Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I do interviews with entrepreneurs about how they built their businesses.
There is a developer/entrepreneur who’s really well-known in the tech space whose, Twitter bio just says just one word, influencer. It’s his way of kind of making fun of this whole influencer world, where everyone is supposedly an influencer and they all get ad revenue. He’s kind of a cynic that way. It’s easy to laugh this stuff off. What I think is more interesting is to say we are in a world where I’m not as influenced by what — I’m trying to think of even a celebrity name. I can’t even think of them.
I’m not as influenced by what these movie stars are trying to do, but frankly, if a guy like Casey Neistat carries a specific phone, I’m much more aware of it. If he does something to his hair, I’m much more interested in it, and I’m much more likely to buy the skateboard that he talks about than one that just is advertised by a celebrity or by no one. All that is to say we can be cynical and laugh this stuff off, or we can realize that there is a real movement, a real change in the way that people buy products, make decisions and where their loyalties and hearts are.
Well, today’s guests are a pair of entrepreneurs who have understood this longer than I did who said, “Let’s see if we can help bridge the gap between companies and these influencers.” The company they created is called Influenster. They are Elizabeth Scherle and Aydin Acar. Influenster is a digital community of consumers shaping the lifestyle marketplace through user-generated — you know what? I read this to them before the interview started and we kind of liked it, but I don’t even love that description. I want them to tell you because I want you to get a full understanding of how big this opportunity is and how much they’ve grown this company.
This interview is sponsored by two companies, HostGator, which hosts your website, and Toptal, which helps you hire your next great developer. But I’ll tell you more about them later. Before I do, I’ve got to tell you, Elizabeth and Aydin, I’m trying to read your faces as I say this intro, and I’m seeing a little discomfort. Aydin, I see it mostly in you. Talk about what your discomfort is, be open, with my intro.
Aydin: No. There is none. I think that was a good introduction we discussed. I feel like you are describing what is happening in the marketing world. You’re 100% spot on.
Andrew: Okay. Good. I see you guys because I’ve seen your product, I’ve told you before the interview started, I’ve embedded myself in your world for a little bit to understand it. Everything is so perfectly polished, and here I am like screwing up the intro, riffing. I wanted to see how that sits with you. Elizabeth, before we started, I said, “I don’t like the notes that I have to describe what Influenster is.” Before you even describe it, let’s give people the revenue so they’ll pay attention to the description. What size revenue are you guys doing?
Aydin: We just closed our year. We are in a fiscal March to April kind of year. So we ended March 31st and we ended it around $11 million. The year we’re in now, we’re closing our first quarter and we’re tracking for around $17 million to $18 million for the year we’re in.
Andrew: Big revenue, fast growing company in a space that recognizes the changes in the world around us. Elizabeth, you started describing to me before the interview started what Influenster is in a much better way than my notes did. How would you describe it for someone that’s coming in brand new?
Elizabeth: So kind of an easy way to think about it is a TripAdvisor meets Facebook for products. So Influenster is an app. We have a site. There are millions of product reviews. What we do is give people the opportunity to like, learn, and talk about products. If you’re an active reviewer, you could potentially earn free products to test.
So we work with tons of different brands in driving trial products where people test products for free, and they basically share what they think on social media and they also give feedback to brands in the form of surveys too. It’s kind of win/win. Brands get a lot of great feedback and honest opinions both in the social space and data that they can use to improve their products.
Andrew: So I’ve got your app right here on my iPhone. It’s hard to see on the screen, so I’ll describe it. There’s a product here called bump patrol, which when men shave, some of us get bumps. Chris wrote a review for Bump Patrol. Chris got the product for free?
Elizabeth: No. We’ve never sent it out. So there are 15 million reviews on Influenster.
Aydin: 16 million, actually.
Elizabeth: 16 million, sorry. So most of the reviews on our platform are just unsolicited. It’s like a TripAdvisor/Yelp, right? People just come and write about anything. But he’s writing about Bump Patrol. So a client might come to us who’s a competitor of Bump Patrol or Bump Patrol themselves and they might want to send the product to Chris.
Andrew: Got it. And say, “Hey, we’ve got another product that helps eliminate bumps. Chris, you’ve written this great review about how much it helped you. Let me show you how much better this could be.” Then what’s in it for the product? What’s the company hoping to do by reaching Chris?
Elizabeth: So they’re basically hoping — I mean, driving trial is a huge initiative for a brand. It’s always been. Having people talk about products has always been around. Word of mouth is not new. With social media, the conversations go so much further, right? So, our members are really active on social. They love to talk about products and kind of brag what they receive.
It’s getting that conversation out there or they might want more feedback from Chris on this new product, like, “Hey, try this,” or they might want to see like more reviews about a new product. If Chris is already a quality reviewer, then he could write a review for this product and give his opinion that people would find valuable as well.
Andrew: I see. All right. Let’s go back and understand how you got here and then see what you did to grow this business so high. I keep looking over your shoulder. You guys are in the emoji conference room. So there’s emoji plastered all over the wall?
Aydin: Yeah. All of our conference rooms are named after different badges on our platform. This conference room is named Curious Cat. It’s a badge people unlock if they’re asking a lot of questions about different products and if you’re there answering those questions. They’re actually helping the community through questions and answers. That is the badge that this room is named after.
Andrew: Do you guys know Kefferin, by any chance?
Andrew: Kefferin has 189 reviews on your platform, 9 discussions, 7 lists. Some of these people are insanely freaking active. I can’t read all of Kefferin’s reviews to prepare for this interview.
Aydin: What does Kefferin do?
Andrew: I have no idea. But Kefferin has 14 badges. I get a sense that these badges are part of what hooks people in. Like one of the badges is the Back to School badge. The other one that Kefferin has is Mega Parent. So Kefferin has kids too and still has time to review on your platform.
All right. Let’s understand how you got here and how you built up this business. Elizabeth, you told our producer that your mom was a stay at home mom, but she taught you about generating revenue, about being responsible. What did your mom do that helped you understand business?
Elizabeth: It’s kind of interesting. I live in New York City now, but I’m from Iowa, the middle nowhere, very small, rural area. I have two sisters. So my mom stayed home with us. My dad was not holding back money or anything like that from my mom, but it was really important for her to like have her own money and her own independence, really and not have to answer when she wants to go spend a lot of money on shopping or whatever.
So she was an artist. I remember she would be up to like 2:00, 3:00 a.m. like painting sweatshirts, like really craft. I’m from the Midwest. That’s what people wear. She would do this work all along the fall season and then during the holidays, we would just go to markets with her, set up a booth and she’d be hustling like selling her sweatshirts for like $100, $150 apiece. I was like, “Wow, this is crazy.” I just really learned the value of one, working for yourself, she was doing something that she loved and two, hard work pays off. So it really did teach me at a young age. I see the value of like working for yourself and being in charge of your own destiny.
Andrew: Aydin, do you have a similar entrepreneurial background at all?
Aydin: Yeah. Our family, I would say, like my grandfather was an olive business man. We have olive gardens back in Turkey. We basically sold olives in a wholesale manner, but also produced olive oil. This is something that was ingrained in us, that like olive gardens that my — actually, Elizabeth came to them — they were our homestead. That’s where the family started.
My father and my uncle, they were both business men as well. They were not in the olive business, but they were in manufacturing. My dad always urged us to do our own thing, to be entrepreneurs. When I was 14, actually, I was selling business cards. I would go door to door with a catalog in my hand to small businesses and say, “Hey, do you have business cards?” They would say, “No, maybe we’re out. I have only like 10 left or 20 left.” “Okay, here’s the catalog. Which one do you like? I will bring the business cards with your name on it printed next week if you order now.”
I’m sure they did it because they thought like a 14-year old boy, that was cute that he was trying this, but it taught us to manage your own P&L, right? You know how much it costs to go to a printing shop and get it like a wholesale number and how much markup you need to do to make money, to make it work for you, to do that during the summer as opposed to just playing soccer all day.
I learned a lot from that experience. This is how I approach still to this business every little opportunity, like it’s a P&L. At the end of the day, what is the end goal? What is the potential? How much money are we going to be making? Why are we doing this? Is there an end goal? Sometimes you even lose—I learned that when I was young. Some opportunities, you give it away because you know there is something much bigger going to come back. I learned that when I was 14.
Andrew: All right. Actually, before I fire off the next question, can you move your camera back a little bit, I want to make sure you guys are in the shot centered nicely. And a little to the side, there you go. I told you guys before we started this is like the most unprofessional operation. I see you guys with your like professional studio just for Facebook Live and here I am adjusting in real time. You guys would never do that, your people would never deal with that.
Aydin: [Inaudible 00:11:02] studios. This is the room that they let us in.
Elizabeth: If they saw it — I won’t let them watch it.
Andrew: There were two things that struck me about your Facebook Live videos, your team’s. One is it’s professionally shot. It’s like — I’m trying to think of TV show that’s like this. The only one that comes to mind is QVC but that’s only because they’re the only ones who sell products and demonstrate it. The other thing that struck me is 639 people shared the video of your Facebook Live. So, it’s highly active people.
All right. Back to the story — still, despite all that entrepreneurial background, Aydin, you decided you were going to go work for a company where you’re doing diabetes surveys. You had this interesting story that you told our producer that you’ve got to tell the audience about how you had this idea to change some aspect of the survey. Can you talk about that? Tell that story.
Aydin: Yeah. Definitely. Like is aid, I’m from Turkey. I came here for college. I was in grad school working on my PhD in political science. At one point, I’m like academics is not for me, I’m going to move to New York and I’m going to get a job. One of my professors was working at this market research company said, “You would be a great fit because you understand this.” I also had a Master’s in market research.
So I started working and was working on this multinational diabetes project. I was this fresh out of grad school, 25-year old working as a research manager in this position and it was a big responsibility. But immediately, this was back in 2006, immediately I saw that the way we were doing things for the past 20 years, that specific group, was extremely inefficient. They were doing things — they did not believe collecting data online, now it sounds ancient, but at that time, you collected data through phone. You would call in to people and talk to diabetes patients for like an hour and a half —
Aydin: On their landline phones and say, “What type of insulin are you taking? What type of shots do you take?” which sounds crazy at the time.
Andrew: And we’re not talking about the 1980s. We’re talking about like 2006 they were still doing this, right? Okay. So your idea for them was to do what?
Aydin: I said, “You have to move online. If you collect this type of data, you have to move online. A, this is extremely costly. B, these people have this survey fatigue after 20 minutes. Their answers are not reliable. I don’t believe in it. These are old people, diabetes patients, you cannot keep them online.
Andrew: Okay. To their credit, they said, “You know what, Aydin? Here’s a little bit of money. Go test this,” right?
Aydin: They didn’t say it right away.
Andrew: You had to persuade them.
Aydin: I had to come up with a plan. I said, “You know what? Here it is. I will show the quality of the data. If we do this online, we’re going to look at the reliability and compare these two data sets if you give me the budget. This is how much we needed.” At the time, I remember it was around like $100,000, maybe slightly less. That’s the budget that I came up with. That was quite a lot of money, but they said, “You know what? We believe in you. You’re passionate about this. Go do it.”
That is the perk of like working at a large company, right? There is like a lot of red tape, but they do have money. So they gave me that budget. I ran with it. I showed the results. Next year, we moved half of our sample to online. The year after that, it was fully online and the department now, they probably looked back at all data and they’re like, “Oh my god, I cannot believe this on the phone back in the day.”
Andrew: From what I understand, even though it made sense and they eventually were happy this worked out, it took them two years to take that transition, right?
Aydin: The whole transition may have taken even longer because they really wanted — they were very scared that their clients would come back to them and say, “What are you guys doing? Why are you guys changing something that is working?” But it was not working.
Elizabeth: That’s corporate America.
Andrew: Yeah. That’s the thing that frustrated you about corporate America. Then Elizabeth and you guys met up and started this company. Real quick, how did the two of you meet?
Aydin: We met through a friend.
Elizabeth: Yeah. So I worked at a startup for a long time. I worked with all fashion designers, actually, at shopping events for women. I became friends with the designers. One of them is a Turkish woman. He’s Turkish, so we met through Turkish friends. Yeah.
I was doing a lot of — there were like gift bags at all the events. You don’t think anything of it when you’re on event getting a gift bag. There’s a whole business of sampling behind it. Brands know that they have to sample. So, I started just doing events and then I moved into like sponsorship. The gift bags were just such a huge draw for these events. There were like hundreds of thousands of them throughout the year.
Andrew: Where people are paying to get into those gift bags.
Elizabeth: Yeah. So brands were for some of it, they weren’t for other ones, just depending. We kept hearing from the brands like, “Hey, do I have more data? Can I get more data about the people who are getting them?” And we were talking, “My company doesn’t provide that.” “Is there any follow up? Are they buying it? Can I get research from it?” Like, “No.”
So Aydin’s market research background and then my background working with all these brands, we were just talking about work and we’d both been working in our careers for a while and we were doing well, but we were ready to do something new. In talking, we thought maybe we could just modernize market research and create online panels easily and see what happens. That’s kind of how it was born.
Aydin: I was shocked to find out that brands were paying to be in these bags and they only thing they knew about recipients were they lived in Philadelphia or Dallas, like, “Oh, these are women who live in Philadelphia.” That’s it? Is that all they know? Our company is founded on data. It’s all about full targeting. We have around 650 data points per user.
So when we target our members, when brands target our members, we know everything about them. You target them in like hundreds of different dimensions. I was shocked that, again, around that time, that brands were willing to give away their products and money just knowing that someone lives in one city. That’s all they know. Nothing more.
Andrew: That was the origin of the idea. “How about if we take this online, get them better data and see if we can scale this?” Let’s take a moment to talk about my sponsor and then I’m going to go back and talk about what you guys did to launch this.
My sponsor is a company called Toptal. Many of the people who I’ve interviewed on Mixergy have said, “I had this idea. I hired a developer, created a minimum viable product that was actually pretty strong and then we were off to market. We actually had real users using this minimum viable product, got feedback, etc.”
Well, a lot of times businesses have ideas for a new MVP, for a new product, but they can’t get to do it. They can’t take action on it. So, they wait and they wait and they wait and they wait until their team frees up or they try to hire. Well, what many people are doing instead of waiting, instead of trying to hire and going through that long, drawn out process is they’re going to Toptal, top as in top of your head, tal as in talent.
When you go to Toptal, they have a network of incredible developers. Really, they pride themselves on turning away 97, not 79, 97% of the people who test and try to be a part of Toptal. They turn them away. They want just the top three percent of developers on the planet in their database so when a company comes to them and says, “We need a developer,” they reach in the database. They find the perfect one based on the company’s needs and they make the introduction.
If you’re out there looking for a developer because your team is too stretched, because you can’t find someone fast enough, you owe it to your team, you owe it to your product, you owe it to your future — listen to me, you guys owe it to your future. You owe it to your kids and your grandkids. I don’t want to be too dramatic, but I do want to be really clear. Toptal has the best developers and they could just have a conversation with you and let you know if they’re a good fit for you and if they are, they can make a match, which often would lead to someone starting within days.
So here’s the URL if you want to get 80 hours of Toptal developer credit when you pay for your first 80 hours. They’re giving it as an exclusive to us at Mixergy. In addition to a no risk trial period, you’re going to get those 80 hours. That URL is Toptal.com/Mixergy, top as in top of the mountain, tal as in talent, Toptal.com/Mixergy.
All right. We were just talking about minimum viable product. What was your first version?
Aydin: The first version was after I left my company, I just went to a designer and just like you described, a developer, and find the developer and basically build a website, just collect some data. I went to Twitter and found influencers and said, “Hey, do you want to join this new community. You’re going to be getting free products.” There was no product. There was nothing. At the time, it was just an idea. But again, this was around 2010 and there was nothing like this. I convinced enough people who said, “Okay, I’ll sign up to this new thing you’re promising.”
Elizabeth: It was like a three-page website, very basic, like stock photos. Then to join, you had to answer like a 100-question survey and people did it.
Aydin: It was a long survey.
Andrew: Why such a long survey?
Elizabeth: Because we were so like data crazy. Now we collect data through a lot of machine learning tools and social connections. So it’s evolved a lot since then, so don’t be afraid if anyone wants to sign up. At the time, it was just like those were the tools that we had. We were asking everything.
Aydin: But also probably from my diabetes research world, I experienced that I thought I could get a away with it. I want more data and people are willing to give it, so why not [inaudible 00:21:15]?
Elizabeth: They were. They were doing it. Then we were like, “Oh great, we have all these people, but now we have to get the products.”
Andrew: The way to solve the chicken and egg product in this case is to go to the influencers because they’re easier to get and you’re not asking that much from them. They’re not being asked to pay. They’re just being asked to fill out a long form. Once you have them, you said then we can go out and figure out who’s going to pay to reach them, right?
Elizabeth: We didn’t have anyone paying or a while.
Andrew: At first you said, “Who’s going to give us products to give them?”
Elizabeth: Yeah. It was kind of funny because I had come from—it was still a startup, but a more established name. If you’re pitching a brand, at least they can look at you and see that you’re legit. So, we had no history. We had this like three-page website. That was it. The office was Aydin’s apartment. We were just asking brands to like give us products for free. I think it was 250 people or something really small.
We pitched probably hundreds of people and ended up getting a few brands. Then we thought it might be kind of shady to have brands dropping off product at Aydin’s apartment, so the one thing we invested in was like getting a warehouse because we thought that has to be like professional. We knew we had to build case studies, right? We were just trying to get brands in so we could run it and then use that as leverage to get more brands interested.
Andrew: Was the original idea to give the product to the influencers who will then write on your website or collection of websites or was the original idea to get them to post on social media?
Aydin: Actually, the original idea was I think that’s what Elizabeth was saying, neither. It was market research. It was get people to use these new products that were just in the market. So maybe we’ll convert them to future buyers, to customer lifetime value, all that stuff. Or on top of that, at the end of the campaign, there’s a survey where like we ask people what you thought about this product, would you buy it again? Would you recommend it?
Elizabeth: Competitive comparison. It was just solely market research and sampling.
Andrew: I see. Market research with sampling. So it’s kind of like if I go into a department store and someone’s giving our frees samples but they don’t know who’s getting the free samples or I walk down the street here on market and they’re constantly offering different food snacks. There’s always some kind of new hippie ice cream pop or something they’re giving out.
So it’s kind of like that but you said these people don’t know if they’re handing it to some guy who just picked up five of them that he’s going to give to his kids and not ever pay attention to or someone who’s a potential influencer who could actually give them interesting insight into the product and become a lifelong customer of the product to boot. That’s what you said we’re going to figure out. I see. That was the original part of the business.
Elizabeth: Yeah. That was originally what we were going to do. Then what we found — again, influencer marketing was not anything anyone talked about or knew and we noticed that people were posting on social media without even asking. We were getting YouTube videos. At the time, it was less Instagram and more Facebook and Twitter.
So we saw this and we’re like, “We’re not even asking people to do this. This is crazy.” Then we thought, “What if we like build this into the campaign? People are already excited about it. What if we give them the tools to talk about it there?” And then social media became a part of it.
Aydin: And gamification was a big part of it. You were talking about the badges that member had. That’s what it was. Next campaign, we send them the products and we say, “Okay, if you talk about each of these products, you will unlock a badge for each of these brands. So, we added the gamification afterwards. That was around 2011 where it was a big game-changer.
The next game-changer was in 2014 when we turned out site into a product review site. We said we don’t want people to just engage with our platform when there’s a campaign, when they get like some free product. We want them to engage with pour platform at all times on a continuous basis. How do we do that? We know they are very vocal when it comes to products. There is nothing in the market where people can write reviews about products outside of Amazon.
So why not give these people the platform so they write reviews about not just the products we send, but any product in the marketplace. That was a big game-changer and it happened around 2014.
Andrew: By the way, your company started 2010. I am on Google — there’s that tab. I went to Google Trends to search for the phrase “influencer marketing” because it feels like it’s been around as long as Facebook. Uh-uh. Influencer marketing as a phrase didn’t really start to take off until late 2016. We are in 2017. So we’re talking about a year ago, that’s it. You guys were jumping on this before it became a thing.
Aydin: We were way, way ahead of our time when it comes to that. Also, our name, Influenster, when I was thinking about it, I basically went in and just searched for if it exists. I searched and there was no entry, none. There was no entry at all about Influenster the way that we spell it. Now if you go, there are like 7 million entries and they’re all about us. If you go to YouTube, there are like 250,000, 300,000 videos, they’re all about us.
Andrew: For the phrase that you made up, Influenster, kind of like Napster influenced —
Elizabeth: It was Hipster, actually.
Aydin: You know what I was thinking.
Andrew: But you did have, I mentioned earlier, a with, and I kind of added a slash quote websites, plural. Your plan at one point was we’re going to have lots of different sites for lots of different topics. What was that, Elizabeth?
Elizabeth: So we originally wanted to have different communities, which there are within Influenster today. We have like moms or college students or even like Gen-Z or people who are into like health products, things like that. Originally, we thought we had to separate out the communities into different websites. So when we started, we didn’t have any money at all. We totally bootstrapped, but we invested money into building these websites. Then Influenster was going to be like our VIP one, if you will.
Aydin: Invitation only.
Elizabeth: Yeah. It was invitation only for a while. But after kind of pitching it and putting it out there with brands and people, we thought this is really complicated. That’s why I think it’s important to let things me, think of them as like a sunk cost. Think of it as like, “Well, it didn’t work, but we’ll just proceed with Influenster, which makes a lot more sense.” And you learn a lot through pitching too, even trying to explain it, you have to keep it as simple as possible is a good rule of thumb.
Aydin: So instead of having different URLs for each of these communities, we said, “Let’s consolidate all of them under the Influenster name and give them badges.” So, there is a badge for moms. There is a badge for techies. There is a badge for eco-friendly or Gen-Z or college. So our initial ideal of different communities, they’re all separated from each other with different URLs. It did not work as feasible as like combining them and doing that kind of targeting through badges.
Andrew: You know what? So I really like a lot about your site and your app. The only issue I had was when I was trying to use the app, I was confused by what it was about and what I was supposed to do as soon as I logged in. You’re smiling. You guys recognize that.
Elizabeth: We’re in the process of changing the onboarding process right now.
Andrew: I forget what it was asking me, but the things that I like about are those badges that don’t feel corny. It feels like it’s something you’d want to collect. It feels like it comes in at the right time without hitting you over the head. What I’m getting at is I get how you two understood the opportunity. I don’t understand who built the site and who had the attention to detail on the product and the experience to create a product like this. Where did you get the development chops?
Aydin: Yeah. Our first hire, my friend from Turkey was finishing his PhD at BU and he had a job offer from Google. I said, “You know what? I have a job offer for you. You’ll be my CTO.” He’s like, “Okay, there’s this like one-person job from out of his apartment is giving me the CTO job, or I can go to the largest technology company in the world. Which one do I go?”
I had to sell the dream. I said, “You have to come work for me.” He did. He’s still our CTO and he’s very happy that he took that chance. But from day one, we were very technology oriented, very product oriented. To this day, like Elizabeth was talking about onboarding process, we have meetings with our technology and product team constantly to make sure that we are really into the product. We know what is going on.
Elizabeth: We’re improving it all the time. We launch a new app and then we’re constantly going over each section like, “How does this work? Do we improve this?” But I think from the beginning, our core team had like very different talents. We’re all friends too. I think that made a big difference. We had Mutlu, our CTO and Emre is another one of Aydin’s friends who joined really early. He’s a product person.
Aydin: He was my business partner at the business card business.
Elizabeth: Oh yeah, the business card business.
Andrew: What did you to convince a Googler to give up his job? You know Google has free sushi lunches and they’ll do your dry cleaning.
Aydin: You have to see us now.
Elizabeth: Now we have it.
Aydin: We have all of that.
Andrew: Oh, you do? Yeah, actually I did see an article. Walker Media, I don’t know what the hell Walker Media is, but they did a fan-freaking-tastic article on you guys.
Elizabeth: I don’t even know what it is.
Andrew: They did a great article on you guys that I used to prep for this interview. What did you do? The fact that you’re friends doesn’t mean that he’s going to come with you. You did have to, as you say, sell the dream. How did you sell it, if you can think back then?
Aydin: I think the idea was obviously he has to believe in you, people who started it, and our dream, like yeah, we have a feasible idea and we have a plan of action. We know how to get from A to B, from B to C and present that and like where he fits in that role instead of just being like a small piece in a big machine like Google, you can come and be at the center of all that stuff.
We have a plan of action how to execute that. We’re not just selling you the dream. Elizabeth really understands selling, business development. I am showing you the business plan. This is how we’ll get there. This is how we’ll convince brands to do it. This is how we’ll grow the community. He’s a smart guy. He saw that we can do it and he said, “Okay, it’s just that I need to convince my wife.” Typical, right?
Andrew: Elizabeth, Aydin just mentioned business plan. I know you guys struggled with writing a business plan and you said, “It’s actually not for us.” Can you talk about why it wasn’t for you and did you get anything out of trying?
Elizabeth: Well, it’s just funny. We were new to this, right? So, at first, I kind of thought we need to follow all these rules. I think I bought like “How to Write a Business Plan for Dummies” or something.
Andrew: I bought that book too at one point.
Elizabeth: I was trying to organize it all. It was just taking a really long time. Once we had kind of the basics down, I think at one point, I’m just like okay, we can write the business plan for months. It was just not our forte. We’re more doers. I understand planning, but we’re just more action oriented. So, finally, we were just like okay, if we want to make this happen, let’s just do it. So Ayden quit his job. He just started selling to brands after a while.
Andrew: And you’re who convinced him to quit his job and you’re the one who got brands in, no?
Aydin: I was ready. I was more than ready to do that.
Elizabeth: To be honest, it was harder for me to quit my job. I was making a lot of money. Aydin quit first. It’s hard when you’re in sales because you’re always waiting for your commission check and it’s scary. But finally, it was like this is getting to a point where we have to make it happen.
Aydin: And that’s actually one advice that I would give all entrepreneurs, like starting. People come to me and ask and I say you have to quit your job. This is not a side thing. You have to commit. At least one person has to dedicate full-time to make it happen.
Andrew: All right. That makes sense. All right. I want to ask you guys about funding. I want to come back and ask about how you got influencers. I want to ask you about what happened when you were in a small office and someone said, “This is stifling for me, it doesn’t look like you guys are going somewhere,” and you guys were struggling to make the bills and a bunch of other things about how you grew to where you are today, like coupons I saw on your website. I’ll ask you about all that.
But first, I have to tell everyone about a company called HostGator. That’s the company that I use to host one of my sites. Before we got started, I’ll be honest with you, I was talking with Aydin about a guy who we knew who signed up for HostGator and was not happy with HostGator. I said, “I’m comfortable talking about that publicly.” Because I think it’s important to talk about when there are issues with HostGator.
Here’s the thing. I’ve actually talked to so many people who have used HostGator from my past ads before reupping with them because I wanted to understand how is HostGator as a hosting company. It’s great for me. I use them. How is it for everyone else? What I discovered was there were some people who had frustrations. The big issue that I noticed that led to frustration, there are two actually. One was people couldn’t reach customer service. I’d been harping on the fact that HostGator does 365 days a year, 24 hours a day customer support. I could get through to them in 90 seconds.
Well, truthfully, there was a period there where they weren’t answering their calls in 90 seconds, where it took people a little longer to get to a HostGator tech support person. That happened about half a year ago when they grew fast. As Aydin and I were talking before interview, it even happened to them years ago. So, that definitely had been an issue. I wanted to make sure that wasn’t before we reupped with them. It’s not an issue now.
The other issue I found is it’s more of a user issue these days, which is that there are some people who said, “My website can’t handle all the capacity of traffic that I’m sending to it.” Then I started digging into what they were using. What they used was the cheapest possible service. Over the years, HostGator went from just having inexpensive hosting packages that you can start with today.
Frankly, if you’re starting with a new idea or just putzing around trying to figure out what your idea is, I really urge you to start with their cheapest package. Don’t waste your money. Go to HostGator.com/Mixergy. There’s a deal that starts with $3.48 a month. If that’s where you are, start with that.
But if your business is growing, there is no doubt that you’re going to want to grow beyond that, maybe get a dedicated hosting package. Maybe if you’re on WordPress, you might want their WordPress managed solution. They have all of that at competitive prices, competitive, I mean, they beat their competition on those prices, but they’re more expensive than the $3.48 a month plan.
So, I’ve been telling everyone about the cheap plan because that’s the entry level plan. What I want to be very clear about is anyone who’s listening to me who has a growing business or a business that’s already grown, you should know there are options to upgrade with HostGator.
I challenge you to compare their pricing and their service with the competition. The reason I challenge you is I had my CTO waste his time — it’s not waste, but he definitely spent a lot of time here he didn’t have it, comparing HostGator to the competition, seeing, “Can we keep a powerful site with a lot of traffic on HostGator’s dedicated server and have it be as fast as our other options. We discovered that it was.
So whether you want the cheap option or you want to grow, I really urge you to check out this special URL they set up just for us where they’re going to give you 50% off and where you’ll always be tagged as a Mixergy customer, which means that they will know that if you ever have a problem, the big pain in the ass Andrew is going to be able to step in there for you guys. Here’s the URL. It’s HostGator.com/Mixergy. Think of that alligator, HostGator.com/Mixergy.
Cool. You guys are marketers. What do you think of the way I do my ads here? As people who have much more class in the way you present, teach me something about my presentation that I can improve. I always want to be a better pitch man.
Aydin: I think you’re doing an amazing job because it’s authentic.
Elizabeth: Yeah. Authenticity is the most important thing today.
Andrew: I agree.
Aydin: That’s what our company is about. If you walk around — I don’t know where you are, but if you come to New York City and stop by our office, I will give you the tour. We have this big wall dedicated to this quote from Scott Cook. He’s the founder of Intuit. He was a director at P&G and he said, “The brand is no longer what we tell consumers it is. It was consumers tell each other it is.”
Aydin: This is what influencer is. You’re talking about your experience with HostGator, with the good and the bad and the ugly, but real stuff. It’s authentic. I talked to you about my experience that was five years ago. I know it was something that we were just growing. It was—we had growing pains in many areas and service just was one of them.
Andrew: You just revealed it was you. I was intentionally keeping it quiet, but if you’re comfortable saying that was you who had the issue, I’m okay with that. I’m glad you feel comfortable doing it because it means that the way that I expressed it didn’t come off as negative, which I know was one of your issues.
You said, “Here’s the issue that I had with HostGator.” They said they weren’t keeping up with your capacity as you guys grew. I said, “Can I talk about it?” You said, “No.” I had the sense that you didn’t want to be negative about the brand. I think you saw that I come from an authentic place. I’m not looking to rip on somebody. I’m glad you got that.
Speaking of that authenticity, sorry to interrupt, but when brands are looking at consumer reviews here and giving people rewards in the form of product based on their reviews, isn’t there an incentive for people who are on Influenster to write positive reviews to say, “I love Avis,” for example, “I love JetBlue,” which is what I’m looking at. There’s an incentive to be positive, isn’t there?
Elizabeth: So, no. If they’re writing reviews on Influenster, we’re not looking at who’s writing a positive or negative review for picking anyone. We could pull in people who are just writing reviews, right? So, maybe we’re sending out a new face cream and they might want to target people who are reviewing other face creams. It has nothing to do with is it positive or negative. Another thing is when we actually send physical products out, people know they can say they can like it or they might not like it.
That’s something that talking about transparency, authenticity, even when I’m talking to the brands, they ask that, “Oh my gosh, what if people don’t like it?” I said, “Some people might not like it and you might see some negative reviews.” But we’re trying to target people for sure. We’re trying to look at data points that we have and connect people to things that hopefully they’ll like.
Andrew: You don’t use a data point of who’s written the most positive reviews? No?
Aydin: That’s something we’ve never looked act.
Elizabeth: And people don’t get punished if they don’t like anything. If you look at a lot of member conversations, they even say that. I’ve read through a lot of them throughout the years and they’re like, “I like that I can say what I think.” It has nothing to do with that.
Andrew: It does seem to be largely positive, though, doesn’t it?
Aydin: I think it does depend on — you were talking about JetBlue. We never work with JetBlue. They’re not our clients. Members just basically found their way on the site—
Elizabeth: They’re searching JetBlue.
Aydin: They’re searching for JetBlue and they get it. There’s like a little bit of bias, especially non-product categories like airlines or other services that like I will seek out a product that I already like for me to say — everybody flies, like everybody has flown JetBlue. Everybody has flown American. I would actually urge you to look at other airlines. I have very positive experience with JetBlue too but not with all.
Andrew: I do too. I have never had a negative experience with JetBlue. My assistant knows if she’s putting me on flights, JetBlue or it used to be Virgin America. It’s okay to pay much more for that. By the way, I can’t stop playing with your app. I’m going to actually do a search for United, which we know has had problems. I really love the little details. I don’t think this is going to come through and frankly, most people listen. Hardly anyone even watches anymore. It’s an audio podcast.
There are like numbers next to this woman’s photo or on this woman’s photo so I can see what she’s using for her hair by tapping her hair. I can see what she’s using for her makeup or for her skin, etc. I don’t know enough about makeup to understand what we’re looking at, but it’s a really well done product. What I’m curious about is how do you know what to build in? How do you know that coupons should be added? What’s your process for understanding and deciding what features to add?
Elizabeth: I think a lot of innovations we’ve had throughout the years, whether it’s like adding reviews or adding new services is listening to our member base and listening to brands. So everything that we add has to work for both of them. Brands are coming to us just because they see there are millions of reviews and they say this is a place where people are on the path to purchase. There’s maybe 50,000 people writing reviews about my brand. I want to let them know they can get a special deal if they want to shop on my store.
So it just kind of makes sense. That’s something that’s pretty new and it’s worked pretty well, honestly. We don’t send out things that are spammy, right? So it’s very targeted, like, “We saw that you were reviewing Tarte makeup. Here’s an offer for Tarte, take it or leave it.” Some people who really like Tarte would be like, “Wow, I get 50% off. That’s cool.” Obviously, the brand sells more. So a lot of those things are just built off of really want we’re seeing from our members and brands.
But the photo tagging thing is cool because we’re trying to add in more social networking. We found people really want to talk to each other on the community. Our Q&A is a huge thing. I post a question and someone else will answer it. Now people are posting just like photos of looks. What they’re doing is tagging each product that they’re using on all the parts of their face or wherever. So, it’s just a way if you like someone’s look, you can easily see, “Oh, they’re using this product.”
Andrew: So I did look up United.
Aydin: I know.
Andrew: What did you see? How many stars?
Aydin: It’s 3.8 as opposed to JetBlue’s 4.6.
Andrew: Yeah, 3.8 out of 5.
Andrew: I think it’s okay. There is a bias towards satisfaction on the platform, isn’t there?
Aydin: That’s the thing. I don’t want to name names, but I was looking at Verizon the other day and it was quite bad. So I think people, a lot of these also reviews come from — you know how Yelp works, right? Yelp, you either write a review if you love a restaurant or you hate it. There’s almost no like three-star or four-star.
Andrew: I’m sorry to interrupt because you mentioned it, 4.0 stars out of 5.0. But can you see that on your screen? Even though it says 4.0, all 5 stars are highlighted.
Aydin: Let me see. That’s something I need to bring to. . . Yeah.
Aydin: Are you talking about the Fios or the Verizon?
Andrew: Verizon Wireless.
Aydin: Got it.
Andrew: I’ll send you a screenshot. I think I’m coming across as much more negative than I am about this. The reason I bring this up is I’m not like a slavish interviewer. I had a guest the other day say, “Andrew didn’t promote enough and I think we should re-do the interview.” I said, “No, I think we did okay.” My goal isn’t to like to get at that part of the product. My goal is to understand how you built to this level.
My goal is to extract some ideas. No one who’s listening to us is going to go, “Andrew got them for four stars versus five stars. My life is better.” They are going to say, “They showed me how they built that first version of their product. That’s how I’m going to use it. They showed me how to come with an idea. That’s how I’m going to use it. My life is really better.” That’s where the reward for me comes for doing Mixergy.
So let’s get more a little bit towards that. I want to understand about the funding that you guys had. When you started out, it was completely bootstrapped. It was just a couple of people, a couple of entrepreneurs with an idea making phone calls, renting a warehouse and just bootstrapping. At what point did you guys raise that $8 million round that I saw on TechCrunch?
Aydin: At the beginning, it was all our savings. It was just Elizabeth and me putting all our money, maxing out credit cards and all that stuff. Around 2011, we did a small friends and family round. So we raised around, I would say, half a million dollars from our friends and family. That also coincided with making the necessary hires and scaling the business, exceeding the $1 million revenue threshold by 2012. We got to that point. We said, “Okay, this is good. The company is growing. We don’t need to raise. We will not raise unless we have to,” because we were profitable very early on.
So initially it was we knew that we were going to raise, but we did not want to do it with the wrong valuation. We wanted to keep the control of the company. Around 2015, we said this would be a really good time. We had like a bunch of new products that we want to scale to and let’s partner with more like a strategic company rather than a traditional VC route. Another company was in the same space bigger than us. So, our interests can align.
So we ended up working with Ebates. Ebates is like the largest affiliate network in the world. They are part of Rakuten, which is like Rakuten Marketing owns a lot of other companies in the affiliate space. They’re a big player in Asia. They’re like Amazon of Japan, pretty much. So these guys, we felt like there was really good synergy for us to work together. Then we did our series A $8 million with them around two years ago.
Andrew: I don’t think enough people know about Ebates.
Elizabeth: I love Ebates.
Andrew: I worked with them years ago when they were getting started with Alessandro Isolani, the founder. I used to sell them ads. What they do is if you go to a store like Walmart and you buy from them, you can get at this point 10% cash back. So you just have to start your purchase on Ebates, then they link you over to Walmart, you buy and they give you some percentage of your order back, which is phenomenal.
I get what you guys bring to them. You guys have an actual community. I don’t think they were very good at building a community. What they are good at is getting great deals and having smart shoppers start their or try to remember to start their shopping experience on Ebates and then go out to those sites. I get what you guys bring them. What do they bring for you? How do they make your business better?
Aydin: I think what they bring in is, like I said, we want to be the number one product discovery platform online. A lot of that is also having like strong relationships with retailers. These guys have — Rakuten has that. Ebates has that. When you are on a product page on our site, you will see price comparison. You know where we get those price comparisons from? From Rakuten Marketing because they do have all these—
Andrew: Oh, I see.
Aydin: Or if we want to give them like our users — we don’t want to be like Amazon. We say, “This is a place where you find out about new products and if you want to buy it, here’s a good deal. Here’s a good link to buy it elsewhere.” For that, Rakuten and Ebates are amazing partners because these guys are top players in this field.
Andrew: I see. Kind of like Wirecutter, which has affiliate links and gets paid but it’s not influencing their content, you’re finding the same thing, that you guys will link out to products. It’s all done automatically. I’m looking here and I see how it works on the phone. I can see people’s photos of this product and I can go and buy it.
Aydin: Exactly. If you search, it’s just like it’s the user journey, right? But also, 90% of our traffic comes from SEO, basically search, Google search traffic. So someone searches for Covergirl mascara, you will see Influenster for a lot of these products, it’s always at the top three, top four. We compete with Amazon and Walmart and those places. In that situation, you come in and you say, “I read, this is amazing, they are good reviews. I see these amazing photos. People are applying this mascara. Where do I buy it?” We include, “Go buy it at this place, go buy it at this retailer.”
Andrew: And they take photos. This is someone’s photo of just acne medicine, not acne medicine, acne care. I’ve never seen stuff like this. I was trying to buy the treadmill that I have in my office, no one has a freaking photo of the treadmill in their office. It’s just the stock photo. You guys have one for a bottle. Literally there are eight photos of this Alba Botanicas acne something, Alba Botanica Acnedote, that’s what it is, the deep pore wash.
I’ve got to put my phone away. I keep getting sucked into your world. Final question—where do you guys get all these influencers? Where do you get these people who are so freaking rabid for products like acne medicine that they’ll take photos? We’re not talking about a 12-year old that has nothing to do with her life. This is a 42-year old woman, Andrea is, who’s written this review.
Aydin: Also keep in mind, that brand you mentioned, we never worked with them. They’re not our clients. People are just doing it themselves. No one asked them to do it. This is a community. Why do people leave reviews on Yelp? Why do people leave reviews on TripAdvisor?
Andrew: I remember asking Jimmy Wales, “Why are people writing your encyclopedia back in the early days? How’d you get them to do all that?” He goes, “People love it. It’s like bowling. Nobody says why am not getting paid to bowl. If you make a great experience to bowl, people will actually pay you for the experience.” He says, “They love writing here.” I get the passion here. But where do you find them? How do you bring them in?
Elizabeth: Most of it is word of mouth. So just like we do for clients we do for ourselves. I think when we’re working with members and we don’t care what they’re saying. They get hooked up with cool experiences and brands, they have a really great user experience on Influenster and I think it’s something they want to share with their friends. So a lot of our advertising has been what we get paid to do through a lot of these product mailers we send out.
Andrew: Do you reward people who bring in more friends? If I bring in more friends, do I get a badge or something or more likely to get a VoxBox?
Aydin: There are usually contests. You wouldn’t get a VoxBox, but there are contests that we do on like a monthly basis where referrals will get you a badge or more higher standing within the community. But most of it is that when we send products, with any given month, we send over 150,000 boxes. We send millions of products. You know what people do? They post on social media when they get these boxes?
Elizabeth: People are like, “Where’d you get that?”
Aydin: They tag Influenster and say, “Thanks to Influenster.” There is an FTC rule disclosure. We keep telling them, “Make sure you disclose that you get this.” If there is a free product you’re getting and you’re posting for that, you have to disclose. Actually, when they disclose, they mention Influenster and that helps Influenster to grow.
Andrew: Here’s what I think I’m getting. Here’s the bottom of this site. When I first discovered you guys, when someone on the team said, “You should interview the founders of Influenster.” I thought, “Interesting site, maybe there’s something here that’s fun for a small group of people.” The further I dig into this, the more I realize not the evil genius but the close to evil genius on the site, like every part of it is so freaking well thought out, but it’s underneath what feels to me like a mommy blog-type experience, what feels to me like an experience of younger people just kind of hanging out.
I don’t think of you guys as techies. I think of you guys who can manage a really nice design. Underneath it is this incredibly compelling user experience that I feel like I scratch like the surface of but anyone who’s listening to me should frankly — listen to me. I’m going to talk to the guys in the audience and the women in the audience, people who are too busy thinking about businesses to think about what acne cream they should look at.
Trust me, go freaking install this app. I never tell you to install anything. I’m not getting anything out of telling you to install it. Go install it. See how they warm people up. See how engaged people are with this. Look at the badges and how subtle it is, but it comes in at the right moment. I feel like instead of studying the same old growth hacking companies over and over, if people just were to look at Influenster, they would get a sense of what it’s like to just like, “Chill out, dude. Be smart about it, but don’t be overwhelming and look at how people come.”
I’m just totally too engaged in your world. I’m a little behind now with the time because I got too engaged. I’m so glad that you guys came here to do an interview with me. I’m excited about this business, as people can hear. I feel like your friends and family ended up with a deal they’re really going to be super-excited about.
Elizabeth: We hope so.
Andrew: Thanks so much for doing this interview with me. Seriously, guys, I’m putting my reputation on the line. Go download this app. Explore past the onboarding thing, which asks you for photos and maybe it will be fixed by the time it’s on. Read what they write. Look at how freaking engaged they are with acne medicine, with humus. I eat humus all the time. I don’t get that engaged with it. go read the reviews on there. All right. I’ve got to run. Thank you so much for doing this interview.
Andrew: I feel like I’ve discovered something that I should have known about and now I’m going to turn something people on to. Elizabeth, Aydin, thanks so much for doing this interview.
Elizabeth: Thank you.
Aydin: Thank you.
Andrew: Thank you all for being a part of it. Bye, everyone.