Entrepreneuship - How its sailed!
As Rand himself announced at the beginning of his presentation, this is the first time that the full story of SEOmoz is being told publicly, in front of an audience and the first time that he his sharing some of lesser known stories, anecdotes as well as the data and numbers that have characterized his unique online adventure.
And being this a story full of valuable lessons, I am truly grateful to him for having given me and MasterNewMedia permission to record and publish this story in full without any editing or censorship.
I must also say, that while watching Rand recount the story of how his company became what it is now, I was humbled by Rand's own honesty and transparency in sharing his own failures and mistakes, as much as I did admire him for the perseverance and determination which he has painted all along his value-creation path.
Having recorded Rand's full SEOmoz story presentation from start to end, I have split the material in twelve relatively short video clips (which I have also transcribed in full), which cover everything from the early times before SEOmoz existed to the financing times, and up to today success. In these videos you can also see Rand Fishkin sharing some of the key lessons learned as well as the strategy and tactics he has utilized to drive his company to his fast increasing
Full English Text Transcription
Rand Fishkin: This is the first time that I am giving this specific presentation.
This is a story that I told many times in bars, restaurants, enotecas, but never on stage in a formal presentation - you are going to be the first to see it, and hopefully it will be valuable.
What I want to do is tell the story about how we started SEOmoz, how it went from being nearly a disaster to a surprising success this year, in fact the last few months have been incredibly exciting for us.
Some of the things we learned along the way, both from an entrepreneurship perspective - starting a company, scaling a startup - as well as in marketing capacity.
I know there are a few of you here that are very interested in search, in SEO, in web marketing... I am going to represent some of the lessons that we have learned from that as well.
The Origins of the SEOmoz Company
Duration: 5' 20"
Rand Fishkin: In 1981 - I know, this is a long time ago to start a startup - my mom Gillian founded a local service that helped people make business cards, print identities, pre-internet marketing services.
In 1997 when her clients started needing websites, then I followed the typical path "I want to make some extra money while I am in high school, I am in college. I will make some websites for her clients, learn HTML, learn CSS" - and I also learned Flash, which is how I still build a lot of my graphics and stuff.
In 2001 - know I am speaking at a university so I should not recommend this - I dropped out of college.
I did not finish, I only had two classes away from graduating, so I paid them almost all the money, but I just did not get a degree.
Two classes away from graduating, I decided that I could not go to school anymore. I just needed to do this startup thing, and of course following the first steps of other great Seattle's entrepreneurs like Bill Gates who did the same thing.
In 2002, Gillian and I started essentially a small agency that did consulting around website building and built a lot of Flash websites.
It was in 2003 that we had contracted some other consultants locally to help us do SEO, to try get our rankings higher on Google for all our clients.
We were struggling. You got to remember that in 2001 the Internet was an incredibly exciting place and then I dropped out of school and it became a much less exciting place very quickly, because in 2001 the market falls apart around technology and I have already dropped out of school. I dropped out of school in June and it was around September that the market took a crash.
It was looking like maybe it was not the greatest decision but, of course, being obstinate - which I truly am - I stuck with it.
We had these third party services that were failing to do good SEO work for our clients, so I started learning it myself, which is how I picked up web design and all anyway.
We had gone pretty deeply to debt - I will talk about that in more detail a little bit later - but hiring those contractors, buying expensive offices, spending a lot of money on equipment, paying salaries that we could not really afford to pay... unfortunately not for me.
There is a very beautiful woman in a black dress in the third row - that is my wife Geraldine - during this time that I was deeply in debt and I could not pay myself a paycheck, she paid our rent, she worked... I did not know what I was doing, I do not know why she stuck with me, but it worked out well, it was a good investment eventually.
In 2004 things are kind of going terribly and I started blog, because not only was I struggling financially, but I was struggling with SEO.
I realized that I was not great at it, I could not figure it out, it was very challenging.
Google makes it really hard to know and understand how to do SEO well. And that was one of the reasons why I built SEOmoz, as I thought that this practice of SEO, should be easier. It should not be this black pox, it should not be so hard to understand and so, SEOmoz was founded around this idea of transparency and sharing and information.
If you go back and read the blog posts from 2004, you are not going to be impressed. They are not particularly insightful. A lot of them were just silly day-to-day stuff.
Things like: "I found this article here, it says to do this thing. I tried it and it did not work", but eventually it gets more popular, it starts growing, I get better at blogging, I get better at writing and building these resources and in 2005, after we produced some viral content, which used to be a very popular magazine in the United States - they had subscription of around eight / nine million subscribers weekly who pick up this magazine - they featured us in a big four / five page spread around SEO and that was a sort of a big coming out party.
We suddenly had a lot more media attention, a lot more clients contacting us instead of wanting us doing web design development services, they wanted us to do SEO. That kind of kicked us off and in fact the Newsweek article was the impetuous for me writing something called? which is still a relatively famous and well-regarded resource.
The weird part is The Beginner's Guide to SEO, brought us more clients, more traffic, more value than the Newsweek article did. I thought: "Oh, Newsweek wrote an article, I would better write a guide to SEO for all the people who are going to come to the website from reading the magazine and want to learn more."
It turned out the other way around. The guide itself is more popular.
How to Raise Venture Capital Money
Duration: 4' 39"
Rand Fishkin: In 2006, after doing a little bit better, we finally have our first profitable year.
You might think to yourself: "Boy, it seems from 2001 to 2006 - five years without making one profitable year - that you would have given up. In fact you probably should have given up." This is one of the lessons on entrepreneurship: If you stick with these things and you keep finding a way to live, you will make it - and I think that story is definitely more true for us than many others.
In 2007 we transitioned to software.
What we realized was we had a good consulting business - it was growing and we finally had a profitable year and we suddenly change business model.
We had a consulting business, but it is incredibly hard to scale consulting.
You take clients in, they pay you money, but you need people, well payed human resources to do a good job, to scale up the practice of consulting, and that is really hard particularly in a field like SEO where there are not a lot of talented people and many of the most talented people run their own firms or in-house set successful agencies.
Training people up takes a lot of time away from clients, so you already need a revenue base before you can do that.
We found it tremendously challenging and we built up a really popular community. The SEOmoz blog now is getting between 8000 and 10000 unique visitors a day.
We thought: "Consulting is a terrible way of monetizing, because maybe we take three or four clients a day. What we need to do is to find a revenue-generation system that can scale with the amount of people that are coming out"
Advertising is a natural one.
When you have a popular site, advertising is something nearly everyone invests in at some point. We did try it and we could make some decent money, but advertising only scales if you can scale the content, the visitors and grow essentially the pie of people that are coming to your site.
Our pie was sort of toward serving a very specific population, SEOs, which was not a huge market, it has now become a much bigger market, but it was not a big market.
We built this s/o For anyone of the members it starts at $99 a month, but it started at $39 a month and we still have people that pay that $39 a month rate of our grandfather in early years.
Kelly and Michelle both sort of took me out to lunch a few times, and they said "What are you doing with this SEO thing? Because we think this is going to be a business, is going to be a big market sector. This is going to be an exciting area."
This is one of the things that when I have spoken to people when I was at the Social Media Week in Milan and today here in Rome... Italy really lacks a lot of this specific type of activity, where someone like a Michelle and a Kelly would come to an entrepreneur who is doing something small, but interesting and successful, and say: "This could be really big". I cannot really underestimate the impact, the influence that that had. Having them come to me and say "We think SEO is going to be big. We think that you can take this to a big place."
It is not that they even told me exactly what to do or gave me the ideas. Just them saying: "This could be a $1 billion company" was enough to get me thinking in a different way about where the business could go and what it could and should be.
In November 2007 we took $1.1 million - a million from Ignition, $100000 from Curious Office.
How to Manage a Board of Directors
Duration: 2' 54"
Rand Fishkin: We did found the board of directors.
When we took this investment, we were very lucky. 2007 was a great time to raise money, which meant that there were founder-friendly terms.
Today, right now, is probably the best time to raise money since 2007.
The last six months or so have been absolutely the best time. You can raise at very good rates, you can get good amounts of money. You can get very good deal terms - and this has not been possible for much of the last three years or so.
It is kind of a different story today.
In 2008 we took the money that Ignition and Curious Office invested and we used it to build out some technology that we could not have otherwise done - we really needed this to do. That technology today is called Linkscape. It is essentially our index of the World Wide Web. It tries to match the index that Google, Bing or Yahoo! used to maintain - something like Baidu or Yandex in Russia or Seznam in the Czech Republic.
We had this cartoon created. My favorite part is... Do you see how the hamster is powering the web crawl? We had his crawler food say: "Not with more VC funds." That was my favorite. I thought that was so clever. Yet, no one even read this comic. They all tried the product, so it worked out. This took us almost exactly a year, because we took the money in November of 2007, we launched Linkscape in October of 2008 and it was in December of 2008 that we returned a profitability. We were sort of lucky in that.
We were able to return to being profitable from a single round of investment. There are a lot of companies, a lot of startups, who take multiple rounds of investment before they can reach profitability.
Business Marketing Strategies
Duration: 8' 13"
Rand Fishkin: One of the interesting things around Linkscape is that, although I designed it for a "me".
I am an SEO expert who has had seven years in the business, been doing this sort of day in, day out and these are all the things I want to see in a tool. This is what I want in software. The frustrating part about that was that there is not a lot "mes" out there. There are not a lot of Rand Fishkin-style SEOs who can use software in that particular fashion.
t was in probably about nine months later that we realized: "OK, we need to rebuild this in a different way."
We launched about a little more than a year later Open Site Explorer, which has gone on to become incredibly popular. It gets a quarter million or so visits a month and a few million requests a week for information. This tool essentially turned into Open Site Explorer over time.
One of the other lessons that I would urge folks who are thinking about startups, is that if you are an expert in your particular field - you have been doing email marketing, energy trading, travel services - and you think: "I am going to build a startup or a software piece that does what I want, that solves my personal problem", that is a really good idea. What is a bad idea is building it only for expert level folks like yourself.
You need to be able to make a market accessible service and that was a big challenge for us. I think it took me a long time.
My VC folks, my board of directors were always encouraging me: "You need to hire a director of product. You need to get someone in who can run the product division, because you are too much in the weeds, too deep in the data to be able to see the big picture." And that worked out. I hired a guy from Microsoft.
Open Site Explorer and pro membership - essentially the service that we offer, the software subscription service, it started at $39. It moves along from essentially what was a collection of 20, 30 tools and resources that anyone can use whenever you need them - which worked well for a specific set of SEO professionals, a subset of our customers - to a single campaign-based web app. That was something that we learned through competitive intelligence.
We saw some competitors in our space building software that was more campaign-based, did everything all in one and seeing the success that those products had and the intuition that we had around... Those products keep people on the service longer than our specific tool set, which in a recurring revenue business is critical to success.
You need to make sure that the people who are subscribing to your service stay with it for weeks, months and years, not just a few weeks or days.
We had about 800 subscribers at the end of 2007 and I believe our membership, which at the time was called premium had gone form $39 to $49 a month. In 2008 at the end of the year we had about 2,500 subscribers. 2009 we got to 4,000. In 2010 I think we ended with just about 7,200 or 7,100 subscribers. This year we are estimating that we are going to double that. And just today I think it is around 10,400 members. It is outpacing this growth - it is possible we will beat that number.
The growth is not like the hockey stick you will see in a lot of presentations from startup guys. What you do not see is the flying up. It's sort of slow steady progress. Five or six years from now if it continues along this growth rate, which is about a 50, 60 percent growth rate depending on the year, it is going to look great, but it is a very step-function process.
It is not the classic Facebook kind of story, where the first two years it is nothing and then it spikes, or Twitter where the first three years people sent 40 million tweets, and then yesterday they sent 40 million tweets. So that process, that scale, is not the kind of business that we have got.
This is today as of a couple days ago, we have got about 10,300 subscribers. Our API, which serves out data from the Linkscape product, has about 20 paying customers and 250 total users. We have 32 employees. We just welcomed a new software engineer.
Our board of directors remains the same, which is relatively rare to see.
Usually when businesses scale, a lot of venture-backed businesses scale, they will bring in an independent outside board member - and we have been looking for someone, but have not found that perfect fit. Since Gillian and I control the board, we can sort of dictate terms.
It's my opinion, my bias, to believe that a board of directors should be run by the entrepreneur. I think most famously... Mark Zuckerberg does that at Facebook, despite not owning 51 percent of the company, he has regulations written into the bylaws of Facebook saying that he will always control the board - which is interesting, but that is what has been done at Google. It is what was done at Microsoft.
A lot of these big companies, I think venture capitalists and investors are coming around to this idea that: "Maybe I do not need to run the company or be able to vote people off, vote the entrepreneur down."
You can see our revenue raised last year. Last year we did about $5.7 million and this number is particularly important for software startup folks.
Your gross margin is going to be extremely important, because it is how people value you.
When we get up a market assessment of SEOmoz's value, they take this number, $5.7 million, and they are going to multiply it by some number that is based on our revenue model and our margin. At this margin and with a subscription revenue business, we are probably worth between four and six times that number. If we were in an advertising-based business and our margins were around 60 percent, which would be pretty good for an ad-based business, that number would probably be two, two and half X. Instead of being worth 20 or 30 million dollars, we would be worth 12 to 15 - and that would be the price that essentially an outside company might come in and offer to buy the company at.
I would not recommend, and I don't think anyone in the startup world would recommend optimizing around margins or towards margin at the beginning of a software-based business. You really want to do that at a later stage, because growth, reinvestment are so important.
Also just to be totally clear, we are talking about gross margin, not net margin. This is essentially just the cost of running the software service. There's no way we would, but if we needed to, we could fire probably 25 of the staff, keep it running with a skeleton crew, just pay the operations in terms of web hosting and that kind of stuff, and that would be essentially what the gross margin is. The cost of structure of running the service, providing the service to customers is 17 percent.
Duration: 5' 9"
Rand Fishkin: Let's dive into some of the lessons learned here.
The first big one that comes from those five years of sucking at this entrepreneurship process is: Do not give up.
I have not fully verified these numbers, but from memory it is probably pretty close.
This is our debt, personal debt before we even took venture capital: At the height we had almost half a million dollars in personal debt - which is one of the reasons why today I cannot get a credit card in my name. I have a proper card and I have a checking account but I cannot get a credit card. I can't get a bank loan, I will not be able to buy a house, a car, even rent an apartment without my wife co-signing for me.
That sucks, but at the same time, it was that debt, all these mistakes, all this time that helped me learn how to figure out how to run a real business. In hindsight I would not trade it in, but I can definitely tell you that in 2005, 2004 I had to mostly not think about this.
What I thought about was business: How is the company doing? Are our clients happy? How do we get more clients? How do we get more traffic to the website? ...And not "I am in $400.000 debt, I think I should probably declare bankruptcy".
Another thing that can be extremely distracting and problematic for startups is focusing on too much stuff.
There are a million things going on with your business, there are things around employees, founders, customers, the product, the marketing and you can get lost in numbers. You really can.
I have seen startups who do that, who have essentially more debt than they present, that is 50000 numbers and they do not have a focus around which ones matter.
At SEOmoz we have just a few basic metrics and then more advanced stuff that essentially provides detailed into those. Things like: "How many paying subscribers have we got?" and then a more advanced version that will be on:
- What is the growth rate and what is the acceleration rate?
- Are we speeding up?
- Are we adding new customers faster than we were three months ago, 4 moths ago, 5 months ago?
That is an indication that our product, our market is doing the right thing.
We look at average revenue per subscriber - a sort of a top line number. If you take all those people who are grandfathers and payed $39 / $49 / $79 a month - I think the average price that people pay today, across all I remember, is around $90 / 95 but there are people who are paying higher prices as well.
Then we look at the distribution of those revenues: How many people are in each group? Are people more likely to state that they are paying more or less? Those kinds of figures.
We look at subscriptions' duration: How long on average a group, a certain number of members who join us in a particular month, are staying with the service? With this data, you get this idea of: "People who joined in January 2010 tend to drop off after nine or ten months, but people who joined after March 2010 or April 2010... Oh, that is when we had the new open settings for our service, that really kept people out of our service."
We look at cross-revenue margin and profit and, of course, the cost to acquire customers, which historically has been incredibly low, mostly because we do organic marketing.
From those figures, we need to track them really well.
We have weekly reporting that our operation staff does - we use a service called Good Data, our intern sees this and then we make them available to everyone inside the company.
By getting everybody on board with the same numbers, everyone is thinking about: "What am I doing this week, today, this hour, right now that it is going to help these numbers get better?"
That means that every week we send out an email update with all these charts. We send out data about how the company is doing - we show the revenue run rate.
For example, the revenue run rate if we were to continue operating at this week precise revenue would be $6,5 million. You can get a sense of: "OK, I own 0.5% of the company and today the company would be worth xyz if we were to sell..." Anyone in the company can think about: "This is the value I am creating and I see that the company is more valuable than it was last week, last month, last year." That has a great impact on the culture inside the company of working on the right things.
Why Startup Culture and Mission Are Important
Duration: 1' 59"
Rand Fishkin: Virtually everyone in the startup world will talk to you about how important culture is. I have to say that I was not always a believer until we developed one at SEOMoz.
We have something that we call TAGFEE. It is an acronym. It means: Transparent Authentic Generous Fun Empathetic Exceptional - but what we do specifically is not nearly as important as the fact that we have one, and that is what I would suggest to all of you.
Even if you are a startup with two or three people, make sure that you have a culture of: "What is it that we are obsessed about? What is it that drives us beyond the revenue that the company is providing?"
If you look at Groupon, Facebook, Google, Twitter, Microsoft, any of these, they will have a mission statement, something they are trying to accomplish. Not, "We are trying to make 50 million dollars," or "We are trying to make 100 million dollars." It is more: "We want to solve this big pain in the ass problem."
For us, the big pain in the ass problem is: It is hard to promote yourself on the web, it is hard to be visible on the Internet and we do not think that should be the case. We think it should be easier - maybe not easy - but easier for everyone, for companies, non-profits, government organizations, individual bloggers, anyone to be able to send out their message across the web. SEO definitely helps with that, but so do all of the other parts of inbound marketing. That is the mission that drives us.
I think it makes us much more successful than just: "How do we make the most money today?" Because you will make a lot of decisions along the way of the business that you would not make if you did not have this.
You would say: "This will bring us an extra $500 in revenue today. This will bring us $5,000 more in revenue next month. Let's do it." as opposed to: "That does not fit with the mission."
How to Hire Good PeopleDuration: 1' 41"
Rand Fishkin: Some of the traits, the big traits, that we seek in the people we hire include that they are really excited about what they are doing.
We now have an interview loop that includes one person - most often me - whose job it is not to find out if the person is a good fit or to find out if they can do the work well...
I will talk to a software engineer; I will not ask him a single coding question, but I will ask him if is he excited about Internet marketing, if is he excited about making this stuff more accessible to people. That really predicts people who are going to do well on the team.
This is something I would urge you to build inside your company. This culture of: "These are the right traits for the people who work here. These are the people who work out and the people who do not."
It's a painful lesson learned.
I can promise you that there is nothing worse as an entrepreneur having to go fire somebody that you hired two or three months ago because you made a mistake. You will do this, because I did this despite hearing this a million times. You will hear yourself saying: "We need to give them more time. We need to train them up better. We need to see if they can maybe come around to these values."
If they do not have those values intact when they join the company, some of that just cannot be learned. There is going to be somewhere better for them anyway.
Like everyone else says, I would urge you to hire slow, be very picky about who you hire, and fire fast.
Get rid of the people who are not working, quickly.
How to Manage Big Challenges
Duration: 1' 39"
Rand Fishkin: When you have big challenges in startups, just put them into tiny bits - I think this is one of the biggest things that all of the entrepreneurs that are back from tackling really big problems would recommend. They will say like: In the SEO world, I would love to have my own web index that is like Google, but how the hell am I even going to get started? It is impossible! It is going to take so much time, money and resources... I do not even know what it would take to build that." That is definitely how we and every other company were in that space in 2007.
We divided it up into small, manageable challenges.
What was the first thing we had to do? We had to figure out if we can crawl things. We tried to crawl Wikipedia "Look at that: We built a crawler and it can successfully crawl all the pages on Wikipedia and build an index of them."
"Can I calculate the PageRank? Let's just try to calculate the PageRank only on the Wikipedia index." "Yes, we can do that. Now let's try and scale that up." "Build a little bit bigger... try that again... how we hold all those pages and index... where we put them... what storage system is going to work... Amazon is... EC2 - which is where we do a lot of our hosting... is too expensive to crawl, so we will find another crawler..."
It sounds like an impossible challenge, and in fact it is just a bunch of little challenges that you can do.
Technology entrepreneurs can accomplish remarkable things, particularly when they are told that they can't - another big driver for me.
Marketing Tips for Startups
Duration: 10' 43"
Rand Fishkin: On the marketing front, I also wanted to preset some of the cool stuff that we have learned and the cool stuff that we do and we have success building.
One of the biggest things that we have found is that - particularly in the transition from consulting to software - is that selling is incredibly painful.
Building a sales team is super challenging, sales people often do not mesh well with engineers, code folks and even many entrepreneurs. That culture I think is a dangerous thing that we have had to watch out for and essentially we have biased against it entirely.
We have zero people who do sales at SEOmoz.
I had a funny phone call the other day from MTV Network, which runs Comedy Central, MTV, VH1 - I think they have some media presence here in Italy as well - and they wanted to know: "Can you have an account manager call us up and walk us through SEOmoz?"
"We do not have any account managers"
"Maybe do you have a sales office in New York?"
"No, we do not have any sales people"
"How come are we going to find out what your software does?"
"...You can try it. You go online and you click, put your email and you can try it, right there..."
That process for us works really well. I wrote a blog post about this: "Do not sell, make people come to you" and how I did not do that when I tried to raise venture capital the second time.
In 2009 I did try to raise a second round of capital for SEOmoz despite the fact that we were profitable and failed at that spectacularly.
With SEOmoz we found that by educating people, by teaching them how to do SEO, how they could do all the kinds of things that I am talking about today, we could build up a great community.
This is what drives the tens of thousands of people who subscribe to the SEOmoz blog, who follow us on Twitter, who participate with us on Facebook, who come to the site everyday... February was our first-ever million visit month. It has built up this massive community and certainly we do not have a million subscribers, but that community means that we do not have to sell.
People can come and if we can convince one other ten, one other twenty people that our software is interesting, they are going to buy.
Some forms of content that works for us to build all that educational stuff:
- The blog - which we update every day.
Updating a blog every day, particularly when there is only one of you writing - which for the first four years of SEOmoz has been me - is terrible. Geraldine would attest, it was 1am, we were back from some work event, had dinner or something and she would go like: "Come to bed" and I: "No I cannot, I need to write...". Every night.
I have this personal feeling of guilt if I do not put something good on the blog, so I never felt good phoning it in, I needed to put a lot of effort in it which means tons of nights staying up till 3am...
It is weird too, because after doing that for a year you think: "OK, now you're successful". No, even after two, or three, or four you are not, but you keep going. But now the SEOmoz blog is really growing to something.
- We do a lot of "viral" targeted content.
We do essentially: "Hey, we wish there were one of these for our industry". I was talking to Robin outside about a company called Oyster which started out in New York that does hotel reviews.
One of the things they always wished is that TripAdvisor and all those other review sites were not the only places to go for information, because they did not really like user reviews. What they wanted was a paid journalists who goes to stay there at the hotel, takes real photos and then really reviews the place.
That is what they built. They call it Photo Fakeouts, where they show the hotels' photos side by side with the ones from the real journalist. It is fascinating, it is great content.
- We wrote that Beginner's Guide to SEO that we talked about.
- We do industry surveys.
- I do a lot of graphic and illustrations. This is because of my background in Flash, but the things about that stuff that is great is that the people who pick this up, who put that in their presentations, their websites will link back to use and they will share the fact that these came from SEOmoz. The citation, that link passes SEO value, visitors, it means good branding for us, etc.
If we are the source where everyone goes to essentially talk about SEO, this is a huge win for us.
- We do a weekly video series... what is weird about that is that if you go to a normal blog post on SEOmoz, you look at our analytics, it is usually read by between 8000 and 12000 people. Sometimes many more, 20000 to 3000 people.
We have never had a video that has been watched by more than 12000 people, so you might think: "Would not you give up on that content format, since it does not get you as many views and visitors?"
The fact is that the engagement on a video is phenomenal and the quality of branding, the number of people who know me or SEOmoz because they have read a blog post is smaller in comparison to the number of people who know us because they have seen the video.
The only way you can feel that is to get out of the "building" and talk to people, go to conferences and events and forums where you can speak to people in person and then you can feel that impact that video has, it is really phenomenal.
We recently switched our hosting provider to a company called Wistia, if you are doing online video, I think they are phenomenal. They do all the good SEO, the XML video sitemaps stuff for you, it is really good. And there is another really good one based here in Italy that is called ShinyStat.
- We also do a lot of research and data sharing.
When we have questions that we wish we knew or we think the rest of the Internet world would like to know, we will spend money, time and resources doing that research and then sharing the result.
This is sort of weird, it goes against a lot of long-term business practices, because if you spend money on research you should use that as a competitive advantage.
Our competitive advantage is to share it and be the resource that everyone else uses to refer to that stuff.
For example we compared how Bing and Google rankings are different - there are different elements that coordinates the ranking on those two engines - and share this publicly on the blog and we had a lot of feedback from people inside Google and Microsoft who commented about this.
If anyone of you uses services like Compete.com, Quantcast or Alexa to try and figure out how many visits other sites have, competitive data, let me assure you that data is terrible. Absolutely horrible.
We did a bunch of work on this and we are in the process of redoing this - the preliminary works still looked horrible - Alexa, Compete, Quantcast, Google Trends for Websites, whatever you want: Any of these competitive intelligence sources compared to the actual visitor data is just awful. Worst than a 0.5 correlation, which it would be the minimum acceptable in my view.
If you are going on Compete and say: "This guy has more traffic than me," that is a random guess. It is not good, but by sharing this information we have lots of people who refer back to it whenever somebody sights Compete score or Quantcast scores or Alexa data and that is great for us, because its shows tat we are thanking about the industry and try to be a step ahead.
- We do a lot of sites presentations.
The interesting thing about these is that I will speak to small audiences and then prepare a slideshow and if there are so many people in the room it sucks that only those people will get it, so I will put the presentation online and I will tell people that is online. Those people will tweet it, they will share it, email it to other people, it will get thousands of views on SlideShare.
Since SlideShare and Scribd, and a few of these other ones, they often take any resource that becomes popular on their site and feature it on the homepage, this means that I will get 10000 people looking at a presentation that I made from a seed of just a few hundred.
That is a really powerful driver, one of the big reasons that I am a big believer in creating new presentations. Virtually, every time I talk.
- We also give webinars on our website.
I would not say we have had a good success with them, but we have found them to be a great customer acquisition and customer retention channel for us. That said, the business I was talking about earlier, HubSpot, their primary customer acquisition channel is a webinar.
They would essentially give a webinar on a topic like social media marketing or the science of tweets and retweets and they will have 5.000 to 10.000 people attend one of those webinars online around the country and then sign up for their services afterwards. They love it.
Successful Web Marketing Channels
Duration: 10' 13"
Rand Fishkin: Some of the channels where we do distribution include:
- Forums: 8.583 visits - where we get a surprising amount of traffic.
It is weird because a lot of web forums have this web 1.0 feel like: "That is so yesterday. Facebook, Twitter, Quora, whatever... that is the next generation."
Forums are fantastic for us.
If you go to Boardreader.com one of things that I will often do is search for either our name, our brand name, or our competitors brand names and I will find people, forum threads that are talking about those and I will go participate in that conversation, if it makes sense.
If somebody says: "Yeah I was using SEOmoz, I was using open sites port and I got back this result and I do not understand it." I will leave a response and sometimes they are like: "Oh my God! Did you see the CEO of SEOmoz left their..." I am just a guy, no one should be impressed by that, but they are. They will tweet about it and they will write about it and that forum thread will get a bunch of views and it will be featured, so it is this great virtuous cycle.
I pulled out most of the forum places that sent us traffic: 8,500 hundred visits set from 117 different forums - and I did this the total simple way. These are just sources that contain the word "forums", so you can tease the sound of your web analytics pretty easily.
- Blogs: 9.278 visits.
We participate in a ton of blogs. We get written up in a lot of blogs and blogs do send us a good amount of traffic, but only slightly more than forums.
I cheated again, this is probably a terrible metric, but you get the idea that I could go in and in fact I did go in and do a more sophisticated analysis of this and we do get a lot more traffic from blogs.
The thing about blogs is that we do not just get traffic from the people who write about us in the post itself. We get a lot of traffic from the comments of blog posts.
Someone for example like the Compete or the Alexa thing someone will say, "Did you see that Path is now more popular than Instagram - which are two photo sharing startups in Silicon Valley - and somebody will say, "Oh, that is BS." Then they will link over to our study showing that those figures are inaccurate and that will send a bunch of traffic to us and awareness.
Participating in those comments can bring a lot of value for us as well.
- Search obviously sends us a ton of traffic: 1.494.971 visitors.
The weird thing about search engines, although it does send us a ton of traffic and we do a good job with SEO, we only get... I think it is about 36 percent of our traffic on SEOmoz from SEO, from search engines.
The rest comes from all these other sources that we participate in. I wrote a blog post about this last night and you can see some comments in that blog post this morning that are angry, almost upset that we are not more SEO only, or that we think that there is this idea that you have to be diverse in your traffic sources.
It is my belief that search engines want to reward people who get traffic from all these other places too. They do not want to just leave to people, just rank people who have done a really good job deeming their algorithm, they want people who are naturally popular and important and that is what all these other traffic sources help provide.
- Twitter: 109.620 visitors.
Twitter has been a great tried and tale, in fact it is from us the number one traffic driver from social media, more than Facebook by almost 2x. I would be careful about that bias because we usually find it is the other way around with consumer focused companies and Twitter or LinkedIn will be the bigger one if you are business to business-focused startup.
If you have a business to business product, Twitter and LinkedIn are likely really worth the investment and certainly if you are a consumer, no matter what you are, Facebook is where a good investment is as well. I will show you our Facebook traffic.
Twitter was talking on TechCrunch on two days ago, how like the last three months they have gotten way more popular and how the earthquake in Japan shot up their popularity, the number of people who joined Twitter service - and our data reflects that.
The amount of traffic that we have been getting from Twitter over the last few months has been spiking pretty much. It is interesting to see that.
- Facebook: 79.305 visits.
Our Facebook sends... also has been growing in traffic, but substantially less than Twitter and surprisingly and super weirdly the value of the traffic is substantially lower.
My sense is that people who are on Facebook will leave it briefly and then they will come back versus Twitter where it is... I go to Twitter and find cool and interesting sites and information and then I will go to them and spend time on them. So, the Facebook traffic value is very temporal.
Email marketing has been phenomenal perhaps. Some of the biggest gains that we have seen in memberships, some of the biggest promotions that we have had have come through email marketing.
If you are a startup you need to get MailChimp, because the first 2,000 subscribers are absolutely free on the service and MailChimp is surprisingly affordable and has great deliverablility rates and fantastic analytics. I am just a huge fan of recommending them. I like their service a lot. They also have a great looking interface. I wish that.... I am little jealous, I love their interface. It is great.
LinkedIn has not been a place where we have invested a ton of effort and yet we still see a lot of value out of it.
It drives probably about a little less than the traffic Facebook does, but it tends to be a much higher performing.
One of the things you can do on LinkedIn is to claim your own company page.
A lot of people who join Linked In for their own personal site but they do not claim their company page and join that. I urge you to do that, because those pages pass links too and you can share all the content that you put up there.
- SlideShare - I mentioned that one - it has been a good source for us.
- Scribd is the same story.
- StumbleUpon weirdly sends pretty good traffic these days.
A few years ago they had 4,000,000 regular users and today they have got 14,000,000, so they are one of those quiet growth stories.
There was a piece in Mashable about how StumbleUpon now sends more outbound traffic to other websites than Facebook does, despite having one fortieth of their users or something - 14.000.000 to 500.000.000, 600.000.000.
StumbleUpon sends pretty decent traffic for us and it is really because we have interesting content in the site that people will stumble to.
- Hacker News: 30.867 visits.
If you are in the entrepreneurship space, you have to read this site - it is a requirement. I think they do it before they will give you the startup stamp on your wrist.
This is like where Silicon Valley happens - it really does.
I probably visit three or four times a day no matter where I am, on my phone. It is obsessive, but it is a way to stay connected to what the Valley is doing even if you are not in the Valley.
I would strongly recommend reading Hacker News everyday and getting linked to Hacker News can be a fantastic way to get in front of investors, other entrepreneurs, other people in startup fields, software engineers - I cannot understand the value of the people who come through here - and it is super spiky, because inside Hacker News you have to be voted up by other users of the site in order to get listed on there.
SEOmoz every now and then have a big spike of a few thousand visits from Hacker News.
It is weird, because the first time you get a spike of traffic it will not provide nearly as much value as the second or the third or the fourth time, because those people who have seen you before and so they are branded with you...
I spoke at something at Los Angeles and a bunch of guys there were like: "Oh! SEOmoz, yeah I..." They don't care anything about SEO or Internet marketing, but they know us because they read Hacker News and so that is a great way to get on people's radar.
- Quora: 2.151 visits.
Quora it is another good one for that, because it is so Silicon Valley, tech world-centric and Quora's traffic has been going insane.
I think we had a board meeting in January and Kelly and Michelle were like:"What did you do over the holidays, over Christmas, other than spend all your time on Quora?" Because that is essentially where everybody who is in technology was spending their time over December.
I answered a few questions, like a hundred questions on Quora and we get good traffic from it.
Basically I started answering questions and then... boom. We are getting serious traffic referring from Quora. I would urge you to invest there.
No matter what you are doing, whether your startup is around, you can answer questions and be perceived as an authority among a lot of these early adopters and market leaders by participating in this site.
Conferences and Events
Duration: 2' 26"
Rand Fishkin: I wrote a post called Why I Am a Conference Whore.
Mark Suster, who is a very well known venture capitalist blogger in Los Angeles. wrote a post called Be Careful not to Become a Conference Ho.
Essentially urging startups entrepreneurs not to go speak at lots of events. This was in sort of response to a lot startup founders who have been filling lately like "you have to get out of the building".
Do not just build your startup in-house, go talk to your customers, go engage with them, be out and about and participate, so you understand what people want, what they need and how they are using your product and what they like from your competitors.
I wrote a response to that and I did a little chart distribution. You can see my days at the office last year which are about 68%, my days on the road, speaking and in transit.
It seems like I am essentially more days on the road in transit than I am days on the road speaking. Last year I just used my Google Calendar to figure this out, but it is worth it.
The value you get from a one-to-one connection, from talking to other startups, other entrepreneurs and customers of yours in a personal way it just cannot be replicated over email or through a support forum, over the phone.
There is no way to build up a personal relationship that you get, or the value that you get from these in-person connections.
Let's use today. You are a startup guy and you come up to me after this session and you say: "Rand, I would liked your talk. I am planning a trip to Silicon Valley next month. Is there anyone you think I should be visiting with, I know this guy, this guy and this guy..."
If you emailed me, I might reply to that email, but probably I would not have time. If you come up to me after the session, I likely will.
I would probably make an introduction to four or five people for you, tell you where you should go, who you should meet with and what you should do while you are there. That kind of in-person connection is totally different than what happens on the Internet and it can be much more valuable. I would urge you to do that.
SEOmoz' Financial Data
Duration: 4' 34"
Rand Fishkin: All the stuff we have talked about from Hacker News and Quora,SlideShare, email, Facebook, Twitter and search... everyone of these things follows the same process. That process really can be distilled into four simple steps:
- I find something new that I think is interesting. Some new place where I think there can value in participating and contributing.
- I test it out. I go answer some questions on Quora.
- I measure it through my analytics or through our conversion data.
- Then I repeat the high ROI ones and throw out the low ones.
The same process is simple to apply to anywhere you go and participate on the web or any channel or any content that you want to try. It is why I am such a huge believer in inbound marketing.
Startups can spend tons of money on customer acquisition, on awareness, on brand building through advertising, through paid search, through brand advertising - back in the '90s through television ads, SuperBowl ads - and yet if you are willing to put in the work, like get down on your hands and knees and scrape for this traffic, you can get a lot more of it for free. It takes your time, it takes your energy, but it does not cost you money.
The last thing I am going to do before I go to Q&A is talk some traffic and financial data. This is our traffic from 2011 - for the last year - and it is a little up.
Most of what we have been doing is refining our on-site marketing process, so our traffic has not been going dramatically up, but here you can see the distribution:
- Search sending about 35% or so (2.757.368 users).
- Direct sending a ton (2.120.028 users)
- Our feed for our blog: 80,000 subscribers clicking on links - that has been big for us (601.919 users).
- Social in a big and growing chunk (451.176 users)
- Unmeasured stuff (1.328.762 users)
What I want to point out is our paid traffic (11.859 users). It is pathetic! It is tiny. You know what the great part about that is? It does not cost very much money to get.
The million the visits that we got in February, or the hopefully 1.1 million that we will get in January. That is kind of what I wanted to share and this is our revenue over the past four years and an estimate of this year's revenue:
- 2007: Less than $1 million
- 2008: $600.000
- 2009: $1.2 million
- 2010: $5.7 million
- 2011: A little bit over $11 million - although it is possible there might be less
We definitely didn't start strong, but we have come to kind of an exciting place.
The reason I love sharing this story is because I wish so much that I had been able to do this. That I had been able to learn and talk to somebody who' would been through this before when I was starting out.
It is a painful process.
You feel lonely and alone even if there is people around you. As an entrepreneur, particularly as the CEO or the person who is responsible, you feel alone in this process - and yet you are not. There are hundreds of us, thousands of us, doing this all over the world.
I know CEOs and entrepreneurs in northeast Canada, north of Québec. I know entrepreneurs in London, in parts of China, in Australia. There is a huge startup scene that is booming in Sao Paulo, in Buenos Aires, here in Rome.
There are people and they would love to help you. If you have questions, I would certainly love to help answer them, around any topic. Around SEO, marketing stuff, entrepreneur stuff, VC kinds of things. I am happy to help out.