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Here’s your program.
Hey everyone, it’s Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. I’m building a website here, an audience here that even though they know that there are tons of websites out there where they can watch funny cat videos, and people slamming into the ground off skateboards. They come here to spend an hour learning from an entrepreneur about how he built his business. And today I’ve got with me a man who has built more than one business, multiple. In fact, we talked before this interview and he said, “five businesses, over forty million dollar exits.” His name is Robin Richards. He launched internships.com just a few months ago. It already has over twenty thousand positions from over nine thousand companies. I wanna ask him how he launched so big. More importantly, since I really don’t do interviews about startups until after they made it big. I wanna also ask him about he took mp3.com public in the late nineties and how he built NTI Group, the service that lets schools alert their students via text message and other methods, how he, how he built that company up and how he sold it. First of all, Robin, welcome to Mixergy.
Interviewee: Andrew, great, great service you’re doing for all, all the wild entrepreneurs out there. It’s really needed.
Andrew: You bet. And all the horrors, the guys who are out there who are probably didn’t sleep last night because they were busy coding up their websites and are still listening to us as a, as a way to fire them up. First of all Robin, first question: over twenty thousand positions on internships.com, that didn’t happen organically, right? How did you do it?
Interviewee: Well, I, I think when, when we started this business we said “there was no central marketplace.” There was no ecosystem for students to come anywhere and have an aggregated a, a, you know, portfolio if you will of opportunities throughout the nation for internships. So the first thing we did is we said, “all right, well, how can we get the best payoff? Cuz we’re just getting started.” So we, so ofcourse we went on to the web and we saw what was available and we, we did a fair amount of scraping, ok? And we brought those in and then we started our process of, of reaching out, of using every medium you possibly could, as well as in person. And going to companies and going to Chambers of Commerce and, and charm them, and, and every kind of website, social media you can think of, saying, “hey, this might be a good opportunity, to, to post.” And so, we’re very, very pleased with the amount of organic postings that we have. I think right now it might be, maybe about six thousand, I, I’d have to check on that, but there’s you know, sixty, seventy, eighty every single day and, and that number has been climbing. And we just have fabulous internships on the, on the site. I mean, yesterday we got an organic posting from Disney and Aflec. And we’ve had the Blue Man Group and Los Angeles Sports Entertainment Commission and untold, you know, fifty states, all fifty states we have something at somewhere.
Andrew: Ok. But you started out by scraping the internships that were already listed on the Internet. You just sent the crawler
Interviewee: That’s right.
Andrew: and brought a bunch of them back.
Interviewee: Yeah, and we, and we put them into good format. You know, made them look good.
Andrew: And when you’re reaching out to companies and Chambers of Commerce, whose doing that? Is that people internally in your office in California or do you outsource that?
Interviewee: No we, we don’t outsource very much. That’s internally. They’re in California.
Interviewee: No, we don’t outsource very much. That’s internally, they are in California, they are also in Indianapolis, they are also in Boston.
Andrew: And how are they doing that? Is it picking up the phone and cold calling, is it looking online
Interviewee: Absolutely, you do a fair amount of hard work, okay, our external folks pick up the phone, say we have good information we would like share with your chamber meeting this week, to tell all your small and medium sized businesses how to get in on the internship boom that is occurring in America today, and why us, and why it is a good platform and we are seeing just tremendous results from that and of course we are going on to small and medium sized business sites throughout the web and tell them about it and producing reporting engines and data that they want.
Andrew: So internships.com is actually sending people in to physically be at a chamber of commerce meeting.
Interviewee: Absolutely.
Andrew: Wow, how many people do you have at your company?
Interviewee: We have 46 now at company I think
Andrew: And have you done some acquisitions already?
Interviewee: We’ve done two acquisitions, yes we have.
Andrew: What were those acquisitions?
Interviewee: Well, if you are going to create an ecosystem for internships, you have kind of three constituents, you have the demand side, the student, you have the supply side which is the corporation or non-profit and then you have the educator which are kind of remarketer, the fastest way to get to the student, cheapest way to get to the student. So you have to create products and services that make the educator want to do business with you as opposed to not want to do business with you and so we put these people, we have a philosophy and always have in every one of our businesses that if you are trying to go national, start a fire in a number of kind of local areas and get real command and real market share in local areas and so we do that and we found that that always helps to build a national company faster. We pick usually an east coast city, a west coast area and somewhere in the middle and we put a lot of concentration on those areas to see if we can build them up and kind of watch the moment build up from there.
Andrew: I am sorry, but I don’t understand how, I understand the strategy there but how does buying companies fit in with that, what companies did you get and how does it fit in?
Interviewee: Okay, good, I should have answered that question directly before, the company that we bought was a database company, it was called crisearch. Crisearch is a very old, very respected database company, they have over 18 or 19 different databases that they use to create a system whereby a student could search by major, they can learn all about the company that they wanted to go work for, this is primarily in the job market, and you could search by region, you could search by industry and it pulled up all kinds of information and your revenues, who are the people in the company were, how to get in contact with them, growth trends in the company, industry issues and we thought that that would be a very effective tool for interns as well as those seeking jobs for interns to be able to say, hey let me take a look at all the companies in the Sacramento California area that have between 10 and 50 employees and see what they are all about and see what kind of opportunities might exist.
Andrew: And the customers for that business were already schools and institutions that were talking to your students
Interviewee: Yeah, there were 160 universities, mostly actually universities that were using that system when we bought it licensing it from anywhere from a $1000 to 7 or $8,000 a year for access to the data put in and we just package that,
Andrew: What was the second company?
Interviewee: The second company was Clear Beam, and Clear Beam is owned by a woman calling Sabatina who is just firebrand created tons of intellectual property and issues like assessments, how to issues throughout the career process, primarily this was in kind of business schools, graduate school groups and we loved the content that she had.
Interviewee: Kind of business school graduate school groups and we loved the content that she had, we loved the resume builders or cover letter builders, we loved her assessment test, we loved her client base. She brought a really good brain trust, she is a ClearCenter director in her past, she brought a lot of knowledge about this industry and how it is currently operating and a lot of content, lot of intellectual property to the process.
Andrew: Okay, I want to come back to this because I think we should talk about what you have done up until now and then we’ll get into how you thought about launching this business, how you even had a menu of options and from that menu how you [10:47] down to this one opportunity and what you saw in this opportunity and I want to talk about the revenue model here and the funding and so much more but let’s go back in time to the late 90s. you had at the time MP3.com, you took it public, it was the biggest IPO at that time, how did you get involved with them?
Interviewee: MP3, I was at tickets.com with most of the team that I have here today, and we were just exited tickets.com, we had just sold tickets.com to Advantex after a very short period of time actually, creating a business model that we loved.
Andrew: Was it six months? Give or take
Interviewee: It was under six months. It was a great exit and with a great team around and a young man walked into the office selling advertising for what was then called Z music and had Z Challenger and Z every application you could think of and he explained to me how there was no need to haul around your CDs, there was no need to have one song instead of 25 songs, that the voice of the independent artists in America and throughout the world was being lost, the internet could change all this, and I saw a young man that I thought had a brain that was gigantic, okay, really understood and was early on the internet, had a vision that was really large and a product that I had never seen anything like.
Andrew: And this is Michael Robertson?
Interviewee: This is Michael.
Andrew: What were your ages at the time?
Interviewee: Well, I was 39 or 40, right, Michael was 10 years younger than that, maybe 15 years younger than that I don’t know Michael’s exact age and probably his first business or maybe his first chance at a business and we really trusted his instincts on the internet, I brought my team together from tickets.com, our chief marketing officer, our chief financial officer, our chief operations officer myself, and chief financial if I didn’t mention that, we all came together and we said alright this is a unique time in history, the greatest weapon our small company has against a large industry is speed, we are going to go really, really fast, we began immediately to put business plans into place, raise bunches of money, Sakoya came in early, Mark Stevens had great vision on that one, gave us a lot of money, and stepped back and watched which was not typically how Sekoya would do things, gave us assistance if we wanted and left us alone if we wanted, in less than six months we had written an S1 and taken it out public for a magnificent success, it was a great company that ushered in the digital music age, and we ended up selling that company to Universal Music, for Vendy Universal, John Marie Massey at the time was riding high and actually when you look at it he probably had it right, he was just little early, and we had a lot of fun with that. that was a great team, it was hard work, it is a testament too, it is never over till it’s over if you can say positive and we had a lot of fun with that one and had just a superb team around us.
Andrew: So let me see if I have got this right? My research from this comes from Wikipedia.
15 – 20
Andrew: Comes from Wikipedia and the top of that entry in Wikipedia said the sources need to be, we need better sources. So let’s give them better sources. Here is what I got. Michael Robertson and Greg Flores in 1997 owned Filez.com. It was a search engine essentially that started out letting people search through FTP sites but I guess it moved on to let them search on online too, they had the domain or bought the domain MP3.com, they directed it towards files.com and in the first day that they did that 18,000 unique people came in and also in the first day they got a new sponsor, and that’s when they said this thing is going to be huge and they started directing more of their energy towards MP3.com. Is all that true from Wikipedia?
Interviewee: I can’t recall if it was 18,000 I know that we made MP3.com a corporation after I got there. So I don’t think they, in fact I am sure they didn’t launch the name MP3.com. It was a music site, Greg Flores was kind of a sales guy, Michael, his sister and a couple of other folks were kind of technical people and then Michael hired us and we made our deals and we all came in and it was a wonderful opportunity and it blew up about as fast as anything I have even seen blow up and it just came and people and came and came, there was a great demand for digital music on the internet. That’s for sure.
Andrew: I know, I was one of the people
Interviewee: Well, we had the first locker system ever which became very popular, we did some of the first streams that were, so we are involved at MP3.com and a lot of firsts, it was an exhilarating time for all 300 employees then.
Andrew: When you joined, was the website launched at all?
Interviewee: I think there was a fair number of kind of websites that were going on. We sold all of them to Bill Gross actually except for the music one, he bought all of the names and [17:30] and I don’t know what he did with them, but we concentrated then on the music site only and we just got off and go on MP3.com and [17:43] was a gentleman if I recall right by the name of Martin Paul who sold MP3 to us and I think we bought it at $1,000 I can’t recall the exact number but a low number.
Andrew: A thousand bucks for MP3.com?
Interviewee: I think at the time people weren’t, might have been $1,200, I can’t recall the exact number but that kind of number, and people weren’t trading in URL’s then, that wasn’t the business really that was going on. So it was lot of firsts with a lot of good people that have gone on to be great entrepreneurs, I think we spawned more entrepreneurs out of that company than I have ever seen before, I bet you, 10 or 15 folks went on to own their own companies after that.
Andrew: I paid a few years after that over $100,000 for the name grab.com and that’s not even a name that people just type in, you have got internships.com I bet you didn’t pay a 1000 bucks for that? Can you say how much you paid for internships.com?
Interviewee: No I am not going to say but I can tell you geometric multiples above that?
Andrew: Was it more that I paid for grab.com?
Interviewee: Absolutely and a lot.
Andrew: And it is worth it, internships.com is a great name.
Interviewee: I think it is worth it too.
Andrew: Going forward with the story you said that you had a locker system back in MP3.com, that’s what caused the trouble? Where did the idea come from?
Interviewee: Well, I don’t recall, we had probably 150 engineers would be my guess, they came up with product ideas and product management people came up with product ideas all the time. Is that really where the trouble came from and that’s a whole long and different discussion. MP3 was very responsible as a corporation and in vending license content. So I don’t think this is a good forum for the fight we had with the music industry and how people fight. So we can move on off of that one.
Andrew: I will but I am curious why you don’t feel comfortable talking about it now? And I won’t push, I am just curious about why it is not the right forum.
Interviewee: I think when you acted as responsibly as we acted, which we did, we had a tremendous number of musicologists listening to ensure that we are not letting new bands put unauthorized music onto our site and when you spend that kind of money to make sure you are doing that and you go and try and build a challenge and response system which is what we built in search your CD, and we can kind of tell us it a real CD, we could tell what it is, put it in your locker so you can play it back to yourself and in doing that market research, in fact we were so proud of the market research we think the music industry missed the mark by taking the CD and making it obsolete as opposed to making the CD a box top that brought you into a whole new world once you proved you owned it, so that was our concept is hey the CD is your ticket into this new and wonderful world of options and experiences and get to the front of the line for tickets and it never ends, every smart person could think of the ingenuity that could have been, but in order to recognize the challenge and response of that CD as you put it in, you had to create a database, it did that, it was the database that got MP3.com in trouble only the database.
Andrew: Right, their idea, I am still upset about this, their idea was that if you would have let users take the CD I guess and ripped the DVD and send it into the cloud, that would have been okay, but the fact that MP3 did it themselves and created this database with all the music and saved us the users that step, that was the problem.
Interviewee: That’s right. I’d only saved the users the step but then there was only authorized MP3s into the Universe, not unauthorized, [22:13] it saved developer the music industry that frankly didn’t want to get disintermediate and that’s where the fight began and MP3 went off into the horizon and things that I am sure they never anticipated came on to the horizon and Steve Jobs now sells more music than the music companies and they don’t control distribution and fighting new technologies is an age old thing in every industry the guy that owned the ice box didn’t own the refrigerator, kind of the guy that owned the CDs may not when the story is told on the distribution of music in the world.
Andrew: Alright, he is a quote that I wrote down when you talked earlier, you said it is never over till it’s over, what I’d like to ask you is you’ve had ups and downs in your life, at the worst moments, the biggest downs, how did you keep yourself motivated? How did you get yourself to keep firing because you are the guy who everyone looks to and if you, you the CEO, if you the president, if you the founder are showing a little lack of confidence, every one else losses it. So how do you keep yourself going in those moments.
Interviewee: I think if you are CEO, you’ve got to understand one mantra and more CEOs understand there is a better chance they have of being successful. You don’t get strokes, you give strokes, that is number one, don’t expect to get them, and number two you give credit and take blame, if it goes wrong it is your fault, if it goes right it is one of your troop’s accomplishments, and if they know that you are in their corner, if they know that you have their best interest in mind, and if they know you are a smart person, male of female, you are a smart person and that you lead with compassion, and you lead with a strategy with a clear set of tactics, that you are going to do the best you can to get over this hump and that you actually wouldn’t be wasting your time, if you didn’t think you could get over this hump, you guys go to work, let me fight the fight, and if you do your job, I’ll do my job, and I think people really respond to understanding that when the chips are down that’s the CEO’s job, that’s the founder’s job, when the chips are down, the founder must address the problems, whether that’s his or her area of expertise or not
25 – 30
Interviewee: Or not, they have to be willing to take that bar and solve that problem. Front and center, total accountability, total responsibility, and the other thing I think a CEO has to do is they have to think of the big idea, it is their job to break the company out and you have to understand it is lonely being a CEO and it is hard being a CEO and you have to take on the hard stuff and the only time you get credit is after the victory, and that’s how it should be.
Andrew: What do you mean by break out? You have to break out you said.
Interviewee: I think my observation in the companies that I have, I have been at the helm of, the market carries you so far in the competitive landscape, you have to either have a business model, a product, a brand that some event has occurred, you’ve launched, you caused that event to occur, that sets you apart from your competition, and all of the companies I have been part of, that’s a big piece of what we do. Who is that one client that [26:21] would change the perception. That’s up to the CEO to get that client. Not the sales guy. What’s that one product that you see every day, your product people are bringing and things in or you are sitting around and you are thinking of things, it is the CEO’s job to say, you know what it’s that one, and we are going to get behind it and we are going to bet the ranch out and you got to have that kind of confidence, that kind of stubbornness, that kind of guts to get to something that’s worthwhile than natural.
Andrew: Todd W in the audience is say I wouldn’t mind working for someone like that? Of course, that’s what people are looking for, if you are going to go work for someone you want to do it so that you could be inspired, so that you can feel like you are learning, like you are growing, like you are working for somebody who has a sense of vision, and hopefully some of that rubs off on you. Do you put interns by the way at your place?
Interviewee: Oh my goodness, I love interns.
Andrew: How many interns are there in internships.com?
Interviewee: I would guess, but I am not exact, I would guess we have 12 to 14 maybe right now.
Andrew: 12 to 14 people who are interns? Wow.
Interviewee: They know they live in the market that we are surfing. They help us with design, they help us with how to acquire names that we need to go after, they help us ensure that we drive students to the organic listings so that the business is going to pay off, they help in so many ways and I think interns do one other thing for a company besides you are giving them an opportunity to take their course work in that class room and see what it is like in the real world, they are giving you an opportunity to see what the real world is going to be very quickly because they are it, right, and so it is a wonderful give and take I think. I find something else that happens that’s kind of magical with interns. All your employees are on their just most positive and best behavior showing that the place they chose to work is a great place and here is what we do here, here is how we conduct ourselves here. I think interns spread a culture that’s just fabulous and help to reinforce the culture that is just fabulous in a small to medium size company.
Andrew: I am going to move on to NTI Group in a moment because I want to hear how you built that but let us found out here, a couple of people are asking about how to work with interns? I have had two kinds of internships in my life, one where you are basically going and Xeroxing and do nothing and you understand that you are there because you need to be in the environment and the other where you are given everything and maybe it is a little bit too much, how do you manage interns properly?
Interviewee: I think the first thing you do with interns is you set expectations. So many companies get interns and don’t have a system, don’t have a what are we going to do with them when they get here, well give them to the finance guy, see if they can do spreadsheets, give them to the marketing person they have you go do copies. I think interns are valuable and I think they expect valuable work and I think it’s up to us as business people, that’s the kind of the community service aspect of an internship I believe for business people, give them valuable work, help them to learn something. They are not slowing you down, students are smart and they
30 – 35
Interviewee: They know this world as good as we know this world. They are digital nomads, and if you are over 30, I call you a digital immigrant. If you are under 30, chances are you were born with this stuff all the way home. So you got to set expectations, so what we do with our interns is we bring them and we say hey here’s what we have in mind for your for the next x weeks, and I also think internship should be a year around. It makes a lot of sense, do eight hours a week throughout the school year and then ramp it up because you are creating great relationships while you are doing this and you get a lot of learning but [30:41] expectations. This is what we are going to have you do, we are going to either do a rotation for each week or each two weeks we are going to have you in a different department, I ask the departments in advance to give a project, interns should do projects because you don’t want them to get in the flow of the business because they leave. So there is always good valuable projects that you can think of that help them learn about how business is conducted. Now interns learn a lot of valuable things. Hey you can’t be five minutes late, you got to come in on time, there is rules of engagement in turn, you don’t get to walk into the vice president’s office and say you know I have been thinking about that carpet the [31:23] so you teach them a little bit about the rules of engagement, little bit about the expectation management and you give them an opportunity and permission to have a voice, if you don’t like what you are doing, tell us. Our whole company is based on a premise that you have an obligation to dissent. And if you don’t speak up you have no problem, speak up so that we can get the best brain.
Andrew: You are inviting over a dozen people who are in your office as interns to dissent, to disagree?
Interviewee: Absolutely.
Andrew: Ahah.
Interviewee: Absolutely. Now, we are going to spend three days talking about it, no, but I want to hear what they have to say, my managers want to hear what they have to say, because I think what happens to people at the top of the pyramid is they forget they are not really smarter, they just got to the top of the pyramid, they might be better at the game, they might be more risk tolerant, but we are not really smart let’s face it. So if somebody watches your company for the same amount of time you are watching the company, whatever they are doing, chances are if they are honest and it is an environment that’s not going to hurt you, they could figure out how to optimize what they are doing, and all you have to do is prioritize that with all the other things you got going on, but you got to pay attention, because most people can optimize their game if they are free to optimize, if they are free to offer that.
Andrew: I see a few people have asked about free vs paid internships, let’s come back to that because I think that the beat is interesting and it is worth talking about, but let’s move on now just to NTI group. Did the company start off as Notification Technologies Inc.
Interviewee: Yes it did.
Andrew: What was the original premise back in 2001 when you launched.
Interviewee: The premise was pretty interesting again as is my case I am not a deep technology guy, I love technology, I recognize good technology but that is not my skill set, the creation, so I usually get technology brought to me and then we had just come off of our last company and we are looking around and we are trying to decide what to do and probably look at 20 or 30 different industries. It is not the idea that excites me as much as the marketplace that should exist that doesn’t, okay, and so we look at a few things. We say is the market fragmented before we see the idea, is the market fragmented, if the market is fragmented that is a good thing if you are going to start a business. How fragmented is it, pretty fragmented in the case of NTI, it was all regional in nature, servers in the basement of schools and businesses and colleges, plugged into wall sockets like you do two calls a minute
Andrew: And for people who don’t know what that was, the company as I said in the introduction allowed the schools, I guess using this old technology at the time to send text messages or voice mailer or robot calls I guess to students to say hey there is no school today because of bad weather or there is this other issue over here that you need to be aware of, right. That’s what was there when you saw it.
Interviewee: That’s what was there and the leaders
Interviewee: And the leaders had an extrordinarily cumbersome time of accessing that technology that late in the phasement somewhere, there was no database tied to it, the UI was, you know, not on the net and we said, “Man, there’s an opportunity here. Not only was it a fragmented industry, but of the fragmented industry, the biggest person in it probably wasn’t doing five million in revenue and they lived in North Carolina and they did that and I saw that people were kind of splitting up that industry and kind of seating the regions to each other so there are about four or five folks in that, none of which were doing very much volume. We thought with a small amount of technology that we could fundamentally change this industry, just take it to the SAS model, take it to the net, allow the exact person who needs to use this stuff be the one that can control using it so now I could get a principle that could pick up a telephone, dial an 800 number, leave a message, and to them it was close to magic, “Oh my God, it’s now on my computer,” you know, one second later they could preview the message, pick the database off their student information system, send it out, and we could preload these things if the person’s absent and you know, preset messages. We got up to a lot of volume where we could do up to 3 million calls an hour. The texting platform is a little more cumbersome, it doesn’t quite handle that as is the cell phone platform a little more cumbersome. So we could do lots of emails, we could the maximum amount of text messaging. Then we create a report that came back to the educator, or the mayor, or the president of the university very quickly and it just kind of caught on. We changed the model and this was the biggest thing that we did other than acquire a couple of great clients that changed everything from our brand perspective, but we changed our model from a paper call model to an all you can eat model. That said everything. We said, “Hey, a penny a day per student you owe that to the parents to protect them for a penny a day per student.” Here are some of the other things you can do besides emergency to make this system advantageous for you, to really get your money’s worth, you have no hardware, you have no software, you have no phone call costs, a penny per day per student, go at it. And that began the floodgates, that, just simple, how you charge for it, the business model opened the floodgates and we started selling everything on the site and we stayed very true to our markets.
Andrew: What else would schools use it for besides emergencies?
Interviewee: This is what our product people began to, you know, create. The first thing that they used it for in the K-12 space was notification of absenteeism instead of at two o’clock in the afternoon and 9:20 in the morning. And we found that parents could actually do something and did do something about that, we find 6-7% of the students’ mom would get on the phone, “What are you doing? Get to school,” right? So that was good for all of those states that got paid by the day, you know they like that, when the student was in the seat. The other thing that we said were colleges. How about using this thing you had, you know, 9,000 people sending an application or an information request to come to your college. How about sending a message from the president 9,000 at once saying, “Hey, we really appreciate it,” good old customer service, “Thanks a lot, I think you’d find it good to come to Loyal or Mary Mount University, it’s a great place for your kid,” right? So using it for those kinds of things without wondering, “Did I spend ten seconds because it was an unlimited use system. Two, of course all the emergency uses. Cities would use it and say, “Hey, Main Street, new service here by the mayor. We’re closing it down on Tuesday, no garbage claim on Wednesday and they could pick and choose streets and it actually saved the cities a ton of money because their 311 systems didn’t get a thousand of calls saying, “Hey, the garbage guy didn’t come today,” right? It became very effective and pretty much most every city has it, most every school has it, most every college has it today and the adoption was very, very quick and we sold that company to Blackboard and they’ve done a nice job with it and they’ve acquired a couple of other companies in the industry.
Andrew: You sold it for $182 million dollars, fifty million in stock what I understand.
Interviewee: $182 million dollars, 50 million in stock, yeah, that’s just about right, that’s right.
Interviewee:
40 – 45
Interviewee: $182 million, $50 million in stock, that is right answer.
Andrew: Before I move on I’ve got to ask you how would you even come up with these ideas of business, you are not in school saying I wish my teachers would text me, you are not in the school system saying somebody needs to build this I am going to go out and build my own company that addresses this issue that I have been facing every day, how do you come up with the ideas? Where did this specific idea come from?
Interviewee: I don’t fall love with the ideas. I adopt them.
Andrew: I see. I could see that here with MP3 and
Interviewee: Yeah, I adopt the ideas and this is a young man out of Florida that had a little business going, that used realtors to sponsor, his mass notification system, he got some schools in California, we thought the model was bad, we thought the business was great. We bought his business for a lot of money because I believed we can now run it, and I started negotiating, we could now run the delta and what it was worth and what we paid, so we didn’t do a traditional analysis, it turned out that was a good thing because we got into the market fast, leadership position fast, outran the delta value to payment
Andrew: How did you meet him?
Interviewee: I met him through a neighbor. Finding businesses is about keeping your eyes open and your ears open and your brain open, not sitting down in the den one afternoon and saying you know what I better think soft and good today because I am going to start a business in the morning. You just have to be aware of what’s effective, what’s not working, people’s ideas, just keep listening. And the light goes off. This time it took almost two years before the light went off and when it went off I said my goodness this is a home run, we are going to have natural demand, there is going to be weather issues, there is going to be disasters, there is going to be a constant natural stimulation of this industry, it was, just comes to you I think.
Andrew: I got to ask you the same question that Ray Crock got for the whole rest of his life, why didn’t you copy it and create a business of your own from scratch instead of buying it? For Ray Crock it was McDonald?
Interviewee: Well, maybe I am not smart enough, I don’t know.
Andrew: You are plenty smart and lots of people around you who you have around you for ever, who jump at the opportunity, you would have interns who jump at the opportunity of building something for you?
Interviewee: I think that is really a fundamentally big difference between going to the board and saying I have this great idea let’s see does it work and researching the fundamentals of a market. We come at it from a market perspective about six different elements and then we find an industry that fits that element, then those elements are those most elements we can get and then we try and find a business that fits in that industry that’s doing some of them, right or they come to you and you say oh my God I pray it hits off five of these, let’s take a look what is the industry doing because this is one heck of an idea, so either way.
Andrew: So with internships.com as I read in Socaltech, you had a bunch of ideas brought to you, how formal was that process of looking at those ideas, getting those ideas and then picking the right one?
Interviewee: Well, my partner is Paul, Paul is a brilliant analyst, Paul is a brilliant strategist, a finance guy, I met him at tickets.com, he was chief financial officer of MP3, he went on to be chief operating officer when we sold it to Vivendi, and we stayed to run the Vendi USA, he became the president of that group, he was my partner and president at NTI, he is just a smart guy, does great financial and strategic and industry analysis. So we set out about almost 18 months ago, we hired a young MBA, [44:31] and we said we are going to start looking at businesses and industries and here is the six things we want to you to find in an industry or a small business and bring them back. And the new chap, this 20 pages looked at all this and we would sit down and I would say too hard, can’t do this, going to be hard to get repetitive revenues, going to be hard to, no, no, no….
Interviewee (from 45:00): …going to be hard to get repetitive revenues, going to be hard…no, no, no. And then internships came up, and Paul and I looked at each other and I said to Paul, “You know, Paul, I wonder if anybody will pay for this? Right. I wonder if at the end of the day, will anybody pay for this.” And he goes (and Paul was really Bullish on this one), and he said “Robin this is a multi-billion dollar industry. Figure out the business model. This a multi-billion dollar industry…And I said, ” Okay…I sure like the fact that there was 28-million students that refreshed themselves a quarter every year. I sure believe that the fact we had at the time about 7% unemployment, I was watching what was going on and I certainly thought it was going to cap 10. And we have a very interesting thought process that stimulates this business in general. I think for the first time, maybe in American history to this extent. Let me say that. I think that in the 70″s it might have happened to a small extent, but to this extent our best and our brightest, our college graduates, the hope of college education and hard work is upward mobility, THAT’S what America promises. Today, college graduates in 2010 will look at over 20% unemployment, is our belief. And right now, the last time it was measured for 2009, it was 16.9%. I believe it’s going to come out at over 20%. So what that tells me is that out best and our brightest, have a significantly worse opportunity at getting a job than the general population… and there’s something wrong with that statistic and America should be outraged. And what, how are we going to fix it? Well in the reduced job scenario, fewer jobs being offered, then you better set yourself apart and that was our premise. That just like the students went to Kaplan – to get into grad school and nobody liked that, “well isn’t that our job”. Well…yeah it is your job if you had time to get to it, but it can supplement your job. And if you really want to stand at the front of the line when you graduate and get a job, we know a couple of things. 2/3’s of the company are hired within the company with which they interned. Right? We know that the ability get access, the ability to create relationships, certainly trumps the piece of paper that said, “I went to Harvard,” right? And,”I’m a 4.0,” and “I went to Michigan State and am a 3.0,” and the HR person sitting across from there, and their reduced job opportunity, and guess which one they pick? And if we’re going to democratize America a little bit, which I think we need to, we have to stimulate the internship process because you know what? The kid from Michigan State might fit with your culture, might work harder, and might be the kind of person that you don’t need to look at any more resumes when he’s done or she’s done – That’s your person. And that’s what the internship experience does as well, is kind of expose a young person to the whole work environment. So we thought all that going, with all this unemployment and at such a fractured market. “My dad will help me get an internship,” is where all the internships occurred if they weren’t in the government sector. “My uncle knows somebody here,” it was as most fractured as you could possibly get, right? So by creating a marketplace, now any student could come and say, “Hey, I’m going back to Oklahoma City this summer, and I’m a Marketing major, is there anything in Oklahoma City I can get?”
Andrew: Now from a business point of view, you said that 28-million students are “refreshing” through the system every year… I don’t know what the number is, but its new people every year, every four years! How do you go back in and remarket your product vs. someone like monster.com that gets to talk to essentially the same group of people with new entrants into their market every year?
Interviewee: Well… You know monster.com right? We’re certainly not in the jobs business. Monster.com is in the jobs business, you know? They have a kind of fixed group of companies that they know over time are going to be hiring, right? They post on the net, they have a, once you graduate from college until you’re 65, you find yourself in & out of the job market every so often. If that’s been an effective service for you, you’re going to toss your resume onto monster or you’re going to go onto monster or a monster like company and you’re going to see if there’s anything going on. Right? Ah…good business! Charged what, 300 bucks to post, good business. Evidence by how big they’ve gotten.
Andrew: So how do you get people in? You, every year would have to go out and remarket and reintroduce the business to new students?
Interviewee: They post on the net, once you graduate from college until you are sixty-five you will find yourself in and out of the job market every so often, if that has been an effective service for you, you are going to thrash your resume under Monster or you are going to go on to Monster or monster like company, right. Good business. Charged 300 bucks to post, good business, evidenced by how big they have got.
Andrew: So how do you get people in, you every year have to go out and re-market and reintroduce the business to new students?
Interviewee: Well, don’t you think that a brand kind of carries itself, at any given time we are going to have three-quarters of the students in college that are aware of us, so that next quarter that comes on, I happen to believe in the viral nature of life, so those new students are going to be told by their peers what to do and where to go and so actually it is helpful. I think the more interesting question for us kind of the question that blackboard in some other companies face, what do you do when they graduate, you have cultivated this great relationship, how do we keep them and provide valuable service so they want to stay in our family, so that our family grows. So those are some of the things we are thinking about now, but it has got to be valuable, it can’t just be we hope, got to give real values. Young people they are smart.
Andrew: And what’s the revenue model behind the business?
Interviewee: The revenue model behind the business, there is a multiple revenue models I think behind the business. We sell colleges, to have access to the platform
Andrew: So they could give it to their students and let their students go online and
Interviewee: Absolutely
Andrew: Instead of using their own homegrown system?
Interviewee: Absolutely. Well, our system just has more fruit that whether the homegrown system is good or not, it doesn’t have this kind of fruits.
Andrew: I remember going into the NYU system looking for internships, it is the same companies that happen to know that NYU is a great place to list, the rest just aren’t on there, aren’t represented.
Interviewee: Internships are, the primary difference between internship and job is job is about getting a payoff on what you studied, and intern, and you know clear where that is, you need your payoff, you just spent a lot of money to get that opportunity, internships are more about where you [52:42], where am I going to be this summer, right. Now we are going from there, so they are more geographically based decision points, especially for the masses, I guess the rich kids can go wherever they want, but the masses go home for the summer.
Andrew: I am sorry, I want to be fair with your time that’s why I am pushing to get as much in as possible, to understand the revenue model, revenue comes in from the schools, do you also charge the companies?
Interviewee: No we are not going to charge the companies. We think that’s a roadblock to the payoff, we give a robust amount of stuff for free to the students, you can search, you can do that, but there are certain things we think the students will pay for and should pay for, we pay a lot of money for deep diving these databases that we have. If a student really wants to do deep dives in the database maybe that’s a premium opportunity, if the student doesn’t want to fill out an application, fifty different times for fifty different companies, maybe they should use our common application if they choose to take the elevator instead of the stairs, you pay for that kind of thing. You can drive a Toyota or a Ford, that is a good car, or if you want to go upscale and you have the capability of doing it, and you think there is going to be a payoff for it, it is a good price and we charge $30 annually for a premium subscription that matches you with employers, notifies you when new employers in your region come in, and are constantly adding great stuff. Gives you a sort of
Andrew: 30 bucks a months, 30 bucks a year?
Interviewee: It is a steal, it is an absolute steal.
Andrew: Will you charge businesses for premium listings?
Interviewee: No, I think that businesses are the goal, businesses are the payoff for the students and I want them to come to our site, experience our tools, experience the vast number of great students that we have and more coming in everyday and know that when you are in internship, this is kind of the go to no-brainer approach. I don’t want anybody thinking that to give me a hundred bucks or maybe they should, or maybe they shouldn’t and then can I have an alternative.
Interviewee: – or maybe they shouldn’t and can I have an alternative. Put it on here, there’s no reason not to.
Andrew: I see. When your running a market place like this, you want as many people as many companies in that marketplace as possible.
Interviewee: Absolutely. I think when you’re creating a new market place that the first obligation of the entrepreneur is to make a profit. You know, make sure that as many people want to, should come and want to come back. That the man creation happens virally because once someone sees it they have natural demands for your product. And so I don’t wanna put hurdles like money in front of building this great marketplace. We know that asking everybody to go in the middle the forest for a concert called Woodstock many years ago, well how are you going to make money you’re not charging for anything. Well there’s a whole lot of folks that made a lot of money when 400,000 people showed up, right?
Andrew: Yeah.
Interviewee: I could sell water, I could sell anything, you know. Come here, we’ll give you something valuable. You’ll tell us whether it’s valuable or not but let’s make a great marketplace.
Andrew: This question that I promised that I would bring up now about free internships. Are companies getting free labour when they’re offering internships and not paying anything?
Interviewee: Well, oh, I think, my observation in our market place is that over 64 percent right now are paying. So I think the vast majority of interships are paid. You know, there’s a lot of government interships, they’re not usually paid, right? Washington, D.C. has a ton of interships and they’re usually not paid interships!
Andrew: I didn’t know that.
Interviewee: And that’s called volunteerism. Okay. I guess. Alright. And the private sector probably pays at well over 70%. Okay. The total that would drop down a little bit. I think students are pretty smart. What we notice on our side is that unpaid interships don’t get as much action as the paid internships. Right? So in a market place, if you want more action, pay! Right? And there’s so much stimulus money going around today, maybe one of things that we should do to protect the students that wish they could participate in the market, but don’t have that option, right? Is, shouldn’t there be a place if it’s a legitimate internship for them to apply to get their ten dollars an hour for the, you know, you call it 270 hours a year that they might do that. There should be a place for that.
Andrew: If they’re paying for education in schools, maybe they should consider somehow funding education and internships.
Interviewee: I would think that that would be prudent since we know that interns –
Andrew: This is an interesting business direction. I like it. I mean I like it if I were running a business.
Interviewee: Well, hey listen. We know that, in fact, we just did a great survey that we’re just coming out with on Tuesday. The voice that was, you know, kind of missing from this department of labour conversation were career counsellors. Nobody talked to those guys. There’s the ones – so we decided to take a survey of 300 career counsellors. And we said, okay, what do you think about, you know, these guidelines. Right? And some of them they thought were okay. But some of them were totally unrealistic like you’re not allowed to give a benefit to the company, right? Unless, in a free ent- I can’t imagine. I’ve never had an intern that didn’t give me a benefit, right? So, you know, you take at look at this and why shouldn’t the government. They also said and the career councellor told us in this survey that almost all, 98%, of all of the employers prefer a new hire that’s had an internship over a student that has not had an intership given everything else was equal. They will always take the person that’s had an internship. You know, the statistics are just overwhelming that this is just a smart thing to do that this helps jobs, that this young people get jobs. The government should participate in it I think.
Andrew: You’re – let’s see. Troy Simpson in the audience, apparently he’s from Canada. He’s saying in Canada internships are heavily subsidized. And there are a few people in the audience here agree that it should happen that way. I’m not sure but here’s what I think about it. I like that you’re seeing every part of this business. You’re not a just kid who’s got some small marketplace idea for internships. You’re thinking, right from the beginning, how do we get this data base full of great information before we even launch so that it has it has something of value for the day we launch. And then how to we think about this market in a way that other people don’t think about the markets, they’re just –
Andrew: …they’re just cobbling something together and hope that it works. And the way that you’re thinking even about government and how that can play a role in the future. This is interesting, and that’s what I liked about you when I did my research– the thought process that went into business– and that’s what i admire about this interview.
[…]
Andrew: Sorry, I’m going to get off my soapbox in a minute here–I try not to talk too much here but give you form to talk, especially since I know you have limited time. I need to know about how you pick the entrepreneurs you invest in, so let me ask you about one of them. Jason is our mutual friend, the guy who runs Docstoc. You’re an early investor in the business. What was it about Jason that made you say, “Yeah, I like this guy. I want to be in business with him. I want to fund his dreams. I want to help him get where he needs to go”?
Interviewee: Well, Jason is a great young man. I’ve invested in Docstoc, Adly, Muze Inc.– I’ve invested in some excellent entrepreneurs, and one of the characteristics of a great entrepreneur is “Never say die”, right? Jason has a work ethic that’s over the top. At the same time, you want a person that looks down the road a little and says “What if this? What if that? Can we do this?” and when they set hat [path] with other people, they begin a strategic plan, and charge towards that goal. I look for people that are thinkers that plan their tomorrow and not just their today, and start to create tactics ahead towards that tomorrow to make that business a national-scope business. If you have the capability to think nationally, you might have the capability to become national. I look for these hard working thinkers, and Jason’s one of those guys. I think he will have a national business that will be worth nine figures one day.
Andrew: Wow. You mentioned Adly, founded by Sean Rad. Adly’s issue is that they’re focused on Twitter. Where do you think they should go? What do you think they should do with the business that they have now focused on Twitter– a market that’s a little bit shaky as a platform or developers for especially people selling ads?
Interviewee: I think Adly is going to surprise the world. How can I tell you any more than that? I think Adly is a phenomenal business with phenomenal leadership and great understanding of the entire stream. Twitter may be where they started, but it is not going to be where they [finish].
Andrew: Where are they going next?
Interviewee: I think that this is a company with grand plans. We just brought on Arny to be our CEO. Sean and Arny dance well together– they have grand plans with smart backers. I think this is going to be a company that the world is going to hear a lot about.
Andrew: All right. I know this is a company we can’t hear too much about publicly even though a lot of us are very curious about it. I’ve heard Mark Suster say they’re ‘going into streams beyond Twitter’, but he hasn’t said much; you haven’t said much– I wish i was in Los Angeles so I could talk to Sean Rad in person, and get a sense of the direction, but i think we’re all going to have to sit on the sidelines and watch and see. […] Right now, someone who’s going to get an internship with you or had an internship with you has listened to [this] interview all the way through to the end– maybe on a jog, in the gym, on a long car ride– let’s leave them with one little bit of advice that will guide them for a long time. What’s the one thing you can say to an intern who comes into your office or listens to you right now?
Interviewee: To be successful, you have to appreciate relationships. Do whatever is takes to create them, to serve them, and they will serve you.
Andrew: All right, great place to leave it. I hope you guys all get a chance to meet Robin Richards in person. I’m looking here at my notes to see ‘is there anything I have to say before saying goodbye’ but you didn’t give me a list of websites or anything, so I’ll just say go to internships.com; if you get a chance to meet Robin in person, tell him that you listened to this interview all the way to the end because I’m telling you, most people [that] want internships […] will do zero research–if you’ve done some, let him know that you did it and let him know especially that Mixergy is why you did it.
Andrew: Is there another way for people to connect with you or get to see you or find out more?
Interviewee: Internships.com, I’ll answer all my emails, I’ll answer any phone calls, I believe you mix it up and you listen to people and you find a better way and I think what you are doing here is fabulous for entrepreneurs and it’s and this is going to be a bigger success and it already is.
Andrew: Right on. Thank you for coming to Mixergy, thank you for doing this interview, it is great to meet you, I hope I get to meet you in person and for everyone who watched, thank you guys for watching.
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