Hello, this is Cortland Allen from IndieHackers.com, and on this podcast, I talk to the founders
of profitable internet businesses, and I try to get a sense of what things were like in
the early days, especially how they came up with their idea and the things they did to
grow their businesses to where they are today.
In today's episode, I am talking to Scott Gies, the founder of a very interesting business
called Scotch Cheap Flights.
How's it going, Scott?
Hey, how's it going?
Good to be here.
Thanks for coming on the show.
It's great to have you.
So, Scotch Cheap Flights is a mailing list for cheap flights, and the way it works is
that you, Scott, and your team of basically flight finders spend the better part of every
day tracking down the cheapest deals on flights all over the internet.
And as a subscriber, you get access to all of these deals and your inbox on a daily basis.
So, we're talking things like $350 round-trip airfare to Paris.
Yeah, that's kind of it in a nutshell.
We are people who are really obsessed with finding cheap flights.
Some people really like cooking.
Other people really like, I don't know, making Instagram videos.
And for whatever reason, our obsession is literally just spending hours and hours and
hours on Google Flights and Kayak and Orbits and just trying to hunt down those cheap deals
almost like a treasure hunt.
And then when we find them, email them out to subscribers who want to know about these
cheap flights and get them before the best deals before they disappear.
I think one of the coolest things about your story is that it kind of started as a personal
obsession.
It wasn't really a business from the beginning.
In fact, you're just finding flights from yourself.
And this was back in 2015, a couple years ago.
Fast forward to today, it's transformed from this small mailing list that was really just
for your friends and family, and to this, you know, 600,000 subscriber behemoth that's
generating $300,000 a month, which is almost $4 million in revenue.
How did you make this transition, and how did you start Scotch Cheap Flights?
That's exactly right.
You know, I never intended to start a business.
I was never really an aspiring entrepreneur, but I loved to travel.
And I didn't have hardly any money in the bank, so I wanted to try to figure out a way
to still travel without liquidating my life savings.
And so I got really good at sort of figuring out those tips and tricks to get as cheap
of flights as possible, got really good at navigating the frequent flyer miles world.
And then it all kind of culminated in the middle of 2013 when I ended up finding and
booking the best deal I've ever gotten in my life, which was nonstop from New York City
to Milan for 130 bucks round trip.
I didn't even know I wanted to go to Milan until I saw this deal, and of course, who
could say no to $130 round trip flight to Italy, you know?
I ended up going and like hang out on Lake Como where, you know, George Clooney has a
house there, like hanging out, going like skiing in the Alps, going and hiking in Cinque
Terre.
Like, it was incredible.
And so then when I got back, that's when sort of things changed because, you know, I was
hanging out in the break room at the office and people would come up and say, hey, Scott,
you know, can you, like I heard about that crazy flight that you got.
Can you let me know next time you see something like that so I can get in on it too?
And so then, you know, I had enough people ask that of me that I started to realize,
like, okay, I can't keep everybody's, like, try to remember every single person I was
supposed to tell.
Why don't I just start a little email list and that way I can just kind of send it out
to everybody at once.
How big was your email list at first?
Yeah.
So at first it was just a few dozen folks.
I mean, I started a little free MailChimp list because, you know, first I was just going
to do it on Gmail, but then I realized I think there's a limit in terms of how many, like,
carbon copies you can have on Gmail.
I can't remember what it is, something like 25 or 50, maybe, at least at the time it was
not very high.
So I started a little MailChimp list and just kind of sent it out to my networks, like,
hey, I'm doing this just for fun, you know.
And this is totally, totally free, like, just a hobby, something I enjoy doing.
So for, you know, like, a few dozen friends signed up the first day and then over the
next kind of 18 months, it just slowly started to grow out from that network.
And so then by the time of about April 2015, so just a little over two years ago, it had
grown from that, you know, maybe an initial kind of 25, 50 people to about three or four
hundred.
And how did you, like, were you actively promoting your list at this point in time or was it
growing entirely by word of mouth?
Just word of mouth.
I mean, it was just, you know, I would, again, would like, it's one of those weird guys who
really enjoys trying to find cheap flights.
So then, you know, once I found it, it's not like I can take all of them.
So I might as well just send them out to people who I know and like and would want to be able
to take advantage of them as well.
Did you ever think, you know, in that early stage, like, hey, this is something that I
could probably charge money for?
Was it just like a hobby?
No, never, never.
It was just a total hobby.
I imagine it was a lot of work to send out all those emails.
You know, it wasn't, was not like at the time, you know, I was very, like nowadays we send
out, you know, three or four deals departing the US every single day.
And then, you know, a number one's departing, like, like it doesn't just cover the US.
We also cover flights departing Europe, flights running Asia, Australia, Canada, Latin America.
One down the line.
And so, you know, we probably as a company now send out 15, 20 like deal alerts each
day.
But, you know, at the time I would send out maybe I would run across like one or two a
month because again, this was not even a side hustle because I wasn't getting any money
for it.
It's just a pure hobby.
And so it's just like, you know, when I had some time felt like going to search for some
flights and like stumbled across something really great, then I would send it out.
But anyway, it wasn't that much of a time suck initially just because, you know, it
wasn't that big of a priority, at least in those sort of initial hobby stages.
Right.
So when did things change?
Yeah.
So where things really sort of like the inflection point was April 2015.
So I'd been living down in Mexico and was getting ready to depart for a kind of big
two month round the world trip with my now fiance.
We basically amassed a bunch of frequent flyer miles and we're using them to get, you know,
free flights all over the world.
So we're going to, you know, 13 different countries, like 20,000 miles, you know, this
big, big trip.
And I posted a little map on Facebook just showing, you know, where I was going to be
going.
And like for those, you know, doubters and haters of frequent flyer miles, like this
is this I'm about to take this awesome trip for the next two months and it's all for free.
And just so happens, you know, I was working as a journalist at the time and, you know,
so I had friends at other working at other journalist outfits and I had a friend of mine
who worked at Business Insider saw this and was like, Oh, that looks like an interesting
story.
Hey, Scott, can I, you know, pass this along to my friend here who writes about travel
for Business Insider and see, you know, if she's interested in doing a story.
So yeah, you know, sure.
By all means.
And so she was and ended up doing an interview.
So the day I left, you know, the day we left for this big trip of the Business Insider
article went up and, you know, it's one of these sort of slightly clickbaity, but, you
know, made for viral headlines like, you know, man travels, you know, around the world, 20,000
miles, 21 flights, like all for free, you know, figures out how to game the airline
industry.
One of these that really sort of like gets people, you know, across between like exciting
people, you know, frugal, the free part, all that stuff.
And so it ended up going super viral, you know, 250, 300, 400,000 clicks on it.
And like literally over, you know, in that article, it had a link to the email list.
And so literally overnight, it went from, you know, this just sleepy little hobby of
for 300, 400 people, you know, 80% of whom I knew personally to 5,000 subscribers, like,
overnight.
That's crazy.
Yeah, it was.
And, you know, and I didn't really quite know what to make of it, A. And B, it was kind
of one of those crisis tunities, you know, because the bad part was this, you know, little
hobby that I enjoyed doing and enjoyed doing with a free MailChimp list, all of a sudden
the email list was big enough that I was going to have to start paying hosting fees.
And you know, I love doing this just the hobby for friends, but I wasn't really thrilled
about the idea of just paying money out of pocket for server space to, you know, do a
favor for my friends.
So, you know, that was the bad part.
The good part was, you know, I sort of realized, hey, you know, maybe there's more interest
in this type of thing than I realized, like, there, you know, all of a sudden there are
5,000 people who are really into this.
I knew, you know, I'm not a businessman by background or trade, but I knew enough about
sort of business and marketing to know that, like, getting that first 1,000 subscribers,
those first 1,000 customers is by far the most difficult thing to do.
And you've already crossed that at this point.
Yeah, exactly.
And the fact that I crossed that fivefold with doing nothing, like not having to do
any hustle, not, you know, take the time or anything, I was like, man, maybe there's an
actual opportunity for a business here.
And so it was, you know, during that trip that I then started to sort of percolate in
my head, hey, you know, how can I turn this into maybe a little business, going around
some different sort of revenue models in my head, like ways to actually turn into a business,
you know, should I do like a paid advertising thing, should I do like a referral link type
of thing, should I do like a, you know, paid subscription, tossing all those around.
And then come August 2015, I ended up officially relaunching it as a business, went with the
paid subscription model.
And yeah, that was sort of the birth of Scott's Chief Flights as a business just about two
years ago.
I mean, you mentioned that you basically didn't have any entrepreneurship experience and you
never really started a business and you ended up just kind of falling into this.
I mean, did you plan when you were writing, you know, collaborating for the article on
Business Insider, did you plan to put a link to your man list in there and did you expect
to get, you know, a ton of traffic?
No, it was all completely serendipitous.
You know, I had no idea what links you included, no idea if it was that it was going to go
as popular as it did.
I had no idea like that, you know, I'd never even considered at that time that there would
be a like a business opportunity here is just again, something that could just kind of date
in my every once in a while in my spare time just for fun and got incredibly, incredibly
lucky that it ended up turning into a big break.
So today's Scott's Chief Flights is not just you working alone, but you actually have a
co-founder and a whole bunch of employees.
And your co-founder Brian actually collaborated on your indie hackers interview a few weeks
ago.
How did the two of you guys end up meeting?
Yeah, that was kind of a crazy story.
So this is very early on a couple months after you know, officially launched as a business
and it was starting to grow enough and have enough customers and have enough work going
on that I realized like I need some help like I can't do this by myself.
And so just around that time when I started to think like man, how am I going to find
somebody like as a you know, business partner or someone to kind of take on responsibility
with this.
Brian reached out to me because he was doing a giveaway.
He was trying to start like a travel blog, travel community thing and figured okay, maybe
I can give away a couple subscriptions to Scott's Chief Flights and do an interview
with him.
And so you know, we chatted for a while, give a couple of subscriptions and I just got a
really good vibe from talking with him like man, this guy you know, he's got a shit together
like he seems like pretty you know, hard working entrepreneurial like I'm just sort of impressed
with the cut of his jib.
So kind of on a lark, I just messaged him like hey, you know, look, this may sound kind
of weird but I like we kind of need help over here, you know, like we're things are growing,
we've got customers but like it's just more work than we have like there's a lot of opportunity
to help build this up but yes, that's something that you're interested in.
And you know, he said yes, we worked it out and it ended up being just such again going
back to serendipity, like it's not it's probably not a wise or advisable business partner search
strategy to just take somebody who you randomly met on the internet and be like hey, you want
to go into business together, you know, and we'd never even actually met face to face
until about five months ago or so but I just again got so lucky because our not only is
he incredibly competent, incredibly skilled and hardworking but also our skill sets really
complement one another as well so you know, I'm good obviously good at the sort of flight
searching stuff and then good at like writing with the journalism background and then he
is really good at that sort of behind the scenes back end stuff like a lot of sort of
building systems kind of trying to get partnerships worked out trying to build up like you know
marketing and development growth, all sorts of stuff like that behind the scenes that
it's hard to kind of put a singular label on but man, I mean, you know, Scott Street
Flights wouldn't be a tenth of what it is today if we hadn't had that serendipitous
meeting and decided to go into business together.
And it sounds like you met Brian at kind of the perfect time because you were at the time
thinking about, you know, how do I put a business model on this and how do I charge and make
money from all this demand?
Yeah, that's absolutely right.
I mean, it was like at that time probably when he came on there maybe 10,000 total subscribers
maybe you know, 500 or 1,000 were paying like so you know, definite growth and bigger than
I expected but you know, a fraction of what it is today, you know, 18 months later.
So you made a lot of decisions early on about what your business model would look like and
you decided to basically do a freemium business model which for people who don't know what
that means, effectively you gave away a lot of your product or your service for free and
then you charged for an upgrade.
So people could sign up for the normal mailing list and then what did you charge money for?
Yeah, so initially we set the pre and premium model and the thinking was I was very sort
of again coming from the journalism world, I was very cognizant of the difficulties that
a lot of newspapers went through going from their websites where they offered all their
articles for free to then trying to charge for it and I know how difficult it is to have
a categorical shift in people's mind from trying to start charging them for things that
they used to get for free and so I was very sort of tried to stay mindful of that and
so that's why I was like, okay, I don't want to just have a purely paid list and tell everyone
like, hey, you know, starting in August 2015, you have to pay for this if you don't then
take a hike.
So that was part of the thinking, you know, I think another part of the thing which ended
up working out really well was that if we have this free list, A, it's a lot, it's,
you know, a massively lower sort of barrier of entry for new subscribers, you know, it's
like asking someone just to sign up for an email list is a way smaller than asking someone
who'd never heard of Scott Street Flights to come in and pay for it but even more than
that than having this sort of built-in list of free subscribers wound up creating a captive
audience where anytime, you know, we like when we send out deals to the free list, you
know, includes little banners like, hey, just FYI, you know, free subscribers missed out
on like, I don't know, $350 deals to Rome yesterday or something like that, like sign
up, you know, sign up for premium here to get all the deals.
Those types of things, you know, we have these folks who are interested, already know, you
know, how Scott Street Flights works and are much, much, much easier to convert to paying
subscribers than, you know, just random Joe Schmo who just found out about Scott Street
Flights yesterday.
You guys had like a long-term view basically, it was not, you know, at the end of the world
if someone doesn't pay immediately, it's fine, you can convert them later, you know.
Right, right, especially because, you know, the beauty of a sort of 21st century mail list
business model is that the marginal cost is so low and, you know, it's effectively zero
for any given subscriber.
Obviously, you know, once we have certain thresholds, we have to upgrade server space
and stuff like that but for any given subscriber, it's effectively zero but, you know, we found
that over time just about 1, just about 10 to 12% or so of free subscribers wind up becoming
paid subscribers and so, you know, that is incredibly lucrative than if we can just sign
up 10, you know, get convinced 10 people to sign up for the free list, we know at least
one of those people are gonna wind up paying for it.
I think that's huge, especially considering like you were mentioning earlier that like
it's so hard to get people to pay for things they're not used to paying for, especially
content.
You know, and we don't even, we actually even recommend people that they don't sign
up for premium right away, like I want people to sign up for the free list initially and
we actually on our website, you know, when you come in, there's only one call to action,
it's just put in your email address.
If you do that, then there's information about like the premium list, you know, if they're
really interested right away but I want folks to start out on the free list because I want
them to get a sense of how Scott's Cheap Flights operates, you know, and make sure that it's
what they're looking for, make sure that they don't have sort of a preconceived notion about
what it is that it doesn't ultimately end up being, you know, some people think it's
like Groupon where, you know, we have sort of this block of flights that we're selling,
you know, ourselves or some people think it's like Kayak where they can search for the flight
themselves or some people think it's like Flystein where they can, you know, just have
an expert go look up the best flights for them, you know, and Scott's Cheap Flights isn't
any of those things.
It's something new and different and so having people come in and see, you know, for the
first week or two, just get the free deals, see what it's all about and then sort of decide,
okay, you know, am I interested in getting more of the perks, am I interested in getting
all of the deals rather than just some of them?
So the difference between the premium and the free list is all the deals go to the premium
list where it's just one out of every three go to the free list.
The premium list gets to choose which specific cities you want departure alerts for.
So, you know, say like you live in New York, you say, okay, I only want flights departing,
you know, JFK, LaGuardia and newer or, you know, maybe you can add in Philadelphia and
Boston in there too, if you really want or Hartford, but you get to choose which specific
ones.
Whereas for folks on the free list, they choose by region.
So say, okay, I just want deals departing the Northeast.
I just want deals departing, you know, the West Coast or something like that.
Is this something that you've played around with at all?
Like, how did you determine exactly where to draw that line between what free users
would get and what paid subscribers would get?
It evolved a little bit over time.
The one out of every three has been that way the entire time.
Premium subscribers get a deal 30, like when a deal goes to the free list, premium subscribers
get it 30 minutes before the free subscribers, which, you know, for some deals doesn't matter.
But for some deals, they like legitimately only last a couple hours at times.
And so finding out about it early can sometimes make the difference.
There's no ads in the premium emails.
It's also been there since the beginning.
And the two kind of premium features that have changed since the beginning are that,
like I said, that sort of specific airport selection feature that I mentioned, and the
we now offer text message alerts as well.
But that's only for for premium subscribers as well.
Those are things that, you know, we just didn't have like the functionality built out initially.
But it's something we do have now, we ended up taking away one feature initially, like,
so initially, you know, when the when the premium list is really was a lot smaller,
well, the entire list was a lot smaller, we offered free credit card consultations for
premium subscribers.
So, you know, I got going back, I got really good at frequent flyer miles, you know, generating
them and using them for best value.
And a big part of that is which specific like airline or points credit cards to open.
And so, you know, I'd say like, okay, yeah, if you're a premium subscriber, like, and
you're thinking about opening up a new credit card, send me an email, you know, I'll help
you choose.
And that went along great for the first six months or a year or so.
But then it just ended up getting big enough that, you know, I was just every day having
dozens of doesn't Yeah, just swamped in it because that, you know, that was sort of the
one perk that was not really scalable, like that each each person emailed had to have
individual attention.
And so we ended up kind of phasing that out and implementing, you know, these new features
that talked about the city departure selection and the text message alert.
So rewinding a bit, you've gotten to this point now where you went from 300 subscribers
to 5000 to 10,000 subscribers, and, you know, up until this point, you're doing it pretty
much by yourself.
And you haven't even brought Brian on.
What did it take for you to actually build out the infrastructure of the business?
I mean, were you on MailChimp the entire time and, and did you set up a website?
Yeah, so it's on MailChimp initially, um, I had a website that I just actually my brother
was like good at web design.
So he just kind of built out a website initially, you know, did MailChimp that we used form
crafts initially, which is just a form plugin thing that connected well between the website
and Stripe, which we use for payment processing.
So that that was like sort of the initial stack setup.
We ended up over time phasing out form crafts it once we got sort of the new website built
with our own with our own kind of form capture, and then just connected directly to Stripe
for still for payment processing.
We did PayPal for a while we offered that as a payment option, ended up taking it out
because it just didn't like without getting too wonky about it, it just, it doesn't play
no is nice with other apps and plugins.
It ended up being, I'll just take one specific point here.
When folks would pay with PayPal, it would automatically use whatever email address they
had as their PayPal email as the email that they signed up for the list with like for
the cheap flights email list.
But a lot of times people didn't want that they wanted a different one.
And so, you know, it would cause problems like they didn't realize that so they wouldn't
be getting emails for weeks and really like where my emails like oh, you know, went to
the one that you signed up with or you know, ended up just being big headaches trying to
trying to figure it out with everybody.
So we yeah, we ended up phasing out PayPal as an option.
Oh gosh, six months ago or so and we keep we go back and forth on whether or not to
bring it back but I think we're all kind of happy to to not have it even though it's it's
like slightly probably sacrifice just a marginal amount of revenue by not offering it.
We I think are like like amount of hassle and headache that we saved by not doing it
and is by far worth it.
What happened after after you brought Brian on like how did scotch cheap flights as a
business change?
Yeah, so that was really where it kind of started to get professionalized.
You know, the first few months were really just sort of almost a test to figure out.
Okay, I've done but doing this thing for free got a bunch of potential people are people
willing to pay for this, you know, is this something that I could even cover my my hosting
costs with, you know, to have that time, I think we're $50 a month.
And so my you know, I just initially wanted to set a really low price point and say, okay,
is this something that I can convince 25 people to sign up for a two bucks a month?
Like can I do that?
And you know, even the first day or two wasn't really clear if I'd be hit it.
But then it started to pick up and and and you know, but I think by the end of the first
month had 100 120 paying subscribers to two bucks a month.
So you know, I was really happy I was making money like as profitable the you're already
turning a profit in the very first month.
But again, when it's sort of grown to 1015 thousand, you know, by the time I brought
Brian and we really realized, okay, a there's a lot of potential here, you know, most people
were signing up were really happy, there was basically no churn at the time, you know,
it was expenses were next to nothing, you know, we don't have an office space, there's
no physical product, like it costs basically nothing to scale.
And you know, user satisfaction was really high.
So he's just started to put our heads together like, okay, what types of what types of tactics
can we take to try to, you know, to try to get things as good as possible.
And so he came up with a bunch of like, really, I think smart ideas.
So I'll give you a few examples.
We shifted away from the $2 per month model to I think initially, the price was five bucks
for three months, 15 for six months and 29 for I'd have to double check and make sure
that's what it was initially or something like that five 1529 for three months, six
months or 12 months subscription.
And it basically was about the same price in some cases, even a little bit lower than
two bucks a month.
But by not processing payments every single month, and instead of processing them like
once a year, once every six months, once every three months, we ended up saving, you know,
a ton on credit card processing fees, because you know, the way it works is like standard
processing fee is something like 2.9% plus 30 cents.
And that 30 cents out of two bucks, you know, is more than 10% that we're you know, so we're
getting eaten every transaction 15 you know, somewhere between 1520%.
And so just by shifting to a longer payment structure, we ended up, you know, making and
saving a ton of money.
So that was a, B, you know, came in with ideas about like, a Black Friday sale, and raising
prices.
So we ended up raising prices like right around New Year, I believe, I was gonna say, like,
one of the most common things you hear is that you should always charge more, you know,
more than you think in $2 a month is so insanely cheap, like, there's nothing online that I
pay for the that's that cheap, you know, and that's sort of what I was thinking, like,
I want it to be a loan of price point that it doesn't deter that the price point doesn't
deter anybody.
So I just wanted to see, are there people who are willing to pay money, whatever amount,
but pay money for this type of thing?
At what point did you have enough validation to say, okay, people will pay for this, I
should charge more?
Like, was there a certain target?
After, after a few months, yeah, I mean, that was right around when Brian came in, and we
shifted to this longer term structure, whereas, okay, you know, there's a potential to raise
prices here.
But you know, there's always a little bit of a fear when you raise prices, like, are
people going to revolt, you know, are we undermining ourselves?
And so we did two things.
Well, the first thing we did is we kept everybody grandfathered at whatever, you know, rate
that they signed up at.
So you know, you signed up at $2 a month, you can stay at that for life, and we still
have some subscribers on the list who are paying $2 a month, you know, with people who
signed up, say, $15 every six months, like, they're still at that.
So we didn't, you know, we're in by, by no way, affecting existing customers.
And so, you know, negate any chance of like, revolt, you know, people's canceling because
of that.
The other thing that I really that I realized from this, which was a really real surprise
for me, is how much of a sales booster raising prices can be.
And that's because again, because we had this sort of grandfather clause, the result was
that people realize, oh, shit, if I don't sign up by the deadline tomorrow, prices are
going up.
So I bet, you know, it takes everybody who's all this, these 10,000 people who are on the
free list and are sitting on the fence deciding, you know, should I upgrade or not, all of
a sudden forces them to make a decision and make a decision that's weighted in our favor
because there is, okay, either I can do it today at 19 bucks, or I can do it tomorrow
at 29 bucks.
And so, you know, the sales just skyrocket in the day or two leading up to that sort
of deadline.
And so that's made me much more, much less averse to price increases where they're warranted.
Because I know that when that happens, it's going to drive a ton of upgrades in the, you
know, in the time leading up to it.
The last insight, I think, you know, just tangible example, I can think of that Brian
really came up with and executed really well was that I went back and kind of did some
analytical data crunching on existing users.
And he found that basically, he noticed an interesting little quirk that, you know, when
someone signs up, there's a, you know, there's a decent chance that they're going to upgrade
right away.
And there's a decent chance they'll upgrade in the first month, even that first to second
month, there's somewhat of a chance that they'll become paying subscriber.
But almost nobody on the free list who had been on there for more than two months was
upgrading, like it was very, very small number.
And so what we realized from that is, okay, these people are, you know, have a very low
chance of upgrading.
And you know, ostensibly are not like, high value because of that low chance of upgrading.
And so what if we can offer them something to try to entice them to upgrade.
And so what we did was we offered them a free month.
We just, we would segment the list, we would say, okay, and you know, I only want people
on this list who have been on for more than two months and, you know, on the free list
who have not upgraded.
And we sent them all just a free upgrade thing.
He said, hey, you know, for the next couple days, you can try out the free, the premium
list for free for one month.
You know, you got to put in your credit card and stuff.
It won't get charged for a month if you cancel, you know, cancel anytime, no questions asked
in that month.
You won't get charged, you know, even if you forget, you know, oh, you know, I just got
charged.
I forgot.
Like it's two days later.
Can you, can you cancel and refund?
Yeah, absolutely.
But we found that, you know, they like something like we would get, you know, thousands and
thousands of upgrades just from this, again, from this group that had almost no chance
of upgrading to begin with.
And it was leading to, you know, tens of thousands, you know, 50,000 plus in revenue that was
just like free money because it wasn't, it wasn't going to happen naturally.
And so that was, again, just a tangible, really insightful thing that Brian noticed and implemented
and one of the reasons why I'm so grateful to have him on the team.
Yeah, it sounds huge.
And I think one of the cooler points from your interview is that you talk about, you
know, in terms of time, I think it was April of 2016 was when you guys bought scotchcheapflights.com.
Yeah, I know, super lucky that it still existed.
Before that, it was just, I had written like a couple of ebooks and it was on like flyforfreeguide.com
and they had, I just had like flyforfreeguide.com slash email list or something was the URL
for the email list for a long time.
And it was kind of confusing people like, you know, I want to refer my friend over,
like, what's the URL again, like, what the hell is that?
And so like, we're really lucky that scotchcheapflights.com still existed, you know, that we got it and
yeah, and that was part of the sort of professionalization of the company that that Brian helped bring
about.
Do you remember about how many subscribers or how much how much revenue you guys were
generating at that time?
Oh, and this is in April of last year 2016.
Yeah, about a year ago.
Okay, in that month, we brought in about $30,000 that month.
So about about a 10th of what you guys are making now and probably similar subscriber
numbers.
Yeah.
How did how have you guys grown by 10 X and then the last year, man, that's a huge amount
of growth.
I imagine pretty hectic.
Again, I think a huge part of it again is the free going back to the freemium model,
the fact that we don't have a big ask, you know, just, hey, sign up, it's free, try it
out.
And that's the one called action.
And so a lot of the web page right now is optimized for that type of thing.
Again, there's one call to action.
Just put in your email address, you know, there's a like an opt in, you know, you you're
going to leave like, hey, just put in your email address real quick.
So a lot of that is optimized for clicking email addresses, a lot of growth through Reddit.
We've been, you know, post a lot on like Reddit entrepreneur on Reddit, doing AMA is stuff
like that, that has led to a ton of subscribers done, you know, media hits.
You can always see a decent spike when there's a good article in Washington Post or, you
know, Conde Nast Traveler, stuff like that.
But honestly, the biggest source of growth, we did a survey recently of subscribers, 45%
of people said they found out about Scott's cheap flights via word of mouth.
You know, almost half of people came because somebody, some friend of theirs had told them
like, hey, you should sign up for this.
And that's been a that's like extremely flattering, you know, that it's something that people
really sort of recommend to their friends and that it's gotten so much growth that way.
But be it's it's been an interesting data point as we have gone back and forth about
whether or not to do a referral program.
You know, should we like offer people, hey, like, get a month free on your subscription
for every person that you bring in or something, you know, something like that.
And we like we keep going back and back and forth on it because on the one hand, you know,
people like referral programs, they work like it helps bring in new customers.
On the other hand, if 45% of our people are already coming in 1000s, 1000s, 1000s a month
are coming because they heard about it from friends like, do you even need a referral?
Yeah, do we need a referral?
Do we need to boost?
Do we need to like, you know, make that could end up.
End up just being in expense at that point by giving away money for something that we're
already getting.
So it's tough.
We go back and forth on it.
But you know, it's an interesting problem to grapple with.
I think one of the cool things about being freemium is that it really helps enable your
word of mouth growth, too.
Because if you charge everybody up front and you know, maybe 90 to 95% of people who would
otherwise be on your free list just don't end up using it all because they're not willing
to pay, then they never end up telling their friends.
Oh, yeah, no, I'm a super skeptical guy, like, I almost never pay for something like right
off the bat.
You know, I want to try it out.
I want to see if I like it.
And there are plenty of things that you know, I've tried out, liked a little liked and then
decide, yeah, you know, I'll pay for this.
So I'll give you a real quick example slack, like we, you know, what once the team started
growing big enough, we couldn't just like, use, like hangouts as our as our message service,
messaging service, because, you know, there was no group aspect to it, like it was all
just one on one conversations.
And so we ended up moving over to slack.
But then, you know, you get above 10,000 messages, stops are coming and being all these other
things.
We decided like, yeah, you know, this is actually pretty valuable.
We've been using this.
We really like it.
Like, yeah, we'll pay, you know, 50 or 100 bucks a month, whatever, whatever it costs
nowadays and and are really happy having having done so.
And that I think is the the model, I think nowadays is just it just makes so much sense
to let people try something out, see if they like it and then, you know, figure out if
it's worth paying for or not.
Yeah, especially if you know that that what the service or the product that you're offering
actually provides value.
Like if you have something that's not that good, then okay, like, you know, maybe freemium
is not going to work for you because people people will check it out and be like, I don't
want to pay for this.
This sucks.
Yeah, absolutely.
There are a lot of sort of trust and faith in yourself and your product that like, you
can have these people signing up for free and then that you can convince them to be
that it's worth paying for over time.
And you know, like, obviously, we know that 80, you know, somewhere between 85 and 90
percent of people were not going to be able to convince to pay for.
But that's fine because the margin again, the marginal cost for every free subscribers,
basically nothing.
But you know, by having the we wouldn't be able to get those 10 to 15 percent, we wouldn't
be getting nearly that, you know, that many folks if we didn't have the free list for
people to try it out first.
And I think one another cool thing about your business is that typically it's pretty hard
to get consumers to pay for things like if you sell to businesses, businesses are making
a lot of money.
And so there's a lot of opportunities to help them make more money, or to help them save
money.
And so it's it's easier for them to do the calculation in their head of court of like,
okay, of course I'll pay for this product because it's going to help me make money or
save money.
But with consumers, it's a little bit harder to get that, you know, that point across.
And I think that scotch cheap flights is in this interesting area where like consumers
spend a lot of money on travel and on, you know, airline tickets.
And if you can save people hundreds of dollars on that, then it's a no brainer.
When it's also just a very, it's just a very unique industry, right?
Because it's, you know, it's not like, I don't know, buying an iPhone where like the price
is basically always the same, you know, you know, you know exactly where to get it.
Like the price is going to be the same today as it will be next week, like, you know what
to expect.
It's just one single product, whereas with flights, you know, I mean, literally the price
is changing by the hour, if not more, you know, you who has any idea what it's supposed
to cost on any given route between, you know, like, what's the flight supposed to cost between
like DC and Sapporo or something like, I don't know, like, like for most, I mean, I mean,
I do know because I spend my, my day doing this type of thing, but for most subscribers,
I think you could tell them $900 or you could tell them $1,900 and they would like, yeah,
you know, I guess that's probably what's right.
And so the fact, you know, when whatever kayak sort of spits back at you as the price, like,
there's not a good, always a good reference point for folks to know, like, is this a good
price?
Is this a bad price?
Like, should I be buying it now?
Like, you know, I'm traveling in, I want to travel in like three months.
Should I pull a trigger now?
Should I wait?
Those types of, it's a super opaque industry that, you know, that every, like almost every
single person on any given flight is paying a different price, right?
Then, you know, then the neighbor sitting next to them.
So almost positioning ourselves as this sort of concierge or a decoder in the middle to
tell folks, not only to be your advocate and searching like, hey, you know, here's a really
good deal.
We're always looking for them, but also that, you know, we can tell you like, what's not
a good deal, when you should book it, how long we think it's going to last, that type
of thing.
And you guys are so single-mindedly focused on this one thing that, I mean, you guys don't
do anything else.
You guys are just purely flight search.
And so like your homepage, yeah, nothing else.
Whereas every other site that I've been to is everything, you know, and I talked to people
in the Andy Ackers forum about this a lot.
Like there's so much of a temptation when you start a business to like spread into all
these adjacencies and do all these kind of related things.
But if you just focus on one thing, then you can do what you guys have done and like, you
know, streamline your homepage.
So you only have one single call to action and you can, you know, increase your conversion
percentage and you can like deliver a product that's going to be superior to everybody else's
because you're not doing anything else.
You just focus on one single problem.
Yeah, I think that's exactly right.
I mean, especially, you know, early on, I think that's one of the – we didn't know
it for sure at the time, but in retrospect, I think has been one of our keys to success
is keeping our focus very narrowly tailored and just keeping it on our sort of core competency
rather than trying to get into – you know, even if there was an opportunity there for
other like methods of revenue, keeping it focused on like the things that we know we're
good at and that we know we're providing value in other people like.
One thing you mentioned earlier is that, you know, at this point in time, you've got a
team.
It's just you alone and you brought on Brian and I think now you've got 15 or 20 people
helping out.
What is everybody doing and how did you find these people?
So everybody does different types of things.
So we have folks who do our customer support.
You know, we get somewhere between 300 and 600 emails a day in the inbox.
So they're, you know, helping folks out.
We decided very early on to basically do no paid advertising, but instead take that budget
and focus it on customer support.
So I wanted people when they email in to not have to wait the standard sort of 24 to 48
hours to get a response.
I wanted to get our response in a couple of hours if not a couple minutes because I think
that type of interaction with – especially with a new company that you don't know, are
they trustworthy?
Is this good?
Is this bad?
If you get a response back in, you know, like within minutes of emailing, that's a really
positive interaction that you have with a company, especially, you know, answer your
question, help you out.
And so I think like bringing on – really investing in customer support was something
that I was really, really glad that we did early on, especially given the nature of the
business that because it's so email-based, anytime somebody has a question, they just
email it back, right?
Like they're not always going to take the time to like look on our, you know, FAQ on
the website or anything like that.
They're just like, why am I going to look there?
Let me just email them back.
And so putting that emphasis on customer support folks was important.
So we have some folks who are doing flight searching as well.
You know, I used to be the only one doing flight searching for U.S. and Canada.
Now I've got a few folks helping out with that as well.
And then we've got folks, you know, doing the flight searching for Australia, New Zealand,
Europe, you know, Latin America.
We have some folk – we have like a social media manager, some folks doing, you know,
web development, building, you know, doing sort of the techie side of things.
Yeah, it's kind of all over the map now, like a bunch of different roles.
But one of the cool things is that everybody is based – everybody works remotely.
We're in 10 different countries around the world.
So you're literally all over the map?
Yeah.
Only a few of us have ever met face-to-face.
It's a very sort of 21st century type of business.
I think the thing you mentioned about choosing to focus on customer support instead of, for
example, putting money into ads to go to your business is a super interesting decision.
Do you think that will always be the case?
Will you ever start spending money on ads or other growth channels?
I mean, I don't want to say never say never.
I'm just highly skeptical of the efficacy of ads.
Like I don't think – I think it's just something that nowadays – who likes to feel
like they're getting sold something, you know?
People like to feel like they found out about something on their own, you know, so whether
it's word of mouth, whether it's doing their research, that type of thing.
I think – I tend to think that the budget can be put to much better use in terms of
like customer acquisition better than paid advertising.
The – you know, I think there are slight exceptions to that, like the fact that Facebook,
you know, with their boosts lets you engage more either with your own, you know, audience
or like-minded audience.
Like we started to dabble very minimal, you know, 10 bucks here, 15 bucks there in terms
like boosting a couple stories or posts that we'll put up.
But I just don't – you know, I'd have trouble envisioning us ever having, you know,
a four-figure, five-figure ad budget or anything like that because I just don't – I tend
not to see that as not the best way to get – like not the most effective way to get
new subscribers.
Well, I'll give you an example.
I think, for instance, that money is better spent.
If I had $1,000, I would not spend that on $1,000 worth of ads.
I would do a giveaway and say like two free flights to Europe, you know, for you and your
friend.
And, you know, this is something we've done before and literally, you know, when we do
this we'll get 30, 40, 50,000 new subscribers just because we like – not only from doing
a giveaway but also doing a giveaway that is effectively tailored to promote share – you
know, to promote social sharing.
So you get like one entry for putting in your email address but you get five entries for
every person who subscribes with your, you know, referral link or – not subscribes
like enters the giveaway with your referral link.
That's such a smart idea.
And it's cool because I see a lot of companies do giveaways and the thing that they're giving
away is so unrelated to their product.
Like if you give away free flights and it's like anyone who enters that competition and
cares a lot about it is also going to enjoy scotch cheap flights because they like cheap
flights.
Yep.
Yeah, yeah.
It's very on brand.
So, you know, while we're talking about growth and ways to grow, like you guys have also
been completely bootstrapped from the beginning.
You've never raised any money from investors.
And I'm sure at this point that you've got investors banging down your doors trying
to convince you to take money.
Why not go that route?
We've just never had to.
Been lucky enough that we never – you know, we've been approached by various investors,
VC funds and whatnot.
But I mean our profit margin is so high at this point and our expenses are just so low
that we never had any need.
And not only that but, you know, obviously as – I'm sure your listeners are well aware
as flattering and it is extremely flattering to be approached by investors and funders.
Obviously it doesn't – you're never getting money with no strings attached.
Like you're giving up equity, you're giving up some control, and then you're starting
– you're shifting from being the ones in – you know, your own boss, the one making
all the decisions to all of a sudden having to be accountable and answer to someone else
as well.
And, you know, that's a big mindset shift.
Like we can do with the company what we want right now.
We can either try to maximize profit or we can reinvest everything.
We can try to focus on user acquisition or just improving the user experience.
We can take things in whatever direction we want and not be – have to be like maximally
focused on returns in the way that you might have to be if you have, you know, an angel
investor who's kind of breathing down your neck.
So yeah, I mean, again, very, very humbling, very flattering to be approached, but in a
super fortunate position to be able to say no to it.
And what would you say your goals are at this point?
Like kind of like, you know, at a personal level but also at a business level.
I mean, a year ago you guys weren't making nearly as much money as you are now.
You didn't have nearly as many subscribers.
Do you want to keep growing that fast or do you want to – you turn it into more of like
a –
I will preface this with saying it is really hard to think long term because every – you
know, if you had told me a year ago that we would be 10 times larger than we were then,
I would – I said you're flipping crazy and, you know, like – and so it's hard
to even – I think there's very little chance that we're 10 times bigger a year
from today, but, you know, who knows?
I guess it's possible.
Who knows?
So A, it's a little bit hard to envision it, but B, it's because it's like hard
to – almost to visualize like where would I be, you know, with 6 million subscribers
rather than 600,000.
It's a little bit hard to like make long term plans.
So we've almost kind of issued doing any sort of type of super long term planning.
We've mostly stuck to sort of short term and middle and medium term planning.
So you know, within like kind of thinking three to six months ahead, like what types
of new features, what types of new outreach methods and stuff do we want to pursue.
The main thing I think that we'd like to do, you know, obviously without giving away
too much of our plans, but the main thing that we really want to do is improve the customer
experience, you know, the user experience.
So you know, right now we're still kind of running on an MVP with some of the new systems
in terms of like premium subscribers choosing their departure airports and things like that.
We really want to kind of build out a system that's much more user friendly, that's
much more intuitive and much more visually pleasing for folks to be getting – you know,
when they're setting up their account and getting that type of stuff.
And then to start to explore more types of outreach opportunities, whether that's building
a blog, whether that – again, we keep going back and forth on this possible referral program.
Even starting to – for instance, we sent out an email blag the other day asking for
folks saying like, hey, you know, hey, have you gotten any like really good deals in scotchy
flights and have a cool story with it?
You know, we get people emailing us all the time about, you know, all I got – you know,
we took our honeymoon that we didn't think we could afford or like I visited, you know,
this relative back in Europe who I hadn't seen for 10 years, you know, because prices
were too expensive.
Do you have any cool stories like that?
And so, you know, we got hundreds and hundreds of stories and, you know, people sending photographs
and stuff of these like really touching, heartwarming stories.
And so, we started to post those a little bit like on Facebook, but trying to figure
out, you know, is there more sort of ways we can focus to engage people with those types
of stories, you know, sharing those types of successes.
And then we also have folks, you know, who are traveling all the time, like ever, you
know, thousands, tens of thousands of people taking these cheap flights who are taking photos,
having experiences.
Is there a way that we can kind of start to tap into their experiences, you know, have
people be like, Oh, snap, when you're in Barcelona, you go to this really awesome hole in the
wall restaurant.
Or if you're in, you know, Venice, like, here's the best way to hell a gondola or something
like that.
It starts to harness some of that sort of user generated content into into something
that we can kind of share with everybody and build, build a little bit more of a community
or a little bit more of a knowledge base.
How do you how do you decide where to divide your marketing efforts?
Because it sounds like you've got some channels that work super well.
You've got Reddit, where you guys have made like, you know, a ton of AMA posts, and then
kind of showcase posts where you've gotten, you know, thousands of upvotes, and you've
got your your viral giveaways, which he said, you know, bring in like 40, 50,000 new subscribers.
Why not keep doing those rather than switching into content marketing or a new type of marketing?
It's a couple things.
First of all, you know, to a certain extent, it doesn't always have to be a choice you
can do, you know, we can be doing giveaways and be doing Reddit and be, you know, trying
to gin up earned media and stuff like that.
But you know, you're right to the extent that you do have to kind of focus your efforts
somewhat and try to decide, you know, on any given day, are we going to try to do this
or that part of it is we try to recognize the sort of unescapable gravity of diminishing
returns that, yes, you know, we've got we've had some really successful viral posts on Reddit.
But if we tried to do that every day or every week or even every month, not only not only
would we would it stop working, but we would get we would take all the goodwill that we've
earned on Reddit and folks, you know, telling each other to subscribe, recommending it to
you know, other Redditors, stuff like that.
And it would turn it instantly into bad will because they'd be like, this company is just,
you know, on here, just they're just advertising, they're just trying to, you know, they're
just in it for themselves rather than trying to help people, stuff like that.
I think the same type of thing happens with giveaways to a certain extent, you know, if
you have it every every week or every month, it stops becoming special.
People are just sort of start to tune it out.
And so we try to mix it up, try to figure out different types of areas.
One of the things that's made things, you know, much more complicated these days is
the fact now that we're not just in the US and Canada that, you know, have cover flights
departing Europe, Asia, Latin America, Australia.
And so that's trying to think about ways to sort of grow larger in those types of markets
can also get difficult, right, because it's just a whole different ballgame.
For instance, with the giveaways, I didn't realize this, but the like, internal, like
each country's laws regarding giveaways are vastly, vastly different.
You know, sometimes there's little as like in Canada, if you do a giveaway, I think in
the province of Quebec, you have to also post the language of the giveaway in French.
In some places, like, I think in France, if you're doing a giveaway, you have to reimburse
people for either the postage or like the internet costs that that took them to enter
your contest.
Like, they're all these sounds fun.
Yeah, they're all these random little things that we, you know, for the most part, we've
just avoided doing because it's so complicated.
But we might have to start to try to navigate those waters a bit because it can be really
fruitful if you pull it off well, but it's not as simple as just taking what's worked
in the US and then applying it to, you know, to Australia or to the UK or anything like
that.
Got it.
Well, we are running towards the end of our hour.
I think your story is super interesting and hopefully it'll inspire other people who might
not be programmers or might not be, you know, career entrepreneurs to get out there and
do something valuable and, you know, start from nothing and build a successful business
as you have.
Thanks so much for coming on the show, Scott.
Hey, thank you for having me.
This is great.
I appreciate the opportunity.
All right.
Take it easy.
All right.
Take care.
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