Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com and the last 17 minutes of my life have been spent looking at today’s guest’s financials. I have a guest coming up here today. His story seemed a little too good to be true. His name is Chris Kelsey. He is the founder of Appsitude. Hey, Chris.
Andrew: It’s an app and web development firm. They also do marketing. And his revenue for his first year just seemed too good to be true. The client list seemed a little too impressive. So, I just subtly but firmly grilled him about what his numbers were. And I asked you, Chris, if you would show me your screen and login to your bank account and walk me through it. And you didn’t show me everything. We didn’t go through every single month.
But you started scrolling through and giving me a good sense the numbers were there. I’m curious about how you did this. We’re going to find out in this interview why you decided to leave high school early. It was important for you to make a statement by quitting early and making this business, how you got your customers, what your revenues are, what exactly you’re building, what kind of apps, what kind of marketing you’re doing.
And this whole conversation is sponsored by two great companies. The first is HostGator. I asked Chris if he had any experience with them. He said, “Oh yeah, we use them.” So, I’ll ask him about that when we run the ad. The second sponsor is Pipedrive. I’ve been using them for years. I’ll tell you why if you need to grow your sales, you should check out Pipedrive.
First, Chris, welcome.
Chris: Thank you.
Andrew: You launched the business what year and what was your first year sales?
Chris: December, 2014 and first year sales was $500k.
Andrew: $500k first year?
Andrew: Building apps for other people.
Andrew: And you weren’t setting out to be an entrepreneur. You were going to be a pharmacist. Who wants to be a pharmacist?
Chris: So, I wanted to be a pharmacist in my sophomore year. And then what happened was I met my cousin–met with him, not the first time I met him–he was a pharmacist. At 24, he was making $130k a year. So, I looked up to him at the time because all my cousins did too. Then I talked to him about it and he was just depressed with his job, not surprisingly. And he said it was the same thing every day and then the weekends, rinse and repeat. Just party on weekends, work in the week, same thing.
Andrew: He was making good money so he could party on the weekends. But during the week, he’s basically–to me it seems like they just count pills. What else do they do?
Chris: I don’t really like know. I don’t remember much of what he told me about the actually job description because after he told me about it I never wanted to do it.
Andrew: One conversation completely took you off that track. And then you started reading a bunch of books.
Andrew: What kind of books were you reading?
Chris: So, I read some of the typical, like, “Think and Grow Rich,” “How to Win Friends and Influence People,” “48 Laws of Power,” James Altucher, “Choose Yourself.” That was in the summer of 2014, like right before I dropped out.
Andrew: What did you get out of reading all those books?
Chris: One was ideas of like what I could do as a business. Another one was like it gave me the confidence in myself that I could do it because before that point, I kind of didn’t really believe that you could have a successful company. I thought it was like if you don’t go to college, then you’re not going to be able to make more than x-amount of money a year. I started seeing all these examples of people. Some went to college, some didn’t.
“Choose Yourself” was one of the biggest ones because he was saying he’s kind of against college, James Altucher is. He was saying you don’t really need college for becoming successful. As an example, when I met with my dentist–this was back in my sophomore year of high school–he was telling me how he went to school for 12 years, got $300k in debt, then he worked for someone else for 10 years and then when he was 40, he started his own practice.
He said he built up his client base and all this stuff. I was like this sounds like a normal business where you build up clients, except he went to school for 12 years and got massive debt. So, I realized, “Why do that?”
Andrew: I see. All those books were telling you, you don’t have to start off with the debt before you can get to the business of your own. So you said, “All right, I’ve got an idea.” Flier distribution company–that was what you did. What does a flier distribution company mean?
Chris: That was actually really more the medium. So what it was–I noticed that online there were a lot of sites offering distribution services around the country or one area. So let’s say there was one in New York City, one in San Francisco, one in LA. So I thought if I could make a website and aggregate all of them and offer these big marketing campaigns for people that wanted nationwide campaigns, I thought that would actually–people would want that.
So I had like a basic landing page for the site and then I literally just cold called probably around – I thought it was like 50 to 60 people a day. It was around maybe 30 or 40, something around that. And I didn’t get any sales after like a month and a half. I was just trying to come up with different ideas and it didn’t work out.
Andrew: Were you calling people who were already buying fliers and saying, “I can get you more distribution?”
Chris: No. I didn’t, actually. At the time I hadn’t even thought that far. I was just thinking like, “Maybe I can call pizza places and random things.” I really was just scraping whatever I could online of, “Oh, I know restaurants might want fliers.” I didn’t put a lot of thought in. I was calling and calling and calling.
Andrew: In retrospect, if you were to look back and say one thing that kept that idea from working, what would that be?
Chris: I would say I think that if I had done it a better way of marketing it, it could have actually been an okay business. But I just didn’t have the desire–I didn’t really have the drive to take that one that far. I realized like I didn’t care that much about doing it. So I just decided to move on to something else instead of trying to make it work.
Andrew: Okay. Is that when you decided to quit school before you had the next idea or did you know what the idea was first?
Chris: No. I didn’t. So that was like August, 2014 when I started that. And then I stopped doing that in, I would say, around September, October. Then I started a second business and then the third one in early December, which is when I dropped out, when I started that one.
Andrew: Okay. So first you started the third one, then you dropped out.
Chris: No. Sorry. I dropped out and then like a week after that was when the third one had started, which was the app one.
Andrew: I see. So this was intentional. It’s not like you dropped out because you had a great idea or a business that was working. You instead had a concept from the book “Think and Grow Rich” that you were going to live out before you had a successful idea. The concept was?
Chris: The concept of my life or the business idea?
Andrew: The concept of your life. You made a decision. You were going to burn your ships is what I’ getting at. You said just like I think it was Cortes who landed and then burned his soldiers ships so that they couldn’t go back unless they were victors, you said, “I’m going to quit high school so that I have no other option but to succeed in this business and then I’m going to find a business to succeed in,” right?
Andrew: And where did you come up with the business idea?
Chris: So, I was getting–so, actually previously my–I was just looking a lot about articles online about development companies and saying how people were paying like $300k or something for an app, which I thought was crazy at the time. I started thinking–because one of the things that happened when I read the books was I began to say–sort of a cheesy thing–but I started believing I could do it as well.
Andrew: Did you literally write it down and repeat it the way that they say?
Chris: No. I didn’t.
Andrew: Did you mentally find yourself repeating it the way that Napoleon Hill suggests?
Chris: Probably mentally. I don’t think I repeated it the same way he would have had it. I may have just been saying I’m going to be rich or something like that or I can do it.
Andrew: I see. So it’s not like a formal thing. Napoleon Hill in the book, “Think and Grow Rich” advises that you write it down and you pull it out of your wallet every day and you read it out loud. You didn’t do it. But it was more like walking around with this ambient noise in your head that says, “I’m going to be rich. I’m going to be rich.” Is that right?
Chris: Yeah. Exactly.
Andrew: Okay. And then you said, “Hey, there’s actually the people who are paying a lot of money for apps. . .”
Chris: Yeah. So that thought was in the back of my mind. And then mid-December my barber said she had an app idea. That’s when it clicked to me and I was like, “Wow, I have this idea that people wanted apps.” The thing is everyone has an app idea but not everyone necessarily has the budget to do it or that kind of thing. I gave her the–I said I could do it. I could find developers and I could have it done. I gave her the contract and everything and a week later, she pretty much said she didn’t have the money for it. I was like, “Okay.”
So out of like whatever, like I’ve got to do something because I just dropped out of school, I went on Craigslist and I posted an ad and I said, “Revolutionary app idea development. We build awesome app ideas that you have,” and stuff. And then I replied to, I don’t know, I went on SearchCraigslist.org so you could get the whole list of all the Craigslist ads from different states and then I just replied to like 20 posts, all the posts that I could find over like a week period.
And then at the end of December, someone wanted to do a Skype call. I was like, “Oh, someone’s interested.” So, then we ended up–it wasn’t Skype. It was Google Hangouts. We got on the Google Hangouts call. We talked for an hour. On the call, I said, “What’s your budget for the app.” He said, “Around $15,000.” That was the Trip to Remember app, actually, that you saw.
So, in my mind I’m like holy crap. So, then I ended up closing that deal and I sent him–the totally contract was $16,500. I gave him a Square invoice of $7,500 up front. He covered that. And then with that I used that to hire the developers, who I had talked to beforehand.
Andrew: I noticed that. When you and I were doing a screen share to check out your revenue you showed me Square. Why were you using Square to charge people?
Chris: I wanted to make it like the lowest barrier to entry to pay. At the time, that’s what my thought was. I still wasn’t sure how–I wasn’t sure how likely someone would be willing to wire the money as opposed to doing a credit card.
Andrew: You just wanted like a quick thing.
Chris: I wanted to make it quick and easy. I feel like barrier to paying can be a big issue for some people, especially with that. So, I thought I could do Square. Now we barely ever use Square now.
Andrew: Okay. And you built that app for him for $15,000.
Chris: It was $16,500.
Andrew: Impressive. Do you know how to code this stuff? I know that you’re a guy who discovered development early. At 12 you realized something about the Google homepage, you told our producer. What did you realize at 12?
Chris: So, my friend–the Roomba just went off.
Andrew: Oh, I don’t hear it. You want to go turn the Roomba off?
Chris: Yeah. I’ll be right back.
Andrew: Okay. Go ahead. He is actually staying at an Airbnb here in San Francisco not too far from where I’m recording. Generally he’s been traveling a whole lot and staying at random places, so random things like Roombas going off is not unusual for him. So, Chris, you were saying about the developers–actually no, the Google thing that you noticed at 12 years old.
Chris: So, when I was 12 years old, my friend Micah at the time, he was doing something–he was really big into coding and making small games and stuff. So we were at school and he went on the Google homepage and edited the HTML so that it showed–he edited the HTML so it said like, “I hacked Google,” or something like that. I was like, “How’d you do that?” I got really freaked out. I thought he actually hacked Google. Then he was like, “Oh, you just do this,” and then he showed me.
Then I got super interested because I saw this code and stuff. I’m like, “That’s’ what they talk about.” I was like 12 at the time. “That’s what they talk about on TV or whatever.” Then I started doing web development then. I did it until I was like 13, so like a year and a half maybe. And then though I really did web development, I never actually coded apps, though.
Andrew: Yeah. I see a passion for development. I see an interest in the technology. But from what I’m looking at your history, there is no ability to code up an app. So, you really had to rely on developers to do this and you were going to be the project manager.
Andrew: And where did you find these developers?
Chris: Originally I just knew developers personally that I randomly met over time. Then I just talked to people they knew. I looked at the apps they had done. What I did was to verify if the code quality was good was I hired a different person to look over the code they had sent to make sure they weren’t giving low quality work.
It was a developer that didn’t know the other developers. So, if they were saying, “We fixed this bug,” you could tell if they fixed the bug because you can test it, but if there was something in the code they were being sloppy, the other person I was working with would be able to know that.
Andrew: Okay. You built it. Was he happy with it?
Andrew: He was?
Chris: Yeah. He was happy.
Andrew: That’s the story of your very first customer and at that point you got hooked on development work?
Chris: Yeah. What happened was one of the other leads I had gotten, which turned out to be an $85,000 contract that came in March of 2015.
Andrew: Right. How’d you get an $85,000 contract?
Chris: Okay. So, what happened was I had replied to someone’s ad post and then he had also replied to my post that I had made before. So, I was like, “Oh, this is the same person,” I realized. I talked to him on the phone a few times.
So, he was the son of an architecture firm in Napa. And we had like the first call and it was fine and then we had a few more calls. Then he said to me after the second call he’s going to talk to his boss because he’s going to see if his boss wants to fund the idea. So then in my head I’m like, “This is probably not going to happen.” People say that all the time when it comes to apps that they’ll have someone fund it.
So, then I essentially went to–he came to me next week and he called me and was like, “Oh, he actually wants to fund it.” I’m like, “Okay, great.” Then I met with him in person, not the guy that was funding it, but the guy. Then we had like four or five meetings before I even met the guy that was going to fund it.
Then the fourth or fifth meeting, he brought me to dinner with the guy. We’re just talking and everything. He’s like, “What apps have you built before?” This was literally when we had just gotten the other contract just before. I said, “I have around three or four UI screens I can show you right now we’ve done. We haven’t coded anything. This is literally the first app we’ve done.” I showed it to him. He said, “Okay.”
Andrew: He said okay based on the fact that you just had screenshots.
Chris: Just screenshots. I said we never coded anything yet for it. He’s like, “Okay, that’s fine.”
Andrew: That’s it? And then he committed to $85,000?
Chris: They didn’t pay $85,000 up front. I think it was like $8,000 or $10,000 up front.
Andrew: Why do you think he was willing to do that? Even $8,000 commitment up front and a long-term conversation with you seems like a lot.
Chris: Because he is a successful entrepreneur himself as an architect. He’s an architect but his company is successful. He’s 78 years old, the guy that was funding it. I asked my dad that too later. I said, “Why do you think he did that?” My dad says he thinks he saw something in me, like he saw himself in me in the sense of here’s a young entrepreneur.
Andrew: “I want to help him out.”
Andrew: Like someone might have taken a shot on him. He’s going to do it with you.
Chris: Exactly. So, I think that was like actually probably one of the biggest factors.
Andrew: Okay. What was his app?
Chris: It’s called Architect Owner Builder. But it’s a private app. It’s not like available in the store. It’s an app that they use for their clients. They have a lot of celebrity clients. So, it’s like an app that shows the progress of their house being built and just like things like that, instant messaging, notifications, stuff like that.
Andrew: Okay. So, you built this thing. Did it come in under budget?
Chris: What do you mean under budget?
Andrew: Actually, I guess it wasn’t a budget issue. You were quoting him a price for the full on app.
Andrew: That’s a lot of money, $85,000. You definitely were able to come in at that cost and make a profit on that.
Chris: Of course.
Andrew: And it was the same set of developers?
Chris: The other developers were working on an existing project. So, I hired two developers from Ukraine. What happened was each time that we’d get a new–the way I did it so that we could maintain overhead initially was I paid them per project. So, if we didn’t have a project for a certain period of time, then I would be able to go, “Okay.” I wouldn’t have a full-time salary, which later in June we did do that, which I got screwed over kind of.
Andrew: We’ll talk about that because you’re basically only committed when you have a project, but when you have a project, you’re committed regardless of whether you get paid, which is a really tough spot to be in.
Andrew: How did you find these developers?
Chris: So besides the ones that I had originally known, I actually went on to–it was Odesk at the time and now it’s Upwork. I just interviewed–I had a very specific way of interviewing people where I could kind of just–
Andrew: What was it?
Chris: For example, I would ask them questions to make–I would ask stupid questions to make it sound like I didn’t know about development and if they didn’t respond in a way that made sense, then I knew they were trying to rip me off on the price or something like that. And then once they had the first developers, I’d ask them too for their feedback. Actually I don’t want to call him a consultant, but he was like an as needed person that would check the code. I’d ask him too what his thoughts were about the specifications and that kind of stuff.
Andrew: You also talked to them, it seems like a lot.
Chris: Yeah. I would just do a video interview. I almost got scammed a few times even. One guy was like a white guy, supposedly a white guy from the Netherlands. So, I added him and everything. And I’m talking to him and he had like a Chinese accent, like specifically Chinese.
I said to him, “I noticed you have an accent. It sounds like you’re almost from China or something,” and I looked at his IP address through the Skype. It said China. And then I said, “What part of Amsterdam are you in?” I don’t remember what I said, but I made up some fake names, like this side or that side of town and he picked one of the sides that was not real.
Andrew: I see. Got it. So, by talking to them, you were able to see if they were real or not and get a sense of who they are.
Andrew: I’m looking for that setting on Skype. But I know the one you’re talking about. I used it to see whether my guest’s internet connection was slow.
Chris: It’s Skype Resolve–it’s not on Skype. It’s like a program you can have.
Andrew: There’s also something that was a part of Skype I used to use. Those little tricks are just so freaking helpful.
Andrew: How much money did you make on that?
Chris: On the architect one? I don’t know if I. . . We don’t usually. . .
Andrew: Give me a neighborhood?
Chris: I would say that our margins on average are 50%.
Andrew: 50%. So you definitely had something there that finally worked.
Andrew: I’m on that Google–what was it, Craigslist search?
Andrew: SearchCraigslist.org. The reason I didn’t know the name is essentially they have a Google custom search on all of Craigslist.org. I could type it right in, “app developer,” hit search and I see people who are looking for an iOS developer.
Here’s someone, “We’re looking for talented developers who are passionate about. . .” etc. “We have a framework for TNC rideshare app and we have several extremely talented. . . “That’s another one. “Full-time designer and app developer wanted.” These people are actually looking to hire employees. Did you start calling people who were looking to hire employees and convince them to hire you instead?
Chris: No. I would have to vet them. If they were looking for full-time employees, if I thought there was a chance that they might want some other team to do it, then I would message them, but usually if it said that, send my resume, I would look for look for the ones that said they were looking for a developer in general, so kind of like a freelancer or something like that.
Andrew: And then what was your next step? Did you have a multi-step process for closing them?
Chris: Essentially. So, it would be send an initial email, get the response, setup a call, have the call, figure out what their concept is, figure out the budget, everything like that. They didn’t always know the budget the first call. And then send them the agreement and then if they go through then they go through, if not, then. . .
Andrew: Got it. All right. Let me talk about my first sponsor, which is Pipedrive. This actually fits in so perfectly with Pipedrive. One of the things I noticed about you, Chris, is that you had a really clear process for closing sales. You may not have even realized it because you were using it at the time, but there was a process there.
The reason that I like Pipedrive as a tool for keeping track of potential customers and existing customers and also closing sales is the whole thing, the whole CRM is designed to help people close sales. The first thing they tell you to do when you sign up for a Pipedrive account is layout what you think your sales process would be.
So, if we were to go back to Chris right out of school, it might be find potential people on Craigslist, column one. Column two would be send them an email. Column three would be if they didn’t respond, send them a follow-up email. Column four would be if they did, schedule a phone call, all the way to the end where you close the sale.
The reason that it’s important to use Pipedrive as opposed to your memory or Excel spreadsheet or any other system is because Pipedrive holds you accountable. You decide how many people do you want to add to the system every week. You see it in black and white. You know exactly how many people you called each week or how many people you emailed each week.
The other nice thing about Pipedrive is as you get bigger, you can say, “I’m too big to search Craigslist. I’m going to hire a virtual assistant who for $5 will search Craigslist with my criteria and add people to the first column. And then as you get a little bigger, you say, “I don’t want to be the first person to email. I’m going to assign column two to another virtual assistant, someone who has a little bit more of a language skill.” And so on down the road. And Pipedrive allows you to not just keep yourself accountable but coordinate this bigger growing team as it happens.
And there’s so much that I can add on to here but one other thing that I like is if you start to see that a lot of people are dropping out or not following through at a certain column, Pipedrive alerts you to it. It says, “Column number three, the one where you’re supposed to send a follow up, no one’s really responding. Maybe you should change your follow up email,” or, “Column number one, you’re not getting enough people in there. Maybe you could find a new system for finding potential customers.”
So much going on in Pipedrive, all designed to beautifully, elegantly drive potential customers to be customers. Really good. What I love–we use it to book guests here at Mixergy–what I love about it is it’s very easy to keep adding new people. It’s very easy to try closing new people when they’re ready to close, but that in between stage, we were finding we were missing people, Chris. There would be someone who said, “Yes, I want to do an interview.” We’d say, “Great, here’s how you book.” Then they wouldn’t book and we’d forget about them.
Well, Pipedrive has this little feature that will turn a card–each contact is represented by a card–we can turn that person’s card red if they haven’t had any interaction with us for ten days or five days. I don’t know what number we set. But you can set it yourself. That way you get an alert that says, “Hey, team, this guy is about to forget about you. Move on it.”
All right. Lots of other features–here’s the best thing to do. I can talk about this for days. Literally I believe I have talked about it for days with my friends. But I think the best way to understand a piece of software is to actually use it. They’re going to give you a lot of free time if you go to the special URL they setup for me. Here it is. Go use it and you’ll be able to try it, plot out your sales process, see if it doesn’t increase your sales, see if it doesn’t increase your discipline, see if it doesn’t allow you to hire more people to work with you on your sales process.
The URL is Pipedrive.com/Mixergy, Pipedrive.com/Mixergy. They’re going to give you a bunch of free time on it because you’re coming through my URL. I’m glad that they’re sponsoring because I talk about them anyway. I might as well get paid to talk about them. Imagine someone, Chris, came to me and said, “Hey, I’m going to pay you money to talk about your wife.” Great. “I’m going to pay you money to talk about what you added to your iPhone last week.” Good.
I see how you got your first customer. I see how you got the bug. Where did you get the next batch of customers? Those two aren’t getting you to $500,000.
Chris: No, definitely not. So, we ended up getting a few other projects such as Premium Wallpapers HD. Essentially what happened was we had the first batch in the first six months and that was mostly from online. Then in October of last year, around October of last year I started going to events in San Francisco.
I actually lived in Northern California before then in Santa Rosa because that’s where my family is/was. It was the first or second week of October I said I was going to go to an event every single day and just meet people because I still had not–I was in the startup world but not as much as I thought I should have been.
Chris: I went there. I went to really random events like some Chilean-Californian energy conference. I did it just to get out there because I had never done a lot of networking. I’d done a bit, but not a lot. So, I wanted to practice. So, I doctor that and ended up getting a new client in the first week that I was there.
Andrew: From one of these random events or from one that actually–a random event?
Chris: Yeah, a random event.
Andrew: What was the event?
Chris: I was an event hosted by Appster, actually, which is technically a competitor.
Chris: They interviewed a few people that had raised funding successfully in their startups and it was like 25 Taylor Street in San Francisco. I think it was the WeWork location.
Andrew: The WeWork Center for those events. Okay.
Chris: Right. And then I went upstairs and I ended up meeting with one of these guys. His name is Chris Kettle, a similar last name to me, Kelsey. So, he ended up being the first client I got and that was like the third event I went to. It automatically validated that going out and meeting people was the smart thing to do.
Andrew: I’m looking at Premium Wallpaper HD in the Google Play store. It’s got 420,000 reviews, 4+ stars out of 5 rating, really positive. I can see that people are really into this thing. But the maker of it is listed as Pixel Apps LLC, not you.
Chris: Yeah. So, what happened was when we originally built it for the client, their original account was not our account. We’re building these for the clients. So, they post it on their own developer accounts. It actually got sold in 2015 at the end. I don’t know what happened. Beyond after getting sold, I have no idea who–
Andrew: But you built that original version for a company that builds apps for themselves, right?
Andrew: But they do iOS and Mac apps, it looks like.
Chris: Yeah. They do a little bit of everything. Sometimes what happens is we get contracted even from–it wasn’t this case–but even development companies will subcontract us.
Chris: So, there are times where we build apps that we can’t even say that we built. Thankfully we can say we built that one because it did really well. But usually we have to sign an NDA. They say their company did it.
Andrew: You told our producer one of the biggest challenges was trying to figure out where to take the company, what direction. What do you mean? What kept you from feeling like you knew the direction?
Chris: Because in the beginning it was just literally I felt like a lot of this happened by chance in the sense of I happened to go on Craigslist and test it out. I didn’t know how to find a steady pipeline. At the time we were doing well, but it wasn’t to the point where–my goal was to have a multi-million dollar company, essentially. I remember at the end of 2015 I was looking back and I’m like, “We did well, for sure, and definitely did well.
But I was kind of like I felt like I could have done more than we had done. And in terms of the direction, it was kind of like I felt like I was reaching out in the air, like go to events, network, maybe you’ll find someone that wants something, but it wasn’t steady. But if you have a company where you have employees you have to pay and there’s a lot of overhead and everything, you’re like, “Okay. I’ve got to keep getting deals. It wasn’t steady.” That was my concern.
Andrew: I get that. The other issue, it seems like, is that you kind of have random customers. There was one, was it a lawyer group who came to you wanting a development job?
Chris: Yeah. Just to give you an idea of how random that was, one of our people on our team at the time, he went to university in Detroit. He told one of his friends who–I don’t know if he worked in the school. He had some kind of position there. He was friends with these lawyers and he said he had an app he wanted to build.
Then we got like a random email in, I think it was January of 2016. We closed the deal in February. But in January they emailed up, said they had an app idea. They said it was like four of them and they were all funding it together. It was like a running app for old people. They ended up never wanting it published publically. It was fine, but they never. . . Anyway, that contract ended up being $370,000.
Andrew: Did you do it?
Chris: Yeah. We did it.
Andrew: That was one of your projects?
Andrew: So, actually that came to fruition.
Chris: They never had it published publically though, but we did that. What happened was they had contacted saying they had reached out to local development companies in Detroit. I was expecting them to go with them because they were local and everything. But I think because of some of the previously successful apps we had built for clients, like Premium Wallpapers HD. They emailed us again. They barely replied originally.
Then in February, I was at MWC in Barcelona. I remember because I was with two of my friends. We were at this event. I remember reading the email of the guy saying, “We decided to do it.” I can even look for the email right now if you want. I can see if I can find it. So, he’s like, “We’re going to do this.” They put the price as $370k. I don’t know why. They never asked me for a quote or anything. I didn’t even think they were going to work with us. He just emails us saying we’re going to do it at a $370k budget.
Andrew: And is that a situation where you’re a little afraid to ask why because as much as you want to ask why so you can get more people like him, you’re also feeling like if you ask why, they might doubt themselves?
Chris: Yeah. That’s definitely why I didn’t ask why. I figured it’s because they probably got higher quotes from somewhere else and they assumed that $370k was fine or something. But I don’t know. I guess they probably just had a lot of money and they were like, “Okay, we’re going to do this.”
Andrew: So then did you end up organizing or finding a niche to focus on? Was it even important to do that?
Chris: We tested it. So, for example, in March I had a few of our team members in London and also in San Francisco. They went to different art galleries. We wanted to see if we could build for specific markets. I knew that art galleries were a dying industry and we could modernize it by having a virtual reality app. You could walk in the gallery, things like that. So, I had our team, like we researched all the different problems they had. We spent a lot of time doing it.
What we found was that pretty much even the art–the art galleries either didn’t have the money for it or the ones that did are owned by very old people who don’t understand technology. I realized it wasn’t worth having to explain it to all of them to do it. We tried it in a few different markets that didn’t work at all. Then what happened was a lot of people started coming to us for marketing contracts and that kind of thing because of the previous apps. We originally started as a development company and then moved to marketing after.
Andrew: Do you make most of your money now from marketing?
Chris: Not the contracts themselves–it will be a combination of development and marketing. So, the development is usually more. But they work with us on the whole thing because of our marketing.
Andrew: I see. Because you guys won’t just build it, you’ll market, they’ll go with you and have you build it as opposed to someone who will build it and then they have to figure out what to do to get users.
Chris: Exactly. Yeah.
Andrew: I see. Is that your niche? I heard that you were into banks now, that banks were a big group of customers for you. Do I have that right?
Chris: In the beginning of the year more so. I don’t know how much I’m allowed to say about that because they were really secret about NDAs and everything. But essentially I had met someone–are you familiar with Draper University?
Chris: I met a lot of people from there. I didn’t attend it, but I just met one kid and then they introduced me to everyone else.
Andrew: The VC created a university because he wanted to teach people a different way of thinking about the world and about business.
Chris: Exactly. So, there were a few kids form Mexico there and they had some connections in Querétaro and Mexico City and places like that. One of the kids, his family was very connected and they said they had a friend who had a bank and they wanted to do an app. So, that’s how it started. So, we did a few projects with them.
Andrew: Apps for banks. And banks are going to hire a guy who’s dropped out of high school, who’s still in his early 20s, who doesn’t have a formal–
Chris: I’m 19, but yeah.
Andrew: Oh, 19–who doesn’t even have a formal employee base.
Andrew: Something doesn’t seem right about that.
Chris: I think what it is is that it’s because of the network and referrals. If it’s like, “I know a guy who does this and that.” Also because I think people also look at me, they see a young person plus apps, they often assume whiz kid, especially if you drop out of school.
Andrew: Still, banks don’t want a whiz kid. They want security.
Chris: Yeah. I don’t know.
Andrew: What are you building for them? Are you building the app that people–
Chris: Yeah, building the app people can use for their–
Andrew: To see how much money is in the bank account?
Chris: See how much money they have and all that kind of stuff.
Chris: It wouldn’t work in the US because in the US they do that stuff in house, especially if you’re using people from other countries and that kind of thing, it’s very security. But in Mexico, that’s what I realized is a niche, doing kind of big projects, kind of being the big fish in the small pond. Because we’re based in San Francisco, helping a company in Mexico, I think just the perception looked very powerful to them. Because of that, we were then able to, I guess, use that to our advantage of being based in San Francisco.
Chris: And then also being a personal connection. I think if we reached out to them randomly, it would not have worked. Because it’s a family friend of theirs referring. . .
Andrew: I see your site right now. You said founded in 2014 by 17-year old Christopher Kelsey. So, you’re right up on your homepage saying, “This is a teenager who’s running this business.” And they’re okay with that?
Chris: Yes. Like I’m saying, I really think that the–
Andrew: Connection helped.
Chris: The connection helped, but also just in general being a company, because most development companies are not always but are often run by older developers that are like 30, 40 years old, it’s kind of like a unique twist because you don’t see a 17-year old or 19-year old kid running a company like this usually.
Andrew: I get owning that. I’m just shocked that a bank would be eager to do that and even more so that then you would make that your niche because banks in general would be open to it.
Chris: It wasn’t a full on niche in the sense of our main focus of the company became that. It just happened to become something that we did. It’s not like we only focused on banks. Whatever projects they came to us with we would do.
Andrew: By the way, I really like your website. It’s so easy to get lost and just flipping around on it because I every time I move, every time I scroll, another–like the phone’s image changes. There’s another app that goes on there. What kind of marketing do you do? It seems like that’s a big draw for your customers.
Chris: We essentially from the basic perspective, obviously there’s social media, doing Facebook ads and that kind of thing, managing the social media accounts. But then on the higher level, we ended up partnering with a few people that have, for example, there’s someone named Rembrandt Flores who’s based in LA.
He did all of the PR and marketing for Tinder. He also has a lot of celebrity connections. So, if you go on his Instagram, he has like the Kardashians and all that kind of stuff. So, we have people like that that will work with us on certain parts of it. So, if I need him to go, “Hey, we need some PR for this,” we’ll do that.
Andrew: So, what he’ll do is celebrity PR for you?
Chris: He can also do press PR as well. But celebrity as well, like for example, right now we just started working with a fashion company, very, very small, like it just started. One of the things I’m doing is I’m connecting her, her name’s Marsha, with Rembrandt so that they can essentially–I’m going to be connecting them–so they can see what celebrities would be wanting to wear it that they can feature on their website, that kind of thing.
Andrew: What else?
Chris: Also essentially helping with partnerships. So figuring out–for example, we recently partnered with the BayAngels in the Bay Area, obviously. And they are an investment group. So, essentially when we’re working with certain companies, we will go, “Hey, these guys are raising funding,” or this kind of thing, essentially helping connect them to investors.
Keep in mind too that we started more as an app development company, then marketing and now recently we started moving on to more of the accelerator model, which is where we share an equity basis as well and help them with a lot more than just doing basic marketing services. So, that’s what I mean.
Andrew: The BayAngels?
Andrew: Something doesn’t look right to me about them. I remember years ago every city used to have their collection of angels. They would band together. They would have meetings. They would have pitch competitions. These guys I think used to get off–I don’t know the BayAngels specifically, but a lot of these guys used to just get off on the fact that they were being asked for money and they could decide yes or no and they would make like two investments a year but it would be as a team together.
Chris: I completely agree with you.
Andrew: AngelList undid all that. Actually, they were kind of undone before that. It was the whole angel, the successful startups who became angels and were prolific investors that killed that model. But what were you going to say?
Chris: I agree with you. One of the things I noticed with a lot of events that are hosted in San Francisco is that they make money off of the events. Yeah, they get off on a lot on getting to call themselves an investor. They invest like $10k a year in their son’s whatever it is.
Chris: I definitely think there’s a lot of that. Even from the perspective of like looking at everyone from an analytical perspective, I’ve definitely noticed that as well. I don’t want to name specific names, of course. That’s definitely a huge thing that’s going on.
Andrew: Everything I’m seeing about the BayAngels looks like they may be it.
Chris: Yeah, if you feel that way, it’s fine. Essentially what happened is I spoke with their CEO because he reached out and then they just said essentially that they would like to see how they could invest in some of our startups. So, anything beyond that, I really wouldn’t know.
Andrew: I see your angle, whole accelerator thing. I’ve seen some development shops try to do that, where they say, “We’ll reduce our cost for projects we care about if we get a share of the business.”
Andrew: As a result of getting a share of the business, we’ll have an incentive to keep helping out. Over the years I’ve seen that happen in different cities.
Chris: That’s somewhat what it is. And then also, for example, our CMO is Deepansh Jain. So he had an app called Shifu that he sold for $8 million in January. They had 1.5 million daily active–you can see on TechCrunch even.
Andrew: And you got him as a CMO?
Andrew: Okay. By the way, they’re not on your website, none of these people are.
Chris: No. We haven’t updated the website in probably like eight months or something. We’re actually releasing a new site specifically dedicated for the accelerator that’s going to replace the Appsitude.com site. And that one has Deepansh on it. It actually has Deepansh, Fernando and I on it.
Andrew: Yeah. I think that’s one area where your website could do a little bit better. I can’t even click on Fernando to see who he is.
Chris: I completely agree.
Andrew: Fernando De los Rios is the Head of UX and design. Is he also your cofounder?
Chris: No. I founded it originally myself.
Andrew: Why is it when I asked you a few questions before the interview started you said, “Let me check in with Fernando.” What’s his connection?
Chris: He’s actually our COO now. If you see on his LinkedIn, I think he also put COO now. As I was saying, we haven’t updated the site in like eight months, mostly because we haven’t had to. If we found that people were–I get like you could technically update it all the time, but we never had to because everything was working fine as a business. If we found I wasn’t, then we would have changed it.
Andrew: I get that.
Andrew: All right. Second sponsor and then I want to come back and ask you a little bit more about how you got your customers, what’s the process you put in place and what do you do for promotion that anyone who’s listening to us can learn from and hopefully use themselves. First, the second sponsor is HostGator. Before we started I asked you about HostGator and you said you have a current connection to them. What’s that?
Chris: So, a lot of the websites that we’ve used are hosted on HostGator.
Andrew: So, you build the websites for them too?
Andrew: They just happen to be on HostGator.
Chris: Yeah. When I was like 13, I think I used them, but they’d always been on the back of my mind. Like even the first site that I had done for the flier site was hosted on HostGator.
Andrew: Yeah. They are an easy company to set up your first website with or a quickie website because you could just go on there and within minutes have your site up, you know it’s going to work and you know if there’s a problem, you have someone you could call on. In fact, they pride themselves on having real human beings answer calls.
Andrew: And I’ve noticed that a lot of people who I interview have clients and they need quick websites for their clients. So they basically resell HostGator’s hosting solution. There’s one guy who I interviewed who all he does is create websites for other businesses and so he creates them using HostGator. He plugs in his software on air and they’ve got a website that is essentially run on HostGator but he’s the rep for it.
So if anyone out there has got clients who need websites, an easy way to do it, especially if it’s like mobile app–mobile app websites don’t need to do much. They just need to work and be inexpensive so that they don’t add to the burn rate of the company. So if you’re building web apps for your clients and you need a landing page for them, go to HostGator.com and set up your account with them.
In fact, don’t go to HostGator.com. Add a little URL at the end that will take 50% off and frankly give me credit for sending you over. That full URL with a little bit at the end is HostGator.com/Mixergy.
And the nice little benefit of doing that is if you do that, you buy through me, I think and I have found that companies look out for my customers differently because I think they’re a little bit nervous about me. I think they see, Chris, that I ask you to show me your screen and show me your numbers.
I think they see that sometimes I ask some questions that come across as a little pushy. They don’t want to piss off my customers. So if you’re going to buy HostGator anyway, you might as well do it through my special URL. I think HostGator takes care of all of their customers anyway. But I like to look out for my people even more.
All right. You’re also going to get a $100 AdWords offer. You’re also going to get a $50 search credit from Bing, Yahoo, which means you’re going to be set up with ads that you can start buying, of course, really easy to install WordPress. Of course as you grow with WordPress and you want maybe a WordPress managed solution, they’ve got that, of course unlimited email addresses. That should just be a given at this point, unmetered disk space and bandwidth. All right. So much more coming in there. Just go to HostGator.com/Mixergy.
Before we started, I said, “What’s a win for you, Chris?” And you said, “I want to tell my story, but what I’d really like is for someone who’s listening to get something out of this that they can use.
Andrew: So, there are a few areas that we can talk about that. One is how you get customers–I think that’s definitely information people can actually act on. The second is what recommendation do you have for promoting apps. Let’s start with the first one.
Chris: Okay. So, in terms of how to get customers–
Andrew: Yeah. What’s worked?
Chris: Do you want me to use for me or the business in general?
Andrew: Let’s talk about you. What’s worked for you that will work for other people?
Chris: So, I think that one of the first and simplest ways to do it in terms of validating a concept really is Craigslist or going on online forums. So, you can go on a forum that is relevant to whatever your niche is. For me, it wasn’t as successful actually going on forums. Craigslist was the best way.
But I think a lot of it goes back to networking. For example, there are websites like Rolex forums, there are like Lamborghini clubs you can find online where you can network and meet people. It depends on what your business is. But if you want to meet clients that have more capital or more money, those are great places, I would say, to meet those kinds of people. So, in terms of getting customers, for my business, it had a lot to do with finding people that had the funds to afford $100,000 for app. So, you can’t just go online and find anybody.
So, in terms of finding customers, the online methods that worked for me would be Craigslist. But other ones I would suggest that didn’t work for me that I think would still work would be online forums. Obviously YouTube–it depends on the business. That’s the thing.
Andrew: One of the things that you found is that validating the idea by using forums and Craigslist, it’s not going to scale, but it’s going to get you some feedback right away.
Andrew: It’s one of the things that you told our producer you did after you listened to Noah Kagan’s talk somewhere and he said that you should validate on Craigslist. I know he’s also validated on Reddit. So you tested it out. You’re still advocating it to other people. What about as you grow? Did you ever find that source, the beginning of your funnel, beginning of your pipeline?
Chris: I found it to be meeting–really what happened was meeting people that had money. I guess you could say rich people.
Andrew: How do you find rich people?
Chris: In terms of what I did, I went to places that people–okay, for example, Draper University, a lot of the kids there were spending $10,000 to go to a program for five weeks, eight weeks or something.
Andrew: Is that what it cost? Okay. So you figured their parents had money.
Chris: I didn’t go there thinking that. Yeah. I didn’t go there thinking that. I just happened to go because I had seen it at–I forgot the event. But I saw Tim Draper speak. Then I visited the place and I met with the kids there and a lot of them wanted to startups and that kind of stuff and apps. Then I went, “Okay.” I met kids there–that’s what kind of helped get me started with that. Then also mostly just getting involved with rich people, really.
Chris: Yeah. In terms of finding people like that, I haven’t gone golfing really or anything like that. But I’ve gone to exclusive–like there’s Olympic Club in San Francisco. Olympic Club is like a very private club. I don’t have a membership there, but my friend would bring me as a guest all the time. There’s also Battery Club. I didn’t go into Battery Club, but I have friends that go to Battery Club. So, people like that.
Andrew: So what has worked? What’s the one thing that’s really worked for you?
Chris: I would say really what happened was going to the startup events. It wasn’t the startup events themselves, but it’s the people I met down the line.
Andrew: I see. You meet someone at the startup event. You get to know them and then they introduce you to someone else.
Andrew: Do you have a process for staying in touch with them or does it naturally happen with you?
Chris: Originally it was naturally. I didn’t have any CRM. I would use an Excel sheet and then later–I would say I contacted over three days and I would mark it as an X. Then we started using HubSpot. I have to say, like startup events, the majority of them are a complete waste of time. Like 95% to 99% of them are an absolutely waste of time.
I really think it’s just like an easy way for people to–they have a VC who doesn’t really invest in anything talk about what startups he invests in and then you get to pitch in front of VCs that don’t actually invest anything. I realized the vast majority are a waste of time. But then the people I met would introduce me to someone else and then introduce me to someone else. The people at the startup events usually didn’t have–they weren’t always the best connections, for sure.
Andrew: Okay. So let’s switch gears to promoting apps. What’s worked?
Chris: In terms of what’s worked, from a–there are a few different methods. One of them is obviously doing the social media aspect where it’s like Facebook ads and that kind of thing. Then on the other hand there is having a celebrity or someone do a shout out. Now, what’s worked in terms of social media, it’s not just social media…
Andrew: What’s worked best? If you can give me one thing that’s worked especially well for you, what would that be?
Chris: SEO, app SEO.
Chris: That’s why Premium Wallpapers HD did really well. I don’t think it’s for everything.
Andrew: Like Google search engine results or App Store SEO?
Chris: On the Google Play store.
Andrew: Okay. Got it.
Chris: The thing is it really depends if your business is the app or if the app is like the medium for it. So the business was the app for Premium Wallpapers HD. SEO happened to do very well for that. But most apps, I don’t think, are going to do that. The app game has completely changed as well because people think you can just build a game now and it’s going to do really well based on–it’s way too saturated now. I look at it now as if you’re going to do a business with apps, the app needs to be a medium of something. It should not be the business itself.
Andrew: Give me an example.
Chris: For example, if you’re going to build some kind of simple game–I can’t think of an exact idea, but some random simple game that’s kind of clever–it’s going to be hard to make it become successful now just off SEO. You’re going to have to do some kind of marketing for it. Unless you really have a passion for marketing for that game, it’s going to be generally speaking, hard to make it worth it where you’re going to have enough revenue or profits.
Andrew: What’s the better approach?
Chris: I think for me if I were to do it, I would be doing like a SaaS platform, something that’s like a subscription-based model. Not as an app. It could be a web app that charges $20 a month for X, Y or Z. We might release an app later that is an add-on for it to make it easier to use, but not the business itself.
Andrew: I see. So, the app is a tool for the people who are paying for the SaaS.
Chris: Yes, exactly.
Andrew: As opposed to go and get people to install the app and make money from the app.
Chris: Yeah. I don’t think that for now while we’ve been doing marketing, last year was different but this year it’s not been really app SEO. For example, one of the projects we’re working on, we’re doing a lot of Facebook ads, testing out what works, what didn’t work and then just kind of increasing the conversions. It really kind of sounds like generic marketing stuff, but then–some of it is, but some of it isn’t.
Andrew: But the ads are to get people to install the app or to get people to sign up for the service that happens to include the app?
Chris: This year it’s been doing that.
Andrew: The second one.
Chris: The second one, yeah.
Andrew: Get people to sign up for the service and then once they do, they also happen to all have an app.
Chris: Exactly. Yeah.
Andrew: Got it. So, it almost feels like having an app is like having a customer service phone number. The product is what you’re selling, you give people a phone number so they can contact you, an app so they have a better experience and you give them all these other things in addition, but the main thing is the product that the app is just an extension of it.
Andrew: All right. That makes sense. Frankly, that’s what we’re doing at Mixergy. I don’t believe that the App Store is a welcoming place for new products. Frankly, I don’t install that many apps any more either.
Chris: I don’t’ either.
Andrew: I didn’t go and discover Pipedrive in the App Store. I just happened to have a Pipedrive account for a long time and one day someone called me in the morning to say, “What do you think of this guest? Why don’t we have them on?” Then I installed Pipedrive and I was able to look up the guest. I feel like that’s the large number of ways, the paid apps I have end up on my phone.
All right. This has been really good. I didn’t even get into all your travels, but anyone who wants to see where you’re traveling to and how you’re building this company as you’re apparently traveling to Singapore a lot–
Chris: I’m going to Beijing a lot.
Andrew: I see Singapore, Malaysia, where else have you been, Costa Rica?
Chris: Thailand, Costa Rica, I just got back from New York City a few days ago.
Andrew: Los Angeles, Hong Kong, lots of different places. If they want to see it, they can go to your Instagram account. Your Instagram account is Instagram.com/ItsAppTime, right? And your site is Appsitude.com.
And of course, thank you to both of my sponsors. The first is HostGator. Many, many people who I’ve interviewed have currently or in the past had HostGator accounts. If you don’t like your hosting company, switch. You don’t have to be with them. Switch to HostGator. Go to HostGator.com/Mixergy.
If you want to close more sales, understand the structure that will help you and your team get more customers, you’ve got to check out Pipedrive, use my special URL. It’s Pipedrive.com/Mixergy. All right. There’s someone else–I know who it is. We use Swiftype for search on my site. Those freaking guys are so good. Do you know Swiftype?
Andrew: I’ve got to thank these guys. I forgot to do it in my last interview. They have been so helpful. It’s these guys who just–our search for interviews was so horrible that I just searched online or someone on my team searched online, found Swiftype, integrated it into our site.
We custom-coded it for them so they’re built into our site. We custom-coded it into the app we’re going to release soon. They’ve just been helping me out tremendously, above and beyond what they usually do for other customers. I want to say thank you to Swiftype. If you hate your search and you need new search, you’ve got to check out Swiftype.
You don’t need a special URL. I’m just telling you your good guys and I’m glad and appreciative they’ve been helping me out. Thank you, Swiftype. They also were a very popular interview but that’s because they have such fantastic investors in the YC world. Their YC partners, the ones who took an interest in them have a huge following. So the Swiftype interview on Mixergy ended up being really good. Swiftype, thank you very much.
Chris, thanks so much for doing this.
Chris: Yeah, no worries. Thank you.
Andrew: Cool. Bye.