Andrew: Before we get started, I want to introduce you to Haystack. Haystack is where you are going to find the right web designer for your next project. So let’s take a look at it here. If we scroll through it we can find lots of different portfolios. If there’s a company that we’re interested in we can quickly scroll through a bunch of their work and see whether we like them or not. If we’re interested in them, in them even more we can click over and see their page. Find out a little more about them. See each portfolio image, in big. So we can really decide if this is the right company for us. And if we want to follow up with them there’s their email address and their website right on the bottom so we can connect directly. We can also go to top, we can hit “save to favorites”, save it for later, and then keep clicking around. If you want to narrow your search down a little bit further you can click on the city, and I used to live in Los Angeles, so we’ll experiment by clicking on Los Angeles. And we can even narrow it by budget. We can click over here and we can say three to ten thousand dollars is our budget and find it, companies that can do the work at that price. Of course, if there is someone we like we can click over, we can either save them to favorites or we can scroll to the bottom, get their email address, and contact them directly. Haystack.com, that’s where you’re gonna find the right web designer for your next project. Here’s the interview.
Hey everyone, it’s Andrew Warner, founder of Mixergy.com, home of the ambition upstart. And one of the requests that I keep getting from people who watch interviews with me talking to venture backed entrepreneurs or to venture capitalists, is, they want to hear from people who built a business from nothing. Guys who are really in there, who were scrappy entrepreneurs. Well, I’ve got a guy who’s done it. Otis Chandler is the founder of Goodreads.com. And Goodreads, before it got any outside funding, it was him, just building this thing up. Got up to 600, let me see if I got the number right, 650,000 members. That’s intense. That’s huge. On his own, and then he went out an got funding. Before we continue with the story, Otis can you tell the people what Goodreads is, if they’ve never been on it, if they’re not one of the, one of the millions of people on the site?
Interviewee: Sorry, repeat that.
Andrew: Sure. Is the audio coming in? I know the first time that we tried this interview it didn’t work out so well.
Interviewee: Yeah, it’s looking good. It’s good.
Andrew: Okay, great. So, can you tell people what Goodreads is?
Interviewee: Right, sure. Goodreads is basically a social network for book lovers. Which means a lot of things, but most people get a lot of value out of, from keeping track of what they’ve read. So, you can kind of think of it as a virtual bookshelf. You know, one of the first things I do when I go into any body’s house is I look at their bookshelves and see what’s on there. And Goodreads allows you to keep all of the books you’ve ever read. Whether you own them or not. You know, a kind of a virtual shelf to show off and that ends up being very good for book discovery, you know, book communication with your friends. So you can kind of think of it as a book discovery tool, a book communication tool, and really our mission is really just to get people excited about reading. Which we’re very passionate about.
Andrew: And I know from looking at Goodreads, from looking at your profile on Goodreads, you’re reading “Think and Grow Rich” an inspiration for me. How do you like it?
Interviewee: Oh, it’s, it’s, it’s amazing so far.
Andrew: Yeah. Alright, let’s go back to when you were at Stanford. You were studying mechanical engineering. What’d you want to do when you graduated? What was the plan?
Interviewee: Heh, right. I think if you go back and look at my app. I probably said I wanted to be a mechanical engineer and build cars someday. And I did major in mechanical engineering and I liked it a lot. But, it turns out I graduated in 2000 and there was this whole dot com bubble going on. And it turns out that most problems in mechanical engineering are pretty solved. You know, there’s still challenges. There’s still people doing interesting things like Tesla, etc. But… So, the large degree most of the jobs I found were, you know, building printers for HP or just stuff that wasn’t getting as exciting as hearing about all the stuff going on it the dot com world.
Andrew: Was it about the, the… Was it about the businesses that were being built out of nothing that excited you?
Interviewee: Yeah, I think so. It just seemed like there was a lot more innovation going on. You know, there were guys creating things and then six months later a big company would come and buy it and that guy used to live down the hall from me and holy cow. You know, it kind of seemed like it was the wild west where you could actually create real things from nothing. Whereas mechanical engineering you weren’t going to be able to do as much on your own.
Andrew: Yeah, it’s still true today though, right?
Interviewee: I think so. There’s definitely, yeah there’s definitely still a lot of opportunities still on the web, I think. It’s still very young.
Andrew: Yeah. Alright, let’s continue. I want to get into Goodreads and how you came up with the idea and how you built it up but let’s go a little bit more back story. “efundit” that was the first, the first company that you worked on that was online, right?
Interviewee: Huh, how did you find that?
Andrew: It’s all about research online. Linked in, I think.
Interviewee: Ah, right. Yea, that was what got me into the web. Cause I was you know, Mechanical Engineer major, and these were two mechanical engineers that wanted to build a website for mechanical engineers, and it was basically gonna be an online resource for engineers to look up metallic chart properties or various formulas that you would normally find in your textbooks, but this was just gonna be easier. So I spent the summer learning HTML, and mySQL and plugging in a lot of boring mathematical formulas and chemical property charts into a website. But it got me to learn HTML and SQL which were important, cause it got me into the web.
Andrew: Do you think you could’ve learned it if you didn’t have an engineering background? Do you think you could’ve learned it so quickly?
Interviewee: Probably not. But I’ve always been an engineering minded kid. I mean I was totally the kid that disassembled every mechanical piece in our house when I was young. I had a drawer, not a drawer, several cabinets full of disassembled stuff. My mom knew to give me a broken VCR rather than throw it out. [Andrew Laughs] And I took a few CS classes – two CS classes at standford. I learned C, so I had a little bit of exposure to it, but not a lot.
Andrew: CS of course ‘Computer Science’. I remember when my brother and I started a company together, I said ‘It’s an internet company, I should learn how to program’ and I went out and I got a book on coding, and, I think after a few pages I realised it wasn’t me but I was gonna struggle with it because you gotta just have that burning desire to suceed and you can’t give up, and my brother just looked me and he said ‘Give me the book, go make some phone calls, it’s just not you’ and he was absolutely right, it wasn’t in me, but it feels like if you have it in you you got a superpower. I was talking to Lea, why can’t I think of her last name, the founder of Pounce, who told me it that it just feels like a superpower, you don’t rely on anyone else you can just build it yourself, from start to finish.
Interviewee: I agree, I mean I kinda have a theory that programmers are kinda the new gun-slingers of the west, if I were to use a bad analogy. So much depends on being able to get stuff done, and engineers are the only guys who can get stuff done, so yeah, they have a lot of power in today’s internet company.
Andrew: Alright, but, so you were taking things apart even as a kid. Were you also building or creating little businesses as a kid?
Interviewee: No I didn’t have to do that. You know I wish I could have that story, ‘Yeah I sold candy to everyone in the second grade and that was my first business’ like every other entrepeneur seems to have, but my mind wasn’t there. I was trading basketball cards.
Andrew: [Andrew Laughs] that actually I think is a good prep for a business. Better even than many of the business classes that I took at NYU. Alright so it seems to me like where you really learned the business side of things was working at Tickle.com – the company that you were with for about six years. Am I reading your history properly here?
Interviewee: Yeah that’s right.
Andrew: OK, so what was Tickle.com?
Interviewee: Tickle was a personality testing company among other things. It actually started as EMO.com which is when I joined it in 2,000 and I thought it was pretty dumb when I joined it actually to be honest but luckily it was started by some really smart people who knew what they were doing, and that was lesson number 1: People who are smart and determined to succeed, WILL succeed, even with what seems like a dumb idea, and you know, the Tickle guys were smart and determined and that’s what they did, so they took an idea to do a testing company online from an idea to a funded startup to selling it to Monster.com in 2004 for 100,000,000 bucks.
Andrew: 100 million bucks?
Interviewee: 100 million bucks.
Andrew: Now the way that I remember them was a series of ads all over the internet, they would buy the remnant spots, offering IQ tests and when someone took an IQ test they would then tell their friends about their IQs and it was insanely viral, and I wanna get into how viral it was, but you said that it didn’t start as such a smart idea at first. What was it like at first?
Interviewee: So, the founder, James [?] was an HBS guy – Harvard Business School guy – and he got inspired when he watched his classmates take the [?] [?] Carreer Personality test, and he noticed they spent two hours taking the test, and two weeks talking about it, and he was like ‘There’s something there, if people are that into it to talk about it that much, let’s do a company around it.’ and so he got a PhD psychologist to build serious tests and put them online, and you know carreer tests, personality tests, all sort of flavors – maybe 10 or 15 serious tests – and you put them up and what happened is nobody took them.
They were too serious. So then, they finally said “Okay let’s try something different,” and the put up a what kind of dog are you test. You know you basically take fifteen questions and you learn about yourself a little bit and at the end you get typed into one type. Andrew you might be a golden retriever because you’re kind of outgoing. I was a Saint Bernard because I’m loyal. You know they had all different types and this thing went viral and this was right before I joined. So they finally got an idea that went big, it was just because it was something that was fun. So that was the big lesson, serious is good but fun is viral.
Andrew: What about the business behind it, or how do you, alright so I can understand it’s fun, but if there’s not as much substance to it where’s the money coming from is I guess what I’m asking.
Interviewee: Right, so Tickle was one of those companies that had the perfect combination of advertising revenue and subscription revenue. So what we had is we animated on this fun, plus serious model and I think at the end we had maybe 600 fun tests and maybe 150 serious tests, and the serious tests we eventually figured out we could sell a result to these. So if you took a 40 question test about your personality we’d give you one page about what it meant for free and then we’d give you 15 pages about deep psychological analysis coming from our PhD psychologist about what exactly it means for your personality and how you can improve your life, and we would actually sale those for between $4.99 to $9.99 depending on the test so there was a little bit of direct consumer revenue there. Then plus we’d have advertising on the test throughout it and that ended up working because the fun tests would go viral and draw people into taking more fun tests and then some of them would take a serious test and all of it was designed to be fun and to learn about yourself.
Andrew: Alright, so one of the reasons that it went viral is because people love talking about their IQ’s or the results of their tests, what kind of dog they were. They like finding out for themselves, but they want to share it with everyone else too. But, you guys also did certain things to make it even more viral. Can you talk about some of the things that you did over at, and for the transcribers it’s tickle.com T-I-C-K-L-E.com, can you talk about some of the viral techniques that you used there?
Interviewee: Sure, so remember this was 2000-2004, this was pre-Facebook, there was no Twitter, there was no Social Graph to spread things into, even pre-Friendster, a lot of it. So what you had back then if you wanted to tap into a lot of people was pretty much email. So Tickle was viral because when you took a test it would say compare your result with your friends and it was kind of like an early social network in that there were friends except the only thing we did with them was when you took a test was show you Okay you’re a Saint Bernard, and here’s your friend Andrew who’s a Golden Retriever, and here’s your other friend Olivia who’s a Pug or something like that. So this is fun, you’re like wow, I’ve got three friends and I can see their results I want to see the rest of my friend’s results let me go send them an email. Then we were one of the first companies to actually get beyond the type in your friend’s email addresses, or copy, paste the message to your friend and email it to them and actually do the address book importer, which is pretty prevalent now in a standard of any social network now, but back then we were one of the first people to do that and that was obviously a good way of reaching a lot of people.
Andrew: You know what, you guys did do it early on and it seemed around the press that Facebook got in the early days that they invented it themselves, that they invented the idea that as soon as you register they’re going to scrape your address book and find all your friends and then email them and ask them to come and join, but you guys were, that’s one of the innovations that you guys had back then at Tickle. What else did you do that was different and that helped spur on virility?
Interviewee: What else did we do? I don’t know that I can point anything else out. I mean it was all about creating content so I mean to make something viral you have to create something that is able to go viral right? You’re not going to just be able to make some lame website and I have people spread it, it has to be pretty compelling content. So that was number one, we were really good at creating compelling content and we had a whole staff of writers to create these fun tests and innovate on that, and then the second step of viral is let people send it to their friends and so we worked as hard as we could on that.
Andrew: Did you… I remember one thing that was an innovation for us, a real breakthrough, was storing the email addresses of our users’ friends – if they allowed us to – and that meant that the next time they picked a greeting card on our site, we can say, hey ‘these are the five people who you messaged the last time, can we send it to them too?’, and in addition, can you type in a few other people and we’ll send it to them. That was huge – did you guys do anything like that?
Interviewee: Well sure, like I said, every time you had… you made a friend on Tickle. The easier you make things for users, the better; so if you tell them: You’ve got to do a bunch of work to find your friends and send these test results to you, they’re not going to do as much. But yeah, if you show them: ‘Here are five friends you compared with you on the last test, invite them to compare with you on this test’, and there’re one, two, three, four, five and there’s a button: that’s a lot more better. So reality’s about making things really dead simple for the user.
Andrew: Alright, and you talked about compelling content. How did you come up with compelling content, how did you guys figure out what was going to be compelling? Did you run a bunch of different quizzes, and then that ones that… did you test a bunch of different quizzes and only run widely those that worked well, or did you have some other system to figure out what was compelling?
Interviewee: I can’t answer that as well because I can’t take credit for doing that part. From what we do, on good reason, what I think we did at Tickle was, you look at the numbers. It’s all about stats, right. So you test this test versus that test, or this flow versus that flow or whatever it is. And you look at how many people come in and how many invites get sent and how many people can make it to the end. And you just track as much as you can and then better it. And then what wins goes first, and then you try another one. It’s all about (muffled) testing.
Andrew: The book “Think and grow rich”, I think one of its points there is to work with good people, because their systems, their was of working is going to rub off on you. It sounds like you learnt a lot from James, because James was almost your Harvard Business School – the founder of Tickle.
Interviewee: He was. He had a number of good things about him. Number one was he actually would stand up in front of the company and say ‘We don’t hire assholes here’, which is kind of, like well… “Did our CEO just use the word ‘asshole’?” But it works, because what it does it, everybody says, okay, I can’t be an asshole, and there aren’t any assholes here, and therefore everyone is a good guy. Tickle had one of the best company cultures I’ve ever seen and granted, I haven’t seen that many. But even talking about the people who’ve moved on, it was a really special culture.
Andrew: How did he cultivate that?
Interviewee: I think he hired smart people, and like you said, smart people want to work with smart people, and that just kind of grows.
Andrew: And how did he pass on what he learnt at Tickle to you? Was it just ‘watch me and you’ll learn’, or was it more formal than that?
Interviewee: Tickle had a very open policy. Once a week, someone would stand up from one department (unclear) or somebody else would kind of give an inside into the business. They were very open with all number and stats and where the business was going, and they really believe in being a teaching company, which I also believe in, from them. He essentially mentored me into becoming more than an engineer, becoming a product manager, and by the end of Tickle, I was not just a coder, I was managing a team of ten people including marketing, design, business development and engineering, and et cetera. It was all about learning how you build the product. And yet, a funny thing that he said about business school: He said “Don’t go to business school”, and you go “James, you went to business school”. He said, “I’ll teach you everything – in two days. Don’t go.” So I’m glad I didn’t do it.
Andrew: Funny how many people who went to business school would say the same thing. Mark (unclear) was here, and I asked him if he’d recommend business school to other people and he said “No, there’s so many better ways to waste your money than that”. And I see Dave Yank, who’s watching the slide has got a question. Dave, I’m going to ask your question in a little bit when we get deeper into Goodreads, but if anyone else has questions like Dave does, just punch them into twitter with the word “mixergy” and I’ll see them. Did you have shares of Tickle.com?
Interviewee: Yeah, I had basic stock options.
Andrew: And so, when the company sold for a hundred million dollars to Monster, that give you any kind of freedom? What were you able to do? Go buy a yacht?
Interviewee: Not even close.
Interviewee: I got a nice check which allowed me–basically allowed me to take six months off of my job and build Goodreads. And not work. It did not give me much more than that. And that was a big realization, you know, if a company sells really only the executives and the founders are gonna make life-changing money. The rest of us get a nice check. Maybe we can afford a down payment on a house, in East Bay. Nothing big. To get me to take the mindset of “yeah okay, I can take a year off and not go on salary and build something for my living room”, that was essentially life-changing. So, from that perspective, absolutely, it was life-changing.
Andrew: Why did you decide to start your own company instead of going and looking for another great company to work in?
Interviewee: For one, I didn’t feel like getting another job. Maybe after six years of an intense startup I was burned out. And two, I think I’ve always kinda had the idea that I would start a company some day. And both my grandfathers own their own companies and are successful. So it just always seemed like something I wanted to do.
Andrew: Okay, and how’d you figure out that Goodreads was going to be the vehicle? Where’d you come up with the idea? How’d you come up with the idea?
Interviewee: First, I’ve always been a reader. Since the second I found the Hardy Boys all the way through when I got to high school. [inaudible] I’d always kinda been a reader as a kid and I wanted to get back to that. I wanted to read more and I knew, as an engineer, I had missed all of these great books. I had never read “Pride and Prejudice”. I had never read “Sherlock Holmes”. I had never read all these classics that I knew were really good. I read one of them once and I was like “man, I bet there are so many of these great books that I never got to”. How can I get myself to be more excited about doing that? And in thinking that way, I realized “wow, books are kinda broken on the internet”.
My process before Goodreads was that I’d hear about a book somewhere and I’d put it in my Amazon shopping cart. And maybe every couple months I’d empty my Amazon shopping cart. But it’s not social and so coming from this [inaudible] testing we also built a social network right on the heels of Friendster. We built a dating site right on the heels of match.com. We built a photo-sharing site right on the heels of Flickr. All of which were successful. So we were really shocked when we were trying to do anything that was going on that wasn’t working. So having seen all this social networking going on I was like “wow, reading would be so much more fun if it was a social network and I could see what my friends were reading and I could browse their bookshelves online”. One of the sites we built, that photo-sharing site I mentioned, was called ringo.com. It had a news feed before Facebook did. Its position was “see your friends’ photos”. You would add photos and there was a news feed that had all your friends’ photos and our whole company, an 80-person company used this every day and every day there was an email update with everyone’s photos from the weekend or the day before and it was really amazing because you really got to know everyone in the company much better than you did by just talking to them because you got to see where they were and then you had a basis for a conversation.
So I wanted to provide that experience around reading. If I know what my friend is reading, or has read, that gives me a basis for conversation around that. And plus it’s more fun for me because I get to discover books, etc. So I realized that a niche social network around reading, much like a social network around photos, would probably work. Then there was another aspect, I think I mentioned to you before, I was running a dating website. And what I noticed about dating was that you had big generic social networks. You had match.com, you had americansingles.com, and eHarmony, and those are great. But people started to get burned out on those big generic sites. They wanted more of a community. So then they started going to these niche sites. If they were Jewish, they would go to JDate. If they were Christian, they’d go to ChristianSingles. If they were black, they’d go to a black dating site. You know, for pretty much every ethnicity, every race, every sports activity, anything you can figure that you can create a community around there was a dating site for that. I actually found a dating site once for people who golf. I don’t think it worked. But the point is, you went from big generic to lots of little niche ones and the niche ones worked because they were tight around a community and the interests that people liked.
Interviewee: And I could see social networking was probably going to do the same. And I think it has. You know, today we have Goodreads for books and we have Flickster for movies and we have Netflix and we have LastFM for music. And there’s a lot of…pretty much everybody’s building a social network these days. And I think for every niche now you can find a social network around that. And then there’s Ning. Ning has built like what? 160,000 social networks or something like that? So that was my realization.
Andrew: That’s kind of interesting that the next big trend to come out I wonder if instead of trying to copy the big company, we can niche it out and focus on a specific area that we might have a more…a bigger chance of succeeding. I can’t imagine what the next thing is going to be. Maybe it’s going to be some kind of mobile, social networking that we can all access on our iPhones. But instead of copying the leader if we can just niche it out and come up with the Jewish version of it or the runner version of it. Maybe there’s the business model. Or do what Ning did and allow people to create small niches. Big Space, I see your note. Thank you. She’s loving that line that you said, “I’ll teach you everything about business school in two days.” I love it too Big Space. Okay, so that’s where you came up with the idea. Did you code it all up yourself in the beginning?
Interviewee: I did. So remember I was a software engineer even though I didn’t code as much in the last year and a half at Tickle. But I was really excited to learn this hot new language called Ruby on Rails. And I had moved to LA…I had followed a girl to LA and so I didn’t know a lot of people down there even though I grew up down there and I didn’t want to get a job, like I said. So I just sat in my living room and I decided to learn Ruby on Rails and code this idea. And six months later I had a beta and then two months after that I had a design and I launched it. And it actually launched under Goodreadz.com with a “z”. Little bit of Goodreads trivia. Luckily the guy who had Goodreads.com with an “s” sold it to me otherwise I’m not sure if it would have taken off like it did.
Andrew: How expensive was it? Are we talking thousands of dollars? Hundreds of dollars? Tens of thousands?
Interviewee: Thousands of dollars. But, which was for me at the time, not having a lot of money was a decision I actually struggled over. I can’t believe I struggled over it because now it’s a no-brainer. You know, James had another bit of wisdom for me which was a good domain will give you a 30% extra chance of success. And I think a lot of companies don’t realize that when you look at all the dumb domains out there.
Andrew: I’m going to save that for Mixergy.com. Nobody ever knows what I’m talking about when I say, “Mixergy”. I should have gone for Mix Energy or Mix Synergy. I don’t know. Not Mixergy.
Interviewee: Mixergy’s good, I think.
Andrew: It’s working now. I’m beating it into people’s heads at the beginning of all my interviews. The design. Are you a designer? Did you design it yourself?
Interviewee: I’m not a designer.
Andrew: How’d you get the first design?
Interviewee: I had an absolutely horrible design at first and then I had one of the Tickle designers, friend of mine, do the design and he was really good. So he came up with the current look and feel of most of it.
Andrew: How’d you get the initial users?
Interviewee: So we launched it, I think, in December of 2006. And my wife and I, I kind of view my wife as my co-founder. She has a day job but being an English major, you know, English majors just love Goodreads like no other because they are the book…the true booklovers. Or the most hardcore booklovers. So she’s really been into the product and we kind of view it as both of ours a little bit. So we both launched it, blasted out an email to all of our friends and we got it up to…I don’t know, I think after a month, from December to January, we got it up to about 800 people with our friends and friends of friends, just kind of organically grown. And in early January I finally switched the name from the “z” to the “s” so we looked a little more official and worked out a lot of the initial bugs. And then I think in mid-January Mashable picked us up. And that’s when we went from five users a day to 100 users a day and then kept going up from there. And then we kind of got into this blog phenomenon. So it turns out what had been going on, people who had this desire to share their thoughts about books, they had all been using blogs. Blogger or WordPress, whatever. And they had little rings of blogs where I’ve got my ten blog roll, front book blogs on the side and every time they read a book they’d write a blog post. And these guys just picked us up like crazy because it was essentially what they wanted to do only better.
So suddenly we were just being mentioned in all these blogs. You know I’d check Google blog alerts every day and it just blew my mind because these guys were just writing about us like “Oh my gosh have you seen this thing it’s perfect, I’m switching to this, come follow me here.” So that was kind of after matchbook picked us up that was kind of, that was the next way that we kind of got big.
Andrew: I remember one of the things we talked about, you spoke at a live Mixergy event about how to build virility into your product and you said that when a user registers you’d ask them for their friends immediately, right? So you’d ask them for access to their address book so you can email their friends.
Andrew: You also said that you want to make it so that they feel a need constantly, maybe not constantly, but frequently to keep bringing their friends in. That they should see that the place doesn’t feel as good, doesn’t feel as comfortable without as many friends on it. Can you talk about that?
Interviewee: Sure. So, if the product is going to be viral it has to be useful, more useful if there are friends then if there are not. So Goodreads was built to do this, our position is not catalog your books, our position is see what your friends are reading, or get excited about reading through your friends. So, everywhere on the site you go we don’t show you like book reviews about Harry Potter, we show you here’s what your friends thought of Harry Potter, and we show you here’s what everybody else thought of Harry Potter. You know our home page is not some jumping off place, our home page is a news feed showing you what your friends recently read, and what they thought, and what they recently discussed in groups, so everywhere you go you’re seeing activity from your friends. And, if you’re on the site and you have no friends, then everywhere you go it’s saying you have no friends who’ve read this book, add some friends. You have no friends who are discussing this right now, add some friends. So you know this idea is kind of built into it, and everywhere you go on the site you’re kind of getting this reminder that there’s stuff happening here and your friends are talking about it, and that just kind of helps get the concept across that hey, I should add friends. Any good social network does that well.
Andrew: What else worked well? What about groups?
Interviewee: Groups work really well. You know for us we had a problem where Goodreads was about cataloging your books so you come in and you’d add a bunch of books and you’d say what you thought of them, and maybe you’d go kind of nuts. Like about 10% of our users went kind of nuts and would add everything they’ve ever read. You know they’d spend half a work day going down memory lane, all the books I read in junior high, all the books I read in high school, and it’s a kind of fun process to go through actually. It’s kind of like what Tickle provided, you kind of get to look back at yourself and think like, man what was I like in junior high, what did I read? You know personally, I can’t think of junior high without thinking of Danwich [sp] is when I first read that, or Lord of the Rings, which is when I first read that. But, after you go through this process of adding all the books you want to add at that time there’s not much left for you to do. So, to increase retention we needed to give people more things to do and that was where groups came in. So now people, I mean our groups are amazing now, we have book clubs that have thousands of people in them that read two books a month. You know the Sci-Fi and Fantasy group on Goodreads is one of my favorites, those guys are just amazing, and there’s so much discussion going on, and there’s so much excitement going around all the books that people are reading. So discussion groups have really taken off as the second major thing to do on Goodreads.
Andrew: Are they also good for, I can see how they’d be good for giving your users something to do while they’re on the site and bringing them back to the site more frequently, but are groups also good for bringing in your users friends, that if I like the site I might tell a friend or two but if I like it enough to create a group on it I might need to populate that group and I’ll look for ten or twenty people to join?
Interviewee: Definitely. You’ll notice that if you create a group on Goodreads the next page is invite your friends to your group on Goodreads and I wouldn’t say those are insanely viral like that because you’re not going to invite everybody, but it definitely helps.
Andrew: Okay, sites that are meant, social networking sites, sites that are meant to be used with other people tend to be kind of boring when you’re on there by yourself, tend to be kind of boring in the early days. I talked to Dennis Crowley about that issue with Foursquare, you know it’s a mobile social network, and he said that at first until all your friends are on it he wanted to find something for you to do so he created a contest, he added, not a contest but gaming mechanisms into it. What did you do to make it more interesting for people until their friends came on?
Interviewee: It’s a very smart point, because if something is boring, if you sign up for a service and there’s nothing for you to do until someone signs up, you’re just going to leave, right? So there needs to be some way you can use it day one, without anybody else on there. And Good Reads it was obvious. It’s cataloguing your books. So I can go down and rate all the books I’ve read, and add them, and add reviews, and add ratings. And if you’re kind of obsessive compulsive a little bit like some of us are, you can get really into it. You can spend hours on there. We allow you to actually create custom shelves. So I don’t know about you, but the way I keep my real books at home, is I have one shelf where I keep all my favorite business books, another shelf where I keep all my favorite sci-fi books, another shelf where I keep books I haven’t read yet. So I kind of already had it segregated that way at home. I wanted that on the site. So now you can create a custom shelf and put all the books you want into it. So it’s kind of fun like that. So giving users the ability to do that means you can use it without your friends being on there.
Andrew: Now onto Dave [Yanik’s] question. He says he loves Good Reads, he loves the community on there, and he wonders what you’re going to do to get authors more engaged.
Interviewee: Right, that’s actually a big focus of ours right now, and has been for the last two years, I think. Because one thing we noticed early on was that we’d be browsing around and some guy’s profile would say ‘Hey, I’m so-and-so the author of this’ and we’d be like ‘Whoa, there’s really cool authors hanging on our site’. I can’t remember who I was thinking of but guys with serious cred. were creating profiles, and I said we’ve got to make these guys special. And we’d already built it so every book has an author profile that lists the titles by that person. So we allowed the authors to kind of take over their author profile. And this is kind of like what MySpace does for bands. The band can have a profile and show off their music and their events. So we’ve got that for authors. We’ve got I think over 8,000 published authors who’ve signed up and said ‘I am this person’. You don’t have to be a published author to do this. You can self-publish through any of the self publishing sites like [LuLu] and come on and even if you’re just writing a book you can do it do. But most of them are guys who published a book or self-published a book and they’re trying to figure out ‘How am I going to market my book to people?’ And this is the biggest problem that authors are facing right now. Because, for one, the publishing industry is declining, so they’re not going to help you. If your name is Stephanie [Myer] or Dan Brown, then they’re going to help you. If your name is Chris Anderson or Malcolm Gladwell they’re going to help you. But that’s the top two percent of authors that publishers are going to be helping them. And by helping them I mean actively getting them into the press and spending money, marketing money, to promote the book. Beyond that, publishers do not have budgets to help market their titles. So pretty much it’s up to the author. Even if you get published by Harper Collins or Manninghouse, great they’re going to put your book in the Barnes & Noble store but
they’re not going to market beyond that. [Break in audio] So what a lot of these authors are realizing ‘Hey, I’ve got to be out there on the internet collecting fans and gaining readership.’
Andrew: How are they doing that? I actually interview authors all the time, and I can see day one, when I talk to them, before their book launches they are so freakin enthusiastic. They finally have written a book, it’s going to be out there, people are going to know their name. Talk to them a couple months later after the books been on the shelves for a while, they are so depressed they don’t even want to talk about the book anymore. They don’t want the interview; they don’t want to be on anywhere. They just want to move on with their lives. Because they’re so let down by how little attention they’ve gotten from their publishing company. They’re so let down by how people aren’t paying attention to their book in the world. What can they do as authors? How can they get their books out there? How can they get people to read them?
Interviewee: I mean that’s the challenge. So for some perspective, it used to be, say maybe 20 years ago, all you had to do as an author was write a book, hand it to your publisher, they would take it do their thing, you’d get a check, you’d go back to writing the next one. You didn’t have to go about marketing it yourself. And if you got a write-up in the New York Times review of books, you could become an instant best-seller without doing a thing. You know I was talking to one of my favorite authors, Steven [Pressfield] who told me that exact thing. His books ten years ago they would just become best sellers by getting in the New York Times. Now he gets the same write-up and nothing happens. So it’s gotten a lot harder. And it’s become more on the author to market themselves. That’s actually one thing publishers look for in an author, is do they have a way to market it?
You know, maybe in their job they’re a professor of something or a TV personality so that they know they’ll be able to market it on their own. That’s actually a big asset which is kind of sad because it means that first time writer who’s got an amazing idea or an amazing story to tell is not going to get the same chance that, you know, I don’t know, Sarah Palin is going to get.
Andrew: Good example, by the way. So if an author wants to think of himself as an entrepreneur and get a following before he gets published, how do they do it? I guess, is it enough to go on Goodreads and create a community and create a community on Facebook? Can you ever get a big enough community to make it worthwhile?
Interviewee: I think you can and there’s certainly examples of guys who’ve done that. But yeah, I think you need to be doing everything and anything you can. So, I mean, first of all it depends on the content of the book. You know, if you wrote a book about…I can’t come up with a good example. But if you wrote a book about a certain topic you should go to people who…find communities around that topic and market to them. Don’t…a lot of authors I think get depressed because their publisher tells them to go do signings around the nation and so they go to some Barnes & Noble store in Ohio somewhere and ten people show up to sign a book and they just get, ‘Oh man, what am I doing in Ohio with ten people?’ That’s not going to move the needle anymore. But actively working at it, getting into doing speaking events around the book, doing readings and absolutely social media, I think, is big. It depends on, again, on the book. And it also depends on the author. Some authors don’t get into it but go look at Paul Coelho who’s a bestselling, international bestselling author and that guy in on Goodreads every day. He’s on twitter every day. He’s on Facebook every day. MySpace everyday and he’s just posting little stuff, little snippets, things he’s thinking about. He’s talking to fans and he’s got big followings on all those services.
Andrew: Is that really him who’s going out on all those networks? Is that him on twitter? Him on Goodreads? Him on everywhere else?
Interviewee: I think it is. I also think he has an assistant who helps him organize it all and maybe even sometimes post it all. And that’s okay. But if the author’s not into it, it’s not going to work.
Andrew: And he’s a huge author with a huge following and a great track record and he’s still out there hustling, selling, connecting, building his audience every day.
Interviewee: Right. And if you think about it, from an author’s perspective now is more exciting than ever because now you can actually interact with your fans in a way you never could before. You can get real time feedback about something you write. Or much faster feedback about something you write. So now you have the opportunity to become a better writer by putting yourself out there more and more often and seeing what people like and don’t like. And this is the way you build any product, right? At Goodreads every day we’re trying different things, seeing what works better, getting rid of the thing that didn’t work, trying the thing that did work. And it’s an iterative process. And I’m no author. I should say that. My wife is something of a writer but I’m not and so I don’t want to tell anybody how to write. But I think, you know, my sense is from talking to authors that that’s kind of becoming more of what they have to do.
Andrew I’m seeing Scott Simko who’s watching us live is saying, ‘GRR Martin has a big following on his blog.’ I don’t know GRR Martin. Am to admitting some kind of ignorance here? But yes, I have seen the bloggers, I have seen the podcasters built up a big enough audience to then parley that into book sales. Dave Yenk, again, I’m reading everyone’s twitter names here, he’s saying, ‘You’d think that Goodreads would allow authors an easy way to get in front of their target niche’, I’m guessing is what he means. Yeah, you guys do. You allow them to connect with their readers.
Interviewee: Right. So one other thing we’ve done is we’ve figured out, ‘Hey, let’s not just give these authors a platform to connect to their fans but let’s actually let them get in front of the entire Goodreads audience.’ So we built a self-serve advertising product where you can sign up right now with a credit card and buy advertising for your book on Goodreads. And this is very similar to the Facebook self-serve product or the MySpace self-serve product. Or even the Google AdWords self-serve product in that it’s cost-per-click based. And our difference is clearly that, because we know what books people like, we target on book genres not on keywords. So it’s not keyword based like the other ones; it’s book genre based. So if you have a new book about science fiction…
Interviewee: Science fiction and we want to reach our science fiction readers. Now it’s really easy to put down a hundred bucks and see, hey do I get any traction, and… Go ahead.
Andrew: How much are the business side of things? I love that, I love the clever thinking, the clever business thinking, behind Goodreads. How much of that is coming from you? A person who’s an engineer who wants to develop, who wants to think about engineering problems, and not financial problems.
Interviewee: It’s all coming from us.
Andrew: I mean you personally. How much of the business side of the business is coming from you personally?
Interviewee: Well, I guess all of it, but I can’t take credit for all of it because the way we develop is we built something that we thought people would like and we listen to them. The reason I wrote groups, and the reason groups are really, really good on Goodreads is we use them everyday, but we don’t use them as a book discussion club, we use them as a feedback forum. So we’ve essentially built a really good way for our users to talk to us everyday and half of what I do is I listen to what our users are saying about various features we’ve built, about various ideas for things we could build, about things that we have built that might be buggy, and then I go react to it. I say “Okay there’s a lot of users here that are really, really wanting this or that,” and then I can prioritize what we’re going to build. So am I coming up with these ideas, kind of, but really it’s our users who are coming up with it and saying “Gee it would be really great if you did this,” and I go “Yeah, you’re right,” so it’s not that hard actually, you just have to listen.
Andrew: How can you decide which ideas you listen to? I’ve done several interviews here with entrepreneurs whose companies have failed and what they say often is “I just gave everybody what they wanted, I was told I was supposed to go into the community, listen to the feature request, the product request that they had, and give them what they want, but then I ended up doing everything and my business lost it’s focus and I was too distracted. How do you know what to pick? What to give them and what not to?
Interviewee: I think that’s the trick and I don’t know if there’s a right answer, but we try to judge every new feature on kind of three criteria, and they would be: number one is it going to get us more traffic, number two is it going to make us more money, and number three is it going to be stickier? Is it going to increase our user retention? So we kind of, I actually have a spreadsheet where I’ve got a product and then I give a rating on each of those three criteria and then I come up with a total priority. Doing that process helps you think, okay well here’s a feature that would be really cool and maybe it’s going to really increase user retention but it’s not going to help us at all with revenue or getting new traffic, so maybe it’s not as important as this other idea which is going to really make us money and increase retention, or this other idea which is going to get us new traffic and increase retention. Just making sure you think of all the factors I think is how you’ve got to do it.
Andrew: I see. Alright, how many members do you have now?
Interviewee: Now, we’re at about 2.7 million registered users.
Andrew: 2.7 million registered users I said in the beginning you got up to 650,000 on your own, no outside funding. Do you have some advice that you can give to other scrappy entrepreneurs who say, “I like the way Otis did it, he didn’t go out and look for funding first, he built his product first, I want to duplicate that approach.”
Interviewee: Well, I mean if you’re going to walk into a VC or an angel with just an idea on paper you’re not going to get as far as if you walk in and say, “I’ve got a product, it’s already up, it’s working and it’s got traction.” You’re in a better bargaining position. So that’s important to understand, but it’s easier said then done. I think the trick is going back to what you said in the beginning, it’s having the rock star engineers. If you’ve got a guy on your side that can build you’re farther ahead, and luckily I was that for yourself, but every time I’m at a Mixergy event and I meet some guy who’s like “I’ve got this great idea, but I need a good engineer and some money, what do you suggest I do? Should I go outsource to India or whatever?” I’m like no, just get a good engineer, get a smart guy out of college, give him a large piece of your company, make him your right hand man and go build something before you do anything and prove that it works.
Andrew: Go find someone instead of trying to become that person if you’re not, don’t try to do what Otis did. which is go out and get the book and try to learn it on your own. If it’s not you focus on the part of the business that you know and get a rock star engineer.
Interviewee: Yeah, I mean if it’s you, do it. Or if it’s you but you’re not good at thinking about the business side I think engineers like myself, who can think about the business side and the engineering side, are kind of rare, and I don’t know why that is. A lot of engineers just like thinking about code and I can understand that, so if you’re an engineer who likes just thinking about code maybe you need your left hand man who can go think about business, like you and your brother.
Andrew: You know where they grow those kinds of engineers/entrepreneurs is Hacker News. Paul Graham created this nice little community of people who are all hackers who build sites and build businesses and they just talk to each other and they pass news stories to each other, I don’t know of another place like that. Do you have a group on Goodreads that’s like that? That has that kind of community?
Interviewee: No, we have a lot of book geeks but…
Andrew: We might need to start something like that.
Interviewee: We might.
Andrew: Alright, I’ve got to tell you too I looked at one of your latest reads, the book by Tessla, and I said well, Tessla wrote a book, how interesting could it be. Then I read your review of it and you said, “This guy can write.” You’re a great reviewer by the way. I got that book for my Kindle, I love it. Thank you for that recommendation.
Andrew: I got a lot of books from friends like that. The other person who gets me a lot of books, I guess over time, Kareem Mayan, a friend of mine has recommended a bunch of interesting books. He’s a guy who once he’s done reading a book he just tosses it out I guess because he sent the book to me, the one that I was most interested in. I never give up my books after I fall in love with them.
Interviewee: Did he use Goodreads books blog?
Andrew: Did he use it? No, I get those emails from you. I emailed Kareem and I said “I love your reviewer, I love the book that you talked about.” He talked about a book that talked about Ryanair, I forget the name of the book, and he said, “Dude, I’ll send it to you.”
Andrew. So he did.
Interviewee: I couldn’t do this without plugging the fact that we just launched book swap.
Andrew: Book swap? What’s that?
Interviewee: Well, it’s a big new feature for us, it’s the ability for members to list their books swappable and then swap with other members. It’s only about a week and a half old, but it’s pretty exciting for us.
Andrew: Can I find people locally to swap books with? I’m in Argentina can I find people who are here instead of having to get the book shipped from the US?
Interviewee: Well, the other caveat is that we launched it in the US only.
Andrew: Alright. That’s the hard part of being down here in Buenos Aires. Thankfully the Kindle is allowing me to buy books remotely though. Alright how can people connect with you Otis? They can go to Goodreads.com, they can add you over there right? They can see the books that you’ve read and can read these great reviews. If you’re an entrepreneur, developer, or even into a Sci-Fi it seems like Otis’s picks are the one’s to go to, so that’s one way. Number two, we’ll give you a way to connect with him on Twitter. Number three when I finally come back to the US you can come out to a Mixergy event to see him in person.
Andrew: Definitely, alright, we’ll end it there. Thank you Otis. Thank you everyone for watching, I’m looking forward to your comments and I’m looking forward to talking to, actually I’m looking forward to your comments let’s leave it there. Thanks. Thanks Otis.
Interviewee: Thank you Andrew. Thank you everyone.