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DoesWhat

Interview with Ben Chestnut (MailChimp)

MailChimp is a well known freemium email marketing service.

I interviewed Ben Chestnut, MailChimp co-founder and CEO to find out more. This is the hundred and eighteenth in a series of DW interviews. Big thank you to Ben!

Describe MailChimp in under 50 words.

Monkeys send your email, so you don’t have to. Only they’re apes, not monkeys.

What were you doing before MailChimp?

I ran a web-dev agency called The Rocket Science Group. Pretty much sucked at it.

What made you decide to start working on MailChimp in 2001? Why did you wait until 2007 to dedicate yourself strictly to MailChimp?

Back in 2001, we had multiple customers who needed help sending their email newsletters. They were using really big, expensive, bloated software. We had some “scrap code” lying around from a previous business idea that failed (e-greetings), so we modified the code and turned it into an email newsletter app for them. We opened it up to the public, set up some Google Adwords, and basically forgot about it.

In 2005, we noticed it was a better business than our web-dev agency (it was growing faster than us humans, and its recurring revenue was basically keeping us afloat) so we decided to take all of 2006 to wind down the agency business and beef up MailChimp’s features. We officially hit the “reset button” in 2007 and became a product company.

How did you come up with the name? Does the chimp have a name?

The big, bloated email software back in 2001 required you to manually code your tracker links, your HTML emails, and all kinds of things. We thought it was silly to force users to do a bunch of repetitive coding that a monkey could do for you. We also had this philosophy when it came to our web design projects: “If all else fails, add a monkey. Clients love monkeys.” So we called it ChimpMail. Then we learned the domain was taken. So we called it MailChimp. One day, a customer asked us for our mascot’s name, so we came up with the most ridiculous one we could think of: Frederick von Chimpenheimer IV (aka “Freddie”). It’s amazing when I look back at Freddie’s history. We really didn’t spend that much time fostering his image or brand or anything. It was our customers and employees who brought him to life and gave him his personality.

Your non-traditional creative culture scared away a lot of typical corporate customers. Did this affect your growth at all?

Yep, it made our growth more fun.

Seriously, corporate customers are stodgy and high maintenance. We avoided them, because we always dealt with them back when we were a web-dev agency. We had our fill. The whole point of starting a software business, in our opinion, was to make scalable, self-serve apps. We felt like we shouldn’t need to talk to customers, nor should they waste any of their time talking to us (they should be spending their time smelling flowers, or hugging their mothers and stuff). The app should be so easy, they just get things done.

So that’s what we focused on: making it easy. Turns out a lot of those big corporate customers seem to like simplicity too, and are signing up to MailChimp despite the monkey business.

You often send customers gifts and handwritten postcards. How have you built customer loyalty?

The gifts we send are just fun. We know they’ll surprise the hell out of our customers, because nobody does that kinda stuff anymore. Plus, we’re an online-only company, right? So it’s ironic to send something hand-written and tangible. We love irony.

The goal isn’t to buy any kind of loyalty. I really don’t believe brand loyalty exists (anymore), and I don’t believe a company should waste any time trying to earn it. People want what’s best for them, and they can switch on a dime, because there’s always a new disruptor disrupting the last disruptor. So companies should just strive to keep changing and adapting to their customers’ needs.

I get the impression MailChimp is a fun place to work! How have you cultivated the culture?

I can’t say we really try to make it “fun” around here. Just “fulfilling.” I do my best to keep changing things up and to keep coming up with new, difficult, challenging projects that make your brain hurt. People who think that kind of work is fun tend to hang around longer. Kind of a self-fulfilling prophecy?

What does a typical day as CEO consist of?

On a good day, it consists of a lot of walking around to talk to different teams about what they’re working on. I can help connect ideas, plant new ideas, show people it’s okay to be weird, prevent meetings, etc.

On a bad day, it’s just me stuck at my computer.

MailChimp went ‘freemium’ in September 2009 and increased the number of paying clients by 150%, while growing profitability by 650% during its first year. With now over 2 million users, what would you say are the main factors that have led to MailChimp’s success?

I spoke about this recently.

1) Going freemium.

2) Being different. Different in our design, our name, our personality, our approach with customers, and just about everything. By being different, and therefore not dwelling on the competition or playing by their rules, it basically made us more creative and nimble.

Did you expect such massive growth and success?

Expect? No. But massive growth and success is kinda the whole point of starting a business, so I definitely dream about getting it one day. All. The. Time.

What are your thoughts on the future of email marketing?

Like everything else, it’ll change. The challenge is staying nimble enough to adapt.

Can you tell us about the data research you’re doing under EmailGenome.org, which you started to help improve the email ecosystem?

It’s been a challenge just wrangling the massive amounts of email data we have. But so far we’ve uncovered lots of awesomely cool things, along with some awesomely disturbing things. Like the predictability of reader engagement. And how we can find the optimal time to send an email to each recipient. And how there are networks of comment trolls, constantly signing up for certain types of lists. We can also uncover trends in email, like whether or not certain industries are dying. We’ve been able to tell when accounts import stolen lists, and identify where the lists originated from. We can tell who is human, and who is not. Perhaps the most interesting part about this “big data” initiative is the fact that it produces so many innovative product ideas, it’s hard to choose where to begin. The data keeps growing, so the possibilities (and scope) keep growing.

What do you wish you’d have known ten years ago that you know now?

That it takes about ten years before your company really hits its stride.

Where do you see MailChimp in another ten years time?

Not sure what business we’ll be in, but I’m pretty sure we’ll be coming to work in jet packs. Bet on it.

What is your favourite app or piece of software that helps you every day?

Hmm, that’s a hard one. Helpful and used every single day? Communication apps: Gmail, Apple Mail, iChat, and Jabber.

What is one mistake you’ve made, and what did you learn from it?

About 10 years ago, I put my life savings into Apple stock (when it was around $17 a share). It was a wild bet, but I kinda liked where Apple was going, and I thought OSX might be huge one day.

After a year of no change whatsoever in the stock price, I chickened out. I took some stupid advice I read in a book about “diversifying” and I traded it all in so I could spread it out into safer stocks. All of those stocks–every single one of them–flattened out or declined. Sigh. If I could go back in time, I would’ve put all that money into MailChimp instead. I can’t control someone’s stock price, but I can at least have some control over my own company.

What one piece of advice would you give to startup founders?

It’s hard. And just when you think it can’t get any worse, it does. There’ll be times when it just keeps getting worse and worse and worse. Meanwhile, everyone else around you is getting better and happier and richer. You’ll feel like the only one who hasn’t figured it out yet. You’re sinking, your life sucks, and your business isn’t going anywhere. Oh yeah, and you’re not getting any younger, either. And just when you think about finally throwing in the towel, and saying “f* all this!” that right there is the test that all founders are eventually faced with: when things get too hard, you decide to stay, or you decide to quit. My advice is this: Before you decide, look at all those great, successful businesses that inspired you to start your own. They stayed.

What’s the best prank someone has played on you at work?

Years ago, someone arranged for some accomplices to ring my landline, send an email, pop up a chat message, send me a TXT, and call my cell phone all at once. Everything just suddenly started beeping and buzzing all around me. I was paralyzed. I had no idea which to answer first. The sheer logistics of making this happen is pretty impressive, considering this was before telephony APIs.

What key goal have you yet to achieve?

Sadly, I’ve yet to finish a business plan.

What gives MailChimp a competitive advantage?

Our weirdness.

Finished reading? Check out MailChimp!

Interview with Duane Jackson (KashFlow)

KashFlow is a web-based accounting application for SMEs with no accounting experience.

I interviewed Duane Jackson, KashFlow founder to find out more. This interview is the ninety third in a series of DW interviews. Big thank you to Duane for the interview!

How would you describe KashFlow in under 50 words?

KashFlow is web-based accounting software for business owners that are sick of spreadsheets but alienated by traditional accounting software.

There’s no accounting jargon, it’s integrated with lots of other web-based apps like MailChimp and Dropbox. It automates many tasks to make your business more efficient

It’s fair to say you have overcome a variety of setbacks in an extraordinary career so far. Tell us a bit about your background and how you came to start working on KashFlow.

I grew up in childrens homes in the East End of London and left school at 15 with no qualifications and spent a year with a ZX Spectrum and a programming book.

At 19 I was arrested in Atlanta, Georgia in possession of a lot of Class A drugs. The full story involves DEA agents, guns, lap dancers, a serial killer, big piles of cash, death threats and a 6 month police surveillance operation. But that’s one for another time!

I sometimes get asked how I “fell in to crime”. I didn’t fall into it, I’d grown up amongst it. The guys I’d grown up with were running a large drug trafficking operation and I got involved to make some quick cash without giving it much thought.

On my release from a 5 year prison sentence my girlfriend fell pregnant very quickly. I didn’t want to end up like the many men I’d seen in prison only seeing their kids for an hour or two a month and decided I needed to turn my life around.

With no chance of getting a job or any start-up finance from a bank, I turned to the Prince’s Trust for help.

You have met and been praised by Bill Gates for turning your life around. This must have been quite a moving moment?

It was quite a surreal day for sure. It was before Office Live and I was winding him up about Microsoft having not yet moved to the cloud. He assured me they would be.

It was also shortly before he stepped down as CEO at Microsoft. Maybe after meeting me he decided to give up? : )

Are you still involved with The Princes Trust?

I am still involved with the Prince’s Trust. I’d never have got the help I needed anywhere else so I’m eternally grateful to them.

I quite often attend small lunches for them with tech entrepreneurs that have had a big exit with a view to encouraging them to make a donation. So I get to meet very interesting people and occasionally it ends with a big fat cheque for the Trust.

You are the first accounting application in the world to be PayPal certified. How did your partnership with PayPal materialize?

When we first built our API we wanted to build a “proof of concept” app to show what could be done. So we wrote a small tool that connect to the PayPal API, extracted data and imported it into KashFlow to create your financial accounts. It worked but was a bit clunky.

PayPal got in touch and encouraged us to rebuild it within the KashFlow application and make it as easy to use as the rest of our software. They said they’d help promote it to their customers and gave us access to the techies at their end so we could get it done quickly.

PayPal are a great company to partner with and they continue to promote us to their business customers today.

KashFlow regularly beat established accounting software companies at software awards. Congratulations on your numerous awards! What advantages do you offer to customers over your competitors?

Very simply: software that makes sense to non-accountants.

Winning customer or product satisfaction awards when you’re up against the likes of Sage and Quickbooks is a bit like beating the Elephant Man in a beauty pageant.

You have published a lot on the ‘flaws’ of one of your competitors, Sage. They have even threatened you with legal action. To what extent has the controversy around KashFlow and Sage raised the profile of Kashflow?

The Sage battles have been enormous fun and really helped to raise our profile. The whole “David v Goliath” angle is a great way to get your name out there on a tight budget.

There’s an entertaining blog post from one of my friends who was around at the time it first kicked off that gives you an insight into how Sage reacted to us.

As well as lots of media coverage it means we’re also well regarded by city analysts. They often phone for my opinion on Sages’ latest SaaS-related comments and in return we get name-checked in various reports.

What do you wish you’d have known 6 years ago that you know now?

We went through an interesting time in 2011 and I learned a lot. A lot of time was spent in talks with other companies that wanted to acquire us.

I’d always thought there was a “proper” way to build and grow a business. That there are some sort of magical rules that MBAs and corporate know about that I didn’t.

The realisation from talking to these big companies is that there isn’t. The whole SaaS business model is so massively different from the old world of software. The old rules of business and business models just don’t apply.

When I sat and listened to what these companies thought we should be doing differently if they bought us I was amazed at the utter stupidity of some of what they wanted us to do.

So I wish I realised more clearly 6 years ago that I do actually know what’s best for my company and had more confidence in what I was doing then.

Where are you based and who is the team behind KashFlow?

We’re based at London Bridge. There are close to 30 of us now and everyone plays an important role. But there are four people who have been with us a very long time and have contributed lots.

Dominique joined us out of school at 16 at the time when I was first starting up. She was Employee #1. She wears many hats including office manager, running the support and admin teams and was my PA for a long time. She pretty much runs the business whilst I’m front and center taking all the credit.

Michelle built up our accountants channel which accounts for a large part of our userbase.

Sandile is our lead developer. Having a CEO who writes code isn’t fun for him. He spends more time correcting bugs in my code than he’d like.

And Tim is the unsung hero of the support team. As he’s been with us so long he knows a lot about the wide range of features and the inner workings of the system so can quickly resolve complicated problems that would take others a long time to figure out.

Where do you see KashFlow in another 6 years time?

I think we’ve cracked the basic “accounting software is full of jargon and incredibly dull” problem already. We’re gradually adding more and more automation and integrations to make small businesses more efficient.

I think as we move more and more in that direction then KashFlow will become a wider business software application as opposed to an accounting application that happens to be useful in other areas of a small business too.

If there was one thing you could go back and do differently what would it be?

I’d have built a marketing team much, much sooner.

We’ve done very little actual marketing. All of our growth came from word-of-mouth, PR and social media. Whilst that was great and gave us brilliant growth at a very low cost we could have grown much quicker with a more structured approach and actually spending money on marketing.

It’s wasn’t until early 2012 that we actually had people in the company whose sole focus is on marketing.

What one piece of advice would you give to someone looking to startup?

Don’t do it. It’s going to be hard thankless work for a long time. Working silly hours, having no social life. TechCrunch aren’t going to write about you and you’re not going to make any money. Ever.

And if they listen to me and decide not to do it then they weren’t meant to be entrepreneurs in the first place.

What are you most excited about at the moment?

We’ve got lots of platform work going on behind the scenes. We’re moving from what is mainly a classic asp (yuck) application to a pure Javascript and HTML5 client that plugs in to a new REST API.

This is going to be a massive improvement to the user experience, be beneficial to our development community and enable us to iterate much faster across multiple platforms.

There’s lot of other exciting commercial things in the pipeline, but it’s still the technology and product that excite me the most.

Can you convince the reader to start using KashFlow in under 50 words?

If they’re not convinced after reading all of the above then another 50 words won’t help. But maybe watching the video (voiced by Stephen Fry!) on our home page will.

Oh, and there’s a free trial.

Finished reading? Check out KashFlow!

Interview with Chris Wanstrath (GitHub)

GitHub is an online project hosting application using Git. It includes a source-code browser, in-line editing, wikis, and ticketing. It’s also free for public open-source code.

I interviewed Chris Wanstrath, GitHub co-founder and CEO. This interview is the seventieth in a series of DW interviews. Big thank you to Chris for the interview!

How would you describe GitHub in under 50 words?

GitHub makes software development awesome for everyone. You can use it to develop an iPhone app by yourself, open source software with strangers, or an enterprise application with your entire company.

You started GitHub as a side project in October 2007. Did you have any idea of it’s potential at that point in time?

We knew it was good because we were using it every day during development. Once we finished the basic source control features, such as code browsing and viewing the commit history, we started getting really creative with other features we could add to make the experience more awesome – that was really exciting. We thought it could turn into its own business, but at the time we mostly focused on making the best product we could. And we knew we were on the right track.

How did you come up with the name?

Tom Preston-Werner came up with the name. We wanted a place where people could easily share Git repositories and also learn more about Git – a Git hub, if you will.

You launched publicly in April the next year, what did you learn from 3-4 months of private beta testing?

The beta was a great way to find and fix bugs. Hosting git repositories wasn’t something we’d ever done before – it was extremely helpful to have hundreds of people pushing code to GitHub. Tons of issues were exposed early on. We had to rewrite a few basic systems because our assumptions were wrong or because we hit some major blockers.

Has your initial vision changed since launch?

We still want to make sharing code as easy as possible, but now our vision is much broader. Sharing code is just one part of the software development process. Reviewing code, working with your coworkers, exploring open source projects – there are so many things GitHub can do to make your life easier and we’re trying to do them all well.

How did you meet co-founders Tom Preston-Werner and PJ Hyett?

I met PJ when I was working at CNET. We worked together on the relaunch of Chowhound.

Tom I knew through the open source community. He had released some pretty awesome Ruby code that I was using. Eventually I met him at a Ruby meetup in San Francisco and we started working on projects together.

When did GitHub start gaining traction?

From my perspective it had traction right away. Our first beta user was Yehuda Katz, a prolific hacker who was able to give us tons of good feedback and invite other high quality developers. The Ruby community took to GitHub right away and really helped us figure out what to focus on.

You learned Rails in your spare time while you were developing with PHP professionally at CNET (before GitHub). Would you recommend PHP developers branch out to Rails or Django?

I actually learned Rails before I started at CNET, but there weren’t many Rails jobs at the time and I really wanted to work at GameSpot. So that’s why I was still doing PHP.

I loved PHP, but I loved Rails more. My advice would be to try as many new technologies as possible. Try Rails, try Django, try node. Don’t write anything off just because it’s new.

What has been the most challenging scaling issue you’ve come across?

The first major problem was the way we were storing git repositories. In early 2009 we were using a network file system so all the machines had the same view of the repositories on disk. This was really simple to develop against, but it wasn’t scaling at all – the network file system was failing daily, and when it wasn’t failing it was super slow. We knew we needed a new approach.

Tom spent most of 2009 designing, developing, and testing our new repository storage system. It was classic sharding – instead of every machine sharing everything, we’d have specialized file servers that would each store a subset repositories based on the owner. We developed a routing system to keep track of who lives where and how full each file server was.

It worked.

Two and a half years later we’re still largely using the technologies Tom developed for the rearchitecture. We’ve made some changes and improvements, but the general idea is still going strong.

How has the growth in open source projects compared to the growth in private paid for repositories?

They’ve both been tremendous. There is so much great open source on GitHub that it really boggles my mind. At the same time, we have some of the companies I admire most using GitHub to host their private code.

As a developer, why did you become CEO? Did you consider taking a more technical role and hiring a career CEO?

We’ve never discussed hiring a career CEO – I think we all agree that the best person to be CEO is someone who works great with the founding team, is technical, understands where GitHub came from and where it’s going, and believes in making both the company and the product great.

Working well with the founding team is really important. All the GitHub founders are very hands-on in running the business. We’re working hard to build a place where people can do their best work, and we’re doing it together.

If I wasn’t CEO, one of the other founders would be. There’s just no point in looking outside for that role when we have so many qualified people internally.

As far as me personally, who better to be CEO of GitHub than a developer?

GitHub is completely bootstrapped, did you ever consider pitching for funding?

We never considered pitching, but we’ve always had interest from investors. Plenty of times we had serious discussions but the timing never felt right. We didn’t need the money and were super happy with the way things were going.

How do you find talented employees?

It’s hard. We’re lucky that we’re in San Francisco and there is so much world class talent here. Mostly we try to use the networks of people who work at GitHub. If that doesn’t work we’ll post a job on our job board – we’ve had some amazing luck doing that. We also sometimes receive unsolicited resumes that turn out to be really great.

We’re always watching the rising stars in the open source community. We want to find really amazing people who are passionate about what they’re doing, and open source is a great way to find that type of person.

Where do you see GitHub in 5 years time?

What I really want is happy users and happy employees. In five years, in ten years, in twenty years. That’s really all that matters.

As far as the product goes, I see GitHub further integrated into the process of software development. We spend all day with github.com open in a browser, but there are still other tools we use in our workflow. Some of those tools suck. GitHub should make software development awesome, and if that means broadening its scope so you spend all day with great tools instead of crappy ones then that’s a direction we should head. At the same time, we shouldn’t be competing with great tools but instead working together with them.

What are you most excited about at the moment?

2012. We’ve built such an amazing team and this year we’re going to release some really awesome things – new features, new products, and reimagined versions of current features and products. As a GitHub user, I can’t wait for all this new stuff to get released so I can start using it daily.

Can you convince the reader to start using GitHub in under 50 words?

I don’t think I can, and I wouldn’t want to. I’d rather you just try it out for yourself. Explore some open source or contribute to someone else’s project. GitHub sells itself better than I ever could. I think if you give it a shot you’ll really like it.

Finished reading? Check out GitHub!

Interview with Phil Libin (Evernote)

Evernote helps you remember and act upon ideas, projects and experiences and is synced between all the computers, phones and tablets you use.

I spoke with Phil Libin, Evernote CEO to find out more (download audio MP3 – 36:16). This interview is the sixty sixth in a series of DW interviews. Big thank you to Phil!

To anyone who’s never come across Evernote, how would you describe it?

Evernote is your intellectual brain, it’s a service that lets you remember everything important that happens to you and use that information in a way to make yourself happier and more productive.

When you joined, it seems like you took some great projects and helped combine it all into a product and viable business. You joined a team with a largely scientific background, what were some of the difficulties you had at this time?

There was actually two teams that we brought together in 2007, a team of mostly scientists and researchers that had been working on image recognition and this concept of memory augmentation for a long time and I had a startup team mostly of engineers that were interested in making a product along the same lines. Making a product that would help people remember everything and combine those teams in the summer of 2007 and launched the first Evernote service in 2008.

I think starting with two teams presents slightly different challenges than a typical startup where you just go with a small number of people that are all together, but on balance it was definitely a very positive experience.

Could you tell me a bit about Evernote founder Stepan Pachikov and Dave Engberg CTO?

Well Dave and I have know each other for many years, he was the CTO of my last company CoreStreet, he was part of the original team that was with me at the beginning in 2007. Stepan started a different team of people in Russia in the late 80s, they developed a lot of the really cool technology for the Apple Newton, the very first tablet computer back in the late 80s early 90s and Apple actually brought them from Russia to California and then they sold their company to SGI. Stepan and his team have been working in this area for a while. So Stepan had one group of people and I have Dave, Andrew and a bunch of other people and we met up in 2007 and joined forces.

With around 20 million users you must receive a lot of feature requests and suggestions. How do you manage all of them?

I think we may have just passed 23 million. We get quite a bit and we really want to hear from users and see what they think. We’ve found that different types of user feedback is relevant in different ways. The least relevant is when you ask users what should we build, having users do product design or feature roadmap for you doesn’t really work. Users aren’t designers they don’t particularly know what they want so in terms of how we decide what to build. We are the target market, we are the users that we want to build for. We build software that we want to use and so anytime we get a recommendation or suggestion for something new, the filter we run it through is whether it’s something we want to use. That does happen sometimes and if not then we don’t build it.

What user feedback is extremely useful for, is feedback about particular things that we’ve done that aren’t working particularly well that people aren’t understanding or that they don’t like. The negative feedback and the feedback about how to improve specific features, that is the most audible feedback. Feeback about big ideas are just as vocal, but less ultimately valuable.

So have you had any feature ideas yourself which you’ve managed to push through?

Everything we make is basically made for me, it’s what I want to use. For me and for the rest of the team, we’re a bunch of fairly like minded people, it’s a diverse group in terms of backgrounds and tastes and ages and demographics, but we’re all nerds and passionate about the idea of remembering things. So we really build things for ourselves. I guess I am kind of king of the nerds, so a lot of the stuff I want gets built.

Who started the notion of Evernote as a 100 year company and how does this idea make itself apparent within the company culture?

Evernote is my third startup and a lot of the original team were with me or with Stepan for a couple of startups so it’s a pretty experienced team, almost everyone in the initial group had built 2 or 3 companies before. I think we had a common experience, theey were successful companies with good exits, but we were always building them for someone else. The products we built weren’t products for us, my first company built e-commerce software, so we sold to a lot of retailers. My second company built security systems for government and big banks. Those were all interesting, but we weren’t a government or a big bank, we weren’t a retailer. We never felt like we were building it for us. Ultimately we sold both of those companies, so it wasn’t even a company that we got to keep and when we were doing Evernote we thought, the first two companies we built for somebody else, the third one, lets build it for us, lets make a company we want to keep. I think from the very idea, this concept that this is the one we want and if you’re building something that you love and you’re building it for yourself you shouldn’t want to sell it, you should want to keep it.

I don’t think we thought about it as a 100 year company right away, but we knew we wanted to do something that was very long term, we weren’t interested in flipping it. We were interested in building something great. The 100 year stuff, probably most of it was influenced by Japan. We started traveling a lot to Japan, just because Evernote got very popular in Japan so we started doing a lot of work over there. We had a lot of partners and a lot of users and some of our partner companies were these Japanese companies that are more than a 100 years old and they’re still innovating and we felt really inspired by that. Let’s try to combine the best of both worlds. Let’s build a company that has the long term planning and thinking of some of these great Japanese companies, combined with the best of the Silicon Valley startup mentality. We don’t just want to build a 100 year company, we want to build a 100 year startup.

Am I correct in saying that roughly 5% of users upgrade to Evernote premium? What’s your philosophy on converting free members?

The overall percentage fluctuates quite a bit and isn’t particularly important because what happens is users convert as they use the service, the longer you’re using Evernote the more likely you are to convert. The conversion rates go up with the age of the user, so if you just want to take the overall conversion rate, you’re dividing the overall premium users by the total number of users, that’s primarily influenced by the ratio of new users to older users of the system. In a month when we grow really fast we get a whole bunch of new users, the overall conversion rate will be lower because more people haven’t been around for a few months, if we slow down growing then the overall conversion rate goes up because a larger percentage of users are older returning users.

The overall rate we frankly don’t pay attention to, but it’s probably somewhere around 4 or 5 percent range. What we pay a lot of attention to is what percentage convert in the first month, in the first year, in the first two years. Our oldest users, the ones who have been using Evernote for about 4 years, I think we first launched the service 4 years next month actually. Of the first few months worth of users, people who have been with us for about 4 years, around 25% of them are paying us right now, that ratio declines as you get new users.

We don’t care if you pay, we just want you to stay around and keep using it and get all your friends to use it. The longer you stay, the more likely that you’re going to fall in love with it and then pay.

In July 2011 you received $50 million in funding and have raised almost $100 million total. Do you think this kind of funding is necessary to create a world changing business/startup or do you have other motivations for raising such large amounts of capital?

We never needed all of this funding, we haven’t spent the majority of the money we’ve collected. We may very well take additional funding even though, we don’t need it for the cash. We really see funding as just another type of infrastructure we’re building, the goal is to build a 100 year company, when you start planning for a 100 year company you have to take that seriously and say well how do we structure everything for longevity. Part of that is how do we build out our data servers? How do we build out our architecture, how many people do we hire and how do we build out our management structure? A big part of it is investors and how do we put in the financial infrastructure that will last for 100 years. When we think about funding, we really think about in the context of wanting to isolate ourselves from having to make any short term decisions and being influenced by fluctuations in the market. We don’t want to have to time things. Is the IPO window closing, all that stuff, so we want to make sure we have investors who have the same time horizon. Investors who have this very long term vision and then whenever we can put together some financial infrastructure at good terms from the right investors, we’re always happy to take it because it’s just another tool to make sure we can achieve the company we want.

Where are you currently focusing your spending?

We spend money on the same things that we always do, it all goes to the product. The vast majority of the money we spend, the people we hire are building the product. So it’s developers, designers, QA, managers, testers, support people, operations people. We don’t have a sales culture, we don’t sell anything, we don’t have a sales team. Everyone is working on the product, we get more money as we increase spending, it all goes into the product account or the majority of it does.

How involved are you with fundraising?

We don’t do very much of it anymore, we haven’t needed to raise money in several years. The first few years of the company that was extremely involved, it was very time consuming, very difficult for us to get money the first couple of years. Really the whole team, but I suppose mostly me spent a lot of time and energy on it, now that it’s less important I don’t personally spend a whole lot of time on it myself.

We don’t go out and look for money, we get a ton of inbound requests on a daily basis from people who want to invest. Most of them we don’t talk to, it doesn’t take up much of my time these days. I spend most of my time on what I want to be doing, which is basically product design.

Back in 2007 everyone was pitching social startups. How did you convince investors that unsociable was right for Evernote?

We didn’t really convince them, we had almost no investment until 2009. 2007, 2008 we never had a few weeks of money in the bank, we were putting a lot of money in ourselves. I put money in, Stepan put money in, we were getting a lot of friends and family for funds. We were getting money from some of our more passionate users, from Russia, Japan, Canada, but we didn’t really have professional venture investors until 2009. Everyone was pitching websites and social, we were the opposite of both of those and we suffered because of it. We couldn’t actually get investors to pay attention until we had the data, it all flipped around in 2009 when we actually had a year or so of data and we could show the covert analysis and what was actually happening. Then it turned, almost overnight we went from having to constantly beg for money to having multiple term sheets.

So would that be your tip to someone looking for investment, create your product, make it successful to a certain level and then take it to investors?

I think the central insight is to match the investors that you’re talking to with the strengths that you currently have and the stage of the company that you’re currently in. There’s a type of plan that’s very common, which Evernote definitely falls into, it’s fundamentally not an investable concept. We couldn’t walk up to an investor and say here’s our plan, we’re going to make some software and it’s going to let you write stuff down and remember things and we’re going to give it away for free. We don’t have any experience in the consumer space either, please give us some money. That was the pitch. It doesn’t work.

The idea behind Evernote isn’t particularly novel, no ones going to hear, “we’re going to use computers to help people keep track of information” and be like “ok I’ll write you a cheque”. There are other ideas that are not on the face of it really brilliant ideas that you may be able to do this with, but certainly not 99% of what people pitch. For us it was about showing we had traction, we understood what our users were doing, we understood what they wanted. We could deliver a product, meet on time, deliver our plans and fundamentally we got the unit economics right. Every time we added a user, we made money. Once we showed that and we showed that in a very rigorous way, we’re fanatical about the data and how we present things. Then it became much more real, investors were much more willing to take a chance on us. It was still very high risk, everyone understood that it was still very unlikely, there was a very high degree of uncertainty, but we could show proof, that worked out well.

How did Max Levchin (PayPal founder) become involved with Evernote?

He was actually involved with Stepan. Max Levchin and Esther Dyson were actually both on the board of Stepan’s company before Stepan and I had even met. Max and Esther were probably the two people most instrumental in talking me into combining the two teams and making a unified Evernote.

Evernote has native apps for most operating systems, both desktop and mobile requiring varied skill sets and many teams. How many people are currently working at Evernote and how do you find talented people?

We have about 104 people right now worldwide, which has grown really quickly. We were only at about 40 or 45 people just last year, so we’ve basically tripled in size in a year and we might triple again this year, which is a little bit scary. We’re probably going to go from 40 to 130 to close to 300 maybe in a year. It’s difficult to get excellent people, it’s always the hardest thing. It hasn’t been nearly as bad as I thought it’d be because so many people that come in looking for work at Evernote do it because they love Evernote. People will come to us and say I love Evernote, I love what you’re doing, I want to help build it. We draw in a lot of people who specifically are not just looking for work, they want to work with us, be part of the adventure. That really helps, that gives us a very big qualified group of people and of course we hire people everywhere in the world. We have people in California, Texas, Switzerland, Japan, China and all over the place. We tend to attract the best and the most passionate product people from many of the top countries in the world.

How involved are you with the hiring process?

Not just hiring, but building the team is a fundamentally important thing, it may be the most important thing. It’s what I tell all of the managers as well. The product we build is built for us. Evernote could only have been built by our team. A different team wouldn’t have built it, they would have built something different. We’re not working off abstract customer requirements. We are the customers. To guarantee the long term success of the company, the only way to do it is to make sure that the team continues to be the right kind of people. If we become the wrong kind of team we can’t build this product anymore. It’s pretty important and all of us are deeply involved in it, luckily I have various executives that have become excellent at keeping and recruiting people and evangelizing. It’s working relatively smoothly.

The HR job is almost the most important one at Evernote because the HR department is in charge of building the company that’s going to build the products. It’s what has to come first.

How quickly did you realise that native clients would be important to the success of Evernote?

Realize is maybe not the right word. We bet on it. Our intuition, we didn’t know if this was going to be correct, but our intuition right form the beginning was that people are going to want the best possible experience on their devices. So much of the growth of the mobile industry, of app stores, so much of that is generated by rapid improvement in the quality of the hardware and in the devices from generation to generation. The shiny new tablet that you buy now is a lot better than the shiny new tablet that you bough last year. We thought while this really rapid improvement in consumer devices is happening people are always going to want the best possible experience. Evernote has to work better on your brand new phone than it did on your crappy old phone. If it doesn’t give you a better experience then what was the point? The only way to do that is to write all the clients natively. To go down the bare essence of what the device can do and say, how do we make the best possible experience on this great new device? If you take the lowest common denominator approach using cross platform stuff, you by definition create something that’s average. You get an experience that’s the same on your shiny new phone as it was on last years phone. If it’s the same experience you’ve removed the motivation for the manufacturers and publishers to promote you. You’ve removed the excitement of people who get their new device.

That was the bet we took, at least for the next decade or two, consumer devices are going to be improving so rapidly that it’ll be important to take advantage of that. If that ever slows down, maybe we can go to some sort of lowest common denominator approach, but there’s certainly no evidence that the improvement in phones and tablets is slowing down anytime soon.

You gained your first half a million users in around just 10 months. How did you get off to such a quick start?

Our user growth has actually been really smooth from the very beginning. It’s actually quite surprising, I just dug up the original model we used when we closed our first Silicon Valley round with Morgan Capital in 2009. I found the original plan, we built this model for them that shows how we’re going to grow, both users and revenue. It was from 2009 and that plan went to the end of 2011. The end of 2011 back then was unimaginably far in the future for us. I just found it, I wanted to compare how we did against what we projected and we were within 5% on both users and revenue, that’s kind of amazing. The growth has followed this really smooth exponentially growing upward slope. It’s just driven by word of mouth. We don’t spend any money on user acquisition, we don’t do any SEO or SEM. There’s no tricks. We don’t pay money for users. We don’t pay for incentive downloads or any of the stuff you hear people talking about, we don’t do any of it.

It’s all just word of mouth and people finding Evernote because of friends who love it recommending it. We’ve probably added more than 2 million users in the past month and it just keeps increasing because of that.

What were some of the initial successes you had with gaining users, up to to get say the first 20,000 users?

We launched closed beta on TechCrunch, we were lucky enough that TechCrunch wrote about us right as we were starting the closed beta and we gave away 100 invites, that was the first spark. We had a couple thousand people within the first few days just because of that really early spark and it just grew from there.

What we did, is we really killed ourselves in the first couple of years to always be in all of the app store launches on day one. Whenever a new device or platform would come out, we would work days and nights for months before that to make sure Evernote was there and supporting the new device or operating system in the app store on the first day. So that it could be one of the showcase apps for all of these devices as they launch. We were mostly successful. When iPhone launched we were one of the very first iPhone apps, so we were promoted and had a lot of visibility. When iPad launched, we were there on day one, not just with a port of our iPhone client which a lot of other companies did. A completely new designed version for the iPad even though we’d never seen an iPad before we stood inline with everyone else. Same thing with Android devices and Kindle Fire.

In the early days the we put in a lot of hard work synchronizing so we could follow in the wake of all these massive new releases and benefit from those. Now that’s less important to us because the momentum is already so high, but in the early days that was fundamental.

So do you think the timing was perfect because that period was when apps as we know them now were taking off? You were there at the beginning of a big change in mobile.

We definitely were very lucky with the timing, absolutely. I think that’s mainly true of many successful companies, in hindsight you look back, it’s always easy to point to things where the timing worked out. We were very fortunate that the app stores were launching right as we were getting ready. If we were 6 months behind in our development, we would had missed all of it.

The logic works the other way as well, there’s many events where the timing was horrible. We ran out of money, we came within days of shutting down the company in October 2008, this was the worst time in the history of the universe to raise money. That was when Lehman collapsed and the markets were crashing. No one was giving any money. That’s bad luck, needing to raise money at the worst time for raising money is also not something we anticipated. In the long term you have to deal with both the good luck and bad luck that’s dealt to you and what you make of it is ultimately what determines the success of the company.

You had over 125,000 users before you came out of closed beta mid 2008. What was the main takeaway?

The main purpose of the closed beta was doing the user testing, making sure we understood what people actually wanted and that it worked. This was a new experience for most people. We had native apps that were synchronizing in real time, we had a new type of server architecture that we were tweaking, so a lot of it was really just for technical reasons. We couldn’t support a lot more people, but it also started as a good way to generate interest. The fact that you have to sign up and send around invites to get in actually generated some buzz. That was never our intention, we never thought of the closed beta as a marketing exercise. We were frankly terrified that everything would crash all the time. It actually turned out to be pretty good as well as just a way to generate interest. I wouldn’t recommend that any company starting up today go through anything like that purely for the sake of generating interest. I think users can smell that. They can smell marketing tricks and you tend not to respond to it very well. But for us it worked quite well.

We were almost forced out of beta by Apple. The iPhone app store launch in July 2008, Apple doesn’t allow betas, you can’t have a beta in the app store. We knew if we wanted to be there on day one, we had to be out of beta, so we worked 20 hour days 7 days a week for a few months before then to make sure that we could have something that was genuinely available and out of beta.

Everything about Evernote, from the product to the business model seems to be based around simplicity. How important is it for you to keep Evernote simple?

That’s a real balancing app, I think the core Evernote app is too complicated right now. I don’t think anyone understood design philosophy, especially mobile app design philosophy in the early days, we certainly didn’t. A lot of initial designs were very feature oriented. We had check lists of features we wanted to implement, we went through and put them in. What we’ve realized since then is that isn’t really how you should build software, you really need to be experience driven. Focus entirely on what is the experience of using that and then add the features almost as a secondary criterion. So I think a lot of our newer products are very straightforward and simple and a lot of initial products aren’t. But we are in the process of tweaking the designs, sometimes in major ways to simplify them. Of course you don’t want to lose any power from those apps while doing it, so it’s very difficult.

It turns out it’s much much harder to make something simple than complicated. Making something complicated is easy for developers, because it’s always easier to add things. Making something simple is very hard. We’re just starting to get good at it.

Do users tell you how they’re using Evernote? What are some of the surprising ways in which it’s being used?

I think it’s an early sign that you might have a successful product, when you see people using it in ways you totally didn’t anticipate. That started happening right away at Evernote. Use cases are very broad.

I was just in Tokyo a couple of weeks ago and went to get my haircut. The hair stylist was using Evernote to basically run the business. So she would take pictures of all of her clients and their hair styles every time they came in and take notes on them. She had Evernote on iPads and would flick through so whenever someone came in they could see what they’re hair styles looked like before and what some of the other people had gotten and choose what they wanted. All the notes, shampoos were in there, so she was using Evernote as a source of both inspiration and management for hair salon, which was certainly not something I ever dreamed of, but a really cool use case and there’s thousands more as well.

When you look at companies like Dropbox, do you think that’s the future now, as in flexibility and simplicity? Letting the user decide how they want to use the product.

I think Dropbox is doing something really great. They’re the ubiquitous hard drive in the sky. They made this industry and got a head start on everybody else, so now Apple, Google, Microsoft, Amazon and everyone else, every cellphone carrier, they’re all trying to compete with Dropbox. Dropbox just did it really well and got a lot of love and deserves it. The primary use case is fairly simple, you shouldn’t have to think about the concept of computers and files. What we do at Evernote is philosophically pretty different. We’re not an infrastructure play, we’re really about how you experience your life. The experience of your memories, what they mean to you what can you use them for to make yourself more productive and happier. We really focus more on making a beautiful user experience, but I think the core philosophies are quite similar and I’m a big fan of Dropbox myself.

What do you wish you’d known when you became CEO?

We certainly made lots of mistakes. The fundamental thing that I wish I’d of known, is I underestimated the importance of simplicity and design. The first couple of years I really didn’t feel that, I didn’t have a good enough appreciation that the most important thing for consumer facing software was that it was beautiful, simple, people immediately and intuitively understood how to use it.

It really wasn’t about making it more powerful, it was about making it more natural. I think I’ve only internalized that in the past couple of years and it’ll take another lifetime to really master it.

What are you most excited about at the moment?

Wow, I’m generally a very excitable person, I figure if I need a one word description for myself, if I need to put something on my tombstone. I just want it to say I’ve certainly been an enthusiast. I’m excited about just about everything, I think this is the best time in the history of the world to be starting a technology company and running a technology company.

We live in almost a geek meritocracy right now. Where all you have to do is make a great product and you can be successful. That was never true before, that wasn’t true for my first two companies. You could make a great product, but you still had to worry about everything else, all the channels and logistics, advertising and relationships. It was very tough. Right now, especially in the consumer space and because of things like app stores and tablets, if you’re a nerd and you focus passionately on making a great product you could be really successful and change the world and that’s a deeply exciting thing for me.

Finished reading? Check out Evernote!

Interview with Jason Cohen (WP Engine)

WP Engine provides premium WordPress hosting for clients of any size.

I interviewed Jason Cohen, WP Engine co-founder and CEO to find out more. This interview is the sixty first in a series of DW interviews. Big thank you to Jason for the interview!

How would you describe WP Engine in under 50 words?

WP Engine is the premiere managed WordPress hosting platform. Our sites are speedy, even under massive traffic loads, and guaranteed secure. And our support staff is knowledgeable about WordPress.

You host over 30,000 websites, when did WP Engine begin to gain traction?

I had three dozen customers before I had a product, a team, a website, or even a company name, so in that sense “traction” came before the product. We’ve grown every month since inception, and the growth *rate* has also grown every month, so there wasn’t a specific point where we suddenly had traction.

As a premium host, you use top of the line hardware and provide expert support. What else differentiates you from other web hosting companies?

(1) We’re the fastest, as measured by Pingdom, a 3rd-party service.
(2) We have larger sites than anyone except WordPress VIP, which means we know how to scale better than almost anyone.
(3) We guarantee security, in the sense that if you’re ever hacked, we’ll un-hack you for free.
(4) We have more WordPress-knowledgeable tech support staffers per 1000 customers than anyone, which means we have the time to solve your special problems.
(5) We’re the only hosting company who lets you try us for 15 days, free.
(6) We’re the only hosting company with an investment from Automattic, which doesn’t automatically mean we’re better, and doesn’t mean we’re “favored” — Automattic is great about NOT favoring any one vendor — but it does mean we have the support and assistance of all the smart folks there to help us make the best service we can.
(7) We give you a staging area where you can test changes to your site before making them live.

You didn’t start WP Engine until you had 30 people saying they WILL give you $49/month. What are some of the other ways you can validate a business model before starting up?

Personally that’s the only method I like.

If you can’t find people who are willing to part with money, you don’t have a business, you have an idea that might be cool and might someday become a business. But that’s not validation! That’s a stab.

Even if you want to do the freemium model, it’s not a business unless some of them convert to paying customers, so you need to validate that *those* people exist.

You closed $1.2 million in funding November 2011. Why did you decide to fund WP Engine after bootstrapping previous startups?

WP Engine started self-funded (really a small set of folks who knew each other — not at all a formal “round”) and we got profitable in 7 months. We hired two people and got profitable again in another 6 months.

At that point we could have just grown at a certain rate and been profitable, or we could have double-downed and see whether we can grow much faster, but with the cash resources to do that with a better and better service and more offerings. We decided that would be interesting, fun, and warranted.

Either path would be a rational choice.

What do you make of startups like CloudFlare which are improving performance and security on low cost shared hosting for free?

I love CloudFlare and similar companies. The more options people have for more fast, scalable, and secure sites, the better.

Fortunately we’re partners, not competitors, with those companies. In fact we push people to use CloudFlare all the time.

The reason is that these things — speed and security — are a never-ending battle where every piece along the stack matters. Having a CDN matters, but CloudFlare only puts about 50% of your static content on their CDN, so having our CDN makes a big difference. And CloudFlare doesn’t cache HTML, whereas we deliver it on average in 70ms, so that’s a big difference in page-load time. But CloudFlare has some cool tools for on-page optimizations that we don’t provide, and that helps too.

Same with security. CloudFlare blocks a bunch of stuff — that’s awesome, why not use it? But what if other people on your shared hosting environment get hacked, and the hacker gets into YOUR site? Happens all the time. So you need security from your hosting provider too.

So again, it’s not that any of these services are “bad,” it’s just that none of us — including WP Engine — is complete, and the more stuff you have the better (to some limit).

What are some of the challenges you face as CEO on a day to day basis?

Currently it’s getting myself unbound from daily operations. I built the original architecture so I’m still involved in that, for example, but I shouldn’t be still logging into boxes to download a log file.

We’re growing fast — adding several new employees a month — so my challenge is to stay ahead of that, help train everyone, and get away from being required for any one task.

Of course the goal isn’t to become idle! But rather, to have the freedom to work on whatever project is most valuable, or even jump in on an emergency, rather than already being bound to lots of tasks.

Does WP Engine have any big features in the pipeline?

Tons! Part of the rapid staff-up is to get the mental bandwidth to do strategic work.

We already have portal.wpengine.com where WordPress consultants can manage multiple blogs, but it’s just an MVP right now and needs lots of features.

We’ve built a self-serve snapshot/rollback mechanism which is awesome, but next we’re going to connect that with Github so you actually have “Heroku for WordPress.”

There’s a bunch of other things too!

You’ve started four companies, all profitable. Your last exit was Smart Bear, which you bootstrapped to millions of dollars in profit and sold in 2007. Are your exit days over or are you working towards an acquisition with WP Engine?

I don’t believe it’s healthy to “work towards an acquisition” even if you want one.

In my experience the best way to get a valuable exit is to build a solid company that’s growing fast, with an undeniably awesome product (the market says so) and team (obvious from cursory interactions), and with good profit margins. Bonus is the growth rate appears independent from any external factors (e.g. remains a smooth curve even with economic issues, competitors appearing, employees leaving, etc).

Of course that’s because that’s a healthy company! Which you don’t even have to sell. And which is awesome to work for. Which is why it’s the most valuable.

One of your investors is founder and CEO of DreamHost, Josh Jones. How did Josh get involved? Is there any conflict of interest?

He got involved because we hired away one of his top WordPress support guys! :-)

Josh is awesome and has already been very helpful. Although it may appear that we’re competitors, in fact the segment of the market where we overlap is small, and even then our two value propositions are quite different.

What failures have you had as a startup founder?

This is a loaded question, but I’m asked it during almost every interview.

On the one hand of course I fail all the time. Constantly. At everything from handling personal situations to marketing campaigns to dealing with a customer to engineering choices. You name it.

On the other hand, all my companies have been successful, so it’s disingenuous for me to really talk about failures because the reader has to think “yeah but it can’t have been that bad.”

The key is to make your experiments, your tests, such that it’s not too expensive to run and you’re keeping your *honest* eyes open to whether it’s working. Then you can correct failures before they’re fatal.

For example I had a “great” company idea (before WP Engine) which I did customer development on for two months and finally decided it was not great. Being honest about the fact that my baby was in fact ugly kept me from wasting more than two months on it.

Your blog has over 30,000 subscribers, do you have any examples of opportunities that have been created from A Smart Bear?

People think a blog gets you customers — it doesn’t.

It does get you influence and connections, which means for example when I raised money I built a dream-team of investors.

It also gets you credibility, which I use for hiring. Working for WP Engine means working with me, and if (that’s a big if!) you read the blog and LIKE what you see and want to pick up this stuff by osmoses, then this is a great opportunity, and we can pick up talent who of course has many other options.

It also gives you an overinflated ego, if you can’t already tell, which I have to work at not clouding my life.

Can you convince the reader to move their WordPress site to WP Engine in under 50 words?

For $29/mo, why wouldn’t you get access to awesome tech support, a super-fast site (so people don’t bounce off and SERPs go up) and don’t worry about your site going down when you get great press? Since you can try free for 15 days, see for yourself.

Finished reading? Check out WP Engine!

Interview with Matt Mickiewicz (Flippa)

Flippa the leading marketplace for buying and selling websites. I interviewed Matt Mickiewicz, Flippa co-founder to find out more. This interview is the forty fourth in a series of DW interviews. Big thank you to Matt for the interview!

How would you describe Flippa in under 50 words?

It’s a markplace that allows people to buy & sell revenue generating websites through an auction model. We’ve sold $70 million worth of websites to date, with millions more in monthly transactions.

Your entrepreneurial journey began aged 14 in 1998 with Webmaster-Resources.com, which eventually became SitePoint. When did you start getting attention from the press?

Within 2 weeks of launching Webmaster-Resources.com, the site got featured in USA Today. Further coverage in LA Times, Washington Post and WINDOWS Magazine (which at the time had a million subscribers) quickly followed within a year.

What were the main influences that led you to start Webmaster-Resources.com at such a young age?

I was learning web design and internet marketing as a hobby, and I was finding there was a huge lack of resources and information available. So I started doing a lot of the legwork myself, finding out how to register a domain name, which webhosting company I should use, how to submit to the top search engines, what HTML Editing software to buy, etc.

I was confident that I’m not the only person who had so many unanswered questions, so I started compiling all the information & resources I found into a website to help others. It turns out, my timing was impeccable.

How did SitePoint make it through the dot-com bubble?

Initially, our business was 100% advertising supported. When that market collapsed, we had a look at what else people were doing on our website – and it turns out that the “PRINT THIS ARTICLE” link on any given page was immensely popular.

It made a lot of sense. Back in 2000/2001, few people had two monitors on their desks (remember, this is back before flat-panel LCD monitors), so when they were learning to code, they would print out our tutorials and have them sitting next to their keyword so they could follow along.

We came up with the theory that people would pay us for the privilege of printing out content on their behalf, so we took our most popular tutorial about PHP & MySQL, written by Kevin Yank, and turned it into a print-on-demand book that we sold for $35. It was a very quick and easy test, and the book sold like hotcakes despite all of the content being available for free online.

In June 2009 the SitePoint Marketplace moved to Flippa.com. Why?

A brand can online stand for one thing. SitePoint is about education for web designers and web developers, not an auction marketplace for buying and selling websites.

What have been the main advantages building a separate identity?

By creating a new company, with a new brand, with a dedicated team, and its own budgets and P&L statements, we allowed the business to stand on its own two feet and flourish on its own.

People can only associate one thing with a name. Aside from Virgin, few companies have been able to serve a multitude of different markets and customers using a single name. That’s why Toyota launched Lexus.

Flippa has become the leading website marketplace with over $70 million in overall sales. What are the main factors that have led to this success?

Critical mass in a marketplace is very hard to displace… just look at Craigslist, numerous companies have built much better, prettier, more user-friendly, better organized local marketplaces, but at the end of the day, if you’re looking to rent an apartment, or get rid of some old furniture, you still go to Craigslist.

We’re not sitting on our hands though, we’re constantly looking to innovate, improve the user interface, roll out anti-fraud features (mandatory credit card verification for large bids, verified Google Analytics stats) and requested improvements such as instant alerts based on custom criteria.

In March 2010 Retweet.com sold at auction on Flippa for $250,000, were there any complications with the sale? Do you know what plans, if any are in mind for the domain?

The sale went through successfully, and we’ve had many sales since then that are even bigger.

Have you passed up any opportunities which you now regret?

I wish I bought more domain names in 1999, and got into PPC arbitrage back when GoTo.com was around and you could buy clicks for 1 cent with no quality score issues and there was virtually no competition.

Can you convince the reader to buy or sell a website using Flippa in under 80 words?

Buying high-traffic websites on Flippa is relatively bargain compared to buying traffic through channels like pay-per-click.

Imagine working with a $2000 budget, what would you rather have, 2000 clicks @ $1 each, or a website with 2000 unique visitors, each and every month, that you can mine for a profit — and at the end of 3 months, 6 months or 12 months you’re still able to resell it and get all of your money back, and perhaps even more?

Finished reading? Check out Flippa!

Interview with Neil Patel (KISSmetrics)

KISSmetrics is a person-based analytics platform that helps online businesses turn analytics into insights that guide decision-making and growth.

I interviewed Neil Patel, KISSmetrics co-founder to find out more. This interview is the thirty fifth in a series of DW interviews. Big thank you to Neil for the interview!

How would you describe KISSmetrics in under 50 words?

KISSmetrics is a customer analytics software that allows you to understand and optimize the user experience throughout your entire customer lifecycle from first click to the last conversion.

How did you come up with the name?

It was a team effort. We all thought that metrics should be simpler, hence the “K.I.S.S.” part and “metrics” because we are an analytics company.

Has your initial vision changed since launching KISSmetrics?

It has. We first started out as an analytics tool that was based around Facebook applications and now we are a customer analytics platform.

You spent 6 months pitching Crazy Egg to investors. What did you learn?

If an investor doesn’t give you money, it’s because you did something wrong. In most cases you couldn’t get them excited enough or you could help them understand how you were solving a big problem and creating a big enough company that they could get a good ROI from.

In addition to that, investors typically like investing in people they know or people that their friends know. So get to know them.

How did you get True Ventures to fund KISSmetrics?

My business partner had a talk with Om Malik, and he highly recommend that we get funding from True. He brought us into the firm and helped us get the money.

Because of him we were able to get funding from True, which has been a blessing for us.

You’re working on creating a 100 million dollar company. If KISSmetrics becomes that company, what next?

I probably will end up working for someone else. As sooner or later we have to create an exit for our investors and ourselves (either go public or sell). In most cases, when you sell a company, you end up working for the acquirer.

After that I probably will start another company. I just don’t know what else I am good at and enjoy other than starting companies.

What does a typical day consist of?

I have a pretty hetictic schedule that is full of calls and meetings. My day is broken down here.

Which article on your blog (Quick Sprout) has received the most views?

I wrote an article about business quotes years ago and it still gets tons of visitors each day.

To date it is the most popular article on Quick Sprout.

How do you find the time to respond to almost all of the comments on your blog?

I rarely sleep. ;-)

To be honest I just work a lot of hours. At one point I responded to all comments and these days I just respond to new comments. As I still get comments on posts that I did a few years ago… at this point it is impossible for me to keep up with all comments so I just stick with new blog posts.

What do you love being most – a blogger, entrepreneur or investor?

I love blogging. For me it is a stress reliever and I enjoy teaching others. Plus I learn so much from readers of Quick Sprout… so it kind of is a win/win situation.

I also do enjoy being an entrepreneur and investor, but I probably will always blog even if I am not an entrepreneur or investor.

You often push things to the limit. What’s a good example of this working and another of it failing?

A good example of this is my personal brand. I push it to the limit by doing whatever it takes to brand myself. From speaking at over 50 conferences a year to blogging on Quick Sprout to participating on the social web… I do whatever it takes to create a strong personal brand. And over the years it has worked well.

A good example of this not working is YouTube. I figured out how to game it and at one point I had a top 100 YouTube channel with 0 videos uploaded. Sooner or later I got caught and YouTube removed most of my subscribers.

What are the difficulties in working with big companies like AOL, General Motors and Hewlett-Packard?

They move REALLY SLOW. It’s hard to get things implemented and there is a ton of bureaucracy. If I had my choice I would only work with startups… but big companies tend to pay a lot better.

How do you think formal education can be improved?

They can teach you more things that would be valuable in your career. I can’t say I learned much in college… I kind of did the minimum amount of work and just cruised by, so it could be my fault.

You were a top influencer on the web according to the Wall Street Journal. How do you keep a zero inbox?

I have someone who works for me that helps me manage my inbox. That’s all she does for 8 hours a day.

Sadly, I still can’t keep a zero inbox. :(

What’s the biggest mistake you’ve made?

I lost over a million dollars into a hosting company. It was my worst investment to date. The idea we had was great, but the people who ran it weren’t rockstars.

The big lesson I learned… ideas are a dime a dozen, it is all about the people.

If you could only give one piece of advice, what would it be?

Learn from your mistakes. The number one reasons I see entrepreneurs failing isn’t because they make mistakes, but they keep on making the same ones over and over again. Learn from them and avoid making the same ones over again.

Are you where you expected to be 10 years ago when you were 17?

I am not. I was hoping I would be much further along, but there isn’t much I can do other than to keep on pushing forward. :)

What are you most excited about at the moment?

I am really excited about KISSmetrics. We are making some cool product changes in the next few months. I can’t say what they are… but stay tuned.

Can you convince the reader to start using KISSmetrics in under 50 words?

What do you use your analytics for? To see how you can boost your traffic, right? But does more traffic mean more income? In most cases, it doesn’t.

KISSmetrics helps you see what causes your revenue to go up and down so you can focus on boosting your income.

Finished reading? Check out KISSmetrics! If you’re interested to find out more about Neil, check out his about page.