Full Transcript for How Rand Fishkin is changing the way he builds companies

And I'm Marc Thomas [00:06:37] Rand Fishkin: I was not always like that. I certainly. Especially over the last maybe decade, dozen years or so. I have been educated like a lot of folks to recognize that I have advantages because of who I am and where I was born and to whom I was born. And the fact that I'm a dude and all that kind of stuff. [00:07:01] Marc: Rand, aside from being a total expert on internet marketing is also one of the most encouraging and kind people that I've met in my work as a marketer. Now if you follow him on Twitter, you'll appreciate this. You'll have seen it already. Just about any time, there is an opportunity to give someone else a platform or to shine a light on an injustice. Rand uses his frankly enormous platform to do that [00:07:25] Rand Fishkin: "Women in the marketing world in particular have been a big source of influence for me. And I think just by being a, I don't know, empathetic person or trying to be anyway I get to hear a lot of stories that are horrible. Um, and I think as I started to hear those, yeah, probably about a dozen years ago I had this recognition that, oh maybe things are one way for me and another way for other people and fundamentally that is wrong and unfair. And the way to be an evil human being is to ignore those things and focus on making money . My goal in life is to be not an evil, human being and to try and do good. And I think the only way you do that, if you have earned some degree of recognition and influence and people following and paying attention to you is to. Amplify the voices of those who have historically been marginalized and to, as much as you can, give opportunity and present pathway ways for other people to be successful who aren't like you." [00:08:31] Marc: A key element of leaving a company that you've built seems to be making changes to yourself as an individual. And trying to discover the value of what you experienced during that time. And the value and my experience personally. It's not usually the money. Here's Sam again: [00:08:53] Sam Goudie: "I remember the highlight of my last day being one of our employees who I'd mentored to that point. He made me a handmade wallet. Like beautifully crafted and leather. And I had to go to the post office to pick it up. I didn't know what it was and he, yeah, handmade me this wallet. It's still my wallet now actually it's aged nicely. And as he said it would but that moment, I was like, ah, that was the value of the company was actually having a chance to develop this. This guy worked with this guy and really the people that I worked with that experience, and I said to you. I think in a kind of like a parting email, I like our final email exchange that working with you had been one of the greatest parts of my, like my working life. After I left, I definitely felt, I felt free. I felt like I could do anything. I felt like I was very free again. And it was weird seeing the company operate with that. It was a bit like

like breaking up with someone and seeing them go on with our lives, you know? [00:09:54] Marc: I know so many people who have broken up with someone and then found themselves regularly checking that person's social media profiles to see how they've changed in the following months and years. Maybe that's even, you. And no judgment here because it's not that you want them back necessarily. Often it's nothing more than curiosity. But let's bring it back to the company for a second. We don't want to get too far into your personal life. And when you've grown something, it can also be really hard to watch the next CEO or Manager or CMO, doing things to your work, making the company their own. [00:10:33] Rand Fishkin: Gosh. I mean, I historically have felt a lot of, um, guilt around that. Right. I think that look MOZ while I was, you know, the CEO was, um, amazing in lots of ways, but I have no doubt that it was imperfect and flawed and problematic in other ways, too. You know, one, one thing that I obviously created in the culture was a, an extremely, um, gender imbalanced, uh, engineering team. Right. And that was, that was something that, you know, even after years of effort, um, Still is problematic and that's true for tons of software companies, but that doesn't excuse what was going on at MAs. Um, but I have a lot of guilt about the things that happened after I stepped down as CEO, because I'm the person who chose my successor. Right. And so, um, I think for a long, long time, I felt like I was responsible for, but no longer had control over a situation that I strongly disagreed with. And of course, I think folks could folks internally at the company, even after I left and folks in the community could tell that this was a way that I felt because I am not someone who hides their feelings well. Um, and, and because of that, I got, um, I got a lot of the stories. Right from whatever, you know, team members from people who are disgruntled from people who are having a hard time, uh, with the company, whether that was working with it from the outside or being a customer or being a community member or whatever. Um, and, and a lot of those folks would come to me and voice their concerns and complaints. And I think despite my, despite my efforts, um, Didn't know his workout, but you asked for one story out, um, man this is going to be a hard story to tell. Ugh. So did you know Russ Jones before he passed away? [00:12:55] Marc: Russ was a well loved and highly respected figure in the SEO community. And when he died suddenly in June, 2021. The marketing world started sharing the most heart wrenching stories of how Russ had impacted everyone's lives. [00:13:16] Rand Fishkin: So Russ is a delightful guy, um, just to, you know, one of the most interesting and. Humorous and loving people you could ever meet. He's um, sort of from North Carolina has these, uh, three little girls and, and after Russ, Russ, and I had been aware of each other in the search marketing world for a long time, and I recruited him to come join MOZ. And, uh, this was I think right at the end of my tenure as, as CEO and when the new CEO. And, you know, Russ, I think he started as a contractor or maybe he remained a contractor for a long time, but he, um, contributed a ton to the company. Every time we'd go out to, uh, North Carolina for the conferences out in Raleigh, we we'd go visit him in his family. But, um, I, I'm no longer on the I wasn't on the board and I hadn't been in the company for years, but you know, Geraldine and I, my, my wife and I still owned a significant amount of stock because I was the co-founder and, um, and so, you know, when it sold, there was all this like financial transaction stuff and yada yada, anyway, Russ emails me and he was very upset. Like, um, he, he thought that the deal was not being good to Moz option holders and shareholders, and he was. I don't know if he knew exactly how, how the deal was gonna be structured, but whatever it was, he wasn't happy about it. I didn't know the details. And I told him as much. I was basically like, 'Russ I'm, you know, I'm not on the board of directors anymore. I, I wasn't part of this deal. And also like, if you hear about. Um, people who are getting a raw deal in this, or, you know, who's whose shares aren't getting covered, who, you know, are not getting the payouts that they deserve. Please let Geraldine. And I know because we are going to be writing a bunch of personal checks to a bunch of people. Um, you know, they'll all have to be under the $30,000 gift limit, but, you know, we, we want to make sure that that people are properly compensated and we're getting, you know, way more money than anyone deserves. So like we'll, um, we'll do that' And Russ, like just before he died, just before he died. Russ writes back and says, um, 'Thanks, man. I should've known that you would try and make this right.' Um, and I, I cannot tell you how much that email means to me, like to think about. I, I don't know what to think about the guilt and the trauma and the heartache that I, I think I would have always felt if, you know, if, if Russ had passed away and I had thought that he was still upset or, you know, that he, he thought that the steel was no good. Oh, sorry. I don't cry on podcasts. This is a new experience for me. It's it's just, uh, it's, it's a very hard thing, but I think that experiences like that, right? They, they put into relief, uh, stark relief, what accompany is for, right. And w and why it should exist. And, and the promises that you make as an entrepreneur, to the people that you work with and the people in your community, around you and in your customers. And, um, And yeah. I mean, I feel incredibly lucky that we're able to, I don't know, step up and do the right thing, but I, I know how it goes. Right. I know that in 99% of exits where founders or CEOs make millions of dollars employees, team members who absolutely

contributed as much or more than they should. Get very little or nothing at all. Um, and that's, that's something I, something I want to fix. Right? It's like, you gotta, I dunno how he changed that. I think this is, you know, this goes back to the whole power structures of capital versus labor and blah, blah, blah. You know, you can, you can take it real macro, but at that, at that micro level, thinking about that, you know, this lovely guy, um, Who? I don't know. I just feel, so I feel so lucky that we had that experience, um, together and that I got to know him and I don't know man [00:18:01] Marc: What Russ did was to acknowledge Rand and Geraldine's gracious gesture with warmth and friendship. Now that small gesture, a simple email from his friend just before he died, had a huge impact on Rand. But relationships are incredibly complex. And even the best of friends experience, unexpected strain on their relationship. Like I mentioned in the intro: businesses can compound everything. Even negative feelings. [00:18:43] Rand Fishkin: Moz' current CEO Sarah is not, um, was not a co-founder, but she joined the company relatively early on, maybe only a few months after we raised our first round of VC. And she had been my chief operating officer, um, for many years during my tenure as CEO. Uh, and. We were also extremely close friends. You know, she was the officiant for, uh, for our wedding Geraldine. And I would like watch her, her son, you know, babysit. And, um, we went on vacation. We were very, very close. Yeah. Both personally and professionally. And so, you know, when I, when I stepped down and handed over the CEO reins, I assumed that that closeness would remain right? That we would remain very close, personal friends and that, um, we would, you know, align on things in the business. And if, if one of us strongly disagreed with something, then the other one wouldn't do it. Right. Because that, that, that was how I thought I had. It was, um, been as, as CEO for her. And, uh, that experience changed a lot. Uh, over the, over the following years and our, you know, our working relationship was very strained. And then, um, that bled into, uh, our personal friendship and, and there were sort of a breaking point that was, uh, really, really awful and tragic. When this transaction happened, Geraldine and I met my wife and I, you know, A number of conversations around like, well, you know, Hey, we're, we're, we're getting a lot of money out of this. Obviously it's not, you know, maybe as much as we hoped, but it, but it's still quite a substantial amount, right? [00:20:28] Marc: When Sam left the company. I'll be honest. I felt bitter. I know to a certain extent. I think I actually envied the position that he was in. He didn't have to think about how to make the company work anymore. He was free to do whatever he wanted. There was no obligation to turn up for work in the morning. And I, uh, I always tired, you know, it had been several

years of thinking about this project. And really. The worst parts of my personality came out. And I almost completely lost touch with one of my best friends. Over some shares. [00:21:07] Sam Goudie: I remember one point where I went downstairs and my office and I was talking to you and. You said 'Hey man. It's it's been a while when we're caught up.' Cause we used to catch up every day, obviously. And you, you said 'Oh Yeah. I just, I realized that I'm putting off like speaking or talking because I don't wanna talk about the shares. I don't want to talk about this stuff.' I realized, oh, this is even when you and I are just talking as friends and there's like people that work together and we were no longer like solving problems together, but we were both on different sides of a problem. [00:21:43] Rand Fishkin: The conversation we had was if, if we could snap our fingers and go back in time and, and, and change everything. Right. And that, that maybe the company went to zero. Everything completely fell apart. But the relationship between myself and the CEO, Had remained wonderful just throughout, like we had whatever it was. We had agreed on things and it had been worth no money at all. Would we take that deal? And we were both like, 'fuck yes.' I mean, look, you know, millions of dollars is an amazing thing. It's an incredible cushion. It, it lets us do all sorts of things. Right. I mean, it's gonna let us. You know, pay for Geraldine's cousin's college tuition, which their family couldn't afford and, and, you know, help out her brother in LA like all this awesome stuff that we can do. And also that friendship was worth more to me, [00:22:50] Marc: At the end of the day. After a whole year of stress. On both sides of the negotiating table. Sam called me up one day and said he was going to gift me and my co-founder his shares. No strings attached. [00:23:10] Sam Goudie: I sat down with Beth, my wife and we like we talked about it and said 'look, this is the reality of it.' And she said to me, 'Would you invest that amount of money into that company today?' I was like, 'No, I don't think I would at this point.' And that was really the answer to me was that like I was taking something and I didn't know if you would actually see a return on that money that like, I didn't know if you were actually purchasing something of that you would get that back. That essentially I felt like I would have just been taking that money and then. Like running, essentially. And I just wasn't prepared to do that. we realized that yes, it was like a nice chunk of money, but it was also. If we lived our life in this moment, like literally just taking what we could get, then the loss to us was going to be far greater than the gain in terms of relationship, in terms of like soul, like actually like the cost to our being of doing that. [00:24:16] Marc: Sam and Rand's actions are exemplary. And in fact, Sam's grace in that situation totally changed everything

for me. It totally changed the way that I saw that company. It changed the way that I thought about our friendship. It changed the way that I conducted myself professionally and personally. And there's a lot of growth in this episode, dear listener. And while I hope that you're getting your fair share of inflection points here. There's more to come. Rand's view of building a company is very different now. And recently he set it in stone. By sharing the email that he sent when he was hiring Amanda. Natividad to be the first marketing hire at SparkToro. [00:25:02] Rand Fishkin: This is the email that I sent to Amanda before, before we agreed to work together, right. As we were kind of talking through stuff, um, it was, oh, this is the last thing. And it's very important. We, Amanda and I are new old friends and Geraldine and I are old friends with Casey and his wife too. And I'm not ever going to ex again, except that professional shit can get in the way of personal friendship. Geraldine. And I already think the world of you and want to be friends for decades to come. That's true. Whether you join SparkToro or not. It's true. If you decide to do a three month gig with SparkToro and then determined, it's not everything you ever wanted to. leave. It's. true. If you stay at SparkToro for the rest of your career or leave any time in between. So Yeah, the only other requirement is that we're always a hundred percent honest with each other about things that cause us anxiety or worry or problems. Geraldine. And I have a rule in our marriage. That's a hundred percent true. We promise not to be upset about something and not tell the other person we promise not to progressively get more and more upset with someone over something we haven't talked about with them until it spills over into a fight in Casey. And I have that same rule. And I want to have that with you too. If Casey rubs you the wrong way someday, or I send an email that bothers you. Or you think spark Toro should refund a customer because you found their racist, Instagram posts. Just say the word. [00:26:26] Marc: Okay. So we talked a heap here about personal inflection points, and although I felt really dumb, transitioning away from a deeply personal and philosophical conversation with Rand. I know that you're also tuning in for the meaty, meaty revenue growth stories, too. And boy, do I have one for you? Because in June of 2021 SparkToro hit a major inflection point. And a period of 36 hours. They had as many signups as they had in the whole of the previous month. Here's Rand: [00:27:04] Rand Fishkin: These three have tended to be relatively powerful growth drivers for us at sparks are one of them I'm really quite surprised about. And then the other two, you know, have worked for me forever in SaaS. One is, uh, we sent out an, an email basically saying that we were changing our pricing and packaging. So not any of the amounts that you pay, but sort of what you get at each tier was changing. We also told folks that at the, at the lowest tier, at that $50 a month, sort of starter tier what we call starter tier, maybe we're calling it basic. Now, uh, if you were already a subscriber at that level, You would basically get all the benefits of the new level, but none of the detractions. So, um, certain access to certain tabs and features inside the product were, were going away. People at that basic tier. And they would only be available at the higher tiers. But if you were already a subscriber before this change, you were going to get locked in, right. We, we sort of gave you a legacy package and said, you know, Hey, thanks for being a subscriber. We're still going to bump up your whatever number of searches per month, blah, blah, blah. But we're not removing these other things. You'll, you'll still get them. Um, that, and then that email also mentioned what the new tiers were going to be like. And so people could see. That just spurred a ton of folks because we have a big email list, right? So we sent this, we sent like one to people who are already subscribers and another two people who weren't yet subscribers, obviously a bunch of people who weren't yet subscribers, boom, jumped on that, um, legacy tier before we made the change. So that was a big part of it. The pricing change itself, uh, you know, sort of moving around some of those things. That was the one that really surprised me because I, I did not expect that we would have such a larger growth rate just by changing what the pricing tiers looks like, but it looked like it doubled literally doubled conversion rate. So basically we were at, you know, something like 2% of people who visited the pricing page, converted to a paid subscription. And now it's a little over 4%, [00:29:23] Marc: Okay. So that's a classic move. Let people know what's going to change in your SaaS company's pricing structure. And tell people that if they sign up sooner than later, they'll also get the benefits of being in before the change. And you're likely, I've got to say, to get a good number of upgrades in response to that message. [00:29:46] Rand Fishkin: the third thing that I think is, um, a more obvious change as we introduce this new feature. Right. So demographics essentially gives you a whole bunch of data about, you know, kind of classic demographics, like gender and age, but also, um, and, and geography, but also things like education and job title, and role and company size and all that kind of stuff later. It's one of those things that we realized that by having social profiles, across many platforms, you can use. Intuit, a lot of this stuff, you, you generally, you know, for a lot of profiles, you know, where someone works, cause they say where they work and, um, you can see in LinkedIn, you know, everybody puts their education, uh, blah, blah, blah, blah. So, um, that, that data was super useful apparently to a ton of marketers, especially in like brand world

persona building world, I think that's where the signups come from. my sense is almost that like the last eight, 10, maybe 12 weeks SparkToro has also entered this, like. Cycle word of mouth cycle where, you know, obviously I've been doing lots of, um, podcasts and interviews and webinars and, you know, events and all that kind of stuff. Almost all digital, lots of social media marketing, but now there's like this. Um, flywheel effect that that just started turning without any, you know, we don't have to push very hard to get the next revolution going anymore. Like the, the flywheel from the last three years is really, really picked up in the last three months. That's exciting. I mean, that's how the model is supposed to work. That's how flywheel is supposed to work, but it is, um, Yeah, it's cool to be a part of, again, it kind of feels. 2009 MOZ my suspicion is that it's a combination of things, um, which almost all of this is. I think that more people were hearing about SparkToro in more places. And I think that our, um, the people who had signed up for free, we're starting to see. Features inside the free version of the product that they wanted access to, but didn't get with the free version. with the pricing and packaging in particular, we didn't change the amount of money that you were paying per month or the discount for the annual rate. What doubled the conversion rate appears to be what the free version shows you and doesn't, um, what the paid versions say they offer and done. And so essentially I think when you get the psychology of that right of, oh, I pay more for not just more searches per month or more people on the, um, you know, in a team plan, but also the data that I want versus the data that I don't need. I think there's a psychology of like, this is a right fit product for my needs. And that became true at every tier. Um, although especially more so at the upper two tiers, the standard. And agency tier. [00:32:48] Marc: Positioning. Positioning positioning, positioning. Positioning. Look: it's hard to get right. And I say it a lot. But when you've nailed it. It feels like the most obvious thing. What Rand's describing here is a mixture of customer and product market fit. And positioning aligning after a lot of marketing efforts from the founders. Now all of the podcast appearances and all of the articles. Where Rand's talked about moving from search to influence marketing. Those have all added up in marketer's minds. And now they're not seeing SparkToro as a search product anymore. But a market research product. And that changes, the perceived value of features are massively. And that friends. Is why positioning is so important. Because when you've got it right. It feels like pushing a boulder down a hill [00:33:47] Rand Fishkin: SparkToro launched in What was that may I think end of May, 2020, which is maybe the worst time to launch a new business in a hundred years. Um, but. You know, obviously COVID eventually

meant that lots and lots of businesses were doing online marketing and that of the spend shifted there. they helped us over the summer introduce our like $50 price point and change a bunch of other things and do some, some email offers and stuff. And, um, We launched that in September, in October SparkToro got to profitability. Casey and I have pretty reasonable salaries even for, you know, Seattle prices. So getting there was pretty amazing for us. And then over the last, um, Whatever that is seven, eight months. Um, we have continued to grow we've we've grown every month, some months smaller and bigger, right? The last few months have been a bit bigger. Um, but my expectation is we'll probably end this year, uh, over a million ARR, which with three people is not bad. [00:34:52] Marc: Now, knowing what he knows after his experience of building a successful company before and with his personal goals to be a good person. And giving a platform for others in mind. How does Rand see the challenge before him? [00:35:09] Rand Fishkin: I feel a great burden to create a profitable, exciting business. What I no longer feel is the pressure to build up. Hundred million dollar plus revenue, you know, unicorn potential company. Um, in fact, I, I, I think that what's really exciting about SparkToro is conceivably. This is a, an exciting, interesting high return business, you know, meeting its investors expectations for returns. Whether we're doing $2 million a year or 10 or 20, or any number in between those and, and, you know, over that. Sure. Right. It's wonderful. I'll be excited about it. Um, I know we'll have to scale the team a little bit, but Casey and I, we do not want to build a big company. I think, you know, my, my sort of limit for employees is 50 Casey's is like 20. So we're going to try and fall somewhere in between. There. We use a lot of contractors and agencies, obviously, which, which helps us a bunch, but, um, the, the pressure piece is like the pressure comes from really different places. No, the pressure is not either you build a venture scale unicorn or you're a failure. It's. Hi, this is, this is so crazy. So wild to me. SparkToro today is closer to being a success, uh, uh, runaway home run success for its team and investors and employees and customers. Then MOZ was at any point in its journey, [00:37:01] Marc: Building a company isn't about the revenue. Sure some money would be nice. And if you don't have the revenue, you don't really have a business at all. Right? But money isn't the only way to profit. And a paycheque isn't the only way to collect rewards for your work. And the marketing metrics aren't the only thing that grows [00:37:26] Sam Goudie: Material ultimately doesn't matter. That money definitely doesn't matter. The companies that we form ultimately won't matter, that the sum of our lives is not going to be that company, the money that we aren't, but looking back on life, the moment of being able to just do that. And to know that my heart was definitely the company would grow without me. I think that growth moment was worth more to me than the money could have possibly been. [00:38:07] Marc: Sam and I, we, we worked hard at it over the past few years. And we managed to revive our friendship. And when lockdown ended in Wales, where I live, Sam was one of the first people I called. Our families got together and we enjoyed not talking about shares while we watched our kids play together. So, if you enjoyed that today and you want to do something about your B2B SaaS marketing, you should get in touch with us. You can do that by going to poweredbysearch.com and checking out our work with us page , or you can browse the case studies and blogs that we have on the site. Now if you're not ready to do that, definitely say hi anyway, you can ping me on Twitter. I'm at @iammarcthomas. That's Marc with a C or you can ping our founder and CEO Dev Basu you connect with us there. Looking forward to seeing you again for another episode.