Case Study: How to survive when partnerships go sour

Andrew: Hey, everyone. My name is Andrew Warner. And I’ve been sitting on this story for years and, frankly, I would have died with this story if today’s guest had told me, “Don’t ever say it.” I really respect entrepreneurs, and when they tell me something is private, I don’t even tell my wife. That’s how seriously I take it. But this story is one that I think is important to tell and I’m really glad that today’s guest is here to talk about it.

Imagine you start a business, you pour yourself into it. It’s meaningful. It’s actually creating great products. And then it’s kind of taken away from you. And that’s essentially what happened to today’s guest. He created Spring Metrics, which you might have heard me talk about years ago because I freaking loved it. It was finally metrics, analytics for my site that told me how many people were on the site in a way that made sense, in a way that I can look at and understand, not like Google Analytics, which takes me forever to just orient myself every time I open it up and I need consultants to help me figure out how to implement, right? He created Spring Metrics.

His name is Doug Kaufman, long-time Mixergy listener, created this thing. I was so excited to use it. I was so excited to be a customer. I talked about it in Mixergy interviews. Then one day he wasn’t working there anymore. Then I couldn’t use it anymore. As far as I can tell, I can’t now. So today we’re going to talk about what happened there and what happened afterwards when I remember sitting like right down there on one of the couches away from the desk in the office just talking to Doug about what he wanted to do next and whether he should take a job.

And I know that for a lot of entrepreneurs, the idea of taking a job is horrible, but not to me. We talked through what he was going to do and whether he should take this job. He ended up taking it and becoming the leader of a company called TransLoc, which sounds so freaking boring, but actually is software that is changing your world without you even knowing it. Imagine you’re in one of hundreds of places around the country, let’s say Raleigh, and you need a bus.

Well, you get their app and using the TransLoc app, you know exactly when the bus will show up and behind the scenes, it’s helping the whole bus system and transit system stay on time, not just one, but hundreds of them and more features and more is coming soon. And we’ll talk about how TransLoc is actually taking cars off the road and allowing people to get where they’re going in an easy way.

All right. This whole interview is sponsored by the company that will help you hire your next great developer. It’s called Toptal. And by the company whose software we use—actually, we use both companies—but I use Pipedrive to keep our company organized and help us close sales. It’s called Pipedrive. I just said Pipedrive. I’ll tell you more about them later.

First, Doug, it’s good to have you on here.

Doug: Andrew, it is great to be here. I know this is a long time coming and we’ve known each other a long time and yet it’s still a little surreal to be doing this with you, but I’m really happy to be here.

Andrew: I’m happy to have you here, and I’m glad that you’re willing to talk about the email that you once told me you weren’t supposed to get. What was that email?

Doug: Yeah. So this was a few years ago and yet it still actually hurts. I don’t know that the hurt is ever really going to go away, but I received email from one of our investors and board members and it was addressed to the other investors and board members, but I was copied on it. It was all about how I needed to go, and it was all about my failings and what I was doing wrong and the problems I was bringing to the company. Really, it was long. It was a long narrative going on there about how I just needed to be gone from the company and the investors needed to come together and make that decision and make it happen quickly.

Andrew: Now even as I hear you talk about it, I’ve heard you talk about this with me before, but I want to just break something I’m so angry. This is your company, you founded it. As I said, the product was so good. It actually made sense and they’re talking about how you, the founder, the guy who raised money was going away. And this was your first company you raised money for, right?

Doug: It was, yeah. All the previous companies were bootstrapped.

Andrew: When you say previous companies, you were getting your PhD when you decided you wanted to be an entrepreneur. Did you end up getting your PhD?

Doug: I did.

Andrew: You did. As you were doing it, you had this realization that you needed some kind of software. What was the software?

Doug: Yeah. This was pre-Blackboard days. To date myself, it was so long ago that I had to talk my students into getting email addresses and activating them. And they kept saying, “What do I need an email address for?” So I forced them to do it. Then I started putting my course information online, not just my syllabus, but I started putting definitions. I was teaching psychology. So I started putting definitions on there that were in regular English and quizzes and class notes and everything online.

And that ultimately became a website, which was a resource center for college psychology students, which actually still exists today and is doing really well, which is frankly pretty amazing. But I realized that there was so much interest in this and it was helping students so much that if I instead of getting a faculty job I tried to turn this into a business, it could potentially help millions of students across the world. So I went and created that.

Andrew: And the site is called AlleyDog.

Doug: AlleyDog.com, yes.

Andrew: And the vision for it was to help other instructors put their material online for their students?

Doug: Yeah. So the vision was two-fold — one, to have a resource center so students could come and look up information for all their psychology classes and get answers and understand really difficult concepts quickly and easily. But the second part of that was I really wanted to get into mobile learning.

Andrew: Yeah.

Doug: The internet was just becoming a thing, and I had this idea that we could put lots of education online and then ultimately education on mobile phones, which actually became a company later. And I don’t know if you’re going to get into this, but obviously Q Technologies became a part of AlleyDog.

Andrew: So it was called AlleyDog even though you got a — I’m looking at the bottom of the site, copyright 1998 to 2017. So, 1998, you could have gotten so many other domains, right?

Doug: Yeah. I probably could have gotten Psychology.com. I know.

Andrew: You called it AlleyDog because?

Doug: To show my creative side. I had a dog named Alley, who I loved, and when I was trying to think of names, Alley was laying next to me and it just became like your trusted friend, the psychology student’s best friend.

Andrew: I get it. Okay. So you were starting to bring up another company, Q Technologies. My understanding was you had this big idea for AlleyDog. It was going to be this big resource, but you couldn’t fund it on its own because there wasn’t easy revenue to be made back then. So you said, “You know what? I think there’s another place to make money,” and that’s when you started the second company, the one that you ended up selling. It was called Q Technologies. What was the inspiration for that?

Doug: Yeah. So my PhD was in psychology, obviously. I had no idea about business at all. So I didn’t know how to raise money. I didn’t even know what VC meant. I didn’t know about angel investing, nothing. So my idea was I better figure out some way to bring in money so I can develop AlleyDog. This was at a time when everybody was buying home computers, but no one knew how to use them. Everybody wanted to install antivirus software. They didn’t know how to do that. If they had a problem with it, they couldn’t fix it.

So my idea was, “I bet if I hired a bunch of really smart high school kids who knew how to fix every problem on a computer, I could send them out to fix computers in homes and charge an hourly rate and that would be a cash cow and I would use that money to fund the development of AlleyDog.” That was the idea.

Andrew: Sounds solid.

Doug: Yeah. It was solid. Guy Kawasaki likes to talk about his $2 billion mistake by not taking the CEO role at Yahoo. I have no idea if this would have worked out, but I sort of feel the name way.

Andrew: There’s a guy named Robert Stevens, a friend of mine who lives not too far from me, who basically ran with that idea. It ended up becoming GeekSquad and, yeah, it became a huge hit. But you were going around and putting was it posters up trying to get people to sign up? Was it just flyers?

Doug: One day I went out after I got all the kids hired and we knew exactly what we were going to do, I went out and put flyers in one neighborhood. They helped me. We pretty much blanketed one neighborhood with flyers. By the time I got back to the house, the phone was ringing and it never stopped.

Andrew: Wow.

Doug: The demand, the market pull was so strong that I almost immediately said to them, “What friends do you have that can do this because we need more help? We’ll never be able to handle this.”

Andrew: Wow. So I always worried about that business because people have all kinds of junk on their computers. You can’t predict what’s on there. Not only that, you can’t predict the knowledge of the person. A lot of it is like being a private investigator, going through, asking questions, “Could it be this? Could it be that?” It’s really hard to find that match, right? How did you find the match?

Doug: Yeah. It turns out, at least at that time, most people didn’t have serious computer problems.

Andrew: Really?

Doug: Yeah, to the point where I ended up doing calls at times because we couldn’t handle the demand. I had no idea how to fix anything, so when I heard it was a really simple problem, like, “I just need some software installed and I don’t know what to do,” or, “I can’t get my internet to stay connected,” I would go and do that. Most of the time, they were simple problems like that. Hard drives needed to be reformatted, things like that. It was not really complex.

Andrew: So I imagine then a collection of under 40 things that would come up on a regular basis.

Doug: Yes. If I was smart enough to document them and put some SOPs in place, it probably would have been 40 or less.

Andrew: But you didn’t, and instead you still had these students go out there. They solved the problems. Were you able to fund AlleyDog from it? Did it actually help you do the thing you set out to do?

Doug: It did. We used that money. We started building some educational software as well as doing AlleyDog. It was working, but yeah, if I understood the dynamics of market pull and markets in general, I probably would have said, “I know I really want to do this educational thing, but perhaps I should focus on the thing that everybody seems to be aiming for,” and maybe you and I would be having a very different conversation from my private island next to Richard Branson’s island or something, but that’s not the case.

Andrew: And instead, what happened was you met a guy who founded a company or cofounded a company called Blackboard. I think you even introduced me to him a few years ago. He said what to you?

Doug: So it’s funny. It was actually at a luncheon, a networking luncheon. I sat next to a guy. He asked what I did and I told him. He said, “Oh, one of my best friends just started a company in education. It’s called Blackboard. You should go talk to him.” His name was Kevin. He ended up being the head of marketing at Blackboard. He just said, “I think you should talk with my friend, Michael Chasen, who’s the CEO of Blackboard.” So I said, “Great. Let’s do it.”

I went in and I talked to Michael. He said, “Hey, I love what you did with AlleyDog. We’ve been doing sort of software, but we want to move more to the web space, more online. That thing you did with psychology, where you created all this unique content, could you do the same thing, build all this unique content for all the other subject matters that we’re going to cover for universities?” I said, “How many subject matters is that?”

And I remember very clearly he said 253. And I said, “No problem.” And it was just me. I wrote all the content at AlleyDog. So what I said was complete nonsense, but I knew there was a real opportunity here and I wasn’t going to let it go. So I just said, “Absolutely. I can build content for 253 subject matters.”

Andrew: And you said, “You know what? I’ll figure it out later.”

Doug: Yeah.

Andrew: Interesting. Why did you say yes to him instead of saying, “Oh, that’s an interesting idea. AlleyDog should be more than just this one thing. It should be 252 more topics. I’ll take this and run.” Why did you say, “Yes, I can do it for you?”

Doug: Well, Michael is persuasive and he made a pretty compelling case for, “You are by yourself in the basement writing content. Look at our offices and we have millions in funding and we’re going to get many millions more in funding. So today you’re here. We’re here just when it comes to this one thing, but in about three months, we’ll be here and we’ll squash you. And you have a vision for this thing. If you come here, you can actually realize that vision.”

Andrew: I see. Yeah. This was at a time when entrepreneurs would do that a lot. Basically it was the Bill Gates approach to doing business. “We have more money than you. We’re going to have more control. We can crush you. Do you want in or out?” I remember one of the founders of DoubleClick said that to a friend of mine and she said, “I’ve got to find a way to battle them,” and then it kind of sunk in, “They’re actually right. They have way more funding. They could outlast any downturn in the market. We have to find a way to work with them.” All right. So then what happened to Q Technologies, this thing that was doing well that was growing?

Doug: Yeah. So I actually just shut that down.

Andrew: Oh, you didn’t sell that? I thought you ended up selling that thing.

Doug: No, I ended up selling a later company, but I really just needed to shut that down. What I said to Michael was, “You can’t have AlleyDog at all.”

Andrew: “That’s my baby.”

Doug: “That’s my baby.” And he said, “No problem.” Sorry, I guess I missed a step, which was he was saying, “We’re going to crush you eventually, so come here and just work with us. Forget about the licensing deal. Forget about content. I don’t want you to write content. I want you to come here, be a part of Blackboard, be an employee and let’s build this business.”

Andrew: Okay.

Doug: So I said, “Yes, but you don’t get AlleyDog. But I will become an employee and let’s build this thing.”

Andrew: All right. You’re saying you just shut down this one business that was doing so well. That was a mistake, wasn’t it, then?

Doug: Yeah. Absolutely.

Andrew: And I thought that you sold the business. I thought that then you ended up with something from it. I guess not. You continued with AlleyDog. AlleyDog is still doing to this day. What is AlleyDog in a world that has Blackboard and where Blackboard has dominance?

Doug: Yeah. Well, Blackboard helps schools and helps teachers put information online. It’s still the information that’s coming from teachers or from textbooks. It’s all confusing. So AlleyDog is a resource where students can come and get answers to their question, help learning concepts in plain English. Where this came from what students were always saying to me, “I came to class and I got confused by this theory, then I looked it up in the next book and I’m twice as confused because it’s all jargon. Why can’t someone just explain this to me in English?”

That’s what I did and it grew and grew and grew and now there’s about I’m going to say about 20,000 unique students a day that visit AlleyDog and get help being successful in their classes.

Andrew: Was it hard for you to go and be an employee in a world where you already were an entrepreneur and entrepreneurs were starting to get a lot of respect?

Doug: Yeah. Not as hard as it became later.

Andrew: Interesting.

Doug: I’ll tell you why. I don’t think, one, I really had developed a sense of my own identity as an entrepreneur. My identity wasn’t wrapped up in being an entrepreneur just yet. I still called myself an entrepreneur, but I haven’t had enough experience yet and, two, Blackboard at that time was a rock star.

Even though it was early and I think I was employee right about 100, maybe a little less than 100 and it grew to 500 by the time I left and went public and what have you, the energy at that company was unbelievable and the people that were there were the best people I had ever worked with. There was so much passion. The mission was great. It was addictive just to go there to talk about working there that I just knew it would be amazing. And I didn’t even know what I was doing as an entrepreneur.

Andrew: Did you learn a lot by being there about how to run a company?

Doug: Yes.

Andrew: What’s one example of something that you took from your experience with Blackboard?

Doug: So, actually, something I saw but didn’t really understand, until Michael made it explicit when I was actually leaving Blackboard, was the power of a really good, well-tuned, high-functioning sales team. I’m a product guy.

Andrew: Yeah. You were Director of Product Development there.

Doug: That’s right.

Andrew: So what did you learn about a really good sales team?

Doug: So I learned that a sales team can help a company overcome almost any problem a company has, including deficits with the product, right? I saw it because our product, at least when I was there, I just felt personally — I’ll speak only for myself — I didn’t think our product was as good as some of the others that were out there, and I wanted it to be better and better and better. And yet, we were crushing our competitors. Everybody was buying Blackboard. And it was because our sales team was so good. So if it’s okay, I’ll tell the story about Michael and I having dinner when I was leaving.

Andrew: Yeah.

Doug: So when I was leaving Blackboard, Michael was nice enough to say, “Yeah, I’ll go out to dinner with you and talk about your new business.” So, sort of towards the end of dinner, I said, “Okay, so you’ve done this for a while and you’re very successful. If there’s only one thing I need to know that would be the key to my success, what is it?” And he said, “Any problem you have, hire more salespeople.”

Andrew: Really?

Doug: I thought he was kidding. He wasn’t. He said, “Name a problem.” I said, “Okay, what if we release a new version of our software and there are 500 bugs?” He said, “Hire a whole bunch of salespeople. You can generate more revenue. You can hire more [inaudible 00:19:21] to fix all the problems. Next? Give me another one.”

Andrew: Wow. Interesting.

Doug: We went through a series of these. Even if he was only half-joking, he was really making a point about, one, think differently than you think as a product guy. You need to bring in more to be an entrepreneur. You can’t just think product. Two, he made me see the value in revenue and what it can do for a company on many levels. And I didn’t know those things beforehand.

Andrew: You know what? I feel like HubSpot had a similar situation, where their product wasn’t as good as the competition. You really could do better with any marketing automation software and a WordPress website, but man, they had great salespeople and then the product caught up because they had the revenue. Interesting, though, that that was the answer in light of what we’re going to talk about with TransLoc, where you did have salespeople. We’re going to talk about that in a moment.

First, let me talk to people about a company called Pipedrive that I’ve been using to help me coordinate sales. And I don’t just mean like — frankly any sale that we do. We wanted me to do, we as a team wanted me to get out there and do more webinars to promote this chat bot business that we launched. We said, “How do we coordinate this? We have all these people who are soliciting opportunities for Andrew, all these people who are saying yes, some people who are saying no. How do we coordinate it?” I said, “Pipedrive.”

We went to Pipedrive. We created five columns, one for each step of the process of getting somebody to say yes to doing a partner webinar with me and then we all started to collaborate. Anytime we had an idea for someone to do a partner webinar with me, we created a card for them in Pipedrive and we put them in column one. When we messaged them the first time, we moved their card to column two. When we messaged them again, we moved them to column three.

When we got them, we moved them into the one section so we know we won them we had that partner deal. Frankly, if they said no, we moved them to the lost to understand why. Sometimes they just didn’t understand about bots. Sometimes they didn’t have a slot in their schedule. Sometimes they just didn’t respond. So now we have a list of all the reasons why we got turned down so we could grow with it and we have a list of all these people who have said yes and we know how we as a team can collaborate to get to yes.

I use Pipedrive anytime I want to close a sale. It holds me accountable because I know how many people I’ve put into my system. It lets me know why people are turning me down. It lets me know what’s working. It’s really helpful also when I start to bring in more people to collaborate and help me close sales.

If you want to close sales. I mean we’re talking right now with Doug about the power of sales, if you want to grow sales, whether you’re one person working by yourself with a vision of eventually hiring more people to help you or a team of people who are not working well together to get more sales closed, you really owe it to yourself to do the thing that I did years ago when one of my interviewees recommended it.

You owe it to yourself to check out Pipedrive, play with it, use it, try it for a week and you’re going to see how it will help you get more sales. In fact, forget a week. Since you are listening to me right now, Pipedrive is sponsoring. They are giving you two months and frankly they’re doing it to encourage you to use this special URL so they could track how well I’m doing as a pitchman for their product. So the URL is right here where you’re going to get two free months to use Pipedrive to close sales, do deals. And if you don’t like it, you don’t have to continue. The URL is Pipedrive.com/Mixergy. Go check them out.

All right. Spring Metrics was the next big idea. Where did you get the idea for Spring Metrics?

Doug: So, actually, there was a company in between there.

Andrew: Yeah. I’m looking at your LinkedIn profile. There was quite a bit going on in there. Tell me about the company a little bit and then let’s get into Spring Metrics.

Doug: Tell you about ClearTXT?

Andrew: Yeah. ClearTXT, 2003-2009. Give me a quick story there because there’s so much that I want to get to with TransLoc, so much with Spring Metrics.

Doug: Yeah. So the original idea of ClearTXT was mobile messaging in the higher education space, and I wanted to not just do mass messaging, so like, “School is closed today, don’t come in,” but I wanted to connect with Blackboard and other learning systems because there’s so much information in there that’s timely that students are forced to go log in to Blackboard and click refresh, refresh, refresh. Why can’t we just take the information out of Blackboard, send it to students on their mobile phones as a text message? Everybody’s happy.” That was the original idea. Nothing like that existed prior and that’s what I created.

Andrew: And you did it for about six years.

Doug: Yeah.

Andrew: What came of it?

Doug: So I sold that company. It was acquired by a competitor. It was your sort of classic — well, maybe the archetypal entrepreneurs journey of starting by myself in a bedroom, outsourced development team, all the trials and tribulations that come with that, being too early in the market, then getting some traction and then there was this tragedy that happened at Virginia Tech, where a student shot a bunch of other students and while I was trying to turn this into a mobile learning tool, everyone on CNN and MSNBC, etc. were saying, “Why aren’t students getting text messages about these things?” And then every school started calling me saying, “We can use this for emergency alerting. That’s what we want to do. Just send me contracts.”

Emergency alerting is not what I wanted to do. So we did it for a while, built the company up a little bit and then sold it to a competitor who really was much better equipped to handle that sort of scenario.

Andrew: Because?

Doug: Because once you move from mobile learning to emergency alerting, think about that scenario. There is literally an active shooter on campus walking around killing people. If you have 10,000, 20,000, 40,000 students, they need to be alerted instantaneously, and having a backbone that can send that number of messages instantaneously with near 100% guaranteed delivery rate, support, all those things, you needed some real muscle behind you.

Andrew: I see. You know what? I’m thinking of a world where Twilio exists and you can easily do that. No. You’re saying before that, right. In a world where Twilio exists, that’s actually an easier thing to do because there’s no customization. You just have a mailing list essentially and you send it all out. I see how before it would have been tougher. Okay. How was that exit for you?

Doug: It was good. You know the entrepreneur’s thing, it wasn’t f-you money. But it was a nice exit. It was my first actual exit. So going through that process was really interesting. We sort of both walked away from the table on two separate occasions. Again, my background is in social psychology, so group dynamics, teamwork, negotiation, I should be really good at this. So I tried to draw on those skills to bring him back to the table and not get bent over and taken advantage of. So it was a great experience.

Andrew: All right. So then that one was bootstrapped. You then say, “You know what? I’ve got this new idea.” Where did Spring Metrics come to you?

Doug: Yeah. So after I sold ClearTXT, I actually went back to AlleyDog and said, “You know, I think I can turn this into a business.” Of course, my wife was saying, “Oh my god, go get a job. Let’s have some stability.” I said, “How about this? If I can generate $100,000 and double traffic in 12 months, I’ll continue to make AlleyDog into a business. But that’s my time frame. How about that?” And she said fine.

So I actually started selling digital goods on AlleyDog and accomplished my goal in about six months but realized selling digital goods at the time and trying to understand why someone bought compared to the people that didn’t buy was nearly impossible. Setting up Google Analytics, their goals had just come out. It was impossible to set up. This guy with a PhD was not smart enough to set it up. I said, “I’ve got to create something that will help me sell more eBooks by understanding the difference between window shoppers and buyers.” So I asked some friends to help me do it. Then I realized there may be more people that needed us.

So I started sharing the idea with people that are out there in my community, got a lot of really positive feedback, and one of them encouraged me to apply to an accelerator, like a Y Combinator-type accelerator locally that had just started.

Andrew: It’s not around anymore. We’re talking about LaunchBox?

Doug: That’s right. And I said, “No, first of all, I’m too old. That’s for 20-year olds. I’m an old dude, not my first time doing this, etc. And I don’t have anything but an idea.” And they said, “Just do it anyway.” So I actually got three people to help me. So there were four cofounders. We went out and we talked to 12 companies. We said, “This is the idea. Do you have this pain?” So we did a little customer development. If they said, “Yeah, we have this pain,” [inaudible 00:28:45]. “Will you sign up to buy it?” They said, “Yes.” We made them sign something.

Andrew: You did? Wow. Okay.

Doug: So, when we went for our pitch, we walked in, talked through the idea, the market size. We did all that stuff and then we said, “Oh, by the way, here’s a list of companies that have already signed up to buy once we build it.” So that’s how the idea started.

Andrew: Where did you get the idea to ask people to buy before you launched? That was not something people had done at the time.

Doug: Yeah. I’d like to say it was my idea, but I don’t think it was. It was probably one of my cofounders who was probably more in tune with lean startup ideology than I was at the time and said, “We need to do some customer development. Let’s go ask.”

Andrew: I had one of the partners from LaunchBox on Mixergy years ago, Matthew Jacobson. One of the things that I remember really liking about his way of thinking was that he said find real problems. That was one of the first most important messages that he had for the entrepreneurs in his program. Unfortunately, I think they closed up largely because Y Combinator sucked all the startups out of the ecosystem at that stage.

Doug: They sort of did to the community what Amazon has done to small mom and pop shops, right?

Andrew: Right.

Doug: They just sort of ate them all up.

Andrew: Okay. You had the idea. Why three cofounders? Why not one cofounder? I also remember him saying you need somebody technical on the team who could develop it, but he didn’t say you need three other people on the team who could develop it.

Doug: Yeah. So one guy was the pure engineer. Then I got someone who I knew from my Blackboard days, Scott Lacy, who was one of the first, I think, 10 guys in Blackboard, who I trusted, had worked with for a long time. He was really a good product guy. I knew he could bring a lot to the table. Then there was a guy locally who I had been talking with about doing something together. He was a former product manager at Google. He had a really creative way of thinking and he could bring a lot of cache to the business, and frankly I didn’t think we were going to get into this thing because we had nothing but an idea. There was not a line of code. There was nothing.

Andrew: I see.

Doug: But I think the idea, the problem, the size of the market to address that problem were all compelling for LaunchBox, but also I think the list of founders was probably the most compelling thing.

Andrew: Okay. So you guys get in the program. You build the first version. By the time you’re done with the program, your first version was done, right?

Doug: Yes. We had a beta version running. We had ecommerce shops that were using it that were testing it out. The idea was not just analytics, but we want to show you when someone buys, their entire history, so you could, one, attribute where they came from so you know what’s working and what’s not, and you could just keep repeating it. And ultimately, we wanted to repeat it for you automatically.

Andrew: I remember when I used it. It was just really easy to say, “Someone just bought today,” click their name. I wouldn’t necessarily know who they were, but click something about them and then see, “Well, this person came to the site five months ago and here are the pages that they went on.” Am I right?

Doug: Yes.

Andrew: And then they came back again three months ago and they came back again today and here’s the exact path that they took.

Doug: Yes.

Andrew: It was super easy to see it. I didn’t have to set up goals or anything in order to see —well, I did. I have to say, “Here is the page where we complete our sale.”

Doug: Yeah. But that was part of our secret sauce. So when I pitched, I think I actually referred to that thing as like automagical or something goofy like that. What we did is we created this little widget that you logged in to Spring Metrics and then when you said, “I’m ready to set up a conversion goal,” you click a button, your site opens and this little widget follows you from page to page.

Andrew: Right.

Doug: And when you got to like your thank you page of your shopping cart, there was only one button. You just clicked a button that said, “This is my conversion page.” And that was it, just like that, all the code was done behind the scenes for you. You didn’t have to worry about setting anything else up and now the system tracked anytime someone got to that page and that was your conversion.

Andrew: Meanwhile, Google Analytics was frustratingly hard and I always thought it was me, that I wasn’t smart enough to get it, that I wasn’t investing enough time in it, that I hadn’t taken this program or watched that video and in reality, it wasn’t me. It’s Google Analytics. Frankly, even to this day, Google Analytics, I think, is more complicated than it needs to be.

What you just described is super useful to be able to just go in and see where your customers came from. We eventually started using Clicky for that, but even Clicky, it’s not meant for that. Clicky is meant for simple analytics, but it does much more. All I want is, “This person came in, what happened?” Just let me see the story they went through and let me see in the aggregate the stories that many people go through.

All right. So you guys had this product. How did you get sales in the early days?

Doug: So we wanted to do all inbound marketing. So we did a lot of pay per click. We did a lot of just other forms of marketing to try and drive people to landing pages, learned a lot of good lessons about pay per click during that time. That’s really what we did, which I think you’re probably going down this path that inbound marketing was part of my ultimate demise at Spring Metrics, but—

Andrew: A couple of weeks into the launch, your board members come to you and they say two different things. Actually, one of them, I’ve got the quote here. Do you know what I’m about to say? What was it?

Doug: “At what point do you admit that this inbound marketing thing doesn’t work?”

Andrew: And we’re just talking a matter of days since launch?

Doug: Yeah. It was less than two weeks.

Andrew: Why did he say that?

Doug: That’s a good question. It was interesting because that first board meeting, it was a short period of time after we closed our round of funding. We were not doing anything . . . sorry, I just got a popup. Let me get rid of that. Sorry. We were not doing anything different than what we said we would do with the plan they invested in. I think part of it was everybody else on that board, all of our investors really came from direct sales kind of backgrounds. So where you really—the way you make sales is to have an army of salespeople dialing for dollars all day long. I think inbound marketing seemed too West Coast for our East Coast investors.

Andrew: I see.

Doug: It seemed ridiculous.

Andrew: They wanted a room full of people just calling strangers up, not even getting warm leads at all, not getting ads that lead to landing pages, none of that. That’s like HubSpot would do that, right? HubSpot would have content that got you to some kind of whitepaper or some kind of report. When you saw the report and you wanted to get it, you’d have to give them their name, email address, phone number, company size, etc. Then a salesperson would call you. They didn’t even want that. They just wanted salespeople calling from scratch.

Doug: Right. In fact, it gets worse much later because the second part of Spring Metrics was we created some systems that would help convert people on the site. So it was based on the data. So we could say if someone shows up on my site and they’ve been there five times but haven’t converted in this way, display this information. So you could say, “Sign up within the next five minutes and we’ll take 50% off whatever, whatever,” and then you click it and it converts.

So we had an opportunity to use our own technology, basically dog food it, to use inbound marketing to get leads and then use our own technology to convert those leads into sales and that to them seemed ridiculous.

Andrew: Why?

Doug: Because there was no evidence that it worked. They’re so used — there was a lot of, “That’s Silicon Valley hype,” talk.

Andrew: I see. They wanted you to go with what had worked for them.

Doug: That’s right.

Andrew: Right from the very start.

Doug: Yes.

Andrew: How long were you able to push that off and try your way?

Doug: Well, my response to this immediately was, “We’ve only been out a couple of weeks. We really don’t know if it’s working or not. It may not work. Why don’t we continue to use it? Let’s gather enough data and then we’ll analyze it, and if it doesn’t work, we’ll shift.” For some reason, they really didn’t like that answer. So we continued without salespeople for a long time. It was—

Andrew: A year?

Doug: It was close to a year, but I was gone about a year later.

Andrew: What was it like . . . Well, how did you get gone? How did you get pushed out?

Doug: Well, the full backstory, I think what started it was that board meeting because as soon as—

Andrew: That one within two weeks?

Doug: Yes because as soon as they left — and I’ve listened to enough Mixergy interviews that I know that I can curse — so I’ll tell you what actually happened. As soon as they left, I turned to two of my cofounders who were in the board meeting and said, “Holy shit, what just happened? And by the way, I’m fucked.” And they were like, “What are you talking about?” I just said, “For whatever reason, they have no confidence in the approach that we’re taking, in me as the CEO,” and I tried desperately to bring them onto the same side of the table as me over time. It never worked.

So I had always said I just want the company to be successful and if that means if one day me not being CEO will make it more successful, so be it, and I think putting that in the minds of a couple of my cofounders ultimately hurt, because what happened was we got to a point where the investors were saying, “We’re not convinced we should put more money into this. You need more money. I don’t know that we want to do this. You’re failing.”

Meanwhile, they’re all fighting amongst themselves. We had an investor in New York who was saying, “Stop trying to sell. You don’t have product market fit. Just get product market fit and then sell.” They were screaming at him all the time. It was dysfunction all around. So to try and solve this, two of my cofounders went to one of my board members to talk to them about the situation thinking they were helping me.

I’m convinced that first meeting, they both really believed they were helping me. They went and they said they were trying to help bring us together and at some point during the conversation, they said, “Are you guys saying you would invest if Doug was not CEO?” And I think that led to a conversation about the possibility of that.

So I heard about that obviously. Word got back to me, and I sat both of those guys down and I told them my view on what just happened, which was they essentially just signed my release notice or my pink slip, that I’m done. Both of them were very surprised to hear me say this. They didn’t understand. I just said, “You may not think you said this, but what they just heard was two of the cofounders are saying it’s probably time to replace Doug and we would be supportive of that.”

Andrew: Wow.

Doug: So I got them both to promise me that they would never do that again, that if they were going to talk to the board, I had to know about it ahead of time, not because I needed to control everything, but we should talk these things through. So one of them, Scott, who still works with me now and was from the Blackboard days, I think this really hurt him very badly, and he never went back and talked to them again.

But one of my other cofounders had another conversation with them about this that ultimately led to the board firing me. There’s no way they could do it without having a majority of votes on the board. This other cofounder was on the board. So he had to have talked to them and said, “Yes, I will support this so we have the votes.”

Andrew: So you know that the people who you went into the deal with basically turned on you.

Doug: Yes.

Andrew: Wow.

Doug: Yeah. I would say one. It’s not plural. I think the person that went back again and ultimately said, “Yes, I will be supportive of this,” I want to say I don’t think he had any bad intentions, that he thought he was doing anything harmful. He thought he was doing what was right for the company. I do believe that. But I don’t think there was much regard for me as the CEO or me as a person.

Andrew: Why do you think that he thought you leaving would be better for the company?

Doug: Well, I clearly wasn’t able to get the support of the board.

Andrew: I see. “If you and the board aren’t getting along, the board members are more experienced. They’re the ones who have money. They’re definitely all insisting that this doesn’t make sense. Why is Doug being so bullheaded? Meanwhile, Doug said that if it’s better for the company that he leaves, that he’ll leave, so it seems like an easy solution.”

Doug: Plus, they had another person in mind to be CEO that had just come here, had a bunch of West Coast exits, much more experienced than me. The fact that he would even agree to be CEO of such an early stage company seemed like a big win. So I think it was easy for them to say, “We could replace Doug with Doug 2.0, much better, 5.0, 10.0, much better.”

Andrew: Let me take a moment to tell people about Toptal and then we’ll come back to the story. I’ve been saying for months, actually years now, that Toptal is a great place to get a top developer because that’s how they started. They recruited the top three percent of developers out there and they made sure they had the top three by testing them. There’s something else. If you’re out there raising money, you should hear about the story of one Toptal customer who didn’t go to them for developers.

He was going to get funding for his company and couldn’t get much traction. He couldn’t get the valuation that he thought his company deserved. So, he went to Toptal and he said, “I hear you guys also have MBAs.” They said, “Yeah.” He said, “Here’s my issue. Do you have someone who could help me with it?” They said, “Yeah.” They found him a fundraising expert, which I didn’t know they had, to work with him on the pitch deck to not change the company but to change the way he presented the company, to organize the numbers.

As a result, he was sending out a clearer message to his potential investors and from what I heard from Toptal internally, he got a massive return on his small investment by hiring someone from Toptal.

So I don’t think Toptal is the place to go if you’re at a place where you can’t say, “I can’t raise money. I’m going to go to Toptal. They’re going to cure everything for me. Save your money. That’s not the place to go.” But if you’re in there and you need more help, like getting your spreadsheets in order, getting your pitch deck in order and you’re finding that’s not your strength, Toptal has MBAs to do that.

If you’re someone who needs to figure out pricing and that’s not your strength or you want a little bit more thought, a little more math behind it, Toptal is the company to go to. In addition to developers and designers, they recently acquired a company that just decided to focus on MBAs. Some of them are entrepreneurs who are in between gigs who are looking to do something creative and stay sharp.

Some of them are people who are right out of school who understand a lot of the work that they learned in school who are looking for some work where they could use this. Some just decided, “You know what? I don’t want to work at a major consulting company. I want to live somewhere where I feel happy and do the kind of work that I would do if I was working for a major consulting company.” So these are MBAs. These are people who understand the business side of business.

If you’re looking to hire them, a pricing expert, a revenue expert, a fundraising expert, a pitch deck person, Toptal is also the place for you. I know I mumble the name sometimes. It’s Top as in top of the mountain, tal as in talent, Toptal. They have a special offer for Mixergy listeners and I’m going to give you the URL so you can see it for yourself. It’s Toptal.com/Mixergy.

Don’t worry if you’re not sure if it’s the right fit for you. They will turn you down. They’ve turned down a lot of Mixergy listeners who then complain to me. I’m happy that they do it. I’m not going to tell you they’re wrong to turn you down. If it’s not a good fit, I’d rather they didn’t take your money and told you right away even if it means that it hurts your feelings. If it’s a good fit, you’ll be able to talk to them and work with them to find the right person for you. Go check out Toptal.com/Mixergy.

All right. When you got fired, what was the offer that they came to you with?

Doug: Yeah. And by the way, this was after what you led with, that whole story, that email I received where the investors said I wasn’t supposed to get it, which caused weeks of scrutiny and fighting amongst everybody. It was insane. Basically, what they said was — so they had an advisor, a company advisor who I was very friendly with and I trust and respect. He called me.

The board couldn’t even bring me in and say, “You’re fired. We’re voting on it.” They couldn’t vote in front of me. This other person called me to say, “The board wants to fire you. But they want you to stay for three months to help bring the new CEO up to speed, train him, get him ready to be successful, etc. and, during that time, you can’t look for another job and we’re not going to pay you and you can invest anymore of your equity.” That was the compelling offer they made me.

Andrew: Basically, “Work for us for free and get nothing in return, not even equity that you won’t be able to benefit from years later. We want to even take that from you.” Why would they come to you with that offer? Why would they think that you would take it?

Doug: Well, they knew I would take it because I was so invested in the company. I started the company. It was my baby. I had friends that were there. I wanted it to be successful. So they knew they could basically screw me over and I would put up with it because I wanted the company to be okay.

Andrew: And did you put up with it?

Doug: So not exactly under those terms. I did negotiate a small amount of pay. They absolutely refused on the equity. I said, “There’s no way I’m not going to look for my next thing during this time. If you want to be vindictive towards me for whatever reason, I still have no idea, but you’re being vindictive towards my family now and that’s not acceptable.”

Andrew: So you got a little bit of money and you’re able to look for other work.

Doug: Yes.

Andrew: What happened to the company after you left?

Doug: So they never really grew. They never really found their path and never got any more successful than the day they fired me. The company still operates today, although I don’t know that it has a path towards success at this point.

Andrew: I’m not sure what it does. I think it’s called Spring Engage, not Spring Metrics. They don’t do analytics according to their website, at least the homepage. They’re courting hotels and I’m not sure how.

Doug: Yeah.

Andrew: Wow. You know what? The disappointing part was it was a good product. It’s really hard to make analytics work. First of all, you’re sucking in a lot of data, and second you’re trying to take complex information and make it clear for somebody who doesn’t want to get sucked into data on their own site. That’s really hard to do.

Doug: It’s very hard. I mean as I look back, I probably had no chance, none.

Andrew: Why?

Doug: I think a lot of it had to do with the pitch that we made to bring in a certain type of investor that was really focused on revenue. I know better now. I know what could have helped is to say in the very beginning, “You should expect zero revenue for some period of time.” And we didn’t do that. We said there was going to be revenue right from launch, small amount. In their minds, it became a revenue play right from day one. And because it couldn’t be and they were not the type of sophisticated later-stage investor that might be able to say, “We get it,” like the guy in New York stopped selling. They were never going to go for that.

Andrew: So it’s picking the wrong expectations before you launched.

Doug: Yeah. So, look, let me be really clear. They were the wrong investors, but I’m the one that pitched them with my pitch and I’m the one that said yes with my cofounders, but really I was the CEO, that said yes to taking their money. So, as shitty as they treated me and as much as they contributed to the downfall of this company, it ultimately comes back to me saying, “Thank you for your money. You now have a board seat.”

Andrew: You know what, though? At that point, we knew that you need to let the founder just run the company. They hadn’t put . . . How much money did you raise?

Doug: It was under $1 million.

Andrew: They didn’t put that much money into it. Don’t get me wrong, $1 million is a lot of money, but it’s not that much to invest in a company and not let the CEO just run it, not let the founder just figure it out, right?

Doug: Yeah. You’re right, like $700,000, a little under. And to not give it—let’s give it a year. Let’s not get in the way. And here’s the other thing I learned at Blackboard, which I know much better now also is about the value of the team and having a cohesive, high-functioning team. We could have worked very well as a team if we were left to just focus on building that product to be successful. I think we could have done a lot. We just never got the opportunity.

Andrew: So you’re saying go after different investors, tell me a little bit about the background of these investors. I know I could look it up, but I don’t want to reveal anything you don’t feel comfortable with. What were they?

Doug: Yeah. Certainly, I have no interest in throwing them under the proverbial bus.

Andrew: Were they professional investors? Were they people who had businesses before and just had a little bit of money? What was their background?

Doug: One was a professional. The person in New York was a VC. The local guys, one was really a professional investor. The other two were essentially angels.

Andrew: Was it the professional investors who were hardest on you or the angels who were part-timing it?

Doug: I would say it was the local guys, all of them.

Andrew: All the local guys. I see. I get it. I’m picturing somebody listening to this saying, “Hey, pick the right investors.” It makes sense, but I’m just getting going. I can’t pick my investors at this point. I’ve got to take whatever I can and then I’ll figure it out later. What do you say to that person?

Doug: Yeah. I say it’s all really easy to say until someone slides a check for $250,000 across the table and you know if you don’t raise money within a certain time frame, you don’t have a chance to make your company a success. It’s very tough. And at the time in particular, I think there was so much hype around TechCrunch and Dropbox was taking off and all this, that there was this sense that entrepreneurs could go get money from anywhere. There are going to be checks coming out of the sky falling into my lap. That’s just not true. It’s hard work to get anybody to give you real money.

Andrew: All right. And it still would have been worth it to put that hard work in just to see the software grow. I’m so disappointed the software didn’t grow. Let me ask one last question about this. It feels like there was a period there were analytics companies were really big and then people just stopped caring about analytics. I wonder why. Why don’t I see more Kissmetrics success stories or Clickys or anything like that? What happened? Is it that analytics just got wrapped up—is it that Google Analytics swallowed everyone up or people stopped caring about it?

Doug: Yeah. I think Google Analytics swallowed a lot. That’s for sure. But also, analytics in and of themselves don’t have that much value. You need to be able to do something with them to get real value, right? Which is why we were trying to go where we were trying to go. I think you see more intelligence companies coming out since that time. So BI has become a much bigger thing. How do we just take the numbers, not just get you the numbers, but then convert it into something actionable that will help you make your money, grow your business, etc. So I think it shifted to BI.

Andrew: Yeah. You know what? We signed up for Baremetrics to get a sense of what the lifetime value of our customers is and how many customers we were getting each month and so on because Stripe doesn’t give you analytics. Analytics is so hard, they decided early on we’re not going to be in the analytics business. We’ll have good APIs that allow other people to do it.

I remember talking to the founder saying, “I really like how much information you’re giving me and it helps me understand, but I’d love it if you told me what to do. I’d love it even more if you did it for me.” Then there are other companies, I think it’s—why am I blanking on the name? Springwell? Anyway, we’re using a competitor that did that and now I see that Baremetrics is moving into that space.

Doug: Yeah.

Andrew: All right. No, it’s ProfitWell that does that, that does more action, like if somebody’s credit card fails, they’ll follow up with them and help recover the money and they only charge you a percentage of the recovered money.

Doug: Well, Andrew, I will tell you that there was—even though it was a short period of time from the time we’ve closed our round of funding to the time that I was no longer there, that might have been one of the best educations I’ve ever gotten on how to—well, just in general, because there was so much bad behavior, just shocking things that I think if I made a movie about this, people would not believe it.

Andrew: Like what?

Doug: All the stereotypical bad stuff that you can imagine happened and it made me so aware of what I need to do the next time and what kind of situation.

Andrew: Like what?

Doug: Well, you mentioned that email. So that investor insisted he was just replying to another email and that’s how I got included, which of course was not true because the whole thread was there and I was never on any of them. So I think if you had said ahead of time that investors would do stuff like this, there’s no way I would have believed it. It just seems so absurd and frankly vicious, but I learned about what real money is involved, what kind of things can happen, how other people respond to them, how I can respond better.

I learned the value of team, team, team. But also I learned about how to put together a much better board and how to behave better with the board. So my investors now, we are so unbelievably transparent. They know everything that’s going on because I don’t want them to be surprised by anything at all. Maybe I over-communicate.

Andrew: All right. You know what? Let’s just shake off the last story. To me, it’s sad. I love that company. I get it. All right. Let’s talk about TransLoc. I think TransLoc is a company that is easy for people to dismiss in the audience because it doesn’t sound like a fun product, but that’s kind of like dismissing Uber back when it launched because it’s just in the transportation business. We’re looking at something that has deep impact on people’s lives and on the world in general.

Doug: Yeah.

Andrew: You had this opportunity come to you and you were hesitant. What were you thinking? Why didn’t you say, “Hey, you know what? I should just get a job. This whole entrepreneurial thing burned me out. Let me go and relax a little bit somewhere. Why was it a question?”

Doug: I did say that. My wife didn’t like that answer.

Andrew: Because you were a father at that point, for one thing.

Doug: Yeah. I made basically no money at Spring Metrics. We barely paid ourselves anything. I’d been in the hole for a while. Honestly, I was so destroyed from the whole Spring Metrics experience that I said I wanted to take six months, get my head together and then figure out the next company I’m going to start and she said, “How about six days and then go get a job?” And she couldn’t understand why I would put myself through that again. Again, I identified as an entrepreneur. I didn’t know there was anything else.

But yeah, so in that three-month period, when the board fired me but wanted me to stay, I told a handful of friends that I was going to be leaving. One of them told me about TransLoc. You said easy to dismiss. I completely dismissed it because I said, “What do they do?” And he said, “Transit technology.” And I said, “Oh my god, that sounds terrible.” And he said, “No, go talk to them. There’s more to it.” That led to a meeting with a board member, which led to a meeting with the founder and I really saw the potential of what was there.

Andrew: What did they explain that helped you understand that there was potential here?

Doug: Yeah. So, at the time, it was tracking. That’s what it was.

Andrew: Not for users. It was for municipalities, for people who were running the transit system to know where their buses were, where their trains were. Am I right?

Doug: That’s right. It was mostly university bus systems. So we could put sensors on the buses, do our dispatching, make sure the buses are running well. Then we were the first company to give riders an interface to see buses moving in real time, get arrival predictions, know exactly where the bus is, not stand out in the cold and rain wondering where it was. That’s what it was.

Andrew: Yeah. By the way, I never would have understood that until my wife got a job working for Yahoo and the bus to Yahoo is about an hour and a half. She can look on her app and see where is the bus and if he is running late. Sometimes it can be as much as half an hour in cold weather. She might as well stay home for that 20 minutes extra and then go run out to the bus. That alone is huge and you don’t expect that kind of thing from a bus service. You expect them to say, “Hey, you’re the passenger. Sometimes things happen, just deal with it.”

Doug: Exactly. Josh was the founder and he really talked to me about the sustainability aspect of what we were doing. If we make this a great experience, we can get cars off the road. That was great. That resonated with me, but not as much as the impact on people. So I dug in and started learning about transit and was pretty—this should have been obvious, but I never rode a bus, really.

The number of people that ride transit every day and have such a bad experience not because the transit agencies are not trying to do a good job, but just logistical issues—people that may not be able to afford a car or can’t afford Uber, there was no Uber at the time, that have to spend three hours a day each way to and from minimum wage jobs and if they miss a transfer, they lose their job. I hadn’t thought about that.

So it seemed like there was so much opportunity to do better and help transit agencies do better, which they want to do, and help those people have a better experience than they’re having now. That just seemed like a no-brainer to me.

Andrew: Okay. So you get in and what do you find there as you start? What’s the title you took when you started?

Doug: GM of Products and Services.

Andrew: Okay. And then what was the company like on the inside? What did you notice that you didn’t see before you started?

Doug: Yeah. So the company was—Josh was still the CEO, although he was not running the company. He hired myself and one other person. We were peers. We were both GMs. He ran the sales and finance side. Josh said, “You guys run the company. You’ll do great.” There were 14 people in the company, ballpark. Only one was a salesperson and he split his time between sales and support.

What I found was although Josh believed — he wasn’t lying in any way. He thought the company was really healthy and really just needed to scale. It turns out that the company was in very bad financial health, not going up. It was going down. And the culture was totally toxic.

Andrew: What do you mean by toxic? What’s an example of that?

Doug: Well, an example was after I came in, some of the engineers basically just said I was a puppet for Josh and what we should do is all walk out of the company together so the company goes under.

Andrew: Oh wow. Why? Why would they say that? What happens at a company where people want the company to go under?

Doug: Well, it was because there was real friction between the founder and the people that were there. It was not a company filled with experienced startup people. It was a young company, first jobs for many people. I think they thought they were getting into one thing and they got into something else. So maybe they think taken advantage of or lied to or there was something negative that just brewed and when they made a leadership change and brought Daniel and I in there, it just did not sit well with anybody.

Andrew: I see.

Doug: I shouldn’t say not with anybody. There were some people that were very happy, but there were definitely some that said screw this company.

Andrew: Okay. Josh wasn’t working there day to day. He was basically working outside the office, not experiencing all this frustration that people had internally.

Doug: Yes.

Andrew: And at one point he said, “You want to take over, don’t you?”

Doug: Yeah. So I told him, “It’s fine to have Daniel, my peer, to run the company. That’s fine. But you’re not acting as CEO and this company eventually needs to have a CEO, singular vision, etc. and don’t ask me because I don’t want to do it.” He said, “Yeah, whatever.” And I kept saying this over a long period of time. Eventually he said to me, “I know what you’re doing.” He said, “All your psychology mumbo jumbo, this is a trick so that I will ask you and you’ll become CEO.” I said, “If you ask me, I’m going to say no.” And you know, they asked me and I said no.

Andrew: I remember those phone calls too. And instead Daniel became CEO?

Doug: Daniel became CEO. It was for a short period of time. Sorry, I thought I turned all these popups off.

Andrew: Yeah. We’re running a bit behind too. This is going a little longer because I want to get everything in.

Doug: It’s okay with me. I’m not sure—

Andrew: I’m okay with it. Everyone on the team who’s waiting for me knows this is more important. So Daniel became the CEO. How did the company fair with him as the CEO?

Doug: I think it just didn’t go in the direction that Josh wanted the company to go. So I have no ill will towards—

Andrew: But he did hire salespeople, Daniel did?

Doug: Yeah.

Andrew: You went from one salesperson, Daniel started bringing in a sales team, but there was an issue with payment.

Doug: Yeah. That actually happened even before he became CEO. He built a sales team and he instilled a methodology there and much credit to him, we turned that company around and we got into a good financial situation in large part because of him.

Andrew: I see. So what Michael told you back when you were leaving Blackboard actually was true here too — got a problem, hire more salespeople to help solve it.

Doug: Yes.

Andrew: All right. He did solve it, but there were problems with that from what I understand and one of them had to do with commissions.

Doug: Yeah. I think we got into a situation where we had built up a good — again, we were still bootstrapped so we needed our revenue to live on and I think we became pretty aggressive, but we got aggressive with Daniel as CEO. We got aggressive to the point where it was not sustainable and cash flow became a problem. We had more money going out faster than we had money coming in from the deals we were getting. We signed a deal with a government agency or university and it takes time for that money to come in.

So we got back into an unhealthy financial situation. But I think equally important was it was still being run like a lifestyle business. I told Josh I thought there was a lot more opportunity. I had always said that. So, when we got into the situation, he thought it was time for a change and I said no.

Andrew: I see. Okay. What happened then that led to you being a CEO?

Doug: Yeah. So I’m not trying to rehash this, but for clarity, we got into a bad financial situation. Josh did some digging. I said — Josh and Jason, who were really the board — I said, “Talk to people in the company. Figure out the path you think is best and if you think me leaving is the best thing, I’ll be done today.”

Andrew: Again, you said, “If you need me to go, I’ll go.”

Doug: Go, no problem.

Andrew: All right.

Doug: Because I came into the company thinking I was going to be here two years, get my head together and then I’ll go start something because I’m an entrepreneur.

Andrew: I see.

Doug: So I said, “Okay, do that.” They did some digging. They came back and said, “Yeah, this is a problem. We believe we need to make a change. You’re the new CEO.” And I said no. We went back and forth for a while, multiple times. I said, “I’ll help you find an interim CEO. I don’t want to do it.”

Eventually, I kept saying it’s a no-brainer. Even though we’re not in a good financial way, I know we will be. They basically said, “If it’s such a no-brainer, why won’t you take it? What’s your rationale?” I said, “Let me take a step back. Let me figure this out. Let me talk to some friends like you and some others that I respect and knew would help me think this through.” As I started to verbalize my reasons for not wanting to take this job that I thought would be something really good, it became evident pretty quickly that my reasons were just kind of silly.

Andrew: What were your reasons for not doing it?

Doug: Well, I think first and foremost was I didn’t start the company.

Andrew: Yeah.

Doug: So I’m an entrepreneur. How can I be a CEO of a company I didn’t start? That’s not what an entrepreneur is.

Andrew: Yeah.

Doug: I don’t think that’s true. It was that quick, right? We had a couple of conversations and I was like, “Yeah, I need to do this.” But I only did it under the condition that we changed from a lifestyle business to a growth company, raised outside capital, completely redid the organization, launched a whole bunch of new products and went a different direction.

Andrew: What’s a different direction?

Doug: So I shouldn’t say a different direction—a bigger vision.

Andrew: I’m looking at an early version of the site. The early version of the site explains TransLoc in two sentences, “Riders get a safe, comfortable and convenient wait for the bus. Transit operators get a more efficient and appreciated transit system.” That’s it. That was the scope of the business.

You said, “We have to do more. We have to,” like as you were telling me before, give people an app where they say, “I want to go from point A to point B,” and we figure out how to get them there and if that includes a bus, great, if that includes an Uber somewhere along the way, we’ll take care of that too, but we’re going to get them from point A to point B and we’ll take care of the software and the payment for them.

Doug: Yeah. So we knew we had to launch new products. Rider agencies had no idea where their riders were, where they were going. We said we can fix that. We can help transit agencies run Uber-like services themselves with their own buses. But really the bigger vision was let’s stop thinking about, “Should I take a bus or should I drive? Should I take an Uber?” No.

Why don’t we bring everything together, fully integrate everything, make all the modes of transportation work seamlessly together so that all you do is put in destination and we say, “This is the best way. Take a bike to the bus, the bus to an Uber, you’re done.” You say, “Yes, that’s what I want.” The tracking, the payment, the hailing of Uber everything happens magically behind the scenes. You have a great experience. That’s what I said we should be going after.

Andrew: You raised how much money?

Doug: So we raised a little bit more than $8 million.

Andrew: From — I don’t know how to pronounce their name — Fontinalis Partners and SJF Ventures?

Doug: Yeah. So Fontinalis is Bill Ford from Ford Motor Company.

Andrew: Oh, okay.

Doug: That’s his VC firm which focuses exclusively on mobility solutions. SJF, which is a local investor, one of the only ones that I said I would have as an investor locally after my last experience.

Andrew: They’ve invested in a lot of companies that—I thought they were outside, that aren’t local. I thought LeadGenius is actually here in San Francisco. They invested in Voxy, which a few people who love it love it. That’s their way of communicating with their company.

Doug: They’re solid.

Andrew: What did you do this time? I remember when you came to San Francisco and you were looking at your options. What did you do this time to make sure you got the right investors?

Doug: Yeah. Also Marc Benioff invested through his Efficient Capacity Fund, which was [inaudible 01:12:11] for us.

Andrew: Oh, he did?

Doug: Yeah.

Andrew: Okay. I didn’t know that. That’s not on Crunchbase.

Doug: Yeah. It should say Efficient Capacity and that’s his vehicle.

Andrew: I see it now. Yes, I do see it. Yeah. What did you do to get the right investors? It was on you now. Now you’re the CEO. You were going out making the rounds. You were the one putting the sports jacket on.

Doug: Yeah. Really, we wanted to make sure that we had investors that understood our vision and our history. So maybe I spent too much time with them talking with them about let’s be clear about where we’ve been and the fact that I was basically considering us a one-year old startup. We had to redo the organization. It was messy as could be. We had problems all over the place. We didn’t know what we were doing in lots of areas. It’s going to be sausage making for a while. If you think you’re getting an 11-year old company that has it all figured out, that’s not the case.

So it’s really about being very open and transparent with who we were, with what our vision is and where we’re going, but also, as you can see, with someone like Fontinalis, they’re exclusive to mobility. So they were right at the top of the list where we said we want someone that understands our space completely, not just someone who’s been successful like our previous investors.

Andrew: What about this though—you want to be thought of as a new company and at the same time, you’re not a new company, you’re not a startup, right? That’s a really confusing place for investors to be. They either invest in new companies or they want to invest in companies with track records that have been around for a long time, but that in between has got to be tough, isn’t it?

Doug: We had a hard story to tell. That made it difficult because who were we. You’re not taking off. I’m telling a story that we’re about to take off and they’re like, “Doug, you’re flat. We don’t see the curve has changed.” So our current revenue and our history was really holding us back. And they would say, “Oh, you’ve got these new products. That’s great. But we don’t know if they have product market fit. So why don’t you come back in six months when you’ve got product market fit?” So we were right in between. We were in the belt. That was a really rough place to be.

Andrew: How did you get them to understand it and feel comfortable with it?

Doug: Yeah. So we really toyed around with different stories. So, on the one hand, we stopped talking about future vision for a while, but then we really felt like, “No, we’ve got to sell the vision.” What we need to do is make sure that we’re changing the curve as quickly as possible and we’re continually updating everybody about it.

So I put together a list of all investors that I wanted to talk to or had talked to and sent regular updates and said, “We had told you we were going to start selling and getting product market fit and look, this is happening and I would [inaudible 01:15:12] and what was going on.” That helped make sure people were engaging and staying with us. That changed things.

Andrew: You said you were also restructuring internally. What did you do there?

Doug: Oh my god. We’ll have to go for another hour there. We really didn’t have a lot of process. We didn’t have a finance team. We had to completely redo the sales team to start selling in a different way.

Andrew: What’s a different way that you got them to sell?

Doug: So we really wanted to be seen more as a SaaS organization. So we really needed to get people that understood how to sell SaaS, which is a different sale than a consultative sale. We were very much a consultative sale at the time. So we had to basically get different types of sales people to sell in a different manner.

Andrew: A consultative sale, I get it, but you can sell SaaS in that consultative way, can’t you?

Doug: Yeah. In fact, it worked really well for that time and got us to where we are, but now we have to incorporate a consultative sale again and it’s working extremely well.

Andrew: But when you weren’t, you wanted someone who just wouldn’t spend time helping municipalities understand new software and their transit system. You just want someone who would call them up and say, “Here’s our software. Let’s talk about how it fits in with your organization. If you need it, we can bring it in.”

Doug: Yeah.

Andrew: Less teaching them how to restructure and modernize, more selling.

Doug: Yeah. And we wanted to have more of a more robust marketing team that can drive more leads to sales that can just do demos that we could flip the software on really quickly, that sort of sale.

Andrew: How did you get leads for them?

Doug: Oh my god, it feels like I’m going back to Spring Metrics. We did a bunch of webinars and thought leadership and inbound marketing stuff.

Andrew: I see. Then all of that would lead to somebody filling out a form online and that would go to a salesperson who would do a demo and then a demo was where you’d get the sale.

Doug: Yeah. Now, we were concurrently doing outbound calling and building pipeline in sort of the direct line way.

Andrew: I see. Yeah. I’m on your website right now. I’m looking to see where would somebody who wants to sign up sign up or ask for a demo? There it is. Okay. As soon as I look at one solution, there’s a request demo link that comes up.

Doug: They’ve got 30 seconds to call you.

Andrew: Really?

Doug: No. I’m kidding.

Andrew: Do you guys have something like that where people need to call while the person is still on the site, essentially?

Doug: Absolutely not.

Andrew: Okay. You also said you needed systems. What’s a system you needed to put in that you didn’t have before?

Doug: Yeah. So I think there were systems like software systems where we just needed to get more professional like, “We don’t have Salesforce. We should probably . . .” We had Salesforce, we didn’t know how to do it there. We should probably get someone to help us set it up the right way, integrate it with an invoicing system, which we didn’t have, make sure we can invoice it at the right time. I think some of it was that. More of it was systematizing our business more, which we just really didn’t have.

So marketing team, I would say, “What happens when you get a lead and it goes to sales?” And the marketing team would say, “I have absolutely no idea.” I would say, “What percentage were closing?” No idea. “Why don’t you know?” We have no way of knowing. Just even the workflow part, but it was everything. We had to create a new vision. We didn’t have values. We had to create values. We didn’t have an established culture that we wanted it to have, so we wanted to build culture. I think it’s a three-year old startup.

Andrew: Yeah. I can see that. I can see it. At the same time, it’s got to be hard on the founder then because if you have a three-year old startup, you’re basically saying to him, “Everything you did up until now, we’re considering backstory.” And then his equity in the company might change because of it. How much did you have to work with him on that?

Doug: Yeah. So, Josh, he’s a visionary guy. So he always told me, “I just want the company to make an impact. I want it to fulfill its destiny.” His concern with me was often, “Are you visionary enough?”

Andrew: Oh really?

Doug: Yeah, “I want a visionary leading this company.” So we had to have a lot of conversation about, “I think getting to this point was amazing and what your idea originally completely changed everything. It was new. We have the opportunity to do that again in a huge way.” Once I was able to articulate that to him, he was on board with that.

Andrew: One of the things I love about the Hacker News community is whenever Elon Musk announces something new like The Boring Company and shows a video for TED about how it will take a car underground and then route it to the right place and then it will come right back up above ground to the streets, there’s always somebody that says, “Actually, that seems so inefficient. Why not buses? Why are we all getting in our own little pods still to this day and we’re wasting all this space because everyone needs to have their own pod because we love cars so much?”

I love when people say that because I do think — I guess it’s because I come from New York — driving to me always felt so inefficient. Every once in a while when I lived in Queens and drove to Manhattan, I would say, “This is the stupidest thing I could have done to get to the city. Not only am I stuck in traffic for a lot longer and we’re all looking around here stuck in traffic for longer, but then I have to come into the city and find a parking spot.” To me that feels like the future of transportation if we go the way we’re going. If we insist that everyone needs to be in their own pod on their own way to work and then the pod has to sit somewhere, it’s a big mistake.

But if we find a way to make the buses and the trains actually not fun — we’re never going to love it — but a more efficient way to get places, you’re going to find that you don’t need a self-driving car to sit and get work done on the way to work. I did it today. I sat on my phone and for 15 minutes on BART, I got a lot of stuff done. That’s one of the things that excites me about your business.

Doug: Yeah. The fact is that even as much as I love Uber and Lyft, they don’t resolve congestion. They add to congestion because it’s still one passenger in the car. Yeah, you have a driver. It’s still one car. So the reality is that the way to resolve this is to create this ecosystem and have transit at the center, which is our perspective because transit still is the best at moving big groups of people around. They move something like 15 times the number of people that Uber and Lyft move.

But if you can connect other modes with them and create a real ecosystem so that it’s super easy to press a button and get from one place to another in a way that gets the inefficient cars off the road, it’s a win for everybody.

Andrew: All right. I know you’re not going to tell me revenue. We talked before, you said, “I’m not going to.” Can you give me a sense of where the revenue is? Are we talking about $1 million to $5 million a year, $5 million to $10 million? Is there any kind of band that you feel comfortable sharing?

Doug: What’s the way I can say no, like in a loving way to you, Andrew?

Andrew: You just said it. How about number of customers?

Doug: We now have more than 260 transit agencies that are on our platform and growing faster than ever.

Andrew: And I’ve got the app here as a rider. It’s called Rider. How many people are like me who have it on their phones?

Doug: Yeah.

Andrew: Or use you guys for transportation?

Doug: Yeah, so many hundreds of thousands a day. So millions of people are using it to have a better experience and get some cars off the road as well.

Andrew: Sounds good. All right. The website is TransLoc, which is spelled T-R-A-N-S-L-O-C. The website looks really good. Before, it looked a lot like what a transportation company’s website would look like. Now it looks like what a SaaS company’s website would look like, especially that top hero image, which looks hot. Go check them out.

If you forgot the two sponsors that I mentioned, the first is Toptal. They not only do developers. Now they actually have business people. Imagine someone like Doug when he was in between positions just said, “I want to do something interesting, bring in some revenue while I try to figure out what to do next.” He could have, if Toptal was available, he could have been in Toptal’s network.

That’s the kind of people they have in their MBA network. I know you weren’t an MBA, but people like you often in transition periods in their lives are part of Toptal’s MBA network. Go check them out at Toptal.com/Mixergy. And if you want to organize a system around your sales process, the CRM that we use is called Pipedrive. Go check them out at Pipedrive.com/Mixergy.

And thank you all for listening and Doug, thanks.

Doug: Thank you, Andrew. It was great being here.

Andrew: Thanks. Bye, everyone.