What's up, everyone? This is Cortland Allen from ndhackers.com, and you're listening
to the Indie Hackers Podcast.
On this show, I talked to the founders behind profitable internet businesses, and I try
to get a sense of what it's like to be in their shoes. How do they get to where they
are today? How do they make decisions, both in their personal lives and at their companies?
And what exactly makes your companies tick?
And the goal here, as always, is so that the rest of us can learn from their examples and
go on to build our own successful businesses.
Today, I'm talking to Rand Fishkin. Rand is one of the world's foremost SEO experts,
and as such, he doesn't need much of an introduction, but I'm going to give him one anyway. Rand
is the founder of Moz, a marketing and SEO company which helped grow to $47 million in
annual revenue and which has helped many people, myself included, find customers and drive
traffic to our websites. Rand is also the author of a new book called Lost and Founder.
It's a painfully honest field guide to the startup world. I've read it, and it's like
a very transparent, very detailed indie hackers interview. So you enjoy indie hackers to love
the book, and it should be available by the time that you hear this episode.
And finally, Rand recently left Moz to start a brand new company from scratch. It's called
Spark Toro, and I'm sure we'll get the chance to talk about that as well. So Rand, welcome
to the show, and thank you so much for joining me.
Thrilled to be here, Portland.
The problem with talking to people like you have done so many things is that there's no
way we're going to fit all of it into an hour, and so people will be mad at me. So I just
want to start by saying shame on you, Rand, for putting me in this awkward position.
Shame received.
So probably everybody who has a website that they tried to get to the top of Google has
heard of Moz, but very few of them are aware that you started the company with your mom.
In fact, I've never met another mother-son founding team. So can you tell us a little
bit about what those early days were like?
Yeah, it turns out mom and son software startup is the least likely venture-funded company
out there. I've also never met a mom and son venture-backed startup founding team. So I
think the early days were hard, right? I dropped out of college. I was working at my mom's
office out on the east side of Seattle, and we were not good at building a client base,
not great at getting paid. The dot-com bubble had just burst, and a lot of clients were
trying to get their websites done, but then not paying. We were struggling to just make
ends meet, and in fact, going into debt at the same time. So by 2004, I think it was maybe
the end of 2004, beginning of 2005, we had about half a million dollars in credit card
debt. That's because we actually had more like $140,000 or $50,000 in credit card debt,
but then we couldn't make the minimum payments. And so the interest rate spikes and the penalties
jump up, and a couple months into that, you're lucky if it's not 2x. So as a result, we started
trying to find anything to grab onto. And I had built this blog called SEO-MOS that
was all about basically learning the SEO process by writing about it and sharing my experiences.
We had stopped being able to afford our SEO consultants and contractors, subcontractors
for our clients in 03. And so I was learning to practice myself and trying to make a go
of it. And that is what led to eventually being able to dig out of that hole. We got
consulting clients and some speaking engagements and some traction with that blog. And then
a few years later, after we were just barely out of debt, we launched this software product
called the SEO-MOS Pro Tools. And that took off like a rocket, because we already had
the audience, right? We already had this strong group of thousands of people who were reading
MOS's website every day to learn about SEO. We knew that they needed the same tools we
did. I wanted to share them for free. Matt, our developer was like, no, we won't be able
to afford the server bandwidth. So we're going to have to charge them something. I was like,
okay, we'll throw a little PayPal, 39 bucks a month thing up. And within six months, we
saw that that was going to overtake our consulting revenue by the end of the year. And so suddenly
realized the power of having a SaaS product.
I think most people who are half a million dollars in debt would decide to probably throw
in the towel rather than start a blog. What was going through your mind at the time, if
you can remember back that far? And why did you think that building an audience and building
a blog could somehow get you out of debt?
Well, I want to say it was less that I thought that building a blog could get us out of debt
more that anything that looked like it could have any kind of traction looked appealing
at the time. Bankruptcy is actually the super logical option, but my mom and I had never
told my dad that we had any debt. And we were pretty scared that if he found out, I don't
know, all sorts of bad things might happen, you know, maybe divorce my mom and like, what
would happen to their house? What would happen to my grandmother's house in Connecticut and
which my parents owned?
So yeah, it was just it was really stressful times. And it was one of those situations
where you just grasp onto anything you can. And this blog was getting traffic. A few people
a month were contacting us asking for SEO services. And so we just went where the money
was.
So a lot of other entrepreneurs listening in right now are in a similar situation. Maybe
they're not in debt, but they're pretty hungry for any sort of traction. How did you get
so much traffic to your blog? And what were you doing that maybe other bloggers aren't
doing?
Well, one big thing was that there were so few blogs or websites that had, you know,
open transparent information about SEO at the time, it was kind of this secretive dark
world that was perceived as very scammy and sketchy. You know, it's tough to remember
now, but when I started in SEO, you know, podcasts like Indie Hackers, well, you know,
podcasts weren't nearly as popular, but something like the Indie Hackers community or the Hacker
News community were virulently anti SEO, right? They just hated the idea of search engine
optimization.
They thought it was this totally scammy thing. I would say until about four or five years
ago, web developers as a whole just just despised SEO as this as this practice. And so at the
time that I think Moz's transparency, my willingness to be transparent and open about what's going
on with SEO and to be vulnerable and to sort of share what was working and what wasn't
that was refreshing and unique and hard to find. And because of those things, it was
unique that the, you know, it stood out in its field and there was also very few people
writing about SEO, probably, you know, maybe a few dozen blogs at most today. There's thousands,
if not tens of thousands. And so standing out in the field was definitely much easier.
And I'd also say this 2003, I started the blog. It wasn't really until 05 that it got
any traction and it really wasn't until 06, 07 that it started to take off. So while it
looked like to many people, this overnight success in the SEO world, you know, Moz was
years in the making, right? And those first few blog posts, those first few years of blog
posts, they didn't, they rarely got a hundred visits to them. They didn't bring us any clients
at all. It was only a couple of years in that that started trickling.
Psychologically, how do you, how do you decide to keep going if you don't know that it's
going to work and it's not working out immediately? Because I think a lot of founders struggle
with, you know, given the six months, it's not working. I need to pivot. I need to quit.
Why didn't you? Yeah. I mean, because I had real interest
in the topic, it was not an overnight success, but it was clear to me that every month I
was getting a little bit better at it. You know, the, the first few months, it was like
a few dozen visits. Then it got into the many dozens of visits. And then there'd be days
where I'd break, you know, a hundred or 200 visits, six months in, and then a year in
I could break 500 visits sometimes. And two years in, you know, that was a thousand.
So I think it was the sense of progress that kept me going. It's part of the addictive
behavior that, um, that a lot of games create where you feel like you're getting better
at it and you're getting rewarded a little bit. And so even though the progress is very,
very slight, that sense of, oh, every time is a little better than the last time, uh,
I think is what kept me going. Yeah. I can understand that. I spent many hours
leveling up my character in World of Warcraft, probably around the same time that you were
leveling up your blog. I missed World of Warcraft because of SEO mods. I'm kind of, I'm kind
of sad about that. Yeah. I think you probably made the right decision. So you're writing
your blog. It's going well. A lot of your readers are turning into leads for the SEO
services that you guys are providing, but eventually you pivoted to become a product
business. I've talked to a lot of founders who've made that same switch and I'm curious
what it was like for you. How did you decide to become a product business? How did you
build the product and how did you go about finding your first customers to sell it to
you? Yeah. So, uh, we had a very unusual story
in this respect in that we basically built, I think we probably built six or seven tools
that were just for me and two other consultants who worked at SEO laws and Matt had built
them, you know, sort of on the backend of our, our website, uh, accessible only to us.
You know, they were not, not high quality, not very usable, but they got the job done.
They were automating things that were a pain in the butt to do in SEO. Every time you had
to audit a website or check its links or, you know, compare it to another site or put
together a little client report, whatever it was, given the fact that the SEO world
had so few tools, there was a couple of downloadable, you know, pieces of software that you can
install. I think one of them was called web position goal that would track your rankings,
you know, but we hated that we had to download it and you know, the, the requests all came
from your IP address. And so you get blocked by Google sometimes. And so we were like,
well, if we could, you know, put it on a website and have it sort of live in the cloud, that
would be, that would be awesome. Uh, and that those tools, I showed them off at conferences
and events, right? So I'd show them to my, my friends and my buddies as we got, I'm like,
Oh, check this out. I pull up my laptop. Look, I've got this little tool that can scrape
page rank, you know, Google's Google's toolbar page rank at the time was sort of an important
SEO metric. And, uh, you know, Oh, it'll do a site command and look for all the pages
and make sure they're all indexed and then, you know, uh, crawl all of them and fetch
the title tags and stuff like that. And these, you know, cheap little today, they'd be considered
like just junky tools. Uh, this little collection of tools was what we started charging 39 bucks
a month for, uh, in 2007. And finding our first customers was way too easy, right? Basically
I wrote a blog post saying this thing is now available. And that was it. That was all the
marketing we did. But because that blog post went through RSS and email, uh, at the time,
right? This is sort of pre heavy social media days. It was read by thousands of people,
a few thousand people, maybe two or 3000 people who needed, you know, tools just like we did.
And so essentially by solving our own pain point and being in that world, we had built
this community and they turned out to be right customers for us. And to be honest, Portland,
I'm kind of doing that again, right? My hope with, with Spark Toro, with this, with this
new business is to over the next six to 12 months, as, um, as my co-founder and I build
out the product and the technology underlying it and do a lot of validation, you know, I
hope to build a community of thousands of folks who come to Spark Toro mostly for, for
content and to learn about marketing and those kinds of things, and then see, Oh, they have
this product. This is what they're, this is the problem they're trying to solve. If I'm
interested in that, you know, I can sign up to get notified when it comes out. And, uh,
and by building that sort of audience first product second approach, which I think is
actually pretty unusual, unfortunately, in the, in the classic startup world, I think
probably more common in the indie hackers world. Oh, definitely. Um, yeah, I think,
I think that can be a great path to quick traction.
One of the problems that a lot of indie hackers in particular face is that they have pretty
limited resources. They don't have funding. They don't have a consulting business that
they can rely on and sort of building their products on the side while they're at their
full-time jobs. What's your advice for somebody in that position?
Well, so I do think that a lot of folks who are trying to build a business while they're
at their full-time job should consider that rather than product building, you might want
to do audience building first, right? So you, you only have a few hours a night or on the
weekends or whatever it is. And I might consider, Hey, should every week or every month you,
you put out something or, or do something that builds an audience, you know, whether
that's, Hey, I'm going to participate in these Q and a forums, or I'm going to build this,
uh, profile on social media channels that gets me the right kind of following, or I'm
going to engage in blogging, or I'm going to put together a podcast or whatever it is,
a YouTube channel and Instagram following, et cetera, et cetera. And I might consider
whether building that audience first rather than building the product first and then sort
of launching and going, okay, now how do I get traction? How do I get an audience can
be a real path to, you know, validation, market validation, building the right thing. And
then having that audience up there early, which, which can make such a difference when
you do launch.
It's fascinating how much of entrepreneurship is sort of taking this windy, curvy path instead
of going directly where you want. So you want this big, hairy product, but maybe it doesn't
make sense to just start building all the features or you want to build a successful
company, but maybe it makes sense to you rather than build your company directly, uh, build
an audience first. What are some of the ways that you at Moz leveraged your early advantages
to go into a completely new arena?
Yeah. I mean, one of the, one of the clear big wins for us was having this giant email
list, right? So we had foolishly, I say this because, you know, I think today we absolutely
would be on, you know, WordPress or another CMS system that's much more flexible and doesn't
require a ton of in-house work, but we had built our own CMS and as a result, we had
our own system for registering and commenting on the, on the blog or, or, you know, trying
out some of the free tools or whatever it was. And so we, we assembled this giant email
list, uh, over the first few years and we were able to use that to do, yeah, lots of
really powerful marketing. I think between email and organic search that probably accounted
for 90% plus of all the, all the signups that we earned. And so certainly to the extent
that, that folks can build, build things that capture emails, I still think emails are far
more powerful than, you know, OAuths or Facebook fans or, you know, Twitter followers or anything
like that. I would do that. Email also lets you do things like, you know, upload that
list to Facebook or LinkedIn or Google and run ads against them and, um, lets you do
clever retargeting, lets you put it into a system like full contact and get out a bunch
of data about your audience. So I would absolutely encourage anyone who's building an audience
to go email first.
Yeah. I'm doing the same thing at ND hackers, trying to build my email list, trying to use
it as sort of the primary distribution channel rather than being completely reliant on these
other channels like Twitter, Facebook, Hacker News, et cetera. And it's, it's a long slog.
It takes a while to build up your email list. It's not as instantly viral as some of these
other channels, but like you said, it's so valuable. It's so, it's one of the most talked
about things that I think is still underrated.
Yeah. I mean, I would take, I would take 10 email addresses over 5,000 Twitter followers
any day.
Yeah. So in your book, you talk a lot about how marketing was always part of Moz's DNA
and that maybe building the product and dealing with technology was difficult, but getting
millions of visitors to your website was the easy part for you. But for a lot of ND hackers
listening in, it's the exact opposite. They have no idea how to get millions of users
to their websites. What do you know that they don't? Was this just lessons that you picked
up in your blog or was it some part of who you are naturally?
No, I don't think that I had any particular special skill, right? When I dropped out of
school and started doing this stuff, I think that it really was a, you know, years and
years of trial and error. And if you were to say, well, what does Rand know or what do,
you know, professional web marketers know that software engineers and product builders
and designers and developers often don't, I think it comes down to this sort of uncanny,
hard to describe ability to recognize things that will resonate with an audience and draw
them in versus be perceived as either bullshit that no one's interested in or just boring.
But I think many startups try and engage in is sort of like content marketing, right?
They try and build content, whether that's across social channels or or podcasts or videos
or or blog content or articles or a news section or whatever it is, right? And they don't have
a great answer to this fundamental question when they produce that content. Who will help
amplify this and why? And that's something that marketers are really good at. They're
not, they're not just good at saying, Oh, well, I think that people who, you know, need
accounting software will help me amplify this. People who need accounting software need accounting
software. They don't want to amplify things. They're not there to, they're not there to
help you market, right? They just want accounting software. And marketers recognize that there's
customers and then there's sort of like channels and sources and publications and people who
influence potential audiences. And those are the people who desperately need things to
amplify, right? Every day they're, you know, scrolling through tons of different content
channels and trying to find things that are worthy of sharing with their audiences through
whatever means they've got, right? Whether that's journalists trying to figure out what
to write about or people trying to figure out what to submit to Hacker News or people
trying to figure out what they're going to tweet or share on Facebook or put on LinkedIn.
They're influencers, but they have this desperate need every day of stuff that they have to
share. And so by serving them and then attracting the audiences that they help you build, you
get this, this powerful marketing effect. But if you just try and target your customers,
you often miss out. I think from far enough away, if you're a programmer, you have no
marketing experience, it's easy to kind of squint at it and just think that it's luck.
You know, some things take off, some things don't, who really knows why? Hopefully my
customers help me amplify. But from your position, you're aware of all the sort of levers that
can be pulled. You can break down things and explain exactly why people share things via
word of mouth and exactly why people amplify things in front of their audience. And it's
not a mystery. One of the things that you guys did, that I think is super cool, and
I love talking about it whenever anybody does this, is you sort of modeled your growth like
a flywheel. Can you talk a little bit about what that meant and why you did that?
Yeah, yeah. So I wrote this chapter about my frustration with growth hack chasing, which
we did plenty of at Moz, right? We were trying to find that one silver bullet, that one weird
trick to lose 10 pounds tomorrow. And of course, as you know, there's no one weird trick. Or
if there is, it's a pill that makes you sit on the toilet all day, so don't do that. We
experienced a lot of the pain of chasing those growth hacks, even when we had a successful
growth hack every once in a while. A, we'd get addicted to that practice. And B, it often
would produce lower quality customers, right? Lower lifetime value, higher churn customers.
And so the alternative is to build this sort of marketing flywheel. And the reason I use
the flywheel analogy is because a flywheel is something that scales with decreasing friction,
but it takes a tremendous amount of energy to get started, right? The first few revolutions
of a flywheel are very energy intensive, but then inertia and a lack of friction lets it
go faster and faster and revolve and revolve with less energy input. And that's exactly
what we found with our marketing practices. So, you know, Moz is a sort of classic content
marketing machine, but let's, let me use an example. It's 2007 and I want a blog post
thousand visitors, right? I'm trying to get 10,000 people to read this blog post that
we put out. Well, you know what? For probably two to three months, I'm going to be pounding
every channel I possibly can, right? My early Facebook and Twitter, my, you know, my LinkedIn
back in those days, other people's blogs, going to forums and writing answers to questions
that mentioned the post and, you know, emailing folks and talking about it at conferences.
And I'm unlikely, I'm unlikely to ever get to that 10,000 because it's just, it's just
a such a big number compared to our, the audience that we generally reach, which I think in
those days was maybe, you know, 1500 people per blog post. If we were lucky, if it was
a good one, maybe 2000 fast forward to 2018 and I want 10,000 people to watch a whiteboard
Friday video that I produced yesterday. How do I do it? I hit publish. That's all, that's
all I have to do. Why, right? Why is that? Because over those 10 years, over those 10
years, every time we, you know, had a piece of content that, that went out there, a few
more people subscribe via email and a few more people subscribe via RSS and a few more
people followed the Moz account on Twitter and on Facebook and on LinkedIn and even on
Google plus for the few years that that was, you know, an active channel and more and more
people who amplify things saw that when they shared Moz's content, they got more retweets
and more, more amplification. So they sort of got trained like, Hey, this is a good thing
to share. I should share this when it comes out. If there's a good one, I should share.
And as a result, right? Moz's audience just kept growing and growing. Search worked this
way too. You know, in 2007, Moz was a mildly powerful website, right? It had, you know,
tens of thousands of links to it and ranked reasonably well. But today, a whiteboard Friday
post a few hours after it goes up, it'll probably be ranking number one or two for even pretty
competitive keyword phrases that it targets in its title. And that's just because, you
know, Google has been trained that Moz does a great job of answering searchers queries
and that we've got, you know, a tremendous amount of link equity and domain authority
and all these, you know, ranking signals that factor into Google's results. And so yeah,
you want 10,000 visits yet publish. It's a, it's become a flywheel, right? It's turning
so fast at this point that inertia and the frictionless generation of energy keeps it
going.
I think a lot of people trying to grow a company who are obsessed with growth hacks will do
growth hacking without having that flywheel. And so there's sort of growth hacking these
one off things that don't feed into some sort of like long term mechanism that will improve
their company and make it easier to grow in the future. But that doesn't necessarily mean
all growth hacks are bad because you can use growth hacks once you have your flywheel
to sort of accelerate individual components of it. Absolutely. How did your flywheel change
over time? And what are some of the things that you guys did to get it spinning faster?
Yeah, yeah. So I wrote about one of the early ones of these and I think it serves as a great
example of this. So basically, you've got this flywheel that you're trying to turn,
but you find a point of extreme friction. You know, so for me, in the early days of
the blog, it was I just can't get anyone to link to my stuff, right? Like, like no one
in the SEO world is sort of no one who owns their own blog or website in the SEO world
is reading my stuff. There's a bunch of like people who came over from other forums and
they're checking me out and some people who, you know, maybe heard about us through other
sources. So I've got a couple hundred regular readers, but they're not the people who might
link to and share my stuff. And I really need those links. Those links are what are gonna
power my rankings in Google and get me in front of a broader audience and bring in customers,
all that kind of stuff. So I need these rankings to get them. I need these links. And so I
had this, this idea of, Hey, there's a, there was a document on the web called the Google
ranking factors. It was like 101 Google ranking factors. And it was from this guy who does
these like one page documents. I don't think it's the website still exists, but it wasn't
very good. You know, it was kind of a mediocre attempt at trying to explain what was in Google's
algorithm. And so I did this thing where I emailed 150 people that I admired most in
the SEO world, almost all of whom who had their own blogs and websites, you know, and
I said, Hey, on my website, Moz, I'm doing this survey and I'm going to put together
sort of a collection of aggregated opinions from experts in the field about what's in
Google's ranking factors. And if you would do me this favor and take this survey, it's
pretty intense. It'll probably take you 25, 30 minutes to complete this survey. I'm going
to include you in there and link back to your site and, you know, cite you as, as one of
the contributors and like 90 people out of this 150 said, yes, they, they spent the half
an hour to take this survey. And then I aggregated all the results and created, you know, a bunch
of different visuals, but one of them that really resonated was like this pie chart.
It was the percentage of each major, you know, a ranking element of Google's algorithm. And
it's an aggregated set of opinions. You know, it's not perfect by any means, but if you,
if you believe in sort of wisdom of the crowds or wisdom of the expert crowds, it's a reasonable
thing that, that you could refer to and tons of people did of those, you know, 150 over
the next year, probably a hundred of them ended up linking to Moz and that document
and more of them started reading our blog.
And so this one growth hack of this single piece of content, which was an intensive,
you know, amount of work ended up accelerating our flywheel dramatically, you know, and within
six months a year, we started ranking way better in Google and sort of got out of that
rut we were in with, with getting rankings for our, for our blog. That's such a brilliant
idea and really good execution too. And it's so important that like what you were doing
was optimizing for something that was part of your flywheel. You're optimizing for building
links because you knew how that would pay off in the longterm rather than optimizing
for a growth hack that would simply result in like a quick burst of traffic. And a lot
of people don't know the difference. Let's get a little bit nebulous here for a second.
I think a lot of people have trouble coming up with ideas. How do you come up with good
ideas like this one? Are you brainstorming constantly? Are you talking to people or are
you just waiting for lightning to strike?
I'm always on the lookout for things that I think are not good enough or terrible. That,
to be honest, that is, that is my, my fundamental secret. I think, I think I'm contrarian and
I'm highly critical. And that's what gives me my good ideas. I sort of, you know, I look
out there, I wrote a blog post, I think yesterday, that was a good example of this. There's this
study that was flying around the web and it pissed me off, Cortland, like, like really
in my soul, it just made me so angry. So it was data from a company called Shareholic,
which is like a social media sharing widget that you can put on your website, right? And
the data was basically saying that on the 5,000 websites that have Shareholic installed
on them, in 2017, search, Google search traffic overtook social media referrals for the first
time. That is honest. That's the true story. But all these other media outlets picked up
the story and said, Oh, for the first time, search is bigger than social. That's not what
the story said. The story said on these 5,000 websites, which are obviously heavily social
sharing and social media based because they installed the Shareholic widget, right? Their
particular referral traffic saw this, saw this change, but 5,000 websites out of we
think about 350, 400 million websites that get pretty decent traffic across the entire
web is a drop in the bucket, not even a drop in the bucket, right? So, so it just infuriated
me. And so I talked to some friends at Jump Shot who collect clickstream data. And I
wrote this, this blog post on SparkToro using some of this data, right? So I think the blog
post is, yeah, new Jump Shot 2018 data, where searches happen on the web, Google, Amazon,
Facebook, and beyond, and then looked at like, okay, where do people actually search? And
I actually, I hope on Monday, I'm going to be publishing a study on the referral traffic
side that will, that will sort of show that the, yes, search is even bigger than it was,
you know, a year ago or two years ago in comparison to social, mostly because Facebook and Twitter
and LinkedIn have built algorithms that make content on those networks easier to resonate
if it doesn't contain a link than if it does. But fact being, search has been the major
traffic driver by, you know, five, 10X for years and years.
I think this, this trait you have of being contrarian and being critical towards the
things that you see is so, I see it on a lot of entrepreneurs and it's so underrated because
it's, it's how you produce things that are unique. It's how you produce things that stand
out. What are some other times where you being a contrarian has helped you grow your company?
Are you sure you don't want to hear all the times it's hurt?
We're going to get into those for sure. Yeah. I think that one of the things, one of the
things I was very contrarian about that actually really, really helped Moz to take off, especially
profitably, because I'm, I'm an extremely unusual venture backed entrepreneur in that
I'm, I'm sort of obsessed with running a profitable company. You'll remember that for years I
had that ridiculous mustache where I was, you know, that I grew out until Moz was profitable
again and, and it got to be just insane, but the early days of our SaaS business, you know,
after you'd raised our first venture round, one of the things that, that Michelle Goldberg,
our first investor for Magnition, who's super smart and has been, you know, just an incredible
mentor for me. But one of the things that she said was, Hey, you know, you're a SaaS
business. You should think about building a sales team and, and, and sort of, you know,
raising prices and selling into organizations, which I think for many, many venture backed
SaaS companies that, that model is tried and true, right? And especially back then it was
kind of the only way this idea of being totally self-service. Anyone can go to the website,
try the tools for free, sign up, and then, you know, pay the only people who are really
doing that in our world at all where some of the early email marketing providers, like
I think not even MailChimp was around quite yet, or maybe they, maybe they had just come
out, but you know, some of the other ones out there whose names I can't recall now,
but SurveyMonkey was the other big one, right? You went to SurveyMonkey, you wanted a survey,
you just put in your credit card, you know, pay them whatever, 15 bucks a month, and you,
and you could get access to 20 surveys instead of 10. And so because we had gone this self-service
route where anyone could sign up and the freemium route where people could try out some of our
tools or some functionality first, it meant that we very, very profitably acquired customers.
You know, our cost of customer acquisition, when we finally got these metrics down, I
think that was a few years later, but I remember our cost of customer acquisition to lifetime
value ratio was between 10 and 15x in 2009, 2010, 2011. We hadn't even launched a paid media
campaign. We had never spent a dollar to acquire customers, which, okay, let's be honest,
that was probably dumb. We should have done some AdWords, some, you know, advertising,
but regardless, it meant that we could acquire customers just incredibly cheaply and every
lifetime, every dollar of lifetime value was margin for us. And that ended up being great
because we raised 1.1 million, you know, seven and basically built the business to 29 million
of revenue before we ever started using, you know, the rest of our, any other capital or,
you know, money that we've raised.
Ah, it's perfect that you bring up fundraising right when I want to get into my questions about
things that went wrong. One of the big themes of your book is that a lot of the so-called wisdom
coming out of Silicon Valley, misleads founders and they're doing some very dumb things.
What are some of the dumb things that you did while you were at Moz?
Sure. Yeah. I mean, one of them was spending inordinate amounts of time trying to raise more
money. So 2009, 2010, 2011, even into 2012, I probably spent 30 to 50% of my time doing things
that I thought would help me raise my next round of funding. And if you pay attention to, you know,
the blogs and media and, you know, echo chamber of Silicon Valley startup culture,
that's what a founder and CEO is supposed to do, right? You're supposed to keep the company funded
and build all these relationships. And so, you know, I was flying down to the Valley regularly
and having all these dinners with folks. I saw this crazy thing. One of the guys who used to be
really, you know, really, really friendly to me and, you know, would take me out to dinner and
introduce me to other entrepreneurs was a guy named Trevor Treina. And I just saw yesterday,
he was appointed the ambassador to Austria by Donald Trump. And I had this like, what? Really?
That guy? Crazy. That guy. Insane. Suppose apparently he's become a legendary entertainer
since then. So, okay, great. But yeah, you know, it was those kinds of things, right? It was like
networking and network building and then like, you know, going to tons of events and getting
introductions to VCs and going for meetings and trying to, you know, build up that relationship
nine months or a year in advance so that when or if we wanted funding, we could say, Hey, you know,
our business is here now. Our business is here now. And that was, I think, a total waste of time.
If I had spent those months and years with customers, you know, flying to go visit agencies
and go sit in house with marketers and talk to them about what they were doing and, you know,
help them with their work, which which I did some of as well. But if I poured that effort and energy
there, I think the return would have been 10x. What are some of the mistakes that you made as
a result of not understanding your customers and how they were using SEO tools and growing their
companies? Yeah, sure. So I mean, you know, the big one came in sort of the 2011 to 2013 period
when I had this idea that that SEO and content marketing and social media marketing and PR and
brand marketing, we're all going to merge into one practice, you know, you wouldn't have these
siloed individuals and agencies, you would have like, you know, overlapping teams of folks with
these skills that that obviously never happened. That is not reality. But because I believe that
it would happen, I had Moz go on this sort of, you know, like death march of building
two two and a half year long dev and design cycle to build this giant product that when it finally
did come out at the end of 2013 was just a complete failure. You know, nobody wanted it.
It was bad at most of the things that it did, or at least it wasn't as good at any of the things
that it did as individual point solutions. And when I actually started spending time with,
you know, customers and marketers again, I could see that in fact, they loved point solutions,
they were happy to switch context, pay more for another tool, you know, learn a whole new UI and
UX in exchange for even slightly better data. Because marketing is very competitive, especially
SEO, right? There's only one position one, if you can get any sort of advantage to get to that
ranking position one, you will take it, even if it's another tool subscription that costs you
another 150 or 200 bucks a month. And so that was, yeah, that was a big wake up call to,
oh, all in one is not at all what this market is looking for. All in one is kind of a waste.
Uh, these people just want best of breed in everything and they're willing to switch,
switch tools and contexts. And also SEO people are not doing social media marketing, unless it's
things that directly serve SEO. They're not doing, you know, what's what a lot of content marketers
do in content marketing, even if they do some content, they're not doing what email marketers
do. They're not doing what brand marketers do. They're not doing what, you know, public relations
folks do their SEOs. And likewise, each of those individual disciplines is doing their own thing.
So I think if I could have been a little less arrogant, and more humble and recognized, you
know, not just spent time with customers, but internalize the lessons, I would have made a
lot better decisions. It's interesting, because you're, at this point in time, pretty much an
expert in the space, you're eating it and living it and breathing it, even then your intuitions
can still be off in terms of what customers actually want. And I think for a lot of early
stage entrepreneurs, like that's even more the case, chances are you're not an expert,
and you just randomly guessing or intuiting what everybody's going to want is not going to work
out most of the time. Yeah, one piece of advice I would have for folks for doing that is like,
try doing some of the work yourself. So I think a lot of advice in the startup world is spend time
with your customers. But there's not enough advice that is go be your customer, right? If you're,
oh, I'm gonna go, you know, serve truck drivers, hey, see if you can find, you know, someone in
that world, and go on a few long haul drives, right? Like be the driver, to whatever extent you
can go through training, what's that like? You know, so I think that living the lives of your
customers is definitely a cheat code for this stuff. Yeah, and I think what's so hard about it
is like even hearing you say that like, that's a great idea. And the number of insights that can
come out of doing that could be unlimited, you have no idea what you're going to learn that could
change your business for the better. But at the same time, part of my brain is thinking,
that's a lot of work. That's not guaranteed to pay off. It's not directly what's going to help my
business. You know, how do I know that's what I want to spend my time on? I think just guessing
what people want is good enough. How do founders get past these feelings? Well, it can be. I mean,
I think the challenge is if you, if you get that wrong, all of the energy and effort that you put
into building your product and designing your company and branding your company is the place
where people can get this thing will have been for not. So if you're looking for a way to lower
your risk profile and increase your odds of success, that's a great way to do it.
So one of the things that strikes me about you and about Moz is that you have this value of
transparency among other several strong values. Moz is a private company and a pretty big one at
that. And you guys were crazy transparent about your revenue numbers and your internal decision
making. And I've also noticed that you're the same way in your personal life. I mean, I started
reading your book and only a few pages and I was thinking, Whoa, he's really sharing everything
here. There's a lot of stuff in it that most people just wouldn't share. Do you think that
my like, Oh, I know how much Rand makes that? Yeah, I know how much money he makes. I know
emotional state and the state of his relationship. Do you think that Moz's value of transparency
came from your personal the way that you live your life? Or do you think that it's the other
way around that you were influenced to become more transparent because of the values that you had at
Moz? Oh, no, no, definitely, definitely the first way. The best thing that you can do for your
for your startup as you're creating values, which, you know, when you're when you're one person and
you're sort of, you know, hacking stuff together on the side is less important. But as you
get to even two or three people starts to become important, having those values reflect your
personal values is very, very powerful. And they can be aspirational personal values, right? You
can say like, the best part of me wants to always be kind to other people. And so I'm going to make
that about even though I know I don't always live up to it, I'm not perfect at it. But it's something
that I value in others. And it's something where if I find people who are not kind to others,
even if they're extraordinary performers, even if they help my business quite a bit,
I don't want them part of this organization. And I'm willing to take that sacrifice. Okay, great.
Now, now you've identified that value in yourself. Now put that in your company. I think it works
much less well the other way around, where you try and say, Hey, I think this would be a good
value for the company to have now let me see if I can go live up to it. And, you know, make it a
part of my life. That's kind of a recipe for disaster. And unfortunately, a lot of companies
do a lot of startups do choose values because they think they're good for like, recruiting or
marketing. If you don't fundamentally at your core, believe in transparency, don't make it a value.
Just, you know, if you want to use transparency as a marketing tactic now and then great fun,
go for it. Don't call it a value. Because that's a different thing, right? Values are things you
would be willing to sacrifice, even if they hurt your business and cost you money. And I think that
identifying those things is where the real value comes in. So yeah, definitely a personal value
and bias that then became part of the company rather than the other way around.
So I think your value of transparency really resonates with me. I mean,
Andy hackers itself is a community that's built on transparency. I've done hundreds of interviews
on the website. Everybody has to share their revenue. Everybody has to share the good times
as well as the bad times. But I think a lot of people have not even considered making this one
of their values. I mean, it's kind of status quo is that you don't talk about what's going on at
your company. You don't talk about what's hard in your life. What do you think are some of the
costs and the benefits of being transparent? Why consider it?
So that is, that's the fundamental difference between a value and a strategy or a tactic.
When you come up with a value, you don't say to yourself, what is the cost of doing this?
What's the benefit? What am I getting? Is it going to help with customer traction?
Those are not the questions in consideration. It's a lot more like why people have ethical
and moral and even some political beliefs, right? They believe those things because they fit their
worldview because that's how they want the world to be, right? I want the world to be
a more diverse place where it's not just white dudes running the show. There's room for people
of all kinds represented at all levels of power and this is the personal value, right? But because
of that, I'm willing to make sacrifices to do it. If that means that short term, there need to be
sacrifices made or investments made to see that through to the long term, I'm willing to make
those as opposed to a tactic, which is, well, hey, we already have a bunch of whatever money and power
and influence in this group. So let's just keep giving them money and power and influence because
that's the easiest sort of thing to do. And values work that same way. I think going to
the point you made about transparency, there is a culture that I've absolutely not just noticed,
but felt really strongly, most strongly in the Bay Area startup culture, but that ethos has
extended elsewhere. And that is that you always have to be showing or pretending to show strength,
right? Like how is anyone ever doing in San Francisco? They are either crushing or killing
it. I don't actually like crushing or killing things. So I have never been that, but I think
that that that hides a mask of turmoil and sadness and stress and emotional strife and psychological
problems. And when you actually spend time with your close friends and you find out how they're
really doing, they are not crushing or killing it. They're just saying that because they feel like
they're supposed to because they feel like they have to because this, you know, this culture has
created in us a sense that we need to be dominant, that vulnerability and weakness are going to harm
our harm us and perceptions of those things will harm us. And so we put on these masks.
I think that's bullshit. I think that hurts a lot more people and companies than it helps.
And I would like to see that element. There's a lot of wonderful elements of Silicon Valley
startup culture, right? This idea that anyone can come there and build something amazing,
that you can disrupt industries that maybe were, you know, extracting instead of creating value,
that you can have an extraordinary impact on the lives of millions of people. That's hopefully
very positive. And granted, you know, some of the narrative the last few years has been a lot of the
downsides of that. But I think a lot of that downside comes from this bullshit facade that
we're supposed to put on. So, you know, I like Cortland, I love what indie hackers does,
because it takes that mask off. You go to indie hackers any day, and it's a bunch of people saying,
I suck at this. I don't know how to do this. I need help with this. My business isn't doing so
good. How did you get over this hump? And that is the absolute opposite of everything you see on
TechCrunch, right? Which is which is so refreshing. Yeah, the number of stories I could tell about
people who I know their business is not doing well, but who won't open up and who will only
say that they're crushing it is staggering. But one of the chapters in your book is called,
should you sell your startup early? Yes, probably. What's the what's the story there?
Okay. Well, so what I'm trying to do there is try I'm trying to illustrate, especially for
first time founders or folks who don't already, you know, come from a lot of money or have a lot
of money, the value of thinking about an early exit, not as giving up or selling out, but as
giving yourself a long term second and third and fourth shot at doing this and in the process
potentially improving your life and your family's life and the lives of people around you, too.
And I'm trying to also illustrate the that a lot of those early sales that feel like they,
you know, I think, you know, in my case, it was like, well, you know, you could have made these
these few millions of dollars and few millions of dollars. Jesus Christ. Millions of dollars is
an incredible thing. Right. Like, let's not let's not kid ourselves into thinking that it's not.
But you can definitely look at, you know, Moz today and say, well, wait a minute.
You know, it's doing almost 50 million in revenue. If it were to sell today, like maybe you would
make, you know, multiples of that. But the mechanics and realities of dilution and liquidity
preferences and scale and the risks that come with trying to grow a company much bigger mean that
most of the time that those early offers are actually the right thing to do sort of financially
speaking for founders, even if they're not the right ones for investors. There's a bit of a
disconnect there. And I would I would definitely encourage folks to have those those hard
conversations and honest conversations with their investors if you're in that situation
where, you know, you talk about like, hey, this is probably the right thing for me.
I recognize it's not the right thing for your fund. How can we make this right? You know,
is that me taking some money off the table now and being willing to take this risk? Or is it,
you know, us playing saying, hey, yeah, this is a great deal for founders and employees,
even if it's not for the investor. And so let's take it. And then, you know, in the future,
there'll be plenty of other companies for for the investor to pursue. So a little tough.
Yeah, not an easy decision to make. But you're working on a new company now spark Toro. How have
you thought about these issues with your new company? What are your ambitions? How do you
think about fundraising? What are your goals? Yeah, I'm, I'm excited to write about this,
I hope, I hope in the next couple of months to actually have have sort of a financing done.
I'm not raising any institutional money this time. It's sort of all all angel funded, but
I'm doing a very unusual style of fundraising. And I hope to sort of open source that and write
about it, and make it something that's, you know, maybe an alternative that other people can pursue.
Because I think that there's a lot of room for companies that can get profitable quickly,
and that then can choose to invest in growth at a higher rate or long term sort of profitable
operation. And the problem is that the second one, long term profitable operation does not
generally reward investors in the in the structure that that, you know, most Silicon Valley deals are
done. And so I want to try and change that. Yeah, so I've created a structure that basically says,
hey, if you know, this spark Toro is, you know, a few million dollars a year, but it has 20 or 30%
margins, investors can make quite a good return over, you know, five to 10 years, similar to or
better than they might get with, you know, classic venture style deals. And what about your personal
goals with spark Toro? Why start another company? And where do you hope to be in five or 10 years?
Wait, do you want the real answer or the PC? I want the real answer.
I mean, there is no small part of it that's the chip on my shoulder, right? Of course.
You know, so this, the departure from Moz was a little contentious, more than a little contentious.
And that's not to say that there aren't, you know, 100 some people there that I that I absolutely
love and want to do well. And obviously, I'm cheering for the company. So we're working with
the company helping them. But I also feel like I have a lot to prove. And so spark Toro is me,
yeah, hoping to prove that I can do a great job of building a product and a company that can get to
an exciting place, even if it's even if it's not necessarily venture backed. And maybe it won't be
quite the scale of Moz, but I think there's a possibility that it could be. So yeah, I don't
want to say it's not quite a revenge startup, but maybe a little bit.
Yeah, revenge story or not, it's certainly a good story. And I'm rooting for you. And on that note,
what is spark Toro exactly? It's not launched yet. But on your website, you've got some descriptions
of sort of what you hope to accomplish.
Yeah, yeah. So I mean, we're in the process of sort of early stages of R&D on the tech
and validating that we can do what we think we want to do. And that is something customers
actually need, which so far has gone well on both fronts. And that is essentially this fundamental
problem of, you know, let's say, you know, obviously, a ton of people in the indie hackers
world are building products for an audience. And then they have to go through this hard process
to do marketing well of figuring out where those audiences engage and with whom. So what are the
publications and people the, you know, the podcasts, the events, the YouTube channels,
the Twitter accounts, the blogs, the, you know, media, the forums that that your audience
participates in. And if you can identify those, and get some good metrics around them, you can
say, aha, I do think spending time, whatever it is, answering questions on Quora, or building some
relationships with these folks on Twitter, or going to these events and conferences, or getting,
you know, getting our founder onto this podcast, or this YouTube channel, those things will have,
we think, will resonate with the audience that we're trying to reach, because that audience
already engages in those places with those publications and people. And discovering those,
uncovering what those publications and people are, is a pain in the butt right now. And we think
we've got a, you know, a solution to being able to uncover that through, you know, collecting
large amounts of public web and social data, and then anonymizing and building profile information
and, you know, a little bit of NLP and machine learning on top of that. But I'm excited to try
and solve that problem. Because right now, I know tons of marketers who spend, you know,
weeks or months like surveying their audience, or paying a PR company tens of thousands of dollars
to do it, or biasing to just, well, whatever comes up on the first page of Google, I guess I'll go
spend my time there. And that's probably not the best use of their time or energy.
Yeah. And there's a ton of early stage founders who would also love to use it. And I think
what's cool about it is that if you can actually solve that problem, then more people start more
successful companies, I think, because you kind of are making this very difficult challenge a
lot easier. Yeah, yeah, absolutely. And hopefully, you know, it's a positive thing for these
publications and people who are influencing audiences too, in that they will have better,
more relevant folks pitching them and talking to them about stuff that's actually relevant
to their audiences, instead of getting these just random PR emails that are often pretty poor.
So it's been a while since you were at the helm of a tiny business. And now you're,
you're sort of like an indie hacker all over again. Yeah, I took some questions on the forum
to see what people wanted me to ask you. And I'm in on the forum wants to know how your experiences
running Moz will play into Spark Toro. And what are some of the mistakes that you've learned from
and also the good things that happen at Moz that will most affect how you make decisions at Spark
Toro? Yeah, so a few we've talked about, you know, those include like the funding and how I'm biasing
towards or biasing away from from venture because I just don't love the binary outcome model. On the
hiring front, I think that's another thing, almost every entrepreneur I talked to actually says this,
which is, you know, in their second or third business, they really think much harder about
who they hire and how much they hire. And so, you know, my co founder and I are sort of like,
Hey, how about just the two of us build a v one of this product, launch it, get it up to market
before we hire anybody else? I'm not sure if we'll make it all the way. But I think we're going to
keep the team very, very small. Another thing that I definitely plan on doing is, you know,
on the good side, right? replicating what we did with Moz on the marketing front, you know,
trying to build that, that flywheel, and then find the points of friction and apply some growth hacks
to get it over those humps, which I'm sure we will encounter. I also I think that the self service
model is one that I really love. And even though it has its challenges as well, I definitely prefer
that to the sales team sort of classic SaaS approach and plan to pursue that. So yeah,
those are all things on both sides. Awesome. Sounds exciting. Well, I wish you the best of
luck with Spark Toro. I'll be following it. Hopefully I can use it for some future projects.
Is there anything else that you'd like, you know, Andy hackers to listen to or to hear?
Can you tell them also where they can go to find your new book, which should be out by the time
this episode's out? Oh, yeah, very exciting. Yeah, so lost and founders should be available
all over the place. I think, you know, if you go to bookstores, you'll find it there, Amazon and
an indie bound and pals, all those places will have at Barnes and Noble, etc. And I also I
recorded the audio book personally. So if, if you want to hear that, including a few audio,
east audio only Easter eggs, you can pick that up on on audible. And there's a Kindle version as
well. Yeah, and if you if anyone from the indie hackers community, I mean, you know, I love you
guys. So I visit the site once every day or two, at least. But if there's anything any questions
that you have in particular for me, feel free to tweet me at Randfish. All right, well, thank you
so much for coming on the show, Rand. Yeah, thrilled to be here. Thanks, Karla. If you enjoyed
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So you'll see me on the forum for sure, as well as more than a handful of some of the guests that
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