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Alright. Let’s get started.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and the place where over 800 interviews I sat down with proven entrepreneurs to hear how they built their businesses. In this interview I’m looking to find out how today’s guest used affiliate programs to generate over five or about $5.5 million for charities.
Kevin Lee is the founder of We-Care, the site that donates a portion of your purchases to charities when you buy from companies you know, like Travelocity, Lands’ End, and eHarmony. I think I didn’t do such a good job explaining that, so what I am going to say is you buy something from those stores and a portion of the amount that you spend goes to good causes. How’s that, Kevin?
Kevin: That works and what’s great is the individual chooses the cause that they’d like to support. So we’ve got major causes, like the ASPCA and Save the Children, but we also got causes that people are very passionate about and might only have a few dozen supporters. And those do as well, so we are agnostic as to which cause a particular individual supports. They can choose whichever they want.
Andrew: And it’s a for profit company. So if you’ve donated about $5 million, how much have you been able to keep?
Kevin: Well, we split the revenue. We get 50-50 with non-profits unless we have some kind of a particular marketing program that we implement where then we might have a slightly different rev share. But in general, we split whatever we get from our merchant partners 50-50, so shopping with one of the pillars of our revenue. We also have search behavior and in the next phase of our technology we are going to start monetizing people’s attention as well with regards to social media advertising and display advertising.
Andrew: I see. And when you mean search, it’s by user plug-in and I do a search, a portion of the ad revenue that’s included with the search comes to you, and then you donate some of that to my favorite charity.
Kevin: Exactly. We’ve got a private label search engine which essentially we get a rev share of in much the way that some others do, like GoodSearch is a competitor of ours, and they do a very similar thing.
Andrew: Alright. And it’s brilliant. It seems brilliantly easy, but there was a time when you were in the hole a lot of money, and we’re going to get to how that happened because I don’t want people to think, “Oh, this is a great idea. I’m going to do it right now.” Wait until you see what happened along the way.
Kevin: [laughs]
Andrew: The idea came to you though when you were working at your other company, Didit. What does Didit do?
Kevin: Well, Didit is primarily a search marketing agency, but we’ve evolved into a full service digital agency. I’m CEO of that company. It’s about 100 people. We manage paid search and paid social and earned media social. We do SEO for clients. I got to see just how much value individuals had when they’re doing their purchasing and how marketers essentially fight for the attention of specific individuals, the power shoppers in particular, but pretty much anybody. It occurred to me like, wow, people have all this value. It would really be great if some of this value could be used in a cause marketing fashion.
So I started to investigate cause marketing in general as well as seeing whether anyone had really done a great job in executing a cause marketing platform. And there were a few people that had done an okay job with it, but I didn’t feel like anyone had hit a home run. Of course, I felt it would be easy as well when I started. I figured, this will be a cake walk. I didn’t anticipate the challenges from a technology perspective, from a marketing perspective. And as far as, you know, getting to the point of getting users’ attention to the point where they actually do something; it’s a lot harder than you would think.
Andrew: Just because it’s a good idea doesn’t mean people are going to come and use it. And just because they’ve come, doesn’t mean that they’ll continue to use it. Before I ask the follow-up question, I’m noticing that because your mic is on, that your phone, when you move, it makes a noise. If you unplug it, do you have a mic and speakers in your computer?
Kevin: Sure. I can just unplug the mic portion.
Andrew: Let’s see how you sound now. So now there is no mic at all. You might need to going to tools, and then preferences, or tools and options on a PC, which I know you’re on, and select a different mic. Maybe that’ll do it.
It was sounding okay before. But I think once we start talking, we get more animated, and that’s when the mic on the earphones becomes a problem. I need to remember that for future interviews.
And I’m talking, of course, because I still can’t hear you.
Kevin: All right. Let’s try this.
Andrew: That did it.
Kevin: Okay.
Andrew: Great.
So what was it that you were saying about the way that we spend money? To be honest, I don’t understand the insight that led to the business: I don’t understand the shopping habit insight that made you say, “Aha! I’ve got to go into this.”
Kevin: Essentially, what we saw was, you know, that CPCs, since the time that I’ve been involved in search marketing, which is before Google was launched, and even before Goto.com, which was the first pay-per-click search engine, was launched, we saw that the CPCs escalate from a couple of cents, up to close to a dollar.
Andrew: Mm-hm.
Kevin: And that, to me, meant, “Wow.” You know, “People’s attention at that last stage of the buying cycle is really, really valuable.” At the same time, I was speaking at conferences like ‘Affiliate Summit’ and, you know, learning about the performance-based marketing side of the business, and realizing how much merchants were paying out in commissions to affiliates who were able to, you know, be influential; particularly at the last stages of that buying [??].
Andrew: I see.
Kevin: And those two things sort of came together for me. And I said, “Well, right now, the consumer has very little choice, except to the extent that they belong to a rebate program.” So you obviously had the rebate programs like Ebates and FatWallet. And then there was a company out of Chicago called I give that had a very similar model to what We-Care initially launched at: which was sort of a web mole for nonprofits. But I just felt like there was a lot of opportunity to do it in such a way that both the consumer and the nonprofit would be in a win-win scenario.
Andrew: Okay. And, originally, you were going to get to the consumer through organizations that they were part of, right? What was that thinking?
Kevin: Well. The thinking was that organizations would see the fact that we were co-branding the web experience, specific to the organization; and that they would feel very confident in sending their supporters to, you know, some subdomain of We-Care like ASPCA.Wecare or SaveTheChildren.We-Care, and that they wouldn’t have to worry, “Oh.” you know, “They’ll get to that site, and then they’ll search the list of nonprofits, and they’ll find somebody that they like better.” Right? We didn’t want to have that scenario. So we provided this cobranded experience; and that was something that didn’t exist in the market place at the time.
Andrew: I see.
Kevin: We thought that would be a sufficient differentiator for this aha- moment that the nonprofit, where they would say, “Oh great. You know, I’ll definitely want to send my supporters through this process. And get them signed up and get them, essentially, earning money from me, at no additional cost to them, and no additional cost to us.
We didn’t realize how thinly stretched marketing and development staff were at nonprofits; and how jaded, essentially, they were, by, sort of, all the things that they’ve been asked to try, that hadn’t really delivered to the extent that they been promised.
So it was much harder to sell what you and I would think of, “Well, this is a no-brainer.” Well, it might be a no-brainer to you and to me, but it wasn’t a no-brainer to the nonprofit community. So we essentially had to forge some case studies with a few partners to illustrate just how much money could be raised this way.
Andrew: When you called a university, and you said, “Hey, you’ll have ‘Your- University-Name.We-Care.com’. If you send people to this, they’ll be able to buy at Amazon, all the books that you’re recommending to your students. They’ll be able to buy from Priceline, the flights that their parents are going to need, or they’re going to need to go home and see their parents, and so on.”; when you told them this idea, how did they express to you that, “We just don’t buy it.”, that this doesn’t make sense? How did…
Kevin: Well, what was interesting about the university market, which was really the first market I went after, was we had invented the first version of our technology to work at the local area network level; at the land level. So you can throw one switch at the DNS level of a university in particular, but it could have been a hospital or corporation for that matter. And from that point forward, everybody’s searching and shopping behavior from within that organization would be monetized.
Andrew: So if I didn’t do anything, even if I didn’t go to my university’s webpage, their homepage or anything, if I just did a search, automatically you would reroute all the ads that I clicked to your advertiser. If I went to Amazon, it would automatically go through the university, I see.
Kevin: Right. That was the theory, and we built the prototype. And the problem was that within University’s, they have a very clear process for just about everything that happens, from the buying of pencils to the provisioning of IT bandwidth. And this didn’t fall into anybody’s domain. Because, IT was the one who was going to have to either use our external DNS server or configure an internal DNS server to work in the particular way that we need it. And, nobody was motivated enough to make a change.
So, after a dozen meetings with universities, it’s including both of my alma mater, they just said, “Clearly, this is nobody’s job and so since it’s nobody’s job it’s nobody’s responsibility and it’s just not going to happen.” I was originally hoping we could do Universities, we could do hospitals, we could do government organizations and maybe eventually get to corporations.
Andrew: That’s incredibly powerful. Their users don’t have to do anything, they can keep shopping at the same stores that they’re shopping, do the searches they’re already searching, and when they buy, the organization that gives them internet connection will get paid for it. I can see also how Universities aren’t looking to squeeze every last penny out their users, not in that way. And so maybe there was no one there with a vested interest in increasing the bottom line. So, then you said, you had to get case studies. What kind of case studies were you looking for?
Kevin: So we moved from a LAN based level to an individual user based level and at that point we had a much different marketing problem. I was originally hoping I could get 20,000 individual University to throw a big Frankenstein switch and convert everybody at once. When you’re converting people at an onesy-twosy level, it’s a different marketing challenge. So, we reached out to a couple nonprofits after I did some research about the level of passion that people have for different nonprofits. And it ends up that if you look at the category level, the category where people have the highest level of passion is animals.
Now you would think, it would be humans or children, and despite the fact, Ettore Rossetti, a good friend of mine ran internet marketing at Save the Children, I decided to originally decided to partner with the ASPCA because I knew if we’re going to have to do marketing, and we’re going to have to capture people’s attention and get them to install browser plugins and/or register, that animals would be a stronger emotional trigger than children. That shouldn’t be that way really, when you think about it.
Given the choice of saving a life, I’ll chose a child over dogs and cats. I love dogs and cats, but it’s an interesting piece of data, so obviously the ASPCA became a critical launch partner of ours. We were able to prove to them and to ourselves that the business model worked and since then we’ve added in clean water fraction and Save the Children, and got more diverse with regards to our case studies.
Andrew: So when you didn’t do it on a LAN level, you wanted to do it on an individual level. And to do that, you realized you needed to have a plugin that the individual would put in into their browser that would automatically redirect to them when they’re going to Amazon, redirect them back to Amazon using your affiliate link. That kind of thing.
Kevin: Essentially. And Amazon was accommodating in the beginning . . .
Andrew: But don’t get to what happened with Amazon till, let’s take this in chronological order, but, essentially, I had it right, but I’m also missing something I feel, in my description of how you reconfigured your business model. What else is missing beyond the plugin?
Kevin: Well, we had the web based interface. But when I saw my wife shopping at the GAP and often forgetting to go through our web mall, I knew that we needed a way to communicate with the individual as they did their searching and let them know this is a participating merchant, this is not. And essentially, remind them, so we created an application called We-Care Reminder, which would remind people at the point that they’re shopping that, ‘Hey, this is a participating merchant.’ What was interesting about that is that increased the conversion rate at that merchant, and increased the average shopping cart size at that merchant, because the merchant saw that, “Hey, this is a merchant that supports the cause that I like or love, and I’m going to go ahead and make sure I consummate my transaction.” So we built rounds for plugins for Firefox, for IE, and for Chrome.
Andrew: I see. Okay. And even your own wife didn’t go to we-care.com to go to the sites that she was going to go buy from.
Kevin: She would forget about half the time, and that’s, obviously, half the revenue disappears.
Andrew: And there was an issue with that, where if you’re popping up, you’re getting people’s attention, and if they’re going to buy after being reminded that a portion of their sales…a portion of the money they spend, will go to a good cause. If…sorry, that’s the good side of the popup, but there was also a down side, wasn’t there?
Kevin: Yeah, initially we were a little bit too much in people’s faces, so we had to change the way in which we communicate. Where the messages show up, and when they show up, so we moved to what we call the slider version of the reminder, which slides down from the top when you’re at a participating merchant, or messages you if you’re not at a site that’s relevant to you, so you might be at Irs.gov, and then it’ll slide down and let you know that we’ve got partners in the tax preparation or tax software business. So it’s…the messaging is there, but it’s not as in-your-face as it had been in earlier iterations. We learned a tremendous amount, having millions of users out there.
Andrew: Yeah, I bet. It seems like it was just a seamless trial and error process, but it wasn’t. When the land process didn’t work, it seems like you just – from what I hear from Jeremy Weiss, our producer – you put the idea on the shelf for a while, didn’t you?
Kevin: I did, because after having spent a couple hundred thousand dollars prototyping something that worked, and having it initially pitched to universities, and then pitched it again to the corporate land owner, and saying, hey, as part of corporate social responsibility, how about we monitor your employees’ shopping behavior as they shop during lunch, and essentially getting a very similar response like, hey, great idea, but it’s not right for us, we don’t want to condone shopping during lunch, or whatever the reason was. It was always a good reason to say no.
Sort of, I gave up. Put it on the back burner. And eventually, sort of brought it back out when I realized there might be an opportunity to do marketing to the consumer.
Andrew: Okay. And for 2 years, did you kick yourself, or were you doubting yourself because this thing didn’t work? Or were you just saying, hey, one of my ideas just didn’t go anywhere, and I’m okay with that.
Kevin: I was fine with it. My business partner and I are parallel entrepreneurs, and our digital hallways are littered with ideas that didn’t work quite the way we had hoped they would. We Care, in the end, became one of the successes that did work, and it was a combination of luck and perseverance that took us there. It was really more a matter of hey, I’ve figured out how to make this work, I still think it’s a good idea and concept, but I’ve got other businesses to work on, and pay the rent right now, and let’s just keep it as an idea.
Andrew: Okay. What’s another idea…what’s one that really bombed, that you thought would go well, and didn’t go anywhere?
Kevin: [laughs] Well, you know, sometimes it’s just a matter of timing, so from 1998 through 2001, we had an email-newsletter publishing business called briefme.com, that sent out 80 topical newsletters on different topics to email, and that actually did really well when it was possible to do email advertising views that our sponsorship supported. And we had, at one point, a couple million subscribers. When the bottom fell out of the market, and the dot.com bust, all of the sudden we couldn’t support it anymore, so we just mothballed it.
So it made us a few hundred thousand dollars extra, and it was an interesting idea. We had 4,000 editors throughout the globe who were writing content for us. And to some extent, it was similar to what the man in the media is doing now on the Web, when it was all via email. So it just didn’t end up working out, the coming and going, concerning long term.
Also, we had a venture that we did with Dunn & Bradstreet, where we had a private-label business directory, and It was simultaneously successful and not successful. So it was successful in many ways, but when you’ve got large organizations sometimes the politics of large organizations make it difficult for what are essentially startups in that eco system to really realize their full potential.
Andrew: I see. And then, you had to close that business, too. So you’ve had businesses that didn’t go anywhere, and you were okay, and you thought maybe this was one of those, and then you had this new idea. You had this new approach to it. And that’s when you brought We Care back.
Kevin: Yep. And I’ll continue to invest in it, and work on that on the web and plugin based model.
Andrew: So you’re a search guy who’s bought ads and managed ad campaigns for your clients and searched. Did you start buying ads for this product, now that you have the browser plugin and a new approach?
Kevin: We experimented with it. As it happens, a lot of the keywords that would hypothetically work were too expensive for the ROI to be there, you know? The thing that I knew intimately well from PPC search is that it’s an auction based market, which puts tremendous pressure on the marketer to try to find that balance between ROI volume and it ends up that there just wasn’t enough volume at the kind of CPC’s that were affordable. So we use a variety of other forms of marketing, including partnering with software publishers to facilitate trial of our plugins when people were downloading other stuff, at download.com for example.
Andrew: So you go to download.com, you get software that you want and along with it, there’s an option to install We-Care’s browser plugin. The option is pre-selected but people can opt out of it if they want. And once it’s in their browser, every time they buy, a portion of their money goes to good cause and a portion goes to you.
Kevin: Yeah, I don’t recall at download.com whether if it’s pre-selected or not. I think generally, it’s not pre-selected. There are a couple of publishers that do want it pre-selected; in another words, an opt out. In either case obviously, a person can uninstall it. But we prefer that the check box not be pre-checked, because then we have a lower attrition rate. In both cases, that’s the mode of triumph.
Andrew: You thought that because nonprofits have a big mailing list, and I would expect too that they’d be happy to email their list and say, “Hey, go use this browser plugin and every time you shop, some portion of your money will come to us and you’ll be able to help us without taking any money out of your pocket.” But what was their response to that?
Kevin: Well, we tested it jointly with some nonprofits and to you and I, the word browser plugin means something, to the average person that’s gibberish. So, the challenge of explaining exactly how it worked and what it did was sort of too much to a hurdle. The next version of our technology has a lot more functionality that it’s going to be of interest to the consumer. It’s going to have a Twitter integration, it’s going to essentially provide lots of value to the consumer as they surf around. So we’re hoping that that will give us an opportunity to get the conversion rates for sort of, in house mailings, up from where they were before.
As with any marketer, nonprofits are very careful because they don’t want to over mail their list and there is a certain sort of internal cost to mailing anything that the consumer finds excessive, because you’re going to have some opt-out’s. So, we’ve tested to see what’s the conversion rate, is it worthwhile, nonprofits mailing it. For some of them, it’s worth mailing it from the browser plugin we have now, and for other it probably won’t be worth it until we can provide this more fully, feature rich application.
Andrew: You told Jeremy, work was resorting to bribery. What do you mean?
Kevin: Well, I’m trying to recall the exact conversation I had with Jeremy. But it essentially, sometimes we have to take some our slush-fund of marketing dollars and sort of almost prepay a nonprofit, say, “Hey, you’re a great cause. Here’s a few thousand dollars. There’s a lot more where that came from.” And so, for them to get an initial check, anywhere from, you know, $3,000 to $30,000, that’s an eye opener for them. And then they’re often much more interested to hear, “So where exactly did this money come from?” And then you can get their attention.
Andrew: And, you give to them with no guarantee that they’ll start using your plugin or start promoting you at all.
Kevin: Exactly. It’s just, you know, we think they’re a good cause, we get together as a team, we pick a cause that’s topical or just that we love, and we just write them a check. We’re in the business of doing good, so that’s fine by us.
Andrew: You also got your members to opt in to a cause of the month.
Kevin: Exactly. That’s where the slush fund comes from.
Andrew: They give you this slush fund and you decide where it goes.
Kevin: Exactly. So they basically say, ‘Hey, where ever you guys think is important the money to go, that’s fine with us. So every month we can then pick a nonprofit cause, or a group of causes as we sometimes will do, in the case where a particular month, is a particular kind of a cause and sort of many nonprofit cooperate around that. In that case, we’ll sometimes split the money three ways or four ways.
Andrew: I see. So what you do is, you say, “If you, the user, doesn’t pick a charity that you want a portion of the money you paid to go to, it’ll go into our slush fund and we’ll pick a cause for you.
Kevin: Exactly.
Andrew: And that money is what gets the attention of non-profits.
Kevin: Exactly.
Andrew: Gotcha. I see. Okay. Alright. And one of the first non-profits that you chose to do that with was ASPCA, or that was one of the first ones that you decided that you would just allow your members to give money to?
Kevin: Basically that was the first time we allowed our members to give money to . . .
Andrew: I see.
Kevin: . . . but that was sort of a co-marketing agreement. I would really call if a co-marketing agreement because they gave us the ability to experiment using net brand. Very similarly with Save the Children, but in Save the Children’s case, we made them cause of the month one December, wrote them a pretty big check, and then from that point forward, they were sort of more interested in partnering.
Andrew: You’d think that all these organizations would just say yes to anywhere where the money came from, and anything that you want to do. But they don’t. I remember when I was running an email newsletter business, I thought, if I donate 10 cents for every new member to some non-profit, that it would help get me more new members, and it would also help the non- profit. I remember calling up non-profits and saying, this is what I plan to do. And they said, well, I’m not sure you can do that. I’m not sure that we will be allowed to use our name. Maybe ten cents isn’t the right amount, and so on.
Kevin: Right. [laughs]
Andrew: You’ve seen this.
Kevin: Yes, absolutely. The concept of cause marketing is not wholeheartedly embraced by all non-profits. It depends on where they are on their evolutionary scale of big business and non-profit co-exist in interesting ways. If they’re more savvy about that, or have sort of started to see the light of how cause marketing can help, they’re much more open to those kinds of relationships. It’s also important that they be properly organized from a legal perspective, because there are all sorts of state level regulations with regards what non-profits can do and can’t do.
Andrew: I see. So how many non-profits do you have working with you?
Kevin: I think it’s about 740 at this point.
Andrew: So did someone have to call up each one of the 740 non-profits and get the okay and work out an agreement with them.
Kevin: No, what ended up happening was once we started showing success, non- profits started to come in over the transom. We’ve spoken at conferences that are non-profit marketing conferences, and we’ve had non-profits sign up. And then they just either accept our boiler plate terms and conditions, or we go through and see if there are any modifications that they need.
Andrew: So you have an agreement with every one of them?
Kevin: Yes.
Andrew: You can’t just say, I’m going to add the ASPCA to my list, and we’ll give them some money. You can’t use their name unless they’re okay with it.
Kevin: We’ll use an organization’s name. So you could come in and you could decide that you wanted to add the South Piscataway PTA . . .
Andrew: Yeah.
Kevin: . . . to our list. And we’ll include them listed textually, but we won’t use their logo. But if someone from an organization comes and adds a new cause to the list, and we think it’s a good cause, and we’d love to get more involved with them, one of our people will have an outreach with that non-profit. Say, hey, here’s what we’re doing. Here’s our success stories. Would you be okay with us using your logo, when we personalize the sub- domain to you?
Andrew: I see. And if the sub-domain is personalized to them, do they start promoting you?
Kevin: That’s their choice.
Andrew: What if they don’t.
Kevin: Whether they do or, it’s really all over the map. We’ve had some which go really gangbusters with it, and there are others who really are happy that it’s there and they may promote it a little bit, but they don’t go as heavily into promoting.
Andrew: I saw of the early problems, and how you got over them. So far I don’t see, though, how you would get financially in the hole with this business. It seems fairly straightforward. You don’t give any money away until you make the money. There are not a lot of people involved in it. How deep in the hole did you get financially, and then how’d you get there?
Kevin: Well, you know, the first version of the technology, obviously, was the land-based technology. So by the time we were done with that, we were probably close to $250,000 in the hole. Then we had to basically retool and rewrite all the technology to work at the individual browser level, across different PC-based operating systems. And that took a tremendous amount of coding time. So having a team of coders building something before a single dime of revenue comes in, that took money. And we had to do marketing in order to find supporters of our initial nonprofit cost partners; and that marketing took money. So by the time you added it all in, you know, we were probably well over $1.5 million in the hole.
Andrew: Wow. And at the lowest, it was 1.5 million the hole? About?
Kevin: Yeah.
Andrew: Why didn’t you give up when you got to three quarters of a million, or a million?
Kevin: [laughing] Well, you see a light at the end of the tunnel. And, you know, we were lucky enough that we had the resources to be able to invest. You know, many businesses are driven by passion; I mean, really all of my businesses are driven by passion, and this one we were very passionate about. Because we knew, in theory, you know, if…your perspective as well like, “Hey, this should work. It’s just going to be a matter of getting over the technological marketing hurdles.
Andrew: And this is all bootstrapped, which means the money that went into all this came from Didit.
Kevin: Well, actually it came my partner and I, primarily. You know, we…
Andrew: And that money for your part, didn’t that come from Didit, your consulting company?
Kevin: Well I mean, yes. It was the fact that I paid myself less. [laughs]
Andrew: That’s what I mean. That you…
Kevin: Yeah.
Andrew: You made the money from that. So your money was made buying ads for other companies; being an ad buyer, and then being a full digital agency?
Kevin: Right.
Andrew: Really? How old were you when you became a millionaire?
Kevin: Well, I guess millionaire is defined in lots of different ways. You know, there’s cash millionaires, and there’s equity millionaires.
Andrew: Let’s say cash…
Kevin: So…
Andrew: …because that makes a huge difference when you call your bank and you say that number.
Kevin: [laughing] I actually didn’t bother looking at it. It would’ve been sooner, had We-Care not been around, probably. But it probably happened a few years ago before We-Care. I guess I maybe might have been in my late 30s, maybe, maybe 39…38, 39.
Andrew: Were you married at the time?
Kevin: Yep.
Andrew: How did life changed after that?
Kevin: I live in Manhattan. Millionaire is like cost of entry…
Andrew: [laughs]
Kevin: …in Manhattan, so millionaire doesn’t mean that much in New York. So life didn’t really change much. Still, sort of business as usual: running a business, trying to decide how much money to reinvest every year into the business, versus how much to take out. And you know, when various taxing authorities need to take their piece of that action, along the way, you know, and you’ve got a pass-through style organization like an S Corp or an LLC, sometimes it’s actually pretty hard to leave the money in the business working for you, because you’re paying tax on it along the way.
Andrew: Yeah. I’ve remember actually going looking at apartments to buy in Manhattan. And I would see these really expensive places. And one of the most interesting parts of the experience, for me, was hearing the real estate broker tell me how the people who bought it made their money. It was always these random things. And they would have separate apartments just for when they visited New York.
You’re right: Competing in New York against people who make money from, I don’t know, buttons on shirts, and they’re super rich. Or coffee mugs that they sell to Regis. It’s really tough.
Kevin: Well, right now, the real estate market in New York, for the last five years, or so, has been propped up by international money. It’s a safe place, according to international buyers, to put their money. So, you know, you’ve got Russia and China and a bunch of other countries, where millionaires in those countries are saying, “Hey, you know, this money is burning a hole in my pocket. I’m going to go buy an apartment in New York City.”
Andrew: You’ve had a couple of other issues, along the way. The first you mentioned, earlier, about Amazon. Amazon: what happened with them at first, and then what was the change?
Kevin: Well, you know, initially the fact that we were tapping into the nonprofit community, you know, with, sort of, marketing right alongside of the nonprofit community. And convincing nonprofit supporters to, you know, prefer Amazon than other merchants, you know, resonated well with the team that we had chatted with at Amazon. But what’s interesting, though, is as we got bigger and bigger, you know, Amazon was concerned because there was somewhat of a precedent being set: in that other affiliates wanted to be exactly like we were, and they were asking for the same deal.
And so, to the extent that, that was, at least my understanding of it, untenable, you know, for Amazon, as we grew and grew and grew into the millions of users; they said, you know, “This is too much of a precedent. We can’t continue to have the relationship.” So it was obviously a huge blow for us, because we felt like there was a strong partnership there. We had the data that indicated that the conversion rates went up on average shopping cart sizes went up. But, if you look at Amazon’s publicly reported numbers as a publicly traded company, their earnings as a percentage of sales in total are not that great a percentage, right? So, for them to have to share a big percentage with us as we grew, I can sort of see where, you know, if they continued to chart our growth, we could become a problem.
Andrew: You said same deal as you; what was the deal that you had that was so special?
Kevin: It was just the fact that users could continue to be compensated on their purchases, or users could continue to make sure that a portion of their Amazon purchases went to a nonprofit cause, even if it was 100% of their purchases, which is, unusual. Because ordinarily, an affiliate is sort of influencing but is not as much of a loyalty program, right? It’s a combination of a loyalty program and changing behavior. And, it just tilted too much towards a loyalty program for Amazon’s liking. They said the affiliate and/or associates program, as they call it, was never meant to be used as a loyalty program, and so we’d prefer it not being used that way.
Andrew: How much money did you lose when they did that?
Kevin: A considerable amount. I mean, Amazon is a real significant player in the e-commerce arena, and a lot of people in particular, people who have already invested in Prime, have already a preference for using Amazon, even if the price on the item is a little bit higher; they sort of feel like Amazon Prime makes up for it, and also that Amazon has good customer service. So, it was a loss, it was something you had to work through.
Andrew: Did it swing you into a loss from profitability? Was it that significant?
Kevin: No. No, it wasn’t significant enough. It really just changed our volumes, and unfortunately some of the profits saw their revenues drop as we have to sort of build back up. Individual purchaser volumes make up for the fact that that particular store was missing.
Andrew: And then there are also tech issues. You’re talking about different browsers, are you on all platforms now or are you on Mac, also?
Kevin: Only in chrome. Safari, we’ve left on the back-burner just because they’ve got some particular challenges in the way you integrate into Safari. We’re on IE, we’re on Chrome, and we’re on Firefox.
Andrew: Not Firefox for the Mac?
Kevin: I don’t know about Firefox for the Mac, actually. I haven’t personally tested it.
Andrew: Okay. And when you’re with all different those platforms, there are big challenges. Like, wasn’t there an issue recently with Chrome for you guys?
Kevin: Yeah, Chrome recently updated and made it a requirement that third- party applications and apps be installed from the Chrome store, which not all of our applications had been installed from the Chrome store. So, we had to sort of retrofit our methodology to adapt to Chrome’s changes.
Andrew: So you can’t, I guess it’s called “side loading” if it’s on a browser, too?
Kevin: Yeah.
Andrew: So, I can’t side load anymore on Chrome?
Kevin: Well, it’s still feasible to side load. There are still toolbar providers who are side loading. You just have to side load and provide greater levels of transparency to the individual with regards to how easy it is to uninstall and such things.
Andrew: I see. And so, that takes a way a major channel for you. What did you do?
Kevin: Well, again, we just adapt. We’re still opening, we’re still live in Chrome. You can go to the Chrome store and download the We-Care Reminder app.
Andrew: Did they deactivate all the plugin installations that were done before through side loading?
Kevin: They did deactivate the previous installs.
Andrew: They did? That’s devastating isn’t it? I’m shocked by it. You don’t seem phased?
Kevin: You know, we were phased, it was just unfortunate. They’re having people who have been using the side load process, so I understood their rationale, right? So, I’m a business person, they’re business people, I understood their rationale for wanting to sort of make sure that people with applications on their browsers truly wanted those applications on there. The unfortunate reality is that not everybody, again, understands what a plugin is. They understand what it’s doing once it’s there to the extent that it’s fully transparent like we were, but not everyone had done that. So, they essentially decided they wanted to clean house, and we just got swept up in that.
Andrew: I would be so frustrated. Site loading, of course, means someone comes to my site or partner site that I pay. I allow them to install my plugin from my site or, again, from a partner site who I pay, and everything is good. You did that for a long time. Chrome said, “uh uh”, not only can you not do it anymore, but anyone who used that process to get your plugin on can’t use that anymore. They have to go and reactivate it.
Kevin: Right.
Andrew: Wow.
Kevin: So we got, you know, hundreds of thousands of reactivations, so we didn’t actually lose our entire Chrome base, we just have to message them and say to please install the new version directly-
Andrew: How did you message them?
Kevin: We messaged them from within the app.
Andrew: I see, so when someone installs the plugin you ask for their email address?
Kevin: No, we don’t ask for registration. It’s not mandatory. But we have the ability to message through the app, almost like an instant message.
Andrew: The app, I guess, is separate from the plugin? So if I install-
Kevin: No, that’s the plugin. From within the plugin we could message them.
Andrew: But if it’s deactivated how do you message me?
Kevin: Well we had a warning. We knew what was happening, so we took a bunch of our-
Andrew: Oh I see, you had enough notice to go and say, ‘hey, this is about to happen, go and install it from the store.’
Kevin: Exactly. Do a fresh install.
Andrew: I see. Alright. I see that you’re handling this pretty well. What about your people? What about the staff when they see that Amazon, a major online retailer, is disconnecting their relationship from you. How does the staff handle that?
Kevin: You know, each of them will handle it probably a little bit differently. Not all of them had been in business for a long time and so some of them, I think, took it a little bit more personally than others. Similarly, the same thing on the nonprofit side. Some of the nonprofits were just somewhat flabbergasted at that, or at the, you know, the Chrome change, and perhaps didn’t understand the rationale that was happening on the other side of the coin. Right? You always need to be able to put yourself in the shoes of the other side when something like that has happened.
Andrew: Yeah, right, because not only do you lose revenue and your users lose access to your software, but suddenly all of these people who are getting money form you are surprised, maybe even a little questioning that you might have done something.
Kevin: Oh no. Again, they knew exactly what was happening. We had messaged them about, you know, here’s what’s going to happen, here’s what you can expect.
Andrew: In those low periods you told Jeremy that what kept you going was, here’s the quote, “glimmers of hope of big purchases”. Talk about that. Talk about, when things aren’t going well, what do you look for to keep you positive, to keep you optimistic.
Kevin: You know, I’m a data guy. I’ve lived and breathed data for 20 years, marketing data in particular. So all of the data pointed to the fact that it’s still a very viable business and all the data continues to pint that way, so we see continuing systemic shifts, right? People are preferring online shopping to offline shopping. They prefer online transactions, all sorts of things, whether it’s software or doing their taxes or finding their mate or whatever it is. That, you know, constant upward trend is one that’s probably not going to reverse any time soon, so having a platform in place and having it evolving platform that will allow us to take advantage of this, eventually not only at the internet peer play type level but potentially eventually at the local store level, I think, is going to be really powerful.
Andrew: What’s the local store level?
Kevin: Well, we would love to be able to allow people to make selections about which local stores they’re going to partake in based on the fact that that store will essentially, sort of, put some of that money back into the nonprofit eco system.
Andrew: What do you say to someone who says, “these guys clearly have”, not spyware, but some. . . They are installing software on people’s computers without actively telling them exactly what it is because they want to get a share of the revenue that comes from all these online purchases, and they are using nonprofits to whitewash their approach to taking a share of the money that people would spend on online store anyway.
Kevin: Hey, you know, everyone is entitled to their opinion. There are some people that don’t like the fact that any piece of software is installed via site load or, you know, free trial or anything like that. We have always prided ourselves on the level of transparency of our software and the ease with which our software can be uninstalled if you follow the directions, and we continue to be really proud of that fact. We have people answering the phone and answering emails on a minute by minute basis to assist anybody who somehow got confused about how the software got there or somehow has decided they didn’t want it there.
You know the big challenge is in a family environment there are shared computers, so sometimes one person will be downloading a disk defragmenter and be offered a free trial of a piece of software and say, oh this seems like a really great idea, and then they don’t tell anybody else in the household that that’s occurred, so the next person who uses the computer then jumps on and heads off to a merchant and sees something they don’t recognize and they have a little freak out moment, they really think this is a piece of malware and how did it get here, I have no idea, they don’t bother to ask around their household, hey Johnny do you know how this got here, usually they just try to figure out how to get rid of it.
And when you’re talking about millions of installations there are going to be some situations like that where the individual wasn’t paying attention when they were installing that YouTube video, saver, or disk defragmenter, whatever the other piece of software was, and they end up with a reminder app and they’ve seen enough situation where something was there that really shouldn’t have been and there and they have a freakout moment, perhaps get a little bit worried. But we’re there to help and as far as us having less than honorable intentions, again, people are open to their own opinion on that and they’re entitled to their own opinion on that, we basically think you can do well and do good at the same time.
Andrew: Do you think that there’s room now for somebody who’s listening to this to say hey, browser plug ins are the old world, the new world is people are buying off of mobile, I mean to create a version of We-Care from mobile where when people buy stuff on their mobile device I get a cut of it, non-profits get a cut of it.
Kevin: Certainly somebody could go ahead and do that. They’re welcome to do that. We think mobile has a bright future, as to when our mobile apps will be ready, that’s an ever shifting time frame, because obviously we have a lot of moving parts and a limited amount of tech hours. But certainly, absolutely, somebody could go ahead and tackle the mobile side of this market.
Andrew: But this is something that you guys are planning on doing at some point also?
Kevin: Yeah, absolutely, mobile’s here to stay, whether you define mobile as purely smart phone or you include tablets in the mix, mobile’s here to stay.
Andrew: You have a big dashboard that you allow everyone in the company to see. What’s on that dashboard? What numbers are they looking at?
Kevin: They’re looking at dozens of different things, from how we’re doing with specific causes to how we’re doing with specific merchants, as we roll out promotions with specific merchants what kind of responses we’re seeing. Really, we sort of feel like because we’re helping individuals support causes, that we really need to have the ability internally to see dashboards to understand what’s going right and what’s going wrong, how to adjust our headings.
Andrew: I’m going to do a quick plug here and then I want to ask you about, you have a different approach to starting business than most people. But the plug is for, but maybe I shouldn’t call it a plug, PSA, Public Service Announcement, something that doesn’t sound like an ad. But first, a word from our sponsor. Are you Okay to stick around for a little while, or is that phone call for you?
Kevin: Sure. Actually let me just see… Hello. Okay. Can you send that up when Allyson comes back in just a couple of minutes, I’m on this line. Thanks.
Andrew: I was hoping it would be some secret business stuff that we’d all get to listen in on, but it wasn’t. So here’s the plug, quickly guys, if you a [?] premium member I want to tell you about a few courses that you might want to listen to as a follow up to this, in fact they’re not necessarily directly related to this but there are some courses that I and the audience are excited about, and I want you to, if you’re a [?] premium member, go check them out. The first one is Jonah Berger, the guy who wrote Contagious, he wrote a fantastic book, I think we turned it into a great course, I think a lot of people are actually missing it although I’m really excited about it. Missing it because his book and course are about how to spread ideas.
His whole message of virality is like it is so over-used and so over-hyped that maybe you’re a little bit skeptical about it. I’ve got to tell you. He is brilliant. He talks about how to spread ideas, not necessarily viral video ideas, but how do you make ideas so interesting that people want to talk about them, so interesting that they almost feel compelled to act on them. And one of my favorite examples in there is – I’m scrolling through, if you have the book – and if you don’t want to listen to him on Mixergy, at least, do a quick search for the Kit Kat story where Kit Kat wanted to increase their sales and they come up with a hook into something that people already do. And every time people did it, they grabbed a Kit Kat.
That’s the kind of stuff he’s talking about, how to make your stuff so – I don’t think I’m explaining this right. Right as I’m saying this, Kevin, I’m getting in my head because I don’t think I’m doing justice to the course. So let me say this. Instead of talking about the other courses, I’m just going to talk about this one idea from Jonah’s course and tell you that there’s more good stuff in there. And I’ll tell it to you, Kevin, and the audience can listen in.
Here’s what he said. Kit Kat wanted to increase their sales, but Kit Kat obviously is a product that’s been around forever, one the people already know and how do you make it interesting and sexy and get more and more people to buy it? So what Kit Kat did is this. They realized people are drinking a lot of coffee, and it’s habitual for them. It is for me. I’m drinking coffee the whole time I’m listening. So they said we’re going to pair Kit Kat with coffee. Kit Kat goes well with coffee is the new message that they got out there with. So when people grabbed coffee, they started to grab a Kit Kat along with it. In fact, I’ve got a picture here on my screen if a display item that they had with coffee and Kit Kat together, and they were putting this on counters in coffee shops.
So as a result Kit Kat increased sales from $300 million to $500 million because people now were drinking coffee automatically reached for a Kit Kat. And when Jonah talks about how do you get ideas to spread, that’s the kind of strategy that he’s talking about, how to piggyback on what’s already spreading. He has many others in his book and many others in his Mixergy course. So…
Kevin: Interestingly, today I had a green tea flavored Kit Kat for the first time. Apparently, they’re sold in Japan, and they’re available here in the United States in specialty stores.
Andrew: I didn’t know about that until I did a search for the proper image to use in the course. I saw that. Apparently, it’s pretty popular. What did you think of it?
Kevin: It was actually delicious. I happen to like green tea, so it was fine for me.
Andrew: Go figure. So there it is. They hooked in with the caffeine need that we have, coffee and, apparently, green tea also. So obviously I’m a little too excited, Kevin, about this. I need to think it through a little bit before giving this sales pitch, but put my sales pitch aside which I don’t think I did such a good job on and understand there’s real enthusiasm for a reason. The course and that book are fantastic. Go to MixergyPremium.com if you’re a member and take that course, and if you’re not a member please sign up already. You’re missing this good stuff, something so good that I get so excited about I can barely explain it. And I’m a professional explainer, MixergyPremium.com, guys.
Kevin, here’s the final thing I want to ask you about. Most entrepreneurs, it seems like today, want to be serial entrepreneurs. You have a different approach to that. Why don’t I stop explaining stuff and have you tell us what that is and let you explain why you’re doing it.
Kevin: Well, I think that (?) entrepreneurship is a viable model for entrepreneurs. What’s interesting is having been in the agency business since I got my MBA and starting off on Madison Avenue, we were sort of always compartmentalizing in our brains as agency people, “Okay, I work on clients A, B, or C and then once that was rolling that would go from A, B, C, all the way past Z. That way we have more than 27 clients.”
So when another business idea came along, it was very easy to sort of compartmentalize, “Okay, I’m going to give this X amount of time, X amount of resources, and see where it goes.” And that’s sort of the idea behind parallel launching entrepreneurship. It doesn’t mix very well with traditional funding methodology, so I don’t think a venture capitalist or a private equity firm would be particularly interested in investing in an entrepreneur who would be seen as scatterbrained or unfocused because they’re doing multiple ventures at once.
But when you’ve got the ability to keep an open mind and see what else is going on in the system. It’s actually good, I think, in the agency business to constantly looking at new ideas, looking at new stuff that’s going on because it allows you to speak on a more informed basis to clients if you’re essentially also in a business on the side that faces a lot of the same challenges that your clients face.
Andrew: That makes sense. Alright. The website is We-Care.com. Do you also do We-Care.com as one word?
Kevin: No, we don’t. The guy who owns it is perfectly happy to stick with it for now.
Andrew: That’s too bad. We-Care.com. Go check it out and see what we’ve been talking about. Kevin, thank you so much for doing this interview.
Kevin: Thank you.
Andrew: Thank you also for being a part of it. Bye, guys!
