Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I do interviews with proven entrepreneurs about how they came up with their ideas, how they got their first customers, how they grew it, and occasionally even about how they sold their businesses. And today’s guest is an entrepreneur who owns some property, managed that property by himself, used the crude tools that were available to him at the time. Nathan, this was a pencil and paper.
Nathan: An Excel, yes.
Andrew: An Excel and said, “There’s got to be a better way. I can’t keep dealing with this is, especially if I start buying more properties,” and he said, “You know, I think I could create a better way.” And he did. He coded up software that enabled him to manage his own properties better and now enables many other landlords and property managers to manage their properties. His name is Nathan Miller. He is the founder of Rentec Direct. It’s like QuickBooks for landlords or property managers. Actually that’s Nathan’s quote. I actually think it does so much more than QuickBooks. But we’re going to get into how it does it, how he built up this company in a moment.
First, I’ve got to thank my two sponsors for making this interview happen. The first will help you host your website right. It’s called HostGator and the second will help you hire your next phenomenal developer. It’s called Toptal. Nathan, good to have here.
Nathan: Thanks for having me.
Andrew: All right, I’m going to hit you with the revenue question right away. Annual revenue, what is it?
Nathan: We will be pushing our four million this year.
Andrew: We’ll be pushing four million this year, that’s 2018. How did you do 2017?
Nathan: 2017 is about three.
Andrew: Three and are you guys profitable?
Nathan: Very profitable, yes.
Andrew: Very meaning like over 25% net profits?
Nathan: We definitely exceed that, yes.
Andrew: Wow, no outside funding?
Andrew: Holy moly.
Nathan: Cool, right?
Andrew: Yeah, you know what, especially for a guy, you told our producer, “I grew up in the sticks of Oregon, I wanted to be an entrepreneur so badly,” and I’ll talk about what you did in a moment to like get yourself started in entrepreneurship. As a guy from New York, I don’t relate to this at all but I want to hear it. But what was it like to grow up in the sticks of Oregon what exactly made it the sticks?
Nathan: Well, I mean, lots of sticks. There was trees and as you know, if you’re from the East Coast you hear about Oregon, we’re all about trees, right? And I was covered in trees. We lived on a mountain. We had goats, we had cows, we had fields, we had thistles that we would have to pull up out of the field. It was a run of the mill farm and we milked the cows in the morning and walked miles to school and it was out there. We also didn’t have electricity, which is a unique thing that.
Andrew: You had no electricity?
Nathan: No electricity, we grew up off the grid. We used water that came out of a spring off the mountain. We did have solar panels which charged the battery which ran some DC lights at night time.
Andrew: Why were you guys living like this?
Nathan: Just a choice by our parents made out there.
Andrew: Did they go back to nature is that what it was, or this is the way they’d always grown up?
Nathan: Well, no they ended up moving there and it was just a long ways away from services. It’s probably three miles off the road, and three miles away from utilities. And we didn’t have a way to pay for it to get electricity ran up the road back then so it was out of necessity, I would say.
Andrew: I got to tell you, Nathan, right now as you’re talking about it, that’s where I want to go. My wife and I are talking about where we’re going to go for our summer vacation and it’s like all these European trips. I don’t want that. I want where you grew up as my, give me a week there, maybe even a year with no electricity, no internet and just leave me alone for a little bit.
Here’s the thing though that I wonder about you. For me I grew up in New York, I was surrounded by entrepreneurs and business owners and I still didn’t fully get it until I went to the Hillcrest library and picked up books about these guys who built up the world around me and that’s when I got excited about it. I wonder where did you get turned on to this, to entrepreneurship, to business, to this thing that ended up becoming your life?
Nathan: Somewhat of just liking to invent things and liking to save time and partly luck. My little combination of everything. But I would say it’s a long road that went from raising goats and sheep to building a software application. But somewhere in between there I got this huge passion to solve the problem of wasting time. I see us as humans as big-time wasters. We’ll commute. We have people living in the Bay Area, you know they’ll commute two hours to work and two hours from work. And you think about that there’s actually somebody that probably lives five minutes from that same job that can do the job equally well instead of the person from two hours. So just as a nature, of us we . . .
Andrew: So you were always looking you mean for time-saving tips, that was your thing?
Andrew: Give me an example of a time saving tip that you had either back then or now that will give me a sense of how you think.
Nathan: Oh, gosh, well, back then I can’t say I was too good at it but now, I mean, this application is a great example of a time-saving tip because we’re continually producing new features in the application. And every feature has to have the basis of how much time can we save our users? If someone going to log into our system and use this feature, we want this feature to save them time and not cost them time.
Andrew: All right, so the thing you did when you want to get really into entrepreneurship was you joined 4-H. What did you do in 4-H? I didn’t think of them as a moneymaking organization. I didn’t think of them as like a young entrepreneurs group.
Nathan: Yeah, and in reality, they’re not but it was something fun to do. It got me off the farm, because as a kid I did not like living on the farm. I wanted to be in the city where all the other kids were. So it got me off the farm, it gave me something to do, and I looked at the success that some of my friends in school had where they would raise a sheep, a pig, or a cow and they would bring it to the fair and then they would sell it. You know, because they would go through an auction and they would sell it and these other kids who are . . . I was probably 10 at the time. They’re bringing home between $200 and $2,000 and to a 10-year old that lives out in the sticks that doesn’t even get allowance, that’s a lot of money.
Andrew: Wow. All right, so I can see how you got the bug there. What I’m curious is how do you end up owning seven rental properties?
Nathan: Okay, that. We went from, I lived out in the sticks, went to school, ended up moving out of home and I got this passion for working on computers. I enjoyed working on them and I enjoyed playing on them, of course, a teenager I love playing games. And back then computers were still pretty new, but to me, there were some pretty cool games on them. So computers became a passion of mine and I ended up coming to Grants Pass which is the neighboring city to work on computers and install internet service back in the mid 90’s. And that passion to use computers got me into the internet because the internet started becoming a big thing in the mid 90’s and just seeing the power of the internet. And how so many minds can be connected where that couldn’t be connected before just blew me away and I just had to be a part of that.
So I very fortunately and very luckily connected with someone who’s a really good friend of mine now who had an internet company. And I started working with him and becoming the systems administrator for that company. Again it’s like 1996, 1997 time frame and was able to work in that company for almost 20 years learning the ropes of what the internet was about.
And through that process I had learned I got a passion of development and development being able to program and write an application is kind of what really was nice for me. Because I like to invent little things programmatically on the computer, I like inventing things. And being able to program and develop that is the basis of being able to invent on the internet. So that got me to writing an application for property managers.
Andrew: But before that, you’re saying that working for an internet service provider gave you enough money that you could buy seven rental properties?
Andrew: How much did a property go for back there? I think because I grew up in New York, I’m used to million dollar minimum homes, so maybe in my head it’s way different. What was a property . . . what did a property sell for when you bought it?
Nathan: My first property cost me $43,000.
Andrew: And that’s down payment or overall?
Nathan: No that’s the whole thing.
Andrew: That’s the whole thing?
Nathan: Yeah, I couldn’t afford it, of course. I wasn’t making enough money to just give him $43,000 but I got a traditional loan on it and I probably did $2,000 down payment is my guess in order to purchase it. Plus a loan and I lived there and saved a lot of money because the entire house payment and I know this is a condominium and my entire payment including utilities and everything was less than $500 a month, so I was able to save up and shoot seven-eight years later buy my second property. And from that point, I was making more money at the internet service, I now had two properties and a rental, and so then things started just fall into place plus the housing crisis made a lot of cheap properties available on the market.
Andrew: Housing crisis of when?
Nathan: ’08, I know there’s been a few.
Andrew: I thought you started Rentec Direct before 2008 though?
Nathan: On Rentec Direct I did, so it was about the point where I was obtaining these properties through . . . there’s a lot of foreclosures out there. And at that point I had some resources in order to purchase some since worked at this internet service now for almost 20 years. I went through I became the vice president then the president.
Andrew: We are talking about visp.net.
Nathan: We are, yes.
Andrew: Okay, oh, it still exists?
Nathan: Oh, yeah, it’s a great company.
Andrew: I’m on their site right now. So what you’re saying is you built it up to seven before the housing crisis, the housing crisis allowed you go and acquire more properties, and then start renting those out too. Is that right?
Andrew: I see. Got it. All right, so you’re starting to get a lot of different properties under your belt and tell me some of the things that you would do with paper and pencil and Excel spreadsheets that frustrated you.
Nathan: Oh, okay, well, keeping track of the numbers, just who owes me rent and, of course, I was renting these myself and I wasn’t reliant on property management at the time. And so I was a nice landlord and everyone who moved in I made a relationship with them and they kind of became friends, which any landlord today will tell you don’t do that. But I just couldn’t help but I’m a fairly friendly guy and I got to know them and so people would pay late and I would understand their dilemmas and keeping track of who was late, how much they owed. It was all within my technical competence to do but I just felt like it was taking too much time, just who owes me what.
And there was the matter of maintenance, once you get four, or five, six, seven properties there something always going wrong. With that many properties you got something you’re fixing every month. If it’s a fridge, or a water heater, or a roof and keeping track of those and making sure that they’re fixed on time just became a lot of overhead.
Andrew: So somebody comes into you and says, “Hey, my fridge isn’t working for some reason or the water’s not going down the drain in the shower.” It’s not just what I imagine which is you call a plumber and say, “Hey, go take care of Andrew’s shower and check out the fridge.” It’s more like that and then you have to follow up to make sure it actually was handled right?
Nathan: Well, yeah plus you need to go over and make sure it is what they say it and at that time.
Andrew: You mean you personally would go in and inspect it?
Nathan: Yes, I would. Yes.
Andrew: All right.
Nathan: That was back in the point of my life where it was it was saving money and because all these properties weren’t necessarily making a huge profit, it was kind of a break-even scenario. So every penny counted, so I’d go make sure let’s make sure it’s a real issue before we pay a plumber $100 to show up and tell me it’s not an issue.
Andrew: Wow, okay. That’s some kind of life that you’ve got there but you’re building up all these assets and you say to yourself there’s got to be a better way. Most people would have just like use macros on spreadsheets, especially if it’s just for yourself, but the reason that you didn’t is because, as you said earlier you’re a tinker. You played around with lots of different things and this was just going to be another thing for you to tinker with or did you know immediately this is going to be a successful business I got to launch it?
Nathan: No, I didn’t know it was going to be a successful business. I built it just to help myself out. I knew that with what I needed the system to do I could develop it, but I knew I had the skills to develop that and so I went about doing it. But I also have a few landlord friends and I took input from them and “Hey, what would be . . . what you do that takes a lot of your time that could maybe be automated?” And I took some of those features and put them in there too because I know that they’ll be useful for me. Automated notifications on changing smoke alarms is just like a real simple example.
Andrew: Oh, so they would say to you, “I hate having to figure out when to change smoke alarms. Can you create a reminder in my system for it?”
Andrew: All right.
Nathan: Yeah, that’s a big one because if a landlord forgets to change a smoke alarm, suddenly they become a bit liable if there’s an issue that happens after the expiration date. The landlords the one that’s got that liability.
Andrew: How do you learn that?
Nathan: Well, not very well that’s why I wanted to automate this for me.
Andrew: So you weren’t even thinking about this and just by talking to other landlords it opened you up to other things that you could be doing better as a landlord yourself and what to add to your software.
Andrew: I know this sounds kind of like basic questions but I’ll tell you why. When we experience the pain ourselves, there’s a sense of I understand the problem, I’ve been doing this long enough I better just go and start creating. What’s different about you is you said, “I don’t fully understand the problem or maybe I’m blind to some of the aspects of it.” And you went and you talked to others like you before you started building. Did you do that before actually or am I just assuming?
Nathan: No, I did I definitely communicated with my friends as I was developing this because the application before anybody could use it and I guess continuing what I was talking about there is I was writing this for myself. But I knew that it wouldn’t be that hard. If I’m going to write it for myself, I might as well just make a login mechanism and some separate space. So if I can help other people like I’m helping myself with this application, cool, I’ll give it away to other landlords so they can use it.
Andrew: Give it away.
Nathan: So totally give it away.
Nathan: I had no intention of it necessarily becoming a company. It was more like I know this is going to help me, I know I’m running a server for it anyways which doesn’t cost me that much. I could probably get a thousand other people using it. It’s still not going to cost me anything extra, so why not? I’ll help some people out.
Andrew: I’m looking at an early version of the site. There’s a big message here that says, “Rentec Direct is free. When we say no risk we mean it. All the basic functions necessary for a landlord or property manager for him to manage our rentals including in the free package.” It didn’t take you much longer to start charging but it does look like that first version was aware that at some point you might want to start charging.
Nathan: Okay. Well, at the very first version I didn’t have an intention to charge. Because I had no idea that there would be enough people for it to warrant forming a company and merchant accounts and all everything that goes into charging people for service. But what did happen and where I came up with the idea to start charging, was I’m offering it out there for free, I’ve got a couple hundred people using it, and it’s awesome because they’re able to make use of it.
But they’re e-mailing me and I said “Hey, I’ll provide free e-mail support. If you have trouble using the system, I’ll provide you some free e-mail support. I don’t have a ton of time because I have a full-time job and a family but I’ll do what I can.” So that’s was kind of our support policy when it was a free program and what happened is the support load started increasing, and a few people started getting upset that I wasn’t responding quick enough. And then I started getting e-mails about, “Well, your program needs to do this,” or like, “Hey, your program sucks, buddy. It needs to do this if you want it to be a competitive program.” Like, “Well, it’s free. Just use if you want or you don’t have to and I’m not charging anything.”
So where my mindset started shifting was there is people out there that want this program if they have the passion to e-mail me a message like that. That means they want to use it and if I’m going to develop, I’m going through enough and I’m going to develop something that I don’t necessarily need. And I’m also going to need to support it, which means I’m going to need to hire someone to do the support since I don’t have the time for it. I’m going to need to put a nominal charge on it. And I had enough of these requests coming through and I add it up I’m like I think it’ll pay for itself.
So we created . . . we went from Rentec Direct to Rentec Pro which was the professional version for landlords. And I figured what the first price on it was, I’m guessing it was 25, 30 cents a unit something like that, but people ate it up. I had a ton of sign-ups like, yeah we want to use this.
Andrew: You know, I want to understand how you built it because I think that’s kind of interesting. And then also how you got so many users especially before you were marketing and you’ve told our producer I’m not very good at marketing. So how does a guy who’s not very good at marketing get those first 100 users? How do you get the first paid users? And how did you grow to where you are today?
First, let me take a moment to talk about my first sponsor. It’s a company called HostGator. You said you had experience with HostGator?
Andrew: When was that?
Nathan: Yeah, back when I worked at Visp we used HostGator a bit for . . . I think we use them for virtual servers. We would basically rent server space on them and we used them because we had a data center in Grants Pass but we wanted to be able to back stuff off site for redundancy and we used them for that.
Andrew: So you just needed . . . yeah, what these days it seems like I’m promoting HostGator just a place to go publish WordPress sites because that’s where the industry’s gone, right? Anyone who needs to publish something it’s either going to be a store or a WordPress site it feels like but you’re right there’s so much more that can be done on HostGator. And even though if you guys are listening to my voice you’ve heard me say that you can go and do one click install of WordPress in similar software. I should also let you know you can do so much more anything that you need hosted just about can be hosted on HostGator as we just saw here from Nathan’s experience.
But if you want to host a basic website use WordPress, one click install they make it super simple. All you have to do is go to a special URL that I’m about to give everybody, where everyone who listens to the sound of my voice is going to get up to 60%, no 62%, 60% would be chintzy, 62% that is giving people a real deal. Up to 62% really off the lower off their already low price. It really is a great price, great value.
We signed up for them when I started this new chatbot company, liked them, did great, and then we grew and grew and grew and I called up HostGator and I said, “Can you give me something even bigger? I want to make sure that no matter what hits me I am up.” And they said, “Sure,” and it was lower by far and then the competitors that we considered and it’s been up. I don’t think we’ve had a single down moment with them.
So here it is hostgator.com/mixergy. Be sure to check out that unlimited domain plan. That’s the part that I like because it lets you experiment and lets you just fire up a bunch of domains quickly, hostgator.com/mixergy.
The coding I loved what you told our producer about how you coded it because you did have a family at the time. And so, what was your schedule for coding up the first version of your product?
Nathan: Well, I find myself and I learned back then, I’m very productive in the morning. If I can wake up and it’s quiet and it’s before the phones are ringing and I can put coffee in my hand and put a keyboard in front of me on a big giant monitor, I can pump out a lot of code and it happens fast. So I spent many months maybe more than a year just waking up like 4 o’clock and my brain was so excited about this project and how well it was working. I didn’t even need an alarm clock because I would just wake up with this level of enthusiasm and excitement that I would get up, and I go downstairs and I put the coffee on and I would code for a couple hours before everyone woke up. And so yeah, my schedule started early.
Andrew: How young you had one kid or more at the time?
Nathan: One, yeah.
Andrew: One. How young was your child?
Nathan: Oh, gosh, he was . . . I have my timing off a little bit.
Andrew: Are you talking about like a two or three year old, no?
Nathan: No, he was born in 2009, so at the point I had a family. He was not born yet because I started this in 2007 and 2008 is where I did most of the development, but still waking up just as early.
Andrew: Unbelievable because you did have a demanding day job and so you then do this quietly. Why did your eyes light up when I said demanding day job? Was it not demanding?
Nathan: It was demanding. Oh, yeah.
Andrew: It was yeah, and then you’d get up and you’d code this and you’d put it out there and people liked it enough but they were complaining to you. How did you get the first 100 people to sign up?
Nathan: I just made it available. So everything, there’s the basic version and like you said if you go back on that Wayback Machine or whatever to the original version of our site, it was an ugly site. Oh, my gosh, I feel sorry for you if you looked at that.
Andrew: You know, what it is? It’s super clear I get what you mean about your site now looks really polished. It’s just clear. It’s clear. The only thing that ever stood out for me was I think the D in direct at the time was not capitalized, but other than that . . . oh, and yeah capitalization was an issue. Sometimes Rentec is the T, is capitalized, sometimes it’s not. But other than that I know exactly what it does, I know why I should sign up, and I know that it’s free. Relax, go try it. But you weren’t . . . it sounds like as you think back . . . I guess in comparison to where you are now it’s not as pretty. But it worked, but still how did get a 100 people to come up and sign up for this?
Nathan: Yeah, I just made it available. The people came to the site because there wasn’t very many if any options available. When I started doing this the first thing I did and being familiar with the internet is I went and I looked there’s got to be a program that helps landlords manage their properties. And I searched and searched and either they were too expensive or didn’t exist. As a small time landlord I couldn’t throw $5,000 at a giant system that big property managers used and I couldn’t afford $500 or $600 a month those weren’t even options.
So after I did an exhaustive search and couldn’t find anything, I just created a very simple website, I didn’t do any SEO or marketing or anything, but I put the necessary information on the website and then like Google index it and people started coming. And I think because it was the only low cost or at that time free option available to landlords, people found it and they shared it with their friends and traffic just organically picked up on its own.
Andrew: It seems like at some point you got a little bit better at it. You found that there are sites that review software like yours and you reached out to them. You looked at a little bit of blogging. Did that help you?
Nathan: Oh, huge blogging is huge . . .
Andrew: Even back when it was just you as a one-man shop?
Nathan: Oh, I didn’t do a lot of blogging very little but it does help, and today we do a ton of blogging and it’s probably one of the biggest drivers of traffic to our website right now.
Andrew: I’m imagining the way that you got your first paid customers was reaching out to the free customers and saying we have a Pro-version is that right?
Nathan: Yeah, just let them know that here’s all these basic features they’re going to be free forever. Today, 2018, they’re still free. And but if you want like this cool, amazing stuff, you want to be able to send text messages and do background screening, these things that cost us money, then yeah, just click here. You know, make it simple, just click here to upgrade to the Pro-version.
Andrew: And that’s how you knew what to charge for. Whatever was going to cost you money was going to be in the Pro-version with a little bit of markup. Whatever it didn’t was going to be free. Is that the way it was?
Nathan: Well, the original application that does the basic accounting was the piece that was going to be free and then all the advanced stuff that we’ve added onto through the years most of that’s gone into the Pro or now we have a PM version which is adds in trust accounting for property managers.
Andrew: What’s that?
Nathan: Trust accounting is where property managers they’re managing tenants and properties on behalf of the owners of those properties. So they’ve got laws that they have to comply with because they’re receiving money from tenants, holding onto that money for a period of time, and then dispersing it to the owner. And they have to follow these laws and there’s lots of accounting and auditing that goes into that. So we have to build that service into the software.
Andrew: And one of things our producer learned about this is that there lots of different laws in different places regarding real estate, and it having 100 sign ups even though they were free gave you an understanding of what that was like. And what are some of the things? Do you remember some of the nuances or some of the legal issues that you had to take care of that you didn’t even know about until you got started?
Nathan: Well, when we got into tenant screening that was something we added on after we started doing the Pro-version and with tenants screening there is a ton of laws. There’s the whole Fair Credit Reporting Act, everyone has to comply with and landlords are . . . it’s becoming more and more restrictive. Back then it was pretty easy. You could look at a pretty long history of someone’s criminal history and use that to decide if they could move into your property or not. Nowadays regulations has brought that back where you can only look at about seven years of criminal history. So if they’re even had a violent crime seven years and one day ago, you can’t consider that when you’re letting someone move into your property otherwise, suddenly you’re doing something illegal. So those regulations have been challenging.
Andrew: Yeah, how do you stay on top of that, Nathan, considering that people couldn’t be using your software from all over the country?
Nathan: There’s some associations like the National Association of Rental Property Managers is a really good one. NARPM is how you find them. They’re a great organization and if you stay up on their newsletters and stuff, they keep up to date on a lot of stuff. And then we’ve got some screening vendors that supply us with screening data like StarPoint is our credit vendor and CIC is our criminal vendor and they’re great industry partners because they keep us updated on new stuff also.
Andrew: So they tell you, “Hey well, you can get lots of data from us but as somebody who’s dealing with real estate, you should not be asking for all this. You should not be pulling all that data.
Nathan: Yeah, and there’s a whole process that we have to go through that kind of keeps people in line with the regulations.
Andrew: Okay, all right, so you’re coding this up. You’re getting your first set of customers. Were you continuing to talk to customers to understand how their problems were shifting or what you missed?
Nathan: Definitely, and today we still do. We do a ton of that.
Andrew: How did you do it back then and then how do you do it today?
Nathan: Back then it was exclusively e-mail. I had no phones for the company when it was free. And so it was just whatever someone sent me via e-mail and I would try to understand their issue and just use that communication to glean that information from them in order to make the application better and work better for more people.
And today, and we still have thousands of people that use the system for free today, and they don’t pay us anything they get access to the system and they still provide us good feedback. We get comments and suggestions from them just like we do our paid users. So they’re valuable to us just like we’re valuable to them. But now we’ve expanded. We’ve got a live chat where anyone can click and talk to one of our people here in the office at any point and e-mail still, of course, and then we have we actually have a phone system now.
Andrew: How do you keep track of everything that comes in? And figure out what to act on?
Nathan: Okay, well, we’ve used the system for a long time. It’s a system called UserVoice and it’s like a mini CRM but it’s more like a support tool. And what I like most about it because the support tool is getting really dated . We’ve used it for probably seven or eight years now. And please update your support tool someday UserVoice but the what they do have is a voting system. It’s a feature voting system so any time somebody gives us a suggestion, we check to see if that suggestions been submitted already and will add this person to that suggestion. Gives us two things it tells us how many people have requested something, how important it is to them, and then it also logs that this person wants this feature and that way when we get around to doing that feature we close the feature out and the system automatically e-mails everyone’s to say, “Hey, this feature is available now.”
Andrew: UserVoice used to be on everyone’s website. It was when you guys got started. I remember interviewing the founder, he had a massive success. And then, like you said, they stopped updating it and I don’t see it as often and I wonder why. I know why I took it off my site. I was interviewing someone about where he got his ideas and he said, “One of things that I do is I look at competitors’ websites, they have those UserVoice things like you do, Andrew.” And so he clicked on mine. He said, “Where are all the things that people are telling you you’re not doing right. I’m going to go do them right now if I want to compete with you.” And I thought why I’m I signaling, which was actually a mistake. I should have left it on there and done something about it instead of taking it down so that he couldn’t do something about it.
Andrew:I’ve got to . . . you know what, if someone out there is listening from UserVoice, get back on here. Let’s do another interview. All right, so I see how you’re building this up. You say that you’re not . . . that marketing is a deficiency of yours. How did you know?
Nathan: I’m a developer and by trade I like to punch keys and write code and usually people focus on something they do well. And that’s just where my brain goes. But as far as like making something look pretty on a website or I’m bad at graphics, I admit that. Everyone around here knows that. But marketing specifically, I’ve never understood how someone can spend I think, gobs of money $10,000 well, $1000, $10,000, $100,000 depending on the size of your company. They got to kind of like throw in the AdWords. And Google will just eat it up and it’ll be gone in a day if you want to throw that much money at it.
So I never quite understood how people can spend so much money and how that generates a return. And over the years I’ve started to understand this, how marketing doesn’t back the company because it truly is . . . you put a dollar towards your marketing and you should be getting $2 in sales. And which means you put $100 towards marketing and you get $200 in sales.
Andrew: Only if you got it dialed in right, so the getting it dialed in is really tough. Your first set of customers came actually not just from you, but also from Google ad so you were experimenting. Even when you weren’t good, you were buying some Google ads from what I understand, right?
Nathan: Yeah, I forget what year I started tinkering with that but eventually once we started getting a few paid customers we tried that out. And originally Google ads was fairly cheap we could probably pay two to three dollars for someone to click over. Today it’s more like $30 or $40 just for someone to click on it.
Andrew: So what did you do to actually make that, all that traffic that you’re paying good money for convert into customers. What was your process for improving that funnel or what . . . I saw you smile as I said that. It makes me think maybe you weren’t really that obsessed with it.
Nathan: I’ve never really been obsessed with marketing even today. So I’ve got some amazing people here that that do that for me and they tell me you know we need to be doing this. They told me we need to put more time into our blog and I was just told about a week ago that we need to fix our Facebook ads.
Andrew: Facebook ads.
Nathan: Because they’re like seven years old and they’re not generating any conversions anymore and we’re spending too much money there. So I need someone who understands the marketing aspects really to drive me and to push me. Because it’s not my passion and marketing in general, so I would rather let someone handle that and focus on the things that are my passion.
But today I do understand it a bit better because I can see the numbers and we track where customers come from very well and if they come from Google ads, we track them into the system. And we see how many of those Google ads turned into conversions, and how many of those conversions turned into just trial customers or that they turned into long-term customers.
And since we’re on a monthly billing cycle, we do a monthly recurring billing. A customer who sticks generally sticks for between four and six years so we can calculate our revenue on this and where the marketing and spending money on advertising key turned for me was seeing like this dollar that’s spent over here actually might bring in $8 over the long term. And so I can see that and makes a little bit more sense to me now.
Andrew: All right, let me talk about my second sponsor and then get into how you discovered blogging and what your blog strategy is because I know that’s worked really well for you for getting customers. My second sponsor is a company called Toptal you were telling me before we started that you’re hiring. What’s your hiring process today before I get into the Toptal sponsorship message?
Nathan: It’s mostly putting ads on Craigslist.
Andrew: Really, even for developers?
Andrew: Wow, okay, so I had a guest a guy named Derek Johnson on here. He did an interview, he liked Mixergy as a listener, and then when he went to hire he did kind of what you did, which is put ads out on the internet, get a bunch of people in, he screened them, he did 20 to 30 interviews before he realized that all his Craigslist ads were just draining him and not really leading to the best of the best people. And then he said, “You know, what I’ve been listening to Andrew talk about Toptal for a long time. I know him. He actually even came to my office.” So he had every reason to say I trust Andrew, so let’s just call Toptal.
So he went to Toptal and I should say it’s top as in top of your head, tal as in talent and the first thing he did was talk to someone at Toptal and told him how he worked and he’s got some quirky things that he’d rather I not talk about his business. But every business has its own quirky ways of working and they sent him a couple of developers that were spot on. His CTO said we could have hired either one of those two and they finally picked one and the CTO later said, “This guy is so good. He could replace me. He could be our CTO.”
And the reason for that is that Toptal has built a reputation in the marketplace for testing developers really well. So the best developers want to go through the test, want to see if they pass, and then once they pass they’re in Toptal network and they’re easy for Toptal to refer out. If you or anyone else who’s listening to the sound of my voice, Nathan, is interested in hiring a developer, you guys should just go check out do the same thing that Derek and so many others have done toptal.com/mixergy. That’s top as in top of your head, tal as in talent toptal.com/mixergy because when you go there 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, toptal.com/mixergy. Cool and by the way, with them you don’t have to pay anything until you hire.
Nathan: I like it.
Andrew: So how did you figure out the . . . how did who to hire to do your marketing for you?
Nathan: We lived in a small area first off, so that’s one of our challenges both with developers and marketing staff. And so finding that talent is pretty tough just because there’s not a lot of it unless they happen to move up from the Bay Area or down from Portland, so right about in the middle of those two locations.
So finding people is challenging here and for marketing specifically again I threw out some Craigslist ads, had . . . it said something like return your resume to the address provided because in Craigslist you they do a secret address that goes through their system you don’t get a bunch of spam stuff. And that was my intent is send your resume to that and I’ll pick the best of you and then I’ll do a couple of interviews and we’ll pick someone. So for customer service and marketing we get tons, quite a few, and one problem with Craigslist is sometimes those e-mails don’t come through. So they’ll filter the spam and they’ll never make it to you. So I acknowledge some people we miss out on that way.
But looking through all these resumes it is difficult to choose who is going to be the best marketer. These resumes look beautiful, they’re amazing, and of course, everyone brags about themselves and they’re like, ” I’m the best.” And so, you kind of have to test them out to see who really is the best. But through that process and looking at all these people, there’s one person that stood out really well and what she ended up doing is she sent her resume. It didn’t make it. Craigslist filtered it as spam or something. It never made it to my inbox. So I wasn’t even going to consider of course because no resume.
After she didn’t hear back from me a day or two later, she came in and she dropped off her resume and I had her resume in my inbox and I saw it there I was like, “Oh, that’s interesting.” And I put it on my desk and I glanced through it and I was like yeah, equally good to all the rest. That’s pretty cool. About an hour or two later she talked to the people in the front of the office. Now there’s about eight people between me and the door up there. A whole nother company used to be there. You have to get to that company then about eight other people.
Well, she talked her way past that company and then had someone in our company escort her back to my office to introduce herself to me. And I told everyone don’t let anyone back. If anyone brings their resume in, just give it to me later. Well, she ended up working her away back here and she was standing in my door right on the other side over there introducing herself. And anyway, she became our lead of marketing.
Andrew: And well, beyond her the fact that she’s there, doesn’t necessarily mean that she’s good at online marketing. Does it? Or do you just say, if she’s this good at getting in here, she’s going to figure out online marketing for us?
Nathan: It impressed me. However that all worked out just impressed me. And if she was able to get in my door, I have a feeling she would be able to get into other doors that I have had trouble getting into, meetings I couldn’t make or introductions, I couldn’t get to, and so I felt very good about it.
Andrew: You know, so I the reason bring this up is I had somebody come into my office yesterday I’m trying to hire a VP of operations here for Mixergy. I should have done this a long time ago because the people that I get access to are just phenomenal people. I didn’t think I could. And one of them showed up in my office yesterday completely unannounced. I cancelled my meeting just to sit with him because I know he drove from a few states away. And we had this great conversation for a couple of hours and I thought how much am I being swayed by the fact that he’s here and how much am I paying attention to his abilities and background and it’s tough and it’s partially why coming in here is such a good idea. And not that I want to encourage everyone to do but wow.
Nathan: Now they’re coming.
Andrew: What is your process for hiring? It’s just put an ad out? Do you have any other things that work beyond . . . is there something about your ad that makes you more effective? Is something about your screening process?
Nathan: Well, we hire locally only. We don’t do any remote work. Everyone works right in this office and we search for personality, compatibility, and then skill set, probably in that order. Because we all come to work to have fun. We work here and I work with the people that surround me eight hours a day five days a week.
Andrew: Is there a sign by the way on your building saying no pants needed. I’m looking. Why did you say no pants needed? What is this?
Nathan:Are you on Google Maps or something . . .
Andrew: Because whenever you tell me something I always try to look it up. You talk about your blog, I look at your blog. You tell me about your office and how it’s shaped, I look at it up. What’s the deal with no pants needed? Why does it say . . . it says Rentec Direct on a big sign and then underneath it says no pants needed.
Nathan: That’s funny, so partly that is just for fun because we don’t have retail customers. Nobody comes into our office. In 10 years we’ve had maybe two clients stop by. There was a company that used to be on the front of this building, it was a mail company, and when they left we decided to take over the rest of the building and use it for fun areas. Now we have a ping pong table and giant TV and video games and you know just stuff that people enjoy out there. And but then there was this big mail sign that when you walk down the side-walk you look up there and there’s this giant mail sign. Like we got to get rid of that. People keep like knocking on our door wanting to mail UPS packages and stuff. And then but we’re like but why? I mean, we don’t have customers. Nobody comes into our office. We’re just a development house.
And then so we just decided, you know what, like we’re right downtown, we’re on the two busiest streets of town, let’s just do something fun. And we’ll put our logo on it, sure, boring, but let’s also put a ping pong paddle on it a foosball and let’s put no pants needed. And where that came from is it must have been maybe two weeks prior to making that sign is I think we did a blog and we we’re talking about tenants making rent payments. And traditionally a tenant, they go to the bank, they get a wad of cash or really write a check and they either mail it or they walk it, you know, they bring it to their landlord. Around here crazy enough a lot of people like put cash in the door slot of their landlords. It’s crazy, right?
Andrew: It’s just cash.
Andrew:All right. I would know who gave it to me.
Nathan: Well, I don’t know. People run interesting businesses. But one of the things that we do is we empower tenants to be able to pay their rent online. A tenant can go online, they can either put in their credit card, or they can put in their bank account, and they can pay rent, and they do not have to have their pants on when they do it. So that’s kind of where that whole theme came from.
Andrew: Now I see that article right here with the gif on the bottom. All right, I see . . .
Nathan: It’s hilarious. You looked us up.
Andrew: I want to see that article too. I’m telling you, whatever guests say, I go and check it out to see, to get an understanding. So you’re saying if this is our attitude so much so that we’re not afraid to have this no pants needed sign, almost maybe even as big as our logo, I want you’re saying a group of people who are that fun loving. How can you tell? What’s your process for figuring them out? What’s your little tip for figuring out who can have fun your way?
Nathan: Well, usually when they’re e-mailing to like set up interview, I’ll ask them if they have their own ping pong paddle they’re going to bring in or what do you like to do. And half of the time when they do come in, probably half of our meeting, is just talking like what are things you like to do, you know, what do you do outside of work. And of course, everyone thinks you’re going to talk about how do you develop in this language and how well you know MySQL and things like that. But we kind of gloss over a lot of that stuff and go for the personality and see how fun is this person going to be and are they going like, do we get along and not just do I like them and does the other stuff like them but do they like us. Are they going to enjoy coming to work as much as we do?
And so that’s a big part of the test for us and we just started doing this recently is when they come in we give them just a one page questionnaire and it’s like just ten fun questions. And it says, don’t spend more than you know five minutes answering this and don’t use your phone and just ask them stuff that we’re interested in and they’re fun questions. Actually I have a couple right here and this help us get to know them a little bit better and sorry I thought I had it right here.
Andrew: Take your time I’m glad that you’re actually reaching out for that. A real list.
Nathan: Yeah, there’s just someone who came in. We have a graphics position out right now and someone came in and just a couple of questions I’ll read off here. And there just silly like okay, what kind of coffee do you like? Pretty basic one. Second one is like how many pennies would fit in this room. I mean, it’s just out there. I like airplanes a lot so I throw an airplane question in there. How many jet engine does a Airbus A380 have? Do you know?
Nathan: Biggest passenger jet out in the world. So I don’t know I look up at the sky and I see them flying.
Andrew: What are your looking for with that? Are you trying to say . . . are you looking to see if they’re observant, are you looking to see if they have a clever answer, or are you looking for something else?
Nathan: The questions are all over the place. It asked that just because I have an interest in airplanes that ask you know would you rather be scuba diving with sharks or dolphins or other scuba divers? Was the moon landing real? Just stuff to kind of . . . it helps generate conversation I think during the interview process and it also just gives me a little sliver of insight into their brain and you know sometimes maybe all the answers, not that this would disqualify anyone, but maybe all the answers are really serious. Or the last question is how ridiculous was this questionnaire. And if someone put “this was stupid, you wasted my time,” I mean, that might be a really short interview.
Andrew: You know what, I think just need to do that too and I think what I’m learning is I need to own my like aggressive, abrupt style. And I’ve noticed when I’m interviewing people for jobs, I want to put it on display just to see how they react. If I give them harsh criticism or if I’m like jumping in and trying to get a debate and they’re not debating or they shrink, that means my personality is going to crowd them out. And I think I want someone’s who’s strong. I like that approach.
Nathan: They have to be able to handle you, yeah.
Nathan: You want to know up front before you spend all the time training them, we have a long training process to get people up to speed on our software no matter what department there are in. It takes a long time to get someone trained and productive.
Andrew: Can you tell me about that what’s the training process. I don’t think I do a good enough job, especially since we work with a lot of freelancers, I don’t I just assume they know because I know and I need to take some time to say we’re going to spend a week paying you to understand everything. What’s yours like?
Nathan:Well, our whole process, it’s a minimum of two weeks. Like from customer service perspective, it’s a minimum of two weeks. From a development perspective, it’s about two to three months to get up to speed. And we find productive projects for them to work on during that time but usually it’s pairing somebody new with someone who’s seasoned and mature at the company in order to kind of shadow them and learn what they’re doing. And then slowly but surely they’ll start moving out on their own and doing their own thing and picking up the ropes.
But a lot of it’s trial by fire also. Once they’ve shadowed someone for two weeks to a couple of months then you’ve got to throw him in and let them do it, even let him fail a couple of times but we try not to let anyone . . . we don’t want anyone failing but sometimes it’s the only way to learn is just get in there and do it.
Andrew: Been trying this online coding classes and they’re really good at doing micro lesson test. And I feel like that’s one of the things that I might want to onboard people just say, “Here’s a little thing about us. Take a test, not because I don’t think you’re going to get the answer, but I think answering this simple question is going to wake your brain up otherwise it becomes stale to just get them lots of micro lessons.” Largely I think that because we do a lot of a lot of our stuff is going to require people to read to prepare, go read this, go understand that.
You said so you’ve got three things that you look for when you hire someone the first is that personality part of the interview and you express that. What were the other two and how do you look for them?
Nathan: Oh, shoot, let’s say personality.
Andrew: I think the third one is skills and then . . .
Nathan: Yeah, the last was skills. I don’t remember what the second one was. It rolled off from personality but it’s about the how . . . I mean, we look at personality and how well they’re going to fit and work with the team, our priorities. And then finally it’s their skill set and I think from in certain departments sales and like customer service type departments, if you have the personality for it you can be trained into the job.
For development, it’s a little bit different. Someone has to have at least a base knowledge of the development language that you use in your system. So they have to come in with some knowledge but still more important to me is the personality and how well they’re going to fit into the organization. I would rather have someone come in with a little bit of development skill and learn more on the job but get along really well with everyone. Than someone come in and know everything but maybe not get along.
Andrew: Finally what do you do with your profits? Buying real estate? What’s the deal?
Nathan: Well, we invest a lot back into the company. We are going to be . . . very few people know this yet. So I might be telling you a little bit of a secret. You’re to have to update you’re Google Map, but we’ll be moving our headquarters a few blocks away. So we purchased a new headquarters that we’ll be moving to which is awesome. It has an outdoor courtyard, we have an outdoor ping pong table, it has a library, a full kitchen, it’s going to be sweet. It’s going to the best place to work in town.
Andrew: You guys are big on the ping pong table even when I looked at your job page there was a ping pong table. It’s ping pong table and you’re big on monitors. Is it 30 inch monitors that you like and then you’ll even get people three 30 inch monitors. What it’s the deal with monitors?
Nathan: The more space more you have, the more . . . like in my case like the more space I have, the more efficient it is. I’m looking at you on this 30 inch monitor but I have one over here and I have one over here. And if I don’t have to like be moving stuff around and closing things in order to open up new things and instead I can just move my head. I’m that much more efficient and plus us geeks we just love technology and to be able to have this much data in front of me, it’s pretty cool and most of the people around here kind of follow the same thing.
Andrew: I like you with technology and I’m big when I work I want to have lots of monitors because I don’t want to have to go call up my calendar. The calendar needs to stay here. The other thing needs . . . but I just got this VR headset, the cheap one that Facebook put out for 200 bucks and I’m imagining a world where I could have giant monitors in this when I work in this virtual world and maybe even over the monitors have a beautiful scenery that’s not an office.
Nathan: That would be cool. If we can get over that I don’t like having something on my head like I’m about . . .
Andrew: Have you tried it yet?
Nathan: Like at the tolerance level with this headset here today but having something on my head and over my eyes seems uncomfortable in the times I’ve used it. But I’d give it a shot.
Andrew: I’ll figuring it out. I’m looking forward to trying it. All right, for anyone who wants to go check out your website, go look at how much that . . . . actually no one is going to go to the Internet Archive. I’m the only one who’s on there I basically live on the Internet Archive. It’s good. Today just looks really good, really clear, I like that even though I’m not coming from a background of understanding the problems of a property manager, I get it. I understand exactly all your feature set, I understand what you do, I understand why someone would sign up for it, it’s just a really well done site.
If anyone want to check it out, they can go to rentecdirect.com. That’s rentecdiret.com. My two sponsors are hostgator.com/mixergy and toptal.com/mixergy. And finally I am experimenting with telling my audience about other podcasts at the end of this podcast and there’s one from one of my listeners. A guy named Austin Peek, he created . . . What do you think of his name first podcast Millionaire-Interviews?
Nathan: It tells me he’s interviewing millionaires. Hopefully you’re going to learn something that turns you into a millionaire by listening to him.
Andrew: For me too, though I wonder is it going to be because he’s a good guy, you know what it’s about, but I wonder if I just heard the name what I think it’s just about getting rich quick or something. I think it’s going to turn on the right people and it’s going to scare off some people to.
Andrew:It’s millionaire-interviews.com/subscribe. He’s got some good guests on there. So go check him out. I think it’s a really good follow-up to what you’re hearing here. And thank you all for listening. Thanks for doing this interview.
Andrew:Actually, you know what, Nathan, I’m going to tell everyone this, the one interview that they should go listen to right now from the Austin’s podcast is the CartHook guy. CartHook is this great piece of software for e-commerce, the guy has done a great job with it, he’s a good person to go listen to his interview. All right, there, sorry I cut you off as I was saying thank you and appreciating you. Thanks, Nathan.
Nathan: All right. Thank you too.
Andrew: Thank you. Bye, everyone.