Hear how Ian Ippolito, former founder of vWorker (today known as Freelancer.com, and previously known as Rent-a-Coder) stumbled into Internet marketing success not once, but twice. Ian holds a degree in computer science and started out his career company-hopping and consulting before growing frustrated with the roadblocks to innovation and change in being an employee. He decided to launch Planet Source Code for coders and attracted upwards of 4 million new visitors a month before the dot com crash imploded his business. Faced with mounting bills and a flatlining business, he restructured his idea to connect workers with employers who needed coders. That idea became known as vWorker.
- Hear how Ian rapidly grew a devoted audience without having to pay for content
- Find out how Ian stumbled upon massive traffic through luck and by looking at his ventures with a business-minded focus.
- Advice on starting from scratch in a service industry by creating content or finding something that can drive half your market to you. Then focus your efforts on the other half like finding buyers.
- Insights on Ian’s profitable affiliate program supporters were eager to join.
- Look at how Ian developed an ebook with a clever heading as a soft sell for vWorker.
- Ways Ian structured his marketing drip campaign non-aggressively and slowly pulled in his buyers.
- How just one big piece of press was the catalyst for getting featured in the Wall Street Journal, Forbes, Bloomberg and Time Magazine among others.
- Why Ian didn’t get down about fleeting press and traffic spikes, and how each push you a little further along.
- The story behind why Ian had “no choice but to be profitable.”
- Hear about the two people who ran vWorker with him and its growth to 15 before selling it.
- Challenges in figuring out how to hire well by testing different screening processes and where Ian identified time sucks.
- Secrets behind keeping new staff motivated and on their toes by extended trial periods past the traditional few weeks to months.
- How Ian’s trail periods fostered a culture of hard work and inspiration in the office.
- Find out about Ian’s new skilled gaming start-up and how it’s poised to disrupt the industry.
- Reflections on his biggest problems at vWorker including the staggering fraud that almost brought the company to a halt.
- How practicing full disclosure with your employees motivates them to help fix the problems you’re facing together.
- Crossing the Chasm – Geoffrey A. Moore. A consultant who went to investigate numerous start-ups and figure out why some fail and some cross the chasm into thriving businesses.
Eric: Hi everyone, and welcome to this week’s edition of Growth Everywhere where we interview entrepreneurs and bring you; business and personal growth tips. I’m your host Eric Siu and today we have Ian…Ippolito?
Ian: Ippolito. Right.
Eric: Got it. I almost butchered it again. Alright. Cool
Eric: Ian is the previous founder of vWorker, also known as Rent A Coder. Is that right?
Ian: Yes, that’s right.
Eric: Cool. Ian, thanks for being on the show.
Ian: Yeah, my pleasure. It’s great to be here.
Eric: Cool. Great. So Ian, why don’t you tell us a little about your background and how everything led into vWorker, eventually?
Ian: Oh, Okay. Sure. I mean way back my background was, I got a computer science degree from University of Central Florida and I kind of worked for other people. I worked for some large companies. I worked as a consultant and did a couple of things. But I was always…there was always like a dissatisfaction with me because I never…I enjoyed working for those companies, I did my best that I could, I try to do a good job, but there was always a frustration because I always felt I wasn’t able to…as an example, if I saw something I wanted to improve I would suggest it to my boss and he would run it to his boss and maybe something would happen, and there’d be a meeting, and typically nothing would happen. So, it was really frustrating working there. I found it wasn’t just in the place I was working, it’s a lot of these companies are the same way. So, I thought I’d like to start my own company and so that’s kind of like how the idea started. Actually before vWorker and Rent a Coder I actually started a couple of other companies. I started a company that does, that did software, like shareware, and then after that I created a website called Planet Source Code that brought in a lot of programmers. Actually Planet Source Code was kind of a start for creating Rent a Coder and vWorker.
Eric: Got it. Cool. Rent a Coder, did you change the name to vWorker and then why the name vWorker, I guess?
Ian: It was originally Rent a Coder. I created it back in 2001. Well, to explain that; I had this website called Planet Source Code and I had a lot of programmers on my website. I think I was getting maybe three or four million page views, I mean actually, users coming in every single month, so a lot of programmers on the website. But this was like around 2001 and right around then the dot com crash occurred.
Ian: So, I had Planet Source Code, it was doing great. I had all these advertisers, and then “Boom!” it completely fizzled out. And all my advertisers went out of business and they couldn’t pay their bills and I had huge bills I needed to pay too, because back then you couldn’t just get internet into your house. You had to purchase these lines, these T-one lines, so I ended up doing that. Each one of those was about thirteen-hundred or fifteen-hundred dollars a month times five or six, that’s huge bills. So, Planet Source is going down the tubes, it’s like “Oh no. All my advertisers are dying. I need to find something else.” So, that’s where I came up with the idea of Rent a Coder. And so I thought, “I have these coders here. Everyone needs programming work done. Maybe if I can find some way to like connect them with people who need the work done and I can make it safe, I think I can make it work. I think that could be a good business.”
Eric: Got it. Wow! So, let’s talk about those four million users from Planet Source Code first. I mean, how did you get…Let’s say, how did you get the first hundred thousand? And then we’ll go on from there.
Ian: Okay. So, on Planet Source Code…
Ian: You mean. Yeah. I guess I did it in kind of a boring way. I did it very slowly over time. And it took a while. It probably took a year and a half before I was getting even moderate traffic on there. I basically had put it out there, but…and this was a long time ago. Like I said, this is pre-2001 so there weren’t the options like Google ads or a lot of the things that are out there now. There were no Facebook ads. There was no Facebook. But I would basically rely on organic traffic, word of mouth, and then I would also go out to different places where people were discussing my topic, so in this case it was source code, people that were talking about programming, and I went out there and I talked to them, engaged them, and said, “Hey, by the way, the answer to your question could be found right over here.”
Ian:It took a lot of outreach.
Eric: Okay. Cool. So organic traffic at the time, you know, I’m assuming with four-million users you’ve got to have a ton of pages, a ton of profile pages, things like that. What was the main way for you to grow organically? There has to be like one tactic or strategy that you can share, right?
Ian: Yeah, definitely. Well, yeah, there were a lot of pages on that site and I still have that site today, so there still are, kind of like…The secret for that one was that the users generated all the content. So, the idea was, “Planet Source Code – Come here and share you source code with other programmers.” And it’s a really valuable thing. Source code can be reused, it’s the building blocks of programs. If I want to create a new program and I have the source code, you know, that might save me a huge amount of time.
Eric: So kind of like GitHub
Ian: Exactly, kind of like GitHub but way back when. Yes, before open source even had a name. But that’s basically yes, exactly.
Eric: Got it.
Ian: So, people had an incentive to put it up there, to kind of be known and also to kind of share with other people and interact with them. So that was the secret I had for this idea for great content that users would actually supply. I didn’t have to pay for any of the content. They put it up there. And there was just so much of it; that Google was just indexing, and indexing, and indexing all day long.
Eric: Mmhmm. Cool. And was this something that you stumbled upon or was it something you knew Google was going to find all of this and crawl and give you massive traffic?
Ian: No, I stumbled upon it. I can’t say I’m that smart. I was kind of just like…I was looking at it from a business point of view, like, “This seems like a good idea. I don’t know how long it’s going to take to go.” And I guess I was lucky that it turned out to be something that worked well.
Eric: Got it. Okay. Cool. The transition to…I guess we’ll talk about the peak of vWorker. At the height of vWorker, before you sold it, how many users did you have and what kind of revenue were you guys doing?
Ian: Sure. So like, at the peak it was doing about eleven million in revenue a year. It was…I think we had about a hundred and fifty-thousand employers, so the two sides of vWorker are the employers purchasing the work and the people doing the work. And so, the people doing the work, the workers there were about four-hundred thousand to five-hundred thousand of those. So, those were about the numbers.
Eric: Wow! Okay. So you have the chicken and the egg thing, we’ll just call it a market place. How do you go about…Do you already have the…You have the workers already, how do you go about finding the employers.
Ian: Yeah, that’s a good point. I would say for anyone starting a market place, it’s like, I would recommend…I had at least have half of it. If you’re starting completely from scratch, it’s like really, really difficult. So, I would recommend finding like a content site or something that can drive at least half of those to you. Then you can kind of focus your marketing on the other half. And so that’s what I did. Basically like you said, I had Planet Source Code that handled all the programmers and then I just focused all my efforts on bringing in buyers, so it was Google ads, emails, at the time emails work pretty good. I actually had an affiliate program too, which worked really well. Yeah, so sharing the profits with people, I set up something that was much better than all the competitors, because the competitors would give people like fifty bucks or a hundred bucks and I thought, “Well, we’re getting a life-time value out of these referrals. Let’s share that with them.” So, by doing that there were a lot of referrals.
Eric: Got it. Okay. Wow! And this was…What time period was this in?
Ian: Okay, so I started this site in 2001, but it probably took a couple of years to really start taking off, so….We’re talking about 2004, 2005.
Eric: Okay. Cool. Wow! You started doing Google ads, I mean, how much …besides the Google ad stuff was there a lot of…were you repeating a lot of the organic stuff or was there any other secret sauce you can share.
Ian: Yeah. So, the stuff that worked well on Planet Source Code I did over there as well. It’s like, in my case people looking for programmers there’s a lot of information that they need that they usually don’t have. So, I created like these technical guides on how to hire programmers. So, because there’s a lot of steps and most people don’t understand how to do it. So, talk about how to do it…It started off with a really compelling headline which said, “Eighty percent of software products fail and here’s how not to be one of them.” So, that was something that grabbed people’s attention and they talked further, “Well what does that mean?” “Well eighty percent of projects are either over-budget, or not on time, or don’t get done at all.” And then it laid out all the solutions. Then, of course, it pointed out, in this pretty long document, this e-book, how vWorker would make it easy…like it talked about how they could do it manually themselves, but if they wanted to do it simpler, here’s how vWorker can help. At the end was just a little thing about it. So, it was kind of a soft-sell in a way. And there were also drip campaigns, so I would have the email address, send them this book, actually send them half the book, not the whole thing, and then send the second half of the book later, and follow up with some email, you know, follow up with email and see if we can get some sort of activity on them and hopefully bring them into the site.
Eric: Got it. Okay. So, this drip campaign, I mean, this is before marketing and automation, you can’t track everything they’ve downloaded, where they’ve been, and all that. Walk me through, I guess, that process. You have auto-responder, right? How does that work exactly? At what point do you start to convert them?
Ian: Yes, yes. You’re right, there weren’t a lot of tools back then. I had to write it myself. Today there are tools that can automate it and make it a lot easier. But, so, basically you have to gather…The most important thing is that email address. You’ve got to get that from somewhere. So, a lot of times you can put some sort of bait on your webpage that’s going to be something that someone will want in exchange for giving you that email address. And what I found, I wasn’t going to gather a ton of information about them. I wasn’t going to ask, “What’s your age?” “Do you have a programming project?” You know, all these things. I just asked for the email address, that’s it. And so, as soon as they gave me that I would email them the link. I wouldn’t give them the e-book directly because, like on the website, because I wanted to make sure the email address was real. So, I would email them the e-book and so now I have them in the system. And so from there…let me see if I remember right…they had the first part of the e-book, then there would be a follow up email, I think like three or four days later saying, “Hey, did you get you’re e-book? Do you have any questions? Let me know…” Very soft sell. Not, you know, not pushing anything really. Then, like four or five days later, “Oh, by the way, there’s a second part of this e-book. So, here’s the second part.” Okay great. Hopefully they download that. And then, a lot of times that would be enough, they might just sign up, but if they didn’t, then I believe, like ten of fifteen days later there’d be another email. This one was not quite a soft sell. It was, “Hey we have this service that will help you hire a programmer. Would you like more information? Click here to be connected to a customer service rep or to talk to somebody, or to email us.” So, it was that kind of thing where it was step by step.
Eric: Got it. Wow! Okay. It think you pretty much…You stumbled into online marketing and got it all down. This is stuff that’s…I think it all comes…It’s all validated I think. It’s great. I think…So, in terms of, you know…I guess we can shift over to the PR side of things. So, obviously you’ve been featured on Wall Street Journal, Forbes, Bloomberg, and Time Magazine. How did this all come about?
Ian: I guess it came about really…It started with one article and I was just…I had my head down, I was working as hard as I could just trying to get people into the site and it was going good, it wasn’t going fantastic, but it was going decently, and I could see the trajectory was going real well, so I was really optimistic about the future. But, one day I just got an email from this guy, Lee Gomez, and he said, “Hey, my names Lee Gomez. I’m a writer for the Wall Street Journal. I think it’s amazing what you guys are doing. I’ve never seen anything like this before. I’d like to write an article if you don’t mind and also interview my programmer.” And of course I said, “Hey Yeah, no problem at all. Whatever. So, I’ll give you anything you need.” So he did that. He interviewed his programmer. He had hired this programmer to do some work and he got it done in just a few hours, so he was amazed at how well it had worked. So, that was the start. That Wall Street Journal article kind of kicked it all off. What I found that there’s kind of a herd mentality with a lot of the media. So, it’s like…which is good and bad. It’s bad when you’re trying to break in because it can be tough to break in. But once you have that one, then you’ve been validated. So, it’s like, all of a sudden all of these other people start coming to you. And basically that’s what I found.
Eric: I totally agree with that. I remember one time I was at this start-up and once we got featured at Tech Crunch, the Incs. of this world or the Wall Street Journals of the world came…it tends to have a cascading effect after. So, yeah, I think you’re totally right. Do you think that press was more of a very fleeting thing, like typical press, or do you think it helped spurt growth and continued the trajectory for you?
Ian: It was fleeting. So, it was like “Boom!” huge shift for like a week, two weeks, and then “Boom!” back down to normal. But, like you just said, that basically opened the door for some of these other people to start talking about us. So, each one was like another spike. You almost think of it like a porcupine. Each spike takes you up a little bit higher, a little bit higher, and hopefully you don’t come down quite to where you were. In my case, I had a product that had the advantage of strong customer loyalty. So, each time it would come back down, it wouldn’t come back all the way back down to where it started. So, that led to the eventual growth.
Eric: Got it. So, Okay. We’re in…I think we’re in agreement when you say there’re spikes, but it does lead to a consistent lift over time right?
Ian: Yes. Yes. Exactly.
Eric: Perfect. In terms of…I read one of your interviews. In it you said you had no choice but to be profitable. Can you explain what that’s all about?
Ian: It means a couple things. It means, one; that the company was…there was no venture funding, I funded it all myself and just did it that way. But the other thing was; it was born out of, I guess you could say, necessity. I told you a little about how Planet Source Code was doing so well and then just died. I needed to pay my bills, so I didn’t have the luxury of something that was going to just suck up a whole bunch of money, and maybe it was going to work, maybe it wasn’t. I had immediate problems right then with this huge multi… I think I had six T-ones, each over a thousand dollars a month. It’s like, I needed some sort of revenue. So, yeah, I needed something. That’s what it was. It was a very…It really forced me to really, really think about every single dime that I spent and every single moment of time that I spent and made sure those folks are the most important things
Eric: Okay. Wow! Cool. So, obviously for this type of stuff, for Planet Source Code, we’ll start with that, how many employees did you have running that?
Ian: Well Planet Source Code was very small, so I had myself, I had done the programming and I was the webmaster. I had a customer service person and I had a [person] who kind of did emails, answered questions from users, and then I had my CFO, who ran the financials and did that sort of thing, so it was actually a really easy business because it basically was just internet advertising. I had an out-sourced advertising team signage. So, it was a very small company.
Eric: Got it. When you say small company are you able to reveal the revenues for Planet Source Code?
Ian: That one I can’t because we’re still going today.
Eric: Okay. Cool. In terms of employees for vWorkers , you were at peak before you sold, how many employees did you have at the time?
Ian: So that one I had fifteen, so fifteen employees that I would call my own, like some full-time employees, twelve, and the three part-timers, and of course I had a ton of outsourced work, so I had programmers that I was hiring, I had content writers doing some marketing, and things like that.
Eric: Got it. Can you walk us through the challenges going from a very small operation to fifteen employees? I mean, what are some of the things you had to deal with?
Ian: Oh yeah, yeah, a lot of things. I mean, with Planet Source Code, like we talked about, I didn’t really have to worry about hiring too much. And actually, so the CFO, I knew her. She was a personal friend of mine and then we hired a relative of hers, so it’s like I knew everybody. And you just can’t do that when you have a bigger company. So I had to get good at hiring people and figuring out who was going to go do a good job and it’s not easy. You have this resume and on paper a lot of people, they’re not the most truthful, everyone looks great on their resume if they’re smart enough. So trying to differentiate that, trying to learn how to hire well was a big challenge, and that was a key because each individual hire was so important. In a big company if you hire badly it’s not going to make much of a difference. But in a small company, each one is like crucial.
Eric: Cool. So, what are some hiring tips that you can share with the audience?
Ian: What I found is that, this is funny, almost every time…I had to set up a process of hiring where, to minimize the amount of work for me, but hopefully find the best candidates, and so, I would start off, you know I’d post it where ever it was going to be, maybe it was going to be on linked-in, or maybe it was going to be on Monster, or where ever. So, post a job and then receive back a bunch of emails. And then I had an automated thing that would try to weed out a bunch of those people automatically who just weren’t qualified to do it. This automated thing would ask them five or six questions and if they knew the answer correctly, and if they didn’t it would weed them out. So, that was a huge thing there, because at first I was looking at every single one of these and I was just overloaded. So, some sort of way I’d recommend, that was my trick that I learned; some way to quickly weed these guys out. Then after that I would do an email interview. At first I would just jump right on the phone and I’d be like talking, I wasted so much time. What I learned is; do it in steps, at each step try to weed out more and more people. I would do an email interview, it was a canned interview. I had all the questions written out. I would just send it to them. On some of them there was like a little bit of a test, like a timed sort of thing. So I would just schedule a time, send it to them and maybe they would take like…Sometimes they would take a test for the customer service slot for grammar or, you know, because they’re typing emails. The worst thing is when someone, you know, you need customer service and the grammar’s really bad, and you can’t understand what they’re saying. So, you know, a little test like that. So, I would do an email, measure that. If they passed that…so now, about eighty percent are falling out of each step.
So, eighty percent are falling out there. So, now it’s the phone. And again, eighty percent would drop out on the phone. So I’d be left with just a small number. And finally, those people I’d bring in for an in person interview. But what I found is, even when I got to that last step I’d always have maybe like five or six people that like, “Okay, here are my final candidates” and I would try to predict, “Okay who is it that’s going to be the winner?” And I find I almost always predicted wrong based on just…And at that point I knew them pretty well. I knew their writing skills, like they’d taken a test, they had talked to me on the phone, I knew their phone voice if they were customer service, and I’d always guess wrong. What I found out is; so many people on paper and on the phone can present themselves very well. And then you get them in person and you go, “Whoa”, you know? You see their personality and you’re like, “That person’s not going to fit in because they’re a little bit pushy and…” whatever it is, “As a customer I don’t think I’d be so comfortable talking to this person. They don’t open up enough.” or, whatever it is. I know some people will just hire, for example, remotely. For someone that’s going to sit in an office I actually don’t recommend that. Like if it’s someone that’s going to sit in an office, I’d say, bring them in and have that face to face because, to me, like, I was always surprised that it always changed my mind on who was the best candidate.
Eric: Yeah, I totally agree with that. At the start of our work we hired people remotely all the time, we had a remote atmosphere. I totally agree. It’s… nothing’s going to be in person in some cases, this is totally right. Do you agree with Sequoia Capital, you know, they have this one blog post where they talk about a trial week for employees? Is this something you’ve tried in the past? And if so, how did it go?
Ian: Yeah, I definitely did. There’s a saying that you should hire slowly and fire quickly and I definitely agree with that. Because even after going through that huge whole process I wouldn’t necessarily get the best person. Actually I didn’t have a trial week. I had trial months. Yeah, I set up the first six months and said, “Look, you’re being hired on a trial basis. We’re going to be watching what you’re doing and we’re going to be helping you. We want you to succeed. I want you to succeed. I’ve invested a lot of money and time getting you to this point. I’m here for you. Any questions…?” And it’s a small company so I actually could be there for them almost until the very end. By the end it was starting to get a little bit difficult. So, as long as I offered that it was a fair trade. But they understood that they were…that I wasn’t promising them a job for life. It definitely made people be on their best behavior. And what I would find out was it would get people off on the right start because before I did that the tendency was, “Oh, I got the job. Okay. I’m set.” And people would tend to slack off right away. But once people actually start that pattern and that habit of doing it for maybe a week or, in this case, a few months, it’s locked in. So, I found that was a really, really good technique.
Eric: Got it. Okay. Cool. Great. Obviously vWorker has been sold. Let’s talk about the present for a little bit. What’s Ian working on today?
Ian: Yes, I sold that and I got into a completely new field. One of the biggest trends these days is mobile devices. We’re spending so much time on our mobiles and PC sales are flat or going down. I think that most people spend their time on mobiles, actually, is not actually doing work, but listening, listening to podcasts, watching videos like this one, and this, at least, has a work purpose. But also playing games. My newest thing is actually a gaming start-up. The idea of this gaming start-up, it’s a social gaming start-up…It’s basically a casual gaming start-up for people that can play games for money for sixty seconds, it’s basically a sixty second game. It’s really fast, and typically gambling games is what people think of when they think of money. They’re only allowed in three states, but because this is a skill gaming, so in other words, the luck is removed. It’s not like Roulette, where you spin a wheel. It’s actually…You match [?]towels, and you have to do it as fast as possible. It requires skill. So, because it’s a skill gaming thing it’s actually allowed in thirty-six states. So, that’s what I’m working on. It’s kind of a disruptive thing because a lot of the…So we have the casinos that sort of have a lock on a lot of this stuff and they’re trying to block out online gambling with some new legislation, so this is kind of like a whole new area, skill gaming, so it’s a little controversial, but it’s a little fun.
Eric: I love it. I used to play a ton of online Porker.
Ian: Oh, you did?
Eric: I’d love to see what happens with this.
Ian: Ahh. Cool. I’ll send you the link.
Eric: How does this work exactly? Let’s say I’m playing against you. Do we ante up something? I bet a hundred bucks, you bet a hundred bucks, if you win you take my hundred?
Ian: Yeah, that’s exactly it. So, very small tournaments. Four people total with the idea of trying to keep the odds as good as possible for each person. And, yup, people choose the ante, or the entry fee is what we call it. It ranges anywhere from a tiny amount as little as nine cents all the way up to fifty or sixty bucks. And they can choose the odds, if they play recreationally, like three out of those four people will either win back their money or get back more money. And then they can play intermediate or they can play advanced. If they do advanced, the winners are going to double or triple their money, but the lower players are not. They’re going to lose their money. It kind of depends on the level of the player.
Eric: Wow! I love it. Definitely sounds disruptive. Best of luck with that. Obviously you’ve done all these different business. What’s the challenge with a mobile start up right now?
Ian: Oh, there’s a lot. The mobile field is really fragmented. You have all these different environs. You’ve got your Android, your iPhone. And even amongst the Android you’ve got a million different models and things like that. So, trying to roll out a product that works well on all these mobile devices, each with their own programming language, and then also needs to work on the PC for those people who are going to be doing that, maybe they’re going to be on their tablet at home, or something like that, is like really a challenge. This is run on every platform, this game. So, this has definitely been a challenge.
Eric: Now, I imagine there has to be some differences here. Are you taking any funding, you’re going to need a lot more developer talent here. Is there anything different in that sense?
Ian: Yeah. Well, I mean, in one sense I don’t have that gun to my head that I had before which was, “Hey I’ve got to make this work.” So I have…It’s a lot easier this time. It’s a lot less stressful, I can say that. But, yeah, I may take funding. I’m definitely talking to some people that if they want to be involved in this. I was actually really resistant to funding last time and I think I’m more open to taking it this time than I was last time. So, we’ll kind of see, but I also…The advantage is, because I sold vWorker, I have the ability to take it all the way myself. So, that is definitely an option and it could be the most appealing one. I’m not sure.
Eric: Alright. Cool. Best of luck in that space for sure. You’ll have to send me the link after so we can promote it as well. I guess we can talk about, going back to the past, if you could go back and change one thing with growing vWorker what would it be?
Ian: Ooh, if I could change something about it. Well, I made a lot of mistakes, especially at the beginning. I really didn’t know what I was doing. You know what? I think one of the biggest problems I had was with fraud. The problem is that…so we have an employer, say they purchase a thousand dollar project from a worker. They put their money into escrow and we hold the money in escrow and then it gets released to the programmer once the buyer says that they did the work. The problem with fraud is a smart person could pretend to be both parties. As the employer they use a fake credit card, a stolen credit card basically, which you can buy really cheaply these days, I mean, it’s crazy, you can pay just a few cents per credit card. So, a fake credit card, charge a thousand dollars of fake money that’s not even theirs, receive the thousand dollars as a programmer. Then the credit card company comes back to us and says, “Hey, this was a fraudulent card. We need to send the money back to the person who it’s coming from.” Well, at that point we’ve already given out the money. So, this was a big problem on vWorker; how to handle the fraud. It took a while. It took many, many tries and many iterations to figure out a solution that was going to stop that because people are coming in anonymously and you don’t know who they are. Very difficult.
Eric: Wow! I imagine you must have been pulling your hair out on that one.
Ian: Yeah, that was one that was like definitely came really close to sinking the business. There were a few times where the fraud was so high that it was like, if this goes on for another month we’re going to be out of business next month.
Eric: So, when you’re in a moment like that, I mean, I guess, to help the audience, I mean, when you’re in an “Oh shit” moment like that, what do you need to do to turn it around? Like staying up all night, all day…Like what are some tactical things you can share with the audience?
Ian: Yeah, it’s like someone telling you your baby is sick and about to die, basically is where it is. You’ve been nurturing this thing and trying to get to the stage it is, all of a sudden a huge problem has happened. I think it’s almost impossible not to work just as crazy and as much as you can on it. That’s what I did. I mean, basically I realized there was a problem. I had to learn as much about the problem as possible.
That’s what I did. I researched every single thing I could about these people who stole internet… credit cards over the internet. Where do they hang out? How do they do it? How much money do they spend? What are their incentives? What are they trying to do? What are their capabilities? And then, what are their weaknesses? I did that. I talked to a lot of people and then I just kind of huddled together with my team, and at the time there were only three of us, so it was me, and basically the third person was more of a temp, it was myself and Zoe, who was the CFO from Planet Source Code, who kept along with me to vWorker together. So, we huddled together and we just said, “We are going to keep working on this until we figure out the answer.” Eventually we did.
Eric: Cool. You’re working around the clock and you huddle them and, I’m assuming they’re working around the clock too, helping?
Ian: Yeah. Exactly. It was just like, this was…Everyone wants to preserve their jobs, so it’s like if you don’t explain to them what’s going on, people would be upset. They would be like, “Why are you doing this?” But if you explain to them, “Look. Here’s the problem. Here’s our revenues. Here’s what this is doing to our revenues. Here’s how long we’re going to be in business if this keeps up.” That’s pretty motivating for everybody.
Eric: Got it. Good enough. That’s helpful for everyone. In terms of…Winding down here; two more questions. In terms of having a productivity hack you can share with us, what’s one productivity hack you can share?
Ian: Okay. What I found is that over time my to do list would pile up, and I’m actually a pretty hard worker, I’m consistent, I’m pretty disciplined, and I pound things out as quickly as I can. But even doing that it wasn’t enough and it just kept piling up and piling up. And the problem is it would pile up with these things that were kind of difficult to do. They weren’t like quick things. I could get the quick things out of the way. So, when I realized it was getting out of control, what I did was said, “Okay, every morning when I get up I’m going to pick…I’m going to look at my list and I’m going to take the hardest thing that’s on there, one hard thing, the hardest thing on there, I’m going to get it out of the way. I don’t care if that means I’m not going to get to these other things. And it was amazing because what it did was…there’s a certain amount of gridlock that I didn’t realize was occurring there and it was mentally weighing down on me, this huge list, even though I didn’t realize it. And the momentum that I got from getting rid of that hard thing. Sometimes that hard thing would take hours to do. Sometimes it was easier than I thought it was, I’d be like, “Okay, that only took me about thirty minutes.” I wasn’t that big of a deal. Sometimes it would take a couple days to do. But knowing that I was working on, like a really important hard thing and getting it out of the way, just mentally helped me. It made me so much more relaxed and eventually that list got down to nothing.
Eric: Cool. I couldn’t agree more with that tactic. What I find happening to myself sometimes is, that I tend to fall back into old habits. So, I’ll have that one thing, but then all of a sudden I find myself …I look at my list and “Bam!” it’s huge again. Like last week I just cleared it out, right? How do you prevent yourself from eroding into old habits?
Ian: It’s tough. It definitely takes discipline. I kind of use like a system for processing my emails and all that sort of thing. I go through it, I make a couple passes. So, my first pass is get rid of all the junk that I don’t have to pay attention to. That gets rid of about thirty percent of my emails. I don’t know how many emails you’re getting. You’re probably getting a lot, if you’re like most people. At my peak I was probably getting two thousand emails a day. It is ridiculous. Now it’s a lot easier. Now it might be like three-hundred, two-hundred. I get rid of a third. A third of them are junk, boom! The second pass are things I can get rid of in two minutes or less and so I go and make another pass all the way through. And then the rest of are the real thing and then I prioritize and I put them where I need to in my different lists. So, as long as I can kind of do that every day I stay on top of it. But like you said, like maybe you run into an emergency or something, so today I don’t get a chance to get through it, and then it can start to build up and I can go back into old habits. I guess my answer is, when I do that, I have a system. I know how to do it. I just need to do it.
Eric: Got it. Okay. Cool. Final question here. What’s one book you recommend to entrepreneurs? What’s a one must read?
Ian: Must read. Oh there’s so many good ones. I’m going to recommend, for entrepreneurs I would say “Crossing the Chasm”, Geoffrey A. Moore. This was a book that he wrote…He expected to sell five-thousand copies of this book. He didn’t think anyone would be interested in it and it ended up becoming a best seller. It sold well over five-hundred thousand copies. What it is; he’s a consultant that went into numerous companies, most of them tech companies, but all of them start-ups. He saw a lot of companies fail. He wanted them to know if there was a pattern. Is there something that…Why do most of these companies fail and only a small number of them succeed? He came up with a model, or I should say more precisely, there were already existing models, but he kind of refined these models and said, “There’s pieces of these things that are missing most of us don’t think of.” And his idea was the idea of the chasm, the idea that you start off with your early market and people are really excited about your product and you’ve got early adopters coming in and they love it, and they’re happy, and it seems good, but then there’s kind of this chasm where most companies kind of fail, where they cannot convert that early success into main-stream success. And so he came up with a bunch of techniques for moving companies from that first stage into mainstream success.
Eric: Got it. Okay. I lied. One more question. What’s one of the reasons why companies fail according to…like what’s, we’ll call it, one commonality?
Ian: Yes, commonality. He lays out three or four things, but one is the fact that their focus, he talks about a whole product, in other words, and this can kind of be a contradiction with lean start-up. Lean start-up says put out a little bit of something and then refine. Some people look at it as a contradiction. I don’t, but it could be seen as that. And he says; create the whole product with the idea of …like he says, if you create a store and you’re going to spend all the money to bring people into your store, that’s expensive. Each person that you drive in there, if they come in and they say, “I came in here for shovels, and they have just hose. They don’t have shovels.” They’re going to leave and probably never going to come back. So, his idea is, you need to have at least, call it the core product, maybe to be competitive with a lean start-up, rather than the whole product, but you need to have that core product of everything that they need so that they’re actually going to stay. So, he talked about that. He talked about not targeting too big of a market, which a lot of people do, like, “Oh, I’ll take one percent of this global market. I’m going to be rich.” and it’s almost impossible to do because how are you going to market to such a large market. There’s a million different segments in there. That’s another one of those big things. And he has very specific techniques for segmenting the market into tiny sizes that you can go in and dominate. And then once you dominate one of those sub markets, then you use, like a bowling alley, you knock down a pin and that gives you the ability to knock down the others because you have the social group that allows you to, verses if you just try to go into one of them by itself, it’s kind of like, he calls it…When you take over a new market it’s an act of aggression. To go in there without that kind of social proof, extremely difficult, extremely costly, a lot of companies will fail. So, he talks about how you set up that bowling alley of success so you’re knocking down pin, after pin after, pin to [?] [give it] your momentum.
Eric: Got it. In real life examples it would be like…you look at facebook, they throw up some hardware first in schools and then they branch out. Apple; same thing, one product first, now they’re doing everything. Google; search engine, now they’re trying to extend life solve death all this [ cross laughter] That’s sounds about right, right?
Ian: Yeah, exactly. The exact same thing.
Eric: Perfect. Well Ian, thanks so much for joining us. I mean, really insightful stuff and I’m really excited to see what you have going next. You’ll definitely have to shoot me the link so I can play. I’ll play you one on one, we’ll play for money. [cross laughter]. Thanks Ian. Thanks for joining us.
Ian: Okay. Have a good one.
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