Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. And I’ve got one of the early Mixergy fans here who’s built up a phenomenal business. He’s going to come here to talk about how he built his business.
You know, guys, I’ve been really obsessed with chat bots, this experience where instead of going to someone’s website or into their app, you go into a chat app like Facebook Messenger and you start chatting with the company software. You sometimes will get to chat with the company’s founder too. I think that that’s the future of company to human interactions, company to client or prospect interactions.
So the more curious I got about this space, the more I found out about this company called Master of Code. I thought of them as just chat bot makers because their chat bots are—their clients for chat bots are some really heavy hitter brands and they’re pretty cutting edge with the way that they make chat bots, but it turns out they do way more than that. They’re a software development company that’s been around since 2004. They’ve worked with some really remarkable companies themselves and done other software and products.
I invited the founder here, Dmitry Gritsenko—that’s not so hard. I’m pausing on it because I want to make sure to get it right, Dmitry Gritsenko. Am I getting it right? Yeah, super easy. It’s spelled phonetically. He is the founder of the company and I’m excited to have him here to talk not just about chat bots, but I do want to know how when this thing didn’t exist he jumped on it and grew his business so fast, but also how he grew a company that creates software and keeps growing it.
This interview is sponsored by two companies that you’ve heard me talk about for a long time. The first is a company that will host your website. It’s called HostGator. The second is a company where you can, if you need to hire a developer or designer for your team, you can turn to them. It’s called Toptal. But I’ll tell you more about them later. First, Dmitry, good to have you here.
Dmitry: Hey. Awesome to be here. Like I said, you were the first podcast that I started listening to, to become a real entrepreneur. You were the inspiration behind it and like I started listening to a number of things after you, but you were the first one.
Andrew: Thanks. You know what? I was doing it at a time when people thought, “Who would even want to do podcasting at all? People can figure out podcasting.” Thankfully, by getting in early, I got to meet a lot of early Y Combinator companies, a lot of early success stories and as a result, this thing has come up. I want to know how big your company is. Let me ask you, what’s your revenue?
Dmitry: So I’m going to be talking about several of companies in the loop here. So Master of Code is the company I started in 2004. That’s like the big ship. The company is 120 people. It’s international, first of all.
Andrew: 120 employees?
Dmitry: Yes. I started the company in the Ukraine. That’s the biggest base so far. It’s 120 people in Ukraine, all in one location, in one office. So it’s not like contractors. It’s all one building. Then eight years ago, I moved to Canada, actually, started an office there. It’s five people there. We have an office in Denver, which is two people and two people in New York. So that’s how the company is geographically located. And I won’t tell you the revenue for the service company, but we might touch on the revenue for some of the spinoff businesses like product businesses, but not the service company.
Dmitry: It’s a little bit of a sensitive subject because Ukraine is not all that transparent when it concerns money? It’s like people perceive money a little differently. There is a lot of gap between people that earn well and people that barely make it. So you just want to be careful with the concept. It’s going to come to like Ukraine is getting more modernized more like a European company. So that’s going to count towards more transparency and people are going to be more comfortable with money. But anytime there is certain distance between two groups of people, the group that’s unfortunate starts feeling bad about the company that’s making it well.
Andrew: Yeah. I specifically talked to you about this before we started the interview. I want to court more international companies, more entrepreneurs outside of the mainstream Silicon Valley and frankly North American archetype. To do that, I think we need to be very open about how they can’t discuss business the way that we can in the US, partly because it’s cultural and partly, as you said, because of political issues in the countries.
I interviewed an entrepreneur early on in Brazil, who at the end of the interview I said, “Aren’t you worried that what you said was going to get you kidnapped?” because I heard what was going on in Brazil at the time. It suddenly hit him. He was acting like he was in Silicon Valley. He was thinking like it was Silicon Valley but was living Brazil in a tough environment. Back then, I was cutting interviews out and not publishing it. So I gave him the opportunity to back away and he immediately called me up after talking to his wife and said, “What did I do, Andrew? I got lulled into. . .”
So I accept it. I understand it. I got a sense of where the business is though size-wise. What I’m curious about is how you got started. You’re a guy who didn’t start out coding. You’re a guy who started out translating. What kind of translation did you do?
Dmitry: Basically, my major in university was English language and literature. I was supposed to be an English teacher. Being a teacher, you get paid so very little that you don’t have a life to live. I started looking for ways to earn more money, so I met some missionaries, actually, some missionaries from Canada. I got stuck to them and said, “Hey, guys, maybe you have a little bit of something,” like yeah, they needed a translator. I started stumbling along trying to translate. Then I started with an IT company and that’s where my connection with IT happened.
Andrew: You started doing some translation from what language to English?
Dmitry: Russian, Ukrainian and English, any combination of these.
Andrew: Got it. Okay. So you start working for a tech company and then that gets you involved with technology and development and we’ll talk about all that. I want to understand a little bit of your background. What I’m fascinated by is the number of customers you have, you don’t have the background for bringing in this level of company as a client.
How do you structure your business so you can onboard people properly? How do you take care of so many customers without having everyone, 120 people on the team, without having everyone kind of step on each other and create a mishmash? I know it’s been an issue for us internally at Mixergy, what software do we use to organize, how do we onboard new people and so on. I want to learn from that.
But let’s continue with your background before we get into how you run your services business today and the spinoff software that’s come from it. You get into a tech company. How do you then start coding? How do you go from a guy who knows three languages to a guy who knows how to code in multiple languages?
Dmitry: Right. I actually wasn’t too bad in math and physics. So that was kind of my main at school. And then I switched to linguistics for university, but then being in the software company, I first was like a teacher of English there and a translator. Then gradually they said, “Do you want to try something out?” And I was intrigued. So I started working with PHP and HTML. So I hacked something together. Then they put me on a commercial project. The company was called Interlink. I want to give them a little bit of credit for starting me on this path.
So I really enjoyed it, but I wasn’t a person to just sit around and code for long, so it was a really big stress for me. But I saw that the guys that were doing this stuff were earning more than I was and that was a big driver to me at that time. So I was crying, literally crying. We called them crocodile tears because they’re big. So I was sitting down and I was teaching myself to code and finally, when stuff started coming out and they could use some of that in commercial projects and sell that, that gets you a boost.
So I learned PHP, then I switched to Java. That was in the course of two years. Then they said, “You’ve got English. You’ve got communication skills. You’re technical now. Why don’t you switch into management,” which is exactly what I loved, exactly where I thrived. I had done that for about a year. Then I switched companies, where I was a key manager at one other company called eCreative and spent about two years there. After that, I figured out the ecosystem by myself. I said, “It’s pretty straightforward. You find a plan on the internet. You get some guys who know coding and you communicate between them.” That’s how I basically started.
Andrew: And that tapped into, beyond the math skills, beyond the language skills, you had entrepreneurial skills. You actually told our producer about all the different things that you were selling back when you were growing up. The thing that stood out for me is fish, smoked fish. What did you do with fish?
Dmitry: That was my granddad. He [inaudible 00:08:47]
Andrew: Okay. You weren’t buying fish and smoking them?
Dmitry: Well, listen to this. So my granddad, he really instilled this hardworking, entrepreneurial culture in me and my cousin. So we’d be out in summer in his farm and he’d bring like a truckload of fish. Fish was like 25-pound, 30-pound big, big fish. So we were like 10 to 12.
He’d like hand over like 500 pounds of that fish to me and my cousin and we were supposed to cut the freaking things, gut them, slice them, fillet them and get them ready for smoking, then once the fish got smoked, we would go together with my grandpa to the bazaar, the market, and sell that, like at the age of 12, you were selling smoked fish to some hardcore guys bitching about like why so expensive, things like that. That was Soviet Union. So that wasn’t like free economy.
Andrew: I see. I can see how the why so expensive-type questions would help make you a better entrepreneur right now, especially in the services space.
Andrew: Am I actually drawing too big of a conclusion?
Dmitry: No. I honestly believe that was a big, big driver. We would learn how to meet objections. We would learn how to manage different people types and how to find rapport, how to come into contact with people better, how to call them, “Hey, come here, buy this last kilo of cherries,” or whatever, “We want to go home,” stuff like that.
Andrew: Yeah. I used to sell sandwiches as a kid. The fact that they expire puts real pressure on you to sell because if you don’t sell them, you have to throw them out, which means you can’t procrastinate. Your money is going to go away. All right. You had a good job then. Why start your own business?
Dmitry: It’s this big drive. I never had an easy life. It really was hard, like family was a little tough. My mom took very good care of me, my dad not so much. We lived in kind of dire need. So my cousin—
Andrew: What do you mean your dad didn’t take such good care of you?
Dmitry: He drank a lot. So my cousin on the other hand, who I was close with, his family was well off. In Soviet Union, you can just feel a difference. They would buy cars and things like that. When we got our cheap old car, like I felt so, so happy. Anything that moved me up that freaking material ladder, a certain period of time really was driving me very hard. Yeah. I realized I wanted to make more money and I had to find a way to make more money. That was growing a business and getting involved with a lot more people and a lot more clients.
Andrew: And one of the nice things, correct me if I’m wrong, but one of the nice things about starting a consulting business is it doesn’t take a lot of upfront capital and you can start off with your skills and just keep ramping up. Is that right?
Andrew: The first thing that you focused on, was it WordPress and similar software?
Dmitry: Yeah, generally software companies at that time would start with something simpler. Something like a small ticker, a project like that at that time would probably cost—a custom WordPress type of website would be about $200 to $300 and a developer would get close to that in a month. So you can make, like if you crank out two WordPress’ a month with one developer, you’re basically making one wage and double it, right?
Andrew: You’re talking about a few hundred dollars per website that you would get paid?
Andrew: I see. That’s practically nothing, but I guess like you said your costs of labor was pretty—
Dmitry: That was like 2004.
Andrew: I’m looking at an early version of your website and it says, “Welcome to MasterOfCode.com, Ukraine-based software company!” An exclamation point and the excitement over it was, “Look, we have lower costs than you will in the US,” which is what the draw should be, right? And you put your phone number on the website, but you also linked everyone to your Skype, which is the exact same Skype name that you and I are using to connect with each other. So it was like a very personal business.
Andrew: You offered two hours’ max response time during working hours. How do you do that? Is it like during your working hours or you mean the US hours?
Dmitry: So now we do offer that across the globe except for Australia. But during that time, it was during Ukrainian working hours, which wasn’t super elegant. It was a little bit more of a sales pitch, but we stuck to it. If we work to 8:00 p.m. in the office, we’d really make an effort to have two hours’ max response time.
Andrew: And what I like about this page is you didn’t have much experience or track record as a company back when this page that I’m looking at was built, but you explained, “Look, we have all this experience. We’ve done offshore development for six years,” meaning not you at this company, but you as a person has. So you’re bringing that to bear here.
All right. Where did you get your first customers? How did you get these people who were paying you a few hundred bucks?
Dmitry: That would be some of those online marketplaces, similar to Upwork. I forget what they were called, like Elance and Rent A Coder, things like that.
Andrew: Really? You were on those sites?
Dmitry: Oh yeah.
Andrew: Really? I always wondered about those companies. I thought they were small and they were always going to stay small, but for you, this was onboarding into bigger businesses. Wow.
Dmitry: What I am surprised with is still some companies in Ukraine that would be like 10 to 20 companies, most of their stuff would come off of those profiles. They were consistent.
Andrew: To this day?
Dmitry: Yeah, keeping up their profiles and gradually raising rates because they were five stars because they had 10 ratings or 20 ratings. So there is some work to be done there, no doubt, but the amount of junk you get there and the amount of people who don’t appreciate work enough is also pretty high.
Andrew: Who was contacting people on Upwork? In other words, if I went to Upwork and looked for—I guess it wasn’t Upwork at the time, but if I went to one of these freelance sites at the time, who would contact me back? Was it you at the time?
Dmitry: Yeah. I stretched myself thin throughout most of the growth of the company. So I would be like on every front. It wasn’t because of lack of trust. I probably had the best English and I had the best overall understanding of what kind of project we were able to bid for and what kind of promises we were able to make. You talk to developers and they think they can do everything. But you’ve got to realize there has to be a specific context that you can serve so that you can get your rating.
Andrew: All right. Today you have some really fantastic clients. Who are some of the big names people would recognize?
Dmitry: Some of the biggest names are probably under NDA that I cannot mention. Some of the biggest names we’re proud of is World Surf League, MTV, T-Mobile, eBags, Helzberg Diamonds, companies like that.
Andrew: What do you for T-Mobile?
Dmitry: We’re working on their chat bot experiences.
Andrew: Yeah. I thought that you were releasing some of the names of the companies that you worked with. Don’t you do something for MTV?
Andrew: I’ve seen a list of all the companies. I won’t disclose them if you don’t feel comfortable disclosing them, but you have some major companies, major brands. Why would they NDA you? Why wouldn’t they let people know what you do for them?
Dmitry: I don’t understand some of the policies they run, but some of the companies just tell straightforward. We read through all the contracts and everything, like the legal department does that now. So one of the biggest things for, we want to be able to tell about you because we’re proud of you. We have invested in the relationship and if you’re working with us, isn’t it reciprocal?
Dmitry: But for some of them, they just say, “We don’t allow any vendor who we work with to talk about us.” The way I read it is they want to keep that purity of the brand unattached to anything else. It’s so unique. It’s outstanding. It’s so on its own that it has to be self-contained and not surrounded by anything.
Andrew: I guess I get that. I guess they don’t want you to use their brand, to use their name. All right. So how did you make the leap from the freelance sites to the major brands? In fact, why don’t we take a moment to pause and then we’ll come back and talk about it?
The pause is to talk about a company called Toptal. Before the interview started, I did with you what I do with everyone else that I interview. I said, “Do you mind me talking about Toptal?” especially for you because you’re a company that people can hire to build out software. You said, “No, I don’t have a problem with them.” In fact, you’ve had experience. What was the experience you or the people on your team have had with Toptal, top as in top of the mountain, tal as in talent? What was your experience with them?
Dmitry: Right. So, first of all, not a competitor. They’re probably like in a very special league, which is awesome. They just focus on the top stuff, expensive and top-rated talent. They scrutinize their people to the extent where very few developers can really make the list. I know developers that tried to make the list because it’s attractive, first of all, and it’s just like a big boost to the ego, but there was only one person that I think did it out of five plus people that I know who tried.
Andrew: You’re saying just getting through that process is enough of an ego boost or something you can boast about. I see. I saw your eyes open wide from that. I’ve talked about this before. I know entrepreneurs who are in Silicon Valley who have tried and couldn’t get in. I know one CTO of a few big companies here who tried to get into Toptal and couldn’t. I guess if they exclude them, I wonder what the people who they do let in are like. That’s really interesting. Then if they are that good, why aren’t they CTOs? Maybe those people don’t have the kind of management skills or desire to be managers as the person who got rejected who’s really a top developer.
All right. Well, guys, you’ve heard it right here and I’ve talked about it before. Toptal wants to focus not on the cheapest developers out there, but on the best of the best developers. In fact, there are agencies right now who have very few people working within the agencies but when a client needs some work that they don’t have a developer who can do, they go to Toptal and say, “Toptal, we need a great developer,” they hire a developer from Toptal and then they bring that developer to their clients and that developer is kind of a representative of the business. The client never even knows that it’s Toptal who sent over that developer.
So if you guys are out there and you need to hire some of the best of the best developers or even sometimes teams of developers to come into your company and help you grow, I urge you to go not to Toptal.com, but to a special URL that I’m about to give you where they’re going to give Mixergy listeners 80 hours of Toptal developer credit when they pay for their first 80 hours and that’s in addition to a no-risk trial period of up to two weeks. That URL is Toptal.com/Mixergy. Also founded by two Mixergy fans—Top as in top of your head, tal as in talent, Toptal.com/Mixergy. Go check them out.
All right. So let’s talk about the leap. You start off with these lower rent companies. How do you get to these people that I so admire you for having as customers? What was the first big milestone?
Dmitry: It’s realizing that communicating value from Ukraine like over the ocean, like with a little bit different mentality, is just like there is still that apprehension that anything that happens at a distance you don’t really have control over. Before the world got used to the fact that it’s’ global and it’s not about where the team is located, it’s about the quality of resource that you get to work with, you really had to be there personally to try to prove the value, to try to communicate better, shake hands, make sure everything is real. You sign papers there in person, things like that.
So at the point when we realized that—I don’t remember which year that was, but we decided, “Hey, we’ve got to invest in the North American presence.” So we started going out to Western Europe and to the states making personal connections with the clients that would be similar clients but a little bit higher caliber and they would require personal visits. So finally, it wasn’t a leap. It was like a gradual progression.
So we start flying and start meeting. That’s a step up in the level of clients you meet and level of business you start doing. Then you realize you’ve got to have a local presence somewhere in the North American continent. So you set up an office. You partner or hire a person there and the person represents you as a sales or business developer or project manager. When they have somebody on site there, that creates for even more comfortable relationship.
So once that was established, like I said, we have an office in Denver, for example, so we started working with eBags from Denver, which is a very outstanding company out there. If we didn’t have an office there, I don’t think that business would have possible because a big business like that still wants to have somebody to account manage, come to their office, talk to them. It has to be not too often, once a month, once in two months even, but the fact is still there.
Andrew: Yeah. I’m looking at my notes here and research. You at some point started going to a bunch of events. You were at the Lean Startup Machine event. You were at the iDate. That’s an event for the dating industry, is that right?
Andrew: And then on December 22nd, 2011, there’s a big announcement on your site. We open a new sales office in New York. So that’s the gradual transition, from going to events—and some of them were frankly pretty small, to bigger events and then having an office where someone who represents you can go into your client’s office and meet them. That’s the big transition that helps you get there.
Andrew: I have to tell you, though, going to events like Lean Startup Machine and the others are interesting, but how do you actually get customers from there? How do you know which ones are going to be worthwhile? How do you follow up with people? What was your process?
Dmitry: A lot of it was clumsy trying to figure out how. There is no recipe for it. So, first of all, you go in and you try to orient yourself. You try to figure out what kind of people are here. A lot of people there would be the kind of people that you are. They’re looking for business. Sometimes the events are going to pro-business making, sometimes they’re going to be against that, like any hint at pitching the service at any of the pitches at Lean Startup Machine was banned. I had to be very careful that I didn’t mention Master of Code, like I was just there as a participant trying to learn the startup world, which I totally respect.
So you just go to all kinds of different conferences. Finally, we start figuring out either it’s a huge comfortable and you get lost there. It’s too small and it’s like people that are barely making it, or it’s mid-level and they are actually doing real business that you can achieve. It’s not just SVPs of huge companies there, but it’s like mid-level, mid-size companies that you can still approach. They’re still looking to innovate. They’re looking to see what’s out there. They’re looking to orient themselves in the new market trends.
If you can speak to some of those, they all of a sudden realize that a vendor they have worked with is a little bit outdated. It’s a little bit slow-paced. So they start entertaining the thought. So you maintain that entertainment of the thought to the point that they’re ready to give you something to work on, like you buy in with a trial or soft launch of something, like something that is a low ask and you work your ass off to deliver and then it’s kind of like taking their head.
Andrew: Is it mostly talking one on one to people and following up with them that led to sales or speaking?
Dmitry: No, it’s the connections.
Andrew: Just personal connections. So what was your process? Did you have a process for taking a stranger and following up with them?
Dmitry: The biggest problem was to hit on the person and not be weird about it. I remember some situations where I would hit on somebody who’s be standing in the washroom doing the business and I would be doing the business by the side and I hit on the person like that. It didn’t turn into a lead, but I realized, “Hey, I can take this to extreme and I can still make it work.” To me, it was a little bit of a game.
Andrew: The game was, “How do I go into an environment full of strangers and get them to understand what I do and get into a conversation about it without being weird?”
Dmitry: Right. Usually they understand that. A person that comes in with a Soviet mindset with a lot of apprehension comes into an environment where everybody’s speaking freely and outgoing and things like that, that intimidates. A lot of people from here still have a problem freely communicating with clients. That’s a big part of what we do now. We get meetings with clients. We go on site and we do Skype calls and things like that and we push our teams to communicate. That’s a big piece of work that people have to go through because we haven’t been built for that.
Andrew: You did do some speaking, you yourself like I did at the Dimension. You spoke at that gig, didn’t you?
Dmitry: I did speak at iDate. I spoke at multiple events, not a whole lot. One of the things, pretty cool pitching event that I was on was we started a startup called Presentain and that was with Startup Boot Camp in Amsterdam, 2013. So we were the first ones to pitch in the cohort of 10 companies. That was a big event. There was Neelie Kroes there, that’s like the head of digital of the whole of Europe and the Queen of Netherlands and it was awesome. It was setup by Startup Boot Camp in such an amazing way. It was pretty cool. I got a kick out of doing that one.
Andrew: Still, what happened with the Wi-Fi over there? Wasn’t there an issue with your Wi-Fi?
Dmitry: Sorry, I thought you were meaning right now. How do you know?
Andrew: I know, we have researchers here.
Dmitry: Wow, you’re weird. Yeah. Out there on the stage, being the first one and the company that was supposed to shoe how presentations are supposed to work from the smartphone via Wi-Fi or 3G in a very smooth manner casting the slides on the big screen all of a sudden goes down.
Andrew: That was what your software did.
Dmitry: Yeah. Luckily the team there, the CTO there like oriented himself pretty fast and there was a way to work through it. They kind of had a backup, but to orient quite fast like, “Hey, Wi-Fi is off, switch into this backup mode.” Yeah. They did it pretty elegantly.
Andrew: Presentain, as in like a combination of the word—I guess the word is a portmanteau, a portmanteau of present and entertain, right? It’s still out there. Is that one of the standalone businesses you were talking about?
Dmitry: Yeah. That’s a separate company. So we launched it in Amsterdam after the Startup Boot Camp. The business is still running. Unfortunately, this Wi-Fi issue is still begetting us.
Andrew: Meaning, I go to a conference, I want to present, I can’t count on Wi-Fi working largely for the same issue Steve Jobs had when he presented the iPhone one year where everyone is on the Wi-Fi network and the Wi-Fi goes down, right?
Dmitry: 100%. The software is beautiful when it works. It allows people to get connected to the content, to the presenter. The whole experience works better and tighter, gets people connected and excited. But when it doesn’t work, that puts the presenter in a very, very tough spot. So we lose clients like that. So they use it, it works when the infrastructure is right. But we’re not in the business of making it possible for Wi-Fi to be stable, right. So, in this sense, the business and the concept is earlier than the tech allows it to be.
Andrew: Yeah. I’m looking at the website. You guys have updated stats on it. So far, 17,165 people have done presentations using this software, right?
Dmitry: Probably more.
Andrew: A little more than that. Okay. But still not a big breakout hit individual company. What I’m curious about is how did you find the time and the resources to do this. I can’t tell you how many people were inspired with one of my earlier interviewees, Jason Fried, who started as a consulting company, said, “Just figure out your own problems and then create software for it,” and then boom, he created a bunch of companies including Basecamp, which became a huge hit.
So a lot of services companies said, “We’re going to get into software too,” and they couldn’t do it because there’s not enough time, because it still costs money to hire developers, even if it’s like part-time. So they never were able to do it. Why were you able to do it? What did you have going for you that the rest of us can learn from
Dmitry: I think there were two things. First, there was drive, drive to innovate. Innovation is not only technology innovation. Innovation is like being in some context that you haven’t been before. It’s a challenge and you try to make it work, right. So getting into the product side of things, not just service was a context like that. So we wanted to make it work. We tried that in the gaming industry. We burned through quite a bit of money trying to make it work. We published, again, with electronic cards, but we didn’t break even on it, so we had to close that direction down.
There were a number of different failures. I don’t want to count the money that we lost on those things. Yeah. But we got quite a bit of good experience and we haven’t lost the desire to keep doing those things. So one of the things that really helped is that we’re working and building this culture in the service business that is about ownership, that is about serving a client as if it’s your own product. So you own the context in which you work.
That really helps the service because it builds for much better relationship, like the client really feels like you guys care. You’re not just coding lines of code, but you’re analyzing how it connects to the business, like what’s the best way to implements this future, not because it brings you money because you do eight hours and not four hours of coding, but I can actually advise you to do it like this, which is four hours and cheaper, because I really feel this is a better case for you guys that’s going to work more elegantly, whatever.
So when the client knows you have good of theirs in your mind, the relationship develops. So, it’s about long-term. That’s what we’re building on, on the mindset of ownership, mindset of bringing out quality stuff that you’re proud of.
Andrew: So how does that help you create your own products, though?
Dmitry: That’s what it leads to. So, with this mindset, it really helps to now say, “Okay, guys, basically you have been crafting products, but for external clients. Now, let’s think up of different ideas that we can craft ourselves. We’re going to be treating it the same way, except we’ll have to add on an arm of marketing of business dev, but the product is basically the same thing that you have been doing before.
So the developers were taught to get deeper and understand the needs and validate the features, things like that. There is no shortage of ideas. I come across different people and there is a number of very bright people that know that Master of Code is a resource, it’s growing. Like lots of cool developers, “Do you want to do a partnership on this product?”
So what they would offer generally would be like marketing, maybe some finances and business dev and we would do the implementation of the product. We actually got some of those partnerships going and we do have a number of different products that are out there and some of them are performing well. That turns out to be a working model.
Andrew: Does having the partnership also help with creating the product in the sense that now there’s someone else counting on you? It’s not like you’re acting as if this is an independent thing, but it kind of is because it’s in partnership with someone else, because you have obligations to someone else. You’re nodding.
Here’s what I’m noticing. When people have consulting companies, they have a hard time saying, “Let’s keep this developer working on this project,” when one of their clients needs that developer, when they should be selling that developer’s time to someone else, right? Well, if you have an external dependency on that person and on that work, it’s harder to say let’s bring that developer and that team on to one of our client projects. Does that sound right at all or am I getting it wrong?
Dmitry: It does sound right when you were like five or ten people at the company. Every time you dragged a developer out of context that gets paid for by the client into something that is an investment, it’s like minus 10% revenue, roughly speaking, right? So when you’re a 30-people company, you have a little bit of flexibility.
When you’re a 50 or 100-person company, you do have quite a bit of power and strength to work on some of those contexts with two or three developers on a team. Two or three developers can now make a difference. We can have those developers working on that partnership for half a year to bring an MVP out. If that MVP starts earning money, then that money goes into this next version of developing the product and that organically keeps going.
Andrew: I see. It also helps that you weren’t just a five-man operation, but you had 50 people, so three people out of a 50-person team is not as painful as having a five-man operation and then giving one full person over to a passion project. You know, the other things that seems to have worked for you, tell me if I’m wrong about this, but I’m trying to go back in time to try to analyze it. The fact that you would get into cutting edge technology gave you something new to talk about.
So, for example, I see in the early days you talking about mobile apps back when it was still fairly new. So you’re talking about mobile apps, that’s something that the dating world, for example, wasn’t far enough along on and it gave you an opportunity to talk to them. Even if they end up hiring you to develop your site, they got to know you as the guy who could take them beyond the site when they’re ready. Am I right with that?
Dmitry: 100%. Yeah. So you’ve got to be working on two things in your business. It’s the business you’re in now and it’s the business you’re going to be in a couple years out. So you always are thinking, “Where is this going? Where is this moving?” The companies that get stuck in the comfort of today, they’re not strong companies a year or two years out. The contract expires, the technologies go down. If you don’t keep innovating, you don’t keep feeling out these new technology trends, you get antiquated quite fast.
So we’re always doing some research, some experimentations with technologies and also like some business ideas so we have enough feelers out that we can kind of orient ourselves and we can tell our clients, “We can try these things. We know that it’s coming.” Like chat bots—you’ve got to be talking to clients about some things that are coming even though that’s not part of their technology stack yet, they don’t have it on their road map, but start bringing cases out from kind of like a technology future and that starts conversations.
Finally, you start finding some people in those companies that are pro-innovation and they bring that to their board meetings and they start convincing the rest of the board that this needs to be tried.
Andrew: Do they then hire you for this as a way of experimenting or do they get to know you for this—let me get a little more specific. Imagine if I were starting a development agency right now, something like what you had in the beginning. There are a bunch of things that I can do that are today like mobile apps and so on, frankly even a little bit of web design even or web development.
But no one is going to give a rat’s ass if there’s another guy out there who can create mobile apps and websites. What I might want to do is say well, we’re in July, August 2017, AR is coming, augmented reality. Apple has already announced it. I might want to immerse myself in that world and then start giving presentations about how augmented reality can help startups.
So maybe I would even focus on ecommerce companies and then start giving presentations and writing posts about how augmented reality can help ecommerce companies sell more. Then they get to know me as the guy who knows augmented reality. Maybe they hire me for that or maybe they hire me for the stuff that they already have, like running their ecommerce site, knowing that I can help them when the next step is here, which might be augmented reality or something else. Does that make sense?
Dmitry: It totally does, except it’s a big investment. One of these things that I had recently seen is the guy that started Chatbot’s Life blog, like he invests quite a bit in there, seemingly, previously without a lot of the traffic coming in there that would convert into clients. I know now he gets clients and he gets some high-profile clients, but there was a lot of upfront work done. The question is are you passionate about that direction, that trend that you’re able to invest into it for half a year without really breaking even or making anything considerable? If you are and there’s nobody doing that, nobody big competing in that, it’s worth it to be in that.
Andrew: What’s the name of the blog that you were talking about?
Dmitry: Chatbot’s Life.
Andrew: Chatbots Live?
Dmitry: I’ll send you a link.
Andrew: Yeah, I don’t know them. Okay. But I get your point. You’re saying there’s a lot of time just toiling away in this new technology where no one cares about it or they’re not ready for it or they’re curious and not ready to invest. All right. Let’s go into chat bots for a moment. First, I’m going to talk about my second sponsor and then we’ll start to spend a lot more time on chat bots, which is how you and I got to know each other.
The second sponsor is a company called HostGator. You know what? When it came time for us to host our website, we had this new chat bot company called Bot Academy. When it came time for me to host it, I said, “Who do we host?” Well, we went to HostGator and we know that HostGator has got the lowest prices. In fact, if we go to HostGator.com/Mixergy, we see the cheapest prices they have available anywhere. But I know that their cheapest plans are not going to be right for us because I don’t want to share a server. I want them to be ready. I want a hosting company that can be ready for webinars that we do where we have a thousand people on at the same time. That doesn’t mean the cheapest. That means something a little more powerful.
One thing I’ve learned with HostGator is if you start out with cheapest plan, you can upgrade to some of the most powerful plans out there on the internet. So we did it. We said, “If I’m going to recommend HostGator, before we sign another contract with them, I need to be a customer of theirs on a high-traffic website.” So we signed up for HostGator, then we upped out plan to the highest, beyond even the cheapest starter plans. And then I said, “Bring it on.”
We started buying ads promoting the fact that I was going to do webinars about chat bots. We had hundreds then thousands of people register for a webinar with me. All of them for a webinar, they have to show up at the same time, within five minutes of each other, they’re all coming into the site all at once. Our website did not go down once. It was a pleasure to work with. After that experience, I said, “We have to get HostGator back as a sponsor.” So we did.
So if you’re looking to start a website, I’m about to tell you about a URL where you can get a really inexpensive plan to get started. But I want you to also know that when it’s time for you to upgrade, they have everything that you need. So here’s the URL where you can get 50% to 60% off of their already low prices and it’s a great place to get started.
You can have multiple domains of some of these plans, one-click installs of WordPress, which is what we use, WordPress, unmetered disk space, unmetered bandwidth, lots of templates, unlimited email addresses, tech support that’s available any day, including Christmas, any time of day, including 1:00 a.m. and a 45-day money back guarantee if you discover what I’m saying is not right for you and you want to switch out.
Here’s the URL. Whether you’re starting out or you already have a company and you want to take it to a better hosting company, go to this URL. Go to HostGator.com/Mixergy. You’ll see my logo right there at the top of the site and I wouldn’t give it to them, I wouldn’t partner with them unless I felt confident that they were a company I could stand behind and recommend to you. Go check out HostGator.com/Mixergy.
Chat bots—why did you guys get into chat bots?
Dmitry: Because it was one of the new techs. It was pretty easy to understand that if WeChat was as big as it got to be starting in 2013 in China, businesses were on it and businesses were primarily dealing and transacting on WeChat versus any other platform, then big players coming out with chat bot platforms wasn’t about trying. It was trendsetting. If you wanted to be in that trend, you’ve just got to dig in.
Andrew: But China, I don’t mean to disrespect China, but they’re kind of a weird market. They didn’t have the established players that already grew in the US or Russia. They didn’t have any of those players because they exclude Facebook, right? China is also kind of strange in that they didn’t have much bandwidth. I remember doing interviews with entrepreneurs who happened to be in China. It was murder because the bandwidth was so slow.
I could understand why chat would be better there. I could understand why that would be a better intro for them. The US doesn’t have any of that. Europe doesn’t have any of that. Canada doesn’t have that issue. Why did you see it as an opportunity that could go beyond China, the ability for companies to create apps, create experiences? Why did you see that translating?
Dmitry: A number of different signs. So Facebook coming out with that, it speaks for itself. A big player like that does not just do something with as big of a bang as they came out with for fun. It’s trendsetting. If you want to get in there early, you’re going to reap some of the early benefits. So platforms would come out one after another. So Microsoft would come out with their builder for Skype and other platforms.
You could see those things growing like mushrooms. There wasn’t a question that that was going to be a trend. It was a technology shift, a platform shift. So web browser, desktop, mobile. I can easily see how chat bots and chat bot platforms are going to be the next medium for interaction.
Andrew: I see. You’re saying they believe in it so much. It’s already worked in China. I could see this. Plus, it seems like what you do is you try new technology with a small percentage of your resources and see if it takes off. So it wasn’t like you were investing the whole business in this?
Dmitry: That’s correct. We did not just make a stake on some technology shift, all of a sudden shift all our attention there because there is not enough business to be made there. A lot of what’s happening there is trial and error, a lot is research-related stuff, a lot of it is like just trying things out. That’s what I see a lot of the companies doing now with chat bots, “We’re just going to try. Let’s build a chat bot.” That’s a little bit of a problem because now, there is enough knowledge how to do those things better so that they are not just one-offs that die and that tick-box has been put that, “Hey, we have experimented with a chat bot and it sucks.”
Andrew: What’s the first customer that you got for chat bots?
Dmitry: So I should make a disclaimer here. We actually got helped to get in on this by Chatfuel. So the Chatfuel guys, they have a platform for building chat bots on the Facebook Messenger. So I know the founder, Dmitry Dumik and that goes back like six years ago when we actually worked on Presentain and they worked on Penxy, which was a competing product. So we got to talk.
Andrew: I didn’t know he did that. Okay.
Dmitry: Yeah. He was in San Fran. So we got to talk and that’s how the relationship got formed. After that, they closed the company down because they had the same issue, but they could read the signs better. So they started working on Russian social network stuff and we actually helped them out there.
Andrew: Meaning they hired you.
Dmitry: Yeah. They hired us to help with that. Then for the chat bot stuff, they said, “Hey, guys, it looks like there is cool stuff happening here. We’re building out a platform, we’ve got to keep the focus there. But we have clients that come in and want to be serviced. Do you want to be our vendor?” I was like, “Let’s try it.” It didn’t mean anything to me because I didn’t know what a client is like when they’re asking for a chat bot.
So we had to learn how a chat bot is built. So Chatfuel shared their knowledge and best practices and we kept regularly in touch to make sure what they were reading from different clients and the market translated back to what we’re talking about with the clients that come through them and consequently Facebook.
Andrew: And the way it worked was this. I had Dmitry on. I know Dmitry. I love that guy, not just like in a business love. I just really think he’s—I like how. . . I’m not sure what to say that doesn’t get into the personal stuff. I like how personal he shares his life and how he tries different things. Like we’ll chat for a bit and then suddenly he’s got to go off on like a ten-day silent retreat where he’s not talking.
I also like how he talks about business. He had this company, the one that you mentioned that was social media connected that was pretty smart in the way that he created and the way he sold it. He’s thinking very much like a bootstrapped, hungry entrepreneur, like your uncle who had you sell fish would appreciate the way that Dmitry works and at the same time, he’s got the polish of a funded entrepreneur here in Silicon Valley.
But what happens is when somebody creates a bot on Chatfuel, there’s a freaking logo, a label, a connection back to Chatfuel at every freaking bot and you can’t pay him enough. You can’t say, “Hey, I’m friends with you. Can you remove it? I want to just promote myself.” It’s not that big a deal. It’s kind of small. Most people don’t even notice it.
But what it does for him is the people who need it, who are exploring one bot will say, “How did this get made? Oh, it’s Chatfuel that did it.” They click over to that. They go over to Chatfuel and many of them are big companies that don’t want to go and create a Chatfuel account for themselves. So they go to Chatfuel and say, “Can you guys build it for us?” Chatfuel says, “No, but I’ve got this other guy, Dmitry, who works at a company called Master of Code, we can refer you to them.” That’s the way it worked.
Dmitry: Yeah. That’s the way it worked in the very beginning of the platform when it was smaller, but now it’s like a completely different level. They have seriously grown. They have a pool of vendors. We’re their preferred vendor, but they also have a number of vendors across the globe. They have a Director of Partnerships. They have the whole process to manage the vendors to make sure that whatever the experiences get built for high profile clients, those are not just like, “Here’s a client, here’s a lead, you deal with them, I don’t want to hear about it.” They take good care about that.
Andrew: They manage that client too?
Dmitry: On a very high-level but they—
Andrew: What do they do? What do they do to make sure when they pass someone on to you that that person is still taken care of?
Dmitry: They participate in some of the calls. They want to make sure you bring back the information about that account and how that account is doing to see if they can get anything because they get a lot of internal insights from the platform, from Facebook and they can get back and say, “Hey, this is how you would do this direction better,” stuff like that.
Andrew: Really? I see. That’s impressive. Do they get a share of the revenue?
Dmitry: They amazingly don’t.
Dmitry: Can you cut out this portion?
Andrew: But what they get from it is they get some marquee clients. They get to say, “Look at all the bots that are built on our platform.” And then also when you build for a major company, they get all their users discovering Chatfuel because you can’t get rid of that Chatfuel link either. What did you think of the fact that just a few days ago, Dmitry announced on stage that they are going to building bots for clients now?
Dmitry: It’s interesting. I don’t know much about it yet. But it’s a big company now. It would probably make sense. They’re looking for several streams of revenue and it probably would be one of them, but the fact is that they’re also talking about some paid subscriptions where would not have the attribution to Chatfuel. So they play it smart.
So they started and they wanted to grow big. To be able to grow big, they had to have these viral things like to be free, to have this attribution. So they have hit it. They’re like 46% of all the bots built on Facebook Messenger are Chatfuel bots. I think now they’re in the second phase of trying to think, “How do we stabilize the business revenue-wise and how do we make sure we start earning now?” which they rightfully should.
Andrew: Yeah. Maybe they should have done that from the beginning, started collecting payment from all these referrals considering how much they were nurturing them. So that’s how you got that. What I’m discovering actually is—let me broaden it away from your story. I feel like this happens a lot, that there is software that’s really effective but many big companies don’t want to figure it out for themselves. They go to the maker and they say, “Can you do it for us?” the maker says, “No, we’re in the software business. We have a lot on our hands right now, but we can refer you out.”
What I’ve discovered is like let’s take email marketing automation. The more I’ve gotten to know Infusionsoft, the more I realize that they didn’t advertise it in the beginning. I know they don’t make such a big deal out of it now, but when a big customer comes to them, they don’t want to help that big customer set up their funnels and their tagging and all that.
So they have a handful of companies that they work well with and they say, “Look, we are going to pass you on to them.” That seems like a really good model.” Tell me if I’m wrong again. If you’re in a new space, to find the software vendors that you’re using and go to them and say, “Will you refer clients to me? Here’s the kind of work I do.”
Dmitry: That’s a workable model. So, on the side of Chatfuel, that’s a way for them to scale faster, of course. They’re not making this money on the service part of things, but they keep their pace on developing the platform and making sure the platform is being the leader. At any point in time, they can start all of a sudden growing their service part so nothing precludes them to do so.
Andrew: Do you think this would work in other places. Like in other words, let’s stick with marketing automation came out, would it have made sense to go to marketing automation companies and say, “I’m really good at this. You should refer some of your biggest people to me if they don’t want to do it themselves.” I’m trying to think of what technology is coming out right now. Would that make sense?
Dmitry: I haven’t answered that part of the question. It does make sense and we have tried some of those things. If the market is saturated, if there are a number of platforms and it has been like two or three years of maturity in there already, then the ecosystem has formed, more or less and it’s now tougher competition. So you’re going in, you should have some kind of portfolio, some kind of meat on the table so they start considering you as a partner, as a vendor, as somebody who they can refer their clients to.
Most of the time, the first wave of this happening would be their internal people, like a SaaS company internal people building out their network of partners. From there, they cover the bases and then everything else grows on organically. But that initial pool of partners gets the sweetest deal.
Andrew: You said the Chatfuel intros were the beginning. What was the next step for you to get customers?
Dmitry: When we felt that we more or less can position ourselves as a builder of chat bots that are not just building but understands the ecosystem better, we started doing some of the conferences and some of the meetups. During those—we had done a meetup in Winnipeg, for example in Canada where we have one of the offices.
So we put together pretty cool sponsors, which was Deloitte, which was RBC, Royal Bank of Canada and TES, which is a big law firm. We told them, “Hey, guys, this is new tech. We can see how it can get adopted by your clients. So why don’t we do this event with you, together with you guys, we pay together with this event and every one of you invites the biggest businesses you can think of to this forum?”
So we prepped very good content. We thought of different ways that we can position the thoughts for their external dealings with the customers and for their internal teams’ efficiencies. So we talked about Slack. We talked about Messenger bots. It was a very good round out. We got quite a bit of leads and quite a bit of discovery sessions with those companies internally. That’s how it gets like—
Andrew: I see. So you do presentations and the people from those companies, from the law firm and Deloitte also do presentations. So everyone in the audience brings in guests—sorry, every company that’s co-creating this brings in a guest, but they’re also presenting to other guests, right?
Dmitry: Yes. But it was chat bot-specific stuff. So we were doing 95% of the content on that event.
Andrew: So then why does Deloitte need to bring you in? What’s their upside?
Dmitry: Because to them, it’s the reputation of an innovator. They can help their companies with new tech as well. They have partners in their circles to show their companies where it’s all going.
Andrew: You know what? I had a similar experience with Toptal. When they were trying to grow their business in San Francisco, they said, “Andrew, would you come and moderate and ask questions?” I said, “Yeah, I’ll do anything for you guys. I want to see how you work.” I started asking people how people came to the event and it turned out it was three different organizations, I forget what they are, each invited their clients to come to this event and learn about how to manage teams and how to develop and so on. I see. That’s a really interesting model.
So you’re on stage presenting. You can’t pitch from the stage. You started saying you did some demos. What was your process for taking people who were in the audience and turning them into customers.
Dmitry: Of course, you’re talking about it, you are perceived as an expert. You are speaking about some cases that they can translate back to their operation. So you have a list of everybody who’s going to come. You start with the team, we sat down and said, “If we’re thinking about this trailer production company, where do we think a chat bot would fit?” So, internally, it will be team communication on the inventory, whatever. Externally, it would be some campaigns driven from Facebook ads into buying trailers and here’s how you would form your audiences.
So you would hypothesize on some of those ideas and you would gently drop on some of those ideas in the presentation, which is not a roadway to do. That’s value. They have come there not to listen to some technology shit. They had come there to hear about some specific cases and some ideas that would be applicable to their business. It’s completely proper. They’re not there to just learn hypothetical stuff. They want to get back home to some specific ideas to discuss in their boardrooms.
Andrew: I see. I want to know a little bit more. The Shopify evangelist, Ezra Firestone, I’ve had him on and I’ve known him for a long time. What’s your connection with him and how is he helping you grow your business?
Dmitry: Yeah. We started working with Ezra probably three years ago. I got acquainted with him through a guy that I got acquainted with at iDate. So you never know. Keep making your connections. You never know when it’s going to come out to something that really has worked out.
So Ezra is an amazing guy. He’s like an amazing human being, positive. So we started working with him for some of his Shopify clients. It was purely service business. We really hit it off with him and started talking about stuff and wanted to ideate. He came out with this idea, Shopify apps because he was becoming more and more of a heavyweight player in Shopify ecosystem. With his Boom by Cindy Joseph—
Andrew: That’s his product.
Dmitry: Yes. And it’s amazing trajectory for how he got a partnership with product people and grew it so much and gets all the insights of how to do it properly and shares it with all the community and is doing it so right. We thought, “Yeah, it makes total sense.” Now, wrap that knowledge into Shopify apps and get people to benefit.
Andrew: Wait, you created the Shopify apps for him?
Dmitry: We worked with him in partnership on Shopify—on Zipify.
Andrew: Who owns it, you or him?
Dmitry: It’s a partnership with him. He comes up—
Andrew: So you co-own it too?
Andrew: I see. So if I understand you right, what I understand from him was he discovered by running his own store that after somebody buys, if you have a one-click upsell or one-click follow up sale, they’re likely to click it. Shopify doesn’t have that features. So he said, “I’ll make it myself,” meaning you guys made it for him and then he said, “I’m going to take this, turn it into a plugin for Shopify and sell it.” So he didn’t hire you to do it? He doesn’t own it exclusively, you guys co-own it?
Dmitry: That’s right. We have been doing some of that stuff with him as a service, but then he says, “I can see this company really developing. It’s not that I don’t want to pay for service. I would rather pay for service and contain the ownership myself, but I just know that if we are to make this big, I’ve got to have a technical partner. So, basically, we co-own this with him and we take care of all the technical things and he takes care of marketing, selling, trading and he does a very good job of that.
Andrew: Such a good job of that.
Dmitry: He really adds value to people. It’s not just selling apps. It’s making sure people use them properly, people get the big bang out of it and it really increases their sale.
Andrew: He’s given out the revenue for the business on a past Mixergy interview that I did with him. But what’s the share of the breakdown, what percentage of the business?
Dmitry: We withhold that in exchange that for—he still shared that already, but the revenue the apps are making now is $75k to $100k a month.
Andrew: Yeah. He did say that. But I meant can you say what percentage of the business you guys own?
Dmitry: Unfortunately, I can’t.
Andrew: It’s not 50-50, though, is it? It’s more him than you?
Dmitry: I’ll tell you that some of our partnerships are 50-50, but in this one specifically I cannot disclose.
Andrew: Okay. He does a ton of work around this one plugin. He’s completely connected to it. It’s not just his name. It’s his cartoon character on the homepage and it’s his face in the about and throughout because he’s got a good reputation in the Shopify ecosystem. But he sent you customers even before this. How did he send you customers?
Dmitry: Basically, a customer would come to him and he would want to service that customer, but he didn’t want to drop it, but he didn’t really have time to service it with his internal team. So he would hand the customer over and he would be on a very high level managing the project and he would try to do that less and less so we can take ownership of managing the project so he basically pumps deals, but then we realized just doing the service, it’s still service business.
He still could not unplug from that, just hand it over to us. Sometimes we would not understand some of the intricacies of ecommerce. So he basically took us through some educational and experience building period to where then we realized, “Hey, guys, we now understand and it now can be partnership that is very balanced.”
Andrew: I see. He did. I’m looking at his website. I don’t see it now. He started out by teaching people and then he did some services where anyone could hire his team to do the work. But I don’t see on the site anymore.
Dmitry: I don’t think he does that anymore.
Andrew: So I see. He went from him doing it to saying, “Guys, can you take on more of this work?” and he was the face of that interaction and then passing more and more of that work to you and he got a commission and you guys got a stream of customer. So that’s another way you guys got customers. I see. That makes sense. That’s another interesting thing, to partner up with someone who’s an information and say, “You don’t just want to sell content, you don’t just want to sell courses, but you can sell the services and we as an organization can fulfill those services.” Got it. I see. So that worked for you.
You know what? I’ve got a little more to ask you were. I know we’re going a little over time here, but let’s talk about the tough period, which was 2008. What happened to your company in 2008?
Dmitry: Well, the same happened to the entire world basically with the subprime crisis. Gradually, it would come back into budget being scaled down and the clients dropping some of the projects. You were growing in the expectation of things at least not getting worse, right? When they drastically slow down, you stall. You have a little bit of a buffer to take care of the stall and still paying out to people who are your employees, not contractors.
I personally feel a lot of responsibility towards the people that we work with. It was exhausting because I realized that. I look at financials and I understand that next month, stuff is not happening. I’m not able to pay an entire set of wages for the next month. So I started talking to some of the potential acquirers, like I wanted people to move to somebody who could pay and make a little bit of money and the exit, on the forced exit. It was tough time.
Andrew: You were trying to sell the company?
Andrew: Because it was so bad you couldn’t make payroll and as you were looking for someone to buy the company, what happened?
Dmitry: The thing was that I wasn’t able to fire people. I was not able to tell people, “Hey, guys, let’s figure out who we’re going to fire so we can pay for that.” Maybe that’s weakling in me, but I ascribe it to my care of people. People mean a lot to me, people I have worked with I cannot just fire because the economy slowed down. I believed we can make something out of this. But as a backup plan, I was also working on the possible acquisition plan.
So I got some interest, but then we got a client all of a sudden that was a fair-size client and that guy came in and I asked for a little bit of a down payment on the contract and man, that was such a big relief. So I didn’t hire anybody. A lot of the companies—sorry, I didn’t fire anybody. A lot of the companies fired you in that period of time. We’re proud that we never have.
Andrew: How did you find that client, the one that turned things around?
Dmitry: It was a connection that was random. Unfortunately, I cannot systematize that. It was a connection. All of a sudden, the phone rings, “Hey, we have this project. We are talking to several companies. We’d like to talk to you.” And they didn’t have that tech. So we had Ruby on Rails at that point in time. So they basically said, “Well, we’re very interested. How many people can you get?” “Yeah, we can get 20 people on it.” “Really? Are you able to balance that?” “I’ll try hard.” It wasn’t a hard try because people sat without work.
Andrew: All right. I want to close it out by understanding some of the nitty-gritty of the business. You told our producer onboarding was one of the big challenges for you. How do you onboard in a systemized way? What did you come up with? What’s a good way to onboard new customers?
Dmitry: Was it about customers or was it about team members?
Andrew: I’ve got onboarding of new clients as one of the challenges, that you started doing it yourself but you realized there was way too much to do, but then you handed it to a legal team, but I wasn’t sure why you would hand it to a legal team. What’s the system in the company that you’re proudest of and it works because it’s systemized?
Dmitry: It probably is the way we hire people and we onboard people into the company and the culture. So I think that’s—we’re very proud of the clients. But the only way that happens is you can build a team that can service those kinds of clients and the team that you were honest proud of. So, to us, we had to build out something that really made sure that the values were positioned are truly ingrained in people’s minds. That’s a very tough piece of work.
So, to be able to find developers that are able to develop, like they have the skills, but also have the mindset is so, so tough. But then to me, it was becoming tougher to work in an environment where people were not sharing the same values. So we started clarifying those values. We started making sure the culture is there and we started building out the HR department that would make sure that the values get translated, the culture keeps growing and keeps getting stronger and that people that come in, the people that we attract—we always were meeting people—
Andrew: How do you do that? What’s the process for doing that?
Dmitry: You start doing stuff that really speaks of you as somebody who’s a good employer—
Andrew: Like what? I’m curious about how you do that in a systemized way? Sorry I know I interrupted you. Go ahead.
Dmitry: So you run some meetups. You support some of the good causes. You invest money into some initiatives in the city that people watch and know about. So you do a number of things who position you as somebody who is pro-good for the world, for the community. So people realize, “Okay, that’s telling. I am intrigued. I would like to talk to that company.” If they’re considering several companies, they would consider the company that has a better culture with comparable pay. They would consider a company with better culture. But to really make that work consistently and have people absorb that and practice that. That’s tough.
Andrew: How do you that in a systemized way?
Dmitry: Internally, you have information that travels between everybody in a more systematic and higher volume of that information. So if something is happening in the company, we get to know about it and we get to praise each other and we get to celebrate and share experience. Like we have meetups internally happening several times a week where people talk about their projects. It’s like public-retrospective on a project, where a team that worked on a project shares about the failures and the successes of a certain project and questions get asked by everybody. So we do events internally, like just cool events. We go out, we race cars, we drift cars.
Andrew: You drift cars?
Dmitry: Well, yeah. Every spring, we have an event that’s in the local airport here in Ukraine. We just get some rally cars in there and we have a lot of car fun. Yeah.
Andrew: So how does that help you with your culture? I can see how that would create some bonding, but what am I taking away as an employee about how you guys work?
Dmitry: It’s about investing into employees. So I wouldn’t be doing that if I didn’t want to build out this bond. Bond is part of the culture. So also those events would come up with different topics and things, like we constantly keep bringing out new challenges or new values that we’re trying to preface. One of the recent things that we came up with was this all about your launch. You saw it on our website. So what’s the thing that everybody’s really passionate about? We’re passionate about launching new things.
Our clients also want the same thing. They’re apprehensive about their project not being launched. That’s a new model for 2017 for us. It’s all about your launch. We’re making it happen so launch happens on time, on budget, quality and that clients are like—they celebrate the launch. So it’s more than just words. Like people really think this way and they practice the stuff. There’s a big difference between the slogan and how people feel and we make sure that that’s a daily practice, if that makes sense.
Andrew: All right. That does make sense. I think that I’d love to see—I was going to say I should do this, but I don’t think it’s in me to do it. But I’d love to have somebody go out and interview companies about their culture, what it is, how they discovered it, how they passed their values on to their team, what they do to show how their team should behave or not behave, but how their team can express their values.
I’m just fascinated by that and I think that it helps create a better company, but it’s the part of business that we don’t talk that much about. You’ve got Tony Hsieh talking about company culture and values. You have a couple of other people speaking it, but no one is showing how companies actually express it.
All right. The website is Master of Code. Do you know this guy, Sabeen Shamsi?
Dmitry: Rings a bell. Remind me.
Andrew: He owns Masters of Code, but he’s doing nothing with that domain. Right? Don’t you think he needs to give that to you? I want to call him right now. Is this inappropriate for me to call him right now?
Dmitry: Why is it? No, keep going.
Andrew: I’ll call him up, let’s see. He works at AngelHack. Do people mistake your domain for theirs?
Dmitry: A couple times they do.
Andrew: Sponsor hack-a-thon, that’s what AngelHack is. Let’s see if we can get him on. I feel like he’s trying to use the site. He’s right here in San Francisco. Shame on me, by the way, for just assuming that Sabeen is a man. But yeah, AngelHack is the company. You let me know. I will walk over to Sabeen’s place on 11th Street and introduce myself and see if I can make some kind of deal happen here.
Dmitry: That would be awesome. You have my support.
Andrew: All right. I’d love it. The website for now is Master of Code because this is the Master of Code, this company is and man, I’m so excited to have heard your story. Thanks for being such a fan. Thanks for coming on here to do this interview.
Dmitry: Thank you, Andrew, totally my pleasure. Thanks for everything you put out there. That means a lot to a lot of people. That one time when I saw a guy in a taxi that was listening, I was thinking that’s so cool.
Andrew: Yeah. I posted it on Facebook. Chris Winfield, a past interviewee was in a cab in New York City and says to the driver, “What are you listening to? That sounds familiar.” He says, “It’s just a startup podcast.” He’s not saying anything Chris would know. He goes, “That’s Mixergy isn’t it?” The guy goes, “You know Mixergy?” Chris recorded it and posted it on Facebook. I love that.
All right. Thank you and thank you also to my two sponsors. If you’re looking to hire a developer, go check out top as in top of your head, tal as in talent. That’s Toptal.com/Mixergy and if you need somebody to post your website, use the company that’s hosting our site. It’s the bot site we created that’s been really well hosted by HostGator. Go check out HostGator.com/Mixergy. Dmitry, thanks so for being here.
Dmitry: Bye, Andrew. Appreciate it.
Andrew: Thanks. Bye, everyone.