Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I do interviews for entrepreneurs with proven entrepreneurs. So I know many of you are listening as you’re building your businesses and that’s why I get into the details of how my guests built their companies.
Today’s guest is a hustler. Now, I could say that a million different ways and I can find research online to show it, but instead I’m going to tell you this story that he doesn’t know that I know about. When he got on a Skype call with our pre-interviewer and producer, Brian Benson, he happened to be looking through his email and happened, in the sent folder, to reveal a bunch of messages that he sent out that all had the same subject line to other podcasters trying to promote his company.
I thought this guy, he is a former executive at Warner Brothers or president in the Warner Brothers family of companies. He is running a company, AdGreetz, that we’re here to interview him about because it’s so impressive. And still he is hustling. He’s not sitting there in a suit and tie just saying, “Look, I have the reputation. Trust me. Work with me on this.” He’s hustling, sending out messages. That alone makes me like him.
But beyond that, he’s a guy who recognized there’s a lot noise in the ad world. He came up with a great solution for it. The noise in the ad world reminds me like when I took my kids to the indoor playground, a lot of noise there, a lot of screaming kids. Still, when someone in not a loud voice, in a regular voice, said, “Andrew, can you look at this?” And I perked up and I said, “Oh,” and I looked over and it was a father talking to his son, but I realized, if somebody mentions your name, you look up.
So Eric Frankel, who you’re about to meet, is a guy who noticed the same thing could be true for advertising. What if all ads weren’t the same to all people? What if they were so personalized that they understood that I like V-neck t-shirts or button-down t-shirts like this and instead of selling me dresses, they did that. What if they took it a step further and said, “Andrew, I know you like V-necks. Here’s a really good deal on a V-neck T-shirt.”
That’s the level of personalization that he is championing with his company AdGreetz. I invited him here to talk about how he did it, how he’s building it up and I’d like to find out a little bit about his background before that.
This whole interview is sponsored by two great companies. Imagine if I did these ad reads later on I mentioned your, you, listener, your name, you’d pay attention, right? But the two sponsors are HostGator, for hosting your website right and for hiring a developer, Toptal. Eric, good to have you here.
Eric: Good to be here. Thank you, Andrew.
Andrew: How do you feel about me revealing this whole thing about the email that went out?
Eric: I think I’m happy that despite that I showed you what’s under the tent here that you still invited me. So I appreciate it.
Andrew: Yeah, I like you more knowing you’re doing this yourself. Now, I gave the barebones. Can you give us — not in a commercial way because you know people are going to tune out — but like a short example of how AdGreetz is being used today that will give us a sense of where you guys here?
Eric: Well, the quick overview is I think advertising is broken. I think that it worked when we grew up in a three-network world where everyone had two newspapers delivered to their house and there were 12 popular magazines and 12 popular radio stations and if you told everyone you had a new brand of five flavors of Diet Coke, everyone knew it. If you were interested enough, you’d go to the supermarket and purchase some of that Diet Coke.
One-size-fits-all doesn’t really fit anyone anymore. So there’s enough legal data that isn’t breaching anyone’s privacy out there to, rather than talk to you and me about lipstick and other things we might not care about, actually make us happy by telling us things we do care about and opportunities to get those brands. We do that on 19 different channels and surprise, surprise, people pay attention. They click buttons. They purchase. They test drive. They buy their movie tickets, book flights, etc.
Andrew: So you can actually do it today on YouTube for a brand, run an ad that targets a person by their interest—there’s your phone—and also addresses them by name?
Andrew: No, YouTube won’t allow that.
Eric: Not by name. Let me explain. Name, people have to opt-in. Even though name is incredibly effective, as you indicated, you can’t talk to anyone by name unless they’ve opted in. So, if you’re on a mailing list and you get emails every day and frequently it’s called mail merge, on the top left-hand corner, it says Andrew, we take that and turn that into a compelling, entertaining video that the brand sends to you or we offer people the opportunity to personalize the message with their name by either clicking Facebook allow, which is a legal way to say, “Yes, you can talk to me by name.”
We don’t keep that data. We don’t sell it. We don’t pull your friends’ data or any of that. So that’s primarily how we do the name, but we can know that you’re a 42-year old male in San Francisco who’s married, who’s single, who has kids, who has all of these different habits and interests. So we can talk to you about that.
Andrew: How do you get all that?
Eric: Well, there’s all different types of data out there. The simple version is there’s something called brand data. If you and I own a Toyota, Toyota knows all about us. They know we have a two-year old Toyota model where we live and so on and so on. There’s brand data. There’s social data. Half of the world is on Facebook and tells Facebook everything and people like to get things that are relevant. They just don’t like to have their data stolen and their friends’ data stolen and utilized like we’ve been reading with the Cambridge Analytics scenario.
So brand, social—there’s geo browser. Anytime you’re on a phone or a computer, we know where you are, not in a creepy way, but to tell you where the Starbucks is around the corner, although that’s a bad example because there’s always a Starbucks around the corner. But we know how to tell you to go see whatever movie tonight at 5:00 and we’re not going to talk to you about a movie that started an hour ago or tell you to go to a store that’s 120 miles away.
Andrew: So your whole vision is we’re going to customize all the ads that go out there so they’re meaningful and relevant and address people for who they are, not for whatever big lump they happen to be put in. Today, you’re doing it online. You’re also allowing people to personalize letters. I thought I saw a movie studio worked with you guys and enabled people to tell their friends to go watch the movie but they would type in their friend’s name and then the character from the movie would say, “Your friend Andrew wants you, Bob, to go see this movie.”
Eric: Yes. That’s peer to peer. The only thing better than a brand telling you why that shirt is wonderful or why that Toyota is wonderful is when your friend tells you. We frequently get retained to make peer to peer messaging where you get something and it says, “Andrew, you have a personal message from Eric.”
You say, “Eric, I have to pay attention to that. He’s my friend or colleague or brother or boss or what have you.” Then when you open it up, it might say, “Hey, Andrew, your friend, Eric, your cousin, Eric, your uncle, Eric asked us to reach out. He just bought Toyota Prius. He loves it. He thinks you would too and recommended you set up a test drive at San Francisco Toyota.”
Andrew: What’s cool about that is that it’s Big Bird or musicians who I might know who are doing it.
Eric: It all depends what the brand’s point of view and messaging is, spokespersons and what have you. By the way, there’s one other really important point, not to interrupt. It’s not only about giving you that message. It’s also about building a relationship with the brand. So, for example, if you and I decided we wanted to know more about a brand today, we might sign up on the website to get information.
So our smartest brands now thank you for signing up, “Hey, Andrew,” but instead of looking like a letter or a People Magazine ad from 20 years ago, “Hey, Andrew, on behalf of everyone at X-brand, we want to thank you for signing up. We appreciate you reaching out to us. Oh, by the way, would you like to set up a test drive, or would you like to buy something? We’ll give you 20% off.”
Andrew: When I saw you do that, I thought we could do that here at Mixergy. We’ve got all the tools do to it for our own audience, where I could record 50 different names or 100 different names and then automatically create videos for my audience so when they sign up, they’ll get a video that says, “Hey, Eric, thanks for signing up.” Let’s talk dollars and sense here and then get to your story of how you built it up. Revenue, 2017—what was it?
Eric: 2017 was a measly $1.2 million in revenue.
Andrew: $1.2 million, measly. You say that because?
Eric: I say that because what we’re doing right now, 80% of chief marketing officers say is the future of advertising and about 0.5% do it. So you can sit there and go, “Oh my god, how awful,” or, “Gee, look at the opportunity ahead because we’re going to get all of these people to do it.” The good news is the revenue is growing 100% a year and soon I hope it will be 125% and 150% and 175%.
Andrew: Just keep improving in growth rate. And it’s a 10-year company too. For a 10-year company with over $10 million in funding to do $1.2 million is—
Eric: Yeah, we had a pivot, like many of us. So, briefly, we started—
Andrew: Actually, instead of going briefly, we’ll tell the story over time. Why don’t we just get in the back—I interrupted you too. It’s good that we’re interrupting each other. I’m a New Yorker and I think that it’s fine.
Eric: So am I, a former New York, Andrew Warner.
Andrew: So, let’s see, you’re a guy who grew up with entrepreneurship in your blood, you felt. You told Brian, our producer, “I always had an idea for a business, always wanted to be independent.” Do you remember once of them when you were growing up?
Eric: I would say primarily was while I was attending the communications school at Syracuse, I joined what they call the Concert Board and I saw the three people ahead of me almost fail out of school, kill themselves to run three or four concerts a year, not have terrific attendance and then run out of money. I paid attention.
I eventually ran the Concert Board there and did 39 concerts in nine different facilities and became the most successful concert college entrepreneurship in the country, not bragging, but having articles written about how successful we were while the business was dying around the nation. So, that’s what I learned about leadership and having 150 people who cared about coming out each week and having a team to be successful.
Andrew: Then you ended up at Warner Brothers, where you became the President of Domestic Cable Distribution. I read a little bit about what you did even before then. You’re a guy who was selling the cable component of “ER” to TNT, “Will & Grace,” “Suddenly Susan” to Lifetime, etc. You told me before we started, though, that one of the things you had to do was champion VOD, video on demand to a world that wasn’t ready for it. Do you have an example of a conversation you had about video on demand where today it feels like of course, but back then, you had to be persuasive?
Eric: Sure. Even though I was President of at one point, a $4 billion division, and even though I had on any given day 3,600 movies sold and 400 television series sold, there were always more products to be sold. We thought that both consumers would love video on demand and it would enable to us to have more product out in the marketplace because if Andrew wanted to watch “Casablanca” tonight or whatever the program was, or “Maverick,” an old western series, he could press a button and watched it.
When I went to my management and told them what I wanted to do, their eyes glazed over and they said, “Are you crazy? Are you telling me you think people would watch movies or television programs on a computer or a phone? That will never happen in our lifetime. What are you smoking?”
Andrew: You were championing that on the phone. I thought it was just you getting video on demand onto cable providers.
Eric: It was all. As a matter of fact, just for the fun of it, if you want to, after this conversation, put in a Business Insider, on Saturday they ran an article about how Warner Brothers could have owned Netflix. Despite them saying, “What are you smoking?” they let me launch called In2TV. We were the first service in the world to put on hundreds and hundreds of Warner Brothers programs that you and I could watch for free online commercially supported and we were literally having hundreds of thousands of viewers watching on their computers each week. It was a joint venture.
I got AOL, who was huge and popular at the time to partner with us, but they didn’t give it as much money and care and feeding as it needed to eventually become the next [inaudible 00:13:29].
Andrew: I see the story right here, “The forgotten story of AOL’s In2TV, which helped invent binge TV way before Netflix.” You’re saying you helped pioneer that by making it available online and they still didn’t value it enough to promote and make it as big as Netflix if not bigger.
Eric: It’s certainly not a sour grapes story. The beauty of being an entrepreneur, for anyone listening, to a degree, is it’s your candy shop. At Warner Brothers, there was a lot of, “Not inventive here. Why are we letting Eric do this?” even though we were on the cover of the annual report that year and so on and so forth. Yes, we invented it. I was the person who invented it. I was the person who went down on a Wednesday night at 7:00 to AOL and sat down and said, “I have an idea. We can make history together.” John Miller, who ran AOL at the time, said, “I agree with you.” And we went into business.
Andrew: Okay. So I see where you were coming from. I also understand that while you were there, you said, “Look, this whole ad business is broken. I see a problem with it and I’m going to go and find a solution.” What did you see? Give me an example of what you saw that led you to believe there was a problem.
Eric: First of all, I saw too many commercials so that people like you and myself are turned off and will either pay a premium to get the channels where we don’t have to watch commercials or we’ll typically record, DVR our programs and skip through them.
Then I saw that most of the commercials or a huge percentage are irrelevant for the recipient and I thought it would be more valuable to have less commercials that we care about that are relevant and as the world goes to digital, having the ability to click, there’s no reason when I watch the evening news or the night time news on the local station here that runs for three hours, if I put it on for 25 minutes, I’ll see eight auto commercials.
They’re fairly indistinguishable. They tell me why this car is great and then it ends. None of them tell me where my local dealership is. It says, “Visit your Southern California Chevy dealer.” I don’t know what that means. I know what—I know Felix Chevrolet is.
Eric: They don’t give me the opportunity to click and set up a test drive, which if I tell them I’d like to show up at a 11:00 at Saturday morning, there’s a good chance I’ll show up, test drive it and probably purchase or lease it. But I just see the commercial, it’s awareness only and not really activating me.
Andrew: So you saw big picture, “Here’s the problem, here’s the direction the world is going in. There’s got to be a better way.” To figure out if there was a market for this, you told Brian our producer you started talking to people and getting a sense of what they thought of the idea. Who are the people you talked to and what was the feedback they gave you?
Eric: Well, everyone I spoke to or many, many people, I had a lot of good luck. What’s so interesting is on just the concept, we were able to raise a reasonable amount of money from some very, very smart and talented individuals. So many of these people, some strangers who I didn’t even know, friends of friends said, “Love the idea, love your passion and think it’s a great idea and I happen to be in good financial shape. Let me give you some money and let’s see.” One of the advantages of the entrepreneurs listening, I fortunately was in a position where I could put in money along with these investors, which makes them very comfortable.
Andrew: How much?
Eric: I’m in for about $2.2 million.
Andrew: $2.2 million. The people who were investing in the business, they’re people who you knew how?
Eric: Well, some I knew. For example, I had certain clients who brought programming from me. Again, this sounds like the ego hour and it really isn’t meant to be.
Andrew: I’m okay with this being the ego hour. I’ve got no problem with ego. What I have a problem with is somebody who’s being so guarded because he’s trying to be modest so we understand nothing.
Eric: I’ll tell you everything. First of all, I’ll tell you I’m a bad skier, I lose at tennis every week and I’m even worse at basketball, so I have to be good at business. Hopefully, I’m a good father and a good husband. The point of the story is—oh, yeah, I had a client, a terrifically smart client who said, “Eric, there’s you and Warner Brothers and how you market products to me and there’s everyone else. Everyone else together is less than one-tenth as good as you are. So, anything you want to do I’m willing to invest in.” He wrote a check.
The first big meeting would have been a very well-known lawyer named Skip Brittenham, who my client from HBO set me up with and surprisingly, I didn’t know Skip even though he is a partner in one of the largest entertainment law firms in the world—Harrison Ford, Oprah Winfrey, every celebrity you know of and every entertainment executive and the conversation went like this, “Eric, you may think I’m a very popular famous entertainment lawyer, but what I really like to do is invest and meet young people with a really good idea and invest in them. This is more fun even than being a lawyer.” He signed up.
Andrew: And then he brought on some of his clients too.
Eric: Then he brought on lots of other people to invest.
Andrew: I’m looking here. There’s Michael Fuchs.
Eric: He ran HBO for 20 years.
Andrew: That’s super impressive.
Eric: By the way, his conversation with me—this is a great story which isn’t too much different than my feeling. He said, “Eric, what you just told me is the most discipline idea I’ve ever heard.” I was like, “Oh my god,” I was taken back. He says, “You’re like my brother-in-law who says Pepsi is affordable luxury.” He took a pause and said, “Great idea. I’m going to invest.”
So it’s not always that we may like advertising, but we’re smart enough to know that it isn’t done correctly and there is a better mousetrap. I didn’t like every movie or television program that I was selling at Warner Brothers, but if the whole world loved this product, my job was to go out and maximize revenue and sell it.
Andrew: Now I’ve got a sense of the team that’s behind you. By the way, did I pronounce his name right, Michael Fuchs?
Eric: You’ve got it perfectly.
Andrew: It drove me nuts. There’s a podcast that does an excellent job—well, it’s called Business Wars. I really like it. I’d highly recommend it. They talked about the Netflix story, Netflix going up against Blockbuster and then Netflix going up against HBO and then they triumphed. The one thing that drove me nuts was the host mispronounced his name, Michael Fuchs.
I go, “You’re ruining it for me. I can’t get lost in the story because there’s something off.” Other than that, I really like it. So I get a sense of how you did it. Let me take a moment to talk about my sponsor. I’ll talk about my sponsor and I’d love to hear what would a podcast ad be for a sponsor like this.
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All right. I don’t think that was my best read, but it gives you a sense of my read. In your ideal world in a podcast ad, what would be saying?
Eric: Well, what we would probably do is we could talk to every single person—forget the name, their first names for a minute because we already explained why—but I’m in Los Angeles or you can say I’m in Santa Monica. So we could be running ads that say, “Hey, Santa Monica, there’s never been a better time than this Wednesday morning to find a better way to host your website for less money that’s more effective than blah, blah, blah, blah,” and it’s HostGator.com and in conjunction with Mixergy, you can receive a more significant discount, click the link now and so on.
Just because you’ve never seen an ad that says, “Hey, Palo Alto or hey, Poughkeepsie or hey, Cincinnati,” and Wednesday and tomorrow it would say Thursday, Friday. Hey, it may be the end of the work week, but there’s still plenty of time to find out how to get the best deal on hosting your—
Andrew: This is Eric being done now on websites. I’ve seen some websites greet me with, “We’re looking or someone in Santa Monica to join up.” Are you saying your unique addition to all of this is doing it in video?
Andrew: Got it. So in techs it’s being done now. You’re saying it can be done via video and it can be customized even further and as you were talking, tell me if this is off-base here, I was thinking of the people who listen to me in India, for whom every expense is really high.
For me to customize an ad and say, “Hey, guys in India, you’re listening to all these entrepreneurs build businesses and you see it’s very expensive to start a company, but for less than $3 a month, you can compete the big boys and get the same level of hosting they have but it will cost you much less than they paid. Go to HostGator.com/Mixergy.”
Got it. I see. I’m thinking constantly thinking about the naming thing because it’s such a cool feature on your website. Anyone who goes to AdGreetz.com can personalize that video. You’re reminding me customization goes beyond the name to anything that’s personally relevant to where they are and who they are and the product they’d be interested in. What do you think?
Eric: Yes, I agree with you. Let’s talk India for a minute. So individual, the number one ecommerce player according to what I read, is called Flipkart. For the equivalent of what we call Cyber Monday, they do their Cyber Monday through Friday and it’s called Big Billion Days. Last year, 2016, they did one commercial, said the big sale is coming and they big sale is one. We replace that with 100,000 commercials, no one was spoken to by name, but they were spoken to by 20 major metropolitan cities. They were spoken to via gender. They have nine categories of product with 400 SKUs.
So, based on either what you’ve purchased, what you’ve browsed, what you’ve left in your shopping cart, do you have the app? Do you need the app? Do you pay cash? Do you pay credit card? Is it 10 days until the sale? Is it the five days of the sale? We replaced it with 100,000 commercials, never said Andrew and they doubled their revenue from the five-day sale from $500 million to $1 billion. Of course, we’re now in our eighth month with them and busy signing up brand after brand after brand in India and all around the world.
Andrew: Got it. So, to translate this to an Amazon, it would be as if I went to Amazon.com and it said, “Hey, Andrew, people in San Francisco really like the Apple Watch. If you go into our app right now, we’re going to give five Apple Watch bands for $10.” Then I get to go into the app. They know I’m in the app. They know I browsed the Apple watch for a while. Got it. That’s the kind of thing you’re talking about.
Eric: Yeah. I’m not talking to you about dresses and high heels, which don’t have the interest.
Andrew: By the way, Crunchbase has the wrong Michael Fuchs attached to you as the investor. I’m wondering if they also have the wrong amount of money. Did you raise, as they say, about $6 million or did you raise $10 million.
Eric: Let’s do the math together because I just did it again the other day. It’s $6.4 million and $4.7 million, that’s $11.2 million or $12.2 million? It’s $11.2 million.
Andrew: $11.2 million. They actually had the number off. They had $6.4 million.
Eric: Briefly, just to be really clear. It’s $6.4 million in an A series and then we did another $4.7 million in what we call a convertible budget. So many of those investors said, “We love this thing. We want to keep it healthy for a while. Let’s lend the company money, which gets convertible into B shares in a B round.
Andrew: Okay. You said there were some pivots. The first version of the company was not called AdGreetz. It was called StarGreetz. What was the vision—what was the product there, actually?
Eric: Really, what was happening was it was really all about personalization. But if you think back ten years ago, things were blowing up like e-invitations and e-cards. Everywhere you went you would hear a friend’s phone go off with a ringtone and people who I wasn’t familiar with named Soulja Boy were generating $5 million selling ringtones.
So we started studying it. It was supposed to have another five-year trajectory of upward sales. We said, “What if all of these things were personalized? What if Andrew could send his niece a birthday card from Minnie Mouse with video that says, “Hey, Susie, it’s a big day. Your Uncle Andrew tells us it’s your birthday.” So we went into that business. People would buy these by the drove for $3.00.
Andrew: They were actually paying for this?
Eric: It was a premium product and we had a large group of celebrities and personalities and licensed brands, but every time I got $3.00—I call them $3.00 toys—I had to give $1.50 to my partner, Nickelodeon, the LA Lakers, whoever it was, Disney. I didn’t really like being in the $3.00 business and that’s when we said, “Hey, we have the best personalization platform.”
It’s a better model charging brands $33,000 a month with some upside there too and letting them converse with customers and welcome you and thank you and tell you about the big sale and say, “Andrew, we haven’t seen you for six months but you have a five-year history of shopping with us and buying things like the shirt you’re wearing now and all the other items you’ve purchased in trying to convince you to come back in.”
Andrew: By the way, you can see that it works. Every time you use my name, I look up. If I look down, it’s because when you say something, I want to go and research it. I want to go look it up. I want to see the Flipkart.
Eric: I know. I love it.
Andrew: But it always works. The more personal you are—people can still say New York and I’ll look up. The Yankees, for example, I’ll look up. Brooklyn Tech, I’ll look up. It really is so powerful to personalize that way. All right. The transition—I understand that you decided, “All right, it’s time for me to transition over.” When you wanted to sell brands on working with you, is it true that at that point, you started getting into your heavy email mode, you said, “I’m going to be the . . .” tell me about that. What’s the first big email campaign you personally did?
Eric: If you’re talking about email—
Andrew: Cold emails you sent out. That to me is impressive.
Eric: Our first client. I didn’t know if you meant me reaching out to brands. I’m a former television licensing executive. So, if we wanted to get you your own television show, that was what my skill set and history had been. My history wasn’t calling on brands and having deep relationships with the decision makers at the top 2,000 brands who spend $5 million or $2 million a year on marketing.
So I had to more or less reinvent myself and reach out to people and hope that they would listen to our spiel and why this is a better advertising mousetrap. Our first client coincidentally was actually the local ABC News station, ABC Eyewitness News where we did personalized audio wakeup calls. They ran TV spots all over and tens of thousands of people signed up.
You would tell them what time you wanted to wake up on Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Sunday and you would wake up and get a phone call from the four well-known on-air personalities who would then tell you the weather for 200 different cities in the LA area because we have these microclimates like you may have in San Francisco.
Andrew: I get it.
Eric: When I used to work at Warner Brothers, it would be 20 degrees hotter in Burbank than in my house in Brentwood. So “Good morning, Andrew,” would be the weather guy.
Andrew: How did you get them as a client?
Eric: Reached out to someone there. I probably actually knew him a bit and had met him before. He said, “Wonderful idea. I spend money on marketing. What the heck. Let’s do it.” I originally tried to buy another company that only did audio. Not because I wanted to be in the audio business. I had seen them be relatively successful and knew that video would be the grand slam of it versus just the audio portion for brands who want to market and people want to see their product. I was buying them just so that I could say we’ve worked with these hundred brands, but that deal, it turned out there really wasn’t anything to buy and they went into bankruptcy and when I went to buy them, someone else showed up unexpected and outbid me by a lot of money.
Andrew: Here’s what Brian told me you did in the early days. Tell me if I’ve got this right. He said, “Eric used to go all over the internet just hunting down people who could use his service. Then he would find their contact info and start emailing them. He had this four-email sequence that he would personally send out. There are weeks when he would send out 200 to 325 emails just as follow ups to make sure people understood what he was doing.” Does that sound right?
Eric: So not only is that completely accurate, there’s only one slight change. It’s not what we used to do, it’s what we used to do and what we still do today. If I was to share my screen with you and slide your—I just lost you here—I’m looking at a pitch letter that I’m proofing right this second.
Yes, I wake up and from the time wake up until the time I go to sleep, I read everything and I read about companies that I’ve never heard of who seem to have a marketing budget all over the world and then I have a team of people who help me put together pitch letters, find their email addresses and after we get letter number one out, we automatically follow up week two with a second one, a third one, and the fourth one, which in a polite way says, “What the heck? Why aren’t you responding?”
When I was president of this multi-billion-dollar division at Warner Brothers, I literally responded to every single incoming phone call or email because that’s what I was taught to do by my boss. It could be a note that says thanks so much for your email. It’s very interesting. We’re all set now. Wishing you best of luck, but I did and still do respond every day.
Andrew: I see. So this kind of says, “Look, I’m a guy with experience here at a big company and I responded.” Got it. You’re signaling to them you’ve got substance there. Frankly, that’s one of the reasons why we want to have you on here. Your background is impressive. I see. Is this being done manually or are you using software like Mailshake to do that?
Eric: That’s a really good question. The answer is slight automation is something called like Gorgeous, which is just templates and email and you post it in. I’d say it’s really a cut and paste job. We subscribe to various databases to make it a little bit easy for us to find that secretive email of that executive at Ford. If you just got the job, the email opens up with, “Nice to meet you. Congratulations on your appointment to CMO at Ford. Best of luck.” And then we begin our spiel. But obviously, when we talk about brands that we have relationships with, if it’s auto, I’m going to remind you how I’m in business with Nissan and Mitsubishi and Toyota.
Andrew: You’re doing this manually? You’re sitting down and typing all this yourself.
Eric: Oh, myself, no. So I have an assistant who helps me type—I would say we probably do somewhere between 40 to 80 first pitch letters each week, and then there is another person who all day long, it all gets put into a spreadsheet and then that person follows up next week with letter two, so to speak, the following week with letter three and then the, “Come on, buddy, give us a break. Why aren’t you responding? We spelled everything correctly. We have all of these terrific brands and we have a successful track record. Are you the same guy who said no to Facebook and to having a website and ecommerce and all of those other things? Politely, don’t screw it up again.”
Andrew: There’s software that will do that for you now. I’m curious about why you’re not using it. Maybe it goes against your approach to messaging. But there’s software like my previous sponsor, Mailshake, that does that—that’s Mailshake like milkshake—and they automatically will follow up on your behalf but they stop following up as soon as somebody responds and then there are services that will do it. I interviewed the founder of a company that will do this for you. You tell them who you’re looking for, they have people that sit and do nothing but find you leads. The guy who sells our ads was looking for another company like mine to represent and he used them and it worked well.
Eric: By the way, I do get solicited five times a week from people in your latter category who claim they can—then what we do is we say, “Here’s what we’d like, “Can you find me these 12 people at Louis Vuitton or the Louis Vuitton holding company?” They come back and they can’t find them at all. It’s pretty easy—
Andrew: And you’re good at it.
Eric: Not only do we want to pitch them the letter, we add them to our database. So then when we do a campaign and get a 225% lift for brand X, Y, Z, we then push that out to the now 84,000 people on our mailing list and say when Ford wanted to increase engagement activation, converse with their customers on a one to one basis, they turned to AdGreetz, blah, blah, and then it says click and watch your personalized video or when you click and you’ll be on the mailing list unfortunately for you shortly, you click and it says, “Hey, Andrew, looking for a Ford in San Francisco on this Wednesday?”
Andrew: And I get to experience it customized for me.
Eric: And then a dozen people reach back out to us and say, “I saw that really cool thing you did for Ford. I run this company. Could you give me more information? Could you set up a meeting?”
Andrew: All right. I understand now how this work. You’re putting them all on a mailing list. Do you send all of them an email about Ford or about your company or do you only pick out the ones who are car companies?
Eric: Every single one because part of what you’re doing—remember the video on demand and all these other things like that that I’ve touched in the past. It’s about education. I feel like I’m Johnny Appleseed and no one has ever seen or eaten an apple. But I have a bag of them and I have to walk around and say, “Take a bite,” and they go, “Oh, that’s really good. I’ve never heard of this before.” So, people believe what they read, what they see.
So, at the same time—98%, 96% of the time is reaching out to clients. 1% or 2% reaching out to people like yourselves or people where you can get in front of others—call it press—and then 1% of the time, reaching out to potential investors because with more money, I can grow it faster.
Andrew: What would you say to a listener who heard all that and said, “But Eric, you’re actually mass mailing everyone and there’s no customization. So, you’re adding more noise instead of customizing.”
Eric: Right. So the answer is no. First of all, it is a mail-merged personalized note and contained in every single one is a personalized video to that person. They’re not watching the Eric version. Wherever they are, it’s a short note that says watch your personalized video and when they click it, whether it’s BMW or whether it’s an ecommerce site or Amazon Prime Video, they’re watching a spot for—
Andrew: You’re not doing anything like tagging them when you put them in, so a podcaster is tagged as podcaster or auto dealer tags as auto dealers. So you can say auto dealer, I know this is about address company, so it’s not exactly related to you, but if you stick with me, you can see how this will work for auto dealers like you, here’s the case study that we did.
Eric: Not really. But what it does is it indicates how first of all, you’re not on the list if we don’t think this is something you can utilize. We’re not just trying to tell people about what we do unless they appear to be fairly marketers who have reasonable budgets where doing this kind of campaign would be within their means.
So it would be like if the whole world was newspaper and you were now trying to sell a radio spot and once everyone was listening to radio, you were selling something called television, it doesn’t really matter what you’re selling. You’re saying you want to know what’s better than a print ad sitting on a page is looking people in the eye and showing them your car driving down the block or your new refrigerator or whatever the product might have been.
Andrew: Okay. I want to come back and ask you about this specific thing that you read in the Wall Street Journal about Wayfair and what you did with it. But first, a quick message about if you listen to me and you’ve heard me talk about Toptal forever, what I don’t talk enough about is the fact that yes, I hired a developer from them, yes, I hired a designer from them, but I had this issue where I was the only one looking at my finances month to month. I wanted somebody with a fresh perspective to tell me what mistakes am I making that I wouldn’t even think of as mistakes. What am I overlooking?
So I went to Toptal and I said, “Do you guys have someone like that?” And they said, “We do. We have someone who worked for major management consulting company.” They actually gave me three different people at different stages and one of them was a guy named Jack who worked for a major management consulting company.
I liked him a lot and I hired him for frankly, not nearly as much as he was making when he was working for a management consulting company but he’s at a stage in his life where he wants to help out smaller, newer companies than the Fortune 500 companies that would hire a management consulting company.
I’ve talked in the past about how he went through and said, “Andrew, one big mistake that you’re making here is you’re not negotiating your credit processing fees.” I said, “Oh yeah, I never thought of that.” He goes, “Here’s a rundown.” He went and figured all the different expenses that we have.
It turns out every different credit card has a different fee. So not just every different credit card from Citibank versus Chase, but Citibank’s different credit cards each have a different fee that I’m paying. In addition to that, I have to pay the processor their fee. So he went and he said, “Here’s where we are. I think we should negotiate it.” I negotiated it and we cut our costs by 75%, something like that, hugely impactful.
Then he said, “I think you need to look at what you’re doing in the future.” I said, “What I always wanted was some understanding of where our budget is. What should we be spending next year? What do I have to spend on different developers? Am I making the right decision?” And he said, “You know what? I can put this together for you.” He went and he uses Excel—I love Google Sheets, that’s the one thing that drives me nuts. He still uses Excel and Word and that’s fine. He put together a whole budget.
He said, “Based on last year’s expenses and revenue, here’s where you guys should be this year. Here’s where you should be spending a little more money because it’s an investment in the business and here’s where you shouldn’t.” It turns out, the one place I wanted to spend money was a mistake. The one place I overlooked was not. That was another mistake. I shouldn’t have overlooked it. He gave me a lot of feedback.
If you guys are out there building your business by yourself and you want someone to give you some management help maybe putting together the spreadsheets for investors, thinking through where your company should go. It means anything where you have the proper management consulting company, you’d be able to get it done, but you don’t because you didn’t realize that Toptal will do it for you and you can do it right now if you go to Toptal.com/Mixergy.
They’re going to give you a big deal on working with them. Before you get to work with them, they’re going to get on a call with you to understand your needs, let you know what they can do and then if they can help you out, they’ll introduce you to three, maybe four candidates who would be a good fit and you can hire the one you want. We got started within days and you can too. Go to Toptal.com.
All right. Wayfair—what did you do with Wayfair?
Eric: Nothing has happened with Wayfair. I’ve written them many, many times. I’ve never even presented to them.
Andrew: Here’s a story that I heard. I didn’t mean to imply that you presented. You read a Wall Street Journal about them. Apparently, The Wall Street Journal has been writing a few articles about them. They were in the Heard on the Street column a couple times. The reason is that I don’t know if they’re losing money or not making that much, but basically, their bottom line stinks, but the stock price keeps going up and The Wall Street Journal keeps scratching its head going, “What is going on here?” And trying to explain it and you said, “I email them and told them I can help you with this growth rate that will justify this stock price that you have.”
The reason I wanted to bring it up is not because that’s how you landed a sale, but that’s your operation. Your MO is, “I’m going to understand this and personalize the message to them.”
Eric: Correct. That’s what we do all day long. I’m going to click here. Here’s someone, it says Marcello, nice to meet you. I enjoyed the recent Women’s Wear Daily article to unveil new global Omnichannel project and your quote that blah, blah, blah. So, that’s how we do things regularly. We read about their challenge, an opportunity, something they’re doing and just try to sift—
Andrew: What’s your hit rate with that? It does seem like an awful lot of time for a CEO to be spending on this?
Eric: That’s a good question. So I would say our hit rate is fairly strong. I would say over the course of the Ford letters, remember, I deal with brands who are actually even talking to customers and a major financial institution, for example. They used to get a 1.25% response rate. We help them go to a 5.0% response rate, which is a nice 400% increase. I would say we’re probably doing somewhere in the 10% to 12%, which believe it or not, writing to strangers who have never met you and sometimes write back and say, “I get a thousand of these a day,” that’s a pretty good number.
Andrew: So that’s how many respond.
Eric: That’s how many write back and say, “This sounds interesting. I’d like to know more or I’m introducing you to my colleague and they’ll take it from here.”
Andrew: Got it. How many of those end up being customers? How many customers do you have?
Eric: So the real goal of this business and many businesses like this, probably the same to you, you don’t want to get new sponsors every week. You would like your sponsors to sign to long-term deals so you’re not tracing that money all of the time. We’re all about how do get monthly subscribers, monthly customers? How do you get out of the stunt business?
It’s not just about the President’s Day Sale. It’s about the thanking people, welcoming people, haven’t see you for a while and ways to communicate 365 days a year, not with an individual customer every day, but on a somewhat regular basis. So the answer to your question is in any given month, we have a dozen or more customers and the trick is to go from a dozen to 50 to 120 to 200 and then we know of people who do I don’t want to say similar, but other things like this, where they have 1,500 and 2,000 and 3,500 customers and then it starts to be real revenue.
Andrew: I told you earlier that I wanted you to brag and I’m glad you did, but you also said it’s important to talk about the things I don’t do well. Let me bring up one big challenge you had to understand how you dealt with it. You guys had a setback in the business and you realized, “I’ve got to lay some people off.” Set the scene here. What was going on in the company that got you to that stage?
Eric: I’ll tell you exactly and I’m not sure that everyone who’s listening or watching who’s an entrepreneur will have the same experience. But remember, I had spent 28 years at Warner Brothers, eventually becoming somewhat of a fat cat, meaning when your division is generating close to a couple billion dollars a year, you can sort of do what you want and need to do to run your business.
So one day you leave Warner Brothers. The next day, you launch an entrepreneurial effort. You don’t know anything different if that’s the one job you’ve had with all of those resources. So you raise this money and start to spend it like you’re at Warner Brothers. It’s not about the foosball table or ping pong table or we’re offering free massages or dry cleaning.
It’s maybe too many people who didn’t have the right experience being overpaid and one day you realize your business plan isn’t really—the thing is working terrifically well, but you’re not generating—it’s catching on but you’re not generating the revenue you haven’t planned. If you keep doing this, you’ll go out of business. So one day, you go from having 38 employees. You call them in and say, “I love you and I wish you my best and I’m going to pay you for the x-number of weeks following but we’ve got to make a change here or we’re going to go out of business.”
Next thing you know, you have half as many people and then over time, you actually learn how to run it better with that small group of people and with the right group of people and with 24 and 25 and 26-year olds, which is ageism, and I’m not allowed to say that, but people who were born with their thumbs on computers. It wasn’t about 45-year old guys like me back then.
Andrew: I see. It was a sense that you were ramping up for a Warner Brothers-style operation when in reality, what you needed was like a bootstrap operation with as few people as possible.
Eric: With as few people and young kids who were willing to work hard and long and might earn one-third of the fee of someone who is used to being paid lots of money by a giant company.
Andrew: I see. By the way, speaking of this giant company, I’ve got this old time dotcom article that talks about your habits and one of the habits that you developed at Warner Brothers was having a daily press packet put together back before the internet. Do you know what I’m talking about?
Eric: Of course.
Andrew: You’d read everything, clip articles—
Eric: That was my original job, which is why the habits that we’ve been discussing probably still exist. So what I got hired as a kid out of college who did really know anything even though I knew more because I had been running this successful concert business on the side, my job was to sit in a room get lots of newspapers, lots of trade magazines, read everything to learn on my own what was going on but to pull all the important stories of the day that might relate to my business at Warner Brothers, make them all pretty, walk into a Xerox room, make Xeroxes, stable them together and hand them out to executives.
By the way, that’s still my advice to kids or young people looking for jobs. My boss, who was hiring, said if you wanted to be a mechanic, you should be reading Popular Mechanics. If you want to be in our business, you want to be reading Variety and Hollywood Reporter and all of these other trade publications along with The New York Times and the Wall Street Journal and that became my habit.
Andrew: So just keep reading it and pulling out the things that are important and what you did was pass it on to your bosses at the time and they would figure out who would be a good target to buy a popular Warner Brothers TV series or movie or what was in trouble, who’s in trouble, that sort of thing.
Eric: Who’s going up, who’s going down? Who’s successful? Who can you be doing something with because they need your help? Who’s so rich that they’ll have the money to be able to buy your “Harry Potter” movies for the highest price in the history of television, for example.
Andrew: That’s a deal you did?
Andrew: I read about that. All right. For anyone who wants to go check you out, the website is AdGreetz.com. Greetz is G-R-E-E-T-Z, as in greetings, right?
Andrew: I want to say thank you to the two sponsors who made this happen. The first is HostGator. Regardless of where you are, you need good, solid internet at a reasonable price. HostGator will set you up right. If you hate your hosting company, switch. If you don’t have one, go to them first, HostGator.com/Mixergy. If you’re looking to hire a developer, go to Toptal.com/Mixergy. Remember, I even hired a business not coach but a finance person to give me advice on our finances. You can do the same thing by going to Toptal.com/Mixergy.
Now that you’re done with this interview and you’re looking for another one, I did this interview with this guy named Dmitry Dragilev and it hit really well. People liked it a lot because he talked about doing PR on a budget. So, go listen to that interview next even if it’s not the next one in your feed, I think you’ll like it. Of course, keep giving me feedback, guys. Give me and my team feedback by emailing contact at Mixergy.com. We always want to hear from you about the audio, the guests, content and anyone else you think we should be having on here. Thanks, Eric.
Eric: Andrew, thank you for your time. You’re a great guy.
Andrew: Same here. Thank you.
Eric: It was a lot of fun. We’ll talk again.
Andrew: You bet. Bye.