Andrew: Hi everyone. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses.
I’ve been doing this for over a thousand interviews now. And as you probably know, my goal is to understand the entrepreneur, not just the facts, not just the same 10 questions over and over again, but to get a sense of where the guest is, how they came through some difficult hardships, how they figured out their business model, and more importantly, what we can all take away from this and use as we build our companies. Because my goal is to have you listen to these interviews, use what you learn, build up a great company and come back out here and do an interview, so you can pass it on to other entrepreneurs too. The circle of Mixergy as I call it.
And before we started, I was talking to the guest you’re about to meet, about how so many entrepreneurs, even close friends of mine, will just hide whenever something goes wrong and not talk about it and we seem to get this impression that everyone is doing well because when they’re not doing well we don’t know about it.
With that in the background, I’ll tell you that today’s guest will talk about it. She had a period there where as she told our producer, she was in the fetal position with $50 in the bank and I want to know what happened they got here there and what happened that allowed her to grow past it to bring her to where she is today with a successful company that we’re going to be studying here today.
Her name is Melinda Wittstock. She is the founder of Verifeed which identifies and engages relevant word of mouth influencers as your viral virtual sales force.
This interview is sponsored by two great companies. The first is a company that rebuilt our site. They started the whole thing off, created better search and better business for us because they brought us the best developers on the planet. It’s called Toptal, top as in the top of your head, tal as in talent. The second is a company that we use to help us find guests, help us close sales and that I recommend you use if you’re trying to close more sales. It’s called Pipedrive. I’ll tell you more about hose later. But first, Melinda, welcome.
Melinda: Hey, Andrew, it’s great to be with you.
Andrew: You know, I usually don’t like to go into what does your software do and so on because I feel like then we get bogged down and we sometimes end up with a sales message more than a story. But I want to make sure that I’m understanding what Verifeed is. So if I were using it at Mixergy I could use Verifeed sentiment analysis to tell me what? What would you allow me to understand and how would it grow my business?
Melinda: Well, you could think of us as like a fly on the wall. In any given day, millions of people are sharing so many details about themselves. What they like, their habits, their hobbies, their interest, just in casual conversations with their friends. And I’m not talking necessarily directly about wanting to buy something, although they may. But in those conversations if you know where to look and where to focus you can find real gems. You can help people find their customers who’s all out there that really wants to be listening to Mixergy right now.
Andrew: So you know by doing what? By analyzing what people are saying on Twitter, you can’t do Facebook, but Instagram I think is public, right? You would analyze these social networks, see who’s talking about something relevant to Mixergy and who then should be listening to Mixergy?
Melinda: Yes, exactly. So say for instance, we had a great example of this is a dog food company. So who are all the people out there who were talking about their dogs? I mean that’s probably the most simplest.
Andrew: Okay, now dogs are a huge topic of conversation. How do you then know who’s relevant, who you should pass onto your client, and who’s not?
Melinda: Exactly. This particular customer, it turns out that 23% of their followers on Twitter had dogs. And so they were really spraying and praying, they were talking before they hired us. They were talking to so many people that would never purchase from them. And so we were able to really hone it down, so they’re really talking to the people that are likely to buy.
Andrew: So if they find out that only 23% of their followers are actual dog owners what do they do at that point? What did you do for them?
Melinda: Yeah, so this is the interesting thing, is that they can start to actually understand who the folks are that actually own dogs, what type of dogs they own, they can start to personalize their message to those people, make those people feel very [inaudible 00:04:11]
Andrew: On Twitter?
Melinda: Yeah. You can personalize that [inaudible 00:04:13]
Andrew: How do you personalize it based on . . . can’t you on Twitter just post one tweet and then it goes to everyone or you mean by ads that are targeted.
Melinda: No, you don’t even need to use an ad. You can use the @mention functionality. This is something that Gary Vaynerchuk does all the time without technology. It’s just, “Hey @ so and so, you got a cute dog,” and you develop a relationship with that person, right? You show that you actually care about that person overtime.
Andrew: I see. So you tell them, “Here are the list of people who have dogs that are actually connected to you” and the kinds of dogs that they have. Now, you can @ them and do they manually @message thousands of people?
Melinda: Well, that’s hard to do that. It’s very, very painful and labor intensive to do that with so many people. So that’s why we really focus on scoring influence, really understanding who’s the most influential that if you personalize with 10, or you personalize with a hundred those people will bring their friends and their friends and their friends and their friends with them and everybody feels that they have a personalized experience because you . . .
Andrew: I see. And do you then hand them and say, “Look, here’s the list of 10 people who have dogs who are influential in the dog space or other dog owners care about what kind of treatment they have for their dog.” You tweet at them and then they’ll manually tweet?
Melinda: It can be that or it can be different sectors. It really depends. I mean there’s a whole bunch of people who like there are mommy bloggers who have dogs and little kids, and so perhaps content is going to be much more focused on how to keep your little toddlers safe with your big Golden Retriever or your Rottweiler or whatever, right?
Andrew: And they’re tweeting at them?
Melinda: This is the thing, right? So get the right content to the right person at the right time for the right reason, for the right impact.
Andrew: How else do you do it because I feel like Twitter is really being . . . it’s going down in effectiveness. It’s going down in the interest and popularity, right? Yeah, their numbers seem like they’re flat but in reality, I just see that it’s losing relevance. What else you do?
Melinda: It really depends on which market that you’re focused on. So I think that’s the popular perception of Twitter and it’s, of course, why we’re adding more and more social sources all the time. So we’re looking at how we can be much more relevant for instance on organic engagement on Facebook for instance. And so one of the things that we often do is we will figure out from Twitter because we can get at the individual data on Twitter. Anyone who’s on Twitter is also on Facebook, so if you can start to connect the dots you can start to really find a very organic way and even with paid ads as well.
Andrew: So you’ll help them find the person on Twitter who owns a dog, who’s an influencer and then give them their Facebook names so that they could mention them there.
Melinda: Absolutely. I mean the other way to look at this, Andrew, is when you think of how many times, and I know you’ve had lots of people on your show who do Facebook advertising for instance, which is awesome. It’s very cheap right now relative to what you can get. But it takes you a really, really long time to develop that funnel, make sure that you are reaching the right people, right? Hundreds of thousands of dollars to get that funnel right.
Now what if you could concentrate that into a much shorter period of time. What if you knew all the people who are relevant to begin with and you put those people into that funnel. You’re going to get, you know, a much bigger impact . . .
Andrew: How do you do that? Maybe I don’t understand Facebook ads well enough to say it, but I thought you needed to have email addresses or pixels in order to know who to target.
Melinda: No, we have all kinds of little interesting hacks that you can do that for finding people on Twitter. So once you have people’s identity on Twitter, once you know who they are. You can find them on, well, we can anyway.
Andrew: You can create a custom audience for me based on the people on Twitter that you found?
Melinda: Yes, we can.
Andrew: How?
Melinda: That’s kind of a trade secret but . . .
Andrew: Really?
Melinda: Yes. No, seriously, we can.
Andrew: But you find their email addresses and then you load them up as a . . .
Melinda: Yeah, in some cases. In some cases, because Twitter will not give us the email addresses. So there’s different things you’ve got to do. It’s a process.
Andrew: Right. That’s a manual process that takes a long time.
Melinda: It’s a process you got to hack. But say for instance when you’re building an ad on Facebook there’s all kinds of different things to do. Like I think a better way to explain this is that you’re understanding from what people are sharing on Twitter. So you’re understanding what keywords are trending, what phrases are trending, how people talk about things. You’re understanding a lot of the . . .
Andrew: And then you use that as each of your searches on Facebook to know who to target?
Melinda: It’s pattern recognition technology. So you’re understanding all the attributes of the people that you would be talking to for instance on Twitter and you’re building these segments, these audiences and you’re getting to know a lot about them overtime. So it’s not even so much that you need the individual identity, although when we do have that we do use that too. But you can build exactly the prototype audience you want because you know what content is going to resonate with them. Do you follow me? It’s complicated.
Andrew: I see. I do. And then so it’s not just ad-based it’s also direct messaging the right people and also, it’s the content that those people would want. You help your clients understand all of that. So if I’m working with you, you’d say, “Andrew, here are the top people that you should be targeting with direct messages. Here’s a custom audience or collection of audiences that you can go by ads on Facebook to reach, and Andrew, here’s a suggestion for content that you would write to reach the people that you want.” That’s what we’re talking about.
Melinda: Right, all of the above.
Andrew: Okay. Now, I did a site search on Google to try to find your pricing. I don’t see it. You’re one of the businesses where on the home page there isn’t a price list or a buy us or a sign-up button. There’s a schedule a conversation with us. What do you charge for all these?
Melinda: Yeah. It really depends. So companies come in all shapes and sizes and they all have different requirements and we offer a very, very custom solution. So usually what we do is we start with a very kind of strategic deep dive assessment where we look at how the company is doing on social media, we’ll do a full social media audit of how it’s going. We’ll look at their kind of strategic objectives and what they’re hoping to achieve, who their target customers are, we’ll go and validate that.
Often, we’ll find whole markets for them that they didn’t even know existed. We worked for a financial services firm not so long ago that was focused on retirement, a new retirement product that was going to disrupt the Wall Street fee structure or the hidden fee structure. And they were absolutely convinced baby boomers were their target market. And what we found in the Twitter data was something very different that actually it was millennial women aged about 25 to 35 were their core customers.
So we find a lot of surprising things often in the data and from there we set about developing the specific customer target lists and the influencer target lists and the engagement playbooks that the company will use or we will use on their behalf to start engaging people towards conversion.
Andrew: What about prices? Give me a sense of what it would cost?
Melinda: Yeah. So our assessments are about $7,500.
Andrew: Okay, $7,500 for the assessment?
Melinda: Yes. That’s right and the full audit and everything. And now, we also work either project based or retainer based. Usually, our retainer starts at about $2,500 a month and they are often a lot more expensive than that depending on who we’re working with.
Andrew: So if you do the assessment you’d be telling me who I’d be targeting at that point or is it afterwards that you tell me?
Melinda: We understand from the assessment who you should be targeting and what you’re doing wrong and what you could be doing better.
Andrew: I see, so the assessment is not just about how my social media is doing today. It’s also a strategy for what I could be doing with my social media going forward.
Melinda: Yes, it’s a very . . .
Andrew: And I could take it and use it? And in addition, I could also have you on retainer to help me continue this process that you’ve started. So I guess I thought when you said assessment that all you did was assess my current situation. You’re saying no, assessment of the situation and what you think we should be doing.
Melinda: Yeah.
Andrew: I see.
Melinda: We’re all about adding value. I mean I think when we think about our north star or how much can we 10X your conversion at the tenth of the cost, in the tenth of the time.
Andrew: I see.
Melinda: And, you know, we can’t always do that but that’s what we’re aiming for always.
Andrew: You know what I’m listening for as we’re talking is you do have a good radio voice, because it took us a little while to get connected on Skype and now I’m starting to think maybe we should switch away from Skype because Skype is giving us this much trouble. We might look for a more modern solution. But you do have a professional broadcaster voice. You were a host of NPR I know before you got into entrepreneurship. What were you doing on NPR? What were you hosting?
Melinda: Oh, my goodness, well, actually NPR is one of the last things I did. My broadcasting career really began at the BBC in London. I was a television news anchor to begin with. Actually, before that I worked for the Financial Times and I created their television programs for CNBC in Europe and Asia before joining the BBC. And I worked at ABC News. I anchored the overnight show with Anderson Cooper in like late ’90s.
Andrew: You anchored it with him?
Melinda: I did. Yes.
Andrew: So look at this, you had a really good career with Blue Chip brands. Why did you decide that you had to go and start a company? And I know that it had something to do with 9/11, but 9/11 sent most people away from entrepreneurship because the world was crazier and less predictable. Why did that send you to entrepreneurship?
Melinda: Okay. So, Andrew, my entrepreneurial career began when I was five.
Andrew: What were you doing at five?
Melinda: It’s just, you know, I went and knocked on doors with my black lab and ask people to prepay a dollar for my show, okay?
Andrew: And what was the show?
Melinda: My show was something, I used to figure skate. My mom was this Olympic figure skater and so I loved to like dance, music, and stuff, and I had this elaborate thing with like all these chairs set up and like a sprinkler and I did this whole routine, this little dance routine. I barely remember but I do remember asking people to prepay.
Andrew: So you walked door to door saying, “Will you pay?” And people paid you?
Melinda: Yes. And they did. I earned a hundred bucks, so.
Andrew: So to me if I saw that, I was wondering are you more of an entertainer who just craved an audience or were you more of an entrepreneur who happened to sell it or both? Was the entrepreneurial thing significant for you? That selling part, was that a significant step for you in your childhood, do you think?
Melinda: I think the thing that drives my entrepreneurial nature is really my desire to innovate. I like to see, like being Canadian and all, I like to see where the hockey puck is going, not where it is now to quote Wayne Gretzky. And I like to innovate. I like to create things that haven’t been done before and I like to solve problems.
Andrew: Okay.
Melinda: That’s the type of journalist I was too. I mean I joined the Times of London when I was 22 and I always wanted to know where the story was going next and why. Like what did it mean. I wanted to be first, I wanted to be right, and I wanted to be predictive. I really wanted to understand things and really kind of shape a better future through my writing and also through my entrepreneurships. So believe it or not, there is connective tissue.
Andrew: And I guess that first thing that you started which was Capitol News Connection back in 2002 kind of shows that. You had the sense that look, media is being brought to us by the BBC, by CNN, etc. In the future it actually will be . . . the people who are watching the media, the consumers we’re actually going to be producing, right?
Melinda: Yeah. I believe that . . .
Andrew: Which by the way seems like it makes sense today but I remember back then listening to, there was a woman named Bambi Francisco who was broadcasting online, do you know her?
Melinda: Yeah. No, I remember her.
Andrew: And it was like nobody, I never watched a single . . . as much as I loved entrepreneurship, I never watched a single one of her episodes because it took forever to watch it. It was on this small tiny screen and because no one talked about it because no one watched it, I didn’t want to watch it and talk about it either. And that was the state of media and I felt like anyone who was doing it was destined to fail.
And you walked to that situation, you say not only as Bambi Francisco onto something and you may not have said that specifically, but you said there are going to be a lot of people who are going to be creating in this world of broadband where it’s going to be. And that’s where you wanted to play a part in and what was the vision that you had in the business that you launched?
Melinda: Yeah. I really believed in personalization. I thought that content that was relevant to people, the past, the Why Should I Care test was really content that was grounded in conversation and actual authentic connection, and hence the name, Capitol News Connection. After 9/11 people were talking about our democracy and it was so important to defend, but then nobody was voting like nobody was really engaged in the process or even knew who they’re representative was in congress.
And so what can I do as a journalist to change that outcome. And I settled on a phrase of Tip O’Neill’s which is simple, “All politics is local” and I took that to mean “Yes, it’s personalized.” When people hear news that they can use, to use that phrase, it actually impacts them where they live and work and is information that’s actually valuable to them. What’s valuable to me might not be valuable to somebody else so hence the need of personalization.
So I launched Capitol News Connection and at that time, I mean things like MP3 audio was a new thing, right? Like an FTP system. So we were able to disrupt in many cases in a legacy media and create the bureau would produce, I think we produced more than 10,000 really high-quality NPR type . . .
Andrew: Oh, you produced it yourselves?
Melinda: Yeah, we did.
Andrew: Audio shows?
Melinda: We were a news agency.
Andrew: Where did you get the money, Melinda?
Melinda: We had raised it, probably raised more than $20 million for Capitol News Connection over the years and we had an interesting business model where we had sponsorship money for our, much like you do, you have sponsors, we had sponsors as well. We had more than 200 public radio stations as clients, paying clients. We had television stations as clients.
It was a news agency and we started selling to newspapers. And before long, digital properties. And through this process when social networking started to take off and there were concepts, new concepts like crowdsourcing. As a journalist that was fascinating to me, I thought, okay, instead of like two sources, I could have, what, like a thousand sources, I could have like 10,000 sources. It blew my mind. And I wanted to . . . I got more and more interested in the technology and how the technology could make that possible.
And the ultimate result of that with Capitol News Connection was an app that I created called “Ask Your Lawmaker.” That app grew to more than 3 million users in less than eight months in 2008 which you’ll recall was the year that people were pretty interested in politics. So that helped us quite a lot.
Andrew: Did you sell to PRI? Now as we’re talking I realized . . .
Melinda: Yeah, PRI. PRI was one of our distributors actually.
Andrew: I see, because, you know what, I’m searching for it, I now see a photo of you in front of the mike from back then. I see the website which looks very much like a website of that time, you know, with the tabs at the top that looked like tabs from like somebody folders. The how to listen tab links me to a bunch of local radio stations including, I lived in LA for a while so KPCC is where I might have listened if I was there. So I see, you said we’re going to go through the standard . . . sorry?
Melinda: We were heard on KQED in San Francisco, KPCC in Los Angeles, WNYC in New York, so a lot of . . .
Andrew: So it’s a newly produced content that taps into this group of people online who can help you assemble content for the news but professionally assembled and then PRI is one of the distributors. Let me take a moment speaking of sponsors to talk about my sponsor and I want to come back and find out what happened to this company and why am I seeing it on pri.org. PRI is Public Radio International. I hear their voice a lot on NPR.
But first, I have two sponsors in this interview and the first is the company that I used when my website was just out of date. And I’ve got to tell you, Melinda, that when you have over a thousand interviews, the challenge isn’t how do you get a thousand and one interviews, but how do you make the first thousand interviews accessible to people. And for me it was a lot of work. We hired different developers to try to figure out how can we organize this stuff and they were good developers but they kept looking to me to tell them what to do.
I finally said, you know what, I heard of this company Toptal, they weren’t sponsoring at that time, but I said, this guy says they have the top three developers, top 3% developers in the world, “Let’s just do it. How much is it going to cost me, a few thousand bucks to make my audience happy, let’s just do it.” So I go to the website, I put my credit card down, they only take $500 from me and they get on the phone with me. Phone? Let me pay you and move on. No. They want to get on the phone. So I say, “All right, let’s get on the phone.” And the first things they do is they say, “Tell me about the problem. Tell me what your site is built on.” I said, “It’s built on WordPress, the problem is no one can find my stuff.” And then they introduced me and my team to a developer. I say, “I don’t know if this is the right guy, introducing him to someone on the team.” The guy says, “He’s good, but let’s find a better match.”
We go back to Toptal, we say we want a better match. They bring us a second guy. This guy is fantastic. We start working with him. We expect that it’s going to take a couple of weeks to see his first result. He completely rethinks our search, real time search where you type something in, tagging, the works, it looks so good. I mean the technological part of it was so good. I knew it was going to be a game changer for Mixergy and we had to rebuild our whole site around his search.
And today if you come to Mixergy you can search by topics, you can search by categories, you can search by interview [inaudible 00:21:46] etc. all because we started working with Toptal. They did not say, “Tell us what to do, we’ll go code it, like a bunch of robots. You tell us the problem, we’ll find a solution, and we’ll develop it like a bunch of experienced engineers.” And in fact, in this case, we just needed one. So if you’re out there listening to me and you need a problem solved, you need the engineer who could understand your problem and help fix it. What is that sound? It looks like something is going on . . . is that one of your dogs?
Melinda: Yup. I have a Golden Retriever and she likes to go in and out and my son . . . working from home today so my son was going in and out, they like to play soccer and baseball together.
Andrew: I see. That’s cool. I’ll wrap this up by saying guys, if you’re out there looking for the best developers out there you should go talk to Toptal as I have and so many other people who listened to me have. And when you do, go to this special URL that I’m about to give you because that’s how you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to their no-risk trial period of up to two weeks. Go to this URL toptal.com/mixergy. That’s top as in top of your head, tal as in talent, .com/mixergy. That’s the only place where you can get that offer. I’m grateful to them for sponsoring.
What did happen to the company?
Melinda: So really interesting, actually, when I go back and I think about Capitol News Connection because we ran for about 10 years and it was organized as a nonprofit which I really, really regret like when you look back at your I guess, kind of mistakes, they are never mistakes in the moment that you make them. Our first funding came from the Corporation for Public Broadcasting which was awesome so we got this great amount of seed money, and we were able to kind of run. But with those sorts of government or quasi-government grants come very, very tight restrictions on how you are allowed to use that money.
So for instance, [inaudible 00:23:42] what happen like I get a great deal on insurance and I’d get, like I’d have to pay less on the insurance bill and then we’d report that and they’d say, “Oh, well, we’re going to deduct that portion of your grant.”
Andrew: Oh, because you saved money that has to come out of the grant?
Melinda: Because you save money like . . . and there were all these kind of weird things about it. So when it became time to really pivot and become much more of a digital company which we were aiming to do. They kept saying to us, “No, actually, stick with radio. Stick with radio.” We’re like, no, no, you don’t understand. We have to move faster like sites like Politico launching, we had all these ideas of how we we’re going to be a very [inaudible 00:23:42]
Andrew: Yeah. I think even . . . except for snippets, I couldn’t go and download older episodes from your website. It was basically like you said a radio-based network.
Melinda: Yeah. We were very, very constrained and that became . . . that really [inaudible 00:24:35] for me, you know, as an entrepreneur where you really want to go and you want to go chase the market. And after a time, I mean particularly after 2008, 2008 and the whole financial meltdown was an absolute disaster for the company because it took a little while before it hit us because the public radio stations, most of them lost their endowments, most of them lost a lot of their funding, all the sponsorship dried up for everybody. I mean, you know, it really, really had a major [inaudible 00:25:08] effect for us.
So we carried on for a while but I ended up selling the company and I went in pursuit of what I really wanted to do then which was innovate technologically. And so the next company was called NewsiT and on NewsiT this idea that with one of news . . .
Andrew: Before you go into what NewsiT is, I got to ask you about the sale.
Melinda: Yeah.
Andrew: How much did you get for the sale of the business?
Melinda: I can’t say.
Andrew: You can’t say?
Melinda: No.
Andrew: Did you become a millionaire personally from it?
Melinda: No, I did not, I wish.
Andrew: All right, especially now that I guess considering all the grants and all the obligations that go with that. Okay. So you were just starting to say what NewsiT is and you held up your phone, why?
Melinda: Well, because it occurred to me as a journalist with iPhone Android technology that anybody can contribute to the news but not everybody could be a good journalist. And I said about creating the backend technology that would really allow for crowdsourcing of content and crowdsource collaboration in a very socially networked way.
Now, remember, this is 2010 at this point and mobile UI was like a new thing. Big data was a new thing. Algorithms that could curate big data curate. And we were using algorithms to do fact checking and source reputation and a whole bunch of things while trying to innovate mobile UI and build ambitiously a business model that was going to not make any money for a very, very long time like a SnapChat or an Instagram, right?
Andrew: Right.
Melinda: And we were in the exact wrong location to do that, Washington, DC, where startups like this, I mean really revenue is the indicator that funders look for. So as a result NewsiT was always, always undercapitalized. I mean it did some great stuff. We had a lot of user traction but I remember going for our series A round and having a meeting with a quite well-known VC in New York who said, “Well, hey, Melinda, that’s great. Somebody is going to do that.”
Andrew: I’m right here in front of you, why not me. Why not?
Melinda: I asked, “Why not me?” And the best I could get as the meeting came to a close was, “Well, we invest based on pattern recognition.” And I’m like, “That’s interesting,” because we use pattern recognition in our [inaudible 00:26:04], right? So that should be a no-brainer. But, in fact, I mean, as I walked out I was kind of stirred out of the room and I was walking down the street in New York and I was thinking, “Pattern recognition, let’s see.”
Okay, so I’m not 20 something. I didn’t go to MIT, Stanford or Harvard. I did not drop out of any of those schools. I didn’t invent like a new technology. I figured out how to apply things in a different way. Oh, and I don’t eat ramen noodles because they have too many carbohydrates. So, well, like I’m a woman, I don’t know, right? But we could never get the funding we needed to really kind of run with that and it brings me back to your introduction of how I got to be in a fetal position with like [inaudible 00:28:15]
Andrew: Yeah. Before we do, I’ve got to tell you the pattern recognition is now being recognized as one of those phrases that depending on your point of view they either don’t recognize they’re using it for to be stereotypical and just look for young, white men from the U.S. or Canada. Or they either recognize that they’re doing it or they don’t, but either way it’s wrong and I’ve been listening to Kara Swisher a lot go off on this stuff because she thinks they do recognize it.
They’re just using that as their excuse to say, “I’m familiar with this group of people. I just want to hang out with this group of people. I’m only funding and playing with this group of people.” And now it’s become a recognized issue but I know even as far as like . . . even as recently as two years ago it wasn’t recognized.
All right, so I had to just stand up and say that and underline that issue but let’s go into the fetal position. Why around that time you were in a tough spot? Why? What happened?
Melinda: Yeah. Well, I mean, you know, the NewsiT ran out of money. It’s as simple as that. I was so committed to it. I really like . . . it was a personal mission of mine, I believed in it so much and I went to the wall in it. Like I think a lot of entrepreneurs do. And when we do it’s really difficult to admit, you want to get into this, I don’t know, sort of seclusion. You think it means something about you or I don’t know, whatever, like you really don’t want to fail. But the interesting lesson is that the learning is in the failing. And I mean there were a lot of other things that we’re going on in my life at that time.
Andrew: Yes. Talk about the personal side, your personal life. What was going on personally?
Melinda: Well, I was in a marriage that . . . I’m just recently divorced. I was in a marriage that was not good.
Andrew: What do you mean by not good? How long were you in the marriage?
Melinda: Let’s see, I guess we ended up, how long are we married for, I mean I think I mean just got divorced, it would have been 20 years, but . . .
Andrew: Wow. And it sounds like the last couple of years were the hardest because what was going on?
Melinda: Not good.
Andrew: No?
Melinda: Well, it’s hard to talk about it. But, yeah, no, it was not one that was good for me. Let’s just leave it there. Not good for me at all. And it really had the impact of really destroying actually a lot of my confidence in many ways. And I think that can happen often. I think entrepreneurs if they’re married to someone who does not understand what it takes to be an entrepreneur or doesn’t support entrepreneurship that can be very, very difficult.
Andrew: I’ve got to hear my notes, but I’m not going to say any of these unless you feel comfortable. I’ll let you say whatever you feel comfortable talking about but I have to say that this has been an issue that’s been brought up by men in my audience with women who aren’t supportive and the way that they express it is an emasculation and a lack of like a wearing away of their personal confidence. I think if you talk about it it’d be helpful but I completely understand if you say, “Andrew, I don’t want to. I talked about it in the pre-interview but I changed my mind.”
Melinda: Yeah. No, I mean I’m happy to go there. I mean I think sometimes with women who are very successful it can be threatening to a man. And so I think there is an element of that, what does a female entrepreneur need in a mate or a lover or a friend or whatever who is really going to be there for her and have her back. And if you’re married to someone who competes with you or sort of is threatened or jealous or somehow undermines that, that can be devastating. Especially if it happens gradually and over a long period of time and . . .
Andrew: Where you don’t recognize that this is what’s happening.
Melinda: You don’t really recognize it. I mean that’s interesting, you can end up it’s like being a lobster in a nice pot of cold water. And then it starts getting hotter and hotter and hotter before you know it and it takes a long time to really understand the impact that, that can have, you know, on your confidence. And so it’s been quite an interesting . . . I mean I was in that “fetal position” in like 2013, the fall of that year. And it’s been a really fascinating healing process where I feel like I kind of got completely taken apart but then was able to put myself back together again in a much better way and a much more healed and mindful way.
I started with a gratitude practice. I remember I was so depressed and I felt like this failure, like ending marriage, ending business, everything is falling apart. I’m like “How could I have done this? I have two amazing children. Like how could this have happened?”
And I have read somewhere that gratitude was powerful so I created this practice where I would think about 10 people or things every day and meditate on those people and just think about what I could be grateful for. And really within weeks it was a dramatic turnaround. It’s just very hard to be pissed off, sad, or angry if you’re being grateful.
Andrew: It’s so funny. I have one of those practices too and I’ve been committing to it since I got back to the U.S. from Argentina so about like seven years now, maybe a little less. Every single night I think before I go to sleep of three things that I’m grateful for and I’ve stopped all of the thoughts and just focused on one and go to the next one and go to the next one. And if my mind starts to wonder between number one and number two I start right over so that I stay focused and then I allow myself to go to sleep.
Melinda: That’s great that you do that. I mean, there’s a great journal out called “Five Minute Journal” and a lot of entrepreneurial friends . . .
Andrew: I had the founder on here to talk about it, yeah.
Melinda: Yeah, [inaudible 00:34:03].
Andrew: That’s what you use?
Melinda: Yeah, I use that but I started doing my own like before I even heard of that, I think before it even existed. I mean I just started doing a gratitude practice, I kind of went back, started doing a lot of yoga, started meditating.
Andrew: What’s your practice like? You stop yourself and you think of 10 different people and what you’re grateful for about them?
Melinda: Well, this was gratitude boot camp back then. I mean, I don’t do the full thing now like that. I mean it’s just very time consuming but this was triage. I mean I was in a pretty bad shape. And so I mean I really focused on it. I would like really think about the person, I’d meditate on each person, I think about what impact they had in my life. And often cases I would reach out to them and specifically thank them. I mean it was like a big thing that went on for months.
And then it led to a whole bunch of other things. It led to me being able to talk and share more fulsomely with other entrepreneurs, what those true fails stories actually are and like how they impact you. It led me to really think a lot about what’s the inner right stuff that you need as an entrepreneur to really . . . like if you want to do personal growth, become an entrepreneur. That’s a surest, fastest way to learn like humbleness, gratitude. I mean the whole series of things and really be kind of in touch with yourself and your core, your authenticity, who you are, what you want to do, and why you do it.
Andrew: All right, so I’m going to take another break so that we can come back and just talk about Verifeed, where the idea came from, how did you develop it, how did you get your first customers, how did you evolve the business.
But first, I’ve got to tell everyone about my second sponsor which is the company that we use to book guests and frankly, anytime I have something to sell, I use it. It’s called Pipedrive. In fact, just a few months ago I wanted to sell something brand new, bot services. Anyone who wanted to have a bot set up, a chatbot set up for their business I wanted them to be able to hire my company and have my company take them through a process and have a bot built for them.
And what I did was I went to Pipedrive, I created a brand-new account. I wanted it to be completely separate from Mixergy. And the first thing they tell you to do is lay out your steps. So I said, “I don’t know the steps we’re going to take to close these sales. It’s brand new for me.”
But they forced you to do it so I came up with a collection of steps that I thought would be our ideal. Well, we find a guest or we find a potential customer, well, we find out a little bit more about them then we email them and so on until we closed and I put that down. And then I started filling it up.
Well, after five or so I said, “I don’t have enough time to do this.” So I asked my assistant, “Can you please add more people to it?” So the assistant added. Now, Pipedrive allows you to really start to collaborate with people so I could see how many did she add, how many did I add? Then I got to follow-up with them and say, “Hey, I know what you’re working on is this. I got a little bit more interested in them. I got a little more information from them,” and move their card over to the next step because I completed the first step.
Then I followed up again and moved their card to the next step. When I emailed them and asked them to buy, it moved their card again over one more step to the right. Each one of the steps was laid out ahead of time, each contact was moving through my process. And when the process didn’t make sense because maybe I was taking too long or maybe I wasn’t getting enough feedback, I changed the process and Pipedrive makes it really easy to do that.
The point I’m making here is, and it’s so visual. It’s really hard for me to explain it actually. I’ve got to be honest with you, Melinda. I’m like finding myself saying, “That’s not the way I would explain it if I had to do it over again.” I’d love for people to see it because it really is an elegant systemized way to close sales and allows you to really collaborate with your team to do it.
I can’t describe it for some reason well today, so I’m going to tell you that if you’re interested in closing more sales and doing it in an organized way check out this URL where you’re going to get to play with the software for free. Worst case, dump it and move on to what you’re doing already or to some other software. But best case, in my experience you’re going to love this and it’s going to change the way that you and your company sell.
Here’s the URL, go to pipedrive.com/mixergy. When you do, you’re going to get 14 days of free service plus 25 off for the next 3 months. Frankly, it’s so low already that I don’t even know that they need to give you a discount. But they are and I’m grateful to them for doing it. It’s only at this URL, pipedrive.com/mixergy.
All right, back to the idea. The idea of Verifeed came from where?
Melinda: It’s really a great evolution. We go back to I was describing for you back in the days of the lemon times where I wanted to be first, right, and predictive. So I had all kinds of algorithms going on between my ears. Really looking for patterns, really understanding source reputation, all of that. So you fast-forward all these years and I found to do that at scale with data, I mean creating the type of algorithms and algorithms plural that would not only allow you to inaudible 00:38:49] find people based on their topical interest, their hobbies, and all these kinds of things, demographics, all of these. But actually understand them over time.
Being able to see patterns, being able to understand who was influencing the conversation, who wasn’t. You can see the kind of intellectual train that kind of began Capitol News Connection and goes right through. There was a certain point with Verifeed and it was really when NewsiT was coming to an end. And I thought, “Well, this technology, my goodness, it’s really valuable.”
There’s got to be some sort of way that these processes can be used not for news necessarily but for . . . my original idea was for business intelligence that you can really understand so much about a company. How loyal its customers are to that company based on how it’s interacting on social media. You can understand what trends are, you can spot trends before they become trends, there’s a predictive element of it.
So I set out with Verifeed originally to do what we called social intelligence which was really business and market intelligence and consumer intelligence and essentially sell the data. Then we learned something quite interesting is that you could sell all this data and people would buy it but they wouldn’t use it. They didn’t know how to put it into action.
Andrew: I find that a lot that there’s a lot of data out there that I could get to tell me about how long my customers have been customers, which ones are canceling. But then it actually becomes more frustrating because I don’t know what to do with that. So now I know what the problem is but I don’t know how to solve it and so I’m in more pain than I was before I signed up.
Melinda: Exactly. So people want the data, I call it infobesity, right? There’s just so much information, and you need the data at your fingertips but people don’t know what to do with it.
Andrew: Like from obesity and information?
Melinda: Yes.
Andrew: Yeah, I do feel that, like I get way too much and I feel bad about myself because of it.
Melinda: Yeah, like it’s information empty calories because you’re not getting the right content at the right time for the right reason etc.
Andrew: I see, so you said, “Look, yeah, I can analyze all these and I could give really interesting data and it’s probably useful and actionable but they don’t know what to do with it.” And so now they feel like they’ve got too much data.
Melinda: Exactly.
Andrew: Okay.
Melinda: Exactly and then the next big realization was wall case, we can give all this to them in a dashboard, but they’re just going to look at the dashboard and they’ve got a billion other dashboards. So they got another dashboard. Make it stop, right?
Andrew: By the way anyone who’s listening to us who’s got a great idea for a data company because you could see how it can change people’s lives, just pay attention to this part. You really are drowning us in data and it seems like it’s helpful but, no. It’s not on us to use it. Tell us what to do. Okay, so that’s where you were going with this. How did you evolve it?
Melinda: So that’s the next thing. So, we were kind of selling like this and whatever. I have to add something in here. All the people that we compete against have A rounds, B rounds, C rounds, like say a company like Sprinklr, just came out of a hundred-million-dollar round. So we’re not that. We’re relatively new and we’re bootstrapped. And so we had to grow in a way that was kind of uncomfortable for me honestly. I mean it’s kind of like eat what you kill.
So we would be having to use our technology to do a much more of a service offering where if the company I’m building is more of a SaaS company, where isn’t it great to just be able to sell stuff and people use it themselves and it’s like a nice inbound funnel and you don’t really have to do this big consultative sale. But we did go that path and it was actually really great because we learned so much about our customers and what they actually want and what they’re true pain points are by selling our technology and our services. So essentially, we would operate, and we still do, our own technology to provide a much more of a service type sale.
Now the company is beginning to move away from that now with a new product coming out called Return on Authenticity where we saw in the data that companies that really spoke as human beings in a non-salesy way and initiated conversations and actually really genuinely cared about their consumer and social media conversations, were outperforming wildly those that do not. And we set out to like . . . this is a kind of crazy idea as I have, I was like let’s measure authenticity algorithmically. I don’t know anybody else who would like take that on accept me. But, we do. We actually can measure how authentic, we have a whole series of criteria, how authentic a company is being and the impact of that.
And the early stage impact of it is like how many people share the content, how sticky it is, how many people refer other people to it and that sort of thing. So there’s literally a return on authenticity or you’re ROA.
Andrew: So who writes the content that’s authentic?
Melinda: Well, it’s the company. What we’re doing is we’re measuring how well a company is doing at being authentic.
Andrew: I see, and then do you tell them what to do to be more authentic so they could get all of this?
Melinda: Yes.
Andrew: You do.
Melinda: Absolutely.
Andrew: So you could actually look at let’s say my Twitter account, tell me how authentic, give me a rating based on my authenticity and then suggest what I could do to be more authentic or express more authenticity.
Melinda: Exactly. So imagine this, say you’re like a thought leader, aspiring thought leader, right? You want to really increase your influence or whatever. So imagine, again, one of these, in your pocket it’s like, “How am I doing today?” How am I doing? So instead of just worrying about vanity metrics, like how many people are following me, or how many friends do I have or those sorts of things which are ultimately meaningless. They don’t really translate into your bottom line at all. You want to know how sticky you are. How many people you’re really touching and connecting? And moreover, how many of those people are actually amplifying that out to their friends, their friends, their friends, and their friends.
And so as you interact with people, the tool will say, “Hey, that’s great.” So, you’re doing really well here, but how many conversations have you initiated today? Have you asked anybody any questions about themselves? What’s your response rate? How quickly are you responding? And just start [inaudible 00:45:12]
Andrew: And it’s the software that’s telling you all that and telling me hey, respond faster and you’ll be able to communicate your authenticity.
Melinda: Yeah. And then the next generation of this gets really, really interesting as we start to think about how this works in augmented reality, how this works in artificial intelligence, how can you use artificial intelligence in an authentic way. So that’s like the big challenge because you imagine, bots are doing . . . you think of many chat, you think of all of these kind of cool things going on with artificial intelligence, how can you do that in a way that’s really authentic and so that’s something that we’re working on right now.
Andrew: So let me go back at the beginning. I see you got all this data, you’re hearing back from your potential clients, “Hey, this is too much data and it’s not actionable and it’s not really returning the money that we’re spending on it.” How did you understand that? What was your interaction with them that told you they don’t want this product, they want a different one.
Melinda: You know, it’s really interesting. I think people simply don’t . . . when companies go on Twitter or Facebook and they just post some very self-interested message that looks salesy, it’s regarded in social media as spam. I mean people pass over it unless they’re already really interested or they all . . .
Andrew: So how did you know that? You offering this to potential customers and you saw online?
Melinda: Because we can measure it. We score people’s influence. We can see how much a post amplifies. We did a thing, a study a couple of years ago called “Life of a Tweet.” And we could see how one tweet, this is an amazing statistic, and we once found 10 women on Twitter who drove more than 9 million others to an Amazon shopping cart within 4 weeks on Twitter.
Andrew: So I get all that, but what I don’t get is you had this initial theory, how did you understand that this was . . . you had this initial theory that companies would pay you for this research, they weren’t interested. Was it because you were personally making sales calls to them and you found out they weren’t interested?
Melinda: Wait, sorry, I’m not getting your question.
Andrew: I guess what I’m trying to understand is the evolution of the business.
Melinda: Okay. I’m confused, I’m sorry.
Andrew: I’m trying to understand the evolution of the business idea that you had this idea, “I’m going to create this research for companies.” You created it and it was overwhelming to companies. How did you know that it was overwhelming?
Melinda: I think it simply put is that we would . . . the way our initial . . . it takes a while to figure out, you know, your best business model and how you should sell things and how you should package things, right? So we’d be so proud. Like, “Okay, here’s the data, look, and here are your top 20 influencers and this and this and this, here’s your list,” and then it would be like, we wouldn’t see them implement it. And so it was hard to prove the value.
Andrew: How did you know that they weren’t implementing it?
Melinda: Just either didn’t hire us to follow on, or they just didn’t do it.
Andrew: I see.
Melinda: And as we’re listening, because we’re a social listening service as well, right? So as we’re seeing what they’re doing with it you can tell whether they’re not dealing with it.
Andrew: I see.
Melinda: Like if they’re just not doing it, you can tell they’re not doing it.
Andrew: Okay. And so then what was the next product?
Melinda: Well, the next thing was really to say, “Hey, look, we only work with people who can handle the truth.” Who are going to act on the truth. Because if you can buy this data and it makes you feels good, you can pat yourself on the back for having it, but if you don’t use it we’re not creating any value so you shouldn’t work with us. You should fire us if you’re not going to use it. I mean it’s as simple as that.
And I think it was tricky because it’s kind of like a smart product for smart people. It could come across that way. And it’s much harder, you ended up with a much smaller market. So it took us a while to figure out who are the people who were really committed to doing this and they were people who really want to crush it, really want to win, who really want every possible hint that they can to do better.
Andrew: What about this, I’m looking at one of the early versions of your site and I see that you’re selling widgets for $10 a month, $25 a month, or $40 a month. The widgets were about, actually, I don’t exactly understand what they are. It seems like they were helping me understand what people were talking about.
Melinda: Well, originally, we would sell widgets that would allow people to customize their Twitter feed and eliminate a whole series of irrelevant tweets or, yeah, like I’m trying . . .
Andrew: I get that. So right, even today people post widgets on their sites. I see it all the time. They just show their latest tweets and it seems like it’s going to be useful but it’s never useful because it’s full of all this random stuff. Like they respond to someone’s customer service issue, right, and so on. And as you said, all right, people want . . .
Melinda: Because we thought like at the beginning of the second screen for instance, for broadcasters, because of my news background, I mean our initial clients were media companies. So we were trying to . . . because that made sense, that that’s where I should focus my efforts because I knew that industry really well and we’re one of the big finalist in the National Association of Broadcasters startup of the year kind of thing for this, because of second screen.
So you’d be watching something but people would be tweeting about it at the same time. But in those tweet streams there was loads of repetition. There were a lot of irrelevant things. So one of our first things . . . I remember one of our first clients was a television news station in Indiana, I believe, and I think during the March Madness their team was in the semifinals or quarterfinals whatever. And they wanted to post tweets from, specifically from the coaches and . . .
Andrew: And post it on their site?
Melinda: Post it on their site.
Andrew: I see. So this is one of the products you created?
Melinda: Yeah.
Andrew: It seems that product is not around now, what happened to it?
Melinda: No. We decided that we couldn’t make money doing it.
Andrew: I see. Not enough people want to buy these widgets.
Melinda: No, no, no, no. I mean it made much more sense to help people increase their bottom-line, to have a product that actually makes a real financial meaningful difference, where you can really boost your conversions and you can track that and you can do so at less time and less money, was more sellable. As simple as that, I mean, you start a company, it takes a while to figure out what your market is. I mean people don’t know that Twitter itself actually started as a podcast company. It was like many, many iterations . . .
Andrew: And so you had those iterations. What’s always interesting to me is like what happened that made you go from one iteration to the other? And I could see it’s a lot of . . . you try to sell to customers, they’re not buying it or they’re not using what they’re buying and they’re not re-upping and you realize, “Okay, we need to go back and adjust it.” What did you do to make sure that each subsequent product was better than the last or more likely to succeed? Did you do any customer development? Did you do any . . .
Melinda: Yeah.
Andrew: You did? Tell me about that.
Melinda: A lot of customer . . . I mean it’s kind of what we’re doing right now with Return on Authenticity. I mean talking to a lot of thought leaders like yourself, it’s kind of like what would make you use this, why would you use it, what would you need to see. And, of course, I always think about Steve Jobs in this case that people don’t know what they want. If you’d ask them like about the iPhone before he invented the iPhone, like nobody would have come up with that.
So it’s tricky because you can’t rely on customer interviews to help you guide your vision. You can have you a vision but you can listen to the market in terms of how best is that vision going to fit in the market. And it’s so tricky with this, with any kind of innovation because you can be way ahead of your time which I know the pain of that. And then you can be so far ahead of your time that you end up nor being able to execute fast enough so then you end up behind. Like there’s so many things that can go wrong.
So it’s really like listening to your customers, looking for patterns in the sale, getting better and it was painful for me to get good at the consultant of sale which I’d never really had to do before. And this is really the type of sale where all you’re doing is asking questions, asking questions, asking questions, and looking for patterns and finally like, “Okay, would you be interested if we could do this? How about if we could do this? If we do this, that, that?” And then you start to say, “Okay, this is working, let’s really focus in on let’s find you your customers.”
Andrew: I see. And what’s your revenue now having gone through all this process?
Melinda: Yeah. So, you know, we’re kind of up there. We’re not huge. I mean you know we’re still a pretty small startup but it’s a million-dollar kind of run rate type thing.
Andrew: Is it a million-dollar run rate type of deal somewhere around there?
Melinda: Yeah.
Andrew: Okay. And how much of this is a service for a software?
Melinda: It’s all software-based but it is heavily service right now which is what we’re kind of turning around. So with a tool like Return on Authenticity it’s going to be, much, much more based on kind of mobile first and apps and the more classic software as a service. Because we understand now better how people are going to use it.
Andrew: Right, the website is Verifeed, and you’re saying before we started that you wanted to have some kind of offer available to the audience? What’s that?
Melinda: Yes, absolutely. So if you text “tribal” because we like to build your tribe, so if you text “tribal” to 44222 we will provide a free consult, actually with me, and we will do your Return on Authenticity score and not only that but we will tell you your top 25 influencers. So it’s pretty kind of sweet deal.
Andrew: Top 25 influencers?
Melinda: Yes, free.
Andrew: Okay, so what was it again?
Melinda: Okay, text “tribal” the word “tribal” to 44222.
Andrew: Tribal to 44222. Cool. All right, and its Verifeed, of course, and I want to thank my two sponsors. The first is a company that will help you hire your next great developer. Its toptal.com/mixergy, top as in top of your head, tal as in talent, and pipedrive.com/mixergy. And I’m grateful to both of them for sponsoring and to you, Melinda, thank you.
Melinda: Hey, thank you.
Andrew: You bet. Bye, everyone.
