Before we get started, do you know how I’m ensuring that I get paid? By using FreshBooks. FreshBooks helps you save time, get paid faster, and look professional. One of the best things about FreshBooks is that getting started is completely free. And here’s a really amazing thing that they’re doing for Mixergy viewers. They’re giving away a birthday cake every day to a viewer who signs up for a new account. All you have to do for a chance to get your birthday cake is sign up for a new FreshBooks account and enter Mixergy in the “How Did You Hear About Us” section when signing up. The cake is a great incentive, but do it because with FreshBooks you’ll get paid faster.
Next, who’s the lawyer that tech startups trust? Scott Edward Walker of Walker Corporate Law. But don’t take my word for it. Check out what Neil Patel, founder of Kiss Metrics said about Scott. “Scott is a great lawyer. He is affordable, responds fast, doesn’t charge you for a five minute phone call, and always gives great advice.” Walker Corporate Law.
Finally, if your friend wanted to create a store online, which platform would you recommend? I recommend Shopify. Shopify stores look beautiful and they increase sales. So if you know anyone who wants to start a store online, tell them to check out Shopify.com.
Andrew: Hey everyone. I’m Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. And there he is. He’s got his first pump up there. What’s the interview that I get the most requests for? It’s an interview with a first time, unfunded, successful entrepreneur who has to figure it all out for himself instead of having it all handed to him. Well, joining me today is Francois Arbour. He is the co-founder of Premiumbeat which provides high quality, royalty free music, and he’s got an inspiring story that I was eager to have here on Mixergy to share with you. He and I met at South by Southwest, where I lost my voice and where Francois, you came to watch Mixergy live.
Francois: Yeah, great event.
Andrew: Thanks. By the way, I lost my voice. Your voice is still solid from that week. What’s going on? Did you not talk that much?
Francois: Maybe I didn’t party. We went to see a lot of talks, but I really didn’t go to one, not even one party. So, yeah, I don’t know. I’m still fresh.
Andrew: All right. I should have done that. I thought I did. I tried not to go to too many parties, and I only drank one night there and what I tried to do is do lunches and brunches and dinners like you and I had over there. That to me is the most value, when you and I just sat there and talked for an hour.
Francois: Yeah, yeah, absolutely. The last time I was here, I was there three years ago, and we partied a little more. But I’m not really into big parties, especially at lineups, like two hour lineups.
Andrew: Right, to get in. All right. So Francois, as a long time Mixergy fan, you told me that one of the things that you hate is when I ask an entrepreneur about what his revenues are and that the person hems and haws, and you want to just get a clear sense of what their revenues are. So I’m going to hit you with the toughest question up front. What are your revenues at Premiumbeat?
Francois: We’re at about $1 million a year, so that’s a run rate. We doubled within the last year, and we’re well on our way to probably grow by 40% to 50% in the next year also.
Andrew: I’ve got your revenues here in front of me now. I also have your profits from the e-mail that you and I exchanged. Do you feel comfortable sharing your profits?
Francois: Yeah, sure.
Andrew: What are they?
Francois: It’s around $300,000, $350,000 a year.
Andrew: Okay, wow, and this is a business that you guys started from scratch, you and your dad. I’ve got to ask you. The first thing that comes to mind when I hear that is, isn’t it tough to work with a family member?
Francois: For me, no. Me and my dad have an amazing relationship. We’re best friends and we have the same mindset. Most people who have family businesses are businesses that it’s like a legacy thing. They take over a business like Gary Vaynerchuk was talking about, and that might be a little more difficult because they worked for 20 years building this company and now you jump in and you have all these ideas. I can see why it could be difficult. In my case, we started the business at the exact same time and it’s a different set-up. One thing that really works with me and my dad is we don’t really care about being right, ever. I remember a lot of occasions where I worked for two weeks on something and I was really proud of it. I’d show it to him, and he’s like, “Yeah, you know what? I really don’t like it. It doesn’t work.” That’s it and I’m not pissed. It’s okay. I worked on it, but if he has a better idea, we take his idea. I really don’t care about being right. I just care about building the business and so we never fight. I can’t remember one time we fought. In the last five and a half years haven’t fought one time. What can I say? I’m not saying that everybody should do it, but I’m saying that more people should do it because it’s an amazing thing.
Andrew: There’s so much that I want to talk to you about. I want to talk to you about how you were able to take a week off of this business and go to South by Southwest, and I know that automation is the short answer for that, but I want to dig deeper into it. I want to find out about customer service because that’s one of the things that over brunch you and I talked about, and I love good customer service stories like the ones that you shared. I want to find out how you figured out how to get customers. Why don’t we go back in time and learn how you built the business, and we’ll have all of these questions answered along the way. Before we do, I kind of gave an explanation of what the business does. Maybe you can help me understand more about Premiumbeat by giving me an example of how one of your customers would use your royalty free music.
Francois: Our clientele ranges from [inaudible 0:06:45]. I always give this example. It was pretty funny, but a lady who wants to make a video of her cat and wants to put it on YouTube and she needs music. So she goes to Premiumbeat, buys a track for $29, and is super happy about her video. That’s one customer. Then on the other side, we have bigger customers. Like we have NASA is a good client of ours. They need to make a video for Mars exploration and they have music in the background. They use our music. It ranges from productions for TV, advertising, music for iPhone games, iPad games. So it’s developers, churches [inaudible 0:07:29] and whatever and they want music. It’s kind of a big range there. So yeah, that’s our clientele.
Andrew: Okay. You must be so proud by some of the ways that your music is put to use. So let’s find out how you got here. Where did the original idea come from?
Francois: I come from an advertising background. I used to be in advertising for 10 or 11 years. I was always looking for music. I used to be a Flash developer back when Flash was still cool. We needed music, music loops specifically. So it started from that. I needed music and I couldn’t find good music. I was like wow, why is there no good source of music? I mean there were a couple of good sources, but I was really having a hard time finding good music and also the big problem was you had to click through a thousand tracks before you found the one you needed. I knew a couple of composers and I decided to contact them and said, “Hey, would you want to sell your music online?” Since I had a good relationship with this particular artist, he said yes. So I talked to my father. I pitched him the idea, and he was like, “Yeah, this is going to be fun. We’re going to do a father and son thing and maybe we’re going to make a couple of bucks.” It was really not like a, “I’m starting a business. I want to overtake Getty or whatever.” It was just I wouldn’t say for fun, but almost; like just a side project.
Andrew: I remember you telling me that you thought it was going to be really easy, and from the outside, it seems kind of easy. You throw up a website, you take your friends music, you put it on the website, and you add a shopping cart somehow. There must be an easy way to add a shopping cart. People buy, you give them their order, you collect their money, you move on. Is that what you imagined it would be?
Francois: Oh yes. Yeah, what I imagined was really easy, yes. I was saying to myself and my dad, “How difficult can this be? We already have people who want to sell their music; like musicians they need money.” Most of them can’t really live off their music, so it’s so easy. You take their music, you sell it online, it’s all virtual, no shipping, no returns, no defect, no nothing.
Andrew: So what is so tough about it? When you walked in, what did you discover was difficult?
Francois: First of all, there was an element that I didn’t know about in the music industry, and quite frankly that I still don’t know about the music industry. It’s a pretty complex thing. Licensing is really complex.
Andrew: I see. So you needed to have an agreement with the musicians?
Francois: Yeah. So we were like all right, we need a contract. This is more complicated than we thought it would be. So we sat down with a lawyer and it took a while. Those decisions are very important, right? You’re saying to a composer, “I’m going to give you 45% or whatever amount of percent of the sales. You have to guarantee me that the music you’re giving me is yours.” I could get sued if it’s not my music. So it was more complicated that I thought. Also, what’s really complicated is I had to learn PHP to make the website, and I had to learn about SEO. I had to learn about everything, like e-commerce. I was a Flash developer and I had experience with building websites, but this was my first e-commerce venture. So much, much more complicated than I thought it would be. I’m glad that I was naive enough to go ahead and do it. I think it’s a great thing. Being naive in this case saved me because if you had told me that it would take 5,000 or 10,000 hours to build this business, I would have said no because we really weren’t making any money for four years there. We were making some money obviously, but we weren’t generating big profits or anything. We were reinvesting everything.
Andrew: How long did it take you to create the first version of your site?
Francois: I would say probably a year. It was pretty long.
Andrew: A year to code up your first site?
Francois: Yeah. First of all, I had a full-time job. I wasn’t full time on that. I had to learn about PHP. I had to get music. It’s pretty funny when you think about it. We launched with 45 tracks, which is ridiculous. I mean we still don’t have 100,000 tracks, but 45 tracks? I really didn’t have jazz. I didn’t really have hip-hop. It was super limited. It took about a year to get that music, convince people. You have no website, you have nothing, and you’re like give me your music and I’m going to sell it online. We put an ad in the local newspaper in Montreal. People decided to trust us, and it’s pretty astonishing to me that people would trust me with their music, which is for a musician pretty important.
Andrew: Okay. So it took a long time to get all of the tracks and to get the musicians to give you permission. It took a long time for you to figure out the legalities of offering someone else’s music for sale and protecting their music and at the same time protecting yourself. What about the coding of the site? Was there any difficulty in figuring out the shopping cart portion of the site? I don’t want to get too deep into the details, but I’m curious about that.
Francois: It wasn’t that bad. [inaudible 0:14:07] even to present [inaudible 0:14:09] a very simple system. We don’t handle the credit cards at all. We use an external service and they process the credit card. The server sends you a response like this guy bought this ID, and it was pretty simple. That was not like the hardest part. The hardest part was I had to learn PHP from scratch.
Andrew: Why did you have to learn PHP from scratch? I think that you guys are using Joomla now?
Francois: No. It’s a custom built site. Because I wanted to do it. I’m extremely curious. I love to learn new stuff, and I wanted to be in control. It was 2004, I think when we started. There was no Shopify. There were some solutions like osCommerce, but I wanted to build something flexible and it ended up working for us. But it was a lot of work. It was pretty buggy the first version. It was pretty buggy.
Andrew: What kind of bugs were in there?
Francois: Oh my god. You would click on the shopping cart and your shopping cart would empty itself and you would have to start again. It was not perfect, let’s say that. It worked. It still worked. It was a functional website and we had customers.
Andrew: So Francois, you launch a site, it’s a little bit buggy but it works, and you’ve got 45 tracks. Not huge but there’s some tracks. Now it’s time to get customers.
Francois: My first sale, I was really excited. It ended up being a friend of mine who bought a track to encourage me. The second sale was from Australia. We were really excited. We sold music in Australia. We were so big, we were international. It was at $29 a sale but we were super happy about it. So the first customers we got were from AdWords, basically AdWords. We did a couple of banner campaigns for which the ROI is horrible. It’s really, really bad if you compare it to AdWords. You can’t really compare it actually.
Andrew: Were banners the place where you imagined you would get your customers? That was the business model?
Francois: Yeah, I thought I would. Again, I was very naive about it. Yeah, real good banners, like I used to do a lot of banner advertising because I was in interactive advertising. So I was there in [inaudible 0:16:55] when Flash banners had a pretty good conversion rate actually. Pretty good click through rates. But now, and even in 2004, 2005, it was [inaudible 0:17:11]. I think we did a banner campaign on K10K.net which was a design oriented blog, a design site. It cost us probably like $5,000 or something, and it worked but not as good. When we started doing AdWords, then it was amazing. It’s like buying a customer. It’s amazing to me that you can . . . I’m going to give you like $5 and I get the paying customer. It’s super cool. We’re still investing; probably 95% of our ad budget goes to AdWords.
Andrew: How long did it take you to discover that AdWords would be your place?
Francois: I don’t remember. I don’t really remember. I can’t remember exactly.
Andrew: Was it within the first year? Was there a long period there where you were going out and buying banners and failing at acquiring customers?
Francois: Not really. We were not spending too much. We were trying to grow slowly, organically, and it was a natural process. Once we started, I remember we tried AdWords and then Yahoo had their own ad and MSN. We ended up only using AdWords because it was an amazing ROI. It took maybe about a year to figure out that AdWords was the way to go.
Andrew: Okay, so about a year to figure it out. Were there any other false attempts in between?
Francois: We made a lot of small mistakes here and there.
Andrew: For example?
Francois: We tried a bunch of banners that we thought would be really, really cool. Oh this is the perfect target, it’s only $4,000, and we were going to double our sales. It ended up generating five sales, or I don’t even remember exactly, but we tried a couple. We tried something just a couple of weeks ago that didn’t really work, but you keep trying and sometimes you find a golden nugget somewhere. It’s only $1,000 and it gets you 150 clicks a day. In terms of advertising, once we figured out that AdWords was the way to go, we really didn’t take any big risks. We had an ad in the South by Southwest magazine three years ago that kind of worked, but it was nothing spectacular. Even AdWords is not really spectacular. It’s not like getting the TechCrunch front page. It’s a couple of hundred of hits a day more or less.
Andrew: So you suddenly discover AdWords. Do you then say to yourself we can buy as many words as possible? How was it to scale?
Francois: Our business is kind of in a pretty big market, but it’s not like shopping for shoes or something like that. It’s a limited market still, so there are not 1.5 million people searching for royalty free music every day. I don’t know exactly how many, but it’s in the thousands. Some of them might click. Do you ever click on the ads on the right? Most people don’t click on these ads. Most people go by the organic results. So it’s a limited number, but it’s extremely targeted. People have their credit card ready when they click on the link and they’re like, “Yes, this is what I want. I’m going to give you my money, give me my music.” It’s good, you catch them at the exact moment where they want to buy from you. So it’s amazing. You can’t really scale it. Right now I couldn’t double my AdWords budget. I would, if I could, I would because it’s like free money in a sense. You’re buying customers. So yeah, we’re starting to look into other ways, but honestly our returning customers, once we get a customer, we keep them for five years. We’ve had customers who discovered us in 2005 and they’re still with us today. So once you get one, it’s repeat business over and over and over. It’s almost like a recurring model.
Andrew: You know what though? AdWords are great when they work, but they don’t always work right away. You still have to find out how to get the right language into those ads to get the right conversions, not just a lot of conversions, but the right kind of conversions, right? And you still want to, when someone lands on your page, to be able to welcome them in the right way. Not send them to the home page, but have them go through a funnel. How did you figure that part out?
Francois: There’s still a lot that we can do that we haven’t done. But one thing that we did a lot when we started doing AdWords is we did a lot of A/B testing. A lot of I tried this one, I tried that one, okay this one works better. And now, it seems like the secret is to ask a question. So if you type in “royalty free ambient music,” the ad is going to say, “Need Royalty Free Music?” and that one seems to be the best. If anybody wants to test this idea for something else other than royalty free music, it might work because it really is much, much better in terms of click rate.
Andrew: Okay. So the way you figured that out was just doing constant A/B testing, and Google allows you to do that very easily in their system. What about when people land on your page? How did you figure out how to convert them into customers?
Francois: We don’t really use landing pages. We send people over to the right section obviously. So if you search for ambient music, we’re going to send you to the ambient music section. That’s something we should probably do, but we don’t. It’s pretty simple, I just want to make sure that people have just two or three clicks between seeing the ad and being able to buy. Once you optimize that, I think it worked really well for us. I might start using Website Optimizer.
Andrew: Visual Website Optimizer.
Francois: But for now, it works well without specific landing pages.
Andrew: All right. So you’re sending people over to the right category. They’re starting to convert. Why then, if that’s your biggest source of paid customers, why weren’t you able to grow right away to just about the size that you are now minus your returning customers?
Francois: We redesigned our whole platform about eight, nine months ago I think. The website we had before was really not optimal. It was okay. It worked. I think we grew to sell about $800,000 with that website. It was pretty good, but the conversion right now, people buy a lot more from us than they used to. That’s mainly because we have more music. We have what they’re looking for. The site is much easier to use and much less buggy. We have more composers, more great music. So I guess people who weren’t able to find what they were looking for before, now they are and they buy and they come back. Also, the redesigning the website and what we did with our front page with the big logos; you see Burton, Hallmark, NASA, really helps a lot because people trust you. We have the Department of Commerce of the United States buying from us and companies like Lufthansa, Hallmark. These companies want to see a clean design they can trust. The old site wasn’t really that good looking or wasn’t trustworthy enough I would say. So that helps a lot.
Andrew: So the design, the logos on the site that show who has bought from you in the past, and I’ve seen that on your site. It’s very impressive, your list of past customers. And reducing bugs is what helped increase sales?
Francois: Yeah, and just making the flow better. One thing that we did with the new site was a couple of things. We knew when you spend four years living with a site that you don’t really like, you know exactly what doesn’t work with it and you know what to fix. When you spend four years, you know, people tell you what doesn’t work and you notice it. We fixed 99% of it right from the get-go. Before that, you had to click through every track. Right now, when you click on a track, you can just do next, next, next to listen to the next track. That’s a small UI detail, but it’s amazingly important. I think it’s a big part of why people think it’s easy to use because they can just sit back and go through next, next, next, add to favorite, next, next, and then they have a list that they shortlisted and then shortlist again and they buy.
Also one other thing is we automated a lot of things. Before you could buy a $29.95 license, which was the standard license. If you wanted an advertising license, which is not $30, it’s up to $300 for an advertising license, you had to call us. You had to send us an e-mail and negotiate and it was so much trouble. Right now, you check out, you select your license, and it’s all automated. It generates a PDF license for you with all of your information that you can prove you bought the song. The first site we didn’t have a member zone. You couldn’t subscribe to this website. You couldn’t go back to your previous purchases. It was pretty basic when you think about it. It’s still surprising that we grew with that site. The redesign of the site is really what helped us grow so much in the last year.
Andrew: You know what though? It’s encouraging to know that the site was profitable and did grow and did get you here even though it wasn’t perfect. Like for example, when you’re talking about how customers couldn’t go back and see all of their past orders. I was just thinking about that for my own site. I said, “Well, I need to be able to sell things, but people won’t be able to go over to a single page and find all of their past orders. Maybe we shouldn’t start until we get that ready.” I’m so glad we made that decision earlier today, just go for it. Now you’re reinforcing it. You’re saying just put it out there, you can prove it later. You can still build a business.
Francois: It’s funny because I’m very interested in the whole lean startup. Now, because of you actually, because of Noah and Steve Blank and all of these guys who are really . . . it’s pretty amazing how you can start a business today with almost nothing. But I didn’t really know about any of that when we started Premiumbeat. I think that’s what we did. We put it online even. I mean 45 tracks is pretty ridiculous, but we were proud of our website. We put it online. Before we invested too much in advertising, we had feedback. W fixed a lot of bugs and we iterated like that until we had something that was worth promoting.
Andrew: If you didn’t know that it was okay to start a business when it’s not perfect and it’s definitely better to just launch it and fix later, how did you get yourself to accept that 45 tracks was enough to launch with?
Francois: I don’t remember. One huge thing is when you do something just yourself and you don’t owe anything to anyone, it’s pretty hard to push yourself to put it on. I don’t think I would have done anything with that idea because I had a million ideas before that. Oh, I’m going to do a business one. Then I started a bunch of things that I really didn’t finish. The fact that I had musicians calling me and they were like, “When are you going to put my music online?” My dad also, I was building the site and he was like, “When is this thing going to be ready?” So I had people pushing me, so I just put it online. At some point, we were like, “All right, let’s put it online. Let’s get it started and see how high it goes.” Our expectations were amazingly low when I think about it. We were like, “Oh, if we sell one track every day, it’s going to be a fun little business.” So it was on a total different scale. Now it’s pretty serious. Now it’s my life. I breathe this. But back then, it was like a side project, so I really didn’t mind. I was super proud to have done it with my dad and we put it online with 45 tracks. Some people liked the tracks. They bought it, but we were making nothing, like $50 a day or something.
Andrew: If I understand you right, you’re saying one of the reasons why you just launched it was that you had all of these relationships with musicians who were pushing you and you had a partnership with your father and that the difference between launching this company and not following through on past companies, is that you were involved with so many people and they were all just waiting for this promise that you made to be fulfilled.
Francois: Exactly. I’m pretty sure that’s the main reason why we ended up launching it, because we owed a lot to a lot of people and people had expectations. They wanted to see a great website online soon so they could start selling music.
Andrew: Why did they have these expectations that these musicians were going to sell music? I would think that it’s a new website, the guy wants my music, he’s a friend, fine Francois take it, but nothing is going to come of it. I would think that would be the attitude most people would come in with.
Francois: I guess we sold it, right ? We sold the idea.
Andrew: How? How did you sell it to the musicians?
Francois: To be honest, I don’t remember exactly. We had Premiumbeat.com, and we put an ad in the local papers and it was just like a logo with text that says, “Want to sell your music online? This is a huge industry. Contact us. Send us your music.” A very simple page, and then we would talk to every musician. Once we talked over the phone, I think they knew it wasn’t a scam. I don’t know exactly what we did, but probably one out of every ten musicians that contacted us ended up being a composer for us.
Andrew: All right. So I’ve got a big checklist here now that we’ve got the basics of this story. I’m trying to think if there’s anything that I missed. No. Let’s go through it and just hit on everything. First of all, SEO, how did you figure out SEO and how important has SEO been for you?
Francois: I think a big part was I started doing web design with my uncle actually who hired me when I was 18 or 19, and here in Montreal he’s one of the pioneers of the Web. He was there in ’94. I think he was doing web design in ’95, like really early. He knew a lot about SEO. He still does that today. I think that’s part of why. I knew about SEO, I knew the basics. After that, I just studied it like I studied and I was really curious about it. I tried a bunch of different techniques. I don’t know. I like to learn a lot. I like to read a lot.
Andrew: What did you learn? What are some of the key insights that you had about search engine optimization that actually led to customers, not just to increased traffic?
Francois: It’s pretty basic if you know about SEO. We learned that page titles were absolutely crucial. We learned that headers, like H1 tags, were really, really important. We learned that back then, in 2004, some people were still using keywords techniques, just copying over and over the keywords. I learned that it didn’t really work as much as it used to. Right now it really, really doesn’t work. Back in 2004, you had to have real good content. I learned about bold tags, about alt tags on images, about link building, about all these things. I’m not an SEO expert, but I had pretty good knowledge.
Andrew: How much of your sales are coming from search engines now?
Francois: I can’t say exactly. If you go to our website, you’re going to notice that we also sell media players, like MP3 players on our site. If you look on Alexa, you’re going to think that Premiumbeat is media players, because as I said, I used to be a Flash developer. So I said four years ago, I’m going to develop this new Flash player and Flash music player. I’m going to put it on the website. It ended up being huge. We’re still number one or two or three for keywords like Flash music player, music player for websites. So we get a lot of organic traffic from that. The problem is it’s not really the traffic that we want, so it became a monster. It was downloaded probably about a million times. We have our players on thousands and thousands of websites everywhere with the link back to our site. There’s a link in the player, so we get traffic from that. That was a cool technique and it gave us a page rank 7, and if you look at our traffic, we look much bigger than we are in terms of traffic because of all of this attention from the players. Basically, the organic, the links, everything, the reputation of the domain name comes mostly from the music players. It’s a weird thing that you rank well for something that is really not your core business.
Andrew: This is MP3 players that people put on their website. I can understand if they want to play their own MP3s or if they want to play a program like this, the audio version of it, they need a player. So they use your player, and on the bottom, the link doesn’t say royalty free music. It says MP3 player?
Francois: Yeah, it says, “Music player by Premiumbeat,” and if you click on it, it goes to Premiumbeat.
Andrew: Why don’t the new ones say royalty free music?
Francois: It’s a weird thing. It’s a completely different market. Right now, we sell those music players. Before, we just gave them away. Right now if you want to remove the link, we sell them. You can get them unbranded and get it like a professional, like there’s no Premiumbeat link on it. We thought we would try to sell them. It kind of works, but I would say it’s probably not even 5% of our revenue. It’s really [inaudible 0:37:59] kind of fading it out more and more.
Andrew: I see.
Francois: That’s how we got a lot of our organic traffic. Now we’re getting more and more organic traffic for royalty free music, which is our core business so that’s cool. It really took a couple of years before we started getting traction for organic for music.
Andrew: So I actually did a search now for royalty free music, and I thought you’d be on the first page, but you’re on the second page of Google.
Francois: I think we’re 15 or 16. We made a decision with the redesign about a year ago that we weren’t going to optimize at all for SEO. We weren’t going to think about SEO. We’re going to build the website for the customers. And you know what? We lost some traffic. We lost about 15%, but our revenue doubled. So it’s about getting the right people on your site, and apparently those people didn’t really matter, right. It’s fun to have traffic, but I want people to buy my product. We ended up removing a lot of text that was pretty much there just for keywords. I won’t name names, but a lot of royalty free music sites, you have a huge page of text at the bottom that doesn’t really do anything. I think as a small business, when you’re trying to do this, maybe it works. But where we are now, we don’t need to be cheap to use cheap techniques or gray hat techniques. We decided to be completely clean, build websites for our users, optimize the user experience as much as we could, automate as much as we could, and it’s been a really, really good decision. Also one other thing that I think is really important is when your business is built on organic traffic, Google owns your business in a sense that if they want to change the algorithm, you’re screwed. I’ve seen some article sites right now that were making millions, Google considered them to be like poor content. They’re now like the fifth page on Google for organic. I don’t want to depend on Google for my business to be viable and profitable. So that’s why we kind of pushed more Twitter. We do more Facebook interactions. We respond to people on Twitter. We spend a lot of time taking care of customers really well. It’s been mostly word of mouth in the last year.
Andrew: Twitter, that’s right, you and I talked at brunch about Twitter, how you were getting customers from there. Can you tell people about that?
Francois: Yeah, sure. Twitter is a pretty amazing thing when you think about it, that we can do that for free now. If somebody on Twitter asks openly, “Anyone know of a good royalty free music site,” we send them a tweet and we’re like, “Hey, you’re looking for royalty free music? Check us out. If you need help, tweet us, tweet back.” People thank us. They go to our site, and they become customers. The conversion rate I don’t know the exact number, but it’s pretty big, like a lot of people end up buying. It’s one customer at a time. It’s not like casting a huge net, but this customer can bring us $500 a year, $1,000 a year.
Andrew: Going after them one at a time like that?
Francois: Yeah, one at a time.
Andrew: All right. Returning customers, I would imagine that when it comes to royalty free music, people buy one or two songs that they need, they finish their projects, and then they move on. Maybe there are a handful of people who have repeating projects, but for the most part, I figure they’re one time customers. How do you get them to come back?
Francois: Some people are like that. Some people will do an e-card for Christmas. They’re going to buy Jingle Bells and that’s it. We’re going to see them the next year for another Christmas job. If you’re a video editor or if you work on a TV show or if you work in advertising for TV advertising, you need music all the time. You’re always looking for a fresh source of music. What’s happening is most times people have those really old collections, like ’90s sounding royalty free music that came on CDs and they have to pop in the CD or they have big hard drives of 35,000 tracks that they’re all sick of most of them and they want new music. So they go to our site and they buy music. If you work in video editing, you need music on a daily basis. Some people buy like 20 tracks a month from us or more.
Andrew: How do you get them to come back to you? Considering that they found you through Google, either organic or paid search, and that Google is the biggest warehouse of everything, how do you get them to remember to come back to your site, to Premiumbeat?
Francois: Quality and customer service. Once you have great interaction with a customer, you know, the thank you economy from Vaynerchuk.
Andrew: There is the book right there.
Francois: We have customers who had problems or couldn’t find something, and we’d go the extra mile to help them. They will stay with you forever. If they can’t find what they need on your site, they’re going to choose something else because they want to buy from you because they had a good experience..
Andrew: So give me an example of how you create that kind of customer passion. One specific example of one customer that you did it with just to help me understand it.
Francois: Sometimes it’s not always flawless. Sometimes there’s little problems like somebody downloaded the track and there was a little glitch in the track and they contact you. They’re kind of pissed and they’re like, “Well, I thought this was a quality and whatever,” and we respond within I would say minutes. If we can’t solve the issue right now, I’m going to send you an e-mail, “I’m really sorry about this. We’re fixing it at the moment, right now.” The customers who were really angry at you at first really appreciate that you’re not like, “Well, this is not our problem” or you respond four days later. They really appreciate that you’re super responsive and you take your responsibility like we’re going to fix it, we fix it, we send it to them. We give them, “You’re going to have your track I promise within 30 minutes” and you send them within 15 minutes. You over deliver. You under promise and over deliver every time.
Andrew: How do you do that? Tactically how do you make sure that if someone has a problem they get a response quickly from you?
Francois: We use a service called Zendesk. That’s a customer service platform. It’s all web based, so every e-mail goes to Zendesk and then is sent to us. We can automatically set priorities so [inaudible 0:45:51] there’s the word urgent in the message, it puts this customer in urgent with a red flag or whatever.
Andrew: I think you told me also that if there are multiple exclamation points, then you know that’s a trigger. So now if somebody does that, the system knows that this is an urgent and important message for Francois to see. Where does it go to? Does it alert you on your phone? Does it do something else?
Francois: It could. It could do anything you want it to do. In our case, we’re a pretty small business. So it’s me and my dad responding, so it goes to me and him. If it’s a question that he can answer like about more licensing or more legal, that’s him. If it’s more technical, that’s me. Since it’s all on one site, he knows what I told the guy. It’s not in my inbox and in his inbox. It’s all central to one website. So he can see my response. He can see if I solved the issue or not. So it’s pretty amazing. I highly recommend Zendesk. It’s a great service.
Andrew: What else have you done with customers that has helped endear you? Do you have one other example?
Francois: I would say turning a bad situation into opportunity, like if somebody is really pissed and even if they swear at you, and it happens like people swear at you and 100 exclamation points I paid for this how come, you know really, really loud, you kill them with kindness. You’re the exact opposite. You’re like, “Thank you so much for your message. We appreciate your business.” You try to be as nice as you can and understand, and most of the times these people who were really, really angry end up sending a tweet saying, “Premiumbeat has the best whatever,” or sending an e-mail. Just making the most out of every, every customer interaction, even if it means sending them to another site. If you’re a good customer of mine and you’re like, “Hey guys, do you have this exact same Turkish music, traditional Turkish music,” and we don’t have it and we know that somebody has it, we might send them over for this particular track. They’re going to come back to our site after that because we helped them.
Andrew: Let’s talk about automation. I promised that to the audience early on. How do you automate your business?
Francois: I think it’s really critical to automate, and it’s really critical to automate the right things. There are some things that you don’t want to automate. You don’t want to automate customer service in the sense of just an auto responder. You want to engage with the customers. You don’t want to automate Twitter. I don’t want to automate that, I want to have a real, I send them a specific tweet to them and I don’t mass send tweets to everybody who mentions royalty free music. It’s a one on one thing. I don’t automate my music. Basically we’re an exclusive library. So let’s say you know somebody who has a band, he can’t just put music there and see if it sells. We filter each and every song, and now I know what sells and what doesn’t and we optimize. Every track that’s on there I know has the potential to sell. That we don’t automate at all.
What we do automate is everything from sending download e-mails. So the delivery is all automated. We also don’t do any custom work at all. So if we don’t have what you need, we don’t have it. We don’t do like, “Oh, I have $5,000 to give you. Can you produce a track?” We’re just going to send them over to the composer. We don’t take a cut out of it. We’re not about that. We’re about product, if you want to buy the product, it’s an automated system. You can buy it if it’s 3:00 a.m. in the morning that’s all automated. We’ve automated the important stuff that can be automated, and we are still doing by hand the stuff that should not be automated.
Andrew: So far that sounds pretty basic, but I know that there’s more to your automation than that. What do you do that allows you to leave for example for a week and have the business operate?
Francois: We don’t have that much customer service to do. We don’t have that much to do. It’s pretty basic. 95% of transactions happen without any involvement at all from us. It’s all automated. So the only time we have to respond by e-mail is if somebody wants a special deal, they want to do a partnership, or if you want to buy a bulk, like if you wanted to buy 500 tracks at once, then contact us and we’re going to do a bulk deal. These are the kind of more business and the other side of it is customers. “So I didn’t get my download e-mail because of spam or firewalls or spam filters,” so then we respond immediately. I have a macro, so I automate a lot of stuff still. I have a macro on Zendesk where if somebody doesn’t have their download e-mail, I have a macro that is already built in and I just have to change their name, the download link, and I can send it within 30 seconds. If we weren’t developing for the future for other projects, I think we could work two hours a day, one hour each.
Andrew: Two hours a day is what keeps this business going as is?
Francois: Yeah, and it would run and it would still grow and we wouldn’t need to do anything more than two hours a day. We don’t handle any music files. The musicians upload it to the site and it’s automatically converted. We add a voice over. It’s all server side. It’s all that was a huge part of our time consuming. Before I would say it would take 15-20 hours a week to do that and now it’s fully automated.
Andrew: To take the music from the musician and then add that PremiumBeat.com, that audio watermark to ensure that people aren’t stealing the music.
Francois: That’s been probably the biggest automation that we’ve done. It does everything. It prepares the zip file, it zips the music, converts it to MP3, adds everything; everything is done automatically so we on our side we only have to approve and put it online. We click, we listen, all right approved, and it takes like just seconds or minutes. It’s a pretty automated business now. It wasn’t before and that’s why it was growing a little slower but now I could hire somebody really not expensive, but I could hire somebody to do my job and my dad’s job for not a lot of money and we could go on vacation for a year if we wanted.
Andrew: Give us some advice. Give the entrepreneurs who are listening to us right now who have businesses that they need to spend a lot of time on. Give us some advice on how we can automate our businesses so that they run the ways that yours does and maybe it gives us room to go and travel for the year the way you described or more likely it gives us time to spend on more creative ideas or to think about our business instead of running it every day.
Francois: I would say optimize the user experience as much as you can. Before the new website we had people asking us, “How do I buy.” That’s a bad sign when people don’t know. How do I preview music? So optimize, make sure that they don’t need to ask you where the buy it now button is. That’s pretty basic but that’s very important to optimize the user flow and the user experience. Automate as much as you can like we did. Also, don’t run after the money all of the time. If somebody tells you, “I have $1,000 if you do this special thing for me,” don’t immediately assume that it’s a good idea to do it. It might be a really bad idea. You might spend a whole week managing this thing and it only gives you $1,000 or two weeks doing this thing and it takes you off from the real core business and growing your business. Don’t always say yes to money. Sometimes it’s pretty bad to take any offer that comes in. Go away from service and get into product. Anything you do, package it as a product so you can automate it, so you can scale it, so you’re replaceable. If what you sell is yourself, it’s really hard to scale. Some creative agencies they have one superstar in the agency and if this guy quits they lose a bunch of clients. If I quit, if my dad quits, we still have a really healthy business. Try to go away if you can from the service and go into product as much as you can because it’s much simpler, much, much, simpler and much more scalable.
Andrew: All right. I think that’s all of the questions that I have except for one. Last question, you’re listening to Mixergy, well how do you listen to Mixergy?
Francois: I refresh your page five times a day. I listen to every interview. I’m a huge fan and it’s pretty amazing. I don’t know if you realize it but Mixergy and you are a part of why Premium Beat is where it’s at now; and not just you, but all of your guests. I remember the iContact guy and Gary Vanderchuck, and Bob Graham, and all of these amazing interviews. They bring so much to us as entrepreneurs and I’m sure that a lot of people feel that same way out there. I’m a huge fan and that’s why I went to your South by South West event and I took VIP tickets and I was really glad to be there at that moment because I want to give back as much as I can because you gave us a lot of really cool, cool material and really cool knowledge. Very useful.
Andrew: I got to say, I try not to make these interviews about me. I want them to be about the guest and more importantly about the audience that’s watching us but it just means so much for me to hear that. I’m now sitting here, my back is killing me, I don’t know what’s going on. My back is killing me and I was just going to go home today and say forget the interview, I’ve got a few in the bank, Joe can edit them, we’ll be all right. But then I was thinking, look at all of the people who came out. Can you believe how many people came to watch Mixergy? To watch me do interviews live when there was all of this drinking to be done at SxSW?
Francois: I think since we’re all watching you from our screens you can’t see us but there’s a lot of people watching you and listening and learning. It’s pretty amazing. I think that you’re the academy of startup or business to me. It’s pretty awesome. You’re a big, big part of my days. The thing that’s also hard for me because I’m from Montreal and there’s not a big start up scene here or a big web business. I’m really having a hard time finding people to share and that’s what I love about Mixergy. People are there to learn and we’re all like minded people and I love it. Great, great initiative on your part.
Andrew: That’s something that I also noticed too. I wasn’t even sure if it made sense for me to go to SXSW. I said I should just sit here and work, what am I doing going out, but I’m really glad that I did. I got to see that there was a big audience. Sure I saw that the tickets sold out pretty early and I saw that there was a big wait list and that felt really good to know that there were that many people who wanted to see me live, or to see the work live. But to actually see them in person is even more significant. And then to have conversations the way that you and I did over brunch or the way that I did with a few other people over drinks. It helped me realize there are people in the country who not only aren’t in Silicon Valley, which of course is true, but people in the country and the world who live in cities where being an entrepreneur is a little odd. Where a few people said to me, “I tell people I want to be an entrepreneur and in their minds it’s just the dry cleaners down the street and it’s just the guy that’s taking over his father’s job; it’s not someone who’s trying to create something brand new.” It seems so odd that they get resistance and almost want to stop doing it because it seems so odd.
Francois: If you go to San Francisco and you say you own a web based business, people are like, “Yeah, of course, that’s what people do.” Here, I don’t know a lot of people who do that so it’s great to have a place to hang out with other entrepreneurs and I thank you for doing these interviews. It’s an amazing thing.
Andrew: Thank you for doing it. The other thing that’s especially great about you doing this interview is entrepreneurs who have profits and revenue the way that you do often will talk to me in private but won’t want to go public about it. They don’t want the world to know that they’re building this company. Why? What’s the point? They’re not trying to sell their business. They’re not trying to raise another round of funding. They don’t need to do it. You don’t need to do it. So I’m especially grateful to you for coming here and doing this interview.
Francois: My pleasure.
Andrew: Thank you.
Francois: Thank you for having me.
Andrew: All right, the website is PremiumBeat.com. Francois, thanks for doing the interview.
Francois: Thank you very much.
Andrew: You bet. Thank you all for watching.