Why I Left a $250k/yr CMO Position to Found a Startup
I have been asked by several friends and family on my latest move, but rather than write lengthy emails covering my philosophies and attempting to explain how I foresee market shifts and economic considerations, why not just throw it all into a post and work in multiple dimensions. If you’re an executive considering a similar jump, this narrative is for you. Spoiler: I’m currently co-founder and CEO of Intellifluence.
How Did I Get Here?
My path to this decision starts in 2013. After my company Empirical Marketing imploded, going from $10m/yr in revenue and fat margins to losing a ton of money, overnight, due largely to the Penguin algorithm and gigantic recurring expenses, I had to fire 50 people and shutter the doors. My heart hurt because it was a company Eric Kaufman and I had founded in 2003 and run for 10 years. What was I to do next? I dreaded the idea of having to work for someone else. [I’ll write on that in the future if there’s a desire]
After limping along in the shell of Empirical, I was chatting with Jeroen Seghers and Jonathan Beddoes, both board members of CopyPress, talking about what to do next. They suggested Eric and I chat with Dave Snyder, friend from our SEOktoberfest days and CEO of CopyPress. For brevity, it was obviously a fit. Dave wanted some more senior talent and we needed something new; I came on as Chief of Revenue and Eric become the Chief Product Officer. It was a good couple of years, and hopefully viewed by both of us as largely positive and value add in both directions. Eric is still kicking ass for them to this day.
In August of 2015 I was recruited away from my Chief of Revenue role at CopyPress, a company I loved (and still do…I’m an advisor and proud CP partner). I remember calling Dave Snyder and having my stomach in knots prior to the call, because we really worked well together and leaving a position always comes with a certain sense of abandonment guilt. Thankfully Dave is a serial entrepreneur himself, so the call went smoothly. We agreed that while I would be stepping down from an operational role, I’d still be heavily involved in an advisory capacity. My agency Digital Heretix works with Copypress on our content projects and I regularly endorse them to those reaching out to me looking for vendor contacts.
Why would I leave CopyPress if I loved them? Potential opportunity. I was brought in to be a stealth CMO of CPG company based out of Los Angeles. The ambitions for this company were and remain very high…eyeing $10 billion markets to be the category leaders in (with expertise to match that ambition); I don’t want to provide too many details on who the company is and what they do for their own sake. It was an opportunity where if I stayed for 5 years, the probability of my stake being north of $25m was decent, without having to be the CEO and deal with all the difficulties that come with the role. In other words, it was a financial lock for the future security of my family.
But I didn’t stay. That much should be obvious by the title…so what happened?
The itch. It was too strong. It yearned for my fingernails to dig in and scratch, revealing the bliss that lay underneath.
Seeing The Opportunity That Could Not Be Unseen
Mid-way through my tenure at this stealth company, I kept running into the same scenario. As a lifelong marketer (that’s another story) I have to always be on the lookout for new mediums, channel, and concepts to a)get traffic b)convert traffic c)keep traffic coming back to you. What I was running into though was a half solution, but because it was working so well the people involved didn’t seem to realize it was only a half solution.
In 2008 I was guilty of the same mentality — SEO revenue for my portfolio of 5000ish? websites was hitting $50,000/day and I failed to see how layering on additional monetization points could have taken us to $75,000-$100,000/day for that golden period; the mistake I saw is that an industry was only focusing on part of the market and in doing so was inadvertently ignoring half of their consumer base. In other words, 25% potential.
The opportunity was influencer marketing.
For those of you unfamiliar, we can dumb down the concept of influencer marketing to having someone else tell your story for you. PR can fit under that umbrella; evangelist customers spreading the word fits; paid spokespeople fits; having your neighbor Sally mention your line of delicious dill pickles on your Twitter account counts.
Here’s the problem though: the vast majority of influencer agencies focus only on celebrities and other big names when it comes to who their influencers are. This is somewhat problematic because there are multiple types of influence: aspirational, authoritative, and peer level.
“We all want what our heroes have, but we absolutely need what our peers have.”
· Celebrities generally fall under the aspirational category, meaning the level of influence that they hold over people is towards those that want to “be like” said celebrity. Psychologically, if you look up to this celebrity as a hero, you may find yourself wanting the product endorsed.
· Authoritative influence exits when someone you respect as an expert recommends something from within their field of expertise. If I tell my audience of SEOs to go buy a marketing book by @JasonMillerCA there’s a strong possibility that Jason will get some sales due to my audience trusting my opinion on the topic…plus it helps that he’s a better writer than me. Authoritative influence is based on trust. If I also tell my audience to buy a line of women’s t-shirts, it will probably fall flat. Yeah, I did that, and learned a lot on that angel investment.
· Peer level influence is where it is at for most of the world. Your neighbor recommending that you switch to @CoxComm because their sports package is better than what you’re using is a good example. Your co-worker raving about an office chair has a different psychological trigger than aspirational influence. We all want what our heroes have, but we absolutely need what our peers have.
The second problem: by focusing only on celebrities, influencer marketing agencies are too expensive for most companies. The stealth company I was at could afford $20,000/mo minimums, but virtually no small business can swallow that on a test basis.
The first time I came across the issue I thought “huh, I guess as a talent management company they probably can’t afford to deal with thousands of smaller audiences.” Then it happened again, and again, and again. Each time I would look at the client roster and see the usual names pop up…big brands, well funded startup CPGs like ourselves, but no smaller players. Literally 0% coverage on the small business marketing.
That’s when I started to look at some research.
How Big Is This F*ing Market?
“Well, shit” I thought to myself. I’m an old school SEO and have been an executive of a content marketing company; this is about as natural of an extension as I could possibly hope for. I should build an influencer marketing network.”
In starting to poke around at relative market sizes, I found myself chatting with longtime friend and fellow programmer/SEO Terry G. We constantly were pinging each other on Skype with articles indicating how enormous the market had the potential to become.
Even just looking at a Google trend graph, it was obvious that influencer marketing was indeed growing, which was of course enough to merit further investigation. Then we’d see that MediaKix thought the market could hit $10B in 5 years. Huffpo was saying that this was a market that is here to stay, and because I’m a contrarian in some ways, my favorite is this bit: the FTC is cracking down. I was in the payday market in a former life, so I’m very aware of the role regulators can play to both bring chaos to existing markets as well as provide protections to users and define acceptable behavior.
Reading through the various predictions and listening to the thought leaders espouse on how big the market was going to be, it still seemed they were continually missing small businesses. I’m aware of several influencer networks that have smaller audience players in their network, but the focus for these networks was and still are to help larger brands, as determined by their pricing models. Many of these networks are going to make a lot of money.
I wanted something different though. If I was going to leave that potential $25m+ payday 5 years from now, it needed to be for a damn good reason, which means money plus a societal benefit. I wanted to create a service that any business could use, regardless of size. It became a bit of joke at the @Intellifluence office later, but our mission even well before founding was to help small businesses act like big brands, and big brands to act like super crazy big brands.
As fate would have it during those back and forth conversations, Terry was already toying around with building a platform that would be 50% of what I had in mind. Loosely we agreed that after I left my position we’d formally found a company together with him as the technical co-founder and me being the guy that writes Medium posts and prays someone reads them (kidding?). Roughly 4 months later, we made that a reality and founded Intellifluence in July of 2016.
How big do I think the market is going to be though?
1. Existing influencer marketing market size in 5 years is projected to be $10B.
2. According to SBA, 28 million small businesses drive 54% of sales.
Using some back of the napkin math to account for lack of small business focus currently in the market, I think by 2021 we could be looking at a ~$22B total market size for influencer marketing. Feel free to quote me on this come 2021 on how I vastly underestimated the growth; I will be very happy to be wrong.
Getting Going
Starting up a company isn’t terribly difficult administratively, but the question that always comes up though is the decision to either bootstrap or get funding. As mentioned earlier, I’ve had a bit of past success, so I leaned more towards self-funding. It wasn’t so much a function of greed as it was not being 100% certain on how quickly we could grow and how closely a MVP would end up matching our initial ideas — this turned out to be wise.
Just in case though, I decided to ensure that I could afford to spend 3+ years on Intellifluence pre-revenue if needed, putting some of my assets up for auction, like Autoloans.com (old domaining habits die hard).
For fun, I also looked into the value of my Magic The Gathering cards acquired from 1994–1996 — bummer, not worth millions yet. That would have made for a fun post.
We decided to keep an open mind as some channel partners are already sniffing around, but for the foreseeable future are going to self-fund.
Time to launch.
Chickens and Eggs
We launched. Woo hoo. Oh, the market isn’t interested.
Like a lot of startups, when we pushed the site live, we were nervous and wondering just how quickly we might have to add spare bedrooms onto our houses for the mountains of cash that would come pouring in. $0 doesn’t require any additional rooms though; maybe rent it out on @airbnb instead or rent the garage on Roost.
We knew that we had an alpha product, pre-MVP even. The problem as we found it, was we initially pushed live a product that focused entirely on offer management — we made it incredibly easy for small businesses to recruit influencers and manage them from there.
One small problem. Small businesses wanted to know who we already had for them. This meant that we had missed a critical step; rather than providing a way for small businesses to manage we needed to first provide a way for small businesses to connect with people that were already influencers.
Why did we skip such a step? The ol’ chicken and egg problem.
The problem with building any supply and demand network is you need to have buyers to attract sellers and sellers to attract buyers. We had neither, so I started to do what I normally do when faced with such a situation, which politely might be described as annoying the hell out of people.
Reddit? Yep, I bugged a bunch of communities on the merits of joining our review network. Free, of course, for reviewers. Get product from companies you love in exchange for your reviews. Which companies? Let me get back to you on that; just sign up here. This was good for several hundred new influencers.
Facebook Groups? I got in a little trouble for being too aggressive. It was my fault of course; once I had a little bit of success I became a man with a hammer and all I could see was nails. It resulted in nearly a thousand reviewers, so I can’t fault the tactic and lesson learned, but if I could do it over again I’d be more judicious on which groups I joined and how I interacted with them.
Friends? Yep, you’ve got spam mail.
Social proof? Terry had the idea to make it easy for new influencers to recruit more influencers and that’s been a nice vein.
Industry contacts? This is just now getting started. The benefit of having sold hundreds of digital agencies on the benefits of content marketing is I can now go back to the same people and offer up a white labeled influencer marketing solution — I expect a lot of future growth will come from our white label, since it makes scaling that much easier in handling millions of small business queries.
Hitting brands? We wanted to see how small businesses would react to such a new service, so we reached out my friend @rsnake who helped us define out our outreach list to only those we were certain were using Shopify.
Shopify? Yep. App is created and submitted; we are excited to be a part of their vendor community and intend to reach out with our list ask them to join.
Content marketing? You know it. This is the grind that gets glossed over a lot because it is a lot harder than it sounds. Do a bunch of interviews and write at least 2,000 words a day? No problem. Sure, but try doing it while also running a company. Granted it is a small company and there’s only 6 of us, but still…it is a huge time suck. That’s also why it is worth it. Thanks @seobook for taking that first post and @bronco for that first interview. I’m confident if I do this another 100–200 times, we’ll have a momentum that builds upon itself.
The Road Ahead
We have so much planned that it is heady to think about. I often have to slow myself down and not get too antsy when we are focused on fixing critical search functionality at 11pm because I want to also build a multi-offer outreach functionality and multi-level white labeling over an affiliate program…baby steps Joe, baby steps.
What is next though?
1. Well, as mentioned in the second paragraph, I’m a proud CopyPress partner. That extends to Intellifluence — they are an awesome company and agreed to join as our first major partner; that kind of support goes a long way in my mind. It becomes an immediate inflow of potential brands and influencers.
2. Once we are happy with what we consider to be our MVP we’ll submit to Product Hunt. Feel free to up vote us when you see us there. ;)
3. We have just under 200 brands and ~4100 influencers as of writing this post. I want to be 10x both those numbers by mid-September, so we will constantly doing outreach, knocking on doors, and doing whatever it takes to get the word out to both smaller influencers and small businesses. This will also involve needing to build out custom solutions for every major ecommerce platform, so our dev team has a lot of work on its plate.
4. After our MVP is solid, we can start to redeploy the offer management technology that we pulled back, meaning we can have multiple billing plans depending on a company’s needs. Layer in the multi-offer, multi-level white label that I want and I think this means we’ll end up with 4 distinct and clearly separated plans by the end of the year.
5. Growth hack and biz dev. Now, like most marketers, I do fall into the trap of seeing growth as new users, but realize that at certain point we need to tweak growth via pricing and also customer retention. Since we’re only pricing this well below market at $9/mo, we’re aware that the base plan will need to rise precipitously in order to match the value provided, but we also wanted a way to grandfather in early adopters to the system and turn them into evangelists. As that is occurring, I expect that I’ll be hiring a growth/biz dev team in Scottsdale to push like crazy. I may not be able to hire the talents of John-Henry Scherck, John Doherty, or Dennis Goedegebuure but I’m certainly going to try.
Is a startup right for you?
Confusing as mud? Hopefully my dear reader this helps you to understand why I would trade the near certainty of long-term financial security for what you might consider to be a hair brained idea. I can’t not try. I’ve been called a hacker (Paul Graham version of the definition), a spammer, and been accused of possibility being a robot by most major social networks, but at the end of the day I’m just an entrepreneur that happened to be working inside of a larger company and realized that I’d be happier if instead I had my own company…again.
Are you wrestling with a similar move? Hit me at @CygnusSEO and I’ll see what I can do.
Cheers,
Joe Sinkwitz
