Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com. It is, of course, home of the ambitious upstart.
You might know that I started Mixergy back when I lived in Santa Monica, just like four blocks away from the beach, beautiful environment. Santa Monica is also known for having a startup community. I remember I lived six blocks from the water. Four blocks from the water was Clearstone Venture partners, the VC firm.
I remember back in the mid-2000s the VCs and people in the tech community were really excited about the idea that just like Google searches for web pages, there were going to be these new search engines for people. That’s the thing. They were so hopped up about it. That’s the thing that was going to be huge. I remember when it launched. Man, it got so much attention. Michael Arrington, back when he wrote for TechCrunch wrote about it, VentureBeat. So many people talked about these sites. And then I never heard anything.
I kind of assumed–I’m going to be honest with you guys, I’m going to be honest with my guest today–I assumed that today’s guest’s business just disappeared, that it failed. But it didn’t. It actually pivoted. It transitioned. I don’t even know if I’d call it a pivot. It just transitioned into something different and has been doing really well. I didn’t know about it because TechCrunch didn’t tell me it’s been doing really well because no one told me. VCs didn’t tell me how exciting the company was and how well it was doing.
Well, my team here did tell me and I’m so proud to have today’s guest on to talk about how he built up the business. His name is Harrison Tang. He is the founder of Spokeo. Spokeo is a people search engine. Let me tell you what that means. It’s kind of scary, actually, what it means and kind of useful. I think people are going to be grateful to know it exists and also nervous it exists.
You can put someone’s phone number in there and find out who owns that phone number or you can put someone’s name in there and find out their address. If you’re looking for someone and Facebook isn’t helping you reconnect, this is the way that you can actually find out where they are and what they’re up to. It’s kind of big. It’s kind of a big thing and we’re going to find out how big the business is.
I should say this interview is sponsored by two companies, the first is going to host your website right. It’s called HostGator. The second is going to help you actually get together with people on the phone or in person. It’s called Acuity Scheduling. I’ll tell you more about them later.
First, Harrison, welcome.
Harrison: Thank you. Thank you, Andrew, for having us.
Andrew: Do you remember when everyone knew exactly who you were and were talking about you endlessly?
Harrison: Yeah, of course.
Andrew: And then you failed–not failed, but it didn’t go so well. We’re going to talk about the frustrating time where you had to go talk to your dad about the money that he invested in the business. Let’s bring it up to speed to today. Where are you guys now? How much revenue and how much traffic?
Harrison: Sure. We serve more than 18 million unique visitors a month and we did $78 million last year. So we’re doing very well.
Andrew: $78 million last year in sales?
Harrison: Yeah. We’ve been growing that without any outside funding, just doing it through our own efforts and then our own team.
Andrew: Did you have no outside funding at all?
Harrison: No. We had no outside funding.
Andrew: You did have your dad put some money in?
Harrison: Yeah, my dad and another one of our cofounder’s dad.
Andrew: How much did the two dads put in combined?
Harrison: Probably around a couple hundred thousand.
Andrew: Okay. And your competitors at the time raised millions from blue chip investors, right?
Harrison: I think it has been a very incredible journey for us. Very, very grateful to be here today, actually, overcome all these challenges and not given up, but at the same time having been able to overcome these challenges and survive.
Andrew: I want to find out what the original idea was, how you knew that original idea wasn’t going to work out. Frankly it worked out for one of your competitors. There was a site that did well with one of your original ideas. I want to know why you transitioned and how you actually are getting so many customers to your site. But let me just get to know you as a person. You’re a guy who grew up in Taiwan. You came to the US at what age?
Andrew: 13. And you told our producer that at 13 you discovered Barney. What did you make of Barney as a 13-year old?
Harrison: Yeah. I know no English at all at that time. I had to start from scratch. Math and logic translate–I guess it’s universal across all cultures. Unfortunately, if you are very good at logic and math, that doesn’t translate to language. For language, to master a language, you need to know the vocabulary. You need to know the nuances.
Andrew: That’s why you wanted to watch TV. Going to Barney actually was maybe a mistake, don’t you think?
Harrison: Yeah. As a teenager, honestly I felt a little bit, should I say, a little bit not very. . .
Andrew: A little out of place.
Harrison: A little out of place, yeah.
Andrew: You also got open with our producer and said, “We were trying different business ideas because neither me nor my roommate in college had any girlfriends.” I get it. You’re coming in as an outsider with a little bit of an accent, definitely not the same culture as the people around you. One of the things I admire about you is at an early age, you wanted to study, you wanted to become better. You did something I kind of did. You copied the dictionary. How did you do it?
Harrison: At first I realized that I couldn’t–I need to know the vocabulary in order to master any language. So, I figure I might as well just–watching a dinosaur dancing on TV, sometimes it feels a little bit weird. I was watching all these–I was studying poems and poetry, like classical poetry in Chinese while I was back in middle school in Taiwan and now I suddenly had to watch a dinosaur dancing on the TV. I felt I might as well start copying dictionaries.
Andrew: You would copy it word for word on paper?
Harrison: Yeah. Correct.
Andrew: Did it help you understand the language better?
Harrison: Yeah, it helped to memorize the vocabulary. You read something. You read a vocabulary, you read a word and if you go to the next one, you forget it two or three days later, but if you write it down, it helps you memorize that. I did that. Later when I was able to find more of my vocabulary, I started using English to English dictionaries. So, if you don’t understand a hard word, you use simpler English vocabulary to explain a harder English. So, I did that.
Afterwards I started reading novels. I picked Jane Austen because Jane Austen liked to use very hard, very flamboyant vocabulary. Jane Austen’s novels also have–nowadays a lot of novels, they have a couple chapters just to build up a big climax. In Jane Austen, every chapter has a small climax of a small plot in it. If your reading speed is five hours per page, you don’t want to read.
Andrew: You want something with a faster climax than one that comes at the end of a 300-page book. I see. By the way, as you’re talking, all that keeps going through my head is $78 million. The number is shocking to me. That’s how much you guys brought in, in sales 2015?
Harrison: Well, let’s put things in context. I think that is not compared to, let’s say when I came to the United States without any knowledge of English compared to 10 or 11 years ago when I first started a company with no funding and things like that, I think $78 is definitely an achievement. But that’s putting it in context of what we need to achieve. Eight percent of searches online are first and last names.
Andrew: How many, 80%?
Harrison: Eight percent.
Andrew: Eight percent. That sounds more real. Okay.
Harrison: Eight percent of searches online are about people and then it’s the second biggest search query type behind locations. So, if you put that into a context, I think Spokeo has a lot of room–
Andrew: So, you’re telling me $78 is big for a guy from Taiwan who was watching Barney videos to get acquainted with the new culture, but it’s not nearly as big as you guys are thinking. It’s profitable, I imagine. What are the net margins on this business?
Harrison: We can’t disclose that number.
Andrew: Are you profitable?
Harrison: Yeah. We’re profitable.
Andrew: You are profitable?
Harrison: I’m pretty sure our competitors are also watching this video.
Andrew: Oh, I’m positive. They’re going through the transcript from what I’ve seen. Just one more thing for how I get into how you got into Spokeo. You were studying to get a PhD and you realized the end game for a PhD is to be a professor. That’s not where I want to go. You and your roommate decided, like I said before, because you didn’t have any girlfriends, and you had nothing to risk, you said, “We’re going to try coming up with a startup,” and the first thing you did had something to do with Skype. What’s that first business?
Harrison: It’s a Skype mouse. So, it’s a mouse and a Skype call comes in, then the mouse vibrates, you pick it up like this and then you literally talk into the mouse. That tagline we used is a mouse that talks.
Harrison: So we did that. Unfortunately, our PhD friends doesn’t want to give up their PhD for this idea. I guess in retrospect, it is kind of a good decision.
Andrew: I can feel instinctively that that’s not a winning idea, not nearly as big as Spokeo. But let me understand your thought process on it now over ten years later. Why wasn’t that a good business idea to jump into?
Harrison: Well, because it sounds like a cool idea and it’s very, very original. When I talk to people, people chuckled a little bit. One of the things that I always look for when I’m building a new product, whether it’s Yapper Mouse or Spokeo or we have this new product called Family.me, I’m always looking to create an emotion. I think Yapper Mouse did that, a mouse that talks, that did that.
But then there are so many details involved that you don’t realize until you actually implement the idea because entrepreneurship, as we all know, is basically walking into the unknown. You don’t know the details. Devils are always in the details. One such detail is that when you’re using a mouse on the table, it gets dirty. I’m not sure people want to talk into a dirty surface, right?
Andrew: There’s also the thing that people want to click around their screen as they’re talking to people because they’re not paying attention anyway, so you’re just taking away their distraction.
Harrison: I think it is a funny idea. It’s an idea that got people interested. I think it’s a very good idea that gathers a talented team around to build a startup. But then as you embark on this journey, you will start realizing and learn all these details and all these lessons. I think the key to building a startup is not about your original idea because you’ve talked to so many entrepreneurs before, I think almost all of them will tell you there are all these twists and turns before they find the right idea.
The key to entrepreneurship is about solving problems, not being afraid and also have the patience to solve problems and then learn from the lessons and adjust your strategy. When you do that often enough, then the right idea will come.
Andrew: Where did the idea come from for Spokeo? What was the original source?
Harrison: So, our PhD friends, they don’t want to give up their PhD for this Skype mouse idea. So, I realize that we need to–basically, we can’t do things half-ass. So, I close down that company and then a couple of us, three of us came out to start Spokeo. The idea is to create a social network aggregator. At that time, social networks aren’t dominated by one player as exists today. Myspace was huge and Friendster is still a force. I’m not sure today a lot of people today know what Friendster is. But at that time, Friendster is still one of the top social networks. It is a very, very fragmented landscape. We thought there is a unique opportunity to create an aggregator to simplify people’s digital lifestyle.
Andrew: There was also Flickr at the time. There was Twitter going on at the time. Flickr had photos. Twitter had text. The idea was, “Why do I have to go to Flickr to see if my friend form high school just posted a picture and then go to Twitter to see if he posted some text and link to an article and then go to some other site to see what he’s up to for lunch today? I should just have one site that brings people together and aggregates it.” That was your original thought.
Harrison: Yes. Correct.
Andrew: I’m actually looking at, I think, Michael Arrington’s screen shot because he wrote about you guys and someone else actually at TechCrunch wrote about you guys and showed Michael Arrington’s screen. It looks pretty useful. What it reminds me of is it reminds me of FriendFeed. You got compared at the time to FrinedFeed. FriendFeed was started by Paul Bucheit and a few other cofounders. Paul Bucheit is the founder of Gmail who is now, I think, the head of Y Combinator.
Andrew: He did the same thing with comments. So, if you saw what your friend posted on Flickr, you could also comment. Your eyes just went wide as I said that, why?
Harrison: FriendFeed, we preceded FriendFeed by about a year.
Andrew: A year?
Harrison: We launched a year prior to FriendFeed. After we launched, Gigaom actually picked it up and coined the term digital lifestyle aggregator, social network aggregator. We actually started that entire trend. Right after that, there were a lot of services that tried to build a social network aggregator. FriendFeed happens to be the one that’s the most successful, actually, probably more successful than Spokeo as a social network aggregator.
But I think very, very early on, I guess one of the good things about being the first mover is that you learn things earlier than other people. So, very early on, we realized that while there is a very core audience for that social network aggregator concept, that core audience isn’t big enough for the ad model to work. We tried to put ad platforms and tried to monetize the service through ads.
I remember we were making $4 a day, basically one Starbucks coffee for four of us. We realized very early on that while this idea can gather press, can gather traffic, we could have monetized it. That’s actually one of the reasons why we decided to pivot to a social search engine and to search for a business model that can keep the lights on.
Andrew: But there just weren’t enough people out there in the world who said that they wanted to see what their friends were doing on all these other networks because there weren’t a lot of people out there who were on that many networks. Is that right?
Harrison: Yeah. And then also the fact that around 2008-2009, it becomes more and more clear that Facebook is going to dominate the social landscape. When that happens, the value of aggregation becomes less and less.
Andrew: Yeah. And frankly, there are even more social networks than there were back then, but it really go down to almost zero or to just one–well, two, Facebook and Twitter. Today you’ve got Music.ly, you’ve got Snapchat, you’ve got Instagram, etc. But it wasn’t like that.
Andrew: All right. I want to find out where you found this idea, how you grew it, what’s going on with the wall behind you and the desk underneath you, so many other questions. First, a quick message about my first sponsor, it’s called Acuity Scheduling. Let me ask you–how many people at your company right now, Harrison?
Harrison: More than 200.
Andrew: More than 200. So, imagine if you wanted to talk to all 200 people at your company, if you said, “I’m going to take a week off in the fall or around the holidays and talk to every single person one on one.” It would be a scheduling nightmare, right? Well, what if instead of just emailing them and saying, “Are you available on Monday?” and they’re on vacation that Monday and then, “Are you available Monday at 11:00 a.m.?”
What if instead of all that, you go to Acuity Scheduling, connect your calendar–what do you guys use, Outlook or Gmail?
Harrison: We use Gmail.
Andrew: So, you connect your Google Calendar to them so they see what your availability is. Then you go on the calendar within Acuity Scheduling and say, “I’m available at the these times to have 15-minute conversations with everyone in my team.” So, you mark that off. You then hit Submit.
They give you a link that you could email to everyone on your team and say, “This week, I’m going to talk to every single person one on one. If you have an issue, if you want to tell me what you’re doing, here’s a link. Schedule a meeting with me. They get to see the link. If somebody books Monday at 11:00 a.m., the next person can’t book it Monday at 11:00 a.m. It automatically removes it.
Or if Monday at 11:00 a.m. you decide to have lunch with me because I happen to be in Southern California, you mark it off on your calendar and then no one gets booked on that. It’s a smart calendaring system that allows you to really have conversations with people. That’s what Acuity Scheduling is all about. I can’t believe you have that many people at your company. Do you even do this? Do you talk to every single one?
Harrison: I try to. I think I remember pretty much everyone’s names.
Andrew: Wow. That’s a big memory. Acuity Scheduling is good for that. It’s good for talking to your customers, talking to potential customers. So many people have tried to talk to their customers and they couldn’t get them on the phone. It’s because people don’t answer the phone right now and scheduling is a pain. If you send them a link that makes it easy for them to schedule with you, it’s fantastic. It will work. They’ll get on a call with you. Acuity Scheduling does that and so much more. It integrates with all of your systems.
So, if you guys out there are using Infusionsoft to send out email or MailChimp, you can collect someone’s email address when they book with you on Acuity Scheduling and then send them a sequence of emails. I’m not going to go on with all the details. You know what you can do. You can think about it on your own. Or better yet, you can play with it for free for 45 days just because you’re a Mixergy listener and Acuity was created by a Mixergy fan.
So, here’s a URL for you. It’s AcuityScheduling.com/Mixergy. Let me say it again with a pause before the name–AcuityScheduling.com/Mixergy.
By the way, that wall behind you, it looks cool but it’s got more to it than that. What’s going on with the wall behind you?
Harrison: Well, this room is called Bacon.
Harrison: Yeah. Oh, so to start off, we have basically an open office format. So, no one has their own individual rooms beyond accounting and legal departments. So, everyone, if we need to have meetings, then they have to book a meeting conference room. Every single conference room has themes. That’s actually decorated by our own teammates. We actually have a team called a culture team. They make sure that we do things that align and are consistent with our culture values.
One of the big things about tech companies, especially information technology companies that we have, we all know that the core value, the core assets that we have as people is the people’s ingenuity, the team’s collaboration. So, we actually have a culture team that maintains that. One of the things they do is create these beautiful theme conference rooms.
They all have a reason. This one happens to be Bacon. We have a “Star Wars” one. We have a “Game of Thrones” one. They literally used broken keyboards to build that throne with swords and things like that. We have a Lego room. That happens to be my favorite because I like to build things and I love Legos. And we have a Mario room. We have different rooms.
Andrew: So, you’re in the bacon room. There’s bacon painted on the wall behind you. It actually says–I’m looking here at a picture of it. There are meat cuts, America’s favorite since 2006. That’s when you guys launched the company. Underneath you on your desk is eggs and bacon there. If anyone is watching, you can see it right there. That’s a really cool environment.
You mentioned the people and how important they were. There was a time when you had to fly out and convince somebody who got a great job to come work for you in the early days. I think you had to fly to LA. What was going on there?
Harrison: You know, when you’re building a team, especially when you’re a newbie trying to build a team, it’s very hard, to be very honest with you. A lot of my college friends, they have great jobs. They have very comfortable lives, great careers and why would they want to give up all of that to join you?
One of our very early three team members, a couple months after we started got an amazing offer. So, he has to take that offer. I totally understand that. That can break up the entire team and the entire opportunity.
Andrew: This is a cofounder who got the offer?
Harrison: He doesn’t have a cofounder status because he left very, very early on, but then from that, it’s very hard to build a company with only two people. So, I basically drove down to LA three times to bug my roommate. He’s a roommate of four years undergrad. His name is Mike. He’s one of our cofounders still here today. I just literally bugged him and then at the end I just told him, “Hey, man. Help a friend.”
Andrew: You’re using the friend card with him.
Andrew: I see. One person left and it’s not like you fought to get that person back. You understood he got a great offer. He wants to move on, let him move on. You said, “I need somebody else in the company. Let me help out.” That’s when you drove to LA to recruit a different person, am I right?
Andrew: So, basically this guy left. He’s your Pete Best, to use the Beatles analogy, right? He had an opportunity to be one of the cofounders but instead he was Pete Best. That’s painful.
Harrison: Well, it’s totally understandable. He’s a very smart guy and he got an amazing offer. At that time, I was a newbie. To be honest with you, I don’t have a lot of experience. I had never done startups before, tried to look for funding. Everyone realized I’m a newbie. So, no one wanted to give us money.
Andrew: What’s the most embarrassing funding story you have?
Harrison: I think the VCs are all very nice. So, they all gave us a very polite no. So, there are no embarrassing stories or anything like that.
Andrew: There was no one who was being a jerk?
Harrison: Okay. You had your idea. It was aggregating everything that was out there about your friends and making it easy for you to keep up with them, but it turns out there weren’t a lot of people who needed it and Facebook was dominating the market. You pivoted to this thing that now is doing so well. Where did this idea come from?
Harrison: So, we basically at that time were running out of funding. We were running out of our parents’ money. We realized that we have to find a way to monetize the service. We would just start brainstorming different ways that we can do that, brainstorming what are the fundamental human needs. One of the things that we realized is we realized that people, there is an opportunity, the people search opportunity. People will actually pay for information if the information is valuable.
Andrew: How did you know they would be willing to pay for this information?
Harrison: We did a lot of research.
Andrew: What kind of research did you do?
Harrison: We would just go online. We tried to find–one of the things that we learned is that if you have money to pay for AdWords ads, you probably have some kind of business model.
Andrew: Okay. That’s a good point.
Harrison: So, we start searching for different queries, different ad placements. Then one of the things that we realized is that when we searched for people queries, we realized there are a lot of companies, not just one, a lot of companies who have that monetization engine that enables them to buy search engine ads.
Andrew: At the time, I do remember that if I search for someone’s name, I could find several sites that would tell me how I could find that person’s phone number or that person’s age. I remember because there was a girl who I was in LA that I met who I was curious, “How old is she? She’s older than me. How do I figure out anything about her?”
I went on Google and I ended up on one of these sites that told me her age, that told me her address. They existed. So, you saw they existed and that to you was validating? Why didn’t that say to you, “There are people who are already doing this. I shouldn’t get into this business?”
Harrison: We realized that we could actually carve out a niche with the technology that we built. So, we built this technology that aggregates social identities. We realized that technology could also be used in addition to helping you aggregate your own social identities, it can be used to search for other people’s social identities.
So, we realized very early on that we can repurpose the same technology for the people search industry and we were the first one who carved out that niche because at that time, the people search engine doesn’t really have the social aspect and the social search capabilities.
Andrew: So, where did they get the information?
Harrison: From the public web.
Andrew: I keep hearing that there are public records, all this stuff is public. What are the public records that would make someone’s home address available if they’re renting? Where did you get that data?
Harrison: A lot of them are phone books. A lot of them are court records. A lot of court records are public, real estate records.
Andrew: I see. So, if I sue my landlord, my address is listed in the court records and that’s public.
Andrew: I see. Got it. Okay. And then if I do some other things, that’s public and it’s in city hall somewhere. What you guys do is you get it and you aggregate it.
Harrison: Well there are many different players in the space. So, we work with different partners who also do that. Correct.
Andrew: I see. All right. So, doesn’t Whitepages.com do that too?
Harrison: Whitepages.com does that as well.
Andrew: I remember actually I interviewed Neil Patel. I asked him how being an advisor has helped him and he said most of the companies didn’t pan out, but Whitepages did.
Harrison: Whitepages is actually one of the biggest brands on the internet as well. As I mentioned earlier, people search is a huge space. Eight percent of searches online are about people. Whitepages is one of the oldest brands that people know when they want to search for others.
Andrew: I see. So, you said, “Look, this already exists, but none of these guys are actually using social data. We can pull in social data and add more information than anyone else.” If we can figure out this whole ad model, then we’ve got a hit business, right?
Harrison: Yeah, correct. Building a business is like climbing a ladder. I think it’s very, very unrealistic for four people in 2008-2010 to take on Whitepages. I don’t think that’s what we were imagining. What we were thinking is, “How can we carve out a niche? How can we create a unique value proposition on top of this market?”
As we establish a foothold, then we start expanding that value proposition beyond social. So, now we aggregate over 12 billion records. And we can process them [inaudible 00:29:53]. But that process to get to where we are today is not a one day or one night thing. So, it’s about climbing that ladder one step at a time. We’re very fortunate. I’m very grateful that we have the opportunity to do that.
Andrew: I get that. I get the challenges behind putting the product together, but it seems like a lot of this business is about getting traffic, mastering traffic acquisition. You guys, as far as I can tell, you didn’t have skills in it. You personally didn’t, Harrison, right?
Andrew: How did you figure out traffic?
Harrison: Well, first of all, by the way, I studied electrical engineering and optics. Now I’m doing consumer internet. So, how do I do that? Well, you just learn. One of the most important lessons, when people ask me, “Oh, you got into Stanford, this helps you with this and that,” actually the biggest lesson I learned at Stanford is not a particular course. It’s when my professor asked me what’s the speed of electron in some material, I frankly forgot what material that is.
I said, “Okay, I’ll go find out?” I try to look at the internet. I tried to look at books. I told him I couldn’t find the answer. I don’t think people know that answer. Then he told me, “Who writes the books? People do.” So, he didn’t give me the answer, by the way. He showed me how to derive that answer.
He showed me what is the speed of light in the space and then what’s the speed of light in different materials and what’s the coefficient here in that and he helped me derive that answer. That’s actually the most important lesson I’ve learned throughout my five, six years.
Andrew: The lesson is how to get the answer to a complicated question so it’s not that you remember all these answers, it’s that you learned how to find the answer when you understand the question.
Andrew: So, here, it was how do I get traffic? No one taught me about this in school, but they did teach me how to think through questions like this. I’m going to think it through. So, when you did, what was the process that worked for you? We’re talking about ten years ago. But there was something that didn’t work that probably stands out and there was something that did work. What are those?
Harrison: Yeah. First of all, the way I look at it for traffic acquisition is there are different channels. There is obviously direct, people going directly to your website. There is paid marketing, search engine marketing. That’s one such paid channel. You can do display ads and all that stuff. And then there’s also search engine optimization.
We start out for systematic acquisition methods. We start out in paid channels. That’s the easiest to understand. If you have a business model, we pivot in 2008. We start finding out the business model. We realize what is our lifetime user value and then we set aside a certain amount to acquire the customers. So, we did that. Again, this is not a one-day thing. It takes a couple months, a couple years.
Andrew: By acquisition, you were going after names in search engine, is that right?
Harrison: No. Actually we started going after some keywords.
Andrew: What are some of the keywords, for example?
Harrison: Like people search, reverse phone lookup, those kinds of keywords.
Andrew: And you were personally handling that?
Harrison: Me and my friends, yes. Another cofounder of ours is handling that. And then we also learned about SEO. So, we started reading Moz.com. We started reading all the different tech blogs to learn about SEO and starting from scratch. So, we did all these things.
Andrew: And again, it’s you sitting in your room working on this.
Andrew: You doing the search. Why did you have to learn it? Why didn’t you just say, “Moz is full of,” at the time it was SEO Moz, “It’s full of all these guys who are Rand Fishkin acolytes, one of them we could hire and have him do the SEO for us?” Why didn’t you do that? Why didn’t you hire the best woman on the site and say, “She’s going to be our woman?”
Harrison: Because we were poor. That’s why.
Andrew: I see, because you had to.
Harrison: People ask me, “What does Spokeo mean?” I was like well, there are many different reasons why we use the word Spokeo, but one of the key reasons was that it’s free. Again, we didn’t have millions of dollars of funding. You’ve just got to make the best with what you have.
Andrew: Tell me about the time you had to go to your dad–is someone calling your attention? Is that Maggie? How are we doing on time? We have another 20 minutes, right?
Harrison: We’re fine. We’re good.
Andrew: Where was I with this? Your dad, the period where you had to tell your dad, “I can’t give you your money back,” what was that conversation like and why did you get there?
Harrison: Yeah. We were running out of money. We didn’t run out of money.
Andrew: But you were getting close.
Harrison: We were getting close. So, I just told my dad, “Hey, dad, I’m about to lose the money you gave to me. Sorry.” The first thing he told me is, “Don’t worry about it because when I gave it to you I had already written it off.” So, I think my dad always had a trust in me putting in a lot of hard work. He never asked my grade. He only asked, “Did you try your try your best?” So, he realized that we tried our best in doing this entrepreneur process. So, I guess he doesn’t want to burden me too much and just said, “Don’t worry about it.”
Andrew: “I’m not going to add to your worries.” But what got you there to 2008? This is when you had the conversation with your dad. What got you in 2008 to the point where you were running out of money? Is this before you started spending money on ads or after?
Harrison: Before you started spending money on ads.
Andrew: That’s before we even had a monetization model and business model. So, that’s before all of this.
Harrison: So, you burned through all that money before you figured out what the model was even.
Andrew: Yes, correct, because the site was free. We tried the ad model. It’s not that we were sitting still. We tried the ad model, but it was only making $4 a day. So, we knew a couple months in that this is probably not going to scale. So, yeah, I told my dad that.
My dad told me–this is a key thing that inspires me to today–he said, “Success is not about how smart you are. It’s not about how high your IQ or EQ is. It’s about who survived until the very end,” because a business will always go in cycles. When there’s a downturn or when there is a difficult time and when your competitors drop out and you’re the only one that’s left in the race, by definition, you’re going to win the race. ”
So, he told me that and we took that to heart. To be honest with you, when you are almost running out of money, while the team, do to peer pressure, we didn’t really discuss quitting, but I think every single one of us probably had fleeting thoughts about giving up, but we didn’t. We were able to try other things.
Andrew: Why didn’t you? You’re a logical person. You have other options. Why didn’t you just try something different?
Harrison: Because like my dad was telling me, his instruction was very clear, just try everything you can until the last cent runs out.
Andrew: I see.
Harrison: We did. We didn’t stumble into the ad model. We didn’t stumble into the freemium model. We tried the ad model. We tried the freemium model. We tried so many things. So, we tried many different things and this is the market that sticks.
Andrew: One of the things that I do when I research a guest is I go back and see what was written about them in the year they started and the next year and the next year and the next. I came across this one article by Guy Kawasaki. I read the whole thing and at the very end, the very last line was a disclosure, “I’m an advisor to Spokeo.” Is he still an advisor? What’s your relationship with Guy Kawasaki, the former Apple evangelist?
Harrison: He was an advisor. He’s not an advisor now. After we moved to LA or shortly before we moved to LA, he’s no longer the advisor of the company.
Andrew: Did you give him shares in order to get him to give you feedback?
Andrew: What was the relationship? You did? And he still has common shares in the business now.
Harrison: Yeah, some.
Andrew: So, he’s done pretty well for himself, huh?
Harrison: Yeah. I think so.
Andrew: But he’s not the kind of person who could have given you advice on this. He could have given you advice on the first version of the business, but now where you were, right?
Harrison: I don’t know because I haven’t talked to him for a little bit. But he was very, very helpful in the beginning. Obviously everyone knows that he wrote the book on the startup. I think he was very helpful in at least most importantly giving us the confidence. Having a very well-known guy such as him interested to sign up as an advisor to Spokeo, I think it gave us more than anything else, gave us the confidence.
Andrew: I see. Because he’s an advisor, then it gives you credibility and it also tells you, “Hey, you’re on the right track.” He wouldn’t be an advisor to something that didn’t make sense.
Andrew: Okay. All right. Quick sponsorship message and then I’ve got to tell you, Harrison–I’ve got this fan, this customer of Mixergy, Alec Kinnear, who complains that I don’t ask the tough questions and that I’m too easy on certain people. So, when we come back, I’m going to talk about what happens on the Ripoff Report about you guys. I’ll talk to you about that and we’ll talk about some other things. There’s a head’s up for you too.
Andrew: Here’s the sponsor. It’s a company called HostGator. The thing about HostGator is they make it really easy for you to start a website. Harrison, let me tell you this, let me ask you this–if you were right now in school, again, we go back in time to the mid-00s, you’re in school and you have nothing but a hosting package. What business would you launch today if you were still in school?
Harrison: Hosting package. . .
Andrew: Yeah, I’m saying all you have is the ability to launch a website. You can get any domain. You can get Spokeo–well, not Spokeo. That’s taken already. But you can get any domain and you can put up a website. Is there something that you think, “That’s an easy one to do?”
Harrison: Honestly, I don’t think there’s anything easy because devils are always in the details. The grass always looks greener on the other side because you don’t know what the other side looks like. I think to answer your question, if I had to redo again what company or idea I’d like to start, I think I would redo Spokeo because I think it is not the only job I have so far, but the best and worst job at that. So, I would not take anything else other than Spokeo.
Andrew: Let me come up with a suggestion. This is one based on Rand Fishkin. Rand is a guy who I’ve known for a long time. He told me that when he started writing about SEO, he didn’t know anything about SEO. What he did was he went out and researched, he learned and then he wrote a post about it.
By doing that, he got smarter but he also started teaching other people who appreciated what he was teaching them, started guiding them towards getting good at search engine optimization and then we started to sell things, then they started to buy from him and he started selling the community.
He started selling more information. Then he started selling software and now he’s created this company, Moz.com that influenced you tremendously and countless other people online tremendously. That’s the model that if I had to give one to the audience, that’s the model that would still work today. Pick a topic you’re especially excited about.
There’s always something new. The internet of things is interesting now, autonomous vehicles is interesting now, messaging bots is interesting now. Pick that topic. Every day challenge yourself to learn something new about it and write a post about it. You eventually will be teaching so many people that they’re going to think of you as the expert when you weren’t when you started, but you’re becoming the expert as you go along.
And of course as you start to come with ideas for things to sell like software or other services that help these people reading from you, you now have an audience of people who are appreciative and trust you and are ready to buy from you. Tons of different ways to do this, tons of different topics to take on. If you want a site to get started with, go to HostGator. So many people who I’ve interviewed have signed up for HostGator to start their websites, because it’s inexpensive and it’s dependable.
It’s been around for freaking years. They’ve outlasted the competition. There was a period where there were tons of different hosting companies. Many of them stunk. You had a problem with your website–I remember I had one, I had a problem with my website and I had to file a ticket. And then they’d have to email me back. The problem is my website is down. Don’t email me back. Get on a call with me. Help me out here.
Well, HostGator is the company that will be there. HostGator is the company that will give you unmetered bandwidth, unmetered disk space, unlimited email addresses and 24/7 365 tech support. For people outside of the US, that means 24 hours a day, 7 days a week, 365 days a year tech support.
They also have a 45-day money back guarantee if you think I’m full of it and it actually doesn’t live up to its promise. I know you’re going to love it. They keep buying ads for a reason. They’re getting customers who are happy who are not taking advantage of that 45-day money back guarantee because they’re so happy with it.
So, if you’re listening to me, I’ve got one last thing to say about them. HostGator is giving everybody listening to Mixergy 50% off. Nobody is offering half-price as far as I know on HostGator. No one is going to give you a better deal and it’s only for a limited time. They’re just testing me out to see if they can make more money by charging my audience less. So, if you want to sign up, go to HostGator.com/Mixergy, HostGator.com/Mixergy.
Harrison, I’ve got to tell you, when I started running ads, I would read them within the interview and I sucked at it. I called myself out. I said, “That’s not a good read.” But now I’ve gotten to a place where I have no notes. I’m just kind of talking about making it up as I go along–not making it up, actually. I’m making up the story but the facts are always true. It’s getting better and better. I think I’m. . .
Harrison: I can see that.
Andrew: Right. Here’s the thing that I see on the Ripoff Report. I saw it on a couple of Better Business Bureau reports. People are saying that they didn’t know they were going to be charged for a monthly recurring fee or a recurring fee at all, actually. It’s not monthly. What do you say to that? What do you say to people who say, “I just wanted to find out when this woman was born or what her phone number was. Why are you guys charging my every six months?”
Harrison: Our business model is a subscription business. We make that very, very clear up from. When you have 18 million uniques a month and then millions of customers, some customers are bound to have different opinions about your service. One of the things that we learned is that we have to be very receptive and customers are always right. We have to be very receptive to their feedback.
One of the things that we have done is not only have we invested quite a bit, tremendously into an in house customer care team, they are all in Pasadena, California in the same office. In addition to that, earlier this year we started a 24/7 customer care so that whenever customers have any feedback to us, whether it’s positive or negative, we always here to listen to them.
Andrew: I see that. I think every single Ripoff Report or Better Business Bureau report that someone complained, I saw someone else on the team was there to respond and clear it up. In many cases people said, “Yeah, they responded. I wish they would, that this problem wasn’t there, but they did respond and they fixed it because I posted here.”
The question that I guess I have is a lot of people are just typing somebody’s name in and just want information about that one person. Doesn’t the model then, shouldn’t it be just charge them for that one piece of information they want, instead of charging them a monthly fee. They’re expecting to buy this one thing and they ended up with more than they need, more than they’re looking for.
Harrison: So, actually, we have a test right now that does that.
Andrew: Where you’re testing selling one.
Harrison: Yeah, one, and then the option of the subscription.
Andrew: But the one is like $0.99, right? You guys can’t make $1 on that one. So, people get surprised when they end up with monthly recurring fees.
Harrison: First of all, I do want to say that while there are some customers that only find the transactional value to the service, there are a lot of customers who find recurring values. People search is not just a one-time thing. It’s not an everyday thing for some users. It’s just about finding your long lost friends and families, doing dating research or any time you find an unknown caller or unknown person and you want to find out more about that to validate and create more trust in that relationship.
More than that, small medium business actually use this quite a bit too. There’s fraud prevention and all those things. At the end of the day, what I’m trying to say is there are a lot of customers who find recurring values. I can tell you our average number of searches per user is not one. It’s multiples of one.
Andrew: Even after. So, I’m looking at your payment page. It’s Spokeo.com/Purchase. There’s recommended, which is $4.95 a month. That’s the best deal. But there’s also casual user, which is one month membership for $13.95. What would a casual person need to do beyond look for that one person they came in for?
Harrison: Well, first of all, our aspiration is to create a complete people intelligence platform for users. So, it’s not just about people search. It’s like later one, one of the key features that we’re building is that you can actually import your address book and we can actually append all the data you don’t have. We can refresh data for you to give you the most up to date information. So, our aspirations, again, is to create this complete 360 people intelligence platform for the users.
Andrew: I see. You’re saying that after I sign up, I can connect my address book and then you guys will update phone numbers and addresses of people already in my address book.
Andrew: And do you also get that information then to make it available for the next person?
Harrison: No. We don’t. That’s what we call user-generated content and user-generated content is not public information. So no, we do not do that. But going back to your earlier question, yes, there’s a lot of room for improvement in terms of us education our users about recurring values. That’s one of the things we want to work on. But then people search, like I said the use case of online dating, the data research, reconnecting old friends for older audiences, small businesses–by the way, that’s part of their workflow is to catch fraudsters.
Andrew: They use you guys to do that?
Harrison: Yeah. Correct.
Andrew: What about the other complaint? There are two that I saw. The first was the one I just brought up. The other one was–again, this comes from Michael Arrington eight years ago, I think it was–that said you’re offering people’s addresses and anyone who’s built a business that offers people’s addresses does not care about the repercussions of making addresses available. I don’t believe that’s true. But I do wonder what about the dangers of making someone’s address available?
Harrison: We do want to recognize that different people have different feelings of privacy. So, we do want to recognize that. As a result of that, we have actually created this very easy one-click opt out, one-step opt out process for people who do not want to be listed on our search engine. On top of that, we have this what’s called compliance gateway to make sure that all our premium customers are vetted so that they are using it for the appropriate purposes.
Later on, not today, but later on we are working on the user-generated profiles or allowing people to claim and then create profiles and adjust profiles. So, we are doing a lot of these things to address these issues. But one of the things I do want to point out is that privacy does not mean don’t share. It doesn’t mean that.
I believe that the world will become more and more open. I believe in the world where open data enables technology such as autonomous driving, machine learning–by the way, if there’s no big data, no open data, there’s no machine learning, there’s no AI advances we’re seeing today. I believe that that’s the world that we not just live in, but that’s the world it’s going to move towards. I think that’s a more beautiful world that I’m more excited about.
Andrew: I can see that. Frankly going back over the years, a lot of the complaints people had we don’t even care about anymore, like the idea of why are you showing photos of people on your site. I know what it was. Why are you showing who someone is married to? We don’t think about that anymore. That’s so public on Facebook that I take it for granted.
I was going to meet someone yesterday who’s a fan. I knew his wife was coming over. I took it for granted that I could go to Facebook and find his wife’s name and even what she looked like and all kinds of information so that I wasn’t just sitting there and talking to a stranger.
Andrew: Let me wrap up with this. Those kinds of questions aren’t really my style. I appreciate Alec asking about them. The thing I’m curious about is how you built it up. One final thing I want to ask you about is I’m going to SimilarWeb to see where you get your traffic and I see that you get your traffic from PeekYou. You get it from Pipl.com. You get it from ThisCaller. A lot of these sites are sites that do the same thing you do, which is they’re basically search engines for information about people. What’s that about?
Harrison: Our site is very, very diversified. Our traffic sources are very diversified. While yes, we do get traffic from PeekYou, from other sites. We call this referral partner sites. They’re actually only about 10% to 15% of our traffic composition. So, we do work with other partners. When you’re building a business, you want to create a diversified traffic base. You want to create a diversified revenue base. We definitely work with different partners. We believe that success is built on top of–
Andrew: These are affiliate sites.
Andrew: They get paid as a share of a revenue that you make. What they did is look like search engines, some of them, but in reality what they’re doing is funneling to you. You’re the back end of their search engine.
Harrison: Yes. Actually, most of them do it by pay by click instead of–
Andrew: I see. Every click that they send you from their sites, they get paid.
Andrew: I see. Is there anything I missed here? I’m sure there is, but I can’t think of anything.
Harrison: You actually covered most of the questions. One of the key things I do want to talk about is earlier you were talking about building entrepreneurship, this journey. I think one of the key things I do want to reiterate is the importance of having the right attitude. My lessons, the most important lessons I’ve learned from Stanford or even from my own dad, like it’s not about giving me the solution. It’s about inspiring me to have the right attitude to accept a challenge.
So, now I have this model. Actually everyone in the company knows that because I’ve been repeating it so many times. Our biggest opportunity lies with our biggest weakness. I think eking out–
Andrew: What is that? What’s the biggest weakness in opportunity?
Harrison: I think our biggest opportunity and biggest weakness is to create more retention and more recurring value proposition for our users. This is one of the things, one of the big focuses for Spokeo in the last two years. I think we have made quite a bit of inroads on that. Bu the reason why the biggest opportunity is our biggest weakness is because eking out 10% improvement on top of your strength is not that easy. But that said, doubling your weakness is not easy.
So, I think that’s one of the things that I’ve learned through the entire process, whether it’s my educational background at Stanford or what I’ve learned through almost going bankrupt and what my dad taught me is to not be afraid of a challenge and see a challenge as opportunity to survive and thrive. I think I would probably want to end on that. It’s about an attitude. It’s not about–it’s about a means to an end, not the end.
Andrew: That’s a good place to put it, good place to end it. We didn’t talk about things like Family.me, where people can go in and create their family tree. We didn’t talk about so many other things you’ve done, but people can go check out your website. It is Spokeo.com. I urge them also take a look at–there’s a Hyperlush.com article about you with really good shots. I like getting a sense of where you work and what your thought is about your business.
I also want to thank my two sponsors. Again, they are the company that’s going to host you right, HostGator.com/Mixergy and the company that will help you connect with people AcuityScheduling.com/Mixergy.
Finally, I want to close out today by saying congratulations to a Mixergy fan who created and launched his business. It’s called YesInsights. It makes it really easy to send out emails to your audience to survey them. The survey happens right within the email, one click. If you go to YesInsights.com, you’ll see what our member, Wilson Peng, created. I’m really proud of it, YesInsights.com Congratulations, Wilson. And thank you, congratulations, Harrison, on what you’ve built, $78 million, dude.
Harrison: Thanks. Best.
Andrew: Thanks. Bye.