Can content really be profitable?

I’m about to do an interview with a founder whose company you don’t know, but I assure you it’s a massively successful site.

Once you get to know this company, you’re going to realize that you’ve actually seen a lot of the stories that they’ve broken but probably didn’t realize it. Today’s guest is Fred Mwangaguhunga. The company is MediaTakeOut, an online gossip site.

I want to understand if content can really be profitable in a world where it’s tough to get anyone to come to your site because everyone seems to be on social networks.

Fred Mwangaguhunga

Fred Mwangaguhunga

Mediatakeout

Fred Mwangaguhunga is the founder of MediaTakeOut, an online gossip site.

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Full Interview Transcript

Andrew: Hey, everyone, my name is Andrew Warner and I’m about to do an interview with a founder whose company you don’t know, but I assure you it’s a massively successful site. And I’m also going to tell you that once you get to know this company, you’re going to realize that you’ve actually seen a lot of the stories that they’ve broken but probably didn’t realize it. His name is Fred, the founder’s name is Fred Mwangaguhunga.

Fred: That’s right.

Andrew: Did I get it right?

Fred: You did, you did.

Andrew: Let me say it again like a man and not like a questioning child. Mwangaguhunga.

Fred: That’s right, that’s it.

Andrew: How would you pronounce it?

Fred: I would say Mwangaguhunga.

Andrew: Okay. And you’re from Uganda, right? That’s where the name came from?

Fred: Yeah, my parents were born in Uganda, I’m from New York though.

Andrew: Cool. And the company is MediaTakeOut, it’s an online gossip site. And, as I said, you’re going to see that a lot of the stories that you’ve read about actually originated or were about Fred’s site. I want to find out how he built it up, but I want to understand can content really be profitable in a world today where it feels like advertising is being controlled by a couple of companies where it’s tough to get anyone to come to your site and where everyone seems to just be on social networks. And I want to understand how he built up his business.

This interview is sponsored by two companies you know. The first will help you hire your next phenomenal developer, it’s called Toptal. And the second will help you send out marketing e-mails properly, it’s called ActiveCampaign. But I’ll tell you guys more about them later. First, Fred, welcome.

Fred: Welcome. Good to be here.

Andrew: Hey, how much traffic are you guys doing now per month?

Fred: So we’re doing about 30 million uniques, and that averages to about around 300 million page views a month.

Andrew: And I actually first saw you but didn’t realize that I saw your site in the Rihanna photos. Chris Brown hit Rhianna, there were photos of her bruised face, I’m looking at them now, they still give me pain to watch them.

Fred: Yeah.

Andrew: I didn’t notice at the time there was a big watermark on them, all over them. And the watermark said?

Fred: Mediatakeout.com.

Andrew: And because of that TMZ, when they reported it on the news and showed the photos, they showed mediatakeout.com, everyone else showed mediatakeout.com. Was that your first big hit?

Fred: I think that was probably our kind of… We were always kind of bubbling and, you know, we kind of had a niche, we were a niche player. And when we broke that story, it kind of crossed over.

Just to give you a little bit of background, MediaTakeOut, we deal in primarily urban celebrity gossip, so most of our celebrities are African American. And at the time most of our audience was African American, too. But everyone once in a while there’s a story that kind of crosses from, you know, everyone is interested in. And so that was sort of one. We’d been covering Chris Brown and Rhianna ever since they started dating and the big blow-up happened, and we were actually one of the…we actually were the first person, first place to break the actual assault. And then eventually we got the photo images and we posted them, too.

Andrew: And you said a tipster sent it to you. How does something like this happen? Is it just some random person who sends it over?

Fred: Yeah. Yeah, that’s exactly right. I mean for that one specifically it was a person that had the photos and they were trying to get it out and I think they were trying to sell it to a couple places. They weren’t able to sell the photos to the places that they wanted to and they were just basically like, as a “screw you” to the places they were baiting, they sent it to us. We were happy to take it.

Andrew: And it was just that they were fans of yours and you didn’t have to pay.

Fred: Yeah. Yeah, we didn’t have to pay for those photos.

Andrew: That’s phenomenal, for a guy whose background had nothing to do with this. You went to school to learn to do what?

Fred: I went to law school and business school, so I certainly don’t have a gossip background.

Andrew: And you told our producer, “You know what, I’m not the kind of person if you’re looking for a story of a childhood where I sold pencils and I made money and I knew I was always going to be an entrepreneur, that’s not me.” So who were you then back then?

Fred: Okay, so, I mean, I think I always knew that I wanted to work. I mean I came from a very humble immigrant home. And so if I wanted anything, I actually had to go out and work and earn it. So I started working when I was about 12 years old, I started off delivering papers, and shortly after that I started working for a videographer who videotaped weddings. And I did that from sort of 13 through high school, into college.

Andrew: Did you do Donald Trump’s wedding?

Fred: I did.

Andrew: You did? So you got to see behind the scenes stuff there. What did you see there?

Fred: Nothing, there was nothing big there. I mean it was Donald Trump with Marla Maples. There wasn’t really a ton there. I mean it was a big, beautiful wedding at one of his grand hotels, tons of celebrities were there. For me it was kind of an easy job because it was such a big job, they had so many people there I was kind of just sitting around and twiddling my fingers.

Andrew: How do they keep someone like you, by the way, who has cameras from taking photos and sneaking them out? What do celebrities do to avoid that?

Fred: Well, I mean you really can’t do anything to kind of stop that from happening. And, in fact, on that day one of the people that I worked with actually did take a camera and snuck a photograph and actually sold it to the tabloids.

Andrew: I see.

Fred: So for something like that you really can’t stop it. I mean you make people sign documents and whatever else. But if they’re going to sell it and they’re going to sell it under an anonymous name, you can’t stop that from happening.

Andrew: Okay, so you did that, and then you had an idea for Laundry Spa. Which I can’t find photos of it, but I found, like, a New York Post article about it, or New York Daily News. People were… Oh, there it is. New York Daily News wrote a post about it back in 2005 about how wonderful it was to get their laundry back.

Fred: Yeah.

Andrew: What made it so good?

Fred: So the idea was…I mean at the time I was working as a lawyer on Wall Street, and so most of my clothes were sent out to the laundry. But the problem is, you know, I had clothes that I needed laundered, like underwear and undershirts, and then I needed clothes that I needed dry cleaned, like suits, but then you have these clothes kind of in the middle, right? Like a nice sweater, maybe a nice pair of jeans, that aren’t necessarily stuff that you want laundered, just kind of thrown into a laundromat, into a laundry machine, without anyone actually thinking about it. But they’re not necessarily dry clean items and you don’t want to spend $5 or $6 to dry clean that simple piece.

So the idea was you had this kind of whole in the market, and so that’s exactly what we did. The kind of selling point for us was where we’d read all the labels and wash them exactly as the label said. So if it was hand wash, we hand washed it. If it was line dry, we line dried it. If it said “wash cold,” we washed cold. And that added a lot more to the kind of process, but in the end the people were able to get a better product.

Andrew: And it was mostly an online business, is that right?

Fred: Yeah, it was all online. I mean we had a giant factory that was doing all the laundry, but the…

Andrew: That you owned, that was part of the business, or contracted out.

Fred: Yeah. No, no, we owned it all. I mean eventually we got so big that we had to contract out a large part of it, but that was the idea.

Andrew: What did you sell the business for?

Fred: I don’t want to say.

Andrew: Did you become a millionaire at that point?

Fred: At that point I did very, very well, but I was also, like, 30 years old. So even if someone gives you a million dollars at 30 years old, what are you going to do? I mean you’re not going to, like, start a foundation with it. I knew I still had to go to work. I did well on it, I probably didn’t do as well as I should have. I mean part of the thing, even to this day it still kind of gets me, right? Because the idea that I did when I got into that business was, you know, when you look around and you look at, you know, the businesses of the ’80s.

So in the ’80s you saw a lot of drugstores, you saw a lot of hardware stores. And all those stores kind of got kind of consolidated to these giant conglomerates, right? Like you don’t see any drugstore that’s not a CVS or Walgreens or something like that. You don’t see any hardware store that’s not a Home Depot, right? But you still have these laundromats and you still have these dry cleaners, right? Whoever you are in the city, in whatever city you are, there’s a little mom and pop dry cleaner. And my idea was there really shouldn’t be. There are economies of scale that you can work and you can build it together and create the kind of billion-dollar conglomerate in the laundry/dry cleaning industry.

And I truly believed it then, I believe it now. But it was just really…it was my first real business that was kind of in my hands and it was a lot of work. My wife was my partner at the time, it was taking a toll on our relationship. And so when the money came and the offer came, as much as I didn’t want to take it, it was just too good of an offer and I eventually took it.

Andrew: You raise money for that business?

Fred: No.

Andrew: No money?

Fred: Well, not exactly. So it wasn’t a formal round, but we did have a friends and family round.

Andrew: Before we started you said, “Hey, Andrew, one of the things I’d like to bring up is the challenges or what it’s like to raise money as an African American.” Was that part of it?

Fred: Yeah. Well, I think for the Laundry Spa in particular it was interesting because that was kind of my first kind of non-business school chance of raising money. So when I was in business school, I worked for a company called [Inaudible 00:08:51]. It was a telecom start-up that did some kind of technology. Let’s put that aside for a second. But I was able to raise money because it was me, it was a founding team, and I was just one of a team out there.

So I figured, you know, “Hey, look, I raised…the team raised about $15 million.” I was a part of the team, I was lead in a lot of those, in a lot of the negotiations, so I figured, “Hey, when I’m going out on my own, I should be able to do the same.” It was a completely different thing when I tried it with the Laundry Spa. And here I am, I had spent…I had a decent amount of money, I spent three years on Wall Street, I had a bunch of other smart people, I thought, investing with me. And so I didn’t want to go out for a specific equity round, but we did try and go get a loan.

So we applied for the loan, we had our assets in order, everything was there. I remember the first thing is when I had my business plan, I had everything, we had a door open, the factory was there, and things were actually moving, and the woman from the loan office came in and she looked at the business plan and she was like, “Who helped you write this business plan?” And I remember thinking, “I just went to business school. Like why would she think I couldn’t write a business plan?” Right? And from then on the interview just kind of went downhill and eventually we got rejected for the loan.

And even looking back to this day I don’t understand it. Right? We had the capital. Right? We had a relatively good idea, we had some traction going. It was going to be, the assets were going to be collateralized by my assets. So there really was no…

Andrew: Risk.

Fred: …you know, obvious reason to turn us down and I just have to assume that at least, you know, one of the reasons why is because of my race. And I think that’s something that a lot of African American entrepreneurs find. And I can tell you that story and that’s a direct story of me going out and trying to get a loan, but you hear countless stories about the same things when people are going out and trying to raise equity. And I think that’s a problem that a lot of African American entrepreneurs hear.

Andrew: You know, before I move on past the laundry business, I’m curious about your take on it, why hasn’t there been one giant laundry company with branches everywhere the way there is with Domino’s? And I see people take shots at it a lot. Like one of the most recent ones is Washeo, created by a guy who would, like, have the Uber of laundry. I used the service a bunch and it’s gone now. What do you think about this space keeps it from working?

Fred: I think the biggest problem with the laundry space is that it is incredibly labor-intensive. So in order to kind of get it to work you really have to have a lot of people to make it work. Right? It’s not like most companies where you get an algorithm and you can outsource it, and then everything kind of goes. And you have an office somewhere with, you know, 500 employees and a billion dollars in sales. It really isn’t going to work like that. You really are going to have to figure out a way to…you can automate some of it, but it’s a lot of labor, it’s a lot of handwork in there. And because you have that labor cost in there, it puts a lot of pressure on your margins.

And so if you’re going to try and run a business like that, you can’t then try and run it as a commodity business and compete against, you know, the mom and pop, which might be an immigrant family who are willing to do it for, you know, pennies over cost.

Andrew: Yeah. All right. How did your life change after the sale?

Fred: Well, I’m not sure. I mean because it was kind of like a good side and a bad side, right? On one side, you know, it was a sale, everyone knew about the sale, and people were kind of like, “Wow, Fred, you know, it was great. You went out there, you started a business, you know, you’re now filthy, filthy rich,” which I wasn’t. So for me it was more, you know, “What do I do next?” I mean I kind of…there I was. I had worked on Wall Street for three years, all the people that were working there were like, “Hey, come back, be a lawyer again. You tried entrepreneurship, you made a couple dollars. Maybe buy an apartment, and then come back to work.”

And so there was all of that out there. That’s certainly not something that I wanted to do. I still kind of felt that I had lost this opportunity to kind of create this billion-dollar business, so that was kind of in my head.

Andrew: And so you had an exit, you did well for yourself financially with it, and you still felt like, “I didn’t do right, I didn’t do enough.” There was still this sense of inferiority or something about it?

Fred: Yeah. I mean, remember, whenever you go into starting a business, you really are putting 110% of yourself in it. You actually believe that you’re going to take this all the way through to IPO. Right?

Andrew: And you were risking your marriage for it, to that degree.

Fred: Yeah, you’re risking everything. I mean, you know. So anything short of that, like, IPO, you know, where you’re sitting on there, cover of Fortune, is kind of a loss to you. I mean, and I think, you know, a lot of entrepreneurs that have exits feel this way, especially if it’s not the exit that they expected.

So there was kind of this, you know, I wasn’t happy, I was happy, you know. But either way I was still about…I think I was 30 years old or a little bit younger than that and I had to start something, I had to do something with myself. I didn’t have enough money to kind of live off of it. I had to kind of go out there and it was either go back to Wall Street and work, which I didn’t want to do, or start another business. And that’s where MediaTakeOut kind of came out.

Andrew: I do feel like you’ve got this entrepreneurial bent to you. That you leave one business, instead of going back to Wall Street you started another. You got this company that we’re interviewing you about here today, MediaTakeOut, and you then go and start another. Later on in the interview I’m going to talk about Crowdshot, your new video editing software that uses machine learning and artificial intelligence to edit videos. It’s just, like, there is something in you. And I’m wondering, of all the different things that you could start, why start a blog? Why a blog?

Fred: You know, a lot of people ask me that. I’m not entirely [Inaudible 00:14:38]. The best thing that I can do is, you know, where you are in life, you’re in different stages, right? So when I started the laundry service, I was working on Wall Street and I was sending my clothes to the laundry all day. Right? When I was sitting at home with no job and on the computer playing around all day, I was like, “Wow, you know, this blog thing kind of works.” Because I was kind of the blog consumer. I didn’t have anything else to do but to just kind of sit around and play around on the Internet all day.

And so that’s kind of what drove me to it. I think I’m always kind of looking for opportunities. It doesn’t really matter, right? Like I’m not particularly tied to one industry or one type of business. I’m mostly looking for opportunities where I can understand it and where I think that I could actually be a customer.

Andrew: I see.

Fred: And so that was kind of it.

Andrew: And so this was roughly also around the time when Weblogs, Inc., which had Engadget and other sites launching, you launched a little bit after them. This was when blogs were just becoming a thing. And so were you a consumer of blogs, were you reading them a lot, were you reading gossip blogs?

Fred: Yeah. What’s interesting is while we were at… So we had this kind of whole plan to grow the Laundry Spa. One of the plan was to use blog advertising. And at the time there were a couple of blogs out there that were just starting to get popular, but they really didn’t understand how to monetize. And I remember one thing, which was the funny part. Is Gothamist, whose blog is still around, they just started and we advertised on them and they just had their kind of blog ads on the site of a page that used to be there and they had no other ads on the page.

So I remember talking to the guy and I was like, “Listen, would you mind if I hired a developer and figured out, like, change the layout of your site and included an ad right in the middle of your site?” He was like, “Yeah, you can do that.” So we did that, we actually called up a developer, we actually created a new theme for the site, theme for the page. And then, because we did, we were able to stick a giant ad right in the middle of the page. And that lasted about a month, and then he realized that he could get a hell of a lot more of it from us.

So we were really…I was really kind of hands-on involved in kind of the blog advertising, even before I was even in there. And so I was able to see kind of the growth in the industry, whereas a lot of people at the time just thought of it as kind of someone in their basement kind of playing around on the Internet. I saw that there was a real business here and there’s real growth, and so I was able to kind of take advantage of that once I was outside of the Laundry Spa.

Andrew: I get it. Why gossip?

Fred: I’m not entirely sure, and in the beginning MediaTakeOut wasn’t specifically set out to be gossip. I mean the name “MediaTakeOut” kind of shows where it was…the origins. And the idea was there was going to be some gossip, there was going to be some sports, there was going to be some hard news, there was going to be some, you know, some TV, TV and movie reviews. And the idea was that all of that was going to be there and you were going to take what pieces you want out of it, and that was kind of the idea of MediaTakeOut. And eventually we just kind of, like, ran off analytics, the gossip was working and we got more gossip.

Andrew: I’m looking at an early version of the site. Dude, this looks so much like Drudge Report, except MediaTakeOut is at the top of it in orange lettering with a Chinese takeout box with the chopsticks.

Fred: That was it.

Andrew: How inspired were you by the Drudge Report?

Fred: Even to this day, I mean, I am still amazed at how it’s managed to stay relevant. I mean you think about it, it was launched, I think, in like 1996, it’s kept the same outline, the same layout, and it continues to grow.

Andrew: Do you know, by the way, not only has it kept the same outline and layout, he’s kept some of the same links to other people’s columns. Some of those links, not only are the links dead, but the people who he’s linking to are gone. And so, you’re right, that’s how much he hasn’t changed the design of it.

Fred: Right. And I always just looked at it and, you know…especially in the Internet, in Web, everything is about change, right? Like, “Oh, hey, let’s just update, let’s update.” And you have people that do that all the time and I was always just amazed that he never did that. He had something, he knew that it worked and he kept it as simple as possible and had you focus on the content and not on the layout. And I think that was always…that was his winning way. And I admired it, I was like, “Wow, I think this is great.” Besides that, at the time we didn’t have WordPress, so we actually had to pay to make the site look whichever way you wanted it to. And that was a very, very simple and easy and inexpensive way to make a site.

Andrew: I see, right. If you don’t have a really sophisticated content management system, then what you probably want is as easy a system as possible, and that’s what Drudge had. But Drudge rarely serves up his own pages, he links out to other people’s pages. You guys created a CMS, content management software, that actually allowed you to create blog posts, essentially.

Fred: Yeah, yeah. So we were totally outside of WordPress. For the first, I think, two or three years we had our own content management system. And it was completely different. Remember, there was no cloud, right? So if you were hosting photos, you actually had to host them on a server. There was no caching pages, so you had to make sure that you had a database architect, make sure that your pages were dynamically being able to produce even on high traffic days.

So it was a totally different world, just the idea and what you needed to do to get a site up, a site up that can get 5 or 10 million people on it a month. It cost a hell of a lot more and it really was a lot of planning before you got to that point.

Andrew: Yeah, the more I’m digging into this the more I see the similarities with Drudge Report. Even the posts that are on your site, like here’s one, it’s an exclusive, “Prominent Black Minister is Gay, Exclusive,” asterisks all around the word “exclusive.” And then just typed out like a typewriter typed it out, the way that Drudge has when he does an exclusive. All right, I get how you’re doing this and now I understand the design of it. I thought you just did not like WordPress, or I guess at the time TypePad was big. I thought you didn’t like it. You’re saying the stuff just didn’t exist, it wasn’t a sophisticated market.

Fred: Yeah, there were all kinds of bugs to it and it wasn’t something that you could rely on at the time, and eventually it turned into it.

Andrew: I started Mixergy’s blog on TypePad. It was pretty bad, it was so bad. Lots of little issues. You had to actually, like, redo the whole site every time you published a post and a pop-up would come up and tell you to wait. All right, let me do a quick sponsorship message, and then we’re going to come back to this story.

Hey, guys, the sponsor that I’m going to tell you about is a company called Toptal. “Top” as in “top” of your head, “tal” as in “talent.” When you have an idea the way that Fred did and you need to implement it, you don’t always have a tech developer, you don’t always have a team around you to go and implement it. And what you could do is basically do what Fred did, cut down your specs and go for the simplest thing, and then you could get a cheap solution, a cheap person to put it together for you.

The other approach is to say, “You know what, what would Google?” Google would not put the cheapest person they could find on the problem, they would say, “Who’s the smartest person? The person who can take this problem and not just implement it as we, the product visionaries, can see it, but find a way to solve the problem that uses this developer’s experience, that uses this developer’s understanding of how the platform, the software that we’re using works. How do we get the smartest and the best?”

And when it comes to finding the smartest and the best it often takes a long time to find them. You need to do a lot of networking, you need to do a lot of job placements, you need to do a lot of interviews. It really is a tremendously difficult task, which is why you see a lot of sites out there now, a lot of companies offer to take your ad and place it on multiple job boards, let you get all these inquiries inside some system that lets you figure out who the right person is, and it’s still a lot of work.

Toptal is a company that raised money from Andreessen Horowitz because they came up with a unique solution. They decided they were going to test people out ahead of time, only get the best of the best in their network. And so when someone, like you, whoever is listening to me, or Fred, needs to hire the best developer out there, they just come to Toptal, tell them what they need, and Toptal makes the match. And a real human being will make the match and make sure that you’re happy.

If you want to try Toptal, they have a special offer for Mixergy listeners because they are created by two Mixergy fans. And the place to go to get that is a URL I’m going to give you in a moment, but I want you to know when you get to that URL you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours. And that is, and I want to underline this last part of this sentence, that is in addition to a no-risk trial period of up to two weeks. Go check that out at toptal.com/mixergy. “Top” as in “top” of you head, “tal” as in “talent,” .com/mixergy.

All right, Fred, you had your first version of the site. It was a guy in the Philippines, from what I remember, who created your first version, right?

Fred: Yeah, yeah. I think I went on guru.com and it was a guy in the Philippines. And he created for, I think, $300.

Andrew: Not bad deal. All right, you were basically linking out, actually, just like Drudge Report, to other things, but you also had the ability to write your own posts. You were trying to figure out where the content was, as you said. Celebrity gossip became your thing. The analytics were showing that your posts that you guys were writing were effective, or was it posts in general about gossip?

Fred: I think it was the gossip posts. Like I said, in the beginning, in the first, like, couple of months there were some posts that were about news and there were some posts about, you know, how did the Yankees score last night, and then there was gossip. And gossip just kind of worked. I think part of it is because at the time there really weren’t that many places out there to get gossip. I know it’s hard for a lot of people to believe when you look at the Internet right now and you look at entertainment news, it kind of leads, right? It’s kind of the bigger markets. But at the time that really wasn’t the case, there really weren’t a lot of the big players out here right now. And a lot of the major news agencies just really didn’t cover entertainment news at all, and certainly not African American entertainment news.

Andrew: Were you going for the African American audience from the beginning? I’m sensing that you kind of were, but the Laundry Spa ad in the center of this, which takes a large chunk of the page, it features, like, a white, blond woman. “Kate Moss Snorting Cocaine” is one. Oh, wait. “Kate Moss Snorting Cocaine in Nelson Mandela’s Home,” I had no idea that happened. But were you targeting an African American readership?

Fred: We were. And I think that that kind of goes back to when I was at the Laundry Spa. So when I was at the Laundry Spa, we got a lot of press. We got written up in the New York Post and a lot of the local New York papers, we got written up in Vogue. And then right before we sold it I got written up, me and my wife got a write-up in Black Enterprise. And after all of the different press that we got, and we’d been on TV, we’d been basically in tons of papers. And, you people, would call you up and say that, “Wow, I saw you in the paper today,” or whatever. But when we got a write-up in Black Enterprise, it was like every single person that I’ve ever met called me up. Like my kindergarten teacher called me up and she was like, “Fred, I saw you in Black Enterprise, what a wonderful thing, you must be so successful.” And it’s kind of odd because when I started the Laundry Spa I really didn’t know what…I knew I was an African American entrepreneur and I didn’t know exactly how to deal with that.

So when we started the Laundry Spa, all of the kind of imagery that was there didn’t necessarily tell you that we were African American, but it didn’t hide it either. So it was all kind of…there was a lot of cartoons in there that were kind of of ambiguous race. And I did that on purpose because we also felt that if you put out that you’re an African American entrepreneur, there could be some blow-back to you. Maybe people wouldn’t feel as comfortable sending their clothes to an African American entrepreneur. And these are the kind of crazy things that go through your head. But when we got the response from Black Enterprise and I just saw how many people out there were just hungry to see an African American entrepreneur that’s successful, that kind of just changed my view.

And so when I started MediaTakeOut, whereas before had I never started the Laundry Spa and I’d never gotten that write-up in Black Enterprise, I probably would have done it just like every other blog out there, like TMZ or the like. But because I had this experience and it was just so big, it was… Even to this day, and I’ve gotten write-ups in The New York Times, I’ve gotten write-ups everywhere, there has never been a piece of media that I’ve ever gotten that got the response of that Black Enterprise piece.

Andrew: I’m getting shivers as you’re saying it. I think I’m looking at the post. It’s just one paragraph about you, the rest of the paragraphs are about other people, right?

Fred: Well, I’m not even sure if they even had a website at the time, that’s how far back.

Andrew: Okay. So maybe it’s not on there.

Fred: But it was in the actual magazine. Maybe it was a couple paragraphs, but there was a photo of us in there and it was a nice thing. It wasn’t…by far it wasn’t the best piece of piece that I’ve gotten. But, like I said, I saw that, that it was there, there was a hunger that was there.

Andrew: I see.

Fred: And so when I started MediaTakeOut, I was like, “Wow, there is this kind of hole in the market and there is this under-served…the African American community is being under-served. One, in the blog sphere. But there’s a lot of people out there that, if they ever saw that I could be successful, would be there to kind of help me along the way.

And so that was…because I knew those two things were there, it was pretty easy for me to kind of recognize that the opportunity for MediaTakeOut was doing urban or African American celebrity gossip.

Andrew: So, Fred, then our producer asked you in the pre-interview, “How long did it take you to get anyone to come to your site?” It took me months to get over 100 people a day to my site. You said, “We had 500 in the first month. It actually grew pretty fast, 50% to 75%, after that.” How did you get people to come to your site?

Fred: I’m not exactly sure. I think I literally sent an e-mail to every single person that I know and begged them to go to the site. And then at the time you actually…not only were you able to see, like, analytics, you were able to see the IP addresses. And I knew what the IP addresses were, so I’d know when people were on the site or not on the site. So I’d call them up and be like, “You weren’t on the site today.”

So I would just kind of badger people to go and tell them to tell their friends about it and go on and on. And then we ended up breaking a couple of stories that kind of started to catch wind a little bit. And then I think kind of the biggest jump that we got is Wendy Williams, who obviously is a giant TV talk show host here in the United States.

At the time she was a local radio host in New York and she was big on gossip. And she would read our stories on the air and tell everyone, “Oh,” you know… I’m not even sure why she did this, and even to this day, I’m good friends with her right now. [Inaudible 00:29:30] “Why would you, like, tell people?” She’d be like, not only would she tell the story, she’d say, “Go to MediaTakeOut and read it.” She didn’t know who I was, she didn’t know anything, and she just did it. Just out of, I think, she was excited that there was a site out here that was reporting this kind of stuff and she wanted to support it, just out of the goodness of her heart. And to this day, I mean, that’s why I love her so much. I mean, just there’s so few people that would do something like that. And she did it.

Andrew: And you’re now friends with her. The people who you used to admire, used to see from a distance, you’re friends with. What does it mean to be friends with Wendy Williams? I imagine you guys go to brunch a lot.

Fred: Yeah, I mean sometimes we do. But, you know, she lives in New Jersey and she’s a really busy person. But whenever we get together, we can talk openly about a lot of great things.

Andrew: Really?

Fred: And we can go back, too, and talk about, like, the journey that we’ve come up through, right? Like she was a local radio host, now she’s one of the biggest talk show hosts in the world. Right? And I was just a small blogger and now, you know, we’re the biggest urban blogger in the world. So, you know, it’s a journey that, I think… And the longer that you’re on the journey, the fewer people that there are kind of there that can share those stories with you. So I think that that kind of builds the relationship, too.

Andrew: Do you talk a lot when you have brunch with her?

Fred: Yeah, I do.

Andrew: You do? Okay. Is she soft-spoken in private? Because she’s not soft-spoken on the radio.

Fred: Yeah, she’s exactly what you see. I mean she is 100% absolutely the most relatable person that you could imagine. I mean you don’t have that kind of longevity by putting up some kind of a face, right? She is who she is, what you see on TV is who she is. She’s a caring, loving person, and I’m glad for her to be my friend.

Andrew: I see you guys still cover gossip about her, apparently her son was caught with synthetic marijuana. But she reveals this stuff, so there’s nothing that’s…

Fred: Yeah, I mean that was there.

Andrew: All right. So then you started to get your audience, Wendy Williams is helping you promote, exclusives are helping you get traffic, which is huge for any content site, and you have to figure out revenue. You had a hard time figuring out that ads were the right way. It wasn’t until your wife stepped in that you did it. Why? What was so difficult about advertising? Gothamist was doing it, all the others were doing it.

Fred: Yeah. You know, and it’s why I kind of got into the business. And this is probably something that, I think, a lot of entrepreneurs go through. Right? Like you know why you went into the business. You went into business because there is this sort of meteoric growth in advertising and that’s why you did it. But then you kind of get there and then there’s all this noise from all these different places. And at the time there was a couple of kind of blogs out there. Not blogs, but tech companies. There was a company called Delicious. I don’t know if you remember them.

Andrew: I do, a bookmarking site.

Fred: Yeah. And there were a couple of other sites like that, and Wikipedia. And they kind of had this idea that, “We are not going to advertise.” Like, “Advertising is bad.”

Andrew: Yes.

Fred: “We’re going to kind of keep away from it. And what we’re going to do is we’re just going to get really, really big, we’re going to have a really, really large audience without any advertising, and then we’re going to sell a company for a trillion dollars.” Right? And that was the idea that was there. And it’s silly to even think about it, but remember, you know, in 1999 the idea was just put out a business plan and have no business, and then sell your company for a billion dollars.

Andrew: This was after that craziness, but it was still at a period where if you took ad revenue you were somehow polluting your site. If you did a blog post for money, you were polluting the blogosphere. And there was this even sense that if you created software, it should be free. Why shouldn’t everything be free online, right? And so I didn’t realize that you felt that, and so as a result you said, “Maybe I should rethink this advertising approach.” Is that right?

Fred: Yeah. I mean, and remember, too, there is kind of like a scale, right? Like until you hit a certain number of users, like advertising doesn’t really make a lot of sense anyway, right? Like if you have 50 users and you’re going to get $2 in advertising that month or that day and you’re forgoing that $2, you’re not really forgoing much, right? So we were kind of at the point where the advertising dollars weren’t going to make a lot of money, weren’t making a ton of sense, so it was easier to kind of adopt those views. Luckily, because our growth just kind of kept going…sorry, kept going very fast… You know, and my wife was kind of like, “Hey, we got rent to pay here.” I changed my mind, and I changed my mind just at the right time and it all worked out.

Andrew: I see. You started placing ads. Was it Google Ads that you were doing first? Their AdSense product?

Fred: Yeah, it was AdSense, and then there were a couple of kind of AdSense type products that were out there that we were running, also.

Andrew: Right, I forget the networks that were doing it. Not Technorati, but there were a handful of other networks, right?

Fred: Yeah. I think Travelfusion and…

Andrew: Right. And then they all got swallowed up. And so do you remember how well you did? Because at the time there were bloggers, I think even Jason Calacanis, who has been here on Mixergy a couple of times. I think he even held the check saying, “Look at how much money I made from Google.” Were you doing good money from that?

Fred: I think I was doing okay. Now this is about six months into the business, so at six months into the business I was making enough to certainly cover all expenses and to, cover all living expenses, and to actually save. So I was making a good living off of it, it wasn’t a fantastic living. But, remember, the idea was that it was growing at, you know, 50% to 75%. And it was essentially growing a bottom line, too, right? Because it was, you know, if you grew your traffic 50%, you essentially grew your checks 50%, too.

Andrew: What about this forum that you had? How did that do for you? Do you still have a forum? I don’t see it on the site now.

Fred: No, no. We had a lot of things in there. So we had a forum and the idea was always kind of… And this was in the beginning. Remember, in the first year you’re kind of trying a lot of things. And I still was never really comfortable in the first, I think, year that it was a true content media company. Right? I was always thinking that there is some kind of way to kind of get some technology in here to work it so that it can kind of…I can kind of collate all the stories from users and it would get kicked to the front page and there would be an algorithm that kind of works it. That was always my thought process and that was also, like…

Andrew: Software, not content.

Fred: Right. And so the forum was kind of like the first start in this kind of to get a lot of the stories off, to get stories kind of bubbling and percolating in the forum, and then there was going to be a software algorithm that was going to pluck it from the forum and put it on the home page. But it never worked out, the forum never took off like I had thought it would. And the stories were always there, they kept on coming, and that was kind of the driver of traffic.

So, you know, I think it took about 9 months, 10 months, maybe even a year before I formally said, “This is not going to ever be a software company, this is going to be a traditional Internet media company.”

Andrew: Okay. It didn’t take too long to get to that point. Then you needed to start hiring writers. What was your process for hiring writers?

Fred: Yeah. So for us at the time the biggest problem was the majority of the writers that were out there were magazine and newspaper writers. And they kind of had, especially magazine writers, had to write, you know, two articles a week, or something like that. And so I had to try and, right, I had to convince them to write, you know, 15 articles a day, or whatever it was. And I just couldn’t find anyone, I could not find any traditional journalist that would do that. They were just like, “No, this is not journalism, this is not the way it’s done.”

And so I was just hiring people that were…sometimes they were people that were on the site a lot or sometimes they were people that I just knew really loved the content. And whether or not I hired them or whether or not they worked for MediaTakeOut, they were going to be reading this stuff, they were going to be talking about it, they were going to be doing it. And that was the kind of hire that I was looking for. It wasn’t so much where you went to school, how you wrote, it was more so kind of how, like, elbows deep were you willing to get into this content. And if you were and you had a reasonably good work ethic, I’d bring you in and we kind of tried people out.

And I think the first couple people, we go lucky with our first hire, who is actually still with us today.

Andrew: Wow.

Fred: But the first three or four people, you know, we got a couple of weirdos, as you could imagine.

Andrew: Because you’re not paying that much. This is the days when Gawker was paying $20 per post and trying to get people to post, I don’t know, what, 10 a day?

Fred: Yeah.

Andrew: And I don’t know if those numbers are right, but that’s essentially where we were. Right? And that’s what you were paying. And you’re nodding, is that true?

Fred: Well, no. So what we were doing is something a little bit different. I think Gawker and Nick’s approach was kind of bring in a bunch of people, and then have them just produce a whole bunch of content. And the idea would be that, you know, some good content would come out of it and some not so good content would come out of it and there would just be a lot of it there. We weren’t about kind of creating a ton of content, we were always really specific about collating it. We realized that people have this specific amount of time on the site, they’re looking at, you know, somewhere between, I think at the time it was something, like, between three and four posts a day. So if you produced 50 posts and the average person is looking at only 3 or 4 a day, you’re really just wasting your time. You’re better off just producing five really good ones and trying to move that from three or four to four to five.

And that was always the concept, it was always quality over quantity. And even today, you know, there are…you know, when we publish, a lot of times… You know, you see most sites, they publish 4, 5, 10, 15, 20 times a day. We still publish once or twice a day. And that’s kind of completely the opposite of the way a lot of people in the industry do it, but it still kind of comes back to this. If people are, on average, coming to your site once a day, then why are you publishing more than once a day, right?

Andrew: Well, the reason at the time was you don’t know what’s actually going to hit. Google was going to index all of your stuff, every new post was another potential, like, warrior going out into the battlefield to bring in, you know, to bring in the money, to bring in the eyeballs. And so you didn’t have that approach.

Fred: No. And I think that…I still think that that approach is wrong even today. And a lot of people take that approach, especially with social media. It’s that, you know, you could either sell…you’re either selling the home page or you’re selling some piece of commoditized content. And if you’re selling the commoditized content, then the value of your brand, the value of what it is that you’re offering really isn’t there. And a lot of times people out there, and they can get a ton of people on the site, but even the readers don’t even know what they’re going to, what the site is, why they’re going there. You think of a place like The New York Times, most of the time you go to The New York Times you don’t go there because, you know, you got a Facebook link, right? You go there because you’re like, “Hey, I want to read some news,” or… This isn’t one of the four or five…

Andrew: Because I want their sensibility.

Fred: Right.

Andrew: You know, other bloggers at the time also were basically, they weren’t breaking stories, they were just trying to take the stories that were out there and find a hook that would make it interesting to their people. You were trying to break stories a lot, how do you get writers to learn how to break stories when they don’t come from journalism?

Fred: And I think that’s…you know, it gets harder and easier in a way. At the time there was no social media, now it’s a lot easier, right? Like if you just kind of go on social media, go on Twitter accounts and Twitter feeds and just kind of look and see what’s going out there, you can get an idea of what’s going on without…

Andrew: Yeah, you guys have this post that’s big right now on your site about there was some Caribbean event, I can’t find it fast enough so I’ll just grab it, some Caribbean event going on in Toronto. There was a woman who was being mauled by a bunch of guys and on Twitter the big question was, “Was she raped or was she enjoying and being part of the event?” And you guys didn’t even host the video of it, you just told about the story, talked about the hashtag, and then there were links directly to the raw videos on Twitter. Which boy was that raw. And that’s the way that you’re talking about now news get broken, somebody finds it within the mess of social media.

Fred: Right. So nowadays it’s a completely different animal, right? Like all the stories are there if you know where to look for them, right? Because especially most millennials they’re out there, when they see something they’re either tweeting about it or they’re Facebooking, they’re putting it on Instagram or talking about it or whatever. So it’s all out there, you’re just now trying to collate it. At the time it was difficult. It was different, right? That you actually had to go out there and find what’s going on. But at the same time there really weren’t that many places out there that were doing what we were doing. And I’d say that, you know, when you look at the way… The blogosphere right now has gotten professionalized. At the time it really wasn’t.

So there were people out there that were running, like our competitors, that were fans. They’d be, like, a Beyoncé fan would be, like, running a competitor site. And so they would only do…only tell fantastic stories about Beyoncé, no matter what. And Beyoncé would call them up and be like, “Hey, thank you very much for writing these great stories about me.”

Andrew: I didn’t realize she would do that, that’s smart. Okay.

Andrew: And so this is the way it would kind of work, right? Like it would be fans and, you know, they’d invite them to, like, album listening parties and, like, invite you to dinner with them and let you sit down and talk. And that was enough for most people to just really just say, “Okay, well, if they’re going to do this for me, I’ll just stay out of this gossip world because that’s going to not ingratiate myself to them. And so I’m just going to…you know, that’s just the way I’m going to work.” But I was professional about it, I was like, “This is a business, this is how we’re going to do it. There are people out here that are looking for this, there’s a market for this, and this is what we’re doing. And so I don’t care what anyone else says, I don’t care whether we’re making friends or not. We’re out here trying to produce a product for the consumer and the consumer is the people that are reading MediaTakeOut.”

Andrew: So then how did you break stories?

Fred: So we would talk to people directly. So a lot of times, you know, and I’m sure a lot of people won’t believe this, but a lot of times you can break stories with the subject of the story.

Andrew: So you can’t call Beyoncé up, right?

Fred: No, I can’t call Beyoncé up, but I can call up a lot of people. And you can ask them. You know, you could ask them for stories, I could call up people and say, “Hey, you know, send me some photographs. I saw that you’re looking good, why don’t you send some photographs of your new hair or send some photographs of”…

Andrew: Got it. I see. So, for example, one of the posts on your site, I’m looking at it now, is, “Comedian Tracy Morgan shows off his new hairstyle. Dude is wearing a lace front like Blac Chyna.” Got it. And so that’s the kind of thing that he may not have a hard time sending you if you just messaged him privately back then. You’re saying you’d say, “Hey, anything interesting going on? New outfit, new look, any new place that you’re going to?” He’d say, “Yes,” he’d send it to you, you guys would promote it by finding some way to hype it up. He gets some benefit, you get some benefit, your audience gets a fun experience.

Fred: Right. And when you do this over the course of months and years, and so we’d have real ties to the managers. And then the manager, let’s say we deal with Tracy Morgan. Then Tracy Morgan’s manager no longer manages him, he now manages Dave Chappelle. So now we have a relationship with Dave Chappelle. And the manager understands how we work and how we do things.

So it just…over time a lot of these relationships begin to build. And, remember, you don’t have to break anything to crazy every day, right? Like you just have to try and produce interesting content that people would be interested in consuming.

Andrew: I’m a little late to the ad, I want to read it, but when I come back I’ve got to ask you how you keep track of your relationships with the celebrities, with their managers, especially when some people on your team might move on, some people on their team might move on. I read a book about Jay Leno and I saw that it would take them years sometimes to get a guest. There must be some system internally that you use, that they use, that allows you to do that, and I want to find out about it. And I know this is a geeky, like, “businessy” question to ask, but that’s what it’s about, when people do it right.

But first let me take a moment to tell people about ActiveCampaign. Do you know ActiveCampaign, by any chance, Fred?

Fred: I don’t.

Andrew: Dude, I’m going to open your mind to something new. You’re really good at web stuff. How good are you with e-mail? Do you guys collect e-mail addresses?

Fred: We do. We don’t know what to do with them.

Andrew: Brilliant, okay. So here’s the thing. What most people tell you to do is to use some standard e-mail system that just sends out messages saying, “Here are the top stories.” The problem with that is I may be into celebrity music, you may be into business news, someone else might be into something else, and you don’t want to ask, necessarily, “What news do you want?” You don’t have to. What ActiveCampaign will do is allow you to, like, see what are people clicking on most. So if I click over and over on celebrity news, you might actually start shifting me towards content that’s just celebrity news because you know that’s what gets me to click. But you don’t have to do that even, you can even see what am I doing on your site.

So if I’m a subscriber and I keep zeroing in on this type of celebrity news and you see that there are a bunch of people who are doing it, why not create content just for that and send out e-mail just to people who keep going into your celebrity news section? And content to people like you who might go into the business section, send them just the “businessy” stories. That’s what ActiveCampaign is about, they do this because marketers need tools like this to identify who’s a potential customer and send them a message maybe with an extra 10% discount, or find out who’s already a customer and send them a different message.

That’s marketing automation. Fred, whether you use them or not, I really urge you to take advantage of this because it’s so freaking powerful.

Fred: Yeah, I mean it’s definitely something I want to look into.

Andrew: And the reason, guys, that I’m promoting ActiveCampaign is, first of all, it’s working for you. I did a few test ads earlier in the year and people have been happy with it and ActiveCampaign is happy with how long subscribers stay. But beyond that it’s a simple-to-use piece of software that allows you to do everything that I’m describing and so much more, tagging, organizing, systemizing, following up, and so on, in an easy-to-use way so that you can do it and you won’t have to hire tons of professionals to do it. So that when you bring in other people to help you with your marketing automation, you don’t have to, you know, send them out for training for years and years. They actually can pick it up and run it for you.

So if you’re interested in this, they’re giving Mixergy people a couple of things that will make it easier for you to use it. Number one, they’re giving you two free one-on-ones with their consultants so that you can actually think through how to implement it and know that you’re implementing this right. Number two, second month free. Not much more to say about that. And, as a bonus, they’re also going to migrate you for free. So if you’re with a simple software that doesn’t do any of this, they’ll migrate you over.

If you want to try it out, right now you can try it for free, limited time, go to activecampaign.com/mixergy. Activecampaign.com/mixergy. And when you do, just scroll down about 75% of the way down that page and you’ll see on the right side they have this flow chart that will really help you understand how marketing automation works. One image will capture the whole thing. All right, activecampaign.com/mixergy.

So, Fred, what do you do to keep in touch with these people properly? Is it, like, a CRM, is it methodology? What am I missing here?

Fred: Well, I think for me for the most part is it’s usually one-on-one relationships. So with most of the celebrities I know I usually have a relationship directly with the celebrities, and then I might have a separate relationship with the manager and a separate relationship with the publicist.

And so most of the times that we actually get…I actually get content, it’s usually directly from the celebrity themselves. And the problem with that is, you know, it’s like layers upon layers of stuff, right? Like the publicist might say, “Hey, we might not give that photo to MediaTakeOut, we don’t know exactly what they’re going to do with it.” Right? And obviously if the publicist were to give them a photo and something bad was to happen, it could be his or her job, right? Whereas a celebrity kind of understands the nature of this, of what we do. Remember, we publish every single day. So if you’re mad at us today, you might be friends with us tomorrow, right? You’re never really mad at us for a very long time because we could always turn that relationship around pretty quickly.

And so, you know, over the years you just kind of meet people, and especially when you’ve been around a long time. Right? You know, most people don’t kind of hit the stage, you know, or hit the celebrity world as an A-list celebrity, right? Usually you work your way up. And when they’re kind of at that D level or they’re kind of new celebrities and they’re, you know, they’re fresh from…you know, they were MediaTakeOut readers. And they were, you know, they were out here trying to work on their craft and they’re trying to do everything that they want, they can to kind of get publicity. And a lot of times that’s where we build the relationships, and they just kind of sustain as they get bigger.

Andrew: You know what, that’s something that I’m missing at Mixergy. When I ask other people who have blogs that are text-centric how they get this big star, they say, “Well, we first feature them at a small event, and then we did this post when they launched, and then another one when they did that. And so they kind of feel like they owe us, and so we’re asking them and they do it.” But do you personally have, like, a CRM for keeping up with all these relationships? Do you have something that allows you to stay in touch? No? It’s just you?

Fred: No. It’s part of my job, right?

Andrew: And that’s why I’m surprised you don’t have software that manages it, that you just have to remember, “You know what, it’s been a while since I reached out to Tracy Morgan’s people, let’s go see what he’s up to.” That’s the way it works.

Fred: Yeah, basically. I mean, and a lot of times, too, it’s, like, sometimes it’s just something comes up. I mean we’re looking at photographs every day, we’re looking at hundreds and thousands of photographs every day, and sometimes you’ll see a photograph you’ll be like, “Oh, they have something coming out.” Also, you know, their movie premiers that you get invited to and you see them, so you kind of understand what the schedule of everything is. You’ll realize someone has a movie coming out or an album release coming out.

Andrew: Do you enjoy all this? Like you’re getting to meet celebrities, go to premiers. You do?

Fred: Well, that part of it I don’t really like anymore. I mean my wife loves it, right? Because she goes to, like, the MTV Music Awards and she’s like, “Wow, I’m here, look at all these great people.” But for me it’s a completely different environment, right? Like I go there and now it’s, you know, meeting with Usher’s manager, and then a meeting with, you know, this filmmaker. And it’s just over and over and over, it’s just business after business after business after business. It’s like the worst place for me to be.

Andrew: I see. So the star power of it is not great for you, you’re not drawn to it. On the other hand it’s a bunch of work meetings, like a conference, for you.

Fred: Yeah, it literally is like that. It’s like going to, like, the conference, and the worst conference possible. Because everyone is kind of coming at you at the same time and you can’t really say “no” to anyone. You never really can get any work done really because people are just…a lot of times they’re drunk or high.

Andrew: Your relationship with your wife now must be great then.

Fred: Yeah, yeah. Every once in a while we’ll go to, like, an event for her and I’ll just kind of, like, put up with it.

Andrew: Can I ask you something man to man?

Fred: Yeah.

Andrew: You’re now a celebrity in your own right, you get around these celebrities, do you feel like, “Dude, I could have had this, like, experience, I could have dated so many women”?

Fred: You know, it’s…not really, because you look at things differently when you see it. I’m like I see the sausage being made. So when I see a celebrity person, you know, some of the people that, I think, a lot of people think are the best or the most, you know, the most attractive people, some on the inside are not very attractive people.

Andrew: I’m not saying spend time with them on the inside, I’m saying… Do you remember that song by Shaggy, “Can I get a rain check? Just 21 and I’m not ready yet,” or whatever, “29 and I’m not ready.” Right? Like do you feel like, “Dude, look at all this. Give me just one year”?

Fred: Let me tell you, I’ll give you a perfect example. So I am completely straight-laced, I have my wife, my kids, and just kind of do right. I had a friend of mine who ran another business very similar to mine and he actually lived that life. So he was going out, he was dating all the celebrities, he was popping bottles every night, he was doing all of that stuff. And it really just ran him down physically, right? Like you can’t really live that life for the longevity. Right? Like maybe if you do it for, like, a week or two weeks or whatever, it will be fun. But if you try and do that for, like, a year a lot, it really runs you down. And eventually it could take your life, too.

So I look at things a little bit differently in that sense. And at the end of the day, too, it’s every time that someone is… So let’s say a celebrity wants to be a friend, right? That friendship usually causes a complication in your business that might eventually end up losing you money. So I have…I try and keep very few celebrity friends. There are a couple that I have that are friends and I can tell you that those relationships are never fruitful at all for the business. In fact, they’re bad for the business in a lot of ways.

Andrew: Because? Do you have an example of something bad that happened because of a celebrity relationship?

Fred: Yeah, they’ll call you up and they’ll say, “Hey, look”… You know, something will happen and the whole entire world will be reporting on it. And if you report on it, they’ll call you up and say, “Hey, listen, I thought we’re friends. How can you say this?” And my response is, “The whole world is saying it, TMZ is saying it. Like if we’re not saying it, we look like weirdos.” But to them they’re just like…

Andrew: Would you break a news story about a friend that was horrible, but the rest of the world had not known about it yet?

Fred: And, see, that’s come up a couple of times, too. And in those cases you don’t, right? Because this is personal friend.

Andrew: Oh, I see. And that’s where it hurts your business.

Fred: And that’s where you’re like, “Why am I doing this? Now I can only say fantastic, great things about you,” but that’s just not the way of the world, right? Or then even more they’ll say, “Why don’t you just write this great, fantastic thing about me,” and it just is boring, it wouldn’t normally make the cut. And now you’re adding content there that shouldn’t normally be there.

So either way, like the me injecting myself into that world is never a good business decision. I’ve seen a lot of people do it, it’s never worked out, in my opinion. And to the extent that I do have those relationships, from a business standpoint but not from a personal standpoint, it’s great, right? These are my friends. But from a business standpoint it’s not a good idea.

Andrew: I get it. It’s so freaking compelling. I cannot keep it up on my… Even if I don’t know who the person is or don’t like them or don’t care about them, I know if I click the link you guys aren’t going to hold back, the shock value will be there. It’s not here’s a crazy headline, and when you click over there’s a story about it. You’ll show the freaking picture. Like you’ll continue with the freaking story.

Fred: We go all the way.

Andrew: I’m going to go one tab over to the left from your site to this Inc. article that was written about you in, let me see when. December 3rd, 2009. The headline says “Building a Hugely Profitable Blog.” I did a search for the dollar symbol and I came up with two references to money. $19.99 for a Yahoo! account is what it cost you to start out, and $7.99 for a domain name. I don’t see where this high profit ability is. Inc. wrote an article about you saying you’re really profitable, they didn’t ask you the one question that would help them understand, like, how true that headline is? How much money are we talking about?

Fred: Well, I think, you know, a lot of people, especially when you’re privately held companies, you don’t really talk about that because there’s no… I mean if you have investors and the like, it’s fine to talk about it. But for me there’s no real benefit to me to talk about, you know, how profitable you are. I can say that we’ve done very well, we’ve continued to grow.

Andrew: Can you give me a sense of revenue? Are we talking about $5 million in revenue, $10 million, more?

Fred: Like I said, this is…

Andrew: You can’t even do that?

Fred: I can’t. I can’t.

Andrew: Did you finally become a millionaire? Never mind on paper, a real millionaire in the bank?

Fred: Yeah, things have been good, yeah.

Andrew: I see. You said “yes,” and then you said, “Things have been good.” Can I take the “yes” as a “yes”?

Fred: Yes, let’s take it as a yes.

Andrew: That’s phenomenal, all right. Okay, so then you decide, “You know what, this is going well,” it sounds like the business is kind of running itself at this point, right? It still depends on your relationships, but you don’t have to hit the “publish” button on every post the way you did in the beginning. And you start this thing. What is Crowdshot?

Fred: Right, so Crowdshot kind of came about in an interesting way. So we’ve been kind of doing MediaTakeOut for about 10 years and the idea was, “Hey, let me go out there and start investing in other companies,” that I thought had technology that was interesting and we could use…kind of leverage the audience that we have and the relationship we have with celebrities to kind of get the technology to consumers. So that was the idea behind it. And I ran into some technology that I thought was incredibly compelling. And after a little while kind of we were talking to the people that were creating it, eventually I decided to partner up with them and start another company, and that’s Crowdshot.

Andrew: What’s the URL on that one? I’ve been trying to google it and I get nothing.

Fred: It’s www.crowdshot.com, I think you just see a “coming soon” page or something like that. I’m not even sure.

Andrew: Maybe that’s why. Maybe that’s why Google is not showing it up high. Okay. And you’re not on AngelList, are you?

Fred: No.

Andrew: Okay. Yeah, I see Crowdshot. So it is coming soon. So this is an investment that you made? How active are you in it day to day?

Fred: No. I mean it was an investment, but I eventually ended up bringing on the entire team that was working on it. We have a small team now that’s been working for about two years on this video editing technology. It uses artificial intelligence and machine learning so that you can edit multiple videos.

Andrew: Who is it aimed at? Is it aimed at someone like me if I have multiple videos? Is it aimed at someone who’s doing television work?

Fred: Yeah. So, I mean, that was kind of the idea, that’s kind of where we were, right? Like the technology was there and the idea was, “Who is it that’s going to use it?,” right? Initially we thought about using it for concert video footage, and that’s what the initial idea behind it was. We have all these people that are at a concert, you can all hold up your phones, shoot that Taylor Swift concert, and then everybody kind of uploads it together.

Andrew: That’s why the “crowd” in Crowdshot exists.

Fred: Right.

Andrew: Okay. And then what happened to change it?

Fred: Well, you run into a lot of licensing issues and also intellectual property issues that just are going to cause an entirely big headache for the company. So we decided to kind of scrap that idea, to leave it concert footage, and instead focus on, and this kind of goes back to what I was saying before, is, you know, where I am as a person, right? When I started the Laundry Spa, I was a guy who was, you know, sending all my clothes to the laundry. When I started MediaTakeOut, I was the guy sitting at home without a job playing on the Internet all day. Now I’m a father of three and when I look at the videos on my phone, most of them happen to be with my kids and doing kids kind of stuff. And so that’s the way, that’s who we’re focusing it on right now. We’re looking at parents, students, schools to create a safe place and a safe micro-community for them to kind of upload their videos to share them and have them edited in a safe, engaging, and fun place.

Andrew: I see. So I would take videos of my kid. Which usually I try to keep it short, in this case I don’t have to. I take a bunch of them, you take out the most interesting things and you put it together in one click that then I share with my family.

Fred: That’s one way of using it, but the other way is so let’s say that you are at your kid’s softball game. And you’re there and you’re there photo’ing and you’re videoing it and you’re having a great time, and there are also seven other fathers that are there that are shooting it from different angles, maybe they’re shooting their kid, maybe they’re shooting a wide angle or a tight angle. Wouldn’t it be great if, instead of you having just that single video that you had of yours, you actually had a compilation video that shows all the best shots of everyone there?

Andrew: I see.

Fred: So instead of having kind of the kind of one-angle video that you have that goes in and out of focus and is kind of bumping up and down you have a single video that uses all of the best pieces of all of the different videos.

Andrew: I was kind of hoping you were going to say, “Hey, Andrew, think about this. Editing this interview is going to be a pain. We’re going to give you one way to edit.” It makes sense, right? I want my video when I’m talking, your video when you’re talking, but I don’t want to have to be distracted by software to do that. But that’s kind of a basic use case, isn’t it?

Fred: Yeah. I mean that can clearly happen, right? There’s a number of things that it does, and one is facial recognition, right? So if we were talking back and forth and doing this and we ran it through the software, it would absolutely cut back and forth to us. But let’s say we do…we take it a step further, let’s say that you had two cameras on you there, right? Like you had one camera kind of shooting you and the other camera that had you kind of on the profile. And you wanted to kind of turn and change views, that would work, too. So you can. And with me on it it would still work, right?

So you can have two cameras on your end, one camera on our end, and eventually what you’re ending up with is, and it’s something that, I think, a lot of people don’t realize, necessarily, because we’re just in the kind of YouTube era, we’re so used to seeing kind of a single video with a single person kind of looking forward, and a single shot. But when you see multiple angles, you see it’s a lot more natural and it’s just the way that we actually see it. It’s the way that the news shoots, it’s the way that most talk shows are shot. And so when you see what it looks like, you start to understand the value in it.

Andrew: All right. If you don’t mind, let me close out with this. And I say “if you don’t mind” because we already went over and you did me a solid by starting a little later because I had an issue here. We asked you in the pre-interview if you could teach anything to other entrepreneurs, what would it be. You said, “Understand the customer.” I’m wondering how you do it. How can you understand your audience so well that you can just keep churning out content that they care about? What’s the process? How would you teach me how to do that? How would you teach our audience how to do that?

Fred: So I’d say you really have to start thinking like the customer and spend as much time as you can really trying to be the customer, trying to understand it, listen to what people are saying. I think on the Internet it’s a lot easier, right? Like you can read the comments, you can sit down and everyone that you talk to, ask the, what they like about the site, what they don’t like about the site. And try to understand, I think, more so than the obvious ways, right? Like you can send out a questionnaire or you can send out some material to try and kind of gauge what they like and what they don’t like, but sometimes there’s things that are not said that you kind of have to put two and two together to see, right?

So, for example, you might have a person might like baseball and they like football, and then they’ll tell you, you know, “But I don’t like soccer.” Right? And if you ask them that, they’ll say that. But in large part if this is a person that’s a real big sports fan and they’re really invested in baseball and they’re really invested in football, maybe they don’t have the time or the effort or energy or whatever to invest the same time to soccer. But they’re really is no reason why if they really are into sports, this is a sport, this is a sport that it’s not something new, it’s something that the entire world loves, that there might be people that say that they don’t like soccer. But, by based on other things that they’re doing, they really might like it.

And so the idea is to try and get as much…to try and get in as deep as possible with the consumer. And so many times you hear entrepreneurs, and especially when they’re starting businesses or even when they’ve been in business for a while, when you talk to them and they’ll talk about all the numbers, they’ll talk about budgeting, they’ll talk about technology, they’ll talk about all this stuff, but they don’t really talk about the customers. And, you know, when I was investing in companies, that was the thing. It wasn’t really hard to find a company with really compelling, great technology. There are tons of companies out there that are like that. That if you want to invest, you can go out there and do it. And most of them, their biggest problem is getting customers.

Andrew: So how do you guys do that at Crowdshot? How do you understand what your customers are…what they need?

Fred: I think part of it is me being one of the customers is kind of there, right? And on the other hand is, like, we don’t know exactly how people are going to use the software. Right? So, for example, I think people are going to say, “Hey, let’s go take it to a kids baseball game and go do it.” But how do I know that they’re actually going to do that? We’ve taken a bunch of steps to mitigate that.

So, for example, instead of just kind of throwing it out there and putting up the website and talking about how great it is and going on podcasts like this, which I’m going to continue to do, we’ve actually gone directly to schools. So we’re looking to make partnerships directly with schools. We’re going to be partnering with about 20 schools here in The Bronx in New York and we’re going to talk directly with the schools, we’re going to have a person, a member of Crowdshot, talking directly with the schools and the students and try and walk their hands into using this technology and figuring out how…what the best use case is for it. And that’s kind of like our test kind of a…

Andrew: I see. Go right in there.

Fred: Right. And the idea is, you know, if we can get it to work in those 20 schools, then we can go to 40 schools and 50 schools and whatever there is. There are 2,500 schools in New York, there is 25,000 schools on the East Coast, there’s 225,000 schools, I believe, in the United States.

So that’s the kind of…the way that you do it. And when you’re kind of thinking like that and you don’t kind of walk in there. I mean I could tell you that this is exactly what the customers want, but I don’t know, right? And so the idea is to kind of put this in their hands to show it, to give them the access to this technology and to watch and to see what comes out of it. And what comes out of it, just like with MediaTakeOut or the like, how I was able to see that the gossip was kind of the part that was percolating, I’m certain that we’re going to see a part of this that’s going to be percolating and we’re going to be able to put all of our efforts into that, too.

Andrew: All right. The website is, and I don’t know if I should even tell people to go check it out, it’s mediatakeout.com. You guys are like Breitbart in that everything is a red headline. What is it with red headlines? Just test better?

Fred: Yeah. I mean we’ve been doing red and black and the red ones just tested better. And so we just kind of kept them.

Andrew: I’m surprised, even though the whole page is red headlines.

Fred: I know, I know.

Andrew: My eyes can’t focus on it. Can you read…when you go to Breitbart, forget about the content, everything is not just red, it’s all uppercase. Can your eyes actually pick up on all the headlines?

Fred: I think you’re right. You know, sometimes you don’t even realize it. And this is, like I said, this comes down to, like, understanding the customer, right? Like I don’t know why, I don’t know why red does better than black. I can’t see…intrinsically there’s no reason why it should do better than black, but it does. And so that’s just how we make the decision.

Andrew: All right.

Fred: [Inaudible 01:07:26]

Andrew: [Inaudible 01:07:26] WordPress, there’s so much else I can cover. But anyone who wants to go check it out can go check it out at mediatakeout.com. And coming soon, maybe by the time this interview is up, crowdshot.com. Or maybe it will just show up at your school, your kids will introduce you to it. And I appreciate you coming here to do this interview, Fred. I’m also grateful to the two sponsors who made this happen. The first will help Fred, or anyone else, send out customized e-mail to your audience. It’s called ActiveCampaign, check them out at activecampaign.com/mixergy. And the second will help you hire your next phenomenal developer, it’s called Toptal. Check them out at toptal.com/mixergy.

Cool. Thanks, Fred.

Fred: I had a great time, thanks a lot.

Andrew: You too. Bye, everyone.


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