Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and I do it for an audience of real entrepreneurs who are often building their businesses while listening to these interviews. And I know it because more and more of the people interview say that they listened and now they’re looking forward to giving back.
All right, so when I prep for an interview, I do a lot of research. And I remember one time I was interviewing someone who was in the insurance business and I thought, ” You know what? Let me just do a little bit of research.” And I filled out a few forms online and I said, “You know, one of these sites I could actually probably sign up for because we do need new car insurance.”
And then I went to do my interview after I filled out their form and while I was doing the interview my frickin’ phone rang and I hate for my phone to ring. Even my wife knows. She texts me and says, “Are you there first?” to just see if you can get on a call with me. But these guys didn’t. They just called me in the middle of an interview. It was very disturbing. It was partially probably my fault for not hitting “Do not disturb,” but still. While I was doing the interview, I saw that their message got converted into text. It was clearly from this company that I just filled out their form calling me and interrupting my day. And for some reason I let that bother me more than it should and I decided, “No way am I going to do business with those people. I don’t even want them in my life anymore.”
Well, if you’ve ever experienced something like that, you probably know that you don’t want to do that for your customers. You want to give them better experience than that. Well, today’s guest is an entrepreneur who came up with a solution for it and as a result he’s been building a business that’s been growing and growing and growing even though he is a bootstrapper. His name is Aaron Christopher Evans. He is the founder of Drips. They use conversational text messaging to help their clients contact users when it’s convenient for their users. So you can imagine if the company that I was filling out a form for were using Drips, they might have sent me a text message recognizing that it’s the middle of day and say, “Hey, Andrew, when you’re free, we’re available to talk.”
And then I could responded back and said, “You know, I’m not free today. Can we talk tomorrow?” And then scheduled a call that made sense or maybe said, “I’ll call you,” and get on a call with them right away. But it’s in my hands. That’s the idea behind Drips. And as a result of that kind of conversational texting experience, they help their clients close more and more sales. And as a result of that, they closed more and more sales themselves.
All right, we’re going to find out how we built up this business. This interview is here thanks to two phenomenal sponsors. The first is no longer going to be a sponsor of ours. I think this is the last ad they’re running. It’s called DesignCrowd and I feel like I’ve let them down because we didn’t give them a big win, just an okay win.
All right, and I’ll tell you why I’m in love with them and a little disappointed that they won’t be sponsoring us, DesignCrowd, and the second is a company called Toptal. I’ve used them to hire a lot of people and I urge you guys too and they’ve been advertising a lot, which means that many of you are using them. And I’ll tell you about DesignCrowd and Toptal later. First, Aaron, I know you go by AC. AC, it’s good to have you on here.
Aaron: Thanks, Andrew. How are you today?
Andrew: Good. Dig your setup, by the way. Look at that. What’s your annual recurring revenue?
Aaron: We’re currently at a about a $10 million ARR.
Andrew: Ten million dollars. You started the company how long ago?
Aaron: First time we showed Drips at a trade show was January 2016. So we’ve tripled, tripled revenue and then this year will double last year.
Andrew: And I said bootstrapper, but it makes it sound like it’s super easy. The truth is that it’s kind of tough. And we’re going to talk about some of the difficulties involved with that. But let me talk about one of the inspiring moments that happened to you long before you started Drips. You are at a friend’s house and you saw that his parents had cars, a couple of cars and a bunch of computers. What were the cars that they had and walk me through that experience?
Aaron: So it wasn’t his parents actually, it was his house. So this is my junior year of high school, so ’99. My friend, Jimmy, was a senior in high school. We were on the wrestling team together and this guy drove around a Porsche 911 Carrera, convertible Porsche. He had an H1 Hummer both canary yellow. It was ridiculous and amazing. He had his own house. Very nice. You know, a couple $100,000 house. And his parents, I can’t remember what his mom did, it wasn’t anything extravagant and his father delivered pizza at the local pizza shop. So, you know, everybody had seen him with these cars and there’s always rumors about what he did. You know, is he a drug dealer? Is he, you know, peddling this or that? Like, you know, what was this guy doing to make this kind of money as a senior in high school?
But anyway, long story short, I visited his house one day and I can’t remember what the context was, but I walked in and, you show, he was showing me the place and I walked into his office and there was a room not too much smaller, larger than the room we’re in now. And there was probably about 15 old school, you know, Dell just computer towers. Some of them have the sidings ripped off of them and fans blowing on them to keep them cool. The room was about 105 degrees, right? I mean, it was brutal. If you walked into it today you would think, “Oh, this guy is mining Bitcoin or something,” right? Just dozens of computer stacked on top of each other running things.
And I said, “What in the hell is going on here,” right? I’d barely even used a computer or had a computer at the time. And he said, “Oh, these are . . . ” you know, candidly he said, “These are my spammers.” I’d never heard the term before. You know, this is before the report spam button. You know, I was like, “What is a spammer?” And he started to explain it to me. He turned on one of the monitors and on the monitor was AOL popping up. This is like AOL 4.0 maybe, right? AOL would pop up. It would literally dial in, you hear like [inaudible 00:05:51], you know, and as soon as it got it and it would jump into a chat room and it would drop a link to I think it was like make money working from home or a dating site or a weight loss pill or one of the three things that are still being spammed out today, right?
And then it would go to the next chat room. It would do the same thing over and over and over 24/7, 365 across, you know, multiple computers, across multiple accounts that this guy had created. And I was still confused, right? I was like, “How is it doing this? Why is it doing this?” He’s like, “Well, I send out these things for these advertisers and they pay me every time I get a sign up,” right? And I was like, “Well, how did you make the computer do this?” And he explained to me that he programmed it. He was one of the original kind of AOL guys, right, like back in the day. He programmed this tool that would automatically send out mass marketing, right?
And he did email and other things as well but he was an affiliate. He was a webmaster or a publisher, if you will. And these companies would pay him, you know, for signups. And he explained to me that these computers that he only had to reboot maybe once a week you know, run some antivirus on, whatever were outputting the equivalent of like 120 people, right, working 24/7, 365. And he said, “But I don’t have to pay my computers. I program it once and it automatically does what it does.” And my mind was just blown. I was hooked instantly. It wasn’t about the money. I mean, that was obviously interesting as a young guy, but it was more about the automation behind it. I’d never seen anything automated before like that.
And when he said that these things are working as hard and as fast or faster than 120 people would without having to pay that kind of payroll, I was just blown away because I think I was like washing dishes or something at a restaurant at the time. So it was super interesting to me. And he was the guy that, you know, kind of opened up my eyes to the world of affiliate marketing.
Andrew: You ended up in lead gen. What kind of lead gen were you doing? And that’s kind of where you got the idea for Drips. But what kind of lead gen were you doing?
Aaron: It was a lot of different things. Insurance was one of them. So let’s see. From the beginning, Jimmy taught me a lot about programming and how to do this automation stuff. I then started getting into graphic design and building websites. We built one of the first doll maker websites of its time. There’s a site called customsouthparks.com. Probably a lot of your listeners built one of these little South Park characters at one point where they can change the hair and the eyebrows and the shirt and give it a little quote and share it on Myspace. We had tens of thousands people making these a day and I realized it on the back of that I could sell those users’ information.
So they would go to save the cartoon and I would say, “Hey, look, this is a free website. To help support us, you know, we’re supported by ad revenue, could you please fill out the short survey.” And the survey was something like, “Would you be interested in switching your cell phone provider to save money? Would you be interested in save money on car insurance? Do you have student loan consolidation debt? Do you need credit repair?” You know yes/no questions, co-registration questions. And I was able to monetize on that user’s data and multiple times. Much to their dismay, as you’ve experienced, you know, I would sell that data and then somebody else would start hounding them and calling them.
But we were able to earn about $5 a user that filled it out and we were, you know, doing a couple thousand, you know, sometimes thousands of registrations a day. So you can do the math, it was it was a really good earner. Got sued by Viacom eventually for that. Viacom who owns Comedy Central who owns South Park. It was interesting. We ran this thing for months and months, maybe even over a year. This is back in 2006, I think. Did a ton of lead gen. You know, worked directly with a lot of big brands and lead sellers and we had a constant demand from the fans, right? Like there’s a lot of people that love this site. That community is around it, you know, South Park fans and whatnot.
We had a lot of demand for physical product, you know, cups, mugs, T-shirts, posters, calendars, and we were going to make a deal with Cafe Press or something like that to enable them to do their own printing. But instead we said, “Look, we don’t need to make money off of this. We just want to give the fans what they want.” We hooked up with a local T-shirt company and sold the T-shirts for a cost. So we charged I think 12 bucks. And I was including T-shirt, including shipping and we shipped like 100 or so T-shirts. I think three weeks later, we got a cease and desist from Viacom.
So they must have been watching this the whole time. And we were young guys. We didn’t know any better, right? Before we were selling the T-shirts, it was completely legit, right? It was an ad revenue-driven fan site. We weren’t selling the copyrighted, you know, art, right? But the second we printed it on a T-shirt and sold the T-shirts, even though it made no money on it, we were infringing on Viacom’s, you know, IP and they came after us pretty hard. So that was a good lesson to learn there and that knocked me on my butt, you know, and caused the whole bunch of other financial issues. But, you know . . .
Andrew: What do you mean? What’s the other financial issue?
Aaron: Oh, well, I was young and was not saving properly for taxes, long story short.
Andrew: What did you spend money on?
Aaron: A house, a car, a girlfriend, you know, trips, travel, food. You know, nothing. I was never like a big Rolodex guy or anything like that. But, you know, I bought a house that I couldn’t afford just like most people in 2006 and 2007. I could have afford it if CustomSouthParks didn’t get obliterated. But I was I was naive in my young entrepreneur days of imagining that my project at the time would continue on forever, right? So the first three quarters of the year I’m like, “Well, I spent all that money but no big deal. I’ll just save the last quarter to make sure I paid for the taxes.”
Andrew: How do you resolve something like that? You have to [inaudible 00:12:12] with the government, don’t you?
Aaron: Yeah. You pay eventually one way or the other and luckily I’m . . . that chapter is behind me now. Me and Uncle Sam are super square and I don’t have to worry about that anymore and I save now. So now when I get a paycheck, even my current company now when I get a paycheck, I literally have it because I have to do a guarantee distribution [inaudible 00:12:33] whatever because it’s an LLC and I can’t take a regular salary. But 35 or 40, I can’t remember percent of my paycheck literally goes to a long-term Amex savings account so that I don’t even see the money. You know what I mean? Like it’s just gone and never hits my bank account. I don’t have to worry about it. So lesson for any young entrepreneurs out there, if you can set up some automation like that around your pay if your 1099 type person, do that because the alternative is a rough road.
Andrew: You know, I can’t tell you how many entrepreneurs have that issue. We don’t talk about it because people are embarrassed by it. But I see that it’s an issue. It eats up people who are going through it and they always think that it’s just them. They always think they’re the only ones but they’re not. And I’m glad that you talked about it. You also discovered through lead generation that there was this gentleman you were working with who was doing student loan consolidations, you were, I guess, helping him get leads, and he was paying you per lead. And he was using SMS text messages. How was he using it? And how did that inspire you to create this company called Drips?
Aaron: Sure. So the fellow you’re talking about is actually currently a minority partner in Drips, one of three of myself, my co-founder, our CTO, Anthony, and you have Tom. Tom was our first client. He was really the kind of the guinea pig or the test monkey, if you will. He calls himself the inspirational genius when we’re on stage together talking about it. But yeah, so he had a lead gen project, right, where he was buying traffic on Facebook, people looking for student loan consolidation. He was able to, you know, just for simple math, let’s just say, he was buying these leads for $1. He could convert 10% of them into a call via his SMS blaster and he was selling the call for a little over 10 bucks.
So he’s making a decent, you know, 10%, 20%, 30% margin on the spend. And he was leveraging Facebook accounts and leads that we had set up for him. So we were in that equation through helping and run these ads and allocate these resources for these Facebook accounts. So I was incentivized to keep him buying leads. One day he called me and he said, “AC, my texter broke. My text message platform broke.” And long story short, his CRM, just the texting plan part of the platform had just stop working. He got blocked by some of the carriers. But anyway, I asked him, I said, “Well, what did your texter do? What was your SMS platform doing?” He said, “Well, every day at noon, it’ll send out a text message to the last seven days’ worth of leads,” right?
So imagine getting the same message every day at noon for seven straight days, right? If you’re this person that just filled out an insurance form or a student loan consolidation form. And the message was atrocious. It was, “Hello, thank you for filling out the form. This is student . . . ” that freedom, whatever, you know, I can remember the brand. “Call us back at 888 . . . ” right? And it sent that message every day at noon. But that was enough to get 10% of these leads on the phone and he was able to convert those calls and sell those calls and make a good ROI. But when the texter broke, the phone stopped ringing. So he said, “I can’t keep buying leads. I can’t keep funding these Facebook accounts because this thing broke.” I said, “Well, that sounds rather simple. Let me see if I can just rebuild it for you.”
And I stayed up all night, me personally. I coded the first version of what would eventually become Drips. It was about a four-foot tall PHP script, very minimum viable product, very proof of concept. It did exactly what Tom’s original system did. And then when we turned it on the next day, he was converting 15% of those leads. So instead of 10%, it’s was a 50%, 5-0 percent increase in conversions, lead to call conversions. And he’s freaking out, right? Because now instead of a 10% ROI, it’s like a 50% ROI.
Andrew: What did you do get him such an increase? I understand, by the way. If you send someone a text message and get them . . . or I guess he was sending out a text message at first, getting people to call up his sales people and then the sales people will close the deal, right?
Aaron: That’s right. Yeah.
Andrew: And so I get the power of that. What were you doing that got him a 5-0, 50% increase in results?
Aaron: Yeah, it’s actually really simple, the creative, right? Like in any marketing or media or email or direct mail or Yellow Page ad, the creative is always the variable, right? And his creative was, “Hello. Thank you for calling.” Or, “Thank you for submitting your form.” And he sent the same message at noon, right? So my message instead said, “Hey, Andrew. Thanks for finding us on Facebook.” So I added, you know, personalization using the name of the person. I added recency and social proof by mentioning the platform they came from Facebook, Google, etc. “We’re really looking forward to helping you resolve your student debt. Please call me back anytime today. Here’s my number.”
So now I added a human element to it. It looked like it was a real person. It wasn’t demanding. They could call back whenever they wanted. I left the number in the message and boom, we got a 50% increase in lead to call conversion. So he’s happy, right? He’s back. He’s live. We didn’t have to turn anything off. We’re happy because, you know, we’re still able to help him monetize this and then he quickly, you know, the same day after . . . I still hadn’t any sleep for 36 hours and he said, “Well, what else can we do? You know, you made a 50% increase by just working on one pot of coffee overnight What else can we do?” And I said, “Well, you’re doing the same message every day at noon. Every day, right? Same message for seven days.”
And I said, “What if we did a different message at different times and added some context to it, like some recency context.” So I changed it up, you know, the next day and then it would do a good morning message at 10:00 a.m., then it would do a lunchtime message and it said, “Hey, hope I call you on your lunch break.” Two days later, we do an after work messages 6:00 p.m., “Hey, I’m trying you after work. Haven’t been able to get a hold of you the last couple days.”
The last day it would do a, “I’m here for one more hour.” You know, some scarcity. “I’m here for one more hour. If you’re not interested anymore, no worries. If you are, let’s get this resolved for you.” And we jumped up to 20%, 25% conversion with that because now it’s a better user experience. There’s contacts into why and when we’re reaching out and then there’s just a lot of iterations past that.
But long story short, he’s getting rich now, right? Like he’s just crushing it. He’s spending $1 on Facebook. He’s making $5 now. Now he’s buying all of the leads he can get. I had to bring in my partner, my RC [SP] co-founder, Anthony, to rebuild this Frankenstein of code that was about to explode, right, because I’m not a great developer by any means. I’m what my programming team call a brogrammer, which was a new term for me. So Tony rebuild the whole thing, you know, over a weekend or a week or whatever. Did it in proper code, proper databasing. There was actually a start, stop button, which was new. And he told me that we were having over 1,000 errors a day, errors in an error log.
And I didn’t even know what an error log was. I didn’t know there was an error log on the server. And I said, “Well, what are the errors?” And he said, “Well, every time somebody texts you back, it’s causing an error because you’re not handling it properly. There’s no handler in Twilio.” Our telephony provider at the time, “Is looking for a response on what to do and we don’t have response so it hit an error page.” And then I was just like, I was like, “People are texting us back.” You know, that’s weird, right? Like who would have imagined? So I said, “Well, what are they saying?” And he pulled a log and he, you know, he sanitized it. And then I looked at it, and I’m looking at hundreds and hundreds of rows of responses and the responses . . . this is kind of when we fell back into what we call conversational texting.
The responses were, “Can’t talk now. Call me in 10.” “I’m at work.” You know, “Leave me alone. I don’t need insurance.” “Who is this?” You know, whatever. I mean, there’s a lot of really good context. Very interested and wanted to call right away and they were getting a call the next day. Some people didn’t want to call and they were getting another text five minutes later. Some people wanted a call the next day at noon and they were getting a call the next day at 9:00 a.m. I mean, it was just the broken part of it was so obvious to us that we’re like, “Oh, my God. There’s so much context here that we could. If we can contextually, you know, have conversations with people and give them what they want when they want it, we will convert even better.”
So we built . . . we I should say. Tony built a chat room, long story short, and we staffed a few operators out. So we literally had three people working, you know, normal shifts just responding to these messages. So if they said, “Call me in five minutes,” they clicked the five minutes later button, they hit call and they said, “No problem. We’ll call you then.” If they said, “Leave me alone,” they clicked the “Do not call button” and boom. I think we got to the point we were over 40% lead to call conversion. So over 400% increase where he originally started.
Andrew: That is amazing. And it makes total sense. Total sense. And I can completely understand it. And so then you say, “You know what? This could be the next big thing.” Or is it that Tom’s friends started coming to you and they told you that . . . you know what? Let’s hold that answer for moment. I want to tell everyone about my first sponsor, and I’m disappointed that they’re leaving me. It’s a company called DesignCrowd. I’ve talked about how great they are so many times but I guess I didn’t win you guys over. So this is my last chance to tell you to go check out designcrowd.com/mixergy where you get a big discount. Here’s the latest great experience that I had with them.
You guys already know. I told you with DesignCrowd that when I needed a new design for my cover art for my podcast, I went to them. I filled out a simple form even though I hate design. I love when it looks good. I hate figuring it out. I filled out a form and they made me into somebody who could explain exactly what I wanted. And I ended up with not just one person and one design but dozens of people and about 100 different designs. I helped shape it by giving feedback about the ones I liked, about the ones I didn’t, and it kept growing as all these people were working on my design and they gave me what I think the greatest cover art I’ve ever had on Mixergy.
All right. So I told you about that. Here’s the latest thing that happened. Russell Brunson, the founder of ClickFunnels invited me to come out to do this thing with him that I don’t think I could talk about yet. But he said, “Andrew, I need the cover art of your podcast and I need it in the original Photoshop file.” I never downloaded that. Who cared about it? Apple didn’t want that so I didn’t download it. And I said, “You know what? I’m just going to go into DesignCrowd.” I went to DesignCrowd. My account is obviously still active. And I just went in and I saw the whole interaction that I had and the full collection of files that the designer who I picked with DesignCrowd even though dozens of people create designs for you. You only pick and pay for the one that you love.
Well, the guy’s design who I loved, he didn’t just send me the design the way that iTunes needed it, the way that Apple needed it, he gave me everything, including the Photoshop file and it was still there in DesignCrowd. With one click, I downloaded it. I sent it to Russell and it was off. This is the thing that I got to tell you about DesignCrowd, it is so good but you will not believe it until you try it and maybe that’s why I lost them as a sponsor. But I got to tell you, I love them. I want you guys to all go check them out. And if you use this URL for a limited time because they’re no longer be a sponsor but they’re going to give you up to 100% off they’re already low prices.
The site is designcrowd.com/mixergy. Designcrowd.com/mixergy. I’m a little concerned that one the other reasons why they didn’t continue, AC, is because they can’t possibly have enough margins. I paid about $100 for that design. They had to pay the designer some money. So I imagine that their margins are probably small because their price is really low. And so we need like dozens, hundreds of people to sign up from these ads. So I don’t think that we didn’t get enough, that we didn’t get customers. I just think we didn’t get enough customers because their profit is got to be super low on this.
Aaron: Yeah, it’s got to be a small margin. And I know there are some competitors in the market space. I’ve used that methodology before actually for the Drips logo that you see on my chest here, and I’m a huge fan of that methodology, crowdsourcing design, because, you know, you can get a great designer and you can get three or four great ideas for a logo out of that great designer, but you can’t get dozens or hundreds of different opinions on ideas for a logo. When I did the Drips, crowd sponsor contest, this was not the way it came out, but one of the designers did a subliminal Drip in the D and the P.
And another one did something else that I liked and I was able to kind of cobble it together. But without seeing literally hundreds of different viewpoints on the logo. I can’t believe everybody doesn’t do this for a logo. Just to throw that out there. Like it’s the cheapest, most unbelievable way you can get hundreds of logo ideas or landing pages or websites or business cards.
Andrew: Yeah, you’re right. Even if you have designers, it’s so pays to go to get dozens of other designers to go re-conceptualize what your idea is and then you pick the things that you like, you merge them, and then you end up with something that you wouldn’t have thought of on your own and no single designer could ever come up with.
Aaron: That’s exactly right.
Andrew: Okay. Let’s go on with your story in Drips. And I do love your design. Dude, by the way, not only do I like your logo, the freakin’ shot that you have set up for this. And I know you’ve got that remote control. Who has it? Brandon on your team set that up. Look at that.
Aaron: Yeah, you probably can’t tell . . .
Andrew: Look at how you’re planning around. Dude, what’s that desk?
Aaron: So I designed this. So this is all old school communication devices. So, you know, it’s kind of like a graveyard of, you know, cell phones and BlackBerries and Dell . . .
Andrew: I see it. Let me describe for people who aren’t listening. He has got this glass encasement that then becomes a desk. Inside this glass box is old typewriters that just look beautiful, old computers, old as you say, communication devices like phones. And what’s your message to yourself and anyone who sits there from all that?
Aaron: Yeah, always. You know, everybody was . . . as I say, to me, it’s kind of a graveyard of all this stuff that we thought, you know, was super advanced at the time. I mean, you know, we got we got iPhones in here for crying out loud. But, you know, a year later, 2 years later, 10 years later, they’re completely obsolete. We bought this stuff for nickels, you know, at a flea market. So it’s just, you know, as we’re sitting on top of this designing the newest forms of communication, it’s kind of a nod or homage to the stuff that came before us.
Andrew: Is it also kind of a memory or reminder, “Hey, this stuff could go away?” Kind of like if you go to Facebook’s office here in Palo Alto, you look at the back of the signs and I think it’s the Sun logo is still on there because they took over Sun’s offices and they wanted to keep reminding people, “We are painting our logo on one side keeping the old logo on the other to remind you even the biggest companies can go away. Fight like you could die tomorrow.”
Aaron: Yeah. I love that. I always say be the company that put yourself out of business, right? Like so that’s another thing that we talked about a lot with this and why we don’t stagnate, why we’re always testing and proof of concepting new methodologies, new tools. We could have stopped doing what we were doing back when we’re converting 47% of Tom’s leads, you know, in 2016. But every day, we’re coming up with new features, new ways of doing these messages, new methodologies so that we’re always way, way, way ahead of any would be competition.
Andrew: I love that, man. That’s so inspiring for me. I’ve got to keep . . . I’m going to your story on our Tuesday company meeting and remind everyone we have to keep changing. We have to keep innovating here. All right, so the next customer, I understand, Tom, and, by the way I’ve been looking up Tom Martindale, dude is impressive. He’s one of those guys that is in like the lead space. Probably has a bunch of clever things that have worked for him over the years.
Aaron: Oh, yeah.
Andrew: And we probably could only really find out about if we had drinks together. Does he drink?
Aaron: No. He does not drink at all actually. Super interesting guy. He’s had his finger in a lot of things. He’s a little older. He’s I think 50 years old now. He runs circles around me in the gym. He’s definitely a good guy to have on our team. [inaudible 00:28:52].
Andrew: Wasn’t he in Ohio and now he’s in L.A. from what I see?
Aaron: Both. Yeah. So he calls himself “bicoastal” because he has a house in Hollywood Hills and he has a house in Akron now. Which is funny because his place in the Hills. I think, you know, his mortgage or rent or whatever it’s about 10 times as much as his place in Akron. But his place in Akron is like a mansion. Like he was laughing. He said, “Man, this is cheaper than my car payment, my California house.”
Andrew: You know, I’ve got a few friends who do that. The most notable is . . . what’s his name? Wil Schroter from Startups.co. He bought Zirtual and a couple of others. He also was in L.A. and I think he and his wife moved there too, but they kept their home in Ohio and the frickin’ place is gigantic. It’s beautiful, super comfortable. And I kind of feel like Ohio has a bunch of these really smart entrepreneurs who are not funded, who are not the Silicon Valley prototype. But boy, are they good at generating sales. Boy, they’re good at business. And it’s the kind of stuff that you don’t usually hear on TechCrunch or anywhere else.
Aaron: Yeah, and it’s interesting, right, because the stories are always like who raised this? You know, who got bought by that? And there are some stories out here. A buddy of mine, one of my best friends actually, Mark Jenney, his company RVshare which is Airbnb for RVs. Long story short, they just had a $55 million cash injection in their company. It’s a local Akron company. But he bootstrapped as well. Like most entrepreneurs in the Midwest like we just didn’t grow up knowing about VC or private equity or funding or, you know, any of that stuff. There was no Shark Tank back then, right?
So nobody was thinking about it. What we did have was guys like my buddy, Jimmy, you know, rolling around in Porsches, you know, just crushing it making a ton of money and that’s what he did. He focused on execution just like we did and that’s why, you know, there’s very little about Drips when you Google around on us because we’ve just been focusing on execution to get ahead of this market that we think is about to explode and now we’re at point in position where, you know, we want to tell a story a little bit and that’s why we’re here.
Andrew: So let’s talk about the second customer. Where did the second person come from?
Aaron: Yeah, it was exactly, you said, it was Tom’s friends in the industry. So Tom was our first client, our first salesperson, our first partner. You know, a lot of the guys that he knew that he was working with, they were wondering what it is that he’s doing and, you know, he kind of lifted up the skirt a little bit. Told them about what at the time was called Text Drip. It wasn’t [inaudible 00:31:28] called Drips at the time and he came to me and Tony and said, “Guys, look, this is going great, and we’re all making a decent amount of money but you can make a business out of this,” right?
And Tony and I had multiple different projects. We had a marketing company. We had a software company. We did software for iOS or some of the biggest, you know, Fortune 100 companies out there. We did a bunch of different things and this was just going to be another project that we decided to try to put some effort into. And we did and we showed it at a trade show trade show called Contact.io in San Francisco in 2016 January. And we got a couple logos almost out of the gate, which was great. The first one was 3 Day Blinds. They have a very, very progressive Chief Revenue and Chief Marketing Officer, Dan Williams. He’s like the kind of marketer that, you know, he speaks at Google. He speaks at Marketo. He speaks at Facebook.
So very, very well established marketing guy and he and brands like his and 3 Day Blinds are always testing stuff, right? They see something new, they test it. They see something new, they test it. They break things. He once told me that if somebody comes and you hire somebody and they haven’t broken something within six months, they’re pretty much about to get fired. So they’re big into testing things. So luckily, we got a good brand with him. We made a huge impact on their business. And he’s been an evangelist ever since and a friend of mine.
Andrew: See, you know what, I’m on 3 Day Blinds’ website. These are direct marketers who will sell you blinds. Is it in person or online?
Aaron: Yeah, they’re in person, so they’re the biggest in their brand. We accept 3 Day Blinds in this room even though you can’t see them. But they will come into your house, show you all the different, you know, types of . . . you know, in home consultation, different fabrics, different types, you know, mechanical otherwise and then they will come in and install everything all within a three-day time period. So it’s a luxury.
Andrew: Okay. That’s something that you might want to talk to someone, you want to get info and I could see on their website they are really prominently featuring both phone numbers and chat buttons. But the big thing that takes up the most space is the big communication thing is fill out this form to tell us about yourself and it includes phone number and email. And what would happen back before you was someone would fill out a form with a phone number and then would a salesperson call up?
Aaron: That’s exactly right. They had a call center, in-house call center. I think a couple of dozen agents and they would take that lead and they would try to call them. And a lot of times it would be a very similar experience that you had with your insurance company is you’re probably at work, probably on the computer. I guess you’re allowed if you own the place but a lot of people are browsing and, you know, plugging in their information to 3 Day Blinds in the middle of the day in their work computers and then their phones start ringing, right?
Then they’re like, “Oh, my God.” You know, they’re ignoring the calls. So we took over that whole effort. We do the texting and the calling thing for them now. And they now have no more outbound call center at all. They only take inbound calls. And so any form that goes to there, any drop off in their customer journey, any people that don’t show up to their appointments, that all goes through Drips. Drips reaches out as if we were 3 Day Blinds in 3 Day Blinds’ voice and we engage with our users in the right way.
Andrew: So you even had the people to do that. All you would do is when it was the right person . . . first of all, when someone chatted back, you would chat in, you and your software?
Aaron: That’s right.
Andrew: And then when it was time to make the call, you would connect to 3 Day Blinds salesperson to them.
Aaron: That’s exactly right. It would be a recording. It is all automated. So it would just, you know, your phone ringing from the same number that you’ve been texting with at the time that you asked for it to ring and it would say, “Hello, this is 3 Day Blinds calling for your scheduled call. Press one if you’re ready to speak to a live agent. Press two if you need to reschedule for different time. Press nine if you’re no longer interested in this offer,” or something like that. So we keep it all automated while scaling.
Andrew: All right. Okay. Why did you decide to do that? People are hard to scale. Most companies that are in software don’t also want to be in the people business. Why did you decide to do that? And, by the way, I got to stand up. I’m so freakin’ psyched about what you what you’re talking about.
Aaron: Yeah, so there’s, there’s a few things, right? Like I love automation, right? Like it’s been my passion since I saw my buddy’s office and his, you know, “127” non-existing 24/7 365 workers. So I’ve always thought of that. You know, I’ve always had that kind of spammer marketer, you know, scale mentality. So there’s no way to scale it with humans, right? I’d end being a glorified call center operator, which is not interesting to me. But, you know, scaling to the point where now I think we’re doing I think it’s over half a million new leads a day are coming through our system. So that’s literally millions and millions of concurrent conversations that are happening at Drips and that’s where the team of you know, 30, 35 people in the office. So most of which is, you know, completely automated.
But one thing I think that’s interesting that we kind of skipped over and I love your opinion on, but you’re just like, maybe about my age, right? And you remember a time I’m sure when the phone rang and it was exciting, right? Or like, you know, the phone rang in your kitchen or your parents’ house and you run to the phone and then it’s such a great moment in time. Fast forward to today, and your wife will text you before she calls you, right? So somebody told me recently that calling somebody before texting is like walking into their living room without knocking on their front door, which I thought was funny. But why do you think that is? Like I’m curious like why that big communication shift? Why do people not [wanting 00:37:19] to be called?
Andrew: My parents refused to get any kind of voicemail system and I always hated the phone ringing. I hated that no matter what you did, my dad would make us go and run to the phone. And I thought, “Why am I on somebody else’s schedule? Because they decided to call me. I don’t even know who they are. It’s on me now to get up. Stop what I’m doing. Stop the show. Stop the food. Stop whatever and go get it? I don’t like that.” And the reason that I would prefer my wife text me is sometimes . . . like this is a little . . . it’s not too embarrassing.
But the other day, I was on my way to the bathroom and she called me. If she could have just waited a moment I would have finished and come back or I wouldn’t have gone in. Give me like that. Little bit of a heads up that it’s you that it’s about the call so I could be in the right spot for it.
And the other problem is there is a lot of junk calls coming in. I actually think the phone companies are in for a world of trouble because they’re not stopping it. And we are now afraid of picking up the phone because chances are really good that it’s going to be a really useless call. It’s going to be someone with area code and first three digits that are very similar to my phone number pretending to be a neighbor, pretending [inaudible 00:38:29] sometimes we pick it up because it could be your kids school. It sucks.
Aaron: That’s exactly right. So there’s two big problems, right? One is the prevalence of robo calling or spam and the problem with that is now legitimate companies like 3 Day Blinds who you just filled out a form out for are indistinguishable from them, right? They also have a local presence because they have a local contractor and you’re not answering that local person’s call because you’re scared of who it may or may not be. So texting allows them a way to at least say, “Hey, this is 3 Day Blinds, Andrew. I know you’re probably at work. When should we talk?”
The other thing is and you hinted at this is we’re all busy nowadays, right? Like back when I was younger, I had a boring childhood. Like we lived in, you know, kind of humble beginnings from North Carolina. Me and my sister, if the phone rang, we were just excited to stop throwing sticks at each other or whatever we were doing, you know, for entertainment at the time. You know, we had six channels on our TV and the bunny year things. So I loved it. The phone rings, somebody at the front door, it was a big deal for us. You know, we would trip over ourselves to get to the phone. Fast forward to today, I’m always busy.
Back then what did we have on demand? I couldn’t watch the shows I wanted when I wanted. If I was hungry, you know, I’d have to make something or maybe, you know, back then we had like what Domino’s I think was the first on-delivery, on-demand food service, right? Fast forward to now I can get any food I want from any restaurant I want with UberEats, Postmates or any, you know, a number of these different apps. If I want a date tonight, I don’t have to go hunting to try and meet somebody. I can just swipe right on an app. I can play any music I want. I can pause live sports. I mean, it’s just we have everything we want on demand on these little devices, right?
And what that means is, we always have something to do, right? I can always be, you know, watching Netflix or watching the game or whatever it is, and what I don’t want is for you, or you know, my wife or whatever, to essentially call me in the middle of whatever it is I’m doing. And calls have essentially became an interruption to your day. It’s a disrespect of your time. It’s saying like, “Hey, Andrew, I want to talk to you now.” So instead of like emailing you and scheduling with you, you know, I’m just going to call you, right? And that’s the difference. We live in an on-demand economy now where the consumer has been conditioned as we have been conditioned to get whatever it is when we want it, how we want it, where we want it on the right channel that we want it on and nothing less. And if brands don’t begin to understand this, they’re going to continue to lose the attention of their clientele.
Andrew: So I totally get that. What about the sales team? Can you only then work with people who have a sales team? Because I can imagine a lot of people listening in and saying, “You know what? I don’t want to just randomly call my people. I do understand that calling is effective. But it’s hard to set up a whole sales operation. It’s hard to have somebody there to make the calls once Drips says here’s someone who’s ready.”
Aaron: Well, keep in mind Drips will do the calls. So we will do all the heavy lifting, all the outbound, all the conversations and the scheduling and rescheduling and what if they missed the call that Drips did.
Andrew: But the actual sales call won’t be by Drips?
Aaron: Correct. No, so we will then turn the inbound call back to our clients. So we don’t work with, you know, solo shops or SMB, small medium businesses. We were definitely an enterprise solution where we will work with larger companies like creditrepair.com or debt.com or T-Mobile or, you know, companies . . .
Andrew: You guys have T-Mobile as client?
Aaron: Yep, yeah, I was just . . .
Andrew: All right. Let’s talk about how you moved up in the world to these bigger clients. I know that was a big challenge for you. So the first couple of clients, handful of clients came because you went to the conference, to the to the trade show. How did you get 3 Day Blinds? How did you get creditrepair.com? How did you get these people to take you seriously as a guy from nowhere? Well, I’ll tell you I think Joshua Fletcher is the one who introduced us. I think that I knew Joshua well enough to trust him but still I had to go and do some research on you. How did you, without that introduction, without any of the background get these clients to sign up and trust you with their users, with their customers?
Aaron: Sure, yeah. Look, it’s not easy. I think it’s always a stepping stone from one to the other, right? So we started with Tom. Now this is if you don’t want to try to throw a lot of money on it, build a big sales force, cold call, etc., right?
Andrew: And you weren’t. You were just at a trade show going via Tom and his direct network and your direct network.
Aaron: And that’s where it started.
Andrew: What did you do to get people to sign up with you, trust you?
Aaron: Yeah, so we start with Tom, right? We’d go to a network. We established ourselves there. You know, we did a decent job on the brand and the logo and whatnot. So we already looked a lot bigger than we were. We were really just me, Tom, a girlfriend of ours who worked with us doing the chat rooms and my co-founder Tony and we were literally four people at the trade show. But we looked a lot bigger. We had this great domain name drips.com, you know, and Drip Marketing, right? Like what better name could you get? I luckily bought that name for like $4,000 off somebody online so that was a win.
Andrew: Just whoever had it and you bought it that way?
Aaron: Yeah, yeah. The guy had it listed on . . . it was parked . . . I can’t remember what he had it for, but it was tens of thousands of dollars, you know, which it’s easily worth and I emailed the guy and I was just like, “Hey, man, got the startup. This thing would be super cool.” And, you know, I talked to the guy and he was an investment guy. Drips, I guess also could stand for an acronym. It’s like a Derivative Reinvestment Plans or something like that, Dividend Reinvestment Plans. I can’t remember. But anyway, got a good brand, got a good website, got a good logo.
Andrew: I see. You listed it with sido.com [SP], or sido. I don’t know how to pronounce right? [inaudible 00:44:28]
Aaron: Yeah, yeah, sido, yeah. Yeah, who knows. But so we started the trade show. Like I said, luckily we got 3 Day Blinds kind of really quick out of the gate. We were . . .
Andrew: Just because they are willing to experiment and have things break.
Aaron: Yeah, two parts.
Andrew: That’s the kind of [inaudible 00:44:42] you want.
Aaron: Yeah, two parts. I knew an agency owner, one of my buddies, Warren, and he owned an agency who he did some work for 3 Day Blinds. He knew what I was up to a Drips and he’s like, “Oh, you might be able to help these guys convert more of their leads to calls.” It was a problem they had. So that’s been one very successful avenue for us is referrals through agencies, right? These agencies that will work with these big brands. That will you know tee-up vendors and tools and methodologies to these brands that may help the agency win the business.
The second is just step by step social proof. So we started with Tom. Tom’s friends obviously believe whatever it is that’s working for Tom, because why wouldn’t they believe him? We did the work for them, right? And we got into credit repair with some of his friends and then they were selling the credit repair calls to creditrepair.com, right? So then we got an intro into creditrepair.com. And then that companies, we did very well for them. We helped them turn I think a 500-personnel outbound call center into a 250 person inbound call center. So much more efficient, much better CPAs, a customer acquisition costs, [inaudible 00:45:47] going to call it. They, you know, we got to mentioned at their board or to their PE level and got . . . I think we were talking to one of the biggest tax companies. It’s in their portfolio to now.
So there’s always a lot of word of mouth with these types of enterprises. They all share you know, similar advisors or boards or PE backing, etc. So if we get into, you know, a home security company that’s owned by PE with . . . what do you call it? Rocket, Quicken guys, right? The Quicken Loans, Rock Ventures. All of a sudden, it’s very easy to get an intro into Quicken so we can talk to them about their mortgage thing. We just recently closed one of the biggest or the biggest rather Medicare company in the country. And on one of their board meetings with their PE firm, another one of their portfolio companies TruGreen was complaining about contact rates.
And this Medicare company raised their hand and said, “Hey, we just rarely use the app but we’re trying out these guys at Drips. Sounds like it’s something you could use.” Two weeks later, my salespeople were at TruGreen. They closed it and we’re about to launch with them here in the next couple weeks. So it’s a lot of that, really. Like it’s a lot about who you know? What proof you have? What case study you have? Who will vouch for you when you’re at this level? That’s really what it’s all about because again we’re not going really the cold call route. We’re going much more strategic in the enterprise accounts we attack.
Andrew: All right, I’m going to come back in a moment and talk about what happened with Sprint, some of the challenges of being a bootstrap company, and then how you overcame them and what’s next. But first, I’ve got to tell everyone about Toptal. And get this, I’ve been talking about Toptal, AC, for years now and I know it’s converting well for them but in a past interview I said, “What we should do is freshen up the ads. I’d love,” I said, “to hire a writer to go and research some of the people who signed up for Toptal and turn them into case studies so I have something interesting to say.”
And so this writer, Jacqueline Shift, heard me and she said, “I want to do it. Hire me.” And I said, “All right, let’s see what you got.” And so here’s what you put together, I said “Look, I can’t have you write the whole ad. Give me some bullet points and I’ll read it.” But I freakin’ loved the bullet points she wrote. She went out and she found out that one of the Mixergy listeners, a guy named Greg Archibald, longtime listener, he needed an experienced developer for his company GreaseBook. It’s a software startup for the oil and gas industry. I love by the way when startups like gearing towards something completely different. And he found that it was difficult to find and to screen top developers.
I got to tell you, one of the best parts about being in San Francisco is if you’re trying to find and screen developers, there are tons of companies around here that you can bounce ideas off of, that you can again help screening.
But not everyone has that. And so Greg was in a bind. He didn’t know how was he going to find the right person especially in a heated job market. The local hiring pool was tough. Recruiters cost a lot of money. And so he said, “You know what? This company that Andrew keeps talking about, Toptal, has an international talent pool of the best and there’s no recruiting fee. You know, they’ve tested people. They’ve got them in their pool.” He said, “Let’s give it a shot.”
By using Toptal, not only was he able to find great developers but he was able focus on his business instead of getting distracted and looking for these people. He ended up hiring from Toptal. And as a result of that, he got selected for an energy accelerator which would not just give him some funding, and we know accelerators don’t give you the most amount of funding, but more importantly, they believe enough in you, see the vision, see the product, and they’re willing to accelerate your growth. And that’s what was happening with Greg because he signed up for Toptal. I’ve had people up and down Mixergy’s growth curve. Smaller companies, more advanced companies, and highly developed companies who need to hire a team of developers all come to Toptal and hire from them.
If you’re looking to hire, here’s a special URL where you are never going to get this offer from . . . well, not never, I don’t know, maybe in the future they will. But they’re not offering this to other people. Mixergy listeners are going to get 80 hours of Toptal developer credit when they pay for their first 80 hours in addition to a no-risk trial period of up to two weeks. If at the end of the period, you’re not 100% satisfied, meaning you’re 99% satisfied, you’re 98% satisfied. You just think it’s okay but it’s not great. If you’re not happy, you will not be billed. So all you have to do to get that offer is go to the special URL, hit that big green button and you will not start getting charged for anything.
What you’re doing is getting a call scheduled with one of their matchers. You talk to them about what you need. They will then go to their network and find people for you to talk to. Often it’s one or two people because they get a sense of who you are and they know their team really well, and then they’ll introduce you to them. If you like them, hire them and go on. If you don’t, nothing happens. You just have an interesting experience. All you have to do is go toptal.com/mixergy. That’s top as in top of your head. Tal as in talent, toptal.com/mixergy. All right. And in the past, I told you guys post this online, please don’t post it online anymore. They don’t want to offer it to everyone else. Apparently it’s only a moneymaker for them with Mixergy people.
Aaron: Well, I’m sold.
Andrew: I’m telling you, Mixergy listeners sign up, but it’s the interviewees I think that they get the most bang for their buck from. If they could, they would probably pay me just to reach you before the interview started and then just run no ads.
Aaron: Well, hiring top talent, great name, by the way, Toptal is everybody’s problem. That’s interesting. I’ll personally look into them because we do pay a lot in recruitment fees. We spend a lot on internal recruiting efforts. And it’s most medium sized companies’ biggest problem is the people.
Andrew: Hey, you know what? And they had a different issue from you as far as funding. I think the first angel investor for Toptal was this well-known investor, just an angel investor. And then because of the reputation of the angel investor, Andreessen Horowitz said, “All right, well, let’s jump in there we back them because we believe in this investor. They had an easy time raising money and I don’t think they’ve needed to do it ever since because . . . I don’t want to get too much in their finances. They hate when I talk too much about their secret stuff.
All right. You didn’t get funding. I wonder how much of it is because you just are a bootstrapper and how much was it because you are trying to get funding and they didn’t understand your business and didn’t believe in you.
Aaron: Yeah, I know, it’s almost exclusively the former. Up until last November, we never even entertained the idea of taking on partners, funding, strategic investors, etc. Candidly, we could continue to grow at the rate we’re growing, which is significant. I mean, we’re doing often double-digit growth month over month still to date. And, but what we have realized that this is a market that we’re just scratching the surface on. And while I could, you know, take our time and grow and bootstrap, you know, into forever, this is something that I think is really going to just explode over the next year. So SMS chatbots, whatever you want to call it, this idea of automating communication. Conversational marketing is one of the big buzz words right now, right, like not just direct marketing, but conversational marketing.
And it’s something that we have a good head start on, but it’s something that we’re just ill equipped to attack the vastness of the space. And we’re talking about every service company, every insurance company, every car company, every internet company, phone company that is out there, their employees at call center, which is most of these, if not all, service businesses, they should be using something better, right? It’s not the 1970s anymore. Telemarketing call centers are not as impactful as you should be. They’re more expensive these days to run and they’re getting less returns. So that is why we’ve started to come around to the idea of taking on funding to accelerate our growth and candidly kind of put our flag down as the market leaders in this.
Andrew: AC, you keep it calling a conversational . . . what was it?
Aaron: Conversational texting.
Andrew: Conversational texting. When I was talking to you before the interview started about how I was going to describe you is very much about the mechanics of getting somebody on the phone. You said conversational texting. I wonder why. What’s your vision here?
Aaron: Well, it’s really simple. It’s putting the power of the conversation back on the user’s hand, which no better way than texting, right? That being said, the user will forget. Like you getting that insurance quote is not the most important thing and your day. So they have to be reminded. It has to be humanized because nobody wants to talk to a chatbot. That’s one big difference between our system and any chatbot out there is you can’t tell it’s a bot. It is completely humanized. And when you may be able to trip it up to the point where you would be able to tell a bot, it actually still gets flipped back to a human to respond with empathy and context.
But at the end of the day, it’s a conversation before the sale has to happen, right? And it’s just like me scheduling with you. There’s certain channels that we need to go through as professionals to figure out a good time to connect. And that is happening with you and your wife. That’s happening with me and my wife. It’s happening with my employees. It’s happening with consumers all over the places. There’s this kind of micro scheduling conversation that happens before the need for a phone call. And sometimes, you know, maybe you can close the deal right over texting.
I mean, we’re playing with that. We’re playing with appointment setting with 3 Day Blinds. We’re playing with customer service and lifetime value increasing with other financial service clients. Maybe people don’t even have to take a phone call, right? Like that’s the ultimate win is, you know, a year from now, they can just get your quote right over texting. Like why do you have to get on the phone with an insurance agent these days? It’s kind of crazy.
Andrew: I do actually prefer the idea of texting to making phone calls. I love when I go to the Fairmont one of the first things they do is they text me to say, “Hi, and if you need anything let us know.” And then I was moving rooms from a regular room to a suite. I just texted them and with a picture of my luggage and the things I wanted moved they said, “Could you move it?” They said, “Sure.” I said “Is there pool?” They said, “Yes, but you can’t swim in it. It’s too small. You can’t do laps.”
So helpful. And I really felt this comfortable stopping my day to make a call. And I see where you are going with this. Let’s talk about some of the challenges here. I don’t want to give people the impression that this was just a happy-go lucky experience without any hardships along the way. One of the challenges I kind of hinted out a few times, Sprint is a big company. You tried to get them. What happened with Sprint?
Aaron: Yes. It’s T-Mobile but no big deal.
Andrew: [inaudible 00:56:21].When you first started, if you . . . Oh, I see you were saying to our producer, “If I tried to close Sprint, I couldn’t make it past their gatekeepers. Their vendor manager would due diligence and find out that we were a baby company and pass.”
Aaron: You got it.
Andrew: So it wasn’t specifically Sprint. You’re saying when you tried to go after big companies like them.
Aaron: Yeah, any enterprise, right? So when you go into big enterprises like that, and I didn’t know this until just a year or so ago. There is a vendor due diligence very similar to investing due diligence. They will look at your financial records so we just closed. I can publicly say we just signed Liberty Mutual recently. Their vendor due diligence was significant. You know, they expect a large degree of security and financial stability of a company. We are also an RFI, one of their biggest competitors who I can’t name because I’m under order not to.
And there is this so diligent that they go into our financial records, actually. They look at the P&Ls;, the financial records, the ARR of the company. And they’re looking not only just for a healthy company that’s solvent, but one that likely isn’t going to sell next year. Like if they saw that we were just ripping the ball off the cover, you know, or making, you know, 99% EBITDA, they probably wouldn’t work with us because they wouldn’t think we’d be around in a year. And it’s just so interesting how these big companies have to operate because it is a big deal for them to integrate these types of tools or services.
So they have to do due diligence to make sure that we are up to the security standards that they are. We have the correct insurance coverage that they do, or they need, you know, for liability purposes. That we are compliant with all the laws and regulations that go on in the telecom space, which that’s one of our big differentiators is we actually care about the laws and we try not to text people during the hurricanes or, you know, state holidays, or Sunday at 6:00 a.m., or whatever it may be.
We build those things into our system. So we have very robust legal opinions to that degree. But all that stuff really matters when you start going to pitch those big companies. And every time you learn. You know, the first one, they’re like, “Well, tell us about your disaster contingency plans?” And we’re like, “Oh, quick, somebody build a disaster contingency plan.” You know, things like that. Like some of the stuff you have to kind of build the plane as you’re flying it. But every time it gets a little easier, right?
Andrew: Yeah, that makes sense. And I wouldn’t have thought of it. What they’re saying is when somebody fills out one of the forms, things could be okay, but when we’re texting them the next day and maybe there’s a disaster, we don’t want to text them asking them to get on a call with the salesman when there’s a disaster. That’s the thing?
Aaron: Yeah, there’s federal laws for that. So a big, big differentiator for Drips is we spent . . . I mean, by now it’s hundreds of thousands of dollars on legal work to make sure we are not only adhering to, but also defining some of the best practices in the texting and telecom space. So yeah, there’s federal laws is that “You cannot solicit to or market to a state that is or under state of emergency.” So currently, North Carolina, South Carolina, and I think Virginia are still under state of emergency because of the flooding from the recent hurricane. So during the time of the hurricane and even thereafter until that that ban is lifted, you are not meant to or supposed to solicit to their residents. They are all . . .
Andrew: And that’s true via text.
Aaron: It’s any call, any marketing call.
Andrew: Oh, calls [inaudible 00:59:51].
Aaron: Now, because we . . . yeah. Any telecom reach out. You know, they kind of consider texting the same as a call for the laws that we have to abide by. There’s state regulations, you know, state by state. Like certain states honor Memorial Day, or Labor Day, a different day of the week than other states. There’s like a General Lee state holiday in Arkansas or something like that. I mean, there’s different days of the week you can dial at different times of the day.
Andrew: I see. Because you’re marketing to all these different places, you now have to be aware of it. And every time you talk to an enterprise client who has legal team that’s aware of it. You learn more, you go back and you improve the software. And that’s one of the reasons why you were able to grow. You also mentioned to our producer, “Look, one of our challenges is that we’re serving four dozen different verticals.” I didn’t even know there would be four dozen different verticals. I guess the blinds industry I wouldn’t think of as a vertical but that is one.
Aaron: That is.
Andrew: And then you got at the telecom industry and so on. How does it affect your business that you’re going after so many different industries?
Aaron: It’s hard. And in the beginning when you bootstrap and I’m sure there’s a lot of entrepreneurs out there know this, but you hire anybody who will come work for cheap, right? You close any deal you can. You take any money you can from any client you can because you have to, right? So that [inaudible 01:01:09] you don’t ran out of money. So that is kind of the problem that we started with was, you know, yeah, we started kind of in financial services, credit repair, student loan consolidation, debt consolidation just because it naturally, one lended to the other.
But quickly thereafter, we’re going to trade shows, we have people come up to us like, “Wow, we do real estate. We do window treatments. We do prepaid credit cards. We do insurance.” I mean, everything, right? We’re like, “Well, sure. We’re solving the same problem, right? We’re solving contact problem. People don’t want to get calls. They’d rather get a text.” So like that works across the spectrum. What unfortunately happens, though, is you quickly become a mile-wide and an inch deep.
Andrew: So what’s the difference between reaching someone who’s in one industry versus the other? I would think that it’s all the same phone.
Aaron: No. Look, the plumbing is the same meaning Yes, we’re just sending a text message to a person’s phone but there’s different intent levels, there’s different psychological profiles for different buyers. You know, somebody who’s looking for a divorce attorney is a very different user than somebody who randomly saw save money on GEICO on Facebook. So very . . .
Andrew: And you’re communicating with them. It’s not just that it’s software, it’s also the writing skills involved in creating the bot, the people who are . . . I see the challenges.
Aaron: You got it. Yeah.
Andrew: All right, one last big challenge for you guys. You guys hired a fractional CFO. What’s a fractional CFO?
Aaron: Fractional CFO is a chief financial officer that comes in for some amount of hours a week to help with strategy and projections and things like that.
Andrew: Okay, I’ve done that, again, through Toptal. Phenomenal. You had an interesting situation though. The guy looks at your data. And what happened?
Aaron: Well, so I hate to and I don’t like to point the finger on this too much. But what happened was, I didn’t realize at the time, and this was a good learning experience for me that these fractional CFOs are really meant to be CFOs, right? Like the strategy. They’re not meant to be in the weeds and checking the day-to-day transactions. And what happened was this fellow who came in to help us out was doing just that. He was looking at month over month projections, month over month spending, assuming that this month will be similar to last month as far as growth patterns or shrinkage or margin expansion or contraction.
And we were quickly running out of space at our existing office and we decided we wanted to move offices. And we did this, you know, beautiful build out. It was all budgeted. It was in the forecast. You know, it looked like we were going to be super good with tons of cash in the bank. You know, spent $100,000 on this build out including this, you know, beautiful piece of custom furniture you see in front of you with all this junk in it. And then one day Tony my CTO who is definitely the numbers guy. I mean, he is the guy that finds all the mistakes anywhere.
You know, if a nickel is missing, he will find it. He comes to me and he’s like, “Hey, man, the CFO’s projections are just insanely off. Like by $150,000,” which at the time was, you know, a couple few months of our payroll, I think. And I’m like, “Whoa, whoa, what do you mean?” He’s like, “Well, we have this much in the bank. Thought we had this much. We’re going to lose $100,000 this month,” when we thought we were going to make $100,000 profit. And it was just completely wrong. So we had a meeting with guy the next day.
And we asked him like, “Hey, how do you think this month is looking?” “Well, it’s looking great. I mean, you guys are scheduled to grow by another 30%.” I mean, we were doing 20%, 30% week over week growth at that point. And he expected that J-curve to continue and we had a bad month. You know, I lost a big client or, you know, somebody slowed down I can’t remember what but that growth did not continue. And instead of having, you know, a few months of payroll in the bank we were, you know, at a point where we were looking to maybe instead of finishing building up this new office, we might have to do layoffs because we were operating off of a bad forecast, unfortunately.
Andrew: So what did you end up doing to recover from that?
Aaron: Just struggled, you know. Me and Tony I’m sure, you know, turned off our measly salaries at the time and we scraped by and we just did what we do best, bootstrapped and, you know, resold into some companies and expanded some things and that was it. You know, we slowed down the build out of course. I mean, there was a point where we just stopped everything. There were still like dry wall hanging in some places. We were sitting on boxes and other places.
But, you know, we had to pause on a lot of hiring that we wanted to do. We had to on a pause on some the finishing some of the build outs we want to do. And we had to get right back to selling and growing. And that was when we realized like we didn’t need a fractional CFO, we needed a controller, you know, or full time staff accountant, you know.
And now we have a nice finance department and maybe soon actually we’ll look to get a fractional CFO again, which is just kind of funny. But we needed somebody in the weeds looking at the numbers day to day, week over week. And since then, literally still today, today is Wednesday, right? Yesterday, Tuesday we have a standing finance meeting. Where we go over cash flow, we go over burn rate, we go over hiring plans, what we’re spending on trade shows. And every single week we look at this cash flow now. We still don’t operate on a . . .
Andrew: When you say “we,” who does that? You and who else?
Aaron: It’s me, my co-founder, Anthony. Tom often joins. It’s us three on the board. And it’s my COO, John Dearborn. We just brought him on recently. A great, great, great hire for me specifically and Rich our controller. So it’s a team. You know, it’s a finance committee and we are every day looking, you know, are we making money? Are we losing money? How much we making? How much are we losing? What do we need to speed up on? What we need to slow down on? And that’s just the way you have to do it when you’re bootstrapping. There is no, you know, popping your head up once a month to see how the September’s P&Ls; went. That just doesn’t work.
Andrew: Yeah. And you know what? That has helped me so much and I think we need to do it even more often. I don’t do a weekly but maybe I should. Maybe I should. And make sure that all the numbers are in there once a week. All right. What’s the best part of having built this? You’ve worked hard. You almost didn’t get to finish your office. It looks like now it’s finished. You could have gotten knocked out a couple of times. What’s the best part of having built Drips up to where it is today?
Aaron: Oh, man, it’s a lot of learning for me, right? Like that’s probably my favorite part. I’m big into improvement and challenge and learning and scaling and automation. And just that the amount of data that we get to play with is just amazing. You know, we’ve had almost a couple 100 million conversations through the system so far and we still have not hired a data scientist. We still have not done much with big data. So it’s always a constant learn. It’s always a constant, you know, battle, right? Like we’re still trying to hit, like I said, double digit month over month growth numbers. Like that is a hard thing to do.
And our, you know, our 10 million ARR. But every month, every quarter, we continue to challenge ourselves. So the challenge is fun to me, you know, being a founder being a bootstrap type guy, like it’s just the obsessiveness of it is fun to me. The team is great. Building this culture and environment has been very fun and very rewarding. Often times, we’ll get dinner together at the office. We have a full time chef here so we have lunch every single day together. You know this is just building the team and then trying to attack in the market. Just trying to come up with the next challenge and the next, you know, step.
Andrew: You like you’ve picked such a great spot to be in. I mean, I say this all time, my wife and I text each other more than we call. The people I work with will send texts or chat messages to me more than email, more than phone calls and still there are businesses that are phone obsessed and I think you’re helping them get through to the way we interact today. All right. If anyone wants to go check out your business, it is the easiest.
I kept like second guessing myself when I typed it in is it drips.co, drips.is or something? No. It’s just drips.com. I can’t believe you got it for such a low price. It is a great URL. The thing that I recommend everyone do is the thing that helped me a lot is just check out that video on the homepage. It’s one of those simple explainer videos. In a minute you understand how the company works. And if you want to continue to work with them, there are lots of different ways to do it.
Probably you might want to try their phone number just to experience this whole thing for yourself. Thank you so much for doing this and I also want to thank the two sponsors who made this happen. The first is Toptal. Top of your head, tal as in talent, toptal.com/mixergy when you’re hiring. And if you want to get beautiful designs done by a crowd of designers who are going to blow your mind, go check them out at designcrowd.com. AC, thanks so much for doing this.
Aaron: Thank you, Andrew. I really appreciate. It’s fun.
Andrew: Same here. Bye. Bye, everyone.
