Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. And I am enough of a pro to toss out this whole intro here that we’ve written, because instead I want to tell you that today’s guest is a guy I had asked on multiple times to do an interview, and multiple times he said no. And I’ve known him for a while and I thought we were friends, and we would talk on the phone, and he would still turn me down.
And then suddenly a few weeks ago he sends me a text message saying, “Andrew, I’m ready to come on Mixergy. So, here he is today. We’re going to find out why he said no up until now, what’s making him say yes, and, according to my researcher, he now has a multimillion dollar company. I didn’t realize it grew so much.
The guest is, Ben Congleton. He is the co-founder of Olark. They’re the easiest way to add live chat to your website, so you can talk to your customers while they’re still on your site and sell more. You’ve probably seen them a million different times every time you’re on a website, you know that little chat box that’s in the bottom right? That is their creation.
And this interview here is sponsored by Scott Edward Walker, of Walker Corporate Law. I’ll tell you more about why if you need a lawyer and you’re a startup you should go to Walkercorperatelaw.com. First I’ve got to welcome Ben.
Ben: Hey, Andrew. Thanks for having me on, finally. It’s a lot of fun. I see you now have some gray hair, since last time I saw you.
Andrew: Yeah. I like that. Last time I saw you, or, one time I saw you at a barbecue, the first thing you said to me is, “Hey, thanks for coming, and dude you have a lot of gray hair.” Yes, I’m getting some gray hair. People are watching me get more professional and gray, right before their eyes. But never mind me. The big point here is, why did you say no? I’ll ask you why now, but why did you say no up until now? I knew you were doing well with Olark.
Ben: Yeah, yeah, for sure. So the main reason, there are a few reasons I said no. One reason is because, I feel like the longer you go on, the more you learn, right? So the more you have to say, the better time it is to do an interview, right? So I could have told you a lot of stories early on about how we started the company, and about how things were going, and about where we getting to.
But I felt at that time we didn’t quite have the story, or this narrative, that made an even better interview. And I’ve seen other people go on Mixergy, without that narrative, and give alright interviews. But I wanted to give a kick ass interview. I wanted to be one that people could take a lot away from. And so, I figured I’d just hold off until I had that, and something to say, right? So selfishly, when I went on I wanted to have something to promote.
Andrew: Something to promote. I’m going to ask you about the selfishness thing in a moment. It’s interesting, it sounds to me like you also had a milestone in mind. That you didn’t want to come on until you felt like you had earned the right to start talking about your story, right? You’re smiling. What’s the milestone that you had in mind?
Ben: You know what, I don’t think it was that clear, honestly…
Andrew: It was just a need to be in a good space.
Ben: …I didn’t have a direct milestone in mind, but I think where we’re at right now is pretty, it’s pretty fun. I mean, we’re up to like 27 employees. As you said, multimillion dollar company. Tens of thousands of active users a day, I mean stuff, it’s going pretty well.
Andrew: When did you hit the first million in sales?
Ben: I’m sorry, what’d you say?
Andrew: When’d you hit the first million in sales? And I promise the audience, it’s not all going to be about numbers, I want to learn as much as possible from how he built his business.
Ben: Yeah. The first, million, in sales. That is a really good question. We hit the first 90k of sales in 2009.
Andrew: Two thousand nine, okay.
Ben: The first 90k, of sales. So we launched paid in August, hit the first 90k in 2009. I’d have to look it up, honestly. I don’t know exactly where in 2010/2011 it happened.
Andrew: Whoa, that’s pretty impressive.
Ben: But somewhere in there.
Andrew: Okay so, 2009 you launch. By the end of the year you hit your first 90k in sales?
Andrew: Wow. And then the following year, or soon after, you hit your first million in sales.
Ben: Well, I’m doing gross.
Ben: But you know, I think we’ve been doing pretty well, like gross over all time.
Ben: So, but yeah we’ve been building a product that people like, which is a nice thing.
Andrew: I wanted to introduce you as a PhD student, oh wait, actually, the selfish thing. I kind of had a sense, when you texted me, you said, “Yes, I’m ready to do this interview.” But, if you’re texting me and saying, “I want to come on,” there’s a sense of urgency. What are you trying to do right now, that there’s all the urgency for?
Ben: Well, to clarify texting, it’s the only way to get you to pay attention, is to text. But on top of that. So the reason I decided to come on was because, we’ve decided, Olark, to sort of put our stake in the ground and say, you know what we stand for? We stand for customer insight. We stand for helping companies and entrepreneurs really know their customers, and building cultures around caring about your customer.
I’ve seen so many companies that take their Customer Service Department and the they put it off somewhere, like maybe in Manila; or maybe the spread it out across a bunch of remote workers. They have one really smart person that sort of manages that group, and that’s the way they interact with their customers. They have product people that maybe do some interviews, they have engineers that take what the people do and turn that into product.
But the engineers never see the results of all their hard work. The marketing people hardly understand what sort of questions are being asked on the front lines. We decided to really try to change that.
Andrew: I see, you want not just some guy in Manila, or one who’s a dedicated Customer Service person to run that pop-up that comes on people’s websites that say, “Hey, can I help you?” You want me to do it.
Ben: Yeah. I want you to do it. I don’t want you to do it every day. I don’t want you to do it, necessarily, every month. What I want you to do, is, I want you to do it a few times a year. I want you to actually go out there and see what it’s like to be that person in Manila, or that sales guy.
Andrew: Why? What’s the benefit? I don’t want to get too deep into the product picture. But frankly, what’s the benefit? Why shouldn’t I just answer my email or spend more time digging up dirt about you or, I don’t know, talk to current customers.
Ben: That’s a good point, that’s a good point. I think in a way, as we, meaning people who are building businesses, move further away from our customers. We sort of lose touch a bit. The nice thing why chat works, in a way that email doesn’t work as well is it really easy to answer the question. And then ask a question and get a response.
So for example, just today, I was on chat, and I was talking to a guy that was having problems customizing our chat box. It’s fairly customized but there are some more advanced things you need help for.
Then I asked how are things going for you? How’s the product working out? The guy responded, this thing is pretty amazing! I didn’t realize how shy the visitors on my website were until we put this thing on and were able to talk to them. We were getting a lot more sales. That’s sort of a pitch for Olark. But, in the same way, that was a guy that was not interacting with his customers, directly.
He was owner of the company. He had three guys that were actual operators that were doing all the chats. He just happened to be on there talking to some of his users. I want more of that. I want more…
Andrew: I get that. I get the real kindness of it. I’ve been on Olark. And the cool thing about that is, unlike a phone call, where I’m talking to one person at a time; and they’re forced to answer my questions quickly, or I’m forced to answer theirs quickly. I can handle three different people at a time. They can take their time as they’re trying to figure things out.
All right, I’m going to ask you more questions about that, including one important one, that relates to me, personally, using Olark. Let me write that down. Okay, but first, let’s see how you got here. I was going to introduce you as a guy who was a PhD student, who built up this company. I thought, great, there’s the hook! An egghead who became a business owner. And you said, what?
Ben: I said I don’t like being categorized as a PhD dropout.
Andrew: Because you’re a PhD dropout. Why did you drop out?
Ben: That’s a good question. For me, I have always been splitting my time. It was really interesting. I started my first company in high school. It was 1997 when I registered my first domain. At the time I was an idiot, I should have bought that I could have sold for a lot of money. But instead, I bought nethernet.com and I started a consulting company, with an initial investment of $100. This was in 1997.
This is what I did instead of mowing lawns over the summer, in order to have income and pay for gas and stuff like that. So since 1997 until 2009, I’ve always been doing two things at the same time. I’ve always been a student, so going to school, and I’ve always been doing companies on the side.
For me, I got to this point, where I was three years into my PhD, and I was like, “You know what, Ben, you need to pick one of these two things. You can’t be spreading yourself between these two things because you are never going to be excellent if you split your time. You have to just pick one, and go for it, and see if it’s going to work. Fail if it’s going to fail, but just go all-in.” So really, up until 2009, I never had gone all-in, on either one of these.
Andrew: Can I just highlight that for the audience, please? I need sometimes to just underscore certain things. This is the key reason why you’re here today; and not just walking around in confusion trying to figure out what am I going to do next, what am I going to learn from Mixergy?
It makes this interview, when you watch interviews, it’s more useful for you. It makes every day of your life more productive. I talk to people all the time who don’t make that one decision. That’s why I have to highlight that. Frankly, I’m proud that you quit the PhD program.
I see that one of the things that you told April in the pre-interview with us is that you only had one W2 form in your whole life and it came from an internship. To me, that says a man who is so proud of being an entrepreneur that it’s a core part of who you are. If you walk in the wrong direction, then good for you for moving away, great.
Ben: Well, I don’t know. You’ve never been in a PhD program but all I can say man is I frigging loved it. I knew so many people who dropped out because it wasn’t working for them and they weren’t having a good time. For me, at the time, it was one of the hardest decisions of my life. We had just applied for a grant, which is the equivalent of your BC funding. I think it was maybe half a million dollars or something like that. I didn’t know if we were going to get it. I walked away, knowing we might get 500K to basically do exactly what I want to do for the next three years, yeah.
Andrew: What tipped you over? What allowed you to turn your back on something that was so much fun?
Ben: Yeah, that is a really good question. I think two things. One, is I had this equation in my head. If I’m going to do a startup, I need to do it in the situation where it’s not that risky. For me, the time to do that was before getting a PhD. Because after I got a PhD, I had just earned all of this institutional momentum. I could take that PhD and I could trade it in for a job and have these publications and stuff like that.
If I was going to go get a job based on having a PhD, I couldn’t do a startup, once I’d finished it. I had to do the startup first. I had to quit the PhD, try the startup, go all in, and try to make it real. If it failed, if I wanted to, I could always go back and finish the PhD. But I couldn’t do it the other way around. I couldn’t do the PhD and then do the startup. Because I wanted to do both.
Andrew: You know, Ben, I’m so glad you stopped me and you gave that response. Because you’re right. That if you have two options to make, you might as well pick the one that doesn’t invalidate the other, if by all things being equal. That makes sense, Okay.
Ben: All things equal is very important. If one is much more valuable than the other, the decision making process is different.
Andrew: Yeah, if you stunk as a PhD student and you didn’t enjoy the process, then of course it would make more sense. This web hosting company, that’s pretty impressive.
Ben: Yeah. In 1997, it was a pain to put a website online. It was really hard. We had trouble putting our website online. We were starting a little consulting firm. We were, like, “You know what, we’re pretty smart. I bet we can figure out how to do this.” I recruited a bunch of kids on my bus that rode the bus to school with me. When we installed our first server, my dad had to drive us there, because none of us had driver’s licenses. We just started getting it going.
The thing is, running a company when you’re in high school is a really incredible experience. You learn so much about the way that things actually work. As opposed to what’s taught in this class. I like to think of the hosting company is the time that I’ve made a lot of really big failures to sort of save myself from them a little bit.
Andrew: For example?
Ben: Let’s start with this one. In 2000, we had built this system. Because we were in high school, we built a system to completely automate web hosting. We wouldn’t have to do any work. Because we were in school all the time. We couldn’t be there to fix things. People could go to our website, they could sign up, they could pay us money, and we’d invoice them.
They could do anything that they would need to do to run their website. We would have to do no work. Companies were coming to us and saying, “We want to buy this. This is so great. This will save us so much time.” At the time, we were like, “No way. This is our competitive advantage. This automation system is what makes our hosting company so great.” Because our margins will be so high that we don’t have to do any work. But what ended up happening was we turned those people down. We had people who wanted to buy the software and we just said no.
Andrew: They said, “We want to buy the software and use it on our hosting companies?”
Andrew: Oh, I see. And you said, “Well then if you buy my software for your hosting company, then how can I compete with you?”
Andrew: I see, and that’s why you didn’t want to do it, Okay.
Ben: At the time, we thought that that was our advantage. But, what ended up happening is a few other companies came out and started building software that did just that. That helped people automate web hosting companies. In our opinion, they were still much crappier than our automation, but the thing is they were building an entire company around that concept. Whereas or us, it was just one piece of our business.
So we could never compete with a company that was building their entire company around a particular piece of the product. However we had to split our resources around. At the time, I even had friends of mine that were like, “You should really sell this thing to those guys. If someone is willing to pay you a bunch of money for something, you should at least sell and see how it works.”
At the time I don’t think we really understood that webhosting was headed toward this sort of commoditization or at least the kind of web hosting company we were running was headed toward commoditization. If we had realized that a little bit better, we could have one, like… I don’t know, spent a lot more on sales and marketing earlier on and two, we would have thought long and hard how to differentiate ourselves.
Andrew: So am I taking the big lesson away clearly? Is it, if people are trying to buy something from you desperately, at least entertain the offer, if not go in and sell it to them?
Ben: In fact, it may even be worth selling to them and trying to find out how much money they are willing to give you, before saying no. Because I think for us, we didn’t really even take it long enough to evaluate whether it was… to fully evaluate whether it was a good idea or not. We just sort of shortcut it and we were like, “This is not our business. We’re in this business of web hosting. We’re not in the business of selling software to people.”
Andrew: Okay. You mentioned that you had a consulting company beforehand. As a kid you had this?
Ben: Yeah, yeah.
Andrew: What kind of consulting did you do?
Ben: In middle school I think I convinced some random people on the Internet to pay me to install some software on their websites. So I earned $200 here to setting up PhP forms for someone and this was way before E- lance and all that stuff. I imagine just through bulletin board postings.
Andrew: We’re talking about mid-’90s.
Ben: Yah, we’re talking mid-’90s.
Andrew: Mid-90’s the internet had barely any photos on it. We’re talking about an internet with Mosaic as the browser, if that. Barely that.
Ben: Yah, I remember when Mosaic… well I think Mosaic was out, but you had to get it through CompuServe. It was right around the time that Netscape II and III were coming out. This was way back then when I started messing around and building my first websites.
Andrew: How did you get those costumers when you were a kid, who paid you money to install software for them?
Ben: I think I was just active… this is a long time ago, but I think I was active in a few forum communities and that’s how you would know people and you would exchange instant messaging handles with people. You would end up with these buddy lists of people that you can just talk to all of the time.
Ben: Back then instant messaging was so critical to my growth as a person, back then.
Andrew: What about this, Ben? I remember going and shoveling snow as a kid in Queens, NY and I’d have to charge people to shovel snow. And I felt bad asking them for $15 and $20, and I didn’t know where I could charge them and I didn’t know how to negotiate with them.
These aren’t things that just come naturally. Now we’re talking about $15, $20. You’re talking hundreds of dollars. How did you know that you could charge them hundreds of dollars and have the courage to go off and offer that?
Ben: Oh my God. I wish I had known I could have charged them a thousand dollars, because at the time $200 was what I thought was as much as I thought I could charge them. We totally undercharged a ton when we were getting started. I don’t know. I think we realized that we could charge people money, but we didn’t understand we could have charged 4x that, 5x that, 10x it.
Andrew: Okay, let’s take a bigger lesson away from that. How do you know, as a consultant, what you can charge?
Ben: When clients are turning you down, because you’re charging too much.
Andrew: I see. So as long as… As soon as money becomes an issue, that’s when you need to either dump them or raise your price.
Ben: That’s the true way of doing it, but at the time… It took me ten years to learn that lesson, because I probably was never really focused on consulting. It was never my primary income. It was mostly, this thing will help me pay for college, not like I need to drive a nice car.
Andrew: I see. Okay. It’s kind of like a negotiation. If they take the first offer, then you didn’t ask for enough.
Andrew: All right. Then you do the webhosting company. What happened to the web hosting company?
Ben: Oh man. So we were kind of… We were doing really well for high school students. I think in 2001 we did like 170 in revenue.
Andrew: 170? How many people?
Ben: Three people.
Andrew: Wow! Nice! Okay.
Ben: We did 170 and then what happened is we all went off. We all graduated in 2001 and went off to undergrad. We didn’t want to sit down and work this thing like it was a real job. We all wanted to have a good time as undergraduates. It was mostly passive income for us. We would pay people to do support for us.
This is something I started to see happen at Olark. We passed off the responsibility of talking directly to our customers to our support team. We had some oversight over them, but not as much as we should have. They stopped really caring about customers and we were removed from customers. The company didn’t die in one day. It slowly stopped growing.
Then it slowly started growing negatively. Then, we finally ended up selling it to our former head of support who had left to start his own web hosting company. [Laughs]
Andrew: I see. There’s a whole lot of talk about passive income. Like, never run a business passively without loving your customers, caring about them and checking in with them. I know that happens sometimes. Basically, anyone who is looking for that is really looking for a bond.
Andrew: A bond over time. Is the site just Nethernet.com?
Ben: It was Netherweb.com.
Andrew: It was Netherweb.com. That’s where I got it wrong.
Ben: So, I had two. I had two sites. I had Nethernet which was a consulting company. It was just my holding company. When you’re in high school you’re always going to want a holding company. So, we had a holding company and Netherweb was the hosting division of our holding company.
Andrew: I see.
Ben: We had like 50 properties . . .
Andrew: Look at this.
Ben: …run by three people.
Andrew: What is this on the side that archive is telling me about? “Want to earn some cash? Earn money. Ten cents for every visitor you refer off your website with our referring program. You also earn money from our site when someone whom you refer to our site purchases a hosting plan.” Nice use of the word whom instead of who.
Ben: I guess Kevin proof read that.
Andrew: I just see Nethernet as a portal.
Ben: Yeah. So, it was kind of fun. That was high school. [Laughs]
Andrew: Okay. At the time, Pay per click was really big at the time through affiliates. You can kind of trust affiliates back in the late ’90s until they started to realize. Oh, wait 10 cents per click. I’ll just flood the guy with traffic.
Ben: Hahaha. I think we were pretty stingy with that program. I think we only paid out if it actually converted. If a high enough percentage converted. The TOS on that was really to our advantage.
Andrew: I see you supported Real audio, Real video and Microsoft Front Page. Congratulations.
Andrew: So, when you sold it, how much did you get for it?
Ben: I got 1x revenue funded by the revenue.
Andrew: 1x revenue? So, was the revenue still anywhere around 150, 170 like you said before?
Ben: It was probably around an inch. It wasn’t great.
Andrew: That’s roughly 50 thousand over time. That’s not bad.
Ben: Yeah, I mean it’s not horrible to make that kind of money. At the same time, we could have done a lot more with it. And, the margins weren’t great. We ended up paying for all these servers. We had to… at one point we had a rack of servers at a tier one data center. We were sitting next to Google stuff.
We had negotiated the best deal in that entire data center because we went to cut down the amount of space we were using… Back in those days, we had tower servers sitting in a rack at a data center. Tower servers take up a lot of space. Nowadays servers are these small ones, little one and a quarter inch machines and ours were two feet tall. When we downsized our self, we actually had to pay them more because we had negotiated our rates so well for the amount of space we had. It was a fun time but I’m done owning computers that depreciate to nothing. That’s no longer fun for me. [Laughs]
Andrew: Okay. Then, you start to come up with better ideas. What is this plug-in for a garage band idea?
Ben: Ha, ha. Oh, man. I think I was in grad school. I went to grad school and Kevin and Roland, who were my cofounders or partners in Netherweb, went off and were doing freelance work after they had graduated from undergrad. So, we had the hosting money coming in. We had freelance work they were doing. I would go off and find deals but really not do that much of the work.
None of us really liked doing the freelance stuff and wanted to move to a product company. At the time, Roland was out in L.A. trying to do the band thing. Kevin was really into digital audio and we thought there was an opportunity to build a garage band plug-in and sell it and make some money off of that.
If we could build a piece of packaged software and just get a lot of people to buy it, it seems like it would be a lot easier than building a web hosting company. We built a really nice garage band plugin but we didn’t really understand how to market it and the amount of time and effort we spent building it didn’t really pay off. We made a few thousand dollars off of it but in terms of the time invested and opportunity cost, it wasn’t…
Andrew: What’s the big takeaway in that market? If that was the biggest challenge, it’s obviously a challenge faced by lots of other entrepreneurs. What’s one big lesson that you took away from that about marketing?
Ben: I think you need to really understand your market before you spend a lot of time building something.
Ben: And I think that we might’ve thought we understood the market a lot better than we actually did ad on top of that, back then we had read nothing about MVPs so I think we probably could’ve figured out how to build an MVP before spending any of our time.
Ben: Going in that direction.
Andrew: Every entrepreneur I feel I the text space owes the debt of gratitude to Eric Reese for the phrasing minimum viable product if not the idea behind it but because boy, he saved us a lot of time.
Andrew: The idea for Olark comes from where?
Ben: It comes from a lot of places. We talked about the hosting company, right? Back in the 90s, we had Live Chat on our website and we were using this company called Human Click that was targeted small businesses and it was all right. It wasn’t great but it was all right.
Then, Live Person went and bought Human Click and made them a lot more expensive and Live Person, from a business decision, it was a really great business decision for them but what it did is it made small guys like us unable to afford their software and in a way Live Person sort of became the de facto this is what Live Chat is.
They were building software that was oriented towards enterprise back in the late 90s and everyone else was copying them, so you ended up in this situation where you had a lot of software that was built for call centers and no software that was really designed for people who didn’t have giant call centers so we sort of muddled through and used the software anyway because it was very valuable to us, but we really didn’t like it.
Ten years later when we were searching around, we’re like, “The audio plugin thing didn’t work. What else can we build?” We looked at the Live Chat space and we were like, “Whoa, it’s the same guys form 10 years ago that are doing this. It’s still like Live Person and Bulge Chat, that crappy PHP app that we tried out once.
No wonder no one has Live Chat on their websites because the products really aren’t built for people who don’t have giant call centers or really built for people who aren’t using the software themselves.”
Andrew: I do see it here on your site from over ten years ago. It’s right on the left margin. You didn’t really have much on your site but you did have a button that says, click here for live customer assistance by livehelp.com and then over time I see a change. It’s a live person and all that. You were just a bunch of kids essentially. How did you find the time to respond to live tech support for people?
Ben: For us, when we got home from school, we were on the East Coast so that gave us some overlap with West coast. We didn’t need to be online all the time. We realized back then that you could offer live chat support when you were available and people would still really appreciate it. It wasn’t like you had to be there 24/7 and respond in 10 seconds, it was when you are there and you do respond very quickly people are super happy and for us it was mostly about sales because we’re just kids, right.
We were just a few kids and we needed to convince people that we were trust worthy and we would respond to their issues and what better way to do that than via communication? Via two way live communication?
Andrew: I get that.
Ben: It worked out very well for us back then. It was so surprising to us that we had all these new businesses starting and none of them were taking advantage of the fact that they could be talking to the people that are on their website right now. Everyone was focused on analytics and just looking at graphs of their customers rather than actually engaging with them.
Andrew: Okay, one of the mistakes you made with the garage band plug in, what was it called?
Ben: It was called Mofis [00:29:40].
Andrew: Mofis. One of the mistakes you made with Mofis was going way too big. How did you narrow down the scope of this product which at the time could’ve been deeply involved, could’ve needed your own servers, could’ve needed your own software for the support people, own software for websites. How did you figure out where to narrow it down?
Ben: Well, I think there were a few places. What is the cheapest way we could possible build this thing? What is the simplest way of doing it? We want to make it as easy as possible for someone to install. On top of that we want to make it work the way it would have worked for us back in 2000 or 2001 when we first started using Live Chat.
When people add it to the site we want them to be able to edit the site without a designer. We want them to be able to put it on the site and not have to think about layout or colors or anything. That’s why we made it float in the lower right-hand corner. Then we said, “We don’t want to build or offer a console because we don’t have a ton of resources. We want to make it work with our existing instant messaging program.” Because a lot of people have instant messaging programs. At lease we thought they did.
We wanted to take advantage of the fact that there’s so many people that are sitting in G Talk and sitting in Adium and sitting in iChat and let them use that to talk to the people on their website and see if they like that. The people on your website should be like a buddy in your Buddy List. We wanted to build the simplest version of that.
Andrew: What was the hardest thing to leave out of that MBP?
Ben: The hardest thing to leave out? There were so many things left out that it hardly worked. That was something we did pretty well. We built the junkiest, ugliest looking…
Andrew: What made it junky?
Ben: It had a lot of bugs in it and it didn’t have very many features. It was basically like we did a proof of concept because we weren’t even very sure that you could build something that you could put inside an instant messaging program. We wondered if it was possible.
We set out like it was a research project almost. We wanted to prove that we could actually do this and then prove that people actually wanted it. One lesson that we learned was to not spend a lot of time on those different pieces, and to not sit there with our heads down building something for a long time. We wanted to build something for customers as fast as possible and with basically no functionality other than make it work and see if anyone would actually use it.
So, we had people who actually used this thing back in 2007. In June or July of 2007, we had this little proto type that had been mentioned on a few message boards and people were using it. They were clamoring for more functionality.
Andrew: It worked right out of the box? We’re not talking about a service that my team and I use internally so if it’s bad and buggy and ugly and internal no one cares. If it’s something facing consumers then I would be upset. These people weren’t upset with that?
Ben: Our customers had become more sophisticated over time. At the very beginning it was a free product. We didn’t even charge for it for the first two years because at the time I was doing a PhD and this was a side project for us. The guys that were getting it for free were willing to put up with the kinds of problems that we had back then. Problems like not very great quality control and a pretty limited feature site.
For the first two years you could only have one operator. As one operator you could talk to the people on your website and most of the time you wouldn’t know their geo location. You would only know that there was someone on your website and that they were talking to you. It was built pretty light.
Andrew: May 2009, Eric Reese was first on Mixergy. I asked him if he needed to charge for his MBP and he said, ‘Yes. Charging helps because it gives you real feedback.” Why did you decide not to charge when you’re the guy who as a kid had the guts to charge?
Ben: This was 2007 so I hadn’t watched Eric Reese’s interview yet.
Andrew: This was 2009 was when the payment part started, and 2007 was when you launched. I got it.
Ben: Let’s forget the fact that I even watched that Mixergy interview. At the time we weren’t really sure if we were building a business then. Honestly, we were building a product. We’ve always been a little bit more product first. We’ve always wanted to build a really amazing product that Really solves a problem. You can always see that we’re very focused on solving problems and building a really great product and maybe not quite as much about squeezing every dollar value from the customer, so for us, I don’t know.
Maybe we’re just hippies or something and we want to build something awesome and give it away and see if people use it. I think for us, just having all these customers that really appreciate what we are building… that was enough to get us to the point where we’re like, hey, you know what? Let’s see if we can make this thing real.
Let’s see if we can build all those features that we know that our customers need and let’s see if they’ll pay us for it, because what we did is we sort of on purpose kept the product pretty light in terms of features because we knew that there were a series of features that we could build that we were sure people would pay for. Once we proved that people would actually use it, and it was growing, then we were willing to put in the time and try to make it better.
Andrew: And make it premium.
Andrew: Help me out here. I’m cyber stalking you and I see on the bottom of some of your old pages, it said, “Olark by Habla Inc.
Ben: Oh yeah. That’s another good lesson. In 2007, it was called Olark. It was called Habla because Habla means to talk in Spanish. Doesn’t everyone know that? We owned Hab.la because I really like short domain names. We were Habla up until we actually got into Y Combinator as Habla and really the big piece of advice that Paul Graham gave us… people talk about Paul Graham being a genius and having all this great advice. The main thing he told us was you guys need to own Habla.com or you guys need to change your name.
That was the one piece of advice he just hammered on every time we’d meet with him. In the summer, I think it was something like July of 2009, we changed our name from Habla to Olark sort of on a whim of some regard. We knew we needed to change our name and Olark was an open dot com domain name.
We had sat down and generated a list of hundreds of available names that we could be and no one could make any decision about what name we should be since we were all so attached to Habla. Finally, I was just like, “Alright, we’re going to be Olark for this week and if we like being Olark at the end of the week we’ll stay Olark. Otherwise, we’ll pick another name from the list.”
Andrew: So, Olark was openly available or a domain for you to buy?
Ben: That’s the only reason we’re named Olark.
Andrew: It’s a good name that it’s easy to spell. It’s memorable, right? It’s short.
Andrew: The only issue with it is, what’s the connection between Olark? And you kind of tied it in with the bird.
Ben: A little bit, yeah. The thing that we liked about it is it sounded nothing like our competition, so in the space going in we didn’t go into this blue ocean. There were tons of other companies out there in our space in Live Chat and they all had names that were like two English words following each other so there was Live Person, there was Bulge Chat, there was Provide Support, there was Instant Service, and we were like, you know what?
We don’t want to sound anything like any of the guys in the space. We want to make sure that they never get us confused with each other because I had heard a lot of people who are using Live Person claim that they are using Live Chat which I think in a way helped the company Live Chat be more successful because no one can ever remember who they are. Live Chat is getting word of mouth from people who aren’t even their customer.
Andrew: It’s such a good name in that it’s become the generic term and, yes, I’m sure I’ve made that mistake myself.
Ben: We were just like we do not want to be, we would never want anyone to mistake us for someone else.
Andrew: I should do a plug for Scott Edward Walker. The man is paying me to have a conversation. Think about that. Ben, that’s a pretty freaking good life, right? Someone says, “Hey, Andrew, you enjoy talking to your friends, you enjoy prodding people about how much money they’re making. I will pay you to do that.” That’s what my sponsor does. Frankly, I’m even going to take the shortcut out.
Even though I could say that Dotty and Scott Edward Walker is the entrepreneur we are promoting, I’m instead going to take the easy way out and say, Ben, do you have any advice for entrepreneurs about either how to pick a lawyer, how to avoid making a big legal mistake? I see a big nod. What is the advice?
Ben: It’s a really good question. You need a good lawyer and you need a lawyer you can trust who’s not going to overcharge you for every single thing, at least in the beginning. Once you get your company built I will say legal fees will end up not really being that big of a percentage of your business but just like when you’re getting started, having someone who sort of understands what it’s like to be there in the beginning and have no freaking clue what’s going on. I went and I talked to a bunch of different lawyers when I was setting up Olark and I ended up going with the guy who gave me the most information about what was going on and did a really good job explaining stuff to me because I knew nothing about what a convertible note was.
So the person who did the best job explaining convertible notes to me and had good references is who I ended up going with.
Andrew: Good References, could explain the tough concepts to you, could take the time out to have a conversation with you and not rip you off with the price.
Andrew: Was that man Scott Edward Walker? Maybe not. I will tell you this that is describing Scott Edward Walker to a tee. In fact, I will even tell you if you guys are entrepreneurs out there and you want to have a conversation with him you can call him or e-mail him. I’m going to give you his phone number right now 415-979-9998. I do not understand why he wants to give out his phone number but if he is willing to I’ll do it. 415-979- 9998. and here is, since we are talking about price, $2,900 all you can eat startup package.
That gets you going, actually mighty text did that I’ve got a note here. Mighty Text first engaged Walker Corporate Law for their $2,900 all you can eat startup package then they used them for note c financing then for their stock option plan.
You’re talking about a lawyer who will get you started cheaply well establish your rights so later on you can work together. If you need that kind of lawyer go to Walkercorporatelaw.com. Ben, thanks for helping me out with that.
Ben: Glad to help. Having a good lawyer is important.
Andrew: You switched your name to Y Combinator, as you said. How did you get into Y Combinator?
Ben: Back in 2009, no one had heard of Y Combinator. People who were in the startup world… it’s much smaller than it is today, I’ve heard of Y Combinator. I think at the time, we got in for a few reasons. One is, we had built a product that had a lot of traction. We had a lot of users on our product.
Andrew: Did you have a paid customer base, yet?
Ben: We launched paid right before our interview at YC. I think we had something like one paying customer.
Andrew: Was that in preparation for going into Y Combinator or was that going to happen anyway?
Ben: We didn’t know we were going to get into YC, so we acted like we weren’t going to get into YC. We did everything we could just to build a successful company. I think the best way to get into YC is to not need YC and make them really want you.
It was actually sort of funny. We applied to YC in 2008 for the winter batch of 2009. If you remember, there was a huge recession in 2009. I think this is probably the only time that YC’s done this. They sent us an email and said, “If you want to postpone your interview, you can. Because, we’re not sure if anyone’s going to be able to get any funding who comes out of this thing.”
Andrew: Oh, wow. I didn’t know they did that. So, they said, “We may not be able to help you grow beyond us and so you may not want to be a part of this program.”
Ben: They said, “You can put off your interview if you want for the next batch.”
Andrew: For six months…
Ben: For six months… for me, I wasn’t even expecting to get an interview, honestly, going into that. I was mid PHD and six months seemed like a good amount of time to get our shit together and push this thing hard, right? I was that little bit of extra validation like, “Hey you guys, you’ve got an interview.”
Then, once we had that interview, we just basically put on the gas, so to speak, and just getting ready to make this thing real. We applied to Tech Stars. We became very active in the local Ann Arbor tech community. We were onstage presenting at an event about start up.
Andrew: What’s the benefit of being involved in the startup community and presenting at these events?
Ben: When you’re like three people, it’s a really good way to feel like you’re part of something bigger, I think. The guys that do startups… they vary from community to community. I think the guys that end up being successful in startups have a very much pay it forward sort of approach.
When you’re around people who are willing to help you out and helping other people out, it makes it feel like you’re a lot less alone. It’s not like being out in Silicon Valley where you walk down the street and half the coffee shops are full of people pitching ideas when you’re not out here.
When you’re in Ann Arbor, Michigan, you probably know like one person who’s ever raised money, at least back in 2009 it was like that… now, Ann Arbor has a much more popular growing startup.
Andrew: And, what about being on that stage? What’s the advantage of pitching, essentially, to other startups, your startup?
Ben: Well, I think that particular event was [inaudible 00:45:00] we were pitching at the VPs of Annual Investors and startups. But, this is Michigan, so I don’t think so many of those people really showed up who actually wrote checks. I met a lot of people who considered themselves angel investors.
So we thought we’d get some feedback there. The one thing that I thought we’d got out of that was some exposure among startups. I mean, startups were sort of where we started, right? A lot of our early customers were people willing to try out new software. Because when you’re building new software, more established companies are less likely to try it out. So…
Andrew: Yes, Neiman-Marcus is not ready to install “ob.la,” but a new company is more willing to do it.
Ben: Yeah, absolutely. Because you’re small. So we’ve always tried to hook up startups. So we’ve worked with incubators to give nice discounts on Olark. And when I meet startups at events… I was on the train the other day just talking to someone, and heard her trying to figure out where she’s going to find a designer for this side project she’s working on. And I was just saying, ‘Hey, you know, once you get this thing a little bit further along, I’d love to help you out. Just shoot me an e-mail, and I’ll see what I can do. I… ”
Andrew: You mean, “See what I can do with Olark? Give you an…”
Ben: Well, in any way really. On the one hand, I’ll give you this six months for free, just to try it out, right? But on the other hand, I think a lot of times people can use a little bit of help. And I know that as you get more busy it’s harder to find time for that. And so the most important thing you can do is to set expectations really low. So when you do offer to help, make sure you fulfill that and not just…
Andrew: So now that you’ve essentially said that if anyone meets you in person that you’ll give them a discount or some free time on Olark. If someone who heard this interview walks up to you and says, “Hey, Ben, what do you say? Will you hook us up, or assist us?”
Ben: I would say it’s more of a needs based equation, in my mind.
Andrew: I see.
Ben: I think most people can easily afford Olark, given the value it provides. I think, really, the deal is that our pricing is so low that you’re going to make a lot of money and we should be charging you more. So that’s a discount we give everyone. Right now, everyone gets that discount.
Andrew: Y Combinator? Actually, you have six months, and you’ve started to sell your product. How are the conversions going for you in the early days?
Ben: That’s a really good question. And we always looked at conversions in a few different ways, right? So we had — Olark is a fairly complicated product to install. You have to get someone to add code to their webpage, right? And that requires a certain level of technical expertise.
Ben: Then you need to get them to connect it to their existing instant messaging program. And at the time, which we later learned, is most people didn’t have an existing instant messaging program. So you end up getting them to download something new, or maybe plug into the G-talk, which worked all right.
And so, because we had such a complicated just ‘you need to do this in order for it to work’ funnel, we always worked really hard on that particular funnel. And, you know, we have graphs and funnel analytics and everything around that. We’re just always trying to make that process work more, and worrying a lot less about whether people converted to paid. Because we felt like if we could get them to use the product, the value would prove that you needed to upgrade.
Andrew: So just smooth your funnel. What’s one key thing that helped you smooth your funnel?
Ben: That is a really good question. I think the thing that has helped us the most, recently, is removing… For us, the hardest step was getting people to install the IM client, really, or getting their IM client set up. So really just trying to make it very clear what the next step was and not give people a bunch of options. It’s like the more options you give people, the more paralysis there is about what to do next.
Andrew: You mean, if you tell them it will work with IM, AOL Instant Messenger, and it will work with…
Andrew: Oh, really? So that adds too much?
Ben: Yeah, I would say that if you can detect what they need and give them just one option. Once you have three options, because in our case there are many people who didn’t know what these things were called or if they already had one, for us, just definitively saying, “This is what you do,” was one of the more valuable steps we could do. Another thing that we did that has helped out conversion is just . . .
I think a lot of people talk about removing fields, and that probably made a small bump. I don’t know, it’s been a long time since I’ve been in the trenches worrying about that. It was like, at the beginning, we spent a ton of time on it. Recently we spent some time, but we haven’t seen the kind of percentage improvements that we saw back then, so it’s…
Andrew: One of the cool things I saw in the early days that you guys did, and actually I see it now that I’m on the site, there’s a box on the earlier version of the site that says, “Try Olark on your website, just type in your website to get started.” And if I typed in my URL, it could see what Olark would look like and how it would work for my users on my site.
Ben: Yeah, exactly, right? So Matt builds his own. We were three people, and Matt built his own framework to maintain that web-based thing. And it turned out that Matt was the only person who knew how to make any change to it. So whenever we needed to make a change, we had to rely on Matt. And really, it just became a big bottleneck. We couldn’t iterate on the marketing website because we had a custom framework for building static websites.
Andrew: Oh, wow. I see.
Ben: And this was pre-backbone, pre- all this other stuff. So certainly there was a need there, but it just wasn’t our job to solve that problem back when we were three guys. I think if we had built it on something a little bit more off the shelf, it would have been more maintainable by other people. And, it’s one of those things where it would be nice to try it out again and see now that we’re a little bit more advanced about how we approach problems, to see what sort of boost it would have. But we haven’t seen much big boost to conversion rate.
Andrew: Okay. I know Dan says that that worked really well for them at Optimize. Continuing then, with the story, you have to get some people who are used to a free product to pay. What did you do that made it worth their while?
Ben: Oh, at that time, that was super easy. We just let them have more than one person, and we let them look at transcripts. So you couldn’t ever see any history of any of your conversations, and you still can’t, until you pay us.
Andrew: How did you know that that was the thing that would make people want to pay?
Ben: Well, the multiple operator thing was a very, very common request of ours. We had a lot of people who wanted that functionality. And, it was pretty clear that in any successful organization, you’re going to need more than one person. The other thing that we did that was kind of neat, is on the branding on the chat box we changed it from free chat by Olark to powered by, when you paid. So, a lot of people don’t like to be cheapskates, right? Especially if you’re putting up a business website, you don’t want something on it that says “free” on the bottom of it.
Andrew: I can’t believe that… so, one of the great things about your business is every time someone has Olark on their site, they’re essentially promoting you, right?
Ben: In a way, yeah. In a way that they do with a lot of other products, yeah.
Andrew: But there aren’t that many products that will be on other people’s websites with that, right?
Ben: It does, it does work well.
Andrew: So that works really well. Branding is phenomenal, right? It’s on there. If I have a good user experience, with Olark, on someone else’s site, I might come back to my company and say, “Why aren’t we doing this ourselves? Look at how great it was.” And I don’t have to hunt around to figure out what software people use, it’s right there and I know it.
The other thing that I see that’s worked well for you, two other things, and you tell me, there’s got to be more, obviously. So that’s number one. Number two, partnering with big companies. I think you partner up with-oh, here’s a good one. You were so good when you were listening to Mixergy and building your company, researching out for guests, and talking to them for Biz Dev purposes. Including your contact, your conversation with Noah, I think it was, from Clicky.
Ben: Yeah, yeah that’s a really good point.
Andrew: Talk about that. What happened there?
Ben: I did reach out to him, specifically for a Mixergy interview. I think at the time, I had no idea what Clicky was, so I watched the interview and I was like, “Oh, this guy seems cool.” What is interesting there? Well, we have… I think it’s interesting. When you’re a small company, you see a lot of gain from going around and trying to partner with as many companies as you can. Once you’re a little bit further along, you realize those companies don’t have a ton of incentive to promote you. So you need to figure out situations where you can have a mutually beneficial relationship that works out really well.
So one thing… we have a lot of Shopify stores, and Shopify has really great analytics. So really early on, they were able to tell us that people who have our chat on their website are much more likely to retain for Shopify. And part of that could be that using Olark is a signaling mechanism that they’re going to be successful. Or it could be that talking to your customers is more valuable.
And they’re also able to run numbers, like the people who chatted on Olark before buying, on average, spent thirty percent more than the people who didn’t. So there’s a lot of good, sort of, correlative shared value. And for someone on Shopify to use Olark…
Andrew: So then they have an incentive to promote you. But Clicky doesn’t. The smart thing about reaching out to Clicky, is that you’re both talking to people who have web businesses, and who care enough about their businesses to invest in them, and to look at the analytics or to talk to customers.
And I can see that that’s complementary, but you’re saying, “Yes, we did work well with them, and there is a partnership that works well there, but they don’t have enough of an incentive to their users and say, ‘Go and install Optimizely’ excuse me, not Optimizely, Olark.”
Ben: Yeah, right, exactly. So they don’t have a huge incentive there. It works much better when you have a nice shared incentive.
Andrew: What about just paying them, and saying, “Look, you guys have customers. If you upsell us, we’ll give you a share of that.”
Ben: That is a very reasonable approach. We just haven’t, we haven’t built that system for Clicky in a way that I guess is been compelling to Clicky, but honestly I haven’t talked to Clicky in very a long time.
Ben: We do a similar deal with big commerce where we do pay people when they come from big commerce.
Andrew: So big commerce gets paid every time.
Ben: Yah, absolutely.
Ben: And so finding deals like that, that are mutually beneficial, I think just the cash value for someone who is a big company very rarely is the main way they are making money, because it ends up being just a percentage of the money that that customer is paying you. So there needs to be something beyond just that money for the relationship to be really powerful. I think you need to get a higher customer lifetime value or a higher customer satisfaction or some other thing that just makes it more valuable than just cash.
Andrew: I see. Weebly and Squarespace use you and send you traffic. Are they also introducing you to their customers?
Ben: We haven’t done anything big with those guys. I think our general customer tends to be a little bit bigger than the guys that use Squarespace and Weebly.
Andrew: I thought so too and still when I look at where you’re getting your traffic, number one I’ll talk about in a moment, number two is Weebly, number three is Squarespace, after that is Ooshirts, down there is Shopify, Hipmunk. So what’s the deal with Weebly and Squarespace? are they just using you as customers to promote their stuff or are their customers using you?
Ben: I think that my guess is the place you’re getting your data from is probably is just looking at traffic to Olarck.com, not necessarily referral traffic, so probably what you’re seeing is that those guys get a lot of traffic and that it has to hit our servers when it loads our webpage. That would be my guess.
Andrew: I see. You’re saying they’re probably using it, not people who are customers of theirs.
Ben: That would be my guess, because my analytics look a little bit different than that. So that’s my theory.
Andrew: Interesting. Okay. I see PC Optimizer Pro sending you a lot of traffic and as far as I can tell that is probably coming in from a popup and they are using you to explain to their customers at their site why they need to tweak, repair, enhance, and protect their computers.
Ben: I’ll have to check that.
Andrew: I don’t think you should say a word about that. I don’t know that there’s anything you know about them frankly, I’m just taking a look at your traffic.
Ben: Yah, yah, yah.
Andrew: Here’s the other thing that I see worked for you, Y Combinator. For promotion it feels like every Y Combinator company leaves with some cash, with a good network, and Olark on their site.
Ben: Well I think Y Combinator knows how to create winning companies.
Andrew: How are you integrating? Are they intentionally producing you?
Ben: No. We don’t have anything fancy going on with Y Combinator. I think what it is, is on some level a lot of successful companies have gone through Y Combinator. A lot of successful companies have used Olark. Especially in the early days, it is a very easy argument to make that you should talk to the customers that are on your website and a lot of people see a lot of compelling value in it and so I think that is really what has happened with Y Combinator in particular.
We have seen a bunch of successful companies like Hipmunk and WePay and a bunch of other ones come through and build really amazing companies that really care about build customer service and use Olark. And when they come back and talk at Y Combinator events they mention how Olark helped them in their success.
We’ve had companies from Techstars, companies form 500 Startups, there’s a lot of young companies that get value out of talking to their customers in the early days and then the longer term decision is do we want to stick with it as we scale? Is customer service something that is important to us? Do we use it for sales? Do we use it for support? That happens later.
Andrew: So then where else, what else? If you were listening to this interview you would say, “Great, I like hearing this guy’s story. It keeps me entertained, but give me one thing that I could do, that’s useful for me for getting new customers, for getting new traffic.” What’s worked for you that we can pass on today?
Ben: Certainly when you’re really young, I think the strategy has been sort of tried more now, so it’s more successful for us than it might be for you, but going out and building relationships with all of the incubators was very useful for us right at the beginning especially when we were small. And the fact that we had a product that was very well suited for companies at an incubator stage and a lot of those guys turned out and grew. I wouldn’t say we got lucky, but if you go after companies that are likely on a nice trajectory that can really help you grow.
Another thing that we did is we were pretty focused around how we did marketing. We really only market to two groups of people. We market to two groups of people. We market to software companies and we market to e- commerce stores. Once you can kind of really hone in on who those people are and what size they are and how many employees they have, it’ll help you understand what you should be doing to reach people.
Andrew: I see, okay. Where you guys are buying ads, is it adroll.com? Is that the big thing?
Ben: Right now we aren’t buying any ads.
Andrew: No ads?
Ben: Which is crazy. It’s crazy we don’t buy any ads. I don’t have a good reason why we’re not buying ads right now, other than we haven’t really put the analytics in place, that we feel like we will know exactly how successful they are over the lifetime value of the customer.
Andrew: The founder of What Runs Where gave me an account on his site. I’m trying to see where, if I could figure out where you’re… No, there are not ads even that I could find anyway. I love that I get this stuff.
Ben: Honestly? There could be a small $10 a day campaign running on Google, like some tests. But we’re not doing anything that is not a test, and the tests are pretty small. Pretty cheap tests.
Andrew: Remote teams are an issue for you.
Ben: Ya. Well, why are we remote or…?
Andrew: Why are you a remote and what’s the challenge with a remote team?
Ben: We were all out in California and then Zack sort of decided, “Hey guys, I don’t really like living in California that much. I really like living in Michigan and I like helping build up the Ann Arbor server community. He decided to move back to Michigan. Really early on we were four people with one person in Ann Arbor, and three of us out here in California. We had to build up these practices around dealing with a remote team. As we scaled the company, our first hire turned out to be remote.
I guess part of the reason is, we were boot strapped. We couldn’t go compete with salary with Facebook and Google and other well-funded startups. We had to compete on culture; we had to compete on people we knew. We didn’t know a ton of people out in the valley that were willing to work for less than market [laughs]. So we were able to hire people that we were able to pay above market for their geography that were friends of ours, but not have to compete on salary in the Bay Area.
Then as the companies grew, I think about half of our employees are in offices and about half of them aren’t. We’re pretty dedicated to building one of the best remote cultures that we can. Part of the reason we started Olark and, at least one thing that keeps at least me motivated, is trying to build a company where I want to be both the CEO and the next hire. I want to make sure that whether that hire is remote or in person, I would be willing to be that person. That we are building a strong culture and the company is really like one giant family.
Andrew: Meaning whatever it is that you’re hiring for, should be a job that you would want to do yourself?
Ben: I would want to work at a company, like Olark, not necessarily the role. I’m not going to want to do every role at Olark, but I would want to have some autonomy, right? I’d want to be able to, sort of, take the lead on projects that I thought were really important to the bottom line. I’d want to have the ability to spend some of my time, in addition to that autonomy and just products, but some of that time more self-directed. I’d want to know everyone else at the company and have a reason to talk to them. I wouldn’t want to feel like I was just a support person, or just an engineer.
Andrew: What you’re telling me is, it seems like things are working well. You’re forced to build processes that allow you to work with a remote team. As a result of doing that you end up having people who you couldn’t otherwise reach, for a price that you wouldn’t be able to pay if you are local. But there is a challenge. What is the challenge with that?
Ben: The challenge is, when you bring these people on as a remote, you’re in a situation where it’s- how do you make someone really, really passionate about what you do if you don’t see them every day? How do you build that really strong culture where everyone feels like a team?
Andrew: I see what you mean. So how do you do that?
Ben: Well, we’re working on it. Right now we do things where everyone we hire we bring them on site for as long as we can. As long as we can get their significant others to sign off on it, we’ll try to get them to spend some time at the office.
Andrew: So you guys rented an apartment here in San Francisco, which is not too far from where you were. You threw a BBQ, which is fantastic. It’s within walking distance from here.
Andrew: I go over there. Everyone’s telling me you guys have some fun house that you get to work out of. That’s the thing, right?
Ben: Well, that used to be the thing.
Andrew: That’s the thing, right?
Ben: Well, those, that used to be the thing. Things have changed. So we used to have this giant Victorian house in downtown Palo Alto. And, it used to be a sorority house. And we were there for, from 2010 to, like, mid-last year. And then the landlord decided she wanted to cash in on it, sell it, and make some money. So we, we’ve moved up to the city since then. So now…
Andrew: Oh, so you’re in San Francisco
Ben: …Ya, we’re in San Francisco.
Andrew: I see, so…
Ben: We’re currently… I’m currently not in San Francisco. But ya, the company is in, is in San Francisco. We’re on South Park, and when we moved up to the city we wanted to make sure we kept a little bit of that, like, Palo Alto feel. So we, we have a rooftop deck, we still grill on Tuesdays, and try to invite some people over. I think last week we had all product managers but one from best.com hanging out at our [laughs], like grilling on our backyard. One of our, one of our guys made crepes. I mean, it was, it was a lot of fun.
Andrew: And then, you don’t work from… you don’t live in San Francisco, do you?
Ben: I do not.
Ben: I commute up on the train.
Andrew: But not every day…
Ben: Not every…
Andrew: So you’re basically a remote worker too.
Ben: Well, you know, I like the flexibility that remote gives you and with all these east coast people, there’s no, for me, it was not like we’re set up where there’s, like, an office that’s like, the support office. Or, like, the executive office. Or, like, the engineering office. Everyone’s sort of spread out. So being in an individual office is kind of, like, do I feel like going to the office rather than, like, do I really need to be in an office today.
Andrew: All right. We did this great courses here at Mixergy, if I do say so myself. One with Ryan Carson, the other with Jason Fried [SP] both about how to work with a remote team. And the coolest, most surprising thing about both of them is they both like to have chat rooms where people can post even cat videos. Jason Fried [SP], a person who I think is a very serious individual, has a chat room where people will put cat videos and he will not laugh at them. And he will not say this is, this is useless stuff. I love those courses that they did. That’s, those are the two things, that’s, I guess two things one idea that they both do. Do you guys do that? Do you have a chat room where anyone in the company can share a cat video?
Ben: Ya, I mean, I don’t think it’s targeted at just cat videos but we have…
Andrew: It’s not, what’s the deal with these?
Ben: We have, we have a chat room called Olarkville. Which is basically where people can kind of hang out and, you know, we have topical chat rooms. So there’s a chat room for support. Which is like support stegosaurus. And then there’s, you know, a bunch of other, like, fun chat rooms that are sort of organized around a particular function of the company. So, like, people that are in marketing sit in the marketing room. People that are in, like, op, like, ops, meaning like dev ops, they like the ops fortress of solitude. Which, you know, like, I named the channels.
Andrew: So there’s a place for them to chat.
Andrew: And a place for them to have like, work chat, and fun chat. Alright. I have, like, two tough questions to ask you.
Andrew: One is about a competitor of yours. And I know as soon as I say it on camera here with everything recorded you’re going to give me the PR answer and it’s going to stink for the audience.
Andrew: So I can either address that and we’ll have the thing where you pretend, or I’m going to put in the Skype chat right now a name of a company that used to be more of a competitor seen maybe as someone who can take you on. And now I don’t see them anymore. Give me your insider or professional feedback on why they lost to you or why they’re not doing as well. Here, hang on. There we go. Why isn’t…
Andrew: That company doing better and like I want to understand what…
Ben: Why are they not doing better, or?
Andrew: …well, what we can learn from them. Yes. Why aren’t they doing better than you? Why aren’t they as well as, why didn’t they…
Ben: Ya, ya, ya, ya…
Andrew: How about that. There’s the question. Why didn’t that mystery company keep up?
Ben: That’s a really good question and I know the other company you’re going to talk about too, so it’ll be a fun discussion. So the, like, that. Those guys, I think have built a pretty good product. I think that, I think that live chat is a tough market. And I don’t know what they’re doing internally that is making it so hard for them, because I think that they’re, I think the whole market is growing pretty fast. I think they may have sort of edged a little bit more on the enterprise direction which is a more competitive asp- area of the market and you end up going up against live person and a lot of the big guys all the time.
And so for us, we decided that, very early on that we were going to be sort of, like, bottom up rather than, like, top down. Like, let’s build, like, what everyone who has one operator needs. All right let’s build what everyone who has, like, 5 to 15 operator’s needs. All right, let’s build what everyone to like 15 to, you know, hundreds of operator’s needs rather than just trying to start a little bit further up. Like, say, like, hey let’s just jump directly to the people that need a hundred operators.
And I’m not really sure where they, where they sort of sit on that and from their product I would expect them to be doing better. So I, I’m not sure. I’m not sure what’s going on there.
Andrew: It is a very good product. There are a lot of things that I like about it. All right, well, you’re saying is the difference is they might have gone after the bigger companies and it’s harder to break into that bigger business when, when you’re starting out as, as opposed to starting out with the startups and then growing with them.
Ben: Well I think also that if they really, and this is just kind of an outsiders perspective, if you’re going for those guys you need a bill of sales team. So you need to like have a different type of organization. I know that they’ve been trying, they been probably similar to us to where they like being small, and so Olark likes being small, we like having a varying engineer product customer service oriented company and I think if you’re going to target more enterprise you’re going to need to have a strong sales culture.
Andrew: Okay, all right, rapid fire here, there is something else I want to talk about and that is the time when you guys lost data.
Ben: Oh yeah, there was a time, this was many years ago, we were probably called Olark at the time but it was like this is 2010. So in 2010 as many small companies do, we didn’t quite have staging fully separated from production and someone ran a command on staging that ended up dropping the main database and it didn’t just drop the main database, it dropped the main database on the replicas as well because it was just propagated across to all of the replica machines. And we we’re good and we had daily backups but what ended up happening at the time was we tried to recover from our daily backup and it failed.
And so it was one of the more stressful times you’ve ever had as being an entrepreneur or just running a business when your database backup failed and all of your replicas are shot. The cool thing about Olark is our customers didn’t quite notice immediately because a lot of Olark runs out of memory and out of cash, so if you can’t hit the database, we’ll still keep running for a while.
So at the time we were like okay how do we dump all of this cache stuff out of memory and write it to disk, how do we, can we talk to our host provider and figure out what the heck is going on and lucky it was one of those situations where we sort of like, band of brothers style thing where everyone is totally stressed out and we’re like oh shit we’re going to have to like start over tomorrow or something but some people were working on just pulling data out of logs, pulling data out of, you know we were hoping like maybe we can recover all of our customers email addresses so that at the very least we can send them an email and ask them if…
Andrew: Oh you guys lost even your customers email addresses?
Ben: This was like the database that had everything on it; this was one really bad day. It was kind of like…
Andrew: You’re laughing a lot, this is nervous laughter isn’t it?
Ben: Well it’s not in the sense that like the story has a nice ending, right because what ended up happening is even though the data restored failed, initially we were able to get in touch with our hosting provider and it was kind of in their earlier days of their cloud offering so at that they’re a little bit more buggy than they are today. So even though it said restore failed the first few times we tried, they actually had a copy of the data, so we were able to recover it, with just an 8 hour lag or something but at the time that is killer.
Ben: Yeah I know. I’m sorry I’m on an interview. Give me like one second; we’ll have to cut this out.
Andrew: Cut it out, I don’t edit anything, I’m watching and so is the audience. Let’s see what’s going on there, alright at this point I should actually say that Mixergy has both interviews and courses, the course part is part of our Mixergy premium offering where entrepreneurs teach and as a follow up you could either watch the courses that we’ve talked about where we talk with Jason Freed and Ryan Carson about how to run an external team.
Or I just recorded a course with Ryan Holiday about his book called “The Obstacle Is the Way” where he talks about situations just like Ben faced and how those holy crap moments are really when you make it bones as an entrepreneur and if you don’t lose your cool and run things right it can actually be a situation that you laugh about later on the way that Ben is. Anyway that’s available at Mixergy premium dot com. I was using the opportunity to do a plug. I know that we are running very late and I should…
Ben: We are running late…
Andrew: Let you go…
Ben: Yeah we can continue this, we can have another call sometime else and like…
Andrew: No here let me finish this up right now and then we’re all good.
Ben: Okay lets…
Andrew: I know you got to go; I don’t want to take up too much more of your time. Here’s the thing that I want to ask you. Mixergy has a twenty five dollar product am I really going get on tech support with Olark with every potential customer when it’s basically a twenty five dollar product or does it make more sense for higher end businesses?
Ben: Well it depends on what you’re trying to do right. If you’re trying to, you know what I would do I would run a test, I would go put it on your pricing page or on the page that has the highest drop off in your funnel. And I would see if you get a lift out of putting a lift on the site. And if you don’t get a lift then it’s probably not for you. And if you get a lift, then figure out how much that lift is working for you and figure out whether economically it makes sense. I can tell you that a lot of our customers get nice lifts. So, typically it makes sense. But it doesn’t make sense for all businesses.
Andrew: Alright, there’s a great answer. Right there, you’re encouraging people to use it. What kind of revenues are you guys doing this year?
Ben: We’re doing like multi millions.
Andrew: How much 2013 that’s old history at this point?
Ben: Sorry what did you just say?
Andrew: How much, what kind of revenue did you guys do in 2013?
Ben: I’m going to stick to multi millions until we have, sorry, next time.
Andrew: Alright, fair enough. I’m going to leave it right there you’re encouraging everyone, entrepreneurs, developers, the whole team to get on Olark for at least a few weeks and see what it’s like to talk to real customers to answer their issues. To talk about, to talk to them about their challenges. Help them buy, help them solve their problems. And you’ve got a plan right now on Olark.com where anyone can sign up and empower their team to jump in.
Ben: I got one more plug real quick.
Andrew: OK. Hit me with the plug.
Ben: If you come to Olark and you say you came from Mixergy we’re doing this promotion that’s happening on April 24th, this is going to run after April 24th. This interview. If you come and you say you saw it on Mixergy you want to try a little hand support we will honor our all hands support date deal. Where we’re given people unlimited operators for the month of May. To try out bringing the rest of your team….
Andrew: So even if they come in after you’ve official do this. But before May, before the end of May.
Ben: Before the end of May when you sign up tell them you want to try it out. Because I want to help your listeners.
Andrew: I would like that too.
Ben: Like bring the rest of their team into the process and just experience what it’s like.
Andrew: And ordinarily they would have to pay if more people on their team. If they did it this way, they would have multiple people for the same company and they could experience it together.
Ben: Yeah Absolutely.
Andrew: Alright. Good so then maybe the boss will get in there for a couple of hours, but they’ll have really a hand full of other people do it most of the day.
Ben: Yeah, let’s see some more bosses talk to their customers directly.
Andrew: Alright then, thank you so much. The website is Olark.com please have more success so that you need to keep coming back here. Thank you all for being part.
Ben: Take care.