Andrew: Here’s a quick way to improve your online business – add a form or a survey to your website and make it easy for your audience to give you feedback. I’ve been using Wufoo for years and I recommend that you use them for your embeddable forms and surveys. Not just because they’re my sponsor, but because they’re so easy to use that your audience will actually fill out your forms and take your surveys. Check out Wufoo.com, use them for free today, have them embedded on your website in minutes. Wufoo.com.
This interview is also sponsored by Shopify. Many in my audience have said that they’ve heard my sponsorship messages about Shopify here on Mixergy. They checked it out, and it is, just as I’ve been saying, easy to set up a store with them. You’ll have all the features that you need in order to sell and maintain inventory and take credit cards and everything else. You can even customize it, check out one of their themes and customize it and make it your own. With Shopify.com, you can be up and running with the store today. Within weeks, you’ll be selling; within a month, you’ll know how successful your online store can be. So check out Shopify right now.
Finally, this interview is sponsored by Grasshopper, it’s the virtual phone system that entrepreneurs love. When you set up a phone number with Grasshopper, you can have multiple extensions. If you’re business doesn’t have multiple departments, that’s okay. You can still set them up and give the impression of size to anyone who calls you. Let them hear that they can call and reach the sales department, IT department, etc. Of course, as your business grows, each one of those extensions can have a real person and a real department behind it. Check out Grasshopper.com today. Here’s the program.
Hey, everyone. It’s Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart. The goal here at Mixergy is to talk to a mix of different entrepreneurs, find out how they built their business, learn as much as we can from them. More importantly, as great as it is to find out about other people, I think it’s more important for us to take the best ideas and use them in our own business. Then, email me if you’re going to do it and tell me what you use. I love hearing from the audience about how they’ve used these ideas.
Today I’ve got with me Paul Singh. He started an online business as a joke, got his first customer within the first day, business has been around for six months, has been profitable since the beginning. I’m going to grill him about how much money he’s making. I’m going to grill him about why he did this as a joke. Also, just learn as much as we can about how the business grew. MailFinch is the name of this business. Paul, what is MailFinch?
Interviewee: MailFinch is an on demand, direct mail platform. We basically make it super easy for you to send small batches of direct mail.
Andrew: This is direct mail, that’s the paper-based mail that goes in people’s mailboxes, they open it up, the old stuff.
Interviewee: That’s it, yes, it’s the old stuff. Incidentally, it makes people a lot of money.
Andrew: I’m going to find that out how much money makes you in a moment. But we’re going to hold off on that for now and find out just where this came from? What was the original name for MailFinch?
Interviewee: So the original name, it was called SnailPad, and realistically, there was no real reason I called it SnailPad other than it was an available domain and I thought, “Well, the name is really not going to be important.” Five seconds later, I bought the domain and launched something on that Monday.
Andrew: You told me in the pre-interview that this was just a one-pager. What was on that one page?
Interviewee: It was basically a single page that basically had a little textbox at the top where you can like paste your letter in. At the bottom, you put in your return address, destination address. When you press the send button, it actually took you to PayPal. You had to pay me $3 to send that one letter. Again, I kind of thought that maybe people would want to send letters to their grandmother or they want to send one letter to their mom. But that didn’t turn out to be how people use it.
Andrew: (Paul, let’s see if our video camera just…good, I thought we lost each other). Paul, once somebody paid, was it automated? Did you automatically set it? No, nothing like that, right? It’s just a single page, goes to PayPal, and that’s it.
Interviewee: Yes. And then it actually would email me a confirmation email. Obviously, the one from PayPal, telling me I got some money and then a separate email from my system that would say, “Here’s what they want to mail, they want it on this date. Do it.” Then I would go into Word and make it look pretty and send it out. I was using a free printer that I actually got from my sister-in-law when she bought her last laptop. So, it was so ghetto. It’s still is ghetto.
Andrew: When the interview started, actually, I said that my goal here is to learn from entrepreneurs like you and play your best ideas and give it to my audience so they can use them. Before the interview, you said that one of the biggest take aways that you have from this is that minimum viable product, the link startup idea, that it really does work. This really is, the minimum viable product. It’s just an HTML page that links over to PayPal, PayPal gave you the button, you didn’t need to do anything beyond that.
Interviewee: That’s exactly what it was, actually.
Andrew: How did anyone discover it? There are people out in the audience right now, they have Web pages, that they’ve been blogging on, and people still haven’t discovered. How did they discover your page?
minute 5 to minute 10
Andrew: How did anyone discover it? There are people out in the audience right now, they have Web pages, that they’ve been blogging on, and people still haven’t discovered. How did they discover your page?
Interviewee: When I emailed out the link to a couple of friends of mine…again, in hindsight, I know the answer. At the time, I was like, “Holy shit, how did somebody even find me?” But in hindsight, what had happened was that when I emailed it out, somebody that was in somebody else’s network decided to try the service. It just so happened that he turned out to be a real estate agent.
Andrew: I see. So you just emailed it to your friends, you said, “Hey, I’ve created this website, if anybody wants to use it, go check it out.”
Andrew: Now, I introduced this as a joke because you told me it was a joke for one site. Was it really a joke or were you trying to test out an idea that’s been rattling in your head?
Interviewee: It definitely wasn’t rattling in my head. What had happened was that I had just exited my last startup and I was having dinner with a couple of friends in downtown
DC. I’m fudging this, so if any of you, guys, listening, I’m sorry. But, in general, they were saying, “Paul, maybe you going to have to go get a real job now.” I said, “Oh, God, no, that’s not going to happen.” I’m going to try to figure out that there’s something I can do that touches the real world, and that’s sort of how this kind of all happened. Actually, if you talk to some of those guys from that night at dinner, they’ll tell you that like, that day, they didn’t really think that I was going to do anything. Then the following Monday, when I launched it, they were like, “Oh, shit.” Actually, one of the guys at the table turned out to be an early customer and he was actually the first one to give me his actual credit card so that I could cover some of his mailing needs.
Andrew: What option did you have with that first version?
Interviewee: With the first version of the product?
Andrew: Yes. I mean, I could understand that they can only write one letter, they can only address it to one person, and they can only come from one address. Right? So those are the three fields, basically, that you had there. But did you give them the option to send it first class versus third class? Did you give them the option to send one versus a hundred? There was only one letter that they could send out this way.
Interviewee: Yes, it was just one. Within a day or two, once they started kind of seeing what people are mailing, it turned out that it was generally the same thing over and over. So I just experimented and I added a PDF upload area. That actually, turned out to be – I think in hindsight – what kind of helped the users use it ever more and give me more feedback about how they were using it. That’s how I really figured out what they’re using it for, it really was just newsletters. It was all the email marketing stuff that your audience probably already knows about. But it turns out that a lot of brick and mortar places or a lot of specific industries still rely on high touch marketing.
So, once they had that PDF upload, I started to see a lot of patterns in the data. We’re not talking like thousands of data points, it was like, “Hey, this guy just sent the same PDF to ten people, I wonder why?” And then you look at his domain name, that’s actually how…before I got to the phone with anybody, the first thing I did was look at their domain name. I captured their email address on the premise that I said, “Hey, I’ll send you a confirmation when the mail guy picks it up tomorrow.” So, when I looked at the domain name, I’m like, “Oh, this is on a gmail account. He’s making money off of me, I got to figure out why.”
Andrew: Actually, before we continue with the story, I got to say that the audience here is loving this idea. I see Dan Blank saying, “SnailPad, love it.” Eddie, “Yes, he sounds cool.” A guy in my audience who calls himself The Guest says, “Pretty cool idea, something most think of, but something a lot of businesses need.” I guess not something most people think of, but what a lot of businesses need. Casey loves the name SnailPad and hopes that you use it for another business. Dan Blank, “It’s so simple, it’s genius.” Omar, “It’s always the simple ideas.” AppRabbit, “What I love about this idea is that it’s the type of thing you could ask a small business owner, what are some of your problems? This might be the answer to one of them.”
Really, people on the audience are loving this idea. I want to see how it evolved. So, before we get into the PDF, let’s understand, were there any steps beyond that? Actually, no, I want to go even simpler, my goal here is to really dissect this so I can understand every piece of it. That first email, the first letter that was sent out, what did he send out?
Interviewee: I probably need to go back and look. I want to say it was just some sort of test letter to himself, I think. [xx] to that, but I think it was like a test letter back to himself.
Andrew: So he wanted to see what it would look like, how it would work.
Interviewee: Yes. That actually, in hindsight, that told me a lot about how some of these high touch marketers got into this business. They don’t necessarily just trust something right out of the gate, they needed to see what they were going to get.
minute 10 to minute 15
Interviewee: Yes. That actually, in hindsight, told me a lot about how some of these high touch marketers got into this business. They don’t necessarily just trust something right out of the gate, they needed to see what they were going to get. Samples became a big part of what I do.
Andrew: Do you give out free samples now?
Interviewee: Yes. There’s actually like a trial account mail that I call. When you sign up, it allows you to send one letter to yourself.
Andrew: Because you saw the people were doing that to themselves, you said, “Let’s give them that so that they can understand that this really works.”
Interviewee: Yes. I wish I had done it sooner, actually. I probably waited, I want to say about 60 days, before I did that. Honestly, in hindsight, I was really scared that people will going to abuse the system and just like using multiple accounts. In hindsight – I hope your audience doesn’t take advantage of this – nobody has done that yet. Every once in a while, I do get a guy that will just sign up and send like a notice to a credit agency or some one off letter, and that’s okay. I mean, it amounts to such a small amount of my current volume that I’m happy to do it. If they want to come back and use me again, they’ll pay for it next time.
Andrew: What did you charge for that first letter?
Interviewee: Three dollars. In fact, today, it’s still $3 for one letter.
Andrew: So, one letter, it’s $3. Did you email him afterwards and asked him anything about why he used the system or how he found you?
Interviewee: Not until I saw somebody used it multiple times, and by multiple, it was like, at least, twice. In the early days, we really talked about like three or four guys.
Andrew: So, these people were using it, some of them used it multiple times, you decided to email them. How did you ask them about what they were doing with the system? What did you ask?
Interviewee: Actually, I just sent an email saying, “I could probably send you the template if you want,” but basically, I think, the first line was like, “Hope you give me 30 seconds of your time. I’m the founder of the service called MailFinch, that you recently used to send a letter to so and so.” I used that name that I thought it would keep them from just deleting email right away. And then I just basically said, “Look, this started out as an idea. I just really want to learn more about how you use it. Could I jump on a quick 20-minute call to talk to you?” I can’t remember where I heard this or where I read this, but it was definitely not my idea. I used one phrase at the bottom that I believe, fundamentally, made these people want to talk to me. I just said, “I promise I’m not trying to sell anything, I just want your advice, or your expert advice.” I’ll tell you, like, without that line, I don’t think people would have replied.
Andrew: It’s pretty cool. Okay. So, what did you learn in those conversations?
Interviewee: I learned that these people were really hurting. I remember one lady I was talking to, she worked out of a Century 21 office, she was an office manager there. Basically, once a month, they have a pecking order of like their top real estate agents, depending on how much volume you had. But basically, at the end of every month, they’ve got like the bottom three or four guys, the ones with the worst sales, would actually have to spend a Saturday in the office printing, folding, stuffing, addressing, and licking envelopes. They had to do this 800 times. That’s like 12 hours worth of work and like that’s lost time in the field. You know, it was just really painful.
I just said to her, “Look, what if you could just upload the list and be done with it,” and it was like a no-brainer for her. That’s kind of like where the light bulb started to turn on. It’s easy for me to say this in hindsight, but at the time, that was kind of where my light bulbs start to turn on. I’m like, “Wait. These guys are just sending newsletters. They have somebody in there that just writes a newsletter and then, they have people fold it.” This was not rocket science, guys, but this is how they make money.
Andrew: So, what was the first improvement that you made to the site? After you had that basic site, what did you add to it?
Interviewee: One of the first things was that you could log in and have your own, like you could have a return address. It turned out that when repeat users came back, they would always use the same reply address or return address. Okay, I did that. I just created a log in area, you could log in now. You could just, in your default settings, create a return profile address or whatever, and that was it.
Andrew: Why did you think of that? After those phone calls, I would think the first thing you would add is the ability to add a list of contacts.
Interviewee: Yes. I wish I was that smart. Actually, the reason I did the return envelope thing was, one of the early users was actually having his admin send these letters. So, she emails the support thing, which was just me, and she’s like, “Hey, I’m so and so and I have to do this all the time. It really sucks that I have to copy and paste the same address every time.” I was like, “Well, that’s not rocket science. I can fix that.” So, I did that really quick, and it was just a [xx] point. In hindsight, she was actually turned out a virtual administrator.
Interviewee: …and it was just to solve her pain for me. In hindsight, she was actually it turned out, a virtual administrator so she had multiple clients and by making her happy she was able to bring me a few more of those guys.
Andrew: I see, she was one of these virtual assistants that you get in a foreign country that work for multiple customers.
Interviewee: Yeah, I think she was actually in Kansas or Missouri or something like that. I didn’t know this at the time because it looked like she was an employee for that company, she had their domain name and everything on her email address. But in hindsight after I sent her, I was like hey, I built this for you. I hope things are a little bit easier. Tell me what else sucks.
And she replied back and she was like this is awesome! I’m a virtual admin, blah, blah, blah. I’m going to tell all my friends about it. I was like oh, shit, this is awesome.
Andrew: All right, another basic question, but I also ask the basic questions. The tactical basics I get into… how did they find your contact information? How were they even able to contact you through these people?
Interviewee: Oh, I just used that feedback button on the right side — I’m forgetting their name now.
Andrew: It’s either Uservoice who I use or…
Andrew: UserVoice, it is, OK. You just put a UserVoice button on the side of your site.
Interviewee: That’s what I did, yeah. Then I started experimenting with live chat and that actually I’ll tell you right now, the live chat I wish I’d done sooner. One of my goals early on was that I was not gonna invest any money in this. Other than my time, I just wanted this thing to be profitable.
And so the way I gained the system and for you people that run those live chats, I’m sorry, but what I did was there were two main ones that I liked. I’d just sign up for fake accounts because they all had 30-day trials and switch it up, or 2-week trials and switch it up. And anyway, that was awesome because that helped me talk to people in real time.
In hind sight that if you can solve somebody’s problems in real time so that they never leave the site, they’re more likely to make an order right there and then. That’s something that you could’ve told me, but I wouldn’t have understood until I actually saw it myself.
Andrew: ISee in the audience is pointing out that the button that people use is Get Satisfaction. What are the two live chat programs that you used?
Interviewee: Well now I use Olark which is a Y Combinator company and they’ve been really good in terms of support and all that. It’s just olark.com. And the other one was…oh, come on, I can look this up, but it’s basically an orange logo that I remember.
Andrew: Tell you what, tell me afterwards and we’ll include it in the program. Moses wants to know how to spell Olark?
Andrew: All right, cool. So you’re using both of these and you settled on Olark. And what happens is, only when you’re online, when people are the website they’ll see this little box that says do you want to chat, and if they have an issue, they chat with you.
Interviewee: Well, actually yeah, that’s generally how it works, but for example, right now I’m offline. The box is still there and users can click on it and still submit a request and I’ll get it via email.
Andrew: I see, so they get the box, but they’re not told that you’re there live.
Interviewee: Yeah, it actually tells them whether I’m there or not.
Andrew: How does it work when you’re not there? How effective is it I mean?
Interviewee: Well that’s really hard to say. I do know like very few people have actually sent an email in. So I try to be online and whenever I’m on the laptop I’m online. Well, in fact, this interview is probably the one time where I’m online, but…so you’re costing me money.
Andrew: Good, it’s worth it. I’m costing you money, but I’m getting you a lot of admirers for you here in the audience.
Let’s see, Todd W. in the audience is asking if the other live program was a LivePerson?
Interviewee: No, no, no. LivePerson is great, they’re a great company, but they weren’t as easy to integrate I don’t think. I guess I had an affection for smaller companies and so I just went for the small guys.
Andrew: OK, and Y Combinator is a supporter of Mixergy so I’m especially happy to hear you work with one of their companies.
Andrew: OK, Olark, what did you learn from having them and this other company? What did you learn from having them on your website?
Interviewee: Well, I learned if I really had to boil it down into one statement, if I could solve…if somebody is on my website and has an issue and I can answer it right there and then and they never leave my site, they’re more likely to buy something right there and then.
And fundamentally, that was a dollars, revenue-driving. It was just really fascinating to me that if you can answer their question right there and then, they were never going to leave the site and if they were going to put in an order, they were going to do it right there and then.
Andrew: But were you discovering features that you never thought of, were you discovering needs that you weren’t aware of…
Andrew: … were you discovering features that you never thought of, were you discovering needs that you weren’t aware of because you were answering questions in real time? Did it impact your ad copy?
Interviewee: You know, I don’t think any live chat helped me do that, I think it was really calling the customers, and one thing of things I was really adamant about was, early on especially I called at least two people a day and you know, especially early on a lot of those were cold calls, so I can tell you a lot about my tactics for getting those cold calls done, but early on a lot of the success was not through like, Adwords or like, word of mouth or anything like that, it was just good old-fashioned like, “Hey please don’t hang up on me, do you mail stuff?” or “Hey, please don’t hang up on me, I saw that you sent a flier to my house,” or “Hey don’t hang up on me, I see you have an ad in the local paper.”
Andrew: Interesting, so you would say “Who’s out there using a service that, who’s out there doing something that they could be doing on my site” call them up cold call, find out what they’re doing, how they’re using it and see what, how do you make the transition to information that you could use for your site?
Interviewee: So, so here are my assumptions right, is that I basically today was actually recycling day so I don’t have any with me, but basically I called a lot of my friends, I live in the Washington, DC area and I called a lot of my friends, and they _____ around me and said “Look, send me your local newspapers, I don’t want Washington Post or something big, just send me your local newspapers.” And then what I did was, I just flipped through them and my wife will tell you, because I, she helped me a lot and she still does a lot, thanks babe, she would open them up with me, and we would basically circle all the ads that were half-page or larger. And our assumptions, our core assumptions were these were people with money, these were people that already bought into the idea of print marketing, and hell, all these ads had their fucking phone number on them, and so I would just call and say “Hey, I saw you in the paper,” and that was an, for example I realize if you just say “I saw you in the paper,” and you then said “Hey I’m running this thing,” they would realize you’re selling something and hang up. So, early on I would start it off by saying “Hey, I saw you in the paper, don’t hang up, I’m running a start-up in the area here, you know a lot of this stuff that I don’t know, and I just really wish you’d give me 20 minutes of your time, I promise I’m not selling anything.” And that was really a line in general, some people hung up on me, other people like wasted my time for 20 minutes and then hung up on me, but the rest of them, and I’d say it was over like half, would actually like, take pity on me and say, they would explain to me how they currently did stuff, and what I found was, they did send fliers and they did send newsletters, and most importantly, they tied revenue to that. They knew like, it’s high touch. In the industry I learned that was the word, “high touch.” And so once I learned that it was kind of like “Well let me see the patterns across two or three calls,” and it turned out they all sent newsletters, and they all had to print, fold and stuff. Well, hey I can do that. And you know these people would contribute, you know the core question I would ask them was, like once they told me their problem I would say like, “Well, so how much time do you think that takes you?” And that was really important because when they would say you know “Oh well, each one I do takes like five minutes,” you know, or “Each one takes three minutes,” in my head I’m thinking, because you know that’s how I think, I was thinking, “If they can do, if I can cut that down to like 10 seconds for the whole thing, they would pay me for that.” Because it would add up. It turns out that these people mail a lot of stuff. So…
Andrew: So that just tells you that there’s a market there, what are you learning about how to improve your product through these phone calls?
Interviewee: Yeah, so, one of the things was in hindsight I wish I had learned this sooner or at least seen the light a little bit sooner but, about two months after I started I realized that these people were sending their newsletters to the same list every month. And I know you can laugh at me because it’s not rocket science, but I just didn’t get it. And then I realized like, “Hey, I wonder if I just made it easy for them to, I don’t know have all their contacts in one place?” And you know, I built this thing and I’m like, “Huh” and I start seeing people like, put stuff in, and then I was like, “Well, oh,” and then I started showing it to users and I started watching and they would type in all the addresses and put all their contacts in and that’s how they did it. And I called one of the users back that day and I was like, “Hey dude, what do you think?” And you know he’s like, he’s an old guy and he’s like “I have all my stuff in Excel, how do I get it in there?” and I was like, “Well that’s not rocket science.” So I like, put this .CSV import thing in there, and it was so ghetto, it’s still ghetto today, but literally within that first hour I had 2,000 contacts imported, and that was maybe one of the early tipping points, was that I realized the product became like, silly, silly sticky once they got their contacts in.
Interviewee: Yeah so…
Andrew: Did you have a rule for what you’re going to do for these customers and what you just couldn’t do and you were going to leave out for now at least?
Interviewee: Well you know my, my, my B.S. filter in general was like, you had to be a paying customer for me to build you something. And so the way it really boiled down, like, in that, if I had said it in those words to people, I don’t think they would have responded very well. But, what I found was is it people generally understood that if they were asking for something, that was not currently in the product, I would effectively say something to the effect of, “look, I’m happy to build this for you, it sounds like it’s a problem that other people in your industry have. But I just need a little bit a show of faith from you that once I build this, you will use it. And so if you’ll go ahead and give me your credit card number, I promise I won’t charge it until your happy, that would at least make me feel comfortable about the time I invest.” And, these were all salesman you know so they understood it too they’re like, “yeah, I wouldn’t go to your house to sell you a house if, you weren’t like seriously in the industry either. Or seriously in the market either.” So that was my B.S. filter is like, if you’re willing to put your, you know put your money where your mouth was, I would say yes. And knock on wood anyway, I haven’t pissed anybody off yet.
Andrew: What about size of request where there any size, sizes, or any big requests that you couldn’t handle?
Interviewee: You know, I think there’s really only one and its still been a request. It’s coming in more and more right now, and… you know if any of you guys, customers are listening, it’s gonna take a little bit longer. But, it’s white label. It turns out that one of the niches that I’ve kind of uncovered here, is that there’s a whole bunch of people out there that write direct mail newsletters, and sell them to the people that want to send them out so if like you’re a real estate agent, and you don’t want to write that stuff, there’s like a whole industry of people out there that will write those for you, put your name on it and then send you a PDF that you print and stuff. And so, I’m starting to hear more and more from those guys that are saying, “give me a white label product, that I can kind of put under my own thing.” Without sounding like a tool, that’s really…it’s really complex, and I’ve just been putting it at the back of the pipeline. It’s gonna have to be built, I just don’t want to build it right now. But, it’s coming soon, so…
Andrew: Okay I’m gonna take questions from the audience, but first, one from me. One more from me. You do two calls a day. Did you do a cold call today? Do you still…
Interviewee: I did not today actually, I had a couple meetings early this morning.
Interviewee: I you know, yes, I did do two yesterday.
Andrew: What did you learn yesterday?
Interviewee: Yesterday…it turns out, so, I’m starting to try to get into the non-profit space, so… it turns out they have a lot of mail to send, especially like every donation, they send some, I’ve been trying to call more and more non-profits. What I’ve learned is that gate keepers are a bitch. So, I’m trying to find a better way to like, get to the decision makers, and so now I’m trying to use Linkedln, to try to filter out and figure out who actually sends those for a particular organization.
Andrew: Are you just trying to learn from them or are you trying to also close a sale when you do these cold calls, or is it both?
Interviewee: I think that’s, I think that one in the same. I think I…well just to be clear, I don’t get on the phone, directly saying, “hey I want you to be a customer, don’t hang up.” I start out by saying, something to the effect of, “you’re smarter than me. I’m just a small time entrepreneur. I was wondering if you have a problem like with mailing stuff?” And… if I, if I by using that tactic, I try to get them to talk, and, what I’m trying to get out of that is, for them to identify the problem, which I hope is not too different from what we do, and then say something to the effect of, “well, hey, so I got this thing called Mail Finch. We send x amount of mail. Would you be willing to try it?” And… I just try to get them to try it. I just try to get them to say yes. And if they don’t say yes, then before they hang up I try to say something to the effect of, “well, can I just send you a sample, and just get some feedback on what you received, to just see what you think?” And, so those are the two, the two goals that I’m driving for. The worse case scenario is they just hang up on me or they just say like, “please don’t call here again.” Luckily that hasn’t happened too much.
Andrew: What percentage do you close? You do ten calls a week how many of those, do you close?
Interviewee: Honestly, I’d say about… it’s a little bit over like 60% that will give me one of those two answers. They’ll either let me send a sample or they will sign up.
Andrew: Wow. Alright let’s take questions from the audience. I promised them. Let’s see, “is Paul building all this stuff himself?” [inaudible] Rabbit want’s to know.
Interviewee: Yes. Caveat is that just about two weeks ago, I brought on a part time contractor, as an engineering intern to help me. But yeah, I mean, code and the back end…
End of transcription.
Interviewee: …and the back end automation, the printing now that I’m starting to work on, all that’s in-house. That’s me. When I say we for any of this, it’s me.
Andrew: Andrew SG is asking why not hire a few salespeople and have them work on commission?
Interviewee: Yeah, so actually that’s a great question. That’s actually what my meetings were about this morning. I’m trying to figure out how to break into that space without any cash outlays on my side. Before any of you call me cheap, I’m OK with that, but the reality is I haven’t proven or I do feel comfortable getting a bunch of sales guys across the country or in one big office just sitting there dialing for dollars yet.
So, what I’m trying to figure out is is there a way I can build a commission only structure to start with and use that to prove out the model. I think we’ll get there. I think within the next six months I’m going to try and bring on a sales guy and just try that idea, but I’m not convinced that it’ll work just yet.
Andrew: All right. By the way, I will never call anybody cheap in a bad way. Cheap is good!
Let’s see, have you ever considered using direct mail to promote your business, Mike B. wants to know.
Interviewee: You know, I’ve started to think about it, but I don’t yet have a good way to filter out who should receive those letters just yet. And each of those leads would cost me like $.50 to send out, right, because of postage and all that. So just in the interest of being cheap I haven’t done it yet.
Andrew: I should tell you that my audience also respects cheap. Afrabbit respects cheap, he’s saying Dano, I respect frugal. Good, this is the right kind of audience that I’m getting off here. I don’t want these people that are more into the trappings of success then they are into the work that goes into it.
Again, from Andrew SG, why not create an affiliate program?
Interviewee: So actually there is one. It’s not advertised yet because somebody just started asking for it three weeks ago, so I’m testing it. But there is one now. I’ll probably put a page up in the next few days.
Incidentally, I can talk a lot about what I learned about distribution if you like, but affiliate channels are one of them right now.
Andrew: What are you using to handle your affiliate programs?
Interviewee: It’s all kind of in-house and manual right now. I have this philosophy that I don’t build anything until I generally feel comfortable that it will work. So, right now, basically I have this script…
So the way we do it, I modeled it after…I just ripped ideas from 37 Singles, sorry guys. I looked at their affiliate program. I saw how they were doing it, and if you guys don’t know in a nutshell, I think they pay you 20% of the first month’s base fee; and then 5% for each month thereafter.
And they pay you — this is the beauty of it all, man — they pay you 45 days after they collect money. That’s awesome. So basically I collect the money and I don’t have any outlays, so that’s how I do it.
I have this script that runs in the background that just tells me in the morning, hey it’s been 45 days, you owe this person this much money, and then I just go pay via Paypal. So, if you know of any vendors, I could use some help on the outside, but otherwise we’ll build this in-house…but affiliate program is gonna be a big channel for us.
Andrew: We’ll get back to distribution and channels in a moment. I want to keep taking questions from the audience. Let’s do some rapid fire questions.
Todd W. wants to know what programming line, which is probably a friend I met on Hackety’s [? 33:25].
Interviewee: Ruby on Rails.
Andrew: Ruby on Rails. Awesome. Let’s see, Tanya wants to know who does the printing, stuffing, and mailing today?
Interviewee: You’re looking at him.
Andrew: So you’re still printing and stuffing these envelopes by hand?
Andrew: Paul, are you folding the paper and putting it in the envelope or do you at least have the machine that folds it for you?
Interviewee: I was for a long time. I found a few machines on eBay that help, but it’s still kind of a manual process. Basically, the beauty of this to be honest with you, I don’t think the innovation of MailFinch is in the website piece of this. To be really bluntly honest with you, any joker could do that.
The real innovation for us is what we’re doing on the back end. And basically what I’ve done is I’ve built something here that you know, large printing houses have to spend half a million dollars on to go to Pitney Bowes or whoever to build these huge mailing systems.
For us, I’ve taken off the shelf printers — these are all like $300-400 dependable machines — and built this custom thing that just spits out rapid fire pages, spits out a envelope next to it, and puts a collating page in between. And on a bad day, what I’ve learned was you know, when I walked into this, I thought that over a 30 day period it would be an equal amount of mail for 30 days.
In practice, that’s not true. You see this lump at the beginning of the month because people want the mail to hit the target…
Interviewee: Because people want the mail to hit the target and then they want to close the deal before the end of the month. So true, it will not be right and so on a really bad day I have been calling local temp agencies and I just get them in here and having actually one of the printers is right next to me, they are still in the basement but they will just send in some temps in four hours and knock out even the worst load because this isn’t rocket science.
Andrew: I just added a note here to my sheet of paper to ask you to flip not yet but towards the end of the interview to flick your camera around so we can see where your office is and what it looks like. Are you at home by the way?
Interviewee: I am at home, yeah.
Andrew: Okay, we are going to see that a little bit. Okay, the business only six months old guys, I don’t want to, in fact I wasn’t sure what this interview would be like Paul to be honest with you, I can never tell if an interview is going to be a hit if the entrepreneur is going to be interesting, and be able to teach what he does or if it is just going to be somebody who sits there. I have had the big news here, I sit down to an interview with them and they just sit there like they had the worst day of their lives and this is just adding to it and what can we do to just give Andrew a quick answer and move on. And today I had no clue what you are going to be like, it turns out you are one of my best guests here, and I could see here from the audience, Mike B who is hard to please in the audience, [36:15] earlier and saying that’s a success. I feel like this guy is one of us says Kasion, yeah they are loving you and I feel the exact same way. I could feel when an entrepreneur is really bringing it.
Interviewee: I am glad to be here, thanks for having me.
Andrew: I am really glad you are here too. Why the name change? Why did you change to Mailfinch?
Interviewee: Yeah, so what had happened was, as I kept calling to, when I was doing these calls per day, the two calls per day, it really was a little bit more than that, it was like five, but what I found was that I was calling these people on the premise that I wasn’t going to take more than 20 minutes of their time and so the first 10 minutes were spent explaining snailpad and I am not lying people would be like wait, so you are telling me that you are going to send mail guaranteed next day and you have the word snail in your name, and I am like that’s not the point, just listen, and so before I changed the name actually a friend of mine is the founder and CEO of Brandstack, and I have been talking to him and on his website I saw there was this logo from Mailfinch and the guy who has put this logo up I think he was a designer in California or somewhere, he was offering to sell the domain with this thing, and like it was going to be $400 and I was like well I don’t really want to spend that money but let me just see if it works. So I actually just called, my cold calls that day was like hey I am Paul, I run this thing called Mailfinch and there was no site, there was nothing, and as I run a site called Mailfinch we basically make it easy for you to send small bursts of direct mail without any hard work and people got it, they were like mail check finch, oh so it is like a carrier pigeon with a little brother, I get it, and Res will tell you from Brandstack, I think I was in an airport that day and like two seconds later I went to the website and bought it, and it took me a couple of days to kind of get around and switching everything over, it was customers or I should say user calls or whatever cold calls that drove that name change.
Andrew: I really admire the way you are doing these lean tests. Well design, somebody in audience as I think it might have been Tanya, who does the design of your sites?
Interviewee: So there is a guy named Robert McGuire his link is actually on the bottom of my website, down at the bottom right, really awesome guy, he is down in San Antonio. There is not much bad I can say about the guy, he took the idea and ran with it and how that worked out, I basically said to him hey my site is really shitty looking, can you make it look better, and I said look it is not rocket science, just make it look better, I just need one or two screenshots, just give me your vision. He came back with this image that looked really awesome, in fact there is not many differences from what he came back from with and what the site looks like today. I went to psd2html.com and had them cut those images into CSS and then I just
Andrew: It is the website, you are talking about that will take an image and it into a website.
Interviewee: That’s right.
Andrew: What’s the name of this company?
Interviewee: It is called psd2html.com and just to be clear, they don’t make the website for you, they just give you the code back, and then I had to kind of skin it on top of my site.
Interviewee: There is still a lot of work to be done, but it was pretty fast.
Andrew: It is interesting, I didn’t know that service existed, I just got an email from somebody today who said Andrew keep asking for these services, we want to know what’s out there, we want to know what tools are out there that people are actually using. The PDF story. How did you discover that you needed to do PDF.
Interviewee: Oh, well that was pretty easy. Early on I realized that people were sending the same thing over and over, I mean, I can’t drive this point home far enough
minute 40 to minute 45
Interviewee: That was pretty easy. Early on, I realized that people were sending the same thing over and over. I can’t drive this point home far enough, it’s like when I look at the database early on about what people were sending, it was all the same. It was like word for word was all the same, maybe the name was different at the top, but it was all the same. So it was kind of like no-brainer.
Andrew: Where do you get your customers, beyond cold calls, how were you getting customers?
Interviewee: Actually, I’m glad you ask, because I think that was something I didn’t want to touch on. So, we service four verticals right now, three are kind of proven, the fourth one is getting really closed to being proved in my mind, but real estate agents, insurance agents, attorneys, and now non-profits. What I learned early on, like with real estate agents, and this holds true for all those verticals, but with real estate agents, I originally thought that the agent was going to be the one that sends these newsletters. But, what I learned was, remember when I talked about the newspapers and how I circled the ones with the big budgets? It turns out, when you have a big budget, you actually also have like an office admin that does all that ‘bs’ work for you.
So, I realized that my customer was not the agent, because the agent already knew that they had to send mail, my customer was the office admin. It was like this 20, mid-20 something-year-old office manager who just hated the fact they had to sit their and do this work. What I realized was that office managers have a lot of friends that are office managers. So, what I found early on was that if I could get even one foot in to the door with a small agency, like a small real estate office, I could get everybody else in that office network, because all the office managers were friends. Then, down the road, I realized that they were all bastards, maybe like me. So that’s where I started kind of the affiliate program idea came up. One of those people was like, “Hey, I referred so many people to you, can you pay me?” I was like, “Well, I don’t know how, but that’s fair.”
Andrew: Love this. Dana in the audience says, “McGuireDesign.com, if anyone wants to see who did your work.” Andy Dang in the audience, he’s a member of the Mixergy community, so I’ll give out his website. He says he can do design work, too, if anyone needs it, AndyDang.com. (Let’s see what else is out there. All right, they’re just talking to each other here). My next question is competition. MailFinch isn’t the first business to do this, I’ve seen other sites do this.
Interviewee: Yes. I heard that from a lot of like my tech friends or entrepreneur friends. It was like, “Paul, this isn’t like rocket science.” I didn’t know what to think, so I did two things early on. One thing I did was I looked at some of the competitors. I’ve no problem mentioning them, they’re guys like PostalMethods, Postful. There’s a couple of others that actually had fizzled out now, but those are probably the two big ones; at least, have a large Web presence anyway. So that was one group of companies I looked at, and I’ll talk about those in a minute.
Then the other group of companies was like, I looked at the big mail houses. So, again, I live in the Washington DC area, it turns out that there are lot of bulk mail facilities nearby. So actually, I called ten of them and three of them never called back, but the rest of them did talk to me. It turns out they’re all family-own businesses, so I end up talking to people. Fundamentally, what I learned was that if I wanted to tackle the whole market, I’d probably get hurt. Those guys are going to annihilate me.
So, early on, I wasn’t really worried about like PostalMethods or Postful, any of those guys, I was worried about the big guys. I was like, “Why would an agent come to me instead of going to a big mail house?” The funny thing is when I talked to those six or seven bulk mail facility owners, they told me themselves, they were like, “Paul, look, we invest a ton of money, like upwards of a quarter million dollars in this specialized mailing systems. We cannot touch anybody that wants to send less than 5,000 or 10,000 pieces of mail.” It’s just the economics of the game, they have so much money invested, they couldn’t do it.
So, I kind of scratch my head, and I was like, “Okay.” So, I don’t really want to touch the guys with a million pieces of mail every month, because I don’t know how to mail that. I have to sit here and fold all of that, it’s going to suck. But, I get a lot of fliers in my neighborhood, I wonder how they do that, so I kind of like narrowed it down. So, then when I looked at some of those two online players that I looked at, I noticed two things about them. One was, they don’t talk, like you can’t talk to the founder. You can’t talk to anybody on either of those sites, easily. That’s one thing.
The second thing is that, at least, with one of those competitors, and I won’t name this one but you can figure out when you go to their site, if you want to get the best pricing, you have to pay a ton of money upfront.
minute 45 to minute 50
Interviewee: …If you want to get the best pricing, you have to pay a ton of money upfront, like $10,000 worth of money upfront. Then you have to eat out of that money, as you send credits, and we don’t do that. I wasn’t worried about them, because if somebody had $10,000 to give upfront and then burn through that over the next 60 days, maybe they’re not my customers right now. I needed people that directly attributed this month’s revenue to this month’s mailing. These people were okay with paying a little bit upfront to get that mail on the target by like the third business day. That was kind of like why I went after the target that I did and, frankly, that’s why it’s worked so well.
Andrew: Casey Allen in the audience asked if you were intentionally following the Lean startup ideas. Did you hear about that process, the whole methodology, and say, “I’m going to build my business that way,” or did it just happen that this is the way you’ve been building?
Interviewee: I’d be lying if I said that a lot of the stuff that you learn in the Lean startup movement or whatever didn’t affect me. In hindsight, I would say that what really drove me to build the business this way was the fact that…you know, my principle was that I would not spend my own money, that this business had to pay for itself. Right now, our profit margins are terrible because there’s people involved in every step of the process. But that’s okay, because we’re still eking out a little bit of profit. I don’t pay myself, but that’s okay. It will get better, the profit margins will get better.
I think I’m getting to the point now where I’m starting to think about the larger scale investments. But, again, the major innovation for us is going to be in the backend. The good news is that the economy sucks for everybody. So, I’ve been calling Xerox, HP, and Canon directly and saying, “Look, nobody is buying stuff from you, guys. I want to build the custom solution, I want the patent to it, and I want to pay good money for it. Let’s talk.” All three, actually, sent me demo units and one of the units, actually, is still here, I can’t show it to you yet. But, that’s going to be – I think, knock on wood, anyway – our secret weapon.
Andrew: They’re building something custom for you.
Interviewee: With off-the-shelf components.
Andrew: So they’re taking components that they already have, they’re just piecing them together, they’re saying, “This is just for MailFinch because he asked for it and because we have a bad economy and somebody is finally asking to buy something. We have nothing else to do, anyway. Let’s do it for him.”
Interviewee: Yes. Just to be clear, the main driver for them, the main incentive for them is that I didn’t promise to just buy one, I promised to buy a lot. The reason is that I’ve got a large customer who – I can’t name, but their logo’s on their website – they send a lot of mail and they are helping finance this, indirectly. We already do just in time, everything goes in the mail the next day, but all mail goes out of the DC area. So that means if your targets are in San Francisco, we won’t get there until four business days. Well, it turns out, with a lot of these high touch marketers, they want it there the next day and they want to be able to call these people within 24 hours of that. So one of the things we’re doing is once we get these units, I’m going to try to place them in different areas based on our volume. That’s going to be a little tricky, but that’s the direction we’re heading.
Andrew: Talk to me about how you’re getting a customer to fund your business. That’s another thing that I’m seeing in scrappy startups. They’re not raising money, they’re getting it from their customers. How did you do it?
Interviewee: In hindsight, if I had gone to, for example, this large company and said, “Guys, this is my idea, dah, dah, dah. Pay me and I’ll build it,” I don’t think it will work. They don’t know me, there was no warm intro, like how could they trust me? So, instead, actually, it started out with one person at their company started using us to send newsletters to their prospects. It turned out that they were already doing this, because each agent at this firm had to send – it was a sales topic – they sent these newsletters, and within 24 hours, they had to call them. It turns out that one agent works in an office with 12 other agents. As soon as this one agent is making more money, the other 11 or whatever in that office are like, “Oh, shit. I need to do this, too.” They were willing to pay me, this one girl that was the first customer of that company, she was willing to pay me. By paying me, she could spend more time on the phone, and that to her, translated into money.
Anyway, so I went up the chain from there and what I started hearing, I didn’t make this up. These people came to me and said, “Look, Paul, you’ve got this one office using it now. That’s great for this one office and all the offices that are like within 50 miles of it, but it sucks for offices that are like 600 miles away.” How do we get that office to be able to get mail to their prospects, which are all within 50 miles, within one business day?
Interviewee: How do we get that office to be able to get mail there prospects which are all within 50 miles within one business day? I said well we could put another facility there by facility that sounds like fancy. But that’s actually like a printer, its like a printer in one room or something with like me getting an intern or something and go down there.
It’s not rocket science and I said, “Well I can do this but you know I need a commitment from you that if we invest this capital in this hardware you know I am not expecting you to pay for all out right but I do want a commitment that you will stay a costumer for X amount of months. I am not going to ask you for all that money up front I just want a firm commitment.”
And you know my dirty little secret is I didn’t have a lawyer to review it, so I didn’t ay anything but I just like a little one page document says, “ I promise to pay so and so this much money over the course of this much time.” Maybe it will come back and bite me in the ass but they paid there bills so far.
Andrew: I like this a lot, I like what where hearing here. OK, let’s know talk about revenue and profits. Six months in business what was the revenue last month?
Interviewee: The revenue probably just under $22,000.
Andrew: $22,000 in revenue last month. What was the revenue the month before that?
Interviewee: Revenue then was a little bit over $7,500.
Andrew: $7,500 and you suddenly went to $22,000.
Interviewee: Well the volume jumped as well.
Interviewee: Actually as the volume jumps with individual clients per piece margins go down considerably.
Andrew: How about the month before that?
Interviewee: The month before that was probably I want to say just about $2,000 bucks.
Andrew: Wow, so this phenemal growth $2,000 to $7,500 to $22,000.
Andrew: OK, and last month was month number five?
Interviewee: Last month was month number six.
Andrew: Number six, OK.
Interviewee: The site actually went live November 13th so I might be doing the math wrong but November 13th of 14th but I think it is month five.
Andrew: Give or take month five was $7,500.00, month four was $2,000 do you remember what month three was?
Interviewee: It was like in the high hundreds of dollars.
Interviewee: I didn’t in hine site I wish I knew some of the stuff I knew today because like in hine site I left a lot of money on the table.
Andrew: What do you mean?
Interviewee: Well I you know I originally started by thinking, OK. Everybody will pay me three dollars a letter and what I realized was that works really well for like you know the guy that is going to send a 100eces or something or like 50 pieces.
Early on I tried to stick to my guns when I started to see agents that wanted to send like 600 people a month. Well $1,800 is a hard sell because they have think about it and anyway over the last 60 or 90 days really when I realized that when they send more and they commit to sending more. I should give them a smaller price or the smaller per piece price.
You know I kind of wished I did that earlier, that’s kind of why that revenue ramp is so steep now. Is just that by decreasing the per piece cost customers were more willing to actually take a chance and jump on board. If you look at our pricing page today the way it works, the way I modeled it for better or for better worse is kind of like your cell phone contract.
In the sense of like you know I got a I-phone probably just like you and your audience right. There is a certain amount of minutes that are associated with that, a certain amount of text messages and data. You pay what ever it is you pay for it and so you committed to that much money and they got your credit card on file probably.
So over that 30 days if you stay with in those limits great, fine you don’t have to pay anything else. But if you go over and above then you on your next renewal you pay the next month’s monthly fee and you pay for any overage in the last month.
That turned out to be a easy sell to these people that I wish I learned earlier because in the vast majority of these cases they already got revenue. They already attributed to near revenue to this channel to this direct mail channel before that overage fee comes in.
Andrew: I don’t understand that so they figure there only thinking of that base price they don’t realize that there going to go over at times. And go over is good for you.
Interviewee: Yeah, to be really blunt with you like if you sign up for example from my smallest let’s just say my middle of my road plan. Which is actually where a lot of people start out. It’s like $99 bucks a month you get a 100 stamps with it or whatever.
If you send actually a 100 letters inside US that’s my margin is like the smallest. Right, it’s like you know that curve in the dip the smallest part is where you send actually as many as in your package. Where I make a lot of money is where you don’t use all the stamps.
Interviewee: …Or where you really go over. Or even if you over by one, the margins increase. Now, if you don’t send as many, I’m really careful about that and I’ll actually might email you or call you and say, “hey, what happened? Maybe we can find a way… cuz I don’t want you to ever feel like you left any on the table.” To be perfectly blunt, I want to get you signed up and grease the wheels so much, that you’ll never, you’ll blow past that limit. And frankly, that’s where the huge margins are for me right now. Well, when you, when you look at it on an individual customer basis, the huge margins are when I grease the wheels, and they blow past the 500 limit on whatever plan they’re on so…
Andrew: They’re loving you in this audience. Guys, thanks for giving me this feedback as I’m doing this interview. And if you’re, if you’re not listening live, first of all you should be. Eleven am Pacific, everyday, just about come watch us, just about every week day, and if you’re not watching us live, come back to the site and give us your feedback. Let’s see what else I have here. Margins, what are the net margins?
Interviewee: Net margins right now are pretty terrible, they’re like 15%. Take that with a grain of salt, it’s like plus or minus 3% I’d say. The reality is that, I use, it’s a lot of manual labor. Lot of, tech support or admin support. We’re using shitty hardware so it fails all the time. I suspect that, my target margins, I would like to shoot for over 50%, but were gonna have to invest in a lot of hardware to do that. And…that’ll probably take, you know, conservatively I think it will take at least another year, if I don’t invest my own money to do that.
Andrew: We talked earlier about distribution and channels I said I’d come back to that. One channel that we discussed was affiliate programs, what else is there?
Interviewee: That’s actually the main one. Affiliate programs is really what I would boil it down into…or boil it up into. Is that, how do you get your existing users to talk about it? And, and when people talk about that online today, I feel like a lot of advice that you get is like super hand wavy, kind of like what I’m doing a lot in this call unfortunately. You know, if you’re solving a real problem for somebody… they will tell their friends. And it’s not important that they tell their friends. And it’s not important that they tell their friends, as much as it is important that they tell their relevant friends. And so like, you know when I solve a problem for an office manager, in a certain vertical, the reason I do that is because I, I expect my assumption is that she probably networks, with other office managers. It’s unlikely that she’s hanging out with like, the CEO of all your local gas station chains or something like that, she’s probably hanging out with, you know, somebody else in another office that does something similar to her. And so…the hand wavy word for that is, “word of mouth.” But, frankly like, I just think of that as like the affiliate channel. Like how do you get an individual user to tell their friends in that same market? And money seems to be a very good, motivator, to get these people to, to, to do what I want them to do.
Andrew: Okay. But you haven’t tried Google Ads yet, you haven’t bought ads in those newspapers you’re picking up, you haven’t done any of that have you?
Interviewee: No I have not tried newsletters, or newspaper ads. I did try Ad Words, truthfully I suck at that stuff. And… I didn’t get the ROI out of it. It just, I couldn’t, I got not a single customer out of it and I spent like $600 bucks and I was like, “okay, I’m either doing this wrong or the decision makers, in the industries that I want, don’t click on these ads.” And if I had to bet you money right now, I don’t, I think it’s less about me about being terrible at running Ad Words campaigns, and more about my target industry or my target users not being the ones that click on those ads.
Andrew: I’ll say this, we have people in the audience who are great at Ad Words, if anybody wants to help Paul…
Andrew: …Paul, what’s a good way for them to contact you?
Interviewee: So my email address is just email@example.com. And, I’d be happy to, talk to them about that, or if they have any ideas, or thoughts about their own stuff, I’m happy to… I love, I love helping people so…
Andrew: Cool. I know that about you actually from the research I did about you before this interview. I want somebody in the audience if they can to be able to help you back too.
Andrew: I’ve got just a little bit more time here so let’s…
Andrew: …let’s rip through some other tools that you use since I keep getting a request for that. What tools do you use that have done well for you?
Interviewee: You mean for, like for talking to customers?
Andrew: Yeah, for talking to customers, for…for what else? For keeping track of your orders, for collecting payment, anything that you can’t live without, anything like what was the website that you told us, Olark?
Interviewee: Yeah so for LiveChat it’s…well I should say LiveChat, Yeah LiveChat is Olark. The feedback button on the right is user voiced. The…the printing systems actually are, it’s [inaudible] and then the way I keep, this is going to sound really ghetto because it is, but like the way that I validate that all the orders went out properly, is that actually every order generates an email that comes to me and my wife…
End of transcription.
Interviewee: Every order generates an e-mail that comes to me and my wife. And every afternoon we just like spot-check everything and make sure that like the right stuff went into the right envelopes for tomorrow’s mailing. And it’s not super complicated, like the tool there is like the Maildot app on my Macbook. And other than that there’s really no specialized tools. There’s a lot of printers, a lot of USB cables.
Andrew: (laughs) We’re gonna see those in a moment.
Interviewee: I use RacksP’s cloud for the actual hosting, I started out on heraku, because you could get a Ruby-On-Rails site out really fast. But, to be really honest with you, I needed something called Delayed Job, which is like this background working system to keep the site going fast. And I realized I had to pay for it, and I was like “well, if I’m gonna to pay for this thing on heraku, I may as well just go get a shitty box at RacksP’s cloud” because at least I know it’s like vendor neutral. And so I moved everything there. Sorry heraku guys, but that’s what I did.
Andrew: There were two, was there two others? Let’s talk about one other, actually yeah two other businesses. What was Filtro real quick? That was a business that you launched, than within 11 months you sold. What was the business?
Interviewee: Yeah, Filtro was basically a real-time relevancy engine, which sounds hand-wavey and it kinda is. But basically what we did is we filtered out, we scraped all the major social media sites, and we figured out what people were paying attention to. And what we… it started out as a consumer site, but I had to pivot really fast because I realized consumers are fickle and they don’t pay for shit. And I realized that if you could take all that data and figure out what people might be interested in buying, I’ll tell you just on the record that businesses will pay a shitload of money for that. Because it’s targeted needs. So that was what Filtro was, and I forget the second part of that question, I’m sorry.
Andrew: Actually I was gonna ask you about the next thing that you were involved with, but let’s spend a little bit more time here.
Andrew: What were you selling to businesses that you were collecting from social networks.
Interviewee: Actually, just to be honest no money ever traded hands. The first people I started talking to it just kinda like went downhill from there. It was kinda like, “Hey we’re thinking about investing in you.” and then like two weeks later it was kinda like “Hey we were actually thinking about whether you’d like to join our team.” And I was like “What does that mean?” (laughs) You know, truthfully maybe I got out a little too fast, but it was a fantastic team, and a fantastic group of guys that were gonna use the technology for something actually different than what it started out with.
Andrew: I see, so you had this idea of scraping social networks, you were gonna make it available to…
Interviewee: No, actually it also started out as an accident. It started out and, again remember that it’s super easy for me to say this in hindsight, but the reality of this was that when I first started it was actually like a few days’ worth of code. I wanted to learn Ruby on Rails, and at the time I was kinda flying to San Fransico a lot, and it’s funny to even say this, but at that time, only like 15 months ago, they didn’t have Wi-Fi on planes. At least on Virgin America. So what I used to have to do was like: I would have to fire up Net News Wire while I was at the airport at Dolus, and get all my stuff synchronized, and then I’d get on this Virgin America plane, and I’d sit on there for 5 hours to go to San Francisco. And what I found was that I’d take of and I’m like “Yeah I’m gonna real all ten thousand of these things.” And then I’d order one drink and start watching like, y’know Family Guy and then I’d be like “meh, mark all this read.”
And it just started out where like, I started thinking “Hey, maybe I could just build something that would filter this for me.” And I showed it to somebody in San Francisco, and he turned out to be one of the first investors in it. And he just said “Hey, can I get a login?” And I was like “Well, I don’t actually don’t have a login system. But give me a couple days, I’ll get that for you.” And then I kinda like, one of my friends called me up, good friend of mine, we did a startup together a long time ago, but he was like “Hey, you gotta go to this thing called South by Southwest.” And I was like “Why would I want to go to that? I hate conventions.” And he was like “just shut up and come.” And so he talked to my wife, I’m not making this up: I was in DC having dinner with some people. So this guy Vid calls me and he’s like “dude, you gotta come to Texas.” I’m like “Oh, let me talk to my wife, I dunno I don’t really like conventions.” He was like “Well, I already talked to your wife. She’s already booked the flight, so I’ll pick you up at this point.” And I’m like “oh shit, alright.” And so I had no tickets, I didn’t buy any tickets to South By, in fact THIS year I didn’t buy tickets to South By but I went anyway. Because all I did was: I walked around the hallways at South By Southwest, walked around with my laptop and I was like “Hey, can I show you something? Hey, can I show you something?” And there was a targeted list of people, this sounds so stalkerish because it is. There were some specific people I wanted to show Filtro to.
hour 1 and 5 minutes to hour 1 and 10 minutes
Interviewee: …But, there were some specific people that I wanted to show Philtro to, in it’s early form, and it really was shady. But I basically, found them on Twitter, I figured out where they were going to be, what panels they’re going to go to. Last year, I don’t know if you were there or if some of your audience was, but the panels were on the same…like you can walk around on that same level, you just couldn’t go into the panels without a badge.
So, that was okay, because if you were the person I wanted to talk to, and show you the product, and I knew that you were going to a certain panel, which you, as a general South by Southwest attendee, you’re going to pimp out to all your friends and say, “I’m going to this panel.” I’d find out and then I get to that room like 15 minutes early and start walking away. I’ll be like, “Hey, Andrew, hey, funny seeing you here. Let me show you this thing, I just want some feedback.” I got a few people really interested in it, they helped me build the beta list, and helped kind of like figure it up from there.” So, it was more of a necessity, an accident, and being naïve and just talking to people that kind of got me…
Andrew: What kind of exit did you get for Philtro?
Interviewee: I can’t talk about the numbers or anything like that, but, basically, it was a cash settlement with a little bit of equity in the new company that was formed around it.
Andrew: The company is CityVoice, people can go to CityVoice.com and see it. Actually, it’s integrated, so they can’t see it as a stand alone product.
Interviewee: Yes. What Philtro was is not there anymore, it’s totally different now. CityVoice is a totally different industry, but if you got any plumbers or rich fat guys in your audience, CityVoice is looking for you.
Andrew: Results Junkie, that’s the other thing that I was going to ask you about. It’s a management consulting company that you started. What were you doing with that?
Interviewee: I hate the term management consulting, but unfortunately, whenever I talk about it, that’s the only thing people really get. Basically, I advice a lot of companies, both startups and not so startups, about all, what I call, the unsexy parts to their business. What that really means is that I fundamentally believe – and this is true with MailFinch, too – that 85% of every business is the same. Meaning like, at your core, you’re going to invoice, you’re going to provision customers, build them, receive money. You know, all of the stuff that nobody really wants to think about. I argue that 85% of every business is the same, so Results Junkies is kind of my umbrella firm for that consulting where I just kind of go in.
I don’t do like handwaving strategies to tell you how to do it. I guess if you really want to pay me to do it, I could. But I’m better at just saying, “Here is how we’re going to fix this problem,” and I’ll get in there, roll up my sleeves, and fix it for you. So, actually, that’s kind of how I’ve been okay with not paying myself with MailFinch is that I just do this consulting things on the side. I don’t drive a Ferrari or anything like that, nor do I need to, but it keeps things interesting for me because I get to see more and more companies. The unintended benefit is it turns out that I’ve learned a lot about what back end processes people have to redo. I keep thinking about like what I could build that can help productize that. Again, MailFinch is maybe just one avenue of doing that, but it definitely didn’t start out that way.
Andrew: You know what? I wish we had a whole other hour just to do an interview on that. I’d love to see what you learned and I love to see how you systemized it in your head and for the clients that you have. All right, guys, people are loving this interview. I agree with you, Omar, guerrilla marketing, he loved the way you approach people at South by Southwest; me, too. That was one of the best pieces of this interview.
Okay. Final thing, final note on my piece of paper here, is to see the office. Can you swing your camera around?
Interviewee: Yes. All right, guys, I’m a little messy.
Andrew: Good; me, too.
Interviewee: So that’s the first printer, actually, from MailFinch.
Interviewee: Free, actually. I got this from my sister-in-law or my mother-in-law, I think. She got it free with her laptop purchase last year. That’s it, man, and I’m not throwing it away and I won’t sell it for anything. Just my desk, and some books across the way, and that’s about it. The rest of it is just kind of a mess.
Andrew: So you’re still just printing out on that one printer there.
Interviewee: No, no, no. There’s more printers now in the basement. They look just like that, they’re all just basic inkjet printers that you can buy from Staples and Office Depot, and that’s where I get everything from. Well, that’s what’s contributing to my shady profit margins, too.
Andrew: Because you have to just keep buying the stuff.
Interviewee: Yes. Well, you know, each ink cartridge, like I got one here that’s being replaced. Each ink cartridge cost like $40 and it will probably last anywhere between 500 sheets and a thousand sheets. It sucks, but the alternative was to pay like $6,000, at least, for like a crazy awesome printer. They can do what I wanted to do and I haven’t bought it yet.
Interviewee: …they could do what I wanted to do and I haven’t bought it yet. I figure if I can make the margins work on crappy hardware then it’ll hopefully only get better when I invest in good hardware.
Andrew: You’ve got $22,000 a month coming in now, that’s about a quarter million dollar a year run rate, that’s not bad.
Interviewee: Not bad.
Andrew: That’s a six month company. I love how you keep focusing on profits and keep asking your audience, your customers for feedback and how you build based on what they’ll pay for, not just what they’ll ask for. Man, there’s so much good stuff in this interview.
Interviewee: If I could just say one thing to your audience though. I don’t remember where I saw this or anything else, but a long time ago I think I read something that I’m just gonna take credit for now because I don’t know who originally wrote it. It’s driven my thoughts and it basically is, all truth is in the cash account.
Meaning if I can’t attribute something that I’m working on or somebody I’m talking to in terms of a client call in anyway to MailFinch, then I probably shouldn’t be doing it. And you know, maybe that’s only true for industries like ours where it’s online or something like that, but I’d just encourage your audience to think about that and what it might mean for whatever projects they’re working on.
Because the reality is that getting venture money is harder now and it’s probably not right for the majority of guys that are on this call or out there. If you can get customers to pay and they will if you can solve a business problem for them, I would encourage you to do that because it’s awesome. They will love you.
I’ve got customers that call me and say you are awesome because they don’t have to lick…one of my earlier customers said…I called them up and said hey dude, how are feeling about this thing? He just sent his first blast of newsletters out.
He was like dude, for the first time I can taste my breakfast because he wasn’t licking envelopes anymore. And I’m like sweet, send more next month!
Andrew: Great. I loved doing this interview. As much as you guys love listening to it and watching it, I love doing this kind of interview. It’s a little bit harder for me because I have to do so much work before to make sure what you’re saying to me is legit, because young companies, you’re not sending your finances to Inc. magazine and not having anybody audit them.
There’s not a popular, trustworthy reporter whose article is on you I can trust. So what I’ll often do with these bootstrap companies — and you and I were introduced through a mutual friend and I was able to look you up a little bit — but in many other cases what I do is I ask to see the numbers.
I will ask to see the register. I will ask to see the Paypal account. I will ask for screen shares so we can justify and make sure everything I’m putting out there is real. So what I’m saying is these interviews are harder, they’re harder to do, they’re harder to research, but they’re absolutely worth it as you guys can see in this interview with Paul Signh.
All right, and keep telling me if you know anyone like Paul Singh. If you know anyone like his kind of story, tell you what, there’s not gonna be anyone like Paul Signh, but if there’s anyone with this kind of story out there, boot strappy, startup, scrappy guy with real results, I’d love to meet him.
For now, Paul Singh, they love you here. They’re already demanding that I have you back in three months. Andy Dang wants you back in three months. Dano Manion wants you in three months. We’re gonna have to do another interview at some point and find out what you learned. So let’s stay in touch.
Interviewee: Absolutely. Andrew, thank you for the time. Thanks for having me. I really appreciate this and had a great time.
Andrew: All right. Thank you for doing this interview and you guys, thank you for watching. Come back to Mixergy and I’ll see you there.