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All right. Here’s the program.
Andrew Warner: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. And you know what we do here today. First of all, we battle tech trouble, and we’re having a little bit of that today.
And the second thing that I do is I bring entrepreneurs here who have done interesting things online to come and talk to you about how they did it, to fire you up, to give you ideas based on their experiences, and to give you techniques so you can use to go out there and build your own company and then, hopefully, come back here and do an interview the way today’s guests are doing.
Joining me is dot com pioneer, Cynthia Typaldos. In 1995, she launched GolfWeb, a site that offered reader reviews and social networking. At a time when most people didn’t even know what the Internet was, she was already out there building it out. She sold that company to CBS Sportsline and followed it up with RealCommunities, a platform for social networking.
Today, she runs Kachingle, a site I first heard about on NPR. It was so cool to hear about it, and the description that I’ve got here in my notes is a site that helps readers give voluntary contributions for digital stuff that they love. And man, they at NPR were going crazy for it. They just want anyone to save the digital media industry, and they were hoping that you could do it.
So, Cynthia, first of all, welcome to Mixergy, and thanks for doing the interview.
Cynthia: Oh, thanks a lot, Andrew. It’s great to be here.
Andrew: So, you know, I’d love to find out what first got you interested in the Internet. What was it?
Cynthia: Oh, my gosh. Actually, I worked at Sun Microsystems. I think it was in 1990. No, no, 1990. Oh, my God, it was so long ago. I can’t remember, but I first was introduced to the Internet then, and I decided that that was, you know, just the most incredible thing.
And then, I had the opportunity really early to start GolfWeb with a co-founder. I’m actually not a golfer, but my co-founder was just passionate about it. And we felt it was a really good market for the Internet because it was very social, and we thought the Internet was a great way to connect people together. And also VCs love golf, so we figured we could raise money, and that was actually very true.
It was just a fantastic experience because we launched that site in January, 1995. Like you mentioned, we had reader reviews, find a playing partner. We had a huge golf course database. It was really an exciting time.
Andrew: What was the Internet like back in ’95? I want people to understand where you were when you came up with this idea, because today everyone has an idea for an Internet company. But back then, I don’t think enough people recognized where it was all going. So, can you describe what it was like?
Cynthia: Oh, yeah. Well, first of all I think we might have been the first company to get official press passes as an Internet site, and we went to the golf tournaments. Well, I went to one, but my co-founder went and we hired a lot of stringers who went and reported it. We had to fight that battle of are we really the press? So, it’s no big deal now, but that was something that we were kind of the pioneers for. So, that was part of it. Another thing was I remember going into the press room and this was at the AT&T down at Pebble Beach. There were still people there with typewriters. It was hysterical.
Another thing that was really interesting was we had to devise a business model. Now, everyone feels they kind of know what the business models are. Maybe they’re not working so well, but when we put together a business plan we said, “Okay, there’s going to be these three business models: selling stuff, we actually sold golf clubs and things like that; advertising; and then a membership program. And we had to invent that on our own. That part was just incredibly exciting. It’s just as exciting now but in a different way.
Andrew: You know, I remember someone in ’95, I think it was, showing me an online flower store and saying, “Look, you can buy flowers online.” And what he showed me was I think a Telnet screen which basically meant a black screen with green text. And he was showing me that if you type in this command and that command, you can figure out what to order, and I think you place your order on Fax machines.
I remember thinking, wow, this is so cool, but there’s no business being done on something like this. No customer is going to go and buy on a system like what this guy showed me. It’s never going to work out. They’re going to pick up the phone and call and order, or they’re going to look at brochures and catalogs.
Why did you, in that time, see an opportunity when I and people like me didn’t? What was the opportunity that you saw that the rest of us missed?
Cynthia: Well, what the opportunity was . . . we saw initially at that time it was mainly publishers getting online so you could read content and that kind of thing. And I remember even then being so annoyed that Yahoo and Excite, you remember them, were developing these great valuations but on the backs of these companies that were putting out the content, right?
You know, we weren’t making that much money off of advertising, so I’m thinking this is not quite fair. I feel very strongly about that now, and I have been for 15 years. So, that’s why . . .
Andrew: They weren’t around then, were they? They weren’t getting those big valuations in ’95 when you first conceived of this business, were they?
Cynthia: Well, we went on for a few years, and they were starting to get those valuations, yes.
Andrew: I just saying, the original place. Where would you come up with it, you know, someone is going to show me technology tomorrow that I’m going to think is cool, that I’m going to think is not ready for a business, I’m going to be thinking about Cynthia and saying, “What would Cynthia have said about this?”
How did you know? Take me through your thought process. Help me understand how you knew that there was going to be a market here.
Cynthia: It was all about the social aspects, and that’s why golf was such a great place to start, especially if you don’t play. I didn’t play golf, but many people play golf for the social aspects, and I always felt it wasn’t the content. It wasn’t the merchandise, you know, the retail. It was going to be people connecting together because we could just see how someone from Sweden was now connecting with someone in Australia to arrange a golf game.
That was just the most incredible thing. That was like impossible before. I built with my team this thing we called the GolfWeb Players Club. We launched this in 1997, August 1997, and it had player profiles. It had a reputation system. It had “find playing partners.” You could join groups. This was before Yahoo Groups even existed.
So, to me that was the true power. You could even see it then. At least, we saw it because people were so desperate to connect on GolfWeb. So, I think that’s what was really inspiring for me. And it was really frustrating. Then, later, as you know, again the investors kind of went through the cycles where they invested in content producers and they invested in online stores. It took forever for them to finally realize that the real power of the Internet was people connecting to other people. And if you look back to some of the words and things that I wrote back in the early days, and that stuff is still hanging around, you can see I wrote quite a bit about that.
But, now, I think we’re actually doing something that combines several of these aspects, not only the social networking and the social power of the Internet but also the crowd funding mechanism and the way for people to really, with very small amounts of money, kind of create a new world. It’s based on the things that they want to have exist.
Andrew: Let me go back a little bit, and I’m going to come back to Kachingle and make sure that I understand it completely and understand what you’re doing because I gave an overly simplistic description of it in the intro to this interview.
What you told me was that you knew the venture capitalists were interested in golf, and that you yourself weren’t a golfer. You basically were chasing where the business was. Now, I did the same thing. So, I know I said, “Where’s the money? I’m going to build it. If it’s in greeting cards, I’m not into greeting cards, but if people online like them, I’ll create an online greeting card business.”
What I hear from a lot of self-improvement people is find a business that you’re passionate about, that you love, that you do. And I hear that from other entrepreneurs, too. What do you think about that versus just finding where the business is and chasing that?
Cynthia: We’ve gone dark here because we stopped moving.
Well, although I wasn’t passionate about golf, I was passionate about the connections, the social ability of it. And so, to me it was just one area that I could watch that and observe that and build upon that. So, are you asking, do you just go . . . you don’t just go where you think the opportunity is. You have to have this deep passion for it, and no, it wasn’t specifically golf but it was the whole concept of people connecting.
I think it’s the same here with Kachingle, which is that even from way back then, none of the other things were happening. I just felt like, how do you support great digital stuff on the Internet because I also did some negotiations with Napster. And this was around 2000 with my next company which was RealCommunities. I proposed that they build a whole community around a reputation system where you could get people to pay, not for the free stuff, but to build a reputation. We actually were making some progress with them, but then they had a lot of legal problems and kind of went out of business.
So, that’s kind of been the thing that’s kind of my passion, which is how do you support great online stuff in a world where everything can be free.
Andrew: I see.
Cynthia: I think there is a theme, and I think for entrepreneurs it has to be that kind of theme. There might be different ways that you might manifest that. Does that answer your question?
Andrew: Yeah, absolutely. What you’re saying is you may not . . . Andrew may not have been completely passionate about online greeting cards, but he was really passionate about the Internet and building an Internet company and other aspects of the greeting card business. You may not have been a golfer, but man, you loved connecting people and you loved other aspects of the business. And without that, there can be no business. If all you’re doing is chasing the money, it’s not going to work out.
Okay. So, now we see where the idea came from. Why did you find a partner? Why not build this out on your own? A co-founder?
Cynthia: You mean, Kachingle?
Andrew: Uh, no, the first business. I thought I’d take this interview in chronological order and then stop on three companies, GolfWeb, RealCommunities, and spend a lot of time on Kachingle in the end.
Cynthia: Well, my co-founder actually had the idea.
Andrew: I see.
Cynthia: He was the golfer, and I was so enthralled with the Internet. He knew a lot of things, too, like how do you . . . we needed to download all the scores. He had a satellite dish, and he already had all that stuff hooked up. He understood that whole aspect of it. Again, like I say, what I was really fascinated by was how much people wanted to connect.
And so, I did all the kind of product stuff, and he did all the software product, product management and marketing. And he did all the golf related things. So, I think you’ve got to have a partner. Of course, there’s the famous case of one person at Facebook who seems to have done it himself, but I think it’s just fantastic to have a partner or partners because they bring different experiences. You get the right partners, and it’s a joy.
Andrew: What’s the first thing you guys launched? What’s the first version look like?
Cynthia: GolfWeb?
Andrew: Uh, yes, GolfWeb.
Cynthia: Sorry. Which company?
Andrew: GolfWeb.
Cynthia: Oh, the first version was the golf course database and find a playing partner, write a golf course review. So, we did reviews before Amazon. I hope you make a note on this [interference] we might have been the first people to implement that.
We covered the tours. We had a news side, and then we had the people connecting and finding data about golf courses. So, that was the beginning. Then, we launched the next piece which was a . . . I have forgotten the word for it.
Andrew: eCommerce?
Cynthia: Well, we did eCommerce a little bit later. We did where people sell things online to each other.
Andrew: I see. A classified marketplace?
Cynthia: Classifieds. I don’t remember what you call those things. I can’t even remember what they are called anymore they’re so dead.. So, we did classifieds, and that was pretty successful although eBay was coming out at the same time. And they, with the auction system, made it a lot more fun. So, that was pretty interesting.
And then, a year later we launched the GolfWeb Player’s Club which was the subscription system which I don’t really believe in anymore where people could join and build out their golf game and improve their game by comparing themselves to others and join groups and all this kind of thing.
Andrew: How big did the members, paid membership Player’s Club get? How big did it get?
Cynthia: I’m not really sure because the company was sold shortly after that. And I left after it was sold to CBS Sportsline. So, they ran it for several years. And then, they had a very tight relationship with the PGA Tour which is the big Professional Golf Association. And they went pretty much totally toward just covering the golf tournaments.
Andrew: I see.
Cynthia: So, they changed it quite a bit, and they dropped the retail aspect, too.
Andrew: I couldn’t find an article about how much it sold for.
Cynthia: Well, you could say it was worth about $60 million because at one point that is what it was worth, my stock was worth. But then, if you looked at it another time, it was less than that. I like to say that certainly our investors made money because we sold at a time that Sportsline stock was pretty reasonably valued, but it drop lower. I remember those days.
Andrew: Man, I do, too. So, at what point were you able to get out of it to sell the stock?
Cynthia: Well, we got out of it right at the . . . the company was pretty much sold at the peak, but unfortunately I was so enamored with the concept that I didn’t sell my stock until it really was the end. By the way, for all of you others founders, I suggest that you not make that mistake, especially if you’re no longer there at the company. If the company’s sold and another company is taking over, you should, at least, sell half of your stock. Write it down.
Andrew: I think, from what I remember at the time, there was a lock-up period, and entrepreneurs who sold their companies weren’t able to sell their stock until it was often too late.
Cynthia: Oh, yes, you’re right. We did have that, and that was part of the reason, too, but I held onto it after that. So, you’re right, and I think it used to be a year or something. I don’t know if they do that any more, but there definitely was a lock-up period.
Andrew: What’s the most significant thing that you did that helped you achieve success, that helped you get your growth, that helped you get your customers? Is there one thing that you say that because you did that, we got so big at GolfWeb?
Cynthia: Yeah, I think it was covering the major, well, we covered all 23 world golf tournaments, covering the major tournaments. I remember when we were covering the British Open. We had these huge peaks during the big golf tournaments, and that was when the only really way to find out what was going on, on a moment to moment basis, was coming to GolfWeb. You couldn’t really get it in other parts. There were people all over the world that were watching GolfWeb because they couldn’t get the live TV coverage, and coverage wasn’t as accurate as ours was. Of course, we had people there too hat were constantly reporting, and I think that’s what really made us well known and brought a lot of traffic to the site.
“Business Week” used to be big then, too. You know how they used to do products of the year? We got a product of the year. I think it was 1997, or maybe 1996.
But the thing that we struggled with and that everyone is still struggling with is making money off of advertising. So, for those days we had a lot of traffic, but the advertising revenues were difficult.
Andrew: So, what did you do to bring in the sponsors? How did you do it when you weren’t well known?
Cynthia: That’s interesting. I actually made what might have been the first Internet advertisement sale to 3Com. I just knew someone. I got in there, and I said, “Wouldn’t you like to advertise?” This was like, maybe, March 1995. And I said, “Okay, we’ll sell you an ad on the home page for, and I made up some number, $10,000,” And they said, “Great.” And that was it. So, I thought well this is going to be easy. That’s when I first tried to sell, and I got a $10,000 sale in one meeting. But it wasn’t as easy after that.
Andrew: So, what did you do to grow it after that? How did you get more sponsors?
Cynthia: Well, you know, we hired people, salespeople. There weren’t all of these ad networks then. You had to do it all on your own. That’s something that’s really, really changed a lot. I think for the better, although, of course, even those networks don’t deliver a lot of money.
One good thing, though, about GolfWeb is that the market that people were reaching is a market that a lot of companies are quite interested in reaching. So, we had some success with advertising for things that were other than golf related items. But we were actually calling on all these big companies, including the car companies and everything, and that was a new experience.
That was when Tiger Woods just left Stanford to go pro, and we were in a competition to bring him on as our spokesperson versus another company. We were so close to getting him. And we didn’t, another company did. So, there was a lot of really interesting things that we were doing at the time.
There was more than one golf site, of course. There always is, but we were the top site and the most well known of the sites.
Andrew: Why did the other company get him?
Cynthia: Oh, they paid more money. It wasn’t another website. I can’t remember the name of it now. It was a big company that does a lot of sponsorships. I mean, we were up against a very well funded, long-term in the business company. You have to remember how radical we were.
Yeah. It was really fun. I remember going to the PGA Tour. Their offices are in Florida, which is the home of all the tournaments here in the U.S. And speaking in the conference room with all of these executives of the golf organization, explaining to them what the Internet was. That’s the thing. Not only were you trying to get them to buy into whatever it was you were doing, selling ads or trying to get access to their tours, you had to explain what the Internet is. And, of course, you couldn’t show it because no one had Internet access. In fact, I can’t exactly remember why you would connect up to the Fax line in order to show the Internet.
Andrew: The Fax line? Wow.
Cynthia: I remember connecting to a modem. I think that’s what we were doing, believe it or not. So, it’s a lot better now.
Andrew: It’s painful to be pioneers. I feel like I’m a pioneer here on online video, and I’ve got to tell you the Internet connection, I’m sorry, guys. We’re having trouble with it. At some point, we’re all going to laugh at how slow the Internet was in 2010, when Andrew’s doing this interview with Cynthia.
But I know for now I’ve got to deal with it. I talked to the people over at Regus. For people who are watching these interviews and they’re waiting to see when the Internet’s going to get faster here, I talked to this guy over at Regus, and I got him to commit right here on paper. By Monday. I will have average net connection as defined by SpeedTest.net and a private office, a quiet office, in which to use it. So by Monday, people, the Internet will be better here. We’ll hold our fingers crossed and keep fighting.
Finally on GolfWeb, and then I’ll move on. Community, how did you build community back then, considering the limited tools that you had?
Cynthia: Well, we built things.
Andrew: Tell me.
Cynthia: Well, like, we built a community. For each golf course, it had a comment section. People could write reviews about the golf courses, and that was another thing that was really interesting. Before when you read a review of a golf course, it was written by Jack Nicklaus or a great golfer or golf writer. It was never written by an ordinary person, like you, and people just loved that. That was really the first time you could see that kind of thing.
It wasn’t a very hard tool to build. A good engineer can build that pretty quickly. And then, find a playing partner. These things aren’t so difficult. The group capability that we built was a bit harder mainly because we had to invent it. So, a lot of these things you take a great engineer can build these things, especially with all the open source now. Back then, you had to not only write all the code, but you had to envision it and figure out how it was going to work.
I’d forgotten about this part. I had done a lot of research into sociology. Now, I have a very technical background. I acted like I didn’t know what sociology was, but then I watched how these people were so eager to connect. And I thought, “What is this?” And I actually went and read sociology books and read some of the great sociologists.
I just figured that what people were trying to do in the Internet was exactly the same thing they would do in real life. And the question is what kind of tool could you give them to facilitate that. That’s what I did with RealCommunities. And that’s what we’re doing with Kachingle, also. People aren’t different just because they’re on the Internet.
People always say, “Well, on the Internet everything’s different. People are going to behave in a different way.” I’m like, “Well, no, when people come on the telephone, they didn’t act any different.” Of course, at the time when people got telephones, they thought it would be different. But people are always people, and then they use these tools in ways that make sense to them. These are social tools. So if you look at how people interact socially, and you think, well how can you make the technology make that better for them, then you’re pretty much on the right track.
Andrew: OK. So, I can see that you’ve had this passion for communities. It helps me to understand the follow-up business which is RealCommunities. What was the business plan for that company?
Cynthia: For RealCommunities?
Andrew: For RealCommunities.
Cynthia: Well, what I did and I brought my lead engineer from GolfWeb to co-found it with me. I generalized from GolfWeb. So, I said okay. What are people trying to do here? Well, they need to be able to connect. They want to write reviews, product reviews. So, we took all that and just created a generalized tool. And then, rather than create a stand alone, it was a tool that you could then connect to another website, whether it be a retail website or a business website. We had several very large customers that actually paid for us to do the development, and we based it on angel money.
So, it was really to kind of create . . . in today’s world I’d say it was kind of like Ning, but believe me, it was way too early. People just didn’t get that the Internet was really about people connecting. And, of course, that’s when the crash came. Amazon was also very successful at the time, so okay, the big thing is going to be retail.
And, you know, the understanding of the power of the Internet for social capabilities didn’t come until later, and there was no name for it. I told my teammates, I said, “We’re building a new kind of software where people are interacting with each other.” [inaudible 26:35] You couldn’t get anywhere.
I remember you were really hesitant to use the word, social, because that implied kind of a fuzzy, loving, touchy, feely. And being a woman, I wanted to be careful not to go that way. And then, it ended up being called social anyway.
Andrew: So, what happened to the company?
Cynthia: Well, we had several large customers that paid for our product. We developed a product, and then the crash came and our large customers pretty much went out of business. We had almost done a deal with HP, and we could have gone a different direction for the business communities, but that deal hadn’t closed. So, we ended up being in the dot com community business, and that business was in trouble. But I did sell the company to another startup, and they ran with it for several years.
Andrew: What kind of exit was it?
Cynthia: Pardon me?
Andrew: What kind of exit was it?
Cynthia: I’m sorry. What?
Andrew: What kind of a sale was it? I mean, you had funding for the business.
Cynthia: It actually was stock.
Andrew: OK.
Cynthia: We had a stock exchange with this other company that had the funding to integrate our product with their product, which is what they did. But, this was 2000, 2001, 2002. Things got really difficult.
Andrew: So, how was it like for you as an entrepreneur? I tell you that for me it was very painful. I remember that period. I went from a high where everyone was offering me a hundred million dollars for my company to suddenly a lot of my clients were going out of business, and I had to find a way to grow the business.
I remember in my most exhausted moment, saying, “Why didn’t you take that hundred million dollar offer? What was wrong with you?” That alone was a paralyzing set of thoughts. What was it like for you?
Cynthia: Oh, that’s interesting. Well, for my first company, we did take the $60 million offer. But I still had terrible regrets. That was my first company. And even though I didn’t care for golf, I’m telling you it was like selling your baby. What can you say? It was, right?
Andrew: Were you officially a millionaire after you sold the stock?
Cynthia: Oh, yeah. I didn’t sell the stock. I was officially with the stock but, of course.
Andrew: But then after you were finally able to sell it, was the stock so low that . . .
Cynthia: Officially, I was a thousand-aire after that.
Andrew: So, that was painful. So, you don’t mind pain.
Cynthia: That happened quite a few years later. Bu, still, the thing I would say to entrepreneurs is, you know, your first company may be the stepping stone for your next company. This sounds terrible to say, you know, I don’t love this one as much as I will the next one. But don’t think it’s the end of the world if you have an exit, whether it’s good or bad, where you don’t continue with that company because if you have one great idea, you’re going to have another great idea. So, I would tell people to just build on top of that.
Andrew: At the time were you able to think that way? It’s harder at the time to think that way.
Cynthia: No, it was horrible. It was so painful emotionally because it was all we’d done for three years, lived and breathed this thing. And it wasn’t just that. We built every piece of it. We were just so enthralled with that. It was hard to sell it, even though we were making money, although the investors were able to make more money. And there was kind of an issue of how much the employees got, that we had to work really hard to make sure that our employees got a reasonable share.
Andrew: This is GolfWeb that the investors did so well on?
Cynthia: Yeah.
Andrew: Why did the investors do so much better than the entrepreneurs?
Cynthia: Liquidity preferences. So, I would advise every entrepreneur to really understand that aspect.
Andrew: Yeah. That’s come up a lot in these interviews.
Cynthia: Yeah.
Andrew: And more and more entrepreneurs are understanding that, it seems.
Cynthia: I have to move around, so the lights stay on.
Andrew: That’s very energy efficient of you. The lights go off in the office if nobody moves. There we go.
Cynthia: Actually, we’re at the Plug and Play in Sunnyvale, California.
Andrew: Oh, get out. Really?
Cynthia: Yeah. We have an office here, compliments of PayPal. They’ve kind of adopted us, and they’ve given us some office space. So, we just moved in here, like last week. So, that’s pretty exciting. We were all pretty much working from our homes, and we went to this place called the Hacker Dojo. But now, we actually have official cubicles and like a real conference room. So, it’s really nice.
Andrew: One more quick question, and then let’s move on to Kachingle. How do you get past that when every one of us who’s listening to you right now is going to have a moment where it’s such a deep low that we feel like we can’t get out of it.
For me, the low that I was telling you about, the way that I got out of it was taking up running. I started running just about every morning, even if it meant that I was late for work. And by the time I got to work, I didn’t feel like a loser who’d missed out on a hundred million dollar opportunity. I felt like a guy who could do anything because I was running, and I started remembering how big the company really was. I said, “All right. I can grow this even more.”
What was it for you? How do you get yourself out of that? It’s really tough.
Cynthia: For me, it took time. It took a few years, to be honest with you. I took up swimming, but now I do yoga. You’re absolutely right. Actually, now I go to yoga class every day. You’ve got to have something. You go there, and you’ve got another life. You’ve got the running life or the yoga life, right?
But what happened also was that I had an idea for another company. So, I started working on that other company. Eventually, the first one kind of . . . even talking now about GolfWeb it seems, of course, it was a long time ago, but you just get over it. You move on, and you have something else that you become even enthralled with. What can I say, you know?
Andrew: Yeah.
Cynthia: So, I think that’s the thing. You’ve got to give yourself some time to recover, although I don’t think going on a long vacation is it, because when you go on a long vacation, you just sit around and mope. So, I don’t know, maybe just moving on quickly is the thing to do.
Andrew: All right.
Cynthia: But I know a lot of people in your situation, and they still think . . . one of my co-founders in this company, they had an offer just like you. They didn’t take it, and it’s difficult to get over that, but you will.
Andrew: So, what was the idea behind Kachingle, the idea that helped you launch this business?
Cynthia: Well, I think it’s a lot of things happened. You remember I was telling you about GolfWeb I felt, why are we spending all this energy and time and money creating this great content, and yet Yahoo is getting all the valuation off of our backs. Not just us but all of the content, right? I really remember thinking that’s just not fair.
So, it really even started back then that I got really interested in the content business, and then I got really interested in the social aspects and the business models of how do you build an online business, because I could see even then that advertising just wasn’t going to make it. Even two or three years ago, they were still talking about how advertising was going to be so successful. Well, I think many of them, that’s just not going to happen.
But there was a specific thing that gave me the idea for Kachingle, which was my best friend, her name was Laura. She actually became ill with brain cancer, and her English wasn’t very good. So, she asked me to do some research on the Internet because we knew nothing about brain cancer.
Now, people are more familiar with it because there’s been a number of famous people that have had it, but it was like the biggest shock in the world. So, the Internet was just fantastic, and I did a lot of research just going to discussion bars, people’s blogs to non-profit sites, hospitals, everywhere. I went everywhere, and I gathered up all this information and put together some information, this thing for her and talked to her about it.
And then, when I was done, I felt like I wanted to go back to all the places I got the information, whether it was a person’s blog, whether it was a medical website, whether it was a discussion bar, I didn’t care. I’d just take a hundred bucks and give some money to say, “Keep doing this for the next person.”
And there have been people that have donated some buttons on some of these sites. I never pushed the button because I didn’t know. At the time I was just searching for information. I didn’t know if it was going to be of value or not. I didn’t know which sites I had gone to the most.
So, I thought, there’s got to be a better way. That’s how I got the idea for Kachingle. There was also a site that I was using a lot, and this was around 2005, which was the housing bubble blog. I went there, like, every day because I really thought there was a housing bubble bust, and they had a “pay to donate” button. After a year, I finally pushed the button, and I felt why didn’t I do that. And I thought about all the reasons that it was so difficult to do.
So, that’s how I got the idea. The whole thing came at once, that people should have a way to make voluntary contributions, but there can’t be any mental transaction cost.
Andrew: Just, it needs to be click a button and you’re making a contribution.
Cynthia: Well, the way Kachingle works is you sign up with us for a PayPal subscription of $5 a month, and then when you see content that you love, you just turn on the button once. And then, basically we distribute your money, based on usage.
So, it’s fair because if you go to one site a lot more than another, they’ll get more of your money. You don’t have to do any thinking. You don’t have to decide, is this worth this or that. I mean, we based it on the value that you’re getting.
Andrew: I see. So, I donate five bucks. I pick three sites that I’m into, but if I’m on one of those sites 98 times and the other sites only one time a month, the one site that I go to the most gets 98% of my five bucks and the other sites just get a few pennies.
Cynthia: Exactly, although we do base it on the number of daily visits. So, you can only go to a site, at the most, 31 days.
Andrew: Gotcha.
Cynthia: We had to choose some algorithm. It could have been something different, but we thought that was a pretty fair measure, and it seems to work well. What people really like about Kachingle is no thinking. You just say, I like this site right now at the moment. You don’t have to decide, will I like it in the future because if you don’t come back, then they don’t get any more of your money.
And then, of course, if you do come back, they get their fair share. And then, you don’t have to do any clean up either because if you stop coming back, it just falls off your plate without having to say, oh no, stop, stop this. The other thing is as your interests change, it changes with you because you go to different sites and that kind of thing.
So, the key thing is that people if there’s a particular site that they want to support, so that’s what gets them in the system. And then, as they come to divine on other sites, they can turn it on or not. It’s their choice.
Andrew: What about the challenge of . . . I’ll say this. I like to give sites money, but I’m in the frame of mind of going and signing up for a system where I’ll donate money. I’m not at that point. I’m not in that frame of mind of going and signing up for Kachingle. I just want to be able to give it to them now in the easiest way. How do you make it easy for me to sign up when I’m not ready to do it or when I’m not passionate about signing up?
Cynthia: Well, that’s exactly what you do is that you say the easiest possible way. So, let’s say, you’re on a site. I think I can even show you this, but you’re on a site that you’re really passionate about, and you just sign up through Kachingle. You’re signing up for just that particular site then. We try to make it very direct. You are signing up to support this site. Yes, there may be other sites you may want to support, and that’s perhaps in your future. But the main way we get Kachinglers is they sign up specifically to support a site, and it’s only $5 a month, so many people feel like, well, even if all my money goes to that site, I’m okay with that although then they can visit other sites.
That’s one of the reasons the amount of money is so small, and we don’t even give you a choice because we don’t want you to have to think about, well, how much should I give? What are my friends doing? I don’t want to look cheap. I don’t want to look like I’m spending too much money. So, we try to make the minimum number of decisions, and the sign-up process is very, very quick. There’s hardly any fields to fill in, just your email address, your display name, a password. and then you go to PayPal and click on the subscription and you’re done.
Andrew: How many people have you gotten to do that so far?
Cynthia: Thousands of people have done it. We also have about 350 sites that have signed up, but we’re actually making an announcement soon that we think will be pretty radical.
Andrew: How soon?
Cynthia: And encourage a lot more customers.
Andrew: Well, let’s say, in the next few weeks. I’m willing to hold this interview and not publish it until then if you want to say it right here.
Cynthia: I can’t. I can’t reveal it now, but we could do a little short segment where I could tell you more about that. We think it’s going to be very radical.
Andrew: It’s just you and me. Regus’ Internet connection won’t allow me to broadcast this live.
Cynthia: I’m telling you . . . oh, the lights went out again.
Andrew: The lights went out again.
Cynthia: It’s totally secretive.
Andrew: I’m telling you, one day we’re going to be looking back and I’m going to be telling stories about how bad the Internet connection was and how you had to go and turn the light on as I did the interview, maybe in 5, 10 years. I’ll be telling stories about this at a bar somewhere with a Scotch in my hand or at a party somewhere.
Cynthia: I have to get my dog to walk around. When I stop moving, they’ve got the lights so they will turn off.
Andrew: You know what, by the way? I’ve got to say the Internet is frustrating. I’ve got to think that everybody who’s even listening to this, you don’t even need to pay me for this. You just have to listen to this and keep giving me your feedback and keep helping me grow this because this is the best training ever.
I used to read stories about guys like Charlie Rose and how he became an interviewer by interviewing people over and over and under tough circumstances. This is one of the toughest circumstances, toughest situations to do an interview under. You and I can’t talk like human beings when you have to have these computer screens in front of us, and even these computer screens don’t work right because we don’t have Internet. Even if we did have the right Internet, it’d still be just a little slow. It would make me into a better interviewer. Do you agree, Cynthia?
Cynthia: To be honest, I think the technology is working great. I think this is working fine. There’s little glitches here and there. I used to teach for UC-Berkeley Extension. I’ve seen it all. I had to teach one class, and 60 people showed up the first day and we lost power. And so, I taught the class in the dark because I knew I could never get 60 people to come back for a make-up class.
So, yeah, the great thing about doing this is by the time you’ve done it enough, you’ve seen it all. Nothing phases you. It’s like when you give talks. You always know there’s going to be the heckler in the front, right? And so, whatever, or the mike’s not going to work.
Actually, I’ll tell you one great thing about Kachingle. We have the most fantastic engineering team you can imagine. We’ve never had a bug. We’ve never had a single site failure. I mean, we’re talking about a startup, right? Because at my other startups, I used to go and give presentations, and I’d be, “Is the thing actually going to work, right?” I’m telling you it’s such a joy to never have any doubts that our system is working flawlessly.
Andrew: Why, why is this one working flawlessly? How has all that past experience get you to a place where you can get the site to work so well?
Cynthia: I’ll tell you how because my top priority for my co-founders was people that were absolutely the best of the best. I’m not the CEO. I have another person who’s the CEO. He’s just a fantastic businessperson, so I get to do all the product definition and marketing stuff. And at the same time we have two lead engineers that are just fabulous.
It’s just a totally different experience when you have the absolute top, I just can’t explain it, intellectually brilliant engineers to work with. You know, I’m a product person, right? I started my career as an engineer, but I don’t write code anymore. To have a product vision and then to be able to sit down with these unbelievable engineers and then have them build the thing flawlessly, it’s just wonderful.
So, I would say that to your entrepreneurs, too. So many of them are going to be the engineers. It’s just a joy. Of course, we’re going to be wildly successful, but part of it is the journey. And the journey of building something that is so . . . to see your vision actually come to life and then have it work so perfectly, it’s just really thrilling.
Andrew: How do you feel that way because I want to get to the place where I feel like you? I always feel like I’m battling. I’m battling the companies that have more money than I do. I’m battling against technology. I’m battling against the bank, sometimes. I always feel like I’m going into war.
I’d like to feel like, you know what? Everything’s okay. It’s all going to work out. The journey is the fun. How do I get to that place? Are you born with it?
Cynthia: Huh?
Andrew: Are you born with it? Is that what it is?
Cynthia: No. This wasn’t true in my other companies. I think the people issues is what makes this Kachingle to me to be, it’s not that battle that you’re describing. What we’re battling is the marketplace, because we’re trying to create a new social norm, paying for free stuff. I mean, that’s like ridiculous, right?
And we have talked to every major newspaper in the country and worldwide. They have called us and said, “Oh, we’re interested. The digital people would be really interested.” And then, they take to the senior management and they go, “Oh, we can’t do this.” And, of course, then they’re all going out of business.
So, our battle is with the market. But the other battles, you know, the technology and the product, those are a joy not a battle. For me, as a marketing person, you don’t want the market to be too easy. It wouldn’t be any fun, right? But, when you have the right team, and I just can’t emphasize this enough, because we just have the greatest team and people that are passionate about what we’re doing as much as me. We have a couple people that have journalism degrees. Although one of our engineers has a Ph.D. in biology. They just absolutely believe in what we’re doing, and that is the thing that I think makes it really, really fun.
We have not raised a lot of money, we’re friends and family and a bit of angel funding. So, in a way that’s worked out good because that’s the only kind of people you can get, right? If you’re paying people serious money, yeah, you get some great people, but you also get people that are in it for the money. Right now, we’ve got people that just think we’re going to change the world and are willing to put a lot of energy and effort into it.
Andrew: How did you get that story about you in on the media, the NPR show that I mentioned earlier?
Cynthia: Oh, that. What happened was there was actually a time when things were not going as well, team wise, as they are now. So, this is where I learned. I actually had a different team at the time, and we had built an early version of the product in RubyOnRails. And I thought it was ready to launch. So, I had carefully picked a blogger. His name is Steve Outing. He was working at Editor & Publisher at the time. They have kind of gone out of business. I had filled him in on Kachingle, and he had actually written a story, and that story went out on Editor & Publisher.
We were about to launch, right? It was the first time anyone had heard of any of this concept. So, everyone was calling us. If you go back and look at that period of time, we had interviews everywhere, and all the newspapers were contacting us. That’s how I got that interview. That was the upside. The downside was what really turned out to be an alpha product actually was months from being ready for prime time.
Andrew: But the reason all those other people covered you is because you picked an influential blogger that the rest of these guys read, and because you were building a product that specifically addressed the media industry.
Cynthia: Yes. That’s exactly right. In fact, I had them watching the bloggers. I had approached about 10 of them, and I waited, not waited, but I looked to see which one was interested. Steve is a very unique person. His blog is SteveOuting.com, and he’s very knowledgeable. He’d been watching the whole business model for the media industry, and he just became very interested. And the other great thing about Steve is that he’s a fantastic journalist, and he got all the details right. I mean, what can happen? I learned this at GolfWeb. If someone writes that first article about you and they get things wrong, everyone else just repeats it, right?
Andrew: Yeah.
Cynthia: Well, Steve got everything right. So, when people pretty much copied what he wrote in whatever newspaper, it was right. But that also got us all of the follow-up publicity.
But, then what happened and this is for your entrepreneurs, is that we weren’t really able to capitalize on that because, you know, the product was really only an alpha product. So, it took us another six months before we then had a beta, a product. We actually ended up rewriting the entire thing from RubyOnRails into PHP.
So, everything’s really great now from a product perspective, but we did have a very difficult time getting to the right implementation and with the right engineering team. But believe me, you know when you have it.
Andrew: Well, I’m looking forward to watching your growth. I’m looking forward to hearing the announcement. Thank you for doing this interview. And let me thank you for sticking with me with the tech issues, especially at the beginning of this interview. I want to thank the audience because, you know what, both you, Cynthia, and the audience could both be listening and watching all kinds of programs that have incredible production values. They’ve got CNN here in the lobby. I watch them, and it’s always very flawless. You could watch stories about shootings, about the Republicans fighting the Democrats, the Democrats fighting the Republicans, all in perfect quality and still you tune in here.
Hopefully, you do it because I give you value here, because talking to entrepreneurs and hearing about how they built their business is more inspiring and more useful than listening to the Republicans and the Democrats fight each over in High Definition. So, thank you guys for watching. I’m looking forward to seeing what you all are doing with this.
Cynthia, thank you for coming in and doing this interview. I’m looking forward to seeing what happens with your company, and I hope that I get to meet you in person sometime.
Cynthia: Thanks a lot, Andrew.
Andrew: All right.
Cynthia: Bye-bye.
Andrew: Thank you. Bye, everyone.
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