Andrew: Three messages before get set started. If you’re a tech entrepreneur don’t you have unique legal needs that the average lawyer can’t help you with? That’s why you need Scott Edward Walker of Walker Corporate Law. If you read his articles on Venture Beat, you know that he can help you with issues like raising money or issuing stock options or even deciding whether to form a corporation. Scott Edward Walker is the entrepreneur’s lawyer. See him at WalkerCorporateLaw.com.
And do you remember when I interviewed Sara Sutton Fell about how thousands of people pay for her job site? Look at the biggest point that she made. She said that she has a phone number on every page of her site because, and here’s the stat, 95 percent of the people who call end up buying. Most people though don’t call her, but seeing a real number increases their confidence in her and they buy. So try this, go to Grasshopper.com and get a phone number that will make your company sound professional. Add it to your site and see what happens, Grasshopper.com.
And remember Patrick Buckley who I interviewed? He came up with an idea for an iPad case. He built a store to sell it and in a few months, he generated about a million dollars in sales. Well, the platform he used is Shopify. If you have an idea to sell anything, set up your store on Shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up a beautiful store and manage it, Shopify.com. Here’s the program.
Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. The place where you come to hear entrepreneurs tell the stores about how, behind how they built their businesses so that you can learn from them, hopefully go out there, build your own success story and come out and do what today’s guest is doing, which is tell your story to my audience.
Joining me is Jim Williams. He’s an entrepreneur who sold his first company for $15 million dollars. He went on to launch another startup that did $3 million dollars a year in revenue, and now he’s running a site called MustHaveMenus. A menu management system for print and digital menus. Jim, welcome.
Jim: Thank you, Andrew.
Andrew: So I want to go through your story in chronological order, but let’s just quickly tell people what MustHaveMenus is. I think it’s an innovative idea and I don’t think many people think about this base and they certainly haven’t come up with this idea. What is MustHaveMenus? What’s the use case?
Jim: Yes. Well, in a simple sense Must HaveMenus allows restaurants to manage their menus from the web as opposed to using desk top software that might have been around for the last 20, 25 years or using a print shop or a designer. It’s a self service product for restaurants. It gives them much more flexibility, saves them a lot of money, makes the product, the menu a lot more timely. A lot of things in a restaurant are last minute. There’s sort of an urgent sense. I’ve got to make a substitution in my menu for tonight so do I start making calls to the printer or to the designer or do I just go on the web and make the change and print it myself. That’s where we come in.
Andrew: Or what I see a lot of times, which maybe tells you something about the kind of restaurants I go to, they’ll just cross it out or they’ll have the waiter tell you that the item you want isn’t available but they have a special that’s not on the menu. What I love about this is, the menus look beautiful, they can create the menu online and print it out and the example that you have here just nails the use case. Valentine’s Day, there’s a beautiful Valentine’s Day menu here with, it looks like it’s Valentine’s, it looks like it’s relevant to why I might be going to the restaurant on February 14th and it communicates elegance. The kind of feeling that I want when I go to a nice restaurant.
Jim: Thank you. Yeah. Well there’s something about that. Valentine’s is one of the top restaurant sales days along with Mother’s Day and Thanksgiving and Christmas. Restaurants actually have a lot of seasonality. They really depend on these days to hit home runs. That’s another way that we come in. Instead of having to rush out and come up with a brand new Valentine’s menu or a menu for a special holiday or an event, they just come onto the site and key in their menu items and print it out.
It’s all fast, it’s all accessible, it’s one price, it really makes things easy. That’s where we start. The beauty of our system is that we are the company that is making the transition from print to digital as well. We’ve now launched the ability to publish any menu to Facebook. Restaurants are pretty big in Facebook pages. Trying to build a community.
Andrew: So instead of getting them to reenter the current, excuse me. Instead of getting restaurants to put their menus online, you start off online and you let them print it and then you send the online digital version to Facebook and maybe to other places in the future?
Jim: Yeah.
Andrew: And the revenue is a subscription based model, right? So they pay you every month and they get access to these beautiful templates, access to editing features and they get to edit as much as they want?
Jim: Exactly.
Andrew: I love this model and I love this business. Let’s find out where you were before here and then we’ll come back to this business in chronological order. So, the first company that I talked about I didn’t give the name. This was on the late 90s. What was the name of the business?
Jim: The name was Market Home. It’s not too intuitive what that meant, but that was an e-mail marketing company. We were one of the first on the scene in 1997. We built a self-service e-mail marketing system that customers could upload their own lists. It was really a new concept at the time. We were going around to catalogue companies such as L.L. Bean, Brooks Brothers. You know, name brands that everybody knows. They were just starting in eCommerce.
They had these fledgling neat eCommerce sites and had already collected tens of thousands of e-mail addresses and didn’t know what to do with them. We were going to them and saying, hey, why don’t we put them in this system, create some HTML newsletters and send them out. Overnight those catalogue companies were making tens of thousands of dollars with the e-mail blasts.
Andrew: How did you know that they were the right market to go after? I saw a lot of people who were, maybe not a lot, but some were figuring out the e-mail space and they were going after new entrepreneurs or online entrepreneurs and you know that the big business was in people that had existing business and had existing lists. How did you figure that out?
Jim: In a way we stumbled on it, but I’d like to say it was intentional as well. We tried to think, who was spending a lot of money on paper and how can we relieve that pain for them? Catalogers were already struggling with this. The size of their books that are going out, the frequency of mailings. It’s a huge, huge cost for them. The possibilities for them to not only reach their customers and make a lot of money, but to save costs were big.
Andrew: So another thing that would happen with entrepreneurs, with most entrepreneurs is they’d have this idea, maybe they’d figure out that the big market was in these catalogers but the problem they have is, they wouldn’t know how to connect with catalogers, how to open the right doors and how to make the deals. How did you connect with them?
Jim: Well, it turned out to be a stroke of luck. The day we signed the L.L. Bean contract, L.L. Bean is a bellwether in the catalog industry. As soon as we had that business we could call up any other cataloger and say, we’re doing e-mail marketing for L.L. Bean. Can we come over? And they’d say, sure.
Andrew: Interesting. Zach from TerraCycle told me that that happened to him, too. That once he did a deal with Wal-Mart, he was able to go back to every company that was smaller than Wal-Mart and they all respected the fact that Wal-Mart made a decision and signed up to do a deal with them. So how did you get L.L. Bean then?
Jim: That was a fun story, too. Those guys, like I said, they were just learning eCommerce. They had a young team on the eCommerce side. This is a hundred year old company. It was a little bit of a gamble I think on the management side there, but they wanted to prove something and they were willing to take some risks. That’s unusually for a hundred year old family-owned business. They were willing to take some risks and we ended up having the good fortune that they flew out to the bay area and we met in our offices and sat down for a couple of hours. You know that a meeting is going well if it goes from the board room table to down to the restaurant and into the evening and into drinks and what-not. With one meeting we ended up closing the deal.
Andrew: You know, I’m thinking right now that someone in my audience has the perfect deal for the bigger company and they don’t know how to open the door. Based on your experience, what advice would you give them for connecting with the L.L. Bean of their industry?
Jim: I think you’ve got to find a champion. You’ve got to find somebody who knows L.L. Bean first. Sure, we cold called into L.L. Bean and began to bug them. They remembered our name, but not until we knew a couple of guys who could call L.L. Bean on our behalf. That really helped.
Andrew: Are these old college friends or mentors?
Jim: They were guys that we befriended through business and we started spending some time with them and they really like what we were doing in e-mail marketing and saw promise in it. I think that was relationship building at its core. It’s just getting to know somebody, establishing rapport, establishing some trust. Then they’re saying sure, I’ll make an introduction for you.
Andrew: Who’s the we? Who did you partner up with to build the business?
Jim: Well, let’s see I was the founder and I had a close group of angel investors. Those guys were invaluable in making connections for me. They connected me to the guy who ended up being our VP of sales who landed the L.L. Bean account. I’d have to say it was my initial investors.
Andrew: I see. So, how did you get the angel investors? [laughs] I’m kind of working my way backwards here, but…
Jim: I like this.
Andrew: …each piece leads to another so I’ve got to figure out how we got here.
Jim: You may end up in a territory that you weren’t expecting.
Andrew: So, how did your parents meet then? That’s where we’ll end.
Jim: That’s right. My girlfriend at Berkeley introduced me though a friend of hers to another guy. He turned out to be a lifetime colleague and co-founder and angel investor with me. In fact, he is on the Board and investor in MustHaveMenus today, 20 years later.
Andrew: So you had this idea and you took it to him and then you launched it?
Jim: Yeah. Right.
Andrew: Who developed the first version?
Jim: Well, I outsourced it.
Andrew: Back then outsourced?
Jim: Yeah.
Andrew: OK.
Jim: Yeah. And that was a little ragged, I admit it. Back in those days there was a lot of uncertainty around technologies for internet businesses. Java was still a little bit fresh.
Andrew: Mm-hmm, mm-hmm.
Jim: And I happened to know some guys who were on a contract team. I asked them, I figured it would just be my prototype. I asked them to build a prototype for me. They gave me an amazing price and… But the minute I got the prototype I knew I needed Version 2.0 like right away. So I never stopped to think about, how am I going to find a team that will take this to the next level.
Andrew: What did that first version look like?
Jim: It looked very much not like the ultimate version that was sold. The first version was a concept that was e-mail marketing in reverse. Have you ever heard of a company called Topica?
Andrew: Yes.
Jim: Yeah. So in Topica consumers would sign up for things that they wanted to hear about. That’s what we had to begin with. We thought that it would be, and that’s why it was Market Home. Market to the home…
Andrew: I see.
Jim:…was the idea.
Andrew: So they give you permission to market to them?
Jim: Yes. So we were going to build a list and then we were going to take the list around to retailers and allow them to market.
Andrew: And how were you going to build a list originally?
Jim: We didn’t get that far in the plan because what happened was as I was building Version 1.0,
I started e-mailing retailers and asking what they’d like to see. I made a couple of friends. I must have e-mailed 1,000 of them. Ultimately found two or three of them who wanted to talk a lot about this. One of them was like a roller warehouse for inline skates. That guy was awesome. He’d sit and talk internet all day with me. He ended up guiding me in a different direction. He said, look Jim, I don’t want to wait around for you to create a list that matches my needs. I have a list already from my eCommerce site. I want you to do the mailings for me. So that’s when we had out ah-ha moment and we said, well, let’s flip this around and we went back and built another version.
Andrew: I see. So Version 1.0 was people select their interests, give you permission to market to them and you hadn’t figured out how you were going to get them to do that, but the next step after getting their permission would be to sell it. Version 2 I guess or 1.5 was what? What did that look like?
Jim: Yeah. So that was where we built the self service model. We said, what we need is an interface for this guy at the roller warehouse to log in, upload his list and create his campaign and blast it out. That’s essentially what we built. The Version 1.0 became kind of a front end for list building.
Andrew: So at first, I guess people would add their e-mail list to some kind of input box or upload it and you would give them permission to e-mail it out. There was no HTML, it was just standard text. They could change the from line I’m guessing.
Jim: Yeah. You’re absolutely right. Back in those days, HTML was too rough in e-mail. Not enough browsers would accept and HTML e-mail so it was text to begin with.
Andrew: OK. And pricing, how did you do that?
Jim: Pricing was really advantageous at the time. We were able to price it per e-mail, five cents an e-mail.
Andrew: Oh, wow.
Jim: Yeah. So if somebody came in with 20,000 names, every time they hit send, it was really good for us.
Andrew: And I guess they were comparing it to stamps?
Jim: They were. That’s the thing. They were comparing it to stamps and printing costs layout and everything that went into a magazine.
Andrew: How much did you raise in order to do this?
Jim: We were really into bootstrapping as we always have been, under a million dollars.
Andrew: Oh, wow.
Jim: $900K.
Andrew: I guess for, it still sounds like a lot of money actually. It doesn’t so much sound like bootstrapping when it’s $900K. I’m guessing though, I know in fact, that for the time that was peanuts. I mean there were people who were…
Jim: It was peanuts.
Andrew: … collecting tens of millions.
Jim: Bingo. You know, there ended up being a half dozen e-mail marketers that were strong in ’99. Companies like Digital Impact, Message Media. I mean some of these guys had raised $50 million or $20 million dollars. I didn’t know how they did that. I just wasn’t in those circles. It turned out to be much to our advantage.
Andrew: Why?
Jim: Because when an opportunity came around to sell the business at $15 million as you pointed out, it was a huge win. It wasn’t this kind of a ransacking of the company or a sale of assets. It was actually a huge win for everybody.
Andrew: I see. If you raised $20 million dollars and sell your company for $15 million, you haven’t done such a good job but if you’ve raised less than $1 million and gotten $15 million, that’s huge.
Jim: Yeah. And by the way, to all entrepreneurs out there, I highly recommend staying on that type of course if you can.
Andrew: Were you frustrated at the time when you saw all these guys getting bigger and bigger by raising more and more money? How did that impact you?
Jim: Yeah. I was frustrated. I felt…I ended up making the circuit of some VCs and I’d go in and I’d present the plan. I thought that it was…there was no rhyme or reason to the decision making at the VCs considering that some of these other guys had made $10 million or raised $10 million or $20 million. We were going in and we’d say, we’re looking to raise $1 million or $2 million
We had a pretty good presentation, I’m sure as the other guys did. We had some name brand clients and we were getting turned away. We would get a brush off that felt like, we don’t get it, we don’t get it at e-mail marketing. This is frustrating for entrepreneurs, that they don’t want to talk to you until you’ve already made it. This is a piece of frustration and sometimes you just have to persevere through that. Because as soon as we started to make the press and we started to sort of wrap up the catalog industry. Once we had thirty or forty major catalogs at the business, I started getting called by the VCs, they started wanting to make meetings with me. [laughs] I just said, “Nope, not interested at this point.”
Andrew: Why?
Jim: Pardon me?
Andrew: Why did you say, no? I have an understanding of why but I should ask.
Jim: You know, primarily there was a bit of pride in there, right? But at that point I figured we had a real business. That we could grow it, that there was a very large market still to have, that we could profitable and I really didn’t see the point of having the pressure of millions of dollars. I knew the guys were raising millions of dollars had the pressure to use it. Which could mean frivolous uses of full page ads and commercials and things I just wasn’t interested in.
Andrew: Were you profitable at that point, too?
Jim: I think by the time, the year that we sold the business and this is only two and a half years in totally. The year we sold the business it would have been profitable had we not sold it.
Andrew: What size revenues were you doing at the time?
Jim: We were on a million dollar run rate in ’99.
Andrew: OK. All right. And then the development, did you ever manage to find the right team to bring it in-house?
Jim: No we didn’t, we ended up going the distance with a contract team.
Andrew: Really? The same one that put together that first product for you for a song?
Jim: Yeah, you can imagine Andrew thing were going really fast. And we had demands from customers to upgrade really quickly. So the thought of stepping aside and finding the debt team and bringing them up to speed, and the possibility they would want to rewrite the code was a little much for us.
Andrew: You sold in ’99, right?
Jim: Yes.
Andrew: Why did you decide to sell?
Jim: Well, that was probably the third business I’d started and I’d never had an opportunity to sell the business before. [laughs]
Andrew: OK.
Jim: So a lot of people can relate to that. I’d been around and had a few failures.
Andrew: What were the failures before this?
Jim: In ’95 I’d started a company called Elastic Media that was venturing into the banner advertising space.
Andrew: This is the early, early days. You were really ahead of your time. Uh-huh.
Jim: Well, super, super early. I don’t want to toot my own horn but we were the first company I was working on in ’94 was a wellness software company and we were one of the first companies to integrate the Netscape browser into our CD-ROM package. So we knew what was going on, we knew that the internet was very, very interesting.
I had the interesting opportunity to interview with Yahoo and there were about ten guys there, with Jerry Yang and Tim Brady and a bunch of other guys that stuck around for a while. I was learning so much about the internet. And what happened after that Yahoo interview is I thought, there is a lot of opportunity in advertising and I thought banner ads seem the way to go, seems to be what people are adopting. So let’s create a banner network. I’m not a technologist. The first failing I had in that business was that I did not do a good job of vetting my engineers and they never delivered the product.
Andrew: Oh, wow.
Jim: Yeah.
Andrew: And so did you raise any money for that one?
Jim: Very, very little, like $50K.
Andrew: What was it like to go to your investor and tell them about this or him or her?
Jim: It wasn’t much of a big deal. That group of investors had a shotgun approach and they were investing in dozens and dozens of companies. It was really casual and we ended up saying, let’s just shut this down. I realized I wanted to move on and really start something from scratch.
Andrew: I’ve got to ask what that “something from scratch” was, but first, where did you get the angel investor back in ’95 to take a shot on a new entrepreneur unproven?
Jim: Good question. My brother introduced me to them.
Andrew: So how were you able to convince this investor, based on your brother’s introduction, to take a risk on you?
Jim: Well…what happened was they asked me to take on the project management of a small CD-ROM development. That took about a month. During that month I was talking to these guys. This was the same time I was interviewing at Yahoo. I was going in there everyday and we were talking about Yahoo and we were talking about this new company we had heard of called, eBay. We were having a good time just talking about the internet and how much fun it is out there. They actually turned to me and said, Jim, if you write a business plan we’ll back you.
Andrew: Wow.
Jim: Not a lot of money of course, but at least they were going to give us some seed capital.
Andrew: Yeah and this is before the big Yahoo explosion, before Netscape went public, this is before anyone recognized how valuable these companies could be. Before even the skepticism about the bubble, before the bubble itself.
Jim: Yeah.
Andrew: Impressive. So then you went out [??] Sorry?
Jim: I said, it was before all the IPO’s.
Andrew: Yeah. So then you went and decided to start something else. What was the next one?
Jim: That was Market Home in ’97.
Andrew: I’m sorry, that was what? Oh, Market Home. OK.
Jim: Market Home.
Andrew: I thought you said you had two failed companies before Market Home.
Jim: The first one, the wellness software company. That was a big learning experience for me. My partner in that, he was actually the original founder and I was the second guy. He ended up being bought out. That’s where I learned about equity.
Andrew: So he got bought out and you didn’t have equity.
Jim: He had the lion’s share of the equity and I had a small package. I ended up getting shut in the door with a little bonus.
Andrew: And you were co-founders essentially?
Jim: I wouldn’t say a co-founder. I was basically there from the early, early days when he was in his house starting this business.
Andrew: Why weren’t you bitter at the end of that experience?
Jim: I was very bitter.
Andrew: You were?
Jim: I was extremely bitter. I mean…not at my partner at all. He was a great guy or is today. I was bitter at the management, what happened in that business was these stores seem unreal looking back at them. We were fundraising. We had a BCA a lot of people know of names Kleiner Perkins. Who was looking to put a bunch of money in to us? We had pushed this and pushed it. We probably nurtured that investment for about a year. At the last minute the angel, the original angel in the business said no to the Kleiner investment and said, he’s going to take the company. He brought in, he bought out the founder, he brought in a new CEO, brought in new CFO and said, I’m going to take this in a different direction. In a couple years those guys were out of business.
Andrew: Why didn’t it make you cynical? I could see a lot of people going through that experience and saying, you know what, this start up life isn’t for me. It doesn’t make sense. Everyone’s out to get everyone else in the business world in general. I’ll just go find my quiet little place and I’ll find other interests outside of work to give my life meaning.
Jim: That might have been a wise thing to do, Andrew.
Andrew: No it wasn’t. I see your history now with 20/20 hindsight.
Jim: Yeah. I mean entrepreneurism is in your blood, I believe. I’m sure you can relate and a lot of your listeners can relate. I was starting businesses by the time I was a young teenager.
Andrew: What kind of businesses? See, now we are going to get to how’d your parents meet and what happened for that?
Jim: Well, it was a dark and stormy night. I had a lot of the classic high school type businesses. A friend and I got together and did a car detailing business for a while. We did a home painting business for a while. Before high school I actually, with my parents permission, grew a garden in my back yard and set up a little farmers market and sold fresh vegetables to my neighborhood. Whoops.
Andrew: I’m still here.
Jim: Still there? There we are. You know so that’s probably when I was 11 or 12.
Andrew: So where do you get entrepreneurship? How does that get you? It not like there are TV shows that tell you about entrepreneurship and get kids, I mean there aren’t any TV shows that tell kids about it and get them excited about it. There aren’t super heroes who happen to be entrepreneurs during the day. Where does a young guy say, this is life exists and I think it might be for me?
Jim: I think there’s a creative aspect to it that is really thrilling to me. I like the risk side of it. I’m not much into physical risks like downhill mountain biking or anything like that. I’m more into entrepreneurial risks, financial risk. It wasn’t anything that my parents pushed me into. It wasn’t anything that I had a mentor with. I just found it a really natural, really instinctual. It’s hard for me to say as you ask the question, where does it come from? When I was in college I switched major about seven times. I’m very restless. My major had nothing to do with business. I ended up graduating with an English degree.
Andrew: Did it help you in business?
Jim: Yeah. It’s a huge help.
Andrew: How?
Jim: Looking back, I think it’s been one of the best majors I could have had. In terms of writing, communicating, writing business plans. I’ve written so many business plans and once you start writing a business plan, like back in the Market Home days and you start going to angels or partners or eventually VC’s you need to write another iteration of that. I probably had 50, 60 versions of the Market Home Business Plan. Writing comes in handy.
Andrew: It does come in handy. More and more actually. Now especially since so much of our communication is done via writing online.
Jim: I agree.
Andrew: So then that brings us back to 1999. You said you like risks and still ’99 you get an offer from Click Action to buy you business and you sell.
Jim: Yeah. And that was a dream. I admit I was caught up in the whirlwind of the .com everything in the Bay area. It seemed like people were flooding into Silicon Valley. We couldn’t hire fast enough and neither could anybody else. We ended up selling the business and very, very fortunate on the time. Click Action was a publicly traded company and we came out of our lock up in March 2000 at the peak.
Andrew: So you were able to sell before the bubble burst?
Jim: Mostly.
Andrew: OK.
Jim: For the most part, yeah. With the help of some friends and the CEO of Click Action, it turned out to be a really, really good experience.
Andrew: What kind of help do you need in order to sell after the lock up is over?
Jim: Well, it depends. So that was a company that wasn’t heavily traded.
Andrew: I see.
Jim: A thinly traded business, you need a good broker who’s going to be wise about when to make a move on the buy side or the sell side. You can’t just dump your shares. Not that I wanted to dump my shares or… So there’s a public relations aspect to it.
Andrew: Right. You know I owned, I think it was like, it ended up being a little over $1 million dollars I think of a publicly traded company that was very thinly traded and when the founder heard that I wanted to sell, he wanted me to sell it to a friend of his because he didn’t want the, he didn’t want this thinly traded stock to go down because of it. I ended up doing it through his friend, but it didn’t happen fast enough for me. So I ended up finding a broker who could take care of it for me. I think it’s been now, I don’t know, ten years I still have the same broker because he was so helpful at that point. It’s true. You never realize this stuff.
Jim: In fact, a good broker can do a lot for you. I had a very similar experience where they tried to line up a single buyer for a block of shares for me. That did work out for me, but on other occasions my brokers really found a way to pull a rabbit out of a hat.
Andrew: You know what, that’s good to know. How did life change after that, after the rabbit came out of the hat?
Jim: Well, I could pay off my credit cards.
Andrew: So you waited until that point. You weren’t able to sell it, get rid of your credit cards until that point.
Jim: I was not. As part of the funding of Market Home was my personal credit cards. I think I had about ten of them…
Andrew: Wow.
Jim: …back in those days. I was willing to take a lot of risk. You’ve heard this story before where an entrepreneur will mortgage his own house or her own house for a business. I didn’t have a house to mortgage so I mortgaged my credit cards and there was a lot on those cards so that was the first thing I did. Getting out of debt is a great feeling.
Andrew: It is a very liberating feeling. Was there…was there a time that you had that debt that you couldn’t sleep at night? That you were worried that it was weighing down on you?
Jim: Not at all. Not at all. I’m always an optimist…that things are going to work out one way or another.
Andrew: I’m an optimist too, but there are times when I felt so overwhelmed by the credit card debt that I took on or so overwhelmed by some aspect of the risk of starting that first business. I always feel like risk and no way out is great to keep you motivated because there’s no way to turn back, but if you go just a little further than you can handle, it’s all you can think about and it becomes paralyzing and you never got to that point?
Jim: Yeah. Yes. Somewhere I’m sure, like you, in the back of my mind was the word bankruptcy.
Andrew: Yup.
Jim: The thought that I might have to face that. But it was really far back in my mind and I think that was part of the irrational exuberance of valley is that you just ignored stuff like that…
Andrew: Right.
Jim: …and expected that if… I was taught early on in start ups that perseverance through adversity leads to success. Some of my best mentors told me that a key to a good entrepreneur is that you’re willing to make a change to fit market conditions. You’re not married to your vision in any way. I always felt that I was willing to do that.
Andrew: That’s a good way to put it. What about, what else, how else beyond getting rid of credit card debt, how did life change at that point?
Jim: Life…it gave me a chance to slow down a little bit. I had been racing most of my 20s at top speed. When you’re in the .com boom and prior to that I was working seven days a week and I was enjoying it, but it takes a toll. I ended up taking a couple of years off. I coached track and field at high school. You know I was able to, bought a house and I got married. I started to do all the things that I needed to catch up on.
Andrew: I know the feeling. And then at some point you decided it was time to go back. When was that and what’d you do?
Jim: Yeah. It almost caught me by surprise that I went back. I thought that I was going to be happy being a track coach forever but once again this entrepreneurial thing came back and bit me. I thought, I’m going to do this as a hobby and see how it goes. I started this company called Letters and Arts. I thought I’m going to incubate some ideas. I once again contracted to a developer to build a subscription eCommerce platform that allowed for content download.
Andrew: OK.
Jim: You buy a subscription, you download some content. Then I started applying that to different markets and ended up in the first couple of years picking ten markets… You know this is from the catalog experience, is that you’ve got to have your focus. You’ve got to pick a market that is definable, that is targetable and that has a real value proposition. That’s what I was trying to do with this business is come up with ten potentials and then window it down.
Andrew: And then you were going to run them all yourself?
Jim: Yes.
Andrew: And what was, what happened when you tried to run ten companies yourself?
Jim: It became ridiculous. I go to an annual entrepreneur’s group, a summit called the Spartina Summit. Every year I would show up with the same sob story for all the guys. You’re supposed to bring your challenges to the group. Mine was always what should I do? Should I go deep on one of these sites or should I stay broad?
Andrew: And what would they tell you?
Jim: It was always like some guy saying, yeah. Go deep. Some guys saying, go broader. You know, like do 100.
Andrew: And let five of them be [??] and let five of them be super stars.
Jim: Yeah. I mean, we built a platform to clone almost like a franchise. I could have been franchised. We had it down so that we could clone a site and spin it out in a day. Everyone looked at that and they said, well, that’s kind of cool. Why don’t you make lots of them? But that’s very impractical. Once you want to get good at something, you have to build domain expertise.
That’s what I was trying to do is build domain expertise and too many things. I was stretching. I was not going a good job with it. I ended up really doing…putting more emphasis on recruiting for the first time in my life. On finding really talented people who could come in and start to carry the load along with me. I ended up finding a couple of super talented people. At this stage the ten companies have been brought down to three. They’ve been separated into separate legal entities and I’m running MustHaveMenus and we’ve got two other companies that are being run by other people.
Andrew: How did you know what to get rid of and what to focus on?
Jim: Well, the market told us to some degree. That’s probably number one. Number two is the talent that we found. When we found people that were really good with domain expertise in one area then that was a green light saying, we have got to go that direction.
Andrew: What’s one idea that the market told you uh-uh, get rid of it?
Jim: Let’s see. We had a site called Garden Publisher. It was supposed to be a content site. A site for newsletters for garden clubs and that was a little bit out there.
Andrew: OK.
Jim: There just aren’t enough Garden Clubs in America, maybe a thousand. I think we had a thousand subscribers at one point but there’s no economy there.
Andrew: All right. And you said you got really good at hiring people. How did you do it? What did you do different? What can you teach someone else who’s at a stage where you were just before you figured this out?
Jim: I would say that what happens in hiring is the… The first step is of course, is trying to see a lot of people. Trying to be really vigorous and disciple about going through resumes, getting a lot of flow and not making a quick or impulsive decision on a hire. But ending up seeing a lot of people. The two people that stand out most in my mind I could tell on the first interview that they were capable of much, much more than we were talking about. I think that wasn’t anything that I had been taught but just through the years, after 15 years of interviewing and working with people and working with some very good people, I was able to see somebody who was a diamond in the rough.
Andrew: I’m trying to figure out, how would you know that… I guess it’s just experience you’re saying. You’re essentially giving these people companies to run. You’re saying, this is a startup, you don’t have to come up with the idea. We’ve come up with the idea. You don’t have to worry about whether the market doesn’t love it. I whittled those companies away. This is yours. So, I guess it’s Share Faith that was one of those companies and the other one is OneHeartWeddings.com?
Jim: Yes.
Andrew: That you found people to run? OK.
Jim: Yes. And we were not hiring, we were not recruiting for CEOs so that’s part of the key, too.
Andrew: Interesting.
Jim: Yeah. We were recruiting for managers and creative directors in the case of OneHeartWeddings. What happened was that we recognized that these folks had a lot of potential and what we needed to do was challenge the right away. You can tell, when people rise to a challenge, it becomes immediately obvious. They come back here and they say, OK. I’m done with that part. What else can I do?
Andrew: Oh. Interesting.
Jim: That’s music to your ears. So they guy who is running, excuse me, running Share Faith today interviewed as a graphic designer and very quickly became a manager and then became sort of a general manager of the site and it’s been four years and now he’s the CEO of the site and it super dynamic, super entrepreneurial. One of the most amazing designers I’ve ever met.
Andrew: And in the intro I didn’t give the makes of the companies except for MustHaveMenus, but when I said that there was a company that’s generating three million a year in revenue, this is Share Faith.
Jim: That’s correct. We have 20,000 churches on subscription basis. It’s a very value oriented product.
Andrew: And they pay $126.65 a year for what?
Jim: Yeah, actually $150 a year, $149 a year for access, unfettered access to over 40,000 worship media resources. Things that they would use in a Sunday church service. Everything ranging from a power point to a sermon video to clip art to newsletter templates. We have a pretty deep library at 40,000. We just kind of see ourselves as the all-in-one solution for churches. We also sell websites for churches.
Andrew: So if they want a website, their membership gives them a website that’s plug and chug. They want to create flyers, you got designs for flyers. All they have to do is pick the right design and then customize it. They want to create a bulletin, you got the bulletin covers for them, all part of their membership and so I see why churches would sign up for this.
Jim: Yeah. Absolutely.
Andrew: But what I don’t see is where would you come up with this idea? I live this idea. We’re going to get to Must Have Menus in a moment too, but they’re both ideas that never would have struck me. It never would have struck me, I never would have come up with them, they’re so clever, they’re so creative, they obviously have good demand for them. How do you do it? Where do you come up with an idea like this?
Jim: Well, a lot of it is trial and error through iteration. We’re huge believers in iteration. The sites started out with the simple things, clip art and photographs. We would test those and we would see what was popular and then we would use the popular things to make other designs. So on the wedding site we would have clip art images, which people thing of as being kind of corny, but bridges use them in their crafts and in materials that they are making for their wedding. We found the ones that are popular, we turned them into wedding invitations and wedding programs and we made DIY wedding invitations on that site.
Andrew: Is it all on [??] Is this also on subscription basis, the oneheartweddings.com?
Jim: Yeah. One Heart Weddings is essentially the same model where you get a year’s access, they might have pulled it back to a month’s access, to the entire collection for a small fee.
Andrew: I see.
Jim: I should also add for One Heart Weddings that they’re going to turn another corner, and this is part of the iteration process, they’re going to turn another corner and start offering printed wedding invitations and other items, cards, holiday cards, along the lines of a Tiny Prints.
Andrew: One more thing before we move on to MustHaveMenus, you said clip art. I want people to see OneHeartWeddings.com because the word clip art might give you a whole other impression of what this site is. This is a beautifully designed site. I love your sense of style. In fact, even as I was reading about you before you and I got on camera I said, this guy’s got to have a good sense of style because look at this, the company’s that… Even going way back to Market Home, you worked with Coach, Brooks Brothers, I mean you were with some of the top brands out there. I would be intimidated just having meetings with some of these people.
Jim: Thank you, Andrew. I really can’t claim any responsibility for all of that beauty on that site.
Andrew: Really well done.
Jim: We have some amazingly talented designers. I really feel like we have some of the top designers in the country working on this site as well as working on the Share Face site. We have a woman names Leah Griffith who is the creative director at OneHeartWeddings and she does, she leads all of the design, she sets the tone. I really think she’s like a junior Martha Stewart.
Andrew: Mm-hmm.
Jim: She’s amazing.
Andrew: So, I notice a common thread, they’re all membership sites. How did you decide to create membership sites?
Jim: Well, we knew in terms of business models, we knew that we wanted to build relationships with customers that lasted for a long time. We didn’t want to have the challenge of having to win a customer back or spend a lot of money on marketing year after year after year. Subscription was the way to go for us. I’m trying to think of who we used as inspiration because it’s always somebody else that you’re looking at and you say, we want to do that. I hate to say it, but I think it might have been ClipArt.com.
Back in 2001, 2002 I noticed that there was this little site, not so little actually, ClipArt.com had something like eight million pieces of clip art and it’s subscription based. I was reading about the financials. ClipArt.com was sold around that time. They were doing about eight million dollars a year. I think they had just a skeleton staff. It was extremely profitable.
Andrew: I see. And you’re seeing this and realizing the possibility for niches?
Jim: Yeah. Absolutely. There you go.
Andrew: And so when you had this system in place to roll out tons of sites, it was because they all were membership based sites and had similar philosophy on products to sell.
Jim: Yeah.
Andrew: I see.
Jim: Exactly.
Andrew: So, Must Have Menus. You come up with this idea. Why did you decide that this was the business that you wanted to take on?
Jim: I got really excited about this sometime last year. When we started to think of the data ramifications. Everyone’s talking about data these days. Collecting, using data as a cornerstone of your business, learning more, everybody talks about the power that Amazon has knowing so much about customers and customer profiles. So in the case of menus obviously, a menu is a lot of data. We started looking around and we’re realizing that there’s a lot of activity in the restaurant industry, in the technology side of the restaurant industry. Coming from companies like GrubHub and SpeamlessWeb were doing a lot of business in online ordering and they need the data obviously to take an order. We started looking at how these guys were collecting their data and we realized that a lot of it was manual.
In our business, we have the restaurant in a relationship with us updating their own menus. There is no intervention from us. They come in… About one-third of our restaurant customers will update their menus on a daily basis so there’s a lot of fresh, really relevant, really amazing data. The places we can take that to help the restaurant and sort of be a hub of information for the restaurant are amazing.
Andrew: Where would you take it beyond Facebook?
Jim: Facebook was just sort of step one on the marketing front for a restaurant. The places we can go from here, probably the two main channels that we’re going to be looking at are online ordering and food guides.
Andrew: You mean to create your own online order site or to enable someone else’s? [??]
Jim: Initially our idea is that we’ll start out own.
Andrew: OK.
Jim: We have the data, fresh menu data for 8,000 restaurants today and we’re going up 500 restaurants a month and accelerating. The idea is that we will create a mobile application that allows consumers, who are anywhere in the nation, to locate a restaurant, review a menu and in this case, we have the designed menu which also is non-existent on the web right now. Unless you’re actually going to the real web and you’re pulling up PDFs off the web. We have the designed version.
Andrew: I think Amazon tried to do that for a while there and it seems like they gave up on scanning menus.
Jim: Yeah. There have been a lot of guys that have been using technology to pull together menus or data bases of menus. They have been… We’ve got some guys out there who have crawled Google locations and some guys who have just found data bases of restaurants and pulled them together and said, OK. Now we have a restaurant guide. To us, that really doesn’t hold water. We think that a restaurant guide should have the restaurant involved and there should be a brand and it should be up-to-date menu data. None of those cross-outs you talked about.
Andrew: Good. I’m glad that you noticed them, too.
Jim: Yeah.
Andrew: I used to live in Argentina and it was worse there because of the inflation. On the prices there would be stickers. So the sticker was like this big, about a quarter inch at times. It was just so many. Every time the dollar would change again so they would adjust it. I see [??] Uh-huh?
Jim: I was going to say, one of our engineers spends a lot of time in Buenos Ares.
Andrew: Yeah. That’s where I was.
Jim: Yeah.
Andrew: By the way, do you have internal developers now or is it still all outsourced?
Jim: We have a really fantastic team of internal developers who are scattered around the globe.
Andrew: I see. And they’re all internal, but working externally?
Jim: Yeah. We have a couple guys in Brazil. We have a guy in Thailand. We have the guy who’s in Buenos Aires some of the time. He’s going to be in Barcelona. He’s our CTO. Really a top notch guy.
Andrew: How do you find restaurants?
Jim: Pardon me?
Andrew: How do you find restaurants? I remember I interviewed the founder of GrubHub and he told me that in the early days he went door to door getting customers one at a time and then he hired a salesperson and it grew and grew and grew, but it was door to door. How do you do it?
Jim: Yeah, and I’ve talked to the founder of GrubHub as well and big respect for what they’ve done and accomplished by now. I’m really impressed. We’re trying to figure out how not to go door to door on the restaurant side. We have gained experience over the years in SEO, so we pull about 300,000 visitors a month right now using the important keywords like menu design, menu template, cafe menu template, so restaurants that are looking for menus are coming to us already.
We’re leaning on that a lot. We’ve built an e-mail list, going back to e-mail marketing. An e-mail list of 200,000 restaurants.
Andrew: Wow, how do you do that?
Jim: Well because we’ve been incubating this company now for 4 years and we’ve had all that traffic. We’ve been collecting the names. We have 200,000 names today and 8,000 active restaurants and we think we’re just getting started.
Andrew: So if I come in and I click on menu template. In fact, I just did a search for menu template. There you are, MustHaveMenus is on there. It takes me to the homepage. I mouse over and it says, try this free. Edit this menu. This Valentine’s Day menu that I told you about and I’m guessing what happens is at some point in here after I edit you collect my e-mail address and that’s where you’re saying that you get my e-mail address and that’s how I would get added to the 400,000? I’ve been incubating Mixergy for 4 years and I don’t have 400,000 yet. How do you do it?
Jim: 200,000.
Andrew: 200 OK.
Jim: But in the registration process we’ve been running a free trial program, which is a way to give restaurants and potential customers the ability to sample the product. So we collect their name even if they cancel.
Andrew: I see. OK.
Jim: Because they may come back. Over the years we’ve added so much new functionality and even with adding Facebook we’re going to go back to our list of cancels and say, now you can take that Valentine’s menu and post it to Facebook. It might be interesting.
Andrew: Yeah, absolutely. Absolutely. Let me just do a quick plug here and then I’d like to ask you one last question based on everything we’ve learned. The plug is for Mixergy Premium. If there’s anything guys, if you’re trying to get new members, if you’re trying to get new e-mail addresses, if you’re trying to get new customers.
Whatever issue you’re facing as an Internet entrepreneur, hundreds if not thousands of other entrepreneurs have faced the same thing. What I do at Mixergy Premium is I bring the guys who mastered that area and I have them teach it to you. Just turn on their computers and walk you step-by-step how they did it. If you want to sign up, go to mixergy.com/premium.
You can browse all the different courses that we have on there. They’re very detailed. If you’re already a member, I urge you to keep checking back in every week. We add new courses by entrepreneurs who you know, who you respect and who have proven results. Mixergy.com/premium.
All right. Jim, based on all this experience, a lot of hits behind you, some struggles that you’ve overcome, based on all this what’s one piece of advice that you can give an entrepreneur who’s listening to us who says, I’d like to leave this kind of a footprint.
Jim: Well I can say I’ve got two pieces of advice. One is to network. Network as much as you can. It may have been clear as I was talking, but I am still super connected with the guys that I met right in college 20 years ago. I’m still investing with those guys. I’m still collaborating in many ways with those guys and that has been an unbelievable help, so that’s one, and two would be to not be afraid to iterate your idea. I think that’s it for me. If it’s not working, it’s not catching on with your customers, make a change and see how that works. The faster you can iterate. It’s that saying of ‘fail faster.’
Andrew: How do you stay networked with people? I’ve been doing all these interviews, it was Michael Evans of GrubHub, he and I happen to stay in touch a little bit via e-mail. There are a lot of great entrepreneurs who I meet here on Mixergy. I get to know them and talk to them for an hour, but I may never connect with them and see them again. I know that the person who is listening to us right now has interacted with spectacular people, would love to stay connected. How do they do it?
Jim: I think you have to pick a core group that you’re going to work on. It’s like your high school friends. You can’t be connected to all 300 people in your high school class, but you can say there are 20 guys or gals that I want to stay connected to. Somehow you’re going to work on it. We do this very intentionally this group that I’m involved with. We get together every year, and we have a multi-day summit.
So I would suggest for anybody listening who wants to start a networking group, pick three or four other entrepreneurial friends and say ‘at a minimum we are going to get together for starters maybe every quarter, but maybe every year, and we’re going to try to swap ideas, share war stories and successes.’ In a couple of days you can learn more than six months of research or six months of banging on your website. That’s what I recommend.
Andrew: That’s great advice. I’m glad I asked that. By the way, you’re not at home right now, right? Are you in a hotel? Are you traveling? I know that you’ve done some traveling today.
Jim: Yeah, I’m in Portland, Oregon in a hotel. We just wrapped up a board meeting yesterday. I’m going to be leaving tomorrow going back home. I’m in Ashland, Oregon. That’s where we’re based. I’ve spent a lot of time in the bay area. A long time in Portland. We’re really enjoying the virtual experience with this business.
Andrew: I’m really grateful for you for doing this from your hotel. I really appreciate you telling us your story. The website for everyone who’s listening is MustHaveMenus.com. You’ve got to check out the website and stay on top of this business. Jim, is there a way for people if they got anything out of this and they’re moved to say thank you is there a way for them to connect with you and just send you a thank you note?
Jim: Oh, absolutely. Jim@MustHaveMenus.com
Andrew: Jim@MustHaveMenus.com I think that’s the e-mail address I used to get a hold of you. I hope that people will send you quick e-mails to say thank you. I’m going to do it right now. Thanks for sharing your story. I really appreciate you doing this story.
Jim: Thank you, thank you. My privilege.
Andrew: Thank you all for watching.
