Neil Patel on building (and leaving) Kissmetrics

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When you hear that a founder left the company, don’t you internally wonder what happened? What happened to the company that made the founder leave? Well, joining me right now is Neil Patel. He is the founder of Kissmetrics, a company that he’s no longer with day to day.

Kissmetrics is an analytics startup that raised over $10 million in venture funding and has some of the most respected advisors in Silicon Valley. Their mission is to be a revolutionary person-based analytics platform for your whole team. They had some extraordinary wins, like generating over 10,000 leads per month from content marketing. They also had some setbacks. Most notably, they were sued in federal court for allegedly violating federal privacy laws.

I want to talk about what happened to Kissmetrics, where they are now, what he learned from it.

Neil is also the author of “Hustle: The Power to Change Your Life with Money, Meaning and Momentum.” This book is kind of his response to a woman who he met who told him that creating a successful company can’t be done unless you’ve already had some kind of advantage beforehand. In it, he talks about how to hustle as an entrepreneur, how to know yourself, and how to build your business.

Neil Patel

Neil Patel

KISSmetrics

Neil Patel is the founder of Kissmetrics and the author of “Hustle: The Power to Change Your Life with Money, Meaning and Momentum.”

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com. It is home of the ambitious upstart. Joining me today is a repeat Mixergy guest.

Let me ask you this. When you hear that a founder left the company, don’t you internally wonder what happened? What happened to the company that made the founder leave? Well, joining me right now is Neil Patel. He is the founder of Kissmetrics, a company that he’s no longer with day to day.

Kissmetrics is an analytics startup that raised over $10 million in venture funding and had some of the most–and still does–the most respected advisors in Silicon Valley. Their mission is to be a revolutionary person-based analytics platform for your whole team. They had some extraordinary wins, like generating over 10,000 leads per month from content marketing–and man, their content people keep sending around. They also had some setbacks. Most notably, they were sued in federal court for allegedly violating federal privacy laws.

I wanted to him on here to talk about what happened to Kissmetrics, where they are now, what he learned from it, what worked, what didn’t work, etc. Neil is also the author of “Hustle: The Power to Change Your Life with Money, Meaning and Momentum.” This book is kind of his response to a woman who he met who told him that creating a successful company can’t be done unless you’ve already had some kind of advantage beforehand. In it, he talks about how to hustle as an entrepreneur, how to know yourself, how to build your business.

I’m doing a lot of yapping here. I’m going to say two more things before I give it over to Neil. This interview is sponsored by two great companies. I bet Neil knows them. The first is the company that will help you grow your leads. I’m actually speaking at their conference. I hope everybody shows up there. It’s called Leadpages. Go to the conference at Leadpages.com/Mixergy. The second is a company that will help you actually schedule meetings with people. It’s called Acuity Scheduling. I’ll tell you more about both of them later.

Neil, welcome.

Neil: Thanks for having me.

Andrew: How would you assess where Kissmetrics is right now?

Neil: So, funny enough, I’m not involved with the day to day. I’m not on the board. So, I actually don’t know the current trajectory or how the company is doing. I don’t think it’s doing poorly. Of course, it’s not a billion-dollar company or anything like that, or else I wouldn’t know that as well. But it’s moving along fine. It’s cranking away.

Andrew: When you left, what size revenues were you guys doing there?

Neil: I don’t know. It was in the millions. We didn’t hit $10 million at that point. We were above like $4 million or $5 million, somewhere in that range.

Andrew: Okay. Does it feel like it’s going to be a big win for the investors or you’re unsure?

Neil: I hope so. Again, as I mentioned, I’m not involved in the day to day. They raised quite a bit of money. I think it’s getting close to $20 million. I’m not sure how the cap table looks or anything like that. I myself probably own around 7% of the business, maybe 5%, something like that, 5% to 7%.

Andrew: 5% to 7%. My sense was that you were always more excited about the other projects than Kissmetrics, that Quick Sprout, for example, seemed to take more of your time than Kissmetrics. This is your blog that’s now turned into a tool to help website owners know what kind of content to create. Am I right or am I just reading too much into it?

Neil: Probably reading a bit too much into it.

Andrew: Yeah?

Neil: I loved Kiss. So the funny thing is we were generating a lot of the customers from blogging–blogging, speaking at conferences. We of course didn’t want people to copy our strategies. So, when people would say, “Hey, how are you marketing Kiss?” I’m like, “I don’t know. People come, they sign up.” A lot of it was generating from my personal blog, me speaking at events. You don’t want competitors, especially ones that have raised a lot of money to just copy you, right?

Andrew: So, in private you told me that Quick Sprout, your blog led people to end up being Kissmetrics customers because they would do one of the free calls with you that you offered and then they would talk about marketing and you’d tell them about how Kissmetrics could help them. Am I right?

Neil: That’s correct.

Andrew: Okay.

Neil: We got Air Canada through that, for example. We got quite a few big accounts from that process.

Andrew: So, Air Canada went to what was essentially your personal blog, bought your $2,000 package, content package and then they got a phone call with you and bought? Is that what happened?

Neil: No. Air Canada was a bit different. Air Canada was reading my personal blog. They submitted a contact request and they bought one of my info products for $97 at the time, so close enough.

Andrew: Okay.

Neil: At the time I reached out to them like, “Hey, let’s get on the phone. Let me see what I can help you with.” I was like, “You have all these people sitting on your airplane, when someone logs in, why not just show them the seat they normally pick? If they like a window seat, why don’t you show them a window seat by default? Or if a person goes from Vancouver to Toronto on a regular basis, when they go to the site, shouldn’t that be the route you show, especially you know they book 30 days in advance almost every single time?”

Andrew: I see.

Neil: They go, “How do we do all this?” I’m like, “We can’t do it for you, but we can create software that helps you identify the patterns, or at least we have the software you can pay for and from that you can get insights and then modify your website from there.” They’re like, “Oh cool, let’s check it out.” That was a big account for us and we had quite a few like that.

Andrew: So, blogging on Quick Sprout helped. What other blogging did you do? There was the blog on Kissmetrics too. I think it was Blog.Kissmetrics.com, still is?

Neil: That’s correct. That one is actually more popular than Quick Sprout. That one generates a lot of leads. It became a point where that one was generating enough leads, more so that the sales team couldn’t handle the volume. We were trying to figure out ways to automatically qualify the leads because we’re like, “We’re engineers or computer geeks. Why do we need to pay all these sales people to pick up the phone and go through 10,000, 11,000, 12,000, 13,000, 14,000 leads a month, whatever we were getting and call them up? Why can’t we figure out how to automate some of this process that way we can reduce cost?”

Andrew: I love the work that you put into this interview beforehand. You sent me some notes on what you learned from Kissmetrics, what worked and what didn’t. And one of the lines in here is going to make me feel comfortable admitting this. I tried Kissmetrics. I really wanted to install Kissmetrics because I wanted to organize my sales funnel better. But I didn’t know how to use it or I didn’t know what it was and I was confused by it. You said this was an issue for other people too. Can you talk about that?

Neil: Yeah. We created a product that tried to do everything instead of a product that just solved one or two simple problems. The product over the years has evolved. It’s gotten better. But still, when we came out with the product, we’re like, “Oh yeah, we’ll help you optimize your funnels, we’ll do cohorts for you, we’ll track the user cycle of each use, lifecycle of each user,” and we had quite a few other features. “We’ll track the conversion rates.” We even got into A/B testing in it. There’s a point when someone sells a product, they’re going to be like, “Where do we start?”

And it wasn’t just the product. It also started with the messaging. This wasn’t anyone’s fault other than mine. As one of the cofounders, I should have focused on fixing the messaging. Eventually we figured out how to get it right because people were like, “How do you compare to Google Analytics?” That’s the big player in the space that’s free. We figured out that, “Everyone is comparing us to Google Analytics. We’re trying to figure out how we’re different and that’s the biggest question of potential customers.”

So, we decided to try a headline out. I don’t know what they’re using currently. This one converted really well. I was something like Google Analytics Tells You What’s Happening. Kissmetrics Shows You Who Did It. People were like, “Oh, cool, you guys track individuals and people and you can tell the story.” Now you get what the product does.

Andrew: And you still did all the things you were telling me a moment ago was too much to do at once, but now you found a way to communicate it better? Is that the distinction?

Neil: The communication helped increase front end signups from someone going to the website and then signing up.

Andrew: I see.

Neil: And then the team was working on the first user experience to figure out how to onboard and increase that ratio from people signing up for a trial to implementing it on her site.

Andrew: So, what did you find worked well there?

Neil: By the time I left, we had not fixed it at that point. We’ve improved it, like limiting the feature set, we knew that if people didn’t just put JavaScript on their website but tracked specific elements, then they actually would be more likely to pay for the software. So, we went all the way from helping them install the JavaScript, more so email follow up.

And then we had a customer success team that followed up with people and helped them track specific elements, like, “Here’s the code that you would put on this area of the site, etc.” It was worth it because we were pitching software that would cost $5,000, $6,000 minimum and could go up to $20,000-$100,000 a year.

Andrew: I see. You said the first version–this is in your email to me–that you spent over–how much money did you spend on that very first version?

Neil: $1 million. That’s roughly the first round that we raised.

Andrew: And you should have instead, you told me, built an MVP, minimum viable product. Why did you spend so long building something?

Neil: There are a lot of smart people in Silicon Valley. We would take their opinions and build, but we weren’t getting feedback from people.

Andrew: Now, you guys were the poster children for Eric Ries’ Lean Startup movement.

Neil: After we burnt the $1 million.

Andrew: That’s what it was?

Neil: Yeah. So we first burnt the $1 million and then we figured out how to fix it using his process. It was really helpful.

Andrew: I see. And then he became an advisor.

Neil: He was an advisor.

Andrew: Okay. When you say that you gave too many shares to one advisor, was that him?

Neil: No.

Andrew: It wasn’t.

Neil: Not one advisor, to each advisor. So Hiten and I as cofounders, there are option pools when you keep raising rounds, you have a 10% option pool for employees, advisors–I’m calling them team members. Without them you wouldn’t have the business. But team members, advisors and whoever else it may be, even sometimes consultants.

Consultants would come and say, “I can help you fix X, Y and Z. Give me some shares.” We were giving advisors a half a percent, sometimes up to a percent, a quarter of a percent. That adds up really fast, especially when you start getting 5, 10, 15, 20 over the course of a few years. We had way more than 10 advisors.

Andrew: I see. So what’s the big takeaway from this? What is the right amount to give an advisor?

Neil: It’s not even what’s the right amount to give an advisor. These people are smart. The advisors did nothing wrong. On our end, we didn’t a) learn how to utilize them. B) We were giving them shares before figuring out if they’re a good fit. Just because someone is smart, it doesn’t mean they’re a good fit for your business. C) What we should have done is start working with them and talking with them, see how they could help us and then figure out what share amount we should give them based on the value we think we would have received.

Andrew: I see. So first get the advice, first get the value and then once you’ve tasted what it’s like, then give them shares and know what you’re going to get from them in the in the future.

Neil: And you don’t necessarily have to get the advice, but you have to figure out where they’re going to specifically help you and what you’re going to get in exchange for the shares. Most advisor roles are pretty casual, “Hey, Andrew, you’re a smart guy. You know a lot about podcasting and marketing and making a blog. We’d love to make you an advisor to my content marketing startup. Let me just give you some shares.”

That’s how most advising positions work. They’ll pick your brain here and there. I think that’s a really inefficient approach. Why not figure out what’s wrong with your business, where you need help and, “Hey, Andrew, if you can help me solve these problems, I’ll gladly give you some shares.”

Andrew: If you can help me solve these problems, then I’ll give you shares.

Neil: Not as in if you have you to do it first, but if you agree to it and you feel that you can fix those problems, then sure let’s work out the details before you put in a minute worth of work.

Andrew: I see. You were an advisor to other companies before you started Kissmetrics. How did they work it out with you?

Neil: Typically they were like, “Neil, can you help us with marketing? We’ll give you some equity.” That was it. We negotiated the percentage, the amount of shares and there wasn’t much more to it.

Andrew: They were doing it right, the way you’re suggesting.

Neil: No. They were just giving me shares. They weren’t figuring out what I could specifically help them out with. They were like, “Just help us with marketing in general.”

Andrew: I see.

Neil: You need something specific. Let me give you an example. If I’m a marketer and you have a company, Mixergy, you could be like, “Neil, I know SEO drives me a lot of my premium subscribers. Can you help me boost my SEO traffic?” “Yeah, Andrew, I think I can help you boost your SEO traffic.” “Okay, sounds good to me. What specific things would you recommend? You don’t have to tell me the specific tactics, but what issues do you see? Do you think there’s a lot of potential?”

And once you feel confident that I actually can help you, then at that point you figure out what kind of advisorship should I give percentage wise, how much time do I need? You can even ask, “Hey, Neil, how much time is this going to take you to fix it all? Do you have any other sites that you’ve worked with and what were the results from that?” It’s almost like a consulting contract.

Andrew: Yeah. It sounds like it.

Neil: And you don’t have to do it that way, but I’ve found it to be much more efficient. If I want one or two percent of your company, you could be like, “That’s a lot of advisor shares. Most people only ask for a tenth of a percent.” But if I can show you I could provide a lot of value and I could prove it to you and the advisor shares vest over a period of time in which the first year is a cliff where you don’t give any shares.

After that, year two, the first year’s vest and then there are three more years after that. So, you have very little to lose, but you don’t want to go into it saying, “I’m going to knock out all the advice and cut someone off and not give them any shares. You want to make sure both parties are happy.”

Andrew: Did any of the advisor shares that you got from before Kissmetrics or even after, did they translate into real cash?

Neil: Yes.

Andrew: They did?

Neil: There’s one specifically that will do well. It’s a company called Whitepages.

Andrew: I know it.

Neil: That company was structured right. Alex, the founder of it, he figured out what I was going to provide, what I want in exchange, how much cash, etc. This company is privately owned all by him. I believe the employees may have shares as well. What Alex ended up doing is, “I’ll give you restricted stock. We’re a company that’s already worth millions and millions of dollars. Restricted stock means you get it as if the company was worth zero. So, if I give you. . .” He didn’t give me this much, but let’s say he gave me one percent.

I’ll get everything from zero to what they’re worth right now. In most cases, if you’re getting advisor shares and the company is worth $100 million and the company sells for $200 million, if you have one percent after investors and everything like that, let’s say you own a clear one percent, you’ll make $1 million. You’ll make the difference from $100 million to $200 million.

Andrew: Is that right?

Neil: Yes. It’s usually they do valuations of the company.

Andrew: I see. That’s the difference between restricted stock versus stock.

Neil: Yeah, stock, I think.

Andrew: And then do you buy it?

Neil: Alex was really friendly in which he gave me the restricted stock for free and then he paid the taxes I incurred on the money for accepting the stock and then he even upped me on the money, the taxes I would pay for receiving the money. The accounts of the math were he gave me enough money to not only cover the stock but any taxes I’d receive on the money he gave.

Andrew: I’ve gotten to know him a little bit only through you. I still don’t understand why is Whitepages doing so well. What is it about them?

Neil: They created a really good product. When you’re looking for people information, like people search, if I don’t know who Andrew Warner is, I can look him up on Whitepages. Most people and companies in the space charge for the information. They give almost all of it away for free. They’ve also been around for a long time.

Andrew: And where does their revenue come from?

Neil: Ads. They also sell premium information. But they’re giving away more for free than everyone else in the space. They also don’t use scammy tactics too, so they have a long-term, solid reputation. Other players in the space, like you’ll look up Andrew Warner and they’ll have a sign that pops up that says, “We’re looking up Andrew Warner, but what you may end up seeing will shock you. Are you sure you want to proceed?”

Andrew: That seems like a pretty fun tactic. They don’t do that? It doesn’t work?

Neil: It does work, but Whitepages is really on the up and up. They’re trying to provide the best user experience. The companies who are using those tactics, they’ll be like, “What you may find out may shock you. Do you want to proceed?” You click yes and then you don’t find out anything that’s shocking. It’s like, “Oh, I just got duped $15 and I’m being charged recurring fees when I didn’t even know this.”

Andrew: I’ve seen those. Some will even have the data right away, but they put that searching screen up, like, “We’re hunting here. We’re hunting there.” They make you wait for a second and then they try to sell you.

Neil: Yes.

Andrew: All right. Let me talk about my sponsor and then we’ll talk about how you recovered from spending too much on that MVP and what you did next with the business. But my sponsor is–you know Leadpages, right?

Neil: I actually use them. It’s a great tool

Andrew: Yeah. What do you use Leadpages for?

Neil: I got in on their old pricing too. They’re really nice for the old customers. They didn’t increase it. I love the tool. I use it every single day.

Andrew: For what?

Neil: For content upgrades. So every time someone reads a blog post, it’s actually crazy, the number one way we collect emails is let’s say the blog post is “Ten Ways to Double Your SEO Traffic.” We’ll have a content upgrade, kind of like a checklist or you can do more information, “Want Ten More Ways to Double Your SEO Traffic? Click Here.”

So, they click there, the Leadpages box pops up. It puts in their name and email and then Leadpages passes that information to Infusionsoft so then we’re capturing more emails. But that’s the number one way to capture emails from a blog post right now.

Andrew: I’m hearing that from not just you but for a lot of people. Content upgrades, as you described them, are the number one way to do it without feeling like you’re overwhelming people with excessive pop-ups. It feels elegant and it feels natural. So, that’s what Leadpages is. We all use Leadpages.

Well, they’re putting on a conference called Converted 2016, where they’re bringing in people like you, Neil, to talk about what’s worked for them, kind of like this one thing you just gave us took what, 60 seconds? That’s 60 seconds of a much bigger conference. They’re going to lots of these things, lots of different tactics for converting viewers into leads, people who give you their email address and converting leads into sales and they’ve got people like Ryan Deiss. You know Ryan Deiss, right?

Neil: Yeah.

Andrew: Digital Marketer. Steve Kamb form Nerd Fitness, he’s got Pat Flynn. Pat Flynn’s tearing it up lately, right?

Neil: He’s been crushing it.

Andrew: I have to tell you for years I did not have Pat Flynn on Mixergy because I didn’t know him fully. I just knew Smart Passive Income was his site. I said, “These passive income guys are just–you’ve got to watch out.” The more I got to know him, the more I realized this guy is solid. Clay Collins, the founder of Leadpages is going to be speaking at this conference. Marc Maron is going to be speaking at this conference.

Lots of people, including one very important guest–Andrew Warner. I will be speaking at the conference. They bought this ad so that I could invite anyone who’s listening to Mixergy to come to the conference. The reason you want to be there is partially to listen to the speakers give you real, actionable techniques like Neil just did right now. They all have it. That’s why Leadpages invited them to speak at Converted.

But also so you get to know the people in the audience. What I found was when you get into a group of people who are all smart marketers, who are all coming up with great ideas, you’re going to start connecting with them. They’re going to start to be in your phone book. They’re going to start to be in your Facebook Messenger.

So, you can ping them from time to time and get ideas. You can ping them from time to time to see what’s working for them and share what’s working for you. That’s why I want you to go to Converted, to get to know how the smart marketers do it and to get to know them.

Well, I’m going to be speaking there. If you are going there, I want you to email me. Just send me your ticket saying you’re going to be there so we can meet up. I’ll send you my phone number so we can connect on text messages or maybe we’ll do Facebook Messenger for a bunch of us that are going to be there. I want to meet you in person and introduce you to the other speakers and other people I meet there.

They’re giving us a discount because they want more people from Mixergy to be there. If you like the big discount–they’re giving us $250 off–here’s where you go. Go to Leadpages.net/Mixergy. It’s for a limited time. I think it’s the summer promotion they’re giving us. Go sign up. Let’s meet in person and let’s talk to all these other incredible marketers at the conference. It’s called Converted 2016. Leadpages.net/Mixergy.

Cool, Neil. Are you going to be there?

Neil: I’m not going to be there, but I should. I have too many conferences. Funny enough, I met you at a conference.

Andrew: Is that where we met in person?

Neil: We met in person.

Andrew: No. We met at an event that I did.

Neil: In Santa Monica.

Andrew: Right, where I invited you to speak at a conference.

Neil: Yeah, same thing. We met at a conference.

Andrew: Right. And then we went out for drinks afterwards and yeah, we became friends.

Neil: Eventually you came down to my hometown of Cerritos. We had dinner there one time.

Andrew: I’ve got to ask you something. At the time, you were incredibly well known. That’s why I wanted you to speak at the event. You were incredibly respected and you were considered super successful. You picked me up in your mom’s station wagon.

Neil: We still have it today.

Andrew: You still have the station wagon. We went out to dinner at–do you remember where it was, the Olive Garden?

Neil: No, not Olive Garden. It was Macaroni Grill.

Andrew: Macaroni Grill. Were you at the time in financial trouble?

Neil: No. We still have that car. It’s from 2003. It works well. My dad was thinking about selling it because my sister is giving my dad his new car. I’m like, “Why? It still has another 100,000 miles.”

Andrew: Just keep using it.

Neil: Yeah. It was funny. I don’t even have a car because I think they’re expensive. But somebody was asking me the other day–Uber is cheaper–someone was asking me the other day, “If you had to buy a car, what car would you buy? Would you buy a Ferrari, Lamborghini? What car would you buy?” I’m like, “Probably a Kia or a Honda.” They’re like, “That car is terrible. You would be seen in that?” I’m like, “Why not? It was a ten-year 100,000 warranty. It’s a really good car.”

Andrew: I get that kind of thinking. But I’m looking at your shirt. I feel like your shirt costs more than a Hyundai. I’m looking at the way you’re dressing lately. You’re spending tons on clothes, right?

Neil: I spend tons on clothes, but check this out. My friend says I have messed up logic. I just got a new iPhone. My iPhone was three and a half years old. I had the 5, not the 5s. I know the numbers are like 5, 5s, 6. They only come out with these once a year. It’s really old. September would have been four years on the iPhone 5.

The phone didn’t break. The antenna broke just natural issues, so I couldn’t get any reception. No one could call me and I couldn’t call out. I have three free upgrades on the Verizon plan because we have a family plan. No one really uses the upgrades because they give you a discount for not using them. So, my sister is like, “All right. Get a phone. Get a good one.” I got pretty much the same looking iPhone because it was free. The other ones would cost money. I’m like, “I’m not spending $100, $200 on a phone.”

Andrew: Why not?

Neil: It’s expensive. I don’t know. My mind is really weird. Like phones, I just use it for talking. Why do I need a fancy phone that has all these apps and stuff if I just use it for calling and checking my emails?

Andrew: I see. You work on your computer, not your phone. Then why spend so much money on clothes?

Neil: I speak at conferences. The one part that most people don’t know is I do a lot of paid events for governments and when they do it, they have dress codes. So, not only do they pay me to speak, they pay for my wardrobe. So, all the money I’ve spent on clothes, technically I’ve gotten paid more from speaking than I’ve spent on clothes.

Andrew: Which government events are you speaking at?

Neil: I’ve done ones in Greece, recession. I did one for the Brazilian government, trying to help them get out of a recession.

Andrew: How are you going to help them get out of recession?

Neil: They just want me to help stimulate entrepreneurship.

Andrew: I see. So they’re bringing you to speak to the entrepreneurs in their community?

Neil: And teach people how to start businesses, to take risks, what they should do, how to make smarter decisions. I did Malaysia before for Magic, which is a government incubation-type of program in which the government gave them like $50 million or $100 million or something like that to help stimulate the Malaysian economy. So, they bring me and other people down there. I just got hit up by them again saying–

Andrew: What’s your rate? What do people pay to have you speak?

Neil: Anywhere from $25,000 to $50,000.

Andrew: $25,000 minimum for you to speak?

Neil: For an hour. If it’s close, I won’t charge that much. For example, I’m speaking at a conference next week in Las Vegas, so it will take me two minutes to get there in a cab. They’re giving me $5,000 for I think a 30-minute speech. So, I was like, “I’m not doing anything anyways during that time, so I’ll take $5,000, but normally I won’t hop on a plane and do it for less than $25,000.

Andrew: Less than $25,000. And they know you because of your blog, because of Quick Sprout. Good lord. What are we doing talking about Kissmetrics. I should have Neil back on just to talk about Quick Sprout. So, the reason I asked you about whether you weren’t doing well is because I read this one line in your book that said Neil had lost $1 million by the time he was 21, one hell of a deep hole at such a young age.

Neil: Yeah. And I was able to pay it all back within 12 months.

Andrew: How?

Neil: Consulting. I started doing consulting for poker, gambling, stuff like that overseas in Europe.

Andrew: Where you were helping them with their marketing?

Neil: SEO, yeah. It’s legalized there.

Andrew: Got it. Okay. One of the things that you told me that you guys should have done at Kissmetrics was have a freemium option. Tell me about that. I remember talking to Jason Fried–well, actually I don’t know what his position is. What’s your position on freemium? Why do you think it hurts you guys not to have a free version?

Neil: If you look back five, ten years ago software was more unique, more of a novelty. Companies were charging hundreds and thousands of dollars for software. So, charging companies $100 a month, $500 a month, $1,000 a month, no problem. Everyone was charging for software. Technology is so much cheaper these days. Hosting costs are so much lower due to the fact that Amazon’s very flexible.

Now, you can create software companies and your costs are very minimal. You don’t even need venture funding. Ten years ago, you needed a lot of venture capital to create a big software company. Now, you don’t need that. You don’t even need any money in theory, right. Having a freemium product gets you out there to the masses. Yes, you will lose money by doing it, but it’s cheaper to market your company through freemium than it is to do ads to track those users.

Andrew: So I get that. I’m looking at Hello Bar. You guys bought the company and man, I heard you guys took over and just cleaned up the software, you turned things, you grew it even more. I understand freemium with Hello Bar because if someone doesn’t pay, then there’s an ad essentially for Hello Bar on the bar–Hello Bar is the bar that people have at the top of their sites that allows them to collect email addresses and send people to sales pages, etc. How do you do freemium with Kissmetrics and get more customers because of it?

Neil: You limit usage. If you want more usage, you pay. So I could say the first 1,000 people that you track are free each month. After that, you have to pay. I could say that it’s free for you, but if you want to add multiple people within your organization to the account so you can all look and analyze the data, then you have to pay.

Andrew: I see. So it doesn’t get you viral growth. It just gets you more usage and then that usage is going to translate into sales.

Neil: That’s correct. It creates so much more word of mouth and the math, every time I’ve seen it from different SaaS companies, the cost per customer acquisition for a freemium product is very little compared to someone who doesn’t have a freemium play.

Andrew: So you spend all $1 million you raised on the first version of your product, right?

Neil: Close enough.

Andrew: Close enough.

Neil: There were other costs like administrative, finance, etc. But the first $1 million that we raised went to building the first round of the product.

Andrew: And after you launch, what’s the reaction from potential customers?

Neil: They were confused. They were like, “We don’t need this.” The first version of Kissmetrics was around social media and tracking and virality and Facebook and viral loops. People didn’t really want that. But we built that.

Andrew: Okay. Wow. So then what do you do? You’re kind of stuck, right? Do you go back to your investors? What do you do at that point?

Neil: Yeah. Even though I’m no longer a part of Kissmetrics right now, I still own shares. The investors are great. The reason I own very little equity in the company isn’t their fault. It’s my fault. It’s poor decisions on my end. The investors didn’t do anything wrong by me. Every time we needed more help and went back to the investors, they gladly gave us more money. They were really easy going.

Andrew: Okay. But you did say to me before the interview started that you didn’t focus on raising big enough rounds when you were raising money, so you kept having to worry about money. Can you talk about that?

Neil: Yeah. When we were raising, we got really good feedback from True Ventures. They were our lead investor. They’ve always supported us throughout the whole business. They still support us today. They’re great guys. If I went to raise money for another startup, I would first go to them. They taught us a few things.

One of the investors was Tony Conrad. He was on our board for quite a while. Tony Told us, “Hey, you’re the one who determines your next round. If you perform, you will get a big next round,” not necessarily from True, but any VC, right? He’s not saying, “Take money from me.” Any VC. If you don’t perform, you won’t get a big next round.

When we started raising, the first round we did was $1 million. We asked for $1 million. The next round we did, we’re like, “Yeah, let’s get $3 million, $4 million.” True helped us raise it. Tony wasn’t the one who said, “Hey, you should go smaller or bigger.” He’s like, “What do you think you need?” It was our fault for miscalculating how much money we should have raised.

Once you raise the for you add the headcount and you burn more money and you’re like, “Oh crap. In a year and a half we’re going to be out of money, so in six months, we should start fundraising again.”

Andrew: So, what should you have done instead? How would you have known what to raise?

Neil: We should have created a bigger vision and tried to raise amounts that would last at least two years.

Andrew: Instead you raised for how long?

Neil: One to one and a half years.

Andrew: I see. So, when you talk about a bigger vision, what’s the vision as you expressed it and what’s the vision as you think you should have expressed it?

Neil: The vision that we were explaining things relative to a VC, we were saying, “Hey, we have this analytics product. We’re going to help you track the lifetime value of a customer, yadda, yadda, yadda. Here’s our software and here’s what it does.” VCs don’t always care to be dragged down with the small little details. If they’re interested in investing with you, yes, they want to know all those details.

What we should have started to pitch was something as simple as businesses make x-percent of their revenue from new customers and x-percent from repeat customers. Our software helps increase the repeat business by x-percent.

Andrew: I see.

Neil: We had case studies. That’s a big picture. That’s a big vision pitch. Then you can say, “Oh, I can see how you can take this into Amazon and if they make x-billion dollars from repeat customers, you can increase it by 10% to 20%, here are the case studies. Here’s the proof in the pudding. Talk to these customers in different sectors. These are the results that they got.” That’s how we should have started off.

Andrew: A simpler, clearer message, am I right?

Neil: With businesses, it’s all about pain points. Similar with VCs, when you’re pitching a product to the business, you’re either making them more money or saving them time. In the B2B realm, that’s usually how it works. It’s not always the case, but in most cases. Investors are the same way. We created a software that helps businesses make more money out of their existing customers. “Here’s the overview. Here’s how much of an increase our current customers have gotten and here’s how we do it.”

Instead, we dove into, “Here’s how we make companies generate more revenue from our product.” We didn’t start with the pitch. We started with, “Here’s our software. Here’s how it works. Look at the results.”

Andrew: I see. That’s much more concrete, which feels more correct, but I see how it doesn’t show the big vision and it doesn’t create clarity for what you’re going to build next.

Neil: Yes because for investors, they’re not exactly about what exact feature are you building. Our investors or board members never told us, “You have to go this way with the product,” or anything like that. They were really easy going. They’re just there to help you whenever you need advice and if they see you’re doing something wrong, they’ll give you feedback, but they don’t say you have to do it this way. They just give you casual feedback.

We never went in the approach that, “Hey, this is a big picture-type of company.” If you go into the approach that we’re in the analytics market and, “Look, here’s how much more revenue people are getting by using our analytics software.” “Okay. Cool. Who else is in the analytics space? Oh, Omniture, they’re the biggest at this time? What’s their market cap? Oh this is the potential market size of the space.”

Andrew: I see.

Neil: Versus, “Hey, here’s a product that just helps companies get more existing customers or get more repeat business.” That applies to a lot of businesses out there. They’re not going to compare you to, “Who’s the biggest in your space. You’re doing something totally different. We can see how you help these ten companies make way more money. Let’s make this a big company.”

Andrew: All right. Let me talk about my second sponsor and then we should go faster through this list. I keep spending too much time on each item on the list because I want to dive into more detail, but we have so much more to cover. So, my second sponsor is a company called Acuity Scheduling. Do you know them?

Neil: I do not. That’s the one I didn’t know. But I’m going to try them out after this interview.

Andrew: Good. Sweet. I think you’re going to love it. It’s created by a Mixergy fan, a guy who’s been a Mixergy for a long time. Here’s the problem. You actually are showing how this kind of tool could be used really well. You get a customer. You say, “Get on a phone with me.” Once you get them on the phone, you can help them out. You can understand who they are and maybe you have a bigger relationship because you’ve gotten on the phone with them and maybe you learn how to improve your product after you’ve talked to them.

The problem is that most people don’t do that. And frankly, I should be doing even more of it at Mixergy. But when they do do it, it becomes such a mess that they never want to do it again. What happens is most people will say, “Hey, do you want to get on a call?” The customer will say, “Yeah, sure, I guess so.” “Are you free Monday at 9:00 a.m. or Tuesday at 5:00 p.m. or Thursday at 6:00 p.m.?”

And you give them a list of different times. If you didn’t give them a time that works for them, they’re going to have to email you back and say, “No, that didn’t work. Can you send me more times?” Or if they did take a week to respond, that means you have to leave those spots open so no one else can book anything in those times because this person might actually book something. It’s a big freaking mess.

Here’s what Acuity Scheduling does. They give you a simple URL or in our case when we use them, it’s an embed code. You put it on your site if it’s an embed code or give the person a link and say, “Hey, thanks for buying my stuff. Click here to go and schedule a call with me so I can talk to you one on one and help you out.”

The customer gets the link, sees a calendar full of your available times. It’s your clear available times because it hooks into your calendar. If you happen to have something going on at that time, it won’t make it available to someone. The customer can pick the time that works for them. Once they pick the time that works for them, they’re asked, “What’s your name? What’s your phone number?” If you want to connect over Skype, “What’s your Skype name?” If you want to know a little more about their business, you can ask them that.

Once they hit submit on that, it automatically goes to your calendar, which means no one else can book at that time. It means also you’re going to remember because it’s on your calendar and it goes on their calendar so they remember. And Acuity Scheduling will send out reminders. It works. Really simple. It makes sure that if you want someone to get on a call with you, Acuity will do it, make it easy for them.

If you want to go try them out, go check out AcuityScheduling.com/Mixergy. When you use that URL, they’re going to give you 45 days free, which means if frankly, if you’re just starting out, you can use it for 45 days and get all the value out of it, make some sales with it. If you’re not sure if this works, 45 days will tell you that your business will grow because of it. Go check out Acuity Scheduling.com/Mixergy. They’re a good sponsor.

Let’s see where else we want to go. I want to talk about–here’s another mistake you told me. You said that you guys should have gone into mobile earlier. What happened there?

Neil: The web is a big market. We thought that so many people have issues with their website, let’s help them fix that first before we go into mobile and teach them how to fix mobile.

Andrew: Okay.

Neil: But for the consumers, even businesses, they don’t look at it as, “Hey, my website has a lot of problems so we’re going to fix that first before we go to mobile.” They’re looking at it as, “Everyone has a mobile phone. We should get into it as well.” So, then they have two sites with different issues. We could have created a software right away because it was the same thing that helped mobile sites and web-based sites or apps or whatever it may be, but we focused on the web before going into mobile.
Andrew: And you’re saying you could have done it. It wouldn’t have taken too many resources away.

Neil: It wouldn’t have.

Andrew: You just wanted to get really good at it.

Neil: Yes.

Andrew: And the answer, the bigger takeaway from that is if your customers were asking for something, if you’re starting to shift somewhere, then you just have to be where they are, is that right?

Neil: Yeah. It’s not even if the customers are asking for it. We didn’t get a ton of the early stages asking for it, but the market trend showed that everyone was creating mobile websites and that was the hottest thing. So, why wouldn’t we create something that helps them track it and fix that as well?

Andrew: I see. All right. Let’s talk about the biggest one. To me it feels like the biggest one, the lawsuit.

Neil: Yeah.

Andrew: How do you tee up this issue? What was the lawsuit about? I’ve got some notes here from a Wired article. I’ve got some notes here about when Quantcast went through the same thing. By the way, who is that over your shoulder? Is that okay for me to ask?

Neil: Yeah, housekeeper. I call her Mama. I love her to death.

Andrew: All right. And you’re now living in Vegas?

Neil: I mainly live in Seattle.

Andrew: Okay. Did you move to Seattle because of the tax savings?

Neil: Yeah, a long time ago. I moved in–I don’t even know, like seven years ago, eight years ago.

Andrew: I see. Right now you’re not getting capital gains mostly. It’s real profits.

Neil: And you’re in San Francisco. So, you pay state income tax.

Andrew: It freaking sucks to be here. I tried to tell my wife to not be here. I told her let’s go to Puerto Rico for two years. Basically the US government is going to pay us to go to Puerto Rico. She had no interest. What are you going to do? It’s kind of funny because she’ll pay attention if I spend $10 or maybe more–let’s say I decide I don’t want to clean something up or I don’t want to take a box over to the UPS store and I’ll pay someone from Shyp to go pick it up. She’ll pay attention to the $5 there, but the taxes, she won’t care that much about because taxes aren’t that visible. Taxes we’re talking about way more money.

Neil: It’s way more, 12.6% in California, 12.8%, something like that.

Andrew: Yeah. I don’t even know what it is. I just know it’s painful. So, tee up this issue. What’s going on? You guys tracked people–well, tell me.

Neil: Yeah. So, after our second round of Kissmetrics, we raised $3 million or $4 million. I forgot the exact amount. We were doing well. We were close to break even. We got an email or technically we saw an article. The article got published saying that we’re sharing data. Some of these sites did retractions saying we weren’t sharing data in the end. But they were saying we were sharing data.

Then over the next few days, we got call from the FTC saying, “Hey, just wanted to let you know we’re going to be investigating you guys.”

Andrew: And then sharing data was that you were using the same pixel for multiple clients and the assumption was you were taking data from one client’s customers and passing it to another client, right?

Neil: That’s correct.

Andrew: They were showing it was the exact same cookie and that’s the assumption. Hiten at the time, “That’s not at all what we’re doing.”

Neil: Yes. The first article that ever came out, things got changed so that we were sharing data. So, then when people say you’re sharing data and it gets covered by New York Times, Wall Street Journal, ABC TV, you start getting phone calls from people saying, “Stop tracking me.” I got phone calls saying, “I live in Austin, Texas, can you tell me how many drug dealers live in my area so we can avoid those areas?”

Andrew: Literally?

Neil: Yeah, I really did get those calls.

Andrew: There was another issue to where people would use Incognito because they didn’t want to be cookied or they’re turn cookies off or they’d delete them. But you guys were storing their data about who they were in–

Neil: Flash cookies.

Andrew: Flash cookies, yes.

Neil: So, if they clear their cookies, it’s still there. The reason we did all this is not to spy on people. We never shared data. It was because as a startup, we had to be scrappy. We figured how to save 30+ percent on our server costs.

Andrew: So how do you save 30+ percent on a server cost, by using one cookie?

Neil: I don’t know the exact technical way, but when we removed it all, our server costs went up by roughly 30%.

Andrew: I see. Weren’t you also trying to say, “Look, some people are deleting their cookies but they’re having a bad experience and the companies that are trying to give them a good experience need to know who they are.

Neil: That’s correct. It’s up to users. Users could opt out. We also started creating opt out pages after that whole experience. During the FTC investigation, I found out that the government is really friendly. They’re easygoing. They’re smart. People think that the government is dumb. They move slow. Yeah, they actually do move slow.

But the government is really friendly. They’re like, “We’re not looking to shut you down. We don’t want to close businesses that aren’t doing anything wrong if you aren’t.” They’re like, “We don’t know yet. We want to investigate.” But they have smart people like from MIT going through our code base to make sure that we weren’t screwing over the American population or our companies.

The government didn’t find anything wrong. They only made one recommendation to us. They said, “We wish you had more of your ducks in a row when it comes to auditing.” When they asked us questions, they asked some tough questions like on code and stuff, we weren’t really able to pull it out really quickly and give it to them like a large corporation like Microsoft would be. But we’re also a startup. We’re understaffed, right? They were telling us how the larger corporation are much better at handling these questions and they’re able to give the government responses quicker.

The government went through our code like, “You’re doing nothing wrong, but you should have everything structured, that way when we ask you questions, you can give it to us quicker.” If we did that, we would go bankrupt because we would have to add a lot of headcount. So, startups just don’t do that.

Andrew: Yeah, you guys were seven people, I think, at the time, right?

Neil: Yeah. We were really tiny.

Andrew: Wasn’t there also a second lawsuit filed?

Neil: Class action.

Andrew: What happened there?

Neil: That was against The Common Good of America vs. us. Our lawyer at the time was Ashlie Beringer. She’s now head FTC counsel. She deals with this stuff for Facebook and Apple. She now works full-time at Facebook. Congrats to her. She’s one of the best lawyers out there on this. She’s like, “Oh, we can defeat in court.”

She’s like, “I’ve defeated this stuff. But the insurance policy doesn’t cover your legal fees, so you’re going to be out $1.1 million in legal fees if you want to do that. Or if we settle, Berkshire Hathaway,” which owned the insurance company at the time, she’s like, “They’ll settle and they’ll pay for most of it. You’ll just have to come out of pocket some.” She’s like, “That’s cheaper than if you went to court and fought it.”

FTC she fought and we passed that with flying colors. Class action, she was saying we shouldn’t fighter and should just settle. It was cheaper if you settle. If you fight it, it would bankrupt you because you would owe $1+ million in legal fees.

Andrew: I see. What’s the insurance that you get that covers that?

Neil: Errors and omissions.

Andrew: Oh wow. Okay. And you said to me that this almost took you out of business though. It almost closed you down. The way you’re describing it, it sounds like it’s just a minor infraction that caused a little bit of a headache.

Neil: The issue wasn’t the lawsuit or changing the code and fixing it. The issue was the negative press. The negative press lost us so many customers. We were almost at break even, so we weren’t planning on raising more money. Plus we had quite a few acquisition talks that were happening.

There’s a really high chance that I’d be working at a large corporation at this point, right? We had multiple people trying to look into buying us. It would have been a really good exit for how much we raised, at the time no more than $4 million. So, we were just like, “Why raise more money? Why get diluted?” Hiten and I owned a large percentage of the company. “Let’s get to break even.” When you get negative press, what happens? A lot of your customers start dropping you.

Andrew: Is there one big one that you’re now looking back on or at your worst time you look back on and say, “I could have that one?”

Neil: What was the question again?

Andrew: Is there one big potential buyout that in your rough moments you say, “I could have had that?”

Neil: Yeah.

Andrew: How much was it for? Can you tell me what the company was?

Neil: I don’t even want to get into what the company was, but it was large. I wouldn’t have had to work a day in my life again.

Andrew: Really? How much money would you have taken away? We’re now talking hypotheticals here.

Neil: Millions and millions. It was a lot.

Andrew: Tens of millions?

Neil: Yeah.

Andrew: Tens of millions of dollars. Are you worth more than $10 million now?

Neil: I am.

Andrew: You are. Good lord.

Neil: If you just base it on salary, yes.

Andrew: What does that mean?

Neil: When people count their net worth, I believe the number is really flawed. I don’t think I’m worth a lot. I don’t think I’m worth hundreds of millions of dollars. The way I calculate net worth is really simple. How much do you make each year? It’s that simple. It’s not, “Oh, I have stock in this company. It’s profitable and I can sell it for 4x profit or 8x.” Until someone buys you out, you’re not worth shit.”

Andrew: So you’re not including Kissmetrics and other shares that you have. You’re just saying, “I’m worth $10 million.”

Neil: I just look at paychecks.

Andrew: So, all your paychecks combined would be $10 million?

Neil: I look at bank accounts, savings, stocks, real estate investments–tangible things.

Andrew: In liquid assets you have $10+ million?

Neil: No. But I know how much I’m making each and every single month. It’s a lot.

Andrew: So then how does that come out to a net worth of $10 million?

Neil: I don’t take $10 million in salary but my salary has been well into the millions for years. So, over the years, that adds up, right?

Andrew: And you still won’t get a freaking phone?

Neil: No. That thing’s expensive.

Andrew: Force Touch is so good. It will make you so much more productive. Maybe you’ll work off your phone instead of your laptop all the time.

Neil: No. I don’t want to take the risk.

Andrew: You don’t want to do it.

Neil: Not for $200 for an iPhone 6. That’s a rip off. My dad’s like, “You’ll spend $500-$600 on a hotel per night, but you won’t spend $200 on an iPhone that will last you a year or two.” He’s like, “There’s something wrong with you.”

Andrew: Interesting. I feel like there’s not something wrong with you. There’s something that we’re not getting. Maybe you want to be a little more disconnected. You don’t want to work on your phone. You don’t want to have apps. Is that part of the logic?

Neil: I don’t care for technology that much. I know I’m a technology person. I just don’t care. I don’t Snapchat.

Andrew: What do you for fun?

Neil: I don’t use Instagram or any of that stuff.

Andrew: What do you do now for fun?

Neil: Hang out with friends, party.

Andrew: What kind of partying are you doing?

Neil: Clubs, sometimes like a buddy of mine will be like, “Hey, come down. I have a boat. Come party on it. Just random stuff.”

Andrew: Seattle has good clubs?

Neil: No. I also live in Vegas.

Andrew: I see. I thought so. Then you go to Vegas clubs.

Neil: Yes.

Andrew: Are you in a long-term relationship now?

Neil: I am not.

Andrew: You are not. Do you want to be in one or are you feeling like–no, you don’t. Your eyes lit up so much. Have you ever been in love?

Neil: Yeah. But here’s the problem–I don’t like compromise.

Andrew: Okay.

Neil: And I believe at the age of 31, which I am right now, I’m stuck in my ways. I don’t want to change.

Andrew: What’s a compromise that a wife would inflict on you?

Neil: You’re saying what kind of compromise?

Andrew: Yeah. What’s one example of a compromise you would not put up with?

Neil: You want to go to Puerto Rico, your wife doesn’t want to go to Puerto Rico.

Andrew: That’s right. That’s a good one.

Neil: I just don’t like little compromises. I’m stuck in my ways. My lifestyle is really horrible. I could take more salary if I want. I could make more money each year. We try to invest all the money back into the company. I wish my salary was only $500,000 because I’d pay less taxes. I’m creating an asset. Maybe one day I’ll be able to sell it. I’m willing to roll the dice.

But you start getting married, my chances are I’m going to marry someone who’s high maintenance because I have bad luck and then I’m going to have to support their lifestyle because they won’t want to work anymore. I don’t want to deal with it.

Andrew: I picture you still having the iPhone 5se that you still have right now and her having the latest iPhone and then another iPhone so she can Snapchat her using her iPhone and you in the corner just biting your fingernails.

Neil: Yeah.

Andrew: It doesn’t have to be that way. You can actually find someone who will bring out the best in you, someone who would actually show you not how to compromise but how to 2x who you are.

Neil: The problem is there are certain things. So, any time I get in a relationship, I’m travel, like oh bring me on my trips. I don’t want to bring people on my trips. Things like that. They’re like–if you saw my house, you’d be like, “It looks like a bachelor pad.” “I like it that way.” “We should put like artwork and flowers and pictures of us.”

Andrew: Now I’m at a point where because I’ve got a kid, this is the point where people do settle down and I’m seeing those issues with husbands and wives where now we really have to have not the bachelor pad but let’s settle down into a house, almost like our parents.

Neil: I don’t want that life. I don’t think there’s anything wrong with it though. It’s just not for me.

Andrew: By the way, speaking of, in your book, “Hustle,” you talk about the renter versus owner life. Maybe this is a good time for us to talk about that. What’s the difference and how does it express itself in your life?

Neil: Can you repeat the question? You’re cutting out.

Andrew: The renter versus owner life. You’re feeling like most people don’t own their lives. They’re just kind of renting?

Neil: Yeah. You can have your own dreams, fulfill your own destiny, pick where you want to end up going, right? A lot of people, they’re going into life, they’re working, it doesn’t matter if you work a corporate job or not, they’re like, “This is what I’m going to do. I’m going to stick with this life for a while.” They’re not owning their destiny.

At the end of it, when you’re trying to figure out what you want to do in life, the biggest problem we’re seeing comes down to what are you passionate about? How are you going to get there? How are you going to create your own destiny? How are you not going to let someone else dictate what happens to you?

Even if you work in the corporate world, you can figure out how to control your own destiny. The main focus of the book, “Hustle,” when we ended up writing it, we found that most people don’t even know what they want to do in life. You grow up as a kid, as a little child, you’re like, “I want to be an astronaut. I want to be a doctor. How many people go through with that when they’re older?” They don’t know what they want to do. I know people in their 30s being like, “I don’t know what I want to do.”

Andrew: What do you want to do with your life now at 31 years old? How would you answer that? And then we’ll talk about how other people could get there too to that kind of answer. What do you want to do?

Neil: What do I want to do? I want to help other small and medium businesses succeed.

Andrew: That’s going to be your life for the next foreseeable future?

Neil: 20 to 30 years.

Andrew: How do you get to that point where you have that kind of clarity? How does someone who’s reading your book get to that point?

Neil: We teach you throughout the book that it’s about trying. You figure out what you love in life by trying different things. How did you know you loved podcasting? You tried it out. Did you go into Mixergy being like, “I would love to do this. This was my dream as a child?” No. You tried things out. You figure out what you like and what you don’t like. You keep pushing forward. I believe one of your first businesses was a greeting card company, correct?

Andrew: Yeah.

Neil: Did you like that?

Andrew: I loved it.

Neil: That’s awesome. You loved it. You probably did other things you hated, correct?

Andrew: A bunch of things that didn’t work out, but I feel like I knew what I wanted to do with my life from the time I was 10 at least, I really do.

Neil: Most people don’t, though.

Andrew: Most people don’t. So, what you’re saying is they should try podcasting if they feel like it. They should try karate if they feel like it. They should try a bunch of stuff until they find something that sticks.

Neil: Yes because you’ll learn what you don’t like.

Andrew: And then at some point you find something that you love. You also want to make sure that people want to pay for it.

Neil: That’s correct. Not only do we teach you how to find something you love, but how you can end up generating income from it. Most people don’t realize you don’t make money by trying t make money. You make money by solving a problem. You have to figure out what issues people have in their lives, create a solution, ideally affordable, but one that’s easy to use and then go from there.

Andrew: There are certain kinds of problems that are worth more than others?

Neil: Yeah, the bigger the problem. For example, if you figure out how to stop pollution, that’s a bigger problem or cancer, right? The pharmaceutical companies are trying to do this all day long. If someone figures out how to cure cancer, you know someone’s going to try to make a killing with that.

Andrew: Of course. So, what’s a problem that you’re solving right now?

Neil: There are a lot of small and medium businesses who feel that they need money to succeed. The number one reason that most businesses fail is they say capital. I want to teach people how to be scrappy and create businesses and succeed online or offline without spending a ton of money.

Andrew: That’s what you mean by hustle?

Neil: For me, yes.

Andrew: Okay.

Neil: It goes down to helping people find out what their passionate about in life, succeeding and even generate money from it. You don’t have to generate money. If you figure out what you love in life and you’re happy, that’s good enough. My mom was a teacher. She never generated a lot of money, but she was happy doing it and she hustled her way into becoming a teacher.

Andrew: I’ve seen Quick Sprout evolve over the years. It started out as a blog that was at times kind of a funny blog and kind of personal, then it became kind of a serious marketing blog. Now when I look at it it’s a tool. Here’s what it says, “Quick Sprout is the easiest way for you to make better content so your audience and traffic continues to grow.” I put in my domain name and I hit the button that says login with Google and I went through the whole process and it says coming soon, essentially.

Neil: Yes.

Andrew: You’re still building the product.

Neil: That’s correct.

Andrew: Is me typing in my email address, my domain name somehow helping you figure out what to build?

Neil: No.

Andrew: How are you not going to make the same mistake that you made before?

Neil: We are surveying. So, as users come through. We do find out what they want and we’re focusing on building that. For example, we recently found out that people don’t us to–they want us to help them out with their social media efforts, but they’re not willing to spend money on it. So, we won’t focus on building a social media platform.

Andrew: How can you tell that they’re not going to spend money on it?

Neil: We survey them. When they tell us that they need help with social media, we give them all these questions, then we ask them, “Hey, do you want us to help you solve X, Y and Z?” They say, “Yes. This would be amazing.” “What is it worth to you?” They’re like, “We don’t want to pay for it.” But people would pay for something that solves them solve content marketing and SEO-related stuff.

Andrew: Like what? What’s a content marketing issue that you think you’re going to be able to help them?

Neil: Figure out what topics that people should write on. Most people don’t even know where to start.

Andrew: Just what to write on. You guys did really well with that as I said at the top of the interview at Kissmetrics. You also did really well with webinars. I remember at one point I started seeing a lot of webinar images on the sidebar of Quick Sprout’s blog. How did those work for you? What did you do to make those webinars work?

Neil: The webinars worked out really well because we had a lot of form fields for the sales people to follow up with. We knew who was qualified because if you showed up in the webinar and was somewhat related to the product, then the sales reps would follow up to you. If it wasn’t somewhat related to the product, then they wouldn’t follow up with you.

But webinars were a great way to make it work to generate leads. But the best part was you could do co-webinar types of events in which if you have Mixergy and you’re selling something and I’m selling something at Kissmetrics, you could promote the webinar to your audience, I could promote to my audience, we’ll do it together, we’ll talk about a topic that’s relevant to both groups and we’ll share the leads. That was a great way for us to generate signups and leads without spending a ton of money on marketing.

Andrew: I see. What’s the number one thing that worked for you?

Neil: The number one thing that worked for us? Content marketing. It came all the way down to could we write blog posts that taught ecommerce sites and subscription services how they could generate more income from their site.

Andrew: And it was a blog post? It wasn’t the eBooks, etc.?

Neil: The blog posts were the number one thing, blog posts and webinars. It was a combination. The blog post drove the traffic. The traffic ended up causing the leads. The leads, whether it was webinars or opt-in forms on the blog, the salesman would follow up and then they would close.

Andrew: All right. Well, we’re at the end of the interview. There’s so much more I want to ask you about, but I want to be fair with your time. I’d love to have you back on. I think you’ve been on here a billion times?

Neil: Three times, four times? It was either three or four times.

Andrew: Three or four times. Hiten was on here. Hiten did a bunch of fantastic interviews and courses. You taught a course here for Mixergy Premium people. Anyone listening should go check that out. You’re talking about how to market and you gave specific actionable advice and you’re always so freaking organized. I love it.

Neil: Thank you.

Andrew: And Hiten did something about how to blog for startups, specifically what to do to grow your business using blogs. I can see why he would talk so much about it because you guys experienced so much success from it.

All right. For now, anyone who wants to learn more from you, they should go check out “Hustle,” the book. It’s everywhere, right? When’s it out?

Neil: September.

Andrew: September. Do you want me to hold this interview until September or do you want people to pre-buy.

Neil: Hold.

Andrew: Sorry? Both?

Neil: Hold.

Andrew: Hold? Hold it until just before you’re ready to publish.

Neil: Yeah.

Andrew: I wonder actually if we can even do that. Let me hold it was much as you can with the conference coming up.

Neil: Hold it as much as you can and then go from there. I don’t mind. If it has to go out tomorrow, it goes out tomorrow. It’s no big deal. I appreciate you doing this either way.

Andrew: All right. Thanks for being on here and everyone, go check out “Hustle,” the book and my two sponsors are the conference. It’s at Leadpages.com/Mixergy and the system that’s going to make it easy for you to actually get on calls with your customers. It’s called Acuity Scheduling. You can see it at AcuityScheduling.com/Mixergy. Of course, Neil’s blog is at QuickSprout.com. If you look in the navigation, you’ll see the blog.

Thanks, Neil.

Neil: Thanks for having me.

Andrew: Bye, everyone.


  • Kyler Patterson

    Lol @ the conversation about compromise in relationships. Especially about bringing someone on your trips. Had a good laugh

  • JonKragh

    Awesome interview. I did a call with Neil back in 2009ish… I just love his demeanor. Very humble.

  • Cassidy Hennigan

    By god! Fascinating interview and man! But 25,000$ and hour for a conference talk? I mean, wow! It’s nice you met him previously in person and that people say he has a humble demeanor. We need more entrepreneurs like him!
    Contributing Author,
    http://www.salarieswiki.com

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