Because Noah Kagan is an old friend who’s easy to hang out with and I was exhausted from recording 2 interviews before having him on Mixergy, instead of my usual interview, Noah and I just talked. Along the way, he opened up about how he felt when he was fired from Facebook. He explained how he got Gambit, his previous company, to over $30 million in revenue. He told us why he launched AppSumo, which offers limited time deals on bundled web apps, and what it’s earning. And he pushed me to be clearer about what I’m doing with Mixergy.
Oh, and he took his pants off. But I’ll let you watch the video to understand why.
Andrew Warner: Before we get started, have you seen articles like this on TechCrunch about companies that were launched by startups who joined the Founder Institute? Well, the Founder Institute is accepting applications right now and I want to encourage you to apply right now before it’s too late on FounderInstitute.com. The Founder Institute is a technology startup accelerator, an entrepreneur training program, that launches companies in 13 cities worldwide. What do you get if you’re in the Founder Institute? Training, mentorship, help getting investors, and just about everything else you need to get a startup launched properly. Go apply right now before it’s too late. FounderInstitute.com.
Do you remember Patrick Buckley, who I interviewed? He came up with an idea for an iPad case, then he built a store to sell it. In a few months, he generated about a million dollars in sales. Well, the platform he used is Shopify. If you have an idea to sell anything, set up a store on Shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up and manage your store. Shopify.com.
Do you remember when I interviewed Sarah Sutton Fell about how thousands of people pay for her job site? Look at the biggest point she made. She said she has a phone number on every page of her site because, well, and here’s a stat, 95% of the people who call end up buying. Most people, though, don’t even call, but seeing a real number increases their confidence in her and they buy. Try this. Go to Grasshopper.com and get a phone number that will make your company sound professional and see what it does to your business. Grasshopper.com.
Here’s the program.
Hey, everyone, it’s Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Noah Kagan’s back on Mixergy. Last time he was on, we talked about how he built Gambit into a payment service that was on track to earn over $10 million in sales. Since then, Facebook, which his company was dependent on for business, shut him out of the service. I want to find out what happened. Also, Noah recently launched AppSumo, a website where you can get a package of deeply discounted web apps. We’ll find out how he’s doing with that, too. Noah, welcome to Mixergy.
Noah Kagan: Good to be here, Andrew.
Andrew: First question is this, where were you? You’re two hours late!
Noah: I was at nine, so technically I’m only an hour late. I was just in Israel and everybody’s two hours late.
Noah: It really bothers me. Being on time is a point of mine or I try my best to do it. I thought I was an hour off.
Andrew: If this was TechCrunch, would you have shown up a half hour early? True or false?
Andrew: False. Okay. If this is Mashable?
Noah: Honestly, I could tell you the one site I would be a half an hour early for, Lifehacker.
Andrew: [laughs] All right. Why Lifehacker? They give you a hard time? You saw how I was tweeting out nasty things. You should see the voicemail message that I left you for being so late. Why Lifehacker? Are they more aggressive or are they nicer?
Noah: No, no. Actually, depending on relationships, one of the interesting things is on different bundles, I’ve had different people promoted and companies that we’ve worked with. I think there’s different things, right? After the TechCrunch post for AppSumo, we actually got a ton of visits from people that wanted to do partnerships, which was okay, but not super valuable. We had around 9,000 visitors. With the Lifehacker trackback, we got around 35,000 visitors and all those visitors were qualified people that were really interested in what we were doing. It’s like quality over quantity. Just something interesting. Andrew, I will be on time and I’m sorry. I have a gift for your viewers, fans, followers.
Noah: If they go to AppSumo.com/Mixergy, we’re going to give everyone 10% off of our bundle. That starts tomorrow. I know this sounds like an infomercial, but there’s more.
Andrew: You know what? I’m glad that you’re doing that and I’ll tell you why. Everyone, please go over to AppSumo.com/Mixergy just to show him that I’ve got some credibility, some audience over here, even if all you’re doing is going to propose some kind of business transaction with him, go over there, fill out the form and show him that we actually have an audience over here.
Noah: Dude, 15 more people and we got my underwear on screen live.
Andrew: That’s the other thing you’re going to do, if the live audience supports this and tweets out and tells people to come watch us live and we have 50 people who are watching us live, right now, we’ll get to see your underwear. I don’t know exactly why I’m fighting to see this, but okay. All right. I’ll take it.
Noah: It could be worse.
Andrew: Seriously, you’ve been traveling. You were in Israel. Where are you now?
Noah: Yeah. Right now, I am in Paris, France. We had a crazy day of Israel to stuck in Rome, Italy, then Venice and then 36 hours later, we’re in Paris.
Andrew: Wow. You’re traveling while you’re building this business?
Noah: Yeah. We were living in. . . Lora. She, yes! We got her! There, see.
Andrew: We tried the first interview to get her on camera.
Andrew: Now I got to give her sad commission or whatever it is that you do when you get.
Noah: I know. Our lease was up in San Francisco and I had to be in London for an event. One of my things has always been wanting to check out Italy, Croatia, and Berlin, mostly because I thought it’d be interesting to work in those places and live there. I said, “All right. I’m building up Sumo. Why don’t I try doing it while we traveled?” Lora’s helping me out. We spend 50% of our time and 50% of the time touristy, sight-seeing, traveling stuff. Yeah, I said Crotia.
Andrew: [laughs] I thought that actually you’d just be in some hostel or you’d be in a little hotel and you’d have a hard time getting Internet access, but I’m looking around as you’re showing us your place, it looks beautiful. Your connection is stellar.
Andrew: These are the kinds of places you’re staying in?
Noah: Andrew, you know me. [laughs] This is definitely not the kind of place I stay in. I’m staying with a good friend of mine who I actually stayed with in Argentina when I went there. She runs a really cool company that. . . I actually met her backpacking in Thailand. They make really cool shoes called Como-No. I believe it’s Como, C-O-M-O, dash No dot fr. I was like, “Hey. I’ll come by France and hang out.” So, I’m hanging out with her.
Andrew: Oh, wow. All right. Actually, I do know you and when you were here in Buenos Aires, I looked at one of your videos to see what kind of apartment you were living in and you were living pretty nicely.
Andrew: You’re traveling. I’m not saying that you’re living in the lap of luxury, you’re not sitting around at the Ritz while you’re building a business, but you’re living pretty comfortably as you’re traveling and building your companies is what it seems like to me. Or is that just what I’m seeing?
Noah: That’s what you’re seeing on this apartment. It’s actually varied. What I’ve tried to do is actually average out my costs to be equivalent housing-wise to what I was in San Francisco which is about $50 a day. I try to either. . . We’ve used AirBnB.com. We’ve used CouchSurfing. CouchSurfing is amazing. We’ve had a few friends, we’ve tweeted out and gotten friends of friends let us stay, like the guys from Daily Deal in Germany. Soocial, S-O-O-C-I-A-L, dot com in Amsterdam. We stayed in hostels. We were doing P90X, the workout. That was hard to do in a dorm room so we got our own rooms. For the most part we spent around $40 to $50 a day, U.S.
Andrew: Oh, wow.
Noah: Europe’s definitely more expensive than I would ever imagine. Super more expensive overall. I had no idea about that.
Andrew: All right. Let’s go back in time and talk about Gambit. $10 million is what you were on track to do. Did you hit $10 million a year?
Noah: Yeah. We hit way more than that. With Gambit specifically, the interesting thing about the business is that there’s overall revenue that we have to give a lot of that to the clients and the partners that we worked with and then we had our own profit number. In terms of what we did in 2009, easily over $30 million, so that was in gross volume. In net volume, a few million bucks, somewhere give or take around there. I actually don’t know the specific ones of last year.
Andrew: A few million dollars in profit that goes into the business and you’re living on 50 bucks a day. Were you able to get any of this out for yourself?
Noah: I’m not sure what my. . . The other guys are still running the company so I’m not sure how comfortable they would feel about talking about specifics. Yes, we got a little bit of it out, nothing where I can retire. Maybe I can retire in Kazakhstan or Thailand, but in California, maybe it’ll get me a one-bedroom apartment.
Andrew: Okay. For people who don’t know what Gambit is, can you describe what the business was?
Noah: Yeah. Long story short, we helped companies that made video games or social networks monetize their virtual currency. Instead of going out and building all these payment options, you would plug us in and we’d have this buffet of payment options that you just could use within a few minutes.
Andrew: Okay. One of those options. . . I actually was on Isohunt.com checking you guys out on there.
Andrew: That’s kind of new, right?
Noah: That’s really cool. People asked for a donate option so Isohunt was one of the companies. The companies, it’s crazy to go to an eight-figure company in one year. Literally didn’t sleep and do anything else but this. Lora, my girlfriend who you saw on camera, did it. We were consumed by it. It was fun. It was really, really fun.
Andrew: Why’d you leave? What happened after Facebook?
Noah: What happened with Facebook is that of all the companies doing one of the forms of payment, was called offers, we were the one that got banned. There’s other things with that legally that are going to be worked out. As a company, we floundered. We had a big company. One of the lessons I can suggest to people is we had a big company that said, “Hey. You should do this for us. We’ll make you guys a lot of money. This is your saving grace. Come kiss the hand.” We spent four months doing it for them. After four months, they’re like, “Yeah, we’re kind of busy. Thanks for what you did.” The biggest thing I would say to people is make sure you have up-front contracts, not verbal agreements. After four months, it was like, “Yeah, we don’t care anymore.” We were like, “Shit, we just spent money and time on that.”
Then, as a company, I think we’re evaluating a lot of different options. I can tell you my specific thought process. After we were just floundering, there’s three things that specifically happened that made me want to move on past Gambit. One of them is Jeff Bezos’ video called “Regret Minimization Framework.” I saw it on Ramit Sethi’s website and it is a phenomenal video. It’s two minutes long and it basically said, “Looking back on your life, if you have a framework of how to make decisions, what would you regret least?” Obviously, you would regret least going to Amazon and that’s what he wanted to go do. That was one.
Second, my friend Ben, I think you may know him from DailyMile.com, Ben said, I was running with Ben in San Francisco and I was like, “Ben, if you could go work. . .” He does DailyMile and they don’t make a ton of money but they love it, more than anything I’ve ever, very passionate about what they’re doing, more than a lot of other entrepreneurs. I asked Ben, I was running, I’m like, “I like Gambit. I’ve worked in this for a long time and and I don’t want people to think I’m a flake and not seeing it through even thought I’ve been doing this for three years. What else would you be doing through time?” He said, “I wouldn’t do anything else. I wouldn’t change anything. I would keep doing DailyMile. I love what I’m doing.” I was just like, “Holy crap. I’m not spending the time I want to spend it.”
That was the moment where I decided I need to move on and do something where. . . The emails I get weren’t, “Fuck you. Die. Give me my Farmville chip coins.” It was like, “Hey. You created some valuable stuff that I actually really like. Thanks.” Those are the emails I get. It’s kind of strange. I’m like, “You really like me?” They don’t like me, they like what we’re doing and the other people involved. It’s just cool to get emails like, “Thanks for fixing that problem,” instead of like, “Here’s a picture of your address and your house. I’ll come kill you.” We did get ones where they sent Google street map of my house.
Andrew: Wow. I hear that a lot in my interviews where you have to just do what you love. Isn’t there also just that period there where things just all stink and you have to go through that rough patch where everything stinks, where you’re going to battle on until you get to the place where everything’s easier, where the revenues are locked in, where the business can run on its own, where you can get to a place where you’re creative enough to come up with the next new thing, but you also have people there to take care of what you’ve built up until then? Isn’t there anything in that tough period that you have to just muscle through?
Noah: Yeah. I’ve been doing it for three years so we muscle it for a pretty long time. I was actually thinking about something like this two weeks ago and I figured out the solution. The idea that I’ve come up with is you have to work in a business that you’d never want to tell, where there’s no amount of money that someone could offer you. Like Andrew, with you and Mixergy, if I said, “I’ll pay you $50 million.” You’re like, “It’s not even about the money. I’m just really enjoying what I’m doing.” That was the process that I wanted to be in, of what I wanted to be working on
Andrew: Okay. All right.
Noah: In terms of toughing it through the tough times, I think, I hate when people always say this answer because this is the answer that’s “kind of right,” if you’re working on something you really want to do, there’s not a point where it ends, there’s not a point where it’s tough. It’s always going to suck sometimes, but it’s what you want to be doing, so those are just part of the challenges.
I think the problem is with Gambit, we basically took an opportunity and worked our asses off to maximize revenue and we liked the customers, we liked what we were doing, but it wasn’t something that we really cared about, at least from my part. So when times are tough, it’s like, “Yeah. I stuck with it for quite a lot of time and I helped make a lot of money for people and we did great stuff, but it just wasn’t for me. It wasn’t something that I can imagine doing for the next five years.” I think a lot about dying lately. If I’m about to die, is this really what I want to look back and think of how I spent my time? It’s not.
Andrew: Why do you think about dying a lot?
Noah: My dad’s sick. That’s an easy excuse, but my dad is sick so I start reflecting on how am I spending my time. Even day-wise now. I do it on a daily basis. Like, what did I get out of this day? It wasn’t like something happened to me. I did fall on a scooter, so I’m a little injured, but just every day and every week, I’m trying to think about did I spend the day the way I wanted to spend it? Is there other ways I’d want to be doing it? That’s what I’ll go and actually try to do.
With Lora and vacation, this is an issue. People are like, “Yeah. I’m traveling Europe and we’re working around here.” They’re like, “That’s so cool. You guys must be having lots of sex. . .” Which we’re not. Joking there, not about the sex. What’s actually happening is, right now, you think when you come to France you want to go see the Eiffel Tower, you want to go out and do all these things. Honestly, we just want to stay inside and play on the computer. [laughs] I’m typing to her on Skype, “Lora, what are you doing?” “I’m talking to you on Skype.” I know it’s weird, but it’s just spending the days and time you want to do it. Now with AppSumo, I’m not madly in love with it, but I love helping people and I love the product and all these others things, so it is something that I have no problem spending a few hours a day and more working on. Sorry if I rambled a bit.
Andrew: No, you didn’t at all. In fact, Rihad [SP] in the audience is saying, “I love this guy.” To many people, this is the way they want to live, too.
Noah: Yeah. I’m actually looking forward to getting back. It’s a weird thing. I’ve always said when I was in the states and working in Silicon Valley and Facebook and Mint, I was like, “My dream is to run my own company,” which I’ve gotten to do at Gambit, with the other partners, and now AppSumo. I’ve always wanted to travel. I’ve always wanted to see these countries. You go to these other countries and you realize the people still shit there, they eat the kind of food you could probably get in the states, and it’s just like living anywhere else. I was hoping I’d get to some country and the light would shine and music would come out and I’d find my home, but I think that’s California, or maybe Austin. I just got back from Israel, which is my family’s country, and I really liked that. Nothing really just grasped me.
Andrew: With this business, can you pretty much live anywhere?
Noah: Yeah. I think most people could live anywhere regardless. Right now, I could live anywhere I want. I actually want to come back. We’re talking about skipping the rest of that trip. We have about two weeks left and we’re thinking about leaving France a bit early and Wales and coming back to the city.
Andrew: Oh, wow. Wow. Let’s talk a little bit more about Gambit and then we’ll move on to AppSumo. I see this letter that Facebook sent you personally. It said that you’re sending users to different landing pages. Did you do that? That you were using landing pages that generated pop ups, pop overs and pop unders.
Noah: Yeah. We were a part of that. We did whatever. It’s questionable, because we didn’t control the advertisement. The way that the offer companies work, we’re us, Offerpals, Super Rewards, TrialPay, any of these guys, is that you put up an offer like “Click and sign up for this shitty thing,” and then people go to it. The advertiser controls that page and they do all that different stuff that you can’t control. The options are, and I know TrialPay does this, and we’ve implanted stuff at Gambit, where you can check the pages through code. We manually check them. Or you can control the ads yourself. You run your own ads, which no one does. That’s why some things happen. The issue with Facebook, what happened is that all these companies were showing ads that they didn’t want to show and for some reason they chose us as the black sheep or scapegoat in the situation.
Andrew: That’s what TechCrunch said, that you were used as the scapegoat there. Why you? Why you guys?
Noah: I would love to have it be it’s because of me and I worked at Facebook for Zuck and he was my homie for a little bit and then not my homie. I don’t really have a good reason. I hope it’s something more thought out than just “It’s Noah,” and I’m guessing it is. I’d love to find out and I think we’re going to. I can’t really talk about all those details, but I’m hoping we’ll have an interesting story to come back to you wtih.
Andrew: Why were you guys not homies, as you said, anymore?
Noah: I used to work at Facebook, I was one of the first employees there. I’ve actually figured out what didn’t work. But yeah, so I worked directly with Mark and I talked with him a lot. I think I matured as a person. At that time, I probably wasn’t a great fit for the company as it got larger. Those people moved on. One of the more interesting things that you remind me of was when people get fired, the company doesn’t remember you. They don’t know you. You, as a person, you don’t think about that, but you think about, oh, you have all this hatred and anger and depression. I had it for so long. But everybody at the company went back to work. I think I’ve told this story about a guy died at Facebook, in a biking accident unfortunately, and we had a 10-minute ceremony. I was like, “Oh, we should build a bike rack and do all these things.” Ten minutes later, we’re all back to work. I don’t know. It’s just a harsh reality of getting fired and being a part of a company, how they can just let you go and cut you in a heartbeat.
Andrew: Why didn’t it work out with you guys?
Noah: With me and Facebook?
Noah: Probably a few different reasons. One, I worked on a lot of different things, a lot of good things. I came up with Facebook status, which is now the default thing on Facebook and Twitter. I think probably three things. One, I did Facebook professional which was when Facebook started opening up to more people and I told TechCrunch the night before, like, “Hey. We’re going to do this. Hey. You should write about it in the morning when it launches.” He wrote about it that night. I emailed the E-Team and then they were pissed. That was probably part one.
Part two, I got a little negative. We had meetings where I would go up to Zuck’s desk, or [??], or any of these guys’ desks, who were amazingly talented, and we’d make decisions and talk about things. As we grew to 150 people, it was like a 30-person meeting with this dumbshit marketing lady who knew nothing. That wasn’t an environment I wanted to be in.
I think third, I matured as a person. This is a really interesting thing for me. A lot of people who blog and I do have a blog, I think they’re more self-interested. I found out when I was at that age, I was more interested in my own brand, and the Noah brand, and Ok Dork, and all this stuff versus Facebook. To be at a company, and I think to be at a successful company, what I did with Gambit was, there’s Gambit and I can make my brand really strong by just making Gambit stronger. At Facebook, it was like let me make Noah strong and I also love Facebook, too. I just don’t think that will really work.
Andrew: Huh. I see. That’s pretty insightful and I feel like at the time, a lot of people were told to do that, to create their own personal brands apart from work, to spend time creating their own blog and their own identity, and name, and audience.
Noah: I think you get your name out there a jillion times more by just creating kickass stuff. There’s certain people like designers and people I see on Hacker News. I’m tired of Hacker News, that’s a whole ‘nother story. I see their stuff out there and I’m like, “You really haven’t done shit. The stuff you’re preaching really isn’t tested or verified. All the stuff you put out there is crap. I wish you would just go build some awesome products and then let that speak for you instead of just putting out words, which anybody can do.”
Andrew: Was it tough to come to the decision to move on from Gambit?
Noah: I thought you were going to ask me about Facebook. I was going to say I was depressed for six months.
Andrew: You were? Because they let you go, because this thing was. . . Why?
Noah: Yeah. I still remember the day. I was like, “Hey. We should go to this cafe.” They’re like, “No. We should go to this cafe.” I walked into the cafe and I’m like, “Oh, cool. I’m ready for a coffee.” Was ready to get to work. I saw Matt Cohler there sitting at a table and I walked and I sat down and my boss was with me. He got fired two months later, but that’s a separate story. I saw Matt and I was looking and I was like, “Am I getting fired?” Who gets fired? I was like, “Fuck.” Then my phone died, so I had to go. . . They’re like walking to me to my desk, I got my shit, went to the AT&T store because I had to give back my phone, called my girlfriend, got a pack of cigarettes and went to the Facebook house. I was living with six other Facebook guys, so call that perfect. I just sat and smoked, packed up all my stuff, and moved, went to my friend’s apartment and I went and smoked at his place and drank beer. I think we had a barbecue. [laughs]
Andrew: [laughs] So you were not only fired but pretty much you had to leave your house?
Noah: Well, no, they didn’t ask me to leave. But, shit man, it’s like an alcoholic in a bar, you don’t want to be at a party that you can’t drink at or go be celibate at the Playboy mansion, I don’t know, whatever story it would be. What was your thing about Gambit? Sorry.
Andrew: What about leaving Gambit? Was that hard? It was your company, you launched it, you were so identified with it.
Noah: Yeah. That was an interesting experience. I remember I finally felt like an adult, I felt like I matured. I remember I made the decision and I actually went and talked to my other partners. With my ex-girlfriends, what happens is I’d always either cheat or it would just fall off or we wouldn’t talk and things would fall apart, but I actually was an adult about it and went to the guys. I think after talking with Ben from DailyMile and seeing Jeff’s video and realizing there’s other things I want to do out there.
I also had some people come to me and say, “Hey. We’ll pay you for this consulting work.” I was like, “I have the money, so now my mom won’t give me shit. I already have savings and stuff like that.” It’s just not how I want to be spending my time. Swallowed my pride and went to the guys. Right afterwards, your heart’s beating fast and you talk to the guys, quit, then afterwards, you’re like, “Whew.” You’re nervous, and things suck then a week later, it’s getting better and you start doing things you’re excited about. You’re like, “Oh. I can’t believe I didn’t do this sooner.” [laughs]
There’s a lot of good times at Gambit was well. I still like the guys and I still keep in touch and I still want them to succeed. It was the right time for them. What it actually was, I was a parasite in the company at that point. I was great, created all this value, build this work, worked really hard, but at that point, they needed other people who were there for different reasons and wanted to do what they were going to be doing.
Andrew: For what kind of reasons? What was the difference?
Noah: I think they wanted to go into mobile spaces and other spaces and keep doing this virutal currency stuff and I just really had no interest in creating a commoditized product, in essence. Overall, what happens is I think there’s two types of business. There’s these flat-line businesses, [makes noise], which is a consultant. A consultant comes and they make $5 an hour, fixed. Then there’s these value-based businesses where you have your flatline and so if you create, every time it builds on itself. Yelp, for instance, it’s got one review, two reviews, three reviews, so over time, there’s actually more inherent value in that product and in that business. I wanted to have something more of that with what I was creating. Also, I wanted to create and work on stuff that people would really value and enjoy and appreciate versus they wouldn’t know the difference between us and Super Rewards or XYZ that comes out the following week.
Andrew: Was there a chance for you to get sold around the time Super Rewards sold?
Noah: Yeah. We could have made a few million dollars. We got offers from Super Rewards. We got offers from Offerpal. We got offers from PinaLabs [SP]. We got offers from a lot of different guys really early on when we were kicking ass. We were really aggressive and pushing hard and I think a lot of people were getting their margins and revenue hurt from us. We did have offers at the time. One of these things in retrospect I don’t regret it.
Gambit started from me building Facebook apps with a guy in the Phillipines. Watercooler, who’s now called Kabam, offered me $100,000 cash for my apps. At the time, I was like, “I’m going to be rich! I’m going to be so rich.” I think I said this in my previous interview. You make decisions at the time based on what’s happening then and what you think’s going to happen in the future. I don’t think we made a bad choice. I think we probably could have seen more of this coming and we talked about. . .
Chris is really smart, very thorough, one of the co-founders. He wrote up this really good doc, and I think this is a good thing for a lot of companies, all your points of failure. Single point of failure, I think, is the technical term for engineers. He wrote this doc, all the things in our servers, the backup server, the database server, and we forgot to put Facebook bans us. [laughs] It’s actually an interesting thing to think about in your company of where are the biggest things that could take your whole company down. Facebook for a long time wasn’t our biggest source of revenue, which is another piece of the story.
Andrew: What was the biggest source of revenue?
Noah: It was an even split between Myspace, the Internet, and Facebook. Once Zingman [SP] played them and these companies started moving over, the revenue went like 90% Facebook. Then, companies who we were working with outside of Facebook said, “Well, maybe we’ll work in Facebook one day so we’re just not going to work with you to make life easier.”
Andrew: You’re saying that something’s coming up. What’s happening with Gambit?
Noah: I don’t think it was really right the way things worked out with Facebook. I think the guys are really smart, very technical. They still have clients they do really well for. I think they’re going to figure something out and I’m still an advisor, I still have equity, and I want to help them. I think mobile’s a big space with payments and games and stuff like that. I think the Facebook stuff is still unresolved and there might be something there. So, yeah. I think there’s other people that might want them for the technology and for really good people that know this and have a client list.
Andrew: All right. What was the opportunity that you saw with AppSumo?
Noah: I was actually really surprised. MacHeist has been around for a while and I started lumping us with Groupon when we really are not anything close to Groupon. Groupon is online buying with groups. It’s not even the old traditional online buying where you. . . Anyway, the point being, MacHeist is basically like, “Hey. We take Mac apps, we put them in and we sell them at a great price. We give a little bit to charity and we make a ton of money.” They were posting million dollar numbers and I was like, “That’s cool.”
I was thinking about Groupon with the local business and Mac with Mac Apps and I was like well, the web business with Salesforce, and Dropbox and Xobni, all these web-based businesses, wow, the margins aren’t like Groupon, distribution is everywhere, it’s not like San Francisco. There’s got to be this out there.” I was like, “Okay. Let me go look.” I figured this is an industry that’s going to be growing. You see it happen, right? You see Salesforce is growing to a billion dollar company and 37signals. I was like, “There’s no one else doing this. Okay.” What I realized is that this is not the thing that makes me happiest in the world. I think if it was the happiest thing, it would probably be opening a taco stand or a smoothie stand.
Andrew: You’re saying this as a joke? You wouldn’t be. . .
Noah: No, I love. . .
Andrew: You’d love just being locked into one location day in and day out?
Noah: No. But there’s things with inventory and I like the scale of the Internet, but I don’t know if there’s ever this perfect thing that you can do and I think a lot of people are waiting for it and talk about it and write about it. For me, I actually find the best things come from starting to do certain things. Either I’m helping advise a company on some of their product and marketing and I just start building other things. I did user research and things like that. The companies that built the stuff wanted it. Customers were buying it already, of course they’re going to want more of it. It worked with MacHeist and Mac Apps, it’s going to work with other verticals. I talked with the guys at Evernote and they’re like, “Oh, you should just do themes.” That’s almost been where we’ve gone.
Andrew: What kind of themes have you done so far?
Noah: Yeah, I am rambling. Sorry, Troy.
Andrew: Are they telling you that you’re rambling? I shouldn’t allow any guests to watch this. Troy, you should not be telling him not to ramble, or to ramble or ask him questions. Troy, what you should be doing is tweeting out that he’s here live and getting more people in here. Troy, [??].
Noah: You get my $50 underwear, Troy. Come on.
Andrew: Yeah. This is embarrassing. You should not. . . You know what? You should be sleeping right now, nevermind sleeping earlier. I can’t even get you 50 people to come into the chatroom.
Noah: I’m going to get my mom. Hold on. Lora, call my mom.
Andrew: Please, let’s see that. Call my mom, have her just log in. She doesn’t even have to listen, she just has to log in. Let’s get to 50.
Noah: My mom is probably one of the best marketers I’ve ever met. She’s always telling me to get on. . . She’s like, “I heard on the radio with Dr. Laura. You got to get on Dr. Laura for Gambit, there’s where all your clients are going to be.” [laughs] I’m like, “Oh, Mom. Yeah, you’re right.” Then she’s like, “You got to get on local news.” Our world is different than their world. Coming back to the question where I’m not going to ramble is the bundles we’ve done so far are productivity. We’ve done design, which is really successful. We’ve done start-up bundle. We’re launching tomorrow, you guys are hearing it first, our web optimization bundle. You can get a discount.
Andrew: What’s going to be in that?
Noah: Crazy Egg for heat maps. Visual site optimizer for A/B testing. GetClicky for real-time data. User testing, you can give it real users test your site without being there. Performable, which is A/B optimization as well. It’s only going to be $25, so it’s probably one of our best-priced deals. The software is phenomenal. We’re giving a discount to all your. . .
Andrew: I pay more than that for Clicky alone.
Noah: I know. I know. This is a great deal for everyone. It’s like a win-win-win. It’s like quadruple synergy, maybe sextuple.
Andrew: What’s your deal with the app makers? How much do you give them?
Noah: Yeah. I’m going to pull up the numbers right now. It’s varied. I wish I could say I’m making a killing and I’m going to retire, but I’m not. Frankly, I’m learning a lot about what works and what doesn’t work. Also, what I give to the app makers, normally I pay them, so the way that I equate it to them is what’s your cost per acquisition now and a lot of them don’t know, so it’s varied. We’ve gone from anywhere from $0 up to $25. We pay them for every customer that we deliver.
Andrew: You pay them per customer. I see. Obviously, with this bundle, you’re not paying anyone 25 bucks?
Noah: No. It’s some percentage of their plan.
Andrew: Overall, it’s one number and you just pay them all. . . Oh, no, you said per member. I’m not even paying attention.
Noah: No. I got to start drinking because that’s going to help me not ramble as much. I’m joking. I’ll wait till afterwards.
Andrew: No, drink, come on. You really can?
Noah: All right. What happened was in the first bundle, I paid everyone for ever sell. Every company, no matter what, got the amount that we agreed on. The challenge with that was there’s the brand-name companies that do most of the sales and they promote it a lot and there’s companies that are just cool because people get to try them out but they’re not really the star of the show. It’s good to find new things. We’re very selective about who we work with. The thing is, is that company only 50% of the people redeemed the coupon we provided or the code, but they still got paid for 100% of the buys. Similar to Groupon, we only pay now for redemptions.
Andrew: I see. Okay.
Noah: That changes the dynamics for us a lot.
Andrew: You’re going to show us the numbers?
Noah: I can tell you about the numbers.
Andrew: Can you tell us now?
Noah: Yeah. From our first bundle, let me just bring it up, our first bundle we sold almost 500 bundles, so it was around $25,000 in total sales. I want you to know my profit, Andrew. I want all your, this is going to make me look like such a shitty entrepreneur, a 2% profit margin.
Andrew: 2% of $2,500 is what you got to keep. That was on the first one.
Noah: Yeah, I know, but I worked really hard on it. If you look at my hourly, I’d make more money working at Taco Bell in the back.
Andrew: What about the last one, that last big one that we saw that was on TechCrunch that I think also was the one that I saw on Lifehacker?
Noah: TechCrunch doesn’t sell [??]. I like TechCrunch, I think there’s very good purposes for it. I get a lot of my news from it. For what we do, I’d rather be on Lifehacker, TUAW.com, your blog, Hacker News, a few other sites. On the last bundle, we raised money for charity, so again my profit margin was sub-10%.
Andrew: Wow. How much money did you raise for charity?
Noah: We did over $5,000 for charity.
Andrew: $5,000. I thought you were giving up half of your revenue to charity.
Noah: Yeah. We gave up 248 sales plus or minus, so the revenue was around 13. We had to pay out the processing fees. One of the companies, we had to pay out regardless, so that was separate. We paid over $5,000 out to the charity, and then I took a little cut.
Andrew: Is it growing? It is, right?
Noah: It is. This is one of the things that. . . My thought is I don’t really want, I want the profit margin to break even and I want to get qualified people that are buying that want to know about more deals. That to me is the number one priority. I want to get an email list of 50,000 qualified, not quantity, but qualified people that will buy cool things that we put out, like tomorrow.
The problem is that we send out 6,000 emails for this entrepreneur bundle and I think it sold three. Three. That means either all the people we have on our list suck because it’s something I did wrong, or one of the things that’s actually been interesting is that we found a lot of deliverability problems. We’re testing AWeber and Mailchimp, and not knocking them, but a lot of people were like, “Hey. I never got your email.” Mailchimp, I actually said that to them, and they’re on their game. They’re like, “Well, we’re going to put on some code. We’re going to do some testing with you.” They’ve been very proactive in trying to help us solve that problem. We’re going to test it with this bundle to see if it makes a difference.
Andrew: With AWeber, people have to confirm that they’ve signed up, right? Are you incentivizing that confirmation?
Noah: No. I don’t do double opt in.
Andrew: Okay. I wonder if that’s impacting it.
Noah: I’m sure it is. I’m sure it is. We can definitely try it. That’s one of the things. . . Hold on, let me write that down. I got another tip for things that I’ll come back to about something that’s helped me in terms of figuring that kind of stuff out. I would talk to some of the clients and some of the people who have bought in the past, I can just tell you now. Something that I think people should do, they’re always like, “User feedback. User feedback.” What I did was actually segment it. I talked to the people that were my best clients and then I talked to my worst clients to see the differences of the best clients. One of the best clients was like, “Yo, I never got your email.” I was like, “Holy shit.” Funny enough, I got him on the phone talking about it and I told him about the bundle, this start-up bundle, and he’s like, “Oh, can I still buy it?” I was like, “No, but I’ll give it to you for free.” Anyway, so one of the things I learned in user feedback was actually you should segment your people to see why the best the like it so much and then why the worst are avoiding you.
Andrew: Rihad is asking was there a common theme with the worst clients?
Noah: The feedback that I heard from this is that a lot of the people who already have that kind of stuff, they’ve already paid for it if they’re going to be using it. Secondly, I think we need to work on our product in terms of the price point. We did this designer bundle that was really successful. Success is different. For me, success is quanity of sales not in profit yet, because I just want people to buy and get people that like this kind of stuff. I think, at $55, people were like. . . It’s not like an emotional “I want to get this,” it’s the gum impulse buy at the candy store.
Interestingly enough, on the last day of sales, I dropped the price to $25 just as a test. In 13 days, we did 100-plus sales. In one day, we did 106 sales. I don’t want to basically just be a margin grabber on the companies. Ideally what we want to do is create so much value that people are just impulsed to buy. We’re working on that. It is interesting to see that. We need to figure out the right price point and the right mix of applications and themes that are really effective.
Also, marketing and figuring out what marketing strategies that are going to work. I know you’re going to follow up asking me about it. I’ll talk about a few of them. I do think that, for us, it’s around three apps and I think it’s going to be around $15 to $25 price point that’s really effective in terms of the S&B freelance entrepreneur designer people that we’re targeting.
Andrew: What kind of marketing. . . Well, actually before we get to that question, and then I also want to ask you about Christian Owen from. . .
Noah: 56, Andrew. It’s underwear time.
Andrew: Yeah, we got 56 people. You said that you’d show your boxers. . . I don’t even know why I’m fighting for this. Your girlfriend should be fighting for this, not me.
Noah: She doesn’t want it.
Andrew: I would like to see it as an experiment. We’ll do an A/B test. We’ll show half the audience your underwear, the other half won’t, and we’ll see if it increases retention.
Noah: Here, why don’t we make them wait 10 minutes, Andrew? Let’s make them actually listen to some of the interview.
Andrew: Okay. All right. We got 55 people in here. Let’s, in 10 minutes, he’s going to be showing us some kind of super special underwear. I don’t know why, but. . .
Noah: It’s [??] color underwear.
Andrew: All right.
Noah: I’ll talk to you. I want to talk a little bit about paying more for things because I’m generally known as a pretty frugal person but I’m starting to change my ways.
Andrew: Okay. All right. Here, I’m going to write down, I got marketing written down here. I want to ask you about Christian Owen, this 16-year-old kid who you and I talked about on Skype yesterday who says he earned a million dollars in sales pretty much doing what you’re doing except for Mac software. We’ll also. . . What was that last thing that you brought up?
Noah: Starting to pay more for things.
Andrew: Pay more. Why don’t we start with marketing? What kind of marketing has worked for you?
Noah: Okay. The marketing that’s worked is having the companies promoted. Having the companies send it out to their people, free users that want to know about it. Affiliate stuff, I actually got the idea from the Christian kid and I think from Shopify, with one of your interviews, where they’re like, “Affiliate was my big ticket to success.” It just hasn’t been. I don’t know if it’s because the bundles aren’t super compelling or what not but affiliates has done okay, but not nothing like a lion’s share. Promotion partners, like tweeting bundles, I don’t want to say the guy, but I had one person do this tweet bundle giveaway. He had 1,300 clicks from his tweet. 1,300 clicks, guess how many sales? Three. Sorry, were you going to guess? [laughs]
Andrew: How did he get 1,300 is what I was going to say. Who is he? You can say who it is, people will find out.
Noah: No, because I don’t want, no, because then it makes him feel like he’s got a small penis. It’s like. . .
Andrew: But he got you 1,300 clicks. Who can get you 1,300 clicks?
Noah: I’ll tell you afterwards. He’s done other things with me that have been effective. I’m just saying for the bundle and the mix. For this bundle, he’s going to help promote and it’s going to crush. Point being is that affiliates do okay. Having the companies promote it crushes it. Going to targeted niche blogs, so Lifehacker is. . . If I could get on Lifehacker once a week, I don’t know if I’d give a toe for it but I’d pull tricks, I would do some nasty things to be on Lifehacker every week.
Andrew: You’ve had friends over there for a long time. I remember Dina thanking you in old blog posts.
Noah: Yeah. With Mint getting on there. . . What you go to do is you got to send stuff people want to cover. Oh, 49, they’re losing it.
Andrew: No, no, oh come on people.
Noah: Two people gone. Yeah, I would say affiliates have done really well. The retweet bundles, it’s kind of a 50/50, so that guy’s one didn’t do so well, other people’s have done better, where it’s like people are going to keep retweeting for that stuff, the companies themselves. Now I’m starting to play more around with Facebook fans. Initially, when I started this all out, I wasted about a month and I was one of the guys doing Mint.com’s landing pages and marketing. You put up an ad, they come to your page, they sign up for your page, they get an email, a month later they find out about AppSumo, then 0.1% of them bought.
I’m starting to rethink that process where if they’re on Facebook, they like MacHeist, they click like, any time I launch a bundle they’re already going to know about me. I cut from 10 steps down to 3. Now what I’m doing, and Christian came up with it yesterday after the fact, any money we’re making in profit, I’m going to try to put around 20% to 30% of the profit margin, of profit, not the profit margin, of profit into advertising. It’s hard because I don’t know my LTB but I have some great books, “The Loyalty Effect.” “The Loyalty Effect,” if anyone’s interested, is an amazing book about figuring out your LTB, so once I could figure that out, it’s easier for me to do advertising. I do think advertising would be a great way for me to pay a little more for users now that will work better in the future. Another secret place that’s worked very well for my first bundle was Reddit.com ads.
Andrew: Really? Tell me about that. That’s the ad that goes at the top of Reddit.com. They only have one ad, it’s just text, right?
Noah: Yep. I hate giving out all my secrets, but yeah. Check out Reddit.com. No one uses it. The people don’t really like to spend money but if you find out stuff that they like and you’re part of the community, which I am because I was of the pics and the girls and all that other stuff, NSFW, you start knowing what things they’re going to respond well to. I tried Stumble Upon ads. I got a negative. . . I got zero sales from that.
Andrew: Guys, let’s try this. Could somebody please find me a woman dressed but looking hot? I’m going to put her on just for the live audience here, so that when. . .
Noah: Let me show you my girl. Can we show them? Okay, she says no.
Andrew: She said what? No.
Noah: Can I say your website? Can I tell them your website?
Andrew: All right. Let’s go to that. Hang on a second.
Noah: This is going to be on the Internet forever. Quick side question, someone said, “Why not advertise Facebook people who like MacHeist?” That’s what I’m doing. The pricing. . . Andrew, let’s come back to Troy’s question because I think that’s a good question about AppSumo.
Noah: About devaluing the brands. I get that a lot. I’ll let you run the interview. Sorry.
Andrew: No, no. You go ahead. Go ahead. I’ll look for this picture. What I’m going to do is I’m going to put it up. I see that more people are coming into the room. Let’s see if we can retain more people if we put up all kinds of pictures. I’ve been thinking of that, too, for the live videos and for the recorded versions. Maybe I could just have all the random cat pictures from ICanHazCheezburger just cycling through, maybe from HotMiss.com [SP], whatever it takes, got to increase traffic, right? That’s what pays the bills.
Noah: Dude, it’s not traffic, it’s quality traffic. That’s what I’m learning a lot with AppSumo.
Andrew: Most people don’t care, they just see a big number over there and they go, “Oh, Andrew must have something.” They see a small number, they go, “Forget it.”
Noah: That’s actually a trick on Twitpic. Paul Stamatiou taught me that from Stammy.com. If you go to Twitpic and you see a photo that has five views, you immediately close it, but the social proof, he basically autogenerated a script that got a photo 10,000 views and then it started spreading more virally.
Andrew: Can you say that again because as you were saying that, I was looking at the, I got to stop looking at the numbers. Nevermind. Say that again. The number went to 100 and then suddenly it went down to 46 in three seconds as James F. is saying, for the live people who are watching this. What was it that you were saying again?
Noah: One of the tricks is that, I hope Stammy doesn’t get too mad, but Stammy basically put a photo on Twitpic. He wrote a script that basically autogenerated page views and that once it hit 10,000 it started to actually getting more viral. He could see that more people were talking about it.
Andrew: Ah, I see. Yeah. People used to do that for YouTube also. All right. I also have a note here to come back to Christian Owen. He’s the kid. What did you think of the way that he built his business? What did you get out of that interivew?
Noah: I got that affiliates are good. Right? [laughs]
Andrew: To reinvest a portion of your profits back into your company.
Noah: Exactly. Exactly.
Andrew: Why did he get so many people to come in and register and buy his first product?
Noah: I think it’s more, that scares the shit out of me. Not me personally because this is just fun and games, frankly, but I think this whole bundle stuff is too easy to reproduce, right? A 16-year-old kid could do and MacHeist does it and all these other people can do it. Where’s your competitive advantage? Where’s your differentiation? That’s a whole ‘nother question.
The thing that’s weird with him is that I was looking at all his traffic numbers and his Twitter numbers, it doesn’t really match up wtih the million dollar number. Frankly, what I think people should do is rob him because if he’s got a million dollars, I would either marry him or be his friend. I don’t know, something. It doesn’t match up with what his Compete and Twitter numbers say for the deals that he’s done. That weirds me out. What an opportunity is now is someone should just do MacHeist. Go get the apps they did last time and re-release it. They haven’t done something in six months. For the opportunity, guys, anybody wants the opportunity to make money, you will make probably about $100,000.
Andrew: You’re saying just copy MacHeist, but once they close their deal, you open yours, exactly the same way?
Noah: MacHeist hasn’t launched a deal in six months plus. If you go to their forums, we actually get a lot of sales and traffic from their forums. People are still there and they want it. I read the forums, people are like, “When are you guys coming out? We miss you.” I’m like, “I wish I had people that were a part of AppSumo that liked it that much.” It’s starting. But if you want to go do Mac apps. . . I think Christian has a, he got a on a big wave. It’s a very strong Mac community that has money that wants those apps. Also, the developers are willing to take a much lower margin because it’s a one-time purchse.
Andrew: I see. Okay. Paying more. You said that you’ve recently decided you’re going to spend a little bit more.
Noah: All right. Is it underwear time? Nope, 49.
Andrew: [laughs] No, 50. Do it!
Noah: All right. I only buy expensive underwear now. This is smart wool, they’re $50.
Andrew: Guys, tell me if this is inappropriate to have. It’s not the way I thought he was going to show us.
Noah: All right. These are smart wool underwear.
Noah: And they’re ripped. I crashed a scooter in Italy, you can see it.
Andrew: Uh huh.
Noah: Can you see that?
Noah: These are smart wool. They don’t smell so you don’t have to wash them as much. I wear these for weeks at a time.
Andrew: You’re messing with me.
Noah: I know Lora doesn’t really appreciate it. The thing that I realized is, so I’m getting rid of all my underwear and I bought this pair and two pairs of ExOfficio On the Go underwear, and what I realize is if you buy higher quality things, they last longer. These Levi pants, I’ve only bought one pair of pants this year and I wear these, I don’t know, maybe 50% to 60% of the time. They’re like my stagehand. This is my old underwear. It says “change daily.”
Noah: I’m giving these away and most of my other underwear. These were bought on eBay. Those are old, but they glow in the dark. Point being is that I started realizing that I’d rather spend the money I have on higher quality things and just get less things. I’m trying to reduce a lot of the things I have in my life. There’s a phenomenal post by Ross Hill and when he travels he only carries 35 things. Tim Ferriss put up a great post about how he travels light. I’m doing that with all the different things in my life and it’s been a really nice help. You feel like you’ve lost weight, mentally and just surroundingly.
What I find is that I just spend more money on higher quality things, I need less of them. You buy expensive Levis, $75, which is a lot for me, and it was a gift from my friend Boris, so was the underwear, these are both from him. I don’t know what he’s trying to tell me. You spend, you don’t need as many things and they last longer and they feel better. This underwear, like my ExOfficio underwear, look up ExOfficio Give and Go underwear, $25 on Amazon. I love them. I just bought another pair. I give them as gifts now.
Andrew: Are you really not changing your underwear for more. . . You’re wearing them for more than a day?
Noah: Let’s get a third party. Like a week. A week, on a bad week.
Andrew: I saw her. She’s freaking beautiful. She’s stunning. She’s allowing you to do this? She could do better.
Noah: It’s smart wool, you don’t need to wash it. Also, you can wash them in the shower. Leave them in the shower and they dry quickly.
Andrew: What’s the name of this underwear?
Noah: This is the smart wool underwear but it’s $50. What I did find is there’s a $25 pair from ExOfficio on Amazon called Give and Go. They kind of look like this, but they just fit really well. I got the medium size and I have two pairs and I’m only going to have three pairs of underwear in my life. I’m giving away, if anyone wants them, the rest of my underwear.
Andrew: She’s putting up with this for real?
Noah: No, it doesn’t smell that bad. She just gets mad bout not showering in general. She doesn’t care about the underwear. That’s another hour-long discussion.
Andrew: [laughs] Right on. How long have you guys been together?
Noah: Two years. She’s actually helping me on AppSumo.
Andrew: Yeah? What about interns? I know that you got a bunch of interns. Can you talk about how you got that?
Noah: Yeah, definitely. Interns are people working with me. I have David Kramer [SP], who’s phenomenal. DavidKramer.com who helped me scale AppSumo. It used to be a PHP widgety house. He actually moved everything over to Python, did a really phenomenal job and now we can launch deals in minutes versus hours. I got Sunkith Cuta [SP], shit I forget his last name, Sunkith Cotta [SP], excuse me. I spoke at Berkeley. Anytime I speak, I’m always like, I care less about how qualified and smart someone is versus just how much heart and if they’re reliable. I can always teach people the things to do in marketing and product and web.
He came up to me and was really ambitious and knew the web and I said, “Hey. Follow up with me.” He followed up and then I gave him, I think, three more tests. I always give a lot of stuff to do. Basically, I want it to suck. I want it to be hard so you feel like you’ve earned something. I gave him a few tests like research. He didn’t follow up with me on time, and one of the things I’ve written on one of my blog posts on Ok Dork was, he missed a deadline for me and this was just him following up, so I didn’t respond to him. I was like, “If you want a job, you better be aggressive and be hungry.” So, he followed up again.
Andrew: You’re not paying these guys, right?
Noah: David Kramer I’m paying a little bit from time to time. Lora, I pay her with sex. No, I don’t. I pay for more of the trip because she’s helping out with a lot of the work stuff.
Andrew: How do you get the other people? How do you get them for free?
Noah: This is going to sound weird, if Sunkith is listening, I’ll tell this to your face, but I think I’m giving him a lot of value in what I do. It’s almost like you should be paying me. Not with David Kramer, not with Lora, but with Sunkith. Look, when I was a freshman in college, I didn’t know shit about the web, I didn’t know anyone, I didn’t know what to do. Right? I didn’t know what to do professionally or for work. If I had someone that came to me and was like, “Look. I’m going to give you some crap work but some really good work and I might pay you, but you’re going to learn a lot, you’re going to get connections, you’re going to be able to figure out what you want to do and actually get that value.” I always ask him like, “Hey. Are you getting what you want out of this? How can I help you more?” When he says yes, that’s a big value for him that’s non-monetary.
Andrew: How do you make sure you give them enough value? Once you’re in there and you’re working together, it’s really hard to take time out and make sure somebody’s learning.
Noah: I want to talk about my friend Dmitry from ZURB. What happens is, maybe once a month. . . When he started, I asked him what did he want out of this. Every month, give or take one to two, I’ll ask Sunkith, I’ll be like, “Hey. Are you getting things out of this? Are you enjoying this? How can I improve the experience for you?” I think people should just be doing that on an ongoing basis to make sure that. With interns, and even just employees and people you work with in general, make sure they’re gaining something and they’re learning and they’re enjoying their work.
Andrew: All right. Fair enough. Are you looking for any more people? If anyone wants to work for Noah Kagan. . . Or, you know what, I’m getting in on this, too. If anyone wants to come and work with me, email us. We’ve got our contact information up online.
Noah: You have like half the Phillipines working for you.
Andrew: No. I got one guy I brought on. I’m a busy guy.
Noah: Argentina. One of the things I’ve actually found really useful lately. I met this guy Dmitry, let me tell you. For so many apps, I’m asking people what do they want in the app because that just makes my life easier. I don’t have to go figure it out. A buddy of mine, Derek, from 5ThirtyOne.com, said, he’s a designer and this is for the designer bundle, he’s like, “I want Notable app. I want Notable app.” I was like, “WTF Notable app? I don’t know what that is.” I looked up Notable app. It’s 2 a.m. in Austria and I was like, “Fuck it. I’m going to call them. They have their number on their homepage.” You go to Zurb.com, they have their number on the homepage. I called up and I’ve done sales so I know sales tactics and things like that. Best book on sales, “Ultimate Sales Machine.” Best book ever on sales.
I cold called and I said, “Hey. I’m looking for Jeffrey, the partner.” I just acted like I’m supposed to be talking to him. I said, “Hey. My customers are asking for you, I got to give them to you.” He’s like, “What do you want?” I was like, “I don’t know. You got to get in this bundle. Let’s work something out.” I met Dmitry and then they got in the bundle and that was a great thing.
Moving to the original point in terms of learning and working with people, Dmitry’s someone that, when I launched the bundle, he was very helpful and now we bounce things off each other and it’s good to have that outside opinion. Recently, I just complain to him like, “Hey. Sales aren’t great. Growth isn’t there.” He’s just like, “One, stop being a little bitch.” That was nice. Two, he’s like, “Pick something. What’s your bounce rate?” Right? That’s a great indicator if people are coming and getting your site. Are they coming and leaving or are they coming and staying? I was like, “Oh, it’s a really good thing.” I dropped the bounce rate from 75% now down to 58% in three days.
Andrew: How? How’d you drop your bounce rate?
Noah: If you go to AppSumo.com, basically I used Crazy Egg, ClickTale, and Google Analytics. The easiest thing to do in Google Analytics is you sort your content by traffic and bounce rate. I was seeing that a lot of people were coming to the homepage and I was getting a 75% bounce rate on the homepage. I was like, “All right. Where are people going from the homepage or where are they not going?”
I wanted to give more people things to do from the homepage. They don’t know anything about us, so tell us what you want. Now there’s a “tell us what you want” link. The web app directory, which is kind of a Yelp for web apps. We’re going to be putting our past deals which give us a little more credibility. We put a link there that says “No, thanks, when’s the next deal?” which links to tell us which next deal you want. I saw on the bottom, this is the one thing i fixed with Dmitry today, on the bottom of the footer, it used to say “What’s the deal?” That was getting a ton of page views. I’m like, “Why the fuck is that getting so many page views?” What happened is that if you go to the bottom of the page and it says what’s the deal, you’re like, “Yeah, what is the deal?” [laughs] People kept clicking it so I changed it. Dmitry was like, “Yeah, how it works.” I was like, “Of course, now people aren’t going to click it.”
It’s figuring out and trying to get in the mind of a user who’s coming that’s not buying that either presenting with a few different options and testing, hey, let me add this to see if that changes page views, which would reduce your bounce rate, then does that increase time on site, which it did. It’s going through that. The next thing I’m going to do once the bounce rate gets to around 50% is focus specifically on the conversion rate. Coming back to learning and stuff, it’s nice to have an outside partner that maybe once a week, I used to do it with Brian Balfour from Viximo, once a week, once every other week, once a month, you just, “Hey. Here are my problems. What are your problems? Let’s just spend a little bit of time talking about each other.” It’s super, super valuable.
Andrew: That’s what you said on Skype last night, that it’s helpful to have somebody come in from outside to really dig into your company and give you feedback this way.
Noah: Yeah. Dmitry got a post on TechCrunch for ZURB. He sent me his article and I had no problem giving all the feedback an dtime in the world because he’s invested in me and vice versa. Now, the article’s on TechCrunch and it was a great read, about how to remember things.
Andrew: Oh, cool.
Noah: See, I remember what he wrote.
Andrew: [laughs] All right. There it is. Now that your pants are back on, I see the audience has dropped down. This must drive people in television crazy because then you start to think of how can I pander to that number? How can I get more people to watch? Do I say something that’s outrageous? Do I say something that, in the moment, will get people interested? Then the whole thing goes to pot because it becomes a kitten video. That’s what I was about to do, right? I’m going to put kitten pictures.
Noah: I know. If I was only hotter. If I was a chick. . .I just like what Veronica Belmont or Leah Culver and then. . .
Andrew: What we should have done was have the camera on your girlfriend and have you talk, let her keep working with the camera on her and you talk and give us all the business stuff.
Noah: Babe, could we do that? Just for a little bit. Let’s just see if that changes. Let’s see what it does to traffic. All right, hot chick, she loves, look, she loves.
Andrew: There you go. I see the numbers going up.
Noah: She hates, not hates, she loves mobile computers. She reads Boy Genius Report. Mobile phones, sorry. She reads Boy Genius Report. She reads XKCD. She loves Reddit. What else is there? Dude, she jailbroke her Android phone.
Andrew: Let me ask you this. Listen, your boyfriend is not changing his underwear. If one of my readers, one of my listeners, emails you with a good picture, a good story, maybe he’s a fan of Boy Genius Report, too, and jailbroke his iPhone to boot, would you be interested?
Lora: In the article or in the guy?
Andrew: In the guy. [laughs] In the guy. I’m saying I might be able to find you somebody who changes his clothes and doesn’t make you work for him for slave wages. Noah’s great. Noah’s one of these charming guys. Is that how he won you over?
Noah: I met her online.
Lora: I’ll be honest.
Lora: Actually, it’s not that big of a deal. It’s not like my face is in his crotch all day, so the fact that he doesn’t change his underwear. . . If he had an incontinence problem then yeah, it’d be a problem.
Noah: A what?
Noah: What’s that mean?
Andrew: I see. You’re saying it’s still pretty clean? He doesn’t change his underwear for a few days, but it doesn’t smell, he’s still pretty clean. What is it about Noah? Why’d you decide that Noah’s that guy you need to date?
Lora: That’s a good question. I honestly don’t know. We clicked. I didn’t have any reason to not date him.
Noah: Just like saying God is real. There’s no proof that he’s not real, so he must be real.
Lora: No. I didn’t have any reservations about dating you, so I dated you and I continue to have no reservations, so I kept dating you.
Noah: Andrew, I want to link to your listeners, we met through her blog post that got on the front page of Delicious.
Andrew: Oh, really? what was the blog post about?
Noah: Let’s see if your viewers can. . . Sorry, I’m putting back on the ugly guy.
Andrew: Ugh. Yeah.
Noah: There’s a post called Crazy Delicious about Delicious pants. Instead of saying Juicy Couture on the ass, it says Delicious. It was amazingly well-written, very funny. LoraAbe.com, sorry babe. L-O-R-A-A-B-E.com. Find it, post it. It’s an awesome article. That’s actually how we met and started dating.
Andrew: All right. You saw that article and how’d you connect with her?
Noah: I just reached out. Here’s one of the, I’d say one of my secrets of success, for me, I haven’t been overly successful, but I’ve had a few little successes. I just do. I do it right then, instead of waiting for it, like with Notable app. I saw this article and then I saw the chick and I was like, “Hot. Good article. All right.” I IMed her actually because she put down her IM and I messaged her.
Andrew: With what? With like, “Hey. I like your article”? Did you spend some time talking to her about the article and then work in to date or did you hit her up for a date right away?
Noah: No. Funny enough, I did have a girlfriend at the time.
Andrew: You did?
Noah: I did, right? Anyway, what happened was we just started talking about herself. AndrewSG, nice work, man.
Andrew: AndrewSG is unreal. Yeah. He found the link right away.
Noah: He found the article. I was writing on OkDork.com and I worked at Facebook. I was talking to Lora about herself and she was looking for work and I tried to help her find a job. Over the next three years, we kept in touch every six months and then one day we were both single and I was like, “Hey. I’m in Austin, you should come and hang out with me in Austin.” Actually, two weeks later, or three weeks later, after she came out and left back to Vegas, I really liked her and we were talking a lot, so I just tried to drive from Austin to Vegas one night. That’s a 20-hour drive.
Andrew: How much of that did you do before you had to crash?
Noah: I did about 10 hours of driving and then I got to El Paso. Texas is really big, I didn’t realize that. Then I flew to Vegas.
Noah: Then we’ve been together ever since.
Andrew: I got to believe that that kind of stuff is charming, that women like that, that you’re willing to just get in your car and do it, that you’re willing to jump on a plane when it doesn’t work out. There’s always something going on with Noah.
Noah: Dude, you’re an aphrodisiac, Andrew Warner.
Andrew: Is it working for you?
Noah: Oh, yeah. She’s giving me the look like, “Oh, Noah.” I’m like, “Oh, Andrew.”
Andrew: [laughs] In fact, what am I doing talking to your girlfriend? I should be talking to my wife. I’m a newlywed, I got to go butter her up. She’s a little pissed at me right now. I couldn’t take her phone call earlier.
Noah: Oh, I know, because I did the double hour thing.
Andrew: No. It was actually through the first interview so I can’t even blame you.
Noah: The first interview wasn’t this good was it?
Noah: I got to be extra good because I was late.
Andrew: You showed us your underwear, you drank, you showed us your girlfriend. You know what, frankly, what I care about more than all of that, you told us your numbers. You were up front, you showed us all your numbers. I love that.
Noah: Cool. Can I give you a few more tips?
Andrew: Yeah. Yeah, hit me up. What do you got?
Noah: If people like beer, I’ve been traveling a lot of Europe, trying a lot of different drinks. Leffe Blonde is the most delicious Belgian beer you could ever try. You guys get a chance, drink it.
Andrew: Is that what you held up earlier?
Noah: It’s another blonde from Belgium because I always try to just get different beers.
Noah: This is good. We were doing P90X. I got into the accident. P90X is a really good diet plan if anybody’s trying to. . . It’s a lot of work but it’s a great way to lose weight.
Andrew: What’s P90X? What’s the gimmick behind that?
Noah: It’s the most amazing gimmick ever. 90 days, every day you work out, you follow your diet, and you get ripped.
Andrew: 90 days? I see. It’s just really hard for 90 days but at the end of it, you end up with something valuable? You end up with a lot of progress.
Noah: You feel so much better about yourself. I noticed when I started working out, I walked around thinking, “Yeah. I’m hot. I’m better than you.” It’s just logical and you feel so much better about yourself with the way you work and the way you feel, it really does matter. There’s a lot of haters and haters going to hate, but it helped me out a lot.
Andrew: Okay. What else?
Noah: Also, the most helpful thing wtih AppSumo is tracking and processing. Lora might be getting another job with someone else so what we’re working on a lot now is making videos and Google Wiki writeups about the things she’s doing so that. . . Basically, if someone, and it says it in “Ultimate Sales Machine,” you should always be training people so that they can replace themselves and keep moving up and forward.
Andrew: All right. You’re saying you’re training your girlfriend so she can move up and forward and then what?
Noah: I don’t think this is her long-time thing. I think she’s better than this job right now. She’s done a great job and she’s learning some things, but I think there’s more for her to do.
Andrew: You know what though? My parents, when they first got married, were working together, helping each other out, my mom helped my dad build his business up and I feel like it was a real bonding experience for them. I don’t know that I could do it with Olivia. I feel like we’d just be on top of each other too much.
Noah: Literally or figuratively?
Noah: You said on top of each other, nevermind.
Andrew: Yeah. [laughs] How are you guys getting along as you’re doing that?
Noah: We did it at Gambit and we’ve done it now with AppSumo. I really enjoy the experience. I think a lot of people, whenever I say it, they’re like, “Oh, that’s got to be horrible.” Or, “Oh, that creates a lot of problems.” It brings us closer together. We can talk a lot more about the work stuff. She understands it. I actually do think it would probably strengthen the relationship, on a counterpoint, if she was doing something completely opposite so we could talk about a lot more different things. It does help a lot that she’s a part of it and it really hasn’t created too much firction. Has it created any friction? None. There’s the travel stuff.
Andrew: All right. One last tip and then we’ll end it there.
Noah: Oh, well I want to do a plug, is that okay? For the Mixergy special.
Andrew: Yes, let’s say it again. What’s the site?
Noah: AppSumo.com/Mixergy. Sign up, you’ll get a special discount that no one else will get. I’m going to try to keep it up for another few hours or until at least this goes live so more people will see it and then I’ll turn that off.
Andrew: For one day after it goes live you’ll leave it up.
Noah: Yeah. Another tip would be download PDF books. Dude, they’re awesome. I’ve thrown away all my books. I got an iPad only for reading books. I go to Demonoid or any of these iso torrent sites and I find all these amazing books. My new fascination has been with warfare and military strategy.
Andrew: Uh huh.
Noah: There’s a book “War Fighting.” I’ve been on Cora [SP]. Less Hacker News, more Cora. It’s like iPads and information. iPad and books has been really big for me. Cora’s actually been really interesting. Hacker News I feel is very subjective based and Cora, people are really aggregating really useful information. One of them is you’re looking for things, I went to Cora and I looked for conversion rate improvement. Hacker News, you get the same articles. . . I don’t know the guy, but Gabe Weinberg pushes out something new for DuckDuckGo. I like Gabe and I like Duck. I don’t know him but I want stuff that’s a little more for me and that’s what I’ve been getting out of Cora for myself.
Andrew: Cool. I tried those, the pirated books. People are giving us a hard time about that. I don’t like it at all. It’s such a pain in the butt. It’s a lot of time to download it, then when you finally get it on your system, it doesn’t look nearly as good as the Kindle version.
Noah: I can teach you how to do it. I can do it with you right now in 45 seconds, just tell everyone how to do it.
Andrew: Tell them. Let’s tell people how to pirate.
Noah: Go to Demonoid. You download the .MOB or .PDF version of the book. It literally takes about 20 seconds, maybe a minute, to download books because they’re only one to five megs.
Noah: There’s a program called Calibre. Calibre will convert your book to a readable format if it’s not readable. All you do is if it’s in the format of PDF or MOB, from the download, all you do is drag it into iTunes and it’s there. I was reading Anthony Bourdain’s books, “War Fighting,” I read all of Stieg Larson’s. Those books are really good, the girl with the tattoo. Have you read those?
Andrew: “The Girl with the Dragon Tattoo”?
Andrew: No, I actually just saw the movie last night.
Noah: Oh, the Swedish version?
Andrew: Yeah. It’s not that good.
Noah: The books are good though. You’ve read them, right?
Andrew: No, no.
Andrew: I saw the movie, what do I need to read the book for?
Noah: The books are good.
Andrew: Olivia read the book, she loved it. That’s why we had to watch the movie.
Noah: You can use Calibre. You don’t even need Calibre, if you just download the format, drop it in. I’ve only had about maybe one out of ten books be awkward formatting. There’s also a program called Stanza that’ll help you transfer them to other devices if you need help. Andrew, do you have an iPad?
Noah: Do you have a mobile phone?
Andrew: I could barely get an iPhone. The only reason I have an iPhone. . . I had an iPhone here but it broke. The only reason I was able to get a replacement in Buenos Aires, because it’s so tough to get technology, is some guy named Jason King saw that I didn’t have an iPhone and was complaining and he helped me out. He found a way to get it to me.
Noah: Damn, dude.
Andrew: Incredible. He just heard me in one of these interviews and he helped out.
Noah: What has been the biggest growth for you in Argentina you wouldn’t have gotten in the states?
Andrew: Focus, man. Coming down here, it wasn’t for the steak. I didn’t know I’d like it, but I did. It wasn’t for the atmosphere. It wasn’t for the beautiful scenery. I just needed some space. I wanted an office without anyone who could bother me, where I didn’t know the language so that I wouldn’t be distracted by little conversations. I just wanted to focus on the things that I cared about.
Noah: What have you missed out on because you’re not. . . I know it’s your interview, but what you have missed out on because you’re not in the states? Where do you think Mixergy would be if you weren’t in the states?
Andrew: I don’t think Mixergy missed out on anything because I wasn’t in the states. I think there are a few things that I had to do with my finances that maybe fell through the cracks because I was here. I won’t know until I get back. I tried to be on top of it. I don’t think I missed out on anything significant. I would have gotten the iPad. These are little things. It doesn’t matter. That’s why I’m not. . . I’m going to be in Washington, DC next. I don’t care that Washington, DC is nothing for technology. There’s nothing really going on over there. I just want the space.
Noah: There’s Webs.com who you interviewed. I think in Virginia or. . .
Andrew: Are they there?
Noah: Somewhere on the east coast. I know you’re leaving but what do you want to have happen at the end of the year for Mixergy? Like for you and your businesses and as well personally. Where do you want to be at the end of the year?
Andrew: I’d like to find a way to get the interviews a little bit more organized to pull more value out of them. Maybe that means that having a series of interviews that are more directed towards a specific goal, like how to launch a product. Maybe I’ll do five or ten interivews on the minimum viable product concepts, on how to get that, how to do the feedback loop and have people who are really in that do interviews that are more like classrooms where all I’m there to do is make sure that we’re moving along through a series of points that they’ve already planned out. We’re not just coming out here and hanging out but we’re really getting to business.
Noah: That sounds like AppSumo. I think you’re taking my idea, which I like.
Andrew: No. I’m talking about doing interviews like this. You’re doing web apps.
Noah: I think that’s the way to do it. I’m curious, how are your sales numbers? You know your old video stuff? I try to check them out. Have you talked about that publicly?
Andrew: The vault?
Noah: Yeah. I was like, “Damn, I want to pay and I like Andrew, but I don’t want to pay, but I do.” Now that I’m doing AppSumo, which is basically you’re paying for digital goods, more or less, I start to pay for this stuff.
Andrew: [laughs] Yeah. Once you start selling digital goods, you start buying it.
Noah: Yeah. Have you talked about those numbers publicly?
Andrew: I haven’t known what they were until recently. I think they’re something like, I don’t even know. I don’t know. It’s, I think, half my revenue comes from that. Maybe two grand a month? No, no, no. That’s not half my revenue. That’s less than half my revenue. I don’t know. I think half of. . . I don’t know. Part of my issue is that I haven’t bee able to get my data into an accounting program to figure out what’s what. I’ve been trying everything and I couldn’t get anything to work and I finally found a company called inDinero that’s trying to do what Mint.com is doing.
Noah: Oh, you’re doing inDinero with Jessica Mah.
Andrew: Yeah. I actually am going to invest in the company. I’m goin to use inDinero to sort things out and hopefully that will help me figure out what’s what.
Noah: Honestly, how is it? I don’t have any accounting for my stuff.
Andrew: inDinero, very much like Mint.com, but for business. In fact, the way that you categorize in inDinero is very similar to Mint.com. In fact, you look at it and it looks like you’re still in Mint.com.
Noah: Wow. Pretty cool.
Andrew: Yeah. It’s good stuff. I didn’t give you a clear answer and it’s frustrating that I don’t have a clear answer.
Noah: No, I’m just curious like overall volume. It’s basically like 1 to 3k?
Andrew: It’s not huge. I don’t know how many people overall pay. I’d say about one a day come in and pay.
Noah: The thing is you’re stuck, I guess. . . You see that Hacker News monthly article? We can talk about this offline if you need to talk.
Andrew: No, we can do it publicly. I don’t want to hide anything. I’m trying to actually bring up the accounting software to see if I can give you a more meaningful number here. Here, let’s see if I can figure it out.
Noah: All right. Troy Simpson, we’re doing the bundle tomorrow about A/B testing. Come on, man.
Andrew: Now we’re just hanging out here.
Noah: Have you seen those videos just two guys having a good time?
Andrew: [laughs] I wonder if maybe these interviews need to be a little bit more like that. Tell me what you think. We’re drinking, we’re seeing his underwear, and we’re just chatting here.
Noah: We haven’t seen your underwear. No, I’m joking.
Andrew: It doesn’t really matter what people think. I don’t really like that it’s not an organized conversation here. It’s cool for now, but it’s not something that I’d want to do long term.
Noah: Are you thinking of putting together either classes or more of PDFs and books and content around the things? You get some really juicy nuggets. You ask good questions. You could put a lot of that stuff together.
Andrew: I know. I know. I’m exhausted though from doing the interviews.
Noah: You make good questions and I think people, I think they get it, but I don’t think people know how hard that is.
Andrew: It takes a long time to do the research. It takes a long time do to the interview. Then there are always things that come up. Sorry?
Noah: No, no. Please.
Andrew: I’ve just been so freaking exhausted just from doing the interviews and the day to day work that I haven’t had time to come up with other stuff. I’m looking here at the number. I don’t think I’m ready to say it. I’ll tell people another time.
Noah: Oh, Andrew. Really?
Andrew: I know. Here I am, I’m asking everyone else for their number and when it comes time for me to give my number, I’m not doing it. I want to save it. I want to find a time to do it that it has a little bit more impact.
Noah: Okay. Fair enough. We don’t want to spoil the fun. We were talking about this at dinner. Sharpie pens.
Andrew: What about Sharpie pens?
Noah: They don’t come up with. . . They do the same thing over and over but they work. Right? It’s like when they come up with shorter pens, and they came out with that new one lately. Like, hey, we drank, but that’s what people want. I don’t know. It’s hard to say. I think at the end of the day, you do the things that you’re enjoying, that’s interviews. I think with you it’s tough because you’re still doing interviews, you’re like, “Well, where’s that bigger picture of where I’m going? Am I doing these things?” Doesn’t it burn you out, too? I don’t know.
Andrew: No. I like doing the interviews. I feel better about the way that I do the interviews now. I like focusing on stuff and the fact that I get to do an interview every day means that I get to focus on it. I get to get a little bit better at it and I’m watching myself improve as I do it and that’s meaningful to me. That’s something that I’ve been wanting to do. Someone in the audience is saying that you should be laying the smackdwon on me.
Noah: Dude, he smackdown on me. I’ve never had anybody insult me so hard on Twitter. Actually, I did feel guilty. I felt like my douche brother.
Andrew: What did you think of the way that I attacked you for not comign on here?
Noah: You are a genuine person. Me, I’m 95% nice, right? I have 5%. . . You’re a good person. There’s a few people like you. One, I don’t want to let you down, so I felt bad. It’s you, so I’ll take that from you. One thing I’d love to close out with is how can we, and the audience, let’s do this outside perspective, how can we help you? What do you need help with? What sucks?
Andrew: I just want to keep doing more interviews and pulling more value of those interviews. I know I need to have a bigger vision here. I know it myself. Maybe I need to spend a bit more time doing it, but I just want to keep doing these interviews.
Noah: Do you need help finding more guests?
Andrew: I always need more help finding guests, yes. Really quality guests. People who’ve built companies. People who aren’t looking to get promotion from here, because frankly, I’m not going to be abel to get them a lot of promotion for doing these interviews. Get people who’ve done something who just want to give back by telling their story of how they did.
Noah: Have you interviewed Avinash?
Noah: Oh, dude. Avinash.net. I just started reading his blog. The most ridiculously good blog on analytics and optimizing through Google Analytics. You guys should all be reading it if you try to build a business. Avinash.net. He’s actually one of the advisors for our theme, dude. I just started getting back into his blog. It’s Avinash, right?
Andrew: If you can introduce me to him, introduce me to him. I just figured out how we give people the revenue numbers. Here’s what we do. If they sign up for your thing, what is it? For AppSumo.com/Mixergy, and they email me what they get, I will give them the number. Done.
Noah: It’s money, dude.
Andrew: There you go. Go to AppSumo.com/Mixergy. I don’t even get a share of this. I want you to go and help out Noah and check out what he’s up to. Then forward me what you get and I’ll give you the number that Noah asked for. There you go. Noah, thank you for doing the interview.
Noah: Thanks for listening.
Andrew: All right. We’ll come back on again soon. Everyone else, thanks for watching. I’ll see you on Wednesday.
Noah: Bye, everyone.
Andrew: I’ll look for your email. Bye.
Andrew: Let’s put an expiration date on that. Do it within 24 hours of this interview going up. Help Noah out quickly.
Noah: Awesome, man.
Andrew: Bye. Thanks, man.