03:14 DA
Hey Austin what's going on. Thanks so much for joining me today.
03:17 AD
Yeah. David thanks for having me on.
03:20 DA
Awesome I'm super pumped about today's interview, about today's call. You know I'm a big user of your platform. I've been a big advocate of what you guys have been doing since last year basically when you guys got started. So I'm really excited to kind of dig into some of the things that I've been working for you guys. Your growth has been astounding, absolutely amazing and I would just love to learn from you director of marketing, the guy behind the scenes actually in the trenches there doing all the hard work. What's been going on and what's been working. But before we jump into that also what I would love to do is just
kind of get a lay of the land, lay a little bit more about when you got started how this whole thing started unveiling for you, some maybe give me a little bit of background of when you joined the Proof team and maybe what the company
was like at that size, how many people were on the team or with MRR stuff like that.
04:05 AD
Well it's funny because you know Steve Jobs has a famous quote during his Stanford speech where he says you can't connect the dots looking forward you can only connect them looking backward. And I think that's so true with my story and Proof because two years ago I was running a marketing agency and I had taken a course by a guy named Dave Rogenmoser on how to scale your marketing agency. Now I know that name sounds pretty familiar because he's actually the CEO of Proof and the one of the three cofounders. And so our stories begin there and about eight months after taking his course. We got really
close, I did some case studies for him and eventually he said Hey Austin I want to start this community called The Entrepreneur Alliance. Basically we were frustrated with the State of the Internet, a lot of smoke and mirrors. a lot of get rich schemes out there that you know they'll sell anything, they'll say anything just to make a sale.
04:59
And The Entrepreneur Alliance was pretty much a push against that. It was a push towards transparency towards authenticity in online marketing. And we believe it begins with the people who teach it and the people who share that information in a community. So we started that, I moved from Atlanta up to Maryland and then about three months later with the same mission that we want to, you know get more sales through honest and transparent marketing, a great software came out of that community as well. And that's Proof. And so while in I think it was 2016 October when we launch The Entrepreneur Alliance,
four three months later in March maybe February is when we launch Proof and it begins scaling so quickly that we eventually merge the two companies.
05:48 DA
So that's really exciting to hear. One it sounds like you kind of came up with the idea out of need, out of your own need of what's going on over there at the at the company The Entrepreneur Alliance. So at the time you joined basically it
was pre software so you're even at zero dollars MRR when you're getting started. What was revenue like at Entrepreneur Alliance. Sounds like you kind of even launched to them initially, right.
06:11 AD
Well so I do want to take a step back here because this has all been kind of a part of the master plan. If we look at what we wrote down we have a lot of videos about this too, if you look at some are really old videos from like 2015 and 16. The plan to get to 100 million and it starts with consulting. A lot of times you need cash flow to be able to start your thing as you know development is very costly and even if you have a product how do you market it without some paid advertising. You know that's really hard to get your first few users so having a little bit of a cash flow stream is super helpful and that's why Consulting was
great. The way Dave and those guys started their journey was through digital marketing consulting and then eventually they got into the second stage of this masterplan which was courses.
06:55
How do you create something that's consulting but now scalable and so using the Internet to distribute your knowledge instead of just doing one on one consulting. So once we went from those two models, the obvious next step was to create something that was scalable without having to do just like one to many. Now having a platform that is distributed through systems and not
people dependent but now system dependent. And that's really the main difference from making a membership community, actually I just skip a step in there. So we went from consulting then to selling courses. That's a one time payment. So a thousand dollars to learn how to do Facebook advertising or something like that. The next stage after that there we come to find if you don't have a promotion, if you don't have a launch happening, then you're not making money.
07:48
You know if you stop paid advertising, guess what, the next month you're not going to make any money. So that's really frustrating. It's also really scary because the market's changing so quickly and so that's when we said OK well maybe information doesn't have to be distributed in a one time thousand dollar payment high ticket but rather a low monthly recurring payment subscription.
That's when The Entrepreneur Alliance business model really changed from being a thousand dollar course into a thirty dollars per month payment and that quickly outgrew the monthly recurring revenue compared to what the monthly one time revenue when courses were happening. And so now we're where here in software.
08:31 DA
That's amazing. I think that's you know a lot of the steps that a lot of entrepreneurs take as they get into software, that kind of the step by step approaches which is amazing and from the marketing perspective I'm sure you guys started to learn a lot too. Was your target demographic the same way all the way through, with just kind of leveling up your marketing each way?
08:50 AD
We have continued to you know revamp our who our Avatar is, who we want to attract because sometimes the customers you have today aren't the customers you want tomorrow. And that's really important. Keep in mind that as your product grows and as your team grows it might not be a cost effective structure but two you might need to find a different kind of client. You'll notice that now we've come to notice here in Silicon Valley that once a company gets a huge amount of investment, the investors want to change their pricing model to go to enterprise.
09:23
And so when you focus on enterprise clients, like what happens to all the other ones that are on freemium plans or you know low ticket plants like 30 bucks a month. And so that just change the way that you position your product.
09:37 DA
Absolutely. Yeah. Hundred percent. Is the evolution of your persona right, you got to evolve as you grow. Look at those churn buckets. See what's actually happening in your software and then make the plans really for that. That's really amazing. So just to kind of step back really fast. So you kind of had these steps leading through the evolution of Proof and kind of your position there in the team, let's take a look where we are now at Proof. So you guys started in March and March of last year. Where are you at right now in terms of MRR, customer size.
10:06 AD
Yes so when we started The Entrepreneurial Alliance quickly got up to maybe ten thousand dollars per month in recurring revenue, just from our e-mail list that we had developed through our courses. So that was the cash flow, that's what began, i was employee number one back in October of 16. And so then we launched in February, we launch Proof in February and that quickly outgrew our recurring revenue for The Entrepreneurial Alliance. Not too long ago we merged the two companies into one. And so now everybody that is a Proof user gets an Entrepreneurial Alliance membership and we just did that because we wanted to focus but what that also allows us to do is scale quicker, where I don't worry about running two ad accounts, I don't have to worry about you know two customer support channels right, like everything is now into one. And I believe that focus is so hard to gain so easy to lose the same as momentum is once you get it.
You got to go all in. So look because of that focus and because of these decisions now we're at about one point eight million APR. So our monthly recurring revenue is one hundred sixty eight thousand and where we projected it by the end of the year if this continues is one point eight million.
11:27 DA
That's amazing. That's absolutely fantastic. And the fact that it hasn't even been a full year I think since launch if you launched in February.
11:34 AD
Yeah we launched in February you know and it's been awesome but we know that what got us here won't get us there. And so you know that the marketplace is changed. Our goals have changed, what we want to become as a company has changed. And so really where we're headed to in the next couple of years is dramatically different than where we started.
11:54 DA
Totally. And that's probably a definite in the marketing and product perspective and you're constantly always evolving. I love that. But I want to know what what got you guys, obviously this is kind of sounds like already know the answer to that question, your first customer what was that initial marketing kind of concept that you guys went with. Because I want to kind of move forward like what's working now but I want to know what got those initial customers and was it just going to The Entrepreneurial Alliance, to the marketplace you already had.
12:21 AD
So you know we did the product first for ourselves and like we want in a way how do we increase the conversion rate on our landing pages or lead pages or sales pages in our checkout but through an honest way, we hated the fake scarcity stuff, we hated. You know that people would say like there's a limited number of seats on a webinar right, like we all know you can have a lot of seats on a webinar. It's not like it only held the 20. This is a fake scarcity. We know that it works and that comes from the leaders so we didn't like that we wanted you know other ways to market. So we were shopping on hotels.com and Expedia or something like that. And you know saw a bunch of people were, I think it was actually maybe Airbnb we're looking at, how many people were looking at this same Airbnb and we were like holy crap you got to get this thing right now and we're in a by then like wow that was actually like one represented what we like, the transparency, authenticity, a little bit of social proof there, a
little bit of fear of missing out, you know I don't want this hotel room to leave because it looks like the one I want and so I want to take action now. And so we're like OK well how do we get that little app on our page. We searched the market and we couldn't find anything, funny enough David like all these different companies were making it for themselves like internally there's their own team. And so we're like OK I guess we have to make it ourselves if we want it. And so we did that, we just ran as an experiment. We A/B tested it and you would not believe the results. Check this out.
13:50
So the lead page that we put it on was converting before at like 19 percent conversion rate and which is great. It was at 19 percent before using Proof on it. And then two weeks later we came back to the results 42 percent conversion rate like it over doubled. Right. Holy crap what did our checkout page look at. So before Proof our checkout page was converting around 8 percent. We came back it was at 16 percent. I kid you not. And so we're like oh my god this is working is this a fluke is this real data. Well you know Google optimizes told us yes this is real. Ninety nine percent confidence rating. And so we say OK maybe
this is just for us because we had run it. This is for The Entrepreneurial Alliance at the time.
14:41
So we let some of the other members use it and say hey try this on your site. We want to make sure this isn't a fluke and it worked incredible for them as well. We like guys like Nicolaus Kuzmich. You know all these other big time agency owners and consultancies on their client site and all their clients boosting in conversion.
15:04
So like holy crap maybe this is more than just like a cool little hack we found, maybe we could build this into a company, so that's when we suddenly do like a prelaunch webinar, just kind of test the market you know, see hey if you guys pay a thousand dollars here today then we're going to go ahead and build this development and we'll let you guys have that as an annual price, we'll pretty much give you first access to all of our beta features et cetera. We called it The Founders Pack and from there we maybe sold 25 at a 1000 dollars, so that gave us a good little development fund and within about a month it now launches the
actual product. And that was about that was about March.
15:48 DA
Awesome. That's awesome. That's really utilizing the prelaunch ability really getting the agile kind of feedback loop. You got a feedback loop early, you got paid for, you've validated the product had to break under it, so I absolutely love that. I love that you guys put some marketing initiative up front before even finishing the product development. That's amazing. So did 25 then you launched into the group, how did things go when you launched it back, did you find resistance or did things in marketing kind of started clicking together or was it just kind of an easy process once you got people getting results.
16:22 AD
So one thing that we know about this industry is that people look towards the influencers more than most other industries. So we are thinking 80/20 out of all the customers that are in the market. What are the 20 percent of customers that are going to be the most valuable to us. And so we began with our friends, you know being that we were in the consulting info course creating niche. We looked at our course creators. We looked towards other people that had influence and had a following and had a huge list that they could show the results to people that had a lot of Web site visitors and if we began there we
knew that trickledown effect would happen and that we would quickly gain market share which is you know in the beginning you got to start in a blue ocean. Right. Like how do you take over the market. It begins at looking more to
the 20 percent of people that you need to contact first and really quickly we became the number one person in the market for this and you know, first we were the only ones right, like we were the only ones selling it publicly. Right. All
these other sites had it privately they built it themselves. We were the first ones to be able to say hey you have a Clickfunnels page, a Leadpages or any of these other pages, you can now use this as well. And that was revolutionary. Some
little knock offs came out here and there which is fine because they were going for a totally different market than we were. But it also validated that this is something that everybody wants and we could position ourselves as the ak
Apple or you know Tesla in the marketplace. You know being the premium service, the one that like... what we stood for was different than all the knock offs too, like we wouldn't allow people to upload information which is something that a lot of affiliate marketers want as they want like fake information out there to make themselves look cool and popular. And that's just
something that we were willing to put up with, like we started the company with a mission and it was from that mission, is the reason why our company took off and the reason why The Entrepreneurial Alliance loved it so much is because it was real.
And so that's why we're not too worried about some of these knockoffs that are coming off because they're not verified by Proof. Our little tag at the bottom of the notification verified by Proof is our stamp of approval. That's the bread and
butter of it. And so I think a lot of people get mixed up with that like they have to stick to what they started with what their core belief is and build a tribe around the belief system.
18:55 DA
Well I think you said a couple of really key things here and it sounds like your marketing plan is really deeply tied not only into the product mission and vision but also in the product itself. So you're talking about having you know a link in
your Proof notification that links you back to your website and you're going after influencers or people with larger audiences to leverage their audiences to come back and check out Proof, that they might have your target demographic
or earlier target demographic so you built in a little bit of virality in the product itself. You also had unique values that you wanted to stand out as a brand symbol uniquely branded inside of the marketplace and also sounds like you did
a kind of a cold, not a cold reach out, did a reach out campaign to those influencers to get them on board so kind of three different approaches of marketing layered into the product itself.
19:47 AD
Well yeah and you know at the end of the day this is not the hardest sell in the world, we're basically selling money right, like increasing conversions gives you more leads and more sales and so who are the people that are most interested
in more leads and sales? Well the influencers of course, the ones that think about this all day every day, how can they get a lower cost per acquisition on their Facebook ads and so reaching out to them and saying hey if you add this to your site, one is going to show how popular you are so little ego boost there but two it's going to decrease your costs and increase your revenue. So people are very intrigued by our offer. And so yeah wasn't the hardest sale when we reach out to some of these influencers.
20:27 DA
That's awesome. When you guys kind of evolve and you got past this initial reach out what were you guys starting to do as you expanded your marketing, were you looking at new marketing channels, looking at advertising, cold email reach, what are other things that you did and were there any surprising results cause it sounded like you had some explosive growth initially with these referral partners and some of the influencers you had. What about some of the other marketing channels you ended up going after?
20:51 AD
So I have a firm belief that if you can structure your company in a way to be able to out advertise your competition, you'll take over market share and then you'll win the brand. For us, we understand that Facebook right now is it's not a blue
ocean but if you are able to effectively get a high conversion rate and then that's going to lower the cost per acquisition and you have a price structure that allows for a little bit of padding, you're able to then out advertise everybody and
gain market share. So there are companies out there right now that you know are you know nine dollars per month for their Calendly link or whatever it is, like the you know something a software that's low priced is going to have a really
hard time gaining any market share because they can't do through advertising. They've got to do it through only paid only through free acquisition maybe organic channels maybe referral traffic maybe cold email outreach and that
stuff is fine but when I look 80/20 How do you launch a company, how you'd be that rocket ship quickly? It's by paying for it. I know it's a little bit of a shortcut but if you can price premiumly and be able to back up that price that it's not just
like oh you're premium but you're overpriced. No but if you are able to actually have a legitimate offer but it is so high ticket, high enough ticket, that you can have padding in there to acquire a customer, you're going to be quickly able to
take market share. So that's that we're able to do and I look at the number one metric I look at as a paid traffic manager would be EPL 45. Earnings per lead within 45 days. That's the metric you really want to focus on if you have a 14 day trial.
22:36 DA
Wow that's huge and great advice. I love that, the EPL 45. Any other marketing KPIs or things you guys look at in the marketing? Like basics when you do marketing mean stuff like that?
22:45 AD
Well you know back in the day when you know I was more green, I used to look at a lot of vanity metrics such as like how many likes comments and shares I had on my thing, you know that showed me how great my ad was. But if you look at
the outperformance sometimes it's not always the best. You know let's say an audience might have really high likes comments and shares but a really low conversion rate in a really high cost per acquisition, that's not what you want.
And so at the end of the day sometimes we make our decisions based on vanity metrics where we should actually be raising our decisions on clarity metrics. The things that actually matter such as your cost per acquisition or your conversion
rate.
23:28
And so that's what we focus on here today. And so the reason why I said our EPL35 is the main metric that we want to try and focus on, is because think about it if it takes a 14 day trial at the end of the 14 days we get payment number one
and then 30 days later, when their subscription kicks and again we get payment number two, so I can between those two payments keep my acquisition costs below those two payments combined, the earnings is higher than the costs
within 45 days. Now that's a recipe to be able to scale.
24:06 DA
I love that, that is such a good thing to look at and I think for even for us it's not something that we look at. I love that idea of looking at the long, the long term EPL. So let's do this. Let me ask you this question, seem you guys started really
with a lot of, I would say almost referral growth rate like the virality growth structure with influencers and stuff like that, moving into a more scalable self-controllable advertising medium of marketing which was, you know Facebook advertising. What has been the biggest win, where do you guys see most of your growth coming from? Where would you attribute that?
24:43 AD
You know there's a pretty diverse like we're pretty we're pretty diverse at this point now. Some of it is referral traffic some of it is Google AdWords some of it is Google display network, some of it is Perfect Audience or other audience
networks. Then Facebook ads, then a little bit of affiliate marketing. If we look at 80/20 it's paid traffic, still today.
25:04 DA
Love it. Yeah. So I mean that's really great advice a lot of people kind of shy away from paid advertising that they're afraid of the cost and stuff like that but it's true the mathematics behind it that makes it work so well. So I love the fact you've been able to do that.
25:19 AD
That's exactly right. It's because the mathematics that you are scared. See if you are, if you're very clear on the mathematics of it you're not scared, you're confident. The only reason why they're scared is because they don't know what their Cost per acquisition is and what their trial conversion rate is and what their lifetime value is, if you have those three things in stone, you know exactly what they are, you have those things on your dashboard every day. Then you know if
you spend this much then you'll get this many customers and you'll make this much over the long run. And if you want a very simple formula for it spend up to one fourth of your lifetime value on acquisition.
26:00 DA
That's super helpful. I love that. I want to go a little shift here. I'm gonna take a look at 2018 where I take a look at what's coming up here this year for you guys, you guys have some really big hairy audacious goals, I love that you guys are really aiming for. But where do you see actually marketing changing here in 2018? What are you guys as a team are going to be looking at internally to continue to grow?
26:22 AD
You know as we one, look at the product and what we want out of it. We've been refining our message a lot but what we see here today is that the Internet is quickly becoming more personalized. And if we if we look at 2000 you know 25 or even 2030 we look several years out we can place a big bet that the Internet is going to be much more personalized and humanized at this point.
And so we don't, think that you know by that time we're all going to be seeing the same site. David you have you know a certain personality set you search the internet in different ways, why should you see the exact same website that I see right? Like you and I don't see the same YouTube ads, we don't see the same Facebook ads. So why should we all see the exact same site.
And so this idea that static sites will be around in 20 or 30 years is out of my mind like I don't see that being in any realm of possibility. So we can be on the forefront of personalization and obviously with the intent to increase conversion rate because we know that when we have a better experience online we're more likely to use that service or product. So that's where we're taking the company is personalization really humanization how do we put a face to the
data. How do we make a website know who you are and talk to you in the language that you need to be talked to at.
27:48 DA
I love that and probably a traffic source, level of awareness of all those types of things where you are in your business if you could gather stuff like that and really have personalized, I don't want to say websites, are personalized messaging for you. I mean I think that's absolutely amazing. It's a breakthrough because you guys said transparency relationship building those things are getting pushed down a little bit in marketing and I think you guys are really on the forefront of really bringing those things back to light and I love that.
28:15 AD
Well think about this, all the giants are already doing it right. Netflix is doing it. They're telling you shows that you're recommended. If you look at Amazon they are on the forefront of this. I would say the biggest player and personalization.
So your Amazon account looks totally different than mine. And I love like how now I do all my grocery shopping through there and it gives me recommended items to buy. And often they hit me perfectly. It's exactly what I wanted.
28:41
So how do we take the exact same data and same technology that Amazon is using and now bring that down to mid-market websites. How do we allow everybody to be able to use that technology.
28:56 DA
I love that. Is that going to affect any of your marketing initiatives are you guys going to just wait for the product to evolve there or are you guys actually going to go and do some type of marketing campaigns around this?
29:07 AD
We're taking a big bet this year on machine learning and in fact right now we're running through a program called YCombinator's out of Silicon Valley and we're being mentored by you know all the big guys like Airbnb and Uber and other
people like that, about how do we scale a team that can make this happen. So by 2020 we want to help 100000 websites humanize. That's the big goal, how do we get there. And so we're going to be growing our team by 30 to 45 people this
year, taking on our series A, doing a lot of things to grow in that direction. Our product is going to change a lot but at the end of the day it's to one create a more humanized experience for your visitors as a user of Proof but also how to increase conversion rate for you a user Proof.
29:58 DA
I love that. So I'm to end up and end this conversation with some lightning round questions. Typically the way I do these is just ask the question and think of the first couple of things that come to mind that you can answer about. But
it's super helpful because it's just like top of mind. Answers are always great. So let's go and get started. Advice for early stage SaaS companies starting marketing, what advice would you give them?
30:20 AD
Make sure that you understand who you are targeting first, say this is basic 101 but create an Avatar and hanging out with them, get to know them. What do they read. What did they love to watch on TV. What kind of restaurants they go
to and start to really develop like the perfect customer of who that is and make sure that aligns with the way that you've structured your business. How do you position it. The wording, the copy,,, the pricing structure. Everything should be
around that. And at the end of the day you should know Six Degrees of Separation of what they want. So let's say for example, we know that our customer avatar in the beginning was always like somebody who is an online marketer that values transparency and authenticity and so we built products around that. We built courses around that. Then we built a membership
community around that and now we're building software around that. And so the six degrees of separation means that we're creating products that all revolve around the same topic, the same category.
31:23 DA
Love it. Great answer. That's such a good answer. What marketing skill do you think is vital for marketing teams to improve and build on today?
31:41 AD
You gotta know your paid traffic and analytics those two hand in hand. You have to be able to set up you know maybe you don't have that, they don't have to be the same character right. Often we have our monster awesome Troyer that's doing all of our paid traffic and then we have me doing more of our creative and together or both of our names are awesome. So in the company of the awesome. Yeah. His last name is Troyer and my last name is Distel, together we're destroyer. And so yeah it’s think about the creative mind and the technical mind put together, when you're thinking about advertising.
31:41 DA
What's the best resource you recommend for marketing?
31:41 AD
Your customer.
32:28 DA
Love that. Getting calls. Love it. Favorite marketing tool you can't live without?
32:28 AD
Proof.
32:35 DA
That's self promoting. I love it. Brand business or team that you admire, the whole company admires?
32:43 AD
I really admire why Amazon is doing. I really admire what Intercom is doing and really admire what Demio is doing.
32:52 DA
Love all three. Those are awesome. Well Austin it was an absolute pleasure.
We're going to wrap up here. Those are some of the major questions that I wanted to get through. I learned a ton especially the EPL. So I just want to thank you so much for your time and just really appreciate you coming on and talking a little bit about what you guys are going on at Proof. I know you're busy. I got a lot of stuff going on. So really appreciate you coming through.
33:15 AD
Yeah absolutely man and wanted to offer everybody to reach out at any time you ever have questions about this stuff I'm an open book so you can find me on Instagram you can find me on Facebook, be happy to chat.
33:27 DA
Perfect. Love it. Thanks so much Austin. I'll talk to you soon.
About Austin Distel:
