Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, the place where I interview entrepreneurs and get deep about how they built their businesses. And I’ve been doing this for a long time, so I can tell you that I see the progress of these entrepreneurs over time.
In fact, about four years ago, in fact almost to the day four years ago, I interviewed today’s guest, Colin Hodge, about his company, which at the time was called Bang With Friends. Yeah, just like you imagine, that’s what it did. He seemed to have it all at the time. His business was big news. He was getting a lot of attention for creating an app that allowed people to sleep with their friends. It enabled people to have a good time. And it also got him massive downloads. And he seemed, as I said, to be on top of the world.
But after the interview, Colin was in for a world of pain. He got sued. He got kicked out of the Apple App Store. Apple threatened at one point to have him arrested. I’m just going through the list of things here, Colin. Just reading this is pretty shocking. He had to change his company’s name and was screwed, in my opinion, by a potential acquirer, and I have a sense of who it is and I’ll ask him about it in the interview.
It was super painful .Tears were involved. Pain was involved. He almost got crushed. And I think most of the other people would have said, “Hey, you know what? I tried. It didn’t work out. I’m going to walk away.” He didn’t. He stuck with it. As a result, he says it made him stronger, and he eventually sold his company to Paktor. I invited him back to talk about what happened in those years and to figure out why this happened and why it made him stronger.
This interview is sponsored by two great companies. The first you heard me talk about for a long time and it suddenly disappeared from Mixergy. I’ll tell you about why in a moment. They’re the hosting company called HostGator. And the second is a company I’ve used forever to help me coordinate my interviews and to help me sell. It’s called Pipedrive. I’ll tell you more about them later.
But first, Colin, welcome.
Colin: Thank you, Andrew. Great to be back.
Andrew: You’re going to admit in this interview that you cried.
Colin: I definitely cried, yes.
Andrew: Okay. But you’re also going to say that you sold and it was a high. What did you sell your business for?
Colin: We sold for multi-millions, and it was a mixed deal of equity and cash.
Andrew: How much money did you raise for it?
Colin: For the company over the lifetime? We raised a little over $1 million US.
Andrew: Oh, really? I thought you raised so much more than that. When you sold, did you sell for multiples of that or a small percentage of it?
Colin: Yeah, we sold for multiples.
Andrew: Multiples. Okay. So your investors ended up doing okay. Did you become a millionaire from the sale?
Colin: It depends how you count. But investors are very happy. I’m pretty happy, and I’m more importantly excited to be working with Paktor and now with the company, M17.
Andrew: So, wait, what’s M17, actually?
Colin: So I sold to Paktor. Then a few months ago, we merged with another company that runs a live streaming app. So now our full company is named M17 Entertainment.
Andrew: I see. I had no idea. It feels like this whole thing started to go down when it was Zynga that started to come after you, right?
Colin: Right. Yeah. We were sued by Zynga for use of the suffix “With Friends.”
Andrew: Can they do that?
Colin: If you have money and lawyers, you can do a lot.
Andrew: So their lawyers come after you. You realize, “They have more money than me. They are more aggressive than most other people in the world.” Do you at that point say, “We’re not going to fight,” or do you try to put up a fight?
Colin: Yeah. There’s a part of you that wants to fight, especially when you believe that what they’re saying isn’t true. The fact of the matter was we were a small startup and we wanted to focus on building a lasting product and something that had value. Litigation can cost hundreds of thousands of dollars, and it’s a big distraction for the CEO and possibly more people. It was an easy choice to meet with them and come out with basically a name change that solved the issue.
Andrew: The name was what?
Colin: We changed to Down Inc.
Andrew: Is it fair to say that it was actually good for the business? It allowed you to mature.
Colin: Yeah. It was fair. It happened at a time when, due to the App Store banning, we were actually changing the app name on Apple. It kind of just hastened our move to the new brand. It did add a little extra pressure, and we had to distance ourselves more from that name than maybe we would have.
Andrew: What do you mean? How would you have done it if you could have done it properly?
Colin: Yeah. That name, we built a lot of publicity around it. So we would have blown it up more and done more with the domain and just advertising in general. But long term from the product, we moved away from just finding partners for your friends, and we moved to location-based matching.
Andrew: Things started out with a previous business that you had. You got into dating for a while. What was the first dating site you created?
Colin: Yeah. The first one I created was called HeardAboutYou. It was meeting friends of friends through your Facebook friends. So similar to Hinge, if you look at their original model, same idea. You could be introduced through a friend and basically have them be your wingman online using Facebook apps, same way Bang With Friends started as well.
Andrew: And how’d that do for you?
Colin: It never got off the ground. I did a beta. But one night, I got really frustrated and kind of saw the writing on the wall and decided that HeardAboutYou was not going to work. So Bang With Friends was created from that honest look at the potential failure coming.
Andrew: And was it called HAY or HeardAboutYou?
Colin: Yeah. I abbreviate HAY to simplify it in our notes.
Andrew: What is it about dating sites that attracts you?
Colin: Yeah. I got into it six or seven years ago, just super, super interested in the social dynamics around how people meet, how they first open up that relationship and conversation and how they form all the impactful relationships in their lives. I think dating is one of the more intriguing ones, because when I was a teenager, I wasn’t good at it. So, as I went through college and I wanted to learn more and grow as a person, it’s just something I studied more and more. Then with HeardAboutYou, I did about a year of research interviewing men and women across Seattle, where I lived at the time, learning as much as I could.
Andrew: What did you learn from those conversations?
Colin: Well, this was pre-dating apps. This was dating site era. So just a lot of frustration with how intensive the process is, with how desperate a lot of people seem and just a lot of the matching was kind of pseudo-scientific. So it was a frustrating experience for all genders and for everybody involved.
Andrew: I thought it was just me who had a hard time with those dating sites. You really end up putting in a lot of work and I thought, “At the end of this, I’m going to get really good at screening and writing emails. But I’m kind of good at writing emails anyway. I don’t need to develop that superpower.” I finally gave up on it without getting a single date from a dating app.
Frankly, I don’t even know that my profile was up. I didn’t even want to write my own profile. I know what it was. I heard a woman on Howard Stern say that her business was she was going to write profiles for people. I called her up and I said, “How much do I pay you?” She said, “The business is not really working out. No one on Howard Stern called.” I said, “I’ll pay you anyway. Do it.” She did it for me and I said, “I still don’t have the patience for it.” And I went out to date. It was a pain in the butt. I get the challenges that people had with it.
One of the things that you picked up was if I could help them meet people through the friends they already have, a lot of this would go away. But isn’t it a little weird to try to date your friends or your friends’ friends even?
Colin: Yeah, for sure. Bang With Friends originally was matching directly with your friends. That was all about discovering when there was a potential romantic or sexual relationship that you can have that perhaps you didn’t want to broach the subject and risk the friendship. The friends of friends model, I still believe in that. I still believe that a lot of good relationships are formed that way, whether they end being casual, friends with benefits, or something more serious and getting married. But obviously now, I’m a big believer in finding any relationships in the real world and not restricting yourself to your existing friends group.
Andrew: Okay. So that didn’t work out. You decided, “I’m going to come out with this new thing, Bang With Friends.” At the time when you launched it, you didn’t even say it was you. It was a guy named C., your first initial, that ran it, which also added to the mystery and people wanted to find out more. That was all intentional. You’re really good at PR and you get it, right?
Colin: You know, it was a combination. I wish I could take full credit, but a lot of it was just because I was working on HeardAboutYou still. So I was fundraising for that and I needed to keep it secret. Once we saw the frenzy around that approach, though, I did do about a six-month press plan, where every few weeks we had a goal, a new press angle that we were going to try to get some traction. It worked really, really damn well, to be honest.
Andrew: What worked especially well about it?
Colin: Well, starting with the anonymous approach, being anonymous founders and seeding out a little bit of information and then also misinformation about us. Then starting to talk about what are our future plans, are we fundraising, how’s the product going to evolve, what are some product stats? In that first six months, we hit around 90% of the stories we tried to hit, which is really hard to do unless you own a news site, basically.
Andrew: Can you give me an example of one of the stories that you put out there that was a hit that you’re especially proud of?
Colin: Yeah. I think in the early days, we put out a story about the matches that we had. So just to get people excited about using the site, like it’s not just funny. It’s not just in your face. It’s actually useful. We were able to seed that story right around the time that SXSW was starting that year, which led into our SXSW stories, which were part planned, part just taking advantage of the situation.
Andrew: I’m wondering how you got so good at it. You were basically just three guys brainstorming ideas. You ended up with this thing. You cranked out the first version in how long?
Colin: It was three and a half hours.
Andrew: Three and a half hours?
Colin: Three and a half hours of coding, yeah.
Andrew: I see that it’s a fast idea. You got so much substantive news for it. How did you learn how to do that? Where did that come from?
Colin: That’s a very good question. I wish I knew. I think a lot of it was obviously luck. You’ve got to put a certain amount to being in the right place at the right time with the right type of idea. But learning on the fly and seeing what sort of stuff is interesting to journalists, seeing what they and your friends get most excited about is how we rolled out that initial six-month plan, because we didn’t have an option to go and study like how do we do better at press.
Obviously before then, we were in an accelerator. We’ve heard all the standard lessons. Make relationships with journalists and make sure you’re keeping them up to date and you’re showing interest in what they’re doing and do your research and all that. We hadn’t done that yet. We didn’t even do our demo day yet. It was a lot of learning on the fly and just running with it.
Andrew: Okay. All right. So you mentioned how you got some press. The product starts to take off. SXSW, you get some attention before SXSW. Then you get declared one of the winners of SXSW, which gets you even more press. Then a month after that, a venture capital firm makes an offer to lead the seed round with how much?
Andrew: And then what happens to that? I know the name, but I’m going to let you decide whether you want to say it or not. What happened to that investment?
Colin: So we had the soft offer from them. They said they wanted to lead. They were super excited with what we were doing and the pitch. Their concerns at the time were that we were a website only. We were a web app within Facebook. They were saying, “When are you going to go to mobile? When are you going to roll out the rest of the plans?” We said, “We want to focus on SXSW. We think this is a huge opportunity to get noticed and get a lot more traction.” Plus, we rolled out a special website for SXSW, an event localized one where you can match with people nearby.
So we came back from that and they said, “We don’t have faith that your popularity is going to transfer to mobile.” They used that as their primary excuse to pull out. Then a month later, we launched on mobile and got to the top ten, passed Tinder for a bit until we got banned, actually.
Andrew: Wow. Boy were they wrong. Can you say who they were?
Colin: Yeah, IDG.
Andrew: I feel like maybe there was a different issue there where IDG was a little more conservative, a little more corporate, and maybe that’s why they pulled out. Do you sense that at all?
Colin: You know, it’s hard to tell at the time. I can say that our meetings were extremely positive. They were on board with everything, even the branding and all that. So it was just one of the many hits you take as an entrepreneur. I think you have something in your hand, and then it’s gone the next day.
Andrew: Any advice you’d give to an entrepreneur based on that experience, where someone says, “We’re going to work with you, we’re going to fund you,” and then they suddenly pull out days later, essentially?
Colin: Yeah. Take a moment to kind of process it and then get back to work, because you’ve got to prove them wrong, use that as a motivator.
Andrew: It seems like that’s what it was for you. In your head, did you think, “I’ve got to show IDG I can launch this. I can go mobile faster that they would imagine.” You did?
Colin: That’s exactly right. Frankly, I used this in the past like ten years of my life, basically since I graduated college. Anybody who says, “Your idea won’t work,” or, “Your company won’t work,” or, “You’re going to fail at something,” or, “It’s too hard, too risky,” I use that as my personal motivation.
Andrew: How formal are you with that? Is it something that floats around in your head, or do you have a list or journal entry where you say, “I’ve got to come back to that and show them,” or do you use it as fighting words for the team, “Let’s show IDG we can launch this fast?”
Colin: Definitely used it with the team. But personally, once or twice a year I’ll review and say, “Where am I going with my personal goals and why am I doing it?” The consistent thing that comes up is somebody or some organization turned us down or said this isn’t going to work. It is motivating. Sometimes you need external factors to kind of rally your heart against and push to prove them wrong.
Andrew: All right. Let me talk about one of my sponsors and then I’m going to come back and find out about what happened. You get to the top of the App Store. I didn’t realize this, you were ahead of Tinder. What happened after that?
The first sponsor I’m going to tell everyone about is a company called HostGator. And if you guys have been listening to me for a while, you know that they were advertising with us almost every single freaking interview, practically it was every single interview. Then suddenly they disappeared. I want to be open with you guys about why they disappeared.
We had some complaints in the Premium membership about people who said, “Hey, HostGator is not a great hosting company.” I said, “If these are Premium members and they’re telling me that HostGator is not a great hosting company, I want to take it seriously. Let’s go look into this.” So we spent some time looking into it. We talked to people who signed up to HostGator and had positive and negative experiences. We wanted to understand what were the issues. What was going on?
Until we had a satisfactory understanding of how good HostGator was, I said, “I have other sponsors. I don’t need to take a sponsor just because.” I have to tell you every single person who had a negative experience, I went to HostGator and I said, “Guys, here’s what’s going on with them.” Not only did they give me an overall understanding of what was going on, which there were two things that were happening and I’ll get to them in a moment, but they put each one of them in a Google doc.
In the notes of the Google doc, they told me what happened with each individual customer, with each individual situation. I said, “This is a company that’s freaking obsessive. I like that.” And what I came down to was an understanding that two things were going on. The first is HostGator at one point around the time they started advertising with us, they were getting massive, massive customer sign-ups. They went from being kind of known in the industry to deciding they were going to advertise a lot.
So the thing I promoted them most for was customer support, because I saw within 90 seconds I could get on a phone with someone, get customer support with HostGator, which was unusual. Suddenly, those times were taking longer and longer. So that’s number one. They explained what that was. They hired more people. They get customer service now back to where it was before. They’re always going to be, I think, trying to figure out what the right number of people is to have for customer service, but that’s something that they care about, and now they have 24/7, 365 customer support.
The second thing was some people in the Premium community were comparing HostGator’s cheapest, least powerful plan to the most expensive plan they were getting from somewhere else, and of course it’s not going to measure up. HostGator has everything from really cheap shared hosting to dedicated servers, to managed WordPress hosting. So they have the whole package. I’ve been promoting the cheapest one, because I want you guys to get started with something that’s easy, fast and then you can grow with HostGator.
So, after all that investigation, I am proud to say that HostGator is back. If you want to sign up for a great hosting company, go to HostGator.com/Mixergy. In a moment, I’ll tell you what you get. But I want to tell you that when I launched my new business, Bot Academy, I wanted the best hosting company I could find for it, and I went to HostGator. We did a major launch on it with live events where I had over a thousand people register to come watch me live, where hundreds and at one point it was 700 people all at once came to watch me live. HostGator stood up to all that attention, all that traffic.
We do regular WordPress sites. We do bots on it. We also do a membership site. So all that stuff together on one WordPress site that’s on HostGator and it still survives. So why would you want to go to this special URL I gave you? Well, you might give me credit for it, which is a nice thing to do, but also they’re going to give you 50% off, which means really low prices have gotten cut in half.
But finally, whenever you sign up to any sponsor using my URL, using my discount code, you have me standing behind you, which means if you complain, it’s not just going to go into whatever process the company has. I take this stuff freaking seriously. I can’t support everyone on my sponsor’s companies. I can’t give you personal one-on-one support for every one of my sponsors, but I can say to the sponsors, “Hey, what’s going on with this?” and help you guys out where possible.
So there’s the URL. Go to HostGator.com/Mixergy. Get 50% off. I’m using them. If you want a really good hosting company, especially for WordPress, but frankly for other platforms too, go check them out at HostGator.com/Mixergy. I’m glad to have them back.
So, Colin, do you remember when you found out that you were banned? Where were you?
Colin: Yeah. I was playing soccer in San Francisco. I checked my phone after, and it was an email from a journalist asking about it.
Andrew: Do you remember which journalist?
Colin: No, I don’t at the time, actually.
Andrew: All right. And then immediately your world goes black, I imagine.
Colin: Yeah. It was very overwhelming, because there’s not a clear process on what to do.
Andrew: That’s the problem with being an entrepreneur. At any moment, you could be enjoying yourself, having a good time with your friends and boom, the whole thing could come collapsing down. So how did this potential arrest happen or the threat of arrest happen? What did you do?
Colin: They ended up calling me the next day and just telling me, “Hey, we’re going to take your app off or the update that you sent in also will not be processed. It’s because you’re violating our terms. But they wouldn’t even tell me which of the terms originally it was violating. So through lots of emails and messages back and forth, finally I tried to just get an appointment face to face and say, “We want to adjust our app. We want to fix things and get back on the App Store. How can we do that? How can we understand what you’re looking for?” And they wouldn’t do that.
So I drove down to their Cupertino office. I found the right building and tried to wait — I told the security who I was waiting for and tried to get an appointment face to face. After about half an hour, he came out and said, “If you’re not off of our campus soon, we’re going to call the police and you will be arrested. You need to leave.” The security guard was pretty damn serious about it too.
Andrew: That’s unbelievable. It feels like such a lack of power in an environment where they have so much power over you. What do you do about that? They’re not even willing to talk to you.
Colin: Honestly, it was just iterating, submitting new versions that we thought addressed potential issues, and finally we landed on something I think two and a half months after we got banned originally.
Andrew: What was it you think got you banned, and what did you do to undo it?
Colin: I think we were riding high for the two weeks after we launched. Obviously, they approved the initial version. I think what they saw was a lot of news and press about it. It raised a flag internally and someone said, “Do we really want to be having this app?” And the conversation got restarted and somebody higher up took offense to it.
I think eventually the answer we got was they objected to the concept of it, not the name, not any content in it. There certainly weren’t any racy photos or anything, but the entire concept. For us, that was a bit harsh to hear considering how many apps existed with the hook up or casual relationship intention, many of them with hook up in the name. So that was hard for us to hear. But what we ended up changing was removing all references to Bang With Friends to BWF to banging to hooking up.
Andrew: Your launch screen used to have a suggestive photo of a woman in — I can’t tell, I’m looking at an old version of it. I can’t tell if she’s wearing underwear or not because the connect with Facebook is right where her midsection is.
Colin: It’s strategically placed.
Andrew: Yeah. And then suddenly it changed from that to just a red screen with some texts explaining you should connect it to your Facebook page in order to start out. That’s the difference and you also changed the name from Bang With Friends to Down.
Colin: Yeah. That’s right. The original photos we used were suggestive, but not showing too much nudity.
Andrew: So, basically. Zynga and Apple meant that you had to switch the name of the app. Now, your competitors had some more traction, had some more attention, and what happened to your app after you launched?
Colin: Yeah. So once we got back on the App Store, we had some traction, but it wasn’t nearly as large as before. So we went back to the drawing board and said, “What do we need to improve about the product? How do we get people more matches? How do we get them more profiles to view?” As you can imagine, seeing only friends is very limiting. So we expanded to friends of friends, and we improved our matching and we drastically improved the design of the app as well.
Andrew: What did you do improve that had the most effect on conversions, on engagement?
Colin: I think launching the friends of friends connection was super strong, definitely boosted our match rates and our engagement rates in general. Then we got praised. This was the press angle we used. We were very different from the UI at the time. Everybody was using Tinder taking off, using that card metaphor, swiping left and right. We tried to be a bit more elegant in our design and stand apart a bit.
Andrew: What did you do that made you more elegant? I don’t see screenshots of that in my research.
Colin: Sure. What we did was we went with circles that could drag up and down. We heavily associated the gestures with the intention you had, whether it was to get a date or get down with someone. We had a very beautiful blurred background that felt very immersive in the person’s profile that you were viewing. So, instead of using a card, we filled the entire page with elements of that person’s profile, so it felt like you’re focusing on one person at a time.
Andrew: One of the things that I get from you is you’ve always had the sense of self and the sense of confidence in the way you projected yourself publicly. I’ve known some — we have some friends in common, so I’ve had a sense of you behind the scenes, and I’ve known about some of the uncertainty you face.
I’m wondering is what I’m seeing now the person who you were at the time when you were sued, when you weren’t in the App Store or when basically TechCrunch was waiting for you to come back and wondering were you going to survive or not. At that point, did you say, “What the fuck am I doing with my life? Am I dead here?” Or did you even at that point have the same confidence that I see here in front of me?
Colin: I definitely had my moments where I questioned it, of course.
Andrew: What was that like for you at the time? When you questioned it, what does it mean? Is that the period when you were crying? Is that the period when you said, “I maybe screwed up?”
Colin: Yeah. When your whole world feels like it’s crashing down and everything is going wrong and you don’t have a founding team that is 100% committed and full-time, which I didn’t have, so yeah, that was a time when we were getting sued and we were out of the App Store and we couldn’t close our funding round yet because investors were seeing this and we had the VC pull out and all that.
So I definitely had those down moments where I had to reflect on things, and then I came out stronger because I realized both internally and then obviously leaning on friends and advisors that we did have something that we could build on. It wasn’t just a fluke. It wasn’t just a — we didn’t get to a few million users by accident. It was our ability to adapt and to persevere that got us there.
Andrew: Your partners, your cofounders weren’t as invested as you were? What were they like?
Colin: Yeah. So, because we started this as a side project, an incubator, they had their own projects and they were working on them. One was fundraising as the CEO of another startup. The other one was working as the CTO of the incubator. So it was definitely a trying time because they put in as much as they could at the beginning, but it definitely trailed off. As the only full-time founder, I had to build a team with very limited experience and obviously finding people who are top notch but also are willing to kind of play career roulette a little bit with a brand name like Bang With Friends is a little difficult, yeah.
Andrew: This was Draper University. Was it Draper who was the investor?
Colin: So the incubator was Boost VC, run by Adam Draper.
Andrew: By Tim Draper’s son.
Colin: Exactly. Tim Draper was our first investor as well.
Andrew: All right. So they’re not fully in. You’re fully in. You have now this app that’s finally back up. Here I’m looking at my notes from your conversation with our pre-interviewer and your additions to this Google doc where you say, “You know what? We still had to let go of everyone or a lot of people back in 2014.” What happened there?
Colin: Yeah. I think the biggest thing that happened was we weren’t seeing the traction on the user growth that we wanted. More importantly, we didn’t see a clear path forward to profitability. So I think the team, I placed everybody that I could. I helped them get the next jobs as best I could. Many of them ended up at really good places, actually. But it was just a natural time as well to shrink the team back down to just me.
Andrew: To just you?
Colin: To just me.
Andrew: I had no idea. So you were at the time running the company by yourself, doing the coding yourself?
Andrew: The design yourself?
Colin: Tweaks to the design, yes. Thankfully, I didn’t have to do too much design, but anything that had to happen during that year or so period, it was all me. Yeah.
Andrew: When I interviewed you last, you were in the Bay Area like I am now. After that, you moved out.
Colin: I had to escape the Silicon Valley bubble.
Andrew: Tell me what you mean by that. I’m feeling like I want to leave now too. I just want to get some distance. What do you mean?
Colin: I needed some more perspective, and I needed to get out of the kind of rat race where everybody feels that raising more money and growing your team to a lot of times too big is the goal, rather than being a bit more rational with it and saying I want to get profitable, I want to really lock down the key metrics that are important to a sustainable company.
Andrew: What were the key metrics that you were going to focus on when you left San Francisco?
Colin: Yeah. At the time it was how do I introduce revenue to an app that’s traditionally been free the last two or so years, and how do I continue user growth without falling into the performance marketing trap that every dating app in sight seems to?
Andrew: What’s that?
Colin: Just a massive amount of revenue has to feed back in to user acquisition.
Andrew: I see. So you have to keep paying affiliates to send you users who are going to pay for the app and disappear soon after where you’ll have to buy more.
Colin: Yeah. And ad networks, Facebook and AdWords and such. I wanted to grow it organically. That was our history so far, and I had faith that I could figure out how to get that growth for basically free.
Andrew: Okay. Where’d you go?
Colin: So, throughout the history of Down, we’ve come up with various ways to grow organically, but at that time, the most successful one was really diving deep on ASO and finding out how to rise to the top of the keyword search rankings, the chart rankings and then play on the existing in app referrals that we already had going.
Andrew: ASO, App Store optimization, it seems so rough because you can’t tell what’s working for you or not, right? There’s no A/B testing obviously, but there’s also so little data that the only way I think you can do App Store optimizations and then see the results is to make a change and see if in the next couple of days the results will pay out, that you’ll get more downloads, right?
Colin: Yeah. That’s the basic approach that I used and it worked.
Andrew: What were some of the things that worked for you?
Colin: The key things that worked there are understanding how Apple and Google, how their algorithms work in terms of surfacing an app in a search result and making sure that once the user sees that impression that they’re actually going to click through and download. It’s interesting enough and catches their eye.
Andrew: Do you remember one thing that was especially powerful?
Colin: The most powerful thing was making sure you’re getting enough five-star reviews in an organic way.
Andrew: How’d you do that?
Colin: Appealing to our users and saying, “You love the app, but if you don’t rate us, we can’t get as many matches as we want as a community. So let’s bring more people in, rate us the five stars you think we deserve for our approach to this dating niche and then bring more people in.” It really, really worked.
Andrew: Just by saying, “We need more people here. The best way to do it is to get more ratings.” I feel like something else is at play and my concern is, Colin, that after I publish this interview, I’m going to go drive with someone to Napa or have a beer with someone and they’re going to say, “You know what Colin really did is . . .”
Colin: Yeah. To be as transparent as possible. We prompt the user and we say, “Do you want more matches?” We want more matches. The community wants more matches. How do we do that? Get more five-star ratings on the App Store.
Andrew: So the question was, “Do you want more matches?” If they clicked yes, then you say, “Here’s how you can get more matches.”
Colin: I didn’t directly A/B test this, but I iterated, like you said. That was one of the ones that worked well.
Andrew: It was one question that says, “Want more matches?” They click yes and then you say — they’re kind of expecting more matches instantly, but what’s really happening is — is that what it was?
Colin: Up front it said, “Do you want more matches? By rating us five stars, the community can grow and we can all get more matches.” Something like that.
Andrew: Okay. Where in the world did you go when you were thinking all this and escaping in San Francisco?
Colin: So I started in Southeast Asia, but then after about two months, I went to Guatemala and focused personally on learning Spanish and then focused the company on pure revenue features, how to get that break-even revenue point.
Andrew: Where in Guatemala?
Colin: It was a mix of Guatemala City and Antigua.
Andrew: Isn’t Guatemala City too dangerous to walk around with a laptop and sit and work?
Colin: It is a little dangerous in parts, but for the most part, I didn’t have issues there. It’s the same as any city. There are dangerous parts. If you are careful where you’re going, especially not flashing your phone and laptop, then it’s okay, usually.
Andrew: I see. My video editor is in Guatemala. When my wife and I went to visit him, we said, “We’ll come to see you at the restaurant.” He said, “I’m going to walk over to your hotel and walk you to the restaurant.” We said, “Okay. Why?” He said, “We’ll tell you when we get together.” Then he basically said, “Don’t walk around by yourselves.”
Colin: I think it’s wise to advise tourists of that in general, yeah.
Andrew: Okay. Revenue, how did you pull that off?
Colin: So, honestly, I was determined to find a way to make revenue that was not the traditional bread and butter of the dating industry, which are subscriptions, right? So I experimented with many different methods and obviously small in app purchases for boost and stuff like that. And then partnerships, trying to do physical goods, sending people — we had a condom company, we had a dating advice company, we had all sorts of partners that we tested out, but none of them brought in substantial enough revenue for this to grow at a substantial rate. Those did get me to break even, but not nearly enough to basically justify more investment money or justify expanding the team and growing the app.
Andrew: Was there one that seemed like a great idea at the time but now in retrospect was a little misguided?
Colin: I had this idea that we could — I mean lots of apps have tried it, but small micropayments for all the different advantages and features that make up in app purchases. You see them in games a lot too. But what I’ve found is that subscriptions are so much more reliable and high-ticket items that it’s hard to move away from it. For users, I think it also boosts their retention so much. It gives them a commitment and says, “I’m here to get a result.” So it kind of cements them into being a more active and positive user for the community as well.
Andrew: Let me take a break and then come back and ask a little more about revenue and then about this acquisition that should have gone through. I think I know who it was and something happened there.
Colin: All right.
Andrew: The sponsor is a company called Pipedrive. You used HostGator you told me before but you’ve never had any experience with Pipedrive, have you?
Colin: Correct. I haven’t.
Andrew: I’ll tell you what Pipedrive is. It’s basically software that helps you sell. Yeah. It’s a CRM, but it’s a CRM that says, “Forget about us focusing on phone numbers and addresses, all that stuff is too simple. What was want to focus on is the most important thing—the steps that a company takes to converting a lead into a sale.”
So they say the first thing you have to do when you use this software is not enter your friend’s contact, not enter your leads into it, but just articulate the steps. What are the steps involved in taking somebody who doesn’t know about your product and turning them into a customer? So every one of those steps becomes its own column. Then every time you have a new contact, you add their card to the left most column and you as a team work to move their card over one column at a time until you close the freaking sale.
That’s what I love about them. That is why I’m such a huge believer in Pipedrive. They force my company to say, “What are the steps involved in closing a sale,” and then everyone on the team can collaborate. If I don’t follow up with someone — we use it even for interviews, but we also use it for closing sales.
If we hadn’t followed up with you for too long, there was a card in our Pipedrive that represents your interview that goes red, then Andrea sees it and she says, “Andrew, what the hell is going on with you?” She doesn’t say hell because she’s from the Midwest. She says, “Andrew, y’all okay?” I go, “No. Here’s a problem.” But we can at least collaborate. We can at least understand where everyone is and we work together to close a sale.
If you guys are out there listening to me and you want a tool that will actually help you close sales, not that like thousands of email subscribers at a time, not the landing page conversion, but I mean like when you want to talk to someone one on one via email, messaging, phone call, you need a system to hold you accountable and to make sure that you really work towards closing the sale.
That’s where Pipedrive comes in. Everything about it is about helping you close your sales. And when I say hold you accountable, I mean if you think that you’re really putting out a lot of offers or you think you’re really paying attention to your customers, there’s a stats section in Pipedrive that will tell you whether you really are doing it or not.
When I work with someone and they say, “I’m working so hard and I’m not getting any sales,” if I know they use Pipedrive, I say, “Do a screen share, show me your stats,” and I can often tell their problem is they’re not putting enough potential leads in their system, they’re not moving them forward enough and their stats just tell the story instantly.
If you’re out there and you want to close more sales, you have to check out Pipedrive. If you’ve been listening for a long time, you know I’ve talked about them longer than they’ve ever subscribed, they transformed my business and they have for many other Mixergy listeners. Go check them out, special URL where they’re going to give you 14 days for free and those 14 days, you’ll actually close some sales, and 25 off for 3 months after that. My guess is they’d probably give you an even bigger discount, but their prices are absurdly low already. Go check them out and you’ll be really happy with them. It’s at Pipedrive.com/Mixergy. You’ll thank me for it.
Okay. One other thing about revenue, talk to me about one big transformational move you made with revenue that allowed you to continue.
Colin: Yeah. I think another big transitional move was definitely tested out the pricing model. Do we do a free trial for this subscription, or do we charge up front? I can say now that I’ve joined Paktor. It definitely varies by your product. So some of ours, we do the seven-day trial and it works really well. Down is one of them. They get a taste of it, and then they see the results and they want to stick around. The others, it helps to kind of curate the community by only having the VIPs pay up front. So it was something we tested. Once I got the subscriptions right, it more than quadrupled our revenue in one week, basically.
Andrew: Really? And the big change that quadrupled it was doing the seven-day free trial with an upgrade that automatically happens?
Colin: Yeah. That along with moving away from the small in app purchases and going to subscriptions.
Andrew: Got it. All right. So then first half of 2015, you said to our producer that’s when I moved out, that’s when I focused on this. The second half of 2015 is when you had an offer for a buyout. Tell me about that.
Colin: That’s right. So, as a solo founder, basically, I was shopping around for acquisition for quite a while. We used a few different firms to even help us with that process. Unfortunately, we had many, many different companies in various stages fall apart with the deal. So one of them in particular was a pretty big messaging company at the time, and they gave us an offer for — it was in the Bay Area as well. I even had the team at the time. It was before we had broken up the team.
We went and interviewed there, and they liked us and they gave us an offer and then they came back three days later, I believe, and said that their board rejected it. So, as their first acquisition, they were afraid of the headlines that a company formerly known as Bang With Friends would be their first acquisition. So they turned down the offer but said, “If you’re interested, we’re willing to give you a very cushy offer for employment. We just can’t on the books acquire your company.”
Andrew: I see. Why did you reject that?
Colin: I still had faith that I could turn the product into something. I filled a duty to my shareholders and myself to see it through a bit more. It was selling it short to give up that easily, I think. I wanted to see — we had a lot of happy users. I wanted to see it live on if I could, see the app live on. If I had moved on, I was 100% sure that nobody else would step in and run the company.
Andrew: What was the dating app? What was the messaging app, excuse me?
Andrew: Okay. And then how did you find so many offers? I want to ask you about another one that fell apart. What was the company that helped you find it? What was the networking that allowed you to find so many people?
Colin: You know, through some of our investors, but mostly — one of our investors, a pair of our investors, they actually run an M&A firm. They were our initial contact, helped connect us and come up with a lot of the ideas. Then we came into contact with another one that was actually based in SF and could work with us more closely. I don’t think their company exists anymore. I think they moved on to other things. But what they were able to do is find a way to connect with all the dating sites around the world, basically.
Andrew: I see.
Colin: So they connected us with all the different CEOs. Then of course we explored the hedge fund route as well and all sorts of private equity, that sort of thing, all sorts of options. But ultimately the offers we got either weren’t good enough or just fell apart for various reasons.
Andrew: Let’s talk about that dating company that I’ve got here in my notes.
Andrew: I think I know who it is. I think you’d feel comfortable saying who it is. What happened there?
Colin: I was meeting with the CEO at the time of Ashley Madison, flew to Toronto, met with their team. Obviously, they were comfortable with the brand and the niche of casual dating. But they just jerked us around a bit too much, to be honest, this sort of conversation where every time you talk about the deal numbers, they change and they seem to be getting lower or the bar gets higher somehow. At the end, it was just a waste of time, and I couldn’t keep jumping through all these hoops just to get what would have been a very, very low multiple for myself and investors.
Andrew: It would have been such a good purchase for them. They frankly had a very old community. There wasn’t anything sexy about their brand. They were just great marketers who could buy ads. But you had that sizzle. You had that app. You had the whole thing I feel like they needed. What happens to a company internally when this kind of acquisition process drags on?
Colin: Yeah. Well, first of all, we were on mobile and we were successful with our organic downloads. That was the main thing that I could bring to them. They were really excited. What happened to our team — this one I didn’t share too much with the team. The Tango one, it got further, so they did the team interviews. They were talking about hiring everybody.
So thankfully I didn’t involve the team in every acquisition deal that we were talking about, but it is demoralizing. It is very frustrating, because you look at it and you say, “Wow, I just wasted six months or a year talking to this potential acquirer and what did I get out of it. Maybe I discovered a little bit more about the process, but it feels like a waste right now.
Andrew: Yeah. And I don’t know about you, but when it happened to me, my mind started going through the next stage of my life. I was already there. Then it felt like, “This is impossible. I’ll never get there because it just seems so close now that if this was taken away, who knows about the next one. It was really tough.”
Colin: Yeah. It’s super tough, but it also made me not count my chickens until they hatched sort of thing with the future deals, I guess. So, especially with Paktor, I approached it very cautiously and was able to be a bit more level headed, I think, about maybe the dreams or the picturing my future at a new company and all the outcome that can come from that.
Andrew: What is Paktor? I didn’t know anything about them until I researched them for your interview.
Colin: Yeah. So Paktor is the top dating app in Southeast Asia. They’re based in Singapore. They have a big presence also in Taiwan, but they have really good user growth and they’re really talented at iterating and optimizing on revenue.
Andrew: And they’re very similar, from what I saw, to Tinder, swiping left and right, etc.
Colin: Yeah. The basic function is similar, but they have innovated quite a bit on the other features to get users more matches, to basically improve their algorithm so that users can match better and be happier.
Andrew: And at the time, you went to Taiwan, you joined an accelerator there?
Colin: Yeah. That’s correct.
Andrew: How’d you end up in an accelerator in Taiwan?
Colin: So I spoke at a conference in Bali, which I highly recommend if you ever get the chance.
Andrew: Going to Bali or speaking at a conference there?
Colin: Both. You can use it as an excuse, right? It was a great time. One of the investors I met there was running an accelerator network. He was running China accelerator, but he introduced me to their teammate who is going to start this one in Taiwan. At the time, I was feeling kind of rudderless. The acquisitions fell through, and the new round of funding that I was considering raising fell through.
So I just said, “I haven’t tried expanding in Asia yet. They have the experience. I might as well go learn and see if the sister app I had created that was more romantic for it had the potential there.” So I just flew there with about a week notice and started in the accelerator.
Andrew: So what did you get out of being in that accelerator?
Colin: I think for me, just being completely transparent. It was the first batch of that accelerator. So the best thing I got from it, maybe two things. The first was just being in that environment again, where all these teams of very talented motivated people are hustling and trying to get progress and reporting to each other so you’re held more accountable. The second was I got the chance to meet face to face with the CEO of Paktor. I think really cemented the transition or the progress of our deal that made it real so that we could — we knew that we wanted to move forward. He made a verbal offer after that. So it was a really good serendipity situation.
Andrew: Do you remember the day when the deal came through?
Colin: Man, I don’t. It’s all such a blur right now.
Andrew: Okay. But you did celebrate afterwards. You took a bunch of people and you went where?
Colin: Yeah. I waited quite a few months for this, but I celebrated, basically flew some friends and had some other advisors and such join me in Thailand. We did the whole partying in Bangkok and then the beach experience and island experience. So it was a really, really nice reward to bond with friends and advisors and kind of reflect on what a crazy rollercoaster it had been.
Andrew: So no one can see this, but I’ll describe it. We have a Google doc that we keep for our conversations with guests. Our producer leads it. Our producer types in it. But the guests are encouraged to look at what the producer is writing so you can see the notes the producer is taking on in your conversation. You went in there and you added so much more depth to this that I couldn’t include enough of the notes in the conversation, but more than that, there are bookmarks. Most people don’t know the bookmarking feature exists in Google docs, let alone how to use it to organize your notes. You’re sitting in front of your logo, right?
Colin: Yeah. This is the logo for 17, our live streaming app.
Andrew: Beautifully placed behind you. You’re framed nicely in the shot. The reason I’m bringing this up is I can tell a lot about an entrepreneur based on the little things like that that the entrepreneur does. You’re so detail-oriented, which makes me wonder about this process that you said you went through, every year to say, “Where am I going and how does this business fit in that?” It kind of reminds me of Sam Altman who told me that he did a similar thing, and I never got to ask him more about how he did it. Let me ask you. What’s your process every year to figure out where your life is going and to think through how to get there?
Colin: Definitely. Yeah. So I’m a big fan of pro and con lists. I definitely do that for most decisions. That’s the first thing. Any major decision I’m coming up against, whether it’s business or personal, like do I want to leave San Francisco and start traveling? Do I want to try to raise more money? Do I want to start my next company? All those things, do the pro and con list.
Then along with that, I don’t have a set calendar item. But it’s just kind of alarm that goes off in my head. If it’s been too long, I feel myself stagnating. I make basically a list of what are the things that I want to achieve in the next year and the next five years, and what does success look like in my career and how do I think I can be happy? So it really is just reflecting on that each year and going through and crossing off the items like a big to-do list and changing the ones that aren’t there anymore, aren’t significant or are I have learned enough to know that it’s no longer necessary for me.
Andrew: Like what? What’s not necessary anymore?
Colin: Well, maybe a better example is to fill in more with why I left San Francisco. I try not to have these artificial timelines in my head in terms of you must get married by this time, you must have kids by this time, these kinds of rules that society has a way of pressuring us to do. But one of them that really I couldn’t shake was I felt very uncultured and like I didn’t travel enough.
I was getting close to 30 years old, and I said I need to experience more of the world. I always felt a little inadequate because I only spoke one language fluently. So I decided I’ve got to learn Spanish and experience more cultures. That’s one of them that was at the top of my list, and I finally was able to cross it off when I left San Francisco. So it was a very freeing, liberating feeling.
Andrew: You know, Colin, for me, one of the challenges with writing this out every year and I do it most years is when I’m in a slump, it’s really frustrating to see the list from last year and know it’s the same as the year before and that you hadn’t hit it at all. It feels like I’m about to rewrite the exact same goal yet again because I still want to achieve it and I’m persistent and then end up with essentially the same year repeating itself this year, or do I just feel like this whole thing doesn’t make sense anymore and I’ve outgrown writing lists and to dos and goals and so on. How did you deal with that, or did you have to?
Colin: I have two or three friends that call me on my bullshit. I tell them most of my goals, and I tell them even on the micro level. I tell them what I’m working on this month and all that stuff. I think just in those casual conversations, they have a way of naturally reminding me to get back on track if I’m off track. Also, I want to be a man of my word. I want to be held to that standard. If I say I’m going to do something, I’m going to do it. If I don’t do it, there’s going to be a logic reason why not. It’s not just because I gave up or whatever. It’s because a better option came along that made a lot more sense for me.
Andrew: How do you stay in touch with those friends so they can see when you’re bullshitting yourself?
Colin: It depends on their availability, mostly FaceTime or Facebook.
Andrew: You just Facebook message each other and talk about what’s going on?
Colin: Yeah. We’ve written essays back and forth just asking each other for that sort of adult advice that I think a lot of times friends have trouble broaching the subject.
Andrew: I have a hard time doing that electronically. Even FaceTime feels like it’s too much going on or messaging. I send it out when I care about it and then afterwards the passion is gone and now it’s another thing coming at me. It’s nothing like doing it in person. It’s impressive that you’re able to keep that going. Who are those two friends? Do I know them?
Colin: I don’t think you do, but one of them was my designer at Down for about two years. So he was as close to a cofounder as I had in terms of full-time.
Andrew: Is the other one famous or just a friend? It sounds like he is. You don’t have to tell me the person’s name.
Colin: Well, there are two others and they’re famous to me. They’re maybe not too big, but they’re epic people.
Andrew: All right. It’s impressive that you did this. Man, you pulled through one of the hardest transformations in tech, right? To go from having a team to nothing to being on your own, that’s tough enough. To go from being on top of the world to suddenly being sued and having Apple ban you, that’s really incredibly touch. To try to figure out how to make revenue with a product that didn’t start out with a revenue focus was tough. At the end of this, what did you get? What are you taking away? How are you better off because of this?
Colin: So now I know that as CEO I can overcome a ton of obstacles. I know that I can run a team in the good times and bad. I was very happy my team was on board for the fight. But when they realized that we needed to change things, they were very amiable and very helpful in saying, “You know what? We appreciate you not just as the CEO but as a friend.” So that’s why one of them, like I said, I still lean on him, I still talk to him all the time.
So overcoming those obstacles and preserving and knowing that I can do it and I can figure out whatever the growth challenge is, for instance, the growth hacking challenge or the product or revenue challenge, that’s something that is really cemented in me over this trip.
Andrew: All right. Colin Hodge, his website is DownApp.com for anyone who wants to go check it out. I’d say he’s on Twitter, but you’re not on Twitter. You basically now went from being one of the most popular people in tech, you really just hit the top, when everyone wanted to know who the hell this guy C. was, to suddenly just finding yourself and running your company.
Colin: You can find me on Twitter occasionally, but I do keep it pretty quiet.
Andrew: What country are you living in now?
Colin: Now I’m in Taiwan.
Andrew: Taiwan. Wow. All right. If you’re in Taiwan, hit him up, but probably not on Twitter. You can figure out his email address or get him on Facebook Messenger. Apparently, he’s really active there. I’m really grateful to you for coming back and telling your story and being as open as you were about it. Thanks, Colin.
Colin: Thank you so much, Andrew. Take care.
Andrew: You bet. Let me close out by saying the two sponsors are the company I use to host my new business and I’ve been loving them, it’s HostGator, check them out at HostGator.com/Mixergy and the company that helped me organize our sales process. If you’re really obsessive about sales, you owe it to yourself to go check out Pipedrive.com/Mixergy. I’m grateful to them and to you, Colin. Thanks. Bye, everyone.