David Cancel, CEO, Drift
Customer First, Then Product
The son of hardworking immigrants, David Cancel learned early on the value of hustle and persistence. That’s translated to an approach to startups that involves relentless testing and focus on customer needs. It’s served him very well, as founder of five companies and advisor to many more.
David Cancel always knew that he wanted to be an entrepreneur, even if he wasn’t quite sure what that meant. As a kid, he found that flipping through the pages of Inc. Magazine and other early entrepreneurial publications didn’t offer much insight. He saw ads for get-rich-quick schemes and stories of businessmen who had reached amazing heights. Although he wasn’t quite sure how to get there, he knew he wanted in.
Reaching Serial Entrepreneur Status
The term “serial entrepreneur” gets thrown around a lot. But few have lived a life that defines it as well as Cancel. Building and selling companies has become a way of life for him; his obsessions around an idea or problem quickly snowball into companies.
He has now started and exited five companies in the past 16 years and has served as an advisor, investor, and/or director for several more, including BigCommerce, Rapportive, and Yieldbot. Cancel is probably best known for his current endeavor Drift, a messaging app that lets businesses interact with website visitors, and his prominent role in inbound marketing company HubSpot.
Along the way, he’s figured out a recipe for success that combines being in the right place at the right time, a lot of hard work, and a uniquely dogged devotion to serving his customer.
It all Started with a Bolt
Cancel’s first entrepreneurial foray started when he joined two other co-founders to launch Bolt, a company that was essentially the same as Facebook, only 10 years earlier. By 1999, the social media platform had millions of users and was set for an IPO when the market crashed. Although Bolt never went public, it was acquired, and the transaction showed Cancel that there is money to be made in establishing well-run companies even if their big day never comes.
In 2006, Cancel formed his second startup Compete, an analytics company he sold within a few years, and paved the way for his next big venture Performable.
With Performable, Cancel knew that he wanted to stick with analytics, but he also learned from his time with Compete that analytics had to be tied to performance. With the product itself still in the making, Cancel assembled a dream team by following his obsession to work with a specific type of product engineer. It was during this process that Cancel embraced the idea that a company has to put a big emphasis, first and foremost, on the customer it intends to serve. In this case, the team took a deep dive into understanding Performable’s target audience—marketers.
Unlike Cancel’s previous endeavors, the timing of Performable was spot on. The company targeted marketers during a time when this group was often sidelined. Cancel and the Performable team found that their audience was pleasantly surprised by the way the team paid close attention to their feedback, and the speed with which Performable moved to make improvements.
Performable was meticulously catering to this group when they needed it the most. The digital responsibilities of marketing teams were exploding at the time, but the size of those teams remained unchanged. They also desperately lacked technical experience and resources, challenges that made it difficult to harness the flourishing power of digital marketing.
A strict focus on the customer acted as Performable’s guardrails, and kept their focus on building a product to suit the audience instead of the other way around. As a result, they were iterating every day. While they had built an A/B testing model, their real information came from talking to customers. Cancel recalls that customers would often to say that Performable’s “answer to everything was to hit ‘refresh’ because we were iterating that quickly, and that is what blew them away.”
Talking to customers sounds simple, but it’s actually not so easy to do. In fact, it’s really hard work. Every member of the Performable team was talking to customers every day. At least once a month they were releasing a new home page and pricing model based on the feedback they received from users.
Performable grew from three members to more than 20 and received $3 million in investments. As a local competitor, Performable quickly gained the attention of HubSpot. Both companies were based in the Boston area, and every time HubSpot would lose a deal, the name Performable came up. At the time, HubSpot had a world-class sales team, but wanted to increase their technical depth. Performable was a perfect fit. After five attempts, Cancel finally agreed to sell his company to HubSpot.
This Guy is Spooky Good
Soon a friend asked him to send over the tool for his own personal use, and since it was easier to just post it in the Firefox plugin store than it was to explain the installation, that’s what Cancel did. Before he knew it, what became known as Ghostery had 30 million users, made up of everyone from grandmothers in the Midwest to executives in New York. There were other tools out there that provided the same information, but they were super technical and not at all user friendly. Ghostery was the perfect mix of form and function.
When Google released Chrome, Cancel ported the tool over and eventually sold it to Evidon, which has since changed its name to Ghostery and grown the user base from 30 million to more than 300 million.
Ghostery turned out to be an “accidental thing that grew out of control—in a good way!”
His Current Squeeze
Partnering with his VP from Performable, Cancel launched into his newest venture, Drift. A company focused on helping businesses understand and communicate with their customers, Drift picks up where HubSpot and Performable leave off, by providing live chat functionality within the application. The way Cancel sees it, “mobile messaging is in its infancy.”
The expectations of communication have changed dramatically over the last few years. “Everyone has gotten comfortable with Facebook Messenger and SMS messaging.” Snapchat, WhatsApp, and Facebook Messenger are becoming the default communication tools. Cold calls fell out a long time ago and email inboxes are flooded, which is forcing teams to move to platforms like Slack to communicate. This shift presents a challenge for companies that still want to communicate with their customers, and this is where Drift steps in.
When asked about achieving product-market fit, Cancel says that in some ways Drift has definitely found it, while in others there is still room for improvement. However, the first generation of the tool has been well received by a market that, like the audience in his Performable days, is underserviced.
Drift itself grows its customer base using inbound marketing—creating content that resonates with their target audience has proven to be the most effective way to achieve growth. He advises other entrepreneurs to do what he has done: “Double down on what works and ignore everything else.”
Out of Drift’s 16-person team, three are dedicated to producing and promoting content (blog posts, slideshows, and videos) full time. However, that doesn’t mean that the others are off the hook. Every team member talks to customers and every team member writes. Internal blog content is promoted to existing users via in-app messages and plain text emails that are written by real humans to be both funny and engaging.
How To Bring an Idea to Market—Advice from a Pro
So by this point, you have got to be asking yourself how he does it. How is it that everything Cancel touches seems to turn into entrepreneurial gold? His first rule is, “Assume every idea you have is wrong.” From Cancel’s perspective, this mindset makes it possible to get out there and test with gusto. In reality, “at least 10% and as much as 100% of your idea is wrong.” Testing and iterating is the only way to figure out what is wrong and ultimately fix it.
Second, plan the market and NOT the product. When setting up Performable, Cancel remembers that he went from a person fixated on an idea to someone who cared deeply about a specific customer and the team he needed to fix the challenges they were facing. From there, the product grew organically.
Much of Cancel’s ability to bring ideas to market has to do with the work ethic he witnessed in his parents as a child. He didn’t go to the best schools or have a lot of opportunities, so like many of us in the Foundr community, Cancel had something to prove. He operates in “an environment where I feel like I could outwork anybody, and that came from my parents.”
The experiences of the last 16 years have taught Cancel the value of perfect timing and approaching each venture with a focus on the customer and not the product. As a result, he has found wild success in developing companies that meet a need and quickly change when needs change.
B2B – Back-to-Basics Rules from David Cancel
- Behold the power of no – Cancel’s default answer to investment offers and acquisition attempts is no. How does he get companies ready to sell so quickly? He jokes: “I try not to sell them—how do you get beautiful people to date you? Ignore them!”
- Be obsessed with learning – The motivation to keep getting better flows from Cancel’s obsession with learning. “I always feel like I could be better—that keeps me hungry.”
- Don’t believe the Hollywood Myth – the Hollywood Myth is the belief that you will be struck with an idea that will be wildly successful without any testing or tweaking. It is a “false idea. It is a Hollywood story and those people [who believe it] scare me.”
- Play the game of iteration – Never stop improving on your products. “The first version is never the final version—it is a game of iteration.”
- Firsthand feedback is best – “Firsthand customer feedback is the easiest thing to give up as you scale.” Stay vigilant!
- What it takes to create a successful product
- How to listen to your customer and what you can learn from it
- What kind of feedback you should listen to and what you should ignore
- The secret to iterating effectively and how you can start improving your own products
- Where to find the right audience and what it means to serve them
Full Transcript of Podcast with David Cancel
Nathan: Hello, and welcome to another episode of The Foundr Podcast. My name is Nathan Chan and I’m coming to you from Melbourne, Australia. So, thank you so much for taking the time to share your earbuds with me. What’s been happening in my world? We’re working on this awesome product that we’ve had in Beta for the past, oh, close to five months now called Foundr’s Club. And essentially, it’s a way that we’re going to be able to connect our community together because we’ve got all these amazing people in The Foundr community that read the magazine or listen to our podcast, you know, follow us on social, read our blog, part of our newsletter. And we wanna connect those people. We want a way for our community to get together and just make a ruckus. And it’s so important to be surrounded by like-minded entrepreneurs and it’s even more important to learn from other entrepreneurs. And that’s why, you know, we’re bringing in monthly mentors. We’re doing all sorts of crazy things with this product. So I’m really, really excited about that. That’s what we’re really focused on at the moment.
And the team is growing really fast, which is cool. We’ll be close to seven people now, part of the team. Awful time which is super exciting that things are growing really fast. And, you know, this wouldn’t be possible if it wasn’t for you. And, you know, I’m talking to you right now listening to this podcast, spreading the word, sharing our message, and just supporting our brand. So I just want to say thank you. Thank you for taking the time. Thank you for listening. Thank you for your attention, and thank you for believing in us. But thank you for believing in somebody. For those of you that are new to our brand, thank you for believing in somebody that exactly three years ago, knew nothing about entrepreneurship, nothing about design, nothing about apps, nothing about interviewing, nothing about editorial, nothing about anything that comes to do what I do with this media company. So, yeah, guys, I just wanted to shout out to every single one of you guys that is supporting our brand.
All right. So, about today’s guest, his name is David Cancel. And this one was a cold pitch, actually. We get pitched so often it’s so difficult. You know, we have to say no to most of these pitches. But this one was really, really good. This guy’s name is David Cancel. He’s the founder of a company called Drift. And before that, he’s built and sold four other companies at astronomical rates. His last one he sold to HubSpot. And this guy is an absolute freak, absolute weapon entrepreneur, and there’s so much that you guys can learn from him. I know you’re gonna love this. The way this guy thinks is exceptional and there’s so many things you can take away. He has so many golden wisdom nuggets, however you say it, wisdom golden nuggets, whatever. There’s so much gold to you, guys. That’s it for me. If you are enjoying these episodes, please do take the time to leave us a review.
All right, guys, that’s it for me. Now let’s jump into the show.
The first question I ask everyone that comes on the show is, how did you get your job?
David: That’s a great question because I’ve been trying to avoid a job my whole life.
Nathan: So, tell us about that.
David: So, you know, I grew up with two parents who immigrated to the United States and both of them had a kind of solo businesses. And I won’t call them entrepreneurs because that probably sounds too glamorous, but I kinda grew up around that household which is common. And so I thought, you know, everyone work seven days a week and we’re kind of, like, all in on what they did. And once I got out into the real world, I realized that I was rare and that most people aren’t like that. And so, I kinda grew up wanting to become an entrepreneur. And I really didn’t know what that meant as a kid. You know, I saw magazines like Entrepreneur Magazine on the news stand or Ink, or other magazines. Today, it would be something like Foundr mag, but I had no idea what they meant. You know, I looked inside those magazines and all I saw was, you know, franchises and kinda get rich quick schemes. And so, I had no idea what it meant. But that was always in the back of my mind and I guess that’s how I got to where I am today.
Nathan: I see. So, what was your first company that you started and how did that come about?
David: So, my first company, I was part of a founding team. So, I joined two other people who really started the company, and that was a long, long time ago. And basically, we built what would be today Facebook. It was called Bolt, bolt.com and it was kind of everything you could think about as you see today in Facebook except, you know, 10 years before Facebook. So, super duper early. And we got that to millions and millions of users and kinda went to file to go public. And then, you know, the market crashed in 1999. It never went public but I learned a lot and later it got acquired. And so after that, I went off and started my own company called Compete in 2000. And really just by…almost all my companies have been the same thing. I kind of had an obsession around an idea or a problem, I should say, and then they kind of turn in snowball into a company.
Nathan: I see, because you have… The way I came across was your growth guy got in touch with me and he mentioned that you’ve started and you’ve exited five companies, your five X.
Nathan: That’s a lot of exits so I’m really curious, how long have you been a founder for and started to build and sold companies?
David: A long time. So, the company I first started on my own was Compete and that was 2000, so 16 years ago. Although I was part of two other companies prior to that. And they’re kind of an internet speed, you know, like a year and a half, which felt like 5 or 10 years back then, you know, when things were really booming in their first craze. And so learned from those two and then started my own in 2000. And since then, you know, five companies and have invested in a ton of companies, and I’m an adviser to a bunch of funds and companies. And so, yeah, I live and breathe this.
Nathan: Yeah, yeah. Look, I can see, it says you’re an adviser, investor, or director to BigCommerce, Help Scout, Rapportive, Yieldbot. There’s some companies that I’m quite familiar with here. So, I just wanna delve in and really understand, you know, what makes you effective? Like, how is it that you’re able to build and sell five successful companies in the space of, let’s say, 16 years? What is that? What is allowing you to do that? Because, you know, I have mentors and they’re still be working on that same company for 15 years, it might be a $300 million company.
Nathan: But still, like, you know, what is it that makes you effective?
David: Good question. I think one is, I’m obsessed and I kind of grew up in my obsession, manifests itself in the companies. And I grew up in, kind of, an environment where I thought like I could outwork anyone. And so, you know, that came from my parents. And I think a lot of people come up and learn and go to school or go to college or learn informally but they stop learning. And I’m obsessed with learning and my companies are kind of a by-product of that because I’m obsessed with getting better, right? That’s a nature of all organisms on our planet is growth, right? But many people stopped growing. And I am obsessed with growing and getting better, and that’s what keeps me starting companies. And I always feel like I had something to prove and that I haven’t really figured it out yet. And that I could do better on the next one and it just keeps me going and keeps me hungry. I’d say I’m hungrier than most and that kind of fuels me. And maybe it comes from, you know, growing up and feeling like, “I didn’t go to the best school. I didn’t have the best kind of opportunities and I had just pushed through it and break down through walls. And I think that’s what separates me when I look to other people around me who have worked for me or who kind of give in before I would give in. And there’s no give up with me.
Nathan: I see. So, for example, one of your companies, Performable, was acquired by HubSpot in, it looks like 2011. You started that company in September 2009, so that’s just down to two years that you built and sold that company. Like, that’s a really short time frame, man. I’m really, really curious how an opportunity like that comes about, like how did that happen? You know, even your other company, Ghostery, which was acquired by Evidon, you know, it was used by more than 31 million people around the world. Like, how do you build these companies that fast and sell them? Like, there must be more to it and I really wanna delve deep on this, David.
David: So, you know, I’m happier that Ghostery, when I sold it, you know, there was 30 somewhat million people were using it, but today, 300 million people are using it. So that, I’m more proud of that.
Nathan: Yeah, wow.
David: So, it’s a good question. You know, I started…I feel like with all my companies, I’m getting one place where I will say that I’m getting better is my timing. And you can never have full control over this, but I’m getting better at the timing aspect. You know, I’d say my first company I was a part of, which was Bolt, was probably 10 years too early. And this is common for entrepreneurs. Then my next company, Compete, was probably five years too early. And you just keep going down the line. And that with Performable, I was pretty much right on the money. And I’d say that the big learning that people could take away is that my approach really changed from that first company to by the time I had done Performable.
And what changed was most people who started companies that I meet are obsessed around an idea that they have, right? So they have some idea, they’ve listened to the Hollywood stories, and they had some idea in their shower or walking to work one day, and then they’re obsessed around making that idea into reality, those people scare me. That was me. That kind of idea scares me because it’s a false idea. The idea that you just had, an idea randomly, and that idea becomes the thing, has never been the case. I met thousands of entrepreneurs, thousands, and that has never been the case once. That’s a Hollywood story.
If you go and look at anyone who makes anything in the world, whether it’s an artist who paints, whether it’s a writer who writes, whether it’s a furniture maker who makes that piece of furniture, or an architect, they will tell you that the first version is never the final version, right? It’s a game of iteration, right? And for some reason in technology and in starting companies, we’ve been sold this false idea that the first version is gonna be the one. And so I’m just gonna push through on my idea. And if I just put my head down, my idea will become reality, but that’s not the case. And so the big thing that changed for me is I went from a person who is obsessed around ideas to by the time I started Performable, I was…I don’t give a shit about ideas anymore.
What I cared about was a market, a specific customer that had pain in that market, and a team that I wanted to work with. And that was the triangle for me. And yes, of course, I had a million different ideas and everyday I will have an idea and trip over the number of ideas that I have each day, but the ideas don’t matter. What matters is identifying the market and, in my case, customers who have clear pain, zeroing in on them with a team and iterating non-stop until you build a thing that those customers need.
Nathan: So, speed. You said that you’re obsessed with growth. And I can see, you’re obviously obsessed with speed. Like Performable, one year, 10 months, you’re acquired by HubSpot in that space. How did you build, like, how did you make that company ready to sell? How did you form that team? How did you validate that concept so quickly at scale?
David: A great question. Yeah. So we, you know, by the time we started Performable, I had this obsession around speed and around, you know, the type of product people, whether that’s engineers or designers, or just product folks that I wanted to work with. And I assembled that team and then we had a kind of strict focus on a specific market and a customer we’re going after. We didn’t know the exact product that was gonna come to bear but we knew those two things. Those were kind of what we would call our guardrails, right? So, on one end you have customer…
Nathan: How many were in the team?
David: What’s that?
Nathan: How many were in the team? Sorry, I’m really curious.
David: In the beginning? It was, you know, three or four of us. By the time we got acquired, it was 25, 26, something like that.
Nathan: Wow. And did you raise, did you raise capital? Do you raise capital for these projects? Are they self-founded?
David: Not all of them. But for Performable, I did a raise. It was a hard time in 2009. I raised $3 million. By the time we got acquired, we had more than half of that money still in the bank.
Nathan: Yeah, wow.
David: Yeah. So, we were, and I am frugal to this day. And so what we did was cheap, you know, as my wife would say. So, what we went, we got the team, we focused on the market and we focused on the customer. And then we had this discipline of iterating every single day with customers. And I remember to this day, we still have customers that we talk to from back then who said our answer to everything when we would talk to them was, “Hit Refresh”. Because we would implement things that quickly and that’s what blew them away as a customer, right? And our customer was a marketer, much like the customer of HubSpot. And so they were, one, not used to product or engineering people paying attention to them. Two, they were not used to people operating at our speed. And what we were doing was learning each day because we had this framework which I still have to this day which is assume all your ideas are wrong. Everything that we…whether it’s a feature idea, company idea, what have you, it’s wrong.
And now, your job is to ship as fast as possible so that you can go out in the market, validate, test, learn, run some repeat so you can figure out how wrong you are. Were you wrong by 10% or were you 100% wrong? You know, it’s usually somewhere in between those two numbers. But you are, by default, wrong about some aspect of the company, the feature, the concept that you have, so get out there as soon as possible. And to give you an example, you know, during that time, which is a very short time, you know, it’s like 18 months, we had, at minimum, an new homepage. And you can see this on the way back machine, and a new pricing page at least once a month. Minimum, once a month.
David: Radical changes in our product and our pricing model.
Nathan: And how are you working at what was right and what was wrong?
David: By talking to customers. Doing the thing that people don’t wanna do, which is, you know, we built an AB testing product at Performable and at HubSpot. But we as, you know, and I’m saying we as engineers, right? I’m talking to myself here. We, as engineers and business people, want to get lost in numbers. And I love numbers as much as anyone else. But the hard truth is out there when you talk face-to-face with customers or, in our case, we would do it over Skype or we do it over phone, or do it over IM, or email, but we were talking every single day. Every single person on the team talk to customers. And that’s how we were gaining the truth each day. And it’s something that is so simple but it’s not easy to do. Most people will not do that.
Nathan: I see. So, I’m curious around, like, let’s focus on Performable. You know, you’ve started many other companies and sell them quite quickly. So, take us through the process. You know, Performable, you came up with this idea. How did you find this idea? Because you seem to finding ideas. Like, you’re creating things that people wanna buy. At the end of the day, you’re selling things that people want to buy. So, what is the focus here around the ideas? You’re writing them all down as time goes on and then you’re saying, you’re picking one and you’re testing them. Like, was Performable originally what you had planned?
David: No. The market was and the customer was definitely what we planned. But the, you know, what the product was, it was definitely not what we planned. And that’s, you know, that’s kind of my point, right? That is what we are learning. So the way…and also, one other point there on writing things down, I’m against writing things down. I hate writing ideas down. And I’ll tell you why. I mean, you know, it works for my personality. I don’t like writing things down. One, because I never re-visit them. Two, if I do re-visit them, they just cause anxiety, right? I don’t need to create to-do list because on a to-do list, everything looks to be the same priority. And I meet too many people who have long to-do list who get everything down on their to-do list each day who don’t accomplish anything except, you know, check box on the to-do list, right? They’ve had no impact, real impact in the world, except to check boxes in to-do list.
So, I don’t believe in to-do list. What I do is I write things down to get them out of my head but I never re-visit that stuff. And then, the ideas that keep coming back to me that, you know, no matter how hard I try, I try to get them out of my brain but they keep bothering me, those are the ideas that I pursue, right? I wait for those to keep coming back to me even though I bring them down, try to get them out of my head, those are the ones that I pursue. And that’s how Performable came about. I was thinking, with Performable at that time, 2009, one of the problems that I saw was, you know, Compete, I had done a company before that which was really focused on measurement. And one thing that I thought after we sold that company, it got acquired in 2008, 2007-2008 by a company called WP. We got acquired for $150 million. What I thought after that was, like, “I’m never gonna do an analytics company unless it was tied to action.” Because I had sold analytics for so long, the marketers could not take action based on the analytics, right? Because they didn’t have developers, they couldn’t do anything on their own. And so I said, “The next time I start a marketing company, I’m gonna focus on tying analytics with actions. And that is, today, we know as kind of marketing automation, right?
And so I focused on that area. And then one specific twist that was bothering me and that was that all the social media sites were emerging. And even though marketing team’s budgets were growing year over year, the number of people in the marketing team really wasn’t growing. And so all of a sudden, in a few years, you went from an online marketing team having to worry about maybe SEO, their website, maybe some email marketing that they’ve joined. And maybe they were playing a little with ad words, to all of a sudden having to worry about those things: Twitter, Facebook, Pinterest, a mobile strategy, both iPhone and Android, you know, push notifications, etc., etc. And so I thought, how are they gonna deal with this? Same size marketing teams, no technical people on their team traditionally. And so, what are they gonna do to deal with this problem? And that is the birth of Performable.
Nathan: I see. And how do you make your companies ready to sell so quickly?
David: I try not to sell them, actually. It’s gotten in.
David: You know, that’s how most things work in life, right? You go the opposite pattern, right? How do you get beautiful people to date you? Ignore them, right? How do you get your company ready to sell? Try not to sell them. I have the same advice on fund raising. I’ve raised a lot of money in my days and people asked me, “Okay, how do you go and raise money?” I do the opposite. I try not to raise any money. And when people who want to give me money, try to give me money, I tell them, “No, I don’t want your money.” And there’s honestly in that.
Nathan: So, how do you end up taking it?
David: I ended up taking it later if we need it for the business. But my default is no, because my default is, “I’m focused on the business. I don’t have time to go running around talking to this venture person, that angel, this whatever. I need to focus on the business.” And to those people, those investors who are the ones who are used to always say no. No one ever says no to him. When I say no, it puts them back on their heels, right? This is a classic sales technique. Although in my case, it’s not a technique. I’m not trying to do it as a sales gimmick. It’s just true. I’m trying to focus on the business.
And then also, when they hear that, I’m more focused on the business than going around and having lunch with them, the more interested they are in the business. Because they say, “Oh, there’s someone who’s actually focused on the business and doing exactly what they need to do instead of chasing me around the block,” right? It’s called dating dynamics.
Nathan: Oh, I see. So, how did the HubSpot acquisition come along?
David: So, the HubSpot acquisition came along, one, because we were moving fast and growing quickly. Two, HubSpot happened to be in the same area as us in Boston. And then three, we kept coming up as a competitor in deals that they were in. Right, so this is always what you want. So there were deals that they were losing that we were coming up in. And, you know, I didn’t know this at the time. They also had a desire to want to go up market and our product was more upmarket, right, more technical than what they had back then. And then I didn’t know this as well at the time, but they had an incredibly strong world class sales and marketing team there, still do to this day. But, you know, they internally felt like that they needed to, you know, turbo charge or boost their product and engineering team. As an outsider, I didn’t know any of this. And so they were looking around and they happened to keep hearing our name and had heard of us, and kinda knew some of us from old days. And so, that’s how it happened. And, you know, it was probably, within that short time frame, maybe four or five times that they had tried to acquire Performable before we decided that it made sense.
Nathan: Yeah, wow. And what about Ghostery? How did that come about? How was that exit? Like, because how did you build that tool to have, you know, within that space of, you know, you said they have 300 million people around the world using this, gone and visiting the website now. But in the space that you built it about a year, you know, you had 31 million people. How did you build something like that so fast and how did that come about?
David: You know, Ghostery is probably my craziest one in terms of…in a couple of different ways.
David: Yes, speed for sure, one. And also, that I kind of ignored it. It wasn’t really a business focus even though I managed to have all these people using it, right? It was kind of like this accidental thing that kinda grew out of control in a good way. So, Ghostery was something that I built, a tool that I built, for myself. And it was super geeky, right, so I didn’t think anyone in the world would care about it but me. And it helped, it let me know what other, what third party job description were running on the site that I would visit. So, you know, if I go to foundrmag.com I could see, like, “Oh, they’re running Google Analytics and they’re running – I’m just making this up – Marketo and they’re running MailChimp and they’re running, you know, the Saddler[SP] product and Zendesk, and this, and that.” And I didn’t think anyone would care about that. And, you know, they’re running this ad network and Facebook Pixels, and all this kind of geeky stuff. But a friend of mine in San Francisco, you know, saw it on my browser, and this was a Firefox browser at that time, this was a plugin that I built. And so he asked me to release it so that he could use it. And I thought, “Okay, he’s equally as geeky as I am but no one else is gonna care.” But it was easier for me to put it in the Firefox plugin store back then. Then it was for me to basically tell him how to install it. And so I put it on there and it kinda grew out of control on its own.
And it wasn’t the first in its category, right? There were a lot of it. It turned ability, a privacy tool, right, so that you could see what’s running on a site but also block those, the things. Let’s say you don’t want double click or you don’t want to see ads, you could use Ghostery to block those ads. It wasn’t the first. There were lots of other tools out there but mine was the first that was really focused on having a friendly experience. You know, we had the little…I had the little ghost, I had the, you know, the mini Ghostery. I kinda packaged it more like a brand and has a friendly website versus everything else was like really technical, really hard to use. And so, you know, my tool was a tool that, you know, literally grandmothers in the Midwest would use and email me about and CEOs that, you know, in New York would install in their browser. Right, they would never install some of the other technical tools out there. And kind of it grew on its own. But, you know, the whole time it was growing, it was really…it was just a plugin in the website that I built, that was part of it. And then I imported it over to Chrome, when Chrome was about to launch extensions.
But the whole time, I kept dismissing it and say, “This isn’t really business”, right? Even though there were millions of people using it. “Ah, it’s just a little toy that I did on the side.” But I kept getting companies that were interested in buying it, and this was about the time that I was getting ready to start Performable. So, I talked to a number of them and I agreed to sell it to a company in New York. Back then, they were called Evidon. They’ve since renamed themselves to Ghostery. That’s how the Ghostery became bigger than their core business.
David: Yeah. And so they’re, you know, there’s 300 million people using it now. Ghostery, the company is, at last, count over a hundred people with offices in Utah and New York City, and they’re growing nicely. And so, you know, that’s a happy story. But a thing that, you know, I looked at now, I could look back and then be like, “Wait a second, those are big businesses there”. But I kinda dismissed it because it was, you know, I’m used to doing more B2B things and it was more consumer thing and I kind of viewed it as, you know, as a toy.
Nathan: Gotcha, gotcha, gotcha. I’m very, very grateful for your time, David, but we have to talk about your latest company now. So, you sold Performable to HubSpot, you worked at HubSpot for a few years and you’ve been doing a little bit of angel investing, and advisory, and stuff like that. But now you’ve started a new company about a year and a half ago called Drift. So, tell us about Drift.
David: Sure. So, as you said, I, you know, we sold Performable to HubSpot. I was there for three and a half years and I ran engineering product, operations, anything that had to do with the product. And then we got to a point where we were about to go public as a company. And, you know, when we got there, the company was maybe 200 employees. By the time I left, we were well over a thousand people.
David: Yeah, crazy. My team alone was, you know, 200 people by then. And we had, you know, offices in actually Sydney, we had offices in Dublin. We were about to open offices in Singapore and, of course, here in Cambridge. But, you know, I reached a point where there was so much to do and learn but the things that I felt, the things that I would learn after we went public, more into things that I really wanted to learn, right? I really wanted to see that scale from 200 to 1000 people, from private to public, and to learn all the things that we went through in that short time frame. And so I decided to leave. I didn’t know what I was gonna do at that time. And my co-founder from Performable who’s one of the VPs of engineering at HubSpot, he decided to come with me. And so we went off and said we’re gonna start a new company. And that’s how we started Drift.
And at Drift, we’re focused on helping businesses understand and communicate with their customers, right? Really simple. At HubSpot and at Performable, and my past companies, I’ve been focused on helping companies get more leads and turn those leads into customers. But when they become a customer, that’s the end of HubSpot, that’s the end of Performable. And at Drift, we’re focusing on everything after you convert someone into a customer. How do you communicate with them, how do you do that now that everyone’s used to Facebook Messenger and chatting, and SMS, and this. And everyone has a different kind of view on communicating that didn’t exist, you know, even a few years ago. And so we’re helping businesses with that.
Nathan: Gotcha. So, is it kinda like an intercom kind of play or…?
David: I’d say we have some stuff that’s, you know, overlaps with them, the live chat stuff on your site. So, you can do that stuff. I’d say, you know, all the website and mobile messaging stuff for businesses is at its infancy right now. We’re just at the beginning. And we’re gonna see a lot happening in this world. And so, you know, there are the old players like live chat and a couple of other, you know, smaller public companies that have kind of focused in on this area more from a support standpoint. There are newer folks like intercom and a few others, and then there’s the newest of them all, which is Drift.
Nathan: Gotcha. So, you heavily believe that the way things are moving is a lot of in app kind of stuff and communicating within the app, whether it’s web app, whether it’s mobile?
David: Absolutely. So, you know, I think we see it because we are living through the shift, myself, you, others. We see it as kind of a new thing that shift. But everyone, including emerging markets that are just coming online now, with main experience is through this kind of one-to-one communication, right? Whether you call it chat or messaging or whatever you call it, it’s not a shift for them, right? This is the world that they have existed in. And we’re playing catch up in some ways to the shift, right? You go and you look at whether it’s WeChat or other apps within China, you look at apps that are emerging within India and other emerging markets, and this is the default, right? And those populations are way bigger than the existing populations online. We are kind of learning from them.
And so, I do think people are headed that way. Even here in the U.S., my daughter, this is the way she communicates. People on my team who have just graduated from college and coming on board, this is what they do all day. Whether it’s SnapChat or Facebook, or WhatsApp, or whatever, this is the default mode of communication. And so, absolutely, we think that businesses have to move this way and we think in a world where less people are paying attention to cold calls on the phone. And now, you know, even your emails being flooded and people wanna move to whether it’s Slack or HipChat, or other chat mechanisms, they wanna move out of email. How are you gonna communicate with your customers? How are you gonna communicate with your leads and prospects? The best place to do that is the place that makes the most sense for them which is while they’re actually using your product.
Nathan: Yeah. I know, I really like what you’re doing here. And I’m curious, you know, have you found product market fit right now with Drift and you’re in scale mode? And tell us how you plan to scale this company like you’ve done all your previous companies?
David: That’s a great question, right? It’s not one that we think about all the time. Let’s say in some ways, we definitely think we hit product market fit because this is a category that, although underserved, has existed for a long time on the web.
Nathan: This is hot.
David: And it is… Yeah. And this is, you know, chat, you know, whether in app chat kind of stuff that you see with the e-commerce sites or support sites. It’s been, in our opinion, badly done. There’s a lot of room for improvement and, at least, there’s been this first generation attempt at it. So, in some ways, we could say, yes, we’ve hit product market fit there. There are public companies who do nothing but this functionality. So, it’s not like we’re inventing, you know, a new form of transportation that’s never existed.
David: So it does exist. So, in some ways, we’d say that. But in the other ways, in all of the innovative ways of, in which we want to push and go, and we think that we can transform this channel. We think we are still kind of in defining, hitting product market fit, right? Pre-product market fit on some of that stuff. And so we’re kind of balancing the two of those things. You know, we can go to market and scale right now with the existing pain that exist and then continue to innovate in the newer forms and newer ideas that we have around the way that this kind of channel can be redefined.
Nathan: Got you. So, you’re saying that you believe you have something here. You’re not 100% but you will continue to scale and iterate as you go on?
David: Yeah. I’m saying, you know, using the old framework and you call that live chat. Let’s call it live chat. We can grow, scale, and we are a product market fit in every way that I know how to measure that. And we can go to market with that. I think we can innovate beyond that and I think the opportunity is way bigger than just what we would consider live chat today. And that will be something that unfolds over time.
Nathan: Got you. So, you know, what is your number one source of customer acquisition right now for Drift and tell us about that?
David: Sure. So, it’s no surprise, it’s inbound marketing. It’s the stuff that we preached at HubSpot. And, you know, whether you call it content marketing, inbound marketing, it’s through creating content that resonates with, you know, the type of users that we’re going after and it’s our number one channel for acquisition. We experiment with lots of different other ideas and concepts, but the thing that we keep coming down which is the lesson that I try to remind myself every day but it’s a hard…it’s simple lesson but not easy to implement which is double down on what works, ignore everything else. That sounds simple, it’s not. And so we always have to remind ourselves the thing that works for us is the remarkable content that we put out, double down, double down, double down. And only start to look elsewhere when we see that slowing down or had stopped, you know, it’s becoming less effective. But we haven’t seen, you know, anything close to that. But it’s a hard thing to remind ourselves all the time.
Nathan: Yeah, wow. So, if you guys are just doubling down inbound marketing, I’m curious how many writers do you have? How many people in your content team right now?
David: Yeah, we’re tiny. So, we’re like a 16 person company right now, and three of those people are on the content side, in marketing. You know, I do writing as well as our PM. So, we all kind of back to like how we were talking about at Performable, how we all talk to customers. And we all talk to customers here at Drift. We also all write to some degree. But we have three people focused on that and then we have other people who are either friends who are guest writing or people that we use as contractors to kind of supplement that, but that’s hard. You know, they have to be at a certain quality level for us to want to do that. And so, you know, as you know, those people are rare. And so when we find them, we jump on it. But otherwise, we rely on internal content.
Nathan: Gotcha. So, how many piece of content do you produce per week?
David: You know, our goal is for each of the full-time people in marketing that they’re putting out three pieces each week, right, in different meetings. And that’s not just blogging. So that could be blogging, video, that could be Slideshare or SlideDecks, internal, private, different forms of content. They’re usually putting out more than that. But the thing that we try to lean into here is it’s not just about putting out the content but it’s the follow through, right? Each of those people have to be in-charge of their own promotion of promoting it, of making sure that it’s getting promoted in all the right places, and that’s happening over time, right? And as you know, that takes a lot of energy. In a lot of cases, a lot more energy than writing the piece. And so it’s three pieces but they really have to focus on driving the numbers on those pieces.
Nathan: Gotcha. And out of curiosity, if you guys did an internal blog post on the Drift site, what are the best forms of promoting that content? What were the best tactics that you could share?
David: You know, we have always our existing customers and our existing users. So we have, right now, you can go to Drift and you can sign up to get our product completely free for your website. And pretty soon, in a week or two, you’ll be able to do that for your mobile app as well. So, it’s 100% free for as long as you wanna use it, very similar to kind of a Slack model, free forever, right?
And so, our number one promotion is to those users. And so, we do that, of course, in app. It’s the best conversion rate on that. And then second to that is emails that we will send out to that group. And we try to do emails that are…don’t have much graphic or they look like plain text emails and they are plain text emails from real humans, right, not automated emails. And we write each of those and they’re funny. And we spend a lot of time focused on the words and those and test them a lot. And those other ones that, you know, perform the best.
Outside of that, you know, we…depending on the people that we’re going after, something like a product manager, a site like Quibb which, I don’t know if many of your listeners know about it but it’s QUIBB.com. It’s a small site, very small site, mostly folks in Silicon Valley who use it. But if you wanna get at it, you know, take a look at it and look at the demographics at it, it’s got a really great demographic and we get really great engagement from that site. And, of course, we do the other sites and Twitter and Facebook, and Instagram, and etc. But it really depends on the piece of content.
Nathan: Gotcha, gotcha, gotcha. Well, look, David, time is almost up and we have to work towards wrapping up. I have one more question, and I think I’d be doing a disservice to our audience if I didn’t ask you this. But when it comes to scaling a company, do you have a set of rules or framework, or anything you can follow once you know these same product market or go-to market, like you’re ready to go to market?
David: Yes. And I’ll be happy to… I had some rules that I live by, you know, heuristics, I should call them instead of rules, right? And I’m happy to share them with you so you can share with the group, with your listeners. But they are kind of like what I was saying about being simple, not easy. They are kind of very simple back-to-basics. We call them B2Bs and internally back-to-basics that we need to make sure that we pay attention to. Everything from talking to, you know, first-hand customer feedback, right? As you scale the easiest…one of the easiest things for you to give up is first-hand customer feedback.
Also, when you’re getting second-hand, third-hand, counter bits and fourth-hand feedback, and you need to stay vigilant as a team on always first-person feedback, right? You don’t wanna play telephone with that. And so, we wanna make sure, as a team, that we stay on, as we scale first-person feedback. And there’s probably 10 things on there that we’re focusing on but that’s, you know, number one at the top because we are customer driven.
Nathan: Awesome. All right. Well, look, we will wrap there, David. But thank you so much for your time. I really, really appreciate it. You have to go now, right?
David: Yes. It’s been a pleasure, Nathan. Thank you for having me on. I appreciate it and I love what you’re doing.
Nathan: Thank you so much.
David: And, you know, I follow your Instagram account religiously.
Nathan: Thanks, my man. Awesome. Yeah. For us, that’s what we’re doubling down on.
David: Oh, I see it. I see it. That’s where…and I’m always sending it to people internally. “Look at this, look at this.” Because I’m, you know, pope master. So, I love what you do.
Nathan: All right. Thank you.