Rand Fishkin, Founder, SparkToro
The Remaking of Rand Fishkin
With a new book, a new startup, and a chip on his shoulder, the Moz founder and SEO legend is challenging Silicon Valley.
“Howdy, Moz fans!” It’s the catchphrase that’s greeted more than a decade’s worth of Whiteboard Friday viewers, uttered by one of the most recognizable faces in SEO.
With his quirky-yet-helpful insights on topics from meta descriptions to long tail keywords, Rand Fishkin, the founder and former CEO of Moz, became a mainstay in the digital marketing community. But as he’s learned the hard way, business success doesn’t ensure personal well-being.
“I’ll tell you a crazy thing,” says Fishkin, now the founder and CEO of new influencer marketing startup SparkToro. “I’ve been happier in the last two months running a company that, you know, has to do everything—it’s still not even off the ground yet—than I was probably for the seven or eight years prior with Moz.”
Fishkin built one of the most influential SEO companies on the market, but he had been struggling emotionally for years, and navigating a strained relationship with his own company that ended with his departure earlier this year. Now he’s got a new company in the works, and a new book that openly delves into the personal and business lessons he’s learned, while countering a lot of conventional wisdom in Silicon Valley that he finds highly problematic.
Of course, even if he hung up his webcam and retired today, Fishkin’s career with Moz, which sells SEO software for marketers, would be impressive enough. The company boasted $47.4 million in revenue and 36,000 customers in 2017 alone. But even with the achievements of his previous company, Fishkin still feels he has work to do.
“Some of it definitely was a perception that there’s opportunity in this market,” he says of his decision to start SparkToro. “But I think there’s also a big part of it that’s a chip on my shoulder and feeling that I have something to prove.”
The Long Tale of It: How Moz Came to Be
Like so many legendary startup founder stories, Fishkin’s begins with him dropping out of college. But that’s where the similarities end. As he tells it in his new book, Lost and Founder, a love of entrepreneurship wasn’t what inspired him to leave school. It was the high cost of college, a lack of perceived value, and a broken heart from an ended relationship.
And instead of teaming up with a scrappy engineer to build a software product, Fishkin paired up a with a marketer (who happened to be his mom) to start a consulting firm. In 2001, they began designing websites for small businesses in Seattle.
From the outside, business was going great—the three-person team worked in an expensive high-rise office tower—but beneath it all, he and his mother were concealing a heavy burden. To finance their struggling business, they’d dug themselves into $500,000 in debt that not even Fishkin’s father knew about.
In 2004, Fishkin traded the high-rise office for a dingy (and much cheaper) office above a movie theater. That same year, he launched SEOmoz.org to blog about his thoughts on the burgeoning field of search engine optimization.
Eventually, the blog turned into a software business, churning out SEO advice and tools that were snatched up by marketers everywhere. From Moz forums to Whiteboard Fridays, everyone in the online marketing world looked to Fishkin for the latest and greatest on SEO. You can thank Moz for things like Domain Authority (DA), which is still the go-to score for determining how well a site might rank in search engines, and “The Beginner’s Guide to SEO,” a nearly 40-page blog post Fishkin wrote in 2005 that still lives on Moz.com to this day (with updates, of course).
Because of his experience hiding his early consulting firm’s troubles—and the stress and pain resulting from it—Fishkin adopted a leadership style that helped Moz become known for its radical transparency. For example, the marketing software company regularly shared financial reports on its blog and publicly discussed its strategies and struggles.
“If you ask me why I’m so open,” Fishkin writes in Lost and Founder, “so bluntly honest about things that the startup ecosystem and business culture usually urge us to keep silent, this is why. I’m done with the pain of secrecy.”
On Leaving the Company He Founded
When Fishkin left Moz in early 2018, it sent shockwaves through the SEO community. What had happened? Did he get fired? Fishkin cleared the air in an open letter posted on the SparkToro blog, writing, “On a scale of 0-10, where 0 is ‘fired and escorted out of the building by security’ and 10 is ‘left entirely of his own accord on wonderful terms,’ my departure is around a 4.”
Looking back, the transition happened in stages, which were announced publicly. In January 2014, Fishkin wrote on the Moz blog that he would be stepping down as CEO in favor of the less-defined role of Individual Contributor.
Fishkin tells Foundr that he decided to make then-COO Sarah Bird the CEO after speaking with a board member and some of his executive team, who all agreed.
“In the state that I was in, my emotional energy and the things that I was bringing to the company were not good for the business,” he says. And of his decision to step down: “I don’t think that was the only way to handle it, but it seemed to me at the time like the best way to do it. And I have some regrets about that.”
After handing over the reins, Fishkin remained for another four years at Moz, which underwent a round of layoffs in 2016. “I had a lot of frustrations and a lot of contentious discussions and disagreements with the leadership,” he says of that time, adding, “We determined that we really couldn’t work together well anymore.”
Then in July 2017, Bird wrote on the company blog that Fishkin would “transition into a supporting role as a Moz Associate” over the next six to nine months.
Busting Myths With Lost and Founder
Ever eager to share his findings, Fishkin wrote a book for fellow entrepreneurs to study the lessons he learned the hard way. Released earlier this year, Lost and Founder: A Painfully Honest Field Guide to the Startup World, is one part tactical, another part personal, shedding light on topics most founders wouldn’t dare talk about publicly, such as debt, layoffs, and the $25-million acquisition he turned down (and regrets to this day).
With characteristic transparency, Fishkin skewers classic startup advice, but does so with humility and heart. And he’s not afraid to open up about his own life either, including his battle with depression and nagging impostor syndrome.
Why share all of this? So that the wider public can eavesdrop, in a way, on those heart-to-hearts that occur between founders in private settings. “I wanted to take the contents of those kinds of conversations and put it into a book,” he explains. “The fully transparent, not-hiding-anything, warts-and-all approach.”
With Lost and Founder, Fishkin wants to send this message loud and clear: You are not alone. “Those of us who’ve done this entrepreneurship thing sort of know that struggle, and I think it can feel very lonely having the sense that no one else in the world gets it.”
The Silicon Valley Trap: Advice Is Not One-Size-Fits-All
Part of Fishkin’s book turns a critical eye to the typical startup model. “The venture-backed startup is put forward as the fundamental model that everyone should be following or at least aspiring to,” he says. Not that venture capital’s a bad thing (Moz raised three rounds of it); it’s just not for everyone.
“The Silicon Valley bug, it sort of infects you with this idea that your startup should look like these other startups,” he says, which is fine if you want to be the next Google, Facebook, or Airbnb. But what if that’s not your goal?
“Even if you’re an entrepreneur who knows that’s not what you want to be or that that’s not what you’re going to be,” says Fishkin, “you still get inundated with advice that is centered around those kinds of companies.”
What kind of advice? Seek fast growth, reinvest profits into growth channels, broaden your markets, and raise funding. “But for the rest of us, it’s kind of bad advice and misleading advice, because it doesn’t tell the whole story.”
To be clear, Fishkin doesn’t think venture capitalists are trying to mislead everyone. “It’s just that they’re the people who get the microphones, right?”
And because of that, many entrepreneurs of various goals and backgrounds are getting one-size-fits-all guidance. That’s that kind of advice that Fishkin wants to challenge.
Founders, What Makes You Happy?
One of the unique aspects of Silicon Valley culture that Fishkin wants to point out is that the investor-founder relationship is fraught with competing desires.
Look at it this way: An investor might put money into, say, 50 companies in a fund, knowing full well that most of those companies will fail or not make a return on investmen. But as long as a few do well, she’s not too worried. It’s a model investors are familiar with, says Fishkin, “You put all your chips behind your winning horses.”
Now, on the flip side, behind each of those companies is a founder who doesn’t have a portfolio—he only has his one company. So when an investor puts pressure on a founder to “become [a winning horse] or die trying,” she’s neglecting the interests of the founder who’s placed all his bets on the only horse he has.
“You don’t even have one more that can turn it around for you,” Fishkin adds. “You only had that one. And so you’ve got to play a little bit of a different game.”
Because of this, Fishkin encourages entrepreneurs to ask themselves what they’re really trying to build. “If what you would be very happy building is a profitable company that maybe grows at a slower clip, but who can acquire customers profitably by month six instead of month 18, then you should direct your efforts there,” he advises. “Even if the prevailing advice and sort of all the chatter around startups is to do something very different.”
So when you’re in the thick of it as an entrepreneur, how can you know when to do things like sacrifice profit for growth? How do you know when to follow those long-held beliefs and when to scrap them entirely?
“I think this is a little bit more about…what makes you personally happy and what you want and want to build rather than what external forces are nudging you to do,” he says. “And I think one of the challenges that we all have as human beings is to try and push away the culture that surrounds us, right? And the prevailing media environment and all the examples of other people and stop comparing ourselves to others, and instead, ask what will really make us happy.”
What Fishkin proposes is a “process of relentless self-inquiry,” where you must ask yourself if what you’re about to do is good for your business, your customers, the world, and of course, yourself. That’s a tall order that he acknowledges is difficult, especially when tempted by the allure of being the next Zuckerberg or making the Inc. 500 list.
“Those external forces are meaningless,” Fishkin says. “They are meaningless. And finding a way to have those fall away from your consciousness and stop biasing your decision-making can be incredibly powerful.”
SparkToro: A Different Kind of Search Engine
Now, the SEO legend who spent much of his career trying to outwit Google is building a search engine of a different kind. SparkToro aims to solve a common problem for entrepreneurs: They know the audience they want to reach, but don’t know how to get in front of them.
Fishkin paints this picture of how that might play out. Let’s say you’re going to start a lighting design company, and you want to reach interior designers on the West Coast. Traditionally, you’d probably do some research to see what keywords you could rank for in Google. But what if very few people are searching for those keywords?
In that case, you’d need to find the places your audience already hangs out. Maybe you’d scour social media or survey your audience to find out whom they follow, what they listen to, and what they read. And after weeks of tedious investigation, you’d have a list of potential influencers to focus on in your marketing efforts. (And in case we’ve lost you at this point, Fishkin adds that he knows plenty of entrepreneurs who have paid PR firms up to $40,000 to do this process for them.)
Fishkin wants his latest project to offer a simpler, cheaper way. In this case, you’d be able to type “interior designers” into the SparkToro search engine, filter to “United States” and “West Coast,” and then get a list of valuable results—the podcasts they listen to, the Instagram accounts they follow, the events they attend, even the subreddits they subscribe to.
“Now, obviously there’s lots of work to do on the product to get there,” he admits. “But that problem is just, is ridiculous that there’s no technology to solve that yet.”
And if you think you’re so knee-deep in your own market that you know it like the back of your hand, Fishkin says you’d be surprised at what isn’t on your radar. “Us believing that we know our market sort of makes us ignore opportunities that could be really high ROI.”
The Long Path Ahead
While we covered a lot of ground in our interview, once our time was up, we realized we never even got around to asking Fishkin about the topic he’s best known for: SEO. And maybe that’s a good thing, reflecting on the new path he’s taking with SparkToro.
After years at an established tech company, Fishkin is once again traversing the unpredictable terrain of a fledgling startup, but he’s “excited to get to run the show again.” Even so, he acknowledges he’s “staring down the barrel of an incredible amount of work” and that the odds, as with every startup founder, are against him.
When asked why he feels like he has something to prove with this new venture, Fishkin says it’s hard to explain. “Part of it is proving it to other people,” he says. “But a lot of it…is proving it to myself.”
- Why striving to emulate Silicon Valley startup culture can negatively affect your business growth
- How and why Moz’s customer acquisition costs went down after laying off half of his marketing team
- How to know when to sacrifice profit for growth
- The dark side of entrepreneurial leadership
Full Transcript of Podcast with Rand Fishkin
Nathan: The first question I ask everyone that comes on is how did you get your job?
Rand : I made it myself. I made it myself, Nathan, yeah. That’s true sort of both times. Both jobs that I’ve had as an adult are self-made jobs. I think that’s true for a lot of entrepreneurs.
Nathan: Yeah, awesome. What do you do now? What’s your job right now? How’d you find yourself doing the work you’re doing today?
Rand: Yeah, well I started a company called Moz many years ago back in 2003 initially as a blog. It became a consulting company, and then a software business, and raised a few rounds of venture. I eventually stepped down as CEO and then just this past February I left the company and started a new start up called SparkToro. I am the CEO and Co-Founder of SparkToro. I have one other person working with me, my Co-Founder, Casey Henry. He and I had worked together previously at Moz. Yeah, my job these days is do everything
Nathan: Happier days.
Rand: The ideas … yeah, right. Everything from run the blog, to run the strategy, to set up the taxes, to sweep up the shed.
Nathan: Yeah, wow that’s crazy. So I’d love to get to that more, and we’ve only got a certain amount of time. First of all, I wanted to talk to you about your latest book, Lost and Founder. How did that come about? Obviously, you’ve been through a whirlwind of a journey. I’d love to talk about that journey as well. I’ve heard some of it. I haven’t heard all of it. How’d you come about, because this book’s about to go live soon, right?
Rand: Yeah, the book just came out a couple of weeks ago. Lost and Founder came about because I wanted to share the conversations that entrepreneurs have often in private with one another about the challenges and hardships that they go through and be able to share that with a lot more people. This is a very transparent book, and it’s trying to do really two things: one is to be tactical, to help people through specifics parts of their journey, right? Here are some things that worked for us in marketing. Here are some things that didn’t. Here are some things that worked for us in hiring, in promotions, in team structure, in setting goals. All of those kinds of things. And here are a bunch of things that didn’t.
But then it’s also there to help people feel less alone, to feel like even though … no matter where you are, whether you’re just starting a business, or whether you have something that’s going amazingly well, Lost and Founder is sort of there to say, “Hey, you’re not alone. These challenges, these problems,” whether it’s the anxiety or the depression, or the emotional challenges that you go through, the people issues, we all have them.
Nathan: You know, one thing I’ve read about, because I’ve followed your journey for a very, very long time, man. I’m really excited to finally speak with you because you’ve been someone I’ve wanted to speak to for a long time, especially because I said to you before we jumped on that we were a customer of Moz and Whiteboard. What, was Whiteboard Fridays I think it was? Whiteboard Fridays, yeah Whiteboard Fridays just yes, always smashing those videos, man, to understand how we can master SEO and all this stuff. So it’s so cool to connect and one thing I did read about somewhere was the hard times that you went through as a Founder. You said this publicly. Can we talk about just around … you said the really hard times that you went through
Rand: Sure, yeah.
Nathan: When things were really tough. I think that’s something that lot of Founders don’t talk about enough because it is so incredibly hard and we haven’t a software product. I think we’ve built kind of a little easier business with the media side of things, but still mate, I just know just from so many friends it’s just so difficult to make everything work. Can you tell us and share what are those times and exactly what happened?
Rand: Sure. I think one thing that’s really interesting, and I’ve seen this over and over again with entrepreneurs, not just myself, is that a lot of times the hard times that we experience as people are not necessarily connected to the hard times we experience as a business. I mean I say I think probably got depression in 2013 and in 2014, and at that time, Moz was growing 50% year over year. One of my investors told me that were the most exciting company in their portfolio at that time, or one of the most exciting.
We had tens of millions of dollars of revenue and tens of thousands of customers, and a great reputation. So I’m not sure that the story is always the company is doing badly and so the person is doing badly. I think that often times those two can be disconnected. I think it can be even harder for entrepreneurs to say, “Gosh, things are going okay,” or “They’re not going great, but why am I struggling? Why am I having such a hard time? Why do I feel all this pressure, all this anxiety, all this trouble getting out of bed in the morning, and trouble falling asleep at night, and trouble keeping my emotions in check? This isn’t how it’s supposed to be.” And that is actually really, really common. You’re not alone in those times. That is true for a lot of folks.
I think feeling alone can be really hard in those times. Feeling like nobody else gets it, nobody else understands the struggle of having to hire people, having to hold people accountable and having tonnes of your employees tell you that you’re doing things wrong, but knowing that in fact you’re doing the best that you can, and you’re learning all the time too. Also, this is not easy and there’s no sort of single formula that’s always going to work, and there’s a million things that other people aren’t considering that you have to do. Those of us who have done this entrepreneurship thing sort of know that struggle. I think it can feel very lonely having the sense that no one else in the world gets it.
Nathan: That’s interesting that you say that because yeah that is a common thing that people usually link, or you think that their company success is linked to their happiness, and that is also a trap that you can fall into as well that if your company is doing really, really well you’re super happy, you’re excited. But if it’s doing really bad, you can really let it get to you.
Rand: Yeah, I mean I’ll tell you a crazy thing. I’ve been happier in the last two months running a company that has to do everything. It’s still not even off the ground yet, than I was probably for the seven or eight years prior with Moz, which by many standards, would be considered quite successful. I think that part of that is being able to control my own destiny and having this freedom and flexibility. But you know, you’re staring down the barrel of an incredible amount of work, another probably decade at least of work to build something exciting again, and the odds are really against you. As you know, the tech start up world, nine out of 10 companies are going to die, so it’s an odd thing to have that disconnect, but it’s also very real.
Nathan: Yeah, I can kind of relate. I know what you’re talking about in the sense that like it’s more … like there is a lot of pressure and it’s fun to just kind of wake up and just hustle, and you don’t anyone to worry about, and you just worry about yourself. It’s really … yeah, I know what you’re talking about because I feel like I’m in the thick of it now where we’re scaling up and hiring all these people, and we wanted to set up another office overseas and do all this stuff. And it’s just like, oh God, you know? Obviously I totally relate and can totally understand, but I’m curious. I know that you stepped down as the CEO at one point. Is that kind of what triggered, because you just weren’t really enjoying and it wasn’t as fun and stuff like that? Do you want to go work or
Rand: I think a little less … it wasn’t as fun and a little more … I had a conversation with one of my board members and investors, Brad Feld, and with some of my executive team, and they kind of agreed that in the state that I was in, my emotional energy and the things that I was bringing to the company were not good for the business and that we needed to make some changes, or I needed to make some changes to help get through that.
That was when I decided, “Hey, I’m going to step down from this role and I’ll promote my Chief Operating Officer, whose been with the company for a long time, and make her the CEO.” I think it was … yeah, it was that sort of depression that led me to that. But yeah, I don’t think that was the only way to handle it, but it seemed to me at the time the best way to do it and I have some regrets about that, but I would say that certain when you’re in that kind of a head space, it can take a toll on your logic abilities.
Nathan: Mm-hmm yeah. Thanks for being so open, Rand. I really appreciate it. What happened next? Why did you end up leaving Moz?
Rand: I was with the company for about, I think, not quite another four years, and during that time growth slowed significantly, the company raised some more money and burned through that pretty quickly and then had to do a big round of layoffs in 2016. I had a lot of frustrations and a lot of contentious discussions and disagreements with the leadership. I think eventually we got to the point where that professional disagreement spilled over into some personal stuff and then that personal stuff spilled back over into the professional and we determined that we really couldn’t work together well anymore. I think when something like that happens, the person who is not the CEO is the one whose going to go. That’s what happened to me.
Nathan: Yeah, got you. Are you still … you’re not active in the company, even on a board level, or just fully exited?
Rand: No, I’m still the Chairman of the Board, and I think still the largest shareholder, but yeah not active sort of day to day in the company anymore.
Nathan: Yeah, got you. You started SparkToro. Can you tell us about that and what kind of lighted you up to start another company and do it all again?
Rand: Yeah, it seems pretty crazy, right? Like who wants to go through that stress and energy again? Well yeah, so I can tell you that some of it is I was excited to get to run the show again and have an opportunity like that. Some of it definitely was a perception that there’s opportunity in this market, and that we could build something exciting. But I think there’s also a big part of it that’s a chip on my shoulder and feeling that I have something to prove that I can build an exciting software company and that it doesn’t need to … there’s a few people in the world where I want them to go, “Oh man, that guy’s really good at this. I think maybe we made a mistake.”
Nathan: Yeah, why is that man? Because you’re so … I like at you, dude, and you’re such an accomplished guy. You’ve built this massive company, you’re amazing at content marketing, you’ve got a great personal brand, you’ve launched this book. Why do you feel like you have something to prove? I’m curious.
Rand: You know, that’s a hard thing to explain. I think it’s just a motivating factor and has been for a long time in my life. Yeah, I’m not sure if it’s correlation or causation, but I suspect it’s somehow connected to why I’m an entrepreneur, is that I feel like I have to prove this. Part of it is proving it to other people, but a lot of it too, is proving it to myself.
Nathan: Yeah, that makes sense. I can definitely relate to that. I was going to say, when I go to this back to our website, when it goes to what you’re building, you’re in the early stage of building a data and software product to help marketers, public relations professionals and entrepreneurial teams learn more about the audiences they want to reach. You haven’t launched the product yet, are you in beta? What’s the game plan here? Are you allowed to reveal any more?
Rand: Oh, I’m allowed to reveal anything. I’m the CEO now. I get to do all the things, it’s one of the awesome parts. Yeah, so we are not in beta. We are in the just barely designing the product and running some experiments to validate whether we can do all the things that we want to do and what we can do. I would say we’re a minimum of six and probably closer to nine months away to actually having a product even in beta that I could show you or that folks could play with. So a good long ways out, but we’re excited to put our heads down and keep building and cranking away on this thing.
Nathan: Gotcha. Where’d the ideas spark about for what you’re building? How did that come about?
Nathan: Do you think you’ll raise VC again, are you going to bootstrap all the way, and going to stay bootstrapped to the end, or what are your thoughts?
Rand: Yeah, yeah. So VC.
Rand: Definitely not going to do that. I don’t want to say definitely. How about for at least the next four or five years, and maybe probably into the very long term, if not the forever future, I want to allow for the fact that who knows, maybe there’s some perfect VC company and deal out there, and maybe SparkToro becomes a perfect kind of match for it. I don’t know. It’s hard to say. But for right now, definitely not. In terms of where the idea for the opportunity came from, it actually came from working with a lot of marketers and also a lot of entrepreneurs, like the folks in your audience.
I think that one of the things that entrepreneurs struggle with regularly is this problem of saying, “Okay, here is the audience I’m trying to reach with my new product, or my new business, my new service,” whatever I’m offering to them, “How do I get in front of them?” One of the ways to do that is if people are already searching for what you have to offer then you can rank in Google and SEO is great for that. But what if no one’s actually searching for it? Or what if very few people are searching for it? Then you’ve got a different kind of challenge. Then you really need to go out and create demand by reaching the right audience in places where they already subscribe and pay attention, and listen.
So that process is incredibly difficult. If you said to me, “Hey Rand, we’re going to start a lighting design company, and we need to reach interior decorators on the West Coast of the United States,” I’d throw my hands in the air and say, “I don’t fricking know what they do. I have no idea what they … what do they read? What are they listening to? Are there any podcasts that are popular with them? Or YouTube channels? Do they all follow somebody on Instagram or Twitter? Is LinkedIn big for them? Or are there are bunch of events where they all gather and meet up?” And what would we do? We’d go through Google, we’d do a bunch of searching, we go to all the social networks and we do a bunch of searching.
And after a couple of weeks of that kind work, we’d probably come up with a list, maybe we’d interview a bunch of our customers or survey them, we build a list and then we’d sort of try to figure out which ones were bigger and smaller, and worth our time and not worth our time. That difficult manual process that takes weeks and often costs … and I know plenty of entrepreneurs who’ve spent $20,000.00-$40,000.00 for a PR firm to go do this for them, yeah seriously.
Nathan: Yeah, I know. I know exactly what you’re talking about.
Rand: Yeah, yeah. That process, you should be able to type into a search engine, into the SparkToro search engine, “Interior Designers” filtered to United States, it’s filtered to West Coast, and you should get a list and then you can click on, “Okay, here’s the most popular podcasts that are listened to the most by interior designers on the West Coast of the US.” Bam, one, two, three, four, five. “And here’s the Instagram accounts they pay attention to. And here’s which subreddits they’re on. Here’s the events that they go to in the US.” All of that stuff. The publications that they read. That is exactly the solution that we want to provide, and obviously, there’s lots of work to do on the product to get there, but that problem is just ridiculous that there’s no technology to solve that yet.
Nathan: Yeah, you know what? I think you’re really on to something there, mate, because we do a lot of stuff with Instagram and we’re quite strong on Instagram, and just a general common question that we see come through often is how do I find the influencers in my market? How do I find the who’s who in the zoo? For me, with the stuff that I’m doing at, I am so deep within this market of serving this entrepreneurial market that I just know the who’s who in the zoo.
Nathan: But if that person is not so obsessed with the market, and a crazy marketer like me, and that’s probably most people, 99% of people, they just don’t know how to find who those influencers are, who are the who’s who in the zoo, the top 20, where your audience, where your starving crowd is hanging out, and that’s a really key part towards building your company or being able to sell something. A great story that a marketer that I’ve learned from is you’ve got to find that starving crowd. One of the best ways, if you want to sell hot dogs, is at 3:00 a.m. outside of a nightclub. Have you heard that one?
Rand: Right, right, right.
Nathan: Yeah, so like … yeah.
Rand: And here’s the fundamental problem, right, it’s not just that it’s tough to go figure that out, it’s also tough for us insiders, for you and I, maybe who think we know our own markets really, really well. A lot of the time, I will be shocked to discover … I’ll find some new YouTube channel the SEO field, and I’ll look and I’ll go, “Oh my God, this has 50,000 subscribers, how have I never even heard of this channel? I’ve been doing this for 15 years. Where did this come from?” Or I’ll find a offline publication.
Rand: I’ll find a trade journal in the real estate field that a bunch of real estate agents get, and I’m shocked to discover that a tonne of the content in there is about SEO because that’s something that real estate agents suddenly care about a bunch. Oh my God, what is going on? How did this dodge my attention for a decade? I think that that is part of the problem is actually us believing that we know our market sort of makes us ignore opportunities that could be really high ROI, really exciting. So it’s both ways, right? It’s both the, “Gosh, I don’t know where to start,” and “Oh, I know this market cold. Oh wait a minute, maybe I don’t.”
Nathan: Yeah, wow. Awesome, yeah, I’m excited to see this product come to life, man.
Rand: Yeah, me too.
Nathan: Yeah, awesome. One thing I found interesting as well is in your book you said that Silicon Valley misleads Founders in start-ups into doing dumb things.
Nathan: Are you able to elaborate on that?
Rand: Sure. Yeah, absolutely. I think one of the big problems is that the classic Silicon Valley start-up culture, the venture-backed start up, is put forward as the fundamental model that everyone should be following or at least aspiring to. I don’t know if this is the case in Australia, but certain I’ve seen it in a lot of other parts of the world that Silicon Valley start-up culture, for whatever reason, gets kind of worshipped.
Nathan: Yeah, it’s not as big here in Australia.
Rand: Oh, that’s good.
Nathan: Yeah, it’s not as big, but I definitely know what you mean because most of we’re a global brand and most of our audience is in the states, so I’m exposed to it. I know exactly what you’re talking about. But yeah, people do go over there from Australia and get bitten by what the call the “Silicon Valley bug”.
Rand: Yeah, yeah exactly. The Silicon Valley bug, it sort of infects you with this idea that your start up should look like these other start-ups. That you should look like Google and Facebook, and Dropbox and Air BNB, and Uber. And people like that, these sort of billion-dollar unicorns, and the companies that are striving to eventually become them. One of the problems is even if you’re an entrepreneur who knows that’s not what you want to be, or that that’s not what you’re going to be, you still get inundated with advice that is centered around those kinds of companies.
Rand: Our goal is to seek out fast growth, to reinvest profits into growth channels so long as they’re ROI positive in order to outrun our competition that we should be looking for funding sources that can help us accelerate growth rates, that we should be thinking about broadening our markets, so that we are not at risk of having one market go away and have that collapse our entire companies. And a whole bunch of other myths that are … they’re not myths if you are a billion dollar unicorn or trying to be one, and backed by tens of millions of dollars in venture capital. But for the rest of us, it’s kind of bad advice, and misleading advice because it doesn’t tell the whole story. I don’t think there’s a bunch of bad, evil people, I don’t think there’s these terrible venture capitalists who are trying to give bad advice to everyone.
I think it’s just that they are the people who get the microphones, right? Then people are looked up to in our field, it’s those folks, both the investors and the CEOs and Founders, and the people who’ve had these big exists. And because of that, you get one kind of advice that’s not right for everyone.
Nathan: Yeah, that’s actually something … it’s interesting you said that, because that’s something that one of my mentors taught me is he said, “Don’t always pay attention-” Like you know, Gary V., amazing guy and I love him as well, and I like to follow his work and stuff, but there’s a difference between advice that you hear versus stage-specific advice. So there’s certain levels of advice, like Gary V., he’s built, I think, $200 million a year now agency, so the advice that he’s giving will not be relevant to you unless you’re playing a much bigger game, or you have hundreds of staff for certain things. So you can’t always pay attention to that, and I think sometimes it’s easy for people to get caught because they’re not at that stage of where that advice is being come from.
Rand: Part of it is stage and size, and I think part of it is also trajectory and approach. One of the things that is certainly unique about classic Silicon Valley startup culture is that an investor is going to put money into let’s say 50 companies in a fund, and they’re going to hope, sort of fingers crossed, that three or four of those companies are going to make the whole fund back, and be the vast majority of the returns, and maybe another five to 10 are going to survive and do okay. And the rest will probably be failures, not to say complete failures every time, but that they won’t really return any interesting amounts to their investors and they’re probably not going to make very much for Founders and probably going to make nothing at all for employees.
Because of that model, that investors are very familiar with, you put all your chips behind your winning horses and you encourage anyone whose on the cusp of potentially becoming the winning horse to become one or die trying. And die trying is okay, that’s a perfectly legitimate way to go, but this creates a really different sort of set of expectations and set of goals from what a Founder has because a Founder does not have a portfolio, right? You only have your one company. So it’s great if your investors say, “Well you know, that company died, but we’ve got 47 more that are doing okay. They could still turn this around for us.” You don’t. You don’t even have one more that can turn around for you. You only had that one. So you’ve got to play a little big of a different game depending on what you’re trying to do.
Nathan: So if you’re start up Founder right now listening, you probably found product market fit, or you’re trying to, how do you survive? Sometimes people think … a common misconception is if you want to win or you want to be like … or the billion dollar opportunity, or you want to build a big business that you need to raise VC to grow faster, and as you said, reinvest in everything that you’re making. You reinvest all your profits, you reinvest back into [inaudible 00:30:49] asset, and you sacrifice profit for growth and then you also use that money in the future to raise funds to acquire a customer over a long period of time.
There’s like a two year period where you believe you’ll make that money back, but usually assess or software proxy, in particular they acquire a customer at scale with the … I can’t remember the term, but they don’t acquire a customer profit. It takes six to 12 month period to get into the So what do then? What do you do?
Rand: Well I mean I think that the answer is to question some of this conventional wisdom and ask yourself what you’re really trying to build. If what you would be very happy building is a profitable company that maybe grows at a slower clip, but who can acquire customers profitably by month six instead of month 18, then you should direct your efforts there even if the prevailing advice and sort of all the chatter around start ups is to do something very different. But challenging that conventional wisdom and then finding people who’ve done that and been there, and can talk you through it, and give you advice on that is difficult.
So yes, Lost and Founder, a big part of that is challenging some of those myths, walking people through exactly these types of scenarios where Moz got ahead of it’s skeez and overspent on customer acquisition at times, and then pulled back. I tell story toward the end of the book particularly about how our marketing team got cut almost in half when we did the lay offs. I think maybe even slightly more than in half. And yet this crazy thing happened where cost of customer acquisition went down, number of customers acquired went up, and the percentage of people who visited the site and then became a customer also went up. In talking about why could that be? What in the world is going on where you’re spending less and you’re having fewer people work on this, and yet you’re getting better results. Why? How is that possible?
I talk about some of the elements that go into that, but a big one for sure is focus, and discipline and the discipline of profitability is actually a powerful lever. It’s not a lever that classic Silicon Valley start ups would talk about very much, but it is really interesting and it can do wonderful things. It’s sort of a customer scent that you can follow, that your marketing team can follow, that can produce some exciting results.
Nathan: Yeah, wow. We have to work towards wrapping up, mate because we’re going out of time-
Rand: Yeah, yeah.
Nathan: But I’m loving it. Just out of curiosity, a couple of last questions out of curiosity, if you want to, I guess, focus on profitability and like you said, not grow as fast or not be as obsessed with growth, be an absolute growth junkie, like that kind of that thoughts pushed or kind of within this start up world, and society and grow, grow, grow, grow. Like Jeff Bezos, just sacrifice … still to this day sacrifices profit that makes no money because you want to grow, right?
How do you make sure … it’s just so difficult because I’m speaking now from experience because I love growth, I’m a growth junkie, and I want to hire more people because it’s fun, it’s exciting, but it adds all this pressure and stress. How do you know when to sacrifice profit for growth, or how much or how little, or what to do there. Can you see where I’m coming from?
Rand: Sure, yeah. I think this is a little bit more about what makes you personally happy and what you want and want to build rather than what external forces are nudging you to do. I think one of the challenges that we all have as human beings is to try and push away the culture that surrounds us, and the prevailing media environment, and all the examples of other people, and stop comparing ourselves to others and instead ask what will really make us happy? That’s a very, very hard thing to do.
I don’t expect that everyone can just, “Oh, okay. I’ll just go do that.” Nope, right? This is a process of relentless self-inquiry where you’re constantly saying, “Gosh is this thing that I’m doing, which I believe to be good for my business and my career, is it bringing me greater joy? Is it bringing me greater value? Is it bringing greater value to my customers and my team, and my market, and to the world? Do I really want that? Or am I doing this because goddammit, I feel like I can be Mark Zuckerberg, too. Or goddammit, I don’t want to be left off the Ink500 list.” You know, that kind of thing. Those external forces are meaningless. They are meaningless and finding a way to have those fall away from your consciousness and stop biasing your decision making can be incredibly powerful.
Nathan: Yeah, great answer. Thank you, mate. Well look, we’ll work towards wrapping up there, Rand, but we didn’t even talk about SEO and I think that’s a good thing because you’ve done probably too many interviews, lost count on SEO and tactics and strategies, and
Rand: Sure, well we can do that next time.
Nathan: Yeah, we can do that next time. But yeah, look, I just really wanted to focus on your life as a start up Founder, and what’s led to the work you’re doing today. How can people find out more about yourself, your work and get a copy of Lost and Founder?
Rand: Yeah, absolutely. Our website is sparktoro.com, and I’ve got a blog there that you can certainly check out and follow. Then my most active social network is Twitter, where I’m @RandFish.
Nathan: Awesome. All right, well look, thank you so much for your time, Rand. This is a great interview. I had a tonne of fun. Yeah, you’re welcome to come back anytime, mate.
Rand: All right, I look forward to it.
Nathan: Awesome, thank you.
Rand: Take care.
Key Resources From Our Interview With Rand Fishkin