Rand Fishkin on The Things I Wish I Could’ve Told Young Mr Fishkin

Rand gave a very honest and open talk at BoS Europe 2016 reflecting on what he could have told his younger self. We’ll let Rand provide some context for the talk from his blog post about it but take it from us, it will both make you smarter and move you. A talk that is not just about SEO and Inbound marketing but the entrepreneurial journey. Thanks to Rand and Geraldine for sharing this story.

Introduction from Rand’s blog…

“This week, at Business of Software Europe, I was asked to give a talk on this topic, and created a short, visual set of slides. Typically, I put those on my Slideshare and have enough detail in them to be useful, but this presentation is an exception and, as such, I’ve instead opted to turn the talk into a blog post.

“First — some critical caveats. This topic, more so than most others I share, is very specific to a point in time (May, 2016). I often revisit questions like these while tossing and turning in bed or on my daily walks from home to the office and back. Every few months, one or a few of my opinions on these issues change as I have more data, more experience, more input from across the industry, and (hopefully) greater perspective.

“That said, I believe it’s a worthy exercise to regularly re-evaluate. The world of software and marketing tech move insanely fast, and holding a 2010 or even 2015 mindset in 2016 is likely dangerous (e.g. Tomas Tunguz’s recent analysis of SaaS valuation predictors, which upended some formerly long-held beliefs about the market).

“I broke my presentation into three sections. The first — What I’d Change — looks at mistakes, regrets, and issues on which my thinking has evolved.”

Find Rand’s talk video, slides, notes, AMA, transcript, and more from Rand below.

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Notes

What I’d Change; What I’d Keep the Same; And What I Don’t Know Yet

• Things I’d Change
  • #1 Learn Software Engineering
    • “Learn to code” is misleading… I wish I would have invested years to know software ENGINEERING
    • Especially in the beginning, this had a lot of negative impact. This resulted in a lot of failures
    • “I have a hard time calling BS on estimates…”
    • I’ve done almost all roles at the company, except software engineering
  • #2 Spend Time at Another Startup or Two
    • I would emphasize this for younger entrepreneurs
    • Go somewhere you love or even hate… it gives you valuable context you lack otherwise
  • #3 Reject No-Touch Onboarding
    • Folks who comment on blog posts have greater conversion and retention rates.
      • This is a great predictor of LTV.
      • Retention is the most important metric.
    • Moz has a high churn rate.
    • 6.4% MONTHLY churn
  • #4: Push My Investors to Be Tougher With Me
    • To Brad… “Will you just F’ing tell me what to do!!”
      • “Why didn’t you do this before?”
        • I wish I had… I felt like it wasn’t the right time.
        • We both regretted.
  • #5: Only Launch EVPs, Not MVPs.
    • Especially in crowded markets, which most are… the focus on “minimum” is erroneous. You need to be multiple factors greater + better.
    • Intercom’s “Jobs to be Done” – The 9X Effect
      • Happy consumers overvalue existing product by 3x
      • Innovating companies overvalue their new benefits by 3x
  • #6: Hire Less. Build Less. Focus More.
    • After 18mil in funding, we felt an artificial need to grow faster than needed / appropriate.
    • Startups don’t die from starvation, they die from INDIGESTION. They try to do too much!
  • #7 Pay More for Fewer, Proven Hires.
    • I felt a false pressure from the capital injection to staff up… I wish I would have gone lower and paid at a higher percentile for more even better, and fewer people.
  • #8: Sell Early. Start Again.
    • You don’t just have ONE TIME you can do this in life. I hope I have DECADES more life to contribute.
    • I wish I would have TAKEN THE DEAL earlier. With the combination of ownership + the deal, we would have been in a great stuation… I don’t know if that will converge again.
• Things I’d Keep the Same
  • #1: Geraldine
    • My wife has been the rock of my life.
    • I would generally recommend NOT starting a software company with your parents. Mom + Son cofounders are probably the RAREST combination for tech startups.
  • #2: Our TAGFEE Code
    • This is our code that defines our values, which are greater than growth and making money.
    • Transparent & Authentic
    • Generous
    • Fun
    • Empathy is a very high value for us!
    • e.g.: removing a cancellation button and replacing it with a phone number cut another company’s churn in HALF.
    • Exceptional
  • #3 IC vs. PW Tracks
    • These tracks are equivalent. it is OK if you love doing the work but DO NOT want to manage people.
      • Equivalent pay & stock
      • Similar Levels of Influence
      • Equivalent levels of expectation
    • Individual Contributor Track : Junior Role > Entry-Level Role > Mid-Level Role > Advanced Role > Senior Role > Architect Role
    • People Wrangler Track
  • #4: Marketing First. Product Second
    • Built our audience intentionally long before launching the product.
  • #5: Live Our Customers’ Lives
    • i LOVE spending time in the lives, hearts, and efforts of our customers.
  • #6: Raise Capital (at least once)
    • I wouldn’t raise money again, but I’m glad I did it because it grew me a lot and gave me very important perspective.
  • #7: Choose a Sector Other Startups Avoid
    • I like being in a market that other avoid.
• Things I DON’T KNOW Yet
  • #1 Multiple Products vs. Singular Focus
    • Historically, we had one product. Our primary products are MOZ Pro and MOZ Local. Now we have 5 products.
  • #2 Whether I’m any good at designing software, or just got lucky a few times early on.
  • #3: Self Service vs. Enterprise SaaS
    • Dude puts all the numbers shared
    • bit.ly/saasdatalist
  • $4: Acquisitions vs. Build-In-House
    • I don’t know which is better… build or acquire.We have done ~5 acquisitions.
  • #5: Making Work Personal
    • I’m not sure if I would make the next company as personal as I have.
    • Especially when you aren’t the one in control of the decisions.

Recommendation: I urge you to make your own 3 lists!

• What you’d change
• What you’d keep the same.
• Mysteries you don’t know.

Questions

• Depression… what would you do differently?
  • Fitbit has helped! This has encouraged me to be more active which has a direct impact.
  • Get more sleep!
  • Therapy helped. I worked with 2 therapists that also had coaching backgrounds.
  • My wife and I implemented an anti-ork
• How would you make work less personal?
  • Not have your personal finances exclusively rely on that business
  • Having cofounders that helps you disconnect yourself completely from the brand.
    • Even if having cofounders at a much lower %
• AI + Search… is SEO dying?
  • There will always be SEO as long as search exists.
• Influence by women
  • Diversity is a good thing and outperforms non-diverse organizations across the board in almost everything.
  • Diversity helps you see more perspectives and have greater empathy.

Transcript

Rand Fishkin: Howdy, Gang! So two things I want to say in follow up of Mark’s great introduction. First off, I want to apologise on behalf of my country. I know we’ve been making ourselves look like a bit of an ass, I just want to say this! Statistically speaking, about 40% of Americans are registered republican primary voters. Of those, only about 19% voted in the primaries this year so quite low turnout. Of those, 35% voted for the candidate who is now the republican nominee. So before you judge all of our country, I’d like you to remember these numbers [laughter]. Now, that being said, also did you know the UK has invaded every country on the planet except Seven? Every single one, but Seven. So get to work! What is the queen doing?

All right, if I remember correctly the best place to stand is where Rory stood cause that’s where you get the best light. Do you see me standing here? I will try to stay in this region. 99% of the time when I speak, I have my slides online for you to all follow along. This is one of those unusual cases where I don’t, I will by the end of the day and I will share that link via the BoS on Twitter. That being said, there’s a couple of URL’s that I put in here for you all so that you can follow on.

Mark, I think this is a very unique topic that you asked me to speak about and it’s one that I find quite interesting. He asked me what are things that you regret or would change about the past? And I decided that I did want to cover that, I think that’s a very important topic, but I also wanted to talk about things that I would keep the same, decisions that I’m glad I made and Moz made and things that I don’t know yet to be discovered. And I think all three of these can prove interesting.

Before we get into things, what I want to do is for those of you – a fair few of you are familiar with MOZ. Can you raise your hand? Ok, so about half. I will give a 5-minute background for the rest of you.

In 2001 I dropped out of college from the University of Washington and started working with my mom who was working as an independent marketing consultant. She had been doing things like business cards, yellow page ads, pre internet and her clients started needed websites. So in high school I designed a few websites and I started building a bit in PhP and Dreamweaver and I dropped out of school to do that with her. I was not a great web designer in any sense and my mom and I went deeply into debt, about 150000, through to the early part of 2005 when we stopped being able to make minimum debts on that debt. If you owe a lot of credit card money and you can’t pay them the minimum you owe them in a month, you can guess what happens. Your interest rates suddenly spike, so the penalties accrue and by the middle of 2005 we were 500000 in debt which was no fun. I had debt collectors come into the office with gold chains looking for me and knocking on Geraldine’s work.

I lived with my wife who is a travel writer, at the time I was working at Starbucks, making enough money so that we could pay the rent and bills however in 2004-2005 we started transitioning, I started a blog called SEO MOZ.ORG and that blog was centred around making the practice of SEO transparent. For those which don’t know, SEO was something that until that time had been – I wouldn’t say incredible secretive but the search engines themselves were far less transparent than they were today. It was frustrating and challenging to learn, I hated that about SEO and wanted to change it and that’s where the idea came about. MOZ after the directory, open directory project. And shaft Moz at the time which was an open source recipe site and a bunch of others. All of them fell by the wayside except for Moz so that proved all right.

Fast forward a bit, we made some real money, had some success consulting, we were able to pay down those debts and in 2007 we tried an experiment. We built a bunch of software tools which we used internally ourselves as consultants and we thought we wanna make these available to other professional marketers on the web but we knew we didn’t have the bandwidth to support them so we put up a pay wall, we had a PayPal sign in, you had to PayPal us 29 a month in early 2007 in order to get access to the tools we use in our trade and that business took off like a rocket.

By the middle of July that year, it was half of our revenue so we did just about 900000 in revenue total in 2007 and half of that was from consulting, the other from software. That year, a couple investors reached out to us, an angel investor named Kerry Smith who ran a company called Curious Office and Michelle Gold from – was a big early stage investor in Seattle, now they’re more mid and late stage. And we raised 1.1 million and used that to build an index of the web so that we can replicate the backend of Google’s link graph and show people page rank number and data and all these things. In fact, someone I worked very close with on open side explorer which many of you are probably familiar with who is also in the room, Jamie Seefer! She’s back there! And she’s with us at Moz today which is fantastic. So now you have the – and hopefully still tomorrow unless I say something wrong [laughter].

The next few years we had tremendous growth, one of the tough things that happened in 2007 was Gillian was asked to step down as CEO by her investors, basically one of the condition of this investment was that I become the CEO and so I remember we had a very long, awkward conversation with each other about that and I took over as CEO and retained that role until early 2014. So for about 7 years.

During that time MOZ has tremendous growth, 100% year after year for 6 years in a row and then all the way up so basically our revenue would have been 1.1 million in software in 2008, then 3.1, 5.7, 11.4, 21.9 and then growth started flattening at 29.1 in 2014. And then 37 last year. This year we will be around 43 million. So MOZ is a moderately successful SAS company by venture capital standards. By normal human standards you go that’s pretty awesome! But when you have investors and venture capital in you, as Nick pointed out yesterday, the growth expectations are very different.

In 2014, 2013, I suffered a deep bout with depression, probably several of you have read my blogposts about that. I tried to be very public about it because I think it’s a topic that too many folks – particularly men and entrepreneurs don’t talk about because they feel it’s a weakness and I tried to be very public about that in hopes of making that a bit more of an open topic. In 2014 I stepped down as CEO and promoted our COO, Sarah, a role that she holds today and she’s done a terrific job turning things around from some of the mistakes I made, particularly on a big product launch that we had at the end of 2013.

So now you have a basic understanding of who MOZ is. I’m gonna walk you through some of the things I’d change, keep the same and some I don’t know yet.

8 Things I’d Change

#1: Learn Software Engineering

First of – that is a real photo of me, that’s what I look like if I shave my beard right now. It’s pretty amazing what a beard can do for a gentleman! This is me in high school! Same pose – this is me in high school probably 1996 and one of the big regrets I have is I learned to code a bit but I think learn to code is misleading advice for someone who is gonna run a software engineering company. I think the real advice and the thing I wish I could have done is spend a true number of years becoming a software engineer.

There’s a number of frustrations that I have around this, one of the biggest ones is that I have a hard time hiring and identifying great engineers, early in my career. Later, when we had a bunch of engineers on board, it’s much easier because those folks can help support. But early on, I made plenty of mistakes in hiring including in leadership and junior roles, all across the board. Second big thing that’s been challenging I think more emotionally challenging and for my personal psyche rather than just for the business is that I have a hard time calling BS for lack of a better word on any type of estimate. So I don’t know when an engineer or team – particularly early in my career when MOZ is a few engineers and me and a couple other folks – I wasn’t able to say yes, that seems like a reasonable estimate and time to get this thing done, that seems like a good approach and an intelligent way to go about things. I had to rely on something I had no personal knowledge of and that was thought. In nearly every aspect of the business, I have done that work, whether it’s finance or HR or marketing or customer service or office management or hiring – you name it. I’ve done all those forms of work except this one which is core to the company.

#2: Spend Time at Another Startup or Two

This is me with a considerable beard, this is probably during the deepest parts of the depression that I mentioned I had earlier and I grew out my beard for a long time, despite it looking terrible! That’s rough! Thank god for moustache wax and beard trimmers.

One of the other things I never did that I regret is that I didn’t spend time at other start-ups and technology companies and this would be advice which I would give to other entrepreneurs, before you go out on your own journey try to spend a year somewhere else. It could be somewhere you admire or even hate, but you will have a perspective and will bring an understanding of things you love and copy and keep the same and some you don’t. One of the things that was very frustrating at MOZ was that I had no context, everything that we did, we were doing for the very first time and I have a deep understanding now of why investors love 2nd and 3rd time entrepreneurs. They’ve seen this rodeo before, they know how the horse is gonna buck. That is a powerful skill!

#3: Reject No-Touch Onboarding

This is Jean Luc for those of you who don’t know, he’s been a long time MOZ customer, probably one of the most passionate supporters of MOZ and he hosted Geraldine and I in Valencia and we’re going to his conference again tomorrow morning. And I think one of the things we have noticed, and this is something that has now been quantified by a number of firms, I will have a link to share with you in the post that I do this afternoon, some research showing that folks who commented on blog posts in the SaaS world tended to have dramatically higher conversion and retention rates versus cohorts that were not engaged in the community around the website. And this is true for MOZ as well so some of our best customers are the ones who’ve engaged with us and the ones who engaged with us prior to singing up. They’ve commented on the blog for year, even posted items of their own. It turns out that’s a great predictor of a successful long term customer.

For those of you not familiar with the software and subscription business world, retention is the key metric, how most of your evaluation growth curve is gonna be determined and MOZ has always struggled with a high churn rate, one of the reasons being we have no on boarding. If you sign up for MOZ today, you get a series of emails but you’re not gonna get someone reaching out saying Hi, I’m Randy and your personal assistant and if you have any issues, you can come talk to me. I think there might be a question here. Yes! So MOZ today is I think we are – Jamie correct me if I’m wrong – 6.3-6.4% on PRO which is our largest product which has about 22,000 subscribers and is about 85-86% of our overall revenue. So that 6.3% monthly churn so if you do the math on that, in 2 years, assuming that no one else signed up for MOZ, that product would have no revenue because all of those customers will have churned out. Investors and entrepreneurs don’t like that [laughing] that’s no fun!

#4: Push My Investors to Be Tougher With Me

Now before these are my investors, you can tell I work with the Big Lebowski on the right here, that’s Brad and I think he’s a cousin of Mark’s, judging from the shirt choices [laughing] and on the left is – on my right that’s Michelle Goldberg and her husband, also named Brad. But Michelle and Brad are two of the kindest, nicest, most empathetic people that you will ever find in the investment world, especially the venture capital world and I’ve been thrilled to have them as investors and wouldn’t change that for the world. What I would change is especially many of the times when we were going off the path, they identified that and they very suddenly nudged me at board meetings and phone calls that we had that maybe I wanted to rethink some of the strategy that we were taking and I didn’t listen! And one of the things I wish I can do is ask them to be a little tougher in terms of feedback. I remember distinctly a morning Sara and I – who is my CEO now, we flew out to Boulder together which is where Brad is based, and we had breakfast at this little café and I said Brad, will you just effing tell me what to do? Just tell me what to do! And he sort of said well, I usually don’t like to do that but ok. I will just tell you what to do. And what the right path is and I remember I gave him a really hard time, we were walking back after the breakfast and said why wasn’t this something that you could do before? Why didn’t you do this? He apologised and said he wished he had, he felt like it wasn’t the right time. That’s a regret of mine and I think a regret of his as well.

#5: Only Launch EVPs, Not MVPs

Number 5, so in many markets, most of you are familiar with the lean start-up and a minimum viable product. I hate the minimum viable product, at least in many markets I hate it and here’s why. Because many, many folks who build software focus on the word minimum. They think it means build the smallest thing that will actually just barely work and then test that. But in fact, in a market where you have a lot of competitors, I will make sure that this is online and beautiful. Jpeg and gif that you can download. In a market with many competitors, many of whom have a lot of the features and people are already using them and you’re trying to take a market share from those competitors or change people behaviours to switch to a different product, I think you need something that is multiple times better than they’re already doing in order to have that effect, it’s not good enough to just be a bit better or have something that barely works and is competitive in this field, I think you have to be significantly better. And I think there’s a great post from intercom and this is PDF that you will have to enter your email in order to get the download for it but I put it in here and it’s called jobs to be done and in it, they call it the 9X effect. Essentially that happy consumers are overvaluing the product that they already have by many multiples. They think it does everything they want to do so why would they switch away from something they know and love? The gains and loss theory – a lot of the psychological nudges and impacts that Roland talked about yesterday. In order to get people interested and over this threshold, you need to be massively better.

And one of the challenges that I noticed in my field, I don’t know how true it is in other fields, it tends to be the case that folks evaluate software within the first few days it came out. 2 weeks ago I launched a new tool – something I’ve been working on with the team at MOZ for about a year and I’m actually very proud of it, which is if you know me, extremely unusual for me. I usually hate even things that we build, I just hate them less than other things. But this product I thought was pretty good. And you could see that within 5 days after launch, something over 50,000 had tried this product. Holy Moly! That’s a huge percent of the market that is trying the product. I don’t know if it’s 2-5% but a significant part of the market is trying the product within a few days and their attitude about it is gonna determine how they feel about it, how they amplify it, what they say about for months is not years to come. And you could make that product massively better in the next 6 months but if they don’t come back and weren’t tempted by your first effort, you are out of luck. This has been my experience and one of the big things I feel I’ve learned and would change about lot of the launches we’ve done over the years at MOZ and someday I hope to do another company and start-up and that would be something I’d carry with me.

#6: Hire Less. Build Less. Focus More.

Number 6, this is a tough one. I don’t harbour any ill will against anyone that MOZ has hired, I think by in large we have done really good hiring, brought on great people, but I think for a few years, particularly after our 2nd funding, when Brad – he put another 15 million into the business and so he raised about 18. At that time, we felt this artificial need to grow faster than we actually needed to do, I think what we should have done – even probably a few years before that, I would have hired less people, built fewer things and I would have focused more on just a couple of them. There’s a great quote that I love from Bill, who is one of the chief investor of venture capital of Benchmark – although I do love Sandhill Lane – I kind of want to rename the street. But so Bill says start-ups don’t die from starvation, they die from indigestion, from doing too much. And I think MOZ certainly at the riskiest times in our history was on the verge of having these catastrophic scenarios when we tried to do too much.

#7: Pay More for Fewer, Proven Hires

Number 7, I wish that I could go back in time to 2006-2007-2008, particularly in those very early years and hire fewer people but more experienced and higher paid individuals. I think I felt that artificial constrain of well we only have $1 million in funding and we need 4 engineers and 3 marketing people and this many folks so this is what we can afford to pay the staff that we require. And that was a false pressure that I was feeling! We didn’t need to hire that many people, we could hire 3 fewer of those people and pay them – at the time we were paying maybe in the 40th percentile, now MOZ is paying over the 60-to the 90th percentile. But I would go back in time and hire in the 75th to 90th percentile universally. This has gotten much harder for those of you who aren’t familiar with Seattle, Google has their second largest engineering office there, Amazon employs 10% of the town directly or indirectly, Microsoft obviously is huge in the Seattle area and a number of any companies. So this is getting a little out of hand in our region but that’s ok.

#8: Sell Early. Start Again.

Number 8, this is a birthday present that Geraldine made me out of clay. That’s our little robot, Roger. For those of you who aren’t familiar with Roger know that he’s got on the back a toggle and the toggle is between hugs and destroy [laughter], we have the toggle permanently glued to hugs, don’t worry! But this little guy has an alternate version, he’s the only existing alternate version of Roger and as Geraldine notes he’s not edible. MOZ is incredibly special to me, it’s a huge part of who I am and my identity, personally and professionally, it’s a huge part of my relationships with hundreds of people that I know that dozens of my closest friends, it’s been a labour of love my entire adult life.

I dropped out of college and worked only at this one company with the exception of college I worked a couple retail jobs. Even so, at the beginning of 2011 I remember I was at a conference and the CEO of a larger software company sat down with me that morning and said Rand, we wanna buy MOZ and they made a very nice offer. I’m gonna give you the number but let’s keep it between us rather than tweet it. So at the time MOZ had done I think it was the year we had done 5.7 in revenue and we were trending to 11.4 so we were getting ready to double again and the offer was for XXXX, it was half cash and half stock and this company stock has since done quite well so that would have been a much larger offer. At that time, Geraldine and I owned about 35-36% of the company, to give you a sense today obviously a few rounds of – a couple rounds of funding and some delusion from expanding the option pool, the stock option that you give out to employees over the years means that today we hold around 18-19% so half of what we did at that time. That would have been a great financial exit but it also would have been a really great company to work for as it turns out and I think despite all the love and care that I have for MOZ, I really believe that this not – you don’t just have one time that you can do this in life, right?

I hope I have decades of more productivity that I can contribute to the world of marketing and software and the opportunity to do this again, but I don’t know when or if we’ll get an offer like that. It’s tough to say. I mean Sara is very hopeful that MOZ can someday have an IPO but that an intense amount of requirements around it, as you’re aware. APM are not very forgiving, especially recently, with software firms. So despite all my love for MOZ I wish I could go back in time and tell myself Rand, take the deal! [laughter] I think one of the worst parts is staying up nights when you’re having intense stress, especially over the last 5-6 years, and thinking man, I could have been out of this, right? Now out of this, but at least not stressed about it. Even if I was still working at MOZ at that company and they kept the brand and all that.

7 Things I’d Keep the Same

All right, let’s get past the tough parts and into some things that I would keep the same. I bet you can probably guess what’s on the first slide.

#1: Geraldine

It’s true! This is actually taken in southwest Ireland, last October we were here with our friends, Will and Nora and their tiny son, Rio. Actually, I have a little bit of time so I will tell you a hilarious but slightly non PC story.

So most of you are familiar with Will Reynolds from Senior Active, tall, good looking, black guy from Philadelphia runs this company and he and I traded companies for a week. I ran their company as CEO and he ran MOZ as CEO for a week. We sent each other emails, lived in each other’s houses, took care of his dog, it was a great week! Except for the fact that he wakes up at 6 AM which is not good for me. So we went out there and stayed at this fancy hotel in Cork, Ireland. And Will is at the bar, late one night. He’s gonna let me tell this story, he won’t kill me for it? Hopefully I’m good! So are you ready for a bad Irish accent [laughter]. Will is talking to the barman and the barman says well what brings you to Ireland? And Will says my wife is actually Irish and she wanted to see – oh, what’s your wife’s name then? Nora Morisee. Nora? That’s a good Irish name! What’s the matter? You couldn’t find yourself a nice black girl in America? Totally well-meaning barman but…

So we had a number of great trips around Ireland, but Geraldine has been absolutely the rock of my life. I had a very contentious and tough relationship with my parents, particularly following some of the things that have happened around MOZ and I would generally recommend not starting a software company with your parents. It’s not [laughter] an ideal scenario. I think actually the – mom and son founders are pretty much the most uncommon pair of software founders that you can find.

One of the things I didn’t tell you, we were 5000 in debt in 2005 and one of the smart things that you can do that the US is very good about is you can declare bankruptcy and just start from scratch, we could change the company name and do whatever. It wasn’t called SEO MOZ, it was called Outline West. The company that my mom had started in 1981. The only reason we didn’t declare bankruptcy is because then my dad would find out. We never told him we had any debt and anytime he would occasionally get upset that my mom wasn’t making enough money and she would bring a pay check off of a credit card we should have paid. It was insane so you can imagine. I heard from my little brother Evan that my dad found out a few years ago about the debt, apparently from a talk I gave [laughter] and I heard that night didn’t go well, it wasn’t a great night, really glad that we were already on not speaking terms at that time.

If you’re wondering where transparency comes from, this is where it comes from. You’re keeping secrets that big and deep around something so important to your family – I just think I got trained to hate secrecy and that’s why I care so much about transparency.

#2: Our TAGFEE Code

Number 2. You’d like to hear more in the break about how great Geraldine is, you can direct your questions at either of us [laughter]. I’m glad you came, honey. So second thing, related – many of you might be familiar with our core values, what we call our TAGFEE code, these are 6 letters the represent the core values we hold to be more important than growing and making money. I will give you an example of that.

So one of the core values in fact the one that we place highest in the order of operations is empathy and most of you are probably familiar with how software as a subscription works. You sign up online, you put in your credit card. A friend of mine said hey, we were working with a client and they have a subscription business very similar to MOZ’s, not in the same realm and industry, but financial model business model. And one of the things they did that massively decreased their churn is they took away the cancelation button and you can’t go online and click cancel and your account isn’t charged anymore. They put a phone number, give us a call and we can cancel anytime. They had 24/7 service where they called every time and it cut their churn in half when they implemented this phone number and they learned more about their customers who were cancelling. Rob said to me Why don’t you do this at MOZ? And I said because I hate that I can’t just go online and click the cancel button and I don’t wanna do that to anyone else. I feel like that’s wrong, a bad way to create more money for me and less for you because it’s that pain of making the phone call. It doesn’t feel right. And that’s what we mean by core values. A lot of folks, especially in the Silicon Valley start up world when they talk about company culture what they mean or trying to say unfortunately is I want to hire people who are just like me, people who I wanna be friends with, who also like Star Trek and lacrosse. And that’s not what we mean at MOZ, when I’m talking about it, what I mean is why do you hire someone? Why do you fire them? Why do you promote them? What do you believe is more important than growth and making more money? That to me is culture and core values. By the way, the author of TAGFEE, the person who came up with it, there are more options to get it to far less optimal phrases with Geraldine. Yeah.

#3: IC vs PW Tracks

Number 3, we have a concept at MOZ that I’m actually very proud of. We took it from Microsoft and Google who do this, but only for engineers. They basically have two tracks by which you can advance your career. Mark, could I bug you for a water? Thank you!

So the first one is the individual contributor track and probably many of you have worked at places and said to yourself gosh, I love doing my job and the work. Thank you kindly! But I really dislike managing people, I dislike having to be responsible for them and sort of like growing a career and working on political elements and how people work together and say well have you had a conversation with this person that you had a conflict with? Which is in my experience about 80% of HR. Have you talked to them? No. I think that’s a good starting point. And one of the things that I love at MOZ and you can see this in the salary numbers and the stock option numbers is that at each level, these equivalent, so if you’re an individual contributor, let’s say you’re someone who is on our customer service team so you’re in a very junior role and you love doing the work but you don’t wanna manage people. We have folks who are on our customer service team that either this one or this one and they are making as much as mid-level managers on their own team. I, in fact, when I step down from being a CEO, became a contributor, I met a nice high level here and I make not quite as much, but almost as much as him. If I didn’t have the stock, I would be very tight with the guy I work to.

Funny story, a long-time friend of mine and guy I hired, he’s been with the company for a long time. But I urge every company that I talk to start-up mid-sized big companies, I don’t care. If you can implement this, you can change how people are invested in their careers at your company, you really can. Because suddenly it becomes not the case that management is the only way up and management shouldn’t be so. You should be able to get great at the work that you do and advance in the same fashion, this is a strong belief of mine and something I would do again.

#4: Marketing First. Product Second.

Number 4, one of the things that MOZ did really well by accident, was we built our marketing first, the audience we need to reach before we ever really had product. For what? From 2003 to 2007, 5 nights a week, Sunday to Thursday I blogged from 10 PM to 2 AM and put out a post every night and that built up our audience through what we didn’t call content marketing yet but today would. That building up of the audience before we launched the product was something hugely helpful and I would do it again in my next company. So if you see me start a new blog, you might guess he’s gonna do a product eventually in this space.

#5: Live Our Customers’ Lives

Number 5, I mentioned to you that CEO swap that I did, where I went and was the CEO of this agency and sat down with their clients and team and learned all their practices. That’s something I found incredibly valuable not just to dog food our own product which start-ups do and it’s very common advice but to actually live our customer’s lives. And one of the big ways that I do that is I go to a lot of marketing conferences and events and I spent a lot of time talking to professional and marketers. I had a conversation this morning with someone about – where are you? I know you’re in here, you have a great beard, British guy. Sorry what was your name? Mike! So we were chatting about which volume numbers you should use and what you’re used to using, try and order things – that’s awesome! I love that! That’s one of the things I’m most passionate about, I would do it again every company that I get to be a part of. This is, by the way, at Will’s house, he’s got one of his walls chalk boarded and he writes all the things he wanted to do that week. He made a list for me.

#6: Raise Capital

My hope is if I ever get to do another company years down the line, I probably would not raise money again but I’m very glad that I did it once and the reason is that I think that outside capital made me a vastly better entrepreneur, a much more aware entrepreneur of the ecosystem, of the demands that are on venture backed companies, of the difference between what’s unfortunately called a lifestyle business versus a venture back to growth business. I think that distinction by the way is a word that I won’t use here, but I found it very valuable to be on both sides of that, I think that’s universally true for me, that having those experiences on both sides is very useful. This is the day that Brad funded us – for those of you in the back, did you get our money yet? I heard a rumour that I was sent. And I replied already stocking up on caviar and – all right.

#7: Choose a Sector Other Startups Avoid

One of the other things that I would do – I know [laughter]. Google, be a little kinder there! One of the other things that I really liked doing was picking a field that other entrepreneurs and many venture capitalists and investors have avoided. I would estimate that the market for SEO software and for organic traffic software in the US is a couple of billion dollars today and probably has more room to grow and yet it’s garnered very small amount of investments because they are scared of how Google might operate in that space and the risk around it and the perception around the market. As you can see, SEO has been dead every year for almost 20 years despite people searching more and more. All of those, I really – all those aspects of a field other people avoid I really like. That’s one of the reasons why the second E in TAGFEE is the exception.

5 Mysteries I Don’t Yet Know

#1: Multiple Products vs Singular Focus

All right, last bit is 5 things that I don’t yet know the answer to. First one, couple years ago we were at a board meeting, Sara had been trying to formulate her thesis on where she wanted to take the business and one of it was we should try having multiple products rather than just a singular product. Most people familiar with MOZ are familiar with 1 of our 2 products. MOZ pro, the SEO produce or MOZ local which is the one for local businesses which works only in the UK and US right now and we’ve actually got 5 products now but historically we only had 1 and there are a lot of beautiful things about having only one product in the company because all the traffic that you get and earn can be funnelled into that one single product people have an association with what do you. We don’t know PG but we know Colgate and Kleenex and 500 other consumer products that they own and I don’t know whether the strategy it’s gonna be something that’s very successful for us and I would replicate or whether in few years I hope to stand in front of a stage and be able to say well maybe that didn’t work. We’ll see!

#2: Whether I’m any good at designing software, or just got lucky a few times early on

Number 2, I also have a lot of self-doubt about whether early in my career I got lucky with a couple of the products that I built, sort of built – when I say built I mean designed what they should do and how they should work with the product and engineering and design teams who did the real work of building these things or whether maybe I’m good at this. I think we’ll get to find that out. One of the interesting things about being an employee at your own company is that you take on suddenly all this risk, it sounds odd today, but if it doesn’t end up doing well, chances are Sara will not ask me to design any more products. She will be like you go do marketing you’re great at that but we’ll let other people design product! If it does well, maybe I get to build some more. We will find out, and I don’t know. That will also tell me whether in my next company I should be the person who designs what the product does or someone else should.

#3: Self-Service vs Enterprise SaaS

Number 3, this is an incredible resource, a comparison of SaaS and self-service businesses. I will give you the URL in a sec so you can go there. It’s basically created by a guy who is Nathan and he launches a bunch of podcasts with founders and CEO of companies and then he puts all of the numbers that they share with him into the spreadsheet. So you can see how all of these companies compare to each other and I find this fascinating. This is the monthly revenue, gross returns. So you can see I put in our churn and our MRR and there’s Webber and Yesware and Buffer and LeadGenious – dozens of companies and you see how you compare. One of the interesting things is virtually every one of these companies that is enterprise SaaS meaning they have sales people that sign you up and you enter a contract, they have very low monthly churn rates. Some of them even have negative monthly churn. Which means people are basically buying more of the product faster than they quit. That’s an awesome super power in the SaaS world, and you will get crazy amazing evaluations and pricing and all that kind of stuff from investors and companies who might offer to buy you. And MOZ is on the high end here, of the churn curve for where we’re at. This URL by the way I put it in but it’s a good and long url but you can get it at here. If you want to compare with how a company you’re interested is doing, you can get it there.

#4: Acquisitions vs Build-In-House

Number 4, this was taken at Christmas last year. We went down to Portland, spent some time – this is Matt Brown, one of the 2 guys we acquired when we bought – and that’s David. We basically buy all our companies in Portland cause they have the best food and it’s the most fun place to visit and it’s only 3 hours from Seattle so it’s terrific! I don’t know however – we’ve done 5 acquisitions to date, 3 of them were very small, what I consider very small, 2 of them were a little more sizeable and a little more sizeable, I put in the very low 7 figures and the other ones were below that, in the 6 figure range. I don’t know whether acquisitions are a great way for a company like MOZ to grow. We would generally be considered at the stage where we should consider them now and we were doing acquisition when we were closer to the 11-20 million range. So pretty aggressive early on with the acquisition strategy. I think MOZ local which is the product in the company David had built has been a successful one and that will prove to be a good choice.

#5: Making Work Personal

And the last thing I will talk about before we have a bit of time for QA is I’m not sure that if I were to do another company I would make it as incredibly deeply personal. That has been an immense mental and emotional challenge for me and I think something that has affected me much more deeply than I expected or considered making MOZ a part of who I am and my identity, particularly when you’re not the CEO anymore and you can’t control all the aspects of it and you feel like your own destiny is in someone else’s hands. Even though Sara is one of my closest friends, she officiated at Geraldine and I’s wedding, we have known here since 2002 or 2003, and been very close with her and still there’s a lot of nervousness and pensiveness I obviously have felt amounts of regret and pain going through this process and I’m not entirely sure whether I would do it again. It’s tough to tie one’s personal identity to a brand identity and let’s say that I got really tired or sick or needed to do something else, take care of sick family members or something with Geraldine, whatever it was. Could I step away from MOZ and have that company do as well with their be a lot of institutional risk around that? That’s a scary thing, right? This is the stuff I think about when I can’t sleep.

I’m gonna make a recommendation! I think that no matter what you’re doing in your professional career, I found this exercise incredible valuable and Mark, thank you for that! I urge you to make your own 3 lists

• what you’d change,
• what you’d keep the same and
• what you don’t yet know.

I think this exercise is worthwhile for all of us, thank you very much!

Q&A

Mark Littlewood:  A hug before some questions. Wow thank you! Questions? Jonathan over there! Who is first? Go!

Audience Question: Hi! Having been depressed from running a business myself too and not making money but did the depression part. What have you changed to avoid doing the same mistakes again?

Rand Fishkin: So in particular I assume you’re asking around depression and managing your own mental behaviour and stability. A few things have been pretty helpful for me. One of the biggest – and I have no association with this company but this little thing on my wrist the fit bit. The two biggest things that it’s done for me is it encouraged me very strongly to be more active than I had been historically which has a direct positive effect on my psyche and the second is it helps me get more sleep. When I see that I haven’t gotten 8 hours of sleep in a night, the next night or night after I make up for it, I actually work proactively to make up for sleep and those 2 things have been big. Another one, certainly was therapy, I did do – worked with a couple different therapists, both of whom had coaching backgrounds which I found helpful as an entrepreneur in business person to have someone with context and not just kind of a pure therapy background. And then I think the other thing is we implemented something called Antiwork night. So once a week, starting at 7 PM until I go to sleep, I don’t work at all! That’s pretty unusual for me, even on weekends I’m usually working all day every day and that has been nice so those are a handful.

Mark Littlewood: Can I just add to that, we had a fantastic talk about developers and entrepreneurs and depression 3 years ago. I tweeted out the link to it, it’s by a guy called Greg – it’s the funniest talk about depression you will ever see! Yeah. So it worked, I put it out with the hashtag.

Audience Question: So you mentioned one of the things you don’t know yet is making the more personal things. What would you do to achieve that? Because even your personality you seem like an engaging person, how in the world could you do that?

Rand Fishkin: That’s a very fair question and that is a challenge. I think there are two things that help disconnect that, one is not having your personal finances exclusively reliant on that business, I think that’s certainly helpful and then the second thing is having co-founders – I’m gonna say I think Nick’s advice is good if you want to maximise your return but I would take my advice if you’re trying to disconnect your personal self from the brand or being the only thing connected with the brand and that is to have very involved passion and committed, helpful co-founders and one of the other things I will say about them is that it’s reasonable and I know many folks who will fund a company, have 2-3-4 co-founders with them and those folks will have 4-6% of the company so not 50%. That’s also an option for entrepreneurs.

Audience Question: Hi. At the dawn of artificial intelligence, is SEO dead?

Rand Fishkin: I will say this about SEO. So every year I would say there are many prognostics saying that I think SEO will never die until internet search dies because there will always be ways to optimise, whether the algorithm is controlled by a machine or a set of engineers doesn’t matter. AI merely means that a machine learning system will identify the ranking inputs that are best correlated with the most relevant, highly clicked results and you have to – as a marketer or search engine professional, identify what those are and be able to influence them. Just like an advertising person would need to identify what the learning processes go on and your brain and be able to optimise towards those. If you believe search might die someday I think it’s reasonable to think that SEO might die someday. If you think humanity will continue searching and number of searches per searcher have grown and the number of visits sent by search has grown so I would suspect we have a healthy life left still.

Audience Question: Hi, Rand! You mentioned conferences as a way to get close to the customers and live their lives. I love this idea! Do you have any other cool ideas on what their lives are actually like?

Rand Fishkin: I love that CEO swap thing, it’s a very weird type of experiment and it’s a little bit more than unusual, I think it had almost a PR characteristic to it, but it was very deeply powerful and deeply affecting for both Will and I and brought us closer together and friends and me with their people and him with our people. You don’t have to do that on the CEO page, you can do that and say hey, if you’re in the healthcare industry, can you go work as a healthcare professional for a day or a week? Can you follow someone around? Can you interview lots of them? I think these things are all possible but I really enjoyed that.

Audience Question: Hi, Rand! I thought it’s weird we had a female voice – I’m kidding but I do want to ask you, you started business with your mom I got that that may not have been the best thing ever but it still resulted in MOZ and your CEO was a woman, etc.

Rand Fishkin: And my first investor was a woman and my board of directors has more women than men.

Audience Question: So I’m kind of fascinated by your background and I know you have feminist in your Twitter bio as well. I just want to ask you do you think that that’s a positive for businesses? If you’re talking about enterprises starting up, if you end up with a room full of broads, that is that a good thing? Products for a male and female audiences?

Rand Fishkin: Yeah, so I am a huge believer in diversity in general and I think the nice thing is you don’t have to merely be a believer in the moral and ethical side of it which hopefully everyone already is, except for the 35% of the 19% of the 40% but we’ll ignore that [laughter]. I would say that the statistics are also on your side. So boards of directors of public companies that have more diversity in them, both male and female, gender diversity as well as ethnic and background diversity, outperform their non-diverse competitors significantly. That’s true in private companies, evaluations and money raised. It’s also true in the performance of mutual funds and funds and what are those called? It locked down the economy in 2008. Sorry? Derivatives? No, not so well. Yeah, the hedge funds. Even in a field that is very white dude centric, you find that the ones that have more diversity outperform. And I think that’s very natural and makes a lot of sense when you are able to see more prospective, when you have – if you’ve ever been in a room with – I’m gonna stereotype a bit and say 5 young male engineers – you will notice that the behaviour can get quite crass and if you add even one or two women into the mix or someone who is older or someone from a different background who maybe English is their second language, suddenly that environment gets more professional, more adult. And I think that tends to predict better results. So it’s not particularly surprising.

Mark Littlewood: Thank you! That is all we got time for but they do say behind every successful person is an astonished partner. In this particular instance, I will like to invite you to take the applause with Rand cause you’re clearly a big part of what you’re doing so get up here, Geraldine! [clapping and cheering].

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Rand Fishkin

Inbound marketing and radical transparency are two of the things that Rand is renowned for. He will talk about both at Business of Software Conference 2014.

 Rand Fishkin uses the ludicrous title, Wizard of Moz (we like it because we love puns and the moustaches remind us of an old school magician, but have no idea what it means).

He co-authored/co-founded the Art of SEO, Inbound.org, and Moz (he really likes doing stuff with other people). Rand’s an addict of all things content, search, & social on the web, from his multiple blogs to Twitter, Google+, Facebook, LinkedIn, and FourSquare. In his minuscule spare time, Rand enjoys the company of his amazing wife, Geraldine, whose serendipitous travel blog chronicles their journeys.

Rand has made a name for himself, not just because of the things that he has done and achieved, but from the way he has approached business with the aim of being honest and transparent about everything he does.

More From Rand.