Andrew: Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. I did this because I’m fascinated by companies that endure. In fact, if you go to the about page on Mixergy I say that my goal is to study how businesses can leave a legacy. The truth is though that most software companies don’t really end up leaving a legacy. I think Steve Jobs had this statement about how software that was created just years ago is basically garbage right now, and the same goes for hardware and a lot of the products that we make go away but also the companies that we make go away.
Which is why I was fascinated when I found out that ActiveCampaign was not just still around but growing and getting better and better. And I’ve got to know them better over the years partially because they’re a sponsor and partially because people who I interview and talk to in the space use their software.
And I remember ActiveCampaign. I’ve been in the Internet now for over a decade, well, over a decade. This is a company that was around back when there were so many other email marketing software and most of them went away, and the ones that survived kind of got fat and happy and did not improve their software, and here ActiveCampaign without me knowing it, without many of us noticing, it just kept getting better and better doing smart email automation, getting easier to use and growing as a business.
And so I’ve tried for months and months and months to get the founder on here to do an interview. And you would think that because they’re our sponsor that, yeah, it would be like a second, a no-brainer, let’s do it. But it took us a little while to get this interview to happen and I’m excited to have the founder on here to talk about how he built this business starting with basically $5,000.
Jason VandeBoom is the founder of ActiveCampaign. I was going to say something about how ActiveCampaign will let you send out smart email, how it lets you automate your interaction with people. Here’s the phrase that he gave me, “ActiveCampaign does customer experience optimization.” I want to find out why that’s the phrase that he would use to describe his company, and I want to find out how he grew it, how he stayed relevant, how he kept evolving it, what happened when he killed this product that he had a while back that was so successful and shifted to something brand new. And I’ve got screenshots to ask him about here in the interview.
And this whole thing is thanks to two great sponsors. The first will help you hire your next great developer, it’s called Toptal, and the second is a company that I use when I want a lot of great design options and just want to pay for the best, it’s called DesignCrowd, but I’ll tell you more about those later. Jason, welcome.
Jason: Thanks for having me. I’m looking forward to it.
Andrew: Were you ducking me or were you just busy?
Jason: No. Purely just busy.
Andrew: Just busy.
Jason: Actually, yeah. And I really appreciate all the work you’ve done over the years as well. You know, really great information that needs to make it out there, so . . .
Andrew: You . . . Actually, I’m curious if you could tell me what kind of revenues are you guys doing right now?
Jason: In the ballpark of about $40 million. There are . . .
Andrew: $40 million in revenue.
Jason: Yeah, yeah.
Andrew: You were profitable for a long time. Are you guys profitable now?
Jason: So we are cash flow positive from 2003 through now.
Andrew: Really?
Jason: Yeah, so that’s a . . .
Andrew: So why did you take on funding? This is the thing that blew my mind. You are a guy who started out as basically a kid with very little money, created all this software. Why did you take money?
Jason: So really no real need for the capital, really no desire to deploy like, you know, 50% of it on sales and marketing like a lot of companies would do. But it’s more about complete optimal timing, which I’m a huge believer in sort of optimal timing and optimal speed in which you can do things. So like in the case of funding it’s really simple and clear. Optimal timing of being to pick who you want to work with, the terms you want at basically something that you can kind of craft and control versus, let’s say, you continue to grow, you do want to take funding at some point, and then you’re just running the risk of not having as many controls of that situation.
Andrew: So you had a place where you could get the terms that you wanted and so you went for it.
Jason: Yeah, and with a very small minority so that we’re not sort of boxing ourselves into some sort of situation, right?
Andrew: And this was roughly around the time that you guys started sponsoring Mixergy, 2016 is when you guys took on funding.
Jason: Yeah, yeah.
Andrew: Is that also because you figured out your marketing and if you put more money into it, you knew that you were going to make it back?
Jason: No. You would think so though because that’s one of the classic reasons, right?
Andrew: Did you have to raise $20 million to buy ads on Mixergy, is what I’m trying to ask? No.
Jason: It was very expensive, but the return on that was like 40, so . . . But, yeah. You know, it really came down to we knew we wanted to take some more risk and advancements on the product side. And that’s where we’ve always leaned as a company, really having this product focused. I come back from a background of both development and design and a really strong focus on sort of the strategy behind product.
While we don’t need capital and it’s actually really hard to deploy capital for that if you’re not taking into account like acquisitions or something which I think are rarely if ever are truly a great success. But it allows you to take a little bit more risk and remain comfortable and not get into a situation where perhaps you end up starting to even burn a little bit of capital, and then you start thinking about maybe a raise capital but then your situation is a little bit different on paper, you know, still people would be plenty interested, but you don’t have as much power to sort of influence what the end result is.
Andrew: Okay. For 13 years you’re bootstrapped roughly. You started out as an art school student, and then at what point did you come up with this idea for an online business?
Jason: Yes, so a couple months into art school. So basically I was doing consulting in some form or another for many years prior.
Andrew: Web design consulting?
Jason: Yeah, web design, I was doing visual design consulting, some interactive learnings. A little bit of everything. All of it ended up involving some sort of coding in the end.
Andrew: How did you learn to code? That’s a part that I keep hearing about your art school background. I don’t understand where you learned to code.
Jason: Yeah. So I was just really a combination of bored and interested in the topic, I guess, as a child. So the minute I convinced my parents to actually buy a computer, that’s when it started, but it was very self-taught. So like this is back in the day like there are some resources online, things like that, but it’s just like sort of playing around with things. I remember like one of the first sites that I was just playing around with a bunch of different like scripting technologies and whatnot, I had to buy a subdomain hosting. Like it was the craziest thing. You paid in this place like a couple hundred bucks a year and you get a subdomain of their domain and build a . . .
Andrew: To put like something.vandeboom.com?
Jason: Oh no, something.that company. So this is even like not even having a true domain name. So it just kind of goes back to the days of like where PHP was PHP3 and Perl was a little bit more popular at the time. But knowing I can create something and I can create something that can reproduce value over time, that’s always what the interest was.
Andrew: So you’d read these books on your own and you’d learn how to code by yourself?
Jason: Yeah, essentially.
Andrew: Okay. I see your old portfolio. I mean, even as a kid . . . How old were you in like ’97 because I see your portfolio from ’97? It’s really intense.
Jason: Is it?
Andrew: You’ve got like the Wisconsin Association of Criminal Defense Lawyers website on there?
Jason: Yeah. That’s . . . So in ’97, 13 or so, and, you know . . .
Andrew: Okay. And you’re figuring out things for them, like how do I put a contact form on their website? And that’s informing what your knowledge of what businesses need.
Jason: Yeah, and so initially I found there was a real disconnect between customer communication and these small businesses. So at the time Lyris was a popular option on the mailing list management side on-prem software, and they didn’t need Lyris but they needed something.
Andrew: Wait. Lyris was the thing I was going to bring them up in the intro because I remember them as the software that people would use to send out email, right?
Jason: Yeah.
Andrew: So you’re saying businesses would sign up for this but they wouldn’t need something like Lyris, why not?
Jason: Well, true SMB and that’s something I’m really passionate about is like getting into like the actual like what SMB means to myself versus . . .
Andrew: SMB, Small Medium-sized Business.
Jason: Yeah, but a lot of people . . .
Andrew: The Fortune 5 million as it’s been called.
Jason: Yeah, but a lot of people take SMB and then they start categorizing SMB as everything over like 10,000 or 20,000 ACV and that’s not . . .
Andrew: What’s ACV mean?
Jason: Like, Annual Contract Value. So you’re talking about a price point . . . Like HubSpot is an example of that. A wildly successful company, SMB focused on paper, but up until recently before the premium offerings, price point is basically pricing out a lot of the S of SMB. That’s an area of the market that I really just care a lot about, in addition to I think there’s just a giant opportunity there because similar to back then with Lyris, it was not something that a true like really, really small business would pick up and install. It just didn’t make sense economically or otherwise.
Andrew: Okay. And so you saw this and you said, “I think I could start creating my own tools.” What’s the first . . . And I’ve got a list of things like Knowledge Builder, an old frequently asked questions site. Calendar Now, one to all broadcast email. What’s the first of all these that you created?
Jason: So the mailing list manager product which was . . . It was at times called different things, like one time it was called ActiveCampaign Mailing . . . It was called ActiveCampaign Email Marketing. We went through a few iterations over and over because as I said . . .
Andrew: That explains it, because I did keep seeing different things and it was all housed by ActiveCampaign, the website, at the time.
Jason: Yes.
Andrew: Okay:
Jason: And then we ultimately sort of simplified everything and just focused in on one thing which was a very interesting and experience in of itself, but . . .
Andrew: So what was different about your product? So email was the first product. What was different about your product from what was out there already at the time?
Jason: Honestly, it was pricing was a big component at that time because the ability to get in something Lyris or whatnot was just simply more. Also just the simplicity of it, it didn’t try to do more than what our base was looking to do.
Andrew: But they couldn’t run it on like a Windows desktop, right?
Jason: No, they couldn’t do that. But we made it . . .
Andrew: That means they would still need to hire someone to do it for them, wouldn’t they?
Jason: Well, the average user actually did not hire anyone. So . . .
Andrew: They would do it themselves.
Jason: They would do it themselves. So they would do it on like shared hosting or something like that or spend up a single, you know, dedicated . . . But it was something that they managed to themselves which was a blessing and a curse in a way. So we made it so simple to install and whatnot, but if there was ever a technical issue, if you were to refer to them and say like, “Let’s bring your system and your server administrator into play,” it’s them, right? So we had to really solve around just about all these unknown configurations and all these different servers and shared hosting platforms and try to get something to consistently run stably for all these different platforms.
Andrew: Okay. And then you started adding a bunch of other software.
Jason: Yeah.
Andrew: I’m wondering, why? Things like as I mentioned some of them before, one of my favorites was this software that made any form into like Microsoft Word’s type styling, so as people could bold any form on their site or add the feature of bolding, italic, etc.
Jason: And it’s a laughable thing now, right? Because you have like CK, [Tiny 00:12:02], you have all of these like wonderful platforms. Back then, it was actually a little bit more of a . . . It was a challenge people were trying to solve. So that one was actually to get a little bit into the development community and to provide something, which also helps build awareness of our products because especially early on, like if we could get a developer, if we could get a marketing agency or whatnot to buy into sort of our way of doing things, that’s great because they solve some of the complexities I was talking about of having like a small business owner try to deploy the software.
Andrew: Okay. What I’m trying to get at is, what was the . . .
Jason: Why build all these different products?
Andrew: Yeah. It seems like maybe you saw an opportunity and you said, “I can code it and I’ll put it up on my website and sell it.”
Jason: Yeah. A slight opportunity, but I’d actually say the whole business at the start was a little bit less opportunistic and it was more . . . We were just trying to solve for ourselves, like we needed to have help content, so what did we do? We built something. We need to have a helpdesk, so what did we do? We built that because I wasn’t happy with any of the solutions that existed at the time.
Andrew: So you built for yourself, for your clients, and then for vandeboom.com clients, and then you said, “I’ll also turn this software into something that I sell.”
Jason: Yes.
Andrew: You know what? And I was looking at how you sold. It seems like you at the time leaned heavily on affiliate programs and all your products seem to have affiliate programs from the start and also on what we might call viral marketing right now, but is just a natural branding where your websites might link back to your site and say designed by Jason VandeBoom. Am I right?
Jason: Yeah. So I’d say on the affiliate side it was always a component I really find it to be a useful part of the partner program, but it was never a percentage that would make you think that this is the main driver. So like I’m talking about like never probably even eclipsing like 15%, 20% influence on new sign ups.
Andrew: Okay. It was just an easy thing to add but not a huge windfall.
Jason: Yeah. In a sense then like we’ve gotten a little bit better of how we sort of like run partner programs and whatnot and it’s a huge opportunity, but it was a lot of that combination of viral from like always, you know, starting to link back before those like common practice to sort of have that powered buy and whatnot. But then also it was just overemphasizing like on the simple things like the onboarding of our users, the simple things of support and sales. There were always such soft things to talk about like, “Our support is great and that’s a differentiator.” That’s usually what someone says when they have nothing else to differentiate on.
But I would say that it is actually the reason why we had this sort of like organic sort of viral thing going on, we were not doing paid acquisition, we couldn’t afford to do it, so it was really we were relying on people to actually see value, tell other people naturally and not even under the context of, “We’ll give you a percent of revenue,” and then just have it sort of snowball from there.
Andrew: One thing just caught my eye. I can’t believe I didn’t catch it before. The website from 2003 says, “To order by mail, send a check or money order to . . . ” and then there’s an address there.
Jason: I have a wonderful purchase order, those faxed over from a Fortune 500 for Knowledge Builder and I’ve got it at the office now. Some of the things and ways they would send payments and the use of fax and things like that.
Andrew: And you keep it there for pride that you sold a Fortune 500 company back then?
Jason: Yeah, but that we did not go to them, they came to us. And that goes back to my focus on SMB, like I’m not going to use SMB and then push mid-market and kick SMB to the curb like so many other companies have, because I think we can truly make SMBs both successful and also profitable for our business so that we can continue to serve that market.
Andrew: You know what? Your video just froze. Let me hang up and call you right back and it’ll pieces together.
Jason: Okay. All right.
Andrew: Okay. Was there anything though that worked for you actively to get customers? So far what I’m hearing is that affiliate programs were fairly small and people talked about you and that got you customers. But you were an active person, what did you do to try to promote your business that worked at the beginning?
Jason: Yeah. So going back to like marketing firms and things like that trying to get in there, so it’s not necessarily the affiliate model but at some form of like a reseller model or more of that consultant approach. I’ve actually seen more success with that for our business than just like more of the strictly traditional affiliate.
Andrew: And in the old days, it was you calling up these firms saying, “You have clients that need this software. I will give you the ability to resell it?”
Jason: Not too much of actually calling people. So everyone just sort of came to us. So maybe this is sort of unfair in the way that it was seemingly somewhat easy because we had a lot of people coming to us just from the sort of . . . I think we just struck a nerve and there was just a need out there. But then from there, I was the one like on the call trying to get a marketing company to use us over whatever they’re currently using or whatever they’re looking at alternatively.
Andrew: I see. Once they hit that contact sales link that would go to you and you were the person trying to persuade them.
Jason: Yeah.
Andrew: I see. And I saw that you had like 10 packs of your software, but a company would just need one piece of software to send out email for their whole company. The 10-pack was for resellers?
Jason: Yeah. Resellers, so those usually like maybe it’s a freelancer that has a couple of customers. Yeah. And we don’t solve . . .
Andrew: You weren’t even getting on a huge discount for it. So a 10-pack . . .
Jason: But was priced fairly low.
Andrew: It was priced low. It was $85. Do you remember what Lyris used to charge at the time?
Jason: More than $85 at the time.
Andrew: Hundreds?
Jason: Yeah, yeah.
Andrew: And you came in on the cheap solution. All right. And you kept building up this software. What came next? Was it paring it down to one or was it starting to get into SaaS?
Jason: So I think it was a little bit of both. Obviously, we had quite a few products like secondary products at one point actively selling, small teams, so we’re talking like eight people. Eight people, eight products, that doesn’t really work very well. So we wanted to focus in, but we also started realizing some obvious things about the benefits of recurring revenue because some of our products we were able to license them in somewhat of a reoccurring way, so that was really appealing as well.
But the biggest driver was, we’re trying to improve the customer experience for all these SMBs and their customers, but our experience was just so poor in the way that you had all these points of friction of downloading something, installing it, being to deploy and iterate quickly on the platform was also hard. We had to package it up, like a traditional like shrink wrap software almost, and have these like releases and it’s always a big thing, you have a release, everyone tries to update. So switching over to SaaS just we knew it made sense, we knew it would never be like the ideal moment. We would never be like, “This is the day we want to like potentially upset our entire base and, you know, completely change how we make money.” But at the end of the day we had to just say that one day. And we had some knowledge and whatnot but we just had to take that chance.
Andrew: All right. I see something here that helps explain how you made that transition. I’m going to come back in a moment and talk about it. First, I’ve got to tell you about DesignCrowd. You have some experience with DesignCrowd but I don’t know that you’ve ever used them. Let me tell you what I use them for. I needed a new cover art for my podcast and I have a designer who I love, Jose’s fantastic, he’s been working on some other projects for us, so you don’t really see his work on Mixergy, but he’s doing beautiful work, work that convert. And I still didn’t go to him. And the reason I didn’t go to him was, I had this sense of what I wanted but I wasn’t really sure and I didn’t want him to give me one. I wanted a little more creative options.
So one Friday night, I was sitting there with whiskey, my wife went out, I was watching the kids who were basically asleep, and once they’re asleep, I could have a little whiskey and just relax, listening to music. I said, “Let’s try DesignCrowd.” So I go to DesignCrowd and I thought I didn’t know what to say because I don’t know how to describe what I’m looking for, this color blue, this feel, I don’t know.
But they had two questions and it turns out I knew how to answer those questions. I wanted my face on the cover art, and the reason I did I’ll be honest with you, I saw all the most successful podcasts had the person’s face on the cover art. So I said, “All right. I want that.” And I wanted the color green because that was the number one business podcast color. They were the only ones who were green. It wasn’t number one, it was Planet Money by NPR.
So I said, “Great. Here’s what I want. And I don’t need Mixergy on there. Make Mixergy really small. No one’s going to see Mixergy on there and go, “Yeah, I got to sign up for Mixergy.” They’ll know it once startup stories on there.” So I did that, and I forgot about it, I went on to watch Netflix or something. Monday I come into my email with assistant, we go through try to get the inbox zero, I see that I have dozens of design options. Oh, holy smokes.
So I go over to DesignCrowd and I start to see all these different designs and I give some people ratings. I say, “No, I don’t like that. I specifically told you to do this. I don’t like that you put Mixergy so big. I do love that you did that.” And one guy comes in with yellow, my photo clearly laid out, startup stories clearly laid out, and yellow and I go, “Actually, yellow is not what I was going for but it really stands out well. Look at what he . . . ” And so I gave him some feedback, he adjusted and I ended up buying his thing for like a little over $100. Nothing, peanuts. Less than I would pay Jose as much as I love Jose. Jose I think would charge that for an hour minimum.
All right. So anyone out there who wants to do this kind of experience needs to go to designcrowd.com/mixergy. When you do, you’re going to see what my final design looked like and all the other designs that I had along the way. You’re going to get $100 discount for signing up. But all of this stuff really pales in comparison to the experience of saying, “I have something in my head. I don’t really know how to do it. What I’m looking for,” and then seeing lots of options and picking the one that you love, you can refine it if you want, and only paying for the one that you love. And frankly if you don’t love it, they have a money back guarantee.
So many people have been signing up and these guys keep buying more and more ads from us. You’re going to hear more from them for 2018. But I really want you to go and check out what they did for me to see what they could do for you. And seeing is believing by going to designcrowd.com/mixergy, designcrowd.com/mixergy.
All right. Here’s what I see in front of me. The way that you got recurring revenue seems to be you were selling software, but you were also doing upsell of support. So three months of support came for free, but if I wanted 12 months I could pay $162. If I wanted 24, I would pay $320. So you got that.
There was also a period there where you had one foot in each camp, where I’m looking at your pricing page. I love you your company for your design simplicity. You’re one of the easiest pieces of software to use. You have way more pricing options than I could ever describe here. There is monthly plan and unlimited email, or choose pay as you go email, each one of them has its own price and table, then there’s a button to go to download options, then I have to decide how many admins I want.
And then you’re on the software, and I can see why you want to get out of software. You tell people specifically on the downloadable software version of the sales page, “Be aware. You need an administrator to manage this and you need your own web server, underlining web server, and an administrator user is . . . ” and then you describe what they are. It’s like wow wee. This was like a period . . . Talk to me about this. I feel like you knew where you wanted to go but you couldn’t bring yourself to fully go there yet.
Jason: So yeah. That’s exactly it. We knew where we wanted to go. We needed to take steps there versus just a quick switchover. So we’re talking about, you know, we have a good amount of built-up revenue from the perpetual software. If we had funding and if we had a bunch of cash in the bank, we could switch it over and make that transition really fast. But if we also did that, then it would cause some disturbances with our customers. And we actually wanted to make sure that we’re really supporting and sort of getting them to buy into the idea that this is actually better for them.
So there is this period of time where, one, we’re trying to get that like start highlighting the SaaS model a little bit, start to downplay the other one. But then we’re also trying to figure out what’s pricing for the SaaS model. So that’s what you’re talking about where we have all these different sort of options. So we lean on a couple of different things that like marketing providers we’re using, we’re trying to come up with some of our own ways. But it provided for a very complex pricing page for a period of time. I’d like to think we’re back to a little bit simpler of those now.
Andrew: You are. It’s much, much clearer now. I see. So it wasn’t that you thought this was the best way, it’s that you didn’t know what the best way to price this was.
Jason: Yeah. And we needed to have both for a period of time.
Andrew: I read some interviews that you did because you’re Chicago startup by the way, or you were a startup from Chicago. You got a lot of articles written about you by people from Chicago who just admire that you’re able to do this and it was like, if he could do this we could do it here too. I read a lot of interviews with you where people asked you about the pricing change. And for you, part of the risk was, you had at the time over a million dollars in revenue, right? And that’s what you were giving up?
Jason: Yeah.
Andrew: And you told our producer, “You know what? It was saying goodbye to all that and instead go into $9 a month plan and that was the big risk.”
Jason: Yeah. Because even during the perpetual days, like a problem with that is every month you don’t know exactly what you’re going to make. It’s like constantly trying to sell new licenses and contracts. It at least had some form of stability that was higher than $9 on average. So right there at the end we were doing license deals that are what 50,000 plus. So some nice sizable things for the size of the business we were. But yeah, switching to $9 a month takes a lot of time for that to sort of like slowly organically grow. So you have to really be . . .
Andrew: Fifty thousand is for this downloadable software you’re saying?
Jason: Yeah, yeah.
Andrew: Oh I see. So you would have customers who are doing 50,000 and then you go down to $9?
Jason: Yeah, yeah.
Andrew: You know, my dad was in the clothing, the wholesale clothing business, and he would sell thousands, tens of thousands of dollars’ worth of clothing all at once. Then he went into retail, and like you, he would have to sell $9 shirts, and the idea of like it’s a whole other sale cycles, it’s a whole of the sense of self-worth because people buy you and they buy what you’re selling to quote an old HBO movie, and that’s really tough on him.
Jason: Yeah. And so we’re also going from a business that was entirely cash upfront to pay by month, right? So even if the value of over the course of a year is greater than $9, it’s still not a lot in the end compared to what it used to be with perpetual, but we also have to wait in increments to get it, so all the more reason why we had to have this sort of gradual and sort of calculated switchover collaborating . . .
Andrew: Does your revenue at any point go down because of the transition?
Jason: No.
Andrew: It didn’t.
Jason: It actually only went up and profitability went up.
Andrew: Okay.
Jason: But it was not the most fun I’ve had. It wasn’t the greatest experience.
Andrew: Why?
Jason: Because it’s hard. You’re building something, you’re seeing something grow quickly on one side, but if you look at like the top line of everything, it’s growing but not nearly as much, so you feel like everything is working here, you’re putting in so much work on making this happen, and you’re not seeing the results necessarily because you’re depleting the one revenue source while you replace it. It’s just a very frustrating thing.
And then also it’s, I actually just really care that people wanted and understood the switch, so education on the user base and from a marketing perspective, that was a very challenging thing to sort of basically educate people on like your time is worth money. So while with a perpetual product, everyone had that idea and sense that it’s going to save me money because I pay once, but you spend like an hour here, an hour there, and guess what? You’re actually like really valuable, like I don’t care if it’s like a business of like one or two people, you’re even more valuable of that.
So like the idea of like offsetting that by like $9 or $29 a month, is monstrous, but it’s hard for a lot of people to, especially SMBs, to sort of like be able to kind of distribute work and really value their own time. So I think I got really good at that pitch of valuing your own time during that period, but it was a lot of work from the education side of things.
Andrew: I see that you were growing and shifting. I don’t see the break from lots of products to one that also is a gradual paring down, is that right?
Jason: A little bit, yeah. So it wasn’t like all on one day where like one product also going back to it needed to be done in a way where we weren’t leaving anyone just like stranded, right? So we just sort of picked what made sense and just slowly, but the overall game plan was to sort of consolidate and really focusing on something to do that, well, versus be so spread out.
Andrew: And at the time you had eight people in your team. Did the eight people on our team knew, “We’re going to get rid of some of this software, the software that you love, that we’re selling, that we’re supporting. We are going to get rid of it all and come down to one clear product that we sell?”
Jason: Essentially, yeah. And probably it wasn’t that clean day one, like they didn’t know. Like, you know, we were all sort of figuring that out and determining what can we take from some of these products, and does it make sense to take any of the technology from some of these products and bring them in under a single umbrella? Right? So we were all making those decisions together. But that’s tough too because people spent a lot of time developing those, right? So they’re very attached to sort of that. So but really highlighting sort of where we’re going and just kind of the benefits of that, like just being able to control the customer experience, just really, you know, it wasn’t a very challenging thing internally of itself.
Andrew: It also feels like you’re failing by closing up some products, or if this makes sense, why aren’t we doing it right now? Why should I waste my time on products that you, the founder, don’t care about? Did you have that?
Jason: No, not so much. But I think that also came from like I was actually doing a lot of support and development still, so I was doing the same thing as they were essentially in that regard, and the commitment to like even if we sunset a product we’re going to support it like to someone’s contract length and then probably a little bit after that, like we’re not going to just, that’s just our actually putting like a customer success beforehand, which is like a really kind of cheesy thing, like printed, but that’s how we’ve always sort of operated. So I think it was a little bit easier for people to sort of have that understanding. And they actually cared about the customers too because even developers were doing a lot of like frontline support and whatnot, so they saw these SMBs using the product relying on it. Nobody wanted to be like jerk that was like, “Let’s hurt a bunch of people, you know.”
Andrew: You know what? I just saw in my notes here that my producer said that one of the ways that you got your early customers was going to online directories. These are the old listings of top email software, you know, that kind of thing.
Jason: Yeah. Stuff like that. Yeah.
Andrew: What else?
Jason: Earlier on in the perpetual day is like Hot Scripts things like.
Andrew: Like what?
Jason: Hot Scripts and PHP scripts and stuff like that dot com.
Andrew: Where you created the script and you give it?
Jason: No.
Andrew: How did that work?
Jason: It was mostly like a directory transformed over time but it was like popular in like the early 2000s and it was mostly like Perl software and then switch to PHP and whatnot. But then as we started getting more into a SaaS focus, I’d say the reliance on things like that and directories started to diminish a bit. What was nice is during all this time and during all this build up, we had a lot of content built up, we had a lot of back links and things like that. So we actually had a really solid like activecampaign.com in terms of organic traffic sometimes for somewhat unrelated things, like we’re talking about survey practices and things like that.
But the fact that all of our products we built had something to do with the customer experience, something to do with dealing with your customers and helping them have a better experience, all sort of kind of fed in to like there would probably need ActiveCampaign as it is now. So that traffic it only took like a decade or so to build out from a content strategy really helped out.
Andrew: I know that AWeber was really good about going to the online marketers, giving them an affiliate payout that made sense, and then they would start writing articles about them. Like Yaro Starak, right? He had a huge following in the online digital marketing space, he would do opposing, use AWeber to link over. You guys didn’t have that, but I still saw articles about you in different email. There used to be sites dedicated to email marketing fewer than there are now it seems, at least from what I saw this morning. What did you do to get the word out, if not that, to get people to write about you?
Jason: Yeah. So it’s really comes down to actually sort of not having that be the focus. So starting from the other side of product first, which is easy to say but really hard to do, and sort of identifying ways in which we can show how we’re contributing value and whatnot. From there, people were so passionate because there was this like void especially as we started getting into marketing automation, but then even care about necessarily money from our referral. It was more . . . They knew if they were going to spread this information about what it can do to a business that their thought leadership increases from that because those people that read it will see that impact.
Andrew: But did you reach out to them and say, “Hey, we exist here. We have this market and marketing automation feature?”
Jason: No.
Andrew: No. They just knew about it?
Jason: Yeah.
Andrew: Because it’s their job. You know what? I didn’t know that you guys did marketing automation. So because you were around for so long, in my mind you were one of these email companies that I could upload my list to and I could send out messages, everyone would get the same message. At what point did you guys add marketing automation which would allow me to do things like, if somebody clicked the link that was geared towards one topic, I could then fire off a following email to them and based on that topic?
Jason: So this is actually really interesting because even in the perpetual days, we had like the early feature set of the marketing automation platform. We didn’t brand it that way and we didn’t highlight those features properly. But right when we switched over to SaaS, I had this moment where, so we made this large change as a business, but at the same time I don’t want anyone basically saying what you’re saying and that we’re an email marketing company.
It doesn’t really follow sort of the values and sort of thought process in which I think about how messaging should be done. And we already have the feature set for like how do you do it based on triggers and actions and things like that to a certain capacity. So how do we highlight that, make it so that people think about less messaging, more personalized, and then also going beyond messaging and just more of this orchestration of events and blending human and automation touch together.
Andrew: What do you mean by that? I saw you say . . . Actually, you told our producer, “Hey, the one thing you guys didn’t ask me about is this, this blending of people think that software is where it’s at and it’s all about automating everything, but we believe in bringing humans in.” What do you mean by that?
Jason: So I feel like, you know, we made these progressions. We’ve gone from this like email marketing and send everything to one person or send everything the same to everyone, right? And then we sort of progressed into marketing automation as more of the category out there. And you get someone on marketing automation platform, the first thing they’re going to try to do is automate everything. I believe that does a huge disservice to the actual end user that’s receiving something and it actually impacts SMB that’s using the platform.
So enabling people to orchestrate events that could be, maybe it’s getting sales team involved, maybe it’s notifications. It can be simple things like that. Or maybe it’s like telling salesforce something or having customer success team to know about something and doing a personalized reach out. I think the worst thing a business could do is really take a marketing automation platform, automation platform of any form and just automate, because once you start automating and thinking automation first and that’s going to solve something, you’re starting to manage an experience instead of actually optimizing an experience.
Because, you know, the thing about calling the phone company or something like that, you get the big phone menu. It’s not exactly always the best experience. It’s done to manage sort of how everything’s routed and whatnot, but it’s a simple example of like how you can sort of over-automate before you need to. I think the market still right now and market automation is a little heavy on the automation piece, and we’re an automation company. The human side of it is could not be more important.
Andrew: I’m imagining something like, if the software sees that a customer hits support link 50 times in two days, then maybe customer support person might want to reach out to the client and say, “I want to check in to see if you need a little bit help.” That’s the kind of thing that you’re thinking we need to add as opposed to saying, “Hey look, the automation is working. Every time they click the link, they get support pages.”
Jason: Yes.
Andrew: But at what point did you add the marketing automation piece, the part that allows me to identify who is clicking on what and then target them with follow-up messages? Was that back in the downloadable software days?
Jason: Some of it was there, it was just hidden. So like you could take actions based on like when someone clicks a link for instance, but I’d say 2013 or so is when we really started highlighting it with our workflow builder which was rather unique at the time.
Andrew: What’s a workflow builder?
Jason: So think about just like a flowchart of sorts. So you see some [inaudible 00:38:15] . . .
Andrew: Sorry, wait. I think about what?
Jason: You see a . . . Like you have a trigger happen . . .
Andrew: I just lost your audio. Let me call you right back.
Jason: Okay. Sorry.
Andrew: Oh wait. There it is. Tell me, what’s the workflow building?
Jason: Okay. So you have a trigger and from there it just sort of shows a flowchart of actions that can occur, right? So nothing like revolutionary by any means, but before this, all marketing automation platforms for the most part had this drag something in, connect a bunch of lines and connect things together. Usually, for whatever reason going in a horizontal mode. So we took a really sort of refreshing way of looking at it and technically it was actually a little bit less flexible in the way of like we just put things where we thought they should go, but people really were drawn to that. Now you see like everyone is sort of gone to that mode, Pardot, HubSpot, and others are all going in the sort of automation workflow builder that’s just this top-down and more simplistic approach.
Andrew: The flow chart. The flow chart, it’s an overly simplistic way of explaining it, but it’s . . . Because there’s an item on the flow chart for a form that somebody fills out. If they fill out saying, “I want this type of messaging,” then there’s a line that goes to another box that says, “Send them this type of message,” and then if they say they want a different type of messaging, there’s a line that goes to another box. That visual representation was revolutionary, I feel, when it came out. Who came out with it first? Was it Infusionsoft?
Jason: I would say they must have been one of the first ones, at least especially in the category of like SMB, but that was interesting there, was this like you have to drag something and always starting with a sort of like blank slates, you don’t have too many ideas on what to do, which is why I think they had such a heavy consultant crowd. And then you drag lines, but they left it up to you where you put everything. So human nature is like . . .
Andrew: And you said, “I’m not going to give you a blank form that you have to drag these boxes into and figure out how to connect the boxes. I’m going to do what instead?”
Jason: Two things. If you want to start blank and you advanced, great, but otherwise we’re going to provide a bunch of different workflow ideas that allow you to start. And then when you choose one of those, we’re going to guide you through all the different areas we think you should tailor. So that was a huge hit, but then also we’re not going to let you drag everything wherever you want it and we’re not making you do like lines from one action to another if it’s not necessary.
So we force the sort of top-down approach where everything is just sort of popped into place, you couldn’t really move them around, but we then looked at like, what is the workflow of Infusionsoft look like over time, and it just like gets a little crazy. And then what can it look like when we sort of structure it for our people? So I think that really helps in terms of just like the user friendliness and getting true SMBs to sort of be able to do this themselves. And that was a common thing from Infusionsoft users saying like, “I used to spend a bunch of time or I used to have like a consultant do this all for me. I just did it for myself in an hour and I’m calling you to say that I’m just like really excited about myself.”
Andrew: That is a huge difference.
Jason: And know that was just such rewarding for them.
Andrew: Since we’re not naming names, I feel like Infusionsoft is the one piece software that I don’t know anyone who manages it on their own for more than a couple of months. They eventually do end up hiring Infusionsoft consultants paying 10,000 sometimes more a month.
Jason: Yeah.
Andrew: The no blank slate thing seems to be a big thing of yours. I’m trying to go back to my YouTube history. You know, YouTube actually keeps a history of every video you’ve watched? Which is kind of creepy even if it’s on someone else’s site. It’s kind of creepy but it helps in situations like this. Let me see if I can find it. There was a guy who did a walkthrough of your software. I have too many YouTube accounts. I’d have to switch too many to find it. But I found a guy from about 10 years ago who did a walkthrough of your software, and one of things that he liked about it was, you gave templates from the beginning. The reason I wanted to bring that up is, it seems like not leaving people with a blank slate is part of your design philosophy that you want to talk about that.
Jason: Yeah. So a lot of platforms will just try to push for a more and more data, more and more options, right? And the more options, the more data you have, the less actionable it all is because you have to try to figure it out. If you try to bring something into the SMB market and you want to have that simplicity but you also want to have the power of sort of all of those options and data, the only way you can do that is by providing examples and making things actionable for them.
So the workflow example was a nice one of we can give people these like, “What are you trying to do? Are you trying to improve your e-commerce rate of closure? Are you trying to improve your sales cycle?” And then from there are a bunch of different things, so based on where they feel pain or opportunity, they can start with something.
But then also with data like there are so many platforms that’ll bring in so much data and it’s really powerful if you know how to group it up, if you know what to think about. And the problem there is like anyone can figure that out, but it’s not the best use of time necessarily, and it’s also probably not always even the best thing because ideally whatever’s kind of looking and taking all this data would be able to make those decisions for you.
Andrew: You’re saying the reports that people could create from scratch also is a problem. We should give them templates. That’s a big part of your philosophy as I said earlier. You want to give people templates, give people a starting point. And as I see that now and understanding the way you think of the world, I think too like chatbot software that in many ways is mimicking your flow builders, but they do start people with a blank slate so that they could create anything, and I wonder if what they should do instead is say you don’t have to create all the content for your chatbot, instead what we’re going to do is we’re going to say, “Tell me what you’re trying to do. Are you trying to sell the five products?” We’ll prepopulate your content for your chatbot and let you sell five products. We’ll just tell you where to upload the photo, we’ll tell you at what point to . . . Okay. All right. That’s a lesson that I think we could take beyond your company.
Jason: Definitely. And take it a step further of that. Don’t stop with just giving them like a template. Once they choose that, help them identify and walk them through the important pieces they should tailor and customize, because if they do that then they’re actually truly successful. If they just use something prepackaged thing, they won’t necessarily see value right away, and then you’re going to have a problem.
Andrew: All right. Let me come back in a moment and ask you how you came up with this. How do you know what to put in these templates? How do you know how to create flows for all these different businesses? Who does that for you? All right. But first, I’ve got to tell people about a company called Toptal for hiring developers. And this is so good that I’m talking about them in your interview, because you know what, Jason? I think you’re a great model of what can be done.
I’m imagining there’s somebody out there right now who says, “You know what? There’s so many other things that we should be adding to our company, but our developers can’t get things done, because they’re just maxed out.” Well, you know what? If you’re listening to me and you’re at that place, you could just go to Toptal, you could hire fantastic developers. Think of them as like your elastic developer team. You could hire one person or group of people who all work together and have experience together. And I would love for somebody to not just do it for themselves to just get past an issue, but also think the James’ way, which is to say . . . Actually, it’s the Jason . . .
Jason: The Jason way.
Andrew: The Jason VandeBoom way. The VandeBoom way, which is to say, “You know what? Some of the features that we need could actually be productize and be delivered to other people and maybe we sell them, maybe we just give them back to the community, but it becomes this standalone product that solves our problem but also is solving other people’s problems.” And I’ve seen people do that. I’d love to see more of that being done. If you need developers one, two, many part-time, full-time, project based whatever, go to Toptal.
You will not be able to just go and hire developer from Toptal to just by filling out a form, they also can automate the hell out of everything, but what they do is, they say, “Just schedule a call with one of our people. And if it’s a good fit, we’ll talk to you, we’ll help you figure out whether it’s a good fit or not or how it could be a good fit. And if it’s not a good fit, we’ll be honest with you. We’re not going to take your money and just walk away. We’re trying to . . . ” They keep saying to everyone who they higher, “We’re trying to find the perfect fit for you so that you can become a long time customer of ours and a raving fan.”
And we do have lots of customers who got turned on to Toptal because of Mixergy interviews, which is why this is now their third year of saying to us, “Give us every single ad spot we possibly can get.” So if you’re out there, I’m telling you the Mixergy community has gotten great results from them and I urge you to go in and have a conversation with someone from Toptal. And start it off by going to this special URL where you’re going to get something that they’re not offering anybody else which is Mixergy listeners get 80 hours of Toptal developer credit when they pay for their first 80 hours and that’s in addition to a no-risk trial period of up to two weeks. It’s . . . Here’s the URL, toptal.com/mixergy. That’s top as in top of your head, tal as in talent .com/mixergy.
All right. So how do you know how to create these templates? Are you watching what your customers are using? What are you doing?
Jason: Yeah. So it’s combination of things. Like from the beginning when we built our products for all of our needs, we are a growing business, so we’re sort of our customer in a way, so we know from that perspective, so marketing contributes to this to an extent. We also have a customer success team that actually goes out and proactively like helps make customers more successful. So they’re seeing people in just about every different vertical, seeing challenges, seeing pain points, and that’s been huge. So they provide a ton of product value.
Andrew: So if I’m a customer of yours for a year a . . . What is it called? Customer success person would contact me and say, “Can we help you get more out of the software?” or how does that work?
Jason: Yeah. So and depending on like what you use in the platform and whatnot, a different type of person would contact you to get a better understanding of what you’re trying to do. So part of that is onboarding, part of that is making sure that you’re able to onboard, and then part of it’s just like, “where do we take it next and how do we sort of provide more value?” Maybe that’s like expanding inside, but it’s not sales focus, it’s purely strategy and how do we provide value.
Andrew: Okay. You know, we are a customer of yours. I’ve got to find out through an acquisition we made, we’ve discovered ActiveCampaign, we killed just about every piece of software except for their hosting and their email marketing, because ActiveCampaign was just so frickin good to use. I got to find out if you guys did contact us and what you would talk to us about. What I’m curious about then is, I get how someone on your team could come in and help someone on our team and give them some guidance. What’s the feedback loop for that? Because we’re not very good at that internally with our chatbot business. We’ll learn a lot and there’s no way to come back and bring it to the rest of the company.
Jason: Yeah. So it’s really trying to package it up into certain like categories, but then from a product standpoint, what we do when we start thinking about, “Where can we expand and just where can we optimize things?” we bring those people into those discussions. So we want to bring some people from sales support and success, but success has this very unique sort of point of view because they are actually seeing not only like ideas and pain points and problems, but they’re seeing and watching someone try to implement it. So they’re finding like where the pain points inside of our platform where people are having to do like five or six things or have to talk to them a ton and trying to figure it out and what can do there.
So it’s all about trying to get that feedback into the sort of product processes for somethings that goes into more like of like a generalized internal feedback forum. And then important thing there is to close the loop on as many things as possible, meaning it doesn’t work if you expect like success to bring out or anyone on your team to bring out ideas, and then you never tell them that you did something about it even if you did. It’s really easy to do when you’re really small company when you have like hundreds people, you need to make an effort just to notify them. And you can do that systematically through programs and whatnot, but they need to know like where their ideas are going and when are they implemented.
Andrew: And is the forum the place where that happens mostly, the internal forum, or is it something else?
Jason: I like to just over do it. So it’s the internal forum that will alert anyone that’s ever talked about something in that topic, you know, whether it’s an all hands, whether it’s product updates. Just calling out people as much as possible for like they helped create this sort of idea process, right? Because then that sort of builds and then people actually realize that feedback is actually something acted upon and not just as like trash thing in the corner.
Andrew: I see. Okay. So it’s not like a . . . I guess I imagined some kind of linear process where someone finishes talking to a customer, takes their data, part of their process is at the end to go and write it up somewhere and then someone else every month is supposed to go through and look at what they’ve written up and find a way to integrate it into the next template or the next flow. None of that. That’s not the way it works.
Jason: No. Not to that level because I really want to use intelligence of that success route to sort of group things up and really find these trending things and then highlight them, right? Because if we do every little thing, you’re going to have so much noise that you won’t be able to act on anything.
Andrew: All right. So we’ve talked about a lot of the successes, a lot of the growth. Let’s talk about one of the big challenges. You got married in 2008, you went on a honeymoon.
Jason: Yeah.
Andrew: Where did you go, by the way?
Jason: Tahiti.
Andrew: Tahiti. What did you think?
Jason: It was nice.
Andrew: Yeah?
Jason: Yeah. I was cut off from the internet. So it was nice time.
Andrew: Really?
Jason: Yeah. It was like one of the first times. But then I came home and then . . .
Andrew: And what happened? Tell me.
Jason: Things were just clearly in a state where there needed to be some changes in terms of product and whatnot. Obviously, the economy had its own effect on SMBs and whatnot. But we just started getting to this place where I think it was a combination of some investing in some of the products in terms of time and whatnot where we shouldn’t have, and I felt like we’re at the state where we had a problem, and if we weren’t going to solve it, we were probably going to go out of business from a financial standpoint.
Andrew: What you mean? It seemed like things were going okay over there. Yes, you would have lost customers because of the 2008 financial crisis, but what else was going wrong that you had to fix?
Jason: It was just right before that where we expanded the team from like six to eight or something, nothing crazy. But we were just investing in kind of the wrong areas and so license sales, the idea of perpetual, and this sort of goes back to the pressure to switch the model. You don’t need a whole lot to have it sort of create a problem.
Also with having larger license prices, it can provide more complexity in a way if you don’t get a couple of those to close or if they don’t keep during their contract, you have a problem. So we had some of that going on as well and that’s why, you know, even now I’m like paranoid about any large customer. I don’t want large customers. Like the idea that we have no customer that makes up more than half a percent of our revenue, and that’s sort of my like guideline. Like if we want to bring on a larger customer, great, let’s grow the SMB base so that they’re like half a percent of our revenue, and we’ll do that, because, one, I don’t want to have the problem of instability in terms of revenue, but then also I don’t want to answer to any single customer in terms of where we take the product. It means true to a couple of things, yeah.
Andrew: You know, it’s funny that you’ve always been for SMBs, but there was a big period of time where you still used your bigger companies like Canon, like Audi as a way of reassuring SMBs, “Look, we’re trusted by these bigger companies.” It was.
Jason: Yeah.
Andrew: Yeah. All right. So what changes did you make as a result of that? That started sort of the focusing end. So even though we didn’t bring the products down, we really focused in on what was working which is more of the marketing side of thing and trying to expand there through a couple of different things. We also came up with a couple different license models and things like that to provide some more stability in terms of revenue. But quite frankly, during that time we were also just flat out doing things to make means like we’re doing contract work. Like we went from . . . I was doing consulting to a software company, and then we started doing consulting again for a period of time.
Andrew: Really? To just make ends meet, you personally would go work for other people on their software to bring in money to keep your business going?
Jason: Yeah. So a combination of two things. One, just custom work on our products, and I never wanted to be a service business at all. Like it had to for a little while. And then there were a couple projects that spawned off into like, it was just truly custom. Like I actually did something. I did this rather large project during that summer for a competitor and it was a project that was more like visual and it was more like email-centric, but I did that which was weird all around.
Andrew: Who was the competitor?
Jason: I don’t know if I can even say who it was. I don’t what I would . . .
Andrew: It’s a company that I would know?
Jason: Yeah.
Andrew: And how would they let you into their house? They weren’t worried about you?
Jason: They weren’t worried, no. Now things have shifted where it’s a little bit of a different situation, but yes. And during this process like the team didn’t have this like understanding of like, “Oh my goodness. Everything is on fire.” But that’s just because I managed to figure out ways to like, “How do we get through this?” That wasn’t a sustainable thing, that wasn’t something I wanted to do forever.
Andrew: Right.
Jason: Because if I’m not having fun, I don’t really want to do this.
Andrew: But you had to do it.
Jason: And I had to do it, but it also help sort of like we need to focus on first and then we needed sort of course-correct on improving our own customer experience and getting to more of a SaaS revenue model.
Andrew: We asked you in the pre-interview, “What would you teach other entrepreneurs?” And this stood out for me. You said, “Create actionable chunks and steps.” How do you do that in your business? What do you mean by that?
Jason: Yes, so I think it all comes back to like classic iteration and not like in the general like super basic MVP approach, but realizing . . . You know, what I have learned the most is you can’t over plan and you can’t overthink something no matter how much you know about a category. Like even myself, like I can think I’m delivering a ton of value of a feature set. If I get like a quarter of that out there, I’m going to realize a whole different set of things no matter how much research I do out of time.
I think a combination of that and just not letting yourself get hung up with perfection. I think a lot of people hold back because they are in fear. They’re in fear of like releasing something too early, they’re in fear of releasing something that could potentially hurt them, but it actually really works against you. And we did a number of things where we just sat and fear whether it was like switching to SaaS pricing changes anything like that. And it always . . . I always look back and I’m like, “We should have just done something.” You know, especially when you’re small, just like act on things quickly as long as you can.
Andrew: More action, less strategizing. That’s one of the quotes they wrote down for me. And that means not big action necessarily but break it down into small chunks and just start doing one small piece of it.
Jason: Yeah.
Andrew: Is there an example of how you do that today? Something you did recently in a small chunk?
Jason: Yes. So we’ve really been focusing on like e-commerce integrations and the data behind them. We could have released everything with full like abandoned cart, a bunch of other feature sets and things like that. But instead of going all the way that way, I just wanted simplicity of we’re consuming a lot of e-commerce data, we’re going to make it action and group it up.
And that’s what I care about the most so that people don’t have to try to like map out things and whatnot to make it actionable. We’re going to deliver that, and I know immediately we’re going to have some people like, “What the heck? What about X, Y and Z?” I know X and Y might not know Z though, but based on that then we plan and figure out what state two. So then that’s what we’ve done. We’ve sort of built on that and it works out really well because you get that momentum of just continual change and iteration, and especially like SMBs really pick that up because they want to be part of . . . They want to be using a platform that’s actually leading and not just sort of kind of following or just like . . .
Andrew: Yeah, it does feel like the more you put work into it, the more there’s somebody there who’s still managing it and it feels like I’m on the right path. I’m with the right software company. The one weird example that I saw as another Chicago company, Basecamp recently updated their stuff a lot, and I looked at the comments on their medium post announcing the changes and people said, “Quit changing too much. We can’t keep up with this.” Are you happy this work?
Jason: Yeah. They take a really interesting approach too where they keep like older versions just like around.
Andrew: That’s crazy.
Jason: But it . . .
Andrew: You get that?
Jason: From the customer experience standpoint, I get that. Now, I don’t operate that way necessarily. I think you can mitigate a lot of the concern of that through sort of end product sort of flows and education and whatnot, and just slow releases in increments and not massive changes, and that comes back to like iterating small chunks. Because at the end of the day, I don’t really want to manage like three or four versions, right?
Andrew: Yeah. For a company that’s all about reducing features, for them to have Basecamp 1 up live and support it, Basecamp 2 live and support it and Basecamp 3. Even logging in is pain sometimes because you have to figure out which one you’re supposed to log into.
Jason: But I get where they’re coming from with it and I understand that, like . . . And . . .
Andrew: Because businesses do not like changes. Like Facebook can a change every day to their page and people will accept it, but businesses rely so heavily on it that they create internal documentation. A small change causes headaches for businesses.
Jason: And I think product companies often think like, “I know what’s best. I know what will help your business. You need this.” And that’s just not always reality. I think you can find a middle ground. You know, their approach is interesting. And, you know, you can’t really completely fault it because it’s . . . From the customer standpoint it makes sense at the same time like if there is more value to be derived by something newer, I want to get those people at state, right?
So when we make fundamental changes, we made some in our email designer and whatnot. We actually had people for over a year using a previous version of it. And so we have this case where it’s similar to them where we had this completely not the entire platform but these products inside the platform using this really, really old thing and everyone internally is like, “Let’s get them moved over there.” Like, “No. When they choose, we will.” And then at a certain point we got down to like 16 people we were like, “Will someone call them or . . . ”
Andrew: Do one on one zoom sessions with them.
Jason: To see if they don’t mind if we just switch that on them so they’re aware of what’s going on. So I think it really . . .
Andrew: You know, FreshBooks also is in a similar boat. We are with the previous version of FreshBooks, the founder came on here, Mike McDermott, to talk about how they updated their software. And, you know what, I like to learn new software, we did not shift to their new version of the software even though I saw that it looks better and works better because my assistant is sending out my invoices for me. I don’t want the pain in the ass of having like any issue with it. It works, leave it alone. You’re not going to get me more money collected, right? Why do I care?
Jason: Yeah, you don’t want to inconvenience the businesses by pushing something new.
Andrew: Yeah. She’s got ton of other stuff. All right. Let me close it out with this. You guys are going to, in the future, add artificial intelligence, is that right? Machine learning to your software? How are you going to do that and what’s the goal with it? Talk to me about the future.
Jason: Yes. So a couple of things. We think about customer experiences as needing to be truly unique that comes from messaging, timing, a bunch of different areas. You can accomplish some of that with human and automation plans that I talked about, but really making and think about the workflows, and of all those lines you see all of those lines should have intelligence in it. That’s all this like empty area in between automation.
Andrew: What do you mean? What’s a workflow that has a line?
Jason: So a workflow that, you know, or a contact just becomes a customer and then they go to a wait condition. They’re waiting for what? You’re going to pick like five minutes, an hour. Hopefully there’s some logic to it, probably not initially but you’ll test it out. One, we probably know like based on a bunch of different things, like what would be optimal there, and we can play around with the timing of . . .
Andrew: Oh, I know one example. So you send an offer to somebody, they don’t buy, you wait a little bit, and then you come back in and say, “You know what? We’ll give you 10% discount.” That’s overly simplistic, not the smartest marketing technique, but you might wait a day or so. But you’re saying, “Our software could figure out what the optimal wait time is. Maybe it’s not a day like you think, maybe it is just 10 minutes later or an hour later.”
Jason: Yeah, and it’s not even something that’s like static. It has to be unique to each single contact too, right? So like and you don’t want to do something that’s classical in the way of some platform say like, “We’ll send the email whenever they open it.” I don’t really care when people open an email, I don’t care when they take a phone call. I care when they’re in that sort of mindset of they’re actually open to it.
And how do you get there? Like you have to have a better understanding of that contact, you have to have a better understanding of the geography that they are within and things like that to just really understand location and the individual to build out when is the ideal timing. So time is one of them, but you can do that from messaging as well. So there’s a number of things that we’re really sincere in terms of marketing automation where the workflows become pretty much entirely unique per customer in terms of time.
Andrew: And you guys create it.
Jason: Yeah.
Andrew: And one of the things that that solves is the headache of, “All right. We’re only going to sell, we’re only going to offer discount, if somebody watches video, click this link and this.” And then you start creating these rules and it becomes worse than my Gmail rule list and you can’t keep track of it. Now I can keep track of my Gmail rule list because I remember what I was thinking three years ago when I created that for cocktail rule. But imagine with a company set of tags and labels and identification to transfer to a new employee who hasn’t been around two years ago is a nightmare.
Jason: Plus all those rules, while they’re going in the right direction, it’s not as ideal as if we can analyze thousands of different data points and in real time sort of know what to do, right? So deal prediction is good when you probably . . . Like any business owner knows like, “What are these areas where I know this happens it’s probably a better deal for me?” We can take about a step further and sort of simplify that. But with all of our ML, I think what’s really important to differentiate is every SMB will be able to customize the model without thinking about it like a model. So just like that example of deal prediction. If a business owner knows like this and that, means it’s probably likely a little bit better they can help influence the model and then the model will just learn more and more and optimize itself.
Andrew: I see. All right. I thought maybe you were just jumping in on the buzzwords now because you’re venturing back.
Jason: No. I actually, I hate . . . So our whole approach on like ML in particular is ML is like 99% . . .
Andrew: Machine learning.
Jason: Yeah, it’s 99% fluff, and when you get into the SMB category it’s this like mystery box that’s going to solve your problems. And that doesn’t work. You see like a machine learning in enterprise, that doesn’t work half the time and that’s highly customized. So our stance is we have to have all machine learning be customizable by the business, but the business needs to be able to understand how to do it and not think about it as a model. If they’re thinking about their business, we’ll take those like aspects that they tell us and then we’ll customize things and tailor them for them.
Andrew: All right. Final question. You take any money off the table when you raise money? You raise 20 million, was part of it for you to . . .
Jason: Yeah.
Andrew: You did.
Jason: Not. That wasn’t like the true incentives. You have to understand like for over a decade, I ran a very profitable like growing business as well. So I’m in a situation where it’s more I’m actually enjoying the experience, enjoying the creating. So like building the team just in the last couple of years and not really relevant to like taking funding, that has been the best part.
Andrew: I can’t believe you enjoy that. That’s such a tough part of the process. Most creators are great at starting do not like the hiring the next 100 or 200 people.
Jason: Yeah. So like the year we took funding we went from like 20 and we were at like 30, at the time funding. We ended the year the off at 70 and this is 16. And we’ve gone from like 70 and we’re like at 240 now. In a very short period time it’s, I’m not going to lie, it’s a lot of work and it’s not always fun like tripling the team in a year. But it’s that challenge, it’s that like trying to think through and it just kind of goes back to like, you know, you think about automation and human touch and what . . . That’s literally a business. You have to figure out how to like ever haul [these profits to work 01:07:05].
Andrew: And what are you doing to automate onboarding or hiring process? I don’t like to over-automate there. So like for being an automation company, we really don’t like to automate a lot of things because like recruiting with people, you need to like have a very unique sort of approach and just build a framework, but from onboarding and whatnot, there’s certain things we can do in terms of communication, there’s certain things we can do or set checkpoints of things and whatnot to make sure everyone gets a consistent process. It’s not perfect. We can definitely improve it, but it’s a . . . I find all of that to be quite an exciting thing. It’s like building product, but as a company.
Andrew: I see. You’re using leverage. One of things that I’ve discovered over the years is this new software to manage the hiring process is fantastic. I don’t know what we ever did before that?
Jason: We used email for way too long.
Andrew: Right.
Jason: And then we started using like Trello which worked really well for a little while, but then the candidate flow was just crazy, and then once . . .
Andrew: To manage like the hiring process, so all the potential candidates get their own Trello cards and then you start moving them through process, then you have to send an email.
Jason: Yeah.
Andrew: The new software and there’s a handful of different companies now that manage this for different sized companies it’s just fantastic for managing the hiring process. All right, you guys use lever.co for anyone who’s interested. The website is activecampaign.com. You know what? I don’t want to give my unique URL because then that makes it feel like it’s an ad and already I was very complimentary, so it feels like doubly ad. But why don’t you give another URL where I will not get credit but people will at least get the discount. Is there something like that or should I just give mine.
Jason: You can just give yours.
Andrew: I’m so conflicted about it because I don’t want to compromise my integrity. Screw it. No, I do not screw the integrity, but I’m open about it.
Jason: Screw that up, yeah.
Andrew: I think maybe just being open helps. I don’t know. This is the kind of thing that wakes me up at night. Why did I give my URL with an interview? Does it taint the interview? This drives me nuts. And then the thing that I do lately is, when this is going to happen to me tonight, I’m going to have to like listen to an audio book with a one ear pod in to just get my mind off of stop thinking about. It’s not killing anyone. All right. But it’s activecampaign.com/mixergy for anyone who wants to go check it out.
The two sponsors are, oh I already do regret it, toptal.com/mixergy and designcrowd.com/mixergy. Here’s what I will not regret guys. We’re trying to improve the audio quality. You might have noticed earlier that I jumped in when Jason said ML and I jumped in and I said machine learning. I wonder if that got cut off for some people or not. We’re making the audio better, but along the way we might be making mistakes. Keep giving us feedback especially when you’re hearing that something sounds a little bit off because we want to make the audio of these interviews sound as good as possible.
And the best way to give us feedback is to email the whole, contact.mixergy.com and let us know where you were able to hear Jason clearly, where you were able to hear me clearly. Are we improving? Is there a problem? All right. Jason, thanks so much for doing this and congratulations.
Jason: Thank you. I appreciate it.
Andrew: Thank you all for listening. Bye everyone.
