a teenager?
Jennifer: Because I was a teenager.
Andrew: I see. So how do you stay in the background in an organization like that? Is it because it’s all over the phone, and email?
Jennifer: No, it’s just really easy, because people don’t believe it anyway. But I took advantage of the people sort of discounting me, especially when our competitors came over thinking we were stealing their sales reps, because they were all on their non-competes. And so, they had to change their names, you know.
Andrew: So, you did take sales people from your competition?
Jennifer: We did, yeah.
Andrew: You did. And you just had them change their names, that way the competition didn’t know that their old sales people are now in your new office?
Jennifer: Yes. And they keep sniffing around, but then they’re like, ‘Oh, no.’
Andrew: Because you’re so young, they said, it’s not happening.
Jennifer: Yeah.
Andrew: Interesting. What did you say to the sales people to get them to leave an older, more established company and founder, and come to your business?
Jennifer: Well, the benefit was they were working in a really high-pressure sales environment at the old company, and these were just wonderful sales reps. And so, for me, I said, ‘I don’t want a boiler-room atmosphere. I want it to be very much like relationship selling. And, giving them the freedom, the ability to sort of manage themselves and create the sales program on their own, and exercise their leadership abilities. I think that was a huge draw for them, you know. We had a viable database. They were making commission-only sales at the other place, and so it was like this fresh, untapped database, growing and growing database.
Andrew: What’s the database that you’ve had?
Jennifer: It was just the registered agent customers that were coming onboard.
Andrew: They were already coming onboard. A new sales person who’s working on commission doesn’t have to sell to them, doesn’t get benefit of them, I would imagine. No?
Jennifer: That’s true, it’s true. It’s much harder sales, because there’s no direct meeting. But the truth is that people that formed companies in Nevada generally form one on one. And they know other people that need to form them, so a lot of it was just word of mouth. Because we were doing so much mingling we were getting a lot of people like, you know, oh, you do incorporations? Can I form one, etc.? The benefit was that we had like two or three sales reps and they were getting all of the leads. When you don’t have a lot of leads, they’re still getting the same amount of leads because they worked for the other company, but they were on a floor with like 50 sales reps.
Andrew: I see. Do you remember one of the sales tactics that you guys used that was especially effective back then? We’re talking over ten years ago, at this point. So, you can reveal it.
Jennifer: It’s funny, because I keep wanting to call her Kay Johnson, but her name was really Debbie Swenson.
Andrew: She went by a pseudonym, because of as you described earlier.
Jennifer: She is just wonderful. She ended up having to move away for health reasons. You know what’s weird, I know this sounds sexist, but I think hiring women sales reps is actually . . . depending on the situation . . . she would just converse with people, and be friends with them, and get them. You know, it’s funny, because I’m about to build a sales team now, and just kind of meeting with sales people, and sort of sticking them in a room and interviewing them, seeing what they can do. A lot of them will call up and launch into a pitch. And I’m like, no. Do not do that. Ask them a question. Start with an opening question. And really the opening question, if they’re calling like say registered agents to see what their solution is for giving their customers operating agreements is, hey, do you offer operating agreements? Oh, if your client asks for an operating agreement, what do you tell them? It’s just asking these questions and getting them to sort of realize the need, to create the need, and get it very present in their mind. Then offer the solution. Because, even if they have the need, you have to get it present in their minds, and get them in that position where they’re like, wait, yeah, I need to solve this. Really, it only takes five minutes. OK, I’m willing to hear what you have to say. You know what I mean?
Andrew: Yep.
Jennifer: So, as opposed to . . . and also, I think some people just have a natural sales talent, you know? And in that you’re able to think on your feet, and can tailor the pitch to whatever information you have or are getting, asking questions.
Andrew: So you remember the date you hit a million dollars in sales–the first million?
Jennifer: No, I was just probably working too hard. It was one of those things where, because you know, when you’re starting a company and moving that aggressively and that fast, ironically money was not a metric for me. It never was, because we were so lean. And numbers of clients was our metric, and we actually had a printout. We brought on a partner later on who did all the techie automating of everything. So every day he’d run a report. And we had a printout in the office of where our standing was, like how many clients, how many registered agent customers we had, and then where our standing was with all of our competitors. Because he would analyze the database every day, you know, [scrape] it, analyze it. And so, we had a highlighter, and we’d be watching ourselves move up the board. So we were just super aggressive about, you know, if we get five more clients we can get all the way up here, and surpass these. And of course, it’s much harder as you go higher up. We were like, we can totally get five new customers today, you know.
Andrew: Because this information was all public you were able to?
Jennifer: I know, yeah. We were so lucky to have public information and be able to really accurately see what our standing was.
Andrew: Do you think other companies were able to do that, or were smart enough to know that they could, a) go and scrape the database to find out who the prospects were, and b) find out who was moving up in the rankings?
Jennifer: I don’t believe so. And actually, that’s the lesson that I’m bringing into this company, and trying to find that one key metric, and make the whole company just universally focus on this one key metric. And it doesn’t usually have to . . . like, the money will follow. It’s just a numbers game. So if your conversion rate works out and the numbers work, and you’re able to convert profitably, at that point you forget about the money. It’s all about finding that one key metric. There’s nothing more effective than having an entire team, very tight knit, close team of people, all striving toward one goal.
Andrew: One key metric is the way to get everybody focused and help them understand what that big goal is?
Jennifer: I think that was the huge key to success for InCorp.
Andrew: I see.
Jennifer: Because the thing’s on the board, and every day we were all universally obsessed with raising the rank, going up the ranks.
Andrew: It’s such an exciting story. What about the people within the company? Hungry people, because they’re sales people, smart, willing to do certain things, because they have changed their names, we can infer that. And here they are watching a seventeen, eighteen year old girl pull this whole business together and they see how you’re doing it, where you’re getting the names. How did you prevent them from going off and starting their own companies, and coming up with brand new pseudonyms to compete with you, using your own system?
Jennifer: I never thought once about that.
Andrew: You didn’t?
Jennifer: Not once.
Andrew: Because it didn’t occur to you, or because it’s just not a reasonable thing to worry about?
Jennifer: You know, if they did, more power to them.
Andrew: You can really feel that? You’ve been open with me until now, so I trust whatever answer you give me. But how can you say, ‘More power to them,” when you’re so competitive, when you want to grow, and when having somebody else do an exact duplicate of your business is a real threat to your model?
Jennifer: Because, you know what, like sometimes people say, oh, so and so is competing. I’m like, really? If you really want to compete, we’re running every possible variation of every [??]. Like, go and try. Just really, go and try. All the power to you, because I honestly think the more competition, it just doesn’t bother me, you know. There are few key competitors that might bother me, but even if it’s one of our own, to create and build a business is about so many different systems. And I think that you either need experience or you just have that single-minded drive. A lot of it is luck, you know. It just doesn’t bother me. And also, I honestly feel like if one of my team members goes and starts their own business then it’s my fault, because I wasn’t a good enough leader to fully engage them in my vision, you know?
Andrew: All right. We went from people thinking, who is this person to thinking, how do I become that person, to maybe thinking right now can this really be real? Humanize yourself a little bit in a story by sharing a big challenge. What were some of the issues you had along the way? This couldn’t have been as easy as it sounds so far.
Jennifer: My God, it was so not easy. It was horrible. There were these moments where you have payroll the next day and your account’s in the negative. And you have like a $15,000 payroll the next day and sales were flat, and there’s no explaining them. You can’t figure it out and you have no buffer, because you’re growing so fast. It’s those moments that you just have to swallow your pride, which has probably been the hugest challenge for me–huge, huge challenge. Having a couple key friends you can call and be like, hey, can you help me out?
Andrew: Help me out make payroll, you mean? That kind of help?
Jennifer: Yeah.
Andrew: How do you end up struggling to make payroll, when you’re bringing in hundreds of thousands of dollars a year, and are just 12 months into the business, 14 months into the business; when you’re bringing in hundreds of thousands a month?
Jennifer: Reuting
Because it goes out, and some months you don’t. And so, it’s managing that growth, you know. Bootstrapping a company, you’re always going to face that, because you don’t have the benefit of being able to say, OK, these are my fixed costs, and then anything else, you know, the growth can sort of allow us to expand in this direction, etc, etc. The venture capital has that benefit, and fund raising in general has that benefit. But when you’re bootstrapping it’s literally, like, your financials are on a weekly basis. You’re like, what did I bring in last week? What did I [inaudible] last week? How many thousands of dollars can I put toward more advertising? You know what I mean? And so, it really is iterative every single week. Your whole business model can shift and you’re just sort of in this survival mode all the time. And you know that you can spend; I didn’t spend any money because any money that you do spend is money that you can’t put towards advertising. And being as young as I was at the time, I didn’t keep a buffer, either. I didn’t keep anything in reserves. That was actually somewhat of a good thing, because you’re super hungry. You know that, I’m like, at the beginning of the week, like, OK, payroll’s this week. Our rent is due. We have this much time, and it takes two days for the credit cards to get to our account, so these next two days we have to make this much amount of money.
Andrew Warner
And when you needed to stretch to make more money than you would have if you didn’t have that pressure, what kinds of things would you do to pull in more money, to take that energy that you have and use it for good?
Jennifer: There were times when I would literally have to call, like get on the business license database and start calling companies, asking them to incorporate, because I could see he was a sole proprietor, and just selling myself, because I needed to survive. But those experiences are actually really good because I feel like sometimes when you grow too fast you can create a little bit of a buffer between you and your market. Whereas, when you’re in the trenches you’re there selling to the customers yourself, as the head of your organization. That’s a really beneficial, because as you adapt, you really adapt, so you close that customer feedback loop consistently every day.
Andrew: The company was acquired, InCorp was, in 2007. You stayed with the business until 2008. Around the time of acquisition, what were your responsibilities?
Jennifer: The company actually wasn’t acquired. I’m still a shareholder.
Andrew: Oh, excuse me. The company did acquire other companies. I’m mis-reading my own notes, here.
Jennifer: That’s all right. Yeah, we acquired quite a few companies.
Andrew: So why did you take a step back in 2008?
Jennifer: A few reasons. I got burned out, after working so long and I really wanted to start working with entrepreneurs. And we started our company at the same time Legal Zoom did, but I sort of went into the direction of registered agent, which means, we have a lot of fortune 500 companies as well as small businesses. I was really getting into speaking and working with entrepreneurs. Wiley approached me about writing LLCs for Dummies and it was around that time that I didn’t want to dilute the brand by making it about small businesses and entrepreneurs so I went and got some key employees from a competitor and set them up shop in Westlake Village and my LLC was born.
Ever since it’s really been about helping small businesses and entrepreneurs. I didn’t really take too much of an active role in that because I wanted to exercise my leadership skills in helping guide that team to create something that they never thought they could create before. They’ve done a stellar job.
It sort of left me with this passion and I’m not the sort of entrepreneur where I just have to start something all the time. I’m a serial entrepreneur, but I knew that I had the big idea, the one that you don’t fall into, but the one that you just cannot do anything but, and that’s when DocRun came along.
I was going to buy a house and I was kind of happy just being semi-retired and all of a sudden this idea is huge and I didn’t buy a house. I ended up hiring a bunch of engineers.
Andrew Warner: Why didn’t you buy a house up until that point? Why not enjoy more of your success? Why not pull some money out and go get a house, maybe get a second vacation house?
Jennifer: Oh my God, that’s just not me.
Andrew: It’s not you? So you’re living where? You’re living in a rental?
Jennifer: Yeah. Two bedroom.
Andrew: You are?
Jennifer: Yeah. $2200 a month. It’s good.
Andrew: You’re living in a $2200 a month rental?
Jennifer: Yeah.
Andrew: And your company is a registered agent for Fortune 500 companies?
Jennifer: Yeah. But I don’t need a lot. It’s not about that. I did move to L.A. and I moved into a big house temporarily and the market was crap so I wasn’t going to buy it. It was going down really quickly. I had this 5 bedroom house in the hills, it was monstrous and I was like, this is just so much baggage. I was 23 at the time and it was too much baggage.
It’s just a lot of upkeep and it’s like a full-time job. I want to be able to fly to wherever I want to fly to and there’s a time and a place for everything.
Andrew: Did you cash out at all?
Jennifer: No, not really.
Andrew: So basically you still have shares in InCorp, in MyLLC and now in a new
business?
Jennifer: Yeah and somebody was actually asking me yesterday, an investor, I’m wondering why you never sold your company and the truth is that every single time we get an offer I never regret not taking it because our value just keeps increasing, increasing, increasing.
I could have sold it at $20 million, I could have sold it at $30 million, I could have sold it at $40 million and I could have sold it at $50 million, but why? It’s on an upward trajectory and the systems are in place. The systems are excellent and it has a great team behind it. There’s no reason to sell it. Not right now. It’s the best investment. It’s the best place for my money. I could put it in Apple, but it wouldn’t grow as fast, not now anyway unfortunately.
Andrew: Let’s talk a little bit about MyLLC and then I’ll thank Dan Bliss in a moment for introducing me to you. MyLLC I understand the original idea for it, actually maybe I don’t understand it fully, was the idea to just let people create limited liability companies?
Jennifer: Yeah. And corporations.
Andrew: And corporations.
Jennifer: Yeah, but the majority of formations now are LLCs and rightly so. They’re great entities.
Andrew: Why? Actually maybe we should talk about that quickly. Why is an LLC better than a corporation?
Jennifer: A lot of reasons. There’s a lot of flexibility with an LLC. You can choose your own form of taxation. If you want to be taxed like a corporation you can choose to do so, you can also be taxed like an S corporation and you also have the benefit of pass-through partnership taxation, which is great. You can structure your management, in the management of your company, however you want. Unlike corporations where you have a very traditional president, directors, shareholders, very hierarchical, structure with an LLC is essentially however you want to manage it. You can give some members, which are the owners of the LLC, some management rights. And you can give other members no management rights. Membership, there’s a lot you can do with that. You can vary the distribution and the allocation. With a corporation, if you own 50% of the company, you’re getting 50% of the dividends, 50% of the profit at the end of the year.
Andrew: Right.
Jennifer: If you own 50% of an LLC you could get 50%, or you could get 75%, you know, which is great for especially films or anything where you’re taking on investors, and you want to incentivize them. You can structure your LLC in a way that incentivizes investment. Another reason they’re great is you can transfer assets in and out of them without creating a taxable event, for the most part. They are just a lot lighter on the tax laws.
Andrew: I see. It’s like a super entity. It really gives you all the benefits and flexibility of apparently just about every other form of corporation, of legal corporate entity.
Jennifer: That’s true.
Andrew: All right. I see it. You showed me the opportunity that you saw in InCorp. What was that opportunity that you saw at MyLLC that made you say, we’ve got to come up with a business, here, and go after that opportunity?
Jennifer: It was the team, basically, the ability to take some great team members. And I credit Doug, my partner, with finding that team. It was like, OK, do we want to invest in these guys and back them, and further this vision of helping small businesses and entrepreneurs?
Andrew: So you first found a team of people who would be good; then you said, we’ll come up with a company around it. And
Jennifer: Yeah.
Andrew: And once you found the people and decided to come up with a company, what did you after? How did you find your first customers there?
Jennifer: Well, it’s great when you already have a, and we do a lot of SEO. Now we’ve evolved into an Internet-based company, for the most part, SEO, promotional work, a lot of business development. We have a lot of affiliates. And the book has been really great, just the notoriety driving apps.
Andrew: The book, SEO Affiliates, by the way, people who are good at SEO make my job of researching so much harder, because you know how to get the stuff you want to rank high in results, and so when I go and I search I end up with articles about you. I end up with articles about your company. I end up with articles by you. But I don’t end up with those articles that you don’t want me to see. It’s harder. There are no bad articles. No, apparently not.
Jennifer: I don’t think there are. I think that maybe I’m doing something right. It’s more trash talking, apparently.
Andrew: Let’s find out. Here’s one of the tactics. I wonder if my researcher did this. Usually what we do is put the person’s name and then we put word.
Jennifer: OK.
Andrew: Here’s what we do. I put the person’s name and then I put word ‘sucks’ in after. No. Nobody says that Jennifer Reuting sucks.
Jennifer: Yeah.
Andrew: I had a guest recently that when I did that, puff!
Jennifer: Who was it?
Andrew: I won’t say.
Jennifer: Come on. You asked me a lot of questions.
Andrew: I can’t talk badly about people, or even suggest that you do. I’m happy to tell you afterwards, though. I will absolutely tell you. In fact, the audience even called me out on that, because it was a lot of negative stuff. All right. So, I see the opportunity. I see how built it. What else do I need to know about that? Oh, actually, what’s the biggest source of customers at MyLLC? What was the best source?
Jennifer: SEO is huge, and affiliates.
Andrew: Affiliates?
Jennifer: Yeah.
Andrew: What’s the affiliate program like?
Jennifer: Well, it’s actually something that I’m duplicating with DocRun, and I don’t want to get too much into that, because it’s a little bit proprietary. But it’s just sort of based on that phenomenon, but you can get a mention in the Wall Street Journal and get maybe 7 conversions with millions of readers. But if you get a mention by a blogger with like 700 loyal followers, you’ll get maybe 35 conversions. So, it’s really aimed at those key affiliates.
Andrew: Got it.
Jennifer: The SMB market – and I actually like to call it, like, SBE, the small business entrepreneurs – it’s very decentralized and it can be very slippery. So finding those key people is key, essentially, to being able to get acquisitions, especially because small businesses generally purchase based on trust. Trust is a huge factor in their purchasing decisions.
So for guerrilla marketers aiming at hitting that market I would always choose to put your money in things that are very trust-based as opposed to general advertising, because you’ll never be able to fight, you know, I can never fight Legal Zoom on the amount of AdWords; their ad spend, it’s insane. I mean, they raise so much capital and it’s all put towards advertising.
Andrew: So what’s an example of an outlet that you’d turn to because it has trust and not just because it sells you more ads than your competition?
Jennifer: Those types of bloggers, or also people, trusted vendors are key – wherever small businesses congregate and whoever they trust, essentially, would be a key target for us.
Andrew: Gotcha. OK. And that, I’m guessing, is why you’re here on Mixergy.
Jennifer: It’s true, yeah. And how I know Dan Bliss is we sponsored one of his conferences, and that was a key for us as well because they get to meet us face to face and we were associated with something that instilled a lot of trust in people. You know, it was a high quality conference with a lot of great speakers and trust-by-association, so to speak.
Andrew: I see. Let me go to DocRun right now – let’s see what people can see. When do you launch?
Jennifer: We are doing a soft launch in about 10 days which means I’m not going to be sleeping till then! I was asking the team, like, are you guys ready for the most [??] 10 days of your life?
Andrew: So 10 days from now, we’re talking about September 23rd, 2011.
Jennifer: Yeah.
Andrew: Until then, if anyone wants to be notified or wants to try to get in before the launch, they should go to docrun.com and click the notify button.
Jennifer: Correct.
Andrew: All right. I kind of wish then that we’d done this when the site was live. Is there anything that I can do to send me audience out to help them be a part of this?
Actually, here’s what I’m thinking. I stutter when I don’t say what I really mean to say, which is this. I want to impress you by how big my audience is, but now I have no place to send my audience to let you know.
So now earlier when you were talking about all these other people who were credible sources, that were big for traffic, that were all kinds of helpful, I thought, ‘I want to be talked about that way! Now how do I . . .’ but I can’t. All I can do is say, guys, go to docrun.com and . . .
Jennifer: Well you know what? If they do go to – you know, it’s interesting. We should probably put something where we know that they are from you. I’ll work on that.
Andrew: All right. Actually it might be good for me that it’s not so directly connected to me because this way I can let you imagine that it’s a much bigger audience.
Jennifer: Oh, Andrew.
Andrew: All right. The website is docrun.com, and here’s one other question. Dan Bliss introduced us so that we could get together for lunch. And I thought, this is kind of an odd thing. Did he really mean for us to connect for lunch, or was he saying, ‘Andrew, I want you to connect with her with the hope that you’ll do an interview with Jennifer?’
Jennifer: I have no idea.
Andrew: OK.
Jennifer: All I know is I got cc’d on e-mail, and . . .
Andrew: And if Dan introduced you to a stranger and said, ‘You guys should get together for lunch,’ would you have gotten together for lunch with me if we happened to be in the same city?
Jennifer: Absolutely.
Andrew: You would? So how do you do that? You’re running a company that’s about to launch; you’re trying to figure out the future for yourself; you have these two other businesses that I’m sure from time to time pull you in and need your attention. How do you find time to sit down with a stranger to go to lunch?
Jennifer: It depends on who the referral is from.
Andrew: I see. Because it comes from Dan Bliss it’s good.
Jennifer: Yeah.
Andrew: All right.
Jennifer: He’s only referred me to people who have been stellar. And also, their reputation – you know, I like Mixergy a lot.
Andrew: Well, thank you.
Jennifer: It was an easy sell. Your reputation preceded you.
Andrew: Thank you, Dan. I hope you introduce me to more and more of your friends.
Thank you all for watching. Oh, I’ve got to do a plug for Mixergy Premium.
Guys, go to Mixergy.com/premium. People keep telling me that I’m not doing a good enough job of explaining what’s there so I’ll explain right now.
I’ve done hundreds of interviews. Every one of those interviews is now a part of Mixergy Premium. But I’ve also done lots of courses. I think it’s now up to 30 courses where I bring back past entrepreneurs that have taught on Mixergy through interviews and say to them this: you’re so good at buying ads. Show me and my audience your computer and show us how to buy ads. The founder of Mix Rand did that. He showed us exactly how he figures out where the ad buys are and how he makes them profitable quickly. Or I say to them you’re so good at SEO, don’t tell me I should do SEO. Show me your computer screen. If you’re using WordPress I want to see the exact plugins you use on Word Press and teach my audience as you show them what you do on your site.
That’s the process behind Mixergy Premium. If you sign up once you get all of those courses and interviews.
Jennifer: I’m signed up for Mixergy Premium.
Andrew: That’s pretty good, right?
Jennifer: Pretty good. That’s amazing.
Andrew: Well there you go. Jennifer’s going to be a part of Mixergy Premium. You guys should be a part of it. I hope to see you there. If it fits. If it doesn’t don’t join up. That’s fine because I’m just going to use that as feedback to figure out what to do to make you guys join up. I’m going to hunt every one of my members down.
Jennifer: If more people did things like that and learned hands on like that they could save themselves a lot in business school. That’s how I learned is really just absorbing knowledge from [inaudible] people.
Andrew: You know, for a long time I wasn’t promoting it because I wasn’t sure how to make it work. I wasn’t sure, I couldn’t find the right product there.
Jennifer: [inaudible]
Andrew: Sorry?
Jennifer: I think it’s a disadvantage for your viewers if you’re not promoting it.
Andrew: You know what? Now I absolutely believe that. I see these courses, I see the impact they have for our businesses. I’m learning from these guys. We implement them internally. Now I can’t stop talking about it. Maybe about a month from now my audience will say Andrew, we’ve heard enough. Slow it down, don’t say so much. Keep your pride back.
For now I will say this guys, I think I’m leaving [inaudible] message here. If you go to Mixergy.com/premium you’ll see all the courses. If you don’t love them I personally guarantee, me the guys who’s been doing hundreds of interviews for you, who you trust, I personally guarantee and I’ll personally give you your money back. One guy asked for his money back, Jennifer. Yes, a couple have. But this one guy asked for his money back and then he emailed me afterwards and he said you know Andrew, I thought about it and I realized I don’t want my money back. Can you apply it towards a lifetime membership? I want to be a lifetime member. I wasn’t a member for a little while, or I wasn’t active for a little while, and then I saw all you’re adding to the site. I realized forget cancelling, I want to go even further in.
Jennifer: Nice. Well, maybe I should finagle a lifetime membership then, huh?
Andrew:
Maybe you do a lifetime membership, we’ll know each other for a lifetime.
Jennifer: All right. Well thank you Andrew
Andrew: Jennifer, thanks for doing the interview. Thank you all for watching. Bye.
