Andrew: Hey, everyone. It’s Andrew Warner, the very brown Andrew Warner. I say that because I always have to make sure the camera picks up on my dark skin tone. You’re about to meet a founder who says that he puts his life ahead of his company. In fact, he told our team that he never works more than 35 hours a week and still, his company continues to grow. It continues to grow even when he works on new projects, like the one that he’s got right now.
His name is Drew Little. That’s Drew as in Andrew, Drew Little. He is the founder of Red Giant. They develop special effects tools and I’m going to ask him to tell you what that is. His new project is called KnewHealth, like you always knew it was a good idea, KnewHealth. It’s an online healthcare company. I invited him here to talk about how he did it. He’s a little bit skeptical that this even matters, to talk about how a company is built.
This whole thing is sponsored by two companies that definitely do matter, largely because they pay for all these interviews to keep going, but also because they’re great freaking tools. The first is ActiveCampaign, which will help you send out smarter email marketing. The second is called Toptal. They will help you hire your next great developer, but I’ll tell you more about those later. Drew, good to have you here.
Drew: Hey. Thanks for having me, Andrew.
Andrew: Drew, my first question to you was going to be about your revenue, I was going to tee up this great question for you to talk about how mind-blowingly big this little company that you bootstrapped got, but I’m intrigued by what you said before we started. You said, “I’m a little sure whether all this startupy business man stuff even matters.” Why do you feel that way? I’ve been thinking about that stuff too?
Drew: So, I find business extremely fun and interesting, almost entertaining. It’s kind of a challenge. It’s a little bit of a puzzle. But at the end of the day, I just view human beings getting together to try to accomplish something. I think we’ll get into that a little bit deeper. But sometimes when we get into some sort of cliché business phrase and synergy or whatever it is, I think it just makes me laugh a little because we think we’re sitting down and we’re working so hard at creating the next algorithm or the next widget or something. It’s so important. And it’s just not.
It’s kind of what we’re doing together that I found more important. So, you asked me, “How can we help Red Giant during this podcast?” And I was like, “Red Giant is fine.” I just want to explore some other things. That’s why I kind of reacted that way.
Andrew: I think I had a different expectation of what you meant by that. I’ve been listening to a lot of music from the 60s and 70s lately and I’m wondering if they were all fools. These were people who were supposed to change the world. You think about Crosby, Stills & Nash, they were singing against the Vietnam War. You think about all these artists of the day who had this vision of how the world was going to be and for a while there it seemed like the earth and history was bending towards their more liberal point of view, towards their sensibilities.
Then I now look back on their documentaries and wonder, “Did these people even matter?” While they were protesting, Steve Forbes was in school in a Young Republicans-type organization getting stuff done and Steve Jobs was creating software. And all their little outfit changes and all their little CDs or records at the time that people fought so hard to get and they thought were so meaningful didn’t really change the world today. If you look at the world today, it’s not ruled by their sensibility.
I wonder are we kind of kidding ourselves too? Are we setting ourselves up to admire certain people, like Drew Houston, the founder of Dropbox, the founder of Foursquare? In like ten years, people are going to think these companies didn’t even matter. They were just making their money, enjoying their lives and everyone else was becoming a super fan of them and should have just gotten a life instead of admiring them so much. What are your thoughts on that?
Drew: It’s so good. So, I’ve been challenging friends of mine recently and most people don’t even like this subject, but I like it—so, I think that the net result of almost all technology to this day is negative or at best neutral. There’s some technologies that help and there’s some technologies that hurt us.
So Facebook is a great easy example. So, Facebook comes out and really helps you connect with people around the world. It helps you stay connected to others. I think that’s important. I think that’s a true relationship builder, but yet, it takes so much time away from friends and family. So, on its own, Facebook is probably somewhere around neutral. I would say it’s probably negative.
So, you take something like Dropbox. I think that technology is actually—well, Dropbox specifically, what is it doing? It’s helping us manage files on a computer. So, it’s like we were giving technology—so, Dropbox is a technology to help with this other technology. So, in itself, it’s not necessarily a benefit because it’s just trying to fix something. So I just view everything in terms of priority, time, relationships, love, these things. So, if you ask me any of these questions, I’ll always go back to that.
Andrew: And so you don’t—I imagine you’re not someone who goes home and looks at his phone a lot, you spend a lot of time with a family. Is that true? You’re smiling. You get addicted to like us, but it’s a negative for you. Is that what it is?
Drew: So, I tried to use the phone like I try to use my computer as an object to serve me to make money or to stay connected with my friends. The phone itself, when I go home, all of our electronics go into a closet—I’d show this picture. It’s amazing how I have it set up in there. The door is closed. When people text me, they often text, “Hey, Drew’s closet. When you pick this up in the morning. . .” Seriously, it’s hilarious, but little things like that. My wife and I actually no longer take our phones into restaurants, just as an example.
Andrew: Just leave it in the car?
Drew: Just leave it in the car. You’re sitting in the restaurant and every single time something comes up like, “Oh, I should Google that.”
Andrew: But Drew, what do you do when she goes to the restroom?
Drew: What do I do?
Andrew: Yeah. That’s when I pull out my phone.
Drew: I talk to my kids.
Andrew: What about when it’s the two of you on date night, you’re sitting by yourself at the table? Let’s round it up to five minutes. Five minutes of you just sitting there, what do you do?
Drew: Five minutes in the bathroom?
Andrew: I’m going to round it up, walking to the bathroom, maybe my wife will have a conversation with the waitress on the way back. I don’t know what it is. Let’s say three minutes. What do you do for the three minutes?
Drew: I’ll tell you, I’ll sit there or I’ll talk to someone next to me. I’m very social, but this is just a matter of discipline. So, I think guys like you and I—I know you’ve had financial success, I know people listening to this have had financial success—we’re so goal-oriented and we’re so disciplined in so many ways.
You sit there and listen to Tim Ferriss’ podcast and what does he say, “Okay, when you get up in the morning, what’s your routine?” And every successful person has one, for example, right? It’s just discipline. Why can we not be disciplined with our phones? Just create a rule. I’m just saying create some rules and create some boundaries, same in our relationships. Why can we not be disciplined there? It’s kind of silly. I think it’s silly.
Andrew: I think you’re right that it’s a challenge. It feels silly to me, but it is a big challenge. When my wife goes to the restroom, the three minutes that I spend there, I will pull out my phone. I don’t get anything of value out of that. It’s not like I’m getting work done in the three minutes. It’s that I can’t sit still sometimes. I get that.
I’ve got to get to these questions. I’m curious. You said you do have a routine. Everyone has a morning routine. It seems like you’ve got a good one.
Drew: Yeah. Forever I’ve gotten up—mornings are my favorite. I get up at, say, 6:30 naturally. It’s actually like 6:23, so strange. I make coffee. Actually, for the last three or four months, I’ve been doing these stretching routines because I have pretty significant back stress and I play competitive sports, so it’s annoying. So, I stretch and then I’ve read the Wall Street Journal for 20 years.
Andrew: I’m disappointed by it. I used to read it. It’s kind of a waste now. They’re trying to be The New York Times. They’re not giving me deep insight into business. They’re telling me what Donald Trump is up to today.
Drew: I know.
Andrew: I want them to deeply analyze a company. How about when that guy Martin Shkreli gets convicted, they have one paragraph describing what he did and in that paragraph, there’s no explanation. It’s just he committed some securities fraud. I’m here for the Wall Street Journal. Don’t give me the backstory about how he’s the bad boy of business. Spend three paragraphs describing what he did. Don’t make me go to Wikipedia.
Drew: I’m with you. But the thing is, I listened to this guy on a podcast the other day and he was talking about what he did in the morning, super smart guy, I can’t remember who he was, really smart guy. He read their local crappy paper. He’s like, “It’s a crappy paper and has nothing in it,” so it has something to do with that routine.
The thing is if you study like flow state, flow state comes right after maybe meditation, which is also just a sense of focus. So, I know for me, reading the paper, drinking my coffee, which I’ve actually learned to drink slower and enjoy. Someone told me, “Just drink it slower and actually take a moment to enjoy it.” It’s so weird. But I enjoy it so much more and then I read the paper. I have read it for so long that I know the sections, the way I read it, exactly the way I read it. So, I think it actually creates focus and then I get into this state of stimulated flow. Man, that first two or three hours in the morning working or doing something important, jam.
Andrew: What do you work on first? What did you work on today? I guess today you’re at your parents’ house. So, maybe you weren’t working. What do you work on first thing?
Drew: I definitely go to email first. That’s one of those tricky ones. I go to email first and go through and check things. I’m a big believer in the book “Getting Things Done,” David Allen.
Drew: If you’re going to ask me what book I give away, it’s that one.
Andrew: Tim Ferriss always asks that.
Drew: So, if I ever feel discombobulated or I’m not sure where to go, I have such a strict to-do system that I’ll just go review that and it just brings my—
Andrew: And you don’t feel like you’re being managed by your to-do system. Sometimes you want to be creative. I can never stick with those to do systems.
Drew: Yeah, interesting.
Andrew: I just can’t have a system or a person tell me what to do. It’s like being back in school. I want to do what I’m excited about.
Drew: Yeah. I think it can work within there. I think it’s a fair point. I think if you look at life, like how are you at peace and how do you feel satisfied? People always use the word happiness, I hate it. It has to be satisfied because happiness is an emotion and satisfied is something you can achieve.
So, I can’t feel satisfied unless I’m really getting things don’t also. So having the to-do list and the function of checking things off, I am so disciplined to putting things on there. I flow through my life and I only really go back there when I feel I need it and when I feel like I’m a little lost. So, I will give you my little speech, not now because it’s kind of boring, but I’ll give you my little to do list speech if you want it. I’ve given it so many times.
Andrew: Well, let me ask you this question. Let’s get to the numbers and then I’m going to ask you about the speech and then we’ll talk about how you built this company.
Andrew: Revenue for Red Giant, since I said I was going to get to that.
Drew: We’ll do $20 million this year.
Andrew: What did you do 2016?
Drew: 2016 was—is this ’17? Last year, we did about $1 million less, just under $19 million.
Andrew: Wow. Okay. It’s a bootstrap company, did I get that right?
Drew: 100% bootstrap. We’ve actually acquired a bunch of companies along the way and total bank debt.
Andrew: You don’t give them equity in your business?
Drew: I never have given equity.
Andrew: Okay. So, there’s a reason why I wanted to know that. I wanted to set up for the audience this isn’t just a guy with a theory who’s trying to make it. You built something really solid here and you did it with no outside funding, which is challenging and we’ll talk about why. What is this speech about getting things done. There’s your dad behind you.
Drew: Hey, dad.
Andrew: Hey. Tell me the speech about to do lists. I feel like I can use it and then I also want to ask you about the horrible thing that happened to you in the dotcom world before Red Giant. What’s the to-do thing?
Drew: I can summarize this really fast. First off, if you don’t use some form of to do list, you’re an idiot. You really are. I think it’s impossible to navigate through life. I have family, kids—you know what I mean? I’m not obsessive about it, but the key to a to-do list—if you read the book, it will say the same thing—is you’ve got to use one. So, people often use a whiteboard and they use post-it notes and they use their phone and they also remember it in their head and write it on a notebook somewhere.
First off, use one thing, everything on one thing. I recommend a phone because it’s ubiquitous. The to-do list also shows up in your computer. If you don’t use one thing, the problem is your mind doesn’t trust it. So, if you use three things, you actually distrust it. Now when you’re lying in bed, your to-do list is spinning in your head because you don’t trust where it is.
Drew: Just use one. I use it on the car because I can basically bring up Siri and I can put something on my to-do list while driving.
Andrew: I do that too. I would just even say, “Hey, Siri, in one hour remind me to pick up whatever I need to do.” It’s actually doing it right now.
Drew: So, there’s a few other ways to do it. The thing about the to-do list, no priorities. You review it frequently. There’s no one, two, three because priorities change. I put everything on a list called today and then everything on just a general list. So, everything goes on the general list and then I move things that I want to do on to today. If they stay on there too long, I move them off.
Andrew: I’ve done that too. I find that big long one is too hard for me to pay attention to. I’ve got this one list on the phone.
Drew: Knock it off to the side.
Andrew: It’s called Rock Today. It’s like what is going to make me feel like I’ve just really rocked today. That’s all that goes on there and I try to get that done. All right. Let’s go into how you started this business. Part of this, “I refuse to work all day and all night” thing goes back to what happened to you with the failed dotcom, Toolfarm. What was Toolfarm?
Drew: Yeah. So, I was living in San Francisco in the 90s. I moved out there, high-paying sales job, tech sales job. Really, everybody was starting dotcoms. It was a crazy, fun atmosphere. So, my buddies and I started a dotcom. We raised $50,000 and started a dotcom called Toolfarm, just worked 80 hours a week and ran it for three and a half years. The thing ended up crumbling disastrously just make most dotcoms.
We ended up with $800,000 in debt. I got sued personally twice, knock on the door, “Are you Andrew Little?” “Yes,” “You’re served.” All that happened and I paid myself $50,000 a year. So, I didn’t pay myself anything. I was unhealthy, overweight and that whole thing. Then I had $800,000 in debt, which I took really seriously, I wanted to pay the investors back, which by the way, all investors paid back now.
Andrew: Investors don’t need to get paid back. They get equity. If the thing doesn’t work out, they lose their equity.
Drew: It’s just a principle thing.
Andrew: I see. So, even though you didn’t have to, you said, “I want to make sure that they’re paid back.” They were not professional investors then, they were friends?
Drew: They were accredited, but there were a few we didn’t know, but it was people we knew.
Andrew: I’m looking at early versions of the site. You sold After Effects, Ampe Studio, Cinema 4DX. What is this business?
Drew: Actually, if any of my customers are listening, they’ll probably be laughing at you right now.
Andrew: Why, because I’m not pronouncing this right?
Drew: A few. I’m just kind of joking.
Andrew: It’s not Ampe Studio?
Drew: I actually don’t even remember what that is. But I’ll tell you what it is because it is kind of fun. I got into—I’m not like a natural entrepreneur. I didn’t have the paper route. I just kind of happened into this. I’m willing to jump off and do something, which I did with the Toolfarm. That was just—it really was a fun experience, but I was sitting there one night and all 18 employees were gone. No kidding. I was sitting there running the company by myself in the evening. I couldn’t remember where everybody went. One person went and got another job. Another person got another job. There I am.
It’s digital media products. It’s special effects tools. So, whether or not you want to take a video and you want to add a filter to it so it looks like a cool effect or whether you want to add a digital light like a sunset or you want to put a light behind an ESPN logo like a digital light flashing, we do all those. That world is ours.
Andrew: So, you took on some investors. You went for it. It seems so similar to what you’re doing now. Why didn’t that work?
Drew: Lots of reasons. It starts with I think the way I was running the business. Because I was naïve, I was running a business the way I thought a business should be run, just trying to follow all the rules. I was working so hard and I had money and it was all about growth and all the eyeballs. I wasn’t paying attention to the finances. It’s the same old story. But here’s where it shifted.
So, literally two weeks after I got out of Toolfarm and got other people to run it—save it, I should say, because they’re doing amazing—I started Red Giant. [Inaudible 00:18:26] space, but it’s a product company where Toolfarm was a distributor. So, I wanted to own my own products.
Andrew: I see. Toolfarm, you were taking other people’s software that I as a consumer might be able to buy on other sites and you were selling that. Here, you had exclusive software. You owned it completely. The margins were much bigger and your customers didn’t have a bunch of other places to go to, so the competition for it was lower.
Drew: Exactly. So, I kick off Red Giant. I was burned out at Toolfarm. Here’s the crazy thing. I could barely get up and go to work. Two weeks later I start Red Giant, I am jumping out of bed. I can’t wait to work again.
Drew: Because I was excited about what I was doing. I was doing my own thing. I was building it. It was starting to work.
Andrew: Clean slate, there was no more—what about the debt from the other company. Wasn’t that still weighing on you?
Drew: Corporate debt.
Andrew: It was all corporate debt at that point?
Drew: Yeah. It was weighing on me, but I found good people to run it and I knew it had a chance.
Andrew: Okay. So worst case, the company goes out of business, you’re not dead. You’re not using your house or your livelihood. Got it.
Drew: The personal lawsuits we settled.
Andrew: I see.
Drew: You settled by doing something called you just say no contest, which is what they want. You just say no contest, which means they sue, then yes, you owe them the money. Once it starts going bad, creditors want to get first in line. It’s almost a date on the lawsuit. Who’s got the earliest date once money starts being paid out. Who’s got the earliest date once money starts being paid out.
Andrew: Got it. I get that. I was actually one of the early dates and that was important to me when someone went bankrupt. Let me talk about my sponsor and then I want to come back and ask you where the idea came from for Red Giant and what’s the first step you took.
But first, the sponsor is a company called ActiveCampaign. I’m about to take a risk here because I want to ask you—you said you tried ActiveCampaign and it didn’t work for you. Usually, I wouldn’t bring this up without knowing why because who knows where you’re going with this, but tell me about your experience with ActiveCampaign since you’re considering it. I want to give people a good view of it.
Drew: Sure. I’m probably not the right person to ask. Everybody says, “Use ActiveCampaign,” and I was building email lists on one of my new software companies. So, I just jumped in and frankly, I didn’t spend enough time on it. I can tell it’s laid out awesome.
Andrew: What drew you to it? Do you remember?
Drew: Just the recommendations, all my tech buddies saying, “Just use ActiveCampaign.”
Andrew: Yeah. So, I thought you were going to say years ago and then you outgrew it. Years ago, what they allowed you to do was build a mailing list and then send an email to that list. What they realized was the smart marketers weren’t just building a list and sending the same thing to everyone. They were starting to customize their messages based on what people had done or said or clicked on.
So, ActiveCampaign said, “Let’s rebuild ActiveCampaign and make it into a smart email automation,” which means that if you buy, the person who’s using ActiveCampaign can send you different messages and not send you a message like, “Hey, get 10% off the purchase price,” because that’s kind of awkward and you don’t want to send that to someone who just bought.
If someone is clicking on one part of your product’s feature set on your website, you want to know it, you want to tag them so you can send them follow up messages emphasizing why buying to get that feature is so impressive and so important. That’s what ActiveCampaign does. They actually try to make it so simple that anyone in your organization can use it. But I can understand we’re all entrepreneurs. We’re very busy. We don’t want to get too wrapped up in any one piece of software. We want to focus on the thing we’re selling and not get distracted.
So, if you’re listening to me and you like this marketing automation and you’re kind of curious about it the way that Drew was and you say, “I might be like Drew. I might not have the patience, the attention span, the capacity right now to go through and understand that on my own.” They’re actually offering Mixergy listeners something that will help with that problem. That is two free one on ones with their professionals to help you strategize and understand how you can use ActiveCampaign in your business.
So, the reason I emphasize two is I understand you get one consultation, you have to go off and figure it on your own and then when you get stuck, you feel like you’re stuck and you’ve got to deal with it yourself. The second consultation will allow you to clear up whatever you were supposed to get done with the first one. They will make it really easy for you to use all the tools that you need to in ActiveCampaign. Imagine sending one email and then maybe the middle of the email is different based on what people have clicked on or two different emails based on who’s opening it up.
So, they’re going to give you those two free consultations. They’re going to do a second month free and they’re also going to migrate you for free from whatever other software you’re using when you’re ready to upgrade to ActiveCampaign. As Drew said, a lot of entrepreneurs are recommending it. You owe it to yourself to just go and check it out.
There’s one other thing you’re going to get on this page I’m giving you and that is a free trial. So, my suggestion to you is just go sign up. Grab a drink. Maybe it’s a coffee that you sip slowly, maybe it’s a whiskey, maybe it’s wine, maybe it’s wear—I have a lot of Mormon listeners—whatever it is, I don’t care. Spend an hour looking through it, getting a sense of what your business can do with smart marketing automation.
It’s really easy and accessible and I want to make it as easy as possible, so I’m going to give you this special URL where all that mentioned and more is going to be available to you. Go to ActiveCampaign.com/Mixergy and when you scroll down about 75% of the page, you’re going to see a flow chart that will explain to you in one visual how you should be running your email marketing, just that one thing on the right side of the screen. Go to ActiveCampaign.com/Mixergy to see it.
Drew, thanks for not ragging on my sponsor. I wonder how I would have handled it if you had.
Drew: What’s that?
Andrew: I wonder if you would have said, “Andrew, they’re the worst. Here’s what happened.” I wonder how it would have handled it. What I’m pushing myself to do is just roll with it. What’s the worst thing that can happen? I’d lose them as a sponsor? If they’re not good, I should lose them.
Drew: I think people are hesitant to be authentic. It’s one of the things I think about all the time. So, when my wife and I think about relationships, we think about genuine and authentic. It is kind of hard to find. So, the only way to really be genuine and authentic is take risks and have disclosure. Disclose, just talk. It’s all okay.
By the way, if somebody says that ActiveCampaign sucks to you, you should consider not having them be a sponsor. So, in sales, I learned always after you make a sale, you call that person and ask, “Why did you buy?” and have the courage to do that because if you do that, then you just use that story on the next person. Why’d you buy?
Andrew: Hey, Siri. Hang on. I’ve got to do that. At 4:30 today, remind me that we need to have one question every customer that comes into our site is asked and that is, “Why did you buy,” period. We’re creating this new flow for onboarding customers. We need to incorporate this in there right now. You’re absolutely right. People have told me to do this in the past and I just forgot to incorporate it. If it’s not in my system, it doesn’t get done.
Drew: People often times don’t ask the question because they’re worried about a negative response. You should be happy about getting a negative response.
Andrew: I’m worried about bothering them. I feel like you just bought, you don’t want to do my survey now, you want to use what you bought. I shouldn’t be worried about that. It’s part of the flow. They want to tell you, they want to think about it. Frankly, what I should be doing is saying I don’t want to bother them, so let’s make it something useful for them and I wouldn’t ask why did you buy.
Imagine you buy from me. The question should be really clear on what you want out of this and why you signed up for this so you can remember and stay focused on your mission here, something like that. So, I’m telling them why it’s important for them to be clear on why they bought. So, they’re helping me but they’re helping themselves.
I could talk to you for freaking hours. I need a coach like you. I feel like you’re very level headed and also very organized.
Drew: Yeah. It always makes me laugh. I am organized in a sense, but really, I’m like a disaster mostly, but in work and life and priorities, in eating, I just have this way to be disciplined and organized.
Andrew: Where are you a disaster?
Drew: Time. My wife jokes all the time if a day comes up, I’m like, “I’m going to do these ten things today,” because I like to do lots of things. So, I flow and I’m late. I’m not a punctual person.
Andrew: I get it.
Drew: It’s on my list to be better at because evidently it’s disrespectful.
Andrew: Yeah, people don’t like it. Where did the idea for Red Giant come from?
Drew: So, this is what I—there was a product that I sold inside of Toolfarm and those guys approached me and said, “Hey, you want to spin this out and we’ll give you a license for this product.” At the time, I met my Red Giant business partner and he was able to get a worldwide license on a second product. So, we connected and said, “Let’s form this company together.” It fit me because I knew the industry. I also wanted to be a product company. So, we had worldwide exclusives on two products.
But here’s the key to everything and here’s where it changed. I said, “I’m going to start this company,” but as I’m mentally thinking of starting another company because I’m like it’s the last thing I should be doing because I’m an absolute failure and I’m burned out. I shouldn’t be starting another company.
I just said if I do it, I’m just going to do it in my own way and the company is going to work for me. I’m not going to work for the company, just never again. That was 15 years ago and never again, the company has never driven be again and I did it my own way. So, as I had success, I paid attention to how I did it and then I just kept replicating it and it just kept working.
Andrew: What do you mean? I don’t want to company to run my life either. I want it to be organized enough so I can take time off. Basically, at this point you told me before the interview started, “Look, Andrew, Red Giant is kind of working without me. I don’t need to talk about it. They don’t need me promoting it.” How do you get that level from the beginning? Let’s start that basic. What did you do to set yourself up for this kind of life?
Drew: So, first and foremost, you have to have ActiveCampaign. Is that good?
Andrew: I almost spit out my hot water.
Drew: No. But the reason I thought of that is I set up the company from the beginning to be very autonomous and very technology-driven. So, accounting system all online. By the way, this is back in 2002, so people are like, “Duh,” but back then, online accounting systems and other things were really rare. So, the entire company is all online and everything is automated.
Andrew: Give me an example of something that’s basic that most people wouldn’t automate but you do. What do you automate the most people would not automate?
Drew: Okay. I’m going to give you an example anyway. So, tech support, for instance, if you have lots of tech support, you have to have more employees and the customer aren’t happy. So, we always put a serial number system in there that on the back actually always worked. It wasn’t even a real system. We basically let people—they could rip off our software all day. We made the system so easy that it was barely serialized.
Andrew: You mean if I downloaded your software and you gave me my serial number, even if I typed it wrong, it was going to work, even if I didn’t really—is that it?
Drew: That’s it. Even if you bought an upgrade that was $99 and the product was $500, the upgrade was always the full product. We never wanted to create a problem. So, when I say automation, I’m making practical decisions throughout the business that are good for the customers. What happens in software is you get in this piracy philosophy and if you try to stop pirates, it works a little bit but then you punish honorable good customers. So, I never got into that. Then I automate all serial number delivery and we created a 30-day money back guarantee for software.
Andrew: This is not SaaS we’re talking about. We’re talking about downloadable software. They can come to you and say, “I don’t like it, I want my money back?” There is no way for you to pull that software off their computer.
Andrew: So, when we think of automation, we think of email that goes out one day and then a follow up the next day and so on. When you think of automation, I imagine you think about that too, but you’re also thinking about how do I reduce steps and headaches in the future by not even having the checklist, by just saying, “I’m giving you the full software. We’re not adding another process to remove it or break it if you decide to get your money back. That’s the kind of system you’re talking about.
Drew: You got it. My goal always is a customer never calls us. As soon as a customer calls you or emails you, everybody loses. You failed. The software was either hard to use or it broke. See what I’m saying? People will give me so much grief for saying it that way. Yeah, we don’t want customers to call because it’s good for them. So, does that make sense? By the way, all the [inaudible 00:31:44] stuff. . .
Andrew: . . . away from this interview largely because we had tech issues here to tell you about my sponsor, Toptal. Specifically, there was a question on Quora about who had experience with Toptal and wants to share it. The founder of Sidekick said, “I did. Let me tell you guys what happened.” You can see it on Quora, but I’ll sum it up for you like this. He said that he used Toptal to design the app that he had in mind. He wanted someone who could do UX, user experience development really well.
So, he went to Toptal. They understood his issues, understood what he was looking to crate and they matched him up with a design/UX expert, someone who could actually help him think through how he wanted to present his application. Once that was done, he said he went back to Toptal because he needed a finance expert to help him with his round of funding, somebody who could help him get his numbers in order, someone who could help him think through what investors are going to ask him when he’s raising money. He said that alone gave him a tremendous return on investment.
Then he said that he went to find a cheap developer and as he did that, he realized, “Actually, this cheap developer is not going to end up being really cheap.” He went back to Toptal. He found someone that got him a 10x faster result at a quarter the cost. So, Toptal is not cheap, but their people work so well that it ends up being cheaper in the long run and as a result, he is so ecstatic about his relationship with Toptal that he basically answered this Quora question in detail.
Many other people have had this experience. You’ve heard me tell their case studies here. If you’re looking to hire a developer or a designer or a finance expert, you can see that Toptal is the place to go. That’s top as in top of your head, call as in talent and in fact, if you go to the special URL that I’m about to give you, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours and that’s in addition to a no risk trial period of up to two weeks. Top as in top of your head, tal as in talent. That’s Toptal.com/Mixergy. Let’s get back into this great interview.
A lot of technical issues here, but now that we’re back, the question I wanted to ask you was how did you get customers? You have your process in place, what did you do to get customers?
Drew: Well, the first customers, obviously those are important. So, I ended up getting some database from friends of mine in the industry. They worked for companies that treat them poorly and they were willing to send me the databases. I can’t remember all the details. I just know that’s how it happened. So, I ended up with 11,000 people and I had this new software that I had just gotten for my new company, Red Giant. I emailed it out and that first month, we did 23,000.
Andrew: Wait, they gave you email addresses from the companies they worked for without the company’s permission?
Drew: Did I say that?
Andrew: I think you did. I’m not going to push so you don’t back away.
Drew: It’s kind of pre—like it’s a big thing now. This was really early. So, I basically said, “I’m sending you this because you purchased this software.” They were customers of the software. It was a new version.
Andrew: But for the company that owned those email addresses in that database, you didn’t get their permission to use the email addresses.
Drew: That’s possible.
Drew: That’s possible. So, we did send them out and we had a one-page website that had a huge red buy button that I built because I’m lame at design.
Andrew: I think I saw that site. You gave us a link to it. It’s a Yahoo Store.
Drew: Yeah. So, used Yahoo Store. They could have had it all. It was basically for people that don’t know, Yahoo Store was the original Shopify. You could build a template site right on top and it really wasn’t made for software. I had to totally kluge together a system to us it for software and downloads, but Yahoo Store.
Andrew: Yeah. This is the thing that Paul Graham built and sold to Yahoo. I forget what he called it, Viaweb. Then Yahoo bought it, turned it into Yahoo Stores. That’s how Paul Graham started out in business, the guy who founded Y Combinator.
Drew: I didn’t know that. I loved Yahoo Store and I was so sad that it didn’t continue and that they didn’t develop it along the way. I sent so many ideas to those guys.
Andrew: They neglected it and they had this huge marketplace. Not only that, they had something that Etsy for a long time was aspiring build which was one unified store where you access just about every Yahoo Store. So, if you have your products listed on the Yahoo Store, it goes into their big store, kind of like an Amazon for small merchants. It didn’t fully work out for them. Why did you use Yahoo Store? It sounds like that was an intentional decision. You didn’t want to build your own site even though you could.
Drew: Because I was dedicated to having a life going forward, every decision I made was to try to not hire people or try to not make it complicated. So, I didn’t want an engineer. So, I just built it myself.
Andrew: The next thing you did was you started offering a trial version of the software as a way of getting people on your mailing list, right? This is the freemium thing before freemium was a thing. Where did you come up with the idea for this freemium option?
Drew: Well, the one thing I knew from the beginning, it’s one of the few things I did that was really smart is I collected emails from anybody that downloaded a trial version of the software. So, I started this in 2002 and obviously it’s 15 years later. So, now the mailing list, I think it’s like 1.3 million. That is just because we collected emails from day one. The thing is in that first year, we probably had hundreds.
Andrew: You know what? I remember talking to the founder of Envision. He’s a longtime fan of Mixergy. He says one of the things they do to grow their mailing list and give back to the community is they create these little tools that are going to be for free, but to get them—did you do anything like that, register people or create free products just to grow the list?
Drew: We actually did a couple of free tools. It just never worked for us. It’s kind of another thing or another story. We charge for software. That’s what we got really good at. We just gave a trial version that anybody could use and make a project or something and then hopefully they came back.
Andrew: I see. Was the trial version, in the beginning, was it a fully functioning version of the software with an expiration?
Drew: This is special effects. So, it’s a little bit of a different world, but we never had a 30-day. In fact, to this day, we’re thinking about doing a 30-day. We would let you render a file with a red x on it.
Andrew: I see. Got it. You can fully experience it, but there’s the watermark. Can you describe what this software does? I’ve seen your YouTube videos that explain it. I understand it, but I don’t know how to communicate it to the audience.
Drew: Sure. The best way to talk about it is there’s really two groups of software products. One is [inaudible 00:39:08]. . .
Andrew: Sorry. We just lost the connection yet again. So, you were saying there were two groups of products. You just started saying what the first one is digital effects. So, if you turn on ESPN and the logo comes spinning at you and all around it it’s got these lights on it, lights on the corners, we do digital lights. We like rule digital lights. Who knew? In the world if you see digital lights, originally, this was actually from Tinkerbell in the original “Hook” movie and then it was further developed by John Knoll at Industrial Light & Magic and now at Disney. He developed it for the photon torpedo in the Starship Enterprise.
Andrew: So, you created software like that or is this the same software?
Drew: No, it’s his.
Andrew: It’s that software that was used in those movies and others?
Drew: Yeah. We basically teamed up with or we found these visionaries out there and we helped them productize these tools and bring them to the market at $200. They developed it for big feature films.
Andrew: That explains why even in the early days, your site said, “These are the same tools that are used in. . . And then you gave a list of movies like “Vanilla Sky,” you said, one of the early versions of your site.
Drew: “Vanilla Sky,” “Avatar.” Almost all movies are now using some version.
Andrew: MTV’s “Jackass: The Movie” used it. So, you kind of partnered with them and said, “We’re going to productize your software and make it available. That’s one thing. You own digital lights, you say. What else?
Drew: So, digital lights, anytime you have little snowflakes moving around—if you watch a car commercial today and you see rain, by the way, that isn’t rain. Those are digital interpretations of raindrops coming down. So, our software is used to randomize that rain so it looks supernatural and it blows in the wind and it’s got all the physics properties. That’s a category.
The second category is you shoot in video and you want to make your video look a little more like film and you do a filter on it. So, Magic Bullet is the number one filtering tool. So, we really influence the way people treat video and do color correction and other color filters. When we started, it was a really kind of nerdy, high-end thing. Now you can use our tools. We have 300,000 customers, probably 500,000 or 600,000 people have used it because of the pirate sites and other things. So, we influence the way you see TV and the way you see commercials.
Andrew: And YouTube videos?
Drew: Oh, yeah. Ask your videographer if he uses Red Giant products or Magic Bullet.
Andrew: That makes sense.
Drew: Skin tone, make sure that skin tone is just right.
Andrew: Make sure I’m brown, the right kind of brown. All right. I get now where you’re going. We asked you what your biggest challenge was. With the first company, there was a challenge where you guys brought in the wrong CEO. The CEO had this issue, all these issues. Here, the problem was focus. I don’t see how that was an issue for you. I’m looking through internet archive to try to find the lack of focus. You guys stayed pretty focused. Why did you tell our producer that was a challenge?
Drew: So, the first company, we lacked focus. So, we were a distributor of tech products. We also got into [inaudible 00:42:33]. In the dotcom era, about every six to eight months, there was a new technology that was popular getting funded. I’m telling you, there was a month, we switched the entire company focus to e-learning because suddenly those were the technology that was getting funded. I’m like what the heck were you thinking.
So, Red Giant focus is not necessarily a problem. It was a little bit towards the end of my tenure before I got someone else to run it because I was getting a little bit bored and I was taking risks, but Red Giant hyper-focuses. By the way, if you only work 35 hours a week, which I said I do, you don’t have a lot of time to do stuff that’s not important.
Andrew: What’s an example of something that you could have gotten carried away with, that you attempted to get into, but because you were so focused and so disciplined, you did not?
Drew: I think one of the best stories is early on at Red Giant, we were a software company. We knew we wanted to build our own products. So, Adobe approached us and they said they wanted to hire our engineering team at like $150 an hour, which is a lot of money back then because I wasn’t making too much as contractors. So, we could have made hundreds of thousands of dollars contracting out our engineering team. We said no because we wanted to be a product company. We said no to the money and then we kept doing our products.
Andrew: And the credibility that goes along with that.
Drew: Yeah. So, we stayed in the product space—you can’t scale what you do in life, you cannot own your time unless you have products. Products are the only thing that are repeatable and scalable and don’t suck up your time, whether you sell 10 of them or 10,000 of them. You’re smiling because you now know this.
Andrew: You know what? I started out my career knowing that, doing these interviews is like an example of how I forget that.
Andrew: I get it. I’ve talked to people who have done 50 interviews when they started and they evergreen those interviews and that’s it. They’re not going back every week. I just love it. I want every week to get to know someone new like you. I hate that we’re having these connection problems because that’s like infringing on our conversation. I do enjoy that.
At the same time, I understand your point about how this is not a scalable thing. You left your company about three years ago. There’s a CEO now running it. You spent one to two hours a month on it. I couldn’t do that with interviews. It needs to be products and not just products but software products, especially.
Drew: Yeah. I would only suggest to you that’s a problem if something in your life important is suffering. Otherwise it’s not a problem. So, I’m rabid about building scalable solutions and making things profitable and making them work without me is because I want to spend time with my family and I want to spend time with my kids and I want to be a dad. I want to spend time on health and then I want to spend time on giving back to the world working with nonprofits and some other things.
Andrew: I want to hear about the other projects you’re working on. Let me close this out by asking you about what you do to run your company so that you wouldn’t have to be there. Is there project management? Is there a standard operating procedures book somewhere? What’s your way of doing it? I’ve noticed a lot of entrepreneurs who are likely to have that.
Drew: Can you list a few more? Can you guess a few more? You said project management.
Andrew: If I had to guess, here’s what I would do. My guess is that you have a set of philosophies that everyone understands and maybe you have some short quotes around it or stories around it. Software that manages the way that you guys work so when an order comes through, there’s something that goes to something else to make sure that your customer’s happy.
For things like bookkeeping and the rest, you probably outsource it so that you don’t have to take it on and it becomes someone else’s headache. So, philosophies that are memorable, software that manages things and then you outsource the things that aren’t important. Did I get it right?
Drew: No, none of those.
Andrew: So, what is it? How do you organize a company then?
Drew: So, I’ve been kind of creating this new concept that I call exponential relationships. I’ve blogged on it. I’ve explored it in that way. Getting good people and then having a common mission and letting them go do it. So, we don’t have an operating manual. We have project management like systems to communicate.
But just getting good people and let them go do it—we agreed on what’s important. We agree on profit, for sure. Let’s focus on profit. We agree on taking care of all of your coworkers. We agree that life is first. We agree that you can do side projects. That’s fine. We agreed, we’re going to be the best in our industry, the best artistry, the best speed, but the people vet, that’s all, then the people go do it. Does that make sense? What you said I think is what typically is done. You think you need that, but just like Jack Welch and others have said, you just get the right people on the bus.
Andrew: When you agree, how formal is this agreement, is it a list of things that you put out that say we care about profits and we care about these other things or is it just articled in the company and everyone knows it.
Drew: It’s talked about. There’s live thought about writing the list and stuff, but when we have company meetings and we get together, we talk about this. We have a 100% profit sharing program. We take a percentage of profits that I’ve told a lot of entrepreneurs how much do and people are going to be like, “That’s crazy,” And we distribute to 100% of employees, like really big checks. You’d actually be shocked.
Andrew: How big?
Drew: I’ll tell you the lowest employee will get $7,000 or $8,000 a year, put own a deposit on houses.
Andrew: So, as a company, do you guys do over $5 million in profits a year?
Drew: It’s actually the only remember I don’t really talk about. What I will tell you is we’ll tell you it’s a lot higher than that. We do software. So, I have made four different acquisitions and I have paid all of them off. Right now, I just made by biggest acquisition a year ago, $18 million, so I haven’t paid that one off yet, but the others are all paid off. So, own everything. So, I was debt free up to 12 months ago.
Andrew: Debt-free and no shareholder nagging you to sell so he can cash out. You and the team that you work with.
Drew: So, what happens is we have this profit sharing program and if we hire someone else, you’ll have people as, “Does that increase profit? Does that decrease profit? You might think I’m insane about profit but what else are you doing? Why would you not focus on profit.
Andrew: But what about if someone comes in and says, “Hey, Drew, if we do an e-learning component, people need to learn how to use the software anyway. We’ll increase our profits,” or, “If we cut back on what we offer people, we’ll increase our profits.” What’s limiting their desire for profits?
Drew: Got you. Well, we also have this thing called the double bottom line, one being profit, one being us, people. So, if we make a decision that increases the profit but makes us work too much or has a negative effect on us, we won’t do it. Everything goes through the double bottom line filter. So, what you just suggested is we want to do what’s best for our customers—I know it’s cliché, but it’s really true. We want to deliver the best products. People have done love stories for us on YouTube about Red Giant. When we go to tradeshows, people hug us because they appreciate all the stuff we do. This is the kind of stuff we’re trying to achieve. So, what you just asked is this is the filer.
Andrew: Okay. So, understand then how you’d be able to bring in a CEO and trust the company would continue to run the way you set it up. I’m wondering why you created KnewVisions, LLC, which is the owner of KnewHealth.com. And knew, by the way, is knew as in, “I knew what you were going to say.” What are you trying to do here?
Drew: Three years ago, I left Red Giant, brought in an amazing friend and CEO to run it. He gets almost full authority to do everything at this point. So, we have monthly meetings and talk about high-level things. This is why I only spend a couple hours a month. Again, it’s the ultimate of what I did for the company is bring in a great human being that runs it like I used to, but he’s also super smart and really motivated.
So, I just spent the last two years trying to figure out what I wanted to do next. I wanted it to be big. I read the book “Bold” by Peter Diamandis, who’s amazing. He’s just an inspiration to me in the way he thinks about being bold and the way you 10x things and the way you exponentially grow things. After I read that, I said I’m going to reshift all of my goals in life. So, I 10x everything. I want to go and basically affect and help millions of people. So, I decided on health and I think we have a health travesty in the US. People are suffering.
Andrew: What’s the travesty?
Drew: So, chronic disease—every indicator out there is just going through the roof, whether it’s chronic disease like diabetes two, there’s just a long list, people are unhappy, people are getting sick, people are on prescription medication. Me and my team are going to try to take healthcare online and create a membership model and pay a low fee like $100 a month and have a trained health coach interact with you 1 v. 1 and create a health plan for you and check in on you on a weekly basis to make sure you’re going through with it and help encourage you.
Andrew: So, they might tell me, “Andrew, you need cut back on your French fry consumption,” and have maybe two nights of whiskey, not three. Then they’ll check in with me every week to make sure I’m actually doing that, like a coach.
Drew: Yeah, it is a coach. They’re actually health coaches. We use a system of medicine called functional medicine. You can Google it. It’s been out there for decades. Mark Hyman is probably the number one spokesperson in the US. It is a lot of lifestyle changes. So, what to do, how to do it and having the discipline to do it is the hard part. So, that’s what we help with.
By the way, we can go through and do blood tests and we’ll give you numerical data—this is bad, this is good. We’re going to ask you to change your lifestyle for two weeks, three weeks, numerically you see the change.
Andrew: I’ll go to a Quest Labs here in my area, they’ll take my blood. You guys will get the data. Got it.
Drew: The thing is men especially, they respond to data-driven analysis. So, if you get numbers—I don’t want to be sexist here, but it’s mostly true—men respond to numbers. I’ll give you numbers, you commit to changing your lifestyle for three weeks, we’ll influence your numbers and you’ll feel better and you’ll be like, “Okay, it works.”
Andrew: I see. I’m imagining that with the wearables revolution, you’re going to have even more data to use and to come back to me and analyze with.
Drew: All the data comes in. It’s come in from all areas. In fact, I saw a blood test monitor the other day that you can wear that basically pricks your finger, but it stays in there. It’s mostly for diabetics, but there’s a reason you can’t use it just to monitor blood levels.
Andrew: Why are you the COO of this company? Why does the guy who doesn’t want to work a lot take on the role of the person who has to work a lot or make sure other people are working too? Why the COO and not the CEO role?
Drew: You had to ask me that question? I needed a high level position. The founder, James Maskell, is amazing. He’s a bestselling author. You can Google him also. He’s going to be the CEO. It’s his vision. I’m not interested in being the CEO. I literally had to Google what a COO is. I did and actually the thing is it actually really does fit me. You think it’s more operational, but it’s also very strategic. I do want to grow and run the business in my way, like this is just a new challenge, like I’m ready. I’ve been doing very little for three years.
Andrew: Because the COO does create the systems that run the company, takes the founder or CEO’s vision and then creates a process that—like the CEO is the person that creates the business that creates the product.
Drew: Yeah, it is, while influencing the product and the strategy, you know what I mean? Titles aside, I believe that my founding team is a team that is very collaborative. We are on board with the same vision. We’re going to go for it. I’m very honest about my lifestyle does come first, but I’m also going to work hard. Not many people get as much done as I do in the four hours a week or day at work, you know? Just get into that flow state, read the Wall Street Journal and flow.
Andrew: Start your day with that.
Drew: It’s a new challenge. I just need to do it. I think a lot of people talk about being satisfied. One of the keys to being satisfied is continuing to grow and continuing to challenge yourself.
Andrew: I can see that you’re doing that. I like to hear you speak more—first of all, I know that you’re doing this interview and you usually don’t do interviews. I’m glad that you’re getting more open about your story. I’d like to hear you, as you tell your story, to get into not business advice, but talk about what your philosophy is on running a business and how you acted on that philosophy as a CEO, as a founder, now as a COO. I want to hear more of that. I think you’ve got an interesting angle on how to run a business.
Drew: Yeah. The number one thing is to get people around you to care. So, the way I think about it is if you’re not standing next to someone, are they working at full tilt? Are they all in? Do you know what I mean?
Andrew: Yes, I do.
Drew: I’ve found the best way to do that is to get someone to care—people don’t care about businesses. They don’t care about a company. It’s a myth. What they care about is they care about the people around them in that company and they care about the company’s mission. So, how do you get people to care around you is you have to sit down and communicate, you have to respect, you have to listen. All this stuff, it’s so hard, like you just want to go and you want to bark orders and do this and do this. Go ask anybody. No one will work hard for that person.
Drew: I sit and I talk to people and I have a very simple conversation, which is, “Tell me in the last six months what you really enjoy doing.” They kind of start out and then they tell me and I’m like—I really find what it is and I really attempt a shift of more of what they enjoy doing. Then you don’t have to motivate.
Sometimes, it obviously doesn’t fit into what you need as a company, but I found more often it does because they say, “Hey, I like throwing Frisbee in a park.” I’m like, “No, professional, what do you like doing?” So, you shift people over there and you find that most spots fill. So, getting people to care is like a number one thing. So, when you’re not there or you’re there, people are caring. I’m telling you productivity just goes through the roof.
Andrew: I get that. What’s the book? I forget the name of the book that talked about that, “First Find Your Strengths.” I know that Facebook spent a lot of time hiring the author, Marcus Buckingham and having him go in and work with their people on that. I get the power of that. I’d like to just see you talk more not just here in this interview but in general about it. I just looked it up. It looks like you write on a regular basis, what is it called. It is just StartGo.com, am I right?
Drew: That is correct, yeah.
Andrew: You’re smiling.
Drew: It just makes me laugh because when I came up with it, it was just a funny thing in my head. I write because someone taught me the best way to figure out what you’re thinking is to write. It turns out to be true. It just organizes your thoughts.
Andrew: You’ve got “The Founders Guide to Hiring,” “Complaining is Lazy,” “Ten Things to Do to Get Your Company to Run Better.” I had no idea you were writing about this. I’ll go take a look at this. “Be Careful, Your Instincts are Lying to You.”
F: Sorry, go ahead. If I’m asked a question like ten times, like, “How do you get your company to run without you?” or, “Who do you hire first when you’re a founder?” I get these questions and I’ll eventually go write a blog so I can send everybody in my blog post. It’s more efficient.
Andrew: The website for that is just StarGo.com. Of course, for Red Giant, you can check him out at store.Yahoo.com—that was the old URL. If we did this interview a few years ago. Today, I can say go check out RedGiant.com. Finally KnewHealth and I want to thank my two sponsors, Toptal.com/Mixergy and ActiveCampaign.com/Mixergy. Drew, thank you so much.
Drew: Andrew, hey, I really appreciate it. I appreciate the advice on how to help me go through these interviews. Appreciate it.
Andrew: You bet. Thank you all for being a part of it. Bye, everyone.