Andrew: Hey everyone. It’s Andrew Warner. I’m the founder of Mixergy, where I do interviews with entrepreneurs about how they built their businesses. As you can hear, my voice is getting more and more hoarse, which kind of stinks because I’m about to interview a man whose business is voices and here I am, I’ve got the worse voice I’ve ever had on Mixergy. It’s because I’ve got two young, young, kids that happen to be sick, and so I’ve been waking up in the middle of the night to take care of them. Thankfully, I haven’t gotten sick myself, but I am not getting more than four hours sleep. I know it because I use an app called AutoSleep to just keep track of how many hours of sleep I get and what the quality is, and man, it’s not been good quality and it’s not been a lot of hours. But I’m here. I will not showing up.
One of the reasons why I came in to record interviews today is that I’ve got an interview with an entrepreneur whose business I profiled a couple years ago. Actually, it was back in 2014, and the company was big back then and it’s grown since then, and I thought we’d come back to the story to hear how much bigger it’s gotten and what it took to grow a business. I know that the origin story is always interesting, but the growth story, to me, is where I think Mixergy needs to spend more of our effort. What does it take to go from having a successful business to having a mega-successful business? And we’ll talk about what that means in numbers today in this interview.
So joining me again is David Ciccarelli. He is the founder of Voices.com, which is an online marketplace where businesses can find voiceover professionals.
This interview is sponsored by two great companies. The first will let you hire your next great developer. It’s called Toptal, and the second is the software that I used to book this interview and that you can use if you actually want people to get on a call with you. It’s called Acuity Scheduling. But I’ll tell you more about both of those later.
First, David, it’s good to have you back.
David: Awesome. Thanks so much, Andrew. Great to be here.
Andrew: You know what? I’ve been looking to see are you going to like wince as I talk? It’s not affecting you in the least, even though you know what a good, polished voice sounds like, right?
David: No worries. We have four kids ourselves, so I know what it’s like to be waking at all hours. You know, we must persevere and power through, so I’m so glad to be joining you on the call today.
Andrew: Thanks. So where are you revenue wise? Let’s talk 2016. What’s the revenue?
David: Yeah, for sure. We’ve been continuing to grow at a healthy clip. At this point, our base case for this year is $20 million.
Andrew: That’s 2017, though, right?
David: Yeah, so we end our fiscal year at the end of August. So we’re just about halfway through, so we’re clipping along to that one. We’ve got some really interesting product innovations coming out, so our stretch goal would put it at $25 million. But still we’re growing at the rate of 70% year-over-year, and that trick takes a tremendous amount of effort as well as some good planning and, obviously, some great people behind the scenes making it all happen.
Andrew: Yeah, one of the things you told me before we started is that you’re a real systems person, that you want to be organized, and so we’re going to talk here today about the process you used to hire people that allowed you to grow to this level, what you did for marketing that allowed you to get more customers in, what happens when fraud starts to take over your marketplace, and then what are you doing to become a $100 million business? All that and so much is what we’re going to cover, but I’ve got to ask you a very fundamental question.
Andrew: Why is your fiscal year different from the traditional year? Why don’t you go January to December? What’s the . . .
David: Yeah, great question. I mean, many corporations have kind of odd fiscal years if you will. We found, for us, that it made sense to kind of kick off the academic year, align it with our fiscal year. So September kicks off our fiscal year, and we find that a lot of folks that, you know, there’s a lot of budgeting, kind of campaign planning that really starts then as well too. So, you know . . .
Andrew: Because you want to start your year the same way you did back when you were in school.
Andrew: But you still have to prepare your taxes, right, based on the end of the year being December 31st, right?
David: No. Well, personal taxes. But the corporation is all done on the end of the fiscal year.
Andrew: Oh, I didn’t realize that. And you’re in Canada, right?
David: Yeah, correct.
Andrew: Cool. All right. So one of the things that you said that you did was . . . You know what? Why don’t we get into the danger first, because I think that this is something that all marketplaces are going to need to be aware of. You had an issue where people were money laundering on your platform.
Andrew: What were they doing specifically?
David: Yeah, a bit of a refresher. So as many of you know, Voices, you know, we’re connecting clients who are looking to hire a voice actor, and then the voice actors are really looking for work, and that could be anything from a commercial to a phone system recording or a podcast, you name it. So what occurred was a client’s clearly a fraudulent account was created, and the client would go on and they would post a job, being the first step of the process. They’d fill out the job, and it kind of looked somewhat real. And they would say that their budget range for this particular project — and it was a series of video games and small games — and they would say, “Okay, my budget is between $100 and $250,” and it would get posted.
Now they created a client account, but they also created a voice talent account. So they posted the job, invited themselves to reply to the job, and put in a bid of $150. Then they did the same thing again, recreating different accounts with $250, $500, $1,000. It got up to about $2,500, and then they stopped and then recreated that whole thing again, basically trying to see where in the system is the threshold for any fraud or any kind of warning. So maybe at $2,500 they felt like they might have been pushing their luck a little bit.
To be candid, we didn’t catch this. This was a while back. We had very weak controls in terms of processing credit cards, and the craziest part . . . . So basically, they were paying themselves and using us, Voices.com, as that trusted intermediary.
Andrew: How does that help with money laundering?
David: Because they would be paying with a fraudulent credit card.
Andrew: So it’s not money laundering. It’s taking money out of a fraudulent credit card, right?
David: Right, and then using us to whitewash it or clean it.
Andrew: I guess I see that that is money laundering.
David: And then the payout from our escrow account, we would pay out themselves, like the real them by corporate check or by PayPal. So by the time we paid out the talent, in this case, themselves, we paid them out, we’d be getting a call from VISA or MasterCard or our merchant processor who would say, “Hey, these are chargebacks. We’re reclaiming all this money.” And we’re like, “Oh no, but we’ve already paid out the money.” Then they took it back.
So it was at the rate of $50,000, which in and of itself doesn’t sound like a lot, but the real consequence was that this happened 17 times in a matter of a week and a half. Now, it happened to be the same week and a half that I was on vacation, a family reunion and, of course, when it rains it pours.
Again, it wouldn’t have been quite so much of an alarm except for the fact that when we initially set up our credit card processor — I remember this as clear as day — the account manager said, “Okay, well . . .” And this was like start-up days. We hadn’t processed a single transaction. They’re like, “So how many sales do you think you’re going to do through your website?” I’m like, “I have no idea. It’d be great if we did one a day, you know, like 30 a month.” He writes 30 down and says, “What’s your average transaction like?” I’m like, “I really don’t know. We’re new to this,” and they put zero on the application. So when the fraud comes up years later, they told us something ridiculous like 1,000 times outside their risk profile, like basically all the alerts went off, and so they made the immediate assessment that we had a problem, we weren’t controlling it, and they said they had the right and the authority to shut down our credit card processing immediately.
Cash is king in business. It’s not customers. It’s not a great product or anything else. Do you have the cash to survive another day? And when you shut off the inflow of the cash into the company, meaning your credit card system, that naturally really put us into a bind. I basically begged and pleaded with them. I said, “Look, give us 30 days. Don’t do it immediately. Give us 30 days,” during which point graciously they went and continued to process credit cards. They just didn’t release us the money. They processed it, and if you know anything about credit card processing, they hold it and they disburse it after two or three days. Well, with us, they held all of it and they were holding, I think, up to about half a million dollars.
I thought, “No sweat. I will switch credit card processors. Come 30 days later we’ll get a windfall of a half million and it’ll all work out.” What occurred was I used that 30 days. I hustled to every merchant bank and, of course, they’re all skeptical. “Why are you looking for a new credit card processor?” Truthfully, we were trying to save some money. I knew that we were paying more than we were. So evaluating some options we found one firm that gave us a new credit card processor, switched all that in 30 days.
Andrew: Did you get your money?
David: One of the kickers was that they actually had the right to withhold the money for a year. And I was like, “Oh my goodness.” So basically, we’ve been starving for cash, and then right at the moment when I think I’m going to get it, they’re like, “No, we’re going to hold onto it year to year.” I’m like, “That’s ridiculous.”
You go and read online, and I would encourage people who might be evaluating credit card processors. You need them, of course, but I’ve read just horror stories of cash that either gets locked up through a processor or through PayPal because of some kind of fraudulent activity.
Andrew: Actually, it’s funny that as you’re saying that I’m feeling the pain in the pit of my stomach, and I realize I didn’t even realize you were processing through a company called EVO Payments. I got an alert from them saying that there’s some potential fraud, and they want to review the account. This was back on February 24th. They still haven’t responded after I sent them back all the data that they asked for. It stinks to work with these guys. But let me ask you this. How do you catch the kind of fraud that you had? What do you do to recognize that someone is doing this?
David: Now we’ve got a whole series of proactive systems that are set up. I mean, the telltale sign is . . . Let’s put it this way. Fraudsters have no patience. That is the principle number one. And because they have no patience, it means they’re going to create an account, they’re going to post a job in our world and make a payment all within like an hour. That is just so irregular to our normal course of business.
Andrew: Really? Somebody wouldn’t say “I need a voiceover artist. All right, I found a website. Let’s just get this done and I’ll go and sign up and pay?”
David: Not all in an hour. That’s really . . . Maybe in a day. We that all the time in a day, but I mean, it was so fast and especially when they were doing it time and time again. It just starts to set some red flags for us. So we literally built what we call an early warning system. It’s a series of indicators, actions that somebody might take that would alert us that maybe this is two successive payments to the same person. Well, that seems strange in a short period of time.
Obviously, there are white-listed countries, maybe countries that we may need to be more suspicious of and time of day. There’s a whole series of things. I think we have about 15 or 20 of these indicators. I’m not going to reveal all of our secrets, but I’m sure if you brainstorm them, that everyone’s pretty sharp.
Andrew: You’re sitting back and saying, “What is it that all these fraud accounts have in common?” I can understand that someone who’s never paid for anything before, who then pays for someone who’s never been paid before and maybe, in addition, they were both created roughly at the same time, both accounts.
Andrew: That’s a potential problem, and so you freeze that money before it goes out, and that’s one way to avoid it. Any other fraud issues that we should be aware of that you experienced in the marketplace?
David: I think one of the other takeaways was to have a redundant system, so in the event that our credit card processor goes down, or locked, or temporarily suspended, well we can always process through PayPal, or you can have a Stripe account. I mean, there’s multiple ways to do it. For a relatively low monthly fee, you’re maintaining a redundant system. And if you know the value of cash coming in on a daily basis, if you get $50,000 to $100,000 cash on a daily basis or multi-millions on the month, what is $30 to pay for some backup system that does the same thing?
Andrew: I see. And that actually goes back to something you and I talked about before we started. I asked you about your marketing and you said, “You know what? Frankly, the best thing that we had to do and the most important thing is figure out the lifetime value of a customer. And once you figure that out, then it becomes easier to start to play your marketing dollars.”
I thought that you would have had that set up a long time ago. Maybe it’s because I feel like you, David, are someone who’s got everything together.
David: Thank you. I wish we did.
Andrew: But I’m heartened to know that it took you a while. Sorry?
David: Yeah, I wish we did have everything together. I appreciate . . .
Andrew: It seems like it, but then I feel like the lifetime value of a customer is important. Everyone acts like it’s such an easy metric to get. “Oh yeah, figure out the life value of your customer. Then you know how much you can afford to spend on ads.” But it’s a challenge. What’s the challenge that you found in figuring that number out?
David: I think it’s defining what do you even mean by lifetime value? Is it literally the lifetime of a customer, in which case, well, you need to have some data? Fortunately, at this point, we’ve been heads-down building an amazing company for 10 years, and so we have 10 years of data, of transactional data stored in Salesforce, and so we have that as our starting point. We define. . . Basically, we say, “Here’s our group of customers with the repeat purchase rate. So if 80% of the people purchase the next year and then that group . . .” We basically did a cohort analysis in that group and then 80% again is like 66%, and then we kind of wind all that down and realize that, for us anyway, it worked out to about $5,000 was the lifetime value of a client buying.
Now, that gets skewed between what we lovingly call the onesies and twosies, and then there’s like the power users. Some advertisers, video producers have used Voices.com literally 1,000 times. They’ve run 1,000 transactions. So you do need to kind of create a definition for what does lifetime value mean for you. Once you’re clear on that, then it all goes to . . . I think there’s a famous Einstein quote that’s like, “If I had an hour to solve a problem, I’d spend the first 55 minutes defining the problem and then 5 minutes coming up with the solution.”
Andrew: How does that apply here? When you define the problem when it relates to the lifetime value of a customer, what does that mean?
David: So what do we mean by lifetime? Is it literally a 5-year period? What’s the average spend over a 5-year period? Are we looking at gross or net? Are we baking in other costs? I mean, there’s a lot of nuance that goes in there that I think sometimes people just try to pull out a quick number. And if you don’t have it “fully baked” with all of your costs, then you might be overspending and thinking that you’re making money. So I mean really thinking through the definition and what it is you’re ultimately going to be doing with that result, what kind of decisions it’s going to drive, so understanding the problem. The data is there. It’s really how do we kind of slice and dice it to ultimately . . .
Andrew: One of the things that I like about what you said, that I’m taking away from this, is the lifetime value of a customer doesn’t literally have to mean their full lifetime with you, that it could be that we look at how much they’re worth over the course of a year and that becomes the number that we use because we can’t predict beyond a year.
Andrew: Is that right?
David: Nor do you want to spend 10 grand on a customer who’s going to give you . . . Yeah, sure they’ll give you 10 grand, but it’s going to take 10 years? Nobody has that amount of patience. Investors, Silicon Valley, New York, Boston, anywhere, have a payback period of three to five X in three to five years, so that got us thinking they’re looking for their investment back in five years, well, we’ve got to set some goalposts on our initial spend and when do we want to get our money back on that.
So we started at one year. We felt, hey, that seemed like a reasonable payback period, and then we extended the lifetime, meaning five years, because, beyond that, you’re right. Technology changes, market dynamics. There’s way too many unknowns that it just gets to be a little bit ridiculous to say that you’re going to be still making money from customers like 10 years into the future.
Andrew: Okay. I want to come back. Now that you know what your lifetime value is of a customer, what each customer’s worth, let’s talk about how you decided to spend money to bring that revenue in. But first I’ve got to tell people about my sponsor. It’s called Acuity Scheduling. Do you know Acuity Scheduling, by any chance?
David: No. I mean, we signed up for the call pretty efficiently, so I’m certainly pleased and impressed from that standpoint.
Andrew: One of the things that I notice is that a lot of the entrepreneurs who I talk to have software companies, and I assume, David, that that means that every sale happened on the web, right? You create a sales page and people buy.
David: Oh yeah.
Andrew: Does that happen for you, or is there more phone calls involved?
David: We actually have an account management team, which works with . . . We’ve segmented our customers to be kind of let’s call them a self-serve, doing it through the web and then more of a full-service approach for larger, enterprise-size customers, and they do actually happen, those sales happen over the phone.
Andrew: Right. And I’m noticing that more and more that happens even for software companies, even if it’s just you have the trial online, but you then get someone on the phone with someone on your team who could make sure that your potential customer is starting to use the software, is actually understanding what it’s for, can see how it can help their business. Phones, I’m noticing, are a bigger and bigger part of businesses than I realized because you don’t see it on the website. It happens behind the scenes.
And so I started to wonder, “How are all these companies getting their potential customers and their new customers on the phone with someone on the team without driving the whole team crazy? And if it it’s like a one or two-man operation, how does the person who has to run the business figure out when to get these people on the phone?
What I’ve discovered is that a lot of them use software, like Acuity Scheduling, where as soon as somebody expresses an interest and wants to have a demo or signs up and then gets an email inviting them to do a demo, they send a link to a calendar to that user, and that user then gets to go to the calendar and pick a time that they’re free, that matches up with the time that the person at the company is free.
I know that there are lots of different tools, David, for this. The reason I like Acuity is it allows me to have multiple people on a single calendar, like you know that we have multiple producers here.
Andrew: We have Jeremy. You talked to April the first time. You talked to Ari the second time, right? But I don’t need to give you three calendars and say, “Hey David, here’s April’s calendar. Here’s Jeremy’s availability. Here’s Ari’s availability” That would drive you nuts. What I do is I tell them all, “Just put your availability in one calendar. As soon as somebody books, the calendar needs to be smart enough to know whose booking is that? And then put it on their calendar so that the producer doesn’t forget, hey, I have a call with David. David’s very important to Andrew.” And so it scales up with the team. It let me know what your Skype name is, because as soon as you book a time, you tell me your phone number, you tell me your name, and you tell me your Skype name so I have it ready for me.
All those things are available with Acuity Scheduling, and what I love about Acuity beyond that is it’s so easy anyone on my team, including new hires, can go in and figure out Acuity and start to improve it and start to make it their own.
So, if you’re listening to me and you want to get on the phone with your potential customers, with your existing customers, if you just want to say, “Hey, you know what? Next Monday I’m going to talk to 10 of my customers and understand why they signed up and what they’re looking for, or 10 potential customers and find out why they haven’t signed up or what they’re using today.” You can do that for free, frankly, if you use a special link that I’m about to give you. Go to acuityscheduling.com/mixergy. You’re going to get 45 days to try this. You will be able to run multiple campaigns to talk to customers in that 45-day period, and you’ll see how powerful it is, all for free. If you like it or love it the way that I do, you’ll be able to continue on as a customer. Go to acuityscheduling.com/mixergy.
David, as I did that ad, did your lights go off because you have some kind of . . .
David: They did. The power was sucked out of the room. No, just kidding. No, it’s a new energy-efficient system we have in this office.
Andrew: I like that you’ve got like a 20-plus million dollar business, and you still sweat the details of that. And it’s your office. You could do whatever you want, right? Is that it? Are you still a penny pincher?
David: I don’t know if I programmed that one exactly. Obviously, it was the least opportune time to make that happen, but, of course, I think you’re always cost conscious, because the responsibility of the CEO or the entrepreneur is to most efficiently deploy resources, be they time, energy, capital, your team, aligning them on projects. And when it comes to finances, the first thing that goes through my mind is, “Look, do we spend it on a project, a trip, some furniture, or can we acquire another customer?” So I’m always thinking about how do we win another customer that ultimately . . .
Andrew: I see. So the lights going off when no one’s in the room, or in your case it happens to be because someone’s sitting still, could potentially mean one extra customer for the business over the course of a year if the lights aren’t . . .
David: For sure.
Andrew: That’s the way you’re thinking. And it’s not that that matters to you so much. As you said, you didn’t program it. My sense is that you programmed it into the culture of the company and somebody knew, “Hey, you know what? We actually care about the cost of electricity.” Am I right?
David: Yeah. Oh no, absolutely. These are the kinds of things that . . .
Andrew: [inaudible 00:23:58] the team that you care about that?
David: Oh yeah, and you build it into the culture.
Andrew: How do you do it? How do you, David, build that into the culture? What’s your specific way of doing that?
David: I think it starts with the recruiting, the hire and the onboarding training. At the recruiting stage, there’s lots of things that we do to, I guess, give a potential candidate an opportunity to see and experience what it’s like to live and work, if you will, at Voices. But we’ve identified, through our top performers, what are those kinds of attributes that really make somebody a star?
We’ve narrowed down to three main things that we look for. If I can share those, I think it might be beneficial. They might be commonplace to some folks as well too, but for us anyway, we do look for people that are competitive. They’re competitive with themselves. It doesn’t mean that you need to be an Ivy League rowing club expert or anything, but you could be competitive with yourself. You could be competitive with a member of your team or somebody else in a different company. So I think that desire for greater achievement tends to be reflected in high performers.
Andrew: Okay. What’s the other C?
David: The other one would be those people who are curious. People who are competitive are always wondering, “How do I actually get better?” They’re asking the question why, they’re inquisitive, and they’re problem solvers. We just hear it in the course of dialogue in an interview.
Finally would be someone who’s coachable. Coachable is you can’t have somebody coming in who’s the know it all, who thinks day one that they understand how the business works or the industry. They need to be the equivalent of the human sponge to soak up all that knowledge and be able to put it to work. So we try to create scenarios that maybe are different than the traditional interview.
Andrew: Like what? What’s a scenario that lets you know that somebody is coachable?
David: One would be we actually give what we call office tours. We try to do that early on, just so that people can kind of see and experience what it’s like to walk around the office. It’s 45,000 square feet, so it takes a good 10 or 15 minutes to walk around and stop and really get a feel for it. This is going to sound very silly, but we were running speed interviews. Basically, think of it like speed dating, but a candidate would get to meet four or five different hiring managers just for five minutes each. We’d have a big number countdown and a bell would go off. It was a lot of fun. It was an event.
Whether they’re speed interviews or group interviews where you ask someone, “Here’s a fictitious situation. How would you coach your colleague through it?” It’s kind of role playing. You get to see how a candidate work with other . . .
Andrew: Because someone who knows how to coach someone else is coachable themselves or more likely to be coachable?
David: I find that, because they know how they want to be coached. They’re better listeners. So the bigger theme of it is a lot of them are softer skills. It’s not necessarily something that’s going to show up on a resume.
Andrew: Yeah, that’s a harder thing to identify. What about curiosity? What do you do to see if someone’s curious?
David: I guess the magic word is “why.” Anyone who’s asking why or how, “How does it work?” You can almost see them trying to peel the onion layers back to reverse engineer the process to figure . . . To ask the same kind of question, “Why do the lights go out halfway through an interview?” or “Why is the floor plan set up this way in the office?” Those are great questions that we love to hear.
Andrew: You know what? I’m not looking for a job, but I feel like I have all those three C’s. I’d be a great employee. As much as my voice is shot, all I can think about is I am still getting on my bike later tonight and I’m going to ride the hell out of it.
David: That’s right.
Andrew: I’m just going to be so fricking fast. You’re competitive like that too? Where does your competitive side come out?
David: Yeah. I played music and playing piano growing up there were always recitals and competitions. There were like song-writing competitions I was often in. Anything kind of performance. Myself and my wife and co-founder, Stephanie, she’s very competitive. Some of the team here might say that we’re even competitive with each other to a certain degree.
Andrew: Give me an example. How are you two competitive with each other?
David: I think just different points of view. Winning at arguments. And I say that in the most respectful way. There’s a great book right now called “How to Win Arguments,” that was taken out of Greek literature if you will. So I think . . .
Andrew: That’s been out for a long time, hasn’t it?
David: I think so. I’ve just been listening to the audiobook version of it. We actually were at Harvard last week, and she saw it and she was like, “Oh, you’d like this,” and I’m like, “I’ve already got the audiobook version.” She’s like, “Well, I’m buying the book.” So even down to something like that, I think there’s an essence of . . .
Andrew: We’re talking about the book . . . You know what? Maybe this isn’t the older one. There was an older book called “How to Win an Argument.” This one’s by Madsen Pirie. Does that sound familiar? There’s a hammer on the cover.
David: Yes. It’s a yellow cover.
Andrew: Oh yeah, this is a new one. There used to be one called “How to Win an Argument,” and I remember as a kid buying it from the used bookstore near my house thinking, “I’ve got to do this.” And then I picked up on Dale Carnegie’s “How to Win Friends and Influence People.” He’s like just stay away from those arguments.
David: Yeah. The argument isn’t meant to be like a conflict. It was more of how to create a position statement, how to reason with someone through logic, reason with someone through their feeling and emotion. So it was taking kind of that approach to it and not necessarily kind of a “You’re right, I’m wrong,” but like how to get your ideas across and communicate clearly.
Andrew: You know what? I was waiting to see if you would bring up your wife or not, because I wasn’t sure. What if they’re not together anymore? What if they’re still running the company but . . . Is it hard that you’ve been now working with her, living with her, being married to her for this long?
Andrew: Do you ever feel like, “Enough of you already. I’m done. I need like a week to myself”?
David: I think she probably thinks that of me.
Andrew: Right. Stop with the argument, dude.
David: We literally live, breathe, eat, and sleep this business. It’s what we do. We’re super passionate about the space. I think one of the things we got right off the get-go was we got a piece of paper. This is our founding document, a piece of paper. We literally drew a line down the middle of it, and I wrote down the things that I thought she would be good at and like things I kind of didn’t want to do that I thought she might be better at, and she did the same thing for me. It worked out that because we run a two-sided marketplace, that I was kind of always more responsible for the clients and the buyers, and Stephanie’s background is more artistic and performance oriented, so that’s really been her side of the company, if you will, in terms of where she spends her time and energy.
We travel together. When we can, we certainly do. I wouldn’t necessarily recommend that, because it is a lot of time with one another, but I think there’s really interesting benefits. I mean, like her office is right beside mine, and so when we meet up at the end of the day, we know all the people. We know the stories. We know the weight and gravity of the actual issues. It’s not like, “Oh, that’s just some petty issue at work.”
Andrew: You know what kind of stood out for me David is that you’re such a systems person that right from the start you said, “Listen, I know we love each other. We don’t know where this company is going,” and I know that you were trying to figure it out back in the days when you were doing thousands a year and not tens of thousands and you still said, “We’re going to write down what our responsibilities are.” You’re very systems oriented.
Going back to hiring. What’s the process that you give somebody new to make it easy for them to work at your company, and then how systemized are you with your team?
David: There’s some great tools that we use. I use that not in terms of software or anything along those lines, but one thing I think that’s super helpful is what we call a checklist. It’s an onboarding checklist. Again, taking a page out of the book. I think it’s called “The Checklist Manifesto.” This came up so often that that’s wonderful that we have all these user guides and documentation, but just give me the one pager and that’s kind of our rule of thumb. The checklist can’t be more than one page. Print it off or let me have it onscreen so that if we get off track of the training schedule, I always have this grounding document that I can go back to, to go, “Oh right. I missed this piece,” or “Let me circle back to that.” So it’s kind of like . . .
Andrew: So you wouldn’t necessarily onboard someone with a checklist, but you would have a checklist somewhere so that if the onboarding process doesn’t go right, you go back to the checklist?
David: We give it to them, because schedules change, things happen. So we say, “Here’s the checklist of mission critical information you need to know in order to start serving customers, launch your first campaign,” or whatever it is. And then it allows them to ensure that they’re getting all the right information. If they’re not confident with it . . . We were at one point even having their manager sign off that they completed all the items, but at this point, it’s a little more of a self-management. But these kinds of one-pager checklists are really helpful.
Also, for every role in the company, we have a playbook, which is basically a shared Google Doc that is a table of contents and then all the roles and responsibilities, the system, the procedures, the policies and so forth that is role specific. We have that for I think there’s 20 different kind of unique roles here, and the manager who’s kind of the most senior person is responsible for that document. Ultimately it rolls up to HR.
When we say, “Oh, we’re going to roll out a new process,” if it’s not in the playbook, it doesn’t exist. It’s like it’s never been communicated out, so it avoids . . .
Andrew: I see. What do you do to keep that playbook updated?
David: Like literally quarterly reviews. Especially if there’s a new hire, that can be like, “Oh, we haven’t hired somebody into customer support in a year,” and all of a sudden you go back and you’re reviewing it and you’re like, “Oh my goodness. Let’s get this thing up to speed.”
Andrew: “Before we even hire the next new person, I need somebody to go in and make sure this is updated.”
David: For sure. Yeah, because it gives a bad first impression to us if the information’s out of date. Those are the two things. I mean, we have a mentor program as well too, which is basically a buddy system, one that just helps people kind of integrate within the company.
Andrew: Meaning everyone who gets hired gets a mentor within the company as soon as they sign on?
David: Yeah, somebody that’s assigned, yeah.
Andrew: I see. Okay. And is it somebody who’s in a similar role? Is that how it would work?
David: Yeah. Often it’s like a team captain, so it’s not a manager, but it’s somebody who’s kind of an on-floor support if you will. They’re doing the same role, but they just have the experience and can share some of those war stories, maybe avoid a few mistakes along the way and really just serve as a mentor.
Andrew: Okay. We were starting to talk a little bit about marketing. As I did that, I went over to Google in an incognito window and I just typed in “voiceover artist,” and I came up with your ad right at the top of the page. You obviously are doing a lot of Google ads, right?
David: Mm-hmm. Yeah, Google, I mean, it’s probably very similar to most internet-based companies. It’s search, it’s social, and both kind of paid and organic if you will, on both of those. Display, email. Those are the big sticks.
Andrew: Display, email. Where has the bulk of your ads been going right now?
David: Well, it’s actually on . . . I mean, we think of it as organic search, but it’s really content creation. Stephanie started blogging when it was on Blogger.com, before Google bought them. She’s written 3,500 articles to the point that it actually attracted . . . We put it into an ebook. I pitched it to Wiley Publishing as a For Dummies book. It was going to be “Voices.com for Dummies” because the whole thing was like, “Hey, how do we . . .”
Andrew: There’s the light. It went off again.
David: I’ve got to move around and wave my arms more or something. How do we take Voices as a brand, that’s this internet company and like literally put it into the hands of people? I saw, actually, how Salesforce.com had done that with this custom branded “Salesforce for Dummies” book. I thought, “Wow, that’s genius. It’s accessible. It’s 30 pages. You hand them out at trade shows and whatnot.”
So I had pitched Wiley “Voices.com for Dummies,” and they said, “Well, look, you’re actually part of a bigger ecosystem.” We had a 150-page ebook at the time. They’re like, “Why don’t you write us a proposal for ‘Voice Acting for Dummies’ and kind of broaden the scope of it?” And they loved it. It went from Wiley Canada, Wiley USA to Wiley Worldwide, and we ended up getting the book deal for what’s called a trade full kind of global distribution book. So there are ways that you can take content and position yourself as an expert. I mean, there are countless stories of blogs that turn into books, but we’ve been very much into content marketing before it was a thing.
Andrew: You were. Here’s what I think that you told me before we started. You said, “And at this point, everyone knows about blogging, but what people don’t realize is that content goes beyond text. It’s not just blogs. It’s voice, it’s audio, it’s other things.” As soon as you said audio, I said, “Let me go into the podcast act to see if they’re in there,” and yeah, you guys have three podcasts. What are they and what’s your strategy with them?
David: Sure. Our podcasts, the first one is Vox Talk, which was a weekly news, arts and entertainment, and technology news as it relates to voiceovers, audio production, and video production. That one we haven’t been as consistent with, but there are two that we’re really gaining traction with. One is called Voiceover Experts.
I think there’s this maybe myth or belief that’s like, “I don’t have a lot to say on a podcast.” Well, we’ve actually created an intro and an outro to kind of brand the show, and we’ve invited coaches, like vocal coaches, talent agencies, casting directors and producers to send us a 10 or 15-minute audio recording with a lesson. They send us an MP3. So literally, in the audio recording, it’s like you’ve got the intro, the outro, and the bumpers if you will. It’s like a donut. We literally just drop the show into the middle, and so that’s a great 15-minute production that is having a number of different voices from experts around the world.
Then more recently, Stephanie’s been leading Sound Stories, and, you know, story is probably the most memorable way that people learn. I’ve tried to weave in a number of stories in this show today, but Sound Stories is all about dissecting the story itself. What are the main components? How do you tell stories, not just through the human voice or through moving picture, but even through user experience, even through different kinds of games? You can even kind of choose your own adventure-type storytelling, where you use immersive experiences as well, too. We’ve had cartoonists from “The New Yorker.” Upcoming is a storyteller from Pixar. So she’s just been able to land some really amazing guests onto this. So if telling stories is your thing, that’s a great show to check out.
Andrew: I can see it. By the way, I got into something called Zwift recently. It’s an app that lets you connect your stationary bike or a bike that’s connected to a trainer to your phone or to a computer, and when I pedal, the character on the screen pedals. You know, there’s only so much time in the day to do it or to even explore it, but I’m listening to podcasts throughout the day, so I saw that Zwift had something called the Zwiftcast. So I signed up to that, and now I’m hearing people talk about Zwift and cycling, and I get more and more worked up for it. I can’t wait to go home and use this thing, which is great for them because it’s a subscription basis. The more I use the subscription, the more likely I am to stay with it.
I understand how building up that passion gets your customers excited for your product, gets them to understand the details that they wouldn’t notice otherwise, because they’ve got busy lives and they’re not exploring the product as much as you’d like them to.
The thing that I wonder though is, for you, both of your podcasts are great for bringing in voiceover artists, but I know that your number one side of the market to target with your promotion is customers, right? This podcast isn’t about getting customers, is it? And the voiceover book, “Voiceover Acting for Dummies,” isn’t for companies.
David: That’s why Sound Stories is our most recent edition, and that one really is for the creative producer, the person who’s looking to tell a brand story to educate, inform, or entertain an audience, and so that’s why we took a bit of a different turn in that one.
That’s a very astute observation, and this is a demand-driven marketplace. Anyone that’s considering building a marketplace, you really need to kind of pick. Yes, it’s two sided. In the early days, you’re probably building up both sides, but the further you go down that path, there is going to be one side of the marketplace that tends to fuel or drive the other side to continue to stay engaged. For us, it is getting those companies that can bring their jobs to the site that is ultimately hiring talent, because the talent will continue. As long as they’re landing work, they’ll continue to . . .
Andrew: Isn’t there always demand side? Except for dating sites, where the more people you have on there, the more demand builds up.
David: For sure. I feel . . .
Andrew: Is it always demand, or is it sometimes also supply that drives the market?
David: Well, from what I’ve understood, often in B2B, it’s very difficult to get the supply where people are willing to kind of, I don’t know, list my empty office space that I’m going to rent out on an hourly basis. So in business-to-business environments, people are like, “Hey, we’ve got our resources. We don’t want to share our resources.” But in consumers, of course they have lots of supply. Therefore it’s really the demand that drives it. But yeah, I think you’re right. Demand is going to drive most things. It’s just there are some niche markets within business-to-business where it might have some different . . .
Andrew: All right. Let’s come back then and talk about what you do to bring in the demand. But first I’ve got to tell people about my sponsor, which is also kind of a marketplace. It’s Toptal.
The thing about Toptal is that they decided that if they had the best developer — actually, there’s a great example of supply — that if you have the best developer, businesses are going to find you, which is why Toptal doesn’t advertise that much. They’re not out there on podcasts. They’re here supporting Mixergy because it’s created by a longtime Mixergy fan, but they figured, “If we could get the best developers on our platform, then the businesses who need to hire them are naturally going to have to come over here.”
So what they did was they spent a long time putting together a process for hiring the best developers and for making sure they screen out people. In fact, they screen out 97% of the people who want to be developers on their network.
And now when anyone is looking for a developer, they to go Toptal. Actually, you don’t go in and look through the site and browse. The first thing you do, David, is you get on a call with a matcher. The matcher understands your problem. The matcher understands how you operate, whether you need someone for a project or a full-time basis or something in between. Maybe you need a team of people, and so they hook you up.
That’s the idea behind Toptal. If you want to hire, if you’re out there looking to hire developers, the best place to go is actually not toptal.com, but toptal.com/mixergy, because when you go there, they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours, and that’s in addition to a no-risk trial period of up to two weeks. That’s Top as in top of the mountain, Tal as in talent. toptal.com/mixergy.
David, by the way, this is a marketplace for developers. Do you think that there’s room to create marketplaces in other niches? Like, I’ve got a friend who’s created one for growth marketers. Do you think there’s room for that?
David: Yeah, I mean, speaking in kind of macro trends, it all started when Elance was the 800-pound gorilla and then oDesk and both of those merged, and now it’s become Upwork and they kind of cover it all.
Andrew: They even have voiceover artists, frankly.
David: They do. They have a category for that. So I guess the question is: How can we co-exist if you will? I think it comes down to the user experience. If you want web developers or growth hackers, if you will, it’s where that community of people is going to be attracted, what’s going to stay them engaged and give the buyer the best experience knowing that they’re getting — love that term — kind of the top talent, right? How do I know? Well, it’s because that talent, be they voice talent, developers, or growth hackers, they’re attracted to these communities that become best of breed.
I think what we’re seeing, particularly on the gig economy, is more specialization of what gigs are available, and people know that they’re creating . . . It comes down to the profile, the information you’re capturing on the profile.
Andrew: I can see it. By the way, I can see why someone would come to Voices.com instead of Upwork. Upwork, first of all, has got a broad collection of people. But second, once you find someone, on Upwork, maybe they’re linking you to a YouTube video. Maybe they’re linking you to some portfolio on their site. On Voices, I do a search and immediately all I see is the faces, some tags next to each one, which are easy to read, and then a play button so I can see a sample of their voice. It’s a much more directed experience toward the job that I’m looking to perform.
But do you think that there’s a place in the marketplace right now to say, “You know what? Upwork has this broad marketplace. I want to have just comic creators, or I want to have just a marketplace of writers, of copywriters”? Do you think this kind of niching down of marketplaces is still an existing opportunity?
David: It is, as long as that total addressable market, let’s say, is at least $1 billion in annual spend. For voiceover, we’ve done a total addressable market, which is a great exercise for anyone to do. We’ve come up with $4.4 billion, which is immediately addressable. There’s 16 million voiceover jobs done annually across 12 different subcategories, like radio, TV, internet, video, phone system, podcasts, and so forth. I think if you can identify, hey, it’s a multi-billion-dollar market, there’s enough work that’s out there, well then absolutely you can create a market.
Another way to look at this, and this is very low-tech, is go down to the local bookstore and see what magazines are available. Somebody gave me this tip, and it’s a great one. It’s like if there is a magazine publishing to that industry that’s been around for 10 years, you can be sure there’s a whole cottage industry that’s built around this, a whole ecosystem that’s built around this space. So, how do people kind of get involved in that space? Flip through the magazine. That will give you all kinds of ideas. But magazines represent industries that obviously need to be big enough that can support an ecosystem of buyers, sellers, advertisers, and other supporters.
Andrew: I see “The Voiceover Insider” for you guys.
David: Yeah, that’s one of them. There’s “Mix Magazine.” There’s “Audio Mag.” Then there’s all kinds of advertising magazines like “Ad Age,” and “Marketing Week.” There’s a bunch of them out there.
Andrew: So then what do you do to bring in the businesses?
David: So at this point, speaking of those four form factors of digital content, there is audio, video, tutorials we produce. We create a lot of articles that are supported by engaging images that are ultimately shared on social.
Andrew: So content marketing is the number one way you bring in new businesses?
David: Yeah. About 85% of our traffic is from organic search, and so it’s really a volume play for us. It’s not just thin, 200-word articles. I mean, these are 1,000 to 2,000-word articles about some facet of the industry. In addition to that — that’s really all online — we also subscribe to Data.com, which is a Salesforce property, which is really tapping into the Dun & Bradstreet database. There’s a number of them out there, SalesLoft. ZoomInfo is another one and InfoUSA. Basically, they’re databases of like white and yellow pages that you can import lists of prospects. Business development is reaching out to them, making introductory calls.
It goes back to your point and we’ve discovered this. A lot of business nowadays is happening over the phone, where you need to schedule an initial appointment. It’s hard to get people on the phone to be able to carve out the time to make the presentation. In doing so, we found that — and this is a great phrase for everyone to remember — people do not switch from “good enough,” what they have now, to “might be better,” and that is the biggest challenge plaguing so many startups that have a great idea. The problem is what your customers have right now is “good enough,” and so you need to talk to somebody on the phone, really ask those probing questions to understand: Why is it good enough? Do you wish it could do more? And then be able to introduce the solution. That just requires people to be able to tell that story and have those meaningful conversations over the phone.
So in addition to everything we’re doing online, there’s a team of 50 account managers engaged in those types of . . .
Andrew: Actually I’m imagining email potential customers, whose data you get from Data.com. You try to schedule a phone call. If they do schedule a phone call, talk to the potential customer and try to close the sale.
David: Exactly, yeah. And at least if it’s not for this project, it’s for the next one. We’ve planted that seed in their minds.
Andrew: Is that worth it for you, even though each client’s value is less than $10,000?
David: This is what else we’ve discovered. There’s price points, right? In terms of a pricing strategy, if your product is let’s call it $0 to $1,000, it’s got to be fully automated, online and no human intervention. If it sells between $1,000 and $10,000, you can be kind of inside sales, somewhat supported by marketing, but like inside sales. One hundred thousand or more, that’s when you get into the outside sales, where you’re literally traveling, pounding the pavement and meeting people in person. So there are these thresholds, and that’s why it’s important to figure out that lifetime value and the price points. If they don’t fall into there and if you’re only selling something for $10 a month and people stick around for on average a year, there’s no margin in it. You can’t sell that through an inside sales team.
It actually really came to a head for me when we were looking to buy some ads, basically some job slots on LinkedIn as we were growing and looking to recruit. You can buy an individual job for, I think at the time, $300 or $400, but if you want to get the help of an account manager or some other kinds of features, you’ve got to commit to $4,000, and that’s the only time you talk to somebody. If you’re not willing to do that, you do not get an account manager. Salesforce does the same thing, HubSpot is the same thing. So encourage people listening to align your go-to-market strategy with your pricing strategy. They both need to work in harmony.
Andrew: And in fact, Salesforce is when somebody calls in, they need to speak to a human being. Outside is you guys go out and try to find them.
David: Physically going out of the office, yeah. So inside sales actually can be inbound or outbound, but it means you’re like inside these four walls. Outside sales means you’re physically leaving the office.
Andrew: I see. Okay. And I’m looking at some of the content and now I can understand why, when I’m on YouTube, your YouTube videos are things like “How to Post a Job,” “How to Find Voiceover Talent,” and that kind of thing.
David: Yeah, for sure. Many of you know that YouTube’s the second biggest search engine after Google. People just think it’s a video site. It’s more than that. It’s the Number 2 search engine. It’s also the Number 1 educational site on the planet. So it’s like, yeah, people go there to get entertained. You’re watching content, but also a lot of people are going there to learn. I mean, I know I do. Any time I’m evaluating a software tool or a sales tool or a marketing tool, I always go to watch prerecorded webinars. I always go to watch the short explainer or demonstration videos. It’s a great way to kind of bring somebody in initially.
Andrew: Hey, you know what? I forget to do that sometimes. If there’s something I want to buy, I might go to look up a review on Google and definitely on Amazon, but I have to remember that someone’s got an unboxing video on YouTube, and in many ways that’s better to watch them unbox it, see them set it up and I’ll understand what it’s like for me.
David: Oh yeah. For sure.
Andrew: Like right now, I’ve been considering Process Street for something, and I googled it or wanted to try to play with it on my own, and that’s not the way to do it. I should just go to YouTube, which I just did now as you were talking. Type in “Process Street” in there, and now I see somebody talking about it and in 8 minutes and 37 seconds, I can understand whether it’s a good fit for me or not. I like watching those videos while I eat my lunch.
David: Yeah, exactly. It’s one of those activities that you can do while something else is running, especially maybe if you’re so fortunate to have two screens or a split screen or something along those lines.
Andrew: You know what? I never believed in two screens. I like to focus, but I needed a second computer, just one for interviews and one for everyday work, and so it actually helps to have it going in the background.
All right. We were talking about how now your next goal is to get to $100 million, right? You had this goal of getting to $1 million. You broke it down into small chunks, $83,000 a month and into daily chunks. “How much do we need to do to get to that?” What are you doing now that your goal is so much bigger to get to $100 million?
David: For sure. We built out a financial model that really takes a series of inputs, meaning average transaction size, growth rates for each of our revenue streams and project that out. We know what the average transaction size is. We know the volume of work that’s getting completed through the platform, and so, you know, it’s really a 5X kind of growth from where we are today. And as crazy as that sounds, I mean not in my wildest dreams would I think, “Hey, we would get to . . .” — I mean, you hope — “that we would get to $100 million.” You really just do need to break it down into understanding, “Okay, that’s the goal and here’s what we would look like.” Let’s work that all the way back to, “What would I need to do today?” And that comes down to the people, your pricing strategy, your process, and just making sure you have those infrastructures in place to all facilitate that.
Andrew: Can you give me an example of something then based on that that you’re going to have to adjust, that you’re definitely going to have to change, maybe even completely?
David: Yeah. Well, one thing, we went through the change, and it was a bit of a leap of faith. We started our company initially in a startup incubator at the local university. We moved into an office space downtown. It was about 6,000 square feet. We took over the whole floor, and then we got another floor. We had, I think, at one point three or four kitchens and really just kind of outgrew the space. So we moved from there to where we are today, which, as I mentioned earlier, is 45,000 square feet, so it’s actually twice as big as what we had before. We got what I believe to be a sweetheart of a deal with our landlord, who was a longtime relationship, so yeah, we moved into literally twice the space, an office facility that when we did the floor plan can support 300 employees.
Andrew: Which is a big risk to take on. You’re really saying, “I’m going to take this risk because I believe we’re going to get to $100 million.”
David: Exactly. It may not be next year. It may not be the year afterwards, but there will be 300 people that are working here. We’ve planned for that, just in the physical space and even where the furniture’s located, that each department could grow at a proportionate amount. All of those things, as I say, it’s a leap of faith to do that, but that required a whole different way of thinking that we found really exciting, to be honest with you, of just reimagining . . .
Andrew: I can see that. First of all, I think most people would not even sit and plan out where the furniture would go when they got 300 people or when they basically doubled in size, and I can see how with your personality that’s what you do.
David: Oh, I love it.
Andrew: What I wouldn’t expect is the upside of that is that you’re basically like envisioning this future and making it more real and making it into a clear goal for you. I can see how it would help you get there.
David: I was speaking with our HR Director just yesterday. Sometimes I find, and maybe several listeners are the same way, you find that you’re kind of living in the future, because I see it so clearly and I realize, okay, but my job is partly to kind of get people from here to there, as I see it. I can do that by communicating, by being very open and transparent with our goals, our projects that are happening. I think even, again, reflected in the physical office space, it’s clear that we want to grow to become the industry dominant player in a much bigger capacity than we are. This space kind of just speaks to that. I try to be as clear as possible with that, because I want people to get excited that they’re along for the ride with us.
Andrew: All right. The final question is something that our producer asked you. She said, “Listen, I asked you a bunch of questions to prepare for this interview to make sure it’s a good fit for Mixergy, and I know I asked you a lot, but is there something I didn’t ask you?” You said, “Yeah. We never talked about why an internet company would want to be offline or want to do offline work. For example, we’re doing these in-person events.” I was wondering, what are these in-person events, and why is that so important for us to include here?
David: I touched on this when we talked about the idea of bringing an internet or an online brand down from the clouds, if you will, and being in person, kind of being accessible. So the book was one way to do so and obviously attending a conference and events, but we found especially because we are 100 people strong, it is inside sales, we’re not going out to see people, that let’s create a bit of a road show where we travel and we host one-day events. We travel. We actually get our strongest and best supporters and customers all in a room for a day of learning and sharing. We have a couple of events, one in San Francisco this weekend actually, and then in a couple weeks in Brooklyn, New York. So we’re excited for both of those.
Andrew: Why would someone want to get together with voiceover artists?
David: Yeah, so creative producers looking to hear from other talent how to be more productive when they’re hosting sessions and what other talent is out there? Often it’s the same talent that gets hired over and over, so form some bonds that way. Then candidly, I think a lot of talent are attending these events. They get to meet the people who are hiring and hear from marketers and product managers here to kind of get a bit of a glimpse into the inner workings of Voices.com and what’s on the product roadmap. Yeah, I think it’s just a really fun opportunity. It’s something that we’ve been wanting to do for a while, and we’re so excited that we can finally pull it off.
Andrew: All right. Well, congratulations on the success. I’m looking forward to having you on when you hit $100 million in sales. That’s going to be a celebration.
David: That will be the next one.
Andrew: The website, for anyone who has not been paying attention, is Voices.com. What a great URL.
If you want to hire a great developer, that URL is toptal.com/mixergy. And of course, if you want to actually get people on the phone, the software that we use here at Mixergy to help book meetings is acuityscheduling.com/mixergy, and I’m grateful to them for sponsoring.
Thank you for being here, David and I’m going to go rest my voice.
David: You do that. Take care.
Andrew: Thanks. Bye, everyone. Bye.