Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy and also one of Mixergy’s customer service reps. And the reason I say that is because a couple of months ago, I was going through email and I got an email from one of the listeners. And as we were talking, I got to know him and his business. And I said, “Hey, you know what? You know these interviews. Are you ready to do an interview here?” And he said, “Yeah, I am.” And then I passed him on to the team and the team said, “Actually, maybe, Andrew, not yet.” I said, “No, no, you guys don’t understand. I’ve talked to him. This story is fan-freaking-tastic.”
So we are now going to meet one of the listeners of Mixergy, someone who, like you, has been listening to these interviews. And as he’s listened, in fact, even before he ever discovered Mixergy, before Mixergy ever existed, he was starting up all kinds of companies. This is the kind of entrepreneur that I’m really proud to have on Mixergy because you’re not going to see today’s guest on other sites. He’s just not registering. I don’t know why. They feel like they need to cover just — Justin, I’m babbling in this intro. Why don’t I just shut up and go right into who you are. I hate when I do a bad intro, but I refuse to edit it out. I’m going to let the world see when I do it great, and I’m going to let them see when I do it bad.
All right. Justin Hartzman is the founder of Needls. It’s a robo-social media advertising agency. The way it works is businesses go to them. They answer a few questions, and then Needls builds anywhere from 50 to 500 ads in real time, and the number of ads that Needls will build depends on how many questions and what kind of answers you give. Then what they do is they run those ads for you. Am I right?
Justin: Yeah. That’s the nuts and bolts of it. I want to thank you for having me, first of all. I’m a little bit fanboying out, but great to be here.
Andrew: Does it suck that you came on here at a time when I gave the worst intro I’ve ever done, I think?
Justin: No. We’ll make the rest of the interview so entertaining that everyone will forget about that.
Andrew: Yeah. I also want to bring up that you’ve had lots of companies, including this company that you had back when you were 12, 13 years old that I went back in time and saw and I could have sworn I saw some porn ads on there, but I’m going to ask you about those. I saw that look on your face. I’ll bring that up in a moment.
But first I’ve got to tell everyone this interview is sponsored by two great companies. The first is a conference, and I’m so freaking excited to tell you guys about. I’m going to be there. I’m hoping Justin’s going to be there. I’m hoping you’re going to be there. It’s called Fireside Conference —no cell reception, we’re going to be in bunks together. It sounds crazy. I’m going to tell you more about it later. The second is a company called HostGator, which is what I use to host my new business’ website.
Again, I’ll tell you about them later. Justin, you know this interview. You know one of the first questions I’m going to ask you what kind of revenue you have. So, Needls, what kind of revenue did you guys do in 2016?
Justin: We launched April 2, 2016, and in our first fiscal year did $1.7 million and we’re on pace to do just under $4 million this year. So it’s been some pretty aggressive growth, from zero revenue to $200,000+ a month in total revenue in under 14 months.
Andrew: And have you been covered by the major tech sites like TechCrunch, Mashable?
Justin: Not for Needls yet. We haven’t. I’ve been there before for my past projects, but not this one. We’ve kind of taken a slow approach versus organic, which everyone tries to go to first. We took a totally different way of doing it. That comes down to using our own platform. We’re dogfooding our own technology to find our own customers. That’s the story we love to tell, and we can jump into a little bit later in how we’re doing that and why it’s so effective.
Andrew: And you’re doing that much revenue by charging people $100 a month or agencies $3,000 a month?
Justin: Yeah. So we charge $100 a month for our regular platform, and then we take between 10% and 15% of the ad spend they do on their side as well. So, yes, we are growing very quickly. I’d like to say, and I don’t have facts to actually back this up, that we’re the fastest growing digital agency of any type in the world, and we are the first robo-agency, as we call it.
Andrew: It’s such a creative way to run an agency. Again, on the traditional agency client side, where you’re selling to traditional agencies that basically are reselling your work, you’re charging $3,000 or more and you’re taking 10% to 25% of the ad spend from them, right?
Justin: Correct. Yeah.
Andrew: All right. Let’s go back in time and talk about this early website that you had. It was called RudeJoke.com. What was Rude Joke?
Justin: It was like your normal content site you’d go to, to find funny memes at that time, rude pictures. There was some 18+ content on it. We were young kids. We were only 12, 13 years old running this website with my buddy of mine, Jamie. It just blew up. Funny, enough, I’ll just grab it right here. I think I have it. I don’t think I have it right here. I have lots of other magazines I’m in. But I have somewhere the Maxim Magazine we were featured in, in 1999, as the joke site of the year to go to. That really exploded us from very little traffic to I think a million plus people a week at that time. If you knew anything before the bust, we were getting $60 to $80 CPM rates. It was an unbelievable time for us.
Andrew: Unreal. And it was all user-generated content from what I could see. It was a bulletin board, right?
Justin: Yeah. People could post up what they wanted. We’d highlight the things that we thought were super funny. It was passed around by email. That was the viral way at the time. It wasn’t any other way than that.
Andrew: And so, am I right to say that you guys had some porn ads on there? It seems like it.
Justin: I want to say I don’t remember, but yes is the answer. So, at that time, AdWords didn’t exist. YPN didn’t exist. We were using networks like Bla-Bla Network out of New York back in the day. They were awesome. You still got a physical check in the mail. You loved getting them. You expected them on the 15th of every month 65 days later. But yeah, these were all networks people will never have heard of. They had the run of network at that time. We couldn’t define who was on. There was no programmatic. Whoever was paying the biggest dollars we took.
Andrew: And I can tell you had a loyal community because some people would, before posting their joke, say, “Sorry it’s been so long since I’ve posted a joke. Things have been busy here. Now here’s a joke.”
Justin: Yeah. It was crazy. That was the funny part. We had to produce nothing at the time. We could just aggregate information at the time from all the places, searching on Google, probably Metacrawler at that time or some other search engine, and posted it. We got away with it. It was really interesting. It all went really well until the bust happened. And at that time, things really just fell apart.
Andrew: Before the bust, what kind of revenue were you doing per month?
Justin: I think we were doing — I’m trying to remember exactly — I think for us it was a lot of money. It was between $15,000 and $20,000 a month. As a 13-year old, your parents thought you were doing other things, not that.
Andrew: What did you do with the money as a 13-year old?
Justin: I actually have been always into business. My family is big in investing in real estate and other methods. I invested pretty much every dollar that I made. Until I was married with kids and I went into a startup and had all these viable businesses, I think I invested 70% of every after tax dollar that I have back into different methods.
Andrew: Into real estate mostly or into other things?
Justin: Mutual funds, stocks, real estate.
Andrew: So safe bets?
Justin: Safe bets, yeah, into some startups at the time that I was doing, which was interesting. I made two big mistakes the last four years.
Andrew: The last four years, meaning since 2010?
Andrew: Before we get into that, I want to understand these investments that you made. Frankly, we’re going to go to a conference together, I hope, so I want to ask you more about it in person. I remember as a kid, I was making good money. I wanted to invest in real estate. No one took me freaking seriously. Even my family, who was in real estate, would say, “Come back when you’re over 18.”
Justin: My parents were always into that. I came from a very good family. We had everything provided to us during the recession that happened in the ’90s. It was a really bad time for our family. We had to readjust. That’s when I really learned the value of a dollar, going from having absolutely everything in the world to not having absolutely everything in the world.
At that time, my parents also changed from being entrepreneurs that my dad went — well, still an entrepreneur — went into real estate and my mother went into financial planning for people. They spent years to get into that. I started learning it with them and understanding it. It was easy for me at the time. They wanted me to understand it, and they wanted to push me into it and really understand the value of what it meant. So they were very supportive in helping me get to that spot.
And just the group of friends, even the guys I started this business will, Jeremy now, we’ll get into how we met in a minute here, they were very into it early on. So we really in the game, whether it was an MLM that we invested ourselves into early on in the telecom business or whether it was stocks and IPOs at that time, day trading. We tried it all.
Andrew: Did you lose a lot of money? Or by the time you were 20, did you have a considerable bank account?
Justin: I’d been lucky. Well, I guess it’s not lucky. I guess I had played it safe enough that I had a considerable savings account.
Andrew: How much would you say by the time you were 20, 21?
Justin: I’m open to saying lots of things. I’m not open to talking about that. I actually couldn’t tell you, but I’ll put it this way. I had my bar mitzvah at age 12 and I still had — that was worth seven times when I got it at that point, and I put in probably 500, 600 times that amount. So there was a considerable amount of money put away at that time.
Andrew: Wow. And it was all in safe investments. You’re saying you took your bar mitzvah money and you 7x’d it?
Justin: Correct. My mom 7x’d it, actually, yeah. It was set it and forget it for me. Just take it and do it. I had trust in her to do that.
Andrew: Okay. All right. I’m sensing you were about a millionaire by the time you were 21.
Justin: I don’t think a millionaire. Actually, by 21, I think we had made our first million dollars working with my current cofounder.
Andrew: Let me ask you this. Why did Rude Joke work? There were so many people trying sites back then. A lot of them were failing. Some of them raised money and seemed to succeed for a while before the internet bust, but very few actually were able to put cash away. Why were you able to do it? If you could, analyze that for me.
Justin: We had no cost. It was all just myself and Jamie working on the site. We were making dollars to do it. And for us, we had some advantage. I’ve been very lucky and have been very —very lucky items have happened to me in the past.
I guess at that time, we knew someone who worked at Yahoo and for $75 a month, we got the number one listing on Yahoo, so we could actually pay for it at the time. Yahoo did that. When Google came out, they followed their listings at the beginning. We had the success going to there. That pushed us. Then Maxim found us. When Maxim found us, we had this huge following, and they perpetrated it and sent it around. It was the original viral effect.
Andrew: Because Yahoo was a directory, human-curated directory and if you ended up at the top result, you were getting the most traffic. I see. You paid $75 a month to stay at the top?
Andrew: I see. All right. Then the bust happened and people stopped paying their bills. But they came back to you and they said what?
Justin: I look back and I think they were trying to do anything they could to figure out how to get some of their revenue back. So they read some articles about us. We were one of their highest single property sites. They realized that we were 13 years old, and you had to be 18 years old to sign a contract. Looking back, our parents did sign it on our behalf. We were smart enough to do that.
They said that wasn’t the case. They thought we had forged that on their behalf. They looked at it and said, “We’re going to come after you.” We said, “Here’s our parents’ lawyers’ information.” We never heard from them again. It wasn’t worth their time or their energy. We kind of went, “What do we do now?” We were kind of scared by it. Then we had another great opportunity fall into our lap.
Andrew: What was that new opportunity?
Justin: A good friend of ours, again, his grandfather owned a factory that produced high-end watches. He was selling us watches at 25% of the wholesale cost, anything that came off of the production line afterwards. We were selling on eBay for 50% of wholesale, sorry, retail. So everyone was buying them. We couldn’t keep them in stock. Eventually, this company went, “Holy crap. How are people selling these watches at these prices?” And word got back, obviously and that dried up.
But it helped us really understand eBay. That was our eBay days. This is before they niched out into certain areas. We really worked heavily with them for them to understand what it took to list and promote jewelry. These watches how diamonds on them, how they were graded, what they had meant, so they could have proper search and functionality. We worked with them very early. We were a power seller.
Justin: It was exciting times for us. We’d be sitting there. At the time it was just by email, no text message, nothing for this. The phone would be beeping. We’d make custom ringtones. Every time we had a sale, we had cha-ching go on. It was awesome times. We were still young too then. We had to be like 15, 16 years old.
Andrew: I feel like most kids don’t understand entrepreneurship can be, how much fun these businesses can be. All right. So then suddenly that business dried up. You stayed in school. I’m imagining you had a bunch of other businesses. And then you graduated and you got into real estate.
Justin: That’s right. I went into real estate development. It’s what I knew. It’s what my parents were doing. They were from a small city outside of Toronto where I’m located. I was trying to make a name for myself here in Toronto, the big city, the big smoke, the exciting place. Everyone I knew and I ran in a pretty good circle of people who were affluent enough to purchase homes or condos at that time coming out of universe, but there was no trust then. Everyone had an agent. Everyone had developers they were working with. Who was I, someone who didn’t have a name?
So three months into that — listen, I took every advantage. I got on an early reality TV show with Michael Holmes that was on at that time. I made a couple bucks in it. It wasn’t that bad. I had support from my parents still at the time, which was great. But three months in I called Jeremy. Jeremy is one of my cofounders at Needls, along with Michael, and he went to work on Bay Street, our equivalent to Wall Street here in Canada.
I just called and I said, “You’ve got to send me $5,000 right now. Don’t ask questions. We’re going to do something. I’m not doing this shit anymore. I’m not running around the city like an idiot. I’m just not doing it. It’s not what I was built for.” He said, “Well, what do you want?” I actually was asking the question and said, “Just give me $5,000 and next week you’re going to quit your job.” He sent it to me. I don’t know why he trusted me, but we had a long history together.
So I sat down. I had $5,000. I was going to risk his money, not mine, which was even better, right? I said, “What am I going to do?” I reached out to a bunch of buddies on ICQ at that time. I still had it and still had it on my list.
Andrew: I saw ICQ all over Rude Joke.
Justin: Yeah, 725208, still know my number.
Andrew: That was your number? Okay.
Justin: That was my number. Great guys. I met the guys who started ICQ right after they sold. You know a funny story? You want to hear about them?
Justin: After they sold for $100-something million, one of the biggest sales we heard about at that time, they both went out and got a UPC code registered for how much money they made and then put it on their arm, so anytime they go somewhere, they could get their UPC code. That’s awesome. If I ever had a tattoo, that’s what I would do. I love it from those guys.
Andrew: This is the ICQ founders that did that?
Andrew: Wow. Okay. I don’t hear much from them, but I hear their dad a lot. He does events in Israel, where he brings entrepreneurs from the U.S. to come invest.
Justin: Where were we?
Andrew: You were saying how you connected with your cofounder.
Justin: That’s right. I said to him, “Let’s do this.” He said, “Okay.” I sent it. I went on to ICQ. I started talking to a bunch of guys that I knew. One of them said, “I’ve got what you’re going to do. It’s going to make you a ton of money. But I’m never going to talk to you again after I tell you about this.” I’m like, “Okay, that’s weird. But if you’re going to make money, I’m interested in talking to you.” He goes, “I’m starting a thing called a social network. You’ve never heard about it before. You don’t know what it is, but I’m doing it. I’m going to build the platform, you build the content. I know you guys like to do content.” And he deleted me. I sat there, I’m like, “What is this?”
I started Googling it. There’s no such thing as social networks. No one’s talked about this ever. Nothing is out there. So I kept emailing him. I kept trying to re-add him as a friend. Five days later, he gets back and he goes, “Oh yeah, sorry, it’s called Myspace.com. Delete.” So this was Tom. He never talked to me again, never really knew the guy very well, just knew he was going to be making money at the time.
Andrew: How’d you know Tom?
Justin: Just crossing paths at that time doing business.
Andrew: Tell me what kind of business you were doing with Tom.
Justin: That’s the whole thing. It could have been something for Rude Joke. It could have been on eBay days. It could have been when I was doing online —
Andrew: Why would you reach out to him?
Justin: I reached out to everyone on my ICQ list that I had talked to at one point.
Andrew: Trying to raise money?
Justin: Not raise money, just trying to find ideas of what goes on in the industry, asking where they think it was going and where I should be putting my money or Jeremy’s money.
Andrew: I’ll tell you how I knew him. We were looking for ads when the internet bubble burst. I was trying to figure out, “What do I do?” Before the bubble burst, I had these top-tier advertisers paying premium bucks for good quality relationships. Then I started to, when that dried up, look all over, “What can I sell?” And these guys, I forget the name of his company, they used to have these small, remote control cars, for like $10 or $20. They sold a bunch of cheapo stuff online. They just sold. So they’d buy ads in our email newsletters, and people would freaking buy these things.
So I connected with them, and then I also knew the company that ended up buying them. Then when I sold my greeting card company, it was to the company that started Myspace, that Myspace was a part of.
Justin: I remember now how we met him. So I knew another gentleman who was working with him beforehand. He owned free disk space. So originally Myspace.com was supposed to be essentially Dropbox is what they were planning on doing at that time. I connected him about that and he introduced me to Tom. Eventually, as the story goes, he told us that and we had no idea what it meant.
But he was making a platform. We went to it, we saw it, and we realized there were all these ways to use HTML code to produce things to customize your profile. So we became the first guys to customize or pimp your profile and provide the content. We had people in India, Indonesia, all these places pumping out as much as we possibly could so that we can offer it free to our users.
Andrew: They were creating designs that would reskin people’s Myspace profile, and you were offering it for free as a reason for people to come to your site.
Andrew: I see.
Justin: It went so much deeper than that, because we had the ability to provide the HTML to them. We could essentially take over three-quarters on their page on the left side, so anyone who clicked there automatically came to our website to see what was —
Andrew: Right. That was a whole business. So you’d give them the skins for their Myspace page, but you’d also get links back to your site, which kept bringing in more —
Andrew: This was a business you started while you were in real estate?
Justin: Well, yeah, I guess, essentially. But it was like one day to the next. We made the site in three days. It took nothing to do. As soon as we put up one, it started getting traffic. I just kind of let real estate drop off. It made no sense to me. We were making money instantly. We grew really large. In three months, we went from 100 visitors a day to 1 million people a week to over 20 million people a month we were seeing on this within three months, and we sold that company three months in. It was pretty exciting for us.
Andrew: What did you sell for?
Justin: Just under $1 million. It was really significant for us at the time.
Andrew: All right. Let me pause this right here and just say to the audience two things. Number one, when I was babbling in the intro, this is what I was trying to say. I feel like, Justin, you’re the kind of entrepreneur that I’ve known for a long time and I’ve loved getting to know, but that the rest of the tech community doesn’t talk about.
They would much rather talk about someone who has a 5% chance of making it and is more likely going to die than someone who’s building a real business. They’re these real growth engines underneath the internet economy and the tech economy, and they just don’t care about them because you’re not going to turn into a unicorn tomorrow. You don’t have backing of somebody who’s kind of promoting you to these publications and so on.
That’s fine. I’m not faulting the publications. I’m just feeling like the vast majority of entrepreneurs are missing out on how business gets done online. That’s why I’m proud to have you here as a guest.
Justin: I appreciate that. That’s something that comes up in a lot of your episodes, which I love. I understand the underbelly of what we call this internet game, which is not everybody needs to know about it, but it’s really what does drive the economy. Not only does it drive the internet economy, it’s where a lot of these unbelievable ideas come from. We had a need or we saw a gap in this market. For us, to be frank with you, everyone wants to be a disruptor. We went, “I don’t want to be a disruptor.” We spent a long time understanding how we should get into this business. We wanted to fill a desperate need. When you can fill a desperation, that’s when you can become the biggest companies out there that people never saw coming.
Andrew: All right. I’m writing the word desperation so we can come back to that, because I think that’s an important word to talk about. But first, I want to talk about my sponsor. I wasn’t going to talk about them because they didn’t give me enough data. Then when I told you I was supposed to talk about Fireside, I can’t do it today. Do you remember what you said?
Justin: I said I love them.
Andrew: You actually applied to go there. So I thought let’s find a way to do this today. Why did you apply to go to Fireside Conference?
Justin: Well, it’s a local conference. I’ve known the guys in passing very well who’ve run it. I’ve wanted to go for the last two years. I’ve just been away, and we’ve been busy or I was down at an accelerator in the States during what was going on. This year I’ll be here. It happens right about when I’m having my second child. So we’ll see how this goes over, but I hope to be there. It’s just something that’s exciting for me.
Part of what I’ve been trying to do as an entrepreneur and learned more about myself is take on a business coach and go to communities where I can learn from and really open up. This is a place where you can feel safe to open up your vulnerabilities as a CEO with problems you may be having within a company, with your company, people who have been there before. There are no distractions. You’re there for a couple days just doing it. I might be stepping on your toes, but I love the fact that it’s no cellphones. For me to ever relax for a minute, you’ve got to put my cellphone in a safe and don’t give me the code. It’s buzzing in my pocket right now. It’s driving me nuts.
Andrew: I know a lot of times when I go to conferences, the worst part of the conference is sitting there watching something that I could frankly just go back home and listen to as a podcast as I run or go about my day, getting ready for work, whatever, and I don’t need to waste that time. I didn’t fly all the way out to the conference so I could sit there for eight hours so I don’t feel guilty avoiding stuff.
What I really want is I want the drinks that happen after hours. I want the escape that happens in the middle of the day when you’re supposed to watch a speaker, but you really get together with four other people and you go do something. The problem with that is many people don’t want to give up on this stuff they paid for. They paid for the program, so they don’t want to leave. Or if they do want to leave with you, you’re wrestling with, “Where do we go? We’re in the middle of Chicago. What’s fun to do in Chicago but not so far that we’re going to miss the rest of the event here?” So it becomes a pain in the butt.
So what I like about Fireside and the reason I’m going there and the reason I’m promoting it is it’s all about that stuff that you want in a conference and none of the boring speaker stuff that distracts you from the conversations and the relationships that you want. So we’re all going to be in bunks. They actually said to me, “Andrew, you’re a celebrity. Do you want your own space, your own cabin?” I said, “Actually, I don’t want my own cabin. I want the full experience. I want to actually be in with other people. It’s helpful for me to do that.”
And then we’re going to get to do things like waterski and play tennis, which I’m not a tennis player, but who knows? Sometimes you just want to try stuff — basketball, there’s a private lake, there’s some rock climbing. The whole thing is included. So, unlike other conferences where in the middle of the day you want to escape with someone to just go have a fun activity so you could talk to them during it or get to know them as you play tennis or whatever and you can’t find those, here they give it to you.
They make it all available. They also say, “Look, keep your wallet at home.” Well, I guess bring it with you so you have it in emergencies. But you don’t have to pay for the waterskiing and you don’t have to pay for the alcohol. You don’t have to pay for the camp activities, for the tennis, etc. All camp activities are included. We will provide what they’re saying to you, just be there.
The reason I want to go is to get to know you if you come, Justin. They’re going to get to know people like you. The reason that I want to be in a room with other people, even though there’s an option not to, is so I can keep hanging out and talking and getting to know people. So if you’re out there listening to me and you’re an entrepreneur or investor, this is the place for you.
Come to Fireside, where we wall just disconnect for a little bit and get to know each other and talk shop and talk life and talk and talk and do the kind of stuff that we try to squeeze in at other conferences but don’t really get a chance to. It’s a beautiful opportunity. I’m looking forward to getting to know everyone who comes.
If you’re a Mixergy listener, you can go to FiresideConf.com and request an invitation, which is what Justin and many other people will do, or you could go to the special URL where they will have you skip the line. They know that if you’re listening to Mixergy, you’re going to be a good attendee. They want to really curate this event.
But I said look, if they’re coming from Mixergy, you can trust them and they’ll just automatically accept you if you go to this URL, FiresideConf.com/Mixergy. And when you go there, there will be a special bunk just for Mixergy people. If you want to be in part of that, you’ll get to know other people. We’re going to have dinner together. I expect to do scotch night with everyone. It will be fun. It will be useful. It will be a great way for you to get to know other people and for them to get to know you. Come sign up at FiresideConf.com/Mixergy.
Justin: It’s awesome there. It’s amazing. It kind of brings me back to my like origin story, because this is exactly the kind of conference you want to be at, where everything is what you’re hoping for at another, those collisions where you’re coming together outside of it where you can actually talk to someone or be part of an activity and get to know them, you’re only doing that. So, it’s the best part of every other conference that you wish you want to go to.
Justin: And it’s camp. These are the guys that we went to camp with. Kids camp. Some of them in our community —
Andrew: Did you literally go to camp with these guys?
Justin: I didn’t go with them at their camp, but that brings me to my origin story, where I went to camp at six years old with my cofounders and we’ve been —
Andrew: I see. That’s how you got to know — got it.
Justin: That’s where you have your best relationships, the most long-lasting ones. That’s why 20+ years later, we’ve sold two companies, ran two very amazing ones, as we’ll talk about, and now have this awesome startup together and we really understand each other. So I think it’s bringing people into that same situation that got me to where I am today.
Andrew: Yeah. I kind of think that I should have started Fireside. Maybe if they run into trouble or they decide that they don’t want to do this for some reason, I should partner up or buy it. It’s such a great freaking idea for a conference. Just bring us all together. I don’t want the speakers.
All right. Let’s come back to the word “desperation,” which was — is it wrong for me to say that if my sponsor’s business crashes, then I want to buy it? I just dig it.
Justin: I think the more likelihood is they have one in Canada. There should probably be one in the south as well.
Andrew: Right. I should just say, “This is a great idea. I need to do something like that here.” All right. Let’s come back to the word “desperation.” Desperation. Why is that important when you’re looking for a business? Why did that allow you to build these companies that we’re talking about today?
Justin: I think it starts from after we did Rude Joke, did the watches, went to college, university, came out, started the Myspace third-party sites, sold that. To finish that story and get where we are, we sold the first company after three months. We took that just under $1 million, we bought all of our competitors because it was a quick-moving market. We had an advantage because we were on Yahoo Publisher Network. YPN was paying out ten times what AdWords was paying. We bought them on AdWords. We put it on YPN, made our money back within a month or two, and then nine months later, rolled them all together and sold that out. So we had two really quick sales.
Andrew: So you bought all these sites that were customizing people’s Myspace pages, you put them all into one business, changed the ads that were on there for ads that were producing ten times as much revenue, and then you rolled them all up and sold them to who?
Justin: It was just a content company out of Hawaii. They were interested in this. It was an individual. He ran them into the ground.
Andrew: Of course because the whole business died when Myspace died. In fact, even before Myspace died. I interviewed an entrepreneur who was — I think he was like 19 at the time when he had a business like this. And he made one change to a site, lost his SEO, that’s how he was getting traffic, and the whole thing just went away. It was the moment in time type of business. You sold at the right time. How much did you sell this rolled up collection of businesses for?
Justin: So we made our $1 million back by putting the 10x ads on it.
Andrew: You mean in revenue you made your $1 million. Your cost of buying the sites you made back in revenue and then you sold it for how much?
Justin: Just under $2 million at that time. We had to get —
Andrew: So a total of just under $3 million just from the Myspace customization business.
Justin: Plus revenue we made in that nine months. We did pretty well on it. But more than that, we learned a lot, and it helped us to grow to how we got to where we are today. The reality is to your question is what I’m getting to here — sorry, it’s long-winded, but that’s who I am — we realized that when we were selling those two businesses, there were no internet brokers out there that existed, that we had become that. We had to fill that gap.
Now everyone we talk to, they just heard about the YouTube $1 billion deal. It’s only private equity firms and lawyers who are doing mergers and acquisitions, but there was no one doing the middle market boutique deals between $1 million in EBITDA and $50 million a year. So we said — and at this time, it’s how you branded companies. We said we’re starting two companies right now. One called All You Can Eat Internet, where we made people’s businesses. So everything from ideation to creating and marketing them, so a typical dev shop.
Where I spent my time — Jeremy actually was focused on that — was on WeSellYourSite.com. Very simple name, but no one forgets it. We’re all about that brandability. That’s what we did. We went to these people. You can’t go to a typical business broker who has no idea what analytics is and how to measure traffic and try and sell something. We became that. Before you’ve had Empire Flippers on and before Matt at Flippa started Flippa and these marketplaces, we helped really pioneer this industry, but we always stayed boutique brokerage. So every listing that we did we vetted and we sold one off. We never marketplaced the scenario.
But, again, back to your question, over the last 10, 11 years, we got to see so many deals happen. Not only just what they were and who we sold them to, but we got to get under the hood. How are they doing their SEO? What is their email marketing? What are they doing with the tools, the processes that make it easier for them? How are they automating? All of the stuff that you talk about every day on Mixergy we got to live every day.
What we got to see after we analyzed and sat back and looked at all these deals and said, “What do we want to do next?” We said, “We ought to find desperation. That’s what we’ve always looked for.” What we looked was it had to have something to do with social media. We saw at that time ad networks and ad tech were getting the highest multiples. We knew that SMBs were so underserved in those markets. So if we could hit on those three pieces, we have a winner in the desperation category, which would help us to succeed.
Andrew: I’m wondering — I get why you do WeSellYourSite. There was a real need for smaller to midsize businesses to be able to sell their stuff, and they couldn’t do it and I get it. I’m wondering why you got into All You Can Eat Internet. Why did you get into services when they take so long? They don’t scale well. It doesn’t become this huge business that you can sell easily. Why do that?
Justin: Well, we just didn’t know what we were going to do. We sold these companies. We had some money. We knew that we could make websites. We knew SEO. We were ranking top ranks and all these terms for what we were doing, starting in the Rude Joke days through to the Myspace days. What was happening is people would go okay, we’d buy that little site at $100,000. At the time, we were doing lower price sites, nothing less than $100,000. But then they’d want to make a better site or market it better or want to add features. It just came into this natural progression where they were growing really quickly.
But that’s where it comes to in 2013. We have these two service businesses that take all of my time, all Jeremy’s time, Michael who joined us at that time on WeSellYourSite, we said it was growing quickly and I needed other hands, but if we wanted to go on holiday or go away for six weeks to Europe and just fuck around, nothing was happening and we weren’t making money.
The problem was we were seeing all these people, we were playing with the Joel Comms, the EVRs from JVZoo, JLD, all these guys that were running — we were selling their businesses for them. We saw they were building s scalable solutions that if they weren’t there, they were making money. We were like, “This is BS.”
So actually funny story. We were sitting in our year-end meeting, 2013, companies were each doing — I’ll put it this way. We were making north of $500,000 each at these businesses prior to this. We were sitting there going, “How do we scale them?” But it was only us.
Andrew: With these two businesses, the We Sell Your Business and All You Can Eat Internet?
Justin: Yeah, WeSellYourSite and All You Can Eat Internet. We were making a lot of money. But we wanted to grow them. So we were sitting in a meeting. I got a phone call from my wife at the time and she said, “Hey, Justin, you see that your friend Jeff needs an iOS app built? I think that’s an iPhone app and I know you guys do that.” I said, “You think I sit on Facebook all day long?” She’s like, “Yes, that is all you do. What are you talking about?” “I don’t, but please tag me in the post.”
So she tagged me in the post. I hadn’t talked to this guy in ten years. I called him right there in the meeting. I messaged him and called him. It turned into a $60,000 contract. That’s kind of —go ahead.
Andrew: I see. I get it. He’s posting because he wants a friend to do it. You’re responding — or because he wants someone to do it — you respond right away and I can see how that would translate into a big sale.
Justin: Yeah. The moment was, “Holy shit, people were asking for things on social media. How do we get to those people, and how do we offer what they need right away?” So it was the holidays. I went away for two weeks. We came back January whatever day it was. He came back. I had one of our developers just create a simple script that just watched my Facebook wall or news feed. Anytime a simple keyword came up, like website, building a business, logo, we’d do it.
We increased our business by $300,000 in the first quarter by just this one script that watched it. Come that March, we said, “We’ve got to do this. It fits all the boxes that we talked about.” We were looking to buy a business at that time. We had an advantage. We understood it. It hit social media. It hit advertising and marketing, and it hit small business. So it hit all the boxes that we had studied hard from our past sales, and we saw that there was a need for it.
We produced it, our first version of it. We hired a guy from overseas that we never worked for. We didn’t want anyone touching it from our current companies. We built it as a white label, and we went back to our roots because we were really into the webinar scene, especially with our clients. We sent out an email. We partnered with a great internet marketer. He’s here local in town. His wife actually we’ve known forever. She went to camp with us as well when we were kids. We said, “Hey, we have this awesome product. You are amazing at webinars. Why don’t you go sell it? It’s a white label product, okay?” It was Needls, but white labeled.
We scrambled it all together. We set a date of November 24th, 2014. We’re going to do our first webinar. We sent an email to 17,000 people. We got 440 on the call, super disappointed. We’re like, “This is crazy. What are we going to do here?” We had such high hopes for it. We do the webinar. He knocks it out of the park. We convert 280 of them for yearlong packages on the phone call. We bring in revenue, over half a million in revenue on the first 48 hours, and that set us up for everything in the steps that we got to today. That product sucked. It wasn’t great.
Andrew: What the product did was it allowed people — like I could say find anyone who’s using the word “startups” or whatever or maybe want a bot. If they want a bot, then I have a list of them and I can contact them and say, “Hey, we have a service that will do that for you.”
Justin: Right. It was a lead generation tool. But the problem was people want leads that are looking like 100 to 200 a month. They’re not looking for 5 to 10. Our intent technology at that time, which is what our whole company is based off — we’ll talk about that — wasn’t that accurate. We were about 50% accuracy, which is still higher than the industry average at 35, but when you send someone 30 leads when they want 100 and only 15 of those leads are worthwhile to them, they don’t love the product.
Justin: So we were in trouble.
Andrew: Why were only 15 worthwhile to them?
Justin: Well, because only 15 of them had the proper intent with them. I’ll give you an example. You’re a contractor who does bathroom renovations. You don’t want to get another lead that says, “If you want to do your bathroom, call me. I’m a good contractor.” You don’t want to see that. You want to see, “I’m renovating my bathroom. Call me to give me a quote.” So it looked very similar, but you were giving them a lot of crap that made no sense to them, if that makes sense. They didn’t love it. We sat down and we actually at that point needed to go for funding. I knew nothing about that.
I had never really raised capital. We did for — in between, we did another startup, which we can talk about. It was a nice fail that we had called TicketFlow.com. TicketFlow was a third-party ticket aggregator like Kayak.com or SeatGeek does. So, actually, I love the interview you did with the guys at SeatGeek because we knew each other at that time. We were building our companies, and they succeeded and we didn’t.
Andrew: Why? Why do you think you didn’t where they did?
Justin: Very simply was because we were under-funded. We had $100,000 to do it. It was a hard problem to solve. The market was super cloudy. Users had no education of what a secondary ticket market was at that time. They persevered through that. They were based on more of a technology of fare prediction at the time, which was kind of why they were getting more press. We were in The Wall Street Journal. We were talked about in TechCrunch.
It was great, but they were getting more because it had a better technology aspect to it and they persevered. So I’m super happy that they did. Someone had to succeed there. I remember I was looking back before this interview at emails that we had back and forth. We were helping each other out at that time, and we wanted to see each other succeed, so I’m happy they did. Go ahead.
Andrew: You know what? I just have to tell you that part of the reason why I’m smiling has got nothing to do with what you’re saying. It’s something to do with what I see. I found a link that I don’t think you guys meant to make public of every single business you guys have for sale right now on We Sell Your Site. I don’t want to distract from the conversation, but I’ve got to show this to you at some point. I’m going to put it in the chat.
Justin: Okay. Let’s take a look at it.
Andrew: I don’t think you mean for that to be public, but I can see you guys have a nursing essays page, where people can buy nursing essays. I guess that’s one of the businesses that you’re selling, BuyEssaysHere.com. Then you have all the different links for it. You have a cellphone spy app. That’s one of the businesses that you’re selling.
Justin: These have been sold, most of these businesses. That’s a directory of where everything is.
Andrew: I think your index is accidentally showing, not a big deal. I like looking at it getting a sense of the business behind the scenes. What kind of revenue is that business doing right now, the WeSellYourSite?
Justin: We don’t run it at all. We stepped back from it. We still have it in existence for two reasons. We get a lot of incoming leads, and when I get something that’s interesting to us that might be a good addition to our business, we look at buying that ourselves to help us grow, plus it’s a great for me to find investors or high net worth individuals.
Andrew: Because they’re on there buying sites.
Justin: They’re on our buying site. They’re looking to invest. I can introduce them to Needls and bring them there. Plus we have some deals that are paid out over many years. We’ve done this for their buyouts or their earnouts or stocks. We have to keep the company open while we continue to receive that in. But essentially it’s zero dollars.
Andrew: Is there someone running it for you? You do have a pretty big list of sites that are being sold here.
Justin: Yeah. Most of them are sold right now. We’ve totally neglected that business. We do not run that at all anymore.
Andrew: Okay. What about All You Can Eat Internet?
Justin: No. Same thing there. We don’t do that.
Andrew: I see. Once you discovered that Facebook intent is a thing, even though the first version didn’t work out for you, you started to shift your attention completely to Needls. You’re 100% on Needls now, 90%?
Justin: 100% because there’s nothing bigger than that.
Andrew: Fully focused on it. I like that you wouldn’t even say 110%.
Justin: What makes people say that? There’s no 110%. It’s a full 100. Let’s go with that.
Andrew: Let me take a moment here to talk about my second sponsor, HostGator. But instead of me saying it, knowing all that you know about businesses, and you’ve seen so many bought and sold on your platform, you’ve helped create so many, both yourself and for your clients. If someone were starting out with nothing but a HostGator right now and it could host anything for them, what’s a simple, easy to get up and running business that would produce real revenue?
Justin: Well, it’s changed so much. First of all, I love HostGator. We’ve used them. We still use them. They host our blog.
Justin: Yeah. We refer to it a lot. We were one of their major referrers for a long time. That’s a good question. I’ve heard you ask it before. I think right now, I’ve been out of this game for a while on the brokerage side, but I don’t know, I may have to come back to you on that. I think if you can niche down into specific topics under a category, so not just mommy blogging, but getting down to children’s fashion in that way or nutritional eating, I think that’s a good way to start out and start gaining an email list to then do other things with, which we all know very well.
So it’s niching down into very specific topics that other people aren’t and being really real about it. It can’t be just ideas anymore. You have to be super focused on the truths. I think we need to get the truths out there, that’s when you start having the followers.
Andrew: So maybe like a wire cutter. Could you see a wire cutter for kids’ toys being a thing or a wire cutter for office electronics?
Justin: Yeah. That’s exactly it. You know what’s done so well on YouTube, just the unboxing of children’s toys, millions of views on that stuff. My daughter is obsessed with them. I have to pull the phone away from her, which I don’t give to her in the first place, she takes it herself and knows how to put the password in and do the whole thing. She’s not even three yet. I think those are the areas.
It’s unfortunate. We came from the days when you could start anything in your basement and they could turn into those huge businesses. It’s hard to do that now, and I don’t want to discourage people because you have to start and you have to try. You’ve got to do a number of things before you find what it is you’re passionate about and then just take it to the complete other level, be so OCD about it.
Andrew: Do you think there’s room to, say, resell Needls’ services, your services, as a —
Andrew: Could someone start a standalone site that says, “I’m going to place ads for you online,” and really what they’re doing is reselling Needls?
Justin: They do it now. We have a white label version of it. We have an affiliate program. That’s exactly what they do. They go out. We work with agencies. The reality of the fact is all these — I don’t mean huge agencies. I mean a guy or a woman who has 20 clients in their small town and does their business for them. They only have time to deal with the ones that have $10,000+ budgets because it’s only them doing it. So when they can account manage and they want to bring in additional revenue, they use us to be their secret weapon. So anything under $5,000 in budget, they’ll put it on our platform. They do that. They build it and brand it themselves.
Andrew: So they would create their own ad buying agency. Could they start off with not doing any work themselves but just writing content, bring in customers but having you do all the service?
Justin: We do it all. That’s how it works with us. So it’s driving the traffic in.
Andrew: I’ve noticed there are some businesses built that way. What they do is they get nothing but a website and a blog on a site. They write some good content and they start pitching themselves individually to clients saying, “Hey, I can buy ads for you,” or, “I can build your mobile app for you.” But in reality, they don’t buy the ads. They don’t build the mobile app. What they do is they then pass it over to an agency like yours, and the agency builds it, and all this new company does is act as an in between, someone who gets customers and then helps them when they have issues.
All right, guys, if you’re listening to me, whether you have that idea or any other idea, I urge you to go check out the site that Justin and I have used to host our sites. It’s called HostGator. HostGator has lots of different plans. When you go to this URL that I’m about to give you, you’re going to see their cheapest plan, and it’s going to be 50% off. If your business is growing, if you want dedicated server, if you want WordPress-managed hosting, meaning you tell HostGator, “You guys manage my site. I don’t want to have to deal with plugin conflicts, etc.,” all that’s available.
You can start out with the cheapest plan, and you can keep rising up to the level that you need. I now have a new business that builds bots for other companies. We host our whole site on HostGator, haven’t had a hiccup with it. It’s a really solid hosting company, and I urge you guys to go check them out at this special URL where you’re going to get 50% off their already low prices. It’s HostGator.com/Mixergy.
And of course, beyond that, if you ever have any issues and you sign up through my URL, let me know, I want to find out about it, good and bad. All right. HostGator, thanks for sponsoring.
Justin: Hosting is some of our biggest problems we’ve ever had in business. They go down or you think you need to have your own servers and then you have no one to manage them. HostGator just makes it simple. The fact is they have great support any way that you want to get them. They’re a great company. I urge everyone to start there. The fact is they have great support. They’re a great company. I urge everyone to start there when they’re getting things running. It’s the best solution.
Andrew: I do too. I’ll be honest with you. There was a period where their tech support was getting slow and people would email me, because I encouraged them to tell me when things aren’t working with the sponsor. So I said, “Hey, guys, let’s pause the ads. Let’s see how you guys are doing.” I wanted them to address all the issues we had and then once I understood what the problem was, which was they were getting so many customers they couldn’t keep up with tech support, they caught up and said, “Let’s start up advertising again,” because tech support, I think, is really important for hosting companies.
All right. Now, let’s come back to you. Needls starts out as this site that monitors social media and gives two small/medium size businesses leads. The leads aren’t really doing so well, but you’ve got some revenue, you have some customers, you want to iterate on this thing. What’s the next thing you did?
Justin: So, like I said, I wanted to raise some funds, but I had no idea what I was doing, literally none. So I went to a local firm out of Montreal. We spoke to them and said, “Can we have some money? Can we join your accelerator?” We had no idea what we were doing. And they came back to us, “We love your idea, but you’re a little too far in advance with your technology. We’re a technology accelerator to get you going there.” Eventually, they said no. Then they said, “Listen, we have a new general manager that’s joining our group. We’d love for you to talk to him. I think he has some good insights for you.
So we got on the phone with him and he said, “Hey, guys, I’ve kind of tried this myself before. Here’s where I failed. I’m just leaving Twitter right now. I’ve been there for five years on their advertising product side of things to run this accelerator and be a general partner on the fund. I’m going to give you a word of advice.” All these people giving me advice. He said, “Be a data overlay onto the social network’s advertising platform.”
Andrew: What does that mean?
Justin: Exactly. I had no idea what that meant. Well, long story short, we reached out to him, we spoke a couple more times. He helped mentor us a little bit. What we realized and we brought that to mean was we’re having data that really sets us apart, why don’t we create ads to those people and look at what those people look like and build demographic groups around them for better advertising targeting.
So what we morphed into and what we were today is a full-service ad platform that overlays onto Twitter and Facebook. Sorry, it was Twitter and Facebook. We have removed Twitter from our platform as we found results weren’t working very well, and they’re having their issues with their tools. We are now Facebook and Instagram, and that’s been a really big upswing for us.
Andrew: So now, if want to target my audience, I can come to you and you can help me find the right people to buy Facebook ads for?
Justin: Right. Let me just run you through how it works. So, as a robo-agency, we do three specific things. One is the creation. The second is the targeting and the optimization. So as a robo-agency, we want you to come answer questions and never have to touch it again. So you answer six simple questions like what do you want to name your campaign, how much do you want to spend on it, provide us five keywords. We build out ads using data science. Those ads are delivered to the network.
But where we’re standing and what we’re doing differently — I’ll give you some actual statistics here in a second, I put them somewhere, just to make sure I had them accurate for today — it’s our targeting. This is how we stand out. We’re looking for intent. So the idea is when someone says — I’ll give you a real example — at 11:47 p.m. last night, a gentleman in Downtown Toronto said, “My toilet is broken. What do I do?” We send them an ad for a plumber. We can actually track them on the website and convert it into a sale. That’s great. There’s not enough people just saying that for us just to advertise. That was a problem with the links.
What we can do is now look at 30, 60, 90 days’ worth of data of people who have said something in Toronto similar to needing a plumber using our intent. Then we can build a demographic group. So really, over 90 days, what it looks like is a 25 to 31-year old female with $100,000+ household income with two children between 8:00 and 9:00 a.m. and 3:00 and 4:00 p.m. in the afternoon.
Why is that? They just dropped their kids off at school. They’re now going back to work and back home and solving a household problem. Or in the afternoon, that’s when their kid naps and they have more time to solve that. Us knowing that that demographic group at those times are usually looking for plumbers, we can now spend your ads at that time to those people, giving you the chance of finding the right customer for yourself.
So, to give you an example how this runs down, there are 65 million small businesses on the Facebook platform. Only 4 million of them today are using the ad network. Why is that? The status quo options are do it yourself, which is really expensive. It takes a lot of time and expense when you fail at it or going to a typical digital agency, which is $3,000 to $5,000 setup fee, 15% of spend, you get it. It’s expensive. You can’t do it.
So we’re solving that problem. We’re doing a good job. So across those four million campaigns, the average click-through rate on Facebook is 0.9%. We are at 1.3%. That’s a 42% greater click-through rate because we’re finding the right customers when they need it.
And two, the way we produce ads. A lot of people go out and there and we have to have this awesome campaign. We have to have slogans. We have to go to creatives and pay for them. We don’t believe in that after all these years and spending all the dollars we have on the networks. The more organic it looks — I always say kitty cats and butterflies sell everything.
If it’s a picture of you baking the cake, if it’s you in front of the house you have for sale, it’s better. Because we’re 42% greater in click-through rate across all of our campaigns in Facebook, we are on Facebook it’s an average of $7.29 for CPM rate. We’re at $4.75. We’re at 46% less of cost of viewing an ad. That’s what’s really showing us and helping us to become this company that Facebook is really looking at today.
Andrew: Let me break this down. In fact, I don’t understand Facebook ad buys as well as you obviously or as well as many people listening to us. I want to really understand it. We bought ads recently. The first thing that the guy who bought ads for us said was, “Can I have the email list, or do you have any audiences you already are doing well with?” So we uploaded our email list. We could target the people who are already in our email list, and we could target people similar to them. That’s one thing we did.
The other thing he said was, “Who are you guys similar to?” And we gave him a list of sites and a list of products our people would love. And then he just took it from there. He built ads and he ran them by me, and he started building audiences and he started targeting. What do you guys do? You guys start targeting on a micro level? You could target individuals, like if somebody mentions something like a broken toilet, you could target that person with an ad?
Justin: Right. We’ll put them into a — when we have enough of them, we can put them into a custom audience just like you’re saying. Then we can build lookalikes against those. Then we can run that data.
Andrew: And Facebook lets you do that, lets you target based on people who have used certain phrases?
Justin: Correct. We can’t do it on anything that’s private, anything that’s on someone’s wall. It has to all be in public groups. We also take a lot of our data —
Andrew: In public groups?
Andrew: Sorry to interrupt, but not on their personal Facebook page.
Justin: That’s right.
Andrew: So if I’m a Facebook page, I say, “I need a new website,” you can’t do anything with it. But if I say it in a group, you can if the group is public?
Justin: Right. You know what we found is a funny story with that too. April of last year they changed their rules and algorithm at Facebook. Where we used to before being able to search anyone’s profile for keywords like that, then analyze post-processing on our side, they changed that. I’m like, “Oh my gosh, our business, we can’t do anything.” I literally locked myself in this office for two weeks until I could figure out what happened.
What we realized was we could still get access to groups, and people ask for more stuff in groups because that’s where they’re solving it. So you go to your local mom and dad group or your buy and sell group or your health group or your community group, that’s all they’re really doing is asking for things.
Justin: You look at that, and they’re public. We can get that knowledge, and then we can do it. But only 20% of the data that we use comes from Facebook itself. Eighty percent of the data comes from the Twitter fire hose that we pay for access through.
Andrew: So you pay for access to what people are saying on Twitter, and then you target those people on Facebook.
Justin: Well, we don’t target them, because we can’t transfer one to the other. But what we do is we understand the demographic and interest looks like on that side to then start matching it up with those similar type people on Facebook’s side. Here’s our whole thing. You said it well. That’s exactly how Facebook advertising does work. But when’s the last time — let’s say you go home tonight and your child throws down your watch into the toilet. You need a plumber.
When’s the last time you went and said, “I like plumbers,” or you have interest in plumbers or liked an article about plumbing on Facebook. How the heck do they know you need plumbing at that time? They don’t. We can make inferences about things and understand them through interest. The interests are a big way that we use to start campaigns. We just find that the data that we can provide and adhere to that afterwards makes for a much more targeted, much more profitable campaign for people.
Andrew: Let’s suppose I had a business that sets up websites for small to medium size companies. What would you look for on Twitter to help you understand the demographics of people to target so then you could find those similar people on Facebook?
Justin: Well, it started right here for us, as a good example. “Starting a new business,” that’s pretty simple. “Can you recommend a great website designer? I need a logo.”
Andrew: I see. Anyone that’s someone who’s starting — I get doing that manually. How does your system do that automatically?
Justin: What we do is we send to our data provider a set of rules. The rules are within this location or within this location or no location look for these keywords. Those keywords come back in a set of raw data. The user ID, what they had said. Anything they make public about them we get back. Then this is where our technology and where our proprietary stuff is. We post-process all that raw data to understand the difference between a contractor, like I said, saying, “Call me for a quote,” or, “I need a quote for my bathroom.”
That’s where we have to get really — the word is creative to help ensure that we teach our classifiers what to look for and how to look for it. So, in trained industries, we’re about an 85% accuracy, which is way more than necessary for what we’re doing right now, which a human is 85 to 86 when we use humans to do it.
Andrew: So for $100 plus a percent of my ad spend, you guys take it from there. I don’t even log in to the dashboard on Facebook Ad Buyer or what do they call it, business.Facebook.com?
Justin: Yeah, Business Manager. So that’s right. You come in and you answer the six questions. You target in this completely different way. Don’t get me wrong. We still use interest. We still use the tools that are provided there. We’re just adding on top of it to do a better job. The numbers don’t lie. I guess that’s my opinion. That is the case.
Then we optimize 24 hours, 7 days a week. As I always say, people suck, they eat, sleep, they drink, they go to the bathroom, they go on Facebook. They’re not there to do it. If you’re only spending $500 a month in ads, which a lot of these micro advertisers do, there’s no account manager who’s going to spend time actually working on your account for you.
Our systems do that. Fifty percent of what we do are tools that are provided by network that you would never know how or when to use appropriately, and 50% are proprietary tools that we’ve created on our side, things like predictive budget allocation, understanding that your business is better to advertise at 8:00 a.m. on Instagram, but it’s better to be spending 100% of your budget at 10:00 p.m. on Facebook. We have to analyze that data to understand that.
Andrew: What do you say to someone who tells you you’re too dependent on Facebook and Facebook wins are hard to predict?
Justin: Facebook wins are hard to predict? Well, I think the idea is we’re working right now very close to becoming Facebook’s next marketing partner. Hopefully we have to cross our fingers and we get that approval. But Facebook looks for people like us that can help enhance their platform and bring people to the market where they have a hard time doing it. There are going to be a lot of big winners in this space, and we’re definitely going to be one of them.
Andrew: I see. Are you guys raising money now?
Justin: We are. I’m in the middle of a $3.5 million raise right now. We’ve had some good people come on board, and we’re looking for some more.
Andrew: Who wants to come on board?
Justin: I actually can’t say that yet until we’ve signed the paper. I’m going to hold that piece back. But we’ve had three different well-known VCs, two locally, one in the States come on board. We’ve been on SeedInvest, which is interesting for us and we’re working on a couple others.
Andrew: SeedInvest, where non-accredited investors can invest?
Justin: Well, we actually are only running an accredited investor campaign, but yes, typically that is the case.
Andrew: I see. Why are you doing SeedInvest?
Justin: Well, one of our board members knows them very well. He was an early investor into SeedInvest, and he said it might be a good introduction. We liked what they were doing. We feel that’s opened up a lot of doors to different types of investors that we haven’t have gotten to before and don’t have direct access to. It was an interesting piece for us. We’re just going through the process with them now, and we hope that becomes very successful for us.
Andrew: Yeah. I don’t see you on their site right now. I was just doing a site search. It doesn’t look like it’s public if you’re on there. There’s so much I didn’t cover from my notes. I’d love to have you back. When you do, I’m going to go back to some of these notes and bring them up. There’s one thing I thought was odd and interesting at the same time. The guy you partnered with to do a webinar, you originally said, “Hey, would you be interested in investing?” He said, “No, I’m not investing, but I can get you customers. If I bring you business, could you do a share of the business of your company?” That’s what you did.
Andrew: Who was this person?
Justin: Well, I will give credit where credit was due. We don’t see eye to eye. It’s not someone we currently work with anyone.
Andrew: Because he was hard to work with?
Justin: Yeah. With myself, our personalities clashed.
Andrew: So now he’s still on the cap table?
Justin: He’s still on the cap table. I have to say he truly helped us to get where we are today. I will give credit where credit is due. He’s a good salesperson, just not the greatest friend to have or more of an enemy than a friend, an ally on our team. It’s just been a history of similar things from him. But anyways, I’ll keep his name out of it, because I don’t think it’s fair for him. But I will give him a few list assists. I hope he does. We do give him credit where it’s due. He did a great job to help us get where we are today.
Andrew: Why did you even need that? You’re a marketer. Couldn’t you just build it yourself? Why do you even need to raise money at all? You’ve had a couple of successful companies, more than a couple. Why not just start Needls on your own with your ability to get traffic and keep funding it from your previous companies?
Justin: I think it went a little like this. We met him — we saw him at an event because we’re running the same communities. We talked about it. He’s like, “That’s super interesting.” I said, “Yeah, we’re about to launch it.” He said, “Can you make it a white label?” Two weeks later, we had a white label. He said, “I’m going to do a call for it.”
We negotiated it, made $500,000 in revenue in 48 hours. I think it was a spur of the moment decision. And I will say it definitely helped us to get where we are today. I’m not saying we couldn’t have, but I think it accelerated us and got us to where we are. We haven’t even got into half of how we got to where we are today on the Needls story.
Andrew: What else? Let’s go with one more thing and then we’ll close it out. We’re definitely going over, but I think it’s worth it.
Justin: So when we talked to the guy from Twitter, he told us to be on this platform. We didn’t know what to do, but we got a call the next week from a lady named Abby. She was the program director at Gener8tor. Gener8tor is one of the — now they’re tiered. They’re not ranked anymore. So there’s the premiere tier, which is your YC. Then there’s your platinum tier right underneath that. They were one of that. We had no idea. They were in Milwaukee. We had no idea what Milwaukee was. They said, “We want you to come here, apply.” I said, “I’m not coming to Milwaukee. I have a child under one years old. We have mortgages. We have an office full of people. We’re not doing it.”
Long story short is they begged us and ended up paying for us to come down there because I refused to spend the company’s money on a $2,000 plane ticket to be there the next day. We said, “No, no, no,” eventually talking to some of their companies like EatStreet and Matt Howard, who you’ve spoken to before, have gone through Gener8tor.
Andrew: EatStreet was 2012.
Justin: They were there. We spoke to Matt. We spoke to other companies. It was the best experience they had. We thought we knew everything. We said, “We’re mildly successful. We’ve done this. We understand internet marketing better than anyone else, people’s needs.” We got in. We heard these people that said it was the best experience, and we said, “Okay, we’ll do it.” But I said to my cofounders who were against it and I said, “I’m going there saying I know nothing and see if we can make this experience change everything.” It truly did. It was a life-changing and a business-changing experience for us.
Andrew: What did it change for you? By the way, for anyone who wants to look it up, it’s Gener8tor with an 8 between the R and the T. Frankly, if you just Google Gener8tor accelerator and spell it any way you want, Google will find it for you.
Justin: I highly recommend checking them out, talk to them. You can say I sent you through Mixergy. It is fully worthwhile.
Andrew: Why? What did you get from them?
Justin: Well, first of all, they’re a 5-company cohort, not a 75 or 100 like these other ones. We’ve been to Techstars, and we know the guys there and YC. What I took away from it was I don’t know anything. If you open up your ears and you shut your mouth a little bit, there’s so much to be gained from it. There are people that have done better and know better.
Andrew: So what did you gain?
Justin: Well, just the ability to listen to people. I think that was the first thing. I thought I knew everything.
Andrew: But it seems like it also shaped your business in a new direction. Here’s what I’m seeing. Your businesses up until Needls were very much of this bootstrapped, make money today type of companies that were completely on the outs with the mainstream tech world. I did not see on WeSellYourSite a mainstream business sold there. I saw really expensive companies, but it wasn’t the kind of companies most people would know about.
With Needls, I feel like you’re making a transition towards this new type of business, one that may not generate a huge profit today, but will be a huge asset in the future. That seems like a difference. But how did they — you’re nodding, so I’m guessing I’m right on that, right?
Justin: That’s exactly it. We wanted to — at the end of the day, I wanted to build a legacy. I wanted to build something that was scalable, that was repeatable, that would help people. Our mantra here is our user success is our success. We really believe in that in everything that we do. That’s why we provide world-class service.
What they helped me to understand was you can’t do it alone. You’ve got to open up your ears. You’ve got to find the people who are smarter than you and bring them on board. They put us in front of really great people. We built an awesome board with some really significant people, helped shape us, helped shape our product. They looked into things we hadn’t previously.
Andrew: That’s what I’m getting at. What did the board help you — is there one example? Excuse me. Is there one thing the board helped you come up with, one direction that you wouldn’t have come up with on your own that you could bring up that illustrates what they’ve done?
Justin: I don’t think it’s one thing. I think it’s the overall mentality of having the cadence to have a board, to update them when you don’t fly by the seat of your pants. You ask them. You don’t need permission on everything, but having their permission and going in the direction that we all feel comfortable with often makes it — I’m going to make the decision that I essentially think that my business or our business is going to be successful in the long run. But when you think you really know something, they start asking the questions that you forgot, that you should be asking yourself. Does that make sense? Have you talked to people to normalize that to see if that rings true past your simple beliefs?
So it’s just another mentality, and it’s one that has led me to taking on a business coach to understand more of compassion. Cutthroat was my way we’re going to do it. Let’s do it well. How do we open up and be compassionate? How do we build a culture? Before culture was words that we put on a paper and we said live by. Now what culture is to us is who we hire, what they believe in and how they bring that to the company.
Andrew: What’s one aspect of your culture that you guys make sure to live up to that you might not have paid attention to before?
Justin: The smallest things like listening to people, having one-on-one meetings with them. When three people talk about the same thing in one-on-one meetings, ensuring we solve that problem within 60 days so that it’s not talked about again.
Here’s an example, just last month, 3 out of our 20 people had said, “You know what? We really don’t care for an hour lunchtime. Why don’t we make that a half hour and then we can leave a half hour early?” What’s the difference to us? You’re getting your work done, and that’s going to make you happier. Let’s do that. Previously we’re like, “That’s the way we had it. That’s the way it’s working. Forget about it.”
So just opening up our ears, having an understanding. Some of the stuff actually they put on my wall this morning, as you can see there, my mantra is be useful. That’s the thing. It’s like there’s so much that you can do, and there’s so much that you can get back. Be useful to everyone. That’s always the way to do it.
Andrew: I see that.
Justin: Hustle is fine. I have on my wall here, “I never dreamed about success. I worked for it.” That’s a big thing. It doesn’t just fall into your lap. You better work and be really willing to work hard for everything that you’re doing. And then we have stay hungry. That’s a famous quote there, but it’s something that we live by. We have a quote that’s two thing that Mark Zuckerberg said just the other day in the convocation speech that he did, which rings true more, “May the source of strength be blessed to the ones before us, help encourage to make living a blessing.”
Andrew: What was that? You were turning away from the mic so we didn’t fully get it. What’s the gist of it?
Justin: The gist of it is we have to thank the people that helped us to get to where we are, what they’ve done in the past to help us to get to where we are in the future. I think that’s a super important piece for us to do. Last one that we have that I don’t have on the wall yet, which I think is awesome, this is just a viral video that I saw on Facebook. Of all people, Will Smith said it, but, “The best things in life come on the other side of fear.”
I think a lot of people who are listening to you today, who may have not started their business and want to or think about it, it’s really tough. There are a lot of dark days. You go through a lot of things. There’s a thing called the trough of sorrow that you really want to avoid. But if you just know that you take that other step on the other side of fear, that’s when the best things in life will happen and successes will come. That’s one thing that really rings true to me every day now.
Andrew: All right. Well, the website, for anyone who wants to check it out, is Needls.com. It’s Needls without that last E, Needls.com. I’m hoping I get to spend some time with you in private. I feel like a lot of the stuff that we’ve talked about is interesting, but it’s the beginning of a conversation.
Justin: It is.
Andrew: Especially about that marketer and the webinar. I’ve got to find out more about that.
Justin: He might be there. We’ll maybe see if you can get him to come. He’s here in Toronto. I have great stories. We’ll see you at Fireside Conference, because I can’t wait to tell you about the Mormon he sold a porn site to through WeSellYourSite.
Andrew: Here’s the thing. Do you drink whiskey?
Justin: I do. I have a nice bottle right behind me here.
Andrew: If we drink, can we bring other people in the conversation and get open? You know they’re not going to have their phones out, recording it, publishing it on Facebook Live. But you can get this kind of open. Will you even, if this marketer is there, will you introduce him to other people?
Justin: Yeah. I’ll ask him to come.
Andrew: So let’s not hide that from this small group of people. I understand you can’t talk about some of this stuff publicly, but in private, we can have some of those conversations. I’m really psyched about this. They even said, “Hey, do you want to bring your wife?” I said, “No.” First I said, “Hey, maybe,” but then I said, “No wife, no kids,” not because I don’t think she’d be a good fit, but because I want to have more time to spend talking to people and getting to know them. Are you bringing your wife?
Justin: Certainly not. Not that I don’t love her.
Andrew: I love hanging out with her. I want to have time to just talk. The important part of a conference to me are those private conversations. I went to the Podcast Movement Conference. Before I went to sleep, I said, “I want to talk to every single person I could. If they’re part of this conference at all, I want to talk to them.” That was some of the most meaningful stuff that I did over there.
It helped me find someone who could help book guests and help me understand what people were doing to grow their podcasts, help me see some of the desperation that people had about growing their podcast, but frankly allowed me to realize, “This didn’t take a short amount of time to build Mixergy where it is. I’ve got to really appreciate that. Look at all this hustle that people have to get another five listeners. I have thousands. I should be really happy about it.” So all that really helped me.
Justin: It’s so true. My last point to that is I was at TiEcon down in the Valley, 7,000 people. It was a big conference. We’re there in the lobby bar. That’s where I do my best business. Someone mentioned Dalhousie University, and that’s where Jeremy and Michael, my cofounders, went for business. That’s like a small university in Eastern Canada. Really weird someone brought it up.
It ended up he was one of the people running the conference. He also ran a VC firm. They’ve made a commitment into a round just from that conversation. So you never know who, when, or what you’re talking to. Just make those connections, collide. There’s a whole conference called Collision. I’m sure you know it. I’ve spent many years going to it. Make those collisions to it. Run into people. The Fireside is a really great way to do that.
Andrew: All right. For anyone who wants to come, I’m going to be there. It’s FiresideConf.com/Mixergy. If you want to register, remember even though they have a registration process, if you’re part of our community, they know that you’re good people and you’re automatically — that’s part of the deal I made with them. I don’t want people who are Mixergy listeners to be turned away because I know they’re going to be a great fit. Go check them out, FiresideConf.com/Mixergy. And if you want your website hosted right, if you’re not happy with your current hosting company, you want to save money and have someone who can do it right, go check out HostGator.com/Mixergy.
All right. Justin, thanks so much.
Justin: Thank you. You’re the man, look forward to seeing you here.
Andrew: Thank you.