Imagine the economy goes bust and you have to sell your company at a liquidation price. How do you come back after that?
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Let’s get started, guys.
Hey there, freedom fighters. My name is Andrew Warner and I’m the founder of Mixergy.com, home of the ambitious upstart. Imagine this. Imagine the economy goes bust and you have to sell your company at a liquidation price. How do you come back after that? Well, that’s what happened to Thor Muller. I invited him here to talk about how he withdrew from the tech world after that setback and how he came back stronger and co-founded Get Satisfaction, a platform that supercharges customer service online. Thor is also the author of the hit book, “Get Lucky. How to plans serendipity to work for you and your business.” We’ll talk a little bit about that book too. Thor welcome.
Thor: Thank you. Thanks for having me. It’s good to be here.
Andrew: How many people are on Get Satisfaction? How many companies actually are on Get Satisfaction right now?
Thor: I think we’re going on about 70,000.
Andrew: Some of them are paid and some of them are free?
Thor: That’s right. We have several thousand that pay and then we have, you know, tens of thousands of companies from large companies to small companies that use our services for free.
Andrew: What’s a typical charge? Or what’s that smallest charge?
Thor: The smallest charge is about $20 a month.
Andrew: How many companies do you have paying that?
Thor: Oh gosh, I haven’t looked at these numbers in a while.
Andrew: You haven’t been with the company for about nine months. We’re going to talk about how the idea came to you and how you grew it. We’re not going to talk about topical events. So, roughly nine months ago where were you guys?
Thor: Where was the company? Interestingly if I was to chart it, I don’t have exact numbers, but the biggest number is not the lowest number. The most popular plan was the $50 a month plan.
Andrew: Wow, OK.
Thor: You know, there is this truism in pricing. Strategy which is you have your small, medium and large, and you really ultimately want people to pick the middle one. I mean you want them to pick the big one, but if you do, you’re pricing strategy right. The big one is aspirational. The small one is…most people don’t look at themselves as being a tiny company. They want to be reaching for the stars, so the middle price is right. It’s the Goldilocks formula.
Andrew: I see. How many paid customers did you have?
Thor: When I left, there were about 2,500.
Andrew: OK. That’s pretty strong.
Thor: We also have enterprise customers. The way we think about it is there are free customers. There are self-service customers who pay between twenty and a few hundred dollars a month. Then there are enterprise customers who need additional services, more enterprise features and they will pay thousands of dollars a month.
Andrew: I’m writing a note here to make sure that I come back and follow up. I’m going to take this interview in chronological order but I want to make sure and follow up and ask you about how you guys get customers. How you got your first customer?
Let’s go back to that time when right after the setback you peaked at 30. You and your wife decided your wife would go back to work. Can you take me back into that conversation and tell me that story?
Thor Muller: Sure. So I was like a lot of 20 something’s in the late ’90s, 2000 period where, for me myself I got pulled into the Internet out of love of what it could be. It was 1995, there were no jobs in the Internet. In fact I would call around to companies to ask if they were hiring for a webmaster and they said, what? You mean like AOL? And so I had to start a company, give myself a job in the Internet. And it was simply because it was what I wanted to be doing. But a few years went by and if you weren’t a millionaire by 30 you were doing something wrong, that was the ethos of that time in San Francisco. It was kind of disturbing. And we chased after the big girl opportunity and raised 16 million dollars for this company I started called Trapezo. And it was a classic solution in search of a problem. And today we talk about lean start up, methods where you’re constantly working with an audience to make sure your product fits with the market wants. Well we didn’t have that method at the time, at least it wasn’t the method we used. And so even though we had some great technology, we had some great customers, a couple of years in. As the rest of the market was collapsing we got pressure to sell the business for pennies on the dollar. So it was a soft landing in a sense that we didn’t collapse. But it was definitely not a win.
But that wasn’t really the hard part. The hard part was that I thought, I’d come to think of myself as a good entrepreneur, somebody with really desirable skills and knowledge about the Internet. The problem was that in 2001, 2002, there was such a fallout, the nuclear winter as we called it, from the dot.com bubble burst that nobody wanted to be associated with an entrepreneur, or at least somebody that had been only an entrepreneur, especially in the Internet. So I felt basically like I had a bunch of skills and a bunch of interests that were unmarketable. So I retreated, my wife and I we retreated to a little house that we bought with the few dollars that we’d actually made on the sale of our previous company.
Andrew: How much?
Thor: How much did I end up taking home? About $100,000 which is basically, what happens is when you’re a founder and you have assets and the board wants you to agree to a sale that’s not in your interests, they will often sweeten it for you. And so they basically gave me a chunk of a year’s salary to take the deal.
Andrew: Like severance.
Thor: It’s like severance, basically.
Andrew: A strong severance.
Thor: And it was great that they gave me that severance. They certainly didn’t have to. There were ways they could have just rolled over me. But, and so that was enough to buy a house. I bought a house outside of San Francisco, in Napa, which felt like a million miles away as it turned out. And I proceeded to take some consulting work and feel like I was fading away into the sunset, my best days behind me. So it was a sad moment for me, I definitely felt over the hill. And….
Andrew: Why? Help me understand that. And I was in a similar situation. We did really well with Bradford and Reed and I still felt like, maybe my best days are behind me. Maybe these super powers that I thought I had for entrepreneurship and business, maybe I don’t really have them. I was just second guessing my ability, second guessing my place in the world. I know that someone who is listening to us right now would think, hey Thor ended up with $100,000, a house, a decent track record. What does he have to second guess himself about? Why would he think that his best days are behind him? And still you did, why?
Thor: Well part of it’s just turning 30. It’s probably like any milestone like that. But a lot of it has to do with the culture I think of tech start up scene where even then where there are, no matter how good you are there’s always somebody better. There’s always somebody who’s been more successful and so it’s very easy to fall into the trap of comparing yourself to others. So that was part of it. Part of it was also that I couldn’t get hired. I decided at that point I wanted to go get a job. And I started taking some meetings, the few meetings that were offered to me. And to be fair I probably wasn’t as aggressive as I would have been, had I been more confident at that moment. But, nobody hired me. And, the few people who I thought I was a shoe in, because I thought I had perfect skills and I had what they needed. They told me that they felt I was an entrepreneur a flight risk. They didn’t think I could stick it out at a big company.
Andrew: And, was it true?
Thor: Yes, actually, So, in retrospect, I would not have done that well at those companies. I think. But, of course, I went on to start other companies. So, self-reinforcing cycle for me.
Andrew: But you know what, Thor, you’re not a developer, right?
Thor: No. I am.
Andrew: You are.
Andrew: So, couldn’t you have gotten a job as a developer?
Thor: Well, let me explain. So, I am a developer, but at the time, I didn’t think of myself as a developer.
Thor: Because I’d been a jack of many trades. I had coded since I was a kid. But, my first company was a web design company back in 1995. And, I had a partner who was a designer. And, I did everything he didn’t do. So, that included programming, that included design, and that included a lot of business stuff, selling stuff. And, so, a lot of my jobs, particularly up to that point, were very focused on being that jack of all trades entrepreneur.
Andrew: I see.
Thor: And, so, I devalued, as a result, some of my core skills and most marketable skills, like programming. And, really, I think what shifted for me is that I’d basically fallen out of love with the Internet. Between 2002 and 2004 or 2005, the Internet didn’t go away. Instead it became the domain of SEO experts, e-commerce merchandisers.
Thor: Win by any means entrepreneurs. So, while the venture capital seems to dry up, there was a lot of innovation happening with the kind of block and tackle area of building Internet businesses. And, my consulting work was doing more and more of that. I was programming to those ends as well. But, something magical happened in 2004/2005, this kind of pragmatic, not very sexy area of the Internet, that I’d been dwelling in, took a back seat as I noticed there was this new breed of web application emerging. Social software and social networks. Specifically, Delicious, and, more importantly, Flicker. Flicker, when you look back on it, was the Xerox part of web 2.0. Everything we came to think about in terms of web 2.0 was in Flicker from open APIs, social sharing, all the troupes of social networks in terms of very personable avatars, profile. Everything.
Andrew: Even the way they allowed you to arrange your photos within a photo album on the web, not in an app, but on the web. I remember being revolutionary.
Thor: Exactly. And, the fact, that it was not about printing. Here’s photos. It wasn’t about printing. It was about creating a social object that brought people together. So this is just all the things that Flicker did have been defining components of virtually all of the big hits in the consumer Internet space since. Right? Whether you’re talking Facebook to Instagram. And, this is probably one of my worst skills, seeing these trends early. I mean, I saw that and within 24 hours, I said, “OK. This is really big. And, this is really meaningful.” Because it was why I got interested in the Internet in the first place. Is that it was humanizing. And, so, from that moment, I said, “OK. I’ve got to figure out how to get back into that. Into this space. Into the flow.”
Andrew: This is while you were being you were being a consultant or this is what got you to become a consultant?
Thor: No. I’d been a consultant. But, I was doing this kind of block and tackle Internet work.
Andrew: Forgive me. Let me spend a little more time on this earlier period of your life. First of all, I want to understand. The last days of Trapezo [SP]. Am I pronouncing that company name right?
Andrew: You were fairly checked out. You actually told Jeremy, our producer, that you want to go. You didn’t want to go to work anymore. You just started to make a movie.
Thor: Yeah. That’s right.
Thor: So, the original idea for Trapezo was a bit of futurism. Right? I said there. Today and the mid-90s, we were focused on building websites, getting people to our websites, the future of the Internet is going to be about being wherever your audience wants to be, happens to be, right? It’s about distributing your content everywhere. So that was fine. But the process of selling this idea to investors and to co-founders, co-workers changed it from this kind of pure idea, which is good and natural. And we eventually came up with a business that seemed to justify the vision. The problem was that business I was not very interested in, right. And so I think it’s really important to take pure idea and expose it to reality and build something that is actually useful for people. But you also have to want to be spending your, a bulk of your time on building that. And this is the key thing for anybody practicing the lean startup methods as well which is if you’re not careful, you’re just doing lots of AB tests, you can end up building an online gambling or porn site.
Andrew: Right. The market’s going to take you where there’s profit, not necessarily where there’s meaning.
Thor: Yeah, exactly. And you can miss actually the bigger opportunities. So really being clear about what you care about and want to spend your time doing is an important part of the process for an entrepreneur. I did not do that. I basically was following the feedback of others to the exclusion of my own instincts.
Andrew: So how do you stop that? I mean even internally at Mixergy people will tell me, Andrew, you need to focus more on conversions, you need to focus more on marketable interviews. The whole interview series of where I interviewed failed startups didn’t get any traffic really, not compared to the average interview. And still I feel like there’s meaning there. I feel like there’s a bigger purpose there. How do I keep myself focused on that? In fact, am I even making a mistake to want that instead of focusing more on the revenue? Because revenue indicates what the audience wants.
Thor: Yeah, to some extent. I mean I think about Pixar and they have this model where they, I can’t remember exactly what the formula is, but for every three merchandising heavy movies that they make they make one movie like Up, or like Ratatouille, which is really for the artists, right? And that is art in and of itself. And they really don’t think about merchandising. And I know that when they were separate from Disney there was always this tension that Disney, who was their partner at the time, we can’t merchandise old man and Up? (?) buy an old man doll. But Pixar remained true to that vision and I think that that’s a great model to have. You can have commercial success and metrics driven view of your business and have a kind of pure vision that can (?) with.
Andrew: That makes sense.
Thor: Now Pixar’s approach is one approach, it’s more of a buy for kids approach. There are others like Apple, which is a sort of overused example, where they’ve embedded that in their overall product approach. Like the Apple website, I often think you’d never get that website by AB testing. Now they (?) by AB testing but that’s not how they define its look, how they define its layout, right? They have higher order premises that dictate, or Google for that matter, Google (?) is still extremely simple on its home page because they have higher order principles that dictate what they can or can’t do, and that’s simplicity overall.
Andrew: All right, one other question before we get into how, to the thought process and the opportunity that led to Get Satisfaction and that is this. Here you are a guy who by many people’s standards had been a success. You’re in Napa Valley in your own home, married. You had a good track record as I said, you were actually an entrepreneur who was funded, and still you doubted yourself. Many of us I feel like when we doubt ourselves we don’t notice these great things we have going for ourselves. In fact if someone stopped and said, hey but don’t you recognize you have this, you have this, you have that. I’d think, shut up, you don’t get it. So they can’t snap us out of it, we have to snap ourselves out of it and recognize the power that we have so that we can create some good things in the world, the way that you did. How do we do it when we’re under the influence of doubt and uncertainty?
Thor: Yeah. Yesterday my son was saying, I’m not a fast reader, or he said, I’m a slow reader. And I’m like, why do you think you’re a slow reader? And he says, well my friend Nick he gets done with a page when I’m only halfway through. I said, well, Nick is a very fast reader. He’s absurdly fast, right? And I had to explain to him, I do the same thing with myself all the time, with other people. I have developed certain mental tricks to shut that out, because it’s damaging.
Andrew: Give me one, because especially in this space, you’re right, we open up the tech blogs to see what’s going on in our space, and where the new opportunities are, and who’s doing what, and what we’re inundated with is guys who are 18 years old and billionaires because they sold an app that they’d built overnight somewhere, and it makes you feel like, well I’m not anywhere near that, I’m a failure, and it’s crushing to the motivation. So, what’s one tactic?
Thor: Here are some of the things that I tell myself. First of all, I know for a fact that much of this absurd success that people have, for instance, the obvious example being Instagram, completely unpredictable. They’ve said it themselves, lovers need love. Now, Kevin Systrom, super smart guy…
Andrew: Of Instagram.
Thor: …of Instagram. Super smart guy, worked his ass off, has lots of great connections. But so do many other people, right? And that was Kevin’s point when he said that luck was a big part of it. When you’re looking at somebody with absurd success, in a startup space, it’s important to remember that that’s highly unlikely, and what happens has very little to do with anything. [??} differently. For me, that's helpful, right? It reminds me that I need to be enjoying the process of building something, but there's ways to contribute, there's really lots of way to make money. The reason we like start-ups is because we enjoy the creative process, we enjoy trying to disrupt an establishment we think is flawed, whatever. There's lot of reasons to do it. Those are the things we need to be focused on. No winning. You know, there's another aspect of this, which I've thought a lot about, which is this drive to win. I think that that's a very important drive in a start-up. Like the hunger to conquer the odds. Not necessarily somebody else, or some other competitor, but to conquer the odds. That is what gets you up every morning. Both at the end of the day, and if you're not aiming at something that has a high likelihood of failure, you're not aiming big enough is the way I think about it.
In fact, I just met a guy who has this thing called the failure quo, which is designed around getting people to identify and commit to goals which are too big to actually succeed, and what they find is that people often succeed at those absurd goals. But in terms of getting over this kind of sense of doubt...the other thing that frankly has helped me over the years, I might have something in common with sort of the Zen practice that others use, is actually I tend to be a little more analytical about some of these things. Happiness research that has been emerging over the last few decades is really powerful to me because we are sold this idea that we'll be more happier if we have more of something; more wealth, more fame, more popularity, and what we've found in happiness research is that it's not true. That people tend to operate within a certain band, a normative band of happiness, and there are things that can temporarily depress them. Let's say, a death in the family or a financial loss, something like that, and there are things which can temporarily boost them; winning the lottery. But for the most part, there's very little that boosts levels of happiness for long periods, other than we also have internal (?). So I look at start- ups as a way of boosting my internal sense of self and happiness, and a sense of happiness can flow out of that. A sense of autonomy. People that end up in start-ups where they actually lose their autonomy, which by the way is one of the things that's happened to me with Trapezo. I had very little control over the board at that point. We'd raised so much money and I felt like an employee. When you start off as a founder and you end up feeling like an employee, it's very difficult to feel any sense of connectedness to it.
Thor: So anyway...
Andrew: And when you don't feel control over your life and your future then you also are unhappy. Ok, I've got a sense of it, I promised that we would get into get satisfaction, let's go back to that. You are starting to see all these different possibilities with Flickr and the technology they were using, Delicious of course, and how social they made other websites and bookmarking, specifically. Then you created an experiment site, right?
Andrew: Joke site. What was that?
Thor: So, there's a few more hops in there, but we had created the, we noticed that there were lots of people in our group who would wear text schwag. But not the ugly text schwag that we remember from the 90s, but kind of this new generation of the text schwag, at the time Ed Williams had a company called Odeo, and he had this designer create this bird figure. It was a really cool shirt, it looked more like band swag than text schwag, and there were others like that; Songbird had theirs, there were a bunch of startups that we no longer think about that had great schwag. People started saying that didn't live in the bay area were saying; where did you get that Odeo shirt or the Songbird shirt we love it. Dogster had (?) swag and they said oh we went to a party and they just handed them out. It struck us it would be pretty funny if we created swag of the month club, and we have people just pay for the privilege of getting free stuff. Kind of a joke on the industry that at that time at the early stages of showing life again. So we did that and we just put up a website in an afternoon, connected to PayPal, and before you know it, it was called Valley Schwag, which was off a joke Valley Wag, kind of gossip, a blog on the (?) network. It blew up, we just hit it perfectly on timing and within six weeks we had 2,000 subscribers.
Andrew: 2,000 paying subscribers?
Thor: 2,000 paying subscribers.
Andrew: At $20.00 a month.
Thor: $20.00 a month.
Andrew: And they were getting stuff that was essentially free t-shirts with company's labels on them.
Thor: Yeah, exactly we would send them t-shirts, stickers, sometimes ball caps. Sly the company had condoms that were one of a kind. Hold that thought.
Andrew: Yeah, you bet. You were plugging your computer in.
Thor: That was bound to happen.
Andrew: I'm going to ask you about that office later on also. I want to see how you're enjoying it and what's going on there. But sorry. 2,000 people paying you $20.00 a month to get t-shirts of brands that are brand new those are dying to get some publicity. They were giving you the t-shirts and other schwag for free?
Thor: Well, yeah, well that was the theory. The problem was there were thousands of subscribers; there was nowhere near enough schwag to go around. The fact is that most startups do not spend most of their money on cool t-shirts, let alone pay a designer to come up with a design for a t- shirt.
Andrew: Right and not (?) Williams.
Thor: It's usually around a serious fee when that kind of schwag investment starts. So we ended up having to self-start, going out and identifying companies and subsidizing their schwag, you know schwag manufacturer. I hired a schwag procurement officer, a friend of mine, to go out and do this. It was so much work that it became very clear within a few months that this was not a sustainable business. So we had to kill it, but along the way what we realized was that it was hard to procure the merchandise and it was hard to handle all of the shipping. You know shipping was a huge issue; the hardest thing was actually customer service. We realized people, our customers were talking to people on our blog, and we were talking to them on the blog so it was public. So we could answer somebody once and all the other customers could see the answer. The blog was a terrible way to go about this, so it occurred to us this is actually the perfect place for social media, which we weren't calling it that at the time. For the social network ideas to hit the hard core business problem and making it better for both customers and companies. That's what we did by creating that satisfaction.
Andrew: Can you give me an example of how you were answering customer service in your blog or how others were answering customer service issues for your users?
Thor: Sure. Well there were a couple of great examples. So one great example was that we pushed the change to our member website, and we sent out an email, about 10:00 in the evening. Then we went to bed. Right about the time when all of the European customers were waking up, they opened their email, clicked on the link and it was broken, they went to our blog and on the comment section, the thing doesn't work, it's broken. What's wrong with you people? Then, within an hour, one of the smart customers had figured out through process of elimination what the real URL was, and posted the answer to comments section of the blog, and so now everyone that came to complain saw the answer instead and they were happy. In the morning, when we woke up, we saw that others had done customer service why we slept. It's amazing.
Another thing we noticed is that it wasn't always on our blog. Sometimes it would happen on somebody else's blog. We were tracking what people were saying about us and we'd see somebody written a blog post complaining about getting the wrong T-shirt size or something like that. We would go and comment on their blog and say, we apologize, we're going to send out a replacement tomorrow, and then they would flip out, so excited that we had taken the time to respond on their blog.
Andrew: Someone else's blog, right.
Thor: It seemed to us that this was the future, right? This was, instead of customer being told, take a number, wait until we got around responding to them. Instead, we were creating an open transparent environment where customers were really getting in the center. We were revolving ourselves around them and that made perfect sense in the network economy. Right where anyone could post material content about my business and we're on the same playing field. We saw it as kind of a (???) shift in business itself.
Andrew: You know, I see that even today on my site where if I post a broken link to the Mp3 of our interview, someone very often in the comments will figure out the, first of all, someone will tell me that the link is broken. I won't know. I check it, but don't check it enough. Someone else will try a bunch of variations on the URL and say, aw, here's the right one. It's phenomenal how it happens. When you see how you are putting the pieces together, how are you taking Flicker Delicious, this observation on your site? The observation on what happens on other sites and making it into a coherent business idea?
Thor: That's a good question. Sometimes you just have the instinct, I suppose. Reality there was a lot of (???) work that went into it. For instance, there was a moment when we sat down with our founding team. I had just read the book, The BlueMotion Strategy, Which is, you know, a pretty good book for what it is. It follows some of the same problems that a lot of business books have. You only need to read half of it, but what the point of BlueMotion Strategy is, that what you want to do when you when you are approaching a space, there are known solutions to a problem. You have an airline in a sea of airlines, how do you going about differentiating yourself? The traditional answers were, you offer the same thing for lower prices, or you offer more features, right? The break out players in a lot of categories, BlueMotion Strategy says, in solution's strategies says, are those that actually don't do many of the table stakes features that others do. Southwest Airlines did not have hubs; they did not have reserved seating, right. Instead, they had more short hop flights and they had better customer service from the airline attendance, and so on.
Andrew: I see.
Thor: Right. You figure out what you're not going to do that everyone else does. Then you figure out what you are going to do that no one else does. I remember we sat down and said, all right, there are plenty of other solutions for customer service. What things we are absolutely not going to do? That decision of creating constraints, which are constraint that you embed into the DNA of your business, ends up being very important.
Andrew: Can you tell me about some of them? As many as you can remember, from back in the beginning. What you weren't going to and what you were going to?
Thor: Yes, OK, we decided that we were not going to do ticketing. You know the kind of traditional workflow ticketing.
Thor: Which was basically the foundation of every other customer service tool out there.
Andrew: Right, ticketing is when someone sends over a complaint to me. Immediately they get a ticket number from our system when we respond back and forth. That number identifies that problem.
Thor: That's right. That we were going to, instead of erring on the side of private, we defaulted to public, right, and that's a huge chip. And that was actually something we did that was inspired by Flicker. Because Flicker actually started off with their photos defaulted to private, and once they shifted to defaulting to public for any photos you published, all of their stats skyrocketed. Defaults matter, and so we focus on that. We wanted to focus early on [??] and build less features overall. So there were a lot of features like that.
Andrew: I see. And still you talked to a friend of yours, Lane Becker, and you weren’t sure that you should run this business. Why not?
Thor: Right. So I at the time had another business. It was a consulting business called Rubyred Labs with my wife and another co-founder, his name is Jonathan Grubb and I had pitched this idea to them and he was like whatever you want. She liked the idea but she was kind of neutral on the idea.
Jonathan kind of went back and forth. He definitely was not sure he wanted to be a part on the customer service space. So he is very good at being true to himself about what he wants to spend his time and saw that he wanted to spend his years working on a customer service related app.
But I told the idea to my friend, to our collective friend Lane Becker and Lane says you have to do this. If you don’t do this, I’m going to do without you. And that was the push that I needed and that Amy and I needed, and Jonathan saw that it was a big idea. And so we were able the four of us took our team out of Rubyred Labs and took the office that we had and transitioned over into this new entity called, at the time it was called Satisfaction but we couldn’t get the domain name so it became Get Satisfaction.
Andrew: How much of an impact was the money you were making off of your consulting business? I mean, how much of a factor was that in your decision?
Thor: Well, we actually just turned the corner at our consulting business and we were starting to make real good money.
Andrew: I see. And so at that point to consider something different, why couldn’t you do both? I know Jason Fried from 37signals often advocates that.
Thor: Yes. We definitely considered doing both and 37signals was kind of a model for us. Even with the original idea for the business it was much more of a [??] business where we focused on small businesses as our paying customers. Well, we talked about the up side and the down side and the reason why we didn’t do it was that Lane had done a spin out business from his consulting firm called Adapted Path which is still around and doing well, design [??] firm. And they had a product spin-off called [??] Map which eventually got bought by Google and became the basis for Google Analytics and his experience with trying to manage an internal project within a consulting firm was not a positive one. And in fact I knew lots of cases where a company failed both as service company and the [??] company when they tried to do both.
Thor: It’s hard to be a slave to two masters. And if you try to divide the team, a) you better have a team that’s big enough to support both, which we didn’t really. We had about seven people. You better have coverage on all the key functional areas like business development and so it’s hard to be raising money for beta testing your product with customers and selling to clients. Now, it can be done. I have numerous friends who’ve done it. So I have no problem with that approach but we decided that we wanted to go all in on the product and you know, the other consideration was that we did have several friends and family that were willing to give us startup money and had some cash flow left over from the services business.
So it’s what we chose to do and I think it was a reasonable good decision. But one of the things that I realize in retrospect was that if we raised a million and a quarter as a [??] to get to our first major moment of proof for the business, and we did that. A year after we raised that money, we had thousands of customers. We had nice charts that showed up and to the right. We had great press. We had a strong brand. The problem was that the market of 2008 was in the process of disintegrating.
Andrew: Hold on. Let’s go back to the disintegration in a moment, because that also factors into your story. What I want to spend a little more time on is that first version. You told us what the vision was. Now you had to take that vision and turn it into a product. What did that first version look like?
Thor: The first version for us actually had a lot of the core ideas that we have today. It had a widget that was designed to sit on a contacts page. We believed that we wanted the finished to be main stream. We had to intersect an existing behavior, so a person coming to a website wanting to send an email to a company. What we wanted to do was hi-jack that process.
Andrew: Still let them send an email, but now the email does what?
Thor: It looks like an email form, but we start to intersect that behavior with comments from the community, which has now, I think, gotten to be a pretty common design pattern, but at the time, we hadn’t really seen much of this, but it seemed obvious to us that if we could show people conversations that were already happening about their very issue, we could get them ported over to a public discussion. We had a fairly straightforward community discussion. We had this idea that we stumbled on very early that there were very specific outcomes that customers were after, solutions to problems, answers to questions, sharing ideas and praise, that we’d seen as building blocks of other customer communities. We felt like this could be a way to organize these kinds of customer communities in general, so we had all of these elements, but when we started talking to investors, we started hearing some interesting feedback.
They didn’t think that we would be able to capture enough of an audience by selling just services to small businesses. They said, “Why aren’t you using virality and widgets and SEO, cheap distribution methods that are available?” We said, “We are,” but they didn’t see it. It wasn’t strong enough in our story, and so we went back and started saying, “How can we actually bring those ideas to the forefront?” We actually made a fateful decision that really transformed our business to something a little bit bigger. We decided that instead of requiring a company to come and rate a community, which required us to communicate to everyone in those companies, what we’d do instead is allow anybody, including a customer, to create one of these customer communities. By doing so, we created a kind of [?], somebody who was passionate about Timbuktu, a popular bag company, could come and praise them here.
Andrew: Or upset about their cable company could come in and basically create a customer service forum where the company has an incentive to come and respond.
Thor: Exactly. We knew that all of these companies were determined to track what was being said about them, and so we thought this was an amazing way to get big fast.
Andrew: As I understand it from your pre-interview, the way that you got to that point was that you couldn’t get companies to set up shop on your site, so you set up shop for two experimental companies, by yourself without their permission, right? Timbuktu and, I think, Apple? Or maybe Timbuktu, Apple, and Comcast?
Thor: Yeah. It wasn’t that we couldn’t get them. It was that we didn’t think that our distribution plan was going to get us where we needed to be.
Andrew: I see, so before you even reached out to companies, you said, ‘Wait a minute. This model of us reaching out to companies and getting them to integrate with us is going to take forever. It’s just not workable.’
Thor: It’s too traditional. It was too much heavy lifting. We needed some way to get the network working for us, and to get our brand out there, and to take advantage of SEO, and so on. One of things we did was we said, ‘Let’s build some of these customer communities for these brand we felt either people were passionate about, or frustrated with.’ We built them for Apple. That was easy. There were a lot of Apple communities, but it was kind of a no brainer because the iPhone was just coming out, the very original iPhone. And the second one we did was Comcast. And that, both of those worked to our advantage right? Because when we eventually launched a few months later we had these example communities that were going strong and it was getting people to explain what this was, right? This was a way for anybody to complain or to communicate directly with the company without having to go through the company’s, usually very bad, customer service system.
Thor: And so we grew very quickly as a result. Now that was a great launch strategy. It wasn’t, as it turned out, a long term strategy for one great, very big reason which is that Twitter, mostly Twitter and to some extent Facebook, became the default way that people hit the panic button with companies. And so we had to then adjust over time to embrace Twitter and Facebook as part of our platform.
Andrew: What did you do?
Thor: We did two things. The first thing we did is we built a tool called Overheard which gave, which embedded Twitter stream of people talking about your brand into your Get Satisfaction community. So that allowed you to have your own random community at the same time as staying on top of your Twitter community. So then the second thing we did was we built an application for Facebook that allowed Get Satisfaction communities to be embedded within Facebook. So that if you had a conversation that was answering questions about a new feature that (?) live both on your website and anywhere else on the web including Facebook.
So we had to mature our distribution strategy over time, but I think that’s how it works. The main thing I think is that we were able to, when I think back to Trapezo, my regret was we lost sight of what we were trying to do while we took the feedback from investors and others. We began to just respond to their needs rather than our needs relative to their needs. And so with Get Satisfaction we did a much better job of taking their feedback about distribution and marketing and working that into our vision, so.
Andrew: I should say, by the way, since we’ve been bringing up Trapezo a lot, I think i pulled this from your LinkedIn profile. Trapezo is a venture funded, or was a venture funded company that made web software for syndicated content and it was acquired by PerfectCommerce in 2002. Alright, so now I see where the original vision was. I see how you integrated the new entrants into that space, Twitter and Facebook. What about bringing in customers? You had AOL and Trip Advisor early on. Within four months they came to you and they said, hey you guys are doing a great thing here. We want to work with you. We want to actually use you as customer service and your response to them was what?
Thor: Yes. But know what that meant. Because in the pursuit of getting this flywheel spinning up growth using this kind of customer driven model that I just described, we had not done as much work getting ready for selling a enterprise class service that these guys could buy, right? And so we didn’t have a contract. We didn’t really have a way to give them some of the core features they would need. And so what we tried to do was keep them, try to close them even though we didn’t have those things.
Andrew: How’d you know that’s that what they would need?
Thor: Well, they told us.
Andrew: They told you. We’ll pay you just give us these features.
Thor: Yes. So what we were doing at the time was innovative enough that there were not replacements for what we were doing, short of building it. So these guys, AOL and Trip Advisor, had seen what we were doing and said we want that. And but they knew we weren’t, I think they could tell we weren’t selling lots of it yet. They wanted to be really adoptive. So (?) to wait. But the problem was we just, we weren’t able to move fast enough and we lost the boat. And so that was a great wake-up call that we needed to very quickly step it up, right? We needed to figure out a revenue model, we needed to figure out what we needed to support customers that were as big as them. And so I went to Zappos and we figured it out with them.
Andrew: You mean Zappos you figured they would make a good customer. They’re the way that they treat their customers is how you want your other users to treat their customers. So you sat down with them and said, what do you guys need?
Thor: Yeah, we decided to create some experiments with them and build a service that they would buy. And so we did that. At the same time as we built our self-service options, right, which is really just additional moderation tools, it was very simple tools on top of our free product. And we were able to start testing with the general audience. So we were testing with Enterprise Solutions as well as self-service solutions at the same time, which is a lot to test. And I would say we probably moved slower in both areas as a result of trying to do too much.
Andrew: I see. You did talk to the big guys like Zappos or offer that self- service so anyone can start paying and getting features.
Thor: Yeah, trying to do both, it diluted our efforts.
Andrew: And still, Thor, the idea of sitting down with a potential customer and asking them what would you pay for, what should we build for you, it’s brilliant. What did you hear from your conversations with Zappos that you wouldn’t have discovered if you were just internally trying to figure out what features to add and charge for?
Thor: Yeah. Well so we, in that particular case I think we learned some of the wrong things. The fact is that when you’re talking to one customer it’s very easy to fall prey to their specific needs that may not be representative of the whole market. And so we ended up building some tools for them that we would have never used for anybody else.
Andrew: For example?
Thor: So they were very interested in, and this could have been a really cool direction for the company and maybe will be in the future. So Zappos is a merchandiser, right? So Zappos has their brand and they have a service they provide which is merchandising and fulfillment to their customers. But they sell many other brands, right? And they could be an expert on many other brands, whether that’s FooBog [SP] Shoes or Donna Karan or whoever. Like they have hundreds of brands that they can talk to. So they wanted to basically have a kind of branded representative that could go into all of these other communities.
Andrew: So if I had a question or an issue with one brand of shoes and they knew it well they wanted to manage that community so that they could give me a response which would work well for them and also work well for me because I’d get a response from someone knowledgeable without waiting for the shoe manufacturer to care about Get Satisfaction or even the online interaction. That’s their vision. But most people don’t want that, that’s what you discovered.
Thor: What we found is that it was not the (?) for us. It was a very cool idea and theoretically could have worked. But it was complex enough that the number of things that would have to go right made it much harder to pull off.
Andrew: How much time did you spend building this out for them?
Thor: Oh, you know, it was like one and a half engineers for a couple of months.
Andrew: But it was just a distraction, going in the wrong direction.
Thor: Yeah exactly. I mean there were lots of other things, but this is hindsight right. I think in any business there are going to be false starts and blind alleys, and this is one of those for us. I mean, there was no way of knowing that. That could have been our billion dollar idea. And you just have to get used to that. As it turned out the one that was much more representative was Mint.com. So Mint.com wanted to augment their customer service process. And they had specific needs. They needed to be much more enterprising. They needed to have a lot more security, they needed to have a lot more sort of moderation, they needed more weight to organize the content. And we needed to build several features for them to close that deal and make it work. But those features were, are the foundational features of all of our enterprise software today. And so now we know that.
Andrew: I see. So if, and we’ve been hearing a lot about this, that if you want to know what to charge sometimes you sit down with customers and you say, where’s your pain? And then when you hear it you say, if I build the solution for it would you pay for it? If they say yes you go and build it. What we’re learning in this interview, what we’re re-emphasizing and I think we’ve heard in the past is don’t talk to one. One person can be an outlier. You talk to a handful and then you start to see patterns and understand, okay you can solve a problem that multiple potential customers have.
Thor: Yeah, yeah, that’s absolutely critical. You have to find ways to move beyond the sample set of one. And I’m not sure what the ideal sample set is for enterprise solutions but it’s probably on the order of five or more across the market category.
Andrew: All right. So you launched 2007. The next year is when this disintegration that you mentioned earlier happens. How did it impact you guys?
Thor: So we, this disintegration in the market, it did that late 2008, was happening we were implementing the Zappos thing. We were [??] before we were launching our self-service services. We didn’t believe that we needed to have the track showing traction on revenue slide built out. We thought we could go in on the momentum in all the other areas. And that is one of the things that I think I’ve learned over the years which young entrepreneurs would be surprised by if they get stung by it, which is that what is true three months ago about what you need to close around may not be true today. And, even your investors who see lots of deals may not know it until you know it because you might be the leading indicator.
Andrew: I see. All right.
Thor: So, and that’s what we found with ourselves is that everybody was surprised that we were not able to raise money with all of our progress in 2008. But what we were seeing is that the market was falling apart and that expectations for showing progress in key areas like revenue model was not being expected. Little did we know that nine months later it wouldn’t be expected again.
Andrew: Like you said, it does change a lot.
Thor: We needed to survive through a period, this is the good times, rest in peace era…
Thor: …where every company was being told to slash their expenses. You know, a kind of key moment for us was we were asked to slash our expenses, and we did find way to renegotiate our rent, and reduce some of our outside services. But we really felt like we couldn’t let go of our team, any of our team members.
Andrew: And they wanted you to.
Thor: Well, our board was very supportive of us and they were never strong arm. They did not strong arm us. But they did ask us to strongly consider it. And, I would say that they put their suggestion in the form of you should, “You should reduce your head count.” But, we came back to them and in a kind of moment of truth for us we told them, “No, we’re not going to lay-off head count. We are going to raise some more money in a really difficult environment through friends and family. We are not going to do institutional. We’re going to reopen our previous round and sell more shares at the previous price, so it dilutes us. And we’re going to find a new CEO who can help us build this thing into a big business, somebody who has a lot of software and service experience. And we’re going to do this all in three months.”
And our investors said, “Well, you know, if you can do that more power to you. But if you can’t you’re in serious trouble.” So we had to go do that. And, we did do that. I will say that was one of those moments of truth that set our relationship with our investors I think forever. We remain very good friends with them. I think they have a lot of respect for us because not just that we pulled of what we said we were going to do, that we actually took at stand in way which it was hard. It’s hard to say no to your investors on your board, but they want you to. This is a little secret I tell several of the CEOs that I informally advise. I say, “Number one, get yourself a CEO mentor, because even if you are an experienced CEO it’s hard t have perspective. But most of us are not experienced CEOs and those tips and tricks, those tools are not obvious.” That’s the first thing I said.
The second thing I say is, “We feel like…” A lot of these investors are very opinionated and head strong. “We feel like they want us to what they tell us, but I think as often as not they want us to say no. They want us to be firm in our convictions even if we’re wrong. They want to feel like we are going to be bold in our actions. And so I wish I had been as bold as I was then in other points because I think that builds confidence in people.” And it’s very much a temperament thing. I tend to be thoughtful and reflective about my decisions and would bring people into my confidence. But I feel like as a leader of a board, that’s not the right approach. You want to ask for feedback, absolutely. But you want to take your own advisement ultimately and make your own decisions. That’s key for a CEO.
Andrew: I see. And be clear about it even when other people disagree, “This is what I think we should be doing, and we’re going to go do it and show you guys where we are in three months.” One of the things that Jeremy asked you in a pre-interview is, “What are the big lessons that you took from building Get Satisfaction?” And you said that you needed to, we would do less and be more aggressive on focusing on what we do well. That’s what you should have done. That you had too many features and always had a flavor of the month. How do you get to too many features, and how did you get to too feathers? And then the follow-up question that we got to you is, “What do you do to stop from doing that?”
Thor: Yeah. Actually I think we were pretty good for the first year or so, and then right about this time where we start to figure out our business, the revenue, we start… Actually it started a little earlier than that if I’m going to be honest. There was this moment where we felt like we could jack up our growth even further. And [??] strong growth, but we felt like we could increase our growth even more. And there was a lot of focus in the market at that time around Facebook apps, social games, viral websites, and so you saw these companies that would, you know, within a few months have millions of users. And so we felt like, “Well, we should have that.” The tricks these guys use are not that complicated. We should clearly have an invite your friend feature, we should probably have an address book, and all these things. And, once you start down that path, it’s very easy to rationalize it.
Andrew: And address book so that if I join you give me the ability to add everyone from my address book into your system so that you can invite them to also have a conversation about this company that I joined to talk about.
Thor: Right. And, so yeah, it becomes, it’s very difficult in the moment to know what is a flavor of them month and what is actually a core driver of your business. Right? And so what we were really good in the early days, think, here things we’re not going to do, like we’re going to add constraints around our business.
As we started to solve specific problems like consumer growth or converting paying customers, we start to throw a lot more stuff at the wall. And some of that stuff is okay. But I think what I would do today is I would create a framework around testing those features to see if they had an impact. And would constrain that not just on terms of the time we spend on them, but how long we keep them up. You know, just because you release a feature doesn’t mean you need to keep the feature.
Andrew: I see. So if you were to launch say the address book feature today, before you launched it you’d sit down with your team and say, “What’s our goal for this and how long do we give it to hit that goal? And if we don’t we’re going to remove it.” That’s the thing you would do.
Thor: Something like that. Yeah, absolutely. I would say, I would maybe even in the beginning say, “Look. We’re going to test this hypothesis that people want to invite their friends to conversations around products that they’re happy with, they’re frustrated with. This is not something we know for certain.” I would just embed a little more humility into the process so that we can disprove a hypothesis and remove the feature, because the problem…
Andrew: I see.
Thor: …is that you end up, the problem isn’t building more features, the problem is you end up with unsupported features or half built features that whither on the vine. And, at first that’s not too big a problem. But, two years later, three years later, it’s a big problem. You have all these things which are kind of vestigial organs. So it is really important to know whether something is successful or where it’s successful. I mean, because what you get out of a hypothesis driven approach is not just binary, it doesn’t work, does not work. You also have a way of discovering things you didn’t know to ask for.
And this is something I’m really passionate about which is, we don’t, our matrix, the data we have is only as good as the questions we’re asking. And we can instrument narrowly to tell us whether something is working or not or we can instrument broadly like big data approach were we’re collecting lots of things and then we can retrospectively go in and ask questions of the data. And, so I think that starting off with a view to how you’re going to find stuff out is a really mature way of going about building a product. But it’s hard, it’s really hard, and I think you can prematurely optimize for the data question and not get stuff out. I feel like there’s a prototype phase where you can ask questions in person of your 20 users. Don’t over-invest in a big data setup, but as you start to do bigger rollouts then the big part of your process needs to be “how are we going to learn from this.”
Andrew: What about this, I can see that everything you’re saying makes sense and at the same time, someone who’s listening to this is going to say, “You know what, I have this idea for a feature, I’ll just add it, it’s going to survive on its own and then I have another idea for a feature, I’ll add it, it could survive on its own. I don’t have to babysit this feature, it just works.” Then we add and we add all these features which we think could live on their own.
Andrew: What’s the problem with that? What did you find?
Thor: The problem is that you need a framework for knowing what to say yes to and what to say no to, right? If it’s simply a customer asking for it is reason enough to add it, then you will quickly spin out of control, adding every feature under the sun, many of which would contradict the others, right? It’s incredibly important, I think, to have some world view, some set of opinions, about why that feature is worth adding, right? For us, in the early days, we were really careful about a lot of things and I think we’ve continued to be pretty good about it. Better and better, again, but there was a period where we went off the rails a little bit where we were chasing deals and we would throw anything at them to close them. It’s a natural phase, but it’s kind of a danger-zone. For instance, we really believe that we as Good Satisfaction, part of our brand was that we had a compact where enabling a compact between a company and their customers where they would be transparent in their communications. Not 100 percent transparent, but sort of in principle, transparent about what they were doing and why they were doing it. When we set out to add these features that would allow a company to delete a customer’s comment, it was a big moment for us, right? Because if a company can just delete their customer’s comments, they were basically a unilateral censorship. At the same time, we knew that there were bad actors. We didn’t want to allow somebody who had a bone to pick, a competitor for instance, to come in and post lies about a company, right, where they post slang. That was unacceptable as well. We knew we needed to roll-out some moderation features. The ‘just add the feature approach’ would have gotten us to go down a slippery slope towards blatant censorship without respect or without consideration for the customer.
What we did though, was do it in a way that was consistent with our beliefs, our core convictions. We could just add a change log and in the change log we could have a listing of which action the company had taken.
Andrew: I see, let the company delete, but also have a change log that shows what they deleted so their customers can say, “Oh, of course, he deleted it because he’s a bad actor, or hey, wait, they’re trying to hide things that don’t reflect well on them.” This happened because you had an issue with Zappos where PETA animal rights activist started to attack Zappos and then you said, “Hey, you know what, we work with Zappos, let’s let Zappos delete it.” That’s when you realized, “Hey wait, that’s not the way we should be doing things.”
Thor: Yeah, well, Zappos is one of the instances where we had to do that. They had PETA . . . I mean it’s an interesting scenario where . . . PETA was a legitimate point, they can make that, but they were posting over and over and over again, right?
Andrew: You can make your legitimate point but you can’t drown out everyone else’s legitimate points.
Thor: Right. Exactly. There’s a lot of finesse, there’s a lot of subtlety in managing a community and we had to find a way to do it that didn’t undermine our core brand proposition. I think there are lots of decisions that companies make. Twitter has been criticized over the years for not having enough features and yet they have been very focused on what they believe is their core benefit they’re offering people, which is the most streamlined way to get a message out there to anybody who cares to hear it. And it had certain constraints that would enable that. I mean, the 140 character limit is an incredibly powerful constraint that allows messages to be heard because they are short enough to fit in the stream. So, figuring out what your constraints are can help you guide that feature process, feature decision process. Without it, you can very quickly start adding things that you’ll come to regret later.
Andrew: You know, what I didn’t ask you yet is, how’d you get users? You came up with a great idea, but there are tons of people in my audience who have wonderful ideas who end up getting no users. You had a two-sided problem. You had to get users to come in and talk about the brands, but you also had to get the brands engaged. Not so much of a two-sided problem. If the brands never showed up, you could still do well with your traffic because you created a site that would work if only one side came to the party. But how did you get that side? How did you get people to come complain on your site and not on some other site, and not ignore the whole opportunity?
Thor: So, we had SEO. We highly optimized these communities for SEO. And they were great, because they were self-optimizing for whatever keyboards people would tend to search for because people would post using the same keywords. We had widgets. So, we gave these widgets to mostly companies to use to embed our [??] in their sites.[??] And some of the great users were very popular. Like Twitter. Twitter used that as [??] to all.
Andrew: I see. By enabling people who had big reach to use your site to talk to some of the people who they were reaching, you grew too. And people would come to see Twitter and to interact with Twitter, and then discover this site where they can also talk to Comcast and other services and say, “This is where I go to complain or get satisfaction.”.
Thor: Yes. Exactly. And the third thing was…well it was just this…premise…this brand premise that we threw out there which is that customers were in control, and that if they were frustrated, they had a place to get satisfaction. What’s interesting about that third one is that really worked for us in the beginning. We got tons of press as a result of being kind of provocative. But, we ended up getting into some trouble. I would say it was…inadvertent design decisions…which made it seem like we were on the side of the customer at the expense of the company. So, what started off as a strength from a brand standpoint, especially with consumers, ended up being something we needed to work out over time with companies.
Andrew: When brands were starting to say, “Hey, you’re hijacking my brand” specifically Jason Fried [SP], who I mentioned earlier… I’m looking here at a post of his from April 2nd, 2009. He says, “Here is our Get Satisfaction page”, took a screenshot of the whole page, and he said, “everything in red is our brand. And everything in blue is their brand.” And now, as I’m looking at this page I see two blue, which is Get Satisfaction brand, and eight if his brand on his site. Plus, I see three logos that he didn’t highlight in red. And so he was saying, “People think that we own this. People think this is us. So how do you deal with that?
Thor: Again, part of it was the premise. The premise that we had was actually, if I’m being honest, kind of a hijacked model.
Andrew: That’s really honest of you. Yes.
Thor: But again, the idea was for companies like Comcast or AT&T, which had, at least at the time, terrible reputations for customer service, where people felt like they had no rights, no redress. And most people don’t have top-tier blogs. If you have a top-tier blog, you can use your blog to get that kind of attention. But most people didn’t. So, we thought we would give them the kind of equivalent of a top-tier blog to get redress against these big companies. The problem was, and to Jason’s point, was that… when you’re a small company, you’re scrambling just to make a product and keep it up. You may make mistakes. And you don’t need to deal with this thing which looks like it’s yours. You know, the complaint was legitimate, even in general. But some specific complaints that have to do with some design decisions…What he picked on was the design that was days old. We were in the process of revving [SP] the design. And lots of things were happening that weren’t being reviewed very quickly.
Andrew: His overall observation which is that you guys are making it look like this is a place to complain. It was legitimate and worked well when it was directed at big companies. There was no way to talk to big companies and get satisfaction from them. You needed a stronger force as possible. Once you go to smaller companies that strong force overwhelms them. That strong force is unnecessary. It could come off as unkind. That’s what you had to reconsider as you grew you’re saying.
Thor: Yeah, exactly. That was a great moment where first it was to look in the mirror and say, “All right. How can we do right by companies of all sizes at the same time as we are empowering individuals?
Andrew: On a personal level, you’re a guy in the (?) business. You’re a guy in software. You admire Jason (?). When he does this publicly, how do you on a personal level feel?
Thor: Well, I will say that was the lowest moment that week, was the lowest moment I’ve had professionally. We were actually very passionate about doing something that was a social good. We really believed that creating a new era for customers and companies to interact on a more equal footing was important and good. We were really trying everything we did to be conscious of our impact. We felt like our brand particular had benefited from that. People talked about Get Satisfaction as not quite a social impact company, but a company that had a bigger vision they were focused on.
In one week, not one day, I felt like all that was gone. I felt like we had been made (?). That he used words like mafia shakedown was ever (?). We had just rolled out a few months before our paid services. We were just figuring everything out, right? And moving really fast, so it was really hard. I felt like that our intentions, our good intentions showed in our responses and as a result, two weeks later, three weeks later people started coming up to us saying, “You know what? They way you handled that was really inspiring to me. You were really transparent and you responded quickly.” You end up coming out looking better than you had ever before.
I don’t know if that was true for everybody, but it was certainly true for enough people that I ended up feeling OK about it. You never want to go through that. I will say, “You live by the sword.” To encourage feedback you have to open up the (?) button or at least be willing to get wounded occasionally.
Andrew: So you’re saying you could decide where other people can talk that loudly at their companies that they’re upset with. You have to be willing to take that to yourself.
Andrew: All right. I want to do a quick plug for Mixergy Premium here. Then I’ve got to ask you about the one thing that was (?) in 2005 said…was the reason of his success and you talk about it in your hit book which I mention at the top of the interview Get Lucky. I want to know what that one thing is and then how can we create that one thing? It doesn’t seem like we can.
So, when I talk about Mixergy Premium, I should say that Mixergy Premium is courses done by proven entrepreneurs. Often those courses are like this one I’m looking at right here by (?), “How to raise capital?” People come to it saying, “I want to raise money for my business.” (?) is a good guy to teach that. He’s done it himself and I’m going to sit down and learn it.
Sometimes, as Martin here on the site who saw this course did. People use it in different ways. Martin actually said, “I’m not necessarily looking to use (?) idea to raise money.” Here’s what he said instead. He used it and his company used it to give better presentations in general. They said if these presentations that (?) teaching us are good at raising money, we are going to use it to just create great presentations. Let me see if I can read his comment. (?) talks about focusing on the big idea first, so I trash my old presentation and I use that as a centerpiece for a new one. The big idea he means. Instead of selling every detail of our work, we started with, “Look our target group of students…” and then he talks about how he used it.
This has been happening over and over again. Mixergy Premium has dozens of courses designed to address the exact needs that you as entrepreneurs have. When you take it, my belief is, you’re going to find that there are other applications. I’ve often said that (?) idea is I’d actually use them beyond (?). I use them like prizing in my personal life with my wife and even with friends. It’s extremely powerful. If you’re a member of Mixergy Premium go to mixergypremium.com right now and take those courses and if you’re not, sign up today and take them all. All right. So, Thor, what was that one thing that Serge Bruin said was a secret of his success?
Thor: He said it was luck.
Andrew: So usually when someone in an interview says luck, I go, “Now I can’t use any of that because what’s my audience going to do, go and create their own luck?” So, I’ll ask you. What’s my audience going to do, go and create their own luck?
Thor: Yes, actually.
Thor: I think that actually the start-up environment is designed to actually optimize what you might call luck. More specifically I would call serendipity. Now, serendipity is often used to be synonymous with coincidence, but serendipity actually has a specific meaning which is, I would paraphrase it as chance interacting with creativity. So it’s required, this is actually it goes back to the original definition. It required being able to take an unexpected discovery, it could be an idea, a new person, an event, and do something with it. And so when you think about what entrepreneurs do, we see something that’s new in the market, some new technology, we see an opening in new consumer behavior, whatever, and we put two and two together and we come up with something new.
And so when you think about serendipity as a business practice it is powerful because it gets us thinking outside of predictable outcomes, because it’s thinking beyond how can we simply work harder to reach our aims. And, so when we, this is not a new idea. Actually the idea that serendipity plays a critical role in the development of new ideas has been explored by a lot of scientist.
One in particular is a guy named James Austin, a neurologist who back in the late 70s wrote a book called “Chance, Chase, and Creativity” which we discovered through Mark Andreesson who commented on how great this book was. And it was a framework for medical researchers and he was asking the questions like, “How do discoveries get made in medical research?” And what he observed was that serendipity plays a key role. And as it turns out, we look at scientific papers, over 10% of the actually mention the word serendipity. It means that it plays a much bigger role even than that.
Andrew: So then how do I create serendipity so that I can have these results or do I just say, “Hey, I’m going to go about my day and if it happens, it happens. And if it doesn’t I’m not going to sweat it, because I can’t make it happen.”
Thor: No. So we think about, we actually identified eight skills of planned serendipity. And, we say planned serendipity because there are things that you can do to create a state of mind and the environment that leads to creative collisions. And people had put them to use them in creative endeavors. So again, I think that people who are already entrepreneurs are more likely to work in co-working spaces. Co-working spaces are actually ideal for getting people out of their routine and getting them to collide with other people working on projects that they otherwise wouldn’t know about.
Andrew: And getting out of the routine, physically out of the routine is one way to create serendipity. By the way, yesterday you and I started recording this interview and we had terrible connection, and you were so generous with your time that you restarted your computer, your Skype, got rid of everything that was running on your computer. We tested everything, it still didn’t work, and then I had this idea.
I always wanted to test having somebody use an office that we rent for them where we can control the environment a little bit better, and do the interview from there. And I thought, “Thor might take me up on this opportunity because in his book he says, ‘Physically go, move, try something different’”. And so I said, “Thor, would you go to this office and then you can use the office for the day.” And I thought, “Thor is going to want to, or be more likely than most people to sit in a new environment and open themselves up to what might happen in this new space.” And so even though there was like fewer than 12 hours, I think, notice, you took us up on that.
Thor: Yeah. Absolutely. And I try to live by this creed in general. Right now I’m living in New York for three and a half months to get outside of the pay area and expose myself to new things. I think that this is incredibly powerful because we end up finding comfort level and can get into ruts and it’s very difficult to see a way out of what you know to be true. And so yeah, motion is one of our key skills. And it’s interesting when you look at some of the great successes, like Pixar we talked about earlier. Steve Jobs, this is a pretty well known story, but Steve Jobs had the Pixar office designed to flow people from their little offices where they might be doing their work into columnaries where they were likely to bump into each other, precisely because he knew that this was how some of their best idea came in from. They have joke meetings where a film team will bring in people from other film teams and show them the story boards and have them throw out jokes. Often their best jokes come from random people who are not even writers. So shaking things up is a key way; it almost programs them. We talk a lot about, in the book, another skill which is preparation, right, based on the idea that fortune favors the prepared minds. But rather than preparation being simply being well-trained in your area, the key to preparation is actually being able to forget what you know to be true. And you can do this, what we found is that, one of the common ways [??] were able to let go of conventional wisdom, is that they tend to have something we call a gig brain, a gig mind, right? What that means is, they have obsessive curiosity in the area of interest, so much so that they kind of lose themselves and that provides them with distance, a psychological distance from the mundane things that they tend to do. It turns out that there’s psychological research, oodles of psychological research which shows that when we have distance, psychological distance from something, we think about it more abstractly and we’re able to connect it to things that are in very different categories of thinking. So it’s incredibly powerful.
Andrew: You’re saying, let myself get lost in some new discovery; it’s okay if I let myself fully get lost in it, I will uncover something that I might be able to bring back to something that’s more business related.
Thor: Yeah, and even one step further than that, if you’re getting lost in something, if you’re deep in some area of interest, then you are looking at mundane things in a less mundane way, okay?
Andrew: Kind of like having a traveler’s mind.
Thor: Yeah, exactly.
Andrew: Where you’re walking through the streets and suddenly everything stands out as different, the coffee shops, the way people interact with each other.
Thor: Great example of that very thing was, see the founder of Starbucks, I’m drawing a blank on his name…
Andrew: Howard Schultz.
Thor: Howard Schultz, thank you. Famous story, but he was working for a coffee company, and his job was to go and buy beans. And he went over to Italy to buy beans, and he noticed that there were little cafes on every street corner where people came and they socialized. And he said, “Why don’t we have cafes on every street corner in the United States for people to come and socialize around and get their coffee?” And he came back and he pitched to two coffee companies and they said, “That’s a terrible idea. This is how you make money in the coffee business.”
Andrew: Selling coffee. Not letting people sit around in unused landscape.
Thor: [??] and building the Starbucks.
Andrew: That was a great story that was in his book, “Pour Your Heart into It,” I think? It was just such a good book. By the way, I’m looking here at this image; when I do research on a guest, like I research you, I just clip everything I can from everywhere and it’s hard for me to sometimes figure out where I get stuff. But I’ve got this great image called “Serendipity = Chance + Creativity” and you’ve got images for each of the eight skills of planned serendipity. How do people even get this thing that I’m looking at? Can I give it to them?
Thor: This is an infographic?
Andrew: It’s an infographic, yeah.
Thor: Yeah, so that is on our blog. If you want I can send you the link and you can post it.
Andrew: Okay, I can link to it; it’s on your site somewhere and I can link to it so people can see how they can create serendipity for themselves.
Thor: Yeah. If you go to GetLuckyTheBook.com, I believe it’s there.
Andrew: Even better. GetGetLuckyTheBook.com, that way if I don’t link to it properly, someone in the comments could. Sergey Brin; how did he create luck?
Thor: What’s interesting about Larry and Sergey was that, they were obviously brilliant and they worked hard and they had the gig mind in the sense that they were just really interested in how you could programmatically learn from these little clues there in the form of links how you could create… But they were focused on this very specific space– academic search. But that allowed them to go down the rabbit hole that eventually led to Google. But what made Google Google was not just their great search algorithm, but the fact that they figured out how to do AdWords. And they tried a lot of other things. They, like us, [??] tried things that ended up being not a great idea. I was licensing their search to Yahoo, as I recall, and others.
Andrew: That was one of the better ideas.
Thor: The better ideas. [laugh]
Andrew: But that was one of the better ideas, that they also tried running different kinds of ads. So they did try different things, and so, by trying different things, what happened?
Thor: They were able to stumble on this idea that somebody else had had, which was [??] we were doing a paid search, and they realized that they could stay truer to their vision of a search engine that wasn’t cluttered, that was always working to provide better results to individuals by doing an algorithmic paid search product that would only show ads that helped people. And the people would show that they were helped by them by clicking on them, which itself was the revenue model.
Thor: They really stumbled on this idea and they were purposeful about the stumbling process. One of the skills that we talked about is divergence. That’s the ability to take paths that you didn’t intend on taking. And so, Google have had a rigorous framework for going and doing this. They tried lots of things, but they were routed to a core vision that allowed them to… However they diverged in the revenue level, they would help them build the products they had set out to build.
Andrew: All right. I can’t let you go without asking you about your next business. I actually have… Before you and I started recording, you said, “I don’t want to say too much,” but I’m looking at my notes, here, and through your conversation with Jeremy, we got a lot of information about what it is. How much are you willing to say publicly about what this new idea is?
Thor: I don’t remember talking about that.
Thor: I don’t remember talking to him about that.
Andrew: Jeremy is good. He gives you some space to talk and talk and talk, and before you know it you start revealing your credit card pin number.
Thor: Yeah, I don’t remember what I said. Maybe it was a different business I was talking about.
Andrew: Oh, so you’ve been thinking about different ideas.
Thor: [??] probably a couple of different ideas. So I’m very interested in… Remember how I talked about how Flickr was this kind of Xerox PARC for Web 2.0.
Thor: That there are moments where you get a new set of patterns that seem like they’re going to be transformative. I feel like right now we’re seeing that with GitHub. I think GitHub is an incredibly powerful set of ideas for how people are increasingly working with one another to… For those who aren’t familiar, GitHub was initially a website where you could host to your code and track the versions–what we call version control, [??] to it. But their innovation was to make it social, so that people could link to one another’s projects, they could share a code base, and basically apply all the lessons of social networking through a code repository. But there are so many lessons that are coming out of that.
And when we’ve gone around the country, talking about our book and meeting with people, we’ve seen that, increasingly, it’s not about what we used to put on a resume which is, “We’re affiliations. We’re academic credentials,” it’s what the work you’re doing, right? It’s the projects through which you learn your skills. It’s the projects through which you are collaborating with other people. And so, there’s a much bigger world out there than just developers, so we want to take a lot of the lessons we have learned and to apply them to other areas.
Andrew: All right. And that’s all you’re going to say right now, so we’ll leave it there. I will, of course, say to the audience, as always, do what I’m about to do, which is if you got anything valuable out of this interview, and God knows I got a lot of valuable ideas out of this interview. But if you did too, listening to us, I urge you to just find a way to say thank you to Thor. And I’m actually looking here at an interaction between James Ashenhurst and Susan Su, who taught a course on Mixergy. And he emailed her to say, “Thank you, I used what you taught.” She emailed him back and actually they got on the phone… James and I hear her note back to me when I asked if I could talk about this publicly. She said, “Yeah.” James and I spoke for an hour and he was an inspiration to me. Someone who really took action and who’s on his way.
And I found that all the time, that if there is something that you use and are grateful for it, send an email to the person who taught you that or who you heard it from. I don’t know what’s going to come of it. Maybe you end up on an hour conversation with them. Maybe you end up working with them, which I’ve heard from the Gabriel Weinberg interview. Maybe nothing directly happens today, but in the future something will. So whether it’s on Mixergy or somewhere else, if you’ve got anything of value, find a way to say thank you. I know I’ve seen a lot of value flow towards people who’ve done that. So I’m going to start out with Thor by saying thanks for doing this interview with me.
Thor: Thank you. I enjoyed it very much.
Andrew: Thank you all for watching. Bye.