Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I’ve interviewed entrepreneurs about how they’ve built their businesses.
And a few weeks ago, today’s guest sold his company. And one of the fascinating things to me about his company is that it was a dating company. I’m actually looking at Andrew Chen’s blog right now where he talks about why investors don’t invest in dating companies. He’s got this long blog post, but I’ll sum up some of the points. He says it’s got built in churn. Dating sites, you match somebody and of course, they’re going to leave because they’re in a relationship.
Dating has a small shelf life. Paid acquisition channels are expensive. City by city expansion, he says, sucks. It really is challenging. It’s hard to exit. Demographics mismatch with investors–there are so many reasons why dating sites are tough to build and to grow and to make successful. And today’s guest did all that. How? How did he do it? And how was he able to build something up and sell it? That’s what I want to find out today.
His name is Ludovic Huraux. I’m hoping I’m pronouncing his French name well enough. He is the founder of Attractive World, which is a French dating site that was acquired by Affinitas, a German company. Today he’s working on an app called Shapr, which I have access to right here. But you can see I have to wait 13 more hours before I get to go back into it. It basically uses all the mechanics of dating, the stuff you might expect from an app like Tinder, to match you up with people that you might want to network with and meet for coffee and do work with. I’ll ask him about both of those companies.
I get to do all this because of two great sponsors. The first will help you organize your books properly–not help you, they’ll do it for you. It’s called Bench. The second one will actually get you the best developer or designer you’ve ever had. It’s called Toptal. I’ll tell you more about those later. First, Ludovic, welcome.
Ludovic: Thank you for the invitation.
Andrew: What did you sell the company for?
Ludovic: Because I was running another company called Shapr and I created my first venture called Attractive World–
Andrew: No, sorry. How much, I should say–how much did you sell it for?
Ludovic: We cannot talk about that. I have an NDA with the seller.
Andrew: Is it fair to say over $10 million?
Ludovic: Yes, you can say that.
Andrew: We can say that? All right. But you don’t want to go any deeper than that?
Ludovic: No. I cannot talk about that.
Andrew: Okay. Fair enough. And I’ll ask you later why you sold it. But I’m curious about how you got here. Before this, you were working at a private equity firm in Paris. What did you do there?
Ludovic: Yes. I was working in an LBO firm and I was–
Andrew: Leveraged buyout.
Ludovic: Leveraged buyouts, yes.
Andrew: As a kid, this is how geeky I was–as a kid, I wanted to do leveraged buyouts. The idea behind a leveraged buyout is you have a little bit of money. You borrow a whole lot more. And then you go and you buy a company, you turn it around and then you sell it and boom, right? You end up with this big windfall and you get to go do it again and again and again.
Andrew: Lots of companies have done it.
Ludovic: Exactly. It was a good period. At the very beginning, I wanted to work in the sport industry, but I understood that it’s a very tricky business. You really need to know a lot of the [inaudible 00:03:19] the sport players if you want to succeed. So I decided to work in finance. In France, LBO [inaudible 00:03:25], people didn’t know that in 2004, 2003.
So I decided on this LBO firm. I’d got a lot of responsibilities. I had carried interests. I was on the board of a company with 100 employees. So my mother was very proud of me, and I was getting money. I was very happy about that. But every week, I wanted to create a company. I had a new idea and I was making my business plan. But afterwards I didn’t have the courage to make the leap and quit my job, you know? So I had a lot of ideas.
Andrew: And you kept telling your friends about them. In fact, you even had an idea that came to you when you were traveling that’s similar to Airbnb, to what Airbnb is today. What was that idea?
Ludovic: It was a mix between Airbnb and Century 21, because when I was younger, I loved to travel around Europe. I didn’t want to go to hotels. So I booked apartments. But there was nothing at this time like Airbnb. So it was very difficult for us to find a very nice apartment with my friends. I didn’t think about it as an internet company, but more like you know Century 21?
Andrew: The realtor.
Ludovic: It’s an agency, like a broker–yes, exactly, with apartments. I saw that it could be the same, but only for short-time rents. So I wanted to work on that, but as I told you, I didn’t have the courage to quit my job. Every week, every month, I was getting to my friend and saying, “Okay, I have this new idea.” At the end of the day, they say, “Forget it, we know that you won’t have the courage to quit your job to create your company. Otherwise, just do it and we will support you.” When they say that, it was the idea about Attractive World, the dating website I created in 2007.
Andrew: I see. So they finally said to you, “Look, you’re never going to do this, so either do it or shut up about it.” You finally said, “All right, this is the idea. I’m going to go with it.” What attracted you to the idea of a dating site? It’s pretty tough.
Ludovic: Yes. In 2007, there was only one dating website in France called Meetic. It’s exactly Match.com. And they were very comfortable. They were public. I think they were making more than $100 million revenue in 2007. There was no other dating website as a competitor. I saw that the market was going to be segmented and probably that we would have a space in the premium dating. So that’s why I created these websites. My friend invested at the very beginning of the company. But I didn’t have any CTO. I did not have any business partner who knows marketing. So I was very naïve about that.
Andrew: It was just you with some money from your friend. How much money did you raise the first time?
Ludovic: The first time, maybe I invested $50,000.
Ludovic: $50,000 and my friend invested $50,000 as well.
Andrew: And by the way, you were in your early 20s. You were like 22 years old when you were working for the LBO firm. That just goes to show how great it is to start at an LBO firm because you make good money, which sadly you had to give up and your friends make good money, which means you have access to their wallets a little bit and to their intelligence and their connections, which is fantastic.
Andrew: By the way, did you quit the job when you had this idea, when your friend finally told you, “Do this or don’t, but don’t keep talking about it.” Did you at that point say, “I’m quitting the job at the LBO firm?”
Ludovic: Yes. That’s what I did.
Andrew: You did?
Andrew: Without having any revenue, you just said, “I’m going all in?”
Ludovic: Yes. In France, it’s a little bit easier because you get 80% of your salary the next 24 months.
Andrew: If you quit?
Andrew: If you quit, not if you get fired, if you just go in and say, “I quit,” you basically get a salary?
Ludovic: Yes. You make a deal with your boss and you have an agreement and you quit and you get money to help you to create your company.
Andrew: Wait, is that if you quit for any reason, or if you quit to start a new company?
Ludovic: It’s a specific agreement that you can have with your employer and it’s like a severance of your contract that you both agree and with that, you can get [inaudible 00:08:03] to create your company.
Andrew: I see. That is unbelievable. I had no idea. All right. So now, you have this money. You’ve got a salary coming in to you. I don’t understand why more French people don’t quit and go start companies. But you don’t have technical ability. It’s time to go and get somebody to build this for you. You don’t have a CTO. Who did you go find to create the first version of the software for you?
Ludovic: I went to see some students. But I didn’t know how difficult was the tech part of the job. So I made so many mistakes the first two years.
Andrew: You just went to two students? Why two students?
Ludovic: Because I didn’t know anybody in the tech industry, anybody. I was not a geek. I didn’t know anything about tech and everything. Some of my friends, they were laughing at me when I told them I wanted to create a website because they told me I even don’t know how to have internet in my apartment.
Andrew: Literally, is that true?
Ludovic: Yes. I was not a geek. I was not a geek.
Andrew: Because you could have it. I think even at that point, I’m pretty sure you could have just bought or licensed someone else’s software and said, “I’m just going to take software that already exists. I’ll use it on my site and hire designers to make it look nice.” But you didn’t even know to do that?
Ludovic: No. I didn’t even know to do that. I was very naïve about that. I think that sometimes it’s good. The way I sought the positioning and the way we launched Attractive World was very different from the other websites. For example, when we started it, we didn’t invest in marketing online on Google, for example. We hired 70 people who were walking on the streets of Paris and said, “Okay, Attractive World is a new very selective website and we are selecting the first 1,000 founder members.” So, we made the launch offline and it created a lot of buzz.
Andrew: People would go in the streets of Paris and say, “There’s a new dating site, you should go check it out?”
Ludovic: Yes. The first months, you can only sign up. We didn’t open the whole website. You can sign up and after one month, you will know if you’re accepted as a founder member or not. If you were accepted, it will be free forever. So we had a lot of signups through this marketing.
Andrew: I see.
Ludovic: And we selected our first 1,000 members. Maybe we had 5,000 sign up. We selected 1,000. We opened the website and people were so happy. They talked about that. We had a lot of bloggers and journalists who wrote an article about Attractive World. It’s how we launched Attractive World.
Andrew: Let me understand this a little bit better. These people who walked around and tried to solicit, were they like–when I came out of the train this morning, there was a man handing out little leaflets about the local gym. Is it like that, where they were just handing out leaflets or did you do something different?
Ludovic: They were going in a very trendy club, very trendy place in Paris and they had some black cards.
Andrew: Like a business card.
Ludovic: Like a secret code, like a business card with a secret code and you had to enter the secret code to apply as a founder member.
Andrew: And did they look good, the people who were walking around handing those cards?
Ludovic: They were cool.
Andrew: They were cool. Got it. The guy who was handing out the–
Ludovic: It was not about good looking. We wanted to create a new lifestyle because in 2007, I don’t know how it was in the US, but in France, dating was taboo. People were not proud to say that they are on a dating website. So we wanted to make it more trendy to help the dating to be more cool.
Andrew: Did you ever have any experience with a dating website before yours? Did you date on one of these sites?
Ludovic: No, not at this time. But I had some friends who were working in finance who did it. They told me it’s impossible to meet the right person on Meetic because there are so many people. There are some people who are very [inaudible 00:12:26] lifestyle, other people who want a serious relationship, other people who want just a one-night stand. So people have different lifestyles, different education, different expectations. So they told me that I should make something more serious for them.
Andrew: I see. When you had 5,000 people apply, roughly, and 1,000 get accepted, you’re rejecting 80% of the people who want to be part of your network based on what? What did you use to figure out who the right people were?
Ludovic: It was just the beginning. We wanted people who were very trendy, influencers. So we select them and we were checking our complete profile because we wanted people involved in the community. But it was just the very beginning. Afterwards when we launched the website, when we opened the website, it was the community which selected the new members. So, it was not us as–
Andrew: Right. Afterwards, from what I understand, after this launch, if someone new wanted to apply to be a part of the network, they ask to be included and then other members have to accept them and only when they’re accepted by other members can they then have opportunities to date people.
Andrew: That was the thing.
Ludovic: 35% of people were accepted into the community.
Andrew: So two out of three people were bumped, which actually caused you issues with your marketing because you were spending a lot of money to acquire all three people when two of them were being rejected and only one was accepted.
Ludovic: Yes. It was a big bet.
Andrew: Let’s go back to the software. When you hired these students to create a dating site for you, did they do it? Did it work? How long did it take? Describe that process for me if you could.
Ludovic: It was nine years ago, but I think it took maybe four months. But we had a lot of issues because you know, the pages, it was maybe ten seconds to get loaded. So the website was not scalable.
Andrew: Let me highlight that–ten seconds for a page to load, which is insanely slow.
Ludovic: Yes, when we started it.
Andrew: People move on.
Ludovic: It was so slow. Yes. But people were more patient because it was not like now. Now, you download an app and if you don’t like it, you delete it and it’s over. Nine years ago in France, people were more patient about new services. So, because the service was free at this time, they keep getting back to the website, even if it was not perfect.
Andrew: All right. Let me continue because you did overcome some of the challenges we’re talking about here and others and some of the challenges Andrew Chen brought up in his blog post. But first, I’ve got to tell people about a company called Bench. Bench is an accounting company.
Let me tell you something, Ludovic, a few weeks ago I was taking my two-year old son to just spend the day with him. As we walked down the street, I saw one of these hipster movie theaters that had a game called Space Invaders. Do you know Space Invaders?
Ludovic: I don’t really know.
Andrew: It’s like a game from the 1980s. I said, “Let’s just go see this and introduce it to my kid.” So I go in and I look at it. It’s only a quarter to play. I put a quarter into the machine. He plays it and he doesn’t score a single point. So I show him how to do it and I hit the button and I shoot one of these aliens and I get ten points. Then I give it to him but he doesn’t shoot anything.
So I get the joystick back from him and I shoot another alien and I get ten points, then ten points. Then I start to move him away slowly because I want to get more points up on the board. So this experience that I brought for him is now all about me for only one reason, Ludovic–because of the freaking points, because every time I shot one of those aliens, I got another 10 points or another 50 points if they were up higher.
So let me tell you why I’m telling you about this. Points are very, very captivating in games and very captivating in life. In business, points are the revenue and the expenses and the dollars that you end up with at the end of the day. Now, we as entrepreneurs always need to keep an eye on our points. How are we scoring this week, this month, this year compared to last week, last month, last year?
Getting that kind of data takes forever in entrepreneurial online world because there are so many different revenue sources, so many different expenses and we have to either do them ourselves, which a lot of entrepreneurs do or many people will then go hire a virtual assistant and say, “Enter this into my accounting software,” which then means that, “I’m not equipped for it.” So they make mistakes.
Or people will then go and hire an individual bookkeeper and say, “I want you to do my books the way you do other people’s books,” which is a problem because you’re trusting one person who may be sick one week or who may take their eye off the ball or make a mistake, etc.
So the answer to not have those mistakes and not have those headaches but still get the points that drive us as entrepreneurs is to use Bench. The reason I like Bench–do you know Bench, Ludovic?
Ludovic: No. I didn’t know that.
Andrew: They’re a newish company, raised a lot of money, making a lot of impact in the startup world because what they do is they use software and people to get people’s accounting done right. Software will go suck in the data from Stripe, suck in the revenue data from PayPal, get bank account information from Citibank or Chase or whoever you happen to be with, put it all together with your credit card information, your other expenses, the software sucks the data in, starts to sort it out, but human beings will actually go in and make sure it’s all correct.
If one of those human beings is sick, no problem, there’s a whole team of people at Bench. If one of those human beings happens to make a mistake, no problem. There’s a whole team to look it over and make sure our points are always kept track of.
Now, what you want is an outside person to do this, someone who’s not trying to hit a certain number. I know when I want to see that we’ve made good money this month, I might overlook an expense or I might not pay attention to this or that. When you have an outside company do it, they don’t overlook those because they’re not as invested. They just want to do the right job and get it done right.
That’s why I recommend people go check out Bench. There’s a special URL that they created for us to give us a discount on their pricing. It’s called–and if you’re listening to me, you’ve got to write this down. You’re going to need this at some point. Your friends will need it. It’s Bench.co/Mixergy. All the startups don’t have time for the .com. It’s got to be .co. Bench.co/Mixergy.
You’ll get a big discount. You’ll get to use this software that comes with humans who get to do the work for you and do it right. There’s a reason why two Mixergy interviewees have praised them, Jason Fried and Patrick McKenzie, because they do a great job and they have an elegant design that makes sure that you know your numbers when you need them. Go check out Bench.co/Mixergy.
All right. You launched the site. It’s up and running. Frankly, four months is not that bad. Ten seconds is a pain, but you’re just getting going and things are doing okay. People get in there. They like it at first. How do you know that it’s working? How do you know that the matches are working out the way you imagined?
Ludovic: It was working because we got a lot of word of mouth because people stayed on the website very long, they stayed like 30 minutes every day.
Ludovic: So we knew that they liked it. The concept of Attractive World is that you need to get accepted by the community to use the website. Also there are a lot of events organized by the community as well. So, it’s more than a dating website. It’s also a community of single people. There were a lot of events organized by the community. The first month, maybe 30 or 50 events every month organized by the members.
Andrew: Wait, so they would do single events on their own?
Andrew: Without you suggesting it?
Ludovic: No. Without me.
Andrew: What communication tool did they use to chat and think up these ideas?
Ludovic: They just had like a calendar page on the website and they could create their own events and communicate on the events. It was working very well.
Andrew: What did your chat look like at the time to enable this kind of conversation? Was it a message board or was it a live chat?
Ludovic: It was a message board.
Andrew: Message board. So, in addition to a dating profile, they could also see a message board.
Andrew: And from what I understand, new members who applied but hadn’t yet been accepted by the community into the dating site couldn’t go to these events, am I right?
Ludovic: No. They could not go to the website. You finished your application and we say, “Come back in three days and we will give you the answer.”
Andrew: I see.
Ludovic: It was crazy. That’s why I think that somehow it was good that I didn’t know anything about internet because when you know internet, you cannot create this kind of concept–15 minutes to sign up, you have to wait for three days to get accepted or not and after people have to pay. It was crazy. People who knew internet told me that, “Ludovic, you are crazy. You refuse 65% of your potential customers. You are totally crazy and you want to make people pay very, very high fee.” And that’s why when you know internet, you cannot start like that.
Andrew: What was the incentive for a member to go through the applications and decide whether someone should be allowed into the community? Why would they do that?
Ludovic: It’s interesting. As an applicant, because you know that the people you are going to meet will be involved and will be interesting people and your interest to what for the new people is that when you vote–for example, I am a woman and I vote for you, I know that you will talk to me first because you will know that I voted for you.
Andrew: I see. They see who voted for them afterwards. Got it.
Ludovic: Yes. When you are accepted, you send a message to every people who voted for you. So you start the conversation the first day with a lot of different people who voted for you. So, when people vote, it creates a lot of interaction on the website.
Andrew: That’s brilliant. I see it. Pricing–you mentioned after this application, not only do they have to apply, you said it took three minutes to apply, they had to wait three days before people accepted them. In addition to that, they had to pay.
Andrew: How did you figure out what to charge?
Ludovic: It was just feeling. We knew that Meetic, the website I was talking about like Match.com, it was €30 for one month. So, we said because we are premium, it would be €60 for one month.
Andrew: If we’re better than them, then we have to charge more than them.
Ludovic: Yes. It worked very well. It worked very well. We had 35% of people who would get accepted by the community who paid. So the conversion rate was very high and the lifetime value was very high as well. So, after two years, the first two years of the website was free.
So I raised money. It was not easy because a lot of potential investors were very scared about this business model. But I raised money with private investors. I raised €1.5 million the first two years. After we make people pay, we make people pay and we saw that the conversion rate was very good. So, I raised more money with private investors and also they told me that I was crazy because with this money, I told them I wanted to invest on TV.
Andrew: Before we get into that, the first way that you got people in was actually just streets, street team.
Andrew: The second way–did you start to buy online ads before you got into television?
Andrew: You did? And how did those online ads work for you?
Ludovic: It was good. But the volume was not very important.
Andrew: You mean you weren’t getting enough people?
Ludovic: Yes. It was difficult to attract a lot of people through online ads. We knew that the business model could work because we were seeing the conversion rates and they were very good and the churn was very low and we had a very good lifetime value. It was difficult for us to grow very fast. That’s why I went–
Andrew: That’s essentially what Andrew Chen was saying in that post, that it’s too expensive to buy ads online and get enough people to come in. The other thing that he said was investors are not the right demographic. One of the things I noticed is that if investors don’t get the space because they don’t live in it, they don’t understand why anyone else would get it and they don’t want to put money into it.
Some of the famous examples of that have to do with Snapchat. A lot of investors didn’t use Snapchat, didn’t get why someone would use Snapchat. So, they said, “I passed on it and it was a mistake.” How did you find the right investors? What was the challenge involved in telling an investor, “Dude, put money up in this idea that you don’t fully participate in and trust me that I will then use this money for television, which I don’t know well?” What was that process?
Ludovic: I always did it through my network.
Andrew: Always your network. So, it was always going back to these LBO friends?
Ludovic: Yes, it started with the LBO friends, people in private equity. Then I love to meet people. It’s what I prefer in my life is to meet people. Since I am an entrepreneur, I meet like one person every week.
Andrew: Every single week? Let’s talk about that. This is something that you knew, you told our producer, since you were a kid, that you loved meeting people to learn from them. Why did you do it and as a kid, how did you do it?
Ludovic: Just because I am very curious and I think that the best way to learn is to meet people. When you meet people and you feel inspired, you learn a lot. It creates a lot of opportunities. Most of the time, these people become your friends and it’s what I did since I am an entrepreneur and it’s created a lot of good faith in my professional life but also in my personal life. It’s how I raised the money with Attractive World. We raised €5.3 million only with private people.
Andrew: Can you give me an example of someone who you met because you love to meet new people who then ended up investing, someone who’s a little bit different than the usual investor story?
Ludovic: Yes. For example, I met a guy, his name is Josh [inaudible 00:27:31]. He’s a Greek guy and he’s 70 years old. We spent probably one hour and a half–it was through an introduction and we spent one hour and a half to talk about branding, marketing, etc.
But Josh didn’t know anything about internet. We talked about that and it was the first fundraising of Attractive World. It was in 2008. He was not very–he didn’t feel secure to invest in this kind of company and at the end of the day told me, “I will invest €20,000. I think that I will use it, but it’s like your MBA. I will understand how a startup works.”
Ludovic: Josh invested in all the fundraising I did with Attractive World and with Shapr. He invested, I think, €500,000 at the end between Attractive World and Shapr and invested in all the fundraising and Josh became the guy who bought the TV advertising for us. To invest in TV was the best decision we ever made with Attractive World.
Andrew: Did he have the experience in television?
Ludovic: Yes, it was his business.
Andrew: I see. So you were teaching him about startups and investing in them and he was then introducing you to television advertising, which then shaped everything. And we don’t think about television advertising as online entrepreneurs. Let’s get into that in one minute. I want to tell people about my second sponsor, which is a company called Toptal.
For years I’ve been telling people about Toptal being the place to go hire a great developer, but yesterday I talked to this guy, Raj, whose company was acquired by Toptal. What he did was–he’s British–he was an MBA student who then was hired by a management consulting company to go to major companies, giant Fortune 500 companies to advise them on where they should change their companies, how they should think about pricing, how they should think about the future.
When he left that company, people would then say, “Can I hire you? Can I hire your friends to come and do this for me, for my smaller company?” So, he would then go work for these smaller companies and advise them on their direction of their company and advise them on how to organize their financials and advise them on how to raise more money and so on. The same thing would happen with his friends.
So he said, “You know what? I’m going to start a company. I’m going to get the best of these guys who work at management consulting and just have them in my network.” And when somebody needs to understand, “How should we do pricing on our company, what should we change about the way we structure our company, how can we create our financials, in fact, how do we hire someone who can create our financials?”
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Ludovic, great company. Have you ever heard of them before?
Andrew: All right.
Ludovic: But it could be very helpful.
Andrew: I love that I get to introduce people like you to them. So let’s talk about this television advertising. It feels expensive because you have a lot of production cost to get your first ad up and running. It seems like you have to buy a lot to get going with it. You can adjust as fast as you could with say a Facebook ad or a Google ad. How did you make it work?
Ludovic: It’s so impactful that it works. You need to take some risk because when you are a small startup as what we were in 2011, it was a big risk, but we invested around €150k.
Ludovic: It worked so well. We had the same acquisition cost as on Facebook, but the brand awareness was going very, very fast. So, of course it was a big investment, but we had so much traffic, we worked a lot on the best way to track it. So we knew how many people signed up right after the TV spot and we saw that it was working very, very well. We got a lot of traffic and the website was growing very fast.
Andrew: So the way you would do it is you would say, “We know that our ad is going to run at 10:00 p.m. How many new orders did we get at 10:00 p.m.?”
Andrew: That’s roughly how many new people came because of the ad. Great. Now we can see if we can–but then if you didn’t get enough, how do you adjust? You can’t go back and reshoot your commercial, can you?
Ludovic: No, but you can adjust your media planning. Of course it’s a big risk on the creative because you cannot rework on the creative easily. But your media planning every week can change.
Andrew: Meaning the time of day that you go for the show that you’re on, the channel you’re on.
Ludovic: What kind of show, what kind of channel, what time. You can work on that. So we were seeing how many signups after the commercial, what kind of people were signing up, are they well education, etc. Based on these stats, we were working on the new media planning every week.
It was working very well because at this time, there was only one dating website which advertised. It was Meetic. So we were the number two. The brand awareness, which is the most important thing in dating business, it’s all about the brand, was growing very, very, very fast. From 2011 to 2013, we went from 8% of brand awareness to 71% of brand awareness in France.
Andrew: 71% brand awareness?
Ludovic: In 2013, yes. Now we have 91% of brand awareness.
Andrew: That means that nine out of ten people know your brand.
Ludovic: Yes. In France, yes.
Andrew: That’s something that only television can do.
Andrew: Even someone who’s not buying, not clicking, not even checking out your website at least has heard about the company.
Ludovic: Yes, of course. We advertised almost every day on TV, almost every day because we knew that it was working and that the brand awareness was stronger and stronger. You have a lot of positive impact because all the journalists call you because when they want to make something on dating, they watched your TV ad.
Andrew: So they think of you.
Ludovic: They say, “Okay, I need to talk to Attractive World guy.” So we had a lot of coverage from the media.
Andrew: What tips can you give us about how to do television advertising right for a tech startup?
Ludovic: I think that you need to invest a minimum of $100k. Otherwise it’s too small and you cannot see if it works or not. A lot of startups try to do that. They try to make a very small, very low cost TV spot and they invest like $20k and the site doesn’t work. So they stop. It’s better to invest in Facebook and Google. It’s a big mistake. You cannot be in the middle. You need to really invest to make sure that it works or not. So the first thing I will do is that.
After, you really need to invest in the creative because the creative can really change the performance of your investment. It can be 50% higher or 50% lower depending on the commercials. So you really need to invest and take time to think about the creative and to work on that. Otherwise you have to work on the tracking system because you cannot just do it and say, “Okay, we will see.” You really need to work on the system to make sure.
Andrew: How do you track it? I remember interviewing the founder of Carbonite and he said because of the kinds of ads he bought, he had to know specifically what time of day did the ads run, but also in what market did they run and then he had software that told him if it ran in Chicago, we also have to tie it back to how many new orders we got from Chicago, otherwise we make a big mistake in our media planning. So what did you do? What was your process?
Ludovic: Yes. It was kind of the same process. We have a software that we developed in house to help us to track people who don’t come from the online marketing and who signed up in the five minutes following the TV commercials. Because people were signing up, we knew [inaudible 00:37:57] and what is the education.
We knew that these people were more than 30 years old and well educated. The probability that they convert into subscribers was very high. So we exactly knew how much we could spend to get these kinds of people. If we didn’t have the right person, we changed the media planning and if it was working, we keep investing in this channel or in this show.
Andrew: I see. Earlier we talked about how you started out by having two students develop your website. That didn’t really go so well. Obviously a ten-second wait time is one indication of it, but there were other issues. You then decided, “I need another solution,” and you started hiring people from–was it Tunisia?
Andrew: It was one person from Tunisia, actually, in 2008. Talk about that process.
Ludovic: After the students, we were working with a very good developer and he was from Tunisia. He was a very good guy. He told me, “We need to restart the website from zero. So I suggest to you that I come back to Tunisia and I create a team of developers and we will redo the website, the whole website.” It was May, 2008. He told me that by the end of September, 2008, everything would be okay and we would have a very strong platform to build on. Finally, the website was not ready at the end of 2008.
Ludovic: So I was in Tunisia between Christmas and New Year’s Eve to test it because I was very worried and it was a very difficult time because of the crisis, because of the subprime, etc. So, it was very difficult for me to raise more money. It was worth time for [inaudible 00:39:58]. We were very close to be over because we didn’t have a platform which was working. It was very difficult for me to raise money. In Tunisia, we didn’t have the new website. So, we could not have a paying model.
So the end of 2008 was very, very tough and I was lucky because I met our CTO at the very beginning of 2009 and he saved my life. He saved the company. He told me, “Okay, Ludovic, now it’s very difficult for you, but I’m going to come to the company. I’m going to help you to rework on the new website and I promise you that by the end of summer, 2009, you can make the subscription model on it.” He did it.
Andrew: How did you find the CTO?
Andrew: More of you just getting to know a lot of people and networking with them?
Ludovic: Yes. The way I found the CTO was because of a crazy mistake I did. I made a lot of mistakes. But I wanted to sell advertising on Attractive World in 2008, which was crazy because we didn’t reach a critical size and it was not the right timing to hire sales people to sell our advertising, but it’s what I did.
I hired a very, very good head of sales of a very, very important company in France. She joined the team. But she understood that she could not work at Attractive World because we didn’t have the size to sell advertising. But before she left, she introduced me to my CTO. So this mistake made me a very happy man because otherwise, I wouldn’t have met my CTO. His name is Cyril Ferey.
Andrew: You mentioned earlier, you started talking about why you sold the company. I feel like you were doing great–90%, 91% awareness. Was it profitable?
Ludovic: Very profitable.
Andrew: Very profitable, growing.
Ludovic: In 2013, we started to be profitable. And in 2016, we made more than 15% net profit. Since 2014, we distributed dividends.
Andrew: How profitable are we talking about? How much money were you guys making every year?
Ludovic: Around $1.5 million.
Andrew: Get out.
Ludovic: Net profit. Yeah.
Andrew: For a guy who didn’t know how to setup his internet at home, who didn’t have any friends who could help him with the development, who had to hire two students to go create a site that was really slow. Why sell it? You started saying it as the answer to my first question. Let’s come back to that now. Why did you sell it considering all that?
Ludovic: Because I was working on a new project called Shapr and now Shapr is growing very fast and I raised $7 million. It’s growing very fast in the US.
Andrew: Why start a new project? Why not say, “You know what? This thing is going great. I’m a hit in the dating world?”
Ludovic: Because what happened is that in 2013, the website was very famous in France. We were profitable. And I wanted to expand in the US because as an entrepreneur, my dream was to move to the U.S. and expand in the U.S. I didn’t raise the money to go to the U.S. The VCs, the French VCs didn’t want to invest in a company that would go to the U.S. because they were very scared. The U.S. VCs were very scared to invest in a French company.
So, unfortunately, it was a big failure for me and it was very tough for my ego because it was my biggest failure as an entrepreneur at this time, so I thought that maybe I cannot launch Attractive World in the US, but my next company, I will start it from the US. So, in 2013, we became profitable and I hired a CEO. She was head of product at [inaudible 00:44:12] in Europe and she managed the day to day operation.
I was still the main shareholder and the chairman. I moved it to New York to launch Shapr, my new company. We started to distribute the dividend. We distributed between $1 million and $1.5 million every year of dividends.
Andrew: That’s unbelievable. So then you clearly sold for more than $10 million. No wonder when I said more than $10 million, you said yes very fast even though you don’t want to get specific.
Ludovic: Yes, I cannot talk about that.
Andrew: It’s more than just the money. The relationships that were formed because of it–can you talk about your dad? What happened to your dad?
Ludovic: Yes. You know everything.
Andrew: Yeah. I like good research.
Ludovic: I always had a very difficult relationship with my dad. My parents broke up when I was one year old. It was very difficult to have a good relationship with my dad. When I quit, I quit my job to create Attractive World, he really didn’t understand it because he was not in tech. He was not very close to the entrepreneur mindset. So we had a difficult relationship. In 2014, my dad became single.
Andrew: He became single again.
Ludovic: Yes, he became single again. Yes. He was with another women, etc. But he became single again in 2014. He watched a TV advertisement about Attractive World. He told me that it was like late in the night maybe at 11:00 p.m., something like this. He signed up, not because of me, because of the TV advertising.
Andrew: That says a lot about television.
Ludovic: He used a lot of Attractive World in 2014 and 2015. He met his fiancé through Attractive World.
Ludovic: Since that, our relationship has changed a lot. Now we are much more closer and he understood why I worked so much these last nine years and now we are more closer.
Andrew: Wow. That feels fantastic, to have your dad even understand what you do is a gift. Frankly, I’ve been in the internet tech world, entrepreneurship world my whole life. My dad doesn’t get it, never understood it. I told him I did online greeting cards. He said, “Greeting what now? How do you do it online?” I told him, “I’m doing this.” He doesn’t fully get it.
So now Shapr–Shapr is this app. Let me describe it. First of all, you login using LinkedIn. I like that you don’t force me to put in my LinkedIn password because I can never freaking remember that thing. You just take me into the app and then I come back in and then you take my photo from LinkedIn, you take my information, I get to edit a little bit.
Then I have a profile. Then what I see is a card representing people whose interests align with mine, not relationship interest, but business interests align with mine. If I like them, I think I swipe to the right if I want to start a conversation. If it’s not a good fit, I swipe to the left and then if it’s a match, we both think that we want to talk to each other, we can chat. And if we want to, ideally we can go out for coffee and maybe start doing some business together. Am I right?
Andrew: And the business model for it is what? I don’t think I was charged.
Ludovic: No. So far we are focusing on the user experience, the algorithm and we want to grow the community because our vision is that now networking is boring and Shapr’s mission is to make networking more inspiring and more seamless. So we are working on the user experience. You don’t have to make proactive search. You don’t have to solicit people. You just have every day your daily dose of inspiring people.
You swipe, just one minute. If both are interested, you can grab a coffee. So, it’s very, very easy, very simple. For that, we need to be very, very relevant in the suggestion that we do every day. So we are working a lot on the data. We are working a lot with a very famous mathematician in France to retrieve the most relevant data from all your social networks to understand what kind of people you should meet or you’re interested to meet. Then we suggest you these people. And when you swipe, the algorithm learns every day to improve the suggestion.
Andrew: What about this, though–when it comes to a dating site, I understand the draw. If you are single and you keep going out and you’re not meeting anyone, you’re desperate to find a better solution and if someone comes up with a website that has a ten-second launch, it doesn’t matter because you’re desperate to find someone.
With this, I’m not sure what the desperation is. It’s interesting for me to go to Shapr and maybe meet someone for me to talk to, but I don’t see that you’re addressing a desperate need of mine, versus something like even–I can’t remember that site which would hook me up with–what was that website? I’m going to find it, hang on. Come on, scroll to the very bottom where they list. . .
Ludovic: You know what? I’m going to give you some examples.
Andrew: Here it is. It’s Clarity. Sorry. With Clarity, if I need to understand how to do my SEO better, I can go to Clarity and I can say, “Give me someone who knows SEO and can solve this problem for me so I can get on a call with them.” I feel like this isn’t–I feel like Shapr isn’t hitting that desperation yet.
Ludovic: Yes, but ten years ago, people didn’t want to go dating websites. They thought it was for losers. So, things change. You know the first word I learned when I moved to New York? It was serendipity. Shapr accelerates your serendipity. It’s the story of my life and I know the power of a network. I know how important it is when you want to raise money as an entrepreneur, when you want to find a job. Did you know that in the U.S., 70% of the jobs are found through networking? 70%–more than everything else.
Andrew: I know. But that’s the thing. If you told me this could lead to a job, then I could see someone who’s feeling urgent enough to get it. If you even said to me, “Look, Andrew, I know what you probably need is. . .” Instead of network with people, but find the people who can solve your problems, that would be more interesting.
Like for example–and I hate to turn this down because I freaking love the design and I’ll talk in a moment about what I love about it–if you were to say to me, for example, “Find the perfect expert in whatever,” if I had an issue with search engine optimization and you showed me a bunch of cards and I could flip through the ones who seem interesting and then chat with them–
Ludovic: It’s not the mindset we want to have.
Andrew: You don’t want–you want just serendipity.
Ludovic: We think, for example, LinkedIn is a very good tool, but it’s very transactional. Every day I get some message from someone who wants to sell some software or to sell some SEO, etc.
Andrew: I do too.
Ludovic: Shapr, is to get inspired. For example, when I moved to New York, I didn’t know anybody. I knew some French entrepreneurs, but I wanted to meet American people and I loved tech but I loved sport, I loved music. I met amazing people. In the music industry, I met a very, very cool producer. In sports, I met some athletes. In tech, I met some very, very brilliant entrepreneurs. To me, life is like that.
If you just use it as a lifestyle–for example, I don’t like to make exercise, but I do it because I know that it’s good for me. I also do meditation because I know that it is good for me. I really think that networking should be a very, very healthy habit because it creates a lot of opportunities in your life.
It would be very good for freelance people because when you are freelance, you need to get connected for business, but also to interact socially. It would be good for people who travel for business. It would be good for people who just moved to a new city or when you’re an entrepreneur and you start your company, you need to connect with founders, cofounders, investors, etc.
So, you have a lot of different people who are interested to go on Shapr. What we saw is that we have huge traction, larger traction than I ever saw with Attractive World. Last month, for example, we made 100% month over month compared to October.
Andrew: 100% what?
Ludovic: Growing very, very fast, yes.
Andrew: You made 100% what?
Ludovic: Of growth, of new signups.
Andrew: Oh, I see. So how many new signups do you have now?
Ludovic: We have between 1,000 and 1,500 new signups every day.
Andrew: Is that partly because if there’s someone in my network or extended network who’s not on Shapr but is on LinkedIn, you then send them a message saying–
Ludovic: No. We don’t do that.
Andrew: You don’t? So there’s no viral growth.
Ludovic: No viral growth. It’s word of mouth because we have a lot of active people who meet very cool people on Shapr and they talk about that. We have a lot of people who have written about Shapr in France, in the US, in London and it’s mostly word of mouth.
Andrew: So one of the things that I like–I just love the design of it. It’s really easy to fill out a form with my profile and everything, which is always the big draw back. But also I like how the very first person that I could swipe on happens to work for your company.
Andrew: So, if I want to just test things out, I think she works for the company. What’s her name, Mandy?
Ludovic: Yes, Mandy. She’s very cool.
Andrew: She works for the company, so who cares if I send the wrong thing. I just want to see how it works so I can send her a message so we can match up and maybe we can talk and I can understand how it works. I also like how it’s intuitive. It doesn’t need any explanation. But when I do something in the slow way and there’s a faster way to do it, like if I hit the button to connect, but there’s a faster way I could just swipe, it says a little tip comes up and says you can just swipe over to the side and its’ easier. It’s a very, very cared for app. I really love apps that have that kind of design.
Ludovic: Thank you very much.
Andrew: The serendipity just gets me. I feel like if you were pushing a specific benefit like you did here, an urgent need, then more people would discover it, but I could be wrong.
Ludovic: Yes, but it would just be more transactional. I really feel that–
Andrew: You don’t want the transactional?
Andrew: I actually see the face when you say more transactional, you are pained that I’m saying it.
Ludovic: I love a book called “Give and Take.”
Ludovic: It’s all about that. We want to be a community of givers. You just don’t go to Shapr only because you need to sell something or because you need someone because it’s not how it works in real life. In life it works when you create a very authentic relationship first. Once you did that, you have a lot of business opportunities. It’s the best investment you can do. So, maybe some people don’t understand it yet. But when they will see that, people on Shapr have a lot of opportunity who come organically because they create the relationship first and then think about business and opportunities, they will see that it’s a very, very good investment.
Andrew: You know what I would love is for something like this to be available to the Mixergy community because I know that people in my community want to meet each other, but they don’t want to get to know every single person. If they had that in common, if I could just say, “Here’s Shapr,” just for the Mixergy people, go connect up, that would be really exciting.
Ludovic: We are working on this for the first app of 2017.
Andrew: So, I might be able to say, “If you’re a Mixergy member, you can join this and get to know other Mixergy members and if you’re an interviewee, we’ll add you in here and you guys all get to meet each other only if you want to.”
Ludovic: Yes. You could have like a code to tell that you are in the Mixergy community and every day in your batch of ten people to meet, you will have maybe two people from the Mixergy community.
Andrew: I see.
Ludovic: We will do it for the alumni community as well. So, if you are in Stanford, you will have maybe two people from Stanford in your batch as well.
Andrew: Why not only the batch, only Mixergy?
Ludovic: People will decide. We really think that we need to mix. You want to meet people in Mixergy. You want to meet people from Stanford, but you also want to meet people from Shapr because you have common interests.
Andrew: Okay. All right. Fair enough. I like it. I think it’s early days with Shapr. I think that I was hesitant to download another app because I feel like there are just too many freaking apps on my phone and I never get to it. Then I downloaded it because I wanted to see what you’re up to. As I said, I just really like the intuitive onboarding, the simple app, the functionality of it. I like the experience of it a lot.
I feel like you guys must have spent a lot on that, a lot of money to do it, a lot of time on it and it shows. I wish I could copy it for Mixergy, but it’s obviously way different from what we’re doing. I love it so much. I even like the fact that I have to wait. Look at this, I have to wait another 12 hours and 52 minutes before I get my next batch of suggestions.
Ludovic: Yes, as I told you, we want to make it as a [inaudible 00:57:40] habit. We don’t think you have to swipe 100 people the same day. You swipe 10 people every day so you come back and that way the engagement on the app is much higher than the other apps.
Andrew: All right. It’s Shapr, available on Android and iPhone app stores. So proud to have you on here. Congratulations on your success with the first company and now the growth of the second business.
Ludovic: Thank you so much.
Andrew: You bet. Thank you all for being a part of it. Of course, my two sponsors, the company that will do your books for you and give you your points on a weekly/daily basis, it’s called Bench. Check them out at Bench.co/Mixergy and second is a company that will help you find your best developer and your best designer and now your best finance person for your company on a project by project basis, on a day by day basis or long-term connections with them. You can go hire those freelancers at Toptal.com/Mixergy. Top as in top of the mountain, tal as in talent. They want to get the best talent–Toptal.com/Mixergy.
Thank you all for being a part of Mixergy. Bye, everyone.