Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com. It is, of course, home of the ambitious upstart. I say that because there’s a group of people who just want to do something bigger, always want to do something bigger, never satisfied. The rest of the world will tell us, “Hey, come on, be happy with what you’ve got,” or, “Wouldn’t it be great if you could just have a little bit and do okay every month?”
We don’t want that. We want to do something bigger. That’s why we listen to Mixergy interviews. That’s why I bring these people on, people who have built successful companies so that they could break down what they did and we could learn from them and keep improving our own companies.
And the person who you’re about to meet is someone who I met and got to know at a dinner recently. I went out to a dinner that a past Mixergy interviewee put together of people who were doing growth for companies. And as I talked to today’s guest, I realized he’s really interesting. He’s got this process for doing growth. He runs a company that does growth for his clients. He keeps dropping out of this company. It just keeps running on its own. He drops out and he does growth for other businesses.
I thought that was pretty interesting and I figured let’s bring him on here to talk about how he did it. The person is George Revutsky. He is the founder of ROIworks. It is a consulting company that offers growth in a box to startups and fast-growing companies. We’ll talk about how he did it. We’ll get some growth techniques from him and we’ll talk about that one company that actually didn’t do so well. He took a step away from ROI and boom. We’ll find out what happened there and what he learned and how he turned it around.
This whole interview is sponsored by HostGator. That is the company that will host your next website and it’s sponsored by the company that will help you find your next incredible developer, Toptal. George, good to have you on here.
George: Thanks so much for having me, Andrew.
Andrew: George, I want to start off with this thing that doesn’t directly relate to ROIworks but gives people a sense of who you are. It’s the way that you sold this consulting company that you had before. You walked into a burrito place and you saw what?
George: So, yeah, I was like 20-something in the ’90s and I walked into a burrito place and I saw a bowl–this was in Walnut Creek–I saw a bowl of people’s business cards. I was two years into running this early web design company. I was just trying to hustle my way to bigger clients. I noticed that this card at the top was a guy named Chris Wilhelm, who was like a VP at Shugart Matson Young. It was the largest ad agency in the East Bay. I’d seen them on the top agency lists or what not.
So, I pulled the card out. I did what everyone would do, right? I pulled the card out and I called them up and I said, “Hey, I’ll buy you a burrito. I want to talk to you. I think you guys are missing the boat in terms of web design and digital. You guys are just doing direct mail and print and radio.” He and I ended up striking up a friendship. I did some work for them. And then I sold my company to them three months later.
Andrew: Did you say, “I want to buy you a burrito,” or did you say, “Hey, you won the burrito. Let’s claim it?”
George: I may have started with, “You won a burrito.” But I quickly disclosed that I really didn’t work for High-Tech Burrito in Walnut Creek.
Andrew: Do you on a regular basis go through those bowls looking to see if there was someone impressive there or was it just a random thing?
George: I don’t do that these days. But I don’t judge anyone who does or would. Back when I first started out, I had no contacts in the Bay Area. I was a 20-something year old kid. I would look into bowls at hotels where I was staying when I traveled. I would look at bowls at burrito places or wherever. If I saw an interesting card, I had no compunction about contacting them and just talking to them about something or getting their advice.
Andrew: What a gutsy thing to do. I love that. Especially if it’s just a burrito, you say, “Yeah, you want a burrito? I’ve got it.” It’s $10 to get some time with them.
ROIworks, let’s get right to the dollars and cents. How much revenue are you guys pulling in a year?
George: Sure. So, right now we’re on a run rate of about $1.4 million to $1.8 million. The reason I have this range is because we have a lot of companies come in and do a project. The $1.4 million is sort of a hard number, like those are retainers that we have and they’re recurring revenue. And then the additional $400k to $800k might be projects or apps we have to help redesign for people or what not.
Andrew: I’m fascinated by how you can build to that level, which is impressive, but even more excited to find out how you can actually get this company to run on its own so you can take time away. When you and I met, you apologized for being late and then you said, “I’ll give you a free massage.” “What do you mean a free massage?” You said, “Well, I’m spending a lot of time now work on this company called Soothe. They bring masseuses to your house.” I go, “How are you running this consulting company while you’re basically their chief marketing officer, right?”
George: I’m full-time helping these guys.
Andrew: And your consulting company is running on its own. Usually consulting companies depend on their CEO, depend on people all showing up because you’re selling your time. Let’s talk about how you got there, but first I want to understand a little bit about what you were doing before. You were working for this company called Cybergold. I don’t know how many people even remember Cybergold, but you’ve got to remind them. What is Cybergold or what was it?
George: Cybergold was started by a really visionary guy named Nat Goldhaber, who currently is the founder of Claremont Creek Ventures in Berkeley, Oakland. He had this idea pretty early on that people’s attention was really valuable. So, he decided to get one of those Amazon one-click-type of patents on paying people to get their attention, except Cybergold would pay you for attention as opposed to patenting a click.
Nat started a loyalty and incentives company. It was sort of like a cross between Price Club and Groupon, where you would have a bunch of members. We would approach them and say, “Hey, do you want to switch to EarthLink as your internet provider?” or, “Do you want to join Oprah’s Book Club?” because you have teenage kids and what not. If they took the offer, Cybergold would get half–let’s say the cost-per acquisition for that brand was $40. So, Cybergold would get, let’s say, $15, and then the consumer would get a $15 bounty to thank them for taking the offer and then the brand would save $10 on cost of acquisition.
Andrew: Was it that consumers were paid in cash or were they paid in Cybergold?
George: Cybergold actually really used real cash. That was kind of like the difference between them and MyPoints, who was eventually our acquisition partner. Cybergold, you earn so much Cybergold and then you can transfer it to your checking account. I came on board–Nat recruited me. I once remember I sold that digital agency I had to Shugart Matson Young and then I worked for them.
Then Nat and I met about something and he recruited me to come to Cybergold. I got a chance to kind of go through the IPO with them. Then Cybergold really grew pretty large for that time. It grew to about I think it was 7 million or 8 million consumers with about 20 fields of demographics and interests. We went public on the NASDAQ, acquired a couple of smaller companies and then merged with our biggest competitor, MyPoints.
Andrew: I’m looking here at an old article from April 17th, 2000, “MyPoints.com Acquires Cybergold for $157 Million.”
Andrew: What’s one growth strategy that worked for you back when you were doing growth for Cybergold?
George: That’s interesting. So, one of the main things I learned was that a lot of the affiliates we had were kind of useless and create a lot of noise and kind of focusing attention on coreg partners and affiliates that were providing 80% of the value and then maybe going out and finding and signing up some affiliates and coreg partners that were our own and weren’t through Commission Junction or beFree was also really valuable.
Andrew: One on one relationships?
Andrew: I think we might have done an affiliate deal with Cybergold back in the day. I had this greeting card site where you pick your greeting card. You address it. You hit submit. You’re done. The greeting card is out the door. You’re not going to send another greeting card. So, what we would do is say, “Do you want to get membership in Cybergold or something like that?”
And if the person said yes, we already had their name, we already had their email address. We just had to ask a couple of extra questions and sometimes not even that. The person would hit submit. We’d make money for having passed that person onto Cybergold and that person would get Cybergold for doing things online.
So your growth strategy there was to concentrate on those affiliates who were doing especially well and get rid of the ones who were not and just making a lot of noise and also cut out the middle man and go directly to your affiliates?
George: We respected our affiliate management partners. But we would find others that were very similar. So, once we learned what worked really well, we would try to go out and sign up our own affiliates directly.
Andrew: So, what did work really well? What’s an example of that?
George: I have to look back and remember who. This is really kind ancient history. If we wanted to kind of increase the number of moms with kids because one of our advertisers was Disney’s Club Blast, then we would kind of go out and try to find affiliates that were related to parenting or somehow the right demographic.
Andrew: George, is it too crass for me to say did you become a millionaire from being at Cybergold and then lose it after that dotcom bubble burst?
George: No. It’s not a crass question. I did not become a millionaire. I did kind of initially seem to do well because there were sort of three exits involved. I wasn’t a founder at all. I joined Nat and I was part of the management team. But I didn’t have a ton of stock. It was really nice seeing the stock I did have go up through the IPO and then the acquisition to MyPoints and then MyPoints sold to United Airlines.
So, those were all really good things to see. It was not good to see the stock start crashing down. At the end of the day, I made a little bit of money and put pretty much all of it away. For my first time out, kind of participating on a fast-growth startup like that, it was a really nice outing for the first time.
Andrew: All right. So, you look at what you’ve learned and you realize, “I’m really good at this user acquisition thing. I’m really good at product and user experience. I’ll just do a consulting company where that’s what I do for other businesses. Am I right?”
George: Yeah. That’s kind of what I did. I was a little bit, like any fast growing startup, you want to take a little pause. So, I said, “Hey, I’m going to do a little consulting.” It naturally turned into doing work for like St. Mary’s College and…
Andrew: I want to find out how you found these customers, but let me ask you this. You’re leaving in 2001. We’re talking about one of the worst years for any internet-based business. Where do you find your first–first of all, forget find your first customer. Aren’t you walking in there going, “I’m never going to find any business? Nobody wants any user acquisition. People don’t want users anymore because every user costs more money and they can’t make money on them.”
George: Maybe I just was too dumb to know better, but I just felt like I would be fine getting customers. When you’re one person, it’s actually the biggest problem is sort of like having too many customers or having none. It’s rarely in between. So, I got pretty busy pretty fast. I think I started working with St. Mary’s College. They were competing with the university of Phoenix. Believe it or not, my dominant tactic there was print advertising.
Andrew: Let’s hold it for a second. I just want to make sure that I understand what you were saying right. I feel like part of the reason you felt confident was the work you were going to do was growth. If you could bring a company like St. Mary’s another student, that student was going to pay St. Mary’s and St. Mary’s was going to be happy to pay you, that if you were doing design, it would be a lot harder, if you were doing user experience, it would be harder in that space. But if you’re a guy who could bring in customers, then there’s always work for you. Does that sound right?
George: Pretty much. Yeah. I felt like I could apply a data-driven approach to marketing. So, you could sort of plug me into St. Mary’s very traditional marketing department and I could plugin unique phone numbers into all their print ads, start kind of optimizing their media buys, start negotiating their media buys based on results.
To me, just because I was moving from online to print, it’s all the same thing. I’m just trying to grow their business. I was lucky that I had a wonderful client named Dean Elias, who ran the School of Extended Education and the leadership program. He really said, “Hey, if this stuff works, go for it.” He gave me almost free rein to really redo how marketing was done for St. Mary’s.
Andrew: How did you get St. Mary’s as a customer?
George: I’m trying to remember. I think almost all my clients over the last 15 years have been by referral. Another client referred me or a venture capitalist referred me or a former employee.
Andrew: So, it was just you sending out emails saying, “I’m about to start this new business. All I’m going to do is do growth. If you know anyone who needs it, please make an introduction?”
George: Pretty much. Yeah. I think I sent out one email, if that. I had folks asking me, “Can you help out?” St. Mary’s seemed like a really fun challenge. I love challenges. University of Phoenix was spending like $10 million a month in the Bay Area. St. Mary’s and USF and other good regional skills were like a fraction of that. I thought, “I wonder if I could beat the pants off of Phoenix with a budget that’s like one-tenth?” That sounded like a fun challenge.
Andrew: I bet it is. All right, a quick sponsorship message and then we’ll figure out how you got that growth for St. Mary’s–the sponsor is a company called Toptal. If you need a developer or a designer, Toptal is the place to go. They’ve got the network of people. They are the best of the best. Let me ask you this. If you were–and I’m just asking you, George–if you had a Toptal developer build something for you right now that would be the basis of a brand new business for George, what would that Toptal developer build for you?
George: That’s a great question. I actually would love to have a Toptal developer build for me an app that would help me find home care workers for like disabled or elderly folks to fill in because when your home care worker for your older parent or grandparent is suddenly unavailable–so, it’s kind of like Sittercity but for home care workers.
Andrew: I see. And the reason you want to build that business is because you need it personally. Sometimes your…
George: Occasionally I might have a parent or relative or even like some grandparents of like a good friend of mine, they’re almost like family. Sometimes I find out that oh my gosh, their caregiver fell through and I need to get someone. These folks have to be highly trained and vetted. The people are in a very vulnerable position. I want to be able to find relatively quickly trained homecare workers.
Andrew: So, would the app actually go out and scrape the names of those people who already exist or are we talked about a brand new app that would require you to find the caretakers and put them in the service and so on?
George: I think this would have to be some sort of two-sided marketplace, much like Sittercity would be, where you kind of have these caretakers, but you’ve also gone through a little bit of vetting and kind of have their records on file.
Andrew: That’s a great idea. You know what I like also beyond the specific idea? The way you’re thinking about it–you’re saying, “Here’s a problem I’ve got and I know other people have it too. I don’t have an easy solution. What if I create it?” That’s the beauty of Toptal and frankly the beauty of entrepreneurship in general. You find a problem. You can code up a solution for it. You can get started fairly easily and then build it up as the product actually starts to take off. I actually think the one that you’re talking about is out there. It’s HomeHero. I interviewed the founder of that company.
George: Oh, cool.
Andrew: But I like the general idea. Frankly, I like the idea of even having for younger kids if the nanny can’t show up for the day because she’s sick, you need a nanny for the day, not a sitter, but a nanny who’s going to be there the full day. There are a lot of these businesses out there that are just screaming to be created because the problem is so painful and most entrepreneurs don’t feel it because they’re not in the age group to feel it. They don’t usually have enough experience with older parents who need home care or kids who need day car. Anyway, I love the idea. I love your thinking about it.
Whether it’s that idea or something else, if you’re out there listening to me and your team of developers does not have enough time to build it because they’re already working on other projects or your one developer doesn’t have time to do it because he’s working on another project, you just go to Toptal.com/Mixergy. You let them know what you’re looking for. We’re talking about how do you work, how many hours you want, is this a one-project thing? Is it a long-term, full-time commitment? Is it a team of developers?
They could supply you what you need. They go into their network after they understand what you need, they go to their network, they find the best of the best and they make an introduction and if you’re happy, you can get started with them right away and if they’re not, they’ll find somebody else. Frankly, if you’re never happy with them, fine, you could just move on to somebody else. There is no obligation.
I love working with Toptal. I’ve been with Toptal for a long time. I recommend anyone who’s out there go to Toptal, not just Toptal but go to Toptal.com/Mixergy. When you do, you’re going to see that after you pay for 80 developer hours, they’re going to gift you another 80 developer hours and they have a guarantee to make sure you’re happy. If you start off working with someone and you’re not happy with them, you have to be 100% satisfied or you won’t pay.
I want you to go and take a look at that page for details because I can’t summarize everything for you. Go to Toptal.com/Mixergy. You’ll be happy you did. Frankly, if you want me to introduce you to my guy over there, just email me, Andrew@Mixergy.com. I will intro you to Toptal.
All right. So you get St. Mary’s. Now it’s time for you to deliver. How the hell do you end up with print ads, dude?
George: All right. So, I had done a little bit of print advertising stuff but I didn’t have a lot of experience with that. I’m pretty media agnostic. I just look at where can I get the right target audience, the right customer for the least amount of cost.
So, I noticed that University of Phoenix was spending all this money on acquisition digitally and meanwhile the print publications in the Bay Area were really dying. San Francisco Chronicle was like a quarter of its size. The Chronicle reached all its zones where St. Mary’s had their finish your degree at night kind of locations. They were in 10 or 12 locations throughout the Bay Area or maybe like 8 or so.
So, I went to the Chronicle and I said, “Hey, you guys reach everywhere. How much is a full-page ad?” They said, “Well, a full-page ad is $40,000.” I was like, “Wow, that’s a lot of money. That’s crazy. What if I bought ten of these from you?” They’re like, “Then it’s like $30,000 apiece.” Okay. “Well, what if I spent $1 million with you? What if I go crazy?” So, by the end of this process, we got like a $5,000 per print ad cost, full-page in the Chronicle.
Andrew: If you buy in bulk?
George: Yeah, all zones. So, I said, “I’m not wasting your time. I’m serious. I can deliver a $1 million budget to you.” This is many, many years ago, like 2003 or so. They were like, “Okay.” So, I got like an opt-out clause, obviously. My client at St. Mary’s was really supportive of these things. I tagged every single ad with unique phone numbers. I tried unique headlines, unique calls to action.
Basically, we made the Chronicle perform like a direct response banner ad. We spent I can’t reveal the official number, but it was a very large amount of money. We centralized with the Chronicle and then we used email marketing and then we used kind of like events. During that year, I think it was 2003-2004, St. Mary’s, I guess their enrollment grew like 20% and the following year it was another 15% to 20%. Meanwhile, Phoenix actually only grew like 1% or 2%. So that was pretty awesome. I felt like I kicked their ass with a much smaller budget.
Andrew: I love that you still remember to this day and I would be proud of that too. I want to make sure I understand something. Did you spend $1 million worth of ads with them at the end?
George: We spent a very large amount.
Andrew: But it was under $1 million?
George: It was maybe over $1 million.
Andrew: So, when you said, “How much would it be if I spent $1 million?” They’d tell you, “$5,000.” Your eyes just did something as I said that?
George: They didn’t quite say $5,000 apiece. There was some negotiation back and forth. Eventually I got it down to $5,000.
Andrew: So, $5,000. But then you also got an opt-out. So, if you run four ads and you can’t make enough money on it, can you at that point walk away without a penalty?
George: I could. But obviously we all wanted this to work, right? They understood that we weren’t spending all this time negotiating with them only to walk away after a couple of ads. So, I think the risk we all took was we said, “Well, if you guys run a couple of full-page ads and we pay $10,000 for them, if we get the phone ringing, then we’re going to keep doing this.” The folks at the Chronicle were great.
Andrew: I like that negotiating approach. I could imagine somebody doing that for us with ads. I wouldn’t say yes, but I’m also not at a point where the Chronicle was where they were really desperate. But it makes a lot of sense. I like how you did that. Then what you did was you said that you ran a bunch of tests. Did the Chronicle allow you to run on the same day for that same let’s say $5,000 multiple ads to multiple zones, multiple regions? They did?
George: Sort of. We could insert different ads into different zones. So, sometimes we would sort of split test. Now, each zone behaves differently, but still it was like an order of magnitude. Sometimes we would do this very different design with another very different design. So, we had directionally good information.
Andrew: You had split tests within the same day?
George: The same day with different zones had very different style ads a couple of times.
Andrew: Okay. And the way you knew which one was doing well was you’d have a different phone number in each ad and you were able to count how many people came in. I can see how you would be proud of it. That was your first big customer and your first big success story, true?
Andrew: All right. And then you had to grow from there. How do you find your next big customer?
George: Basically, I kind of developed this niche in education and luxury goods. So, I got a couple of other universities, like Notre Dame de Namur University and a few others kind of came to me after I did this stuff for St. Mary’s. So, I worked with them. But then the other area was there’s this little caviar company in San Francisco called Tsar Nicoulai Caviar. You can find them in the ferry building.
The two founders were like these gentleman farmers from Europe. They farmed trout and fish. Their head of PR found me just through social connections and was like, “Hey, we need someone who understands growth and digital. We’ve got the print part covered. Can you help? So, I started helping Tsar Nicouali Caviar a little bit. From there, I got referred to like Bentley Motors, Fairmont Hotels and Resorts, BMW. Suddenly I had this like luxury niche for about four or five years. I was doing a lot of work with luxury brands as well.
Andrew: I see. Is it Campton Place Hotel was one of your customers?
George: Oh my god. I can’t believe you found that. Yeah. Years ago, a long, long time ago, I did a website for Campton or something. Yeah.
Andrew: Okay. So, that’s part of the stuff that you did. You didn’t just do growth. You also would build websites for people.
Andrew: It looks like you did mini-sites for people. You did banners for them. You did extranets. I don’t know what extranets are. You did print. You did flash.
George: You dug up like an old, old, old website from those years.
Andrew: I’m finding all kinds of stuff. As you’re talking, I’m researching Cybergold. I’m researching your name for what you did in the past. Were you making money at that period in your life?
George: I was making money.
Andrew: What’s that ding, by the way? You get a ding every few minutes.
George: I’m going to turn that off.
Andrew: What is it?
George: When we hit certain growth goals, I’ve got some alerts that go off. We just hit a whole bunch.
Andrew: This is Soothe?
George: This is Soothe. I have some kind of if this then that zaps, Zapier automation things that kind of ping me when a test closes. So, about five just finished. I just turned my phone off. Sorry.
Andrew: Interesting. Do you usually keep your volume on during the day? You don’t just do vibrate?
George: I usually do vibrate. I should have done that before our interview.
Andrew: All right. I thought maybe there was something about the way you think that came through from that. Union Bank was a big client for you?
George: Yes. I worked with Union Bank for about a year and a half or two years. So then the other kind of vertical that came through somehow was like financial services. So, we’re a few years with union bank doing small business loans and checking. Did some SEO for them. That was not as successful because it was really hard to get them to implement everything I wanted. But on the paid acquisition side, we were pretty successful.
Andrew: So, as a guy who would go into a burrito bowl and pick out the name of the person you want to meet, as a person who was smart enough to negotiate a deal that basically gave you a super low price for an ad that was an eighth of what you would have to pay ordinarily, you’re not just hoping that people are going to spread the word about you, you’re doing something. What did you do to get those early customers? You’re in that hustle mode. We’ve got people listening to us that are still in that hustle mode. Give them a couple of ideas based on what you personally did.
George: Sure. So, the number one thing I did was I focused on really getting agreement on a baseline with my customer at the beginning. How are you currently performing and then what are your goals? I would in many cases or most cases beat those goals or reach those goals, I would come to them and say–and this was in my contract–I’m allowed to say, “I gave you an x-percent improvement against whatever it was.” I won’t reveal budgets or I won’t reveal costs per action, but I can say officially in my contract with everyone I’ve worked with, “I gave you a 40% decrease in cost per acquisition,” or, “I increased your conversion rate by x-percent.”
Andrew: You have them agree up front that if you hit a certain percentage, you can show off and tell everybody that you did it, right?
Andrew: Which is how you can have a link on your website called ROIworks.com/Results where I still I think to this day can see the percentage–yeah, there it is–the percentage increase you got for people.
George: Yeah. We actually have that clause regardless of do I hit the goal or not. I’m never going to like show off I got a 1% improvement. Basically as long as I’m factually correct that there’s an x-percent improvement in a metric, I’m allowed to say that on my site. That’s been really key because when people come to us or to me, they want dramatic results in short timeframes. That’s kind of what I think ROI has become known for.
Andrew: I see. I’m looking here on your website. Cardstore.com, you got a 569% increase in organic revenue in five months. TriNet, you increased their lead volume by 306.5%. Saatchi Art, 40% conversion rate increase in four months. So that’s one thing you did. Tell me another. What else did you do to get clients?
George: Aside from just like trying to do a really good job and being allowed to say that we’re doing one, the other thing I think I did was just try to give away advice for free. So, right now like every Friday I usually spend one to two hours with startups, with venture capitalists, with angel investors. I just try to give back.
Andrew: In person?
George: I do it by Skype. I do it in person.
Andrew: One on one?
George: Yeah. I work out of the Twitter building like out of the Runway Accelerator and folks know to find me there. People will come and be like, “Can I get 15 minutes of your time?” It turns into 45 usually. I just try to help. I will tell you that probably every fourth person I do this for, you’d never think they would be successful. These are desperate startup people. These are VCs who I’m thinking, “I’ll probably never hear from this guy. He’s such a big deal.” But two months later, six months later, a year later, I’ll get an email, “Hey, such and such referred me to you.”
So, just doing this–the other crazy thing is right now our website is relatively up to date, but until five months ago, we spent three and a half years without touching our website. We had like almost a non-functional website and I still don’t have any business cards. I don’t have any. I haven’t had any for five years.
Andrew: So, what you would do is instead of blogging about the stuff or in addition to, I should say, because I think you also blog or your company does, instead of just doing that, you do one on ones with people and just about anyone can get one on one time with you if they ask for it. So, if I wanted to spend 15 minutes with you and ask you about growth for Mixergy, you’d say yes and we’d either do it by Skype or I’d come over to the Twitter building.
George: Yeah. And sometimes if it’s like a person I really can’t help, I’ll let them know, “This is out of my area of expertise,” but if it’s someone I can at least connect to the right person, I usually spend 15 to 45 minutes.
Andrew: I take it back. You guys don’t blog. There’s like one blog post a year on ROIworks’ blog.
George: We just launched our blog and Andy, our frontend developer has like three posts. I’m promising myself that I’m going to publish a post next week.
Andrew: All right.
George: We’ll see if I follow through.
Andrew: When you’re starting to build a business like this, you can’t keep counting on last-minute creative ideas like how do I go to print instead of digital, how do I negotiate it? You have to have some kind of system, otherwise you can’t grow the business to a place where you can move away from it, right? You can’t take these three to six-month periods of time where you walk away from your business and it still runs. So, what did you do to systemize the work that you do to allow you to take some time away?
George: Sure. So we actually have a process. You’re familiar with Dave McClure’s kind of pirate metrics, AARRR.
Andrew: AARRR, yeah.
George: Which I love. I love Dave and everything he does for startups. So, our system is actually an homage to AARRR, but we call it ROAARRR. So, instead of starting at acquisition onward, we actually start with research and optimization and the rest of the R is the same.
Andrew: Wait, what does it break down into? ROAARRR means what, research?
George: Research Optimization Acquisition Activation Retention Referral Revenue.
Andrew: That’s a process that you take new customers through?
George: That’s the process that if you do it right, there’s anywhere from one to three years of work. You can squeeze dramatically improved revenues month over month over month like one to three years if you follow this process correctly.
Andrew: Do you have an example of a customer you took through this so I can see how this works in real life? Can you think of someone?
George: Yeah. Soothe is an excellent example of this. Soothe–in this case, I can actually quote revenue numbers and growth numbers.
Andrew: They let you do that?
George: They do because it was publicized in TechCrunch. We published our revenue publicly recently. So, they’re letting me do that. So, Soothe recently landed a $35 million series B growth round. It was largely on the basis of growth because we had a 20% to 33% revenue growth rate month over month for like the last four or five months.
Andrew: Okay. So, the first step you took them through was this research. Is that right? What does that mean? What did you do to research for them?
George: There are two types of research in a larger sense. There’s quantitative and qualitative. The first step is we create a bunch of funnels. We look at your desktop funnel, your mobile funnel, your new user funnel, your returning user funnel. We look at your app, like your iOS funnel and we see where are the frictions from step one all the way through to checkout or purchase. So, now that gives me a bird’s eye view of where am I losing money and where do I see the biggest opportunities. That doesn’t tell me why. The other type of quantitative research involves digging into lifetime value by cohorts and kind of like the rate of decay of different types of users.
Andrew: What do you build all these funnels in? What software do you like to use?
George: Actually, I love to take Google Analytics and Mixpanel or KISSmetrics depending on what people are using and then I really like to kind of–it’s like doing kung-fu, right? I force myself and the management team to manually fill in, cut and paste the data for these funnels into a Google Doc, a simple Google Doc because I want people to feel in their bones like, “Oh my god, I’m losing all this money because I suck on the Android platform.”
So, my little evil plan is to basically sit down and walk a CEO or a board member or the CMO in this case in Soothe, I’m the CMO, so walk the team through, “Wow, this is where we’re losing money. This is where we need to focus our attention.”
George: And then the second part is understanding why, why are users buying or not buying? What are their unspoken objections? I’ll give you one great example that doing qualitative research totally turned them around. There was a company called Pley.com. It’s rentable Legos, Netflix for Legos. They had this beautiful website and this beautiful video. They came to ROIworks and they said, “We really want you to buy all this traffic, different channels.” They paid like ROI like a really nice retainer. It was like $20k a month. They said, “I want you to do five different channels.” I said, “I’m a little worried because your funnel seems a little funky to me.” He said, “No, our website is beautiful. Our video is beautiful. We should do it.”
So, a week later, I come to the CEO and I’m like, “I can’t take your money. I don’t feel right. I’m buying all this traffic and it’s not converting. I know it’s qualified traffic.” So, we cut the retainer in half to like $10k a month and I said, “Give me one month and let me fix your funnel.” So, then me and our analytics director, Ian, we went to the YMCA and the Jewish Community Center and coffee shops and we started interviewing moms with kids.
We would show them the website and they would all say, “I love this. My kids will no longer be staring at a screen. I can rent for $30 a month Legs, unlimited. This is amazing.” So, then I’d sit back and I’d be like, “Great. Why don’t you sign up?” And I didn’t give them a credit card or a special offer, I just want to see what their objection was. Nine out of ten people said, “What if I lose a piece? Do I have to pay for the whole thing?”
Andrew: That makes sense.
George: Which undercuts the whole value prop. See, the founder, who’s a dad, and I’m a dad and the other cofounder, she’s a mom, none of us thought of this. We thought about are the pieces sanitized. So, my first A/B test counterintuitively was changing one bullet on the homepage. I added one bullet. So, it looked odd. So, instead of three bullets under the headline it was four. The first bullet said, “Lost a piece? No problem. We won’t charge.” 98% conversion rate improvement off the first test.
Andrew: From talking to potential customers. I see. That’s why you want to do that kind of research ahead of time.
George: Yeah. So, the qualitative and the quantitative allow us to form a better hypothesis to fix the funnel.
Andrew: Okay. What I’m getting from you is you’ve got a process you take customers through. So, when you’re not there, the rest of the team at least knows this process. They may not go through it exactly the way you would, but they’re going to walk through it in some way and they have some guide.
George: The team is like really senior. The most junior person on the team has like eight and a half years of digital marketing experience.
George: Everybody is like 10, 12, 15 years. So, they do a great job without me. I keep in touch. I still work a little bit and advise ROIworks, but I’m not as involved day to day.
Andrew: Okay. There’s an important thing for me to talk about there, which is how do you get your customers in even when you’re not there, but first let me talk about my second sponsor, which is HostGator. Do you know anything about HostGator? Have you used them at all?
George: I have not used HostGator, but I know about them, yes. They have a great rep.
Andrew: They’re a phenomenal hosting company. So many people who I’ve interviewed say, “I have a website on HostGator,” or, “My website is currently on HostGator.” The reason people like to use them is because it’s so quick to get a new website up and running with them, one-click install of WordPress and so many other different open source software. And they make it really cheap. We’re talking about one of the cheapest packages out there by a company that’s really reputable and actually has sales people and tech support people waiting by the phone in case you have any issues.
George, I like the way that I asked you a question before about what software you’d have built for you. Let me ask you this–you’ve seen lots of different business being built. If somebody was starting from scratch and all they had was a HostGator website, is there an idea for a business that you’ve seen that they could copy and put on their, maybe on a WordPress site or a shopping site all on HostGator or a membership site, which HostGator can do really well?
George: Yeah. I think that either a membership site, where maybe you have a course, let’s say you’re an expert in analytics for small ecommerce companies and you’ve been kind of pimping out your time kind of one on one and you can only stretch it so far. You don’t want all the hassle and headache of running an agency like I’ve had.
Let’s say you want to record a bunch of really big videos about you teaching people. You can actually take your existing blog posts if you’ve written some and do a video for each one. You can make a membership site, give away maybe a third or a quarter of these for free. If you want like a punchline or the second or third in a series, it’s gated and you’ve got to join it. It’s inexpensive. You don’t make it too expensive. Worst case, it’s going to drive a lot more consulting business for you, but best case, it becomes a passive income stream.
Andrew: What’s the best way to get new customers or new traffic to that kind of site?
George: So, I think you can do a couple of things. Surprisingly Bing PPC is for certain verticals and certain things a lot cheaper than AdWords, a lot less competitive. I would look at Bing. I would look at some Facebook ads targeting people by interest. You can do some great B2B customer acquisition using Facebook. These are like controllable things where you can spend just a couple hundred dollars, right?
Andrew: Great idea.
George: Cool. I love it. Anyone who wants to go to–I don’t know what it is about this cough. I think I get so excited about the sponsorship messages and that’s why I cough. I’m still recovering from a cold. So, I’ll say it a little softer. Anyone who wants to sign up to HostGator, you will get that tech support 24/7, 365 days a year, free site-building tools, over 4,500 website templates, free shopping cart software ideal for WordPress, but frankly you could launch any site on it.
Thirty percent off if you go to HostGator.com/Mixergy and don’t forget, you’ll get unmetered disk space, unmetered bandwidth, unlimited email–so many things–unlimited email addresses, $100 AdWords offer, $50 search credit from Bing and Yahoo, which is what you were just talking about. Go to HostGator.com/Mixergy. You’ll love it.
George: That’s a great deal.
Andrew: It really is. If you hate your current hosting company because they don’t have a great deal, switch to HostGator.
Revenue–so, I understand now, when you get a customer in, you’ve got a process for dealing with them. You know how you’re going to also collect data from them and be able to share it because that’s in your contract when you get started. What about bringing in new customers? How did you systemize your business to a place where you can get new customers even when you’re not there to drum up new business?
George: Sure. So, all of the clients I’ve helped over the years and some former employees of mine and business partners and a decent number of investors and VCs in the Valley continued to send me inquiries every month.
Andrew: It still comes to you? It’s still you doing those one on ones. It’s still you getting the referrals from venture capitalists. There is no other system in the business that works? Like, if you die, that’s it?
George: No, not at all. When I say they send me referrals, they might come to the ROIworks website and kind of fill out the lead gen form there. Some of them do come to me via LinkedIn or via email. Then in most cases, I connect them to like our client services manager or our VP of analytics. They do kind of an initial assessment. There’s definitely a process to assess is ROI works the right choice. Can we help that client? If it’s a vertical I know well or if it’s a really interesting client, of course I’ll once or twice a month take a few calls.
Andrew: George, is there someone who’s going to be listening to this at your office who goes, “George is totally leaving me out? What I do is the reason we get new customers.” What would they say?
George: I think they would say what I said was pretty accurate. I have a team of folks at ROI that’s really good at meeting new customers and assessing their needs. But I definitely participate a little bit. Yeah.
Andrew: It doesn’t look like your site has a lot of traffic. I’m looking at SimilarWeb. You guys have very little traffic to ROIworks.com unless I’m missing something.
George: Our business is very word of mouth. We get maybe 10 to 15 high quality inquiries per month. A lot of them do come to my email or LinkedIn, a lot of them come to the site.
Andrew: Okay. So, you decided that you were going to start a new business. We’ve got to talk about that for a few minutes before we end the conversation. MyNextCustomer–where did the idea come from for that?
George: That’s like my big learning experience. I found it kind of a pain to measure marketing ROI for different clients across multiple channels–paid, organic, offline. So, I said, “It would be kind of cool if I could pull all this data from different sources, different APIs and also not just do conversions but do phone leads, track phone conversions as well. But I got to that pretty good place originally by trying to do way too much in a bootstrapped fashion. I think I tried to build like Omniture or like AdStage or AdEspresso with no funding, basically.
So, I basically said, “Not only am I going to pull all this data, I’m actually going to manage all these different ad channels. It will be like a full on enterprise software platform.” It was kind of crazy. I tried to do this with like me and two guys. Me and two cofounders were like basically trying to build this enterprise software platform. After like a year and a half, I’d wasted like $300,000 on my savings on paying their salaries and I was not paying myself anything. My wife saw the three of us like around our living room table all the time.
Finally, another six months past. By then, I’d spend like $400,000 of my savings. At the time, I really didn’t have much more. I didn’t have a whole lot saved. I had been freshly married like about a year and a half. My wife was very supportive. But she saw the money dwindling. Then I had this epiphany. I’m like, “Why am I building so much? I need to stop building all this crap and just create a good reporting tool. That’s it. It just reports. Where are you wasting your money?”
Once I stopped building and made it leaner, I was able to, over the course of the following two and a half years, earn back all the money I had emptied out of our savings and it became for me and one of the cofounders almost like a passive income stream for about two years.
Andrew: Did you do for yourself what you say you want to do for your customers, which is go and talk to potential customers and do that whole analytics research and funnel and all that? Did you do that?
George: It’s a great question. One way I learned you need to do that is because initially, I did not. Initially when I kind of overbuilt everything, I felt like, “I’m the customer. I know enough. I’m definitely the target audience.” And then I encountered one of my friends and mentors, Richard Boardman, who was a Director of UX at Google who later helped SlideShare a bunch and now is at Salesforce.
Basically, Richard told me he has an acronym, TTYFU, which is like talk to your fabulous users or f’ing users. So, he basically spanked me. He was like, “Dude, what are you doing? You’ve got to like stop building, building, building, get out and start talking to customers.” That’s when I understood that I had built a lot of stuff I didn’t need and the company was going to be like unsupportable with our small team.
Andrew: Do you remember one customer that you talked to that helped finally open your eyes to this stuff? It seems to often just take one person.
George: Yeah. One customer was COIT Cleaners, which is a franchise carpet cleaning service. They’re a pretty big company. What I realized was that the reporting for them was such a big pain because they had all these franchisees and the head of marketing in the franchisor had no idea what the results and the ROI was for each franchise. That completely pivoted my product to a multi-location reporting tool.
Andrew: I see. So, you realize all they need is reporting for all these locations and was it simpler reporting than you were offering?
George: Yeah. I really simplified it down to just like PPC. You spent this much. You got this many conversions. You had this many phone calls. You can listen to the calls if you want–I wasn’t trying to be a call tracking company, more like a reporting company, but bottom line is your ROAS on PPC is this.
Andrew: I see.
George: Yeah. Then same thing with Twitter–I figured out kind of a hack to like sniff the refer, figure out if somebody coming from Twitter made a phone call. So, I figured out a way to pretty early on how to calculate the hard ROI on social media. So, it got a little bit of notoriety there. That helped really sell the product to about 300-400 paying customers.
Andrew: What was the name of that cleaning company?
George: COIT Cleaners.
Andrew: I see. All right. I think we’ve got everything here. Actually, there’s so much more that I want to cover, like the rest of the ROAARRR process. I want to cover moderated user testing, blended cost per acquisition. But we’re at the end of our time here together. I’d love to have you back on at some point to just teach marketing. Are you up for that?
Andrew: Just teach growth.
Andrew: Cool. And the website is ROI, like return on investment, ROIworks.com. If you go to the blog, you will very soon see a new blog post direct from George. Does that sound right?
George: I promise.
Andrew: All right. Cool. If you ever get a chance to have dinner with George, hope he’s a little bit because he’s very generous when he’s late. I didn’t use the massage myself. I’m not a massage person. But my wife loved it. Soothe is fantastic. I can attest to that. They come right to your freaking house. Are you guys outside of San Francisco too?
George: We’re actually in 22 cities and three countries now.
Andrew: I love tech. I know everyone thinks unless you’re curing cancer you haven’t done anything meaningful. But if you come to my house and you give a massage, you’ve done something meaningful. If you bring me a burrito in the middle of the night, you’ve done something meaningful. I love this stuff. I love the whole tech startup world. All right. But thank you, George, for being here.
George: Thank you, Andrew. Thank you all for being a part of it. Remember, my two sponsors, if you want a hosting company, go check out HostGator.com/Mixergy. If you want to finally hire an incredible designer or an incredible developer, not just a pair of hands, but someone who can really think much better than you ever could, at least about design or development, then you’ve got to go to Toptal.com/Mixergy. I’m grateful to them for sponsoring and for all of you for being a part of Mixergy. Bye, everyone.