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Welcome to the My Wife Quit her Job podcast. We will teach you how to create a business that suits your lifestyle so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Welcome to the My Wife Quit her Job Podcast; today I’m excited to have Bill D’Alessandro back on the show. Now if you don’t remember Bill he was featured in episode 48 where he talked about how he purchased an ecommerce business and doubled its sales in just one year, now it turns out that he’s actually man of many talents and he’s got a lot of projects on his plate. Now we’ve had a lot of ecommerce entrepreneurs on the show at this point, but we haven’t really discussed some of the intricacies of the selling process. Some online stores like mine cater mainly to the end customer, but there are others that sell wholesale and serve as suppliers to other retail stores.

Now because Bill is an expert on the topic of selling wholesale, I actually asked him to come back on the show to talk about how to create a profitable wholesale shop. So with that welcome the show Bill. How are you doing man?

Bill: I’m doing good, thanks for having me Steve.

Steve: Yes, you run a whole bunch of ecommerce stores and do they actually all sell wholesale today?

Bill: Yeah. So when I started we were just selling B to C– business to consumer, shipping via post office and UPs and everything, and as we got bigger you know, we have our own brands and this is more applicable if you have your own brand versus if you are retailing other peoples brands, but as our brand started to get bigger we realized that in order to get really big we had to go into retailers. You can build a big business online, but if you want to build a really big business you really have to be in stores. And what I discovered is that is a whole different ballgame going to the stores than it is selling direct consumers online, and so hopefully I can share how to do that.

Steve: Yeah.

Bill: How to take your brand from an ecommerce store to an ecommerce store that also sells wholesale and get your products in the retailers.

Steve: Yeah, I’m actually interested in this myself because with my store, I didn’t really want to deal with the quality control and then kind of like the buying and selling of huge quantities of goods to retailers, so you know what was your primary motivation just for selling wholesale in the first place? Like can you factor in the decision making process versus the pain in the ass factor?

Bill: It’s close, it’s close, it is the pain because there is more pain in the ass factor for sure is bigger orders but there is more pain in the ass factor, but really the reason I did it is I wanted as I mentioned before I realized that you’ve got to do it to get big. Like I’m sure everybody is heard of Bonobos, the brand of mans pants, and now shirts and everything else. Andy Dunn the founder of that, if you know, kind of read in his writing in the early days of Bonobos he was pounding the table you know.

We are going to build a men’s wear brand online only. Men didn’t want to go on the stores to shop, this is the new way that men are going to buy pants, and he was right and they did very well, but they topped out at about 10, 20 million in revenue. And then about, I guess it’s maybe 18-20 months ago now, Bonobos announced that they had taken funds from Nordstrom and that Bonobos would be in all Nodstrom nationwide.

Now they not just in Nodstrom they are in other big box retailers and they are also opening their own guide shops all over the country. So I think the realization that Andy had of Bonobos was, we can build a nice company online only, but if we want to build a global brand, a big business you just have to go to retail because that’s where the people are, you know, they are walking through just go into Nordstrom just watch all people walking through.

Steve: Right, okay, and in terms of the progression note you probably would still recommend going B to C first and then once you get tapped out there then start going B to B.

Bill: You’ll have to, you’ll have to.

Steve: Okay.

Bill: Because you won’t have, you don’t have to, but it would be easier to go to a big box store and say hey, I analyze our ecommerce records for the past year; we’ve done 1,000 orders into the city where you are located. You know I have customers already here that like this product and want to come in and buy from your stores. Because they are going to want to see some proof that you are– because they get pitched every day, so they are going to want to see some proof that you are legit, and having a track record is one way to show that and plus it’s just you can get started and I know you’ve done a number of blog posts like how you can get a Shopify store going for like I forget the numbers– like $86 or something.

Steve: Yeah.

Bill: It’s going to be more work to do that wholesale. So yeah I would start B to C first.

Steve: Okay.

Bill: So this is really for– if you are doing B to C you are doing well and you want to kind of know how to take yourself to the next level, wholesale might be a way you can do that.

Steve: So what is considered doing well, and what do some of the larger retailers kind of demand from you?

Bill: So a lot, I would recommend, so let’s just take for example my products.

Steve: Okay.

Bill: We do sunscreens, shampoo; you know moisturizer, all sorts of things like that. They are organic, so Whole Foods is a big sort of target account for us. That would be the home run smash it for us.

Steve: Okay.

Bill: Wholesale we’ll just kind of use Whole Foods as the example, but you can search it to your favorite retailer in there. So we approached Whole Foods a couple of years ago and they basically immediately told us to get lost, and the reason they told us to get lost is because we didn’t have any proof. We had online sales as I mentioned earlier, but they said we don’t know does it move at retail. And so what we did over the last two years before going back to Whole Foods is we got in to a bunch of Mom and Pop retailers.

Steve: Okay.

Bill: And so we did Mom And Pop first and it’s tempting to go elephant hunting and call Whole Foods, but it’s much easier to call Bob’s organic market on the corner because you can just walk in with your product and Bob is probably there. And then you can go, hey Bob, check it out this is pretty cool and he can make a decision right there. With Whole Foods and big box stores there is a whole structure like you can only submit at certain times during the year, like there is a whole presentation, you know there is a million decision makers, but if you go a local shop they could just write you cheque on the spot.

I’ve had, I’ve walked into stores locally here in Colorado, we have a sunscreen product called Ski Bum. So I have walked in like Ski shops, out of brokerage and stuff and with a case and they are like yeah, that’s cool and they literally take money out of the cash drawer and hand it to me, and put the thing on the shelf right there.

So it’s just easier if you start with the small guys and then after you’ve been in the small guys for a while, what Whole Foods is going to want to know and really what any retailer is going to want to know is does this sell through, does it move it.

Steve: Okay.

Bill: So like the key thing is you will say yeah, we are in 100 stores and then the immediate follow up question will be how many of them reorder, and how often do they reorder and how many cases do they move you know, what’s the velocity?

Steve: Okay.

Bill: So when you go Whole Foods you can go hey we’ve been in a 100 small retailers for the last two years, they each move about two units a day or three units a day or a case a week whatever it is, and then you can get Whole Foods some proof that your product actually does move through.

Steve: Okay and when it comes to getting these Mom And Pop guys just from listening to your answer, it implies that you actually had to physically go and visit these guys one by one.

Bill: Yes, unfortunately.

Steve: Okay, all right.

Bill: I mean you don’t have to, it just massively easier. The other way to do it is to email first, follow up with a phone call, and then send them samples.

Steve: Okay.

Bill: Which you can do and will and can work, but it’s so- you know it a longer sale cycle and you are going to send a lot of samples and never hear back, but chances are for whatever you are selling there are a couple of stores in your town that will carry it. So I recommend if you are going to start, start there.

Steve: Okay and I understand that the pricing is got to be different when you are selling in these large volumes. So can we talk a little bit about how pricing works?

Bill: Sure, because you are selling in large volumes and also because they have to make money, when you go to wholesale a typical margin retailer wants to make is 50%, we’ll just call key stone pricing.

Steve: Okay.

Bill: So take your retail pricing divide it in half and that’s what they want to buy it from you for.

Steve: Okay.

Bill: Some Mom And Pops, maybe that’s negotiable they’ll take 40% off. Some perishable food items like bread will drop even as slow as 30, but for almost for all durable goods, I mean my products included, shampoo all that stuff is 50% off retail.

Steve: Okay, so that implies that you actually have to be making at least 4X profit on your own stuff then to consider doing this?

Bill: Exactly:

Steve: Okay.

Bill: So my rule of thumb for everything is if your product for it to be viable at wholesale your gross margin has to be 75%.

Steve: Okay and it also implies that since you are doing large volumes like your margin of error is a lot smaller too?

Bill: What do you mean by margin of error?

Steve: What I mean by that is if you have like a bad batch or something that can just really screw you over.

Bill: Yes because they will send it back to you.

Steve: Okay, and are there any sort of terms such as like you give them the product and they only pay you for what they sell or is it only typically they buy a big batch from you?

Bill: It depends, it depends.

Steve: Okay.

Bill: So what you just mentioned is called, will be called consignment. So typically when I go into the store what I do- the standard way to do it would be what’s called net thirty.

Steve: Okay.

Bill: Which means that you send them the product, and they pay you thirty days later. And they do that because they want to have some time to get their money back out so they don’t have so much money sitting on their shelves.

Steve: Okay.

Bill: So it’s a financing thing for them. So what they want to do is, and so this is different than B to C, when you sell online you swipe all those credit card right way, you get the money, you ship the product, not so with wholesale. They’ll say great, they’ll send you an order and they’ll say send me an invoice and go ahead and ship it. And so what you will do is send them an invoice that says here is what you bought, here is how much of it and we shipped it to you and here is the payment due date which is 30 days from today, almost standard, almost always 30 days.

Some larger retailers will try to push you for 60 or 90, net 60, net 90 which is, I wouldn’t agree to unless it was an account you really wanted. I’ve even had of I have a buddy that sells auto parts to O’reilly and they pay net 365.

Steve: Wow, okay. That’s crazy.

Bill: Which is outrageous, I’ve never had anyone else doing that, but most likely it will be net 30 and even Mom And Pops would want net 30.

Steve: Okay, so I mean that means you are like a bank, you are loaning money so to speak. So do you have to do a lot of due diligence for these Mom And Pops shops as well.

Bill: You can, so if they ask you for terms or they say hey, we want payment terms, that means they want net 30. If they ask you for terms you are totally legit trying to go okay, can I have some credit references. And they are used to hearing that and they are probably have a sheet that is already printed they’ll just hand it to you, and there will be other vendor of theirs, so you just call and you go, hey does Bob’s Organic still pay on time all the time, and if they say yes I extend them the terms.

Steve: Do you do any other due diligence like, like do you take their dones numbers and do a look up or anything like that?

Bill: No, it’s just; I mean it’s not that much money, right?

Steve: Okay.

Bill: I mean if it’s wholesale they are going– if it’s a lot of money it’s probably is a big order its Whole Foods and they are going to pay, but if it’s a Mom And Pops it’s just not that much money typically.

Steve: So what’s the typical minimum order that you force them to make?

Bill: So that’s, that’s– I’m glad you mentioned that because this is one thing that you can do as a wholesaler to kind of take a little bit of the power back for yourself, because if they are going to be getting 50% off retail and they are going to get 30 days to pay and everything in exchange the whole point is that they are buying in volume, right?

Steve: Right.

Bill: And so you– it is your right to enforce a minimum order. This is highly negotiable; I would say I usually start at about 250 bucks, as a minimum order.

Steve: Oh, that’s really low okay.

Bill: Well, for a Bob’s organic store it is, but at Whole Foods you might say it is $5,000.

Steve: Okay.

Bill: You know, but Whole Foods would not order less than $5,000 because it would not even move the needle for them.

Steve: Right.

Bill: What you want to do or you might say instead of using a dollar amount you might say your minimum order is one case, or some quantity unit that is easy for you to take off the shelf and mail them, because what you don’t is them going like yeah, send me one shampoo and one moisturizer and one of these and I’ll take 50% off of all of it. Because that now it’s looking like a B to C order and you got to pick pack it and it’s a pain in the butt and they are getting 50% off, and that’s not really the agreement that you had. So either enforce the minimum dollar amount or a minimum quantity.

Steve: Okay, and then once you’ve sold them a case is it up to them to reorder or do you kind of have to remind them to reorder? Like how does it work?

Bill: Well so just like you know with your B and C orders you know you do email marketing, you do all these things to remind them, it’s even worse in wholesale because they’ve got I mean, think just like walking in Whole Foods, how many products are on their shelves you know millions. And most retailers don’t have good systems to know what they are out, so they could very easily be successful with your product and sell it though rapidly and just be out and not even know.

Steve: Yeah, exactly, yeah I can see that happening.

Bill: So you’ve got to be on top of them, so you should know and this is again so you should start paying attention and say in a store like Bob’s Organic shop, how often does my product turn over. And if you know that small stores like Bob’s typically order every three or four weeks and you haven’t heard from Bob in five weeks, you need to call him.

Steve: Okay, so that implies that you have to keep track of the orders of all of your customers in order to be successful?

Bill: You should.

Steve: Okay.

Bill: You could probably be successful despite that, but that is a very good best practice to get them to reorder.

Steve: Okay and all right, so let’s start, let s take a step back a little bit, how do you actually find these retailers that are going to willing to buy from you? Like what’s your strategy for finding people?

Bill: So it can be tough right? Because you are saying like, okay, how many places sell shampoos and you know Borough Colorado or whatever. It’s kind of hard to get your arms around you know who would be interested, who is still in business like who carries stuff like this, and so I have a really good sort of track for this.

So everybody if you’ve got a brand you probably have some competitors, so the products that are most like yours. The easy trick is to go to your base competitor’s website and click on the store locator like. These are all the stores that are carrying your competitor’s products. And call them all because– and if they are carrying your competitors products they are probably interested in products like your competitors and like yours. So you just got a pre-curate it already trimmed down list of all the stores in your area or nationwide, you know filter by zip code or whatever data into your product.

Steve: Okay, that sound like a really good strategy, so then after that you go visit them and bring your products along or?

Bill: Yeah, go visit them if they are local, the other thing you do is call them, send free samples and a brochure. So for wholesale it’s really good, a lot of people will go, do you have any literature? It’s really good to make up like a one and a half by 11 page or like a couple of pictures of your products, hit the highlights and the pricing.

Steve: Okay.

Bill: So like a leave behind, like a brochure.

Steve: So one thing I was a little bit curious about you know, normally when you go B to C you kind of advertise, you do paper click and sort of thing, is that happened in wholesale? Like are you going to attract other retailers through advertising?

Bill: That’s pretty non-viable in wholesale.

Steve: Okay.

Bill: I don’t know anyone that makes paper click or traditional advertising work. The way that you find new retailers besides the trick I just mentioned is to go to [Inaudible] [00:17:06]

Steve: Okay.

Bill: You know because buyers will be there cruising the booth saying hey, what products they want to pick up. The other thing you can do is hire a sales rep or a sales rep group. These are you know, independent companies that represent a lot of products, so they might you know, my case might not represent a brand of granola bars, and my brand of shampoo and brand of milk. And so when they go into Whole Foods they check on all those place in the store. They make sure none of them are sold out, talk to the buyers at Whole Foods about all of them, non competitive you know, none of these products are competing. So one person can touch Whole Foods and also they’ll go hey, my brand of milk is in this one store maybe I can get my brand of granola bars in there too, and those people are typically compensated with 15% commission on the wholesale price.

Steve: Wow, okay.

Bill: Yeah, so as you mentioned you got to have big margins to go wholesale.

Steve: Okay and then how do you– let’s say you’ve gotten a whole bunch of Mom and Pops shop on board, how do you know when you are ready for like the big guys? Like the Whole Foods or the department stores?

Bill: When the Mom And Pops are reordering regularly.

Steve: Regularly meaning like, every month in quantity like in your case for your products?

Bill: Predictably I would say.

Steve: Okay.

Bill: I mean because, you could sell them, I mean maybe you are them a three months supply and they reorder every three months. Maybe you are selling them a month supply and they reorder every month, but when they are reordering predictably and regularly and they are happy with it that’s when you know you’ve kind of hit this fit where people walk into a store see your products and buy it off the shelf, and that’s when you can go to a bigger chain.

Steve: Okay so the predictability from that I’m hearing is almost more important than the absolute quantity it sell, is that accurate?

Bill: Yes, that’s accurate and it depends also by category, so like in Whole Foods for example in some categories if you sell two units a week and three units a week that’s good. In some categories it should be two to three a day; it depends on what you are selling.

Steve: Okay, yeah of course. Another question I had was let’s say you get in one of these Mom and pops shop, how do you ensure that your products actually gets some visibility on their shelf? Like is there something extra you have to do?

Bill: Yeah, so that’s– I mentioned the reps before and you can hire reps for this or you can do this yourself.

Steve: Okay.

Bill: I would recommend you go into it when you know ship it, I would ship it to him and if they are local show up a week later and look for it on the shelf, and make sure it’s you know arranged correctly to make sure they didn’t give you a crappy bottom shelf or something. And if it’s on the bottom shelf and looks bad, go talk to Bob and go, hey man, this is not going to move down here you know, it’s been our experience that mid height are better, you know, our product sells better, and I want you to sell this through, like we are in this together. I want you to make money on it, and my best advice to you is how to merchandise it correctly, that’s called merchandising, how it’s presented in the store.

Steve: What about like displays, so does this all kind of factor into the negotiations? I’m just trying to get an idea of how all this works.

Bill: So I would say the negotiations, there is not usually a negation, the negation is do you like this products enough to put it your store, and then there is usually zero negotiation on price because it is 50% off period. And sometimes like if they feel your price is too high, your retail price is too high they won’t tell you that, but after the fact you go in the store you’ll see they’ve dropped it and they are accepting a little bit less than the 50% margin. But if they think your retail price is really too high they’ll go, no the retail price is too high, I don’t think it will sell, I’m not taking it in at all.

Steve: Okay.

Bill: So there is typically no discussion on price, and there is typically no discussion on terms either. They like if you are like pay me up front, they are like we got net 30 from everybody else, what are you going to say? You know.

Steve: Okay.

Bill: So the negotiation is more of a sales process of get it in and then the key thing to remember in wholesale is in B to C you are kind of done once you’ve sold your product. In wholesale you are not done until they’ve sold your product because if you sell a case to them and it doesn’t sell through and they’ve got to throw it out or they eat the cost of that case like yeah, it didn’t cost you any money, but they are not reordering.

Steve: Yeah, I was just thinking like let’s say I had like a slightly more complicated product or let’s say I had one of your lotions and I really wanted the store to kind of really express the value proposition, and so how would I– would it just be kind of like a negotiation on how to get like a display, like you know when you walk to like Wal-Mart or something there is like a display right front and center.

Bill: Yap.

Steve: Do you kind of, is that rampant to the negotiations or the terms in order to get one of those things up there because…

Bill: Yes.

Steve: That floor space is limited, right?

Bill: Yes, so it’s kind of again the Mom Pops and the Walgreens [Inaudible] [00:21:55] here.

Steve: Okay.

Bill: Mom And Pops typically they will see themselves on the same team as you as soon as they agree to take your product in.

Steve: Okay.

Bill: And so at that point I typically approach it as hey, this sells better if you do a, b, c, d and if you want a display like the anchor display you are going to have to provide that, but they will typically put it out if you push.

Steve: Oh, okay, okay.

Bill: However when you go to Walgreens like walk down the isle of Walgreen, just to be out on end cup, just to have your peanut butter or whatever it is on the end cup is 20 grand a week or something at Walgreens in addition that you pay them you know and if you want display of something, there is a whole different negotiation when it comes to big bucks.

Steve: Okay, okay are you at any big buck store right now with your stuff?

Bill: We are working on the Whole Foods right now.

Steve: Okay.

Bill: So hopefully with the year we will be in Whole Foods and that’s, like when I say within the year that’s I mean we’ve been working with them for three months and its probably– it’s a year process or six month between the time they say yes and the time you end up on the shelf at Whole Foods.

Steve: Okay, and how many Mom And Pop shops did you have your stuff in prior to deciding when to apply?

Bill: Pushing a hundred.

Steve: Pushing a– oh wow, that’s a lot, so that’s a hundred stores that you’ve visited and have been talking with and have keeping track of their sales of.

Bill: Yes.

Steve: Okay, well that’s a lot of work, okay.

Bill: Yes.

Steve; How do returns work if they don’t work your products, do they just send it all back to you?

Bill: So again negotiable, a little bit, and when I say negotiable on this stuff my recommendation to people would be to have a policy. So like you just come in and go here is our policy. If you are selling something that is perishable sometime stores will say hey if it spoils on our shelves you got to take it back for a full refund which sucks. Some stores will say if it’s not perishable they still can return to you if it doesn’t sell, you know if it’s been on their shelves for 90 days and they hadn’t sell they can return it, but you also it’s, that’s not– it doesn’t happen all the time, so you could say sorry no returns and that would be fine. But if the store gets– like a consumer returns it to the store the store generally eats it, or they will sometimes they will bill it back to you also. It kind of depends on how the store already does it.

Steve: Okay, what are some of your terms just an example?

Bill: So we don’t take returns.

Steve: Okay, okay.

Bill: We don’t, because it is- you know not perishable but it’s semi perishable, we want to encourage them to kind of order lean and move it through and that’s another thing too. It’s much better to sell someone a one month’s supply and have them reorder every month than to have sell them a three months’ supply and they reorder every three months, because it gives the perception that’s it’s moving.

Steve: I see, interesting.

Bill: And you know, they order from you more often and that they think of your brand as a brand that sells for them and moves. You know if you only get to do something every three months it’s easy to forget.

Steve: So when you go in there you actually don’t even try to sell them a long term supply? So you aim for like a month?

Bill: Yeah, aim for a month.

Steve: Okay, that makes you work more though, also right?

Bill: Yes, but it’s better for the long term.

Steve: Okay.

Bill: Because it will move through faster and also if you try to sell them a long term supply they won’t do it, because they don’t know you, you are new, why would they a take three months gamble when they can take a one month gamble.

Steve: But once you’ve been working together for a while then all bets are off, right?

Bill: Yeah, then all bets are off if you want to, if they want to take it more you know I would kind of resist if someone wanted to buy a six months’ supply from me for the reason I just mentioned but-

Steve: Okay, another kind of thing that just popped into my mind is do you actually advertise your products even if they are sold at the retailer? So let’s start with that question first I have another one after.

Bill: Yes, so and again Mom And pops and big bucks are going to be different. You go into Walgreens and they might require you to spend like 50 grand to market and say available at Walgreens. And you will see those ads if you watch TV sometimes you will see like such and such and then at the end there is a Walgreens logo, and some branches do that because they want to sell through at Walgreens and for Walgreen too, maybe they know they are in 100 Walgreens in Florida and they want to be in 6,000 Walgreens nationwide. So they’ll run ads in Florida to try to convince Walgreen that it sells through.

Steve: Interesting, okay, how do you do it, do you advertise your own products?

Bill: So we no, we really don’t, because we are not, I mean we are not like at national brand scale, I mean we are not Coca-Cola and if you are listening to this you are probably not either. So you probably don’t have to. What I have offered occasionally in the past like when I’m talking to a really big account like Whole Foods, we are here in Borough and we trying to get them to try us in all of their Colorado stores.

So what I said to him is look guys, we got a ton of customers already in Colorado, they buy online already, if you roll us out of all the Colorado stores, I’ll do an email blast, I’ll pull every one that’s ever bought from us and shipped it to Colorado and say hey, now available in Whole Foods go and get it at 20% off this week. And the buyer will be like, oh cool first of all they are blown way that I have the capability to do that because they are used to, they are used to working with you know, people who are to that sophisticated, but you know they think that’s cool.

But really the fact of the matter is to your benefit. As I mentioned before it’s not– your job isn’t done until it’s moved off their shelves, so anything that you can do to move it off their shelves is helping you sell because that means they are going to reorder and they are going to roll it out in more stores. And plus everybody that buys it from them, there is a chance they come back and buy it directly from you, and I meant to say this at the top, but this is really one of the other main reasons I do wholesale is I see it as marketing.

Even if you break even, even if you don’t make a dime, even if you move thousands of units and don’t make a dime, that’s thousands of units of your products that are out in the world now, and you probably put your URL on every label. So hopefully some fraction of those people are going to come back and buy direct.

Steve: That actually leads into my next question, so you are selling to the consumer and wholesaler here right? And so does that mean that you can’t undercut them on price, like how does it work?

Bill: So you typically you want to greet anything like that, but it’s kind of widely regarded as a dick move. So if you are like, if you are selling online which you probably all are if you are listening, and you are a small brand in smaller stores they probably won’t care, but if you start to go into like some smaller chains like ten stores or whatever, they all start to ask you, do you sell online and you’ll say yes and they’ll start to get squarely.

And then immediately what you want to do before they get too squarely you just see their face kind of turn upside down as soon as you say you sell online, and you are going to say right away before they even have a chance to open their mouth don’t worry we are here to map pricing and what map pricing is minimum advertise price, which means that they have to sell it for the same price as you sell it for as all the other retailers sell it for.

You know, we don’t undercut you, to undercut them would be what’s called a channel conflict meaning you are trying to jump out in front of them with the consumer. So you have to make some promises, and they might make you sign something but it’s very hard for them to enforce it or for you to enforce it for that matter.

Steve: Okay, because you know in your own story you have the infinite ability to drop the price right? Since you are making four x and they are only making two, right?

Bill: Right.

Steve: So okay, so let’s talk a little bit about the logistics here because based on our conversation thus far it seems like it’s a pain in the butt to sell wholesale, right?

Bill: It is and it just works a little bit different too.

Steve: So the advantages I can see also is that you have a consistent revenue stream unlike a consumer who just buys it once and disappears, these businesses will hopefully consistently buy from month to month from you, so it’s a more predictable revenue stream, is that accurate?

Steve: Yes.

Bill: Okay, if you know if your stuff moves.

Steve: If your stuff moves of course, so you know for shopping carts and that sort of thing, do you just use an off the shelf cart to manage all this stuff, or do you have something custom? What do you do?

Bill: So it’s funny you ask because you can’t really, it’s hard to use an off the shelve cart because the process is a little different. So when you buy B to C right, you go, you add the things to your cart and you put it in your credit number, you pay instantly and it ships, but with wholesale let’s say some, a big store says we want to order five hundred units but you only have 510 units in stock, you probably don’t want to sell them 500 units because now you only have ten units to sell on your websites or to anyone else.

So you really need to review wholesale orders before they come in or before you approve them and they are used to that, stores are used to that, they are used to stuff going on back order. So you can’t just blindly accept all the orders that come in because then you could end up in awkward spot of calling them back and going we can only sell you 200, we can’t sell you 500 right now.

So it’s kind of hard because regular carts don’t have approvals. The other thing regular carts– the two other things regular carts don’t have are support for terms. So like I use BigCommerce for my B to C sites and BigCommerce has the ability to do multiple payment methods, but what they can’t do is multiple payment methods only for some people. So if you enable people to place orders without paying for them like you need to do for wholesale, that’s going to enable it for you website, you know for people that come to your website to just place orders and not pay for them at all.

Steve: Right, right.

Bill: Which you don’t want. So you need different payment methods for wholesale, and the other thing for wholesale is you might have different pricing, like Whole Foods might get 50% off Bob’s Organic shop might get 40% off. So you need to be able to show different prices to different prices to different, you also need to be able to enforce minimum orders.

Steve: Okay, that implies that everyone has their own account right? And they log in and they get a completely different experience on your shop.

Bill: That’s kind of what you need yes.

Steve: Okay.

Bill: And so as a result I couldn’t find, it’s very hard to this on off the shelf cart, so I actually just launched a software to do this, it’s called Order Circle, and you would think of it really as Shopify For B to B commerce because you’ll find that if you start selling wholesale very quickly most people are emailing you orders, calling orders, faxing orders and it turns into a giant logistical mess. So we need a software internally to run it, so we built Order Circle about nine months ago internally, we’ve been using it to run all the wholesale for all my brands for most of 2014, and just in the end of 2014 we opened it up to other brands to sign up.

So it helps you know, manage all of your customer accounts, it helps you generate those invoices to see how many days left on those 30 days they have to pay you, they can leave a credit card on file that you can charge after the 30 days you know with one click, you can sort and see who is late, you can see who still needs to be shipped, you can also view a customer page, you can see like when the last time was they ordered and how frequently they order. So as I mentioned earlier you can do that follow up, like hey, it’s been too long we should call them. So it’s really designed with this wholesale order flow in mind which most B to C carts are not, not any fault of theirs because it’s not what they are made for, and so we have, we use everything on Order for Circle and it’s really streamlined things for us.

Steve: You know it’s funny, as we kind of doubled into B and B recently, I mean actually from the start we’ve had event planners contact us to buy stuff in bulk and each time what happens is they call us up, and then they place their order that way, so each time it’s a phone conversation so does that imply then with your system like they just go on the website and it’s just all self serve so to speak?

Bill: Yes it can be.

Steve: Okay, okay.

Bill: So there is, they’ll go to you know, nurturemybody.ordercircle.com and they’ll log in and they’ll see their customized pricing you know they won’t know, they only see the one price, but it could be different for different people. So they’ll see their customized pricing, they’ll be able to see all their old orders, they’ll be able to reorder with one click…

Steve: Okay.

Bill: Etcetera and that goes into your, into the order circle back end, so you can see all their orders and then if they— but if they still call you and I’m sure you guys will have you know, I’m sure you have with event planners people who don’t to do that, or they want to order on the phone, there is a back end for you where you just open up orders while they are calling, you can key the order in on their behalf, all their information is already saved. So whether the customer inputs it, or you input it, it all ends up in the same place in the same flow.

Steve: Okay, and I’m just curious, I mean you pose that inventory dilemma which we actually have all the time. Someone comes in and they want to order like almost all the units we have in the inventory, so how do you kind of manage that with your shop.

Bill: So we have in Order Circle, we have built in order approvals. So when someone places an order and when the customer logs in and places an order, it’ll say your order is pending and it sends a ping to one of my sales reps and says hey, your– and depending on which sales rep is signed into their account. Hey, new order login and check it out. So the sales rep logs in and they can see the total inventory on hand and how much was ordered, and then they go, and they decide hey we are going to accept this order as is, we are going to reject this order or I need to edit this order, and you know take it from 500 units to 200 units and then approve it.

Steve: Okay, and so in terms of just your own operations with your store, do you kind of reserve a set of inventory just for B to B versus B to C?

Bill: Yeah, I don’t do it that formally, I just kind of know, I have like kind of a danger zone for like how much I like to keep on hand for B to C, and then I know anything above that is kind of game for wholesale.

Steve: Okay and in terms– since it’s like the wholesale side of the business it seems more predictable, do you just order when it comes to time for ordering inventory based on the months projections?

Bill: Yeah, yeah, I try to guess and some it depends on how long your lead times are. Some wholesale customers are cool at ordering [Inaudible] [00:35:54] in a month. It depends, if it’s not a seasonal product, now if it’s a wedding they probably won’t be cool with that, but sometimes you know they are just going to put your widget on their shelf and it’s not seasonally specific or it’s not anything like that, and there is a one month lead time, they might not like it, but that might be okay.

Steve: Okay, interesting and so Order Circle manages all this stuff as well?

Bill: Yeah, so you can see all the– everything you have on hand, everything you have pending, what’s kind of available to sell and we are also launching soon a sync with Shopify so you can keep your whatever inventory in Shopify is up to date with Order Circle and vice versa, so you never sell anything you don’t have.

Steve: Okay and so just looking at your store kind of like a high level you have wholesale sales, you have B to C, and then you also have Amazon, right?

Bill: Correct.

Steve: Okay, and then all those just kind of tie together and you sell on all channels just full blast.

Bill: Yap, so it is Order Circle basically is like another cart, so I think if we sell on BigCommerce, we sell on Amazon, and we sell on Order Circle.

Steve: Do you find that your retail customers, do they kind of eat into your online sales, or they are just completely separate channels?

Bill: You know, I think we are not big enough, you know and I mean and I’m too afraid for that to happen, I think you would need to be you know a national brand. There is so many people who have not heard of Nurture my Body in America that I think is additive. I really don’t think– the person that is in the store and is going to grab some shampoo is probably not the same shopper that is going to buy some shampoo in the internet, I don’t think.

Steve: Okay.

Bill: And hey, even if it- even if it’s slightly cannibalized it, it’s worth because the overlap is not a 100%, if the overlap is 5%, I still expanded my total market.

Steve: And in terms of just overall sales, is the wholesale portion of your business a lot larger than the rest of it?

Bill: No, not yet which is good because it means my margins are better, no I think wholesale it depends, so for Nurture my Body organics and skin hair care products we do, it’s probably 10% right now as wholesale but growing because we really-

Steve: Okay.

Bill: You know we just started in earnest you know a couple of years ago, but for Ski Bum which is a wind bum protection sunscreen for your face, something that you really want to kind of grab while you are on the slopes right, you forgot sunscreen, that is 90%-95% wholesale.

Steve: Oh, okay, but at the same time you are still driving like paper click traffic and other advertising to your own website, right?

Bill: Yes, yes.

Steve: Okay.

Bill: And they kind of exist really independently.

Steve: Okay, and then is the plan to grow the wholesale business so that one day it’s larger than the rest of yours, like what’s the overall strategy?

Bill: I think that will happen just because I think the ceiling on the wholesale business is higher than on the B to C business. I mean look at– I mean when you look at ecommerce, ecommerce I think the numbers for 2014 are not yet, but for 2013 I think ecommerce was like 11% of total retail sales, which means Brick and Motor retailers are 89% of total retail sales, when you think about it that way. So if you restricting yourself to ecommerce only, you are taking yourself out of 89% of the market, just you are not even addressing.

Steve: I’m just thinking like as an individual business owner there is only like finite amount of resources that you can allocate, and it sounds like this B to B stuff requires a lot of legwork.

Bill: It does unless you use good software.

Steve: Right, and just like how do you allocate your time– like how are you allocating your time?

Bill: So I take– I have a full time sales rep who I hired, who works for me and reps my brands only, and she goes to stores and that’s been good. But then we also have a wholesale section on our website that says, hey if you are a retailer we get leads for this, people would say hey, I’ve been a customer direct for years and I love it, I own this store and I’d love to carry your stuff. I own a saloon or whatever it is and they are like they just submit the form and then we picked up accounts that way too. So if you definitely have mentioned on your B to C site that hey, put in the photo of wholesale information that takes them to a form that says, hey fill out you know how you are and then you follow up.

Steve: Interesting, cool that’s definitely something I’m thinking about looking into and maybe I’ll check out your software as well. Hey Bill we’ve talking for 40 minutes, so where can people find you if they have questions on selling wholesale?

Bill: So you can always find me at rebelceo.com and I have a contact form on there it goes right to my inbox, or if you want to check out Order Circle, you can go orderCircle.com. And if you are a My Wife Quit Her Job listener, we’ll give 25% off forever, so all you have to do is sign up and just reply to the sign up email, and I’ll give you the discount.

Steve: That’s awesome, that’s a generous offer, does that apply to the owner of My Wife Quit Her Job also?

Bill: It does, are you a listener?

Steve: Sweet, sweet, all right Bill, hey man thanks a lot for coming on the show again, I learned a lot.

Bill: Sure, thanks Steve this is fun.

Steve: All right take care.

Bill: See you.

Steve: Hope you enjoyed that episode, while our online store primarily focuses on the consumer, we also have many event and wedding planners that have very similar characteristic to a wholesale customer, and overall I learned a ton about the differences between B to B and B to C from talking to Bill to today, and I hope you did too. For more information about this episode go to Mywifequitherjob.com/episode63 and if you enjoyed listening to this episode, please go to iTunes and leave me a review.

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Now as an added incentive I’m always giving away free business consults to one lucky winner every single month, for more information go to Mywifequitherjob.com/contest. And if you are interested in starting your own online business be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information and thanks for listening.

Thanks for listening to the My Wife Quit her Job podcast where we’re giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes, and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information, go to www.mywifequitherjob.com/contest. And if you are interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information, now onto the show.

Welcome to the My Wife Quit her Job podcast. We will teach you how to create a business that suits your lifestyle so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the Wife Quit Her Job Podcast, today I’m really excited to have Ezra Firestone on the show. Now Ezra is someone who I met at the Ecommerce Fuel Conference in Austin Texas, and the guy actually does a ton of stuff. First of he runs a pro-age cosmetic line called Boom by Cindy Josephs and he also teaches others how to start an effectively run ecommerce store at smartmarketer.com.

Now based on a lecture that Ezra gave in Austin at Ecommerce Fuel Conference, I actually followed his advice to make my facebook campaigns profitable. Now here is what I like about Ezra, the motto for his site is serve the world unselfishly and profit, now how cool is that. And Ezra holds true to that model with lots of free content and tutorials. Anyway we are going to explore the methods that he has used to make Boom by Cindy Joseph a powerhouse company and with that, welcome to the show man. How is it going Ezra?

Ezra: Thanks man, I’m happy, to be on MyWifeQuitHerJob.com, I get excited when I hear that URL just like as [Inaudible] [00:02:30] so I just want to keep saying it over and over, I’ve been repeating it, I’ve said it like four times most to my wife and she’s like okay, that’s enough.

Steve: Appreciate that man; hopefully we can turn your wife into a reader and a follower.

Ezra: Yes, she’s into podcast, so I’m sure.

Steve: All right man, so what is the background story behind Boom and how do you hook up with Cindy Josephs?

Ezra: Okay, so you know Boom– it’s kind of a long story, but I will give you the shorter version which is that well I’ll give you that version and you can tell me if you’d like more.

Steve: Okay.

Ezra: So I grew in an alternative lifestyle experiment, sort of a hippie commune of sorts in the Bay of California, and it’s a really-really fascinating place. And my parents and this group where I came from called [inaudible] [0:03:18] they teach courses and things like communication and jealousy and money and possessions and man-woman relationship, and kind of things about what it takes to have a successful relationship of any kind not just like across the gender line, but just relating in general, how do you win that relationship?

It’s really something that’s helpful you know, having successful relationships is kind of what you need in life to be successful in any venture.

Steve: Absolutely.

Ezra: You need to have successful business relationships, successful personal relationships, and so they teach these course and Cindy was– would come and take these courses, and when I was 18 you know, I decided that I wanted to move out to New York and I had made friends with Cindy who would come to our house and take these courses. And so I called her up and I said hey, I would like to move to New York, can I come stay with you? And she said yes. So I moved out of there and I was playing poker for a living, I played in all these underground clubs and I was doing quite well.

Steve: Interesting.

Ezra: Yeah, man the whole of the poker world in New York City is a whole other thing, but that was really wild times and really fun, but I become very close friends with Cindy. We were sort of like best friends and she was 55 at the time and I was 19. And I was a little bit of from the time I was 18 to 20, 18 to 20, 18 to sort of 21 and we would have all these conversations about sort of ageism and you know, the difference in how society treated the both of us you know, me as a young man and her as an older woman, and it turns that in western society and in America and in most western civilizations men are valued for production.

So like as we produce more, as we make more money and as we get older, we get more social power and more value in the eyes of society. And this is not a view point that I subscribe to obviously, but it’s the way that society views men and women. And women on the other hand are valued for youth and beauty, and so as they get older society you know, tells them that this power that they have goes away and you’ll notice that all the messaging towards older women is that, hey this process, this ageing process is a thing that is happening to you is bad, it’s wrong, it’s anti-aging, anti-wrinkle.

You know you want to stop this thing and you know we have 80 million baby boomers, half of them and which is the largest part of our demographic, the whole entire United States the largest demographic are the baby boomers, half of them are women, and they are all collectively having the experience of their hair graying, their skin wrinkling and their bodies aging on the outside faster than they are on the inside, or just ageing in general and society treating them differently as a result of it.

And so you know, she was experiencing this first hand and Cindy used to be a very famous and successful makeup artist. So she was a like a make put artist to Trya Banks and Cameron Diaz and all those people, and I was learning at the time about ecommerce and online marketing and I said hey, you know, we ought to leverage this celebrity that you have. She also became a fashion model, now she is a very famous fashion model because brands were realizing that, hey baby boomers have money, and we ought to use them in ads to sell them things, sort of a noble concept.

But so you know, her first response was, hey like you know, do you think the world really needs another [inaudible] [0:06:38] lipstick? And the answer is no, the world doesn’t need another [inaudible] [0:06:42] lipstick, but we ultimately decided was that we would create a cosmetics line that was Pro-Age, that was you know, all the cosmetics would be sheer and natural and organic, and it wouldn’t be about covering your skin up, it would be about you know, showing off and celebrating who you are now, and so our cosmetic line is a Pro-Age cosmetic line.

We were the first people, there are a bit of Pro-Age campaigns, a couple of people have done a Pro-Age campaign now, but that messaging to that group of people worked really-really well and the way this business is build is that it’s not like we didn’t have– there was no nobody searching for our products. We didn’t have any query based traffic which is how all my other ecommerce businesses were built up to that point; it was all the query based traffic. So this business was built 100% with content marketing, with engaging with a group of people in a conversation about what was happening on their lives, and then making them an offer from there. And it went really-really well because you know, there is nobody– it’s a good sort of example of the right message to the right market at the right time.

Steve: Yeah, those are some deep conversations to have at such a young age Ezra.

Ezra: Hey you know thanks I came from the cool place.

Steve: Hey, let’s talk about that, I mean you mentioned content marketing was this whole focus of Boom. So you mentioned query based advertising did not work, right? So there is…

Ezra: Well there just wants anyone searching. Everyone was searching for anti-aging everything.

Steve: Right.

Ezra: And we are not anti-aging and you know, we did some– we do some right, where we convert people and say, hey, you are looking for anti-wrinkle cream, but check this out and sort of like we try to convert them, but it’s much easier to catch someone through a piece of content.

So like, let’s look at content marketing in general, right. Like this is the– it’s been around forever, it’s not like we invented this thing, so soap operas are content marketing, like the Deb and Johnson and Johnson, all these companies created soap operas so that they would have their target audience is engaged and they can place products in that piece of content. American Idols is one big piece of content designed to sell you a record you know.

So this idea of engaging someone in a story and getting their attention and getting them enrolled in an idea and then moving them to a sales message has been around forever and is an, it’s the soul concept that we use, sort of soul bit, the main model or funnel that we use in all of our business. And if you look at how we use it from a contextual traffic stand point, what we do is we run facebook ads to what we call a pre-sell article. So an article on– that engages someone, that enrolls them, so for example, I’ll give you a perfect example right now. I just told you I’m running Pinterest ads, right? We started a couple days ago; we spent $8 to generate $200 of revenues.

So Pinterest ads are doing quite well, but the way we are doing it we are running people into an article that says you know, XYZ make up tips for older women, and then it takes them thorough this whole article about make up tips and what to do if you are you know, how to wear makeup as an older woman and this kind of stuff. And then it leads them over to Boom and says hey you know we have this makeup line and takes them over to our sales page, our product offering, and that funnel where we are taking someone form a traffic source where they weren’t looking for, they weren’t looking for makeup and we enroll them in a story because we know something about them, either age and their gender, and then we make them our product offers.

That’s sort of a good example of direct response content marketing. However, Boom was build not on direct response content marketing, Boom was build on just traditional content marketing where we would you know put up blog posts about– that had nothing to do with our skin care, just about you know, how we felt about XYZ topic, or what we thought about menopause or our view points on ageing. And then it would be on our blog which was on our website, so people would share that and they would end up back on our stores. So it was a little bit different how we did Boom, it wasn’t as direct response.

Steve: Yeah, I was going to ask you about that, so in the very beginning you just started out with a blog for the most part?

Ezra: Yeah we just– basically what we did, we created this blog and we just promoted content for about six months really heavily on all the social channels, we also had a press agent who would give us spots on magazines and you know radios and TV and stuff like that. And really through the promotion of this content we build the community of people who are interested in following this content. And then what we would do is we have sales and we make offers to that group, and so that’s still my business model in general. If you look at Smartmarketer.com, if you look at any of my other businesses my agenda is to build the community who is engaged with me around a specific set of topics and conversations, and then make that community offers that I believe are relevant to them.

Steve: So was the store up first and then the blog, or did you kind of start the blog first?

Ezra: The store was up from the start.

Steve: Okay.

Ezra: I mean we were not going– I mean we were getting some sales, but we weren’t really, we didn’t really, we didn’t have anyone to sell to and we didn’t, we couldn’t buy query based traffic. So we kind of just had our store there and we had the do concept for quite a while before we build that community, and now we have such a large community and our content is so viral, every time we post it because everyone shares it that it sort of significant, we are easier now.

Steve: I see and how did the people find your blog? Just through popular topics that women of that age experience?

Ezra: We bought ads on Facebook to promote our content.

Steve: You bought ads?

Ezra: We bought on you know, different– we did traditional contextual traffic sources to promote our content, so our content was not by any means, we didn’t just throw it out there and say you know hey good luck to us you know, we deliberately purchased traffic to our content from that demographic, most of them Facebook.

Steve: Okay and this– when did it start because Facebook ads didn’t come around until maybe like five years ago? Yeah.

Ezra: We didn’t, our business really took off in 2010 Boom, although Facebook has real ads, Facebook ads pretty heavily in 2009 but there wasn’t Boom yeah, but I mean without Facebook I think we would have been lost.

Steve: Okay, so let’s go into a little more depth since you mentioned you have such good Facebook success, how do you structure an ad, and how do you kind of structure this campaign and how does the whole funnel work?

Ezra: I mean for Boom it’s pretty simple, right. What we do is something called the third contact direct response advertising, where we take a piece of content, and we market that to a specific audience. And all we are doing is sending people from Facebook to our blog, or even most of the time from Facebook to our video on their news feed but we are not even asking them to leave Facebook, they just have to consume a piece of content right in our news feed, but then after they’ve seen a couple of pieces of our content, we then run a direct response ad to that same group.

That’s why we call it third contact direct response because we don’t run the direct response ad until they’ve had at least three contacts with our content. And the direct response ad might just be a simple email often which then leads to a funnel that has a webinar in it, or it might be a simple email often that just then leaves to our store page, or might be a sale. So that’s really the strategy that we use on Boom is really we promote our content and then we promote direct response offers. That’s pretty straight forward.

Steve: Okay and then how do you measure like the effects of a particular ad on conversions and that sort of thing? So you have someone you send to a piece of content, and then you can track that, but then you have them going to your email list like a special separate email list?

Ezra: Yeah, when you get to our blog we’ve got a bunch of– we’ve got– obviously I have retargeting pixels on the pages they’re landing on.

Steve: Okay.

Ezra: And we do really well with retargeting advertising off of our content. I think that if you want to start a business that is going to use content marketing as its source of visibility, and lead generation, and you know optimization strategy, then what you’re going to want is at least $1,000 a month to spend…

Steve: Okay.

Ezra: On advertising your content, and we spend a couple of grand a month, we don’t spend a whole lot believe it or not on Boom at this point with our content marketing anymore, just because we’ve built up such a great community and we get so much social shares and all that kind of stuff. But I think that you’ve got to be willing with content marketing to invest in five/six grand over the course of a couple of months to build that community, and to get the name out about your content before you start trying to optimize. And then from there what you do is you have direct response optimization campaigns, where you’re not really relying on your content to make money for you for monetization.

You’re relying on it to engage with people and get them back to your blog and get you email opt ins and stuff like that, and then you have direct response campaigns that you’re running to your current community, the people who are on your retargeting list, the people who are on your on email list and you’re using that to optimize. So the content is really about building the community, you’re not really measuring– what you’re measuring is how many leads you get, how big are you are your retargeting list? And how many leads are on your email list?

Steve: Okay and then so just for some of the listeners who might not have I guess products that might be interesting, like your product line caters to a very specific demographic. So how would you proceed with a business let’s say you’re were selling mops or something like that, how would you…?

Ezra: Yeah like we’re doing this kind of thing with a bunch of Amazon business owners who have like garlic peelers and like yeah, all kinds of random stuff, so it’s like, How not to Cry when you’re Peeling Garlic, what’s on– the Dirtiest Part of Your Floor, or like Do You Know What the Dirtiest Part of Your House is, or whatever it is the kitchen sink is what people say right, that has the most germs or whatever, like you can do content about anything.

If you are having a hard time being creative, then hire someone who can come up with ideas for you, but you can give me any product and I’ll give you some idea for a piece of content. Basically here’s what you want, you want people to be curious so you can ask the question, you want to scare people, fear is a very– you don’t want to scare them too bad right, you got to be cool. But fear is really important motivator like you’ll notice on the news they’ll be like, “There’s one thing in your fridge that will kill you,” and then they’ll say, “News at 11,” and it’s like 6PM you’re like, “Now I got to wait till 11, to find out what’s in my fridge.”

That’s gets used a lot– fear as a motivator to get your attention. So there is fear, there is curiosity, there is humor. We use humor a lot. And there is a bunch of other psychological triggers that you can use: shock and all. I’ve got a list of them that we look at before we write a pre-sell article. I think that essentially what you are doing is engaging someone in a story. It’s not really about your product in the end; it’s about something related to your product that’s interesting.

And in any product– like why would someone be buying a mop? Why would someone be buying an air filter, because there are afraid that there is like dirty stuff and other stuff in the air that they don’t want to breathe in, and so then you create an article about that. So it’s essentially related to the solution that your product provides.

Steve: So let’s talk a little bit about this landing page. So it’s just– you mentioned it could be just like a blog post.

Ezra: It should be a blog post actually. It should really be– articles work better than videos, best is to have a video on your long form article page, and you want to write it like a traditional article like with bullets points, five things, five reasons, five steps to this, or how to do this– any kind of article that’s engaging. And you can look at buzz feed, and you can look at a bunch of these other sort of big content websites to get ideas for– there is actually one– there is a place Zerg Z-E-R-G-N-E-T.com. It’s called Zergnet.com.

Steve: Interesting.

Ezra: And it’s a website that has viral content on it, for like all kinds of industries, a lot in the sort of Hollywood industry or whatever, the sort of celebrity world– Zergnet.com. And they’ve got like you can go on there and you can see all these different articles that are really popular, and I’m looking at it right now. I’ll just read them to you: six things you didn’t know about liquor’s most popular brands, crazy things you never knew about the Transformers movies, 10 games that are just relaxing to play, five weird games that actually exist. So you can kind of take some ideas from these blogs of what’s going to be a compelling article and then you can write that about your industry.

Steve: Okay. And then the goal of that landing page is it to get some sort of email sign ups so you can get that [crosstalk]?

Ezra: The goal of that landing page is to get people to click through to your product offer. It’s 100% to move them– to basically engage them in a story and then allude to the solution that solves the problem that you are telling them about, and the solution is your product.

Steve: Okay.

Ezra: And of course we retargeting pixels on the blog and we’ve got email opt-ins. We get quite a lot of email opt-ins and that kind of stuff, but it’s really designed to move people over to your product.

Steve: Okay. Yeah, no, when I was designing my funnel based on your advice that you gave at that conference, I had to experiment a whole bunch of time to get people to click over because often times they just read the blog post and then they leave, right?

Ezra: Totally, totally. You’ve got to– you put a bunch of blue underlined links and you can’t have a blog about– let’s say your product is a mop and you’re telling, “Here’s like– you want to know some good cleaning tips, here is how you clean your kids clothes” yardi, yardi, yarda. And you don’t even talk about your mop, because that’s not going to work.

Steve: Yeah, yeah. So what I ended up doing was I think I had pop ups to collect emails at the bottom, slide ins and then I also had links on each of the photos that I put in there, and then gradually it finally worked out where I could make a profit. But it was a long process actually.

Ezra: It’s going to take some optimization. We’ll find that like one out of five articles that were using for this pre sales strategy would be effective. So it’s not like this– I’m not saying this is easy. You got to be willing to work and test and tweak and put in energy and effort, but what I am saying is that if you can dial this funnel in, then I don’t think there’s a better one. There’s no better funnel out there. It’s the most profitable funnel that you can create because it’s– when you do it right, you’re engaging someone in a story, and then eluding them over towards a solution which is just so effective.

Steve: So in terms of budget, I know there are some listeners who drop ship, there’s some people who sell other people’s products, what should be your profit margins in order to make Facebook kind of a viable prospect?

Ezra: What do you mean as far as a…

Steve: In terms of how much it would– in your experience with like your healthcare products– with your beauty products, how much do you spend to get a conversion?

Ezra: Our store is a little bit different right, because we have such a big community now. But if you’re just talking about cold Facebook traffic, we’re spending between $10 to $20 to generate a sale.

Steve: Okay.

Ezra: I think for people on– I think in my view point is that drop shipping is quite difficult these days with buying cold traffic, and so if I was a drop ship retailer, I would probably switch my motto to purchasing emails, because there’s no market on Facebook right now where you can buy email addresses for five bucks or under. I mean with a little bit of optimization I’m talking about Facebook ads directly to like a lead page that says, “Hey learn XYZ thing, or get XYZ eBook, or find out XYZ trick about cleaning your house, where you’re generating email.

Then I would– if I was drop shipping I would have a 45 day sequence of some kind like that, sends people to a couple of pieces of presale content, this is through email not writing– generating your email with lead, and now you’re sending them to a couple pieces of presale content over the course of a week, but then lead up to your products, then you’re inviting them to a webinar where you’re spending and hour with them telling them how great your products are.

Like I would have a much longer form sales funnel for if my margins were lower than they are now, and I used to have significantly lower margins, because I was a drop ship retailer. So I needed longer form funnels to convert a lead into a buyer, and so it’s really about what can you a lead for, and what kind of profit are you making per sale? And I think it’s easier for me because I have a consumable, right?

Steve: Yeah absolutely.

Ezra: Like people come back they purchase from me a couple of times, and I very deliberately– and then markets where that’s the case, because I understand that these days if you’re breaking even on advertising you’re doing quite well, if you’re acquiring a customer at break even that’s like a really good thing. And you want to either have additional products on your line that you can sell people, or a consumable where people will back, or some way of getting repeat business. I think that it’s quite difficult to have a successful business if you are onetime sale only, unless that one time sale only unless that one time sale is a pretty high dollar value.

Steve: Okay, and just a couple of details regarding Facebook, do you advocate buying likes and then marketing to that crowd or do you…?

Ezra: I advocate purchasing likes from retargeting, so here’s– I don’t advocate purchasing likes straight up, I think that’s a terrible idea.

Steve: Okay.

Ezra: And there’s much better ways to spend your Facebook dollar, I do advocate purchasing likes from your retargeting list. So basically have a retargeting pixel on your website, right? And if you’ve ever visited my website or any of my websites, and you’ve been haunted by this ad because it follows you around everywhere where it says, “Hey thank you so much for visiting our website, please click like to stay in touch,” that’s all the whole ad that’s it, and then it’s a like ad to get them to like our page.

The reason we do that is because our Facebook fans are really profitable audience for us, but its only fans of people who actually visit our websites, it’s not just random fans off of Facebook, it’s actually people who have engaged to the degree of making it to our website. So I do recommend doing like generation in that way, I’m sorry if I’m sort of monotone, I’m a little bit sick.

Steve: No-no-no, no problem so I was just curious then, so we run retargeting ads that go back to the product pages, so you’re…

Ezra: I would do both.

Steve: Do both, okay.

Ezra: Yeah totally I think that…

Steve: So how would you separate out which to send to what, I mean you just run both and just let Facebook run with it?

Ezra: You just set up two ad groups; and one ad group has the– I’m sorry ad set rather two ad sets; one ad set is using the retargeting targeting to send people back to your website, and the other ad set is using the retargeting targeting to build likes, they’ll both run to that same audience.

Steve: Okay.

Ezra: And they’ll both get allocation.

Steve: Okay and then outside of Facebook have you tried anything else like Twitter, You Tube ads?

Ezra: Yeah we run a lot of different ads, I think that for content marketing Facebook is really the game in town right now, Twitter is quite expensive, it doesn’t work great for ecommerce retailers; it works pretty well for business opportunity stuff and information where you have much higher profit margins, because Twitter clicks are between a dollar and three dollars depending on your market.

You Tube at this point we do not have any– we’re tweaking around with it, and testing it, we obviously run retargeting for our videos and stuff like that, but we don’t have any kind of scale with regard to traffic on YouTube for our ecommerce businesses, we got a little bit, but I wouldn’t say it’s worth your time.

Pinterest ads is looking very promising, but I would say that your best sources of traffic for an ecommerce business are going to be query based traffic on Google, so that Google Shopping, Google Search, or Amazon if you’re on there, then Facebook display, and then Google Display. Google Display Network is phenomenal, if you’re– at the very least you should be retargeting using the Google Display Network if that’s all that you’re doing.

Steve: Let’s talk about that for a sec, because I have not being able to get the display network to work for me, it just hemorrhages money and fast.

Ezra: What are you using it for?

Steve: I’m using it to drive people– it’s similar to how my Facebook campaign is set up, I drive them to a landing page retargeting pixel everything, email sign ups, and the traffic just is like a black hole. And maybe I’m just putting the ads on the wrong sites, but there’s a wide swath of sites to choose, and it sounds like you need a large budget…

Ezra: Are you going through and like pruning– so basically the way that Google Display works is you basically put in your keywords, right? And then Google picks a bunch of websites for you…

Steve: Yes.

Ezra: And then you have to go in and look at what specific URLs on those websites are converting and get rid everything else.

Steve: Yes.

Ezra: So you’re probably going to lose money the first two months, but then you’ll find a couple of placements that work, and then those placements will really work. So it’s sort of a lost leader at the start where you’re trying to– when you’re figuring out which placements are going to work for you, but I would say at the very least throw a retargeting pixel up for Google on your website and run Google Retargeting, because that converts out quite well.

Steve: Yeah that’s the only thing that we’re using right now on the GDA network retargeting.

Ezra: The other thing is they have something called the Google Display Planner where you can go ahead and put in a keyword, and you can see the URLs that they’re going to suggest and then you can pick just those, and then you can run on those and then hopefully you got a better shot at getting some success right from the start. But the way we do it is the old school way we just put in some keywords and let it run.

Steve: And then you just monitor it like a hawk to make sure that the sites that were– that they’re putting your ads– okay…

Ezra: Yeah you say you got a $2,000 budget to test, right? Then we just let that run over the course of a couple of weeks or whatever, set our daily budget, let it run, have a conversant check and pixel there, and then come in and prune out anything that didn’t work excluding anything that didn’t work.

Steve: Yeah I made a lot of early mistakes where my ads were being shown on apps, and that just destroyed my…

Ezra: Ah yeah you got– they’re a little sneaky that’s the other thing about Google, Facebook is not this way yet where Google is going to show you on mobile, they’re going to show you on like whether webs like 404 pages.

Steve: Yeah exactly everything.

Ezra: Yeah so you’re going to turn all that stuff off.

Steve: Ezra I was hoping we could walk through also one of your email funnels, and how you kind of structure your emails. Is it primarily content emails, mixed in with sales?

Ezra: For which purpose?

Steve: For the purposes…

Ezra: Are we talking about pre purchase or post purchase?

Steve: Pre purchase.

Ezra: Pre purchase?

Steve: Yes.

Ezra: So I would say the most effective pre purchase campaign goes like this, you opt someone in, right? And then over the course of a week you send them three pieces of presale content that lead back to your product, and that presale content could be social proof, it could be authority, or science, it could be an engagement article, or whatever it is, it’s a piece of content that then leads back over to your solution, right? Then the next week or next week to 10 days, if you’re me you’re doing a webinar following, because I believe that live event selling is the most effective way to sell any product on the internet, physical products, ecommerce products, information products.

Like we really believe heavily in the use of live events to sell, and so you’re inviting someone, “Hey we’ve got this event happening where we’re going to tell you XYZ thing,” and it’s kind of just more presale content leading to your solution except that you’re doing it all live on a webinar, or you’re using a prerecorded webinar through something like Stealth Seminar. And you’re getting them excited about it, you’re inviting them to it, you’re getting them the opt-in for it, and then you’re actually running that event, and then you’re sending them out the replay, and you’re doing a whole webinar sequence.

And then I’d run a half off sale for the next seven to 10 days, because if you haven’t converted them with your presale content and the webinar, then you’ll get a bunch of more people with the severe discount. Because our goal at that point is you’re in your in your two three weeks in, you just want to see if can acquire a customer, if you can acquire a customer, then you just pull them out of that out responder and you drop them into your weekly content bucket, where you’re just sending them blog posts.

Steve: That’s interesting, I mean this– what you just described is kind of how I run my info product funnel but, for ecommerce we…

Ezra: Info product and ecommerce are the same thing man, you have a subscriber.

Steve: They are, but sometimes the product is not webinarable, so…

Ezra: I disagree.

Steve: Okay, so let’s take your garlic peeler…

Ezra: I think that all products are webinarable, okay let’s take your garlic peeler for example, so I’m going to do a webinar on five gadgets that will change the way you cook or whatever. I’m going to do a webinar on something some– people love to be told stories man, and given solutions to stuff, and then I’m going to– at the end I’m going to elude to the– I’m going to have the garlic peeler be the main thing that I talk about, and then I’m going to say, “Hey you want to get this garlic peeler at a significant discount?”

I mean how does– you look at infomercials, right? The QBC, and the HSN, all that stuff, basically those are just many webinars for that product. They don’t go into all a bunch of story, but any product can have a story told about it, and then be pitched. I mean even if it’s a 20 minute webinar, a 15 minute webinar, even I mean obviously you’re probably going to prerecord it. So essentially what you’re doing is you’re creating a 10 or 15 minutes sales video, if you feel like you don’t have a lot of content that you can create for your product, and you’re sending people to that, but you’re framing it as a live experience.

Steve: That’s interesting.

Ezra: It’s worked really-really well for us; I mean I think that…

Steve: No I’m sure yeah.

Ezra: I think that basically what we’ve been doing is taking all these funnels and all these models that we use in the information marketing world, and apply them to our ecommerce businesses and having great success with it.

Steve: That is good food for thought, yeah maybe we’ll try some– I mean we’re wedding industry, it’s ripe with webinar potential.

Ezra: Oh man, what are you guys selling?

Steve: We’re selling personalized wedding handkerchiefs, we sell linens…

Ezra: Dude you can target people who are on Facebook who just got engaged…

Steve: Yes.

Ezra: And you can say, “Ten ways to make your guests say wow.”

Steve: That is the title of our landing page actually, pretty close to it.

Ezra: No way.

Steve: It is yeah.

Ezra: No way, really?

Steve: It is yeah I mean we followed you instructions to a T, it’s actually “Nine Unique Wedding Ideas to Make your Wedding Extra Special,” it’s something…

Ezra: Oh man I guess I’m pretty predictable with what I suggest.

Steve: And we’re targeting people who are engaged, who make over $50,000, these are all…

Ezra: That’s so funny.

Steve: Ezra reasons.

Ezra: Yeah man I would have a webinar for sure, I would totally add a webinar, I’ll be talking about, “Man, you can personalize these handkerchiefs, you can–” I would go crazy with it.

Steve: So let’s talk about the post sales funnel then, what do you do post sales?

Ezra: Post purchase?

Steve: Yeah.

Ezra: Obviously you want to thank them for their order, and then I recommend having some pre-arrival sequences going where you’ve got a bunch of emails going out before the product arrives to get them excited about it, man you’re about to get this product, it’s going to be the craziest thing you’ve ever seen. Get them super juiced up, like get them really excited, there was a story of this hotel that immigrated pre-arrival marketing where they were like, they know when you’re going to show up, right? They know what day you’re going to get there, and so they send you these videos– I can’t remember who told me the story.

And they’re you sending these videos, “Hey, this is Bob down in that restaurant. Man I’m going to cook you a shrimp skimpy when you get here.” And they got another one that goes, “Hey, I’m Joe” or “I’m Jane from the”– Jane probably doesn’t have that deeper voice. “Hi, I’m Jane. And I’m from the massage therapy lounge and I’m going to give you a massage.” And they basically tripled their sales and their amenities through this pre arrival sequences.

Steve: Huh?

Ezra: And so I use pre arrival sequences to get people excited and to frame the fact that we’re going to be asking them for a review, and to lower my returns and stuff like that. And it really works. So I have a couple of pre arrivals emails going on. Then I’d have a social promotion where I’m like, “Hey, here’s your chance to win a $50 Amazon gift card” or “here is your chance to win xyz thing. What we want you to do is take our product and grab your iPhone, and take a selfie” people love taking selfies, “of you with our product and upload it here or have it in Instagram and hashtag this.” So you get social proof, like people are using your product, so holding your product. They don’t have to be using it, just holding it up, and smiling.

Then, we have a little banner on the bottom of our product detail pages with little feed of all the people who are using our products. And then we get a higher conversation rate on those product detail pages because we got social proof. So I put a social commercial in there. And then I would a survey go out page, can you tell us what you liked about our product or didn’t? And then I’d have couple of emails going out trying to sell them other stuff.

Steve: So does that happen at end, where you try to sell them other stuff? And do you put on them on like this– like in your product is a consumable right?

Ezra: Right.

Steve: So do you have emails going out every month asking them to the refill and re-buy? Or–

Ezra: We’ve got automation based on what product they bought. If they didn’t buy this product then we try to get on a webinar for another product. Like we’re doing some pretty sophisticated stuff, but I think that most important is that you get them excited first, then you try to get some social proof and you frame the review, then you get them take your survey, and then you start selling stuff. You don’t have to sell them right away, they’re– you can take some time.

Steve: And let’s talk– you talk a lot about split testing on your blog. So what have been some of your biggest split testing triumphs when you’re optimizing your site?

Ezra: We talking about for the blog or for the ecommerce store?

Steve: For your ecommerce store.

Ezra: Okay. For the ecommerce store, I would say have unique selling propositions in image format under the cart button. So that’s like the fast shipping and great customer service and whatever. Have images right under the cart button because you want to get people to click that. Have a video, a start video, on your product detail page just above the fold and easily visible. What else? I’ve got a whole course dude on my blog where we talk about conversion rate best practices for ecommerce store, it’s free.

Steve: I will link up to it for sure.

Ezra: I think I did like, I don’t know, an hour of stuff, of split tests on that, conversion rate optimization for ecommerce stores. And actually I’m going to release one on the Shopify blog pretty soon too. So it’s sort of an updated version of the one that’s on my blog.

Steve: Okay.

Ezra: It’s not quite ready yet, but in a month or two here on the Shopify blog we’ll have– kind of release all of our split tests for ecommerce which will be an updated version of the one that’s currently on my blog.

Steve: Okay. And last question here. Let’s say you’re just starting out, you had no idea what you’re doing, what is your first plan of attack to get customers? I think I already know the answer but…

Ezra: Well, if you look at– I wouldn’t even be looking at Facebook ads or anything, right? Because my first plan of attack would be to start an Amazon business.

Steve: Okay.

Ezra: And then market. Because I think that it’s just so easy to get sales over there man. It’s so easy dude. It’s like really incredibly– the opportunity is incredibly large right now on Amazon. And you need less money because you don’t have to build your own platform. It’s sort of just built for you. So all you have to worry about is marketing the product, but there’s no design and development or anything like that.

So you basically have to purchase your product and then market it through Amazon, which is all about getting reviews essentially. Right now, what we’re heavily investing in is Amazon businesses because the opportunity to grow them to six figures and beyond, it’s the easiest way I believe to do that right now is physical product retail. So that’s kind of…

Steve: That’s funny you say that. I have actually started restructuring my chorus myself to focus more on Amazon in the beginning.

Ezra: Oh yeah, you have to man. Because if you’re on ecommerce, you’re a new ecommerce retailer, you need some time to start to understand keyword research and it gives you a way of making money while you’re just getting started and understanding how ecommerce actually works.

Steve: So how do you bundle people over from Amazon over to your own site?

Ezra: It’s quiet difficult actually. What you do is– the only real way to do it is to have package insert in your product that goes out from Amazon that sends them over to your site for some kind of sweet offer like another $1 coupon or something. But the way that we do it is we get a lot of our Amazon buyers from Facebook. And so we get a lot of leads that way.

And all of the leads that we’re getting from Amazon, we don’t really have– there’s not great way to get them to become leads for your own website. Basically a lot of people once you start getting successful on Amazon, a lot of people start searching for you and that’s helpful, so you get leads that way, because your brand is well known. But at this moment there’s not a great way to take all the buyers from Amazon and get them over on your own platform.

Steve: So do you actually run Facebook ads for your Amazon products?

Ezra: Yeah, same way I just told you about, through pre article, through long form sales page that then leads over to Amazon.

Steve: Interesting. What’s the incentive of doing that versus sending them to your own site?

Ezra: The incentive of doing that is to grow the Amazon business, and also because Amazon converts like ten times as well as your own website.

Steve: Okay.

Ezra: So it’s an easier way to generate conversions. And most people are going to not be successful at driving contextual traffic to a presale page to a long form sales page for their product right out of the gates, while as with Amazon they could be pretty successful, because it’s quite easy to get someone to buy an Amazon product.

Steve: Cool.

Ezra: Conversion rates are like 30% higher. It’s ridiculous.

Steve: And I assume you’re running the Amazon sponsored ads on your…

Ezra: Yeah, but you can’t get a whole lot of volume from that.

Steve: Yeah.

Ezra: You know.

Steve: Yeah.

Ezra: It’s kind of tough. You have a business that’s making a 100 grand a month and you’ll only be able to spend like four grand on Amazon sponsored ads. So it’s a little bit difficult right now.

Steve: And since we’re talking about Amazon. So what are some of your tactics for getting reviews?

Ezra: Well, I have a whole course on that. But essentially what we do…

Steve: You got a course for everything

Ezra: Well, not really but I have a course for that. What we do is it’s a pretty straight forward sales funnel, where we are giving our product away at a steep discount. We’re selling our product at a really steep discount with the goal of getting a review. We say, “Hey, please try our product for $2. And here’s where you can opt in to get a coupon for that.” And then they opt in, they get their coupon, they buy the product at a discount and then we follow up with them through email and say, “Hey, we hope you loved our product, would you please gives us a product review, tell us what you thought of it.” And that’s essentially the funnel.

It’s a little bit more complex than that. We use re-targeting, all kinds of stuff. But basically we’re selling our product at a discount in exchange for– to get it out there into the market place and get people to find out about it and to get their feedback on it. And then those reviews help us to rank organically in Amazon. And then we get organic sales from Amazon which is the life plan of our business.

Steve: And how many reviews are you shooting for during this initial process?

Ezra: I think in any new product you want to get up to a 100 reviews. If you can get up to 100 reviews, you’re probably going to get yourself up to ten to 12 sales a day pretty quickly. And I think once you’re up to ten to 12 sales a day on Amazon, then your product is starting to take off. We have a product now it’s doing like 100 sales a day, it’s got like four, 500 reviews. So I think that first 50 to 100 reviews is really important on an Amazon product.

Steve: Okay. Sounds good…

Ezra: Obviously they should be good. Five star reviews.

Steve: Of course, of course. Dang Ezra we’ve been chatting all over the place.

Ezra: Yeah, sorry. I’m a sort of– my voice is going out on me here, I got– I’m hoarse.

Steve: Yeah, we’re good. We’ve been talking for 40 minutes. You held off for this long and so it’s pretty cool. So let’s end it right here. If people want to find you and then find all those tutorials that you mentioned, where can they find you?

Ezra: Yeah, I’ve got those courses– thanks man, on smartmarkerter.com. It’s just like it sounds smartmarketer.com and there’s a blog post on there, instant courses and stuff like that. And also if you get on my email list over there, you can find out when I do stuff like events, and masterminds and things.

Steve: Okay. I was on your website earlier and none of the courses that you mentioned were actually listed on there. So is it all just part of your email sequence or…

Ezra: Once you click on the courses tab, on the main tab menu, there’s a button called courses and it’s got the conversion best practices course as well as the content marketing course. The Amazon course where I teach about Amazon products is a course that’s published by another company that doesn’t– it’s not available all the time. They do this launches for it. So it’s not available right now that Amazon course. But those other two courses the content marketing and the conversion courses is all there.

Steve: Awesome, I’ll definitely send people that way.

Ezra: Cool well thanks man. I appreciate it. This has been Ezra and Steve from My Wife Quit Her Job.

Steve: Signing off man.

Ezra: See you.

Steve: All right take care. Hope you enjoyed that episode. The world of ecommerce is constantly changing and it’s important to understand how to leverage content based marketing to create a brand and a mind share for your business. And I love how Ezra broke everything down very clearly, and how he creates these funnels for his pro-age cosmetic company. For more information about this episode go to Mywifequitherjob.com/episode64 and if you enjoyed this episode, please go to iTunes and leave me a review.

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Now as an added incentive I’m always giving away free business consults to one lucky winner every single month, for more information about this contest go to Mywifequitherjob.com/contest. And if you are interested in starting your own online business be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information and thanks for listening.

Thanks for listening to the My Wife Quit her Job podcast where we’re giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes, and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information, go to www.mywifequitherjob.com/contest. And if you are interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information, now onto the show.

Welcome to the My Wife Quit her Job podcast. We will teach you how to create a business that suits your lifestyle so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast, today I’ve got two people with me on the show, Austin Brander and Chad Benix. Now I met both of these guys at the ecommerce fuel live conference in Austin Texas last year and they actually both really made an impression on me. So what they do is they create behavior based triggered email marketing campaigns for ecommerce, and if you don’t know what that means we are going to get into that today in great depth.

Now besides being cool guys, they both run ecommerceinfluence.com where they help other ecommerce stores improve their sales, they also run an awesome podcast that you should all check out called Ecommerce Influence as well, and I’ve actually had the pleasure of being a guest in the past on that show and it’s definitely one that you should check out. Now what’s fun about Austin and Chad is that they’ve helped so many different ecommerce companies in so many different ways, but today what we are going to do is we are going to focus kind of on the market personalization aspect of helping business and basically they had to tell the shopping experience via email differently based on the individual and what’s sort of actions they actually take on your website. And with that intro welcome to show Austin and Chad. How are you doing guys?

Austin: Hey great Steve, thanks for having us and we are pumped.

Chad: Yes super stoked to be here.

Austin: It’s been a little while since we hang out in Texas.

Steve: It has and I imagine we will see each other again this year at the conference again, you guys will be there?

Chad: Yeah, and more barbecue too.

Austin: Awesome men, so you know first off I’ve never interviewed two guys simultaneously before, so I want you guys to take a little easy on this poor Chinese guy here.

Austin: It’s all right we are one mind here, so it’s all good.

Steve: So before we start up I’m pretty sure a lot of the people listening don’t know who you guys are, so give us a quick background story and how you guys got together to start Ecommerce Influence.

Austin: Okay, perfect well, Chad and I actually worked together at a previous company for– what was it about? Two years, yeah, two years together and we split off, left the company separately, went kind of different ways, we’ve had a similar vision about transferring some of the stuff we learnt at the last company to where our real focus was which is ecommerce.

Steve: Was that last company an ecommerce company, sorry.

Austin: No, it was not, it was actually…

Chad: But they were really good at online marketing, they were huge.

Austin: It was incredible, it wasn’t– it was business to business and also like business to consumer, but mostly business to business, they were excellent at the domain marketing.

Chad: That’s kind of where we got our taste you know and it’s weird because we got the taste there then we left, kind of went off and did our own thing, and Austin was just crushing it with these ecommerce companies. He came back to me and he goes, hey you are doing your own– actually the weirdest part is we would meet every Friday for like a year to talk about marketing and we were still hustling by ourselves like really speeding wheels sometimes like you know launch forward then you had to back up and launch forward. And then one day Austin was just like hey dude, why don’t we just team up, and I was like oh man, that’s so smart.

Austin: Yeah, it was great because we were already meeting the other way, by the way which I highly recommend if you don’t have a business partner to find somebody else starting a business and like create a business relationship. We met up once a week and whenever our individual goals which worked out really well, but…

Steve: What if that person happens to be a wife or a girl friend, you guys still recommend that or?

Chad: No, I think we talked about this before, it’s really top anyway I was like ahh, we are going to meet, yeah, hold on.

Austin: Yeah, that’s how we found each other to talk about that stuff, but yeah so we were meeting up, and we’d really focused on it, the last company we worked out was inbound like email marking. So capturing people who come to the website and then build a company was almost ten million dollars, almost 100% through email marketing.

Everything was sold through email marketing, that and the combination of being on the phone, but there was really sophisticated sequences that we build for those B to B companies. We realized that there just are not out there, like ecommerce companies are not doing the same stuff and putting as much time into creating sophisticated, really powerful follow up sequences that business to business companies are.

Steve: You know it’s funny, I just interviewed Ezra Firestone, we were just talking about the same thing. A lot of the info product guys are doing a really great job at this, but the guys selling physical products typically don’t think in terms of funnels for some reason.

Austin: No, it’s true, it’s really– I think it has to do with maybe people thinking that they have so many different products that it’s not going to work, where info product guys have like one or two, but it really does work and it’s where we saw a huge opportunity.

Chad: Yeah, the other thing is like, what I’m actually astonished by is that not enough– like you said physical products or whatever maybe, most people aren’t using email marketing in any way except for the online marketer for the most part. I just met with a guy today who actually creates documentaries and he’s a friend of mine, he is making a feature film and I’m asking him like what, how are you marketing this, and it’s only like through twitter and facebook, I mean do you capture any emails at all? Do you use email marketing in any way to get your feature film out there, and he’s like no, I was like wow, we could really take this to the next level with email marketing so.

Steve: Yeah, especially for him it sounds like he could create a following really easily right.

Chad: Easily.

Steve: Yeah, easily. All right, let’s talk about some of your biggest wins; I want to hear about those before we get into the guts of the section here.

Austin: Sure.

Steve: So what’s some of the companies and what’s have been the boost in sales once you started using email marketing with these companies.

Austin: Well, I think it’s important to distinguish a little bit between like the different types of email marketing, so it is some bench marks that are run every quarter by a company called Absolunave; they profile how much email is sent and what percentage is sent to each different type of email. So there is usually two types people which people are listening are probably familiar with.

Number one is that like newsletter type email great, which a lot of companies actually do send out, a lot of ecommerce companies they send out either promotions, product launches, just a typical kind of business is usually know. That accounts for 96% of all email sent, the other type of emails are the triggered emails.

Triggered emails are based off of an event or an action that somebody actually does on your site, so and it’s– you can either, you can reward people for good actions, right. Somebody signs up for a newsletter or your ecommerce site well then, that’s a good action and you would like to reward them with something whether a follow up email or a coupon, that sort of thing, or like bad actions as well they can be followed up with where somebody abandons a cart. It’s considered a bad action, but that can link to an abandoned cart email that follows up with them to try to bring them back into a customer. And so those are only about 3.9% of all emails sent, but they are way- way-way more effective. I’m talking about– go ahead.

Steve: So when you guys go in and help a company does one replace the other, or do you still do both, like the newsletter style plus the triggered emails?

Austin: So absolutely working together, that’s where a lot of companies have a focus on the newsletter, but haven’t dug to triggered emails, and that’s where a lot of the money can be made, a lot of it actually comes from triggered emails. Those are the typically the money making emails are the ones that are triggered where the newsletter are the more a broadcasting content.

Steve: Okay, so here is a kind of a broad based question here, let’s say you are using the triggered email as a broadcast, now presumably that email won’t apply to everybody, but it will apply to a certain subset of people. So what are the disadvantages of sending out broadcast versus more targeted emails?

Austin: So the disadvantages of sending broadcast versus more targeted, well I think what happens is if people want to protect their brand right, and they want to provide– so you will see this in a lot of ecommerce with stores and other brands, they don’t want to give away discounts or coupons because if they feel like they are getting out, this may devalue the brand, right?

Steve: Okay, right, right, okay.

Austin: But still those are very-very valuable especially to people who have been with you for a long time. A customer who’s purchased let’s say, $300 worth of your products like six or seven time is way more valuable than somebody who has purchased one time. So you may want to reward the people who are previous customers and specifically like VIP previous customers with trigger emails.

So let’s say when someone passes a certain threshold maybe they hit $500,000 in sales, then they would receive some sort of a reward based action and you are not blasting your entire list. Likewise with somebody, you know customer acquisition is difficult, it’s something where it’s expensive to go use adwords, Facebook and often time you are very close, you can drive somebody to the website and they can be looking around, and they can be thinking about purchase and then they bounce instead of purchasing. So that’s kind of wasted money where you would rather capture those people with some sort of an offer, and then follow up specifically one to one with a potential new customer, to get them to convert and finally like and turn into a customer. And actually capitalize on the spend you’re doing, you’re putting out there for customer acquisition through AdWords or Facebook.

Steve: Okay and so does this work kind of in conjunction with retargeting ads as well?

Austin: Absolutely, it works in conjunction with retargeting ads. There’s also ways to set it up so that you can even determine if people click emails or open emails, it can disable or enable certain retargeting ads based on their behavior.

Steve: Okay all right, so let’s kind of like start from the very beginning.

Austin: Sure.

Steve: Pretend like I’m a company who doesn’t do any email whatsoever, I come to you guys, what are some of the questions that you ask me? And where do you kind of get started with this whole thing and setting it up?

Chad: Well yeah, this is Chad by the way. Normally when somebody comes in through the door here, they come to me and I start with a series of questions. First I want to find out about their business, and find out actually what they’re doing now to get to where they want to go. So we start off figuring out, all right where are you at now? Where do you want to go? What are you doing? And how is that working, right? Just kind of start this the whole thing off.

Then the following question is really these simple– honestly I call these disqualifying questions, this is when I know if they’re serious or not, when I say serious I mean have their stuff together. Either they are a perfect client for us or not, but it’s what is your cart abandonment rate? So most people don’t even know that, but on the flip side what is your cart recovery rate, right? Meaning how much revenue are you recovering currently, so if you’re losing let’s just says there’s $100,000 lost in abandoning carts in a month, you want to get 10% of that, which is 10 grand. So I say what is your abandoning cart rate and most people don’t know.

On top of that the other question is, what are you doing any way to recover? So we’re looking for our super number one question of recovery rate, but what are you actually doing? And a lot of people have something like abandon aid in place, or these one systemized emails through a plug-in in some capacity. And that tells me right away that they’re trying obviously not succeeding, because they usually don’t know the recovery rate. So there’s an opportunity for us right then and there to actually make a difference.

After that we really jump into a few other things which we might talk about later in this podcast, but one of them is list building, right. How are they building their list? What’s their conversion rate on their website in terms of the email list, and what kind of welcome sequence do you have post purchase sequence, and what kind of results are you getting from that. Obviously there’s whole suit [ph] of questions that I go through, but I think especially when we’re talking about abandoning carts, that’s really the first couple of questions. What’s your abandonment rate? What’s your recovery rate? And what are doing about it right now?

Steve: Okay so let’s talk about the abandon cart email sequence first. Now presumably if they’re not doing any email marketing, they’re probably not doing any abandoned cart stuff as well, so what does a typical abandon email sequence look like for you guys, like when you’re employing one?

Austin: Sure, well I think just to be clear if people are– yeah, if people aren’t doing email marketing they’re probably not doing abandon carts, but a lot of people are doing email marketing and still aren’t doing abandon carts. That’s also one thing that first question is what percentage of your emails are newsletters versus behavior base are triggered? And so going to abandon carts and what those actually look like, so and this kind of goes in to some of the wins that that you were asking about earlier, the type of stuff that we’ve been able to put together.

We focus on a much larger like kind of processor system than a lot of other people, it’s not just someone abandons a cart; let’s hit him with the email to trigger them to recover. There’s a couple of things you got to think about right, because different steps since– if someone adds something to the cart they’re surely interested right, if they leave that in their cart and don’t return for let’s says seven days, well they probably forgot about it. But that’s a lot different than somebody who’s left it in their cart for one or two hours.

Often sometimes something comes up; people may have to leave to go pick their kids up and couldn’t finish the order. So the way we approach it is we look at it as time based. So within the first day, we usually follow up with an email that focuses– it’s recovering– it’s trying to get the people who just got in and thrown off when they were checking out, or had trouble with check out, right. So it’s not sending an offer or anything like that, it’s just checking in with them, providing customer service, customer support, and giving them a direct line to the person who can help them check out.

Steve: Okay.

Austin: After one day then psychology kind of changes, because if they ignore that first email and don’t check out, that means probably they’re not as interested or maybe they’re thinking about somebody else, maybe they’re price checking that sort of thing. So then we follow up with emails that are more offer based with urgency, to try to get them to convert, a couple of emails, two to three days away, and a lot of this comes down to personal testing.

I can’t give a template for what’s going to work best for your business, because everyone is got a different kind of buying cycle. But usually two to three days later send an offer to them, and then a week later just checking in trying to like close the deal. And after a week you run to a period where you don’t want to lose these people, but it’s been a week since they added it to the cart and haven’t checked out, so you got a much higher chance of losing them, if that makes sense.

Steve: So when do you guys give up, by kind of like the week has passed?

Austin: Kind of like– well we really think about it’s like buy or die at a week, you give them your best offer at a week and then afterwards if they don’t convert you can follow up later on, but typically the process is about a week long, week to 10 days long.

Steve: Okay and then do you try to get them to opt in to an email list or anything at that point, or you’re just trying to close the sale?

Austin: That’s a good question, actually you don’t even need to get them– you don’t even need to get them to opt into an email list to send them emails, like these abandon cart emails because they’re transactional, you can send them directly to them. The whole point is just one point is just to get them to make that purchase, become a customer. There’s only one really thought process, that’s close the deal, they were so-so close; you want to get them to make that– to check out.

Steve: So does this process always include some sort of coupon code or discount?

Austin: Not always, but it’s way more effective if it does.

Steve: Okay, so that’s the abandon cart sequence. Let’s talk a little bit more about the post sales process; presumably you guys have some sort of sequence that you put in place also once a customer has made a purchase?

Austin: Yeah absolutely, and that’s going to depend once again on every brand, but I’ll give some kind basic rules of thumb and also talk a little bit about how like what we’ve being seeing. So after someone makes a purchase, this is a place where I think most companies just are totally negligent. They do not think about the ideal experience, and follow up that needs to happen after someone becomes a customer for the first time. This is really like the door opens, because a lot of times people continue to purchases more one after another and become big fans.

So we start outlining desired actions right, what is the best possible thing that can happen to somebody after they make a purchase? Typically it comes down to you want them to write a review for the product they just purchased. You want them to– if there’s social media channels follow on social media channels. You want them to share with their friends, those are three desired actions. And then ultimately the other desired action is to get them to make another purchase of a similar product, or a complementary product.

So we outline those desired actions and start building sequences based over 90 days that target people, 90 days is a typical range, but depending on your product it maybe longer or shorter. Replenishables often it’s quicker like socks or something, someone might want to buy them within 30 days or 60 days.

Steve: So what frequency do you send these emails out at?

Austin: That’s really depends on the type of product. I would give a general overview of like maybe six to eight emails over 90 days, like that is what we want to put together. Because remember you’re going to be supplementing these with newsletters emails. So these are specific action based, triggered emails, I mean they’ve hit 60 days after making a purchase and haven’t purchased again, it goes out. But you’re also going to be hitting them with whatever newsletter emails you’re doing on the other side.

Steve: Okay, so newsletters emails, meaning the traditional stuff like we’re having a sale here this is what’s new in the shop and that sort of thing?

Austin: Exactly.

Steve: Whereas these other emails that you’re talking about are more along the lines of where you kind of tell your own story and have people share their experiences with your company?

Austin: It’s a combination of like direct offers, especially with complementary products right. Because if you know someone has purchased let’s say a good example– okay so here’s a good example, let’s say someone purchases a straight razor from a [web] [00:20:34] shaving company.

Steve: Okay.

Austin: And you know by looking at their customer reference they’ve never purchased the strap whatever the sharpener, so then you’d follow up with a complementary product, to try to get them to add on to what they have already purchased. That can go on and on whether it’s they’ve bought boots and they want to follow up with either a complementary pair like or style, or something to clean them that sort of thing, there’s lots of different options and there’s a specific targeted of emails.

Steve: Okay and so that implies that your emails are being sent out based on some sort of customer database that you have?

Austin: Yes.

Steve: Is that– okay, so let’s talk about that, because that’s kind of the most interesting part of all this right?

Austin: Before we move on I want to say one thing about each, about the abandon carts, and the post check out sequence is– so typically right– actually you need some like aggregate email. Clavier there’s somebody Clavier that we’re going talk about in a second, does a great a job of providing that customer database. They averaged up all their emails and measured the number of emails sent divided by revenue created by those emails, and they found that on average every email that their customer sent brought in 20 cents.

Some of these emails– sequences we’re putting together are hitting like five and $10 an email, because instead of being a broadcast to everybody, they’re just targeting one to one, and specific places, during specific actions, and they’re recovering carts or they’re getting people to buy complimentary products, and they’re really-really effective. If you’re already running newsletter emails, getting these targeted emails is going to boost up the amount of revenue you’re bringing in without sending a ton more emails.

Steve: So without actually giving away your clients’ names, can you actually work through an example of one of your implementations?

Austin: Sure.

Steve: Okay.

Austin: So let’s start with– I guess I start with abandoned carts, that would be a good one. We put together abandoned cart sequence before the holidays for one of our clients and they were looking– they had like a really busy holiday season, it’s like they’re holiday focused.

Steve: Okay.

Austin: So we put together an abandoned cart.

Steve: I think I know what company this is already but go on, yeah.

Austin: So we put together a holiday focused abandonment cart sequence and we targeted the difference between– well they had some rules, right. Because most of their products, the products they wanted people to purchase were above, I think it was like $65. Below that were the smaller products that actually ate into their margin a little bit because of their shipping offerings. So they weren’t that excited about selling the smaller products, but they were very excited to sell products above the $65 mark.

Steve: Okay.

Austin: So we created actually two campaigns. The campaign for the above $65 mark included discounts, and was really aggressive to try target these people, because they knew if they converted they were making a lot of money off every purchase.

Steve: Okay.

Austin: So it was a four email sequence, customer service then there was a very like an offer. I think it was 15% off under a 48 hour deadline. Two emails for that. And then a follow up email from like a higher up person who was trying to get them to convert. And then we had also had the second sequence which was for lower than $65, which did not include a discount because it was not worth giving a discount to people who were lower than $65. That same thing can be done with international versus domestic orders, because often times people can give free shipping domestically, but not internationally. So there’s really good offers you can do when you segment.

Steve: So this is just based on what people actually put in their shopping cart? Is that correct?

Austin: Based on what they put in their shopping cart, and you can actually even segment them based on IP address.

Steve: Okay.

Austin: So…

Steve: And then…

Austin: And that one…

Steve: Just…

Austin: That one brought in over a 100 $10,000 in a month and a half of closed out carts, just putting those two things together.

Steve: I’m just curios how that would have compared to just kind of a generic abandonment sequence, where everyone got the same sequence like, “Hey, I know that you didn’t finish check out, why don’t you come back.” Versus– and then sending another email a couple of days later with a coupon code, that sort of thing. Do you have any sort of insight on that?

Austin: So you’re saying it’d just been a single email or two emails?

Steve: A series of two to three emails versus this sort of targeted approach, where you’re sending out coupons just to people in a certain segment. You kind of see what I’m asking?

Austin: Yeah, yeah. Well, the reason we don’t have the opposite is because they didn’t, as a company they didn’t want to send those coupons to those people who were lower.

Steve: Okay, got it.

Austin: Because they were like it’s not worth it. It‘s not worth it for them to check out with a coupon and so– I don’t know if we have…

Steve: No that’s okay.

Austin: It made sense for them because just purely because of their product offering. We had to go, we had to segment. They wouldn’t want to do it if it wasn’t segmented, if they had to treat everyone the same.

Steve: Yeah. It makes sense, because if they gave coupon codes for the cheaper items, then they might have lost money on that, right?

Austin: Exactly.

Steve: Perhaps, okay.

Chad: But I guess the other question I think maybe, I don’t know maybe you’re hinting at this is what is the difference between– really what’s the recovery rate difference between a segmented program that we just talked about, and then the standardized system that you’re referring to. Is that kind of how…

Steve: That’s kind of what I was getting at. More of like the advantages of doing it…

Chad: Like…

Steve: The segmented approach, yeah.

Chad: The segmented approach with Clavier versus the plug-ins you get with a standard cart, like…

Steve: Yes, yeah.

Chad: Is just blasting out to whoever and whatever they buy. Do we know the differences like any numbers on them?

Austin: That’s totally going to be company specific. We’ve been finding if you’re running a longer abandoned cart recovery sequences versus just one or two, often times we’ll pull in like 20 to 30% of our revenue from the last email that is sent in the sequence. And like 50% in emails three and beyond. So for people who are sending just one recovery email with an offer or two with an offer, or let’s say no offer, you’re missing out on a lot of revenue in those back emails. Because that’s where people are converting, it’s hard to believe that after seven days they’re going to convert. But that’s what’s happening and that’s kind of we’ve seen is error on the side of complexity and length, and you’ll have…

Steve: What happens during that last email; is that like the best offer of them all though, in that last email?

Austin: It depends. Often it really depends on the company. So yeah, we like to put a better offer in the last email. But sometime it’s matched the same. If we ever look at the lowest possible offer, it will be the same as offer three or offer two. But it will be just delivered in a different format. So instead of just an image with your stuff like a personalized email describing that you want to have them join the company– become a customer and that you’re personally putting together a coupon code for them, that’s sort of thing works well for them as well.

Steve: So are we kind of training customers to kind of wait for these coupons though? It’s becoming a pretty prevalent practice these days with these abandonment sequence, right?

Austin: Well, I wish it was more prevalent, but no people are– yes and no. It’s becoming more understood, but it’s not out there as much as it should be. And here is— it’s a really good question, because what you want to do is you want to make sure there’s a lot of options, that you’re a service not just a one off coupon deliver. You can divide it between first time customers; deliver something different for someone who’s been a customer for a long with no offer. That’s often another one we’ll do. We Segment out first time customers, and previous customer and give previous customers no offer. And first time customers be very aggressive because we know we want to acquire a customer for the first time.

Steve: I see.

Austin: So that goes back to– that’s all like segmentation.

Steve: That makes sense.

Austin: And so many advantages of segmenting between first time, previous customers, or even people, previous customers who’ve received an abandoning cart email one time in the past, you don’t want to give it to them again. So you don’t train them.

Steve: Do you guys do anything in terms of helping kind of like more of a cold customer? So let’s say a customer has landed on one of my content pages. And I actually got them to opt in to my list. Do you guys do any sort of segmentation on those kind of cold people coming in? How do you convince those guys to buy?

Austin: So segmentation for those customers when there is a prospects actually there’s couple things you can do. And we usually focus on building somewhat of a welcome sequence, where…

Steve: Okay.

Austin: Going to back to what we talked about with post check out.

Steve: Right.

Austin: And the desired actions. For welcome sequence we like to think of best possible things that they can be exposed to, to give them the highest chance of making a purchase. So once they sign up and often times we’ll help companies build a higher more compelling offer for them to sing up with. And sometimes that can be– whether it’s a coupon or some sort of a download, a buyer’s guide, those sort of things. We’ll typically deliver that and then focus on building a sequence that ultimately the number one goal is to get someone to convert from a subscriber into a buyer.

Steve: Right.

Austin: But at the same time you don’t want to just hammer people with discounts. You want to tell the message of your store, you want to have them complete other desired actions like follow you on Instagram or Facebook, tied with the offers, specifically with urgency. Because we talk about training people, it’s important to give them– if you’re going to give a discount make sure that it just lasts for like a day or two days. I don’t like giving open ended discounts, because if you train them when they get an email, they’re going to make a purchase within 24 hours, that’s something that consistently goes with them throughout their life cycle.

If you’re just giving discounts, discounts, discounts, it kind of just devalues what you’re doing. So the whole goal would be to convert that subscriber into a buyer. And then once they become a buyer you change your relationship with them, where you’re not giving them any discounts because they’ve already made a purchase.

Steve: Okay. So I would love to see kind of like an example of an on boarding sequence. So let’s say I came to you with my wedding handkerchief store. And I got someone to sign up by offering them some sort of arts and crafts guide, which is something we give out…

Austin: Sure

Steve: In order to get them on our list. So what would be kind of your sequence, your first couple of email sequences, and how would you get them to actually buy some of these things?

Austin: Well, the question would be what would be the– is there an introductory purchase or what is the most typical first purchase from customers?

Steve: I guess it depends who they are, but a lot of our customers let’s say are just brides.

Austin: Okay.

Steve: Brides to be who want to buy some of these items as a part of either a gift for the bridal party or as part of their wedding.

Austin: Okay. So obviously delivering the arts and crafts guide. Then thinking about well if the goal is to get them to go from arts and crafts guide to making a purchase, what differentiates you guys from everybody else? So for a lot of the brands that we work with, a lot of it is going to be telling the story if there is social aspects, exposing the people who get subscribed but haven’t seen like the important pages on your website, and then combining that with an increasing offer. So one email maybe a week later with an offer for them to get onboard and make their purchase.

If they don’t respond to that one, then maybe following up with something that’s not an offer a week later or 10 days later, then try again 10 days with a better offer thinking, “Okay what is the”– knowing what your allowable cost is to get somebody to convert, and then increasing it from where you want to be to your allowable cost, because you still– no matter what you want to get these people to convert. And once they convert and they make a purchase then kicked out of that sequence and they go to a new one which is not incentive heavy.

Steve: Are there any incentives other than discounts that you guys employ with your campaigns?

Austin: Yeah, there are. Discount is just one– it’s easy to talk about because it’s in eCommerce. What other incentives we’ve got– it really depends on the– what else do you offer besides discounts? We can relate to your store.

Steve: Sure. We tend to offer kind of information.

Austin: Okay. I see what you are saying. One thing we’ve been building a lot of that have been really, really helpful is like buyers guides. For example we just build one for one of our clients. He’s in the wet shaving niche. We went over and we built out a downloadable guide that explains the best materials, or the best type of products for the beginner being like intermediate and then the expert. And those are increasing based off of their reviews, like in-house, what people like, that sort of thing, and then each one has got a description and link back, so they can purchase it on the site.

And it’s been shared– people have been going crazy about these buyers guide because it answers the question they’ve already been asking, and does it in a way that they can just have in their computer and then go check out and they can forward to their friends. That’s one of the things we’ve been employing that works quite well.

Chad: I think there is a lot of things that I think somebody can do for this welcome sequence, like honestly a lot of is information, we’ve talked to a lot of eCommerce companies that have been using video. I think of Alex Icon from [Lexi Hair for One]. Think about the number question that he probably gets for– and this is hair extensions by the way. The questions that he gets from potential clients are about hair extensions, and he’s got a ton of videos. I think he’s got like a million subscribers and if somebody opts in to his website you can send videos over, “Hey, by the way here is how you do this,” and then another video on how to do this. “By the way would you like to buy something that helps you do this better?” I really think that content side is really a big part of it.

Austin: Yeah, well it is. And I think just to be clear from what you were saying earlier when I was talking about incentives, I was purely thinking of the offer discount I think. But you have to pair those absolutely with the information like Chad is talking about, because you don’t want to be just bombarding with– that’s like one of the biggest failures. People will just bombard with discount after discount.

Steve: Yeah. That is what I was getting at. What is kind of the email ordering and the mix look like? Do you do content offer, content content offer? Do you kind of get what I am asking?

Austin: Sure. And that’s going to depend a little bit on the brand, and how much information they’ve got or what type of a job they’ve done in creating quality content, but typically about 50/50 ratio is what I like to go with, what’s worked best for us. 50 between high quality content and then clear offers to make a purchase.

Steve: And how far out are these sequences before you kind of just stop trying to get that initial sale?

Austin: If you are in an ideal world it would never stop, but realistically 60 days is a good– 30 to 60 days is a good timeline. Maybe 90 days if you are more sophisticated.

Chad: But over time you can keep adding to it.

Austin: Yeah.

Chad: Because they are all automated.

Austin: That’s the…

Steve: I’m asking you these questions because we do– that’s what we’ve been doing. We’ve just been kind of adding onto the sequence, and I was just curious what you guys were going to say.

Austin: Now you just keep– yeah, you just keep adding. Just start with at least 30 days. If you are listening and you don’t have this setup, start with at least 30 days because that’s going to give you the ability to have like four emails in 30 days. It’s a great place to start.

Steve: So let’s talk about implementation very briefly. So you guys mentioned you use a tool called Clavier.

Austin: Yeah.

Steve: How do you use that tool to setup these complicated funnels? Is the functionality already built in there? Is it straightforward?

Austin: Yeah. It’s fairly straight forward. I think one of the advantages of using a program like Clavier for an eCommerce store is that the integration allows you to pull information from not only just newsletter subscribers, but from customers who you’ve ever had in your database which is awesome because then you pull it over. All the information you’ve got in your store is then easily sortable in Clavier. So then you can run basically segments and sort based on behaviors. You can create a VIP category where you filter people who purchase six times. Those are going to be very different customers than people who purchase one time and never come back.

Steve: Sure. Does that imply then that you kind of import in your shopping cart database over to their platform?

Austin: Yeah. It automatically pulls everything over there which makes it so, so easy. So once the integration happens it will be talking back and forth using the API and it will be– yeah, you’ll be able to see almost in real time. When people make a purchase they’ll be updated in Clavier and then all your funnels can be triggered from within that.

Steve: This is starting to sound like a Clavier advertisement here. It sounds really cool.

Austin: The thing is like– so…

Steve: Just for the record these guys are not affiliated.

Austin: I know, well the thing is [crosstalk]. You don’t have to use Clavier; it just makes it a lot easier. So I’ve used so many different platforms; MailChimp, AWeber, Infusionsoft, Get Response– literally like almost every single one of them. And the difference is that nobody– the stuff we talk about doing like segmenting and figuring out the difference between domestic and international orders, it’s not possible to do with a lot of the other programs. And that’s why I think we are just scratching the surface on what we can do is because now we are able to understand where people are coming from, what their intention is on a website and follow up with them accordingly.

And that’s why we like using it because it allows you to do all that stuff. I think Bronto does something similar as well but yeah, we just had a lot of success with it.

Chad: And it’s gotten to the point where Austin now requires me on the front end to require somebody to switch to Clavier on. And we have no financial incentive, that’s how good it has become.

Austin: Yeah, we don’t.

Chad: We don’t work with anybody who is not using Clavier and if they aren’t they have to switch to it. And afterwards they always ask, “Well can we still keep our old one,” and we said, “Yeah, keep it.” And then next thing you know they are like, “Let’s forget it. Let’s just move everything to Clavier.” And like I said there is no financial incentive for us on this.

Steve: I was just about to make that comment. You guys are not affiliated with Clavier in any way.

Chad: Exactly.

Austin: We do have a discount for all of our clients. People that sign up with us they get a discount for using it, but we don’t have a financial relationship with them. And then it honestly comes down to just us– we want people to use what’s best out there, and be impartial in that sense. We’ll switch if there is something better, but for the time being this is what we found and it’s worked to accomplish our goals in ways that things we’ve wanted to do for a long time are now possible are using the software.

Steve: Yeah, awesome. Hey you guys we’ve been talking for quite a while.

Austin: Yeah.

Steve: So just for the listeners out there, Chad and Austin– this is what they do and they do it well. So if you’ve got an eCommerce store that’s kind of struggling to hit the next level and you are not really taking advantage of email marketing, I’ve learned a lot from these guys. And so Austin, Chad where can they find you if they want to reach out?

Austin: Well you can go to our website Ecommerceinfluence.com, that’s a great place to start. It’s got all the information about our podcast; you can listen to it there. And also Chad has got– if you qualify, like if you are listening and you are really like above, typically like a $500,000 run rate we also create behavioral marketing, triggered email like audits to give you an idea of where your revenue could come from. And like if you are already sending emails or not sending emails, what that sort of thing would look like and that’s over to Ecommerceinfluence.com/apply.

Chad: Yeah. Basically that’s an audit plus a blueprint. So at the end of the day, like you said if you quality we’ll be able to do the duty audit or create a blueprint for you and what you need to do, and then you can either implement it yourself or we can do it for you.

Steve: Sounds good guys. Well thanks a lot for coming on this show men.

Austin: Thanks Steve. Hopefully– it was good. We will hopefully answer some questions about your own business which is kind of– we use our podcasts to get some insight about our own business. It’s a great little thing to do.

Steve: Cool men. Well take care.

Austin: All right. Cheers.

Steve: Hope you enjoyed that episode. Austin and Chad are a few of my go to guys when it comes to using email to effectively boost sales for an eCommerce store. And hopefully you all learned something today. Now if you aren’t sending email to your customers then you are definitely leaving a lot of money on the table. For more information about this episode go to Mywifequitherjob.com/episode65 and if you enjoyed this episode, please go to iTunes and leave me a review.

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Now as an added incentive I’m always giving away free business consults to one lucky winner every single month, for more information about this contest go to Mywifequitherjob.com/contest. And if you are interested in starting your own online business be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information and thanks for listening.

Thanks for listening to the My Wife Quit her Job podcast where we’re giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes, and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information, go to www.mywifequitherjob.com/contest. And if you are interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information, now onto the show.

Welcome to the My Wife Quit her Job podcast. We will teach you how to create a business that suits your lifestyle so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Welcome to the My Wife Quit her Job podcast. Today I am thrilled to have Tom Kulzer on the show. Now if you’ve never heard of Tom, he is the founder and CEO of AWeber, the most popular email marketing provider amongst bloggers today. I personally use AWeber for my blog, my online store and my online store course, and I can confidently state that email marketing brings in probably 90% of the revenues for my blogs. Now without AWeber my blog definitely would not be where it is today, and I’m actually a huge fan of Tom and his service and I’m really ecstatic to have him on the show today.

So welcome to the show Tom. How are you doing today man?

Tom: Great, thanks for having me Steve.

Steve: I’ve always been curious actually how you got the name AWeber. What’s the back story behind that?

Tom: That’s one of my favorite stories. During kind of the beta phase and doing the development for AWeber, the service was always called the Automated Weber System. It was kind of the– you got to remember this was back in 98, and nothing like it had really existed. So we were just kind of calling it that and I was more interested in the product than necessarily coming up with a catchy name for it. And in the process I was literally sitting in the business registration office in downtown Baltimore about 10 minutes before five, before that office closed, and the process of setting up a business ID for the state in which case I needed then to be able to go off and get a tax ID for doing taxes and what not.

But the most critically it was involved in getting a merchant account. You got to have a merchant account in order to have an online business. Back in that point in time you couldn’t just go around the corner and get those sort of things. So I had to go all through all this rigmarole to get all of these set up, and I was literally sitting on the floor there going, “Automated Weber System– I can’t call a company that. That’s way too long.” We didn’t really have a domain name. I was just testing off of a random domain that I’d already had, and I was just sitting there racking my brain to come up with something short.

And I’m like, “Hey Automated Weber System– like AWeb Ass.” No, you can’t call a company AWeb Ass. That’s not good. So it became AWeber and the whole– the capitalization with the A and the W, a lot of people think that there is like a Mr. Weber somewhere.

Steve: Yeah, that’s what I thought.

Tom: There is no Mr. Weber. For me it was kind of the fact that we scooshed [ph] a couple of different words together. And frankly I think the A and the W look cooler capitalized than lower cased, and it just makes it more pronounced. So 16 years later we have AWeber, there is no Mr. Weber, there is no AWeb Ass and my parents did not disown me because I did not name a company AWeb Ass.

Steve: I probably still would have signed up even if it was AWeb Ass but…

Tom: We actually do own that domain now. We haven’t put anything there yet, but during my history classes that I teach here at the office for new team members, I always joke about that, that we need to put like a donkey or something up there.

Steve: So how did you come up with the idea of starting AWeber in the first place? What’s the back story behind that?

Tom: Sure. I was a college student at the time and I was selling wireless modems. I was like a reseller for a company that was selling wireless modems for connecting to the internet. Now this was back in late 96, early 97. And so when you say wireless modem, you don’t think like an iPhone in your pocket, think a big device that you would literally like [inaudible] [0:05:25] on the back of your laptop and connect to your laptop with a serial cable.

So no USBs, no lighting ports or anything like that, and that thing went blazing fast 92 kilo bytes per second. But at the time that was really quite remarkable and state of the art. So I was selling those on the side, going to computer shows and that sort of thing to sell this hardware and then the usage package of it. I was working with a bunch of other folks who were also reselling that, at that same product around the country. And I developed a website basically where I could put whoever sales information on the bottom of it and they could– they have their own site then to kind of represent and this little thing that I was running on the side.

And over a period of time they had these contact forms on the side where people could enquire and I saw a lot of people enquiring. And I touched base with the guys who were running those sites and it’s like, “So did you follow up with anybody? Are you making any sales, there was a lot of that. A guy– yeah, I sent an email or two where I tried to call him and they didn’t really get back to me, so I dropped them. He’s like, “No, you got to send more than like one or two messages. Just send out a whole sequence of messages. Here, I’ll send you the sequence that I am sending the people.”

And one thing led to another and I got tired of people telling me that they just– they’d only sent one or two because people didn’t respond. So I basically just automated it and I essentially created the first version of AWeber that wasn’t yet AWeber where it had sequence of seven follow up messages that went out over a period of about two months, to people that had enquired about that wireless model products. Over time the number of sales that those people started generating it increased dramatically and they were spending a whole lot less time manually following up with people.

So one thing led to the other, I ended up leaving that company that was selling the modems to focus on school. That’s kind of important.

Steve: To an Asian guy, it is very important. But go on, sorry.

Tom: A lot of those people that I was working with were like, “Hey can I get this automated follow up thing for this other company that I’m working with now?” I was like, “It doesn’t really exist,” and there was no other product on the market that existed like that where you can set up a sequence of emails to go out over a period of time. So one thing led to the other, I was busting tables at an olive garden and decided, “Hey, maybe this is a good idea to make some money on the side.”

So I figured out how to basically create a generic software to do what we do, create a log in, get a merchant account, sit in a downtown business office and get a new tax ID, all that jazz that’s involved in starting a business and making it legit there, and set that all up. Within the first couple of months we had several hundred customers and away we went. So I ended up taking a semester off from school to see where things went, and 16 years later I haven’t gone back.

Steve: Wow! So you ended not finishing school and just pursued AWeber full time.

Tom: Yep, exactly. I was a mechanical engineering major, switched to finance at the end of my first year, then I dropped out in my second year.

Steve: So are you technical guy? Are you coder?

Tom: I wrote all of the initial code. I have no formal training, I do not write code these days, but I can definitely look a code. I sit with most of our engineers on a daily basis, so it’s definitely the part of the business that is most fascinating to me is the building products and solving problems, connecting people with problems and using software to solve those problems. That’s the part that really fascinates me and keeps my interest.

Steve: So basically you kind of validate your idea early on with your other business. So you kind of knew going into this that it was going to work and you probably already had a couple of customers just at launch. Is that kind of accurate?

Tom: Yeah, absolutely. We had a thousand or two like beta testers and folks that were using the software already as I kind of developed and added on to it during the course of developing and probably the nine months or so, between the time when I said, “Hey, this is an idea I’d like to turn into something to make some money,” to the time when it kind of like launched, and it was open to general public where they could come and sign up. And it’s funny like when we– and I always say it was really friendly bunch, it was me, myself and I for a year and half or so before I hired anybody else.

But when I launched the site the very first time, it’s like I mentioned that merchant account. I didn’t actually have the merchant account approval setup, I had a secure gateway and I was able to collect credit cards, but I wasn’t able to actually process them. So it’s very much what you hear about today with the MVP product, minimally viable product. Get something out the door. I had no means of actually charging anyone at that point. So I stressed heavily to– that you could send us a check payment for your first year of service and that way it would be heavily discounted. But I also took those credit cards online.

So it wasn’t until probably about a month and a half later when I could actually charge those credit cards, where I ended up backing charge people for their first month of service. And surprising very few of the credit cards that were given at the time actually declined or were invalid in any way. So it was a nice way to be able to get out the door whereas I might I’ve otherwise had to wait another month or two for a merchant account to come through.

Steve: It’s really comforting to hear stories like this because a lot of people think when they start their businesses they have everything together right from the start. And it sounds like you just did the bare minimum to keep going, and then get the idea tested to the point where you were willing to invest a lot of money into it.

Tom: Sure, absolutely. It really comes down to– you have to get something out there because until you get something out there you have no validation in the market, and the sooner you can get it out there, the sooner you can avoid costly mistakes and time spent developing something that nobody has an interest in, and nobody is actually going to pay you for. I had people clambering right away to pay me to do this before I ever had an actual product to do it. So it was a matter of find a need in where people are looking to solve a problem there, and where they are willing to pay to solve that problem and kind of go from there.

Steve: How much did you end up investing early on into your business?

Tom: I ran my Penn State credit card right up to its limit. It was everything that we’ve done over the time. I was a college student at the time, so I didn’t have a crazy credit limit or anything. Everything that we’ve done over the years has been all organic growth. We’ve never taken any outside investment.

Steve: Awesome. So let’s talk about some of these early customers. Now how did you get the first 100 you mentioned?

Tom: Sure, I was– up to that point I was really involved in a number of online forums and discussion forums and what not about entrepreneurship. It was always like a passion of mine to learn more about that, like the whole business process just fascinated me: how you start a business, how you run a business, how you grow a business, all those sort of things. So I was involved in a number of online business forums exchanging tips and little tit bits on things that I had discovered: what worked and what didn’t work, etcetera. So when– and that was all around kind of the marketing of the wireless hardware product that I was representing then. So when I initially launched AWeber it just became– hey, I’ve got this new tool. We’ve talked about this sort of problem a number of times; I have this solution to solve it.

And it really became a word of mouth thing from there. I had an affiliate program, almost right from the start. It was really early that we had an affiliate program for having resellers and getting that word of mouth out there, but it really came down to– I solved the core problems for quite a few people. And it was just a word of mouth thing because there was nothing else out there like it at the time it really existed.

Steve: Just curious, did you actually have like a landing page and started collecting email addresses?

Tom: There was definitely an opt-in form on the homepage. At the time I wouldn’t say that it was like a landing page, specifically like you are trying to– it wasn’t like what you would call a [sweep] page or anything like that today where you had to enter an email in order to get anything further. It was here learn more, see a demo. I always kind of set it up as like a demo to see how things work and it was literally– you were being demoed on the product itself.

Steve: Yeah exactly, it’s kind of funny. So what were some of the early challenges with some of the first 100 customers? I imagine there was a lot of back and forth and debugging going on.

Tom: It was kind of a constant evolution of– of course everybody from a software product perspective, it’s always a fine line of balancing future requests with problems, and so forth that people are reporting. One of the biggest things and I think one of the biggest mistakes is have somebody come to you and say, “Hey, I want XYZ feature.” And you run off and start writing code to implement XYZ feature. I think the biggest and the most important step of all that is I don’t really care what features a customer is requesting.

I want to understand the problem that they are trying to solve with those features because a feature that a customer might suggest is not necessarily the best way to go about solving the problem, it’s just the one that they’ve thought of themselves. So I want to understand the problem so that I can understand all of the problems that are kind of about their need or system and how to best solve a bunch of those problems at the same time rather than a piece meal feature, feature, feature, feature, feature, feature kind of thing whereas eventually you end up with so many features that you solve so many different problems as– you actually solve no one’s problem because no one can figure out how to use it. So it’s a fine line, it’s a real balance to be able to…

Steve: And you were a one man show early on too with 100 customers, right?

Tom: Yeah. We had– I am trying to think. There were almost 2000 customers before I hired anybody. So yeah, it was a friendly branch. I didn’t sleep a whole lot– it’s like– folks would be like, it’s like it must be nice to be able to just like disappear from the business for a week or so kind of thing here and there. It’s like, yeah I do, but it’s like I put in my time. It’s like there were two or three years where literally like there wasn’t a whole lot of sleeping going on, let alone any hint of any sort of like day off or vacation kind of thing.

Steve: Yeah, for sure.

Tom: When you have a business like that it’s all consuming. Weekends don’t exist, night times don’t exit. And 24/7, if I wasn’t eating or sleeping the very little time that I took besides [Inaudible] [00:16:57] was anyway an active cyclist at the time. So if I wasn’t out riding and getting some exercise, I was usually planted in front of the computer working.

Steve: So I actually started blogging maybe in the end of 98 or early 99– actually sorry, 2000. And everywhere I went, everyone constantly recommended AWeber. So I am just kind of curious how you kind of built up that name share among– especially the blogging community. Like what was the process? How did you get the word out about AWeber early on?

Tom: I wish I can say that it was a more conscious effort than it actually was. I think I spent probably more time just trying to do really well by the customers that we had. Then a lot of that mindshare that you get from a market standpoint just comes from having really happy customers. You are looking at your things like MPS or net promoter scores and so forth. The more promoters that you can build around your product and around your company, the better you are going to be off. You wanted out ways with detractors and they are out there.

No matter how awesome you maybe you are always going to have detractors and over time you build that detractor base. At the same time you want to be making sure that you are building a promoter base, and hopefully those things will always be greater than any number of detractors you could have. So it’s really– do really well by your customers, always deliver a massive amount of value in comparison to whatever fee you maybe charging. It’s like there’s a– I always look at it from the standpoint, if I’m going to ask for a dollar from a customer I want to make sure I am delivering at least $100 in value to any particular customer that I am asking for that.

And then don’t be shy about asking for that either. It brings this full circle relationship where you are more than happy to help out your customers in a bend over and make that experience a really great one for each and every customer that you have.

Steve: Interesting. So your growth was primarily via word of mouth. Were you running any ads, paper click ads or any sort of search engines optimization for your site or anything along those lines?

Tom: We’ve always had our blogs. I have always– for the longest time, we never had anyone on staff that was considered as sales role. Everybody– they had a sales role from a title perspective. In my world everyone is sales whether it’s our customer solutions team, whether it’s our engineering team, whether it’s our product team or marketing team etcetera. We all do our jobs to create a remarkable experience for our customers.

We of course have PPC campaigns out there for ad words, and other sites, we have a blog for content placement and so forth. We write a lot of articles for other post blogs, we speak a lot at conferences. It’s just– one thing kind of feeds the other. The overwhelming majority of our customers come from word of mouth. Even after spending hundreds of thousands of dollars a month on advertising, the bulk of our customers still come from word of mouth, as well as our affiliate program has always done really well. And I look at that as a general extension of word of mouth. You’re not going to get somebody to personally refer to you to other people just based off of monetary incentive. You also have to be awesome, so that kind of goes along with it.

Steve: Yeah, the affiliate program is actually one of the more attractive ones in the industry, and you mentioned that you started that early on, were you getting a lot of affiliates early on in your product cycle?

Tom: Yeah absolutely it was really…

Steve: Okay.

Tom: Something where– I never really pushed the affiliate program directly. It’s always available on the site. It’s never really something that we like– we don’t place ads to try to find new affiliates. I always look at it as– excuse me. I always look at it from the perspective of, if we make a happy customer, three to four months into that customer relationship, I should introduce him to the fact that we also have this affiliate program, and not only can they continue to hopefully say good things about us to their network, but we’ll actually pay you for that as well. And it just kind of helps up the incentive for somebody to do that, and it’s really worked really well for us over the years.

Steve: And then can we talk a little bit about today. There’s just tons of email marketing providers today. So what are some of the challenges of running a SAS [ph] business among all the competition that’s available out there?

Tom: Sure. There’s always– in any good market, there’s going to be, where there’s opportunity, there’s going to be a lot of bad folks that flood in to fill that market. I think there’s a variety of ways to approach it. I always look at it– it’s funny. I actually said this to one of our product manager earlier today that at any given time in the world there’s probably ten people that have the same idea. And who is going to be successful with that idea frequently comes down to who executes on that idea and that vision first. So being able to get out there and actually execute.

There’s a million and one people that say they have a business idea, and that they want to get started with this business. And they’re making all these plans and doing this, that, and the other thing. It really comes down to like, “Okay you’ve got this idea. What the hell are you actually doing to get it out there in the world?” Because until the world actually knows about, it’s not doing anyone any good, it’s not creating any value for anybody and you’re just doing– you’re kind of wasting breath just talking about it. It’s like, “Get out there, execute and put something out there in the world.” You may need to iterate on it to make it better, but you got to get it out there in the world.

From our perspective, at this point once you kind of are in a more mature market where there’s a number of more established players that have a ground base of customers as well as kind of ground full of what the market expects in a certain product, you can’t just enter that market with something that just sends emails, you have to have a fully thought out product in order to enter it competitively, unless you have some totally different take on them. One of the biggest ways that we have really kind of differentiated ourselves over the years is kind of just what I spoke about with not having someone specifically with a sales title. We’ve always looked at marketing and sales as education.

Most small businesses these days understand that they should be doing some element of email marketing and communicating with their prospects, communicating with the customers and so forth. It comes down to how they go about doing that. And it’s that educational process that goes about doing that. And that’s why we spend so much time at conferences speaking about the subject. Why we spend so much time and energy and money frankly creating educational resources on our blogs, PDFs and so forth, and webinars, all that kind of stuff that goes along to educating people, because we can have the best tool in the world, but if people don’t know how to use and don’t know how use in their business specifically, it’s not going to do anyone any good, and they’re not going to any value out of it.

Steve: Okay.

Tom: So we’ve really approached that sales process and that differentiation process from a marketing education stand point as well as then going back to support. I don’t know if you’ve ever had the opportunity to talk with anyone here, but like you can actually call us seven days a week and get somebody live on the other end of the line to be able help, whether that’s via the phone, live chat or email, we’re here to help people and actually solve the problems that somebody might have specifically with their business, and not just with our product at large. And now we can….

Steve: Yeah, I have a couple comments on that. I’ve actually strayed from AWeber in the past, forgive me. But I’ve always come back…

Tom: Interview over. We’re done.

Steve: Yeah, I know, see you. But I’ve always come back because I just like the way the autoresponders are setup. And I like the fact that I can just get someone on the phone. There’s other competing providers that offer only email support and it’s just frustrating as hell when something goes down. So…

Tom: Sure.

Steve: Yeah that’s why I keep coming back to you guys.

Tom: Sure. Thanks a lot. I appreciate that.

Steve: Yeah. So let’s talk a little bit about just email marketing in general. So first of all where do you think email marketing is going? And how is it going to evolve going forward in the coming years?

Tom: Sure. Well, it’s– email marketing in 98 looked nothing like email marketing in 2000, looked nothing like email marketing in 2005, 2010 or 2015. It’s a constant evolution. I think the biggest things that are weighted these days is everybody talks about spam and getting to the inbox and these sort of things. Most of that comes down to individual senders and their overall reputation. And when I talk about reputation of a sender, I’m looking at things like your overall engagement with your subscribers.

So engagement can mean somebody opening a message, can mean someone clicking on a link in a message, can mean someone moving it to a folder in their Gmail or whatever other email client that they happen to be using, it can mean replying to that message, it can mean forwarding that message, anything that you’re doing to really engage with that email and interact with that email in some way that gives signals to the ISP that, “Yes I actually did want this message.”

The higher the percentage of your subscriber base that’s engaging with your messages, the higher your overall inbox delivery is going to be there. We’ve seen a continued evolution of that over the last five years or so where initially a lot of base spam filtering and what not was based on just the content of your message, and what words and such appeared in your message. And that’s really very rarely done these days. It’s more about the overall engagement of your messages and how your subscriber base is actually interacting with it.

The days of having a super large mailing list were only like a fraction of a tenth of a percent of people actually click on anything are really gone. You want be kind of holding in on those people that are most interested in what you’re doing and really kind of pruning your list, and getting rid of the people that have shown over time are none engaging with what it is that you’re sending there. So…

Steve: So let me ask you a question. Let’s say have this pretty large list and a bunch of them, they don’t open, but they don’t complain either. The fact that they’re getting the emails and not opening it, is that reducing the delivery rate that will make it in their inbox?

Tom: Over time yes, absolutely. So in much the same way like how in Google you can go and search for something, and you can type in a keyword and search for something and you’re going to see one set of results. I can go to Google and type in the exact same results or the exact same keyword and see totally different results. And that’s all based on the context of how I’ve interacted with Google over time. Gmail and other ISP providers are using the same kind of analytics and the same kind of data to be able to classify a message. So that’s why it’s often times one of those things where somebody will say like, “Well my messages are going to the spam folder.” And it’s like, “Okay. What address are they going to the spam folder on?” It’s like, “Okay.”

You’re seeing those going to a spam folder on Gmail. I can clearly see you’re getting lots of opens and clicks from Gmail and the spam folder. So the one thing that– one email going there, does not mean all of your emails are going there. And then you dig a little deeper and you go, “Oh, this is your test mailbox.” And when you get messages to this mailbox, all you do is delete them right away, or “What are you doing over time?” Overtime you’re training Gmail to know that you get this particular email from this particular sender, you delete it. That overtime is telling them– it doesn’t take a rocket scientist to kind of figure out that you probably don’t want that email.

So what are they going to do with that overtime? They’re probably going to start delivering it to your spam folder. And it makes sense that that be where you go, if all you’re looking at is the context clues of how you’re interacting with that message.

Steve: Okay.

Tom: So it’s really important to kind of think, kind of big picture about how somebody is delivering to a list. And overtime yeah. If you have somebody that’s on your list that hasn’t opened or clicked on anything, one I’d question whether or not you’re even getting to their inbox anymore because of what they have trained their particular ISP to interact with those messages. And that’s why you want be pruning that, because eventually, if you have too high of a percentage, eventually they just figure like, “Well 80% of the people that get messages from this guys just delete them right away. So we’re just going to stick the other 20% that are still getting delivered to the inbox, in the spam folder, because in all likelihood most people probably don’t want these.”

It’s a fine line and they’ve don’t publish those matrix for obvious reasons. So it’s just one of those things where you want to always make sure that you’re really holding in and targeting those people specifically that are engaging with your messages. And if people are no longer engaging with them, get rid of them because they’re not helping you in any way, and they’re not going to magically come back. And we’ve done many split tests where we segmented either our messages or our customers’ messages, where we’ve done tests on those. We segmented them off and you’ll get somebody that’s– let’s say somebody has 10,000 subscribers on their lists. And they’ll segment off like 8000 of those subscribers that haven’t clicked or opened anything in a year.

You always get the one person that– the multiple people on a blog post when you talk about this they go, “Oh well. They may not be interested now, but they’ll be interested in six months from now.” You can split them off and mail to those two different distinct segments for six or 12 months, and see like the percentage of people that actually turnaround from that 8,000 person list that was unengaged, and actually become engaged again is so infinitesimally small, it’s completely noise.

Steve: Okay.

Tom: That removing them affords you the ability to be more hyper focused on the people that are actually engaging with your campaigns. Think about the last time that you got something in your inbox and you ignored it for 12 months. Do you suddenly start reengaging with them later? Like no, you probably are annoyed 12 months later that they’re still sending you messages and they haven’t gotten the clue that you don’t like them anymore.

Steve: Yeah. That’s totally true. So do you guys do anything on your end, in terms of deliverability if you find that someone is not getting a lot of opens on their account?

Tom: Sure for every bit of repetition and engagement matrix that ISPs are doing, we also do that. It’s how we surface customers that are doing bad things from a [blinded] abuse perspective and it’s also how we surface customers that are just not following best practices and could use some additional education. So yeah, we rank in and sift and sort all of our customers based on their overall matrix and engagement that they have with their subscriber bases.

Steve: Yeah, because one thing I’ve been always curious about is, all it takes is a couple of bad seeds to kind of affect the overall deliverability of the service, right?

Tom: Sure.

Steve: Okay.

Tom: It can. When you’ve got a hundred plus thousand customers, it takes quite a few seeds but you have to be ever vigilant about those things, and making sure that they stay off your network, because it doesn’t take a whole lot to do damage in the eyes of an ISP, so you want to be hyper vigilant for that. We have really good automated processes, we have a whole reputation engine that’s, like I mentioned, it kinds of sifts and sorts our customers, and bubbles up those that are doing bad things, so that we can take action either on a manual basis or on an automated basis, which does happen.

Steve: Okay.

Tom: So…

Steve: Let’s, since you’re the expert, talk about some best practices here. How do you improve your open and click through rates typically for your emails?

Tom: That is wide open, isn’t it?

Steve: Let’s assume that people actually were interested in what you had to say at one point.

Tom: Sure. I think that– in starting at the very basic, go back to your opt in page. It comes down to are you setting expectations? So when I go to your opt in page, I should know both, what I’m getting from a content perspective, like what kind of value am I getting for signing up for this? And then how frequently are you going to send it? Because if I go to your– let’s say I go to your blog and I sign up and I say like, “I’m going to sign up for this.” And most reasonable people would expect an update maybe once a week, or maybe once a month, somewhere in that range.

But if I sign up for your mailing list and then all of a sudden I start getting like three emails a day or even an email every day, after like four, five days of that, I’ll probably going to be pretty annoyed unless you’re delivering like remarkable value in every single one of those emails. It kind of comes down to that signal to noise ratio. And in which case you haven’t really properly set my expectations for how frequently I’m going to receive that. And thus I’m much more likely to actually complain every time by not having those expectations set. Excuse me.

Steve: So let’s talk about frequency for a little bit because I know some people send once a week, some people send once a month, some people send once a day. And so are there any kind of guidelines or is it just a matter of setting expectations?

Tom: The biggest part of that is set expectations. If you want mail four, five times a day, I say that’s perfectly fine, but you better tell people upfront that you’re going to send them five times a day. And it’s so funny I have this conversation on a really regular basis with people. It’s like, “Oh I can’t figure out why I’m getting such a high complaint rate” or “why people unsubscribe after like the first four, five days.” And I’m like, “How many emails are you sending?” They’re like, “Oh we only send ten emails in the first four days.” You send ten emails on first four days? Like what are you sending?

I go to their opt in page and it’s like there’s no hint of any sort of expectations being set there, or worse yet they frequently say like, “Sign up to get monthly updates.” And I go, “Your opt in page says you’re going to send them monthly updates, and you’re sending them like five months worth of updates in the first three days. Like what’s up with that?” And they’re like, “Oh, well we haven’t got around to changing that.” It’s like, “Well people are getting around to unsubscribing, so the sooner you can get around to changing that probably the better.”

So there’s no real like– I wouldn’t say there’s a guideline to how frequently to send. I would say generally in this day and age with mobile phones and people reading things on the go, shorter is usually better when it comes to the content that you’re delivering. So if you have a lot of valuable content to deliver, delivering it in smaller bytes more frequently is probably the better way to go. Make sure that there’s– when you’re sending something out that there are some reason that you’re sending it out.

One of my– and it was funny. I was just talking about this with one of our new education marketing folks a couple of weeks ago. We had this blog post, did it probably three, four years ago where it was just pictures like some stock photo of a group of people. It was started out with like a group ten people, and then it was a group of 50 people, and a group of 100, and then 1000, and then 10,000, and then a 100,000, like what those looked like. So it was like a small concert and then a big conference, and then a giant football game or something like that, like a super bowl game where you see the size of the crowds and you estimate the capacity of an actual stadium and you put actual numbers on top of those.

You’ll hear numbers especially in the blog world of like, “Oh I have 10,000 subscribers” or “I have 50,000 subscribers, I have 100,000 subscribers or 500,000 subscribers.” The number of people that have more than even 1000 subscribers out there is so small, like as a percentage of overall businesses that are out there.

Steve: Really? Okay.

Tom: It’s kind of ridiculous that– it’s so funny too because I frequent a number of forums where people talk about how many subscribers they have. And it’s like, they’ve got AWeber accounts. I’ll just go and look and it’s like, “You just said that you had 100,000 subscribers, and I know in your account that you have 4,000 subscribers, did you”– so take…

Steve: Shoot! What did I tell you man? I forgot.

Tom: I didn’t go look but don’t, I think, don’t take people and what they’re saying as a basis. Look at your market and the number of people that are in your market. If you’re a mainstream kind of yoga studio, like how big is that market for that particular yoga studio. They might have like a 100 customers that visit them regularly, 200 on the upper hand. So they might have like 500 or 600 people on a prospect list. Those are reasonable numbers for a brick and motor business like that that’s interacting with people in the flesh.

Bloggers have a bigger sphere of influence, because they are just reaching so much, so many more people, but when you look at the overall traffic volume of a particular blog and you know you look at somebody the number of twitter followers and the number of Facebook follower that they have, you can generally get the numbers of email subscribers then tend to correlate fairly closely as a percentage overall, and so you can kind of get an idea when somebody is feeding you a line, feeding you a total line of BS there so. You know don’t take people for what they are often saying you know, you really have to look at what your actual list is and how you are engaging with it but– So we are way off on a tangent down, I forgot where we even started.

Steve: It’s okay I actually was– another question just popped into my mind just now and I was going to ask what your take was on single versus double opt in. When do you use that?

Tom: Sure, I would always use confirmed opt-in, so many people in the market often call it double opt-in, folks in the actual mailing email marketing industry and you know the ISP industry look at it as confirmed opt-in and what you basically do is you are confirming that an email address that is entered in your form has actually been the one that requested it. So you run a blog, I know you have comments on your blog, you know give me an idea just off the top of your head like how many spam comments do you get on the bottom of your blog on a daily or a weekly basis? Probably quite a few I would imagine.

Steve: Yeah, quite a few, but now so many ever since I started using different plug-ins, but yeah, it used to be out of hand completely.

Steve: So you are doing a lot to be able to get rid of a lot of that, the spam comments that are coming in through that, so looking at this from a holistic big picture perspective you put an opt-in form on a website. An opt-in form looks just like a blog comment form. It looks just like any number of forms that lots of bought spam and so forth go around the web randomly filtering out with the email addresses and names and little like the you know the names like Viagra, the names like Louis Vuitton shoes and such websites and those sort of things.

Like those boughts [ph] all they tend to submit your opt-in forms as well, and for everyone one of the invalid addresses that they ask, they attempt to add there, they also add email addresses that are owned by real people. And those real people are real people that didn’t ever hear of your website, have never requested anything from your website, and when you are not using that confirmed opt-in process those addresses then end up on your mailing list, and you start emailing them. And people make all kinds of arguments about why that is not spam but at the end to the day that’s spam.

Any email that you send that was not requested by somebody else is spam. Even in this day and age the definition of spam has really evolved over time that it’s not just email that you didn’t request, it’s email that you no longer want anymore. So somebody might have requested it at one point, but they don’t want it anymore it’s now spam in their eyes and they will usually call it that.

Steve: So here I what is funny Tom, so I recently switched to single opt-in because I found that 50% of my confirmed messages weren’t getting hit, and I found that overall the engagement didn’t really suffer and I was getting a lot more subs as a result and it turn that you guys do a really good job of filtering out some of those spam email addresses, so that’s why I asked you the question.

Tom: If you are only getting a 50% confirmed opt-in rate, we got other things to talk about so.

Steve: Okay, maybe after this podcast is over.

Tom: Typically you see anywhere from 70 to 80% of folks do a confirmed opt-in, the you know other things that you know that lead to that being lower either– a number of different things can lead to that being lower, but it could– right now, our spam detection algorithms that we look for in boughts, over 25% of all opt-in form submissions are box spam. So when you are using single opt-in the protection layer that you have there against people doing bad things or boughts doing bad things and really harming your mailing list can cause some serious issues over time.

And you may not have seen it yet, but I would really-really strongly recommend against using single opt-in, so it’s generally a really bad way to go unless that page is protected, and the only people that can possibly get to it are real people meaning like you can always after like you know shopping cart check out, or it’s after you know on a part of a landing page that you are only mailing to and it’s not generally accessible to the web from spiders and that sort of thing so.

Steve: Interesting, interesting. Yeah, maybe I’ll have you take a look at my account at some point or have someone over there look at it.

Tom: Yeah, absolutely.

Steve: But it’s been good so far and I prune every month, so practically and so yeah.

Tom: So who are you pruning?

Steve: I prune people who haven’t opened in the last couple of months who joined after certain amount of time, a certain period.

Tom: Okay, you are kind of doing it at the — yeah you are doing it at the– you are getting rid of a lot of those, but I would, you are probably still ending up with a lot of addresses on there that shouldn’t be there, but you are by far the not the norm as far as people that would prune that regular and that liberally so.

Steve: It’s because you know, I’m getting charged for them so you know.

Tom: It’s interesting because people often you know ask us about that and it’s like you know I recommend and everybody here at AWeber recommend using confirmed opt-in, and you would be hard pressed to find anybody in the email marketing industry that doesn’t recommend using confirmed opt-in. And it’s like completely cut, they always say well I don’t want to use it because it artificially limits how big my subscriber base can be, and it’s like if I was looking at this purely from a business perspective I’d say hell yeah use single opt-in and get as many subscribers on there as you possibly can, because at the end of the day you pay us based on the number of subscribers that are on the mailing list, and they are like the two things are at odds with one another.

It’s like on one hand I’m telling you to keep your mailing list to only the people that actually really want your mail, and on the other hand like you know that is artificially constraining the revenue that we could be generating from our customers overall. And it really kind of comes back you know, you can have that short term perspective of looking at the email ecosystem and saying like yeah, out of all those addressee you want, but in the long run all you need up doing is harming the overall email ecosystem and mailing to addressees that didn’t actually request it. And it just– in the long term it generally will cause more problems than it’s actually solving. So it’s just– it’s one thing that I would caution you to reconsider, and to take a bigger longer term picture of it.

Steve: So here is what is interesting Tom, I come from ecommerce world, that’s actually kind of how I started out, I didn’t even here about double opt-in till I stated blogging because most people on ecommerce, it’s all single opt-in and so that’s where I kind of got you know a little confused.

Tom: They are also getting those from topic cart check out typically where there has already been a sales transaction. Usually that is the case, we just-

Steve: It goes both ways but yeah.

Tom: Which is very different than a general like somebody happens to drive by and enter an email into a form. You know you’ve had to whip out a credit card and you’ve got, you’ve given me your address and all those sort of things, and there is business relationship and what not there. From a single opt-in, confirmed opt-in stand point that is totally different in my view, but if you’re just dumping that form on the front page of your website and asking for opt-ins or something, there should be confirmed opt-in.

Steve: Okay, cool. So Tom hey, we’ve been chatting for quite a while, and I just wanted to thank you for coming to the show. In case anyone has any questions, where can they get access to you? Do you have a twitter handle that you use or?

Tom: Sure, I’m on twitter @Tkulzer, K-U-L-Z-E-R, you can also find a whole bunch of my info on– I just have like it’s kind of embarrassing actually, but I have a personal site at Tomkulzer.com, and I’m also really hard to find here at AWeber at Tom@aweber.com, so yeah, so I’m not shy about giving up my email address and you know I only ask that if you generally have a like a question that our front line solutions team can handle, please try to ask them there first, I can’t become the sole support person for 100,000 people, so-

Steve: Absolutely.

Tom: That doesn’t work, if there is ever an issue that needs escalating you are not able to get response to you know free to drop me a line, I’m am more than happy to reply, so to get something to get an issue sorted out so we have…

Steve: And you know I use AWeber and I’ve used it for probably five years, maybe six years now. I’ve strayed, and I’ve always come back, and I think your support is top notch and whenever there is a problem I seem to always get the answer right way, and that’s why I am sticking with you guys here on out. No more straying.

Tom: Sure, I appreciate it. You know I always look at that as you know it give you context for what else is out in the market place, and I feel that is important for people to do it. You know I want folks to know what’s out there and to have tried it and to realize what the differentiators are, and you know often can’t tell that without having given them a shot. So you know I always hope that everyone comes back and that’s awesome to hear, and I really appreciate your business over the such a long period of time.

Hope to continue to earn that going forward, and I think from a business perspective that’s always really important to realize, because it’s like you know you can earn a customer, but you have to keep earning that customer every single day, so you can’t take that relationship for granted.

Steve: Absolutely, hey Tom thanks a lot for coming to the those man, it’s great talking to you.

Tom: I appreciate it, thanks for having me on Steve.

Steve: All right take care.

Hope you enjoyed that episode, I am a huge fan of AWeber, and I can say with a straight face that AWeber is responsible for probably 90% of the income from my blog no joke, and if you aren’t doing email today, then you really have to get your but in gear. For more information about this episode go to Mywifequitherjob.com/episode66.

And if you enjoyed this episode, please go to iTunes and leave me a review, because when you write me a review, it not only makes me feel proud but it helps keep my podcast up in the ranks so other people can use this information, find the show more easily and get awesome business advice from my guests. It’s also the best way to support the show. And please tell your friends because the greatest complement that you can give me is to provide a referral to someone else, either in person or to share it on the web.

Now as an added incentive I’m always giving away free business consults to one lucky winner every single month, for more information about this contest go to Mywifequitherjob.com/contest. And if you are interested in starting your own online business be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information and thanks for listening.

Thanks for listening to the My Wife Quit her Job podcast where we’re giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information go to mywifequitherjob.com/contest, and if you are interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

Now before I begin I just want to give a quick a shout out to this episode’s sponsor Bigcommerce. Now Bigcommerce is a fully hosted shopping cart platform that allows you to set up your own online store in minutes. And as most of you probably know, I teach a class on how to start a profitable online store. And Bigcommerce is actually one of the shopping carts that I highly recommend in my class. Now here is what I like about Bigcommerce, unlike other competing platforms, Bigcommerce doesn’t really nickel and dime you with every little shopping cart feature. And when you sign up, you immediately have a fully featured and extremely powerful shopping cart at your disposal.

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Welcome to the, My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have a Stanford buddy of mine on the show Eric Cheng. Now if you don’t know who Eric is, he is an award winning under water photographer, aerial imager, and publisher. Now his work has been featured in the Smithsonian Natural History Museum. And he spoke at internationally at events like TEDx, the Chow Chow club, and most recently on Good Morning America.

Now he is also well known for being the founder of Wetpixel.com, the most popular community website dedicated to underwater photography and videography. Now as part of this side he leads under water expeditions all over the world which is pretty damn cool. He has also held leadership roles at Lytro the first light field Camera Company, and today he is actually the director of aerial imaging at DGI, a leading quad captor manufacturer. Now before we begin this interview, I just want everyone to just hit pause and go to echengphoto.com, that’s e-c-h-e-n-gphoto.com, and just go ahead and check out some of his work because it is breathtaking.

Now here is why I invited Eric on the show. Out of all my Stanford buddies, Eric has an incredible attitude about life. And in a nutshell, he pretty much does whatever the heck he wants to do and he uses entrepreneurship as a means to facilitate his lifestyle as an artist. Now today it is actually pretty rare to see him stand any place for long. He is often found travelling the world taking underwater photos in exotic locations, or flying quad copters over active volcanoes and he just got back from Iceland last week doing this.

So today’s episode is actually for all the artists out there in the audience, and I’m hoping that Eric’s story will inspire all of you to take a leap of faith and take a chance at lifestyle entrepreneurship. And with that welcome to the show Eric how are you doing man?

Eric: Pretty good, thanks so much for having me on the show.

Steve: Yeah, really happy to have you and it’s funny, you know we were in school, we were in undergrad together and we didn’t really hang out that much. You went into CS, I went to electrical engineering. And you took a CS job when you graduated right?

Eric: I did yeah.

Steve: Yeah, but then you decided to quit cold turkey kind of long time ago, like over decade ago right?

Eric: Yeah, it was in 2001, I think, I have to do math to go back that far. Yeah, I was at a company called [tiffany?] they were doing something that– actually I didn’t even know what they did when I joined. You know I sort of went to their company with the smartest people I could find and a lot of them were close kind of cohorts I guess at Stanford who were looking for similar things. And I worked there for a few years and really enjoyed a lot of aspects of it, but really just didn’t care what the company did. You know then it was really about, the motivation and the bigger picture view of what I was doing there. And that’s I guess a lot of what we are going to talk about today.

Steve: Yes, so actually let’s just start with that. So why did you quit and how did you get the courage to kind of pursue your own thing?

Eric: Well, I mean courage is relative. You know if you are in a tech company being paid pretty well it’s easy to have a lot of courage. At least I feel like it’s easier to have courage, but when I talk to a lot of friends who are in that situation they ask the same question because quitting is a big deal. You know and it doesn’t– we are taught sort of not to quit from when we were very young. And I ended up leaving– just because I looked around one day and realized that there were people at the company and my colleagues who seemed to actually be enjoying what they were doing in every way.

You know so what I enjoyed were little problems, little technical problems that we would solve together, and kind of the intellectual environment of being in software at a really exciting time, you know at the end of that tech gloom in the 90’s. But I just– I don’t know I thought something fundamental was missing and I was getting a lot of my creative energy out playing the cello, because you know pretty much before photography I was a cellist. And all of my creative energy and spare time went into playing chamber music and hanging out with classical musicians. And that was really missing at work you know in my primary job you know which at the time was taking out like 80 hours a week in a little start up.

I just felt like there was a huge piece missing and I would be escaping to kind of live my life and then come back to work which I also enjoyed, but something was missing. So I just really left, it was a leap of faith. You know I left and– it’s not like I just walked away one day and picked up a camera and became a photographer. You know there was a very long process involved and during that time with a few friends we started a consulting company and did– we did work on the side to fund ourselves. You know and we had health insurance, and so I would say the courage was really leaving the full time gig. But it wasn’t like I left and starved and tried to build myself up as an artist.

Steve: So you actually had a side gig, even though you were working 80 hours a week?

Eric: Well, I mean the side gig was fun, it was being a musician. And yeah, so it wasn’t like I was working as a photographer at the time. And you know anyone who has worked for a startup in Silicon Valley pretty much knows that it’s the most flexible job in the world. You know the goal is to do your work and that takes a lot of your time, most of your time. But if you need to get out for a couple of hours in the day or shop at 2pm and work through the night, that’s totally up to you.

Steve: So actually so had you been doing photography for quite a while?

Eric: I was always a hobbyist photographer, and you know so I knew how cameras worked from a technical standpoint. You know I could tell you all about the variables for exposure and you know in theory how to get a sharp well exposed picture. And I was kind of the guy who always had a camera, who would take pictures of what was around me. So you know I took pictures of my friend kind of constantly during school, but I would say that I didn’t– I wasn’t inspired to be a photographer at the time. You know I had a camera, I liked to take pictures, but I didn’t really know what I was doing with the camera. There was no kind of driving force to push me into doing it in a more serious way, and yeah.

Steve: So how did you discover underwater photography? I mean it sounds very nichy.

Eric: It is, it’s sort of yeah, it’s sort of the ultimate niche photography. I discovered it more or less on accident, but there were many factors that were pushing me in that direction kind of over the years. And the first is that I was really interested in nature and wildlife. So even during school you know at night I would watch animal planet and discovery channel. This is before reality TV, so the shows were actually still good. And yeah, and I was obsessed you know I watched everything you can imagine about every animal in every environment. Kind of between that like 11 and 12pm you know in the evening kind of while you are taking a break in between projects or something.

And so I was really interested in wildlife and I started keeping salt water fish and corals in my dorm room, kind of you know in secret because you are not really supposed to have a big fish tank in your dorm room. And you know when you keep corals; you’ll start to learn about rainecology [ph] and about the waste cycle and all the things that are necessary to keep you — to keep those animals thriving in an enclosed environment. So I became really knowledgeable about the ocean, kind of well I was just doing you know the normal sea stuff and like taking breaks to play music. And I was also sort of an amateur diver. You know I had around 20 dives or something in five years during school, I didn’t have time, I didn’t have the money to do it.

And I had a camera and so all of these things had to merge at some point, and what happened was I planned the trip to Palau, kind of during you know while I was winding down in software, and getting a little bit uneasy. And I went there with a friend and I just — I bought an underwater housing for the digital camera I had at the time, which is a Nikon cool pix 990, you know that, remember that swivel like 3.39 pixel Swivel digital camera. I took them underwater and the pictures are terrible. They are absolutely terrible. And you know I was kind of an amateur diver.

You know I have never taken a camera underwater. Advanced divers were with us and you know I was not an advanced diver at the time. But what I did was open up that world to me, and I just remembered this moment where I was under water and a school of fish swam by for 19 minutes. And we surfaced from that dive, and the dive guides who were with us on the trip just said, “We have never seen anything like that. “You know these guys had been working in that area for many-many years and they just — I mean that was a light bulb, it was this moment when I realized that the underwater world was more or less unexplored. And you could be doing it for 20 years and then go in the water one day and have something that no one had ever seen happen, right there in front of you.

And so that was really the motivation that drove me to become a photographer. I just — I started doing it as much as I could and being you know sort of methodical on the way that I’m about it, just I experimented constantly. I didn’t know that people actually did it in the real world. You know I didn’t know that there was sort of this industry around underwater imaging and it’s very small. But I just did it on my own and started publishing pictures wherever I could; I got published in a couple of magazines pretty early on. And I put everything online and very quickly ended up with a website called Webpixel, which we can talk about, and that’s sort of what kind of bolted me into that world.

Steve: Yeah, let’s talk about Webpixel. So was that just meant to be a repository of photos in the beginning?

Eric: Well, so Webpixel has actually had a long history even before I got involved. So I’m often credited as being the founder and in many ways, I’m the founder of Webpixel on the way that it exists today. But I was working, you know I was sort of going on these trips, I got hired to do satellite web publishing from a boat in Kona, and that was very painful you know to be on a satellite connection in the year 2001. Or maybe it was 2000 even, kind of Nansen [ph] web you know terrible connectivity 2400 [inaudible] [0:13:32].

Steve: Yeah, crazy okay.

Eric: And I started you know I was kind of like the technical guy. I had– I was shooting in underwater and– but I had all of this technical knowledge about digital imaging, about networking, kind of the computer stuff that was starting to become important. And I was posting about what I was doing online and I met a guy named David Bradigan who was running kind of– do you remember Steve, Digicams?

Steve: Steve, no I don’t actually.

Eric: It was before DP review there was a site in just reviewed cameras. And there was this underwater discussion forum that didn’t really fit into the site, and kind of span off into a one page kind of scrolling off into infinity website that had digital underwater imaging news. So kind of nobody was doing it at the time. And it was that community just existed for the few of us who were doing it. And we just teamed up and I rebuilt the site and put forums in as a way for all of us to communicate about it.

And I wrote articles constantly you know basically if I had to spend more than five minutes figuring something out, I would write about it and put online. And that sort of — that’s one of the major themes in my life is putting content that has taken me a while to figure out online in a way that it’s easy to find for people. And I’m really compelled to do it and I still do it even today.

Steve: Yeah, I was just looking at skypixel.org which is your latest site on aerial photography and you have all these recommendations and how to guides, and its sounds like these are just problems you experience you just write about it, right?

Eric: Yeah, yeah. That’s right. I mean some of them; some of the problems are really small and esoteric. It’s like, you know, what is this weird little connector called? If you don’t know what it’s called you can’t buy it, you know. And so it took me– if it took me 20 minutes to figure out something, I would just write about it and put it online. But the net-effective writing all the time is that I became really good at writing very quickly, and informatively and that is a skill I think everybody should develop you know, I think being able to communicate in writing online is really important.

Steve: So, in terms of just traffic then did all these articles get indexed? Like do most of the people find you through search or is it just through a community that you have built over time?

Eric: It’s definitely both. I mean, I think anyone who gets really into underwater imaging, maybe not today because so much of community has moved into social media, but certainly at that time everybody ended up finding the content because if you did a Google search you will find it, and if you made friends in the community, you know in the real world, they would all be on it already. And you know, we had people who might be from a little town somewhere, who had come up to me, you know, and if they met me in person and said just, you know, “Thank you, you are, like Webpixel is literally my community outside of work because nobody else in my town does this, and the only place I can find community is online.”

So the audience sort of found, you know, because it’s niche, they found it and it became kind of the place to talk about mostly technique and locations and how to shoot. And we started running expeditions out of it, and you know, I had a lot of places I really wanted to go, these trips became more and more involved over time because, you know we were sort of, we had done kind of like three weeks, and clearer water and started doing shark, lab shark work and whales and seal fish and each one of those has a place you go, and you know, local operator with a lot of expertise, but not necessarily kind of normal mainstream trips that might be run. And so we started organizing trips with the sole purpose of being photographically productive underwater.

Steve: Okay. And these were just members of the community that wanted to go on these trips with you, so you would organize them?

Eric: Yes, I would organize and run them, and members would join. Anyone could join really, but, you know you had to know about it and, so it’s typically kind of these same crew, you know, pull up people who would go with you on one or two trips a year. And these trips, I mean, the longest trip we run were 40 days, I mean they were…

Steve: Wow!

Eric: These are serious expeditions for people who are shooting at a very high level profession.
You know, they could have been professional imagers had they decided to do it, and some of them were. And it was really really fulfilling, you know, to go on these trips. I still some of the, but fewer than…

Steve: Sure.

Eric: I did it in, you know, when I was – when I had a lot more time. I was running six of those trips a year, and a couple of personal trips a year, maybe a couple of assignments for magazines, and then kind of running a publishing company on the side, which included a pre-magazine at the time.

Steve: Wow! That’s crazy, six trips and each one of those are like 30 to 40 days, that’s quite a long time.

Eric: Yeah. Up to, I mean some of the trips were less involved, but a lot of them ended up being, you know [laughing] for long periods of time in very remote areas, and the reason we run trips that long is that some of these places took three to four days to get to, and just because there wasn’t the local [Inaudible] [00:18:41] to just fly direct. And so, if it took, you know, if you are doing a week of travel, you can’t go for a week; you have really go for a serious amount of time.

Steve: Oh! Yeah. Sure. Yeah, so hey Eric, you know, before this interview I actually come through your, almost your entire journal. Just getting an idea of…

Eric: That is old stuff.

Steve: It is old stuff, you know, we didn’t really hang out much in school, but we share common friends which is kind of interesting, but in one of your posts, and you probably don’t even remember this, but you used to talk about how a lot of people used to ask you how you made money as an underwater photographer. Now, here is the thing, a lot of my listeners are– they are kind of hesitant about pursuing the lives that they love because they need to pay the bills, so I kind of want to kind of get your take on your passions verses the need to make money. So, when you first started out as this underwaterphotographer, how did you get by, and how did you get your name out there?

Eric: I, so, I have really– I am extremely opinionated about the right way for most people to go about what you just talked about.

Steve: Okay.

Eric: Because I have seen so many people do it the wrong way, and the wrong way– it’s not really the right way to put it because, you know, there is a right way for every person, it doesn’t– they are not all going to be the same. But personally, I do not like to be struggling for money while I am pursuing something completely new, because first of all there is no guarantee of success. Most of these fields, the more you get in to these kind of esoteric photography, the lesser the market there is, and the more people potentially there are who are doing it for fun and actually paying to do it. So on these trips that I run, everybody paid to be out there, it was their vacation. And so, to expect to be paid for something that most people are paying to do, I think it’s a very bad– it’s not a good expectation. It’s not appropriate.

Steve: Okay.

Eric: So, you know, this is kind of the hardest area, I think, to make money, and, you know this kind of adventure travel photography. And a lot of people go about it in a sort of round-about way. You know, they become educators, they lead trips. One of the biggest pitfalls, I think in this area is like is going into the dive industry, you know people– if you want to be an underwater photographer, people are “I’m going to go teach diving so I can be under water all the time.” But it turns out that if you go teach diving, you don’t get paid very much, and you don’t get to shoot, you are teaching diving, you are in the water training people and you know, holding people’s hands all the time.

And I just think it’s really hard to go through these industries, you know, to try to– you know, you just like, put blinders on, and like, put your head down and kind of push your way through this industry. So I like to think about ways to go around the existing industry, and you know, this is all sort of hand wavy, but you know, I mean the advice that I gave– that I have been giving to a lot of people who ask, especially young people who still have their whole lives ahead of them, you know, is to become generally educated.

Like make sure you are educated so that you have a lot of options, you know, and, I mean, for example, studying Computer science, Aeronautical engineering or Physics, or something technical, we’re not really studying Computers, you know, Computer science is really about problem solving, as are those other, you know, most technical fields, and I feel like that’s skill set let’s– if you can translate that skill set to another domain, then that you are just you are already ahead.

And so, in, you know, I think there are a lot of ways to make money out there, and you don’t have to just turn off what you used to do and start doing this new thing because it’s going to be very very painful. And so I’m a big fun of the technical industry especially, you know, web development. Some of these things you can do anywhere and make money to support this primary thing you do. And of course the risk is that you end up just making money and then you are like struggling on the side, and the [inaudible] [0:22:47] never takes off.

Steve: Yes.

Eric: And so there is definitely a trade off, and you have to take a leap at some point, and so you know, something that I recommended a lot is to develop an audience in the transition period. So, during this transition period in which you, maybe you have decided I can’t do this anymore what I’m doing for a living, you know I want to pursue this particular artistic endeavor, and I’m just going to go for it. Well, you know this is the age of internet, you can develop an audience, and I just, you know I’ve always recommended that people just publish constantly. You know, like have a goal and a routine and say every week, take what you did that week, collapse it into something presentable, you know, for this whatever your interest is, it could be, let’s say in photography let’s say its three images or one image, and write about it.

You know, write whatever you can, write a paragraph, a sentence, you know, two pages, and then share it, and develop a community online, and just do that for as long as you can. And this is essentially what I did to get into the industry. I just started writing about it and my work started to get noticed, and what happens is if you have aptitude for it, you know, if you are actually generating work that is valuable to other people, and you know this is where art is not– it doesn’t always work this way, but you’ll start getting noticed and you will start to develop commercial opportunities out of the work that you do.

Another hand, if you don’t do anything, if you just sit at home and you hold all your work and you are afraid to show it, nobody is going to notice you, unless you get really lucky. So, I think just getting your work out there, writing all the time, giving to the community at a very free way, you know, like just write about all of your challenges, there are other people who are trying to the same thing, they might be a little bit behind you, they are going to get a lot out of your journey. And the journey is really the important thing and you know I think, getting work out there like that is important. And you know, after a year, if your work hasn’t been noticed, then maybe you should be thinking about going about it another way, you know, like tweak a little bit but at least you are not kind of starting.

Steve: So let’s talk about that a little bit. Let’s say you’ve got good work, but just because you’ve got good work and you’ve put it out there, does it mean that anyone will be able to find it? So what are some ways that you could get people to actually find your work provided that it’s good?

Eric: I think the key is, I mean, there are a couple of ways I think you can do. One is to engage in a community for a long period of time, you know so nobody who just posts and then walks away actually ends up participating in the community. You know, you need to be someone that invests in a particular community. This doesn’t have to be online, this could be, you know, something local if it’s appropriate, and hold on a second, can you do that again because I need to close the door? My wife is laughing.

Steve: Yeah, go ahead, this is all edited, so don’t worry about it.

Eric: Okay hold on a second. She’s very happy, and laughs a lot on the phone. I don’t know this form of happiness.

Steve: That’s good.

Eric: She’s in the other room on a conference call. Okay, sorry about that. Can we back up to the last question?

Steve: Jeez! We were talking about how to get early traffic to your site.

Eric: All right. Okay. So we were talking about getting early traffic. Okay.

Steve: Yeah, you can just start wherever.

Eric: Yeah. Okay, okay. Yeah, so I think, I mean, my perspective is that you should engage in a particular community and actually participate in the community. So you know, you can reach out these days to basically anyone online, and if you are putting out work that is really interesting to a particular audience, people are going to re-share it. And, this might sound like, I’m putting a lot of emphasis on social network and stuff, and in some ways I am, and I think it’s certainly can’t hurt to be really involved in a community and engage in the community.

So this doesn’t mean that you post a picture and then walk away, you need to post pictures and you follow up with people who are engaging with you, and you become a notable person in that particular industry, or a knowledgeable person, you know, someone– when that person goes off and has a commercial opportunity related to say underwater photography, they might say, “Oh! Yeah! I remember this guy, he posted the screen pictures, he answered my questions, let’s go back to him and see if he’s available for work.”

Steve: Yeah. I’m just– I’m listening to everything you are saying right now, and it’s pretty much exactly how I started my blog. I– let’s see I started in 2009 and for that first year, I was just writing, and I don’t think anyone was really reading…

Eric: [Laughing] Right.

Steve: And it was only after a while something happened after the two year mark, and I started getting noticed, and then all of a sudden all these opportunities started coming in, but it was a long drawn out process where I wasn’t sure what the heck was going to happen.

Eric: Right.

Steve: How soon did Webpixel get traction or with your work that when you are posting photos online?

Eric: Webpixel, I mean, it was slow because digital cameras were not being taken seriously at the time, so you know at the time people who were interested would engage, but most people especially professionals weren’t, they weren’t considering digital as being a valid option for professional work. And in many ways I think they were right at the time, I gave a lot of talks about this stuff, this a thing that, you know any emerging industry, there only going to be a few experts in the beginning, and so they are going to call on you to come talk about what you do.

And I would go up and talk about digital imaging, and there would be, you know the old school guys in the back, I could see him sitting there with their arms crossed, and I just knew that they were going to challenge me, you know and ask questions and be upset about things. And the trick really was to not to be an ass hole back, you know the trick was to be– to talk about the potential of this, regardless of the current environment, you know. So it’s really about, I’m not trying to change anything you are doing, what I’m saying is that you should be aware that this exists, and that its moving forward very quickly and it could be really interesting.

So this is little off topic I guess, but in general I think, you know having a consistent voice when you are talking, that’s polite, professional and educational is important, which can be very– it can be challenging to stay that way, I have– I certainly have challenges in that area.

Steve: You know, so one thing that, so I’ve had a couple of people email me regarding, you know they have these photos that they want to sell, and so they kind of throw up an online store and they put their prints on there, but then no one buys. And it’s mainly because they don’t have their own voice, they don’t have a presence out there, and they don’t have a following. But in terms of just kind of making it as an artist, is there some sort of element of salesmanship? Did you ever feel like you were, you know salesman? Did you try to sell your own prints at any point and basically how did you keep afloat, you know did you try to sell your own works at the time?

Eric: I found that balance to be a difficult one to ride for me because I don’t really want to market my work you know, and that sort of I think the people that I know who are most successful as artists if they are 100% working in their art form you have to be a salesman, and you know and you have to go out and find those opportunities. And you know the trick is finding opportunities that don’t compromise your work and in photography unless you really love shooting something that’s commercials, and I certainly have friends who love the work that they do and the work happens to be commercially viable you know without much of a stretch in terms of imagination, but some people love to do things that are just not that interesting from a commercial standpoint.

Steve: Sure.

Eric: And that’s where it gets really hard and you know that’s why I talked about going around the industry a little bit. You know I think for me personally I am more fulfilled by doing what I want to do as a photographer say half time, than I would be if I struggled and if I were a photographer a 100% of the time and I had to do a lot of work I didn’t want to.

Steve: Okay, So you kept both worlds separate then?

Eric: Yeah, but the other world was publishing in the same industry and kind of expeditions and you know it was really– it was providing value for my audience in a different way than selling an image to them you know. So there are different ways to be valuable as an artist and one is in this way that is not like a drift sale here of the picture you’ve taken.

Steve: Okay.

Eric: I think I very much could have gone in that direction you know if I decided that I wanted to be a gallery artist or to be focused on stock photography or something, I could have changed the sort of work that I presented to the world, and instead of sharing stories, you know in some way that was interesting to people which might result in something which licenses you know some print sales and you know two more people signing up for the next expedition you know.

I could have just gone that route and tried to sell imagery, but I think I would have had to change the way that I shot and you know when I have done image sales. The pictures that sell are not my favorite images. They almost are never my favorite images, but they sell and so you know I might do an addition and just keep at a gallery or something. And I do this very infrequently you know, I have my work is only in very few physical locations and that’s 100% because I don’t have the time to manage that side of the business.

Steve: Okay and so it sounds like by keeping everything kind of separate in a way your art is your art, and you have the freedom to do whatever you want with it, and the way you make money it still related to your art, but it’s kind of more tangential, is that…

Eric: Yeah, I mean that just happens to be the way that I did it.

Steve: Okay.

Eric: You know I certainly have friends who have managed to be 100% artists, and you know I mean that’s almost impossible unless you are very lucky. You do have to run a business and you know I certainly know a lot of people who are photographers, but really what they are doing is running a small business, and they have to be smart about that. You know these are the guys after a one year licenses expires for a picture, you know they are on the phone with the company saying would you like to renew or would you like to take your picture down, take the picture down you know.

Steve: I see.

Eric: Most people don’t do that, they are not organized enough, they don’t have an office messenger or someone they can work with to do it, if they are not doing it themselves. A lot of artists just don’t think that way which is probably why they are artists you know and I just happen to be in the middle, you know I really think of myself as being– I’m usually considered to be an artist by technical people, and I’m considered to be a technologists by artists you know.

Steve: Actually that’s true, I’m an engineer, I consider you an artist, that’s true. So hey, let’s talk a little bit about community, so what were some of the things that you did to kind of foster this community of underwater photography or was it– did it just come naturally? Did you not even have to try that hard?

Eric: I mean I think I didn’t really have to try that hard, but only because I was producing a ton of content all the time

Steve: Okay.

Eric: So one of the things that I did for example in the industry was I went to the big industry shows, and I covered them exhaustively you know. I talked about every single product that was relevant for the particular audience, and I made relationships with the people who ran all those companies. And so I went back year after year and pretty soon everybody knew me at these conferences, and I was sort of cemented: I was in the industry without having to push my way through the industry.

Steve: I see.

Eric: You know I sort of just– I was a conduit from these companies to keep people who might be interested in their products and– but only because I was really interested in the industry. You know I was fascinated by all the gear, there was a huge shift happening in general photography between– you know from film to digital, and a lot of the established players out there were having a hard time in the transition.

The one that transitioned– everyone transitioned eventually, but you know, some transitioned earlier, and I just happen to be there as the guy who knew how to do it, and had all the technical information, but wasn’t you know shooting a 100% of the time necessarily. I wasn’t a threat you know.

Steve: Sure.

Eric: And this community is really friendly anyway, and everybody you know it’s a great, I mean underwater imagining world is fantastic you know, for the most part.

Steve: And you reviewed all these things and wrote these articles just for fun, right? Because it was something you were genuinely interested in.

Eric: I mean I think I would have done it either way, what I ended up doing was opening up advertising on the form, and it wasn’t advertising in that, that you know we didn’t– first of all there was no advertising infrastructure available at the time, so it’s not like I could use you know adsense or something from Google and just open it up. And even if I had it wouldn’t have been that useful because it turns up if you open it up for certain topics like, let’s say you write an article about photographing sharks, so the ads that come are about shark fishing you know because that’s a big industry, and people pay a lot of money to kill them or shark fins or whatever.

Steve: Which totally goes against what you believe in.

Eric: Yeah, so I felt we had a police and you know band companies in the system and so we– what worked really well is working with all of these small companies who were supporting this niche industry you know, who weren’t necessarily doing advertising anyway, but you know this was the ultimate targeted audience for those companies.

So if you go to Webpixel now and you look at the group of sponsors on the right hand side in the column, they are mostly smaller companies generating very specific tools for this audience and we also– and we kept the advertising really cheap because you know, I didn’t have the staff to, like a sales force going out looking for advertising and taking money from whoever would give it to us. You know we were very selective in who we accept as advertisers, because we didn’t want a giant player who could discount and run everyone else out of business.

Steve: Sure.

Eric: We didn’t want to necessarily support them you know explicitly on the site because that would have caused a lot of problems in the greater community. And so the advertising income at least ran he site you know, it enabled me to spend time you know technically in upgrading service like just doing whatever was required to keep the site up, hiring the coders eventually to help do the things that I didn’t have time to do. And so at least I wasn’t pouring money into running a website.

Steve: Sure. Okay and to all the artists out there who are listening, the people that want to sell their own prints and what not, what sort of advice would you give them today if they’re starting out? You already mentioned putting out content on a regular basis. You also mentioned– I don’t know if I’m saying this correctly, but don’t necessarily focus on selling your work. Find other ways to just get by why you kind of enjoy the art that you’re producing. Do you have any other sort of advice to give them?

Eric: Yeah. I think– and these are just the ways that I went about it personally, but of course there are a lot of different ways to do it. I’ve enjoyed doing some of these mainstream articles. They are usually articles that have– potentially have interesting content, but a terrible headline, like a buzz feed type headline.

Steve: I hate those.

Eric: Those headlines are terrible and I almost never click through. Unfortunately I have participated in producing the content for some of those stories, and what I found is that it’s not a particular picture that anyone wants; it’s the story around the picture that people want. So you can get a story to go viral or to be published, and you can get people to pay you for it if you actually have a story. If you went out in your backyard and took a picture of a bird, that maybe a really beautiful picture, but there is no story around it.

So the stories that I produce tend to be around some event or some series of weird things that happen that just led to a strange picture being taken. This happens a lot with sharks– people like sharks, so it’s pretty easy to get articles published. Some of these strange scripts I’ve done like volcano stuff, like volcanoes are just unusual, they look fake, they are really weird, and if you combine them with something like drones which are new and kind of– it looks like a sci-fi moment. That story is fascinating for people.

So if you do a trip like that, maybe you can piggy back on another trip, but a lot of these weird stuff is centered around access. So I think really it comes down to community, like if you don’t know– if you’re not a part of the community people don’t trust you. You are not going to have access to any of this stuff. So it’s really building your brand, your personal brand overtime and not doing things to compromise the integrity of that brand. That’s really important over time.

Steve: And then it’s a long term– so one thing I always emphasize is that it’s a long term process. You should be willing to invest at least three to five years I would say on developing your brand in order to bear the fruit later on.

Eric: Yeah, I agree. And I’ve seen some of my friends have done it really successfully. I’ve always been impressed by the people who actually go do it. Most of them I’ve found have some support network under them. They’ve saved enough for a couple of years, or they are married to someone who helps support them during that time, or there are still working and they are doing in all their spare time. Most of them have something that allows them to do– to pursue their artistic endeavors without this insane burden that would come with not being able to…

Steve: To pay the bills.

Eric: Pay your rent or something.

Steve: For sure.

Eric: On the other hand I think if you’re too comfortable, for many people it’s hard to produce interesting work. Many artists I know draw inspiration out of suffering or– you need an experience that motivates you. For me it happened to be going under water, from going to really remote places and seeing things that are really unusual. Everybody has that thing that motivates them, and it’s very rarely sitting in comfort on your backyard, by your pool or something.

Steve: That’s true. Actually that’s a good linden to your most recent project on Skypixel.org. What is SkyPixel all about, and is this your way of producing kind of like the next Webpixel for aerial photography?

Eric: Yeah. SkyPixel started in the very same way that WebPixel started in that I was figuring things out and spending a ton of time combing forums online to get some piece of information that was critical for me. I’ve just posted and it’s a Tumblr site. It’s very simple, and the goal was always to develop it into something else, something that was a community site for aerial images. And what happened was I ended up going to DJI. The aerial pursuit kind of threw me into the industry in a much larger way.

And then I talked to them about it, I think leaving the site up is fine. I’ve been posting to it constantly, but it’s very hard for me to develop it as a commercial enterprise while I’m working at DJI. So it’s a little bit of a conflict of interest there.

Steve: How did you get the position at DJI? Had you already established yourself as an authority in the aerial imaging space?

Eric: Yeah. I would say that I did establish myself as an authority, whether I actually was one at the time it’s different, because what happened was that there was an established long time hobby community doing– flying fixed wing RC aircraft, and then doing quadcopters, kind of building them from kits for many years before. I have been watching that space for a long time, but I wasn’t– I didn’t participate in the space. I was sort of a silent observer.

And then when things started becoming easier, a little bit easier I still had to build some stuff, but when it become actually feasible to put a camera in the air without spending most of your time trying to put the camera in the air, when it became a useful tool for photographers I jumped all in, and I’ve been waiting for a way to put the cameras in the air for many, many years. And so what happened was because I had come from the photography world and I was already established as a content producer, I wrote an article for Auto Photographer.

The magazines were really interested in the possibilities, and it wasn’t going to be someone from the hobby world because there are not in the photography world, and there are not necessarily out shooting interesting content. Some of them are certainly, but I became an authority only because I managed to kind of link the…

Steve: The two worlds.

Eric: That technical world and the photography world and in fact I was challenged online by it. These– in the hobby forums people would ask, “Where were you five years ago?” And I would just say, “I was in the field producing content. Where were you?” And I was very straightforward about it. I just said, “I think the intersection between our worlds is temporary and forced, and I expect for aerial imagery to move out of hobby into the mainstream as set of tools.” And hobby will be hobby. It will be there. You’ll still be tinkering, it’s great. I think the hobby world is fantastic because people test a lot of concepts there. But I think this is a much bigger thing than hobby and it will move right past and separate itself.

I would say that I was only an expert and that I was very early in putting cameras up in the air from a creative stand point. And DJI found me because I was producing interesting work, and I was of course posting about all the stuff that I was doing. And then I had a lucky introduction through the chairman of the board who is like a friends with– a friend of the family. Sort of a lot of different things pushed me in that direction. And that’s the thing I found is if you put thousands of hours into something, a lot of different forces are going to start pushing you into positions of expertise. And if you’re not putting that time in, if you want to be a photographer and you shoot one hour a week, you’re not going to make it. It’s just not going to happen, unless you get really lucky. Maybe there are people who manage to make that work.

Almost all of my spare time was spent tinkering in the garage during that time, and going out and flying all the time, developing the skill set necessary to not think technically when I’m in the field. And most of it is about overcoming the technical huddles, so that you can kind of direct your efforts creatively without struggling. And…

Steve: Right.

Eric: I think if you don’t put that time in, you can’t do it. It’s much harder.

Steve: I kind of have a selfish question for you here. You have a CS background, and it sounds like you’ve used those skills a lot over your career even though you we’re actually working at a tech firm. So my question for you is, for me right now I’m a little bit torn whether to go completely on my own, because my online endeavors have exceeded my day job. And one of the things that I’m struggling with is that if I were to leave, I wouldn’t not be able to develop hardware anymore. So do you struggle with that, with your software? And do you code anymore? Do you miss it?

Eric: Well, that’s a good question. It’s strange because I have ended up participating in a company that builds hardware. In the past I was software focused, and all about online web community. I don’t miss coding. I don’t miss it all. I think other people code really well. On the other hands, I think having the skill set has been really useful for just figuring out this, the technical parts of what I do. Because it’s just problem solving, and it’s not always straight forward. I think there have been some projects I have done that have brought me back in the coding, mostly scripting image processing stuff to allow me to build animations for example.

At Light Trail I was doing light field imaging and I what’s really in a product role there, but I did some coding on the side. I wrote a light field video player for example, because nobody else had the bandwidth to do it, and I could do it in a rough way that was the working prototype as a proof of concept. The computer science skills have been really useful for me in photography because everything is digital. Here’s a very basic example, storage is a huge nightmare, and this is something that I’m really passionate about. Storage backups, kind of maintaining the integrity of your work over many-many years is something that is beyond the scope of understating of most photographers.

Steve: Yes.

Eric: And so I feel like I get that for free, and it pisses me off. I’m very upset about it all the time because I feel like many photographers– especially if you’re going to the video world, you’re no longer the target audience for most consumer storage, but you’re not the target audience for enterprise storage, and nothing exists in the middle. And that’s kind of the space we live in. So I sort of get understanding of that for free with the technical background, and I feel sorry constantly for people who struggle with things like data. It’s not just a fun thing to have to deal with.

Steve: Yeah. Occasionally I’ll see a Facebook run pop by how you had to wait like three days for your volumes to sink up or something like that.

Eric: Yeah, yeah. There’s passion around that. I think there’s a company that I think to be in need.

Steve: Eric we’ve already been talking for quite a while, want to be respectful of your time. If anyone wants to check out your awesome work, where can they find you and where can they contact you?

Eric: Well, my main website these days is echengphoto.com. The same site you mentioned at the beginning. That’s E-C-H-E-N-G photo.com. Also if you’re interested in underwater photography, check out webpixel.com. I read about aerial imaging at skypixel.org, .com is now an aerial imaging sharing site that DJI does that I’m not really involved with, but it’s there as well. And I’m also really active on social media. I’m on Twitter as echeng. I’m on Facebook, I’m sort of everywhere.

Steve: Yeah, you are everywhere. Yes.

Eric: Yeah. I guess finally the site that I don’t share a lot, but I put a lot of my efforts into is my Vimeo site. So it’s vimeo.com/echeng. I do a lot of video work these days, it’s mostly experimental. But there are things like live broadcasts from [Inaudible] [00:50:41] and that was many-many months ago.

Steve: Yeah, yeah.

Eric: It led to things like this Good Morning America thing last week. So if you’re interested in kind of experimental use of video, that’s a good place to check out as well.

Steve: And you have your videos linked up on your sites too, right? Echeng Photo has a lot of videos on there as well, right?

Eric: Yeah, if you go to…

Steve: Yeah, okay.

Eric: If you go to echeng photo and click on video link, some of my work is there.

Steve: Okay. Well, Eric hey, it was great having you on the show, and finally I’m really happy we got a chance to connect. Thanks for coming on.

Eric: Yeah. Thanks so much for having me, and I’m easy to contact, so get in touch if you have anything you’re curious about.

Steve: Sounds good. Thanks Eric.

Eric: All right thank you.

Steve: All right. Hope you enjoyed that episode. I’ve known Eric for quite a while now and I really love his story. Basically he spent a couple of years working for the man, had an epiphany, and decide that he was going to take advantage of his life and do whatever the hell he want to do. And when I look back, he’s done some amazing things. From being a leading underwater photographer to now being the director of aerial imaging at a leading quadcopter company. It’s been awesome.

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Once again I just want to thank Bigcommerce for sponsoring this episode. Bigcommerce is one of the best shopping carts that I recommend, if you want to start your own online store without having to worry about anything technical. They’ve got an incredible theme store where you can choose from a wide variety of attractive store designs, so you don’t need to hire a designer. And they also offer integration with Ali Baba, so you can easily find products to sell online.

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Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information go to mywifequitherjob.com/contest, and if you are interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

Now before I begin I just want to give a quick a shout out to this episode’s sponsor Bigcommerce. Now Bigcommerce is a fully hosted shopping cart platform that allows you to set up your own online store in minutes. And as most of you probably know, I teach a class on how to start a profitable online store, and Bigcommerce is actually one of the shopping carts that I highly recommend in my class. Now here is what I like about Bigcommerce, unlike other competing platforms, Bigcommerce doesn’t really nickel and dime you with every little shopping cart feature. And when you sign up, you immediately have a fully featured and extremely powerful shopping cart at your disposal.

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Welcome to the, My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit her Job podcast. Today I’m thrilled to have Albert Lee on the show. And even if you’ve never had of Albert, chances are that you’ve used his app called My Fitness Pal. Now My Fitness Pal is an app that helps you lose weight by keeping track of your calories and watching what you eat. And together with his brother Mike, Albert recently sold My Fitness Pal for $475 million to Under Armour. Now what’s cool is that they pretty much bootstrapped the entire business from the ground up.

And Albert is actually someone who I’ve known for many years and we mainly catch up at kids’ birthday parties of all places. Now here is what is funny, whenever we meet up, we almost always talk about our respective businesses, and I distinctly remember this moment five years ago when we were chatting, and Albert with his usual laid back head bob was like, “You know Steve, this is going all right. We are getting some traction and we are starting to hire some people.” And it turns out that that was the understatement of the century.

It’s cool how My Fitness Pal has grown to a giant with over 70 million users and has helped people lose over 200 million pounds in weight. Now what I find especially cool about My Fitness Pal is that it’s a business run by two brothers, Mike and Albert. And I’m totally inspired myself by how they completely bootstrapped and sold a $475 million company. With that, welcome to the show Albert. How is it going today man?

Albert: It’s going great. Thanks for having me Steve.

Steve: It’s too bad we couldn’t have Mike on today, but perhaps you can tell us the story about the idea behind My Fitness Pal and why you guys decided to start it.

Albert: Sure. So actually the company was formed about 10 years ago. It seems like an eternity to be honest with you. But what had happened was my brother had taken a little bit of time off and he was getting prepared for his wedding. Him and wife were having a beach wedding in Mexico. So one of the things they wanted to do where they were like, “Hey, we got to get in shape for this wedding.” So they went to see a trainer, and the trainer had talked to them. He said, “Hey it’s great that you are here. It’s great that you are trying to be more active in working out, but if you really want to see results you need to actually watch what you eat as well, and here is the way to do it.”

He can kind of handed out this paper notebook and a little reference guide. It said, “Track everything that you eat. You can see the calorie counts on this guide and just keep it in this notebook and make sure that you stay at a certain level and you will be good.” Even though it was 10 years ago my brother kind of looked at that and said, “Wow, there got to be some kind of software. There has got to be a better solution than me literally carrying around this notebook everywhere I go.”

So he looked around. There was some websites out there, there were a couple of apps for like the Palm Treo for example which was actually where my brother worked, but nothing that really worked the way that he thought it should. And that was kind of the impetus for building the first product. It was just something where he said, “I think I could essentially build something better.”

So he took it upon himself to do it. Luckily he had a little bit of time at that point. Once again he wasn’t working, that allowed him to kind of get the product launched. But he actually ended up going back to work, and MFP sort of remained a little bit of a side project for him.

Steve: Was the intention when he created the app, was it to actually turn out to be something huge, or was it more for just personal reasons in the beginning?

Albert: It was mostly for personal reasons. My brother has got a little bit of a strange story; probably like many people I think who end up starting businesses. He had started programming when we were both– when he was 10 years old. So when we were pretty little. My mom had actually gone back to school to get a degree in Computer science and she would drag him along to the classes, and he ended up learning the program that way. And he had written a lot of software during kind of junior high and high school and got a little bit burned out.

So when he went to college he didn’t major in any engineering discipline or didn’t major in computer science. He became a consultant, he started working in marketing. He ended up getting into medical school and declined to go. It was sort of like, I think like many people just kind of thinking, “Wow! There is got to be something else out there for me that I’d be really passionate about.” He kind of woke up one day and said, “I want to start writing software again.” And I think that kind of dog-tailed with time when he started thinking about the idea for out of picking around.

So it was really a perfect project for him to think about from a personal standpoint, chances like getting back into writing code and actually building something. I think he obviously also thought about like, “Hey, I think there is an opportunity here. I think there is something really big that can become of this.” But I don’t think that was like the driver. That wasn’t where the passion came from. It was really because he just felt like this was a problem that he wanted to solve.

Steve: And as the co-founder, when did you actually step in with MFP?

Albert: So Mike was working on the product for a couple of years really like– once again it was kind of this like couple of times a quarter, on weekends, here and there. He actually wasn’t really doing a lot of active development, but the product was still growing pretty slowly. There was a very small, but very active and loyal community of users. And right around 2008, the end– sorry, towards the end of 2008, it gotten to the point where Mike really thought like, “Hey, I think there is something here.”

The iPhone had come out not that long before that and the app store had launched, and some of the more popular apps early on things in the health and fitness area. So that was when he came and talked to me. He said, “I think there is a much bigger opportunity here. And unless we really dedicate ourselves to this thing, I don’t know if it’s going to happen.” So he convinced me to quit my job. People are always like, “Well how did your brother ask you to quit your job?” It’s like, “He didn’t really ask me. He just kind of told me to quit.” He said, “Albert you got to quit and work out this thing with me.” So that’s when we started working on it. So that was a little over six years ago.

Steve: So you guys didn’t take a salary, right?

Albert: No.

Steve: I vaguely remember.

Albert: So the business was being monetized through advertising. There wasn’t a ton of revenue there. Yeah, there was some, but we very deliberately decided that we weren’t going to take any money out of the business. In fact we obviously invested more at that point. But anything that we made from a revenue standpoint we plowed it into getting help or development or design or anything else that we thought would help the business move forward. So it was like, well we were two years before we actually took our first sort of pay check out of the company.

Steve: Actually in my mind My Fitness Pal is actually a pretty ambitious project as there is just tons of weight loss and fitness apps out there. So what would say makes the app truly unique, and how has MFP managed to help so many people?

Albert: Well there is a couple of things. So one is we have I think done a really terrific job in accumulating this amazing data set around nutrition, and that’s a big part of what makes My Fitness Pal easy to use– is the fact that when you come into the app, when you try to launch something that you need that we generally have that thing in our database. If we don’t, that means that you got to like go out and look for the information and perhaps try to input it all manually and that’s a little bit of friction.

So a big part of how we think about the product is it’s hard enough to ask people to change their behavior. So if you come in here and you say, “Hey I want to lose weight.” That means you got to start doing things differently in your life. Well the software and the service and the tools that we provide can’t get in the way of that. If we are adding more friction on top of that then your chances of succeeding goes down dramatically.

So getting all that data, really focusing on the user experience, the product and taking away all these really steps to make it something that you can do four, five times a day every single day for an extended period of time, removing all those barriers, I think was a big factor and just making it easy enough that people unmask and start using.

Steve: So you have all sorts of foods. For example if I looked at monkey brain, there would be something in there on the app too, and I would know instantly how many calories were in there.

Albert: Yeah. Monkey brains is probably fairly choleric, but I’m just guessing.

Steve: So one of the things I love about My Fitness Pal is that it’s a feel good company. I’m sure you got many incredible stories from people who you’ve helped in the past. I just thought it would be kind of cool if you could care to share a quick success story.

Albert: Sure. It’s funny because I think people get super excited to hear the story of the person who was like in really dire health, maybe they were incredibly overweight or obese and they lost a dramatic amount of weight. That’s like a super common story that people get excited about. But I think sometimes what we get really excited about; we obviously get excited about those stories also. But sometimes what we get excited about is just hearing about things that kind of fall under the category of non-scale victories, so that’s something that our members talk about a lot.

And so an example of that is like we got a letter from a woman and she just talked about how she’d always kind of struggled with weight and her health and never really found something that had truly worked for her, that really resonated with her in terms of helping her understand how to govern her behavior, and how to eat and be more active. But My Fitness Pal just worked and she knew that it was working because she got up from a chair– from sitting down and she didn’t have to use her hands to push up, and it was the first time that she had done that in like 20 years.

Steve: Wow!

Albert: And so to her that was like this really powerful moment. This non-scale victory, like I got up. I didn’t need even to assist myself. She literally took the time to write us about just that moment. I think that kind of stuff is incredibly powerful, it’s super motivating.

Steve: That’s amazing. If I got stories like that, that would just make me really happy. I bet you got a ton of those too.

Albert: Yeah. That’s really what keeps you going. I think– I’m sure people in your audience can understand there is so many sort of highs and lows in like building your business. Even when things are going great you are just stressed out. There is always something that you are worried about. And to be able to hear these stories from your customers in terms of how you are helping change something for them, how you are improving anything for them is just– it really forces the fact that all the work that you are doing is valuable, and it really helps you to kind of stay focused.

Steve: So let’s go back to kind of the very beginning of MFP. So first of all, how did two brothers manage to fund this company without a team of engineers? Did your brother actually write all the code for the first app?

Albert: He did. So my brother was kind of the primary developer and when I came on, one of the big things that I started working on was getting an iPhone app development. So what we decided to do was we both put in some money, plus we took the revenue that we were making and we hired this guy to work for us and he was like working for us for like two days a week. He actually still works for the company now. And his only job was to work on the iPhone app and I worked with him on that while my brother was working on the website and kind of [inaudible] [0:15:05] for structure.

Steve: And here is the question that’s always kind of been on my mind. You guys kind of bootstrapped the whole operation. If you can go back in time, would you have actually chosen to get funding early on to kind of increase the growth rate?

Albert: No. I don’t think that there are a ton of things in particular that we could have done early on had we had money that would have really changed the trajectory or the outcome of the business.

Steve: Interesting.

Albert: I think one of the things that’s kind of magical about our product is we don’t pay any money to acquire users. So from a marketing standpoint we never pay for installs and that’s a very rare thing to get to. We actually have 80 plus million users now, and we haven’t had to actually pay to get them. So it’s really been dependent on this kind of fly wheel of people coming in, using the product, loving it, going out, and telling others. So it’s been very product driven.

And so once again I don’t know that at those early stages having money, a lot of more money would have changed those kind of things. It also actually– the big thing is you get– the longer you can wait. And I think it’s a delicate game because you do want to be cognizant of course starting out the business when you could be doing better if you had more capital. But certainly if you can wait and you can really grow things, before you decide to take any institutional money it really changes the terms of what you do that, and that’s super valuable.

Steve: True. So you are saying that you never ran any Facebook ads, any paper click ads, or any sort of burner ads on any other site to get the word out?

Albert: Yeah, we didn’t do that. We did– well I shouldn’t say that. So like super early on, before I even got involved with the company, my brother did run like a little bit of PPC advertising on Google. But that was literally like in the $50 a month kind of range. And then sometime last year we did a little bit of experimentation as we were expanding internationally, but I wouldn’t guess that we spent more than five grand or something. So it’s really inconsequential in terms of the size and scale of business.

Steve: So that’s really interesting. So what was the early strategy for getting people to use the app? And so how did you get your first 100 users.

Albert: Well the first 100 users was absolutely kind of friends and family. And I think the good thing is we weren’t necessarily like reinventing the wheel at that point. We were taking a solution that had been around for probably like 50 years, like this kind of notion of keeping a food journal and tracking your activities. Dieticians and nutritionists have been recommending that forever. But we’ve provided a digital version of it, and made it a little bit more convenient and used the benefits of technology to make it easier for people.

So things like, hey you remember stuff that you eat most commonly that makes it easy to input it again in the future. Just like really basic stuff like that and I think that was enough to get just friends and other people out there to start using the product. And once you kind of get hooked into certain communities. So like one community that really engaged with our product early on were body builders. It sounds really funny because was like, “Oh my gosh. My Fitness Pal is like weight loss community.”

And that’s not necessarily how we see ourselves and that actually wasn’t really the demographic that was highly active in the app early on. It was these people who really wanted to track their nutrition down to a very detailed level like how many grams of protein am I consuming everyday because they are literally competing in competitions. And those guys became very vocal proponents of the product, and that helped because you see somebody at the gym and that person is like totally ripped and they are saying, “Hey I’m using My Fitness Pal.” Just the word of mouth power there is actually really, really amazing.

Steve: So were you guys apart of that community? Like how did you get the word out about the app to that community in the first place? I don’t remember you body building Albert.

Albert: Yeah. If the listeners could see me they’d be like, “Wait a second here. What is this guy talking about? ”We weren’t, but there certainly were a lot of places where you could actually go and say, “Hey, we’ve got a solution around some of this.” And the thing is like because there wasn’t anything out there people were really looking for this. We did a little bit of work on SEO early on, and thankfully that kind of paid off. We did some stuff, like we made it easy for people to have these weight loss stickers. And those things obviously were put into all sorts of forms and stamped everywhere and people caught up. And like once again it was like the really active users found it, and those people became really foundation of this community that started to get built around the product.

I think like one piece of advice that I’ve always given to people because they’ve asked a lot about, “Wow you got these really robust and highly engaged community of people. They are talking to each other; they are giving each other advice, and support, and knowledge. How did you guys foster that?” And I think one of the important things to consider is like, everyone wants that to be this very passive thing. But the reality is you have to invest super heavily in that. And it’s like basic things.

So like things that we did that other people weren’t doing at the time was we didn’t have like just a link on our site that said community and if you clicked on that link it went to the forums. We actually intentionally surfaced foreign content right into the application on its homepage, so that even if you were interested necessarily in like going and visiting community, like you would just see people talking to each other in there, and that would lure a lot of people in. And then the other thing that we did really early on is we had people who would post.

Like there is always those people who go in the forums, or kind of in the ghost town because there is not enough people yet to post, we made sure that we answered every post even if we didn’t have an answer. We just wanted people to know that if you post in here, somebody is going to post back. And eventually as more users get involved, they start becoming the ones that really take over and start answering other people’s questions, and it does have sort of take on a life of its own, but you have to be just super deliberate and very meticulous about going through that step early on. I’m glad that we did that.

Steve: Let’s talk about starting a forum because I know you need a lot of traffic to make sure that it doesn’t seem like a ghost town. And it’s like a chicken and egg problem, right?

Albert: Mm-hmm.

Steve: So did you guys have that forum early on in the product, or was it something introduced later on once you already had an established customer base?

Albert: It was something like initially used to actually asking for. I think there may be a dynamic here with regards to the space that we are in. It’s kind of digital health and fitness because you know its sort of– in general health and fitness people have more questions and answers.

Steve: Sure.

Albert: There is just so many things like, “If I exercise and I burn more calories, how am I supposed to like eat back those calories? Just like really basic stuff. So we constantly get like emails from people who are like, “Hey, I’d love to be able to just like talk to other members and ask them questions.” So that’s like– it was one of the first things that we ended up doing. Again, even when you do that you can’t just hope that other members are going answer any of those questions, you just got to go in there and do it yourself.

Steve: So did you guys create multiple personas in the beginning to make it seem like it was more filled out.

Albert: We did, we did. Actually Mike answered a lot on himself. He has thousands of posts in the forums to his credit, and people didn’t mind. I think they were happy that somebody was out there trying to get their answers for them.

Steve: And at time point Mike obviously was a consumer of the product and he probably had great results as well. And so he was showing that off in the forums as well, right?

Albert: I don’t know…

[Crosstalk]

Steve: I’ve actually never met your brother, but I picture this guy who is super fit now.

Albert: I think that’s a very powerful sort of concept. I think when you look at a lot of really successful products and kind of fitness and weight loss phase, certainly providing inspiration to customers can be very motivating. And that’s why like if you go on [inaudible] [0:24:16] you are going to see a lot of lazy success stories. Everyone that you see is going to be just like incredibly thin and they are going to look like what you want to look like.

But I do think that there is some level within our product that is very approachable because that isn’t necessarily what you see when you come and you use our service. One thing I think we recognize is just like everybody has challenges, even people who are really fit. It’s like we just wanted to make this very inviting and very open for people.

Steve: It sounds like to me at least from what you’ve told me so far that word of mouth was just so crucial in the growth of your app. And so what was your social strategy? How did you kind of foster the word of mouth about your app? Now you mentioned that you had– on the front of the app, you’ve exposed a lot of the conversations. What are some of the other things that you did?

Albert: Well we tried to– as I’m sure many people would have, we tried to utilize social media and outlets like Facebook and Twitter to try to increase the virality. But actually it didn’t work very well. And I think one of the reasons is that there is a little of a strange dynamic where– in the world that we are in, where people are very happy to talk to other people about something that they are doing that’s helping their health, but they want to sort of like prevent their audience first. So it isn’t thing where like I broadcast to everybody, “Hey, I am doing this and this is great.”

It’s more of like, hey I talked to that guy who sits next to me at work because like we’ve got a good relationship and I said like I started saying like hey I’m trying this new thing and it’s pretty cool. And so like I think the traditional methods work very effective in creating these viral loops, but, and this is something that unfortunately a lot of– how easy it is for other people to replicate, but the bigger focus for us is like, just to make people successful. If they go out, they use our product for the first week, maybe they shed a few pounds in that week, they are just going very quickly to become evangelists.

And that was the technique that we sort right away. And the funny part is with something like this is even for somebody who for example isn’t really naturally predisposed to want to go out there and talk about the product, they would lose so much weight for example, people will start haunting them about it. It’s like dude, you look awesome, how the hell are you doing this? And they’ll be like well, kind of shyly like well I started using this product and I’m like this [inaudible] [0:26:57] that kind of endorsement is just like super powerful. So, I’d like to say it was like this incredibly deliberate strategy, but I think the real strategy was make sure that people succeed with the product, do everything we can to make sure that they get through that first week, and if they do they are going to start talking about it.

Steve: Wow! Okay, so when people were bragging about it would they be posting this on the forums or would they post it on Facebook? Where was most of the activity?

Albert: Yeah. I think you know people would certainly love posting in forums because there is a community there that they know will be very welcoming to their stories, there’s a lot of people who post on Facebook now, we have a very-very active Facebook page, and now for example that’s the way the community comes and kind of engages with us and it engages with other community members. People are using Instagram a lot now.

Steve: Yeah.

Albert: And so they can view kind of hashtag [inaudible] [0:27:57] you’ll see like people just taking pictures of their– what they are eating, or their success or they’ll take a picture– and they take a picture with like an inspirational statement or something like that. So that’s like we have a lot of other conversations happening, there is also Reddit forum, that’s pretty big.

Steve: Okay.

Albert: That tends to get a lot of conversations going on.

Steve: So what I always kind of curious about was that giving out My Fitness Pal is actually a free App, how did it actually generate revenue earlier on? Was it just primarily advertising?

Albert: Yeah. And it’s still primarily advertising.

Steve: Interesting. Okay.

Albert: And so that’s– that was a tough part in the beginning because obviously it was harder to scale revenue, because you hadn’t just generated a tremendous amount of usage to create any significant amount of revenue, but I think the way that we looked at the business earlier on was, this is a service that gets better when more people are using it. We get more data, our community becomes more richer and more powerful, we have people who create more social connections in our service, and that’s really valuable, and it allows us to do bigger and better partnerships. And so we highly deliberately do not pursue other revenue opportunities like creating a subscription service for example, which was pretty popular amongst other companies that we recognize.

Steve: Right.

Albert: And entirely focused on our growth, and I think that was a horrible thing to do as a bootstrapped business, because you always felt sort of the pain of not being able to do some– you know hire engineers or do things that you wanted. But I think being forward looking I think has greatly contributed to our ability to get the skill that we did end up getting to and really, you know that led to the outcome, selling the company recently.

So, I think that’s like kind of my advice to somebody out there whose bootstrapping is like– it’s hard because I think, you have great discipline, you’re thinking really wisely about like how you are spending your money, how you’re generating more revenue access the fuel for your company. But being able to marry that with the long term view and sort of vision and mission for what you are trying to create, could be in a neighborhood for [inaudible] [0:30:31] even greater heights of success.

Steve: You know what’s interesting is I have a lot of experience in the advertising space, and it’s actually not a set-it-and-forget-it type of thing if you actually want to make significant money, so were you taking private placements or was it just automated services that filled up the ads for you?

Albert: We were– we didn’t have a lot of time to do private placements, and so we didn’t do very much of that, we did a little bit of it. But I think like you said even under– even in terms of like working with partners like adsense and Google obviously we’ve worked with like hundreds of different ad networks over time, like we’ve spent a lot of effort trying to optimize that, and there were huge dividends to be paid out and I’m sure like what’s to get explained, that’s something that is a great revelation to your audience, but like we– whether it was like trying to figure out something like day parting things like we spend probably a significant amount of time doing that and every time we’ve figured something out it ended up being really-really worth it.

Steve: Okay. So, you talked about money and that sort of thing, so when did you guys actually decide to take on your first hire?

Albert: So, we did– the way that it ended up working out is we had like just enough money to pay this guy who used to work for my brother who is a developer two days a week. So he was like the first hire, he worked for us like two days a week, and that’s all we could really afford. But literally like as it revenue grew it’s like hey I think we can pay one more day a week and he had another consulting gig that he was doing that he liked a lot less than working with us. And so every time we had a little bit more money and we were able to do that, he ended up kind of shifting one day until finally he was our first full time guy.

Steve: Okay. And then once you kind of had this space and you had the iPhone app, how did your investments in the business kind of evolve over time?

Albert: Well it was– we kept looking at growth opportunities, so we had the iPhone app, about I want to say seven or eight months offer that, we launched the android. That was another huge propellant for growth, I mean that was actually pretty early on in android, and so when we ended up going on there, we already had a disc [ph] track record on IOS, plus talking to the folks at Google, they were like, yeah we would love to really promote you guys and that gave us a huge amount of promotion earlier on and that helped a lot.

Steve: Did you guys do anything special to make the apps more visible on like iTunes, or in the play store?

Albert: Yes. So, one thing that I think at that time and I still think it’s really important that people potentially take for granted is the app description. And so, we actually tested a lot of apps descriptions and that was something like I don’t think people were doing at that time, and we found out that we were like 10 times better than the ones out there.

Steve: Interesting. Okay, so you guys are split testing description, what else? The titles?

Albert: Yeah. We are doing– we are, I think you get, the audience can see even today the name of our app is not My Fitness Pal, I think these days it’s like a lot more common for people to label their products in that way, but at that point like we were like the only people doing that. And I think it mattered in terms of kind of app stores, SEO but I think that iTunes was kind of search [inaudible] [0:34:07] and what not incredibly refined at that point. And I think we just had– I think even now you can see if you type like M-Y or something in search for iTunes like we are going to pop up the first thing, so we did do a lot of experimentation around that.

Steve: What about soliciting reviews? Did you guys have a strategy for that?

Albert: We didn’t, I think luckily for us when we really launched we– and this is different from a lot of people who ended up going into mobiles, like we had a website, we had a web community who loved us. And so as soon as we ended up getting our app in there, like our existing users went in there and they were like, we love this service, and so we’ve never really had to do anything there.

Steve: Okay. So would you– if you were to do it all over again would you go that same route of developing an audience first, and then launching an app or would you have just launched the app first?

Albert: I think it’s a luxury, not something like I think it’s like a very necessarily like a smart deliberate strategy, I think getting– if you can get yourself up there it really helps. I think people absolutely believe that it’s this incredible self-fulfilling prophecy like if you are the number one health and fitness app, and you are top 100 app in iTunes, that might– you’re just getting– continually getting tons of downloads because you are there on app, I think that is a little bit of a fallacy. I think what we see is yes there are some people who are downloading your app just because you are highly ranked, but a lot of it is really like still dependent on like do you have a good product?

You need to have a great product to really stick there and once again many of the people that are finding our product, even now are still finding us through the word of mouth, not because they went to the app store and just happened to see it there.

Steve: I can actually vouch for that in just running this podcast. Well it helps to actually be in that top of the ranks on iTunes, I’ve been– I feel like I’ve been generating most of the traffic just through building an audience on my website, and then pointing them over to the podcast, so I can totally vouch for what you just said. So let’s just briefly talk about the acquisition. Why did you choose to get acquired as opposed to remaining an independent company?

Albert: The is a lot of different factors, I mean I think for us one thing that is would be a piece of advice that we would give to anyone starting a business is you really focus in the beginning like getting your product, building it, getting it out there, but pretty soon after that you’ve– you really want to start thinking about like what kind of company you are trying to build, like what are you really trying to achieve? Like what is the mission? Like why do we exist?

Why is this product necessary? And so we’ve been very strong in mission driven in our company, and our goal is to really make it easy to be healthy, and so that becomes something that can be a very important lens for you as you’re looking like every other thing you do in the future, writing, responding or whatever. And as part of the acquisition it also became a really important thing which is like, this is going to help us achieve our mission.

And I think on a first level we felt like wow! With the support of Under Armour, their amazing products, their incredible brand, their amazing marketing capabilities, like that we would be able to kind of expand and reach areas that would be very difficult [inaudible] [0:37:31] potentially as an independent company, and then we obviously thought about a lot other things I can talk about like economically it’s just something that’s going to work out well for an investor, it’s something that’s going to work out well for our employees and for us. What does the market look like right now?

What are the dynamics, there’s a ton of competition out there, I don’t think we were afraid of that, our business was incredibly successful and I think we obviously believed even as an independent that we can continue to be really successful, but you just try to weigh all the different factors, you know there are risks out there and what– like you know we looked at working with Under, we just felt like well, these guys are people who can really help us build something amazing, and that made it kind of easy.

Steve: So let me ask you this, let’s say you guys chose not to get acquired, would you have chosen different monetization methods outside of advertising?

Albert: Yes.

Steve: Okay.

Albert: Yeah. I think monetization is something that was actually becoming a much bigger focus for us, it just– it’s the fuel for growth and at some point you do need to have a lot of resources if you want to tackle really-really ambitious things. So we were– we still are looking at like subscription, it’s simply looking at other ways to monetize.

Steve: Interesting. So could you care to come in on some of those ways? You mentioned subscriptions, what about physical products or services?

Albert: Yes. We dabbled a little bit with physical products, not done very much there. I think it’s not because we don’t see great opportunity there, it’s just there are a lot of different opportunities and we just didn’t have, you know that capa– we wanted to be focused, so we didn’t have the capability to exploit them all. We’re going to be, as you can probably imagine exploring all physical products because we’re being acquired by a company that makes physical products.

But stuff like subscription revenue is, I think where we believe there are services and content that we could deliver to our customers, that’s really valuable to them, that they will keep willing to pay for on recurrent basis, that’s the more obvious, it’s like the parallels in– for other businesses in our space especially like once people would really have things like, weight watchers, those are all really– they are very well suited for a subscription model, and that’s where they make all their money.

Steve: Okay. So my next question for you is actually kind of more of a selfish thing. So I kind of started my businesses to free up my time, but you have three kids, so how did you actually balance your lifestyle early on before it was really successful?

Albert: It was pretty hard. I think though one thing that really worked out well for us was when we started working on this– my brother and I first started, I had– my daughter was two, and my other daughter, my second daughter was just a baby, she was just like an infant, and because of that, and I’m sure you know what it’s like or just like you are up at all hours…

Steve: Yeah. It’s crazy.

Albert: I needed a lot of flexibility, but we didn’t have like a ton of employees, our first guy actually I didn’t mention this, the first employee was actually revoked. So he was living in Austin I think at the time. And you just don’t have a lot of overhead in terms of like meeting with people, and all that kind of stuff, like my brother was like writing a lot of code and I was like working with this other guy, and so we dint have to be together very much.

So that meant that we actually had a lot of flexibility in our schedule, we worked super hard, but I could like– if I woke up at two in the night, so like help the baby I would just stay up. I would work till like seven in the morning, and then I sleep till like noon maybe– and it wasn’t like– and so there is actually a ton of flexibility in those early stages that you can leverage to make it easier on your family. And now it’s like we’ve got more employees, it happens to coincide with my kids like they’re all in school and stuff like that. So we had actually worked out nicely because now that they are on a more regular schedule, I’m also on a more regular schedule.

But before, when I needed to like kind of work all over the place, my family– I could kind of work around that and vice versa, which I thought was really helpful. It’s something that was like not obvious, and I don’t know if it’s something you can really plan for, but that was something that helped a lot earlier.

Steve: I was expecting you give [inaudible] [0:42:09] your wife, so I’ll give you a chance to do that right now in case she is going to listen to this interview.

Albert: She is yeah. Sorry honey, but my wife was actually working, that was a huge factor. She was still working, she had a good job and she was still making money for us, and you know obviously it was still on me kind of being all over the place, and so that was obviously really-really important. And I think just having the support of someone, there is just so much anxiety that comes with starting a business, like just going without a pay cheque, it’s not so much even like the everyday, like what are you doing like is my wife supporting me by making money, but if she’s supporting me by just like making me feel free to do this, to go out there and like take a chance.

And she was always very trusting and very confident that we would do right by her, that we were out there, that we were working as hard as we could and that we would eventually make this thing successful. So I can’t tell you how much I appreciated that, that she just– she never like, she never made me feel like that I was taking the success of risk even though she was a part of it too.

Steve: Absolutely. I’m always looking out for you over.

Albert: Thanks man, that was the hook up of the ages.

Steve: So today is MFP is kind of a remote company or is everyone in an office these days?

Albert: So, for the most part people are all in our office– most of the people are. We still have remote workers, and I think that is a way that you can certainly secure really great talent, in places where there are not really necessarily great companies to work at, and that’s how you compete with companies who maybe are willing to make that sacrifice and are willing to say like hey, we want to have– we were okay having people remote. So we had a bunch of people remote earlier on and that worked out fine, and almost all those people are still with us, and still working remote. So we can still make it work, but I think at some point you do or you’re trying to build this like culture in your company and that’s fine to do if there’s nobody in [inaudible] [0:44:24].

Steve: Of course. So I thought I’d close this interview by asking you if there are people out there listening who actually want to create an app or a company, what sort of advice would you give them.

Albert: Well I think, so I think there’s like a couple of things that usually come to mind, it’s like, one is people tend to kind of think about the business opportunity first, and they don’t think about like who the customer is, do they really need or care about whatever they are trying to create. I think it’s like something you gloss over because you are like hey! Won’t you want that, If you could have that? And it’s like yeah, I think a lot of ideas sound great would you say it that way, but then you can focus on like that a business is okay forward and it’ll make money through advertising, we can do all this stuff. And so I think the first thing is like, do you really focus on like trying to figure out in any possible way whether you really think customers are going to care about your product.

So like there are so many ways to do that. You don’t have to build anything. You don’t like say for example, like sometimes people would say I want to create this thing and it’s going to help you in circumstance when you need to like reference somebody’s information for like a sales call. And I’m like, okay, well how do you know that people need that, it’s like why, I feel I need it all the time. And I’m like well, why don’t you take this week, take a notepad and just keep it with you, or like use your phone notepad.

Every time you think you need that product just write it down like check the box, you know, put a tick, if that is like one or two by the end of the week, then you are probably wrong. It’s like you– if you feel like oh! crap I can– six times this week I needed that, this like really basic stuff like that you can do it. So just spend a lot of time validating that, and you can once again you can do that and you can do that while you have your job, you don’t need to go out and build anything.

If you want to try to and build something like draw it out, jot it out on people, like use a paper prototype and show it to people, I just think people get obsessed with like, I got to go out and hire developers and testing stuff, it’s like, no, you don’t have to do any of that.

Steve: So just as an aside, how did MFP do it’s early validation?

Albert: Well, I think Mike you know– luckily for him, and I think this is what everybody has the fortune of having, like he was able to build a bunch of things really early, but I think even in that case what he did was, he didn’t go too far.

He just showed people stuff, even if there was like supper wrath, like you can search and ad of food like how does this feel to you, and it’s like oh! Well that seems pretty simple, it would be cool if you could do x, y, z and I think going through that process and never feeling sort of ashamed of showing people stuff early is like a great thing to be thinking about as an entrepreneur. I think the one other thing that– I was listening to your podcast.

I’ve listened to just a bunch of different episodes and I think that one thing that I feel like is great about bootstrapped entrepreneurs is like it was really as experience for me as a bootstrapped entrepreneur that I felt all the time is like what I would tell people that we were bootstrapping, I felt that people would always make it seem like that we weren’t doing something important, or that we weren’t trying to build something big, and that kind of talk really– I think it can kind of poison your mindset in some ways. And so the one thing I just want to say is like dude, you should always be thinking about your business and like it doesn’t matter where the money is coming from, you can build something big and amazing. And don’t let other people’s opinion or thought process on bootstrapping affect that.

Steve: I here you there. I think it’s just RO [ph] factor of where we live and how the basic community, all my friends they are in funded start ups, so it’s actually kind of rare to see a bootstrapped guy especially one such as yourself where MFP has gone on to be a super successful company, and I think it’s just an RO factor where we live.

Albert: Yeah, it’s like you are working on this cool family business, that’s nice and it’s like, no it’s awesome.

Steve: Yeah, actually really quick last question. When did you guys know that it was going to be more than just a lifestyle business? Was that the intention in the beginning, or was it always to just kind of go big once it started getting traction?

Albert: We’ll I think the– maybe the way I will characterize is like we had big goals, but we knew that we didn’t need to be humongous for us to be happy and successful. So I would say that like we kind of went into the [inaudible] [0:49:06] like we’re not like conquering the world that–this isn’t what we want to become, this is about what we want from this. And so I think in that way maybe you could characterize it as a lifestyle business, we wanted to work on something cool that we were passionate about, and we wanted to make sure that like we can make it successful enough so we could keep doing it. And that’s how we thought about it, and unfortunately I think once we got out a mobile, things really took off and I think that’s when we started realizing well, this is like a millions and millions of people opportunity.

Steve: Okay. Cool, Albert I really appreciate your time, and I’ve learnt a lot from this interview and it’s just really nice to get an insight of someone who’s actually made it in the bootstrapped business world. So thank you for coming on.

Albert: Yeah. Thanks for having me.

Steve: So if anyone has any questions for you, do you have like a twitter handle that you use or-?

Albert: Yeah. It’s @Albertlee all one word.

Steve: Okay. Awesome, once again thanks a lot for coming on, and really happy to finally have talked to you.

Albert: Yeah. This is great, I’ll keep listening.

Steve: I’ll catch you at the next birthday party.

Albert: Take care Steve.

Steve: All right Lee.

Hope You enjoyed that interview, what I like about Albert is that he’s so down to earth and easy to talk to, and it just goes to show that you don’t need to get funding in order to produce a nine figure company, you just need to watch what you spend and focus on what matters most for your business.

For more information about this episode go to MyWifeQuitHerJob.com/episode68, and if you enjoyed this episode please go to iTunes and leave me a review. Because when you write me a review it not only makes me feel proud, but it helps keep this podcast up in the ranks so other people can use this information, find the show very easily, and get awesome business advice from my guests. It’s also the best way to support the show. And please tell your friends because the greatest gift you can give me is to provide a referral to someone else, either in person or to share it on the web.

As an added incentive, I’m always giving away free business consults to one lucky winner every single month. For more information go to MyWifeQuitHerJob.com/contest, and if you’re interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.MyWifeQuitHerJob.com for more information.

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Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information go to mywifequitherjob.com/contest, and if you are interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

Now before I begin I just want to give a quick a shout out to this episode’s sponsor Bigcommerce. Now Bigcommerce is a fully hosted shopping cart platform that allows you to set up your own online store in minutes. And as most of you probably know, I teach a class on how to start a profitable online store, and Bigcommerce is actually one of the shopping carts that I highly recommend in my class. Now here is what I like about Bigcommerce, unlike other competing platforms, Bigcommerce doesn’t really nickel and dime you with every little shopping cart feature. And when you sign up, you immediately have a fully featured and extremely powerful shopping cart at your disposal.

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Welcome to the, My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit her Job podcast. Today I’m excited to have Maneesh Sethi on the show. Now Maneesh is a fellow Stanford grad, he’s published four books including an international best seller and he is a CEO of a company called Pavlok which is sells an extremely interesting product that we are going to talk about today. He is also runs a popular blog called Hackthesystem.com where he writes about his various hacks for everything in life. And here is what I like about Maneesh, he is a hardcore CS guy which makes a hardware engineer like myself smile, and he’s made enough with his various businesses that he does whatever the heck he wants.

Now he’s travelled over 30 countries, he knows five languages and he even became a famous DJ in Berlin. He’s actually done more already than most people do in a lifetime and with that welcome to the show Maneesh. How are you doing today man?

Maneesh: Hey, it’s a pleasure to finally chat with you.

Steve: You know it’s funny– I’ve met and hang out with your brother Rameet, and I was actually told that you guys have like the complete opposite personality. I’m actually not sure what that means, but I’m sure we’ll find out today.

Maneesh: Yeah. I got a lot of talk about on personalities if we want to go that route too.

Steve: Sorry go ahead.

Maneesh: No, it’s interesting. Let me tell you while we seem opposite in a lot of ways we are actually really similar, if you look at like the Myers-Briggs type. He and I are the same except for the last letter which is perceiver verses the P versus the J. And a J likes to finish stuff, so when they have an idea they want to execute it and make it perfect, and they hate opening new loops without closing the loops. And a perceiver on the other hand loves to start new things, but they have a lot of trouble finishing stuff.

And so what we found is that– it’s well known that ETNP and ENTJ together always mesh really well. It’s like Steve Jobs is a ENTP and Tim Kirk is a ENTJ. They act of having someone who is an idea guy followed by somebody who can execute upon those ideas is one of the things that I have been learning a lot over the last few years.

Steve: So which one are you?

Maneesh: I’m ENTP, Rameet is a ENTJ.

Steve: Interesting, okay. So it’s up to you to find the right team to execute then in your case?

Maneesh: Yeah. Like in my case it’s like identifying your weaknesses and instead of trying to see– instead of trying to optimize yourself to be some idealistic person, it’s recognizing your strengths and recognizing your weaknesses and then building a team that supports you.

Steve: There is a lot we can talk about today, but specifically I want to know more about Pavlok which is your baby. If you could just give a brief intro about Pavlok and how you came up with the idea, that would be great.

Maneesh: Sure. So Pavlok is a wearable device that uses vibration, beeps and electric shock, mild electric shock in order to help you break bad– it helps you break bad habits, improves your memory and trains your behavior. The idea of it started off with an experiment I used to run on my website called Hack the System. Basically I had a lot of trouble while travelling to get stuff done. It’s very hard to maintain a routine and execute it when you have to learn a new language every few months. So along the way I found that there is a lot of tasks that I knew I needed to finish, but they weren’t urgent so I just ended up never getting them done. Things like writing blog posts or filing paper work.

So I eventually started running experiments to see how to get this done. And one particular experiment I hired a girl to sit down next to me and every time I used Facebook I had her slap me in the face. I tracked my productivity during this time and you can see my score on productivity sky rocket from– it was like 28 or 38% on average, I sky rocketed to 98% when she sat down next to me. I said, “This is interesting.” I posted the video online, it went viral, crazy viral. There is over 150 different new sources in a 100 countries and I said, “Well if this is so viral, why am I paying her? I should just make a dog shock collar that shocks me every time I go on Facebook.”

So I did. I made a dog shock collar that shocked me every time I went on Facebook. I laughed about it, I made a video and right before I posted the video online I said to myself, “Wait, this is interesting. There are hundreds of devices out that there that are tracking what we do, but I think that we just made something that’s changing what I do.” There is something here. Maybe it’s more than just a viral blog post. So I took that idea, pitched it to some incubators. One incubator invested in my company, in the idea, and gave me some office space, and gave me a lot of mentorship and helped me bring it to reality. And that’s how it happened.

Steve: So let’s talk about this slap experiment real quick. So did you actually get slapped?

Maneesh: Yeah. If you Google Craigslist’s slapper, you’ll find my name at the top. There is a video of me getting slapped. And actually today I had a– and now I have a– at my office we have a lot of fun here. I have a giant tesla gun. It’s a tesla coil that shoots electricity up to six feet long and it’s held by a gun. You can– like a trigger based gun. So I have a new assistant now who about an hour day, she’ll sit down behind me while I do my email and if I get off task she’ll just start electrocuting the air, scaring me and I haven’t gotten to the point where I have to actually get electrocuted by it yet because I get back to work.

Steve: I know the last time we had spoken you gave me this log in to a website where I could actually send shocks remotely to you?

Maneesh: Oh gosh.

Steve: Are you still doing that?

Maneesh: No, I turned it down because I got electrocuted a lot one day, so I had to turn that off.

Steve: So I just want to make a distinction real quick for the people listening out there. It’s more of like a surprise than an actual electric shock. It’s not like a tesla gun or– not a tesla gun but one of those stun guns or anything like that.

Maneesh: This is actually a really interesting thing to say from a business perspective. I know we are not chatting about this too much so I’ll briefly say this. When we started off the thing that made us different and interesting was the word shock. So we found that when we started– like we got on Good Morning America, [inaudible] [0:08:40] on Steve Harvey show mostly because people were just so blown away by this word shock. How would you do that to yourself? When you start to show it to people, they understand that the word shock is not what the people’s idea of what shock is, is. It’s like shock is any sort of electrical current running through your body that causes any kind of stimulus.

So my electric shock is just like touching a door knob if you rub socks on the ground. It’s like a slight impulse that’s surprising. We’ve actually been changing our literature to use the word jolt or use the word like electric stimulus, and it has changed the way people think about the product from the get go.

Steve: So I was actually looking on your site earlier today. It says that Pavlok can help you with exercising, language learning, creative writing. So how does that actually work from a functional perspective? So for example you mentioned that whenever you went on Facebook you got a shock. Is there some code involved there or do you shock yourself? How does it work?

Maneesh: So we have two different [inaudible] [0:09:37] that we are releasing: one in which you shock yourself and one in which it shocks you. So the one in which you shock yourself is actually really powerful. This is a big breakthrough for our business as well, when we discovered the power of self administered shock. So for untrackable habits, things like smoking cigarettes, nail biting, eating sugar, gambling or like scratching, whatever it is, bad habits like that, it turns out that if you shock yourself while you do the action for about five days your brain starts to classically condition itself to associate the pain of the shock with that undesired action, and it sort of deletes the habit from your brain.

So I did a couple of examples. I used it on myself for tortilla chips. I used to eat like a bag of tortilla chips a day. And so I said, “All right, for five days I’m going to eat as many tortilla chips as I want. I just have to shock myself at every bite.” Day one, day two were terrible, I didn’t want to eat them anymore. Day three, it was really bad. Day four and day five it was really difficult to eat the chips, but at the end of the fifth day I completely still until this day– it’s been over six months now, cannot eat tortilla chips in my house, in particular blue totistos tortilla chips make me sick.

Steve: Because of the fact that you shocked yourself every time you ate one.

Maneesh: Yeah.

Steve: Interesting.

Maneesh: We did a test group at our university. So we did like a research report over at the University of Massachusetts at Boston, and we took a group of eight people who wanted to quit smoking. We had them smoke their cigarettes. They were a pack a day smokers. And just so you know, the average success rate on quitting smoking for anybody who wants to quit is about five percent per year, and for people who use nicorette patches it’s like seven point five percent effective.

Steve: It’s really low.

Maneesh: So what you’ll see on the nicorette boxes like 50% better than a placebo. But 50% better than five percent is not that high. So what we did is we took a group of eight smokers who wanted to quit smoking, and they agreed to for the first five days they shocked themselves with the first cigarette of the day. They pressed the shock button [inaudible] [0:11:41]. And for the second week they shocked themselves for every cigarette of the day. By day 10 six of the eight had completely quit smoking, four weeks later the seventh had completely quit smoking.

So we had in our test period a 75% success rate of smoking secession. Until today it’s been two months now and when they take a puff a couple of them tried, they spat out the cigarette saying it was disgusting.

Steve: That is crazy. So outside the self administered shocking though, like how does it work. Can you have someone else enforce it or can you make it automated somehow?

Maneesh: Sure. Then there is the other side of it, the version which shocks you and that’s done though our device which is Bluetooth connected to your phone and it has an open API. So when you– went to the old website that shocked me from across the internet. What it was doing is when you typed in that URL and hit shock, it was sending a push notification to my phone, and that phone received the push notification and translated it into a shock on my wrist. So what that means is that we are creating an open API. Sorry, for viewers who aren’t familiar with open API is think of it more like an app store, like a free app store.

So people are able to develop apps that vibrate, beep and shock with your permission. So a couple of good examples of stuff that we’ve already built are, there is one integration I have with my productivity tracker where it looks at my productivity over the last 30 minutes, and if I have less than 50% productive, it vibrates, less than 30% productive it shocks and greater than 80% it will give me a vibration like a good job positive reinforcement.

Then we have one that looks at your email and if there is important emails from your boss, if you haven’t responded to within forty five minutes you get a vibration, if you haven’t responded to it within 60 minutes it shocks you. And then stuff like that that are related to fitness. So if you haven’t stood up in the last 30 minutes it will start to vibrate, if you haven’t stood up in the last hour it will start to shock you, if you haven’t been to the gym on time etcetera, etcetera, etcetera.

Steve: I see. So there is a like a software app store type of component to this as well where you’ve developed apps that– or you’ve developed integrations with apps that do this.

Maneesh: Yeah. So we’ve developed our own app that is– our own app that has a lot of different courses within it. And those courses all have sister apps like– sort of the processes. You download the product, you buy the product, you install the app and the first five days the product only allows you to press the shock button. So you can only shock yourself. In those five days you have to listen to our five day audio course. It’s the introduction to habit formation audio course, where we take you through the process of will power breaking and then we actually identify your personality type, and we start to give you a self understanding of what affects your behavior.

Once you get to day five you’ve unlocked the Pavlok [inaudible] [0:14:30]. So now all these different app store integrations are available as well as our sister courses. So we have like a course on waking up earlier and we have an app that allows you to vibrate and/or shock yourself to wake yourself up. It’s the world’s best alarm clock. Then we have another app on fitness where we allow you to bet with your friends and create competition, and then we have flash card app for memory. The memory is actually fascinating with [inaudible] [0:14:55] shock plus remembering things– just you just don’t forget things. So that’s how we kind of build it up.

Additionally we have a full on integration with other people who want to develop their own apps and a few other things.

Steve: So just listening to what’ve you said it sounds like Pavlok requires a combination of a whole bunch of things including mechanical design, hardware design; user interface is on as well as software development, right? So how does one execute on such a complicated product from the very beginning? Were you by yourself when you started this?

Maneesh: Yeah. It’s actually really rare to have a startup, like a hardware startup by a sole non-hardware founder. So I got very lucky in the sense that– I got very lucky but I had a good idea and I put it forward to the right people. So this incubator in Boston called Bolts, B-O-L-T.io is the URL.

Steve: Is that just like a coincidence?

Maneesh: Super coincidence.

Steve: Okay.

Maneesh: So they decided to– they are a hardware startup incubator. If you are familiar with Y Combinator, think of it like the Y Combinator for hardware. They decided to– their first class they offered seven slots. They had like a B to B slot and a B to C slot, and then they had a wild card slot and I was the wild card slot. And so what they were saying here was let’s take a good idea with like a guy who knows marketing, but he doesn’t know hardware and see if we can introduce him into the product.

Now I had to jump through a lot– like it took me forever. I would say the first six months of my one year at Bolt were basically lost– with the exception– the only thing that came out of those first six months was getting the Pavlok name, getting the logo and the tattoo. That’s what happened the first six months. Afterwards I finally found my cofounder who was– his name is Jim Winch. He is the original mentor of Lego Mindstorms.

Steve: Nice.

Maneesh: And he helped me bring about the product into actual something that I could show people. And the process of that was to start off by building out the specks– you speck out exactly what you need, then we bought a lot of product that did the stuff already, then we split our product idea into the known and the unknown. So there was the shock which was the unknown and then everything else which was like a vibrating motor, Bluetooth’s, [inaudible] [0:17:24], that was the known.

And we basically had these two big boards on the table, and the unknown which was the shock; we decided to make it sexy, so we turned it into a business card. So I have these business cards that shock you. And then the known section, other stuff we just set it up, then we connected the two together and know we had a flat two dimensional prototype that worked great. The next step here was to design the industrial design. So what is it going to look like? And this actually took a long, long time. In fact we just basically finished it now.

Steve: You are talking about the mechanical design at this point, right?

Maneesh: Sort of. The industrial design is like what should it look like? The mechanical design is what actually can we manufacture? At least that’s how I define it. So you can 3D print things today in a way it were impossible before. We came up with a lot of designs that we started to 3D print on these printers and they came out great. And actually we assembled them, sold up a lot of these 3D printed Pavlok prototypes, but they are unable to manufacture it because the way the 3D printer process works doesn’t quit mesh up the manufactured tools.

So we had to redesign them as a DFM designed for manufacturing process. So step one– I’ll just reiterate this. Before step one, step two is to have the idea, speck out the document, know what you are going to do. Step one is to build it on flat two dimensional surface with just the electronics and no industrial law. Step three is to try to mesh that into something that you can actually print and wear, and then step four is to fix it so it actually works in the real life setting. And that’s the stage that we are at right now. We’ve just finalized our designs; it’s currently being tooled and produced in China while we sell our prototype versions.

Steve: You said a lot of stuff there. And I just want to break things down. Start from the beginning. First of all, why did you decide to go with an incubator as opposed to just finding a hardware cofounder?

Maneesh: Sure. I tried really hard to start the company before this incubator, I tried for six months. I did not have hardware context back then. And so one thing was I actually found some prototyping companies who offered to prototype the product for us for cash. Their rates were enormous, and they were out of my possible ability to spend. And so I actually had given up on the project before Bolts offered me this contract.

But even in retrospect, incubator gives you a lot of value more so than just the person who knows how to do hardware. They also gave us the office space with 3D printers. The culture of having people around you working on stuff that’s hardware related is– you can’t count the value there, just a culture shift of thinking in hardware. And lastly you can never just build a hardware product with one person. The worst part about hardware is also the best part about hardware, which is that it’s really hard.

So a software product can usually be copied by two dudes, two college kids in a garage over a month or a week again even, whereas a hardware product requires electrical engineers, industrial designers, mechanical engineers and then software designers, app developers and UI UX designers as well. After having a hardware incubator really helped us get– helped me get an understanding over a six months through a year period of the real size of this challenge.

Steve: Since I am hardware guy here, I was just kind of curious what the costs were involved. Did you feel like you needed funding just to produce the hardware itself?

Maneesh: Yeah.

Steve: Because I was just thinking to myself, I was just listening to you talk, the way I would have proceeded with Pavlok is I would just buy an off the shelf board with all the components that you had, kind of muck with the software a little bit. And then I would probably need a mechanical guy and to shrink all that stuff down into a very small PCB, and then all the logistics involved in packaging it for a wearable.

Maneesh: There is a lot of ways to approach the hardware problem. We actually started off by taking the dog shock collar approach, right? So we took the dog shock collar apart, we turned into something that we could use. Then we discovered that the shock from the dog shock collar was too large to fit into a consumer wearable, so we had to turn it into smaller one that required a whole new PCB design and then we started rolling our PCBs.

PCBs are actually the easier part of the product compared to the– well the mechanical and the hardware is hard enough. The PCBs are difficult as well, the firmware has its own thing, and then that doesn’t count anything that relates to software.

Steve: Right. I know, I can imagine all the pieces together would be a pain. I was just curious though I noticed on your site that you also did an Indiegogo campaign. Was that to raise money or awareness? What was the purpose of the campaign?

Maneesh: It was both, right?

Steve: It’s both.

Maneesh: Money and awareness. I’ll tell you like we sold $270,000 or so on Indiegogo and it was great, but we spent that since and we haven’t even bought the products yet. Like hardware costs alone, just tooling costs as well as mostly staff of course costs the most. But to raise awareness it was huge, and actually one of the biggest things that came out of it was understanding how little we knew about our customers.

So we framed this Indiegogo campaign as the best– you know when you live inside of a bubble, when you live inside of something all day you don’t think about– you can’t really see it from the outside view point. So we put up this Indiegogo campaign and there were– we sold really well, but we kept getting the same question of like, “Okay, I get little shocks you but how does it know? How does it know when to shock you?” And we explained that that wasn’t even the point of the sensors and also the stuff but that’s not the point.

The point is that you can use to spur forming habits. Along this process through this Indiegogo campaign made us really look at what we were actually building. And in fact there was one particular day in fact it was Halloween last year where our UI UX guy came. He flew in from San Francisco to hang out with us, and we were all looking at our product and we were like, “This is kind of confusing. We make a product that’s cool, that’s shocks you– cool. But how come all of our Indiegogo campaign question are relating to forming habits about like how do you get yourself to go to the gym and how do you get yourself to eat better.”

That isn’t really what our product does, right? We were all like, “This is interesting.” Let’s take a look at some of the science behind what we’ve been doing. And then we started to look out for what electrical shock has been used for in the past. And we stumbled on about 40 different peer reviewed clinical studies where electric shock was used between 1960 until 1994 to help cure bad habits. And we started to look deeply at these papers where it showed people who were using it to quit smoking within five days, using it to quit nail biting, over eating, sugar addiction, obsessive compulsive disorder, gambling, even heroin addiction in a matter of five to 10 days.

And they didn’t have apps back then; in fact they didn’t even have remote controls. They were just using self administered shock. When it was that month of Indiegogo and not knowing what we were selling before we stumbled upon the fact that we had been holding this world life changing device in our hands for eight months, not focusing on what we had but focusing more on what we should it make it work for what the people or expect the people wanted. I hope what I’m saying is making sense, but what I’m trying to get to you is that the purpose of the Indiegogo campaign was to help us really solidify what our product was more than anything else.

Steve: Interesting. So did you change it halfway through then as you got more information?

Maneesh: We changed it a little bit. We really simplified and clarified kind of what our product was, but even until the end of the campaign we didn’t realize how strong and effective the self shock was. It was kind of mind blowing. When we discovered also that like all the stuff we were selling this product has been tested and proved, and like it was the most common way to quit addictions until 1994 when it just disappeared from America in a matter of four weeks from every single clinic. It was a really fascinating experience to notice that I didn’t even know that until that point.

Steve: So the reason why I asked you those questions about Indiegogo it’s because I had another guest on the show. He did it mainly for the marketing and not necessarily for the money. And it sounds like you did a full combination of both. This first round did it– you kind of used this money to fund your first set of prototypes. Is that accurate?

Maneesh: No. We had already started selling prototypes beforehand.

Steve: You have, okay.

Maneesh: But they were like alpha prototypes. The truth is the amount of money you get from Indiegogo is never enough and Indiegogo is a big risk, because it was always costs more to produce something. We had to raise more money to get to this point and we wouldn’t have been able to do it had we just used Indiegogo money. It was more of a liability than it was anything else.

So I found out like the people who do an Indiegogo campaign and raise like 50K or whatever, I don’t know how they manage. A lot of them just never ship because if we had only made X amount of dollars and hadn’t been able– if we only made the amount we raised, the 250K and we didn’t have any ability to raise any more money, we would not have been able to get a finalized product.

Steve: Interesting. So you just said that it could have been a liability. What did you mean by that? Like if you couldn’t deliver…

Maneesh: It is a liability. Like literally on my balance sheet it’s a giant liability because we got to produce– so we sold like what– 3000ish units on this Indiegogo campaign, and so we got to actually pay to build those units, right? So the 270K we made is great, but the actual cost of good soul, the actual bomb cost of these products that build the materials, the actual cost to get the hardware preassembly is like a significant chunk of that, a very significant chunk of that.

Steve: I see.

Maneesh: The act of having– but the research and development that went in between November and today is higher than the cost– the entire amount of money we made from that Indiegogo campaign.

Steve: Now that makes sense, but these guys what you are basically saying is they are getting at a pretty big discount, because if you were to sell these in stores the margins would be a lot higher than your Indiegogo campaign.

Maneesh: Yes. The prices would be higher.

Steve: That’s what I meant. And I just had a curious– out of curiosity what’s the difference between Indiegogo and Kickstarter? How did you decide between the two?

Maneesh: Honest truth is that Indiegogo’s CEO called me and said, “Hey, here is why you should use it?” But they– I feel like Kickstarter is like the hot girl at the party who doesn’t care about you. Indiegogo when they like your project really supports you. So Indiegogo like took me to sun dancing, introduced me to dozens of celebrities who got shocked by me because they liked our product idea. They’ve really been there for us to help us throughout the process afterwards.

Steve: Interesting. And then when it comes to actually creating the campaign and you want to use it for marketing purposes, do you actually have to promote your Indiegogo campaign like crazy or does Indiegogo kind of bring their awareness to you. Do you kind of understand what I’m asking?

Maneesh: Yeah. Indiegogo does– I’ll say out of the 270K that we sold something like 70 or $80,000 came from Indiegogo users. So they did provide a significant amount of awareness and they also did it through– they added us to their emails, like they did email blast where they promoted us. But no, they would do like not like– no, it’s not enough. You got to do a lot of your own marketing. We had a very targeted goal of hitting our goal by the first 24 hours which is a big thing for long term sales, which we did. We hit our first goal within– we hit our first $50,000 within 24 hours.

Steve: Interesting, okay. Can you walk me through that?

Maneesh: Yeah. So we had a $50,000 minimum and we said, “We want to hit $50,000 by midnight tonight.” And how do we do that? So what we did is we had a bunch of people who were partners of us promised to tweet out and do like social media pushes for us. We had a bunch of– we released a press release and had different– we had already gotten a bunch of different big blogs to– and news reporters who promised to write for us on the day of launch. We set up a bunch of media to go out that day, and we did a couple like guest posts and such that went live that day to ensure that it would be a huge win.

Steve: In reaching out to these people, were they just friends of yours or did you establish contact with them like way in advance or I guess…

Maneesh: I established contact with them well in advance. Some are friends of course. But a lot of people– the thing is we had a product that’s pretty interesting.

Steve: That’s true.

Maneesh: Whether or not you like it or don’t like you can’t just ignore it. So with that in mind we started building out our press contacts and started building our people that we trusted quite early. And we started using that information to start– if they wanted to write stuff about us. And so we gave the people– like we had a systematized system for it. So we have like a press and media list and we have like to tier A, tier B and tier C people. And we got in contact in them in a pretty systematic way.

So tier A people knew like two months of time before they can promote something, tier B people like a couple weeks of time and then tier C people just tweet or Facebook share whatever you want. So we would get in contact with them, get them to agree– we built an affiliate contest, so we had– if you referred sales you would get x dollars per sale and if you got the most sales you would get an extra bonus. That was pretty effective in generating a lot of people helping us out. Does that make sense?

Steve: In terms of reaching out to the tier one people, what was your procedure? Did you coldl or email or did you find someone who knew that person and then get…

Maneesh: I found someone, I knew them or I had talked to them like months before.

Steve: Okay, got it. And then was that to just promote your Indiegogo campaign or is that kind of how you use– what you use today to kind of produce, to promote your website?

Maneesh: Right now we are starting to build our own packages that help them as much as it helps us. We have not been doing as much out boundary reach as we are focused on finishing the product right now. But our sales product is through partnerships. A lot of our sales products is through partnerships.

Steve: Interesting, so partnerships with what sort of companies?

Maneesh: So a lot of health is a big deal. So we had the spray that you spray on your tongue that makes sugar tastes like nothing. I should take a step back and say this. The product is called Pavlok, but that is not our company. Our company is behavioral technology group, and what we do is we focus on helping people improve their behavior and focus from a larger scale. Our core mission is on upgrading humanity, and there is three steps to upgrading humanity.

The first step is to break the bad habits of people who want to break them. The second is to improve the sensory input and the internal subconscious knowledge of people who want to improve themselves. And the third step is to move humanity from where we are to where we could be. So one of the first cores of this is in quitting bad habits and a lot of bad habits are really, really easy to break given electric shock. So one of those bad habits in particular is sugar addiction, which is a really big death sentence for Americans and everybody.

The three biggest killers in America are sugar, smoking and sanitary behavior. We wanted to attack all three of those with this first product. So with regards to sugar, we have a couple of partner products we’ve been working with. One is called knockout sugar which you spray on your tongue and it makes sugar taste like nothing. And so when you combine that knockout sugar with ice-cream or a sugary item for five days, if you eat ice-cream after you spray your tongue, the ice-cream just tastes like nothing. It tastes like yoghourt.

If you shocked yourself for those five days what happens is that your brain starts to see that this item it likes to eat that has no pleasure anymore, it’s only adding pain. It completely deletes the desire for sugar from your brain, no add needed.

Steve: Interesting.

Maneesh: So for a lot of like health bloggers who are creating these special packages where you get the sugar product plus the shock product and then resell them, then they get like an affiliate or wholesale commission.

Steve: Okay, got it. So it just seems like a huge component of the sales for your product depends on education, right?

Maneesh: To an extent, yeah for sure.

Steve: So is there a strategy then to just kind of reach out to these health providers and kind of sell your products alongside with their services?

Maneesh: That’s just a sales outlet. So one of our biggest sales outlets we are working on is retail. Retail can deliver a 20 million purchase in one [inaudible] [0:34:25] if you get the right team. So what you said first about education, that’s very true. Getting people to educate themselves on why they should shock themselves is a big deal. But once you start to see the results you’ll see something very interesting, which is that people who start using the shock directly have insane results. It’s mind blogging how good these results are.

Even I still can’t believe the fact that when I eat tortilla chips I get sick. I still can’t believe the fact that when I shock myself to remember someone’s name or their email address I don’t have to write it down anymore. I just remember it. The power of electric shock is insane, and it’s only been verified by the media since 1994 when it disappeared. So the first step is getting people who use it to actually use it, getting people who’ve already bought the product over 3000 people now to actually use it and then give us back testimonials which we’ve been doing.

I’ve noticed that the product itself sells itself. I can’t have a conversation not about shock anymore even when I try because when someone asks me what I do and I say, “I make a wearable device that uses electric shock.” Or they say, “What’s that on your wrist? And I say, “It’s a wearable device that shocks me to help me improve my memory.” The first thing they say is, “Wait, tell me more. Let me try it. I got to try this out. Holy shit, like let me get my friends over here. Hey come on, you guys want to try this out.” The product sells itself. So I think that our big marketing plan right now is honestly getting into people’s hands because everybody who I give it to sells more.

Steve: No, that makes sense given the nature of your device. Actually you have an advantage in that it has a great story, and it kind of does sell itself actually. That’s what mainly interests me to your product when I saw it.

Maneesh: I can tell you our retail strategy if that’s interesting to you.

Steve: Yeah. Let’s hear it.

Maneesh: So starting last year I was focused on getting our core early app users to do it. So I did this by taking my old email list and pre-selling them this product. Then we took it to Indiegogo in which we had this big launch. And we focused that time on really just detail in the story and getting enough money that we could move to the next step of actually delivering their product. In the mean time we built these prototypes out. And these prototypes we’ve been shipping to customers have gotten us a lot of good results on how users will use it, the user’s experience, how we can improve the product, etcetera.

From now– now our next goal is to get the Indiegogo users to have their product fulfilled. Those will be fulfilled by July, August and that’s a good and bad time. It’s a terrible time to launch a product. July and August is the worst two months you can possibly have, but it’s a fine time for us because we are just delivering a product we’ve already sold, getting it to more users’ hands, and see how they use it. In August and September we are focused on a couple things. The first step is proving that we can sell the product using television, home shopping television channels.

So we are doing a few– we are working right now on building up a couple of different TV channels that we sell sort of like QVC, HSN in order to– where you have enough time to sell your product. This product requires a little bit of education, so you get 20 minutes being able to actually sell it as an infomercial. Once you have that evidence of being able to sell a thousand or so units within a 28 minute session, then you take that proof and you go over to Best Buy or Target and you say, “Here is our product. We want to get it in your stores. We have evidence it sells. What do you think?” And then they make a big purchase order, and that’s where big profit comes for hardware companies.

Steve: And just curious to get on these QVC like type of shows, what are the terms and how do you reach out? How do you even know where to reach out and how do you reach out?

Maneesh: For you, you can just call me. I’ll get you an intro. I’d say that they are a bunch of people– once you start building hardware they start coming to you. The thing is they want to feature your product. They want to sell your stuff if it sells because then they make money. The terms, I can’t really tell you.

Steve: It’s fine.

Maneesh: But it’s typically– a typical deal is involved like a 35% ish cut. But the goal is– my point is understanding that they want your business because you are their customer. You are their client. If your product sells they make money. So the first step in making your product sell, secondly you find them or they find you, but there is a lot of ways. It’s usually intros and intros. And then lastly once you have that evidence then you go to the next step.

Steve: And one thing specifically about your product I would imagine like let’s say I see it on the show for Best Buy, I’m not going to know what to do with it. It almost requires some sort of huge setup to kind of educate the customer on how to buy it or how to use it.

Maneesh: Yeah. We are working through this a lot right now. So there is a couple of ways we are tackling that problem. The first thing is I really believe it’s revolutionary. Our long term vision of this product is to replace your smart phone. And so a lot of things that we are doing is– like if you ask someone like what does a smart phone do you in 1994? It doesn’t really make any sense. It makes calls and it texts, but it also lets you check your bank account and it also lets you do this and also lets you do that. It doesn’t quite make any sense? There is just too much you can do.

So condensing to the core of what it can do is one of our biggest– is what we are doing right now. So getting customers to buy that product alone– sorry, getting customers to buy the Pavlok, buy in to Pavlok, to believe in Pavlok is an education process. But then Pavlok has so many specific use cases that we’ve been testing out like niching down for particular different niches. Pavlok quit nail biting for example can be its own product and it’s just– our Pavlok [Inaudible] [00:40:19] little module that you put inside of a silicon band.

Steve: Like a Fitbit.

Maneesh: Yeah, something like a Fitbit. And also we’ve also created different integrations so it can go in your necklace, or can go into your watchband like in the strap. So we are spot testing like a nail biting product. So you go to Wal-Mart and you just see like “Quit nail biting forever,” and it comes with a wrist band and audio CD. Quit smoking program, quit sugar program that comes with a knockout sugar as well as the Pavlok. So we are testing out the right way to get into the right people’s hands.

Steve: Actually if you frame it that way it’s much more sellable, right? Then you are selling a solution as opposed to your product.

Maneesh: Yeah. And one of the biggest things that has really helped us grow is our coaching program. So we are not just a device. We are actually a coaching program. So everybody who buys a Pavlok get a call from our habit hackers and our habit hackers break down you– they help you understand what you want out of your life or who the dream version of you– what he would be doing in six months, what he’d be doing in three months, what he would be doing next week.

And then we created a poaching service in which we are able to use– whether or not you have a Pavlok actually. We are able to help you coach you through the process of improving yourself. And Pavlok acts as a nice conduit into that world of life. It’s not quite like coaching but something similar like coaching. So right now we offer that coaching program just to our buyers and that helps them even more than the hardware. We’ve found a lot of our– few of our best users have kept the Pavlok on mostly as a reminder of the coaches have really help them push through on their habit formation. So that has been really important, getting human beings to help coach you is a big deal for us.

Steve: When I first saw Pavlok I thought it was just a gadget. It sounds like you have an entire vision that kind of is built completely around Pavlok. Like a much higher level vision that you are trying to meet.

Maneesh: The vision is pretty insane. It gets bigger every day and it’s one of those ENTP things that I have to hire people to making sure [inaudible] [0:42:27] sometimes.

Steve: Hey, just a couple of random question. This is just mainly out of my own curiosity if I want to create my own device. How do you guys going to handle QA and stress testing and all that stuff once you start selling in mass?

Maneesh: Yeah. Right now we have a QA. At my old office in Bolt we have a testing machine so we can do hit and cool. And so we’ll use that for the beginning test and then as we scale really high I’m sure we’ll have a full QA and testing process assembly line.

Steve: For just an aspiring entrepreneur, who kind of wants to create some sort of hardware software device, would you recommend that they took your path or if and if not which path would you have taken ideally?

Maneesh: That’s a tough question. For a hardware entrepreneur?

Steve: Yes.

Maneesh: I recommend getting into an incubator for sure, if you don’t have enough money of your own– hardware is like– when I used to be– like my old blog was all about entrepreneurship and building business and I would just be honest about it. And I’d be like it’s easy, just do it, like go start, write down a code, build it up. But with hardware it’s something that I really do want to caution people, because you can get in over your head and it can be– like software won’t lead to the same sort of credit card debt that hardware will.

So make sure that you have somebody on your team who knows what they are doing, who’s done it before because– or you raise some funding, or you just don’t want to be non hardware person jumping into the hardware world without some kind of experience whether it will be through an incubator, through a partner, through a cofounder. But if they were to have a great idea and a good prototype, then incubator is a really good way to go.

Steve: So just curious, why incubator as opposed to pitching an idea to a VC?

Maneesh: In our case, the incubator helped us build the product. A VC would have just given us money.

Steve: I see, okay.

Maneesh: So incubator really gave us literally 5000 square feet of 3D printers, laser cutters, CMC machines, mills, everything we needed to build the product and people to help us operate them, whereas VC would have just given us the money and said, “Figure it out.”

Steve: I see. And then the resources to actually create the electronics is all in-house as well, like layout guys and all those…?

Maneesh: They had helpful people, but we didn’t need our team to do that. I’d hire people to get that happen.

Steve: Interesting. Can you just briefly comment of kind of like the equity terms of the incubator as opposed to like going with the VC?

Maneesh: Yeah. Bolt in particular was nice. They gave us– what was it, 50K for 10%. And that was common stock whereas VC would have had– they had very few controls like a lot of it– money is cheap right now compared to anytime in the past. Money has never been cheaper meaning that you can get cash. If you supposed to be in Sans Francisco you can get VC terms, but there are two variables and control here. One is cash and one is control. Control is a lot about– we could have gotten, we can still go raise a ton of money if we want, but the terms on that money from VCs will involve a lot of board seats and liquidation preferences and all the stuff that gets us screwed in the long run, whereas Bolts terms were very cool.

They were common stock, like we are on equal terms and we just have to– from most incubators will give you a little bit of help and not kind of ruin you from– before you know what you are doing. It took me a year to figure out what all these venture deals mean, like what these venture terms mean. They can really screw you without you noticing, like really screw you without you having any idea. There is a good article last week about how– there is an article on Happy News I saw that was called, “How to build a billion dollar unicorn company and walk away with nothing.” And it had to do with like these things called liquidation preferences which are really common in VC deals.

What they’ll do is that they’ll say, “We invest $200 million into you out of one billion dollar valuation with a one x or two x liquidation preference.” So from the entrepreneur he’s like, “Holy crap, I just got $100 million at a billion dollar valuation, that’s only 10% of my company, right?” And then the VCs will be happy because they invested at this big amount, but it’s actually a company worth more or whatever.

And then the problem is the liquidation preference which is– the liquidation preference says, “Okay, you bought 20% of the company for however much money and for $100 million.” So you bought 20% of the company for $100 million, so when the company is sold or IPO, when the company exits the VC– first of all he gets his liquidation preference back. So his $200 million comes back to him and then owns 20% of the rest. And so– does that make sense? So he gets…

Steve: I see. So he gets that money in addition to 20% of the rest. He gets his give money guarantee basically.

Maneesh: He gives his money guaranteed and then 20% on top. And those when they start adding up round after round after round, can really screw you over. So I didn’t know that and I thank God because we have a lot of– we are doing some very interesting stuff with our company like from a legal corporate matter style. And if we had taken any VC funding, we would not be able to do the stuff we are doing.

Steve: Interesting, that’s good to know. So it sounds like your incubator is just common stock and they have not preferential treatment over just another regular investor. Is that kind of…

Maneesh: Yeah. It’s just like [inaudible] [0:48:08] invest in our company for example. So he did ask for free [inaudible] [0:48:05] cool people and they all have very similar terms.

Steve: Okay, cool. Hey, we’ve already been chatting for more time than I allotted for you actually. So if anyone wants to know more about Pavlok your company, where can they find you?

Maneesh: Yes. So head over to Pavlok.com P-A-V-L-O-K.com. It’s like Pavlaw but the last letter is a K. And if you want these cool discount credit we have, if you guys want to buy one there is preorders which are the final production units that will be shipping in July and August, and then there is prototypes which are shipping right now. And I’m actually kind of excited because we are going to be raising the price on the prototypes soon, because they are kind of like a collector’s item at this point. It’s only 250 of them left at this moment. And so those ship right now, and they are actually really cool. I’m like really proud of them.

Steve: I’m definitely going to pick one up and then maybe I’ll do a little blog post on my results. I got a couple of bad habits I want to break too.

Maneesh: Yeah. And if you strive for memory, it’s mind blowing dude.

Steve: For memory.

Maneesh: It’s like– I can talk about this a lot. Sorry, before I move onto that– and there is discount code for your readers P-A-V-1-5, PAV 15 is a 15% off discount code.

Steve: Sounds good. I’ll also put a link to your site along with that coupon code in the show notes as well.

Maneesh: But it’s pretty cool. So we discovered that– basically the way that your mind processes memory is through external senses. And so you know how you remember faces or like places that you walk into or like emotional events, but you don’t remember names and numbers because they are like pieces of data and they are not tied to any kind of incoming human sense. Turns out that electric shock is a sense, and so when you get shocked while you are thinking about someone’s name or while you are thinking about someone’s email address, your brain uses that shock as like glue to associate that moment with that memory, and it makes it so at least for the next 48 hours and often for a long term memory that memory is saved.

So I started using shock as like a file save for the brain. Someone is like, “Check out this website or here is my email address.” I don’t have to pull my phone and write it down anymore. I just focus on what he’s saying, press the shock button and when I get home I shock myself again and it comes back. It’s pretty cool.

Steve: One problem I have is when I meet someone I almost forget their name immediately. So you are saying that if I meet someone and I shock myself I’ll remember that guys’ name?

Maneesh: I did a lot of tests on this because I’m the same. I used to have like a 20% success rate of name recognition. So for the first basically six weeks of using the shock, the shock has a two second timer. So the guy would say– I’d say, “Hey my name is Maneesh.” And he’d say, “Hi, my name is Jack.” And then I would press the button as he said Jack, and then I would try to shake his hand and time it. So I said his name right when it hit me. And I found that for the first six weeks my memory shot up to 90%, like I would remember names forever whether or not I was drunk or sober when I met them, whether or not I was on a phone call or it was next to them, I would always remember their name.

I think that has dropped after about six weeks it drops to like 40 to 50%, but it’s still far higher than my two– 20% and we are adding a new memory, like a randomization of the shock to help improve that higher as well. So try that when you get it. It’s pretty cool.

Steve: I know this podcast wasn’t meant to like to sell your product and stuff, but you’re doing a pretty good job.

Maneesh: I’m not even trying to sell it…

Steve: I know, you are not even trying, yeah…

Maneesh: It’s like really cool. I know its crazy– yeah.

Steve: All right dude. Hey man I really appreciate you coming on and maybe one day when you are in the Bay area or something or if I’m out in Boston then we can meet up.

Maneesh: Sure. Let’s talk about that after– and it was a pleasure man. Thank you very much.

Steve: Thanks dude. What an awesome episode. What I like about Maneesh is that the guy always finds a way to do what he’s passionate about. And I simply love the concept of Pavlok. And in fact I just ordered one for myself and will be writing a blog post about it soon.

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Once again I just want to thank Bigcommerce for sponsoring this episode. Bigcommerce is one of the best shopping carts that I recommend, if you want to start your own online store without having to worry about anything technical. They’ve got an incredible theme store where you can choose from a wide variety of attractive store designs, so you don’t need to hire a designer. And they also offer integration with AliBaba, so you can easily find products to sell online.

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Now before I begin I just want to give a quick a shout out to this episode’s sponsor Bigcommerce. Now Bigcommerce is a fully hosted shopping cart platform that allows you to set up your own online store in minutes. And as most of you probably know, I teach a class on how to start a profitable online store, and Bigcommerce is actually one of the shopping carts that I highly recommend in my class. Now here is what I like about Bigcommerce. Unlike other competing platforms, Bigcommerce doesn’t really nickel and dime you with every little shopping cart feature. And when you sign up, you immediately have a fully featured and extremely powerful shopping cart at your disposal.

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Welcome to the My Wife Quit her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit her Job podcast. Today I’m happy to have Erin Matzkin on the show. Now Erin along with her partners Heather Porter Joyce and Damian Toohey are the creators of the popular iPhone app, CluckCluck app which helps organize and simplify communication between parents and their kid’s care givers. Now what I like about Erin is that she’s a very caring mom who wants the best for her children. And as a mom she had a problem and came up with a very clever solution to solve using technology.
Now her app has been featured on TechCrunch, Business Insider, Real Simple as well as other high profile publications and it’s really something special. With that, welcome to the show Erin, really glad to have you on tonight.

Erin: Thank you. I’m so glad to be here and thank you for that lovely introduction.

Steve: Yeah. It’s a great app. I actually took some time to download it and fire it up.

Erin: Excellent.

Steve: So give us the quick background story; tell us about the app, how it works, and how you came up with the idea?

Erin: As you mentioned my cofounder, Heather– Heather and I have been friends for well over a decade. We are both technology lawyers by way of background, and we started work at the same law firm together and then we both worked together for many years at the Walt Disney Company at Disney Interactive which is their website– which is the part of the company that manages all of Disney’s website and mobile apps. So during this period of time, Heather and I– we got married, we had babies and we spent a lot of time together sort of discussing the challenges of work life balance.

One thing that we talked about a lot was how difficult it can be as a working mom to kind of come home at the end of the day and just really have no idea about what went on with your kids. I mean– for a baby you are like did they get a nap, how many ounces did they have in the bottle? For a bigger kid you want to know like did their homework get done? And then we talked about sort of other babysitting challenges like getting a sitter for a Saturday night. Then one day I was with Heather and she was trying to book a baby sitter for her own birthday party so she could go to her own party.

She was texting and driving which is terrible, texting all of her sitters to see if they could come over. Finally she said, “There has to be a better way to do this.” So the next morning after her birthday party I came over to her house. We were having coffee on her porch and we started hand drawing wireframes for what a mobile app would look like to sort of solve all of our child care problems. A week later, we were like. “This is a really good idea. We should get serious about this.” So we built some wire frames for real and then we were incredibly fortunate that our friend Damian was willing to do the coding for us, to engineer it and CluckCluck was born. Honestly we built it to solve our own problem.

Steve: So exactly how does it work? If you can just walk us through a use model.

Erin: Yeah, sure. So there are three main parts. The first is a booking engine. So you need a sitter for Saturday night. I personally have four people who I use on kind of a regular basis. So with the app you can send one invitation to all of your regular sitters at once. They indicate if they are available or not, and then you pick the one you want and book it. It will calendar for you and for the sitter and it will disappear for everybody else.

Steve: Okay.

Erin: Then kind of the main part of the app is what we would call the feed. So you can set up a little profile for each of your children with what you want to be notified about. That could be anything from again bottles or naps, for a baby to like sports practice or let’s say school gets out on Tuesday early, you could put that in their profile. And then give your babysitter access to this profiles while she is on the job, and just with quick one touch buttons she can give you updates on what’s going with your kids.

So she can just say with one click school pick up is done, homework is done, baby’s nap is done. She’ll also have access to all of your family’s emergency contacts. So let’s say she takes your baby to the park to play, she’ll have all the information with her just in case something were to happen. And then the last piece is the payment engine. So you can pay your sitter through the app and keep the payment history in case you need to export it to excel, like if you pay nanny taxes for example. And that’s pretty much it in a nutshell.

Steve: So in regards to– when the sitter hits the button you basically– there is no texting back and forth at that point. It’s just probably just one user interface where you look at to determine whether they’ve accomplished whatever you’ve setup for them to accomplish, right?

Erin: That’s exactly right.

Steve: That’s nice. So when you decided to design this app, did you have Damian this whole time or were you kind of worried about the technical challenges of developing an app in the beginning?

Erin: We were definitely worried about the technical challenges. Heather and I do not code ourselves. I wish I did. In my next life I will be an engineer. But we are– again we are tech lawyers and so we have helped various clients build many mobile apps, many websites. So we knew what that piece of the process should look like. So we were able to really sketch out a great level of detail, what the functionality would be. And once we finally got Damian on board– I’m not going to say coding was simple for him, but he had a clear road map for what it needed to be.

Steve: So you mentioned wire-framing a lot. So that’s terminology that only someone who is kind of experienced would use that sort of term. So were you developing apps in your job or?

Erin: Well no, I was helping. So when I worked at Disney, I would help the Disney business team to develop and build apps.

Steve: Okay. So for the listeners who don’t know exactly what a wireframe is, if you can just kind of describe that process that you went through, that would be great.

Erin: Yeah. It’s– pardon me for using weirdo technology terms. It basically just means like a graph of the app. So you create a step by step map of what it will look. So if you touch this button here, you will get a picture showing this is what the user will see next. So it’s just very clear what the flow will be as the user is working their way through the app. It’s not a difficult process but it can be complicated. You just want to make sure people don’t get trapped somewhere in a dead end and [inaudible] [0:08:54] whatever piece of the app they need to use next.

Steve: So do you use software for this or did you just do it on a piece of paper?

Erin: You can do it either way. We did a lot of it sort of by hand at first and then once we had it locked down we built it more formally with programming.

Steve: So have you used any tools like Balsamiq or any of those tools to wire frame the app?

Erin: No, not me personally.

Steve: And then how did you find Damian?

Erin: This is just– honestly just luck, the stars aligned. We had actually started out with a big development shop was our– they were our first partner and they were great. I will say that they were a lot of young guys who did not have children themselves. And as fantastic as they were I think they couldn’t really wrap their heads around what we were trying to do.

So after a few months with them, when it became clear that relationship wasn’t going to be productive, we parted amicably. About a week later, a friend of mine introduced me to Damian. Damian has three kids and it was like you could see the light bulb turn on. He got it immediately. And he was really enthusiastic about it, and has just found a fantastic partner. Damian is a natural rocket scientist, he teaches– he does aerospace engineering, he teaches classes in engineering and he’s the LA, he’s brilliant, and we are so lucky to have him.

Steve: So are you guys all doing this on the side? Then Damian this is side job for him?

Erin: That is correct.

Steve: Okay. And he has three kids, and he’s a rocket scientist.

Erin: Correct.

Steve: Okay. And he had time to code this up.

Erin: I think he doesn’t sleep, I think [inaudible] [0:10:33].

Steve: So that first company, where did you find that first company that didn’t work out, was it just through a service or something or?-

Erin: That was through a friend of mine recommended this company.

Steve: Okay, okay.

Erin: Former coworker of mine recommended the company.

Steve: Okay, and then as you were wire-framing your app, was there some sort of validation process that you went through before you all decided to kind of go all in on this project?

Erin: Actually not really. Damian was able to get a Beta app and running for us with a lightning speed. And once he had the beta app, we honestly, we sort of pressed our family and friends, and [Inaudible] [00:11:09] and we had a couple of hundred people, our friends and family tested out for us. And that was really the validation we made, several edits to the app as a result of that process before we publically launched it on iTunes.

Steve: Okay, so your Beta testers were mainly friends and family?

Erin: That’s correct.

Steve: Okay and how quickly did you get the Beta version out?

Erin: I want to say from the time we started working with Damian, maybe four months, and again remember he was sort of doing this on nights and weekends.

Steve: Okay, I was just curious, were you getting feedback along the way as you were developing that first Beta or was the first Beta just based on ideas that you guys just the three of you had talked about?

Erin: It was really just the three of us at that point.

Steve: Okay, and then once you started testing, or once you had Beta customers, did you guys make a lot of changes at that point, and what was the process by which you actually took feedback, because I have experienced developing software as well, and often times you get all sorts of feedback, and some of it might not jell with your overall vision for the app, so what was the process by which you kind of processed the feedback.

Erin: It’s a really good question. First of all we could see the path of the app where people are really engaging, and some things that weren’t being so utilized, so we knew where to focus our efforts. And I would say I think to some degree we were just lucky, we had friends and family who were pretty candid with us, and gave us some really excellent points of suggested functionality we had never considered, there was a lot of work around the calendar and piece in particular, around being able to blast one invitation to all of your sitters, and pick the one you wanted.

And so that function– we scrapped that whole thing and started over based on feedback that was– it was not friendly enough. And then we added some additional functionality, like the payment history and there is a time also you can have your set of clock in and out, when she starts and stops of her work, so you know how much you owe her. Those were things that were entirely suggested to us by our users. I do agree with you we received some feedback with which we didn’t agree, we didn’t feel like it was really going to work with our central purpose of the app, with our vision of the app. So there were some things that we considered carefully and discarded. But by and large the feedback that we received during Beta was really helpful.

Steve: And then why your app was in Beta, was it on iTunes for everyone to download, or was it just kind of a private Beta.

Erin: It was a private Beta, we used [inaudible] [0:13:43] which is the modern test flight, so you can just blast your app, only to people you want to have access to it.

Steve: Okay and then how long it was in Beta before you actually decided to put on iTunes.

Erin: I don’t remember exactly, it was a few months of testing.

Steve: Okay, and then once you decided to put it on iTunes, what was kind of your launch strategy?

Erin: Well, we are a small start up, we are bootstrapped, and candidly we were trying to get as much organic press as we could, because we did not have a gigantic marketing budget to spend. So we had then kind of cultivating relationships with a few recorders during the Beta process. And we’re incredibly lucky to have TechCrunch cover our launch, which was amazing. That was amazing.

Steve: So, let’s delve deeper into that, how do you TechCrunch to cover your launch?

Erin: So, my partner Heather who is braver than me, and cooler than me, she without time she applied for us to be in a TechCrunch pitch off, I don’t know if you are familiar with this or not.

Steve: Okay, no I follow TechCrunch for sure, I didn’t know that they have pitch offs.

Erin: They do, they have regional pitch competitions, where basically they take you usually five to ten companies, they give you literally one minute to pitch your company, and then the winners get tickets to TechCrunch Disrupt which is their big conference.

Steve: Yes, yes. I’m familiar with Disrupt, yes.

Erin: Yeah, so Heather applied for us to be in a pitch off and we ended up winning one of the prizes and getting a booth at Disrupt, in their start up early, and we just– we met a ton of really interesting and fun people, but also met a couple of reporters who offered to cover our launch, and in fact came through for us when we were ready to launch.

Steve: Wow. Okay. And so was that the magazine Real Simple on business insider or with these other people?

Erin: I will tell you, I think we were very lucky to get the coverage from TechCrunch because a lot of the other publicity start from there. The pickups from business insider and battle, and some of the other apps, Mommy press, I believe– I don’t know for sure, but I believe they probably came at that because people saw the TechCrunch article.

Steve: Okay, and then just hypothetically speaking, let’s say you did not win that TechCrunch pitch, what was some of the other things that you had in mind, like what was plan B and C and D?

Erin: I think you gave me a credit for being more organized when I answer. We were prepared to work with the PR Company, with a PR firm if we needed to.

Steve: Okay. Do you guys work with one now, I mean how do you get publicity today?

Erin: We do not work with one now, we do a lot of blogging and a lot of social media, and that gets us a fair amount of traffic. In a perfect world if we were– if we had decided to pursue VC money or something like that, I think we probably would be working with a PR firm, but we are really enjoying kind of this organically grown business, it’s been a lot of fun for us, it’s been a great adventure.

Steve: So let’s talk about blogging, so I run a blog, and…

Erin: You run a great blog.

Steve: So is this– thanks– is this blog– flattering me, it always works. Is this blog directly tied to the app or is it kind of an independent blog that…

Erin: No, it’s tied to the app; you can access that from the app web page.

Steve: Okay, So let’s talk about your content strategy, so what are some of things that you write about, and how does that tie into your app?

Erin: Well, we have found that the demographic who’s most humbly using our app is working mums.

Steve: Surprise, surprise.

Erin: Surprise, surprise which makes a lot of them, so we try to blog and write honestly about issues that we ourselves have tackled as working mums, whether it’s suggestions for how to make your day a little easier, or just want empathy for hey this is tough, we’ve been there, you are going to get through it. We blog about a lot of issues, about work and family.

Steve: So, having started a blog myself, I know that in the very beginning it’s pretty lonely when no one is reading, so how did you start that initial traffic burst with your blog?

Erin: That and the second question, Heather and I each wrote a blog, so we did blogging for a little while and it’s kind of what you are talking about, we are so alone in here, and no one’s reading it. And then each of us wrote a post that was very honest, mine was about why I had quit my big corporate job to become– to go freelance. In addition to the app, I’m also an attorney and I run my own small practice. So I wrote a post about why I had quit my big corporate job, how difficult it has been for me, and how candidly I was still mad that I had to quit, and that kind of turn the traffic.

And then Heather wrote a post about her experience, she at one point had quit her job to be a stay-at-home mum, and after several years at home returned to work force. And she talked very honestly about what an incredibly difficult transition that had been for her, and how off ramping, you’re taking time off to stay at home can be more detrimental to your career than people generally will admit in the media. And those two posts together somehow managed to drive a fair amount of traffic to our website. We still get head time results all the time.

Steve: How did you get the word about those articles?

Erin: We posted those articles in addition to like our CluckCluck social media accounts, we posted them to our personal social media accounts which links back, and the traffic all came from there.

Steve: Okay and how did you build– is this from Facebook, or twitter, what are your main social media outlets?

Erin: Our main social media outlets are Facebook, Twitter, and Instagram.

Steve: Okay, so let’s talk about all those actually, let’s talk about Facebook first. How did you build your Facebook fan page?

Erin: Well, Facebook is a tricky one, right. Facebook– I’m going to get all boring a lawyer, I get away from that. Facebook has changed the way the algorithm works, so that posts by companies are becoming less and less obvious in your news feed, and so I think we rely less and less on Facebook, simply because it is not driving traffic that it used to.

Steve: Okay, so what do you focus on then?

Erin: I mostly use Instagram more than anything which is funny because our app is not naturally a super visual piece of media. And so we try to post a lot both serious posts and funny posts on Instagram about challenges of being parents or working parents.

Steve: I actually– I was just about to say your app is perfect for Instagram, because you can post all these funny things about your kids and your family. So do you get kind of personal on your Instagram account? I know my wife doesn’t like me posting pictures of my kids on my account. Are you guys wide open with that?

Erin: We do not post pictures of our children. I will certainly post pictures of the aftermath of our children. My son broke the window this afternoon; I posted a picture of the broken window.

Steve: So how do you mix Instagram posts with kind of more with posts that encourage people to check out your app.

Erin: That has been– it’s a challenging one, because you want your audience to be entertained but you also want them to know about your product. I really love our product and I believe in our product. I just think we try to keep it a fine mix of like “Hey these are funny relatable moments that we’ve had as working parents.” And then we usually– we will post a photo about one of our latest no– let me give you an example. We did it a post about going back to work after maternity leave and we found this great shot of this really gorgeous woman, who look professionally dressed. And so we’ll post something like that with a link back to the blog in the profile section.

Steve: So by link– because Instagram doesn’t allow links, so is it just like the typed out URL?

Erin: So what we do in your Instagram profile, you can– there’s one live link. And we update that link constantly with whatever our new blog post is.

Steve: I see so you make the post and then you say “link in profile” or something like that, right?

Erin: That’s correct.

Steve: And so how do you measure all these– how do you measure what’s coming in from Instagram and– do you guys measure where all of your downloads are coming from? Like the sources?

Erin: It’s hard to measure downloads. We are iTunes only. We are IOS only right now. We are working on an android version, but it is not up and running yet. So it’s hard to tell what brought somebody to iTunes. It’s relatively easy to tell where web-traffic to our website is coming from. And we do use like a Google URL shortener for twitter, for Instagram and so sometimes it’s hard to tell something has come from a Google search or from a URL shortener. Yeah there are many tools available that will tell you where your traffic is coming from.

Steve: So would you say that Instagram is one of your primary sources outside of your blog?

Erin: Yes. Facebook [inaudible] [00:22:44] a fair amount of traffic, but we have kind of seen that go down over the past six months and I expect it will continue to go down.

Steve: Okay, and then what are some of your strategies to get more Instagram followers.

Erin: I do not have any good strategies. Do you have any you would like to share with me?

Steve: Maybe I’ll find. I mean I’ve interviewed some people who base their businesses on Instagram. So I was just curious if you are doing anything special to get more ads. But I mean in a nutshell a lot of these people that build their following, they run contests, they do giveaways and that sort of thing.

Erin: You know we keep talking about that. We probably ought to get more sophisticated about it and do more about it, but right now no we haven’t tried any of those tactics.

Steve: Do you guys do anything paid advertising?

Erin: A little bit. We kind of dabbled to see what moves the middle. But I will tell you in terms of app downloads, the paid ads don’t seem to work as well as just some of the press coverage we’ve gotten.

Steve: Absolutely. So what is your– so you don’t have a PR firm, so how do you do your outreach today for press?

Erin: Oh boy! It’s– we try to be strategic about once a month. We look at our media plan and update it. But it’s really a lot of organic outreach; it’s me and Heather emailing editors, calling people, trying to let them know about the app.

Steve: So are these just editors that you know or they are just brand new cold call editors.

Erin: It’s a combination of both. It’s a lot of cold call quality emails though.

Steve: Okay, and do you guys use the service like Harrell or anything like that?

Erin: We don’t. We haven’t. I know some people have great luck with it, not us.

Steve: Yeah I mean you have to be like the first person to respond. Basically– I mean it’s been hit or miss for me, but I was just curious. So I had another question actually and this is just about the app, why did you decide to price it at 99 cents as opposed to giving it away for free with advertising? What were some of the thought process behind that?

Erin: You know we thought about that a lot and we played with several different models. But this was a big part of our beta test was how– what is the best way to sell it? What do people feel is the best value? And you know free with ads is not a great business model for most apps these days. It’s just that the ads– I think that there will be a great way to monetize mobile, but just banner ads and apps doesn’t tend to really get it done unless you are gigantic, unless you are a huge app. And also kind of we’ve used a bunch of apps without them and some of them don’t just look that great. It interferes with ease of use.

Steve: Yes definitely.

Erin: And we decided we really wanted this to be a clean and simple tool for parents and for baby sitters. And the keeping it ad free was the better way to go.

Steve: Did you guys run any tests to see whether it would generate more income than the download?

Erin: We– yes we did. And we believe that the download model works better for us financially as well.

Steve: Okay. Just a side story there is this pay app that I let my kids play but it’s ad driven. And every now and then they will hit the ad which pisses me off because it takes them to the seller website. Anyway, okay so let’s see– so now your app is on iTunes, what is the secret to getting visibility on iTunes?

Erin: That is– it’s really tricky. There are definite strategies to making your app more visible. If it’s optimized for both iPhones and for an iPad, that will help you definitely apps that are so general orient app that don’t have any mature content on them, that’s a better way to go. And ours definitely doesn’t have mature content, it’s general audience. Having the app available– this is something we are working on; having it available in multiple languages can be helpful. That actually would– will be great when it’s up and running for our app as well because a fair number of our app users English is not their first language.

Steve: Oh really, okay.

Erin: Yeah. Apple is a little bit secretive. There are some strategies to getting your app more favorably placed. But it’s all a little bit of a guessing game I would say.

Steve: So you didn’t do anything super special to kind of rank higher in the iTunes search algorithm?

Erin: No, things like downloads matter. And I will tell you a lot of apps out there pay for downloads. They buy downloads so that their apps appear to be more popular. And that’s is something we have steered away from for a variety of reasons.

Steve: Yes I know that there is companies in china where you just pay X number of dollars and you get like 5,000 downloads, a thousand down– it was actually just in TechCrunch I think, that article. It’s basically this person in front of like a thousand phones, like a huge warehouse array of these things and people are just downloading apps. Okay interesting. What about a strategy for getting reviews. Reviews probably help also, right?

Erin: Yes reviews help also. Maybe aside from sort of bribing our family and friends into reviews was…

Steve: Yes I will go give it a review right after this interview.

Erin: Oh thank you. That’s very kind of you. It’s actually funny enough that we are about to push an update the app-store, which I think it’s going to be a great update. But one of the things that we’ve done is made it easier for people to give reviews within the app, you don’t have to leave the app and go into the iTunes environment. You just prompt– you may have seen this. A lot of apps do this, Instagram is one of them. “Hey, would you like to give us a rating.” And for apps where there is royalty in use of attention, a lot of people will go ahead and volunteer to give the rating.

Steve: Okay yeah that would definitely make it much easier because I don’t– I rarely use– going to iTunes and actually give a review, right?

Erin: It’s not the easiest process.

Steve: Yeah, I mean I have that same problem with this podcast right. If people have to go on the web or iTunes to leave a review generally they are not going to do it. I actually went as far as to bribe people. So I know that works if you want try that.

Erin: Oh that’s good. That’s good [snore] I’m going to put that into our media plan.

Steve: So this is kind of like a technical product. Do you guys actually have to deal with support?

Erin: Yes we do. We do have to deal with support. I mean I will tell you the first version we thought we had beta tested it to death and after it had been live we found a small bug. So these things happen. Luckily again Damian is a genius. So he had a correction on that in about an hour.

Steve: Really? But he still works full time?

Erin: He does, it’s incredible. I don’t know how that man gets it all done; it’s very impressive, because we do get customer emails. “This isn’t working for me.” “Hey I thought this functionality was going to behave a little differently.” We just try to be really on top of that. We are not currently using a service. We are still doing that piece ourselves.

Steve: Okay, do you guys have a phone line or is this all basically email support.

Erin: No, it’s all email support.

Steve: Okay and do you find that because customers pay 99 cents for an app they kind of demand that things get fixed quickly or what has been your experience with customer support?

Erin: We’ve had a few customers who have taken out tact and felt that they either wanted to fix or they wanted their 99 cents back. But I will say most people have been pretty generous and not terribly demanding or mean with their feedback. Not really big with customers, we’ve been lucky so far.

Steve: Okay, and then given that IOS kind of gets updated all the time, does Damian kind of maintain all the code for all the different versions?

Erin: He does, I mean he uses his tool kit, yes, but he is a one man show pretty much, that’s correct.

Steve: He is a one man show, wow, it sounds like I should get a hold of this guy and pay him double whatever you guys are paying him.

Erin: I would never give you his contact and for my sake. No it really is funny though, because he — when Heather and I went to TechCrunch Disrupt which is the giant technology conference, which just everybody there has their own startup that they want to tell you about; people could not believe that Damian had coded the app. Like he was one guy had done it by himself, people were astonished by it. He is real…

Steve: Yeah, I know totally, I mean most apps these days have like a team of people working on them, right?

Erin: Yes, that’s much more common, and that’s where we started, we started with the team.

Steve: I mean the days are over where you could just put up some stupid floating app online to make a lot of money, right?

Erin: Oh, I don’t know YO, was really popular last year.

Steve: That’s true it was, that’s true. So let’s talk about pricing why did you settle on 99 cents? I know there is apps that are priced all across the board.

Erin: We have played with the price a little bit.

Steve: Okay.

Erin: But 99 cents seems to be the sweet spot where customers are — I think most people are willing to do the 99 cents price point. There have been a lot of studies about apps on iTunes. And it seems that there is a drop off between 3 and 99 cents. And there’s a drop off between 99 cents and 2.99, and then a big drop off after 2.99, if you go any higher than that. But 99 cents is a really common price point on the apps store. A lot of people don’t like to pay for downloads, but they’ll consider the dollar. And that just seems to be the sweet spot for us.

Steve: Okay, and did you guys experiment with some of the other price point? I was just curious what the fall off would be if you went to 2.99.

Erin: We did, so we’ve made it free for a while, we’ve made it 2.99 for a while, to see how it moves the numbers. And I’ll tell you making it free — oh boy, I hope this isn’t like two tricks where Heather is going to get mad at me. But making it free actually does not result in a giant increase, making it 2.99 results in a big decrease.

Steve: Okay, and so you guys gave it for free, but there was no ads, right? So there was free ones you weren’t making any money off of right?

Erin: That’s correct, we’ve done it as like promos, hey we are going to be free for the next week, that kind of thing.

Steve: Oh, okay, and in terms of that little payment part of your app. Do you guys take a cut of that at all or is it just…?

Erin: Yes.

Steve: Okay, so in a way that’s kind of internet monetization, right?

Erin: That’s correct, that’s exactly right.

Steve: So what carrier do you use to process credit card transactions in?

Erin: Currently we only have a PayPal integration, and if you use our versions of the app that plan to roll out additional payment options.

Steve: Okay, so the babysitter has to have a PayPal app and you have to have…

Erin: There’s only PayPal accounts, the PayPal functionality yeah.

Steve: So they have an account and then do you need a special account? Like website’s pin and pro or anything like that in order to accept payments?

Erin: No PayPal really handles the entire thing. At this point they can do the payment to the babysitter and then the tiny payment to us in parallel.

Steve: Okay, and so you just need a very standard, very basic PayPal account in order for this work?

Erin: Exactly right, nothing fancy, nothing special.

Steve: Okay, and so what are some of these — what are some of the other — like because I didn’t even know that you are monetizing that part of it. Are there any other ways to make money with the app, like I kind of applied that one app?

Erin: We have some plans to monetize the app in the future. Nothing I can talk about today though unfortunately I apologize for that. And nothing that [inaudible 00:34:14] to roll out and it comes in. I think that we are at least six months away from any different type of monetization beyond taking the convenience beyond the payments of babysitter.

Steve: Okay, now I know a lot of listeners out there they are interested in developing apps for iPhone and android. One question I had was why did you start with Apple as opposed to android, given that android actually has a larger market share at this point?

Erin: That’s a really good question; we did a fair amount of the research. And we had identified relatively online that really our demographic was primarily parents aged 25, to let’s say 45, with generally both parents working outside the home, vast majority of people who fall into that demographic are iPhone users.

Steve: Okay, now that makes total sense actually. And if you were to give some advice to listeners who want to start an app from scratch and they don’t have Damian…

Erin: Oh, good luck.

Steve: If you would just start all over again, could you kind of just walk me through the process that you would go through to create a successful app, as successful as your app has done.

Erin: Oh, yeah, thank you. Yes, so I think the — probably the most important piece first of all is to be very clear in your vision for what the app would look like, how it should behave, because if you go to a developer let’s say you decide to hire a developer to build it for you, the more vague your idea is, the more expensive it is going to be to build. Because you are going to have to iterate more — there’s going to be a discovery process to really clarify that idea to the point where an engineer can do the coding for you.

But if you could go down with it really — going with it really locked down on paper. So somebody could kind of walk and code, pick up your paper and understand the app, and how it should look and how it should work, you are going to save yourself a lot of time and pen.

Steve: So is this as simple as just taking a piece of paper and saying hey, when someone clicks this button, it goes to this page and how the flow of the app works?

Erin: Yes, I think it absolutely could be that simple.

Steve: And what about — one thing I forgot to ask you about was graphics. Who does your graphic design for the app.?

Erin: So my graphic designer is a fantastic woman named Kim. She is — actually I got to tell you this app was a Bourne [ph] racing at the beginning. Kim is the sister in law of one of my best childhood friends. And she was the graphic designer in Natal [ph] for a very long time. And now she works independently, she is freelance designer and she is amazing. So we — Heather and I are lawyers, we are lawyers by background, we are not super creative people, so sort of the logo and looking through was a challenge for us.

So we got her in very early on and hired her to create our logo and to kind of give us some style guidelines for the app, and I think that has made a tremendous difference. Her work took our basic idea and she made it beautiful. And that’s a big deal when you’re using an app. You want it to be stylish, and you want it to be good looking on your phone, so full credit to Kim for that.

Steve: So I’m just listening to all the different pieces that you need to come together for this app. It look like you need a coder, you need a graphics designer, and you needed two lawyers. So how much did you invest to get this app off its feet?

Erin: Well, the funny thing about doing this is [Inaudible] [00:37:46] raising is we didn’t actually end up cutting the cheque. I will say we paid Kim for her graphic design help, but she probably gave us the friends and family rates.

Steve: Sure.

Erin: Damian came on as an equity partner, so we’re not paying him an hourly fee or anything along those lines.

Steve: I see.

Erin: Yeah, so we have been able to keep ourselves pretty lean.

Steve: Okay and so is that– let’s say you didn’t have Damian once again…

Erin: Oh yeah.

Steve: Would you still have gone the equity partner way or would you have kind of paid lump sum, like that first firm that you used, did you pay them or was that an equity deal?

Erin: Without going into great detail, it was more of an equity deal. We did not pay them.

Steve: Okay, and so would you suggest that going forward for people who want to start their own apps and they’re not technical at all?

Erin: I think yes. In my belief, the best thing to do is to find technical co-founders, to find your own Damian. And I do think those people are out there. They can be very difficult to find, but if you are serious about building a product that you want to have a high quality functioning product, the best thing you can do is to have somebody who is invested in it with you. And either– there are some services out there that help match technical co-founders with non technical co-founders. There’s a website called Founder2be, it’s like a match.com for startups, where you can kind of go find the missing piece of your startup.

Steve: Oh, okay. Nice.

Erin: There are places you can go to try and meet engineers or whatever type of expertise you need.

Steve: Okay, are you down in the Silicon Valley, are you?

Erin: No, I live in Los Angeles.

Steve: Oh, you live in Los Angeles. And is everyone local to where you are or people are…

Erin: Actually Heather is based in Atlanta, but she’s back and forth to LA on a regular basis. And yes, Damien and I are both based in Los Angeles.

Steve: So how much would you expect to invest in an app?

Erin: That’s a hard question. So there are apps out there that are really simple like Yo that we talked about early that does literally one thing. And then there are apps that are incredibly complicated like Facebook. The price points on those apps are going to be wildly diversions. I think anything from maybe a few $1000 for something basic, to $100,000 to build Facebook from scratch; probably I’m sure it’s way more than that by the way, but a lot…

Steve: What about…

Erin: In terms Complexity.

Steve: What about from a different perspective. So you guys all work your job still, what about a time commitment? How much time would you guys say you devote to this app?

Erin: A lot of time, a lot of time. I would say it’s [Inaudible] [00:40:27] flows. Right before it launched we were, all three of us, probably working 40 hours a week on it.

Steve: In addition to your….

Erin: In addition to our day job. But then there are times where if we don’t have any updates, that we’re working on at the moment, no big press push, maybe it’s only ten hours a week. It really varies.

Steve: Okay. And so where would you say you spend most of your time now that the app is actually launched?

Erin: Now that the app is launched, we’re currently working on an update as well as working on Android, so that’s a fair amount of time. But marketing and PR is probably the bulk of it at the moment.

Steve: Okay. And then how are the duties kind of divided between you and Heather?

Erin: Heather and I are pretty much 50-50. And the great thing about having a co-founder like Heather is that we can both kind of pick up the spot for each other. If she’s having an insane week at her a day job, I can step it up and vice versa.

Steve: Okay. And then Damian of course, then rockets will not get designed that week I guess.

Erin: I know, right? Seriously though you have to meet him, he’s great. He occasionally has to go into a secret bunker for his job, where he’s like, “They’re going to take my phone away for six hours, but I’ll be back.”

Steve: So this company is government related then I guess?

Erin: Yes.

Steve: Oh, okay, okay. And he’s down in LA?

Erin: Yes.

Steve: I think I know which company it is. Well that’s cool Erin, any other advice that you would give out to someone who’s interested in developing an app? Were there any books or anything that kind of gave you a head start?

Erin: Not on the apps specifically. I’m a big fan of The Lean Startup, if you’re looking to start a business. I’m a huge fan of Ben Horowitz’s book, The Hard Thing About Hard Things, which is about both starting a company and then scaling it up to a big company. And he’s part of Andreessen Horowitz, the large venture capital firm, and man does he have some good advice.

For me personally, I would say my best advice is just to persevere. A lot of small startups, a lot of app companies fail simply because the founders run out of steam and kind of give up. And Heather and Damian and I are pretty tenacious. I really attribute a lot of our success just being willing to beat our heads against the wall until something works.

Steve: And it sounds like in terms of maintenance, maintaining this app does not cost that much money because you have the engineer and then you guys obviously are working on it yourself, but you don’t have any outside help that you’re paying at the moment, right?

Erin: We do not. I think in my dream world if our app got gigantic, I’m sure we will at some point, yes. Sort of outsource or to insource, but currently it’s just us.

Steve: Do you guys pay yourself a salary or just all the money kind of goes right back into the app?

Erin: Right now all the money goes right back into the app. I could envision a day where we all might take a salary, but not yet.

Steve: Okay, and then what is the realistic time frame that you would give for somebody who wants to create an app?

Erin: Well, again I think it’s kind of very based on complexity and based on the talent and time that is there to be doing it, but honestly there’s phrase about the longer it takes to launch, the less likely it is to launch. And I think there is some truth there. You got to give yourself a few months to a year, but try not to go a whole lot longer than that.

Steve: Okay and then you highly recommend doing some sort of beta right away as soon as you can, and then iterating on it?

Erin: That has worked great for us. I loved that route. I know other people have done other things, but that was great for us.

Steve: Okay. Well, great Erin. We’ve been chatting, believe it or not, for 40 minutes already.

Erin: This is been really fun. Thank you again for having me. I very much appreciate it.

Steve: Yeah, really appreciate having you on. If you could tell the audience where they can find you, where they can find your app…

Erin: Yes, of course…

Steve: And get more information that’d be great.

Erin: So our website is www.cluckcluckapp.com, and you can find us on iTunes, if you just search for CluckCluckapp, like the noise the chicken makes.

Steve: And what about your Instagram account and your twitter account?

Erin: We’re @cluckcluckapp for both and same on Facebook, it’s just– search for CluckCluckapp and you’ll find us.

Steve: Awesome Erin. Well, thanks a lot for coming on the show. I had a great time.

Erin: Thank you, so did I. It was a pleasure.

Steve: All right, take care.

Erin: Bye-bye.

Steve: Hope you enjoyed that episode. What I like about Erin is that she doesn’t have a technical background, but she still managed to create an awesome app for parents. And it just goes to show that you don’t really need to know how to code in order to create a successful app. You just need to create the right team to do so.

For more information about this episode go to MyWifeQuitHerJob.com/episode71, and if you enjoyed this episode, please got to iTunes and leave me a review because when you write me a review, it not only makes me feel proud, but it helps keep this podcast up in the ranks, so other people can use this information, find the show more easily and get awesome business advice from my guests. It’s also the best way to support the show. And please tell your friends because the greatest compliment that you can give me is to provide a referral to someone else either in person or to share it on the web.

Now, as an added incentive, I’m always giving away free business consults to one lucky winner, every single month. For more information go to Mywifequitherjob.com/contest, and if you’re interested in starting your own online business be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

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Thanks for listening to the My Wife Quit her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.MyWifeQuitHerJob.com.

Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information go to Mywifequitherjo.com/contest. And if you are interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

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Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I am really excited to have Scott Fox on the show. Now Scott is actually someone who randomly reached out to me, I want to say two years ago maybe, and we’ve kind of loosely kept in touch ever since. Now if you’ve never heard Scott, he has built or advised hundreds of websites that have generated billions of dollars in sales including popular sites like livenation.com and billorilley.com. He is also the bestselling author of three books including his most recent one, Click Millionaires: Work less live more with an internet business lifestyle that you love. Now today Scott is an internet start-up coach, a father and he runs a portfolio of niche sites including the popular free entrepreneur coaching forum at clickmillionaires.com.

Bottom line Scott knows a lot about creating niche websites for profit and how to create lifestyle businesses which makes him ideal for my podcast. And with that welcome to the show Scott, how are you doing today man?

Scott: Good Steve thanks for having me, nice to talk to you.

Steve: Yes so give us the quick background story about how you got started on the internet and how your journey kind of led to Click Millionaires.

Scott: Sure, it’s a longer story than most. I was involved in the internet in the early 90s which is, these days, going to be a while ago. That’s because I was at Stanford in the early days and this thing people kept talking about and producing– there was email and is very all text-based. This is before there were even images on the internet.
And long story short the Palo Alto in the early nineties was a good place to be for sort of a human incubator or for future internet entrepreneurs. Everybody knows that story by now and I got involved in the internet then. And I raised money for my first dot com in ’96 and I’ve had lots of ups and downs since then, but along the way figured out that there is a lot of opportunity online. And a lot of people don’t get to hear about how to do this. They are kind of getting left out of the revolution.

I made up my mission once I had made enough money to do so; to write books and podcasts and offer forum services and stuff like that. To help other people who are not necessarily blessed like you or me with a particularly– I’ve got a business background and you’ve got a technical background, and they don’t necessarily have those tools. And I thought it was important to try to share the fruits of the revolution that is happening online with other folks. And that’s what my books and coaching forum are about; to help other people figure out there are opportunities here for anybody. It’s not easy, it’s not quick, but it’s a new way of living and that is the lifestyle business which I know we are going to talk about.

Steve: Yes for sure, so you aren’t a part of somebody’s larger company anymore right; today you just kind of run a bunch of niche websites? Is that accurate?

Scott: That’s right; I would like to say I graduated. (Chuckles)

Steve: Graduated?

Scott: Yes so some of the bigger ones you mentioned I can’t personally claim I made billions, but when you build websites like livenation.com that’s billions of dollars of ticket transactions every year. It’s for real, so I give the money from my books to charity and our forum at clickmillionaires.com is free. I’m still making money but it’s really not from helping other people learn to do this. It’s from other niche businesses that I’ve started.

Steve: You know it’s funny there is often this disconnect; a lot of people think that when you start a business you have to shoot for the moon like start the next Amazon or the next Facebook, but there is a lot of business that you can just kind of create on the side that will exceed your income and you can live quite comfortably doing that. So that’s what we are going to be talking about today.

Scott: Yeah, I think that’s a great point. People think you got to be Mark Zuckerberg or Steve Jobs or something. There is kind of myth of like the lone genius who is going to conquer the world. I guess it started back with Thomas Edison or something, but it doesn’t have to be about that and a lot of my approach in my books and so forth, is about having a portfolio of businesses just like venture capitalists invest in a bunch of companies. They are not like going to put their money in and hope that it’s going to become Google right. They put in a bunch of little things and some rise, some fall, some muddle along and you know over time you make money in a bunch of different ways, so that’s what I like to do.

Steve: Yes since you’ve worked with a bunch of different websites I thought it would be pretty interesting to get your take on how to get started as a brand new internet entrepreneur today. So I thought we’d just kind of go over some of the different business models, and I’m going to create kind of like a scenario for you. Let’s say I have like a one to two year time window where I kind of want to gradually replace my income and quit. So in that respect, with that scenario what kind of business models would you recommend online; how would you go about getting started?

Scott: The big thing for me, I think is a real paradigm shift from the way that people tend to think. There is so much out there about like find your passion and follow your passion and do what you love, and the money will follow and that’s supper. But if you’ve got a mortgage and you’ve got a timeline, your passion may not turn into cash real quick, so the offer is very different. If you are like I’m going to build this up over the next twenty years so that when I retire I have some extra income. That’s very different than what you are suggesting, so if you are talking about making real money right away, or again not right away, this is not instant cum not a get rich quick game.

Steve: Sure, right.

Scott: But getting right to it, focusing on the money, the number one thing is you got to find a need and this is, I know you know this, we are talking in theory in general, right? You got to help people. I actually have seven principles in the Click Millionaire’s book. You said you were flipping through it last night, you might have seen this chapter. The seven principles that I have found, not just to design a business, I’m not trying to teach people to found Microsoft, right.
You really do need a technical background and millions of dollars and a big team to do all that. I’m talking about little niche businesses. So if you are going to do that there are seven principles in the book. The first one is really obvious; help people. You’ve got to find a problem and solve it, and the more painful that problem is, the sooner you can solve it, the sooner you’ll make money. That may be a little obvious, but that’s where I start every time. It’s not about your passion, if you want to make money, you got to find a problem and solve it.

Steve: Okay so where are some good places to find problems?

Scott: Yeah exactly, so that’s what leads to the interesting part and that’s where the passion does come in because you can look at your own life. Look around and find out what annoys you in your life? What’s the problem that bothers you? You see lots of apps out there that solve different things, or make things more convenient, right? What is an area that you are passionate about? You are big into yoga or you are a gardener or you love to restore old cars; I don’t know.
That’s where the passion can come in because I really do think passion is important if you are entrepreneur, because if you don’t love it what’s the point, right? You can get a job. But if you are going to create your own job across between your passion and a commercial need that other people need filled is the right place. So that’s a little airy fairy, but what I’m saying is look at things that bug you.

Where is the biggest problem that you can help address, and if you can help other people figure out how to solve that you can sell them information, you can could sell them products, you could sell them services, you could broker those things, there is lots of ways to solve it through this, amazing internationally distributed internet thing.

Steve: So how do you determine whether a particular area is too saturated or not?

Scott: Well then you’ve got to go online and that’s the beauty of the web, right? You go to some Google searches and see what’s out there. What’s interesting to me is that a lot of people immediately get turned off if there is competition, and that’s potentially a valid approach, right? Just try and start a general purpose bookstore right now online?
That’s going to be tough taking on Amazon, right?

So you got to be realistic about this stuff, but I would look and think deeper. In a lot of cases you’ve got to go to a second, third or even a forth level niche. Let’s say pick books, let’s say you don’t do a general bookstore, you do books that appeal to sports people, athletes okay you know, what’s sport? You drill down to scuba diving or to field hokey or whatever and narrow, narrow, narrow and find a problem. Where is something that is being underserved, and that’s a research task that is hard to quantify.

Where you can get a little more quantifiable and you probably know this part as well is, with Google Trends and Google keyword planner and things like this you can go in and actually get reports on things, how much are things searched for and where is less competition and where there is more competition. That’s sort of validation can help you. I kind of like to do a mix of that stuff with my own gut, because the fact is if you found a niche because there’s an area you’re passionate about and you actually know that Google may not know it yet either. You really know that there’s a lack of information about scuba diving in Belize because you were there last month and your cousin lives there or whatever, you’ve got some insight angle. I would run with that crossed with some quantifiable research.

Steve: So what are some of the search guidelines that you have when you are doing the research?

Scott: Well you want to look at volume of keyword searches per month. If you see somebody– I just made that up, but Belize scuba diving. If there’s a billion searches and little competition; wow that was easy, right? It’s not going to be that easy though. And you’re probably going to drill down and you probably want something that’s got several thousand searches a month. And that will point you in the direction of an area to explore, and then the further you go you want to figure out what’s a variety of different ways to say that.

This is basic SEO stuff, Belize scuba diving, scuba diving Belize, you know the major towns in Belize, or maybe major equipment manufacturers for scuba diving equipment, or different keywords related to that, and build a bunch of pages around that. That’s sort of 2007 version of SEO, that’s not the whole game anymore, but that’s enough to give you a solid platform, hopefully in an area that isn’t completely overrun by competition.

Steve: Okay, so based on what you said, once you kind of have a niche you mentioned putting together some sort of information site and starting writing about it, would that be your next logical step?

Scott: Well that gets to your question earlier which is kind of you were implicitly asking about business models as you well know as ecommerce guy, there’s lots of different ways to skin a cat, right?

Steve: Yeah, yeah.

Scott: So you could– my natural thing is that I just like situations where I don’t have to carry inventory, because there is just a lot expense with that right? So I tend to gravitate towards publishing models or information products; blogs, videos, podcasts, things like that. But there’s a perfectly valid approach, and I’ve done it many times and made money that way too as you know better than I. At this point you can buy a bunch of stuff and ship things to people, and there’s a good margin there too if you find the right niche.

So that’s a part of the process I think of once you’ve identified scuba diving in Belize what’s missing, right? If there’s fifty blogs about it well maybe that’s not it, but maybe nobody’s sending out this particular type of equipment that’s appropriate for that market, or something maybe that’s native to the Belize market. There’s some product that the local folks make that hasn’t been marketed well, and you can get into physical e-commerce real quickly again through the Internet. But those are very different models obviously.

Steve: Yeah I just thought I’d comment on that a little bit. So I’ve done e-commerce and I’ve done the info route. I have a blog, I’ve done affiliate marketing, and the blog just took a lot longer to make significant income because it took a long time to develop that audience. Whereas with e-commerce I had something right away that I could sell, and so the money kind of came sooner rather than later. So that’s why I gave you that one to two year time frame. What would you suggest; do you think you could pull off an info-related site within that time frame?

Scott: In terms of making real big money from it?

Steve: Not big money, but just income let’s say fifty thousand dollars.

Scott: It is harder to see. I agree with your point, I’m glad you’re talking about– speaking up here, it’s not just about me because you have as much expertise in this area as I do. So let’s make this two way [laughter].

Steve: Sure.

Scott: I think it’s a harder road, but I also think it’s easier to produce if you have a passion and you’re not as technical. How’s that? So I think you can make a little money and grow it overtime, and the key from what I’m driving at and this is just different structure for different folks right it’s not there is a right or wrong. I’m really trying to help people find lifestyle businesses.

If you want to live the lifestyle where you go scuba diving in Belize a lot, blogging about that is going to be something that serves your needs. Maybe not just financially, but also in your life and that’s something that my books are about that a lot of– I don’t see in any other business books which is what do you want to do? How do you want to spend your time, and if you are only focused on making money, then scuba diving Belize probably isn’t the idea anyway, right?

Steve: Sure, sure.

Scott: So you should be selling socks or something more commercial right? So that’s– it’s hard to give specifics here and I appreciate you pressing me on, because it’s– this is the, as you know again I’m talking too much, you got to talk some more here. But the trick for every entrepreneur is figuring out this balance right; how commercial, how lifestyle, how product, how publishing, how marketing, how these are all the different levers that you have to pull as an entrepreneur.

Steve: Yes, so let’s talk about blogging because it’s something that we both do well and you have a bunch niche sites as well. What are some of the ways? So if you could just give an example of one of your niche sites and how you’ve monetized it. That would that would give us a pretty good idea of what some of the sites you have created are all about.

Scott: Sure. Well I guess my personal favorite model is communities, forums. And I just like it because as we were talking before we came on the air together, when you work alone as an Internet entrepreneur, sometimes you get a little isolated. And so I have set up several forums over the years where people get together. So one you can look at is artfairinsiders.com and this is actually a site that I talk about in all my books. Well not all my books because we didn’t start until the second book.

My star pupil is my mother, and my mother is now 73 years old, and runs a six figure website businesses all based around her interest which are art fairs. So that’s her thing. She likes art fairs, handmade art craft, stuff like that. I’m not interested in that stuff I think, but I set this up for her that we started like ten years ago I guess, 2004 so.

Steve: Wow!

Scott: Not the community, that came later, but it was early anyway. So if my mom can do it anybody listening can do it if you take time and find a niche. And this to be more specific in response to your question, this– one of these sites or several of them, but the artfairinsiders.com is a forum community for art fair artists, and there are thousands of people. Five figures is ten or twenty thousand people in there now, and it makes money through advertising.

They come and they post stuff and they talk about and share the business tips for the different art fairs they go to and where to stay in you know all that kind of stuff. And they’re both AdSense ads, affiliate ads, and actual art fairs want to sponsor things on there to reach the artists. So it’s kind of like what thirty years ago would have been a magazine. But now it’s interactive, it’s online, and the people are all there in real time. So it’s a mini Facebook for artists.

I love that kind of concept because it destroys the geography that used to keep us all a part and the internet is amazing at that, because well even as you and I right now we’re here talking to each other long distance. It’s going to be on podcast and reach people all over the world; those sorts of opportunities for communities are a personal favorite of mine.

Steve: Let’s talk about building communities because starting a forum is not easy to do. You actually– there’s often a chicken and egg problem, right?

Scott: Yeah.

Steve: You have to get people in the door and other people who want to join; they want to see these other people are already hanging out in there. So how do you do it?

Scott: For sure it’s a great question because there’s almost nothing lonelier than an empty forum, right?

Steve: Yeah.

Scott: Well I guess even lonelier is the forum with four people. That’s the worst, yes you’re right. This is something. I used to be in the music business back when there was a real music business anyway. And one of the things that bands are really good at is spreading their music through word of mouth, and leaking things out to influencers.
And all this stuff is now public knowledge through things like Seth Godin has taught us, or our Malcolm Gladwell’s books, things like that. But the idea for getting a forum going; the way I teach it and the way we talk about this at Click Millionaires forum all the time, is targeting people to leak it out slowly. It’s really hard to do a forum with one big launch and have everybody show up and maintain enthusiasm.

I would look– the quick version of this I’d like talk about it for hours is find the people that you want to attract, figure out who the key influencers are, make it very exclusive and very small to start, and basically pretend you’re in high school and you want to have a party, right? And you want the whole school to come, but find the cool kids, tell them, invite them in, incentivize and don’t charge them, maybe even pay them. Get the cool kids in, and then gradually incentivize them to leak it out on an exclusive basis. Pretend you’re a cool hip night club promoter and gradually build that up, and that can be tough in industries that aren’t cool and hip, but that’s the way it’s done, at least the way we do it and it’s worked a number of times.

Steve: So how do you convince the cool kids to come over?

Scott: Well it’s incremental, it’s probably like when you started your podcast right, you find one guy who’s medium cool and then use his name to get up to a cooler guy and a cooler girl. And gradually upgrade and pretty soon you have a dozen of those people, and you use their names to leverage. It’s a pretty manual process, but it’s repeatable.

Steve: Okay and pretty soon you get to the pinnacle and you get Scott Fox on your show.

Scott: Yeah wow.

Steve: So let’s talk about again those first cast– so we talked about communities and you mentioned you have advertising and just let’s talk a little bit about just building traffic to begin with; not necessarily with the forum. How do you get those first couple of readers or customers in the door; what’s typically been your strategy for some of these niche websites?

Scott: The basic– I always start with SEO which is having a good keyword-rich domain name and then basic links from other sites that kind of stuff that again depending on how long you’ve been in the Internet you may know that may sound new to you, or may sound really dated but that’s where we start. And a lot of that’s been devalued supposedly by Google, but we are still finding that keyword-rich domain name doesn’t hurt, right?

Steve: Right, right sure.

Scott: To have other websites talking about you or using guest posts, it doesn’t hurt. So always start with an SEO place so that you have the foundation built so that if somebody is looking for what you’ve got on the internet, then Google will at least know you’re there. I think that’s really important because it’s hard to add this stuff later. I’m sure you’ve done this too right; it’s hard to add search engine optimization later. And then after that these days it’s harder than ever, Facebook isn’t the goldmine that it used to be unless you are going to pay them.

Steve: Yeah.

Scott: Guest posting is a pretty good way. You can tweet a lot, you know, there are so many different channels now. It’s hard to be an expert at all of them, but my recommendation is surely to find two or three that you like, like you love Pinterest, you’ve got a lot of visual stuff, then do that. Don’t tweet if you can’t constrain yourself to 140 characters. That’s probably not your channel, right?

Steve: Sure.

Scott: Pick a few that you like, this is back to lifestyle thing. Don’t build a business or try to build a niche business that requires marketing that you don’t want to do. There’s a lot of ways to market now; if you don’t like to write well probably being a podcaster, right? Things like that and that my answer the question that…tried?

Steve: Well, I was going to actually follow on actually which was at least for my businesses outreach has been a large part of growing my blog, and I was just curious what were some other ways that you do outreach for your properties.

Scott: The– it’s a good question. For me it’s been probably a lot of ways I guess, but guest posting can still work. There’s a lot of noise about the death of guest posting, actually there is a post today at the clickmillionaires.com forum. Somebody is saying that they just discovered that it was dead and a lot of us saying, “I don’t think so.” But yes a podcast is a great way to reach out as we were talking about, you can reach a lot of people if you seem to have an audience.

Steve: Yes.

Scott: And that’s a great way to get people to return your phone calls literally, and friending and commenting on social networks. A lot of marketing to me; outreach you need to talk more because I’m talking a lot here, but I want to hear more about what you just said, but my answer would be again finding influencers and trying to make friends and be influential yourself by choosing carefully the company you keep, and encouraging them to share your stuff as you share theirs.

Steve: Yeah, so I can tell you what I do. I go to conferences now, and typically the way I find my podcast guests, I go out to conferences and I hang out late at night with some of these people. And once like the alcohol starts flowing a little bit you start to learn a lot about some of these people, and you realize that some of these big influencers they’re just regular people.

Scott: Yeah.

Steve: They have families, they have insecurities and everything, and it all just kind of comes out once you have a couple beers and then you invite them on your podcast. And we never experience this, but you know once you get them on your podcast, you talk and then the recording happens, but then generally before or after the podcast is when a lot of the juicy stuff comes out as well. So that’s kind of how I’ve done outreach, and for guest posting for myself it’s really hard to just cold call someone for a guest post.

Scott: Agreed.

Steve: You really kind of have to get to know them at least on a superficial level in the beginning, and if you’ve met them in person it’s almost a guarantee. Like if you’ve met me in person and we’ve actually spent some time together and chatted, and the topic you want to write about within my niche I would be happy to take a guest post. That’s just kind of how it works, and I think what a lot of people do is they kind of hide behind their computers and they don’t really get out a whole bunch, and they randomly solicit guest posts and that that strategy just never works. I don’t know.

Scott: Yeah I think you’re right on, I don’t know about never works, but because the counter to that would be if you’re the only– if you’re in a really small niche blogging about scuba diving in Belize, let’s just repeat that example to death, and there’s only four other guys doing it, you are probably all going to know about each other pretty soon online anyway without having met them in person and you probably can help each other. But it certainly does help to have had a couple beers. Absolutely.

Steve: That’s actually kind of rare these days to find like such a small subset, but it can still happen. Yes it’s a completely brand new niche. Like I have a buddy who I just had on the podcast; he’s really into aerial photography and you know drones have just been becoming popular relatively recently. So he’s like the pioneer into this area which is really cool.

Scott: Nice very well done, there definitely a growth there, good for him.

Steve: Yes so hey Scott so you’ve helped a lot of people improve their websites as well, and so I thought I’d just talk a little bit about some of the things that you do when you take a look at someone’s website and you try to improve it. What are some things that you look for?

Scott: Oh that’s a great one, and then I want to hear yours too. The number one and this amazes me and everybody is listening to this is going to laugh when I say this; how many people don’t have e-mail sign ups. Like people start a website and they are so focused on their content or their products that they forget to collect emails and that sounds silly, but I see it over and over again.

I was actually on a radio show at big Midwestern WJR in Detroit which covers like most of the Midwest, with the CEO of a startup company who was– it was like the tech hour or something. And he was trying to start, I just got back from CES and we had this great thing, we get this press event blah, blah, blah. And so I just very innocently said, “Oh really that’s great, congratulations. How many email sign ups did that generate for you?” Silence.

I literally thought the line went dead, and then the host, the interviewer guy stepped in and tried to cover it up, but the guy– they too completely blew it. They had all this press and didn’t collect a single email address. What are you nuts? So that’s my first one anyway.

Steve: I take that to an extreme actually Scott, so if you go on my blog today I’ve got a sign up form at the top of every post, at the bottom of every post, I have a pop up, I have a slide in and I have something at the side bar as well.

Scott: Right, right well what do you think about all those pop-ups? You’re obviously a fan. People complain, but they work don’t they?

Steve: They do. I mean it’s actually one of the highest converting forms on my site, and I actually haven’t had any complaints really.

Scott: Right.

Steve: I have it set up so that as soon as you close it you’ll never see it again. Some people– what I think can be annoying is if you’re traversing someone’s site and the pop-up happens on every single page. That can be kind of annoying.

Scott: Yeah for sure.

Steve: So as long as you are kind of discreet about it– I also set it so that it doesn’t actually pop up until like maybe thirty seconds later. So you’re just not kind of annoyed by it right off the bat.

Scott: Yeah you get a chance to decide whether you’re interested or not first. Yeah that helps.

Steve: There are subtle ways of doing it too. You don’t have to use a pop up; you can use a slide-in. So as soon as you are scrolling down the page this animated thing just kind of slides in, that gets your attention as well; works almost as well as a pop up actually.

Scott: I agree.

Steve: Yeah so incidentally I just thought I’d add that e-mail marketing is probably 80 to 90 percent of the revenue that I bring in on the blog.

Scott: Well there you go. That’s– say that over and over, that’s a whole podcast right there, repeat that three hundred times. People dismiss that somehow you know, they get so focused on– this is one of the big things I talk about in my forums is people are so focused on supply rather than demand. Right there like I want to do this, I want to sell this, I want to offer you this, but you really got to figure out where the demand is and that’s the trick.
And if you’ve got the people’s e-mail addresses, you know they’re interested, you can keep selling to them, but if you don’t have the email addresses you’ve got no demand, it’s you’re just waiting for random customers to drive by your website. It’s a really tough way to make a living.

Steve: Yeah you know one other mistake that I often see people do is you land on someone’s website and you have no idea what it’s all about.

Scott: Yes.

Steve: So what I’d like to see and what I always advise people who ask me for help is you should have some sort of attractive picture on your front page along with text like a headline that describes exactly what your website is all about.

Scott: Absolutely that’s– would be another one of my big ones. Actually I don’t know if you know this, but one of my many little sites is called expertwebsitereviews.com and I do videos for people. I think it’s 99 bucks or something like that, and I’ll actually look at their site and do a twenty minute video forum and go through this stuff, and I’ve done that about 700 over the years.

It’s amazing what people can’t see because they’re so close to their own site, and that’s– you’ve hit another one, so often I’ll come and I’ll say “Nice looking site, but what is it about and what do you want me to do.” If you can’t tell me what it is, you need a tagline that states your mission and what you– and then some calls to action, those along with the e-mail collector would improve 80 percent of the websites I see.

Steve: Yeah and I actually do those too as part of my course. I actually critique e-commerce web pages. I can’t keep track of all your sites Scott.

Scott: No it’s fine, that’s fine.

Steve: So I don’t know that you did that yourself also.

Scott: I even do them for free, actually later today I do video office hours once a month from the Click Millionaires forum. It’s a Google Hangout open to the public where people from all over the world come in and where they ask questions, or we actually look at sites together live and do some of them, they’re not as thorough obviously as a private paid one, but that’s all through the clickmillionaires.com forum, for free.

Steve: I would also go as far as to say that every page on your entire website should have just one objective. Remove all the noise, remove all the extra links, and just highlight that one specific action that you want someone to take on a page.

Scott: Yeah that’s– especially if you’re running an e-commerce sort of situation like you are that a lot of folks get in and they get frustrated because they’re not getting as many sign ups or conversions or sales or whatever their goals are, and then they add more and more stuff right? So they go like nothing is happening, so I’m going to add some Facebook links. Well that’s not going to help your sales you know, or I’m going to post a bunch of posts instead of just one on a page. It’s like well yeah, but the clear path to the goal is very important for conversion.

Steve: So what are some other things, I mean you’ve done more critiques than I have, what are some other common mistakes that you see?

Scott: Well that’s a good one and people junk things up. They get frustrated and I spend a lot of time helping people pare things down. Simplicity is what you want especially now that so much of the traffic is mobile right. People are seeing these tiny little screens; you can’t have 400 different things to click on one page anymore. That redesign movement towards responsive designs is really important and hard for people to get their heads around, because it’s a different set of technical requirements, right?

Steve: Absolutely, yeah so let’s talk about that a little bit about mobile. So what are some of the changes that you advise people to make regarding mobile?

Scott: Well, you can redo your site in a responsive theme, right? But that’s kind of a big change for people if you’re going to rework your whole site, so if you’ve already got one. If you don’t obviously let’s start there; start with a responsive theme. That’s today’s number one recommendation right? But other than that the easy way to think about this is to make the fonts bigger and get rid of the side bars as much as possible.

And I’d be the first to admit my sites do not follow this, so I’m the doctor and not curing himself here. It’s really hard to let go of your own sites too, but if you can reduce the side bar width so that the center column is large enough to read on a variety of different platforms, that’ll help everything you do. That’s the basic one I’d say.

Steve Cool, I have a couple of things to add in regards to e-commerce; make sure everything is tappable. So if you have like a link, make it into a big button. Don’t make– the reason I discovered this is before when our e-commerce store was not mobile friendly, I remember my daughter was just surfing on a website and she was having problems clicking on certain things. She’s got the tiniest of fingers.

Scott: Right.

Steve: And so if she can’t navigate it, that means a regular adult won’t be able to either.

Scott: Good point, good point that’s one of my favorite suggestions actually is to actually sit behind somebody and watch what they do on your website. Don’t tell them anything and don’t– complete stranger’s kind of weird or another person, because somebody like your wife or your cousin or your friend; they know what you do, so you don’t have to explain the whole context.

But then literally just shut your mouth, stand behind them. And we used do this actually at some of the Fortune 500 companies for internal testing. We’d have like one of the secretaries come and just say “I want you to go buy a ticket,” and just shut up and watch. And you’ll be amazed the things that they miss that you think are obvious, and that doesn’t mean they’re stupid, it means your design is bad.

Steve: Yeah there is actually services out there that’ll do this if you pay them. Like five second test I think is one of them, they just give you a quick first impression of your website as soon as they land on it.

Scott: That’s right, the Click Millionaires way is to not pay for stuff unless you have to though, so…

Steve: Of course, of course and a couple of other things with ecommerce that I might add is people hate typing on their little phones, and so it helps to turn off auto correct. So if you’re trying to enter an address and you trying to check out, you don’t want like your address to autocorrect to some random word, dictionary word.

Scott: That’s a good one, very good.

Steve: I lost a lot of business that way without even realizing it. It wasn’t until a customer called us up having problems checking out on their phone. They told me I kept trying to change– add my address and it kept changing to this, and I was just getting really frustrated.

Scott: Right.

Steve: And thankfully this woman called.

Scott: Yeah right exactly. She called six months earlier, right?

Steve: Well, incidentally we have a clickable dial link right below that as well, so I’m sure she just clicked on it and called us, but…

Scott: Right, nicely done.

Steve: Yeah, so what– you mention a lot– you manage a lot of websites and so I was going to ask you this question whether it’s better to have like a portfolio of websites, or just have one main website that you kind of focus on.

Scott: Well, that’s up to your life I think, I’ve chosen the multiple approach because I’ve got a lot of different experiences, a lot of different interests, but a lot of people struggle to even find one good idea right? So I think it’s kind of partially what the hand that life deals you, and it’s also a question of whether you’re doing it full time or part time. In your case you’re also doing other things and you know you’re not going to have 40 other websites because you’ve already got a job and kids and other things, right?
So it’s a matter of how much time you have available. But I also I am– my first career was as an investment banker actually, and I guess where I got this portfolio idea early on, diversification seemed like a good idea to me. I have heard lots of people getting hurt because they tried to build their business say around Facebook right, or Pinterest. Now Pinterest recently finally made a clear decision that they’re going to not allow affiliate links, well if you were making money you know through affiliate links on Pinterest you’re in trouble right. And then the Google updates crushed lots of people.

I am a fan at least in theory of having a bunch of stuff so that they can all balance each other out. Now that’s not easy to do and it takes time. It’s hard enough to get one business going, so if you have one business going well I wouldn’t drop that to go start other things. Again I think in between this is probably the right answer. What about you you’ve got a couple different things going on, what’s your answer to that?

Steve: Yeah I’m actually had the opposite philosophy I agree. I believe in kind of focusing on one until it’s ready to move on. A lot of people email me and they’ll present me with five sites that they’re working on, and they’re all not very good because they just put them up to see which one is going to gain traction with the hope that they’ll focus on the one that’s getting the most traction. But what I found ends up happening is none of those sites every any traction because you’re spreading yourself too thin.

Scott: Yeah, I can’t argue with that. That’s a great answer too.

Steve: So I believe in focusing on one property until you can get something working. Like keep at it until it works, because the other thing is people tend to give up really easily especially with blogging, right? You don’t see any traction for often six months to a year, and that can be hard for some of the stomach, and if you’re putting together a bunch of sites and you’re only giving it that small time frame, then you’ll tend to give up on everything.

Scott: Yeah that’s quite possible for first time entrepreneurs especially; I guess my approach has been developed over a long period of time, that’s true.

Steve: Sure so you mention the portfolio approach, but you also mentioned earlier that a large strategy to get traffic is through SEO, so how do you kind of make your sites Google proof.

Scott: I wish I could. Well I’ll just find another big G, right? Well I am talking about niches here, so I tend to put in things that have pretty deep roots, and then try to get some links back to them, it’s basic blocking and tackling. But again I’m not opening a book store to compete with Amazon. I’m suggesting a bookstore about scuba diving techniques as applied to Belize which believe me there’s not going to be as much competition.

So I think getting it right early on thinking about what the niches and particularly this is interesting SEO tip which is obvious to you I’m sure, but not to use the word you want to use, but figure out what people actually type. A lot of people tend to get very jargonish when they think about a topic especially if you’re in a field like in medicine or law or in any specialized industry, any B-to-B site. People get all jargonish and that can’t help because if you can attract other specialists who know those terms, but you also need to think about what just regular people type into the search box, and you can uncover farm or some great SEO angles doing that.

Steve: So Google’s search business has actually been kind of flat lining as of late. And so where do you see some of the other traffic opportunities going forward that is not search.

Scott: Well the apps world is very interesting, but I have to be honest I haven’t– I’m not an expert there so I won’t talk about that. Social media is getting harder as well, I don’t have a good answer there Steve, what do you think?

Steve: That is a good question, so I asked you that question because I didn’t have the answer.

Scott: Okay, all right, all right. At least we are honest, right?

Steve: Okay, so for me I would say getting the traffic that you do have and retaining them with e-mail is going to be an important step going forward, and reaching out to other mediums like podcasting, YouTube, certainly social media. Facebook has nerved the amount of reach that a business can have, but then there’s other avenues like Instagram and Twitter where someone will get your entire feed and just kind of putting your feed in all the different platforms to grow I would say this is the best way to diversify your traffic sources.

Scott: Diversify yes, but I just since we are talking that sounds like a lot of work right? I mean to be an expert on all those and have all those feeds going unless you can automate them as a sole– at least if you’re a sole entrepreneur it could crush you. A few years ago Pat Flint, who you probably know, Pat was talking about his be everywhere strategy in 2008. That was fantastic because there were only you know there was You Tube and Twitter you know there were only three or four things, but now there’s Instagram and Snap Chat and Pinterest and you know other 50 things. To do all that even halfway well is hard.

Steve: Yes I actually use automation for that, so my friend Laura Roeder recently released a tool called Meet Edgar which is a great way to kind of automate some of your social media. So I use that to handle my Facebook and my Twitter, and then there’s tools like viral tag which handle Pinterest to kind of automate your pins and that sort of thing. So there are tools out there you don’t necessarily have to become an expert in any given thing, and it also helps to interview experts in their respective fields and get information out of them as well. So everything that I’ve learned or a lot of the stuff I’ve learned is from actually interviewing other people on podcasts.

Scott: For sure I have to admit that I’m guilty of that too. Yeah I remember interviewing Perry Marshall who is a pay per click expert nearly back like 2007 or something, and like after that interview I well understood pay per click and helped me a lot. So stuff like that is a great strategy. I think podcasting is a wonderful thing and actually I’d recommend that if you’re looking for new traffic sources. Audio consumption is rising. There’s a lot of competition, but again if you can find a niche I’d be doing a podcast these days and a video version too. Why not?

Steve: So what would you– how do you feel about the different mediums, like if I had to focus on You Tube podcasting or blogging, what would be your recommendation?

Scott: I would look at where your target market is. Again there is a cross between demand and supply right, so demand is you want people that you know if you want people that are illiterate just to make a silly example then you better go to You Tube so they can watch you right. And vice versa then is the other side is what are you good at? Blogging may be what seems to be required, but you are a terrible speller and you hate to write, so back to podcasting. The answer again I can’t give you a yes or no there. The answer is specific to the situation, but I think those are the three big ones these days blogging, video, or audio, those channels.

Steve: I guess I should have phrased the question a little bit differently. How important is it in your mind to have your own personal branded website as opposed to relying on somebody’s third party platforms?

Scott: Okay that I think is hugely important. Chris Rogan used to talk about hubs and spokes right? So you need a hub and I would see Facebook or any of the social media platforms as outlined spokes to drive traffic back to your hub, because Facebook can change their rules tomorrow and wipe you out. If you’ve built a big you business on Facebook or Pinterest like I just mentioned a couple of minutes ago, I think you have your central hub is absolutely required and that’s your email list.
Also you said most of your sales from your blog actually end up coming from the email list and I agree with that, and I’m glad to hear it and I would say even further. I would also say it is your IRA. It is your 401k. You need to build that up, it is your retirement plan. If you are going to build an internet business for five years, or 15 years, and you are done, that email list is what you’ve got left.

Steve: So Scott what is one piece of advice that you can give to my listeners on kind of how to start if they are still a little bit on whether to start an online business.

Scott: I would say try. I think it is a wonderful– at the minimum it is a wonderful hobby. It can keep you interested, engaged, and learn some stuff, right? More importantly it can turn into something and that’s the really elastic question here is how much money how soon? And people always want an answer to that, and it is so dependent that you can’t give a credible answer to that without knowing a million variables that are unforeseeable.

But I really encourage people to try even if it doesn’t make you a bunch of money right away you’re going to learn a bunch of stuff. And I think it’s often like when people go to college right or like me, I’ll just be personal. When I was in high school I was going to be a doctor. I was even in the pre-med club. But then I took chemistry, right? You know some things change and the further you go the more you– the further you can see.

Unless you– I’m mixing a bunch of metaphors here, but unless your ship leaves the dock you’re not going to know what’s beyond the horizon, and I know that’s a leap of faith that most people aren’t trained for or maybe they don’t have the confidence or the money or time to pursue, but if you don’t try you’re certainly not going to get anywhere. And internet business is an easy thing to start and the key I think is to make that leap that you obviously have got in your bones and so do I.

You have to stop looking at the internet as a consumer platform and look at it as an entrepreneur. Where are the opportunities here? Yeah I can use Facebook, but you know it’s somebody smart and I forget who maybe you know, somebody said if something is free, then it’s not a service, you’re the product right, there aggregating you to sell you as advertising eyeballs. And that’s for Facebook and all the other stuff that seems free. Once you start realizing that looking at things as an entrepreneur, you’ll see opportunities in a lot of places.

Steve: Okay and then where would you recommend that people– what books would you recommend for people to read about this stuff.

Scott: It would be wrong to recommend…

Steve: And so shameless probably…

Scott: Obviously I spent a lot of time and a lot of years doing this. I’ve got three books and all of them are written for folks who are new to this, so your audience may be a little sophisticated for some of it. But a lot of my– my books aren’t so much about like here’s what to do on Twitter today right? They are not– I’m trying to help people change their mindset, to think about a lifestyle business. Like I said there’s these principles in the book that– how to think about this stuff because I’ve thought about it a lot, and I was a successful investment banker, I have a law degree, I’ve raised a bunch of money for different companies.

I’ve just– I think about this stuff and I don’t– I’m not going to be able to tell you what to do on Pinterest tomorrow to make money. But I can tell you how to think about this if you’ve not thought about it much, because I’ve heard about a lot and I’ve written three books of 60 or 80,000 words a piece, and we’ve got this forum and I’d encourage you to explore. Oh you know I should mention we have this niche business identification checklist, we’ve talked a lot about finding niches.

There’s a PDF that you can download at clickmillionaires.com that lists all the factors that I use personally. There’s like 30 factors or something and you can score things. What’s the size of the market, how much will this cost me to build, and what is the production operations going to cost and stuff like this. But it gives you quantifiable way to think about businesses and especially if you don’t have a background of thinking like this about these things, it can be really helpful and it’s free at clickmillionaires.com.

Steve: Yes send me the link I will put it in the show for sure.

Scott: Sure.

Steve: So Scott where can people get a hold of you if they have questions; where can they find you hanging out?

Scott: Well literally hanging out on Google plus, I’ve got a hangout later this afternoon, we do those once a month, we call them video office hours. But clickmillionaires.com is the main site, it’s a free forum. In fact it’s the only forum I know where we give the ad money back to the audience, the top contributors each month get a check.
I personally pay pal them half our revenue, we keep the other half to pay for the expense of the moderators and the hosting and stuff. But it really is free and the money from my profits from my books go back to charity, so trying to help people figure out that there’s a thing here, and even if you don’t have a computer science degree or an MBA, you might be able to play and make your life better too, so clickmillionaires.com.

Steve: Awesome Scott, well thanks a lot for coming on the show. I enjoyed the conversation.

Scott: I did too Steve, it’s great to talk, let’s do it more often.

Steve: Absolutely man, take care.

Hope you enjoyed that episode. Scott has been running online businesses now for decades and it’s always fun to chat with him to get some inspiration on what to do next. For more information about this episode go to mywifequitherjob.co/episode71. And if you enjoyed this episode please go to iTunes and leave me a review, because when you write me review it not only makes me feel proud, but it helps keep this podcast up in the ranks so other people can use this information, find the show more easily, and get awesome business advice from our guests. It’s also the best way to support the show and please tell your friends, because the greatest compliment that you can give me is to write a referral to someone else either in person or to share it on the web.

Now as an added incentive I’m always giving away free business consults to one lucky winner every single month. For more information go to mywifequitherjob.com/contest. and if you’re interested in starting your own online business be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

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Thanks for listening to My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at triple www.mywifequitherjob.com.