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. I do it for an audience of entrepreneurs who are often sitting at their desks working late into the night, or sometimes going out for runs or driving or working out and getting something to just remind themselves of how other people have gotten past some of their difficult points in their businesses and they’re arming themselves too with that knowledge, so they can build phenomenal companies. These are the kinds of entrepreneurs, the ones who I interview are here to appeal to an audience of entrepreneurs that I hope, at some point, to interview in the future.
And you’ve heard me do this more and more. People who have listened, learned, built, have come back on here to do interviews themselves. In this interview, we’re going to talk to an entrepreneur who had a job and came across a problem, and the problem was so painful that he said, you know, “I think there’s a better way and I’m going to go there out there, start a company, and come up with that better way.” He did and, as a result, Mike Brown, ended up founding Fision. Fision is a cloud-based software that specializes in digital asset management. Let me tell you what that means, and, specifically, they’re talking to salespeople.
So imagine this salesperson was coming into your office and he’s trying to explain something to you and a video would really make it clear. But where would that video be? Or maybe he wants to invite you to a golf outing and there is an invitation somewhere in the company. Is it in Google Drive? Is in his email? Is it somewhere else? Should he send a message to someone on his team, maybe his sales manager to get it? That would be kind of a waste of time.
Or maybe there is a PDF or a PowerPoint presentation the team needs to have to communicate what he’s doing. Should he email his boss and ask her, “Where is it?” In some organizations that’s how it happens. But Mike’s got a better way, and that’s what Fision is about, giving sales people all the digital assets that they need in a way that’s easy to find, easy to use, and enabling them to close more sales.
This interview, where we talk about how he did it, Mike went all in. We’re talking about a guy later in life who said, “I’m going to go all in, financially, put my reputation in, put my time in. And if this doesn’t work out, I’m going to go out and start, I don’t know, selling gym memberships to try to make a living.” That’s how committed he was to his business. I want to find out how it did. All thanks to two great sponsors.
The first will help you find a design that’s un-expectedly good because you’re going to get multiple, dozens of designs that all are geared towards your needs. It’s called DesignCrowd. Mike and I both use them. We’ll talk about them. And then the second is going to help automate your marketing so that you can actually sell more. It’s called ActiveCampaign. I’ll tell you more about those later. Mike, good to have you here.
Mike: Nice to be here, Andrew. Thanks.
Andrew: You were working at a gym when you had this problem. It was Lifetime Fitness, and you looked up, you saw a sign, and something just bothered you about it. What did the sign say, and why did it bother you?
Mike: Yeah, more than just a gym. I’m very proud of the time I spent at Lifetime Fitness. It is a resort style health and wellness company. And these facilities that we were creating and developing, we’d spend anywhere from 15 to 30 upwards to 40 million per copy, right? So brand was really, really important to us, and we were running at the time that I exited the company, I retired from there, we were running about a million, I guess, business a day through our, at that time, close to 80 locations. And we were having a hard time controlling the local brand messaging and communicating in a brand and legally compliant way with those members. In looking at the marketing place, it was really no effective technology tool. So I built Fision. That was the impetus of it.
Andrew: I think the specific thing that you and the producer talked about will help our audience understand the problem. And that was . . . and we’ve all seen this, you just mentioned how much care goes into the brand. You mentioned all the legal compliance that they care about and still, when the pool was closed, what did somebody on the team do?
Mike: So my job was to oversee all sales and operations, and I was on the road almost every single week and I would visit all of our different locations. Now partly just to stay connected with the field. But I would walk up and here’s this beautiful Chilton stone wrapped two story, 100,000-foot resort building. And somebody has a white piece of paper taped to the front door “Pool closed.” And I’d lose my mind.
I mean, you want to talk about brand, how quickly can you destroy a brand? And so that’s when it became very apparent, there needs to be a technology that local frontline employees, not just salespeople but all local employees, can got to get the necessary tools to be able to execute a brand message, whether it’s in a sign or poster or PDF, an email, being able to create an event that’s all branded and legally compliant. And so Fision does that. The companies that really benefit from Fision are large, distributed enterprise that have many, many, many users and lots of content.
Andrew: I get it. I’m trying to get to the story, and I’m telling it over the course of an hour which is why I’m interrupting, not because I don’t want to hear it, but I feel that pain. There’s so many times where I’ve gone into really nice hotels, really nice offices, everything is so polished and taken care of, and then they’ve got that ratty note with the magic marker that someone decided to use to say “Pool closed,” or, “Tomorrow we’re not going to be open,” or there’s some other issue. I get that problem. You were at Lifetime Fitness when they went through the sale and is that partially why you ended up leaving?
Mike: No, no, no. I’ve been a dear friend of the founder, Bahram Akradi, for years, decades actually. And I worked on and off with Bahram for over 30 years, so we developed Lifetime Fitness. I helped create all the systems, the process, and we took it public. We went through Sarbanes actually. I actually got to stand on the floor at the New York Stock Exchange. It was amazing, right? So I just had had my run and stock was high and it was time to, you know, cash the chips out of the casino, as they say, right?
Andrew: This is kind of a personal question, but I know you talked to our producer about this. How much money were you able to put away so that you could invest in this new business, in Fision?
Mike: You know, that’s a little personal and maybe I don’t want to divulge all of that, but let’s just say that there are multiple millions that I was able to walk away with and I have reinvested in the new casino called Fision with all of those. So I’m the pig at breakfast on this, I’m not the chicken.
Andrew: What’s the pig and breakfast?
Mike: Oh, it’s an old adage. You know, if you’ve got breakfast, you’ve got bacon and you’ve got eggs, right? The chicken provides an egg or two. The pig is fully committed to providing that bacon. So I’m the pig in this scenario. I went all in on this. My family . . .
Andrew: You knew, look, if this works out, we’re going to do well financially. If it doesn’t, I’ve put up everything. You put up almost your whole savings into this?
Mike: A large portion if not my entire nest egg, yeah. Here is what’s interesting about it though. You know, the fitness business, so people say, “How do you go from a fitness club business to running a global technology company?” The business model is identical. It’s an annuity-based business. So instead of selling memberships to a health club, I’m selling memberships to my cloud-based software, right? So I understand the annuity business model, and I’m very confident that I was extremely confident in my research that there was a tremendous need in the marketplace.
Interestingly enough, so much so that our technology received a patent this past spring. So we’re really onto something. And albeit it sounds really risky, I did my homework, did my research.
Andrew: What’s the revenue right now? It’s a public company.
Mike: Yeah, it’s a public company. It will come in under a million this year, but we’re already going to have in contract for next year already over a million for our contract revenue next year before we even start the new year.
Andrew: On contract, so people are committed to paying over a million in total.
Andrew: So you’re roughly at a quarter million a quarter is what I saw, right?
Mike: That’s correct. And now this coming year, we’ve already got that and then some booked in our contracts that we’re already delivering on. So we’re about two and half times what we started the year for our annual contract value going into ’18.
Andrew: You know what? I want to get into your story, but there’s some things since we’re talking about financials that stands out for me. Your expenses, you’re operating losses at, what, two million a year roughly?
Mike: Yeah, about half of that is paper loss. When you go public, you have to actually consider all that paper trail of those stocks and those options, right? So about half of that loss is paper loss.
Andrew: So about a million in loss and a large number of it is from sales, right?
Mike: In sales and marketing, you bet. So if you go after that enterprise market, you’ve got about a 12 to 15-month lag time from the time that you really engaged these customers until they’re providing an actual revenue stream off of your sales efforts. So there’s a little delay there, right?
Andrew: Okay. So I’m curious about what your sales process is. I’m going to make a note here to come back after we hear your story to hear the sales process. But let’s come back to the story. You have your idea, you see the problem, you’re fully committed, you decide I’m going in. What’s the first thing that you do to launch this business?
Mike: You know, I spent a lot of time with a really clever team of architects. And the thing that really separates Fision from other technologies in our space is the ease of use. It’s just like when Apple came out everybody is like, “Apple is so easy to use. It’s like they’re talking to me. The iPhone now is so amazing,” you know? So we did the same thing, how do we focus the technology so that the frontend user can use it more simplistically? So we built the tech from the end user on the field level back into corporate marketing. And there was another concept they . . .
Andrew: So was it you guys, was it you sitting down with someone who is . . . you being the software architect, a designer who designed the whole thing and then it’s time to go build it? Or did you say, “He’s designing it. I’m going to take it out to my client, show it to her, have her give us feedback, and then improve it”? What was the process?
Mike: The process was this exactly. So I gave this charge to my design architect. I said, “Look, we had a concept at Lifetime Fitness called ‘club within a club.’ And that means that every member of Lifetime had a unique relationship with the brand. I want to replicate that in the software technology. I want to create a club within a club architecture in our software so that every user could literally have a unique relationship with the technology.”
And what the enabled us to do was create this multi-tenant, multi-tier technology where we can create individual relationships and interaction with our technology to make it simple for the user. So every single person has their individual login and they have specific things that they can do, stuff that they can access and use. And so we think that’s made all the difference.
Andrew: So my salesperson would be able to actually see the PDFs that relate to her, but not the way to upload new PDFs because it’s not her job.
Mike: If you’re in Denver, you may have different material, and it might even look different when you go into the tool, into the technology than somebody sitting in Atlanta or in London.
Andrew: So this was you telling it to your designer. The designer put it together? Did you take it out to clients and say, “This is what we’re planning. Would you want it?”
Mike: Some of our original clients were really instrumental. I’d say probably post the initial 1.0 design, 90% of what we have in our technology today is input from our customer base, you know, based on an actual user saying, “Hey, wow, this is cool. If it could do this,” right? So we really paid attention to the voice of our customer and developed it in a way that they want to engage the technology. I think that’s really critical.
Andrew: So first product you come out are customer . . . so you get the design, you show it to some customers, you get some feedback, your developers put it together, you take it out to customers. Do they buy it, or do you start to realize to realize that there are some changes?
Mike: They did and . . .
Andrew: They did, they bought it right away?
Mike: Yeah. We had a couple of really nice clients. Quest Communications was one of my first clients. They were later purchased by CenturyLink. Quest used it in their B2B business sales for about 10,000 of their sales reps. And they can not only make it easier for the sales reps to use the tools, but then they can see what every single sales rep was using and being able to measure a more effectiveness and some best practices. Yeah, it was awesome.
Andrew: What did it do? What did the first version do? Was it just about video assets? It wasn’t doing email back then, right?
Mike: Oh yeah. We did emails right from the start. So we probably started with, I’m guessing, 50 to 80 different files structures that we could organize and store. We’re probably at about 200. Anything digitally created now, we can store and distribute it off of our platform. And then some cases those assets, those pieces of digital material can be localized with pre-approved content.
Andrew: Localized meaning for different countries, different languages. I’m looking at an early version of the site from 2010.
Mike: It’s not as pretty as today’s site.
Andrew: But I see the list of features. It was brand control system, email module. Email module is so that if a salesperson wants to send out an email, it’s in line with the way the rest of the company messages with like the sig file looks the same, etc. Ad Builder you envisioned it being used also for creating ads?
Mike: Yeah. Many of our companies do do that. Coupons and out-of-home displays, PDFs, PowerPoints. You know, if we have a nice email template and I’d say, “So, Andrew, nice talking to you yesterday . . . ” and I’m writing this email, “Nice talking to you yesterday. You had some information that you would like me to pass on. Here’s a link to our most recent product video.” And I can vet that right into the message.
Andrew: Wasn’t the first version very similar to just like a Google Drive or, I don’t know, Dropbox or something like that?
Mike: Yeah. You know, we get compared a lot. And when people go in and actually use it, a common term, they go, “Oh, this is Dropbox on steroids.” So it’s much more configurable. It’s much more specialized. I would liken Drobox to a big, old brick warehouse where you drive in with a dump truck and you dump stuff in the middle of the warehouse. Fision would be more like an IKEA warehouse where everything is organized by SKU number, you know right where to go to get it. It’s specific usability to me. Very organized.
Andrew: All right. You mentioned Quest is a customer. How did you get the early customers? What was your process for getting them?
Mike: Well, here’s what’s interesting about our history, when we first came out with this product, we had to teach people what digital asset management was. They were focused on CRM Salesforce. Then a few years later it was Marketo and Eloqua around campaign management. It’s only been the last 24 months where people are seeking us out to say, “Hey, we have a digital asset management problem,” right?
So we’ve got a large financial services company that I’m not going to name specific, here in Minneapolis, they’re one of the largest in North America. They have 20,000 sales reps. They know that their sales material that’s on the street is out of FINRA compliance, which is a big problem, millions of dollars in fines potential. So they sought us out, matter of fact, Marketo introduced us to them because we’re very collaborative with Marketo. So it’s only been the last 24 months that people really understand this digital asset management.
Andrew: So going back to the time when they didn’t, what was your process for explaining it to them? How did you get them to understand this is important?
Mike: We went through a very lengthy discovery process with them and we’d ask them very specific closed-ended and open-ended questions to try and point out to them that they have a pain point. But even then, they said, “Yeah, well, but we’re working out a large CRM project right now. We’re waiting to install our Marketo. Maybe we’ll talk to you next year.”
Andrew: For them CRM is not what CRM might be for another entrepreneur. CRM means two things unfortunately. CRM is like the phonebook that we keep on our desktops or in the cloud. But it also could mean the marketing automation software that we use to send out lots of emails and to keep track what people are doing on our site.
Mike: Today’s world that’s really one and the same. Salesforce is the preeminent 800 pound gorilla in the room.
Andrew: Right, right. And Salesforce has Marketo. So at Salesforce, tell me if I’m wrong about this, but an individual salesperson would go into Salesforce and update records after they talked to a customer or have it automatically updated based on the email they were sending. But if they wanted to send out a mass email, they would use the Marketo product to mass email hundreds of thousands of people in their list, right?
Mike: Salesforce has their own competitor.
Andrew: Oh, right, right. What is it called?
Mike: It’s Pardot. It was created in Atlanta. That was purchased by ExactTarget, which is an email service provider, and then ExactTarget was bought by Salesforce.
Andrew: Okay. So I can see why they would say, “Hey, look, you’re about to tell me how to fix my signs in the store or the email that some individual salesperson is sending out to someone. I want to fix this software that’s going to reach hundreds of thousands of people.” Get in line behind that. Talking to hundreds of thousands is more important than talking to one salesperson at a time, and you had to convince them that it still made sense to do it.
So how did you find the right people? How did you convince them? What was your process? Did you go into LinkedIn and look it up?
Mike: Just keep banging on doors. We used a lot of LinkedIn, a lot of referral network. You know, we just had a lot of cups of coffee.
Andrew: So LinkedIn. We could get more specific here. You would go into LinkedIn. You would do a search for what? Was it like the sales director? Was it the ad person?
Mike: The higher level sales and marketing people, right? We were calling on IT. IT at that time reported to the CFOs, and in most larger organizations, they still do. Although that’s changing rapidly, where technology is reporting in now to CMOs and because the majority of the technology the large enterprise is buying is sales and marketing focused, right? So yeah, we would call a higher level sales and marketing folks, the buyers of the product, the decision makers and . . .
Andrew: And ask them for a meeting in person or for a phone call?
Mike: Usually over the phone and then we use webinar to demonstrate our capabilities once we . . .
Andrew: And you walk them through and say, “Here’s what we could do,” and keep looking for those questions that will help them realize that they have problems. This is a pain point. Do you remember one of those questions, one that made someone say, “You know what? Actually this in an issue. It is painful”?
Mike: Yeah. How do you manage brand control and brand compliance now?
Andrew: When they hear that they say, “Damn it, we don’t have anything. No way to do that.”
Mike: And the simple thing is, “Well, how many of your sales reps are out there right now using out-of-date, rogue marketing materials and they’re destroying your brand and in some cases maybe even putting you in a litigious situation? How many?” “Well, we’ve got like 20,000 sales reps.” “So what do you think is the percentage? What if half of them or what if 10% of them are out there using out-of-compliance material? What’s your risk?” And then the aha moment is like, “Holy shit, we’ve got a problem.”
Andrew: Right. I see that. Okay. Well, let me talk about my first sponsor and then get back in and talk about once you got a customer, what did you do to keep working with them? And I can see, by the way, why reporting was so prominently placed on the original website that now they get to see how many people are out of compliance, how many people are using the latest brand assets. All right.
But the first sponsor is a company called DesignCrowd. You and I talked before the interview started about how you use DesignCrowd. Do you remember what you use them for?
Mike: Yeah, we used them to give them some ideas around branding and around our logos. And within minutes of submitting the information, they come back with just some really creative, really clever designs. I was really impressed by their service. I would recommend it highly to anybody that’s a [inaudible 00:21:00].
Andrew: Yeah. You have designers in-house, right?
Mike: Yeah, we do.
Andrew: Yeah, I have a designer I work with. I love him. He’s starting to take over a lot of the projects that we have internally, and still I go to DesignCrowd for certain things. And I’ll tell you what the big things are that I go for. Any time I want a new perspective on something, like a new image, a new design, like we have these graduates of our bot course who we certify, and they kept asking for some logo they can put on their sites or on their presentation material when they go out to speak to give them credibility that says, “Hey, I’m certified by Bot Academy. I can do this work for you. I can speak here.”
And I wanted lots of different perspectives on it, and I wanted dozens, if not hundreds, of different perspectives on it to give to them and say, “Guys, here is some of the best ones out there. Which do you feel comfortable with?” Instead of having one designer go in and pose their vision on him. And we did. We got over a hundred different designs from what I remember. I showed it to some of our . . . frankly, what I did, was I gave my user name and password to one of our best graduates and I said, “You are a designer. You pick out the ones that I should be looking at,” and she had a lot to go through.
And she picked out some. We gave feedback to everybody, and then we took, I think, it was five of the best ones. We posted it up for all our graduates and we said, “Here, which of these five do you like?” They picked the one that they like best, and that’s the one that we paid for. That’s it. Anything that anyone out there who is listening to my voice right now wants designed can be taken to DesignCrowd, just about.
So imagine going to them and saying, “I need a new website. Here’s a field that I’m going for. Here’s some examples of what I like. Here’s what I wanted to communicate.” And then not getting one designer who says, “This is it. This is what I think what you want.” But instead getting dozens of designers to give you often over a hundred different designs so that you can broaden your options, give feedback to all of them . . . well, not all. Reject the ones that you outright don’t like, give feedback to the rest.
Have them go in and give you more work. Have others submit more work and then you keep going through that process as long you have the patience for it and as long you have the excitement for it and until you find the one that you love. And my guess is that once you find the first round of designs you’re immediately going to have strong opinions one way or the other. “Man, I love this one,” or, “I hate that.” And you pick the one that you like, and you only pay for that.
If you’re into this kind of design and I’m such a big fan of DesignCrowd, I absolutely am, I urge you to go to not just designcrowd.com but go a special URL I’m about to give where they’re going to give you a discount off of up to $100 on what you pay, and they’re going to show you some of the designs that I’ve gotten through DesignCrowd and other companies like yours.
All you have to is go to designcrowd.com/mixergy. They’re going to treat you like VIPs, and they’re going to let you save up to $100 on your design project by going to designcrowd.com/mixergy. Really good company. And I agree with you, it’s great for logos because with logos you want lots of different perspectives and you want to have just enough feedback to guide them.
Mike: Yeah. And it’s not even just logos, Andrew. I mean, if I’m going to have an event or I want a brand or a get-together of my customers, there’s so many different uses. Not just a holistic logo either. There’s a variety. But I’m a big fan.
Andrew: Yeah. Yeah, I can imagine a sign for an event, you’re going to speak somewhere, you might want someone to design your slides.
Andrew: All right. Once you signed up a customer, what was the process for nurturing them, for working with them?
Mike: Yeah. Well, you can imagine if you’ve got one customer and then two, you’ve spent all of your time and they make comments, “We must be your only customer.” Oh, no we’ve got dozens but, you know, we really care about them. So you’ve got to kind of play it big, right? You got to play bigger than what you actually are, and that’s important that you nurture those first clients because if they’re not successful, chances are that’s the end of the ball game, right?
Andrew: How are you able to show that they were measurably successful because they used you so that you can then go to future clients and say, “Look, this is how we helped increase their sales”?
Mike: Yeah. Two things that we were able to show pretty readily. Number one, the marketing teams would replay and redo and republish all of this content time and time and time again. So we measured how much time are you spending in your marketing team replicating the same poster, the same banner, the same messaging time and time again. And we found that they were spending about 70% of their time reacting to field requests before Fision. After Fision, those field requests dropped to about 20%. So we saved half of the marketing team’s time because they didn’t have to republish it. It would be in the Fision system, or I could go serve myself if I’m in the field.
Andrew: What’s an example of something like that?
Mike: Oh yeah, but let’s say I do open houses. We used to do a lot of them at Lifetime Fitness. If I wanted to order an open-house banner I’d have to contact marketing. They’d have to put the order in, send it to the printer, have it drop shipped out to my location. Why can’t I just go in on a template and put a new date and time in, send it over to Kinko’s across the street, all brand controlled, go pick it up in less time than I can do the whole project that you’re just communicating, right? So [inaudible 00:26:25] we can allow our frontline staff of team members to serve themselves without having to all bottleneck go through the corporate office.
So that was on the marketing side on the sales side. The typical salesperson would spend a third of their time selling, a third of their time looking for the right materials to sell with. There’s the opportunity, right? If my sales team knows all materials I need and the latest version are in a web-accessed cloud 24/7, I don’t have to go anywhere. So I go right to what I need, get what I need, customize it, send it, download it, whatever. I could almost increase my effective selling time double.
Andrew: I feel like that third, the stats that you just pulled, came from somewhere interesting and as a result you’re able to use that to get some nods from your customers and explain to them. Where do you get that kind of data? Was it your customers?
Mike: Yes, we did. And think about this too. There’s a third opportunity here. So I’m a large global enterprise. Let’s say I’m SAP and I’m SAP Ariba and I’ve got 2,500 sales reps around the globe. How do I know what materials these sales reps are using? How can I take that information and determine which ones are being more successful?
With Fision, we give them visibility to what’s being used by whom, and then they can cross-reference that into a best practice to say, “Hey, we’re going to start doing it like Jim in Denver does it because he’s getting twice [inaudible 00:27:56]. So providing that kind of visible data and measurable data to these companies is also invaluable, and Fision does that as well.
Andrew: Right. You talked to me how you got your early customers by going on LinkedIn, but you also said referrals. What was your process for getting referrals?
Mike: Well, you know a happy customer is more apt want to say, “Hey, I’ve got a friend over at XYZ company. Man, I bet they could use this.” “Oh, great, would you like to . . .”
Andrew: You know what? I’ve never said that. I’m a happy customer of Regis, I use it. I never think, “You know what? I should go and tell my friend.” You know what I think about? How do I increase my sales? But if Regis were to sit down with me and say, “Hey, you know what? You really like your office space here.” I’d say, “Yeah, I do.” “Do you think that it’s great for companies your size?” “Yeah, it is.”
“Would you know of any businesses like yours that you’re friends with that probably should hear about Regis?” I’d say, “Yeah, I guess I do.” “Can you list some?” And then I’d go and I’d talk about one and then another and another, and then give them a list of 5 or 10. “Well, these are the kinds of people that would be interested.”
And then they come back and say, “All right, you gave me these six people. Can we contact this first person and just tell them, maybe invite them in to use the office space for free for a week?” Something like that would work. And basically, what I’ve given is a referral process that I read about that some insurance salespeople use. I feel like, yes, a happy customer is more likely to go along with this, but you still need a process, you still need some way of getting them. Are you processed that way, or is it more like, “When it comes, it comes. If they rave about us, great, they’ll rave about us.”
Mike: We make it part of our ask, part of our conversation. So our goal is to create a raving fan of our new customers. And at that point, when they’re the most excited, we’ve just launched the platform, they realized how easy it is to use, we say, you know, “Is there anybody else?” And we’ve asked questions all along. “Where did you work before? Who else do you know in the industry?” People know.
Example, so Shopko is a client of ours, and a gal that worked in the Shopko marketing department went to the Green Bay Packers. Well, guess who she called, first thing she does when she gets to the Green Bay Packers? She calls Fision. She goes, “We need your technology up here.” So as people have left our client companies and gone out, we had a gentleman that left Ameriprise Financial. We just were able to sign Ameriprise as a new client. They’re a U.S. bank now.
Andrew: So when they leave, part of your process is to keep tabs on them and then you can follow up? How do you do that?
Mike: We build relationships with these people. We try and help them solve their problem. And in the meantime, we get to know these people, and we get to care about their outcome and making sure that they’re successful. And in kind, they take a liking to us and . . .
Andrew: So it’s not part of a sales process where . . . see, because I’m thinking as we’re talking, I know part of the bot business is done using demos. I’m wondering if once we get on a call with someone and it’s not a good fit, maybe at that point when they’re rejecting us and saying it’s not a good fit right now, maybe at that point I should institutionalize a follow-up question that says, “Okay, it’s not a good fit for you. Who do you know and work with who it might be a good fit for?”
Mike: It’s exactly right.
Andrew: And so do you have it? Is it that systemized, or is it not?
Mike: We use scripted questions to make sure that we include all of the opportunities that we talked about. And as we go through in the clients services engagement with our customers, we make sure to undercover other opportunities and make sure that we build it into our normal conversation. It’s just part of what we do.
Andrew: What’s a question that you would use that might lead into more referrals down the road?
Mike: Some of the ones that we just talked about. “You know anybody else? I’m sure you know somebody over at XYZ company. We’re trying to get into Old Republic Insurance. I see that you’re connected with somebody on LinkedIn. You know them very well?” “I didn’t even think about them. Absolutely, I’ll introduce you,” right?
Andrew: Yeah. I’m a very systemized person, and I’m curious about other people’s systems and where we could be including this, especially up until now all we’ve done is email marketing automation and web automation. Now that we’re doing demos and one-on-one sales, I want to figure out where in the demo process you would include a follow-up request. How do you close more sales that way? How do you get more people into demos? So your business is interesting to me in that way that I can see that I can learn more from that.
And frankly, I’m seeing more of that happening on online businesses. Online businesses used to be more about, “How do I get more people to click the button that says ‘Buy’ and then get them to sign up and buy?” And it’s still very effective, but I’m seeing more and more businesses say, “How do I get them to click the demo button and then that leads into a sale? How do I get someone on a call with them?”
SDR is now a popular acronym where . . . is it called an acronym? Abbreviation, whatever, sales development rep where people will do nothing but call up or email potential customers and try to set them up with calls with salespeople. And I’m watching this develop and it’s really interesting to me.
Mike: Yeah, a lot of your technology sales process, not just in our company, but we’ve replicated what’s worked in the industry as well. So you’ll do an automated drip campaign out of Marketo as an example. And once that lead, those leads score a high enough score, they become a marketing qualified lead, those that are handed off to an inside business development rep and that business development rep will call him up and ask him some qualifying questions.
Which then if they answer those questions in a positive way, they become a sales qualified lead and that sales qualified lead is handed off to that outside sales rep that has a little bit more horsepower to go into their part of the sales process.
Andrew: Yeah. You know, that scoring is not something that we use enough of. And by scoring you mean you want to see which of the email subscribers is clicking frequently this week, who’s clicking on the more interesting . . .
Mike: They click on the link in my email. They go to my website. They download a white paper. All of those activities create an increasing score. Once a score gets above a pre-determined number, now you know that they’re probably a warm enough lead that you should reach out to them.
Andrew: And that salesperson, the goal is to get them on a demo?
Mike: Exactly. And we use Marketo for them.
Andrew: What’s the typical sales price? Is it per salesperson you guys charge, or is it per company?
Mike: Yeah, it’s a user-based model, right? So there’s a onetime setup fee that ranges low-end $15,000 one-time upwards of $50,000 setup depending upon the size of your organization. Larger global organizations would be on the upper end obviously. And then it’s a user and/or location based model, if we’re talking . . . well, we’ve got quite a few banking clients right now. So we’ll actually tie our pricing model to the actual branch, number of branches that they’re serving. So it could be anywhere from 25, 30, 50 bucks a month per branch location depending upon volume. It’s very cost effective for our clients, and it’s very meaningful for us.
Andrew: All right. So first customers are starting to come in. What are the improvements that you’re making to your product based on the feedback that you’re getting? As you said earlier, you obsessed about following up with them.
Mike: So our strategy is, right now, we simplify brand distribution and we simplify sales enablement. So we just acquired another technology company here in Minneapolis, which is called Velero. And Velero is like if you’re a Trello user in some of these collaborative team tools, Velero is an amazing technology that simplifies teamwork.
So we take content into our cloud that’s been created by the company. But how is that content created? Well, Velero was a tool that can assist in collaboration between agencies and marketing departments to create the campaigns and the content that gets uploaded into Fision. So our long-term strategy is a platform play.
Andrew: It’s project management software.
Mike: Yeah, it’s project management, team collaboration. It measures time and use. It’s drag and drop file structures. You can fully annotate between teams. It’s real time. It’s cloud-based. It’s very simple. It’s really cool actually. And PC Magazine just gave it a four out of five stars in rating. And we acquired that company. So that got bolted onto Fision.
So we’re going to continue to expand our functionality in our core product, the Fision platform, but we’re also going to look for opportunities to go out and acquire distributive technologies, social media distribution, analytics, and software, right? So we’re spending a lot of time on our APIs layers right now so that we’re easier plug and play.
Andrew: I see what you mean about PC Magazine. I see May 4, 2017, they gave it four out five stars, compound style project management and very similar to Trello that way.
Andrew: I feel like . . . well, there are a couple things that are unusual about them, like the PHP URLs. So it’s like if I click on how it works, the URL goes to velero.com/site/howitworks.php, the out-of-date copyright on the bottom, which is copyright 2014. It feels like it’s a product that you guys acquire that needs a little bit of updating. Am I right? One year ago is the last time they blogged.
Mike: Exactly. And we’re in the process of doing that right now, integrating that to the main platform. But fabulous little tech that just needs some loving and it needs an engine to take it to market.
Andrew: And this would be you guys, your entry point into customers, or an add-on for existing customers?
Mike: In some cases, a matter of fact, that was the entry point into Green Bay Packers. And now . . .
Andrew: And they were using this and then . . .
Mike: Shopko was using Velero and still is. And so we’re expanding the footprint in Shopko for the Velero product, but now we’re also introducing Fision to Shopko for all of their brick and mortar locations as well. So it is a great opportunity for us to get in. So we have a channel partner. We have a reseller partner.
Iris Worldwide they’re a very large global advertising agency offices, 13 offices around the world. We’re going to be doing a beta roll-out with them so that they can use this collaborative tool called Velero with . . .
Andrew: And what do they do? They help promote you guys to their customers?
Mike: They’re a global agency. They’ve got clients like HP Enterprise, Samsung, Under Armour, Otis Elevator. They’ve got hundreds of clients that that they create strategy and campaigns and content for, and they’re going to use Velero. We’re going to start working with them to use Velero in their collaboration.
Andrew: Oh, this would be project management that they use to work with their designers and their team. Got it. Okay.
Mike: So the initial introductions on the frontend to our overall platform.
Andrew: And the price is like under eight bucks per user, right?
Mike: Very cost effective, yeah.
Andrew: Okay. All right. Let me talk about my sponsor and then come back and ask you a question about going public and about a couple of other things regarding finances.
The second sponsor is a company called ActiveCampaign. If guys are listening to me and you hear me talk about scoring and what people are doing on the site and all that and you’re thinking, “Boy, I wish I could do that. It feels a little bit like advanced or maybe I wish I could do it. My software can do it but I’m not doing it myself.” Well, then that’s where ActiveCampaign comes in. ActiveCampaign is software that says, “Look, for a few years now, bigger companies have been using marketing automation. They know based on what people are clicking in their emails who had to follow-up,” right?
So imagine if someone is getting the same email as everyone else but they keep clicking on the getting started new business links . . . no problem about that, Mike. You actually set your ringer on? I always turn my ringer off. I feel like that little knob, you know, Apple just killed a button, I’d be okay if they killed that little switch. I never want to hear my phone ring. I guess that’s not an issue for you. I even talked . . . so it’s not a big thing that you have your ringer on. I talked to some entrepreneurs, every time they get an email, their computer buzzes. I don’t know how they could live that way. I thought maybe they didn’t know how to turn it off and I thought I could help them by turning it off. They said, “No, I love it. I want to know every single email.”
All right, let me come speak in a focus. Let me come back to focusing on this. Here’s the deal behind ActiveCampaign. A lot of the software that we talk about today when it comes to marketing automation would allow you to say, “Hey, here’s one user who keeps clicking on a new business, who keeps clicking on a single founder links in our emails. How about we send follow-up emails to them that are automated that are just geared towards convincing them that this is the right software, this is the right site for a single founders.” Well, the only way you can do that is if you have smart marketing automation.
Software that says, “I’m going to watch what people are clicking on and then enable the company to follow up with just messages based on what they’ve clicked on.” Problem is, that has always been too difficult and that’s where ActiveCampaign decided we’re going to make it easy. Marketing automation that’s super simple, if you want to check it out, go to activecampaign.com/mixergy. And when you’re there, here’s what I urge you guys to do, take a look at that flow chart on the right side of the page, that will immediately tell you how they work, and more importantly, even if you don’t go with them, how you should be structuring your marketing automation.
Just very simple yes/no type flow chart that instantly will show you what the possibilities are. Go to activecampaign.com/mixergy, and when you do, not only are you going to get to try it for free, you’re going to get your second month free, you’re going to two free one-on-one sessions with their expert consultants who will show how you can do smart email automations, smart marketing automation, and they’re going to migrate you for free if you’re with one of those cheaper not so good email software companies. They will migrate you for free. But it’s only if you go to activecampaign.com/mixergy.
All right, is kind of weird that in the middle of an interview I’m interrupting and doing an ad?
Mike: No, not at all. Not at all. You got to make money. You’re a businessman, and you’re the entrepreneur’s entrepreneur, so that’s . . .
Andrew: I am. And frankly they should see me sell, they should see me struggle sometimes. I think this ActiveCampaign ad that I just did right now was not one of my best, to be honest. I was a little thrown, not by your call, but by my response to it.
Mike: My phone call threw you off, Andrew. My apologies.
Andrew: No, it’s me. And also here’s the other thing, I was going a little too complicated with it, and then I saw myself second guess how I was explaining it and that threw me off. And I think the audience should see it. They should see me pat my back whenever I do a great ad for a sponsor, and they should see me not do so well because I want the reality of entrepreneurship. I want the reality of sales to come across, and I want people to see how I improve from interview to interview, and sometimes have some setbacks.
All right. Let’s get away from me and go back to you. You decided to go public. It was a fairly young company. A fairly, like sales weren’t super high. It hadn’t even hit a million dollars when you went public. Why did you go public at that point?
Mike: Yeah. The first thing I would suggest to entrepreneurs, you really need to be honest, really brutally honest with your evaluation of yourself, what’s working, what’s not. One of the big mistakes I made early on was not raising enough capital. I thought I could get enough momentum built out of my own investment from my hip national bank to get the . . .
Andrew: Hip national bank meaning your pocket.
Mike: My two pockets, both branches are involved in this deal, right? So going public it solved two problems. Number one, investors that are interested in a small growth, an early stage, small growth stage company, they’re going, “I believe in what you’re doing, but how long is my money going to be tied up? I could be with you forever and what’s my exit strategy?”
So going public not only helps with that situation, but let’s go back to the Velero acquisition. We used our stock as currency. We purchased the Velero technology, the assets of that company with stocks from our company. So there’s benefits in it. I wouldn’t recommend it to everybody. There’s a variety of ways to raise capital. This is just one way, and this is the decision that we made to do it. And I think it’s going to work out well in the long run for us.
Andrew: Did you do it in a reverse merger? Is that how you did it?
Mike: Yeah. There’s a variety of ways that folks talk about reverse merger. We actually, we did not reverse into an operating company. We reversed into what’s called a Form 10, a clean Form 10 company. And then we took it through the FINRA 15c2-11 process. Got approved, took it through DTC and got it on the OTCQ e-board earlier this year.
Andrew: Let me break that down. What is a Form 10 company?
Mike: A Form 10 company is a corporation. In this particular case, it had one large shareholder and it had no operating assets. There was no revenue. It was clean, but it was a public entity. And so that entity, basically, merged or acquired the Fision entity.
Andrew: And it was a publicly traded company with only one shareholder?
Mike: No, it was not publicly traded. It was a Form 10 shell company, right? But, yes, it only had the one shareholder at the time. Correct.
Andrew: Okay. And so that . . .
Mike: We merged the two together, right, and then that individual then gets a portion of the new co of the combined entity. So we gave up a small percentage, 4.5% of our total shares to go into that.
Andrew: You gave them 4.5% of your shares in return for having this company that you merged your assets into or merged your whole business into and now you’re publicly traded? No, you still have to go through a process, an S1.
Mike: Exactly. We still have to go through this process called 15c2-11. And what that is, is a process that you go through with FINRA to get approved, and we took that process. So we were able to become a publicly trading company for less than $100,000, and that was one of the big reasons we did it the way that we did.
Andrew: Okay. And then you’re still saying that you have all these expenses from that process that you have to spread out year after year, then what are the expenses if it’s only $10,000 to go public. I don’t know this process. I want to learn it.
Mike: A little under $100,000, I said.
Andrew: Okay, $100,000, excuse me.
Mike: And then we spent another . . . probably cost us another $80,000 a year for legal and accounting services for our quarterly and our annual reports and all of the auditing that we have to go through and compliance, right?
Andrew: And then you got to sell shares when you did this? So you sold your business to this shell company, the shell company original holder got 4.5%, you had all these shares, and then you started selling shares to investors?
Mike: Yeah. So there are shares available now. So I had friends and family investors. I had some small investors that had invested to me. They own shares of the company. So the collective company now, you know, I don’t know exactly how many. My guess is we’re probably north of 500 investors, now are shareholders in the company since we’ve been selling the stock on the open market, right? So it trades today at about $30,000 to $35,000 shares a day, and there’s not a lot of liquidity yet, but that will come in the New Year.
Andrew: And so then how do you bring money in? And so far, we’ve seen how it costs under $100,000 to do it and 4.5% of your business, where does the cash coming into the business come from?
Mike: A dilution of existing shareholders basically.
Andrew: Because you can keep putting out more shares and sell them and get money from that. How much of that did you do?
Mike: We’ve invested external to this probably $1 million.
Andrew: You mean you’ve raised $1 million by selling new stocks? I see.
Mike: Yeah, approximately.
Mike: Yeah, I don’t have the exact number in front of me.
Andrew: Okay. All right. And then I still don’t see like why are marketing expenses still so high. What you’re saying is it’s because of the way you guys went public. I guess I still don’t understand that.
Mike: Sales and marketing?
Andrew: Sales and marketing.
Mike: Yeah, sales and marketing expenses.
Andrew: Oh, this is you starting to . . . right, right, excuse me, I made a mistake there. So then what are you doing that’s costing so much to grow sales?
Mike: Well, you know, all of your sales costs, all of your commissions, all of your salaries, all of your expenses for any marketing that you do online, the expenses around your marketing automation technologies that you’re using, travel expenses, that’s all included in that.
Andrew: And that’s all 2017 salespeople software, etc., to grow sales for 2018 because you’re getting commitments up front.
Mike: Yep, that’s correct.
Andrew: Okay. Was this as tough as being in the military doing this interview and hearing me trying to figure out this whole reverse merger process?
Mike: You know what? You do interviews every day, right? This is new to me, so there’s a little bit of camera shyness when you do these interviews.
Andrew: Oh, this part is new to me because I feel like I get more insight, more transparency with your company because it is public and I’m looking here in my little Chrome book and it’s giving me all the financials. But at the same time there’s a lot that I still don’t understand about it because the whole reverse merger process I don’t understand. When I get to see someone’s financials in such detail, they’re obviously isn’t every single expense, so that brings up a whole bunch of other questions that are hard for me to go and answer online. And I’m trying to phrase my questions in a way that helps me understand, at the same time keeps the audience from being confused.
Like I said, it’s new for me just as it is new for you, and I’m hoping that’s it’s not as tough as it was like to be in the Navy and having to go do that. What was that tank that you had to scrub? I keep thinking, “I don’t want this do to be tougher than that.” You got to tell people that story.
Mike: It’s funny and I probably am going to embarrass myself on this right now. But there’s always that moment in your life where you think you’re absolutely at the lowest point. And if you have one of those stories, one of those memories, and I do, I’m at sea on a nuclear powered submarine and in order to dive the submarine, we have to have all of our hull valves and our backup hull valves totally closed, and we get green lights up in the control room. Well, there was one red light, the backup hull valve to our sanitary tank where all the human defecation goes[inaudible 00:51:26], right? So somebody had to go in to the sanitary tank. And the sanitary tank, by the way, is like a thousand gallons. It’s a huge tank. Somebody had to go in and physically find the backup hull valve and unlodge whatever was in there. Well, that was yours truly.
Andrew: Go into where the poop is . . .
Mike: The poop and the pee and the spit and everything else that goes into there.
Andrew: I never even thought of it, but of course, it’s got to be stored somewhere. You’re not just dumping all that stuff out at sea.
Mike: That’s right. Well, you do dump it at sea, but it holds for a while until you dump it.
Andrew: It does? Okay.
Mike: I had to do what they call Dive San2. So I had to go into the san tank. I’m in my underwear, and I’m literally waist deep in human defecation with lord knows what’s raising up between my toes. And I found there was a belt buckle that had jammed the backup valve in the sanitary, and I removed the belt buckle. We got the valve shut. We could go back and do our normal dive operations.
But whenever things get really bad for me in my life, I always remember, I’m not standing waist deep in human defecation. It’s not that bad. I can get through this. And so it’s my own little personal inspiration moment.
Andrew: Yeah. All right, well, you’re getting through it. You’re growing the business, and I’m glad to hear how you did it. Thanks so much for being on here.
Mike: Andrew, it was awesome. Thank you. I hope you have a Merry Christmas.
Andrew: You too. All right. Thank you and thank you all for being a part and, guys, if you’re listening, this was recorded just before Christmas. I’m going to go take the holidays off now and you’re going to take some time off. Thank you so much for doing this. Bye, everyone.