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Here’s your program.
Andrew: Hey, everyone. It’s Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart. How does a do-gooder site get over 14 million registered members? Joining me is Randy Paynter, founder and CEO of Care2, which is an online community of healthy and green living, human rights and animal welfare. Actually, I should say not of healthy and green living, but for healthy and green living, human rights and animal welfare and the people who care about all that. Now, I hope he doesn’t think that I’m a skunk; Randy, I hope you don’t think that I’m a skunk, because instead of talking to you about human rights and all of those issues that you care so much about, that you built this company that you dedicate your life to, instead of talking to you about all that I want to talk to you about how you built up your audience and how you got 14 million people to register and be active on your site.
Randy: Sure.
Andrew: So do you mind spending about 45 minutes telling me your story, and also tell me how you built it so my audience can glom ideas off of you go build up their companies?
Randy: Absolutely. I’d be happy to.
Andrew: Okay. I’ll start off with, how long has the company been around? When did you guys launch?
Randy: Well, we’ve actually been around for 12 years now. So we launched in September of 1998, and it’s grown a lot and changed a lot over the years. We had an advantage early on in that we were one of the early movers in this space. So, that’s certainly given us a lot of a head start and critical mass that’s really helped fuel that future growth.
Andrew: All right. When I say to people that you have 14 million members, in fact if they go on the website, they can see that I’m wrong already. It’s over 14 million, and they can see the counter as your audience grows. What exactly is a member? What does a member mean? What does a member do on Care2.com?
Randy: A member is somebody who has actually registered on our site. We have their e-mail address, a password for them, usually some other information that they’ve registered. Basically, what they’re doing is they are using our site to make the world a better place.
There generally are two kinds of ways that they are doing that. We say, “Can we take this holistic approach?” So there’s the “Me” side and then there’s the “We” side. On the “Me” side they are learning how to live a more sustainable lifestyle, such as how to reduce toxins in their home, how to find more balance in their life, maybe how to eat better. We have lots of information for them that they can access and educate themselves on that.
Then we also have the “We” side, which is helping to take collective action, usually in support of a nonprofit organization that is advocating for a specific cause or certain legislation. Collectively we can raise our voices and be more powerful than if we tried to do certain things individually. They are signing petitions, they are joining groups, they are creating personal profiles, they are commenting on our site. There are all sorts of ways that you can interact and support good causes.
Andrew: I’ve got a list here of some of the things I went over when I checked out your site today, trying to figure out some of your secret sauce. What I noticed was that there’s a lot of stuff that you can find at other places, but the twist you guys have is butterfly rewards, where you give points for doing certain things like commenting. Another twist is that I think if I send out a greeting card on your site I . . . what is it? I help create an acre or I help save an acre? Like when I do usual things that I might do online, if I do them with Care2, I make the world a better place. What’s that acre example that I’m not getting right here?
Randy: Well, actually when you send an e-card you earn butterfly credits. Basically the model, the butterfly credits concept is basically a frequent flier program, a rewards program that helps people to earn credits when they do good things on our site, support causes, comment, or whatever it is that is contributing to the benefit of the world. They earn credits, and then they can redeem those credits. But rather than getting a t-shirt or something is personally going to benefit me, our members can redeem those for gifts that are going to make the world a better place, such as a day of clean drinking water, a tree, a saline tablet to help save a child from dysentery. You’re not going to get any personal benefit, but you’re going to do something good for the world.
It’s a great observation. That is part of our secret sauce, I would say, and actually this was from day one. The idea originally for Care2 was to let people do what they were going to do at any rate, and it was originally to work with e-mail, greeting cards, and search, which were the first three services that we offered. We put a green twist on it, or a twist on it where by doing good things or doing what they were going to do at any rate, they’re actually going to generate other benefits to the world. Originally, it was simply we’ll make to certain organizations by taking a revenue share off of the revenues we earned from the advertisers on our site. Then we realized that it was a lot more fun and a lot more interesting and a lot more personal if we could actually let the individuals earn credits and then redeem those credits themselves so they could direct the money to where they think it’s most important to direct that money.
Andrew: Okay. I’m going get to the whole evolution of the idea in a moment, but I’ve got to stick on this and just fully understand it. Saline tablet, what does it mean to give a saline tablet?
Randy: Basically what we have done is, we work with . . .
Andrew: I mean, what is a saline tablet and how does it make someone’s life better?
Randy: Well, if a child is suffering from dysentery, sometimes the simplest things that we take for granted here in the West can actually help save their life, and so a saline tablet helps them absorb more water into their body and protects them from dehydration, which is a killer with cholera and other forms of dysentery or diarrhea. Basically the saline tablet can help protect that child and get them to the hospital or whatever. So, we’ve actually worked directly with organizations to make sure that our funds are directed to support these particular organizations and their programs that are going to be doing things like the saline tablets.
Andrew: I see. You are a real do-gooder. I sometimes go home and I say, “Did I really do anything today? I mean, am I making the world better? Am I having some kind of impact? Am I leaving a legacy?” You must not have nearly as many worries.
Randy: [laughs]
Andrew: I’m sure you haven’t. But you have hard numbers that say, “This is how many saline tablets we gave out.” It must help you sleep better at night.
Randy: Oh yeah. Well, that’s the whole reason that I started the company.
Andrew: Actually, let me stick with the saline tablets. I’m so obsessive sometimes. I apologize, and I promise I’m here to hear this story, but I’m obsessive with this. What does it cost to give a saline tablet?
Randy: You know, I actually don’t know the answer to that particular one.
Andrew: We’re talking like, 5 cents, 25 cents?
Randy: Something like that. Probably somewhere in that magnitude, yeah.
Andrew: So maybe 5 cents; can we say that?
Randy: Yeah.
Andrew: So 5 cents. How many actions does a user need to take on your site in order to give a saline tablet?
Randy: You know, actually I don’t know that off the top of my head. But it depends on what kind of action you’re taking because different actions are rewarded in different ways. You can take some actions and get hundreds of points, hundreds of credits basically, and others you only get two credits, let’s say. Somebody can give you basically a thank you, what we call green stars on our site. If you get a thank you from somebody, we acknowledge that also by giving you two butterfly credits as well. So it just depends on what you’re doing on the site.
Andrew: Okay. What I’m getting at though, is that it’s probably not very expensive per action. It’s a small cost to you but it has big impact with your audience. It helps them do good. It helps you do well, and it helps you also to compete against Gmail. Your audience isn’t going to flock away from your e-mail service as easily as, say, Yahoo’s might.
Randy: Yeah. Yeah. And there’s also, one of the other services that we started back probably in ’99 or 2000 was these click to donate sites, where you can click and generate a small donation that supports a good cause. Maybe this is kind of the rainforest example that you were thinking of. Actually I got this idea from the hunger site, which launched the first of these models. And we saw that and I was like immediately, “Oh my God, we’ve got to do that for the rainforest.” So we launched the rainforest site, which was the second one of these out there. Originally it was called the “Race For The Rainforest”. Now we just call it “Click to donate to support rainforests.” When you click the button on the page, you will go to the next page where you see advertisers, and those advertisers pay us to be seen on that page. Then we make a donation, we guarantee basically a minimum donation there. So I think you’re saving seven square feet of rainforest every time you click on that button. It’s one of those things where it’s so simple we all could do it, but we just generally don’t think it’s necessarily in our capacity, or we’re just not aware that we can even do that.
The beauty of it is, from a social psychology perspective which I love researching that area, is people get motivated when they realize that they’re actually having an impact and they’re actually doing something positive. We’ve tried to chunk it down and to make these actions as simple as possible and help them to visualize the impact that they’re making. So if you click that button, and you save seven square feet of rainforest, you do it today, maybe you do it tomorrow, maybe you do it the next day, eventually you start to realize that you actually have power. You are empowered to make the world a better place. You are empowered to save the rainforest. Maybe you even start thinking of yourself an environmental protector or maybe even an environmentalist. Eventually what that does is lead to other actions. As you’ve kind of internalized that, and you see yourself as someone who protects rainforests or the environment, you are more likely then to vote with your dollars or with your vote. Or in terms of other actions, in terms of talking to your friends, you are more likely to act in concert with who you now perceive yourself as. That’s what we’re trying to do here is to help people incorporate that into themselves so that they feel empowered and feel like they are protectors of the planet.
Andrew: And here’s something that my wife loves about it. It’s a company, right? I mean, it’s a for-profit business. You’re showing that you can earn more profits if you also do more good for the world.
Randy: Yes. We are a “B” corporation, which is a for benefit corporation, which means that we have passed through certain screens that say we are doing good things for the world through our local providers, service providers, you know, our employees and the environment and other key beneficiaries out there. We’re basically taking them into consideration when we make decisions. Also we are, our mission is aligned with our margin. So this is one of the most important things that I think we did, and it took years to try to figure this model out. It was basically so that the more good we do, the more revenues we generate; the more revenues we generate, the more good we do. I don’t consider ourselves a triple bottom line or a double bottom line company. I consider ourselves a single bottom line company because our mission and our margin are totally aligned. So when times get tough, we don’t have to make a decision between well, should we protect the environment today, or should we try to make more on the bottom line or save a job here internally because it’s all aligned. Basically our members trust us and come to our site and to our community because of what we stand for. If we violate that trust, we’re not going to have a community. We’re not going to have any business. We are kept in check. If anyone were to ever worry about that, we’re kept in check by our own members. And the more that our members use the site, the more actions they take, the more good that they do, the more revenues we generate. So, it’s a very positive, virtuous cycle.
Andrew: I see it. I was actually frustrated in trying to research you, because usually what I do is if I want to find out, I look for the bad. I say, “What is this guy trying to cover up that I’m going to look like a fool for not bringing up in the interview?” And I do searches for “Care2.com space sucks” on Google, and no, people love you. If anything, they’re using you to help fight the things that they think suck in the world and that kept coming up.
Randy: We do have some who don’t love us because we are trying to create change. Whenever you try to create change, you’re going to ruffle some feathers, so . . .
Andrew: Like what? What are people saying? What’s the big criticism?
Randy: Well, it could be when we take a controversial stand, or sometimes these things I feel like shouldn’t even be controversial. Drilling in the Artic National Wildlife Refuge, and protecting the ANWR. Is that something that is controversial? Yes. Is that something that I think is good for the world? Absolutely, to protect it. And yet, we will get people that hate us because we want to protect that; because we’re against, you know, drilling for more oil. And I understand why some people have that perspective, but we strongly disagree and we are sticking to our guns, but we get some people out there that can be pretty frustrated and take it fairly personally and get pretty rough on us, I would say, at times. But we still stick to our guns and do the right thing.
Andrew: To me that’s fine. That’s not the kind of thing that I usually look for. What I was wondering was, I was looking for complaints where people said, “I signed up and then they got my whole address book, and they slammed all my members onto their website and that’s how they got to 14 million people. That’s how they get those e-greeting cards sent out.” I didn’t see that. So let’s go back and find out how you started this. You’re a guy who, if my research is right, you went to Harvard University, got an MBA from Stanford Business School. So you’re a businessman. That’s the background. A do-gooder businessman. I don’t think they have to be mutually exclusive, but an entrepreneur. If I got the rest of my research right, you were a consultant with venture capital firm Comtech Management Corporation. Is that right?
Randy: Yes.
Andrew: Why? Why did you go there?
Randy: Well, so actually immediately after business school, what I did was I started an electronic greeting card company, and that was my first real venture. I did that with a couple of friends. This was 1995. The Internet was just beginning to take off. I’d actually taken no courses at all on anything in technology. I was kind of afraid of technology and didn’t think I would go into consumer products. I had some photographs from some travels that I had done, and a friend of mine knew something about programming. So we thought, “Well, let’s put the photographs with this e-mail, which is kind of plain and boring, and let’s call them e-cards.” And so we started Ecards.com. Unfortunately the partnership didn’t work out, but we learned a whole lot and I got to run that on nights and weekends with one of my partners. Eventually, I actually wanted to get more business experience, and long story but one of the gentlemen from the venture firm was the owner of the cottage that I was living in at the time. So he set me up so that I could work with his companies and help start those companies. At the same time, I was continuing to evolve what eventually became Care2.
Andrew: The e-card business, Ecards.com. Was it a business for you?
Randy: The initial intent really was just to learn about what the real opportunities were online. This was 1995. We were all clueless I think at the time, and just trying to figure out what the opportunities were. What we realized was just the power of viral marketing. This was before the term viral actually had even come about. So we, what I realized was that 80% of all greeting cards are sent by women. So if you want to attract an audience of women, and Care2 is 75% female audience actually, greeting cards are a great venue to do that; and what they are, in particular if you have certain themes around your cards, you can attract a certain type of person in fact, because people are likely to send cards to their friends that they think their friends are going to like. So their friends are actually introduced to Care2 in a very positive light. Because we’ve framed it in this do-gooder kind of frame, when someone gets a greeting card from Care2, they’re introduced to a world of goodness there that maybe wasn’t even the initial intent of the card sender but it ended up becoming the reality. So we actually have a lot of people that discover Care2 through e-cards. It was interesting, because it was a fairly controversial thing, I would say back in ’98 when I actually started Care2, because I think most organizations at the time didn’t take it seriously. They said, you know, I think they felt that if you are going to do the right thing for human rights, for the environment or whatever it is, you don’t get involved in greeting cards.
Andrew: [laughs]
Randy: That has nothing to do with environment and human rights. So we used it essentially as a Trojan Horse to do good. So it’s ended up becoming quite effective.
Andrew: But ECards.com, the business you had before. That was a business. What was the revenue model there?
Randy: It was advertising based as well. It was basically, the more people send cards . . . it’s evolved a little bit over time, but we would donate a percentage of our revenues to non-profit organizations.
Andrew: And the ads are around the greeting card, or on the landing page after they send it? Or is it co-reg?
Randy: You know, actually I’m not sure as to where they’ve evolved it now, but it was . . .
Andrew: At the time?
Randy: . . . not on the card itself but on other pages.
Andrew: Okay. I was in the business in the late ’90s and early 2000s. I don’t know if you know, my company was called Mailbits.com. We did a lot of online greeting cards. We brought in a lot of revenue. You’re smiling because you know it?
Randy: No, I’m laughing because I was just explaining to you all about e-cards.
Andrew: No, we should be explain it to the audience. I don’t think people recognize how insanely viral greeting cards are. They’re just so simple and the virality is built in them. Our revenue came from co-reg and landing page advertising. So you’d finish sending the greeting card, and on the landing page it’d say, “Hey Randy, do you want to sign up for BMG or for Time Magazine” or for something else. Okay. So you had this. The business is still around. I saw it. I went to ECards.com and it redirected me to E-Cards.com. Am I doing that right?
Randy: Yeah, that’s it, yeah.
Andrew: Okay. I saw . . .
Randy: I’m not involved in that. I haven’t been involved in that for 12 years.
Andrew: Gotcha. So that leads you to work at ComTech, and that also helps you to discover Care2. What was the original idea behind Care2? Can you tell us a little bit more about it?
Randy: Yeah. It was really about enabling people to do what they were going to do at any rate, but do it in a way that was going to support good causes. So the three initial services were search, webmail and e-cards. Actually, interestingly enough, it was the first site to combine a contact book, an address book for webmail and e-cards, which seems so ridiculously simplistic these days it’s kind of funny. The model was to basically generate donations mostly through advertising, and the next step was really about green e-commerce. So those were the two basic components of the model. It turns out that green e-commerce was a little bit early and it didn’t work out. So we ended up dropping that although today, we recently relaunched an interesting new opportunity which we can talk about maybe later.
Andrew: Okay. Did you launch with e-mail, greeting and search all together?
Randy: Yes.
Andrew: And the search I guess was powered by one of the search engines?
Randy: Yes. It was, I want to say LookSmart. I can’t remember even anymore who it was, but yeah.
Andrew: And the revenue was banner advertising on the search results?
Randy: For that part of it, yes.
Andrew: Okay. E-mail, I guess you didn’t build your own e-mail system, right? You bought a white label service?
Randy: Yes.
Andrew: And greeting cards, that you probably built yourself because you had experience in it.
Randy: Exactly. You’re exactly right.
Andrew: How long did it take you to launch these three services?
Randy: I started working full-time on this in probably March or April, 2008, and basically my partner bought me out of ECards. I ended up using that money to start Care2. I hired some folks to get it started. So we launched in September of ’98. I ended up bringing out a couple of the contractors who are now, who are still actually with Care2 after all these years.
Andrew: Wow. For any Internet company to survive after 10 years is a miracle, not a miracle, but it’s a lot of hard work. And to do that and maintain people who you started off the business with, that might be a miracle. That’s insane.
Randy: [laughs]
Andrew: That’s tremendous.
Randy: They’re good people.
Andrew: So how do you get your first users to the site?
Randy: Well, this was back in ’98. Part of the agreement with ECards actually was that, we actually split the ECards homepage down the middle for like a month or two, I can’t remember what it was. That actually got the initial people. But one of the things I did was I hired who I think is the best e-card animator in the world, Camilla Erickson who is still with Care2, and she created just awesome greeting cards. That really helped us to grow very rapidly, along with the webmail service which was clearly differentiated from other webmail offerings at the time. When people send out their e-mails, they have the tagline on the bottom basically it gets people coming. People were just curious about the names we chose — wildmail or whalemail or snailmail — and they’d end up coming back to our site and signing up themselves.
Andrew: All right. Let me dig into three things that you’ve said here that I wrote notes on. The first is, you split ECards down the center? And I understand one side must have been greeting cards. What was on the other side?
Randy: Well it was ECards versus Care2 was really the two choices.
Andrew: So you come in and you see two buttons. One says “Take me to Care2.” The other says, “Take me to ECards.”
Randy: Yeah.
Andrew: Oh really? Okay, that’s simple. That’s all it was, and that’s how you got the first users?
Randy: Yeah.
Andrew: You said she created awesome greeting cards. What did you discover in the early days about what it took to make an awesome, viral greeting card? Or what did Camilla discover?
Randy: Well, I think Camilla is uniquely talented in that she has the ability to create caricatures, characters in animations that just create a certain emotion that you don’t get from a lot of other animators. They were quirky and funny, and they were different. They were quality looking, basically. So we realized, you quickly learn what’s successful and what’s not. The real challenge in the early days was the holidays where you end up with like Valentine’s Day. You just get this huge spike of traffic that would literally knock our site off for an entire day, which is the last thing you want to do at that point. It was tough going in the beginning, particularly for those spiky periods.
Andrew: You know, we learned a couple of things, and I’d like to hear if you had a similar experience or if maybe you learned anything similar. We learned holidays are hot, so make up your own holidays. So suddenly Tuesday would be Tell Your Friend You Love Them Day or something like that, and that would, even that artificial fake holiday would get a spike. The other thing was, we learned to tie into whatever people were talking about. So if “Mission Impossible” was in the news, we had a guy who created a “My Mission Is To Make You Happy” greeting card. So it was kind of Mission Impossibly, but also it was about something that would get you to send it out. Did you have anything like that? Did you have any early discoveries like that?
Randy: We did a little bit of that, but I think what we, I mean we had such a small staff, and we still do. It’s a one person staff there, so she’s doing a lot. There’s no way that you can jump on all these hot topics or timely opportunities. But they’re definitely, if you can do them, you can get a nice little boost there. So we are just about really focusing on the big holidays because so much of the volume comes there, and not so much on every little holiday. Blue Mountain Arts was the best at that, I would say, probably early on creating a holiday for every holiday you’ve never heard of ,and they had enough staff they were able to create a lot of cards.
Andrew: Okay. That might be where we stole the idea. The other thing is you said you had quirky text on the bottom of the e-mail. What kind of text? Tell me a little bit more about it, and how did you figure out what was the right text for bringing people back to Care2?
Randy: Well, we didn’t, I would say, we weren’t all that analytical about some of those decisions because we didn’t have a good way to track it. We did track it sometimes briefly to see what would make the difference. But it was difficult. We basically wanted people to understand that the user of this e-mail is a good person that cares about good causes, and you might want to take a look too. So we experimented around with a variety of different sayings down there, and we couldn’t always track it, but we could get some good feedback at times as to what was more effective.
Andrew: Okay. All right. So that’s how you got the first users, those were the first three services. What was the next thing that you did? The first three services being e-mail, greeting and search. What’s the next thing you did in the evolution of the business?
Randy: I think it was probably try to do shopping. We tried at that for quite a while.
Andrew: Tell me about that. I’ve got a note to come back and find out. You said earlier that you failed with it. I love hearing those stories as much as I love hearing success stories because I learn from them too.
Randy: Yeah. I think the original idea was that, because everything you do on Care2 is going to do something good for the world, why not buy your purchases through Care2? We sent a percentage of that affiliate fee basically that we would earn when people buy through our site we would send to a good cause. Sounds like a good idea, and we’ve certainly seen hundreds if not thousands of similar ideas since then, in the last 10 or 12 years. People have created charity malls of one sort or another. The problem is, I think what we found, and it’s getting worse and worse, or more challenging maybe, people are very fixed in their habits of how they end up shopping. Amazon is the big monster there, that kind of pulls everybody in. So if you think about shopping, you probably go directly to Amazon. You don’t think about going to Care2 first. And we’ve also seen, I’ve seen at least a hundred different entrepreneurs over the years come to me with an idea about an affiliate marketing relationship with a non-profit organization. Well, we’re going to have this non-profit that is great with wildlife and has hundreds of thousands of members. They’re going to send these promotions out to their members and we’re going to earn an affiliate fee with them and basically share the revenues. It never works.
We had some similar hopes and dreams I think way back in the day. And so we tried that and decided to move on. We also did something for awhile that actually worked pretty well, which was what I call a browser redirect. It wasn’t just a toolbar that redirected people to affiliate link basically. What it was was, we teamed up with a non-profit organization to help categorize different websites and the companies behind those websites in terms of how environmentally and socially responsible they are. So you could get a little bit of information when you went to a certain website about the ethics of the company. If you went to a shopping service, we either gave it a green thumbs up or not. We would also have a redirect there that would automatically switch the URL so that we would get credit for the sale so that the person could make their donation as they wanted to. The problem was, that I think a lot of anti-virus software vendors would categorize that as malware of some sort and basically would say it’s, kick it out of the system or shut it down, or remove it from the system. We thought that the perception that people had, even though it was not correct, that it was something illicit or whatever, we just didn’t want to be associated with anything like that so we decided not to pursue that, even though it was pretty good at generating some of our revenues but it just wasn’t worth the challenges around that I guess.
Andrew: So painful. I wouldn’t have known, actually. Looking from the outside I would say, if people are on your site anyway and they want to go to Amazon, not all of them, most of them would definitely type in Amazon.com directly, but some small percentage of them will go to you and have you direct them to Amazon and let you collect the affiliate fees. And you’re saying that even that small percentage that did it was not a big enough percentage to matter?
Randy: Exactly. Yeah. I mean, there were certainly certain people that did it, and we had, we experimented. At times we would have, we had one shopping service offering; another time we would have many offerings. In the end we just decided none of it worked, really.
Andrew: OK. And you said earlier that it was tough to say “This isn’t working”. Can you describe that decisionmaking process because when it’s, when we’re entrepreneurs and we want to do something, there’s a sense that we have to keep at it until we get it.
Randy: Right.
Andrew: So how did you come to the decision, “Ive gotta let this go so I can focus on the rest of my business?”
Randy: Yeah, I think there’s generally inspiration or desperation that leads into these changes, so I think this is probably a desperation time where we were, really, probably in 2001 was when we really kind of gave up on the idea that it was just wasn’t generating enough revenues to make it worth our while. We were promoting it a lot and we found other ways to generate more money. But one funny anecdote, just to show you how far we went, was we actually registered a site called Piggypoop.com, which was Vietnamese potbelly pig poop fertilizer. We literally went out into the field, collected this, ground it all up, bagged it and sold it. We sold thousands of dollars worth of this. Part of it was just a publicity stunt, but it was also really good fertilizer. The problem was, when we vacuum sealed these bags of piggy poop, the methane gas would expand over time and you’d get this bomb, this packet of methane that people would end up shipping to their friends and stuff. [laughing] It was a disaster, so it was certainly a good experience; we learned a lot and we got a little bit of publicity out of it, and it’s good that those days are behind us.
Andrew: So that’s what made you say, that and other experiences finally made you say “No more ecommerce? Let’s focus on what we do.”
Randy: Yes. Exactly. Yep.
Andrew: OK. Here’s my observations going through the site. You’ve got the petition site; incredibly viral because if I sign a petition I want you to sign a petition and so I pass it on to you and all my other friends and if I create a petition I certainly wanna pass that on. Thepetitionsite.com is a part of Care2. You’ve got photos, of course naturally very viral. You’ve got email; extremely viral, I send out, that’s the father of the word viral I believe. And I think one or two other services like greeting cards that are viral in nature. It seems to me that what you’ve done is you’ve focused on creating products that are inherently viral. Is that right?
Randy: Yes. Exactly. Everything we’ve done always has that as a component of it, if not the central aspect of it, yeah.
Andrew: How do you decide what’s going to be, of all the things that are out there, what’s going to be viral enough to work for you? Or do you just try anything that sounds viral and make it part of your community?
Randy: Well no, we certainly don’t try just anything because we don’t have enough bandwidth to try it all. We have to be very selective and as we’ve gotten bigger, we’ve had to be more selective, I would say, in terms of what we try but I think we, maybe just because the first experience I had on the Internet was with creating this ecard site, that I just intuitively often can see when a system will be viral and when it won’t be. it’s getting tougher and tougher to build those systems. We have the great benefit of having been early in the game and then gotten to critical mass which now makes it easier for us to try things maybe than for startups. But it’s the old thing of, if it was easy to know exactly what’s gonna go viral, you know, everyone would be doing it. You gotta try a lot of things and throw em against the wall and some of it’s gonna stick and a lot of it’s not going to. We’ve tried a lot of things over the years; that’s partly why you see a lot of things on our site that are maybe not so core to what people are mostly doing today, but we’ve just tried and experimented a lot.
Andrew: You said something that I wrote down here; that if it was easy and viral everyone would do it. But the truth is, photos are fairly easy and they’re very viral, and everyone does do it, and many people have failed at it. I’ve had a couple of entrepreneurs here who’ve talked about their photo companies and they failed. The reason that these ideas work for you is because you have a built in community that’s not just popping in and out of your site. But they’re commited to your site because you sign them up to their email address, so you, I was gonna say own the relationship but you don’t own it, you’ve got a tight hold on that relationship, or a tight friendship with them let’s call it. Or if they have a different email address, they’ve given it to you and given you permission to come into their lives whenever there’s something new that they’d be interested in; they trust you there. Where one way or another you’ve connected with them and so you have this big audience that’s sticky and you can say “Hey we created photos; try it out.” And so you have a leg up that way over, say, I’ll use myself as a bad example of it. Mixergy, you come to the site; you like it, great; you don’t, you pop out. Even if you like it, you may never come back. With you, you’ve got a hold on that relationship so you could come back and say “Hey, I’ve got photos” and get more registrations than I would, for example, man for man.
Randy: Yeah. I think that’s true, all things equal, but there’s a social proof aspect of it; ‘there’s a lot of other people using it so therefore it’s likely to be a good service’, something like that helps. I think inherently that the twist that you have is key. I mean, you look at the difference between YouTube and, there were a lot of video sharing upload services at the time YouTube went crazy. It was a subtle difference, and that’s one of the biggest challenges, I think, in creating viral services is that sometimes it’s these very subtle details that make all the difference in the world. So you have to really understand your audience and what motivates your audience to want to share things and if you can do that well, you have a chance at least of creating a viral service. It’s not inherently what the service actually does, it’s more of how it does it and why people are motivated to participate.
Andrew: OK. We’ve found out about marketing; it seems to be chiefly viral. True?
Randy: Yeah.
Andrew: I’d like to . . .
Randy: All of our, we don’t do any advertising. We do a little bit for a couple of things, but generally almost no advertising. We certainly try to do search engine optimization; we get maybe 30% or so of our traffic comes from that. But most of it’s just by making it inherently viral.
Andrew: OK. So that’s the audience. Technology I talked a little bit about in the early days where the technology was. To this day, is that still true, that it’s white labeling other people’s products so you don’t have to build photos from the ground up?
Randy: I wish. No, because of the level of customization that we’ve done we’ve ended up building a lot of this stuff ourselves. That is a whole other topic, that’s a tricky thing to even talk about because sometimes it does make sense to build it yourself and sometimes it doesn’t. It depends in part on how core it is to your business, it depends on how customized it needs to be, there’s a whole bunch of other factors that you need to consider. We have chosen more often than not to build it ourselves, and that sometimes ends up coming back and biting us, or just things end up aging over time and we just can’t spend the resources to upgrade it. That’s just the reality of the situation but we’ve also been able to create much better experiences I think, and more effective platforms because we’ve been able to customize many of the services ourselves.
Andrew: Better experiences like what? How does building it yourself create a better experience than buying from someone else who specializes in these, in tools like photosharing?
Randy: Yeah. Well actually I’ll use an example of the butterfly rewards program. So part of it is, well also there’s the question of time to market; I think today there are actually a number of folks providing kind of a currency, essentially for sites or a rewards program. When we launched this there weren’t that many options out there actually, and there weren’t the, there was nobody that kind of offered the ability to integrate it into our system quite the way we wanted to, and display it like we wanted to, and a lot of the times it comes down to account systems. If a system needs their own proprietary account system, it needs to connect with our account system. It just becomes a challenge to link all those up and keep the passwords in sync and all of that. You end up with all sorts of problems over time, and so it made more sense for us to just stick with, basically build it ourselves and we’re very pleased with that result. It’s a major, major hassle to keep that up, and to be able to deal with the volume that we get. We get just a huge amount of transactions happening every second; there are lots and lots of transactions happening that have overwhelmed our database at times and we’ve struggled for the last year. Not in the last 6 months probably as much, but a year, year and a half ago we struggled a lot with database latency because of them.
Andrew: Wow. This is a profitable business, right?
Randy: Yeah.
Andrew: And outside of the funding you put in personally from your past business, your greeting card business, has there been outside funding?
Randy: There has, yes. We actually raised money from angel investors, high net worth individuals mostly in the Bay area, back in ’99 to 2000 and then by 2001 we had run out of money and we ended up having to do a layoff, and eventually we hit cash flow neutral and basically built up the business through internally generated cashflow from that point on. We did end up taking a debt round from a strategic partner later, but yeah, we’ve raised very very little money compared to most companies that are our size, I would say.
Andrew: And it doesn’t seem like you’re looking to sell the company anytime soon. It doesn’t seem like you’re looking to go public. What do you tell investors who invest with the idea that an exit would happen at some point. What do you tell them or how do you deal with them when the company becomes more of a lifestyle business?
Randy: Well I wouldn’t necessarily call this a lifestyle business.
Andrew: I wouldn’t either. I hate the term ‘lifestyle business’ in general but my audience in the internet world seems to love it. But it’s not a business that’s gonna give them an exit soon, is it?
Randy: Well, we still hope that someday [cough]. Excuse me. Part of my mission is to demonstrate that investors can do well while doing good. That they can actually make money while doing good things. This is one of the areas that I feel that it’s really disappointing that we haven’t had more success stories on the investment front on the do good side of the world. Until we start to see some profitable liquidity events for those investors, it’s going to be difficult to get new investors into the space. It’s gonna be difficult to get more startups, more socially responsible social venture startups. At some point we definitely want to have a very positive liquidity event for those investors. Some of them have been in for 10 years or more, and so I think for awhile they probably wrote us off. I think now that they see things are going so well they’re maybe getting a little more interested again that maybe there’s some real opportunity here. But a liquidity event doesn’t have to be an acquisition, or a sale of the entire company, or going public; there are other opportunities to get liquidity for investors, so . . .
Andrew: For example?
Randy: Well, there are secondary markets; there could be strategic investors that come in and buy a chunk of the company and take out part of the existing investors. We’re not exploring those right now; but in the future we’ll probably look into those.
Andrew: OK. You said now that things are going so well. How do you mean? What’s the indication that you give investors that things are going really well now?
Randy: Well I mean we’ve had, you know, that this past year we grew nicely and we’ve had good growth in profits, and our traffic also is up considerably; so I think by the revenues and the traffic are the most important metrics from the investor’s side. Certainly we measure our success in terms of how good we do, or how much good we do, as well but from an investment perspective that’s certainly key.
Andrew: I keep taking notes; I’m an obsessive note taker. Let’s go back now to the question that I started this whole program off with, which is: How do you get 14 million members? How does anyone who is listening to us, who is saying ‘This is a fascinating story but now what about my life? I wanna be able to do something here similar to what Randy did.’ What advice do you give them about how they can build their memberships?
Randy: Well, ,Id say my first bit of advice is, don’t try to create a destination site. You know, Care2 is, to a great degree, a destination site, although we actually have widgets, such as petition widgets that publishers can put on their site. We call it the take action platform. Huffington Post and others actually have these widgets on their site where we show petitions to people who are on the publisher’s site and they can actually generate some revenues from that when people sign petitions there. So we are still muchly defined, maybe, or seen as a destination site. My number one advice would be to go to where the people are. Go to the river; don’t try to create your own river. Fish in the river where they are. Facebook is an obvious example of why so many companies have glommed onto that, and Twitter and others. And so, I would say…or work with Care2 or something like that. But don’t try to recreate the wheel; it is extremely difficult to get, especially in this day and age, to get mass numbers of people to come to a website and stay loyal to it. Once you’re there; once you’ve got that critical mass, once you’ve got that true sense of community, now you can retain it. But we’ve seen so many folks spend tens and tens of millions of dollars to try and go after this same space and fail. So that’s probably the most important message I can give.
Andrew: Do not be the destination. Go where the people are, and then create membership opportunities there, create interactions there that lead to membership opportunities.
Randy: Yeah.
Andrew: What else? What about one more thing?
Randy: I would say make sure you are understanding what those people you are trying to interact with value. And don’t assume they value what you value, and don’t assume that in the do gooder space, just because you’re doing something good for the world doesn’t mean that everybody’s going to say, ‘Oh yes. It’s more difficult to use but they’re doing something good for the world so I’m gonna go use it.’ Or, ‘It costs a little more, but he doing something good for the world so I’m gonna go buy it.’ Generally that doesn’t happen even though we might like to hope that that would happen. Fundamentally you have to find core value, create real value, really understand who your customers are and what they’re looking for, and help them to be successful at whatever need they’re trying to fill.
Andrew: Yeah Tom Zaki [SP] said the same thing to me. He says that a lot of people in the do gooder space imagine that as soon as they do good, if their product is placed on a shelf with someone who’s not doing good that people are gonna buy it. But it’s not true. And so, a lot of entrepreneurs say, “Hey I’m not getting enough sales. I need another boost in sales; I’ll join a cause or I’ll donate revenue to a cause.” Will that make any significant impact on their business?
Randy: You know, there are benefits to doing that that go beyond directly increasing sales, I would say. It’s good from an employee perspective; it’s good from a PR perspective, you can get some benefit out of that, but in terms of truly moving the needle, it usually doesn’t do that unless that is core to who you are. There are some companies out there, Thom Shoes, or others where they’ve incorporated the whole ethos of doing good into their model, and they’re living it every day. People are getting really good; they’ve got good antennae where they can tell whether someone’s faking it, or whether they’re serious about this. Especially in this area which we are in, in terms of what we call conscious consumers, people that are cognizant of these social and environmental issues. They really reject anything that’s commercial, you know, or that’s kind of overtly commercial and they really want authenticity, and so you have to be authentic about it, it really has to come from the heart, and that shows. You can’t just kind of slap it on the side and say, “Now we’re a do gooder company because we support this cause,” because that’s not true to who the organization is.
Andrew: All right, here’s a third thing that I got about how to increase registration, that I learned by researching you. Almost every interaction is an opportunity to create a member on Care2.com. So if I am collecting points, in order to collect points I need to be a member, obviously. Naturally. But when I’m sending out a greeting card, that’s an opportunity for me to become a member. When I try to comment on the site, or when I go back after commenting, the first time I do I become a member. I give me an opportunity to become a member. The second time I do, you say “Hey, do you also want to get email updates?” And I think you might do that the first time too, but if you don’t get us the first time, you give us another opportunity the second time. So to sum up that long winded way of explaining it, every interaction that you create is an opportunity for your users to become more than users, to become members of the site.
Randy: Absolutely, yeah. That’s a great point; I just take that for granted but you’re right. The first time that somebody comes to your site, you need to do everything that you can to kind of hook ’em right there, because chances are very very likely they will never come back to your site again if you don’t hook em right there and give them something of value. It’s gotta be something; you have to offer them something of value in order for them to commit to a relationship basically of any nature; and so you have to give them something right there at that time and make the ask. Ask them to join you in some way, shape or form because you’re not going to get a second chance, most likely.
Andrew: All right. Even thepetitionsite.com, I go to sign a petition, opportunity also for me to become a member. All right, I’ve got everything in my notes. When we connected, I heard that you have some news that you might want to release. If you’re not ready to release it, no sense releasing it now. I don’t want to pry information out of you just for the sake of making news or just for the sake of prying information. I just want to give you the opportunity to say whatever it is you feel you need to say, or want to say.
Randy: Yeah, thanks. Actually we’re excited; we just launched today a new service called Care2 Daily Deals, and it’s very much like a Groupon service but with a do gooder twist. We’re working with the great folks at Listmo [SP] so it’s not something we’re doing ourselves, but we are promoting the offers that they are going out and working with vendors to create. And it’s a really important opportunity for our members, I think, to create more change in the world because the dollars that we spend are either going to do good in the world, or do not so good in the world. So, if you can direct those dollars to do more good by buying from companies that are moving in a more responsible direction, then that is a positive kind of vote with your dollars; and the economy makes a huge impact on the overall good balance out there. So we’re trying to offer, kind of help people to discover great deals on great products from companies that are really moving in the right direction. So that’s the new Care2 Daily Deals site and it’s very much like a Groupon, you get a daily email with an offer that’s good for the day, and hopefully we’ll be expanding from there.
Andrew: Care2DailyDeals.com.
Randy: It’s Care2.com but you can, you’ll see it on the right side of our homepage, and you can sign up for the newsletter, yeah.
Andrew: All right. There seems to be so much money in the deal space.
Randy: Yeah. There does. And it’s, we haven’t seen anybody else out there, we’ve seen, I would say, few that are directing the dollars for good and that’s, I think, an important differentiator; it’s, I think, Groupon and Google and others are going to do a fantastic job with what they’ve done. It’s a really kind of different thing that we’re talking about here. It’s really finding those products and services that are more sustainable, that are organic, that are natural, that are gonna be good for the planet and people.
Andrew: Well that’s a score for them that they got you, that they got Care2 on as a partner.
Randy: They’re good folks.
Andrews: Who’s the founder of the company? I forgot his name.
Randy: Sen Deep. [SP]
Andrew: Sen Deep, that’s right. He used to live in Los Angeles. He moved up north to San Francisco somewhere.
Randy: Yeah, one of the early, the first marketing guy with Kiva actually as well.
Andrew: Yep, that’s right. He’s the one I think; well, I don’t know. I love what he’s doing; I love that he’s got you guys as partners because you have such a broad membership base now to send out deals. Check out Care2.com if you want to see what I’ve been talking about, if you wanna just look around and see how they get new members, or if you want to find deals online. Thanks for doing this interview, Randy; this was really good. This was a lot of meat, a lot of good information here.
Randy: Good. Thanks. We’ve had 12 years to work on it, so thank you. I appreciate it.
Andrew: I appreciate it. Thanks. Thank you all for watching. Bye.
