Hey everybody, today’s guest is Austin Neudecker, head of Growth at Rev, which provides transcription services for audio and video formats, translation services, and caption and subtitle services.
On today’s show we discuss how Austin went from startups to venture capital to the head of Growth at Rev, why they get 10-20% conversions even without a “beautiful” website, what their primary channel for new customer acquisition is, and the importance of learning to fail quickly.
Download podcast transcript [PDF] here: Austin Neudecker On How Rev Got 50,000 Customers (& Doubling Every Year!) by Having the Fastest Turnaround Time & Highest Quality TRANSCRIPT
- [03:34] – At Rev, Austin is involved with CXP or customer experience
- [03:54] – Rev is a freelancer marketplace that builds specific services they can sell to customers
- [04:47] – For a dollar a minute they will get transcription in under 24 hours, they manage their freelancers and have the fastest turn around time and deliver the best product they can
- [00:06:59] Rev focuses on making their services the best in the category they play in – turnaround time, competitive price, acceptable level of quality
- [07:55] – Incredible website conversion – SEM – Sales team to target whales – they know the customer acquisition cost of each channel
- [09:34] – They are in the 10-20% conversion rate range
- [09:51] – They spend less on other channels because of the website conversion
- [10:34] – They don’t think their website is the most beautiful thing in the world, but it is very simple and easy to pay with less clicks
- [11:45] – Being a VC is the best job Austin has ever had, that you should never take – it’s a very difficult field to get into
- [12:59] – Being a VC is doing a lot of analysis, but to make money, you have to invest in the right company and become a partner to get a return
- [13:32] – When looking for a VC you want one who has been a founder before and has experience under their belt – to shortcut the VC process operate as an entrepreneur – then retire into the process and become a VC
- [14:38] – The average return for a VC is zero, 70% of funds have a negative return, the top percentage 30% is making most of the money – that is where you want to be
- [16:07] – Find two important things to do each month that will really move the needle, focus on one thing, test, measure, and move on to the next thing
Resources from this interview:
- Austin Neudecker
- Twitter @aus_n
- Must-read book: Lean Customer Development: Building Products Your Customers Will Buy by Cindy Alvarez
- Startup San Diego
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Full Transcript of The Episode
Speaker 1: Do you want to impact the world and still turn a profit? Then you're in the right place. Welcome to Growth Everywhere. This is the show where you'll find real conversations with real entrepreneurs. They'll share everything from their biggest struggle to the exact strategies they use on a daily basis. If you're ready for a value packed interview listen on. Here's your host, Eric Siu.
Eric: Before we jump into today's interview, if you guys could leave a review and a rating and also subscribe as well that would be a huge help to the podcast. If you actually enjoy the content and you'd like to hear more of it, please support us by leaving a review and subscribe to the podcast as well. Thanks so much.
All right everybody, today we have Austin Neudecker who is the head of Growth at Rev which provides transcription services for audio and video formats, translation services, as well as caption and subtitle services. Austin, how's it going?
Austin: It's going great. Thanks for having me here.
Eric: Yeah, thanks for being here. Why don't you tell us a little bit about yourself and what you do?
Austin: Sure, yeah. I'll give you a little bit of a story of how I came to be in the position I'm in today. I actually tried my first startup as a student at MIT. I found a great group of friends and we kind of iterated through a couple different ideas. We landed on the concept that was basically delivering audio articles or audio books. It was kind of a podcasting service before podcasts really existed. That ended up dying pretty quickly but it gave me the bug for being an entrepreneur and starting companies. After that I sold my soul, I went into management consulting for five years but I learned a lot about how large corporations operate and the types of decisions they were making and how they were structured.
Ultimately, I really wanted to get back into entrepreneurship. I wanted to be the master of my own domain. After going back to business school to give myself a little time to think, I got involved in venture capital. First I was just sourcing deals for a Silicon Valley venture capital firm called Foundation Capital as a young entrepreneur. Then I became an associate at a seed stage fund called Genacast Ventures under a rock star investor named Gil Beyda who flies a little bit under the radar but I really consider him to be one of the best investors today.
After kind of seeing it from both sides of the table I really thought that I had to get back out and get into the driver's seat again. I had a string of startups. I started a smart pill bottle company called Adhere Tech. I went to the Y-Combinator Program with a company called Yealthy, and then I even started a little memory app called Membright. That one we might get back to later. It was a very fast failure and that is something I'm
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particularly proud of, is actually failing quickly. We can talk later about how to do that.
In the process of all that I got involved with a bunch of accelerators, as a mentor at Dreamit, Evil Nexus, Techstars, and I joined Rev in 2014. It was a company that had already started, I wasn't the founder of that business. I was first working on building better tools for our freelancers and I can talk more about that in a bit. Then, kind of moved into a growth role. Now actually my official title has evolved into something we call CXP or customer experience and trying to improve our customer's perception of the product and getting them to buy and order more. I hope that's helpful to set the stage.
Eric: Great, cool. Why don't you tell us a little bit about Rev and what it does exactly.
Austin: Yeah. When I think about Rev I think about a freelancer marketplace that builds specific services that we can deliver to customers. As you said in the intro, we do several different services today. We do caption services which is watching a movie and then typing up all of the things that are said and have it timed to show up on screen so if you couldn't hear the movie you could at least read it. With transcription services it's usually audio recordings of things like meeting minutes or even podcasts and trying to get the entire transcript pasted down below this podcast which you probably could use and get the SEO benefit out of it.
Also, translations. You send us a document in English, you want it in German, we can do that for you. Really it comes down to, for a dollar a minute we can get a video or audio transcribed or put into captions in less than 24 hours. The way we do that is, unlike a company like Up Work that has their own army of freelancers, we actually fully manage our workforce of freelancers. They're abstracted from our clients who don't really want to deal with managing the workforce as they go through. That allows us to focus on having the fastest turn around time, having the lowest price, and really having the highest quality. Those freelancers today are [inaudible 00:05:11] et cetera that really care about having a job that gives them flexibility, gives them good pay, and gives them a little bit of a community.
Everything we do is to try to give them a good experience to earn money at home flexibly and deliver the best product we can.
Eric: Great. What are some numbers you can share around the business today in terms of growth rates, revenues, customers?
Austin: Yeah. We're actually a little bit secretive about this. We have grown very, very quickly, I can say we're more than doubling every year. We have ... I'm a little bit reticent to share some of the exact specifics because we do have some other ...
Austin: Yeah. Like I said, primarily we're doubling every year. We've got very high, 10,000 very much more customers every year. Like I said, 7,000 freelancers on the service. Yeah, so that kind of sets.
Eric: Okay, so just to back track a little bit. It sounds like you have 10,000 customers and
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7,000 freelancers. Is that what the numbers are?
Austin: No, no, no. I'm saying we have very, very much more than 10,000 customers. I'm just being a little bit keen about it because we've decided that when we make announcements, talk about specific numbers, we want to use that as a PR moment and go out strategically to the market. That's why I'm kind of going to hold back some of those things.
Eric: Okay. When you say more than 10,000 customers, are you ... Let's just say this, is it plus or minus 50,000 customers?
Austin: It would be in that ballpark.
Eric: In that ballpark, okay. Is that plus or minus ... Okay, so you're saying it's in the range of 50,000?
Eric: Okay, great. Yeah, I just want to give the audience an idea of where Rev's at. Yeah, can you talk to us about what's working for you guys today in terms of customer acquisition?
Austin: Yeah, sure. Primarily what we focus on is ... This is going to sound counter intuitive but I'll get back to answering your question which is, we really focus on trying to make our services the best in every single category that we play in. What we try to do is we talk to our customers and try to learn about what are the things that they're making their buying decisions based on. We focus on trying to optimize whatever that is. For us in our specific things it's turn around time, how fast can you get this back to me? Is the price competitive? Is the quality above a certain level that I need it to be to be acceptable?
Because we focus so much on those it's mint that our primary channel for new customer acquisition is word of mouth. Because our service is just better than all other services out there, people come to us because they hear about that. Other than that, the things that I really am proud of is our website conversion is just incredible and so that allows us to [inaudible 00:07:52] people to our website from different channels which I'll talk about in a second. Then, since we get a high [inaudible 00:07:57] our customer acquisition cost is lower. We spend a significant amount on SEM every month. We are kind of our largest non-word of mouth channel that brings in still a minority of our new customer acquisition, but it is our primary paid channel.
We've spun up a sales team to go after what we consider to be whales, big customers that we think the unit economics work out for them. If you think about it, some of our services like, let's say, translation. We know for each service what exactly the customer acquisition cost is versus the lifetime value of customers in that channel. For certain channels it hasn't made any sense to throw an internal direct sales team at that specific service. Now we're at the point where we've got a variety of services, there are a few where the economics work out, where a direct sales team to go after some new whales
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We have spun up eight new sales reps recently and they're doing very well in terms of getting us the big customers.
Other than that, we've tried all sorts of other typical growth hacking channels. We've tried posting in blogs. We've tried a little dabbling in SEO. None of that has really paid off like we thought it could.
Eric: Got it, okay. I want to take a step back. You talked about having really high conversion rates. Around what range are ... What are your conversion rates sitting at right now and what do you think is really pushing that or driving that?
Austin: We're in the 10-20% range ...
Austin: For every single person that hits our site, a new user to hit our site whether they give us money or not. We're very proud of that, it's a very high conversion. Like I said, what that does is it drives down ... When we think about other channels. When we think about SEM, when we think about our sales team, we have to spend less on those channels to get people in the doorway to buy less leads in order to be competent that we're going to get business out it.
Eric: Okay. What is a conversion defined as for you guys? Is it just an email lead or is it somebody signing up for a trial, what is that?
Austin: No, we're talking about dollars in the door.
Eric: Dollars in the door. Wow.
Austin: Yeah. We're talking about someone coming to our site fresh that actually enters a credit card and pays for something.
Eric: Got it, okay. Yeah, I think we'll drop the notes, or the website into show notes and then everybody can go take a look at it and then figure out how they can get a 10-20% conversion rate.
Austin: Yeah, I think that that's really an interesting thing because if I'm going to be frank I would say that we're actually a little bit embarrassed about our website. We don't think it is the most beautiful thing in the world. I think we've definitely focused on some core principles about making it very simple and being very few clicks to actually get to a pay. You also will notice that if you go through out check-out flow that the payment is ... This is just a general tactic, right? The payment section is actually very early in the flow because as soon as they fill out their credit card then they're already quite bought in. They've already made a decision to spend some money. Then, if we have any other additional asks for them after that then that's kind of icing on the cake for us, but we've already kind of captured them as a client.
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Eric: Got it. Okay, makes sense. I want to switch gears a little bit right now. You talked about how you used to be involved in the VC world. Why did you decide to come back from ... Go from the VC world back into kind of starting other companies and then eventually working at Rev? What's the story behind that?
Austin: Yeah. There's a couple different factors. I talk very frequently with people that think that they want to become VCs. I try to tell them that it's probably the best job that I've ever had that you should never take. The reason I say that is just the realities of the VC game is ... This is kind of an aside but it's a very difficult career path to get into in the first place. Went into Wharton. I knew that there were 50 other of my classmates that wanted to get into VC. Every year about five people actually got into VC. The sad part of it is ... Maybe you can guess. How many of those five have had previous venture capital experience? Do you want to venture?
Austin: Four. Every year about 50 people try to get into VC, about five people actually succeed, and usually four of them have been an analyst at a VC before. I was that fifth guy, I was the guy that hadn't had any experience but got lucky enough to get a job in VC. I will tell you that in hindsight it's a very fun job, you get to spend your days ... I would screen about 2,000 businesses a year looking at them. You get to go to networking events. You get to go to all of the ... South By Southwest, Tech Crunch, Disrupt, all those different events looking for people, talking to passionate entrepreneurs. Ultimately, you're doing a bunch of analysis, you're making recommendations, you're trying to help the companies. At the end of the day, the way you make money as a VC is you have to get part of a carry. You have to invest in the right companies and then you have to be on the receiving end when they do well. The only way to be on the receiving end when they do well is to become a partner.
Just think about yourself. If you're an entrepreneur and you're trying to get fund raising from a VC you want to find a VC that's been there and done that. You want to find a VC that's built a couple businesses, maybe who've had some failures, but especially have had some good successes. As kind of a young associate or analyst you don't have that under your belt so you're not really respected by the entrepreneurs yet nor are you respected by the partners that have done that so they're not really going to promote you to partner. At some point, they're going to say, "Hey, why don't you go out, work for one of our portfolio companies, go start your own company, and come back to us once you've had some of that experience under your belt."
If there are people out there that really want to get involved in VC my best recommendation to them is, short cut the process. Go out there and start operating as an entrepreneur. Start learning these things and then, hopefully if you're successful, it will be so much easier later to "retire into VC" as a partner and actually get part of the care break. Was that helpful?
Eric: Yeah, super helpful. I think a lot of people ... You kind of clarified it. It's not easy as I think people think it, or make it out to be and I think you kind of just, you articulated
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that pretty well.
Austin: Yeah, and I hate to go on this topic too much but a real quick aside as well is if you look at the VC industry over the last 10 years, the average return for a VC is basically zero. The reason for that is 70% of funds return negative. They basically don't get enough money to pay back fully their investors. Now, the top percent, the top 20%, 30% who have all the returns for the entire industry, especially the top 10% who are doing all the best returns, are a very limited set of VCs.
Now, becoming a VC at one of those bottom 70 is a lot easier than becoming a VC at one of those top 30%. That's the only way to make money, is to get to be a partner at a successful VC fund. That's not always predictable but that's where you want to be.
Eric: Right. Totally makes sense and I think that's a great lesson for everyone here, including myself. Switching gears here, we just have a few more questions. How old are you right now?
Austin: Sure, 33.
Eric: Thirty-three. Okay, what's one piece of advice you'd give to your 22 year old self?
Austin: Oh, to my 22 year old self. A piece of advice that I still need today, that I am working on all the time and I think it's important for all entrepreneurs is a lesson in focus. That lesson in focus is that as a young entrepreneur you get a lot of advice. You get a lot of people telling you all the types of things you should be doing or the experiments you should try. I think the most successful guys are good about figuring out what is the one or two most important things to do this next month that will really move the needle? I can say for myself that I've failed at times on this. Trying to do six different experiments at once or trying to test multiple different businesses or strategies.
Ultimately, I think the entrepreneurs that win are the best at iterating quickly, getting something out there, testing it, measuring it, focused on that one thing, figuring out if it's a success or failure, and then moving on to the next thing in more of a serial process than a parallel process.
Eric: I love it, okay. What's one must read book you'd recommend to the audience?'
Austin: The one that I really like is really simple, it's called "Lean Customer Development" by Cindy Alvarez. The book talks about what are good ways to talk to customers so you're not biasing the conversation and you're actually getting the most learning out of it. Something I see other entrepreneurs do a lot is they'll come to me with their new app and they'll say, "Hey, look at this cool thing that I built. Would you use it?" That to me seems like such a horrible question because almost everyone is going to say yes. You're standing there, you're happy about it, you're showing this person, you're putting it in their hands. Of course they're going to agree with you. That's why I generally don't believe in surveys and that kind of stuff.
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The best way to figure things out is to have very open ended conversations with customers about their pain points. Really dig in kind of deeply into them and open endedly and you'll learn so much more than you will about, "Hey, would you use this solution?" You're basically asking them, "Is this a problem you have," or, "Can you imagine yourself having this problem?" Rather than talking to them tangibly about the last time they had that problem and what they experienced.
Eric: Right. Okay, great. Well, Austin, this has been awesome. What's the best way for people to find you online?
Austin: The best way to find me online on Twitter is @aus_in. I guess you can always hit me up on ... One really good way to find me is through Startup San Diego. It's an organization I kind of help run in San Diego. We've got a huge conference coming up if you happen to be in the area, with 130 different events in June, 13th. You can go to startupse.org or you can go to sandiegostartupweek.com.
Eric: Awesome, I love it. Austin, this has been fantastic. Everyone, make sure you check out Rev, check out what Austin's doing. Thanks again for doing this.
Austin: No problem.
Speaker 1: Thanks for listening to this episode of Growth Everywhere. If you loved what you heard be sure to head back to growtheverywhere.com for today's show notes and a ton of additional resources. Before you go, hit the subscribe button to avoid missing out on next week's value packed interview. Enjoy the rest of your week and remember to take action and continue growing.