Andrew: Hey there, freedom fighters. Today, we’re going to talk about something that I don’t think I’ve ever been able to get another founder to come on and talk about. They’ll talk about it over dinner, they’ll talk about it in private, they’ll sign up and do an interview to talk about it, then they won’t show up and we’re out do it. Issues with cofounders — really tough, really important. We’ve seen, I think Y Combinator said that’s one of the top reasons why people, why their companies break up over cofounder issues, still it’s not talked about. We’re going to talk about it in this interview. And it’s kind of odd Ben that we’re going to talk about it in this interview because I literally have been asking you to do an interview with me for over half a decade.
Ben Fox is a long time Mixergy listener. I kind of connected with him online. I then moved into Washington, D.C. for a couple of years. He happened to live there. We got together in person. He was an early Mixergy premium member. I talked to him in person. I thought of him as a friend. I asked him to do an interview. He said no. I said, “Come on, it make sense.” He said no. I couldn’t persuade him and then he says, “You know what, I’m ready to do an interview and I’m willing to talk about the one topic that no one else talks about, cofounder issues.” And so we’re going to talk about it.
And we’re going to talk about in the context of company that he ran called Stie5. It’s a webhosting company that he bought and sold and I want to find out about the purchase, about what happened immediately afterwards. I want to find out about how he grew it in a tough time and then why and how he sold it and what he ended up doing next. And I should also say that he is not currently running an official business exactly but he does have a website that if you’re interested in this conversation you should go check out. It’s called healthybusinesspartnerships.com. It’s all about keeping the cofounder relationships happy and healthy.
And Ben Fox’s interview here on Mixergy is sponsored by two phenomenal companies. The first, he knows well, it’s called HostGator for hosting your website. And the second is called Toptal, for hiring a developer.
Ben, good to have you here.
Ben: Yeah, thanks for having me.
Andrew: You know, I don’t want to give away the whole story just yet because we need to set up some context around it but there was like a January phone call from your partner at 5:30 a.m. and what happened on that call, to give people a sense of what’s coming up in the story.
Ben: Yeah. It was just a real breaking point in our relationship. It was the start of it and everything just kind of kept going downhill after that. It was kind of the small explosion that set everything off.
Andrew: And he called you up and said what?
Ben: He just said he was not in a good place both personally and with the business. Eventually it kind of came out.
Andrew: What is “not a good place mean”?
Ben: He wasn’t happy where things were in terms of both size, scope, complexity, and he hadn’t talked about it in a long time. It really just kind of weighing and weighing . . .
Andrew: What does that mean that he’s saying that the company is not as big as he wants it to be, his life isn’t where he wants it to be, that kind of thing?
Ben: Yeah. It was actually a little bit opposite and the company was too big for him, too complex. There were too, you know, the finances were getting bit out of hand, he thought. A lot of that kind of stuffed in and it was just wearing him down and then he had a lot of personal stresses going on in terms of, you know, some family health stuff, you know, life changes in terms of, you know, possibly getting married and having kids, you know, just weighing in on him and I think all that kind of precipitated that, so.
Andrew: Is this the same person that you started a business with back in 2005?
Ben: Yeah. He’s been a good friend for, God, since junior high and high school.
Andrew: How do you know him? What happened in high school that you guys connected on?
Ben: Ultimate Frisbee.
Andrew: Really?
Ben: We decided playing in junior high, yeah, with other friends and ended up rooming together for college, we ended up like I think we lived together for 7 of the last 14 years, really close friends. So we decided to start a business at some point after college.
Andrew: But it seems like you didn’t immediately started . . . no, maybe, you did. Was this MUHQ?
Ben: No. This was a network of websites kind of in the affiliate realm doing ad tracking and branding protection for different hosting companies.
Andrew: What does that mean? Brand tracking and . . . tell me more?
Ben: Yeah. So we did a lot of things around reviews, you know, putting up review sites for individual hosts and being pretty ethical about it for the time in terms of making sure that bad reviews were aired as well as good reviews. And then we got, you know, affiliate commissions for customers we sent to different hosts, pretty much every single one.
Andrew: Those are so big that they were I think whole WordPress themes at one point designed around letting you create a quick rating site largely for hosting companies because what people would do is they would put the hosting company that pays them the best at the top of the list and then put the others in reverse order from, you know, in order of the most profitable to list and they’d link and they get affiliate. And so you guys were doing that but you’re saying yours was ethical. You were actually soliciting feedback and ranking based on feedback.
Ben: Yeah. We didn’t rank based on payments, we ranked based on actual user reviews. We worked with the hosts. You know, when there was somebody that was really upset, we kind of put third-party pressure on the host to make sure it was resolved correctly, that kind of thing. Kind of like a poor man’s BBB.
Andrew: What was the name of that company?
Ben: God, it was a long time ago. You know, it didn’t really . . . webhostingunleashed.com. It was eventually that kind of the figure head site for it. But, hey, it had, you know, 50 to 100 domains at one point.
Andrew: How much money do you make from that?
Ben: Man, it had its heyday it was making about a million a year.
Andrew: Wow-wee.
Ben: Yeah.
Andrew: You know what, no one would know about it if they saw you. First of all, you’re pretty quiet. You looked up until now until you got married you looked like a 14-year-old boy. Can I say that?
Ben: Yeah. You can say that, yeah.
Andrew: Right. And everyone else is like trying to in conversations over drinks trying to show how well they’re doing and you always would downplay it, like be the quietest person at the table. Why? Is it that you’re shy or that you feel like you don’t want to show your hands?
Ben: No. We liked what we were doing. It wasn’t necessarily about the money. The money was great but, I don’t know, there’s something about talking about money was just . . .
Andrew: What do you mean you like what you were doing? You liked creating all these different websites to rank other hosting companies? You loved that?
Ben: Oh, I loved that. I was doing the SEOs and it wasn’t like the Wild West of SEO times, so we could just do about anything. You know, it’s so boring now comparatively but, yeah, it was just fun. You got to figure out what Google is doing. You were doing tests. It was really exciting.
Andrew: Okay. So you did all that and this is after you became, I didn’t know about this until I saw your LinkedIn profile. You were, were you the first employer of HostGator or one of the first?
Ben: First official employee. When I joined I think there were another 20 contractors but I was the first one as an employee. I worked out of the owner’s bedroom in Florida for a long time.
Andrew: Wow.
Ben: That was an awesome time.
Andrew: Is this before or after this business that you described a moment ago?
Ben: Before, yeah. I actually . . . we launched kind of the first couple of sites and then I quit my job a few months later.
Andrew: Okay. Did you learn anything at HostGator that informed your decision to buy Site5?
Ben: Yes, so much. I mean being able to work directly with the owner of HostGator, Brent, was just awesome. I just learned a crazy amount because even by the time I left it had grown to I think about 30 employees plus 20 contractors which was, you know, just crazy growth and, you know, we stayed in touch after that and I did, you know, some work contracting for him for a long time. And I think, you know, I came back before Site5 and it had grown to 150 people. So, yeah, I learned a ton from him both in terms of marketing just how to like run a business in those early days. It was a ton of stuff, yeah.
Andrew: All right, so then you and your friend. Are we not naming him intentionally?
Ben: Yeah. I think it’s better just to say like my cofounder, yeah.
Andrew: I see. You and your cofounder went on to start another business, right? This was a content management system before WordPress was a huge thing. Didn’t you?
Ben: That was actually the same business as the affiliate, yeah. That was the background of it, yeah.
Andrew: Oh, so you’ve created this affiliate business where you’re creating sites and then you also said, “We should just create our own software for publishing our sites?”
Ben: Yeah. My business partner is an amazing software developer and he was new to it at that time but he built a CMS system that stay in multiple domains that for that time was amazing and he also built one of the first affiliate tracking systems that we kept in-house. So it would, you know, work with the host to track sales and do some really cool stuff so that was all what we sold eventually.
Andrew: And you guys worked together or you were always remote?
Ben: No. We worked out of the same place for most of that time period.
Andrew: So you’re super close.
Ben: Super close, yeah.
Andrew: And you’re working on business together. You weren’t living at one point together, were you?
Ben: Yeah. We live together for like, like I said, 9 of the last 15 years.
Andrew: Wow.
Ben: He’s my best friend. He was as close as a brother, if not more, yeah.
Andrew: Wow. You know what, I love my wife. I can’t imagine being in the same like apartment with her working side by side all day. That would be a really tough thing for any relationship. All right, what happened to that business, the publishing business that you had?
Ben: Yeah. So eventually, after the SEO stuff was going well, it got kind of boring and so we had the chance to sell, I think that was around 2007, yeah, towards Christmas 2007. And we sold that to some venture-backed company out of California.
Andrew: How much did you sell it for?
Ben: Around three million.
Andrew: Wow. And this was all bootstrapped, so you each I’m assuming got half a million dollars?
Ben: Yeah.
Andrew: Have to pay like 15% taxes or something, but otherwise you pocket it?
Ben: Yeah.
Andrew: You’re not that type of guy who would blow it on strippers and coke or anything like that? Are you? No?
Ben: No. I was just reflecting on what I did with that money because I remember thinking about it a lot because I kind of grew up lower middle class kid from Arkansas. So I think like the first thing I did was I bought like new socks like nice socks not that type of Walmart socks that like rip after a while that I always had.
Andrew: Okay.
Ben: So, yeah, I was thinking about that yesterday actually.
Andrew: How did you grow up? I remember hearing that you and your brother at one point had this mistletoe business. What was that?
Ben: Yeah. I forgot about that. So my brother would climb these giant trees in our neighborhood and knocked down the mistletoe and then we’d wrap it with, you know, Christmas ribbon colors and go door to door to sell mistletoe when we were kids to like get some Christmas money so we could buy presents.
Andrew: And you say you guys were not super well-off. What was life like day to day?
Ben: It’s not like we were going hungry but I definitely remember times growing up where my mom would cry over money because my parents were split up and it was just pretty hard on my mom, to both raise us and try to work, you know, and my dad helped a lot too. But she was just very stressed over money and that really, you know, lodge in my memory watching my mom, you know, occasionally cry just because she was . . . everything was so tight.
Andrew: How do you think it influenced you or you’re thinking about money?
Ben: I think it really drove me to make money and want to make money because I felt like that was the only security you could have in the world. It’s, you know, you would be okay if you have that.
Andrew: I have to say, it’s true, isn’t it? Like even now if you look back with hindsight, it’s not like you took the wrong lesson from it. You didn’t exaggerate the significance of the money but I think you left with a good vision of it. Don’t you think?
Ben: Yeah. And I think my business partner I think had a healthier relationship with money. He’s like very frugal and I think he really, in college, you know, there was a lot of times that I really wanted to go after money no matter the cost and he really, he kind of tempered me just because he’s kind of frugal and very steady. So I know that like we had so many conversations when we were roommates in college and I think that really helped to kind of temper that harder edge that might have produced more disaster or, you know, money at all cost, you know, kind of thing. All right, I got a lot more relaxed about it.
Andrew: Wow, I kind of admire the relationship that you guys had. It’s painful now to know where it ended up. So you sold the business. It looks like based on your LinkedIn profile that you had like you have a little bit of time. Well, actually, it’s hard to tell because the business that you used to buy Site5 was called is it Bweeb?
Ben: Yeah. It’s Bweeb, yeah.
Andrew: Oh, just Bweeb?
Ben: Yeah. So we on nickname and company.
Andrew: I’m sorry. I just lost your audio for a second. Can you repeat that?
Ben: Yeah. It was a Bweeb, it was basically just a holding company I had for a long time so the dates don’t line up, yeah.
Andrew: Okay, yeah, so I can’t tell then. How long did you wait before you decided to buy Site5?
Ben: Yeah. We sold in I think, so we sold December 2007 and started doing some SEO contracting for a friend in the hosting industry for a while, went pretty crazy. I think as you’ve had some good interviews with other guests of do you sell that first business where a lot of your identity is tied up in it? I call it my like first midlife crisis of trying to figure out who I was without that. So I think we had 10 months, yeah, because we closed on the Site5 business in October 2008 when you can imagine the world was going crazy.
Andrew: Yeah.
Ben: [crosstalk 00:13:12]
Andrew: It was an awful time to buy anything. Why buy a hosting company at all?
Ben: Yeah. We were very frustrated because we were doing all these marketing for 40 to 50 hosting companies through that affiliate network and we just kept seeing so many of them not really do split testing, not doing customer service well, you know, we were seeing all these complaints and honestly, it was just a belief that we could do better, both for like the customer service side but also the product side. We were really interested in some cloud technology to add redundancy to hosting plans and some of the stuff that was emerging around that time. So, yeah, it was honestly just let’s get in this business. We know it really well. We can do better than these guys.
Andrew: You know, isn’t it one of the reasons why they didn’t do well, why they didn’t do a lot of customer support, why they weren’t doing AB testing. Was it the problem that there just wasn’t much money in it? It was a commoditized business where the price kept getting lower and lower and there wasn’t enough margin to hire great customer support and so on.
Ben: No. The margins are actually good in hosting especially if you stick to your pricing and don’t just do a race to the bottom. I mean obviously, people doing like $2 a month, like that’s not going to work unless you can really scale it. But no, a lot of these companies, you know, just didn’t have any concept of what good service look like. They were outsourcing everything to India, you know, they were not hiring good people. They’re hiring contractors that maybe were doing two jobs at the same time now. It was more just a, and at least in my opinion like badly run or they were sucking out all the money for another project because they just didn’t care about hosting.
Andrew: What did you buy the business for? How much?
Ben: That I can’t disclose that but I will say that mid-seven figures.
Andrew: Okay. I got here are my notes but if you gave it to us in a confidence, then I won’t reveal it. You bought it, you took it on, and then you both were surprised by . . . ?
Ben: It was kind of silly because we sold the previous business in part because we didn’t want to hire people and then we bought a company that had, I don’t know, around 25 people. And it was just a rude awakening to suddenly, you know, be in charge of people on the whole spectrum of skill sets, you know, everybody from a $10 an hour customer service person to a, you know, a great COO. So it was a shock and to have to manage people.
Andrew: Yeah, and payroll and payroll taxes and the whole thing. They have a bookkeeper to handle all of that stuff?
Ben: Good, yeah. At that time, yeah, and we kept her. Yeah, she’s great.
Andrew: You also discovered that there was more debt than you expected?
Ben: No, we knew that prior to . . .
Andrew: You knew that going in? Okay.
Ben: Yeah. We knew that going in and a lot of that. That company was going bankrupt unfortunately due to the way it was run. So we knew it was going to be like a bit of a rescue and a lot of that debt got removed, just when we paid them, we also paid off the debt as part of the purchase price, so yeah.
Andrew: So your deal was I want to talk to the big creditors, I want to negotiate down and make it contingent on my buying it. I will not buy it unless I can negotiate it down. Is that how it worked?
Ben: No, it was simpler than that because the debt was to affiliates so, you know, call . . . there was about $150,000 in debt, something like that so that just when we paid the owner of the purchase price that amount stayed in and we paid off the affiliates to make sure they were happy. So it wasn’t that sort of an external, you know, third party, it was more of these people that were already doing a great service for the company.
Andrew: And you were paying the full amount. You weren’t negotiating it down.
Ben: No. We wanted to pay the full amount because we wanted them to keep promoting us.
Andrew: Okay. I’m looking at this version of the site from back then, $6.95 a month is what shared hosting started at? You had a margin in that? There was enough money in there?
Ben: Yeah. There’s good money especially if people pay it for one to three years upfront. You know, it’s kind of all based on the premise that over the course of the year maybe only 30% of your clients actually will need customer support. And of that, you know, maybe only 20% will need, you know, more than an hour or two. Yeah, there’s great margins in it. We also did a lot of work right after we bought it. They had done a lot of sales that slowly lowered the price. So the biggest thing we did was to totally, you know, restructure the finances and push the price per customer up and we really made the plans more cost effective. So we did increase the price on a lot of those.
Andrew: You increased the price. Tell me more because I want to see how you turn this thing around. They people who knew the company best could make it work and were about to go bankrupt. You found a way to make it work. I want to understand how you did that. You increase prices but how do you just increased prices on people? What else did you do?
Ben: Yeah.
Andrew: Well, let’s start with increasing prices.
Ben: Yeah. So the previous owner was kind of an absentee owner at that point. So he had just kind of let it run. He wasn’t really paying attention to it. And they’ve gotten this habit of doing these humongous sales. So they would suddenly, you know, do a sale once a month and they would lower the price by like 40%. And so like half their customers were signing up over that special pricing that was like three years for a $150 or something really cheap. So the first thing, you know, they had a great brand, so when we came in we really focused on doing two thing which was lowering how long the term was and increasing the price generally by about 20%.
So I think when we took over the average customer when you took all of them was about $7 a month in terms of income and I think over, you know, the next four years we just slowly pushed the average up to about $22. And we pushed the term down for about 21 months to about three months, so it just increase your cash flow much more frequently on a monthly basis and increased the price.
Andrew: Why isn’t it better to have people pay you three years in advanced or 21 months versus three months?
Ben: It’s great but it means you have to be a lot more disciplined with the cash you’re receiving because it needs to last for services in hardware for a longer time and the company had gotten this pattern of taking a huge discount even though, you know, in the future they still needed that money so we just wanted to reverse that a bit. It made sense.
Andrew: All right, it takes a lot of faith though because now you’re potentially going to lose customers and it’s a pretty high churn business. Actually, is hosting a high churn business?
Ben: It’s not that bad actually. A lot of people think it is but generally, it’s because there’s so many technical people and for technical people it’s easy to move a host but for our normal people it’s not that easy.
Andrew: Yeah.
Ben: It’s giant pain especially back then when email was more tied to your host and nobody wants to disrupt their email. So, no, it wasn’t too bad. We also had to migrate everybody to a new server. So that first year was pretty tense. It took a good 10 to 12 months for us to be . . . you really turn that thing around because we had to migrate I think 40, you know, 30,000 clients to new servers and a new DC that had better pricing and also a stable service because the place they had been using was just a terrible data center. I mean we had pictures of them with just fans everywhere to kind of cool the servers and our servers would like sometimes turn off just because of heat problems took over.
Andrew: Wow.
Ben: So it was a very intense first year for us to get over that hump.
Andrew: You know, my first sponsor is HostGator. You know them. Before we started, you said you had some stories about them. What is a story that you remember about HostGator?
Ben: I’ve got a good one. So Brent lived in Florida and I was living there at that time and it was hurricane season and I remember driving for 20 hours straight out of the path of a big hurricane at that time, and forgive me because I can’t remember the name, made it out of the hurricane’s path. I think I was up in Tennessee playing an Ultimate tournament, got down with the Ultimate tournament and I find out that, you know, that entire area of Florida we’re in near Boca Raton was without power and there was no real plan to get it back.
Brent to his credit was amazing and went and got several generators and was trying to get the office back up and running, you know, back then, so internet was pretty rare so he’s trying to hook up like 4G routers when they were just emerging I think. And I remember I went and got a hotel room and I worked, I don’t know like 12 to 18 hours some days because I was the only person on support, sales, tickets, and we were pretty big by that point. And there’s about four or five days that I was the only person, you know, in some way running HostGator because I was the only one with stable internet and it was an intense period. I had to, I think I took like four days off just because my hands were cramping so much from typing so much.
Andrew: Why do you think HostGator, why do you think Brent . . . Brent Oxley is the founder, why do you think he and why do you think HostGator beat out so many of the other competitors who came in? What was it about him and what was it about the company?
Ben: Yeah. So, God, he will never give up. I have never met somebody who is so resilient and just will keep pursuing something to the end of time. And then specifically at HostGator, they had really good customer service. Like Brent cared about customers, you know, even when we’re at fault we would make people feel better just because he cared so much about them receiving good service. And then kind of I think this is the other main thing was Brent did a really good job with affiliates. He was the first one to do an incentivized affiliate program in hosting maybe. So the more customers you sent to HostGator, the more he paid and that was at that time groundbreaking. And so he was able to get all these relationships with affiliates who just kept sending and sending and for every hundred customers you might get, those hundred customers refer another 10 customers. So it just snowballs and snowballs and snowballs.
Andrew: Wait, why would a customer refer another customer in the hosting business?
Ben: Just, generally, because it’s such a, at that time there were so many hosting companies. There was a lot of people asking, “Well, who are you using and are you happy with them?” And the fact that he gave good customer service they would say, “Yeah, I’m happy with them.” And that would be a sign up. And that kept repeating every year. So the more, even though, he’s paying out this really big commissions to affiliates, he was making so much money on the back eventually because, you know, he might pay one year income for this customer but that customer every year would send him, you know, a client or at least two tenths of the client.
Andrew: All right, instead of doing an ad for HostGator I’ll just leave it there. Anyone who wants to go sign up for HostGator, this is a company that’s been around since 2002, still has super low prices. Look at this, the lowest price is $2.64 but I actually recommend the people don’t take that. I think that they should take the next level up because it comes with unlimited domains. I’m a really big believer of having the ability to quickly publish an idea and having unlimited domains will allow you to do that but regardless of whichever plan you pick you’re going to get the same great HostGator service and the low price and they will actually lower the price much more than they do for everyone else if you use the special URL hostgator.com/mixergy, hostgator.com/mixergy.
All right, so you’re in this business. You’re improving it. What else did you do on the marketing side that worked?
Ben: Honestly, we put all our marketing dollars into customer service.
Andrew: That was it?
Ben: Yeah, that was really it. We know we had a solid brand. We put a lot of money to into the interface, so we were one of the few companies that had a cohesive user interface that sat kind of on top of cPanel. So we redid cPanel so it was easier to use and made it easy to jump through sites but otherwise, yeah, we put, you know, all that money that would have gone to marking into customer service. I was the only person who did marketing at a company for seven years. It was the last year that we finally hired two people to start on more.
Andrew: So did you try any marketing? All this AB testing thing that you want to do, did you get to do that?
Ben: Yeah. We did all that. You know, my business partner built a really amazing AB split testing tool for our landing pages, for our home page, so, you know, we were doing things like that. It was just him and me really . . .
Andrew: The whole affiliate deal . . . did you do affiliate deals? Did that work?
Ben: Yeah. We did affiliate stuff but we paid less. We really just wanted that to be, you know, only 20% of the new customers. We didn’t want to spend a ton of money like that, so, yeah, we still had a lot of good affiliate relationships. But they were pretty [inaudible 00:24:59].
Andrew: If I go into like Internet Archive I’m going to see that guys offered people a lower price or an incentive to recommend their friends, none of that?
Ben: Yeah. Well, no, we did a little of that because that was all under the affiliate program and, you know, that drove probably 20% or 30% of the signups for us but the rest was just solid branding referrals from the good customer service.
Andrew: That was it? And did you anyway ask customers who got good customer service to refer a friend?
Ben: Yeah, absolutely. We played that program up quite a bit. So any support ticket when they said they had a good experience, you know, we would send them something and ask, “Hey, can you tell your friends about us?” You know, “Can you post a review?” We did a lot of stuff like that but we didn’t really have a team doing it. It was . . .
Andrew: So whenever somebody . . .
Ben: . . . more [inaudible 00:25:40] to the customer service.
Andrew: Someone got good customer service you’d follow up and you say, “Hey, would you mind going and reviewing us there?” Or “Tell a friend or refer someone and we’ll give you . . . ” I think at one point you guys were offering $20 commission to anyone who signed, a friend up, right?
Ben: Yeah. And that was the affiliate program, yeah. So we really encourage people to do that. I mean we did some other things like we use the third-party review site, RatePoint [SP], I think at one point in Shopper Approved where we’d send people to leave reviews of us. And so I gave a lot of, you know, social credit when people could go to a third-party site and see, “Wow, these guys have 1,200 reviews on this site and people love him. You know, there’s only 51 star reviews.” So I think that was a big help but honestly, the fact that we had customer service that would just never give up, you know, spoke fluid English, that kind of thing I think really helped.
Andrew: You know what else, I think you guys, tell me if I’m wrong, but 10 years ago you had live chat.
Ben: Yeah.
Andrew: Before Intercom was even around.
Ben: Yeah.
Andrew: And yet people in the U.S. man the live chat.
Ben: Yeah. Eventually, we had, I think by the end we had about a 135 people on 18 cross countries because we had gone to even . . .
Andrew: Wow-wee.
Ben: But, yeah, at that time we were a 100% I think America . . .
Andrew: You’re still the quietest at dinner. Am I making it up? Are you kind of a . . . I know this is directly, not directly related to business at all but I’m curious about you. Are you someone who’s more introverted? Are you someone who just doesn’t feel as comfortable in social situations? What do you like?
Ben: Yeah. I’m super introverted, I think also too the affiliate community is not known for being quiet so a lot of times when I was at affiliate stuff or even hosting conventions, you know, you’re hanging out with guys that rent a Ferrari to drive.
Andrew: Right.
Ben: Or on the biggest gambling table behind you. That just always seem like a waste to me, but, yeah, I think naturally I’m just a bit more quiet.
Andrew: I was at Traffic & Conversion for the first time in my life this year, you should’ve seen the row of cars in front and people intentionally will make sure that you know it’s their car, whether it’s the license plate or something else. What else? You know what, let me just talk about people and then we’ll get into you and your founder. I get how intimidating it is to walk into a company that has a couple of dozen people and to build it up even more. What did you learn about management that allowed you to go from, what did you say you had, 20 people or so when you’re starting?
Ben: Yeah. I think we had about 25 when we took over, yeah.
Andrew: Twenty-five to four or five times that. What did you learn about management that allowed you to take it to that level?
Ben: Yeah. A lot of mistakes, I think honestly the first four years I just skated by because both me and my business partner cared about the people like you . . . I think we got so much forgiveness for the stuff we did, you know, by accident that just because we did care about them and we did a lot of communication in terms of explaining to them why we are making a decision. That’s a hard one to answer. I feel like I’ve got 10 points there. I think honestly, yeah, the biggest one was we just showed a lot of caring.
So like in the early days, you know, we did have thinner margins when we were newer. So for example, we only paid 50% of healthcare costs for our employees but we would explain to him why we didn’t feel we could pay more at that time. And then, you know, they we’re able to see the next year, we were able to pay 75% and the next year we were able to do a 100%. So it’s things like that that I think really gave us a lot of credit with that team. We tried to be very transparent as well. It’s very hard to run a remote company just because you can’t talk to anybody. There’s no informal communications, you know, back channel.
Andrew: Especially back then there was no Slack. What did you guys do to communicate?
Ben: God, yeah, we use the, I want to say it was a . . . we’re using IRC when we came in and then we switched to something else. We switched to our server with like a chat client of some kind.
Andrew: Some chat client, that’s how you manage your team?
Ben: Yeah.
Andrew: And were you like were using numbers to make sure that everyone was doing what they needed to do? Were you using something else? Was it culture?
Ben: Yeah. So, I won’t lie, I think we had to fire five people in the first month who just were not working, who would give us excuses like their dog had runaway for the day, things like that.
Andrew: But how do you know? How do you know that they’re producing? What was your way of figuring out the people were doing their stuff that they were on top of things?
Ben: Yeah. Hosting is a bit easier for part of it because they’re either working tickets or they’re working live chat. And, you know, there’s a result there that you can see. You could say, “Oh, this person did four live chats.” “Oh, this person did 10 tickets today.” And then on the server side if the server is, you know, having problems and they’re not saving it and making it work better then you also know. So it’s a little bit easier that the work is very trackable except for like the high level team where it’s much more one on one. You have to talk to him.
So what we did after, it took us, I think about 18 months, but my business partner built a really amazing customer support desk. So that customer desk would show us, you know, who was on a ticket, how much they are working, and eventually, over that next five years we built out a very good structure of the team in terms of, you know, teams of eight, one person is kind of helping everybody and also watching over, you know, a break system, a clock-in system. We added a lot of that structure in the first 18 months and then a lot of culture too, I guess.
Andrew: Hard to believe you’d have to build that yourself. Like every one of these little things that you guys had on the site or in the business is now whole company, several?
Ben: I know, yeah.
Andrew: Right? Like I think your live chat was self-hosted, self-created. Am I wrong about that?
Ben: It was for like the first 12 months and then we switched to a paid product that was host eventually, yeah.
Andrew: Yeah. What you’re talking about with email, we signed up for, I didn’t actually. I was against it and then I’m . . . Help Scout, but now I like it. It gives you incredible data on how happy customers are with their responses, what our response time is, who’s answering the fastest, that whole . . . it’s all built in. Okay. Then you get that call from your cofounder, immediately, did things start to go wrong after that?
Ben: No. It took a few months because at first, you know, I wasn’t really sure what’s going on. I was just super worried about him. And I should know . . . so I’m trying to be very fair here because, you know, I only know my side and then what he’s kind of told me. So I’m trying to be fair at least to him.
Andrew: Yeah.
Ben: So, yeah, it took a few months. I think it took a few months and then it really shifted into, you know, kind of blaming me for a lot of stuff. And that was kind of [inaudible 00:32:06]. You know, like it was a weird mix of kind of personal attacks in terms of, you know, you’re running the business like a dictator. You know, you’re not listening to people, that kind of thing on the leadership side as well as that was seem like just a lot of he wasn’t sure where he fit in anymore.
Andrew: Were you a little bit of a dictator?
Ben: Yeah, a little bit.
Andrew: Yeah. How?
Ben: Yeah, it was something I really had to work on over the years.
Andrew: What’s an example, some way you were of apace where you were being dictatorial, I guess is the word.
Ben: Yeah. So when we first got started the company was going bankrupt which, you know, I think the common term is like a war leader. You know, you didn’t have time for a lot of discussions or committees because we were, you know, the business was failing. And we had a very short amount of time to turn it around and start making money. And so after, you know, you have to make that transition, you know, from sending down the edicts of here’s how we’re going to do it, you know, or very quick decisions that might only be based on half the information which you have.
And then you have to switch over to more of this growth mindset of, you know, supporting the people around you making sure they can handle the new responsibilities because over, you know, that next five years we might have somebody who use to run a team of eight, someone is running a team of 50. And it’s a hard, it’s a hard transition both to get out of the micromanagement and the, you know, “I want to tell you what I want done here” not “you might know better than me kind of thing.”
Andrew: And you’ve learned.
Ben: So it was hard.
Andrew: Okay. So in that respect, he has a point there?
Ben: Yeah, he definitely did. Yeah.
Andrew: Okay. Where doesn’t he have a point? What was he saying that made you feel like this is being a little irrational, turning on me instead of being fair, being my best friend?
Ben: Because by then it was year seven and there are a lot of progress have been made on that front. We had a really amazing management team that I, you know, that I built and he had built and we had grown. So we had, you know, we had a COO, we had a CTO, we had two VPs in the technology division that were amazing as well. We had chief software developers, so we had built this robust team to do this and I feel like those were more things he was lashing at out. I don’t feel that that was accurate at that time.
Andrew: Okay. And so could you actually just tune him out and keep working or did you guys still need each other? No.
Ben: Yeah, I mean like it was, you know, he’s my best friend and, you know, that’s, I mean I trust him implicitly. You know, he’s one of this people that if he tells you something you listen. So man, no, it hit me deep. I got super down. I was really worried. I lost all passion, you know, for the business. You know, I went out and I went and hired a coach and I . . . an executive coach. I went out and do the 360 review who talked to my management team and tried to get a feedback because I was really shook. I was really worried that I was, you know, causing issues to the business and that he might be right. It really worried me. I went and joined Vistage which is a group of entrepreneurs who can kind of peered by. So I immediately went and did those things, but man I was mega depressed and crazy stressed.
Andrew: Just because, I don’t get it, just because he tells you you’re being controlling?
Ben: Well, there was more to it than that. That was part of it.
Andrew: So tell me more because so far all I’m hearing is this guy had pretty reasonable criticism.
Ben: Yeah. It was . . .
Andrew: Don’t hold back.
Ben: Yeah, I’m trying to be fair and I’ll also phrase it correctly but he was going through a personal life crisis. So at the same time, you know, he had some issues with some substance abuse. He had immense pressure, I think I mentioned one of his close family members, you know, was facing, you know, cancer. He was also facing huge life changes in terms of he knew he was pretty soon going to get married and have kids. So from my view at least like all these things were just pushing on him, you know, he suddenly didn’t have control here, he didn’t have control here and so it almost like this he wanted to manifest control over the one thing he did have which as our relationship in the business, yeah.
Andrew: Was it also that he needed more money than you guy were able to pull out of the business?
Ben: No. We were both super frugal and that was, you know, money is never been really an issue too much.
Andrew: So even with his financial . . . he didn’t have financial pressure?
Ben:No.
Andrew:Even with all the obligations that were coming up, he was fine?
Ben: Yeah, absolutely. Yeah, and I mean we . . . yeah.
Andrew: You did tell our producer “Look, every little thing became a fight.”
Ben:Yes.
Andrew:Like the direction of the company became a fight, what to do, who to hire, became a fight. It would just break into arguments.
Ben:Yeah. I mean it was really, it was, you know, like there were personal attacks and there were business attacks and that was definitely a merit to some of the business attacks, but it was like, it was like a new person like suddenly I was talking to somebody I had never known. So even the business attacks weren’t done with his normal style of, “Hey, here’s what I’m seeing.” He was more became a very aggressive. He can be a very aggressive arguer. He’s very, very smart.
And normally this isn’t a problem between us because we both enjoy a good argument but these became like very personal. So even though if there was a business comment, it might then be wrapped up in a personal attack about me. So it was . . . I didn’t know how to describe it because, you know, it just shut me down. I just couldn’t take him and eventually, you know, by two months after that January call I had to say no more phone calls because he had gotten that bad. And I also, it was like he wouldn’t remember them because I would write them down and quote parts that he would say back. And it just wasn’t there. It was just like it was a true . . . felt like he was going through a true crisis, you know, and just not, just flailing, you know?
Andrew: He was upset that you went to Tasmania. I remember you going there.
Ben: Yeah, that was one . . .
Andrew: What was he upset about?
Ben: Well, he just . . . it was part of his example of me being very controlling. He said I’d planned this . . . I was living in Australia for a year and he came and visit for a couple of weeks. We did a great camping trip to Tasmania and then some parts of Melbourne and it was this weird thing that came out of nowhere during one of these calls trying to figure out what we’re going to do and what was going on with him and I remember him saying like I had planned the whole trip and controlled it. And I was, it really shook me because I was like, “Oh, man, do I have this issue?” And I went back through emails and I was like, “No, no I asked him like, “Hey, what do you want to do here and here?” And it was like I realized that I wasn’t talking to somebody that was thinking clearly, you know, like they were in the crisis mode just, yeah.
Andrew: Okay. And so I see that this is becoming a problem. You then decided, you know what, I’m going to get a mediator. We’re going to being somebody in. I’ve actually . . . by the way, I kind of get how he’s feeling not that he’s right or wrong but I know that when things frustrate me, I get upset with my wife for no . . . it’s not her fault. I know in my head it’s not her fault and I know that I should actually not like make it her fault but I still watch myself do it.
And it could be that, I don’t know, like something’s up where the recordings all day and the interviews don’t work or our numbers don’t make sense or why are we losing money after I’m working so hard and revenue is up, you know? And then I come home and she’ll say something like “We need to plan on our next vacation?” I go, “Fuck that, I don’t plan vacations. Just pick a place. Why do we have to negotiate a vacation? Just pick a place, we don’t have to . . . ,” right? And then I get, like, indignant, there’s something wrong with her for wanting to have discussions about stuff instead of just getting it done.
Ben: Yeah. And part of this I will say is like in January after that initial call, because that was a lot more personal is he took 30 days off from the business. So he was like “I just need a break, man, I’m just going overloaded.” So this was when he came back and I was like, “Man, I don’t know where this is coming from.” But, yeah, in hindsight like when I look back, I mean I was younger. I didn’t know as much. I hadn’t been married for a few years. I think that would have really helped me. But I was too focused on trying to solve it. And it wasn’t something that needed to be solved. I just needed to listen.
And that’s the biggest, you know, I’ve got a lot of regrets around it. I don’t think I could have done better at that time but I was trying to come up with solutions when he was just in a state where he needed me to listen and just support him and like . . . and eventually it got to the point where I didn’t realized that I made it worst and then I felt like I had to make a choice between protecting the people at the company because you’d feel like it’s a heavy responsibility when you have, you know, 130 people whose livelihoods and their home payments, you know, rest on you and this is going on. So I was just, you know, it was a bit of a shutdown and then trying to protect these people and then figure out how can I make this, you know, get it back to a point we can talk about it.
Andrew: Wow. Right, so he was also taking it out on people?
Ben: No. He wasn’t taking it out on people but like that behavior . . .
Andrew: Would hurt the business that would then hurt their livelihood.
Ben: Yeah. I mean he had a huge voting share and I was very worried about what that meant and, yeah.
Andrew: We’ll come back in a moment and talk about the mediator that you brought in, what that did for your business, what you learned about working with the cofounder, and then what happened to your business as a result of all of this. First, I’ve got to say if anyone is interested they should go to check out, if they’re interesting in hiring a developer, they should go check out Toptal. Do you know much about Toptal? Have you hired from them?
Ben: I do. [inaudible 00:41:34]
Andrew: All right. I freaking hate hiring. I’m trying to hire a VP of Operations, somebody to run Mixergy with me. It’s just taking every freaking ounce of energy out of me. Maybe I should talk to you about how to do this right. And I keep thinking I had hired developers from Toptal. It was such a pleasure. I wish that they would do more than that because all I did was talk to a person kind of like going through therapy and say, “here’s what I need, here’s the way I want them to go.” They ask me questions that draw me out. And then they put two people in front of me. In fact, forget that. I even needed someone to do finance, that’s a more personal part of the business. I wanted them to help think through the finance of Mixergy, to help me think through what we should be doing, where I’m missing opportunities, where we’re wasting money, where I should be investing more money.
In fact, it was his push that got me to look for a VP of Operations. I’m like I don’t know what to look for. I talked to someone at Toptal. They help me think through the role which I liked because I thought I needed a part time CFO. It turns out I needed someone who is more about profitability and help me think through profitability. It was it totally a different role that they created for me. And then they found people for me to talk to.
Then I got someone at Toptal to think through the decision making process and pick the right person. And then frankly, if it didn’t work out, no loss, because I could just call Toptal and said, “Look, I don’t want to talk to this guy, it’s kind of awkward. You fire him and get me someone else.” Thankfully, it ended up working well. That’s the way that you work with Toptal. I’m going to give you guys a URL and Ben I’m going to give you a URL because I know you’re going to be hiring for your businesses for the rest of your life.
If you go to this URL, you’re going to get the same experience. One big green button, as soon as you press it, you get to talk to a matcher. As soon as you talked to the matcher, you let them know everything about the way you work, your corks, the way that you run your operation, what you’re looking for, they will then connect you with two, maybe three people who could fit your profile perfectly. If you like one of them you could hire them if not, no loss. You can go back and ask for other people or just move on.
Most people will end up loving it and if you’re not happy, they’ve got 100% satisfaction guarantee right there on this website where you’re also going to get 80 hours of Toptal developer credit. I should enunciate better, Top as in top of your head, tal as in talent, Toptal. So every Mixergy listener is going to get 80 hours of Toptal developer credit when they pay for their first 80 hours and that’s an addition to a no-risk trial period of up to two weeks. Here’s the URL, Top as in top of your head, tal as in talent, toptal.com/mixergy, toptal.com/mixergy.
The mediator, I’ve heard a lot of entrepreneurs go out and get a like marriage counselors, mediators, coaches. Did it work for you?
Ben: It did. It brought us back to the point that we could talk to each other. We did two full days I believe. And it did. It got us back to the point that we were more connected to the point, you know, we could talk. So it did helped but there were still . . .
Andrew: How? What did you . . . I’m wrestling with a cold here. How? What did they each you that helped you guys work it out a little bit?
Ben: Yeah. So we all say in the room together and I mean it was kind of some of those hokey exercises just to rebuild connection like, you know, tell me about the time you guys felt very connected or, you know, write this down on a piece of paper and hand it to the other person, you know, about their strongest quality. It was a lot of those types of, you know, things that we would consider silly or hokey. But, you know, after doing it in for a day and the mediator was really good on just bringing them altogether. We felt like, you know, there’s still a lot of anger and frustration I think on both sides but we are at least able to start talking and get over kind of that awkward bump that we kind of hit.
Andrew: Right, any advice for anyone who’s listening to us about how to deal with partner issues based on your experience?
Ben: Yeah. I would get a mediator a lot sooner and . . .
Andrew: Wait, when you say mediator I think of the mediator as someone who comes in almost like a judge to deal with the conflict. That’s not what you mean, is it?
Ben: No. It’s more a, I mean maybe a better word is a business coach or a business therapist. It’s hard to . . .
Andrew: Get somebody to help, someone who’s experienced in dealing with issues like this and conflicts like this to help you guys talk through.
Ben: And in our example it was . . . they were an X therapist who I had focused on the business community for the last 20 years and they really, you know, they were really good about this type of stuff. They’ve don’t it before. I got a referral from another friends, and I have should have done it sooner because I waited five months after things turned bad just trying to see if something would settle down. I waited too long.
The other big advice I would give is you have to be aware as a cofounder that small changes can have big ripples. So, yup, so in my case for example, we had been living together, you know, when we took over this business in Colorado.
And I was tired of Colorado and decided to leave, and, you know, I moved to DC for a year and we, you know, we still had a very strong relationship. We talked, you know, three to four times a week. I still went back a couple of times but I think in the hindsight it’s little things you like that you don’t think about that create boundaries that start growing and growing because after that I traveled for two years working remote. And, you know, at the same time the business is getting bigger, my responsibilities are growing, he’s were not. You know, necessarily, and it’s the little things like that that you don’t think about are going to cause problems in your relationship. You know, I started to drink less. You know, there’s little things like that that then you can’t bond over a drink as easy.
You know, it used to be our, you know, in our 20’s we would go out to the bar and have, you know, 6 or 7 mixed drinks. And there was a certain amount of, you know, camaraderie that emerged from that. And when you cut something like that off or you end it, you know, three hours before you get up to your like normal shenanigans like some stuff like that has long-term effects on your relationship and if you don’t talk about them openly or if you don’t add something more formalized in, it can cause so much damage.
And after that I went kind of through this year, I’ve talked to so many other founders who had very similar stories, you know, where somebody gave up something and, or change their life in some slight way but they had long-term modifications that came out two years later that destabilized that cofounder relationship.
Andrew: You know what I didn’t realize, I’m just now realizing as we go through this. You also had a partner in the business beyond the two of you, right, which I know. It was a hosting company, right? Were they experienced enough to help you guys out? Were they both with the relationship and with the business because they were a big hosting company?
Ben: Yeah, so a little back story there. Originally, the owner of HostGator had invested in us to make this deal happen. So it was me and my business partner plus the owner of HostGator who had backed us.
Andrew: Personally?
Ben: I can’t remember, honestly, yeah. It might have been through HostGator but it might have been a personally. I really can’t remember at that time. So eventually, what happened is HostGator is sold to a larger company called Endurance International Group and they sold so, Endurance International Group by that point was a public company. So 40% of our business was owned by a public company and I would say that the relationship was good with some people of that company but otherwise tense because they wanted to buy us. They didn’t want us to be a competitor. So it was this terrible situation where 40% of the business was owned by somebody that we did not want to be in business with. And that’s a longer story but . . .
Andrew: So I imagine that they were giving you a lot of help, servers, feedbacks? No, they did not want any of this.
Ben: There was one fantastic person at the company who we had a really great bond with and luckily they were our rep but otherwise, we had nothing to do with them. We were a totally separate identity. You know, my business partner and I had majority control but you can see the ramifications are if my business partner, you know, decided to side with them in some way, I’m outvoted. So it was a very tense thing where we both . . .
Andrew:And that was always a possibility.
Ben: Mm-hmm. And we felt like we couldn’t . . . we don’t want to tell them because anything that we . . . they’re aggressive, you know? Like if anything that’s they see splitting us apart, we feel like they would magnify and that would also, you now, cause them to probably offer to buy us at a lower price because they’re seeing, “Oh, these people are having problems. They want out.” You know what I’m saying?
Andrew: Mm-hmm.
Ben: Yeah.
Andrew: Yeah, they ended up being one of the big winners in this space.
Ben: Yes. They did. They did a rollup strategy and brought everybody. There’s not many companies, you know, that they don’t own at this point.
Andrew: Including HostGator which is my sponsor and Bluehost and sometime I’ll have people say, “Andrew, you should not be getting HostGator. You should get Bluehost.” I’m like. “Wait a second, it’s actually the same thing.” And they’re getting more and more similar. Yes, there’s some differences but the differences are becoming more about marketing than they are about product. Right?
Ben: Yeah. That’s correct.
Andrew: Because it seems like they’re all competing in the end, competing with wordpress.com and with like Squarespace and those types of companies, right?
Ben: Yeah, from a frontend. From the backend, you know, they are competing with themselves in terms of efficiency, stability, some of the technologies that, you know, consumers don’t see, they keep their server online. There’s some companies that have, you know, a bigger advantage than others in that realm.
Andrew: What’s the advantage?
Ben: So, you know, if you’re running 5,000 servers, if you have some technology that keeps them online with only 5 people as opposed to somebody who has 50 high-paid system admins keeping 5,000 servers, that’s a humongous advantage. So there’s some companies in the hosting space who are still around that are doing a really good job on the technology front and then from the frontend they look very similar but that’s, you know, kind of enabled them to stay in business, to stay competitive even with a large public company or GoDaddy who’s doing quite well.
Andrew: Who’s Dreamhost? Are they independent?
Ben: They are independent run by a group of great guys. And yeah, they’re still independent doing some cool stuff. They’ve got really, really cool technology on the back and they also have a custom control panel for users that’s . . .
Andrew: They do have a nice control panel. The problem with them is there’s no customer support number. There’s always a ticket. If the site is down, you’ve got to file a ticket and then it’s like a day later you get a response, which is tough and I kind of feel with them. I guess they’re your friend so we shouldn’t get too deep into it but here’s what I think . . .
Ben: [inaudible 00:51:40] product offerings. You know, you sell the people who are technical and provide less support. It’s kind of a tradeoff, you know, who are you targeting?
Andrew: There also is like they’re not really . . . it doesn’t seem like they’re growing very much so what they’re doing is they’re finding ways to like increase what their current customers are going to pay for the same services or add extra services that aren’t super necessary. I feel like for a while that they were the innovators and they just kept things super clean and easy to use and then something happened.
Ben: Well, webhosting too is pretty flat. I mean you kind of nailed it. The bottom of webhosting is getting, you know, destroyed by like Weebly, Wix, those kinds of companies are pulling the easy users out. So you’re left with and growths. Well, sometimes these companies nowadays stealing market share from each other.
Andrew: Yeah.
Ben: You know, there’s not a lot of natural growth, yeah.
Andrew: Which is why I think Endurance is moving into like email and other things that they’re going to be hosting.
Ben: Yeah.
Andrew: You eventually sold to Endurance, is it because of the issue you had with your partner?
Ben: Yes. You know, it was the worst year of my life. I would imagine, maybe the worst year of his life as well. And we got to the end of that year, you know, by July or October we were talking. We were trying to figure out what we would do and we spent a lot of time on that. The mediator worked, you know, with us and him for I think three months, you know, after that initial bit to just kind of help sort out what was going out in this head, you know, to tell me what he wanted.
And eventually I felt like, I didn’t know what he wanted even after that. He wanted me to tell him. It was a very weird thing where he felt kind of lost and unsure. And so eventually, I decided, well, does he want to get out like can I buy him out. So I talked to him about that, you know, he was pretty upset at first but then he said, “Okay, let’s look at it.”
So we spent another five months through 2015, you know, exploring, you know, can I buy him out of his percentage, how can I do it in a manner that’s fair to him that he gets some upside down the road, that kind of thing. And I think I got to about March 2015, I had just gotten married four months before. I was crunching these numbers just living in spreadsheets, you know, trying to see how to make it work and I eventually realized that it was too much to buy him out and it was too much risk for where I was at and I just felt like this is the time to sell for both of us. You know, he was going to be financing the deal, so it wasn’t pulling him out any risk, you know, it was basically he still own part of the company while I paid him out.
So I just decided, “No, this is not going to work. This is too much risk. I want to start a family. I don’t want this hanging over my head and stressing me out anymore.” And that’s when I decided to sell.
Andrew: You go back to the people who own 40% of your business, is that an easy negotiation?
Ben: It was actually. And they’ve been trying to buy us. I mean they emailed us I think twice a year to ask if we are ready to sell and, you know, I sent one email. I was actually on vacation with my wife in Italy because we were living in Europe at that time. I sent one email and I got I think an answer back in eight hours that said, “Yeah, fly on over.” So I think we ended the vacation about two days early which my wife is not too happy about, and flew to Boston and sorted all out. I think it still took another three months to sort the details and some pretty intense negotiation at times. But, yeah, it was set by then and closed on that deal in June or July.
Andrew: It doesn’t sound like you did a lot of shopping around, did you?
Ben: I did. At that time, I mean hosting is really consolidated so there’s only a few big players. But the problem is since they own 40% they had a right of first, you know, refusal. Right of first offer. So basically, if another company came in and said, “We want to buy.” They could do all the due diligence, all the negotiation work, and then EIG could stop in and say, “Well, we’re going to pay that and we get it since we have right of . . . ”
Andrew: And that’s because you gave that to your friend?
Ben: Yeah.
Andrew: He asked for it. He was smart enough to say, “Look, I’m buying 40% of this business, I want to make sure that if you guys get a deal and someone else wants to buy it, I get the right to match their price.”
Ben: Yeah. And that’s not uncommon. I would say that’s pretty standard when you own that much. So that’s not, you know, we weren’t following a venture type fund. This was more an LLC partnership and that’s pretty common in that situation from my understanding. So, yeah, we were unfortunately, locked into them. You know, there are a couple of other groups that were interested but they had to pass because they couldn’t make an offer like that.
Andrew: What did you sell it for? How much?
Ben: So, see, a little over 40 million.
Andrew: Oh, 40?
Ben: Yeah. Oh, we had a typo. Ari wrote 14, wow.
Andrew: Yeah. So 40 million, you had a third of that?
Ben: Yeah.
Andrew: Why are you not an asshole?
Ben: I don’t know. I know we had to . . .
Andrew: It’s not too late to, dude.
Ben: Yeah. We had some debts to so that paid. We also gave a lot to employees in our team, but, yeah.
Andrew: So you ended up with what, eight million at that point?
Ben: Yeah. About there after taxes.
Andrew: And then you started press.net which is a WordPress hosting company?
Ben: Well, that’s we were already working on that at Site5 and so we basically spun it out and we’re able to exclude it from the sell contract. We had some other assets in that business, a lot of really valuable domains so me and my business partner split up the stuff that we could convince them not to take. And so we had been working on this, a very cool backing system to be able to launch multiple hosting brands, really focused on small groups, customize the hosting for their needs, that kind of thing.
And so that was one of the saddest things about this is we had been working for two years on this and suddenly we couldn’t continue it. So I wanted to spin that and keep pursuing it. So, yeah, we spun out Managed WordPress Hosting business as a white label platform so that the agency could come in and launch their own Managed WordPress Hosting, but we run all the support in the infrastructure.
Andrew: So if I wanted to have like a Mixergy WordPress Hosting to compete with them, what is it called, WP Engine, I could do that.
Ben: Yeah, plus you could include custom plugins and everything else to make it more a SaaS, so let’s say you were focusing on, “Hey, I just want to encourage entrepreneurs to blog about their journey so then it has a very simple, you know, backend that would only work on [inaudible 00:58:01] host.
Andrew: For membership sites which is it takes a lot of understanding of how to coat it up. Oh, got it. All right, that makes sense. How did that deal with the business?
Ben: That did not do well. It was hard because I was both running that new business with a group of about six, you know, employees who kind of switched over. At the same time, I still had to run World Wide Web Hosting while it transitioned to EIG for 16 months. So it was a very busy period where there were, you know, basically running two businesses and a very painful one where we’re migrating and helping customers move over to the new platform. It was a pretty frustrating experience at times.
Andrew: Why are you doing this interview now? So I’m obviously a fan of yours. I’ve known you for a while. I’ve asked you for a long time, you said no. I kind of get . . . actually I don’t know why you said no before. It felt like it would have made so much sense at Site5, build the brand, you did interviews on other people’s sites. Why not then and why yes now?
Ben: Yeah. So then I was in the middle of the business. I don’t like publicity. Like I didn’t really want to be known as that kind of figure head of the company at that time especially when we were hanging out in DC. So I just wanted to be under the radar, like I wanted the company to kind of stand out more, and it just felt weird.
So why am I doing it now? I went through such a painful period in 2014 when all of these was going on. And in hindsight I see so many things I could have done differently. And I want to at least talk about it more publicly because I know it happens so much from talking to other cofounders. So my hope is that this interview alone will help one person avoid, you know, what I went through in 2014. And my bigger hope is along with the site where I’m trying to talk about this morning, encourage other people to talk about it more, is the people will head off, you know, the problems before they grow to so big that it causes, you know, to have to sell a company or so much stress and pain.
Andrew: So one big thing to do is get somebody to come in and talk to you, a coach, a marriage counselor, whatever it is, someone how has experienced dealing with conflicts like this to sit and encourage better conversation and guide better conversation. Another thing is be aware that when you make big changes in your life or in your business that could be affecting your relationship and don’t assume that hey, we’re a distributed company, I could move from Colorado to DC to travel and everything is going to be the same. What else would you leave them with?
Ben: Do some things formally. A lot of people especially when their friends and they’ve known somebody, which is a lot of cofounder relationships, they don’t think about what should we formalize about this relationship. You know, like in a marriage you might sit down and do a budget once a month. You might sit down and talk about where we’re at a couple of times a year. And so I really, looking back and talking to other people I think cofounders need to make sure that they’re setting time on a weekly basis not just to talk about the business but to connect personally because if something is going on in either one of your personal lives, the other person needs to know it because that can cause a lot of havoc in the business. So I think you really need to formalize some of that interaction.
Andrew: What’s one thing that you’d want to formalize? If we had to pick one important thing to make sure that we don’t leave out. Is it the buy-sell agreement?
Ben: Legally, is whole nother question but in terms of formalizing I think that one of the most important is that you meet with your cofounder one on one without fail two to three times a week just to talk personally and stay connected on that side of things because it’s all too easy when you’re running a business you get excited or depressed or just talk about something forever. And really what you need is like after work go get a beer, go get an orange juice, whatever you want and just talk about you guys and where you’re at. Or, you know, 30 minutes before you start the day just the two of you and it’s got to be something that you never move because you do have to maintain that personal connection. You don’t want to lose it.
Andrew: All right, the site is healthybusinesspartnerships.com, for anyone who wants to check it out. This is not the next big thing. Your LinkedIn profile says “I’m looking for the next big thing.” This is just you saying, “Hey, I just went through something that was pretty bad. I want to show everyone else how they could deal with this if they go through it.” And one of the things that Cameron Herold [SP] when I saw him in person at Baby Bathwater event, he said, “Guys, you’re dealing with this as entrepreneurs, understand that this is, you know that this is part of your journey but it’s kind of crazy to everyone else. Tell you wives, tell your husbands, tell your kids that this craziness that you’re going through it’s normal. Don’t worry about it. This is part of the way that things work for us because they’re going to worry you beyond where you’re worried because that you have more information than they do and they’re taking on your crisis and they don’t know that this is normal.”
And the reason I bring that up is the bottom right of your site, healthybusinesspartnerships.com is a link to a site for, or, yeah, I guess the site to anyone who’s married to an entrepreneur because they’re in on this rollercoaster ride and they didn’t sign up for this. This is not their love. They didn’t like climb through these, get mistletoes, sell it, and decide that for the rest of their lives they want to do this. They just fell in love with someone and then as part of that package they’re on this rollercoaster.
All right, thank so much for doing this interview. I hope this won’t be the last time you’re on here, Ben Fox. The next time you come on I’m going to change why you changed your last name but I’ll save it for the next interview and I really appreciate you being here.
Ben: Yeah. Thanks for having me. It’s been a pleasure.
Andrew: Thanks. And I want to thank the two sponsors, the first is the company that Ben was a first employee of, it’s HostGator. Go check them out at hostgator.com/mixergy. And the second if you’re looking to hire, do yourself a favor, hire from the best place on earth. This is no exaggeration. Actually, they’re really good, toptal.com/mixergy. They do not need my hyperbole. Thanks so much, Ben.
Ben: Thank you.
