What’s up, everyone? This is Courtland Allen from IndieHackers.com and you’re listening to the Indie Hackers Podcast. On this show I talk to the founders behind profitable internet businesses and I try to get a sense of what it’s like to be in their shoes, how do they get to where are today, how do they make decisions both in their personal lives and at their companies, and what exactly what makes their companies tick? And the goal here, as always, is so that the rest of us can learn from their example and go on to build our own successful businesses.
Today I’m talking to Rand Fishkin. Rand is one of the world’s foremost SEO experts. And as such, he doesn’t need much of an introduction, but I’m going to give him one anyway.
Rand is the founder of Moz, a marketing and SEO company, which he helped grow to $47 million in annual revenue, and which has helped many people, myself included, find customers and drive traffic to our websites. Rand is also the author of a new book called Lost and Founder. It’s a painfully honest field guide to the startup world. I’ve read it and it’s like a very transparent, very detailed Indie Hackers interview. So if you enjoy Indie Hackers, you’ll love the book, and it should be available by the time that you hear this episode. And finally, Rand recently left Moz to start a brand-new company from scratch. It’s called Sparktoro, and I’m sure we’ll get the chance to talk about that as well.
So Rand, welcome to the show and thank you so much for joining me.
Thrilled to be here, Courtland.
The problem with talking to people like you who’ve done so many things is that there’s no way we’re going to fit all of it into an hour, and so people will be mad at me. So I just want to start by saying, shame on you, Rand, for putting me in this awkward position.
(Laughter.) Well, shame received.
So probably everybody who has a website that they’ve tried to get to the top of Google has heard of Moz, but very few of them are aware that you started the company with your mom. In fact, I’ve never met another mother-son founding team. So can you tell us a little bit about what those early days were like?
Yeah. It turns out mom-and-son software startup is the least likely venture-funded company out there. I’ve also never met a mom-and-son venture-backed startup founding team.
So I think, yeah, the early days were hard. I dropped out of college, I was working at my mom’s office out on the east side of Seattle, and we were not good at building a client base, not great at getting paid, the .com bubble had just burst, and a lot of clients were trying to get their websites done, but then not paying. We were struggling to just make ends meet, and in fact, going into debt at the same time.
So by 2004, I think it was, maybe end of ’04, beginning of ’05, we had about half a million dollars in credit card debt. That’s because we actually had more like $140,000 or $150,000 in credit card debt, but then we couldn’t make the minimum payments. And so the interest rate spikes and the penalties jump up. Ad a couple months into that, you’re lucky if it’s not 2x.
So as a result, we started trying to find anything to grab onto. And I had built this blog called SEOmoz that was all about, basically, learning the SEO process by writing about it and sharing my experiences. We had stopped being able to afford our SEO consultants and contractors, subcontractors for our clients in ’03, and so I was learning the practice and trying to make a go of it.
And that is what led to, eventually, being able to dig out of that hole. We got consulting clients and some speaking engagements and some traction with that blog. And then a few years later after we were just barely out of debt, we launched this software product called the SEOmoz Pro Tools, and that took off like a rocket because we already had the audience. We already had this strong group of thousands of people who were reading Moz’s website every day to learn about SEO.
We knew that they needed the same tools we did. I wanted to share them for free. Matt, our developer, was like, “No, we won’t be able to afford the server bandwidth, so we’re going to have to charge them something.” I was like, “Okay, we’ll throw a little PayPal $39 a month thing up.” And within six months, we saw that that was going to overtake our consulting revenue by the end of the year, and so suddenly realized the power of having a SaaS product.
Yeah. I think most people who are half a million dollars in debt would decide to probably throw in the towel rather than start a blog. What was going through your mind at the time, if you can remember back that far? And why did you think that building an audience and building a blog could somehow get you out of debt?
Well, I want to say it was less that I thought that building the blog could get us out of debt, and more that anything that looked like it could have any kind of traction looked appealing at the time. Bankruptcy is actually the super-logical option, but my mom and I had never told my dad that we had any debt, and we were pretty scared that if he found out, I don’t know, all sorts of bad things might happen. Maybe he’d divorce my mom, and what would happen to their house, what would happen to my grandmother’s house in Connecticut, which my parents owned.
So yeah, it was really stressful times, and it was one of those situations where you just grasp onto anything you can. And this blog was getting traffic. A few people a month were contacting us asking for SEO services. And so we just went where the money was.
So a lot of other entrepreneurs listening in right now are in a similar situation. Maybe they’re not in debt, but they’re pretty hungry for any sort of traction. How did you get so much traffic to your blog, and what were you doing that maybe other bloggers aren’t doing?
Well, one big thing was that there were so few blogs or websites that had open, transparent information about SEO at the time. It was kind of this secretive, dark world that was perceived as very scammy and sketchy. It’s tough to remember now, but when I started in SEO, a podcast like Indie Hackers – well, podcasts weren’t nearly as popular. But something like the Indie Hackers community or the Hacker News community were virulently anti-SEO. They just hated the idea of search engine optimization. They thought it was this totally scammy thing. I would say until about four or five years ago, web developers as a whole just despised SEO as this practice.
And so at the time, I think Moz’s transparency, my willingness to be transparent and open about what was going on with SEO and to be vulnerable and to sort of share what was working and what wasn’t, that was refreshing and unique and hard to find. And because of those things, it was unique. It stood out in its field. And there was also very few people writing about SEO; maybe a few dozen blogs at most. Today there’s thousands if not tens of thousands. And so standing out in the field was definitely much easier.
And I’d also say this: 2003 I started the blog. It wasn’t really until ’05 that it got any traction, and it really wasn’t until ’06, ’07 that it started to take off. So while it looked like to many people this overnight success in the SEO world, Moz was years in the making. And those first few blogposts, those first few years of blog posts, they rarely got 100 visits to them. They didn’t bring us any clients at all. It was only a couple years in that that started trickling.
Psychologically, how do you decide to keep going if you don’t know that it’s going to work and it’s not working out immediately? Because I think a lot of founders struggle with, “I’ve given this six months. It’s not working. I need to pivot. I need to quit.” Why didn’t you?
Yeah. I mean, because I had real interest in the topic. It was not an overnight success, but it was clear to me that every month I was getting a little bit better at it. The first few months, it was like a few dozen visits, then it got into the many dozens of visits, and then there’d be days where I’d break 100 or 200 visits six months in, and then a year in, I could break 500 visits sometimes. And two years in, that was 1,000.
So I think it was the sense of progress that kept me going. It’s part of the addictive behavior that a lot of games create, where you feel like you’re getting better at it and you’re getting rewarded a little bit. And so even though the progress is very, very slight, that sense of, “Oh, every time is a little better than the last time” I think is what kept me going.
Yeah, I can understand that. I spent many hours leveling up my character in World of Warcraft, probably around the same time that you were leveling up your blog. (Laughter.)
I missed World of Warcraft because of SEOmoz. I’m kind of sad about that.
Yeah, I think you probably made the right decision.
So you’re writing your blog, it’s going well, a lot of your readers are turning into leads for the SEO services that you guys are providing. But eventually, you pivoted to become a product business. I’ve talked to a lot of founders who’ve made that same switch, and I’m curious what it was like for you. How did you decide to become a product business, how did you build a product, and how did you go about finding your first customers to sell it to?
Yeah. So we had a very unusual story in this respect in that we basically built – I think we probably built six or seven tools that were just for me and two other consultants who worked at SEOmoz. And Matt had built them sort of on the backend of our website, accessible only to us. They were not high quality, not very usable, but they got the job done. They were automating things that were a pain in the butt to do in SEO every time you had to audit a website or check its links or compare it to another site or put together a little client report, whatever it was.
Given the fact that the SEO world had so few tools – there was a couple of downloadable pieces of software that you could install. I think one of them was called Web Position Goal that would track your rankings. But we hated that we had to download it, and the request all came from your IP address and so you’d get blocked by Google sometimes.
And so we were like, “Well, if we could put it on a website and have it sort of live in the cloud, that would be awesome.” And those tools, I showed them off at conferences and events. So I’d show them to my friends and my buddies as we’d go out. I’m like, “Oh, check this out.” I’d pull out my laptop. “Look, I’ve got this little tool that can scrape Page Rank.” Google’s toolbar Page Rank at the time was sort of an important SEO metric. “And oh, it’ll do a site command and look for all the pages and make sure they’re all indexed and then crawl all of them and fetch the title tags” and stuff like that.
And these cheap, little – today they’d be considered just junky tools. This little collection of tools was what we started charging, I think, $39 a month for in 2007.
And finding our first customers was way too easy. Basically, I wrote a blogpost saying, “This thing is now available” and that was it. That was all the marketing we did. But because that blogpost went through RSS and email at the time – this is sort of pre heavy social media days – it was read by thousands of people, a few thousand people, maybe 2,000 or 3,000 people who needed tools just like we did. And so essentially, by solving our own pain point and being in that world, we had built this community and they turned out to be right customers for us.
And to be honest, Courtland, I’m kind of doing that again. My hope with Sparktoro with this new business is to, over the next six to 12 months as my cofounder and I build out the product and the technology underlying it and do a lot of validation, I hope to build a community of thousands of folks who come to Sparktoro, mostly for content and to learn about marketing and those kinds of things, and then see, “Oh, they have this product. This is the problem they’re trying to solve. If I’m interested in that, I can sign up to get notified when it comes out.”
And by building that sort of audience-first, product-second approach, which I think is actually pretty unusual, unfortunately, in the classic startup world; I think probably more common in the Indie Hackers world.
Yeah. I think that can be a great path to quick traction.
One of the problems that a lot of Indie Hackers in particular face is that they have pretty limited resources. They don’t have funding, they don’t have a consulting business that they can rely on, and they’re sort of building their products on the side while they’re at their full-time jobs. What’s your advice for somebody in that position?
Well, so I do think that a lot of folks who are trying to build a business while they’re at their full-time job should consider that, rather than product building, you might want to do audience building first.
So you only have a few hours a night or on the weekends or whatever it is. And I might consider: Hey, should every week or every month you put our something or do something that builds an audience, whether that’s, hey, I’m going to participate in these Q&A forums or I’m going to build this profile on social media channels that gets me the right kind of following, or I’m going to engage in blogging, or I’m going to put together a podcast, or whatever if it is, a YouTube channel, an Instagram following, et cetera, et cetera.
And I might consider whether building that audience first, rather than building the product first and then sort of launching and going, “Okay, now how do I get traction, how do I get an audience” can be a real path to validation, market validation, building the right thing, and then having that audience out there early, which can make such a difference when you do launch.
It’s fascinating how much of entrepreneurship is sort of taking this windy, curvy path instead of going directly where you want. So you want this big, hairy product but maybe it doesn’t make sense to just start building all the features; or you want to build this successful company, but maybe it makes sense to, rather than build your company directly, build an audience first.
What are some of the ways that you and Moz leveraged your early advantages to go into a complete new arena?
Yeah. One of the clear, big wins for us was having this giant email list. So we had foolishly – I say this because I think today we absolutely would be on WordPress or another CMS system that’s much more flexible and doesn’t require a ton of in-house work. But we had built our own CMS, and as a result, we had our own system for registering and commenting on the blog or trying out some of the free tools or whatever it was.
And so we assembled this giant email list over the first few years, and we were able to use that to do, yeah, lots of really powerful marketing. I think between email and organic search, that probably accounted for 90-plus percent of all the signups that we earned.
And so certainly to the extent that folks can build things that capture emails – I still think emails are far more powerful than OAuth or Facebook fans or Twitter followers or anything like that. I would do that. Email also lets you do things like upload that list to a Facebook or a LinkedIn or a Google and run ads against them and lets you do clever retargeting, lets you put it into a system like FullContact and get out a bunch of data about your audience.
So I would absolutely encourage anyone who’s building an audience to go email first.
Yeah, I’m doing the same thing at Indie Hackers; trying to build my email list, trying to use it as sort of the primary distribution channel rather than being completely reliant on these other channels like Twitter, Facebook, Hacker News, et cetera.
And it’s a long slog. It takes a while to build up your email list. It’s not as instantly viral as some of these other channels, but like you said, it’s so valuable. It’s one of the most talked about things that I think is still underrated.
Yeah. I mean, I would take 10 email addresses over 5,000 Twitter followers any day.
Yeah. So in your book, you talk a lot about how marketing was always part of Moz’s DNA, and that they’d be building the product and dealing with technology was difficult, but getting millions of visitors to your website was the easy part for you.
But for a lot of Indie Hackers listening in, it’s the exact opposite. They have no idea how to get millions of users to their websites. What do you know that they don’t? Was this just lessons that you picked up from your blog or is it some part of who you are naturally?
No. I don’t think that I had any particular special skill when I dropped out of school and started doing this stuff. I think that it really was years and years of trial and error. And if you were to say, “Well, what does Rand know or what do professional web marketers know that software engineers and product builders and designers and developers often don’t,” I think it comes down to this sort of uncanny, hard-to-describe ability to recognize things that will resonate with an audience and draw them in versus be perceived as either bullshit that no one’s interested in or just boring.
What I think many startups try and engage in is sort like content marketing. They try and build content, whether that’s across social channels or podcasts or videos or blog content or articles or a news section, or whatever it is. And they don’t have a great answer to this fundamental question when they produce that content: Who will help amplify this and why?
And that’s something that marketers are really good at. They’re not just good at saying, “Oh, well, I think that people who need accounting software will help me amplify this.” People who need accounting software need accounting software. They don’t want to amplify things. They’re not there to help you market. They just want accounting software.
And marketers recognize that there’s customers and then there’s sort of like channels and sources and publications and people who influence potential audiences. And those are the people who desperately need things to amplify. Every day they’re scrolling through tons of different content channels and trying to find things that are worthy of sharing with their audiences through whatever means they’ve got, whether that’s journalists trying to figure out what to write about or people trying to figure out what to submit to Hacker News, or people trying to figure out what they’re going to tweet or share on Facebook or put on LinkedIn.
They’re influences, but they have this desperate need every day of stuff that they have to share. And so by serving them, and then attracting the audiences that they help you build, you get this powerful marketing effect. But if you just try and target your customers, you often miss out.
I think from far enough away, if you’re a programmer and you have no marketing experience, it’s easy to squint at it and just think that it’s luck. “Oh, some things take off, some things don’t, who really knows why. Hopefully, my customers will help me amplify it.”
But from your position, you’re aware of all the sort of levers that can be pulled, you can break down things and explain exactly why people share things via word of mouth and exactly why people will amplify things in front of their audience, and it’s not a mystery.
One of the things that you guys did that I think is super cool, and I love talking about it whenever anybody does this, is you sort of modeled your growth like a flywheel. Can you talk a little bit about what that meant and why you did that?
Yeah. So I wrote this chapter about my frustration with growth hack chasing, which we did plenty of at Moz. We were trying to find that one silver bullet, that one weird trick to lose 10 pounds tomorrow. And of course, as you know, there’s no one weird trick; or if there is, it’s a pill that makes you sit on the toilet all day, so don’t do that.
We experienced a lot of the pain of chasing those growth hacks. Even when we had a successful growth hack every once in a while, (a) we’d get addicted to that practice and (b) it often would produce lower-quality customers, lower lifetime value, higher-churn customers.
And so the alternative is to build this sort of marketing flywheel. And the reason I use the flywheel analogy is because a flywheel is something that scales with decreasing friction. But it takes a tremendous amount of energy to get started. The first few revolutions of a flywheel are very energy intensive. But then inertia and a lack of friction lets it go faster and faster and revolve and revolve with less energy input.
And that’s exactly what we found with our marketing practices. So Moz is a sort of classic content-marketing machine. But let me use an example. It’s 2007 and I want at blogpost (distortion) 10,000 visors. I’m trying to get 10,000 people to read this blogpost that we put out.
Well, you know what? For probably two to three months, I’m going to pounding every channel I possibly can: my early Facebook and Twitter, my LinkedIn back in those days, other people’s blogs, going to forums and writing answers to questions that mention the post, and emailing folks and talking about it at conferences.
And I’m unlikely to ever get to that 10,000 because it’s just such a big number compared the audience that we generally reach, which I think in those days was maybe 1,500 people per blogpost if we were lucky, if it was a good one, maybe 2,000.
Fast forward to 2018, and I want 10,000 people to watch a Whiteboard Friday video that I produced yesterday. How do I do it? I hit “publish.” That’s all I have to do. Why is that? Because over those 10 years, every time we had a piece of content that went out there, a few more people subscribed via email and a few more people subscribed via RSS and a few more people followed the Moz account on Twitter and on Facebook and on LinkedIn and even on Google+ for the few years that that was an active channel.
And more and more people who amplify things saw that when they shared Moz’s content, they got more retweets and more amplification. So they sort of got trained like, “Hey, this is a good thing to share. I should share this when it comes out. If there’s a good one, I should share it.” And a result, Moz’s audience just kept growing and growing.
Search worked this way too. In 2007 Moz was a mildly powerful website. It had tens of thousands of links to it, it ranked reasonably well. But today a Whiteboard Friday post a few hours after it goes up, it’ll probably be ranking number one or two for even pretty competitive keyword phrases that it targets in its title. And that’s just because Google has been trained that Moz does a great job of answering searchers’ queries and that we’ve got a tremendous amount of link equity and domain authority and all these ranking signals that factor into Google’s results.
And so yeah, you want 10,000 visits? You hit “publish.” It’s become a flywheel. It’s turning so fast at this point that inertia and the frictionless generation of energy keeps it going.
And I think a lot of people trying to grow a company who are obsessed with growth hacks will do growth hacking without having that flywheel. And so they’re sort of growth hacking these one-off things that won’t feed into some sort of long-term mechanism that will improve their company and make it easier to grow in the future. But that doesn’t necessarily mean all growth hacks are bad, because you can use growth hacks once you have your flywheel to sort of accelerate individual components of it.
How did your flywheel change over time, and what are some of the things that you guys did to get it spinning faster?
Yeah, yeah. So I wrote about one of the early ones of these, and I think it serves as a great example of this. So basically, you’ve got this flywheel that you’re trying to turn, but you find a point of extreme friction. So for me in the early days of the blog, it was:
“I just can’t get anyone to link to my stuff. No one in the SEO world is sort of – no one who owns their own blog or website in the SEO world is reading my stuff. There’s a bunch of people who came over from other forums and they’re checking it, and some people who maybe heard about us through other sources. So I’ve got a couple hundred regular readers, but they’re not the people who might link to and share my stuff. And I really need those links. Those links are what are going to power my rankings in Google and get me in front of a broader audience and bring in customers, all that kind of stuff. So I need these rankings; to get them I need these links.”
And so I had this idea of, “Hey there’s a document on the web called the Google Ranking Factors.” It was 101 Google Ranking Factors. And it was from this guy who does these one-page documents. I don’t think the website still exists, but it wasn’t very good. It was kind of a mediocre attempt at trying to explain what was in Google’s algorithm.
And so I did this thing where I emailed 150 people that I admired most in the SEO world, almost all of whom had their own blog and websites. And I said, “Hey, on my website, Moz, I’m doing this survey and I’m going to put together sort of a collection of aggregated opinions from experts in the field about what’s in Google’s ranking factors. And if you would do me this favor and take this survey – it’s pretty intense, it’ll probably take you 25, 30 minutes to complete this survey – I’m going to include you in there and link back to your site and cite you as one of the contributors.”
And like 90 people out of this 150 said yes. They spent the half an hour to take this survey. And then I aggregated all the results and created a bunch of different visuals, but one of them that really resonated was this pie chart. It was the percentage of each major ranking element of Google’s algorithm. And it’s an aggregated set of opinions. It’s not perfect by any means, but if you believe in sort of wisdom of the crowds or wisdom of the expert crowds, it’s a reasonable thing that you could refer to. And tons of people did.
Of those 150, over the next year probably 100 of them ended up linking to Moz and that document, and more of them started reading our blog. And so this one growth hack, this single piece of content, which was an intensive amount of work, ended up accelerating our flywheel dramatically. And within six months, a year, we started ranking way better in Google and sort of got out of that rut we were in with getting rankings for our blogposts.
That’s such a brilliant idea and really good execution too, and it’s so important. What you were doing was optimizing for something that was part of your flywheel. You were optimizing for building links, because you knew how that would pay off in the long term, rather than optimizing for a growth hack that would simply result in a quick burst of traffic. And a lot of people don’t know the difference.
Let’s get a little bit nebulous here for a second. I think a lot of people have trouble coming up with ideas. How do you come up with good ideas like this one? Are you brainstorming constantly? Are you talking to people? Are you just waiting for lightning to strike?
I’m always on the lookout for things that I think are not good enough or terrible. To be honest, that is my fundamental secret. I think I’m contrarian and I’m highly critical, and that’s what gives me my good ideas. I look out there.
I wrote a blogpost, I think, yesterday that was a good example of this. There’s this study that was flying around the web and it pissed me off, Courtland. Really in my soul, it just made me so angry. So it was data from a company called Shareaholic, which is a social media sharing widget that you can put on your website. And the data was basically saying that on the 5,000 websites that have Shareaholic installed on them, in 2017 search Google search traffic overtook social media referrals for the first time.
That is honest. That the true story. But all these other media outlets picked up the story and said, “Oh, for the first time, search is bigger than social.” That’s not what the story said. The story said, “On these 5,000 websites,” which are obviously heavily social-sharing and social-media based because they installed the Shareaholic widget, “their particular referral traffic saw this change.” But 5,000 websites out of, we think, about 350-, 400 million websites that get pretty decent traffic across the entire web is a drop in the bucket, not even a drop in the bucket.
So it just infuriated me. And so I talked to some friends at Jumpshot who collect clickstream data, and I wrote this blogpost on Sparktoro using some of this data. So I think the blogpost is, yeah, “New Jumpshot 2018 Data: Where Searches Happen on the Web (Google, Amazon, Facebook & Beyond).” And then looked at, “Okay, where do people actually search?”
And actually, I hope on Monday I’m going to be publishing a study on the referral traffic side that will sort of show that the, yes, search is even bigger than it was a year ago or two years ago in comparison to social, mostly because Facebook and Twitter and LinkedIn have built algorithms that make content on those networks easier to resonate if it doesn’t contain a link than if it does, but fact being search has been the major traffic driver by 5, 10x for years and years.
I think this trait you have of being contrarian and being critical towards the things that you see is so – I see it in a lot of entrepreneurs. And it’s so underrated because it’s how you produce things that are unique, it’s how you produce things that stand out.
What are some other times where you being a contrarian has helped you grow your company?
Are you sure you don’t want to hear all the times it’s hurt?
We’re going to get into those for sure.
Yeah, I think that one of the things I was very contrarian about that actually really, really helped Moz to take off, especially profitably – because I’m an extremely unusual venture-backed entrepreneur in that I’m sort of obsessed with running a profitable company. You’ll remember for years that I had that ridiculous mustache that I grew out until Moz was profitable again and it got to be just insane.
But the early days of our SaaS business after we’d raised sort of our first venture round, one of the things that Michelle Goldberg, our first investor from Ignition who’s super smart and has been just an incredible mentor for me. But one of the things that she said was, “Hey, you’re a SaaS business. You should think about building a sales team and sort of raising prices and selling into organizations,” which I think for many, many venture-backed SaaS companies, that model is tried and true.
And especially back then, it was kind of the only way. This idea of being totally self-service – anyone can go to the website, try the tools for free, sign up, and then pay – the only people who were really doing that in our world at all were some of the early email marketing providers like – I think not even MailChimp was around quite yet or maybe they’d just come out. But some of the other ones out there whose names I can’t recall now, but SurveyMonkey was the other big one. You went to SurveyMonkey, you wanted a survey, you just put in your credit card, pay them $15 a month, and you could get access to 20 surveys instead of 10.
And so because we had gone the self-service route where anyone could sign up, and the freemium route where people could try out some of our tools or some functionality first, it meant that we very, very profitably acquired customers. Our cost of customer acquisition when we finally got these metrics down – I think that was a few years later. But I remember our cost of customer acquisition to lifetime value ratio was between 10 and 15x in 2009, 2010, 2011. We hadn’t even launched a paid media campaign. We had never spent a dollar to acquire customers, which, okay, let’s be honest, that was probably dumb. We should have done some AdWords, some advertising.
But regardless, it meant that we could acquire customers just incredibly cheaply and every dollar of lifetime value was margin for us. And that ended up being great because we raised 1.1 million in ’07 and basically built the business to 29 million of revenue before we ever started using any other capital or money that we’d raised.
Oh, that’s perfect that you bring up fundraising right when I want to get into my questions about things that went wrong. One of the big themes of your book is that a lot of the so-called wisdom coming out of Silicon Valley misleads founders into doing some very dumb things. What are some of the dumb things that you did while you were at Moz?
Sure, yeah. One of them was spending inordinate amounts of time trying to raise more money. So 2009, 2010, 2011, even into 2012, I probably spent 30% to 50% of my time doing things that I thought would help me raise my next round of funding. And if you pay attention to the blogs and media and echo chamber of Silicon Valley startup culture, that’s what a founder and CEO is supposed to do. You’re supposed to keep the company funded and build all these relationships.
And so I was flying down to the Valley regularly and having all these dinners with folks. I saw this crazy thing. One of the guys who used to be really, really friendly to me and would take me out to dinner and introduce me to other entrepreneurs was a guy named Trevor Traina. And I just saw yesterday he was appointed the ambassador to Austria by Donald Trump, and I had this, “What, really, that guy? Crazy.”
Insane. Apparently, he’s become a legendary entertainer since then, so okay, great. But yeah, it was those kinds of things. It was networking and network building and then going to tons of events and getting introductions to VCs and going through meetings and trying to build up that relationship nine months or a year in advance, so that when or if we wanted funding we could say, “Hey, our business is here now, our business is here now.”
And that was, I think, a total waste of time. If I had spent those months and years with customers flying to go visit agencies and go sit in house with marketers and talk to them about what they were doing and help them with their work, which I did some of as well. But if I had poured that effort and energy there, I think the return would have been 10x.
What are some of the mistakes that you made as a result of not understanding your customers and how they were using SEO tools and growing their companies?
Yeah, sure. So the big one came in sort of the 2011 to 2013 period, when I had this idea that SEO and content marketing and social marketing and PR and brand marketing were all going to merge into one practice. You wouldn’t have these siloed individuals and agencies. You would have overlapping teams of folks with these skills.
That obviously never happened. That is not reality. But because I believed that it would happen, I had Moz go on this sort of death march of building two two-and-a-half-year-long dev and design cycle to build this giant product. And when it finally did come out at the end of 2013 was just a complete failure. Nobody wanted it. It was bad at most of the things that it did, or at least it wasn’t as good at any of the things that it did as individual point solutions.
And when I actually started spending time with customers and marketers again, I could see that, in fact, they loved point solutions. They were happy to switch context, pay more for another tool, learn a whole new UI and UX in exchange for even slightly better data, because marketing is very competitive, especially SEO. There’s only one position one. If you can get any sort of advantage to get to that ranking position one, you will take it even if it’s another tool subscription that costs you another $150 or $200 a month.
And so that was a big wakeup call to, “Oh, all in one is not at all what this market is looking for. All in one is kind of a waste. These people just want best of breed in everything, and they’re willing to switch tools and contexts.”
And also SEO people are not doing social media marketing unless it’s things that directly serve SEO. They’re not doing what a lot of content marketers do in content marketing even though they do some content. They’re not doing what email marketers do, they’re not doing what brand marketers do, they’re not doing what public relations folks do. They’re SEOs. And likewise, each of those individual disciplines is doing their own thing.
So I think if I could have been a little less arrogant and more humble and recognized – not just spent time with customers but internalized the lessons, I would have made a lot better decisions.
That’s interesting, because you’re at this point in time pretty much an expert in this space. You’re eating it and living it and breathing it, and even then, your intuitions can still be off in terms of what customers actually want.
And I think for a lot of early stage entrepreneurs, that’s even more the case. Chances are you’re not an expert and you just randomly guessing or intuiting or what everybody’s going to want. It’s not going to work out most of the time.
Yeah. One piece of advice I would have for folks who are doing that is try doing some of the work yourself. So I think a lot of advice in the startup world is, “Spend time with your customers.” But there’s not enough advice that is, “Go be your customer.” If you’re, “Oh, I’m going to go serve truck drivers.” Hey, see if you can find someone in that world and go on a few long-haul drives. Be the driver to whatever extent you can. Go through training. What’s that like? So I think that living the lives of your customers is definitely a cheat code for this stuff.
Yeah. And I think what so hard about it is even hearing you say that, I’m like, “That’s a great idea. And the number of insights that can come out of doing that could be unlimited. You have no idea what you’re going to learn that could change your business for the better.” But at the same time, part of my brain is thinking, “That’s a lot of work. That’s not guaranteed to pay off. It’s not directly what’s going to help my business. How do I know that’s what I want to spend my time on? I think just guessing what people want is good enough.”
How do founders get past these feelings?
Well, it can be. I think the challenge is if you get that wrong, all of the energy and effort that you’ve put into building your product and designing your company and branding your company as the place where people can get this thing will have been for naught. So if you’re looking for a way to lower your risk profile and increase your odds of success, that’s a great way to do it.
So one of the things that strikes me about you and about Moz is that you have this value of transparency among other several strong values. Moz is a private company and a pretty big one at that, and you guys were crazy transparent about your revenue numbers and your internal decision-making.
And I’ve also noticed that you’re the same way in your personal life. I started reading your book and only a few pages in I was thinking, “Whoa, he’s really sharing everything here.” There’s a lot of stuff in it that most people just wouldn’t share. Do you think that Moz --
You’re like, “Oh, I know how much Rand makes. That’s weird.”
Yeah. “I know how much money he makes, I know his emotional state, I know the state of his relationship.” Do you think that Moz’s value of transparency came from the way that you live your life, or do you think that it’s the other way around, that you are influenced to become more transparent because of the values that you had at Moz?
Oh, no, no, definitely the first way. The best thing that you can do for your startup as you’re creating values, which when you’re one person and you’re sort of hacking stuff together on the side is less important, but as you get to even two or three people, starts to become important. Having those values reflect your personal values is very, very powerful.
And they can be aspirational personal values. You can say, “The best part of me wants to always be kind to other people.” And so I’m going to make that a value. Even though I know I don’t always live up to it, I’m not perfect at it, but it’s something that I value in others and it’s something where if I find people who are not kind to others, even if they’re extraordinary performers, even if they help my business quite a bit, I don’t want them part of this organization, and I’m willing to take that sacrifice.” Okay, great. Now you’ve identified that value in yourself. Now put that in your company.
I think it works much less well the other way around, where you try and say, “Hey, I think this would be a good value for the company to have. Now let me see if I can go live up to it and make it part of my life.” That’s kind of a recipe for disaaster.
And unfortunately, a lot of startups do choose values because they think they’re good for recruiting or marketing. If you don’t fundamentally at your core believe in transparency, don’t make it a value. If you want to use transparency as a marketing tactic now and then, great, fine, go for it. Don’t call it a value because that’s a different thing. Values are things you would be willing to sacrifice even if they hurt your business and cost you money. And I think that identifying those things is where the real value comes in.
So yeah, definitely a personal value and bias that then became part of the company rather than the other way around.
So I think your value of transparency really resonates with me. Indie Hackers itself is a community that’s built on transparency. I’ve done hundreds of interviews on the website. Everybody has to share their revenue, everybody has to share good times as well as the bad times. But I think a lot of people have not even considered making this one of their values. It’s kind of the status quo is that you don’t talk about what’s going on at your company, you don’t talk about what’s hard in your life.
What do you think are some of the costs and the benefits of being transparent? Why consider it?
So that’s the fundamental difference between a value and a strategy or a tactic. When you come up with a value, you don’t say to yourself, “What is the cost of doing this, what is the benefit, what am I getting, is it going to help with customer traction?” Those are not the questions in consideration.
It’s a lot more like why people have ethical and moral and even some political beliefs. They believe those things because they fit their worldview because that’s how they want the world to be. I want the world to be a more diverse place where it’s not just white dudes running the show. There’s room for people of all kinds represented at all levels of power. And this is the personal value.
But because of that, I’m willing to make sacrifices to do it. If that means that short term there need to be sacrifices made or investments made to see that through to the long term, I’m willing to make those; as opposed to a tactic, which is, “Well, hey, we already have a bunch of money and power and influence in this group, so let’s just keep giving them money and power and influence because that’s the easiest sort of thing to do.”
And values work that same way. I think, going to the point you made about transparency, there is a culture that I have absolutely not just noticed but felt really strongly; most strongly in the Bay Area startup culture. But that ethos has extended elsewhere, and that is that you always have to be showing or pretending to show strength. How is anyone ever doing in San Francisco? They are either crushing or killing it. I don’t actually like crushing or things. I have never been that.
But I think that hides a mask of turmoil and sadness and stress and emotional strife and psychological problems. And when you actually spend time with your close friends and you find out how they’re really doing, they are not crushing or killing it. They’re just saying that because they feel like they’re supposed to, because they feel like they have to because this culture has created in us a sense that we need to be dominant, that vulnerability and weakness are going to harm us, and perceptions of those things will harm us.
And so we put on these masks. I think that’s bullshit. I think that hurts a lot more people and companies than it helps. And there’s a lot of wonderful elements of Silicon Valley startup culture: this idea that anyone can come there and build something amazing, that you can disrupt industries that maybe were extracting instead of creating value, that you can have an extraordinary impact on the lives of millions of people that’s hopefully very positive.
And granted, some of the narrative the last few years has been a lot of the downsides of that. But I think a lot of that downside comes from this bullshit facade that we’re supposed to put on.
So Courland, I love what Indie Hackers does because it takes that mask off. You go to Indie Hackers any day, and it’s a bunch of people saying, “I suck at this, I don’t know how to do this, I need help with this, my business isn’t doing so good, how’d you get over this hump.” And that is the absolute opposite of everything you see on TechCrunch, which is so refreshing.
Yeah, the number of stories I could I tell about people who I know their business is not doing well but who won’t open up and who will only say that they’re crushing it is staggering.
But one of the chapters in your book is called “Should you sell your startup early? Yes, probably.” What’s the story there? (Laughter.)
Well, so what I’m trying to do there is I’m trying to illustrate, especially for first-time founders or folks who don’t already come from a lot of money or have a lot of money, the value of thinking about an early exit not as giving up or selling out, but as giving yourself a long-term second and third and fourth shot at doing this, and in the process potentially improving your life and your family’s life and the lives of people around you too.”
And I’m trying to also illustrate that a lot of those early sales that feel like they – I think in my case it was like, “Well, you could have made these few millions of dollars” and – “few millions of dollars,” Jesus Christ. Millions of dollars is an incredible thing. Let’s not kid ourselves into thinking that it’s not. But you can definitely look at Moz today and say, “Well, wait a minute. It’s doing almost 50 million in revenue. If they were to sell today, maybe you would make multiples of that.”
But the mechanics and realities of delusion and liquidity preferences and scale and the risks that come with trying to grow a company much bigger mean that most of the time, those early offers are actually the right thing to do sort of financially speaking for founders even if they’re not the right ones for investors.
There’s a bit of a disconnect there, and I would definitely encourage folks to have those hard conversations and honest conversations with their investors if you’re in that situation, where you talk about, “Hey, this is probably the right thing for me. I recognize it’s not the right thing for your fund. How can we make this right? Is that me taking some money off the table now and being willing to take this risk, or is it us saying, “Hey, yeah, this is a great deal for founders and employees even if it’s not for the investor. And so let’s take it and then in the future there’ll be plenty of other companies for the investor to pursue”? So a little tough.
Yeah, not an easy decision to make.
But you’re working a new company now, Sparktoro. How have you thought about these issues with your new company? What are your ambitions, how do you think about fundraising, what are your goals?
Yeah, I’m excited to write about this. I hope in the next couple of months to actually have sort of a financing done. I’m not raising any institutional money this time. It’s sort of all angel funded. But I’m doing a very unusual style of fundraising, and I hope to sort of open source that and write about it and make it something that’s maybe an alternative that other people can pursue. Because I think that there’s a lot of room for companies that can get profitable quickly and that then can choose to invest in growth at a higher rate or long-term sort of profitable operation.
And the problem is that the second one, long-term profitable operation, does not generally reward investors in the structure that most Silicon Valley deals are done. And so I want to try and change that. Yeah, so I’ve created a structure that basically says, “Hey, if Sparktoro is a few million dollars a year but it has 20 or 30% margins, investors can make quite a good return over five to 10 years, similar to or better than they might get with classic venture-style deals.
And what about your personal goals with Sparktoro? Why start another company and where do you hope to be in five or 10 years?
Wait, do you want the real answer or the PC answer?
I want the real answer.
There’s no small part of it that’s the chip on my shoulder.
So the departure from Moz was a little contentious, more than a little contentious. And that’s not to say that there aren’t 100-and-some people there that I absolutely love and want to do well, and obviously, I’m cheering for the company so we’re (inaudible) them. But I also feel like I have a lot to prove.
And so Sparktoro is me, yeah, hoping to prove that I can do a great job of building a product and a company that can get to an exciting place even if it’s no necessarily venture-backed. And maybe it won’t be quite the scale of Moz, but I think there’s a possibility that it could be. So yeah, I don’t want to say – it’s not quite a revenge startup, but maybe a little bit.
Yeah, revenge story or not, it’s certainly a good story and I’m rooting for you. And on that note, what is Sparktoro, exactly? It’s not launched yet, but on your website you’ve got some descriptions of sort of what you hope to accomplish.
Yeah, yeah. So we’re in the process of sort of early stages of R&D on the tech and validating that we can do what we think we want to do and that that is something that customers actually need, which so far as gone well on both fronts. And that is essentially this fundamental problem of – let’s say, obviously, a ton of people in the Indie Hackers world are building products for an audience. And then they have to go through this hard process to do marketing well of figuring out where those audiences engage and with whom.
So what are the publications and people, the podcasts, the events, the YouTube channels, the Twitter accounts, the blogs, the media, the forums that your audience participates in? And if you can identify those and get some good metrics around them, you can say, “Aha, I do think spending time,” whatever it is, “answering questions on Quora or building some relationships with these folks on Twitter or going to these events and conferences or getting our founder onto this podcast or this YouTube channel – those things will have, we think, will resonate with the audience that we’re trying to reach because that audience already engages in those places with those publications and people.”
And discovering those, uncovering what those publications and people are, is a pain in the butt right now. And we think we’ve got a solution to being able to uncover that through collecting large amounts of public web and social data, and then anonymizing and building profile information and a little bit of NLP and machine learning on top of that. But I’m excited to try and solve that problem, because right now I know tons of marketers who spend weeks or months surveying their audience or paying a PR company tens of thousands of dollars to do it or biasing to just, “Well, whatever comes up on the first page of Google. I guess I’ll go spend my time there.” And that’s probably not the best use of their time or energy.
Yeah. And there’s a ton of early stage founders who would also love to use it. And I think what’s cool about it is that if you can actually solve that problem, then more people will start more successful companies, I think, because you kind of are making this very difficult challenge a lot easier.
Yeah, absolutely. And hopefully, it’s a positive thing for these publications and people who are influencing audiences too in that they will have better, more relevant folks pitching them and talking to them about stuff that’s actually relevant to their audiences instead of getting these just random PR emails that are often pretty poor.
Yeah. So it’s been a while since you were at the helm of a tiny business, and now you’re sort of like an Indie Hacker all over again.
I took some questions on the forum to see what people wanted me to ask you. And Amin on the forum wants to know how your experiences running Moz will play into Sparktoro, and what are some of the mistakes that you’ve learned from and also the good things that happened at Moz that will most affect how you make decisions at Sparktoro?
Yeah. So a few we’ve talked about. Those include the funding and how I’m biasing away from venture, because I just don’t love the binary-outcome model. On the hiring front, I think that’s another thing. Almost every entrepreneur I talk to actually says this, which is in their second or third business, they really think much harder about who they hire and how much they hire.
And so my cofounder and I are sort of like, “Hey, how about just the two of us build the v1 of this product, launch it, get it out to market before we hire anybody else?” I’m not sure if we’ll make it all the way, but I think we’re going to keep the team very, very small. Another thing that I definitely plan on doing is, on the good side, replicating what we did with Moz on the marketing front, trying to build that flywheel, and then find the points of friction and apply some growth hacks to get it over those humps, which I’m sure we will encounter.
I also think that the self-service model is one that I really love. And even though it has its challenges as well, I definitely prefer that to the sales team sort of classic SaaS approach and plan to pursue that. So yeah, those are all things on both sides.
Awesome, sounds exciting. Well, I wish you the best of luck with Sparktoro. I’ll be following it. Hopefully, I can use it for some future projects.
Is there anything else that you’d like Indie Hackers to listen to hear or to hear? Can you tell them also where they can go to find your new book, which should be out by the time this episode is out?
Oh, yeah, very exciting. Yeah, so Lost and Founder should be available all over the place. I think if you go to bookstores you’ll find it there, Amazon, and IndieBound and Powell’s. All those places will have it, Barnes & Noble, et cetera. And I also recorded the audiobook personally. So if you want to hear that, including a few audio-only Easter eggs, you can pick that up on Audible and there’s a Kindle version as well.
Yeah, and if anyone from the Indie Hackers community – you know I love you guys, so I visit the site once every day or two at least. But if there’s any questions that you have in particular for me, feel free to tweet me @RandFish.
All right, well, thank you so much for coming on the show, Rand.
Yeah, thrilled to be here. Thanks, Courtland.
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