Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. I know people that are so ambitious that they’re listening to other entrepreneurs talk about how they built their businesses, looking for ideas like, “How do I get another Fortune 1000 customer? How do I grow my business? How do I get another big leap in my company?” Anyway, that’s the audience that I have.
Here’s what I’ve got for you today. Have you ever gotten one of those robot calls from maybe a bank with a problem with your account? Well, today’s guest got a call like that and she hated the experience. So, she created a company that improved on it. Her software is so good that it lets even big Fortune 1000 companies address each customer by name and make it feel authentic and normal and comfortable.
Tara Kelly is the founder of SPLICE Software, which creates personalized human voice messaging software. We’ll talk to her about how she did it and it’s all thanks to my sponsor Toptal.
Do you ever have an idea for a great product but maybe your developers don’t have enough time to work on it because they’re working on other things or maybe you don’t even have a team of developers? So, what do you do? Do you go out there and start hiring people? It takes a long time, right?
How about going out to the freelance sites and looking for someone’s rating and seeing if they’re the right fit, maybe throwing a couple of tests their way? That takes forever and it sometimes will take up to three months of working with them before you realize that their product isn’t good or they’ve run away with your code. You don’t have time for that.
So, what do you do? You go to Toptal. They are a network of top developers, proven to be among the top three percent among their peers. You talk to them. You tell them what you’re looking for. You tell them the kind of platform you want to work in. You tell them what environment you have, how many hours you want, full time, part time, maybe a few extra hours to supplement the team of people you have.
They will go to their network, find the best person for you. They’ll introduce you and if it’s a match, if you feel comfortable, you can get started working. They promise and they live up to their promise that that person will be a good fit for you. You can get started often the very next day after talking to a developer.
I went through the process and I highly recommend that if you’re looking for a developer you go to Toptal. When you talk to one of their people and tell them what you’re looking for, don’t tell them you heard them on Mixergy in a sponsorship spot. Say, “I’m a friend of Andrew from Mixergy. I’m Andrew’s friend.” They’ll take really good care of you.
Tara, welcome.
Tara: Hi. Thank you.
Andrew: I don’t usually do my sponsorship message that long, but I was kind of on a role. I felt inspired with that one.
Tara: I thought it sounded really good. I was thinking about jotting that down. You said the website a couple of times. It worked.
Andrew: Thanks. Hopefully it will be stuck in your memory and these guys are going to be flooded with phone calls because of this great spot that I did for them. By the way, speaking of phone calls, who was it that you called that you got so frustrated?
Tara: Well, we’re lucky today to call them a customer, so I would sort of let them off the hook. It was a bank. It was a large bank in Canada, actually. I had been banking with them for years. I phoned on an inbound experience and it was just so bad. At the moment it happened, I really didn’t have all the answers. I just knew that if in music we could mix sound like that and they had all of the data, how could it possibly be this horrible?
Andrew: What was the horrible experience? What happened?
Tara: Well, I phoned in and I was going to make a payment on my credit card. So, you’ve got to go back like seven years. We didn’t really do a ton of online banking. So, I was doing phone banking. Every time of the month, I would call on the 17th to make a payment. So, if I was phoning on the 17th, I didn’t want the whole menu. I didn’t need the IVR. I didn’t need all this waiting. I didn’t need a voice response system. I needed to make a bill payment. I was really good at it. I probably could have done it in my sleep, right?
So, they didn’t recognize my number, even though I was calling in from one of my primary-
Andrew: That frustrates me to no end. Yes.
Tara: Right. Exactly. Right there, in that moment, 80 percent of the time people are calling from one of three numbers and I know they have it in their CRM, why are you doing this to me? It’s just mean.
Andrew: Sometimes multiple times on a single phone call. When they get it, when they say, “Oh, I see your account. Are you whatever?” It feels like, “Hey, you guys know me,” it’s such a relaxing experience. I feel like, “Alright. Now I’m dealing with a smart company and they’ll get my problem too if they understand this basic thing about me.” So, they needed your number. What else was it about the experience?
Tara: The IVR, the automated voice that I was hearing sounded so bad. It was just a horrible computer recording and it had no concept of who I was and it didn’t even sound nice. So, if it at least isn’t going to recognize me and it’s going to be foreign, couldn’t it at least be a high entertainment value? Could there be something good about this experience? So, it failed me on a data and context perspective. But then it completely failed me on my experience on how it felt.
I just thought, “You know what?” I had previous experience in writing reminder systems for small businesses like massage therapists. “If a massage therapist can record their own voice and greet me nicely and remind me of my appointment or greet me on the inbound, how can a bank not do this? Like what’s wrong? What’s so broken that this is okay?”
So, it was really just about saying, “Stop.” I know this technology is here. I don’t know why they’re not using it. There’s probably a good reason. Maybe there’s a good reason. I hope there’s a good reason. But it’s enough. We have to make it easy. Nobody to date has made it easy enough for them to make this better. There it was.
Andrew: I think one of the epiphanies that I’m hoping people who listen to this interview will have is if you have frustration in your life, don’t be bothered by it. Get creative about it and say, “Maybe there’s some solution that I can create.” Frankly, it seems really tough to get the software in place. We’ll ask you how you did that. And then get the bank, which isn’t taking your call as a customer, to take your call and then buy something from you. That seems like a tough process and I want to know how you did it.
But you mentioned a little bit about your background. I’m actually looking at a screenshot of your site from roughly 2007 and I see two links here, one called Rendezvous and the other Symptomatology. Am I pronouncing them-Symptomatology?
Tara: Yeah, Symptomatology and Rendezvous you got perfectly.
Andrew: So, that’s what you were doing before, right?
Tara: Yes.
Andrew: What were these two products?
Tara: Great question. So, I still have a lot of nostalgia looking around my office thinking if I can show you a plaque on the wall.
Andrew: I saw you smile and I thought, “As I’m pulling this up, is she going to be frustrated and embarrassed about what I just discovered or is she going to feel proud?” I saw the smile of pride and I’m glad.
Tara: So, life is a journey. Back in ’97, I had a health food store, like a retail storefront. I was scared to death of cash flow like any good entrepreneur. So, I was renting out back offices to health practitioners and taking a percentage of their appointment and charging them really low rent. That’s a business before the one that you just found called the Kelly Center of Wellness. When I did this, it didn’t take me long to realize if they did appointment reminders, I made way more money, about 28-30 percent more because more appointments showed up.
Andrew: They were making what kind of reminders, just phoning up?
Tara: Yeah. They were just manually doing it. Because they were renting a room from me, I really was in no position to be like, “Listen, you have to do a reminder.” That wasn’t right. So, I thought and I thought. Along came Rendezvous. Rendezvous was about the reminder of your rendezvous. It was a fun, playful name. Yes. Thank you. I liked it. Even if you didn’t, I’m going to thank you as if you did.
But it was a scheduling and it could read off of QuickBooks, Simply Accounting or, at the time, Microsoft Small Business Accounting because that’s what most of these offices were using to do their books. So, that accounting system was almost their quasi-CRM because a lot of these smaller practitioners, they didn’t actually have an automated system. They were writing it down in a book but yet their accounting was automated.
So, that’s where we could pull from. So, I built out a reminder system using like T1 and dialogic boards and all hardware, no soft PBX, no cloud, in a day and age where we had to do a web service application.
So, that’s kind of how I got dragged into it. But I had this health food store and I was like, “Hey, I need a reminder system.” Again, a problem. I have a problem. Luckily, my dad was a programmer in the late ’70s. He had taught me to program as a kid. I had sworn an oath that I was not going to be a programmer/developer as an adult. I was just going to dabble in it to fix my problem. But I was not going to relate to myself as a developer.
Andrew: Did you create the first version of this, of Rendezvous?
Tara: I did with my dad. Yes.
Andrew: Wow.
Tara: So, we put together a small team out of his basement and this Rendezvous product was born. So, in 2001, a company called Simply Health Systems came along. Symptomatology came along because we ran into a health practitioner that had an automated system that did phenomenal recommendations and I was like, “God, that really stinks.” Yeah, he begged us. I said, “Sure, we’re going to take part ownership. Let’s collaborate.”
So, again, we were fixing somebody’s problem. We automated it. We attached it to an automated credit card system with the bank and set everything up. So, I really think when you look at the journey, especially from the angle you’re sort of putting it, it’s just about solving problems as they come across your path.
And then you kind of come across this next level of problem. You fast forward to 2006 and this bad bank call. I was so frustrated because I could make it sound better for massage therapists and dog groomers.
Andrew: But your dad then and you-who was such a great programmer who could put this together? Well it’s not easy today, but it’s easier. I saw an ad for Twilio on the way over to work today.
Tara: I love Twilio.
Andrew: Twilio will take those phone calls. You didn’t have to setup so much of the infrastructure that you had to set up. But back then it didn’t exist. How did you do this? What kind of programming chops did this team have?
Tara: Yeah. It’s a great question. We wrote most of it in VB6.
Andrew: Visual Basic, you said?
Tara: Yeah, Visual Basic. At the time, you’ve got to go back then and say internet wasn’t stable in most of these small businesses. So, for every entrepreneur, I think you always have to address, “Where is my customer? What does their world look like?” And you have to make all of your design choices based on that because if you design outside of that and it won’t work in their environment, you actually didn’t solve anyone’s problem.
So, we had to really look at what did they have, what was the average PC that they were running, all of these things. What was the internet connection into their office? What we decided was that dial-up was still a reality.
Andrew: Wow, even in 2007. Okay.
Tara: Well, not in 2007. That’s when SPLICE started. So, we started to migrate. That project, we eventually sold that company. So, it didn’t immediately die when we launched SPLICE.
Andrew: So, this is 2001?
Tara: Yeah, in 2001 is when we first architected. So, when we first architected the system, we wrote it to be a desktop application with an external web call so we could transfer the data in so a small business could transfer the data over a dial-up. In 2007, we were still letting all of our legacy customers run. So, we had 67 customers using our reminder system. It was working. We were letting them just sort of continue to live and looking to bundle it for a sale.
Andrew: Okay. And that’s when you came up with this idea. Frankly, it is intimidating to create the software around it, to get the customers. The first thing I imagine you have to do is start getting customers. Is that what you did?
Tara: Yeah. It’s always funny. You become friends with some of your customers over the years. Some of them have been with us since the beginning. When they look at it, had they only known how half-ready you were, would this relationship have started? It’s hard to know. You know you have a proof of concept that functions but you immediately have to get to a customer and find out in their world against everything else that they’re doing in a day, does it actually solve their problem?
So, when we started doing emergency notification calls and we started getting outside of appointment-based businesses into what SPLICE is today, we had to go to scale really quickly. We found out tons of things that sucked, like reporting or call center integration. What if their agents weren’t ready for the transfer? All of these things that were all of a sudden not there. Had we tried to fully fund and build the product without being with a customer and finding out what they needed, you would have built the wrong thing.
Andrew: So, how did you get them to actually give you time? In fact, I know that talking to customers before you have a product is the right thing to do, but frankly, just the other day I got an email from someone that said, “I think I can fix your transcripts or make them even better. Do you have some time for me to learn a little bit about your business before I start creating this solution?” I said, “No, I don’t. I’m really packed with things. I have interviews. I have work. I can’t.” I don’t have nearly as much on my plate as some of the banks and bigger clients that you’re looking to work with. How did you get time on their calendar?
Tara: I think you just have to get the right to five seconds. I really mean that. I think you have to be able to hit that pain point. So, it’s research. Everyone has a different answer to this. So, I’m going to tell you this is my answer. Is it the right answer? I have no idea. It’s how I’m running my life. Who knows?
But I think what you’re really trying to find out for that customer is, “Is this neat gadget I have hitting your pain spot?” So, if they’re focused on customer experience, for example, or if they’re being measured by number of people that transfer through to make a payment-because one of our biggest solutions is credit collections-if I get on the phone with you and I say, “Look, I don’t know for sure my product is going to work for you, Andrew, but I guarantee you that if I can get customers on this line for an extra 30 seconds, I think I can get them to transfer. Do you want to try?”
Andrew: And get them to transfer-why would a bank want a transfer?
Tara: They may want them to make a payment. I’m using your credit collections scenario, either transfer to a live agent-
Andrew: Oh, I see, transfer to a live agent-
Tara: Or authenticating the IVR payment.
Andrew: I see. So, you said, “I think I can get you more business,” and that’s what got you in the door.
Tara: Yes.
Andrew: And how did you know who the right person was to talk to?
Tara: You don’t. You never do. Even if their title matches what you think you’re looking for, especially in the beginning, you don’t even know the title you’re looking for. You have to follow the rules-twenty calls and assume that one is going to be good. That good version, it just needs to talk to you and he helps you find the one that you really need.
Andrew: Tara, you just kept making phone calls, making phone calls, looking for the right person and when you did, you talked to them?
Tara: Yes.
Andrew: Wow. That must have been such a tough slog. When you get them on the phone, you tell them, “I think I can help you.” And then you’re basically pulling as much information from them as possible so that you know how to solve their problem?
Tara: Well, you haven’t earned that right yet. So, you try. You’re trying to be a good listener. But what you’re really trying to do is say, “Listen…” because you’re not a consultant. Keep that in mind. You’re not a consultant. So, if they tell you about a problem that you can’t solve, then get out. You still need them to self-select you. So, at this point when you’re calling, I’ve selected that company and I’ve selected that person. Now I need them to select me, right? That’s sort of how I see it.
Andrew: Okay.
Tara: So, I’m trying to tell you something that you go, “Oh my gosh, that’s exactly it. Tara, I’m losing everyone at 17 seconds.” You say, “Great, Andrew. I can get them to 30. If I can get them to 30, does that possibly solve your problem?” Now you’ve selected me. Now we have some reason to have a conversation.
Andrew: Because there are so many different things that they could want. Maybe they want more people for their call centers, maybe they need a whole other office or something completely different. I see. You want to make sure that their problem matches your solution and that you guys are in sync.
Tara: Yeah.
Andrew: Once it does, at that point, did you sell them or did you say, “Give me some information so I know what to develop?”
Tara: At that point, you want to talk about, “What would it take to do a test?” If a company says, “You know what? I love everything about you, but we have a mandate. We only work with Gartner top quadrant companies,” hang up as fast as you can or maybe ask you who you can talk to that thinks the same as them.
But I think the number one thing that I’ve learned from all of my businesses is there is such a thing as what I call “bad money.” That is money that takes you away from your vision. I was not passionate about solving the problem of maybe employee retention in call centers. That wasn’t my passion. So, if that’s his problem, I don’t want to solve it. I don’t really want to hear about it. I’d kind of like to be friends, but I’ve got lots of friends. Do you see what I’m saying?
Andrew: Yeah. I see exactly what you’re getting at. I can see how easy it is to get trapped in that. The person just gave you some time after you made tons of phone calls to people who didn’t want to. This guy is saying he has a problem. He’s probably willing to pay for it.
Tara: And he trusts you and your ego is getting bigger and bigger. You’ve got to be disciplined at this point.
Andrew: Okay. So, you finally got a customer and then you built?
Tara: Well, we have the solution functioning already. So, the core piece of the solution was fully functioning first. So, I never don’t built a prototype. So, you interview and talk to people, but frankly, I do it all the time anyways. If I’m a plane, I interview the guy beside me. I’m always watching the world.
Andrew: I do that too.
Tara: If you’re in the Starbucks line, you’re watching. So, break that into two different phases-customer feedback about validating if this problem is just yours is before the product build. But it didn’t take me very long to figure out that tons of people were really ticked that there was a horrible automated experience, right? I could validate that pretty fast. The next thing was could I build something that actually sounded better?
Andrew: Yeah. And do it so fast too, frankly.
Tara: Yes.
Andrew: So, how long did it take you to build that first what you call a prototype?
Tara: Well, the first prototype probably came out in about 46 days.
Andrew: Wow. So, how do you create something that intense in 46 days in 2007.
Tara: You drop sleep and you drop part of your food.
Andrew: And were you coding it or was it your developers from the previous products?
Tara: So, primarily it was our developers from the previous products, but a lot of the design architecture was me. So, a little bit, but I’m more of a very sloppy coder, really, especially these days, around design as to what does the interface have to look like. So, I’m more probably on the graphical interface design and I still will do a lot of drag and drop and pull.
As far as the concatenating and the slicing and the ascending and descending algorithms, we were looking for what that net result was. The biggest place I would say I participated is-this is going to sound crazy-but you can’t over-solve the problem either. Nobody will pay you to over-solve the problem. So, there’s this weird line where the money will happen. If you get here, no good. If you’re over here, they’ll still you pay the same thing as here. This is a lot of extra cost.
Andrew: What’s the extra cost that might have been over-solving the problem? Tempting but just not a good idea.
Tara: Multi-language right from the beginning, to be quite honest. You know what? If it doesn’t even work in a language and a dialect I understand, maybe I should get over myself. I can’t solve the problem.
Andrew: I see.
Tara: So, do I want to take over the whole world? Do I want every automated voice experience better? Yes. But do I have to start somewhere? Yes.
Andrew: Tara, I like your attitude and I like the way you tell the story. Alright. So, you finally got your first customer. Do you remember who the first customer was?
Tara: Yeah.
Andrew: Okay. What kind of customer?
Tara: So, our very first customer-well, they were kind of both the same week-one was the Calgary Flames. It was on parking reminders for when we had a ton of construction around where they could park. So, it’s a hockey team in Canada. For those of you that don’t know, shame on you.
The other customer was actually a fabric quilting club. They actually had hundreds of thousands of members. Their problem was they didn’t all get to find out the information at the same time. Sometimes they were calling inbound to ask other questions and they didn’t find it. Sometimes it was outbound. They were using live agents like the store personnel.
So, the very first two case studies were very different. The level of expertise of the individuals were very different. You have a somewhat savvy direct marketing person on one side and on the other side, you’ve got sort of a smattering of chains. So, it was very different. They launched from there.
Andrew: By the way, I recognize that as the iPhone vibrating. If you hit the top button, it silences it right away.
Tara: Perfect. I will do it right away.
Andrew: That’s a trick I learned a while back. It’s so helpful. It starts vibrating, hit the top button, the thing will keep ringing but no more vibrating.
Tara: Done. It’s quite almost out-of-reach. Sorry. Yeah. So, those were the first two. And then from there, the next set, we actually got one of the larger Canadian telecos, TELUS came along. It was within their call center infrastructure. I’ll talk openly about this. At that point, TELUS was the scariest thing that could happen because all I could think is, “I’m positive they have the ability to do this. I’ve never understood why they don’t. But I’m about to give away all of my development, explain how to do it and I’ve just got to hope for some reason they don’t eat me alive.”
Andrew: First of all, let’s break this down. These are three different companies, three different industries. You weren’t even going to concentrate on one vertical at that point. Why not? Why not say, “I’m going to get really good at parking or really good at something else?”
Tara: Okay. So, say like in a perfect world, you said what did I do and I made a lot of mistakes.
Andrew: I see.
Tara: I’ve made a ton of mistakes. I definitely would recommend for anybody moving forward, always pick one vertical, start there and win it. But I didn’t know which vertical was going to have the fastest ROI. I just knew that these voices absolutely stunk. They sucked. I wanted them to be better.
So, I was seeking to figure out which vertical had the fastest, easiest ROI, which one did I have the least amount of yes’s, right? So, any time I experienced a negative automated voice in a call center environment, I tried to sell them period. That was it.
Andrew: I see. Frankly, there’s a logic to this that makes sense. I don’t think that was wrong. Do you?
Tara: I guess we’ll never know. I look at it today and I paid for big market surveys and stuff. Sometimes they don’t field the answers the same way. So, being that I went out there and I sold in everything from teleco to retail to political to entertainment, I learned so much. I can’t call it a mistake.
Andrew: Yeah. Alright. So, TELUS, they are now a $25 billion company. They have incredible power. Why did you trust them with all of your intellectual property? You just said you were just crazy. Or was it that you were just so excited about the upside? What do you think?
Tara: I think I was so excited about the upside and I’ve always believed in my heart life, you can’t hide under the rock. You won’t win. Everybody has brilliant ideas all over the world all the time. It’s execution. We were executing really well. I had to believe in all the things I read, whether they were true or not, I didn’t know. But I took a leap of faith and I believe that as a small, lean, mean machine, I could do it at a better cost factor.
That’s where I sort of defended it to colleagues and even the group of friends and family that were shareholders. I said, “Look, I can’t promise you anything. But I believe from all of the metrics that I’ve seen, we can do this more economically.” We’re only focusing on this one thing. TELUS has bigger fish to fry. They’re trying to take over the whole East Coast. They’re competing with Rogers. They have all these other business initiatives.
So, I think you have to always realize that every single business only is focusing on a limited number of things. If you can help them with something else, you’re probably going to be just fine.
Andrew: But then it’s software. Doesn’t it take a little bit of money to create the same software that you have and then they run it internally?
Tara: Yeah, for sure. So, once you give somebody a roadmap of how to do something-but if you talk to anybody, look at the plug we just gave out to the placement company at the beginning of this one. If you look at what it takes to build a team, it’s very rare that you will get your team 100 right away. Typically, you’re going to have some churn in developing a high development team that’s truly agile and can get that product out there.
So, you have to say whatever it costs me to duplicate my product that I built is the barrier to entry times the factor of churn on staffing and you have to say, “Look, if they want to solve their problem today, I’m their best bet.” If they can make the longshot bet, go for it. You know what? We live in a capitalist society. It’s a beautiful society. The best guys should win. If TELUS can kick my butt, then I guess I better get better.
Andrew: Alright. That’s a really interesting way to see things. In fact, it’s really inspiring. That’s the way we should all see things. But sometimes I still want to crush competitors. Alright. You launched. We talked a little bit about the software. The first version of your software you told April in the pre-interview was just an FTP site with a tiny logo on it.
Tara: Yeah.
Andrew: Why use an FTP site?
Tara: So, we focused all of our energy on building this phenomenal audio component because that was our key differentiator. There are big lessons in this part. Our key differentiator that we could be the best in the whole world at was the way that audio sounded. We knew that we do that beyond compare. The rest of it was infrastructure surrounding it that’s really critical to create a better experience, a trusted experience, blah, blah, blah. So, I need data to crate this authentic file. I need to receive audio from my voice talents around the world and I need a safe place to do it. Hello, FTP site-a little logo, a little ID.
The benefit we got with these first few customers is we built a real relationship. So, as long as I gave him a secure FTP and a login ID, it wasn’t pretty, but he wasn’t stupid. They know that I didn’t have 2,000 people working for me. I didn’t have 12 people. I barely had four of us, right?
So, you’ve got to be honest with who you are, where you are and trust that they’re with you for the right reasons. If TELUS had been with us because we seemed so robust and phenomenal and our FTP site was a stunning website dashboard, then I guess if that’s how we sold it, we were screwed because it wasn’t. TELUS was choosing us because our audio sounded so good and they recognized that there was a chance that could solve their problem.
So, it goes back to bad money. Don’t pick somebody who chose you for what you’re not the greatest at. Know what your real strength is. I like to compare absolutely everything to dating or relationships. If you were dating somebody and they didn’t get that you have the greatest sense of humor in the world, it’s probably not going to last.
Andrew: Speaking of, I can’t see it now, but your Twitter profile says something like, “Looking for love,” what is that?
Tara: No. It doesn’t.
Andrew: Doesn’t it say something like that?
Tara: I’m very happily married. Yes.
Andrew: Wait. Hang on. Oh, “Waiting for my love.” It’s the SPLICE Meeting Room’s account that says that. Not yours.
Tara: Got it.
Andrew: I guess maybe somebody just typed that in because they were waiting for somebody and it’s just stuck in that conference room Skype.
Tara: It’s quite possible. We’ll often reference people, “Oh, where’s my love?” So, it’s probably a cultural thing here too. People know how to treat each other in caring relationships. I believe that every corporation should reach back out to their customers that same way, completely honestly.
My favorite story of that is always if you were to pick somebody up at a sports event or wherever you were out and you asked for their number, they would be totally cool for you to call or text them. But if you reveres appended it and like showed up at their house in the morning or at night, that would be really freaky. Yet, we do that kind of behavior to our customers all the time.
Andrew: By reverse append, you mean if I just took their phone number, typed it into a Google search and found their address based on their phone number and then showed up and said, “Hey, surprise, look, I’m going the extra mile.” That’s creepy.
Tara: Yeah. “Aren’t I a hero?”
Andrew: So, I get how that would be creepy in a person. How do companies do that?
Tara: Well, they do it all the time with your files. So, you talk about big data today. How much of that transactional data has been purchased? So, you’ve got transactional, behavioral, this whole hierarchy of data. The thing we’re always saying to companies is the Holy Grail is the thing that you ask, like, “Hey, Andrew, do you like to be called Andy or Andrew?” This is reasonable. “Do you want me to call you Mr. Warner?” Why can’t I ask these things?
Andrew: I see, as opposed to saying, “Look, Andrew is our customer.” So, let’s go back to the example from the top of this interview where I get excited when I call a company and they say, “Oh, are you Andrew?” and they have my account based on the phone number. If I gave them the phone number, that would be okay.
If I didn’t and they found the phone number online and connected it to my account, then I’d feel a little bit creepier if after that the first thing they say is, “Hey, how is that podcasting thing going for you and that cream that you bought at the store? Can we help out?” then it would definitely be creepy. That’s the kind of stuff-well, this is an exaggerated version of what you’re saying.
So, you just want to help companies with the day-to-day-
Tara: It’s not exaggerated, though. Go back to the Target example that’s like five years old now. Remember, her dad learned she was pregnant because they started sending her-
Andrew: Target knew she was pregnant before her dad did and Target was sending her ads based on her pregnancy before…
Tara: Bingo. Yeah.
Andrew: You’re funding this with no outside funding, right?
Tara: Correct.
Andrew: Two years into it, you needed to get profitable or at least break even so you’re not losing money. Did you do it? I think you promised the team that it would happen. Did you hit it?
Tara: We did.
Andrew: Why did you need to promise it? How close did you get to the end?
Tara: Oh God. You’re asking tough questions. So, it’s important to give kudos where kudos are due. I did raise $1.3 million from friends and family and like friends of friends.
Andrew: I see.
Tara: Like, “Hey, you’ve got this $50,000 you can give me? Nice.” This is not a sophisticated raise. We raised money from some strange Ernst & Young technology entrepreneur accountants. I went to them for advice. I told them I was raising money. They said, “We love your story. We’ll give you some money.” But it was all personal.
Andrew: You mean not Ernst & Young as a company, but their individual partners.
Tara: Correct.
Andrew: Oh, wow. Okay.
Tara: So, individual people, though, that were in amazing places. The funniest story-I’ll segue this and I will come back to this.
Andrew: Yeah. We’ll come back to this.
Tara: But we raised money at three different times because I wanted to maintain a really, really high level of ownership. So, I only wanted the money I actually needed in like four to six month chunks. That’s a dangerous game. So, what you do is you go out the first time at eight cents and you say, “I will get three customers and I will get to proof of concept and I can do this. When I do, I want 25 cents.” Then you do it, you come back and you go at 25. So, we iteratively upped our raise all the way.
So, one of the times it was getting really short, we finally signed these two phenomenal customers. Our list is growing. This is my last time I know I want to raise capital and it’s not going to happen. They’re not going to go to our payment terms. I’m screwed. They need 60-day payment terms. I can’t come up with this. We finally get them to agree to like 30, which is like Earth-shatteringly awesome. It was a nightmare. Everything is going wrong.
I’m staring out-this is your question, “How close did it get?”-at the people that count on me to like feed their family and themselves. Thank God only one person had a family, but still, I just was like, “Oh God, who wants to live in my basement? My garage is available.” At this point, I’m driving an Acura with 300,000 kilometers. I am truly eating my own dog food in every true sense of the word, not quite.
Andrew: Everything except for the actual dog food.
Tara: Exactly.
Andrew: But you’re putting yourself out there.
Tara: Right. I was out there. So, I went and I started to explore all the options. I went and I met with a software bankruptcy trustee. I wanted to know, “If everything goes wrong, I know I have this core IP. How do I yard sale my company?” They don’t use that term. It’s my term. But, “How do I make these shareholders whole because we have a significant amount of IP now. We have a lot of people using it. Is there a sum that’s bigger than zero?”
I’ll tell you, this still today is a very passionate thing for me. I don’t believe that when you’ve architected things that solve somebody’s problem, shareholders should ever see a zero-value gain. It’s lazy. It’s irresponsible. It’s wrong. I really think that. Those are really big inflammatory words and I appreciate that, but I still think that.
So, anyway, I met with him. I said, “Look, I’m forecasting out. I’m in like 90-days. I’m not paying these bills. I’m in trouble.” He listened to me and he listened to me. He finally said, “So, you’re raising money right now?” I said, “Yeah, but we’re off. We’re off our position and I don’t know what to do.” He said, “Hmm… Why don’t you send me that paperwork as well?” I was so clueless, I didn’t even know what was happening. But now he was interviewing me about my company. I thought he was learning about it to figure out how to sell it when I went under as a worst-case scenario plan C.
Anyways, long story short, he invested in our company. He’s a shareholder still today. He had never known me before in his life. So, we have this weird group of people that I would be wrong not to say, “Yes, I have some money from outsiders.” Ninety percent of this company is customer-funded, but there was that seed capital of people that just took a crazy chance because they believed it could be better and they thought maybe we were the people to do it.
Andrew: I’ve never heard of such a thing, going to the bankruptcy guy who then says, “I want to invest” and he ends up investing and giving you the money that keeps the company going.
Tara: Yeah.
Andrew: Unbelievable. Now, when you go to the bankruptcy guy, there’s a sense of depression about it, isn’t there? You don’t seem like it as you’re telling the story, but at the time, did you feel, “I’ve let all these people down. I’ve let myself down. Look at all the years I’ve put in. I’m going to end up on the street.” Your head goes to, “I’m going to end up on the street,” the way mine does?
Tara: No. So, I’m probably the most pigheaded person you’ll ever meet. But I always like to literally have three plans. I can’t even sleep at night if I don’t know my other plans. Now, a lot of very successful entrepreneurs don’t operate that way, which makes me wonder if I am that entrepreneur. That’s another set.
But anyways, my plan A was I was going to close a couple more customers and get another deposit because that was best for my long-term goals. So, that was plan A. Plan B was I could kind of get the bank to do something or the other shareholders or, or, or. Plan C was absolutely everyone thought I was a lunatic and I had to find a way to make these people whole, even if nobody else but them. I had to have a worse case that wasn’t zero. That’s all I could think about. I couldn’t feel bad for myself. I’m sure if it happened and six months later and it was still happening, maybe it would have been different. But all I really needed was a situation where my worst case wasn’t zero.
I really think-I say the same thing a lot of times in universities when I’m doing talks-you also need to find out what is that minimal level that you can actually survive on? Once you realize, “Hey, I live on $60,000 if I have to,” or whatever that number is, $30,000, $5,000, whatever, you are in a very powerful position because you know where your bottom can be. The more you start to understand your floor more than your ceiling, the better you are.
Andrew: So, you weren’t going there because that was the end for the business. You were going there because you needed a plan C. When you have a plan C, you feel safer and that’s why you didn’t go out there freaking out. You went out there because you said, “I’m going to reassure myself even if all this goes.”
Tara: Yeah.
Andrew: I see.
Tara: And you can sell more confidently when you feel more stable, right? I think to anybody emerging in business, I think that’s a big one. If I’m shaking inside, that customer won’t know why they don’t feel safe. They’ll just know they don’t feel safe. No matter how hard I work to hide that, I’m just going to come off as non-sincere, non-authentic and a whole bunch of words that don’t end in commerce.
So, I needed to know that there was a way through this. I was looking at it saying, “Can I negotiate licensing terms for my existing clients so they can still use it?” So, then everybody that I cared about was whole and then I could be find. That’s what I needed.
Andrew: I was just thinking about how the other day I interviewed the founder of AnyPerk who said that he started out in the US living in his car for $30 a day outside a Taco Bell. When he thought about how tough things were going, he wasn’t scared because he said, “I could always go back to living at $30 a day in front of the Taco Bell. Let’s keep taking this risk. What’s the worst thing that can happen?”
Tara: That’s the most powerful place you can get to. You just have to know, “I could keep that totally 300,000 kilometer Acura.” I needed to make sure I had enough money for my kids’ hockey fees. That was the only thing I had to worry about, right? Whatever that is for you, you’ve got to figure that out. It feels good when you know it.
Andrew: You’re an entrepreneur from inside. I know you said, “Maybe I’m not enough of an entrepreneur because if I have a plan A, B and C then maybe there’s something wrong with me.” But you’re a woman who, when you were in third grade, I heard that you were not selling magic markers, you were doing what with them to the other students?
Tara: I was renting them. So, they were smelly felts. It’s how we referred to them. They had all these amazing flavors. Again, I would argue it was from a good place. I just was worried that if we’d all use them all the time they would run out. My parents wouldn’t just give me another set. So, therefore I needed to make sure I had enough funds to get the next set. I was responsible for making our class time good and awesome.
So, I would rent them out for lunch money. I would have been in business still had the milk lady not realized that kids were like, “I don’t have milk money. I don’t have milk money.” “Why does nobody have milk money?” And then eventually it broke that I was getting the money and I was renting the markers and my business was over.
Andrew: They shut you down.
Tara: Government squashed me. Yes.
Andrew: Anything else you would have done, they would have patted you on the back. If you were singing, if you were drawing, if you were writing something, they would have found a way to encourage you and a club for you to be a part of and maybe an international or a national competition.
Tara: Exactly.
Andrew: But you continued. University, I heard you had a vending machine business. What was that?
Tara: Yeah. So, I think that cash is king. You hear it, but what does it mean? So, we setup a vending machine business. I set it up so that I paid commissions. The end of the month, I got a tally of my whole month and then I got two weeks to pay them. So, I had to buy product on a credit card, which typically gave me at least the 30 days.
So, the money I made at the beginning of the month, although my margin was like maybe 20 percent, I had all of the cash from the vending machine for 30-45 days. So, I got really good at making money on money. That’s also a super dangerous slope. I wasn’t as risky as I could have. I probably could have made more, but I also could have lost it.
Andrew: What did you do with the money?
Tara: What kind of vending machines?
Andrew: What did you do with the money? Did you put it in the stock market?
Tara: I would put it in money markets. I would do commodities, like grain and other things. Stocks were just too scary.
Andrew: Grains and commodities are even scarier. But I remember growing up and listening to AM radio where they’d have commercials for how to get rich with grains like you said or some other commodity.
Tara: So, soy was just emerging at this time. So, this was going into the late 90s and stuff. You could see what was happening with it. So, there was just a chance to make money on money. You could always put a little bit in the short-term fund so you had at least a minimum payment.
I think the other thing that’s always really happened is I believed in the power of people. I’ve always believed that if you’ve been pretty good to them, you can always negotiate. We’re living in this right now in Calgary in energy. I’m watching a lot of friends renegotiate contracts of things that were already done. If you’ve had a good relationship, there’s just always an element of people that are still people.
Andrew: You’re saying the M&M person would still have delivered your next shipment even if you lost your money on grains because they would-I see.
Tara: Well, not if I told them that, “Listen, I was trying to make a fortune. You’re going to have to cover for me.” That might not have worked.
Andrew: Maybe not like that. They didn’t allow just anyone to create an account. Your dad must have helped you out or your mom or somebody, right? They didn’t allow you to trade commodities even as a 21 year old.
Tara: Sure, you can. I got a really great relationship. So, I have two banks I have a really good relationship with, TD Bank and Royal Bank of Canada. So, Royal Bank of Canada lent me six figures when I was barely 20 years old to open my health food store. I wrote a business plan in university and it was kind of like a dare. I didn’t think it would get funded and I was still trying to finish school and all of a sudden I got this funding.
So, I also got my first car loan when I was like 16 years old. You can’t get a loan from a bank. My dad co-signed. I made all the payments. So, by the time I was 18, I had huge credit. I also had a black Mustang 5.0. Let’s talk about that.
Andrew: Wow, rocking. That’s amazing. I also want to know about the vending machines. Where do you buy vending machines and who lets you put a vending machine in their place when you’re just a kid, essentially?
Tara: Yeah. So, you ask terrible questions. I didn’t want to carry things that were heavy. So, you said like M&Ms. I will tell you, I went to cigarettes. I don’t smoke. I’m not against it, but it’s not what I do. Keep in mind, I owned a health food store right after that.
Andrew: It balances out somehow.
Tara: That’s what I felt like. It was karma. I used to tease people I put my business cards on the backs of the cigarette packs because I was making my own business. It was perfect. It was a little ecosystem I had going. I was looking for something that would have amazing cash flow.
Shockingly, I actually was contemplating in university, being a stay-at-home mom. I wanted something that had enough cash flow that I didn’t have to sacrifice tons. So, I was looking at high-cash businesses where you had the money for longer. I worked as a waitress and had a sense of the way money moves. So, vending machines just sort of fell out.
Then I looked at pop and I looked at food. The factor of risk on food was kind of horrifying. Pop had low risk but it was so heavy. I’m a girl and I’m thinking, “I’m still in school. I’m going to haul this pop around. I don’t have a vehicle for this. Logistics were a nightmare. Then bam, along came cigarettes.
So, it was actually the sales guy at the vending machine company that convinced me I should look at it. I felt really like morally weird about it and my friends, I was like, “How do I explain this?” But it was about the math. I was like, “Yeah, it’s legal. Why not?” So, there you go. I guess I’m morally flexible. I’m joking.
Andrew: So, where did you get to put the vending machines?
Tara: So, we put them in the hottest clubs. This is another really important thing about supply and demand. So, in the hottest clubs, there’s a lineup to get in. Most of the best clubs, once you leave, you probably aren’t getting back in. This was back in the day when smoking wasn’t banned everywhere too. So, if you ran out to get a pack of cigarettes, you weren’t partying with your friends that night.
So, when you think about who a smoker is, how bad they want it, I you have this brand there, even if it’s not exactly what you want, you’ll probably pay an extra $3, $4 or $5 more than you would have at Mac’s or 7-Eleven to get your smokes now and stay in the bar. So, our prices were typically about 40 percent over what you would have paid at Mac’s and we still made a killing. I always figured like, “Who cares?” because I wanted more cash anyway. If you don’t want to buy them, someone else will. I could only put 100 in a machine.
So, these were wall-mounted. They were quite a bit nicer. There was a patent. There’s a patent on my voice software now too. This was my first business patent now too was with these cigarette machines. I got into cigar machines. I learned a lot about Cuban cigars and other cigars, buying cigars. I still kept some of those relationships. Those are good guys.
So, I just learned that people are lovely. If you ask questions, they’ll help you. Don’t sign up for crap you can’t do, like hauling pop or food that’s rotting. You don’t have to do your own product. But that was how vending machines came along.
Andrew: I was going to say that’s really big. But SPLICE is incredibly bigger than that. Where’s your revenue now for SPLICE? Actually, 2014, we talked to you, I think, in the middle of the year. You said, “We’re on track or our goal is to hit $5 million in sales.” Did you hit $5 million in sales?
Tara: So, it depends how you go with tracking. Software companies get a cheat. So, we get to talk about tracking.
Andrew: What’s tracking?
Tara: Tracking typically would mean, because you’re doing SaaS contracts, that you are on track to be closing your full $5 million versus fully $5 million recognized in your calendar year versus tracking it.
Andrew: So, they’re committed to paying a certain amount of money and they’re going to do it over a certain amount of time. I see. That’s tracking.
Tara: Yes. It can be measured differently. So, typically a rolling average is another way to look at it. So, our three-month rolling average would exceed it. When you’re a SaaS-based company and a lot of renewing contracts, it’s typically looked at that way. We are private. We don’t talk about our revenue tons. I’m going to tell you that 2015 is going to blow 2014 out of the water. You might see me write a book if we hit these numbers.
Our forecasts are ridiculous. Our sales people are all seeing the best years they’ve ever seen. I’m going to tell you, I think it’s because we’re re-reading-don’t you laugh-“How to Win Friends and Influence People.” I know everybody’s read that book.
Andrew: I went to work for Dale Carnegie.
Tara: Did you really?
Andrew: Yeah, Dale Carnegie & Associates right in the heart of Manhattan where the whole thing started. Yeah. I’m totally with you on that. Why are you guys re-reading it as a company, though?
Tara: Because I think we got really guilty of when we wanted to attract a customer, we really did everything right as far as making sure that every communication had what’s in it for them first. We were really brilliant listeners as we tried to sell something. But as we grew those relationships, we started to rely too much on the fact that we cared, they cared, we listened. It wasn’t consistent enough. We weren’t living it.
We work with some amazing brands. We worked with companies like Intuit, La-Z-Boy, just really large international world players and they love us. They all work with other awesome companies we should work with. I think our referral rates and 100 percent references from customers, but why are the referrals not there? Why can’t we take it to the next level?
I’m just seeing it’s just not good enough. It’s just not good enough. It comes down to how you treat people. I guess that’s the biggest thing in my DNA and that’s why joke about the “my love” thing and the thing on the this. We’re really there right now. Smiling when you talk isn’t really that hard.
Andrew: It seems like it comes natural to you.
Tara: Yeah.
Andrew: You know what?
Tara: Too many people take little things for granted and it’s the little things that make all the difference.
Andrew: So, “How to Win Friends and Influence People,” what else allows you to sell to companies like the ones you mentioned, Intuit, La-Z-Boy? You sell to big companies that I know, having talked to people in my audience, they would like to reach those businesses but it seems impenetrable to even get through their wall, through their gatekeeper. So, give us some tips. How do we do it?
Tara: So, smile when you call them. Smile when you talk. Put a mirror up in front of every sales person’s phone. Be on that.
Andrew: Literally, there’s a mirror in front of every sales person’s phone at your place?
Tara: There was. There isn’t always. Come audit us in Chicago and Toronto. Those are our sales offices. Most of the time, yes. So, literally, though, yes, I recommend it until you get in the zone. So, I think it is finding the right person, finding the right questions.
But this is a big one-I don’t care what you sell. Find a way to let them try it risk-free. Risk-free doesn’t have to mean completely free. How do they define risk? So, when we introduced our pilot program and our test project, it wasn’t because we hadn’t done it before and we didn’t know what worked, it’s because they hadn’t done it before.
So, I think for those large companies, they have to find-you’re scary. You’re little. Remember, I was seeing a bankruptcy guy. You have to be honest with where you are. Say, “If I’m running this company, I have to accept that this risk is real.” So, as an organization selling in, you need to make it really clear that you can eliminate the risk for them. That’s critical.
Andrew: But for them often the risk is no the cost of your software. What is the risk? If we just say, “Hey, it’s going to be free for a few months,” they don’t care about that. That’s not the make or break. What is the make or break is what?
Tara: So, let’s say that ten times. It’s not the money. So, don’t give away your money because they don’t care about giving it to you. Get the money. It means a lot to you. So, that’s not the risk. I think it’s two things. Every company on the planet risks everything to earn customers. It’s their brand reputation with their customers. If anything about what you’re doing or selling them can affect their brand relationship with their customer, that’s what they’re risking. Showing respect for what that is and what you can do in the process to avert that risk-
Andrew: So, how do you avert that risk? When they are handing you a handful of their customers, you could potentially ruin that relationship. How do you show them this isn’t going to ruin their relationship? It’s risk-free. What do you do?
Tara: So, references are a huge one. But that’s small first step, “Hey, other people did it. See? It worked for them.” Okay.
Andrew: Right. Okay. So, show them some case studies. That helps. In your case, you had a couple at least.
Tara: After case studies, I think what you need to show them is all of their safety gates in the process. This is where small companies versus big companies are very, very different. You need to actually have documentation that talks about safety gates. Where can they bail? How can they bail? How can they mitigate their risk?
Most large organizations understand risk is necessary to growth and success. What they’re really asking when they say, “How can I avoid risk?” is, “How can I mitigate or reduce the amount?” So, it can’t be a 100 percent risk factor. So, for us, we offer approvals at multiple levels. We offer a pause and stop function that’s controlled at a higher level. There are all these steps through the process.
Andrew: So, they can pause or stop the relationship if they need to. Here’s something else that I read in the Globe and Mail, I think, a few years ago. They did a piece on you, 2012. You said one of the things you do is pilots. You let them try for as little as $5,000, $10,000 for about a month. You give them a small test to do.
Tara: Yeah.
Andrew: Okay.
Tara: And that’s what I’m talking about. You have to give them the opportunity to try it before they risk everything. So, typically for a pilot to be successful, it has to be a statistically significant amount of their business that it’s worth talking about with their managers.
So, if it’s not going to be big enough to be statistically significant, don’t bother, it’s a waste. But accept that if they have six million records, doing a 60,000 pilot might be enough to show. You’re just going to have to look at that. So, doing that pilot and giving them those control gates all the way through, giving them third-party evidence and letting them experience it.
Andrew: Alright. Congratulations on doing this. Actually, one more thing-if there was a hesitation there it’s because I feel like the time is up, but at the same time I have one other thing. How do you get in? I see how you just smiled and dialed and you kept calling, you kept calling. There’s got to be a way to do it more efficiently. Before you started hiring the team of people that you have today and after you were making all those phone calls, what was that in between step that allowed you to get people to pay attention to you and to buy from you?
Tara: Get references. Get your customers to call the person. Get references.
Andrew: Your customer then calls up.
Tara: We literally have had customers call other people on our behalf. So, in the US, Raymour & Flanigan would be a great example. Art Van is a great example. They call each other. So, allowing them to really be that great fan-you’re going to do work for them for it, but you want to please them anyway. You want to do work for them. So, don’t be afraid of doing hard work. If you’re in love with what you’re doing and you really believe you’re solving a problem, you can take those risks. If you’re selling hotdogs and Coke, you need a different marketing strategy.
Andrew: Alright. I should thank a few people for putting this interview together for us. One of them is actually Jason Calacanis. You and I met at Launch Fest where I was doing interviews from the stage and we connected there over a year ago now. But we’ve been persistent and we had this interview setup.
I want to thank April Dykman here on the Mixergy team who talked to you and did this pre-interview, Andrea Schumann who did research and made sure that I had screenshots of the past sites and a couple of other things that helped me move things along, old articles like the Globe and Mail, and Arie Desormo who will be posting this up on the site and coming up with a great headline and making sure that people see this. They are all part of the Mixergy team. And of course, Tara, thank you so much for doing this interview with me.
Tara: Thank you. It was a pleasure.
Andrew: You bet. Thank you all for being a part of it. Bye, everyone.
