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Finally, who’s the lawyer that entrepreneurs trust? Scott Edward Walker of Walker Corporate Law. Neil Patel, Jason Calacanis and other well-known founders trust Scott Walker. Scott knows the start-up community because he’s a part of it. He’s the lawyer that the media turns to to explain start-up law. Walker Corporate Law. Here’s your program.
Andrew: Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and how does an ambitious upstart with little money use clever hacks to build traction? Chuck Gordon is about to get very open with you and show you the tactics he used, including calling up customers to sell things he didn’t even have yet, publishing a site that didn’t really work yet and foregoing paying rent on a standalone office by parking himself in his adviser’s office. That last tactic came with a nice bonus, which you’ll hear about later in the interview.
Chuck is the founder of SpareFoot, the largest open marketplace for self-storage. You can think of it like Expedia for self-storage facilities, that’s what SpareFoot is. Chuck, welcome and thanks for doing this interview.
Chuck Gordon: Thanks, Andrew. I appreciate it.
Andrew: So I want to know what happens after you tighten your belt, after you suck it up and sell things that you don’t yet have, after you even suck it up and just make a sales call, which is sometimes tough to do. I want to know what the payoff is and this past Halloween you felt a little bit of that payoff. Tell me what happened on Halloween.
Chuck: This past Halloween we had a team happy hour and costumes required and everyone brought their +1 so it was 25 plus their significant others and it was just really awesome to be able to look around the room and see everyone having such a great time and knowing that we’re all working on the same team, making SpareFoot a huge success and that we were able to get there by only raising a relatively small amount of money and just being scrappy the whole time. It just feels good to know that it didn’t require some heavy duty Experian, CEO or tens of millions of dollars in venture capital or anything like that, but we were still able to get to this point and we’re just growing a lot even from here.
Andrew: Let me make that point too. You raised, tell me if I’m wrong here, $4.5 million, right?
Chuck: Yes.
Andrew: And being able to raise that kind of money is another benefit of the scrappiness that you had early on because you were able to build traction without much money and then once you had that traction investors of course said, now this looks like a business we want to be a part of. Unlike other companies that would’ve gone out of business quickly after launching, which is kind of common, as I think it was a Time Magazine story about you pointed out.
Unlike them, you actually grew to 25 people, you were able to raise money off of your scrappiness and you were able to build a real business that people can go and see on sparefoot.com. SpareFoot the way it is today is a second iteration on an idea for self-storage. Before you got scrappy, before you used the tactics that you’re going to show us today, there was a first iteration that you told me in the pre-interview is kind of like air B&B for self-storage. What was that? How long did it take you to build it and what happened after you built it? Give me just a quick summary and then we’ll go into the tactics.
Chuck: Definitely. When my co-founder Mario and I were still in college we had the idea that people could rent out the extra space in their personal property storage. Instead of in a storage facility, so you’ve got an extra garage, bedroom, backyard, closet, whatever. You can list it on the site, and rent it out to someone instead of a traditional storage unit. So, we spent at least six months building this thing, both technically and getting all these complicated legal agreements in place, making sure we had our brokers license, and doing all this stuff, that really took us six months to launch the thing.
What happened was, when we launched it, we soon discovered that the actual consumer need was in finding regular storage facilities, and that the storage facilities themselves, really needed a way to advertise. So, when we switched to the new model, we learned our lesson and said OK, we’re not spending six months worrying about building this fool proof system that’s going to end up not working in the first place, just get something out there now, and it only took us three weeks to build the second iteration.
Andrew: Three weeks for the second iteration.
Chuck: Of course, it was much less sophisticated, but, of course we iterated it and now today it’s obviously way better then the first one.
Andrew: It was much less sophisticated intentionally. You’re going to show us how you made it so unsophisticated first, so that you can launch it quickly, and what was the payoff of it. The first thing you say is that you don’t need to build a back end for your website and your business, when you launch, you don’t need to do it immediately. What does that mean, and what did it mean, specifically, for your business?
Chuck: So, basically, when we launched our second version of SpareFoot, which was the Hotels.com for self-storage, versus Air B&B for storage, we just, to test out the concept we just basically put a landing page up there that had some self-storage facilities listed, and essentially, what looked like the ability to make a reservation, to the consumer, but really it just sent me an email.
So, they thought that they were making a reservation, but when they made the reservation, that just said to me, hey this person wants storage in 78702. So, with that, I was able to call the storage facilities myself, I was the back end, and say hey do you want a customer who is interested in a 10X10, or what prices do you have? I was able to make those initial connections like that to really prune out the viability of that business model.
Andrew: I see. The listings that were on the website, were they real listings, or did you have a real relationship with them beforehand or did you just find them in the yellow pages?
Chuck: No, we just scraped them.
Andrew: Scraped them, manually?
Chuck: Well, some of them yes, and some of them we built some bots that went out and scraped other websites.
Andrew: Got it. So you had a directory that was put together without any direct relationships with the merchants who were in the self storage facilities, and as soon as a customer came on and said hey I like the price of this facility, you would get their order and you would manually call them up.
Chuck: Right.
Andrew: All right, another reason why this is painful for people to do, when they actually have to do it, is because they think of all the things that aren’t in place. So let’s talk about some of the things that aren’t in place, and then I want to understand why you just accepted the pain of it and launched. So, well you tell me, did you have prices next to each of those self storage facilities?
Chuck: In some cases.
Andrew: You did, and how did you get those prices?
Chuck: We would scrape it, then we did.
Andrew: Where did you scrape it?
Chuck: Just from their direct website.
Andrew: OK. So building a scraper sounds like a pretty complicated thing to do. How were you able to do that so quickly?
Chuck: One of our developers back then, had done it before, and was literally to go scrape one of the storage websites, you know, it’s like a day for them to build it. So really it wasn’t actually that complicated. It wasn’t perfect, you know, the data was definitely not perfect, it was just generally, name of storage facility, unit size, price and it wasn’t right all the time, but at least it was something to start with.
So yeah, you could easily look at that and say, oh my gosh, I can’t show this information that’s probably not right to anyone, because, how could we do that, it’s shady.
Andrew: Yeah, so how can you do that? I mean you’re showing people fake prices.
Chuck: Well, they’re not fake, it’s just sometimes a little error.
Andrew: Wrong prices.
Chuck: That’s how. If there was a problem, you just say oh well there must be a technical error with the site, let me see how I can help you, and you have them on the phone, you can help them out and make sure that they ultimately end up getting what they need. We definitely never believe in screwing someone over, you know, just we did what we had to do to talk to people, and once we talked to them, we were able to help them out.
Andrew: What about collecting credit cards. If somebody saw a storage facility that they liked and they wanted to rent space in it to store their extra stuff, did they give you a credit card or just a name and phone number?
Chuck: We did not to credit cards at first. It was first name, last name, email phone…
Andrew: Was your plan eventually to collect credit cards?
Chuck: Yes.
Andrew: All right, so what about that, I imagine if I were in your place I’d say. My model depends on collecting credit cards from customers. If I don’t have their credit cards now in this experiment how do I know I can get them to trust me with their credit cards later on?
Chuck: Well if you can’t get them to give you their name and phone number, then they’re definitely not going to give you their credit card.
Andrew: If you’re able to get them in a test to give you their names and phone numbers. It doesn’t mean that when you build out the real site that they’d also be willing to give you a credit card that’s an extra step that’s a lot more significant than just collecting a name phone number.
Chuck: Sure, but one comes before the other. If you did credit cards up front and spent all the time building the infrastructure to go make that happen then one, it would take along time. Two, you would possibly get a false negative because maybe people don’t want to give you their credit card but it might be for some other reason. And if they did give you their first name, last name, email and phone first, and then they didn’t give you their credit card when he put that on there. Then that would tell you something else. That would tell you it’s still possible that people want to book storage online but, there’s some reason that they’re not wanting to put in their credit card, what’s that reason.
Andrew: I see, that makes a lot of sense. What you’re doing is just trying to see, is there a path here and I can always smooth it out later on, and get people to go further down the path. Collecting phone numbers and information did you build that out yourself or did you use something like a [??] form for it.
Chuck: No, we built it our self at first, but it was just very simple.
Andrew: What was painful for you, Chuck? What was it that when you looked at it that you said, I can’t believe we’re doing this?
Chuck: Honestly, the most pain thing for me in this whole process, and I remember these calls vividly. Was back in the early days when we had these consumer leads coming in, and then we had to go do something with them. We had to go call the storage facilities and say, “Hey, we’ve go this site, it’s like Hotels.com for storage. I’ve got customers who are interested in your facility, would you like to pay me for them?” Just the whole concept of cold calling someone, asking them to pay you, was really, really tough at first.
I’m not a trained sales guy; I’ve never done that before in my life. I started doing it, all the calls you’re on there and you’re nervous, shaking, but you just have to suck it up, because if you don’t do it, you’re company’s not going to work. So, basically it was just rinse and repeat, do it until you got comfortable with it. And even today I’m not going to pretend like I’m a natural sales guy and that I love cold calling because I don’t. But I’m definitely many times more comfortable with it than I was back then.
Andrew: That’s one of the scrappy parts of the business to. That you didn’t have it automatically go by fax or email to the storage facilities. You didn’t even have a relationship with them, you had to manually call them up. And as you said right now, it was tough for you. What was the proposition that you made them? So if you called up Manhattan Mini Storage and said, “Hey, I’ve got a customer who wants storage in your facility. What was the deal you were offering them?”
Chuck: It’s changed so many times. Basically, the whole concept always been, you pay us per move in. So the amount has changed over time, but it’s always been about pay per performance.
Andrew: You’d call them up and say, I need a price for you to pay me, and I’ll release the name and contact information of the person that wants to store with you?
Chuck: Well those vary first calls were like ,where it was like, hey, I have Joe Smith who wants a 10×10 can you help me match him up. And are you willing to pay a referral fee for that. Those were the initial ones. Once we kind of figured that out and got passed to the point where you said, now we need to just sign up storage companies on the site so we can have coverage. Then the pitch evolved to: Hey Joe storage facility, do you have any vacant units? Yes, of course. What kind of online marketing are you doing? Do you want to get listed on [??] dot com. It doesn’t cost you anything unless somebody actually moves in and pays you rent.
Andrew: Got it.
Chuck: It evolved, and is still evolving today.
Andrew: Entrepreneurs who have made the kinds of phone calls that you did, at first, to talk one on one with their future customers, have told me that they learned a lot more from those one on one interactions, then they ever could have with just watching over a website, when stuff happens, because you get to know your customer. Tell me some of the things you learned, by having those one-on-one conversations.
Chuck: Actually, there are two sides of this, because there are two sides to our business, and I have a funny story for you on the consumer side, too. So, calling the storage facilities, initially we kind of thought, OK, well, every storage facility is going to understand and know the data that we’ve read on the self storage foundations website. It says the average lifetime value is a thousand dollars, basically. So every storage facility should understand, before I even call them, that they should spend a hundred dollars to acquire that customer, because it’s worth it.
That proved to be completely not true at all, and most people, not to say anything badly about them, but just really haven’t thought about their business that way. Because they’re used to yellow page advertising and more old school methods, like that. So, when we came in saying, “Hey, pay per customer, this amount.” You have to educate them to shift their thinking from a this is how much I pay per month, on advertising, this is how much my advertising cost, per year on a square footage basis, to this is how much I pay per customer that comes through the door. So it really turned, from talking with them, we discovered it had to be about education as well.
Andrew: I see. So, I understand how you educate them when you’re making one-on-one phone calls. Was the model ever to switch to an automated process, where you wouldn’t have the opportunity to make that kind of pitch, where you educate?
Chuck: You know, what we found, I will admit, we tried very hard to automate our signup and get the self storage industry to start signing up for SpareFoot on their own, without us having to call them. But, what we found is, no matter what we do, we have to talk to them. So, even today, we’re building a large inside sales team, because that’s what we found is the only way to do it is to talk to them. So we still talk to hundreds of storage companies a day, now.
Andrew: SpareFoot, from my research, apparently has a hundred thousand listings nationwide. That means, not necessarily, that you sold a hundred thousand different times, but that you’ve sold tens of thousands of times, and I imagine some of those facilities had multiple locations, right?
Chuck: Yeah, a hundred thousand is a stat that we haven’t used in awhile. It’s based on the number of vacant units we had available, I think the better stat to look at is the fact that we have close to 6,000 facilities, across the country. We don’t typically talk about exact booking volumes, but it’s a lot of bookings, it’s a lot of lifetime value revenue generated with these storage companies.
Andrew: What types of revenues are you guys doing now?
Chuck: I think that I would probably get in trouble if I said that out here.
Andrew: I don’t mean the exact number, I don’t want to get you into any trouble. But, roughly are we talking about tens of thousands a year, or are we talking about this year, 2011, that you guys are going to do over a million in sales, yet?
Chuck: We are well over a million, that’s all I can say.
Andrew: That’s all you can say, and how old of a business is it?
Chuck: 2 1/2 years.
Andrew: All right, so, you told me about the one side, where you make sales to storage facilities. Tell me about the other side. You said that you had an interesting story about what it’s like to get end users, to get customers who end up renting these spaces.
Chuck: Yeah, OK. So this is a pretty good example, and it’s probably more applicable, to a lot of consumer businesses out there. So, when we first launched the site, actually this goes back to what we were talking about earlier. Where, we initially launched the site, and it was just a forum. When we moved to adding the credit card, obviously, as you, I think, were expecting, not as many people filled it out. So, we didn’t really have a good way of knowing why, I mean we could look at Google Analytic all day and we could see that, yeah everyone stops at four, but what does that really tell us.
Well, they don’t want to put in their credit card number, but why? So what we did, is I ordered a cell phone, an additional cell phone for $49.00 a month, or whatever it is, unlimited minutes, and we put that cell phone number on the site, and said, call with questions and all of a sudden, the phone starts ringing and it’s our customers calling. So, we’re like, “Hey, welcome to sparefoot.com. How can I help you find a storage unit?” So, we just, me and Mario turned it into the call center. We started fielding calls and it would literally happen all the time. We really started to understand why they weren’t booking online.
Andrew: Why?
Chuck: “Well, does the manager live on site? What are the office hours? What are the access hours? Where in the facility is this unit located? Can I drive my moving truck into the facility? Can I drive up to the unit?” All this stuff we hadn’t really thought about but, this is the information that they needed and we didn’t have it at the time, so every time we talked to someone and they asked for something new, we’d write it down, then go figure out how to get that info from the storage facilities.
Andrew: I see. And so now a lot of that information is on the site.
Chuck: Yeah. That’s all on there now.
Andrew: You know the questions they’re going to have, and so you field off those questions by putting it into the search result.
Chuck: Right. Exactly.
Andrew: Oh, wow. That’s perfect.
Chuck: We used to, funny story is, we used to trade who would have to take the call center at night. So, on some nights I’d take it home and, yeah, it would ring at 3:00 in the morning sometimes and we were starved for bookings back then so we’d take the calls and occasionally, yeah, we’d have a 3:00 a.m. storage booking. Those people were always a little bit questionable.
Andrew: What do you mean? What’s somebody who calls you at 3:00 a.m. want . . . that’s questionable?
Chuck: Exactly. That was my question. Who needs a storage unit at 3:00 in the morning? What’s wrong with you?
Andrew: You know, I listen to Howard Stern sometimes and there’s this guy there, Richard Christy, who talks about how, when he was starting to make it, when he was trying to make it, he’d sleep in his storage facility. Ever see that?
Chuck: Oh, yeah.
Andrew: Where people basically using SpareFoot like it’s a rental search for a place to live?
Chuck: I mean, it’s definitely not any kind of significant volume and we have no idea, of course, if any of our tenants do that, but we just know from talking to some storage facilities that they do frequently have someone who will try to sleep in the storage unit.
Andrew: I see. Just going back to that story about the phone number, I saw, when I went to sparefoot.com, I think, in these big numbers, I think it was as big as your logo, the phone number on the upper right-hand side of the site. Am I right?
Chuck: Yes.
Andrew: It’s all the way up on the top right, big phone number and on the top left is the logo.
Chuck: Yep.
Andrew: All right, so it still helps. How many phone calls would you say you get now as compared to before?
Chuck: Oh, we’re doing, we have like a large call center operation. We’re doing thousands of calls.
Andrew: So people still need to make a phone call in order to buy. Why?
Chuck: Yeah. Because, basically, what we found . . . so when we first started doing the phone tests, almost everyone would call because we had no information on the website. Now, I think it’s about 40% of our bookings happen over the phone and it’s because, some people just want to talk to someone because they’ve never rented a storage unit before, they don’t know anything about self-storage. They want to feel safe about putting their stuff somewhere. They want to know, “Is this deal really true?” Honestly, what we found is the self-storage consumer is just, generally, not as web-savvy as other verticals. So there’s that contingent of people who just do everything over the phone.
There’s another set who, well, I guess I should back up and say, a lot of people who rent storage, do so as part of their move, and storage is one of the things that happens usually right before the moving event, so a lot of times people will call and they’ll be super-stressed, they’re moving in a couple days and they don’t have time to mess around on the Internet and they’re just like, “I need a storage unit now!” They want to talk to someone and they want to feel like it’s secure and done and ready for them to go drive down there right away.
Andrew: All right. I get that. I’ve done that. Next big message that you wanted to get out there was, you say, “Make transactions manually in the beginning to make sure that you close a sale.” And you had an example of a Boston customer that you dealt with. Can you tell us about that?
Chuck: Yeah. So this, I think the example I was using before too about getting that cell phone and using that as our call center, is a perfect example of this as well. I know a lot of people would say, “Well, I don’t want to field calls all the time.”, but, again, just do it if you want your business to work. The example with our Boston customer was actually the very first transaction that we ever processed.
What happened was, someone filled out that lead form that I was talking to you about initially, where they said, “I need storage in Boston.” It was a student, can’t remember what school he went to, somewhere in Boston, might have been BU, and they needed storage. So I basically went out and called the different storage facilities that I’d been trying to talk to, look for someone who had some coverage in Boston. Of course, we didn’t have any coverage at all, so the only thing I had was portable storage.
So I called our guy at Smartbox Portable Storage and said, “Hey, we’ve been talking about getting you guys signed up, I’ve got a customer ready to go, can you give me a quote, please?” And so he was like, “Sure!” So he responded back with a quote and then I passed that information back on to the customer and the customer said, “OK. That sounds good. How do I book it?” Then I said, “OK. Well, hold on.” I went back and asked the storage company, “How does he book it?” and got the information and then, basically, ended up hooking them up and doing the transaction for them. The role that I played in that transaction is basically the same exact thing that our site plays today. So, you know, I kind of learned what it meant.
Andrew: Chuck, let me ask you this: you’ve seen, from everything that I’ve seen about, you seem like a fan of business. You’ve probably been reading Tech Crunch. Are you a Mixergy fan?
Chuck: Yeah, definitely.
Andrew: All right. So you’ve seen the entrepreneurs on Mixergy? Here you are, a guy who’s seeing all around you, super-successful people raising millions of dollars, building incredible businesses, selling out for even more millions of dollars and you’re working two phones at the same time. Do you feel at that point, “Oh, I’m such a loser. I’m so small time compared to these guys who I’m reading about on Tech Crunch. Why am I making both phone calls here? I can’t believe I don’t have better programming skills or any programming skills in order to build this big site and have it operate on its own.”? You feeling any of that?
Chuck: There are some things that I feel that way about, which is definitely in my technical skills, since I don’t have any. I’m not a developer. I’m not an engineer. I do not have any technical background. That is a weakness and I wish that I was. On the stuff that you’re talking about though, with handling calls and being scrappy and just doing whatever it takes, I personally believe that any of those people that I look up to on Tech Crunch or Mixergy all did that. I mean, you don’t get there unless you do that, I believe, personally.
Andrew: I see. And so when you were going through that, instead of having in the back of your heads this sense of inferiority, you were saying, “No. This is what it takes to make it. I am part of a movement of people here who start out like this, who build up in time and the fact that I’m small right now, it doesn’t mean that I’m off track, it means that I’m on the right path here, just like these guys who I’ve been admiring.”?
Chuck: Definitely.
Andrew: All right. You ever see that in other people, by the way, or am I crazy to assume that this happens to entrepreneurs?
Chuck: No, I mean, I can easily see how people could think that, but you kind of have to just keep in the back of your mind, “Hey, those guys, that’s what I want to be and I’ve got to do whatever it takes to get there.” Now, in my case, I’d never done it before so I was just, kind of, learning as I went. Obviously, I’ve kind of seen the creation this time and I’ve learned a lot, so it’ll be easier next time. But, yeah, I mean, I can why people would think that, but you need to just, again, I think it all comes back to sucking it up and putting in the hard work and that’s really what’s going to make it happen.
Andrew: That’s what I thought. And I do see the other side a lot. I think a lot of people might watch this interview or listen to it or read the transcript and say, “This is a really cool story.” But then when it comes time for them to launch their own businesses, they’d say, “You know what? This is my business. It’s got to be big. It’s got to be right. It’s got to be this vision that I have or else I’d be too embarrassed to launch it.” And they won’t launch without a back-end and they won’t launch if they have to have the phone calls come in to their cell phone that they bought, some cheap cell phone that will let them make unlimited phone calls. They’ll wait until they get the right call facility. They’ll wait until they build a perfect back-end. They’ll wait until everything just works and then they’ll launch and meanwhile, by the time launch day comes around, they’re out of business.
Chuck: Yep.
Andrew: Another thing that you told our pre-interviewer, Jeremy is, you believed in building an infrastructure to scale only after proving viability. You know you hear a lot of times, in business school especially, I remember taking business classes where they’d tell us, “Scale, scale, scale, scale. You’ve got to build everything to scale. It doesn’t make any sense to build something that will only work for 100 customers. Build with a million customers or a bajillion customers in mind, or else you’re just a small business and that’s not where you want to be.” You said the opposite. Tell me about that.
Chuck: Yeah. Whenever we test something, this is true from day one, obviously, with our lead form, to even today when we’re rolling out new projects on the site, we don’t really build a scalable solution until we prove that the concept works in the first place. You can spend all day building a system that’s going to handle million and millions of transactions, but if no one want to do a transaction in the first place, wouldn’t you rather spend a shorter amount of time building the system that can handle 10 transactions first? That’s, basically, my view is prove it first, then invest the time and money in going to make the scalable solution.
Andrew: Do you have a specific example of that? Of what you build not to scale, just to work and then you scaled later?
Chuck: Well, I think, just our basic site infrastructure in the first place, right? I mean, at first, all we did was build a landing page with a lead form. Obviously, if we want to be a big business with tens of millions of dollars in revenue, we’re not going to be able to handle hundreds of thousands of leads coming in and call them back myself. Clearly, that is not going to work. But, I had to make sure that people actually wanted to do that first, before we went to go build that system where we can actually handle those reservations, really make the reservation like a hotel does in their system, have a call center and handle all of the support and the bookings on the phone and all that. So, it’s usually pretty obvious when you need to build a scalable solution because you’re other solution is breaking, horribly.
Andrew: Hmm. What broke?
Chuck: It’s just too much to handle. You’re losing business because you can’t handle the volume.
Andrew: Ah, I’ve got you. You had a storage facility in Austin that you worked with? Can you tell us that story?
Chuck: Yeah. They, I don’t know if that really fits into this too much, but basically, these guys, they signed up with us and said, “OK. Well, let’s try it.” And they were so surprised when they got an actual customer who moved in, who actually paid online with a credit card, probably one of the first people who ever did that. Frankly, we were surprised, too. “Wow! Someone actually filled out the credit card form! Yes!” So they went to the storage facility and moved in and then that storage facility was so stoked that they started talking us up to all their friends and all the other storage facilities signed up and it just kind of worked really well from there. That’s that story.
Andrew: OK. All right. What about traffic? We haven’t talked about how you actually get more end users in the door, people who eventually will sign up for the storage facilities that you have up on your website. What did you do to get that traffic when you didn’t have much money?
Chuck: So, our initial strategy was to partner with other sites that have traffic that may be interested in storage and provide them with a co-brand solution. So, pretty early on, we were going to sites like, basically, we had built the site up enough to the point where we had a couple thousand listings that we’d screened.
We went to a couple sites like apartments.com, forrent.com and other apartment sites that have a lot of people who are moving and said, “Hey, we’ve got this big inventory of self-storage, wouldn’t you like to provide an easy way for your customers to book a storage unit? And we’ll pay you for any commissions that you get, or for any bookings that come through from your traffic.” So, they said, “Oh, yeah. That sounds great.” So we ended up, once we signed the deal, which was really just a foot-in-the-door deal, they were just testing us out too, we didn’t try to get them to commit for long periods of time or anything like that because there was no way they were going to do that. And we got them to sign up, built them a co-brand and then they started sending traffic into it.
So we did already have some storage facilities who were paying us, but obviously not enough. So then we were able to use the deals at apartments.com to go back to our storage facilities and say, “Hey, don’t you want to be listed on apartments.com?” So it was kind of like a chicken-and-egg thing. “Now we’ve got apartments.com and you really should be listed on there.” That’s kind of how, at first, we built it up. Now, of course, we have a lot of inventory and we have a lot of traffic partners, but in the early days, being scrappy about it, that’s what we did.
Andrew: And that’s before you even had funding, right, is the deal that you had with apartment.com?
Chuck: Yeah.
Andrew: Is it apartment or apartments.com, by the way? It’s plural, so apartments.com. Why did you go towards that instead of buying ads, instead of building your business based on Google ads or Facebook ads or some other strategy?
Chuck: Well, PBC in storage is very, very expensive. We spend a lot of money on PBC today. It’s a major investment. We spent every penny we had in our bank account in two days back then, if we tried. It just wasn’t viable. Now, today, with our increased conversion rates and much broader coverage, it’s something that we can actually do, profitably. On the SEO side, we knew that we would need to start putting the right things in place so that eventually we could rank well but we knew that that was going to take years, probably. So we needed something that would get us there right away. We figured that a kind of distribution partnership would be the perfect way to do that.
Andrew: All right. So you got this far and, as a result of everything that you just told us, you were able to raise money, first from Capital Factory, and by the way, those guys are phenomenal. What’s it like to work with the Capital Factory?
Chuck: The Capital Factory was honestly, probably, the best possible thing that could have happened to us at the time.
Andrew: Give me one thing beyond, I know the Capital Factory works on an incubator model, where they put a little bit of cash, $20,000 into the business, but they also put in a lot of mentors and expertise. Give me one benefit that you got, besides the cash, from the Capital Factory.
Chuck: Benefit from Capital Factory for us?
Andrew: Yeah.
Chuck: The cash was negligible. It didn’t even matter. What really matter from Capital Factory was when we’re trying to figure out how to make a deal with apartments.com, being able to go to one of our advisors and say, you know, real time after the call, “They just said that. What do I do?” and have them be able to say, “OK. I’ve been there, I’ve done that, this is what you can do.” That happened so many times and that’s invaluable [??] about dealing with Capital Factory.
Andrew: And you had a list of advisors who you were working with so you could pick the right one who probably had a relationship with apartments.com, call them up, find out all this information that you needed.
Chuck: Yeah. Usually not necessarily a direct relationship like that, but more like, OK, we went out and found apartments.com and then we’re trying to negotiate with them and this advisor has done similar negotiations and they know what we should say and what we should ask for and that kind of thing.
Andrew: Got it. All right. So now you get it, you have enough money to get big offices and still you told Jeremy, our pre-interviewer, “Don’t worry about a fancy office. Entrepreneurs need to think about people, not offices.” Why?
Chuck: Well, because your office is not going to grow your business.
Andrew: Where did you end up, I hinted about this in the introduction, that you took some space in your advisor’s office. Whose office and what was that like?
Chuck: Yeah, so even today, right now, I’m sitting in the offices of Bluefish Development Group in Austin here. Basically, they were able to house us, I think, actually, when we all moved, all of the Capital Factory companies in 2009 moved into some extra space that they had. It was just the five of us at the time in one room and what’s basically happened is, and I think we paid $500 a month or something really cheap, but we were still able to be in a downtown building in Austin, all the benefits of a nice office but without having to pay for it. Now, we’ve had a really good relationship with Bluefish through the years, and we’ve, kind of, been able to move people around and squeeze in such a way that they’ve, basically, accommodated us all the way up to where we are today, 25 people in here. And we’ve never had to sign a lease. I mean, yeah, we’re paying our [??] share of this rent, which is not cheap, but it’s certainly a lot cheaper than us having to have bought furniture. We’ve never had to buy furniture. We’ve never had to buy monitors. We never had to buy, you know, computers even, for awhile but, of course, now we do.
Andrew: You mean you were able to use their spare computers?
Chuck: Yeah, at first we were.
Andrew: I’ve got to ask you this too, Chuck, entrepreneurs are very proud people, we don’t want to be given anything, we want to prove that we can earn everything that we get, that we pick ourselves up by our bootstraps. A lot of entrepreneurs listening to you would think, “Hey, you know what? I’ve got an advisor. I should ask him. I should ask him for office space.”
And then the second thought that they’ll think of is, “I don’t even feel comfortable asking him for advice. I’m not really paying the advisor. Yeah, he gets shares in my business or maybe he doesn’t, but either way, it’s not going to make that big an impact on his life. I can’t ask him for advice. I can’t ask him for office space.” And yet, Chuck, you keep working with the people around you. I got this interview because of one of your advisors, because of Jason Cohen, who helped me out by seeing the vision here for this interview. You don’t feel any hesitation, why? How do you get over that hesitation, and what could the rest of us do to get over our hesitation?
Chuck: You know, I don’t exactly know. I think maybe I have some sort of defect where I don’t get these normal hesitations that other people get, about asking for something. I’ve never been shy about asking for what I want. I think when I was young, I used to go by Charlie, my parents would tell me that despite what I thought, I didn’t live in a Charlie – centric world. So, I think I’ve always just kind of not been shy about asking what I want
Andrew: Even though you don’t give them anything in return? I’ll tell you, I shouldn’t speak just for the audience I know is out there, I get a sense from my audience and sometimes I speak for them, but I should also speak from my own hesitations. Jason Cohen, I just realized, he is kind of like an adviser to me. He set me up with so many great introductions, so much great help over the years, especially since he’s a WordPress guy he runs a WordPress engine, and I live in WordPress, Mixergy is built on top of it, but I never feel comfortable reaching out to him and saying hey listen, I’ve got this issue. Do you know someone?
I only will take help from him when he offers it unsolicited. I’m always extremely grateful, and I’m always extremely guilty for getting it, I feel guilty for it. You, it just doesn’t occur to you. You just say, hey you know what, the guy wants to help, and I’m going to reach out to him and see if there’s a way for him to help me?
Chuck: Basically yeah. I think part of it is just not being scared to be told no, or rejected. That’s probably where most peoples fears stem from. One thing that Josh Bear, one of Jason’s partners in the Cattle Factory, was telling us early on, just keep asking for free stuff, until someone tells you no. So that’s what I did.
Andrew: So, ask for free stuff until someone tells you no?
Chuck: Yeah.
Andrew: You know what? It’s a whole other mentality than the one we were basically raised with all as human beings. I mean the sense that you want to be considerate of other peoples feelings, you don’t want to ask or intrude on them, but really as an entrepreneur, especially one who has to be scrappy, who doesn’t have a ton of cash. You have to take advantage of all those opportunities, you have to reach out to people.
Chuck: Maybe I’ve offended people, I’m sure I’ve offended people.
Andrew: And that doesn’t keep you up at night?
Chuck: Not usually.
Andrew: Alright. I’m holding this up as the way we need to be as entrepreneurs, I am intentionally highlighting this because I think we all need to get past our hang-ups, including me. I still have these hang-ups. Alright. Final point here, you say have all staff build features that are cheap and simple. How do you, not take this scrapiness that you have internally, and translate it to a mentality that, in a culture, that the rest of the office can hang on to and can build your business with, especially after you have millions of dollars in the bank?
Chuck: So this is the same kind of concept. When we’re sitting in our prioritization meetings, going through, you know what’s going to be in the next sprint. Can you hear me?
Andrew: Yeah, we lost you for a second. So you’re saying when we sit in our prioritization meetings and we say what has to be in the next sprint?
Chuck: Yes.
Andrew: OK. Sprint meaning the development spring, the rush in build something.
Chuck: Exactly. Part of what we do every time is we sit there and say OK. Why are we doing this, do we need to build it out in such a complicated way, first, can we test this in a scrappy fashion before going and building this thing that’s going to take two weeks. Can we go spend two hours, instead of two weeks first to make sure it works, and then do it?
We basically ask that about every single item that we ever prioritize. So, it’s just kind of ingrained in everything we do.
Andrew: All right, Jeremy asked me to ask you about the Geo pages story. So, tell me about the Geo pages story. Do you know what we’re talking about here, in the notes?
Chuck: Yes absolutely. Geo Pages is our newest product that we launched a few months ago, to buy ourselves storage clients. Basically we help them set up their Google Places listing, and provide an optimized landing page, that they can direct it to. Then we give them a tracked phone number, that’s recorded, and alerts them every time a phone call goes through, let’s them make online reservations through the same back end that we use on regular SpareFoot.
Basically before we even built the product, we went around there and tried to sell it, before we even had anything. We said “hey, have you set up your Google Places listing?” Yes or no, OK, you know, how’s that working for you? Would you pay $50 if we could give you this page that did X, Y, Z? We vetted the idea and even pre – sold some Geo Pages before we even had anything out there.
Andrew: Did you say, would you, if we built this or did you say we built this, do you want to buy it? Before you built it?
Chuck: To customers that we’re really close with, and have very strong relationships with, we’ll say would you. But then, that’s kind of like the initial test and then you go to the next phase, which I believe is, “Hey, we have this thing. This is a mock up of what it is. It’s coming out next week. You want to buy it?”
Andrew: I see. And after you asked someone would you buy it, if they said, “Hey, you know what? I think I would buy it,” would you say, “All right, what’s your credit card number?” Would you start selling it right there?
Chuck: Sure, yep.
Andrew: All right. I got to believe both Jason and Josh are proud of that story to investors. All right, what about the free booking widget feature?
Chuck: Yeah, so that was something we thought, well Jeremy and I were talking about is, that’s an example of something we thought would be just a massive hit, but it’s kind of fizzled a little bit. Basically, it’s a really simple snippet code booking widget that any storage facility can go put on their website that enables them to take an online reservation.
Andrew: Mm-hmm.
Chuck: It looks real slick and it integrates with their management software. Super cool. So we thought, why wouldn’t anyone want to do that? It’s free.
Andrew: Right.
Chuck: So, initially we thought this would be a good way to help us go sign up more storage facilities. [??] But basically what we discovered is that, these guys don’t actually have access to go make changes to their website. I mean, these are not programmers. There not developers. They can’t just go say, “Ooh, here’s a snippet of code. Let me go put it on my page.” They have to get the code out of SpareFoot somehow, which can be a challenge in the first place. Then, they have to go send it to their web developer, pay that web developer by the hour to go change it. So it’s actually a much bigger barrier to getting that installed than we had ever thought about. And we discovered that, of course, after we did it.
Andrew: So, in that case, instead of selling it before you built it, you built it and you realized, hey, wait, no one’s going to use this.
Chuck: Right, some people do use it but. . .
Andrew: So it’s a cautionary tale inside the company. From now on, you guys are all going to remember it. Let’s think about selling a product before we build it. Let’s think about this free booking widget which we thought was going to do really well, and it didn’t do well and remember that next time we want to build something first.
Chuck: I mean, it’s done okay, but. . .
Andrew: Okay. All right. . .
Chuck: It hasn’t been a total fail but I wouldn’t [??]
Andrew: It looks like somebody else needs to use a conference room, huh?
Chuck: All that walking by? Yeah.
Andrew: I see that someone’s walking by trying to get your attention. All right, well, we’ve gone a little over the time that we set aside for this interview. I appreciate you doing the interview. Let me ask you one more question but first I want to say something to the audience. As always, at this stage in the interview, I say, “Guys, go to mixergy.com/premium,” and I’m really proud to say right now that the premium courses that we offer right now on Mixergy actually get a bigger audience than the free interviews.
As great as this interview is with you, Chuck Gordon, I think the PR for start up interviews that I posted within the last seven days has done even better. I mean, we’re now seeing more people take the paid courses than even watch the free interviews. Why? Because if you see all the work that we put into these interviews, you can imagine that for the courses, where we’re actually going to show you someone’s screen and have them walk you through each part of their process, step-by-step, that we’re going to put an insane amount of work, way more work than we put even into these interviews, and I believe we take these interviews to a level that most people never even imagine. Like imagine a pre-interviewer in a web based interview. Imagine the preparation that went into this and you feel it. Chuck, are you exhausted from all of the prep work that we asked you to go through?
Chuck: I’m about to go take a nap.
Andrew: Yeah, you’re going to take a nap. Do you have Mixergy now for making you put in all this work? Do you say, “You know what? I have my freaking business to run. These guys want me to put in so much work for their audience. How about my audience, my customers? What are they going to think of me?”
Chuck: [??]
Andrew: We’ll think of you. We’ll give you good links with anchor text.
Chuck: Thank you.
Andrew: I don’t know if you want good links with anchor text but if you do, that’s one of the reasons a lot of people have done interviews on Mixergy. They want the links anyway, not necessarily the anchor text. So, if you haven’t signed up for Mixergy premium, go to mixergy.com/premium and sign up right now.
I’m going to recommend, based on this interview, two courses that I think you should try. The first is PR for BootStrap StartUps. You get to see one of the early members of Fee Fighters talk to you about how she got an insane amount of publicity on Business Week, on Tech Crunch, on lots of different media platforms because she knew how to do PR on the cheap and the second course I recommend is taking Network for Introverts because if you see how Chuck is good with getting people to help him out, and you say I don’t have that skill, you’ve got to listen to Ruben Gomez, who teaches you. He’s an introvert and how he gets people to help him out, using a system that anyone could implement. So both of those courses are available to you right now if your a premium member and if you’re not, join me and sign up for those courses.
All right, Chuck. Final question. Someone’s listening to us right now and saying, “I need to be a little scrappier. I need to find a way to just do it and do it on the simple, on the scrappy, in the scrappy way.” What’s the one piece of advice you give them?
Chuck: Do it yourself first.
Andrew: Just all manly. Don’t even count on computer, don’t count on some developer to do it for you, just find a way to do it yourself.
Chuck: The ultimate form of scrappy is just doing it yourself.
Andrew: That’s a great place to leave it. All right, do it yourself and when you do, send Chuck an email saying thank you. I’m going to say thank you first. Chuck, I always encourage the audience to say thank you to the guest if they got any value out of it. It’s a good way to show appreciation but it’s also a great way to connect with the guests, so I say to the audience, send a message out to Chuck if you got anything of value out of this saying thank you, but I’m going to be the first one to say, ‘Chuck, of SpareFoot, sparefoot.com, thank you for doing this interview.’
Chuck: Thanks [??]. I really appreciate it.
Andrew: Cool. Bye.
