Episode 167 |

Painful Lessons Growing an 8 Figure Business with Rand Fishkin

Imagine the euphoria of learning that an investor is willing to bet $20 million on your company. Then imagine the stress that sets in after you realized what you’ve just signed up for. After all, that investor is expecting you to quadruple their money. My guest on this episode has been there. He not only lived to tell the tale, but he also wrote a book about it. Rand Fishkin is the author of Lost and Founder, which charts to rise on his multimillion-dollar company Moz and his rocky dealings with venture capitalists along the way. Rand is my co-author on The Art of SEO, which is considered to be the bible on search engine optimization. Back in 2009, that book put me on the map and I’m forever grateful for our collaboration. If you’ve ever considered growing your business or courting investors stick around. You’re about to learn some valuable advice and uncomfortable truths you won’t get from anywhere else.

Lost and Founder: A Painfully Honest Field Guide to the Startup World

I’m here with Rand Fishkin, Founder of Moz, formerly SEOmoz, now Founder of SparkToro. He’s also the author of Lost and Founder and co-author of The Art of SEO. I am so excited to talk to Rand about how his book came about, the Lost and Founder book, the aftermath of the book, what’s happening in his life, and how this could apply to us in the business world and in the SEO world, the social media marketing world. Thank you so much for being with us, Rand.

My pleasure, Stephan. It’s always good to chat with you.

Let’s start by debunking some myths about the startup world. What are some of the world’s worst myths about the startup world?

The one that particularly bothers me especially right now is this idea that if you want to be a tech startup, the only path, the best path or the most respectable path is to be a venture-backed company. That’s not to say that there’s something necessarily wrong with venture. There are many challenging issues with venture capital as an asset class in terms of its performance and how LLPs are doing and all that kind of thing. The bigger issue is that for millions of entrepreneurs, we believe that if you want to be taken seriously, you have to raise money from a respectable venture firm. That is not the only way to build a company. That is one of the least optimal ways, if what you are trying to do is build something that will last, that is likely to be profitable. That is likely to be healthy for you as a person and for the people, your team and that’s likely to provide long-term value to your customers.

The reason that’s true is that the venture world works like this. Let’s say you and I, Stephan, we start a venture firm. We go and raise a bunch of money, $200 million, $300 million from some limited partners and we go invest. Our expectations statistically speaking is that we’re going to put money into maybe 200 companies and eight of those companies are going to bring significant returns; five to seven times our initial investment, hopefully more than that, hopefully more like ten or twenty times. There’s going to be another twenty-ish companies that we invest in that do okay, not great. Maybe they make us some money. Maybe they make their founders some money. Then there are going to be 176 companies that we invest in that die, that don’t survive five years, that don’t return our minimum expectation. That probably make very little money, that mostly underpay the people who work at them that don’t provide much value for any customers. That works fine. Our model, if you have 10X returns, you make 100 investments and only one pans out, you’re still fine. You’re doing great, but for an entrepreneur that math sucks. Very few of us realize that and very many of us are enthralled by the idea, by the media culture of venture is the way to be taken seriously.

Isn’t that the only path to becoming a unicorn?

No, it’s not. First off, why do we all want to become unicorns?

They’re shiny, sparkly and magical.

Transparency and honesty are more important than preserving the status quo. Click To Tweet

There is a shiny object syndrome in entrepreneurship that, “I want to be a unicorn because that’s what everybody talks about as being the thing that’s good.”

Define unicorn for our audience in case they haven’t heard that term in the context of a startup.

In the venture-backed startup world, unicorns are companies not who have made money or who have done anything necessarily for customers, but companies whose venture firms, venture investors have valued them at $1 billion or greater in an investment round, which is an odd way of putting it. Some notable exceptions to this that are extraordinary companies are Mailchimp, which has never raised any money and done extremely extraordinarily well, and 37signals, which has done extraordinarily well and has raised money, Craigslist and a very healthy number of others that have done remarkable things. There are even a number of firms who raised money so late in their existence. Atlassian is a good example of that where they were essentially a unicorn, even though they weren’t technically valued by a venture firm when they raise their private equity style round before going public. If your goal is to build a billion-dollar plus company, there are ways to do it without raising money. If that’s your goal, venture might be okay as long as you’re on the same page. As long as you, as an entrepreneur say, “I don’t mind the fact that 94 times out of 100, this isn’t going to go well. I’m in it for the 6% odds and I’m comfortable with that risk profile.”

The way you shaped that or the way that you phrased that makes me definitely not want to get venture funding.

This depends on who you are and what you want to do. I have good friends who that is exactly what they want to do and they’re very comfortable with it, “I know that this is incredibly long. It probably won’t work, but I want to give it a try.” That venture is for you. You understand the model. Too few of us do. Many founders I had talked to have this idea in their head that, “How do I make a company that’s attractive to investors?” That’s a crazy question to ask. The real question for the overwhelming majority of us should be, “How do I make a company that’s compelling and exciting for customers, not for investors?” but this is the world we live in right now.

If you’re going to start up a company these days and you’re in the throes of this right now. You just started up SparkToro. Could you share with our audience who are not familiar with Moz or the SEO world because this podcast covers everything from self-help, biohacking, productivity to spirituality? Not everybody is going to be familiar with your world and with concepts like SEO, growth hacking, pivoting, all that startup stuff and internet marketing. Let’s start off by explaining here what happened that you were asked to step down from your own company? First, step down as CEO and become just a figurehead essentially, the Wizard of Moz and then to leave the company. There was some negative stuff that happened there. Whatever you want to share around those two transition points would be fantastic.

I’ll start with the first part of that, which is what is Moz and what we do. I was a web designer who dropped out of college to start working with my mom, Gillian. I created this blog around SEO, which is search engine optimization, the practice of earning organic rankings, traffic and Google’s non-paid results. I started this blog called SEOmoz, hoping to make the world of SEO more transparent and accessible to people and that took off. It turned our company from a web design and a traditional marketing firm into an SEO consulting firm. We shifted to making some software in 2007. When we launched that, it went very well. We raised an investment round from some local venture investors here in Seattle of $1.1 million. I became CEO. For the next seven years, that company grew from a few $100,000 in revenue to $30 million in revenue. Then in 2014, I stepped down. I was not asked to step down. I made the decision personally and brought it to my Board and said, “I want to step down and I’d like to promote my Chief Operating Officer, Sarah Bird, to the role. We made the decision that together that was the right thing to do or my Board agreed that that was the thing to do.

We made that shift. I asked for that primarily because at the time I was going through a serious bout of depression. I had compromised judgment and a very poor outlook on the business and on life in general. I hope that this might relieve some of my mental and emotional strain, which I unfortunately don’t think it necessarily did, but I hope that it would unburden the business from my personal complications. It did do that. I stepped down in 2014 and then for the next about four years was the Wizard of Moz. I was an individual contributor working mostly on product and marketing. Also, I’m still the Chairman of the Board of Directors. My wife, Geraldine, and I own a pretty significant stake in Moz. We’re the second largest shareholder with about 18% and 20% of the company. What led me to stepping down or to leaving the company was that over the last couple of years, especially after Moz had a tough round of layoffs in 2016, I had increasing amounts of conflict with the leadership. That bled over into personal stuff as well as professional stuff and caused us to say like, “This is not working at all.” It was somewhere halfway between, “You should go,” and me saying, “I should go.” I left on February 28th of this year and started SparkToro on March 1st. I gave myself a nice few hours of vacation there.

There’s this badge of honor to be extraordinarily overwhelmingly busy, but that’s not necessarily productive or making high-quality decisions.

 

You started it with a Cofounder?

I started SparkToro with Casey Henry, who I had worked with many years ago at Moz. He also did stints at Wistia, HubSpot and Ookla after that. He is a very talented engineer. He and I worked very well together.

You had a few hours off and then suddenly you had a new company. You had already found your Cofounder. Was that something that you had conversations beforehand about, “We should found this company,” or did you contact him after you left and said, “I just quit, or was asked to leave my own company. Now, I’m going to start another one? Are you in?” What happened there?

We had started in the prior fall and over the winter about the problem space that SparkToro was in. We had a few months of discussion in there before he came aboard officially. It was just me for the first couple of months, although Casey was still doing some stuff on the side. We were talking about it but not officially a part of the company until May. Then we raised a round of investment and closed it on June 7th.

Was that friends and family or was that an Angel investor or venture? What was that?

There were no venture and no family, just Angels. Many of whom are also friends and a lot of whom are professional contacts and a few professional investors as well. No institutional money, which was a bias that we intentionally went for. We raised a very unusual round and we wanted to give ourselves a lot of freedom and flexibility in terms of what the company could be rather than saying, “We’re going to go the institutional capital path and only be $100 million plus company or a failure.”

Had you entertained the possibility of not raising money and just bootstrapping?

Yeah, we talked about that as well. That was my general preference. In particular, our round was relatively friction-free. For two or three months, I had phone calls and emails with 45-ish potential investors and 35 or 36 of those ended up coming aboard and on terms that were very favorable to us and also very favorable to our investors. We decided that, “If we can close around with the structure that we want, it will give us a lot of freedom to concentrate on product and making it great in the long run and not have to panic in the first three to six months to get a relatively first version out. We probably also would have had to do some consulting or other types of revenue-generation. We wanted to just focus on the software side.” The round was great and certainly takes a bunch of risk off the table. I probably would have used up all of mine and Geraldine’s savings on the business otherwise.

People who are very humble tend to correlate well to honesty. Click To Tweet

Would you like to share the amount of money that you raised?

We raised $1.3 million from 35 or 36 investors. The average was around $40,000 per person. Some folks put in as much as $100,000, some folks as little as $25,000 or so. Essentially, the plan is to use that money as a buffer. We’ve spent very little of it. I’m not taking a salary currently. Casey’s taking a below market salary. A big portion of what we’re spending right now is on healthcare for the two of us because healthcare plans in the United States for small businesses are extraordinarily expensive. We’re both working from homes so no office. We have a few contractors who are working with on the UX and design side and probably a little bit soon on the machine learning and natural language processing side as well.

The plan is to be very frugal. Be able to use that money to give ourselves a lot of time to get the product right. We hope to have the first version out in Q1 of 2019 and we’ll iterate from there. Another problem with the venture backing biased, the idea is once you’ve raised this money, you’re supposed to spend money fast in order to make quick progress. That attitude inspires a lot of folks to say, “We closed our $1.5 million round and now let’s get a pricey office space in San Francisco. Let’s hire three extremely expensive engineers. Let’s try and crank on this thing as fast as we can. We need everybody to work 60, 70-hour weeks.” I don’t think any of those are optimal if what you’re optimizing for are long-term odds of success.

They’re not sustainable.

I was having a conversation with a friend of mine on Twitter about this. We both agreed there are weeks where we feel like, “I’ve put in an 80-hour week and felt good about it, but I don’t know if I’ve ever put in three or four in a row and felt anything but dead.” You can see all the stats. If you and I go and we have a week where we work 30 hours or ten hours and then we take a challenging test, we’ll perform well. We will do very well on that standard test. If we have a week where we work 60, 70, 80 hours and then we take that same test, we will statistically perform very poorly. I can’t think of something more important, especially for founders to do in early stages than make good decisions. Good decision making is crucial. I’d take extra 20 or 30 hours and put them toward sleep, rest and time with friends and family and personal care. Knowing that that will mean I do better work the next week.

One area that I’ve gotten heavy into is optimizing my productivity, my neurology and all my physiology. For example, the best thing for me is this bio hack.

What is it?

It’s an Oura Ring. It tracks my sleep. It tracks my activity level, my heart rate. This is the old version. I’ve got a new version waiting for me when I get back to the States. The new version is waiting for me there. It will track my heart rate variability as well and HRV is very important. If you have no variability in your heart rate from the in-breath to the out-breath, your heart works harder when you’re breathing in versus breathing out. If those two are the same, you are going to be dead in a few hours. Your heart rate variability is very important to your health. You can compare your heart rate variability to your breathing and say, “I’m going to synchronize the two to each other,” and then that will facilitate you getting into an Alpha brainwave state.

Depression can strike people who are happy and healthy and doing all the right things. It can strike people who are not taking care of themselves at all.

 

I’ve gone to his place up near you in Seattle called 40 Years of Zen. I’ve had the CTO of 40 Years of Zen on this podcast talking about neurofeedback and how to optimize your brain for massive amounts of Alpha waves, creativity and flow state. It was cool stuff. We did a full deep dive training on neurofeedback for five days and it was incredible. There are so many bio hacks, brain hacks and so forth that you can do. One of the most damaging things that most of us do to undo all the great brain hacks you can do with things like supplements like CILTEP or Aniracetam or Unfair Advantage or any of that stuff. I take a lot of supplements too. The fastest way to undo all that is to not get enough sleep. If you’re working 80 hours a week unsustainably, so because there’s no time for meditation, for downtime, for family, friends, hobbies and fun, it’s damaging to all sorts of relationships. It’s also damaging to your sleep thus to your brain and all your physiological processes.

You and I are in complete agreement about this that if there’s a week where you need to put in crazy hours because that’s how things go, okay but if you can slow that roll and bring it back down to under 40, under 30 for a week or two after, that’s an extremely good decision. Unfortunately, there are a lot of people in Silicon Valley culture, startup culture who believe the opposite. That it’s a badge of honor to be extraordinarily overwhelmingly busy. Not necessarily productive, not necessarily making high quality decisions, but at least busy or the appearance of busy for months or years at a time. That’s a pretty terrible way to go both for you personally, but also for your company. We would have a lot more success stories in the startup world if people had healthier relationships with their work.

Workaholism is one of those strange addictions that people wear as a badge of honor when it is very damaging. It’s not that dissimilar to drug addiction or alcoholism.

The years when you and I were writing The Art of SEO together, I was CEO of this $5 million, then $10 million, then $15 million, $30 million company, growing fast, hiring, managing executive team, blogging, doing Whiteboard Friday, speaking at all these conferences and events. Then also writing a book on this idea that was insane. I should have said no to half those things or more. Probably a lot of the results speak for themselves. Moz had this wonderful growth spurt for seven years but then I don’t think due to market conditions, industry stuff or even execution, which I will certainly admit was imperfect. What caused Moz to plateau in terms of growth and to go from 100% year-over-year to 20% then drifting down to 10%, 11% year-over-year growth. If you’re not venture backed, that’s still very good but if you are, it’s a little bit of a stuck in the middle form. That was poor strategic decision making, all on me in terms of what we should have been doing, what we should have been focusing on and not focusing on where to spend money, effort and hiring energy, all that stuff.

The unsustainability and the hard driving, the VCs pressuring you and the team to not get enough sleep but hit the numbers and all that. Do you think that contributed to your depression?

I want to be very fair to my investors in that they were not very personally or professionally pressuring with me or with the company. Especially in the years where I was going the craziest, which were probably ’09 to 2013, 2014. They were extremely happy and like, “Whatever you’re doing is great. We are not pushing you. We think your numbers are fine.” They were in a little bit more of the don’t stress too much view, which I should have listened to more. Most of the pressure came more from me personally, my own beliefs and what I thought I was supposed to be doing as the CEO of a venture-backed company. Looking at all of my peers in the venture-backed world and looking at how the media and the culture talked about it. Reading all the blog posts about how to be a good CEO and how glorified those crazy work weeks. That impression of being busy all the time and the, “If you want to be a successful founder, you’re supposed to care about nothing but your company for the first five or ten years.” That was what was influencing me much more.

In terms of the cause of depression, I don’t want to assume. Statistically, probably but it is very hard for me to know to reverse engineer that. Depression can strike people who are happy and healthy and doing all the right things and paying attention to their bodies like it can people who are not taking care of themselves at all. It’s more frequent when you’re not taking care of yourself at all. I don’t want to blame who are going one way or another. It’s different for everybody. Some of us are genetically predisposed, some of us are emotionally predisposed, some of it is family issues, some of it are work issues. For me, work was absolutely a contributor, but not necessarily the only catalyst.

Most people who have depression, they go at it alone. They keep that part of their lives pretty much to themselves. Whereas you’re very vocal about the depression you were going through. You wrote on your blog about it, you spoke to CNN about it. You wrote a book about it. What inspired you or compelled you to share this with a larger audience and not keep it to yourself and suffer in silence?

I was going through it. I noticed that the feeling of being alone was absolutely an accelerant for that terrible feeling. I didn’t want other people to have to feel like they were the only ones, which I felt that times. It was a huge relief for me when people that I admired and respected a lot. People like Ben Huh who was the Founder of Cheezburger Network and Brad Feld, who was one of Moz’s investors from Foundry Group. When folks like that were public about their own depression and when I could talk to them personally about what they had gone through, that was powerful. That made me feel like, “You can be a strong, smart, successful, admired person and still have these issues. It strikes all of us. It is an okay thing rather than it’s this shameful secret that we have to hide. American culture for a long time did not allow it to come to the surface, especially for men. There’s this myth that if you’re a real man, you’re strong and tough. You don’t have emotions. You don’t show them if you do have them. I hate that culture. My dad was definitely a part of that generation and that inculcation of culture. I wanted to reject a lot of that. This is not just true of issues like emotional stuff, anxiety and depression, but also true of a lot of other things.

Simple messages work. Human beings generally don't like complexity. Click To Tweet

The conversation that we’re having and the book that I wrote and those kinds of things, they probably mean that if I want to raise venture capital in the future, that’s going to be very hard. A lot of investors are going to be like, “I’m pretty sure I remember you trashing on us hard. No, I’m not interested.” The same is true with my relationship with Google over the years, which was very positive for a long time. Then as Google became more of a monopolistic bully, I changed my attitude towards them. It changed what I talked about publicly and what I expressed about them. That relationship is probably strained at best depending on which team it is. There are plenty of people at Google who I have a very positive relationship with. My guiding mantra has been transparency and honesty are more important than preserving the status quo.

Honesty is top of the list. A good friend of mine, he told me about the honesty test, which he incorporates into job interviews and it’s brilliant. I’ve been incorporating into my job interviews too. The idea is you ask the candidate to pick one of a handful of different attributes that would be most needed for the job, whatever the job is. The only right answer is honesty, but they don’t know that. “Tell me, what do you think is the most important attribute for this job? Would it be attention to detail, dedication, creativity, honesty?” You just make something up. Then the only right answer is honesty. If they say, “Attention to detail,” they think you want that. Honesty is non-negotiable. It’s part of their value system. They’re going to say, “Honesty is the only way.” Honesty is something that you cannot inspire in a person. You cannot instill it in them. You cannot train it in them. If they don’t have it, you’re screwed if you take them onboard. That’s a secret weapon to getting great people that and doing the personality assessments like DISC, Kolbe, StrengthsFinder and How to Fascinate Test from Sally Hogshead. I have new team members who do those tests as well.

I like that idea of asking about honesty. The other one that I love in candidates is humility. That’s a super underrated trait. When I find people who are very humble, it tends to correlate well to honesty, which is good. I’m also passionate about the difference between honesty and transparency. Honesty is, “I don’t say things that are false.” You can hide a lot by being honest. Transparent is, “I go the extra step of identifying things that are uncomfortable and hard to say. They give me that pit in my stomach when I think about having those conversations or needing to share that and I do it anyway.” That’s something I admire in people and try to live up to myself. If there’s a hard conversation that needs to be had, let’s have it. That’s hard but worthwhile.

There’s this concept called radical honesty and radical transparency, which is interesting to explore too. I want to make a distinction here for our audience that is important. A lot of folks think of honesty as just not lying, but it’s not. It’s so much more than that. If you just not lie, you’re spreading falsehoods by letting people be led to believe that something is true when it’s not. Being truthful and honest is about not leading people and not letting them be led on. Correcting misconceptions that if you left them, you know that you’re not saying the thing that is going to be uncomfortable because you don’t want the repercussions of that. That’s lying as much as saying something completely untrue, boldfaced lying to their face. You’re lying without opening your mouth.

This is why I like the distinction of the words honesty and transparency because a lot of people do think of honesty as merely, “When I say something, it is true. I don’t always say everything that is on my mind or that might be of use, but I’m always honest.” That’s absolutely very different from being transparent.

I wanted to share this model, this framework that I’ve learned from Alison Armstrong, who is an amazing person and thought leader in the area of the development of men and women. She’s got this great book about men and the stages that us men go through. She figured this all out through lots of research, lots of speaking with men. It’s incredible. What you were describing feeling disconnected, lost, depressed and so forth, some people might think that that could be a midlife crisis. What Alison referred to was she calls it the tunnel. It’s not a midlife crisis that could happen much later in your life. It might be a late life crisis. Some people enter the tunnel in their 50s. Some enter in their 30s. Some never enter it at all and they die still in the Prince stage. It goes from Page to Knights to Prince. Then there’s early, middle and late Prince. You could be an early Prince, the middle Prince and the late Prince. There’s then the tunnel after the late Prince stage, which is very short. That particular stage might only last six months or even a few weeks. The middle Prince is the stage that many of us men especially as entrepreneurs are very aware of where we’re building something. We work hard and we’re driven to create this thing to build something that’s going to last. 

If you think about, “I’ve built something. I’ve gone through all the hard yards and now I get to enjoy the fruits of my labor,” that’s the late Prince stage, it’s so fleeting. Within a few months, you recognize there’s more to it than that. That there’s more to life than just having built this amazing little business or whatever you’ve created. Then you get that existential crisis, you enter the tunnel. That tunnel certainly can have depression associated with it. I felt depressed when I entered the tunnel. I was going through a divorce at the time. I felt so lost. I felt empty. I felt like I gave up my true passion and what I could have created in life. Not in SEO or online marketing or even in computers, but biochemistry, molecular biology and virology.

Having a lot of validation about a market, even if it takes you a longer time to get started, is a wonderful thing and can prevent you from being in emergency situations.

 

I was a scientist studying for a PhD in biochemistry, specializing in biological viruses. I gave that up. I dropped out of my PhD to start an agency, to start Netconcepts. When I was going through this existential crisis, I was like, “What did I do? Did I just thumb my nose at the Creator?” I was not even believing in the Creator at that point in time. It was dark. Thankfully a few different people that I knew simultaneously within a couple of weeks recommended I go to a Tony Robbins’ event, so I did. That can’t be a coincidence. That was pretty weird, these people didn’t know each other. It changed my life. I woke up and I got inspired to do a complete reboot. I’m completely different looking, different acting and different believing than the person I was before. You know me from the before and the after.

That was the tunnel. I thankfully exited the tunnel and after the tunnel comes King. Some people, not very many, but a couple percent of those Kings move on to become an Emperor, but most people stay as King. Sometimes these guys don’t exit the tunnel and then go to King. They go back down to Prince and they want to build something. They start over again because they don’t like the King thing. This was all new to me. This illuminated a lot for me learning about these stages that men go through and being able to identify where I’m at and where I’ve been through these stages. How does that resonate with you? Do you connect with any of that?

Parts of it for sure. One thing it definitely reminds me of small parts of our professional life, but they’re not our entire professional life. As I went through the publishing world and certainly as Geraldine, my wife, went through publishing her book, that feels very familiar to a lot of what I’ve heard from friends of mine who are writers, friends of hers who are writers where they put all their lifeblood into this work. They publish it and they have a few months of reveling in the, “I’m a published author now. My book is become my life and what I’m known for.” Then it turns into this, “Now what’s next?” That can come from inside. It’s also very strong externally. Everyone in your life is asking you, “What’s the next book?” I’ve definitely seen what you’re talking about. I haven’t heard those particular nouns used to describe the stages, but the stages sound familiar especially in the literary world.

What would you tell your critics, your detractors, who are hating on you for oversharing, for airing your dirty laundry in the book, on CNN and the blog?

Most of the people who are negative about the stuff that I share, 99% plus of the people who are not negative on sharing around depression, anxiety stuff, building a company stuff, venture stuff, SEO stuff. It’s almost always political. It’s something like, “How dare you share your political views? I was following you for information about SEO,” and I don’t care. If you have been following me or anyone else and you like what they have to say. You’re impressed by the perspectives that they bring. You feel like they’ve added value to your professional and personal life. Then they share a political opinion you don’t agree with, maybe you should investigate or explore, whether if this person seems wise on these other subjects, potentially. Maybe they have some wisdom to share on this and you can still disagree. Reasonable people can disagree about all sorts of things but that seems to be the big one.

I’ve almost never received with a couple of exceptions, negative sentiment around sharing on these other topics. It almost exclusively come from internal sources. What I mean by that is people who I worked with at Moz, people inside the company saying, “Why do you have to be so public about the challenges, hardships and negative things that are going on here as opposed to what I thought a founder and CEO was supposed to do at their company, which is to be a cheerleader for the business, to be promoting it positively?” My answer to that has always been the same, which is you knew what you married. When you came aboard Moz, I hope you knew, I hope you had read the blog. I hope you had some exposure to what the company was like and what I was like that this was the way I operated, and this was the kind of company that I wanted to build. This is part of our value set. If that’s not a match, I encourage you to go somewhere else. Apple, Facebook and Amazon, these companies are extraordinarily secretive. There are a lot of places you can go there that hide all that negative stuff or do their best to hide the negative stuff. If that’s a company you want to join, great. There are lots of jobs available.

The other thing is that my belief is that even if in the short-term saying things, and this is a very tactical example. For those who don’t know, one of the big things Moz built in its early years that launched the company’s success in the software world was a Link Ex. You could go and plug in a website and see all the links that are pointed to that website on the internet. We had a lot of success with that and then we fell behind a few other competitors, notably these two companies Ahrefs and Majestic who many other folks in the search engine optimization world used. I would talk publicly about that, “I used our Link Ex for this, but I used our competitors for these and other things because we’re not good enough and we need to get better.” There were a few people on the Moz team who hated that their work was being derided by their own CEO. It felt terrible to them. They despised that and I kept it up.

Anyone shouldn’t just believe someone else's word. We should all do the statistics and math. Click To Tweet

The reason I did that is because when we finally got to be better than those other competitors, I could speak honestly about it. I could say, “For the last four years, our Link Ex has not been as good as our competitions and now, it’s finally better.” People could believe that because I had been telling them the truth the whole time. It’s a weird way to operate for sure. You don’t hear the CEO of Volkswagen say like, “We’ve been lying about fuel emissions for two decades, but now we’re not.”

Do you believe with your heart and soul currently that Moz’s Link Explorer is better than Ahrefs now?

My contention was that we would not release Link Explorer until it was. We had all these metrics that were like, “We have to be better on size, quality, percent of spam found and identified, coverage of these sorts of things, crawl of these types of sites, correlation with Google’s rankings,” whatever that fifteen or so metrics were. When it launched, we were better on twelve of the fifteen. There are a few things that we’re not as good on. It’s less a matter of belief and more a matter of like, “You don’t have to believe me. Go run the numbers yourself.” I don’t think that anyone should just believe someone else’s word. We should all be able to do the statistics and math. That stuff shouldn’t lie. It should be out in the open.

What’s your involvement in Moz currently now that you’re into your next thing? You’re still the Chairperson of the board. Is that a show up for quarterly meetings and that’s it? Do you do a lot of evangelist’s stuff still for the company or what? What’s your ongoing role?

I am Chairman of the Board. I just show up four times a year. This last Board meeting got canceled so it’s only three times a year. That is pretty much it. No evangelism. I have a few things like a noncompete agreement. Otherwise, no particular involvement. I’m a shareholder. I like to disclose that when I say things like, “If I tell you Link Explorer is better, you shouldn’t believe me. You should go investigate yourself and look at the third-party analysis and all that kind of stuff because I am a substantive shareholder.”

What do you think of these startup concepts where they are popularized by the startup world like pivoting and growth hacking? Is it a bunch of malarkeys, a bunch of spin or is there real substance to this stuff? Is it new, innovative and important for all companies to learn from the startup culture?

You can probably pay attention to things that are going on in the startup world and get some valuable tactics and strategies. Like anything else that is being hyped and earning a ton of popular attention, there’s an over indexing that happens. The pendulum swings too far. There are a lot of companies in the world of marketing that are overly obsessed about finding that one growth hack that’s going to transform their business as opposed to building a healthy flywheel that scales with decreasing friction over time, and it gets better and better. It’s more of a slow burn. I’ve seen a lot of companies over index on that. The same with pivoting. A lot of especially early stage companies that think, “We’ll build this. If it doesn’t work, we’ll pivot and then we’ll pivot to the next thing.”

The pivot is a tool that is for emergencies only. I’m not a huge fan of that. Having a lot of validation about a market, even if it takes you a longer time before you get started is a wonderful thing and can prevent being in those emergency situations. The open office culture is probably one of the worst myths pervaded by startups, especially because now we have decades of research showing that open office plans are terrible for productivity. I worry a little bit about Slack in that regard too and in general, always on chat messaging. Maybe there’s a swing against that as well because that culture is also pretty dangerous for productivity.

My team uses Slack but I refuse to use it.

Recognize that over-optimizing for a single metric may mean that you’re doing unhealthy short-term things.

 

There are good uses like alerting types of stuff. It makes total sense to me if you set up these automatic alerts. You have a channel in Slack that you can go into and has recorded all these stuff for you. The idea that every four minutes that I’m away from my always on Slack, I’m seen by my team as not being engaged. People have to do deep work. I much prefer deep work to surface level, “I’m always available via chat.” I don’t think that’s useful.

Have you read the book Deep Work?

No, I haven’t yet.

I had the author, Cal Newport, on this show. We talked about it. It was good. He also wrote So Good They Can’t Ignore You, another great book. One last question about open-book management. You’re a transparent open guy. What did you do in terms of open-book management that’s super innovative at Moz? That you’re going to be instituting as you add more staff and more moving parts with SparkToro? I’ll preface this by saying I’m a big fan of open-book management. I read the book by Jack Stack about open-book management. The Great Game of Business is the name of that book. Keeping your team abreast of what’s working and what’s not working and what the scoreboard is and what matters on the scoreboard is super important.

A lot of times, especially in marketing, we can get distracted and thrown off track in terms of what’s a metric that is meaningful. What we should pay attention to versus what we should. Part of that is good decision making from leadership to identify the right metrics, the ones that have an impact on the business in a positive one. Also being cautious at the same time to recognize that over optimizing for a single metric may mean that you’re doing unhealthy short-term things. Keeping in mind a short-term metrics we care about and here’s a long-term goal or overarching strategy with values that we’re unwilling to violate. Holding that in your head and being able to communicate that well is hard. It’s hard for people to pick up on people who are not good at nuance. Human beings generally don’t like complexity. That’s often why politics is such a bad field is that simple messages work and complex nuances is what’s real.

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I have a lot of empathy for leaders who struggle with that. In terms of innovative stuff that we did, we were early in the game of being very transparent about our numbers. We would publish our numbers publicly every year about how we performed despite being a private company. We did that when I was CEO monthly and then quarterly internally. A lot of folks who subscribe to the daily numbers of how Moz was doing ended that a couple of years after I stepped down. Anyone for a long time could say, “I want to see the daily counts of how many people are subscribing, how many people are quitting, what’s going on?” That gave people a real mouthfeel for, “We had an outage for a week on our ranking data. How many people quit? What did that do to our numbers,” versus, “We had this launch, how did that contribute to our growth?” I can see why CEOs don’t do it because it was hard for a lot of people who had been used to these many years of massive growth and then saw that slowing and then plateau. That can hurt.

Thank you so much for baring your soul and being open and vulnerable with me and our audience. If folks want to follow you on Twitter or other social media, if they want to read your blog, where should they go?

The blog is at SparkToro.com/blog. You can find me on social. I’m most active on Twitter where I’m @RandFish. Stephan, it’s been a real pleasure. It’s always great to talk to you. I love seeing how well you’re doing. It’s just great.

Thank you. You’ve been a great friend. I appreciate our friendship, our co-authorship status and hanging out at conferences over the years.

Take care.

Your Checklist of Actions to Take

☑ Don’t fall into a trap that there’s only one path to becoming a venture-backed company. Focus on building value and opportunities for my clients.
☑ Be honest and transparent. At the end of the day, my success is defined by the relationships that I build.
☑ Hire people that shares and displays the same values and culture of my company. Honesty is non-negotiable and so as humility.
☑ Do my research. Don’t just believe what’s being presented to me but strive to know the numbers.
☑ Be patient. Build a sustainable business with proven results of scaling my companies’ growth even if it takes time.
☑ Develop a healthy lifestyle. My best investment is myself, therefore, I should learn how to properly take care of myself.
☑ Manage my time wisely. Being busy doesn’t mean I’m being productive. Strategize and use tools that are effective and drives efficiency.
☑ Beware of startup companies that promote growth hacking and pivoting. Following the trend is not always the best route.
☑ Identify the right metrics for my business that are impactful and effective. Without over optimizing things, find the balance between a short-term goal and a long-term goal.
☑ Grab a copy of Rand’s book called Lost and Founder and the book that he co-authored called The Art of SEO.

Important Links:

About Rand Fishkin

In 2004, I co-founded the SEO software company, Moz, where I served as CEO until 2014. In 2018, I left and founded SparkToro, a software and data company focused on helping people understand how and where to reach their target audiences. I’m also the author of Lost and Founder: A Painfully Honest Field Guide to the Startup World (2018) and a frequent keynote speaker on marketing and entrepreneurship topics around the world. In my spare time, I mostly like to hang out with my wife, Geraldine, and eat pasta.

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