How Infusionsoft was built

Infusionsoft started out as a company that was doing just okay. But then I noticed how they started dominating the market and now it feels like they’ve always been there.

In this interview I want to find out how Infusionsoft has gotten as big as it has. I also want to find out how they almost went out of business.

Clate Mask is founder and CEO of Infusionsoft which helps businesses automate their workflow.

Clate Mask

Clate Mask


Clate Mask is founder and CEO of Infusionsoft which helps businesses automate their workflow.


Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. I do it for an audience of entrepreneurs who are looking for some insights that they can use as they’re building their businesses and who just, frankly, just love the stories behind how businesses are built. We love this the way that other people love watching, I don’t know, sitcoms or mindless YouTube.

So, over the years, I remember doing interviews with info-marketers and online marketers and there are two things that started to come up as I was doing those interviews. The first is the software guys for some reason did not like the info-marketers. It was like, “No, info-marketers, you’re ruining everything,” instead of saying, “Hey, let’s be open and learn from these guys who are marketers.” And the second thing that started to come up was more and more of them were using software called Infusionsoft. And at first it was just kind of okay software and then it was dominating and then it felt like this big, colossal business that had always been there. And to be honest with you, I never really knew the story behind the company. I just had the sense that they were huge. I’ve had a few whispers and that’s it.

Well, in this interview we’re going to figure out how they got as big as they got and we’re going to find out how they almost went out of business because we’ve got the co-founder on. His name is Clate Mask. And for those of you who don’t know Infusionsoft, Infusionsoft helps businesses with their automated workflow. I got to be honest with you, that is not my sentence. That is Clate’s sentence from before the interview started. I was going to say email marketing. He says, “No. Automate their workflow.” I’m going to find out why he wants that to be the . . . why that’s the vision and why that’s the product because I always thought of it is just email marketing software.

All right. This interview is sponsored by two great companies. The first will help you host your website right, it’s called HostGator, and the second will help you hire phenomenal developers, it’s called Toptal. Clate, welcome.

Clate: Andrew, great to be here. Thanks so much for having me.

Andrew: Clate, what’s your revenue for 20 say 17.

Clate: Yeah. So we’re over $100 million now and growing, and in 2018 we’ll be well over 100.

Andrew: Over $100 million.

Clate: Yeah.

Andrew: Wow wee. For a business that you guys started as bootstrappers. You told me before the interview started, people see that we’ve raised a lot of money but they forget that we’re bootstrapped . . . like, we started out as bootstrap or started out as regular entrepreneurs. You said, “We have this big vision.” What’s this big vision that you have?

Clate: Yeah, so our vision is to grow for millions of small businesses worldwide. And we’ve been for the last 10, 12 years we’ve been working on that. The truth is, for the first five years or so, we weren’t working on that. We were working on staying alive. But for the last 10 or 12 years, that’s what we’ve been working on. And initially, we really worked at that from a powerful marketing automation standpoint. But as we’ve grown and evolved, we evolve beyond marketing automation and help our customers to serve their customers more effectively by automating the customer relations.

Andrew: Like what? Give me an example. Here’s what drew me to Infusionsoft when I started hearing people talk about in interviews. You had people based on what they’re doing and then set off a sequence of events that happens. The sequence of events can include everything from email to, I think, even fax. You guys still do fax, right?

Clate: We can still do that. There are few [inaudible 00:03:23]

Andrew: Fax and text messages and with a little ingenuity, even chatbots, right, on Facebook Messenger. Beyond that then give me an example of what you mean when you say workflow.

Clate: Yeah. So anything that your customer does. So for our customers it’s all about building great relationships with their customers. Well, how do you do that in a way that does require a ton of individual face-to-face time, phone time, whatever that is? You can’t really grow and build your business unless you just add more and more and more people. So what we do is we provide a platform to our customers that helps them to automate the customer relationship with customers. And so, yes, you drew out a use case which is, hey, customer opens this email and it said, “Customer,” and then clicks up and sets off a series of actions that get done for our customer.

But that can happen in a number of different ways. It can be a person that [inaudible 00:04:17] that’s a really simple thing. It can also be a person that has come and done a certain thing. Now you can kick off a sequence. It might be a customer that bought something online and a customer that just has an inquiry. Whatever it is, you think about, the reality is a customer comes first and follows, basically, gets on a flow that goes through your business and you want that to be an automated conveyor belt where it’s just . . .

Andrew: Wait. But what else . . . I see. If I say email, I’m emphasizing one mode of communication.

Clate: Exactly.

Andrew: But I already mentioned a few, everything from fax machines up to chatbots on Facebook Messenger, it could be triggered based on that, but also phone calls. All right, I got it. Let’s go back and understand who you are and how you got here because I told you, you guys seem like you’re always there and you seem like you were giants but you weren’t for a long time. In fact, you started out in Phoenix, Arizona in that area as a guy with a paper route and you told our producer, “Look, one thing that I learned was collection is where you really make the money.” How did you learn that? What happened to you as a guy with a paper route?

Clate: Yeah. So, when I was a kid, if was going to have the things that I wanted, I was going to pay for them. My parents made that really clear. So I got a paper route and I delivered papers for several years when I was young. And I remember early on the work of . . . Getting up at 4:35 in the morning and delivering the papers and nobody sees you and you’re groggy eyed, that part actually wasn’t the hard part. The hard part was going and knocking on people’s doors and saying, “You owe me $5.25 for the last three weeks of newspapers that I’ve delivered.”

And I remember, it wasn’t hard if it was $5 or $6 or $7, but when the prices would get higher, it was all too tempting to like tear off a couple of the stubs and not actually charge them for the work I had done because I felt like they were going to yell at me if I told them they owed me $19. And so the collecting part was really hard. You had to stay on top of it. If you didn’t go out and collect every week, before you knew it, you had some people that owed you $20, $30, $40 and you might not get that money and then you basically were working for free. And so I just learned that collections was actually where you make the money or you don’t make the money and that’s very . . .

Andrew: What did you do to get yourself to take the hard step of knocking on someone’s door and asking them for money?

Clate: You know, it was really interesting. And when I first started doing it, I went with a friend because I was like 11 years old, you’re cowering at the front door asking for money, which is so ridiculous because you’ve only been going every day of the week at 4:30 in the morning dropping off the paper on their doorstep, but for some reason I just learned that asking for the money was really hard, so initially I went with a friend or with a brother or a sister, but eventually I just got used to it and I had to like just push my shoulders back, stand in front of them and say I was there to collect my money, not your money, my money.

Andrew: Wow. That does teach you a lot as a kid. I remember for me what it was, was I would picture one thing I could buy with the money as I collected it and then I wouldn’t buy it because I cared more about building up my bank account.

Clate: That’s great.

Andrew: Did you build up a bank account before school debt started to take it out?

Clate: You know, I was not great at that, I’ll be honest. When I was younger, I worked to be able to play and have fun.

Andrew: What did you do to play?

Clate: Well, when I was a little kid, it was video games. Before we actually had good game systems, you had to go to this thing called an arcade to play the video games, right? So, when I was young, I played these video games and ice cream and food and stuff like that, but as I got older it was different toys and sports and things like that that I enjoyed.

Andrew: You saw a bunch of your parents’ friends go into entrepreneurship. You saw it as a viable direction in life and still, you went to a lot of school. Why did you go to so much . . . What school did you go to?

Clate: I went to Arizona State and did an economic [inaudible 00:08:16] and then I went to Brigham Young University and did a law degree and an MBA.

Andrew: That’s a lot of schooling. Why did you do that?

Clate: Yeah. It’s a great question. I love learning, and so even though when I was young, I loved entrepreneurship and I always considered that eventually I would start a business. I really love learning. I loved economics when I started to go to college. I knew I wanted to go to college, just I wanted to get a degree that was just kind of always underscored and important in my family. And so when I was doing my undergraduate studies, I enjoyed the learning, I enjoyed growing and developing, and so I decided to go to law school, and even though it’s funny because I told Charisse, “I don’t really think I’m going to practice law.” And she’s like, “Why are you going to go to law school?” And I just said, “I just want to learn. I think it’s going to be good learning.”

But partly through law school I decided to do business school as well. And I really enjoyed business school. I love learning about business. I love studying business. Even though it was kind of frustrating because it was sort of more book studying than street studying, I did enjoy the case study and the learning and the academics and . . .

Andrew: I love those case studies. What did you like . . . The Harvard case studies, what did you love about them?

Clate: Yeah, yeah. I really did love the Harvard case studies. I liked business cases a lot more than I liked law cases, let me put it that way, because I really felt like the business cases you could see the story, you could see the . . . The way they write those things, it’s very . . . there’s kind of this dramatic story around it, but you see the principles of business at work and the challenges and how you have to work those principles. And I just enjoyed getting into those cases and kind of imagining myself doing those things and learning those lessons.

Andrew: And it was always a dramatic hero who was faced with a deep crisis and you as the student were supposed to puzzle through how you would handle it and there was no right answer . . . Well, I guess there was because these people had actually often found the right answer.

Clate: Right.

Andrew: If I’m right, it was about you trying to think through a problem to train yourself to think through problems later on, right?

Clate: Yeah. I think that’s well said, yeah.

Andrew: You left with how much debt?

Clate: Yeah. So, when we finished . . . So I got out of undergraduate with no debt and then four more years of graduate school at the same time that my wife was finishing her degree we walked together, that was a great day, but we finished with $100,000 of student debt and that was just suffocating to me. I hated that.

Andrew: A hundred each or a hundred together?

Clate: No, 100 total.

Andrew: A hundred total thousand in debt and kids at the time, am I right?

Clate: Yeah. We had our fourth child on the way when we both graduated which . . .

Andrew: How do you sleep at night when you have that much debt?

Clate: Yeah. So I didn’t.

Andrew: You literally would be up at night doing what?

Clate: I would work. I was trying to figure out ways to make money. I was doing . . . I had a job. I got a job in dot-com. It was great, it was fun, but on the side, I was trying to figure out different ways to build a business and make money and . . .

Andrew: What are some of the ways you tried?

Clate: Oh, gosh. I did a couple of different websites. I’m a big fan of the NBA, so I started a bunch of NBA fan websites and it was kind of an advertising model. I worked for dot-com. It was really built on an advertising model, and so I learned about the pros and cons of building a business around an advertising model both a small, little when I was doing myself called and then obviously the larger company I worked for that had millions of free websites or free servers back . . .

Andrew: We’re talking about is the site where you did that? was one of the first user-generated sites, people could pick a topic and then they would expand it by creating content around it, would send them attention. And I think you were in charge of revenue for them for a while there in like around the time of the dot-com bubble burst, right?

Clate: Yeah, that’s right. That’s exactly right.

Andrew: So what did you do to get revenue for them?

Clate: Yeah. So what I did was bought our company which was a collection of free website providers. So if you remember the old GeoCities model where you could get a free website. We were and it was basically a vanity domain name, so you could get like instead of I’m totally dating myself. Three-quarters of your listeners are like “What are you talking about GeoCities?”

Andrew: Let them learn.

Clate: But yeah, it was a free website model and then we put banners on those free websites. So what I did was we had millions of websites and I would teach the . . . My job was basically to monetize all of those websites. And we did that with banner advertising or with checkboxes in the registration process. But we did all kinds of different things that when our customers took an action we would get $1, $2, $3, $4. It was a cost per acquisition model, CPA model and we made a bunch of money on CPAs.

Andrew: Okay. And that’s one of the things that you brought to About?

Clate: That’s right.

Andrew: And it was constantly hunting for good CPAs, showing people that the actions that people were taking were honest and that they weren’t people trying to jigger the results.

Clate: That’s right.

Andrew: And did About share the revenue with their content providers? I don’t remember.

Clate: They did. If the content providers created a certain number of page impressions, you could get to where you actually got compensated for that. We were a little different because we were a network of free websites and so for us, we were just ad inventory for and we were basically their surplus inventory. But I came up with a bunch of different ways to monetize those free websites. And it was important because when the bubble burst and the . . . we crashed, our advertising revenue went from 1.1 million per month to 100,000 per month in one month.

Andrew: Wow wee. Wow. That’s it. You know what? There are two things that I’m thinking of over there. Number one, my revenue was bigger than at the time? I had this greeting card site. I thought we were so much smaller than About.

Clate: Well, we were part of, so our piece was the 1.1 million.

Andrew: Oh, okay. All right. That’s too bad. I could have felt really good about my past then. And why did you then after that want to go and be a lawyer?

Clate: Oh, gosh, that’s a great question. So what happened was, we went through two acquisitions. So bought us and then another company called Prime Media bought And after that second acquisition, the bubble burst, it just was not fun anymore. It was really frustrating to try to continue to grow the business. And I had taken . . . I had gone to law school but I had never taken the bar exam and prepared to practice. And I looked at it, I had all these student debt. I was paying down a little bit during those first two, three years that I was working at About outside of school, but I just felt like if I didn’t practice law at that point I probably never would and I was kind of frustrated with what was happening at the company where I was.

So I decided, “You know what? If I ever was going to practice law, now is the time.” So I took the bar exam, passed it. It was a miserable summer taking that test, but got myself ready to go practice law. And my thinking was I would go practice business law for a few years and pay down more student debt and then go start a business. That was the plan.

Andrew: Oh, okay. And then 9/11 happened. We actually are recording this 17 years to the day of that incident.

Clate: Yes.

Andrew: What happened as a result of 9/11?

Clate: So I got my . . .

Andrew: Actually, do you remember where you were on 9/11?

Clate: Absolutely.

Andrew: Where?

Clate: I remember very well. My son’s birthday is on 9/11.

Andrew: Wow.

Clate: So we were at the kitchen table celebrating his birthday, opening up presents and a friend called and said, “Can you turn on the TV?” And we just were captivated obviously and watched the whole thing go down and unfortunately my son his birthday is 9/11, so people always talk to him about the planes instead of his birthday. Yeah.

Andrew: And as a result . . . By the way, you guys open presents that early in the morning?

Clate: We did that day for some reason. I’m not sure. Usually, we did it at night, but we did . . . He was six, so I guess . . . I think, he was turning seven. Yeah.

Andrew: Okay. And so as a result of that the world turned upside down. And what happened to your decision to become a lawyer?

Clate: Yes. So this is the interesting thing. I planned on practicing law at that point. I got my bar results I think on September 3rd, ramped up my search and September 11th hit and law firms stopped hiring. Business law firms were not going to be hiring for a while, and so I had kind of orchestrated my departure at About and kind of had severance and went a period of time trying to find the right law job and I had a couple different options, but there really wasn’t the right thing. And a friend of mine said, “You might just need to accelerate your entrepreneurship plans and create your own thing.” And I remember when he said that I thought, “I don’t know if it’s time yet,” but turns out that’s exactly what happened.

Andrew: All right. We’ll talk about the two people who helped facilitate that transition in a moment. But first, I’ll tell everyone that if you’re looking to host a website right, go to, HostGator . . . You know Host Gator? I see you nodding as I’m talking about them.

Clate: I do. Yeah, I do.

Andrew: They’ve been around for years. They might even been around before you guys were, Infusionsoft.

Clate: Yeah, they’ve been around a long time and they’re part of Endurance. So I know them well. Yeah.

Andrew: Yeah. The founder is one of the few guys who was able to make that hosting business work, and he kept gobbling up the competition. I’ve interviewed his competitors here. He kept getting more and more entrepreneurs to sign up. Entrepreneurs really ended up being the answer for him and sold to Endurance, and now it’s growing and growing and growing. If you’re out there and you need a website hosted by a company that’s been around and doing it well for years and years, use a company that I turned to when I started my most recent website, my most recent company. Go to What you’re going to find there is super low prices.

In fact, our salesperson, Sachit Gupta, said that he got them to give us the lowest prices possible, but what you might want to do as you grow, call them up and get better and better hosting packages. I know that I wanted to have the best of the lot once we started really ramp things up because we’re getting so much traffic. All right., that’s where you get tagged as a Mixergy customer where they’ll take good care of you for being a Mixergy customer and I will too, and also where you’re going to get up to 62% off their already low prices.

Your wife had two younger brothers, the Martineaus.

Clate: Yep.

Andrew: How many Martineaus are there, by the way, in that family?

Clate: Ten.

Andrew: Ten. Oh, 10 siblings?

Clate: Ten siblings, five boys, and girls.

Andrew: Good, Lord. Wow wee. All right. And so two of them were doing what?

Clate: So two of them were writing custom software for small businesses and I was advice . . . They were asking me questions and I was giving them advice, and they kept saying, “Hey, you should come join us. You should come join us.” And when 9/11 hit, and they were saying, “You should come join us.” I thought, “I’m not ready. I got all this student debt. How can I go do . . . ” The main reason why I felt like I couldn’t go start a business was that I had that student debt and my plan was to go work in law and pay it off. And over time, they just kept telling me, “Hey, come join us. Come join us.”

And I finally started consulting them and advising them and helping them and then they started paying me a little bit as I was doing that and I just fell in love with what they were doing. I saw how smart they were, how capable they were, what they were creating for their custom software clients. And so after a number of months, it was about June of 2002, I said, “Okay, I’ll . . .” They said, “We’ll make you an equal partner. So we’ll give you . . . ” There were three of them. “So we’ll give you 25% of the business if you come join.” And so I realized, “You know what? We could build that business up and sell it and I could pay off my student debt a lot faster than trying to pay it off little by little working in law.”

Andrew: What kind of advice did you give them? What was your part in it?

Clate: So my part was to help them get customers. They were great at building software but they were not great at sales and marketing. And I knew a lot about how to generate leads and convert leads because of the business that we did at About. And so I was advising them a lot on how to do that. And, you know, it was pay-per-click advertising, it was following up with those leads, it was building an audience, and having a newsletter, doing different things to build up a list. And I was teaching them how to do that and then pretty soon it turned into, “Why don’t you just handle the leads and work the leads, not just generate them?” And eventually, we said, “Hey, I think we can make this work.”

Andrew: Were you guys called Infusionsoft at the time?

Clate: No, we weren’t. We were . . .

Andrew: Infusion Software Systems.

Clate: Nope. We were called eNovaSys.

Andrew: eNovaSys.

Clate: Yes.

Andrew: How did they end up with eNovaSys?

Clate: I don’t know. It was before I was there. And it was not a great name. I had to spell it constantly. And the [inaudible 00:21:37] when my mom mispronounced and called Enovices. I was like, “No, that’s not it.”

Andrew: That’s exactly the opposite of what you’re trying to communicate to clients. Can you give me an example of a typical client job that you did?

Clate: Yeah. So back then we were trading hours for dollars doing custom software. So we would kind of scope out a project, the customer would . . . So what it looked like was I would do pay-per-click advertising on an old network that was called GoTo, prior to Overture, prior to Google AdWords. It was the early predecessor of the pay-per-click advertising. And we would spend $5,000 per month generating these leads using pay-per-click advertising and then we’d follow up on the leads. And it was basically custom database work. It was custom software and those were some of the keywords that we would advertise and we would do all kinds of derivatives of those keywords.

But a customer would call up and they would explain to us the problem they were having and we would sort of scope out a project for them and bid it, but it was essentially an hourly project and we would build out the software for them and show them kind of . . . We usually kind of break it into phases. And of course, as is always the case, scope creep was the challenge because they would have more and more . . . Once they saw what we could do, then they want to do more and more, but they usually didn’t have the budget to pay more and more.

And so I told my partners, “Hey, this is a really tough business to be in because trading hours for dollars doing custom software for small businesses to help them do their sales and marketing better was just a really big challenge. But at the heart of every project was a customer database where they were trying to track the customers and sell those prospects and turn prospects into customers. And so it was sales and marketing with a customer database at the heart.

Andrew: It seems like a lot of them were in Arizona near you guys. I found a few of them. Here’s one. I think MLeads was a customer of yours that gathered mortgage leads through various internet marketing efforts and sold the leads to mortgage brokers all over the country and you guys created a database for them using Access, a little of MYSQL, Visual Basic, [inaudible 00:23:48]

Clate: That’s right.

Andrew: Yeah.

Clate: I can’t believe you dug this stuff up right now. I haven’t thought about that for years. The interesting thing is that client was the key client that actually enabled me to come join Infusionsoft full-time. It was that client.

Andrew: How do you mean?

Clate: Because we were . . . The three software developers were doing projects, I was trying to help them bring on new customers, but what happened was that client called up one day and said, “Hey, we’ve got probably eight or nine months of work where we’ll probably spend anywhere from 10 to $20,000 a month with you.” And so we had this big project that we took on with them and that enabled us to start . . . that enabled me to go and spend all of my time looking for additional clients. So I was able to leave the other stuff that I was kind of doing and dabbling in trying to get that going and join full-time because of that client.

Andrew: Okay. And then you were hunting for something that would allow you to not sell hours for dollars, allow you to create software that you could sell to multiple clients, and at some point, you ended up with a customer who was trying to do email marketing, had some issues. Can you talk about that?

Clate: Yeah, you bet. So one day it was Friday afternoon, I remember this very, very well. I had been in the business for about two to three months and I had not yet made the first sale. We had some add-on things that we have done to existing clients, additional projects, but I was really . . . I was eight or nine weeks in and we hadn’t made a sale yet. And it was a long sales cycle, but I was stressed. We didn’t have a lot of . . . There was not a lot of money going around and we needed to land jobs.

This guy calls up one day late on a Friday afternoon and just yells, “I have pain. Can you help me?” Yeah. And I kind of was taken aback and I was like, “I didn’t know what he was talking about.” And he started explaining that he had all of this customer data and I realized the thing that had really ticked him off was he had accidentally sent out a special offer with a reduced price on a product to a bunch of customers who had already paid full price for that product.

And so he was just swimming in a bunch of data messes where he couldn’t keep his prospects and his customers straight. And so he was calling saying, “Can you help me develop a customer database system?” And we ended up doing that for him. He was blown away. It was a web-based system that allowed him to track his customers, tag them, keep them separate so he wasn’t always making those kinds of mistakes. And as we created that for him, he started to talk about it to some of his other friends. All of them were kind of in the direct response marketing world and they were generating a lot of leads but the volume was making it very difficult for them to keep everything straight. And so long story short, we began to call that a CRM system, a Customer Relationship Management system, and we began to provide it to these direct response marketers that were generating a lot of leads.

Andrew: That issue of not being able to tag customer so you can message them differently from non-customers was one that actually lasted for about a decade after you guys started with this. It was . . . For many of your big competitors, it was an issue that kept going and they just wouldn’t solve it until they were forced to.

Clate: Yeah.

Andrew: Would he have to tag it back then manually if somebody bought? Is that the kind of thing that you created as the first version?

Clate: No. For the first version, we created it where it would get tagged if the customer did certain things. And that was a huge thing. It wasn’t set up until later that upon that tag, you could trigger a bunch of different actions. That became the automation that really was embraced by marketers because now marketers could . . . They could do a bunch of things and have it all be based on the user’s activity.

Andrew: But at first it was, as soon as someone does something, they get tagged.

Clate: Yes.

Andrew: Did you create the payment page too?

Clate: Yeah, we did. That came a little bit later as well.

Andrew: For the first version that didn’t exist.

Clate: Correct.

Andrew: Okay. All right. It was a little bit more manual. You sold it to him. Do you remember what the first customer did or who he was?

Clate: Oh, yeah. His name was Reed Hoisington. I remember him very well. And what he did was he coached mortgage brokers, and so he generated a lot of leads of mortgage brokers that were looking to improve their business, and he coached them on how to do it. And so we built a system for him that helped him and then he started to share it with a bunch of his clients. And the first CRM system that we created was actually for mortgage professionals, it was called MortgagePro CRM. And that was a couple years after we started the business and then about a year later, we created a version that was for non-mortgage pros and it started to get adopted by marketers. And after about . . . That was the point where the really difficult part of the business started to go into the rearview mirror. But those first three years, Andrew, we talked about some of the projects and some of the things we did, but the truth is, it was a daily fight for survival and we were just every day trying to stay alive.

Andrew: One day your wife came to you and said, “Get a job.”

Clate: Yeah.

Andrew: Why? What were you guys going through internally when she said that?

Clate: She came to me many times and said that. But after several tear-filled conversations, she just said, and this is about two and a half years in, and she said, “I just can’t do it anymore.” And we had created the mortgage product and so we were out of the trading dollars for hours. We’d also created the new vertical product, it was just starting to get going and I was really excited because I felt like we finally have a product, we can sell this repeatedly, not to mention it’s a subscription-based products so they continue to pay us. Back then, by the way, we called it a hosting fee because even software as a service really wasn’t much of a thing yet. was in its early days.

But back in 2004, that’s what we were doing and so we had some recurring revenue and I was starting to feel like things were getting better and I kept telling her, “Hey, it’s getting better. It’s getting better.” She finally just said, “You know what? It’s not for me. It’s not getting better for us. You’re delusional. We have no food.”

Andrew: Because of what? What was . . . You literally couldn’t pay the food bills? Give me a sense of what the challenge was at the time.

Clate: I’ll give you a great sense. $90,000 of student debt that was in forbearance because we couldn’t afford to pay it.

Andrew: Oh, so that means that knocks your credit.

Clate: Well, yeah. Our credit was eviscerated by trying to build a business, living on credit cards, taking home a couple thousand dollars a month and having four kids. That’s what it was.

Andrew: Was there something that you couldn’t give your kids that to this day stands out for you?

Clate: About everything.

Andrew: Really?

Clate: Yeah. With $2,000 a month with four kids, I mean, it was impossible. So, we were just living off credit cards and they were maxed out. And we were just on the verge of bankruptcy. We couldn’t pay our bills. It was as hard as you can possibly imagine financially.

Andrew: Were you tough to deal with at the time because this was a weight on you?

Clate: Yes, but most . . .

Andrew: Can you give me an example of how tough you were to deal with because you were dealing with this weight?

Clate: I wouldn’t look at reality. So the thing that was . . . I can look back now and see it really clearly, but, you know, I just didn’t . . . I didn’t realize. I was so busy trying to get the business going and trying to get through all those challenges that I just didn’t recognize the fact that we literally did not have food in our house. There was no food, and there was no way to get food. I mean, my parents would come over every once in a while and like drop off a bunch of stuff from Costco and kind of save us. We would get a little bit of money from work and be able to have groceries, but, I mean, we didn’t have the things we needed. We didn’t have food, we couldn’t . . . It was garage sales for clothing to get stuff for our kids. We just didn’t have what we needed.

Andrew: Why didn’t you feel diminished as a man by not being able to bring food, having to rely on your parents’ Costco runs, going and buying used clothes from garage sales?

Clate: I did feel diminished.

Andrew: You did. And then how did it impact you? How did it allow you to still work?

Clate: It just drove me to work harder. That was the thing that kind of I look back now, and when I say I was delusional, I really was. I didn’t realize how nothingness we had. You know what I mean. And I was just trying to get the business going. Here’s the thing that made it so difficult. By the time Charisse had got to the end of her rope, I could see it work. Things really were getting better. They absolutely were. We had a product. We were selling a product. We were making sales, but we couldn’t take . . . It takes a while before you can take that money home. We just didn’t have the ability to generate real take-home pay because we’re trying to pay the bills and trying to keep the business from going under. And so I could see we were starting to climb out of it but she wasn’t feeling it at home.

Andrew: And I imagine also you must have lost credibility at that point not seeing any of the problems before and not saying, “No, everything’s okay.”

Clate: That’s right.

Andrew: And then how did you get mortgage clients to sign up for your new hosted software?

Clate: Yeah, I called them.

Andrew: You would call them up out of the blue?

Clate: No. What happened was we partnered with that client, Reed, who had done . . .

Andrew: Reed Hoisington.

Clate: Reed Hoisington. And together we kind of created this mortgage solution and then he had a bunch of clients, so I would talk to the clients that were interested. So he would generate leads and then I would call those leads and work them.

Andrew: Did you give him shares in the business or did he buy into the business?

Clate: Both, yes.

Andrew: Both. From an early time.

Clate: That’s right.

Andrew: And then I also heard the same thing happened with Dan Kennedy, that Dan Kennedy did well financially from investing in Infusionsoft. At what point did he come in?

Clate: Yeah. He came in a little later. So, after we work through the mortgage stuff, then we started to bring on direct response marketers and it started to really gain traction. But let me say one thing real quick because I think this is probably the most significant thing about that story with my wife. There was a day where she just was done, she just couldn’t do it anymore, and we had had lots of conversations like this and I’d always found a way to sell my way out of it and keep working at Infusionsoft. She finally said, “I can’t do it.” Like, “You just have to go look for a job tomorrow.” And she made me promise that I would. And so I did. I said, “Okay. I’ll look for a job tomorrow.”

So next day I went to work and I sat down and work just started to happen to me. I was calling leads. I was doing all the things I did every day. Before I knew it was 6:00 o’clock and time to go home and I hadn’t done anything to look for a job. And I was genuinely worried for my marriage because I had promised her I would. I knew she was at the end of a rope. And I was scared, like, literally, like, I don’t know . . . First of all, I feel bad that I didn’t do it, I said I was going to do and I don’t even know how that happened. I went to work and all of a sudden just the day was gone.

And second, I was afraid. I was like, “Okay. What’s going to happen here with our marriage?” And I got home, I walked in, her back was to me in the kitchen, and she turned around and, Andrew, I swear she turned around and she looked like a different person. And she just looked different. And she walked toward me and she gave me a big hug and she said, “Everything is going to be okay. God knows what we’re doing. Just keep going.” And I was like . . . We both just broke down and cried.

It’s hard to explain if you haven’t been through that and you haven’t been to that point, it’s really hard to explain what you felt as a husband trying to provide. She’s at home taking care of four kids, working her tail off and I’m just failing miserably. And for her to say, “You know what? Keep going,” it was amazing because in that moment what had happened is, we were drifting apart as I was trying to get the business to work, and she just in that moment pulled us right together and I knew it was going to be . . . I felt like I could do anything when she said that.

Andrew: What happened to her that gave her that transformation?

Clate: You know what? She just had just kind of a spiritual experience where she just felt like God knows us and loves us and wasn’t there to abandon us and it was going to be okay. And so she just . . . Her heart was just kind of touched in a way where she was able to be strong and say, “Keep going,” and that’s all I needed, and I just kept driving and it wasn’t long before we got through the challenges and our product really began to take hold with these direct response marketers and we were making a huge difference in their business and helping them to serve their prospects and customers better.

Andrew: All right. The transition from focusing on one industry to being broad was not an easy one. You could understand a small industry well. To understand a broad group of people was harder. I want to understand how you made the transition. But first, I’ll quickly tell everyone, do you know about Toptal, by the way, my second sponsor?

Clate: I don’t. I know HostGator but not Toptal.

Andrew: Toptal is a company that decided that it’s a little bit too hard to hire and they said instead of making it easier for you to place job listings and to screen people out, we’re actually just going to do it ourselves. And so what they did was they started testing developers, putting them through a rigorous process, those that made it through went into their database and now when a company like yours, mine or some of your clients’ needs a developer of any kind, all you have to do is go to Toptal’s website, you schedule a call with one of their people and you tell them, “Here’s what we’re working on. Here’s the platform we’re working on. Here are the quirks of the company. Here’s how many people we need, full-time, part-time, a team people, work together well, whatever.” And then they will often set you up with them within a day or two.

I know for me it was . . . No, actually, it took them longer to set me up with the call, maybe about a week, but once I found the person I liked within a day or two I was able to get started with them and hire them fast.

All right. Anyone out there who’s looking to hire, including you, Clate or your friends, should try Toptal. It’s really is amazing how fast you can hire from them. I’ve had people in my audience say, “I got too many competitors who I can go and hire with. I’ll go with the one that I’m comfortable with and it didn’t work, it didn’t work, it didn’t work,” and then finally they said, “You know what? Let’s give this thing, Toptal, a shot.” And they went to and they ended up hiring right away.

All right, here it is. There’s no risk in here. You don’t even have to pay a listing fee or anything. You just to go to When you do, you hit that big green button so you can schedule a call with them. And if you’d like whoever you hire . . . If you like whoever they set you up with and you want to hire them, you’re going to get 80 hours of Toptal developer credit after you pay for your first 80 hours and they also have a no-risk trial period of up to two weeks. If at the end of the period you’re not 100% satisfied, you’re not even going to be billed. That’s how confident they are that they can match you up with someone good. That’s top as in top of your head, tal as in talent, And man, I’m grateful to them for sponsoring me and supporting me for so many years. They’re the ones who really got me started with advertisers. It didn’t make sense to me until I started partnering up with them.

When you were working in the mortgage industry, you told our producer, “I was able to understand our customer needs really well.” What did they need that you got that you were able to really home in on, I guess is the word, home in on?

Clate: Yeah. It was that they . . . In the mortgage industry, it really is about effectively working the leads. A lot of times what happens as brokers they get leads and then they just sort of get cherry-picked and a bunch of the . . . When you think about it in the mortgage industry, people are interested in getting a home, but the timing isn’t right for a number of different reasons. It can be credit reasons. It can be life reasons. It can be whatever. And so if you don’t spend the . . . If you don’t invest the time to build the relationship with that prospect and all you do is just scrape the top of the hot leads who are ready to buy right now, you leave a lot on the table.

And on the other hand, if we could help our mortgage brokers cultivate those leads until the time was right for the homebuyer, it made a huge difference and they could get a much greater return on their marketing investment because for every one hot lead in the mortgage industry that’s ready, that’s going to do something in the next 30, 60 days. You’ve got four or five that are going to do something in the next 6 to 12 months. And so being able to help them cultivate those leads and build relationship, that was a really a powerful thing and you could do it in a very specific way because there were only a handful of reasons why the prospect wasn’t ready now. And so because it was one industry, we could really gear the content of the marketing campaigns to those things.

Andrew: Were you helping them create the marketing campaigns?

Clate: We were. We were. We would create . . .

Andrew: Oh, you were even helping them with content.

Clate: Yes, that’s right.

Andrew: Oh, okay. Got it. Okay. And so I could understand then why you would . . . Got it. Okay.

Clate: Yeah, because you could create content that was very specific and it was . . . then the solution that they bought in MortgagePro CRM came pre-loaded with these campaigns and it saved them all of the creative work of coming up with that and when to send it and all those types of things.

Andrew: And is that you who wrote it or your company internally, or is that a partnership with Reed?

Clate: It was both. We did some on our own and then we did some with him.

Andrew: Oh, I see. I tried to go to that website MortgagePro CR . . . MortgagePro CRM took me directly to Infusionsoft.

Clate: Yeah.

Andrew: All right. And then when you decide . . . Why did you decide then to go beyond it? It seemed like you finally hit on something that was working.

Clate: Yeah, it’s a great question. There were a couple reasons. First, we really wanted to serve customers not just in the mortgage industry, in part, because the mortgage industry is very cyclical, there’s a lot of ups and downs there, and we didn’t really want to be beholden to the interest rate roller coaster, so to speak. That was one reason, but the other was, even in the early days after we kind of got out of the struggles, we just had this desire to help small businesses that were like us. We were a small business and so when we started using our software to automate the follow-up with our prospects and customers, it was a total game changer and we wanted to create that for other customers. We were also seeing what non-mortgage customers were doing and we just felt like it was small thinking to do it in just one industry.

Andrew: You know, I’m looking at . . . I finally found screenshots of from . . . Let me see how far back. Not a decade ago, a little more. The list of things that you guys did was huge. There was contacts, obviously, right, including linking multiple contacts to a company account, attaching documents to a contact record, etc. There were tasks in there. There was a calendar. There was the ability to email, of course, create and store HTML templates, send personalized email from the templates. There was web forms. There was marketing reporting. One of the things that is always been big advantage of your company but also a big thing that scared people with your company is Infusionsoft had tons of features right from the start. Why add so many instead of focusing on one or a small collection, not one?

Clate: Yeah. It really comes from who we were serving initially. We were really serving these power users, people that really wanted a lot of power to communicate with their prospects and their customers, send the right message at the right time, the right person. And so power users sort of adopted our software, it really helped us develop the software. When you think about Reed and Joe Polish and Dan Kennedy and these direct response marketers. And so we really led with that power.

And, frankly, when we decided to really go for it, that which was about end of 2006, we kicked off 2007 on a 10-year mission from 2007 until the end of 2016, and it was really to be the sales and marketing automation solution for entrepreneurs and specifically it was for kind of marketing savvy entrepreneurs. But it was very much . . . We led with power and that was the way that we built the business up to about 100 million by leading with power.

Andrew: How did you understand the broader market when you decided that you were going to go away from mortgages? Because with mortgages, you said Reed called you. And I remember the way you said it because my eyes went straight to the camera to look at you. You said Reed called you and said, “I have a pain.” And he really came to you with a clear problem.

Clate: Right.

Andrew: How did you get that problem when it came to the broader market? How did you understand them?

Clate: Yeah. So the problems were similar, but a little bit different. When we moved from mortgage to the broader market, it was a problem of disorganization with all of the data that they had. What we typically found was they would have customer information in two or three or four or five different systems, and so they had that disorganization problem where they couldn’t keep things straight. And then they also had the problem of not effectively following up with their prospects and customers because they were disorganized. And then the last was they were having to do things in a very manual fashion, so they were very inefficient. But if you really . . .

Andrew: How did you know all this?

Clate: It was just time spent with customers watching them, learning . . .

Andrew: You would go into their office and do this?

Clate: We would do it in person, we would do it over the phone, we would do it over WebEx and that sort of thing.

Andrew: This was you at the time?

Clate: GoToMeeting. It was more Scott and Eric and my partners, but I was definitely involved in seeing those problems. And then I was having phone conversations with people all day every day listening to it. And it’s pattern recognition. You start to see as you’re doing sales . . . Sales work is research if done right. And I was doing that voice-to-voice research by phones listening to people and hearing the problems. And I’ve got these contacts over here and then I’m using this email marketing from over here and I’ve got this shopping cart thing that I have over here and I’ve got spreadsheets where I’m doing this. And you could just hear it. Their data was spread out in a bunch of different places, and so what happened was as the business began to grow, the ball dropping started and more and more balls would be dropped because they didn’t have one system to use to tie together all that customer information.

Andrew: I remember that world where there were shopping cart software that was horrible, but you needed to collect payment and you couldn’t create it yourself, so you’d use the shopping cart software. You’d use email. What else was it that they would need to keep track of? I guess who came to a webinar would be an interesting one to keep in a spreadsheet. Do you have any specific example of someone who said, “Here’s a problem,” you thought, “We have the solution that’s easy”?

Clate: Yeah. I think we saw it in all of the different tools. So an example would be in an email marketing tool our customer would be sending emails to that customer. Customer would take action and our customer didn’t know, and so our customer would continue to send emails as though they were sending to a prospect but the prospect . . .

Andrew: Yeah, yeah, yeah.

Clate: And so that simple act of being able to tag that in the database and take it out of the campaign that was for prospecting so that our customer didn’t look dumb when they would send the same email again to a customer who already took action. Now, that’s a simple case but it was widespread. We would see it over and over and over. And the more communication you’re having with prospects and customers, the more you make that mistake.

Andrew: How did you get so many customers in the broader direct marketing space?

Clate: Word of mouth just started to spread. And so it started to spread through word of mouth, and then we had some partners who would promote it to others. But once people realized, “Hey, there’s a solution where you can have one system that ties together your customer database, your email marketing, your shopping cart, and not only does it tie it all together in one system, but you can actually send the right message in an automated way . . .

Andrew: Once they saw that this existed, they were lit by it. But you’re saying . . . I remember seeing in my research you guys had affiliate programs early on and you’re saying that kind of marketing help for you. I mentioned people like Dan Kennedy, they helped send their users over to you. Okay. All right. I get how you got it. You guys was finally starting to get your groove, going beyond the mortgage space, you got a good product. And one of the things that turned me off when I looked at you guys years ago was thousands and thousands of dollars to set up. Meanwhile, with your competitors they were saying not exactly free at the time, but they were saying, “Start for like $10 a month.”

Clate: Right.

Andrew: And I said I don’t know that I could invest this much money in something that complicated. Why did you initially have that fee? And then let’s talk about what happened when you took it away because of people like me. Why did you have that fee in the beginning?

Clate: Yes. So we had it for two reasons. One was because it takes a lot of work to get the database setup the right way, to get your customers imported, to get them tagged, to get campaigns set up. And it doesn’t do any good to get the system if you don’t get your data in your organization set and some automated campaigns going. Until that point, you don’t see value. And so we know that if our customers didn’t do the work to get it in, they wouldn’t see the benefits. We also knew that if they didn’t pay for it, they wouldn’t value it and they wouldn’t actually do the work. And so there were two main reasons. One was because it genuinely takes work and effort to get a CRM system that has a bunch of automation capabilities. It takes effort to get that set up the right way. The second reason was, we wanted to weed out the people who weren’t serious because . . .

Andrew: Because your goal was not to be like MailChimp that was going to start off when somebody started in business and maybe they were never going to have a big list, but hope that some of them are going to grow into bigness. You said, “No, we’re going to be the power tool that goes straight to the big players when they’re ready, when they’re big.” That was your vision.

Clate: That’s right. And that’s . . . When I said that, that 10-year mission from 2007 through the end of 2016, we caught our Everest mission. It was about being the power tool for entrepreneurs. And that power tool, we were very clear. If you’re not ready yet, that’s fine, because what would happen is if people came in and they didn’t do that work, they would churn out. They would . . .

Andrew: But did you start off without that payment? Because that was unique. You mentioned Salesforce as the pioneer in the SaaS space. I don’t think they had a setup fee. You guys were unique in that. Where did that come from?

Clate: Yeah. It came from wanting our customers to be successful and learning and realizing if you don’t do this work, you’re not going to be successful. And so it was literally, like, if you look at Salesforce, people spend tons of money on the service. You don’t have to, but the people who actually implement Salesforce they spend far more than thousands of dollars. I mean, they’re spending much more than that. And so we just said, “We’re not going to give people the option to just play around. Either they’re serious and they’re going to do it or they’re not.”

Andrew: And you know what your competitors do?

Clate: [inaudible 00:51:51] serious.

Andrew: They today will automatically they’ll do like a concierge setup where they’ll suck in content and put contacts and content and put it into their software and that’s the way that they get people to sign up. That didn’t work for you and still doesn’t to this model. I’m not putting down your model. Obviously works, you’re doing over $100 million in sales and people who use you stick with you. I’m wondering the thought process behind it, the way that we were thinking about the old Harvard business case studies. Help me understand the thought process there and why that made more sense.

Clate: Yeah. So, by the way, today, it’s very different. Our customers can get in for no services or it’s just much easier to . . .

Andrew: Oh, so people today can just sign up without paying that fee.

Clate: Yeah. You can do a free trial. You can do . . . It’s very different today than it was back then.

Andrew: Okay. I didn’t realize.

Clate: But to explain to you . . . And why is that? Well, it’s a lot easier today. We’ve dramatically simplified the software. And we’ll get . . . I’m probably jumping ahead in the story. Let me tell you why we did that. We did that because we wanted customers who are serious about being successful. And if you have 100 contacts, you’re not going to have a really difficult implementation process. If you come to us with 27,000 contacts and you’ve got a bunch of history with those customers, there’s a lot that goes into getting that imported and getting it organized and getting it set up right and kicking off the automated campaigns.

And so we knew that for them to be successful they had to do the work and we decided this is a power tool, if you’re not ready for it, that’s fine. And that’s the way we did it. And for the first few years, there really was not other . . . there weren’t other options for people and so that was fine. Over time, competitors started to do parts of what we did, and so customers can get part of it and didn’t need to get Infusionsoft. And likewise, over time we were making the software easier and we could afford to onboard a customer less expensively. And so gradually, what you saw was the price was coming down, then we made a move and we said, “You know what? We want to bring on a lot more customers, and so let’s take away that fee entirely,” and that was the point where we nearly lost the business.

Andrew: Because what happened? When you took it away, you went from $5,000 setup fee and coaching… It wasn’t like you were taking the money as a way of putting a gate that would keep out the bad customers. It was spending the money on people who would onboard your clients and work with your clients and so on. You got rid of it. And talk about that. You told our producer that story. I’m going to give you a runway to do that because I thought it was fascinating.

Clate: Yes. So, we went from having this consulting project that was required to making it optional, and when we made it optional, nobody did it. And our sales doubled. We brought in double the number of customers and we thought, “Hey, this is great.” But within a few months the cancellations started to pick up and just really began to pick up, and after several months we realized, we have to give them services, we have to help them, so we decided, “Okay. We’ll do it but we won’t charge them. We’ll do a part of what we used to do but not the full-blown consulting project.”

And we would do kind of a half a project that we felt like was enough to get them started and yet the customer wouldn’t show up on the call. And for everything that we did, we would try to get them to get on the call and go through setting up the campaigns and getting them in place, and some would do it, but many would not. And if they didn’t do it, they were a high churn risk.

And so what happened was our churn skyrocketed and then we began to offer services and we brought the churn down somewhat, but we really couldn’t bring it back down into a good level, and so we put a fee back in place, it was much lower, about $1,500 on average instead of 4 or 5,000. And that was a nice sweet spot. For the next several years we kind of kept it in that range and it kind of . . . It did the work of keeping out the wrong customers and getting the customer to engage and do the work they needed to do to be successful and to get the benefits of the system.

Andrew: You told our producer, this is a quote from her notes, “I remember specific moment, April 2010, a guy brought a waterfall churn report to me.” What’s a waterfall churn report?

Clate: Yeah. It shows of the customers who signed up in a given month, how much are with you the next month, and the next month, and the next month. So if they’ve been with you for a year, you can look back and you can see what percentage of customers that signed up initially in that month are still with you.

Andrew: And this is for six months. And because of the pricing change, do you remember what you saw and what he said?

Clate: Well, first of all, I remember he was super-excited we had the data and I was pissed because the data was not pretty. And I basically said, “At this rate, almost all of our customers will be gone in one year.”

Andrew: Wow.

Clate: I said, “That’s not pretty. That’s not good.”

Andrew: That’s awful. You doubled your customers but you’re losing almost all of them. You said, “Look, I called my wife. I told her we’re screwed. I cried because of the stress. The pressure was huge.”

Clate: Yeah.

Andrew: This because of the funding that you guys had done?

Clate: Yeah. We had investors. They’d put in . . . At that point, we brought investors on in 2007 and end of 2008. So we had investors that had put in $17 million, $18 million at that point and we were not doing a good job with the business. It was not working.

Andrew: Wow. All right. And then you switched back, you reduce the fee to somewhere between $1,000 and $2,000. And then the key metric for you guys was getting a customer to launch two campaigns within 60 days. You knew if you could get them to launch two campaigns they were in. What’s a campaign in your software in Infusionsoft?

Clate: Yeah. It’s a multi-step sequence that is done automatically. And . . .

Andrew: The whole flow chart thing that you guys popularized.

Clate: That’s right. That’s right. And so it’s a customer fills out a form and that kicks off an email on day one and then another email on day seven and then a phone call from a rep on day 14. That’s an example of one. Or an invoice goes out and there’s a number of follow-ups that are both email and phone call or text or whatever, that’s a multi-step communication campaign. They can be internal where it’s workflow and saying, “Okay. The customer did this, now Sally needs to do that, now Joe does this.” It can be that sort of thing, or it could be an external communication campaign or some mix, but some multi-step automated campaign that is basically doing the workflow for our customer. When those are in place, our customer gets great value.

Andrew: To go from zero to a million it was mortgage customers, understanding them, and then I think it was a little bit of the broader audience, right?

Clate: Yeah.

Andrew: Understanding them and creating a product for them. That’s not that huge. It’s $83,000 a month in revenue.

Clate: Yes.

Andrew: But to go from 1 million to the 10 million marks, what did you need to do to get better as a business? How did you rethink the company to get there?

Clate: Yeah. That’s really great. Going 1 million to 10 million was really about getting in with those direct response marketers that we worked with and getting them to help us better understand the problems that we were solving for the customer and better promote the solution that we were creating to those customers. And so that was really about learning to work with partners and learning to get this solution right for those direct response marketers. That is what we were doing as we got that 10 million mark.

Andrew: And it’s constantly calling them up, understanding them. So one of the big challenges is when you understand the power users, they are such . . . they’re so good at using any software that they’ll figure it out. But once you take that to other people, they need to hire consultants, they need to spend a lot of time in your software. And that’s been the issue with Infusionsoft where it’s super powerful that you guys have those certified professionals which by the way, I had two people on our team who as a side thing went and became certified. This is no freaking joke.

Clate: No. It’s real.

Andrew: If this was . . . I stopped being able to talk to them because of this. I literally . . . They went from being gabby and being there and like doing screen share to just saying, “Let me finish this and then I can get back to you.” But that . . .

Clate: Yeah. We want our certified partners to be good. The last thing we want is to certify them and then work with a customer to automate workflow and not be able to do a good job for them. So, it’s a serious certification process.

Andrew: I think it’s the most serious one that I’ve seen people do. Not that it’s the most serious in the world, but I’ve never seen anyone in a marketing framework go through this intensity. Coding, absolutely. There are coding boot camps in San Francisco that put people through that, but not like that. But how do you . . . Was that conscious that you develop software that would need that level of professionalism, or did it just happened that way?

Clate: We were serving the power, right? We were serving up power and when we went from 1 to 10 million we were really serving those power users, those direct response marketers. They understood marketing, and we could charge the prices that we charge for the upfront fee. But the challenge is there’s not a lot of them in the world. So, as we were trying to grow and expand the business, we said, “We want to bring in a lot more customers.” We didn’t raise venture capital to have 2,000 customers. We wanted to have hundreds of thousands or millions of customers, and that’s why we took away the upfront fee.

But ironically, the people that . . . When those people buy, they need the services more than anybody because they’re not as sophisticated. So what we did next was we built a certified partner ecosystem that really helps small businesses that didn’t want to necessarily do all of that work. They didn’t want to go in and become automation experts. And those partners really helped us continue to grow and get . . . I would call it from that 10 to 30 million mark and then even beyond the 30 million mark.

Andrew: You know what? Yeah, that is unique about you guys that there are people who run marketing agencies who then promote your software and then help your clients get set up and I think they even give their clients discounts on at least for a while there. You could get a lower price by buying the software through a partner but then what happens is the partner has an incentive to take care of you and to work with as you upsell. All right.

Clate: That’s right.

Andrew: I got a lot of understanding of how you built this business to where it is today. Let’s close it out with this. You talked about the day that you and your wife had to cry about how you were suffering financially but you were going to be in it together. Take me to a high point with you and your family where you were able to provide or a moment that made you feel like, “All right, I got it.”

Clate: Yeah. You know, I think that about the time we . . . We got through that 10 million mark and the business was . . . And we kind of hit some challenges there we talked about. When you took away the upfront fee and it messed up the churn. That caused some problems. Once we kind of got the business model adjusted and got to that $1,500 price on the service package, we found a good sweet spot for several years and the business really grew and we grew with partners and we grew it through word of mouth and we grew as our customers would implement automation. And it was really fun as we went through that stage to see the accomplishments of the business, to see our customers, to go to events and have them share how the automation had changed their world. That was so fun.

Andrew: Was there one time that you and Charisse said, “We’re going to take the kids to do something,” or even just like took your family to dinner where you realize “We did it”?

Clate: Oh, many times. I mean, gosh, we’ve had so many of those fun things. Certainly, the first time we took the kids to Hawaii. That was a blast. It’s just was so fun. And Charisse and I love Hawaii. Of course, we never went in those early days. It wasn’t until the business started to have some success that we finally started to go. But when we took our kids the first time, that was really, really fun, and that was probably 2012. The business had gotten into a good place. We’re growing nicely. And that was a lot of fun. We’ve had so many different things. We love to travel together. It’s one of our favorite things as a family to go do that and just have a lot of fun and I’m able . . . When I travel I totally disconnect from business and . . .

Andrew: The kids will travel with you even at their age? They’re older. They’re in their 20s, aren’t they?

Clate: They are now, yeah. Our oldest just turned 24 today and our youngest is 9.

Andrew: Oh, you got a young . . . Wow. You’ve got a big family too.

Clate: We’ve got six, yes.

Andrew: Wow wee. All right. Congratulations.

Clate: So let me finish with this because we talked a lot about leading with power. And I think probably . . . I think you see this clearly that we were always known as the power tool, but we got to a point as we were getting toward the end of our Everest mission where we knew that we were not anywhere close to being done. We felt like we were just scratching the surface of what this company was capable of doing. And we also recognized that in order to take the company to the heights that we wanted to we needed to begin to change the way we were trying to serve our customer that instead of leading with power, we needed to lead with ease of use and then allow the power to follow.

And so at the end of our 10-year Everest mission which ended the end of 2016, we kicked off our new Mars mission in 2017 and it goes through the year 2030 and the mission, I said to you early, those specific words, but we’ve always had a desire to serve many but we didn’t really . . . We led with power in those early days, that first 10 years, now we lead with simplicity. And beginning last year we started to make that move and we’re building momentum. The new Infusionsoft, if you go to our website today, it’s much less expensive, you can get a free trial, it’s much easier, it’s all about . . .

Andrew: Yeah, look at this. You guys even have two months free. You know what? I thought I knew this software so well that I spent so much time doing background information and research. I didn’t even go to the homepage which is why I didn’t realize you . . .

Clate: Yeah.

Andrew: . . . do a trial, two months free. So when you say go to simple, what’s an example of something that’s changed to make it easier for people to use your software?

Clate: Yeah. So the mission is to simplify growth for millions of small businesses worldwide. Simplify, simplify, simplify. And what we’ve done is the platform is all new. And you can still get classic Infusionsoft if you want all the power, you can still do that. But most of our customers today are signing up buying the new Infusionsoft which leads with simplicity.

And so here’s an example. Probably the best way to describe it. Instead of going to build out a campaign from scratch, people will say, “Man, Infusionsoft is awesome because if you can flowchart it, you can automate it.” Well, that’s great, but 90% of people don’t want to flow chart stuff. They want to just do some . . . They want the benefits of automation without having to build and design it. So, what we’ve done in the new Infusionsoft is we have templates and you can take those templates, you can answer a few questions in wizard-like fashion, and you can get the benefits of automation without having to go and build that. So that’s just one example. But if you look at the UI, if you look at the entire user experience is just lightened and simplified.

Andrew: So there are two different versions.

Clate: Yes.

Andrew: And one will transition to the other. Do they go both ways so I can go from the simple to the more complicated and vice versa?

Clate: If you start with the simple, you’re going to stay there. If you want the classic, you can migrate to new when you want to. And as we’re building more and more of the power in new, not leading with power, but letting the power follow, we’ll have customers that will want to migrate, but in the meantime, they’ll coexist for years.

Andrew: So, Clate, you basically recreated . . . You created a competitor to Infusionsoft . . .

Clate: Exactly.

Andrew: . . . one with the same spirit, but it starts out with simplicity and you’re allowing the complexity to build in or the power to build in but maintain the simplicity. I had no idea that there were two different products going on now.

Clate: Yeah, that’s right.

Andrew: It’s interesting. You know what? I can think of . . . I’m not going to bring it up because I don’t want to insult them or just like make this political, but I can think of one of your competitors that was doing really well but he had very basic dumb email and I feel like if he would have done this he would have done really well for himself. Create a competitor and allow people to move over, but instead, everything was overly simple and he could never keep up with what you guys were frankly pioneering which is tagging, automation, etc.

Clate: Yes.

Andrew: I had no idea this was going on. All right.

Clate: And we’re super-excited about it because it opens up . . . It expands the market and allows us to be able to serve millions. And our growth . . . We’re signing on more customers than ever, but we’ve clear about twice as many as we were signing up this time last year. The business is doing really well. It’s really fun. But it was a couple of years of really, really hard work. I mean, you’re, kind of, you have to sort of cannibalize yourself in the process and that is not fun to do.

Andrew: Especially since it’s cheaper to go to the newer product, and so you’re trading potentially power users who were paying a lot for simple users who are not.

Clate: Yeah, that’s right.

Andrew: Wow. All right. I had no idea. I remember I invested in a company called ManyChat there because I got passionate about chat. What you guys are doing for email, they want to do for chat. And I started to see that the founder, Mikael Yang, started to create all these flowcharts in his software and I said, “This is like Infusionsoft. This is getting too complicated.” But then I think what he ended up doing was kind of what you’re doing. He said, “You know what? We’re actually going to create two different versions. People can edit in the simple version or they could go into like the Infusionsoft level and they could send out broadcast messages in either way.”

Anyway, and then what he started to do was apparently integrating in with Infusionsoft. And more and more I see that people are doing that, that the brain becomes Infusionsoft. That’s where all the people are, that’s where all the tagging is, and then the brain sends commands to ManyChat that says, “Fire off a Facebook Messenger alert.”

Clate: That’s right.

Andrew: Goes off to a fax software and so on, text messaging and . . . I got it.

Clate: Exactly. Exactly.

Andrew: All right. The website is People, tons of them have paid thousands of dollars to get started with them, but apparently, you guys can just go there and sign up for free. What’s fascinating to me is that I didn’t realize that you guys didn’t start off as giants. I really, frankly, I should know it, but I think for too long you guys were the . . . Not for too long. For a long time, you guys were the big players in the space and I didn’t realize that there was a history before I got started with it. I know that sounds silly to say. Everything started out small, but . . .

Clate: It’s amazing, most people think we just got venture capital and then just started going. It’s like, no, no, no. We work through the hard, difficult, just challenging days like every entrepreneur trying to get the business off the ground.

Andrew: Yeah. All right. The website is And I want to thank my two sponsors for making this interview happen. The first is the company Clate and I both know for hosting websites. Frankly, everyone in this space know them pretty much. It’s And if you want to hire a great developer, go to Really give them a shot, you’re going to see what many interviewees have found. A great place to hire. Thank you so much, Clate, and thank you all for listening. Bye, everyone.

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