Brendan-Chris-Wistia-on-Mixergy0723
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Andrew Warner: hey there Freedom Fighters, my name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is a pair of entrepreneurs that I’ve known for years.
I remember first meeting Chris Savage when he emailed me and said something like, we want you to use our video platform. And… I am a little embarrassed and I’m very proud also at the same time of this. I ignored his email.
Brendan Schwartz: that.
Andrew Warner: And, and he must have gotten my phone number somehow, but the coolest thing he did was, I remember being in Argentina, I went back to Wistia to look at the site.
And freaking A, he knew I was on the site because back then what you guys were doing was like tracking users and that was the whole video marketing platform. It was better than YouTube because you could track users. While I was on the site, I get a call from Chris. And… It was it wasn’t that I think at the time I put two and two together and said he’s watching me on the site It was just top of mind.
I was investigating this. I had questions and he’s right there answering it And as a result, I started using Wistia on my site I started doing amazingly cool things with it we’ve stayed in touch over the years and I’ve watched them from a distance, but truthfully, I kind of felt, uh, Chris, that you guys had gone to, I don’t know, a different stratosphere, you know, you’d gone from being these startup guys that I wasn’t sure were gonna make it to people who had made it and were doing deals with KKR, one of these startups.
It’s the company that has a movie based on its deal to buy Nabisco. And I think through that we’ve kind of lost touch. And then I got a PR company’s email saying, do you want to interview Chris and Brendan Schwartz from Wistia? And I go, yeah, I do actually. Um. And so we reconnected. I want to find out what happened, why you guys bought your company back, essentially from your investors, how you got the money to do it, where that stands right now, and we could do it thanks to, uh, my sponsor lemon.
io. If you’re hiring developers, Chris and Brennan go to lemon. io. All right, let’s jump into this revenue right now is what now with the video marketing platform you run.
Chris Savage: We’re, we’re in the mid sixties, uh, for revenue right
Andrew Warner: Mid 60, 60 million.
Chris Savage: yeah, yeah.
Andrew Warner: This is so
Chris Savage: million, you always put million behind everything, right? So, not, yeah.
Andrew Warner: The reason that I paused there for a second was I told you I was going to ask you about revenue. You said, we’re not going to say what our numbers are. People could maybe figure it out. And, uh, and then I liked that you just jumped in and said it. What about profit?
Are you guys profitable now?
Chris Savage: we’ve been profitable for basically ever since we did the buyback in, um, 2017, we’ve had to be profitable. That was actually part of why we did that deal in the first place was we knew it forced to be profitable. And there’s, we really believe in profit as, Um, it’s a little counterintuitive, but if you can be profitable, it can actually let you run the business differently.
You can be more long term focused. You can take more creative risk. Um, that’s part of what led us to that. So we’ve been profitable the whole time. We actually got really profitable for a while there. And then when COVID hit, it changed our market dramatically and caused us to think like, Hey, we want to, we want to reinvest a lot more.
And so while we’re still profitable, we’ve invested much more aggressively in the last couple of years into the, into the space.
Andrew Warner: Meaning reducing profitability as a way of building equity in the business. And then Brendan, you’ve got big news now, as far as you’ve borrowed money to buy back your investors. Where are you guys now with that debt?
Brendan Schwartz: Yeah. So we rate, it was in 2017 that we did this, this buyback deal where we raised 17 million in debt. Uh, we were about, I think around 17 million in revenue at that time and losing money. This is our first time doing this pretty hard to. If you are losing money, it’s like getting a mortgage. If you have a negative income, you know, that’s not a common, common thing, but we partnered, like you mentioned with Excel KKR that had us a bit nervous.
Like you mentioned, we had known, you know, barbarians at the gate from KKR. We were assured many times that. Excel KKR in this part of the firm was strictly, uh, a lend, a debt lender. There wasn’t some, we, like the biggest fear with debt, right, is like you trip up, you do something wrong. And then suddenly somebody else owns your business.
Um, that was terrifying to us, that, that has not played out that way. Um, so we raised that money, um, and the short, the short version is it worked really well for us. We got, like Chris said, we got back to profitability. The next year, um, we continue growing the business. So we’ve in six years since doing that, we’ve about four extra revenue.
We refinanced that debt twice along the way. And then just as of two weeks ago, we paid it all off. So we’re debt free
Andrew Warner: Debt free! Own your business yourselves now! No outside investors!
Chris Savage: Uh, basic, um, yes and no. So like when we do that, we did, when we did the buyback, we did something that’s called a tender offer because you can’t force people to sell their shares. So it’s basically like, here’s the valuation of the business sell as much or as little as you want. Everyone gets the same packet of information.
This is what we gave to. Our initial investors, we actually also gave the same opportunity to the team, which was a big part of this too, is like we told the company, those early employees, like, Hey, we’re gonna sell this business someday. And when we decided not to sell, we really wanted to take care of those folks.
So everyone got to decide how much they’re going to sell. And some investors sold everything, some investors sold some, and some of them were like, well, if you guys are going to do this for the long term, I don’t want to sell. Um, but an interesting part of the deal was our, our angel investors had what’s called preferred shares.
So preferred shares for those who don’t know, it’s a different class of shares than common stock. And it usually gives you more rights, rights to block a sale, rights to approve a financing, rights to approve subsidiaries, all these types of things. So when we did the buyback, we converted, part of that deal was converting all the preferred shares to common. And so while we do still have some initial investors that stayed in, they have common shares alongside Brendan and I. So, um, it’s very much like, that was a big part of it because while we did have the majority of the shares before the buyback, it meant that not only did we have the majority of the shares, but we have the majority of like the one class.
And it’s, it’s, it’s almost made it a relationship where like, The people who are still in, we think of them as being more on the same side of the table as us, where before the deal, it didn’t feel like that.
Brendan Schwartz: think a big part of it was, was resetting expectations too, because when we took that money originally, we were at this point, uh, I don’t know, close to 10 years in. To, to the business or a little more from
Andrew Warner: Wait, when you took which money?
Brendan Schwartz: that original angel funding.
Andrew Warner: Oh, really? You didn’t take your angel money before 10 years into the business?
Brendan Schwartz: no, sorry, the, when we did the, the buyback was 10 years about from when the folks, folks first put in money. And so it was always this open question of, you know, the business is growing. It’s doing well. It’s commercially successful. When will I, when and how will I get my money back? And so this was this moment of Chris and I saying, Hey, we want to run this for the long term.
And. So this, this is a chance to basically get your money out if you want. And it was, would be a very successful thing, or you can keep, you know, stay along the ride. Um, and that was a helpful way, aside from the alignment of getting to everybody on common chairs was just, if you’re an investor,
Andrew Warner: What about this?
Brendan Schwartz: that decision point.
Andrew Warner: I read that when you launched, I don’t know if this was a joke or not, but… But it rings true, you said that you had a vision of selling, selling the business to Facebook within a year.
Chris Savage: six months.
Andrew Warner: Six months.
Chris Savage: yeah.
Andrew Warner: Like, was that a, a literal vision for the business that you planned? The two of you sat down and said, you did.
Okay,
Chris Savage: we made a forecast and we said we’d run out of money in six months.
Andrew Warner: Okay.
Chris Savage: And so we said, if we’re going to run out of money in six months, what are we going to do? And we’re like, well, this is, this is the honest truth. Like we really sat there and did this. Like six months should be long enough to know if it’s going to work.
And it’s probably like, if we’re running out of money, but it’s working, like just go to Facebook and sell it to them. Or we’ll literally just tell no one that we ever did this and we’ll fail in obscurity. That was our
Andrew Warner: what was the, why would Facebook want a video marketing
Chris Savage: It didn’t make any sense. Oh, we,
Brendan Schwartz: plan
Chris Savage: the, the point of it was that we were wildly naive. I think is the point.
Andrew Warner: Got
Brendan Schwartz: and we had never worked on anything longer than. Two weeks, you know, in our
Chris Savage: yeah,
Brendan Schwartz: six months with an eternity.
Chris Savage: no. Six months seemed like an absolute eternity for sure.
Andrew Warner: Okay, and so where how do you go from having this vision of we’re gonna sell within six months to now We want to hold on to it forever Is it because the business didn’t grow into like a multi billion dollar business that would exit or is it that you grew in a different? way
Chris Savage: I think it’s, um, I can go and then you can go Brennan. But I think for, uh, for, for me, for us, it was like things took a lot longer than we thought. So that’s part of it. We’re four or five years in, I think we probably met you about four years into the business, something like that, uh, around 2010 and. We were just starting to get traction and we could, we could start to put together the pieces like, Oh, this is what our product should be.
And like, this is how we should get to market. This is what the price should be. And we kept talking to ourselves because we thought, you know, actually because we’d said it would take six months. It was so shocking that it had been four years that part of this realization was like, this is actually enjoyable to do.
Like it’s actually fun to build a company. Like the challenges of building a company are we enjoy them and it also can take a lot longer than we thought. And so when you get to a place of deciding to do the buyback, part of it, yes, is like expectation setting, Hey, we’re not this like multi billion dollar company yet, but this is actually enjoyable.
But the other thing was because the process of building a company, we realized some things could just take a lot longer than you think. And if we could reset around that and we could be patient. And we actually enjoyed what we’re doing. We actually could compound into building something really significant, but we had to think about it on a different timeline.
Andrew Warner: Meaning decades instead of months
Brendan Schwartz: Yeah,
Chris Savage: Yeah. And I think, you know, you hear the advice a lot, like, Hey, if you’re going to start something, plan to spend the next 10 years of your life on it. And that, I feel like that’s actually thrown around a lot and it’s really easy to not actually hear what someone’s saying when they say that. It’s like, it’s like super, of course.
Yeah, sounds good. But I think that’s actually the truth. And when you think about it like that, it’s like, well, being patient and setting ourselves up to be patient can actually be a huge advantage. And longevity can be a huge advantage because you don’t have, sometimes you do short term things anyway, but you don’t have to, you can do a longterm thing.
And sometimes that means building different types of products or entering different types of markets or building a different type of culture or what have you. And those can be really strategic advantages that compound. And so we kind of saw that and that’s, that’s like one of the reasons why it made sense.
Andrew Warner: You know what I’m noticing, though? I’m noticing a lot of the people who started around the time we did are burned out now. Like, they’re still doing the thing, but they might be doing it for like three hours a week. Or they’re still doing the thing and they’re showing up all the time, but I can see in their eyes that they don’t have the same energy, the same alertness.
They’re just moving through it, and part of it is we’re in bad economic times. The other part is we’re in a mature market now. And then finally, a lot of people are like you, doing the same thing year after year, and it’s exhausting, and I’m not seeing that in either of you. Why not?
Brendan Schwartz: I suppose it’s changed a lot for us and the markets changed a lot. Um, I think if we were doing the same thing that we were 10 years ago, the same size company with the same product, not building new things, same set of customers, we would probably, I don’t know how you describe this. Have a weary look in our eye and probably not be on this podcast or have a very different message.
Um, but like Chris said that we found early the, I think the combination of it being very hard to grow a business. It’s hard to make a great product at scale. Those are things I find very motivating. And then you pair that with over, over a longer horizon, the company. Right. We’ve had challenging time. Like this last year has been hard.
There’s, you know, that’s going to happen if you’re running a business for 10 years or more, it’s not going to be all, uh, up and to the right, but as long as, as long as you know, you’re seeing growth, I think that has helped, that has helped, uh, keep us, I don’t know,
Andrew Warner: Okay.
Brendan Schwartz: young, young
Chris Savage: It’s also balance. Yeah. I mean, it’s, I think there was like a moment, actually it happened. We were feeling burnt out before the buyback, right? So that, that’s part of the other thing that happened is that we were sitting there, we got three different offers from three different companies are all inbound to buy the business, which is, and we picked our heads up and we got into those conversations.
We were sitting there with an offer that we were actually pretty excited about from a company that we actually respect that would have made it so that neither of us has ever asked to work again. And we were talking about, should we do this or not? And we’re like, well, if we sell the business. We’re probably gonna stay there for this company for two years. And the founder of the, of the business, the acquirer was the one telling us this. He’s like, you guys are never going to stay here longer than two years. Like you’re entrepreneurs, you’re going to go back out. And we’re like, oh yeah. I mean, that’s true. So what will we do in two years? We talked to what we do is like, well, we feel like we have a great partnership.
We’re really complimentary skills. We love working together. We’re best friends. Like we’re gonna start another company because we enjoy doing this. Okay. Then what are we gonna do? We’re like, well, the video space is actually changing a lot. So we’re talking about 2016 2017 just becoming possible to make videos with your computer.
Um, you know, all this like new stuff coming. We’re really excited about it. iPhones with video are relatively new. We’re like, okay, we’re going to get back to video space. Who are we going to hire? We started having the list of people we’re going to hire through on the team. We start to realize if we, if we sold the business, we just try to rebuild Wistia and then we’re like, well, why are we, why would we need to rebuild it?
We’re like, oh, because it’s broken. And it’s like, it’s not fun and it’s really stressful and we’re not doing our best work. And we’re like, well, huh, what if we could just fix that problem instead of selling the business? And so fixing that problem to us meant getting profitable again, because we had been searching for growth at any cost or running negative.
We had tons of projects we were saying yes to, but we kind of lost this rigor of just really saying, like, when something new is coming up, like, hey, is there something that might be a great new idea? Is there something we’re doing that’s not working that we should stop doing and put our resources more into this new thing?
We stopped doing that. So we had all these zombie projects. We had all this stressful stuff. It looked good from the outside, but on the inside, it just wasn’t, we were going to burn out the way that we were going. And so when we did the buyback, it was like profitable, longterm, more creative, double down on what we do best. And that will be more fulfilling. And it’s at that same moment, actually, that Brennan and I had a lot of conversations with each other. We’re like, Hey, if we’re going to do this, we have to actually sustain it. So we need to take vacations. Like we’ve been telling our wives forever, like someday we’re gonna sell this business and then I’m not going to worry.
Like I’m still working. What are we going to do? It’s like, we got to take real. Actual vacations. It has to actually be sustainable. And of course, what that also did is once you’re doing that, you have to delegate more and more people solve problems and more people step up and there’s, it turns out that’s the secret to growth.
And so all these things like come compounded together. And I think that was the moment for us. It was like the closest to burnout was. Almost selling and the truth is like that in that moment, we both felt like if we sold, we were going to fail that that was actually going to be failure for us because there’s so many other things we wanted to do and we hadn’t come close to them yet.
And so it was all kind of wrapped together. If that makes sense.
Andrew Warner: Yeah. Take me through some of the things that you did to get the business profitable and to be strong enough that you could keep growing it. What did you do?
Brendan Schwartz: after the buyback.
Andrew Warner: Uh, yes.
Brendan Schwartz: I mean, a big one was we underestimated, I think, how the, getting the alignment of the team and being really focused on what we want to do. So when we did that buyback, we took the company along on the journey. We even had, when we decided not to take that acquisition offer, we had a town hall.
I think we were sitting on stools and we’re, we did not know at this point we would raise debt or how we, what we would do, but we were talking about. What we wanted for the future of Wistia, that we had these acquisition offers that we didn’t, that we had a real one, those, you know, we didn’t take it. And that’s like a, also, you know, we’re introducing a lot of uncertainty into the company.
A few months later, we figured out how we wanted to move forward. And then at this point, we, you know, we were already running the company open book. But nobody cared about the finances of the business before this. He’ll just, okay. Like you’re like I edit some all hands meeting people’s eyes would glaze over after we did that buyback and people understood that if we couldn’t meet the debt obligation, if we couldn’t become profitable, then we still would be over.
There was a pretty intense focus on those financials and it was really healthy. I remember like the first all hands meeting we had after that. You know, um, our VP of finance, she’s going through the numbers, some, like all these hands go up first questions, like how much does that company ski trip that we’re doing, like, how much does this cost?
Like, how much does that cost? And then maybe the next month, the infrastructure team was up at a show Intel, which is a thing we do every month where people talking about in progress work. And they’re like, look, we saved like X thousands of dollars a month by reconfiguring something in AWS. And they got a standing ovation from the team a few months ago.
Chris Savage: Yeah.
Brendan Schwartz: People would have been like, the hell are you working on? Why are you doing this? Why are you telling me this? And that focus, I mean, we went from, I think, on track to lose 3 million in 2017 to after we did that in 2018, positive 6 million in profit.
Andrew Warner: From losing 3 million to. To making six million a nine million dollar swing and it’s by paying attention to expenses and having everyone on the team Care about it because if they didn’t they went the business would go away It was also you mentioned earlier spending money on a lot of different marketing techniques trying to just do anything to get Customers am I right about that before before you address that I guess we should say just to be clear Wistia It’s for marketers, but it’s a beautiful video player that business people can put on, on their sites and then it comes with all kinds of features.
I mentioned the IP thing, which is, it’s, that was a thing that got my attention, but there, there are many other features. You want to just talk about what they are
Chris Savage: yeah. I mean, so, um, at that time we really thought of ourselves as like a video hosting management analytics platform. So it’s like really fast encoding, works on every device, easy to manage your videos. So access controls for internal sharing, commenting, stuff like that. Tracking that show you every person, second by second, what they watch, what they skip, what they rewatch, and then the ability to tie that data into other systems.
So you could go into your Marquee automation provider, for example, and be like, show me everyone who’s interested in Mixergy episodes about X, Y, Z, and then, Oh, like let’s make lists or let’s retarget them. Let’s do that. And that all that stuff is in the platform. Um,
Andrew Warner: and you could also do something like anyone who comes off of your email. And watches a video to 50%, then you follow up with them in a different way. Or if they watch it to 100%, you come back to them and say, You were supposed to get this tomorrow, but I think you might want this now. It’s that kind of
Chris Savage: Exactly. Yes. Um, I mean, it’s, and a lot of the last few years has been really evolving it to be really just making it much easier to do more around the creation of video. So we’ve added in editing, um, on any, every video, um, we’ve added the ability to record natively inside the platform.
We’ve launched a webinar product because we saw that a huge number of our customers were doing webinars, taking the, when the webinar was done, they would download it, they would edit it like 100% of the time, then they would upload it to us. And so by building this into the platform, you can just save people like 30 minutes to an hour every single time they do a webinar.
All that kind of stuff is now natively in there. But at this moment, yes, it was very much the hosting and the management and the analytics.
Andrew Warner: Okay, and so then when you were, When you were targeting everyone and doing everything to get growth, What were you doing, and then what did you cut back?
Chris Savage: We were just copying other people. I, I, I think, you know, that’s the simplest way to say like, I think it’s like there’s a tendency for everyone, and I’m sure people will do it. I mean, people do it to us certainly, but you see some company doing something, you’re like, oh, I think that’s probably working. And then you copy it.
So it’s like making communities or putting on certain types of events or, um, certain types of tactics. And it’s not that a lot of those things weren’t working. A bunch of them were. But we were losing sight of some of the stuff that had driven the most value. And we weren’t asking simple questions like, Hey, if we’re doing this, that’s working, can we just double this one thing and do it more? And I’ll give you an example.
Andrew Warner: yeah, give me an example of what
Chris Savage: So like we would make, one of the things we figured out was that it was really fun if we made a product launch video for something that was often like a small feature. And yet, like, had, like, a kind of a big video. Like, something, um, I’ll give, one of the, the first ones where we figured this out was this feature called replace video.
So you go on Wistia videos, host it and embed it on your site. You see, you want to change it. You could back into your Wistia account, just change the video and it shows up everywhere for you. It doesn’t seem like a big deal. Turns out it matters to people. It’s very simple and it matters. We made a fun video to launch that.
And it was showing a video on our website where someone had spelled the name of the company wrong and they go back and it’s a screeching halt. It’s like someone’s looking at us like, Oh my God, there’s a problem. How do I fix this? And you show the stress and then they show them very easily going into the interface and they change it and it’s silly.
And there’s like a, I think there’s a confetti can in that one, but there’s like a delightful surprising thing in that video. And it was a small feature. It took that one took like half a day to make. It was very impactful. The video was fun. It put more emphasis on the small feature. People shared that a ton.
Lots of people came back into the platform for that specific feature and we would do that with everything that we launched.
Andrew Warner: Your, your videos were really good. My favorite one, the one where I thought, okay, these guys now found a marketing approach that works, is the one where you showed people how to set up lighting. How to set up lighting for their office, how to set for video meetings, that kind of thing. And you even, I think, showed it using Home Depot
Chris Savage: Yes. Yeah. The 100 DIY lighting kit with Home Depot. Yeah.
Andrew Warner: That one made sense to me because everyone was doing Skype meetings then and eventually Zoom meetings and they all looked bad and they needed something to fix it. And so I could see sharing that, but why would a product feature video get shared? Why would that be something that would spread?
Brendan Schwartz: I mean, one reason is that, and we have this unique advantage. We’re marketing to marketers. So right. All of these customers, it’s a part of your job. You’re, you have a product that you’re launching things. So I think part of what worked for us when we’re, we’re really like on top of our game is that is interesting and inspiring in the same way, you know, our team shares marketing that is inspiring to them, especially like Chris is mentioning around something that is so small or mundane.
Usually. Big company events get the attention and you’re going to make something big and you’re going to be creative and that’s where you’re going to flex as a marketing team. But some of those smaller moments, uh, and then finding the delight in that, that has worked really well for
Andrew Warner: I see you’re saying marketers are saying to each other and to their teams, look at how they’re doing the super polished, interesting, funny video for a feature. Why aren’t we doing something like that? Or we need to be more like this. It became a role model video that people were sharing. That’s what you’re, that’s what you’re telling me.
Chris Savage: Yeah. And it indicates tone, which I think is really important. So like even your response, like, wow, replace video really matters. You can add a really small feature that can actually have a big impact on someone’s day to day and for that person if they feel seen like if they’re like Oh, this is going to save me a lot of time or this is going to reduce a lot of stress for me They’re much more likely to share a really concrete discreet thing to somebody else who has the same problem It’s like, we all want to feel seen.
And so I think inadvertently, that’s part of what we were doing is that we’re putting more of an emphasis on these things, which was the indication of tone. Like these are really important problems to solve. It’s like, if we’re making content about it probably is important. And then, um, that made it more palatable to send to somebody else.
But that was the type of thing that like, we weren’t asking ourselves, how could we go bigger on that, or how can we do more of those things? We’re like, Oh, we’re doing this. So we should also introduce. These other channels to scale. And we were distressed, like, not that you shouldn’t have many channels.
You should, but we, we weren’t asking simple questions like, Hey, if we’re doing something, it’s working. Can we just, can we double the, keep doubling down on the same thing? And actually to the lighting example, before we got started, we were talking about this, but like, we just introduced a new series called fix my setup, which is basically the same thing as that is the lighting example you’re talking about, we’re just going around to different people who are on camera all the time.
In their home, uh, in their home office and they could, we can really elevate the setup with like, in my case, like they did it to me, teleprompter, iPad, more lights, like light blocking screens, blah, blah, blah. And it’s actually still a thing people are trying to solve. The Fix My Setup series has been doing really well, but it’s easy to think you already did it.
You know, it’s easy to think that that story has been told, but the truth is that it hasn’t actually, and it’s a thing you can go bigger on. I think that’s like looking back. On a lot of the marketing we’ve done that simple question of just like, if we’re doing something, can we do more of it? Can we go bigger on it is something that I think I wish we’d asked that question more earlier because I think we
Andrew Warner: do you, what do you spend on videos like you’re, I saw one video where there was a truck with the Wistia logo on the side. You’re talking about, oh, there’s one where it looked like you were standing with a wall behind you, but it turned out it was a roller rink and it was a bunch of Wistia people, I think, on the roller rink.
This seems like a lot of time, which you mentioned one of the videos took half a day, but also a lot of money. How much are you spending on these videos?
Chris Savage: range is huge. Um, I think it is, you know, the, the, some videos, like if you were at the time, the, the, the money would just literally be the time because we have the people and the equipment and stuff ready to go. And like we shot a video. Yesterday, uh, that was about us going to see Oppenheimer, Brendan and I in the theater that took about five minutes to shoot.
It’s a fun little behind the scenes thing. I guess you could just, I look at it as basically free, but maybe you could call it like 30 minutes of time and we’ve done some things that we’ve spent hundreds of thousands on. Um, we did one feature film that was called 110 100 that. If you looked at all the people’s time and stuff, it’s probably like half a million bucks on it or something like that.
Um, but yeah,
Andrew Warner: that as, as entrepreneurs, as marketing people who manage every cost and you want to see if there’s, you know, a payoff for it, how can you justify spending that much money? How do you know it’ll
Chris Savage: to it. I think, I think it’s just you ramp up. You build confidence that things are working and that the risks are worth it. And you also layer, we talk about layering risk together. So like the, the most extreme example is this feature film. It’s called 110 100. And it’s a project where we gave this LA based production agency sandwich video, um, they did launch videos for like Warby Parker, Slack, like they still do launch videos for new startups all the time.
And a lot of their launchers are really incredible. We gave them 111, 000 to make three different ads for us. One with 1, 000 budget, one with a 10, 000 budget, and one with 100, 000 budget. And then we documented their, the difference in their creative process across these different budgets. Thanks. When we looked at that, we’re like, all right, so we’re going to get three ads.
So that’s good. We can test these three ads. Maybe they work. We looked at it as like, we’re going to get learning and development for the team because they’re going to go and they’re going to fly out. They’re going to meet with these folks. Maybe we’re going to get some stuff. That’s going to make our ability to make videos better.
We’re going to, we didn’t think we were going to get a feature length documentary, but we ended up with that. So like, all right, we’re gonna have this documentary. People are gonna be able to spend a lot of time with it. And we think that’s going to impact the brand. We’re also going to end up with a trailer for the documentary that we can use as an ad and that’s going to show people Wistia is different because like hey, we’re a tech company that just made this feature length documentary film So you we looked at it as like there’s like
Brendan Schwartz: And if this whole thing fails, that’s going to be a pretty interesting story. So that was like, you know, the backup plan.
Chris Savage: Yes And so you put them all together and it’s like how many of these Need to work for this to pay off. And I think we looked at it at some point. It’d be clear we were organically figuring this out. Which is like maybe two of these things need to work for it to actually make sense. And it ended up being like they all worked. And so in that example it was, we ended up realizing time spent with the brand was one of the most significant things. Because if you have, you spend a huge amount of time with the brand, you deepen your relationship with them. So you’re much more likely to recommend. You’re much more likely to sign up, convert, like you’re more likely to churn less because you’re more likely to tell them if you have a problem, all these types of things.
And one 10, 100 in the first two months, it was out. And this is something we did. We only could have done because of the buyback, like we were back to being profitable and creative, right? Like that’s the other piece of it. Is that we looked as like, it doesn’t have to get a return tomorrow. Um, we had more time spent with the brand in the two months following that launch than we had had spent across every single marketing activity we’d done in the previous year. And that showed up as like a major increase in direct traffic, major increase in search for Wistia, major increase in signups for accounts, and ultimately a major increase in customers. So
Andrew Warner: I saw, now I saw that. I don’t remember how I even knew that you did it. It’s not like I’m following your blog. It might have been someone on Twitter sharing it or something. Were you buying ads to promote these videos?
Chris Savage: yes,
Andrew Warner: Okay, so you were buying ads, promoting the videos, which then promotes Wistia. Okay, alright, um, let me do a quick ad, ad for my sponsor, and then I want to come back and finish with Brendan.
What else did you, what else did you get rid of so that you could eliminate costs, now that I see what worked video, uh, advertising did? Alright, I should say, Lemon. io. I don’t think you two know about it. Here’s lemon. io story. They were started by an entrepreneur who happened to be from Ukraine. A lot of entrepreneurs like us said, you know what Ukraine has good developers for not much money.
Hey, Alex, could you introduce us? And so Alex made some introductions and then he said, you know, this could be a business. And so he started making introductions as a business, connecting entrepreneurs, connecting CTOs like Brandon with developers in Ukraine. And making sure that it was a match, not just, hey, there’s like a job board, but let me talk to you and see what you’re looking for, and I think I know who you need, and then connecting it up.
And then, of course, the war happened. He left, and then he realized he couldn’t… Keep matching people just with Ukraine. But you know what, there are developers all over the world who are phenomenal developers who are in countries where the pay isn’t as high as it is in the U S and he could expand his matchmaking capabilities to them.
And that’s what he’s doing still great developers, inexpensive pricing, and a direct match. Kind of like. What was that movie with Yenta? Kind of like Yenta. He is the Yenta of the tech world. He is going to connect you with, uh, make me a match, uh, type experience. Make sense?
Brendan Schwartz: Yeah,
Chris Savage: makes sense.
Andrew Warner: Alright, and now since you guys are profit oriented, I will tell you if you use my URL, you’ll get an even lower price than everyone else if you go to lemon.
io slash Mixergy. And, of course, they’ll know you came from me, so they’ll take great care of you. Alright, Brendan, tell me what else. I’d do two.
Brendan Schwartz: Um, I’d say probably the most significant, I mean, a lot of little things add up. The most significant thing I can remember is when we were at, like Chris said, in growth at all costs mode, we really took the eye off the ball on gross margin. So there was a lot of low hanging fruit in how we were running the service and how we were doing that.
I feel like at the worst we were in maybe like the mid sixties, mid sixty percent, right, gross margin, which is quite bad. Um, and right, you move that up like ten, twenty points, that’s going to be a lot of extra. You have to invest in the
Andrew Warner: Gross margin is the revenue you’re getting from a service minus the direct cost that go into providing that service. That is like the AWS server cost, right? What else goes into it that you can manage?
Brendan Schwartz: I mean, for, for us and most software businesses, cloud software businesses, it’s going to be primarily that, right? So for, for us, it’s storing videos, encoding videos, the compute to encode them, bandwidth to deliver them, you know, running analytics, all of, all of that type of stuff. Um, so that was where there was a lot of what’s that
Andrew Warner: What’d you do to cut that?
Brendan Schwartz: you’re testing my memory I mean, some of, for example. Uh, you know, so many people had signed up for the cert. We were 10 years into the business. So many people had signed up for the service. We had a free plant, longstanding free plan, uploaded videos. We never cleared those out or deleted that or anyone who had canceled over those years, that’s just hosted for free forever.
Andrew Warner: Right, right.
Brendan Schwartz: that’s what I mean of low hanging fruit. And then when you have a team’s a little bit more oriented towards this, there are, you know. There are a bunch of small ways that you can build your service to, you know, save money or you care. Did you look at the encoding profile for, you know, how we’re encoding HD assets?
Maybe there’s like a better balance of like quality and, and uh, space there. The other thing that’s worth noting too is In addition to, we want it to grow the business, right? So cutting costs is helpful and important to the, and then that money went back into investing into the business to grow it. And one thing we definitely have come to understand and believe pretty deeply is profit and growth are not mutually exclusive, right?
Like Chris described a lot of the benefits of profit, but one big benefit that came from this buyback. Is getting everyone more oriented towards how the business works from a financial perspective, not just on where we spending the money, but how much does it cost to acquire a customer, how much customers pay was lifetime value, like all those SAS metrics we were, I don’t know if this is getting to, to D I’m sure other founders have struggled with this.
We were in a weird mode prior to this too, where there were questions internally in the company of, do we need to grow? Um, like, is making money good? Uh, is this a business? Like some of our own doing too, because we like overdid it at times on the creative aspect and we’re just like, don’t worry. It’s like, we’re barely a business.
Like we’re just having fun making cool videos. Right. And that’s, there’s a, there’s a piece of that. That’s good. Right. In terms of like expressing your creativity, taking some of these brand risks and doing that, but when that’s disconnected from the fundamentals of how the business operates, what customers actually want, that can get pretty.
troubling. Um, so I’d say that that orientation towards the commercial success of the business. Uh, and we actually we forgot to mention to when we did this, this buyback, it was like we sold. We had all the employees had options. So it’s like we sold the business. We also introduced a profit sharing program. So there was some incentive there to where folks could see as we make more money and as we as we’re able to trim costs and get more efficient. you know, that money goes back to the team.
Andrew Warner: You know what else seemed to have happened? A lot of the competition seemed to have gone away. That Vimeo was in, to some degree, over time, a competitor of yours, but then they decided to focus on a different type of market, right? Um, YouTube, I think for a long time it was, why would I go with Wistia when I could put it up on, when I could put it on YouTube?
It became a totally different experience. It’s just like you wouldn’t put a tick tock video on your site as like a video explaining what your product is. YouTube feels a little bit off that way too. I think, um, Vidyard for a while there seemed like a competitor, right? They were doing, uh, videos too. And they became more of more of like, how do I make a sales video for my customer type of business?
Right.
Chris Savage: And that’s also the longevity piece we’re talking about before is like, I think in our market, there’s always been this element of unlike email where you can just write something with texts, like video is intimidating to a lot of people. And so getting on camera could feel scary. And it inherently was like slowing it down.
I think that’s where we had a lot of competition that actually. Raise venture capital, you know, in 2010, 2011, 2012, and they, they hired big teams and tried to get sales going and they couldn’t, and it was kind of like, well, the market’s actually too early. And it’s not, it doesn’t talk to make sense, but because we had never done that, we didn’t have those like other incentives, we were actually able to be patient and continue to improve the product and figure out our marketing and different ways of getting to that customer base.
And then that’s really just compounded. And so I think that’s just like one of the things about. Our space, it’s been interesting that we really embraced because of having this long term approach to it.
Andrew Warner: What about this going forward? You’re right that it’s very intimidating to be on video. Even for me, I’ve been invited to conferences. I remember even running remote. They invited me to go speak at the conference. They got me an incredible room at Bali. I don’t think they flew me out because I happen to be in the neighborhood, but they would have.
All that, and they said, Andrew, can you please shoot a one minute video? And I just didn’t do it, because it wasn’t because I was… I don’t know, it was intimidating. What am I gonna say? How do I look at the camera? I hate doing it. Unless there’s somebody there talking with me, like we’re doing now, I can’t do it.
And so, I’m noticing, I just opened up CapCut on my desktop today, and they updated to something where all I have to do is type in some words, and then a video comes up. How much of that is going to be competition for you now, going forward?
Chris Savage: I think it’s, uh, it’s a really good question. I think that, I don’t really look at it as competition. Like, anything that’s increasing people’s confidence to create videos is gonna create more uses for video in more places. And like, that’s something that Wistia can help with. You know, the, one of the big changes the last, like four years has been expectations around video have shifted where, especially because of COVID.
Right. Like people assume today, if you want to learn about something. You can read it, you can listen, you can watch. And so, and we, as the audience is in control. So if you only want to watch stuff and you don’t get the option to watch, like whoever is trying to communicate with you is missing an opportunity.
So I just think there’s like massive, massive demand. And I mean, a lot of those AI tools are things that we’re looking at and adding into our platform. That’s the other piece of the puzzle. It’s like, it’s not even competition. It’s like, well. You can record in Wistia. We have like an example is, uh, we have AI highlights.
If you have long form video, we’ll like automatically transcribe the video for you, find interesting moments, help you take them and share them on social things like that we’ve announced, um, and coming at least, I don’t know when this episode is coming out, but I think it’s by next week we should have text based editing inside of Wistia.
And so that’s all, you know, using AI in the back to make that happen. And we’re, that’s the beautiful thing about this moment is like, as this revolution is occurring, there’s all these like little places we can do it that we think actually are going to help increase someone’s confidence that they can get on camera, right?
Like improving the sound, improving what it looks like, making it easier to edit all of those things. Hopefully that should be what causes folks to feel more comfortable making that one minute video, right? Is if you feel like you have tools you can use yourself. It’s very different than if you are looking at a nonlinear editor and you’re like, Oh my God, this, this is so intimidating.
Brendan Schwartz: Yeah, those it’s enabling technology to make more video, just like, you know, everybody having a smartphone in their pocket with a great camera. That was a huge boon to whiskey it to us, but also humanity and everyone making videos. So it’s kind of a, a more, a more is more like you’re calling it this AI script writing.
That’s. A really helpful technology versus staring at the blank page to start with something like previously, you’d have to have an agency. You have to have a writing partner. Where do I even find one of those? That’s going to help more people make better videos. And that is really exciting.
Andrew Warner: I guess I could hear one of the things I’m hearing from you is, look, if Andrew’s using CapCut to create a video, fantastic. He’s going to want to host it somewhere. And CapCut is a TikTok product, but I’m not going to host it on TikTok. I’ll come over to Wistia and put it up on the site. And the other thing is you’re saying, well, we’re also going to add a lot of this stuff into our product.
Text based editing is, it’s huge. I wish CapCut had it in there. It is so important because. You can’t scrub through an hour long video to edit what you need. You just want to, in Descript, I could just go in like a, like a Google doc and just look for the words. Do a find and then remove, or find and then edit it to, and move it to the beginning of the video if that’s what I want.
That’s huge.
Chris Savage: yeah, and I think that’s the perfect, like, we love Descript, Descript is a partner of ours, we have tons of videos that come into Wistia from Descript, and we’re, the reason we’re still adding the editing piece into Wistia is a lot of people want to be able to edit stuff in place where it already is published or it’s about to be published, and so it’s just interesting as like, I think as the creator, we all are going to have, So many options for how to help us make video more confidently.
And I think that’s, that’s really exciting because that’s something that’s like, would have been hard to dream of 10 years ago.
Andrew Warner: Okay, and so, your vision is, Wistia is going to be the platform you use to host your video on whatever other platform you’re using. So if it’s HubSpot, WordPress, whatever else, right?
Chris Savage: Yeah. And I think, I think the other piece of it is that we can help, like, we’re really focused on B2B and we’re really focused on marketers and B2B. And the reason is that You know, you’re still need to make creative stuff. You still need to connect with the human. We, and a lot of marketers are really busy and stressed and using tons of different tools.
And so the other part of it is like, let’s make it really easy for those folks to make, repurpose, edit, and host and publish the right stuff. Um, and they’re going to use all different sorts of tools, just like everybody, like everyone has their own stack and they. Pull different pieces together. We’re going to play well with everything, but we’re going to make it for those people who want that all in one, that it’s like really easy to have it all in one.
Andrew Warner: Did you, um, did you take money out of the business when you borrowed money to buy out your investors?
Chris Savage: A little bit. Um, that was actually helpful because it was a signal to the investors that it was like a fair price. So it was like, that was one of the pieces of advice we got. It was like, Hey, if you sell a little bit at this valuation, they’ll feel more comfortable that this is like.
Andrew Warner: Got it. So you were selling some of your equity in the business and then that gave you a little bit of, imagine, peace of mind to be able to buy a house, to
Chris Savage: Exactly. Um, yeah, but it’s also like, that’s, you know, relative to the value of the business, extremely small. And so it was very much like a, Hey, this is a signal to everybody. And the way that we make money is like growing the business and, and making the calls. Should we, you know, is it better to be more profitable and pull money out, or is it better to invest more back into the company?
And so it’s a conscious choice. And I think that’s, what’s been interesting about the last three years. It’s like, all right, we were quite profitable, but we saw this opportunity to expand, so it’s like, is it better to take the money out and then try to figure out what to do with it? Or is it better to like bet on yourselves and put it into the business and grow the business more?
And like that, our opinion has been the opportunity is there. And so that’s the better thing to do.
Andrew Warner: right, what’s a good investment that you’ve made?
Chris Savage: In the business?
Andrew Warner: Yeah, when you’re looking back and you’re saying, okay, we put some money in, it made me a little nervous, maybe kept me up at night, but it
Chris Savage: Oh, I mean, like basically since 2020 or in the last two years, we’ve doubled our products and engineering organization. So that was a huge investment and it’s meant that we’ve launched like three major new products the last 12 months and they’re all being used and we’re seeing like adoption go up every month.
So I look at that. I’m like, this is, this is incredible. Um, cause had we not made that investment, we would have more profit, but we wouldn’t be positioning ourselves as well for the longterm.
Andrew Warner: What happened to that loom competitor that you two,
Chris Savage: Oh, soapbox. Yes. So we made soapbox competitor loom. We made it as a separate product. And so it was like a Chrome extension. You could go in and record quickly your webcam and your screen simultaneously. It still exists. You can go see it’s in the Chrome store. Um, it’s continued to get a lot of usage, but we realized that like, it was probably one of the bigger mistakes we’ve made on the product side was making it a separate product.
Andrew Warner: Why?
Chris Savage: Because the expectations were, well, why doesn’t it have all the exact same Wistia analytics? Why does it have all the exact same access controls? Why does it have all these other,
Brendan Schwartz: I can’t embed it in my, on my site. Why?
Chris Savage: yeah.
Andrew Warner: Oh, you’re saying you should have made it its own product from the beginning so that people don’t expect it to have all
Chris Savage: no, we did make it its own product. But because it was from the Wistia brand, people still expected all those other things from Wistia.
Andrew Warner: Okay.
Chris Savage: so for a while, we tried to run it in parallel of like, alright, we’ll have Soapbox going with its own dedicated team. And we’ll have Wistia going with its own dedicated team.
And we’re, I mean, honestly, at the time we were like, Oh, look at us. We’re so great. Like, you know, we have multiple business lines. Like, this is what it feels like to run a business. It’s like you get your multiple lines and we’re allocating it. We’re capital allocators, all this dumb stuff that really was like.
Uh, we were making our lives much harder. So we actually pulled the new version of Soapbox is built into Wistia now. So you can record your webcam and your screen simultaneously. You can do that in Wistia. Um, and then
Andrew Warner: do it again, you would just say it’s going to be its own stand alone business,
Chris Savage: would have said, we would have said if we were doing it again, we would have just built into Wistia in the first place.
Andrew Warner: just another feature of Wistia.
Chris Savage: We would have branded it as a separate, more powerful thing. We would have just built it in directly. And the funny thing was people were not asking for it. And that’s why we made it separate, but we had a vision, Hey, this can be the fastest way to make something that feels really professional, that you’re like really confident in. And we were right about that. People continue to use it. They love it for that. But we, the thing we were wrong about is like, we should have, we should have reshaped what Wistia was with that as opposed to making it separate.
Andrew Warner: meaning make it into not just a video publishing platform, but also a video creation platform. And this is, this is how we’re going to show that we’re also into video
Chris Savage: And that’s what we’re doing now. So all these new things we’re talking about, they’re all like, they’re all seamlessly integrated. So like if you record with a whiskey record, well, you can edit instantly after and you can publish and say after, but you combine the things together is what’s interesting.
It’s like, oh, you have a webinar. You did your sales team can record it. You run it in whiskey. It shows up. You know, 60 seconds after the, the, the session is done, the marketer edits stuff out and now the sales rep can go record something with Wistia record and make a bumper on the front of it and send it out to their prospect, you know, 15 minutes after the webinar is over, that was not possible with it being separate products.
And there’s a lot of uses like that that start to happen when you make the product, I would say platform, like really seamless.
Andrew Warner: How do you keep it from being too confusing? Or hidden. I didn’t even know you did the webinar. I’m on your site and I don’t see the link to the webinar in the product menu. How do you keep it from being too confusing or too hidden?
Brendan Schwartz: I think that is a, is a big challenge with this approach. I think on the. Inside using the product, making it easy, that feels like something that’s pretty well within our control and something we have, feel like is a strength, has been a strength of Wistia since the beginning, just keeping it simple, making it really easy to use, but how, like, we, we’ve been around for a long time, like, we talked about a lot of the advantages of that, one challenging thing is, uh, people know us as video hosting, and we’re here, like, the big bet we’ve made in the last three years is, Adding live for webinars, adding record, adding edit takes a long time to shift market perception.
Like you said, you’ve known with, you know, is to you’re on the site. You’re like, what you do webinar, you do live. I can do this on here. I think that’s, that’s, it’s going to be, it’s going to be, that’s going to be a challenge. We haven’t figured that out yet. Or
Andrew Warner: Cause webinar is, you’re right, it’s a clear problem because just waiting for Zoom to render or whatever they call that thing to export, then you move it and you upload it on. Even this interview, I have to set a reminder an hour after this interview is done to grab it from Riverside because it’s not done processing on Riverside.
And I’m in the swing of things. I remember what I want to do. I’d love to
Chris Savage: this is like exactly what we’ve heard from folks is like, if it’s not done seamlessly for you, sometimes it takes an hour and sometimes people, it takes days, right? Like, Oh
Brendan Schwartz: you don’t come back. You never do it.
Chris Savage: Yeah. So I think it’s, it’s, it’s been interesting. The one thing I, the lesson I would share with other people is change your perception is hard, but the good news is if you are actually building something into your core, you get a pretty clear signal if people are using it or not, and so we’ve been able to release a lot of features.
Get close to the customers that are actually using it and be like, what is good about this? What is pad? How can we help you? How can we help save time? And so we’ve been able to make even though like we haven’t done a big push yet I would say to get people to know about whiskey alive, which is the webinar thing It’s gotten much much better where people who are using is like, oh this thing is like Night and day for what it was six months ago And so that’s kind of become the strategy is like release very fast, iterate, iterate, iterate, and then once you’re building confidence that you really have something great, then it’s much easier to push it out to the market.
Much more aggressively.
Andrew Warner: All right. Let me close out with this. This is just selfish. I got to ask you. You like my setup finally after years of having nothing but a white background behind me and like a shadow on my face I set this office up so that I could have multiple setups. I’ve got this beautiful desk that’s on wheels. I would like to be able to have that backdrop sometimes, right?
Which is this gray door. And then, and at the same time, I want to have this where I come in and you see just the bookcase with my, the book that I wrote behind me, that whole setup is amazing. And then I also have the window and all that. What the, what do I do? So that the camera shows just that wall instead of having it look, you see how it looks like the, like, like the walls are angling towards the back wall.
That looks beautiful. Isn’t it a great, a great backdrop over here.
Chris Savage: What you’re saying, how do you change the camera so that you get like, uh,
Andrew Warner: Is there a lens I need to use so that you don’t see those two sidewalls?
Chris Savage: you could punch in in this view. So you could like, you could have a lens that is zooming in more and is like, it’s going to be tighter on you and the microphone, but just like hide the other rest of the
Andrew Warner: And then do I have to be so far up to the wall that my back is touching the wall? No.
Chris Savage: No.
Brendan Schwartz: where you are, probably. How
Andrew Warner: It’s just a matter of picking the right lens.
Chris Savage: I think so.
Andrew Warner: Okay. Alright. Is there a lens that you, do you know lenses enough to, to tell
Chris Savage: Uh, not offhand right now, but we can absolutely have you chat with our team. I mean, I think they would love to see your, your three way setup. They could, they would find it inspiring. And, um,
Brendan Schwartz: Maybe you should be on Fix My Setup.
Andrew Warner: Well, I’m in Austin. I don’t think you guys, I’d love, first of all, I’d love to be on. I’d love to talk to you people in private. I feel like a nice setup changes the whole experience for, for
Chris Savage: Well, we’re coming to Austin. We’re coming to Austin, October. So maybe we’ll see you then.
Andrew Warner: hell yeah. Thank you. All right. Gentlemen, thanks so much for being on. Congratulations on doing so well.
I had no idea about a lot of things and I’ve been following you and it’s good to see what you’re doing.
Chris Savage: Thanks, Andrew.
Brendan Schwartz: Great to see you again.
