Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and joining me today is an incredibly successful entrepreneur who got his start by bagging groceries. And when he bagged those groceries he had a big, giant painful problem that he just couldn’t stand. And that’s what led him to come up with the idea for the business you’re about to hear today. Chad Halvorson is the founder of “When I Work.” It’s an easy way to schedule and communicate with employees. So imagine you are running a grocery store yourself and you have maybe 10 to 20 people who work for you and you don’t want all the hassles of all those posted notes of trying to figure out when Steve should come in and when Barbara should come in after that and what happens with Barbara cancels at the last minute and you need a replacement, all that stuff and so much more is what WhenIWork.com does.
And this interview was sponsored by, you guys probably heard me say this quite a few times, by a company called Toptal. Well, a guy in the audience named Stuart Brent heard me talk about Toptal, and he said, “Andrew, I am one of those success stories of Toptal.” He said he was tired of going overseas and hiring people and getting mixed results, and he finally said he needed a good developer, someone who was a good fit for him and someone he can count on. So Stuart Brent went to toptal.com and he told them what he was looking for. And if you guys don’t know what Toptal, it’s a network of top developers. They’re considered to be among the top 3% by their peers.
They’re all proven, tested, vetted, and so on. So he went to them, he told them what he was looking for, and they found him a developer. That is cool in and of itself that he was able to get a developer to build out his idea, but the more interesting thing to me is he says all this time later, years later if he wants to go back to that developer he still has access to them, that developer didn’t disappear the way some stranger who you find overseas disappears. So Toptal gets you good developers, they’re a good cultural fit and they’re real human beings, part of your company. Hire them for 40 hours, 20 hours, whatever number of hours you need and they’ll be part of your company. Go to T-O-P-T-A-L.com, top like, you know, Top and Tal like talent, and I am grateful to them for being sponsors of Mixergy. Chad, welcome to Mixergy.
Chad: Thanks for having me. Good to be here.
Andrew: Why were you bagging groceries?
Chad: I was bagging groceries because it was my first job, so the first job I got it, I was, I think, I was 15 years old. I walked in there one morning before school and applied and it was my first job.
Andrew: All right. Roughly what year is this?
Chad: This was probably in 1997, I’d say, is when I started.
Andrew: And I said that you found a problem there, something that really bugged you. Can you describe a day that it bugged you? What was that? What was a typical frustration like?
Chad: Yeah, so I think there was issues kind of every time all the time but the thing that really kind of resonated with me and it was something that happened on a weekly. I think it was either on a weekly or biweekly basis. So in an hourly job you have a schedule that changes every week, and the manager at the store would oftentimes post the work schedule for the next week on Sunday nights. So you could be waiting around in limbo wondering if you had to work on Monday or what your week was going to look like because the schedule wouldn’t get posted until Sunday night.
Andrew: Why didn’t he posted it until Sunday night? Was he a jerk? Was he disorganized? Why wait ’til Sunday night and make you guys wait?
Chad: Well, it wasn’t every time that it was until Sunday, but you know what? A manager who is running a grocery store any kind of business that’s scheduling and keeping track of who you need when, it takes a lot of time and oftentimes you’re running the store, you’re ordering, you’re doing all the different things that you need to do as a manager and then the schedule kind of is this the last thing that you might end up not getting to until the weekend or leave sometime. So it wasn’t necessarily an effort to kind of mess with us. A lot of times it was just ran out of time and it would get posted the day before it was supposed to go out. And then you’d have myself and other co-workers that weren’t working on Sunday kind of lining up and coming into the grocery store to check the schedule, or they’d call in to the front desk or to the customer service counter to see who’s working tomorrow or do I am work tomorrow, that kind of thing so.
Andrew: At that time you worked at restaurants who had similar experiences. You call and see if you can if you could get your schedule; you go into this to the restaurant to get your schedule. This is a widespread problem. It was a frustration for you. Did you at that point have a vision for what to do about it or were you just frustrated?
Chad: So it was frustration and then the idea of the genesis for what became when I work was really simple. It was if the manager could post the schedule onto a web page, then I could just log in through my computer at home and check the work schedule and that would be, at least, better than having to go into the store on my day off to check it. So that was really the main point that I thought of solving upfront was just to get that schedule somehow on a webpage somewhere. This is before we had camera phones to take pictures of our schedules like people do now and that was really what it was.
Andrew: And so I’ve seen here that in 1998 you registered WhenIWork.com.
Chad: That’s right, yeah.
Andrew: What you do with it?
Chad: So besides squatting on it for 15 years or more than 15 years I …
Andrew: Was it 15 years because I’m looking here at screenshots of the site going back to roughly the year 2000?
Chad: Yeah, so I’ve had it since then. It’s kind of had different iterations over the years so it wasn’t just squatted for 15 years but what I did do right after I registered it is I did some work towards building a prototype of what I thought it should be because I was learning the internet. I was learning development. That was kind of the thing that I was kind of excited about was how to make the Internet do things kind of thing. And built a prototype of it between ’98 and 2000 and that was kind of the very first iteration or first attempts at making it into something.
Andrew: And what did it do back then?
Chad: Not a whole lot. I mean, it was a very, very rough concept. It wasn’t something that could really have probably been brought to market without more work but what it did do is you’ve got to think it was Internet Explorer 5.5 and what I had was a whole bunch of drop-downs. It was like hundreds of drop-down menus to pick. The start time and end time for each of your employees and you had like I don’t know if you’re a HTML kind of nerd, every drop-down had 48 selection items in it because you had 15 minute increments. And it would crash the browser every time I would try to run it and it worked but it didn’t but that was the first version.
Andrew: I am seeing a little bit of it here in the screen shots that I have in preparation for this interview. The home page even had a couple of drop-downs, check your schedule drop-down go apply for a job, drop down and then hit the go button. How old were you when you created this?
Chad: This was it was probably in ’98. In ’98, I was probably 16-17, so it was between ages 17 and 20 that I kind of worked on this thing first.
Andrew: The other thing that you did was you met with a potential user. You went to the Mall of America and who’d you talk to there?
Chad: Yes, so what ended up happening was I had built this prototype between ’98, 2000, 2001. I moved from the town I grew up in to Minneapolis, the Twin Cities here in Minnesota, and while I was doing some consulting work I got connected to the Management Team at Mall of America in Minneapolis and I had the opportunity to present kind of this prototype to them and what it would mean and how it would help and this sort of thing. And the meeting was good. It didn’t really go all that well. The whole kind of thing kind of fell flat for a couple reasons. There was two things that I learned one thing. One thing I probably could have fixed, the other thing there was no way that I was going to be able to fix it other than waiting. And the first thing was being kind of a novice at this whole thing with business and value propositions. I didn’t have a value proposition for the business.
My entire value proposition was for the employee. I know I was obsessed with was how do we … This is going to be really great for the employees. They can check their schedule, they can trade shifts, they can do all these really cool things that make it really convenient and makes their lives easier and I had zero, zilch. I didn’t have any value proposition for the business other than the obvious which is it helps my employees. So the question was well, what are we paying for if we pay for something like this and this is also 2000. So the idea of a web based service wasn’t necessarily at the tip of everybody tongue like it is now.
Andrew: Because people back then used to use desktop software and they weren’t thinking everything had to be connected to the Internet. They were thinking the Internet’s a future or maybe all these kids are just hyping it too much. It was that kind of a world that you were coming into.
Chad: Yeah, so what ended it up happening, the second part that happened there was one, I didn’t have a value proposition which could have fixed that if I would have thought it through a bit more, but the one thing that was totally missing was, and I didn’t realize it because of my age and being a student is when you think about the hourly workforce and you think about the demographic that would be using the product, sure 60% of anybody with a job is an hourly employee. But you think back to 2000, the variety of the backgrounds the hourly workers came from even back then and now, but back then the connectivity to the Internet wasn’t what it is now. So not everybody was connected to the Internet, not everybody had computers even in their house. So you had a lot of economic barriers with certain types of hourly workers and really the only group that had ubiquitous access to the Internet were students.
And I was a student in college so I thought I’m sure this is going to be great for the hourly worker which it would have been for those businesses that maybe only employ the kind of the younger kind of group that student group and learned very quickly that there was too many barriers of entry for the hourly workforce to really get the value that I wanted them to have from what I was kind of thinking about building. So those were the two things that really kind of had me put the whole thing on the shelf. I kind of parked it and …
Andrew: Let me underline that because those are really good points to remember. The first is that well you’re saying you were thinking about the person you wanted to help but not the person who’s actually going to pay and make the decision to implement this. And you always have to think about the customer, the person who is going to actually make the decision to start using your software. And the second thing you said is you were not your end user, you weren’t like all those other people. You were in college. You were a person who loved technology so much that you are coding up this website. I am looking at the evolution of the site. You kept developing it and so you had access to computers in a world view that others hadn’t yet embraced and so that’s also good to know. And the reason you discovered this is because you went into the Mall of America and you talked to a real customer and the real customer told you about real life as they experienced it. Am I right?
Chad: Yeah, that’s it. it was real life. It was exactly the kind of thing that made me think about the whole thing from a different angle.
Andrew: So what do you do with the idea after that?
Chad: So pretty simple. After that I pretty much parked it. I put it on the shelf. I didn’t forget about it. It marinated for the next 10 years, ’98 to 2008 it was marinating and what I did in the meantime is that I started a consulting company doing web development services and app development and web software development for kind of business kind of B2B.
Andrew: And this clicks interactive.
Chad: Yeah, this clicks and then what was also called Medi-Tech or is called Medi-Tech Communications. We grew into an agency and I ended up partnering with a couple guys. I’m kind of merged our services together and we did app development and video production and 3D animation. We did all these digital marketing services for other businesses and kind of grew that agency over the course of those 10 years from 2000 to 2010.
Andrew: I got to ask you about something I’m noticing about you. The pencil over your ear. I’m looking at different photos here. I’ve got tons of research here. My screen is full of tabs about you, and I think in every single photo you’ve got a pencil behind your ear. What is that about?
Chad: Yes. So the pencil thing, it kind of started to stick quite a few years ago. So if you really want to kind of look at where it comes from and the story behind it is the first time that I ever had a pencil, that I wore a pencil, was when I worked at a grocery store. And once I kind of got through those first jobs where as a worker and I start to get into more more creative jobs and doing development and design and building kind of these things. I continued to use the pencil to kind of sketch things out so then the pencil kind of just stuck there. And then as I got back into when I work into building on that and with everything that happened from there I kind of just had that. It kind of stuck and it’s really just this thing that I’ve had off and on forever and then now being kind of the antithesis of what we do now in terms of scheduling. Most people still use pen and paper and they are scheduling pencil and paper, that sort of thing. It’s kind of the antithesis of what we do and it’s kind of interesting that stuck from way back when or whatever.
Andrew: I see. So do you still use it to actually draw or is it more of a reminder?
Chad: No, I use it all the time. It’s very functional. Yeah, I know it wouldn’t be much of a … There’s got to be function to whatever.
Andrew: So when you have an idea, you’ll pull the pencil out, you’ll start sketching it out. If you and I talk about a book and you want to remember it you actually write it down on paper with the pencil not on your phone.
Chad: I write it down, I sketch out ideas when I’m working with people on the team about what we’re going to do next in the product or I use it as a pointer a lot pointing at things, highlighting things and that sort of thing.
Andrew: It looks good. Immediately it tells me this is a guy who works. He’s not just the CEO and I guess I make judgments based on the way people look and that’s a big thing for me. The pencil I got, so you’re a guy who really works.
Chad: I’ve got to show you something now.
Andrew: Hit me. Let me see what you got.
Chad: So I’ve also got these. We ended up getting big pencils, really huge pencil, and we say that they’re for erasing big scheduling mistakes, so it’s kind of evolved into now like a little novelty thing.
Andrew: And it also makes you feel like to me one of your customers, it looks like you fit into their world. So you put the idea on the shelf. You get into developing sites for other people. I want to jump forward to when you’re re-picked up this idea but in that interim what did you learn that shaped the person who you are as the entrepreneur and more specifically who you are today.
Chad: Yeah, so I think the things that I learned. One, I learned how to run a business, I learned how to manage cash flow, I learned how to make payroll. I learned a lot from my business partners that I had during that 10 year period, so learned a lot of the fundamentals about client relations and client expectations and customer service and all these things that are important in any business. So I learned the things that really matter in terms of managing cash flow, being bootstrapped and watching kind of where every dollar is going and making the best use of that dollar because this was an agency that self-funded and kind of built on top of the growth from each customer that we had. So those were the fundamentals that I learned. I think the things that I learned that helped really kind of create the disciplines for what’s gone into building when I work is we’ve built a lot of web software. We built a lot of user experiences, we built a lot of apps, we built a lot of different things that really kind of shaped the way that I think about user experiences, the way I think about software design, the way that I think about all these kinds of things.
And I think that’s contributed a lot to the disciplines of what’s kind of gone into building when I work in the UI there. The thing that I learned about building a SaaS product and building a kind of a recurring revenue type model is that it’s really, really hard to take a client project. A project that the client is paying you for and turning that into a business, turning that project into a recurring revenue model because that’s what we did. We probably did a dozen or more …
Andrew: Give me an example of that because that was going to be my next question why didn’t you do that why did you go back to the When I Work idea. Give me an example of how you try to turn a client project into a SaaS product that you sold to other people.
Chad: Yeah, so we did it. I counted it up at one point. It was probably a dozen different times that we tried that and what ended up happening, there’s a couple things that would happen but the main thing that ended up causing it to fall short is when we would build an application or a software for a customer. The requirements of what they were looking for and the novel nature of what they needed, it ended up getting to be too narrow to be something that had broad appeal. And as soon as we would finish the project, it would be really cool and it would be something interesting but it would be very, if you like what we could do to sell this to six other people. It wasn’t something that was …
Andrew: For example, what’s one thing that you tried to sell?
Chad: So there was a couple things. So one is we did a lot of work in medical device and patient education. So we did a lot of tools for helping patients, educating patients on how to manage their device that they got implanted. So you go to the doctor, you have to have a procedure done and then you have to get trained on how to maintain the device that you had whether it was an implant or whether it was a device that you have to kind of use during the day and we would create these training modules that were web based. The patient would get a CD-ROM, we’d install the software and it would kind of sync up with the web service in the back end. And it would be this kind of mechanism where the hospital could kind of monitor the progress of the patient in terms of how they understand the maintenance of their product. And it was a cool idea because it’s like okay there’s a lot of people that have device implants, There’s a lot of people that end up going to have procedures done that get some kind of device that they have to be trained on and that they have to be familiar with how to maintain it, how to take a shower with it, how to go to bed with, it how to go outside with it, all these things. And the idea was maybe we could turn this into a platform that could be a kind of this recurring kind of business model that other medical device companies that have patient training needs could use this platform to deploy their content to the hospital and to the patient.
And it sounds like an interesting idea. It sounds like there could be a lot of folks that would find that helpful but as we would go down the kind of road with the customer or the client on what they needed for their particular training, it became too unique, too novel to their product, to their business that when we finished the project it was a successful project and everybody was happy. But at the end of the day we had a product that wasn’t something that could be turned into something that would be kind of brought appeal to others.
Andrew: I could see what you mean. I can see how much sense but to such a small group of people that it wouldn’t be a great big product not like when I work. So then what got you to go back to your When I Work idea?
Chad: Yes. So it was a few things. It was in 2008 is when I started to kind of look back at it and one, you had about a dozen or more projects that had attempted that building into a recurring model that didn’t work and had spent the past 10 years letting this idea for when I work marinate in my head and the thing that really did it was 2008 and I looked at the market, at the space, at the space that when I work was in scheduling and workforce management and nothing had changed from 1998. There was absolutely no innovation that had been done from …
Andrew: What kind of research did you do? Did you go back to grocery stores and see how people were scheduling?
Chad: Yeah. So it was a combination of that kind of anecdotal kind of just checking places and see what they’re doing and being the age that I was. I still had lots of friends that were working in the hourly space and it was the same old stuff that they were doing. I had done a lot of heavy research and just in terms of what was available online and what was out there. And the same kind of crap that was there in 1998 was the same stuff that was there in 2002 and then it was still the same stuff that was there in 2008. So there wasn’t anything that had changed in terms of what was being offered. And then when you look at the bigger companies, the enterprise type softwares that are out there for workforce management. They too hadn’t innovated. They were the same thing as they were 10-15 years earlier and most importantly the thing that I thought was interesting is nobody, even though nothing … One thing is nothing had changed and then secondly none of them had really looked at a mobile strategy. So none of them had looked at mobile in 2008, something that would be helpful whether it was the big enterprise tools or it was the few kind of web based looking Web 1.0 type type tools that were out there.
So my thought at that point was there’s two things that I thought that we could differentiate on. One is we could go to market with a very end user focused approach, very design oriented approach where we’re building the products from the end user perspective kind of back to that employee perspective, that manager perspective. Not necessarily building it for the business first but building it for the end users that operate the business and build something that is very easy for that group to figure out, to learn, to get their employees on and then we would lead the technology from a mobile perspective in terms of the vehicle that would allow the information to be consumed through text message or through smartphone apps as we started to build it.
Andrew: So the research you did was you checked in with your friends and saw how are they interacting with their company schedules. You look at software that was out there just imagining doing things like Googling to see what was out there. Am I right?
Chad: Yeah, and kind of give more detail on one of the big things that I did specifically is I did a lot of keyword research. So I did a lot of keyword research on the various search terms that I kind of perceive people searching for and what I found was that there was a lot of people searching for employee scheduling, software ship scheduling software, or small business scheduling software and the search volume on those search terms was really, really high. It was higher than some of the other search phrases that you would think, like it was higher than payroll searches, it was higher than accounting software services. So there was an obvious pain point, very acute pain point that there was a lot of people searching for this kind of software. So it was through that research that really kind of crafted the go to market strategy for the products as well.
Andrew: What do you mean by that? How does seeing the keywords help you come up with a go to market strategy?
Chad: So it was really pretty simple in terms of the way that my mind was working at the time. So my sales and marketing kind of brain was very Internet marketing focused. So the way that I thought about getting people to know about us.
Andrew: I think I just lost you for a moment but there we go. You’re saying your marketing strategy was getting people to know about you and then we lost you for a moment.
Chad: Okay. So as far as what doing keyword research kind of taught me as far as go to market was that one, there was a large volume of people searching for scheduling software and two, my background was in Internet marketing in terms of how I thought about marketing and I thought it was pretty easy. Let’s optimize the website, let’s do SEO and get things optimized so that when people are searching for these phrases that when I work shows up in the ranks and that was pretty much it. It wasn’t too sophisticated, it was really just hey, there’s a lot of people searching for this stuff, let’s optimize the website so people find it when they search for it and that was really the ingredients that led to the early leads, the early lists that I built.
Andrew: How do you get generated your mailing list of potential customers that then you emailed when you’re ready to launch a product? Am I right?
Andrew: Yeah. I’m actually looking at an old version of the site. This is one from February, 2010, that my researcher gave me and immediately I see a difference between this and the previous site. The previous site, I think, even had flash on it and I could skip flash. The previous site didn’t ask for an email address. The previous site I think was thinking about the end user in mind. Here’s the first thing I see here after the logo. It says on the 2010 version it says do you make or check the work schedules at your jobs. Now you’re acknowledging that there are two different groups of people here who potentially could use your software. And then underneath you ask for their email address to get the pre-released version of the software and interestingly it says Copyright 2009 this click’s interactive, so was this a side business or part of your interactive agency?
Chad: So the way that I got this started was by kind of self-funding it through the agency. So this was first a project kind of an internal kind of project that myself and two of the other employees on our team kind of work on and kind of incubated, kind of self-incubated when I work through the agency to get that initial development and initial traction underway, so yeah so that was kind of how we kind of started and how we incubated from within the agency.
Andrew: Okay, so you’ve got those e-mail addresses and at what point did you start to build the product?
Chad: So we started building the product. We started building on in 2008. We started doing concepts and we started doing kind of the UI design of what we thought was kind of the first version would look like. It wasn’t full time. It was kind of on the side. It was in between projects so we were doing client work and most of the time we were doing this in between projects.
Andrew: For two years you’re spending just kind of whenever you find time sketching it out, thinking about what it looks, like that kind of thing.
Chad: Yeah, so then we kind of concept it and then I worked on kind of the original version and we were kind of building it as a kind of a core group of three people and then over the course of two years, 2008-2010 is when that landing page was up and we were collecting email addresses of people that were searching for employee scheduling software. So we would just optimize that page that we would get this list of e-mail addresses and we would separate the list. Do you check the schedule or do you make the schedule?
Andrew: So the software creation came before the mailing list development. You first were saying how can we build this, what would it look like and then saying how do we find more of these people who I can see on Google searches and how do I get them over the site? First product, then marketing.
Chad: Yeah, it was very obvious to build it. I mean, I had no question that whether or not this should be built or not. So it wasn’t a matter of is there a market. I really intuitively or viscerally just knew it or thought it because of the optics of what I’ve seen. So we went to work on concepting simultaneously with the landing page being out there for those two years before we launched and then that landing page allowed us to get a list of about 650 people or so. Certainly it wasn’t a huge list with 650 people that signed up, that had found to take the web page from their Google searches and then by the time we had our prototype ready to launch in 2010 we had a list of 600 some businesses and like a few hundred employees or something like that we could e-mail and let them know that …
Andrew: Because those 600 businesses had … 200 employees in a separate list. Oh, okay.
Andrew: What were you thinking of doing with the people who were just employees? They couldn’t make decisions about the software they wanted.
Chad: Yeah, So the idea there was I wasn’t sure who was searching for employee scheduling software. I wanted to know was it businesses or was it employees because if it was employees then the whole marketing approach changes and then it becomes more of a question, is there going to be a way to do it if you’re not going to the …
Andrew: I see. Because Google searches will tell you that people are looking for this software but they won’t tell you are they people who can actually buy it or they people who are hoping that their bosses will buy it. I see. It’s a different marketing for both, as you said. It’s much harder maybe even not possible for you to target the employee. It’s a good thing that you ended up with 600 people who were representing businesses versus 200 who were employees. So then you e-mailed them. Sujit Patel, I talked to him. He works with you now. He’s an incredible marketer and he told me to ask you about the payment part of the business. How did the payment part of the business fit into this part of the story?
Chad: So we were getting the product ready for launch. We had a beta customer that was on it two months beforehand and Dan and I, Dan our CTO. He’s kind of the chief product architect. He did 95% of the heavy lifting in that first version and we really wanted to launch the product. It was ready to go the Beta customer was having success with it but we didn’t have a billing system in place yet. We hadn’t built out a way to collect money. We didn’t even have a merchant picked out yet. We didn’t even know who we’re going to use to get money, to get credit cards processed and what we ended up doing is we ended up launching without that. We ended up launching without any way to collect credit cards and any way to process payment. And we figured we were giving away a 30 days free trial and we thought all right, well, we have 30 days to get payment built and if it’s not ready in 30 days then we’ll just extend the trials of anybody that’s in there and they’ll be happy because they get a longer trial and that will give us the motivation to actually get the payment thing done. And it was interesting because we did get it done and we had our first credit card processed 30 days after we launched.
Andrew: What a great idea, what a great way to get going. And so I do actually see earlier versions of your site and the thing that you’re emphasizing throughout is get a free trial 30 days free and now I understand why it said 30 days free. You launched it, you got your first customer. Do you remember the first paying customer?
Chad: Oh yeah, so the first we launched on July 20, 2010. I remember the day. And the first customer was, it actually wasn’t 30 days later. It was in September, it was like the beginning of September. Wait, no, it was the end of August and then the first customer was a restaurant in Canada in Winnipeg called Boone Burger Cafe and Tomas is the owner of that cafe. And he wasn’t the very first user but it was the first person to pony up with the credit card to use the service. And I remember that because I remember that September we had a few issues with one of the features of the product, and we worked our butts off to get those things worked out for Tomas because it was that was kind of a deal breaker at that time and we’re like there’s no way we’re going to lose our very first customer that we got. So we really kind of hunkered down …
Andrew: And you solved the problem.
Andrew: You solved the bug and he still stuck with you guys until you resolved it and once you resolve that you knew that you could keep him as a customer, that you’d actually earned him.
Chad: Absolutely. I mean, it really was what it was having clear communication. It was listening, it was setting expectations, it was getting feedback from him on what it was that wasn’t working well and how he was thinking about the problem that we were trying to solve. And we ended up kind of getting all worked out and he’s still a customer today. Talked to him not more than a month ago and it was a cool experience.
Andrew: Yeah, I bet. I’m seeing on your earlier versions. let me see. Where is that? Lots of different customers on there. I think I saw 800GotJunk because their founder was an interviewee. I recognized his name on there and other companies of that caliber. How did you get so many big … Oh here we go. Dunn Brothers Coffee, I don’t know them but I do know Subway. I do know Verizon Wireless. I do know 1-800-Got-Junk, Walgreens, Comfort Inn, and Harvard University. How did you get all of these customers so quickly? We’re looking at about a year into the business they’d already been on your site.
Chad: Yes, so the things that drove that was this focus on the end user. So when you look at those businesses and you look at all those …
Andrew: End user, meaning the employee.
Chad: The employee and the manager. So in most of those cases what it is there’s a manager that has the task. They’re the ones who have to deal with scheduling. They’re the ones that have to deal when someone calls in sick. They’re the ones who have to deal with making sure that they don’t schedule somebody when they have a class or when they have a second job and all those kinds of things and it’s a really time consuming thing and it’s something you never get ahead of it as a manager that’s doing the scheduling. So you know, it’s these managers of these individuals. It’s the managers of the individual Verizon story.
Andrew: I see, so it’s not Fred De Luca, the CEO of Subway sandwiches who’s signing up for the whole company. It’s some local manager at a local Subway sandwich shop who says I can’t deal with this anymore, Googles and finds you. Was he Googling? Is that how he’d find you?
Chad: Yeah, in those early days that was effectively, everybody kind of came into our funnel, word of mouth sort of was happening after that but it was really Google searches that brought these folks in and it was those end users, those managers who said I can’t take it anymore. This is just too much and they look for it. They sign up they get a little kind of idea of what the product can do for him and then they sign up. And then what happens then it kind of spreads to other stores because they all kind of talk and communicate and that’s what allowed us to really get that early traction kind of from the bottom up in terms of inside these other franchised and brands like that.
Andrew: I’m seeing here in my notes from your pre-interview with April here on our team that it wasn’t just restaurants, it was retail stores, it was hospitals, fire departments, water parks would sign up and people would just keep joining and joining. In that early year was it just the landing page that you had in natural Google searches? No, you’re too much of a marketer. You’d learn too much in that time in between the two launches of this business about how to market. What did you adjust that allowed you to bring in more people and convert them into believers?
Chad: So I think there’s one thing that really helped is that we spoke to the pain point. We didn’t speak to a certain kind of business. We didn’t necessarily speak to restaurants or to theme parks. We spoke to that manager that is dealing with this problem. So if you look back at all the iterations, say, we’re always speaking to the pain point that that manager’s going through and never once really saying that that the pain is different between the different segments. It’s kind of counter intuitive because a lot of the advice that you get, that I got is you need to verticalize, you need to focus on a certain industry, you need to focus on restaurants and you need to focus on retail. And what we ended up learning is one, we didn’t really know who our customer was. We thought we knew who it was, what the usual suspects were, restaurants, retail, and hospitality but what we learned as we iterated the product and we saw more businesses coming into the funnel, it was theme parks, it was water parks, it was personal care, it was dog walking businesses, it was health care.
It turned out that it was small businesses that employed hourly workers and once we figured that out and once we really saw that there was no silver bullet vertical that was coming in through these channels, we learned that the opportunity in this space, in the small businesses that employ 10 to 200 hourly workers was really the vertical that we were in was this kind of this big large group. But the problem was rampant across all of these different types of industries and there was no solution. They’re all using Excel, they’re all using pen and paper or Excel or Google Docs or something like that.
Andrew: How did you know that? In fact, I think even right now. Let me go to When I Work. I think right now it says schedule your next weekend minutes free but two weeks ago when I looked at it it said something like stop scheduling in Excel and find an easier solution. In both versions of the site, the one that I saw a couple weeks ago and the one I see today on the very bottom there’s a link right between Help Center and Site Map that says scheduling Excel template because I know what you guys are doing. You know people are Googling and scheduling Excel template and you’re saying great we will give it to them but when they come here and they get this Excel template we’re going to give them a beautiful landing page that also explains why this is not the answer and why their headache won’t be solved with a better template, it will be solved with a better solution. How did you know this stuff? What kind of customer calls and customer conversations led you to understand people right down to the way they express their pain and the need that they wanted so badly that you had to, at least, give them what they wanted before letting them hear how you have a better solution. What kind of customer calls and conversations did you have?
Chad: Yeah, so that the short answer is the way we found out kind of what people were doing and how they were using it was through talking to them. We’d ask them what are they using now.
Andrew: You call up a customer and you’d ask them.
Chad: We would engage most of the time it was over e-mail and through live chat, but in the early days I was talking on phone with a lot of folks and I was doing a lot of e-mailing with folks. And the main question that I would ask is what are you doing now. Like how do you schedule now and what do you like about it or what don’t you like about it. Those are the two kind of key questions.
Andrew: Why are those key questions to ask the new customers? What are you using now and what do you like about it and what don’t you like about it?
Chad: I think what it does is when you find out what they’re using now, if you know your space and you know your product, you can pretty quickly figure out kind of how your product is going to size up against whatever they’re doing now. You’ll find out pretty quickly if your product’s a fit. So if the answer is something that is totally off the wall in terms of what your product is solving, you can save yourself and the potential customer a lot of time and say okay, yeah, we’re not probably the right thing for you. For example, if I talk to somebody who I say what are you using now for scheduling and they say oh we’re using Base Camp, or we’re using some kind of project management software. Right away I’m thinking okay they’re probably trying to schedule tasks, they’re probably trying to schedule project work and while there are some customers that will use our product for that, it might not be the right fit because they’re looking for something for task management in terms of project based work or client type work.
So it’s really a quick way of finding out how you are doing it now and then once you find out how they’re doing it now, and they say, oh, we’re using Excel or we’re using pen and paper or using our point of sale then you can ask the next question which is for me always a how do you like it and it’s usually always I hate it. It is usually it’s awful. It takes too much time, that kind of thing, and then you can start to kind of think through what are the holes that you can fill, what are the value propositions that you can provide that are going to help in those areas that they’re not happy.
Andrew: When someone signs up to say my program Mixergy premium where they get access to all these courses taught by entrepreneurs. As soon as they sign up if I e-mail them and say, “What are you using now to learn about entrepreneurship? What do you like about it? What don’t you like about it?” That will help me understand whether they’re really a good fit for the company and what I can do to improve to keep what they like about their existing product and how I can fight their existing solution and if anyone else is using it. If they say I’m just going and looking on blogs and what stinks is that it’s too hard to find what I need that becomes part of my marketing and part of what I emphasize.
Chad: Yeah, those three questions help to determine if your product’s a fit. They helps you determine what your product should be. It helps you determine if it’s a sale opportunity. It helps you determine all kinds of things from a product marketing and sales perspective.
Andrew: This landing page, by the way for the Excel template, it looks so good. It’s so basic. It just looks really good. When you’re talking to customers and you hear all these different reasons why they’re signing up and some of them are looking for solutions that you haven’t yet built, how do you know what to build? How do you know whether you should be going into more task management type work when you see so many people saying I use Base Camp right now. Why not say, great? We have a lot of potential customers here. Let’s get into that business.
Chad: Well, I think there’s an importance of having discipline and saying no and staying focused.
Andrew: But how do you know what to say no to? What’s your framework that allows you to decide what’s a yes and what’s a no?
Chad: So for us the first four or five years of doing this, it was very simple. Does the proposed enhancement or the proposed feature help solve the problem of scheduling and communicating with hourly employees? That was the test.
Andrew: You were going to just stick with scheduling and communication. Anything else is just outside of scope.
Chad: Exactly. So we really stuck to that hard and then we were even more disciplined on what we would do and what we wouldn’t do just so that we were building the things that we thought were going to have the highest impact on our current customers and thus also on new people coming into the mix. And we built from the ground up, we built for the smallest business first, then the next business bigger than that and the next business bigger than that and it was that focus on … We’re going to focus on scheduling nothing else. It’s going to scheduling communication. How do we make that easier? How do we make that transformative for the employee? How do we make that transformative for the manager in the business? So it was really just asking that question on everything we did because we had lots of people who would ask us. It’s really good stuff. They want to be able to on-board their employees, they want to have applications, they want to be able to put their W2s up there, all these different things. They want to be able to have repositories of documents for training and while those are really kind I think it can be helpful things. I think what helped us succeed early on was that we focused on just is it self-scheduling, is it self-scheduling, is it self-scheduling.
Andrew: That’s the big pain point that you saw when you were bagging groceries. That’s the big pain point you saw when you were talking to your friends all those years later when you re-considered getting back in the business. That’s the big pain point you saw people were searching for and so until that is solved it’s not time to move on or even consider something else. Am I understanding it right?
Andrew: You got it. That’s pretty much it.
Chad: What about forecasting? One of the things that you say took you in the wrong direction was adding a forecasting feature. What was that forecasting feature and can you tell me what happened there?
Andrew: Yes, so what we did this was probably almost two years ago now. We saw an opportunity to try to get cute with the technology. We saw an opportunity where we thought maybe we can learn, maybe we can use, I don’t want to say machine learning, but more likely we can look at the historical trends of what people do in terms of scheduling and then we can forecast the schedule based on what they’ve done in the past.
Andrew: That makes sense because instead of every Sunday having the manager sit down and redesign the whole schedule for the following week, you could look at what he did in the past, you can look at how other people reacted and forecast based on that. So if Beth, for example, tell me if I’m wrong; if Beth, for example, keeps cancelling every Thursday just don’t book her for Thursday.
Chad: Correct. Right. So the idea would be you’d look back historically and identify certain facts about the patterns and then we would generate a template based on the historical scheduling trends. And what we learned through that is we built something that with the intention of being very simple which it was simple in terms of how you would leverage it. But the result of the information that you got, it wasn’t good enough to actually run as an actual schedule and there was too much manipulation that need to be done in order to actually have a successful schedule. And what we learned through that is that no one’s going to know the business better than the manager. Like the manager is going to know their business better than the software is going to know it.
Andrew: It was just to make it easy for him to do what he does best.
Andrew: So instead I think what you guys do today is you allow him to say copy what worked last week to this week instead of starting with a blank slate and then start making adjustments based on that.
Chad: Yep, so you can make copies and you can make templates and you can apply those templates and you can manipulate those but if you really kind of put us back in the mode of let’s not focus on automating this whole thing, let’s focus on building tools that help the manager and the business owner do their job but do it very efficiently in very little time. And that’s kind of been the cadence of most of the stuff that we will tackle is that, it’s always going to be solving that problem for the manager in a way that allows them to get something done through their own mind in terms of how they look at their business in an efficient and easy way.
Andrew: We asked you in the pre-interview what was your lowest point and you said first or second year which is surprising to me because it feels like you found product market fit very quickly here. But the challenge was there just wasn’t enough revenue coming in. What kept you from getting more revenue?
Chad: Yeah. I don’t know exactly what kept us from getting more revenue. I do know that it was challenging because the first three years we went from zero dollars in revenue to like twenty some thousand in the first three years.
Andrew: A year?
Chad: Three years, it took three years.
Andrew: Oh total twenty plus thousand.
Andrew: Oh my goodness. Why did you stick with it? At that point you’re making I would say less than minimum wage but far less. Why did you stick with it when in three years you were only twenty some odd thousand dollars further?
Chad: Yeah, I mean, it was that it’s one of those things where I don’t know, you just have … You believe something so hard it is going to work, you believe that what you’re building is transformative.
Andrew: But you also aware of the world. The first time you believed also and you said the world is not ready, I’m not going to die on this mountain. I’ll wait. What was it that you were getting from the outside world that told you that gave you an indication that this was a good time and a good idea to pursue?
Chad: Yeah, and I think what it was is the validation that the customers were giving us. It was talking to the customers. Really that was the thing that allowed me to hang on for those first two or three years.
Andrew: You know how happy they were, the same thing that Mike McDerment of Fresh Books told me. He said, “We weren’t making a lot of money with Fresh Books in the early years but we’re getting such great compliments from our users.”
Chad: Exactly. I mean, the feedback was so much validation. It was so transformative for these folks that would use the product to the extent where they would write in testimonials, they would write in things. They would say, “I’ve been searching the Internet for years for something and this is the best thing I’ve ever found” or they’d write in and they’d say, “I didn’t think that I could figure this out. I’m not a tech person and I feel like a hero. I feel like I did an IT thing. I somehow leveraged IT and got my employees to use it and I didn’t have to like know IT or hire someone to help me or train me.” And they feel really integrated to it so that validation. That constant kind of reassurance was the thing that kept me going personally as we kind of struggled to get from that zero dollars to that first 20,000-30,000 a month in recurring revenue. I mean, it took a long time. I think a lot of companies will not … I don’t think will stick with it that long to where they’re trying to get the market fit figured out ahead of time.
Andrew: Yeah, I would imagine not. At what point did you make your first million in revenue?
Chad: So the first million in revenue was August of 2013. That was when we hit that milestone. That was a pretty exciting milestone when we hit that. I think it was in 2013, it was somewhere in the middle of 2013 where we hit that first million dollars run rate, 84,000 a month.
Andrew: I see. That’s the magic number for success.
Chad: That’s the magic number to get you and it took us almost three years to get to 20,000 and then it took us a year to go from twenty to eighty because we had really figured out …
Andrew: 20,000 to 80,000 what…
Chad: 20,000 to 80,000 a month.
Andrew: I see, gotcha.
Chad: So it was almost three years.
Andrew: So 2012 was about 20,000 a month, 2013 you finally hit your 80+ thousand a month which multiplied times 12 gets you to a million dollar run rate and that’s the exciting part.
Chad: Yeah, that was what happened in that particular span of time and it was those first two or three years of that constant customer validation, that constant iteration, that constant evolution of product to figure out that market fit to where we’re building a product that has impact on all these different types of businesses.
Andrew: I talk to Sujin and Sujin just admires the hell out of you as an entrepreneur and there are a few things that he told me he admired how you started as a grocery bagger. That’s where the idea came from, how you did things like just launch before payment came up. But he’s a marketer and so I said as a marketer what do you admire? He goes Facebook,the guy figured out marketing on his own. He got marketing before he hired other people to really expand and bring new ideas in So what did you do? Let’s look at, for example, the Facebook ad model. What did you do for Facebook that he admires so much?
Chad: So I think one of the things that we did was I mean I think a lot of was luck. I think what I did was I dipped my toe into the Facebook ad space when it was first kind of coming out just to see what I could do with it.
Andrew: How much money was dipping your toe?
Chad: Not a lot. I mean, the very first time it was maybe few hundred dollars a month that I would put into it and just trying to figure it out how to use the interest graphs and how to use the different groupings of people that you can group together to kind of market to and I think it was a lot of luck. It was timing because it was before there had been a huge swarm to the Facebook ads.
Andrew: What did you learn back then that other people who invested even thousands of dollars didn’t know? What did you learn that was the magic that got you to keep growing it?
Chad: I think what it was it comes back to the way we spoke to the user, the language that we would use, the language that we would use about the problem we were solving.
Andrew: On the landing page or on the ads?
Chad: I mean, on the ads. It was always very focused on just a very macro level pain point that we’re solving and what the heck we were selling.
Andrew: Do you remember one of your best early ads, the one that you figured out yourself and it just was so hot that you’re proud of it even to this day?
Chad: The thing that I’m the most proud of in terms of Facebook wasn’t necessarily the ads as it was mobile. I ended up doing advertising through Facebook mobile right when it came out, right when you start putting in lines ads into the Facebook and what was cool about it is that the cost to get installation of our app was but pennies. It was really, really cheap, so we ended up getting a lot of a lot of trials for a very, very low cost. Now there was a lot of crappy trials. The ratio was pretty shitty but because it was so cheap, I could really just blast it and get enough trials to have a good result in the early days of Facebook.
Andrew: What’s the interest group that worked especially well for you?
Chad: For us the interest group that we’re early on was small business owners and that was really it. That was the only one that I looked at were small business owners. I didn’t really look at any of the other ones.
Andrew: Today what I see that sending you not just traffic but customers are services like getapp.com, is it wage base. I don’t have a list here in front. I do have a list but I can’t tell which is what. Here are the ones that I’m looking for and I’m not experienced enough in the space to identify them just by looking at this list of referrals but it’s the sites like getapp.com that their whole job is to help businesses find the right app for the problem that they have.
Andrew: And you pay them per customer that they sign up?
Chad: Yeah I think we actually pay them for per click is something that works. So what they’ve done a good job obviously is Get App. There’s another one called [inaudible 00:56:33] and what they’ve done a good job of is capturing traffic. They’re capturing relevant traffic so they’ve done a nice job of capturing relevant traffic but then, of course, it allows companies like us to get access that traffic on a pay per click basis and the traffic that they generate is pretty strong. It’s good quality leads. It’s folks that are really serious about solving a problem and it’s been quite successful for us over the last year and a half or so as we scale it up and captured a lot of that traffic which is generated in good lead gen and good customer acquisition.
Andrew: There isn’t something like that for consumers but for businesses. I can see that a lot of businesses go to websites like that looking for the right product or that these businesses are especially good at generating traffic, like you said, and becoming affiliates.
Andrew: What’s your revenue today? Twenty fourteen, let’s say.
Chad: So our revenue today is, I mean, we don’t necessarily disclose what our revenue’s at but we have more than quadrupled in the last year and a half and we’re in the several millions of dollars.
Andrew: So looking at over five million in revenue annually.
Chad: Yeah, we’re in the ballpark.
Andrew: Wow. Why did you raise money if you have a development team, you’re generating sales yourself. Why go out and raise money?
Chad: So it was a few things. So I mean, in the early days a year before we raised … It was not even on my radar. It was something that I wasn’t even really considering and then a couple things happened. So one thing that happened is we figured out our market fit, we figured out we really kind of hit me of who our market is, who we were serving and I actually didn’t realize how big our market was until three years in or so. And that was when I realized that 60% of anybody with a job in the country is an hourly worker.
Andrew: I see.
Chad: And there were so many things that Dan and I were thinking about we could do with a product, we could just do more transformative things in terms of helping the hourly worker and helping small businesses communicate and coordinate with their employees and our ability to execute on some of those things, those kind of bold things we wanted to do, was kind of held back by the growth that we were having and we wanted to take some bets. We wanted to kind of roll the dice on some things and make those attempts to build even more transformative stuff to really kind of potentially do something more transformative in the hourly workforce than just a tool.
Andrew: I see. I came up with an idea that actually works. Now I need more money to grow it to take advantage of this huge opportunity that even I didn’t recognize you are saying to yourself back when I started.
Andrew: And so where was the money going to go, development or marketing?
Chad: So it was both. It was kind of across the boards. It was development. That was one of the key areas because our development team was really lean before funding. One thing that we did is that was really important to me that we were profitable before we raise capital and that we had [inaudible 01:00:02]
Chad: Because it was for a couple reasons. One is I wasn’t all that enthusiastic about raising capital and I thought well if we’re going to do it, let’s figure out how to make money before we raise money, very 37 Signals kind of approach and I wanted to be able to be in the best position to find the right partners. I want the right investors to be at our sides as we were going through this. So it allowed us to kind of really identify the right partners and have the best kind of opportunities for an investment deal as going into it by being profitable, by having that million dollar milestone kind of met and those kinds of things, so it was those things that kind of …
Andrew: Did you personally cash out also?
Andrew: Not at all. So much money did you raise? I actually don’t see anything about it on Crunch Base. I see your history more on Crunch Base than your present.
Chad: So we raised $4 dollars. That was our [inaudible 01:01:30]
Andrew: From where?
Chad: We raised it from three firms. One that led was e-Ventures from San Francisco and then Graycraft Partners in New York City and then locally here in the Twin Cities or Arthur Ventures which is based out of Fargo, North Dakota.
Andrew: Somebody’s got of update that on Crunch Base for you guys. You guys are incredibly successful and I hadn’t heard of you frankly until I looked up Sujin to see what he was up to today.
Andrew: And I think part of it because you’re not playing in the startup world, you’re playing in the hourly worker world, you’re playing in an environment that we’re not paying attention to. And one of my big takeaways from this interview is to look for ideas in those small patches of the world that are actually much bigger. They seem small to us like the guy who’s bagging groceries. But there are huge opportunities and most people who come to Silicon Valley aren’t thinking like that. They’re thinking of how do I create Uber pf the next thing, right?
Andrew: So that’s the first thing, the second thing is to focus on that solution, not get carried away with all kinds of extra features. Launch even before you have some features that might seem important like how do you get people to pay, focus on the one thing that you need or the few things you need in order to get it up and running. What else is really important? Keep talking to your customers and find out what they switched away from to get back to, what language they’re using and that’s going to help you both define the product and the way you promote it.
Chad: Yeah, I think when you look at the space that is there to work, we are a tech company but we’re not solving a very sexy problem like that it’s not really … I think we do a pretty good job of making it sexy in terms of what we’re doing but it’s just not a very …
Andrew: You know what makes it sexy? The user interface is so simply beautiful and that freaking video you have on the home page. I don’t know if that was on before but I got sucked into watching it before you and I started, and I was worried I was going to be late. That’s so well done. It shows all the features in an easy to tell story. Who did that for you guys, do you know?
Chad: We did that internally.
Chad: Yeah, so that goes back to my video background for my last company. We pulled that together internally. Sam on our team put that together, that little self character.
Andrew: Yeah, when did you launch that?
Chad: We launched that last fall is when we launched that.
Andrew: I must have just missed it this whole time that I was going on or maybe I was looking at a different AB test or something but that really does explain it and there’s a design element and a simplicity to what you’re doing and I can now understand why it’s because the customer you’re talking to is intimidated by software, doesn’t feel they can even handle SaaS software. And so you want to make everything simple enough that they could use it. Yeah it’s beautiful. Congratulations on the success of the business. You guys have done incredible. The website is WhenIWork.com. Chad, thanks so much.
Chad: Yeah, thanks for having me.
Andrew: You bet. Thank you all for being a part of it. Bye everyone.
Well one more thing Joe, if you don’t mind, please don’t edit this. I’ve got to tell people that if they’re listening to this all the way to the end and they want more interviews, they should go to mixergy.com/podcast. That way they get every episode when it comes out for free directly on their phone or no phone, only phone there’s nothing out there no iPods out there in the world. Go to mixergy.com/podcast and get Mixergy directly to your phone as soon as I publish each interview.
All right, Chad, thank you and thank you all for being a part of it.